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, 1999 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, 1999, 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, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. 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, 1998 that appear in the Company's Annual Report on Form 10K.
Statements of Operations for the
Three Month Periods Ended March 31, 1999
and 1998 (unaudited) Page 3
Balance Sheets as of
March 31, 1999 and December 31, 1998 (unaudited) Page 4
Statements of Cash Flows for the
Three Months Ended March 31, 1999
and 1998 (unaudited) Page 5
Notes to Financial Statements as of
March 31, 1999 Page 6
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months
Ended March 31,
-----------------------------------
1999 1998
---------------- --------------
<S> <C> <C>
OPERATING REVENUES ........................................ $ 22,750,604 $ 16,347,403
OPERATING EXPENSES:
Salaries wages, and benefits ........................... 3,963,294 3,893,442
Rent and purchased transportation:
Related Party ....................................... 1,809,000 1,809,000
Other ............................................... 7,073,238 3,292,370
Fuel ................................................... 1,359,625 1,338,712
Operating and maintenance
(exclusive of depreciation shown
separately below) ................................... 7,403,832 3,242,406
Taxes and licenses ..................................... 214,718 131,197
Insurance and claims ................................... 531,304 499,987
Communications and utilities ........................... 209,301 142,107
Depreciation and amortization .......................... 1,092,464 734,321
Other operating expenses ............................... 1,172,263 977,819
----------- -----------
24,829,039 16,061,361
----------- -----------
OPERATING (LOSS) INCOME.................................... (2,078,435) 286,042
NONOPERATING INCOME
(EXPENSE):
Interest expense, net................................... (652,793) (185,597)
Gain on sale of equipment............................... 30,417 28,510
----------- -----------
(622,376) (157,087)
----------- -----------
(LOSS) INCOME BEFORE BENEFIT
(PROVISION) FOR INCOME TAXES............................ (2,700,811) 128,955
BENEFIT (PROVISION) FOR INCOME TAXES ...................... 1,017,132 (59,799)
=========== ===========
NET (LOSS) INCOME $ (1,683,679) $ 69,156
=========== ===========
(LOSS) EARNINGS PER SHARE:
Basic.................................................. $ (0.17) $ 0.01
=========== ===========
Diluted................................................ $ (0.17) $ 0.01
=========== ===========
WEIGHTED AVERAGE
SHARES USED IN COMPUTING EARNINGS PER SHARE:
Basic................................................... 9,777,500 9,777,500
=========== ===========
Diluted................................................. 9,777,500 9,777,500
=========== ===========
</TABLE>
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, December 31,
1999 1998
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,855,769 $ 5,561,996
Trade receivables, less allowance for doubtful
accounts of $1,448,012 and $1,093,403 13,129,023 13,491,451
Other receivables 1,703,054 1,376,576
Prepaid expenses 625,020 840,887
Due from related party - 552,134
------------ -------------
Total current assets 19,312,866 21,823,044
Property and equipment, net 61,579,036 62,054,638
Goodwill, less accumulated amortization of
$323,017 and $311,322 845,925 857,620
Restricted cash and investments 668,262 1,190,918
Other assets 4,305,643 3,302,869
============ =============
TOTAL ASSETS $ 86,711,732 $ 89,229,089
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,101,057 $ 7,341,141
Other accrued liabilities 5,816,161 6,017,108
Current portion of notes payable 4,367,381 3,988,067
Current portion of capital lease obligations 43,877 42,945
Unearned revenue 282,873 470,684
Due to related party 60,300 -
------------ -------------
Total current liabilities 16,671,649 17,859,945
Notes payable, less current portion 29,765,079 31,399,115
Revolving line of credit 10,550,000 8,550,000
Capital lease obligations, less current portion 64,756 76,102
------------ -------------
TOTAL LIABILITIES 57,051,484 57,885,162
------------ -------------
Commitments
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; 9,777,500 shares issued and
outstanding in 1998 and 1997 97,775 97,775
Additional paid-in capital 37,982,818 37,982,818
Accumulated deficit in earnings (8,420,345) (6,736,666)
------------ -------------
Total stockholders' equity 29,660,248 31,343,927
============ =============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,711,732 $ 89,229,089
============ =============
</TABLE>
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999 and March 31, 1998
(Unaudited)
<CAPTION>
March 31, March 31,
1999 1998
------------- ----------
<S> <C> <C>
Operating activities:
Net loss $ (1,683,679) $ 69,156
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,092,464 734,321
Provision for doubtful accounts 471,079 (183,629)
Deferred income taxes (1,017,132) 387,683
Gain on sale of fixed assets (30,417) (28,510)
Decrease (increase) in:
Trade receivables (108,651) (548,403)
Other receivables (327,478) 0
Prepaid expenses 215,867 275,011
Increase (decrease) in:
Accounts payable (1,240,084) 1,203,386
Accrued liabilities (200,947) (1,047,191)
Due from related party 612,434 0
Unearned revenue (187,811) 112,534
------------- ----------
Net cash (used in) provided by operating activities (2,403,355) 974,358
------------- ----------
Investing activities:
Decrease in due to related party 0 (20,100)
Purchases & construction of property, plant & equipment (993,681) (12,319,010)
Proceeds from sale of equipment 430,000 182,650
Decrease in other assets 3,289 172,338
Decrease in restricted cash and investments 522,656 3,461,284
------------- ----------
Net cash used in investing activities (37,736) (8,522,838)
------------- ----------
Financing activities:
Proceeds from borrowing on notes payable 0 841,745
Proceeds from borrowing on revolving line of credit 2,000,000 0
Principal payments on notes payable (1,254,722) (807,607)
Debt issue costs 0 (201,320)
Principal payments under capital lease obligations (10,414) (9,546)
------------- ----------
Net cash provided by (used in) financing activities 734,864 (176,728)
------------- ----------
Net decrease in cash and cash equivalents (1,706,227) (7,725,208)
Cash and Cash Equivalents, beginning of the period 5,561,996 14,277,445
------------- ----------
Cash and Cash Equivalents, end of period $ 3,855,769 $ 6,552,237
============= ==========
</TABLE>
<PAGE>
TRAILER BRIDGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
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, 1998 that appear in the Form 10-K.
2. SEGMENTS
The Company's primary business is to transport freight from its
origination point in the continental United States to San Juan, Puerto Rico and
from San Juan, Puerto Rico to its destination point in the continental United
States. The Company provides a domestic trucking system and a barge vessel
system, which work in conjunction with each other to service its customers. The
Company would not employ either system separately; therefore segment reporting
was not necessary.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS:
Three Months Ended March 31, 1999 and 1998
- ------------------------------------------
Operating revenues for the three months ended March 31, 1999 were $22,750,604 an
increase of $6,403,201 or 39.2%, compared to the first quarter of 1998. Based
upon the deployment of an additional vessel, Trailer Bridge had 29.8% more
overall vessel capacity deployed to Puerto Rico compared to the first quarter of
1998. Core trailer volume to Puerto Rico increased 71.8% compared to the year
earlier period and total car and other vehicle volume was up 35.8% compared to
the year earlier period. As a result, core trailer revenue to Puerto Rico
increased $5,454,116 or 63.8% compared to the year earlier period and car and
other vehicle revenue increased $875,464 or 24.7% compared to the year earlier
period. For the first quarter, revenue from shipper owned or leased equipment
moving to Puerto Rico increased $201,512 or 15.9% from the year earlier period.
Volume from Puerto Rico increased 14.2% while related revenue increased $222,116
or 10.8% compared to the first quarter of 1998. Non-Puerto Rico revenue of
$1,087,689 represented a decrease of 12.1% from the first quarter of 1998.
First quarter operating loss was $2,078,435 a decrease of $2,364,477
from the $286,042 operating income in the year earlier period and an increase of
$1,266,336 from the operating loss in the fourth quarter of 1998. Operating
income was lower compared to the year earlier period primarily due to $2.4
million of additional costs related to the disruption resulting from the
continued loss of use of the San Juan ramp structure due to Hurricane Georges.
The favorable impact of the increased volume was offset by reduced rate levels
and the impact of the new coastwise service. As a result, Trailer Bridge's
operating ratio was 109.1% during the first quarter of 1999 compared to the
98.3% operating ratio during the year earlier period. Net interest expense of
$652,793 was up $467,196 from the year earlier period that included significant
interest income on short-term investments. During the first quarter of 1999,
Trailer Bridge also had a gain of $30,417 related to the sale of older trailer
equipment.
The $2,382,910 of estimated additional costs related to the hurricane
situation included $1,176,823 in operating and maintenance costs (comprised
primarily of stevedoring and port related items), $1,005,230 in rent and
purchased transportation (comprised primarily of terminal equipment rental,
trucking expense in San Juan and the U.S. and revenue equipment rental),
$121,523 in salaries and wages, $17,448 in insurance and claims and $61,886 in
communications and other operating expenses.
The inability to utilize the San Juan ramp necessitated alternative
methods of discharging and re-loading the two roll-on, roll-off vessels that
nearly quadrupled cargo operations time while at the same time reducing
available vessel space. The resulting schedule tightness and uncertainty
exacerbated costs beyond those directly related to San Juan cargo operations,
including trucking costs on the mainland. The Company's goal during this period
of disruption was to continue to provide a high level of service to customers
despite certain adverse cost consequences. The new Triplestack Box Carriers(TM)
now deployed in Puerto Rico do not utilize the floating ramp structure and were
not adversely affected by Hurricane Georges. The ramp structure was re-floated
on January 11. Following repairs, including filling tanks with permanent
flotation foam, it was utilized for partial cargo operations on March 19 and
full cargo operations in mid-April.
<PAGE>
Loss before income taxes for the first quarter was $2,700,811, a
decrease of $2,829,766 from the year earlier period. After income taxes, net
loss for the first quarter was $1,683,679, which was well below net income of
$69,156 for the year earlier period. Net loss per share was $.17 for the first
quarter compared to net income per share of $.01 for the year earlier.
For the first quarter of 1999, total volume to Puerto Rico including
cars and other vehicles grew 55.5% compared to the same period last year, well
above the 29.8% increase in deployed vessel capacity. Total volume from Puerto
Rico grew only 14.2% or less than half the growth in deployed vessel capacity.
During that period, total revenue to and from Puerto Rico increased 48.5% and
10.8%, respectively, implying reductions 4.5% and 3.0%, respectively, in the
overall average yield on Trailer Bridge's Puerto Rico business compared
to the same period last year. Compared to the fourth quarter of 1998, the
overall average yield on Trailer Bridge's business to Puerto Rico increased 1.4%
and the overall average yield on business from Puerto Rico increased 2.2%. The
Company's Puerto Rico deployed vessel capacity utilization during the first
quarter was 88.1% to Puerto Rico and 26.8% from Puerto Rico. These were
generally above comparable figures of 73.5% and 87.8% to Puerto Rico and 30.5%
and 25.5% from Puerto Rico during the first and fourth quarters of 1998,
respectively. They are, however, well below the benchmark utilization of 96.0%
and 51.6% to and from Puerto Rico achieved during all of 1995.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, available cash amounted to $3.9 million, working
capital was $2.6 million and stockholders' equity was equal to $29.7 million.
Net cash used by operations was $2.4 million in the three months ended March 31,
1999 compared to net cash provided by operations of $974,358 in the same period
in 1998. Net cash used in investing activities amounted to $37,736 in the three
month period ending March 31, 1999 reflects $993,681 in capital expenditures
partially offset by a decrease of restricted cash and investments of $522,656
representing the proceeds of the Company's Title XI bond issuances which were
used to fund the construction of the Company's new Triplestack Box Carriers, the
last of which was delivered in the period and $430,000 in proceeds from the sale
of trailer equipment. Net cash provided by financing activities was $734,863
consisting of a $2.0 million draw down under the Company's revolving credit
facility partially offset by $1.3 million in principal payments on notes
payable.
Management believes that cash flow from operations combined with the
Company's borrowing capacity will be adequate to meet the Company's debt service
requirements, its anticipated capital expenditures, and to meet its working
capital needs.
YEAR 2000
Management recognizes the potential effect Year 2000 may have on the
Company's operations and, as a result, has implemented a Year 2000 Compliance
Project.
The Company's Year 2000 Compliance Project includes an awareness phase,
an assessment phase, an implementing phase, and a testing phase of our data
processing network, accounting systems, computer and operating systems and
software packages. The project includes surveying our major customers and
suppliers. Total costs incurred to date associated with the Company's Year 2000
compliance project have been expensed and to date total approximately $75,000.
The Company's computer hardware, operating systems, dispatch applica-
tions, PC network and other desktop applications are Year 2000 compliant as
certified by the various vendors and application consultants. Year 2000
compliance for general accounting applications will be implemented and tested
during the fourth quarter of 1998. Based on initial testing, Management does
not anticipate any Year 2000 issues that will materially impact on operations or
operating results.
The Company has surveyed its major suppliers to determine the extent to
which the Company is vulnerable to third parties' failure to resolve their Year
2000 issues. The company will be able to more adequately assess its third party
risk when responses are received from the majority of the entities contacted.
Management believes its planning efforts are adequate to address the
Year 2000 Issue and that its risk factors are primarily those that it cannot
directly control, including the readiness of its major suppliers and customers.
Failure on the part of these entities to become Year 2000 compliant could
result in disruption in the Company's cash receipts and disbursements functions.
There can be no guarantee, however, that the systems of unrelated entities upon
which the Company's operations rely will be corrected on a timely basis and will
not have a material adverse effect on the Company.
The Company does not have a formal contingency plan or a timetable for
implementing one. Contingency plans will be established, if they are deemed
necessary, after the Company has adequately assessed the impact on operations
should third parties fail to properly respond to their Year 2000 issues.
FORWARD-LOOKING STATEMENTS
This report may contain statements that may be considered as
forward-looking or predictions concerning future operations. Such statements are
based on management's belief or interpretation of information currently
available. These statements and assumptions involve certain risks and
uncertainties and management can give no assurance that such expectations will
be realized. Among all the factors and events that are not within the Company's
control and could have a material impact on future operating results are general
economic conditions, cost and availability of diesel fuel, adverse weather
conditions and competitive rate fluctuations.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Page Number or Incorporated
Number Description by Reference to
- ------- ----------- ---------------------------
11 Computation of Earnings Per Page 12 of sequentially
Common Share numbered pages
27 Financial Data Schedule Page 13 of sequentially
numbered pages
(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 17, 1999 By: /s/ John D. McCown
--------------------------------
John D. McCown
Chairman and Chief
Executive Officer
Date: May 17, 1999 By: /s/ Mark A. Tanner
---------------------------------
Mark A. Tanner
Vice President of Administration
and Chief Financial Officer
EXHIBIT 11
TRAILER BRIDGE, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months
Ended March 31,
-----------------------------
1999 1998
------------ -----------
Net (loss) income $(1,683,679) $ 69,156
========== ==========
Common shares:
Weighted average shares
outstanding during the period -
shares used for basic earnings
per share 9,777,500 9,777,500
Shares issuable under stock
options which are potentially
dilutive - -
---------- ----------
Shares used for diluted earnings
per share 9,777,500 9,777,500
Basic earnings per common
share $ (0.17) $ 0.01
========== ==========
Diluted earnings per common
share $ (0.17) $ 0.01
========== ==========
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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 3
months ended March 31, 1999 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,855,769
<SECURITIES> 0
<RECEIVABLES> 14,577,035
<ALLOWANCES> 1,448,012
<INVENTORY> 0
<CURRENT-ASSETS> 19,312,866
<PP&E> 69,384,916
<DEPRECIATION> 7,805,880
<TOTAL-ASSETS> 86,711,732
<CURRENT-LIABILITIES> 16,671,649
<BONDS> 34,132,460
0
0
<COMMON> 97,775
<OTHER-SE> 29,562,473
<TOTAL-LIABILITY-AND-EQUITY> 86,711,732
<SALES> 0
<TOTAL-REVENUES> 22,750,604
<CGS> 0
<TOTAL-COSTS> 24,829,039
<OTHER-EXPENSES> 622,376
<LOSS-PROVISION> 471,079
<INTEREST-EXPENSE> 652,793
<INCOME-PRETAX> (2,700,811)
<INCOME-TAX> (1,017,132)
<INCOME-CONTINUING> (1,683,679)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,683,679)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
