<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[ ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
OR
[X]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. FOR THE TRANSITION PERIOD FROM JANUARY 1, 1995 TO MAY 31,
1995.
Commission File Number 0-20548
FRITZ COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3083515
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
706 MISSION STREET, SUITE 900, SAN FRANCISCO, CALIFORNIA 94103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 904-8360
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
ON WHICH REGISTERED
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (S 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K/A or any amendment to this Form 10-K. [ ]
At June 30, 1995, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant was approximately $588.2 million.
At June 30, 1995, the number of shares outstanding of registrant's
Common Stock was 16.7 million.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The Exhibit Index is located on page 24 hereof.
--
<PAGE> 2
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Consolidated Financial Statements of the Company.
Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Stockholders' Equity 7
Notes to Consolidated Financial Statements 8
Independent Auditors' Report 21
(2) Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts 23
All other schedules are omitted because of the absence of
conditions under which they are required or because the required
information is included in the consolidated financial statements
or notes thereto.
(3) Exhibits: 24
See attached Exhibit Index
(b) The Company filed the following report on Form 8-K from April 1,1995
through the date hereof in 1995.
(1) April 18, 1995
Item 5. Other Events. - Amendment to the Agreement and Plan of
Reorganization entered into by and among the Registrant, Fritz
Air Freight and Intertrans Corporation.
(2) June 14, 1995
Item 2. Acquisition or Disposition of Assets-Effectiveness of the
merger between the Company and Intertrans.
Item 5. Other Events
- Re-election of the Company's Board of Directors and the addition of
one member.
- Promotion of key officers.
- Election of Carsten S. Andersen as an officer.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Item 8. Change in Fiscal year.
2
<PAGE> 3
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment to its
report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: June 17 , 1996
--
FRITZ COMPANIES, INC.
By /s/ Ronald W. Womack
-----------------------------------------
Ronald W. Womack
Corporate Controller
(Principal Accounting Officer)
3
<PAGE> 4
FRITZ COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31,
May 31, ------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 74,261 $ 54,703 $ 19,055
Accounts receivable, net of
allowance for doubtful
accounts of $4,512 in 1995
($3,674 in 1994 and $2,170 in 1993) 323,729 321,749 201,442
Deferred income taxes 9,767 2,965 2,054
Prepaid expenses and other
current assets 14,021 11,536 8,978
-------- -------- --------
Total current assets 421,778 390,953 231,529
-------- -------- --------
PROPERTY AND EQUIPMENT--NET 79,245 77,095 38,602
INTANGIBLES, NET OF ACCUMULATED
AMORTIZATION OF $6,498 in 1995
($5,119 in 1994 and $2,572 in 1993) 63,711 51,954 19,034
OTHER ASSETS 11,964 10,808 8,809
-------- -------- --------
TOTAL ASSETS $576,698 $530,810 $297,974
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ 6,335 $ 7,219 $ 315
Accounts payable 299,536 267,098 165,184
Accrued expenses 50,213 31,635 23,834
Income tax payable 5,101 6,700 3,282
-------- -------- --------
Total current liabilities 361,185 312,652 192,615
LONG-TERM OBLIGATIONS 33,567 33,048 2,220
DEFERRED INCOME TAXES 1,781 3,292 2,957
OTHER LIABILITIES 5,950 3,901 4,128
-------- -------- --------
TOTAL LIABILITIES 402,483 352,893 201,920
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: par value $.01
per share; 60,000 shares
authorized, 31,858 shares issued
(31,647 in 1994 and 29,955 in 1993) and
16,558 shares outstanding
(16,347 in 1994 and 14,655 in 1993) 319 317 299
Additional paid-in capital 120,066 114,301 60,497
Common stock subscribed - - 3,333
Retained earnings 87,586 97,046 67,431
Treasury stock--at cost 15,300 shares (35,000) (35,000) (35,000)
Cumulative foreign currency translation
adjustment 1,244 1,253 (506)
-------- -------- --------
Total stockholders' equity 174,215 177,917 96,054
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $576,698 $530,810 $297,974
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
FRITZ COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Five Months Years Ended December 31,
Ended May 31, ------------------------------
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE $400,246 $773,389 $549,026 $455,097
FREIGHT CONSOLIDATION COSTS 234,564 440,806 305,984 245,086
-------- -------- -------- --------
NET REVENUE 165,682 332,583 243,042 210,011
-------- -------- -------- --------
OPERATING EXPENSES:
Salaries and related costs 93,055 183,354 136,288 117,872
General and administrative 55,000 103,020 73,308 64,026
Merger and related costs 29,995 - - -
-------- -------- -------- --------
Total operating expenses 178,050 286,374 209,596 181,898
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS (12,368) 46,209 33,446 28,113
OTHER INCOME (EXPENSE) (89) (687) 1,329 (500)
-------- -------- -------- --------
INCOME BEFORE TAX EXPENSE (BENEFIT) (12,457) 45,522 34,775 27,613
INCOME TAX EXPENSE (BENEFIT) (4,138) 15,389 12,061 6,747
-------- -------- -------- --------
NET INCOME (LOSS) $ (8,319) $ 30,133 $ 22,714 $ 20,866
======== ======== ======== ========
Net income (loss) per share-primary $ (.51) $ 1.91 $ 1.51
======== ======== ========
Weighted average shares outstanding 16,438 15,776 15,045
======== ======== ========
Net income (loss) per share - fully diluted $ (.51) $ 1.89 $ 1.51
======== ======== ========
Weighted average shares outstanding 16,438 15,974 15,085
======== ======== ========
PRO FORMA (Note 13):
Historical income before tax
expense $ 27,613
Pro forma adjustment for
acquisition of minority
interest 733
Pro forma income before tax --------
expense 28,346
Pro forma tax expense 10,078
--------
Pro forma net income $ 18,268
========
Pro forma net income per share - primary and fully diluted $ 1.46
========
Weighted average shares outstanding 12,489
========
Supplemental pro forma net income
per share - primary and fully diluted $ 1. 36
========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
FRITZ COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Five Months Year Ended December 31,
Ended May 31, ---------------------------------
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (8,319) $ 30,133 $ 22,714 $ 20,866
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,545 12,514 6,585 6,229
Noncash merger costs 14,681 - - -
Customer deposits refunded--net (202) (465) (653) (726)
Deferred income taxes (8,299) 459 1,552 105
Other 957 (181) 459 1,055
Effect of changes in:
Receivables 604 (61,554) (35,985) (3,010)
Prepaid expenses and other
current assets 2,802 (3,788) (1,769) 661
Payables and accrued expenses 12,125 39,748 14,552 (2,873)
Accrued merger and related costs 12,730 - - -
-------- -------- -------- --------
Net cash provided by operating
activities 33,624 16,866 7,455 22,307
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,067) (42,103) (19,335) (10,663)
Investments in and advances
to affiliates 351 (653) (392) (55)
Acquisitions, net of cash
acquired (2,998) 2,554 (4,984) (1,122)
Other 706 3,056 2,511 771
-------- -------- -------- --------
Net cash used by
investing activities (15,008) (37,146) (22,200) (11,069)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term
borrowings - net - - - (22,633)
Proceeds from common stock issued - 42,160 - 40,289
Long-term obligations issued 1,363 18,500 2,681 6,500
Insurance premiums paid on behalf
of stockholder - - - (1,044)
Long-term obligations repaid (3,332) (4,453) (146) (6,500)
Proceeds from exercise of stock options 2,947 6,159 1,737 1,710
Dividends paid (1,141) (2,252) (1,345) (16,888)
Repurchase of common stock - (688) - (4,549)
Other 1,105 299 (257) (478)
-------- -------- -------- --------
Net cash provided by
financing activities 942 59,725 2,670 (3,593)
-------- -------- -------- --------
INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 19,558 39,445 (12,075) 7,645
ADJUSTMENT DUE TO CHANGE IN YEAR
END OF INTERTRANS - (3,797) - -
CASH AND EQUIVALENTS AT
BEGINNING OF PERIOD 54,703 19,055 31,130 23,485
-------- -------- -------- --------
CASH AND EQUIVALENTS AT END
OF PERIOD $ 74,261 $ 54,703 $ 19,055 $ 31,130
======== ======== ======== ========
OTHER CASH FLOW INFORMATION:
Income taxes paid $ 5,760 $ 11,990 $ 8,950 $ 5,441
======== ======== ======== ========
Interest paid $ 766 $ 1,740 $ 319 $ 907
======== ======== ======== ========
Noncash investing and financing activities in
connection with acquisitions:
Liabilities assumed $ 18,300 $ 80,966 $ 5,837 $ -
======== ======== ======== ========
Common stock issued or subscribed $ 3,400 $ 3,000 $ 4,385 $ -
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
FRITZ COMPANIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
CUMULATIVE
ADDITIONAL COMMON FOREIGN CURRENCY
PAID-IN STOCK RETAINED TREASURY STOCK TRANSLATION
(IN THOUSANDS) SHARES AMOUNT CAPITAL SUBSCRIBED EARNINGS SHARES AMOUNT ADJUSTMENTS EQUITY
------ ------ ---------- ---------- -------- -------- ------ ---------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 26,812 $269 $ 18,017 $ 41,776 15,300 $(35,000) $ 441 $ 25,503
Net income 20,866 20,866
Dividends (16,888) (16,888)
Stock options exercised 169 1 1,707 1,708
Foreign currency translation
adjustment (23) (23)
Common stock issued in Fritz
initial public offering 2,933 29 40,260 40,289
Repurchase of common stock (179) (2) (4,547) (4,549)
Tax benefit due to termination of
S Corporation status 831 831
Valuation reserve on noncurrent
marketable equity securities 187 187
------ ---- -------- -------- -------- ------ -------- ------ --------
Balance, December 31, 1992 29,735 297 56,268 45,941 15,300 (35,000) 418 67,924
Net income 22,714 22,714
Foreign currency translation
adjustment (924) (924)
Stock issued for services
performed 1 29 29
Common stock issued in
acquisition of companies 83 1 2,436 2,437
Stock options exercised 124 1 1,736 1,737
Common stock subscribed $ 3,333 3,333
Valuation reserve on noncurrent
marketable equity securities 121 121
Restricted stock grants 12 28 28
Dividends (1,345) (1,345)
------ ---- -------- -------- -------- ------ -------- ------ --------
Balance, December 31, 1993 29,955 299 60,497 3,333 67,431 15,300 (35,000) (506) 96,054
Net income 30,133 30,133
Foreign currency translation
adjustment 1,759 1,759
Stock issued for services
performed 6 1 203 204
Common stock issued in
public offering 1,150 12 42,148 42,160
Common stock issued in
acquisition of companies 219 2 6,333 6,335
Stock options exercised 315 3 5,486 5,489
Repurchase of common stock (18) (688) (688)
Common stock subscribed (3,333) (3,333)
Restricted stock grants
and options 20 322 322
Dividends (2,252) (2,252)
Adjustment due to change
in year-end of Intertrans 1,719 1,719
Valuation reserve on noncurrent
marketable equity securities 15 15
------ ---- -------- -------- -------- ------ -------- ------ --------
Balance, December 31, 1994 31,647 317 114,301 97,046 15,300 (35,000) 1,253 177,917
Net loss (8,319) (8,319)
Foreign currency translation
adjustment (9) (9)
Stock issued for services
performed 1 29 29
Common stock issued in
acquisition of companies 58 3,400 3,400
Stock options exercised 147 2 3,025 3,027
Repurchase of common stock (19) (689) (689)
Common stock subscribed
Restricted stock grants and
options 24
Dividends (1,141) (1,141)
------ ---- -------- -------- -------- ------ -------- ------ --------
Balance, May 31, 1995 31,858 $319 $120,066 $ - $ 87,586 15,300 $(35,000) $1,244 $174,215
====== ==== ======== ======== ======== ====== ======== ====== ========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE> 8
FRITZ COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The accompanying consolidated financial
statements include Fritz Companies, Inc. and its majority-owned subsidiaries
(the Company). All significant intercompany balances and transactions have been
eliminated.
The Company has changed its fiscal year end of December 31 to a fiscal
year end of May 31, beginning with the five-month period ended May 31, 1995
(herein referred to as the Transition Period). The Consolidated Statements of
Operations, Stockholders' Equity and Cash Flows for the period from January 1,
1995 to May 31, 1995 are presented in the consolidated financial statements (See
Note 12 to Consolidated Financial Statements).
Cash and equivalents--Cash and equivalents (at cost which approximates
market value) include demand deposits and short-term investments with maturities
of three months or less.
Property and equipment--Property and equipment are stated at cost, and
depreciation and amortization are computed principally by the straight-line
method at rates based on the estimated useful lives of assets -- buildings 40
years; furniture and equipment 5 - 10 years; and computer hardware and software
5 years. Leasehold improvements are depreciated over their estimated useful
lives or the terms of the related lease, whichever is shorter. Incremental costs
related to internally developed software projects are capitalized and amortized
over the expected useful life on a straight-line basis not to exceed five years,
commencing when the asset is placed into service.
Intangibles--Intangibles, which include goodwill and covenants not to
compete, arose from business acquisitions and are amortized on a straight-line
basis over estimated useful lives ranging from two years through forty years.
The Company annually evaluates its carrying value and expected period of benefit
of goodwill in relation to results of operations.
Foreign Currency Translation Adjustment--Foreign assets and liabilities
are translated using month-end exchange rates, and the impact of exchange rate
changes is shown as Cumulative Foreign Currency Translation Adjustments" in
stockholders' equity. Gains and losses from foreign exchange transactions are
included in results of operations.
Off-Balance Sheet Risk and Concentration of Credit Risk--Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of temporary cash investments and accounts receivable.
The Company places its temporary cash investments with high credit quality
financial institutions or the U.S. Government and, thus, limits the amount of
credit exposure to any one entity. The Company's customer base is comprised of
customers in a wide range of industries which are located throughout the world.
The Company had no significant concentrations of credit risk as of May 31,
8
<PAGE> 9
1995, December 31, 1994 and 1993. (See Notes 4 and 9 for discussion of the
Company's off-balance sheet risks.)
Revenue Recognition--Revenues and expenses related to the transportation
of freight are recognized at the time the freight departs the terminal of
origin. This method approximates recognizing revenues and expenses when the
shipment is completed. Custom brokerage revenues are recognized upon completing
documents necessary for customs entry purposes.
Revenue realized by the Company as an indirect carrier includes the
direct carrier's charges to the Company for carrying the shipment. Revenue
realized in other capacities includes only the commissions and fees received.
Net revenue for air and ocean freight forwarding and the consolidation of
surface transportation as an indirect carrier is determined by deducting freight
consolidation and transaction costs from such revenue.
Net Income (Loss) Per Share--For the years ended December 31, 1994, 1993
and 1992, net income and pro forma net income (see Note 13) per common share
were based on the weighted average number of common shares outstanding and
common stock equivalents. Common stock equivalents are a result of outstanding
stock options. For the five months ended May 31, 1995 net loss per share was
based on the weighted average number of common shares outstanding (common stock
equivalents of approximately 863,000 shares were not included since their
inclusion would be antidilutive).
Income Taxes--The Company uses the liability method to account for
income taxes effective January 1, 1993, in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Adoption of SFAS No. 109 did not have a significant impact on the Company's
results of operations.
Concurrent with the Company's initial public offering, the Company
terminated its S Corporation status and became subject to federal and state
income taxes on October 22, 1992. Pursuant to the deferred method under
Accounting Principles Board Opinion No. 11, which was applied in 1992, taxes on
income include provisions for timing differences between income determined for
financial reporting and for income tax purposes.
Reclassifications -- Prior years' amounts have been reclassified to
conform to 1995 presentation.
NOTE 2. MERGER WITH INTERTRANS CORPORATION
On May 30, 1995, the Company merged with Intertrans Corporation
(Intertrans); a provider of international air freight and ocean freight
forwarding, customs brokerage, and other consulting and transportation services.
The majority of Intertrans' business related to freight forwarding from the
United States to overseas destinations. In the merger, each outstanding share of
Intertrans common stock was converted into the right to receive .365 of a share
of the Company's common stock. This merger was accounted for as a pooling of
interests, and accordingly, the consolidated financial statements for periods
prior to the combination have been restated to include the results of
operations, financial position and cash flows of Intertrans.
9
<PAGE> 10
The results of operations for the separate companies and the combined
amounts presented in the accompanying consolidated financial statements are as
follows (in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS ENDED MAY 31, YEAR ENDED DECEMBER 31,
------------------------- -----------------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
GROSS REVENUE:
Fritz Companies, Inc $260,449 $166,297 $ 515,969 $ 341,758 $ 248,766
Intertrans Corporation 139,797 107,167 452,156 376,762 366,844
Adjustments - - (194,736) (169,494) (160,513)
-------- -------- --------- --------- ---------
Combined $400,246 $273,464 $ 773,389 $ 549,026 $ 455,097
======== ======== ========= ========= =========
NET REVENUE:
Fritz Companies, Inc. $124,120 $ 80,551 $ 245,448 $ 169,941 $ 141,573
Intertrans Corporation 41,562 35,412 257,420 207,268 206,331
Adjustments - - (170,285) (134,167) (137,893)
-------- -------- --------- --------- ---------
Combined $165,682 $115,963 $ 332,583 $ 243,042 $ 210,011
======== ======== ========= ========= =========
NET INCOME (LOSS):
Fritz Companies, Inc. $ (1,568) $ 4,027 $ 19,571 $ 14,024 $ 10,519
Intertrans Corporation (6,751) 4,017 10,562 8,690 7,749
-------- -------- --------- --------- ---------
Combined $ (8,319) $ 8,044 $ 30,133 $ 22,714 $ 18,268
======== ======== ========= ========= =========
</TABLE>
Prior to the merger, the Company's fiscal year ended on December 31. The
Intertrans financial statements for the five months ended May 31, 1995 and 12
months ended October 31, 1994, 1993 and 1992 were combined with Company's
financial statements for the five months ended May 31, 1995 and the years ended
December 31, 1994, 1993 and 1992. For Fritz Companies, Inc., the 1992 net income
reflects pro forma adjustments. (See Note 13 to Consolidated Financial
Statements)
There were no significant transactions between the Company and Intertrans
prior to the merger, which required elimination. In order to conform to the
accounting policies of the Company, the revenue and freight consolidation costs
for Intertrans were reduced so that pass-through amounts paid as agent for ocean
freight, foreign collect freight, and customs duty, and other services were not
included in the Consolidated Statements of Operations.
Retained earnings, cash and cash equivalents and certain balance sheet
accounts were adjusted in the year ended December 31, 1994 to include the effect
of including Intertrans' results of operations, financial position and cash
flows for the two months ended from November 1, 1994 to December 31, 1994.
In connection with this merger, the Company recorded one-time charges in
May 1995 for transaction costs of $3.3 million and $26.7 million of other costs
relating to combining the operations. The transaction costs consists of fees for
investment bankers, attorneys, accountants, financial printing and other related
charges. The costs of combining the operations include elimination of duplicate
management information systems and facilities (including cancellation of
leases); severance and outplacement of 182 terminated employees; cancellation of
certain contractual obligations; and, other costs related to the merger. At May
31, 1995, $12.5 million is included in accrued expenses.
10
<PAGE> 11
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MAY 31, -----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Land $ 9,520 $ 8,741 $ 947
Building and leasehold improvements 37,292 33,613 13,975
Furniture and equipment 36,720 33,571 21,126
Computer hardware and software 41,738 35,744 23,017
Software development in progress 928 7,485 4,301
-------- -------- -------
Total 126,198 119,154 63,366
Less accumulated depreciation and
amortization 46,953 42,059 24,764
-------- -------- -------
Total $ 79,245 $ 77,095 $38,602
======== ======== =======
</TABLE>
Software development in progress represents costs related to incomplete
internally developed software. In the Transition Period, 1994 and 1993,
$648,000, $900,000, and $1.0 million respectively, of software costs were
completed and included in computer hardware and software; the related
amortization expense was, $438,000, $1.0 million, $422,000 and $221,000 in the
Transition Period, 1994, 1993 and 1992, respectively.
NOTE 4. LONG-TERM OBLIGATIONS AND BORROWINGS
Long-term obligations consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MAY 31, -----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Mortgage note payable at the
bank's reference rate (6.66% at
May 31, 1995) due June 30, 1996 $18,500 $18,500 $ -
Installment obligations related to acquisitions,
noninterest bearing, due 1995-1999
(less unamortized discount, based on imputed
interest rates of 8.5%-- 1995, of
approximately $1.7 million) 16,115 15,018 -
Mortgage note payable at 10%, due in
monthly installments through May, 2000 2,089 2,220 2,535
Bank debt, bearing interest at prime rate plus 1.5%,
repayable in monthly installments of $83,334
through November 1997 and March 1998 1,821 2,127 -
Other 1,377 2,402 -
------- ------- ------
39,902 40,267 2,535
Less long-term obligations--current portion 6,335 7,219 315
------- ------- ------
Total long-term obligations $33,567 $33,048 $2,220
======= ======= ======
</TABLE>
11
<PAGE> 12
At May 31, 1995, the Company's aggregate amounts of maturing long-term
obligations for the years 1996 through 2001 are $6,336,000, $25,209,000,
$5,188,000, $739,000, $740,000 and $1,691,000, respectively. In addition, the
carrying value of the Company's long-term obligations approximate their fair
value.
The Company has entered into a loan agreement with a bank (the "Agreement")
that includes a revolving line of credit of $35.0 million (due May 31, 1996);
and a term loan of $18.5 million (due June 30, 1996) for real estate mortgage
financing. The Company has an option to convert $15.0 million of its revolving
line of credit to a three-year term loan prior to December 31, 1995. The
interest for both the revolving line of credit and the term loan is payable
monthly at the short term funds rate. The Agreement provides the lender with a
security interest in the Company's personal property located in the United
States, and the Company is required to meet certain financial covenants which
were waived and modified in connection with the merger with Intertrans, during
the term of the agreement, such as, (i) minimum net worth, (ii) total
liabilities to net worth, (iii) minimum fixed charge coverage ratio, and (iv)
results of operations.
In addition, the Company has an additional line of credit for $10 million
with a financial institution which expires February 28, 1996.
Information regarding the bank lines are as follows (dollars in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED MAY 31 YEAR ENDED DECEMBER 31,
------------ ---------------------------
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Maximum amount outstanding during period $3,000 $30,250 $5,000 $17,000
Average amount outstanding during period 172 10,314 82 2,400
Weighted average interest rate during period 6.5% 5.6% 6.0% 7.9%
</TABLE>
At May 31, 1995 and December 31,1994 and 1993, the Company was contingently
liable for letters of credit of $15.4 million, $14.1 million and $2.0 million,
respectively.
NOTE 5. INCOME TAXES
The current and deferred components of income tax expense (benefit) are as
follows (in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS YEAR ENDED DECEMBER 31,
ENDED MAY 31, ----------------------------
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Current
Federal $ 1,100 $ 8,628 $ 6,934 $3,633
State 351 1,481 1,479 1,142
Foreign 2,710 4,821 2,096 1,867
------- ------- ------- ------
Total current 4,161 14,930 10,509 6,642
------- ------- ------- ------
Deferred
Federal (7,387) (456) 1,130 105
State (1,049) 113 - -
Foreign 137 802 422 -
------- ------- ------- ------
Total deferred (8,299) 459 1,552 105
------- -------- ------- ------
Total $(4,138) $ 15,389 $12,061 $6,747
======= ======== ======= ======
</TABLE>
12
<PAGE> 13
Sources of income(loss) before income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------
MAY 31, 1995 1994 1993 1992
------------ ---- ---- ----
<S> <C> <C> <C> <C>
Domestic $(20,341) $24,221 $22,628 $19,549
Foreign 7,884 21,301 12,147 8,064
-------- ------- ------- -------
$(12,457) $45,522 $34,775 $27,613
======== ======= ======= =======
</TABLE>
The following is a reconciliation of the statutory federal income tax
provision and rate to the effective income tax expense (benefit) provision and
rate (dollars in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS YEAR ENDED DECEMBER 31,
ENDED MAY 31, -------------------------------------------------------------
1995 1994 1993 1992
------------- -------------- ---------------- ------------------
Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statutory federal income
tax expense (benefit) and rate $(4,236) (34.0) $15,478 34.0 $11,824 34.0 $ 9,388 34.0
Increases (decreases) resulted from:
Foreign taxes lower than federal rate (235) (1.9) (1,866) (4.2) (1,570) (4.5) (875) (3.2)
State taxes on income, net of federal
income tax effect (979) (7.9) 1,048 2.3 976 2.8 753 2.7
Income tax effect on S Corporation
earnings not subject to federal tax - - - - - - (2,940) (10.6)
Change in valuation allowance 570 4.6 223 .5 - - - -
Other 742 6.0 506 1.1 831 2.4 421 1.5
------- ----- ------- ---- ------- ---- ------- -----
Total $(4,138) (33.2) $15,389 33.7 $12,061 34.7 $ 6,747 24.4
======= ===== ======= ==== ======= ==== ======= =====
</TABLE>
The significant components of net deferred income tax liabilities are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MAY 31, -----------------
1995 1994 1993
------- ---- ----
<S> <C> <C> <C>
Deferred income tax assets:
Current:
Compensated absences $ 1,606 $ 1,392 $ 901
Net operating loss carryforward 599 299 523
Foreign tax credit 500 - -
Capital loss carryforward 793 223 -
Other reserves and accruals 5,774 1,396 630
------- ------- -------
Subtotal 9,272 3,310 2,054
------- ------- -------
Noncurrent
Deferred compensation 608 558 389
Other reserves and accruals 680 451 -
------- ------- -------
Subtotal 1,288 1,009 389
------- ------- -------
Total deferred income tax assets 10,560 4,319 2,443
Less valuation allowance (793) (223) -
------- ------- -------
Net deferred income tax assets 9,767 4,096 2,443
------- ------- -------
Deferred income tax liabilities:
Depreciation and amortization (1,781) (4,423) (3,014)
Other reserves and accruals - - (332)
------- ------- -------
Subtotal (1,781) (4,423) (3,346)
------- ------- -------
Net deferred income tax asset(liability) $ 7,986 $ (327) $ ( 903)
======= ======= =======
</TABLE>
13
<PAGE> 14
The valuation allowance for deferred tax assets as of May 31, 1995,
December 31, 1994, and December 31, 1993 was $793,000, $223,000 and $0,
respectively. The net change in the total valuation allowance for the five
months ended May 31, 1995 was an increase of $570,000. The Company has evaluated
the deferred tax assets for which a valuation allowance has not been provided
and believes that it is more likely than not that they will be realized in the
future.
At May 31, 1995, the Company had net operating loss carryforwards related
to its domestic operations of approximately $741,000 which expires in 2010, and
its foreign operations of approximately $376,000 which have no expiration date.
At May 31, 1995, December 31, 1994 and 1993, no provision has been made
for cumulative earnings of consolidated foreign subsidiaries designated as
permanently invested. Such earnings and taxes that would have to be paid amount
to approximately $58 million and $9.7 million, respectively, at May 31, 1995.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company leases office space from a major stockholder of the Company.
Minimum future rental payments under such leases at May 31, 1995 which expire
within one year were approximately $620,000. Rental expense from these leases
was $284,000, $550,000, $510,000 and $616,000 for the Transition Period and for
years ended December 31, 1994, 1993, and 1992, respectively.
In connection with the Company's U.S. customs brokerage operations, the
Company's customers are required to obtain surety bonds, The Company places
such customs bonds with Intercargo Corporation ("Intercargo") and other
underwriters of customs bonds. Mr. Fritz owns approximately 3.49% of the
outstanding common stock of Intercargo. During the Transition Period, the
Company placed approximately $271,000 of insurance business with Intercargo and
received $42,000 in insurance commissions and fees from Intercargo. The Company
believes that the amounts received are substantially the same as the Company
would have received from other third parties.
The Company had paid premiums until 1992 on life insurance policies on the
Company's major stockholder for which the Company is not the beneficiary. Such
cumulative premium payments, (which approximate surrender value) $1.4 million at
December 31, 1994 and 1993, included in other assets, are to be refunded by the
beneficiary upon the death of the insured or, termination or cancellation of the
policies, whichever comes first. The Company has no future obligation to pay
premiums on these policies.
14
<PAGE> 15
NOTE 7. COMMITMENTS
Lease Commitments--The Company leases office and warehouse space, computer
and other office equipment from third parties under operating leases expiring
through 2001. Minimum future rental payments under such leases (including the
leases discussed in Note 6) as of May 31, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
RENTAL SUBLEASE NET RENTAL
PAYMENTS INCOME PAYMENTS
-------- -------- ----------
<S> <C> <C> <C>
Year ending May 31,
1996 $23,009 $(827) $22,182
1997 16,448 (96) 16,352
1998 10,571 (17) 10,554
1999 6,926 - 6,926
2000 and thereafter 18,739 - 18,739
------- ----- -------
Total $75,693 $(940) $74,753
======= ===== =======
</TABLE>
Rental expense from these leases was as follows (in thousands):
<TABLE>
<CAPTION>
FIVE MONTHS YEAR ENDED DECEMBER 31,
ENDED MAY 31, ---------------------------
1995 1994 1993 1992
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Gross rental expense $11,548 $21,724 $16,491 $15,265
Less sublease rental income 1,014 1,567 1,026 611
------- ------- ------- -------
Net rental expense $10,534 $20,157 $15,465 $14,654
======= ======= ======= =======
</TABLE>
NOTE 8. ACQUISITIONS
In addition to the merger with Intertrans, in the Transition Period, the
Company acquired assets and interests in freight forwarding and customs
brokerage companies for an aggregate purchase price of $15.3 million (cash of
$7.1 million and obligations payable of $5.7 million and 43,323 shares at $2.5
million market value - - See Note 11 - - of the Company's common stock). Of the
total acquisition price, the Company acquired current assets of $14.5 million,
fixed assets of $3.9 million, noncurrent assets of $123,000, current liabilities
of $14.4 million, noncurrent liabilities of $3.5 million and recorded minority
interests of $241,000.
In 1994, the Company acquired assets and interests in eighteen freight
forwarding and customs brokerage companies for an aggregate purchase price of
$38.0 million (cash of $20.5 million, obligations payable of $14.5 million and
100,000 shares at $3,000,000 market value -- see Note 11--of the Company's
common stock). Of the total acquisition price, the Company acquired current
assets of $76.0 million, fixed assets of $7.0 million, noncurrent assets of $6.6
million, current liabilities of $77.0 million, noncurrent liabilities of $4.0
million and recorded minority interests of $661,000.
15
<PAGE> 16
In 1993, the Company acquired assets of and interests in various freight
forwarding and customs brokerage companies for an aggregate purchase price of
$6.7 million in cash and obligations payable and for 156,978 shares ($4.4
million market value) of the Company's common stock. Of the total $11.1 million
acquisition price, the Company acquired total assets of $5.0 million, and
liabilities of $4.4 million.
Certain acquisition agreements provide for future payments totalling a
maximum amount as of May 31, 1995 of approximately $9.0 million based upon the
achievement of certain net revenue or pretax income levels.
Intangible assets, including goodwill and covenants not to compete, of
approximately $15.0 million, $30.1 million and $14.3 million were recorded in
connection with these acquisitions in the Transition Period, 1994 and 1993. The
amortization expense was $1.4 million, $2.7 million, $1.0 million and $403,000,
in the Transition Period, 1994, 1993 and 1992, respectively.
The purchase method of accounting was used in all acquisitions, except for
the merger with Intertrans. (See Note 2 to Consolidated Financial Statements).
The following unaudited consolidated pro forma information presents the
results of operations as if the acquisitions in 1994 and 1993 occurred at the
beginning of the year (in millions, except per share data):
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
Net Revenue $ 364 $ 311
Net Income $ 32 $ 25
Net Income per share - primary $1.97 $1.62
Net Income per share - fully diluted $1.95 $1.61
</TABLE>
The information above is presented for informational purposes only and is
not necessarily indicative of the operating results that would have occurred had
the acquisitions been in effect for the entire periods presented, nor are they
necessarily indicative of future operating results and do not reflect any
synergies that might be achieved from combined operations.
NOTE 9. CONTINGENCIES
The Company is party to routine litigation incident to its business,
primarily claims for goods lost or damaged in transit or improperly shipped.
Most of the lawsuits to which the Company is party are covered by insurance and
are being defended by the Company's insurance carriers. The Company has
established reserves which management believes are adequate to cover litigation
losses which may occur.
16
<PAGE> 17
NOTE 10. BUSINESS SEGMENT INFORMATION
The Company operates in the international freight forwarding industry,
which encompasses customs brokerage, airfreight and ocean freight forwarding,
and warehousing and distribution. No single customer accounted for ten percent
or more of the consolidated revenue.
Certain information regarding the Company's operations by geographic areas
is summarized below (in thousands):
<TABLE>
<CAPTION>
NORTH AMERICA FAR EAST EUROPE OTHER AREAS TOTAL WORLDWIDE
------------- -------- ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues:
- - ---------
1995* $269,744 $ 63,405 $60,270 $6,827 $400,246
1994 527,699 140,411 95,750 9,529 773,389
1993 414,956 76,878 54,662 2,530 549,026
1992 372,086 46,818 35,542 651 455,097
Operating Income (Loss):
- - ------------------------
1995* $(18,905) $ 3,773 $2,504 $ 260 (12,368)
1994 26,777 13,422 4,394 1,616 46,209
1993 21,178 8,961 3,084 223 33,446
1992 19,695 6,464 1,535 419 28,113
Identifiable Assets:
- - --------------------
1995* $427,713 $63,256 $58,749 $ 26,980 $576,698
1994 410,459 54,764 22,314 43,273 530,810
1993 241,653 27,281 27,307 1,733 297,974
1992 205,398 20,755 11,481 8,322 245,956
</TABLE>
*As of and for the five months ended May 31, 1995 (Transition Period)
NOTE 11. COMMON STOCK
Employee Stock Option Plans--Each option assumed by the Company under the
merger agreement will continue to have, and be subject to, the same terms and
conditions set forth in the relevant Stock Option Plan. The Intertrans plans
provided for the granting of stock options to key employees at a price not less
than the fair market value of the stock at grant date. The majority of the
options granted are exercisable one-third after the first anniversary date of
the grant, two-thirds after two years and are fully exercisable three years from
the date of grant. In addition, the Intertrans plan provided for the granting of
nonqualified stock options at not less than fair market value on the date of
grant.
In October 1992, the Company established the 1992 Omnibus Equity
Incentive Plan (the "1992 Plan"), pursuant to which an aggregate of 760,000
shares of Common Stock was reserved for issuance to key employees of the
Company. In May 1994, the 1992 Plan was amended to increase the number of shares
available for award by an additional 760,000 shares of Common Stock. The 1992
Plan provides for awards of both nonqualified stock options and incentive stock
options within the meaning of Section 422 of the Internal Revenue Code, stock
appreciation rights, restricted stock, and performance awards entitling the
recipient to receive cash or Common Stock in the future following the attainment
of performance goals determined by the committee administering the 1992 Plan.
17
<PAGE> 18
The majority of options granted under the Company's 1992 Plan are
exercisable one third each on the day after the first, second and third
anniversary of the original grant. The majority of restricted stock vests 100%
on the day after the fifth or seventh anniversary of the original grant. Both
options and restricted stock were granted at a price equal to fair market value
at the date of grant except for 240,000 shares of options which were granted at
90% of fair market value at the date of grant. Related compensation expense of
approximately $67,000 and $160,000 was recorded in the Transition Period and
1994, respectively.
Stock option activity for Transition Period, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
NUMBER RESTRICTED NUMBER PRICE ($)
SHARES OPTION SHARES PER SHARE
----------------- ------------- -------------
<S> <C> <C> <C>
Outstanding -- December 31, 1992 1,314,006 6.16 - 15.00
Granted 13,000 294,614 26.37 - 29.00
Cancelled (1,000) (48,512) 8.56 - 22.00
Exercised (123,432) 6.16 - 8.75
------ ---------
Outstanding -- December 31, 1993 12,000 1,436,676 6.51 - 29.00
Granted 19,500 575,164 32.88 - 39.00
Cancelled (43,074) 13.70 - 30.00
Exercised (315,259) 6.51 - 26.00
------ ---------
Outstanding -- December 31, 1994 31,500 1,653,507 6.51 - 39.00
Granted 24,000 199,252 15.00 - 64.25
Cancelled (25,542) 19.86 - 47.95
Exercised (147,000) 6.51 - 36.98
------ ---------
Outstanding -- May 31, 1995 55,500 1,680,217
====== =========
Exercisable --
May 31, 1995 - 944,888
====== =========
December 31, 1994 - 666,245
====== =========
December 31, 1993 - 556,591
====== =========
</TABLE>
As of May 31, 1995, options available for grant were 301,425 shares.
In May 1993, the Company established the Nonemployee Director Restricted
Stock Plan, pursuant to which an aggregate of 25,000 shares of common stock was
reserved for issuance to outside directors to cover the portion of their annual
compensation payable in common stock. In 1994 and 1993, 970 and 1,112 restricted
shares, respectively, were granted to nonemployee directors.
In connection with acquisitions (See Note 8), the Company issued 43,323
and 219,045 (includes the 119,045 shares that was referred to as common stock
subscribed at December 31, 1993) and 37,933 shares during the Transition Period,
1994 and 1993, respectively.
18
<PAGE> 19
NOTE 12. TRANSITION PERIOD
During 1995, the Company changed its fiscal year end from December 31 to
May 31, beginning with the five month period ended May 31, 1995. The following
are results of operations for the unaudited comparable five month period ended
May 31, 1994 (in thousands except per share amounts):
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED MAY 31,1994
-----------------
(UNAUDITED)
<S> <C>
Gross Revenues $273,464
Net Revenues $115,963
Income from operations $ 12,031
Income taxes $ 4,058
Net Income $ 8,044
Net income per share $ .53
Weighted average shares outstanding 15,314
</TABLE>
NOTE 13. PRO FORMA INFORMATION
Pro Forma Adjustments--During the period of January 1, 1992 to
October 22, 1992, the Company had been treated as an S Corporation pursuant to
the Internal Revenue Code. The objective of the pro forma financial information
is to show what the significant effects on the historical financial information
might have been had the Company not been treated as an S Corporation for income
tax purposes since that time and had the Company owned 100 percent of its
majority-owned subsidiaries. The following pro forma adjustments have been made
for the year ended December 31, 1992.
Purchase of Minority Interests--Effective with the closing
of the public offering, the Company reacquired the minority
interest in its subsidiaries which were sold to the Company's
former sole stockholder on December 31, 1989 so that the Company
would qualify for S Corporation status for income tax purposes.
The Company reacquired the minority interest for a purchase price
of $1.5 million which was equal to the book value of such
minority interest at October 22, 1992. Pro forma adjustments have
been made to eliminate the minority interest in 1992.
Income Taxes--As discussed in Note 1, the Company had not
been subject to federal income taxes and certain state income
taxes. However, the Company paid state taxes at an effective rate
of approximately 2.5%. Effective October 22, 1992, the Company
terminated its status as an S Corporation. In connection with the
termination of S Corporation status, the Company established a
net deferred tax asset that arose during the S Corporation
period. The tax benefit of $831,000 received from this
termination was credited to additional paid-in capital in 1992.
The pro forma adjustments reflect a provision for income taxes at
an effective tax rate of 35% during 1992.
19
<PAGE> 20
Pro Forma Net Income Per Share--Earnings per share are based on the
weighted average number of shares of common stock outstanding during the period
plus the number of the shares offered by the Company (109,410) to fund the
repurchase by the Company of the minority interest in its subsidiaries.
Supplemental Pro Forma Net Income Per Share--Supplemental pro forma net
income per share reflects the issuance of shares to fund the payment of certain
undistributed taxable S Corporation earnings to the Company's former sole
stockholder upon the termination of the Company's status as an S Corporation.
The calculation is based upon the weighted average shares outstanding used in
the calculation of pro forma net income per share including the number of shares
offered by the Company (924,692) to fund the distribution of substantially all
undistributed taxable S Corporation earnings, ($12.7 million), distributed after
the closing of the Company's initial public offering in 1992.
NOTE 14. RETIREMENT PLAN
The Company has a 401(K) retirement plan that covers substantially all
U.S. employees. The Company has recorded matching contributions in the amount of
$218,000, $449,000, $429,000 and $284,000 in the Transition Period, 1994, 1993
and 1992, respectively.
The Company has a noncontributory pension plan covering certain
employees overseas based on years of service and final compensation. Net pension
cost related to this plan was approximately $204,000, $691,000, $182,000 and
$46,000 in the Transition Period, 1994, 1993 and 1992. The actuarial present
value of accumulated benefit obligations was approximately $3.9 million,
including vested benefits of $3.8 million.
NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth selected quarterly financial data for the
years ended December 31, 1994 and 1993 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED (2)
------------------------------------------------------------
MAR 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1994 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $152,579 $182,784 $209,095 $228,931
Net revenue 66,663 77,281 90,648 97,991
Income from operations 7,195 9,992 14,564 14,458
Net income 4,927 6,590 9,201 9,415
Net income per share (1) 0.33 0.44 - -
Net income per share - primary 0.59 0.58
Net income per share - fully diluted 0.58 0.57
<CAPTION>
THREE MONTHS ENDED (2)
------------------------------------------------------------
MAR 31, JUNE 30, SEPT. 30, DEC. 31,
1993 1993 1993 1993
---- ---- ---- ----
Revenue $116,650 $124,915 $146,549 $160,912
Net revenue 54,038 57,374 63,249 68,381
Income from operations 6,215 7,894 9,728 9,609
Net income 4,200 5,280 6,561 6,673
Net income per share (1) 0.29 0.36 - -
Net income per share - primary 0.44 0.44
Net income per share - fully diluted 0.44 0.44
</TABLE>
(1) Primary and fully diluted net income per share are not presented for
first and second quarter of 1994 and 1993, as the dilutive effect is
not significant.
(2) Intertrans quarterly financial data which has been included for the
pooling of interest restatement is based upon a fiscal year-end of
October 31.
20
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Fritz Companies, Inc.:
We have audited the accompanying consolidated balance sheets of Fritz
Companies, Inc. and subsidiaries as of May 31, 1995 and December 31, 1994 and
1993, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the five months ended May 31, 1995 and for each of
the years in the three-year period ended December 31, 1994. In connection with
our audits of the consolidated financial statements, we also audited the
consolidated Financial Statement Schedule II as of and for the five months ended
May 31, 1995 and each of the years in the three-year period ended December 31,
1994. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements based on
our audits. We did not audit the consolidated statements of operations,
stockholders' equity and cash flows, and the Financial Statement Schedule II of
Fritz Companies, Inc. for the year ended December 31, 1992 (prior to
restatement for pooling of interests - see Note 2 to the Consolidated Financial
Statements), which statements reflect total gross revenues constituting 55% and
63%, respectively, of the accompanying consolidated financial statements. Those
statements and financial statement schedule were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates
to those amounts, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Fritz
Companies, Inc. and subsidiaries as of May 31, 1995, and December 31, 1994 and
1993, and the results of their operations and their cash flows for the five
months ended May 31, 1995 and for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/ KPMG Peat Marwick LLP
San Francisco, California
August 28, 1995
21
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Fritz Companies, Inc.
We have audited the consolidated statements of operations, stockholders' equity
and cash flows of Fritz Companies, Inc. and subsidiaries for the year ended
December 31, 1992 (prior to restatement for pooling of interest). Our audit
also included the financial statement schedule for the year ended December 31,
1992. These financial statements and financial statement schedule (which are
not included herein) are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and the cash flows of Fritz
Companies, Inc. and subsidiaries for the year ended December 31, 1992 in
conformity with generally accepted accounting principles. Also, in our opinion,
such 1992 consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information shown therein.
/s/ Deloitte & Touche LLP
San Francisco, California
March 8, 1993
22
<PAGE> 23
FRITZ COMPANIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE FIVE MONTHS ENDED MAY 31, 1995 AND
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
(IN THOUSANDS) Net Write-offs
Balance Charged to Balance at
Beginning Charges Reserves End
of Period to Income and Other of Period
--------- --------- -------------- ----------
<S> <C> <C> <C> <C>
For the Five Months ended May 31, 1995:
Allowance for doubtful accounts $3,674 $1,895 $(1,057) $4,512
====== ====== ======= ======
Year ended December 31, 1994:
Allowance for doubtful accounts $2,170 $2,210 $ (706) $3,674
====== ====== ======= ======
Year ended December 31, 1993:
Allowance for doubtful accounts $2,069 $1,094 $ (993) $2,170
====== ====== ======= ======
Year ended December 31, 1992:
Allowance for doubtful accounts $1,698 $1,129 $ (758) $2,069
====== ====== ======= ======
</TABLE>
23
<PAGE> 24
EXHIBIT INDEX
Exhibit Page
2.1 Agreement and Plan of Reorganization entered into by and among the
Registrant, Fritz Air Freight and Intertrans Corporation and Amendment
No. 1 thereto dated as of April 12, 1995. (Incorporated by reference to
Exhibit 2.1 to Form 8-K dated February 14, 1995 filed on or about
February 21, 1995 and to Appendix A to the Joint Proxy
Statement/Prospectus filed on or about April 13, 1995, respectively.)
3.1 Registrant's Restated Certificate of Incorporation. (Incorporated by
reference to Exhibit 3.1 to Registration Statement No. 33-50808, filed
on August 17, 1992.)
3.2 Registrant's Bylaws, as heretofore amended. (Incorporated by reference
to Exhibit 3.2 to Registration Statement No. 33-50808, filed on August
17, 1992.)
4.1 Specimen certificate of Registrant's Common Stock. (Incorporated by
reference to Exhibit 4.1 to Registration Statement No. 33-50808, filed
on August 17, 1992.)
10.1 First Amended and Restated Credit Agreement between Registrant and Bank
of America National Trust and Savings Association dated as of July 29,
1994. (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the
quarter ended September 30, 1994.)
10.1.1 First Amendment to First Amended and Restated Credit Agreement between
Registrant and Bank of America National Trust and Savings Association
dated as of September 23, 1994. (Incorporated by reference to Exhibit
10.1.1 to Form 10Q for the quarter ended September 30, 1994.)
10.2 Security Agreement by and between Registrant as Debtor and Bank of
America National Trust and Savings Association dated as of March 20,
1992. (Incorporated by reference to Exhibit 10.2 to Registration
Statement No. 33-50808, filed on August 17, 1992.)
10.3 Pledge Agreement between the Registrant and Bank of America National
Trust and Savings Association dated as of March 20, 1992. (Incorporated
by reference to Exhibit 10.3 to Registration Statement No. 33-50808,
filed on August 17, 1992.)
10.4 Service Agreement dated February 25, 1992 between Federal Express
Corporation and the Registrant. (Incorporated by reference to Exhibit
10.4 to Registration Statement No. 33-50808, filed on August 17, 1992.)
10.5 Customs Brokerage Service Agreement dated February 28, 1992 between
Federal Express Corporation and the Registrant. (Incorporated by
reference to Exhibit 10.5 to Registration Statement No. 33-70674, filed
October 22, 1993.) *
10.6 Subchapter S Termination Agreement between the Registrant and Lynn C.
Fritz. (Incorporated by reference to Exhibit 10.6 to Registration
Statement No. 33-50808, filed on August 17, 1992.)
10.7 Form of Indemnification Agreement between the Registrant and Lynn C.
Fritz. (Incorporated by reference to Exhibit 10.7 to Registration
Statement No. 33-50808, filed on August 17, 1992.)
10.8 Fritz Companies, Inc. Salary Investment and Retirement Plan, and
amendments thereto. (Incorporated by reference to Exhibit 10.8 to
Registration Statement
24
<PAGE> 25
No. 33-50808, filed on August 17, 1992.)*
10.9 1992 Omnibus Equity Incentive Plan, as amended. (Incorporated by
reference to Exhibit 10.9 to Registration Statement No. 33-50808, filed
on August 17, 1992). *
10.10 Contract of Sale between the Registrant and Sanjaylyn Company dated as
of March 1, 1985. (Incorporated by reference to Exhibit 10.10 to
Registration Statement No. 33-50808, filed on August 17, 1992.)
10.11 Employment and Deferred Compensation Agreement between the Registrant
and Arthur J. Fritz, Sr. dated as of January 1, 1983, and amendment
thereto dated as of July 31, 1989. (Incorporated by reference to
Exhibit 10.11 to Registration Statement No. 33-50808, filed on August
17, 1992.)
10.12 Lease Agreement between the Registrant and Sanjaylyn Company, dated
June 14, 1991, and Addendum to Lease Agreement dated December 1, 1991.
(Incorporated by reference to Exhibit 10.12 to Registration Statement
No. 33-50808, filed August 17,1992.)
10.13 Lease Agreement between the Registrant and Sanjaylyn Company, dated
July 2,1991. (Incorporated by reference to Exhibit 10.13 to
Registration Statement No. 33-50808, filed on August 17, 1992.)
10.14 Memorandum Lease between the Registrant and Sanjaylyn Company,
effective April 1, 1979, and Addendum to Lease Agreement, dated
February 14, 1990. (Incorporated by reference to Exhibit 10.14 to
Registration Statement No. 33-50808, filed on August 17, 1992.)
10.15 Lease Agreement between the Registrant and Sanjaylyn Company, dated
February 22, 1991. (Incorporated by reference to Exhibit 10.15 to
Registration Statement No. 33-50808, filed on August 17, 1992.)
10.16 Nonemployee Director Restricted Stock Plan. (Incorporated by reference
to Exhibit A to the definitive proxy materials of Registrant, filed on
or about April 10, 1993.) *
10.17 Lease Agreement between the Registrant and Lynn C. Fritz, dated
September 1, 1993. (Incorporated by reference to Exhibit 10.17 to
Registration Statement No. 33-70674, filed on October 22, 1993.)
10.18 Lease Agreement between the Registrant and Lynn C. Fritz, dated October
4, 1993. (Incorporated by reference to Exhibit 10.18 to Form 10-K for
the year ended December 31, 1993.)
10.19 Withdrawal Agreement between Arthur J. Fritz, Jr. and Sandra F. Davis,
Lynn C. Fritz and Sanjaylyn Company, dated March 31, 1993.
(Incorporated by reference to Exhibit 10.18 to Registration Statement
No. 33-70674, filed on October 22, 1993.)
10.20 Customs Service Agreement dated February 28, 1994 between Federal
Express Corporation and the Registrant. (Incorporated by reference to
Exhibit 10.20 for Form 10-K for the year ended December 31, 1993.)
25
<PAGE> 26
10.21 Employment Agreement between the Registrant and Dennis Pelino dated
January 1, 1994. (Incorporated by reference to Exhibit 10.21 to Form
10-Q (as amended by Form 10-QA) for the quarter ended June 30, 1994.)
10.22 Purchase Agreement between the Registrant and Gestion J.L.G., Inc.
dated as of April 29, 1994. (Incorporated by reference to Exhibit 1.2
to Form 8-K dated May 2, 1994 filed on or about May 16, 1994.)
10.23 Addendum to the purchase agreements between the Registrant and Gestion
J.L.G., Inc. dated as of April 26, 1994. (Incorporated by reference to
Exhibit 10.23 to Form 10-Q for the quarter ended September 30, 1994.)
22.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP on Form S-8 Registration Statement
No. 33-57238, 33-78482, and 33-93070.
23.2 Consent of Deloitte & Touche LLP on Form S-8 Registration Statement
No. 33-57238, 33,78482, and 33-93070.
* Indicates, as required by Item 14(a)(3), a management contract of
compensatory plan required to be filed as an exhibit to this Form 10-K.
26
<PAGE> 1
LIST OF PRINCIPAL SUBSIDIARIES
<TABLE>
<CAPTION>
LEGAL ENTITY STATE OR OTHER JURISDICTION OF INCORPORATION
------------ --------------------------------------------
<S> <C>
DOMESTIC
- - --------
Air Compak International, Inc. Pennsylvania
Arthur J. Fritz & Co. Delaware
FCI Logistics, Inc. Oklahoma
FNC Inernational, Inc. California
Fritz Air Freight, Inc. Texas
Fritz International Insurance Brokerage California
Fritz Transportation International California
Frontier Container Line, Inc. California
Frontier Freight Forwarders, Inc. Florida
Global Crating, Inc. Oklahoma
Mattoon & Company, Inc. California
Rex Air and Ocean Freight, Inc. Florida
T G International, Inc. Texas
Texas Crating, Inc. Texas
Trans-shoes Worldwide, Inc. New York
Unlimited National, Inc. Illinois
Unlimited Warehousing, Inc. Illinois
ASIA
- - ----
Fritz Ocean Freight (Bangladesh) Ltd. Bangladesh
Fritz Transportation International Ltd. Bangladesh
Fritz Air Freight (Bangladesh) Ltd. Bangladesh
Qingdao Fritz Transportation International
Service Co. Ltd. China
Shanghai Outer Gao Qiao Fritz Co. Ltd. China
Fritz (Tianjin) Transportation International
Service Co. Ltd. China
Fritz Air Freight Shanghai (H.K.) Ltd. Hong Kong
Fritz Companies India (H.K.) Ltd. Hong Kong
Fritz China Services (H.K.) Limited Hong Kong
Fritz Transportation International (H.K.) Ltd. Hong Kong
Fritz Air Freight Beijing (H.K.) Ltd. Hong Kong
Intertrans Cargo Services (H.K.) Ltd. Hong Kong
Intertrans Consulting Services Ltd. Hong Kong
Fritz Air Freight (H.K.) Limited Hong Kong
Fritz Transportation International Xiamen
(H.K.) Ltd. Hong Kong
Fritz Freight Forwarding India Private
Limited India
Intertrans Japan Ltd. K.K. Japan
Fritz Transportation International (Korea)
Co. Ltd. Korea
FIT Logistics SDN. BHD. Malaysia
FIT Forwarding SDN BHD Malaysia
FAF Forwarding SDN. BHD. Malaysia
Fritz Transportation International
(Malaysia) SDN. BHD. Malaysia
FTI (Philippines) Inc. Philippines
Fritz Air Freight Phils. Inc. Philippines
Fritz Logistics (S) Pte. Ltd. Singapore
FTI Fritz PTE Ltd. Singapore
FAF-Fritz Pte. Ltd. Singapore
Masters Air Freight Ltd. Singapore
Union Transport (Private) Ltd. Sri Lanka
Fritz Transportation International
(Private) Limited Sri Lanka
Fritz Air Freight (Private) Limited Sri Lanka
Fritz Transportation International
(Taiwan) Co. Ltd. Taiwan
Fong Ching Airfreight Co. Ltd. Taiwan
Fritz Transportation International
(Thailand) Limited Thailand
EUROPE
- - ------
IGS N.V. Belgium
Fritz Companies (Belgium) N.V. Belgium
United Forwarders N.V. Belgium
A. Freyman & Van Loo N.V. Belgium
Fritz Companies France S.A. France
Air Compak International (France) S.A.R.L. France
Trace S.A. France
H & D Intertrans GMBH Germany
Fritz Companies (Ireland) Limited Ireland
I-Dika Milano S.R.L. Italy
Globe Fin., S.A. Luxembourg
Airtex International B.V. Netherland
Canne & Balwe, B.V. Netherland
</TABLE>
27
<PAGE> 2
LIST OF PRINCIPAL SUBSIDIARIES
<TABLE>
<CAPTION>
LEGAL ENTITY STATE OR OTHER JURISDICTION OF INCORPORATION
------------ --------------------------------------------
<S> <C>
Air Compak International (Netherlands) C.V. Netherlands
Fritz Companies Nederlands B.V. Netherlands
Texcan B.V. Netherlands
FCI Holdings International B.V. Netherlands
Fritz Companies (C.I.S.) Russia
Jet Air i Malmo AB Sweden
Intertrans Sweden AB Sweden
Jet Air Travel Service AB Sweden
Fritz Companies (Switzerland) AG Switzerland
Fritz Companies Ukraina Ukraine
Fritz Companies (U.K.) Limited United Kingdom
Air Compak International (U.K.) Ltd. U.K.
Freight Intertrans (UK) Limited U.K.
LATIN AMERICA
- - -------------
Laugus Cargo S.A. Argentina
Fritz De Argentina S.A. Argentina
Fritz-Trans-Shoes Agenciam. Transp. Nacionals & Internacional Ltda. Brazil
Fritz Do Brasil Transportes Internacionals LTDA Brazil
Intertrans International Do Brasil Ltda. Brazil
Interaduamar Martima E Despaceos Advaneiros Ltda. Brazil
Fritz Chile S.A. Chile
FTI Container Line, Inc. Panama
Mirabel International Transport S.A. Panama
Fritz Companies Puerto Rico Inc. Puerto Rico
Fritz Venezuela Consolidadores Interacionales S.A. Venezuela
Fritz Companies Canada Inc. Canada
Air Compak International (Canada) Inc. Canada
Gestion J.L.G. Inc. (includes Starber) Canada
Trade Services I.D.M.S.A. de C.V. Mexico
Fritz Companies Mexico S.A. de C.V. Mexico
Intertrans de Mexico S.A. de C.V. Mexico
OTHER
- - -----
Fritz Freight International (Pty) Ltd. (Includes Filway) Australia
Air Compak International (Australia) Pty. Ltd. Australia
Arthur J. Fritz & Co. PTY Limited Australia
Fritz Companies South Africa (Pty) Ltd. So. Africa
</TABLE>
28
<PAGE> 1
ACCOUNTANTS' CONSENT
The Board of Directors
Fritz Companies, Inc.:
We consent to incorporation by reference in the registration statements
(No. 33-93070), (No. 33-78472) and (No. 33-57238) on Forms S-8 of Fritz
Companies, Inc. of our report dated August 28, 1995 relating to the consolidated
balance sheets of Fritz Companies, Inc. and subsidiaries as of May 31, 1995,
December 31, 1994 and 1993, and the related statements of operations,
stockholders' equity, and cash flows for the five months ended May 31, 1995 and
for each of the years in the three-year period ended December 31, 1994, and the
related schedule, which report appears in the May 31, 1995 annual report on
Form 10-K of Fritz Companies, Inc.
/s/ KPMG Peat Marwick LLP
San Francisco, California
June 12, 1996
29
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-57238, 33-78472 and 33-93070 of Fritz Companies, Inc. on Forms S-8 of our
report dated March 8, 1993 appearing in this Transition Report on Form 10-K of
Fritz Companies, Inc. for the transition period from January 1, 1995 to May 31,
1995.
/s/ Deloitte & Touche LLP
San Francisco, California
June 12, 1996
30
