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
September 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 November 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 nine month periods ended September
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
Nine Months Ended September 30, 2000 and 1999 (unaudited) Page 3
Balance Sheets as of
September 30, 2000 and December 31, 1999 (unaudited) Page 4
Statements of Cash Flows for the
Nine Months Ended September 30, 2000 and 1999 (unaudited) Page 5
Notes to Financial Statements as of
September 30, 2000 Page 6
2
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<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------------------- -----------------------------------
2000 1999 2000 1999
----------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUES .................................. $ 23,151,664 $ 20,625,799 $ 68,249,958 $ 66,062,820
OPERATING EXPENSES:
Salaries wages, and benefits ..................... 4,070,615 4,109,261 11,965,544 11,970,579
Rent and purchased transportation:
Related Party ................................. 1,849,200 1,849,200 5,507,400 5,487,300
Other ......................................... 6,569,302 6,276,954 18,312,627 20,045,138
Fuel ............................................. 2,647,833 1,776,631 7,637,603 4,744,000
Operating and maintenance
(exclusive of depreciation shown
separately below) ............................. 4,511,954 5,924,603 14,864,546 18,681,786
Taxes and licenses ............................... 117,963 161,548 376,223 550,854
Insurance and claims ............................. 519,235 231,355 1,687,821 1,397,567
Communications and utilities ..................... 161,467 262,607 470,622 676,091
Depreciation and amortization .................... 1,211,366 1,214,478 3,629,360 3,463,553
Other operating expenses ......................... 1,152,392 1,064,988 3,058,192 3,229,795
----------------- ----------------- ---------------- ---------------
22,811,327 22,871,625 67,509,938 70,246,663
----------------- ----------------- ---------------- ---------------
OPERATING INCOME (LOSS) ............................. 340,337 (2,245,826) 740,020 (4,183,843)
NONOPERATING INCOME
(EXPENSE):
Interest expense, net............................. (820,317) (889,423) (2,626,726) (2,358,912)
Gain on sale of equipment,........................ 39,380 4,008 434,392 83,291
----------------- ----------------- ---------------- ---------------
(780,937) (885,415) (2,192,334) (2,275,621)
----------------- ----------------- ---------------- ---------------
LOSS BEFORE BENEFIT FOR INCOME TAXES ................ (440,600) (3,131,241) (1,452,314) (6,459,464)
BENEFIT FOR INCOME TAXES ............................ 230,343 1,176,658 591,754 2,421,825
----------------- ----------------- ---------------- ---------------
LOSS BEFORE CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE .................... (210,257) (1,954,583) (860,560) (4,037,639)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (NET OF TAX) .............................. 127,100
----------------- ----------------- ---------------- ---------------
NET LOSS ............................................ $ (210,257) $ (1,954,583) $ (733,460) $ (4,037,639)
================= ================= ================ ===============
PER SHARE AMOUNTS:
LOSS BEFORE CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE ................. (0.02) (0.20) (0.09) (0.41)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (NET OF TAX) ........................... - - 0.01 -
----------------- ----------------- ---------------- ---------------
NET LOSS ............................................ $ (0.02) $ (0.20) $ (0.08) $ (0.41)
================= ================= ================ ===============
WEIGHTED AVERAGE
SHARES OUTSTANDING ............................... 9,777,500 9,777,500 9,777,500 9,777,500
================= ================= ================ ===============
</TABLE>
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<TABLE>
TRAILER BRIDGE, INC.
BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30, December 31,
2000 1999
----------------- -------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,595,406 $ 2,445,750
Trade receivables, less allowance for doubtful
accounts of $1,205,356 and $1,368,514 15,524,819 12,535,138
Other receivables 27,625 76,498
Prepaid expenses 1,979,459 1,202,443
Due from related party 20,100 2,750,200
----------------- -------------------
Total current assets 21,147,409 19,010,029
Property and equipment, net 59,093,402 63,086,924
Goodwill, net 775,757 810,841
Restricted cash and investments 718,011 691,419
Other assets 4,937,216 4,463,425
----------------- -------------------
TOTAL ASSETS $86,671,795 $ 88,062,638
================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,122,653 $ 7,460,770
Accrued liabilities 2,991,881 3,793,885
Current portion of notes payable 3,655,517 4,615,862
Current portion of of revolving line of credit 14,578,125 1,943,750
Current portion of capital lease obligations 89,447 83,010
Due to affliate 5,000,000 -
Unearned revenue 499,506 499,506
----------------- -------------------
Total current liabilities 33,937,129 18,396,783
Notes payable, less current portion 24,238,875 26,762,440
Revolving line of credit, less current portion - 13,606,250
Capital lease obligations, less current portion 21,743 89,657
----------------- -------------------
TOTAL LIABILITIES 58,197,747 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 (9,606,545) (8,873,085)
----------------- -------------------
TOTAL STOCKHOLDERS' EQUITY 28,474,048 29,207,508
----------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $86,671,795 $ 88,062,638
================= ===================
</TABLE>
4
<PAGE>
<TABLE>
TRAILER BRIDGE, INC.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2000 and September 30, 1999
(Unaudited)
<CAPTION>
September 30, September 30,
2000 1999
------------------- -----------------
<S> <C> <C>
Operating activities:
Net loss $ (733,460) $ (4,037,639)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,629,360 3,463,534
Provision for doubtful accounts 794,384 1,223,445
Deferred income taxes (513,854) (2,421,825)
Gain on sale of fixed assets (434,392) (83,291)
Decrease (increase) in:
Trade receivables (3,784,065) 797,316
Other receivables 48,873 1,263,439
Prepaid expenses (777,016) (376,322)
Increase (decrease) in:
Accounts payable (338,117) (102,163)
Accrued liabilities (802,004) (1,794,031)
Unearned revenue 0 (78,471)
Due from related party 2,730,100 632,534
------------------- -----------------
Net cash used in operating activities (180,191) (1,513,474)
------------------- -----------------
Investing activities:
Purchases & construction of property and equipment (960,717) (7,279,722)
Proceeds from sale of property and equipment 1,794,355 981,146
Decrease in other assets 40,063 33,432
(Increase) decrease in restricted cash and investments (26,592) 507,527
------------------- -----------------
Net cash provided by (used in) investing activities 847,109 (5,757,617)
------------------- -----------------
Financing activities:
Proceeds from borrowing on revolving line of credit 7,000,000
Proceeds from borrowing from affiliates 5,000,000
Principal payments on revolving line of credit (971,875)
Principal payments on notes payable (3,483,910) (3,267,744)
Principal payments under capital lease obligations (61,476) (31,866)
------------------- -----------------
Net cash provided by financing activities 482,738 3,700,390
------------------- -----------------
Net increase (decrease) in cash and cash equivalents 1,149,656 (3,570,701)
Cash and Cash Equivalents, beginning of the period 2,445,750 5,561,996
------------------- -----------------
Cash and Cash Equivalents, end of period $ 3,595,406 $ 1,991,295
=================== =================
</TABLE>
5
<PAGE>
TRAILER BRIDGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 2000 and 1999
----------------------------------------------
Operating revenue was $23,151,664 for the three months ended September
30, 2000 an increase of $2,525,865, or 12.2%, compared to the three months ended
September 30, 1999. Core trailer volume to Puerto Rico rose 32.5% compared to
the three months ended September 30, 1999, resulting in a $3,101,794, or 26.1%,
increase in core trailer revenue to Puerto Rico versus the three months ended
September 30, 1999. This improvement was achieved despite a 3.2% decrease in
total car and other vehicle volume, which produced a $132,210, or 3.6%, decrease
in car and other vehicle revenue for the three months ended September 30, 2000.
Revenue from shipper owned or leased equipment moving to Puerto Rico for the
three months ended September 30, 2000, decreased by $29,341, or 3.1%, from the
three months ended September 30, 1999. Trailer volume from Puerto Rico for the
three months ended September 30, 2000, increased 3.7%, while related revenue
decreased by $184,628, or 8.2%, compared to the three months ended September 30,
1999. Total domestic and other revenue for the three months ended September 30,
2000, of $1,663,911 represented a decrease of $229,751, or 12.1%, from the three
months ended September 30, 1999.
Operating income for the three months ended September 30, 2000 was
$340,337, an increase of $2,586,163 from an operating loss of $2,245,826 for the
three months ended September 30, 1999. Operating income for the three months
ended September 30, 2000 included a non-recurring expense recovery from an
affiliate of $907,439 for marine related expenses and additional expenses of
$651,195 related to correcting schedule variances caused by a tug malfunction
during the period. Trailer Bridge's operating ratio (operating expenses/
operating revenues) during the three months ended September 30, 2000, improved
to 98.5% from 110.9% for the three months ended September 30, 1999. Net interest
expense for the three months ended September 30, 2000, declined to $820,317 from
$889,423 incurred during the three months ended September 30, 1999. During the
three months ended September 30, 2000, Trailer Bridge also realized a gain of
$39,380 related to the sale of older trailer equipment.
The loss before income taxes for the three months ended September
30, 2000 was $440,600, an improvement of $2,690,641 from a pre-tax loss of
$3,131,241 incurred in the three months ended September 30, 1999. The net loss
for the three months ended September 30, 2000, narrowed substantially to
$210,257, or $.02 per share, compared to net loss of $1,954,583, or $.20 per
share, for the three months ended September 30, 1999.
Total volume to Puerto Rico for the three months ended September 30,
2000, including cars and other vehicles, increased 24.8% compared to the three
months ended September 30, 1999. Total volume from Puerto Rico for the three
months ended September 30, 2000, increased 4.1% compared to the three months
ended September 30, 1999. During the three months ended September 30, 2000, the
average revenue per core southbound trailer load declined 4.8% compared to the
three months ended September 30, 1999. The average revenue per northbound
trailer load, during the three months ended September 30, 2000 decreased 10.2%
compared to the three months ended September 30, 1999. Trailer Bridge had an
average of 233 tractor units operating on the mainland during the three months
ended September 30, 2000, generating 8,782 miles per
7
<PAGE>
month, of which 69.7% were loaded miles. The Company's Puerto Rico deployed
vessel capacity utilization during the three months ended September 30, 2000,
was 80.7% to Puerto Rico and 26.1% from Puerto Rico. These capacity utilization
figures are based upon vessels deployed in service and exclude the effect of two
Triplestack Box Carriers(TM) that were laid-up for much of the quarter. In late
August, a short-term charter of one of these vessels to a third party commenced
and in early October the other vessel was deployed in service to augment the
Northeast Puerto Rico service. The total costs associated with the two laid-up
vessels during the three months ended September 30, 2000, net of charter income,
were $262,849.
Beginning in early October, Trailer Bridge proceeded with its
previously announced plan to expand to a weekly direct service between Port
Newark and San Juan from the previous bi-weekly service. To date in the fourth
quarter, the capacity utilization that Trailer Bridge has experienced each week
on the weekly service exceeds the capacity utilization experienced on the
previous bi-weekly service.
Nine Months Ended September 30, 2000 and 1999
---------------------------------------------
Total revenue for the nine months ended September 30, 2000 was
$68,249,958, an increase of $2,187,138, or 3.3%, compared to total revenue of
$66,062,820 reported for the nine months ended September 30, 1999. The increase
in revenue was due to higher volume to and from Puerto Rico. The net loss
improved by $3,304,179 to $733,460, or $.08 per share, for the nine months ended
September 30, 2000, compared to a net loss of $4,037,639, or $.41 per share for
the nine months ended September 30, 1999. Operating income for the nine months
ended September 30, 2000, improved $4,923,863 to $740,020 compared to an
operating loss of $4,138,844 in the nine months ended September 30, 1999. 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. Net income for the nine months ended September
30, 2000 included a benefit of $127,100 from the cumulative effect of a change
in accounting principle related to periodic vessel dry-docking.
Total southbound Puerto Rico volume for the nine months ended September
30, 2000 increased 14.2% and total northbound volume increased 12.9% compared to
the nine months ended September 30, 1999. During portions of the period, two
Triplestack Box Carriers(R) were laid-up. Total net expenses related to
these two vessels, consisting primarily of depreciation and interest, were
$752,783 during the nine months ended September 30, 2000 reduced by $331,096 of
charter revenue from third parties. Presently one of these vessels is in
scheduled service between Newark, New Jersey and San Juan, Puerto Rico and the
other is being chartered on a short term charter.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, cash amounted to $3.6 million and stockholders'
equity was $28.5 million. Net cash used in operating activities for the nine
months ended September 30, 2000 improved to $180,191 from $1,513,474, for the
nine month period ended September 30, 1999. For the nine months ending September
30, 2000 net cash provided by investing activities was $847,109 and net cash
provided by financing activities was $482,738 consisting of $5.0 million in
borrowing from an affiliate less $4.5 million in principal repayments. As a
result of the above, cash increased in the period ending September 30, 2000 by
$1,149,656 to $3,595,406.
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 $12.8 million at September 30, 2000. Upon the expiration date the
$13.6 million outstanding balance will be due. The revolving credit facility is
secured at September 30,
8
<PAGE>
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.
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 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
9
<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: November 14, 2000 By: /s/ John D. McCown
--------------------------------------
John D. McCown
Chairman and Chief
Executive Officer
Date: November 14, 2000 By: /s/ Mark A. Tanner
--------------------------------------
Mark A. Tanner
Vice President of Administration
and Chief Financial Officer
10
