<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
<TABLE>
<CAPTION>
<S> <C>
[ X ] Quarterly report pursuant to Section 13 or
15(d) of the Securities and Exchange Act of 1934
For the quarter ended March 31, 1999
[ ] Transition report pursuant to Section 13 or
15(d) of the Securities and Exchange Act of 1934
Commission File Number 1-7615
</TABLE>
Kirby Corporation
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Nevada 74-1884980
- ---------------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1775 St. James Place, Suite 200, 77056-3453
Houston, TX
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 435-1000
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the registrant's Common Stock, $.10 par
value per share, on May 4, 1999 was 20,097,529.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
($ in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 646 $ 861
Available-for-sale securities 20,214 20,795
Accounts receivable:
Trade - less allowance for doubtful accounts 46,641 53,586
Insurance claims and other 15,622 16,919
Inventory - finished goods 13,507 14,181
Prepaid expenses 6,640 4,829
Deferred income taxes 1,036 1,187
------- -------
Total current assets 104,306 112,358
------- -------
Property and equipment, at cost 470,696 466,443
Less accumulated depreciation 215,329 209,544
------- -------
255,367 256,899
------- -------
Investments in marine affiliates 12,990 12,795
Goodwill - less accumulated amortization 5,239 5,368
Sundry 4,067 2,879
------- -------
$381,969 $390,299
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 3
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
($ in thousands)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 5,333 $ 5,333
Income taxes payable 718 504
Accounts payable 21,551 12,918
Accrued liabilities 42,758 43,305
Deferred revenues 2,835 3,880
------- -------
Total current liabilities 73,195 65,940
------- -------
Long-term debt - less current portion 128,969 137,552
Deferred income taxes 40,464 40,045
Other long-term liabilities 5,937 5,722
------- -------
175,370 183,319
------- -------
Contingencies and commitments -- --
Stockholders' equity:
Preferred stock, $1.00 par value per share.
Authorized 20,000,000 shares. -- --
Common stock, $.10 par value per share.
Authorized 60,000,000 shares,
issued 30,907,000 shares. 3,091 3,091
Additional paid-in capital 159,075 159,122
Accumulated other comprehensive income -- 338
Retained earnings 151,055 147,054
------- -------
313,221 309,605
Less cost of 10,787,000 shares in treasury
(10,137,000 at December 31, 1998) 179,817 168,565
------- -------
133,404 141,040
------- -------
$381,969 $390,299
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 4
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1999 1998
-------- --------
($ in thousands, except
per share amounts)
<S> <C> <C>
Revenues:
Marine transportation $57,729 $59,397
Diesel engine services 20,752 22,858
Investment income and other 155 457
Gain on disposition of assets 32 36
------ ------
78,668 82,748
------ ------
Costs and expenses:
Costs of sales and operating expenses 52,938 54,712
Selling, general and administrative 9,239 9,576
Taxes, other than on income 1,725 1,981
Depreciation and amortization 6,680 6,830
------ ------
70,582 73,099
------ ------
Operating income 8,086 9,649
Equity in earnings of insurance affiliate -- 494
Equity in earnings of marine affiliates 881 716
Interest expense (2,545) (2,767)
------ ------
Earnings before taxes on income 6,422 8,092
Provision for taxes on income (2,421) (3,052)
------ ------
Net earnings $ 4,001 $ 5,040
====== ======
Net earnings per share of common stock:
Basic $ .20 $ .21
====== ======
Diluted $ .20 $ .21
====== ======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 5
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
1999 1998
--------- --------
($ in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,001 $ 5,040
Adjustments to reconcile net earnings to net
cash provided by operations:
Depreciation and amortization 6,680 6,830
Provision for deferred income taxes 754 2,288
Gain on disposition of assets (32) (36)
Deferred scheduled maintenance costs (345) 1,171
Equity in earnings of insurance affiliate,
net of redemption -- (494)
Equity in earnings of marine affiliates,
net of distributions and contributions (195) 469
Other (96) 8
Increase in cash flows resulting from
changes in operating working capital 13,660 5,019
------- -------
Net cash provided by operating
activities of continuing operations 24,427 20,295
Net cash provided by operating activities
of discontinued operations -- 276
------- -------
Net cash provided by operating activities 24,427 20,571
------- -------
TABLE CONTINUED ON NEXT PAGE
</TABLE>
<PAGE> 6
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS, Continued
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
1999 1998
--------- --------
($ in thousands)
<S> <C> <C>
Cash flows from investing activities:
Proceeds from sale and maturities of investments 500 1,034
Purchase of investments (439) (1,703)
Capital expenditures (5,457) (6,199)
Proceeds from disposition of assets 636 77
Proceeds from disposition of business -- 38,600
Investing activities of discontinued operations -- (275)
------- -------
Net cash provided by (used in)
investing activities (4,760) 31,534
------- -------
Cash flows from financing activities:
Borrowings (payments) on bank revolving credit
agreements, net (8,500) 21,400
Payments on long-term debt (83) (83)
Purchase of treasury stock (11,429) (75,740)
Proceeds from exercise of stock options 130 1,489
------- -------
Net cash used in financing activities (19,882) (52,934)
------- -------
Decrease in cash and cash equivalents (215) (829)
Cash and cash equivalents, beginning of year 861 2,043
------- -------
Cash and cash equivalents, end of period $ 646 $ 1,214
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $ 343 $ 567
Income taxes $ 879 $ 33
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 7
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited condensed
financial statements of Kirby Corporation and consolidated subsidiaries
(the "Company") contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of March 31, 1999 and December 31, 1998, and the results of operations for
the three months ended March 31, 1999 and 1998.
(1) BASIS FOR PREPARATION OF THE CONDENSED FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the Company believes that the
disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant
accounting policies normally included in annual financial statements, have
been condensed or omitted pursuant to such rules and regulations. It is
suggested that these condensed financial statements be read in conjunction
with the Company's latest Annual Report on Form 10-K.
(2) ADOPTION OF ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS No.
133") issued in June 1998, establishes accounting and reporting standards
for derivative instruments and hedging activities. This statement requires
that an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. SFAS No. 133 is effective for all quarters of fiscal years beginning
after June 15, 1999. SFAS No. 133 is effective for the Company's year
ending December 31, 2000 and is not expected to have a material effect on
the Company's financial position or results of operations.
(3) COMPREHENSIVE INCOME
The Company's total comprehensive income for the three months ended
March 31, 1999 and 1998 were as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1999 1998
------- -------
<S> <C> <C>
Net earnings $4,001 $5,040
Other comprehensive loss, net of tax (338) (100)
----- -----
Total comprehensive income $3,663 $4,940
===== =====
</TABLE>
<PAGE> 8
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(4) SEGMENT INFORMATION
The following table sets forth the Company's summarized financial
information by reportable segment for the three months ended March 31, 1999
and 1998 (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenues:
Marine transportation $ 57,729 $ 59,397
Diesel engine services 20,752 22,858
Other 187 493
------- -------
$ 78,668 $ 82,748
======= =======
Segment profit (loss):
Marine transportation $ 6,903 $ 8,144
Diesel engine services 2,117 2,173
Other (2,598) (2,225)
------- -------
$ 6,422 $ 8,092
======= =======
Total assets:
Marine transportation $295,454 $315,989
Diesel engine services 36,839 47,411
Other 49,676 100,507
------- -------
$381,969 $463,907
======= =======
</TABLE>
<PAGE> 9
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(4) SEGMENT INFORMATION - (Continued)
The following table presents the details of "Other" segment profit
(loss) for the three months ended March 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
General corporate expenses $(1,121) $(1,161)
Interest expense (2,545) (2,767)
Equity in earnings of affiliates 881 1,210
Gain on sale of assets 32 36
Other 155 457
------ ------
$(2,598) $(2,225)
====== ======
</TABLE>
The following table presents the details of "Other" total assets as of
March 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
March 31,
----------------------------
1999 1998
------- --------
<S> <C> <C>
General corporate assets $36,686 $ 38,941
Investments in affiliates 12,990 61,566
------- --------
$49,676 $100,507
====== =======
</TABLE>
<PAGE> 10
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(5) TAXES ON INCOME
Earnings before taxes on income and details of the provision for taxes
on income for the three months ended March 31, 1999 and 1998 were as
follows (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
------ ------
<S> <C> <C>
Earnings before taxes on income:
United States $6,422 $7,598
Puerto Rico -- 494
----- -----
$6,422 $8,092
===== =====
Provision for taxes on income:
United States:
Current $1,406 $ 505
Deferred 754 2,288
State and local 261 259
----- -----
2,421 3,052
Puerto Rico - current -- --
----- -----
$2,421 $3,052
===== =====
</TABLE>
<PAGE> 11
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Statements contained in this Form 10-Q that are not historical facts,
including, but not limited to, any projections contained herein, are
forward-looking statements and involve a number of risks and uncertainties.
Such statements can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "anticipate," "estimate," or "continue" or
the negative thereof or other variations thereon or comparable terminology.
The actual results of the future events described in such forward-looking
statements in this Form 10-Q could differ materially from those stated in
such forward-looking statements. Among the factors that could cause actual
results to differ materially are: adverse economic conditions; industry
competition and other competitive factors; adverse weather conditions such
as high water, low water, fog and ice; marine accidents; construction of
new equipment by competitors, including construction with government
assisted financing; government and environmental laws and regulations; and
the timing, magnitude and number of acquisitions made by the Company.
The Company is a provider of marine transportation services, operating
a fleet of 521 inland tank barges and 127 inland towing vessels,
transporting industrial chemicals and petrochemicals, refined petroleum
products and agricultural chemicals along the United States inland
waterways. The Company also serves as managing partner of a 35% owned
offshore marine partnership, consisting of four dry-bulk barge and tug
units, and as managing partner of a 50% owned offshore marine partnership,
consisting of one dry-bulk barge and tug unit. The partnerships are
accounted for under the equity method of accounting.
The Company is engaged through its diesel engine services segment in
the overhaul and servicing of large medium-speed diesel engines employed in
marine, power generation and rail applications.
RESULTS OF OPERATIONS
The Company reported net earnings of $4,001,000, or $.20 per share, on
revenues of $78,668,000 for the 1999 first quarter, compared with net
earnings of $5,040,000, or $.21 per share, on revenues of $82,748,000 for
the 1998 first quarter. For purposes of this Management's Discussion, all
earnings per share amounts presented are "Diluted Earnings Per Share." The
weighted average number of common shares applicable to diluted earnings for
the first quarter of 1999 and 1998 were 20,447,000 and 24,347,000,
respectively. The reduction in common shares for the 1999 first quarter
compared with the 1998 first quarter primarily reflects the acquisition of
treasury stock under the Company's Dutch Auction self-tender offer of March
23, 1998 and through open market repurchases, more fully discussed below.
<PAGE> 12
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following table sets forth the Company's revenues and percentage
of such revenues for the three months ended March 31, 1999 compared with
the three months ended March 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
1999 1998 Increase (decrease)
------------- ------------- --------------------
Amounts % Amounts % Amounts %
------- ---- ------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Marine transportation $57,729 74% $59,397 72% $(1,668) (3)%
Diesel engine services 20,752 26 22,858 28 (2,106) (9)
Other income 187 -- 493 -- (306) (62)
------ --- ------ --- ------ ---
$78,668 100% $82,748 100% $(4,080) (5)%
====== === ====== === ====== ===
</TABLE>
The marine transportation segment's revenues for the 1999 first
quarter were $1,668,000, or 3% lower than the revenues reported for the
1998 first quarter. Two offshore tank barge and tug units, which
contributed approximately $1,800,000 of revenues during the first quarter
of 1998, were sold in October 1998. During the 1999 first quarter, chemical
and petrochemical volumes were firm and refined products volumes were soft,
principally due to the seasonality of those products. Liquid fertilizer
volumes were at expected levels. Marine transportation revenues for the
1999 first quarter reflected the modest quarter-to-quarter spot market rate
increases received during the 1998 year, and the renewal of contracts
during the 1998 year and the 1999 first quarter at generally higher rates.
However, the effect of the rate increases was offset by navigational delays
(weather, locks and other restrictions), which lowered the 1999 first
quarter's revenues due to increased transit times.
Revenues for the marine transportation segment for the 1998 first
quarter were positively impacted by strong chemical and petrochemical
volumes, while refined products and liquid fertilizer volumes were at
expected seasonal levels. Navigational delays, while not as severe as the
1999 first quarter, did negatively impact revenues for the 1998 first
quarter.
The diesel engine services segment's revenues for the 1999 first
quarter were $2,106,000, or 9% below the segment's 1998 first quarter
revenues. The prior year first quarter included approximately $1,300,000 of
revenues from a product line that the diesel engine services segment sold
in September 1998. Strong Midwest and East Coast engine overhauls and parts
sales revenues primarily offset the slower Gulf Coast activities negatively
impacted by decreased service work in the offshore oil and gas service
sector in the Gulf of Mexico. Gulf Coast mechanics were dispatched to the
Midwest and East Coast to meet the positive demands of those markets.
<PAGE> 13
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The diesel engine services segment's revenues for the 1998 first
quarter also reflected strong engine overhauls and parts sales in each of
the segment's markets. During the 1998 first quarter, the Gulf Coast market
was benefiting from enhanced drilling and related oil and gas service
activities in the Gulf of Mexico.
Other income for the 1999 first quarter, primarily investment income,
decreased $306,000, or 62%, compared with the 1998 first quarter. The
decline primarily reflected lower interest income from the investments of
the Company's wholly-owned captive insurance subsidiary.
The following table sets forth the costs and expenses and percentage
of each for the three months ended March 31, 1999 compared with the three
months ended March 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1999 1998 Increase (decrease)
--------------- -------------- -------------------
Amounts % Amounts % Amounts %
------- ---- ------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Costs and expenses:
Costs of sales and operating expenses $52,938 75% $54,712 75% $(1,774) (3)%
Selling, general and administrative 9,239 13 9,576 13 (337) (4)
Taxes, other than on income 1,725 2 1,981 3 (256) (13)
Depreciation and amortization 6,680 10 6,830 9 (150) (2)
------ --- ------ --- ------ ---
$70,582 100% $73,099 100% $(2,517) (3)%
====== === ====== === ====== ===
</TABLE>
Costs of sales and operating expenses for the 1999 first quarter
declined $1,774,000, or 3% compared with the first quarter of 1998. The
prior year first quarter included costs and expenses associated with the
revenues generated from the two offshore tank barge and tug units sold in
October 1998 and the diesel engine services product line sold in September
1998. The costs of sales and operating expenses applicable to the assets
sold totaled approximately $2,600,000 during the 1998 first quarter.
<PAGE> 14
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The marine transportation navigational delays noted above not only
negatively impacted revenues, but also increased operating expenses. The
ice and high water conditions required additional horsepower to complete
the movements, additional fuel and other variable expenses. The 1999 first
quarter costs and expenses also reflected the full impact of the overall
20% afloat wage increases implemented during 1998, the result of a tight
afloat labor market. The 1998 compensation increase reflected a 6% increase
effective March 1, an 11% increase effective August 1, as well as addition-
al costs incurred from expanded longevity pay, trip pay, travel pay and
mileage reimbursement. The 20% increase was necessary not only to retain
current employees, but also to increase compensation to levels that were
competitive with other industries so as to attract new afloat personnel.
During the 1999 first quarter, the marine transportation segment benefited
from lower diesel fuel prices compared with the price of diesel fuel
during the prior year first quarter.
Selling, general and administrative expenses for the 1999 first
quarter decreased $337,000, or 4% compared with the first quarter of 1998.
The decrease primarily reflects savings in administrative expenses due to
the relocation of facilities, continuing reorganization efforts and the
elimination of business lines.
Taxes, other than on income for the 1999 first quarter decreased
$256,000, or 13% compared with the 1998 first quarter. The decrease was
primarily attributable to a lower waterway user tax on inland operations
based on fuel used by the segment's vessels, the result of the navigational
delays experienced in the 1999 first quarter which resulted in lower fuel
consumption.
The $150,000, or 2% decrease in depreciation and amortization for the
1999 first quarter compared with the 1998 first quarter primarily reflected
the depreciation of the two offshore tank barge and tug units sold in
October 1998.
The following table sets forth the equity in earnings of affiliates
and interest expense for the three months ended March 31, 1999 compared
with the three months ended March 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended March 31, Increase (decrease)
---------------------------- -------------------
1999 1998 Amount %
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Equity in earnings of insurance affiliate $ -- $ 494 $(494) (100)%
Equity in earnings of marine affiliates $ 881 $ 716 $ 165 23 %
Interest expense $(2,545) $(2,767) $(222) (8)%
</TABLE>
<PAGE> 15
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The 1998 first quarter included $494,000 of equity in earnings from
the Company's 45% voting common stock interest and its 100% non-voting
preferred stock interest in Universal Insurance Company ("Universal").
Universal, a property and casualty insurance company, operates exclusively
in the Commonwealth of Puerto Rico. Effective September 30, 1998, the
Company sold its remaining 45% voting common stock interest and its 100%
non-voting preferred stock interest in Universal for $36,000,000 in cash.
Equity in earnings of marine affiliates for the 1999 first quarter
reflected a 23% increase compared with the 1998 first quarter. The offshore
marine partnerships' dry-cargo barge and tug units were fully employed
during the 1999 first quarter, as compared with the 1998 first quarter when
one of the units was in the shipyard for 15 days and idle for 30 days of
the quarter.
Interest expense reflected an 8% decrease for the 1999 first quarter
compared with the first quarter of 1998. The average debt and the average
interest rate for the first quarter of 1999 was $135,800,000 and 7.23%,
compared with $147,100,000 and 7.29% for the first quarter of 1998,
respectively.
<PAGE> 16
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
BALANCE SHEET
Total assets as of March 31, 1999 were $381,969,000, a 2% decrease
compared with $390,299,000 as of December 31, 1998. The following table
sets forth the significant components of the balance sheet as of March 31,
1999 compared with December 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
Increase (decrease)
March 31, December 31, -------------------
1999 1998 Amount %
--------- ------------ -------- -----
<S> <C> <C> <C> <C>
Assets:
Current assets $104,306 $112,358 $(8,052) (7)%
Property and equipment, net 255,367 256,899 (1,532) (1)
Investments in marine affiliates 12,990 12,795 195 2
Other assets 9,306 8,247 1,059 13
------- ------- ------ --
$381,969 $390,299 $(8,330) (2)%
======= ======= ====== ==
Liabilities and stockholders' equity:
Current liabilities $ 73,195 $ 65,940 $ 7,255 11 %
Long-term debt 128,969 137,552 (8,583) (6)
Deferred taxes 40,464 40,045 419 1
Other long-term liabilities 5,937 5,722 215 4
Stockholders' equity 133,404 141,040 (7,636) (5)
------- ------- ------ --
$381,969 $390,299 $(8,330) (2)%
======= ======= ====== ==
</TABLE>
Working capital as of March 31, 1999 totaled $31,111,000, compared
with $46,418,000 at December 31, 1998. The decrease was attributable to the
reduction of trade accounts receivable by 13% and inventory by 5%,
primarily reflecting the Company's emphasis on collection of trade accounts
receivable, management of the diesel engine services inventories and assets
sold in 1998. Trade accounts payable increased 67%, principally the result
of accruals for reinsurance premiums and inland shipyard invoices. The
available-for-sale securities of $20,214,000 at March 31, 1999 and
$20,795,000 at December 31, 1998 were investments of Oceanic Insurance
Limited, the Company's wholly-owned captive insurance subsidiary.
<PAGE> 17
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Long-term debt, less current portion, decreased 6% to $128,969,000 as
of March 31, 1999 compared with $137,552,000 at December 31, 1998, the
result of the favorable net cash provided by operating activities during
the 1999 first quarter. During the 1999 first quarter, the Company incurred
long-term debt to fund the purchase of $11,429,000 of open market common
stock repurchases, more fully described below.
Stockholders' equity as of March 31, 1999 decreased 5% during the 1999
first quarter, reflecting the Company's open market common stock
repurchases, more full described below.
TREASURY STOCK PURCHASES
During the 1999 first quarter, the Company purchased in the open
market 661,000 shares of its common stock at a total price of $11,429,000,
for an average price of $17.29 per share. Since April 1, 1999, the Company
has purchased 22,000 shares of its common stock at a total purchase price
of $404,000, for an average price of $18.55 per share. The treasury stock
purchases were financed by borrowings under the Company's revolving credit
agreement.
On April 20, 1999, the Board of Directors increased the Company's
common stock repurchase authorization to 6,250,000 shares, an increase of
2,000,000 shares over 2,250,000 shares authorized in October 1995 and
2,000,000 shares authorized in August 1994. The Company, as of May 4, 1999,
had 2,392,000 shares available under the repurchase authorization. The
Company is authorized to purchase its common stock on the New York Stock
Exchange and in privately negotiated transactions. When purchasing its
common stock, the Company is subject to price, trading volume and other
market considerations. Shares purchased may be used for reissuance upon the
exercise of stock options, in future acquisitions for stock or for other
appropriate corporate purposes.
LIQUIDITY
The Company generated net cash provided by operating activities of
$24,427,000 and $20,571,000 for the three months ended March 31, 1999 and
1998, respectively. The 1999 first quarter was positively impacted by a
$13,660,000 increase in cash flows, resulting from changes in working
capital, compared with a $5,019,000 increase in the 1998 first quarter.
Funds generated are available for capital construction projects,
treasury stock repurchases, asset acquisitions, repayment of borrowings
associated with each of the above, and for other operating requirements. In
addition to its net cash provided by operating activities, the Company also
has available as of May 4, 1999 $81,400,000 under its revolving credit
agreement and $121,000,000 available under its medium term note program.
The Company's scheduled principal payments during the next 12 months are
$5,333,000.
<PAGE> 18
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
During the last three years, inflation has had a relatively minor
effect on the financial results of the Company. The marine transportation
segment has long-term contracts which generally contain cost escalation
clauses whereby certain costs, including fuel, can be passed through to its
customers. The repair portion of the diesel engine services segment is
based on prevailing current market rates.
The Company has no present plan to pay dividends on its common stock.
YEAR 2000
Certain computer systems, software programs and semiconductors are not
capable of recognizing certain dates in 1999 and after December 31, 1999,
and will read dates in the year 2000 and thereafter as if those dates
represent the year 1900 or thereafter, or will fail to process those dates.
This "Year 2000 Issue" could result in the failure of certain systems or
other errors that could disrupt normal business activities.
The Company has designed and implemented an action plan to determine
the likely exposures of the Company and its subsidiaries to the Year 2000
Issue and to take the necessary action to minimize the impact of those
exposures. The Company's Year 2000 action plan addresses both internal and
external exposures to the Year 2000 Issue.
With respect to the Company's internal Year 2000 Issue exposures, the
action plan addresses both land-based and vessel-based systems. The land-
based systems include all of the Company's network components, core
corporate software applications, personal computers, telephone systems,
building management control systems and critical office equipment. The
vessel-based systems include electronic navigation equipment, diesel engine
controlling systems, and fire and other emergency monitors and alarms.
The Company's external exposures to the Year 2000 Issue include
vendors and suppliers of critical services including communications, fuel
and supplies, barge cleaning and repair, and government waterways
maintenance and management. The Company's external exposures also include
general business support systems such as electric power, telephone and
banking services, as well as customers' accounts payable systems. The
Company may experience Year 2000 problems as a result of these external
exposures. The Company is attempting to address all Year 2000 exposures in
advance; however, the Company could potentially experience temporary
disruptions to certain aspects of activities or operations as a result of
the external exposures noted above. It is not possible to determine
whether, or to what extent, any or all of these exposures are likely to
occur or the costs involved in any of the exposures. However, the costs to
the Company could be material.
<PAGE> 19
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company's Year 2000 action plan divides the Company's actions with
respect to its internal and external exposures to the Year 2000 Issue into
three sequential states:
* INVESTIGATION. This stage, substantially completed in the 1999 first
quarter, included a complete physical inventorying of all computer
systems, software applications, and equipment relying on computer
software or embedded semiconductors. The Company has completed the
process of mailing Requests for Year 2000 Issues to the manufacturers
and distributors of the systems and equipment. Responses to date
appear positive, as most manufacturers and distributors have indicated
the Year 2000 status of their equipment or systems as Year 2000
compliant.
* REMEDIATION. This stage involves the repair or replacement of the
Company's equipment and systems which have been identified as not being
Year 2000 compliant in the investigation stage and the validation of the
compliance of the equipment and systems which have been repaired or
replaced. This stage has been substantially completed and the remainder
of the Company's efforts in this stage are expected to be completed by
mid-1999. The Company continues to be proactive in additional
communication with key systems' manufacturers and distributors to
ensure awareness of any unanticipated problems that have not been
previously addressed.
* CONTINGENCY PLANNING. Based on the findings of the investigation
stage, the Company's actions in this stage include the development of
business scenarios likely to result from Year 2000 compliance failures by
external suppliers or their equipment, systems or services, and the
development of remedies to minimize the consequences of such failures on
the Company's business. Those remedies may include preventative measures
and "work around" solutions. This stage is expected to be complete by
October 1999.
While the Company expects that the remediation and contingency
planning stages of its Year 2000 action plan will be completed as indicated
above, the Company must rely on third parties including government
agencies, manufacturers, distributors, vendors and suppliers, to provide
information and to take actions which are beyond the Company's control.
While the responses to the investigation stage appear positive, it is not
possible for the Company to predict either the timeliness of the
manufacturers or distributors who have not responded to the Company's
requests, or the substance of the information and actions provided by third
parties. Accordingly, the Company can not predict whether or to what extent
the information provided by third parties will affect the timely completion
of each stage of the Year 2000 action plan, as the information provided by
third parties may require additional investigation, remediation, and/or
contingency planning. Further, the Company's ability to timely complete its
Year 2000 action plan is dependent upon the ability of third party
manufacturers and distributors to provide necessary replacement equipment
during the remediation stage.
<PAGE> 20
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The total amount expended on the Year 2000 action plan through March
31, 1999 is approximately $100,000. Remaining costs related to the Year
2000 action plan are not expected to be material. The Company will continue
to utilize internal resources to assist in the implementation of the Year
2000 action plan. The costs expended in 1998, and the costs anticipated to
be expended in 1999, do not include the Company's internal costs, as the
Company does not track such costs separately. The costs also do not include
software upgrades that, while Year 2000 compliant, were not specifically
upgraded for the Year 2000 Issue. The completion of the Year 2000 action
plan is expected to significantly reduce both the level of uncertainty
related to the Company's reliance on third parties for Year 2000 compliance
and the possibility of significant interruptions of normal business
operations. The forward-looking statements contained in this discussion
should be read in conjunction with the Company's disclosure in the opening
paragraph of this Management's Discussion and Analysis.
ACCOUNTING STANDARDS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," issued in June 1998, establishes accounting and reporting
standards for derivative instruments and hedging activities. This statement
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is effective for all quarters of
fiscal years beginning after June 15, 1999. SFAS No. 133 is effective for
the Company's year ending December 31, 2000 and is not expected to have a
material effect on the Company's financial position or results of
operations.
<PAGE> 21
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
For a detailed explanation of the material pending legal
proceedings against the Company, please refer to the Form 10-K
for the year ended December 31, 1998.
Item 4. Results of Votes of Security Holders
- ------- ------------------------------------
(a) The Registrant held its Annual Meeting of Stockholders on April
20, 1999.
(b) Proxies for the meeting were solicited pursuant to Regulation 14;
there was no solicitation in opposition to management's nominees
for directors as listed in the Proxy Statement, and all such
nominees were elected.
Directors elected were C. Sean Day, Bob G. Gower, William M.
Lamont, Jr., George A. Peterkin, Jr., J. H. Pyne, Robert G.
Stone, Jr., Thomas M. Taylor and J. Virgil Waggoner. No other
directors previously in office continued as a director or
continued in office after the meeting.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
11.0 Computation of Earnings per Common Share.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months
ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
KIRBY CORPORATION
(Registrant)
By: /s/ G. STEPHEN HOLCOMB
---------------------------------
G. Stephen Holcomb
Vice President and Controller
Dated: May 4, 1999
EXHIBIT 11.0
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1999 1998
------- -------
(in thousands, except
per share amounts)
<S> <C> <C>
Net earnings $ 4,001 $ 5,040
====== ======
Basic earnings per share:
Weighted average number of common shares outstanding 20,341 24,051
====== ======
Basic earnings per share $ .20 $ .21
====== ======
Diluted earnings per share:
Weighted average number of common shares outstanding 20,341 24,051
Dilutive shares applicable to stock options 106 296
------ ------
Shares applicable to diluted earnings 20,447 24,347
====== ======
Diluted earnings per share $ .20 $ .21
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 646
<SECURITIES> 20,214
<RECEIVABLES> 63,070
<ALLOWANCES> 807
<INVENTORY> 13,507
<CURRENT-ASSETS> 104,306
<PP&E> 470,696
<DEPRECIATION> 215,329
<TOTAL-ASSETS> 381,969
<CURRENT-LIABILITIES> 73,195
<BONDS> 128,969
0
0
<COMMON> 3,091
<OTHER-SE> 130,313
<TOTAL-LIABILITY-AND-EQUITY> 381,969
<SALES> 15,634
<TOTAL-REVENUES> 78,668
<CGS> 11,974
<TOTAL-COSTS> 52,938
<OTHER-EXPENSES> 17,644
<LOSS-PROVISION> (93)
<INTEREST-EXPENSE> 2,545
<INCOME-PRETAX> 6,422
<INCOME-TAX> 2,421
<INCOME-CONTINUING> 4,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,001
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
