-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SivCsbGoZNSKcq86BbOsp18IY95hq3QNHM/gs1SW8+X4RsprcDYaBfQTu00sXD4X PeZfblXEFTs2vgcNNqQVaw== 0000719271-97-000028.txt : 19971114 0000719271-97-000028.hdr.sgml : 19971114 ACCESSION NUMBER: 0000719271-97-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSFINANCIAL HOLDINGS INC CENTRAL INDEX KEY: 0000719271 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 460278762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12070 FILM NUMBER: 97714679 BUSINESS ADDRESS: STREET 1: 8245 NIEMAN ROAD, STE 100 STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 BUSINESS PHONE: (913)859-0055X262 MAIL ADDRESS: STREET 1: 8245 NIEMAN ROAD STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: ANUHCO INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CARRIERS INC DATE OF NAME CHANGE: 19910812 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-12321 TRANSFINANCIAL HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Delaware 46-0278762 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 8245 Nieman Road, Suite 100 Lenexa, Kansas 66214 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (913) 859-0055 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. Yes ( X ) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 7, 1997 Common stock, $0.01 par value 6,042,587 Shares PART I. FINANCIAL INFORMATION Item 1. Financial Statements TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, (In thousands, except per share amounts) (Unaudited)
1997 1996 Operating Revenues.......................................................... $ 35,208 $ 30,041 Operating Expenses.......................................................... 34,342 29,332 Operating Income............................................................ 866 709 Nonoperating Income (Expense) Interest income.......................................................... 148 278 Other.................................................................... 33 19 Total nonoperating income (expense).................................. 181 297 Income Before Income Taxes.................................................. 1,047 1,006 Income Tax Provision........................................................ 478 501 Net Income.................................................................. $ 569 $ 505 Average Common Shares Outstanding (Note 5).................................. 6,111 6,609 Net Income Per Share........................................................ $ 0.09 $ 0.08 The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, (In thousands, except per share amounts) (Unaudited)
1997 1996 Operating Revenues.......................................................... $ 99,372 $ 83,604 Operating Expenses.......................................................... 96,507 82,275 Operating Income............................................................ 2,865 1,329 Nonoperating Income (Expense) Interest income.......................................................... 538 886 Other.................................................................... 73 45 Total nonoperating income (expense).................................. 611 931 Income Before Income Taxes.................................................. 3,476 2,260 Income Tax Provision........................................................ 1,571 1,040 Net Income.................................................................. $ 1,905 $ 1,220 Average Common Shares Outstanding (Note 5).................................. 6,268 6,878 Net Income Per Share........................................................ $ 0.30 $ 0.18 The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ASSETS (Unaudited) Current Assets: Cash and temporary cash investments...................................... $ 5,283 $ 9,021 Short-term investments................................................... 3,252 9,957 Freight accounts receivable, less allowance for doubtful accounts of $444 and $419, respectively................. 12,540 9,233 Finance accounts receivable, less allowance for doubtful accounts of $514 and $769, respectively................. 16,157 14,554 Current deferred tax assets.............................................. -- 618 Other current assets..................................................... 2,587 1,965 AFS net assets (Note 6).................................................. 8,194 7,570 Total current assets................................................. 48,013 52,918 Operating Property, at Cost: Revenue equipment........................................................ 29,766 24,373 Land..................................................................... 3,585 3,489 Structures and improvements.............................................. 10,420 10,087 Other operating property................................................. 8,845 5,328 52,616 43,277 Less accumulated depreciation........................................ (21,982) (19,887) Net operating property........................................... 30,634 23,390 Intangibles, net of accumulated amortization................................ 9,446 9,497 Other Assets................................................................ 401 1,007 $ 88,494 $ 86,812 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable......................................................... $ 2,749 $ 2,980 Accrued payroll and fringes.............................................. 7,218 5,533 Claims and insurance accruals............................................ 209 246 Accrued and current deferred income taxes................................ 191 -- Other accrued expenses................................................... 1,893 2,289 Total current liabilities............................................ 12,260 11,048 Deferred Income Taxes....................................................... 2,179 1,203 Other Non-Current Liabilities and Minority Interest......................... 469 -- Shareholders' Equity (Note 5) Preferred stock with $0.01 par value, authorized 1,000,000 shares, none outstanding..................................................... -- -- Common stock with $0.01 par value, authorized 13,000,000 shares, issued 7,508,022 and 7,605,570 shares, respectively.................. 75 76 Paid-in capital.......................................................... 4,625 5,529 Retained earnings........................................................ 81,147 79,242 Treasury stock, 1,448,735 and 1,224,661 shares, respectively, at cost.... (12,261) (10,286) Total shareholders' equity........................................... 73,586 74,561 $ 88,494 $ 86,812 The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (In thousands) (Unaudited)
1997 1996 Cash Flows From Operating Activities Net income.......................................................... $ 1,905 $ 1,220 Adjustments to reconcile net income to cash provided by operating activities Gain on sale of operating property, net......................... (55) (64) Depreciation and amortization................................... 3,404 2,616 Provision for credit losses..................................... 722 611 Deferred tax provision.......................................... 1,697 697 Net increase (decrease) from change in other working capital items affecting operating activities........... (3,997) (644) 3,676 4,436 Cash Flows From Investing Activities Purchase of finance subsidiaries (Note 2)........................... -- (11,979) Purchase of operating property...................................... (8,792) (6,370) Origination of finance accounts receivable.......................... (95,626) (88,206) Sale of finance accounts receivable................................. 62,871 30,140 Collection of owned finance accounts receivable..................... 30,520 59,711 Purchases of short-term investments................................. (10,411) (17,454) Maturities of short-term investments................................ 17,116 39,628 Other............................................................... (743) (351) (5,065) 5,119 Cash Flows From Financing Activities Payments to acquire treasury stock.................................. (1,973) (4,982) Payments for fractional shares from reverse stock split............. (427) -- Borrowings (repayments) on credit agreements, net................... 8 (335) Other............................................................... 43 70 (2,349) (5,247) Net Increase (Decrease) in Cash and Temporary Cash Investments........ (3,738) 4,308 Cash and Temporary Cash Investments at beginning of period............ 9,021 6,617 Cash and Temporary Cash Investments at end of period.................. $ 5,283 $ 10,925 Cash Paid During the Period for Interest............................................................ $ -- $ 854 Income Tax.......................................................... $ 35 $ 92 The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands)
Total Share Common Paid-In Retained Treasury holders' Stock Capital Earnings Stock Equity Balance at December 31, 1995.................. $ 76 $ 5,357 $ 78,390 $ (3,543) $ 80,280 Net income.................................... -- -- 852 -- 852 Issuance of shares under Incentive Stock Plan. -- 172 -- (87) 85 Purchase of 797,341 shares of common stock.... -- -- -- (6,656) (6,656) Balance at December 31, 1996.................. 76 5,529 79,242 (10,286) 74,561 Net income.................................... -- -- 1,905 -- 1,905 Fractional shares cancelled in reverse stock split....................................... (1) (949) -- -- (950) Issuance of shares under Incentive Stock Plan. -- 45 -- (2) 43 Purchase of 223,899 shares of common stock.... -- -- -- (1,973) (1,973) Balance at September 30, 1997 (unaudited)..... $ 75 $ 4,625 $ 81,147 $(12,261) $ 73,586 The accompanying notes to consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include TransFinancial Holdings, Inc. ("TransFinancial") and all of its subsidiary companies (the "Company"). Pursuant to the approval of shareholders the Company changed its name from Anuhco, Inc. to TransFinancial Holdings, Inc. effective June 30, 1997. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and have not been examined or reviewed by independent public accountants. In the opinion of management, all adjustments necessary to fairly present the results of operations have been made. Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements unless significant changes have taken place since the end of the most recent fiscal year. TransFinancial believes that the disclosures contained herein, when read in conjunction with the financial statements and notes included, or incorporated by reference, in TransFinancial's Form 10-K/A-3, filed with the SEC on May 5, 1997, are adequate to make the information presented not misleading. It is suggested, therefore, that these statements be read in conjunction with the statements and notes included, or incorporated by reference, in the aforementioned report on Form 10-K/A-3. 2. ACQUISITION OF PREMIUM FINANCE SUBSIDIARIES On March 29, 1996, TransFinancial completed the acquisition of all of the issued and outstanding stock of Universal Premium Acceptance Corporation and UPAC of California, Inc. (together referred to as "UPAC"). UPAC and Agency Premium Resource, Inc. ("APR"), the Company's other finance subsidiary, offer short-term collateralized financing of commercial and personal insurance premiums through approved insurance agencies throughout the United States. At March 31, 1996, UPAC had outstanding net finance receivables of approximately $30 million. This transaction was accounted for as a purchase. TransFinancial utilized a portion of its available cash and short-term investments to consummate the purchase at a price of approximately $12 million. The terms of the acquisition and the purchase price resulted from negotiations between TransFinancial and William H. Kopman, the former sole shareholder of UPAC. In connection with the purchase of UPAC, the Company has recorded goodwill of $6.6 million, which is being amortized on the straight-line basis over 25 years. In addition to the Stock Purchase Agreement by which TransFinancial acquired all of the UPAC stock, the Company entered into a consulting agreement with Mr. Kopman. Under the consulting agreement, TransFinancial is entitled to consult with Mr. Kopman on industry developments as well as UPAC operations through December 31, 1998. In addition to retaining the services of Mr. Kopman under a consulting agreement, certain executive management personnel of UPAC were retained under multiyear employment agreements. The unaudited pro forma operating results of TransFinancial for the nine months ended September 30, 1996, assuming the acquisition occurred as of the beginning of the period, were operating revenues of $84,837,000, net income of $1,205,000, and net income per share of $0.18. The pro forma results of operations are not necessarily indicative of the actual results that would have been obtained had the acquisition been made at the beginning of the period, or of results which may occur in the future. 3. PROFIT SHARING In September 1988, the employees of Crouse Cartage Company ("Crouse"), a wholly owned subsidiary of TransFinancial, approved the establishment of a profit sharing plan ("the Plan"). The Plan is structured to allow all employees (union and non-union) to ratably share 50% of Crouse's income before income taxes (excluding extraordinary items and gains or losses on the sale of assets) in return for a 15% reduction in their wages. Plan distributions are made on a quarterly basis. The Plan was recertified in 1991 and 1994, and shall continue in effect through March 31, 1998, or until a replacement of the Collective Bargaining Agreement is reached between the parties, whichever is later. The accompanying consolidated balance sheets as of September 30, 1997 include an accrual for profit sharing costs of $986,000. The accompanying consolidated statements of income include profit sharing costs of $986,000 and $953,000 for the third quarter of 1997 and 1996, and $2,812,000 and $2,142,000 for the first nine months of 1997 and 1996. 4. FINANCING AGREEMENTS In December, 1996, TransFinancial, UPAC and APR Funding Corporation (a wholly- owned subsidiary) entered into an extendible three year securitization agreement whereby undivided interests in a designated pool of accounts receivable can be sold on an ongoing basis. The maximum allowable amount of receivables to be sold under the agreement is $50,000,000. This agreement replaced a similar securitization agreement with another financial institution that was entered into in October, 1995 and UPAC's secured credit agreement, dated July, 1994. The purchaser permits principal collections to be reinvested in new financing agreements. The Company had securitized receivables of $34.8 million at September 30, 1997. The cash flows from the sale of receivables are reported as investing activities in the accompanying consolidated statement of cash flows. The securitized receivables are reflected as sold in the accompanying balance sheet. The proceeds from the initial securitization of the receivables were used to purchase previous securitized receivables under the prior agreement and to pay off the secured note payable under UPAC's secured credit agreement. The terms of the agreement require UPAC to maintain a minimum tangible net worth of $5 million and contain restrictions on the payment of dividends by UPAC to TransFinancial without prior consent of the financial institution. The terms of the agreement also require the Company to maintain a minimum consolidated tangible net worth of $50 million. The Company was in compliance with all such provisions at September 30, 1997. The terms of the securitization agreement also require that UPAC maintain a default reserve at specified levels which serves as collateral. At September 30, 1997, approximately $5.5 million of owned finance receivables served as collateral under the default reserve provision. Effective January 1, 1997, the Company adopted the requirements of Statement of Financial Accounting Standards No. 125 ("SFAS No. 125"), "Accounting for the Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," for transfers occurring after December 31, 1996. The adoption of SFAS No. 125 did not have a material impact on the net income of the Company. In September 1988, Crouse entered into a multi-year credit agreement with a commercial bank which provided for maximum borrowings equaling the lesser of $2,500,000 or the borrowing base, as defined in such agreement. In September, 1996 the term of this agreement was extended to June 30, 1998. There was no outstanding balance on this revolving line of credit at September 30, 1997. 5. SHAREHOLDERS' EQUITY Income per share is based on the average number of common shares outstanding during each period. The average number of common shares so computed was 6,110,841 and 6,609,287 for the quarters ended September 30, 1997 and 1996, and 6,267,549 and 6,877,995 for the first nine months of 1997 and 1996. On June 26, 1995, the Company adopted a program to repurchase up to 10% of its outstanding shares of common stock. During the second quarter of 1996, the Company completed this initial repurchase program and expanded the number of shares authorized to be repurchased by an additional 10% of its then outstanding shares. During the third quarter and first nine months of 1997, the Company repurchased an additional 93,848 shares and 223,899 shares of common stock, bringing the total shares repurchased to 1,438,340 shares, or 19.0% of outstanding shares before initiating the program, at a total cost of $12,173,000. On June 26, 1997, the shareholders of the Company approved a 1-for-100 reverse stock split followed by a 100-for-1 forward stock split. These stock splits were effected on July 1, 1997. The result of this transaction was the cancellation of approximately 107,000 shares of common stock held by holders of fewer than 100 shares at a market price of $8.89 per share. 6. AFS NET ASSETS Under the provisions of a Joint Plan of Reorganization ("the Joint Plan"), AFS is responsible for the administration of pre-July 12, 1991 creditor claims and conversion of assets owned before that date. As claims were allowed and cash was available, distributions to the creditors occurred. The Joint Plan also provided for distributions to TransFinancial as unsecured creditor distributions occurred in excess of 50% of allowed claims. TransFinancial also will receive the full benefit of any remaining assets of AFS through its ownership of AFS stock, after unsecured creditors received distributions, including interest, equivalent to 130% of their claims. AFS has made full payment of all its resolved claims and liabilities. The remaining AFS net assets are estimated to have net realizable value of $8.2 million. The primary assets include approximately $6.7 million in cash and investments. There are no material claims outstanding as of September 30, 1997. The remaining AFS assets are recorded at their estimated net realizable value. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Third quarter and nine months ended September 30, 1997 compared to the third quarter and nine months ended September 30, 1996 With the acquisition of APR on May 31, 1995, and UPAC on March 29, 1996, TransFinancial now operates in two distinct industries; transportation, through its subsidiary, Crouse; and financial services, through its subsidiaries, APR and UPAC. TRANSPORTATION Operating Revenue - The changes in transportation operating revenue are summarized in the following table (in thousands): Qtr. 3 1997 Nine Months 1997 vs. vs. Qtr. 3 1996 Nine Months 1996 Increase (decrease) from: Increase in LTL tonnage........................ $3,485 $10,725 Increase in LTL revenue per hundredweight...... 1,623 3,100 Increase in truckload revenues................. 245 856 Net increase............................... $5,353 $14,681 Less-than-truckload ("LTL") operating revenues rose by 22.1% and 18.7% for the third quarter and first nine months of 1997, as compared to the same periods in 1996. Crouse achieved increases of 15.0% and 16.6% in LTL tons for the third quarter and first nine months of 1997, compared to 1996. Third quarter LTL revenues, tons and shipments were increased during the recent Teamster strike against UPS as Crouse met customers' needs for small parcel shipments. Crouse's LTL revenue yield improved approximately 7.0% and 4.8%, from the third quarter and first nine months of 1996 to the same periods of 1997. The third quarter improvement in revenue yield was impacted substantially by the additional volume of small parcel shipments handled. These improvements were also the result of a general rate increase placed in effect January 1, 1997, negotiated rate increases on certain shipping contracts and fuel surcharges to pass-through to customers the continuing high cost of diesel fuel. Truckload operating revenues were more than 5.2% and 6.3% higher in the third quarter and nine months of 1997, on approximately 9% more shipments, offset by slight declines in revenue per shipment. Operating Expense - A comparative summary of transportation operating expenses as a percent of transportation operating revenue follows:
Percent of Operating Revenue Third Quarter Nine Months 1997 1996 1997 1996 Salaries, wages and employee benefits................... 57.0% 56.2% 56.8% 55.9% Operating supplies and expenses.......................... 11.9% 12.1% 12.3% 12.8% Operating taxes and licenses............................. 2.5% 2.6% 2.7% 2.8% Insurance and claims..................................... 2.4% 2.0% 2.1% 2.0% Depreciation............................................. 2.9% 2.5% 3.0% 2.5% Purchased transportation................................. 20.3% 21.1% 20.0% 21.2% Total operating expenses............................. 97.0% 96.5% 96.9% 97.2%
Crouse's operating expenses as a percentage of operating revenue, or operating ratio, for the third quarter of 1997, was adversely impacted in three areas. Crouse incurred unusually high insurance and claims costs on accidents and cargo damage in the quarter. Crouse operating and administrative personnel devoted significant man-hours, primarily on an overtime basis, in training and preparing for the transition to the Crouse's new computer system. The transition to the new system is expected to be complete by year-end. Lastly, Crouse incurred incrementally greater variable costs due to the different handling characteristics of the small parcel shipments (UPS strike impact) as compared to the freight Crouse typically handles. In spite of the above factors, Crouse's operating ratio improved for the first nine months of 1997 as compared to 1996. An increase in the proportion of LTL tons and revenues of total tons and revenues resulted in the increases in salaries, wages and employee benefits and depreciation and the decrease in purchased transportation as a percent of revenues. The improvement in the year- to-date 1997 operating ratio is the result of spreading the fixed component of the Company's operating expenses over increased operating revenues. FINANCIAL SERVICES In the third quarter and first nine months of 1997, APR and UPAC financed $31.4 million and $94.8 million, respectively, in insurance premiums at average annual yields of 14.1% and 14.4%. These operations generated net operating income of $208,000 and $869,000, on net finance charges, fees and other income earned of $1.9 million and $6.2 million for the third quarter and first nine months of 1997. These results compare to third quarter and first nine months of 1996 financings of $32.3 million and $82.4 million at average annual yields of 14.9% and 14.5%, which produced an operating loss of $14,000 and operating income of $73,000 on net finance charges, fees and other income earned of $2.1 million and $5.1 million for the third quarter and first nine months of 1996, respectively. The increases in premium financed, net finance charges, fees and other income are primarily the result of the Company's acquisition of UPAC effective March 29, 1996, operating income was positively impacted by the integration of the administrative operations of UPAC and APR. Also, contributing to the increased operating income was the impact of the Company's new securitization agreement and an increase in gain recognized on receivables sold through that agreement by the inclusion of UPAC receivables. See Note 4 - Financing Agreements in the Notes to Consolidated Financial Statements. UPAC's operating income for the third quarter of 1997 was adversely impacted by a high level of provision for credit losses in the quarter. OTHER Primarily as a result of its utilization of cash and short-term investments for the acquisition of UPAC and the stock repurchase program since the first quarter of 1996, TransFinancial recorded a substantial decrease in interest income for the periods ended September 30, 1997, from the corresponding period of 1996. TransFinancial's effective tax rate decreased for the third quarter and first nine months of 1997, to 45% from 50% and 46% for the same periods of 1996. Outlook The following statements are forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as such involve risks and uncertainties which are detailed below under the caption "Forward-Looking Statements". The Company's three-year strategic plan includes the goal of continuing the growth of each of its business segments, and making the financial services segment a more equal contributor to the Company's earnings per share. In the transportation segment, the plan calls for the Company to continue to provide and improve upon its already superior service to its customers in its primary operating territory, while extending its operations throughout the Midwest. As the Company makes the strategic investments necessary to support this expansion, the Company intends to continue to improve the efficiency and effectiveness of its existing base of operations. The financial services segment will also focus on increasing its market penetration in certain states with substantial population and industrial base. The additional volumes of premium finance contracts is expected to be handled within the Company's existing administrative operations without incurring significant additional fixed costs. In addition to the expansion of its existing operations in each of its business segments, the Company continues to consider potential acquisitions which would complement these operations. Forward-Looking Statements Certain statements contained in this Quarterly Report on Form 10-Q which are not statements of historical fact constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, the statements specifically identified as forward-looking statements in this Form 10-Q. In addition, certain statements in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases, and in oral statements made by or with the approval of an authorized executive officer of the Company which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to (i) projections of revenues, income or loss, earnings or loss per share, capital expenditures, the payment or non-payment of dividends, capital structure and other financial items, (ii) statements of plans and objectives of the Company or its management or Board of Directors, including plans or objectives relating to the products or services of the Company, (iii) statements of future economic performance, and (iv) statements of assumptions underlying the statements described in (i), (ii) and (iii). These forward- looking statements involve risks and uncertainties which may cause actual results to differ materially from those anticipated in such statements. The following discussion identifies certain important factors that could affect the Company's actual results and actions and could cause such results or actions to differ materially from any forward-looking statements made by or on behalf of the Company that related to such results or actions. Other factors, which are not identified herein, could also have such an effect. Transportation Certain specific factors which may affect the Company's transportation operation include: increasing competition from other regional and national carriers for freight in the Company's primary operating territory; increasing price pressure; changes in fuel prices; labor matters; including changes in labor costs, and other labor contract issues; and, environmental matters. Financial Services Certain specific factors which may affect the Company's financial services operation include: the performance of financial markets and interest rates; the performance of the insurance industry; increasing competition from other premium finance companies and insurance carriers for finance business in the Company's key operating states; the successful acquisition and integration of additional premium finance operations or receivables portfolios; and, the inability to obtain continued financing at a competitive cost of funds. New Venture As described below under the caption "Financial Condition," the Company has acquired an equity interest in a start-up venture formed to develop, lease and/or sell equipment utilizing a new technology for particle reduction. This venture and technology are subject to risks and uncertainties in addition to those generally applicable to the Company's operations described herein. These additional risks and uncertainties include the efficacy and commercial viability of the new technology, the ability of the venture to market the new technology, the acceptance of such technology in the marketplace, the general tendency of large corporations to be slow to change from known technology to emerging new technology, the venture's reliance on third parties to manufacture the equipment utilizing the technology, the ability of the venture to protect its proprietary information in the new technology and potential future competition from third parties developing equivalent or superior technology. As result of these and other risks and uncertainties, the future results of operations of the venture are difficult to predict, and such results may be materially better or worse than expected or projected. General Factors Certain general factors which could affect any or all of the Company's operations include: changes in general business and economic conditions; changes in governmental regulation, and; tax changes. Expansion of these businesses into new states or markets is substantially dependent on obtaining sufficient business volumes from existing and new customers in these new markets at compensatory rates. The cautionary statements made pursuant to Section 21E of the Securities Exchange Act of 1934, as amended, are made as of the date of this Report and are subject to change. The cautionary statements set forth in this Report are not intended to cover all of the factors that may affect the Company's businesses in the future. Forward-looking information disseminated publicly by the Company following the date of this Report may be subject to additional factors hereafter published by the Company. FINANCIAL CONDITION The Company's financial condition remained strong at September 30, 1997 with more than $8.5 million in cash and investments at the TransFinancial level, as well as approximately $6.7 million in cash and investments held in the discontinued operation. In addition, during the first nine months of 1997, the Company has purchased $8.8 million of operating property and equipment, without incurring any significant long term indebtedness. Crouse has additional commitments to purchase operating property and equipment at a cost of approximately $5 million for delivery through first quarter 1998. These purchases are expected to be funded from operating cash flows and available cash and investments. A substantial portion of the capital required for UPAC's insurance premium finance operations has been provided through the sale of undivided interests in a designated pool of receivables on an ongoing basis under receivables securitization agreements. The current securitization agreement, which matures December 31, 1999, currently provides for the sale of a maximum of $50 million of eligible receivables. As of September 30, 1997, $34.8 million of such receivables had been securitized. On June 26, 1995, the Company adopted a program to repurchase up to 10% of its outstanding shares of common stock. During the second quarter of 1996 the Company completed this program and expanded the program to include an additional 10% of its then outstanding shares. During the first nine months of 1997, the Company repurchased 223,899 shares of common stock bringing the total shares repurchased to 1,438,340, or 19.0% of outstanding shares before initiating the program, at a total cost of $12,173,000. This program is being funded from available cash and investments. On June 26, 1997, the shareholders of the Company approved a 1-for-100 reverse stock split followed by a 100-for-1 forward stock split. These stock splits were effected on July 1, 1997. The result of this transaction was the cancellation of about 107,000 shares of common stock held by holders of fewer than 100 shares at a market price of $8.89 per share. Effective July 31, 1997, the Company entered into a subscription agreement with a start-up venture, pursuant to which TransFinancial committed to a $2.9 million capital contribution over two years in exchange for the exclusive lease and/or sale rights to equipment produced by, and a controlling interest in, the venture. The venture owns rights to a proprietary, new technology for particle reduction. The venture intends to market equipment utilizing this technology to companies which would benefit from the use of sub-micron materials in their manufacturing processes. Capital contributions through September 30, 1997 total approximately $500,000. The initial phase of this venture will focus on continued research, product development, establishing sources of supply, recruiting and training personnel, developing markets and contracting for production. The Company expects this operation to incur initial operating losses during the remainder of 1997, and in 1998, which may be significant in relation to its consolidated results of operations.* *This is a forward-looking statement which involves risks and uncertainties that are detailed under the caption "Forward-Looking Statements". PART II - OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Item 3 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996. Item 2. Changes in Securities -- None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to vote of Security Holders - None Item 5. Other Information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3(b)* Restated By-Laws of the Registrant 19(a)* Report to Shareholders for the Third Quarter, 1997, dated November 12, 1997. 27* Financial Data Schedule. * Filed herewith. (b) Reports on Form 8-K -- None (SIGNATURE) Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TransFinancial Holdings, Inc. Registrant By: /s/Timothy P. O'Neil Timothy P. O'Neil, President & Chief Executive Officer By: /s/ Mark A. Foltz Mark A. Foltz Vice President, Finance and Secretary Date: November 12, 1997 EXHIBIT INDEX Assigned Exhibit Number Description of Exhibit 3(b) Restated By-Laws of the Registrant. 19(a) Report to Shareholders for the Third Quarter, 1997, dated November 12, 1997. 27 Financial Data Schedule. EX-3 2 TRANSFINANCIAL HOLDINGS, INC. RESTATED BYLAWS AS ADOPTED NOVEMBER 8, 1997 RESTATED BY LAWS OF TRANSFINANCIAL HOLDINGS, INC. ARTICLE I OFFICES Section 1. Registered Office. The registered office of the Corporation shall be located at such place in the State of Delaware as the Board of Directors may from time to time authorize by duly adopted resolution. Section 2. Other Offices. The Corporation may also have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS Section 1. Annual Meetings. An annual meeting of the stockholders of the Corporation for the election of directors and the transaction of such other business as may properly come before such meeting shall be held on such date and at such time as the Board of Directors shall specify, as set forth in such notice thereof. Section 2. Special Meetings. Special meetings of the stockholders may be called only by the Board of Directors. Section 3. Place of Meeting. Meetings of the stockholders may be held at any place within or without the State of Delaware as shall be designated from time to time by the Board of Directors and specified in the notice of meeting or a waiver of notice thereof. Section 4. List of Stockholders. At least ten (10) days before every meeting of stockholders, the Secretary shall prepare a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of meeting or, if not so specified, at the place where the meeting is to be held. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any stockholder during the whole time of the meeting. Section 5. Notice. Written notice of each meeting of stockholders stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, notice of a stockholders' meeting shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. Section 6. Waiver of Notice. Whenever notice is required to be given under any provision of the General Corporation Law of Delaware, the Certificate of Incorporation or these By-Laws, a written waiver thereof, signed by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of any annual or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these By-Laws. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends such meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Section 7. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, at all meetings of the stockholders of this Corporation, the holders of a majority of the outstanding shares entitled to vote thereat present in person or by proxy shall constitute a quorum. If a quorum is not present or represented at such meeting, the affirmative vote of a majority of shares represented at any meeting, in person or by proxy, may adjourn any meeting of stockholders until a quorum is present. In all matters other than the election of directors, every decision of a majority of shares of stock entitled to vote on the subject matter and represented in person or by proxy at a meeting at which a quorum is present shall be valid as an act of the shareholders unless a larger vote is required by the Certificate of Incorporation, these By-Laws or the laws of the State of Delaware then in effect. Directors shall be elected by a plurality of the votes of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors. Section 8. Adjourned Meetings. Any stockholders' meeting may be adjourned from time to time by the Chairman of such meeting until its business is completed, and notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat. At any adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. Section 9. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period, and then only within the period specified. Section 10. Elections of Directors. All elections of directors shall be by written ballot. Section 11. Action by Consent. (a) Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. (b) In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events, within ten (10) days after the date on which such request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, to the attention of the Secretary of the corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. (c) In the event of the delivery to the corporation of a written consent or consents purporting to authorize or take corporate action and/or any related revocation or revocations, the Secretary of the corporation shall provide for the safekeeping of such consents and revocations and shall as soon as practicable thereafter conduct such reasonable investigation as the Secretary deems necessary or appropriate for the purpose of ascertaining the validity of such consents and revocations and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the consents have given consents. Alternatively, the Board of Directors in its sole discretion may appoint one or more inspectors of elections to conduct such investigation. (d) Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated written consent received in the manner provided in Section 11(b), a written consent or consents signed by a sufficient number of holders to take such action are delivered to the corporation in the manner provided in Section 11(b). Section 12. Inspectors of Election. The Board of Directors, the Chairman of the Board or the President shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof, and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector before entering upon the discharge of such inspector's duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. At the meeting, the inspector or inspectors shall: (a) ascertain the number of shares outstanding and the voting power of each, (b) determine the shares represented at the meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (e) certify the determination of the number of shares represented at the meeting, and the count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist them in the performance of their duties. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Delaware Court of Chancery, or any other court having jurisdiction of the matter, upon application by a stockholder shall determine otherwise. Section 13. Advance Notice of Stockholder Nominations and Stockholder Proposals. (a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation at any meeting of stockholders at which directors are to be elected. Nominations of persons for election to the Board of Directors may be made at any such meeting of stockholders (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of record of the corporation who is entitled to vote in the election of directors at such meeting and who complies with the notice procedures set forth in Section 13(b). (b) If a stockholder proposes to nominate one or more candidates for election as directors at a meeting of stockholders at which directors are to be elected, the stockholder must give timely notice thereof in proper written form to the Secretary of the corporation, in addition to complying with any other applicable requirements. To be timely, the stockholder's notice must be delivered to the Secretary at the principal executive offices of the corporation not less than sixty (60) days prior to the date scheduled for such meeting; provided, however, that if notice or public announcement of the scheduled date of the meeting is not given or made at least seventy (70) days prior to the date scheduled for the meeting, such stockholder's notice must be so delivered to the Secretary not more than ten (10) days following the day on which such notice of meeting was mailed or such public announcement was made, whichever is earlier. In no event shall the postponement, deferral or adjournment of a stockholders' meeting commence a new time period for the giving of notice by a stockholder as described above. For purposes of this Section, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. To be in proper written form, a stockholder's notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by the person and (D) any other information concerning the person that would be required to be disclosed in a proxy statement or other filings in connection with the solicitation of proxies for the election of such person as a director under Section 14 of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the corporation's books, of such stockholder (B) the name and address of the beneficial owner, if any, on whose behalf the nomination(s) are made, (C) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by such stockholder and any such beneficial owner, (D) a description of all arrangements or understandings between such stockholder or beneficial owner and each proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder and (E) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors pursuant to Section 14 of he Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. (c) No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any stockholder of record of the corporation who is entitled to vote at such meeting and who complies with the notice procedures set forth in Section 13(d). Any business to be brought before the annual meeting by any stockholder must also be a proper matter for stockholder action. (d) If a stockholder proposes to bring business before an annual meeting of stockholders, the stockholder must give timely notice thereof in proper written form to the Secretary of the corporation, in addition to complying with any other applicable requirements. To be timely, a stockholder's notice must be delivered to the Secretary at the principal executive offices of the corporation within the period specified in Section 13(b) hereof. In no event shall the postponement, deferral or adjournment of a stockholders' meeting commence a new time period for the giving of notice by a stockholder. To be in proper written form, a stockholder's notice to the Secretary must set forth (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of such stockholder, (iii) the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iv) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by such stockholder and any such beneficial owner, (v) a description of all arrangements or understandings between such stockholder or beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such stockholder, (vi) a description of any material financial or other interest of such stockholder or beneficial owners in such proposal and (vii) any other information that would be required to be disclosed in a proxy statement soliciting proxies for approval of the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. (e) The Board of Directors, or a designated committee thereof, may reject any stockholder's nomination or stockholder's proposal which is not timely made in accordance with the provisions of this Section 13. If the Board of Directors, or a designated committee thereof, determines that the information provided in a stockholder's notice does not comply with the requirements of this Section 13 in any material respect, the Secretary of the corporation shall notify the stockholder of the deficiency. The stockholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within five (5) days from the date such deficiency notice is given to the stockholder, or such shorter time as may reasonably be deemed appropriate by the Board or committee. If the deficiency is not cured within such period, or if the Board of Directors or such committee determines that the additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements of this Section 13 in any material respect, then the Board of Directors or committee may reject such stockholder's notice. (f) Notwithstanding the procedures set forth in Section 13(e) hereof, if the Board of Directors or any committee thereof does not make a determination as to whether a stockholder's notice complies with the provisions of this Section 13, the chairman of the meeting shall make the determination and declare at the meeting whether the stockholder has so complied. If the chairman determines that the stockholder has not so complied, then unless the chairman in his or her sole and absolute discretion waives such noncompliance, the chairman shall declare at the meeting that the stockholder's nomination or proposal was not properly made and the defective nomination or stockholder proposal shall be disregarded. Section 14. Chairman of Meetings. The Chairman of the Board or, in his absence, the President shall preside at all meetings of the stockholders. In the absence of both the Chairman of the Board and the President, a majority of the members of the Board of Directors present in person at such meeting may appoint any other officer or director to act as Chairman of the meeting. ARTICLE III BOARD OF DIRECTORS Section 1. Power and Authority. The property, business and affairs of the Corporation shall be under the supervision and the direction of the Board of Directors. Such direction and supervision will not infringe on management's authority to manage the Corporation day- to-day. The Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute, or by the Certificate of Incorporation, or by these By-Laws directed or required to be exercised or done by the stockholders. Section 2. Number and Term. The number of directors which shall constitute the Board of Directors shall be determined from time to time by resolution of the Board of Directors, provided that the total number of directors shall not be less than six (6) or more than twelve (12) director(s); and provided further that no reduction by the Board of Directors in the number of directors shall affect the term of any incumbent director. The directors shall be elected at the annual meeting of stockholders, except as provided herein. Each director so elected shall hold office until the next succeeding annual meeting of stockholders and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Section 3. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; or any such vacancies or newly created directorships may be filled by the stockholders at any meeting. Any directors so chosen to fill such vacancies or newly created directorships shall hold office until the next election of directors and until their successors are elected and qualified, or until their earlier death, resignation or removal. Section 4. Meetings. The first meeting of each newly elected Board, for which no notice shall be necessary, shall be held immediately following each annual meeting of the stockholders of the Corporation or any adjournment thereof, at the place of such annual meeting, or at such place and time as a majority of the members of the newly elected Board who are then present shall determine. All other meetings of the Board of Directors may be held within or without the State of Delaware as may be provided in the resolution or notice calling such meeting. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors may from time to time provide and without any notice other than the resolution or action providing therefor. Special meetings of the Board of Directors shall be held at any time upon the call of the Chairman of the Board; or in the absence or disability of the Chairman of the Board, the Vice Chairman or President; or by the Chairman of the Board or the Corporate Secretary upon the written request of any two (2) members of the Board. A meeting of a committee shall be held at any time upon the call of the Chairman of a Committee, or the Chairman of the Board, or the Chairman or Corporate Secretary upon written request of any two (2) members of a Committee. Section 5. Notice Of Special and Committee Meetings. Notice of all special meetings of the Board of Directors shall be given to each director, which notice shall state the time and place of each meeting. Such notice need not include a statement of the business to be transacted at, or the purpose of, any such meeting. Like notice of all meetings of the committees of the Board of Directors shall be given to each member of the appropriate committee. Such notice shall be mailed, postage prepaid, at least five (5) days before such meeting, addressed to the last known residence or place of business of each director or, at least twenty-four (24) hours before such meeting, shall be sent to him or her at such place by telegraph, cable, telecopier or similar means or personally served on him or her in person or by telephone. The individual(s) calling a meeting shall give notice, or cause notice to be given, for such meeting. Section 6. Waiver of Notice. A written waiver of notice, signed by the director entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of any annual or special meeting need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these By-Laws. Attendance of a director at any meeting, whether regular or special, shall constitute a waiver of notice of such meeting except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Section 7. Quorum. A majority of the directors then in office (but in no event less than one-third of the total number of directors authorized by the Board pursuant to Article III, Section 2) shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum shall be present shall be an act of the Board of Directors except as may be otherwise specifically required by law or the Certificate of Incorporation or these By-Laws; and if less than a quorum may be present at any meeting, those present may adjourn from time to time to another time and place until a quorum shall be present, without notice other than announcement at the meeting of such other time and place. Section 8. Telephone Meeting. Members of the Board of Directors or any committee designated by the Board of Directors may participate in meetings by means of conference telephone or similar communications equipment whereby all participants can hear each other and such participation shall constitute presence in person at the meeting. Section 9. Committees of Directors Designated by Board. The Board of Directors may by resolution or resolutions adopted by a majority of the whole Board of Directors designate two or more directors to constitute an executive committee, audit committee, compensation committee, nominating committee, or such other committee or committees as the Board of Directors may from time to time deem advisable. Except to the extent restricted by law, any said committee shall have and may exercise all of the authority of the Board of Directors in the management of the Corporation to the extent provided in said resolutions and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. The committees shall keep regular minutes of their proceedings and report the same to the Board when required. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Section 10. Committees of Directors Designated by Chairman. The Chairman of the Board of Directors may designate such advisory committees from time to time as the Chairman of the Board of Directors deems necessary and proper, to perform such duties as may be determined by such chairman at the time of their designation or as may be modified thereafter by such chairman; provided, however, that any such advisory committee or committees shall have and may exercise only the power to recommend action to the Board of Directors. Each advisory committee shall consist of two or more individuals (with such alternates, if any, as may be deemed desirable) selected by the Chairman of the Board of Directors, who may but need not be members of the Board of Directors. Section 11. Action by Consent. Unless otherwise restricted by the Certificate of Incorporation, any action which is required or permitted to be taken at a meeting of the directors or of any committee thereof may be taken without a meeting if consents in writing, setting forth the action so taken, are signed by all members of the Board or of the committee, as the case may be. Such consents shall have the same force and effect as a unanimous vote at a meeting duly held. The Secretary shall file such consents with the minutes of the meetings of the Board of Directors or the committee, as the case may be. Section 12. Compensation of Directors. Unless otherwise restricted by law or by the Certificate of Incorporation, directors, as such, shall receive such compensation, if any, for their services as the Board shall, from time to time, determine; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 13. Chairman of the Board. The Chairman of the Board, if any, may sign certificates for shares of the Corporation and shall perform such other duties and have such other responsibilities as may, from time to time, be determined by the Board of Directors. Section 14. Vice-Chairman of the Board. The Vice-Chairman of the Board, if any, shall exercise and perform such duties and have such other responsibilities as may be from time to time assigned to him by the Board of Directors or the Chairman of the Board. Section 15. Removal of Directors. At a meeting called expressly for that purpose, the entire Board of Directors or any member thereof may be removed, with or without cause, by the vote of the holders of a majority of the shares then entitled to vote at an election of directors. ARTICLE IV OFFICERS Section 1. Number. The officers of this Corporation shall be elected by the Board of Directors and shall consist of a President and a Secretary and such other or additional officers (including, without limitation, one or more Vice Presidents, a Treasurer, a Controller, and one or more Assistant Treasurers, Assistant Secretaries or Assistant Controllers) as the Board of Directors may designate. Unless otherwise restricted by law, the Certificate of Incorporation or these By-Laws, any two or more offices, except those of President and Vice-President, may be held by one and the same person. Section 2. Qualifications. The officers need not be members of the Board of Directors and they need not be residents of the State of Delaware. Section 3. Election of Officers. Officers shall be elected by the Board at its first meeting after the election of directors at the annual meeting of stockholders and at such other times as deemed appropriate or necessary by the Board. All officers shall serve at the will of the Board or until their successors are elected and may be removed either with or without cause by the Board of Directors. Section 4. Compensation. The compensation of all officers of the Corporation shall be fixed by or in the manner prescribed by the Board of Directors. Section 5. Expense Reimbursement. The Corporation may adopt, from time to time, a policy with respect to reimbursement of expenses incurred on behalf of the Corporation by its officers and/or employees. Reimbursement of such expenses shall be in accordance with the requirements imposed by the Internal Revenue Code for substantiation of such expenses as deductible business expenses to the Corporation. ARTICLE V DUTIES OF OFFICERS Section 1. President. The President, in the absence of the Chairman of the Board and the Vice-Chairman of the Board, shall preside at all meetings of the stockholders and all meetings of the Board of Directors; the President may sign certificates for shares of the Corporation. Subject to the supervision and direction of the Board of Directors, the President shall have and exercise direct charge of and general supervision over the day-to-day business and affairs of the Corporation, and he shall perform such other duties as may be delegated to him by the Board of Directors, the Chairman of the Board and Vice- Chairman of the Board. The President may sign all notes, agreements or other instruments in writing made and entered into for or on behalf of the Corporation, except in cases where the signing thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general the President shall perform all duties incident to the office of President. Section 2. Vice Presidents. The Vice Presidents, if any, in the order designated by the Board of Directors, shall exercise the functions of the President during the absence or disability of the President. Each Vice President shall have such powers and designated titles, if any, and discharge such duties as may be assigned by the Board of Directors, and shall perform such other duties as may be delegated by the President. Section 3. Corporate Secretary. The Corporate Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders, record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and perform like duties for the standing committees when required. The Corporate Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of special meetings of the Board of Directors and shall perform such other duties as are usually incident to the office of the secretary of a Corporation, as may be prescribed by the Board of Directors or President. The Corporate Secretary shall keep in safe custody the seal of the Corporation and affix the same to any instrument requiring it and, when so affixed, it shall be attested by his or her signature. Section 4. Assistant Secretaries. The Assistant Secretary or, if there be more than one (1), the Assistant Secretaries shall, in the absence or disability of the Corporate Secretary, perform the duties and exercise the powers of the Corporate Secretary and shall perform such other duties as may be assigned by the President. Section 5. Treasurer. The Treasurer, if any, shall have the custody of all moneys and securities of the Corporation and shall keep regular books of account. The Treasurer shall disburse the funds of the Corporation in payment of the just demands against the Corporation, taking vouchers for such disbursements, and shall render to the President and the Board of Directors, from time to time, as may be required, an account of all transactions as Treasurer and of the financial condition of the Corporation and shall perform such other duties as may be required by the Board of Directors or the President. Section 6. Assistant Treasurers. The Assistant Treasurers, in the order designated by the President shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer, and such other duties as may be required by the President. ARTICLE VI STOCK CERTIFICATES AND RECORD DATES Section 1. Stock Certificates. Certificates representing shares of the Corporation shall be in such form as may be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board of Directors or Vice Chairman of the Board, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. Section 2. Lost Certificates. The Board of Directors may authorize the issuance of a new certificate or certificates of stock in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming that the certificate of stock has been lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond in such sum as it may direct sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Section 3. Transfer of Stock. The shares of stock of the Corporation shall be transferable only upon its books by the registered holders thereof in person or by their duly authorized attorneys or legal representatives, upon surrender and cancellation of certificates for a like or greater number of shares, with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, and with such proof of the authenticity of the signature and of authority to transfer, and of payment of transfer taxes, as the Corporation or its agents may require. Except as otherwise expressly provided by the statutes of the State of Delaware, the Corporation shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof. Section 4. Fixing the Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. Subject to the provisions of statute and the Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of capital stock of the Corporation, unless otherwise provided by statute or the Certificate of Incorporation. Section 2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserves in the manner in which they were created. Section 3. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the words "Corporate Seal, Delaware". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 4. Fiscal Year. The fiscal year of the Corporation shall end on the last day of December of each year, unless and until the same shall be modified by resolution of the Board of Directors. Section 5. Checks, Notes, Drafts, etc. All checks, notes, drafts or other orders for the payment of money of the Corporation may be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or any officer or officers authorized by the Board of Directors to make such designations. Section 6. Execution of Contracts, Deeds, etc. The Board of Directors may authorize any director or directors, officer or officers, agent or agents, to enter into or execute and deliver in the name and on behalf of the Corporation any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. Section 7. Voting of Stock in Other Corporations. Unless otherwise provided by resolution of the Board of Directors, the President from time to time may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other Corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other Corporation. If one or more attorneys or agents are appointed, the President may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent. The President may, or may instruct the attorneys or agents appointed to, execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise, such written proxies, consents, waivers, or other instruments as may be necessary or proper in the circumstances. ARTICLE VIII INDEMNIFICATION Section 1. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another Corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another Corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that a court shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 3. Notwithstanding the provisions of Sections 1 and 2 of this Article VIII, to the extent that any person specified in Sections 1 or 2 has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 or 2, or in defense of any claim, issue or matter therein, such person shall be indemnified by the Corporation against all expenses (including attorneys' fees), actually or reasonably incurred by such person in connection therewith. Section 4. Reasonable expenses (including attorneys' fees) incurred by any person specified in Sections 1 and 2 of this Article VIII in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt by the Corporation of any undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as provided in this Article VIII. Section 5. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. Section 6. All rights provided any person by this Article VIII shall be contract rights. No amendment, alteration, addition, change or repeal of this Article VIII, or any other provisions of the Certificate of Incorporation or of the By-Laws shall in any way impair or reduce the rights to indemnification or advancement of expenses provided by this Article VIII to such person with respect to any acts or omissions of such person occurring prior to the time of such amendment, alteration, addition, change or repeal. Section 7. Notwithstanding the provisions of Sections 1, 2 and 4 of this Article VIII, if the Delaware General Corporation Law is amended to permit greater rights to indemnification or advancement of expenses than that provided in this Article VIII, then the persons specified in Sections 1, 2 or 4 shall be granted such greater rights to the full extent permitted by the Delaware General Corporation Law as so amended. Section 8. In the event that any part of the Article VIII shall be found in any action, suit or proceeding to be invalid or ineffective, the validity and the effect of the remaining parts shall not be affected and the Corporation shall indemnify the persons specified in Sections 1 and 2 to the full extent required by the remaining parts of this Article VIII and to the full extent permitted by the Delaware General Corporation Law. ARTICLE IX AMENDMENTS Section 1. Amendments. The Board of Directors shall have the power to make, alter or repeal the By-Laws of the Corporation subject to the power of the stockholders to alter or repeal the By-Laws made or altered by the Board of Directors. Corporate Secretary EX-19 3 TRANSFINANCIAL HOLDINGS, INC. THIRD QUARTER 1997 REPORT TO SHAREHOLDERS Our third quarter highlights included continued improvement in profitability compared to 1996 by Crouse Cartage Company ("Crouse"), TransFinancial's general commodities motor carrier, and Universal Premium Acceptance Corporation ("UPAC"), TransFinancial's insurance premium finance operation. For the third quarter of 1997, TransFinancial increased net income to $569,000, or $0.09 per share, on operating revenues of $35.2 million, compared to net income of $505,000, or $0.08 per share on operating revenues of $30.0 million for the third quarter of 1996. Crouse earned operating income of $989,000 on revenues of $33.3 million in third quarter 1997, compared to operating income of $981,000 on revenues of $27.9 million for third quarter 1996. This improvement was principally the result of a 15% increase in less-than-truckload ("LTL") tons handled. In addition, Crouse achieved a 7.0% increase in revenue yield on LTL freight through the combination of a reduction in average shipment size due to the Teamster strike against UPS, a general rate increase, negotiated increases in contracted rates and the implementation of fuel surcharges. These improvements in revenues were offset in part by increased insurance and claims costs due to accidents and cargo damage during the quarter, increased overtime pay incurred in connection with the transition to a new computer system and increased variable costs required to handle the volume of small parcel shipments moved for customers during the recent strike against UPS. UPAC reported operating income of $208,000 on net finance charges, fees and other income earned of $1.9 million, compared to an operating loss of $14,000 on net finance charges, fees and other income earned of $2.1 for the third quarter of 1996. The primary factors contributing to the improved profitability were increased gain recognized on the sale of receivables through the new securitization agreement and the integrated administrative operations. We believe each of our operating segments made important progress toward its strategic goals during the third quarter. Crouse continued to develop and increase its operations in its expansion markets while meeting the challenge of handling a substantial increase in small parcel shipments from existing customers during the recent Teamster strike against UPS. UPAC maintained its focus on providing superior customer service and increasing the productivity and efficiency of its operations. Effective July 31, 1997, we acquired the exclusive lease and/or sale rights to equipment produced by, and a controlling interest in, a start-up venture in exchange for a $2.9 million capital contribution over two years. The venture owns rights to a proprietary, new technology for particle reduction. The venture intends to market equipment utilizing this technology to companies which would benefit from the use of sub-micron materials in their manufacturing processes. Capital contributions through September 30, 1997 total approximately $500,000. The initial phase of this venture will focus on continued research , product development, establishing sources of supply, recruiting and training personnel, developing markets and contracting for production. We expect this operation to incur initial operating losses during the remainder of 1997, and in 1998, which may be significant in relation to consolidated results of operations. TransFinancial continues to maintain a strong balance sheet with cash and investments of $8.5 million, excluding an additional $6.7 million included in net assets of discontinued operations, and book value of $12.14 per share at September 30, 1997. TransFinancial acquired 224,000 shares in the first nine months of 1997 under its stock repurchase program. Timothy P. O'Neil William D. Cox President Chairman November 12, 1997 "Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995 The Company's 1997 outlook and all other statements in this report other than historical facts are forward-looking statements that involve risks and uncertainties and are subject to change at any time. The Company derives its forward-looking statements from forecasts which are based upon assumptions about many important factors such as the relationship of demand and capacity in the freight market, the performance of finance and insurance markets, prevailing short-term interest rates, the risks and uncertainties inherent in a start-up venture, general market conditions and competitive activities. While the Company believes that its assumptions are reasonable, it cautions that there are inherent difficulties in predicting the impact of certain factors, which could cause actual results to differ materially from anticipated results. These factors, as and when applicable, are discussed in the Company's filings with the Securities and Exchange Commission, in particular its most recent Form 10-Q. TRANSFINANCIAL HOLDINGS, INC. UNAUDITED SUMMARY FINANCIAL STATEMENTS (in thousands, except per share data) CONSOLIDATED STATEMENTS OF INCOME Third Quarter and Nine Months Ended September 30, 1997 and 1996 Third Quarter Nine Months 1997 1996 1997 1996 Operating Revenues.............. $35,208 $30,041 $99,372 $ 83,604 Operating Expenses.............. 34,342 29,332 96,507 82,275 Operating Income................ 866 709 2,865 1,329 Nonoperating Income............. 181 297 611 931 Income Before Income Taxes...... 1,047 1,006 3,476 2,260 Income Tax Provision............ 478 501 1,571 1,040 Net Income...................... $ 569 $ 505 $ 1,905 $ 1,220 Net Income Per Share............ $ 0.09 $ 0.08 $ 0.30 $ 0.18 Average Common Shares Outstanding 6,111 6,609 6,268 6,878 CONSOLIDATED BALANCE SHEETS 09/30/97 12/31/96 ASSETS Cash and Short-Term Investments. $ 8,535 $18,978 Finance Accounts Receivable, net 16,157 14,554 Freight Accounts Receivable, net 12,540 9,233 Other Current Assets............ 10,781 10,153 Total Current Assets.......... 48,013 52,918 Operating Property, net......... 30,634 23,390 Intangible and Other Assets..... 9,847 10,504 $88,494 $86,812 LIABILITIES AND SHAREHOLDERS' EQUITY Total Current Liabilities....... $12,260 $11,048 Deferred Income Taxes and Other Liabilities............. 2,468 1,203 Shareholders' Equity............ 73,586 74,561 $88,494 $86,812 TransFinancial Holdings, Inc., 8245 Nieman Road, Suite 100, Lenexa, Kansas 66214 (913) 859-0055 EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRANSFINANCIAL HOLDINGS, INC.'S CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000719271 TRANSFINANCIAL HOLDINGS, INC. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 5283 3252 29655 958 0 48013 52616 21982 88494 12260 0 0 0 75 73511 88494 0 99372 0 96507 0 0 0 3476 1571 1905 0 0 0 1905 .30 .30
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