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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER: 0-9264
AMERICAN CLASSIC VOYAGES CO.
(Exact name of registrant as specified in its charter)
DELAWARE 31-0303330
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
(312) 258-1890
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $67.0 million based upon average bid and asked prices of $10.125
per share on March 24, 1997 on The Nasdaq Stock Market. Using beneficial
ownership of stock rules adopted pursuant to Section 13 of the Securities
Exchange Act of 1934, certain persons designated as affiliates for purposes of
this computation may not be held to be affiliates upon judicial determination.
As of March 24, 1997, there were 13,910,835 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
PART III Portions of the registrant's definitive Proxy Statement, which will
be filed with the Securities and Exchange Commission by April 28, 1997.
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AMERICAN CLASSIC VOYAGES CO.
INDEX
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ITEM DESCRIPTION PAGE
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<S> <C> <C>
Part I
Item 1 Business........................................... 3
Item 2 Properties......................................... 9
Item 3 Legal Proceedings.................................. 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Part II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters................................ 11
Item 6 Selected Financial Data............................ 11
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 11
Item 8 Financial Statements and Supplementary Data........ 11
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............. 11
Part III
Item 10 Directors and Executive Officers of the Registrant. 12
Item 11 Executive Compensation............................. 12
Item 12 Security Ownership of Certain Beneficial Owners
and Management..................................... 12
Item 13 Certain Relationships and Related Transactions..... 12
Part IV
Item 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K............................ 13
</TABLE>
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AMERICAN CLASSIC VOYAGES CO.
PART I
ITEM 1. BUSINESS
GENERAL
American Classic Voyages Co. and its subsidiaries (the "Company") is the
leading provider of overnight passenger cruises on inland waterways in the
continental U.S. and among the Hawaiian islands. The Company operates two
cruise lines under the names of The Delta Queen Steamboat Co. ("Delta Queen")
and American Hawaii Cruises ("American Hawaii"). Delta Queen currently operates
three vessels having 1,024 total passenger berths, providing two- to 14-night
paddlewheel-driven steamboat cruise vacations on the Mississippi, Ohio,
Cumberland, Tennessee, Arkansas, Illinois and Atchafalaya Rivers as well as the
Intracoastal Waterway. American Hawaii, acquired in August 1993 (the
"Acquisition"), operates one vessel having 817 total passenger berths,
providing three-, four- and seven-night inter-island cruises in Hawaii.
American Hawaii also owns the Constitution steamship which was removed from
service on June 27, 1995. The Constitution will not be returned to service and
will remain in wet berth at a shipyard in Portland, Oregon while the Company
explores various other options for the vessel.
The Company believes it is the largest owner and operator of U.S. flag
passenger vessels. Since non-U.S. flag vessels are prohibited under Federal law
from receiving and discharging passengers at any two U.S. ports without
stopping at an intervening non-U.S. port, the Company's U.S. flag designation,
arising from having U.S. built, owned and crewed vessels, provides it with
significant marketing and operating advantages. As an American flag carrier,
there are certain restrictions on foreign ownership of the Company's common
stock.
The Company, a Delaware corporation incorporated in 1985, is a holding company,
which owns and controls: (i) The Delta Queen Steamboat Co., ("DQSC"), formerly
known as DQSC-2, Inc., which operates Delta Queen through various subsidiaries;
and (ii) Great Hawaiian Cruise Line, Inc. ("GHCL"), which operates American
Hawaii, through various subsidiaries. DQSC also owned and operated the Maison
Dupuy Hotel (the "Hotel"), located in New Orleans, prior to its sale on October
16, 1996. The Company employed 1,470 persons as of December 31, 1996. The
Company's executive offices are located at Two North Riverside Plaza, Chicago,
Illinois, 60606, and its telephone number is (312) 258-1890.
During March 1992, the Company completed an initial public offering of
4,140,000 shares of its $0.01 par value common stock at a public offering price
of $13.50 per share. In December 1993, the Company completed a public offering
of an additional 2,760,000 shares of common stock at a price of $16.00 per
share.
REVIEW OF 1996
In 1996, the Company returned to profitable operations by reporting operating
income, excluding one-time charges, of $7.9 million as compared to a 1995 net
operating loss, also excluding one-time charges, of $8.6 million. This
operating improvement was mainly due to the turnaround of the American Hawaii
operations which realized a 95% increase in gross profit as a result of
reducing costs and improving yields since the second half of 1995. At the Delta
Queen line, the Company utilized additional capacity of the American Queen
which produced lower than historical fare per passenger night ("fare per
diems") as gross profit increased only 9% though there was an 18% increase in
revenues. This increase in Delta Queen capacity, among other factors, had
reduced the booking window for a large portion of its inventory to three months
in advance of a cruise versus its optimal schedule of six to nine months in
advance. Management took steps in the first half of 1996 to correct this trend
and saw positive results by the end of 1996 in its 1997 advance reservations
levels which were both higher in occupancy and fare per diems than at the end
of 1995.
In 1996, the Company also made strategic decisions to better position itself
for the future with regard to its asset base. The Company decided not to return
the Constitution to service after reviewing the scope and cost of a
reconstruction project, thereby recognizing a $38.4 million impairment
write-down (1996 one-time charge mentioned above) in the first quarter of 1996.
In addition, the Company sold the Maison Dupuy Hotel, its only non-strategic
asset, for $22.0 million of cash and additional future payments of up to $2.0
million in the fall of 1996 and recognized an $11.7 million gain related to
this sale.
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NARRATIVE DESCRIPTION OF BUSINESS
The Company owns and operates two cruise lines: Delta Queen, which consists of
three U.S. flag paddlewheel steamboats and American Hawaii, which consists of
one U.S. flag ocean liner offering overnight cruise vacations among the
Hawaiian islands. The Company does not offer gaming on its vessels. American
Hawaii also owns the Constitution steamship which will not be returned to
service and will remain in wet berth at a shipyard in Portland, Oregon while
the Company explores various other options for the vessel. The Company, through
Delta Queen, also owned and operated the Maison Dupuy Hotel located in the New
Orleans' French Quarter, prior to its sale on October 16, 1996.
Delta Queen--Steamboatin'(R) Cruise Line
Delta Queen markets its steamboats as the "Legendary Delta Queen", the
"Magnificent Mississippi Queen" and the "Grand American Queen" and the cruise
experience using its Steamboatin' registered servicemark. Delta Queen's
steamboats travel along the Mississippi, Ohio, Cumberland, Tennessee, Arkansas,
Illinois and Atchafalaya Rivers, as well as the Intracoastal Waterway. Ports of
embarkation/debarkation include New Orleans, St. Paul, Memphis, St. Louis,
Pittsburgh, Cincinnati, Louisville, Nashville, Chattanooga, Little Rock, Tulsa
and Galveston. Other ports of call, such as Hannibal, Missouri; Prairie du
Chien, Wisconsin; Vicksburg and Natchez, Mississippi; Ottawa, Illinois and
Shiloh, Tennessee include locations of historical or cultural significance. The
Company also promotes special cruise packages revolving around specific
seasonal and activity themes including: "In The Good Old Summertime," an
old-fashioned American summertime experience including barbershop quartets,
barbecues and ice cream socials; "Fall Foliage," an opportunity to experience
autumn colors on the Ohio and northern Mississippi rivers; "Kentucky Derby"
cruises that include attendance at the Kentucky Derby horse race; "The Great
Steamboat Race," a reenactment of the famous 19th Century race between the
Natchez and the Robert E. Lee steamboats; "Old Fashioned Holidays," a
southern-style Thanksgiving and Christmas, including Cajun and ante-bellum
customs of these holidays; "Spring Pilgrimage" cruises, highlighting springtime
in the Old South which include tours of ante-bellum homes; "Music of the River"
cruises, exploring the origin and development of America's rich musical
heritage; "World War II" cruises, commemorating the war years at home and
abroad; and "Civil War" cruises, which take an insightful look into our
nation's past by visiting battle sites and historical reenactments. In its
continuing effort to upgrade its cruise product, Delta Queen recently
introduced several new theme cruises such as "Dixie Fest" cruises, celebrating
Dixie's diverse flavors in food and music; and "The Year that Was..." cruises,
in conjunction with Reminisce magazine, reliving the music and memories of the
1940s.
The Steamboatin' cruise fare for an average five-night cruise, as stated in the
1997 cruise brochure, ranges from luxurious suites at $636 per person per night
to interior cabins with bunk beds at $250 per person per night, based on double
occupancy. The fare also includes three full service meals per day, along with
mid-afternoon snacks and a late night buffet, and day and night entertainment
on the vessels.
To reach additional customers, Delta Queen has developed products which combine
its steamboat cruises with escorted tours and overnight stays at historic port
cities. It can provide these combined land and cruise packages at a lower
average per diem price to a customer than a cruise-only trip. Delta Queen
offers additional services and products to its passengers, including trip
cancellation insurance, bar services, beauty salon services, photographs, shore
excursions and gift shop products. Delta Queen also distributes a line of
specialty products through its onboard gift shops utilizing the Steamboatin'
logo. As a convenience to its passengers, Delta Queen will also arrange hotel
accommodations and air and land transportation to and from the cruise
embarkation and/or debarkation point.
American Hawaii--American Hawaii Cruise Line
American Hawaii features three-, four- and seven-night cruise vacations among
the Hawaiian islands. Ports of call include Hilo and Kona on the Big Island of
Hawaii; Kahului, Maui; Nawiliwili, Kauai; and Honolulu, Oahu. Many cruise
passengers also choose to extend their stay in Hawaii, purchasing hotel
accommodations through American Hawaii. American Hawaii offers more than 50
optional shore excursion activities of interest to its passengers, including
helicopter rides, snorkeling, sea tours and other excursions to observe some of
the spectacular natural Hawaiian sights. The itinerary also affords an
opportunity to view Mount Kilauea, one of the world's few active volcanoes, and
the soaring sea cliffs of the inaccessible Na Pali coast.
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American Hawaii offers theme cruises organized around specific activities or
seasons, including: "Whales in the Wild" cruises, in which passengers can
observe whales that make Hawaii their winter playground;
"Aloha Fest" cruises, which emphasize native Hawaiian ceremonies and
rituals; and "Big Band" cruises featuring 1940's Big Band orchestra music and
Golden Age of Movies film screenings.
Cruise fares on American Hawaii range in price, based on double occupancy, from
luxurious suites at $456 per person per night to interior cabins with a single
sofa bed and fold-away upper berth at $164 per person per night, as advertised
in the 1997 cruise brochure. The fare also includes three full service meals
per day, along with mid-afternoon snacks and a late evening buffet, as well as
day and night entertainment on the Independence. American Hawaii also offers
seasonal youth programs to attract passengers with children, as the
Independence has a large number of cabins that can accommodate three and four
passengers.
American Hawaii offers additional services and products to its passengers,
including trip cancellation insurance, bar services, beauty salon services,
photographs, shore excursions and gift shop products. American Hawaii also
distributes a line of specialty products through its onboard gift shops
utilizing the "American Hawaii Cruises" logo. American Hawaii also offers air
transportation arrangements to and from the Hawaiian islands through agreements
with several major commercial airlines as well as hotel accommodations on the
Hawaiian islands.
MARKETING
The Company markets Delta Queen and American Hawaii lines separately.
Delta Queen is marketed as an opportunity to experience an historical mode of
travel reflecting a bygone era which is part of the American heritage, and
promotes its steamboat vacation package as a casual, relaxed, educational and
cultural experience. The Company believes individuals are attracted to its
paddlewheel steamboat cruises because of the quality of its vacations and the
unique characteristics of the steamboat experience, including the connection to
American history.
Delta Queen also places full color advertisements in publications such as
Gourmet, Family Circle, Reader's Digest and Modern Maturity, which typically
appeal to the Company's target customers. In addition, Delta Queen utilizes
newspaper advertising in selected major markets. Its cruise vacations are often
the subject of feature articles in general interest, travel and leisure
magazines, vacation guides and newspaper travel sections, such as The New York
Times, The Washington Post and Better Homes & Gardens. In 1996, Delta Queen was
featured or mentioned in approximately 3,000 articles. The Company believes
this media exposure provides an important source of promotion and actively
seeks such exposure through its in-house public relations department.
Each year, Delta Queen distributes approximately 1.4 million copies of a full
color sales brochure illustrating its paddlewheel steamboat vacations. These
brochures are sent, in response to specific inquiries, to accredited travel
agencies targeted by Delta Queen and to former passengers. In addition, Delta
Queen has a direct mail system which solicits both past and prospective
passengers.
American Hawaii is marketed as an authentic Hawaiian experience and targets
individuals interested in the romance, exotic imagery and convenience of
visiting the different Hawaiian islands aboard a classic ocean liner. The
Company promotes its Hawaiian vacation package as a unique way to explore the
Hawaiian islands and learn about Hawaiian culture.
American Hawaii places full color advertisements in publications such as Modern
Maturity and Travel & Leisure and purchases newspaper advertising in selected
major markets for specific promotions. American Hawaii has been the subject of
feature articles in national travel and leisure magazines, vacation guides and
newspaper travel sections while marketing tie-ins have been implemented with
partners such as Dole Packaged Foods Corp. Approximately 700,000 full color
sales brochures illustrating American Hawaii's operations are distributed each
year to travel agencies and to prospective customers in response to specific
inquiries.
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SALES
The Company maintains separate field sales and reservation staffs for Delta
Queen and American Hawaii. The Company sells its cruise products primarily
through two major channels, of which the most significant channel is travel
agents operating throughout the U.S. The Company has programs which educate
travel agents about the unique nature of the Company's travel experiences, the
vessels' itineraries, special programs, theme cruises and pricing policies. To
assist in obtaining reservations from travel agents, the Company engages in
both consumer and trade-oriented advertising, including direct mailings of the
Company's literature to travel agencies. The Company maintains contact with
travel agents through Delta Queen's 14 and American Hawaii's 13 field sales
personnel who conduct educational seminars and attend trade shows. The
Company's second major sales channel is group travel organizers, consisting of
clubs, travel agencies and tour operators who arrange for the sale of cruise
vacations at discounted fares. The Company provides a variety of incentives to
these organizers, including fare discounts and promotional materials. During
1996, no single travel agency or consortium accounted for more than 10% of the
Company's revenues.
PRICING AND ADVANCE RESERVATIONS
The Company issues separate full color sales brochures for each of Delta Queen
and American Hawaii, which contain descriptive information, itineraries and
fare schedules, prior to the beginning of each upcoming calendar year. The
Company prices its cruise fares, based on cabin category, using a single
pricing schedule for each cruise line throughout the calendar year. As an
inducement for passengers to book early, the Company generally offers an early
booking discount which typically consists of the current year's fares to
passengers who book more than three months in advance for the upcoming year. In
addition, the Company offers to group travel organizers and others certain
discounts from the Company's published fare schedule. From time to time, in
order to stimulate demand, the Company may offer discounts from the Company's
published fare schedule. In 1996, due to the additional capacity brought on by
the American Queen, Delta Queen's yields decreased compared to the yields of
prior years.
The Company actively markets its cruises up to one year prior to the cruise
year and the level of advance reservations at any given date provides the
Company with an indication of its future fare revenue. A significant portion of
such reservations is booked more than six months in advance of the cruise date.
Generally, customers must pay a $200 to $250 refundable deposit within 14 days
of booking a cruise on Delta Queen and a $300 refundable deposit within one
week of booking a cruise on American Hawaii and both cruise lines require the
balance of the cruise fare to be remitted 60 days in advance of the departure
date. Cancellations received less than 60 days prior to departure are subject
to a cancellation charge ranging from 25% to 100% of the cruise fare. For a
nominal fee, the Company also offers trip cancellation insurance through a
third-party insurer which allows the customers to reduce their exposure to
cancellation charges. As of December 31, 1996, advance reservations for the
1997 cruise year for both Delta Queen and American Hawaii combined were $82.6
million. However, the Company cannot specifically determine the amount of
revenues to be derived from advance reservations as there can be no assurance
that any particular advance reservation will result in any revenue to the
Company.
SEASONALITY
The Company's operations are seasonal. At Delta Queen, historically there is
greater passenger interest at higher yields in the spring and fall months of
the year and the vessels typically undergo an annual lay-up in January. In
1996, Delta Queen's revenues and operating income included a full year of
operations for the American Queen which was introduced in June of 1995.
American Hawaii historically experienced greater passenger interest in the
summer and fall months of the year. During the summer months in particular,
American Hawaii tends to have average occupancy in excess of 100% as the number
of families sharing cabins with children increases significantly during this
period.
The Company's 1996 results are not comparable to 1995 due to (i) the
introduction of the American Queen in June of 1995 and (ii) the 1995 mid-year
removal of the Constitution and the subsequent full year out-of-service period
in 1996. In 1997, the Independence will be out of service for a four-week
period beginning May 17, 1997 for a drydock, therefore, the Company's 1997
results will not be comparable to prior years.
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COMPETITION
The vacation industry is highly fragmented and characterized by a significant
degree of competition among a large number of participants, including cruise
lines, land-based destination resorts, sightseeing tours and a wide range of
other vacation options. The Company's vessels compete against all of these
vacation options. Since leisure spending is discretionary, adverse economic
conditions which affect the Company's customer base, including uncertainty over
inflation and interest rate fluctuations, may negatively impact the Company's
performance.
The Company believes that it is the largest provider of overnight cruise
vacations on U.S. flag vessels, and that its cruise experience differentiates
the Company's vacation packages from other overnight cruise vacations and other
vacation alternatives. The Company further believes its principal competitive
strengths include: (i) a high level of recognition by, and familiarity with,
its customer base; (ii) the distinctive nature of its products as an
opportunity to experience historical aspects of American heritage and the
beauty of the Hawaiian islands; and (iii) the vessels' status as U.S. flag
vessels with predominantly American crews.
All of the Company's vessels are registered under the U.S. flag for coastwide
trade, which requires that they be U.S. built, owned and crewed. Federal
maritime laws prohibit non-U.S. flag vessels from receiving and discharging
passengers at any two U.S. ports without stopping at an intervening non-U.S.
port. Should the law be amended or repealed, other entities, including those
with greater resources than the Company, could introduce overnight non-U.S.
flag vessels on inland waterways and among the Hawaiian islands in direct
competition with the Company's vessels. See "Government Regulation" below. The
entry of direct competition could adversely affect the Company's ability to
maintain or further increase occupancy or prices for cruise vacations and could
result in lower margins, thereby adversely affecting the profitability of the
Company's business.
GOVERNMENT REGULATION
Federal maritime law currently prohibits non-U.S. flag vessels from receiving
and discharging passengers at any two U.S. ports without stopping at an
intervening non-U.S. port. Periodically there has been debate about the
potential amendment or repeal of this law and the broader cabotage laws
encompassed under the Merchant Marine Act of 1920, also known as the Jones Act.
In August 1995, the Company helped to organize the Maritime Cabotage Task Force
("MCTF"), a broad national coalition of 415 companies, associations and unions
representing all modes of domestic transportation. The MCTF is responsible for
monitoring potential adverse changes in legislation that could affect the U.S.
maritime industry and publicizing the economic and national security issues
relevant to maintaining a strong U.S. flag vessel industry. Through the
coalition's efforts, numerous legislators and key Congressional staff members
have been made aware of the substantive issues and positions surrounding any
changes to this legislation. In 1996, a bill was introduced to modify the Jones
Act but did not receive significant support.
The Company is subject to various Federal and state regulations which affect
the operations of its vessels. Most importantly, the Company's vessels, as U.S.
flag vessels, are subject to regulations promulgated by the U.S. Department of
Transportation and enforced by the U.S. Coast Guard ("Coast Guard"). The Coast
Guard conducts both scheduled and unannounced inspections to determine
compliance with these regulations and has the authority to delay or suspend
cruises. The Delta Queen vessels must be drydocked for an inspection of the
hulls' exteriors every five years. Previously, American Hawaii was required to
drydock the Independence approximately every 18 months for a similar procedure.
The Coast Guard is empowered to increase the interval between inspections and
accordingly, the Company has requested and received permission from the Coast
Guard to lengthen the interval of the drydocking of the Independence to every
30 months, subject to annual hull surveys. In May 1997, the Independence will
be out of service for a four-week period for its once every 30-month drydock.
The Mississippi Queen was drydocked, as scheduled, in December 1995 while the
Delta Queen was drydocked in mid-December 1996 as the Company had received a
one-year extension on its five-year drydocking interval.
The Company, like other entities that operate vessels on U.S. waterways, is
subject to certain Federal, state and local health and safety laws, regulations
and ordinances, such as the Clean Air Act, Clean Water Act, Ocean Dumping Act,
Occupational Safety and Health Act, Resource Conservation and Recovery Act and
the Comprehensive Environmental Response, Compensation and Liability Act.
Periodically, the Company incurs expenditures to keep its vessels in compliance
with such environmental laws and regulations. The Company does not anticipate
making any material expenditures in 1997 with respect to environmental matters.
However, the coverage and attendant compliance costs associated with such laws,
regulations and ordinances may result in future additional costs to the
Company's operations.
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The Safety of Life at Sea Convention, or SOLAS, to which the U.S. is a party,
requires that passenger vessels for 50 or more passengers be constructed of
fire retardant materials. Since the Delta Queen's superstructure is wood, the
vessel requires a legislative exemption from the SOLAS requirement. Since 1968
Congress has granted the Delta Queen seven consecutive Congressional exemptions
from this SOLAS requirement because of fire prevention and safety enhancements
made to the vessel and the Delta Queen's historic status. The legislation
exempting the Delta Queen requires the Company to notify potential passengers
that the Delta Queen does not comply with applicable fire standards and
prohibits the Company from disclaiming liability for loss due to fire caused by
the Company's negligence. The current exemption has been extended to November
1, 2008. The Company's ability to operate the Delta Queen is dependent upon
retaining its current Congressional exemption and obtaining additional
exemptions subsequent to 2008. For ocean-going passenger vessels, fire safety
amendments to SOLAS require that certain enhancements to life safety systems
must be made by October 1, 1997. The Independence will be brought into
compliance during its spring 1997 drydock as discussed above.
The Company has alcoholic beverage licenses for the Independence. In addition,
the Company has alcoholic beverage licenses for the Delta Queen, Mississippi
Queen and American Queen in Louisiana, and may determine to file additional
applications in certain of the other states in which the steamboats operate.
The Company does not anticipate any material expenses, delay or other adverse
developments if it files additional applications or licenses. In addition, the
Company may be required to qualify to do business in, or to pay or remit taxes
or fees to, certain states or political subdivisions thereof. In addition, the
Company may be subject to fines or other penalties for failure to comply with
laws and regulations of one or more states requiring licensing, qualification
or other action. Neither the costs of compliance by the Company with such laws
or regulations, nor penalties imposed or sought to be imposed on the Company
for noncompliance have been material in the past. However, no assurance can be
given that such costs or penalties may not increase in the future.
The Company's vessels are also subject to regulation under the Federal Food,
Drug and Cosmetic Act and the Public Health Service Act.
The Federal Maritime Commission ("FMC") regulates passenger vessels with 50 or
more berths departing from U.S. ports and requires that operators post security
to be used in the event the operator fails to provide cruise services, or
otherwise satisfy certain financial standards. The Company has been approved as
a self-insurer by the FMC, and therefore, subject to continued approval, is not
required to post security for passenger cruise deposits. The FMC has recently
reviewed its standards and in June 1996 issued proposed regulations to increase
the financial responsibility requirements. The Company filed its position on
the proposals, as it believes that the FMC's current standards provide
passengers with adequate protection in the event of an operator's
non-performance and that further requirements may impose an undue burden on
operators. If implemented, these proposed regulations would be phased in over
time and, among other things, require operators qualifying as a self-insurer,
such as the Company, to satisfy a working capital test, in addition to the
existing net worth test, and to provide third-party coverage for 25% of its
unearned passenger revenue in the form of a surety bond or similar instrument.
At this time, the Company cannot predict if the proposed changes will be
approved as currently constituted, or at all. If they are implemented, the
proposed changes would require that the Company establish a bond to cover a
portion of its passenger deposits and payments, which may impact the Company's
liquidity.
INSURANCE
The Company carries marine liability insurance on its vessels through Steamship
Mutual Underwriting Association (Bermuda) Limited ("Steamship Mutual"), a
non-profit, mutual protection and indemnity association. The Company's marine
liability insurance arrangements are typical of common marine industry
practices and, subject to certain deductibles, provide coverage for losses,
other than hull physical damage losses, resulting from its activities as a ship
owner, including casualty damage by the vessels and claims by crew members,
passengers and other third parties. The policy has no maximum limit of
liability coverage, except for a $500 million limit, per occurrence, for oil
pollution liability claims. As a member of Steamship Mutual, the Company pays
its annual premiums based largely on its risk characteristics and loss
experience, and the loss experience of other members. In addition, because
Steamship Mutual and other maritime mutual indemnity associations around the
world pool a portion of their loss experience in risk sharing arrangements,
Steamship Mutual also may be affected by the loss experience of other mutual
protection and indemnity organizations.
The Company's annual protection and indemnity insurance premium consists of an
advance call which recently has approximated 71% of the expected total annual
premium, and a supplemental call determined by Steamship Mutual's managing
directors later in the year. The Company may be liable for a supplemental call
in excess of the anticipated amount in the event that Steamship Mutual incurs
heavy losses or experiences unusual circumstances.
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The Company also carries hull and machinery coverage with various insurers,
which insures against physical loss and damage to the vessels, subject to a
$750,000 deductible and/or co-payment requirements per occurrence per vessel.
Although the Company believes the risk of a total loss of the vessels is
remote, it acknowledges that the replacement costs would exceed these coverage
amounts.
In addition, the Company maintains contingency coverage for lost revenue in the
event the Company is forced to cancel a cruise, in whole or in part, or incurs
additional expense to prevent or reduce a loss. Coverage for the lost revenue
under the policy is subject to a deductible of seven days, insured between 27%
and 40% of any loss and is limited to $3.0 million on the Delta Queen vessels
and $4.0 million on the Independence. The coverage for additional expenses
incurred to prevent a loss is subject to a $100,000 aggregate deductible and
provides coverage up to $1.0 million.
The Company believes its insurance coverage is adequate based on the Company's
assessment of the risks to be insured, the probabilities of loss and the
relative cost of available coverages.
EMPLOYEES
The Company employed 1,470 persons as of December 31, 1996. Of the vessels'
onboard employees, the American Maritime Officers of the AFL-CIO ("American
Maritime Officers") represented approximately 116 individuals, and the
Seafarers International Union of North America, Atlantic, Gulf, Lakes and
Inland Waters District of the AFL-CIO ("Seafarers") represented approximately
676 individuals. The American Maritime Officers' contracts for Delta Queen and
American Hawaii expire in February 2004 and May 2000, respectively, and the
Seafarers' contracts for Delta Queen and American Hawaii expire in December
2003 and May 2000, respectively. Since 1986, the Company has not experienced
any work stoppages, and believes its relations with its employees are good.
ITEM 2. PROPERTIES
The Company's principal physical properties include the four vessels, the Delta
Queen, Mississippi Queen, American Queen and Independence. The Constitution was
removed from service on June 27, 1995. It will not be returned to service and
will remain in wet berth at a shipyard in Portland, Oregon while the Company
explores various options for the vessel. The Company also owned and operated
the Maison Dupuy Hotel prior to its sale on October 16, 1996. In addition, the
Company leases the Robin Street Wharf facility in New Orleans, Louisiana and
office space in Chicago, Illinois and Honolulu, Hawaii.
DELTA QUEEN
The Delta Queen was constructed in 1926 and has undergone several
refurbishments. The Delta Queen is 285 feet long and is powered by twin
reciprocating steam engines which generate 2,000 horsepower to drive its
paddlewheel. It has a steel hull, a wooden superstructure and 174-passenger
berths based on double occupancy. During the 1996/1997 lay-up, the Delta Queen
had its Coast Guard mandated once every five-year hull inspection.
MISSISSIPPI QUEEN
The Mississippi Queen was placed in service in 1976 and has 414-passenger
berths based on double occupancy. The vessel is 382 feet long, has a steel hull
and superstructure and is powered by twin reciprocating steam engines which
generate 2,000 horsepower to drive its paddlewheel. In January 1996, the
Company completed a cosmetic renovation of the boat and had its Coast Guard
mandated once every five-year hull inspection.
AMERICAN QUEEN
The American Queen, was placed in service in June 1995. The vessel is 418 feet
long, 89 feet wide and can accommodate 436 passengers based on double
occupancy. The steel hull and superstructure is partially powered by twin
reciprocating steam engines which, when combined with a supplemental propulsion
system, generates 3,500 horsepower to drive a wooden/steel paddlewheel.
9
<PAGE> 10
INDEPENDENCE
The Independence steamship was built in 1951 and has undergone several
refurbishments, most recently in 1994. The vessel is 682 feet long, 89 feet
wide, has a steel hull and superstructure and is powered by twin steam turbines
providing 5,100 horsepower. The Independence has 817-passenger berths, based on
double occupancy. In the spring of 1997, the Independence will be out of
service for a four-week period for a drydock that will include 1997 SOLAS
upgrades, the addition of approximately 28 passenger cabins and public area
enhancements.
ROBIN STREET WHARF FACILITY
The New Orleans office building, located at Robin Street Wharf, contains
approximately 30,000 square feet. The Company has been granted a preferential
assignment and right to use the Robin Street Wharf by the Board of
Commissioners of the Port of New Orleans (the "Board of Commissioners"). Of the
approximately 190,000 square feet of property covered by the preferential
assignment, approximately 1,000 linear feet represents river frontage access.
The preferential assignment may be terminated at any time by the Board of
Commissioners, upon 60 days notice, provided that the Board of Commissioners
determines that the wharf is needed for a non-passenger, superior maritime use.
The Company believes it is unlikely that the Board of Commissioners will
terminate the preferential assignment. If the assignment were to be terminated,
the Board of Commissioners would be required to reimburse the Company for a
portion of the unamortized cost of its wharf improvements. The Company believes
that it could relocate its boarding, docking and office facilities to another
location in New Orleans without a material adverse impact on the operations of
the Company.
CHICAGO LEASE
The Company's principal executive offices, and American Hawaii's passenger
services and administrative offices are located at Two North Riverside Plaza,
Chicago, Illinois. The Company and American Hawaii currently lease
approximately 37,000 square feet from Two North Riverside Joint Venture Limited
Partnership, an Illinois limited partnership, controlled by an affiliated
company, Equity Group Investments, Inc. The Company pays an annual rate of
approximately $167,000 for approximately 37,000 square feet which it believes
to be a competitive rate for comparable space from an unaffiliated landlord. In
March 1997, the Company announced its decision to relocate the American Hawaii
- - Chicago office to New Orleans by the fall of 1997.
HAWAII LEASE
American Hawaii leases approximately 40,000 square feet of office, warehouse
and parking space at 2100 Nimitz Highway, Honolulu, Hawaii at a rental of
approximately $25,000 per month. This lease expires in May 1998.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings, to which the Company is a party or of
which any of its property is the subject, other than ordinary routine
litigation and claims incidental to the business. The Company believes it
maintains adequate insurance coverage and reserves for such claims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
10
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock trades on the Nasdaq National Market tier of
the Nasdaq Stock Market under the symbol: AMCV. On March 24, 1997, the
last reported sale price for the Company's common stock was $10.125 per
share. The following table indicates the high and low sales price
information for shares of the Company's common stock as reported by The
Nasdaq Stock Market:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
QUARTER ENDED: December 31, 1996.............. $13.25 $8.50
September 30, 1996............. 10.00 6.75
June 30, 1996.................. 9.50 7.38
March 31, 1996................. 11.38 8.00
QUARTER ENDED: December 31, 1995.............. 12.00 9.38
September 30, 1995............. 13.06 9.63
June 30, 1995.................. 12.00 8.63
March 31, 1995................. 14.50 9.75
</TABLE>
(b) The number of stockholders of record of common stock on March 24, 1997
was approximately 725.
(c) In the second half of 1995, the Company's board of directors elected not
to declare a dividend and determined that any future dividend declarations
will be based on the Company's operating performance and its planned
capital needs.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to the Company's selected financial data is set forth
under "Selected Financial Data" on page 16.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 17.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data are as set forth
in the "Index to Financial Statements" on page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE> 12
PART III
ITEMS 10, 11, 12 AND 13 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,
EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Company will file a definitive proxy statement with the Securities and
Exchange Commission pursuant to Regulation 14A under the Securities Exchange
Act of 1934 (the "Proxy Statement") relating to the Company's Annual Meeting of
Stockholders to be held on June 11, 1997, not later than April 28, 1997.
Information required by Items 10 through 13 will appear in the Proxy Statement
and is incorporated herein by reference.
12
<PAGE> 13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements.
The consolidated financial statements of the Company are set forth in
the "Index to Financial Statements" on page 15.
(a)(2) Financial Statement Schedules.
Financial Statement Schedules, except those indicated in the "Index
to Financial Statements" on page 15, have been omitted because they
are not applicable, not required under the instructions, or all the
information required is set forth in the financial statements or the
notes to the financial statements.
(a)(3) Exhibits are as set forth in the "INDEX TO EXHIBITS" on page 43.
(b) Reports on Form 8-K:
Form 8-K dated October 31, 1996 announcing the closing of the sale of
the Maison Dupuy Hotel with pro forma financial statements.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities and
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date March 28, 1997
----------------
AMERICAN CLASSIC VOYAGES CO.
By / s / Philip C. Calian
-----------------------------------------
Philip C. Calian
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/ s / Samuel Zell Chairman of the Board
-------------------------
Samuel Zell
/ s / Philip C. Calian President and Chief Executive Officer
------------------------- (Principal Executive Officer), Director
Philip C. Calian
/ s / Kathryn F. Gray Controller, Treasurer and Chief Accounting Officer
------------------------- (Principal Accounting Officer)
Kathryn F. Gray
/ s / Sheli Z. Rosenberg Director
-------------------------
Sheli Z. Rosenberg
/ s / Arthur A. Greenberg Director
-------------------------
Arthur A. Greenberg
/ s / Ann Lurie Director
-------------------------
Ann Lurie
/ s / Corinne C. Boggs Director
-------------------------
Corinne C. Boggs
/ s / Jerry R. Jacob Director
-------------------------
Jerry R. Jacob
/ s / Jon E. M. Jacoby Director
-------------------------
Jon E. M. Jacoby
14
<PAGE> 15
AMERICAN CLASSIC VOYAGES CO.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Page
Number
------
<S> <C>
Selected Financial Data................................................................. 16
Management's Discussion and Analysis of Financial Condition and Results of Operations... 17
Independent Auditors' Report............................................................ 23
Consolidated Financial Statements
Consolidated Statements of Income................................................... 24
Consolidated Balance Sheets......................................................... 25
Consolidated Statements of Cash Flows............................................... 26
Consolidated Statements of Changes in Stockholders' Equity.......................... 27
Notes to Consolidated Financial Statements.......................................... 28
Financial Statement Schedules
Schedule I - Condensed Financial Information of Registrant...................... 38
</TABLE>
15
<PAGE> 16
AMERICAN CLASSIC VOYAGES CO.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal
Year Ended
Year Ended December 31, March 31,
--------------------------------------- --------
1996 1995 1994 1993(1) 1993
--------------------------------------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(Amounts in thousands)
Revenues..................................... $191,542 $189,821 $195,197 $121,689 $ 66,725
--------------------------------------- --------
Gross profit................................. 67,863 51,895 51,569 38,708 32,190
--------------------------------------- --------
Special one-time charges(2).................. 38,390 5,900 5,699 -- --
--------------------------------------- --------
Operating (loss) income...................... (30,465) (14,535) (4,438) 6,349 12,586
--------------------------------------- --------
Other income (3)............................. 11,729 -- -- -- --
--------------------------------------- --------
Net interest (expense) income................ (7,199) (4,002) 672 577 1,051
--------------------------------------- --------
Net (loss) income............................ $(17,636) $ (9,671) $ (983) $ 4,220 $ 9,181
--------------------------------------- --------
PER SHARE INFORMATION
(Amounts in thousands, except per share data)
Common and common
equivalent shares............................ 13,802 13,763 14,085 11,641 11,334
(Loss) earnings per share(2) (3)............. $ (1.28) $ (0.70) $ (0.07) $ 0.36 $ 0.81
Cash dividends per share..................... $ -- $ 0.08 $ 0.16 $ 0.16 $ 0.04
OPERATING STATISTICS
Fare revenue per passenger night............. $ 217 $ 210 $ 202 $ 220 $ 273
Total revenue per passenger night............ $ 288 $ 290 $ 297 $ 302 $ 328
Weighted average operating days(4):
DELTA QUEEN.................................. 347 263 339 339 338
AMERICAN HAWAII.............................. 366 272 303 147 --
Vessel capacity per day (berths)(5):
DELTA QUEEN.................................. 1,024 1,024 588 596 593
AMERICAN HAWAII.............................. 817 1,594 1,544 1,526 --
Capacity passenger nights(6)................. 654,666 701,768 666,841 426,185 200,730
Passenger nights(7).......................... 643,891 628,660 632,373 382,823 185,016
Physical occupancy percentage(berths)(8)..... 98.4% 89.6% 94.8% 89.8% 92.2%
BALANCE SHEET DATA (at period end)
(Amounts in thousands)
Total assets................................. $211,864 $247,473 $227,798 $192,598 $ 66,500
Current portion of long-term debt............ 4,100 3,746 -- -- --
Long-term debt............................... 85,898 103,272 65,000 15,000 --
Total stockholders' equity................... 54,982 71,413 82,105 84,786 41,909
</TABLE>
(1) Includes the effects of the Mississippi River flooding and the Acquisition.
(2) In 1996, the Company decided not to renovate and return the Constitution
to service, resulting in write-down costs of $38.4 million ($1.89 per
share - net of tax). In 1995, the Company incurred a $5.9 million ($0.28
per share-net of tax) one-time charge that represented costs associated
with the introduction of the American Queen in June of 1995. In 1994, the
Company incurred $5.7 million ($0.20 per share-net of tax) in one-time
charges due to problems related to the renovation of the Independence.
(3) In 1996, the Company sold its Maison Dupuy Hotel located in New Orleans,
Louisiana for a gain of $11.7 million ($.57 per share - net of tax).
(4) Weighted average operating days for each cruise line is determined by
dividing capacity passenger nights for each cruise line by the cruise
line's total vessel capacity per day.
(5) Vessel capacity per day represents the number of passengers each cruise
line can carry assuming double occupancy for cabins which accommodate two
or more passengers. Some cabins on the Independence and the American
Queen can accommodate three or four passengers.
(6) Capacity passenger nights is determined by multiplying the actual operating
days of the vessel by each vessel's capacity per day.
(7) A passenger night represents one passenger spending one night on a vessel;
for example, one passenger taking a three-night cruise would generate
three passenger nights.
(8) Physical occupancy percentage is passenger nights divided by capacity
passenger nights.
16
<PAGE> 17
AMERICAN CLASSIC VOYAGES CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
American Classic Voyages Co. ("AMCV", or along with its subsidiaries, the
"Company"), is a holding company which owns and controls The Delta Queen
Steamboat Co. ("DQSC") and Great Hawaiian Cruise Line, Inc. ("GHCL"). The
Company, through its various subsidiaries, operates two cruise lines: The Delta
Queen Steamboat Co. ("Delta Queen"), which owns and operates the American
Queen, Mississippi Queen and Delta Queen steamboats; and American Hawaii
Cruises ("American Hawaii"), which owns and operates the Independence
steamship. American Hawaii also owns the Constitution steamship which was
removed from service on June 27, 1995. The Constitution will not be returned to
service and will remain in wet berth at a shipyard in Portland, Oregon while
the Company explores various other options for the vessel. American Hawaii was
acquired by the Company in August 1993 (the "Acquisition"). Delta Queen also
owned and operated the Maison Dupuy Hotel (the "Hotel") which is located in New
Orleans, prior to its sale on October 16, 1996.
The Company changed its year end to December 31, effective April 1, 1993. The
following is a review of the Company's consolidated operating results,
liquidity, capital resources and financial condition for the calendar years
ended December 31, 1996, 1995 and 1994 (referred to herein as 1996, 1995 and
1994).
REVIEW OF 1996
In 1996, the Company's results of operations were significantly affected by the
following factors: (i) the successful turnaround of American Hawaii's
operations; (ii) the decision not to return the Constitution to service and
subsequent write-down of $38.4 million; and (iii) the absorption of additional
capacity at Delta Queen following the introduction of the American Queen in
June of 1995. American Hawaii's 1996 revenues decreased by 10% due to the
removal of the Constitution in June 1995 which resulted in a 17% decrease in
passenger nights. Gross profit increased by 95% due to realizing operating cost
savings on the Independence from cost reduction efforts undertaken since the
second half of 1995. In addition, American Hawaii reduced selling, general and
administrative ("SG&A") expenses by 25%. In April 1996, the Company announced
its decision not to renovate or return the Constitution to service. In
connection with this decision, the Company recognized an impairment write-down
of $38.4 million in the first quarter of 1996. In 1996, Delta Queen's revenues
increased by 18% and operating costs increased by 23% resulting only in a 9%
increase in gross profit. This is mainly a result of a full year operations of
the American Queen which increased passenger nights by 32%. Delta Queen's fare
revenue per passenger night ("fare per diems") decreased by 11% due to
management's strategy of discounting fares in 1996 in an effort to maintain
historically high occupancy levels and to help shift the booking cycle to its
optimal schedule of six to nine months in advance. These factors, among others,
resulted in the Company recognizing a consolidated operating loss of $30.5
million in 1996. Excluding the impairment write-down, the Company had
consolidated operating income of $7.9 million versus a consolidated operating
loss of $8.6 million in 1995. The 1995 operating loss also excluded a one-time
pre-opening charge of $5.9 million related to the introduction of the American
Queen in June 1995. For 1996, the Company's net loss was $17.6 million or $1.28
per share as compared to a 1995 net loss of $9.7 million or $0.70 per share.
In February 1996, the Company settled its dispute with Newport News
Shipbuilding and Dry Dock Company (the "Shipyard") and paid an additional $8.7
million of which $6.4 million was paid in March 1996 and the balance of the
settlement of $2.3 million was paid in April 1996.
In March 1996, the Company completed the refinancing of its long-term debt by
securing $6.9 million of U.S. Government guaranteed ship financing through the
U.S. Department of Transportation Maritime Administration ("MARAD"). The
Company used a portion of the proceeds to fund amounts owed to the Shipyard as
part of the settlement discussed above.
In April 1996, the Company modified the total borrowing availability under its
amended and restated credit agreement with a group of financial institutions
with The Chase Manhattan Bank (formerly Chemical Bank), as agent (the "Credit
Agreement"). The Credit Agreement provided a revolving credit facility, subject
to certain covenants, of up to $25.0 million with a final maturity on March 31,
1999. Upon the sale of the Hotel (as discussed below) the borrowing
availability was reduced to $15.0 million and the Company will be required
every calendar year to maintain a 30-day period during which the outstanding
borrowings cannot exceed $7.5 million.
17
<PAGE> 18
In October 1996, the Company sold its Hotel in New Orleans for $22.0 million in
cash (the "Disposition") and future payments of up to $2.0 million. The sale of
the Hotel resulted in gain of $11.7 million. The cash received from the sale
was used in part to reduce debt and the balance of the proceeds will be used
for general corporate purposes.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Consolidated revenues increased $1.7 million to $191.5 million for 1996 from
$189.8 million for 1995 representing a $3.3 million increase in cruise revenues
offset by a $1.6 million decrease in Hotel revenues as a result of the Hotel
being sold on October 16, 1996. American Hawaii's revenues decreased $10.5
million, or 10%. This decrease was mainly due to a 31% decrease in capacity as
a result of the Constitution's removal from service on June 27, 1995, partially
offset by improvements on the Independence in fare per diems which increased by
15% compared to 1995. Delta Queen's revenues increased $13.8 million, or 18%,
reflecting a 32% increase in passenger nights for the period, offset by a 11%
decrease in fare per diems. The decrease in fare per diems as compared to 1995
was attributable to management's strategy of discounting fares in 1996 in an
effort to maintain historically high occupancy levels and to help shift the
booking cycle of when a majority of its cabin inventory is sold to its optimal
schedule of six to nine months in advance. The consolidated fare per diems for
1996 increased 3% to $217 as the increase in American Hawaii's fare per diems
more than offset the decrease in Delta Queen's fare per diems. Consolidated
total revenue per passenger night ("total revenue per diems") decreased by 1%
to $288 due to a reduction in the percentage of passengers at both cruise lines
electing to purchase air travel through the Company.
Consolidated cost of operations decreased to $123.7 million for 1996 from
$137.9 million for the comparable period of 1995. Of this decrease, $0.5
million represents a reduction of Hotel related cost of operations. American
Hawaii's operating costs decreased $24.6 million primarily due to the
Constitution's removal from service and realization of operating cost savings
on the Independence as a result of cost cutting efforts undertaken since the
second half of 1995. Delta Queen's operating costs increased $10.9 million, or
23%, primarily due to the addition of the American Queen.
Consolidated SG&A decreased to $45.4 million for 1996 from $48.6 million for
the same period in 1995. Delta Queen's additional capacity resulted in
increased marketing and corporate overhead expenditures but was offset by the
reduction in American Hawaii's marketing and corporate overhead expenditures as
only one ship was in operation. The $2.6 million increase in depreciation and
amortization expense represents a $3.0 million increase in depreciation expense
offset by a $0.3 million decrease in amortization expense. The increase in
depreciation was due to the addition of the American Queen while depreciation
at American Hawaii remained unchanged as the increased depreciation on the
Independence was offset by the suspension of depreciation on the Constitution
upon its removal from service in the prior year.
After evaluating the scope and cost of the Constitution reconstruction project
as well as considering various alternatives, the Company announced on April 29,
1996 its decision not to renovate or return the Constitution to service. In
connection with this decision, the Company recognized an impairment write-down
of $38.4 million in the first quarter of 1996. Excluding this write-down, the
consolidated operating income for 1996 was $7.9 million as compared to an
operating loss, before one-time pre-opening costs of $5.9 million, of $8.6
million in 1995.
The $38.4 million impairment write-down was composed of (a) $36.1 million
directly related to the write-down of the vessel and its allocated goodwill to
an estimated salvage value of $2.5 million, and (b) $2.3 million which
represented the remaining goodwill balance from the American Hawaii
acquisition. The Company has reserved for the estimated costs to be incurred on
behalf of the Constitution until its eventual disposition. These costs include
insurance, wet berthing fees and general maintenance of the vessel. As of
December 31, 1996, the balance of this reserve was $2.8 million. The impairment
write-down was recognized in accordance with the Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of", which the
Company adopted effective January 1, 1996.
Interest expense increased $2.4 million due to a greater outstanding debt
balance in 1996 and capitalization of interest costs in 1995 related to the
American Queen construction. The Company's consolidated effective tax rate was
lower in 1996 as compared to 1995. As the minority interest in GHCL was
redeemed in December 1995, the net loss for 1996 reflected 100% ownership of
GHCL by the Company.
18
<PAGE> 19
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Consolidated revenues decreased $5.4 million to $189.8 million in 1995 from
$195.2 million in 1994 due to a $24.0 million decrease in revenues of American
Hawaii offset by $18.6 million increase in the revenues of Delta Queen. The
primary cause of this was a 16% reduction in passenger nights at American
Hawaii due to unsold capacity in the second quarter of 1995. This unsold
capacity resulted from the postponement of the Constitution out-of-service
period commencement from March 1995 to June 1995. Delta Queen's increase
reflected a 38% increase in passenger nights due to the addition of the
American Queen in June 1995. Consolidated passenger nights of 628,660 in 1995
were slightly lower than 1994 as Delta Queen's increase was offset by a
decrease at American Hawaii due to the Constitution being out of service for
the entire second half of 1995. These factors also affected consolidated
occupancy in 1995 which decreased to 89.6% from 94.8% in 1994. Consolidated
fare per diems of $210 for 1995 represented an increase of 4% which included a
2% increase in American Hawaii fare per diems and a 4% decrease in Delta
Queen's fare per diems. Delta Queen's capacity was a smaller component of
consolidated capacity, therefore, Delta Queen's decrease in fare per diems did
not offset American Hawaii's increase. The decrease at Delta Queen reflected
management's strategy of offering higher discounts to maintain occupancy levels
on the Delta Queen and Mississippi Queen in light of the addition of the
American Queen. Consolidated total revenue per diems decreased 2% to $290 as a
result of a drop in air travel revenues at both cruise lines.
Consolidated cost of operations decreased to $137.9 million for 1995 from
$143.6 million in the comparable period of 1994. American Hawaii's operating
costs decreased 15% due primarily to lower passenger expenses and air travel
costs related to the decline in the number of passengers in 1995. Delta Queen's
operating costs increased 25%, in part reflecting higher operating costs
associated with its increase in capacity in 1995. Consolidated gross profit of
$51.9 million was only slightly higher than the prior year. Delta Queen's gross
profit increased 31% due to the addition of the American Queen offset by
American Hawaii's 36% drop in gross profit which was attributable to the
combined effects of lower revenue levels without a corresponding decrease in
cruise operating costs in the first half of 1995.
Consolidated SG&A before non-recurring charges increased to $48.6 million for
1995 from $43.2 million for 1994. This reflected a $3.0 million increase in
marketing expenses and a $2.3 million increase in general and administrative
expenses. Marketing expenditures for 1995 were higher at both cruise lines.
Delta Queen's expenditures were higher due to the addition of the American
Queen. American Hawaii's marketing expenditures were both accelerated and
increased in the first half of 1995 to offset the effects of the rescheduled
Constitution out-of-service period. The increase in general and administrative
expenses was a result of higher overhead costs at Delta Queen related to the
increased capacity and higher corporate overhead expenses somewhat offset by a
decrease in American Hawaii costs due to the cost reduction plan implemented
during the second half of 1995. The $5.9 million one-time pre-opening charge at
Delta Queen represented costs associated with the pre-inaugural activities and
shakedown cruises of the American Queen prior to her first cruise in June 1995.
In 1994, the non-recurring charges of $5.7 million were primarily related to
costs associated with the cancellation of four cruises in October 1994 and
customer satisfaction problems encountered subsequent to the Independence's
return to service.
Consolidated depreciation and amortization expense increased to $11.9 million
for 1995 from $7.1 million for 1994 primarily due to higher depreciation
expense at both cruise lines. Delta Queen's depreciation increased due to the
addition of the American Queen. American Hawaii's increase was related to the
renovation of the Independence offset somewhat by the suspension of
depreciation on the Constitution.
The consolidated operating loss of $14.5 million in 1995 versus $4.4 million in
the comparable period of 1994 reflected a larger operating loss at American
Hawaii.
Interest income increased to $1.7 million in 1995 from $1.4 million in 1994 due
to interest received on the escrow account maintained in connection with
litigation with the Shipyard. Interest expense increased $5.0 million
reflecting higher borrowing levels, higher interest rates, and the
capitalization of interest costs in 1994 related to the American Queen
construction. The Company's consolidated effective tax rate was lower in 1995
as compared to 1994.
The Company's consolidated net loss for 1995 of $9.7 million versus $1.0
million for the same period in 1994 primarily reflected the decreased
profitability of American Hawaii associated with the effects of the postponed
Constitution out-of-service period from March 1995 to June 1995 and the $5.9
million one-time pre-opening charge.
19
<PAGE> 20
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Operating Activities
The Company's liquidity improved in 1996, as a result of the improved operating
performance of American Hawaii, reduced capital expenditures and the
Disposition. For 1996, cash provided by operations was $15.0 million as
compared to cash used by operations of $9.9 million and $4.8 million in 1995
and 1994, respectively. In 1996, American Hawaii's operating results improved
as a result of the cost reduction efforts started in the second half of 1995 as
well as improved fare per diems and occupancy as discussed further under
Results of Operations. Operating cash usage in 1995 and 1994 substantially
reflect the lower operating performance of American Hawaii in both years, the
one-time charge related to the launch of the American Queen in 1995, and in
1994, the one-time payment of $16.9 million made in respect of liabilities
assumed pursuant to the Acquisition.
Passenger cruise deposits, as reflected in unearned passenger revenues,
increased $3.1 million as of December 31, 1996 due to strong bookings for 1997,
both in fare per diem and occupancy, at Delta Queen. At December 31, 1995,
passenger cruise deposits decreased due to lower advance reservations levels at
American Hawaii at the end of 1995, compared to 1994, as the Constitution was
still in service.
Capital Expenditures
The Company's capital expenditures were $15.4 million in 1996 as compared to
$45.2 million in 1995 and $62.8 million in 1994. The largest portion of the
1996 capital expenditures was $11.4 million related to the Independence, which
included $8.7 million paid to the Shipyard in March 1996, as part of the
litigation settlement for work performed in 1994. Other significant capital
expenditures included $2.6 million for the Delta Queen and Mississippi Queen
lay-ups, including completion of the Mississippi Queen cosmetic renovation.
The Company's 1997 planned capital commitments of approximately $18.0 million
include expenditures for the drydock of the Independence, the drydock of the
Delta Queen and other routine capital improvements to vessels, computer systems
and shoreside facilities expansion. The Independence will be out of service for
a four-week period beginning May 17, 1997 for a drydock to comply with U.S.
Coast Guard requirements. In addition, 1997 SOLAS upgrades will be made, as
well as passenger area enhancements and the build-out of approximately 28 new
cabins. This drydock is estimated to cost approximately $12.0 million. The
Company entered into a contract with Cascade General for $5.5 million to
conduct a portion of the renovation work to be performed during the upcoming
drydock of the Independence. The Delta Queen's drydock was completed in January
1997 and included work to comply with its five-year U.S. Coast Guard mandated
hull inspection as well as other minor refurbishments. The Company anticipates
that these capital commitments will be funded from cash on hand and cash from
operations.
Debt
During 1995, subsidiaries of both DQSC and GHCL issued debt guaranteed by the
U.S. Government through MARAD. On August 24, 1995, a subsidiary of DQSC (the
"Issuer Subsidiary-AQ") issued bonds in the amount of $36.4 million with a
25-year life bearing interest at a fixed rate of 7.68%, and issued notes in the
amount of $24.2 million maturing in ten years with a floating interest rate
equal to London Interbank Offered Rate ("LIBOR") plus .25%. Interest and level
principal payments are due semi-annually beginning with the first payment made
on February 24, 1996. This debt is secured by a first mortgage on the American
Queen and contains various covenants which, among other things, requires the
compliance with certain financial ratios at the end of each year. In the event
these ratios are not satisfied, the Issuer Subsidiary-AQ would be prohibited
from making distributions of cash to DQSC. In addition, the Issuer
Subsidiary-AQ would be required to set aside funds equal to one-year's debt
service and make certain reserve fund deposits, calculated as a percentage of
the Issuer Subsidiary-AQ net income. These deposits could only be released with
the permission of the Secretary of Transportation. On December 7, 1995, a
subsidiary of GHCL (the "Issuer Subsidiary-SSI") issued bonds in the amount of
$13.2 million with a 20-year life bearing interest at a fixed rate of 6.84%,
and issued notes in the amount of $13.2 million maturing in ten years with a
floating interest rate equal to LIBOR plus .27%. Interest and level principal
payments are due semi-annually beginning with the first payment made on June 7,
1996. This debt is secured by a first mortgage on the Independence and contains
various covenants which, among other things, requires the compliance with
certain financial ratios at the end of each year. In the event these ratios are
not satisfied, the Issuer Subsidiary-SSI would be required to set aside funds
equal to one-year's debt service.
20
<PAGE> 21
On March 28, 1996, Issuer Subsidiary-SSI issued $6.9 million of debt guaranteed
by the U.S. Government through MARAD. This debt is the second series ("Series
B") of the $26.4 million issue that was completed on December 7, 1995 and
therefore contains the same covenants and security as the original issue which
was guaranteed by GHCL and secured by the first mortgage of the Independence.
The Series B debt consists of $3.4 million of notes due December 7, 2005 with a
floating interest rate equal to LIBOR plus .27% and $3.5 million of 7.46% fixed
rate bonds due December 7, 2015. Interest payments on the notes and bonds, as
well as principal payments on the notes, are payable semi-annually beginning
with the first payment made on December 7, 1996. Principal payments on the
bonds are payable semi-annually beginning June 7, 2006. In addition, these two
series required Issuer Subsidiary-SSI to have $2.2 million on deposit, ($1.6
million was deposited on December 7, 1995 and $0.6 million with Series B)
representing six months of debt service which will be released when either the
Issuer Subsidiary-SSI or GHCL meets certain cash flow and debt to equity
ratios. The debt service deposit is expected to be released to the Company in
1997 as GHCL has met the required cash flow and debt to equity ratios as of
December 31, 1996.
The Company used a portion of the proceeds from the Series B financing to fund
amounts owed to the Shipyard as part of the litigation settlement. The
remaining proceeds were used, in part, to pay down a portion of amounts
outstanding under its revolving credit facility.
On April 22, 1996, the Company modified the total borrowing availability under
its Credit Agreement. The Credit Agreement provides a revolving credit
facility, subject to certain covenants, of up to $25.0 million with a final
maturity on March 31, 1999. Upon the sale of the Hotel on October 16, 1996, the
borrowing availability was reduced to $15.0 million and the Company will be
required every calendar year to maintain a 30-day period during which the
outstanding borrowings cannot exceed $7.5 million. Borrowings bear interest, at
the option of the Company, equal to either (i) the greater of The Chase
Manhattan Bank's prime rate or certain alternative base rates plus a margin
ranging from 0% to 1.25%, or (ii) LIBOR plus a margin ranging from 1.0% to
2.25%. The Company is also required to pay a commitment fee on the unused
portion of the facility at a rate ranging from 0.375% to 0.5% per annum. The
Credit Agreement is guaranteed by AMCV and secured by substantially all the
assets of DQSC, excluding the American Queen. The Credit Agreement contains
various limitations, restrictions and financial covenants which, among other
things, requires maintenance of certain financial ratios, restricts additional
indebtedness, limits intercompany advances to $20.0 million and limits the
payment of dividends from DQSC to AMCV to $2.0 million per annum.
As of December 31, 1996, the Company was in compliance with all covenants under
its various debt agreements.
The Company believes it will have adequate access to capital resources, both
internally and externally, to meet its short-term and long-term capital
commitments. Such resources may include cash on hand and the ability to secure
additional financing through the capital markets. The Company continually
evaluates opportunities to increase capacity, particularly with regard to the
American Hawaii business. In addition, the Company also evaluates opportunities
to strategically grow its business. If it would elect to increase capacity or
pursue a strategic business opportunity, the Company may seek to secure
additional financing. Notwithstanding, there can be no assurances that the
Company will choose to increase capacity or strategically grow its business,
or, if it elects to do so, that it will obtain additional financing.
Sale of Hotel
On October 16, 1996, the Company sold its subsidiary which owns the Hotel in
New Orleans for $22.0 million in cash. In addition, the Company entered into a
Profit Participation Agreement with the buyer which will provide for future
payments of up to $2.0 million based on the future performance of the Hotel
within the next seven years. The Company will also receive preferred rates at
the Hotel for its passengers and employees who require lodging in New Orleans
for the next two years. In return, the Company has agreed to provide the buyer
a minimum of $0.6 million of this business in each of these years. Upon the
sale of the Hotel, the Company was required to pay down its then outstanding
borrowings, which were $9.5 million, under its Credit Agreement. The balance of
the Hotel sale proceeds will be used for general corporate purposes.
Dividends
In the second half of 1995, the Company's board of directors elected not to
declare a dividend and determined that any future dividend declarations will be
based on the Company's operating performance and its planned capital needs.
21
<PAGE> 22
Other
In March 1996, as part of the litigation settlement with the Shipyard, the
remaining balance of $6.4 million maintained in an escrow account was released
to the Shipyard. In addition, during 1996, $1.8 million was released to the
Company from the MARAD escrow account maintained for remaining American Queen
construction costs.
The Federal Maritime Commission ("FMC") regulates passenger vessels with 50 or
more berths departing from U.S. ports and requires that operators post security
to be used in the event the operator fails to provide cruise services, or
otherwise satisfy certain financial standards. The Company has been approved as
a self-insurer by the FMC, and therefore, subject to continued approval, is not
required to post security for passenger cruise deposits. The FMC has recently
reviewed its standards and in June 1996 issued proposed regulations to increase
the financial responsibility requirements. The Company filed its position on
the proposals, as it believes that the FMC's current standards provide
passengers with adequate protection in the event of an operator's
non-performance and that further requirements may impose an undue burden on
operators. If implemented, these proposed regulations would be phased in over
time and, among other things, require operators qualifying as a self-insurer,
such as the Company, to satisfy a working capital test, in addition to the
existing net worth test, and to provide third-party coverage for 25% of its
unearned passenger revenue in the form of a surety bond or similar instrument.
At this time, the Company cannot predict if the proposed changes will be
approved as currently constituted, or at all. If they are implemented, the
proposed changes would require that the Company establish a bond to cover a
portion of its passenger deposits and payments, which may impact the Company's
liquidity.
Factors Concerning Forward-Looking Statements
Certain statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general economic
and business conditions which may impact passenger yields and occupancy;
weather patterns affecting either the inland waterways in the Continental U.S.
or the Hawaiian Islands; unscheduled repairs and drydocking of the Company's
vessels; construction delays and/or cost overruns during regularly scheduled
lay-ups and/or drydocks; the impact of changes in laws and implementation of
government regulations, such as those proposed by the FMC; an increase in
capacity at American Hawaii or pursuit of a strategic business opportunity; and
the ability to obtain additional financing.
22
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
American Classic Voyages Co.
We have audited the consolidated balance sheets of American Classic Voyages Co.
and subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1996. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedule. These consolidated financial statements and
financial statement schedule are the responsibility of management of American
Classic Voyages Co. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Classic
Voyages Co. and subsidiaries as of December 31, 1996 and 1995 and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
February 19, 1997
23
<PAGE> 24
AMERICAN CLASSIC VOYAGES CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995 1994
-----------------------------
<S> <C> <C> <C>
Revenues...................................... $ 191,542 $189,821 $195,197
Cost of operations (exclusive of depreciation
and amortization shown below)................. 123,679 137,926 143,628
-----------------------------
Gross profit.................................. 67,863 51,895 51,569
Selling, general and administrative expenses.. 45,367 48,613 43,191
Depreciation and amortization expense......... 14,571 11,917 7,117
Impairment write-down (Note 4)................ 38,390 -- --
One-time pre-opening costs.................... -- 5,900 --
Non-recurring charges......................... -- -- 5,699
-----------------------------
Operating loss................................ (30,465) (14,535) (4,438)
Interest income............................... 912 1,706 1,389
Interest expense.............................. 8,111 5,708 717
Other income.................................. 11,729 -- --
-----------------------------
Loss before income taxes and minority interest (25,935) (18,537) (3,766)
Income tax benefit............................ 8,299 6,308 1,451
Minority interest in loss..................... -- (2,558) (1,332)
-----------------------------
Net loss...................................... $ (17,636) $ (9,671) $ (983)
=============================
PER SHARE INFORMATION:
Average common and common equivalent shares
outstanding................................... 13,802 13,763 14,085
=============================
Loss per share................................ $ (1.28) $ (0.70) $ (0.07)
-----------------------------
Cash dividends declared per share............. $ -- $ 0.08 $ 0.16
-----------------------------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
24
<PAGE> 25
AMERICAN CLASSIC VOYAGES CO.
CONSOLIDATED BALANCE SHEETS
(In thousands except shares and par value)
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................ $ 17,908 $ 6,048
Restricted short-term investments........ 2,957 10,681
Accounts receivable...................... 3,734 1,134
Prepaid expenses and other current assets 7,640 6,612
------------------
Total current assets..................... 32,239 24,475
Property and equipment, net.............. 166,883 211,959
Deferred tax asset....................... 10,968 4,325
Other assets............................. 1,774 1,995
Goodwill, net............................ -- 4,719
------------------
Total assets............................. $211,864 $247,473
==================
LIABILITIES
Accounts payable......................... $ 10,683 $ 13,073
Other accrued expenses................... 24,532 27,437
Current portion of long-term debt........ 4,100 3,746
Unearned passenger revenues.............. 31,669 28,532
------------------
Total current liabilities................ 70,984 72,788
Long-term debt, less current maturities.. 85,898 103,272
------------------
Total liabilities........................ 156,882 176,060
==================
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value
(5,000,000 shares authorized, none
issued and outstanding).................. -- --
Common stock, $.01 par value (20,000,000
shares authorized, 13,867,829 and
13,769,512 shares issued and
outstanding, respectively)............... 139 138
Additional paid-in capital............... 75,252 74,048
Accumulated deficit...................... (20,409) (2,773)
------------------
Total stockholders' equity............... 54,982 71,413
------------------
$211,864 $247,473
==================
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
25
<PAGE> 26
AMERICAN CLASSIC VOYAGES CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1996 1995 1994
------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $ (17,636) $ (9,671) $ (983)
ADJUSTMENTS TO RECONCILE
NET INCOME TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
Depreciation and amortization...................... 14,571 11,917 7,117
Minority interest.................................. -- (2,558) (1,332)
Impairment write-down (Note 4)..................... 38,390 -- --
Gain on sale of Maison Dupuy Hotel................. (11,729) -- --
Changes in Certain Working
Capital Accounts and Other
Accounts receivable................................ (2,600) 190 (724)
Accounts payable................................... (2,305) (3,971) 11,003
Accrued liabilities................................ (289) 1,537 431
Liabilities assumed in the Acquisition............. -- -- (16,910)
Other assets....................................... (6,400) (6,869) (1,589)
Unearned passenger revenues........................ 3,137 (2,534) 1,975
Prepaid expenses and other......................... (123) 2,012 (3,792)
------------------------------
Net cash provided by (used in) operating activities 15,016 (9,947) (4,804)
------------------------------
INVESTING ACTIVITIES
Decrease (increase) in restricted
investments........................................ 7,724 9,706 (5,012)
Capital expenditures............................... (15,355) (45,227) (62,854)
Proceeds from sale of Maison Dupuy Hotel........... 21,522 -- --
------------------------------
Net cash provided by (used in) investing activities 13,891 (35,521) (67,866)
------------------------------
FINANCING ACTIVITIES
Proceeds from borrowings........................... 6,903 117,018 50,000
Repayments of borrowings........................... (23,923) (75,000) --
Purchase of subsidiary minority interest........... -- (105) --
Issuance of common stock........................... 368 80 148
Dividends.......................................... -- (1,101) (2,199)
Deferred financing fees............................ (395) (1,600) --
------------------------------
Net cash (used in) provided by financing activities (17,047) 39,292 47,949
------------------------------
Increase (decrease) in cash and
cash equivalents................................... 11,860 (6,176) (24,721)
Cash and cash equivalents, beginning of period..... 6,048 12,224 36,945
------------------------------
Cash and cash equivalents, end of period........... $ 17,908 $ 6,048 $12,224
==============================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid (refunded) during the period for:
Interest (net of capitalized interest)............. $ 7,364 $ 3,000 $ 617
Income taxes....................................... $ 450 $ (119) $(1,569)
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
26
<PAGE> 27
AMERICAN CLASSIC VOYAGES CO.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Amounts in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1996 1995 1994
----------------------------
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of period $ 138 $ 138 $ 137
Issuance of common stock.... 1 -- 1
----------------------------
Balance, end of period...... 139 138 138
----------------------------
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of period 74,048 73,968 73,468
Issuance of common stock.... 1,204 80 500
----------------------------
Balance, end of period...... 75,252 74,048 73,968
----------------------------
(ACCUMULATED DEFICIT)
RETAINED EARNINGS
Balance, beginning of period (2,773) 7,999 11,181
Net loss.................... (17,636) (9,671) (983)
Dividends................... -- (1,101) (2,199)
----------------------------
Balance, end of period...... (20,409) (2,773) 7,999
----------------------------
Total Stockholders' Equity.. $ 54,982 $ 71,413 $ 82,105
============================
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
27
<PAGE> 28
AMERICAN CLASSIC VOYAGES CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In May 1994, the stockholders of The Delta Queen Steamboat Co. approved a
change to the company's name to American Classic Voyages Co. In connection with
the name change, DQSC-2, Inc., a subsidiary of the American Classic Voyages
Co., changed its name to "The Delta Queen Steamboat Co.".
NATURE OF OPERATIONS
American Classic Voyages Co., through its subsidiaries, operates two cruise
lines under the names of The Delta Queen Steamboat Co. and American Hawaii
Cruises. The Delta Queen Steamboat Co., through its subsidiaries, owns and
operates the American Queen, Mississippi Queen and Delta Queen steamboats which
conduct overnight cruise operations on certain U.S. inland waterways ("Delta
Queen"). Delta Queen also owned and operated the Maison Dupuy Hotel (the
"Hotel") located in New Orleans, prior to its sale on October 16, 1996.
American Hawaii Cruises, through its subsidiaries owns and operates the
Independence steamship providing overnight cruises between the Hawaiian
islands. American Hawaii also owns the Constitution steamship which will not be
returned to service and will remain in wet berth at a shipyard in Portland,
Oregon while the Company explores various other options for the vessel.
PRINCIPLES OF CONSOLIDATION
The accompanying Consolidated Financial Statements include the accounts of
American Classic Voyages Co. ("AMCV") and its wholly owned subsidiaries, The
Delta Queen Steamboat Co. ("DQSC"), and Great Hawaiian Cruise Line, Inc.
("GHCL") (collectively with such subsidiaries, the "Company"). The Company
acquired an 80% interest in GHCL in August 1993 and subsequently in 1995
acquired the remaining 20% interest from minority interest shareholders as
discussed further in Note 2. The accompanying Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting principles.
All significant intercompany accounts and transactions have been eliminated in
consolidation. Certain previously reported amounts have been reclassified to
conform to the 1996 presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
CASH AND CASH EQUIVALENTS
All highly liquid investments purchased with an original maturity of three
months or less are considered cash equivalents.
RESTRICTED SHORT-TERM INVESTMENTS
The Company's restricted short-term investments include two accounts which were
set-up in connection with the U.S. Government guaranteed ship financing secured
by the Company in 1995 and 1996. In 1995, restricted short-term investments
included the balance of the escrow account, or $6.4 million, set-up as a result
of the dispute with Newport News Shipbuilding and Dry Dock Company (the
"Shipyard"). The dispute was settled in February 1996 and the escrow account
was released to the Shipyard. As of December 31, 1996, the escrow account for
remaining American Queen construction costs had a balance of $0.5 million and
the six-month debt service deposit account related to the Independence had a
balance of $2.2 million.
PROPERTY AND EQUIPMENT
Property and equipment primarily consists of vessels and leasehold improvements
which are recorded at cost. Construction-in-progress represents expenditures
for the vessels under construction, renovation, lay-up and/or drydock. In 1996,
the Company reduced the cost of the Constitution to its salvage value as
further discussed in Note 4 and removed the cost and related depreciation of
the Hotel building and land upon the sale of the Hotel as discussed in Note 5.
Depreciation is computed using the straight-line method based upon the
estimated useful lives of the various classes of assets ranging from 3 to 40
years. Lay-up and drydock expenditures relating to vessel improvements or
betterments are capitalized and depreciated over their estimated useful lives.
In addition, lay-up and drydock expenditures relating to cleaning, repairs and
maintenance are accrued evenly over the period to the next scheduled lay-up
and/or drydock and are included in other accrued liabilities. Interest costs
incurred during vessel construction periods were capitalized into the cost of
the related vessels.
28
<PAGE> 29
GOODWILL
In August 1993, the Company acquired substantially all the assets and certain
liabilities of American Global Line Inc. (See Note 2.) The acquisition was
accounted for as a purchase. In connection with this purchase, goodwill was
recorded for the excess of purchase price over the fair value of the net assets
acquired and is being amortized over its estimated useful life of 25 years
using the straight-line method. Upon the finalization of purchase accounting,
goodwill was decreased by approximately $5.0 million. Additionally, in 1995,
goodwill was decreased by approximately $4.2 million due to the repurchase of
equity from GHCL's minority interest shareholders for $0.1 million. In 1996, in
connection with its decision not to return the Constitution to service, the
Company wrote-off the remaining goodwill balance (see Note 4). Amortization
expense for 1996, 1995 and 1994 was $52,000, $383,000 and $414,000,
respectively.
INCOME TAXES
In April 1993, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes", on a prospective basis. The
adoption of SFAS No. 109 changed the Company's method of accounting for income
taxes from the deferred method to an asset and liability approach. Previously,
the Company accounted for income taxes pursuant to Accounting Principles Board
Opinion ("APB") No. 11. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between carrying amounts and the tax
bases of other assets and liabilities. The adoption of SFAS No. 109 did not
have a material effect on the Company's net income or financial position.
REVENUE AND EXPENSE RECOGNITION
The Company generally receives passenger fares up to 60 days prior to the
cruise date. Prepaid passenger fares are deferred and recognized as revenue
during the associated cruise. The Company is self-insured in respect of
guaranteeing the Company's passenger cruise deposits. Advertising costs are
expensed as incurred and are included in selling expense.
EARNINGS PER SHARE INFORMATION
Earnings per share have been computed by dividing net earnings by the sum of
the weighted average number of shares of common stock outstanding plus common
share equivalents principally in the form of employee stock option awards.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include restricted short-term investments,
accounts receivable, accounts payable, other accrued expenses and long-term
debt. The fair values of all financial instruments were not materially
different from their carrying or contract values.
ACCOUNTING STANDARDS ADOPTED
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of", was adopted by the Company effective
January 1, 1996. SFAS No. 121 establishes accounting standards for recognizing
the impairment of long-lived assets, identifiable intangibles and goodwill,
whether to be disposed of or to be held and used. In general, SFAS No. 121
requires recognition of an impairment loss when the sum of undiscounted
expected future cash flows is less than the carrying amount of such assets. In
1996, the Company recognized a $38.4 million impairment write-down related to
its decision not to return the Constitution to service as further discussed in
Note 4.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation", effective for fiscal years beginning
after December 15, 1995. The Company plans to continue its current accounting
for employee stock-based compensation plans in accordance with APB No. 25, as
permitted under SFAS No. 123. See Note 10 for the pro forma effect of the fair
value accounting method.
NOTE 2. MINORITY INTEREST
In August 1993, the Company, through its then 80% owned subsidiary GHCL,
acquired (the "Acquisition") the net assets and operations of American Global
Line Inc. ("AGL") out of bankruptcy. Pursuant to the Acquisition and for its
80% interest in GHCL, the Company: (i) paid an aggregate of $2.5 million to the
senior subordinated lenders of AGL and a former shareholder of AGL and (ii)
contributed $30 million to GHCL to be used for capital expenditures and working
capital requirements of GHCL. In addition, the Company assumed substantially
all trade liabilities, accrued expenses and unearned passenger revenues of AGL
aggregating $81.1 million. A significant portion of these liabilities were
incurred prior to AGL's bankruptcy petition.
29
<PAGE> 30
In December 1995, the minority interest in GHCL was redeemed through GHCL's
purchase of 20% of the then outstanding shares for a purchase price of $0.1
million.
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consisted of (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------------------
<S> <C> <C>
Vessels...................... $196,347 $218,994
Buildings.................... 6,253 15,134
Land......................... -- 2,600
Construction-in-progress..... 1,446 3,173
Other........................ 7,474 11,121
------------------
211,520 251,022
Less accumulated depreciation (44,637) (39,063)
------------------
$166,883 $211,959
==================
</TABLE>
The Company did not capitalize interest costs in 1996, as compared to 1995 when
$2.2 million was capitalized.
Property and equipment includes the estimated salvage value for the
Constitution of $2.5 million. The Constitution will not be returned to service
and will remain in wet berth at a shipyard in Portland, Oregon while the
Company explores various other options for the vessel (see Note 4 for further
information).
NOTE 4. IMPAIRMENT WRITE-DOWN
After evaluating the scope and cost of the Constitution reconstruction project
as well as considering various alternatives, the Company announced on April 29,
1996 its decision not to renovate or return the Constitution to service. The
Constitution was removed from service on June 27, 1995 and is currently in wet
berth at a shipyard in Portland, Oregon. In the first quarter of 1996, in
connection with the foregoing decision, the Company recognized an impairment
write-down of $38.4 million, composed of (a) $36.1 million directly related to
the write-down of the vessel and its allocated goodwill to an estimated salvage
value of $2.5 million, and (b) $2.3 million which represented the remaining
goodwill balance from the GHCL acquisition. The Company reserved for the
estimated costs to be incurred on behalf of the Constitution until its eventual
disposition. These costs include insurance, wet berthing fees and general
maintenance of the vessel. As of December 31, 1996, the balance of this reserve
was $2.8 million.
NOTE 5. DISPOSITION OF ASSET
On October 16, 1996, the Company sold its subsidiary which owned the Hotel in
New Orleans for $22.0 million in cash (the "Disposition"). In addition, the
Company entered into a Profit Participation Agreement with the buyer which will
provide for future payments of up to $2.0 million based on the future
performance of the Hotel within the next seven years. The Company will also
receive preferred rates at the Hotel for its passengers and employees who
require lodging in New Orleans for the next two years. In return, the Company
has agreed to provide the buyer a minimum of $0.6 million of this business in
each of these years.
Upon the sale of the Hotel, the Company was required to pay down its then
outstanding borrowings, which were $9.5 million under its credit agreement with
a group of financial institutions with The Chase Manhattan Bank (formerly
Chemical Bank), as agent (the "Credit Agreement"). The borrowing availability
under the Credit Agreement was reduced from $25.0 million to $15.0 million and
the Company will be required every calendar year to maintain a 30-day period
during which the outstanding borrowings cannot exceed $7.5 million (see Note
6). The balance of the Hotel sale proceeds will be used for general corporate
purposes.
30
<PAGE> 31
The following pro forma financial information for the years ended December 31,
1996 and 1995 has been prepared as if the Disposition had occurred as of the
beginning of each comparative period. In management's opinion, the pro forma
financial information is not necessarily indicative of results that would have
occurred had the Disposition taken place at the beginning of each period.
Amounts in thousands, except per share amounts:
<TABLE>
<CAPTION>
Unaudited Pro Forma
Years Ended December 31,
-----------------------
1996 1995
-----------------------
<S> <C> <C>
Revenues...... $ 186,096 $182,749
Operating loss (31,841) (17,091)
Net loss...... (17,940) (3,435)
Loss per share $ (1.30) $ (0.25)
</TABLE>
The pro forma financial information includes adjustments applied to the
historical statements of income of the Company to give effect to the
Disposition as if it occurred at the beginning of the respective period. Such
adjustments include: (i) re-establishment of intercompany revenues and expenses
between the Company and the Hotel previously eliminated in consolidation; (ii)
decreased depreciation expense due to a lower capitalized interest balance as
proceeds received from the Disposition were used to repay amounts outstanding
on the Company's long-term credit facility, and therefore, less interest
expense was incurred and subject to capitalization; (iii) decreased interest
expense due to reduced borrowings under the Company's credit facility as a
result of the proceeds received from the Disposition.
NOTE 6. LONG-TERM DEBT
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1995
------- --------
<S> <C> <C>
U.S. Government Guaranteed Ship Financing Note, American Queen Series, floating
rate notes due semi-annually beginning February 24, 1996 through August 24, 2005... $21,812 $ 24,236
U.S. Government Guaranteed Ship Financing Bond, American Queen Series, 7.68%
fixed rate, sinking fund bonds due semi-annually beginning February 24,
2006 through June 2, 2020.......................................................... 36,353 36,353
U.S. Government Guaranteed Ship Financing Note, Independence Series A, floating
rate notes due semi-annually beginning June 7, 1996 through December 7, 2005....... 11,892 13,214
U.S. Government Guaranteed Ship Financing Bond, Independence Series A, 6.84%
fixed rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015................................................................... 13,215 13,215
U.S. Government Guaranteed Ship Financing Note, Independence Series B,
floating rate notes due semi-annually beginning December 7, 1996 through
December 7, 2005................................................................... 3,186 --
U.S. Government Guaranteed Ship Financing Bond, Independence Series B, 7.46%
fixed rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015................................................................... 3,540 --
Revolving credit facility ......................................................... -- 20,000
------- --------
89,998 107,018
Less current portion............................................................... 4,100 3,746
------- --------
$85,898 $103,272
======= ========
</TABLE>
Required principal payments on long-term debt over the next five years are $4.1
million for each of the years from 1997 to 2001.
31
<PAGE> 32
During 1995, subsidiaries of both DQSC and GHCL issued debt guaranteed by the
U.S. Government through MARAD. On August 24, 1995, a subsidiary of DQSC (the
"Issuer Subsidiary-AQ") issued bonds in the amount of $36.4 million with a
25-year life bearing interest at a fixed rate of 7.68%, and issued notes in the
amount of $24.2 million maturing in ten years with a floating interest rate
equal to London Interbank Offered Rate ("LIBOR") plus .25%. Interest and level
principal payments are due semi-annually beginning with the first payment made
on February 24, 1996. This debt is secured by a first mortgage on the American
Queen and contains various covenants which, among other things, requires the
compliance with certain financial ratios at the end of each year. In the event
these ratios are not satisfied, the Issuer Subsidiary-AQ would be prohibited
from making distributions of cash to DQSC. In addition, the Issuer
Subsidiary-AQ would be required to set aside funds equal to one-year's debt
service and make certain reserve fund deposits, calculated as a percentage of
the Issuer Subsidiary-AQ net income. These deposits could only be released with
the permission of the Secretary of Transportation. On December 7, 1995, a
subsidiary of GHCL (the "Issuer Subsidiary-SSI") issued bonds in the amount of
$13.2 million with a 20-year life bearing interest at a fixed rate of 6.84%,
and issued notes in the amount of $13.2 million maturing in ten years with a
floating interest rate equal to LIBOR plus .27%. Interest and level principal
payments are due semi-annually beginning with the first payment made on June 7,
1996. This debt is secured by a first mortgage on the Independence and contains
various covenants which, among other things, requires the compliance with
certain financial ratios at the end of each year. In the event these ratios are
not satisfied, the Issuer Subsidiary-SSI would be required to set aside funds
equal to one-year's debt service.
On March 28, 1996, Issuer Subsidiary-SSI issued $6.9 million of debt guaranteed
by the U.S. Government through MARAD. This debt is the second series ("Series
B") of the $26.4 million issue that was completed on December 7, 1995 and
therefore contains the same covenants and security as the original issue which
was guaranteed by GHCL and secured by the first mortgage of the Independence.
The Series B debt consists of $3.4 million of notes due December 7, 2005 with a
floating interest rate equal to LIBOR plus .27% and $3.5 million of 7.46% fixed
rate bonds due December 7, 2015. Interest payments on the notes and bonds, as
well as principal payments on the notes, are payable semi-annually beginning
with the first payment made on December 7, 1996. Principal payments on the
bonds are payable semi-annually beginning June 7, 2006. In addition, these two
series required Issuer Subsidiary-SSI to have $2.2 million on deposit, ($1.6
million was deposited on December 7, 1995 and $0.6 million with Series B)
representing six months of debt service which will be released when either the
Issuer Subsidiary-SSI or GHCL meets certain cash flow and debt to equity
ratios. The debt service deposit is expected to be released to the Company in
1997 as GHCL has met the required cash flow and debt to equity ratios as of
December 31, 1996.
The Company used a portion of the proceeds from the Series B financing to fund
amounts owed to the Shipyard as part of the litigation settlement as discussed
in Note 1. The remaining proceeds were used, in part, to pay down a portion of
amounts outstanding under its revolving credit facility.
On April 22, 1996, the Company modified the total borrowing availability under
its Credit Agreement. The Credit Agreement provides a revolving credit
facility, subject to certain covenants, of up to $25.0 million with a final
maturity on March 31, 1999. Upon the sale of the Hotel on October 16, 1996, the
borrowing availability was reduced to $15.0 million and the Company will be
required every calendar year to maintain a 30-day period during which the
outstanding borrowings cannot exceed $7.5 million. Borrowings bear interest, at
the option of the Company, equal to either (i) the greater of The Chase
Manhattan Bank's prime rate or certain alternative base rates plus a margin
ranging from 0% to 1.25%, or (ii) LIBOR plus a margin ranging from 1.0% to
2.25%. The Company is also required to pay a commitment fee on the unused
portion of the facility at a rate ranging from 0.375% to 0.5% per annum. The
Credit Agreement is guaranteed by AMCV and secured by substantially all the
assets of DQSC, excluding the American Queen. The Credit Agreement contains
various limitations, restrictions and financial covenants which, among other
things, requires maintenance of certain financial ratios, restricts additional
indebtedness, limits intercompany advances to $20.0 million and limits the
payment of dividends from DQSC to AMCV to $2.0 million per annum.
For the years ended December 31, 1996 and 1995, the weighted average interest
rate on outstanding borrowings was approximately 7.0% and 7.3%, respectively.
As of December 31, 1996, the Company was in compliance with all covenants under
its various debt agreements.
32
<PAGE> 33
The Company believes it will have adequate access to capital resources, both
internally and externally, to meet its short-term and long-term capital
commitments. Such resources may include cash on hand and the ability to secure
additional financing through the capital markets. The Company continually
evaluates opportunities to increase capacity, particularly with regard to the
American Hawaii business. In addition, the Company also evaluates opportunities
to strategically grow the business. If it would elect to increase capacity or
pursue a strategic business opportunity, the Company may seek to secure
additional financing. Notwithstanding, there can be no assurances that the
Company will choose to increase capacity or strategically grow the business,
or, if it elects to do so, that it will obtain additional financing.
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company leases certain facilities and equipment under operating leases. The
Company currently leases approximately 37,000 square feet from a partnership
controlled by an affiliated company, at an annual rate of approximately
$167,000. In addition, the DQSC headquarters is maintained pursuant to an
assignment from local authorities. The Company paid approximately $172,000 and
$174,000 under this arrangement for the years ended December 31, 1996 and 1995,
respectively. This arrangement may be terminated at any time by the local
authorities upon determination that a superior maritime use is deemed to exist.
Rent expense for the years ended December 31, 1996, 1995 and 1994 was
approximately $848,000, $854,000 and $1,082,000, respectively.
The future minimum lease commitments for the next five years under all
noncancelable operating leases, including assignment payments, as of December
31, 1996 are $804,000, $579,000, $433,000, $422,000 and $425,000.
The Company is subject to litigation in the ordinary course of business. In the
opinion of management, the outcome of such litigation will not have a material
effect on the results of operations or financial position of the Company as
most is covered by insurance, net of a deductible.
NOTE 8. INCOME TAXES
As stated in Note 1, the Company adopted SFAS No. 109 effective April 1, 1993
without any material effect on net income or financial position. As such, all
income tax information presented below for 1996, 1995 and 1994 has been
prepared pursuant to the requirements of SFAS No. 109.
The provision for income taxes consisted of (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1996 1995 1994
----------------------------
<S> <C> <C> <C>
Current tax benefit:
Federal.......................... $ -- $ -- $ --
State............................ (458) -- --
----------------------------
(458) -- --
----------------------------
Deferred tax (benefit) provision:
Federal.......................... (9,073) (6,422) (1,238)
State............................ 1,232 114 (213)
----------------------------
(7,841) (6,308) (1,451)
----------------------------
Total tax benefit................ $ (8,299) $ (6,308) $ (1,451)
============================
</TABLE>
33
<PAGE> 34
The (benefit) provision for income taxes differs from amounts computed by
applying the U.S. statutory Federal income tax rate. The differences are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995 1994
-----------------------------
35% 35% 35%
-----------------------------
<S> <C> <C> <C>
Tax benefit at statutory rate.............. $ (9,076) $ (6,488) $ (1,318)
State income taxes (net of Federal benefit) 503 74 (139)
Non-deductible expenses.................... 121 121 73
Other...................................... 153 (15) (67)
-----------------------------
Total tax benefit.......................... $ (8,299) $ (6,308) $ (1,451)
=============================
</TABLE>
The tax effects of temporary differences that gave rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below (in
thousands):
<TABLE>
<CAPTION>
December 31,
---------------
Deferred tax assets: 1996 1995
---------------
<S> <C> <C>
Insurance costs and reserves........... $ 681 $ 442
Non-recurring executive compensation... 809 1,152
Benefit cost accruals.................. 428 133
Alternative minimum tax
credit carryforwards................... 2,196 2,196
Drydock accruals....................... 1,482 --
Net operating loss carryforward........ 15,202 14,025
Goodwill, due to basis differences..... 1,383 --
------- -------
Total deferred tax assets.............. 22,181 17,948
------- -------
Deferred tax liabilities:
Capital construction fund.............. 3,369 3,850
Property plant and equipment, due to
basis differences and depreciation, net 7,293 9,758
Other.................................. 551 15
------- -------
Total deferred tax liabilities......... 11,213 13,623
------- -------
Net deferred tax asset................. $10,968 $ 4,325
======= =======
</TABLE>
At December 31, 1996, consolidated net operating losses of approximately $10.0
million, $30.0 million and $4.0 million expiring in 2009, 2010 and 2011,
respectively, were available to offset future taxable income of the Company.
In 1993, the Company established a capital construction fund (the "CCF")
pursuant to Section 607 of the Merchant Marine Act of 1936, into which it
deposited approximately $12.0 million. This fund was primarily used to pay
liabilities assumed in the Acquisition and allowed the Company to accelerate
recognition of certain deductions for qualified capital expenditures for income
tax purposes. As a result of the CCF, the Company has approximately a $2.2
million alternative minimum tax credit carryforward available with no
expiration date.
NOTE 9. RELATED PARTY
Equity Group Investments, Inc. ("EGI") and its affiliates provided certain
administrative support services for the Company, including but not limited to
legal, accounting, tax and benefit services. In addition, as previously
mentioned in Note 7, the Company leases office space from an affiliate of EGI.
In the aggregate, the fees charged by EGI and its affiliates for such services
and rent were approximately $1.5 million, $1.4 million and $2.8 million for the
years ended December 31, 1996, 1995 and 1994, respectively. These arrangements
with EGI and its affiliates are subject to approval by a majority of the
non-affiliated members of the Company's board of directors, and are conducted
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
34
<PAGE> 35
The largest stockholder of the Company's common stock was Equity-DQSB, Inc., a
wholly owned subsidiary of EGI which owns approximately 51.2% of the Company's
common stock.
See Note 7 and 10 for discussion on other related party transactions.
NOTE 10. EMPLOYEE BENEFIT PLANS
RETIREMENT PLANS
The Company's non-union employees are eligible to participate in the ADVANTAGE
Retirement Savings Plan (as amended and restated October 1, 1987, "ADVANTAGE
Plan"), a profit-sharing plan with a salary deferral feature that qualifies
under Section 401 of the Internal Revenue Code of 1986, as amended. The
ADVANTAGE Plan allows participants to defer a portion of their eligible
compensation on a pre-tax basis. Participant contributions are 100% vested at
the time the contribution is made. Effective January 1, 1994, matching
contributions are made by the Company in an amount equal to 100% of the amount
of a participant's contribution with a maximum of 4% of such participant's
annual eligible wages, subject to Internal Revenue Service maximums. Prior to
1994, the matching contribution was 50%. In addition, the Company may make
discretionary profit-sharing contributions which are allocated to eligible
employees based on eligible compensation. Company contributions vest over a
five-year period. Matching and profit-sharing contributions approximated
$708,000, $401,000 and $321,000 for the years ended December 31, 1996, 1995 and
1994, respectively.
The Company also contributes, under collective bargaining agreements, to funds
designed to provide pension and health benefits for its union employees. The
Company contributed $2,337,000, $2,312,000 and $2,291,000 to such plans for the
years ended December 31, 1996, 1995 and 1994, respectively.
EMPLOYEE STOCK PURCHASE PLAN
The American Classic Voyages Co. 1995 Employee Stock Purchase Plan (the "ESP
Plan") which commenced on July 1, 1995, allows eligible employees to purchase
common stock of the Company, through payroll deductions, at a discounted price
from the market price. The exercise price under the ESP Plan is deemed to be
85% of the lesser of the market value of the Company's common stock on the last
business day of the offering period or the average market value during the
offering period. There is a maximum of 500,000 shares authorized under the ESP
Plan. There were 12,297 and 5,821 shares issued during 1996 and 1995,
respectively, at an average price of $7.13 and $8.80 per share for 1996 and
1995, respectively. At December 31, 1996 and 1995, approximately 482,000 and
494,000 shares were available for offering under the ESP Plan, respectively.
STOCK OPTION PLANS
The Company granted, as of January 1, 1992, fully vested options to Messrs. S.
Cody Engle, Patrick Fahey and Jeffrey D. Krida, the Company's then senior
executive officers, to purchase up to 205,125 shares, 51,282 shares, and
153,846 shares of common stock, respectively, in lieu of bonus payments (the
"Executive Stock Option Plan"). These options are exercisable, in whole or in
part, at any time prior to January 2, 2002, at an exercise price of $3.25 per
share. The Company recorded $4.0 million in the third quarter of fiscal 1992 as
non-recurring executive compensation related to the above-mentioned options.
The Company adopted the 1992 Stock Option Plan effective January 2, 1992 (the
"1992 Plan"). Pursuant to the 1992 Plan, certain officers, directors, key
employees, and consultants will be offered the opportunity to acquire shares of
the Company's common stock via stock option grants. In addition, the 1992 Plan
provides for the granting of stock appreciation rights ("SARs"). The exercise
price of options granted under the 1992 Plan cannot be less than the fair
market value of the Company's common stock at the date of grant. As of December
31, 1996, 1,988,195 shares of the Company's common stock have been reserved for
issuance under the 1992 Plan. Options granted under the 1992 Plan generally
vest over a three-year period and expire 10 years from the date of grant. The
per share weighted-average fair value of stock options granted during 1996 and
1995 was $3.48 and $3.39 on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions for 1996
and 1995, respectively: expected volatility of 50% and 47%, risk-free interest
rates of 6.0% and 6.3%; expected lives of three years and dividend yield of 0%
for both years.
In 1995, under the terms of the 1992 Plan, the Company granted SARs to key
employees. All of the SARs were canceled in 1996.
35
<PAGE> 36
During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock Based Compensation," which defines a fair value based
method of accounting for an employee stock option or similar equity instrument
and encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the method of
accounting prescribed by APB No. 25, "Accounting for Stock Issued to
Employees." Entities electing to remain with the accounting in APB No. 25 must
make pro forma disclosures of net income and earnings per share, as if the fair
value based method of accounting defined in this Statement has been applied.
The Company applies APB No. 25 in accounting for its plans and, accordingly, no
compensation cost has been recognized for its stock options in the financial
statements. Had the Company determined compensation cost based on the fair
value at the grant date for its stock options under SFAS No. 123, the Company's
net loss and loss per share would have been increased to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
In thousands, except per share amounts 1996 1995
-------- --------
<S> <C> <C> <C>
Net loss As reported $(17,636) $(9,671)
Pro forma (18,033) (9,766)
Loss per share As reported $ (1.28) $ (0.70)
Pro forma (1.31) (0.71)
</TABLE>
Pro forma net loss and loss per share reflect only options granted in 1996 and
1995. Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma amounts presented
above because compensation cost is reflected over the options' vesting period
which is generally three years and compensation cost for options granted prior
to January 1, 1995 is not considered.
The table below summarizes the activity for 1994, 1995 and 1996:
<TABLE>
<CAPTION>
Executive Stock Weighted-Average
Option Plan 1992 Plan Exercise Price
--------------- ---------------------- ----------------
Shares Shares Shares
Subject to Subject to Subject to
Options Options SARs
--------------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 360,253 989,410 -- $13.02
Options granted............. -- 229,500 -- 18.88
Options canceled............ -- (4,417) -- 15.93
Options exercised........... (36,282) (500) -- 3.39
--------------- ---------- ----------
Balance at December 31, 1994 323,971 1,213,993 -- 14.11
Options granted............. -- 245,000 280,000 11.11
Options canceled............ -- (279,583) -- 15.34
--------------- ---------- ----------
Balance at December 31, 1995 323,971 1,179,410 280,000 13.04
--------------- ---------- ----------
Options granted............. -- 895,680 -- 9.50
Options canceled............ -- (582,668) (280,000) 15.36
Options exercised........... (85,840) -- -- 3.25
--------------- ---------- ----------
Balance at December 31, 1996 238,131 1,492,422 -- 10.54
=============== ========== ==========
</TABLE>
36
<PAGE> 37
The following table summarizes information about options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------- ---------------------------
Weighted-Average Weighted- Weighted-
Range of Outstanding Remaining Average Exercisable Average
Exercise Price at 12/31/96 Contractual Life Exercise Price at 12/31/96 Exercise Price
- -------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$3.25 238,131 5 $ 3.25 238,131 $ 3.25
7.97 - 9.98 562,680 10 8.99 38,333 8.14
10.25 - 15.00 631,017 9 11.50 267,684 12.08
15.32 - 20.00 298,725 7 17.22 282,058 17.33
- -------------- ----------- ---------------- -------------- ----------- --------------
$3.25 - $20.00 1,730,553 8 $10.54 826,206 $11.14
============== =========== ================ ============== =========== ==============
</TABLE>
NOTE 11. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
Summarized unaudited quarterly results of operations for 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1996
(Amounts in thousands, except per share data)
March 31, June 30, September 30, December 31,
1996 1996 1996 1996
------------------------------------------------
<S> <C> <C> <C> <C>
Revenues..................................... $41,945 $49,305 $50,059 $50,233
Gross profit................................. 13,556 17,721 17,950 18,636
Operating (loss) income...................... (41,784) 2,323 4,834 4,162
Pre-tax (loss) income........................ (43,668) 329 3,029 14,375
Net (loss) income............................ (43,271) 381 2,851 22,403(a)
(Loss) earnings per share.................... (3.14) 0.03 0.21 1.62
<CAPTION>
Year Ended December 31, 1995
(Amounts in thousands, except per share data) March 31, June 30, September 30, December 31,
1995 1995 1995 1995
------------------------------------------------
<S> <C> <C> <C> <C>
Revenues..................................... $44,253 $45,731 $51,964 $47,873
Gross profit................................. 7,941 9,366 18,662 15,926
Operating (loss) income...................... (7,599) (12,092) 4,185 971
Pre-tax (loss) income before
minority interest............................ (7,347) (12,136) 1,754 (808)
Net (loss) income............................ (4,037) (7,484) 1,653 197
(Loss) earnings per share.................... (0.29) (0.55) 0.12 0.01
</TABLE>
The sum of quarterly (loss) earnings per common share may differ from full-year
amounts due to changes in the number of shares outstanding during the year.
(a) Includes a year-to-date tax adjustment of the federal tax benefit related
to the first quarter impairment write-down.
37
<PAGE> 38
Schedule I
AMERICAN CLASSIC VOYAGES CO.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
-----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................. $ 1,945 $ 407
Prepaid expenses and other current assets. 219 91
Property and equipment, net............... 1,920 43
Investment in and advances to subsidiaries 57,403 78,958
-----------------
$ 61,487 $79,499
=================
LIABILITIES
Other liabilities......................... $ 6,505 $ 8,086
-----------------
STOCKHOLDERS' EQUITY
Common stock.............................. 139 138
Paid-in capital........................... 75,252 74,048
Accumulated deficit....................... (20,409) (2,773)
-----------------
Total stockholders' equity................ 54,982 71,413
-----------------
$ 61,487 $79,499
=================
</TABLE>
See accompanying notes to Condensed Financial Statements.
38
<PAGE> 39
Schedule I
AMERICAN CLASSIC VOYAGES CO.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - (CONTINUED)
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995 1994
-----------------------------
<S> <C> <C> <C>
Miscellaneous revenues.......... $ 16 $ 4,492 $ 475
Depreciation expense............ (793) -- --
Income tax benefit (expense).... 295 (1,752) (182)
Equity in losses of subsidiaries (17,154) (12,411) (1,276)
-----------------------------
Net loss........................ $ (17,636) $ (9,671) $ (983)
=============================
</TABLE>
See accompanying notes to Condensed Financial Statements.
39
<PAGE> 40
Schedule I
AMERICAN CLASSIC VOYAGES CO.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - (CONTINUED)
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995 1994
-----------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $ (17,636) $(9,671) $ (983)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Depreciation....................................... 793 -- --
Equity in earnings of subsidiaries, net............ 17,154 12,411 1,276
Dividends received from subsidiaries............... -- 1,100 --
Decrease (increase) in advances to subsidiaries.... 1,817 (5,594) (17,295)
Prepaid expenses and other......................... (128) (91) --
(Decrease) increase in other liabilities........... (743) 2,870 788
-----------------------------
Net cash provided by (used in) operating activities 1,257 1,025 (16,214)
-----------------------------
INVESTING ACTIVITIES
Investment in subsidiaries......................... -- -- (15,000)
Capital expenditures............................... (87) (43) --
-----------------------------
Net cash used in investing activities.............. (87) (43) (15,000)
-----------------------------
FINANCING ACTIVITIES
Issuance of common stock........................... 368 80 148
Dividends.......................................... -- (1,101) (2,199)
-----------------------------
Net cash provided by (used in) financing activities 368 (1,021) (2,051)
-----------------------------
Increase (decrease) in cash and cash equivalents... 1,538 (39) (33,265)
Cash and cash equivalents, beginning of period..... 407 446 33,711
-----------------------------
Cash and cash equivalents, end of period........... $ 1,945 $ 407 $ 446
=============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash refunded during the period for:
Income taxes....................................... $ -- $ 633 $ --
Non-cash investing activities:
Conversion of advances to subsidiaries into
investment in subsidiaries......................... $ 30,000 $14,000 $ --
</TABLE>
See accompanying notes to Condensed Financial Statements.
40
<PAGE> 41
Schedule I
AMERICAN CLASSIC VOYAGES CO.
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) -
(CONTINUED)
BASIS OF PRESENTATION
In May 1994, the stockholders of The Delta Queen Steamboat Co. approved a
change to the company's name to American Classic Voyages Co. (along with its
subsidiaries, the "Company"). In connection with the name change, DQSC-2, Inc.,
a subsidiary of the Company, adopted the name "The Delta Queen Steamboat Co."
("DQSC").
The Condensed Financial Information of American Classic Voyages Co. ("AMCV")
has been prepared pursuant to Securities and Exchange Commission ("SEC") rules
and regulations and should be read in conjunction with the Consolidated
Financial Statements and Notes thereto for the years ended December 31, 1996,
1995 and 1994 included herein this Form 10-K. The balance sheets as of December
31, 1996 and 1995, respectively, and the related statements of income and cash
flows have been prepared on an unconsolidated basis. AMCV's investment in its
subsidiaries is recorded on the equity basis. In March 1992, AMCV completed the
sale of 4,140,000 shares of common stock at an initial public offering price of
$13.50 per share. In December 1993, AMCV sold an aggregate of 2,760,000 shares
of its $0.01 par value common stock at a public offering price of $16.00 per
share.
DIVIDENDS FROM SUBSIDIARIES
Cash dividends paid to AMCV by its consolidated subsidiaries were as follows
(in millions):
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1995 1994
---------------------------
<S> <C> <C> <C>
Dividends received from subsidiaries $ -- $ 1.1 $ --
===========================
</TABLE>
COMMITMENTS
AMCV has guaranteed the credit agreement between one of its subsidiaries and a
group of financial institutions which provides for a borrowing facility to such
subsidiary for general corporate purposes. For information related to this
credit agreement, see Note 6 of "Notes to Consolidated Financial Statements"
included herein this Form 10-K.
The Federal Maritime Commission ("FMC") regulates passenger vessels with 50 or
more berths departing from U.S. ports and requires that operators post security
to be used in the event the operator fails to provide cruise services, or
otherwise satisfy certain financial standards. The Company has been approved as
a self-insurer by the FMC, and therefore, subject to continued approval, is not
required to post security for passenger cruise deposits. The FMC has recently
reviewed its standards and in June 1996 issued proposed regulations to increase
the financial responsibility requirements. The Company filed its position on
the proposals, as it believes that the FMC's current standards provide
passengers with adequate protection in the event of an operator's
non-performance and that further requirements may impose an undue burden on
operators. If implemented, these proposed regulations would be phased in over
time and, among other things, require operators qualifying as a self-insurer,
such as the Company, to satisfy a working capital test, in addition to the
existing net worth test, and to provide third-party coverage for 25% of its
unearned passenger revenue in the form of a surety bond or similar instrument.
At this time, the Company cannot predict if the proposed changes will be
approved as currently constituted, or at all. If they are implemented, the
proposed changes would require that the Company establish a bond to cover a
portion of its passenger deposits and payments, which may impact the Company's
liquidity.
41
<PAGE> 42
Schedule I
AMERICAN CLASSIC VOYAGES CO.
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) -
(CONTINUED)
INCOME TAXES - (Continued)
AMCV has also entered into tax sharing agreements with its subsidiaries which
require each subsidiary to compute its Federal income tax liability on a
separate company basis and to pay amounts so computed to AMCV. Amounts AMCV
remitted to and received from subsidiaries under the subsidiary tax sharing
agreements were as follows (in millions):
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1996 1995 1994
----------------------------
<S> <C> <C> <C>
Tax sharing received from the subsidiaries $ -- $ 3.4 $ --
Tax sharing paid to the subsidiaries...... -- (3.3) --
----------------------------
Net cash retained by AMCV................. $ -- $ 0.1 $ --
============================
</TABLE>
In 1993, AMCV established a capital construction fund ("CCF") pursuant to
section 607 of the Merchant Marine Act of 1936. The CCF allows AMCV to
accelerate recognition of Federal income tax deductions for capital
expenditures related to the American Hawaii vessels. A substantial portion of
the income generated by AMCV is eligible for deposit into the CCF; however,
expenditures for the vessels of DQSC are not qualified for this tax treatment.
As such, on a consolidated tax return basis, AMCV was able to obtain the
accelerated deduction treatment on a substantial portion of its taxable income.
42
<PAGE> 43
AMERICAN CLASSIC VOYAGES CO.
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
**2.(d)(1) Purchase Agreement among Blackland Vistas, Inc. and Great AQ
Steamboat Co. as seller and Thayer Hotel Investments L.P. as
purchaser (filed as Exhibit 2. to the Company's Form 8-K dated
August 22, 1996 and incorporated herein by reference).
**2.(d)(2) Profit Participation Agreement made as of October 16, 1996 by
and between THI FQ L.P. and Great AQ Steamboat Co. (filed as
Exhibit 2.(d)(1) to the Company's Form 8-K dated October 31,
1996 and incorporated herein by reference).
**2.(d)(3) Preferred Provider Agreement executed as of October 16, 1996 by
The Delta Queen Steamboat Co. and THI FQ L.P. (filed as Exhibit
2.(d)(2) to the Company's Form 8-K dated October 31, 1996 and
incorporated herein by reference).
**3.(i) Amended and Restated Certificate of Incorporation of the
Company (filed on January 17, 1992 as Exhibit 3.(a) to the
Company's Registration Statement on Form S-1 (Registration No.
33-45139) and incorporated herein by reference).
**3.(ii) By-Laws of the Company (filed on March 31, 1995 as Exhibit
3.(ii) to the Company's Form 10-K dated December 31, 1994 and
incorporated herein by reference).
**4.(i) Proof of Common Stock Certificate (filed on February 14, 1992
as Exhibit 4.(i) to Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No. 33-45139)
and incorporated herein by reference).
**4.(ii)(a)(4) Stock Pledge Agreement dated as of August 3, 1993, by and
between the Company and Chemical Bank, as agent for the Lenders
(the "Agent") (filed on September 17, 1993 as Exhibit
4.(ii)(a)(9) to the Company's Registration Statement on Form
S-1 (Registration No. 33-68996) and incorporated herein by
reference).
**4.(ii)(a)(5) Stock Pledge Agreement dated as of August 3, 1993, by and
between The Delta Queen Steamboat Co. and the Agent (filed on
September 17, 1993 as Exhibit 4.(ii)(a)(10) to the Company's
Registration Statement on Form S-1 (Registration No. 33-68996)
and incorporated herein by reference).
**4.(ii)(a)(6) Guaranty dated as of August 3, 1993, made by the Company,
Creative Endeavors, Inc., Delta Queen Steamboat Development,
Inc., Cruise America Travel, Incorporated, Great River Cruise
Line, Inc., Great Ocean Cruise Line, Inc., Great River
Transportation Co. and Blackland Vistas, Inc., in favor of the
Lenders and the Agent (filed on September 17, 1993 as Exhibit
4.(ii)(a)(11) to the Company's Registration Statement on Form
S-1 (Registration No. 33-68996) and incorporated herein by
reference).
**4.(ii)(a)(7) Security Agreement dated as of March 31, 1995, by and between
the Company and the Agent (filed on May 15, 1995 as Exhibit
4.(ii)(a)(12) to the Company's Form 10-Q dated March 31, 1995
and incorporated herein by reference).
The following entities have entered into a security agreement
with the Agent which is substantially identical in all material
respects to the Security Agreement filed as Exhibit
4.(ii)(a)(12) to the Company's Form 10-Q dated March 31, 1995:
(i) The Delta Queen Steamboat Co.;
(ii) Blackland Vistas, Inc.;
(iii) Creative Endeavors, Inc.;
(iv) Delta Queen Steamboat Development, Inc.;
(v) Great River Transportation Co.;
(vi) Great Ocean Cruise Line, Inc.;
(vii) Cruise America Travel, Incorporated;
(viii) Great River Cruise Line, Inc.; and
(ix) AMCV Development Corp.
43
<PAGE> 44
**4.(ii)(a)(8) Preferred Ship Mortgage dated August 3, 1993, executed by
Great River Cruise Line, Inc. in favor of the Agent for the
benefit of the Lenders in the principal amount of $65,000,000
(filed on September 17, 1993 as Exhibit 4.(ii)(a)(13) to the
Company's Registration Statement on Form S-1 (Registration No.
33-68996) and incorporated herein by reference).
**4.(ii)(a)(9) Preferred Ship Mortgage dated August 3, 1993, executed by
Great Ocean Cruise Line, Inc. in favor of the Agent for the
benefit of the Lenders in the principal amount of $65,000,000
(filed on September 17, 1993 as Exhibit 4.(ii)(a)(14) to the
Company's Registration Statement on Form S-1 (Registration No.
33-68996) and incorporated herein by reference).
**4.(ii)(a)(12) Multiple Indebtedness Mortgage, Pledge and Assignment of
Leases and Proceeds and Security Agreement dated August 3,
1993, made by Blackland Vistas, Inc. in favor of the Agent
(filed on September 17, 1993 as Exhibit 4.(ii)(a)(17) to the
Company's Registration Statement on Form S-1 (Registration No.
33-68996) and incorporated herein by reference).
**4.(ii)(a)(13) Master Amendment to the Collateral Documents dated March 31,
1995, executed by the Delta Queen Steamboat Co., the Company,
Creative Endeavors, Inc., Cruise America Travel, Incorporated,
Great River Transportation Co., Delta Queen Steamboat
Development, Inc., Great River Cruise Line, Inc., Great Ocean
Cruise Line, Inc., Blackland Vistas, Inc., Great Hawaiian
Cruise Line, Inc., and AMCV Development Corp. and the Agent
for the benefit of the Agent and the Lenders in connection
with the Amended and Restated Credit Agreement dated March 31,
1995 (filed on May 15, 1995 as Exhibit 4.(ii)(a)(19) to the
Company's Form 10-Q dated March 31, 1995 and incorporated
herein by reference).
**4.(ii)(a)(14) Amendment to Preferred Ship Mortgage dated March 31, 1995
executed by Great River Cruise Line, Inc. in favor of the
Agent for the benefit of the Lenders in the principal amount
of $80,000,000 (filed on May 15, 1995 as Exhibit 4.(ii)(a)(20)
to the Company's Form 10-Q dated March 31, 1995 and
incorporated herein by reference).
**4.(ii)(a)(15) Amendment to Preferred Ship Mortgage dated March 31, 1995
executed by Great Ocean Cruise Line, Inc. in favor of the
Agent for the benefit of the Lenders in the principal amount
of $80,000,000 (filed on May 15, 1995 as Exhibit 4.(ii)(a)(21)
to the Company's Form 10-Q dated March 31, 1995 and
incorporated herein by reference).
**4.(ii)(a)(16) Third Amended and Restated Credit Agreement dated as of April
22, 1996, among The Delta Queen Steamboat Co., as Borrower,
and the Company, as Parent, the financial institutions from
time to time a party hereto (collectively, the "Lenders") and
Chemical Bank, as the Lenders' agent ("Agent") and Hibernia
Bank as Co-Agent (filed on May 15, 1996 as Exhibit
4.(ii)(a)(16) to the Company's Form 10-Q dated March 31, 1996
and incorporated herein by reference).
**4.(ii)(a)(19) $11,000,000.00 Third Amended and Restated Revolving Loan Note
dated April 22, 1996, by and between The Delta Queen Steamboat
Co. and Chemical Bank (filed on May 15, 1996 as Exhibit
4.(ii)(19) to the Company's Form 10-Q dated March 31, 1996 and
incorporated herein by reference).
The following Third Amended and Restated Loan Notes, each
dated April 22, 1996 and executed by The Delta Queen Steamboat
Co., as Borrower, are substantially identical in all material
respects to the Third Amended and Restated Revolving Loan Note
filed as Exhibit 4.(ii)(a)(3), except as to the named Lender
and the stated amount, which are set forth below:
LENDER AMOUNT
------ ------
Hibernia National Bank $10,000,000.00
Deposit Guaranty National Bank $ 4,000,000.00
**4.(ii)(a)(20) Second Master Amendment to the Collateral Documents dated
August 31, 1995, executed by The Delta Queen Steamboat Co.,
the Company, Creative Endeavors, Inc., Cruise America
Travel, Incorporated, Great River Transportation Co., Great
River Cruise Line, Inc., Great Ocean Cruise Line, Inc., and
Blackland Vistas, Inc., and the Agent for the benefit of the
Agent and the Lenders in connection with the Amended and
Restated Credit Agreement dated March 31, 1995 (filed on
November 14, 1995 as Exhibit 4.(ii)(a)(20) to the Company's
Form 10-Q dated September 30, 1995 and incorporated herein
by reference).
44
<PAGE> 45
**4.(ii)(a)(21) Second Amendment to Preferred Ship Mortgage dated August 31,
1995 executed by Great River Cruise Line, Inc. in favor of
the Agent for the benefit of the Lenders in the principal
amount of $40,000,000.00 (filed on November 14, 1995 as
Exhibit 4.(ii)(a)(21) to the Company's Form 10-Q dated
September 30, 1995 and incorporated herein by reference).
**4.(ii)(a)(22) Second Amendment to Preferred Ship Mortgage dated August 31,
1995 executed by Great Ocean Cruise Line, Inc. in favor of
the Agent for the benefit of the Lenders in the principal
amount of $40,000,000.00 (filed on November 14, 1995 as
Exhibit 4.(ii)(a)(22) to the Company's Form 10-Q dated
September 30, 1995 and incorporated herein by reference).
**4.(ii)(a)(23) Third Master Amendment to the Collateral Documents dated
April 22, 1996, executed by The Delta Queen Steamboat Co.,
the Company, Cruise America Travel, Incorporated, Great
River Transportation Co., Great River Cruise Line, Inc.,
Great Ocean Cruise Line, Inc., and Blackland Vistas, Inc.,
and the Agent for the benefit of the Agent and the Lenders
in connection with the Amended and Restated Credit Agreement
dated March 31, 1995 (filed on May 15, 1996 as Exhibit
4.(ii)(a)(23) to the Company's Form 10-Q dated March 31,
1996 and incorporated herein by reference).
**4.(ii)(a)(24) Third Amendment to Preferred Ship Mortgage dated April 22,
1996 executed by Great River Cruise Line, Inc. in favor of
the Agent for the benefit of the Lenders in the principal
amount of $25,000,000.00 (filed on May 15, 1996 as Exhibit
4.(ii)(a)(24) to the Company's Form 10-Q dated March 31,
1996 and incorporated herein by reference).
**4.(ii)(a)(25) Third Amendment to Preferred Ship Mortgage dated April 22,
1996 executed by Great Ocean Cruise Line, Inc. in favor of
the Agent for the benefit of the Lenders in the principal
amount of $25,000,000.00 (filed on May 15, 1996 as Exhibit
4.(ii)(a)(25) to the Company's Form 10-Q dated March 31,
1996 and incorporated herein by reference).
**4.(ii)(a)(26) Acknowledgment of Trust Indenture dated as of April 22, 1996
entered into by and among Great River Cruise Line, Inc. and
Chemical Bank as Agent for the Lenders (filed as Exhibit
4.(ii)(a)(26) to the Company's Form 10-Q dated June 30, 1996
and incorporated herein by reference).
**4.(ii)(a)(27) Acknowledgment of Trust Indenture dated as of April 22, 1996
entered into by and among Great Ocean Cruise Line, Inc. and
Chemical Bank as Agent for the Lenders (filed as Exhibit
4.(ii)(a)(27) to the Company's Form 10-Q dated June 30, 1996
and incorporated herein by reference).
**4.(ii)(c)(1) Commitment to Guaranty Obligations by the United States of
America accepted by Great AQ Steamboat Co. dated as of
August 24, 1995 (filed on November 14, 1995 as Exhibit
4.(ii)(c)(1) to the Company's Form 10-Q dated September 30,
1995 and incorporated herein by reference).
**4.(ii)(c)(2) Great AQ Steamboat Co. United States Government Guaranteed
Ship Financing Obligations, American Queen Series Purchase
Agreement dated August 24, 1995 (filed on November 14, 1995
as Exhibit 4.(ii)(c)(2) to the Company's Form 10-Q dated
September 30, 1995 and incorporated herein by reference).
**4.(ii)(c)(3) Trust Indenture relating to United States Government
Guaranteed Ship Financing Obligations, American Queen
Series, between Great AQ Steamboat Co. and the Bank of New
York, dated as of August 24, 1995 (the "Trust Indenture")
along with Schedule A and Exhibit 1 (filed on November 14,
1995 as Exhibit 4.(ii)(c)(3) to the Company's Form 10-Q
dated September 30, 1995 and incorporated herein by
reference).
**4.(ii)(c)(4) Form of 2005 Note, Guarantee and Trustee's Authentication
Certificate Specimen Note as it relates to the United States
Government Guaranteed Ship Financing Obligation, American
Queen Series (filed on November 14, 1995 as Exhibit
4.(ii)(c)(4) to the Company's Form 10-Q dated September 30,
1995 and incorporated herein by reference).
**4.(ii)(c)(5) Form of 2020 Bond, Guarantee and Trustee's Authentication
Certificate Specimen Bond as it relates to United States
Government Guaranteed Ship Financing Bond, American Queen
Series (filed on November 14, 1995 as Exhibit 4.(ii)(c)(5)
to the Company's Form 10-Q dated September 30, 1995 and
incorporated herein by reference).
45
<PAGE> 46
**4.(ii)(c)(6) Authorization Agreement between the United States of America
as represented by the Secretary of Transportation and the
Bank of New York as Indenture Trustee under the Trust
Indenture between it and Great AQ Steamboat Co. dated as of
August 24, 1995 (filed on November 14, 1995 as Exhibit
4.(ii)(c)(6) to the Company's Form 10-Q dated September 30,
1995 and incorporated herein by reference).
**4.(ii)(c)(7) Security Agreement relating to the United States Government
Guaranteed Ship Financing Obligation between Great AQ
Steamboat Co. and the United States of America dated as of
August 24, 1995 (the "Security Agreement") along with
Exhibit 1 and the Schedule of Definitions (filed on November
14, 1995 as Exhibit 4.(ii)(c)(7) to the Company's Form 10-Q
dated September 30, 1995 and incorporated herein by
reference).
**4.(ii)(c)(8) $60,589,000 Promissory Note dated August 24, 1995 by and
between Great AQ Steamboat Co. and the United States of
America (filed on November 14, 1995 as Exhibit 4.(ii)(c)(8)
to the Company's Form 10-Q dated September 30, 1995 and
incorporated herein by reference).
**4.(ii)(c)(9) Title XI Reserve Fund and Financial Agreement among Great AQ
Steamboat Co. and the United States of America dated as of
August 24, 1995 along with the General Provisions (filed on
November 14, 1995 as Exhibit 4.(ii)(c)(9) to the Company's
Form 10-Q dated September 30, 1995 and incorporated herein
by reference).
**4.(ii)(c)(10) Guaranty Agreement dated August 24, 1995 made by the Delta
Queen Steamboat Co. in favor of the United States of America
(filed on November 14, 1995 as Exhibit 4.(ii)(c)(10) to the
Company's Form 10-Q dated September 30, 1995 and
incorporated herein by reference).
**4.(ii)(d)(1) Commitment to Guaranty Obligations by the United States of
America Accepted by Great Independence Ship Co. dated as of
December 7, 1995 (filed on April 1, 1996 as Exhibit
4.(ii)(d)(1) to the Company's Form 10-K dated December 31,
1995).
**4.(ii)(d)(2) Great Independence Ship Co. United States Government
Guaranteed Ship Financing Obligations, Independence Series A
Purchase Agreement dated December 7, 1995 (filed on April 1,
1996 as Exhibit 4.(ii)(d)(2) to the Company's Form 10-K
dated December 31, 1995).
**4.(ii)(d)(3) Trust Indenture relating to United States Government
Guaranteed Ship Financing Obligations, Independence Series
A, between Great Independence Ship Co. and the Bank of New
York, dated as of December 7, 1995 (the "Trust Indenture")
along with Schedule A and Exhibit 1 (filed on April 1, 1996
as Exhibit 4.(ii)(d)(3) to the Company's Form 10-K dated
December 31, 1995).
**4.(ii)(d)(4) Forms of 2005 Note, Guarantee and Trustee's Authentication
Certificate Specimen Note as it relates to the United States
Government Guaranteed Ship Financing Obligation,
Independence Series A (filed on April 1, 1996 as Exhibit
4.(ii)(d)(4) to the Company's Form 10-K dated December 31,
1995).
**4.(ii)(d)(5) Forms of 2015 Bond, Guarantee and Trustee's Authentication
Certificate Specimen Bond as it relates to United States
Government Guaranteed Ship Financing Bond, Independence
Series A (filed on April 1, 1996 as Exhibit 4.(ii)(d)(5) to
the Company's Form 10-K dated December 31, 1995).
**4.(ii)(d)(6) Authorization Agreement between the United States of America
represented by the Secretary of Transportation and the Bank
of New York as Indenture Trustee under the Trust Indenture
between it and Great Independence Ship Co. dated as of
December 7, 1995 (filed on April 1, 1996 as Exhibit
4.(ii)(d)(6) to the Company's Form 10-K dated December 31,
1995).
**4.(ii)(d)(7) Security Agreement relating to the United States Government
Guaranteed Ship Financing Obligation between Great
Independence Ship Co. and the United States of America dated
as of December 7, 1995 (the "Security Agreement") along with
Exhibit 1 and the Schedule of Definitions (filed on April 1,
1996 as Exhibit 4.(ii)(d)(7) to the Company's Form 10-K
dated December 31, 1995).
46
<PAGE> 47
**4.(ii)(d)(8) $26,429,000 Promissory Note dated December 7, 1995 by and
between Great Independence Ship Co. and the United States of
America (filed on April 1, 1996 as Exhibit 4.(ii)(d)(8) to
the Company's Form 10-K dated December 31, 1995).
**4.(ii)(d)(9) Title XI Reserve Fund and Financial Agreement between Great
Independence Ship Co. and the United States of America dated
as of December 7, 1995 along with the General Provisions
(filed on April 1, 1996 as Exhibit 4.(ii)(d)(9) to the
Company's Form 10-K dated December 31, 1995).
**4.(ii)(d)(10) Guaranty and Security Agreement dated December 7, 1995 made
by the Great Independence Ship Co., Great Hawaiian Cruise
Line, Inc. and Great Hawaiian Properties Corporation in
favor of the United States of America (filed on April 1,
1996 as Exhibit 4.(ii)(d)(10) to the Company's Form 10-K
dated December 31, 1995).
**4.(ii)(d)(11) Amendment to Commitment to Guarantee Obligations by the
United States of America Accepted by Great Independence Ship
Co. dated as of March 28, 1996 (filed on May 15, 1996 as
Exhibit 4.(ii)(d)(11) to the Company's Form 10-Q dated March
31, 1996).
**4.(ii)(d)(12) Great Independence Ship Co. United Stated Government
Guaranteed Ship Financing Obligations, Independence Series B
Purchase Agreement dated March 28, 1996 (filed on May 15,
1996 as Exhibit 4.(ii)(d)(12) to the Company's Form 10-Q
dated March 31, 1996).
**4.(ii)(d)(13) Supplemental Indenture No. 1 relating to United States
Government Guaranteed Ship Financing Obligations,
Independence Series B, between Great Independence Ship Co.
and the Bank of New York, dated as of March 28, 1996 (filed
on May 15, 1996 as Exhibit 4.(ii)(d)(13) to the Company's
Form 10-Q dated March 31, 1996).
**4.(ii)(d)(14) Form of 2005 Note, Guarantee and Trustee's Authentication
Certificate Specimen Note as it relates to the United States
Government Guaranteed Ship Financing Obligation,
Independence Series B (filed on May 15, 1996 as Exhibit
4.(ii)(d)(14) to the Company's Form 10-Q dated March 31,
1996).
**4.(ii)(d)(15) Form of 2015 Bond, Guarantee and Trustee's Authentication
Certificate Specimen Bond as it relates to United States
Government Guaranteed Ship Financing Bond, Independence
Series B (filed on May 15, 1996 as Exhibit 4.(ii)(d)(15) to
the Company's Form 10-Q dated March 31, 1996).
**4.(ii)(d)(16) Amendment No. 1 to Authorization Agreement between the
United States of America represented by the Secretary of
Transportation and the Bank of New York as Indenture Trustee
under the Trust Indenture between it and Great Independence
Ship Co. dated as of March 28, 1996 (filed on May 15, 1996
as Exhibit 4.(ii)(d)(16) to the Company's Form 10-Q dated
March 31, 1996).
**4.(ii)(d)(17) Amendment No. 1 to Security Agreement relating to the United
States Government Guaranteed Ship Financing Obligation
between Great Independence Ship Co. and the United States of
America dated as of March 28, 1996 (the "Security
Agreement") (filed on May 15, 1996 as Exhibit 4.(ii)(d)(17)
to the Company's Form 10-Q dated March 31, 1996).
**4.(ii)(d)(18) Endorsement to $6,903,000 Promissory Note dated March 28,
1996 by and between Great Independence Ship Co. and the
United States of America (filed on May 15, 1996 as Exhibit
4.(ii)(d)(18) to the Company's Form 10-Q dated March 31,
1996).
**4.(ii)(d)(19) Amendment No. 1 to Title XI Reserve Fund and Financial
Agreement between Great AQ Steamboat Co. and the United
States of America effective as of January 1, 1996 (filed on
August 14, 1996 as Exhibit 4.(ii)(d)(19) to the Company's
Form 10-Q dated June 30, 1996).
9. Not applicable.
**10.(i)(a)(1) Tax Sharing Agreement dated August 3, 1993 by and between the
Company and Great Hawaiian Cruise Line, Inc. (filed on
September 17, 1993 as Exhibit 10.(i)(a)(1) to the Company's
Registration Statement on Form S-1 (Registration No.
33-68996) and incorporated herein by reference).
47
<PAGE> 48
**10.(i)(a)(2) Tax Sharing Agreement dated August 3, 1993 by and between the
Company and The Delta Queen Steamboat Co. (filed on
September 17, 1993 as Exhibit 10.(i)(a)(2) to the Company's
Registration Statement on Form S-1 (Registration No.
33-68996) and incorporated herein by reference).
**10.(i)(a)(3) Tax Sharing Agreement dated August 3, 1993 by and among the
Company, The Delta Queen Steamboat Co., and Creative
Endeavors, Inc. (filed on September 17, 1993 as Exhibit
10.(i)(a)(3) to the Company's Registration Statement on
Form S-1 (Registration No. 33-68996) and incorporated herein
by reference).
The following entities have entered into a Tax Sharing
Agreement with the Company and The Delta Queen Steamboat
Co., which is substantially identical in all material
respects to the Tax Sharing Agreement filed hereunder as
Exhibit 10.(i)(a)(3):
(i) Delta Queen Steamboat Development, Inc.;
(ii) Great River Transportation Co.;
(iii) Great River Cruise Line, Inc.;
(iv) Great Ocean Cruise Line, Inc.; and
(v) Cruise America Travel, Inc.
**10.(ii)(A)(1) Administrative Services Agreement by and between the Company
and Equity Group Investments, Inc. (filed on March 2, 1993
as Exhibit 10.(i)(A) to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No.
33-45139) and incorporated herein by reference).
**10.(ii)(B)(1) Contract Air/Sea Fare and Marketing Agreement dated as of
January 21, 1994 among American Airlines, Inc. and Great
Hawaiian Properties Corporation, d.b.a. American Hawaii
Cruises (filed as Exhibit 10.(ii)(B)(1) to the Company's
Form 10-K dated March 31, 1994 and incorporated herein by
reference).
**10.(ii)(D)(2) Preferential Assignment Agreement dated September 27, 1984,
by and between the Board of Commissioners of the Port of New
Orleans and the Company, including Assignment thereof and
Amendments thereto (filed on January 17, 1992 as Exhibit
10.(ii)(D)(2) to the Company's Registration Statement on
Form S-1 (Registration No. 33-45139) and incorporated herein
by reference).
**10.(ii)(D)(3) Lease by and between Equity Office Properties, Inc. as agent
for Beneficial Owner and Great Hawaiian Properties
Corporation dated May 30, 1995 (filed on April 1, 1996 as
Exhibit 10.(ii)(D)(3) to the Company's Form 10-K dated
December 31, 1995).
**10.(ii)(D)(6) Lease dated May 31, 1993 by and between Hawaii Press
Newspapers, Inc. and American Global Line, Inc. for the
property located at 2100 North Nimitz, Honolulu, Hawaii
(filed on September 17, 1993 as Exhibit 10.(ii)(D)(5) to the
Company's Registration Statement on Form S-1 (Registration
No. 33-68996) and incorporated herein by reference).
**10.(iii)(A)(1) American Classic Voyages Co. 1992 Stock Option Plan (as
amended) (filed on January 17, 1992 as Exhibit
10.(iii)(A)(1) to the Company's Registration Statement on
Form S-1 (Registration No. 33-45139) and incorporated herein
by reference).
**10.(iii)(A)(2) Performance Management Objectives Bonus Plan (filed on
January 17, 1992 as Exhibit 10.(iii)(A)(2) to the Company's
Registration Statement on Form S-1 (Registration No.
33-45139) and incorporated herein by reference).
**10.(iii)(A)(3) Discretionary Bonus Plan (filed on January 17, 1992 as
Exhibit 10.(iii)(A)(3) to the Company's Registration
Statement on Form S-1 (Registration No. 33-45139) and
incorporated herein by reference).
**10.(iii)(A)(4) Executive Bonus Plan (filed on January 17, 1992 as Exhibit
10.(iii)(A)(4) to the Company's Registration Statement on
Form S-1 (Registration No. 33-45139) and incorporated herein
by reference).
**10.(iii)(A)(5) Advantage Retirement Savings Plan, as amended and further
restated effective October 1, 1987, including Amendment
thereto (filed on January 17, 1992 as Exhibit 10.(iii)(A)(5)
to the Company's Registration Statement on Form S-1
(Registration No. 33-45139) and incorporated herein by
reference).
48
<PAGE> 49
**10.(iii)(A)(6) American Classic Voyages Co. S. Cody Engle Stock Option
Agreement (filed on January 17, 1992 as Exhibit
10.(iii)(A)(6) to the Company's Registration Statement on
Form S-1 (Registration No. 33-45139) and incorporated herein
by reference).
**10.(iii)(A)(7) American Classic Voyages Co. Jeffrey D. Krida Stock Option
Agreement (filed on February 7, 1992 as Exhibit
10.(iii)(A)(7) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-45139) and incorporated herein by reference).
**10.(iii)(A)(8) Letter dated January 3, 1992 regarding Severance Agreement
with Jeffrey D. Krida (filed on January 17, 1992 as Exhibit
10.(iii)(A)(10) to the Company's Registration Statement on
Form S-1 (Registration No. 33-45139) and incorporated herein
by reference).
**10.(iii)(A)(10) American Classic Voyages Co. Dividend Reinvestment and
Common Stock Purchase Plan (filed on June 22, 1994 as part
of the Company's Registration Statement on Form S-3
(Registration No. 33-80614) and incorporated herein by
reference).
**10.(iii)(A)(11) American Classic Voyages Co. 1995 Employee Stock Purchase
Plan (filed on May 17, 1995 as part of the Company's
Registration Statement on Form S-8 (Registration No.
33-92382) and incorporated herein by reference).
11. Not applicable.
12. Not applicable.
13. Not applicable.
16. Not applicable.
18. Not applicable.
21. Subsidiaries of the Company.
22. Not applicable.
23. Consent of KPMG Peat Marwick LLP.
24. Not applicable.
26. Not applicable.
27. Financial Data Schedule.
28. Not applicable.
**Previously filed.
49
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF
AMERICAN CLASSIC VOYAGES CO.
<TABLE>
<CAPTION>
Jurisdiction Under Percentage
Name of Subsidiary Which Organized of Ownership
------------------ ------------------ ------------
<S> <C> <C>
The Delta Queen Steamboat Co. Delaware 100%
DQSB II, Inc. Delaware (1)
Cruise America Travel, Inc. Delaware (1)
Great River Cruise Line, L.L.C. Delaware (2)
Great Ocean Cruise Line, L.L.C. Delaware (2)
Great AQ Steamboat, L.L.C. Delaware (2)
Great Hawaiian Cruise Line, Inc. Delaware 100%
Great Independence Ship Co. Delaware (3)
Great Constitution Ship Co. Delaware (3)
Great Hawaiian Properties Corporation Delaware (3)
American Hawaii Properties Corporation Delaware (3)
CAT II, Inc. Delaware (3)
</TABLE>
(1) 100% owned subsidiaries of The Delta Queen Steamboat Co.
(2) 99% owned subsidiaries of The Delta Queen Steamboat Co.
(3) 100% owned subsidiaries of Great Hawaiian Cruise Line, Inc.
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
The Board of Directors and Stockholders
American Classic Voyages Co.
We consent to incorporation by reference in the registration statement No.
33-80614 on Form S-3 and No. 33-92382 on Form S-8 of American Classic Voyages
Co. of our report dated February 19, 1997, relating to the consolidated balance
sheets of American Classic Voyages Co. and subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related financial statement schedule,
which report appears in the December 31, 1996 annual report on Form 10-K of
American Classic Voyages Co.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 20,865<F1>
<SECURITIES> 0
<RECEIVABLES> 3,734
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,239
<PP&E> 211,520
<DEPRECIATION> 44,637
<TOTAL-ASSETS> 211,864
<CURRENT-LIABILITIES> 70,984
<BONDS> 85,898
0
0
<COMMON> 139
<OTHER-SE> 54,843
<TOTAL-LIABILITY-AND-EQUITY> 211,864
<SALES> 0
<TOTAL-REVENUES> 191,542
<CGS> 0
<TOTAL-COSTS> 123,679
<OTHER-EXPENSES> 38,390
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,111
<INCOME-PRETAX> (25,935)
<INCOME-TAX> (8,299)
<INCOME-CONTINUING> (17,636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,636)
<EPS-PRIMARY> (1.28)
<EPS-DILUTED> (1.28)
<FN>
<F1>Includes restricted short-term investments of $2,957.
</FN>
</TABLE>
