UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1999
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------- --------------
Commission file number 333-52599
The Holt Group, Inc.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 23-2932358
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
Incorporation or organization Identification No.)
101 South King Street, Gloucester City New Jersey 08030
------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 742-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
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]
The total number of shares of common stock, par value $.01 per share,
outstanding as of August 9, 1999 was 100. The Registrant has no other class of
common stock outstanding.
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998 1-2
Unaudited Consolidated Statements of Income
for the Six months ended June 30, 1999 and June 30, 1998 3
Unaudited Consolidated Statements of Comprehensive Income
for the Six months ended June 30, 1999 and June 30, 1998 4
Consolidated Statements of Stockholder's Equity for the Year ended
December 31, 1998 and Six months ended June 30, 1999 (Unaudited) 5
Unaudited Consolidated Statements of Cash Flows for the Six months
ended June 30, 1999 and June 30, 1998 6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-19
Part II OTHER INFORMATION 20-21
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- ------------
(Dollars in thousands,
except share data)
<S> <C> <C>
Assets
Current assets
Cash $ 11,595 $ 4,821
Marketable securities 30,790 26,143
Receivables
Trade 51,753 57,077
Tenants 39,604 40,296
Other 9,596 13,669
Fuel and supplies 2,627 2,338
Prepaid expenses 16,077 3,428
Other current assets 1,767 3,540
-------- --------
Total current assets 163,809 151,312
-------- --------
Property, plant and equipment, net of accumulated
depreciation and amortization 191,148 195,265
-------- --------
Other assets
Receivables, other 32,942 29,032
Investments 2,925 2,925
Unamortized financing costs 3,303 3,616
Capitalized overhaul costs, net of amortization 16,785 19,333
Other 9,459 9,344
Receivables from non-consolidated affiliates 24,022 25,403
-------- --------
Total other assets 89,436 89,653
-------- --------
$444,393 $436,230
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- ------------
(Dollars in thousands,
except share data)
<S> <C> <C>
Liabilities and Stockholder's Equity
Current liabilities:
Revolving credit facility $ 42,500 $ 37,000
Notes payable, bank 26,040 9,036
Current maturities of long-term debt
Note payable, bank 1,542 1,779
Other 3,280 3,211
Accounts payable 46,569 55,676
Payroll taxes payable 4,571 4,433
Accrued expenses 25,035 30,040
Payments in excess of billings 4,060 3,353
-------- --------
Total current liabilities 153,597 144,528
-------- --------
Long-term debt, net of current maturities
Notes payable, banks 1,142 1,164
Notes payable, other 204,738 205,624
-------- --------
Total long-term debt, net of current maturities 205,880 206,788
-------- --------
Payables to non-consolidated affiliates 9,756 13,979
-------- --------
Other long-term liabilities 12,065 11,108
-------- --------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $.01, authorized 1,000
shares, issued and outstanding 100 shares -- --
Additional paid-in capital 1,131 1,131
Retained earnings 68,364 60,685
Accumulated other comprehensive (loss) (6,400) (1,989)
-------- --------
Total stockholder's equity 63,095 59,827
-------- --------
$444,393 $436,230
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ---------------------------
1999 1998 1999 1998
-------- -------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Revenue
Operating $ 76,534 $ 82,513 $ 155,332 $ 166,252
Rental income 7,488 7,280 18,557 16,116
Other 3,776 3,067 9,232 6,257
Revenue from non-consolidated affiliates 4 -- 9 --
-------- -------- --------- ---------
Total revenues 87,802 92,860 183,130 188,625
-------- -------- --------- ---------
Operating expenses
Terminal 20,802 27,484 43,424 55,133
General and administrative 15,762 14,583 30,961 29,013
Equipment maintenance 12,625 12,404 24,494 24,554
Insurance and safety 1,798 1,712 3,375 2,550
Vessel 9,261 12,850 18,920 23,723
Transportation 14,730 14,636 29,312 29,434
Depreciation and amortization 5,178 3,639 10,136 8,163
Operating taxes and licenses 129 245 234 275
Losses on investment in joint venture -- 2,910 -- 2,910
Charges from non-consolidated affiliates 170 206 279 416
-------- -------- --------- ---------
Total operating expenses 80,455 90,669 161,135 176,171
-------- -------- --------- ---------
Income from operations 7,347 2,191 21,995 12,454
Interest expense, net 6,421 4,560 11,744 9,338
Other income
Gain on sale of property and equipment 3 53 3 53
Dividends received 3,062 5,799 3,062 5,799
Realized foreign exchange loss (9) (77) (21) (74)
-------- -------- --------- ---------
Total other income 3,056 5,775 3,044 5,778
-------- -------- --------- ---------
Net income $ 3,982 $ 3,406 $ 13,295 $ 8,894
======== ======== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998
------ ------- ------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net income $ 3,982 $ 3,406 $ 13,295 $ 8,894
Other comprehensive income (loss):
Foreign exchange translation adjustments 67 43 245 304
Changes in market value on marketable securities (487) (2,729) (4,656) (5,460)
------- ------- -------- -------
Total other comprehensive (loss) (420) (2,686) (4,411) (5,156)
------- ------- -------- -------
Total other comprehensive income $ 3,562 $ 720 $ 8,884 $ 3,738
======= ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Common Accumulated
Stock Common Additional Other Total
Number of Stock Paid-in Retained Comprehensive Stockholder's
Shares Amount Capital Earnings Income Equity
--------- ------ ---------- -------- ------------- -------------
(Dollars in thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 100 $ -- $ 631 $ 55,147 $ 16,951 $ 72,729
Net income 10,559 10,559
Gain on sale of equipment to company
owned by relatives of Holt's
stockholder 500 500
Foreign exchange adjustments 275 275
Change in market value of marketable
securities (19,215) (19,215)
Dividends paid (5,021) (5,021)
--- -------- -------- -------- -------- --------
Balance, December 31, 1998 100 $ -- $ 1,131 $ 60,685 $ (1,989) $ 59,827
Net income from January 1, 1999 to
June 30, 1999 (unaudited) 13,295
Foreign exchange adjustments
(unaudited) 245 245
Change in market value of marketable
securities (unaudited) (4,656) (4,656)
Dividends paid (5,616) (5,616)
--- -------- -------- -------- -------- --------
Balance, June 30, 1999 (unaudited) 100 $ -- $ 1,131 $ 68,364 $ (6,400) $ 63,095
=== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
1999 1998
--------- ---------
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $ 13,295 $ 8,894
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 10,136 8,163
Gain on sale of property & equipment (3) (53)
Allowance for doubtful accounts 2,922 357
Change in assets and liabilities
(Increase) decrease in assets
Trade receivables 2,402 (11,932)
Tenants receivables 692 11,636
Fuel and supplies (289) 322
Prepaid expenses (12,648) (1,004)
Other current assets 1,773 (1,108)
Other assets (161) (326)
Increase (decrease) in liabilities
Accounts payable (9,106) 2,976
Payroll taxes payable 138 14
Accrued expenses (5,005) (2,365)
Payments in excess of billings 708 (322)
Other noncurrent liabilities 956 (86)
--------- ---------
Net cash provided by operating activities 5,810 15,166
--------- ---------
Cash flow from investing activities
Proceeds from sale of property & equipment 3 4,554
Purchases of marketable securities (9,303) (5,202)
Purchases and construction of property, plant and equipment (2,867) (7,628)
Capitalized overhaul costs (245) (2,607)
Decrease (increase) in other receivables 163 (16,029)
Decrease (increase) in receivables from non-consolidated affiliates 1,381 (903)
(Decrease) increase in payables to non-consolidated affiliates (4,224) 2,137
--------- ---------
Net cash (used in) investing activities (15,092) (25,678)
--------- ---------
Cash flow from financing activities
Contribution of capital 500
Financing cost incurred (4,501)
Net proceeds (payments on) term notes 22,503 (2,000)
Proceeds of long-term debt 781 142,527
Payments on long-term debt (1,612) (127,450)
Dividends paid (5,616) (4,355)
--------- ---------
Net cash provided by financing activities 16,056 4,721
--------- ---------
Net increase (decrease) in cash 6,774 (5,791)
Cash, at beginning of year 4,821 8,005
--------- ---------
Cash, at end of period $ 11,595 $ 2,214
========= =========
Supplemental disclosures of cash flow information
Cash paid during the year for interest, net of amounts capitalized $ 12,809 $ 5,934
========= =========
Non-cash investing and financing activities
Change in market value of marketable securities $ (4,656) $ (5,460)
Unrealized foreign exchange gain 245 304
Gain on sale of property and equipment to company
owned by relatives of Holt's stockholder -- 500
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
(1) Business And Basis Of Presentation
The Holt Group, Inc. and its subsidiaries (collectively referred to as "Holt")
are engaged in stevedoring, trucking, warehousing and distribution services;
rental of real estate and equipment in the Delaware Valley area, and container-
shipping and chartering of vessels.
The consolidated financial statements include Holt's wholly-owned subsidiaries
Holt Hauling and Warehousing System, Inc. (HHW), Holt Cargo Systems, Inc. (HCS),
The Riverfront Development Corporation (RFD), Murphy Marine Services, Inc. (MMS)
and subsidiary (Wilmington Stevedores, Inc.), San Juan International Terminals,
Inc. (SAN), SJIT, Inc. (SJIT) and NPR Holding Corporation (NPR).
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. However, in the opinion of the
management of Holt, all adjustments (comprising only normal recurring accruals)
necessary for a fair presentation of operating results have been included in the
statements.
Operating results for the six month period ended June 30, 1999 are not
necessarily indicative of financial results that may be expected for the full
year ended December 31, 1999. These unaudited consolidated financial statements
should be read in conjunction with the consolidated historical financial
statements and notes thereto included in Holt's Prospectus filed with the SEC on
June 18, 1999.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS
No. 133). This statement established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of recognized asset or liability or an unrecognized firm commitment, (b) a
hedge of the exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security, or a
foreign currency denominated forecasted transaction. SFAS No. 133 amends SFAS
No. 52 "Foreign Currency Translation" to permit special accounting for a hedge
of a foreign currency forecasted transaction with a derivative. It supersedes
SFAS No. 80 "Accounting for Futures Contracts, Risk and Financial Instruments
with Concentrations of Credit Risk" and No. 119 "Disclosure and Derivative
Financial Instruments and Fair Value of Financial Instruments." Such statement
also amends SFAS No. 107 "Disclosures about Fair Value of Financial Instruments"
to include in SFAS No. 107 the disclosure provisions about concentrations of
credit risk from SFAS No. 105. SFAS No. 133 also nullifies or modifies the
consensus reached on a number of issues addressed by the Emerging Issues Task
Force. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Initial application of this statement should be
as of the beginning of an entity's fiscal quarter following June 15, 1999. On
that date, hedging relationships must be designated anew and documented pursuant
to the provisions of this statement. Earlier application of all of the
provisions of this statement is encouraged, but it is permitted only as of the
beginning of any fiscal quarter that begins after issuance of this Statement.
This statement should not be applied retroactively to financial statements of
prior periods. Holt does not expect the impact of SFAS No. 133 to have a
material effect on its Financial Reporting.
Reclassifications
Certain amounts in the June 30, 1998 Financial Statements have been reclassified
to conform to the June 30, 1999 presentation.
7
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except share data)
(2) MARKETABLE SECURITIES AVAILABLE FOR SALE
In April 1997, RFD purchased 1,096 shares (subsequently converted into 2,192
shares as a result of a 2-for-1 stock split) of common stock, representing 16.9%
of the outstanding shares of Atlantic Container Line AB (ACL), a publicly traded
foreign corporation, at a cost of $23.5 million for cash and a $8.5 million note
payable to a foreign bank. The note is due in December 1999 and bears interest
at the London Inter-Bank Offered Rate (LIBOR) plus 2.25%.
During June 1998, RFD purchased options to buy approximately 1.5 million shares
(11.1%) of ACL stock at a cost of $5.2 million. These options were scheduled to
expire in March of 1999. Prior to the expiration dates of these options, RFD
entered into new option agreements for the 1.5 million shares and paid
approximately $9.3 million for the new options, which are now scheduled to
expire on December 1, 1999 and have an exercise price of 62.50 NOK per share
(approximately $8.10 per share as of the filing date of this Form 10-Q).
Marketable securities available-for-sale and other cost investments were as
follows:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
-------------------------------------------- ------------------------------------
Unrealized Unrealized
Holding Holding
Cost Gain (Loss) Total Cost Gain (Loss) Total
------- ----------- ------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Stock - ACL $23,509 $ 524 $24,033 $23,509 $2,069 $25,578
Options - ACL 14,505 (7,761) 6,744 5,201 (4,649) 552
Other 13 13 13 -- 13
------- ------- ------- ------- ------- -------
Total $38,027 $(7,237) $30,790 $28,723 $(2,580) $26,143
======= ======= ======= ======= ======= =======
</TABLE>
Dividends declared for the six months ended June 30, 1999 and the year ended
December 31, 1998 were $3,062 and $5,799, respectively, and are included in
Other Income in the accompanying Consolidated Statements of Income.
It is Holt's intent to dividend to Holt's sole stockholder the ACL shares and
options it owns subject to all indebtedness related to the shares and options
and also subject to receiving all necessary governmental and third party
consents for ultimate distribution. As of June 30, 1999, such indebtedness
amounted to $30.9 million, of which $8.8 million was payable to a bank and $22.1
million was payable to other subsidiaries of Holt. In conjunction with the
distribution, Holt's sole shareholder shall assume such indebtedness and agree
to pay the portion payable to Holt ($22.1 million) prior to December 31, 1999.
In the event the dividend is not declared, Holt intends to otherwise liquidate
the ACL stock and options.
8
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except share data)
(3) THE REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Revolving Credit Facility $ 42,500 $ 37,000
Notes payable, banks 28,723 11,979
Senior notes 140,000 140,000
Bonds payable
1997 Fixed Rate Series K 27,250 27,250
1992 Fixed Rate Series G 10,000 10,000
1992 Fixed Rate Series H 9,000 9,000
1992 Fixed Rate Series J 5,000 5,000
Construction mortgage payable 4,846 4,896
Equipment financing 11,923 12,689
-------- --------
279,242 257,814
Less current maturities:
Revolving Credit Facility 42,500 37,000
Notes payable, banks 27,582 10,815
Equipment and construction notes payable 3,280 3,211
-------- --------
$205,880 $206,788
======== ========
</TABLE>
Revolving Credit Facility and Notes Payable, Banks
At June 30, 1999 and December 31, 1998, revolving credit facility and notes
payable, banks, consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Revolving credit facility due in November 1999 with interest
payable monthly at 8.25%, secured by the vessels. $42,500 $37,000
Term loan due the earlier of the finalization of the
insurance claim regarding Hurricane Georges or December 31,
1999 with interest payable monthly at 8.25%,
secured by accounts receivable. 17,250 --
Term loan due December 1999 with interest payable quarterly at
LIBOR plus 2.25%, secured by investments in
marketable securities. 8,790 9,036
Payable in monthly installments of $19 plus interest at 1.25% over
prime. The final payment of $1,186 is due in December 1999. 1,303 1,419
Payable in monthly installments of $28 plus interest at prime. 687 750
Payable in monthly installments of $16 plus interest at prime. 672 750
Payable in monthly installments of $.5 including interest at 11%. 21 24
------- -------
$71,223 $48,979
======= =======
</TABLE>
9
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except share data)
Senior Notes
Senior Notes of $140,000 are due in January 2006. The notes bear interest at
9.75% with interest payable semiannually.
Bonds Payable
1997 Fixed Rate Series K
The bonds mature March 1, 2027 and bear interest at an effective rate of 7.8%,
payable semi-annually. These bonds redeemed and replaced the 1986 fixed rate
series D and E bonds.
1992 Fixed Rate Series G
The bonds mature at various dates through December 15, 2015, and bear interest
at 8.4%, payable semi-annually. The bond indenture requires annual principal
payments into a sinking fund beginning December 15, 2006 through 2015.
1992 Fixed Rate Series H
The bonds mature at various dates through December 15, 2017, and bear interest
at 8.6%, payable semi-annually. The bond indenture requires annual principal
payments into a sinking fund beginning December 15, 2008 through 2017.
1992 Fixed Rate Series J
The bonds mature at various dates through November 1, 2023, and bear interest at
8.5%, payable semi-annually. The bond indenture requires annual principal
payments into a sinking fund beginning November 1, 2004 through 2023.
Construction Mortgage Payable
The mortgage is payable in monthly installments of $33 including interest at 6%
beginning April 1997; final payment of $2,952 including interest, is due in
March, 2012.
Equipment Financing
The equipment obligations are payable in monthly installments aggregating $217
plus interest. Interest rates at June 30, 1999 and December 31, 1998 ranged from
7.55% to 11.55%.
10
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except share data)
(4) NON-GUARANTOR SUBSIDIARY
Holt's wholly owned subsidiary, RFD, is not a guarantor on the Senior Notes (See
Note 3). The guarantor subsidiaries are wholly owned and provide full, complete,
unconditional, joint and several guarantees on the notes. Additionally, Holt's
parent, HGI has no operations or assets other than its investment in
subsidiaries. Accordingly, Holt has not presented separate financial statements
and other disclosures concerning the subsidiary guarantors as management has
determined that such information is not material to investors.
As of June 30, 1999 and June 30, 1998 and for each of the six month periods then
ended, summarized financial information is as follows:
<TABLE>
<CAPTION>
June 30, 1999
-------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Eliminations Consolidated
-------- ---------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets $ 754 $132,279 $30,776 $ -- $163,809
Non-current assets 293,116 293,860 3,925 (310,317) 280,584
Current liabilities 67,449 77,330 8,818 -- 153,597
Non-current liabilities 142,074 173,107 22,138 (109,618) 227,701
Six Months Ended June 30, 1999
-------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Eliminations Consolidated
-------- ---------- ------- ------------ ------------
Revenue $ 24,424 $195,089 $ -- $ (36,383) $183,130
Operating income 22,146 24,305 (32) (24,424) 21,995
Net income 13,294 21,846 2,579 (24,424) 13,295
June 30, 1998
-------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Eliminations Consolidated
-------- ---------- ------- ------------ ------------
Current assets $ 5,395 $ 93,471 $40,615 $ -- $139,481
Non-current assets 225,027 269,322 3,925 (240,368) 257,906
Current liabilities 12,844 65,922 8,949 - 87,715
Non-current liabilities 140,000 155,970 15,478 (74,388) 237,060
Six Months Ended June 30, 1998
-------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Eliminations Consolidated
-------- ---------- ------- ------------ ------------
Revenue $ 18,067 $199,320 $ -- $ (29,768) $187,619
Operating income 16,083 14,475 (37) (18,067) 12,454
Net income 9,394 12,190 5,377 (18,067) 8,894
</TABLE>
RFD's current assets consist primarily of marketable securities (See Note 2).
RFD's liabilities consist of bank debt and advances from two of the subsidiary
guarantors. RFD's net income is a result of dividends received, net of expenses.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the Company's
Consolidated Financial Statements and the accompanying notes thereto included in
Item 1 of this Quarterly Report, and the financial statements and notes thereto
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Prospectus filed on June 18, 1999.
Effective January 1, 1998, all of Holt's wholly owned subsidaries file a
consolidated federal return and, for certain state income taxes, subchapter S
corporation tax returns as provided by the International Revenue Code.
Income of subchapter S corporations is reportable by the stockholders on their
individual tax returns. Accordingly, no provision for federal or state income
taxes has been reflected in the accompanying financial statements for the
subchapter S corporations, which earned substantially all of the consolidated
income for each year.
FORWARD-LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q the words or phrases "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "projected," or similar expressions are intended to identify
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties, including but not limited to general economic and business
conditions, dependence on debt financing, competition, changes in foreign
political, social and economic conditions, customer preferences and various
other matters, many of which are beyond the Company's control. Such factors,
which are discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations, could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from any opinion or statements expressed herein with respect
to future periods. As a result, the Company wishes to caution readers not to
place undue reliance on any such forward looking statements, which speak only as
of the date made.
12
<PAGE>
RESULTS OF OPERATIONS OF THE COMPANY
The following table sets forth, for the periods indicated, the Company's actual
operating results in thousands of dollars and as a percentage of total revenues:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------------- -----------------------------------------
1999 1998 1999 1998
------------------ ------------------ ------------------ ------------------
$ % $ % $ % $ %
------- ----- ------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $76,534 87.2 $82,513 88.9 $155,332 84.9 $166,252 88.1
Rental income 7,488 8.5 7,280 7.7 18,557 10.1 16,116 8.6
Other revenues 3,776 4.3 3,067 3.3 9,232 5.0 6,257 3.3
Revenues from non-consolidated
affiliates 4 -- -- -- 9 -- -- --
------- ----- ------- ----- -------- ----- -------- -----
Total revenues 87,802 100.0 92,860 100.0 183,130 100.0 188,625 100.0
------- ----- ------- ----- -------- ----- -------- -----
Operating expenses
Terminal 20,802 23.7 27,484 29.9 43,424 23.7 55,133 29.4
General and administrative 15,762 18.0 14,583 15.7 30,961 16.9 29,013 15.4
Equipment maintenance 12,625 14.4 12,404 13.5 24,494 13.4 24,554 13.1
Insurance and safety 1,798 2.0 1,712 1.9 3,375 1.8 2,550 1.4
Vessel 9,261 10.5 12,850 14.0 18,920 10.3 23,723 12.6
Transportation 14,730 16.8 14,636 15.9 29,312 16.0 29,434 15.7
Depreciation and amortization 5,178 5.9 3,639 4.0 10,136 5.5 8,163 4.4
Allowances for losses on
advances to joint venture -- -- 2,910 3.2 -- -- 2,910 1.6
Other operating expenses 299 0.3 451 0.5 513 0.3 691 0.4
------- ----- ------- ----- -------- ----- -------- -----
Total operating expenses 80,455 91.6 90,669 97.6 161,135 88.0 176,171 93.4
------- ----- ------- ----- -------- ----- -------- -----
Operating income $ 7,347 8.4 $ 2,191 2.4 $ 21,995 12.0 $ 12,454 6.6
------- ----- ------- ----- -------- ----- -------- -----
Net income $ 3,982 4.5 $ 3,406 3.7 $ 13,295 7.3 $ 8,894 4.7
======= ===== ======= ===== ======== ===== ======== =====
Calculation of EBITDA:
Operating income 7,347 2,191 21,995 12,454
Depreciation and amortization 5,178 3,639 10,136 8,163
Allowances for losses on
advances to joint venture -- 2,910 -- 2,910
------- ----- ------- ----- -------- ----- -------- -----
EBITDA 12,525 14.3 8,740 9.5 32,131 17.5 23,527 12.5
</TABLE>
13
<PAGE>
RESULTS OF OPERATIONS
Revenues
Total revenues decreased to $183.1 million, for the six months ended June 30,
1999 from $188.6 million for the six months ended June 30, 1998, a decrease of
$5.5 million, or 2.9%.
Total revenues decreased to $87.8 million, for the three months ending June 30,
1999 from $92.9 million for the three months ending June 30, 1998, a decrease of
$5.1 million, or 5.4%.
This decrease was attributable primarily to the decrease in ocean revenue
to $125.9 million for the six months ended June 30, 1999 compared with $131.5
million for the six months ended June 30, 1998, a decrease of $5.6 million, or
4.3%. Total loads from ocean freight operations in 1999 were 60,965 compared to
62,212 loads for 1998, a decrease of 1,247 loads, or 2.0%. The decreases in
loads consisted of an increase in southbound loads of 1,112 which was offset
with a decrease in northbound loads of 1,858 as well as a decrease in
interisland loads of 501 for a net decrease of 1,247 loads. The decrease in
northbound and interisland loads are due to the time it is taking for Puerto
Rican exporters to recover from Hurricane Georges. Revenues were further
adversely affected by lower revenue per unit due to rate pressure in the
U.S.-Puerto Rico trade routes. This competitive pressure is expected to continue
to impact NPR's revenues for the foreseeable future.
Trucking revenues in 1999 increased to $2.9 million, from $2.0 million in 1998,
an increase of $0.9 million, or 45.0%. Warehousing revenues decreased to $6.6
million in 1999 compared to $8.3 million in 1998, a decrease of $1.7 million, or
20.5% as a result of reduced freight originating on NPR vessels. Stevedoring
revenue decreased to $18.8 million in 1999 from $24.4 million in 1998, a
decrease of $5.6 million, or 23.0% as a result of reduced vessel calls and
container tonnage at Packer Avenue Marine Terminal (PAMT).
Rental income increased to $18.6 million for the six months ended June 30, 1999
from $16.1 million for the six months ended June 30, 1998, an increase of $2.5
million, or 15.5%. This $2.5 million increase was due to increased leasing
revenues from the Lessee-Operators at the Gloucester Facility associated with
increased tonnage of cargo handled. Rental income for the three months ended
June 30, 1999 increased to $7.5 million from $7.3 million for the three months
ended June 30, 1998 an increase of $0.2 million, or 2.7%.
Third party stevedoring revenues at the San Juan terminal increased by $3.0
million to $9.2 million for the six months ended June 30, 1999 compared with the
six months ended June 30, 1998 due to increased tonnage. Maintenance and repair
revenues increased $0.4 million for the six months ended June 30, 1999 compared
with the six months ended June 30, 1998.
Terminal Expenses
Terminal expenses decreased to $43.4 million for the six months ended June 30,
1999 from $55.1 million for the six months ended June 30, 1998, a decrease of
$11.7 million, or 21.2%.
Terminal expenses decreased to $20.8 million for the three months ended June 30,
1999 from $27.5 million for the three months ended June 30, 1998, a decrease of
$6.7 million, or 24.3%.
This decrease was primarily attributable to the lower stevedoring costs as a
result of changing ports of call from the Port of Elizabeth to the Packer Avenue
facility. The decrease in terminal expenses was further attributable to reduced
vessel calls and container tonnage at PAMT and the reduction in the number of
north bound loads handled by NPR.
General and Administrative Expenses
General and administrative expenses increased to $31.0 million for the six
months ended June 30, 1999 from $29.0 million for the six months ended June 30,
1998, an increase of $2.0 million, or 6.7%.
General and Administrative expenses increased to $15.8 million for the
three months ended June 30, 1999 from $14.6 million for the three months
ended June 30, 1998, an increase of $1.2 million, or 8.1%.
14
<PAGE>
For the six months ended June 30, 1999, general and administrative expenses
decreased by $3.2 million as a result of headcount reduction consisting of a
decrease in salaries, wages and benefits of $2.6 million and other related
expenses of $0.6 million. These decreases were offset by a one time charge for
severance payments of $0.9 million, an increase of $1.4 million in professional
fees associated with reorganization of certain administrative and accounting
activities and the registration of the Company's Senior Notes.
A further increase of $0.3 million was attributable to start-up costs associated
with the formation of two subsidiaries (SAN and SJIT) in San Juan, Puerto Rico
for the purpose of expanding the Company's third party stevedoring operations.
In addition, during the six months ending June 30, 1998, the provision for bad
debts was decreased by $2.5 million to reflect collection of certain accounts
receivable balances which had been previously provided for.
Equipment Maintenance Expense
Equipment maintenance expenses remained relatively flat for the six months ended
June 30, 1999 and 1998 as well as for the three months ended June 30, 1999 and
1998.
Insurance and Safety Expenses
Insurance and safety expenses increased to $3.4 million for the six months ended
June 30, 1999, from $2.6 million for the six months ended June 30, 1998, an
increase of $0.8 million, or 30.8%.
This increase was attributable to increased coverage for new equipment, which
was purchased to replace older equipment and increased costs for certain of the
insurance coverage carried by the Company.
Insurance and safety expenses were $1.8 million and $1.7 million for the three
months ended June 30, 1999 and June 30, 1998, respectively.
Vessel Expenses
Vessel expenses decreased to $18.9 million for the six months ended June 30,
1999 from $23.7 million for the six months ended June 30, 1998, a decrease of
$4.8 million, or 20.2%.
Vessel expenses decreased to $9.3 million for the three months ended June 30,
1999 from $12.9 million for the three months ended June 30, 1998, a decrease of
$3.6 million, or 27.9%.
These decreases were primarily attributable to the change from a 2-2 rotation
(Jacksonville twice a week and Philadelphia twice a week) to a 3-1 rotation
(Jacksonville three times a week and Philadelphia once a week) in the Company's
vessel operations as well as taking one vessel out of service during the slow
season. $3.6 million of these savings occurred in the three months ended June 30
1999.
Transportation Expenses
Transportation expenses decreased to $29.3 million for the six months ended June
30, 1999 from $29.4 million for the six months ended June 30, 1998, a decrease
of $0.1 million, or 0.3%
Transportation expenses remained unchanged at approximately $14.7 million for
the three months ended June 30, 1999 and June 30, 1998.
In order to remain competitive within the industry, NPR has absorbed a
significant amount of inter-modal expenses, which had historically been passed
through and paid by NPR's customers. However, a change in the vessel rotation
has helped to more than offset these expenses.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased to $10.1 million for the six
months ended June 30, 1999 from $8.2 million for the six months ended June 30,
1998, an increase of $1.9 million, or 24.2%.
Depreciation and amortization expenses increased to $5.2 million for the three
months ended June 30, 1999 from $3.6 million for the three months ended June 30,
1998, an increase of $1.6 million, or 42.3%.
These increases were primarily attributable to amortization of dry-docking
costs incurred in the latter part of 1998.
15
<PAGE>
Allowance for Losses on Joint Venture
No allowance for losses on joint venture was incurred for the six months ended
June 30, 1999 whereas $2.9 million of such expenses were incurred for the six
months ended June 30, 1998. This allowance had been established to provide for
losses arising out of advances made to fund TNX operations which were wound
down by the end of 1998.
Other Operating Expenses
Other operating expenses, which consist of operating taxes and charges from
Non-consolidated Affiliates, decreased slightly to $ 0.5 million for the six
months ended June 30, 1999 from $0.7 million for the six months ended June 30,
1998, a decrease of $0.2 million, or 28.6%.
Other operating expenses decreased to $0.3 million for the three months ended
June 30, 1999 from $0.5 million for the three months ended June 30, 1998, a
decrease of $0.2 million, or 40.0%.
Net Income
Net Income increased to $13.3 million for the six months ended June 30, 1999
from $8.9 million for the six months ended June 30, 1998, an increase of $4.4
million, or 49.4%.
Net income increased to $4.0 million for the three months ended June 30, 1999
from $3.4 million for the three months ended June 30, 1998, an increase of $0.6
million, or 16.9%.
Despite a decrease in total revenue for the six months ended June 30, 1999
compared to the six months ended June 30, 1998, net income increased as a result
of the cost reductions noted above.
EBITDA
EBITDA increased to $32.1 million for the six months ended June 30, 1999 from
$23.5 million for the six months ended June 30, 1998, an increase of $8.6
million, or 36.6%.
EBITDA increased to $12.5 million for the three months ended June 30, 1999 from
$8.7 million for the three months ended June 30, 1998, an increase of $3.8
million, or 43.7%.
The increase in EBITDA was attributable to the changes in revenues and expenses
as discussed above.
SEASONALITY
Holt handles a variety of cargoes throughout the year ranging from refrigerated
meat and produce to steel and wood products. Holt believes that this diversified
mix of cargoes has reduced the effects of seasonality associated with specific
types of cargoes.
Although NPR historically realized a seasonal impact on its revenues during
December (due to Christmas) and May (due to Mother's Day), this seasonal impact
has diminished significantly over the past two years. The Company believes that
this decrease is attributable partially to greater use of Time Volume Agreements
(TVAs) and fixed rate contracts in NPR's trade, which reduces the fluctuation in
cargo volumes throughout the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs relate primarily to payment of principal and
interest on outstanding indebtedness, including interest payments on the Senior
Notes, the funding of capital expenditures and the funding of distributions to
the Company's sole shareholder primarily to pay income taxes.
For the six months ended June 30, 1999, net cash from operating, investing and
financing activities was sufficient for the Company to satisfy all debt service
requirements and to make the necessary capital acquisitions and improvements.
Net cash flow provided by operating activities was $5.8 million. In addition to
net income of $13.2 million and non cash charges of $13.1 million, cash flows
were also provided by a reduction in trade and tenant accounts receivable of
$3.1 million. Funds used in operating activities included $12.7 million which
16
<PAGE>
primarily represents the deferral of additional expenses incurred to operate as
a result of Hurricane Georges. These expenditures are included in the claim
submitted by the Company to its insurance carrier. Additional Funds used in
operating activities included a $14.1 million reduction in accounts payable and
accrued expenses.
The Company also distributed to its sole stockholder a dividend of $5.6 million
during the six months ended June 30, 1999 which was used by the stockholder to
repay a $5.0 million note receivable to the Company.
Net cash used in investing activities for the six months ended June 30, 1999 was
$15.1 million of which $9.3 million was attributable to the purchase of options
to acquire 1.5 million shares of Atlantic Container Line AB stock, and $2.9
million was used to fund capital expenditures.
Net cash provided by financing activities for the six months ended June 30, 1999
was $16.1 million. The Company borrowed $17.3 million to fund expenses incurred
as a result of Hurricane Georges. The Company also increased its borrowings
under its revolving credit facility by $5.5 million and repaid $1.6 million of
other bank and equipment notes.
An additional source of liquidity for the Company is its Revolving Credit
Facility. Financing available under the Revolving Credit Facility consists of a
$50 million revolver, under which approximately $6.4 million in letters of
credit and approximately $42.5 million of borrowings were outstanding at June
30, 1999. On February 25, 1999 the Revolving Credit Facility was amended to
provide for an additional $17.3 million in the form of a term loan as an advance
against insurance proceeds expected to be collected by the Company for damages
caused by Hurricane Georges.
As of June 30, 1999, the Company had outstanding $279.2 million of consolidated
indebtedness, consisting of (i) $140.0 million principal amount of the Senior
Notes and (ii) $139.2 million of senior secured indebtedness.
The Company's mandatory debt service requirements for maturities of the
Revolving Credit Facility and long-term debt for the years ending June 30, 2000,
2001 and 2002 are $73.2 million, $3.3 million and $2.8 million, respectively.
The Company anticipates exercising its option to extend the maturity date of the
Revolving Credit Facility (having an outstanding balance of $42.5 million at
June 30, 1999) to November 2000.
As substantially all of the Company's operating income is generated by its
subsidiaries, the Company is dependent on dividends and other distributions from
its subsidiaries to generate the funds necessary to meet its obligations. The
ability of the subsidiaries to pay dividends to the Company is subject to, among
other things, the terms of the Revolving Credit Facility and Other Indebtedness
and Financings to which they are subject. Certain of the Other Indebtedness and
Financings restrict distributions from the Issuer's subsidiaries to the Issuer
to a percentage of cumulative net income, subject to certain adjustments.
The Company's aggregate capital expenditures for the six months ended June 30,
1999 and for the year ended December 31, 1998 and were $2.9 million and $19.1
million, respectively. The Company's capital spending in each period related
principally to the construction of certain improvements and purchase of material
handling equipment at the Gloucester Facility and the Packer Avenue Facility as
well as the acquisition of rolling stock used in its vessel operations.
RECENT DEVELOPMENTS
Hurricane Georges. The Company's operations in San Juan, Puerto Rico have been
affected by Hurricane Georges which struck the island during September 1998.
Although certain of its buildings and cranes located at Puerto Nuevo suffered
damages, NPR was able to continue to conduct business since two of the high
speed cranes used by the Company were not damaged. Additionally, NPR's fleet of
vessels did not incur any damage. The Company has submitted a claim to its
property insurance carrier for recovery of the replacement cost of the equipment
and buildings which were damaged, business interruption and extra expense. The
net book value of the damaged equipment and buildings are carried on the
Company's books at a de minimis value since these assets have been fully
depreciated.
17
<PAGE>
The Company has submitted a claim to its insurance carrier for $42.5 million and
believes that substantially all of the damages will be covered by its
insurance policy. The Company has received $8 million as an advance against its
insurance claim which has not yet been finalized.
IMPACT OF YEAR 2000 ON THE COMPANY'S SYSTEMS
Many computer systems were not designed to handle dates beyond the year 1999,
and, therefore, computer hardware and software will need to be modified prior to
the year 2000 in order to remain functional. The Company is in the process of
determining whether its computer systems are Year 2000 compliant and is
replacing or upgrading those computer systems that are not.
The Company has two major data centers, NPR in Edison, New Jersey and Holt in
Gloucester City, New Jersey. NPR has an IBM mainframe, two local area networks
and 13 remote site locations. Holt has three IBM AS/400s, one local area
network, 10 remote site locations and three RF site locations.
The Company's systems software is principally supplied by IBM. The operating
systems for the IBM mainframe and the IBM AS/400s are already Year 2000
compliant. Other system software used by the Company is supplied by Computer
Associates, Microsoft, and Novell. All of these software systems are represented
to be Year 2000 compliant by these software vendors. A detailed plan and impact
analysis was conducted by the Company to determine the extent of Year 2000
implications on the Company's mainframe and AS/400 computer systems with respect
to business applications developed and maintained by the Company. The Company is
utilizing existing staff and outside resources to fix and test all such business
applications. Business software supplied by third parties used by the Company is
represented to be Year 2000 compliant by the vendors of the software.
The Company's Year 2000 readiness plan includes the scanning, testing and
modification or upgrade (where necessary) of approximately 20,000 programs and
files used throughout the Company's operations. The Company has purchased
additional computers and conversion tools to be used in connection with the
testing and upgrading of existing systems and has hired additional programmers
to assist with the Year 2000 project. The Company expects to complete all
required upgrades by September 1, 1999. The estimated cost of the Company's Year
2000 readiness project is approximately $1.2 million of which approximately $1.1
million has been incurred through June 30, 1999.
In the event the Company does not achieve Year 2000 compliance by January 1,
2000, the resulting misrepresentation of date calculation in the Company's
computer systems could result in interruption in the Company's business, loss of
customers, inability to properly process or account for payments from customers
or payments to vendors and personnel, and claims for damages arising out of the
foregoing, any or all of which could have a material adverse effect on the
Company's financial condition and results of operations. The Company considers
this scenario to be unlikely as its Year 2000 compliance methodology includes
testing of the Company developed software and the vendor supplied software in a
Year 2000 environment and is proceeding on a schedule which would result in
completion of all required upgrades by September 1, 1999.
While the Company has contacted its key business partners and inquired as to the
status of their Year 2000 compliance, the Company has not received responses
indicating an expectation of achieving Year 2000 compliance from all of them.
The Company has no control over the systems and services used by third parties
with which it interfaces, and accordingly, there can be no assurance that all
key business partners will successfully resolve all of their Year 2000
compliance issues. Although the Company cannot predict with accuracy the actual
adverse consequences if key business partners do not achieve Year 2000
compliance, it is possible that such non-compliance could result in an
interruption in the Company's business which could have a material adverse
effect on the Company's financial condition and results of operations.
Contingency plans are being developed to ensure critical operations continue
uninterrupted in the event the Company or key business partners fail to resolve
their respective Year 2000 issues in a timely manner. Such plans will be
developed by the end of the third quarter of 1999 and will be in place prior to
the end of the year. The Company will identify and prioritize the potential
risks and will coordinate this plan with all its departments. The contingency
plan will include the close monitoring of service performance in Year 2000 and,
if needed, the replacement of automated information transference with manual
documents and the development of conversion systems of key interfaces should key
18
<PAGE>
business partners, with which the Company exchanges data, fail to comply on
time.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various federal and state environmental
laws and regulations, including but not limited to, the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), which creates
liability on the part of the owner or operator of a facility for the
investigation and remediation of hazardous substances, as well as creating the
authority and funding for unilateral response action by the United States
Environmental Protection Agency ("EPA"). In addition, portions of the Gloucester
Facility are part of a multi-property action pursuant to CERCLA to address
historic contamination via radioactive material. Holt has voluntarily entered
into a consent order with the EPA requiring the performance of certain
investigative measures and the proposal of certain remedial measures in
connection with the Gloucester Facility. The Company has conducted recent
environmental assessments at each of its facilities and believes it is in
material compliance with all environmental laws and does not anticipate material
expenditures for environmental compliance in the foreseeable future.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS No.
133). This statement established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of recognized asset or liability or an unrecognized firm commitment, (b) a
hedge of the exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security, or a
foreign currency denominated forecasted transaction.
SFAS No. 133 amends SFAS No. 52 "Foreign Currency Translation" to permit special
accounting for a hedge of a foreign currency forecasted transaction with a
derivative. It supersedes SFAS No. 80 "Accounting for Futures Contracts, Risk
and Financial Instruments with Concentrations of Credit Risk" and No. 119
"Disclosure and Derivative Financial Instruments and Fair Value of Financial
Instruments." Such statement also amends SFAS No. 107 "Disclosures about Fair
Value of Financial Instruments" to include in SFAS No. 107 the disclosure
provisions about concentrations of credit risk from SFAS No. 105, SFAS No. 133
also nullifies or modifies the consensus reached on a number of issues addressed
by the Emerging Issues Task Force.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of this statement should be as of the
beginning of an entity's fiscal quarter following June 15, 1999. On that date,
hedging relationships must be designated anew and documented pursuant to the
provisions of this statement. Earlier application of all of the provisions of
this statement is encouraged, but it is permitted only as of the beginning of
any fiscal quarter that begins after issuance of this Statement. This statement
should not be applied retroactively to financial statements of prior periods.
The Company does not expect the impact of SFAS No. 133 to have a material affect
on its Financial Reporting.
During April 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-5 "Reporting on the Costs of Start-up Activities
(SOP 98-5). SOP 98-5 requires costs of start-up activities and organization
costs to be expensed as incurred and is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company does not expect the
impact of SOP 98-5 to have a material effect on its financial reporting.
19
<PAGE>
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
NPR and the Company are also defendants in a lawsuit filed in May 1999, in the
United States District Court for the District of Puerto Rico (Sea-Land Service,
Inc., Piercrane, Inc. v. NPR (Navieras) Inc. et al., No. 99-1420). The
plaintiffs seek damages in an amount not less than fifty million dollars
($50,000,000) to compensate them for damages to their property and business
arising out of defendants' alleged negligence and NPR's breach of contract.
In their lawsuit, the plaintiffs claim that during Hurricane Georges, NPR's
cranes, one of which is leased from Sea-Land, broke from their securing
arrangements and struck plaintiffs' cranes because defendants failed to properly
prepare for the Hurricane. Furthermore, the plaintiffs claim that since NPR is
obligated, under its lease with Sea-Land for one of the cranes, to indemnify
Sea-Land for all losses incurred by Sea-Land in any way relating to possession
and use of the crane, NPR's failure to hold Sea-Land harmless for the losses it
suffered as a result of the leased crane striking plaintiffs' cranes,
constitutes a breach of contract under the lease. Although the Company believes
that any liability of NPR and the Company in connection with the lawsuit is
covered by insurance, there can be no assurance in that regard or that the
resolution of this lawsuit will not have a material adverse effect on the
Company's consolidated financial position or results of operations.
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other Information:
On August 2, 1999, the Company consummated the exchange of all of its
outstanding 9 3/4% Senior Notes due 2006 ("Old Notes") for its 9 3/4% Senior
Notes due 2006 registered under the Securities Act of 1933, as amended ("New
Notes"), pursuant to the terms of the Exchange Offer set forth in the Company's
Registration Statement. All of the Old Notes were tendered in exchange for the
New Notes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description
Number of Exhibit
- ------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30, 1999.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE HOLT GROUP, INC
(Registrant)
DATE: August 9, 1999 BY: /s/ Thomas J. Holt, Sr.
-------------------------------------
Thomas J. Holt, Sr.
Chief Executive Officer
DATE: August 9, 1999 BY: /s/ Bernard Gelman
-------------------------------------
Bernard Gelman
Chief Financial Officer and Director
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF THE HOLT GROUP, INC.
AND SUBSIDIARIES AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 11,595
<SECURITIES> 30,790
<RECEIVABLES> 115,090
<ALLOWANCES> 14,137
<INVENTORY> 0
<CURRENT-ASSETS> 163,809
<PP&E> 268,423
<DEPRECIATION> (77,275)
<TOTAL-ASSETS> 444,393
<CURRENT-LIABILITIES> 153,597
<BONDS> 51,250
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 444,393
<SALES> 155,332
<TOTAL-REVENUES> 186,174
<CGS> 154,779
<TOTAL-COSTS> 161,135
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,744
<INCOME-PRETAX> 13,295
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,295
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<CHANGES> 0
<NET-INCOME> 13,295
<EPS-BASIC> 132.95
<EPS-DILUTED> 132.95
</TABLE>
