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, 2000 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 August 14, 2000, 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 that, 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,
2000 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000. 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, 1999 that appear in the Company's Annual Report on Form 10-K.
Statements of Operations for the Three and
Six Months Ended June 30, 2000 and 1999 (unaudited) Page 3
Balance Sheets as of
June 30, 2000 (unaudited) and December 31, 1999 Page 4
Statements of Cash Flows for the
Six Months Ended June 30, 2000 and 1999 (unaudited) Page 5
Notes to Financial Statements as of
June 30, 2000 Page 6
2
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<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------- ----------------- ---------------- ---------------
2000 1999 2000 1999
-------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUES ................................. $23,764,889 $22,686,417 $45,098,294 $45,437,021
OPERATING EXPENSES:
Salaries wages, and benefits ..................... 3,771,121 3,898,023 7,894,929 7,861,317
Rent and purchased transportation:
Related Party ................................ 1,829,100 1,829,100 3,658,200 3,638,100
Other ........................................ 6,132,911 6,694,947 11,743,325 13,768,185
Fuel ............................................ 2,515,995 1,607,744 4,989,771 2,967,369
Operating and maintenance
(exclusive of depreciation shown
separately below) ........................... 5,229,909 5,353,351 10,352,592 12,757,183
Taxes and licenses ............................. 98,159 174,587 258,260 389,305
Insurance and claims ........................... 567,452 634,908 1,168,586 1,166,212
Communications and utilities ................... 145,174 206,156 309,155 415,457
Depreciation and amortization .................. 1,207,764 1,156,611 2,417,994 2,249,056
Other operating expenses ....................... 964,591 990,573 1,905,799 2,162,855
----------------- ----------------- ---------------- ----------------
22,462,176 22,546,000 44,698,611 47,375,039
----------------- ----------------- ---------------- ----------------
OPERATING INCOME (LOSS) ...................... 1,302,713 140,417 399,683 (1,938,018)
NONOPERATING INCOME
(EXPENSE):
Interest expense, net...................... (862,412) (816,695) (1,806,408) (1,469,488)
Gain on sale of equipment ................. 384,250 48,866 395,011 79,283
----------------- ----------------- ---------------- ----------------
(478,162) (767,829) (1,411,397) (1,390,205)
----------------- ----------------- ---------------- ----------------
INCOME (LOSS) BEFORE (PROVISION)
BENEFIT FOR INCOME TAXES................... 824,551 (627,412) (1,011,714) (3,328,223)
(PROVISION) BENEFIT FOR INCOME TAXES ......... (323,927) 228,035 361,411 1,245,167
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE ............. 500,624 (399,377) (650,303) (2,083,056)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (NET OF TAX)........................ 127,100 127,100
----------------- ----------------- ---------------- ----------------
NET INCOME (LOSS)............................. $ 627,724 $ (399,377) $ (523,203) $(2,083,056)
================= ================= ================ ================
PER SHARE AMOUNTS
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE.............. 0.05 0.05
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (NET OF TAX)........................ 0.01 0.01
NET INCOME (LOSS)............................. $ 0.06 $ (0.04) $ (0.06) $ (0.21)
================= ================= ================ ================
WEIGHTED AVERAGE
SHARES OUTSTANDING ........................ 9,777,500 9,777,500 9,777,500 9,777,500
================= ================= ================ ================
</TABLE>
3
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
BALANCE SHEETS
<CAPTION>
June 30, December 31,
2000 1999
----------------- -------------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,328,876 $ 2,445,750
Trade receivables, less allowance for doubtful
accounts of $1,041,564 and $1,1,368,514 14,595,039 12,535,138
Other receivables 30,254 76,498
Prepaid expenses 999,969 1,202,443
Due from related party 40,200 2,750,200
----------------- -------------------
Total current assets 18,994,338 19,010,029
Property and equipment, net 60,135,067 63,086,924
Goodwill, net 787,451 810,841
Restricted cash and investments 708,524 691,419
Other assets 4,719,523 4,463,425
----------------- -------------------
TOTAL ASSETS $ 85,344,903 $ 88,062,638
================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,879,059 $ 7,460,770
Accrued liabilities 2,611,493 3,793,885
Current portion of notes payable 4,062,461 4,615,862
Current portion of of revolving line of credit 15,550,000 1,943,750
Current portion of capital lease obligations 87,248 83,010
Unearned revenue 499,506 499,506
----------------- -------------------
Total current liabilities 28,689,767 18,396,783
Notes payable, less current portion 27,925,884 26,762,440
Revolving line of credit, less current portion - 13,606,250
Capital lease obligations, less current portion 44,947 89,657
----------------- -------------------
TOTAL LIABILITIES 56,660,598 58,855,130
----------------- -------------------
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 2000 and 1999 97,775 97,775
Additional paid-in capital 37,982,818 37,982,818
Accumulated deficit in earnings (9,396,288) (8,873,085)
----------------- -------------------
TOTAL STOCKHOLDERS' EQUITY 28,684,305 29,207,508
----------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 85,344,903 $ 88,062,638
================= ===================
</TABLE>
4
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2000 and June 30, 1999
(Unaudited)
<CAPTION>
June 30, June 30,
2000 1999
------------------- ------------------
<S> <C> <C>
Operating activities:
Net loss $ (523,203) $ (2,083,056)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,417,994 2,249,056
Provision for doubtful accounts 352,679 739,997
Deferred income taxes (283,511) (1,245,167)
Gain on sale of fixed assets (395,011) (79,282)
Decrease (increase) in:
Trade receivables (2,412,580) 646,134
Other receivables 46,244 (1,394,714)
Prepaid expenses 202,474 (145,583)
Due from related party 2,710,000 921,945
Increase (decrease) in:
Accounts payable (1,581,711) (391,969)
Accrued liabilities (1,182,392) (1,302,765)
Unearned revenue 0 (89,885)
------------------- ------------------
Net cash used in operating activities (649,017) (2,175,289)
------------------- ------------------
Investing activities:
Purchases & construction of property and equipment (517,736) (6,460,562)
Proceeds from sale of property and equipment 1,470,000 861,884
Decrease in other assets 27,413 37,874
(Increase) decrease in restricted cash and investments (17,105) 515,281
------------------- ------------------
Net cash provided by (used in) investing activities 962,572 (5,045,523)
------------------- ------------------
Financing activities:
Proceeds from borrowing on notes payable 3,000,000
Proceeds from borrowing on revolving line of credit 7,000,000
Principal payments on notes payable (2,389,957) (1,983,994)
Principal payments under capital lease obligations (40,472) (21,033)
------------------- ------------------
Net cash provided by financing activities 569,571 4,994,973
------------------- ------------------
Net increase (decrease) in cash and cash equivalents 883,126 (2,225,839)
Cash and Cash Equivalents, beginning of the period 2,445,750 5,561,996
------------------- ------------------
Cash and Cash Equivalents, end of period $ 3,328,876 $ 3,336,157
=================== ==================
</TABLE>
5
<PAGE>
TRAILER BRIDGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
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, 1999 that appear in the Form 10-K.
Recent Accounting Pronouncements - In December 1999, the Securities and
Exchange Commission issued Accounting Bulletin (SAB) No. 101 "Revenue
Recognition in Financial Statements." The objective of this SAB is to provide
further guidance on revenue recognition issues in the absence of authoritative
literature addressing a specific arrangement or a specific industry. The Company
is required to adopt the guidance in the SAB no later than the fourth quarter of
its fiscal year 2000. Adoption of this guidance is not expected to have a
material impact on the Company's financial position or results of operations.
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.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Three Months Ended June 30, 2000 and 1999
-----------------------------------------
Total revenue for the three months ended June 30, 2000 was $23,764,889,
an increase of $1,078,472, or 4.8%, compared to total revenue of $22,686,417
reported for the three months ended June 30, 1999. The increased revenue was due
to increased shipping volume. The Company also reported significant increases in
income for the three months ended June 30, 2000, highlighted by net income of
$627,724, or $.06 per share, as compared to a net loss of $399,377, or $.04 per
share, for the three months ended June 30, 1999. Net income for the three months
ended June 30, 2000 included a benefit of $127,100 from the cumulative effect of
a change in accounting principle related to periodic vessel dry-docking.
Operating income for the three months ended June 30, 2000, increased to
$1,302,713, an improvement of $1,162,296, or 828.7%, from operating income of
$140,417 for the three months ended June 30, 1999. Operating income was higher
due to increased volume across most sectors, continuing improvement in costs and
the absence of $709,335 of hurricane-related costs incurred last year related to
the Company's operations in San Juan. Higher operating income resulted in an
improved operating ratio of 94.5% for the three months ended June 30, 2000
compared to the 99.4% operating ratio for the three months ended June 30, 1999.
Income before income taxes for the three months ended June 30, 2000 was
$824,551, an improvement of $1,451,963 from the three months ended June 30,
1999. Pre-tax income for the three months ended June 30, 2000, includes $45,717
in additional interest expense over the three months ended June 30, 1999 and
$384,250 related to the sale of assets versus a gain of $48,866 in the three
months ended June 30, 1999.
Total southbound Puerto Rico volume for the three months ended June 30,
2000, increased 10.1% and total northbound volume increased 22.7% compared to
the three months ended June 30, 1999. Comparing total volume and total revenue
by direction, Trailer Bridge's effective yield to and from Puerto Rico decreased
8.5% and 13.0%, respectively, compared to the three months ended June 30, 1999.
The Company's Puerto Rico deployed vessel capacity utilization overall during
the three months ended June 30, 2000, was 79.9% to Puerto Rico and 29.3% from
Puerto Rico. These were below capacity utilization figures of 90.6% to Puerto
Rico and 30.6% from Puerto Rico during the three months ended June 30, 1999,
when Trailer Bridge had less effective capacity in the Puerto Rico lane prior to
a change in itinerary involving the same number of overall deployed vessels. All
of these capacity utilization figures are based upon vessels deployed in service
and exclude the effect of two Triplestack Box Carriers(R) that are presently
laid-up. Total net expenses related to these two vessels, consisting primarily
of depreciation and interest, were $401,179 during the three months ended June
30, 2000. When deployed, these two vessels will increase Trailer Bridge's in
service fleet capacity by approximately 31%.
The Company's business model involves a high degree of operating
leverage with changes in volume having a disproportionate effect on overall
yields. Based upon its cost structure and the fixed versus variable nature of
those costs, the Company believes that its present incremental cost to handle
additional volume within its system is lower than that of any of its
competitors.
7
<PAGE>
Six Months Ended June 30, 2000 and 1999
---------------------------------------
Total revenue for the six months ended June 30, 2000 was $45,098,294, a
decrease of $338,727, or .7%, compared to total revenue of $45,437,021 reported
for the six months ended June 30, 1999. The decreased revenue was due to lower
effective yields for the six month period ending June 30, 2000 as compared to
the six months ended June 30, 1999. The net loss improved by $1,559,853 to
$523,203, or $.05 per share, for the six months ended June 30, 2000, compared to
a net loss of $2,083,056, or $.21 per share for the six months ended June 30,
1999. Operating income improved $2,337,700 to $399,683 in the six month period
ending June 30, 2000 as compared to an operating loss of $1,938,018 in the
comparable period last year. The improvement in operating income was
attributable to continuing improvement in costs and the absence of $3,092,244 of
hurricane-related costs incurred last year related to the Company's operations
in San Juan partially offset by the effect of increased fuel prices.
Total southbound Puerto Rico volume for the six months ended June 30,
2000, increased 4.9% and total northbound volume increased 17.7% compared to the
six months ended June 30, 1999. Comparing total volume and total revenue by
direction, Trailer Bridge's effective yield to and from Puerto Rico decreased
8.9% and 12.0%, respectively, compared to the six months ended June 30, 1999.
The Company's Puerto Rico deployed vessel capacity utilization overall during
the six months ended June 30, 2000, was 77.3% to Puerto Rico and 28.1% from
Puerto Rico. These were below capacity utilization figures of 89.7% to Puerto
Rico and 28.7% from Puerto Rico during the six months ended June 30, 1999, when
Trailer Bridge had less effective capacity in the Puerto Rico lane prior to a
change in itinerary involving the same number of overall deployed vessels. All
of these capacity utilization figures are based upon vessels deployed in service
and exclude the effect of two Triplestack Box Carriers(R) that are presently
laid-up. Total net expenses related to these two vessels, consisting primarily
of depreciation and interest, were $500,027 during the six months ended June 30,
2000 reduced by $259,090 of charter revenue from third parties.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, cash amounted to $3.3 million and stockholders equity
was $28.7 million. Net cash used in operating activities for the six month
period ending June 30, 2000 improved to $649,017 from $2,175,289 for the six
month period ended June 30, 1999. For the six months ending June 30, 2000 net
cash provided in investing activities was $962,572 and net cash provided by
financing activities was $569,571. As a result of the above, cash increased in
the period ending June 30, 2000 by $883,126 to $3,328,876.
The April 1, 2001 expiration date of the Company's revolving credit
facility of $15.5 million results in the Company stating a negative working
capital of $9.7 million at June 30, 2000. Upon the expiration date the $13.6
million outstanding balance will be due. The revolving credit facility is
secured at June 30, 2000 by $27.3 million of equipment and eligible accounts
receivable. The Company expects to have a new revolving credit facility or
similar financing in place prior to its expiration date.
The Company continues to maintain adequate current assets to satisfy
current liabilities when they are due and has sufficient liquidity and financial
resources to manage its day-to-day cash needs. Management believes that cash
flow from operations combined with equipment financings will be adequate to meet
the Company's debt service requirements and to meet its working capital needs
for the remainder of 2000.
FORWARD-LOOKING STATEMENTS
This report contains statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The matters discussed in this report include statements regarding the
intent, belief or current expectations of the Company, its directors or its
officers with respect to the future operating performance of the Company.
Investors are cautioned that any such forward looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward looking
statements as a result of various factors. Without limitation, these risks and
uncertainties include the risks of weather, economic recessions, changes in
demand for transportation services offered by the Company, and changes in rate
levels for transportation services offered by the Company.
PART II
OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
The shareholders of the Company voted on one item at the Annual Meeting of
Shareholders held on May 17, 2000: 1. The election of four directors, to terms
ending in 2001
Votes were cast for election of directors as follows:
Nominee Votes For Votes Withheld
-----------------------------------------------------------
Malcom P. McLean 9,592,412 33,735
John D. McCown 9,592,412 33,735
9
<PAGE>
Kenneth G. Younger 9,592,412 33,735
Artis James 9,592,412 33,735
Charles R. Cushing 9,592,412 33,735
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Page Number or Incorporated
Number Description by Reference to
------- ----------- ---------------------------
27 Financial Data Schedule Page 12 of sequentially
numbered pages
(b) Reports on Form 8-K - None
10
<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: August 14, 2000 By: /s/ John D. McCown
--------------------------------------
John D. McCown
Chairman and Chief
Executive Officer
Date: August 14, 2000 By: /s/ Mark A. Tanner
--------------------------------------
Mark A. Tanner
Vice President of Administration
and Chief Financial Officer
11
