<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 fiscal year ended December 31, 1993
-----------------------------------------
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from____________________to______________________
Commission file number 2-39895
----------------------------------------------------
Midland Enterprises Inc.
--------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 04-2284434
---------------------------------- -------------------------------------
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1400-580 Building; Cincinnati, Ohio 45202
----------------------------------- -------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 513-721-4000
-----------------------
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON
WHICH REGISTERED
----------------------------------- -------------------------------------
----------------------------------- -------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
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(TITLE OF CLASS)
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(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 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. X
----
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES
OF THE REGISTRANT. (THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY
REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND
ASKED PRICES OF SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO
THE DATE OF FILING.)
Not Applicable
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE (APPLICABLE
ONLY TO CORPORATE REGISTRANTS).
March 16, 1994 - 15 1/2 SHARES
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DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE
DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS; (2)
ANY PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT
TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933. (THE LISTED
DOCUMENTS SHOULD BE CLEARLY DESCRIBED FOR IDENTIFICATION PURPOSES.)
The Registrant meets the conditions set forth in General Instruction J (1)
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(a) and (b) of Form 10-K and is therefore filing this Form with the
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reduced disclosure format.
--------------------------
<PAGE> 2
PART I
ITEM 1. BUSINESS
--------
(A) GENERAL
-------
Midland Enterprises Inc. (the "Registrant"), incorporated under the laws of the
State of Delaware in 1961, is a wholly-owned subsidiary of Eastern Enterprises
("Eastern") of Weston, Massachusetts. The Registrant is primarily engaged
through wholly-owned subsidiaries in the operation of a fleet of towboats,
tugboats and barges, principally on the Ohio and Mississippi Rivers and their
tributaries and the Gulf Intracoastal Waterway and in the Gulf of Mexico. The
Registrant's barge line subsidiaries transport bulk commodities, a major
portion of which is coal. In December, 1993, the Company sold its liquid
barges and in conjunction, Chotin, a subsidiary, sold its liquid contract and
trade name. The Registrant, through other subsidiaries, also performs repair
work on marine equipment and operates two coal dumping terminals, a phosphate
rock and phosphate chemical fertilizer terminal, a marine fuel supply facility
and a barge construction facility. In January 1994, the Company indefinitely
suspended the construction of barges at this facility.
Substantially all of the barges, towboats and tugboats operated by the
Registrant's barge line subsidiaries are owned by and chartered from the
Registrant. A substantial portion of this equipment is mortgaged or leased and
the payments under related charter agreements with its subsidiaries are pledged
to secure long-term debt or to meet lease payments.
The Registrant's barge line subsidiaries are The Ohio River Company ("ORCO"),
Orgulf Transport Co. ("Orgulf"), Red Circle Transport Co. ("Red Circle"), and
Chotin Transportation, Inc. ("Chotin"). The Registrant's other principal
subsidiaries, all of whose outstanding stock is owned by the Registrant, are
Eastern Associated Terminals Company ("EATCO"), Port Allen Marine Service, Inc.
("Port Allen"), Hartley Marine Corp. ("Hartley"), The Ohio River Terminals
Company ("ORTCO") and West Virginia Terminals Inc.
(B) INDUSTRY SEGMENTS
-----------------
Registrant's only reportable industry segment is barge transportation.
(C) (1) (I) PRINCIPAL SERVICES AND MARKETS
------------------------------
ORCO is the largest of the Registrant's subsidiaries, accounting for 63% of the
Registrant's total 1993 tonnage transported. ORCO operates principally on the
Ohio River and certain of its tributaries. Approximately 97% of the tonnage
transported by ORCO in 1993 was transported in movements not regulated by the
Interstate Commerce Commission ("ICC"). The balance of ORCO's tonnage was
transported in movements pursuant to a Contract Carrier Permit issued by the
ICC. For an explanation of regulated and non-regulated barge transportation
see "Franchises". The principal commodity transported by ORCO is coal,
primarily for electric utilities. Grain, stone, sand, gravel, iron, steel,
scrap, and coke are the other groups of commodities which ORCO carries in
significant amounts.
Orgulf operates principally on the Mississippi and Ohio Rivers, and the
Illinois, Arkansas-Verdigris, Tennessee-Tombigbee, and Gulf Intracoastal
Waterways, transporting principally coal, grain and ores. Approximately 93% of
the tonnage transported by Orgulf in 1993 was transported in movements not
regulated by the Interstate Commerce Commission ("ICC"). The balance of
Orgulf's tonnage was transported in movements pursuant to a Contract Carrier
Permit issued by the ICC.
1
<PAGE> 3
Chotin operated principally on the Mississippi, Ohio and Warrior Rivers, and on
the Illinois, Tennessee-Tombigbee and Gulf Intracoastal Waterways, transporting
refined petroleum products and dry commodities including coal, grain, and ores.
Chotin operated without ICC authority by limiting itself to transporting bulk
commodities which are exempt from regulation by the ICC.
Red Circle is engaged primarily in the transportation of phosphate rock in the
Gulf of Mexico and grain to Puerto Rico and, because these commodities are
exempt from regulation, operates without authority from the ICC. EATCO owns
and operates a terminal on leased land at Tampa, Florida. Port Allen operates
shipyard facilities in the vicinity of Baton Rouge, Louisiana. Hartley
operates shipyard facilities at Paducah, Kentucky, sells fuel at Point
Pleasant, West Virginia, and provides towing services principally on the Ohio
River and its tributaries. ORTCO owns and operates a coal dumping facility in
Huntington, West Virginia. West Virginia Terminals Inc. operates a coal
dumping facility in Kenova, West Virginia.
<TABLE>
The following table indicates the tonnages transported by the Registrant's subsidiaries for the period 1991 - 1993:
<CAPTION>
TONNAGES TRANSPORTED (IN THOUSANDS)
-----------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Dry Cargo...................... 60,919 60,781 58,925
Liquid Cargo................... 1,599 1,583 1,677
----- ------ ------
Total Tonnage.............. 62,518 62,364 60,602
====== ====== ======
</TABLE>
The record tonnage in 1993 increased slightly over 1992 with reduced tonnage in
coal, grain and phosphate more than offset by increased tonnage in all other
commodities. The tonnage in 1992 was up 3% from 1991, primarily reflecting
increases in spot coal, iron, scrap and steel, and grain volumes.
<TABLE>
The next table summarizes the ton miles of cargo transported by Registrant's subsidiaries for the period 1991 - 1993.
<CAPTION>
TON MILES TRANSPORTED (IN BILLIONS)
-----------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Dry Cargo....................... 30.7 30.8 30.5
Liquid Cargo.................... 1.5 1.6 1.7
---- ---- ----
Total Ton miles .............. 32.2 32.4 32.2
==== ==== ====
</TABLE>
Ton miles are the product of tons and distance transported. The slight
decrease in ton miles in 1993 reflected lower ton miles from coal, grain and
phosphate mostly offset by higher ton miles in all other commodities. The
record ton miles in 1992 reflected increased ton miles from grain, aggregates
and ores, somewhat offset by lower coal affreightment ton miles as higher
tonnages were more than offset by shorter average trip lengths. In addition to
changes in ton miles transported, Registrant's revenues and net income are
affected by other factors such as competitive conditions, weather and the
segment of the river system traveled. See "Seasonal Aspect."
(C) (1) (II) STATUS OF PRODUCT OR SEGMENT
----------------------------
No significant new product, service or segment requiring a material amount of
assets was developed.
2
<PAGE> 4
(C) (1) (III) RAW MATERIALS
-------------
The only significant raw material required by the Registrant is the diesel fuel
to operate towboats. Diesel fuel is purchased from a variety of sources and
the Registrant regards the availability of diesel fuel as adequate for
presently planned operations.
(C) (1) (IV) FRANCHISES
----------
The Interstate Commerce Act, as amended in December 1973, exempts from
regulation water transportation of dry commodities which were transported in
bulk as of June 1, 1939 (including coal, phosphate rock, stone, sand and
gravel, grain, and ores). In addition, the Interstate Commerce Act exempts
from regulation water transportation of liquid cargoes in bulk in certified
liquid barges. Approximately 96% of the 1993 tonnage was exempt from
regulation by the ICC. Regulated commodities include iron and steel products,
other manufactured products, packaged goods and scrap.
ORCO holds a certificate of Public Convenience and Necessity issued by the ICC
authorizing service as a common carrier on the Ohio River and certain of its
tributaries, the Mississippi River, the Illinois Waterway, the
Arkansas-Verdigris Waterway and the Missouri River, the Warrior System, and the
Gulf Intracoastal Waterway, and for regulated movements to and from Tampa,
Florida. ORCO also holds a Contract Carrier Permit issued by the ICC,
authorizing contract carriage of regulated commodities on the same waterways.
Orgulf also holds such a Contract Carrier Permit. Red Circle and Chotin do not
hold or require ICC authority since they provide transportation only in
non-regulated movements.
(C) (1) (V) SEASONAL ASPECT
---------------
Due to the freezing of some northern rivers and waterways during winter months,
and increased coal consumption by electric utilities during the summer months,
average winter month revenues tend to be lower than revenues for the remainder
of the year.
(C) (1) (VI) WORKING CAPITAL
---------------
No unusual working capital requirements are normally encountered.
(C) (1) (VII) CUSTOMERS
---------
No customer, or group of customers under common control, accounted for 10% or
more of the total revenues in 1993. On the basis of past experience and its
competitive position, the Registrant considers that the loss of several of its
subsidiaries' largest customers simultaneously, while possible, is unlikely to
happen. The Registrant's subsidiaries have long-term transportation and
terminaling contracts which expire at various dates from January 1995 through
December 2007. During 1993, approximately 41% of the Registrant's consolidated
revenues resulted from these contracts. A substantial portion of the contracts
provide for rate adjustments based on changes in various costs, including
diesel fuel costs, and, additionally, contain "force majeure" clauses which
excuse performance by the parties to the contracts when performance is
prevented by circumstances beyond their reasonable control. Many of these
contracts have provisions for termination for specified causes, such as
material breach of the contract, environmental restrictions on the burning of
coal, or loss by the customer of an underlying commodity supply contract.
Penalties for termination for such causes are not generally specified.
However, some contracts provide that in the event of an uncured material breach
by Registrant's subsidiary which results in termination of the contract,
Registrant's subsidiary would be responsible for reimbursing its customer for
the differential between the contract price and the cost of substituted
performance. Due to the capital-intensive, high fixed cost nature of the
Registrant's business, the negotiation of long-term contracts which facilitate
steady and efficient utilization of equipment is important to profitable
operations.
3
<PAGE> 5
(C) (1) (VIII) BACKLOG
-------
<TABLE>
The backlog of transportation and terminalling business under long-term contracts is summarized in the next table:
<CAPTION>
December 31, 1993 1992
---- ----
<S> <C> <C>
Tons (in millions) 165.5 184.5
Revenues (in millions) $585.5 $773.2
Portions of revenue backlog not expected to be filled
within the current fiscal year 80% 81%
</TABLE>
The 1993 revenue backlog (which is based on contracts that extend beyond
December 31, 1994) is shown at prices current as of December 31, 1993 which are
subject to escalation/de-escalation provisions. Since services under many of
the long-term contracts are based on customer requirements, Midland has
estimated its backlog based on its forecast of the requirements of these
long-term contract customers. About 50% of the decrease in the tonnage backlog
is due to the sale of the liquid barge business and its contract. About 40% of
the revenue backlog at December 31, 1993 is associated with a disputed contract
with Gulf Power Company, for which shipments have been curtailed.
(C) (1) (IX) GOVERNMENT CONTRACTS
--------------------
The Registrant has no material portion of business subject to renegotiation of
profits or termination of contracts or subcontracts at the election of the
Government.
(C) (1) (X) COMPETITIVE CONDITIONS
----------------------
Improvements in operating efficiencies have permitted barge operators to
maintain relatively low rate structures. Consequently, the barge industry has
generally been able to retain its competitive position with alternate methods
of transportation for bulk commodities when the origin and destination of such
movements are contiguous to navigable waterways.
Primary competitors of the Registrant's barge line subsidiaries include other
barge lines and railroads (including one integrated rail-barge carrier). There
are a number of companies offering transportation services on the waterways
served by the Registrant, including carriers holding operating authority issued
by the ICC and carriers not so regulated. Competition among major barge line
competitors is intense due to a continuing imbalance between barge supply and
demand, and most recently by weak grain and coal exports. This in turn has led
to revenue and margin erosion, cost and productivity improvements, and some
industry consolidation.
Many railroads operating in areas served by the inland waterways compete for
cargoes carried by river barges. In many cases, these railroads offer unit
train service (pursuant to which an entire train is committed to the customer)
and dedicated equipment service (pursuant to which equipment is set aside for
the exclusive use of a particular customer) for coal, grain and other bulk
commodities. In addition, rates charged by both railroads and river barge
operators are sometimes designed to reflect special circumstances and
requirements of the individual shippers. As a result, it is difficult to
compare rates charged for movements of the various commodities between specific
points.
4
<PAGE> 6
Modern diesel powered towboats such as those which comprise the Registrant's
towboat fleet are, however, capable of moving in one tow approximately 22,500
tons (equivalent to 225 one hundred-ton capacity railroad cars) on the Ohio
River and on the Upper Mississippi River and approximately 60,000 tons
(equivalent to 600 one hundred-ton capacity railroad cars) on the Lower
Mississippi River, where there are no locks to transit, at average rates per
ton mile which are generally below those charged by Class 1 railroads.
(C) (1) (XI) RESEARCH
--------
No significant amount was spent during the last fiscal year on research to
improve existing services or develop new services. The task of improving and
developing services is a continuing assignment of various operating departments
of Registrant's subsidiaries, but such efforts are not segregated and would not
generally be regarded as research activities.
(C) (1) (XII) COMPLIANCE WITH ENVIRONMENTAL STATUTES
--------------------------------------
The Registrant and/or its subsidiaries are subject to the provisions of the
Federal Water Pollution Control Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendment and
Reauthorization Act, the Resource Conservation and Recovery Act of 1976, and
the Oil Pollution Act of 1990, which permit the Coast Guard and the
Environmental Protection Agency to assess penalties and clean-up costs for oil,
hazardous substance, and hazardous waste discharges. Some of these acts also
allow third parties to seek damages for losses caused by such discharges.
Compliance with these acts has had no material effect on the Registrant's
capital expenditures, earnings, or competitive position; and no such effect is
anticipated.
(C) (1) (XIII) EMPLOYEES
---------
As of December 31, 1993, Registrant and its subsidiaries employed approximately
1,500 persons, of whom approximately 28% are represented by labor unions.
(D) FOREIGN OPERATIONS
------------------
Registrant does not engage in material operations in foreign countries, and no
material portion of Registrant's revenues is derived from customers in foreign
countries.
ITEM 2. PROPERTIES
----------
(A) AS OF DECEMBER 31, 1993, THE REGISTRANT'S FLOATING EQUIPMENT CONSISTED OF
2,461 BARGES AND 91 BOATS.
West Virginia Terminals Inc. leases a coal dumping facility in Kenova, West
Virginia. Orco leases office facilities in Cincinnati, Ohio. EATCO owns
terminal facilities on leased land in Tampa, Florida. Chotin owns
approximately 738 acres of land in West Baton Rouge Parish, Louisiana; and Port
Allen owns shipyard facilities located on that land. ORTCO owns coal dumping
facilities in Huntington, West Virginia. Hartley owns shipyard facilities in
Paducah, Kentucky.
Capital expenditures for the Registrant in 1993 totalled approximately
$14,191,000. These expenditures were made principally for replacement of the
barge fleet and for renewal of equipment.
(B) NOT APPLICABLE.
ITEM 3. LEGAL PROCEEDINGS
-----------------
On August 30, 1993, ORCO and Orgulf filed suit in the United States District
Court for the Southern District of Ohio, Western Division, against Gulf Power
Company and its affiliate Southern Company Services, Inc., claiming damages for
breach of a long-term coal transportation contract. See Item 1(c)(1)(viii)
above and Item 7 below.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not required
5
<PAGE> 7
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
---------------------------------------------------------------------
MATTERS
------
The Registrant's common stock is held solely by Eastern and is not traded in
any market. Dividends were declared in the amount of $10,087,000 in 1993 and
$36,837,000 in 1992.
The payment of dividends is subject to the restrictions described in Note 4 to
the Consolidated Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
Not required. Reference Management Narrative Analysis following Item 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
1993 COMPARED TO 1992
- ---------------------
Midland's 1993 tonnage and tonmile production was unchanged from 1992 despite
several significant events that negatively affected the river towing industry
and Midland specifically.
Coal tonnage declined 6% from 1992 primarily reflecting reduced shipments to
electric utilities due to the United Mine Worker's (UMW) strike (resolved in
December), disruption in river traffic caused by record flooding on the
Mississippi River system, and the cessation of coal shipments under a long-term
contract. Regarding the latter, in July 1993, Midland was advised by Gulf
Power Company, a major customer that it was considering termination of a
long-term contract for transportation of coal. This contract, initially
executed in 1971 and extended through 2007, generated revenues of $17,200,000
and $9,122,000 in the prior year and 1993, respectively. Midland believes the
customer's actions to be a breach of the contract, and has filed suit in U.S.
District Court. Presently, the customer has renewed shipments of coal under
the contract, although at significantly reduced volumes.
Non-coal tonnage increased 13% over 1992, despite a 23% reduction in grain
tonnage, and served to offset the lower coal volume, although at lower margins.
The aforementioned flooding on the Mississippi River system and a poor export
market impacted grain tonnage. Increased shipments of alumina, scrap and stone
tonnage and towing of non-affiliated barges contributed to the increase in
non-coal commodities.
Operating results of Midland's terminaling and shipyard repair facilities were
mixed, with improved results for coal terminaling and shipyards being offset by
lower phosphate product terminaling, as export markets continued to be
depressed in 1993. As a result of the reduced coal affreightment tonnage and
lower phosphate terminaling, consolidated revenues declined 3% as compared to
1992.
Operating earnings declined nearly 14% as compared to 1992 with all of the
shortfall occurring in the second half of 1993. The reduction in coal tonnage
as described above, as well as the UMW strikes' related impact on traffic
patterns and operating costs, combined with the record flooding on the Upper
Mississippi River system were the significant negative factors. The Upper
Mississippi River flooding closed or severely restricted operations on that
river segment during the third and fourth quarters which: idled equipment,
significantly increased operating costs, and shifted business to less
profitable markets. Depreciation expense was slightly higher than 1992 due to
recent capital spending for fleet renewal, while administrative costs were 10%
below 1992 due to lower employment and consulting costs, as well as gains on
the purchase of pension annuities for retirees.
6
<PAGE> 8
On December 21, 1993 Midland terminated its participation in the liquid barge
affreightment business by the sale of its tank barges, affreightment contract,
and "Chotin" trade name. The transaction resulted in a pre-tax gain of
$7,988,000. In addition, the Company closed its barge construction facility in
Port Allen, Louisiana, and recorded a $3,500,000 pre-tax charge to reflect
costs associated with the final disposition of the facility. These
transactions resulted in a net gain of $4,488,000 included in "Other Income."
In addition to the above changes in operating earnings and other income,
Midland's 1993 after tax earnings were impacted by the increase in the
statutory Federal income tax rate from 34% to 35% (See Note 5 of Notes to
Financial Statements), which resulted in an increase to the 1993 tax provision
of approximately $1,812,000. Midland's net earnings for 1992 included a
one-time benefit of $12,156,000 on the adoption of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109")
recorded as of January 1, 1992.
1992 COMPARED TO 1991
- ---------------------
Midland's consolidated ton miles transported during 1992 increased 1% from 1991
despite reduced utility coal demand from the mild winter and summer
temperatures and the lingering effects of the recession. Total affreightment
tonnage increased 3% from 1991. While coal tonnage increased nearly 2% from
1991 levels, principally from increased industrial coal and spot coal
shipments, ton miles generated from coal affreightment declined nearly 3% due
to shorter hauls. Ton miles generated from other commodities, including grain,
aggregates, ores, etc., increased nearly 7% as Midland obtained replacement
tonnages to offset the weakness of the coal market. Activity levels at
Midland's support operations were generally lower than 1991. Phosphate product
terminalling was down substantially from 1991 due to weak export demand.
Partially offsetting was coal terminalling activity which was much improved
over 1991 results. Shipyard repair activity was also lower in 1992.
Consolidated revenues declined 1% from 1991 with slightly reduced revenues from
nearly all segments. Affreightment rate levels were essentially unchanged from
those in 1991, with lower volumes mainly from support operations accounting for
the majority of the slight revenue decline.
Operating conditions for river transportation were generally good in 1992 and
improved slightly over 1991. Diesel fuel costs were basically stable, with
1992 costs averaging below 1991 levels. Depreciation expense from fleet
renewal and administrative overhead costs were higher than 1991.
As a result of the lower phosphate terminalling, reduced shipyard activity and
higher depreciation charges, Midland's operating earnings declined 5% as
compared to 1991.
Midland's net earnings before accounting changes declined 18% from 1991,
reflecting the lower operating earnings formerly discussed and higher interest
charges associated with Midland's capital expenditure program. Lower earnings
in 1992 also reflected an increase in the effective tax rate from 29% to 35%,
due to the adoption of Statement of Financial Accounting Standards SFAS No.
109. (See Note 5 of Notes to Financial Statements.)
The Company chose to reflect the cumulative effect of adopting SFAS No. 109 as
a change in accounting principle at the beginning of fiscal 1992 and recorded a
tax credit of $12,156,000 which represents the net decrease to the deferred tax
liability as of that date.
In 1991, Midland elected early adoption of SFAS No. 106 "Employers Accounting
for Post-Retirement Benefits Other Than Pensions". The Company chose to
reflect the cumulative effect of adopting this statement as a change in
accounting principle at as of January 1, 1991 with a charge to earnings of
$5,906,000. This non-cash charge reflected the actuarially computed value of
accrued non-pension benefits of active and retired employees as of December 31,
1990. Net earnings after the accounting change was $15,005,000.
After the cumulative effect of the accounting change, net earnings increased
$14,259,000 over 1991.
7
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Debt payments, dividends to Parent and capital expenditures of $14,191,000 were
funded from cash provided by operating activities in 1993.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Information with respect to this item appears on page F-1 of this report. Such
information is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Not required.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Not required.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Not required.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Not required.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
(A) (1) AND (2) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
Information with respect to these items appears on page F-1 of this report.
Such information is incorporated herein by reference.
(3) LIST OF EXHIBITS
----------------
3.1 Certificate of Incorporation of Midland Enterprises Inc. (filed
as Exhibit 3.1 to Registration Statement of Midland Enterprises
Inc. on Form S-1 (Registration No. 2-39895, as filed May 5,
1971).1
3.2 By-Laws of Midland Enterprises Inc. (filed as Exhibit 3.2 to
Annual Report of Midland Enterprises Inc. on Form 10-K for the
year ended December 31, 1984).1
4.1 Ship financing agreement dated December 27, 1984.2
4.2 Promissory note of Midland Enterprises Inc. to Chemical Bank
dated January 4, 1985.2
________________________
1 Not filed herewith. In accordance with Rule 12-b-32 of the General Rules
and Regulations under the Securities Act of 1934, reference is made to the
document previously filed with the Commission.
2 Not filed herewith. Private placements that are less than 10% of the total
assets of Registrant and its subsidiaries on a consolidated basis.
8
<PAGE> 10
4.3 Indenture between Midland Enterprises Inc. and Shawmut Bank,
N.A. dated as of April 1, 1988 (filed as Exhibit 4.2 to
Registration Statement No. 33-20789).1
4.4 Indenture between Midland Enterprises Inc. and The First
National Bank of Boston dated as of April 2, 1990 (filed as
Exhibit 4.2 to Registration Statement No. 33-32120).1
(NOTE: The Registrant agrees to furnish to the Securities and
Exchange Commission upon request a copy of any instrument with
respect to any long-term debt of the Registrant.)
24.1 Consent of Independent Public Accountants.
(B) REPORTS ON FORM 8-K
-------------------
There were no reports on Form 8-K filed in the fourth quarter of 1993.
__________________________
1 Not filed herewith. In accordance with Rule 12-b-32 of the General Rules
and Regulations under the Securities Act of 1934, reference is made to the
document previously filed with the Commission.
9
<PAGE> 11
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MIDLAND ENTERPRISES INC.
(Registrant)
BY /s/ R. L. DOETTLING
----------------------------
R. L. DOETTLING
SENIOR VICE PRESIDENT, FINANCE AND ADMINISTRATION
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
DATE MARCH 16, 1994
--------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 16th day of March, 1994.
BY: /s/ F. C. RASKIN BY: /s/ R. L. DOETTLING
----------------------------- -----------------------------
F. C. RASKIN R. L. DOETTLING
PRESIDENT; DIRECTOR SENIOR VICE PRESIDENT, FINANCE
(PRINCIPAL EXECUTIVE OFFICER) AND ADMINISTRATION; DIRECTOR;
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
BY: /s/ P. E. HUBBARD BY: /s/ S. A. FRASHER
----------------------------- -----------------------------
P. E. HUBBARD S. A. FRASHER
SENIOR VICE PRESIDENT, SALES VICE PRESIDENT, OPERATIONS;
AND MARKETING; DIRECTOR DIRECTOR
Supplemental information to be Furnished With Reports Filed Pursuant to Section
15 (3) of the Act by Registrants Which Have Not Registered Securities Pursuant
to Section 12 of the Act.
No annual reports to security holders covering the Registrant's last fiscal
year nor any proxy materials have been sent to the Registrant's security
holders.
10
<PAGE> 12
<TABLE>
<CAPTION>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(INFORMATION REQUIRED BY ITEMS 8 AND 14 (A) (1) AND (2) OF FORM 10-K)
PAGE
NUMBER
------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS:
Consolidated Statements of Income for the years
ended December 31, 1993, 1992 and 1991 F-3
Consolidated Balance Sheets -- December 31, 1993 and 1992 F-4
Consolidated Statements of Stockholder's Investment for
the years ended December 31, 1993, 1992 and 1991 F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991 F-7
Notes to Consolidated Financial Statements F-8
SCHEDULES:
V - Property and Equipment F-20
VI - Accumulated Depreciation and Amortization of
Property and Equipment F-21
VIII - Valuation and Qualifying Accounts and Reserves F-22
<FN>
Schedules other than those listed above have been omitted as the information
has been included in the consolidated financial statements and related notes,
or is not applicable or not required.
</TABLE>
F-1
<PAGE> 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To Midland Enterprises Inc.:
We have audited the accompanying consolidated balance sheets of MIDLAND
ENTERPRISES INC. (a Delaware corporation and a wholly-owned subsidiary of
Eastern Enterprises) and subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, stockholder's equity, and cash flows
for each of the three years in the period ended December 31, 1993. These
consolidated financial statements and the schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and schedules 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 financial statements referred to above present fairly, in
all material respects, the financial position of Midland Enterprises Inc. and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note 5 to the Consolidated Financial Statements, effective
January 1, 1992, the Company changed its method of accounting for income taxes.
As discussed in Note 3 to the Consolidated Financial Statements, effective
January 1, 1991, the Company changed its method of accounting for
post-retirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not a
required part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Cincinnati, Ohio,
February 4, 1994.
F-2
<PAGE> 14
<TABLE>
<CAPTION>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
--------- --------- ---------
(000 OMITTED)
<S> <C> <C> <C>
REVENUES (NOTE 1)........................... $ 254,920 $ 263,617 $ 267,044
--------- --------- ---------
OPERATING COSTS AND EXPENSES:
Operating expenses....................... $ 168,140 $ 172,084 $ 176,796
Depreciation and amortization (Note 6)... 25,287 24,607 22,240
Selling, general and administrative
expenses........................... 11,659 13,270 11,861
Overhead allocation from Parent (Note 1). 2,560 2,480 3,480
Taxes, other than income (Note 8)........ 14,273 12,900 12,196
--------- --------- ---------
$ 221,919 $ 225,341 $ 226,573
--------- --------- ---------
OPERATING EARNINGS....................... $ 33,001 $ 38,276 $ 40,471
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income from Parent (Note 1)..... $ 2,374 $ 3,041 $ 3,111
Interest income other.................... 27 122 93
Gain on sale of liquid barge business.... 7,988 - -
Closing of barge construction facility... (3,500) - -
Gain on sale of assets and other, net.... 164 373 229
--------- --------- ---------
$ 7,053 $ 3,536 $ 3,433
--------- --------- ---------
INTEREST EXPENSE:
Long-term debt........................... $ 15,879 $ 16,071 $ 15,199
Other, including amortization of
debt expense....................... 360 179 157
Interest capitalized during construction
(Note 6)........................... (581) (814) (1,008)
--------- --------- ---------
$ 15,658 $ 15,436 $ 14,348
--------- --------- ---------
EARNINGS BEFORE INCOME TAXES................ $ 24,396 $ 26,376 $ 29,556
PROVISION FOR INCOME TAXES (NOTE 5)......... 10,419 9,268 8,645
--------- --------- ---------
EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE........................ $ 13,977 $ 17,108 $ 20,911
Cumulative effect of change in
accounting for income taxes (Note 5)..... - 12,156 -
Cumulative effect of accounting change for
post-retirement health care costs, net of
tax benefit of $3,043,000 (Note 3)....... - - (5,906)
--------- ---------- ---------
NET EARNINGS................................ $ 13,977 $ 29,264 $ 15,005
========= ========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-3
<PAGE> 15
<TABLE>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
<CAPTION>
ASSETS
------
1993 1992
---- ----
(000 OMITTED)
<S> <C> <C>
CURRENT ASSETS:
Cash (Note 1).............................. $ 88 $ 90
Receivables -
Trade, less allowances of $428,000
in 1993 and in 1992.................. 22,714 25,665
Parent (Note 1 and 4)................ 56,952 31,109
Other................................ 2,995 622
Materials, supplies and fuel (Note 1)...... 12,965 15,473
Prepaid expenses........................... 1,676 1,202
--------- ----------
Total current assets $ 97,390 $ 74,161
--------- ----------
PROPERTY AND EQUIPMENT, AT COST (NOTES 4 AND 6):
Towboats and barges....................... $ 542,649 $ 556,753
Terminals and other facilities............ 57,339 59,698
Land...................................... 5,159 5,188
--------- ----------
Total property and equipment, at cost $ 605,147 $ 621,639
Less - Accumulated depreciation........... 288,500 284,494
--------- ----------
Net property and equipment.......... $ 316,647 $ 337,145
--------- ----------
OTHER ASSETS:
Deferred pension charges (Note 2)......... $ 10,729 $ 9,381
Unamortized debt expense, deferred
maintenance and other (Notes 1 and 6).. 5,330 5,519
--------- ----------
Total other assets.................. $ 16,059 $ 14,900
--------- ----------
TOTAL ASSETS........................ $ 430,096 $ 426,206
========= ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-4
<PAGE> 16
<TABLE>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
1993 1992
------ ------
<S> <C> <C>
CURRENT LIABILITIES: (000 OMITTED)
Current portion of long-term debt (Note 4).... $ 5,871 $ 5,591
Accounts payable -
Trade..................................... 12,622 12,329
Parent.................................... 349 19
Reserve for insurance claims (Note 1)......... 8,285 8,480
Accrued expenses.............................. 2,735 2,747
Interest payable.............................. 4,097 4,164
Other taxes payable (Note 8).................. 3,617 2,880
Income taxes payable (Note 5)................. 3,324 2,216
Other current liabilities..................... 7,812 5,127
-------- --------
Total current liabilities................. $ 48,712 $ 43,553
-------- --------
LONG-TERM DEBT (NOTE 4)........................... $157,594 $163,600
-------- --------
RESERVES AND DEFERRED CREDITS:
Deferred income taxes (Note 5)................ $ 57,899 $ 56,016
Unamortized investment tax credits (Note 5)... 5,192 5,982
Post-retirement health care (Note 3).......... 9,306 9,288
Other reserves................................ 1,503 1,769
-------- --------
Total reserves & deferred credits......... $ 73,901 $ 73,055
-------- --------
COMMITMENTS (NOTE 7)
STOCKHOLDER'S EQUITY (NOTE 4):
Common stock, $100 par value -
Authorized Shares - 1,000
Issued Shares - 15 1/2....................... $ 1 $ 1
Capital in excess of par value................ 52,519 52,519
Retained earnings............................. 97,369 93,478
-------- --------
Total stockholder's equity................ $149,889 $145,998
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY................................ $430,096 $426,206
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
<PAGE> 17
<TABLE>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(OOO OMITTED EXCEPT SHARES OUTSTANDING)
<CAPTION>
CAPITAL IN
COMMON STOCK EXCESS OF RETAINED
OUTSTANDING PAR VALUE EARNINGS TOTAL
------------ --------- -------- -----
SHARES AMOUNT
------ ------
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1990 15.5 $ 1 $ 52,519 $ 95,049 $ 147,569
Net Earnings - - - 15,005 15,005
Dividends to Parent - - - (9,003) (9,003)
---- ----- -------- -------- ---------
BALANCE DECEMBER 31, 1991 15.5 $ 1 $ 52,519 $101,051 $ 153,571
Net Earnings - - - 29,264 29,264
Dividends to Parent - - - (36,837) (36,837)
---- ----- -------- -------- ---------
BALANCE DECEMBER 31, 1992 15.5 $ 1 $ 52,519 $ 93,478 $ 145,998
Net Earnings - - - 13,977 13,977
Dividends to Parent - - - (10,086) (10,086)
---- ------ -------- -------- ---------
BALANCE DECEMBER 31, 1993 15.5 $ 1 $ 52,519 $ 97,369 $ 149,889
==== ====== ======== ======== =========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-6
<PAGE> 18
<TABLE>
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
1993 1992 1991
--------- --------- ---------
(000 OMITTED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.............................. $ 13,977 $ 29,264 $ 15,005
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization........... 25,287 24,607 22,240
Deferred and current income taxes....... 2,992 (8,442) (2,525)
Net gain on sale of assets.............. (8,125) (346) (471)
Other changes in assets and liabilities:
Trade and other receivables........... 577 1,006 542
Materials, supplies and fuel.......... 2,508 779 5,624
Accounts payable...................... 623 (3,107) 2,149
Accrued expenses and other current
liabilities......................... 3,148 1,781 (1,018)
Post-retirement health care........... (18) (104) 8,949
Other................................. (647) (1,047) (1,470)
--------- --------- ---------
Net cash provided by operating
activities.......................... $ 40,322 $ 44,391 $ 49,025
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................... $ (14,191) $ (29,327) $ (48,531)
(Increase) decrease in Parent receivable.. (25,843) 12,327 (1,609)
Proceeds from sale of liquid barge
business................................ 14,950 - -
Proceeds from other asset dispositions.... 638 735 1,189
--------- --------- ---------
Net cash used in investing activities.. $ (24,446) $ (16,265) $ (48,951)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt................ $ - $ 25,000 $ 17,000
Repayment of long-term debt............... (5,792) (16,294) (8,068)
Cash dividends paid to Parent............. (10,086) (36,837) (9,003)
--------- --------- ---------
Net cash provided by (used in)
financing activities $ (15,878) $ (28,131) $ (71)
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents................................. $ (2) $ (5) $ 3
Cash and cash equivalents at beginning of
period...................................... 90 95 92
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.... $ 88 $ 90 $ 95
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest, net of amounts capitalized.... $ 15,299 $ 15,432 $ 13,381
Income taxes............................ $ 7,639 $ 5,487 $ 8,114
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-7
<PAGE> 19
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 AND 1991
(1) SIGNIFICANT ACCOUNTING POLICIES
Midland Enterprises Inc. (the "Company") is a wholly-owned subsidiary of
Eastern Enterprises ("Eastern") of Weston, Massachusetts. The consolidated
financial statements include the accounts of the Company and its subsidiaries.
All material intercompany balances and transactions have been eliminated. The
significant accounting policies followed by the Company and its subsidiaries
are described below:
Note 2 - Retirement and employee benefit plans
Note 3 - Post-retirement benefits other than pensions
Note 5 - Income taxes
Note 6 - Property and equipment
(a) The Company's principal business is barge transportation with its
principal commodity being coal, substantially all of which is
transported to electric utilities in the eastern half of the United
States.
(b) Cash Equivalents - Cash equivalents are comprised of highly liquid
instruments with original maturities of three months or less.
(c) Transactions with Parent - Parent receivables represent advances to
Eastern which bear interest at the prime rate, 6% at December 31,
1993, 6% at December 31, 1992 and 6 1/2% at December 31, 1991. The
Company was also charged a corporate overhead allocation from its
parent computed on several factors including direct corporate
management time, revenues, capitalization and employees, which
management believes is a reasonable method of allocation.
(d) Materials, Supplies and Fuel - Materials, supplies and fuel are stated
at the lower of cost (first-in, first-out or average) or market.
(e) Unamortized Debt Expense - Unamortized debt expense represents fees
and discounts incurred in obtaining long-term debt. Such costs are
being amortized over the terms of the respective bond issues.
(f) Accounting for Income on Tows in Progress - The Company recognizes
income on tows in progress on the percentage of completion method by
relating the number of miles completed to date to the total miles to
be traveled.
(g) Reserve for Insurance Claims - The Company is self-insured for
personal injury and property claims, certain of which are insured
above a deductible amount per occurrence. The Company's estimate of
liability for the self-insured claims is included in the "Reserve for
Insurance Claims" in the Consolidated Balance Sheets and is net of
amounts expected to be recovered from its insurance carriers.
Payments made for losses incurred are netted against the related
liability for the loss.
(h) Reclassifications - Certain reclassifications of previously reported
amounts have been made to conform with current classifications.
F-8
<PAGE> 20
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) RETIREMENT AND EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries, through various Company-administered plans
and union-administered plans, provide retirement benefits for substantially all
of their employees. Normal retirement age is 65, but provision is made for
earlier retirement. Benefits under non-union plans are based on salary or
wages and years of service, while benefits under union plans are based on
negotiated amounts and years of service.
The funding of retirement and employee benefit plans is in accordance with the
requirements of the plans and collective bargaining agreements and, where
applicable, is in sufficient amount to satisfy the "Minimum Funding Standards"
of the Employee Retirement Income Security Act of 1974.
<TABLE>
The net pension cost for these plans and agreements charged to income was as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
(000 OMITTED)
----------------------------------------
<S> <C> <C> <C>
Company-administered plans $ 280 $ 283 $ 365
Multi-employer union retirement
and welfare plans 377 322 298
-------- ------ ------
Total Net Pension Cost $ 657 $ 605 $ 663
======== ====== ======
</TABLE>
<TABLE>
The net pension cost for Company-administered plans consisted of:
<CAPTION>
1993 1992 1991
---- ---- ----
(000 OMITTED)
----------------------------------------
<S> <C> <C> <C>
Service cost $ 1,490 $1,470 $1,360
Interest cost on projected benefit
obligation 1,592 1,392 1,179
Actual return on plan assets (4,682) (2,895) (5,037)
Net amortization and deferral 1,880 316 2,863
------- ----- ------
Total Net Pension Cost $ 280 $ 283 $ 365
======= ====== ======
</TABLE>
<TABLE>
The assumptions used to determine the annual pension expense and the projected
benefit obligation at the end of the year were as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Assumed discount rate 7.5% 7.5% 7.5%
Assumed rate of compensation increase 5.0% 5.0% 5.0%
Expected rate of return on plan assets 8.5% 8.5% 7.5%
</TABLE>
During 1993 the Company settled portions of its defined benefit pension
obligation through the purchase of annuity contracts from insurance companies.
In compliance with the provisions of Statement of Financial Accounting
Standards No. 88, "Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans," the Company recognized a pre-tax gain of
$603,267 in 1993.
F-9
<PAGE> 21
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) RETIREMENT AND EMPLOYEE BENEFIT PLANS (CONTINUED)
<TABLE>
The following table sets forth the funded status of the Company-administered plans
and amounts recognized in the consolidated balance sheets as of December 31, 1993 and
1992, respectively, utilizing actuarial measurement dates as of October 1, 1993 and
1992:
<CAPTION>
1993 1992
-----------------------
(000 OMITTED)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including:
Vested benefits $ 12,561 $ 12,210
Non-vested benefits 2,623 2,569
-------- --------
$ 15,184 $ 14,779
Effect of future salary increases 5,365 4,582
-------- --------
Projected benefit obligations for services
rendered to date $ 20,549 $ 19,361
======== ========
Plan assets at fair value, primarily listed
stocks and bonds $ 34,315 $ 31,140
Less - Projected benefit obligations 20,549 19,361
-------- --------
Excess of plan assets over projected benefit
obligations $ 13,766 $ 11,779
Unrecognized net obligation at December 31,
1985 being amortized over 13 - 15 years (457) (570)
Unrecognized net actuarial (gain) (3,458) (2,887)
Unrecognized prior service cost 182 198
Amounts contributed to plans during fourth quarter 191 113
Unfunded accumulated benefits (89) (94)
-------- --------
Net Pension Assets $ 10,135 $ 8,539
======== ========
</TABLE>
Certain of the Company's subsidiaries participate in one or more multi-employer
pension plans, and contribute to such plans in amounts required by the
applicable union contracts. Contribution levels are negotiated between the
subsidiaries and the unions. A subsidiary would be required under the Federal
law to compute its liability for, and accelerate its funding of, its
proportionate share of a multi-employer plan's unfunded vested benefits (if
any) upon its withdrawal from, or the termination of, such a plan.
F-10
<PAGE> 22
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) POST-RETIREMENT BENEFITS OTHER THAN PENSIONS
The Company and its subsidiaries, through various Company-administered plans
and other union retirement and welfare plans under collective bargaining
agreements, provide certain health care and life insurance benefits for retired
employees. The Company's employees, who are participants in the pension plans,
become eligible for these benefits if they reach retirement age while working
for the Company.
Effective January 1, 1991, Statement of Financial Accounting Standards No. 106
("SFAS 106"), "Employers' Accounting for Post-Retirement Benefits Other Than
Pensions" was adopted by immediately recognizing the cumulative effect of the
accounting change. SFAS 106 requires that the expected cost of post-retirement
benefits other than pensions be charged to expense during the period that the
employee renders service. In prior years, expense was recognized when claims
were paid. At the date of adoption, the cumulative effect of the accounting
change ("transition obligation") was $8,949,000.
<TABLE>
The net post-retirement benefit cost of these plans and agreements charged to expense
was as follows:
<CAPTION>
DECEMBER 31
----------------------
1993 1992 1991
------ ------ ------
(000 OMITTED)
<S> <C> <C> <C>
Service cost $ 249 $ 336 $ 337
Interest cost on accumulated benefit obligation 760 753 762
Net amortization and deferral 47 (57) -
------ ------ ------
Net periodic post-retirement benefit costs $1,056 $1,032 $1,099
====== ====== ======
</TABLE>
<TABLE>
The following table sets forth the funded status of the plans and amounts recognized
in the Company's consolidated balance sheets as of December 31, 1993 and 1992 (using
a measurement date of October 1, 1993 and 1992):
<CAPTION>
DECEMBER 31
----------------------
1993 1992
------ ------
(000 OMITTED)
<S> <C> <C>
Accumulated benefit obligation:
Retirees $ 5,180 $ 6,058
Fully eligible plan participants 1,096 1,789
Other active plan participants 2,003 2,560
------- -------
$ 8,279 $10,407
Plan assets at fair value - -
------- -------
Accumulated benefit obligation in excess of
plan assets $ 8,279 $10,407
Unrecognized net gain (loss) (1,101) (3,416)
Unrecognized prior service benefit 2,128 2,297
------- -------
Post-retirement health care reserve $ 9,306 $ 9,288
======= =======
</TABLE>
F-11
<PAGE> 23
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) POST-RETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
The weighted average discount rate used in determining the accumulated benefit
obligation was 7.5%. A 12% and 14% increase in cost of covered health care
benefits has been assumed for 1993 and 1992, respectively. This rate of
increase is assumed to drop gradually to 5% after 7 years. A one percentage
point increase in the assumed health care cost trend would have increased the
net periodic post-retirement benefit cost by $48,000 in 1993 and $75,000 in
1992 and the accumulated post-retirement benefit obligation by $561,000 in 1993
and $644,000 in 1992.
<TABLE>
(4) LONG-TERM OBLIGATIONS AND CREDIT AGREEMENTS
(a) Summary of Long-term Debt - Long-term debt consists of the following:
<CAPTION>
DECEMBER 31
-----------------------
1993 1992
------ ------
(000 OMITTED)
<S> <C> <C>
First Preferred Ship Mortgage Bonds -
9.9% Series, payable in annual amounts of
$5,000,000 beginning in 1999 to 2008...... 50,000 50,000
8.1%-9.85% Medium Term Notes, Series A,
due 2002-2012............................. 75,000 75,000
-------- --------
Total Mortgage Bonds.................. $125,000 $125,000
-------- --------
Obligations under Capital Leases and Other -
BA Leasing & Capital Corporation (Successor
to Wells Fargo Leasing Corporation)....... $ 8,033 $ 8,841
Security Pacific Equipment Leasing, Inc....... 17,409 18,615
Westinghouse Credit Corporation............... 10,362 11,138
8.8% Ship Financing Bond, due 1996............ 938 1,314
Variable-rate promissory note payable to bank
in annual amounts of $2,425,000 to 1995... 3,031 5,456
Other (including unamortized debt discount)... (944) (1,010)
------- --------
$ 38,829 $ 44,354
-------- --------
Less:
Current Portion of Long-Term Debt Included Above $ 5,871 $ 5,591
Monies on Deposit (d)......................... 364 163
-------- --------
$ 6,235 $ 5,754
-------- --------
Total Long-Term Debt...................... $157,594 $163,600
======== ========
</TABLE>
F-12
<PAGE> 24
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) LONG-TERM OBLIGATIONS AND CREDIT AGREEMENTS (CONTINUED)
(a) Summary of Long-Term Debt (Continued)
The First Preferred Ship Mortgage Bonds, Ship Financing Bond, and obligations
under capital leases are secured by a substantial portion of the Company's
towboats and barges and by assignment of rentals for that equipment payable to
the company by its subsidiaries. $25,000,000 and $17,000,000 of First
Preferred Ship Mortgage Medium-Term Notes were issued in 1992 and 1991,
respectively.
Under the most restrictive of the mortgage indentures, the Company, (a) may not
pay dividends, reacquire its common stock or make any advances or loans to its
stockholder or subsidiaries of its stockholder except to the extent of the sum
of (i) Consolidated Net Earnings after December 31, 1988, (ii) the net proceeds
of the sale of stock of the Company after December 31, 1988, and (iii) the
amount of $50,000,000 with respect to any advances or loans to its stockholder
or to subsidiaries of its stockholder, (b) is required to maintain Consolidated
Net Current Assets at least equal to $1,250,000, and (c) may not incur or
permit any of its subsidiaries to incur additional Senior Unsecured Funded Debt
except for refunding unless immediately thereafter Consolidated Net Tangible
Assets will aggregate at least 150% of (i) Consolidated Senior Unsecured Funded
Debt (excluding therefrom unsecured loans or advances to the company from its
stockholder) plus (ii) Consolidated Senior Secured Funded Debt (all terms as
defined in the applicable indenture). Under these agreements, $18,197,000 of
retained earnings at December 31, 1993 are available for additional dividends
to Eastern.
Included in obligations under capital leases is $35,804,000 of barge lease
obligations having a weighted average interest rate of 9.8%. Minimum lease
payments under these agreements are due in installments through 2003; principal
payments due for the next five years amount to $3,070,000 in 1994, $3,378,000
in 1995, $3,719,000 in 1996, $4,095,000 in 1997, and $4,509,000 in 1998.
(b) Credit Agreements
Eastern maintains a credit agreement with a group of banks which provides for
the borrowing by Eastern and certain subsidiaries of up to $60,000,000 at any
time through December 31, 1994, with borrowing thereunder maturing not later
than December 31, 1995. The Company's maximum available borrowings under the
credit agreement are $35,000,000. In addition, Eastern and certain
subsidiaries maintain lines of credit totaling $50,000,000, under which the
Company can borrow up to $10,000,000. The agreement and lines require facility
or commitment fees, which average 1/5 of 1% of the unused portion. During 1993
and at December 31, 1993, the Company had no borrowings outstanding under these
agreements. The interest rate for borrowings is the agent bank's prime rate
or, at Eastern's option, various alternatives.
F-13
<PAGE> 25
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) LONG-TERM OBLIGATIONS AND CREDIT AGREEMENTS (CONTINUED)
(b) Credit Agreements (continued)
Eastern also maintains a $10,000,000 line of credit available to the Company,
which provides for interest at the prime rate or, at Eastern's option, rates
tied to Eurodollar, certificate of deposit or money market quotes. During 1993
and at December 31, 1993, the Company had no borrowings outstanding under this
line of credit.
(c) Consolidated Five Year Sinking Funds and Maturities
The aggregate annual sinking fund requirements and current maturities of
long-term debt, including capital leases, for the next five years amount to
$5,871,000 in 1994, $4,360,000 in 1995, $3,905,000 in 1996, $4,095,000 in 1997,
and $4,509,000 in 1998.
(d) Deposited Monies
Monies on deposit with trustee are netted against long-term debt. In
accordance with the provision of certain bond indentures, these amounts
represent deposits with the bond trustee for the equipment mortgaged under the
bond indenture and subsequently sold. It is the Company's intention to
repurchase its own bonds with these funds to be used for sinking fund
requirements.
(5) INCOME TAXES
The Company and its subsidiaries are members of an affiliated group of
Companies which files a consolidated Federal Income Tax return with Eastern.
The Companies follow the policy, established for the group, of providing for
Federal Income Taxes which would be payable on a separate company basis. For
financial reporting purposes, investment tax credits were deferred and are
being amortized to income over the book life of the related property and
equipment.
<TABLE>
The following is a summary of the provision for income taxes:
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1992 1991
------ ------ ------
(000 OMITTED)
<S> <C> <C> <C>
Current:
Federal $ 7,835 $ 5,364 $ 6,789
State 415 407 481
------- ------- -------
Total Current Provision $ 8,250 $ 5,771 $ 7,270
Deferred:
Federal 2,169 3,497 1,375
------- ------- -------
Total Provision $10,419 $ 9,268 $ 8,645
======= ======= =======
</TABLE>
F-14
<PAGE> 26
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES (CONTINUED)
<TABLE>
Deferred Federal Income Taxes resulting from timing differences between financial and
taxable income consist of the following:
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1992 1991
------ ------ ------
(000 OMITTED)
<S> <C> <C> <C>
Accelerated depreciation $ 1,944 $ 2,943 $ 2,831
Effect of increase (decrease) in
Federal Income Tax rate 1,572 - (1,500)
Non-deductible reserves (1,296) 355 1,000
Other, net (51) 199 (956)
------- -------- -------
Total Deferred Provision $ 2,169 $ 3,497 $ 1,375
======= ======= =======
</TABLE>
<TABLE>
The table below reconciles the statutory U.S. Federal Income Tax provision to the
recorded income tax provision:
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1992 1991
------ ------ ------
(000 OMITTED)
<S> <C> <C> <C>
Statutory rate 35% 34% 34%
Computed provision for income taxes
at statutory Federal rate $ 8,539 $ 8,968 $10,049
Increase (decrease) from statutory
rate resulting principally from:
Investment tax credit - - (264)
State taxes, net of Federal benefit 270 269 317
Effect of increase (decrease) in
Federal income tax rate 1,572 - (1,500)
Nondeductible expenses 28 26 29
Other, net 10 5 14
------- ------- -------
Provision for Income Taxes $10,419 $ 9,268 $ 8,645
======= ======= =======
</TABLE>
Effective January 1, 1992, Midland adopted the Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". SFAS
109 requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been recognized in the
financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
At the date of adoption, Midland recorded a tax credit of approximately
$12,156,000 which represents the net decrease to the deferred tax liabilities
as of that date. This amount has been reflected in the consolidated statement
of earnings as the cumulative effect of an accounting change.
The 1991 tax provision was reduced by $1,755,000 of credits no longer
applicable under SFAS 109.
The Revenue Reconciliation Act of 1993, increased the statutory Federal income
tax rate from 34% to 35%, effective January 1, 1993. The provision for income
tax in 1993 includes approximately $240,000 for the impact of the rate change
in the current earnings, and approximately $1,572,000 to reflect the additional
deferred tax requirements as of January 1, 1993, in accordance with SFAS 109.
F-15
<PAGE> 27
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES (CONTINUED)
<TABLE>
Significant items making up deferred tax liabilities and deferred tax assets, as of
December 31, 1993 and 1992, are as follows:
<CAPTION>
1993 1992
--------- ---------
(000 Omitted)
<S> <C> <C>
Assets:
Post-retirement benefits $ 3,292 $ 3,158
Other 5,973 4,827
--------- ---------
Total Deferred Tax Assets $ 9,265 $ 7,985
Liabilities:
Accelerated depreciation (59,967) (56,474)
Other (7,197) (7,527)
--------- ---------
Total Deferred Tax Liabilities $ (67,164) $ (64,001)
--------- ---------
Total Deferred Taxes $ (57,899) $ (56,016)
========= =========
</TABLE>
(6) PROPERTY AND EQUIPMENT
(a) Depreciation and Amortization - Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of
property and equipment. Depreciation and amortization as a percentage of
average depreciable assets was 4.2%, 4.1%, and 3.9% in 1993, 1992 and 1991,
respectively.
(b) Maintenance & Repairs - The costs of routine maintenance and repairs
are charged to expense as incurred. Major renovations and renewals, which
benefit future periods or extend the life of the asset, are capitalized and
amortized over their estimated useful lives.
(c) Interest During Construction - The Company reflects as an element of
cost in all major construction projects the estimated cost of borrowed funds
employed during the period of construction. Capitalized interest is amortized
over the estimated useful life of the property or equipment.
(7) COMMITMENTS
The Company and its subsidiaries lease certain facilities, vessels and
equipment under long-term leases which expire on various dates through 2008.
<TABLE>
The minimum rental commitment for noncancelable operating leases at December 31, 1993
is as follows:
<CAPTION>
MINIMUM
YEARS ENDING ANNUAL RENTAL
------------ -------------
(000 OMITTED)
<S> <C>
1994 $ 4,278
1995 3,672
1996 3,147
1997 1,817
1998 800
1999 - 2008 3,725
-------
$17,449
=======
</TABLE>
F-16
<PAGE> 28
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
The following amounts were charged to expense during the years ended December 31,
1993, 1992 and 1991.
<CAPTION>
1993 1992 1991
------ ------ ------
(000 OMITTED)
<S> <C> <C> <C>
Maintenance and repairs $ 21,725 $ 24,063 $ 25,112
======== ======== ========
Taxes, other than income taxes -
Real estate and personal property $ 1,769 $ 1,676 $ 1,612
Payroll taxes 4,384 4,557 4,595
Federal Waterways User Tax 7,550 6,498 5,794
Other 570 169 195
-------- -------- --------
$ 14,273 $ 12,900 $ 12,196
======== ======== ========
Long-term rentals $ 4,042 $ 3,429 $ 1,901
======== ======== ========
</TABLE>
Short-term charter rents, which represent amounts paid for the charter of
towboat equipment on a day-to-day, "fully-found" (i.e., fully equipped and crew
included, with all operating costs included in the charter fee) basis, as well
as the costs of chartering barges on a day-to-day basis, have been excluded
from the above rentals. Such amounts are not included above since, (1) they
are considered to be essentially an "outside towing" or barge "per diem"
expense, (2) they involve no continuing commitments on the part of the Company
and its subsidiaries, and (3) the rental amounts contain little or no interest
factor.
Amortization of intangibles, royalties, advertising costs and research and
development costs have been omitted as the information is not applicable or not
significant.
F-17
<PAGE> 29
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) SIGNIFICANT CUSTOMERS
None of the subsidiaries' customers accounted for more than 10% of the
Company's total consolidated operating revenues in 1993, 1992 and 1991.
(10) FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
disclosures for financial instruments:
Cash, trade receivables and accounts payable: The carrying amounts
approximates fair value because of the short maturity of these instruments.
Long-term debt: The fair value of long-term debt is estimated using discounted
cash flow analyses based on the current incremental borrowing rates for similar
types of borrowing arrangements.
<TABLE>
The carrying amounts and estimated fair values of Midland's financial instruments at
December 31, 1993 and 1992 are as follows:
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- --------
(000 Omitted)
<S> <C> <C>
DECEMBER 31, 1993
Long-term debt $123,692 $149,223
DECEMBER 31, 1992
Long-term debt $123,827 $140,491
</TABLE>
F-18
<PAGE> 30
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
(11) UNAUDITED INTERIM FINANCIAL INFORMATION
The following table summarizes the Company's reported unaudited consolidated
quarterly results of operations for the years ended December 31, 1993 and 1992.
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- -------
(000 OMITTED)
<S> <C> <C> <C> <C>
1993
- ------
Revenues $ 65,850 $ 66,746 $ 56,427 $ 65,898
======== ======== ======== ========
Operating Earnings $ 9,087 $ 9,812 $ 5,009 $ 9,093
======== ======== ======== ========
Earnings before cumulative
effect of accounting change $ 3,730 $ 4,252 $ (563) $ 6,558
======== ======== ========= ========
Net earnings $ 3,730 $ 4,252 $ (563) $ 6,558
======== ======== ========= ========
1992
- ------
Revenues $ 61,569 $ 64,327 $ 66,423 $ 71,298
======== ======== ======== ========
Operating Earnings $ 7,668 $ 9,913 $ 9,596 $ 11,099
======== ======== ======== ========
Earnings before cumulative
effect of accounting change $ 2,847 $ 4,413 $ 4,486 $ 5,362
======== ======== ======== ========
Net earnings $ 15,003 $ 4,413 $ 4,486 $ 5,362
======== ======== ======== ========
</TABLE>
F-19
<PAGE> 31
<TABLE>
SCHEDULE V
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
FOR THREE YEARS ENDED DECEMBER 31, 1993
(000 OMITTED)
<CAPTION>
BALANCE SALES BALANCE
BEGINNING ADDITIONS AND OTHER END
OF YEAR AT COST RETIREMENTS CHANGES OF YEAR
--------- --------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
1993
- --------
Towboats & Barges $ 556,753 $ 13,861 $ (22,687) $ (5,278) $ 542,649
Terminals & Other Facilities 59,698 330 (2,005) (684) 57,339
Land 5,188 - (52) 23 5,159
--------- --------- --------- --------- ---------
$ 621,639 $ 14,191 $ (24,744) $ (5,939) $ 605,147
========= ========= ========= ========= =========
1992
- --------
Towboats & Barges $ 538,271 $ 27,634 $ (2,799) $ (6,353) $ 556,753
Terminals & Other Facilities 59,350 1,693 (403) (942) 59,698
Land 5,188 - - - 5,188
--------- --------- --------- --------- ---------
$ 602,809 $ 29,327 $ (3,202) $ (7,295) $ 621,639
========= ========= ========= ========= =========
1991
- --------
Towboats & Barges $ 498,893 $ 47,183 $ (3,804) $ (4,001) $ 538,271
Terminals & Other Facilities 58,210 1,348 (208) - 59,350
Land 5,225 - (37) - 5,188
--------- --------- --------- --------- ---------
$ 562,328 $ 48,531 $ (4,049) $ (4,001) $ 602,809
========= ========= ========= ========= =========
</TABLE>
F-20
<PAGE> 32
<TABLE>
SCHEDULE VI
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
FOR THREE YEARS ENDED DECEMBER 31, 1993
(000 OMITTED)
<CAPTION>
ADDITIONS
-----------------------------
BALANCE CHARGED CHARGED SALES BALANCE
BEGINNING TO TO OTHER AND END OF
OF YEAR EXPENSES ACCOUNTS(A) RETIREMENTS OTHER YEAR
---------- -------- ----------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1993
- --------
Towboats & Barges $ 248,087 $ 22,850 $ 693 $ (21,533) $ - $250,097
Terminals & Other Facilities 36,407 2,437 97 (538) - 38,403
--------- --------- --------- ---------- -------- --------
$ 284,494 $ 25,287 $ 790 $ (22,071) $ - $288,500
========= ========= ========= ========== ======== ========
1992
- --------
Towboats & Barges $ 234,411 $ 22,143 $ 645 $ (9,112) $ - $248,087
Terminals & Other Facilities 34,250 2,464 104 (411) - 36,407
--------- --------- --------- ---------- -------- --------
$ 268,661 $ 24,607 $ 749 $ (9,523) $ - $284,494
========= ========= ========= ========== ======== ========
1991
- --------
Towboats & Barges $ 221,025 $ 19,869 $ 664 $ (3,146) $(4,001) $234,411
Terminals & Other Facilities 31,946 2,371 114 (181) - 34,250
--------- --------- --------- ---------- -------- --------
$ 252,971 $ 22,240 $ 778 $ (3,327) $(4,001) $268,661
========= ========= ========= ========== ======== ========
<FN>
(a) Transfers to other balance sheet accounts.
</TABLE>
F-21
<PAGE> 33
<TABLE>
SCHEDULE VIII
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(OOO OMITTED)
<CAPTION>
ADDITIONS DEDUCTIONS
----------------- ----------
Charges
for which
Balance Charged Charged Reserves Balance
Beginning Costs & to Other Were End of
Of Year Expenses Accounts Created Year
------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
1993
- ------
Allowances and reserves deducted
from assets-
Allowance for doubtful accounts $ 428 $ - $ - $ - $ 428
======= ======= ======= ========= ========
Reserves included in liabilities -
Reserve for environmental expenses 884 (76) - 33 841
Reserve for insurance claims 8,480 5,587 1,098 (6,880) 8,285
Reserve for post-retirement
health care 9,288 1,056 - (1,038) 9,306
Reserve for employee benefits 2,670 6,904 65 (7,076) 2,563
------- ------- ------- --------- -------
Total Other Reserves $21,322 $13,471 $ 1,163 $ (14,961) $20,995
======= ======= ======= ========= =======
1992
- ------
Allowances and reserves deducted
from assets-
Allowance for doubtful accounts $ 424 $ - $ - $ 4 $ 428
======= ======= ======= ======== =======
Reserves included in liabilities -
Reserve for environmental expenses 1,120 - 282 (518) 884
Reserve for insurance claims 8,722 5,932 232 (6,406) 8,480
Reserve for post-retirement
health care 9,184 1,168 - (1,064) 9,288
Reserve for employee benefits 2,061 7,231 46 (6,668) 2,670
------- ------- ------- -------- -------
Total Other Reserves $21,087 $14,331 $ 560 $(14,656) $21,322
======= ======= ======= ======== =======
1991
- ------
Allowances and reserves deducted
from assets-
Allowance for doubtful accounts $ 679 $ (288) $ - $ 33 $ 424
======= ======= ======= ======== =======
Reserves included in liabilities -
Reserve for environmental expenses 1,999 610 - (1,489) 1,120
Reserve for insurance claims 9,170 5,499 1,339 (7,286) 8,722
Reserve for post-retirement
health care 235 8,949 6 (6) 9,184
Reserve for employee benefits 2,345 7,432 (11) (7,705) 2,061
------- ------- ------- -------- -------
Total Other Reserves $13,749 $22,490 $ 1,334 $(16,486) $21,087
======= ======= ======= ======== =======
</TABLE>
F-22
