<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-23192
CELADON GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3361050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9503 EAST 33RD STREET
ONE CELADON DRIVE
INDIANAPOLIS, IN 46236-4207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 972-7000
Indicate by check mark whether the Registrant (1) has filed all reports required
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 [ ]
The number of shares outstanding of the Common Stock ($.033 par value) of the
Registrant as of the close of business on May 7, 1997 was 7,622,580.
<PAGE>
<PAGE>
CELADON GROUP, INC.
INDEX TO
MARCH 31, 1997 FORM 10-Q
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets at March 31, 1997
and June 30, 1996...................................................................3
Condensed consolidated statements of operations - For the three and nine months
ended March 31, 1997 and 1996.......................................................4
Condensed consolidated statements of cash flows - For the nine months ended
March 31, 1997 and 1996.............................................................5
Notes to condensed consolidated financial statements ...............................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................17
</TABLE>
2
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
CELADON GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1996
----- ----
A S S E T S
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................... $1,174 $ 5,246
Trade receivables, net of allowance......................................... 27,161 33,642
Accounts receivable - other................................................. 3,415 4,338
Prepaid expenses and other current assets................................... 4,520 3,247
Tires in service ........................................................... 3,268 2,814
Income tax recoverable...................................................... 3,269 3,926
Assets held for resale...................................................... -- 2,548
Deferred income tax assets ................................................. 4,087 3,404
-------- --------
Total current assets .................................... 46,894 59,165
-------- --------
Property and equipment, at cost ................................................ 114,307 95,003
Less accumulated depreciation and amortization.............................. 28,062 22,715
-------- --------
Net property and equipment....................................... 86,245 72,288
-------- --------
Deposits........................................................................ 528 809
Tires in service ............................................................... 1,939 2,234
Advances to unconsolidated affiliate............................................ 1,933 --
Intangible assets............................................................... 781 875
Goodwill, net of accumulated amortization....................................... 4,881 4,980
Other assets.................................................................... 1,529 1,570
-------- --------
Total assets................................................................ $144,730 $141,921
======== ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable............................................................ 5,208 8,707
Accrued expenses ........................................................... 16,693 20,122
Bank borrowings and current maturities of long-term debt.................... 2,540 4,029
Notes payable............................................................... -- 1,200
Current maturities of capital lease obligations............................. 10,764 7,356
Income taxes payable ....................................................... 269 527
Current maturities of ESOP loan............................................. -- 185
--------- --------
Total current liabilities.............................................. 35,474 42,126
--------- --------
Long-term debt, net of current maturities ...................................... 10,236 26,552
Capital lease obligations, net of current maturities............................ 45,682 23,473
Deferred income tax liabilities ................................................ 8,675 7,796
---------- --------
Total liabilities........................................................... 100,067 99,947
-------- --------
Minority interest............................................................... 12 12
Commitments and contingencies
Stockholders' equity:
Common stock, $.033 par value, authorized 12,000,000 shares; issued
7,750,580 shares at March 31, 1997 and June 30, 1996 .................... 256 256
Additional paid-in capital.................................................. 56,281 56,281
Retained earnings .......................................................... (10,506) (14,035)
Equity adjustment for foreign currency translation.......................... (420) (355)
---------- ----------
45,611 42,147
Treasury stock, at cost, 128,000 shares and zero shares at March 31, 1997
and June 30, 1996, respectively (960) --
Less:
Debt guarantee for ESOP......................................................... -- (185)
--------- ---------
Total stockholders' equity.................................................. 44,651 41,962
--------- ---------
Total liabilities and stockholders' equity.................................. $144,730 $141,921
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
March 31, March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue.................................. $ 47,824 $ 44,138 $140,759 $123,652
------ --------- -------- --------
Operating expenses:
Salaries, wages and employee benefits.......... 16,787 16,427 50,260 46,036
Fuel........................................... 8,011 7,422 23,074 19,617
Operating costs and supplies................... 3,102 3,665 9,650 9,378
Insurance and claims........................... 1,449 1,222 4,074 3,580
Depreciation and amortization.................. 2,647 1,901 7,527 5,531
Rent and purchased transportation.............. 8,754 8,293 25,993 23,433
Professional and consulting fees............... 404 253 1,004 997
Communications and utilities................... 774 658 2,264 1,920
Permits, licenses and taxes................... 1,111 1,015 3,187 2,972
Employee stock ownership plan contribution..... 6 25 39 75
(Gain) on sale of revenue equipment............ ---- (90) --- (995)
Selling expenses............................... 860 809 2,335 2,280
General and administrative..................... 342 677 1,843 1,833
-------- --------- -------- --------
Total operating expenses................... 44,247 42.277 131,250 116,657
-------- --------- -------- --------
Operating income................................... 3,577 1,861 9,509 6,995
Other (income) expense:
Interest expense, net.......................... 1,304 927 3,662 2,738
Other (income) expense net..................... 8 15 (37) 50
-------- --------- -------- --------
Income from continuing operations before income
taxes.......................................... 2,265 919 5,884 4,207
Provision for income taxes..................... 906 177 2,354 1,928
-------- --------- -------- --------
Income from continuing operations............ 1,359 742 3,530 2,279
Discontinued operations :
Loss from operations of freight forwarding
division (net of tax)....................... -- -- -- (1,137)
Loss on disposal of freight-forwarding division
(net of tax)................................. -- -- -- (8,214)
Income from operations of logistics division (net
of tax)...................................... -- 90 -- 538
-------- --------- -------- --------
Income from discontinued operations (net of tax) -- 90 -- (8,813)
-------- --------- -------- --------
Net income .................................. $ 1,359 $ 832 $ 3,530 $(6,534)
======== ========= ======== =========
Earnings per Common Share:
Continuing operations.......................... $ 0.18 $ 0.09 $ 0.46 $ 0.29
Discontinued operations........................ -- 0.02 -- (1.11)
-------- --------- -------- --------
Net income loss per share ................... $ 0.18 $ 0.11 $ 0.46 $(0.82)
======== ========= ======== ========
Weighted average number of common shares and
equivalents outstanding...................... 7,674,768 7,884,100 7,647,194 7,921,627
========= ========= ========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
( DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Continuing Operations:
Cash flows from operating activities:
Net income from continuing operations.................................. $ 3,530 $ 2,124
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization...................................... 7,527 5,531
Provision for deferred income taxes................................... 864 2,580
Provision for doubtful accounts....................................... 189 98
Net (gain) on sale of property and equipment.......................... -- (995)
Changes in assets and liabilities:
(Increase) in trade receivables.................................... (1,132) (6,853)
(Increase) decrease in accounts receivable -- other................ (1,044) 5,029
Decrease (increase) in income tax recoverable...................... 569 (891)
(Increase) in tires in service..................................... (159) (699)
(Increase) in prepaid expenses and other current assets............ (1,422) (452)
Decrease (increase) in other assets................................ 4,172 (2,830)
Increase in accounts payable and accrued expenses.............. 240 9,396
(Decrease) in income taxes payable............................. (148) (571)
--------- ---------
Net cash provided by operating activities............................. 13,186 11,467
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment....................................... (1,274) (7,482)
Proceeds on sale of property and equipment............................... 13,864 1,877
Decrease in deposits..................................................... 281 331
-------- --------
Net cash provided by (used for) investing activities................. 12,871 (5,274)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock................................... -- 136
Purchase of common stock held in treasury................................ (235) ---
Proceeds from bank borrowings and debt................................... -- 1,909
Payments of bank borrowings and debt .................................... (19,005) (436)
Principal payments under capital lease obligations....................... (8,234) (6,312)
---------- ----------
Net cash (used for) financing activities ............................. (27,474) (4,703)
---------- ----------
Net cash (used for) provided by continuing operations................. (1,417) 1,490
---------- ----------
Discontinued Operations:
Income (loss) from operations, net of income taxes....................... -- (247)
Estimated loss on disposal, net of income taxes.......................... -- (8,214)
Change in net operating assets........................................... (2,655) 8,311
---------- ---------
Operating activities..................................................... (2,655) (150)
Investing activities..................................................... --- 2,678
Financing activities..................................................... --- (1,873)
---------- ----------
Net cash provided by (used for) discontinued operations............... (2,655) 655
---------- ----------
Increase (decrease) in cash and cash equivalents......................... (4,072) 2,145
Cash and cash equivalents at beginning of year........................... 5,246 1,809
---------- ---------
Cash and cash equivalents at end of period............................... $ 1,174 $ 3,954
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial reporting and the general instructions to Form 10-Q of
Regulation S-X. Accordingly, they do not include certain information and note
disclosures required by generally accepted accounting principles for annual
financial reporting and should be read in conjunction with the consolidated
financial statements and notes thereto of Celadon Group, Inc. (the "Company")
for the years ended June 30, 1996, 1995 and 1994.
The unaudited interim financial statements reflect all adjustments (all
of a normal recurring nature) which management considers necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the interim period are not necessarily
indicative of the results that may be reported for the full year.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
The condensed consolidated balance sheet at June 30, 1996 was derived
from the audited consolidated balance sheet at that date.
(2) SEGMENT AND GEOGRAPHICAL INFORMATION; SIGNIFICANT CUSTOMER
The Company's continuing operations consist of two divisions: truckload
and flatbed, and the Company generates revenue from its operations in the United
States and Mexico. Revenue from Chrysler accounts for a significant amount of
the Company's revenue. During December, 1995, the Company's Board of Directors
adopted a plan to discontinue its freight forwarding business which was
previously reported as a separate business segment. In the fourth quarter of
fiscal year 1996, the Company also discontinued the operations of the logistics
operations which was previously reported as a separate business segment. The
Company has presented the results of these segments as discontinued operations,
as described in note 5.
6
<PAGE>
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Information as to the Company's continuing operations by division is summarized
below (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
March 31, MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue:
Truckload............................... $41,675 $39,517 $123,950 $110,143
Flatbed................................. 6,149 4,621 16,809 13,509
-------- -------- -------- --------
Total............................... $47,824 $44,138 $140,759 $123,652
======== ======== ======== ========
Operating income:
Truckload............................... $ 3,497 $ 2,423 $ 10,006 $ 8,879
Flatbed................................. 323 230 838 571
-------- -------- -------- --------
Total from operating divisions 3,820 2,653 10,844 9,450
Corporate expense....................... (243) (792) (1,335) (2,455)
Interest expense........................ (1,304) (927) (3,662) (2,738)
Other income (expense).................. (8) (15) 37 (50)
-------- -------- -------- --------
Income from continuing operations
before incomes taxes................ $ 2,265 $ 919 $ 5,884 $ 4,207
======== ======== ======== ========
Capital expenditures (including capital leases):
Truckload............................... $ 225 $ 3,098 $ 28,613 $22,772
Flatbed................................. -- -- 32 18
Corporate............................... -- -- 11 3
--------- -------- -------- -------
Total............................... $ 225 $ 3 098 $ 28,656 $22,793
========= ======== ======== =======
Depreciation and amortization:
Truckload............................... $ 2,571 $ 1,836 $ 7,294 $ 5,338
Flatbed................................. 59 60 179 179
Corporate............................... 17 5 54 14
----------- -------- -------- -------
Total............................... $ 2,647 $ 1,901 $ 7,527 $ 5,531
=========== ======== ======== =======
Total assets:
Truckload........................................................... $122,965 $106,701
Flatbed............................................................. 7,272 7,100
-------- --------
Total from operating divisions.................................. 130,237 113,801
Corporate........................................................... 7,430 3,220
Discontinued operations............................................. 7,063 34,957
-------- --------
Total........................................................... $144,730 $151,978
======== ========
</TABLE>
7
<PAGE>
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS -- (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Information as to the Company's continuing operations by geographic area is
summarized below (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
March 31, MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue:
United States..................... $ 46,346 $ 42,788 $ 136,915 $ 120,117
Mexico (I)........................ 1,478 1,350 3,844 3,535
-------- -------- --------- ---------
Total........................... $ 47,824 $ 44,138 $ 140,759 $ 123 652
======== ======== ========= =========
Income before income taxes:
United States..................... $ 2,117 $ 775 $ 5,772 $ 3,909
Mexico (I)........................ 148 144 112 298
--------- --------- -------- -----------
Total........................... $ 2,265 $ 919 $ 5,884 $ 4,207
======= ======= ======= =========
Total assets:
Unites States...................................................... $ 135,931 $114,802
Mexico (I)......................................................... 1,736 2,219
---------- ----------
Total............................................................ $ 137,667 $117,021
========= ==========
</TABLE>
(I) Relates to the Company's trucking operations in Mexico.
Significant Customer:
Revenue from Chrysler accounted for approximately 43% and 51% of the
Company's revenue for the three months ended March 31, 1997 and 1996,
respectively. The Company transports Chrysler after-market replacement parts and
accessories within the United States and Chrysler original equipment automotive
parts primarily between the United States and the Mexican border, which
accounted for 31% and 69%, respectively, of the Company's revenue from Chrysler
for the three months ended March 31, 1997 and 30% and 70%, respectively, for the
three months ended March 31, 1996. Chrysler business is covered by two
agreements, one of which covers the United States-Mexico business and the other
of which covers domestic business. The international contract was extended for
three years and now expires on December 31, 1999. The contract applicable to
domestic movements is being renegotiated. No other customer accounted for more
than 5% of the Company's revenue during any of its three most recent fiscal
years.
8
<PAGE>
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1997
(UNAUDITED)
(3) INCOME TAXES
The Company's effective tax rate differs from the statutory federal tax
rate of 35% due to state income taxes and certain expenses which are not
deductible for income tax purposes. The effective tax rates for continuing
operations for the nine months ending March 31, 1997 and 1996 were 40% and 46%,
respectively. The 1996 tax provision includes additional tax expense related to
the non-deductible portion of expense allowances paid to drivers which pay
practice was discontinued by the Company in September, 1995.
(4) HEDGING ACTIVITIES, COMMITMENTS AND CONTINGENCIES
The Company, from time-to-time, enters into arrangements to protect
against fluctuations in the price of the fuel used by its trucks. As of March
31, 1997, the Company had no contracts to purchase fuel for future physical
delivery. Contracts for fuel delivery in the period March through July 1997 were
canceled in the September 1996 quarter and the Company realized a cancellation
gain of $85 thousand. This gain was reflected as a reduction in fuel expense in
the September quarter. Additionally, the Company periodically acquires
exchange-traded petroleum futures contracts and various commodity collar
transactions. At March 31, 1997, the market value of outstanding transactions
which extended through February 1998 approximated the $37 thousand recorded
negative value and covered approximately 16% of the Company's fuel requirements.
Gains and losses on transactions, not designated as hedges, are recognized when
realized and in the March 1997 quarter a loss of $75 thousand was recorded. The
net loss for the nine months ended March 31, 1997 was $7 thousand. The loss was
reflected as adjustments to fuel expense in the respective periods. The current
and future delivery prices of fuel are monitored closely and transaction
positions adjusted accordingly. Total commitments are also monitored to ensure
they will not exceed actual fuel requirements in any period.
Standby letters of credit, not reflected in the accompanying condensed
consolidated financial statements, aggregated approximately $2.2 million at
March 31, 1997.
The Company has outstanding commitments to purchase approximately $9.9
million of revenue equipment at March 31, 1997.
The Company has been assessed approximately $750 thousand by the State
of Texas for Interstate Motor Carrier Sales and Use Tax for the period from
April 1988 through June 1992. The Company disagrees with the State of Texas over
the method used by the state in computing such taxes and intends to vigorously
pursue all of its available remedies. On October 30, 1996, the Company made a
payment of $1.1 million, under protest, which includes interest to the date of
payment and enables the Company to pursue resolution of the matter with the
State of Texas Attorney General. In the March 1997 quarter, the Company filed
its Original Petition against representatives of the State of Texas. The state
responded and denied the Company's claims. The Company is preparing its evidence
to submit to the Court. The Company has accrued an amount that management
estimates is due based upon methods they believe are appropriate. While there
can be no certainty as to the outcome, the Company believes that the ultimate
resolution of this matter will not have a material adverse effect on its
consolidated financial position.
There are various claims, lawsuits and pending actions against the
Company and its subsidiaries incident to the operation of its business. The
Company believes many of these proceedings are covered in whole or in part by
insurance and that none of these matters will have a material adverse effect on
its financial position or results of operations.
9
<PAGE>
<PAGE>
(5) DISCONTINUED OPERATIONS
During December, 1995, the Board of Directors of Celadon Group, Inc.
authorized the disposal of the Company's freight forwarding business. In
connection with the Company's plan of disposition effective February 1, 1996,
the U.S. customer list together with certain assets and liabilities of the
Company's U.S. freight forwarding business, operating under the name
Celadon/Jacky Maeder Company, were sold to the Harper Group, Inc.'s primary
operating subsidiary, Circle International, Inc. Pursuant to the terms of the
transaction, the total purchase price for these assets and liabilities will be
paid in cash and will equal the net revenue derived from such customer list
during the twelve-month period following February 1, 1996. The Harper Group,
Inc. made an initial down payment of $9.5 million at closing with the balance of
the purchase price to be paid in quarterly installments as earned by the Harper
Group, Inc. It is now estimated that there will be no additional payments by the
Harper Group, Inc., to the Company. The remaining assets and liabilities of this
segment are in the process of liquidation.
In the fourth quarter of fiscal 1996, the Company disposed of the two
primary operating subsidiaries of the logistics segment. At that time, the
Company determined that it would discontinue offering logistics services as a
separate product line. In accordance with the terms of sale of the South
American warehousing, logistics and distribution business for $3.2 million, the
Company received 100,000 shares of the Company's common stock valued at $725,000
on July 3, 1996, and payment on October 3, 1996, of the $2.5 million promissory
note issued by the purchaser.
In the second quarter of fiscal 1997, there was a dispute between the
Company and its partner in the discontinued freight forwarding operation
concerning final liquidation of the partnership. The dispute was resolved by the
Company acquiring, in February, 1997, the other partner's 30% interest in the
remaining assets and liabilities of the partnership.
On December 18, 1996, the Company sold certain assets consisting
primarily of customer lists of its wholly owned freight forwarding operations
conducted in the New York area to NG Enterprises, Inc. (NGE), a company
controlled by Norman G. Grief, the former President and Chief Executive Officer
of Randy International, Inc. In connection with the sale, the Company acquired a
49% interest in NGE, agreed to provide a five year interest bearing revolving
credit loan up to a $1.9 million secured by the assets of NGE and agreed to an
option exercisable by NGE to acquire the Company's 49% interest in NGE for
$300,000 initially, which amount will increase by $30 thousand annually. The
Company will account for its investment in NGE on the cost basis in the future.
No gain or loss was recognized on the sale.
10
<PAGE>
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
At March 31, 1997 and June 30, 1996, assets and liabilities included in
the Company's consolidated balance sheet related to the discontinued operations
are as follows (in thousands):
<TABLE>
<CAPTION>
Freight Forwarding: March 31, June 30,
1997 1996
---- ----
<S> <C> <C>
Assets:
Cash.......................................... $ 519 $ 3,142
Accounts receivable (net of allowance)........ 1,315 8,436
Accounts receivable other..................... 1,224 2,558
Assets held for resale........................ -- 69
Deferred income tax receivable................ 2,965 2,369
Prepaid expenses and other current assets..... 675 224
---------- --------
Total..................................... $ 6,698 $ 16,798
========== ========
Liabilities and Equity:
Accounts payable.............................. $ 1,339 $ 4,805
Accrued expenses.............................. 2,139 6,146
Income taxes payable.......................... -- 105
Deferred income tax assets.................... -- (11)
Equity adjustment for foreign currency translation 10 25
---------- --------
Total..................................... $ 3,478 $ 11,070
========== ========
Logistics:
Assets:
Cash.......................................... $ -- $ 33
Accounts receivable (net of allowances)....... -- 303
Accounts receivable other..................... -- 632
Assets held for sale.......................... -- 2,479(1)
Income tax - receivable....................... 329 329
Deferred income tax receivable................ 36 36
---------- --------
Total...................................... $ 365 $ 3,812
========== ========
Liabilities and Equity:
Accrued expenses.............................. $ -- $ 214
Income taxes payable.......................... 272 276
Deferred income taxes payable................. 210 206
Equity adjustment for foreign currency translation -- (2)
----------- --------
Total..................................... $ 482 $ 694
=========== ========
</TABLE>
- ---------------------
(1) Represents the net investment in Celsur Inc., the stock of which was sold
on July 3, 1996.
11
<PAGE>
<PAGE>
The disposal of the freight forwarding and logistics segments has been
accounted for as discontinued operations in accordance with Accounting
Principles Board Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions." As such, prior
period financial statements have been restated to reflect the discontinuation of
these lines of business.
(6) COMMON STOCK
On October 18, 1996, the Company's Board of Directors ("the Board")
authorized the sale of up to 250,000 shares of the Company's Common Stock to the
Celadon Group, Inc. Employee Stock Purchase Plan, referred to informally by the
Company as the Celadon Hallmark Investment Plan ("CHIP"). The Common Stock, par
value $0.33 per share, may be treasury shares or newly issued shares, at a price
equal to 85% of the fair market value of the shares as of the day of purchase.
On September 24, 1996, the Board extended to November 1, 1997, the
expiration date for the stock purchase warrant originally issued to
International Bancshares Corporation in August 1990 pursuant to the Employee
Stock Ownership Plan loan agreement.
(7) SUPPLEMENTAL CASH FLOW INFORMATION
During the nine months ended March 31, 1997 and 1996, capital lease
obligations in the amount of $33.9 million and $15.8 million, respectively were
incurred in connection with the purchase of, or option to purchase revenue
equipment (including tires in service). Included in the current period is $6.6
million related to the sale leaseback of certain revenue equipment previously
owned.
12
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1996
Revenue. Consolidated revenue from continuing operations of the Company
increased by $3.7 million, or 8.4%, to $47.8 million for the three months ended
March 31, 1997 (the "1997 period") from $44.1 million for the three months ended
March 31, 1996 (the "1996 period"). Revenue from the truckload division
increased by $2.2 million, or 5.6%, to $41.7 million in the 1997 period from
$39.5 million in the 1996 period, reflecting a slight decline in volume and an
increase in net rate per mile. The rate per mile, excluding out of route miles,
increased by 6% to $1.10 per mile in the 1997 period from a $1.035 per mile in
the 1996 period due to the Company's increased focus on the most economic
business while eliminating non-compensatory business. The Company's flatbed
division acquired in June, 1995 represented $1.5 million of the increase in
consolidated revenues. The number of tractors operated by the Company's U.S.
truckload operation in over- the-road service rose to 1,211 at March 31, 1997
compared to 1,119 at March 31, 1996 in both cases excluding 49 tractors operated
by the Company's Mexican affiliate in both periods. The flatbed division's fleet
of owner operated equipment increased to approximately 280 at March 31, 1997
from 210 at March 31, 1996.
Operating income. The truckload division operating income increased by
$1.1 million, or 45.8%, to $3.5 million in the 1997 period from $2.4 million in
the 1996 period. The operating ratio for the truckload division, which is the
percentage of operating expenses to its revenue, improved to 92% in the 1997
period from 94% in the 1996 period. The improvement in operating ratio was
principally attributable to the increase in net rate per mile noted above
partially offset by cost increases. Excluding Mexican operations, fuel
cost per gallon, net of a $75 thousand loss on fuel management contracts,
increased by $0.03 to $1.12 per gallon from $1.09 per gallon reflecting
generally higher fuel costs during the period in the truckload division. Driver
wages per billable mile increased to $0.354 from $0.341 due to a change in
the pay rates in the fall of 1995 and adoption of a length of service bonus
system in the fall of 1996. The Company's flatbed division operating ratio,
which is typically higher than the Company's truckload division since its
revenue is generated by owner-operators which are generally more expensive as
a percentage of revenue than the use of Company owned equipment, improved
to 94.8% in the 1997 period from 95.0% in the 1996 period. This improvement was
primarily due to the flatbed division's overhead and fixed operating expenses
not increasing as rapidly as the revenue increase. Costs associated with the
rental of flatbed owner- operated equipment is classified as rent expense in the
consolidated statement of operations.
Corporate expenses decreased by $0.6 million to $0.2 million in the 1997
period from $0.8 million in the 1996 period. The decrease is primarily due to
senior management changes implemented at the end of the June 1996 quarter and a
net recovery of $300,000 for claims against Burlington Motor Carriers relating
to terminated acquisition negotiations.
Interest expense. Interest expense increased by $0.4 million, or 44%, to
$1.3 million in the 1997 period from $0.9 million in the 1996 period, as a
result of higher average outstanding borrowings and the conversion in October,
1996 of 252 tractors from operating lease to capital lease.
Income taxes. The effective tax rates for the March 31, 1997 and 1996
periods were 40% and 19% respectively. The discontinuance of foreign operations
associated with the logistics business and the reallocation of related taxes
contributed to a lower effective rate for continuing operations in 1996. The
lower effective tax rate during the 1996 period is also attributable to the
cumulative impact of a lower estimate of state tax expense.
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NINE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE NINE MONTHS ENDED MARCH 31,
1996
Revenue. Consolidated revenue from continuing operations of the Company
increased by $17.2 million, or 13.9%, to $140.8 million for the nine months
ended March 31, 1997 (the "1997 period") from $123.6 million for the nine months
ended March 31, 1996 (the "1996 period"). Revenue from the truckload division
increased by $13.8 million, or 12.5%, to $123.9 million in the 1997 period from
$110.1 million in the 1996 period, primarily as a result of a volume increase in
the demand for the Company's transportation services between the United States
and Mexico in the nine months ended March 31, 1997, as well as an increase in
rate per mile. The revenue miles increased by 8% in the 1997 period compared
with the 1996 period. The rate per mile, excluding out of route miles, increased
by 5% to $1.09 per mile in the 1997 period from a $1.04 per mile in the 1996
period due to the Company's increased focus on the most economic business while
eliminating non-compensatory business. Revenue from the flatbed division
increased by $3.3 million, or 24.4% to $16.8 million in the 1997 period from
$13.5 million in the 1996 period, primarily as a result of increasing the
network of owner-operated tractors to 280 at March 31, 1997 from 210 at March
31, 1996. The number of tractors operated by the Company's U.S. truckload
operation in over-the-road service rose to 1,211 at March 31, 1997 compared to
1,119 at March 31, 1996 in both cases excluding 49 tractors operated by the
Company's Mexican affiliate in both periods.
Operating income. The truckload division operating income increased $1.1
million, or 12.4% to $10.0 million in the 1997 period from $8.9 million in the
1996 period. The operating ratio for the truckload division, which is the
percentage of operating expenses to its revenue, decreased to 91.9% in the 1997
period from 92.0% in the 1996 period. The 1996 ratio includes approximately 1%
point benefit from a gain of approximately $1.0 million on the sale of revenue
equipment. Excluding Mexican operations, fuel cost per gallon increased by $0.07
to $1.12 per gallon from $1.05 per gallon reflecting generally higher fuel costs
during the period in the truckload division. This cost increase is net
of realized gain of $78 thousand attributable to the Company's fuel price
management program. Driver wages per billable mile increased slightly due to a
change in the pay rates in the fall of 1995 and adoption of a length of service
bonus system in the fall of 1996. Other cost increases were offset by the
revenue rate increases noted above. The Company's flatbed division operating
ratio, which is typically higher than the Company's truckload division since
its revenue is generated by owner- operators which are generally more expensive
as a percentage of revenue than the use of Company owned equipment, improved
to 95.0% in the 1997 period from 95.8% in the 1996 period. This improvement was
primarily due to the flatbed division's overhead and fixed operating expenses
not increasing as rapidly as the revenue increase. Costs associated with the
rental of flatbed owner-operated equipment is classified as rent expense in
the consolidated statement of operations.
Corporate expenses decreased by $1.2 million to $1.3 million in the 1997
period from $2.5 million in the 1996 period primarily due to senior management
changes implemented at the end of the June 1996 quarter decreased professional
fees and a net recovery of $300,000 for claims against Burlington Motor Carriers
relating to terminated acquisition negotiations.
Interest expense. Interest expense increased by $1.0 million, or 37.0%,
to $3.7 million in the 1997 period from $2.7 million in the 1996 period, as a
result of higher average outstanding borrowings and the conversion in October,
1996 of 252 tractors from operating lease to capital lease.
Income taxes. The effective tax rates for the March 31, 1997 and 1996
periods were 40% and 46% respectively. The higher effective tax rate during the
1996 period is principally due to additional tax expense related to the
non-deductible portion of expense allowances paid to drivers, which pay practice
was discontinued in September, 1995.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements in fiscal 1997 have been
funding the acquisition of revenue equipment for the trucking division. These
requirements have been met primarily by equipment leasing arrangements. During
the March 31, 1997 quarter, the Company reduced the size of its credit line
based on lower projected requirements. At March 31, 1997, the Company had a
credit facility of $30.0 million from its banks. At March 31, 1997, $12.1
million was utilized as outstanding borrowings, and $2.2 million was utilized
for standby letters of credit. The average balance outstanding during the nine
months was $18.1 million and the highest balance outstanding was $32.4 million
when the credit facility limit was $35.0 million.
The credit facilities bear interest at either a margin over LIBOR or the
bank's prime rate, at the option of the Company. The weighted average interest
rate charged on outstanding borrowings was 7.44% at March 31, 1997. The standby
letter of credit portion of the Company's facility collaterizes the Company's
obligations under insurance policies for liability coverage relating to its
trucking operations.
The trucking division has financed some of its capital requirements by
obtaining lease financing and notes payable on revenue equipment. At March 31,
1997, the Company had an aggregate of $56.6 million in such financing at
interest rates ranging from 6.1% to 10.5%, maturing at various dates through
2003. Of this amount, $10.9 million is due within one year.
During the December 1996 quarter, the Company declared its option to
purchase certain revenue equipment previously financed with operating leases at
the end of the lease term. As a result of this conversion, fixed assets and
capital lease obligations increased $10.4 million. The Company also completed a
sale leaseback of certain revenue equipment previously owned. The proceeds from
the sale and the increase to capital lease obligations was $6.6 million.
As of March 31, 1997, the Company had on order revenue equipment
representing an aggregate capital commitment of $9.9 million. All of the new
equipment has been or will be financed using a combination of operating and
capital leases and the Company's credit facility.
The Company's accounts receivable balance relating to continuing
operations at March 31, 1997, increased $0.9 million to $25.8 million from $24.9
million at June 30, 1996. The net increase represented a $0.6 million increase
in the truckload division and a $0.3 million increase in the flatbed division.
The 4% increase in accounts receivable for the Company reflects the 14% increase
in revenues for fiscal 1997.
Effective September 19, 1996, the Company completed a sale/leaseback
transaction relating to its new headquarters facility in Indianapolis, Indiana.
The proceeds from the transaction were used to reduce by approximately $6
million the borrowings outstanding under its bank credit facility.
The Company purchases fuel contracts from time-to-time for a portion of
its projected fuel needs. At March 31, 1997, the Company had no contracts to
purchase fuel for future delivery. The Company's fuel price management program
has not significantly impacted the Company's recent operating results and has
not adversely impacted the Company's liquidity.
On September 24, 1996, the Company's Board of Directors extended to
November 1, 1997, the expiration date for the stock purchase warrant originally
issued to International Bancshares Corporation in August 1990 pursuant to the
Employee Stock Ownership Plan loan agreement.
15
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Management believes that there are presently adequate sources of secured
equipment financing together with its existing credit facilities and cash flow
from operations to provide sufficient funds to meet the Company's anticipated
working capital requirements and fund the acquisition of tractors and trailers
presently on order. Additional growth in the tractor and trailer fleet beyond
the Company's existing orders will require additional sources of financing.
SEASONALITY
To date, the Company's revenues have not shown any significant seasonal
pattern. However, because the Company's truckload division's primary traffic
lane is between the Midwest United States and Mexico, winter generally has an
unfavorable impact upon the Company's results of operations. Also, business
demands for full truckload service tend to fall during holidays in both the U.S.
and Mexico and the timing of holidays can therefore impact the Company's
operations in any particular period.
INFLATION
Many of the Company's operating expenses are sensitive to the effects of
inflation, which could result in higher operating costs. The effects of
inflation on the Company's businesses during fiscal 1997 and 1996 generally were
not significant.
16
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
<TABLE>
<S> <C> <C>
(a) Exhibits
Exhibit 10.46 - Settlement Agreement dated March 28, 1997 between Leonard R. Bennett and
the Company.
Exhibit 10.47 - Fourth amendment, dated March 24, 1997, to the Credit Agreement dated
June 1, 1994 between Celadon Group, Inc., Celadon Trucking Services, Inc.
and NBD Bank N.A. and the First National Bank of Boston.
Exhibit 11 - Computation of per share earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the three months ended March 31, 1997.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CELADON GROUP, INC.
(Registrant)
/s/ Stephen Russell
------------------------------------
Stephen Russell, Chief Executive Officer
/s/ Don S. Snyder
---------------------------------------
Don S. Snyder, Executive Vice President
Chief Financial Officer
Date: May 9, 1997
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SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT (this "Agreement"), is made as of the 28th
day of March, 1997, between Celadon Group, Inc., a Delaware corporation (the
"Company"), on the one hand, and Leonard R. Bennett ("Bennett"), on the other
hand.
WITNESSETH:
WHEREAS, prior to the date hereof Celadon and Bennett entered into a
Consulting and Non-Competition Agreement, dated as of July 3, 1996 (the
Consulting Agreement.); and
WHEREAS, certain disputes have arisen regarding the rights and
obligations of the parties pursuant to the Consulting Agreement and both Celadon
and Bennett deny and continue to deny any wrongdoing of any nature and any
liability whatsoever in connection with the facts allegedly giving rise to such
disputes, which the parties wish to resolve amicably without further delay.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
SECTION 1. Termination of Consulting Agreement. The Consulting
Agreement is hereby terminated and shall be null and void and of no further
effect as of the date of this Agreement.
SECTION 2. Non-Competition Covenants and Confidentiality.
(a) Prior to July 3, 1999 Bennett shall not, directly or
indirectly, do any of the following:
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<PAGE>
(i) own, manage, operate, control, or participate in the
ownership, management, operation or control of or be employed or engaged by or
otherwise affiliated or associated in any manner with, any other corporation,
partnership, proprietorship, firm, association, or other business entity which
is principally engaged in the business of providing full truckload trucking
services (w) within any of the United States, Canada or Mexico, (x) between the
United States and Mexico, (y) between the United States and Canada, or (z)
between Canada and Mexico (a "Competing Business"); provided, however, that
Bennett's ownership of not more than five percent (5%) of the outstanding stock
of a company engaged in a Competing Business, if such stock is listed on a
national securities exchange, reported on The Nasdaq Stock Market or regularly
traded in the over-the-counter market, shall not be deemed violative of this
Section 2(a)(i); or
(ii) except for members of Bennett's family, Ramiro Leal and
Sandra Hall, hire any person who was an employee of the Company or its
subsidiaries (other than persons who are employees of Celsur Inc. or its
subsidiaries) on July 3, 1996, unless such person's employment is terminated by
the Company or the applicable subsidiary and a period of six months has passed
following the date of such termination; or
(iii) disclose, divulge, discuss, copy or otherwise use or
suffer to be used, in any manner in competition with or contrary to the
interests of the Company, the customer
2
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<PAGE>
lists, marketing methods, research or data or other trade secrets or other
proprietary information of the Company, it being acknowledged by Bennett that
all such information regarding the business of the Company, compiled or obtained
by, or furnished to, Bennett while Bennett was associated with the Company is
confidential information and the exclusive property of the Company; provided,
however, that this Section 2(a)(iii) shall not apply to the disclosure by
Bennett of confidential information (A) when required to do so by a court of law
or any governmental or administrative agency having jurisdiction over the
business of the Company; provided in such event, Bennett shall immediately
notify the Company of the existence, terms and circumstances surrounding such
disclosure so that the Company may seek an appropriate protective order prior to
the disclosure of such information, or (B) information which is in the public
domain other than through disclosure by Bennett.
(b) Bennett expressly agrees and understands that the remedy at
law for a breach by him of this Section 2 will be inadequate and that upon
adequate proof of Bennett's violation of any legally enforceable provision of
this Section 2, the Company shall be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or further breach.
Except as provided in the immediately following sentence, nothing contained in
this Section 2 shall be deemed to limit the Company's remedies at law or in
equity for any breach of the provisions of this Section 2 by Bennett. Any
covenant on
3
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<PAGE>
Bennett's part contained hereinabove which may not be specifically enforceable
shall nevertheless, if breached, give rise to a cause of action for monetary
damages, if such breach remains uncured for 30 days after notice thereof in
reasonable detail from the Company to Bennett.
(c) Nothing contained herein shall prevent Bennett from being
employed by, rendering services to or owning, managing or otherwise being
affiliated with other entities; provided such other entities are not engaged in
a Competing Business.
SECTION 3. Business in Brazil and Argentina.
(a) Bennett hereby represents and warrants to the Company that
any business he has conducted (directly or indirectly, alone or together with
others) in the nations of Brazil and/or Argentina has been in the name of
entities under his control (including without limitation Celsur Inc. and its
subsidiaries (collectively, "Celsur")) and, except for business conducted in the
name of Celsur prior to July 3, 1996, has in no way been affiliated with the
Company and, further, that neither he nor, to his knowledge, any other person
has alleged or led any third party to believe that such business in Brazil
and/or Argentina is related in any way to the Company, except through the former
relationship between Celsur and the Company. In addition, Bennett hereby
represents and warrants to the Company that he knows of no action pending or
overtly threatened against the Company arising from business Bennett has
conducted in Brazil
4
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<PAGE>
and/or Argentina and, further, that he knows of no basis on which any entity
in Brazil or Argentina may assert any claim for liability against the Company
based on such business.
(b) Bennett shall indemnify, defend and hold harmless the
Company, promptly upon demand and from time to time, against any loss,
liability, claim, action or damages that the Company may suffer, sustain or
become subject to arising out of or as a result of any claim made (alone or
together with any third party) by Wal-Mart Argentina S.A., Wal-Mart Brazil Ltda.
or any other affiliate of Wal-Mart Stores, Inc. (collectively, "Walmart") in
connection with business dealings in Argentina and/or Brazil between Bennett or
any entity under Bennett's control (including Celsur) and Walmart.
SECTION 4. Consideration: Benefits and Stock Options.
(a) Simultaneously with the execution of this Agreement, the
Company shall pay to Bennett, by wire transfer of immediately available funds to
an account designated by Bennett or by a bank cashier's or certified check
payable to the order of Bennett, the amount by which $365,565.40 exceeds the sum
of (i) $84,660.07 being the cash value as of the date hereof of the "split whole
life" insurance policy listed on Exhibit A hereto, plus (ii) $40,998.17, being
the cash value as of the date hereof of the "key man whole life" insurance
policy listed on Exhibit A hereto. The insurance policies listed in Exhibit A
hereto are collectively referred to herein as the "Insurance Policies".
Simultaneously with the execution of this Agreement, the Company
5
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<PAGE>
shall execute and deliver to Bennett all documents attached to this Agreement as
Exhibit B, and the Company shall take any and all further actions necessary, to
have the Company removed as an owner, a beneficiary, a collateral beneficiary or
a collateral assignee, as the case may be, with respect to each of such
Insurance Policies listed on Exhibit A, and Bennett shall thereafter have sole
control over such Insurance Policies. The Company shall have no further rights
in, and shall have no further payment obligations whatsoever regarding, the
Insurance Policies.
(b) Simultaneously with the execution of this Agreement, Bennett
shall execute and deliver all documents attached as to this Agreement as Exhibit
C, and Bennett shall take any and all further actions necessary, to assign to
the Company all rights under Mass Mutual Policy No. 7-214-173 (the "Third
Policy"), and the Company shall thereafter promptly take all steps necessary to
discontinue and cancel the Third Policy. Bennett shall have no further rights
in, and shall have no payment obligations regarding, the Third Policy.
(c) Simultaneously with the execution of this Agreement, Bennett
shall surrender to the Company any and all stock options he holds relating to
the Company's capital stock that were granted to Bennett prior to the date
hereof (collectively, the "Stock Options"), and the Stock Options shall be
cancelled, except that Bennett shall retain all his rights with respect to, and
shall continue to receive any and all
6
<PAGE>
<PAGE>
benefits to which he may be entitled under, the Company's Employee Stock
Ownership Plan ("ESOP"), subject to and in accordance with applicable law and
the terms of that ESOP.
(d) Nothing herein shall waive, release or otherwise prejudice
any rights or benefits to which Bennett may be entitled pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986, P.L. 99-509 ("COBRA").
SECTION 5. Releases.
(a) Bennett, on behalf of himself and anyone claiming through him
including, but not limited to, his past, present and future spouses, family
members, relatives, agents, attorneys, representatives, heirs, executors and
administrators, and the predecessors, successors and assigns of each of them,
hereby releases and agrees not to sue the Company or any of its divisions,
subsidiaries, affiliates, other related entities (whether or not such entities
are wholly owned) or the officers, directors, agents, attorneys or
representatives thereof, or the predecessors, successors or assigns of each of
them (hereinafter jointly referred to as the "Released Parties"), with respect
to any and all known or unknown claims which Bennett now has, has ever had, or
may in the future have, against any of the Released Parties for or related in
anyway to anything occurring from the beginning of time up to and including the
date hereof, including without limiting the generality of the foregoing, any and
all claims which in any way result from, arise out of, or relate to, Bennett's
services as a Consultant to the Company pursuant to the
7
<PAGE>
<PAGE>
Consulting Agreement, Bennett's employment by the Company or the termination of
such employment, including, but not limited to, any and all claims for severance
or termination payments under any agreement between Bennett and the Company or
any program or arrangement of the Company or any claims that could have been
asserted by Bennett or on his behalf against any of the Released Parties in any
federal, state or local court, commission, department or agency under any fair
employment, contract or tort law, or any other federal, state or local law,
regulation or ordinance, including, without limitation, Title VII or the Civil
Rights Act of 1964, the Employee Retirement Income Security Act of 1974, as
amended, the Americans with Disabilities Act or the Age Discrimination in
Employment Act, or under any compensation, bonus, severance, retirement or other
benefit plan and all rights Bennett had or may have had in respect of the Stock
Options; provided, however, that nothing contained in this Section 6(a) shall
apply to, or release the Company from any obligations (i) contained in this
Agreement, (ii) contained in the Agreement dated as of July 3, 1996 between
Bennett and Celadon Logistics, Inc. (the "Celsur Agreement"), (iii) based on
acts of fraud or violations of law committed by the Released Parties, or (iv) to
indemnify Bennett with respect to matters occurring prior to the date hereof
pursuant to the Company's Certificate of Incorporation or By-laws or insurance
policies maintained by the Company with respect thereto. Bennett expressly
represents and warrants that he has not transferred or assigned any rights or
8
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<PAGE>
causes of action that he might have against any of the Released Parties.
(b) The Company, on behalf of itself and anyone claiming through
it including, but not limited to, its officers, directors, agents, attorneys,
representatives, heirs, successors and assigns, and the predecessors, successors
and assigns of each of them, hereby releases and agrees not to sue Bennett, his
family members, relatives, agents, attorneys, representatives, heirs, executors
and administrators, or the predecessors, successors or assigns of each of them
(hereinafter jointly referred to as the "Bennett Released Parties"), with
respect to any and all known or unknown claims which the Company now has, has
ever had, or may in the future have, against any of Bennett Released Parties for
or related in anyway to anything occurring from the beginning of time up to and
including the date hereof, including without limiting the generality of the
foregoing, any and all claims which in any way result from, arise out of, or
relate to the Consulting Agreement or Bennett's employment by or directorship
with or offices held with the Company, including, but not limited to, any and
all claims for payments by Bennett under any agreement between Bennett and the
Company or any claims that could have been asserted by the Company or on its
behalf against any of the Bennett Released Parties in any federal, state or
local court, commission, department or agency under any federal, state or local
law, regulation or ordinance; provided, however, that nothing contained in this
Section 6(b) shall apply
9
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<PAGE>
to, or release Bennett from, any obligations (i) contained in this Agreement,
including, without limitation, Section 3, (ii) contained in the Celsur
Agreement or (iii) based on acts of fraud or violations of law committed by
Bennett. The Company expressly represents and warrants that it has not
transferred or assigned any rights or causes of action that it might have
against any of the Bennett Released Parties.
SECTION 6. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered personally,
sent by registered or certified mail, return receipt requested, or sent by a
nationally recognized overnight courier service addressed as follows:
If to the Company, to:
Celadon Group, Inc.
One Celadon Drive
Indianapolis, Indiana 46236
Attention: Stephen Russell
With a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036-8299
Attention: Arnold S. Jacobs, Esq.
If to Bennett, to:
Leonard R. Bennett
2526 N.W. 59th Street
Boca Raton, Florida 33496
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Robert G. Koen, Esq.
10
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<PAGE>
or to such other person or address as any party shall specify by notice in
writing to the other parties hereto.
SECTION 7. Assignability, Binding Effect and Survival. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns. The rights and obligations of Bennett under this Agreement shall
inure to the benefit of and be binding upon Bennett and his heirs, personal
representatives and estate.
SECTION 8. Complete Understanding; Amendment. This Agreement
constitutes the complete understanding between the parties with respect to the
subject matter hereof, and no statement, representation, warranty or covenant
has been made by any party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto. Waiver by any
party hereto of any breach hereunder by another party shall not operate as a
waiver of any other breach, whether similar to or different from the breach
waived.
SECTION 9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof.
SECTION 10. Section Headings. The section headings contained in this
Agreement are for reference purposes only and
11
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<PAGE>
shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 11. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
SECTION 12. Legal Fees and Expenses. The parties hereto shall each
pay all costs, fees and expenses incurred by it or him in connection with the
negotiation and preparation of this Agreement, including, without limitation,
the fees and expenses of its or his own advisors and counsel.
SECTION 13. Further Assurances. Each of the parties hereto shall,
whenever and as often as reasonably requested to do so by the other party, do,
execute, acknowledge and deliver any and all such other further acts, transfers
and any instruments of further assurances, approvals and consents as are
necessary or proper in order to accomplish and complete the transactions
contemplated hereby.
SECTION 14. Counterparts. This Agreement may be executed in two
separate counterparts, each of which shall be
12
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<PAGE>
deemed an original and both of which together shall constitute a single
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
CELADON GROUP, INC.
By: /s/ Don S. Synder
----------------------------
Name: Don S. Snyder
Title: CFO
/s/ Leonard R. Bennett
--------------------------------
Leonard R. Bennett
13
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EXHIBIT A: INSURANCE POLICIES
SPLIT WHOLE LIFE POLICIES:
Mass Mutual Policy No. 7 394 226, effective 10/8/88
KEY MAN WHOLE LIFE POLICY:
Mass Mutual Policy No. 8 836 611, effective 10/22/92
TERM POLICY:
Prudential Policy No. 79 774 583, effective 9/30/92
DISABILITY POLICY:
Provident Policy No. 36-69733, effective 5/1/88
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EXHIBIT B
[MassMutual LOGO]
Change of Owner and Beneficiary with
Proceeds Paid in One Sum
Not for Annuity Policies
Massachusetts Mutual Life Insurance Company
and affiliated insurance companies
Springfield MA 01111-0001
- --------------------------------------------------------------------------------
INSURED POLICY NUMBER
LEN BENNETT 8836611
- --------------------------------------------------------------------------------
The Company is authorized and requested to change the policy(ies) above as
provided in this amendment. The Definitions and General Provisions on the
reverse side of this page are a part of this amendment.
Instructions: Check only one Box (1-8) and complete the information requested.
To change owner from Qualified Plan to insured, use Box 1 ONLY.
Boxes 4 & 5 cannot be used for Disability Income and Business
Overhead Expense Policies.
- --------------------------------------------------------------------------------
Ownership of the above policy(ies) is changed as follows:
- --------------------------------------------------------------------------------
1. [X] The Insured.
2. [ ] Lifetime Ownership with a Reversion to the Insured
The Insured's_________________________ ________________________ , while
(Relationship) (Name)
living and thereafter the insured.
3. [ ] Lifetime Ownership with one Contingent Owner--with a Reversion to the
Insured
The Insured's_________________________ ________________________ , while
(Relationship) (Name)
living and thereafter the insured's _________________ _________________
(Relationship) (Name)
while living and thereafter the insured.
4. [ ] Lifetime Ownership with a Reversion to Estate
The Insured's_________________________ ________________________ , or
(Relationship) (Name)
his/her estate.
5. [ ] Lifetime Ownership with one Contingent Owner--with a Reversion to Estate.
The Insured's _________________________ ________________________, while
(Relationship) (Name)
living and thereafter the insured's _________________ _________________
(Relationship) (Name)
while living, and thereafter the estate of whichever of the owners is
the last to die.
6. [ ] ______________________________, a corporation, its successors or assigns.
7. [ ] ______________________________, a partnership.
8. [ ] _______________________________________, trustee(s).
(Name of Trustee(s))
under the________________________________________________________________
(Name of Trust)
dated _______________. (Copy of signed trust agreement required,
see reverse side for Trust Provisions)
Every right, privilege, option and benefit granted by the policy or allowed
by the Company and the right to change the succession of ownership of the
policy are transferred to the owner by this amendment.
The owner shall be the beneficiary, except if the insured is the owner, the
estate of the insured shall be the beneficiary.
There is no beneficiary under a Disability Income Policy or a Business
Overhead Expense Policy.
If a Qualified Plan is transferring ownerhsip to the insured, see Qualified
Plan Provisions on reverse side.
If other beneficiaries are desired, the new owner must sign a new
beneficiary form (i.e., F5159)
New Owner's Social Security, ID # or Trust ID #:
[ ]
Address all future mail, including [ ]
premium notices to: (Please include all hyphens)
___________________________________ Under penalities of perjury, I certify
NAME that the above is my correct Tax
Identification Number. I also certify
___________________________________ that the Internal Revenue Service has
STREET AND NUMBER not notified me that I am subject
to backup withholding.
___________________________________
CITY, STATE AND ZIP CODE
___________________________________ _______________________________________
CELADON NEW POLICY OWNER'S SIGNATURE DATE
By:____________________ _________ _______________________________________
OWNER'S SIGNATURE DATE NAME OF CORP., PARTNERSHIP, TRUST OR
QUALIFIED PLAN OWNER
By:____________________ _________ _______________________________________
DATE SIGNATURE(S) & TITLE(S)
<PAGE>
<PAGE>
[MassMutual LOGO]
Release of Assignment
Execute in Duplicate
Massachusetts Mutual Life Insurance Company
and affiliated Insurance companies
Springfield MA 01111-0001
FOR VALUE RECEIVED, all right, title and interest in and to
Policy No. 7394226,
on the life of Len Bennett is hereby relinquished and released.
_____________________________________________________ _____________________
INDIVIDUAL ASSIGNEE SIGNATURE DATE
_____________________________________________________ _____________________
INDIVIDUAL ASSIGNEE SIGNATURE DATE
_____________________________________________________ _____________________
INDIVIDUAL ASSIGNEE SIGNATURE DATE
Celadon
_____________________________________________________ _____________________
CORPORATE SIGNATURE (NAME OF COMPANY) DATE
By:
_____________________________________________________ _____________________
AUTHORIZED OFFICER (NAME & TITLE)
By:
_____________________________________________________ _____________________
AUTHORIZED OFFICER (NAME & TITLE)
- -------------
Corporate Signature Requirements
Include full name of corporation and print name of corporate title of each
officer who signs (i.e., President, Vice President, Secretary, or Treasurer)
One Corporate Officer: provided he/she is not the insured or a family member.
Two Corporate Officers: if the first is the insured or a family member. The
second officer may be related to the insured.
Sole Corporate Officer: if the insured or family member is sole officer,
his/her signature is acceptable if accompanied
by a statement to that effect, or if the
corporate seal is affixed.
<PAGE>
<PAGE>
EXHIBIT C
- --------------- ---------------------
[MASSMUTUAL LOGO] Service Request
Massachusetts Mutual Life Insurance Company
and affiliated insurance companies
Springfield MA 01111-0001
Insured/Annuitant LEN BENNETT Policy Number(s) 7214173
- -------------------------------------------- ----------------------------
- ---------------------
[ ] 1. Dividend Option Change commencing with the dividend payable in __________
(year), change the dividend option to:
<TABLE>
<S> <C> <C>
[ ] Cash (CS)-1 [ ] Reduce Premium with excess to: [ ] Term Purchase* with excess to:
[ ] Paid-up Insurance Additions (PD)-3 [ ] Cash (RP/CS)-2 [ ] Reduce Premium (TRP)-7
[ ] Paid-up Annuity Additions (APD)-5 [ ] Paid-up Additions (RP/PD)-25 [ ] Paid-up Additions (TPD)-9
[ ] Dividend Accumulations (DA)-4 (Form W-9 required) [ ] Reduce Loan (RP/RN)-26 [ ] Reduce Loan (TRN)-13
[ ] Reduce Loan (RN)-6 *Subject to company approval
</TABLE>
- ---------------------
<TABLE>
<S> <C>
[ ] 2. Agency Transfer Do not complete Servicing Agent data for UL, VL+, VA or FA contracts.
Change: Agency of record to # __________________ Servicing Agent to ______________________________ ID# ___________________
</TABLE>
- ---------------------
[ ] 3. Lost Policy Agreement (issue duplicate policy or certificate)
To the best of our knowledge, this policy was:
[ ] Lost [ ] Stolen [ ] Destroyed on or about ____________________ 19 _____
under the following circumstances (complete if circumstances known):
______________________________ In return for the Company issuing a duplicate
policy, the undersigned agree to hold the Company harmless from all claims and
liability resulting from the issue of or transactions involving the duplicate
policy. To the best of the knowledge of the undersigned, the policy has not
been given to and is not in the possession of any other person. If the
original policy is found, both it and the duplicate policy will be returned to
the Company to cancel the duplicate and update the original. This agreement
shall be binding on the estate and successors of the undersigned.
- ---------------------
[ ] 4. Reduced Paid-Up or Extended Term Insurance Election
If the Premium due (enter date) ____________________ is not paid, the Policy
shall, in accordance with its terms and provisions, become:
[ ] Reduced Paid-Up Insurance [ ] Extended Term Insurance
Signed request must be received at the Home Office within 62 days following
the premium due date.
Initial here if the policy # is below 3 500 000 and you want to use any
dividend accumulations to increase the reduced paid-up value ________________.
Any provision of the policy(s) which provides for automatic payment of
premiums will not take effect for the above premium.
A statement will be sent showing the amount of coverage.
Refer to the Home Office if the policy was issued substandard and Extended
Term is desired.
Use Form A1052 if the policy number is from 451 462 to 1 147 835 and
Automatic Premium Loan has been elected.
- ---------------------
[ ] 5. Automatic Premium Loan (APL) Election / Cancellation
[ ] The Provision for Automatic Premium Loan is elected. This election is to
be operative even where premiums are allowed on a monthly basis.
[ ] The election of the provision for Automatic Premium Loan is cancelled
(revoked).
- ---------------------
[ ] 6. Withdraw or Apply Dividends
<TABLE>
<S> <C> <C> <C> <C> <C>
Paid-up Annuity Dividend
Withdraw dividends from: [ ] ALIR Purchase Payment [ ] ALIR Dividend [ ] Additions [ ] Paid-up Additions [ ] Accumulations
Amount $___________ Payee: [ ] Owner Apply to: [ ] New Insurance (name) _______________________ Policy # ___________________
[ ] _____________ Premium [ ] Loan/Interest Policy #________________ [ ] Other ________________________________________________
</TABLE>
- ---------------------
[ ] 7. Loans
Each of the undersigned assigns to the Company issuing the policy all right,
title and interest in the policy including all amounts payable under the
policy and any paid-up additions and dividend accumulations as collateral for
a loan in the amount of $___________. The Company is authorized to fill in the
amount in accordance with the box checked below.
<TABLE>
<S> <C> <C>
Policy Loan (complete section 9) Premium Loan
[ ] Maximum [ ] Amount $______________ [ ] Pay __________ premium of $_________
Payee: [ ] Owner [ ] Other ___________________ [ ] Apply $________ to _________ premium
[ ] Apply to _______________Policy # _________
</TABLE>
The effective date for all dividend and loan disbursements will be the date
this form, properly signed, is received by the Company at
1295 State Street, Springfield MA 01111-0001.
<PAGE>
<PAGE>
[X] 8. POLICY SURRENDER [return the policy (or complete section 3), and
also complete section 9]
In consideration for payment of the surrender value, the undersigned
releases all rights, title and interest in the policy(s). This includes any
agreements, provisions or riders relating to the policy. If the policy
number is below 3 500 000 and the right to change the beneficiary has been
reserved to the policyowner, the Company that issued the policy is
authorized to amend the policy(s) and make the proceeds payable to the
undersigned or the estate of the undersigned. Unless a later date is
requested below, surrender will be effective on the date this form, properly
signed, is received with the policy(s) at 1295 State Street, Springfield MA,
or at any other office designated by the Company.
<TABLE>
<S> <C>
Surrender the policy(s) effective________________ Unless exempt, any gain on
surrender is taxable and may
be reported to IRS.
</TABLE>
Payee: [ ] Owner [ ] Other____________
[ ] Pay $____________ To Apply On__________________________________
- -----------
[X] 9. WITHHOLDING ELECTION (The Tax Equity and Fiscal Responsibility Act
requires the following notice:)
The distributions you receive from this Company are subject to Federal
Income Tax withholding unless you elect not to have withholding apply.
Withholding will only apply to the portion of your income subject to
Federal Income Tax. There will be no withholding on the return of your
own nondeductible contributions to the contract.
If you elect no withholding or if you do not have enough withheld, you
may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax
payment are not sufficient.
If you elect withholding, receipt of your payment may be delayed by the
calculation required.
I have read the notice regarding Federal Income Tax withholding and:
<TABLE>
<S> <C>
[X] I do not want Federal Income [ ] Owner's Date of Birth______________
Tax withheld from my payment.
[ ] I want Federal Income tax [ ] Owner's Taxpayer I.D.#_____________
withheld from my payment. (Social Security Number)
</TABLE>
IMPORTANT: IF THIS DISTRIBUTION IS FOR TAX-FREE ROLLOVER OR EXCHANGE, YOU
SHOULD NOT ELECT WITHHOLDING.
- -----------
SIGNATURES
For the purpose of this form, 'policy' also means 'contract'. The Company
that issued the policy(s) is authorized to change the policy(s) as
indicated above.
Each of the undersigned certifies that he or she is of legal age and that
the policy(s) is not assigned, pledged or subject to any bankruptcy
proceeding, attachment, lien or other claim, except as follows:
- --------------------------------------------------------------------------------
INSURED DATE OWNER DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE PARTNERSHIP OR TRUSTEE OWNER ASSIGNEE
CELADON
BY:
- --------------------------------------------------------------------------------
SIGNATURE(S) & TITLE(S) DATE SIGNATURE(S) & TITLE(S) DATE
BY:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Signature Requirements Insured Owner Assignee If the Owner is:
<S> <C> <C> <C> <C>
1. Dividend Option Change x x* A corporation, include corporate name and title(s) of officer(s)
2. Agency Transfer x signing (generally must be other than insured).
3. Lost Policy Agreement x x x
4. Red Pd-Up/Ext Term x x* A trust, sign as Trustee, and include full name of trust, date of trust
5. APL Elect/Cancel x x* agreement and title(s) (if corporate trust) of officer(s) signing.
6. Withdraw/Apply Dividends x x*
7. Policy Surrender x x* If policy is assigned, include full name of assignee and title(s) (if
8. Withholding Election x x* corporate assignee) of officer(s) signing.
*If the policy is assigned, and the right being exercised is granted to
the assignee, only the assignee's signature is required.
- ---------------
</TABLE>
<TABLE>
<CAPTION>
[ ] Direct Any Correspondence regarding this transaction to:
<S> <C> <C>
[ ] Policyowner [ ] Insured Address__________________________________________________________________________
[ ] Agent __________________ Agent ID#___________Agency______________District Office__________________________
[ ] Other___________________ Address__________________________________________________________________________
</TABLE>
Remarks:
- --------------------------------------------------------------------------------
SERVICE REQUEST SUBMITTED BY DATE
- --------------------------------------------------------------------------------
Call 1-800-272-2216 if you need assistance in completeing this form. Return
completed form to Massachusetts Mutual Life Insurance Company,
Client Services, 1295 State Street, Springfield MA 01111-0001.
<PAGE>
<PAGE>
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of March 24,
1997 (this "Amendment") by and among CELADON GROUP, INC., a Delaware
corporation ("CG"), CELADON TRUCKING SERVICES, INC., a New Jersey corporation
("Trucking") (collectively with CG, referred to as the "Companies" and
individually, each a "Company"), the Banks set forth on the signature pages of
the Credit Agreement referred to below (collectively, the "Banks" and
individually, each a "Bank"), NBD BANK, N.A., a national banking association,
assignee of NBD Bank, as co-agent for the Banks ("Co-Agent A") and THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, as co-agent for the
Banks ("Co-Agent B" and together with Co-Agent A, referred to as the
"Co-Agents").
RECITALS
A. CG, Trucking, the Banks and the Co-Agents are parties to a
Credit Agreement dated as of June 1, 1994, as amended by a First Amendment to
Credit Agreement dated as of October 31, 1994, a Second Amendment to Credit
Agreement dated as of October 31, 1995, letter agreements dated January 31,
1996, February 15, 1996 and June 29, 1996, a Third Amendment to Credit
Agreement dated as of September 13, 1996 and letter agreements dated as of
November 25, 1996 and December 18, 1996 (as amended, the "Credit Agreement").
B. The Companies have requested that the Co-Agents and the Banks
extend the Conversion Date and make certain other amendments to the Credit
Agreement, and the Co-Agents and the Banks are willing to do so strictly in
accordance with the terms hereof, and provided the Credit Agreement is amended
as set forth herein, and the Companies have agreed to such amendments.
AGREEMENT
Based upon these recitals, the parties agree as follows:
1. Upon satisfaction of the conditions set forth in paragraph 4
hereof, the Credit Agreement shall hereby be amended as of the effective date
hereof as follows:
(a) The definition of "Applicable Margin" in Section 1.1 shall
be amended as follows:
<PAGE>
<PAGE>
(i) Line 5 and 6 in the table shall be deleted and line 5
below shall be substituted in place thereof
<TABLE>
<CAPTION>
Revolving Credit Letter of Commitment
Loans Term Loans Credit Fees Fees
---------------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
5. If the Leverage
Ratio is greater
than or equal to
2.75 to 1.0
or the Fixed
Charge Coverage
Ratio is less than
or equal to 1.20 to
1.0 1-5/8% 1-7/8% 1-5/8% l/2%
</TABLE>
(ii) The last paragraph of such definition shall be
amended by deleting the reference in the fourth sentence to
"clause 6" and inserting "clause 5" in place thereof and by
deleting the last sentence of such paragraph and inserting the
following in place thereof: "Notwithstanding the foregoing, the
Companies, the Banks and the Agent agree that the Applicable
Margin shall be as set forth in line 5 of the table above,
effective as of March 1, 1997, until the Banks receive the
financial statements for the fiscal quarter ending March 31,
1997, at which time the Applicable Margin shall be determined as
set forth above."
(b) The definition of "Termination Date" in Section 1.1 shall be
amended by deleting the reference therein to "April 1, 1997" and inserting
"June 1, 1997" in place thereof.
(c) A new definition of "Fourth Amendment Effective Date" shall
be added to Section 1.1 to read as follows:
"Fourth Amendment Effective Date" shall mean March 24,
1997.
-2-
<PAGE>
<PAGE>
(d) The "Commitment Amount" set forth on the signature pages
next to the name of each Bank and the "Total Commitment Amount of All Banks"
set forth on the signature pages shall be deleted and the following shall be
inserted in place thereof:
Commitment Amount
NBD Bank, N.A. $15,000,000
The First National
Bank of Boston $15,000,000
Total Commitment Amount
of all Banks $30,000,000
(e) Exhibit A-1 attached hereto (the "New Revolving Credit
Note") is hereby substituted in place of Exhibit A-1 attached to the Credit
Agreement. Schedule 4.4 attached hereto is hereby substituted in place of
Schedule 4.4 to the Credit Agreement.
2. From and after the effective date of this Agreement,
references to the "Credit Agreement" in the Credit Agreement, the Revolving
Credit Notes, the Term Notes, the Security Documents and all other documents
executed pursuant to the Credit Agreement shall be deemed references to the
Credit Agreement as amended hereby.
3. Each Company represents and warrants to the Co-Agents and the
Banks that:
(a) (i) The execution, delivery and performance of this
Amendment and the New Revolving Credit Notes by the Company and all agreements
and documents delivered pursuant hereto by the Company have been duly
authorized by all necessary corporate action and do not and will not require
any consent or approval of its stockholders, violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to it or of its articles of
incorporation or bylaws, or result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Company is a party or by which it or its properties may
be bound or affected; (ii) no authorization, consent, approval, license,
exemption of or filing a registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary to the valid execution, delivery or
performance by the Company of this Amendment, the New Revolving Credit Notes
and all agreements and documents delivered pursuant hereto and (iii) this
Amendment the New Revolving Credit Notes and all agreements and documents
delivered pursuant hereto by the Company are the legal, valid and binding
obligations of the Company enforceable against it in accordance with the terms
thereof.
(b) After giving effect to the amendments contained herein and
effected
-3-
<PAGE>
<PAGE>
pursuant hereto, the representations and warranties contained in Article IV of
the Credit Agreement are true and correct on and as of the effective date hereof
with the same force and effect as if made on and as of such effective date.
(c) No Event of Default (as defined in Article VI of the Credit
Agreement) and no Default shall have occurred and be continuing or will exist
under the Credit Agreement as of the effective date hereof.
4. This Amendment shall not become effective until:
(a) The favorable written opinion of counsel for the Companies
in form and substance satisfactory to the Co-Agents;
(b) The Companies shall have executed and delivered the New
Revolving Credit Notes to the Banks;
(c) The Companies shall have delivered to Co-Agent A such other
documents and instruments as the Co-Agents and the Banks may request.
5. Each Company agrees to pay and save Co-Agents harmless from
liability for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees and expenses of Dickinson,
Wright, Moon, Van Dusen & Freeman, counsel to Co-Agent A, and Bingham, Dana &
Gould, counsel for Co-Agent B, in connection with the preparation and review of
this Amendment and any related documents.
6. The terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. Except as
expressly contemplated hereby, the Credit Agreement, and all related notes,
guaranties, certificates, instruments and other documents, are hereby ratified
and confirmed and shall remain in full force and effect, and each Company
acknowledges that it has no defense, offset or counterclaim thereunder.
7. This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan.
8. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and
any of the parties hereto may execute this Amendment by signing any such
counterpart.
-4-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
CELADON GROUP, INC.
By: /s/ Don S. Snyder
----------------------------------
Its: CFO
-------------------------------
CELADON TRUCKING SERVICES, INC.
By: /s/ Don S. Snyder
----------------------------------
Its: CFO
-------------------------------
NBD BANK, N.A., assignee of NBD Bank,
individually and as Co-Agent A
By: /s/ Michael C. Mahony
----------------------------------
Its: Vice President
-------------------------------
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Co-Agent B
By: /s/ Michael J. Blake
----------------------------------
Its:
-------------------------------
-5-
<PAGE>
<PAGE>
EXHIBIT A-1
REVOLVING CREDIT NOTE
$15,000,000 March ,1997
FOR VALUE RECEIVED, CELADON GROUP, INC., a Delaware corporation,
and CELADON TRUCKING SERVICES, INC., a New Jersey corporation (collectively,
the "Companies"), hereby jointly and severally promise to pay to the order of
, a (the "Bank"),
at the principal banking office of Co-Agent A in lawful money
of the United States of America and in immediately available funds, the
principal sum of Fifteen Million Dollars ($15,000,000), or such lesser amount
as is recorded on the schedule attached hereto, or in the books and records of
the Bank, on the Termination Date (as defined in the Credit Agreement referred
to below); and to pay interest on the unpaid principal balance hereof from time
to time outstanding, in like money and funds, for the period from the date
hereof until the Revolving Credit Loans evidenced hereby shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement
referred to below.
The Bank is hereby authorized by the Companies to record on the
schedule attached to this Revolving Credit Note or on its books and records,
the date, amount and type of each Revolving Credit Loan, the duration of the
related Eurodollar Interest Period (if applicable), the amount of each payment
or prepayment of principal thereon and the other information provided for on
such schedule, which schedule or such books and records, as the case may be,
shall constitute prima facie evidence of the information so recorded, provided,
however, that any failure by the Bank to record any such information shall not
relieve any Company of its obligation to repay the outstanding principal amount
of such Revolving Credit Loans, all accrued interest thereon and any amount
payable with respect thereto in accordance with the terms of this Revolving
Credit Note and the Credit Agreement.
Each Company and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Revolving Credit Note. Should the
indebtedness evidenced by this Revolving Credit Note or any part thereof be
collected in any proceeding or be placed in the hands of attorneys for
collection, each Company agrees to pay, in addition to the principal, interest
and other sums due and payable hereon, all costs of collecting this Revolving
Credit Note, including attorneys' fees and expenses.
<PAGE>
<PAGE>
This Revolving Credit Note is issued in exchange and
substitution for a Revolving Credit Note dated June 7, 1994 and evidences one
or more Revolving Credit Loans made under a Credit Agreement, dated as of June
1, 1994 (as now and hereafter amended or modified from time to time, the
"Credit Agreement"), by and among the Companies, the banks (including the Bank)
named therein and NBD Bank, as co-agent for the banks, and The First National
Bank of Boston, as co-agent for the banks, to which reference is hereby made
for a statement of the circumstances under which this Revolving Credit Note is
subject to prepayment and under which its due date may be accelerated and for a
description of the collateral and security securing this Revolving Credit Note.
Capitalized terms used but not defined in this Revolving Credit Note shall have
the respective meanings assigned to them in the Credit Agreement.
This Revolving Credit Note is made under, and shall be governed
by and construed in accordance with, the laws of the State of Michigan in the
same manner applicable to contracts made and to be performed entirely within
such State and without giving effect to choice of law principles of such State.
CELADON GROUP, INC.
By:
-------------------------------------
Its:
------------------------------------
CELADON TRUCKING SERVICES, INC.
By:
-------------------------------------
Its:
------------------------------------
REVOLVING CREDIT NOTE
-2-
<PAGE>
<PAGE>
Schedule to Revolving Credit Note, dated
March , 1997, made by Celadon Group, Inc. and Celadon Trucking Services, Inc.
in favor of
<TABLE>
<CAPTION>
Principal
Amount
Trans- Principal Type Interest Paid,Pre- Principal
action Amount of of Interest Period (if paid or Balance Notation
Date Loan Loan* Rate applicable) Converted Outstanding Made by
------- --------- ----- -------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- -------------
* E - Eurodollar Rate
F - Floating Rate
REVOLVING CREDIT NOTE
-3-
<PAGE>
<PAGE>
SCHEDULE 4.4
SUBSIDIARIES
<TABLE>
<CAPTION>
INCORPORATION RECORD AND
CORPORATION NAME JURISDICTION BENEFICIAL OWNER
<S> <C> <C>
Celadon Real Estate Corp. DE Celadon Trucking Services, Inc.
Celadon Trucking Services of IN Celadon Trucking SErivces, Inc.
Indiana, Inc.
Cheetah Transportation, Inc. NC Celadon Group, Inc.
Celadon Logistics, Inc. DE Celadon Group, Inc.
Celadon Air Mexicana MEX Celadon Logistics, Inc.
Celadon Express, Inc. DE Celadon Group, Inc.
Celadon Acquisition Corp. IN Celadon Group, Inc.
Celadon Container Services, Inc. MI Celadon Group, Inc.
RIL Acquisition Corp. DE Celadon Group, Inc.
RIL, Inc. DE RIL Group, Ltd.
International Freight Holding Corp. DE RIL Acquisition Corp.
Skymex, Inc. DE Int'l Freight Holding Corp.
RIL Group, Ltd. DE Int'l Freight Holding Corp.
RIL, Inc. DE RIL Group, Ltd.
Randy Express, Ltd. NY RIL Group, Ltd.
Wellingtonmun Holding Co. NY RIL Group, Ltd.
147-95 Farmers Blvd, Inc. DE RIL, Inc.
Randy Int'l Customs House Brokerage DE RIL, Inc.
Randy International, U.K. UK RIL, Inc.
Guestair Ltd UK Randy International, U.K.
JML Freight Forwarding, Inc. NY Int'l Freight Holding Corp.
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 11
CELADON GROUP, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
PRIMARY:
Weighted average shares issued................................. 7,750,580 7,864,866
Weighted average shares in treasury............................ (128,000) --
Dilutive effect of options and warrants using the average
market price under the treasury stock method................. 52,188 19,234
---------- ---------
Shares used to compute primary earnings per share.............. 7,674,768 7,884,100
========== =========
Net income (loss) attributable to common stockholders.............. $1,359,000 $587,000
Net income per common share........................................ $ 0.17 $0.08
====== =====
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
---- ----
<S> <C> <C>
PRIMARY:
Weighted average shares issued............................. 7,750,580 7,921,627
Weighted average shares in treasury........................ (120,434) --
Dilutive effect of options and warrants using the average
market price under the treasury stock method............. -- 17,048
--------- ---------
Shares used to compute primary earnings per share.......... 7,647,194 7,921,627
========= =========
Net income (loss) attributable to common stockholders.......... $3,530,000 $2,124,000
========== ==========
Net income per common share.................................... $ 0.46 $ 0.27
====== ======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS OF CELADON GROUP, INC. AS OF MARCH 31, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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