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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended FEBRUARY 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from___________to___________
Commission file number 0-20548
FRITZ COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 94-3083515
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification Number)
706 Mission Street, Suite 900, San Francisco, California 94103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 904-8360
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year if changed from last
report.)
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
As of February 28, 1997 there were 35,220,000 shares of common stock
outstanding.
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FRITZ COMPANIES, INC. FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements:
Accountants' Review Report 3
Consolidated Balance Sheets as of February 28,
1997 and May 31, 1996 4
Consolidated Statements of Operations for the three
months and nine months ended February 28, 1997 and
February 29, 1996 5
Consolidated Statements of Cash Flows for the nine
months ended February 28, 1997 and February 29, 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
2
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Accountants' Review Report
Board of Directors and Stockholders
Fritz Companies, Inc.
We have reviewed the accompanying consolidated balance sheet of Fritz Companies,
Inc. (the Company) as of February 28, 1997, and the related consolidated
statements of operations and cash flows for the three and nine month periods
then ended. These consolidated financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Fritz Companies, Inc. as of May 31,
1996, and the related consolidated statements of operations and cash flows for
the year then ended (not presented herein); and in our report dated July 31,
1996, we expressed an unqualified opinion on those consolidated financial
statements.
KPMG Peat Marwick LLP
San Francisco, California
April 9, 1997
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FRITZ COMPANIES, INC. FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 41,023 $ 86,461
Accounts receivable, net of allowance for
doubtful accounts of $21,957 in 1997 and
$6,401 in 1996 406,188 397,747
Deferred income taxes 9,823 7,368
Prepaid expenses and other assets 29,377 28,368
--------- ---------
Total current assets 486,411 519,944
--------- ---------
PROPERTY AND EQUIPMENT - NET 129,593 111,399
--------- ---------
OTHER ASSETS:
Intangibles, net of accumulated amortization of
$14,992 in 1997 and $11,963 in 1996 110,144 88,790
Deferred income taxes 3,368 1,727
Other assets 11,822 11,602
--------- ---------
Total other assets 125,334 102,119
--------- ---------
TOTAL ASSETS $ 741,338 $ 733,462
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations and
short-term borrowings $ 78,958 $ 14,514
Accounts payable 250,572 322,018
Accrued liabilities 76,259 65,149
Income tax payable 8,371 6,496
--------- ---------
Total current liabilities 414,160 408,177
LONG-TERM OBLIGATIONS 86,486 89,505
DEFERRED INCOME TAXES 1,528 995
OTHER LIABILITIES 4,474 4,038
--------- ---------
TOTAL LIABILITIES 506,648 502,715
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: par value $.01 per share;
60,000 shares authorized, 35,220 shares
issued and outstanding, (34,898 shares
issued and outstanding in 1996) 352 349
Additional paid-in capital 123,279 118,485
Retained earnings 112,802 112,587
Cumulative foreign currency translation adjustments (1,743) (674)
--------- ---------
Total stockholders' equity 234,690 230,747
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 741,338 $ 733,462
========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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FRITZ COMPANIES, INC. FORM 10-Q
FRITZ COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ -------------------------
February 28, February 29, February 28, February 29,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE $ 270,341 $ 241,096 $ 847,295 $ 783,564
FREIGHT CONSOLIDATION COSTS 152,370 137,285 468,830 445,054
--------- --------- --------- ---------
NET REVENUE 117,971 103,811 378,465 338,510
--------- --------- --------- ---------
OPERATING EXPENSES
Salaries and related costs 80,048 56,725 225,554 180,777
General and administrative 62,651 36,919 150,577 109,245
Merger and related costs --- 4,600 --- 4,600
--------- --------- --------- ---------
Total operating expenses 142,699 98,244 376,131 294,622
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (24,728) 5,567 2,334 43,888
OTHER EXPENSE (1,166) (714) (2,003) (162)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE TAX EXPENSE (BENEFIT) (25,894) 4,853 331 43,726
INCOME TAX EXPENSE (BENEFIT) (9,063) 1,699 116 15,304
--------- --------- --------- ---------
NET INCOME (LOSS) $ (16,831) $ 3,154 $ 215 $ 28,422
========= ========= ========= =========
Weighted average share outstanding - primary 35,148 35,932 35,499 35,323
========= ========= ========= =========
Earnings per share - primary $ (.48) $ 0.09 $ 0.01 $ 0.80
========= ========= ========= =========
Weighted average shares outstanding - fully diluted 35,148 35,972 35,604 35,469
========= ========= ========= =========
Earnings per share - fully diluted $ (.48) $ 0.09 $ 0.01 $ 0.80
========= ========= ========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
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FRITZ COMPANIES, INC. FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
February 28, February 29,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 215 $ 28,422
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 18,286 14,097
Deferred income taxes (3,563) 445
Tax benefit from exercise of stock options --- 11,388
Other 625 ---
Effect of changes in:
Receivables (6,952) (48,249)
Prepaid expenses and other current assets (1,009) (10,980)
Payables and accrued liabilities (61,934) (2,561)
-------- --------
Net cash used in operating activities (54,332) (7,438)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (34,321) (30,923)
Acquisitions, net of cash acquired (16,932) (18,050)
Other 2,168 1,660
-------- --------
Net cash used in investing activities (49,085) (47,313)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term obligations repaid (14,199) (13,537)
Net increase in short-term borrowings 63,297 61,617
Long-term obligations issued 5,160 ---
Proceeds from stock options exercised 4,486 15,573
Other 304 (1,082)
-------- --------
Net cash provided by financing activities 59,048 62,571
-------- --------
Foreign currency translation adjustments (1,069) (1,558)
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (45,438) 6,262
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 86,461 74,261
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 41,023 $ 80,523
======== ========
OTHER CASH FLOW INFORMATION:
Income taxes paid $ 5,919 $ 16,093
======== ========
Interest paid $ 5,396 $ 3,642
======== ========
Noncash investing and financing activities
in connection with acquisitions:
Liabilities assumed $ 2,189 $ 36,608
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
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FRITZ COMPANIES, INC. FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The accompanying consolidated financial statements of Fritz Companies,
Inc. (the Company) for the three and nine months ended February 28, 1997 and
February 29, 1996 are unaudited and, in the opinion of management, contain all
adjustments necessary for a fair presentation of the results of such periods
which include approximately a $17 million increase in the allowance for
doubtful accounts in the third quarter ended February 28, 1997.
The significant accounting policies followed by the Company are described
in Note 1 to the audited consolidated financial statements for the year ended
May 31, 1996. In accordance with SEC regulations, certain information and
footnote disclosures normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted for the purposes of the consolidated interim financial statements. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements, including the notes thereto, for the year
ended May 31, 1996 included in the Company's Form 10-K filed on August 28, 1996.
The results of operations for the three and nine months ended February 28, 1997
are not necessarily indicative of the results to be expected for the full year.
Certain prior years' reclassifications have been made to conform to third
quarter ended February 28, 1997 presentation.
2. COMMON STOCK
The increase in common stock issued and paid in capital was primarily due
to 222,000 shares issued upon exercise of options, restricted stock grants, and
issuance of shares under the employee stock purchase plan.
3. INCOME TAXES
Income tax expense for the nine months ended February 28, 1997 consisted
of approximately $3.7 million of current tax provision and $3.6 million of
deferred tax benefit.
4. ACQUISITIONS
For the nine months ended February 28, 1997, the Company acquired assets
and the remaining interests in several freight forwarding companies for an
aggregate purchase price of approximately $10.3 million consisting of cash of
$8.9 million and obligations payable of $1.4 million. In addition, the Company
acquired minority interests in a company which was recorded using the equity
method of accounting. Of the total acquisition price, the Company acquired
current assets of $2.3 million, fixed assets of $1.3 million, noncurrent assets
of $300,000, current liabilities of $2.1 million, and recorded minority
interests of $300,000. Intangible assets of approximately $8.2 million were
recorded in connection with these acquisitions, which are being amortized on a
straight line basis over forty years. In addition, the Company recorded
approximately $15.9 million of additional purchase price relating to achievement
of specified net revenue or pre tax income levels of certain prior acquisitions.
7
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FRITZ COMPANIES, INC. FORM 10-Q
5. OTHER
Three of the class action suits, filed against the Company and disclosed
in Item 3, 7 and 14 of the Company's Form 10-K filed on August 28, 1996
(Levenson v. Fritz and Hack v. Fritz ) and Form 8-K filed on October 10, 1996
(Greenfield v. Fritz ) were dismissed with prejudice by the Superior Court of
California for the County of San Francisco on the grounds that claims sought to
be asserted under the California Corporate Securities Law and for common law
fraud were not legally tenable. The three cases filed in federal court (now
consolidated into a single case) have not yet been addressed by the courts and
remain pending.
The Company is unable to predict the ultimate outcome of these matters,
and it is possible that such outcome could have a significant adverse impact on
the Company's future consolidated results of operations. The Company believes
that the ultimate outcome of these matters will not have a significant adverse
impact on the Company's consolidated financial position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion is applicable to the Company's financial
condition and results of operations for the three and nine months ended February
28, 1997 and February 29, 1996. See Note 1 to Notes to Consolidated Financial
Statements.
RESULTS OF OPERATIONS
The following table provides the revenue, and net revenue, in thousands of
dollars and percentages attributable to the Company's principal logistics
services during the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------- -------------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 29,
1997 % 1996 % 1997 % 1996 %
-------- ----- -------- ---- -------- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Customs brokerage $ 36,760 13.6 $ 31,006 12.9 $115,434 13.6 $104,044 13.3
Ocean freight forwarding 81,301 30.1 76,517 31.7 249,903 29.5 242,566 31.0
Airfreight forwarding 122,153 45.2 112,637 46.7 382,836 45.2 370,992 47.3
Warehousing and
distribution 30,127 11.1 20,936 8.7 99,122 11.7 65,962 8.4
-------- ----- -------- ---- -------- ----- -------- ----
Total revenue $270,341 100.0 $241,096 100% $847,295 100.0 $783,564 100%
======== ===== ======== ==== ======== ===== ======== ====
NET REVENUE:
Customs brokerage $ 36,760 31.2 $ 31,006 29.8 $115,434 30.5 $104,044 30.7
Ocean freight forwarding 26,338 22.3 22,584 21.8 80,087 21.2 76,410 22.6
Airfreight forwarding 33,125 28.1 34,893 33.6 108,010 28.5 108,182 32.0
Warehousing and
distribution 21,748 18.4 15,328 14.8 74,934 19.8 49,874 14.7
-------- ----- -------- ---- -------- ----- -------- ----
Total net revenue $117,971 100.0 $103,811 100% $378,465 100.0 $338,510 100%
======== ===== ======== ==== ======== ===== ======== ====
</TABLE>
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FRITZ COMPANIES, INC. FORM 10-Q
THREE MONTHS ENDED FEBRUARY 28, 1997 COMPARED WITH THREE MONTHS ENDED FEBRUARY
29, 1996
Revenue and Net Revenue: For the third quarter of fiscal year 1997,
revenue increased 12.1% to $270.3 million from $241.1 million for the comparable
prior year period and net revenue increased 13.6% to $118.0 million from $103.8
million for the same prior year period. The fiscal third quarter represents the
seasonally weakest quarter of the year. The increased revenue and net revenue
was primarily due to warehousing and distribution, customs brokerage and
airfreight (revenue only). The increase in net revenue was partially offset by
the decrease in airfreight net revenue. The increased warehousing and
distribution revenue and net revenue resulted primarily from the Company's
continued expansion of overseas and domestic services, increased demand from
existing integrated logistics customers, acquisitions and the Company's
continued expansion of its warehouse facilities. The increase in customs
brokerage was primarily attributable to the growth from the Company's existing
customer base, new customers and acquisitions. Airfreight revenue increased
primarily due to increased business from existing integrated logistics
customers, acquisitions and the Company's continued expansion of its operations
in Asia, Latin America and Europe. However, the Company's airfreight net revenue
decreased compared to prior year due primarily to competitive pricing pressures
and a decrease in weight per shipment from the United States to overseas.
Operating Expenses: Operating expenses increased 45% for the third quarter
of fiscal year 1997 compared to the comparable period of fiscal year 1996.
Salaries and related costs increased primarily due to growth in the number of
employees resulting mostly from recent acquisitions and the Company's continued
expansion of its overseas and domestic services, and higher salary levels. A
significant portion of the increase in number of employees was in Europe, where
salary costs tend to be higher. General and administrative expenses such as data
processing, occupancy and equipment increased primarily due to expenditures to
support the Company's expansion, including warehouse-related activities. In
addition, there was approximately a $17 million increase in the allowance for
doubtful accounts, due to less than satisfactory collection performance in the
quarter. The Company is undertaking a comprehensive review of its pricing
structure of its various services and customer credit terms. As a result of the
increases in expenses, in particular salaries and related costs, the Company is
reviewing its operating expenses to improve the quality and efficiencies of the
Company's processes within the operating and supporting departments.
NINE MONTHS ENDED FEBRUARY 28, 1997 COMPARED WITH NINE MONTHS ENDED FEBRUARY 29,
1996
Revenue and Net Revenue: Revenue for the nine months ended February 28,
1997 increased 8% to $847.3 million from $783.6 million for the comparable prior
year period and net revenue increased 11.8% to $378.5 million from $338.5
million for the same prior year period. The increased revenue and net revenue
was primarily attributable to warehousing and distribution, customs brokerage
and airfreight (revenue only). The increase in net revenue was partially offset
by the decrease in airfreight net revenue. The increased warehousing and
distribution revenue and net revenue resulted primarily from the Company's
continued expansion of overseas and domestic services, increased demand from
existing integrated logistics customers, acquisitions and the Company's
continued expansion of its warehouse facilities. The increased customs brokerage
was primarily attributable to the growth from the Company's existing customer
base, new customers and acquisitions. Airfreight revenue increased primarily due
to increased business from existing integrated logistics customers, acquisitions
and the Company's continued expansion of its operations in Asia, Latin America
and Europe. However, the Company's airfreight net revenue decreased compared to
prior year due primarily to competitive pricing pressures and a decrease in
weight per shipment from the United States to overseas.
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FRITZ COMPANIES, INC. FORM 10-Q
Operating Expenses: Operating expenses for the nine months ended February
28, 1997 increased 27.7% compared to the comparable prior year period. Salaries
and related costs increased primarily due to growth in the number of employees
resulting mostly from recent acquisitions and the Company's continued expansion
of its overseas and domestic services, and higher salary levels. A significant
portion of the increase in number of employees was in Europe, where salary costs
tend to be higher. General and administrative expenses such as data processing,
occupancy and equipment increased primarily due to expenditures to support the
Company's expansion, including warehouse-related expenses. In addition, there
was approximately a $17 million increase in the allowance for doubtful accounts,
due to less than satisfactory collection performance in the third quarter. The
Company is undertaking a comprehensive review of its pricing structure of its
various services and customer credit terms. As a result of the increases in
operating expenses, in particular salaries and related costs, the Company is
reviewing its expenses to improve the quality and efficiencies of the Company's
processes within the operating and supporting departments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and equivalents decreased $45.5 million to $41.0
million at February 28, 1997 from $86.5 million at May 31, 1996. This decrease
represents cash used for operating activities and investing activities in excess
of the cash provided by financing activities. The Company's investing activities
for this period included capital expenditures of approximately $34.3 million
which includes expenditures for computer hardware, building and leasehold
improvements and equipment. The Company also made cash outlays totaling $8.9
million to acquire assets and the remaining interest in companies during the
nine months ended February 28, 1997. In addition, the Company recorded
approximately $15.9 million of additional purchase price (consisting of cash of
$8.8 million and obligations payable of $7.1 million) relating to achievement of
specified net revenue or pre tax income levels of certain prior acquisitions.
The cash flow used in operating activities was applied to reduce accounts
payable, primarily approximately $59 million Canadian custom payments to improve
the Company's tax position.
As of February 28, 1997, the balance outstanding under the syndicated
multicurrency credit facility (the Credit Facility) was $63.7 million,
consisting of $45 million under the Credit Facility and $18.7 million for
letters of credit. Therefore, the Company's total available borrowing capacity
under the Credit Facility as of February 28, 1997 was approximately $16.3
million. In April 1997, the Company sold and leased back certain of its North
American warehousing facilities. Net proceeds from the sale were approximately
$30.7 million, and the gain on the transaction was minimal. The resultant
proceeds were used to reduce the Credit Facility balance. The Company's Credit
Facility was amended to adjust certain financial covenants and in recognition of
the net warehouse sale proceeds, the Credit Facility was reduced from $80
million to $60 million.
Commencing in April 1997, the Company embarked upon a program designed to
improve its operating results and cash flow. This program includes a concerted
management effort with the objective of: (a) more closely linking the Company's
pricing to services rendered (b) reducing operating costs and (c) improving the
accounts receivable collection process.
RISK FACTORS
The nature of the Company's worldwide operations involves a multitude of
currencies other than the U.S. Dollar. Accordingly, the Company is exposed to
the inherent risks of international currency markets and governmental
interference. The Company seeks to compensate for currency exposures by
accelerating international payment among the Company's offices and agents.
10
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FRITZ COMPANIES, INC. FORM 10-Q
In addition, the Company's ability to provide service to its customers is
highly dependent on good working relationships with a variety of entities such
as airlines, steamship carriers and governmental agencies. However, changes in
space allotments available from carriers, governmental deregulation efforts,
"modernization" of the regulations governing customs clearance, and/or changes
in the international trade and tariff environment could affect the Company's
business in unpredictable ways.
There are also risks and uncertainties associated with the Company's
acquisition strategy, such as a reduction in the pace and/or magnitude of future
acquisitions and the complexities of integrating systems and operations of the
acquired companies.
Management believes the Company's business has not been adversely affected
by inflation in the past. Historically, the Company has generally been
successful in passing cost increases to its customers by means of price
increases. However, due to the competitive marketplace, continued future cost
increases could erode the Company's margin.
Additional risks and uncertainties include the Company's ability to
implement its program to improve operating results and cash flow, dependence of
the Company on international trade and worldwide economic conditions; dependence
of the Company on the continued services of key executives and managers; risks
associated with the Company's acquisition strategy, including the diversion of
management's attention to the assimilation of the operations and personnel of
acquired companies, adverse short-term effects on the Company's operating
results, integration of financial reporting systems and acquired assets, and the
possible inability of the Company's information systems to keep pace with the
increasing complexity and rapid growth of the Company's business; the increasing
level of investment required by the transition of the Company to an integrated
logistics company providing a full range of international transportation and
global supply chain management services; diversion of management's focus and
resources as a result of pending litigation; and other risks disclosed in the
Company's filings with the Securities and Exchange Commission.
OTHER
Three of the class action suits, filed against the Company and disclosed
in Item 3, 7 and 14 of the Company's Form 10-K filed on August 28, 1996
(Levenson v. Fritz, and Hack v. Fritz) and Form 8-K filed on October 10, 1996
(Greenfield v. Fritz) were dismissed by the Superior Court of California for the
County of San Francisco on the grounds that claims sought to be asserted under
the California Corporate Securities Law and for common law fraud were not
legally tenable. The three cases filed in federal court (now consolidated into a
single case) have not yet been addressed by the courts and remain pending.
The Company is unable to predict the ultimate outcome of these matters,
and it is possible that such outcome could have a significant adverse impact on
the Company's future consolidated results of operations. The Company believes
that the ultimate outcome of these matters will not have a significant adverse
impact on the Company's consolidated financial position.
SAFE HARBOR RULES
Except for the historical information contained herein, the matters
discussed in this Form 10-Q contain forward looking statements that involve
risks and uncertainties. The Company's actual results could differ materially.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in the section entitled "Risk Factors" above, as
well as those discussed elsewhere in the Company's Securities & Exchange
Commission filings.
11
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FRITZ COMPANIES, INC. FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Third Amendment to the Multi-currency Credit Agreement between
Registrant and Bank of America National Trust and Savings
Association dated as of February 28, 1997.
(b) The Company filed the following report on Form 8-K during the
quarter ended February 28, 1997 and through the date hereof:
(1) February 25, 1997
Item 5. Other Events
On February 25, 1997, the Company's demurrer was granted without
leave to amend in the case of Harvey Greenfield v. Fritz et al.
Granting a demurrer without leave to amend effectively dismissed
the lawsuit.
12
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FRITZ COMPANIES, INC. FORM 10-Q
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.
FRITZ COMPANIES, INC.
Registrant
Dated: April 10, 1997
/s/ Lynn C. Fritz
-----------------------------------------
Lynn C. Fritz
Chairman and Chief Executive Officer
/s/ Dennis L. Pelino
-----------------------------------------
Dennis L. Pelino
President and Chief Operating Officer
/s/ Robert Arovas
-----------------------------------------
Robert Arovas
Executive Vice President and
Chief Financial Officer
/s/ Ronald W. Womack
-----------------------------------------
Ronald W. Womack
Vice President of Finance and
Principal Accounting Officer
13
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FRITZ COMPANIES, INC. FORM 10-Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
10.1 Third Amendment to Multi-currency Credit Agreement between 15
Registrant and Bank of America National Trust and Savings
Association dated as of February 28, 1997.
27 Financial Data Schedule
</TABLE>
14
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EXHIBIT 10.1
THIRD AMENDMENT AGREEMENT
This THIRD AMENDMENT AGREEMENT, dated as of February 28, 1997
(this "Agreement"), is among FRITZ COMPANIES, INC., a Delaware corporation (the
"Company"), the several financial institutions (collectively, the "Banks";
individually, a "Bank") party to the Multicurrency Credit Agreement, dated as
of December 15, 1995, as amended (the "Credit Agreement"), among the Company,
the Banks, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent
for the Banks (in such capacity, the "Agent").
The parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement, as
amended hereby, are used herein with the same meanings unless otherwise
specifically defined herein.
Section 2. Amendments to the Credit Agreement. The Credit Agreement
is hereby amended:
(a) To add certain defined terms to Section 1.01 thereof as
follows:
"Asset Sale Date" means the date on which the Company
has, with respect to sales (whether or not accompanied by a
leaseback) during the period after December 31, 1996, of
fixed assets of the Company located in the United States,
received total cumulative consideration (whether in the form
of cash, debt, assumption of Indebtedness, or other
consideration and without deduction for any Indebtedness
secured by or otherwise payable from the proceeds of, such
assets) of at least $30,000,000.
"Capital Expenditures" means, for any period, the
capital expenditures of the Company and its Subsidiaries for
such period, as the same are (or would in accordance
<PAGE> 2
with GAAP (as in effect on February 28, 1997) be) set forth in
a consolidated statement of cash flows of the Company and its
Subsidiaries for such period.
"Designated Special Charges" means with respect to
the fourth fiscal quarter of the 1997 fiscal year or either of
the first two fiscal quarters of the 1998 fiscal year, the
amount of any non-recurring special charges to the Company's
consolidated net income occurring during such fiscal quarter
and which are designated by the Company by notice, given
within 30 days of the end of such fiscal quarter, to the Agent
and the Banks as being "designated special charges" with
respect to such fiscal quarter; provided that the aggregate
amount of all such "designated special charges" with respect
to all such fiscal quarters shall not exceed $15,000,000.
"Level V Period" means a period which is not a Level
I Period, a Level II Period, a Level III Period, or a Level IV
Period.
"Operating Lease Obligation Amount" means at any time
for any Person, on a consolidated basis, the present value (at
a 10% per annum discount rate, compounded annually) of all
present and future payments which such Person is obligated to
make as a lessee in respect of operating leases (including the
outstanding terms thereof and all options to extend or renew
such
-2-
<PAGE> 3
operating leases which have been exercised).
"Reference Banks" means BofA, ABN Amro Bank N.V., and
Standard Chartered Bank.
"Third Amendment Agreement" means the Third Amendment
Agreement, dated as of February 28, 1997, among the Company,
the Banks, and the Agent.
"Third Amendment Effective Date" means the date on
which the Third Amendment Agreement became effective in
accordance with its terms.
(b) To amend and restate in their entirety certain
definitions set forth in Section 1.01 thereof as follows:
"Applicable Margin" means
(a) with respect to Base Rate Loans, 0%;
(b) with respect to Offshore Rate Loans other than
Canadian BA Rate Loans:
(x) 1.250% from the Third Amendment Effective
Date to five days after the Compliance Certificate required
under Section 7.02(a) with respect to the financial statements
for second fiscal quarter of the Company's 1998 fiscal year is
received by the Agent, and
(y) for any other period: (i) 0.375% during
any Level I Period, (ii) 0.500% during any Level II Period,
(iii) 0.625% during any Level III Period, (iv) 0.750% during
-3-
<PAGE> 4
any Level IV period, and (v) 1.250% during any Level V period;
and
(c) with respect to Canadian BA Rate Loans, 0.750%.
"Cash Flow Leverage Ratio" means for any four fiscal
quarter period for the Company and its Subsidiaries on a
consolidated basis, the ratio of (a) Adjusted Funded Debt as
at the end of such period to (b) EBITDA for such period plus
$17,000,000 with respect to any four fiscal quarter period
which includes the third fiscal quarter of the 1997 fiscal
year, plus the amount of any Designated Special Charges with
respect to any four fiscal quarter period which includes the
fiscal quarter in which such Designated Special Charges
occurred.
"Fixed Charge Coverage Ratio" means for any four
fiscal quarter period, on a consolidated basis for the Company
and its Subsidiaries, the ratio of (a) EBITDA plus total
rental expense for operating leases minus Contingent
Acquisition Payments, plus $11,000,000 with respect to any
four fiscal quarter period which includes the third fiscal
quarter of the 1996 fiscal year, plus $11,500,000 with respect
to any four fiscal quarter period which includes the fourth
fiscal quarter of the 1996 fiscal year, plus $17,000,000 with
respect to any four fiscal quarter period which includes the
third fiscal quarter of the 1997 fiscal year, plus the amount
of any Designated Special Charges with respect to any four
-4-
<PAGE> 5
fiscal quarter period which includes the fiscal quarter in
which such Designated Special Charges occurred to (b) the sum
of (i) cash taxes, (ii) cash interest expense, (iii) total
rental expense for operating leases, (iv) current portion of
long term debt (as of the end of such period and determined in
accordance with GAAP), (v) $3,850,000 with respect to any four
fiscal quarter period which includes the third fiscal quarter
of the 1996 fiscal year, and (vi) $4,025,000 with respect to
any four fiscal quarter period which includes the fourth
fiscal quarter of the 1996 fiscal year, (vii) $5,950,000 with
respect to any four fiscal quarter period which includes the
third fiscal quarter of the 1997 fiscal year, and (viii) 35%
of the amount of any Designated Special Charges with respect
to any four fiscal quarter period which includes the fiscal
quarter in which such Designated Special Charges occurred.
"Level IV Period" means a period (i) commencing five
days after the Agent has received a Compliance Certificate
pursuant to Section 7.02(a) which shows a Cash Flow Leverage
Ratio of less than 2.75 to 1.00 and continuing until the
earlier of (A) five days after the next such Compliance
Certificate is received by the Agent and (B) five days after
the next such Compliance Certificate and accompanying
financial statements are required to be delivered to the Agent
under Sections 7.01(a) or (b) (as applicable) and 7.02(a) and
-5-
<PAGE> 6
(ii) which is not a Level I Period, a Level II Period, or a
Level III Period.
"Leverage Ratio" for any Person at any time means the
ratio of (a) the Funded Debt of such Person plus the Operating
Lease Obligation Amount of such Person to (b) the Net Worth of
such Person.
(c) To amend and restate in its entirety clause (b) of
the definition of "Offshore Rate" set forth in Section 1.01 thereof as follows:
(b) for Offshore Rate Loans in Dollars or any
Offshore Currency (IBOR), (i) the rate of interest per annum
determined by the Agent as the offered rate for deposits in
the Applicable Currency in the approximate amount of BofA's
Offshore Rate Loan for such Interest Period, which rate
appears on the display page on the Telerate System, Page 3750,
for the London interbank offered rates for interbank deposits
in such Applicable Currency as of 11:00 a.m. London time two
Business Days prior to the commencement of such Interest
Period, or (ii) in the event the Agent is unable to obtain a
quotation as above provided, then the rate of interest per
annum determined by the Agent to be the arithmetic mean
(rounded upwards to the next 1/16th of 1%) of the rates of
interest per annum notified to the Agent by each Reference
Bank to be the rate at which dollar deposits in the
approximate amount of such Reference Bank's Offshore Rate Loan
for such Interest Period would be
-6-
<PAGE> 7
offered by the applicable Lending Office to major banks in the
London eurodollar interbank market at their request at
approximately 11:00 a.m. (New York City time) two Business
Days prior to the commencement of such Interest Period; and
(d) To amend and restate in its entirety Section 2.06 thereof
as follows:
2.06 Termination or Reduction of Commitments.
(a) Voluntary. The Company may, upon not less than
five Business Days' prior notice to the Agent, terminate the
Commitments or L/C Commitment, or permanently reduce the
Commitments or L/C Commitment by an aggregate minimum Dollar
Equivalent amount of $1,000,000 or any Dollar Equivalent
multiple of $1,000,000 in excess thereof; unless, after giving
effect thereto and to any prepayments of Loans made on the
effective date thereof, the (i) Effective Amount of all Loans
and L/C Obligations would exceed the amount of the combined
Commitments then in effect or (ii) the Effective Amount of all
L/C Obligations would exceed the L/C Commitment.
(b) Mandatory. The combined Commitments shall be
reduced by $20,000,000 on the first to occur of (i) April 30,
1997, or (ii) five Business Days after the Asset Sale Date.
(c) Effect. Each reduction of the Commitments
required or permitted by
-7-
<PAGE> 8
this Section is separate and cumulative, so that any one such
reduction shall not diminish any other such reduction, and the
reductions applicable to the Commitments on any date shall be
the aggregate amount of the reductions occurring on or before
such date. Any reduction of the Commitments shall be applied
to each Bank according to its Pro Rata Share. All accrued but
unpaid commitment and letter of credit fees to, but not
including the effective date of any reduction or termination
of Commitments, shall be paid on the effective date of such
reduction or termination.
(d) Swingline. At no time shall the Swingline
Commitment exceed the aggregate Commitments, and any reduction
of the aggregate Commitments which reduces the aggregate
Commitments below the then-current amount of the Swingline
Commitment shall result in an automatic corresponding
reduction of the Swingline Commitment to the amount of the
aggregate Commitments, as so reduced, without any action on
the part of the Swingline Bank. At no time shall the
Swingline Commitment exceed the Commitment of the Swingline
Bank, and any reduction of the aggregate Commitments which
reduces the Commitment of the Swingline Bank below the then-
current amount of the Swingline Commitment shall result in an
automatic corresponding reduction of the Swingline Commitment
to the amount of the Commitment of the Swingline Bank,
-8-
<PAGE> 9
as so reduced, without any action on the part of the Swingline
Bank.
(e) To amend and restate in its entirety the first sentence
of subsection (b) of Section 2.12 thereof as follows:
The Company shall pay to the Agent for the account of each
Bank a commitment fee on the average daily unused portion of
such Bank's Commitment equal to (x) 0.500% for the period from
the Third Amendment Effective Date to the earlier of (A) five
days after the Compliance Certificate required under Section
7.02(a) with respect to the financial statements for the
second fiscal quarter of the Company's 1998 fiscal year is
received by the Agent and (B) five days after the next such
Compliance Certificate and accompanying financial statements
are required to be delivered to the Agent under Sections
7.01(a) and 7.02(a) and (y) for any other period: (i) 0.125%
during any Level I Period, (ii) 0.175% during any Level II
Period, (iii) 0.200% during any Level III Period, (iv) 0.250%
during any Level IV period, and (v) 0.500% during any Level V
period.
(f) To correct the amendment made to Section 3.08 thereof by
the Second Amendment Agreement so that the reference to "subsection (b)" in the
introduction to Section 2(f) of the Second Amendment Agreement shall be
corrected to read "subsection (a)".
(g) To amend Section 7.01 thereof by deleting the word "and"
at the end of clause (c), by substituting a semi-colon (";") for the period
(".") at the end of clause (d), and by adding a clause (e) and a clause (f) as
follows:
-9-
<PAGE> 10
(e) Promptly upon receipt thereof, copies of each
report submitted to the Board of Directors (or the Audit
Committee thereof) of the Company by independent public
accountants in connection with any annual, interim, or special
audit made by them of the consolidated financial statements of
the Company and its Subsidiaries including each report
submitted to the Board of Directors (or the Audit Committee
thereof) of the Company concerning its accounting practices
and systems and any final "management letter" submitted by
such accountants to management in connection with the annual
audit of the Company and its Subsidiaries; and
(f) as soon as available, but not later than 30 days
after the end of each calendar month, an accounts receivable
summary aging report for the Company and its Subsidiaries as
of the end of such month with comparative data for the
preceding two months and the same month of the preceding year.
(h) To amend and restate in their entirety clauses (j) and
(k) of Section 8.01 thereof as follows:
(j) purchase money security interests on
any property acquired or held by the Company or any of its
Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such property;
provided that (i) any such Lien attaches to such property
-10-
<PAGE> 11
concurrently with or within 20 days after the acquisition
thereof (or, in the case of the construction of improvements
on real property, 20 days after substantial completion
thereof), (ii) such Lien attaches solely to the property so
acquired in such transaction, (iii) the principal amount of
the debt secured thereby does not exceed 100% of the cost of
such property, and (iv) the principal amount of the
Indebtedness secured by any and all such purchase money
security interests shall not at any time exceed that permitted
by Section 8.05(e); and (v) no such Lien which attaches after
February 28, 1997, is on any software or data (including data
pertaining to accounts receivable) used in connection with the
accounting or other management information systems of the
Company or any of its Subsidiaries;
(k) Liens securing obligations in
respect of capital leases on assets subject to such leases;
provided that (i) such capital leases are otherwise permitted
hereunder and that the Indebtedness secured by such Liens
shall not exceed that permitted by Section 8.05(e), and (ii)
no such Lien which attaches after February 28, 1997, is on any
software or data (including data pertaining to accounts
receivable) used in connection with the accounting or other
management information systems of the Company or any of its
Subsidiaries;
(i) To amend and restate in its entirety Section 8.03 thereof
as follows:
8.03 Consolidations and Mergers. The Company shall
not, and shall not suffer or permit any Subsidiary to, merge,
consolidate with or into, or convey, transfer,
-11-
<PAGE> 12
lease or otherwise dispose of (whether in one transaction or
in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in
favor of any Person, except (a) the Company may consolidate
with or merge within or into any Wholly-Owned Subsidiary of
the Company, so long as the Company is the surviving
corporation and (b) any Wholly-Owned Subsidiary of the Company
may consolidate with or merge with or into another
Wholly-Owned Subsidiary of the Company; provided that, in the
case of (a) or (b), no default or Event of Default shall have
occurred and be continuing after giving effect to such merger
or consolidation, and after giving effect to such merger and
consolidation on a pro-forma basis, the Company would be in
compliance with Sections 8.15, 8.16, and 8.17.
(j) To amend Section 8.04 thereof by deleting clause (d)
therefrom.
(k) To amend and restate in their entirety clauses (d) and
(g) of Section 8.05 thereof as follows:
(d) Unsecured Indebtedness incurred by
Company so long as none of the Company's Subsidiaries is
obligated in respect thereof, whether as a guarantor or
otherwise; provided that the aggregate outstanding amount of
Indebtedness incurred after February 28, 1997, by the Company
and its Subsidiaries and not otherwise permitted under clauses
(a), (b), (c), (e), and (f) of this Section shall in no case
exceed $500,000;
-12-
<PAGE> 13
* * *
(g) Indebtedness not exceeding 15% of
the total assets of Subsidiaries of the Company which are not
incorporated under the laws of the United States or any
political subdivision thereof; provided that the aggregate
outstanding amount of Indebtedness incurred after February 28,
1997, by the Company and its Subsidiaries and not otherwise
permitted under clauses (a), (b), (c), (e), and (f) of this
Section shall in no case exceed $500,000.
(l) To amend and restate in its entirety Section 8.16 thereof
as follows:
8.16 Leverage Ratio. The Company shall not permit
its Leverage Ratio to be greater than 1.35 to 1.00 as at the
end of any fiscal quarter.
(m) To amend and restate in its entirety Section 8.17 thereof
as follows:
8.17 Fixed Charge Coverage Ratio. The Company shall
not permit its Fixed Charge Coverage Ratio to be less than (a)
1.20 to 1.00 for four fiscal quarter periods ending on or
before November 30, 1996, (b) 1.05 to 1.00 for the four fiscal
quarter period ending after November 30, 1996, and on or
before November 30, 1997, (c) 1.20 to 1.00 for four fiscal
quarter periods ending on February 28, 1998, and (d) 1.25 to
1.00 for four fiscal quarter periods ending after February 28,
1998.
-13-
<PAGE> 14
(n) To amend and restate in its entirety Section 8.18 thereof
as follows:
8.18 Cash Flow Leverage Ratio. The Company shall
not permit its Cash Flow Leverage Ratio to be greater than (a)
3.85 to 1.00 as at the of the four fiscal quarter period
ending on February 28, 1997, and (b) 3.00 to 1.00 as at the
end of any other four fiscal quarter period.
(o) To add a new Section 8.19 thereto as follows:
8.19 Charges. The Company shall not permit or incur
any extraordinary or special charges reducing income after
November 30, 1996, in excess of an aggregate amount of
$1,000,000 in any fiscal quarter (such aggregate amount to be
determined by adding the amount of all extraordinary items,
special or other charges reducing income and without netting
for extraordinary or special items increasing income or credit
for tax benefits), except that the Company may incur such
charges in an aggregate amount not exceeding (a) $17,000,000
with respect to the third fiscal quarter of the 1997 fiscal
year and (b) $17,000,000 in the aggregate with respect to the
fourth fiscal quarter of the 1997 fiscal year and the first
two fiscal quarters of the 1998 fiscal year.
(p) To add a new Section 8.20 thereto as follows:
8.20 Acquisitions. The Company shall not make, and
shall not permit any of its Subsidiaries to make, any
Acquisition after February 28, 1997,
-14-
<PAGE> 15
unless (a) the consideration payable by the Company or its
Subsidiaries in connection with such Acquisition shall consist
entirely of the common stock of the Company and (b) the total
value of the consideration paid by the Company and its
Subsidiaries with respect to all such Acquisitions shall not
exceed $5,000,000 in total amount.
(q) To add a new Section 8.21 thereto as follows:
8.21 Capital Expenditures. The Company shall not
permit Capital Expenditures to exceed $30,000,000 in the 1998
fiscal year or in any fiscal year thereafter.
(r) To add a new Section 8.22 thereto as follows:
8.22 Net Loss. The Company shall not incur a net
loss on a consolidated basis of greater than $17,000,000 with
respect to the fiscal quarter ending February 28, 1997.
(s) To amend Schedule 6.05 thereto to add the following
pending litigation:
The following shareholder class actions against the Company
and certain of its officers have been filed in the United
States District Court for the Northern District of California:
Weiss v. Fritz, et al., action no. C 96-2713 FMS; Polk v.
Fritz, et al., action no. C 96-2712 WDB; E.M. Lawrence Limited
Frozen Retirement Trust Dated September 1, 1992 v. Fritz
Companies, Inc. et al., action no. C 96-2906 MMO.
-15-
<PAGE> 16
(t) To amend and restate in its entirety schedule 2 to
Exhibit C, the form of the Compliance Certificate, to be in the form attached
hereto.
Section 3. Effect. Except as specifically set forth herein, this
Agreement does not limit, modify, amend, waive, grant any consent with respect
to, or otherwise affect (a) any right, power or remedy of the Agent or any Bank
under the Credit Agreement or any other Loan Document, (b) any provision of the
Credit Agreement or any other Loan Documents all of which shall remain in full
force and effect and are hereby ratified and confirmed. This Agreement does
not entitle, or imply any consent or agreement to, any further or future
modification of, amendment to, waiver of, or consent with respect to any
provision of the Credit Agreement or any other Loan Document.
Section 4. Limited Waiver. Banks hereby waive any Events of Default
under Sections 8.17 or 8.18 of the Credit Agreement existing on the date of
this Agreement resulting from Borrower's failure to comply with such sections
of the Credit Agreement only to the extent that such Events of Default will not
exist after giving effect to the amendments set forth in Section 2 of this
Agreement.
Section 5. Amendment Fees. Contemporaneously upon the execution of
this Agreement, the Company shall pay to the Agent for the account of each Bank
in proportion to its Pro Rata Share, an amendment fee (the "Amendment Fee")
equal to $125,000. The fees payable pursuant to this Section are fully earned
and non-refundable when paid, without regard to whether this Agreement becomes
otherwise effective.
Section 6. Costs. The Company shall pay all fees, costs, and
expenses of any kind (including the reasonable fees and disbursements of
counsel and allocated costs for in-house legal services) incurred by the Agent
in connection with the negotiation, preparation, and execution of this
Agreement and the other documents contemplated hereby.
Section 7. Conditions of Effectiveness. This Agreement shall become
effective as of the date hereof when all of the conditions set forth below are
satisfied (or waived in accordance
-16-
<PAGE> 17
with the provisions of this Credit Agreement), and the Agent gives notice of
such effectiveness as below provided:
(a) Counterparts of this Agreement. Receipt by the Agent
of counterparts hereof signed by the Company and the Majority Banks;
(b) Amendment Fee. Receipt by the Agent for the account
of the Banks of the Amendment Fee;
(c) Payment of Certain Amounts. Payment of all fees,
costs, and expenses specified in Section 6 of this Agreement (including the
actual or estimated fees, costs, and expenses of counsel to the Agent) incurred
in connection with the preparation, negotiation, and execution of this
Agreement and the other documents contemplated hereby;
(d) Cross-Defaults. Receipt by the Agent of evidence
satisfactory to the Majority Banks that, after giving effect to this Agreement,
there will be no outstanding Default or Event of Default under Section 9.01(e)
of the Credit Agreement;
(e) Related Consents. Receipt by the Agent of the
consent and reaffirmation of the Subsidiary Guarantors, such consent and
reaffirmation to be in the form appended hereto;
(f) Officer's Certificate. Receipt by the Agent of a
certificate executed by a Responsible Officer confirming the accuracy of the
representations and warranties of Section 8 hereof; and
(g) Authorization Documents. Receipt by the Agent of a
resolution of the Company's Board of Directors authorizing the execution,
delivery, and performance of this Agreement, together with a certificate of the
Secretary or Assistant Secretary of the Company to the effect that such
resolution was duly adopted and remains in full force and effect, all in form
and substance satisfactory to the Agent and the Banks.
Promptly upon the occurrence thereof, the Agent shall notify the Company and
the Banks of the effectiveness of this Agreement, and such notice shall be
conclusive and binding as to the occurrence thereof on all parties hereto.
-17-
<PAGE> 18
Section 8. Representations and Warranties. The Company represents
and warrants to the Agent and each Bank that:
(a) The execution, delivery and performance by the
Company of this Agreement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and require no action by or
in respect of, or filing with, any governmental body, agency or official, and
the execution, delivery and performance by the Company of this Agreement do not
contravene, or constitute a default under, any provision of applicable law or
regulations or of the certificate or articles of incorporation or the by-laws
of the Company or any of its Subsidiaries, or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company or any of its Subsidiaries or any assets of the Company or any of its
Subsidiaries.
(b) This Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, except as enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to creditors' rights, and to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
(c) After giving effect to this Agreement, no Event
of Default or Default has occurred and is continuing, and after giving effect
to this Agreement, the representations and warranties of the Company contained
in the Credit Agreement and the other Loan Documents delivered pursuant thereto
are true and correct in all material respects as of the date hereof as if made
on the date hereof (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date).
Section 9. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original with the same effect as if all the signatures were on
the same instrument. Delivery of an executed counterpart of the signature page
to this Agreement by telecopier shall be effective as
-18-
<PAGE> 19
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of the signature page to this Agreement by
telecopier shall thereafter promptly deliver a manually executed counterpart of
this Agreement, but the failure to deliver such manually executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.
Section 10. Governing Law and Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA AND IS SUBJECT TO THE PROVISIONS OF
SECTIONS 11.16 AND 11.17 OF THE CREDIT AGREEMENT, RELATING TO GOVERNING LAW AND
JURISDICTION AND WAIVER OF JURY TRIAL, THE PROVISIONS OF WHICH ARE BY THIS
REFERENCE HEREBY INCORPORATED HEREIN IN FULL.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in San Francisco, California, by
their proper and duly authorized officers as of the day and year first above
written.
COMPANY: FRITZ COMPANIES, INC.
By /s/ Robert Arovas
-----------------------------------
Title: Chief Financial Officer and
Executive Vice President
By /s/ Jan H. Raymond
-----------------------------------
Title: Senior Vice President
AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/ Christine Cordi
-----------------------------------
Title: Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By /s/ John Holmes
-----------------------------------
Title: Vice President
ABN AMRO BANK N.V.
SAN FRANCISCO INTERNATIONAL BRANCH
By /s/ Gino M. Brusatori
-----------------------------------
Title: Group Vice President
By /s/ D. Barkley
-----------------------------------
Title: Group Vice President
STANDARD CHARTERED BANK
-20-
<PAGE> 21
By /s/ M.J. Machado-Schammel
-----------------------------------
Title: Vice President
By /s/ S. Rivera
-----------------------------------
Title: Assistant Vice President
-21-
<PAGE> 22
REAFFIRMATION OF SUBSIDIARY GUARANTORS
Each of the undersigned (each, a "Subsidiary Guarantor," and, collectively, the
"Subsidiary Guarantors") acknowledges and agrees that such Subsidiary Guarantor
(including in its capacity, if any, as a Subsidiary Co-Borrower) has read and
is familiar with, and consents to, all of the terms and conditions of the
foregoing Second Amendment Agreement (the "Amendment Agreement"). In light of
the foregoing, each Subsidiary Guarantor confirms and agrees that all of the
terms and provisions of the Guaranty, dated as of December 15, 1995 (as amended
or modified to the date hereof, the "Subsidiary Guaranty"), executed by such
Subsidiary Guarantor in connection with the Credit Agreement are ratified and
reaffirmed, that the Subsidiary Guaranty shall continue in full force and
effect.
Although each Subsidiary Guarantor has been informed of the terms of the
Amendment Agreement, each Subsidiary Guarantor understands and agrees that
Agent and Banks have no duty to so notify any Subsidiary Guarantor or to seek
this or any future acknowledgement, consent, or reaffirmation, and nothing
contained herein shall create or imply any such duty as to any transactions,
past or future.
SUBSIDIARY GUARANTORS:
FRITZ TRANSPORTATION INTERNATIONAL
(H.K.) LTD.
By /s/ Henry Lim
-----------------------------------
Title: Director
FCI HOLDINGS INTERNATIONAL B.V.
By /s/ John Johung
-----------------------------------
Title: Director
-22-
<PAGE> 23
FRITZ COMPANIES CANADA INC.
By /s/ Dennis Pelino
-----------------------------------
Title: Vice President
FRITZ AIR FREIGHT, INC.
By /s/ Jan Raymond
-----------------------------------
Title: Vice President
-23-
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> FEB-28-1997
<EXCHANGE-RATE> 1
<CASH> 41,023
<SECURITIES> 0
<RECEIVABLES> 428,145
<ALLOWANCES> 21,957
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<CURRENT-ASSETS> 486,411
<PP&E> 202,143
<DEPRECIATION> 72,550
<TOTAL-ASSETS> 741,338
<CURRENT-LIABILITIES> 414,160
<BONDS> 0
0
0
<COMMON> 352
<OTHER-SE> 234,338
<TOTAL-LIABILITY-AND-EQUITY> 741,338
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<TOTAL-REVENUES> 270,341
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</TABLE>
