<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 APRIL 2, 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 333-62227
AMERICAN COMMERCIAL LINES LLC
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 52-210660
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1701 EAST MARKET STREET
JEFFERSONVILLE, INDIANA 47130
(Address of Principal Executive Offices) (Zip Code)
(812) 288-0100
(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 /X/ No / /
AS OF MAY 17, 1999, THE REGISTRANT HAD 100 MEMBERSHIP INTERESTS OUTSTANDING.
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements (unaudited)
1. Condensed Consolidated Statement of Earnings for the
Quarters Ended April 2, 1999 and March 27, 1998 2
2. Condensed Consolidated Statement of Cash Flows for the
Quarters Ended April 2, 1999 and March 27, 1998 3
3. Condensed Consolidated Statement of Financial Position
At April 2, 1999 and December 25, 1998 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 18
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K. 19
Signature 19
</TABLE>
1
<PAGE>
PART 1
FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS.
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------
APRIL 2, MARCH 27,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
OPERATING REVENUE $ 173,217 $ 116,811
OPERATING EXPENSE
Materials, Supplies and Other 90,219 47,890
Labor and Fringe Benefits 45,659 36,016
Fuel 12,477 11,338
Depreciation and Amortization 13,035 10,154
Taxes, Other Than Income Taxes 7,511 5,405
--------- ---------
168,901 110,803
--------- ---------
OPERATING INCOME 4,316 6,008
OTHER EXPENSE (INCOME)
Interest Expense 18,580 877
Interest Expense, Affiliate - Net - 1,850
Other, Net (1,316) (25)
--------- ---------
17,264 2,702
--------- ---------
(LOSS) EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (12,948) 3,306
INCOME TAXES (BENEFIT) (138) 2,624
--------- ---------
(LOSS) EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (12,810) 682
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1,737) -
--------- ---------
NET (LOSS) EARNINGS $ (14,547) $ 682
--------- ---------
--------- ---------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
-2-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------
APRIL 2, MARCH 27,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net (Loss) Earnings $ (14,547) $ 682
Adjustments to Reconcile Net Earnings (Loss) to
Net Cash Provided by (Used in):
Depreciation and Amortization 13,739 10,154
Deferred Income Taxes - 241
Other Operating Activities (728) 948
Changes in Operating Assets and Liabilities:
Accounts Receivable 16,691 19,211
Materials and Supplies 1,277 (17,291)
Accrued Interest (6,374) (13)
Other Current Assets (581) (1,293)
Due to Affiliates - (2,425)
Other Current Liabilities 22,904 (1,658)
--------- ---------
Net Cash Provided by Operating Activities 32,381 8,556
INVESTING ACTIVITIES
Property Additions (12,302) (14,420)
Proceeds from Property Dispositions 532 1,507
Other Investing Activities (2,504) (1,748)
--------- ---------
Net Cash Used in Investing Activities (14,274) (14,661)
FINANCING ACTIVITIES
Short-Term Debt Issued 25,000 -
Short-Term Debt Repaid (25,000) -
Partner Distribution (541) -
Long-Term Debt Repaid (1,000) (2,242)
Affiliate Debt Repaid - (11,200)
Cash Dividends Paid - (4,750)
Other Financing Activities (628) (5,927)
Short Term Borrowing from Affiliates - 27,445
--------- ---------
Net Cash (Used in) Provided by
Financing Activities (2,169) 3,326
Net Increase (Decrease) in Cash and Cash Equivalents 15,938 (2,779)
Cash and Cash Equivalents at Beginning of Period 49,356 6,925
--------- ---------
Cash and Cash Equivalents at End of Period $ 65,294 $ 4,146
--------- ---------
--------- ---------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
-3-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 2, DEC. 25,
1999 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 65,294 $ 49,356
Accounts Receivable, Net 72,491 88,556
Materials and Supplies 38,336 39,054
Other Current Assets 20,543 19,962
--------- ---------
Total Current Assets 196,664 196,928
PROPERTIES-NET 540,464 541,415
RESTRICTED INVESTMENTS 25,912 25,912
NET PENSION ASSET 21,869 21,490
OTHER ASSETS 54,396 52,785
--------- ---------
Total Assets $ 839,305 $ 838,530
--------- ---------
--------- ---------
LIABILITIES
CURRENT LIABILITIES
Accounts Payable $ 53,464 $ 39,823
Accrued Payroll and Fringe Benefits 22,689 23,166
Deferred Revenue 11,163 9,459
Accrued Claims and Insurance Premiums 16,890 14,661
Accrued Interest 16,149 22,523
Current Portion of Long-Term Debt 2,000 2,500
Other Current Liabilities 54,025 47,109
--------- ---------
Total Current Liabilities 176,380 159,241
LONG-TERM DEBT 755,900 756,400
PENSION LIABILITY 19,347 19,347
OTHER LONG-TERM LIABILITIES 32,335 33,937
--------- ---------
983,962 968,925
--------- ---------
MEMBER'S DEFICIT
Member's Interest 220,047 220,047
Other Capital 161,877 161,051
Retained Deficit (526,581) (511,493)
--------- ---------
Total Member's Deficit (144,657) (130,395)
--------- ---------
Total Liabilities and Member's Deficit $ 839,305 $ 838,530
--------- ---------
--------- ---------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments necessary to present fairly the
company's financial position at April 2, 1999 and December 25, 1998, the
results of its operations, and its cash flows for the quarters ended April 2,
1999 and March 27, 1998, such adjustments being of a normal recurring nature.
Operating results for the quarter ended April 2, 1999 are not necessarily
indicative of the results that may be expected for the fiscal year ended
December 31, 1999.
American Commercial Lines LLC ("ACL") was a wholly owned subsidiary of CSX
Corporation ("CSX") until June 30, 1998. On June 30, 1998 ACL's parent,
American Commercial Lines Holdings LLC (the "Parent") completed a
recapitalization in a series of transactions in which the barge business of
Vectura Group, Inc. ("Vectura") and its subsidiaries ("NMI" or the "NMI
Contribution") were combined with that of ACL. ACL issued $735 million in new
debt in connection with these transactions. These transactions were accounted
for as a recapitalization of ACL and the NMI Contribution was recorded by the
purchase method of accounting. The results of the NMI operations and cash
flows are included in the accompanying financial statements since June 30,
1998.
ACL was reorganized as a limited liability company in the second quarter of
1998. As such, ACL passes through its U.S. federal and state (but not
foreign) taxable income to its Parent whose members are responsible for
income taxes on such taxable income. All of ACL's corporate subsidiaries were
converted to limited liability companies (except for ACL Capital Corp. and
the foreign subsidiaries) on June 30, 1998 prior to the recapitalization.
While management believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these condensed
consolidated financial statements be read in conjunction with the 1998
audited consolidated financial statements and the notes related thereto
included in ACL's Form 10-K.
ACL's fiscal year ends on the last Friday in December. The condensed
consolidated financial statements presented are for the 14 weeks ended April
2, 1999 and the 13 weeks ended March 27, 1998, and the fiscal year (52 weeks)
ended December 25, 1998.
NOTE 2. MATERIAL AND SUPPLIES
Materials and Supplies are carried at the lower of cost (average) or market
and consist of the following:
<TABLE>
<CAPTION>
APRIL 2, DEC. 25,
1999 1998
--------- ---------
<S> <C> <C>
Raw Materials $ 8,713 $ 9,802
Work in Process 11,569 9,829
Parts and Supplies 18,054 19,423
-------- --------
$ 38,336 $ 39,054
-------- --------
-------- --------
</TABLE>
-5-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 3. BUSINESS SEGMENTS
<TABLE>
<CAPTION>
REPORTABLE SEGMENTS
------------------------------- ALL OTHER
BARGING CONSTRUCTION SEGMENTS (1) TOTAL
------- ------------ ------------- -----
<S> <C> <C> <C> <C>
QUARTER ENDED APRIL 2, 1999
Revenues from external customers $ 134,545 $ 32,255 $ 6,417 $ 173,217
Intersegment revenues - 12,174 1,755 13,929
Segment earnings (1,396) 3,348 2,364 4,316
QUARTER ENDED MARCH 27, 1998
Revenues from external customers $ 102,450 $ 7,870 $ 6,491 $ 116,811
Intersegment revenues - 9,470 959 10,429
Segment earnings 7,025 1,087 1,601 9,713
</TABLE>
The following is a reconciliation of ACL's revenues from external customers and
segment earnings to ACL's consolidated totals.
<TABLE>
<CAPTION>
QUARTERS ENDED
APRIL 2, MARCH 27,
1999 1998
--------- ---------
<S> <C> <C>
REVENUES
Revenues from external customers $ 173,217 $ 116,811
Intersegment revenues 13,929 10,429
Elimination of intersegment revenues (13,929) (10,429)
--------- ---------
Operating revenue $ 173,217 $ 116,811
--------- ---------
--------- ---------
EARNINGS
Total segment earnings $ 4,316 $ 9,713
Unallocated amounts:
Management service fee charged by CSX - (3,705)
Interest expense (18,580) (877)
Interest expense, affiliate - net - (1,850)
Other, net 1,316 25
--------- ---------
(Loss) Earnings before income taxes and
cumulative effect of accounting change $ (12,948) $ 3,306
--------- ---------
--------- ---------
</TABLE>
(1) Financial data for segments below the reporting thresholds are
attributable to two operating segments - a segment operating terminals
along the U.S. inland waterways and a segment providing voice and data
communications to marine companies operating on the U.S. inland waterways.
-6-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 4. CONTINGENCIES
A number of legal actions are pending against ACL in which claims are made in
substantial amounts. While the ultimate results of pending litigation cannot
be predicted with certainty, management does not currently expect that
resolution of these matters will have a material adverse effect on the
consolidated results of operations, financial position and cash flows.
NOTE 5. CHANGES IN ACCOUNTING STANDARDS
In December 1997, the AICPA issued Statement of Position No. 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments" (SOP 97-3) which provides guidance on recognition, measurement,
and disclosure of liabilities for guaranty-fund and certain other
insurance-related assessments, including workers' compensation second-injury
funds. SOP 97-3 is effective for fiscal years beginning after December 15,
1998. ACL adopted SOP 97-3 in the first quarter of 1999, with a cumulative
effect adjustment of $1,737 in non-cash expense.
NOTE 6. GUARANTOR FINANCIAL STATEMENTS
The $735 million of debt issued by ACL and a revolving credit facility, which
provides for revolving loans and the issuance of letters of credit in an
aggregate amount up to $100 million, are guaranteed by ACL's wholly-owned
domestic subsidiaries, other than ACL Capital Corp. (which was formed in
connection with the transaction), any Accounts Receivable Subsidiary (as
defined in the Indentures with respect to such debt) and certain subsidiaries
of ACL without substantial assets or operations (collectively the "Subsidiary
Guarantors"). Such guarantees are full, unconditional and joint and several.
Separate financial statements of the Subsidiary Guarantors are not presented
because management has determined that they would not be material to
investors. The following supplemental financial information sets forth on a
combined basis, combining statements of financial position, statements of
earnings and statements of cash flows for the Subsidiary Guarantors,
non-guarantor subsidiaries and for ACL as of April 2, 1999 and December 25,
1998 and for the quarters ended April 2, 1999 and March 27, 1998.
-7-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE QUARTER ENDED APRIL 2, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUE $ 168,004 $ 5,213 $ - $ 173,217
OPERATING EXPENSE
Materials, Supplies and Other 84,566 5,653 - 90,219
Labor and Fringe Benefits 43,384 2,275 - 45,659
Fuel 12,011 466 - 12,477
Depreciation and Amortization 11,739 1,296 - 13,035
Taxes, Other Than Income Taxes 7,329 182 - 7,511
--------- --------- ---------- ---------
159,029 9,872 - 168,901
--------- --------- ---------- ---------
OPERATING INCOME (LOSS) 8,975 (4,659) - 4,316
OTHER EXPENSE (INCOME)
Interest Expense 18,580 - - 18,580
Interest Expense, Affiliate - Net - 995 (995) -
Other, Net (1,434) (877) 995 (1,316)
--------- --------- ---------- ---------
17,146 118 - 17,264
--------- --------- ---------- ---------
LOSS BEFORE INCOME TAXES (8,171) (4,777) - (12,948)
INCOME TAXES (BENEFIT) 89 (227) - (138)
--------- --------- ---------- ---------
LOSS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (8,260) (4,550) - (12,810)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1,737) - - (1,737)
--------- --------- ---------- ---------
NET LOSS $ (9,997) $ (4,550) $ - $ (14,547)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
-8-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE QUARTER ENDED MARCH 27, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUE $ 112,801 $ 4,010 $ - $ 116,811
OPERATING EXPENSE
Materials, Supplies and Other 43,346 4,544 - 47,890
Labor and Fringe Benefits 34,228 1,788 - 36,016
Fuel 10,912 426 - 11,338
Depreciation and Amortization 9,202 952 - 10,154
Taxes, Other Than Income Taxes 5,371 34 - 5,405
--------- --------- ---------- ---------
103,059 7,744 - 110,803
--------- --------- ---------- ---------
OPERATING INCOME (LOSS) 9,742 (3,734) - 6,008
OTHER EXPENSE (INCOME)
Interest Expense 877 - - 877
Interest Expense, Affiliate - Net 1,850 759 (759) 1,850
Other, Net (710) (74) 759 (25)
--------- --------- ---------- ---------
2,017 685 - 2,702
--------- --------- ---------- ---------
EARNINGS (LOSS) BEFORE INCOME TAXES 7,725 (4,419) - 3,306
INCOME TAXES 2,612 12 - 2,624
--------- --------- ---------- ---------
NET EARNINGS (LOSS) $ 5,113 $ (4,431) $ - $ 682
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
-9-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE QUARTER ENDED APRIL 2, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (9,997) $ (4,550) $ - $ (14,547)
Adjustments to Reconcile Net Loss
to Net Cash Provided by:
Depreciation and Amortization 12,443 1,296 - 13,739
Other Operating Activities 590 (1,318) - (728)
Changes in Operating Assets and Liabilities:
Accounts Receivable 16,506 185 - 16,691
Materials and Supplies 1,446 (169) - 1,277
Accrued Interest (6,374) - - (6,374)
Other Current Assets (11,501) 10,920 - (581)
Other Current Liabilities 21,000 1,904 - 22,904
--------- --------- ---------- ---------
Net Cash Provided by
Operating Activities 24,113 8,268 - 32,381
INVESTING ACTIVITIES
Property Additions (3,352) (8,950) - (12,302)
Proceeds from Property Dispositions 508 24 - 532
Other Investing Activities (2,611) 107 - (2,504)
--------- --------- ---------- ---------
Net Cash Used in Investing Activities (5,455) (8,819) - (14,274)
FINANCING ACTIVITIES
Short-Term Debt Issued 25,000 - - 25,000
Short-Term Debt Repaid (25,000) - - (25,000)
Partner Distribution (541) - - (541)
Long-Term Debt Repaid (1,000) - - (1,000)
Other Financing Activities (628) - - (628)
--------- --------- ---------- ---------
Net Cash Used in Financing Activities (2,169) - - (2,169)
Net Increase (Decrease) in Cash and Cash Equivalents 16,489 (551) - 15,938
Cash and Cash Equivalents at Beginning of Period 44,054 5,302 - 49,356
--------- --------- ---------- ---------
Cash and Cash Equivalents at End of Period $ 60,543 $ 4,751 $ - $ 65,294
--------- --------- ---------- ---------
</TABLE>
-10-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE QUARTER ENDED MARCH 27, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings (Loss) $ 5,113 $ (4,431) $ - $ 682
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Provided by:
Depreciation and Amortization 9,202 952 - 10,154
Deferred Income Taxes 241 - - 241
Other Operating Activities 2,348 (1,400) - 948
Changes in Operating Assets and Liabilities:
Accounts Receivable 16,125 3,086 - 19,211
Materials and Supplies (16,671) (620) - (17,291)
Accrued Interest (13) - - (13)
Other Current Assets (7,246) 5,953 - (1,293)
Due to Affiliates (2,425) - - (2,425)
Other Current Liabilities (1,642) (16) - (1,658)
--------- --------- ---------- ---------
Net Cash Provided by
Operating Activities 5,032 3,524 - 8,556
INVESTING ACTIVITIES
Property Additions (1,959) (12,461) - (14,420)
Proceeds from Property Dispositions 1,511 (4) - 1,507
Other Investing Activities (9,275) (1,289) 8,816 (1,748)
--------- --------- ---------- ---------
Net Cash Used in Investing Activities (9,723) (13,754) 8,816 (14,661)
FINANCING ACTIVITIES
Long-Term Debt Repaid (2,242) - - (2,242)
Affiliate Debt Repaid (11,200) - - (11,200)
Cash Dividends Paid (4,750) (4,345) 4,345 (4,750)
Other Financing Activities (5,927) 11,055 (11,055) (5,927)
Borrowings from Affiliates 27,445 2,106 (2,106) 27,445
--------- --------- ---------- ---------
Net Cash Provided by Financing Activities 3,326 8,816 (8,816) 3,326
Net Decrease in Cash and Cash Equivalents (1,365) (1,414) - (2,779)
Cash and Cash Equivalents at Beginning of Year 2,868 4,057 - 6,925
--------- --------- ---------- ---------
Cash and Cash Equivalents at End of Period $ 1,503 $ 2,643 $ - $ 4,146
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
-11-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT APRIL 2, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 60,543 $ 4,751 $ - $ 65,294
Accounts Receivable, Net 62,510 9,981 - 72,491
Materials and Supplies 35,702 2,634 - 38,336
Other Current Assets 42,268 (18,811) (2,914) 20,543
--------- --------- ---------- ---------
Total Current Assets 201,023 (1,445) (2,914) 196,664
PROPERTIES-NET 463,330 77,134 - 540,464
RESTRICTED INVESTMENTS 25,912 - - 25,912
NET PENSION ASSET 21,869 - - 21,869
OTHER ASSETS 106,325 18,826 (70,755) 54,396
--------- --------- ---------- ---------
Total Assets $ 818,459 $ 94,515 $ (73,669) $ 839,305
--------- --------- ---------- ---------
--------- --------- ---------- ---------
LIABILITIES
CURRENT LIABILITIES
Accounts Payable $ 51,377 $ 2,087 $ - $ 53,464
Accrued Payroll and Fringe Benefits 22,669 20 - 22,689
Due to Affiliates - 2,914 (2,914) -
Deferred Revenue 11,163 - - 11,163
Accrued Claims and Insurance Premiums 16,890 - - 16,890
Accrued Interest 16,149 - - 16,149
Current Portion of Long-Term Debt 2,000 - - 2,000
Other Current Liabilities 44,245 9,780 - 54,025
--------- --------- ---------- ---------
Total Current Liabilities 164,493 14,801 (2,914) 176,380
LONG-TERM DEBT 755,900 41,286 (41,286) 755,900
PENSION LIABILITY 19,347 - - 19,347
OTHER LONG-TERM LIABILITIES 23,376 8,959 - 32,335
--------- --------- ---------- ---------
963,116 65,046 (44,200) 983,962
--------- --------- ---------- ---------
MEMBER'S DEFICIT
Member's Interest 220,047 - - 220,047
Other Capital 161,877 44,777 (44,777) 161,877
Retained Deficit (526,581) (15,308) 15,308 (526,581)
--------- --------- ---------- ---------
Total Member's Deficit (144,657) 29,469 (29,469) (144,657)
--------- --------- ---------- ---------
Total Liabilities and Member's Deficit $ 818,459 $ 94,515 $ (73,669) $ 839,305
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
-12-
<PAGE>
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT DECEMBER 25, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 44,054 $ 5,302 $ - $ 49,356
Accounts Receivable, Net 78,390 10,166 - 88,556
Materials and Supplies 36,589 2,465 - 39,054
Other Current Assets 30,767 (7,891) (2,914) 19,962
--------- --------- ---------- ---------
Total Current Assets 189,800 10,042 (2,914) 196,928
PROPERTIES - NET 471,911 69,504 - 541,415
RESTRICTED INVESTMENTS 25,912 - - 25,912
NET PENSION ASSET 21,490 - - 21,490
OTHER ASSETS 109,157 18,933 (75,305) 52,785
--------- --------- ---------- ---------
Total Assets $ 818,270 $ 98,479 $ (78,219) $ 838,530
--------- --------- ---------- ---------
--------- --------- ---------- ---------
LIABILITIES
CURRENT LIABILITIES
Accounts Payable $ 37,602 $ 2,221 $ - $ 39,823
Accrued Payroll and Fringe Benefits 23,149 17 - 23,166
Due to Affiliates - 2,914 (2,914) -
Deferred Revenue 9,459 - - 9,459
Accrued Claims and Insurance Premiums 14,661 - - 14,661
Accrued Interest 22,523 - - 22,523
Current Portion of Long-Term Debt 2,500 - - 2,500
Other Current Liabilities 39,364 7,745 - 47,109
--------- --------- ---------- ---------
Total Current Liabilities 149,258 12,897 (2,914) 159,241
LONG-TERM NOTE PAYABLE TO AFFILIATE - 41,286 (41,286) -
DEFERRED INCOME TAXES 16 (16) - -
LONG-TERM DEBT 756,400 - - 756,400
PENSION LIABILITY 19,347 - - 19,347
OTHER LONG-TERM LIABILITIES 23,644 10,293 - 33,937
--------- --------- ---------- ---------
948,665 64,460 (44,200) 968,925
--------- --------- ---------- ---------
MEMBER'S DEFICIT
Member's Interest 220,047 - - 220,047
Other Capital 161,051 44,777 (44,777) 161,051
Retained Deficit (511,493) (10,758) 10,758 (511,493)
--------- --------- ---------- ---------
Total Member's Deficit (130,395) 34,019 (34,019) (130,395)
--------- --------- ---------- ---------
Total Liabilities and Member's Deficit $ 818,270 $ 98,479 $ (78,219) $ 838,530
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
-13-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
American Commercial Lines LLC ("ACL") is an integrated marine transportation
and service company, providing barge transportation services on the inland
waterways of North and South America. ACL supports its barging operations by
providing towboat and barge design and construction, terminal services and
ship-to-shore voice and data telecommunications services to its subsidiary
companies and third parties.
ACL was a wholly owned subsidiary of CSX Corporation ("CSX") until June 30,
1998. On June 30, 1998, ACL's parent American Commercial Lines Holdings LLC
completed a recapitalization in a series of transactions in which the barge
business of Vectura Group, Inc. ("Vectura"), consisting of National Marine,
Inc. ("National Marine") and its subsidiaries, was combined with that of ACL
(the "Recapitalization"). ACL issued $735 million in new debt in connection
with these transactions.
ACL integrated National Marine's operations into its operations in the third
quarter of 1998, increasing its total barge fleet by approximately 16% with
the liquid and dry cargo barge fleets increasing by 82% and 11%, respectively.
RESULTS OF OPERATIONS
QUARTER ENDED APRIL 2, 1999 COMPARED WITH QUARTER ENDED MARCH 27, 1998
ACL follows a 52/53-week fiscal year ending on the last Friday in December of
each year. 1999 is a 53-week year. The quarter ended April 2, 1999 consisted
of 14 weeks, compared with 13 weeks in the prior year's first quarter.
OPERATING REVENUE. Operating revenue for the quarter ended April 2, 1999,
increased 48% to $173.2 million from $116.8 million for the first quarter of
1998. The revenue increase was due to higher production at Jeffboat,
increased volumes resulting from the combination of National Marine's barging
operations with those of ACL, and the additional week during the first
quarter of 1999.
Domestic barging revenue increased $30.9 million to $129.3 million due to a
14% increase in tons transported. The positive impact from the larger fleet
and the longer quarter was partially offset by difficult operating conditions
early in the quarter when severe ice forced the closure of the Illinois River
for two weeks. Domestic rates were slightly lower in the first quarter of
1999 compared to 1998, primarily due to adjustments to contract prices to
reflect reduced fuel prices. Revenue at Jeffboat, ACL's marine construction
subsidiary, rose $24.4 million to $32.3 million, reflecting significantly
higher production of hopper barges for third-party customers due to increased
public business versus intercompany business and more favorable weather
conditions in the first quarter of 1999 compared to 1998.
OPERATING EXPENSE. Operating expense for the quarter increased 52% to $168.9
million from $110.8 million in the same quarter last year. The higher
expenses were due largely to increased production at Jeffboat, higher
domestic barging volumes, adverse operating conditions resulting from the
severe ice early in the quarter, and the additional week in the quarter.
Domestic barging expenses rose $34.9 million, primarily due to increased
volumes from the larger fleet size and the additional week but also because
of adverse operating conditions resulting from severe ice in January. Fuel
prices continued to be favorable, falling from 53 cents per gallon in the
first quarter of 1998 to 39 cents per gallon in this year's first quarter.
Jeffboat's expenses rose $24.8 million due to significantly higher volumes.
OPERATING INCOME. Operating income for the quarter fell 28% to $4.3 million
from $6.0 million for the same period in 1998 due to the foregoing factors.
INTEREST EXPENSE. Interest expense for the quarter increased to $18.6 million
compared with $2.7 million for the same period in 1998. The increase is due
to $735 million of long-term debt incurred for ACL's recapitalization.
14
<PAGE>
(LOSS) EARNINGS BEFORE INCOME TAXES. Earnings (loss) before income taxes and
before the cumulative effect of an accounting change was a loss of $12.9
million in the 1999 quarter compared with earnings of $3.3 million for the
same period in 1998 due to the reasons discussed above.
INCOME TAXES (BENEFIT). Income taxes for the quarter decreased to a benefit
of $0.1 million from an expense of $2.6 million for last year's quarter.
ACL's domestic corporate subsidiaries, except ACL Capital Corp., were
converted to limited liability companies on June 30, 1998. Due to the change
in tax status, the domestic subsidiaries no longer pay income taxes.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. In the first quarter of 1999, ACL
adopted AICPA Statement of Position 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments." Implementing the new
accounting rule, which applies to workers compensation second-injury fund
assessments, resulted in a non-cash, cumulative-effect adjustment of $1.7
million in the first quarter.
NET (LOSS) EARNINGS. Net (loss) earnings for the quarter was a loss of $14.5
million compared with earnings of $0.7 million for the same period in 1998, due
to the foregoing factors.
OUTLOOK
Management expects the domestic barging demand and spot rates for grain, bulk
and steel to improve in 1999 compared with 1998 levels. The U.S. Department
of Agriculture currently forecasts 1999 corn exports of 1.825 billion
bushels, an increase of 325 million bushels over 1998 levels. ACL's domestic
barging volumes should also increase due to the larger fleet. However,
adverse operating conditions, primarily high water on the Upper Mississippi
River due to heavy rains in April which extended into May, are expected to
negatively impact domestic barging results in the second quarter.
LIQUIDITY AND CAPITAL RESOURCES
In connection with the Recapitalization, ACL incurred $735 million in
long-term debt consisting of two term loans in the principal amount of $435
million, a revolving credit facility and the issuance of letters of credit in
an aggregate amount up to $100 million (the "Senior Credit Facilities"), and
$300 million in Senior Notes (the "Senior Notes"). Prior to the
Recapitalization, ACL participated in CSX's cash management plan, through
which most of its cash needs were funded by CSX and any excess cash was
advanced to CSX for investment.
The Senior Credit Facilities and the Senior Notes contain a number of
covenants with specified financial ratios and tests including, with respect
to the Senior Credit Facilities, maximum leverage ratios and minimum interest
coverage ratios. A failure to maintain specified financial ratios could lead
to an event of default which could result in acceleration of the debt, higher
interest rates or other adverse consequences. Compliance with financial
ratios is measured at the end of each quarter. ACL's ability to meet
financial ratios is affected by adverse weather conditions, seasonality and
other risk factors inherent in its business.
Cash totaled $65.3 million at April 2, 1999, and there were no loans
outstanding under the revolving credit facility. Cash generated from
operations totaled $32.4 million in the first quarter of 1999 compared to
$8.6 million in the first quarter of 1998. The increase was primarily due to
the timing of cash disbursements related to accounts payable.
Management believes that cash generated from operations together with the
borrowings available under the revolving credit facility are more than
sufficient to fund its cash requirements, including capital expenditures for
fleet replacement, maintenance and expansion, working capital, interest
payments and scheduled principal payments.
Capital expenditures for 1999 are projected to be $65 million to $70 million.
As of April 2, 1999, $12.3 million had been spent.
15
<PAGE>
YEAR 2000
ACL formed a Year 2000 project team in mid-1997 to identify information
technology and non-information technology systems that require modification
for the Year 2000. A project plan has been developed with goals and target
dates. ACL is aggressively working toward being Year 2000 compliant.
Over the past two years, ACL has developed, upgraded and replaced certain
systems to meet its core business requirements, with the additional benefit
of achieving Year 2000 compliance for those systems. ACL's current Year 2000
effort encompasses all functions and operations of ACL, including those of
American Commercial Barge Line (domestic barging); Jeffboat (shipyards),
American Commercial Terminals (marine terminals); Louisiana Dock Company
(marine services); American Commercial Lines International (international
barging and marine services); and Waterway Communications System (marine
telecommunications).
The scope of this effort includes all hardware, software and mission critical
business processes. This includes, but is not limited to, mainframe and
client server systems, desktop applications and spreadsheets, mainframe and
personal computer hardware, voice and data communications networks, embedded
systems, electronic interfaces, suppliers, customers, utilities, government
agencies, financial institutions and others. ACL's focus throughout this
process has remained on mission critical systems, trading partners and other
third parties who have been identified as strategically important or
necessary to continue its business into the millenium.
The Year 2000 project team has representatives from senior management and key
areas of its operations. The team provides overall guidance and coordination
of the project through monthly meetings and reports, with more frequent
meetings, as needed, for certain sub-team functions. ACL's senior management
and the Board of Managers monitor this effort through periodic status reports.
ACL's business areas are in various stages of its Year 2000 project plan. The
remediation of its mainframe and client server systems are essentially
complete, except for a shore-based boat maintenance and inventory system
which will be replaced by a target date of the end of July 1999.
Documentation of test plans was completed in April 1999. Testing of mission
critical mainframe and client server computer systems began in April 1999,
with such testing expected to continue through 1999.
ACL replaces and upgrades its personal computer ("PC") and desktop
application software on a regular basis. Testing and replacement, as needed,
of PC hardware and software is now scheduled for completion by the end of
July 1999. ACL also plans to review and remediate, as deemed necessary,
PC-resident spreadsheets and programs by the end of July 1999.
ACL has completed its assessment of key operating assets, facilities and
telecommunications networks for embedded technology. This assessment includes
marine terminal operations and vessel systems such as electronic navigation
equipment, diesel engine monitoring systems and other emergency monitors and
alarms. ACL currently anticipates no material impairment of its operations
due to embedded technology that cannot be addressed by remediation or
contingency planning, which is scheduled for completion by the end of July
1999.
ACL is currently assessing the consequences of any delays in its Year 2000
initiatives or any remediation effort not being successful, and has begun
planning for contingencies, including efforts to address disruptions in
third-party services, such as telecommunications and electricity, on which
its systems and operations rely. ACL expects to complete these contingency
plans by the end of July 1999. These plans will include securing alternate or
replacement suppliers for goods and/or services and developing other
strategic solutions for mission critical areas should the need arise.
ACL presently anticipates that its greatest exposure for Year 2000 problems
may result from telecommunication, utility or financial institution failures;
rail service or other equipment failures that hinder loading or unloading at
marine terminals; failures of fuel or other key suppliers, and failures of
locks or dams that impact river navigation by ACL vessels. Contingency plans
will be prepared to address these and other areas of significant risk.
However, there can be no assurances that ACL's contingency plans or its
efforts with respect to third parties will prevent a material adverse effect
on its business, results of operations or financial condition.
16
<PAGE>
ACL has spent $1.5 million to date, related to this project. The remaining
cost of the Year 2000 project is presently estimated at $1.8 million, which
will be expensed as incurred through 2000. The total estimated cost of $3.3
million will comprise approximately 16% of ACL's total technology budget for
the project period and includes $2.3 million to upgrade and replace software
and $1.0 million for hardware. A portion of the total Year 2000 project
expense is represented by existing staff that has been or will be deployed to
this project. ACL has also engaged consultants and contractors to assist in
its Year 2000 efforts.
ACL does not believe that the redeployment of existing staff will have a
material adverse effect on its business, results of operations or financial
position. However, the remaining cost and the date on which ACL believes it
will complete the Year 2000 project are based on management's current
estimates, which are derived utilizing numerous assumptions of future events,
including the continued availability of certain staff resources, and are
inherently uncertain.
As part of its Year 2000 project, ACL is in communication with its mission
critical suppliers, larger customers and financial institutions and other
significant third parties to assess their Year 2000 readiness. ACL has
identified these businesses and entities based upon revenue generated to ACL
and its dependence for key goods and/or services they supply. ACL has
conducted an initial survey of these key trading partners and is conducting
more thorough reviews or audits based upon these responses. However, risks
associated with any such third parties located outside the United States may
be higher insofar as it is generally believed that non-U.S. businesses may
not be addressing their Year 2000 issues on as timely a basis as U.S.
businesses.
CHANGES IN ACCOUNTING STANDARDS
In December 1997, the AICPA issued Statement of Position No. 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments" (SOP 97-3) which provides guidance on recognition, measurement,
and disclosure of liabilities for guaranty-fund and certain other
insurance-related assessments, including workers' compensation second-injury
funds. SOP 97-3 is effective for fiscal years beginning after December 15,
1998. ACL adopted SOP 97-3 in the first quarter of 1999, with a cumulative
effect adjustment of $1.7 million in non-cash expense.
FORWARD LOOKING STATEMENTS
This Quarterly Report contains certain forward-looking statements about ACL's
financial position and results of operations. These statements include words
such as "believe," "expect," "anticipate," "intend," "estimate" or other
similar words. Any statements that express or involve discussion as to
expectations, beliefs or plans are not historical facts and involve known and
unknown risks, uncertainties and other factors that may cause the actual
results to materially differ from those considered by the forward-looking
statements. Such factors include:
- - substantial leverage and ability to service debt;
- - changing market, labor, legal and regulatory conditions and trends in the
barge and inland shipping industries;
- - general economic and business conditions, including a prolonged or
substantial recession in the United States or certain international
commodity markets such as the market for grain exports;
- - annual worldwide weather conditions, particularly those affecting North
and South America; and
- - the ability of ACL to resolve Year 2000 issues.
As a result of these and other factors discussed in "Risk Factors," Exhibit
99.1 to ACL's 1998 Annual Report on Form 10-K for the year ended December 25,
1998, no assurances can be given as to future results, levels of activity and
achievements. Any forward-looking statements speak only as of the date the
statement was made. ACL undertakes no obligation to update or revise any
forward-looking statements.
17
<PAGE>
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes to ACL's exposure to market risks
discussed in Item 7A of ACL's 1998 Annual Report on Form 10-K for the year
ended December 25, 1998.
18
<PAGE>
PART II
OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
Exhibit 27.1 - Financial Data Schedule
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed in the first quarter of 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
American Commercial Lines LLC has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN COMMERCIAL LINES LLC
(Registrant)
Date: May 17, 1999 By: /s/ James J. Wolff
---------------------------
Name: James J. Wolff
Title: Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer)
19
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-26-1998
<PERIOD-END> APR-02-1999
<CASH> 65,294
<SECURITIES> 0
<RECEIVABLES> 74,387
<ALLOWANCES> (1,896)
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