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
March 31, 1998 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 [X] NO [ ]
As of March 31, 1998, 9,777,500 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-month period ended March 31, 1998 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1998. 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, 1997 that appear in the Company's 1997 Form 10-K.
Statements of Operations for the
Three Month Period Ended March 31, 1998 and 1997 Page 3
Condensed Balance Sheets as of
March 31, 1998 and December 31, 1997 Page 4
Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997 Page 5
Notes to Financial Statements as of
March 31, 1998 Page 6
<PAGE>
TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
Three Months
Ended March 31,
-------------------------------
1998 1997
---- ----
OPERATING REVENUES ..................... $16,347,403 $16,446,066
OPERATING EXPENSES:
Salaries wages, and benefits......... 3,893,442 3,404,267
Rent and purchased transportation:
Related Party .................... 1,809,000 1,890,000
Other ............................ 3,292,370 2,320,837
Fuel ................................ 1,338,712 1,557,433
Operating and maintenance (exclusive
of Depreciation shown separately
below)............................ 3,242,406 3,205,616
Taxes and licenses .................. 131,197 156,237
Insurance and claims ................ 499,987 521,612
Communications and utilities ........ 142,107 134,448
Depreciation and amortization ....... 734,321 689,016
Other operating expenses ............ 977,819 818,701
---------- ----------
16,061,361 14,698,167
---------- ----------
OPERATING INCOME ....................... 286,042 1,747,899
NONOPERATING INCOME (EXPENSE):
Interest expense, net:
Related Party .................... (91,400)
Other ............................ (185,597) (172,016)
Gain (loss) on sale of equipment, net 28,510
---------- ----------
(157,087) (263,416)
---------- ----------
INCOME BEFORE PROVISION AND
PRO FORMA PROVISION FOR
INCOME TAXES ..................... 128,955 1,484,483
PROVISION FOR INCOME TAXES ............ (59,799) (29,690)
---------- ----------
NET INCOME BEFORE PRO FORMA
PROVISION FOR INCOME TAXES.......... 69,156 1,454,793
PRO FORMA PROVISION
FOR INCOME TAXES (Note 2) .......... (545,530)
---------- ----------
PRO FORMA NET INCOME (Note 2) ......... $ 69,156 $ 909,263
========== ==========
PRO FORMA NET INCOME PER
SHARE (Note 2) ...................... $ 0.01 $ 0.14
========== ==========
PRO FORMA WEIGHTED AVERAGE
SHARES OUTSTANDING .................. 9,777,500 6,672,500
========== ==========
<PAGE>
TRAILER BRIDGE, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 6,552,238 $14,277,445
Trade receivables, less allowance for doubtful
accounts of $1,063,210 and $1,165,874 8,620,971 7,888,939
Prepaid expenses.................................. 489,964 764,975
---------- ----------
Total current assets ..................... 15,663,173 22,931,359
---------- ----------
PROPERTY AND EQUIPMENT, net ........................ 41,738,130 30,282,611
GOODWILL, less accumulated
amortization of $276,238 and $264,543 ............ 892,705 904,399
RESTRICTED CASH AND INVESTMENTS..................... 16,821,763 20,283,047
OTHER ASSETS ....................................... 2,121,063 2,493,041
---------- ----------
TOTAL ASSETS ................................. $77,236,834 $76,894,457
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ................................. $ 3,340,637 $ 2,137,251
Other accrued liabilities ........................ 2,351,668 3,398,858
Current portion of notes payable ................. 3,704,882 3,156,142
Current portion of capital lease obligation ...... 40,168 35,908
Unearned revenue ................................. 275,618 163,084
Due to affiliate ................................. 40,200 60,300
---------- ----------
Total current liabilities ................ 9,753,173 8,951,543
NOTES PAYABLE, less current portion ................ 33,445,915 33,960,518
CAPITAL LEASE OBLIGATIONS, less
current portion .................................. 108,633 122,439
---------- ----------
TOTAL LIABILITIES ........................ 43,307,721 43,034,500
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized
1,000,000 shares; no shares issued or
outstanding......................................
Common stock, $.01 par value, authorized
20,000,000 shares; 9,777,500 shares issued and
outstanding in 1998 and 9,777,500 in 1997 ....... 97,775 97,775
Additional paid-in capital ....................... 37,982,818 37,982,818
Retained earnings ................................ (4,151,480) (4,220,636)
---------- ----------
Total stockholders' equity .............. 33,929,113 33,859,957
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................... $77,236,834 $76,894,457
========== ==========
</TABLE>
<PAGE>
TRAILER BRIDGE, INC.
Statements of Cash Flows
For the Quarters Ending March 31, 1998 and March 31, 1997
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income ......................................... $ 69,156 $ 1,454,793
Adjustments to reconcile net income to net cash.....
Provided by operating activities:
Depreciation and amortization .................... 734,321 689,016
Provision for doubtful accounts .................. (183,629) 120,413
Deferred income taxes ............................ 387,683 0
Gain on the sale of fixed assets.................. (28,510) 0
(Increase)/ decrease in accounts receivable..... (548,403) (66,976)
Decrease in prepaid expenses.................... 275,011 621,968
Increase/ (decrease) in accounts payable........ 1,203,386 (622,359)
(Decrease)/ increase in other liabilities....... (1,047,191) 590,532
Increase in unearned revenue ................... 112,534 76,254
----------- ----------
Net cash provided by operating activites...... 974,358 2,863,641
----------- ----------
INVESTING ACTIVITIES:
(Decrease)/ increase in due to affiliate.......... (20,100) 1,225,172
Purchases and construction of property and
equipment....................................... (12,319,010) (2,514,053)
Proceeds from sale of equipment................... 182,650 0
Decrease in deposits/other........................ 172,338 60,312
Decrease for restricted cash and investments...... 3,461,284 0
----------- ----------
Net cash used in investing activities......... (8,522,838) (1,228,569)
----------- ----------
FINANCING ACTIVITIES:
Proceeds from borrowing on notes payable.......... 841,745 1,134,018
Principal payments on notes payable............... (807,607) (981,856)
Debt issue costs (intangible increases)........... (201,320) 0
Dividends......................................... 0 (1,185,750)
Principal payments under capital lease obligations (9,546) (14,199)
----------- ----------
Net cash used in financing activities........ (176,728) (1,047,787)
Net (decrease) increase in cash and cash equivalents (7,725,208) 587,285
Cash and cash equivalents at the beginning of
the period........................................ 14,277,445 1,658,921
Cash and cash Equivalents at the end of the period.. $ 6,552,237 $ 2,246,206
=========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION AND
NONCASH INVESTING AND FINANCING ACTIVITIES:
Amounts paid for state income taxes................ $ 107,375 $ 0
=========== ==========
Amounts paid for interest.......................... $ 928,352 $ 283,620
=========== ==========
</TABLE>
<PAGE>
TRAILER BRIDGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1998
(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
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, 1997 that appear in the Form 10-K.
2. PRO FORMA INFORMATION
Pro Forma Adjustments. 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.
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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Three Months Ended March 31, 1998 and 1997
------------------------------------------
Operating revenues decreased $98,663, or 0.6%, to $16.3 million
during the three months ended March 31, 1998 from $16.4 million during the
year earlier period. This decrease was due to a $203,137 (1.3%) decrease
in Puerto Rico revenue to $15.2 million, partially offset by a $104,747
(9.8%) increase in non-Puerto Rico revenue. Core trailer revenue to
Puerto Rico increased $649,679 (8.6%) and revenue from shipper owned or
leased equipment increased $369,707 (41.1%) compared to the year earlier
period but was offset by a $859,856 (19.5%) decrease in car and other
vehicle revenue and a decrease of $331,760 (13.9%) in trailer revenue from
Puerto Rico compared to the year earlier period.
Core trailer volume to Puerto Rico increased by 16.7% while total car
and other vehicle volume was down 20.9% compared to the year earlier
period. The reduction in total car and other vehicle volume consisted of
a 41.5% decrease in used car volume, partially offset by an increase of
10.6% in new car volume. Trailer volume from Puerto Rico increased by
6.5% from the year earlier period, however related revenue decreased due
to continued rate pressure on the limited volumes moving inbound from
Puerto Rico.
Operating expenses increased $1.4 million for the three months ended
march 31, 1998, from the year earlier period primarily as a result of an
increase in rent and purchased transportation of $890,533 and an increase
of $489,175 in salaries, wages and benefits partially offset by a decrease
in fuel costs of $218,721.
The Company's operating income decreased $1.5 million (83.6%) to
$286,042 compared $1.7 million compared to the same period last year.
This resulted from total revenue which was flat while incurring
approximately $900,000 in fixed marine costs related to the operation of
the first new Triplestack Box Carrier during most of the quarter. The
continuing weakness in used car volume and increasing competitive
pressures on overall freight rates were also contributing factors. The
Company's operating ratio declined to 98.3% during the three months ended
March 31, 1998 from 89.4% during the year earlier period.
Net interest expense decreased $77,819 (29.5%) compared to the year
earlier period as a result of increased interest income from temporary
investments. The Company recorded a $28,510 gain on sales of older
trailer equipment.
Income before taxes for the three months ended March 31, 1998
decreased $1.4 million (91.3%) to $128,955 from the year earlier period.
After income taxes net income was $69,156 or $.01 per share compared to
pro forma net income of $909,263 or $.14 per share for the year earlier
period.
LIQUIDITY AND CAPITAL RESOURCES.
At March 31, 1998 cash amounted to $6.6 million, working capital was
$5.9 million, and stockholders' equity amounted to $33.9 million. Net
cash provided by operating activities was $1.0 million in the three months
ended March 31, 1998 compared to $2.9 million in the year earlier period.
The Company's operating cash flow of $1.0 million in the three months
ended March 31, 1998 reflects $734,321 of depreciation. Net cash used in
investing activities of $8.5 million in three month period ending March
31, 1998 is primarily related to capital expenditures.
Net cash used by financing activities of $176,728 in the three months
ended March 31, 1998 reflects $807,607 in principal payments on notes
payable and $201,320 in debt issuance costs, partially offset by $841,745
in proceeds from notes payable.
PART II
OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In July 1997, the Company effected an initial public offering (the
"Offering") of its Common Stock, par value $.01 per share, pursuant to a
Registration Statement on Form S-1 (File No. 333-28221) that was declared
effective by the Securities and Exchange Commission on July 23, 1997. The
Offering commenced on July 24, 1997. The closing of the Offering occurred
on July 29, 1997 with respect to 2,700,000 shares of Common Stock offered
by the Company. An over-allotment option was exercised by the Company's
underwriters on August 25, 1997 with respect to 405,000 shares. The
managing underwriter of the Offering was BT Alex Brown Incorporated.
The following table summarizes the number of shares of Common Stock
and aggregate offering price of the shares registered for the account of
the Company and the amount and aggregate offering price sold:
<TABLE>
For the account of the Company
<CAPTION>
Aggregate Offering Price Aggregate Offering Price
Amount registered of amount registered Amount Sold of amount sold
----------------- ------------------------ ----------- ------------------------
<C> <C> <C> <C>
3,105,000 $31,050,000 3,105,000 $31,050,000
</TABLE>
The following table summarizes the gross proceeds to the Company, the
expenses incurred for the Company's account, and the net proceeds to the
Company in connection with the issuance and distribution of Common Stock
by the Company in the Offering:
Gross proceeds: $31,050,000
Underwriting discounts and commissions: $ 2,173,500
Finders' fees: $ 0
Expenses paid to or for underwriters: $ 0
Other expenses: $ 385,525
Total expenses: $ 2,558,025
The following table summarizes the amounts of net Offering proceeds
to the Company used for the purposes listed through the date of this
report:
Use of Proceeds Amount
Funding S Corporation Dividend $ 6,000,000
Purchase of machinery and equipment: $ 11,562,538
Repayment of indebtedness $ 4,825,227
Down payment on new vessels $ 2,416,984
Working Capital/Temporary investments $ 3,686,537
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Page Number or Incorporated
Number Description by Reference to
------- ----------- ---------------------------
27.1 Financial Data Schedule Page 11 of sequentially
for quarter ended numbered pages
March 31, 1998
27.2 Restated Financial Data Page 12 of sequentially
Schedule for quarter numbered pages
ended March 31, 1997
(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: May 15, 1998 By: /s/ John D. McCown
John D. McCown
Chairman and Chief
Executive Officer
Date: May 15, 1998 By: /s/ Mark A. Tanner
Mark A. Tanner
Vice President of Administration
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
FINANCIAL STATEMENTS OF TRAILER BRIDGE, INC. AS OF AND FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-07-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,552,238
<SECURITIES> 0
<RECEIVABLES> 9,684,181
<ALLOWANCES> 1,063,210
<INVENTORY> 0
<CURRENT-ASSETS> 15,663,173
<PP&E> 46,925,019
<DEPRECIATION> 5,186,889
<TOTAL-ASSETS> 77,236,834
<CURRENT-LIABILITIES> 9,753,173
<BONDS> 33,445,915
0
0
<COMMON> 97,775
<OTHER-SE> 33,831,338
<TOTAL-LIABILITY-AND-EQUITY> 77,236,834
<SALES> 0
<TOTAL-REVENUES> 16,347,403
<CGS> 0
<TOTAL-COSTS> 16,061,361
<OTHER-EXPENSES> 157,087
<LOSS-PROVISION> 115,693
<INTEREST-EXPENSE> 844,392
<INCOME-PRETAX> 128,955
<INCOME-TAX> 59,799
<INCOME-CONTINUING> 69,156
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,156
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
FINANCIAL STATEMENTS OF TRAILER BRIDGE, INC. AS OF AND FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,246,206
<SECURITIES> 0
<RECEIVABLES> 9,431,172
<ALLOWANCES> (1,178,737)
<INVENTORY> 0
<CURRENT-ASSETS> 10,841,644
<PP&E> 22,059,923
<DEPRECIATION> (7,711,061)
<TOTAL-ASSETS> 26,440,270
<CURRENT-LIABILITIES> 13,664,629
<BONDS> 6,462,054
0
0
<COMMON> 66,725
<OTHER-SE> 6,246,862
<TOTAL-LIABILITY-AND-EQUITY> 26,440,270
<SALES> 0
<TOTAL-REVENUES> 16,446,066
<CGS> 0
<TOTAL-COSTS> 14,698,167
<OTHER-EXPENSES> 263,416
<LOSS-PROVISION> 120,413
<INTEREST-EXPENSE> 283,619
<INCOME-PRETAX> 1,484,483
<INCOME-TAX> 575,220
<INCOME-CONTINUING> 909,263
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 909,263
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
