UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23210
TRISM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3491658
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
4174 Jiles Road, Kennesaw, Georgia 30144
(Address of principal executive offices) (Zip Code)
(770) 795-4600
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
[ X ] Yes [ ] No
As of June 30, 1999, 5,702,137 shares of TRISM, Inc.'s common stock,
par value $.01 per share, were outstanding.
1
<PAGE>
TRISM, INC
TABLE OF CONTENTS
ITEM PAGE
Part I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2 Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II OTHER INFORMATION
Item 1. Legal Proceedings 6
Item 6. Exhibits and Reports on Form 8-K 14
2
<PAGE>
ITEM 1. Financial Statements
<TABLE>
TRISM, Inc.
Consolidated Balance Sheets
As of June 30, 1999 and December 31, 1998
(In thousands, unaudited)
<CAPTION>
June 30, December 31,
1999 1998
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,797 $ 2,029
Restricted cash and insurance deposits 848 847
Accounts receivable, net of allowance for doubtful accounts
of $1,017 and $1,063 for 1999 and 1998, respectively 40,218 37,388
Materials and supplies 1,080 1,389
Prepaid expenses 17,385 18,795
Deferred income taxes 3,053 3,901
--------- -----------
Total current assets 64,381 64,349
Property and equipment, at cost 198,039 193,953
Less: accumulated depreciation and amortization (72,502) (64,775)
--------- -----------
Net property and equipment 125,537 129,178
Intangibles and other, net 19,172 19,624
Other 499 801
--------- -----------
Total assets $209,589 $ 213,952
========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,153 $ 7,206
Bank overdraft 2,952 5,642
Accrued expenses and insurance reserves 11,502 11,832
Accrued interest expense 5,607 580
Current maturities of long-term debt:
Principal payments 16,837 13,857
Residual obligations on equipment debt 1,667 4,014
Long-term debt classified as current 143,206 -
--------- -----------
Total current liabilities 189,924 43,131
Long-term debt, less current maturities - 144,419
Insurance reserves 7,221 6,702
Deferred income taxes 3,053 3,901
--------- -----------
Total liabilities 200,198 198,153
Stockholders' equity:
Common stock; $.01 par; 10,000 shares authorized;
issued 5,903 shares 59 59
Additional paid-in capital 37,229 37,229
Loans to stockholders - (83)
Accumulated deficit (26,260) (19,769)
Treasury stock, at cost, 201 shares (1,637) (1,637)
--------- -----------
Total stockholders' equity 9,391 15,799
--------- -----------
Total liabilities and stockholders' equity $209,589 $ 213,952
========= ===========
See accompanying notes to consolidated financial statements.
3
</TABLE>
<PAGE>
ITEM 1. Financial Statements, Continued
<TABLE>
TRISM, Inc.
Consolidated Statements of Operations
For the three and six months ended June 30, 1999 and 1998
(In thousands, except per share amounts, unaudited)
<CAPTION>
Three Months Ended Six Months Ended
1999 1998 1999 1998
--------- --------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 72,170 $ 77,193 $ 140,800 $ 149,322
Operating expenses:
Salaries, wages and fringe benefits 25,610 28,894 51,027 56,917
Operating supplies and expenses 10,119 10,493 19,556 21,409
Contractor equipment 7,369 5,877 13,973 11,178
Brokerage carrier expense 6,686 4,512 11,803 9,136
Operating taxes and licenses 5,789 6,951 11,913 13,542
Depreciation and amortization 4,976 5,006 10,106 10,055
General supplies and expenses 3,534 3,792 7,397 7,354
Claims and insurance 3,029 2,259 5,174 4,685
Revenue equipment rents 2,511 3,454 6,154 6,665
Communications and utilities 1,072 1,366 2,241 2,639
Loss on disposition of assets 102 121 134 538
Non-recurring expenses 99 402 99 402
--------- --------- ------------ -----------
Total operating expenses 70,896 73,127 139,577 144,520
Operating income 1,274 4,066 1,223 4,802
Interest expense, net 3,677 3,558 7,272 7,210
Other expense, net 243 193 441 273
--------- --------- ------------ -----------
Income (loss) before income tax benefit (2,646) 315 (6,490) (2,681)
Income tax expense (benefit) - 110 - (939)
--------- --------- ------------ -----------
Net income (loss) $ (2,646) $ 205 $ (6,490) $ (1,742)
========== ========= ============ ==========
Basic earnings (loss) per share $ (0.46) $ 0.04 $ (1.14) $ (0.30)
========== ========= ============ ==========
Diluted earnings (loss) per share $ (0.46) $ 0.04 $ (1.14) $ (0.30)
========== ========= ============ ==========
Weighted average number of shares used in
computation of basic and diluted earnings (loss) per share 5,702 5,724 5,702 5,724
========== ========= ============ ==========
See accompanying notes to consolidated financial statements.
4
</TABLE>
<PAGE>
ITEM 1. Financial Statements, Continued
<TABLE>
TRISM, Inc.
Consolidated Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
(In thousands, unaudited)
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,490) $(1,742)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 10,612 10,441
Loss on disposition of assets 134 538
Provision for losses on accounts receivable 121 404
Deferred gain on sale-leaseback (129) (129)
Deferred income taxes - (939)
Changes in assets and liabilities:
Accounts receivable (2,892) 789
Prepaid expenses 1,719 (769)
Accrued expenses and insurance reserves 447 (1,157)
Accrued interest expense, net 4,635 10
Accounts payable 952 (363)
Other 240 (130)
--------- --------
Net cash provided by operating activities 9,349 6,953
--------- --------
Cash flows from investing activities:
Proceeds from sale of assets 1,959 4,773
Purchases of property and equipment (2,691) (1,923)
Other, net 170 595
--------- --------
Net cash (used in) provided by investing activities (562) 3,445
--------- --------
Cash flows from financing activities:
Net proceeds (repayment) under revolving credit agreement (346) 826
Repayment of long-term debt and capital lease obligations (8,533) (11,898)
Issuance of long-term debt 2,750 -
Decrease in bank overdrafts (2,690) (260)
Payment of financing fees (74)
Payment of deferred loan costs (209) -
Collection of stockholder receivable 83 -
Purchase of treasury stock - (87)
--------- --------
Net cash used in financing activities (9,019) (11,419)
--------- --------
Decrease in cash and cash equivalents (232) (1,021)
Cash and cash equivalents, beginning of period 2,029 6,271
--------- --------
Cash and cash equivalents, end of period $ 1,797 $ 5,250
========= ========
Supplemental cash flow information:
Cash paid during the period for:
Interest (non-capitalized) $ 1,355 $ 7,679
========= ========
Capital lease equipment purchases and borrowings $ 5,549 $ 3,785
========= ========
See accompanying notes to consolidated financial statements.
5
</TABLE>
<PAGE>
TRISM, Inc.
Notes to Consolidated Financial Statements
Accounting Policies
The 1998 Annual Report on Form 10-K for Trism, Inc. includes a summary of
significant accounting policies and should be read in conjunction with this
Form 10-Q. The statements for the periods presented are condensed and do
not contain all information required by generally accepted accounting
principles to be included in a full set of financial statements. In the
opinion of management, all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of June
30, 1999 and December 31, 1998 and the results of operations and cash flows
for the periods ended June 30, 1999 and 1998, respectively, have been
included. The Company's operations are subject to seasonal trends common
to the trucking industry. Results of operations for the quarters ending in
December and March are materially lower than the quarters ending in June
and September due to reduced shipments and higher operating costs in the
winter months. The results of operations for any interim period are not
necessarily indicative of the results of operations to be expected for the
entire year. Certain reclassifications were made to the 1998 accounts to
reflect classifications adopted in 1999.
Long-Term Indebtedness
The Company had approximately $86.2 million of Senior Subordinated Notes
(the "Notes") outstanding as of June 30, 1999, which mature December 15,
2000. The Executive committee of the board of Directors and key management
(the "Committee") were mandated to evaluate the various options available
to refinance the Notes and select the appropriate strategy to successfully
execute a recapitalization plan.
The Company has classified all of its outstanding indebtedness as current.
As described below, the Company failed to make a scheduled interest payment
due on June 15, 1999. The grace period for the payment expired on July 15,
1999. This payment default constitutes an Event of Default under the terms
of the indenture pursuant to which the Notes were issued. This Event of
Default caused other technical defaults under other secured borrowing
arrangements, including the Company's revolving credit facility
("Revolver"). The Company executed a Forbearance Agreement with its
working capital lender on August 1, 1999 which states that the working
capital lender will not exercise any remedy available under the terms of
the Revolver until the earlier of September 30, 1999 or occurrence of
additional items of default. The company is required under the Forbearance
Agreement to maintain a minimum of $5 million in availability under the
Revolver during the forbearance period.
On July 15, 1999, the Company reached an agreement in principle with the
steering committee representing major holders of the Notes. The Company
expects that this agreement will significantly reduce its existing long-
term debt, pay all of its other debt in full, and fully satisfy its trade
and leasing obligations in accordance with their terms. The agreement in
principle is subject to execution of definitive documentation, and is to be
affected pursuant to a pre-arranged plan, which may require court approval.
Pursuant to the restructuring agreement, the Notes will be converted into
(i) new notes in the aggregate principal amount of $30 million, due 2004,
with interest at the rate of 12% per annum (the first semi-annual interest
payment on which will be due in March 2000), and (ii) 95% of the new common
equity of TRISM to be issued post-recapitalization, prior to dilution
respecting a contemplated management stock incentive program. TRISM's
existing common stock will be converted into 5% of the new common equity to
be issued post-recapitalization, prior to dilution.
As a result of the Events of Default under the Indenture to the Notes and
the other secured borrowing arrangements, and pending the completion of the
debt restructuring, the Company has recorded all liabilities in default as
current liabilities in the June 30, 1999 consolidated balance sheet.
Revolving Credit Facility
Cash and Availability under the Revolver was approximately $9.4 million at
June 30, 1999, net of a reduction for outstanding letters of credit of
approximately $12.1 million.
6
<PAGE>
Notes to Consolidated Financial Statements, Continued
Contingencies
Under the Comprehensive Environmental Responses, Compensation and Liability
Act ("CERCLA") and similar state laws, a transporter of hazardous
substances may be liable for the costs of responding to the release or
threatened release of hazardous substances from disposal sites if such
transporter selected the site for disposal. Because it is the Company's
practice not to select the sites where hazardous substances and wastes will
be disposed, the Company does not believe it will be subject to material
liability under CERCLA and similar laws. Although the Company has been
identified as a "potentially responsible party" (PRP) at two sites, solely
because of its activities as a transporter of hazardous substances, the
Company does not believe it will be subject to material liabilities at such
sites.
The Company is a party to certain legal proceedings incidental to its
business, primarily involving claims for personal injury or property damage
arising from the transportation of freight. The Company does not believe
that these legal proceedings, or any other claims or threatened claims of
which it is aware, are likely to materially and adversely affect the
Company's financial condition. With regard to personal injury, property
damage, workers' compensation claims, and cargo claims, the Company is and
has been covered by insurance. Such matters may include claims for
punitive damages. It is an open question in some jurisdictions in which
the Company does business as to whether or not punitive damages awards are
covered by insurance.
Segment and Related Information
The Company identifies operating segments based on management
responsibility and marketing strategies. The Company has three reportable
segments: Heavy Haul, Secured Materials and Logistics.
Heavy Haul
This segment consists of Trism Specialized Carriers, Inc. ("TSC"), the
Company's largest operating segment, specializing in the transportation of
over-sized and over-dimensional loads throughout the United States, Canada,
and Mexico. The largest markets for Heavy Haul are manufacturers of large
machinery and equipment, suppliers and contractors to industrial and public
construction, importers of industrial durable goods and the U.S.
Government. Also, the Company entered the Super Heavy Haul market in 1997
through its strategic alliance with Econofreight Group Limited, a U.K.
subsidiary of Brambles Corporation. The Super Heavy Haul market allows for
the transportation of freight in excess of 80 tons up to 10,000 tons.
Secured Materials
The Secured Materials segment consists of the following: Tri-State Motor
Transit Co. ("TSMT"), Diablo Systems, Inc. ("Diablo") and C.I. Whitten
Transfer ("CIW"), and is characterized by the toxic or explosive nature and
special handling requirements of the cargo. The cargo typically consists
of military munitions, commercial explosives, hazardous waste, and
radioactive materials. The largest markets for Secured Materials are the
United States government and various governmental agencies, waste
generators, and environmental clean-up firms.
TSMT, Diablo and CIW service customers in the munitions and explosives
market and are collectively the largest transporters of Department of
Defense munitions in the continental United States. TSMT and CIW operate
throughout the continental United States with Diablo's market focus
primarily in the western regions of the United States.
Trism Environmental Services ("TES"), a division of TSMT, provides service
to customers in the hazardous waste and radioactive materials market and is
the largest transporter of hazardous waste materials in the United States.
TES operates throughout the United States, but its primary market focus is
east of the Mississippi.
The operating companies within the Secured Materials group have operating
authority in the continental United States and certain provinces of Canada.
In addition, the group maintains trailer interchange agreements with
certain Mexican carriers.
7
<PAGE>
Notes to Consolidated Financial Statements, Continued
Segment and Related Information, Continued
Logistics
The Trism Logistics, Inc. ("TLI") segment specializes in the management of
freight by truck (particularly in the hazardous waste market). TLI's client
base includes engineering and construction companies, suppliers to the
European Community, Fortune 500 companies and major utility companies. In
September of 1998, TLI began operations to provide logistics services to
the rail industry through its intermodal division.
A summary of segment information is presented below (in thousands):
<TABLE>
<CAPTION>
Operating Revenue
Three Months Ended Six Months Ended
Segment 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Heavy Haul $ 49,626 $ 53,865 $ 99,320 $ 102,645
Secured Materials 22,561 24,878 42,596 49,205
Trism Logistics 3,442 1,816 5,244 4,129
Eliminations and other (3,459) (3,366) (6,360) (6,657)
---------- ---------- ----------- -----------
Consolidated $ 72,170 $ 77,193 $ 140,800 $ 149,322
========== ========== =========== ===========
<CAPTION>
Operating Income
Three Months Ended Six Months Ended
Segment 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Heavy Haul $ 663 $ 3,016 $ 1,271 $ 3,223
Secured Materials 513 1,031 (339) 1,362
Logistics 98 19 291 217
---------- ---------- ----------- -----------
Consolidated $ 1,274 $ 4,066 $ 1,223 $ 4,802
========== ========== =========== ===========
Interest expense, net 3,677 3,558 7,272 7,210
Other expense, net 243 193 441 273
---------- ---------- ----------- -----------
Loss before income taxes $ (2,646) $ 315 $ (6,490) $ (2,681)
========== ========== =========== ===========
</TABLE>
8
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain statements in this Form 10-
Q include information that is forward-looking, such as the Company's
opportunities to reduce overhead costs and increase operational efficiency,
its anticipated liquidity and capital requirements, the results of legal
proceedings, and the possible restructuring of the Company as contemplated
by the agreement in principle reached with representatives of certain Note
holders.
The matters referred to in forward-looking statements could be affected by
the risks and uncertainties involved in the Company's business. In
addition, there can be no assurance that the restructuring will occur as
described or at all. Subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements in this
paragraph.
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and notes for the year
ended December 31, 1998 and quarter ended June 30, 1999.
The following table summarizes certain financial information on a
percentage of revenue basis for the three and six months ended June 30,
1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Percentage of Revenue Basis:
Operating Revenue: 100.0 100.0 100.0 100.0
------ ------ ------ ------
Operating Expenses:
Salaries, wages and fringe benefits 35.5 37.4 36.2 38.1
Operating supplies and expenses 14.0 13.6 13.9 14.3
Contractor equipment 10.2 7.6 9.9 7.5
Brokerage carrier expense 9.3 5.8 8.4 6.1
Operating taxes and licenses 8.0 9.0 8.5 9.1
Depreciation and amortization 6.9 6.5 7.2 6.7
General supplies and expenses 4.9 4.9 5.3 4.9
Claims and insurance 4.2 2.9 3.7 3.1
Revenue equipment rents 3.5 4.5 4.4 4.5
Communications and utilities 1.5 1.8 1.6 1.8
Loss on disposition of assets 0.1 0.2 0.1 0.4
Non-recurring expenses 0.1 0.5 0.1 0.3
------ ------ ------ ------
Total operating expenses 98.2 94.7 99.3 96.8
Income from operations 1.8 5.3 0.7 3.2
Interest expense, net 5.1 4.6 5.2 4.8
Other expense, net 0.3 0.3 0.3 0.2
------ ------ ------ ------
Income (loss) before income taxes (3.6) 0.4 (4.8) (1.8)
Income tax expense (benefit) - 0.1 - (0.6)
------ ------ ------ ------
Net income (loss) (3.6) 0.3 (4.8) (1.2)
====== ====== ====== =======
</TABLE>
9
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Continued
Summary of Second Quarter 1999 Results
Net loss for the quarter ended June 30, 1999, amounted to $2.6 million or
$0.46 per basic share compared to a net earnings of $0.2 million or $0.04
per basic share in the second quarter of 1998. The results for the second
quarter of 1999 include the full reserve for additional tax benefits
associated with the net operating loss carry-forwards in the amount of $0.9
million, or $.16 per share. Furthermore, second quarter operating results
were negatively impacted by lower asset productivity in both the Heavy Haul
and Secured segments. The Company reduced its average owned tractor
capacity by 130 units from the second quarter of 1998. Additionally, the
Heavy Haul and Secured segments were negatively impacted by lower freight
volume.
Operating Revenue
Second Quarter 1999 as compared to the Second Quarter of 1998
Operating revenue decreased $5.0 million, or 6.5% from the second quarter
of 1998 to the second quarter 1999. Revenue per loaded mile was $1.76 for
the quarter ended June 30, 1999 and 1998. Additionally, operating revenues
were impacted by a decline in the load ratio of 0.2% and total miles driven
of approximately 5.0 million from the second quarter of 1998 to the second
quarter of 1999.
The Secured segment was affected by continued competitive market conditions
in the munitions and hazardous waste markets which negatively impacted
asset productivity. In addition, the Heavy Haul segment was impacted by
lower demand, load ratio and asset productivity. The Logistics segment
revenues increased by $1.6 million, primarily as a result of the intermodal
division which began operations in September of 1998.
Six Months Ended June 30, 1999 as compared to Six Months Ended June 30,
1998
Operating revenue decreased $8.5 million, or 5.7% for the six months ended
June 30, 1999 as compared to 1998. Revenue per loaded mile was $1.74 for
the six months ended June 30, 1999 as compared to $1.75 for the six months
ended June 30, 1998. The Company's load ratio and total miles driven also
declined by 0.1% and 8.8 million miles from the six months ended June 30,
1998 to the same period in 1999.
For the six months ended June 30, 1999 and 1998, the Secured segment was
impacted by a decline in the higher margin government munitions and
hazardous waste business of approximately $1.9 million and $6.5 million,
respectively. The foregoing revenue declines were partially offset by an
increase in general freight business that traditionally has lower profit
margins. The Heavy Haul segment was impacted from lower asset
productivity and lower demand. The Logistics segment positively impacted
revenue with an increase of $1.1 million during 1999.
Operating Income
Second Quarter 1999 as compared to the Second Quarter of 1998
Operating income for the three months ended June 30, 1999, was $1.3 million
compared to $4.1 million in 1998. The decline in operating revenue of $5.0
million negatively impacted operating income by $2.4 million primarily as a
result of fewer miles driven.
In addition, certain variable costs on a per mile basis negatively impacted
operating income as follows: (a) higher fuel costs of $0.4 million; (b)
higher contractor equipment costs of $0.7 million as a result of increased
miles driven by contractor equipment; (c) higher maintenance charges
of $0.5 million resulting from an increase in the overall age
of the tractor and trailer fleet; and (d) higher claims and insurance
costs of $0.6 million primarily as a result of accidents relating to cargo
claims.
Furthermore, certain positive cost variances increased operating income in
the second quarter of 1999 as compared to the second quarter of 1998 as
follows: (a) lower general supplies and expenses of $0.2 million; (b)
lower fixed freight operating costs of $1.7 million resulting from reduced
tractor and trailer fleet size and lower general and administrative costs;
and (c) higher Logistics segment operating income of $0.1 million primarily
relating to the intermodal division.
10
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Continued
Operating Income, Continued
Six Months Ended June 30, 1999 as compared to Six Months Ended June 30,
1998
Operating income for the six months ended June 30, 1999 was $1.2 million as
compared to $4.8 million in 1998. The decline in operating revenue of $8.5
million negatively impacted operating income by $4.1 million primarily as a
result of fewer miles driven.
In addition, certain variable costs on a per mile basis negatively impacted
operating income as follows: (a) higher fuel costs of $0.3 million; (b)
higher contractor equipment costs of $1.1 million as a result of increased
miles driven by contractor equipment; (c) higher maintenance charges
of $0.7 million resulting from an increase in the overall age
of the tractor and trailer fleet; and (d) higher claims and insurance
costs of $0.5 million as result of higher frequency of accidents relating
to cargo claims.
Furthermore, certain positive cost variances increased operating income for
the six months ended June 30, 1998 as compared to the same period in 1998
as follows: (a) lower fixed freight operating costs of $2.7 resulting from
reduced tractor and trailer fleet size and lower general and administrative
costs; (b) lower loss on disposition of assets of $0.4 million; and (c)
higher Logistics segment operating income of $0.1 million.
Operating and Other Expenses
Total operating expenses were approximately $70.9 million for the three
months ended June 30, 1999 and $139.6 million for the six months ended June
30, 1999 as compared to $73.1 million for the three months ended June 30,
1998 and $144.5 million for the six months ended June 30, 1998. The
following expense categories increased or decreased significantly as a
percentage of revenue between the periods:
Salaries, wages and fringe benefits decreased 1.9% of revenue during the
quarter and six months ended June 30, 1999 as compared to the corresponding
periods in 1998. The decrease is primarily due to lower non-driver wage
costs and lower driver wages due to an overall increase in the use of
independent contractors.
Operating supplies increased by 0.4% for the three months ended June 30,
1999 as compared to the same period in 1998, due to an increase in fuel
price per gallon and lower tractor fuel economy resulting from an increase
in the age of the tractor fleet. For the six months ended June 30, 1999,
operating supplies decreased by 0.4% due to lower fuel prices during the
first three months of 1999 as compared to the same period in 1998.
Brokerage expenses increased by 3.5% and 2.3 % of revenue from the quarter
and six months ended June 30, 1999 as compared to the corresponding periods
in 1998. Brokerage revenue as a percentage of overall revenues increased
3.8% and 2.7% of revenue for the quarter and six months ended June 30,
1999.
Claims and insurance expenses increased by 1.3% and 0.6% of revenue for the
quarter and six months ended June 30, 1999 as compared to the corresponding
periods in 1998 primarily as a result of increased cargo claims.
Revenue equipment rent expenses decreased by 1.0% and increased by 0.1% of
revenue for the quarter and six months ended June 30, 1999 as compared to
the corresponding periods in 1998 consistent with the decrease in the
average number of tractors under operating leases for the quarter ended
1999. The six months ended 1999 increase relates to additional trailer
rentals of $1.1 million pertaining to additional revenues in the Super
Heavy Haul market.
The Company established a valuation allowance of $0.9 and $2.2 million
relating to tax benefits associated with net operating loss carryforwards
for the quarter and six months ended of 1999. In 1998, the Company
recorded an income tax expense of $0.1million and an income tax benefit of
$0.9 million for the quarter and six months ended.
11
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Continued
Liquidity and Capital Resources
Net cash provided by operating activities was $9.3 million in 1999 compared
to $6.9 million in 1998. The increase is primarily due to the non-payment
of the scheduled interest payment due on June 15, 1999 of $4.6 million on
the Company's 10-3/4% senior subordinated notes.
Net cash used by investing activities was $0.6 million in 1999 compared to
cash provided of $3.4 million in 1998. The decrease in investing
activities is primarily attributed to a decrease in proceeds from sale of
assets due to the expiration and replacement of operating lease tractors.
Net cash used in financing activities was $9.0 million in 1999 compared to
$11.4 million in 1998. The decrease in cash used in financing activities
is primarily related to a term loan under its revolving credit facility in
which the Company borrowed $2.8 million in 1999.
See "Long-Term Indebtedness" below for a discussion of the Company's
revolving credit facility.
Capital Requirements
The Company does not anticipate material additional capital expenditures
during the remainder of 1999. The Company intends to extend the maturities
of approximately $3.0 million in tractor equipment under certain operating
and capital lease obligations.
Long-Term Indebtedness
The Company had approximately $86.2 million of Senior Subordinated Notes
(the "Notes") outstanding as of June 30, 1999, which mature December 15,
2000. The Executive committee of the board of Directors and key management
(the "Committee") were mandated to evaluate the various options available
to refinance the Notes and select the appropriate strategy to successfully
execute a recapitalization plan.
The Company has classified all of its outstanding indebtedness as current.
As described below, the Company failed to make a scheduled interest payment
due on June 15, 1999. The grace period for the payment expired on July 15,
1999. This payment default constitutes an Event of Default under the terms
of the indenture pursuant to which the Notes were issued. This Event of
Default caused other technical defaults under other secured borrowing
arrangements, including the Company's revolving credit facility
("Revolver"). The Company executed a Forbearance Agreement with its
working capital lender on August 1, 1999 which states that the working
capital lender will not exercise any remedy available under the terms of
the Revolver until the earlier of September 30, 1999 or occurrence of
additional items of default. The company is required under the Forbearance
Agreement to maintain a minimum of $5 million in availability under the
Revolver during the forbearance period.
On July 15, 1999, the Company reached an agreement in principle with the
steering committee representing major holders of the Notes. The Company
expects that this agreement will significantly reduce its existing long-
term debt, pay all of its other debt in full, and fully satisfy its trade
and leasing obligations in accordance with their terms. The agreement in
principle is subject to execution of definitive documentation, and is to be
affected pursuant to a pre-arranged plan, which may require court approval.
Pursuant to the restructuring agreement, the Notes will be converted into
(i) new notes in the aggregate principal amount of $30 million, due 2004,
with interest at the rate of 12% per annum (the first semi-annual interest
payment on which will be due in March 2000), and (ii) 95% of the new common
equity of TRISM to be issued post-recapitalization, prior to dilution
respecting a contemplated management stock incentive program. TRISM's
existing common stock will be converted into 5% of the new common equity to
be issued post-recapitalization, prior to dilution.
As a result of the Events of Default under the Indenture to the Notes and
the other secured borrowing arrangements, and pending the completion of the
debt restructuring, the Company has recorded all liabilities in default as
current liabilities in the June 30, 1999 consolidated balance sheet.
12
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Continued
Year 2000 Position Statement
The Company has evaluated its internal date-sensitive systems and equipment
for Year 2000 compliance. The assessment and testing phase of the Year
2000 project is complete and included both information technology equipment
and non-information technology equipment. Based on its assessment and
testing, the Company determined that it's critical software, hardware and
information technology equipment was in compliance with Year 2000
requirements. However, at June 30, 1999, the Company was approximately 95%
complete in the modification or replacement of the non-information
technology equipment requiring remediation. The Company expects such
remediation to be completed by August 1999. The Company does not believe
the effect of the Year 2000 on its systems is likely to have a material
adverse impact. The total estimated cost of the Year 2000 project was not
material and is being funded by operating cash flows.
The Company has also communicated with key suppliers and customers to
determine their Year 2000 compliance and the extent to which the Company is
vulnerable to any third-party Year 2000 issues. This program will be
ongoing, and the Company's efforts with respect to specific problems
identified will depend on its assessment of the risk. Most key suppliers
and customers who have replied to the Company's inquiries indicated they
expect to be Year 2000 compliant on a timely basis. There can be no
assurance that there will not be an adverse effect on the Company if third
parties do not make the necessary modifications to their systems in a
timely manner. However, management believes that ongoing communication
with and assessment of these third parties will minimize these risks.
Where needed, the Company will establish contingency plans based on actual
testing results and assessment of outside risks.
The costs of the Year 2000 issue and completion dates are based on
management's best estimates which are derived utilizing numerous
assumptions of future events, including the continued availability of
certain resources, third-party modification plans and other factors.
However, there can be no guarantee that these estimates will be achieved,
and actual results could differ materially from those plans.
The above statement in its entirety is designated a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives are recognized as either assets or liabilities at fair value
and establishes specific criteria for the use of hedge accounting. The
Company's required adoption date is January 1, 2001. SFAS 133 is not to be
applied retroactively to financial statements of prior periods. The
Company expects no material adverse effect on consolidated results of
operations, financial position, cash flows or stockholders' equity upon
adoption of SFAS 133.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
The following exhibit is filed as part of this report.
Designation Nature of Exhibit
10 Forbearance Agreement
11 Computation of Basic and Diluted
earnings (loss) per share
27 Financial Data Schedule
B. Reports on Form 8-K
During the quarter covered by this report there were three
reports on Form 8-K filed.
I. Other Events - Filed on June 14, 1999
Omit Interest Payment on Senior Subordinated
Notes
On June 10, 1999, the Registrant issued a
press release, included as an exhibit to
the Form 8-K, that the Board of Directors
of the Company determined that the Company
would not make the June 15, 1999 interest
payment aggregating $4.6 million on its
10 3/4% Senior Subordinated Notes due 2000.
II. Other Events - Filed on July 26, 1999
Agreement in Principle to Restructure Debt
On July 15, 1999, the Registrant issued a
press release, included as an exhibit to the
Form 8-K, announcing that it had reached
an agreement in principle with the steering
committee representing major holders of
the Registrant's approximately $86.2 million
of 10 3/4% Senior Subordinated Notes due 2000.
III. Other Events - Filed on July 26, 1999
Trism, Inc. to be traded on the OTC Bulletin Board
On July 21, 1999, the Registrant issued a press
release, included as an exhibit to the Form 8-K,
announcing that the Company's Common Stock
will no longer be listed on the NASDAQ Stock Market.
Items 2, 3, and 5 of Part II were not applicable and have been
omitted.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
TRISM, INC.
By:/s/Edward L. McCormick
Edward L. McCormick
Director, President and
Chief Executive Officer
By:/s/James G. Overley
James G. Overley
Senior Vice President of Finance,
Chief Financial Officer and
Treasurer
Date: August 16, 1999
15
<PAGE>
TRISM, INC.
Exhibit Index
Exhibit Number Description Page Number
11 Computation of basic and diluted earnings 17
per common share
27 Financial Data Schedule 18
10 Forbearance Agreement 19
16
EXHIBIT 11
<TABLE>
TRISM, INC.
Computation of Basic and Diluted Earnings Per Common Share
For the three months and six months ended June 30, 1999 and 1998
(In thousands, except per share amounts, unaudited)
<CAPTION>
Three Months Ended Six Months Ended
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income (loss) $ (2,646) $ 205 $ (6,490) $ (1,742)
Weighted average number of shares
Basic:
Average common shares outstanding 5,702 5,724 5,702 5,724
Diluted:
Average common shares outstanding 5,702 5,724 5,702 5,724
Common share equivalents resulting from
assumed exercise of stock options - - - -
5,702 5,724 5,702 5,724
Earnings (loss) per common share:
Basic $ (0.46) $ 0.04 $ (1.14) $ (0.30)
Diluted $ (0.46) $ 0.04 $ (1.14) $ (0.30)
</TABLE>
Earnings (Loss) Per Share
Basic earnings (loss) per share excludes dilution and is computed by
dividing net earnings (loss) by the weighted average number of common
shares outstanding. Common shares outstanding include issued shares less
shares held in treasury. Diluted earnings per share reflect the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock (common stock
equivalents). Diluted earnings per share is calculated by dividing net
income by the sum of the weighted average number of common shares
outstanding and dilutive common stock equivalents at the end of each
reporting period. Common stock equivalents are excluded from the diluted
calculation if a net loss was incurred for the period as these transactions
are anti-dilutive.
EXHIBIT 10
FORBEARANCE AGREEMENT
THIS AGREEMENT (this "Agreement" or this "Forbearance
Agreement") is made and entered into as of August 1, 1999 (the
"Effective Date"), by and among TRISM, INC., a Delaware
corporation ("Trism"), TRISM SECURED TRANSPORTATION, INC., a
Delaware corporation ("Trism Secured") TRI-STATE MOTOR TRANSIT
CO., a Delaware corporation ("TSMT"), AERO BODY AND TRUCK
EQUIPMENT, INC., a Delaware corporation ("Aero Body"), TRI- STATE
TRANSPORTATION SERVICES, INC., a Missouri corporation ("Tri-
State"), DIABLO SYSTEMS INCORPORATED D/B/A/ DIABLO
TRANSPORTATION, INC., a California corporation ("Diablo"),
EMERALD LEASING, INC., a Nevada corporation ("ELI"), McGIL
SPECIAL SERVICES, INC.,a Delaware corporation ("McGil"), TRISM
EASTERN, INC. D/B/A C.I. WHITTEN TRANSFER, a Delaware corporation
("CI Whitten"), TRISM HEAVY HAUL, INC., a Delaware corporation
("Heavy Haul"), TRISM SPECIALIZED CARRIERS, INC., a Georgia
corporation ("Specialized"), TRISM SPECIAL SERVICES, INC., a
Georgia corporation ("Special Services"), E.L. POWELL & SONS
TRUCKING CO., INC., an Oklahoma corporation ("EL Powell"), TRISM
TRANSPORT, INC., a Delaware corporation ("Transport"), TRISM
TRANSPORT SERVICES, INC., a Utah corporation ("Transport
Services"), TRISM LOGISTICS, INC., a New Jersey corporation
("Logistics") (each of Trism, Trism Secured, TSMT, Aero Body, Tri-
State, Diablo, ELI, McGil, CI Whitten, Heavy Haul, Specialized,
Special Services, EL Powell, Transport, Transport Services and
Logistics being a borrower under the Loan Agreement (as defined
below) and each is herein referred to herein individually as a
"Borrower" and are collectively referred to herein as the
"Borrowers"), and each of TRISM MAINTENANCE SERVICES, INC., a
Delaware corporation ("Maintenance"), EFB, INC., a Delaware
corporation ("EFB"), TRANSPORTATION RECOVERY SYSTEMS, INC., a
Delawae corporation ("Recovery"), TRISM EQUIPMENT, INC., a
Delaware corporation ("Equipment") and TRISM BENEFITS, INC., a
Delaware corporation ("Benefits")(each of Maintenance, EFB,
Recovery, Equipment and Benefits being a guarantor pursuant to
that certain Guaranty, dated as of July 14, 1997 in favor of
Agent (as herein defined) and each is herein referred to
individually as a "Guarantor" and are collectively referred to
herein as the "Guarantors") and each of the financial
institutions party to the Loan Agreement (each is herein
referred to individually as a "Lender" and are collectively
referred to herein as the "Lenders") and THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation, as Agent of the Lenders
under the Loan Agreement (the "Agent").
RECITALS
On July 14, 1997, Borrowers, Guarantors, Agent and Lenders
entered into various documents evidencing financial arrangements
between them, including but not limited to, a Loan and Security
Agreement (as amended, the "Loan Agreement"; capitalized terms
used herein and not otherwise defined shall have the respective
meanings ascribed thereto in the Loan Agreement), pursuant to
which Lenders agreed to extend to Borrowers a senior secured
revolving credit facility and term loan (collectively the "Credit
Facility") in the respective aggregate amounts and on the terms
and conditions set forth therein; and
Trism is party to that certain Indenture, dated as of
December 15, 1993, between Trism, as Issuer, U.S. Bank Trust
National Association, formerly known as First Trust National
Association, as Trustee (the "Trustee"), and certain of the
Borrowers, as Guarantors, relating to the issuance of
$100,000,000 of Trism's 10 3/4% Senior Subordinated Notes due
2000, as supplemented or amended from time to time (the
"Subordinated Indenture"). On June 15, 1999, Trism failed to
make a required payment of interest pursuant to the Subordinated
Indenture. As of July 15, 1999, Trism has not made such interest
payment and such failure constitutes an Event of Default under
the Subordinated Indenture (the "Subordinated Indenture
Default"). Pursuant to Section 12.1(e) of the Loan Agreement,
the Subordinated Indenture Default constitutes an Event of
Default under the Loan Agreement (the "Existing Default").
By reason of the Existing Default, Agent, on behalf of the
Lenders, is authorized to exercise all remedies available to it
under the Loan Documents, including, but not limited to, the
right to repossess and foreclose upon the Collateral. Despite
the Existing Default, Borrowers desire that Agent and Lenders (a)
forbear from exercising remedies of suit, repossession and
foreclosure otherwise available to Agent, on behalf of the
Lenders, under the Loan Documents in order to afford Borrowers an
opportunity to prepare and implement a proposed restructuring
plan, and (b) continue to make available the Credit Facility to
Borrowers and make other concessions, as set forth herein.
Agent and Lenders are willing to continue to conditionally
forbear from pursuing certain remedies in connection with the
Existing Default, continue to make available to Borrowers the
Credit Facility, as modified herein, and make other concessions
to the Borrowers (collectively the "Borrower Benefits"), on the
terms and conditions contained herein, each of which,
individually and in the aggregate, and including the performance
thereof by Borrowers, constitute the consideration to the Agent
and Lenders for entering into this Forbearance Agreement, and in
the absence of any of which Agent would not have entered into
this Forbearance Agreement or otherwise extended to Borrowers the
Borrower Benefits.
Borrowers and Guarantors each acknowledge and agree that the
Borrower Benefits hereunder are of immediate and material
benefit, financial and otherwise, to such Borrowers and
Guarantors, and that neither Agent nor Lenders was or is under
any obligation to extend to Borrowers or Guarantors the Borrower
Benefits provided hereunder.
NOW, THEREFORE, in consideration of the premises, which are
made a part of this Forbearance Agreement, and the mutual
covenants herein contained, the receipt and sufficiency of which
are acknowledged, the parties hereto agree as follows:
1. Acknowledgments by Borrowers and Guarantors. Each Borrower
and Guarantor hereby acknowledges and agrees that (a) as of the
close of business on July 15, 1999, the outstanding aggregate
respective principal balances of (i) the Revolving Credit Loans
totaled $ 7,573,420.95, (ii) outstanding Letters of Credit
totaled $12,138,127.00 and (iii) the Term Loan totaled
$2,521,833.35, in each case exclusive of accrued interest, costs
and attorney's fees chargeable to Borrowers under the Loan
Documents; (b) the Subordinated Indenture Default and the
Existing Default have occurred by reason of the matters set forth
hereinabove in the second paragraph of the Recitals (c) the
Subordinated Indenture Default and the Existing Default are
continuing and have not been cured by Borrowers or waived,
released, extinguished or compromised by Agent , Lenders or the
Trustee, as the case may be; and (d) as a result of the Existing
Default, all of the Secured Obligations under the Loan Documents,
at the election of the Required Lenders, are absolutely and
immediately due and owing by Borrowers without any defense,
deduction, setoff or counterclaim and Agent, on behalf of the
Lenders, has full legal right to exercise any and all of its
rights and remedies under the Loan Documents or otherwise
available at law and in equity. Notwithstanding the agreement of
Agent and Lenders herein to consider, in their sole and absolute
discretion, Borrowers' requests for additional Revolving Credit
Loans, in no event shall the honoring of any such request be
deemed a waiver of the Existing Default or any other Default or
Event of Default. Neither this Agreement, any forbearance
hereunder, nor the continued making of Revolving Credit Loans to
Borrowers in accordance with this Forbearance Agreement, the Loan
Agreement (as modified herein) and the Loan Documents shall be
deemed a waiver of or consent to the Existing Default or any
Default or Event of Default arising hereafter under this
Agreement or the Loan Documents and Borrowers agree that the
Existing Default shall not be deemed to have been waived,
released, extinguished, compromised or cured by virtue of such
Revolving Credit Loans, the agreement to forbear or the execution
or performance of this Forbearance Agreement.
1. Forbearance. Subject to compliance by Borrowers and
Guarantors of each of the Forbearance Conditions (as defined
below), during the period commencing on the date hereof and
ending on the earlier to occur of (a) September 30, 1999, or (b)
the occurrence of an Event of Default specified in Sections
12.1(g) or 12.1(h) of the Loan Agreement, immediately and without
notice, or (c) the date that any default with respect to, or
other failure of, the Forbearance Conditions as defined in and
set forth in Section 3 hereof occurs (the "Forbearance Period"),
Agent and Lenders agree that they will not, but only by reason of
the Existing Default:
1) exercise any remedy available to them under the Loan
Documents or under any applicable law to enforce collection from
Borrowers of any Secured Obligations or foreclose upon their
security interest(s) in any of the Collateral; or
1) institute suit against Borrowers or Guarantors.
Notwithstanding anything to the contrary contained in this
Agreement, the agreement of Agent and Lenders in this Section 2
does not, and shall not be deemed to, prevent Agent or Lenders
from exercising any other remedy or power available to such
parties, including, without limitation, the right to deliver any
notices under or with respect to the Subordinated Indenture.
1. Conditions to Forbearance. Each of the following conditions
shall constitute a forbearance condition ("Forbearance
Condition"), the continuing satisfaction of each and every one of
which shall be a continuing condition to the agreement of Agent
and Lenders to forbear as set forth above in Section 2:
1) Except with respect to Section 12.1(e) of the Loan Agreement
as it relates solely to the Existing Default (but not including
any subsequent Defaults or Events of Default irrespective of
whether the same are the same as or similar to any of the
Existing Default), Borrowers and Guarantors shall duly observe
and perform each and every obligation and covenant on their
respective parts to be performed under the Loan Documents, this
Agreement and any agreement, instrument or document executed in
connection with this Agreement including, without limitation,
Borrowers' obligations to pay to Agent, on behalf of the Lenders,
all installments of principal, interest, fees (including without
limitation any and all applicable fees set forth in Section 4.2
of the Loan Agreement), charges, and expenses, as and when the
same are due and payable (whether due at stated maturity, upon
acceleration or otherwise); and
1) No Default or Event of Default shall exist or shall have
occurred under any of the terms, conditions, provisions or
covenants of the Loan Documents or this Agreement except the
Existing Default; and
1) No Materially Adverse Effect (except for the Subordinated
Indenture Default and the Existing Default) shall occur; and
1) The representations and warranties contained in this
Agreement and any agreement, instrument or document executed in
connection herewith or pursuant hereto shall be true and correct
as of the date of this Agreement and shall continue to be true
and correct at all times hereafter (except to the extent that any
such representation or warranty, by its express terms, relates to
a prior specific date or period); and
1) Borrowers shall execute such other and further documents and
instruments as Agent may reasonably request to effect the express
provisions of this Agreement; and
(f) Not later than August 20, 1999 (with respect to the
Fiscal Month and Fiscal Year-to-date ended July 31, 1999 as to
subparagraph (i) and as to all matters specified in subparagraph
(ii) hereunder) and monthly thereafter (not later than the 20th
day following the end of each subsequent Fiscal Month), Trism
shall deliver to Agent (i) the Consolidated Balance Sheet and
Consolidating Balance Sheets of the Borrowers and the Guarantors
as at the end of the immediately preceding Fiscal Month and the
related unaudited income statement for the Borrowers and the
Guarantors for such Fiscal Month and for the portion of the
Fiscal Year through such Fiscal Month, together with
consolidating statements for the Borrowers and the Guarantors, in
each case setting forth in comparative form the figures for the
previous Fiscal Year (including, without limitation, a comparison
to the projected budget figures for the previous Fiscal Year),
certified by the Financial Officer of the Borrowers and the
Guarantors to the best of his knowledge as presenting fairly the
financial condition and results of operations of the Borrowers
and the Guarantors as at the date thereof and for the periods
ended on such date, subject to normal year end adjustments, and
(ii) forecasted monthly financial statements prepared by the
Operating Companies on a consolidated basis, consisting of
monthly consolidated balance sheets, cash flow statements and
income statements of the Operating Companies, reflecting
projected borrowings and Borrowing Base Availability hereunder
and setting forth the assumptions on which such forecasted
financial statements were prepared, covering the periods
commencing (x) July 1, 1999 through December 31, 1999 and (y)
January 1, 2000 through December 31, 2000, certified by the
Financial Officer of the Borrowers and the Guarantors to the best
of his knowledge as presenting fairly the projected financial
condition and results of operations of the Borrowers and the
Guarantors based upon the best business judgment of management of
the Borrowers and Guarantors.
(g) Upon execution of this Agreement, Borrowers shall pay
to Agent the Forbearance Fee (as hereinafter defined) and
thereafter shall pay on demand the Expenses (as hereinafter
defined).
In the event that any one or more of the Forbearance Conditions
described above is not satisfied, Agent may forthwith, and
without the necessity of any notice (except as may be required
under the Loan Agreement or applicable law, if any), exercise any
and all remedies available to it under any of the Loan Documents
or available under applicable law or in equity.
1. Modifications to Loan Agreement. The Loan Agreement is
hereby modified and amended by adding a new Section 11.16
thereto, to read in its entirety as follows:
" SECTION 11.16 Minimum Excess Availability.
Notwithstanding anything to the contrary set forth in
this Agreement, permit at any time during the
"Forbearance Period", as that term is defined in that
certain Forbearance Agreement entered into among
Borrowers, Agent and Lenders as of August 1, 1999, as
the same may be amended from time to time, Borrowing
Base Availability to be less than $5,000,000."
1. Payment of the Secured Obligations: For so long as each of
the Forbearance Conditions is satisfied, the Secured Obligations
shall be payable by Borrowers in accordance with the provisions
of the Loan Documents, as amended hereby, applicable as though no
Default or Event of Default had occurred. From and after the
date on which any of the Forbearance Conditions shall cease to be
satisfied, the Secured Obligations, at the election of the
Required Lenders, may be collected by whatever means are
authorized by the Loan Documents and by applicable law.
1. Effect and Construction of Forbearance: Except as
otherwise expressly provided herein, the Loan Agreement and the
other Loan Documents shall remain in full force and effect in
accordance with their respective terms, and this Forbearance
Agreement shall not be construed to: (a) impair the validity,
perfection or priority of any lien or security interest securing
the Secured Obligations; (b) waive or impair any rights, powers
or remedies of Agent or Lenders under the Loan Agreement and the
other Loan Documents upon termination of the Forbearance Period,
with respect to the Existing Default or otherwise; (c) constitute
an agreement by Agent or Lenders or require Agent or Lenders to
extend the Forbearance Period or grant additional forbearance
periods or extend the term of the Loan Agreement or the time for
payment of any of the Secured Obligations; (d) require Agent or
Lenders to make any Revolving Credit Loans or other extensions of
credit to Borrowers other than in Agent's or Lender's sole and
absolute discretion or after termination of the Forbearance
Period; or (e) constitute a waiver of any right of Agent or
Lenders to insist on strict compliance by Borrowers with each and
every term, condition and covenant of this Agreement and the Loan
Documents. This Forbearance Agreement does not constitute an
amendment to the Loan Agreement, but rather, constitutes a
temporary supplement thereto. The terms and provisions of the
Loan Agreement and the other Loan Documents are expressly
incorporated by reference herein except to the extent such terms
and provisions conflict with the terms and provisions of this
Forbearance Agreement, in which case, during the Forbearance
Period, but not otherwise the terms of this Forbearance Agreement
shall control.
1. No Course of Dealing or Performance: Each of Borrowers and
Guarantors acknowledges and agrees that the agreement of Agent
and Lenders to forbear from exercising their rights and remedies
under the Loan Documents with respect to the Existing Default
pursuant to and as reflected in this Forbearance Agreement, does
not and shall not create (nor shall Borrowers or Guarantors rely
upon the existence of or claim or assert that there exists) any
obligation of Agent or Lenders to consider or agree to any waiver
or any further forbearance and, in the event that Agent or
Lenders subsequently agrees to consider any waiver or any further
forbearance, neither the existence of any prior forbearance, nor
this Agreement, nor any other conduct of the Agent or Lenders, or
any of them, shall be of any force or effect on consideration or
decision with respect to any such requested waiver or
forbearance, and neither Agent nor any Lender shall have any
obligation whatsoever to consider or agree to further forbear or
to waive any other Default or Event of Default. In addition,
neither (i) the execution and delivery of this Forbearance
Agreement, (ii) the actions of Agent or Lenders in obtaining or
analyzing any information from Borrowers, whether or not related
to consideration of any waiver, modification, forbearance or
alteration of the Loan Agreement, any Default or Event of Default
thereunder, or otherwise, including, without limitation, any
discussions or negotiations (heretofore or, if any, hereafter)
between Agent or Lenders and Borrowers or Guarantors regarding
any potential waiver, modification, forbearance or amendment
related to the Loan Agreement, (iii) any failure of Agent or
Lenders to exercise any of their rights under, pursuant or with
respect to the Loan Agreement, nor (iv) any action, inaction,
waiver, forbearance, amendment or other modification of or with
respect to the Loan Agreement, shall, unless evidenced by a
written agreement (and then only to the extent provided by the
express provisions thereof):
(a) Constitute a waiver by Agent or Lender of, or,
except to the extent expressly provided herein, an agreement
by Agent or Lender to forebear from the exercise of remedies
with respect to, any Default or Event of Default under the
Loan Agreement;
(b) Constitute a waiver by or estoppel of Agent or
Lender as to the satisfaction or lack of satisfaction of any
covenant, term or condition set forth in the Loan Agreement;
or
(c) Constitute an amendment to or modification of, or
an agreement on the part of Agent or Lender to enter into
any amendment to or modification of, or an agreement to
negotiate or continue to negotiate with respect to, the Loan
Agreement.
1. Fees and Expenses. In consideration for Agent approving and
entering into this Forbearance Agreement:
1) Borrowers shall pay to Agent, for the benefit of the
Lenders, a fee of $5,000 (the "Forbearance Fee") due and payable
upon the execution of this Agreement which fee shall be fully
earned by Agent and Lenders when paid and shall not be subject to
refund or rebate.
2) Borrowers agree to pay on demand all costs and expenses of
Agent or Lenders in connection with the preparation, execution,
delivery and enforcement of this Agreement and all other
documents and any other transactions contemplated hereby, as well
as advice and consultation in connection with the rights of Agent
or Lenders, Borrowers' performance, prospects and compliance
herewith and with the Loan Agreement, as amended, and the
alternatives available to Agent or Lenders, including, without
limitation, the fees and out-of-pocket expenses of legal counsel
to Agent and Lenders (collectively, the "Expenses").
1) Borrowers hereby authorize Agent to charge the Borrowers'
loan account immediately upon the execution and delivery hereof
for the Forbearance Fee, and from time to time for the Expenses,
which charges shall constitute Revolving Credit Loans under the
Loan Agreement; provided, however, that the fees of counsel to
Agent for preparation and negotiation of this Agreement shall not
exceed $5,000.
1. Representations, Warranties and Covenants of Borrowers. To
induce Agent and Lenders to enter into this Agreement:
1) Each Borrower and Guarantor hereby represents, warrants and
covenants to Agent and Lenders that,
1) as of the date hereof, and after giving effect to
the terms hereof, except for the Existing Default, there exists
no Default or Event of Default under this Agreement, the Loan
Agreement or any of the other Loan Documents,
1) each representation and warranty made or deemed to
be made in this Agreement is true and correct on and as of the
date of this Agreement (except to the extent that any such
representation or warranty relates to a prior specific date or
period),
1) each Borrower and Guarantor have the power and is
duly authorized to enter into, deliver and perform this
Agreement, and
1) this Agreement and each of the Loan Documents is
the legal, valid and binding obligation of each Borrower
enforceable against it in accordance with its terms.
1) Each Borrower and Guarantor acknowledges and agrees that no
right of offset, defense, counterclaim, claim, causes of action
or objection in favor of any Borrower or Guarantor against Agent
or any Lender exists arising out of or with respect to, (i) the
forbearance hereunder or any of the Secured Obligations, (ii)
this Agreement, the Loan Agreement or any of the other Loan
Documents, (iii) any other documents now or heretofore
evidencing, securing or in any way relating to the foregoing, or
(iv) the administration or funding of any of the Loans, the
Secured Obligations or any Letter of Credit, and each Borrower
and Guarantor does hereby expressly waive, release and relinquish
any and all such defenses, setoffs, claims, counterclaims, causes
of action or objections, if any, against Agent or any Lender.
1. Release of Claims and Covenant Not to Sue. As a material
inducement to Agent and Lenders to enter into this Forbearance
Agreement, to continue to make Revolving Credit Loans available
and to grant additional concessions to Borrowers reflected
herein, all in accordance with and subject to the terms and
conditions of this Forbearance Agreement and the Loan Agreement,
and all of which are to the direct advantage and benefit of each
Borrower and Guarantor, the Borrowers and the Guarantors, for
themselves and their respective successors and assigns, (a) do
hereby remise, release, acquit, satisfy and forever discharge
Agent and each Lender, and all of the respective past, present
and future officers, directors, employees, agents, attorneys,
representatives, participants, heirs, successors and assigns of
Agent and each Lender, from any and all manner of debts,
accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities,
obligations, expenses, damages, judgments, executions, actions,
claims, demands and causes of action of any nature whatsoever,
whether at law or in equity, either now accrued or hereafter
maturing and whether known or unknown, which any Borrower or
Guarantor now has or hereafter can, shall or may have by reason
of any matter, cause or thing, from the beginning of the world to
and including the date of this Forbearance Agreement, including
specifically, but without limitation, matters arising out of, in
connection with or relating to (i) the Secured Obligations,
including, but not limited to, the administration or funding
thereof, (ii) the Loan Documents or the indebtedness evidenced
and secured thereby, and (iii) any other agreement or transaction
between the Borrowers or the Guarantors and Agent or any Lender
or any subsidiary or affiliate of such parties; and (b) do hereby
covenant and agree never to institute or cause to be instituted
or continue prosecution of any suit or other form of action or
proceeding of any kind or nature whatsoever against Agent or any
Lender or any subsidiaries or affiliates of such parties, or any
of their respective past, present or future officers, directors,
employees, agents, attorneys, representatives, participants,
heirs, successors or assigns, by reason of or in connection with
any of the foregoing matters, claims or causes of action,
provided, however, that the foregoing release and covenant not to
sue shall not apply to any claims arising after the date of this
Agreement with respect to acts, occurrences or events after the
date of this Agreement.
1. Additional Acknowledgments. Each Borrower and Guarantor
expressly acknowledges and agrees that the waivers, estoppels and
releases in favor of Agent and each Lender contained in this
Agreement shall not be construed as an admission of any
wrongdoing, liability or culpability on the part of Agent or any
such Lender, or as an admission by Agent or any such Lender of
the existence of any claims by any Borrower or Guarantor against
Agent or any such Lender. Each Borrower and the Guarantor
further acknowledges and agrees that, to the extent that any such
claims exist, they are of a speculative nature so as to be
incapable of objective valuation and that, to the extent that any
such claims may exist and may have value, such value would
constitute primarily "nuisance" value or "leverage" value in
adversarial proceedings between any Borrower or Guarantor and
Agent or any such Lender. In any event, each Borrower and
Guarantor acknowledges and agrees that the value to such Borrower
or Guarantor of the covenants and agreements on the part of Agent
and each Lender contained in this Agreement substantially and
materially exceeds any and all value of any kind or nature
whatsoever of any claims or other liabilities waived or released
by such Borrower or Guarantor hereunder.
1. Further Assurances. Borrowers and Guarantors agree to take
such further action as Agent shall reasonably request in
connection herewith to evidence the agreement herein contained.
1. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument.
1. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted
assigns of the parties hereto.
1. Counsel and Advisors. Each Borrower and Guarantor
acknowledges that it has consulted with counsel and with such
other expert advisors as it deemed necessary in connection with
the negotiation, execution and delivery of this Agreement. This
Agreement shall be construed without regard to any presumption or
rule requiring that it be construed more strongly against the
party causing this Agreement or any part hereof to be drafted.
1. Relationship of Parties. Nothing in this Agreement shall be
construed to alter the existing debtor-creditor relationship
between Borrowers, Agent and Lenders, nor the relationship of
each Guarantor as a Guarantor of the Borrowers' obligations to
Agent and Lenders. This Agreement is not intended, nor shall it
be construed to create, a partnership or joint venture
relationship between any of the parties hereto.
1. Modification of Agreement. This Agreement may not be
modified, altered or amended except by agreement in writing
signed by all of the parties hereto.
1. Entire Agreement. This Agreement, together with the Loan
Documents, embodies the entire understanding and agreement among
the parties hereto and thereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements,
understandings and inducements, whether express or implied, oral
or written.
1. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws and decisions of the State
of New York, excluding laws and decisions related to conflicts of
laws.
1. No Novation, Etc. This Agreement is not intended to be, nor
shall it be construed to create, a novation or accord and
satisfaction, nor an election of remedies by Agent or any Lender,
and, except as otherwise expressly stated herein, the Loan
Documents shall remain in full force and effect in accordance
with their respective terms, as supplement hereby if applicable.
Notwithstanding any prior mutual temporary disregard of any of
the terms of any of the Loan Documents, the parties agree that
the terms of each of the Loan Documents shall be strictly adhered
to on and after the date hereof, except as expressly modified by
this Agreement.
1. Matters Regarding Guarantors. Each Guarantor acknowledges
and agrees that neither the execution, delivery or performance of
this Forbearance Agreement, nor any action taken in reliance
hereon or to effect this Forbearance Agreement shall have any
affect on or constitute a release, novation, satisfaction or any
modification of the obligations of the Guarantors to Agent or the
Lenders, all of which shall remain in full force and effect in
accordance with the written provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered as of
the date first written above.
AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
Name:
Title:
LENDERS:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
Name:
Title:
FLEET CAPITAL CORPORATION
By:
Name:
Title:
FINOVA CAPITAL CORPORATION
By:
Name:
Title:
BORROWERS:
TRISM, INC.
By:
Name:
Title:
TRISM SECURED TRANSPORTATION, INC.
By:
Name:
Title:
TRI-STATE MOTOR TRANSIT CO.
By:
Name:
Title:
AERO BODY AND TRUCK EQUIPMENT, INC.
By:
Name:
Title:
TRI-STATE TRANSPORTATION SERVICES, INC.
By:
Name:
Title:
DIABLO SYSTEMS INCORPORATED D/B/A/
DIABLO TRANSPORTATION, INC.
By:
Name:
Title:
EMERALD LEASING, INC.
By:
Name:
Title:
McGIL SPECIAL SERVICES, INC.
By:
Name:
Title:
TRISM EASTERN, INC.
D/B/A C.I. WHITTEN TRANSFER
By:
Name:
Title:
TRISM HEAVY HAUL, INC.
By:
Name:
Title:
TRISM SPECIALIZED CARRIERS, INC.
By:
Name:
Title:
TRISM SPECIAL SERVICES, INC.
By:
Name:
Title:
E.L. POWELL & SONS TRUCKING CO., INC.
By:
Name:
Title:
TRISM TRANSPORT, INC.
By:
Name:
Title:
TRISM TRANSPORT SERVICES, INC.
By:
Name:
Title:
TRISM LOGISTICS, INC.
By:
Name:
Title:
GUARANTORS:
TRISM MAINTENANCE SERVICES, INC.
By:
Name:
Title:
EFB, INC.
By:
Name:
Title:
TRANSPORTATION RECOVERY SYSTEMS, INC.
By:
Name:
Title:
TRISM EQUIPMENT, INC.
By:
Name:
Title:
TRISM BENEFITS, INC.
By:
Name:
Title:
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
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0
0
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