<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER __, 1997.
REGISTRATION NO. 333-37113
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
AMENDMENT NO. 1 TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ALLIED HOLDINGS, INC. *
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
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Georgia 4213 58-0360550
(State or other jurisdiction of incorporation (PRIMARY STOCK AND INDUSTRIAL (I.R.S. Employer Identification No.)
or organization) CLASSIFICATION CODE NUMBER)
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160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
(404) 370-1100
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
----------------------------
DANIEL H. POPKY
VICE PRESIDENT, FINANCE
ALLIED HOLDINGS, INC.
160 CLAIREMONT AVENUE, SUITE 510
DECATUR, GEORGIA 30030
(404) 370-1100
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------------
Copy to:
Thomas M. Duffy, Esq.
Troutman Sanders LLP
NationsBank Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
(404) 885-3000
----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. []
----------------------------
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
THE TOTAL NUMBER OF PAGES IN THIS DOCUMENT IS ________________.
<PAGE> 2
* TABLE OF ADDITIONAL REGISTRANTS
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STATE OR OTHER JURISDICTION OF PRIMARY STANDARD INDUSTRY I.R.S. EMPLOYER
NAME, ADDRESS AND TELEPHONE NUMBER INCORPORATION OR ORGANIZATION CLASSIFICATION CODE IDENTIFICATION NUMBER
- -------------------------------------- ------------------------------ -------------------------- ----------------------
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1. Allied Automotive Group, Inc. Georgia 4213 58-2201081
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
2. Allied Industries Incorporated Georgia 4213 58-1850174
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
3. Haul Risk Management Services, Inc. Georgia 4213 58-2204629
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
4. Link Information Systems, Inc. Georgia 4213 58-2253768
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
5. Allied Southwoods, Inc. Georgia 4213 58-2328035
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
6. Axis Group, Inc. Georgia 4731 58-2204628
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
7. Allied Systems, Ltd. (L.P.) Georgia 4213 58-1710028
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
8. Allied, Inc. Texas 4213 75-0121472
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
9. Inter Mobile, Inc. Georgia 4789 58-1859127
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
10. Legion Transportation, Inc. Georgia 4213 59-3041067
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
11. Innovative Car Carriers, Inc. Delaware 4213 59-3041519
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
12. Automotive Transport Services, Inc. Georgia 4213 58-1835655
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
13. Auto Haulaway, Inc. Ontario, Canada 4213 52-1952252
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
14. Axis International, Inc. Georgia 4731 58-2339087
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
15. Axis Truck Leasing, Inc. Georgia 4731 58-2272795
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
16. Axis North America, Inc. Georgia 4731 58-2273308
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
17. Auto Haulaway Releasing Services (1981)
Limited
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100 Ontario, Canada 4213 100347467
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18. Decatur Driver Exchange Company, Inc. Georgia 4213 58-2272793
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
19. Clairemont Driver Exchange Company, Georgia 4213 58-2273306
Inc.
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
20. Kar-Tainer International, Inc. Florida 4213 65-0252817
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
21. AH Acquisition Corp. Georgia 4213 58-2339469
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
22. Canadian Acquisition Corp. Georgia 4213 58-2339472
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
23. Axis National Incorporated Georgia 4731 58-2339474
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
24. RC Management Corp. Delaware 4731 65-071002
3600 N. W. 82nd Avenue
Miami, Florida 33166
404/370-1100
25. Ryder Automotive Carrier Services, Inc. Florida 4213 58-1953041
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
26. Ryder Automotive Acquisition LLC Georgia 4213 Applied for
160 Clairemont Avenue, Suite 510
Atlanta, Georgia 30030
404/370-1100
27. MCL Ryder Transport, Inc. Canada 4213 321235-1
770 Stevenson Road South, Suite 4400
Toronto, Ontario M5H3Y4
404/370-1100
28. Ryder Automotive Operations, Inc. Florida 4213 58-1944786
3600 N. W. 82nd Avenue
Miami, Florida 33166
404/370-1100
29. Ryder Freight Broker, Inc. Virginia 4731 59-2876864
10701 Middlebelt Road
Romulus, Michigan 48174
404/370-1100
30. QAT, Inc. Florida 4213 59-2876863
300 East Long lake Road, Suite 280
Bloomfield Hills, Michigan 48304
404/370-1100
31. OSHCO, Inc. Florida 4213 38-2853268
10701 Middlebelt Road
Romulus, Michigan 48174
404/370-1100
32. Terminal Service Co. Washington 4789 91-0847582
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
33. F.J. Boutell Driveaway Co., Inc. Michigan 4213 38-0365100
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
34. RMX, Inc. Delaware 4213 31-0961359
1450 West Long Lake Road
35. Transport Support, Inc.
1450 West Long Lake Road Delaware 4213 38-2349563
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36. Commercial Carriers, Inc. Michigan 4213 38-0436930
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
37. B&C, Inc. Michigan 4213 38-1377932
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
ALLIED HOLDINGS, INC.
OFFER TO EXCHANGE ALL OUTSTANDING
8 5/8% SERIES A SENIOR NOTES DUE 2007
FOR
8 5/8% SERIES B SENIOR NOTES DUE 2007
OF
ALLIED HOLDINGS, INC.
Allied Holdings, Inc., a Georgia Corporation (the "Company"), and the
Guarantors (as hereinafter defined) hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000
principal amount of 8 5/8% Series B Senior Notes Due 2007 of the Company (the
"New Notes"), for each $1,000 principal amount of 8 5/8% Series A Senior Notes
Due 2007 of the Company (the "Old Notes"), of which an aggregate principal
amount of $150,000,000 is outstanding. The form and terms of the New Notes are
identical to the form and terms of the Old Notes except that (i) interest on the
New Notes shall accrue from the most recent date to which interest has been paid
on the Notes (as hereinafter defined) or, if no such interest has been paid,
from the date of issuance of the Old Notes and (ii) the New Notes are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will not bear any legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the indenture governing the Old Notes. The Exchange
Offer is being made in order to satisfy certain contractual obligations of the
Company. See "The Exchange Offer" and "Description of Notes." The New Notes and
the Old Notes are sometimes collectively referred to herein as the "Notes."
Prior to October 1, 2002, the New Notes will be redeemable, at the
option of the Company, in whole or in part, at the Make-Whole Price (as
defined), plus accrued and unpaid interest and Liquidated Damages (as defined),
if any, thereon to the redemption date. On and after October 1, 2002, the New
Notes will be redeemable, at the option of the Company, in whole or in part, at
the redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date. In addition, at any time on
or prior to October 1, 2000, the Company may redeem up to 35% of the New Notes
at a redemption price equal to 108.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more sales of Equity Interests
(as defined), other than Disqualified Stock (as defined), of the Company,
provided that at least $97.5 million of New Notes remain outstanding immediately
following each such redemption. In the event of a Change of Control (as
defined), the Company will be required to make an offer to each holder of New
Notes to repurchase all or any part of such holder's New Notes at a repurchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the repurchase date. See
"Risk Factors -- Repurchase of Notes Upon Change of Control" and "Description of
Notes."
The New Notes will be general unsecured obligations of the Company,
ranking pari passu in right of payment with all other present or future senior
indebtedness of the Company, and senior in right of payment to all present or
future subordinated indebtedness of the Company. The New Notes will be
effectively subordinated, however, to all secured obligations of the Company,
including the Company's borrowings under the New Credit Facility as defined
herein, to the extent of the assets securing such obligations. As of June 30,
1997, after giving pro forma effect to the Offering (as defined herein) and the
Acquisition (as defined herein), the New Notes would have
<PAGE> 6
been effectively subordinated to approximately $41.8 million of secured
borrowings of the Company, including borrowings under the New Credit Facility.
In addition, the Company would have had $126.3 million of additional secured
borrowings available under the New Credit Facility. The Indenture (as defined
herein) will permit the Company to incur additional indebtedness, including
additional secured indebtedness subject to certain conditions. See "Risk Factors
- - Effective Subordination" and "Description of Notes - Certain Covenants -
Incurrence of Indebtedness and Issuance of Preferred Stock." The New Notes will
be jointly and severally guaranteed by all existing Domestic Restricted
Subsidiaries (as defined herein) and certain other subsidiaries of the Company
and by all Domestic Restricted Subsidiaries (as defined herein) of the Company
created or acquired in the future.
The net proceeds from the sale of the Old Notes (the "Original
Offering" or the "Offering") were used to fund the Acquisition, to pay related
fees and expenses, and to reduce borrowings.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NEW NOTES.
The Company and the Guarantors will accept for exchange any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on November 17, 1997, unless extended (as so extended, the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date.
The Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. The Letter of Transmittal
accompanying this Prospectus (the "Letter of Transmittal") states that by so
acknowledging and by delivering a prospectus a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed, for a period of one year after the date of this Prospectus, to make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
The Old Notes were eligible for trading in the National Association of
Securities Dealers' Private Offering, Resales and Trading through Automated
Linkages ("PORTAL") Market. The Company and the Guarantors do not intend to list
the New Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. The Company and the Guarantors will pay
all the expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount
of Old Notes being tendered for exchange pursuant to the Exchange Offer.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is October 17, 1997
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and in accordance therewith files periodic reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements regarding registrants, such as the
Company, that file electronically with the Commission.
The Company has filed with the Commission a Registration Statement on
Form S-4 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not include all the information set forth in the
Registration Statement and the exhibits thereto, to which reference is made for
further information with respect to the Company. Copies of the Registration
Statement and the exhibits thereto are on file at the office of the Commission
and may be obtained from the Commission upon payment of prescribed rates or may
be examined without charge at the public reference facilities of the Commission
as prescribed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions thereof filed with the Commission are
incorporated into this Prospectus by reference.
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996, as amended on Form 10K/A on August 28, 1997;
2. The Company's quarterly Reports on Form 10-Q for the quarter ended
March 31, 1997. As amended on Form 10-Q/A on August 28, 1997, and for the
quarter ended June 30, 1997; and
3. The Company's Current Reports on Form 8-K filed May 1, 1997, June 3,
1997, July 22, 1997, August 13, 1997, August 29, 1997, September 2, 1997 and
October 10, 1997.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Offering Memorandum.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered upon the written or oral request of such
person, a copy of any and all of the documents which have been or may be
incorporated by reference in this Prospectus, except that exhibits to such
documents will not be provided unless they are specifically incorporated by
reference into such documents. Requests for copies of any such documents should
be directed to Allied Holdings, Inc., 160 Clairemont Avenue, Suite 510, Decatur,
Georgia 30030, Attention: Daniel H. Popky, telephone: 404/370-1100
i
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PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, contained in this Prospectus, including information and financial data
incorporated herein by reference. The terms "Allied" and "Company" refer to
Allied Holdings, Inc. and its subsidiaries (including the Guarantors), unless
otherwise stated or indicated by the context and except in the section of this
Prospectus entitled "Description of Notes." References herein to 1996 pro forma
operating data are to the operating data of the Company for the year ended
December 31, 1996 after giving pro forma effect to the Original Offering and the
Acquisition as if they had occurred on January 1, 1996. See "Unaudited Pro Forma
Financial Information."
THE COMPANY
The Company, as a result of its acquisition of Ryder Automotive Carrier
Services, Inc. and RC Management Corp. (collectively "Ryder") from Ryder System,
Inc. ("Ryder System") on September 30, 1997 (the "Acquisition), is the largest
motor carrier of automobiles and light trucks in North America. The Company
offers a full range of automotive delivery services including transporting new,
used and off-lease vehicles to dealers from plants, rail ramps, ports and
auctions, and providing vehicle rail-car loading and unloading services. The
Company also provides logistics solutions and other services to the new and used
vehicle distribution market and other segments of the automotive industry,
including the rapidly growing used car superstore market. The Company and Ryder
together hauled approximately 65% of the new vehicles sold in the United States
and Canada in 1996 and had pro forma 1996 revenues nearly five times greater
than the Company's closest competitor. For the year ended December 31, 1996,
after giving pro forma effect to the Acquisition, revenues and EBITDA (as
defined herein) of the Company would have been approximately $960.7 million and
$98.9 million, respectively.
The Company operates primarily in the short-haul segment of the
automotive transportation industry with an average length of haul of less than
200 miles. The Company delivers new and used vehicles throughout the United
States and Canada for all of the major domestic and foreign manufacturers of
automobiles and light trucks and certain of the used car superstores. General
Motors, Ford and Chrysler represent the Company's largest customers, accounting
for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues.
The Company also provides services to all of the major foreign manufacturers,
including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi.
The Company also provides logistics solutions that complement its new
and used vehicle distribution services operations and is pursuing additional
opportunities in the growing remarketed vehicle sector, which includes the
delivery of used and previously leased vehicles and vehicles sold through the
automotive auction process. For example, in early 1997 Ryder entered into
agreements with AutoNation and DriversMart to provide transportation logistics
services for the movement of vehicles to their reconditioning centers and
stores, and in August 1997 the Company entered into a contract with Aucnet to
provide transportation logistics services relating to the movement of vehicles
sold through live interactive auctions and bulletin board sales on the Internet.
The Company's executive offices are located at 160 Clairemont Avenue,
Decatur, Georgia 30030, and its telephone number is (404) 370-1100.
THE EXCHANGE OFFER
The Exchange Offer applies to $150 million aggregate principal amount
of the Old Notes. The form and terms of the New Notes are the same as the form
and terms of the Old Notes except that (i) interest on the New Notes will accrue
from the most recent date to which interest has been paid on the Notes or, if no
such interest has been paid, from the date of issuance of the Old Notes, and
(ii) the New Notes are being registered under the Securities Act and will not
bear legends restricting their transfer. The New Notes will evidence the same
debt as the
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<PAGE> 9
Old Notes and will be issued pursuant to, and entitled to the benefits of, the
Indenture pursuant to which the Old Notes were issued. See "Description of
Notes." The Old Notes and the New Notes are sometimes referred to collectively
herein as the "Notes."
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The Exchange Offer..........................$1,000 principal amount of New Notes in exchange for each $1,000
principal amount of Old Notes. As of the date hereof, Old Notes
representing $150 million aggregate principal amount are outstanding.
The terms of the New Notes and the Old Notes are substantially
identical. Based on an interpretation by the Commission's staff set
forth in no-action letters issued to third parties unrelated to the
Company and the Guarantors and subject to the two immediately
following sentences, the Company and the Guarantors believe that New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes
generally may be offered for resale, resold and otherwise transferred by
any person receiving the New Notes, whether or not that person is the
holder (other than any such holder or such other person that is an
"affiliate" of the Company or any Guarantors within the meaning of
Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that (i) the New Notes are acquired in the ordinary course of
business of that holder or such other person, (ii) neither the holder nor
such other person is engaging in or intends to engage in a distribution
of the New Notes, and (iii) neither the holder nor such other person has
an arrangement or understanding with any person to participate in the
distribution of the New Notes. See "The Exchange Offer - Purpose and
Effect." Notwithstanding the foregoing, any holder of Old Notes who
is an "affiliate" of the Company or who intends to participate in the
Exchange Offer for the purpose of distributing the New Notes or any
broker-dealer who purchased the Old Notes from the Company for
resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (a) will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Notes in the Exchange Offer
and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other
transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, each broker-dealer that
receives New Notes for its own account in exchange for Old Notes,
where those Old Notes were acquired by the broker-dealer as a result of
its market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any
resale of the New Notes. See "Plan of Distribution."
Registration Rights
Agreement...................................The Old Notes were sold by the Company on September 30, 1997, in a
private placement. In connection with the sale, the Company entered
into a Registration Rights Agreement with the purchasers (the
"Registration Rights Agreement") providing for the Exchange Offer.
See "The Exchange Offer - Purpose and Effect."
Expiration Date.............................The Exchange Offer will expire at 5:00 p.m., New York City time, November 17,
1997, or such later date and time to which it is extended.
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Withdrawal..................................The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. Any Old Notes not
accepted for exchange for any reason will be returned without expense to the tendering
holder thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
Interest on the New
Notes.......................................Interest on each New Note will accrue from the most recent date to which interest has
been paid on the Notes or, if no interest has been paid, from September 30, 1997.
Conditions to the Exchange
Offer.......................................The Exchange Offer is subject to certain customary conditions, certain of which may be
waived by the Company. See "The Exchange Offer - Conditions to Exchange Offer."
Procedures for Tendering
Old Notes...................................Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and
date the Letter of Transmittal, or a copy thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver the Letter of Transmittal,
or the copy, together with the Old Notes and any other required documentation, to the
Exchange Agent at the address set forth in the Letter of Transmittal. Persons holding
Old Notes through the Depository Trust Company ("DTC") and wishing to accept the
Exchange Offer must do so pursuant to the DTC's Automated Tender Offer Program, by
which each tendering Participant will agree to be bound by the Letter of Transmittal.
By executing or agreeing to be bound by the Letter of Transmittal, each holder will
represent to the Company that, among other things, (i) the New Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder of the Old
Notes, (ii) neither the holder nor any such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other person
is an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of
the Company. Pursuant to the Registration Rights Agreement, the Company and each of
the Guarantors are required to use their reasonable best efforts to file a "shelf"
registration statement for a continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes (and cause such shelf registration statement
to be declared effective by the Commission and keep it continuously effective,
supplemented and amended for prescribed periods) if (i) the Company is not required to
file an Exchange Offer Registration Statement (as defined in the Registration Rights
Agreement) or permitted to consummate the Exchange Offer because the Exchange Offer is
not permitted by applicable law or Commission policy, or (ii) any holder of Old Notes
shall notify the Company prior to the 20th day following consummation of the Exchange
Offer (A) that such holder is prohibited by law or Commission policy from participating
in the Exchange Offer
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or (B) that such holder may not resell the New Notes acquired by it
in the Exchange Offer to the public without delivery of a prospectus
and the prospectus contained in the Exchange Offer Registration
Statement would not be appropriate or available for such resales by
such holder.
Acceptance of Old Notes and
Delivery of New Notes.......................The Company will accept for exchange any and all Old Notes which
are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the Exchange
Offer will be delivered promptly following the
Expiration Date. See "The Exchange Offer - Terms of
the Exchange Offer."
Exchange Agent..............................The First National Bank of Chicago is serving as Exchange Agent in
connection with the Exchange Offer.
Federal Income Tax
Considerations..............................The exchange pursuant to the Exchange Offer should not be a taxable
event for federal income tax purposes. See "Certain Federal Income
Tax Considerations."
Effect of Note Tendering....................Old Notes that are not tendered or that are improperly tendered and
therefor not accepted will, following the completion of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer
thereof. The Company will have no further obligation to provide for
the registration under the Securities Act of such Old Notes.
TERMS OF NEW NOTES
Securities Offered..........................$150 million aggregate principal amount of 8 5/8% Series B Senior
Notes due 2007.
Maturity....................................October 1, 2007.
Interest Payment Dates......................Interest on the New Notes will be payable semi-annually in arrears on April 1 and
October 1 of each year, commencing April 1, 1998.
Ranking.....................................The New Notes will be general unsecured obligations of the Company, ranking pari passu
in right of payment with all other present or future senior indebtedness of the
Company, and senior in right of payment to all present or future subordinated
indebtedness of the Company. The New Notes will be effectively subordinated, however,
to all secured obligations of the Company, including the Company's borrowings under the
New Credit Facility, to the extent of the assets securing such obligations. As of June
30, 1997, after giving pro forma effect to the Offering and the Acquisition, the New
Notes would have been effectively subordinated to approximately $41.8 million of
secured borrowings of the Company. The Indenture will permit the Company to incur
additional indebtedness, including additional secured indebtedness, subject to certain
conditions.
Guarantees..................................The New Notes will be jointly and severally guaranteed by all existing Domestic
Restricted Subsidiaries and certain other Subsidiaries of the
</TABLE>
4
<PAGE> 12
<TABLE>
<S> <C>
Company and by all Domestic Restricted Subsidiaries of the Company created or acquired
in the future (collectively, the "Guarantors"). See "Description of Notes - Subsidiary
Guarantees."
Optional Redemption.........................Prior to October 1, 2002, the New Notes will be redeemable at the option of the
Company, in whole or in part, at the Make-Whole Price, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the redemption date. On and after October 1,
2002, the New Notes will be redeemable, at the option of the Company, in whole or in
part, at the redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date. In addition, at any time on or
prior to October 1, 2000, the Company may redeem up to 35% of the New Notes at a
redemption price equal to 108.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with
the net proceeds of one or more sales of Equity Interests, other than Disqualified
Stock, of the Company, provided that at least $97.5 million of New Notes remain
outstanding immediately following each such redemption.
Change of Control...........................Upon the occurrence of a Change of Control, the Company will be required to make an
offer to repurchase all or any part of each holder's New Notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase. See "Risk Factors - Repurchase of
Notes Upon Change of Control" and "Description of Notes Repurchase at the Option of
Holders - Change of Control."
Certain Covenants...........................The indenture pursuant to which the New Notes will be issued (the "Indenture") contains
certain covenants that, among other things, limit the ability of the Company and its
Restricted Subsidiaries to incur additional Indebtedness (as defined herein), pay
dividends or make other distributions, repurchase Equity Interests (as defined herein)
or subordinated Indebtedness, create certain liens, enter into certain transactions
with affiliates, sell assets or enter into certain mergers or consolidations. See
"Description of Notes - Certain Covenants."
</TABLE>
5
<PAGE> 13
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following table sets forth certain summary historical and pro forma
consolidated financial and operating data of the Company for each of the three
years in the period ended December 31, 1996 and for the six-month periods ended
June 30, 1996 and 1997. The financial data is derived from the Company's audited
and unaudited consolidated financial statements included elsewhere herein. The
pro forma data gives effect to the Offering and the Acquisition as if they had
occurred on (i) January 1, 1996 with respect to the statement of operations
data, other financial data, pro forma ratios and operating data, and (ii) June
30, 1997 with respect to the balance sheet data. This table should be read in
conjunction with "Selected Financial Data," "Unaudited Pro Forma Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements, including the
notes thereto, of the Company and Ryder included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- -------------------------------
HISTORICAL HISTORICAL
------------------------------ -------------------
PRO FORMA PRO FORMA
1994(1) 1995 1996 1996 1996 1997 1997
-------- ------- --------- --------- -------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ......................... $297,236 $381,464 $ 392,547 $960,661 $200,565 $208,969 $ 524,665
Operating expenses ............... 268,505 360,543 373,952 928,913 189,510 197,519 496,936
-------- -------- --------- -------- -------- -------- ---------
Operating income ................. 28,731 20,921 18,595 31,748(2) 11,055 11,450 27,729
Interest expense ................. 5,462 11,260 10,720 23,288 5,396 5,408 11,570
Interest income .................. 312 707 603 1,216 303 357 1,448
Other income, net ................ -- -- -- 2,472 -- -- 752
Income tax provision ............. 9,393 4,222 3,557 6,474 2,504 2,688 8,262
-------- -------- --------- -------- ------ -------- --------
Income before extraordinary item.. $ 14,188 $ 6,146 $ 4,921 $ 5,674 3,458 $ 3,711 10,097
======== ======== ========= ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(3) ........................ $ 45,045 $ 46,352 $ 45,020 $ 98,880(2) $ 23,986 $ 25,236 $ 62,011
Depreciation and amortization .... 16,314 25,431 26,425 64,660 12,931 13,786 33,530
Capital expenditures:
New Rigs and modifications ..... 23,337 11,716 17,092 58,470 12,053 5,811 15,206
Maintenance and other .......... 7,208 6,494 8,880 12,724 2,323 1,0991 1,739
-------- -------- --------- -------- -------- --------- ---------
Total .................... 30,545 18,210 25,972 71,194 14,376 6,910 16,945
PRO FORMA RATIOS:
EBITDA to interest expense 4.2x(2) 5.4x
Total debt to EBITDA 2.3x(2) 1.9x(4)
OPERATING DATA:
Rigs operated (at end of period).. 2,151 2,063 1,947 5,323 1,999 1,893 5,250
Vehicles delivered (in thousands). 3,254 4,515 4,738 10,767 2,450 2,503 5,749
Loads delivered (in thousands).... 385 540 572 1,348 295 307 713
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
------------------------
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.......................................................................$228,694 $540,000(5)
Total debt......................................................................... 105,234 231,789
Stockholders' equity............................................................... 60,157 60,157(5)
</TABLE>
(footnotes on following page)
6
<PAGE> 14
(1) Includes the results of Auto Haulaway commencing with its acquisition
by the Company on October 31, 1994.
(2) Pro forma operating income and EBITDA for 1996 includes an $11.3
million restructuring charge at Ryder related to efforts to improve its
profitability and focus on its core business of transporting vehicles
and related services. See "Business -- Ryder." Excluding such charge,
the pro forma ratios of EBITDA to interest expense and total debt to
EBITDA would have been 4.7x and 2.1x, respectively.
(3) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item. EBITDA
is presented because it provides useful information regarding a
company's ability to service and/or incur debt. EBITDA should not be
considered in isolation from or as a substitute for net income, cash
flows from operating activities and other consolidated income or cash
flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity.
(4) The ratio of total debt to EBITDA for the pro forma six months ended
June 30, 1997 has been calculated as total debt as of June 30, 1997
divided by two times EBITDA for the six months ended June 30, 1997, in
each case on a pro forma basis.
(5) Excludes an after-tax charge of approximately $5.0 million that the
Company recorded to write down Company Rigs and terminal facilities
idled or closed as a result of the Acquisition.
7
<PAGE> 15
RISK FACTORS
Prospective purchasers of the New Notes offered hereby should carefully
review the information set forth below, in addition to the other information
contained in this Prospectus, in evaluating an investment in the New Notes
offered hereby.
SUBSTANTIAL LEVERAGE
The Company has, and will continue to have consolidated indebtedness
that is substantial in relation to its stockholders' equity. As of June 30,
1997, after giving pro forma effect to the offering of the Old Notes completed
September 30, 1997 (the "Offering") and the Acquisition, the Company would have
had total debt of approximately $231.8 million (excluding $155.2 million of
trade payables and other accrued liabilities) and stockholders' equity of
approximately $60.2 million. In addition, the Company would have had
approximately $126.3 million of additional borrowings available under the New
Credit Facility. The Company's leveraged financial position poses substantial
consequences to holders of the New Notes, including the risks that (i) a
substantial portion of the Company's cash flow from operations will be dedicated
to the payment of interest on the New Notes, borrowings under the New Credit
Facility and other indebtedness, (ii) the Company's leveraged position may
impede its ability to obtain financing in the future for working capital,
capital expenditures and general corporate purposes and (iii) the Company's
highly leveraged financial position may make it more vulnerable to economic
downturns and may limit its ability to withstand competitive pressures. If the
Company is unable to generate sufficient cash flow from operations in the future
to service its indebtedness and to meet its other commitments, the Company will
be required to adopt one or more alternatives, such as refinancing or
restructuring its indebtedness, selling material assets or operations, or
seeking to raise additional debt or equity capital. There can be no assurance
that any of these actions could be effected on satisfactory terms, that they
would enable the Company to continue to satisfy its capital requirements or that
they would be permitted by the terms of existing or future debt agreements,
including the Indenture and the New Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
ABILITY TO INTEGRATE ACQUISITION OF RYDER
The full benefits of the business combination of the Company and Ryder
requires the integration of each company's operational, administrative, finance
and marketing organizations, the coordination of each company's operations and
the implementation of appropriate operational, financial and management systems
and controls in order to capture the efficiencies and the cost reductions that
are expected to result from the Acquisition. This will require substantial
attention from the Company's management team. The diversion of management
attention, as well as any other difficulties which may be encountered in the
transition and integration process, could have an adverse impact on the revenue
and operating results of the Company. In addition, there can be no assurance
that the Company will be successful in integrating the operations of Ryder, or
that the anticipated benefits will be realized.
DEPENDENCE ON AUTOMOTIVE INDUSTRY
The automotive transportation industry is dependent upon the volume of
automobiles and light trucks manufactured, imported and sold. The automotive
industry is highly cyclical and demand for new automobiles and light trucks is
directly affected by such factors as general economic conditions, consumer
confidence, and the availability of affordable new car financing. As a result,
the Company's results of operations will be adversely affected by cyclical
downturns in the general economy or in the automotive industry and by consumer
preferences in purchasing new automobiles and light trucks.
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is highly dependent upon General Motors, Ford
and Chrysler, its largest customers. The Company derived approximately 35%, 26%
and 14% of its 1996 pro forma revenues from General Motors, Ford and Chrysler,
respectively. A significant reduction in General Motors', Ford's or Chrysler's
production, the loss of General Motors, Ford or Chrysler as a customer, or a
significant reduction in the services provided for any of these customers by the
Company would have a materially adverse effect upon the Company. See "Business."
8
<PAGE> 16
CONTRACTS WITH CUSTOMERS
The Company operates under contracts with most of its customers with
terms varying from 30 days to five years. The Company's contract with Ford
expires in May 1999, its contract with Chrysler expires in June 2000, and it has
an agreement in principle with General Motors to enter into a three-year
contract. See "-- Dependence on Major Customers." The contracts between the
Company and its customers generally establish rates for the transportation of
vehicles based upon a fixed rate per vehicle transported and a variable rate
for each mile a vehicle is transported. The contracts generally do not permit
the Company to recover for increases in fuel prices, fuel taxes or labor costs,
and any such increases are likely to have an adverse effect on the Company's
results of operations, although some contracts provide for renegotiation to
address certain material adverse changes. In addition, certain of the Company's
contracts provide for annual rate reductions. While the Company may be able to
derive savings through increased efficiencies with respect to vehicles
transported for these customers, the savings may not offset the reductions,
which would adversely affect the Company's results of operations.
LIABILITY EXPOSURE
The Company currently retains up to $650,000 of liability for each
claim for workers' compensation and up to $500,000 of liability for automobile
and general liability, including personal injury and property damage claims. In
addition to the $500,000 per occurrence deductible for automobile liability,
there is a $500,000 aggregate deductible for those claims which exceed the
$500,000 per occurrence deductible. The Company also retains up to $250,000 of
liability for each cargo damage claim in the United States. In Canada, the
Company retains up to C$100,000 (approximately U.S. $72,760 at October 9,
1997) of liability for each claim for personal injury, property damage or cargo
damage. Ryder's insurance contracts also provide for substantial deductibles or
indemnifications. If the Company were to experience a material increase in the
frequency or severity of accidents or workers' compensation claims or
unfavorable developments in existing claims, the Company's operating results
could be adversely affected. The Company formed Haul Insurance Limited in
December 1995 as a captive insurance subsidiary to provide insurance coverage to
the Company with respect to its deductibles for workers' compensation and
commercial general liability in the United States and for automobile liability
insurance in the United States and Canada. See "Business -- Risk Management and
Insurance."
ENVIRONMENTAL REGULATION
The Company is subject to environmental laws and regulations that
impose liability for the costs of cleaning up, and certain damages resulting
from, sites of past spills, disposals or other releases of hazardous materials
or petroleum products. Such liability could relate to spills, disposals or other
releases of hazardous materials or petroleum products at property that the
Company (i) currently owns or operates, (ii) formerly owned or operated, or
(iii) used for the disposal of wastes. These environmental laws and regulations
typically impose cleanup responsibility and liability without regard to whether
the owner or operator knew or caused the presence of the contaminants, and the
liability under the laws has been interpreted to be joint and several unless the
harm is divisible and there is a reasonable basis for allocation of liabilities.
Many of the Company's terminals contain, or have contained, underground storage
tanks ("USTs") for storing fuel and other materials. While the Company believes
that it is in material compliance with all environmental requirements, including
requirements relating to the USTs, there can be no assurance that any failure to
comply, or compliance in the future, with such environmental laws (including the
potential imposition of liabilities associated with releases of hazardous
substances or petroleum products from the properties currently or formerly owned
or operated by the Company) will not have a material adverse effect on the
Company's business, financial condition or results of operations. See "Business
- -- Regulation."
LABOR MATTERS
Certain subsidiaries of the Company, along with five other motor
carriers who, together with the Company, provide approximately 95% of the total
new vehicle motor transportation services in the United States, are signatories
to the Automobile National Master Agreement (the "Master Agreement") with the
International Brotherhood of Teamsters (the "Teamsters"). As a result of being a
party to the Master Agreement, the Company does not have exclusive control over
labor concessions in bargaining with the Teamsters. In 1995, Ryder
9
<PAGE> 17
experienced a 32-day Teamsters strike. In Canada, certain subsidiaries of the
Company are signatories to four labor agreements, each covering certain of the
Canadian provinces and territories. The contracts expire from May 31, 1998 to
March 31, 2000. In addition, the Company is a party to agreements with other
labor unions. There can be no assurance that renegotiation of labor contracts as
they expire will not result in increased labor costs to the Company, which
increases could be material, or that such contracts can be renegotiated without
work stoppages.
COMPETITION
The automotive transportation industry is highly competitive. The
Company currently competes with other motor carriers of varying sizes, as well
as with railroads. The Company also competes with non-union motor carriers that
may be able to provide comparable services at lower costs. The development of
new methods for hauling vehicles could also lead to increased competition. See
"Business -- Competition."
EFFECTIVE SUBORDINATION
The New Credit Facility, which provides the Company with available
borrowings of up to $230.0 million, is secured by liens on substantially
all of the assets of the Company. Under certain circumstances, certain other
indebtedness of the Company may be secured by liens on assets of the Company.
See "Description of Notes -- Certain Covenants -- Liens" and "Description of
Other Indebtedness -- New Credit Facility." In the event of a liquidation or
insolvency of the Company, or if any of its secured indebtedness is accelerated,
the secured assets of the Company will be available to pay obligations on the
New Notes only after borrowings under the New Credit Facility and any other
secured indebtedness have been paid in full. Accordingly, there may not be
sufficient assets remaining to pay amounts due on any or all of the New Notes
then outstanding. In addition, the existence of the liens on the assets of the
Company may impair the Company's ability to obtain additional financing in the
future.
The Company is a holding company that conducts substantially all of its
operations through its subsidiaries. As a result, the Company is dependent on
dividends or other distributions from its subsidiaries to meet the Company's
debt service and other obligations, including its obligations under the New
Notes, which may be restricted by applicable law. In addition, to the extent
that any such subsidiary incurs indebtedness and becomes insolvent or is
liquidated, creditors of such subsidiary would be entitled to payment from the
proceeds of such subsidiary's assets before the Company and its creditors would
derive any value from such subsidiary's assets. The New Notes will be guaranteed
by all of the Company's present and future Domestic Restricted Subsidiaries. If
a court were to invalidate or limit the guarantee of any such Restricted
Subsidiary under fraudulent conveyance or other applicable legal principles,
other creditors of such Restricted Subsidiary would to such extent have priority
as to the assets of such Restricted Subsidiary over the claims of holders of the
New Notes. See "-- Fraudulent Conveyance."
REPURCHASE OF NOTES UPON CHANGE OF CONTROL
The Indenture provides that, in the event of a Change of Control, the
Company will be required to make an offer to each holder of New Notes to
repurchase all or any part of such holder's New Notes at a repurchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the repurchase date. In addition, a
Change of Control may result in a default under the New Credit Facility or other
indebtedness of the Company. If a Change of Control were to occur, there can be
no assurance that the Company would have the financial resources necessary to
repay all such indebtedness and repurchase all New Notes tendered pursuant to
such an offer. See "Description of New Notes -- Repurchase at the Option of
Holders -- Change of Control."
LACK OF PUBLIC MARKET
The Company and the Guarantors do not intend to list the New Notes on
any securities exchange. The Company has been advised by Bear, Stearns & Co.
Inc., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc.
(collectively, the "Initial Purchasers") that the Initial Purchasers intend to
make a market in the New Notes after the consummation of the Exchange Offer, as
permitted by applicable laws and regulations; however, the Initial Purchasers
are not obligated to do so, and any such market making activities may be
discontinued at any time without notice. Therefore, there can be no assurance
that an active market for the New Notes will develop.
10
<PAGE> 18
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of Old Notes set forth in the legend thereon as a consequence of the
issuance of the Old Notes pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
anticipate registering the Old Notes under the Securities Act. Holders of the
Old Notes who do not tender their Old Notes in the Exchange Offer will continue
to hold such Old Notes and their rights under such Old Notes will not be
altered, except for any such rights under the Registration Rights Agreement,
which by their terms generally terminate or cease to have further effectiveness
as a result of the making of, and the acceptance for exchange of all validly
tendered Old Notes pursuant to, the Exchange Offer.
SEASONALITY
The Company's revenues are seasonable, with the second and fourth
quarters generally experiencing higher revenues than the first and third
quarters. The volume of vehicles shipped during the second and fourth quarters
is generally higher due to the introduction of new models which are shipped to
dealers during those periods and the higher spring and early summer sales of
automobiles and light trucks. During the first and third quarters, vehicle
shipments typically decline due to lower sales volume during those periods and
scheduled plant shut downs which primarily occur during the third quarter. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Seasonality and Inflation."
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent upon its senior management
team, as well as its ability to attract and retain qualified personnel. There is
competition for qualified personnel in the automotive transportation industry.
There is no assurance that the Company will be able to retain its existing
senior management or to attract additional qualified personnel. See
"Management."
EFFECTIVE CONTROL BY PRINCIPAL SHAREHOLDERS
The Company's management beneficially owns an aggregate of 3,861,191
shares of the common stock of the Company, or 49.4% of the outstanding common
stock. As a result, if management and members of their families choose to vote
all of their shares in a similar manner, management likely would have sufficient
voting power to elect the entire Board of Directors of the Company and to
determine the outcome of matters submitted to shareholders. See "Management."
FRAUDULENT CONVEYANCE
Under applicable provisions of the United States Bankruptcy Code and
comparable provisions of state fraudulent transfer or conveyance law, if the
Company or any Guarantor, at the time it originally issued the Old Notes or its
guarantee of the Old Notes, as the case may be, (a) incurred such obligation
with intent to hinder, delay or defraud creditors, or (b) received less than
reasonably equivalent value or fair consideration in connection with such
incurrence and (i) was insolvent at the time of the incurrence, (ii) was
rendered insolvent by reason of such incurrence (and the application of the
proceeds thereof), (iii) was engaged or was about to engage in a business or
transaction for which the assets remaining with the Company or such Guarantor
constituted unreasonably small capital to carry on its business or (iv) intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they mature, then, in each such case, a court of competent jurisdiction
could avoid, in whole or in part, the Notes or such guarantee thereof, as the
case may be, or, in the alternative, subordinate the Notes or such guarantee to
existing and future indebtedness of the Company or such Guarantor, as the case
may be. The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, however, the Company or
a Guarantor would be considered insolvent if the sum of its debts, including
contingent liabilities, was greater than all of its assets at fair valuation or
if the present fair saleable value of its assets was less
11
<PAGE> 19
than the amount that would be required to pay the probable liability on its
existing debts, including contingent liabilities, as they become absolute and
matured.
The Company believes that, for purposes of the United States Bankruptcy
Code and state fraudulent transfer or conveyance laws, (a) the Old Notes and the
guarantees thereof were issued without the intent to hinder, delay or defraud
creditors and for proper purposes and in good faith, (b) the Company and the
Guarantors received reasonably equivalent value or fair consideration and (c)
the Company and the Guarantors, after the initial issuance of the Old Notes and
the application of the proceeds thereof, were solvent, had sufficient capital
for carrying on their business and were (and are) able to pay their debts as
they mature. There can be no assurance, however, that a court passing on such
questions would agree with the Company's belief.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on September 30, 1997, in the
Original Offering. In connection with that sale, the Company entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of the Registration Statement, offer to the holders
of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which generally may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement further
provides that the Company and the Guarantors must use their reasonable best
efforts to (i) cause the Registration Statement with respect to the Exchange
Offer to be declared effective on or before December 30, 1997 and (ii)
consummate the Exchange Offer on or before the 30th business day following the
date the Registration Statement is declared effective. Except as provided below,
upon the completion of the Exchange Offer, the Company's obligations with
respect to the registration of the Old Notes and the New Notes will terminate. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the summary herein
of certain provisions thereof does not purport to be complete and is subject to,
and is qualified in its entirety by reference thereto. As a result of the filing
and the effectiveness of the Registration Statement, certain liquidated damages
provided for in the Registration Rights Agreement will not become payable by the
Company. Following the completion of the Exchange Offer (except as set forth in
the paragraph immediately below), holders of Old Notes not tendered will not
have any further registration rights and those Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected upon completion of the
Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent
to the Company, among other things, that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving the New Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a distribution of the New Notes,
(iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes and (iv) neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the Company.
Pursuant to the Registration Rights Agreement, the Company is required to file a
"shelf" registration statement for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old Notes (and cause such shelf
registration statement to be declared effective by the Commission and keep it
continuously effective, supplemented and amended for prescribed periods) if (i)
the Company is not required to file an Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy, or (ii) any holder of Old
Notes shall notify the Company prior to the 20th day following consummation of
the Exchange Offer (A) that such holder is prohibited by law or Commission
policy from participating in the Exchange Offer or (B) that such holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement would not be appropriate or available for such resale by
such holder. Other than as set forth in this paragraph, no holder will have the
right to participate in the "shelf" registration statement nor otherwise to
require that the Company register such holder's shares of Old Notes under the
Securities Act. See "- Procedures for Tendering."
12
<PAGE> 20
Based on an interpretation by the Commission's staff set forth in
no-action letters issued to third parties unrelated to the Company and the
Guarantors and subject to the two immediately following sentences, the Company
and the Guarantors believe that New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any person receiving the New Notes, whether or not that person is
the holder (other than any such holder or such other person that is an
"affiliate" of the Company or any Guarantors within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that (i) the New
Notes are acquired in the ordinary course of business of that holder or such
other person, (ii) neither the holder nor such other person is engaging in or
intends to engage in a distribution of the New Notes, and (iii) neither the
holder nor such other person has an arrangement or understanding with any person
to participate in the distribution of the New Notes. Notwithstanding the
foregoing, any holder of Old Notes who is an "affiliate" of the Company or who
intends to participate in the Exchange Offer for the purpose of distributing the
New Notes, or any broker-dealer who purchased the Old Notes from the Company for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where those Old Notes were acquired by the broker-dealer as a result of
its market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of these New Notes.
See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in
the second paragraph under "-- Purpose and Effect" above), holders of Old Notes
not tendered will not have any further registration rights and those Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the
form and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and will not bear legends restricting their transfer.
The New Notes will evidence the same debt as the Old Notes and will be issued
pursuant to, and entitled to the benefits of, the Indenture pursuant to which
the Old Notes were issued.
As of September 30, 1997, Old Notes representing $150,000,000 aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered Holder and to others believed to have beneficial interests in
the Old Notes. Holders of Old Notes do not have any appraisal or dissenters'
rights under the Georgia Business Corporation Code or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent
13
<PAGE> 21
for the tendering holders for the purpose of receiving the New Notes from the
Company. If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"The Exchange Offer - Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
November 17, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will notify the Exchange Agent and each registered
holder of any extension by oral or written notice prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "The Exchange Offer - - Certain Conditions to
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer,
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange
Offer. Except as set forth under "The Exchange Offer - Book Entry Transfer," to
tender in the Exchange Offer a holder must complete, sign, and date the Letter
of Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and deliver the Letter of Transmittal or
copy to the Exchange Agent prior to the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if that procedure is
available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date, or (iii)
the holder must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth under
"The Exchange Offer - Exchange Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of
14
<PAGE> 22
registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "-- Conditions to the Exchange Offer,"
to terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among
other things, (i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the registered holder, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not
15
<PAGE> 23
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such nonexchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where the Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "The Exchange
Offer - Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old
Notes and the Old Notes are not immediately available, or time will not permit
such holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
16
<PAGE> 24
For a withdrawal of a tender of Old Notes to be effective, a written
or, for DTC participants, electronic ATOP transmission notice of withdrawal must
be received by the Exchange Agent at its address set forth on the back cover
page of this Prospectus prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee
register the transfer of such Old Notes into the name of the person withdrawing
the tender, and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form, and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "The Exchange Offer -- Procedures for Tendering" at any
time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). In any such event the Company is required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. The First National Bank of Chicago has been appointed as Exchange Agent
for the Exchange Offer. Questions, requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
17
<PAGE> 25
The First National Bank of Chicago
By Registered or Certified Mail or By Hand or Overnight Delivery
Service:
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile Transmission (for Eligible Institutions only)
Fax (212) 240-8939
(For Information by Telephone or Telephone Confirmation)
(212) 240-8801
(Originals of all documents sent by facsimile should be sent promptly
by registered or certified mail, by hand, or by overnight delivery service.)
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company. The estimated cash
expenses to be incurred in connection with the Exchange Offer will be paid by
the Company and are estimated in the aggregate to be $50,000, which includes
fees and expenses of the Exchange Agent, accounting, legal, printing, and
related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
18
<PAGE> 26
THE ACQUISITION
On September 30, 1997, the Company acquired Ryder, North America's
largest motor carrier of automobiles and light trucks, from Ryder System for
$114.5 million in cash, subject to post-closing adjustments. Ryder offers a
full range of automotive delivery services including transporting new, used and
off-lease vehicles to dealers from plants, rail ramps, ports and auctions, and
providing vehicle rail-car loading and unloading services. Ryder also provides
logistics solutions and other services to the new and used vehicle distribution
market and other segments of the automotive industry, including the growing
used car superstore market.
For the year ended December 31, 1996, Ryder generated revenues and
EBITDA of $568.1 million and $41.2 million, respectively (in each case, adjusted
to reflect only the businesses being acquired by the Company, before any pro
forma adjustments). Ryder's EBITDA for 1996 includes an $11.3 million charge
relating to a restructuring that was intended to improve Ryder's future
operating performance. See "Unaudited Pro Forma Financial Information" and
"Business -- Ryder."
Ryder operated throughout the Continental United States and Canada
through approximately 90 terminals and a fleet of approximately 3,400 Rigs,
including approximately 600 owner-operated Rigs, and had approximately 4,800
employees. Similar to the Company, Ryder provided vehicle hauling services to
all of the major domestic and foreign automotive manufacturers. General Motors
represented Ryder's largest customer, accounting for approximately 49.9% of 1996
revenues.
The Acquisition was consistent with the Company's growth strategy to
increase its market share of the North American automotive carrier industry. The
Acquisition also provided an opportunity for the Company to significantly
accelerate its penetration with existing customers and gain entry to new
customers. The Company believed that the Acquisition was attractive because: (i)
the combination of Allied and Ryder creates the largest motor carrier in the
automotive transportation industry, hauling approximately 65% of the new
vehicles sold in the United States and Canada in 1996; (ii) significant cost
savings and margin enhancement improvement opportunities are expected to be
realized through consolidation of terminal operations and administrative
functions, the integration of proprietary information systems, and the
implementation of performance improvement programs; (iii) the Company will be
able to provide additional services to its customers through increased
capabilities, such as port processing and rail yard management; (iv) the
Company's customer base will become more diversified; and (v) the Company will
expand the geographic territories in which it does business from the southern
and eastern United States and Canada to the entire Continental United States and
Canada.
The Company believes that the Acquisition will result in the following
cost-savings upon the integration of the operations of Ryder with the Company,
which is expected to begin during the fourth quarter of 1997 and be completed by
the end of 1998.
- Optimize Terminal Network. The Company plans to consolidate approximately
19 terminals, or approximately 14% of the combined companies' terminal
locations, which are located in close proximity to one another. The
consolidation of these terminals will reduce operating and terminal
overhead costs through the elimination of lease or depreciation charges,
the reduction in on-site personnel costs, and the reduction of other
direct operating expenses. In addition, the Company believes that
additional cost savings can be achieved by combining terminal
administrative functions.
- Improve Productivity. Over the past decade, the Company has implemented
performance improvement programs at its terminal locations which have
resulted in reduced operating costs. The Company intends to implement
these programs at the Ryder locations. In addition, the Company believes
it will be able to increase Rig utilization through the consolidation of
terminal locations and through the increased backhaul potential that the
Company believes will result from the Acquisition. These actions are
expected to reduce the number of Rigs the Company is required to operate
and result in reduced operating costs.
- Integration of Proprietary Information Systems. The Company intends to
integrate Ryder's information systems with its own proprietary information
systems. This is expected to result in increased operating efficiencies
and reduced administrative costs.
19
<PAGE> 27
- Centralize Administrative Functions. The Company's administrative
functions are centralized and performed at its corporate headquarters in
Decatur, Georgia. The Company has adopted a detailed integration plan to
combine most of Ryder's central office functions with the Company's in
order to eliminate redundant functions and reduce costs.
In addition, the Company believes that significant opportunities exist
to further increase its revenues by offering a broader scope of services to
existing and new customers. For example, Ryder began providing transportation
logistics services to AutoNation in January 1997 and to DriversMart in March
1997 for the movement of vehicles to their reconditioning centers and stores and
began providing port processing services to Volkswagen in August 1997. The
Company also began providing transportation logistics services to Aucnet in
August 1997 relating to the management of the movement of vehicles sold through
live interactive auctions and bulletin board sales on the Internet.
USE OF PROCEEDS
The Company will not receive any cash proceeds or incur an additional
indebtedness as a result of the issuance of the New Notes pursuant to the
Exchange Offer.
The net proceeds to the Company from the Offering were approximately
$144,650,000 (after deducting discounts and commissions and estimated expenses
of the Offering). Concurrently with the consummation of the Offering, the
Company entered into the New Credit Facility. See "Description of Other
Indebtedness -- New Credit Facility." The Company used the proceeds from the
Offering to fund the Acquisition, to pay related fees and expenses and to reduce
borrowings. See "The Acquisition."
CAPITALIZATION
The following table sets forth the capitalization of the Company at
June 30, 1997 and as adjusted to give effect to the Acquisition and the
Offering. This table should be read in conjunction with "Selected Financial
Data," "Unaudited Pro Forma Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements, including the notes thereto, of the Company and Ryder
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Revolving credit facility(1) $ 59,737 $ 35,487
8 5/8% Senior Notes due 2007 -- 150,000
12% Senior Subordinated Notes due 2003 40,000 40,000
Other debt and capital lease obligations 5,497 6,302
-------- --------
Total debt 105,234 231,789
Stockholders' equity 60,157 60,157(2)
-------- --------
Total capitalization $165,391 $291,946
======== ========
</TABLE>
- --------
(1) The Company entered into a new credit facility (the "New Credit Facility")
on September 30, 1997 which provides for $230.0 million of total
availability. The New Credit Facility was finalized concurrent with the
consummation of the Original Offering. On a pro forma basis, the Company
has approximately $35.5 million of borrowings, approximately $68.3 million
of letters of credit outstanding and approximately $126.3 million of
undrawn availability under the New Credit Facility. See "Description of
Other Indebtedness -- New Credit Facility."
(2) Excludes an after-tax charge of approximately $5.0 million that the Company
intends to record as a result of the Acquisition to write down Company Rigs
and terminal facilities that will be idled or closed.
20
<PAGE> 28
SELECTED FINANCIAL DATA
The selected financial data presented below as of and for each of the
five years in the period ended December 31, 1996 are derived from the Company's
Consolidated Financial Statements which have been audited by Arthur Andersen
LLP, independent public accountants. The selected financial data presented below
as of and for the six months ended June 30, 1996 and 1997 are derived from the
Company's unaudited Consolidated Financial Statements, which in the opinion of
management include all adjustments (consisting only of normal recurring
accruals) necessary to fairly present the information set forth therein. The
results for the six months ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 1997.
The selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements, including the notes thereto, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- ----------------------
1992 1993 1994(1) 1995 1996 1996 1997
-------- --------- --------- --------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $212,655 $ 241,981 $ 297,236 $ 381,464 $ 392,547 $ 200,565 $ 208,969
-------- --------- --------- --------- --------- --------- ---------
Operating expenses:
Salaries, wages and fringe benefits...... 116,901 134,054 157,979 195,952 204,838 105,315 109,634
Operating supplies and expenses.......... 40,154 44,090 51,532 62,179 62,880 31,526 32,563
Purchased transportation................. 2,002 3,223 9,486 32,084 34,533 17,666 19,170
Insurance and claims..................... 9,553 9,745 12,043 16,022 16,849 8,039 8,098
Operating taxes and licenses............. 10,084 12,223 14,301 16,564 16,122 8,381 8,190
Depreciation and amortization............ 8,878 11,683 16,314 25,431 26,425 12,931 13,786
Rent expense............................. 6,051 3,485 3,214 5,354 4,975 2,481 2,470
Communications and utilities............. 1,405 1,456 1,855 3,435 3,111 1,740 1,534
Other operating expenses................. 1,467 1,662 1,781 3,522 4,219 1,431 2,074
-------- --------- --------- --------- --------- --------- ---------
Total operating expenses........... 196,495 221,621 268,505 360,543 373,952 189,510 197,519
-------- --------- --------- --------- --------- --------- ---------
Operating income........................... 16,160 20,360 28,731 20,921 18,595 11,055 11,450
Minority interest in earnings of
consolidated subsidiary.................. (1,034) (858) -- -- -- -- --
Interest expense........................... 6,963 6,042 5,462 11,260 10,720 5,396 5,408
Interest income............................ 61 313 312 707 603 303 357
Other expense, net......................... 169 49 -- -- -- -- --
-------- --------- --------- --------- --------- --------- ---------
Income before income taxes, extraordinary
item and cumulative effect of accounting
change .................................... 8,055 13,724 23,581 10,368 8,478 5,962 6,399
Income tax provision(2).................... 3,249 4,183 9,393 4,222 3,557 2,504 2,688
-------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item and
cumulative effect of accounting change..... $ 4,806 $ 9,541 $ 14,188 $ 6,146 $ 4,921 $ 3,458 $ 3,711
======== ========= ========= ========= ========= ========= =========
OTHER DATA:
EBITDA(3).................................. $ 25,038 $ 32,043 $ 45,045 $ 46,352 $ 45,020 $ 23,986 $ 25,236
Ratio of earnings to fixed charges(4)...... 2.0x 3.0x 4.6x 1.8x 1.7x 2.0x 2.0x
Capital expenditures:
New Rigs and modifications............... $ 11,680 $ 33,848 $ 23,337 $ 11,716 $ 17,092 $ 12,053 $ 5,811
Maintenance and other.................... 1,811 2,149 7,208 6,494 8,880 2,323 1,099
-------- --------- --------- --------- --------- --------- ---------
Total.............................. $ 13,491 $ 35,997 $ 30,545 $ 18,210 $ 25,972 $ 14,376 $ 6,910
======== ========= ========= ========= ========= ========= =========
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................... $ 89,722 $ 119,897 $ 218,806 $ 214,686 $ 211,083 $ 216,903 $ 228,694
Minority interest in consolidated
subsidiary............................... 12,224 -- -- -- -- -- --
Total debt................................. 48,023 44,120 122,894 111,002 95,983 103,259 105,234
Stockholders' equity (deficit)............. (5,944) 35,759 45,835 53,022 56,709 55,563 60,157
</TABLE>
- ----------
(1) Includes the results of Auto Haulaway commencing with its acquisition by
the Company on October 31, 1994.
(2) Prior to the Company's initial public offering in 1993, its predecessors
were not subject to federal or most state income taxes. Accordingly, the
Company's consolidated financial statements for the periods prior to the
initial public offering include a pro forma provision for income taxes.
(3) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item. EBITDA is
presented because it provides useful information regarding a company's
ability to service and/or incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from operating
activities and other consolidated income or cash flow statement data
prepared in accordance with generally accepted accounting principles or as a
measure of profitability or liquidity.
(4) For purposes of computing the ratio of earnings to fixed charges (a)
earnings consist of income before income taxes, extraordinary item,
cumulative effect of accounting change and minority interest in net income
(loss) of
21
<PAGE> 29
unconsolidated entities plus fixed charges, and (b) fixed charges consist of
interest expense, amortization of debt expense and the portion
(approximately one-third) of rental expense that management believes is
representative of the interest component of rental expense.
22
<PAGE> 30
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information has been
derived from the historical financial statements of the Company and Ryder, and
gives pro forma effect to the Acquisition and the Offering as if they had
occurred as of January 1, 1996 with respect to the unaudited condensed pro forma
statements of operations and as of June 30, 1997 with respect to the unaudited
condensed pro forma balance sheet.
The unaudited pro forma financial information does not purport to
represent what the Company's results of operations actually would have been if
each of such transactions had occurred as of the dates indicated or will be for
any future periods. The unaudited pro forma financial information is based upon
assumptions believed appropriate by management of the Company and does not
reflect all potential cost savings or improvements in revenues that the Company
believes could be realized as a result of the Acquisition. However, there can be
no assurance that any of these anticipated savings can be achieved or that the
effects of any such savings will not be offset by unexpected, unforeseen
increases in other costs. The unaudited pro forma financial information should
be read in conjunction with "Selected Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements, including the notes thereto, of the Company
and Ryder included elsewhere in this Prospectus.
The Acquisition was accounted for under the purchase method of
accounting. The total purchase price for the Acquisition has been allocated to
the assets and liabilities acquired based upon their relative fair values at the
closing of the Acquisition, based upon valuation and other studies which are not
yet complete. The allocation of the purchase price reflected herein is subject
to revision when additional information from the valuations and studies become
available. However, the Company does not expect that the effects of the final
allocation will differ materially from those set forth herein.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
ACQUISITION ADJUSTED PRICE PRO FORMA
RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
------- ----------- --------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES ................................. $ 315,156 $(2,663)(2) $ 315,696 $ 208,969 $ -- $ 524,665
3,203(3)
--------- ------- --------- --------- ------- ---------
OPERATING EXPENSES
Depreciation and amortization .......... 19,818 (190)(2) 19,636 13,786 108(5) 33,530
8(3)
Other operating expenses ............... 285,497 (2,637)(2) 286,013 183,733 (6,340)(6) 463,406
--------- ------- --------- --------- ------- ---------
Total operating expenses 305,315 334 305,649 197,519 (6,232) 496,936
--------- ------- --------- --------- ------- ---------
OPERATING INCOME ......................... 9,841 206 10,047 11,450 6,232 27,729
--------- ------- --------- --------- ------- ---------
OTHER INCOME (EXPENSE)
Interest expense ....................... (334) (1)(3) (335) (5,408) (5,827)(7) (11,570)
Interest income ........................ 1,228 (137)(2) 1,091 357 -- 1,448
Other income (expense), net ............ 738 14(2) 752 -- -- 752
--------- ------- --------- --------- ------- ---------
1,632 (124) 1,508 (5,051) (6,089) (9,370)
--------- ------- --------- --------- ------- ---------
INCOME BEFORE INCOME
TAXES .................................. 11,473 82 11,555 6,399 405 18,359
INCOME TAX PROVISION ..................... 3,818 724(4) 4,542 2,688 (1,032) 8,262
--------- ------- --------- --------- ------- ---------
NET INCOME (LOSS) ........................ $ 7,655 $ (642) $ 7,013 $ 3,711 $ (627) $ 10,087
========= ======= ========= ========= ======= =========
EARNINGS PER SHARE ....................... $ 0.48 $ 1.31
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,725 7,725
EBITDA(8)................................. $ 30,435 $ 25,236 $ 62,011
========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
23
<PAGE> 31
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
OFFERING AND
PURCHASE
ACQUISITION ADJUSTED PRICE PRO FORMA
RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
--------- ----------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES .................................... $ 583,292 $(15,178)(2) $ 568,114 $ 392,547 $ -- $ 960,661
--------- -------- --------- --------- ------- ---------
OPERATING EXPENSES
Depreciation and amortization ............. 38,838 (718)(2) 38,120 26,425 115(5) 64,660
Restructuring charge ...................... 18,328 (7,023)(2) 11,305 -- -- 11,305
Other operating expenses .................. 543,315 (25,216)(2) 518,099 347,527 (12,678)(6) 852,948
--------- ------- --------- --------- ------- ---------
Total operating expenses .......... 600,481 (32,957) 567,524 373,952 (12,563) 928,913
--------- ------- --------- --------- ------- ---------
OPERATING (LOSS) INCOME ..................... (17,189) 17,779 590 18,595 12,563 31,748
--------- ------- --------- --------- ------- ---------
OTHER INCOME (EXPENSE)
Interest expense .......................... (866) -- (866) (10,720) (11,702)(7) (23,288)
Interest income ........................... 895 (282)(2) 613 603 -- 1,216
Other income (expense), net ............... 2,470 2(2) 2,472 -- -- 2,472
--------- ------- --------- --------- ------- ---------
2,499 (280) 2,219 (10,117) (11,702) (19,600)
--------- ------- --------- --------- ------- ---------
(LOSS) INCOME BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM ...................................... (14,690) 17,499 2,809 8,478 861 12,148
INCOME TAX (BENEFIT)
PROVISION ................................. (1,256) 3,837(4) 2,581 3,557 336(4) 6,474
--------- ------- --------- --------- ------- ---------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEM ........................ $ (13,434) $13,662 $ 228 $ 4,921 $ 527 $ 5,674
========= ======= ========= ========= ======= =========
EARNINGS PER SHARE .......................... $ 0.64 $ 0.73
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING ........................ 7,725 7,725
EBITDA(8) ................................... $ 41,182 $ 45,020 $ 98,880
========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
24
<PAGE> 32
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
OFFERING AND
ACQUISITION ADJUSTED PURCHASE PRICE PRO FORMA
RYDER(9) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
---------- ----------- -------- --------- -------------- -------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ................ $ 6,047 $ 170(10) $ 1,217 $ 4,409 $ -- $ 5,626
(5,000)(11)
Short-term investments ................... -- -- -- 8,821 -- 8,821
Receivables, net of allowance for
doubtful accounts ...................... 46,396 650(10) 47,046 28,325 -- 75,371
Deferred income taxes .................... 6,509 (293)(11) 11,608 -- -- 11,608
4,433(12)
959(13)
Other current assets ..................... 17,552 (7,861)(11) 9,691 18,469 -- 28,160
--------- -------- --------- --------- ------- -----------
Total current assets .............. 76,504 (6,942) 69,562 60,024 -- 129,586
--------- -------- --------- --------- ------- -----------
PROPERTY AND EQUIPMENT, net ................ 161,299 46(10) 159,122 126,364 14,500(17) 299,986
(2,223)(11)
OTHER ASSETS
Goodwill, net ............................ 42,550 -- 42,550 33,800 14,055(18) 90,405
Other .................................... 10,862 (4,695)(11) 6,167 8,506 5,350(19) 20,023
--------- -------- --------- --------- ------- -----------
Total other assets ................ 53,412 (4,695) 48,717 42,306 19,405 110,428
--------- -------- --------- --------- ------- -----------
Total assets ...................... $ 291,215 $ 13,814) $ 277,401 $ 228,694 $33,905 $ 540,000
========= ======== ========= ========= ======= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt ..... $ -- $ -- $ -- $ 8,248 $ -- $ 8,248
Trade accounts payable ................... 21,246 710(10) 21,956 12,910 -- 34,866
Accrued liabilities ...................... 57,657 50(10) 69,845 37,433 13,082(20) 120,360
(3,329)(11)
12,909(14)
2,558(15)
Total current
liabilities ..................... 78,903 12,898 91,801 58,591 13,082 163,474
--------- -------- --------- --------- ------- -----------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current maturities ..... 805 -- 805 96,986 150,000(21) 223,541
(24,250)(22)
DEFERRED INCOME TAXES ...................... 26,300 765(11) 9,274 8,700 5,655(23) 23,629
(17,791)(12)
OTHER LONG-TERM LIABILITIES ................ 20,615 79(10) 65,665 4,260 (726)(24) 69,199
(1,419)(11)
46,390(14)
STOCKHOLDERS' EQUITY ....................... 164,592 (54,736)(16) 109,856 60,157 (109,856)(24) 60,157(25)
--------- -------- --------- --------- -------- -----------
Total liabilities and stockholders'
equity ......................... $ 291,215 $(13,814) $ 277,401 $ 228,694 $ 33,905 $ 540,000
========= ======== ========= ========= ======== ===========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
25
<PAGE> 33
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(1) Represents the historical results of operations of Ryder Automotive
Carrier Services, Inc. ("RACS") for the period indicated.
(2) Elimination of the operations of RACS not included in the Acquisition.
(3) Addition of the operations of RC Management Corp. ("RCMC"), which was
acquired as part of the Acquisition. RCMC began operations in January
1997.
(4) Reflects the income tax effect of the adjustments.
(5) Reflects the net effect of the change in goodwill amortization expense
related to the Acquisition, as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
(a) Increased goodwill amortization expense based upon the
preliminary purchase price allocation of the Acquisition, using
the straight-line method over a 40-year life................... $ 708 $ 1,415
(b) Elimination of goodwill amortization expense from
Ryder's operations............................................. (600) (1,300)
------ --------
$ 108 $ 115
====== ========
</TABLE>
(6) Represents elimination of the following costs:
(a)Salaries and wages, rent expenses and other operating expenses to be
eliminated as a result of closing duplicate terminals and offices.
(b)Management and other fees allocated to Ryder by Ryder System which
will not be incurred by Ryder under the Company's ownership.
(7) Reflects interest expense at 8 5/8%, elimination of interest expense on
amounts under the revolving credit facility to be repaid with proceeds
of the Original Offering, and amortization of deferred debt costs
incurred in connection with the issuance of the Old Notes.
(8) Represents income before interest expense, interest income, income tax
provision and depreciation and amortization. EBITDA is presented
because it provides useful information regarding a company's ability to
service and/or incur debt. EBITDA should not be considered in isolation
from or as a substitute for net income, cash flows from operating
activities and other consolidated income or cash flow statement data
prepared in accordance with generally accepted accounting principles or
as a measure of profitability or liquidity.
(9) Represents the historical assets and liabilities of RACS as of June 30,
1997.
(10) Addition of the assets and liabilities of RCMC, which was acquired as
part of the Acquisition.
(11) Elimination of the assets and liabilities of RACS not included in the
Acquisition.
(12) Deferred income tax assets and liabilities related to the assumption by
Ryder of certain insurance liabilities from Ryder System as part of the
Acquisition (see note 14).
(13) Effect on deferred income taxes related to severance liability (see
note 15).
(14) Reflects the transfer to Ryder of certain insurance liabilities,
including workers' compensation, post employment benefits other than
pensions, and general liability, previously maintained on the books of
Ryder System.
(15) Severance liability related to termination of certain Ryder personnel
in connection with the Acquisition.
(16) Effect on stockholders' equity of pro forma adjustments to assets and
liabilities as follows:
<TABLE>
<S> <C> <C>
(a) Insurance liabilities assumed from Ryder System, net of deferred taxes...... $ (37,075)
(b) Severance liability assumed from Ryder System, net of deferred taxes........ (1,599)
(c) Assets and liabilities of RACS not acquired................................. (16,089)
(d) Assets and liabilities of RCMC acquired..................................... 27
----------
Total effect on stockholders' equity.............................. $ (54,736)
==========
</TABLE>
(17) Write-up of Ryder property and equipment to fair market value.
26
<PAGE> 34
(18) Adjustment to goodwill reflects:
<TABLE>
<S> <C> <C>
(a) Addition of goodwill related to the Acquisition $ 56,605
(b) Elimination of goodwill recorded (42,550)
-----------
Total effect on goodwill................................. $ 14,055
===========
</TABLE>
(19) Estimated Offering expenses to be deferred and amortized over the life
of the Notes.
(20) Estimated additional liabilities incurred in connection with the
Acquisition, including severance and Acquisition costs.
(21) Reflects the issuance of the Old Notes.
(22) Repayment of amounts outstanding under the revolving credit facility
with a portion of the proceeds of the Original Offering.
(23) Deferred income taxes, recorded at 39%, related to the write-up of
Ryder property and equipment to fair market value.
(24) Elimination of Ryder advances to affiliates and stockholders' equity.
(25) Excludes an after-tax charge of approximately $5.0 million the Company
recorded as a result to write down Company Rigs and terminal
facilities idled or closed as a result of the Acquisition.
27
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company provides automobile and light truck transportation and
logistics services to automotive manufacturers and retailers. The Company's
primary business is the transportation of new automobiles and light trucks
principally from manufacturing plants and rail heads to dealerships in trip
lengths generally under 200 miles.
The Company receives revenues from the transportation of vehicles on a
per unit basis. Revenue is comprised of a fixed rate per unit and a variable
rate on a per mile transported basis to account for differences in the length of
the haul. Accordingly, both the number of units transported, as well as the
distance vehicles are transported, are the primary components of revenue. The
Company's cost structure is highly variable with salaries, wages and fringe
benefits comprising greater than 50% of total revenue.
In October 1994, the Company acquired Auto Haulaway, the largest motor
carrier of new automobiles and light trucks in Canada. Accordingly, since the
acquisition of Auto Haulaway, the Company has derived approximately 30% of its
revenues in Canada with the balance in the United States. The following table
summarizes historic new vehicle production and sales in the United States and
Canada, the primary drivers of the Company's revenues.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------ ------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NEW VEHICLE PRODUCTION
United States................................................. 11.9 11.6 11.5 6.1 6.1
Percent increase (decrease) over prior year................... 12.6% (2.3)% (0.9)% -- 0.3%
Canada........................................................ 2.3 2.4 2.4 1.3 1.4
Percent increase over prior year.............................. 2.8% 3.6% 0.0% -- 8.7%
NEW VEHICLE SALES
United States................................................. 15.0 14.7 15.1 7.8 7.6
Percent increase (decrease) over prior year 8.3% (2.2)% 2.5% -- (2.0)%
Canada........................................................ 1.2 1.1 1.2 0.6 0.7
Percent increase (decrease) over prior year................... 5.3% (7.6)% 3.5% -- 16.2%
</TABLE>
- ----------
Source: DRI/McGraw-Hill.
Since 1996, the Company has made a significant commitment to developing
its logistics business in response to its customers' needs for integrated
automotive distribution services beyond the traditional movement of vehicles.
Over the past two years, the Company has incurred significant start-up costs to
develop its logistic business which is operated through a subsidiary, Axis
Group, Inc. ("Axis"). Management believes these start-up costs are largely
complete.
During 1995, the Company's operations were impacted by the lower sales
of automobiles and light trucks, particularly in Canada, and lower new vehicle
production in the United States. While new vehicle sales improved in the United
States and Canada in 1996, the Company's operations were negatively impacted by
decreased new vehicle production in the United States and by an increase in fuel
costs which impacted operating earnings by approximately $2.5 million, as well
as by the start-up costs of Axis which totaled approximately $3.0 million in
1996. In the first half of 1997, the strength of the Canadian market offset both
slight weakness in United States vehicle sales and approximately $2.4 million of
continued start-up losses of Axis.
Capital expenditures primarily consist of expenditures for the
acquisition and maintenance of Rigs, as well as proprietary information systems.
Capital expenditures for Rigs are utilized to maintain the Company's fleet and
to minimize operating costs. Since 1994, the Company has spent approximately
$52.2 million to purchase new 75-foot Rigs and to modify existing Rigs primarily
to lengthen them to 75 feet, the maximum length allowed by most
28
<PAGE> 36
governmental regulations, in order to increase fleet efficiency. The Company's
proprietary information systems are designed to support the Company's operations
by providing timely management information and sophisticated data exchange with
the Company's customers. Since 1994, the Company has spent $5.4 million to
enhance the capability of its proprietary information systems. The Company's
information systems also facilitate the efficient integration of new operations
into the Company's infrastructure, including those of Auto Haulaway and Ryder.
The Company believes that the Acquisition will provide the Company with
significant opportunities for cost reduction. The Company expects to achieve
cost savings by: (i) eliminating duplicative administrative functions; (ii)
integrating Ryder's operations into its proprietary information systems; and
(iii) consolidating certain terminal locations.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------- -------------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and fringe benefits.............. 53.1 51.4 52.2 52.5 52.5
Operating supplies and expenses.................. 17.3 16.3 16.0 15.7 15.6
Purchased transportation......................... 3.2 8.4 8.8 8.8 9.2
Insurance and claims............................. 4.1 4.2 4.3 4.0 3.9
Operating taxes and licenses..................... 4.8 4.3 4.1 4.2 3.9
Depreciation and amortization.................... 5.5 6.7 6.7 6.5 6.6
Rent expense..................................... 1.1 1.4 1.3 1.2 1.2
Communications and utilities..................... 0.6 0.9 0.8 0.9 0.8
Other operating expenses......................... 0.6 0.9 1.1 0.7 0.8
------- ------- ------- ------- -------
Total operating expenses................. 90.3 94.5 95.3 94.5 94.5
------- ------- ------- ------- -------
Operating income................................... 9.7 5.5 4.7 5.5 5.5
------- ------- ------- ------- -------
Other income(expense):
Interest expense................................. (1.8) (3.0) (2.8) (2.7) (2.6)
Interest income.................................. 0.1 0.2 0.2 0.2 0.2
------- ------- ------- ------- -------
Total other income (expense)............. (1.7) (2.8) (2.6) (2.5) (2.4)
------- ------- ------- ------- -------
Income before income taxes and extraordinary item.. 8.0 2.7 2.1 3.0 3.1
Income tax provision............................... (3.2) (1.1) (0.9) (1.3) (1.3)
------- ------- ------- ------- -------
Income before extraordinary item................... 4.8% 1.6% 1.2% 1.7% 1.8%
======= ======= ======= ======= =======
</TABLE>
Six months ended June 30, 1997 compared to six months ended June 30, 1996
Revenues were $209.0 million for the first six months of 1997 compared
to $200.6 million for the first six months of 1996, an increase of $8.4 million,
or 4.2%. The increase in revenues was primarily due to an increase in the number
of vehicles the Company delivered together with an increase in the revenue
generated per vehicle delivered. The Company delivered approximately 2% more
vehicles during the first six months of 1997 than during the first six months of
1996. A 13% increase in vehicle deliveries in Canada due to increased Canadian
new vehicle production and sales more than offset a 4% decline in vehicle
deliveries in the United States. In addition, the revenue generated per vehicle
delivered for the first six months of 1997 increased approximately 2% from the
first six months of 1996 due to an increase in longer haul dealer deliveries.
The operating ratio (operating expenses as a percentage of revenues)
for the first six months of 1997 was 94.5%, the same as in the first six months
of 1996. Additional operating income resulting from the increase in revenues was
offset by continued start-up losses of Axis.
The following is a discussion of significant changes in the Company's
major expense categories:
Salaries, wages and fringe benefits were 52.5% of revenues in both the
first six months of 1997 and 1996. However, purchased transportation increased
from 8.8% of revenues for the first six months of 1996 to 9.2% of revenues
during the first six months of 1997 due to the increased use of owner-operators,
together with an increase in the vehicles the Company had delivered by other
carriers.
29
<PAGE> 37
Operating taxes and licenses decreased from 4.2% of revenues during the
first six months of 1996 to 3.9% of revenues during the first six months of
1997. The decrease was primarily due to a decline in the operating taxes and
licenses the Company paid for its fleet of Rigs due to a decrease in the number
of active Rigs the Company operated.
1996 Compared to 1995
Revenues were $392.6 million in 1996 compared to $381.5 million in
1995, an increase of $11.1 million, or 2.9%. The increase in revenues was
primarily due to a 5% increase in the number of vehicles delivered, offset in
part by a decrease in the revenue generated per vehicle delivered due to an
increase in the percentage of shorter haul deliveries.
The operating ratio for 1996 was 95.3%, compared to 94.5% in 1995. The
increase was primarily due to planned startup costs for Axis, together with
increased fuel costs and an increase in the percentage of light trucks hauled by
the Company, which led to lower load averages and increased costs.
The following is a discussion of the changes in the Company's major
expense categories:
Salaries, wages and fringe benefits increased from 51.4% of revenues in
1995 to 52.2% of revenues in 1996. This change as a percent of revenues was
primarily due to the addition of payroll costs for Axis, increased costs
resulting from strikes at General Motors during March and October 1996 and the
severe winter weather during the first quarter of 1996.
Operating supplies and expenses as a percentage of revenues decreased
from 16.3% in 1995 to 16.0% in 1996, despite a rise in diesel fuel prices. This
decrease is primarily due to an increase in the units delivered by owner-
operators combined with the use of newer, more efficient equipment which has
reduced the costs to operate the Company's Rigs and has increased fuel
efficiency. Owner-operators are responsible for all costs to operate their Rigs
and such costs are included in purchased transportation. In addition, the
Company implemented productivity and efficiency programs that reduced operating
expenses.
Purchased transportation increased from 8.4% of revenues in 1995 to
8.8% in 1996. This is mainly due to an increase in the number of units hauled by
owner-operators and by other carriers for the Company as part of an exchange
program to improve the backhaul ratio.
Interest expense for 1996 decreased to $10.7 million compared to $11.3
million in 1995. This decrease is primarily the result of reductions in
long-term debt during the year due to debt repayments.
The effective tax rate increased from approximately 41% of pre-tax
income in 1995 to approximately 42% of pre-tax income in 1996. This increase was
due to higher state taxes.
1995 Compared to 1994
Revenues were $381.5 million in 1995 compared to $297.2 million in
1994, an increase of $84.3 million, or 28.4%. The increase in revenues was
primarily attributable to the acquisition of Auto Haulaway which was completed
October 31, 1994. Auto Haulaway contributed $123.4 million of revenues in 1995.
The additional revenues gained from the acquisition of Auto Haulaway were offset
in part by decreased revenues from the Company's U.S. operations due to a
decrease in vehicles delivered arising from a weaker U.S. auto market compared
to 1994.
The operating ratio for 1995 was 94.5%, compared to 90.3% in 1994. The
increase was primarily due to decreases in vehicles delivered because of
decreases in new vehicle production and sales. U.S. car and light truck sales
for 1995 decreased approximately 2% from 1994 and Canada's car and light truck
sales were approximately 8% below that of 1994. In addition, 1995 new vehicle
production in Canada for Auto Haulaway's largest customer decreased
approximately 22% from 1994, mainly due to model changeovers. New vehicle
production in the U.S. and Canada during 1995 was impacted by numerous model
changeovers as well as slower than expected ramp-up of
30
<PAGE> 38
production after the model changeovers at two of the Company's primary
customers. As a result of the decline in new vehicle production and sales, the
number of vehicles delivered by Auto Haulaway during 1995 decreased 13% compared
to 1994.
Salaries, wages and fringe benefits decreased from 53.1% of revenues in
1994 to 51.4% of revenues in 1995. This decrease as a percentage of revenue was
primarily because Auto Haulaway utilizes approximately 200 owner-operators.
Owner-operators are either paid a percentage of the revenues they generate or
receive normal driver pay plus a truck allowance, and amounts earned by the
owner-operators are included as purchased transportation expense. Prior to the
acquisition of Auto Haulaway, all of the Company's drivers were employees of the
Company.
Operating supplies and expenses as a percentage of revenues decreased
from 17.3% in 1994 to 16.3% in 1995. This decrease is primarily attributable to
the inclusion of a full year of Auto Haulaway's operating results as Auto
Haulaway's owner-operators are responsible for all costs to operate their Rigs,
so the operating supplies and expenses related to the vehicles delivered by the
owner-operator are greatly reduced.
Purchased transportation increased from 3.2% of revenues in 1994 to
8.4% in 1995. As discussed above, this increase is the result of Auto Haulaway
utilizing owner-operators to deliver vehicles.
Depreciation and amortization expense increased from 5.5% of revenues
in 1994 to 6.7% of revenues in 1995 mainly due to the acquisition of additional
Rigs together with the additional goodwill amortization resulting from the
acquisition of Auto Haulaway.
Interest expense for 1995 increased to $11.3 million compared to $5.5
million in 1994. This increase was due to the increase in long-term debt
resulting from the acquisition of Auto Haulaway and due to a rise in interest
rates.
The effective tax rate increased from approximately 40% of pre-tax
income in 1994 to approximately 41% of pre-tax income in 1995. This increase was
due to higher effective tax rates in Canada.
Liquidity and Capital Resources
The Company's sources of liquidity are funds provided by operations and
borrowings under the New Credit Facility. The Company's liquidity needs are for
the acquisition and maintenance of Rigs and terminals, the payment of operating
expenses and the payment of interest on and repayment of long-term debt.
Net cash provided by operating activities totaled $30.1 million for
1995, $31.1 million for 1996, and $14.2 million for the six months ended June
30, 1997. The increase in cash flows from operations during 1996 was mainly due
to changes in working capital. Net cash used in investing activities totaled
$18.0 million for 1995, $24.5 million for 1996, and $21.0 million for the six
months ended June 30, 1997. The increase during 1996 was primarily due to an
increase in the number of new Rigs that were acquired, modifications of existing
equipment, and renovations and additions to terminal and maintenance facilities.
The increase in cash used in investing activities during the first six months of
1997 is due to the acquisition of Kar-Tainer for approximately $13.1 million.
Net cash used in financing activities was $12.8 million for 1995 and $15.7
million during 1996, and $9.3 million was provided by financing activities for
the six months ended June 30, 1997. These amounts include repayments of
long-term debt of $12.0 million in 1995 and $57.7 million in 1996. The
acquisition of Kar-Tainer for approximately $13.1 million in April 1997 was
financed through borrowings of long-term debt. In February 1996, the Company
issued $40.0 million principal amount of 12% senior subordinated notes due
February 1, 2003 (the "Senior Subordinated Notes"), the proceeds of which were
used to repay long-term debt. The Senior Subordinated Notes were issued to ease
restrictions and provide increased flexibility under the Company's existing
revolving credit facility.
The Company entered into the New Credit Facility, concurrent with the
closing of the Offering. The New Credit Facility allows the Company to borrow up
to $230.0 million under a revolving line of credit and a five-year maturity. The
Company has approximately $35.5 million of borrowings, approximately $68.3
million of letters of credit outstanding and approximately $126.3 million of
undrawn availability under the New Credit Facility. See "Description of Other
Indebtedness--New Credit Facility."
31
<PAGE> 39
The Company had $59.7 million of borrowings outstanding under its
revolving credit facility at June 30, 1997 bearing interest at a weighted
average interest rate of 7.5%. The Company has entered into interest rate cap
agreements to cap a portion of the outstanding borrowings under its existing
revolving credit facility at June 30, 1997. Such interest rate cap agreements
are required under the terms of its existing revolving credit facility.
Seasonality and Inflation
The Company generally experiences its highest revenues during the
second and fourth quarters of each calendar year due to the shipment of new
models and because the first and third quarters are impacted by manufacturing
plant downtime. During the past three years, inflation has not significantly
affected the Company's results of operations. The following table sets forth
certain operating data of the Company by quarter for each of 1996 and 1995 (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues................................... $ 93.4 $ 107.2 $ 87.6 $ 104.4 $ 392.6
EBITDA(1).................................. 9.5 14.5 7.7 13.3 45.0
Operating income........................... 3.1 8.0 1.0 6.5 18.6
Income (loss) before extraordinary item.... 0.4 3.1 (0.9) 2.3 4.9
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- -------- -------- -------- --------
Revenues................................... $101.1 $ 102.3 $ 82.2 $ 95.9 $ 381.5
EBITDA(1).................................. 12.5 13.9 7.1 12.9 46.4
Operating income........................... 6.3 7.6 0.6 6.4 20.9
Income (loss).............................. 2.1 2.9 (1.2) 2.4 6.2
</TABLE>
- ----------
(1) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item.
32
<PAGE> 40
BUSINESS
INDUSTRY OVERVIEW
The new vehicle transportation business involves the transportation of new
vehicles from manufacturing plants to new vehicle dealers. Vehicles are usually
shipped by rail from the manufacturing plant to rail ramps throughout the United
States where motor carriers, such as the Company, handle final delivery to
dealers. Vehicles destined for dealers within a radius of approximately 250
miles from the plant are usually shipped by truck directly to the dealer. In
each case, the rail or motor carrier generally is responsible for loading the
vehicles on railcars or trailers and for any damages incurred while the vehicles
are in the carrier's custody. Automobiles manufactured in Mexico and Canada are
usually shipped into the United States by rail and delivered from rail ramps to
dealers by truck. Automobiles manufactured in Europe and Asia for sale in the
United States are transported into the United States by ship and are delivered
directly to dealers from seaports by truck or shipped by rail to rail ramps and
delivered by trucks to dealers.
The current trend of automotive manufacturers is to reduce the number of
suppliers with which they do business in an effort to reduce their manufacturing
and inventory costs, as well as to improve the quality of their products.
Manufacturers are increasingly demanding quality, service and cost efficiencies
from the companies that transport their vehicles. For example, manufacturers
require that their automotive carriers utilize sophisticated information systems
to reduce the costs of the manufacturer through measures such as tracking the
location of vehicles being transported, thereby improving inventory management.
The remarketed vehicle transportation business involves the transportation of
used and previously leased vehicles and vehicles sold through the automotive
auction process. Vehicles are usually shipped from dealers or auctions to
reconditioning centers or other used car dealers. There has recently been
consolidation in the remarketed vehicle sector due to the rapid growth of the
used car superstores, such as AutoNation and DriversMart, which has increased
the volume of vehicles being delivered to the used car superstores and their
reconditioning centers.
THE COMPANY
Prior to the Acquisition, the Company, founded in 1934, was the second
largest motor carrier in North America specializing in the transportation of new
and used automobiles and light trucks for all of the major domestic and foreign
automotive manufacturers. As a result of the Acquisition, the Company is now the
largest motor carrier of automobiles and light trucks in North America. The
Company offers a full range of automotive delivery services including
transporting new, used and off-lease vehicles to dealers from plants, rail
ramps, ports and auctions, and providing vehicle rail-car loading and unloading
services. The Company also provides logistics solutions and other services to
the new and used vehicle distribution market and other segments of the
automotive industry, including the rapidly growing used car superstore market.
Allied and Ryder together hauled approximately 65% of the new vehicles sold in
the United States and Canada in 1996 and had pro forma 1996 revenues nearly five
times greater than the Company's closest competitor. For the year ended December
31, 1996, after giving pro forma effect to the Acquisition, revenues and EBITDA
(as defined herein) of the Company would have been approximately $960.7 million
and $98.9 million, respectively.
The Company operates primarily in the short-haul segment of the
automotive transportation industry with an average length of haul of less than
200 miles. The Company delivers new and used vehicles throughout the United
States and Canada for all of the major domestic and foreign manufacturers of
automobiles and light trucks and certain of the used car superstores. General
Motors, Ford and Chrysler represent the Company's largest customers, accounting
for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues.
The Company also provides services to all of the major foreign manufacturers,
including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi.
The Company also provides logistics solutions that complement its new
and used vehicle distribution services operations and is pursuing additional
opportunities in the growing remarketed vehicle sector, which includes the
delivery of used and previously leased vehicles and vehicles sold through the
automotive auction process. For example, in early 1997 Ryder entered into
agreements with AutoNation and DriversMart to provide transportation logistics
services for the movement of vehicles to their reconditioning centers and
stores, and in August 1997 Allied
33
<PAGE> 41
entered into a contract with Aucnet to provide transportation logistics services
relating to the movement of vehicles sold through live interactive auctions and
bulletin board sales on the Internet.
KEY STRENGTHS
The Company's key strengths and distinguishing characteristics, which
management believes have been enhanced as a result of the Acquisition, include
the following:
LEADING MARKET POSITION. The Company has become the largest motor
carrier of automobiles and light trucks in North America as a result of the
Acquisition. Allied and Ryder together hauled approximately 65% of the new
vehicles sold in the United States and Canada in 1996 and had 1996 pro forma
revenues nearly five times greater than the Company's closest competitor. The
Company believes that its significant market position upon consummation of the
Acquisition, combined with its specialized equipment and service, will
strengthen the Company's position as a leader in the automotive transportation
industry.
LONG-TERM CUSTOMER RELATIONSHIPS. Over the past six decades, the
Company has built a reputation as a reliable vehicle transporter and, as a
result, has developed and maintained long-term relationships with its major
customers. For example, the Company has been serving Ford since 1934 and
Chrysler since 1979, while Ryder has been serving General Motors since 1914.
These long-term relationships, combined with consistent quality service, have
resulted in the Company and Ryder together hauling more than 50% of General
Motors', Ford's and Chrysler's 1996 North American production. The Company
believes that its long-term relationships, along with the integration of its
information systems with those of its customers, provide the Company with a
significant competitive advantage.
PROPRIETARY INFORMATION SYSTEMS. The Company believes that its
commitment to being a leader in developing proprietary information systems
enables it to better serve its customers and reduce costs through improved
efficiencies. For example, the Company maintains proprietary information systems
that allow its customers to track the location of vehicles being transported by
the Company, thereby improving inventory management and reducing costs
associated with the delivery process. Additionally, through EDI capabilities,
the Company communicates directly with manufacturers throughout the vehicle
delivery process and electronically bills and collects from its customers,
significantly decreasing cycle time. The Company believes that this is
particularly important as the major manufacturers evaluate automotive carriers
on the basis of such factors as the number of error-free exchanges of
information, cycle time for receiving information, and the security of
information systems.
EMPHASIS ON PRODUCTIVITY IMPROVEMENTS. The Company continually seeks to
enhance and improve performance and productivity through measures such as
efficient management of its fleet of Rigs, the use of performance improvement
programs for employees, and information systems development. Approximately 94%
of the Company's Rigs are 75-foot models, the maximum length allowed by most
governmental regulations, which enables the Company to haul a greater number of
vehicles per load. Additionally, the Company has implemented a management
strategy designed to increase the productivity of its employees through various
programs which recognize employee performance, such as rewarding damage-free
deliveries, employee efficiency and driver safety. During the first six months
of 1997, the Company maintained a damage-free delivery rate of 99.6%.
EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT OWNERSHIP INTEREST. The
Company's management team provides a depth and continuity of experience. The
Company's senior management group averages over 20 years experience in the
automotive transportation industry with certain officers having over 30 years
experience with the Company. Additionally, the Company's management team owns an
aggregate of approximately 49% of the outstanding common stock of the Company.
Growth Strategy
The Company's objective is to consistently meet its customers' needs by
maintaining its position as a leading provider of high quality and cost
effective automotive distribution services. The following are the primary
elements of the Company's strategy to continue to enhance revenue growth and
profitability:
34
<PAGE> 42
INCREASE SHARE OF USED VEHICLE TRANSPORTATION MARKET. The Company believes
it can generate additional revenue by continuing to pursue opportunities in the
growing remarketed vehicle sector, which is undergoing significant
consolidation. The remarketed vehicle sector includes the delivery of used and
previously leased vehicles and vehicles sold through the automotive auction
process. The Company has been aggressively pursuing business from the used car
superstores, which represents one of the fastest growing sectors of the
automotive industry, as well as off-lease companies and auto auctions. For
example, the Company recently entered into a contract with Aucnet to provide
transportation logistics services for the movement of vehicles sold through live
interactive auctions and bulletin board sales on the Internet, and Ryder has
recently entered into agreements with AutoNation and DriversMart to provide
logistics services for the movement of vehicles to their reconditioning centers
and stores.
EXPAND SHARE OF NEW VEHICLE TRANSPORTATION MARKET. The Company believes it
can capture a larger percentage of its major customers' North American
production volume by building upon existing relationships and leveraging its
reputation for providing high-quality service, value-added services and
competitive pricing, while expanding the breadth of services offered to its
customers. The Company also believes it can increase its business with existing
customers by utilizing its expansive terminal locations and its sophisticated
information systems to deliver vehicles more efficiently and cost effectively.
REALIZE OPERATING EFFICIENCIES. The Company continually focuses on
increasing operating efficiencies without compromising the quality or range of
its services. Allied has identified the following areas which, as a result of
the Acquisition, provide significant savings potential:
- Optimize Terminal Network. The Company plans to consolidate
approximately 19 terminals, or approximately 14% of the combined
companies' terminal locations, which are located in close proximity to
one another. The consolidation of these terminals will reduce operating
and terminal overhead costs. In addition, the Company believes that
additional cost savings can be achieved by combining terminal
administrative functions.
- Improve Productivity. Over the past decade, the Company has implemented
performance improvement programs at its terminal locations which have
resulted in reduced operating costs. The Company intends to implement
these programs at the former Ryder locations. In addition, the Company
believes it will be able to increase Rig utilization through the
consolidation of terminal locations and through the increased backhaul
potential that the Company believes will result from the Acquisition.
These actions are expected to reduce the number of Rigs the Company is
required to operate and result in reduced operating costs.
- Integration of Proprietary Information Systems. The Company intends to
integrate Ryder's information systems with its own proprietary
information systems. This is expected to result in increased operating
efficiencies and reduced administrative costs.
- Centralize Administrative Functions. The Company's administrative
functions are centralized and performed at its corporate headquarters in
Decatur, Georgia. The Company intends to combine most of Ryder's central
office functions with the Company's in order to eliminate redundant
functions and reduce costs.
CONTINUE TO INTRODUCE COMPLEMENTARY SERVICES. Over the past several years,
the Company and Ryder have made a significant commitment to providing logistics
solutions and other services to their existing customers and other segments of
the automotive industry utilizing their proprietary information systems and
extensive terminal networks. These services include identifying new and
innovative distribution methods, providing solutions relating to improving the
management of inventory of new and used vehicles, and providing distribution
services relating to the used and remarketed vehicle market. For example, Ryder
has entered into an agreement with Volkswagen to provide port processing and
vehicle distribution services. The Company also believes that significant
opportunities exist for it to provide automotive distribution services to its
existing customers' foreign manufacturing plants through the formation of joint
ventures with established local transportation carriers.
PURSUE SELECTIVE ACQUISITIONS. The Company plans to pursue selective
acquisitions within the automotive distribution services industry. Specifically,
the Company believes that significant opportunities exist to acquire entities
which would enable the Company to provide additional logistics services to the
domestic and international
35
<PAGE> 43
operations of its existing customer base and other global automotive
manufacturers. As the largest motor carrier of automobiles and light trucks in
North America, the Company believes that acquisitions will enable it to leverage
its existing infrastructure and thereby increase profit opportunities. In
October 1994 the Company acquired Auto Haulaway, the largest transporter of
automobiles and light trucks in Canada, for $65.0 million. Allied has
successfully integrated Auto Haulaway's information systems and administrative
functions into those of the Company resulting in significant cost savings. In
addition, the Company acquired Kar-Tainer in April 1997 for $13.1 million to
provide the capability to transport finished and partially completed vehicles
and parts in intermodal containers domestically and internationally and is
currently integrating Kar-Tainer's systems and operations with those of the
Company.
RYDER
Prior to the Acquisition, Ryder, founded in 1914, was North America's
largest motor carrier of new and used automobiles and light trucks offering a
full range of automotive delivery services including transporting new, used and
off-lease vehicles to dealers from plants, railramps, ports and auctions, and
providing vehicle rail-car loading and unloading services. Ryder also provided
logistics solutions and other services to the new and used vehicle distribution
market and other segments of the automotive industry, including the growing used
car superstore market.
As of June 30, 1997, Ryder operated approximately 90 terminal locations
throughout the United States and Canada with a fleet of approximately 3,400
Rigs, including approximately 600 owner-operated Rigs. Ryder provided automotive
distribution services to all of the major domestic and foreign manufacturers.
General Motors represented Ryder's largest customer, accounting for
approximately 49.9% of 1996 revenues. Ryder had also been aggressively pursuing
opportunities that complemented its core automotive distribution services. For
example, Ryder recently entered into agreements with AutoNation to provide
transportation logistics services for the movement of vehicles to their
reconditioning centers and stores and with Volkswagen to provide port processing
services.
During 1996, Ryder undertook a restructuring of its operations in an effort
to improve its profitability and to focus on its core business of transporting
cars and light trucks and related services. The primary components of the
restructuring were (i) to reduce employee headcount through an early retirement
program, (ii) to consolidate administrative functions and (iii) to divest
non-core operations. For example, in February 1997 Ryder sold Blazer Truck
Lines, Inc., a provider of inbound logistics services to the automotive
industry. Additionally, during 1995 and 1996, a number of factors, including
certain special charges and credits, a Teamsters strike at Ryder during 1995,
strikes at certain General Motors' manufacturing plants during 1996, and
increased diesel fuel costs during 1996, limit the comparability of Ryder's
operating performance during this period.
Specifically, 1996 operating results were adversely impacted by a
restructuring charge of approximately $18.3 million ($11.3 million of which is
attributable to the businesses being acquired by the Company), the impact of
strikes at certain General Motors manufacturing plants, which management
estimates to be approximately $5.5 million, and the impact of higher diesel fuel
costs, estimated to be approximately $3.2 million. These charges were offset in
part by asset sale gains which totaled $4.1 million.
In 1995, Ryder's financial results were positively impacted by reduced
insurance costs totaling $2.5 million, an operating tax settlement of $9.9
million and asset sale gains of $10.7 million, offset by the impact of a 32-day
Teamsters strike.
Ryder's results of operations for the six months ended June 30, 1997 have
improved significantly with revenues and EBITDA increasing 6% and 35%,
respectively, over the prior comparable period. The increase in revenues
resulted primarily from a 5% increase in vehicle deliveries. In addition, the
Company believes that Ryder's 1997 results have benefited from the restructuring
initiatives implemented during 1996.
The following table sets forth certain historical financial information of
Ryder for the periods indicated. These results include entities not being
acquired by Allied, as well as the charges and credits discussed above.
Accordingly, such amounts are not necessarily representative of future operating
results. See "Unaudited Pro Forma Financial Information" and Consolidated
Financial Statements of Ryder included elsewhere in this Prospectus.
36
<PAGE> 44
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- ----------------------
1994 1995 1996 1996 1997
--------- --------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues.................................... $ 645,402 $ 594,446 $583,292 $ 297,945 $ 315,156
Operating Income (Loss)..................... 49,850 36,238 (17,189) 622 9,841
EBITDA...................................... 87,422 81,442 24,119 22,499 30,397
Capital Expenditures
New Rigs and modifications................ 39,793 60,628 41,378 18,511 9,395
Maintenance and other..................... 3,996 3,935 3,844 1,909 640
--------- --------- -------- --------- ---------
Total............................. 43,789 64,563 45,222 20,420 10,035
</TABLE>
For the year ended December 31, 1996, the businesses acquired by the Company
generated revenues and EBITDA of $568.1 million and $41.2 million, respectively.
EBITDA includes an $11.3 million charge relating to a restructuring that was
intended to improve Ryder's future operating performance. Such businesses
generated revenues and EBITDA of $315.7 million and $30.4 million, respectively,
for the six months ended June 30, 1997. See "Unaudited Pro Forma Financial
Information."
SERVICES
As a result of the Acquisition, the Company is the largest motor carrier in
North America specializing in the transportation of new and used automobiles and
light trucks for all the major domestic and foreign automotive manufacturers.
Allied and Ryder together participated in the transportation of approximately
65% of the new vehicles sold in the United States and Canada in 1996, including
more than 50% of the North American production of General Motors, Ford and
Chrysler. The Company believes it can capture a larger percentage of its major
customers' North American production by building upon its relationships with
manufacturers and leveraging its reputation for high quality services,
competitive pricing and value-added services. The Company also believes that it
can expand the types of services provided to its existing customers by utilizing
its sophisticated technology in order to deliver vehicles and provide other
services more efficiently and cost effectively than its competitors.
The Company also provides automotive transportation services in the growing
remarketed vehicle sector, which includes the delivery of used and previously
leased vehicles and vehicles sold through the automotive auction process. The
Company has been aggressively pursuing business from the used car superstores.
Ryder recently entered into an agreement with AutoNation to provide logistics
services for the movement of vehicles to its reconditioning centers and stores
and Allied recently entered into a contract with Aucnet to provide
transportation logistics services relating to the movement of vehicles sold
through live interactive auctions and bulletin board sales on the Internet.
Additionally, Ryder entered into an agreement with Volkswagen to provide port
processing and vehicle distribution services.
The Company has made a significant commitment to providing complementary
services to its existing customers and to new customers. The Company is
aggressively pursuing opportunities to provide logistics solutions to customers
in the automotive industry and seeks to leverage its proprietary information
systems and extensive terminal network in order to efficiently provide such
services. These services include identifying new and innovative distribution
methods for customers, providing solutions relating to improving the management
of inventory of new and used vehicles, and providing reconditioning services
relating to the used and remarketed vehicle market. The Company further believes
that significant opportunities exist for it to provide automotive hauling and
other related services to its existing customers' foreign manufacturing plants
through the formation of joint ventures with established local transportation
carriers. For example, through its Kar-Tainer subsidiary, the Company transports
finished and partially completed vehicles and parts in intermodal containers
both domestically and internationally.
CUSTOMER RELATIONSHIPS
The following table sets forth the percentage of 1996 revenues derived from
each major customer:
37
<PAGE> 45
<TABLE>
<CAPTION>
MANUFACTURER ALLIED RYDER PRO FORMA
--------------- --------- --------- ----------
<S> <C> <C> <C>
General Motors............................... 11.1% 49.9% 34.8%
Ford......................................... 53.3 6.9 26.0
Chrysler..................................... 17.9 10.5 13.7
Mazda........................................ 2.5 1.9 2.2
Nissan....................................... 1.8 5.6 4.1
Honda........................................ 2.6 6.3 4.9
Toyota....................................... 2.3 6.4 4.8
Others....................................... 8.5 12.5 9.5
-------- -------- -------
Total.............................. 100.0% 100.0% 100.0%
======== ======== =======
</TABLE>
The Company has contracts with most of its customers. The Company's
contracts with its customers establish rates for the transportation of vehicles
based upon a fixed rate per vehicle transported and a variable rate for each
mile a vehicle is transported. While the contracts generally do not permit the
Company to recover for increases in fuel prices, fuel taxes or labor cost,
certain of the Company's contracts provide for renegotiation in the event
material adverse changes occur. Allied has an agreement with Ford expiring in
May 1999 which provides that Allied is the primary carrier for 24 locations in
the United States and all Canadian locations and a contract with Chrysler
expiring in June 2000, which provides that Allied is the primary carrier for 26
locations throughout the United States and Canada. Ryder operates under a
month-to-month contract with Ford in the United States and Canada and under
various contracts with Chrysler in the United States with terms varying from
month-to-month to those which expire in February 2001. The Company has an
agreement in principal with General Motors to enter into a three-year contract
upon consummation of the Acquisition.
PROPRIETARY MANAGEMENT INFORMATION SYSTEMS
The Company has made a long-term commitment to utilizing technology to serve
its customers. The Company's advanced management information system is a
centralized, fully integrated information system utilizing a mainframe computer
together with client servers. The system is based on a company-wide information
database, which allows the Company to quickly respond to customer information
requests without having to combine data files from several sources. Updates with
respect to vehicle load, dispatch and delivery are immediately available from
all Company locations for reporting to customers and for better control and
tracking of customer vehicle inventories. Through EDI, the Company communicates
directly with manufacturers in the process of delivering vehicles and
electronically bills and collects from manufacturers. The Company also utilizes
EDI to communicate with inspection companies, railroads, port processors and
other carriers.
The Company also utilizes its system to allow it to operate more
efficiently. For example, the Company's information systems automatically design
an optimal load for each Rig, taking into account factors such as the capacity
of the Rig, the size of the vehicles, the route, the drop points, fuel taxes,
applicable weight and height restrictions and the formula for paying drivers.
The system also determines the most economical and efficient load sequence and
drop sequence for the vehicles to be transported.
MANAGEMENT STRATEGY
The Company has adopted a performance management strategy which it believes
contributes to quality, enhanced efficiency, safety and profitability in its
operations. The Company's management strategy and culture is designed to enhance
employee performance through careful selection and continuous training of new
employees, with individual performance goals established for each employee and
performance measured regularly through the Company's management information
system. The Company believes that its performance management strategy is unique
with respect to the role that employees play in the form of participation in
this process.
The Company has developed and implemented various programs to incentivize
and reward increased employee productivity. The various programs developed by
the Company reward damage-free delivery by drivers, driver efficiency and driver
safety. The Company believes that these programs have improved customer and
employee satisfaction and driver related productivity in areas such as
damage-free deliveries, as evidenced by the fact that the Company maintained a
damage-free delivery rate of 99.6% for the first six months of 1997.
During 1997, the Company adopted an economic value added ("EVA") based
performance measurement and incentive compensation system. EVA is the measure
used by the Company to determine incentive compensation for senior management.
EVA also provides management with a measure to gauge financial performance,
allocate capital to appropriate projects, assist in providing valuations in
regard to proposed acquisitions, and evaluate daily
38
<PAGE> 46
operating decisions. The Company believes that the EVA based performance
measurement and incentive compensation system promotes the creation of economic
value and increase shareholder value by aligning the interests of senior
management with that of the Company's shareholders.
SAFETY
The Company's safety department is responsible for training and supervising
personnel to keep safety awareness at its highest level and to minimize injuries
and related lost time. The department rewards drivers who have satisfied safety
performance goals established by the Company. The Company utilizes various forms
of safety equipment, such as cap liners to protect against head injuries, which
have reduced the number and severity of accident-related injuries to its
drivers. Management believes that the Company's safety programs have resulted in
significant cost savings since they have been implemented. For example, lost
time injuries decreased from 526 in 1990 to 453 in 1996, notwithstanding a 65%
increase in the number of employees during this period.
RISK MANAGEMENT AND INSURANCE
The Company's risk management department is responsible for defining risks
and securing appropriate insurance programs and coverages at cost effective
rates. The Company internally administers all claims for auto and general
liability and for workers compensation claims in Alabama, Florida, Georgia,
Missouri, North Carolina, South Carolina, Tennessee and Virginia. Liability
claims are subject to periodic audits by the Company's commercial insurance
carriers. The Company currently retains up to $650,000 of liability for each
claim for workers' compensation and up to $500,000 of liability for automobile
and general liability, including personal injury and property damage claims. In
addition to the $500,000 per occurrence deductible for automobile liability,
there is a $500,000 aggregate deductible for those claims which exceed the
$500,000 per occurrence deductible. The Company also retains up to $250,000 of
liability for each cargo damage claim in the United States. In Canada, the
Company retains up to C$100,000 (approximately U.S. $72,760 at October 9,
1997) of liability for each claim for personal injury, property damage or cargo
damage. Ryder's insurance contracts also provide for substantial deductibles or
indemnifications. If the Company were to experience a material increase in the
frequency or severity of accidents or workers' compensation claims or
unfavorable developments in existing claims, the Company's operating results
could be adversely affected. The Company formed Haul Insurance Limited in
December 1995 as a captive insurance subsidiary to provide insurance coverage to
the Company with respect to its deductibles for workers' compensation and
commercial general liability in the United States and for automobile liability
insurance in the United States and Canada.
EQUIPMENT, MAINTENANCE AND FUEL
As a result of the Acquisition, the Company operates approximately 5,300
Rigs with an average age of 6.9 years. Approximately 73% of such Rigs are
75-foot models. The Company has historically invested heavily in both new
equipment and equipment upgrades, which have served to increase efficiency and
extend the useful life of Rigs. Currently, new 75-foot Rigs cost between
$120,000 and $140,000.
Over the past 10 years, changes in governmental regulations have gradually
permitted the lengthening of Rigs from 55 to 75 feet. This has increased load
factors and improved operating efficiency by permitting the Company to haul more
vehicles with fewer Rigs and employees. The Company has worked closely with
manufacturers to develop specialized equipment to meet the specific needs of
manufacturers.
The Company's Rigs are maintained at 65 shops by approximately 300
maintenance personnel, including supervisors. Rigs are scheduled for regular
preventive maintenance inspections. Each shop is equipped to handle repairs
resulting from inspection or driver write up, including repairs to electrical
systems, air conditioners, suspension, hydraulic systems, cooling systems, and
minor engine repairs. Major engine overhaul and engine replacement can be
handled at larger terminal facilities, while smaller terminals rely on outside
vendors. The trend has been to use engine suppliers' outlets for engine repairs
due to the long-term warranties obtained by the Company.
All of Allied's terminals in the United States have access to a central
parts warehouse through the management information system. The system calculates
maximum and minimum parts inventory quantities based upon usage and
39
<PAGE> 47
automatically reorders parts. The Company intends to implement its management
information system at Ryder terminals during 1998. Minor modifications of
equipment are performed at all terminal locations. Major modifications involving
change in length, configuration or load capacity are performed by the trailer
manufacturers.
In order to reduce fuel costs, the Company purchases approximately 56% of
its fuel in bulk. Fuel is purchased by drivers on the road from a few major
suppliers that offer discounts and central billing.
COMPETITION
The transportation of vehicles in the long-haul segment of the automotive
industry is primarily controlled by rail carriers. In the 1970s and 1980s,
following deregulation of the trucking industry by the Interstate Commerce
Commission and as importers obtained a more significant share of United States
automobile sales, new motor carriers, some without union contracts, began to
compete for automobile traffic. In some instances, these new carriers were
created, or their creation facilitated, by importer interests.
Since the mid-1980s, nearly all transportation has been pursuant to
contracts entered into by negotiation or competitive bid. The competition for
these contracts has been from both rail carriers and union and non-union motor
carriers. As a result, many negotiations and bids have resulted in contracts
that do not allow for recovery of increased costs of labor or fuel over the
contract term and that provide for rate reductions of varying magnitudes.
Two other recent developments are now beginning to have an impact on
competition. The first is the rise in the use of third-party logistics companies
by automotive manufacturers. This is expected to convert further traffic to
competitive bidding and ease entry for less well capitalized, less sophisticated
haulers as the logistics companies provide the information systems and
integrate, more comprehensively, the full distribution function. The second is
the fundamental changes automotive manufacturers are making to their vehicle
distribution systems in order to expedite the delivery of finished vehicles to
dealers. Certain manufacturers are creating vehicle mixing centers where rail
traffic from numerous manufacturing plants is re-mixed for delivery to the
dealer. These mixing centers offer the opportunity for longer haul business to
be obtained through competitive bidding. In addition, manufacturers are creating
new rail ramps in order to place vehicles in more central locations closer to
the market but off the dealer lots. These new rail ramps may reduce the average
length of haul for motor carriers of automobiles. In metropolitan areas,
competition for traffic from the new rail ramps to the dealers may increase as
local delivery carriers and equipment and driver leasing companies may become
new competitors for the traffic. In addition, some parties may attempt to
utilize drive-away operators or dealer pick-ups to deliver vehicles.
Major motor carriers specializing in the delivery of new vehicles that are
competitors of the Company include Leaseway, Jack Cooper, Cassens, Hadley and E
& L, all of which are privately held companies.
EMPLOYEES AND OWNER OPERATORS
As a result of the Acquisition, the Company has approximately 8,300
employees, including approximately 5,400 drivers. All drivers and shop and yard
personnel are represented by various labor unions. The majority of the Company's
employees are covered by the Master Agreement with the Teamsters which expires
on May 31, 1999. The compensation and benefits paid by the Company to union
employees are established by union contracts. The Company also utilizes
approximately 800 owner-operators, with approximately 200 driving exclusively
for Auto Haulaway in Canada and approximately 600 driving exclusively for Ryder
in the United States. The owner-operators are either paid a percentage of the
revenues they generate or receive normal driver pay plus a truck allowance.
TERMINALS AND OTHER PROPERTIES
The Company's executive offices are located in Decatur, Georgia, a suburb of
Atlanta. The Company leases approximately 96,000 square feet of space for its
executive offices, which is sufficient to permit the Company to conduct its
operations. The Company will operate 121 terminals after the Acquisition, which
are located at or near manufacturing plants, ports and railway terminals, 26 of
which are owned and 95 of which are leased.
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<PAGE> 48
REGULATION
The Company is regulated in the United States by the United States
Department of Transportation ("DOT") and various state agencies, and in Canada
by the National Transportation Agency of Canada and various provincial transport
boards. Truck and trailer length, height, width, maximum weight capacity and
other specifications are regulated federally in the United States, as well as by
individual states and provinces. Interstate motor carrier operations are subject
to safety requirements prescribed by the DOT. The DOT also regulates certain
safety features incorporated in the design of Rigs. The motor carrier
transportation industry is also subject to regulatory and legislative changes
which can affect the economics of the industry by requiring changes in operating
policies or influencing the demand for, and the costs of providing, services to
shippers.
In addition, the Company's terminal operations are subject to environmental
laws and regulations enforced by federal, state, provincial and local agencies,
including those related to the treatment, storage and disposal of wastes, and
those related to the storage and handling of fuel and lubricants. The Company
maintains regular ongoing testing programs for their USTs located at most of
their terminals for compliance with environmental laws and regulations.
Management believes that the Company's USTs are in compliance with current
environmental standards and that the Company will not be required to incur
substantial costs to bring the USTs into compliance with higher standards which
take effect in 1998.
LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its business,
primarily involving claims for personal injury and property damage incurred in
the transportation of vehicles. The Company does not believe that any of such
pending litigation, if adversely determined, would have a material adverse
effect on the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Robert J. Rutland......................................... 56 Chairman of the Board of Directors and Chief
Executive Officer
Guy W. Rutland, III....................................... 60 Chairman Emeritus and Director
A. Mitchell Poole, Jr..................................... 50 President, Chief Operating Officer and Director
Bernard O. De Wulf........................................ 48 Vice Chairman, Executive Vice President and Director
Berner F. Wilson, Jr...................................... 58 Vice Chairman, Secretary and Director
Guy W. Rutland, IV........................................ 33 Vice President and Director
Joseph W. Collier......................................... 55 President of Allied Automotive Group and Director
Douglas R. Cartin......................................... 43 President of Axis
Douglas A. Lauer.......................................... 33 President of Link Information Systems, Inc.
Daniel H. Popky........................................... 33 Vice President, Finance
Robert R. Woodson......................................... 65 Director
David G. Bannister........................................ 42 Director
</TABLE>
Robert Rutland has been Chairman and Chief Executive Officer of the Company
since December 1995. Mr. Rutland served as President and Chief Executive Officer
of the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland
was Chief Executive Officer of each of the Company's subsidiaries.
Guy Rutland, III was elected Chairman Emeritus in December 1995. Mr. Rutland
served as Chairman of the Board of the Company from 1986 to December 1995. Prior
to October 1993, Mr. Rutland was Chairman or Vice Chairman of each of the
Company's subsidiaries.
Mr. Poole has been President and Chief Operating Officer of the Company
since December 1995. Prior to December 1995, Mr. Poole served as Executive Vice
President and Chief Financial Officer of the Company. Mr.
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<PAGE> 49
Poole joined Allied Systems, Ltd. in 1988 as Senior Vice President and Chief
Financial Officer. He was appointed President of Allied Industries Incorporated
in December 1990 and continues to serve in such capacity. Prior to joining the
Company in 1988, Mr. Poole was an audit partner with Arthur Andersen LLP,
independent public accountants.
Mr. De Wulf has been Vice Chairman and an Executive Vice President of the
Company since October 1993. Prior to such time, Mr. De Wulf was Vice Chairman of
each of the Company's subsidiaries.
Mr. Wilson has been Vice President of the Company since October 1993 and
Vice Chairman of the Board of Directors and Secretary since December 1995. Prior
to October 1993, Mr. Wilson was an officer or Vice Chairman of several of the
Company's subsidiaries. Mr. Wilson joined the Company in 1974 and has held
various finance, administration, and operations positions.
Guy Rutland, IV has been Vice President of the Company since October 1993
and Vice President of the Reengineering Core Team of Allied Automotive Group,
Inc. since November 1996. From January 1996 to November 1996, Mr. Rutland was
Assistant Vice President of the Central and Southeast Region of Operations for
Allied Systems, Ltd. From March 1995 to January 1996, Mr. Rutland was Assistant
Vice President of the Central Division of Operations for Allied Systems, Ltd.
From June 1994 to March 1995, Mr. Rutland was Assistant Vice President of the
Eastern Division of Operations for Allied Systems, Ltd. From 1993 to June 1994,
Mr. Rutland was assigned to special projects with an assignment in the Company's
Industrial Relations/Labor Department and, from 1988 to 1993, Mr. Rutland was
Director of Performance Management.
Mr. Collier was appointed as a director of the Company and has been the
President of Allied Automotive Group, Inc. since December 1995. Mr. Collier had
been Executive Vice President of Marketing and Sales and Senior Vice President
of Allied Systems, Ltd. since 1991. Mr. Collier joined the Company in 1979.
Mr. Cartin has been President of Axis Group since October 1995. From April
1995 to October 1995, Mr. Cartin was Vice President of Allied Industries. Mr.
Cartin has 20 years of international senior management level expertise in
providing third-party integrated supply chain logistics solutions. Prior to
joining the Company, he held a number of positions over a 13-year period at
National Freight Consortium.
Mr. Lauer has been President of Link Information Systems, Inc. since July
1996. From January 1996 to July 1996, Mr. Lauer was Vice President and Chief
Information Officer of Allied Industries. Mr. Lauer has 11 years of information
technology experience. Prior to joining the Company, he was Director,
Information Systems at Exel Logistics.
Mr. Popky has been Vice President, Finance of the Company since December
1995. From January 1995 to December 1995, Mr. Popky was Vice President and
Controller and, from October 1994 to January 1995, he was Assistant Vice
President and Controller for the Company. Prior to joining the Company, Mr.
Popky held various positions with Arthur Andersen LLP for nine years.
Mr. Woodson has been a director of the Company since December 1993. Mr.
Woodson retired as the Chairman of John H. Harland Company in April 1997 and
remains as a member of its Board of Directors. Mr. Woodson was the President and
Chief Executive Officer of John H. Harland Company prior to October 1995 and
also serves as a director of Haverty Furniture Companies, Inc.
Mr. Bannister has been a director of the Company since December 1993. Mr.
Bannister is a Managing Director in the Transportation Group of Alex. Brown &
Sons Incorporated and has been employed by that firm in various capacities since
1983.
SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth certain information about beneficial
ownership of the common stock of the Company (the "Common Stock") as of June 30,
1997 by (i) each director and the five most highly compensated executive
officers of the Company, and (ii) all directors and executive officers of the
Company as a group. Unless
42
<PAGE> 50
otherwise indicated, the beneficial owners of the Common Stock listed below have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING
- ----------------- ------------------ ----------------
<S> <C> <C>
Robert J. Rutland(1)....................................................... 1,256,469 16.1
Guy W. Rutland, III(2)..................................................... 842,551 10.8
Guy W. Rutland, IV(3)...................................................... 687,311 8.8
Bernard O. De Wulf(4)...................................................... 572,750 7.3
A. Mitchell Poole, Jr(5)................................................... 226,200 2.9
Berner F. Wilson, Jr....................................................... 225,710 2.9
Joseph W. Collier (6)...................................................... 11,000 *
David G. Bannister......................................................... 3,000 *
Robert R. Woodson.......................................................... 4,000 *
All executive officers and directors as a group(7) (12 persons)........... 3,861,191 49.4
</TABLE>
- ----------
* Less than 1% not applicable
(1) Includes 18,099 shares owned by his wife to which he disclaims beneficial
ownership and 25,000 shares owned by him under the Restricted Stock Plan
which are subject to transfer restrictions.
(2) Includes 18,099 shares owned by his wife and 67,800 shares owned by a
private foundation of which Mr. Rutland is a trustee to which he disclaims
beneficial ownership.
(3) All shares held in a general partnership of which he is a partner.
(4) Includes 165,000 shares held in trust for the benefit of his wife and family
members and 2,750 shares held in a limited partnership to which he disclaims
beneficial ownership.
(5) Includes 20,000 shares owned by him under the Restricted Stock Plan which
are subject to transfer restrictions.
(6) Includes 10,000 shares owned by him under the Restricted Stock Plan which
are subject to transfer restrictions. Does not include options to acquire
61,000 shares.
(7) Includes 30,000 shares issued under the Restricted Stock Plan which are
subject to transfer restrictions. Does not include options to acquire 28,800
shares.
SECURITY OWNERSHIP OF OTHERS
The following table sets forth certain information about beneficial
ownership of each person known to the Company to own more than 5% of the
outstanding Common Stock as of September 1, 1997 other than directors of the
Company.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Shares
Beneficial Owner Beneficially Owned Outstanding
---------------- ------------------ -----------
<S> <C> <C>
Brinson Partners, Inc.(1) 585,112 7.5
209 South LaSalle
Chicago, Illinois 60604
Private Capital Management, Inc.(2) 1,044,818 13.4
3003 Tamiami Trail N.
Naples, Florida 33940
</TABLE>
(1) According to a Schedule 13G dated February 10, 1997, filed on behalf of
Brinson Partners, Inc. and a subsidiary and its parent companies, each of
which may also be deemed a beneficial owner of the shares held by Brinson
Partners, Inc. by virtue of their corporate relationships.
(2) According to a Schedule 13G dated March 10, 1997, filed on behalf of Private
Capital Management, Inc. and its affiliates, each of which may also be
deemed a beneficial owner of the shares held by Private Capital Management,
Inc. by virtue of their relationships.
43
<PAGE> 51
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board, which was formed in December
1993, reviews, administers and monitors the Company's executive compensation
plans, policies and programs.
EXECUTIVE COMPENSATION COMPONENTS
The executive compensation philosophy of the Company is to link
compensation with enhancement of shareholder value. The Company's executive
compensation is based on three principal components, each of which is intended
to support the overall compensation philosophy. The three principal components
are:
Base Salary. Base salary amounts for each of the named executive
officers are specified in their employment agreements. During January 1996, the
Compensation Committee approved amendments to the employment agreements with the
named executive officers to increase the base salary and to extend the
expiration of the agreements through January 2001. In January 1997, the
Compensation Committee approved amendments to Messrs. Wilson and Colliers'
employment agreements to increase the base salary.
Incentive Compensation. In 1996, the Compensation Committee approved the
payment of incentive compensation for the Company's executive officers who are
not parties to employment agreements which provide for bonus compensation.
Incentive compensation for Messrs. Robert Rutland, Poole and Collier for 1996
was paid in accordance with formulas specified in their employment agreements.
In January 1997, the Compensation Committee approved amendments to the
employment agreements with the named executive officers to allow them to
participate in the Allied Holdings, Inc. EVA Based Incentive Plan ("Incentive
Plan"). Beginning in 1997, incentive compensation for the named executive
officers will be paid in accordance with the Incentive Plan. Economic Value
Added ("EVA") and the Incentive Plan are discussed in detail below.
Stock Compensation. Executive officers are eligible to receive annual
grants of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance units and performance shares
under the Company's Long-Term Incentive Plan. In December 1996, the Compensation
Committee approved restricted stock awards to Messrs. Robert Rutland, Poole and
Collier. The Long-Term Incentive Plan is discussed elsewhere in this proxy.
EVA AND THE INCENTIVE PLAN
The primary objective of the Company in regard to executive compensation
is to link compensation with shareholder value. To that end, the Company has
adopted a more formalized approach to measuring value creation through the EVA
framework. The Company together with Stern Stewart & Co., the financial advisory
firm that pioneered the EVA framework, undertook a five-month project during
1996 to create and install an EVA based performance measurement and incentive
compensation system. The proprietary EVA financial measure can be defined as net
operating profits after tax ("NOPAT"), less a capital charge for the average
operating capital employed. NOPAT is a measure of operating results which
differs from normal accounting profit due to the adjustment for certain
non-economic charges. The Company and Stern Stewart believe that EVA more
accurately measures shareholder value created than traditional performance
measures such as return on assets, earnings per share and return on equity.
EVA provides a framework that enables management to make decisions that
will build long-term value for the Company and its shareholders rather than
focus on short-term results. In 1997, EVA will be the measure used to determine
incentive compensation for senior management.
CEO COMPENSATION
The Compensation Committee believes that Robert J. Rutland's
compensation as Chief Executive
44
<PAGE> 52
Officer appropriately relates to short and long term performance. Mr. Rutland's
compensation in 1996 was $427,000 as provided by his employment agreement.
Additionally, Mr. Rutland was paid a bonus in an amount equal to $121,620 for
1996 which was calculated in accordance with a formula set forth in his
employment agreement. The Compensation Committee believes that the employment
agreement provides for appropriate compensation to Mr. Rutland based upon the
measures described above for determining executive officer compensation. The
Compensation Committee considers the compensation received by Mr. Rutland to be
comparable to chief executive officers of other leading companies engaged in
transportation.
David G. Bannister Robert R. Woodson
SUMMARY COMPENSATION TABLE
Remuneration paid in 1996, 1995 and 1994 to executive officers is set
forth on the following table:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ---------------------
Securities
Restricted Underlying
Name and Principal Stock Options/SAR All Other
Position Year Salary Bonus Awards(1) Awards (#) Compensation(2)
-------- ---- ------ ----- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Rutland 1996 $427,000 $121,620 200,000 -- $13,667
Chairman and Chief 1995 424,493 143,180 -- -- 14,380
Executive Officer 1994 409,000 284,140 -- -- 14,703
Bernard O. De Wulf 1996 320,000 75,000 -- -- 3,917
Vice Chairman and 1995 318,370 100,000 -- -- 5,217
Executive Vice 1994 306,750 150,000 -- -- 3,488
President
A. Mitchell Poole, Jr. 1996 290,000 121,620 160,000 -- 991
President and Chief 1995 265,302 143,180 -- -- 910
Operating Officer 1994 256,752 256,752 -- -- 886
Berner F. Wilson, Jr. 1996 175,000 75,000 -- -- 1,565
Vice Chairman and 1995 159,179 100,000 -- -- 2,450
Secretary 1994 153,370 150,000 -- -- 1,413
Joseph W. Collier 1996 175,000 60,816 80,000 -- --
President - Allied 1995 131,485 100,000 -- 50,000 --
Automotive Group, Inc. 1994 114,437 150,000 -- -- --
</TABLE>
(1) Represents dollar value of awards granted in 1996 based on the closing
market price on December 31, 1996. Under the Restricted Stock Plan,
restrictions lapse over a five year period, 20% per year, commencing
on the first anniversary of the date of grant.
(2) Unless otherwise noted, all amount in this column are insurance premiums
paid on behalf of the named executive officers.
OPTION EXERCISE AND VALUES FOR LAST FISCAL YEAR
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<PAGE> 53
The following table sets forth as to each of the named executive
officers information with respect to option exercises during 1996 and the
status of their options on December 31, 1996 (i) the number of shares of
Common Stock underlying options exercised during 1996, (ii) the aggregate
dollar value realized upon the exercise of such options, (iii) the total
number of exercisable and non-exercisable stock options held on December 31,
1996 and (iv) the aggregate dollar value of in-the-money exercisable options
on December 31, 1996.
46
<PAGE> 54
AGGREGATED OPTION EXERCISE DURING LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Shares Value Number of Unexercised Value of Unexercised
Acquired Realized Options at Fiscal Year End In-the-Money
Upon Upon -------------------------- Options at Fiscal
of Option Exercise Year End(1)
--------- -------- -----------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Rutland -- -- -- -- -- --
Bernard O. De Wulf -- -- -- -- -- --
A. Mitchell Poole, Jr. -- -- -- -- -- --
Berner F. Wilson, Jr. -- -- -- -- -- --
Joseph W. Collier -- -- 10,500 50,500 -- --
</TABLE>
(1) In accordance with the SEC's rules, values are calculated by
subtracting the exercise price from the fair market value of the
underlying Common Stock. For purposes of this table, fair market value
is deemed to be $7.50, the average of the high and low Common Stock
price reported on the NASDAQ National Market on December 31, 1996.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Messrs. Robert Rutland, De Wulf, Poole, Wilson and Collier have
entered into employment agreements with the Company. These agreements, which
are substantially similar, are for five year terms ending in January 2001 and
provide for compensation to the officers in the form of annual base salaries
in the amount of $427,000 for Robert Rutland, $320,000 for Mr. De Wulf,
$290,000 for Mr. Poole, $175,000 for Mr. Wilson, and $175,000 for Mr. Collier
in 1996, plus percentage annual increases based upon the Consumer Price Index
and other factors. In January 1997, the employment agreements with Messrs.
Wilson and Collier were amended to increase the annual base pay for 1997 to
$200,000.
The employment agreements also provide that in the event of (i) an
officer's termination of employment by the Company other than for cause, (ii)
termination by the officer for reasons such as a material change by the
Company in the officer's duties and responsibilities or as a result of a
merger or consolidation of the Company, or (iii) the death or disability of
the officer, the officer shall receive severance benefits from the Company.
These severance benefits include a cash payment in an amount equal to two
times the annual base salary plus the average of the previous two years' bonus
payments for the applicable officer. The Company is also required to provide
to the officer group medical and hospitalization benefits and related benefits
for a period of one year.
LONG-TERM INCENTIVE PLAN
The Company has adopted a Long-Term Incentive Plan (the "LTI Plan")
pursuant to which an aggregate of 650,000 shares of Common Stock could be
issued. The LTI Plan authorizes the Company to grant incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock,
performance units and performance shares to eligible employees as determined
by the LTI Plan. The LTI Plan was adopted and approved by the Board of
Directors and shareholders in July 1993.
The Compensation Committee elects those employees to whom awards are
granted under the LTI Plan and determines the number of performance units,
performance shares, shares of restricted stock, and stock appreciation rights
granted pursuant to each award and prescribes the terms and conditions of each
such award.
47
<PAGE> 55
Nonqualified Stock Option Plan
During 1996 the Company granted options to purchase 34,000 shares of
the Company's Common Stock at a price per share of $9.00. The options are
granted pursuant to the non-qualified stock option provisions set forth in the
LTI Plan and are not intended to qualify as incentive stock options within the
meaning of the Internal Revenue Code of 1986, as amended. A maximum of 300,000
shares may be issued as non-qualified options under the provisions of the LTI
Plan. Options granted become exercisable after one year in 20% or 33a%
increments per year and expire ten years from the date of the grant. There
were 41,867 options exercisable at December 31, 1996.
Restricted Stock Plan
Effective December 19, 1996 the Company adopted the Allied Holdings,
Inc. Restricted Stock Plan ("Restricted Stock Plan") pursuant to authority
granted by the LTI Plan. The awards granted under the Restricted Stock Plan
vest over five years, 20% per year commencing on the first anniversary of the
date of grant. Effective December 19, 1996 the Company awarded an aggregate of
85,000 shares, with a value of $680,000 as of the date of grant.
STOCK APPRECIATION RIGHTS PLAN
The Board of Directors of the Company adopted the Allied Holdings,
Inc. Stock Appreciation Rights Plan effective January 1, 1997 (the "SAR
Plan"). The purpose of the SAR Plan is to provide deferred compensation to
certain management employees of the Company. Such deferred compensation shall
be based upon the award of stock appreciation rights units, the value of which
are related to the appreciation in fair market value of the Common Stock. All
payments under the SAR Plan will be in cash. The Compensation Committee shall
determine the applicable terms for each award under the SAR Plan. There has
been no grants under the SAR Plan as of the date of this proxy.
EVA BASED INCENTIVE PLAN
The Board of Directors of the Company adopted the Incentive Plan
effective January 1, 1997. The Incentive Plan's objectives are to focus on
(i)creating shareholder value and reward participants significantly when
achieved, and (ii) sustaining, continuous performance improvement.
The Incentive Plan is administered by the Compensation Committee.
Under the Incentive Plan, incentive compensation will be directly linked to
changes in EVA. EVA will be measured for each of the Company's major operating
units and will reward participants for increases in EVA and penalize such
employees for any decreases in EVA. Management employees designated as
participants by the Chairman and President of the Company and approved by the
Compensation Committee are eligible to participate in the Incentive Plan.
Target bonus amounts will be determined for each participant by the Chairman
and President and approved by the Compensation Committee.
A Participant's target bonus will either be based solely on the
performance of the Company on a consolidated basis or on the performance of a
subsidiary or a business unit and the Company. For example, a target bonus
might be based seventy-five percent (75%) on a business unit or a subsidiary
and twenty-five percent (25%) on the Company's consolidated results.
Annually, an actual bonus will be declared for each Participant based
on the comparison of the change in EVA to the expected change in EVA. If the
change in EVA is exactly equal to the expected change in EVA, the actual bonus
will equal the target bonus. The actual bonus for any calendar year will be
higher than the target bonus if the change in EVA is higher than the expected
change in EVA and lower if the change in EVA is lower than the expected change
in EVA. Such adjustment shall be established by the Compensation Committee in
its sole discretion.
The actual bonus declared for each Participant with respect to any
calendar year will be allocated to the Participants' bonus bank, within 30
days after the amount of the actual bonus for such year is determined. If,
after
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<PAGE> 56
the allocation with respect to any calendar year, the balance in the
Participants' bonus bank is less than or equal to the Participants' target
bonus for such year, the entire amount in the bonus bank will be paid as
soon as practicable but in no event later than 15 days following such
allocation. If the balance in the bonus bank is greater than the target
bonus, the Participant will be paid the target bonus plus one-third of the
remainder of the bonus bank balance. Amounts remaining in the bonus bank
will be carried forward to future years. Negative bonuses may be declared if
the change in EVA for any calendar year is significantly below the expected
change in EVA for such year and negative bonuses declared will be subtracted
from the bonus bank.
Ninety-five percent (95%)of the portion of the actual bonus payable to a
Participant with respect to any calendar year will be paid to the
Participants in cash and five percent (5%) will be paid in the form of stock
appreciation rights, pursuant to the SAR Plan.
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<PAGE> 57
RETIREMENT PLANS
The Company maintains a tax qualified benefit pension plan (the
"Retirement Plan"). The table set forth below illustrates the total combined
estimated annual benefits payable under the Retirement Plan to eligible
salaried employees for years of service assuming normal retirement at age 65.
Allied Defined Benefit Pension Plan
Years of Service
----------------
<TABLE>
<CAPTION>
Remuneration 10 15 20 25 30 35
------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
100,000 20,000 30,000 40,000 50,000 50,000 50,000
125,000 25,000 37,500 50,000 62,500 62,500 62,500
150,000 30,000 45,000 60,000 75,000 75,000 75,000
175,000 32,000 48,000 64,000 80,000 80,000 80,000
200,000 32,000 48,000 64,000 80,000 80,000 80,000
225,000 32,000 48,000 64,000 80,000 80,000 80,000
250,000 32,000 48,000 64,000 80,000 80,000 80,000
275,000 32,000 48,000 64,000 80,000 80,000 80,000
300,000 32,000 48,000 64,000 80,000 80,000 80,000
</TABLE>
The Retirement Plan uses average compensation, as defined by the
Retirement Plan, paid to an employee by the plan sponsor during a plan year
for computing benefits. Compensation includes bonuses and any amount
contributed by a plan sponsor on behalf of an employee pursuant to a salary
reduction agreement which is not includable in the gross income of the
employee under Internal Revenue Code (AIRC@) Section 125, 402(a)(8), or
402(h). However, compensation in excess of the IRC Section 401(a)(17) limit
shall not be included. The limit for 1996 was $150,000 and for 1997 is
$160,000.
The compensation covered by the Retirement Plan for Messrs, Robert
Rutland, De Wulf, Poole, Wilson, and Collier is $160,000.
The estimated years of credited service for each of the current
executives as of December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Years of Credited Service
Name as of December 31, 1996
---- -----------------------
<S> <C>
Robert J. Rutland 32.7
Berner F. Wilson 22.0
Joseph W. Collier 17.0
Bernard O. De Wulf 13.0
A. Mitchell Poole, Jr. 8.7
</TABLE>
The benefits shown in the Pension Plan Table are payable in the form
of a straight life annuity commencing at age 65. There is no reduction for
social security benefits or other offset amounts.
CERTAIN TRANSACTIONS
The Company leases the space in the building in which its headquarters
is located from DELOS, a general partnership of which Messrs. Rutland, III,
Robert Rutland, and Wilson are beneficially the sole general partners.
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<PAGE> 58
The aggregate rents paid by the Company to DELOS in 1996 were $1,030,139. During
January 1997, the Company extended the lease with DELOS to expire December 31,
2007. The Company provided loans to DELOS in the aggregate amount of $573,419
which bear interest at the rate of 6% per annum. The outstanding balance of
principal and accrued interest thereon regarding the loans is due and payable on
November 30, 1998.
The Company paid Capital Management Services, Inc., a company controlled
by Messrs. Rutland, III and Robert Rutland's brother-in-law, $40,000 in 1995 and
$80,000 in 1996 to manage a construction project.
David G. Bannister, a director and member of the Compensation Committee
of the Company, is a Managing Director of BT Alex. Brown Incorporated.
DESCRIPTION OF OTHER INDEBTEDNESS
The following is a summary of important terms of certain indebtedness of the
Company.
NEW CREDIT FACILITY
The New Credit Facility allows the Company to borrow, under a revolving line
of credit, and issue letters of credit, up to the lesser of $230.0 million or a
borrowing base amount that is determined based on a defined percentage of the
Company's accounts receivable and equipment. At June 30, 1997, after giving pro
forma effect to the Offering and the Acquisition, the Company would have undrawn
availability of approximately $126.3 million. Annual commitment fees will be due
on the undrawn portion of the commitment. The New Credit Facility will mature in
2002. The interest rate for the New Credit Facility is, at the Company's option,
either (i) the bank's Base Rate, as defined, or (ii) the bank's Eurodollar rate,
as defined, as determined at the date of each borrowing, plus an applicable
margin. The Company has the right to repay the outstanding debt under the New
Credit Facility, in whole or in part, without penalty or premium, subject to a
limitation that prepayment of Eurodollar rate loans will be subject to a
breakage penalty if prepaid other than on the last day of the applicable
interest period. The Company is subject to mandatory prepayment with a defined
percentage of net proceeds from certain asset sales, new debt offerings and new
equity offerings. The revolving line of credit allows the Company to repay and
reborrow so long as there is no event of default. The New Credit Facility gives
the Company the ability to reduce the commitment amount and the Company
periodically reviews its borrowing needs.
Borrowings under the New Credit Facility are secured by a first priority
security interest on assets of the Company and certain of its subsidiaries,
other than real estate but including a pledge of stock of certain subsidiaries.
In addition, certain subsidiaries of the Company have jointly and severally
guaranteed the obligations of the Company under the New Credit Facility.
The New Credit Facility sets forth a number of affirmative, negative, and
financial covenants binding on the Company. The negative covenants will limit
the ability of the Company to, among other things, incur debt, incur liens, make
investments, make dividend or other distributions, or enter into any merger or
other consolidation transaction. The financial covenants include the maintenance
of a minimum consolidated tangible net worth, compliance with a leverage ratio
and a coverage ratio, and limitations on capital expenditures. The New Credit
Facility contains standard events of default including failure to make payments
on a timely basis, breach of covenants, breach of any representation or
warranty, and defaults on other indebtedness.
SENIOR SUBORDINATED NOTES
In February 1996, the Company issued the Senior Subordinated Notes through a
private placement. Proceeds from the Senior Subordinated Notes were used to
reduce borrowings under the Company's existing credit facility. Interest on the
Senior Subordinated Notes is payable semi-annually at a rate of 12% per year on
February 1 and August 1 of each year. The Senior Subordinated Notes are
prepayable at any time at 100% of the principal amount thereof, plus a
make-whole amount (the "SSN Make-Whole Amount"), as determined by discounting
the remaining interest payments through maturity at a rate equal to the yield on
the date of redemption of the class of United States Treasury securities
corresponding to the weighted average life to maturity of the principal amount
being repaid plus
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<PAGE> 59
100 basis points (the "Reinvestment Rate"). The SSN Make-Whole Amount will be
zero if the Reinvestment Rate exceeds 12%.
The indenture pursuant to which the Senior Subordinated Notes were issued
contains covenants requiring the Company to maintain or place limitations on,
among other things: (i) minimum consolidated net worth, (ii) additional
indebtedness, (iii) fixed charge coverage ratio, (iv) liens, (v) restricted
payments, (vi) asset sales, (vii) mergers and consolidations, and (viii)
transactions with affiliates.
The payment of principal, the SSN Make-Whole Amount, if any, and interest on
the Senior Subordinated Notes is subordinated to all senior indebtedness of the
Company, including the Notes. Upon a distribution to creditors of the Company in
a bankruptcy, reorganization, liquidation or dissolution of the Company, the
holders of all senior indebtedness will be entitled to receive payment in full
before the holders of the Senior Subordinated Notes would be entitled to receive
any distributions.
DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued pursuant to the Indenture among the Company,
the Guarantors and The First National Bank of Chicago, as trustee (the
"Trustee"). The terms of the New Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(the "Trust Indenture Act"). The New Notes are subject to all such terms, and
Holders of New Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of the material provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. Copies of the proposed form of Indenture will be made available to
prospective investors as set forth under "Available Information." The
definitions of certain terms used in the following summary are set forth below
under "Certain Definitions." For purposes of this "Description of Notes," the
term "Company" refers only to Allied Holdings, Inc. and not to any of its
Subsidiaries.
The New Notes will be general unsecured obligations of the Company, ranking
pari passu in right of payment with all present and future senior indebtedness
of the Company, and senior in right of payment to all present and future
subordinated indebtedness of the Company. However, the New Notes will be
effectively junior to all present and future secured indebtedness of the Company
to the extent of the assets securing such indebtedness. As of June 30, 1997,
after giving pro forma effect to the Offering and the Acquisition, the New Notes
would have been effectively junior to $41.8 million of secured indebtedness,
including borrowings under the New Credit Facility. In addition, the Company
would have had $126.3 million of additional secured borrowings available under
the New Credit Facility. The Indenture permits the Company to incur additional
indebtedness in the future, subject to certain restrictions. See "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
As of the Closing Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries, other than Haul Insurance Limited, which will be an Unrestricted
Subsidiary. Under certain circumstances, the Company will be able to designate
other current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants set forth
in the Indenture. The Company's payment obligations under the New Notes will be
guaranteed by all of the Company's present and future Domestic Restricted
Subsidiaries and existing Canadian Subsidiaries (other than AH Industries,
Inc.). See "-Subsidiary Guarantees."
PRINCIPAL, MATURITY AND INTEREST
The New Notes (sometimes referred to as the "Notes") will be limited in
aggregate principal amount to $150.0 million and will mature on October 1,
2007. Interest on the Notes will accrue at the rate of 8 5/8% per annum and
will be payable semi-annually in arrears on April 1 and October 1 of each year,
commencing on April 1, 1998, to Holders of record on the immediately preceding
March 15 and September 15. Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. Principal of and premium,
interest and Liquidated Damages, if any, on the Notes will be payable at the
office or agency of the Company maintained for such purpose or, at the option
of the Company, payment of interest and Liquidated Damages may be made by check
mailed to the
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<PAGE> 60
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes; provided that all payments of principal, premium, interest and
Liquidated Damages with respect to Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency will be the office of the Trustee maintained for such purpose. The Notes
will be issued in denominations of $1,000 and integral multiples thereof.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be guaranteed by all
of the Company's Domestic Restricted Subsidiaries and Canadian Subsidiaries
(other than AH Industries, Inc.) existing on the Closing Date. Certain of such
Canadian Subsidiaries will indirectly guarantee the Company's payment
obligations under the Notes by guaranteeing their parent companies' obligations
under direct Guarantees. The Indenture will provide that (i) if the Company or
any of its Restricted Subsidiaries shall acquire or create another Domestic
Restricted Subsidiary after the Closing Date, or any Unrestricted Subsidiary
shall cease to be an Unrestricted Subsidiary and shall become a Domestic
Restricted Subsidiary, then such Subsidiary shall execute a Guarantee of the
notes and deliver an opinion of counsel, in accordance with the terms of the
Indenture and (ii) in the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the capital stock of any Guarantor, or in the
case the Company designates a Guarantor to be an Unrestricted Subsidiary in
accordance with the Indenture, then such Guarantor will be released and relieved
of any obligations under its Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "-- Redemption or Repurchase at Option of
Holders -- Asset Sales."
Separate financial statements of the Guarantors have not been provided within
this Prospectus as (i) the Guarantors are jointly and severally liable for the
Company's obligations under the Notes, (ii) the Unrestricted Subsidiaries are
inconsequential to the consolidated operations of the Company and its
subsidiaries, and (iii) the net assets and earnings of the Guarantors are
substantially equivalent to the net assets and earnings of the consolidated
entity as reflected in the consolidated financial statements of the Company
included in this Prospectus.
OPTIONAL REDEMPTION
Prior to October 1, 2002, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date. On and after October 1, 2002, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................................. 104.3125%
2003............................................. 102.8750%
2004............................................. 101.4375%
2005 and thereafter.............................. 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to October 1, 2000,
the Company may redeem up to 35% of the Notes at a redemption price equal to
108.625% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net
proceeds of one or more sales of Equity Interests (other than Disqualified
Stock) of the Company, provided that (i) at least $97.5 million of Notes remain
outstanding immediately following each such redemption and (ii) such redemption
shall occur within 90 days of the date of the consummation of such sale.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be
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<PAGE> 61
issued in the name of the Holder thereof upon cancellation of the original Note.
Notes called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, the Company will be obligated to
make an offer (a "Change of Control Offer") to each Holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control Payment"). Within 30
days following a Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction. The Company will not be required to make a Change of
Control Offer following a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The occurrence of a Change of Control could constitute a default under the
New Credit Facility or under future agreements governing indebtedness of the
Company, which could permit the lenders under the New Credit Facility or the
holders of such indebtedness, as the case may be, to declare all such
indebtedness to be due and payable. There can be no assurance that, upon a
Change of Control, the Company would have sufficient resources to repurchase all
Notes tendered in a Change of Control Offer and to repay all indebtedness that
may be declared due and payable. The Company's failure to purchase tendered
Notes following a Change of Control would constitute an Event of Default under
the Indenture which could, in turn, constitute as default under the New Credit
Facility or under future agreements governing indebtedness of the Company.
Asset Sales
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<PAGE> 62
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company
or such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (a) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the
Company, at its option, may apply such Net Proceeds to the acquisition of a
controlling interest in another business, the making of a capital expenditure or
the acquisition of other assets (other than assets that would be classified as
current assets in accordance with GAAP), in each case, in the same or a similar
line of business as the Company and its Restricted Subsidiaries, or in any
business reasonably complementary, related or incidental thereto, as determined
in good faith by the Board of Directors. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce borrowings under the New
Credit Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset
at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to any direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or any Guarantor); (ii)
purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company (other than any such Equity Interests owned by the Company or any
Guarantor); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of the Company
or any Guarantor that is subordinated to the Notes or any Guarantee thereof,
except a payment of interest or principal at Stated Maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
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<PAGE> 63
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph
of the covenant described below under caption "Incurrence of Indebtedness
and Issuance of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Closing Date (excluding Restricted Payments permitted
by clause (ii) through (vii) of the next succeeding paragraph), is less than
the sum of (1) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from October 1, 1997 to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (2) 100% of the aggregate net proceeds received by
the Company from the issue or sale since the Closing Date of Equity
Interests of the Company (other than Disqualified Stock), plus (3) the
amount by which Indebtedness of the Company and its Restricted Subsidiaries
is reduced on the balance sheet of the Company upon the conversion or
exchange (other than by a Restricted Subsidiary of the Company) subsequent
to the Closing Date of any such Indebtedness for Equity Interests (other
than Disqualified Stock) of the Company, plus (4) to the extent that any
Restricted Investment that was made after the Closing Date is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (5) in the event that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary, the lesser of (A) an amount equal
to the fair value (as determined by the Board of Directors) of the Company's
Investments in such Restricted Subsidiary and (B) the amount of Restricted
Investments previously made by the Company and its Restricted Subsidiaries
in such Unrestricted Subsidiary.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(2) of the preceding paragraph; (iii) the defeasance,
redemption, repurchase or other acquisition of subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Restricted Subsidiaries')
management or board of directors pursuant to any management equity subscription
agreement, stock option agreement or other similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $500,000 in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; (v) the repurchase or other acquisition of subordinated
Indebtedness in anticipation of satisfying a sinking fund or principal payment
obligation, in each case due within one year of the date of repurchase or other
acquisition, provided that the date such sinking fund or principal payment
obligation becomes due is prior to the final maturity date of the Notes; (vi)
repurchases of Equity Interests that may be deemed to occur upon the exercise of
options, warrants or other rights to acquire Capital Stock of the Company to the
extent that such Equity Interests represent a portion of the exercise price of
such options, warrants or other rights; and (vii) additional Restricted Payments
in an amount not to exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee. Not later than 30 days following the end of any fiscal
quarter in which any Restricted Payments were made, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payments were
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
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<PAGE> 64
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the definition of an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," the Company shall be in default of such covenant).
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company's Restricted Subsidiaries will not issue any
shares of preferred stock (other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company); provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been at least 2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under (a) the New Credit Facility and (b) Capital Lease Obligations and
purchase money financing in respect of property, plant and equipment,
provided that the aggregate amount of Indebtedness incurred pursuant to this
clause (i) shall not exceed at any time outstanding the greater of (1)
$230.0 million and (2) the sum of (A) 80% of the consolidated accounts
receivable of the Company as shown on the Company's most recent balance
sheet, plus (B) 60% of the consolidated inventory of the Company as shown on
the Company's most recent balance sheet, plus (C) 50% of the consolidated
property, plant and equipment, net of depreciation, of the Company as shown
on the Company's most recent balance sheet;
(ii) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes, the Guarantees thereof and the Indenture;
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
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(iv) the incurrence by the Company and the Guarantors of additional
Indebtedness in an aggregate amount not to exceed $10.0 million at any time
outstanding;
(v) the incurrence by the Company and the Guarantors of Indebtedness
in connection with the acquisition of assets or a new Restricted Subsidiary;
provided that such Indebtedness was incurred by the prior owner of such
assets or such Restricted Subsidiary prior to such acquisition by the
Company and the Guarantors and was not incurred in connection with, or in
contemplation of, such acquisition by the Company and the Guarantors; and
provided further that the aggregate amount of Indebtedness incurred pursuant
to this clause (vi) does not exceed $5.0 million; at any time outstanding;
(vi) the incurrence by the Company and its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted to be incurred by the first paragraph, or by clauses (ii) through
(ix) of the second paragraph of the covenant;
(vii) the incurrence of Indebtedness between or among the Company and
its Restricted Subsidiaries; provided, however, that any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Restricted Subsidiary, and any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary, shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company and its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
(a) interest rate risk with respect to any Indebtedness that is permitted by
the terms of this Indenture to be outstanding or (b) foreign currency risk;
(ix) the incurrence of Indebtedness by a Restricted Subsidiary of the
Company that is not a Guarantor in an aggregate amount not to exceed the sum
of (a) 80% of the accounts receivable of such Subsidiary as shown on such
Subsidiary's most recent balance sheet, plus (b) 60% of the inventory of
such Subsidiary as shown on such Subsidiary's most recent balance sheet,
plus (c) 50% of the property, plant and equipment, net of depreciation, of
such Subsidiary as shown on such Subsidiary's most recent balance sheet;
(x) the guarantee by the Company or any Guarantor of Indebtedness
that was permitted to be incurred by another provision of this covenant;
and
(xi) Indebtedness of a Receivables Subsidiary that is not recourse to
the Company or any of its Restricted Subsidiaries (other than Standard
Securitization Undertakings) incurred in connection with a Qualified
Receivables Transaction.
For purposes of determining the amount of any Indebtedness of any Person
under this covenant, (a) there shall be no double counting of direct
obligations, Guarantees and reimbursement obligations for letter of credit; (b)
the principal amount of any Indebtedness of such Person arising by reason of
such Person having granted or assumed a Lien on its property to secure
Indebtedness of another Person shall be the lower of the fair market value of
such property and the principal amount of such Indebtedness outstanding (or
committed to be advanced) at the time of determination; (c) the amount of any
Indebtedness of such Person arising by reason of such Person having Guaranteed
Indebtedness of another Person where the amount of such Guarantee is limited to
an amount less than the principal amount of the Indebtedness so Guaranteed shall
be such amount as so limited; (d) Indebtedness shall not include a non-recourse
pledge by the Company or any of its Restricted Subsidiaries of Investments in
any Person that is not a Restricted Subsidiary of the Company to secure the
Indebtedness of such Person; and (e) Indebtedness of the Company and its
Restricted Subsidiaries shall not include Indebtedness of a Restricted
Subsidiary whose assets consist solely of partnership or similar interests in
another person that is not a Restricted Subsidiary of the Company, where the
obligations with respect to such Indebtedness arise as a matter of law from the
obligations of such other Person.
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For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (x) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this covenant and such item of Indebtedness will be treated as
having been incurred pursuant to only one of such clauses or pursuant to the
first paragraph hereof. Accrual of interest, the accretion of accredit value and
the payment of interest in the form of additional Indebtedness will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant.
Liens
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens, unless the Notes are
equally and ratably secured with the obligations so secured until such time as
such obligations are no longer secured by a Lien.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as in
effect as of the Closing Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Facility as in effect on the Closing Date, (c)
the Notes, any Guarantee thereof and the Indenture, (d) applicable law, (e) any
instrument governing Indebtedness or Equity Interests of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the Equity Interests, properties
or assets of any Person, other than the Person, or the Equity Interests,
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) customary restrictions in asset or
stock sale agreements limiting transfer of such assets or stock pending the
closing of such sale, (i) customary non-assignment provisions in contracts
entered into in the ordinary course of business, (j) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced,
or (k) any Purchase Money Note, or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables Transaction
relating to a Receivables Subsidiary.
Merger, Consolidation, or Sale of Assets
The Indenture provides that neither the Company nor any Guarantor will
consolidate or merge with or into (whether or not the Company or such Guarantor,
as the case may be, is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
Company or such Guarantor, as the case may be, is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if other
than the Company or such Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of
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Columbia; (ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company or a Guarantor) or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company or such Guarantor, as the
case may be, under the Notes or such Guarantor's Guarantee thereof and the
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company or such
Guarantor with or into another Guarantor or a Wholly Owned Restricted Subsidiary
of the Company, or a merger of a Guarantor with or into another Person in
connection with a Permitted Investment in such Person, the Company or the Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph of
the covenant described above under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $3.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) except in the case of the provision of services in
the ordinary course of business to, or the receipt of services in the ordinary
course of business from, any Person who is an Affiliate of the Company solely by
reason of an Investment in such Person by the Company or its Subsidiaries, with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing.
The foregoing provisions will not prohibit (i) any employment agreement or
other compensation plan or arrangement in the ordinary course of business and
either consistent with past practice or approved by a majority of the
disinterested members of the Board of Directors; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; (iii) any Permitted
Investment or any Restricted Payment that is permitted by the provisions of the
Indenture described above under the caption "Restricted Payments;" (iv) sales of
Equity Interests (other than Disqualified Stock) to Affiliates of the Company;
(v) transactions with Haul Insurance Limited, provided that no less than once
each calendar year, the Company delivers to the Trustee a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
transactions are in the ordinary course of business and consistent with past
practices and prudent insurance underwriting standards; (vi) transactions in
existence on the Closing Date, and any modifications thereof or extensions
thereto the terms of which are not materially more adverse to the Company than
those in existence on the Closing Date, including, in each case, all future
payments pursuant thereto; and (vii) sales of accounts receivable and other
related assets customarily transferred in an asset securitization transaction
involving accounts receivable to a Receivables Subsidiary in a Qualified
Receivables Transaction.
Payments for Consent
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that
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consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company will file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company and its Restricted Subsidiaries will agree
that, for so long as any Notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Notes; (iii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
described under the caption "Change of Control;" (iv) failure by the Company or
any of its Restricted Subsidiaries to comply with the provisions described under
the captions "Asset Sales," "Restricted Payments," "Incurrence of Indebtedness
and Issuance of Preferred Stock" or "Merger, Consolidation or Sale of Assets,"
which default continues for 60 days; (v) failure by the Company or any of its
Restricted Subsidiaries for 60 days after written notice by the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes to
comply with any of its other agreements in the Indenture or the Notes; (vi)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists or is created after the
Closing Date, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $5.0 million and either (a) any creditor commences enforcement proceedings
upon any such judgment or (b) such judgments are not paid, discharged or stayed
for a period of 60 days; (viii) except as permitted by the Indenture, any
Guarantee of the Notes shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee of the Notes; and (ix)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together, would
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constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or such Guarantor under the Notes, any Guarantee thereof, the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that such
a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of and premium, interest and
Liquidated Damages, if any, on the Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of and premium, interest and Liquidated Damages, if any, on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the Closing Date, there has been
a change in
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the applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Notes and the Guarantees thereof may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture, the Notes or the
Guarantees thereof may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"Repurchase at the Option of Holders"); (iii) reduce the rate of or change the
time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, interest or Liquidated
Damages, if any, on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration); (v)
make any Note payable in money other than that stated in the Notes; (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium, interest or Liquidated Damages, if any, on the Notes; (vii) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants
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described above under the caption "Repurchase at the Option of Holders"); (ix)
release any Guarantor from its Guarantee of the Notes; or (ix) make any change
in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
any Guarantee thereof to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of Notes in the case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of Notes or
that does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchasers entered into a
Registration Rights Agreement on September 30, 1997. Pursuant to the
Registration Rights Agreement, the Company and the Guarantors agreed to file
with the Commission the Registration Statement of which this Prospectus is a
part. If (i) the Company is not required to file the Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any Holder of Transfer
Restricted Securities notifies the Company prior to the 20th day following
consummation of the Exchange Offer that (a) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (b) that it may
not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Registration
Statement is not appropriate or available for such resales or (c) that it is a
broker-dealer and owns Notes acquired directly from the Company or an affiliate
of the Company, the Company and the Guarantors will file with the Commission a
Shelf Registration Statement to cover resales of the Notes by the Holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. The Company and the
Guarantors will use their best efforts to cause the applicable registration
statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each Note
until (i) the date on which such Old Note has been exchanged by a person other
than a broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Old Note for a New Note,
the date on which such New Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Registration Statement, (iii) the date on which such Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement also (i) required the Company and the
Guarantors to file the Registration Statement with the Commission on or prior to
30 days after the Closing Date, (ii) required the Company and the Guarantors to
use their best efforts to have the Registration Statement declared effective by
the Commission on or prior to 90 days after the Closing Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or
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Commission policy, required the Company and the Guarantors to commence the
Exchange Offer and use their best efforts to issue, on or prior to 30 business
days after the date on which the Registration Statement was declared effective
by the Commission, New Notes in exchange for all Old Notes tendered prior
thereto in the Exchange Offer and (iv) if obligated to file the Shelf
Registration Statement, requires the Company and the Guarantors to use their
best efforts to file the Shelf Registration Statement with the Commission on or
prior to 30 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to 90 days
after such obligation arises. If (a) the Company and the Guarantors fail to file
any of the Registration Statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company and the Guarantors fail to consummate the Exchange Offer within 30
business days of the Effectiveness Target Date with respect to the Registration
Statement or (d) the Shelf Registration Statement or the Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (a) through (d) above a "Registration Default"), then the Company will
pay Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default,
in an amount equal to $.05 per week per $1,000 principal amount of Notes held by
such Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback), excluding sales of services and ancillary products in the ordinary
course of business consistent with past practices (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole will be governed
by the provisions of the Indenture described above under the caption "Change of
Control" and/or the provisions described above under the caption "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary of the Company), in the case
of either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0 million
or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following will be deemed not to be Asset Sales: (i) a transfer of
assets by the Company to a Wholly Owned Restricted Subsidiary or
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by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary; (ii) an issuance of Equity Interests by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (iii) a Permitted Investment or Restricted Payment that is permitted
by the covenant described above under the caption "Restricted Payments; (iv) the
exchange of Rigs or terminals for other assets that are usable in the business
of the Company and its Restricted Subsidiaries to the extent that the assets
received by the Company and its Restricted Subsidiaries have a fair market value
at least equal to the fair market value of the Rigs and terminals exchanged by
the Company, in each case as determined in good faith by the Board of Directors;
(v) a disposition of Cash Equivalents solely for cash or other Cash Equivalents;
(vi) a sale-leaseback transaction involving Rigs or real estate within one year
of the acquisition of such Rigs or real estate; and (vii) the sale of accounts
receivables and related assets customarily transferred in an asset
securitization transaction involving accounts receivable to a Receivables
Subsidiary or by a Receivables Subsidiary in connection with a Qualified
Receivables Transaction.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition.
"Change of Control" means, with respect to the Company or any successor
Person permitted under the covenant "Merger, Consideration, or Sale of Assets,"
the occurrences of any of the following: (a) the adoption of a plan relating to
the liquidation or dissolution of the Company; (b) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act), other than the Principals, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under
the Exchange Act), directly or indirectly, of (i) more than 35% of the voting
power of the outstanding voting stock of the Company or (ii) more of the voting
power of the outstanding voting stock of the Company than that beneficially
owned by the Principals; or (c) the first day on which more than a majority of
the members of the Board of Directors are not continuing Directors.
"Closing Date" means the date of the closing of the sale of the Old Notes.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing such Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits, (iii) Consolidated Interest
Expense, (iv) depreciation and amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and (v) nonrecurring charges relating to the
Acquisition, to the extent that such charges are set forth in "Unaudited Pro
Forma Financial Information," including the notes thereto, in each case on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Person shall be added to Consolidated Net
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Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Person was included in calculating
Consolidated Net Income.
"Consolidated Interest Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, redeems or repays any
Indebtedness (other than revolving credit borrowings) subsequent to the
commencement of the period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"), then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption or repayment of Indebtedness as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, and other transactions consummated by the Company or any of its
Restricted Subsidiaries with respect to which pro forma effect may be given
pursuant to Article 11 of Regulation S-X under the Securities Act, in each case
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iv)
of the proviso set forth in the definition of Consolidated Net Income, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Consolidated Interest Expense
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the referent Person or
any of its Restricted Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), in each case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) if the Net Income of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting is a
gain, the Net Income of such Person shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof, (ii) if the Net Income of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting is a loss, the Net Income of such Person shall be excluded
except to the extent that (a) the Company or any of its Restricted Subsidiaries
funds such loss by means of the provision of additional capital to such Person
or (b) the aggregate losses of such Person excluded pursuant to this clause (ii)
exceed the aggregate gains of such Person excluded pursuant to clause (i), (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
solely for purposes of calculating Consolidated Interest Expense for purposes of
the covenant described under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock", the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (a) the consolidated equity of the common stockholders of such Person
and its consolidated Restricted Subsidiaries as of such date, plus
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(b) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the Closing Date in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (ii) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
and (iii) all unamortized debt discount and expense and unamortized deferred
charges as of such date, in each case determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Closing Date or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, that any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof (or of any security into which it is convertible or for which it
is exchangeable) have the right to require the issuer to repurchase such Capital
Stock (or such security into which it is convertible or for which it is
exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall
not constitute Disqualified Stock if such Capital Stock (and all such securities
into which it is convertible or for which it is exchangeable) provides that the
issuer thereof will not repurchase or redeem any such Capital Stock (or any such
security into which it is convertible or for which it is exchangeable) pursuant
to such provisions prior to compliance by the Company with the provisions of the
Indenture described under the caption "Repurchase at the Option of Holders,"
"Change of Control" or "Asset Sales," as the case may be.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary that is not
formed, incorporated or organized in a jurisdiction outside of the United
States.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness (other than Indebtedness under
the New Credit Facility) in existence on the Closing Date, until such
Indebtedness is repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means all Domestic Restricted Subsidiaries and Canadian
Subsidiaries of the Company existing on the Closing Date (other than AH
Industries, Inc.), and all Subsidiaries of the Company created or acquired by
the Company after the Closing Date that becomes a Guarantor as set forth under
"Subsidiary Guarantees."
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"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap, cap or collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange or interest rates.
"Indebtedness" means, with respect to any Person, (i) any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, (ii) all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and (iii) to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
excluding, however, trade accounts receivable and bank deposits made in the
ordinary course of business. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "Restricted
Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, and any option or other agreement to sell or give a Lien).
"Limited-Recourse Debt" means Indebtedness (a) as to which neither the
Company nor any of its Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or is otherwise directly or indirectly liable (as a
guarantor or otherwise) or (ii) constitutes the lender, except, in the case of
clauses (i) and (ii), to the extent permitted by the covenants described under
the captions "Restricted Payments" and "Incurrence of Indebtedness and Issuance
of Preferred Stock, (b) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(c) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries, except to the extent of any Indebtedness incurred by the Company
or any of its Restricted Subsidiaries in accordance with clause (a)(i) above.
"Make-Whole Amount" means, with respect to any Note, an amount equal to the
excess, if any, of (a) the present value of the remaining principal, premium and
interest payments that would be payable with respect to such Note if such Note
were redeemed on October 1, 2002, computed using a discount rate equal to the
Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of
such Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to October 1, 2002.
"Make-Whole Price" means, with respect to any Note, the greater of (a) the
sum of the principal amount of and Make-Whole Amount with respect to such Note,
and (b) the redemption price of such Note on October 1, 2002.
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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (i) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, (ii) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (iii) amounts applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and (iv) any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain credit agreement, dated the date of
the Indenture, by and among the Company and BankBoston, N.A., as administrative
agent, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (i) any Investment in the Company or in a
Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company or (b) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (iv) any Restricted Investment made as a result of the receipt of
non-cash consideration from (a) an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase at
the Option of Holders." "Asset Sales" or (b) a disposition of assets that does
not constitute an Asset Sale; (v) any Investments received solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (vi) loans or advances to owner-operators and employees of the Company
or its Restricted Subsidiaries made in the ordinary course of business; (vii)
Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to
the extent required by applicable laws or regulations or pursuant to any
directive or request (whether or not having the force of law) of any
governmental authority having jurisdiction over Haul Insurance Limited; (viii)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries; (ix)
other Investments in businesses related to the businesses operated by the
Company and its Restricted Subsidiaries in an aggregate amount not to exceed
$30.0 million, provided that the aggregate amount of such Investments shall not
exceed $15.0 million in any calendar year; and (x) investments by the Company or
a Restricted Subsidiary of the Company in a Receivables Subsidiary or any
Investment by a Receivables Subsidiary in any other Person or assets in
connection with a Qualified Receivables Transaction; provided that any
Investment in any such Person is in the form of a Purchase Money Note, an equity
interest or interests in accounts receivable generated by the Company or a
Subsidiary of the Company and transferred to any Person in connection with a
Qualified Receivables Transaction or any such Person owning such accounts
receivable.
"Permitted Liens" means (i) Liens in favor of the Company or any of its
Restricted Subsidiaries; (ii) Liens securing Obligations incurred pursuant to
clause (i) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock;" (iii) Liens on property or Equity
Interests of a Person existing at the time such Person is merged into or
consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets or Equity Interests
other than those of the Person merged into or consolidated with the
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<PAGE> 78
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clause (v) of the second paragraph of
the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness; (vii) Liens
existing on the Closing Date; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefore;
(ix) Liens securing the Notes or any Guarantee thereof; (x) Liens securing
Permitted Refinancing Indebtedness to the extent that the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded was permitted to
be secured by a Lien; (xi) Liens on Investments of the Company or any of its
Restricted Subsidiaries in any Person that is not a Restricted Subsidiary of the
Company to secure the Indebtedness of such Person; (xii) Liens incurred in the
ordinary course of business of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed $2.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary and (xiii)
Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in
connection with a Qualified Receivables Transaction, provided that such
Indebtedness was incurred in connection with such Qualified Receivables
Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accredit value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accredit value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary that is an
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Principals" means the directors and executive officers of the Company on
the Closing Date, as set forth above under "Management," their respective
spouses and lineal descendants, and any Affiliate of any of the foregoing.
"Purchase Money Note" means a promissory note evidencing a line of credit,
which may be irrevocable, from, or evidencing other Indebtedness owed to, the
Company or any Subsidiary of the Company in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to the
maker of such note, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary of the
Company pursuant to which the Company or any Subsidiary of the Company may sell,
convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a
transfer by the Company or any Subsidiary of the Company) and (ii) any other
person (in the case of a transfer by a Receivables Subsidiary), or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any Subsidiary of the Company, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable, all contracts and all guarantees or other obligations in
respect of such accounts receivable, proceeds of such accounts receivable and
other assets which are customarily transferred or in
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<PAGE> 79
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
(other than a Guarantor), which engages in no activities other than in
connection with the financing of accounts receivable and which is designated by
the Board of Directors of the Company (as provided below) as a Receivables
Subsidiary (i) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (a) is guaranteed by the Company or any other
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (b) is recourse to or obligates the Company or any
other Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (c) subjects any property or asset of the Company
or any other Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings, (ii) with which neither the Company nor any other
Subsidiary of the Company has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or Qualified
Receivables Transaction) other than on terms no less favorable to the Company or
such other Subsidiary of the Company than those that might be obtained at the
time from persons that are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing accounts
receivable, and (iii) to which neither the Company nor any other Subsidiary of
the Company has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying, to the best of such officer's knowledge and
belief after consulting with counsel, that such designation complied with the
foregoing conditions.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which are reasonably customary in an accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Treasury Rate" means, at any time of computation, the yield to maturity at
such time (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such Statistical
Release is no longer published, any publicly available source of similar market
data) of United States Treasury securities with a constant maturity most nearly
equal to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is
72
<PAGE> 80
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
Make-Whole Average Life is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary (a) has no Indebtedness other than
Limited-Recourse Debt, (b) is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
comply with the covenant set forth under "Affiliate Transactions" and (c) except
to the extent permitted by the covenant set forth under "Restricted Payments,"
is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (i) to subscribe for
additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a significant modification of the terms of the Old Notes
and, therefore such exchange should not constitute an exchange for federal
income tax purposes. Accordingly, such exchange should have no federal income
tax consequences to holders of Old Notes.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
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<PAGE> 81
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and disposition
of Notes by an initial beneficial owner of Notes that, for United States federal
income tax purposes, is not a "United States person" (a "Non-United States
Holder"). This discussion is based upon the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury Regulations, changes to any of
which subsequent to the date hereof may adversely affect the tax consequences
described herein, possibly on a retroactive basis. This summary is addressed to
holders who hold Notes as capital assets within the meaning of Section 1221 of
the Code. For purposes of this discussion, a "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in the United States or under the laws of the United
States or of any political subdivision thereof, an estate, or, for taxable years
beginning on or before December 31, 1996, in general, any trust, whose income is
includible in gross income for United States federal income tax purposes
regardless of its source or for the taxable years beginning after December 31,
1996, a trust, if a U. S. court is able to exercise primary supervision over the
administration of the trust and one or more U. S. persons have the authority to
control all substantial decisions of the trust. The tax treatment of the holders
of the Notes may vary depending upon their particular situations. U. S. persons
acquiring the Notes are subject to different rules than those discussed below.
In addition, certain other holders (including insurance companies, tax exempt
organizations, financial institutions and broker-dealers) may be subject to
special rules not discussed below. Prospective investors are urged to consult
their tax advisors regarding the United States federal tax consequences of
acquiring, holding and disposing of Notes, as well as any tax consequences that
may arise under the laws of any foreign, state, local or other taxing
jurisdiction.
INTEREST
Interest paid by the Company to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and such Non-United States Holder
(i) does not directly or indirectly own 10% or more of the total combined voting
power of all classes of stock of the Company; (ii) is not a controlled foreign
corporation that is a "related person" of the Company (within the meaning of the
Code), and (iii) certifies, under penalties of perjury, that such holder is not
a United States person and provides such holder's name and address.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United
States federal income tax on gain recognized on a sale, redemption or other
disposition of a Note unless (i) the gain is effectively connected with the
conduct of a trade or business within the United States by the Non-United States
Holder or (ii) in the case of a Non-United States Holder who is a nonresident
alien individual and holds the Note as a capital asset, such holder is present
in the United States for 183 or more days in the taxable year and certain other
requirements are met.
FEDERAL ESTATE TAXES
If interest on the Notes is exempt from withholding of United States
federal income tax under the rules described above, the Notes will not be
included in the estate of a deceased individual Non-United States Holder for
United States federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will, where required, report to the holders of Notes and
the Internal Revenue Service the amount of any interest paid on the Notes in
each calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments of interest to Non-United States Holders,
temporary Treasury Regulations provide that the 31% backup withholding of United
States federal income tax and certain information reporting will not apply to
such payments with respect to which either the requisite certification has been
received or an exemption has otherwise been established; provided that neither
the Company nor its payment agent has actual knowledge that the holder is a
United States person or that the conditions of any other exemption are not in
fact satisfied. The
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<PAGE> 82
requisite certification is made by providing Internal Revenue Service Form W-8,
Certificate of Foreign Status, to the Company (or a substitute form provided by
the Company or its agent).
Under temporary Treasury regulations, information reporting and backup
withholding requirements may apply to the gross proceeds paid to a Non-United
States Holder on the disposition of the Notes, unless the holder provides
similar certification. A Non-United States holder is advised and encouraged to
consult its own tax advisor as to the consequences of disposing of the Notes.
Recently, the United States Treasury Department issued proposed
regulations regarding the withholding and information reporting rules discussed
above. In general, the proposed Treasury Regulations do not alter the
substantive withholding and information reporting. If finalized in their current
form, the proposed regulations would generally be effective for payments made
after December 31, 1997, subject to certain transition rules.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of one year after
the date of this Prospectus, they will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after the date of this Prospectus, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the issuance of the New Notes offered hereby will be
passed upon for the Company by Troutman Sanders LLP, Atlanta, Georgia.
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<PAGE> 83
EXPERTS
The historical Consolidated Financial Statements of Allied Holdings,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and for each of the
three years in the period ended December 31, 1996, included in this Prospectus,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
The historical Consolidated Financial Statements of Ryder Automotive
Carrier Services, Inc. and Subsidiaries as of December 31, 1995 and 1996, and
for each of the three years in the period ended December 31, 1996, included in
this Prospectus, have been audited by KPMG Peat Marwick LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
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<PAGE> 84
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets at December 31, 1995 and 1996
and June 30, 1997 (Unaudited)............................. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1994, 1995, and 1996 and
the Six Months Ended June 30, 1997 (Unaudited)............ F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995 and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-6
Notes to Consolidated Financial Statements.................. F-7
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
Independent Auditors' Report................................ F-23
Consolidated Balance Sheets at December 31, 1995 and 1996
and June 30, 1997 (Unaudited)............................. F-24
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-25
Consolidated Statements of Shareholder's Equity for the
Years Ended December 31, 1994, 1995, and 1996 and the Six
Months Ended June 30, 1997 (Unaudited).................... F-26
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-27
Notes to Consolidated Financial Statements.................. F-28
</TABLE>
F-1
<PAGE> 85
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Allied Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of ALLIED
HOLDINGS, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1995
and 1996 and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Allied Holdings, Inc. and
subsidiaries as of December 31, 1995 and 1996 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 4, 1997
(except with respect to
the matters discussed in
Note 13, as to which the
date is September 30, 1997)
F-2
<PAGE> 86
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
AND JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 11,147 $ 1,973 $ 4,409
Short-term investments.................................... 0 8,520 8,821
Receivables, net of allowance for doubtful accounts of
$689, $564, and $564 at December 31, 1995 and 1996 and
June 30, 1997, respectively............................ 22,690 22,673 28,325
Inventories............................................... 4,184 4,096 4,215
Prepayments and other current assets...................... 12,400 11,940 14,254
-------- -------- --------
Total current assets.............................. 50,421 49,202 60,024
-------- -------- --------
PROPERTY AND EQUIPMENT, net................................. 134,873 132,552 126,364
-------- -------- --------
OTHER ASSETS:
Goodwill, net............................................. 23,568 22,081 33,800
Notes receivable due from related parties................. 573 573 573
Other..................................................... 5,251 6,675 7,933
-------- -------- --------
Total other assets................................ 29,392 29,329 42,306
-------- -------- --------
Total assets...................................... $214,686 $211,083 $228,694
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 4,368 $ 2,275 $ 8,248
Trade accounts payable.................................... 11,320 15,872 12,910
Accrued liabilities....................................... 27,569 30,347 37,433
-------- -------- --------
Total current liabilities......................... 43,257 48,494 58,591
-------- -------- --------
LONG-TERM DEBT, less current maturities..................... 106,634 93,708 96,986
-------- -------- --------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS................. 3,698 3,621 3,557
-------- -------- --------
DEFERRED INCOME TAXES....................................... 5,561 7,487 8,700
-------- -------- --------
OTHER LONG-TERM LIABILITIES................................. 2,514 1,064 703
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 5, 7, 8 and 13)
STOCKHOLDERS' EQUITY:
Common stock, no par value; 20,000 shares authorized,
7,725, 7,810 and 7,810 shares outstanding at December
31, 1995 and 1996 and June 30, 1997, respectively...... 0 0 0
Additional paid-in capital................................ 42,977 43,657 43,657
Retained earnings......................................... 10,489 14,475 18,186
Foreign currency translation adjustment, net of tax....... (444) (743) (1,074)
Unearned compensation..................................... 0 (680) (612)
-------- -------- --------
Total stockholders' equity........................ 53,022 56,709 60,157
-------- -------- --------
Total liabilities and stockholders' equity........ $214,686 $211,083 $228,694
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 87
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES.................................... $297,236 $381,464 $392,547 $200,565 $208,969
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Salaries, wages, and fringe benefits...... 157,979 195,952 204,838 105,315 109,634
Operating supplies and expenses........... 51,532 62,179 62,880 31,526 32,563
Purchased transportation.................. 9,486 32,084 34,533 17,666 19,170
Insurance and claims...................... 12,043 16,022 16,849 8,039 8,098
Operating taxes and licenses.............. 14,301 16,564 16,122 8,381 8,190
Depreciation and amortization............. 16,314 25,431 26,425 12,931 13,786
Rent expenses............................. 3,214 5,354 4,975 2,481 2,470
Communications and utilities.............. 1,855 3,435 3,111 1,740 1,534
Other operating expenses.................. 1,781 3,522 4,219 1,431 2,074
-------- -------- -------- -------- --------
Total operating expenses.......... 268,505 360,543 373,952 189,510 197,519
-------- -------- -------- -------- --------
Operating income.................. 28,731 20,921 18,595 11,055 11,450
-------- -------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense.......................... (5,462) (11,260) (10,720) (5,396) (5,408)
Interest income........................... 312 707 603 303 357
-------- -------- -------- -------- --------
(5,150) (10,553) (10,117) (5,093) (5,051)
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM...................................... 23,581 10,368 8,478 5,962 6,399
INCOME TAX PROVISION........................ (9,393) (4,222) (3,557) (2,504) (2,688)
-------- -------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM............ 14,188 6,146 4,921 3,458 3,711
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, net of income tax benefit of
$2,072, $573, and $573 for the years ended
December 31, 1994 and 1996 and for the six
months ended June 30, 1996,
respectively.............................. (2,627) 0 (935) (935) 0
-------- -------- -------- -------- --------
NET INCOME.................................. $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711
======== ======== ======== ======== ========
PER COMMON SHARE:
Income before extraordinary item.......... $ 1.84 $ 0.80 $ 0.64 $ 0.45 $ 0.48
Extraordinary loss on early extinguishment
of debt................................ (0.34) 0.00 (0.12) (0.12) 0.00
-------- -------- -------- -------- --------
NET INCOME PER COMMON SHARE................. $ 1.50 $ 0.80 $ 0.52 $ 0.33 $ 0.48
======== ======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................... 7,725 7,725 7,725 7,725 7,725
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 88
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
COMMON STOCK ADDITIONAL RETAINED CURRENCY
--------------- PAID-IN EARNINGS TRANSLATION UNEARNED
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT COMPENSATION TOTAL
------ ------ ---------- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993................. 7,725 $0 $42,977 $(7,218) $ 0 $ 0 $35,759
Net income............................... 0 0 0 11,561 0 0 11,561
Foreign currency translation adjustment,
net of income taxes of $978............ 0 0 0 0 (1,485) 0 (1,485)
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1994................. 7,725 0 42,977 4,343 (1,485) 0 45,835
Net income............................... 0 0 0 6,146 0 0 6,146
Foreign currency translation adjustment,
net of income taxes of $701............ 0 0 0 0 1,041 0 1,041
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1995................. 7,725 0 42,977 10,489 (444) 0 53,022
Net income............................... 0 0 0 3,986 0 0 3,986
Foreign currency translation adjustment,
net of income taxes of $181............ 0 0 0 0 (299) 0 (299)
Restricted stock awards.................. 85 0 680 0 0 (680) 0
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1996................. 7,810 0 43,657 14,475 (743) (680) 56,709
Net income (unaudited)................... 0 0 0 3,711 0 0 3,711
Foreign currency translation adjustment,
net of income taxes of $181
(unaudited)............................ 0 0 0 0 (331) 0 (331)
Restricted stock awards (unaudited)...... 0 0 0 0 0 68 68
----- -- ------- ------- ------- ----- -------
BALANCE, June 30, 1997 (Unaudited)......... 7,810 $0 $43,657 $18,186 $(1,074) $(612) $60,157
===== == ======= ======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 89
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711
-------- -------- -------- -------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 16,314 25,431 26,425 12,931 13,786
Gain on sale of property and equipment............ (401) (57) (13) (359) 27
Extraordinary loss on early extinguishment of
debt, net....................................... 2,627 0 935 935 0
Deferred income taxes............................. 4,189 1,806 1,921 84 1,405
Change in operating assets and liabilities,
excluding effect of business acquired:
Increase in short-term investments.............. 0 0 (8,520) 0 (301)
Receivables, net................................ (3,155) 1,299 (9) (6,149) (5,699)
Inventories..................................... 457 163 82 148 (128)
Prepayments and other current assets............ (95) (444) 452 (2,150) (2,333)
Trade accounts payable.......................... (1,907) 645 4,565 1,247 (2,934)
Accrued liabilities............................. (1,482) (4,927) 1,277 6,069 6,685
-------- -------- -------- -------- --------
Total adjustments............................ 16,547 23,916 27,115 12,756 10,508
-------- -------- -------- -------- --------
Net cash provided by operating activities.... 28,108 30,062 31,101 15,279 14,219
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................. (30,545) (18,210) (25,972) (14,376) (6,910)
Proceeds from sale of property and equipment........ 1,032 768 3,447 1,734 114
Purchase of business, net of cash acquired.......... (32,332) 0 0 0 (12,898)
Increase in the cash surrender value of life
insurance......................................... (356) (589) (1,981) (991) (1,283)
-------- -------- -------- -------- --------
Net cash used in investing activities........ (62,201) (18,031) (24,506) (13,633) (20,977)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt........................ (73,839) (11,952) (57,691) (47,692) (11,404)
Proceeds from issuance of long-term debt............ 113,113 0 42,657 40,000 20,655
Other, net.......................................... (1,243) (827) (655) (513) 0
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities................................. 38,031 (12,779) (15,689) (8,205) 9,251
-------- -------- -------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS......................................... (137) 183 (80) 69 (57)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 3,801 (565) (9,174) (6,490) 2,436
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...... 7,911 11,712 11,147 11,147 1,973
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............ $ 11,712 $ 11,147 $ 1,973 $ 4,657 $ 4,409
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 90
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995, AND 1996
(INFORMATION AS OF JUNE 30, 1997 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
1. ORGANIZATION AND OPERATIONS
Allied Holdings, Inc. (the "Company"), a Georgia corporation, is a holding
company which operates through its wholly owned subsidiaries. The principal
subsidiary of the Company is Allied Automotive Group, Inc. ("AAG"), a Georgia
corporation. AAG is comprised of Allied Systems, Ltd. ("Allied Systems"), a
Georgia limited partnership, Auto Haulaway, Inc. ("Auto Haulaway"), an Ontario,
Canada corporation, Inter Mobile, Inc. ("Inter Mobile"), Legion Transportation,
Inc. ("Legion"), and Auto Haulaway Releasing Services (1981) Limited
("Releasing"). Allied Systems and Auto Haulaway are engaged in the business of
transporting automobiles and light trucks from manufacturing plants, ports,
auctions, and railway distribution points to automobile dealerships. The Company
acquired all of the outstanding capital stock of Auto Haulaway on October 31,
1994 (Note 2). Currently, Inter Mobile, Legion, and Releasing are not
significant to the consolidated financial position or results of operations of
the Company.
During 1996, the Company incorporated Axis Group, Inc. ("Axis Group"). Axis
Group provides logistics solutions to the finished vehicle, service, and
aftermarket parts segments of the automotive market. Axis Group identifies new
and innovative methods of distribution as well as better use of traditional and
emerging technologies to help customers solve the most complex transportation,
inventory management, and logistics problems.
The Company has three other operating subsidiaries, Allied Industries, Inc.
("Allied Industries"), Haul Insurance Limited ("Haul"), and Link Information
Systems, Inc. ("Link"). These subsidiaries provide services to AAG, Axis Group,
and the other subsidiaries of the Company. Allied Industries provides
administrative, financial, risk management, and other related services. During
December 1995, the Company incorporated Haul as a captive insurance company.
Haul was formed for the purpose of insuring general liability, automobile
liability, and workers' compensation for the Company. Link, which was
incorporated in 1996, provides information systems hardware, software, and
support.
2. ACQUISITION OF AUTO HAULAWAY
On October 31, 1994, the Company acquired all of the outstanding capital
stock of Auto Haulaway for approximately $30 million. The acquisition has been
accounted for under the purchase method, and accordingly, the operating results
of Auto Haulaway have been included in the accompanying financial statements
since the date of the acquisition.
In connection with the acquisition, the Company refinanced approximately
$35 million of Auto Haulaway's long-term debt, which resulted in an
extraordinary loss on the extinguishment of the debt of approximately $2.6
million, net of income taxes of approximately $2.1 million. The source of funds
utilized for the payment of the purchase price and the debt refinancing was
borrowings under the Company's revolving credit agreement and available cash on
hand.
The following unaudited pro forma results of operations for the year ended
December 31, 1994 assume that the acquisition of Auto Haulaway had occurred on
January 1, 1994. The pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition of Auto Haulaway had been
consummated on January 1, 1994. In addition, they are not intended to be a
projection of future results and do
F-7
<PAGE> 91
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
not reflect any synergies that might be achieved from combined operations (in
thousands, except per share data).
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Revenues.................................................... $410,631
Operating income............................................ 35,245
Income before extraordinary item............................ 14,871
Net income.................................................. 12,244
Income per share before extraordinary item.................. $ 1.93
Net income per share........................................ $ 1.58
Average shares outstanding.................................. 7,725
</TABLE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions and accounts
have been eliminated.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the Company's Canadian subsidiaries are
translated into U.S. dollars using current exchange rates in effect at the
balance sheet date, and revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded as a separate
component of stockholders' equity, net of related income taxes.
REVENUE RECOGNITION
Substantially all revenue is derived from transporting automobiles and
light trucks from manufacturing plants, ports, auctions, and railway
distribution points to automobile dealerships. Revenue is recorded by the
Company when the vehicles are delivered to the dealerships.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories consist primarily of tires, parts, materials, and supplies for
servicing the Company's tractors and trailers. Inventories are recorded at the
lower of cost (on a first-in, first-out basis) or market.
PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of the following at December
31, 1995 and 1996 and June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ --------
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Tires on tractors and trailers.......................... $ 5,944 $ 6,785 $ 6,611
Prepaid insurance....................................... 3,192 2,572 3,307
Other................................................... 3,264 2,583 4,336
------- ------- -------
$12,400 $11,940 $14,254
======= ======= =======
</TABLE>
F-8
<PAGE> 92
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TIRES ON TRACTORS AND TRAILERS
Tires on tractors and trailers are capitalized and amortized to operating
supplies and expenses on a cents per mile basis.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major property additions,
replacements, and betterments are capitalized, while maintenance and repairs
which do not extend the useful lives of these assets are expensed currently.
Depreciation is provided using the straight-line method for financial reporting
and accelerated methods for income tax purposes. The detail of property and
equipment at December 31, 1995 and 1996 and June 30, 1997 is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997 USEFUL LIVES
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Tractors and trailers..................... $164,422 $181,841 $186,288 4 to 10 years
Buildings and facilities (including
leasehold improvements)................. 22,951 23,679 23,786 4 to 25 years
Land...................................... 9,999 9,953 9,953
Furniture, fixtures, and equipment........ 9,745 10,520 10,560 3 to 10 years
Service cars and equipment................ 1,330 1,175 2,190 3 to 10 years
-------- -------- --------
208,447 227,168 232,777
Less accumulated depreciation and
amortization............................ 73,574 94,616 106,413
-------- -------- --------
$134,873 $132,552 $126,364
======== ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------- ---------------
1994 1995 1996 1996 1997
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Cash paid during the period for interest.......... $ 3,738 $11,470 $8,514 $3,623 $6,124
Cash paid during the period for income taxes, net
of refunds...................................... 6,205 1,364 (280) 730 228
Liabilities assumed in connection with business
acquired........................................ 48,261 0 0 0 0
Capital lease obligations terminated.............. 4,093 0 0 0 0
</TABLE>
GOODWILL
The acquisition of Auto Haulaway resulted in goodwill of approximately
$23,425,000. Goodwill related to the acquisition is being amortized on a
straight-line basis over 20 years. Other goodwill is being amortized on a
straight-line basis over ten years. Amortization (included in depreciation and
amortization expense) for the years ended December 31, 1994, 1995, and 1996
amounted to approximately $607,000, $1,407,000, and $1,541,000, respectively.
Amortization for the six months ended June 30, 1996 and 1997 amounted to
approximately $772,000 and $846,000, respectively. Accumulated amortization was
approximately $4,082,000, $5,623,000, and $6,454,000 at December 31, 1995 and
1996 and June 30, 1997, respectively. The Company periodically evaluates the
realizability of goodwill based upon expectations of nondiscounted cash flows
and operating income for each subsidiary having a material goodwill balance. The
Company believes no impairment of goodwill exists at June 30, 1997.
F-9
<PAGE> 93
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CASH SURRENDER VALUE OF LIFE INSURANCE
The Company maintains life insurance policies for certain employees of the
Company. Under the terms of the policies, the Company will receive, upon the
death of the insured, the lesser of aggregate premiums paid or the face amount
of the policy. Any excess proceeds over premiums paid are remitted to the
employee's beneficiary. The Company records the increase in cash surrender value
each year as a reduction of premium expense. The Company has recorded
approximately $2,146,000 and $4,127,000 of cash surrender value as of December
31, 1995 and 1996, respectively, included in other assets on the accompanying
balance sheets.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
"Disclosures About Fair Value of Financial Instruments," requires disclosure of
the following information about the fair value of certain financial instruments
for which it is practicable to estimate that value. For purposes of the
following disclosure, the fair value of a financial instrument is the amount at
which the instrument could be exchanged in a current transaction between willing
parties other than in a forced sale or liquidation.
The amounts disclosed represent management's best estimates of fair value.
In accordance with SFAS No. 107, the Company has excluded certain financial
instruments and all other assets and liabilities from its disclosure.
Accordingly, the aggregate fair value amounts presented are not intended to, and
do not, represent the underlying fair value of the Company.
The methods and assumptions used to estimate fair value are as follows:
Cash and Cash Equivalents
The carrying amount approximates fair value due to the relatively
short period to maturity of these instruments.
Short-Term Investments
The Company's short-term investments are comprised of debt securities,
all classified as trading securities, which are carried at their fair value
based upon the quoted market prices of those investments. Accordingly, net
realized and unrealized gains and losses on trading securities are included
in net earnings.
Long-Term Debt
The carrying amount approximates fair value based on the borrowing
rates currently available to the Company for bank loans with similar terms
and average maturities.
Interest Rate Cap Agreements
The Company has entered into several interest rate protection
agreements which expire at various dates through February 1999. The
agreements protect outstanding floating rate debt at varying amounts
ranging from $47,000,000 in 1996 to $33,000,000 in 1999. Under the
agreements, the Company is
F-10
<PAGE> 94
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reimbursed when actual interest rates exceed a limit, as defined. The
limit, based primarily upon the 90-day LIBOR, ranges from 6.5% to 8% over
the protection period and certain of the agreements limit the reimbursement
if actual LIBOR exceeds a specified rate. The fair value of the interest
rate cap agreements is the amount at which they could be settled, based on
estimates obtained from brokers.
The asset and (liability) amounts recorded in the balance sheet and the
estimated fair values of financial instruments at December 31, 1995 and 1996 and
June 30, 1997 consisted of the following (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
--------- ---------
<S> <C> <C>
December 31, 1995:
Cash and cash equivalents................................. $ 11,147 $ 11,147
Long-term debt............................................ (111,002) (111,002)
Interest rate cap agreements.............................. 228 0
December 31, 1996:
Cash and cash equivalents................................. $ 1,973 $ 1,973
Short-term investments.................................... 8,520 8,520
Long-term debt............................................ (95,983) (95,983)
Interest rate cap agreements.............................. 309 0
June 30, 1997:
Cash and cash equivalents................................. $ 4,409 $ 4,409
Short-term investments.................................... 8,821 8,821
Long-term debt............................................ (105,234) (105,234)
Interest rate cap agreements.............................. 209 0
</TABLE>
ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1995 and
1996 and June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Wages and benefits........................................ $14,540 $12,566 $15,274
Claims and insurance reserves............................. 9,649 13,145 14,844
Other..................................................... 3,380 4,636 7,315
------- ------- -------
$27,569 $30,347 $37,433
======= ======= =======
</TABLE>
CLAIMS AND INSURANCE RESERVES
In the United States, the Company retains liability up to $500,000 for each
claim for automobile, workers' compensation, and general liability, including
personal injury and property damage claims. In addition to the $500,000 per
occurrence deductible for automobile liability, there is a $250,000 aggregate
deductible for those claims which exceed the $500,000 per occurrence deductible.
In addition, the Company retains liability up to $250,000 for each cargo damage
claim. In Canada, the Company retains liability up to CDN $100,000 for each
claim for personal injury, property damage, and cargo damage. The estimated
costs of all known and potential losses are accrued by the Company. In the
opinion of management, adequate provision has been made for all incurred claims.
Subsequent to December 31, 1996, the Company increased its liability up to
$650,000 for each claim for workers' compensation. The Company also increased
its aggregate deductible for automobile liability to
F-11
<PAGE> 95
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$500,000 for those claims which exceed the per occurrence deductible. These
changes are in effect for the fiscal year beginning January 1, 1997.
INCOME TAXES
The Company follows the practice of providing for income taxes based on
SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires recognition
of deferred tax liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or tax returns
(Note 4).
EARNINGS PER SHARE
Earnings per share are calculated by dividing net income by the weighted
average number of common shares outstanding for the years presented. The
dilutive effect of equivalent shares derived from stock options and restricted
stock was less than 3% for the years ended December 31, 1995 and 1996 and for
the six months ended June 30, 1996 and 1997 (there were no stock options or
restricted stock outstanding during 1994), and therefore, the equivalent shares
were not included in the computation of earnings per share.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." This new statement will not result in changes to the
Company's earnings per share for the first six months of 1997 or prior years.
RECLASSIFICATION
Certain amounts in the December 31, 1994, 1995, and 1996 financial
statements have been reclassified to conform to the current period presentation.
INTERIM UNAUDITED DATA FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
In the opinion of management, the unaudited condensed consolidated
financial statements contain all of the normal and recurring adjustments
necessary to present fairly the consolidated financial position of the Company
and its subsidiaries at June 30, 1997 and the consolidated results of operations
and cash flows of the Company and its subsidiaries for the six months ended June
30, 1996 and 1997.
4. INCOME TAXES
For all periods presented, the accompanying financial statements reflect
provisions for income taxes computed in accordance with the requirements of SFAS
No. 109.
The following summarizes the components of the income tax provision for the
years ended December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------- -------
<S> <C> <C> <C>
Current:
Federal.................................................. $3,991 $ 571 $ 369
State.................................................... 607 177 269
Foreign.................................................. 325 1,989 932
Deferred:
Federal.................................................. 3,599 3,371 4,365
State.................................................... 630 422 646
Foreign.................................................. 241 (2,308) (3,024)
------ ------- -------
Total income tax provision....................... $9,393 $ 4,222 $ 3,557
====== ======= =======
</TABLE>
F-12
<PAGE> 96
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For the six months ended June 30, 1996 and 1997, the Company recorded an
income tax provision of $2,504 and $2,688, respectively.
The provision for income taxes differs from the amounts computed by
applying federal statutory rates due to the following for the years ended
December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Provision computed at the federal statutory rate............ $8,018 $3,525 $2,883
State income taxes, net of federal income tax benefit....... 943 415 604
Insurance premiums, net of recovery......................... 42 54 (115)
Earnings in jurisdictions taxed at rates different from the
statutory U.S. federal rate............................... 0 (252) (494)
Other, net.................................................. 390 480 679
------ ------ ------
Income tax provision........................................ $9,393 $4,222 $3,557
====== ====== ======
</TABLE>
The tax effect of significant temporary differences representing deferred
tax assets and liabilities at December 31, 1995 and 1996 is as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Noncurrent deferred tax assets (liabilities):
Tax carryforwards......................................... $ 1,775 $ 3,623
Postretirement benefits................................... 1,535 1,501
Depreciation and amortization............................. (10,085) (13,823)
Other, net................................................ 1,214 1,212
-------- --------
Net noncurrent deferred tax liabilities........... (5,561) (7,487)
-------- --------
Current deferred tax assets (liabilities):
Tires on tractors and trailers............................ (2,244) (2,615)
Liabilities not currently deductible...................... 3,881 2,470
Other, net................................................ (511) 498
-------- --------
Net current deferred tax assets................... 1,126 353
-------- --------
Net deferred tax liabilities...................... $ (4,435) $ (7,134)
======== ========
</TABLE>
The Company has certain tax carryforwards available to offset future income
taxes consisting of net operating losses that expire from 2002 to 2012, foreign
tax credits that expire from 2001 to 2002, and alternative minimum tax credits
that have no expiration dates.
Management believes that a valuation allowance is not considered necessary
based upon the Company's earnings history, the projections for future taxable
income, and other relevant considerations over the periods during which the
deferred tax assets are deductible.
5. LEASE COMMITMENTS
RELATED PARTIES
Prior to December 1995, the Company leased automobiles and service trucks
from a related party under leases generally having one-year to three-year lease
terms at fixed monthly rental rates. In addition, the Company leases office
space from a related party under a lease which expires in 2003. Rental expenses
under these noncancellable leases amounted to approximately $1,398,000 in 1994,
$1,652,000 in 1995, and $1,030,000 in 1996. In the opinion of management, the
terms of these leases are as favorable as those which could be obtained from
unrelated lessors.
F-13
<PAGE> 97
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNRELATED PARTIES
The Company leases equipment and certain terminal facilities from unrelated
parties under noncancellable operating lease agreements which expire in various
years through 2003. Rental expenses under these leases amounted to approximately
$454,000, $1,796,000, and $3,245,000 in 1994, 1995, and 1996, respectively.
The Company also leases certain terminal facilities and revenue equipment
from unrelated parties under cancelable leases (i.e., month-to-month terms). The
total rental expenses under these leases were approximately $1,973,000,
$1,965,000, and $2,142,000 for the years ended December 31, 1994, 1995, and
1996, respectively.
Future minimum rental commitments under all noncancellable operating lease
agreements, excluding lease agreements that expire within one year, are as
follows as of December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
RELATED
PARTY OTHER TOTAL
------- ------ -------
<S> <C> <C> <C>
1997........................................................ $1,061 $2,840 $ 3,901
1998........................................................ 1,093 2,563 3,656
1999........................................................ 1,126 1,750 2,876
2000........................................................ 1,159 812 1,971
2001........................................................ 1,194 618 1,812
Thereafter.................................................. 1,540 1,052 2,592
------ ------ -------
Total............................................. $7,173 $9,635 $16,808
====== ====== =======
</TABLE>
6. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1995 and 1996 and
June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
------------------ JUNE 30,
1995 1996 1997
-------- ------- --------
<S> <C> <C> <C>
Revolving credit and term loan agreement................ $100,000 $49,348 $ 59,737
Senior subordinated notes............................... 0 40,000 40,000
Floating rate installment note payable with interest at
LIBOR plus 2.25% (8.48% at December 31, 1996)......... 8,909 6,635 5,497
Fixed rate installment note payable bearing interest at
10%................................................... 2,093 0 0
-------- ------- --------
111,002 95,983 105,234
Less current maturities of long-term debt............... (4,368) (2,275) (8,248)
-------- ------- --------
$106,634 $93,708 $ 96,986
======== ======= ========
</TABLE>
In February 1996, the Company issued $40,000,000 of senior subordinated
notes ("Senior Subordinated Notes") through a private placement. The Senior
Subordinated Notes mature February 1, 2003 and bear interest at 12% annually.
Proceeds from the Senior Subordinated Notes were used to reduce borrowings under
the Company's revolving credit and term loan agreement (the "Agreement"). In
connection with the issuance of the Senior Subordinated Notes, the Company
refinanced the Agreement (the "Refinancing") to provide for the Senior
Subordinated Notes. In addition, the floating rate installment note payable was
amended and refinanced to allow for the Senior Subordinated Notes, and the
interest rate was changed from prime plus 2% to the LIBOR plus 2.25%.
The Agreement enables the Company to borrow up to the lesser of
$130,000,000 or the borrowing base amount, as defined in the Agreement. After
the Refinancing, annual commitment fees are .375% of the undrawn portion of the
commitment. Amounts outstanding under the revolving portion of the Agreement,
after giving consideration to the Refinancing, mature February 1998, subject to
one-year extensions, at which
F-14
<PAGE> 98
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
time the balance outstanding converts into a term loan which matures four years
after the maturity date of the revolving portion of the Agreement. The interest
rate for the Agreement is, at the Company's option, either (1) the bank's base
rate, as defined, or (2) the bank's Eurodollar rate, as defined, as determined
at the date of each borrowing, plus an applicable margin.
The Agreement is unsecured and contains restrictive covenants which, among
other things, limit indebtedness and distributions, require certain cash flow
and leverage ratios to be maintained, and require a minimum consolidated
tangible net worth, as defined. After the Refinancing, and assuming that the
extension of the revolving portion of the Agreement is not exercised, future
maturities of long-term debt are as follows at December 31, 1996 (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 2,275
1998........................................................ 12,144
1999........................................................ 11,956
2000........................................................ 9,870
2001........................................................ 7,403
Thereafter.................................................. 52,335
-------
$95,983
=======
</TABLE>
At December 31, 1996, the weighted average interest rate on borrowings
under the revolving credit agreement was 7.3%, and approximately $8,520,000 was
committed under letters of credit. At December 31, 1996, the Company had
available borrowings under the Agreement of approximately $48,000,000.
Property and equipment with a net book value of approximately $10,348,000
at December 31, 1996 are secured as collateral under an installment note
payable.
7. EMPLOYEE BENEFITS
PENSION PLANS
The Company maintains the Allied Defined Benefit Pension Plan, a trusteed
noncontributory defined benefit pension plan for management and office personnel
in the United States, and the Pension Plan for Employees of Auto Haulaway, Inc.
and Associated Companies for management and office personnel in Canada (the
"Plans"). Under the Plans, benefits are paid to eligible employees upon
retirement based primarily on years of service and compensation levels at
retirement. Contributions to the Plans reflect benefits attributed to employees'
services to date and services expected to be rendered in the future. The
Company's funding policy is to contribute annually at a rate that is intended to
fund future service benefits as a level percentage of pay and past service
benefits over a 30-year period.
F-15
<PAGE> 99
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the Plans' status and amounts recognized in
the Company's balance sheets as of December 31, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $15,046 and $16,444 in 1995 and 1996,
respectively........................................... $15,349 $16,810
======= =======
Projected benefit obligation................................ $19,609 $21,438
Plan assets at fair value................................... 17,106 19,052
------- -------
Projected benefit obligation in excess of plan assets....... (2,503) (2,386)
Unrecognized net loss....................................... 3,180 2,787
Unrecognized prior service cost............................. (508) (472)
Unrecognized net transition asset being recognized over
approximately 15 years.................................... (312) (270)
------- -------
Accrued pension cost recognized in the consolidated balance
sheets.................................................... $ (143) $ (341)
======= =======
</TABLE>
The net periodic pension cost consisted of the following components for the
years ended December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits earned during the period........ $ 826 $ 732 $ 993
Interest cost on projected benefit obligation............. 972 1,336 1,523
Actual (gain) loss on plan assets......................... 69 (2,522) (2,226)
Net amortization and deferral of actuarial gains and
losses.................................................. (1,149) 1,169 713
------- ------- -------
Net periodic pension cost................................. $ 718 $ 715 $ 1,003
======= ======= =======
</TABLE>
The following assumptions were used:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Weighted average discount rate............................ 8.5% 7.5% 7.75%
Increase in future compensation levels.................... 3.5-6.0 3.5-6.0 3.5-6.0
Expected long-term rate of return on assets -- United
States.................................................. 10.0 10.0 10.0
Expected long-term rate of return on assets -- Canada..... 7.5 7.5 7.5
</TABLE>
At December 31, 1996, plan assets consisted primarily of U.S. and
international corporate bonds and stocks, convertible equity securities, and
U.S. and Canadian government securities.
A substantial number of the Company's employees are covered by
union-sponsored, collectively bargained, multiemployer pension plans. The
Company contributed and charged to expense approximately $8,350,000,
$10,916,000, and $11,444,000 for the years ended December 31, 1994, 1995, and
1996, respectively, for such plans. These contributions are determined in
accordance with the provisions of negotiated labor contracts and are generally
based on the number of man-hours worked.
401(K) PLAN
The Company has a 401(k) plan covering all of its employees in the United
States. Prior to July 1, 1993, the Company did not contribute to this plan;
however, the Company did incur the cost of administering this plan. The
Company's administrative expense for the 401(k) plan was approximately $221,000,
$160,000, and $165,000 in fiscal years 1994, 1995, and 1996, respectively.
Beginning July 1, 1993, the Company contributes the lesser of 3% of participant
wages or $1,000 per year for each nonbargaining unit participant of the plan.
F-16
<PAGE> 100
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company contributed approximately $183,000, $225,000, and $225,000 to the
plan during the years ended December 31, 1994, 1995, and 1996, respectively.
POSTRETIREMENT BENEFIT PLANS
The Company provides certain health care and life insurance benefits for
eligible employees who retired prior to July 1, 1993 and their dependents.
Generally, the medical plan pays a stated percentage of most medical expenses
reduced for any deductibles and payments by government programs or other group
coverage. The life insurance plan pays a lump-sum death benefit based on the
employee's salary at retirement. The plans are unfunded. Employees retiring
after July 1, 1993 are not entitled to any postretirement medical or life
insurance benefits.
The following table sets forth the status of the plan reconciled to the
accrued postretirement benefit cost recognized in the Company's balance sheets
at December 31, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation, retirees..... $4,111 $3,586
Unrecognized net gain (loss)................................ (155) 338
------ ------
Accrued postretirement benefit cost......................... 3,956 3,924
Less current portion........................................ (258) (303)
------ ------
$3,698 $3,621
====== ======
</TABLE>
Net periodic benefit cost for 1994, 1995, and 1996 included the following
components (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Service cost of benefits earned............................. $ 0 $ 0 $ 0
Interest cost on accumulated postretirement benefit
obligation................................................ 325 308 260
---- ---- ----
Net periodic postretirement benefit cost.................... $325 $308 $260
==== ==== ====
</TABLE>
Assumptions used in the computation of the accumulated postretirement
benefit obligation and net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- -----
<S> <C> <C> <C>
Discount rate............................................... 8.5% 7.5% 7.75%
Initial health care cost trend rate......................... 12.5 11.0 10.25
Ultimate health care cost trend rate........................ 5.5 5.5 5.5
Year ultimate health care cost trend rate reached........... 2003 2003 2003
</TABLE>
If the health care cost trend rate were increased 1%, the accumulated
postretirement benefit obligation as of December 31, 1996 would have increased
by approximately $177,000. The effect of this change on the periodic
postretirement benefit cost for 1996 would be approximately $13,000.
A substantial number of the Company's employees are covered by
union-sponsored, collectively bargained, multiemployer health and welfare
benefit plans. The Company contributed and charged to expense approximately
$11,700,000, $13,723,000, and $14,811,000 in 1994, 1995, and 1996, respectively,
in connection with these plans. These required contributions are determined in
accordance with the provisions of negotiated labor contracts and are for both
active and retired employees.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation and environmental matters
relating to employment practices, damages, and other matters arising from
operations in the ordinary course of business. In the
F-17
<PAGE> 101
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company's financial position or results of
operations.
The Company has entered into employment agreements with certain executive
officers of the Company. The agreements, which are substantially similar,
provide for compensation to the officers in the form of annual base salaries and
bonuses based on earnings. The employment agreements also provide for severance
benefits upon the occurrence of certain events, including a change in control,
as defined.
9. REVENUES FROM MAJOR CUSTOMERS
Substantially all of the Company's trade receivables and revenues are
realized through the automotive industry.
In 1994, 1995, and 1996, approximately 77%, 80%, and 82%, respectively, of
the Company's revenues were derived from three customers, one of which, Ford
Motor Company ("Ford"), accounted for approximately 58%, 52%, and 53% of
revenues, respectively.
The Company had accounts receivable from Ford of approximately $8,081,000
and $8,964,000 at December 31, 1995 and 1996, respectively.
10. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in one industry segment: transporting automobiles and
light trucks from manufacturing plants, ports, auctions, and railway
distribution points to automotive dealerships. Prior to the acquisition of Auto
Haulaway on October 31, 1994, the Company only operated in the United States.
Auto Haulaway operates in Canada. Geographic financial information as of
December 31, 1995 and 1996 and June 30, 1997 and for the years ended December
31, 1994, 1995, and 1996 and the six months ended June 30, 1996 and 1997 is as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
United States $274,293 $258,038 $264,909 $133,841 $133,165
Canada............................ 22,943 123,426 127,638 66,724 75,804
-------- -------- -------- -------- --------
$297,236 $381,464 $392,547 $200,565 $208,969
======== ======== ======== ======== ========
Operating income (loss):
United States..................... $ 27,141 $ 19,821 $ 19,129 $ 9,143 $ 7,678
Canada............................ 1,590 1,100 (534) 1,912 3,772
-------- -------- -------- -------- --------
$ 28,731 $ 20,921 $ 18,595 $ 11,055 $ 11,450
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets:
United States........................................ $136,948 $133,618 $152,734
Canada............................................... 77,738 77,465 75,960
-------- -------- --------
$214,686 $211,083 $228,694
======== ======== ========
</TABLE>
11. STOCKHOLDERS' EQUITY
The Company has authorized 5,000,000 shares of preferred stock with no par
value. No shares have been issued, and therefore, there were no shares
outstanding at December 31, 1995 and 1996. The board of directors
F-18
<PAGE> 102
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
has the authority to issue these shares and to fix dividends, voting and
conversion rights, redemption provisions, liquidation preferences, and other
rights and restrictions.
In addition, the Company adopted a long-term incentive plan which allows
the issuance of grants or awards of incentive stock options, restricted stock,
stock appreciation rights, performance units, and performance shares to
employees and directors of the Company to acquire up to 400,000 shares of the
Company's common stock.
During December 1996, the Company granted 85,000 shares of restricted stock
to certain employees of the Company. In connection with the award of the
restricted stock, the Company recorded $680,000 of unearned compensation in the
accompanying balance sheets which will be amortized over five years, the vesting
period of the restricted stock.
In addition, the Company has granted nonqualified stock options under the
long-term incentive plan. Options granted become exercisable after one year in
20% or 33 1/3% increments per year and expire ten years from the date of the
grant.
No restricted stock or stock options were issued during the six months
ended June 30, 1997.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTION PRICE EXERCISE
SHARES (PER SHARE) PRICE
------- ------------ --------
<S> <C> <C> <C>
Outstanding as of January 1, 1995........................... 8,550 $11.75 $11.75
Granted................................................... 128,500 9.50 9.50
Exercised................................................. 0 N/A N/A
Lapsed.................................................... 0 N/A N/A
------- ------------ ------
Outstanding as of December 31, 1995......................... 137,050 $9.50-$11.75 $ 9.64
Granted................................................... 34,000 9.00 9.00
Exercised................................................. 0 N/A N/A
Lapsed.................................................... 0 N/A N/A
------- ------------ ------
Outstanding as of December 31, 1996......................... 171,050 $9.00-$11.75 $ 9.51
======= ============ ======
</TABLE>
<TABLE>
<CAPTION>
1995 1996
---------- --------
<S> <C> <C>
Options exercisable at year-end............................. 2,850 41,867
Weighted average exercise price of options exercisable at
year-end.................................................. $ 11.75 $ 9.81
Weighted average grant-date fair value of options granted
during the year........................................... $1,220,750 $306,000
</TABLE>
The weighted average remaining contractual life of options outstanding at
December 31, 1996 was 9.2 years.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for the long-term
incentive plan. If the Company had elected to recognize compensation cost for
the long-term incentive plan based on the fair value at the grant dates for
awards under the plan, consistent
F-19
<PAGE> 103
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with the method prescribed by SFAS No. 123, net income and earnings per share
would have been changed to the pro forma amounts indicated below at December 31,
1995 and 1996 (in thousands, except per share data):
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Net income:
As reported............................................... $6,146 $3,986
Pro forma................................................. 6,136 3,844
Earnings per share:
As reported............................................... $ 0.80 $ 0.52
Pro forma................................................. 0.79 0.50
</TABLE>
The fair value of the Company's stock options used to compute pro forma net
income and earnings per share disclosures is the estimated present value at
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for 1995 and 1996: dividend yield of 0%, expected
volatility of 34%, a risk-free interest rate of 5.7%, and an expected holding
period of five years.
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1995
----------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- ------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues............................................... $101,062 $102,252 $82,192 $ 95,958
Operating income....................................... 6,265 7,617 632 6,407
Net income (loss)...................................... 2,063 2,848 (1,182) 2,417
Net income (loss) per share............................ $ 0.27 $ 0.37 $ (0.15) $ 0.31
Average shares outstanding............................. 7,725 7,725 7,725 7,725
Stock prices:
High................................................. $ 12.500 $ 11.000 $11.750 $ 10.000
Low.................................................. 9.750 8.500 7.250 7.375
</TABLE>
<TABLE>
<CAPTION>
1996
----------------------------------------
FIRST(1) SECOND THIRD FOURTH
-------- -------- ------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues............................................... $ 93,396 $107,169 $87,609 $104,373
Operating income....................................... 3,090 7,965 987 6,553
Income (loss) before extraordinary item(1)............. 360 3,098 (936) 2,399
Income (loss) per share before extraordinary item(1)... 0.05 0.40 (0.12) 0.31
Net income (loss)...................................... (575) 3,098 (936) 2,399
Net income (loss) per share............................ $ (0.07) $ 0.40 $ (0.12) $ 0.31
Average shares outstanding............................. 7,725 7,725 7,725 7,725
Stock prices:
High................................................. $ 9.875 $ 10.500 $10.625 $ 10.500
Low.................................................. 7.750 7.750 8.375 7.000
</TABLE>
F-20
<PAGE> 104
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997
---------------------
FIRST SECOND
-------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenues.................................................... $96,393 $112,576
Operating income............................................ 2,806 8,644
Net income.................................................. 198 3,513
Net income per share........................................ $ 0.03 $ 0.45
Average shares outstanding.................................. 7,725 7,725
Stock prices:
High...................................................... $ 8.250 $ 11.125
Low....................................................... 6.250 5.500
</TABLE>
- ---------------
(1) During the first quarter of 1996, the Company recorded an extraordinary loss
on extinguishment of debt of approximately $935,000, net of taxes.
13. SUBSEQUENT EVENTS
KAR-TAINER INTERNATIONAL LIMITED ("KAR-TAINER")
In April 1997, the Company completed the acquisition of the stock of
Kar-Tainer for approximately $13,100,000 and Kar-Tainer became a wholly-owned
subsidiary of Axis Group. Kar-Tainer, with offices in Bermuda, United States,
London and South Africa, is a leader in the containerized shipping of vehicles.
As a result of the acquisition of Kar-Tainer, the Company recorded goodwill of
approximately $12,677,000 which will be amortized over 30 years.
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND RC MANAGEMENT CORP. (COLLECTIVELY,
"RYDER")
On September 30, 1997, the Company completed the acquisition of Ryder
from Ryder System, Inc. ("Ryder System") for approximately $114,500,000 in cash
(the "Acquisition"). The Acquisition is consistent with the Company's growth
strategy to increase its market share of the North American automotive carrier
industry while expanding its range of services and capabilities.
The Acquisition has been accounted for under the purchase method, and,
accordingly, the results of operations for Ryder will be included with those of
the Company for periods subsequent to the date of the Acquisition.
THE OFFERING
On September 30, 1997, the Company issued and sold $150,000,000 of 8 5/8%
senior notes (the "Notes") through a private placement. The Company raised
approximately $144,650,000, net of discounts and expenses, through the issuance
of the Notes. The net proceeds from the Notes were used to fund the
Acquisition, pay related fees and expenses, and reduce amounts owed on
outstanding Company debt. The Company's obligations under the Notes are
guaranteed by substantially all of the subsidiaries of the Company (the
"Guarantors"). Separate financial statements of the Guarantors are not provided
herein as (i) the Guarantors are jointly and severally liable for the Company's
obligations under the Notes (ii) the subsidiaries which are not Guarantors are
inconsequential to the consolidated operations of the Company and its
subsidiaries and (iii) the net assets and earnings of the Guarantors are
substantially equivalent to the net assets and earnings of the consolidated
entity as reflected in these consolidated financial statements.
PRO FORMA INFORMATION
The unaudited pro forma combined information below presents the combined
results of operations as if the Acquisition and the Offering had occurred on
January 1, 1996 and balance sheet information as if the Acquisition and the
Offering had occurred as of June 30, 1997. The unaudited pro forma combined
information, based upon the historical consolidated financial statements of the
Company and Ryder, assumes an acquisition cost of approximately $114,500,000 and
further assumes that an estimated $56,605,000 excess
F-21
<PAGE> 105
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of acquisition cost over the net value of Ryder's tangible assets is
allocated to goodwill with a useful life of 40 years.
The unaudited pro forma combined information is not necessarily indicative
of the results of operations of the combined company had the acquisition
occurred on January 1, 1996 or financial position had the acquisition occurred
on June 30, 1997, nor is it necessarily indicative of future results or
financial position.
The following proforma data is unaudited and is in thousands except per
share data.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1996 1997
------------ --------------
<S> <C> <C>
Statement of Income Data:
Revenues.................................................. $960,661 $524,665
Net income before extraordinary item...................... 5,674 10,097
Earnings per share........................................ 0.73 1.31
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1997
--------
<S> <C>
Balance Sheet Data:
Total Assets.............................................. $540,000
Borrowings................................................ 231,789
Stockholders' equity...................................... 60,157
</TABLE>
NEW CREDIT FACILITY
Concurrent with the closing of the Offering, the Company closed on a new
credit facility (the "New Credit Facility") which allows the Company to borrow
under a revolving line of credit, and issue letters of credit, up to the lesser
of $230,000,000 or a borrowing base amount (as defined in the New Credit
Facility) that is determined based on a defined percentage of the Company's
accounts receivable and equipment. The New Credit Facility matures in 2002, and
the annual commitment fees are due on the undrawn portion of the commitment over
the agreement period. The interest rate for the New Credit Facility is, at the
Company's option, either (i) the bank's Base Rate, as defined, or (ii) the
bank's Eurodollar rate, as defined, as determined at the date of the borrowing,
plus an applicable margin. The Company has the right to repay the oustanding
debt under the New Credit Facility, in whole or in part, without penalty or
premium subject to a limitation that prepayment of Eurodollar rate loans are
subject to a breakage penalty if prepaid other than on the last day of the
applicable interest period. The Company is subject to mandatory prepayment with
a defined percentage of net proceeds from certain asset sales, new debt
offerings, and new equity offerings. The revolving line of credit allows the
Company to repay and reborrow so long as there is no event of default.
Borrowings under the New Credit Facility are secured by a first
priority security interest on assets of the Company and certain of its
subsidiaries other than real estate but including a pledge of stock of certain
subsidiaries. In addition, the Guarantors of the Notes are also Guarantors of
the New Credit Facility.
The New Credit Facility sets forth a number of affirmative, negative,
and financial covenants binding on the Company. The negative covenants limit
the ability of the Company to, among other things, incur debt, incur liens,
make investments, make dividend or other distributions, or enter into any
merger or other consolidation transaction. The financial covenants include the
maintenance of a minimum consolidated tangible net worth, compliance with a
leverage ratio and a coverage ratio, and limitations on capital expenditures.
F-22
<PAGE> 106
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder of
Ryder Automotive Carrier Services, Inc.:
We have audited the accompanying consolidated balance sheets of Ryder
Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and
1996, and the related consolidated statements of operations, cash flows and
shareholder's equity for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ryder
Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Miami, Florida
February 28, 1997
F-23
<PAGE> 107
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 4,558 $ 1,441 $ 6,047
Receivables, net.......................................... 43,945 39,404 46,396
Inventories............................................... 11,012 4,594 3,624
Deferred income taxes..................................... 5,653 7,620 6,509
Prepaid expenses and other current assets................. 13,768 12,813 13,928
-------- -------- --------
Total current assets.............................. 78,936 65,872 76,504
Revenue earning equipment, net.............................. 137,967 142,535 134,493
Operating property and equipment, net....................... 37,326 28,641 26,806
Goodwill.................................................... 40,113 43,266 42,550
Other assets................................................ 11,955 13,200 10,862
-------- -------- --------
Total Assets...................................... $306,297 $293,514 $291,215
======== ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 25,531 $ 22,700 $ 21,246
Accrued expenses and other current liabilities............ 53,116 59,452 57,657
-------- -------- --------
Total current liabilities......................... 78,647 82,152 78,903
-------- -------- --------
Deferred income taxes....................................... 28,685 26,992 26,300
Other non-current liabilities............................... 15,924 19,574 20,773
Advances (to) from Ryder.................................... 2,692 (2,154) 647
Shareholder's equity:
Common stock and additional paid-in capital, $1 par value,
7,500 shares authorized, 1,000 shares issued and
outstanding............................................ 157,335 157,384 157,384
Retained earnings......................................... 25,074 11,640 9,314
Translation adjustment.................................... (2,060) (2,074) (2,106)
-------- -------- --------
Total shareholder's equity........................ 180,349 166,950 164,592
-------- -------- --------
Total Liabilities and Shareholder's Equity........ $306,297 $293,514 $291,215
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE> 108
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue..................................... $645,402 $594,446 $583,292 $297,945 $315,156
-------- -------- -------- -------- --------
Operating Expense:
Salaries, wages and benefits.............. 321,363 293,145 301,276 153,981 166,290
Operating supplies and expenses........... 99,569 90,331 95,178 49,437 46,146
Purchased transportation.................. 61,988 63,596 62,670 30,853 38,080
Insurance and claims...................... 28,384 28,143 37,569 15,754 14,388
Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818
Rent expense.............................. 2,525 2,914 3,291 1,633 1,470
Communications and utilities.............. 4,651 4,934 5,727 2,823 3,344
Operating taxes and licenses.............. 27,247 24,715 23,976 12,444 11,136
Restructuring charges..................... -- -- 18,328 4,174 --
Other operating expense................... 12,563 9,730 13,628 5,616 4,643
-------- -------- -------- -------- --------
Total operating expense........... 595,552 558,208 600,481 297,323 305,315
-------- -------- -------- -------- --------
Operating income (loss)........... 49,850 36,238 (17,189) 622 9,841
-------- -------- -------- -------- --------
Other Income:
Miscellaneous income, net................. 310 4,504 2,470 1,269 738
Interest income (expense)................. (82) 2,402 29 697 894
-------- -------- -------- -------- --------
228 6,906 2,499 1,966 1,632
-------- -------- -------- -------- --------
Earnings (Loss) Before Income Taxes......... 50,078 43,144 (14,690) 2,588 11,473
Provision (Benefit) For Income Taxes........ 20,428 17,777 (1,256) 1,163 3,818
-------- -------- -------- -------- --------
Net Earnings (Loss)......................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE> 109
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
AND ADDITIONAL RETAINED TRANSLATION
PAID-IN CAPITAL EARNINGS ADJUSTMENT TOTAL
--------------- -------- ----------- --------
<S> <C> <C> <C> <C>
At December 31, 1993............................. $139,640 $ 24,794 $(1,744) $162,690
Net earnings................................... -- 29,650 -- 29,650
Dividend....................................... (13,229) (53,057) -- (66,286)
Currency adjustment............................ -- -- (558) (558)
-------- -------- ------- --------
At December 31, 1994............................. 126,411 1,387 (2,302) 125,496
Net earnings................................... -- 25,367 -- 25,367
Dividend....................................... -- (1,680) -- (1,680)
Capital contribution........................... 30,924 -- -- 30,924
Currency adjustment............................ -- -- 242 242
-------- -------- ------- --------
At December 31, 1995............................. 157,335 25,074 (2,060) 180,349
Net loss....................................... -- (13,434) -- (13,434)
Capital contribution........................... 49 -- -- 49
Currency adjustment............................ -- -- (14) (14)
-------- -------- ------- --------
At December 31, 1996............................. 157,384 11,640 (2,074) 166,950
Net earnings................................... -- 7,655 -- 7,655
Dividend....................................... -- (9,981) -- (9,981)
Currency adjustment............................ -- -- (32) (32)
-------- -------- ------- --------
At June 30, 1997 (unaudited)..................... $157,384 $ 9,314 $(2,106) $164,592
======== ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-26
<PAGE> 110
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)....................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655
Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818
Deferred income tax expense (benefit)..... (89) 2,861 362 257 324
Decrease (increase) in receivables........ 6,158 (2,334) 4,541 (12,876) (6,992)
Decrease (increase) in inventories........ (2,912) (2,722) 6,418 4,190 970
Decrease (increase) in prepaid and other
current assets......................... (4,267) (600) 955 (1,083) (1,115)
Increase (decrease) in accounts payable... 13,185 (18,610) (2,831) (1,162) (1,454)
Increase (decrease) in accrued expenses
and other liabilities.................. (5,651) (9,250) 6,336 (10,556) (1,795)
Increase in other non-current
liabilities............................ 3,157 8,912 3,650 (12,135) 1,199
Other, net................................ (1,826) (6,173) 2,005 2,636 1,910
-------- -------- -------- -------- --------
74,667 38,151 46,840 (8,696) 20,520
Cash flows from investing activities:
Purchases of property and revenue earning
equipment.............................. (43,789) (64,563) (45,222) (20,420) (10,035)
Sales of property and revenue earning
equipment.............................. 3,103 11,910 10,011 5,112 1,996
Other, net................................ 2,609 (5,606) 1,926 (637) (663)
-------- -------- -------- -------- --------
(38,077) (58,259) (33,285) (15,945) (8,702)
Cash flows from financing activities:
Net increase (decrease) in advances from
Ryder.................................. 29,163 (8,951) (16,721) 23,814 2,769
Dividends................................. (66,286) (1,680) -- -- (9,981)
Capital contributions..................... -- 30,924 49 -- --
-------- -------- -------- -------- --------
(37,123) 20,293 (16,672) 23,814 (7,212)
-------- -------- -------- -------- --------
Increase (decrease) in cash................. (533) 185 (3,117) (827) 4,606
Cash at beginning of period............... 4,906 4,373 4,558 4,558 1,441
-------- -------- -------- -------- --------
Cash at end of period....................... $ 4,373 $ 4,558 $ 1,441 $ 3,731 $ 6,047
======== ======== ======== ======== ========
Summary of Noncash Activities:
Contribution of goodwill from Ryder....... $ -- $ -- $ 7,853 $ 7,853 $ --
Increase in advances from Ryder........... -- -- 7,853 7,853 --
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 111
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND
1997 IS UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization. Ryder Automotive Carrier Services, Inc. ("RACS"), a Florida
corporation and a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"), is a
holding company which operates through its wholly-owned subsidiaries. The
principal subsidiaries of RACS are Ryder Automotive Operations, Inc. ("RAOI"),
MCL Ryder Transport, Inc. ("MCL"), a Canadian corporation, QAT, Inc. ("QAT") and
Blazer Truck Lines, Inc. (Blazer). RAOI is principally comprised of Commercial
Carriers, Inc. ("CCI"), Ryder Freight Broker, Inc. and F. J. Boutell Driveaway
Co., Inc. ("Boutell"). CCI, Boutell, QAT and MCL are engaged in the business of
transporting automobiles and light and medium-duty trucks from manufacturing
plants, ports and railway distribution points to other distribution points and
automobile dealers. CCI also manufacturers equipment for RACS's use in the
transportation and delivery of automobiles and trucks. Blazer provided inbound
logistics to the automobile industry and was sold on February 28, 1997 (see Note
19).
Basis of Presentation. The accompanying consolidated financial statements
include the operations, assets and liabilities of Ryder Automotive Carrier
Services, Inc. and subsidiaries (the "Company"). The financial statements do not
include assets and liabilities of Ryder not specifically identifiable to the
Company. Reserves for workers' compensation claims, postretirement benefits
other than pensions, auto and general liability claims which are from $500,000
to $1,000,000 per occurrence and medical and dental claims are maintained by
Ryder. The financial information included herein is not necessarily indicative
of the financial position and results of operations or cash flows that would
have occurred had the Company been an independent stand-alone entity during the
periods presented, nor is it necessarily indicative of future results of the
Company. All significant intercompany accounts and transactions have been
eliminated.
Revenue Recognition. Revenue is recorded by the Company when the vehicles
are dispatched to the dealerships and other distribution points. Estimated
direct costs to complete delivery of freight in-transit are accrued. All other
expenses are recognized as incurred.
Receivables. Receivables consist primarily of trade receivables resulting
from vehicle shipments. Receivables are reduced by amounts considered by
management to be uncollectible based on historical loss experience and review of
the current status of existing receivables.
Inventories. Inventories consist primarily of parts, materials and fuel as
well as inventory related to the manufacturing of trailers and headramps.
Inventories are stated at the lower of cost or market.
Tires in Service. The Company allocates a portion of the acquisition costs
of tractors and trailers to tires in service and amortizes this amount on a
straight-line basis over seven years. The cost of replacement tires and tire
repairs are expensed when incurred.
Revenue Earning Equipment, Operating Property and Equipment and
Depreciation. Revenue earning equipment, principally tractors and trailers, and
operating property and equipment are stated at cost. Provision for depreciation
is computed using the straight-line method on all depreciable assets. Annual
straight-line depreciation rates are 14% for revenue earning equipment, 3% to
10% for buildings and improvements and 14% to 20% for furniture, fixtures and
equipment. Effective January 1, 1995, the estimated residual values used to
calculate the provision for depreciation on certain types of revenue earning
equipment were changed to reflect recent experience. As a result of this change,
depreciation expense was decreased by $2.2 million and $1.2 million for the
years ended December 31, 1995 and 1996, respectively.
Gains on sales of revenue earning equipment, net of vehicle disposition
costs, are reported as reductions of other operating expense and totaled $0.8
million, $2.6 million and $0.1 million for the years ended December 31, 1994,
1995 and 1996, respectively, and $0.1 million for each of the six month periods
ended
F-28
<PAGE> 112
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 1996 and 1997. Gains on sales of operating property and equipment are
also reflected in other operating expense.
Goodwill. Goodwill is amortized on a straight-line basis over 40 years.
Amortization (included in depreciation and amortization expense) amounted to
approximately $1.3 million for each of the years in the three-year period ended
December 31, 1996. Accumulated amortization was approximately $11.5 million at
December 31, 1995 and 1996, respectively. During 1996, Ryder contributed $7.9
million in goodwill to the Company for acquisitions made in prior years.
Impairment of Long-Lived Assets. Long-lived assets, including goodwill,
used in the Company's operations are reviewed for impairment when circumstances
indicate that the carrying amount of an asset may not be recoverable. The
primary indicators of recoverability are the associated current and forecasted
undiscounted operating cash flows. If management has made a decision to dispose
of an asset or a group of assets, those assets are reported at the lower of
carrying amount or the estimated fair value less costs to sell.
Accrued Insurance and Loss Reserves. The Company participates in Ryder's
overall risk management programs for vehicle and general liability, workers'
compensation, property (including cargo) and other. The major programs are
summarized as follows:
Vehicle and general liability -- The Company has recorded reserves
which reflect the Company's portion of the undiscounted estimated
liabilities up to $500,000 per occurrence (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. For exposures
from $500,000 to $1 million per occurrence, the Company is charged a
premium by Ryder based on the Company's loss experience and the related
liability is retained by Ryder. Costs associated with insurance premiums to
third party insurance companies for coverage in excess of $1 million are
charged by Ryder to the Company based on the Company's pro rata share of
Ryder's revenue.
Workers' compensation -- Ryder has recorded reserves which reflect the
Company's portion of the undiscounted estimated workers' compensation
liabilities up to $1 million per injury (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. The Company
is billed by Ryder based on actuarial projections of expected losses. For
losses in excess of $1 million per injury, Ryder has third party insurance
coverage, the cost of which is charged by Ryder to the Company based on the
Company's proportionate share of losses up to $1 million. At December 31,
1995 and 1996 and June 30, 1997 the workers' compensation reserves
maintained by Ryder on the Company's behalf were $58.3 million, $47.1
million, and $46.2 million, respectively.
Property, including cargo -- The Company has recorded reserves for
estimated damages to transported vehicles. The accruals for these claims
include both reported claims and an estimate of claims incurred but not
reported for amounts up to $50,000 per occurrence. Damages in excess of
$50,000 per occurrence are insured by a third party insurance company.
Such liabilities, whether recorded as a liability by Ryder or the Company,
are necessarily based on estimates and, while management believes that the
amounts are adequate, there can be no assurance that changes to management's
estimates may not occur due to limitations inherent in the estimation process.
Changes in the estimates of these reserves are charged or credited to income in
the period determined. For reserves recorded by the Company, amounts estimated
to be paid within one year have been classified as accrued expenses with the
remainder included in other non-current liabilities.
Income Taxes. The Company has been included in consolidated income tax
filings of Ryder for Federal and state income tax purposes. However, the income
tax provisions included in the accompanying Consolidated Financial Statements
have been determined as if the Company was an independent stand-alone entity
filing separate income tax returns.
F-29
<PAGE> 113
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred taxes are provided using the asset and liability method for
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
balances are adjusted for any tax law changes in the periods that include the
enactment date of such changes. See Note 12.
Foreign Currency Translation. The Company's Canadian operations use the
local currency as their functional currency. Assets and liabilities of these
operations are translated at the exchange rates in effect on the balance sheet
date. Items included in the Statements of Operations are translated at the
average exchange rates for the year. The impact of currency fluctuation is
included in shareholder's equity as a translation adjustment.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Interim Unaudited Data for the Six Months Ended June 30, 1996 and 1997. In
the opinion of management, the unaudited consolidated financial statements
contain all of the normal and recurring adjustments necessary to present fairly
the consolidated financial position of the Company at June 30, 1997 and the
consolidated results of operations and cash flows of the Company for the six
months ended June 30, 1996 and 1997.
NOTE 2 TRANSACTIONS WITH RYDER
Certain Ryder branch locations provide fuel, vehicle repairs and
maintenance services to the Company. Rates charged to the Company for these
items approximate rates charged to significant Ryder customers for similar items
and reflect the cost plus a mark-up.
The Company participates in Ryder's combined risk management programs for
vehicle and general liability, workers' compensation liability and property
losses and Ryder processes claims related to vehicle and general liability and
workers' compensation. The Company also participates in Ryder's medical and
dental, postretirement and savings plans. See Notes 14 and 15.
Ryder provides various general and administrative services to the Company
including treasury, legal, human resources, accounting and others. Costs for
these services are charged to the Company through a management fee, which is
based on the Company's equity and revenue levels.
The Company's cash and financing needs are managed by Ryder. The
accompanying Consolidated Balance Sheets do not include Ryder's general
corporate debt, which is used to finance the operations of all of Ryder's
business units. However, Ryder allocates its corporate interest expense to each
business unit based upon a target debt to equity ratio. The Company's
shareholder's equity in the Consolidated Balance Sheets has been periodically
adjusted to effect this target debt to equity ratio. Interest expense charged
(or credited) to the Company by Ryder is principally based upon the interest
cost incurred by Ryder for certain of its indebtedness.
Management believes the methods used to determine intercompany charges and
cost allocations are reasonable, however, such costs may not be representative
of those which would be incurred if the Company operated as an independent
stand-alone entity.
F-30
<PAGE> 114
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amounts charged and allocated by Ryder and its subsidiaries to the Company
for the above expense items are summarized in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating expense:
Salaries, wages and benefits:
Medical and dental................................... $ 3,653 $ 2,589 $ 2,615
Postretirement....................................... 1,305 1,139 2,536
Savings plan......................................... 277 368 402
Other................................................ 1,306 117 118
Operating supplies and expense:
Fuel, repairs and maintenance........................ 23,700 19,094 21,459
Insurance and claims.................................... 24,674 18,754 22,823
Other operating expense:
General and administrative expense................... 721 432 1,542
Management fees...................................... 3,370 3,258 3,098
Interest income (expense)................................. 858 (511) (252)
</TABLE>
NOTE 3 RESTRUCTURING AND OTHER CHARGES
During 1996, the Company implemented several restructuring initiatives in
an effort to reduce costs, improve profitability and align the organizational
structure with the strategic direction of the Company. As a result of the
initiatives, the Company recorded pretax charges in 1996 of $18.3 million which
included restructuring costs of $5.5 million, early retirement costs of $4.2
million, asset write-downs of $6.0 million and other charges of $2.6 million.
The charges reduced net income by $14.4 million. The pre tax charge of $4.2
million related to early retirement costs is included in the results of
operations for the six month period ended June 30, 1996.
The Company's pretax charges included $8.0 million in employee-related
costs, which were primarily related to the planned elimination of approximately
140 positions. This amount included $4.2 million for approximately 60 employees
who retired pursuant to a voluntary early retirement program. The headcount
reductions resulted from consolidating and reorganizing corporate and field
operations and affected employee groups across all levels of the Company. Nearly
50% and 65% of the separations occurred by December 31, 1996 and June 30, 1997,
respectively, with the remaining separations expected to be completed by the end
of 1997.
The Company recorded $7.7 million in estimated closure costs, including
asset write-downs of $6.0 million relating to both anticipated property sales
and the anticipated sale of Blazer Truck Lines, Inc. (See Note 19). The Company
also incurred $2.6 million of other costs, including employee relocation
relating to the implementation of the restructuring.
Management believes that the remaining restructuring liabilities of
approximately $6.0 million and $2.0 million at December 31, 1996 and June 30,
1997, respectively, are adequate to complete its plans and that the liabilities
will be substantially paid by the end of 1997. The additional pension and
postretirement liabilities will be paid in accordance with the provisions of the
existing plans. As a result of these actions, and prior to considering the
effect of the sale of the Company discussed in Note 20, earnings are ultimately
expected to be benefited by approximately $9.0 million annually.
F-31
<PAGE> 115
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 RECEIVABLES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Trade accounts receivable................................... $36,152 $35,706 $39,496
Current portion of owner-operator notes receivable.......... 1,813 2,932 3,097
Other receivables........................................... 6,158 1,507 4,538
------- ------- -------
44,123 40,145 47,131
Allowance for doubtful accounts............................. (178) (741) (735)
------- ------- -------
$43,945 $39,404 $46,396
======= ======= =======
</TABLE>
No bad debt expense was recorded for the year ended December 31, 1994. Bad
debt expense totaled $0.1 million and $0.6 million for the years ended December
31, 1995 and 1996, respectively.
NOTE 5 INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Trailer manufacturing inventory............................. $ 9,499 $ 3,149
Parts, materials and fuel................................... 1,513 1,445
------- -------
$11,012 $ 4,594
======= =======
</TABLE>
NOTE 6 PREPAID EXPENSES AND OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Prepaid pension............................................. $ 5,876 $ 5,457
Tires in service............................................ 4,037 3,944
Licenses and permits........................................ 1,706 1,410
Operating taxes............................................. 1,002 882
Other....................................................... 1,147 1,120
------- -------
$13,768 $12,813
======= =======
</TABLE>
NOTE 7 REVENUE EARNING EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Tractors.................................................... $ 226,505 $ 226,941 $ 225,944
Trailers.................................................... 142,858 150,453 147,998
Other....................................................... 966 279 1,349
--------- --------- ---------
370,329 377,673 375,291
Accumulated depreciation.................................... (232,362) (235,138) (240,798)
--------- --------- ---------
$ 137,967 $ 142,535 $ 134,493
========= ========= =========
</TABLE>
F-32
<PAGE> 116
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 OPERATING PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Buildings and improvements.................................. $ 43,316 $ 37,227
Furniture, fixtures and equipment........................... 20,265 20,455
Land........................................................ 12,265 8,866
Service vehicles and other.................................. 6,653 3,513
-------- --------
82,499 70,061
Accumulated depreciation.................................... (45,173) (41,420)
-------- --------
$ 37,326 $ 28,641
======== ========
</TABLE>
NOTE 9 OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Long-term portion of owner-operator notes receivable........ $ 4,035 $ 6,322
Long-term portion of property notes receivable.............. 2,871 2,173
Properties held for sale.................................... 4,845 4,518
Other....................................................... 204 187
------- -------
$11,955 $13,200
======= =======
</TABLE>
NOTE 10 ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Vehicle and general liability reserves...................... $ 20,207 $ 26,552
Salaries and wages.......................................... 22,760 21,805
Employee benefits........................................... 9,448 6,708
Cargo liability reserves.................................... 5,910 5,782
Operating taxes............................................. 4,255 4,140
Environmental liabilities................................... 543 1,198
Other, including restructuring.............................. 5,917 12,841
-------- --------
69,040 79,026
Non-current portion......................................... (15,924) (19,574)
-------- --------
Accrued expenses and other liabilities...................... $ 53,116 $ 59,452
======== ========
</TABLE>
During 1995 and 1996, the Company released employee benefit reserves of
$9.9 million and $0.8 million, respectively, related to prior year FICA taxes.
F-33
<PAGE> 117
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11 LEASES
The Company leases offices and office equipment under operating lease
agreements. During 1994, 1995 and 1996, rent expense was $3.3 million, $3.2
million and $2.8 million, respectively. Future minimum payments for operating
leases in effect at December 31, 1996 are as follows (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 891
1998........................................................ 893
1999........................................................ 847
2000........................................................ 766
2001........................................................ 732
Thereafter.................................................. 3,063
------
$7,192
======
</TABLE>
NOTE 12 INCOME TAXES
The provision (benefit) for income taxes included the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax expense (benefit):
Federal................................................. $18,188 $13,469 $(1,214)
State................................................... 2,472 1,288 (404)
Foreign................................................. (143) 159 --
------- ------- -------
20,517 14,916 (1,618)
------- ------- -------
Deferred tax expense (benefit):
Federal................................................. (621) 1,517 68
State................................................... 355 1,321 334
Foreign................................................. 177 23 (40)
------- ------- -------
(89) 2,861 362
------- ------- -------
Provision (benefit) for income taxes...................... $20,428 $17,777 $(1,256)
======= ======= =======
</TABLE>
A reconciliation of the Federal statutory tax rate with the effective tax
rate follows:
<TABLE>
<CAPTION>
% OF PRETAX INCOME
--------------------
YEAR ENDED
DECEMBER 31,
--------------------
1994 1995 1996
----- ---- -----
<S> <C> <C> <C>
Statutory tax rate.......................................... 35.0 35.0 (35.0)
Impact on deferred taxes for changes in tax rates........... 0.6 -- --
State income taxes, net of Federal income tax benefit....... 3.1 4.0 (0.3)
Amortization of goodwill.................................... 0.9 1.0 3.1
Restructuring and other charges............................. -- -- 19.1
Miscellaneous items, net.................................... 1.2 1.2 4.5
----- ---- -----
Effective tax rate.......................................... 40.8 41.2 (8.6)
===== ==== =====
</TABLE>
The lower 1996 effective tax rate is primarily due to the permanent
differences associated with the charge for restructuring and other items.
Additionally, lower income before taxes increased the rate impact of normal,
recurring permanent differences.
F-34
<PAGE> 118
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As described in Note 1, the Company was wholly-owned by Ryder for all of
the periods presented in the accompanying Consolidated Financial Statements. The
deferred tax assets and liabilities shown below have been determined as though
the Company was a separate company and not part of Ryder's consolidated Federal
income tax returns. The components of the net deferred income tax liability were
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Accrued insurance and loss reserves....................... $ 9,761 $ 11,091
Accrued compensation and benefits......................... 4,027 3,733
Restructuring and other charges........................... -- 1,622
Miscellaneous accruals and other.......................... 3,656 6,256
-------- --------
17,444 22,702
Valuation allowance....................................... (1,812) (3,490)
-------- --------
Deferred income tax assets........................ 15,632 19,212
-------- --------
Deferred income tax liabilities:
Property and equipment bases differences.................. (32,984) (32,510)
Other items............................................... (5,680) (6,074)
-------- --------
Deferred income tax liabilities................... (38,664) (38,584)
-------- --------
Net deferred income tax liability........................... $(23,032) $(19,372)
======== ========
</TABLE>
A valuation allowance has been established to reduce the income tax
benefits of tax loss carryforwards to amounts expected to be realized.
Income taxes paid totaled $19 million in 1994 and $15 million in 1995.
There were no income tax payments in 1996.
NOTE 13 FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's notes receivable, which originate
from the sale of equipment to owner-operators, were $5.8 million and $9.3
million as of December 31, 1995 and 1996, respectively. As of the same dates,
the fair values of the notes receivable were $6.0 million and $9.5 million,
respectively. The fair values were determined from discounted future cash flows
through maturity or expiration using current rates. The fair values of all other
financial instruments approximate their carrying amounts.
F-35
<PAGE> 119
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14 PENSION AND SAVINGS PLANS
The Company sponsors three defined benefit pension plans, covering
substantially all employees not covered by union-administered plans. These plans
generally provide participants with benefits based on years of service and
recent average compensation levels. Funding policy for these plans is to make
contributions based on normal costs plus amortization of unfunded past service
liability but not greater than the maximum allowable contribution deductible for
Federal income tax purposes. The majority of the plans' assets are invested in a
master trust which, in turn, is primarily invested in listed stocks and bonds.
Total pension expense was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Company-administered plans:
Present value of benefits earned during the year....... $ 1,604 $ 1,203 $ 1,443
Interest cost on projected benefit obligation.......... 3,214 3,320 3,755
Return on plan assets:
Actual.............................................. (710) (14,145) (8,397)
Deferred............................................ (3,583) 9,669 2,863
Additional expense from early retirement program....... -- -- 2,650
Other, net............................................. (575) (583) (691)
------- -------- -------
(50) (536) 1,623
Union-administered plans................................. 19,625 18,948 20,921
------- -------- -------
Net pension expense...................................... $19,575 $ 18,412 $22,544
======= ======== =======
</TABLE>
As a part of the Company's restructuring and other profit improvement
initiatives, certain employees accepted early retirement benefits, which
increased 1996 pension expense by $2.7 million.
The following table sets forth the plans' funded status and the Company's
prepaid pension expense:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Plan assets at fair value................................... $66,734 $71,334
Actuarial present value of service rendered to date:
Accumulated benefit obligation, including vested benefits
of $43,819 and $47,770 in 1995 and 1996,
respectively........................................... 44,429 50,107
Additional benefit based on estimated future salary
levels................................................. 2,972 4,225
------- -------
Projected benefit obligation................................ 47,401 54,332
------- -------
Plan assets in excess of projected benefit obligation....... 19,333 17,002
Unrecognized transition amount.............................. (4,311) (3,685)
Other, primarily unrecognized prior service cost and net
gains..................................................... (9,146) (7,860)
------- -------
Prepaid pension expense..................................... $ 5,876 $ 5,457
======= =======
</TABLE>
F-36
<PAGE> 120
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the actuarial assumptions used for the
Company's dominant plan:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 8.5% 7.5% 7.5%
Rate of increase in compensation levels..................... 5.0% 5.0% 5.0%
Expected long-term rate of return on plan assets............ 8.5% 8.5% 8.5%
Transition amortization in years............................ 17 17 17
Gain and loss amortization in years......................... 9 9 9
</TABLE>
The Company also contributed to various defined benefit,
union-administered, multi-employer plans for employees under collective
bargaining agreements. The Company contributed and charged to expense
approximately $19.6 million, $18.9 million, and $20.9 million for the years
ended December 31, 1994, 1995, and 1996, respectively, for such plans. These
contributions are determined in accordance with the provisions of negotiated
labor contracts and are generally based on the number of hours or days worked.
In addition, the Company participates in certain defined contribution
savings plans sponsored by Ryder that cover substantially all eligible
employees. Contributions to the plans include employee contributions and
contributions made by Ryder under a matching program. Defined contribution
expense totaled $0.3 million, $0.4 million and $0.4 million for the years ended
December 31, 1994, 1995 and 1996, respectively.
NOTE 15 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company participates in Ryder plans which provide retired employees
with certain health care and life insurance benefits. Substantially all
employees not covered by union-administered health and welfare plans are
eligible for these benefits. Health care benefits are generally provided to
qualified retirees and eligible dependents. Generally, these plans require
employee contributions which vary based on years of service and include
provisions which cap Company contributions. Reserves related to these plans are
carried by Ryder.
Total periodic postretirement benefit expense was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current year service cost................................... $ 230 $ 216 $ 185
Interest accrued on postretirement benefit obligation....... 867 923 828
Additional expense from early retirement program............ -- -- 1,523
Other, net.................................................. 208 -- --
------ ------ ------
Periodic postretirement benefit expense..................... $1,305 $1,139 $2,536
====== ====== ======
</TABLE>
As part of the Company's restructuring and other profit improvement
initiatives, certain employees accepted early retirement benefits which
increased 1996 postretirement benefit expense by $1.5 million.
F-37
<PAGE> 121
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's postretirement benefit plans are not funded. The following
summarizes the reserves carried by Ryder:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 9,509 $10,006
Fully eligible active plan participants................... 863 800
Other active plan participants............................ 2,908 2,314
------- -------
13,280 13,120
Unrecognized net gains (losses)............................. (1,872) 300
------- -------
Accrued unfunded postretirement benefit obligation.......... $11,408 $13,420
======= =======
Discount rate............................................... 7.5% 7.5%
</TABLE>
The actuarial assumptions include health care cost trend rates projected
ratably from 11% in 1997 to 6% in the year 2003 and thereafter. Increasing the
assumed health care cost trend rates by 1% in each year would have increased the
accumulated postretirement benefit obligation as of December 31, 1996 by $1.0
million and would not have had a material effect on periodic postretirement
benefit expense for 1996.
NOTE 16 ENVIRONMENTAL MATTERS
The Company's operations involve storing and dispensing petroleum products,
primarily diesel fuel. In 1988, the Environmental Protection Agency issued
regulations that established requirements for testing and replacing underground
storage tanks. The Company is involved in various stages of investigation,
cleanup and tank replacement to comply with the regulations. In addition, the
Company received notices from the Environmental Protection Agency and others
that it has been identified as a potentially responsible party (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act and similar state statutes and may
be required to share in the cost of cleanup of four identified disposal sites.
The Company records a liability for environmental assessments and/or
cleanup when it is probable a loss has been incurred. Generally, the timing of
these accruals coincides with the identification of an environmental problem
through the Company's internal procedures or upon notification from regulatory
agencies. The estimate of loss is based on information obtained from independent
environmental engineers and/or from Company experts regarding the nature and
extent of environmental contamination, remedial alternatives available and the
cleanup criteria required by relevant governmental agencies. The estimated costs
include amounts for anticipated site testing, consulting, remediation, disposal,
post-remediation monitoring and legal fees, as appropriate. These amounts
represent the estimated undiscounted costs to fully resolve the environmental
matters in accordance with prevailing Federal, state and local requirements
based on information presently available. The liability includes estimates of
cost sharing with other PRPs at Superfund sites. The Company's environmental
expenses were $0.6 million, $2.0 million and $1.2 million for the years ended
December 31, 1994, 1995 and 1996, respectively.
The ultimate costs of the Company's environmental liabilities cannot be
projected with certainty due to the presence of several unknown factors,
primarily the level of contamination, the effectiveness of selected remediation
methods, the stage of investigation at individual sites, the determination of
the Company's liability in proportion to other responsible parties and the
recoverability of such costs from third parties. Based on information presently
available, management believes that the ultimate disposition of these matters,
although potentially material to the results of operations in any one year, will
not have a material adverse effect on the Company's financial condition or
liquidity.
F-38
<PAGE> 122
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17 INDUSTRY SEGMENT, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company operates solely in the automotive industry, primarily
transporting automobiles and light and medium-duty trucks from manufacturing
plants, ports and railway distribution points to automobile dealerships and
other distribution points. In 1994, 1995 and 1996, approximately 83.8%, 84.9%
and 85.6%, respectively, of the Company's revenue was derived from six
customers, one of which, General Motors, accounted for approximately 51.1%,
51.6% and 49.9% of revenue, respectively. The Company operates in the United
States and Canada. Operating income (loss) shown below includes gains on the
sale of operating property and equipment in the amounts of $0.2 million, $3.5
million and $1.6 million for 1994, 1995 and 1996, respectively. Geographic
financial information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue:
United States........................................ $610,088 $556,663 $547,158
Canada............................................... 35,314 37,783 36,134
-------- -------- --------
$645,402 $594,446 $583,292
======== ======== ========
Operating income (loss):
United States........................................ $ 50,800 $ 37,107 $(13,186)
Canada............................................... (950) (869) (4,003)
-------- -------- --------
$ 49,850 $ 36,238 $(17,189)
======== ======== ========
Identifiable assets:
United States........................................ $233,645 $265,200 $257,095
Canada............................................... 40,942 41,097 36,419
-------- -------- --------
$274,587 $306,297 $293,514
======== ======== ========
</TABLE>
NOTE 18 COMMITMENTS AND CONTINGENCIES
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business which relate to the Company's
operations, including the manufacture of trailers and headramps. While any
proceeding or litigation has an element of uncertainty, management believes that
the disposition of these matters will not have a material impact on the
financial condition, liquidity or results of operations of the Company.
The Company has entered into employment agreements with certain executive
officers of the Company. The agreements, which are substantially similar,
provide for compensation to the officers in the form of annual base salaries and
bonuses based on earnings. The employment agreements also provide for severance
benefits upon the occurrence of certain events, including a change in control,
as defined.
F-39
<PAGE> 123
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 19 SALE OF BLAZER
In the fourth quarter of 1996, management made a decision to dispose of
Blazer, an in-bound logistics provider to the automotive industry. Consistent
with this decision and included within the full year restructuring charge
discussed in Note 3, management recorded restructuring and other charges of $2.8
million and asset write-downs of $4.2 million to reduce the carrying values of
Blazer assets to an estimate of fair value less costs to sell. The Company sold
Blazer on February 28, 1997. The condensed financial statements of Blazer are as
follows:
STATEMENTS OF OPERATIONS AND CHANGES IN COMPANY INVESTMENT
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ------------------
1994 1995 1996 1996 1997
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue................................... $25,529 $19,366 $14,520 $7,565 $ 2,204
Operating expense......................... 25,897 19,816 22,203 8,357 2,277
------- ------- ------- ------ -------
Operating loss............................ (368) (450) (7,683) (792) (73)
Other expense............................. (378) (110) (9) 10 14
------- ------- ------- ------ -------
Loss before income taxes.................. (746) (560) (7,692) (802) (87)
Income tax benefit........................ (19) (472) (320) 275 739
------- ------- ------- ------ -------
Net income (loss)......................... (727) (88) (7,372) (527) 652
Company investment at beginning of
period.................................. 721 5 (151) (151) (7,648)
Net change in Company investment.......... 11 (68) (125) 453 6,996
------- ------- ------- ------ -------
Company investment at end of period....... $ 5 $ (151) $(7,648) $ (225) $ --
======= ======= ======= ====== =======
</TABLE>
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets............................................ $ 2,049 $ 1,526 $ --
Property and equipment, net............................... 1,687 428 --
Other assets, principally goodwill........................ 3,428 -- --
------- ------- -------
Total assets.............................................. $ 7,164 $ 1,954 $ --
======= ======= =======
Current liabilities....................................... $ 2,768 $ 5,976 --
Other liabilities......................................... 4,547 3,626 --
Company investment........................................ (151) (7,648) --
------- ------- -------
Total liabilities and Company investment.................. $ 7,164 $ 1,954 $ --
======= ======= =======
</TABLE>
NOTE 20 SUBSEQUENT EVENT
On August 21, 1997, Ryder announced that it had reached a definitive
agreement and received the necessary regulatory approvals to sell the stock of
the Company, along with another business unit, to Allied Holdings, Inc.
("Allied") for approximately $114.5 million in cash and assumption of certain
liabilities of the business. The sale of the Company to Allied is expected to be
completed by September 30, 1997.
F-40
<PAGE> 124
<TABLE>
============================================================== ================================================
- -------------------------------------------------------------- ------------------------------------------------
<S> <C>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED $150,000,000
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT
CONTAINED IN, OR INCORPORATED BY REFERENCE IN, THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN [ALLIED HOLDINGS LOGO]
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, THE NEW NOTES IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OFFER TO EXCHANGE ALL OUTSTANDING
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY 8 5/8% SERIES A SENIOR NOTES DUE 2007
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT FOR
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS 8 5/8% SERIES B SENIOR NOTES DUE 2007
OR INCORPORATED BY REFERENCE HEREIN OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
___________________ __________________
PROSPECTUS
___________________
TABLE OF CONTENTS
PAGE
----
Prospectus Summary 1
Summary Historical and Pro Forma
Financial and Operating Data 6
Risk Factors 8
The Exchange Offer 12
Use of Proceeds 20
Capitalization 20
Selected Financial Data 21
Unaudited Pro Forma Financial Information 23
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Business 33
Management 41
Description of Other Indebtedness 51
Description of Notes 52
Certain Federal Income Tax Consequences 73
Plan of Distribution 75
Legal Matters 75
Experts 76
Index to Consolidated Financial Statements F-1
October 17, 1997
- -------------------------------------------------------------- ------------------------------------------------
============================================================== ================================================
</TABLE>
<PAGE> 125
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The provisions of the Georgia Business Corporation Code and the
Registrant's Bylaws set forth the extent to which the Registrant's directors and
officers may be indemnified against liabilities they may incur while serving in
such capacities. Under these indemnification provisions, the Registrant is
required to indemnify any of its directors or officers against any reasonable
expenses (including attorneys' fees) incurred by such director or officer in
defense of any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and whether formal or informal, to which such
director or officer was made a party, or in defense of any claim, issue or
matter therein, by reason of the fact that such director or officer is or was a
director or officer of the Registrant or who, while a director of the
Registrant, is or was serving at the Registrant's request as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
to the extent that such director or officer has been successful, on the merits
or otherwise, in such defense. The Registrant also must indemnify any of its
directors, and may indemnify any of its officers, against any liability incurred
in connection with any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, by reason of the fact that such director or officer
is or was a director or officer of the Registrant or who, while a director or
officer of the Registrant, is or was serving at the Registrant's request as a
director, officer, partner, trustee, employee, or agent of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
if such director or officer acted in a manner such director or officer believed
in good faith to be in, or not opposed to, the best interests of the Registrant,
or, with respect to any criminal proceeding, had no reasonable cause to believe
such director's or officer's conduct was unlawful, if a determination has been
made that the director or officer has met these standards of conduct. Such
indemnification in connection with a proceeding by or in the right of the
Registrant, however, is limited to reasonable expenses, including attorneys'
fees, incurred in connection with the proceeding. The Registrant may also
provide advancement of expenses incurred by a director or officer in defending
any such action, suit, or proceeding upon receipt of a written affirmation of
such officer or director that such director or officer has met certain standards
of conduct and an undertaking by or on behalf of such director or officer to
repay such advances unless it is ultimately determined that such director or
officer is entitled to indemnification by the Registrant.
The Registrant may not indemnify a director or officer in connection
with a proceeding by or in the right of the Registrant in which the director or
officer was adjudged liable to the Registrant, or in connection with a
proceeding in which he was adjudged liable on the basis that he improperly
received a personal benefit.
The Registrant's Articles of Incorporation contain a provision which
provides that, to the fullest extent permitted by the Business Corporation Code
of Georgia, directors of the Registrant shall not be personally liable to the
Registrant or its shareholders for monetary damages for breach of his duty of
care or any other duty as a director.
The Registrant maintains an insurance policy insuring the Registrant
and directors and officers of the Registrant against certain liabilities,
including liabilities under the Securities Act of 1933.
II-1
<PAGE> 126
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (See exhibit index immediately preceding the exhibits for
the page number where each exhibit can be found)
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
(2) 4.1 Indenture dated September 30, 1997 by and among the Company,
the Guarantors and The First National Bank of Chicago, as
Trustee.
(2) 4.2 Purchase Agreement dated September 19, 1997 by and among the
Company and the Initial Purchasers.
(2) 4.3 Form of 8 5/8% Series A Senior Note due 2007 (Included in
Exhibit 4.1).
(2) 4.4 Registration Rights Agreement dated September 30, 1997 by and
between the Company and Bear, Stearns & Co. Inc., as initial
purchaser.
(2) 4.5 $230 million Revolving Credit Agreement among Allied Holdings,
Inc. and BankBoston, N.A., individually and as Administrative
Agent, et al., dated September 30, 1997.
(2) 4.6 Form of 8 5/8% Series B Senior Note due 2007 (Included in
Exhibit 4.1).
(2) 4.7 Form of Guarantee (Included in Exhibit 4.1).
(1) 5.1 Opinion of Troutman Sanders LLP.
(2) 12.1 Statement regarding Ratio of Earnings to Fixed Charges
(1) 23.1 Consent of Troutman Sanders LLP (Included in Exhibit 5.1).
(1) 23.2 Consent of Arthur Andersen LLP.
(1) 23.3 Consent of KPMG Peat Marwick LLP
(2) 24.1 Power of Attorney. (Included on the signature pages in Part
II of this Registration Statement)
(2) 25.1 Statement of Eligibility of the Trustee under the Indenture
filed as Exhibit 4.1
(2) 99.1 Form of Letter of Transmittal
(2) 99.2 Form of Notice of Guaranteed Delivery
99.3 Acquisition Agreement among Allied Holdings, Inc., AH
Acquisition Corp., Canadian Acquisition Corp., and Axis
International Incorporated and Ryder System, Inc. dated August
20, 1997 (Incorporated by reference from Form 8-K filed with
the Commission on August 29, 1997).
- - - - - - - - - -
(1) Filed herewith.
(2) Previously filed.
II-2
<PAGE> 127
ITEM 22. UNDERTAKINGS.
The Registrant hereby undertakes the following:
(a)(1) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Offering.
(b) For purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) See Item 20.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day after
receipt of such request, and to send the incorporation documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 128
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED HOLDINGS, INC.
By /s/ Robert J. Rutland
-------------------------------------------------------
Robert J. Rutland, Chairman and Chief Executive Officer
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
Mitchell Poole, Jr., President, Chief Operating
Officer, Chief Financial Officer, and Assistant
Secretary
Each person whose signature to this Registration Statement appears
below appoints Robert J. Rutland and Joseph W. Collier, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Chairman of the Board of Directors and Chief October 13, 1997
- -------------------------- Executive Officer, and Director
Robert J. Rutland
/s/ Guy W. Rutland, III Chairman Emeritus and Director October 13, 1997
- --------------------------
Guy W. Rutland, III
/s/ A. Mitchell Poole, Jr. President, Chief Operating Officer, Chief October 13, 1997
- -------------------------- Financial Officer, Assistant Secretary and
A. Mitchell Poole, Jr. Director
Vice Chairman, Executive Vice President, and
- -------------------------- Director
Bernard O. De Wulf
/s/ Berner F. Wilson, Jr. Vice Chairman, Secretary and Director October 13, 1997
- --------------------------
Berner F. Wilson, Jr.
/s/ Guy W. Rutland, IV Vice President and Director October 13, 1997
- --------------------------
Guy W. Rutland, IV
/s/ Joseph W. Collier Director October 13, 1997
- --------------------------
Joseph W. Collier
Director
- --------------------------
David G. Bannister
Director
- --------------------------
Robert R. Woodson
</TABLE>
II-4
<PAGE> 129
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED AUTOMOTIVE GROUP, INC.
By /s/ Joseph W. Collier
-----------------------------------------------
Joseph W. Collier, President and Chief
Executive Officer
By /s/ David S. Forbes
-----------------------------------------------
David S. Forbes, Chief Financial Officer,
Treasurer and Assistant Secretary
Each person whose signature to this Registration Statement appears
below appoints David S. Forbes and Joseph W. Collier, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer and October 13, 1997
- ---------------------- Director
Joseph W. Collier
/s/ Tom Baker Director October 13, 1997
- ----------------------
Tom Baker
/s/ Tex R. Flippin Director October 13, 1997
- ----------------------
Tex R. Flippin.
/s/ Michael E. Axelrod Director October 13, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-5
<PAGE> 130
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED INDUSTRIES INCORPORATED
By /s/ Daniel H. Popky
------------------------------------------------------
Daniel H. Popky, Treasurer and Chief Financial Officer
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
Mitchell Poole, Jr., President and Chief Executive
Officer
Each person whose signature to this Registration Statement appears
below appoints Daniel H. Popky and A. Mitchell Poole, Jr., and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ William J. Berberich Director October 13, 1997
- --------------------------
William J. Berberich
/s/ Daniel H. Popky Treasurer, Chief Financial Officer and October 13, 1997
- -------------------------- Director
Daniel H. Popky
</TABLE>
II-6
<PAGE> 131
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
HAUL RISK MANAGEMENT SERVICES, INC.
By /s/ Herbert A. Terwilliger
----------------------------------------------------
Herbert A. Terwilliger, President and Chief Executive
Officer
By /s/ Daniel H. Popky
-----------------------------------------------------
Daniel H. Popky, Treasurer and Chief Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Herbert A. Terwilliger and Daniel H. Popky, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. Director October 13, 1997
- --------------------------
A. Mitchell Poole, Jr.
Director
- --------------------------
Bernard O. De Wulf
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- --------------------------
Berner F. Wilson, Jr.
/s/ Herbert A. Terwilliger President, Chief Executive Officer, October 13, 1997
- -------------------------- and Director
Herbert A. Terwilliger
</TABLE>
II-7
<PAGE> 132
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
LINK INFORMATION SYSTEMS, INC.
By /s/ Douglas A. Lauer
------------------------------------------------
Douglas A. Lauer, President and, Chief Executive
Officer
By /s/ Daniel H. Popky
------------------------------------------------
Daniel H. Popky, Vice President, Chief Financial
Officer, Chief Financial Officer, and Assistant
Secretary
Each person whose signature to this Registration Statement appears
below appoints Douglas A. Lauer and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Douglas A. Lauer President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
Douglas A. Lauer
/s/ A. Mitchell Poole, Jr. Director October 13, 1997
- --------------------------
A. Mitchell Poole, Jr.
/s/ Samuel Whitehurst Director October 13, 1997
- --------------------------
Samuel Whitehurst
</TABLE>
II-8
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED SOUTHWOODS, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ Daniel H. Popky
-----------------------------------------------------
Daniel H. Popky, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and Daniel H. Popky, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Vice President, Chief Financial Officer and October 13, 1997
- -------------------------- Director
Daniel H. Popky
</TABLE>
II-9
<PAGE> 134
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AXIS GROUP, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-10
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC., as Managing
General Partner
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer,
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President and Chief Executive Officer, and October 13, 1997
- --------------------- Director of the Managing Director
Joseph W. Collier
/s/ David S. Forbes Vice President and Chief Financial Officer, October 13, 1997
- --------------------- and Director of the Managing Director
David S. Forbes
</TABLE>
II-11
<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
ALLIED, INC.
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President and Chief Executive Officer and October 13, 1997
- ---------------------- Director
Joseph W. Collier
/s/ Tom Baker Director October 13, 1997
- ----------------------
Tom Baker
/s/ Tex R. Flippin Director October 13, 1997
- ----------------------
Tex R. Flippin
/s/ Michael E. Axelrod Director October 13, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-12
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
INTER MOBILE, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer, October 13, 1997
- --------------------- Chief Financial Officer, and Director
Joseph W. Collier
/s/ Tex R. Flippin Vice President and Director October 13, 1997
- ---------------------
Tex R. Flippin
</TABLE>
II-13
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
LEGION TRANSPORTATION, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer, October 13, 1997
- ---------------------- Chief Financial Officer, and Director
Joseph W. Collier
/s/ Tex R. Flippin Vice President and Director October 13, 1997
- ----------------------
Tex R. Flippin
</TABLE>
II-14
<PAGE> 139
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
INNOVATIVE CAR CARRIERS, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Axelrod Director October 13, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-15
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AUTOMOTIVE TRANSPORT SERVICES, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Axelrod Director October 13, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-16
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AUTO HAULAWAY, INC.
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ Daniel H. Popky
-------------------------------------------------
Daniel H. Popky, Vice President and Chief
Financial Officer,
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Director October 13, 1997
- ----------------
Joel M. Rose
</TABLE>
II-17
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AXIS INTERNATIONAL, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-18
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AXIS TRUCK LEASING, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-19
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AXIS NORTH AMERICA, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-20
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AUTO HAULAWAY RELEASING SERVICES
(1981) LIMITED
By /s/ Joseph W. Collier
---------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ Daniel H. Popky
--------------------------------------------------
Daniel H. Popky, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Directors October 13, 1997
- ----------------
Joel M. Rose
</TABLE>
II-21
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
DECATUR DRIVER EXCHANGE COMPANY, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-22
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
CLAIREMONT DRIVER EXCHANGE COMPANY, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- -------------------------
Gary R. Long
</TABLE>
II-23
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
KAR-TAINER INTERNATIONAL, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes., Vice President, Chief
Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Douglas R. Cartin President, Chief Executive Officer, October 13, 1997
- --------------------- and Director
Douglas R. Cartin
/s/ Richard Cox Director October 13, 1997
- ---------------------
Richard Cox
/s/ Robert C. Matheson Director October 13, 1997
- ----------------------
Robert C. Matheson
</TABLE>
II-24
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AH ACQUISITION CORP.
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
A. Mitchell Poole, Jr., President and, Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-25
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
CANADIAN ACQUISITION CORP.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-26
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
AXIS NATIONAL INCORPORATED
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- -------------------------
Gary R. Long
</TABLE>
II-27
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RC MANAGEMENT CORP.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and, Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- -------------------------
Gary R. Long
</TABLE>
II-28
<PAGE> 153
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-29
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RYDER AUTOMOTIVE ACQUISITION LLC
BY: CANADIAN ACQUISITION CORP, as Member
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director of Member October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Operating Officer and October 13, 1997
- -------------------------- Director of Member
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director of Member October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-30
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
MCL RYDER TRANSPORT, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-----------------------------------------------------
David S. Forbes, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Director October 13, 1997
- ----------------
Joel M. Rose
</TABLE>
II-31
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RYDER AUTOMOTIVE OPERATIONS, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-32
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RYDER FREIGHT BROKER, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-----------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-33
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
QAT, INC.
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-34
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
OSHCO, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- ------------------------
Gary R. Long
</TABLE>
II-35
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
TERMINAL SERVICE CO.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 13, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 13, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 13, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 13, 1997
- -------------------------
Gary R. Long
</TABLE>
II-36
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
F.J. BOUTELL DRIVEWAY CO., INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-37
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
RMX, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-38
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
TRANSPORT SUPPORT, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-39
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
COMMERCIAL CARRIERS, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-40
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 13th day of October
1997.
B&C, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 13, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 13, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 13, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-41
<PAGE> 1
EXHIBIT 5.1
October 15, 1997
Allied Holdings, Inc.
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
Gentlemen:
We have acted as counsel to Allied Holdings, Inc., a Georgia
corporation (the "Company"), and each of the Guarantors in connection with the
preparation and filing by the Company and the Guarantors of a Registration
Statement on Form S-4 (Registration No. 333-37113) (as amended to date, the
"Registration Statement") filed with the Securities and Exchange Commission on
October 3, 1997 and October 14, 1997 under the Securities Act of 1933, as
amended (the "Act"), relating to $150,000,000 in aggregate principal amount of
8 5/8% Series B Senior Notes due 2007 (the "New Notes") of the Company that may
be issued in exchange for a like principal amount of the issued and outstanding
8 5/8% Series A Senior Notes due 2007 (the "Old Notes") of the Company. The
Company proposes to offer, upon the terms set forth in the Registration
Statement, to exchange $1,000 principal amount of New Notes for each $1,000
principal amount of Old Notes (the "Exchange Offer"). The Guarantors will
guarantee (the "Guarantees") the New Notes on an unsecured, senior basis. The
New Notes and Guarantees will be offered under an Indenture dated as of
September 30, 1997, by and among the Company, the Guarantors, the Initial
Purchasers (as defined in the Indenture) and The First National Bank of
Chicago, as trustee (the "Indenture"). Capitalized terms defined in the
Registration Statement and not otherwise defined herein are used herein as so
defined.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Indenture, the form of the New
Notes filed as an exhibit to the Registration Statement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Company and the Guarantors, and have made such inquiries of such officers
and representatives as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company and the Guarantors and the representatives of the
Company and the Guarantors in the Purchase Agreement dated September 19, 1997
by and among the Company, the Guarantors and Bear Stearns & Co. Inc., BT
Securities Corporation, and NationsBanc Capital Markets, Inc., as Initial
Purchaser.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
<PAGE> 2
1. Assuming that the Indenture has been duly authorized, executed and
delivered by the parties thereto and that the issuance of New Notes upon
consummation of the Exchange Offer has been duly authorized by the Company, when
(i) the New Notes upon consummation of the Exchange Offer have been duly
executed by the Company and authenticated by the trustee therefor in accordance
with the terms of the Indenture and (ii) the New Notes issuable upon
consummation of the Exchange Offer have been duly delivered against receipt of
Old Notes surrendered in exchange therefor, the New Notes issuable upon
consummation of the Exchange Offer will constitute the legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
2. Assuming that the Indenture has been duly authorized, executed and
delivered by the parties thereto and that the Guarantees of the New Notes upon
consummation of the Exchange Offer have been duly authorized by the respective
Guarantors, when (i) the New Notes upon consummation of the Exchange Offer have
been duly executed by the Company and authenticated by the trustee therefor in
accordance with the terms of the Indenture and (ii) the New Notes issuable upon
consummation of the Exchange Offer have been duly delivered against receipt of
Old Notes surrendered in exchange therefor, the Guarantees of the New Notes
issuable by each Guarantor upon consummation of the Exchange Offer will
constitute the legal, valid and binding obligations of such Guarantor,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
The opinions expressed herein are limited to the laws of the State of
Georgia, and we express no opinion as to the effect on the matters covered by
this letter of the laws of any other jurisdiction. Moreover, in expressing the
opinions set forth herein, we have assumed that the substantive laws of the
jurisdiction of incorporation of each of the Guarantors are the same as the
substantive laws of the State of Georgia.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement.
Very truly yours,
TROUTMAN SANDERS LLP
/S/ Troutman Sanders LLP
-------------------------
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
October 15, 1997
<PAGE> 1
EXHIBIT 23.3
The Board of Directors
Allied Holdings, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Miami, Florida
October 15, 1997
