SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarter ended Commission file number
June 30, 1997 0-22837
TRAILER BRIDGE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3617986
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10405 New Berlin Road E.
Jacksonville, FL 32226 (904) 751-7100
(address of principal (Zip Code) Registrant's telephone number)
executive offices)
_________________________
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 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 [ ] NO [x]
As of August 1, 1997, 9,372,500 shares of the registrant's common
stock, par value $.01 per share, were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The interim financial statements contained herein reflect all
adjustments which, in the opinion of management, are necessary for a fair
statement of the financial condition and results of operations for the
periods presented. They have been prepared in accordance with the
instructions to Form 10-Q and do not include all the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
Operating results for the three and six month periods ended June 30,
1997 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1997. In the opinion of management, the
information set forth in the accompanying balance sheet is fairly stated
in all material respects.
These interim financial statements should be read in conjunction with
the Company's audited financial statements for the three years ended
December 31, 1996 that appear in the final prospectus for its initial
public offering which constitutes part of its registration statement on
Form S-1.
Balance Sheets as of
June 30, 1997, Pro Forma June 30, 1997,
and December 31, 1996, unaudited Page 3
Statements of Operations for the
Three and Six Months Ended June 30, 1997
and 1996, unaudited Page 4
Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996, unaudited Page 5
Notes to Financial Statements as of
June 30, 1997, unaudited Page 6
<PAGE>
TRAILER BRIDGE, INC.
BALANCE SHEETS
(Unaudited)
June 30,
June 30, 1997 December 31,
1997 Pro Forma 1996
(Note 2)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents. . . . . . . . $2,733,980 $2,733,980 $1,658,921
Trade receivables, less
allowance for
doubtful accounts of
$1,069,828 and
$905,581 . . . . . . . . 7,563,723 7,563,723 8,305,872
Prepaid expenses . . . . . 766,417 766,417 964,971
---------- ---------- ----------
Total current assets 11,064,120 11,064,120 10,929,764
---------- ---------- ----------
PROPERTY AND EQUIPMENT, net 17,665,193 17,665,193 12,512,130
GOODWILL, less accumulated
amortization of $241,153. .
and $217,763. . . . . . . . 927,789 927,789 951,179
OTHER ASSETS (Note 3) . . . . 8,959,937 8,959,937 370,592
---------- ---------- ----------
TOTAL ASSETS . . . . . $38,617,039 $38,617,039 $24,763,665
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . $ 2,022,165 $ 2,022,165 $ 1,981,421
Other accrued liabilities . 2,635,569 8,635,569 2,635,099
Current portion of notes
payable . . . . . . . . . 2,477,709 2,477,709 3,117,069
Current portion of capital
lease obligation. . . . . 37,030 37,030 38,197
Unearned revenue . . . . . 116,045 116,045 223,627
Due to affiliate . . . . . 6,350,203 6,350,203 4,653,192
---------- ---------- ----------
Total current
liabilities . . . . . 13,638,721 19,638,721 12,648,605
NOTES PAYABLE, less
current portion . . . . . . 17,018,992 17,018,992 5,909,072
CAPITAL LEASE OBLIGATIONS,
less current portion. . . . 139,632 139,632 161,444
---------- ---------- ----------
TOTAL LIABILITIES . . . 30,797,345 36,797,345 18,719,121
---------- ---------- ----------
STOCKHOLDERS EQUITY:
Preferred stock, $.01 par
value, 1,000,000 shares
authorized; no shares
issued or outstanding . .
Common stock, $.01 par
value, 20,000,000 shares
authorized; 6,672,500
shares issued and
outstanding . . . . . . 66,725 66,725 66,725
Additional paid-in capital. 8,462,370 8,462,370 (66,300)
Retained earnings . . . . . (709,401) (6,709,401) 6,044,119
---------- ---------- ----------
Total stockholders'
equity . . . . . . . 7,819,694 1,819,694 6,044,544
---------- ---------- ----------
TOTAL LIABILITY AND
STOCKHOLDERS' EQUITY $38,617,039 $38,617,039 $24,763,665
========== ========== ==========
<PAGE>
TRAILER BRIDGE, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . $ 16,170,687 $ 14,273,906 $ 32,616,753 $ 28,841,985
OPERATING EXPENSES:
Salaries wages, and
benefits (Note 5). . . 12,089,167 3,212,846 15,493,434 6,647,519
Rent and purchased
transportation:
Related Party. . . . . 1,911,000 1,196,000 3,801,000 2,106,000
Other. . . . . . . . . 2,370,451 2,817,050 4,691,288 5,337,097
Fuel . . . . . . . . . . 1,375,321 1,388,093 2,932,754 2,856,349
Operating and maintenance
(exclusive of
depreciation shown
separately below). . . 3,022,278 3,668,031 6,227,894 6,713,762
Taxes and licenses . . . 75,690 111,820 231,927 250,083
Insurance and claims . . 412,967 463,208 934,579 977,248
Communications and
utilities . . . . . . 135,999 163,379 270,447 306,663
Depreciation and
amortization . . . . . 659,551 713,451 1,348,567 1,414,734
Other operating expenses 851,693 727,370 1,670,394 1,454,121
----------- ----------- ----------- -----------
22,904,117 14,461,248 37,602,284 28,063,576
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) . . (6,733,430) (187,342) (4,985,531) 778,409
NONOPERATING INCOME
(EXPENSE):
Interest expense, net:
Related Party . . . . (94,266) (122,519) (185,666) (265,701)
Other . . . . . . . . (165,299) (123,073) (337,315) (226,700)
Gain on sale of
equipment, net . . . . 1,676 119,718 1,676 110,545
----------- ----------- ----------- -----------
(257,889) (125,874) (521,305) (381,856)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
PROVISION AND PRO FORMA
PROVISION FORINCOME TAXES (6,991,319) (313,216) (5,506,836) 396,553
PROVISION FOR INCOME TAXES. (31,245) (10,476) (60,935) (17,777)
NET INCOME (LOSS) BEFORE ----------- ----------- ----------- -----------
PRO FORMA PROVISION FOR
INCOME TAXES . . . . . . (7,022,564) (323,692) (5,567,771) 378,776
PRO FORMA PROVISION FOR
INCOME TAXES (Note 2). . 1,768,574 124,224 1,223,044 (135,423)
----------- ----------- ----------- -----------
PRO FORMA NET INCOME (LOSS)
(Note 2) . . . . . . . . $ (5,253,990) $ (199,468) $ (4,344,727) $ 243,353
=========== =========== =========== ===========
PRO FORMA NET INCOME (LOSS)
PER SHARE (Note 2) . . . $ (0.79) $ (0.03) $ (0.65) $ 0.04
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING . . . . . . 6,672,500 6,672,500 6,672,500 6,672,500
=========== =========== =========== ===========
</TABLE>
<PAGE>
TRAILER BRIDGE, INC.
STATEMENT OF CASHFLOWS
(Unaudited)
Six Months Ended,
June 30,
1997 1996
Operating Activities:
Net Income (Loss) . . . . . . . . . . . . (5,567,771) 378,776
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization . . . . . 1,348,567 1,414,734
Provision for uncollectible accounts. . 234,493 180,751
(Gain) Loss on sale of equipment . . . (1,676) (110,545)
Compensation recognized for stock
option . . . . . . . . . . . . . . . 8,528,670 0
Change in assets and liabilities
Decrease (increase) in trade
receivables. . . . . . . . . . . . 507,656 1,656,711
Decrease (increase) in prepaid
expenses . . . . . . . . . . . . . 198,554 (754,079)
Increase (decrease) in accounts
payable. . . . . . . . . . . . . . 40,744 1,327,960
Increase (decrease) in accrued
liabilities. . . . . . . . . . . . 470 (48,731)
Increase (decrease) in unearned
revenue. . . . . . . . . . . . . . (107,582) (39,203)
----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . 5,182,125 4,006,374
Investing Activities:
Increase (decrease) in due to affiliate . 1,697,011 (3,202,930)
Purchases and construction of fixed
assets . . . . . . . . . . . . . . . . (6,486,180) (1,584,541)
Proceeds from sale of equipment . . . . . 9,616 423,162
(Increase) decrease in other assets . . . (8,589,345) 38,572
----------- -----------
Net cash used in investing
activities . . . . . . . . . . . (13,368,898) (4,325,737)
Financing Activities:
Proceeds from borrowings on notes payable 12,523,622 0
Payments on notes payable . . . . . . . . (2,053,062) 189,083
Payments of dividends . . . . . . . . . . (1,185,750) 0
Payments on capital lease obligations . . (22,978) (49,404)
----------- -----------
Net cash used in financing
activities . . . . . . . . . . . 9,261,832 139,679
Net Increase (Decrease) in Cash and Cash
Equivalents . . . . . . . . . . . . . . . 1,075,059 (179,684)
Cash and Cash Equivalents at Beginning of
Period. . . . . . . . . . . . . . . . . . 1,658,921 498,328
----------- -----------
Cash and Cash Equivalents at End of Period 2,733,980 318,644
=========== ===========
<PAGE>
TRAILER BRIDGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements include all
adjustments, consisting of normal recurring accruals, which the Company
considers necessary for a fair presentation of the results of operations
for the periods shown. The financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
consolidated financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. The results of
operations for any interim period are not necessarily indicative of the
results to be expected for the full year. For further information, refer
to the Company's audited financial statements for the three years ended
December 31, 1996 that appear in the final prospectus for its initial
public offering which constitutes part of its registration statement on
Form S-1.
2. PRO FORMA INFORMATION
Pro Forma Adjustments. At June 30, 1997 the Company was organized
under Subchapter S of the Internal Revenue Code. The Company has not been
subject to Federal income taxes and state income tax expense has not been
significant due to the utilization of net operating loss carryforwards.
Upon closing of the Company's initial public offering, the Company's
status as an S Corporation terminated. The pro forma adjustments reflect
a provision for income taxes that would have been incurred had the Company
not been organized under Subchapter S of the Internal Revenue Code. The
effective rate differs from the statutory rate of 34% due to state income
taxes (net of Federal income tax benefits), amortization of goodwill and
other nondeductible expenses and due to the utilization of the net
operating loss carryforwards of a corporation acquired in 1992. The pro
forma statement of operations data do not give effect to the one-time,
non-cash charge of approximately $650,000 in recognition of deferred
income taxes resulting from the termination of the Company's S Corporation
status upon the effectiveness of the Company's stock offering.
Pro Forma Balance Sheet. The Company declared a dividend payable to
shareholders of record prior to the stock offering in the amount of $6
million. The Pro Forma Balance Sheet shows the effect as if such dividend
had been declared as of June 30, 1997.
Pro Forma Net Income Per Share. Pro forma net income per share
reflects a 15,700-for-1 stock split that became effective with the
Company's stock offering.
Supplementary Pro Forma Net Income Per Share. The Company used a
portion of the proceeds from its initial public offering to fund the
payment of a $6.0 million S corporation dividend to the Company's
shareholders of record prior to the stock offering and to repay the amount
due to affiliate. Pro forma net income per share adjusted for the
issuance of 600,000 shares of Common Stock to fund the dividend to
shareholders, and adjusted for the interest savings and the issuance of
approximately 782,500 shares of Common Stock to fund such repayment, would
have been ($0.65). and ($0.54) for the three and six months ended June 30,
1997, respectively.
3. RESTRICTED ASSETS
Other assets as of June 30, 1997 includes $8.5 million in an escrow
account for the construction of two vessels known as Triplestack Box
Carriers.
4. TRANSACTIONS WITH AFFILIATED COMPANY
Due to Affiliate. Amounts due to affiliate include cash advanced to
the Company from an affiliated company to fund various construction
projects, general and administrative expenses, interest payable on such
cash advances and barge rent. The balance of $6.4 million was paid with a
portion of the proceeds of the Company's stock offering.
5. NON-RECURRING NON-CASH CHARGE
On May 21, 1997, the majority stockholder of the Company granted to
the Company's Chairman and Chief Executive Officer, an option to purchase
942,000 shares of Common Stock (adjusted for the 15,700-for-1 stock split)
owned by him at $.95 per share or an aggregate price of $891,330 for all
shares. These options are immediately exercisable and have a term of 10
years. In connection with this option, the Company recorded a non-
recurring, non-cash charge for compensation expense and a credit to paid-
in capital of approximately $8.5 million in the second quarter of 1997,
representing the difference between the exercise price and the initial
public offering price of the Common Stock of $10.00 per share. This
option does not involve the issuance of additional shares of Common Stock
by the Company and therefore, any subsequent purchase of shares under the
option will not have a dilutive effect on the Company's book value or
earnings per share amounts.
6. SUBSEQUENT EVENTS
In July 1997, the Company's Board of Directors and shareholders
authorized the establishment of an Incentive Stock Plan with a maximum of
785,000 shares issuable under the Plan and the grant of options for
471,000 shares under the Plan. These options have an exercise price equal
to the initial public offering price and vest equally over a period of
five years.
In July 1997 the Company closed on the sale of Common Stock of the
Company in its initial public offering. After expenses, the Company
received proceeds of the offering of approximately $25.1 million. In
August 1997, pursuant to an option exercised by the underwriters, the
Company completed the sale of additional Common Stock at the initial
public offering price and received proceeds of approximately $3.8 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS:
Three Months Ended June 30, 1997 and 1996
Operating revenues increased $1.9 million, or 13.3%, to $16.2 million
during the three months ended June 30, 1997 from $14.3 million during the
year earlier period. This increase was due to a $2.4 million (19.8%)
increase in Puerto Rico revenue to $14.7 million through the utilization
of a portion of the additional capacity resulting from the mid-body
project, partially offset by a $497,000 (32.5%) decrease in non-Puerto
Rico revenue as available tractor capacity was targeted further towards
Puerto Rico revenue. Vessel capacity utilization on the core continental
U.S. to Puerto Rico traffic lane was 77.82% during the three months ended
June 30, 1997, compared to 94.85% during the year earlier period during
which a smaller substitute vessel was utilized.
In connection with the grant of an option by the Company's principal
stockholder to its Chairman and CEO, the Company recorded a non-recurring,
non-cash charge for compensation and a credit to paid-in capital of $8.5
million during the three months ended June 30, 1997. This charge
represented the difference between the exercise price of the option and
the initial public offering price of $10.00 per share. The option does
not involve the issuance of additional shares of Common Stock by the
Company and therefore, any subsequent purchase of shares under the option
will not have a dilutive effect on the Company's book value or earnings
per share amounts. As a result of this option the Company sustained a loss
of $5.3 million or $.79 per share, for the three month period ending June
30, 1997.
Excluding the charge for compensation discussed above, the Company's
operating ratio improved to 88.9% during the three months ended June 30,
1997 from 101.3% during the year earlier period primarily as a result of
the increased Puerto Rico revenue that resulted from the Company's 1996
mid-body expansion project.
Excluding the charge for compensation discussed above, operating
expenses for the three month period ended June 30, 1997 decreased $85,801
from the year earlier period. This decrease was due to a decrease in
operations and maintenance expense of $681,883 from the increased handling
costs in the year earlier period related to the complexity of loading
substitute vessels during the mid-body expansion project and a decrease of
$446,599 in equipment leasing costs as the Company purchased revenue
equipment. These decreases were offset by an increase of $715,000 in
charter hire on the modified vessels and an increase of $347,651 in
salaries, wages and benefits.
Interest expense (net) was $259,565 for the three months ended June
30, 1997, an increase of $13,974 from the year earlier period due to the
acquisition of trailer equipment that was added in the third and fourth
quarters of 1996.
As a result of the factors described above, the Company's net loss
was $5.3 million during the three month period ending June 30, 1997
compared to net loss of $199,468 during the year earlier period. Excluding
the non-cash, non-recurring charge for compensation related to the option
from the Company's principal stockholder to the Company's Chairman and
CEO, the Company's operating income improved by $2.0 million to $1.8
million during the three month period ending June 30, 1997 compared to an
operating loss of $187,342 during the year earlier period.
Six Months Ended June 30, 1997 and 1996
Operating revenues increased $3.8 million, or 13.1%, to $32.6 million
during the six months ended June 30, 1997 from $28.8 million during the
year earlier period. This increase was due to a $5.1 million (20.5%)
increase in Puerto Rico revenue to $29.9 million through the utilization
of a portion of the additional capacity resulting from the mid-body
expansion project, partially offset by a $1.3 million (48.9%) decrease in
non-Puerto Rico revenue as available tractor capacity was targeted further
towards Puerto Rico revenue. Vessel capacity utilization on the core
continental U.S. to Puerto Rico traffic lane was 77.96% during the six
months ended June 30, 1997, compared to 96.13% during the year earlier
period during which a smaller substitute vessel was utilized.
In connection with the grant of an option by the Company's principal
stockholder to its Chairman and CEO, the Company recorded a non-
recurring, non-cash charge for compensation and a credit to paid-in
capital of $8.5 million during the six months ended June 30, 1997. This
charge represented the difference between the exercise price of the option
and the initial public offering price of $10.00 per share. The option
does not involve the issuance of additional shares of Common Stock by the
Company and therefore, any subsequent purchase of shares under the option
will not have a dilutive effect on the Company's book value or earnings
per share amounts. As a result of this option the Company sustained a loss
of $4.3 million or $.65 per share, for the six month period ending June
30, 1997.
Excluding the charge for compensation discussed above, the Company's
operating ratio improved to 89.1% during the six months ended June 30,
1997 from 97.3% during the year earlier period primarily as a result of
the increased Puerto Rico revenue that resulted from the Company's 1996
mid-body expansion project.
Excluding the charge for compensation discussed above, operating
expenses for the six month period ended June 30, 1997 increased $1.0
million from the year earlier period. This increase was primarily due to
an increase of $1.7 million in charter hire on the modified vessels, an
increase of $317,245 in salaries, wages and benefits and an increase of
$76,405 in fuel. These increases were offset by a decrease in operations
and maintenance expense of $504,024 from the increased handling costs in
the year earlier period related to the complexity of loading substitute
vessels during the mid-body expansion project and a decrease of $645,809
in equipment leasing costs as the Company purchased revenue equipment.
Interest expense (net) was $522,981 for the six months ended June 30,
1997, an increase of $30,580 from the year earlier period due to the
acquisition of trailer equipment that was added in the third and fourth
quarters of 1996.
As a result of the factors described above, the Company's net loss
was $4.3 million during the six month period ending June 30, 1997 compared
to a gain of $243,353 during the year earlier period. Excluding the non-
cash, non-recurring charge for compensation related to the option from the
Company's principal stockholder to the Company's Chairman and CEO, the
Company's operating income improved by 2.8 million to $3.5 million during
the six month period ending June 30, 1997 compared to operating income of
$778,409 during the year earlier period.
LIQUIDITY AND CAPITAL RESOURCES.
In July 1997 the Company closed on the sale of Common Stock of the
Company in its initial public offering. After expenses, the Company
received proceeds of the offering of approximately $25.1 million. In
August 1997, pursuant to an option exercised by the underwriters, the
Company completed the sale of additional Common Stock at the initial
public offering price and received proceeds of approximately $3.8 million.
During the six month period ending June 30, 1997, the Company issued
$10.5 million in bonds to fund the construction of new vessels known as
Triplestack Box Carriers. The bonds were guaranteed by the United States
Government through the Maritime Administration's Title XI program. The
Title XI bonds require equal semi-annual sinking fund payments of $210,300
over a twenty-five year term and bear interest at a rate of 7.07% per
annum. The proceeds of this borrowing were held in escrow by the Maritime
Administration to be drawn down to pay for the construction of the
Triplestack Box Carriers. As of June 30, 1997, approximately $2.0 million
had been drawn from the escrow account to fund construction of two
Triplestack Box Carriers.
Effective with the Company's initial public offering, the Company was
released from its guarantee of approximately $24.2 million outstanding
under a term loan obtained by an affiliate for the 1996 mid-body expansion
of the vessels chartered to the Company. In addition, affiliate's lender
agreed to subordinate its rights to the Company's charter of the vessels.
At June 30, 1997 working capital was negative $2.6 million, which
reflects $6.4 million due to an affiliate which has been subsequently
repaid. After completion of the Company's initial public offering the
Company's working capital was in excess of $25 million.
Net cash provided by operating activities was $5.2 million for the
six months ended June 30, 1997 compared to $4.0 million for the year
earlier period. The Company's operating cash flow of $5.2 million for the
six months ended June 30, 1997 reflects an decrease of $507,656 in trade
receivables, $198,554 decrease in prepaid expenses, and a $107,582
decrease in unearned revenue.
Net cash used in investing activities of $13.4 million in the six
month period ending June 30, 1997 reflects $6.5 million of capital
expenditures, which was primarily attributable to payments for the
construction of the Company's two new Triplestack Box Carriers as well as
the purchase of over the road tractors and a $1.7 million increase in due
to affiliate. Also reflected in this number is $8.5 million escrow
related to the Title XI MARAD financing of the Triplestack Box Carriers.
Net cash provided by financing activities of $9.3 million in the six
months ended June 30, 1997 primarily reflects $10.5 million in Title XI
bonds issued and $2.0 million in debt to finance over the road tractors,
reduced by $2.1 million in notes payable and $1.2 million in dividends
paid.
Forward Looking Information
Statements by the Company in reports to its shareholders and public
filings, as well as oral public statements by Company representatives, may
contain certain forward looking information that is subject to certain
risks and uncertainties that could cause actual results to differ
materially from those projected. Without limitation, these risks and
uncertainties include economic recessions or downturns in customers'
business cycles, decreased demand for transportation services offered by
the company, rapid inflation and fuel price increases, increases in
interest rates, and the availability and compensation of qualified
drivers.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
10.2.5 Fourth Amendment to
Bareboat Charter Party
dated June 30, 1997
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
TRAILER BRIDGE, INC.
Date: September 5, 1997 By: /s/ John D. McCown
John D. McCown
Chairman and Chief Executive
Officer
Date: September 5, 1997 By: /s/ Mark A. Tanner
Mark A. Tanner
Vice President of
Administration and
Chief Financial Officer
EXHIBIT 10.2.5
FOURTH AMENDMENT TO BAREBOAT CHARTER PARTY
THIS FOURTH AMENDMENT TO BAREBOAT CHARTER PARTY, made as of this
30th day of June, 1997, (hereinafter referred to as the "Fourth
Amendment") by and between Kadampanattu Corp. ("K Corp") and Trailer
Bridge, Inc., ("Trailer Bridge").
WHEREAS, in February, 1992 K Corp and Trailer Bridge entered into two
(2) identical Bareboat Charter Party agreements for the vessels JAX-SAN
JUAN BRIDGE and SAN JUAN-JAX BRIDGE; and
WHEREAS, such Bareboat Charter Party agreements were extended each
year for an additional year; and
WHEREAS, in December, 1994 K Corp and Trailer Bridge entered into an
amendment to extend such Bareboat Charter Party agreements to March 1,
1997; and
WHEREAS, in October, 1995 K Corp and Trailer Bridge entered into an
amendment to extend such Bareboat Charter Party agreements until the later
of March 1, 1997 and the date upon which the Construction and Term Loan
Agreement between K Corp and The First National Bank of Boston terminates
and all Loans and other obligations thereunder have been indefeasibly and
irrevocably repaid in full, in cash, and
WHEREAS, in March, 1997 K Corp and Trailer Bridge entered into an
amendment to extend such Bareboat Charter Party agreements to at least
September 1, 2010.
In consideration of the mutual covenants and agreements to be kept
and performed on the part of said parties hereto, respectively as herein
stated, K Corp and Trailer Bridge hereby agree, that effective with the
initial public offering of common stock of Trailer Bridge each of the
Bareboat Charter Parties shall be amended as follows:
1. Amendment to section entitled "HIRE". The section entitled
"HIRE" of each Bareboat Charter Party is hereby amended by
deleting "at the rate of Ten Thousand Five Hundred Dollars per
day commencing on and from the day and hour the vessel is
redelivered in its modified state to the Charter" and replacing
it with "Ten Thousand Fifty Dollars per day".
2. Amendment to section entitled "Period". The section entitled
"Period" of each Bareboat Charter Party is hereby amended by
adding the following paragraph:
"So long as this Charter Party is in effect under this section,
Trailer Bridge, Inc. shall pay to K Corp. the daily rate required
under the section entitled HIRE. In the event of a default,
Trailer Bridge, Inc. shall remain liable for such daily rate
regardless of whether the Charter Party has been terminated and
the vessel returned to K Corp., unless in connection with its
demand for redelivery of the vessel, K Corp. elects to have the
present value of the remaining charter hire due and payable at
the time of redelivery of the vessel. In that event, K Corp. shall
notify Trailer Bridge of such election and Trailer Bridge shall
pay K Corp upon delivery of the vessel the present value
(calculated at a discount rate equal to the then average interest
rate for Treasury obligations having a maturity equal to
approximately one-half the remaining term of the Charter Party
Period plus 2%) of all charter hire payments calculated at the
daily rate due during the remainder of the Charter Party Period."
34. Financial Statements. Within forty five (45) days of the end of
each fiscal quarter Trailer Bridge shall furnish K Corp. with
unaudited financial statements. Within ninety (90) days of the
end of the fiscal year Trailer Bridge shall provide K Corp. with
audited financial statements, to be audited by a "Big Six"
accounting firm.
35. Cross Default. Any default by Trailer Bridge, Inc. in the
payment or performance of any obligation of any obligor for
borrowed money or in respect of any extension of credit or
accommodation or under any lease which, in the aggregate,
involves obligations of $100,000 or more shall constitute a
default under this Charter Party. If such a default is not cured
by Trailer Bridge, Inc., within a reasonable time, K Corp. or
BankBoston may terminate this Charter Party and demand return of
the Vessel. From such demand by K Corp. or BankBoston until
return of the Vessel, the daily rate shall accrue at 150% of the
daily rate as specified in the section entitled "HIRE".
Trailer Bridge, Inc. will promptly notify K Corp. in writing of
any default or event of default. If Trailer Bridge, Inc. shall
receive any notice or become aware of any action in respect of a
claimed default under any indebtedness or obligation to which or
with respect to which Trailer Bridge, Inc. is party, Trailer
Bridge, Inc. shall give K Corp. written notice describing the
notice or action and the nature of the claimed default.
36. U.S. Citizenship. Trailer Bridge shall at all times maintain
its citizenship in the United States for purposes of operating
the vessel in the coastwise trade in accordance with Section 2
of the Shipping Act of 1916, as amended and in effect, and the
regulations thereunder.
37. Payment. Notwithstanding anything contained herein to the
contrary, all payments by Trailer Bridge, Inc. under this
Charter Party shall be made directly into K Corp.'s account
# with BankBoston. Trailer Bridge, Inc. and K Corp. agree
and acknowledge that this section may not be amended without the
prior consent of BankBoston.
Except, and solely to the extent that the same has been specifically
modified, amended or supplemented hereby, by this Fourth Amendment, all of
the terms and conditions of the Bareboat Charter Party shall continue in
full force and effect.
IN WITNESS WHEREOF, K Corp. and Trailer Bridge have caused this
Fourth Amendment to be executed as of the date and year first above
written.
KADAMPANATTU CORP.
By:_____________________
John D. McCown
President
TRAILER BRIDGE, INC.
By:______________________
John D. McCown
Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF TRAILER BRIDGE, INC. AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,733,980
<SECURITIES> 0
<RECEIVABLES> 8,633,551
<ALLOWANCES> (1,069,828)
<INVENTORY> 0
<CURRENT-ASSETS> 11,064,120
<PP&E> 25,074,120
<DEPRECIATION> (7,408,927)
<TOTAL-ASSETS> 38,617,039
<CURRENT-LIABILITIES> 13,638,721
<BONDS> 26,023,566
0
0
<COMMON> 66,725
<OTHER-SE> 7,752,969
<TOTAL-LIABILITY-AND-EQUITY> 38,617,039
<SALES> 0
<TOTAL-REVENUES> 32,616,753
<CGS> 0
<TOTAL-COSTS> 37,433,551
<OTHER-EXPENSES> (1,676)
<LOSS-PROVISION> 168,733
<INTEREST-EXPENSE> 522,981
<INCOME-PRETAX> (5,506,836)
<INCOME-TAX> 60,935
<INCOME-CONTINUING> 5,567,771
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,567,771
<EPS-PRIMARY> (.65)
<EPS-DILUTED> (.65)
</TABLE>
