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 March 31, 2000
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
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Address of principal executive offices) (Zip Code)
(856) 742-3000
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(Registrant's telephone number, including area code)
Not Applicable
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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 [X] No [ ]
--- ---
The total number of shares of common stock, par value $.01 per share,
outstanding as of September 8, 2000 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 March 31, 2000 (unaudited) and December 31, 1999 1-2
Unaudited Consolidated Statements of Income (Loss)
for the Three months ended of March 31, 2000 and of March 31, 1999 3
Unaudited Consolidated Statements of Comprehensive Income (Loss)
for the Three months ended of March 31, 2000 and of March 31, 1999 4
Unaudited Consolidated Statements of Stockholder's Equity for the
Three months ended March 31, 2000 5
Unaudited Consolidated Statements of Cash Flows for the Three months
ended March 31, 2000 and March 31, 1999 6-7
Notes to Consolidated Financial Statements 8-19
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20-26
Item 3. Quantitative and Qualitative Disclosure About Market Risk 26
Part II OTHER INFORMATION 27-29
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>
March 31, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
(Dollars in thousands,
except share data)
<S> <C> <C>
Assets
Current assets
Cash $ 7,028 $ 2,331
Marketable securities 33,367 33,369
Receivables, net
Trade 41,827 46,225
Tenants 8,840 15,082
Other 7,614 7,299
Fuel and supplies 2,840 2,693
Prepaid expenses 6,610 5,607
Other current assets 267 96
-------- --------
Total current assets 108,393 112,702
-------- --------
Property, plant and equipment, net of accumulated
depreciation and amortization 228,373 234,912
-------- --------
Other assets
Receivables, other 26,454 25,713
Receivables, tenants 11,500 14,229
Investments 2,925 2,925
Unamortized financing costs 3,110 3,071
Other 9,541 9,562
Insurance claim receivable 8,366 8,366
Receivables from non-consolidated affiliates 25,691 25,406
-------- --------
Total other assets 87,587 89,272
-------- --------
$424,353 $436,886
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
(Dollars in thousands, except share data)
<S> <C> <C>
Liabilities and Stockholder's Equity
Current liabilities:
Debt obligations $ 264,816 $ 268,294
Accounts payable 49,692 55,084
Payroll taxes payable 4,690 3,589
Accrued expenses 21,227 24,603
Payments in excess of billings 4,439 4,145
--------- ---------
Total current liabilities 344,864 355,715
--------- ---------
Debt obligations, net of current maturities 57,350 49,750
--------- ---------
Payables to non-consolidated affiliates 9,666 9,782
--------- ---------
Other long-term liabilities 12,604 12,369
--------- ---------
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 1,204 11,543
Accumulated other comprehensive (loss) (2,466) (3,404)
--------- ---------
Total stockholder's equity (deficit) (131) 9,270
--------- ---------
$ 424,353 $ 436,886
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
--------------------------
2000 1999
restated
-------- ---------
(Dollars in thousands)
Revenue
Operating $ 72,589 $ 76,597
Rental income 2,589 11,069
Other 5,044 5,456
Revenue from non-consolidated affiliates 84 5
-------- --------
Total revenues 80,306 93,127
-------- --------
Operating expenses
Terminal 26,125 25,649
General and administrative 15,525 15,525
Equipment maintenance 7,878 8,385
Insurance and safety 1,749 1,302
Vessel 9,872 9,893
Transportation 14,646 14,379
Depreciation and amortization 6,978 6,992
Operating taxes and licenses 594 105
Charges from non-consolidated affiliates 121 109
-------- --------
Total operating expenses 83,488 82,339
-------- --------
Income (loss) from operations (3,182) 10,788
-------- --------
Interest expense, net 7,147 6,189
-------- --------
Other income (expense)
Realized foreign exchange loss -- (12)
-------- --------
Total other income -- (12)
-------- --------
Net income (loss) $(10,329) $ 4,587
======== ========
See accompanying notes to consolidated financial statements.
3
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended
March 31,
----------------------
2000 1999
restated
-------- -------
(Dollars in thousands)
Net income (loss) $(10,329) $ 4,587
-------- -------
Other comprehensive income (loss):
Foreign exchange translation adjustments 545 178
Changes in market value on marketable securities 393 (4,169)
-------- -------
Total other comprehensive (loss) 938 (3,991)
-------- -------
Total other comprehensive income (loss) $ (9,391) $ 596
======== =======
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Common Accumulated
Stock Common Additional Other Total
Number of Stock Paid-in Retained Comprehensive Stockholder's
Shares Amount Capital Earnings Income (Loss) Equity
--------- ------ ---------- -------- ------------- -------------
(Dollars in thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 100 $ -- $1,131 $ 11,543 $(3,404) $ 9,270
Net (loss) (10,329) (10,329)
Foreign exchange adjustments 545 545
Change in market value of
marketable securities 393 393
Dividends paid (10) (10)
--- ---- ------ -------- ------ -------
Balance, March 31, 2000 (unaudited) 100 $ -- $1,131 $ 1,204 $(2,466) $ (131)
=== ==== ====== ======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
restated
-------- --------
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $(10,329) $ 4,587
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation and amortization 6,978 6,992
Allowance for doubtful accounts (582) (1,222)
Change in assets and liabilities
(Increase) decrease in assets
Trade receivables 4,980 4,134
Tenants receivables 8,971 (8,127)
Fuel and supplies (147) 129
Prepaid expenses (1,003) (2,931)
Other current assets (171) 391
Other assets -- (684)
Insurance claim receivable -- (1,982)
Increase (decrease) in liabilities
Accounts payable (5,392) (20,725)
Payroll taxes payable 1,100 1,038
Accrued expenses (3,377) 13,758
Payments in excess of billings 295 567
Other noncurrent liabilities (1,253) (1,178)
-------- --------
Net cash provided by (used in) operating activities 70 (5,253)
-------- --------
Cash flow from investing activities
Proceeds from marketable securities 393
Purchases of marketable securities -- (9,303)
Purchases and construction of property, plant and equipment (227) (1,964)
Capitalized overhaul costs (47) (206)
Decrease (increase) in other receivables 432 5,677
Decrease (increase) in receivables from non-consolidated affiliates (285) 2,344
(Decrease) increase in payables to non-consolidated affiliates (116) (4,041)
-------- --------
Net cash provided by (used in) investing activities 150 (7,493)
-------- --------
</TABLE>
6
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
restated
-------- --------
(Dollars in thousands)
<S> <C> <C>
Cash flow from financing activities
Financing costs (180) --
Proceeds from debt obligations 13,600 23,358
Payments on debt obligations (8,933) (2,742)
Dividends paid (10) (405)
-------- --------
Net cash provided by financing activities 4,477 20,211
-------- --------
Net increase (decrease) in cash 4,697 7,465
Cash, at beginning of year 2,331 4,826
-------- --------
Cash, at end of period $ 7,028 $ 12,291
======== ========
Supplemental disclosures of cash flow information
Cash paid during the year for interest, net of amounts capitalized $ 11,182 $ 10,017
======== ========
Non-cash investing and financing activities
Change in market value of marketable securities $ 395 $ (4,169)
Unrealized foreign exchange gain 545 178
</TABLE>
See accompanying notes to consolidated financial statements.
7
<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" or
the "Company") are engaged in container-shipping, stevedoring, trucking,
warehousing and distribution services and the rental of real estate and
equipment in the North and South Atlantic trade routes.
The consolidated financial statements include Holt's wholly owned subsidiaries,
Holt Hauling and Warehousing System, Inc. ("HWC"), Holt Cargo Systems, Inc.
("HCS"), The Riverfront Development Corporation ("RFD"), Murphy Marine Services,
Inc. and subsidiary ("MMS"), San Juan International Terminals, Inc. ("SAN"),
New-Port Stevedores, Inc. formerly known as SJIT, Inc. ("SJIT") and NPR Holdings
Corporation and subsidiaries, NPR, Inc., NPR-Navieras Receivables, Inc., and NPR
S.A., Inc. , collectively, ("NPR") and a combined affiliate, Emerald Equipment
Leasing, Inc. ("Emerald").
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 three month period ended March 31, 2000 are not
necessarily indicative of financial results that may be expected for the full
year ended December 31, 2000. These unaudited consolidated financial statements
should be read in conjunction with the consolidated historical financial
statements and notes thereto included in Holt's Form 10-K filed with the SEC on
August 4, 2000.
Going Concern
The accompanying consolidated financial statements of the Company have been
prepared on the basis that it will continue as a going concern, which
contemplates the realization of assets and liquidation of liabilities, except as
otherwise disclosed, in the normal course of business. However, as a result of
the Company's losses from operations and working capital deficiencies, such
realization of assets and liquidation of liabilities is subject to significant
uncertainties.
The Company's ability to continue as a going concern is dependent upon the
successful restructuring of certain of its obligations, the ability to generate
sufficient cash from operations, the sale of non-core assets, and the
satisfactory resolution of certain commitments and contingencies. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amount and classification of liabilities.
In order to address its liquidity needs, the Company has retained professional
advisors to assist in developing and implementing its financial restructuring
plan along with cashflow projections. In addition, as discussed in Note 4, the
Company executed two amendments to its Revolving Credit Agreement. The first
amendment, executed on January 21, 2000, resulted in making available to the
Company $10.0 million in the form a second term loan for working capital
purposes. The second amendment executed on July 14, 2000, provided that the
Company makes certain mandatory payments of its obligations under the Revolving
Credit Agreement and extends the maturity date of the term loans and the
revolving credit facility to June 30, 2001. The second amendment also resulted
in, among other things, a revision of financial covenants and a waiver of all
defaults under the Revolving Credit Agreement, as amended, existing on the date
of execution of the second amendment.
8
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
1. Business And Basis Of Presentation - (Continued)
As of March 31, 2000, the Company was in default with certain covenant
provisions with respect to its industrial revenue bonds, its indenture for the
senior unsecured notes and other equipment and bank loan agreements and intends
to request waivers of its financial covenant defaults and a revision of its
financial covenants. The Company cannot give any assurances that its lenders
will agree to the Company's requests. Unless the Company is able to revise its
financial covenants, the Company believes that it will be unable to comply with
such financial covenants at each measurement date throughout the period ending
June 30, 2001. (see Note 4)
Recent Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 137, which amended the
effective date of SFAS No. 133 - Accounting for Derivative Instruments and
Hedging Activities, was issued in June 1999. SFAS No. 138, which also amended
SFAS No. 133, was issued in June 2000. The Company is required to adopt SFAS No.
133 by January 1, 2001. This statement establishes accounting and reporting
standards requiring that all derivative instruments are recorded on the balance
sheet as either an asset or a liability, measured at its fair value. The
statement requires that changes in the derivative's fair value are recognized
currently in earnings unless specific hedge accounting criteria are met and such
hedge accounting treatment is elected. The Company does not currently use
derivative financial instruments and does not expect the adoption of Statement
No. 137 and 138 to have a material impact on the Company's financial position,
results of operations or cash flows.
In December 1999, the SEC issued Staff Accounting Bulletin 101 (SAB 101) -
Revenue Recognition in Financial Statements, as amended, which summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. This bulletin
specifies that revenue should not be recognized until it is realized or
realizable and earned. The Company is required to adopt SAB 101 in the fourth
quarter of 2000, and its adoption is not expected to have an impact on the
Company's financial position, results of operations, earnings per share or cash
flows.
Reclassifications
Certain amounts in the December 31, 1999 and March 31, 1999 financial statements
have been reclassified to conform to the March 31, 2000 presentation.
2. Combination of Emerald Equipment Leasing
During April 2000, the Company became aware of the accounting impact of the
existence of certain Company guarantees of the indebtedness of related companies
which had not been previously considered in the preparation of its financial
statements for the three months ended March 31, 1999. The existence of those
guarantees resulted in covenant defaults under certain Company debt agreements.
As a result of these defaults, $206.4 million of indebtedness under the
defaulted agreements should have been presented in the Company's March 31, 1999
balance sheet as current liabilities rather than long-term liabilities.
The assets, liabilities and results of operations of Emerald Equipment Leasing,
Inc., a related party Special-purpose Entity, should have been consolidated into
the Company's financial statements, which would have resulted in $41.4 million
additional total assets and $44.4 million additional total liabilities at March
31, 1999 and would have reduced net income and comprehensive income by $0.7
million as compared to the amounts previously presented.
9
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
3. Marketable Securities Available for Sale
During August 2000, the Company sold its entire interest in Atlantic Container
Line AB ("ACL") for $44.4 million. As a result of the sale, the Company's
stockholder's equity will increase by $9.9 million as a result of the
elimination of the cumulative unrealized holding losses previously recognized by
the Company, partially offset by a loss of approximately $5.8 million on the
sale of the ACL stock. The net increase in stockholder's equity resulting from
the sale of the ACL stock, which will be recognized in the third quarter of
2000, was approximately $4.1 million.
In accordance with the provisions of its term loan agreement with its foreign
bank and the second amendment to the Revolving Credit Agreement, proceeds from
the sale of the ACL stock were used to fully repay its foreign term loan and to
repay a portion of its revolving credit facility (see Note 4).
Marketable securities available-for-sale and other cost investments were as
follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
--------------------------------- -----------------------------------
Unrealized Unrealized
Holding Holding
Cost (Loss) Total Cost Gain (Loss) Total
------- ---------- ------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Stock - ACL $23,509 $ 2,907 $26,416 $23,509 $ 2,515 $26,024
Options - ACL 13,672 (6,928) 6,744 13,672 (6,928) 6,744
Other 207 207 601 -- 601
------- ------- ------- ------- ------- -------
Total $37,388 $(4,021) $33,367 $37,782 $(4,413) $33,369
------- ------- ------- ------- ------- -------
</TABLE>
Dividends declared for the three months ended March 31, 2000 and for year ended
December 31, 1999 were $-0- and $3,062, respectively.
The Company's term loan with a foreign bank (see Note 4) was amended on April 3,
2000, to provide for an increase from NOK 80.0 million ($9.5 million) to NOK
205.0 million ($24.2 million) for purposes of acquiring additional ACL shares.
The amendment provided that the loan be reduced to NOK 145.0 million ($16.9
million) on June 30, 2000 and that any subsequent pay-down of the term loan may
be reborrowed provided that the outstanding balance of the loan does not exceed
NOK 145.0 million and that the loan to market value of the ACL shares does not
exceed 45%.
At March 31, 2000, RFD held options to buy approximately 1.5 million shares
(11.1%) of ACL stock. The cost of the options was approximately $13.7 million.
As discussed below, these options were exercised in full prior to June 1, 2000.
Using the funds available under the increased term loan, the Company exercised
1,325,000 of its options during April 2000. The cost to exercise the options was
$8.9 million. During April and May, 2000, the Company also purchased 250,000
shares of ACL stock and exercised the remaining 200,000 options at a total cost
of $4.0 million. The purchase of the ACL stock and the exercise of the options
increased the Company's ownership interest in ACL from 16.9% to 30.5%.
10
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
4. Debt Obligations
At March 31, 2000 and December 31, 1999 the Company's debt obligations consist
of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Revolving credit facility under the Revolving Credit Agreement, due
on June 30, 2001 with interest payable monthly at prime plus 3/4,
collateralized by the vessels, assignment of insurance claims
regarding Hurricane Georges, capital stock of NPR Holding
Corporation and Subsidiaries and all trade and tenant receivable
balances. $40,100 $42,500
Term loan under the Revolving Credit Agreement, due the earlier of
the finalization of the insurance claim regarding Hurricane
Georges or June 30, 2001 with interest payable monthly at prime
plus 3/4% collateralized by the vessels, assignment of insurance
claims regarding Hurricane Georges, capital stock of NPR Holding
Corporation and Subsidiaries and all trade and tenant receivable
balances. 17,250 17,250
Term loan under the Revolving Credit Agreement, due the earlier of
the finalization of the insurance claim regarding Hurricane
Georges or June 30, 2001 with interest payable monthly at prime
plus 1.25% collateralized by the vessels, assignment of insurance
claims regarding Hurricane Georges, capital stock of NPR Holding
Corporation and Subsidiaries and all trade and tenant receivable
balances. 10,000 --0--
Senior unsecured notes due in January 2006 with interest at 9.75%
payable semiannually. 140,000 140,000
Term loan payable to a foreign bank, due December 30, 2000 with
interest payable quarterly at LIBOR plus 2.50%, collateralized
by investments in marketable securities. (See Note 3) 9,348 9,994
Equipment financing payable in monthly installments aggregating $1.4
million, including interest. The weighted average interest rate
at March 31, 2000 was 7.67% collateralized by certain equipment. 46,092 48,691
Construction mortgage payable in monthly installments of $33 including
interest at 6%; final payment of $2,952 including interest, is
due in March, 2012. 4,837 4,895
Demand note payable in monthly installments of $19 plus interest at
1.25% over prime. The note is due on December 31, 2000. 1,128 1,206
Line of credit due October 31, 2000 with interest payable monthly
at prime plus 1.0% 900 900
Term loan payable in monthly installments of $16 plus interest
at prime. 609 656
Term loan payable in monthly installments of $16 plus interest
at prime. 609 656
</TABLE>
11
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
4. Debt Obligations - (Continued)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Term loan payable in monthly installments of $1.1 including
interest at 11%. 43 46
Bonds payable 51,250 51,250
-------- --------
Total debt obligations 322,166 318,044
Less current debt obligations 264,816 268,294
-------- --------
Net long-term debt obligations $ 57,350 $ 49,750
======== ========
</TABLE>
Bonds Payable
1997 Fixed Rate Series K - $27,250
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 - $10,000
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 - $9,000
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 - $5,000
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.
Debt Covenants and Other Matters
On January 21, 2000, the Revolving Credit Agreement was amended to make
available to the Company $10.0 million in the form of a second term loan. This
first amendment provides that the second term loan mature on June 30, 2000. The
first amendment provides that the revolving credit facility, the letter of
credit issued under the Revolving Credit Agreement and the first and second term
loans are collateralized by first mortgages on the Company's vessels, assignment
of insurance claims regarding Hurricane Georges, capital stock of NPR Holding
Corporation and Subsidiaries and all trade and tenant receivable balances. The
first amendment also requires the total amount of the loans outstanding to be
guaranteed by the Company's non-consolidated affiliated companies and requires
the Company's principal stockholder to guarantee $10.0 million of the loans
outstanding. The loans have been further collateralized by junior liens on
certain of the Company's and its non-consolidated affiliated companies' assets.
12
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
4. Debt Obligations - (Continued)
As of March 31, 2000, the Company was in default with certain provisions of the
Revolving Credit Agreement and its loan agreements related to its industrial
revenue bonds, the indenture for the senior unsecured notes and other equipment
financing and bank loan agreements where certain of the Company's subsidiaries
are either primary obligors or obligated as guarantor.
On July 14, 2000, the Company executed a second amendment to its Revolving
Credit Agreement which extends the maturity date of the revolving credit
facility and the term loans to June 30, 2001 provided that the Company makes
certain mandatory repayments on various dates through June 30, 2001. The
mandatory repayments shall reduce on a prorata basis the revolving credit
facility and the term loans. The amendment provides that interest shall be
payable on a monthly basis at prime plus 1.25% on all amounts outstanding and
further provides for, among other things, a revision of financial covenants and
a waiver of all defaults existing under the Revolving Credit Agreement on the
date of execution of the second amendment.
Except with respect to the obligations payable under the Revolving Credit
Agreement, the Company remains in default under its debt obligations as of the
date of filing this Form 10-Q. As a result of these defaults and because the
banks, bondholders and trustees have the right to accelerate the Company's
indebtedness to each of them, all of the Company's long-term debt obligations,
with the exception of $57,350 payable under the Revolving Credit Agreement, have
been reclassified as a current liability.
The prime rate noted in certain loan agreements at March 31, 2000 and December
31, 1999 was 9.50% and 8.50%, respectively.
Substantially all assets are pledged as collateral for the Company's
indebtedness.
5. Commitments and Contingencies and Other Matters
Commitments
At March 31, 2000 and December 31, 1999, Holt was contingently liable for
outstanding standby letters of credit in the amount of $6,325. See "National
Union Fire Insurance Company" discussed below.
Withdrawal Liability
Holt relocated NPR's northeastern port of call from Elizabeth, New Jersey to
Philadelphia, Pennsylvania, a move designed to consolidate operations. As a
result of the move, the Company has been advised by counsel that it could
trigger a future withdrawal liability that could approximate $12.8 million.
While the Company has several options to mitigate this potential claim, it has
accrued its estimate of the maximum exposure at this time.
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 NPR 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.
To date, the Company has received $8.0 million from its insurance carrier and
has recorded an insurance claim receivable of $8.4 million at March 31, 2000 and
December 31, 1999, which represents direct incremental costs
13
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
5. Commitments and Contingencies and Other Matters - (Continued)
incurred in connection with insurable incidents for which the Company expects to
be reimbursed by the insurance carrier.
On January 14, 2000, the Company filed a complaint against its insurance carrier
seeking recovery under its insurance policy for damages in the total amount of
the policy, $42.5 million, suffered as a result of the hurricane. The suit was
filed in the United States District Court for the District of New Jersey. On
March 7, 2000, the carrier filed its answer, which included its affirmative
defenses, a counterclaim for declaratory judgement asserting that the Company
has not satisfied all of its obligations under the insurance policy and a
request that the case be removed to the Federal Court in Puerto Rico.
Contingencies
Philadelphia Regional Port Authority
The Company filed a complaint on May 31, 1996 with the Federal Maritime
Commission ("FMC") against the Philadelphia Regional Port Authority ("PRPA"),
the Port of Philadelphia and Camden ("PPC"), and Pasha Auto Warehousing Inc.
("Pasha") (collectively, the "Defendants"), alleging violations of Section 10 of
the Shipping Act of 1984 and Sections 16 and 17 of the Shipping Act of 1916
generally, by engaging in unjust and unreasonable practices, discrimination and
unreasonable refusals to deal with and giving unreasonable preferences to others
to the detriment of the Company.
PRPA filed a counterclaim alleging that the Company breached its obligations
under the PRPA lease by operating the Packer Avenue Facility in a manner
intended to benefit the Company's other facilities, refusing to operate the
Packer Avenue Facility so as to maximize its use, failing to market the Packer
Avenue Facility in a first class manner and soliciting container business for
the Gloucester Facility to the detriment of the Packer Avenue Facility.
The Company has requested the FMC to issue an order commanding the Defendants to
cease and desist from the aforesaid violations, to establish and put in force
such practices as the FMC determines to be reasonable and to pay damages to the
Plaintiffs by way of reparation.
A settlement agreement was entered resolving all claims by and between the
Company and the DRPA and PPC. As part of the same settlement agreement, the
Company agreed that it would withdraw its claim against PRPA for monetary
damages. The settlement agreement further resolved all other claims except the
Company's 10(d)(1) conspiracy claim against PRPA and Pasha; and the Company's
10(a)(2) claim against Pasha that the Pasha leases are void ab initio because
they were never filed with the FMC. PRPA and Pasha filed motions for summary
judgement as to the aforementioned unresolved claims. The motions were denied,
and PRPA filed a motion requesting the judge to clarify his order denying the
motions. The judge has ruled that no further clarification is necessary. Before
resolving the merits of the Company's claim, the judge will determine whether
the FMC has jurisdiction over Pasha.
Sea Land
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 $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, two of which are 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 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
14
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
5. Commitments and Contingencies and Other Matters - (Continued)
cranes striking plaintiffs' cranes, constitutes a breach of contract under the
lease.
The parties are currently involved in discovery and a pretrial conference has
been scheduled for November 1, 2000. The Company believes that it is adequately
insured for the claims raised by the plaintiffs and intends to vigorously defend
the claims asserted.
Port of New Orleans
NPR is a defendant in a law suit originally filed in State Court in Louisiana
which was removed at NPR's request to Federal District Court (Board of
Commissioners of the Port of New Orleans v. NPR, Inc.) Plaintiff seeks to
enforce a Cancellation Agreement by which NPR was allowed to terminate, in 1996,
its terminal lease at the Port of New Orleans in return for annual installment
payments of one-half of the annual rental amounts originally due under the
lease. The payments under the Cancellation Agreement total $4,075 of which $311
has been paid by NPR. The delinquent amounts sought by the plaintiffs to be paid
as stated in their complaint is $1.8 million.
At NPR's request the Federal District Court judge in New Orleans referred the
dispute to the Federal Maritime Commission to determine whether the Cancellation
Agreement violated, as claimed by NPR, any provisions of the Shipping Act. On
March 16, 2000, an Administrative Law judge ruled that the circumstances under
which the Cancellation Agreement was entered into did not give rise to
violations of the Shipping Act and remanded the matter to the Federal District
Court for determination of whether the Cancellation Agreement can be nullified
under Louisiana law, if it was, in fact, induced by misrepresentation, as
claimed by NPR. The Company is unable to determine the outcome or to reasonably
estimate the amount of loss, if any, with respect to this matter at this time.
National Union Fire Insurance Company
On February 15, 2000, National Union Fire Insurance Company of Pittsburgh,
Pennsylvania ("National Union") filed before a panel of arbitrators in New York
(the "Panel") a formal claim for $21.9 million against the Company. The amount
claimed by National Union is allegedly due under various indemnification
agreements entered into between the Company and National Union and related to
the Company's workmen's compensation program for the period February 1, 1989
through December 17, 1996. In its statement of the case, National Union claims
that the Company is obligated to pay National Union for unpaid loss
reimbursements, additional fees, indemnification of certain assessments made
against National Union by the Department of Labor and additional cash reserves
to cover future payments to be made by National Union. The suit also seeks the
posting of additional security by the Company for certain of the years wherein
National Union provided workmen's compensation coverage.
On July 13, 2000, the Company was ordered by the Panel to increase the amount of
collateral to secure any potential liability it may have to National Union in
the form of letters of credit by $6.8 million for a total of $11.8 million. The
Panel also permitted National Union to present and to be paid the original
letter of credit posted as collateral in the amount of $5.0 million which
National Union has done. The Company has not yet posted the remaining $6.8
million letter of credit as required by the Panel and may be unable to do so.
The Company is analyzing the claim and is preparing to defend it vigorously, but
is unable to determine the outcome or to reasonably estimate the amount of loss,
if any, with respect to this matter at this time.
City of Gloucester
The Company along with other related parties are named as defendants in a
lawsuit which was filed by the City of Gloucester ("the City") on February 14,
2000. The City alleges that the Company is in default under a loan agreement
entered into between the Company and the City and seeks payment of the remaining
balance outstanding of $4.8 million, plus accrued interest and attorney fees.
The City also alleges that the Company and a related party are in violation of a
Redeveloper's Agreement and certain leases for property currently occupied by
the Company and seeks to terminate the lease and recover for the rent remaining
to be paid under the leases as well as for damages for breach of contract.
15
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
5. Commitments and Contingencies and Other Matters - (Continued)
The Company and other defendants have filed an answer to the City and intend to
vigorously defend this suit. The Company is unable to determine the outcome or
to reasonably estimate the amount of loss, if any, with respect to this matter
at this time.
Guarantees
A governmental authority owns a building located on Holt's Gloucester Marine
Terminal which was financed through the issuance of tax-exempt bonds. The
building has been leased to a Holt related party. Holt has guaranteed the
tenant's lease payments aggregating $18,500 through April 2024. The guarantee is
secured by a mortgage lien on the Gloucester Marine Terminal which is
subordinate to the senior mortgage debt and on a parity with the remaining
mortgage debt.
A governmental authority has issued $7.0 million of its Revenue Bonds for the
benefit of one of the non-consolidated affiliates, all of which is outstanding
at December 31, 1999. The bonds are secured by a mortgage on the
non-consolidated affiliate's interest on the property financed by the bonds. The
bonds bear an interest rate of 9.05% and mature on December 1, 2019. Repayment
of bond indebtedness is guaranteed by Holt and the non-consolidated affiliates.
The guarantee is secured by a mortgage granted by Holt and one of the
non-consolidated affiliates on their respective interests in the Gloucester
Facility.
A governmental authority has issued $6.1 million of its Refunding Bonds for the
benefit of one of the non-consolidated affiliates all of which is outstanding at
March 31, 2000. The bonds bear an interest rate of 8.95% and mature on December
15, 2018. Repayment of bond indebtedness is guaranteed by Holt and the
non-consolidated affiliates. The bonds and the guarantee are secured by a
mortgage granted by Holt and the non-consolidated affiliate on their respective
interests in the Gloucester Facility.
As of March 31, 2000, the Company is in default with certain financial covenants
for each of the above discussed bond transactions as a result of which the
lessee and the non-consolidated affiliates are in default under the lease and
loan agreements, respectively. As a result of these covenant defaults, the
trustee under the tax-exempt bonds and for each of these bond transactions has
the right to accelerate the Company's guarantee obligation. The Company intends
to request waivers of its financial covenant defaults, but there can be no
assurance that these waivers can be obtained.
The Company has guaranteed various equipment loans entered into by Express
Equipment Rental, a Holt related party ("Express") with various financial
institutions. The equipment purchased by Express with the proceeds of these
loans is being leased to the Company. The loans bear interest at varying rates
ranging from 8.21% to 10.28% and mature at various dates through 2004. The terms
of the leases for this equipment provide that, among other things, the lease
payments are sufficient to repay the amounts outstanding under the loan
agreements. The amount of loans outstanding on March 31, 2000 is $4.4 million.
Vessel Financings
Certain of the Company's subsidiaries have guaranteed obligations of Christian
Holdings (Luxembourg) S.A. ("CHL") in connection to its ownership of two modern
refrigerated cargo vessels (the "Vessels"). CHL owns these Vessels in an equal
partnership with a German shipping company. These Vessels call from time to time
at the Company's terminals carrying palletized perishable products from various
points of origin throughout the world. In relation to the above, Holt Cargo
Systems, Inc. guaranteed a loan made between Commerzbank and CHL in the original
amount of $2,760. The bank has indicated that it is willing to extend the
maturity date of the loan from January 31, 2000 to March 31, 2001. CHL is
currently in the process of completing these negotiations. The balance of the
loan on March 31, 2000 was $830.
16
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
5. Commitments and Contingencies and Other Matters - (Continued)
In August of 1996, National Maatschip Krediet an Nuiverd, ("NMKM"), a Belgian
bank, made two loans to CHL, each in the amount of $13,650 for the purposes of
refinancing the Vessels. In February 1997, Gimvindus, n.v. a Belgian economic
development agency, also made two loans to CHL, each in the equivalent U.S.
dollar value of $983 also for the purpose of refinancing the Vessels. Vessel
mortgages were granted to each lending institution to secure the loans. In
addition, the Company has guaranteed the loans made by Gimvindus and jointly
with its partner has guaranteed $1,729 of each of the loans made by NMKM.
6. Non-Consolidated Affiliate Transactions
Holt transacts business with companies which are 100% or majority owned by
Holt's principal stockholder. These transactions include providing advances to
and from those affiliated companies. These advances do not bear interest.
Holt also provided services and goods to these companies which include
stevedoring services, rental of warehouse space and building and equipment
repairs. At March 31, 2000 and December 31, 1999, $25,691 and $25,406,
respectively, was due to Holt in connection with net advances made and services
performed on behalf of certain non-consolidated affiliates. At March 31, 2000
and December 31, 1999, $9,666 and $9,782 was due to certain non-consolidated
affiliates in connection with net advances and services received. Revenue for
these services totaled $84 and $5 for the three months ended March 31, 2000 and
1999, respectively. These companies provided services to Holt which included
rental of warehouse space, building and equipment repairs and management
services. Expenses for these services totaled $121 and $109 for the three months
ended March 31, 2000 and 1999, respectively .
7. Other Related Party Transactions
Leases
For the three months ended March 31, 2000 and 1999, Holt leased property and
equipment from a Holt related party under a non-cancelable lease which expires
December 30, 2000 and which is renewable through 2040 pursuant to four 10-year
renewal options. Rental expense under this lease totaled $650 and $652 for the
three months ended March 31, 2000 and 1999, respectively.
Account Receivable - Trade
At March 31, 2000 and December 31, 1999, Account Receivable, Trade includes $3.8
and $3.3 million, net of reserves of $5.0 million, due from a Holt related
party.
Corporate Services
Holt has an agreement to purchase general and administrative support services
from SLS Services, Inc. ("SLS"). SLS is controlled by certain directors of Holt
who are relatives of Holt's sole shareholder. Expense for these services totaled
$2,145 and $2,767 for the three months ended March 31, 2000 and 1999,
respectively.
In the normal course of business, Holt performs services for SLS. At March 31,
2000 and December 31, 1999, Receivables tenants includes $472 and $931,
respectively, due from SLS.
Other Receivables
At March 31, 2000 and December 31, 1999, "Other Noncurrent Receivables" included
$2,828 and $4,913, respectively, due from SLS and other companies owned by
shareholders of SLS.
17
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
7. Other Related Party Transactions - (Continued)
Agreements
During 1998, Holt has entered into an Option to Purchase and Development
Agreement with Delaware Avenue Enterprises, Inc. (DEL), a Holt related party.
Pursuant to the agreement, Holt paid $8 million to DEL to acquire an option to
purchase 11.5 acres of property located on the Delaware River in Philadelphia
(the "Premises") for a price equal to 120% of any sum expended by DEL to improve
and develop the Premises for use by Holt in its future operations. The option
expired on December 31, 2013. The cost of the option is included in "Noncurrent
Receivables Other" in the accompanying balance sheet.
In connection with the agreement, the Company loaned $10 million in 1998 and an
additional $4.0 million in 1999 in exchange for promissory notes, collectively,
(the "Notes"). The Notes bear interest at 1% over the prime rate and mature on
the earlier of December 31, 2013 or the date on which Holt exercises its option
and purchases the Premises. The Notes are secured by a mortgage and security
agreement on the Premises and a contiguous 28-acre site. The Notes are included
in "Noncurrent Receivables Other" in the accompanying balance sheet.
On July 14, 2000, DEL borrowed $14.0 million which was used to repay the Notes.
The Company used the repayment proceeds to pay interest on its senior unsecured
notes, repay debt on its Revolving Credit Agreement and intends to use the
remainder for general working capital purposes. In conjunction with the
transaction, the Company terminated its $8.0 million Option to Purchase and
Development Agreement with DEL and will record this charge to earnings in the
second quarter of 2000.
18
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
7. Non-Guarantor Subsidiary
RFD and Emerald, are not guarantors under the $140.0 million Senior Notes (See
note 4). The guarantor subsidiaries are wholly owned by HGI and provide joint
and several guarantees on the Senior Notes. Additionally, The Holt Group, Inc.
("HGI") has no operations or assets other than its investment in subsidiaries.
Accordingly, the Company 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 March 31, 2000 and March 31, 1999 and for each of the three month periods
then ended, summarized financial information is as follows:
<TABLE>
<CAPTION>
March 31, 2000
----------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Emerald Eliminations Consolidated
----------- -------------- ------------ ------------ -------------- ----------------
Non-Guarantors
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 395 $ 73,583 $ 33,367 $ 1,048 $ - $108,393
Non-current assets 286,441 286,805 3,925 33,766 (294,977) 315,960
Current liabilities 154,911 145,087 9,367 35,499 - 344,864
Non-current liabilities 57,350 87,110 21,041 2,696 (88,577) 79,620
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
----------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Emerald Eliminations Consolidated
----------- -------------- ------------ ------------ -------------- ----------------
Non-Guarantors
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 10 $88,171 $ - $2,965 $(10,840) $ 80,306
Operating income (loss) (1,032) (2,907) (3) 760 - (3,182)
Net income (loss) (6,034) (4,011) (295) 11 - (10,329)
</TABLE>
<TABLE>
<CAPTION>
March 31, 1999 (restated)
----------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Emerald Eliminations Consolidated
----------- -------------- ------------ ------------ -------------- ----------------
Non-Guarantors
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 5,565 $132,247 $31,264 $ 962 $ (246) $169,792
Non-current assets 285,075 179,766 3,925 42,224 (190,299) 320,691
Current liabilities 203,141 155,655 8,878 44,393 (246) 411,821
Non-current liabilities - 103,526 24,816 - (107,560) 20,782
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999 (restated)
----------------------------------------------------------------------------------------
Subsidiary
HGI Guarantors RFD Emerald Eliminations Consolidated
----------- -------------- ------------ ------------ -------------- ----------------
Non-Guarantors
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 14,014 $ 99,124 $ - $ 2,214 $ (22,225) $ 93,127
Operating income - 24,673 - 129 (14,014) 10,788
Net income (loss) 9,314 10,268 (244) (737) (14,014) 4,587
</TABLE>
RFD's current assets consist primarily of marketable securities. 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.
Emerald's long-term assets consist primarily of equipment. Emerald's liabilities
consist primarily of bank debt and advances from two of the subsidiary
guarantors.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Restatement of Financial Position and Results of Operation for the Three Months
Ended March 31, 1999
During April 2000, the Company became aware of the accounting impact of the
existence of certain Company guarantees of the indebtedness of related companies
which had not been previously considered in the preparation of its financial
statements for the three months ended March 31, 1999. The existence of those
guarantees resulted in covenant defaults under certain Company debt agreements.
As a result of these defaults, $206.4 million of indebtedness under the
defaulted agreements should have been presented in the Company's March 31, 1999
balance sheet as current liabilities rather than long-term liabilities.
The assets, liabilities and results of operations of Emerald Equipment Leasing,
Inc., a related party Special-purpose Entity, should have been consolidated into
the Company's financial statements, which would have resulted in $41.4 million
additional total assets and $44.4 million additional total liabilities at March
31, 1999 and would have reduced net income and comprehensive income by $0.7
million as compared to the amounts previously presented. In addition, revenues,
income from operations and net income for the three months ended March 31, 1999
have been adjusted to reflect revenue adjustments of $2.2 million.
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 Form 10-K filed on August 4, 2000.
Holt's wholly owned subsidiaries file a consolidated federal return and, for
certain state income taxes, subchapter S corporation tax returns as provided by
the Internal 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.
20
<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:
Three Months Ended
March 31,
-------------------------------------------
restated
2000 1999
------------------- ------------------
$ % $ %
-------- ----- ------- -----
Operating revenues 72,589 90.4 76,597 82.3
Rental income 2,589 3.2 11,069 11.9
Other revenues 5,044 6.3 5,456 5.9
Revenues from non-consolidated
affiliates 84 - 5 -
-------- ----- ------- -----
Total revenues 80,306 100.0 93,127 100.0
-------- ----- ------- -----
Operating expenses
Terminal 26,125 32.5 25,649 27.5
General and administrative 15,525 19.3 15,525 16.7
Equipment maintenance 7,878 9.8 8,385 9.0
Insurance and safety 1,749 2.2 1,302 1.4
Vessel 9,872 12.3 9,893 10.6
Transportation 14,646 18.2 14,379 15.4
Depreciation and amortization 6,978 8.7 6,992 7.5
Other operating expenses 715 0.9 214 0.2
-------- ----- ------- -----
Total operating expenses 83,488 104.0 82,339 88.4
-------- ----- ------- -----
Operating income (loss) $ (3,182) (4.0) $10,788 11.6
-------- ----- ------- -----
Interest expense, net 7,147 8.9 6,189 6.6
Net income (loss) $(10,329) (12.9) $ 4,587 4.9
======== ===== ======= =====
Calculation of EBITDA (1):
Operating income (3,182) (4.0) 10,788 11.6
Depreciation and amortization 6,978 8.7 6,992 7.5
-------- ----- ------- -----
EBITDA $ 3,796 4.7 $17,780 19.1
======== ===== ======= =====
(1) The term EBITDA as used herein represents operating income plus
depreciation and amortization, adjusted to exclude certain non-recurring
revenues and expenses. EBITDA has been presented because the Company
believes it is commonly used in this or a similar format by investors to
analyze and compare operating performance and to determine a company's
ability to service and/or incur debt. However, EBITDA should not be
considered in isolation or as a substitute for net income, cash flow from
operations or any other measure of income or cash flow that is prepared in
accordance with generally accepted accounting principles, or as a measure
of a company's profitability or liquidity. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
financial statements of the Company and the related notes thereto included
elsewhere in this Form 10-Q.
21
<PAGE>
RESULTS OF OPERATIONS
Revenues
Total revenues decreased to $80.3 million, for the three months ended March 31,
2000 from $93.1 million for the three months ended March 31, 1999, a decrease of
$12.8 million, or 13.8%.
Operating revenues decreased to $72.6 million, for the three months ended March
31, 2000 from $76.6 million for the three months ended March 31, 1999, a
decrease of $4.0 million, or 5.2%.
The decrease in operating revenues was partially due to a decrease in ocean
revenue of approximately $6.4 million. While southbound volume for the three
month period ended March 31, 2000 decreased by 16.5% over the comparable period
for 1999, which resulted in an $8.0 million decrease in southbound revenue. The
average southbound revenue per unit increased slightly by 1.1%. The Company
experienced a 7.4% increase in northbound volume and an increase in revenue per
unit of 9.7% for the three months ended March 31, 2000 compared to the
comparable period for 1999 which resulted in a $1.9 million increase in
northbound revenue. Inter-island volume and revenue were relatively flat for the
three month period ended March 31, 2000 compared to the same period during 1999.
The Company continues to experience weak southbound volumes and competitive
pressure in rates which is expected to continue to impact the Company's revenues
for the foreseeable future.
Operating revenues were further adversely affected by a $1.4 million decrease in
stevedoring revenue for the three month period ended March 31, 2000 at the
Company's Packer Avenue Marine Terminal (PAMT).
Decreases in operating revenues were partially offset by increased third party
stevedoring revenues of $2.9 million from the Company's San Juan facilities as
well as an increase of $0.9 million of revenue at the Port of Wilmington.
Rental income decreased to $2.6 million for the three months ended March 31,
2000 from $11.1 million for the three months ended March 31, 1999, a decrease of
$8.5 million, or 76.6 %. The decrease was primarily due to revisions of the
lease contracts with the Lessee-Operators at the Gloucester Facility which went
into effect on October 1, 1999. Tenant revenue is currently being realized at an
annualized rate of $9.0 million for the year 2000 due to the revisions of the
lease contracts with the Lessee-Operators.
Other revenue decreased to $5.0 million for the three months ended March 31,
2000 from $5.5 million for the three months ended March 31, 1999, a decrease of
$0.5 million, or 7.6%.
Terminal Expenses
Terminal expenses increased to $26.1 million for the three months ended March
31, 2000 from $25.7 million for the three months ended March 31, 1999, an
increase of $0.5 million, or 1.9%.
This increase was is partially attributable to increases of $0.6 million and
$1.0 million for salary and benefits as a result of increased container volume
at the Company's Wilmington and San Juan Facilities, respectively. This increase
offset by is partially attributable to a $1.7 million reduction in expenses
associated with reduced container volume handled by NPR.
Equipment Maintenance Expense
Equipment maintenance expenses decreased to $7.9 million for the three months
ended March 31, 2000 from $8.4 million for the three months ended March 31,
1999, an increase of $0.5 million, or 6.0%.
This decrease was due to lower maintenance costs as a result of decreased ocean
revenues discussed above.
Insurance and Safety Expenses
Insurance and safety expenses increased to $1.8 million for the three months
ended March 31, 2000, from $1.3 million for the three months ended March 31,
1999, an increase of $0.5 million, or 21.2 %. This increase was attributable to
increased coverage for new equipment, which was acquired to replace older
equipment and increased costs for certain of the insurance coverage carried by
the Company.
22
<PAGE>
Interest Expense
Interest expense increased to $7.1 million for the three months ended March 31,
2000 from $6.2 million for the three months ended March 31, 1999, an increase of
$0.9 million, or 15.5%.
During the first quarter of 2000, the Company borrowed $10.0 million in the form
of a second term loan for working capital purposes. The Company also increased
its borrowings under its revolving credit by $3.0 million during the first
quarter of 2000. The Company also repaid $8.8 million of indebtedness during the
first quarter of 2000 which included a $5.4 million reduction on the Company's
revolving credit facility.
Further increases occurred as result of a 175 basis point increase in the prime
rate of interest during the three months ended March 31, 2000 compared to the
three months ended March 31, 1999.
Net Income(loss)
Net Income decreased to ($10.3) million for the three months ended March 31,
2000 from $4.6 million for the three months ended March 31, 1999, a decrease of
$14.9 million.
The changes in net income was attributable to the changes in revenues and
expenses as discussed above.
EBITDA
EBITDA decreased to $3.8 million for the three months ended March 31, 2000 from
$17.8 million for the three months ended March 31, 1999, an increase of $14.0
million.
The changes 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
Debt Service
Historically, net cash from operating, investing and financing activities have
been sufficient for the Company to satisfy its debt requirements and to make
necessary capital acquisition and improvements to its properties. However,
during the fourth quarter of 1999, the Company experienced cash flow shortages
and as a result, the Company entered into the first amendment of its Revolving
Credit Agreement on January 21, 2000. The first amendment resulted in making
available to the Company $10.0 million in the form of a second term loan for
working capital purposes. In addition, the first amendment extended the December
31, 1999 maturity date of the first term loan in the amount of $17.3 million,
made under the Revolving Credit Agreement to June 30, 2000.
On July 14, 2000, the Company entered into a second amendment to its Revolving
Credit Agreement. The second amendment extends the maturity date of the
revolving credit facility and the term loans to June 30, 2001, provided that the
Company makes certain mandatory repayments on various dates through June 30,
2001. The second amendment provides that interest shall be payable on a monthly
basis at prime plus 1.25% on all amounts outstanding and further provides for,
among other things, a revision of financial covenants and a waiver of all
defaults under the Revolving Credit Agreement.
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The Company continues to incur net losses and its ability to continue as a going
concern is dependent upon the successful restructuring of certain of its
obligations, the ability to generate sufficient cash from operations, the sale
of non-core assets, and the satisfactory resolution of certain commitments and
contingencies. To date, the Company has made all required debt service and
vendor payments.
As of March 31, 2000, the Company was in default of certain provisions of its
Revolving Credit Agreement, its loan agreements related to its industrial
revenue bonds, its indenture for the senior unsecured notes and other equipment
financing and bank loan agreements where certain of the Company's subsidiaries
are either primary obligors or obligated as guarantor. Except with respect to
its obligations under the Revolving Credit Agreement, the Company remains in
default under the remainder of its debt obligations as of the date of filing
this Form 10-Q.
In addition to developing and implementing its financial plan, the Company
intends to request from its industrial revenue bondholders, senior unsecured
note holders and other equipment and bank lenders, as necessary, waivers of its
covenant defaults. The Company cannot give any assurances that its lenders will
agree to the Company's requests. Unless the Company is able to restructure it
financial covenants, the Company believes that it will be unable to comply with
such financial covenants throughout the fiscal year ended June 30, 2001. In the
event the company's lenders seek to enforce their rights under their respective
loan agreements and accelerate their indebtedness and the Company is unable to
generate sufficient funds in exchange for the liquidation of certain assets,
then the Company's financial position and ability to continue its operations
would be materially adversely affected.
As part of its plan to increase its liquidity, during July 2000, the Company
received proceeds of $14.0 million on outstanding promissory notes with DEL (see
Item 13 "Certain Relationships and Related Transactions") of which $2.0 million
was used to permanently reduce amount due under the Company's revolving credit
facility and $6.8 million was used to pay interest due on the Company's senior
notes. The remaining proceeds of $5.2 million have been and will be used to fund
working capital requirements.
During August 2000, the Company sold its entire interest in Atlantic Container
Line AB ("ACL") for $44.4 million. In accordance with the provisions of its term
loan agreement with its foreign bank and the second amendment to the Revolving
Credit Agreement, proceeds from the sale of the ACL stock were used to fully
repay its foreign term loan and to repay a portion of its revolving credit
facility.
As of March 31, 2000, the Company had outstanding $322.2 million of consolidated
indebtedness, consisting of (i) $140.0 million principal amount of the Senior
Notes and (ii) $182.2 million of senior secured indebtedness.
Cash Flows
For the three months ended March 31, 2000, 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.
Cash used by the Company in operating activities was approximately breakeven.
While the Company reported a net loss for the three months ended March 31, 2000,
of $10.3 million, included in this loss were non-cash charges from depreciation
of $7.0 million. Funds provided by operating activities included a decrease of
$14.0 million for payments received for trade and tenant receivables.
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Funds used in operating activities included a net reduction in accounts payable
and accrued expenses of $8.8 million as well as a $1.3 million reduction of
other noncurrent liabilities.
Net cash provided by financing activities was $4.5 million. On January 21, 2000,
the Revolving Credit Agreement was amended to make available to the Company
$10.0 million in the form of a second term loan. In addition, the Company also
reduced its borrowings under its revolving credit facility by $2.4 million. The
Company incurred borrowings of $0.6 million for new equipment and repaid $3.4
million of other bank and equipment notes for the three months ended March 31,
2000.
Commitments and Contingencies
Holt relocated NPR's northeastern port of call from Elizabeth, New Jersey to
Philadelphia, Pennsylvania, a move designed to consolidate operations. As a
result of the move, the Company has been advised by counsel that it could
trigger a withdrawal liability that could approximate $12.8 million. While the
Company has several options to fully mitigate this potential claim, it has
accrued its estimate of the maximum exposure at this time.
Legal Proceedings
As discussed under Part 2 Item 1, the Company is party to various legal
proceedings which if adversely decided, would have a material adverse effect on
the Company's financial position.
IMPACT OF YEAR 2000 ON THE COMPANY'S SYSTEMS
The Company did not experience any material interruptions of business as a
result of the Year 2000 computer problem.
ENVIRONMENTAL MATTERS
Holt's operations are also subject to various federal, state and local
environmental laws and regulations, promulgated by the Environmental Protection
Agency and similar state regulatory agencies. These regulations govern the
management of hazardous wastes, discharge of pollutants into the air, surface
and underground waters, and the disposal of certain substances. The Company is
not aware of any material water or land fuel spills or hazardous substance
contamination on its properties and believes that its operations are in material
compliance with current environmental laws and regulations.
Portions of the Gloucester Facility, including the Armstrong Buildings are
considered to be within a broad geographic area which was designated by the EPA
for investigation and possible remediation under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"). This area,
which covers over 65 properties in the Camden/Gloucester City area, was listed
on EPA's National Priorities List ("NPL") on June 17, 1996, thereby invoking
eligibility for investigation and remediation utilizing the federal "Superfund."
Superfund activity is necessitated by the discovery, in 1981, that the
Camden/Gloucester area contains levels of gamma radiation and radon/thorium
decay products attributable to pre-1940 manufacturing activities of the former
Wellsbach Company. The current Armstrong Building was part of the former
manufacturing facility.
Other than the small portion of the building occupied by office space, the
building is primarily empty and unused. Future plans contemplate demolition of
the building. In order to assess the need for special demolition requirements in
light of ongoing EPA activity, in September 1997
Pursuant to an Administrative Order on Consent with the EPA, Holt completed a
Remedial Investigation/Feasibility Study ("RI/FS"), addressing the Armstrong
Building and has performed a comparative analysis of remedial alternatives base
line assessment. In connection with the RI/FS, Holt has performed recent
sampling and preliminary cost estimate analyses which indicate that it could
cost up to approximately $974,000 to address contaminated areas. The EPA has
verbally agreed to perform the remediation. The EPA continues to sample,
independently, various outside soil areas, in addition to its ongoing activities
in other portions of the NPL site area.
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NPR's operations are subject to various federal, state and local environmental
laws and regulations, promulgated by the Environmental Protection Agency and
similar state regulatory agencies. These regulations govern the management of
hazardous wastes, discharge of pollutants into the air, surface and underground
waters, and the disposal of certain substances. Management is not aware of any
material water or land fuel spills or hazardous substance contamination on its
properties and believes that its operations are in material compliance with
current environmental laws and regulations.
In connection with NPR's acquisition of its business in March 1995, NPR agreed
to assume responsibility for the administration of certain asbestos-related tort
claims against the Puerto Rico Government and the payment of the first $2
million of such claims. The Puerto Rico Government has retained liability for
claims above the $2 million level. Currently, the number of filed asbestosis
claims is approximately 1,549. A majority of the claims have been filed as
independent actions in the United States District Court for the Northern
District of Ohio.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 137, which amended the
effective date of SFAS No. 133 - Accounting for Derivative Instruments and
Hedging Activities, was issued in June 1999. SFAS No. 138, which also amended
SFAS No. 133, was issued in June 2000. The Company is required to adopt SFAS No.
133 by January 1, 2001. This statement establishes accounting and reporting
standards requiring that all derivative instruments are recorded on the balance
sheet as either an asset or a liability, measured at its fair value. The
statement requires that changes in the derivative's fair value are recognized
currently in earnings unless specific hedge accounting criteria are met and such
hedge accounting treatment is elected. The Company does not currently use
derivative financial instruments and does not expect the adoption of Statement
No. 137 and 138 to have a material impact on the Company's financial position,
results of operations or cash flows.
In December 1999, the SEC issued Staff Accounting Bulletin 101 (SAB 101) -
Revenue Recognition in Financial Statements, as amended, which summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. This bulletin
specifies that revenue should not be recognized until it is realized or
realizable and earned. The Company is required to adopt SAB 101 in the fourth
quarter of 2000, and its adoption is not expected to have an impact on the
Company's financial position, results of operations, earnings per share or cash
flows.
Item 3 Quantitative and Qualitative Disclosure About Market Risk
The Company does not use derivative financial instruments to manage interest
rate risk. At March 31, 2000, the Company had $80.1 million of floating-rate
debt outstanding. A 1% increase in interest rates would increase annual interest
expense by approximately $801,000. The Company's exposure to currency exchange
risk has been immaterial through March 31, 2000.
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PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
Philadelphia Regional Port Authority
The Company and Astro Holdings, Inc. (the "Plaintiffs") filed a complaint on May
31, 1996 with the Federal Maritime Commission ("FMC") against the Philadelphia
Regional Port Authority ("PRPA"), the Port of Philadelphia and Camden ("PPC"),
and Pasha Auto Warehousing Inc. ("Pasha") (collectively, the "Defendants"),
alleging violations of Section 10 of the Shipping Act of 1984 and Sections 16
and 17 of the Shipping Act of 1916 generally, by engaging in unjust and
unreasonable practices, discrimination and unreasonable refusals to deal with
and giving unreasonable preferences to others to the detriment of the
Plaintiffs.
PRPA filed a counterclaim alleging that the Plaintiffs breached its obligations
under the PRPA lease by operating the Packer Avenue Facility in a manner
intended to benefit the Plaintiffs' other facilities, refusing to operate the
Packer Avenue Facility so as to maximize its use, failing to market the Packer
Avenue Facility in a first class manner and soliciting container business for
the Gloucester Facility to the detriment of the Packer Avenue Facility.
The Plaintiffs have requested the FMC to issue an order commanding the
Defendants to cease and desist from the aforesaid violations, to establish and
put in force such practices as the FMC determines to be reasonable and to pay
damages to the Plaintiffs by way of reparation.
A settlement agreement was entered resolving all claims by and between the
Plaintiffs and the DRPA and PPC. As part of the same settlement agreement, the
Plaintiffs agreed that it would withdraw their claim against PRPA for monetary
damages. The settlement agreement further resolved all other claims except:
Plaintiffs' 10(d)(1) conspiracy claim against PRPA and Pasha; and Plaintiffs'
10(a)(2) claim against Pasha that the Pasha leases are void ab initio because
they were never filed with the FMC. PRPA and Pasha filed motions for summary
judgement as to the aforementioned unresolved claims. The motions were denied,
and PRPA filed a motion requesting the judge to clarify his order denying the
motions. The judge has ruled that no further clarification is necessary. Before
resolving the merits of the Plaintiffs' claim, the judge will determine whether
the FMC has jurisdiction over Pasha.
Sea Land
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 $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, two of which are 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 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 cranes striking plaintiffs' cranes, constitutes a breach
of contract under the lease.
The parties are currently involved in discovery and a pretrial conference has
been scheduled for November 1, 2000. The Company believes that it is adequately
insured for the claims raised by the plaintiffs and intends to vigorously defend
the claims asserted.
Port of New Orleans
NPR is a defendant in a law suit originally filed in State Court in Louisiana
which was removed at NPR's request to Federal District Court (Board of
Commissioners of the Port of New Orleans v. NPR, Inc.) Plaintiff seeks to
enforce a Cancellation Agreement by which NPR was allowed to terminate, in 1996,
its terminal lease at the Port of New Orleans in return for annual installment
payments of one-half of the annual rental amounts originally due under the
lease. The payments under the Cancellation Agreement total $4,075 of which $311
has been paid by NPR. The delinquent amounts sought by the plaintiffs to be paid
as stated in their complaint is $1.8 million.
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At NPR's request the Federal District Court judge in New Orleans referred the
dispute to the Federal Maritime Commission to determine whether the Cancellation
Agreement violated, as claimed by NPR, any provisions of the Shipping Act. On
March 16, 2000, an Administrative Law judge ruled that the circumstances under
which the Cancellation Agreement was entered into did not give rise to
violations of the Shipping Act and remanded the matter to the Federal District
Court for determination of whether the Cancellation Agreement can be nullified
under Louisiana law, if it was, in fact, induced by misrepresentation, as
claimed by NPR. The Company is unable to determine the outcome or to reasonably
estimate the amount of loss, if any, with respect to this matter at this time.
National Union Fire Insurance Company
On February 15, 2000, National Union Fire Insurance Company of Pittsburgh,
Pennsylvania ("National Union") filed before a panel of arbitrators in New York
(the "Panel") a formal claim for $21.9 million against the Company. The amount
claimed by National Union is allegedly due under various indemnification
agreements entered into between the Company and National Union and related to
the Company's workmen's compensation program for the period February 1, 1989
through December 17, 1996. In its statement of the case, National Union claims
that the Company is obligated to pay National Union for unpaid loss
reimbursements, additional fees, indemnification of certain assessments made
against National Union by the Department of Labor and additional cash reserves
to cover future payments to be made by National Union. The suit also seeks the
posting of additional security by the Company for certain of the years wherein
National Union provided workmen's compensation coverage. The Company is
analyzing the claim and is preparing to defend it vigorously.
On July 13, 2000, the Company was ordered by the Panel to increase the amount of
collateral to secure any potential liability it may have to National Union in
the form of letters of credit by $6.8 million for a total of $11.8 million. The
Panel also permitted National Union to present and to be paid the original
letter of credit posted as collateral in the amount of $5.0 million which
National Union has done. The Company has not yet posted the remaining $6.8
million letter of credit as required by the Panel and may be unable to do so.
The Company is analyzing the claim and is preparing to defend it vigorously, but
is unable to determine the outcome or to reasonably estimate the amount of loss,
if any, with respect to this matter at this time.
City of Gloucester
The Company along with other related parties are named as defendants in a
lawsuit which was filed by the City of Gloucester ("the City") on February 14,
2000. The City alleges that the Company is in default under a loan agreement
entered into between the Company and the City and seeks payment of the remaining
balance outstanding of $4.9 million, plus accrued interest and attorney fees.
The City also alleges that the Company and a related party are in violation of a
Redeveloper's Agreement and certain leases for property currently occupied by
the Company and seeks to terminate the lease and recover for the rent remaining
to be paid under the leases as well as for damages for breach of contract.
The Company and other defendants have filed an answer to the City and intend to
vigorously defend this suit. The Company is unable to determine the outcome or
to reasonably estimate the amount of loss, if any, with respect to this matter
at this time.
The Company is also presently party to litigation arising in the ordinary course
of business, substantially all of which involves claims for personal injury and
property damage. The Company believes that the recovery for any of these claims
would be covered by insurance and would 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:
As of March 31, 2000, the Company was in default with certain provisions of the
Revolving Credit Agreement and its loan agreements related to its industrial
revenue bonds, the indenture for the senior unsecured notes and other equipment
financing and bank loan agreements where certain of the Company's subsidiaries
are either primary obligors or obligated as guarantor.
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The amount of indebtedness in default at March 31, 2000 was $362.5 million which
includes corporate guarantees of $40.3 million.
On July 14, 2000, the Company executed a second amendment to its Revolving
Credit Agreement which provides for, among other things, a revision of financial
covenants and a wavier of all defaults existing under the Revolving Credit
Agreement on the date of execution of the second amendment.
The Company intends to request waivers of its financial covenant defaults and a
revision of its financial covenants. The Company cannot give any assurances that
its lenders will agree to the Company's requests. Unless the Company is able to
revise its financial covenants, the Company believes that it will be unable to
comply with such financial covenants at each measurement date throughout the
period ending June 30, 2001.
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
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:
For the three months ending March 31, 2000, the Company filed the following
Current Report on Form 8-K: April 26, 2000, reporting Item 5 - Other
Events.
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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: September 8, 2000 BY: /s/ Thomas J. Holt, Sr.
----------------------------------
Thomas J. Holt, Sr.
Chief Executive Officer
DATE: September 8, 2000 BY: /s/ William J. Streich
----------------------------------------
William J. Streich
Chief Financial Officer
30
