________________________________________________________________________________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number 1-8544
AMERICAN PRESIDENT COMPANIES, LTD.
(Exact name of registrant as specified in its charter)
Delaware 94-2911022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 Broadway
Oakland, California 94607
(Address of principal executive offices)
Registrant's telephone number: (510) 272-8000
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD.
<TABLE>
INDEX
<CAPTION>
PART I. FINANCIAL INFORMATION Page
_____________________
Item 2. Management's Discussion and Analysis
<S> <C>
of Financial Condition and Results of Operations 1-11
SIGNATURES 12
</TABLE>
<PAGE>
American President Companies, Ltd. and Subsidiaries
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
RESULTS OF OPERATIONS
<CAPTION>
Second Quarter Year to Date
(In millions) 1994 1993 Change 1994 1993 Change
________________________________________________________________________________________________
REVENUES
________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
International Transportation $ 462 $ 429 8% $ 970 $ 904 7%
North America Transportation 181 149 21% 371 304 22%
Real Estate 11 6 90% 16 7 153%
________________________________________________________________________________________________
OPERATING INCOME
Transportation $ 27 $ 24 7% $ 43 $ 48 (11%)
Real Estate 6 4 81% 9 4 153%
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
Transportation operating income for the second quarter and first half
of 1994 was $26 million and $34 million, respectively, compared with $22
million and $46 million in the second quarter and first half of 1993,
excluding the impact of collecting Desert Storm detention charges of $1
million and $9 million in the second quarter and first half of 1994,
respectively, and $2 million in the second quarter and first half of 1993.
The increase in transportation operating income in the second quarter of 1994
from last year's second quarter is the result of volume increases in the North
American stacktrain and international markets, partially offset by a decline
in rates in the company's U.S. export market, a higher proportion of lower-
rated cargo in the company's U.S. import market and an increase of $7 million
in expenditures on corporate initiatives to improve the company's financial
and order cycle processes. The decrease in operating income in the first half
of 1994 from last year's first half is attributable to depressed rates in the
company's U.S. export market, particularly in the first quarter of 1994, a
decline in the proportion of higher-margin import cargo and an increase of $13
million in expenditures on corporate initiatives, which were partially offset
by increased North American stacktrain volumes.
Real estate sales contributed $6 million and $9 million to operating
income in the second quarter and first half of 1994, respectively, compared
with $4 million in the second quarter and first half of 1993. The company
completed the sales of its remaining real estate holdings in the second
quarter of 1994.
<TABLE>
INTERNATIONAL TRANSPORTATION (1)
(Volumes in thousands of FEUs)
<CAPTION>
Second Quarter Year to Date
1994 1993 Change 1994 1993 Change
_______________________________________________________________________________________________
Import
<S> <C> <C> <C> <C> <C> <C>
Volumes 52.4 47.0 11% 102.2 99.2 3%
Average Revenue per FEU $ 4,129 $ 4,151 (1%) $ 4,089 $ 4,092 0%
_______________________________________________________________________________________________
Export
Volumes 36.6 34.0 8% 79.1 72.4 9%
Average Revenue per FEU $ 3,128 $ 3,196 (2%) $ 3,107 $ 3,326 (7%)
_______________________________________________________________________________________________
Intra-Asia
Volumes 43.3 40.1 8% 93.4 82.0 14%
Average Revenue per FEU $ 1,868 $ 1,851 1% $ 1,898 $ 1,878 1%
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
(1) Volumes and revenue per forty-foot equivalent unit ("FEU") data are based
upon shipments originating during the period, which differs from the
percentage-of-completion method which is used for financial reporting
purposes.
<PAGE>
The company's U.S. import volumes increased in the second quarter of
1994 compared with the second quarter of 1993 due to seasonal cargo from Hong
Kong moving earlier than last year, service enhancements in the People's
Republic of China and a competitor's labor strike. U.S. import volumes in the
first half of 1994 increased compared with the same period last year, although
increases realized during the second quarter of 1994 were partially offset by
a weak import market and strong competition during the first quarter of 1994.
Volumes of U.S. export cargo increased in the second quarter and first half of
1994 compared with the second quarter and first half of 1993, primarily due to
an increase in shipments of commercial and military refrigerated cargo and the
impact of a competitor's labor strike. The company's position as preferred
carrier for U.S. military cargo from June 1, 1993 to May 31, 1994 also
contributed to increased export volumes for the second quarter and first half
of 1994 compared with the same periods in 1993. The company's intra-Asia
volumes increased in the second quarter and first half of 1994 compared with
the same periods last year as a result of the company's expanded service to
and from China and the growing economies in Southeast and West Asia, and the
Middle East since 1993.
Average revenue per FEU for the company's U.S. import shipments
declined in the second quarter compared with the second quarter 1993 due to a
higher proportion of lower-rated cargo in 1994. Average revenue per FEU in
the company's U.S. export market decreased in the second quarter and first
half of 1994 from last year's second quarter and first half as weak market
conditions and increased competition have resulted in reduced rates in this
market. Average revenue per FEU in the company's intra-Asia market increased
slightly in the second quarter and first half of 1994 compared with the second
quarter and first half of 1993, primarily attributable to an increase in
higher-rated commercial refrigerated cargo.
Utilization of the company's containership capacity in the first half
of 1994 was 84% and 96% for import and export shipments, respectively,
compared with 84% and 89%, respectively, in the first half of 1993. Import
capacity in the first half of 1994 was increased by additional vessel space
purchased from Orient Overseas Container Line ("OOCL") since December 1993.
The increase in vessel utilization in the company's U.S. export market in the
first half of 1994 resulted primarily from additional volumes of export cargo
carried by the company in the first half of 1994 compared with the first half
of 1993.
For the remainder of 1994, the company expects modest seasonal
improvements in cargo mix in each of its international markets. Competitive
pressures on the company's international rates are expected to continue for
the balance of the year. Beginning June 1, 1994, the company no longer is the
preferred carrier for military dry cargo as it had been since June 1, 1993,
but the company retained its position as preferred carrier for military
refrigerated cargo for the 12-month period beginning June 1, 1994. The
company expects to be able to substantially replace the military cargo it will
no longer carry with commercial cargo, although at lower margins, but no
assurances can be given to that effect. In the first half of 1994, military
dry cargo represented 12% of export volumes, compared with 9% in the first
half of 1993, when the company was not the preferred carrier of such cargo
until the last month of that period.
All Desert Storm detention claims have been settled and final payments
totaling $1 million are expected to be received during the remainder of 1994.
The company and OOCL, a Hong Kong shipping company, are parties to
agreements enabling them to exchange vessel space and coordinate vessel
sailings through 2005. The agreements permit both companies to offer faster
transit times, more frequent sailings between key markets in Asia and the
<PAGE>
U.S. West Coast, and to share terminals and several feeder operations within
Asia. Under the slot-sharing agreement, the company and OOCL have designated
a combined total of approximately 7,000 FEUs per week in the eastbound
direction and 5,400 FEUs per week in the westbound direction to be allocated
to each company based upon proportions specified in the agreement.
Additionally, beginning in December 1993, the company is required to purchase
additional vessel space from OOCL and will compensate OOCL approximately $7
million annually for this space, accrued ratably over each year. This
commitment reduces as the company increases the capacity it can exchange with
OOCL, which is expected to begin with the delivery of the company's C11-class
vessels in 1995.
On April 26, 1994, the company and Transportacion Maritima Mexicana
("TMM"), a Mexican transportation company, entered into an agreement enabling
them to reciprocally charter vessel space for a period of three years. Under
the agreement, cargo will be transported between major Asian ports and certain
ports on the Pacific Coast of the U.S. and Mexico. The company will charter
from TMM between 200 and 240 FEUs per week in the eastbound direction, and 115
FEUs per week in the westbound direction. Each party is committed to purchase
a minimum amount of vessel space at contract rates and may buy available extra
space as needed. The company's minimum space purchase commitment exceeds that
of TMM by approximately $5 million per year.
The company has entered into non-binding letters of understanding to
pursue negotiations with Mitsui OSK Lines, Ltd. ("MOL"), Nedlloyd Lijnen B.V.
("NLL") and OOCL to form an alliance for ocean transportation services in the
Asia-Europe and Asia-North America trade lanes. Additionally, the carriers
are discussing the possibility of a joint all-water service via the Panama
Canal from Asia to the U.S. East Coast, which would utilize vessels of the
company's alliance partners. In the trans-Pacific trade, the company and OOCL
are negotiating to include MOL in the agreement under which the company and
OOCL presently exchange vessel space, coordinate sailings and share terminals.
The company is also negotiating to enter the Asia-Europe market by using a
small amount of vessel space provided by the other carriers in the alliance,
including NLL's current partners in the trade, and presently intends to grow
in that market by adding vessel capacity only when demand and expected returns
warrant. No assurances can be given as to whether any of these negotiations
will be successful, and certain of the principal agreements reached would be
subject to government approvals.
The company is party to an Operating-Differential Subsidy ("ODS")
agreement with the U.S. government, expiring on December 31, 1997, which
provides for payment by the U.S. government to partially compensate the
company for the relatively greater expense of vessel operation under U.S.
registry. ODS payments to the company were approximately $30 million and $31
million in the first half of 1994 and 1993, respectively, and totaled $65
million in 1993.
The Clinton Administration and Congress are actively reviewing U.S.
maritime policy. On March 10, 1994, the Clinton Administration sent its
maritime proposal, "The Maritime Security Program", to Congress, which was
introduced in the U.S. House of Representatives as H.R. 4003 and in the Senate
as S. 1945. On August 2, 1994, the House approved H.R. 4003, which would
provide $1.3 billion in subsidies for approximately 52 U.S.-flag vessels over
the next ten years, or an annual subsidy of $2.1 million per vessel for
vessels enrolled in the program, and would provide subsidies to U.S. ship
builders. The bill now goes to the Senate. The company is not able to
predict whether maritime reform legislation will be enacted or whether enacted
legislation, if any, will have terms similar to H.R. 4003/S. 1945.
<PAGE>
While the company continues to support efforts to enact new maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, on July 16, 1993, the company filed
applications with the United States Maritime Administration to operate under
foreign flag its six C11-class containerships, which are under construction,
and to transfer to foreign flag seven of the 15 U.S.-flag containerships in
its trans-Pacific fleet. Enactment of maritime reform legislation, if any,
may influence the company's decision whether to operate these ships under
foreign flag, should its applications be approved. Management of the company
believes that, in the absence of ODS or an equivalent government support
program, it is generally no longer commercially viable to own or operate
containerships in foreign trade under the U.S. flag because of the higher
labor costs and the more restrictive design, maintenance and operating
standards applicable to U.S.-flag liner carriers. The company continues to
evaluate its strategic alternatives in light of the expiration of its ODS
agreement and the uncertainties as to whether a new U.S. government maritime
support program acceptable to the company will be enacted, whether sufficient
labor efficiencies can be achieved through the collective bargaining process,
and whether the company's applications to flag its vessels under foreign
registry will be approved. While no assurances can be given, management of
the company believes that it will be able to structure its operations to
enable it to continue to operate on a competitive basis without direct U.S.
government support.
<TABLE>
NORTH AMERICA TRANSPORTATION (1)
(Volumes in thousands of FEUs)
<CAPTION>
Second Quarter Year to Date
1994 1993 Change 1994 1993 Change
_______________________________________________________________________________________________
Revenues (2) (In millions)
<S> <C> <C> <C> <C> <C> <C>
Stacktrain $ 127 $ 102 24% $ 260 $ 208 25%
Non-Stacktrain 54 47 12% 111 96 15%
_______________________________________________________________________________________________
Stacktrain Volumes
North America 94.0 77.2 22% 193.7 157.6 23%
International 46.2 43.4 6% 94.6 91.6 3%
_______________________________________________________________________________________________
Stacktrain Average
Revenue per FEU (2) $ 1,352 $ 1,324 2% $ 1,344 $ 1,322 2%
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
(1) Volumes and revenue per FEU data are based upon shipments originating
during the period, which differs from the percentage-of-completion method
which is used for financial reporting purposes.
(2) In addition to domestic third party business, the transportation of
containers for the company's international customers is a significant
component of the company's stacktrain operations. The effect of these
shipments on domestic operations is eliminated in consolidation and
therefore excluded above in Revenues and Stacktrain Average Revenue per
FEU.
Revenues from the company's North American transportation operations
increased in the second quarter and first half of 1994 compared with second
quarter and first half of 1993, primarily as the result of higher North
America stacktrain volumes. The increase in stacktrain volumes in the 1994
periods was due to the improvement in the U.S. economy, increases in Mexican
and Canadian shipments, particularly automotive shipments between the U.S. and
Mexico and competitor equipment shortages. The company added 1,000 containers
to its fleet during the first quarter of 1994, which enabled it to meet
increasing demand. Stacktrain average revenue per FEU increased in
<PAGE>
the second quarter and first half of 1994 compared with the second quarter and
first half of 1993 due to an improvement in cargo mix and increased rates in
certain stacktrain markets in the second quarter of 1994. The company's non-
stacktrain revenues also improved in the second quarter and first half of 1994
compared with the same period in 1993, primarily due to increased volumes.
During the remainder of 1994, the company intends to continue to add
to its fleet of containers, chassis and rail cars via short- and long-term
operating leases and purchases in anticipation of growth in demand in the
North American stacktrain market. There can be no assurances, however, that
such demand will materialize.
<TABLE>
TRANSPORTATION OPERATING EXPENSES
<CAPTION>
(In millions, except Second Quarter Year to Date
Operating Cost per FEU) 1994 1993 Change 1994 1993 Change
________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Land Transportation $ 239 $ 207 16% $ 496 $ 432 15%
Cargo Handling 126 119 7% 265 245 8%
Vessel, Net 76 67 13% 162 142 14%
Transportation Equipment 46 41 13% 98 88 11%
Information Systems 11 11 2% 25 23 8%
Other 74 71 3% 160 149 8%
________________________________________________________________________________________________
Total $ 572 $ 516 11% $ 1,206 $ 1,079 12%
________________________________________________________________________________________________
Operating Cost per FEU $ 2,528 $ 2,599 (3)% $ 2,575 $ 2,624 (2)%
Percentage of Transportation
Revenues 89% 89% 90% 89%
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
Transportation operating expenses per FEU declined in the second
quarter and first half of 1994 compared with the same periods in 1993 despite
the weakness of the U.S. dollar relative to certain Asian currencies. During
the second quarter of 1994, one of the company's C9-class vessels, the
President Washington, which is deployed in trans-Pacific service, was involved
in a collision in Korea. Substantial damage to the vessel and its cargo and
cargo containers was sustained in the collision and subsequent fire. The
causes and responsibility for the collision and fire are under investigation.
Costs related to the collision will be largely covered by insurance. Costs
not covered by insurance, which include the cost of the replacement vessel,
and additional cargo handling and trucking costs, totaled approximately $2
million in the second quarter of 1994. On July 30, 1994, the President
Washington returned to service.
Land transportation expenses increased in the second quarter and first
half of 1994 from the second quarter and first half of 1993, primarily due to
the increase in North American stacktrain volumes and higher rail and truck
costs in Asia. The increase in cargo handling expenses in the second quarter
and first half of 1994 compared with 1993 is attributable to an increase in
stevedoring volumes, including increased relays of China and West Asia cargo
and increased stevedoring services to third parties. Additionally, 1994 cargo
handling expenses were impacted by labor contract rate increases at ports in
Asia and the U.S. Vessel expenses increased in the second quarter and first
half of 1994 compared with last year's second quarter and first half due to
increased charter hire activity resulting from expanded service to China and
the Philippines, costs related to the vessel that replaced the President
Washington, an increase in Latin American activity and additional vessel space
purchased from OOCL and TMM. These factors were partially offset by a
decrease in fuel cost. Transportation equipment costs increased in the second
quarter and first half of 1994 compared with the second quarter and first half
of 1993 due to increased
<PAGE>
repair and maintenance costs, increased lease costs, including the addition of
1,000 leased containers during the first quarter of 1994 for use in North
American stacktrain operations. The increase in information systems costs for
the first half of 1994 was due to software purchases in the first quarter of
1994. Other operating expenses increased in the second quarter and first half
of 1994 compared with the second quarter and first half of 1993 primarily due
to higher employee costs, particularly in Asia.
Certain of the company's collective bargaining agreements covering
shipboard and shoreside employees in the U.S. expired in June 1994.
Negotiations with all but one of the respective unions have resulted in new
agreements expiring in June 1995 or December 1997, subject to ratification by
the respective union memberships. Negotiations with the remaining union have
resulted in a framework agreement, which, if concluded, would expire in June
1998. It is anticipated that negotiation of the remaining provisions of this
agreement will be concluded by October 31, 1994, although no assurances can be
given to that effect. The union has agreed that there will be no strikes or
stoppages of work prior to that date.
General and administrative expenses increased 52% and 44% in the
second quarter and first half of 1994 compared with the second quarter and
first half of 1993, respectively, primarily due to an increase in expenditures
of approximately $7 million and $13 million in the second quarter and first
half of 1994, respectively, on corporate initiatives to improve the company's
financial and order cycle processes. Total spending on corporate initiatives
is expected to be approximately $30 million in 1994. Expenditures on
corporate initiatives are expected to continue in 1995 and 1996. The company
presently anticipates that, during the next two years, between 550 and 900
positions will be eliminated as a result of order cycle process changes, and
approximately 50 positions will be eliminated as a result of financial process
changes. The actual number of position reductions, however, will not be
finally determined until design and implementation of the new processes in
1995 and 1996. Depreciation and amortization expense decreased 4% and 3% in
the second quarter and first half of 1994 compared with the second quarter and
first half of 1993, respectively, primarily due to certain equipment reaching
the end of its depreciable life during 1993. Net interest expense increased
from $3 million in the second quarter of 1993 to $4 million in the second
quarter of 1994. Interest income increased in 1994 due to higher cash
balances and slightly higher interest rates, which partially offset the
increase in interest expense from the Senior Notes and Debentures issued in
the fourth quarter of 1993 and the first quarter of 1994, respectively. Net
interest expense for the first half of 1994 was relatively unchanged from the
first half of 1993, as the increase in interest income in 1994 offset the
increase in interest expense.
The company's estimated income tax rate for 1994 is 34%, compared with
37% in 1993. The 1994 income tax rate includes the effect of revisions of
prior years' estimated tax liabilities.
<PAGE>
<TABLE>
LIQUIDITY AND CAPITAL RESOURCES
(In millions)
<CAPTION>
___________________________________________________________________________________________
July 1 December 31
As of: 1994 1993
___________________________________________________________________________________________
Cash, Cash Equivalents and
<S> <C> <C>
Short-term Investments $ 214 $ 84
Working Capital 231 51
Total Assets 1,612 1,454
Long-Term Debt and Capital
Lease Obligations (1) 405 272
___________________________________________________________________________________________
July 1 June 25
For the quarter ending: 1994 1993
___________________________________________________________________________________________
Cash Provided by Operations $ 46 $ 80
___________________________________________________________________________________________
NET CAPITAL EXPENDITURES
Ships $ 8 $ 75
Containers, Chassis and Rail Cars 20 18
Leasehold Improvements and Other 20 9
___________________________________________________________________________________________
Total $ 48 $ 102
___________________________________________________________________________________________
INVESTING ACTIVITIES
Proceeds from Sale of Long-term
Investment $ 11
___________________________________________________________________________________________
FINANCING ACTIVITIES
Borrowings $ 147 $ 351
Repayment of Debt and Capital Leases (14) (474)
Dividend Payments (9) (7)
___________________________________________________________________________________________
___________________________________________________________________________________________
</TABLE>
(1) Includes current and long-term portions.
In January 1994, the company issued $150 million 30-year Senior
Debentures at an effective interest rate of 8.2%, the net proceeds from which
were $147 million. The net proceeds from the issuance of this debt, combined
with a portion of the net proceeds from the 10-year Senior Note offering of
$150 million in November 1993, will be used to finance vessel purchases, other
capital expenditures and for general corporate purposes.
In the first quarter of 1993, the company used $131 million cash and
borrowings under its previous revolving credit agreement to purchase leased
ships, repay the related capital lease obligations and to retire $95 million
of 11% public notes. Also in the first half of 1993, the company sold its
investment in Amtech Corporation, the proceeds from which were $11 million,
and resulted in a pretax contribution of $9 million.
In 1993, the company began a fleet modernization program pursuant to
which it has placed orders for the construction of six new C11-class
containerships ("C11") and three new Kl0-class containerships ("K10") for an
aggregate cost of approximately $732 million. OOCL has placed orders to
purchase six vessels similar in size and speed to the company's C11s. The
company and OOCL have agreed to deploy the company's C11s and OOCL's similar
vessels upon their delivery in 1995 and 1996, respectively, in their
coordinated trans-Pacific service under their slot-sharing agreement, which
deployment will require U.S. government approval. The deployment of the 12
new C11-type vessels by the company and OOCL, replacing 16 older vessels, will
increase the combined trans-Pacific capacity of the company and OOCL by
approximately 15%. The company expects growth in demand in the trans-Pacific
market and believes that the increase in combined capacity will be sufficient
to permit the company and OOCL to maintain their combined relative market
share in that market. However, no assurances can be given with respect to
anticipated growth in demand, the utilization or impact of the increased
<PAGE>
capacity or whether the necessary U.S. government approval of the agreed
deployment of the vessels will be granted.
The company's K10s, in combination with capacity from its six C11s,
are expected to replace four L9-class vessels chartered by the company and
used in its West Asia/Middle East service. Delivery of the K10s is scheduled
for 1996, which is when the charters of the L9s will expire. Any alliance
agreement with MOL, NLL and OOCL may impact the deployment and/or the ultimate
ownership of the K10s. Deployment of the company's K10s may be subject to
U.S. government approval.
The C11 vessels are being constructed by Howaldtswerke-Deutsche Werft
AG, of Germany ("HDW") (three ships) and Daewoo Shipbuilding and Heavy
Machinery, Ltd., of Korea ("Daewoo") (three ships). The total estimated
project cost for the construction of these vessels is $537 million. A $52
million progress payment was made in 1993 upon contract effectiveness,
approximately half of which was paid to HDW and half to Daewoo, and a progress
payment of $4 million was made to HDW in the first 26-weeks of 1994. The
remaining progress payments are due in installments of $27 million and $20
million in 1994 and 1995, respectively, and the final 80% is due upon delivery
of the vessels. In March 1994, the company entered into a loan agreement with
European banks to finance approximately $400 million of the purchase price of
the six C11-class vessels. Principal payments on any draw-downs would be due
in semiannual installments over a 12 year period commencing six months after
the delivery of each vessel. Interest rates would be based upon various
margins over LIBOR or the banks' cost of funds as elected by the company. The
remaining costs of these vessels are expected to be financed with a portion of
the net proceeds from the company's November 1993 and January 1994 public debt
offerings and cash from operations.
The K10s are being constructed by Daewoo. The total estimated project
cost for construction of these vessels is $195 million. A progress payment of
$18 million was made to Daewoo in 1993. The remaining progress payments are
due in two $18 million installments in 1995 and 70% upon delivery of the
vessels. The costs of these vessels are expected to be financed with a
portion of the net proceeds from the company's November 1993 and January 1994
public debt offerings and cash from operations.
Other than vessel progress payments, the company's capital
expenditures in the second quarter and first half of 1994 were primarily for
purchases of containers, chassis, leasehold improvements and an office in
Mexico. In the second quarter and first half of 1993, capital expenditures
were for the buy-out of certain vessel capital leases and purchases of
refrigerated containers.
Capital expenditures in 1994 are expected to total approximately $200
million, including $31 million for vessel progress payments. The remaining
planned 1994 capital expenditures are for purchases of refrigerated
containers, chassis, terminal improvements in North America and Asia, and
computer systems, and will be financed with the net proceeds from the
company's November 1993 and January 1994 public debt offerings, cash from
operations and financing arrangements. At July 1, 1994, the company had
outstanding purchase commitments to acquire facilities, equipment and services
totaling $79 million.
In 1993, the company entered into a 30-year lease with the Port of Los
Angeles for a new terminal facility. In connection with that lease, the
company has agreed to provide at least six gantry cranes and certain
intermodal handling equipment by the inception of the lease in 1997, the
estimated minimum cost of which, if purchased, is approximately $70 million.
<PAGE>
On June 1, 1994 the company and the Port of Seattle signed a lease
amendment for the improvement and expansion of its existing terminal facility.
Under the amended lease, the facility would be expanded from 83 acres to
approximately 160 acres. The expansion is expected to be completed during
1997, and the lease term would be 30 years from completion. In addition, the
company has the option to expand the terminal by an additional 30 acres. The
annual rent payment for the company's existing facility was approximately $6
million in 1993. The minimum annual rent payment, for the first full year
after completion, under the amended lease is estimated to be $12 million,
depending upon the final scope of development and consumer price index
increases. The minimum annual rent payment increases in five year increments
over the term of the lease, to approximately $38 million in the 29th and 30th
years, also depending upon the final scope of development and consumer price
index increases.
On March 25, 1994, the company entered into a credit agreement with a
group of banks that provides for an aggregate commitment of up to $200 million
for a five-year period. The credit agreement contains various financial
covenants that require the company to meet certain levels of interest
coverage, leverage and net worth. The borrowings bear interest at rates based
upon various indices as elected by the company. The annual commitment fee is
a maximum of one-half of one percent of the available amount. Any outstanding
borrowings under this agreement would be classified as long-term. There have
been no borrowings under this agreement.
<PAGE>
American President Companies, Ltd. and Subsidiaries
SIGNATURES
Pursuant to the requirements 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.
AMERICAN PRESIDENT COMPANIES, LTD.
Dated: August 17,1994 By /s/ Maryellen B. Cattani
_____________________ _________________________________
Maryellen B. Cattani
Senior Vice President,
Secretary and
General Counsel
