|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/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 333-62227
AMERICAN COMMERCIAL LINES LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware (State or Other Jurisdiction of Incorporation or Organization) |
52-210660 (IRS Employer Identification No.) |
|
1701 East Market Street Jeffersonville, Indiana (Address of Principal Executive Offices) |
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47130 (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 March 31, 2000, the registrant had 100 membership interests outstanding.
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Page Number |
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PART I. FINANCIAL INFORMATION. | ||
Item 1. Financial Statements (unaudited) |
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1. Condensed Consolidated Statement of Earnings for the Quarters Ended March 31, 2000 and April 2, 1999 |
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2 |
2. Condensed Consolidated Statement of Cash Flows for the Quarters Ended March 31, 2000 and April 2, 1999 |
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3 |
3. Condensed Consolidated Statement of Financial Position At March 31, 2000 and December 31, 1999 |
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4 |
Notes to Condensed Consolidated Financial Statements |
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5 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
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14 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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17 |
PART II. OTHER INFORMATION. |
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Item 6. Exhibits and Reports on Form 8-K |
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18 |
Signature |
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19 |
1
PART I
FINANCIAL INFORMATION
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Thousands)
|
Quarters Ended |
||||||
---|---|---|---|---|---|---|---|
|
March 31, 2000 |
April 2, 1999 |
|||||
|
(Unaudited) |
||||||
OPERATING REVENUE | $ | 167,477 | $ | 173,217 | |||
OPERATING EXPENSE |
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|
|
|
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|
|
Materials, Supplies and Other | 80,193 | 90,219 | |||||
Labor and Fringe Benefits | 41,237 | 45,659 | |||||
Fuel | 18,610 | 12,477 | |||||
Depreciation and Amortization | 13,163 | 13,035 | |||||
Taxes, Other Than Income Taxes | 6,303 | 7,511 | |||||
159,506 | 168,901 | ||||||
OPERATING INCOME | 7,971 | 4,316 | |||||
OTHER EXPENSE (INCOME) | |||||||
Interest Expense | 17,296 | 18,580 | |||||
Other, Net | (1,357 | ) | (1,316 | ) | |||
15,939 | 17,264 | ||||||
LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (7,968 | ) | (12,948 | ) | |||
INCOME TAXES (BENEFIT) | 129 | (138 | ) | ||||
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (8,097 | ) | (12,810 | ) | |||
CUMULATIVE EFFECT OF ACCOUNTING CHANGE | | (1,737 | ) | ||||
NET LOSS | $ | (8,097 | ) | $ | (14,547 | ) | |
See accompanying Notes to Condensed Consolidated Financial Statements.
2
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
|
Quarters Ended |
||||||
---|---|---|---|---|---|---|---|
|
March 31, 2000 |
April 2, 1999 |
|||||
|
(Unaudited) |
||||||
OPERATING ACTIVITIES | |||||||
Net Loss | $ | (8,097 | ) | $ | (14,547 | ) | |
Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities: | |||||||
Depreciation and Amortization | 13,867 | 13,739 | |||||
Other Operating Activities | (2,739 | ) | (728 | ) | |||
Changes in Operating Assets and Liabilities: | |||||||
Accounts Receivable | (803 | ) | 16,691 | ||||
Materials and Supplies | (2,997 | ) | 1,277 | ||||
Accrued Interest | 7,876 | (6,374 | ) | ||||
Other Current Assets | 1,950 | (581 | ) | ||||
Other Current Liabilities | (17,238 | ) | 22,904 | ||||
Net Cash (Used in) Provided by Operating Activities | (8,181 | ) | 32,381 | ||||
INVESTING ACTIVITIES |
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Property Additions | (8,121 | ) | (12,302 | ) | |||
Proceeds from Property Dispositions | 477 | 532 | |||||
Other Investing Activities | (511 | ) | (2,504 | ) | |||
Net Cash Used in Investing Activities | (8,155 | ) | (14,274 | ) | |||
FINANCING ACTIVITIES |
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Partner Distribution | | (541 | ) | ||||
Long Term Debt Repaid | (8,111 | ) | (1,000 | ) | |||
Other Financing | 4,208 | (628 | ) | ||||
Net Cash Used in Financing Activities | (3,903 | ) | (2,169 | ) | |||
Net (Decrease) Increase in Cash and Cash Equivalents |
|
|
(20,239 |
) |
|
15,938 |
|
Cash and Cash Equivalents at Beginning of Period | 30,841 | 49,356 | |||||
Cash and Cash Equivalents at End of Period | $ | 10,602 | $ | 65,294 | |||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
AMERICAN COMMERCIAL LINES LLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in Thousands)
|
March 31, 2000 |
December 31, 1999 |
|||||
---|---|---|---|---|---|---|---|
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(Unaudited) |
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|||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and Cash Equivalents | $ | 10,602 | $ | 30,841 | |||
Accounts Receivable, Net | 35,211 | 34,408 | |||||
Materials and Supplies | 45,513 | 42,516 | |||||
Restricted Investments | 25,347 | 25,436 | |||||
Other Current Assets | 21,136 | 23,086 | |||||
Total Current Assets | 137,809 | 156,287 | |||||
PROPERTIESNet |
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554,434 |
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559,777 |
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NET PENSION ASSET | 23,502 | 22,651 | |||||
OTHER ASSETS | 37,061 | 37,381 | |||||
Total Assets | $ | 752,806 | $ | 776,096 | |||
LIABILITIES |
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||||||
CURRENT LIABILITIES | |||||||
Accounts Payable | $ | 26,260 | $ | 39,095 | |||
Accrued Payroll and Fringe Benefits | 17,318 | 17,282 | |||||
Deferred Revenue | 11,306 | 10,548 | |||||
Accrued Claims and Insurance Premiums | 19,800 | 17,362 | |||||
Accrued Interest | 15,565 | 7,689 | |||||
Current Portion of Long-Term Debt | 26,038 | 28,730 | |||||
Other Current Liabilities | 48,679 | 52,106 | |||||
Total Current Liabilities | 164,966 | 172,812 | |||||
LONG-TERM DEBT |
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678,658 |
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684,077 |
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PENSION LIABILITY | 22,229 | 22,229 | |||||
OTHER LONG-TERM LIABILITIES | 27,122 | 29,050 | |||||
Total Liabilities | 892,975 | 908,168 | |||||
MEMBER'S DEFICIT |
|
||||||
Member's Interest | 220,074 | 220,074 | |||||
Other Capital | 161,768 | 161,768 | |||||
Retained Deficit | (522,011 | ) | (513,914 | ) | |||
Total Member's Deficit | (140,169 | ) | (132,072 | ) | |||
Total Liabilities and Member's Deficit | $ | 752,806 | $ | 776,096 | |||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
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 March 31, 2000 and December 31, 1999, the results of its operations and its cash flows for the quarters ended March 31, 2000 and April 2, 1999, such adjustments being of a normal recurring nature. Operating results for the quarter ended March 31, 2000 are not necessarily indicative of the results that may be expected for the fiscal year ended December 29, 2000.
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 1999 audited consolidated financial statements and the notes related thereto included in American Commercial Lines LLC's (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 13 weeks ended March 31, 2000 and the 14 weeks ended April 2, 1999, and the fiscal year (53 weeks) ended December 31, 1999.
NOTE 2. MATERIAL AND SUPPLIES
Materials and Supplies are carried at the lower of cost (average) or market and consist of the following:
|
March 31, 2000 |
December 31, 1999 |
||||
---|---|---|---|---|---|---|
Raw Materials | $ | 7,634 | $ | 7,975 | ||
Work in Process | 20,673 | 16,989 | ||||
Parts and Supplies | 17,206 | 17,552 | ||||
$ | 45,513 | $ | 42,516 | |||
NOTE 3. BUSINESS SEGMENTS
|
Reportable Segments |
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|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
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All Other Segments(1) |
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||||||||||
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Barging |
Construction |
Total |
|||||||||
Quarter ended March 31, 2000 | ||||||||||||
Revenues from external customers | $ | 135,202 | $ | 26,777 | $ | 5,498 | $ | 167,477 | ||||
Intersegment revenues | | 1,594 | 1,657 | 3,251 | ||||||||
Segment earnings | 3,344 | 2,965 | 1,662 | 7,971 | ||||||||
Quarter ended April 2, 1999 |
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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 |
5
The following is a reconciliation of ACL's revenues from external customers and segment earnings to ACL's consolidated totals.
|
Quarters Ended |
||||||
---|---|---|---|---|---|---|---|
|
March 31, 2000 |
April 2, 1999 |
|||||
Revenues | |||||||
Revenues from external customers | $ | 167,477 | $ | 173,217 | |||
Intersegment revenues | 3,251 | 13,929 | |||||
Elimination of intersegment revenues | (3,251 | ) | (13,929 | ) | |||
Operating revenue | $ | 167,477 | $ | 173,217 | |||
Earnings | |||||||
Total segment earnings | $ | 7,971 | $ | 4,316 | |||
Unallocated amounts: | |||||||
Interest expense | (17,296 | ) | (18,580 | ) | |||
Other, net | 1,357 | 1,316 | |||||
Loss before income taxes and cumulative effect of accounting change | $ | (7,968 | ) | $ | (12,948 | ) | |
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.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain
6
conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-dominated forecasted transaction. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation. This statement is effective for ACL's financial statements for fiscal years beginning after January 1, 2001, but earlier application is encouraged. ACL has not determined when it will adopt statement No. 133, but expects adoption will not have a significant effect on its consolidated financial statements.
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 March 31, 2000 and December 31, 1999 and for the quarters ended March 31, 2000 and April 2, 1999.
7
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed Combining Statement of Earnings for the Quarter
Ended March 31, 2000
(Dollars in Thousands)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
OPERATING REVENUE | $ | 164,549 | $ | 2,928 | $ | | $ | 167,477 | |||||
OPERATING EXPENSE | |||||||||||||
Materials, Supplies and Other | 75,812 | 4,381 | | 80,193 | |||||||||
Labor and Fringe Benefits | 39,624 | 1,613 | | 41,237 | |||||||||
Fuel | 18,143 | 467 | | 18,610 | |||||||||
Depreciation and Amortization | 11,340 | 1,823 | | 13,163 | |||||||||
Taxes, Other Than Income Taxes | 6,139 | 164 | | 6,303 | |||||||||
151,058 | 8,448 | | 159,506 | ||||||||||
OPERATING INCOME (LOSS) | 13,491 | (5,520 | ) | | 7,971 | ||||||||
OTHER EXPENSE (INCOME) | |||||||||||||
Interest Expense | 17,296 | | 17,296 | ||||||||||
Interest Expense, AffiliateNet | | 1,516 | (1,516 | ) | | ||||||||
Other, Net | (1,580 | ) | (1,293 | ) | 1,516 | (1,357 | ) | ||||||
15,716 | 223 | | 15,939 | ||||||||||
LOSS BEFORE INCOME TAXES | (2,225 | ) | (5,743 | ) | | (7,968 | ) | ||||||
INCOME TAXES | 19 | 110 | | 129 | |||||||||
NET LOSS | $ | (2,244 | ) | $ | (5,853 | ) | $ | | $ | (8,097 | ) | ||
8
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)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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, AffiliateNet | | 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 | ) | ||
9
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed Combining Statement of Cash Flows for the Quarter
Ended March 31, 2000
(Dollars in Thousands)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
OPERATING ACTIVITIES | |||||||||||||
Net Loss | $ | (2,244 | ) | $ | (5,853 | ) | $ | | $ | (8,097 | ) | ||
Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities: | |||||||||||||
Depreciation and Amortization | 12,044 | 1,823 | | 13,867 | |||||||||
Other Operating Activities | (1,150 | ) | (1,589 | ) | | (2,739 | ) | ||||||
Changes in Operating Assets and Liabilities: | |||||||||||||
Accounts Receivable | (2,728 | ) | 1,925 | | (803 | ) | |||||||
Materials and Supplies | (2,934 | ) | (63 | ) | | (2,997 | ) | ||||||
Accrued Interest | 7,876 | | | 7,876 | |||||||||
Other Current Assets | (839 | ) | 2,789 | | 1,950 | ||||||||
Other Current Liabilities | (19,190 | ) | 1,952 | | (17,238 | ) | |||||||
Net Cash (Used in) Provided by Operating Activities | (9,165 | ) | 984 | | (8,181 | ) | |||||||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
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|
|
|
|
Property Additions | (7,602 | ) | (519 | ) | | (8,121 | ) | ||||||
Proceeds from Property Dispositions | 477 | | | 477 | |||||||||
Other Investing Activities | (567 | ) | 258 | (202 | ) | (511 | ) | ||||||
Net Cash Used in Investing Activities | (7,692 | ) | (261 | ) | (202 | ) | (8,155 | ) | |||||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
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|
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Long-Term Debt Repaid | (8,111 | ) | (155 | ) | 155 | (8,111 | ) | ||||||
Other Financing Activities | 4,208 | (47 | ) | 47 | 4,208 | ||||||||
Net Cash Used in Financing Activities | (3,903 | ) | (202 | ) | 202 | (3,903 | ) | ||||||
Net (Decrease) Increase in Cash and Cash Equivalents |
|
|
(20,760 |
) |
|
521 |
|
|
|
|
|
(20,239 |
) |
Cash and Cash Equivalents at Beginning of Period | 29,238 | 1,603 | | 30,841 | |||||||||
Cash and Cash Equivalents at End of Period | $ | 8,478 | $ | 2,124 | $ | | $ | 10,602 | |||||
10
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)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
OPERATING ACTIVITIES | |||||||||||||
Net Loss | $ | (9,997 | ) | $ | (4,550 | ) | $ | | $ | (14,547 | ) | ||
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: | |||||||||||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 | |||||
11
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed Combining Statement of Financial Position at
March 31, 2000
(Dollars in Thousands)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | |||||||||||||
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 8,478 | $ | 2,124 | $ | | $ | 10,602 | |||||
Accounts ReceivableNet | 34,388 | 823 | | 35,211 | |||||||||
Materials and Supplies | 43,174 | 2,339 | | 45,513 | |||||||||
Restricted Investments | 25,347 | | | 25,347 | |||||||||
Other Current Assets | 18,790 | 2,346 | | 21,136 | |||||||||
Total Current Assets | 130,177 | 7,632 | | 137,809 | |||||||||
PROPERTIESNET | 472,393 | 82,041 | | 554,434 | |||||||||
NET PENSION ASSET | 23,502 | | | 23,502 | |||||||||
OTHER ASSETS | 115,770 | 1,400 | (80,109 | ) | 37,061 | ||||||||
Total Assets | $ | 741,842 | $ | 91,073 | $ | (80,109 | ) | $ | 752,806 | ||||
LIABILITIES |
|
||||||||||||
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable | $ | 25,130 | $ | 1,130 | $ | | $ | 26,260 | |||||
Accrued Payroll and Fringe Benefits | 17,320 | (2 | ) | | 17,318 | ||||||||
Deferred Revenue | 11,306 | | | 11,306 | |||||||||
Accrued Claims and Insurance Premiums | 19,800 | | | 19,800 | |||||||||
Accrued Interest | 15,565 | | | 15,565 | |||||||||
Current Portion of Long-Term Debt | 26,038 | | | 26,038 | |||||||||
Other Current Liabilities | 42,397 | 6,282 | | 48,679 | |||||||||
Total Current Liabilities | 157,556 | 7,410 | | 164,966 | |||||||||
LONG-TERM DEBT | 678,658 | 67,240 | (67,240 | ) | 678,658 | ||||||||
PENSION LIABILITY | 22,229 | | | 22,229 | |||||||||
OTHER LONG-TERM LIABILITIES | 23,568 | 3,554 | | 27,122 | |||||||||
Total Liabilities | 882,011 | 78,204 | (67,240 | ) | 892,975 | ||||||||
MEMBER'S DEFICIT |
|
||||||||||||
Member's Interest |
|
|
220,074 |
|
|
|
|
|
|
|
|
220,074 |
|
Other Capital | 161,768 | 44,943 | (44,943 | ) | 161,768 | ||||||||
Retained Deficit | (522,011 | ) | (32,074 | ) | 32,074 | (522,011 | ) | ||||||
Total Member's Deficit | (140,169 | ) | 12,869 | (12,869 | ) | (140,169 | ) | ||||||
Total Liabilities and Member's Deficit | $ | 741,842 | $ | 91,073 | $ | (80,109 | ) | $ | 752,806 | ||||
12
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Combining Statement of Financial Position at December 31, 1999
(Dollars
in Thousands)
|
Subsidiary Guarantors |
Other Subsidiaries |
Eliminations |
Combined Totals |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | |||||||||||||
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 29,238 | $ | 1,603 | $ | | $ | 30,841 | |||||
Accounts ReceivableNet | 31,660 | 2,748 | | 34,408 | |||||||||
Materials and Supplies | 40,240 | 2,276 | | 42,516 | |||||||||
Restricted Investments | 25,436 | | | 25,436 | |||||||||
Other Current Assets | 17,951 | 5,135 | | 23,086 | |||||||||
Total Current Assets | 144,525 | 11,762 | | 156,287 | |||||||||
PROPERTIESNET |
|
|
476,420 |
|
|
83,357 |
|
|
|
|
|
559,777 |
|
NET PENSION ASSET | 22,651 | | | 22,651 | |||||||||
OTHER ASSETS | 121,899 | 1,646 | (86,164 | ) | 37,381 | ||||||||
Total Assets | $ | 765,495 | $ | 96,765 | $ | (86,164 | ) | $ | 776,096 | ||||
LIABILITIES |
|
||||||||||||
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable | $ | 38,496 | $ | 599 | $ | | $ | 39,095 | |||||
Accrued Payroll and Fringe Benefits | 17,284 | (2 | ) | | 17,282 | ||||||||
Deferred Revenue | 10,548 | | | 10,548 | |||||||||
Accrued Claims and Insurance Premiums | 17,362 | | | 17,362 | |||||||||
Accrued Interest | 7,689 | | | 7,689 | |||||||||
Current Portion of Long-Term Debt | 28,730 | | | 28,730 | |||||||||
Other Current Liabilities | 47,245 | 4,861 | | 52,106 | |||||||||
Total Current Liabilities | 167,354 | 5,458 | | 172,812 | |||||||||
LONG-TERM DEBT |
|
|
684,077 |
|
|
67,395 |
|
|
(67,395 |
) |
|
684,077 |
|
PENSION LIABILITY | 22,229 | | | 22,229 | |||||||||
OTHER LONG-TERM LIABILITIES | 23,907 | 5,143 | | 29,050 | |||||||||
Total Liabilities | 897,567 | 77,996 | (67,395 | ) | 908,168 | ||||||||
MEMBER'S DEFICIT |
|
||||||||||||
Member's Interest |
|
|
220,074 |
|
|
|
|
|
|
|
|
220,074 |
|
Other Capital | 161,768 | 44,989 | (44,989 | ) | 161,768 | ||||||||
Retained Deficit | (513,914 | ) | (26,220 | ) | 26,220 | (513,914 | ) | ||||||
Total Member's Deficit | (132,072 | ) | 18,769 | (18,769 | ) | (132,072 | ) | ||||||
Total Liabilities and Member's Deficit | $ | 765,495 | $ | 96,765 | $ | (86,164 | ) | $ | 776,096 | ||||
13
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 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 American Commercial Barge Line LLC ("ACBL") and third parties. ACBL is the leading provider of river barge transportation throughout the Inland Waterways.
RESULTS OF OPERATIONS
Quarter Ended March 31, 2000 Compared with Quarter Ended April 2, 1999
ACL follows a 52/53 week fiscal year ending on the last Friday in December of each year. 2000 is a 52 week year compared to 1999 which was a 53 week year. The quarter ended March 31, 2000 was a 13 week quarter compared to the quarter ended April 2, 1999 which was a 14 week quarter.
Operating Revenue. Operating revenue for the quarter ended March 31, 2000 decreased 3% to $167.5 million from $173.2 million for the quarter ended April 2, 1999. The revenue decrease was due to one less week in the first quarter of 2000 compared to the year ago quarter, offset by improved domestic barging rates.
Domestic barging revenue increased $2.9 million to $132.3 million primarily due to increased freight rates offset by the shorter quarter. International revenues fell $2.3 million to $2.9 million primarily due to the shorter quarter along with the loss of a vessel charter agreement in Venezuela and lower volumes in the Argentine based operation. Revenue at Jeffboat, ACL's marine construction subsidiary, decreased $5.5 million to $26.8 million, partially due to the shorter quarter but also reflecting that no towboats were completed in the first quarter of 2000 compared to one in the year ago quarter and reduced hopper barge construction volume for third-party customers.
Operating Expense. Operating expense for the quarter ended March 31, 2000 declined 6% to $159.5 million from $168.9 million in the first quarter of 1999. Domestic barging expenses decreased $2.8 million due to the shorter quarter and improved operating conditions, offset by higher fuel prices. Fuel price before the effect of user tax and hedging was 75 cents per gallon in the first quarter of 2000 compared to 39 cents per gallon in the first quarter of 1999. International barging expenses fell $1.3 million to $8.4 million due to the shorter quarter and reduced labor and repair expense in the Venezuelan operation. Jeffboat's expenses decreased $5.1 million to $23.8 million due to the shorter quarter, reduced construction volumes and improvements in labor productivity and steel price.
ACL implemented a number of internal changes in the first quarter of 2000, including staff reductions which will result in cost savings of $2 million per year, and reassignment of senior level responsibilities. Changes in health and benefit plans, including the American Commercial Lines LLC Pension Plan, that affect salaried employees covered by the plans, were also implemented and will result in annual cost savings of $5 to $6 million. Management of the barge cleaning facility at Baton Rouge has been assigned to a non-affiliated third party whose core business is barge cleaning, with ACL receiving a variable monthly rent that is linked to the facility's operating profit.
Operating Income. Operating income for the quarter ended March 31, 2000 increased 86% to $8.0 million from $4.3 million for the first quarter 1999, due to the reasons discussed above.
14
Interest Expense. Interest expense for the first quarter of 2000 fell to $17.3 million from $18.6 million for the same period in 1999. The decline is due to a $53.2 million reduction in long term debt at the end of the first quarter 2000 compared to the end of the first quarter 1999.
Loss Before Income Taxes and Cumulative Effect of Accounting Change. The loss before income taxes and before the cumulative effect of accounting change was $8.0 million in the first quarter 2000 compared to a loss of $12.9 million in the same period in 1999 due to the reasons discussed above.
Income Taxes (Benefit). Income taxes for the quarter were $0.1 compared to a benefit of $0.1 million in the first period of last year.
Cumulative Effect of Accounting Change. ACL recognized $1.7 million in non-cash expense related to a workers compensation secondary injury fund in accordance with adoption of the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-3 in the first quarter of 1999.
Net Loss. Net loss for the quarter decreased to $8.1 million from a loss of $14.5 million in the same period last year due to the reasons discussed above.
Outlook
Domestic barging demand and spot rates for grain, bulk, steel and liquids are expected to improve in 2000 as compared to 1999 levels. The U.S. Department of Agriculture currently forecasts 2000 corn exports of 1.88 billion bushels, a level similar to 1999. A recently issued consensus forecast of leading business economists shows that gross domestic product (GDP) is expected to grow 6.4% in the year 2000 compared to 5.7% in 1999. ACL's domestic and international barging volumes should also increase as river depths recover from the drought conditions of 1999 in both North and South America.
The average price of fuel consumed by ACBL vessels in the second quarter is expected to remain consistent with the first quarter price of 75 cents per gallon. ACBL vessels consume approximately 115 million gallons annually and generally ratably throughout the year. ACBL has contract price adjustment clauses and a fuel hedging program which provide protection for 70 to 80% of gallons consumed. Contract adjustments are deferred one quarter.
ACL is in the process of continuing to make additional organizational changes consistent with its strategy of using third parties to operate ancillary services in areas where ACL's resources can be more effectively focused on core assets.
As a part of the strategy to focus on core assets, ACL has entered into an agreement to sell its 100% membership interest in Waterway Communications System LLC ("Watercom") to Mobex Network Services Company. A definitive sales agreement subject to regulatory approval was executed in the second quarter of 2000. Final closing is expected in the third quarter of 2000. The sale of Watercom does not significantly affect ACL's expected future operating income or cash flow from operating activities.
Liquidity and Capital Resources
As of March 31, 2000, ACL had outstanding indebtedness of $680.3 million, including $374.3 million drawn under a Tranche B term loan facility and a Tranche C term loan facility (collectively, the "Term Loans") and $300.0 million aggregate principal amount of Series B 101/4% Senior Notes (the "Senior Notes"). ACL had other notes outstanding, including a note in connection with the purchase of two formerly leased towboats, of which $6.0 million were outstanding at quarter end. The outstanding indebtedness of $680.3 million is net of $24.4 million of Terminal Revenue Refunding Bonds which are discussed below. ACL also had securitized $43.5 million of the trade receivables of two subsidiaries as of the end of the quarter.
15
In June 1998, ACL deposited $26.1 million into an escrow fund that will be used to repay $24.4 million principal of certain Terminal Revenue Refunding Bonds. ACL will repay the entire principal, interest and redemption premium on these bonds at the earliest allowable prepayment date which will occur in the second quarter of 2000. There are sufficient funds in the escrow account to substantially cover all amounts due. These funds are invested in U.S. government obligations through an irrevocable trust. The redemption premium of $0.7 million will be reflected as an extraordinary item on the Consolidated Statement of Earnings in the second quarter of 2000.
The Senior Credit Facilities, which include the Terms Loans and a $100.0 million revolving credit facility (the "Revolving Credit Facility"), and the Indenture dated June 23, 1998 among ACL and United States Trust Company of New York (the "Indenture") contain a number of covenants with specified financial ratios and tests including, with respect to the Senior Credit Facilities, maximum leverage ratios which 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 the financial ratios is affected by adverse weather conditions, seasonality and other risk factors inherent in its business.
Cash totaled $10.6 million at March 31, 2000 and there were no loans outstanding under the Revolving Credit Facility. Cash used in operations totaled $8.4 million in the first quarter of 2000 compared to cash generated from operations of $32.4 million in the first quarter of 1999. The decrease was primarily due to the timing of cash disbursements related to accounts payable.
Management believes that cash generated from operations is sufficient to fund its cash requirements, including capital expenditures for fleet maintenance, working capital, interest payments and scheduled principal payments. ACL may from time to time, borrow under the Revolving Credit Facility.
Capital expenditures are expected to be $24 million for 2000, with most expenditures being for marine equipment maintenance. As of March 31, 2000, $8.1 million had been spent, including a one time buy out of a barge lease obligation for $1.8 million.
Proceeds from the sale of Watercom will be used to reduce the amounts outstanding under the two Term Loans.
Year 2000
ACL continued to monitor its systems through the end of the first quarter of 2000. No significant year 2000 errors or discrepancies were detected and no costs were incurred. ACL will no longer report on year 2000 issues.
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.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the
16
exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and resulting designation. This statement is effective for ACL's financial statements for fiscal years beginning January 1, 2001, but earlier application is encouraged. ACL has not determined when it will adopt Statement No. 133, but expects adoption will not have a significant effect on its consolidated financial statements.
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 discussions 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:
As a result of these and other factors discussed in and incorporated by reference from "Risk Factors," Exhibit 99.1 to ACL's 1999 Annual Report on Form 10-K for the year ended December 31, 1999, 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.
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 1999 Annual Report on Form 10-K for the year ended December 31, 1999.
17
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
Exhibit 27.1Financial Data Schedule
Reports on Form 8-K
There were no reports on Form 8-K filed in the first quarter of 2000.
18
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 11, 2000 |
|
By: |
/s/ JAMES J. WOLFF |
Name: | James J. Wolff | ||
Title: | Senior Vice President and Chief Financial Officer (Principal Accounting Officer) |
19
|