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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
(Mark One)
[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, 1994
or
[ ] 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 1-9063
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MARITRANS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0343903
(State or other jurisdiction of (Identification No.
incorporation or organization) I.R.S. Employer)
ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 864-1200
Securities registered pursuant to
Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, Par Value $.01 Per Share New York Stock Exchange
Preferred Stock, Par Value $.01 Per Share None
Securities registered pursuant to
Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 requirements for the past 90 days.
Yes [X] No [ ]
As of March 14, 1995, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $70,811,296. As of March 14, 1995,
Maritrans Inc. had 12,529,628 shares of common stock outstanding.
Documents Incorporated By Reference
Part III incorporates information by reference from the Proxy Statement for
Annual Meeting of Stockholders to be held on May 10, 1995.
Exhibit Index is located on page 33.
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FORM 10-K
MARITRANS INC.
TABLE OF CONTENTS
PART I
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Page
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Item 1. Business ................................................................... 1
Item 2. Properties ................................................................. 9
Item 3. Legal Proceedings .......................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders ........................ 11
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters .. 12
Item 6. Selected Financial Data .................................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................. 13
Item 8. Financial Statements and Supplemental Data ................................. 17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................ 29
PART III
Item 10. Directors and Executive Officers of the Registrant ......................... 29
Item 11. Executive Compensation ..................................................... 31
Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 31
Item 13. Certain Relationships and Related Transactions ............................ 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ............. 32
Signatures ............................................................................. 35
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PART I
ITEM 1. BUSINESS
GENERAL
Maritrans Inc. (the "Corporation" or the "Registrant"), together with its
predecessor, Maritrans Partners L.P. (the "Partnership"), herein called
"Maritrans," has historically served the petroleum and petroleum product
industry by providing marine transportation services along the East and Gulf
Coasts of the United States utilizing its barges and tugboats. Maritrans has
recently broadened its participation in the industry it serves by adding
marine terminal facilities and distribution coordination.
STRUCTURE
Current. The Registrant is a Delaware corporation whose common stock
("Common Stock") is publicly traded. The Registrant conducts most of its
marine transportation business activities through Maritrans Operating
Partners L.P. and Maritrans General Partner Inc., wholly owned subsidiaries
of the Registrant. Most of the Registrant's terminalling and distribution
services are conducted through subsidiaries of Maritrans Holdings Inc., a
wholly owned subsidiary of the Registrant.
Direct and indirect subsidiaries of the Registrant, including special
purpose subsidiaries, are:
Maritrans Operating Partners L.P. (the "Operating Partnership")
Maritrans General Partner Inc.
Maritrans Holdings Inc.
Maritrans Distribution Services Inc.
Maritrans Barge Co.
Response Members Inc.
Maritrans Capital Corp.
Response Services Inc.
CCF Acquisition Corp.
Maritank Philadelphia Inc.
Inter-Cities Navigation (Texas) Corp.
Maritank Maryland Inc.
Interstate Towing (Texas) Co.
Maritank Inc.
Maritank Tampa Inc.
Maritrans Eastern Inc.
Maritrans Inland Inc.
Maritrans Gulf Inc.
Historical. Founded in the 1850's and incorporated in 1928 under the name
Interstate Oil Transport Company, Maritrans' predecessor was one of the first
tank barge operators in the United States, with a fleet which increased in
size and capacity as United States consumption of petroleum products
increased. On December 31, 1980, Maritrans' predecessor operations and its
tugboat and barge affiliates were acquired by Sonat Inc. ("Sonat"). On April
14, 1987, Maritrans acquired the tug and barge business and related assets
from Sonat. On March 31, 1993, the limited partners of the Partnership voted
on a proposal to convert the Partnership to corporate form (the
"Conversion"). The proposal was approved, and on April 1, 1993, Maritrans
Inc., then a newly-formed Delaware corporation, succeeded to all assets and
liabilities of the Partnership. The holders of general and limited
partnership interests in the Partnership and in the Operating Partnership
were issued shares of Common Stock, par value $.01 per share, of the
Corporation, representing substantially the same percentage equity interest
in the Corporation as they had in the Partnership, directly or indirectly, in
exchange for their partnership interest. Each previously held Unit of Limited
Partnership Interest in the Partnership was exchanged for one share of Common
Stock of the Corporation. For financial accounting purposes, the conversion
to corporate form has been treated as a reorganization of affiliated
entities, with the assets and liabilities recorded at their his-
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toical costs. In addition, the Partnership recognized a net deferred income
tax liability for temporary differences in accordance with Statement of
Financial Accounting Standard ("FAS") No. 109, "Accounting for Income Taxes,"
which resulted in a one-time charge to earnings of $16.6 million in the first
quarter of 1993.
Overview. Since 1981, Maritrans and its predecessors have transported
annually over 200 million barrels of crude oil and refined petroleum
products. Based on its internal research regarding competition, Maritrans
believes that it is one of the largest United States marine transporters of
petroleum and petroleum products in the U.S. Coastwise Jones Act trade (i.e.
from point-to-point within the United States), excluding affiliates of
integrated oil companies, and that it owns one of the largest domestic fleets
of U.S. flag oceangoing tank barges.
Maritrans operates a fleet of tank barges and tugboats and two terminal
facilities. Its largest barge has a capacity of approximately 400,000
barrels, and its current operating barge fleet capacity aggregates
approximately 4 million barrels. Operating fleet capacity will increase by
approximately 300,000 barrels when the Company's most recent acquisition, the
MARITRANS 300, is placed in service in the second quarter of 1995. Aggregate
capacity at Maritrans' terminal facilities totals approximately 1.2 million
barrels.
Demand for Maritrans' services is dependent primarily upon general demand
for petroleum and petroleum products in the geographic areas served by its
vessels. Management believes that United States petroleum consumption, and
particularly consumption in New England and Florida, are significant
indicators of demand for Maritrans' services. Increases in product
consumption generally increase demand for Maritrans' services; conversely,
decreases in consumption generally lessen demand for Maritrans' services.
Management further believes that the level of domestic consumption of
imported product is also significant to Maritrans' business. Imported
petroleum products generally can be shipped on foreign-flag vessels directly
into United States ports for storage, distribution and eventual consumption.
These shipments reduce the need for domestic marine transportation service
providers such as Maritrans to carry products from United States refineries
to such ports. While Maritrans does benefit somewhat from the increase in
demand for domestic redistribution services that results from the delivery of
excess product to terminals by foreign-flag vessels, the overall effect of
refined product imports on the demand for Maritrans' services is generally
negative.
In June 1991, Maritrans, through a subsidiary, Maritank Philadelphia Inc.
("MPI"), acquired a one-million barrel, deepwater marine terminal located in
Philadelphia. This facility is a full-service petroleum product terminal able
to receive, store and subsequently redistribute product by pipeline, tank
vessel and truck. This facility is also capable of performing cleaning of
petroleum carrying vessels. Under current law, a vessel owner is jointly and
severally liable with the barge cleaning contractor and the waste disposal
contractor in the event that either such contractor improperly disposes of
any portion of tank cleaning residues from the vessel which is hazardous. Not
only have the tank cleaning rates paid by Maritrans to third parties been
increasing substantially, but, in addition, Maritrans believes that at least
some of these sources for tank cleaning will not continue to be available in
the future. Management believes the ability to control the cleaning of its
vessels lessens its environmental exposure, as discussed above, since it can
control this activity. Maritrans also believes that this facility provides it
with a long-term strategic advantage since it is able to assure itself of the
availability of these services at a reasonable cost and, by controlling the
facility, it is able to ensure that it can manage vessel turn-around time,
thereby increasing vessel availability, and that the facility is operated in
an environmentally sound manner.
In January 1992, Maritrans restructured its marine operations into three
divisions -- Eastern, Inland and Gulf, supported by executive and service
units. The three divisions also provide marketing, logistical, and
operational support for Maritrans' vessels, which are assigned to divisions
based on market conditions. This divisional restructuring was designed to
move Maritrans closer to its markets and customers, improve productivity and
efficiency in operations and permit more rapid decisions and responses to
changing conditions.
The Gulf Division, headquartered in Tampa, Florida, provides marine
transportation services for petroleum products from refineries located in
Texas, Louisiana and Mississippi to distribution points along the Gulf and
Atlantic Coasts generally south of Cape Hatteras, North Carolina and
particularly into Florida. The Eastern Division, supported by a major fleet
center in Philadelphia, Pennsylvania, transports petroleum products from East
Coast refineries (primarily located in and near Philadelphia) and pipeline
terminals located in the New York Harbor area to distribution terminals
primarily located along the Eastern Seaboard between the Canadian Mari-
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time Provinces and Norfolk, Virginia. Maritrans also provides lightering
services for large tank ships (a process of off-loading crude oil or
petroleum products from an inbound tanker into barges, thereby enabling the
tanker to navigate draft-restricted rivers and ports to discharge cargo at a
refinery or storage and distribution terminal). The Inland Division is also
supported by fleet center operations in Philadelphia, Pennsylvania, and
transports petroleum products and chemicals between refineries and
distribution points along the Delaware River and in the Chesapeake Bay. In
1993, the Inland Division and Maritank Maryland Inc., which owns a marine
terminal in Salisbury, Maryland, began to provide distribution services
through petroleum exchange agreements with customers requiring both marine
transportation and terminalling services. The petroleum exchange agreements
are structured so that Maritrans bears none of the exposure to fluctuations
in inventory price movements.
In early 1993, Maritank Maryland Inc. ("MMI") was established as an
indirect subsidiary of the Registrant. MMI provides marine terminalling and,
together with the Inland Division, distribution services in Salisbury,
Maryland. Maritrans also established an office in Houston, Texas in 1993 in
conjunction with efforts it is undertaking to expand its distribution
services.
Also, in early 1993, Marispond Inc. ("Marispond") was established as an
indirect subsidiary of the Registrant. Marispond provides a series of
services, most of which arise from requirements of the Oil Pollution Act of
1990 ("OPA"). These services include oil spill contingency planning, response
management and other services on a contract basis to Maritrans and other
vessel owners from around the world whose vessels call on United States
ports. In December of 1994 Marispond was sold to the senior executives of
Marispond, which will enable Maritrans to focus on its core distribution
services business. Marispond will continue to provide services to Maritrans
under a multi-year contract.
SALES AND MARKETING
Maritrans provides marine transportation, storage, and distribution
coordination services primarily to integrated oil companies, independent oil
companies, and petroleum distributors in the southern and eastern United
States. Maritrans relies primarily on direct sales efforts, minimizing its
use of chartering brokers. Maritrans monitors the supply and distribution
patterns of its actual and prospective customers and focuses its efforts on
providing services that are responsive to the current and future needs of
these customers.
Maritrans does business on a spot market basis, a term contract basis and,
more recently, on a product exchange basis. Maritrans strives to maintain an
appropriate mix of contracted business, based on current market conditions.
In light of the potential liabilities of oil companies and other shippers
of petroleum products under OPA and analogous state laws, management believes
that some shippers have begun to select transporters in larger measure than
in the past on the basis of a demonstrated record of safe operations.
Maritrans believes that the measures it has implemented in the last five
years to promote higher quality operations and its longstanding commitment to
safe transportation of petroleum products benefits its marketing efforts with
these shippers.
In 1994, approximately 80 percent of Maritrans' revenues were generated
from ten customers. In 1994, contracts with Chevron U.S.A., Inc. (including
affiliates), Sun Oil Company, BP Oil Shipping Company, USA (including
affiliates) and Star Enterprise accounted in the aggregate for approximately
15 percent, 13 percent, 11 percent and 10 percent, respectively, of
Maritrans' revenues. There could be a material adverse effect on Maritrans if
any of these customers were to cancel or terminate its various agreements
with Maritrans. Management believes that cancellation or termination of all
of its business with any of its larger customers is unlikely.
COMPETITION AND COMPETITIVE FACTORS
Overview. The maritime petroleum transportation industry is highly
competitive. The Jones Act, a federal law, restricts United States
point-to-point maritime shipping to vessels built in the United States, owned by
U.S. citizens and manned by U.S. crews. In Maritrans' market areas, its primary
direct competitors are the operators of U.S. flag oceangoing barges and U.S.
flag tankers. In the Gulf market, the primary competitors are the fleets of both
other independent petroleum transporters and integrated oil companies. In the
Eastern and Inland market, management believes, based on its extensive knowledge
and experience in the industry, that Maritrans primarily competes with other
independent oceangoing barge operators and with the captive fleets of integrated
oil companies and, in lightering operations, competes with foreign-flag
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operators which lighter offshore. Some of the integrated oil company fleets with
which Maritrans competes are larger than Maritrans' fleet. Additionally, in
certain geographic areas and in certain business activities, Maritrans competes
with the operators of petroleum product pipelines. Competitive factors which
also affect Maritrans include the output of United States refineries and the
importation of petroleum products.
The primary competition for Maritrans' marine terminals is proprietary
storage capacity of integrated oil companies, merchant refiners, and
independent marine terminal operators.
U.S. Flag Barges and Tankers. Maritrans' most direct competitors are the
other operators of U.S. flag oceangoing barges and tankers. Because of the
restrictions imposed by the Jones Act, there is a finite number of vessels
that are currently eligible to engage in U.S. maritime petroleum transport.
Therefore, the size and capacity of Maritrans' fleet relative to those of
others in the industry is an important factor in competing for business on
the basis of safety and service. The number of vessels eligible to engage in
Jones Act trade has declined significantly over the past several years. The
gradual implementation of regulations requiring significant capital
modifications and in some cases loss of vessel capacity, as well as a
decrease in the number of new vessels constructed since 1982, have been the
major causes of this decline. Competition in the industry is based upon price
and service (including vessel availability) and is intense.
Maritrans is engaged in several different market activities. A significant
portion of its revenues in 1994 was generated in the coastal transportation
of petroleum products from refineries or pipeline terminals in the Gulf of
Mexico to ports which are not served by pipelines. Management believes that
the optimal vessel size suited to serve these ports is between 20,000
deadweight tons ("DWT") (approximately 160,000 barrels) and 40,000 DWT
(approximately 320,000 barrels). Maritrans currently operates six barges in
this size range in this market, which comprises a significant number of the
vessels able to compete in this market. The relatively large size of
Maritrans' fleet generally provides greater flexibility in meeting customers'
needs.
Maritrans competes with operators of generally smaller vessels in its
Inland and Eastern transportation activities. In this activity Maritrans is
competing primarily with other barge operators. This is a diverse market
allowing a broader size range of vessels to participate than in the Gulf of
Mexico.
Management believes that, for the most part, Maritrans' independent
competitors do not provide the same level of service, quality performance, or
attention to safe operations as Maritrans due to its fleet size, maintenance
and training programs, and spill record.
General Agreement on Trade in Services ("GATS") and North American Free
Trade Agreement ("NAFTA").
The possible inclusion of maritime services within the scope of the GATS
and the NAFTA was the subject of discussion in the concluded Uruguay Round of
GATS negotiations and NAFTA negotiations. Maritime services are the subject
of continuing GATS negotiations. If maritime services were deemed to include
cabotage (vessel trade or marine transportation between two points within the
same country) and were included in any of these multi-national trade
agreements, the result would be to open the Jones Act trade, (i.e.,
transportation of maritime cargo between U.S. ports in which Maritrans and
other U.S. vessel owners operate) to foreign-flag vessels which would operate
at lower costs. Maritrans understands that cabotage will not be included in
the GATS and the NAFTA in the foreseeable future; however, the possibility
exists that cabotage could be included in the GATS, NAFTA or other
international trade agreement, in the future. In the meantime, Maritrans and
the maritime industry will continue to resist vigorously the inclusion of
cabotage in the GATS, NAFTA and any other international trade agreements.
The U.S. Administration recently announced support for a proposal to
export Alaskan crude oil on U.S. built and manned vessels. The proposal will
require action by the U.S. Congress before implementation. While Maritrans
does not believe that this step will materially affect the vessel capacity
competing against Maritrans in the Jones Act trades, it could have an adverse
impact on the current status of the Jones Act in the context of future
international trade developments.
Refined Product Pipelines. Existing refined product pipelines generally
are the lowest incremental cost method for the long-haul movement of
petroleum and refined petroleum products. Other than the Colonial Pipe-
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line system, which originates in Texas and terminates at New York Harbor, the
Plantation Pipeline, which originates in Louisiana and terminates in
Washington D.C., and smaller regional pipelines between Philadelphia and New
York, there are no pipelines carrying refined petroleum products to the major
storage and distribution facilities currently served by Maritrans. While the
Colonial Pipeline system reduces the amount of refined product transported
into the New York area by ship, it provides an origination point for
Maritrans' business of transporting such products from New York Harbor to New
England ports. Management believes that high capital costs, tariff regulation
and environmental considerations make it unlikely that a new refined product
pipeline system which would have a material adverse effect on Maritrans'
business will be built in its market areas in the foreseeable future. It is
possible, however, that, as noted above, new pipeline segments (including
pipeline segments that connect with existing pipeline systems) could be built
or that existing pipelines could be converted to carry refined petroleum
products, either of which could effectively compete with Maritrans in
particular locations.
Natural Gas Pipelines. In December 1991, a 370 mile natural gas pipeline
from the Canadian border to the northeastern United States markets was
completed. The operation of this pipeline increased the amount of natural gas
supplied to the northeastern United States, thus reducing the demand for
residual fuel for power generation. This ultimately reduced the demand for
marine transportation of residual fuel and other petroleum products to and
within the area negatively affecting Maritrans and other carriers active in
this trade. The continuation of this reduction will depend on the relative
prices between residual fuel and natural gas, including transportation costs,
in the future.
Imported Refined Petroleum Products. A significant factor affecting the
level of Maritrans' business operations is the level of refined petroleum
product imports, particularly in Florida and New England. Imported refined
petroleum products may be transported on foreign-flag vessels, which are
generally less costly to operate than U.S. flag vessels. To the extent that
there is an increase in the importation of refined petroleum products to any
of the markets served by Maritrans, there could be a decrease in the demand
for the transportation of refined products from United States refineries,
which would likely have an adverse impact upon Maritrans. One possible
outcome of the Clean Air Act could be the importing of more refined product
from outside the United States in order to avoid the expense of upgrading
United States refineries to comply with such Act. In this case, while there
would still be a need for marine petroleum transportation, the demand would
decrease, thereby possibly materially adversely affecting the coastwise
business of Maritrans and its competitors.
Delaware River Channel Deepening. Legislation has been approved by the
United States Congress which authorizes the U.S. Army Corps of Engineers to
deepen the channel of the Delaware River between the river's mouth and
Philadelphia from forty to forty-five feet late in the 1990's. If further
legislation appropriating the funds for this project should become law and
this project is implemented and used by vessels calling on the Delaware
Valley refineries, it would have a material adverse effect on Maritrans'
lightering business which currently transports crude oil which is off-loaded
from deeply laden tankers from the mouth of the Delaware Bay up the Delaware
River to the Delaware Valley refineries.
EMPLOYEES AND EMPLOYEE RELATIONS
At December 31, 1994, Maritrans and its subsidiaries employed a total of
488 persons. Of these employees, 81 are employed at the Philadelphia,
Pennsylvania headquarters of the Registrant or at the Philadelphia and Tampa
fleet centers, 382 are seagoing employees who work aboard the tugs and
barges, and 25 are employed by Maritrans' non-marine affiliates. Maritrans
and its predecessors have had collective bargaining agreements with the
Seafarers' International Union of North America, Atlantic, Gulf and Inland
District, AFL-CIO ("SIU"), and with American Maritime Officers ("AMO"),
formerly District 2 Marine Engineers Beneficial Association, Associated
Maritime Officers, AFL-CIO, for approximately 32 years. Approximately
one-half of the total number of seagoing employees employed are supervisors
and, hence, as part of management, are not represented by maritime unions.
The collective bargaining agreement with the SIU covers approximately 131
employees. The collective bargaining agreement with the AMO covers
approximately 29 employees. Each expires on May 31, 1996. The employees of
the subsidiaries of Maritrans Holdings Inc. are not covered by any collective
bargaining agreement.
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Management believes that the seagoing supervisory and non-supervisory
personnel contribute significantly to responsive customer service. Maritrans
maintains a policy of seeking to promote from within, where possible, and
generally seeks to draw from its union and non-union personnel to fill
supervisory and other management positions as vacancies occur.
Management believes that an operational audit program (performed by
Tidewater School of Navigation, Inc.) and an extensive training program is
essential to insure that its employees are knowledgeable and highly skilled
in the performance of their duties as well as in their preparedness for any
unforeseen emergency situations that may arise. Consequently, various
training sessions and additional skill improvement seminars are held
throughout the year on subjects including deck officer training, tankerman
training, substance abuse awareness, fire fighting, emergency response and
personal professional development. In 1991, Maritrans introduced its Quality
Improvement Program. All employees participate in quality training seminars
in addition to the skills improvement training mentioned above.
REGULATION
Marine Transportation -- General. The Interstate Commerce Act exempts from
economic regulation the water transportation of petroleum cargos in bulk.
Accordingly, Maritrans' transportation rates, which are negotiated with its
customers, are not subject to special rate regulation under the provisions of
such act or otherwise. The operation of tugboats and barges is subject to
regulation under various federal laws and international conventions, as
interpreted and implemented by the United States Coast Guard, as well as
certain state and local laws. Tugboats and barges are required to meet
construction and repair standards established by the American Bureau of
Shipping, a private organization, and/or the United States Coast Guard and to
meet operational and safety standards presently established by the United
States Coast Guard. Maritrans' seagoing supervisory personnel are licensed by
the United States Coast Guard. Seamen and tankermen are certificated by the
United States Coast Guard.
Jones Act. The Jones Act, a federal law, restricts maritime transportation
between United States points to vessels built and registered in the United
States and owned by United States citizens. The entities in the Maritrans
organizational structure engaged in maritime transportation between United
States points are subject to the provisions of the law. Therefore, it is the
responsibility of Maritrans to monitor ownership of these entities and take
any remedial action necessary to insure that no violation of the Jones Act
ownership restrictions occurs. In addition, the Jones Act requires that all
United States flag vessels be manned by United States citizens, which
significantly increases the labor and certain other operating costs of United
States flag vessel operations compared to foreign-flag vessel operations.
Foreign-flag seamen generally receive lower wages and benefits than those
received by United States citizen seamen. In addition, a significant number
of foreign governments subsidize, at least to some extent, the wages and/or
benefits received by the seamen of those nations. Furthermore, certain of
these foreign governments subsidize those nations' shipyards, resulting in
lower shipyard costs both for new vessels and repairs, than those paid by
United States-flag vessel owners such as Maritrans, to United States
shipyards. Finally, the United States Coast Guard and American Bureau of
Shipping maintain the most stringent regime of vessel inspection in the
world, which tends to result in higher regulatory compliance costs for United
States-flag operators than those paid by owners of vessels registered under
foreign flags of convenience. Because Maritrans transports petroleum and
petroleum products between United States ports, most of its business depends
upon the Jones Act remaining in effect. There have been various unsuccessful
attempts in the past by foreign governments and companies to gain access to
the Jones Act trade. Management expects that efforts of this type will
continue.
ENVIRONMENTAL MATTERS
Maritrans' operations present potential environmental risks, primarily
through the marine transportation or storage of petroleum. Maritrans is
committed to protecting the environment and complying with applicable
environmental laws and regulations. Maritrans, as well as its competitors, is
subject to regulation under federal, state and local environmental laws which
have the effect of increasing the costs and potential liabilities arising out
of its operations.
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Marine Storage Terminal Regulation. Maritrans marine terminal subsidiaries
are subject to various federal, state and local environmental laws and
regulations, particularly with respect to air quality, the handling of
materials removed from the tanks of vessels which are cleaned, and any
spillage of petroleum products on or adjoining marine terminal premises.
Management believes that this regulatory scheme will become progressively
stricter in the future, resulting in greater capital expenditures by
Maritrans for environmentally related equipment. Also, there are significant
fines and penalties for any violations of this scheme. Management intends to
reflect any such additional expenditures, to the extent they are able, in the
rates which are charged to customers from time to time for services.
Oil Pollution Legislation. Many of the states in which Maritrans does
business have enacted laws providing for strict, unlimited liability for
vessel owners in the event of an oil spill. In addition, certain states have
enacted or are considering legislation or regulations involving at least some
of the following provisions: tank-vessel-free zones, contingency planning,
state inspection of vessels, additional operating, maintenance and safety
requirements, and state financial responsibility requirements. As a result of
this legislation and regulation, Maritrans has curtailed its carriage of
persistent oils, primarily crude and #6 oil, to or through portions of
several of these states. Persistent oils are those which continue to exist
longer in the water when spilled, thus making them more difficult to clean
up.
In August 1990, OPA became law. OPA substantially changes the liability
exposure of owners and operators of vessels, oil terminals and pipelines from
that imposed under prior law. Under OPA, each responsible party for a vessel
or facility from which oil is discharged will be jointly, strictly and
severally liable for all oil spill containment and clean-up costs and certain
other damages arising from the discharge. These other damages are defined
broadly to include (i) natural resource damage (recoverable only by
government entities), (ii) real and personal property damage, (iii) net loss
of taxes, royalties, rents, fees and other lost revenues (recoverable only by
government entities), (iv) lost profits or impairment of earning capacity due
to property or natural resource damage, and (v) net cost of public services
necessitated by a spill response, such as protection from fire, safety or
health hazards.
The owner or operator of a vessel from which oil is discharged will be
liable under OPA unless it can be demonstrated that the spill was caused
solely by an act of God, an act of war, or the act or omission of a third
party unrelated by contract to the responsible party. Even if the spill is
caused solely by a third party, the owner or operator must pay all removal
cost and damage claims and then seek reimbursement from the third party or
the trust fund established under OPA.
OPA establishes a federal limit of liability of the greater of $1,200 per
gross ton or $10 million per tank vessel. A vessel owner's liability is not
limited, however, if the spill results from a violation of federal safety,
construction or operating regulations. In addition, OPA does not preclude
states from adopting their own liability laws. Numerous states in which
Maritrans operates have adopted legislation imposing unlimited strict
liability for vessel owners and operators. Management believes that the
liability provisions of OPA and similar state laws have greatly expanded
Maritrans' potential liability in the event of an oil spill, even where
Maritrans is not at fault.
OPA requires all vessels to maintain a certificate of financial
responsibility for oil pollution in an amount equal to the greater of $1,200
per gross ton per vessel, or $10 million per vessel in conformance with U.S.
Coast Guard regulations. Additional financial responsibility in the amount of
$300 per gross ton is required under U.S. Coast Guard regulations under the
Comprehensive Environmental Response Compensation and Liability Act
("CERCLA"), the federal Superfund law. The previous requirement was $150 per
gross ton per vessel, or $250,000, whichever is larger. Owners of more than
one tank vessel, such as Maritrans, however, are only required to demonstrate
financial responsibility in an amount equal to cover the vessel having the
greatest maximum liability (approximately $40 million in Maritrans' case).
Maritrans has acquired such certificates through filing required financial
information with the U.S. Coast Guard.
OPA requires all newly constructed petroleum tank vessels engaged in
marine transportation of oil and petroleum products in the U.S. to be
double-hulled and all such existing single-hulled vessels to be retrofitted
with double hulls or phased out of the industry beginning January 1, 1995, in
order to comply with new standards for such vessels. Because of the age and
size of Maritrans' individual barges, the first of its operating vessels will be
7
<PAGE>
required to be retired or retrofitted by January 1, 2003, and most of its large
ocean-going, single-hulled vessels will be similarly affected on January 1,
2005. Management believes that it would, for example, cost approximately $20
milion to build a 20,000 DWT double-hulled barge. The cost of retrofitting an
existing 20,000 DWT barge with a double hull may be somewhat less than the cost
of a new barge, but the retrofitting cost would depend upon a variety of
construction and engineering factors. Therefore, retrofitting may not be a
viable economic alternative to the purchase of a new double-hulled barge. The
prices of retrofitting and constructing new vessels may increase materially as a
result of increased demand for shipyard capacity arising from OPA. Also as a
result of this legislation, the expected lives of some of Maritrans' barges have
been shortened, thus forcing Maritrans to accelerate the depreciation of these
vessels. This change in depreciation calculation began in September 1990 and
caused an increase of Maritrans' annual depreciation expense by approximately
$1.4 million.
The double-hulled or double-bottomed tank barges currently owned by
Maritrans account for approximately 23 percent of its fleet capacity.
Maritrans understands that these vessels are grandfathered under the interim
final rule promulgated by the U.S. Coast Guard.
OPA further required all tank vessel operators to submit, by February 18,
1993, for federal approval, detailed vessel oil spill contingency plans
setting forth their capacity to respond to a worst case spill situation.
Maritrans filed its plans prior to that deadline. Several states have similar
contingency or response plan requirements. Because of the large number of
ports served by Maritrans, the cost of compliance may be substantial, and,
while Maritrans is presently in compliance, there is no assurance that
Maritrans will be able to remain in compliance with all the federal
requirements or those of one or more states.
OPA is expected to have a continuing adverse effect on the entire U.S. oil
and petroleum marine transportation industry, including Maritrans. The
effects on the industry could include, among others, (i) increased
requirements for capital expenditures, which the independent marine
transporters of petroleum may not be able to finance, to fund the cost of
double-hulled vessels, (ii) increased maintenance, training, insurance and
other operating costs, (iii) civil penalties and liability, (iv) decreased
operating revenues as a result of a further reduction of volumes transported
by vessels and (v) increased difficulty in obtaining sufficient insurance,
particularly oil pollution coverage. These effects could adversely affect
Maritrans' profitability and liquidity.
The following table sets forth Maritrans' quantifiable oil spill record
for the period January 1, 1990 through December 31, 1994:
<TABLE>
<CAPTION>
Gallons Spilled
No. of No. of No. of Per Million
Period Gals. Carried Spills Gals. Spilled Gals. Carried
---------------------- --------------- -------- --------------- ---------------
(000) (000)
<S> <C> <C> <C> <C>
1/1/1990 -- 12/31/1990 12,222,000 20 189.37 15.494
1/1/1991 -- 12/31/1991 10,710,000 18 1.28 .119
1/1/1992 -- 12/31/1992 10,272,000 8 .02 .002
1/1/1993 -- 12/31/1993* 10,433,000 4 .02 .002
1/1/1994 -- 12/31/1994 9,954,000 4 .07 .007
</TABLE>
------
* Results for 1993 exclude the product lost, mostly burned, in the collision
of Maritrans' barge, the OCEAN 255, with vessels owned by others off the
coast of Florida in August 1993. Management believes that Maritrans was not
at fault in this incident.
Maritrans believes that its spill ratio compares favorably with the other
independent, coastwise operators in the Jones Act trade.
Water Pollution Regulations. The Federal Water Pollution Control Act of
1972 ("FWPCA"), as amended by the Clean Water Act of 1977, imposes strict
prohibitions against the discharge of oil (and its derivatives) and hazardous
substances into navigable waters of the United States. FWPCA provides civil
and criminal penalties for any discharge of petroleum products in harmful
quantities and imposes substantial liability for the clean-up costs of
removing an oil spill. State laws for the control of water pollution also
provide varying civil and criminal penalties and clean-up cost liabilities in
the case of a release of petroleum or its derivatives into surface waters. In
8
<PAGE>
the course of its vessel operations, Maritrans engages contractors, in addition
to Maritank Philadelphia Inc., to remove and dispose of waste material,
including tank residue. In the event that any of such waste is deemed
"hazardous," as defined in FWPCA or the Resource Conservation and Recovery Act,
and is disposed of in violation of applicable law, Maritrans could be jointly
and severally liable with the disposal contractor for the clean-up costs and any
resulting damages. The United States Environmental Protection Agency ("EPA")
previously determined not to classify most common types of "used oil" as a
"hazardous waste," provided that certain recycling standards are met. While it
is unlikely that used oil will be classified as hazardous, the management of
used oil under EPA's proposed regulations will increase the cost of disposing of
or recycling used oil from Maritrans' vessels. Some states in which Maritrans
operates, however, have classified "used oil" as hazardous. Maritrans has found
it increasingly expensive to manage the wastes generated in its operations.
Air Pollution Regulations. The 1990 amendments to the Clean Air Act give
the EPA and the states the authority to regulate emissions of volatile
organic compounds ("VOCs") and any other air pollutant from tank vessels in
all ports served by Maritrans and storage terminals. Several states with
ports served by Maritrans already have established regulations to require the
installation of vapor recovery equipment on petroleum-carrying vessels to
reduce the emissions of VOCs. Compliance with these federal and state
regulations has required material capital expenditures for the retrofitting
of Maritrans' barges and has increased operating costs. Similarly, various
states require vapor recovery equipment at storage terminals for the loading
of petroleum into vessels and tank trucks. MPI and MMI are equipped with
vapor recovery capabilities for the loading of tank trucks. They do not
currently load petroleum into vessels and therefore have not acquired vapor
recovery capabilities for that activity. The EPA also has the authority to
regulate emissions from marine vessel engines; however, with the possible
exception of the use of low sulfur fuels, direct regulation of marine engine
emissions is not likely in the near future in ports served by Maritrans.
However, it is possible that the EPA and/or various state environmental
agencies ultimately may require that additional air pollution abatement
equipment be installed in tug boats, including those owned by Maritrans. Such
a requirement could result in a material expenditure by Maritrans, which
could have an adverse effect on Maritrans' profitability if it is not able to
recoup these costs through increased charter rates.
Port and Tanker Safety Act. The Port and Tanker Safety Act of 1978
("PTSA") requires certain oil-carrying tankships to be fitted with
segregated ballast tanks. PTSA requires self-propelled vessels to be
retrofitted to meet these standards. Barges are not generally affected by
such requirements. However, if the environmental standards of PTSA were to be
made applicable to the large barges operated by Maritrans, Maritrans would be
required to make significant capital expenditures to retrofit such barges,
and the cargo-carrying capacity of such barges would also be decreased. There
have been no recent regulatory efforts to apply the PTSA standards to large
barges such as those operated by Maritrans.
User Fees and Taxes. The Water Resources Development Act of 1986 permits
local non-federal entities to recover a portion of the costs of new port and
harbor improvements from vessel operators with vessels benefitting from such
improvements. Management does not believe that Maritrans' vessels currently
benefit from such improvements. However, there can be no assurance that such
entities will not seek to recover a portion of such costs from Maritrans.
Federal legislation has been enacted imposing user fees on vessel operators
such as Maritrans to help fund the United States Coast Guard's regulatory
activities. Other federal, state and local agencies or authorities could also
seek to impose additional user fees or taxes on vessel operators or their
vessels. The Coast Guard collects fees for vessel inspection and
documentation, licensing and tank vessel examinations. These fees have not
been material to Maritrans. There can be no assurance that additional user
fees, which could have a material adverse effect upon the financial condition
and results of operations of Maritrans, will not be imposed in the future.
ITEM 2. PROPERTIES
Vessels. The Registrant's subsidiaries owned, at December 31, 1994, a
fleet of 61 vessels, of which 35 are barges and 26 are tugboats. Three
additional tugs and one barge are chartered under long-term leases.
In December of 1994, Maritrans increased its double-hull and double-bottom
vessel capacity to over one million barrels by purchasing the MARITRANS 300,
an oceangoing, double-hulled petroleum tank barge with a capacity of
approximtely 300,000 barrels. After undergoing modifications, this vessel is
expected to be placed in service in the second quarter of 1995.
9
<PAGE>
The barge fleet consists of a variety of vessels falling within six
different barge classifications. The largest vessels in the fleet are the 14
superbarges ranging in capacity from 188,065 to 400,000 barrels. The oldest
vessel in that class is the OCEAN 250 which was constructed in 1970, while
the largest and most recently reconstructed vessel is the OCEAN 400, for
which modifications were completed as recently as 1990. For the most part,
however, the bulk of the superbarge fleet was constructed during the 1970's
and early 1980's.
The fleet's next ten largest barges range in capacity from 61,638 barrels
to 165,881 barrels and were constructed or substantially renovated between
1967 and 1981. The remainder of the barge fleet is comprised of three vessels
falling in the 50,000 barrel class, six vessels in the 30,000 barrel class
and one vessel in the small barge classification and two specially equipped
chemical barges. The majority of these vessels were constructed between 1961
and 1977.
The tugboat fleet is comprised of one 11,000 horsepower class vessel,
eleven 5,600 horsepower class vessels, three 4,000 horsepower class vessels,
five 3,200 horsepower class vessels, six 2,200 horsepower class vessels, two
pusher class vessels and one chartered 15,000 horsepower class vessel. The
year of construction or substantial renovation of these vessels ranges from
1962 to 1990 with the bulk of the tugboats having been constructed sometime
between 1967 and 1981.
Substantially all of the vessels in the fleet are subject to first
preferred ship mortgages to secure payment of the notes of the Operating
Partnership. These mortgages require the Operating Partnership to maintain
the vessels at a high standard and continue a life-extension program for
certain of its larger barges. At December 31, 1994 Maritrans is not in
violation of the Operating Partnership's mortgage covenants. At December 31,
1994 Maritrans owns five barges which were not in a state of operational
readiness. Most of these vessels were too small to achieve satisfactory
returns in current market conditions, or were purchased as non-operating
hulls for potential refurbishment in the event market conditions were to
improve sufficiently to merit additional expenditures. Maritrans does not
believe market conditions in 1995 will merit such refurbishments.
Marine Terminals. MPI owns 35 acres on the west bank of the Schuylkill
River in Philadelphia where twelve storage tanks with a total capacity of
1,040,000 barrels, truck loading racks, office space and related equipment
used in MPI's marine terminal and tank cleaning operations are located. In
early 1993, MMI acquired 25 acres on the Wicomico River in Salisbury,
Maryland where fourteen storage tanks with a total capacity of 170,000
barrels, truck loading racks, office space and related equipment used in
MMI's marine terminal operations are located.
Other Real Property. The Registrant's operations are headquartered in
Philadelphia, Pennsylvania, where it leases office space, expiring in 1998.
Eastern fleet operations are located on the west bank of the Schuylkill River
in Philadelphia, Pennsylvania where the Operating Partnership owns
approximately six acres of improved land. In addition, it also leases a
bulkhead of approximately 430 feet from the federal government for purposes
of mooring vessels adjacent to the owned land. This lease was renewed in 1993
and expires in 1998. The Inland Division leases space from MPI. In the
Philadelphia area, the Operating Partnership has several short term (one year
or less) leases for nearby pier space for the purpose of mooring vessels and
warehouse space for the purpose of storage and shop facilities. The Operating
Partnership also leases four acres of Port Authority land in Tampa, Florida
for use as its Gulf Division fleet center, which expires in 2004, with three
renewal options of ten years each and a limited amount of office space in
Wilmington, Delaware for itself and its affiliated entities. The Operating
Partnership also has an office space agreement in Houston, Texas for its
distribution services business.
ITEM 3. LEGAL PROCEEDINGS
Maritrans is a party to routine, marine-related claims, lawsuits and labor
arbitrations arising in the ordinary course of its business. The claims made
in connection with Maritrans' marine operations are covered by marine
insurance, subject to applicable policy deductibles which are not material as
to any type of insurance coverage. Management believes, based on its current
knowledge, that such lawsuits and claims, even if the outcomes were to be
adverse, would not have a material adverse effect on Maritrans' financial
condition.
In connection with the sale of Main Iron Works, Inc. ("MIW"), Maritrans'
predecessor agreed to reimburse MIW for certain ongoing workmen's
compensation claims arising prior to the sale of MIW, and retained an
assignment of the shipyard's rights against its former workmen's compensation
insurance carrier, which has been in liquidation proceedings. Due to the size
10
<PAGE>
and complexity of the liquidation proceeding, it is unlikely that this matter
will be resolved for several years. Maritrans assumed its predecessor's
reimbursement obligations to MIW and obtained an assignment of the predecessor's
rights against the workmen's compensation insurance carrier. As a result of this
assignment, Maritrans has received to date $0.3 million in reimbursement of
payments made. Maritrans' predecessor originally accrued a liability of $1.3
million for claim payments pursuant to such reimbursement agreement with MIW.
Management believes, based on its current knowledge, that such accrual will be
adequate. However, there is a possibility that future claims could exceed such
amount. Management believes, based on its current knowledge, that the ultimate
resolution of these claims, even if in excess of the amount accrued, would not
have a material adverse effect on Maritrans' financial condition.
Maritrans' has been sued by 20 individuals, alleging unspecified damages
for exposure to asbestos and in at least 12 such cases for exposure to
tobacco smoke. Although Maritrans believes these claims are without merit, it
is impossible at this time to express a definitive opinion on the final
outcome of any such suit. Management believes that any liability would not
have a material adverse effect as it would be adequately covered by
applicable insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security holders,
through the solicitation of proxies or otherwise, during the last quarter of
the year ended December 31, 1994.
11
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information and Holders
------------------------------
Maritrans Inc. Common Shares (and prior to April 1, 1993, Maritrans
Partners L.P. Depositary Units) trade on the New York Stock Exchange under
the symbol "TUG." The following table sets forth, for the periods indicated,
the high and low sales prices per share/unit as reported by the New York
Stock Exchange.
QUARTERS ENDING IN 1993: HIGH LOW
------------------------ --------- ---------
March 31, 1993 $4.125 $2.500
June 30, 1993 4.250 3.375
September 30, 1993 4.250 3.250
December 31, 1993 4.250 3.625
QUARTERS ENDING IN 1994: HIGH LOW
------------------------ --------- ---------
March 31, 1994 $5.500 $4.000
June 30, 1994 5.125 4.375
September 30, 1994 5.375 4.375
December 31, 1994 6.125 5.000
As of January 31, 1995, the Registrant had 12,529,628 Common Shares
outstanding and approximately 1,157 shareholders of record.
Dividends
---------
For the year ended December 31, 1994, Maritrans Inc. paid the following
cash dividends to stockholders:
PAYMENTS IN 1994: PER SHARE
------------------ ---------
December 12, 1994 $.02
For the year ended December 31, 1993, Maritrans Inc. paid no dividends to
stockholders.
While dividend policy is determined at the discretion of the Board of
Directors of Maritrans Inc., management believes that it is likely Maritrans
will pay quarterly cash dividends during 1995.
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA ($000)
<TABLE>
<CAPTION>
MARITRANS INC.
------------------------------------------------------------------
JANUARY 1 TO DECEMBER 31
1994 1993 1992 1991 1990
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues .............................. $124,846 $ 132,539 $133,051 $146,560 $152,368
Operating income before depreciation
and amortization ................... 34,250 24,509 25,576 23,394 31,725
Depreciation and amortization ......... 15,797 15,868 15,578 15,962 13,747
Operating income (excludes interest
expense) ........................... 18,453 8,641 9,998 7,432 17,978
Interest expense, net ................. 9,934 10,373 10,958 10,890 10,299
Income (loss) before income taxes and
extraordinary item ................. 10,355 5,186 3,419 (1,576) 10,031
Provision for income taxes ............ 3,823 16,975(1) -- -- --
Extraordinary item .................... -- -- -- -- 1,784
Net income (loss) ..................... 6,532 (11,789)(1) 3,419 (1,576) 11,815
CONSOLIDATED BALANCE SHEET DATA (at period end):
Total assets .......................... $257,609 $ 253,038 $251,344 $258,957 $258,481
Long-term debt ........................ 113,008 110,556 116,866 120,423 114,000
Partnership equity .................... -- -- 86,571 90,339 106,290
Stockholders' equity .................. 81,173 74,874 -- -- --
</TABLE>
------
(1) Maritrans Inc., the successor to Maritrans Partners L.P. effective April
1, 1993, is subject to income taxation. See notes 1 and 4 to Financial
Statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of Maritrans Inc. (the "Corporation"), and, together
with its subsidiaries and Maritrans Partners L.P. (the "Partnership"), herein
called "Maritrans."
OVERVIEW
Historically, Maritrans has served the petroleum and petroleum product
distribution industry by using tugs and barges to provide marine
transportation services along the East and Gulf Coasts of the United States.
Since 1991, Maritrans has been broadening its participation in the industry
it serves by adding marine terminal facilities.
In June 1991, Maritrans purchased a one-million barrel, deepwater marine
terminal located on the Schuykill River in Philadelphia. This facility
provides terminalling and vessel-cleaning services. The facility was
purchased for $12 million, mainly with the proceeds of a bank loan. In 1992,
more than $2 million was spent to increase vessel-cleaning capability.
In February 1993, Maritrans purchased adjoining terminals in Salisbury,
Maryland, to provide marine terminalling services. The facilities, which have
a storage capacity of 170,000 barrels, were purchased for less than $2
million. Maritrans now operates the merged facilities as a single terminal
and has distribution services agreements with several oil companies.
Maritrans increased its vessel capacity in 1990, when it placed its
largest barge, the OCEAN 400, in service. This vessel is an oceangoing,
double-hulled petroleum tank barge with a capacity of approximately 400,000
barrels. In 1993, Maritrans reduced owned capacity, disposing of vessels
which, due to their sizes and operating characteristics, Maritrans considered
13
<PAGE>
excess to its long-term business needs. In addition, a barge involved in a
collision off the coast of Florida in August 1993 was declared a constructive
total loss. Claims related to this incident have been, and are expected to be,
covered by insurance.
During most of 1993, Maritrans had one or more large barges out of service
for improvements in vessel performance. In December 1994, Maritrans increased
its double-hull and double-bottom vessel capacity to over one million barrels
by purchasing the MARITRANS 300, an oceangoing, double-hulled petroleum tank
barge with a capacity of approximately 300,000 barrels. After undergoing
modifications, this vessel is expected to be placed in service in the second
quarter of 1995.
Between 1990 and 1994, Maritrans transported at least 237 million barrels
annually. The high was 291 barrels in 1990, and the low was 237 million
barrels in 1994. Many factors affect the number of barrels transported,
including average trip length, U.S. oil consumption (particularly in Florida
and the northeastern U.S.), oil company sourcing decisions, and fleet size.
Overall U.S. oil consumption during 1990-1994 fluctuated between 16.7
thousand and 17.6 thousand barrels a day. Excluding the MARITRANS 300, which
had not yet been placed in service at year-end 1994, the operating fleet
owned by Maritrans was approximately 17 percent smaller in barrel capacity
than it had been at year-end 1990.
Over the last several years, Maritrans has been taking steps to become
more customer-oriented and more competitive. These steps have included
measures to increase responsiveness to customers, reduce the risk of oil
spills and lower costs. A corporate streamlining announced in the fourth
quarter of 1993 cut costs by approximately $5 million in 1994, as forecasted
by management when the streamlining was announced. The streamlining resulted
in a $2 million charge in the fourth quarter of 1993. These efforts, along
with a significant decline in the cost of chartering vessels from others,
produced a material improvement in operating income in 1994.
Factors that will affect future results of Maritrans include domestic oil
consumption, particularly in Florida and the northeastern U.S., environmental
laws and regulations, oil companies' operating and sourcing decisions,
competition, labor and training costs and liability insurance costs.
Maritrans' recent broadening of its participation in the industry it serves
through the addition of marine teminals will also affect results.
LEGISLATION
The enactment of the Oil Pollution Act of 1990 ("OPA") significantly
increased the liability exposure of marine transporters of petroleum in the
event of an oil spill. In addition, most of the states in which Maritrans
operates have enacted legislation increasing the liability for oil spills in
their waters; the remaining states may enact such legislation. Maritrans
maintains oil pollution liability insurance of $700 million on its vessels.
This is generally the maximum amount of oil spill liability insurance carried
by marine transporters of petroleum. There can be no assurance that such
insurance will be adequate to cover potential liabilities in the event of a
catastrophic spill, that additional premium costs will be recoverable through
increased rates, or that such insurance will continue to be available in
satisfactory amounts.
Moreover, this legislation has increased other operating costs as
Maritrans has taken steps to minimize the risk of spills. Among such costs
are those for additional training, safety and contingency programs; these
expenses have not yet been fully recovered through increased rates.
Additionally, management believes that the legislation has effectively
reduced the total volume of waterborne petroleum transportation as shippers
of petroleum have tried to limit their exposure to OPA. This legislation has
had a material adverse effect on Maritrans' operations, financial performance
and expectations.
OPA is expected to continue having negative effects on the entire U.S. oil
and marine petroleum transportation industry, including Maritrans. These
effects could include: (i) increased capital expenditures to cover the cost
of double-hulled vessels -- expenditures that the independent marine
transporters of petroleum may not be able to finance, (ii) continued
increased maintenance, training, insurance and other operating costs, (iii)
increased liability and exposure to civil penalties, (iv) decreased operating
revenues as a result of further reductions in volumes transported on vessels
and (v) increased difficulty in obtaining sufficient insurance, particularly
oil pollution coverage. These effects could adversely affect Maritrans'
profitability and liquidity.
OPA will require the retirement or retrofitting of most of Maritrans'
existing barges. The first of the affected barges will have to be retired or
retrofitted by 2003. However, most of Maritrans' large oceangoing,
single-hulled barges will not be affected until 2005. Some of Maritrans' barges
14
<PAGE>
are not scheduled for retirement until 2015. A small number of barges may be
treated as meeting the double-hull requirements and, therefore, may be allowed
to continue operating without modification. If Maritrans were to rebuild its
entire barge capacity with double hulls, the estimated cost would be
approximately $500 million. This estimate could be higher as shipyard costs
increase.
An investment banking firm was retained in 1991 to assist in evaluating
Maritrans' financial strategies and structure in light of strategic
considerations at that time. In April 1992, the Board of Directors of the
managing general partner of the Partnership (a master limited partnership)
decided to seek unitholder approval to convert from a master limited
partnership to a corporation. On April 1, 1993, after a vote of the
unitholders, the Partnership was converted to Maritrans Inc., a corporation.
RESULTS OF OPERATIONS
Year Ended December 31, 1994 Compared with Year Ended December 31, 1993
Revenues for 1994 were $124.8 million, a $7.7 million (5.8 percent)
decline from 1993's $132.5 million. This decline accompanied a 4.5 percent
drop in the number of barrels transported -- to 237.1 million from 248.4
million in 1993. Maritrans operated a smaller fleet in 1994; however, the
fleet was more profitable in 1994 than in 1993. Revenue from sources other
than marine transportation -- primarily terminalling operations -- increased
to 5.5 percent of total revenue in 1994 from 4.9 percent in 1993.
Operating expenses decreased $17.5 million (14.1 percent) to $106.4
million in 1994 from $123.9 million in 1993. Charter hire expense (the cost
of utilizing vessels chartered from others) decreased by $5.5 million as a
result of a decline in the amount of time Maritrans vessels were out of
service for performance improvements. Such improvements were substantially
completed in 1993. In addition, the corporate streamlining measures begun in
the fourth quarter of 1993 at a cost of $2 million produced savings of
approximately $5 million in 1994. Fuel expense decreased by $1.9 million due
to a decline in fuel cost per gallon and the number of gallons consumed.
Lower insurance and maintenance expenses also contributed to the overall
decline in operating expenses for 1994.
Other income in 1994 was primarily interest income, whereas in 1993 other
income was primarily gains on the sale and liquidation of vessels.
Net income for 1994 was $6.5 million compared to a net loss in 1993 of
$11.8 million. The improvement in net income was primarily due to two
factors: (i) the impact on 1993 net income of the deferred tax provision
recorded in that year, as discussed below in "Year Ended December 31, 1993
Compared With Year Ended December 31, 1992" and (ii) the decline in operating
expenses in 1994. Although this decline in operating expenses was partially
offset by the decrease in revenues, it contributed to significant improvement
in operating income in 1994, which was more than two times the operating
income of 1993.
Year Ended December 31, 1993 Compared with Year Ended December 31, 1992
Revenues of $132.5 million for 1993 decreased by $0.6 million, or less
than one percent, from $133.1 million for 1992. Barrels of cargo transported
increased by 3.8 million barrels, from 244.6 million to 248.4 million. Severe
price competition for oil transportation services has existed in the markets
served by Maritrans in recent years, and is expected to continue. In 1993,
more barrels were transported shorter distances, lowering the fleet's average
revenue per barrel. Revenue from sources other than marine transportation
increased from 2.8 percent of total revenue in 1992 to 4.9 percent in 1993,
due to additional terminalling operations, contingency management activities,
and other services supplied to third-party vessel owners.
Operating expenses of $123.9 million for 1993, increased by $0.8 million,
or less than one percent, from operating expenses of $123.1 million for 1992.
Lower vessel activity levels, due in part to time out of service for vessel
improvements, and improvements in maintenance processes have decreased
operation and maintenance expense levels. During most of 1993, Maritrans
utilized vessels chartered from others while one or more of its large barges
were out of service for vessel performance improvements and maintenance. Crew
costs were lower as a result of lower activity levels, including shipyarding
periods, and the previously described disposal of equipment throughout the
year. Fuel expense decreased due to a decline in price per gallon and fewer
gallons consumed. General and administrative costs decreased from the comparable
15
<PAGE>
prior period when general and administrative costs included the early
termination of a lease for office space and costs related to the transaction to
convert from partnership to corporate form. In 1993, general and administrative
costs and operation expense each included a charge of $1 million (for a total of
$2 million) for corporate streamlining costs, most of which related to severance
costs and other continuation benefits for terminating and retiring employees. A
charge of $0.6 million was recorded in 1992 for workforce reduction related
costs.
In 1993, Maritrans recorded $5.9 million in gains on the sales and
liquidation of fixed assets as part of other income. In 1992, $3 million was
recorded in other income as a result of a settlement of outstanding
litigation against the Partnership's former law firm and a partner of that
firm.
The adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," caused the Partnership to recognize a net
deferred income tax provision of $16.6 million in the first quarter of 1993.
The adoption of this accounting rule was prescribed by the conversion of the
Partnership to corporate status, which occurred April 1, 1993.
The net loss for 1993 was $11.8 million as compared with net income of
$3.4 million for 1992. The loss was the result of the previously noted
provision of $16.6 million for income taxes. Income before income taxes for
the period increased to $5.2 million from $3.4 million in the comparable
period in 1992. While the change in operating income reflected the small
decline in revenues and small increase in operating expenses, the most
significant factors affecting income before income taxes were the gains on
sales/liquidation of vessels in 1993 and the settlement receipts from
litigation in 1992.
LIQUIDITY AND CAPITAL RESOURCES
In 1994, funds provided by operating activities were sufficient to fully
meet debt service obligations and loan agreement restrictions (including $6.5
million in required long-term debt repayments) and allowed Maritrans to pay a
dividend of $.02 per common share in the fourth quarter. Proceeds from the
issuance of long-term debt were used to purchase an oceangoing, double-hulled
petroleum tank barge with a capacity of 300,000 barrels.
Maritrans believes that in 1995, funds provided by operating activities,
augmented by financing transactions and investing activities, will be
sufficient to finance operations, anticipated capital expenditures, lease
payments and required debt repayments. Dividend payments are expected to
continue quarterly in 1995.
Maritrans believes capital expenditures in 1995 for improvements to its
current fleet of vessels and existing marine terminals will be approximately
$11 million. However, Maritrans will continue to evaluate potential purchases
of marine storage terminals and other investments consistent with its
long-term strategic interests. It will also evaluate the potential sources of
funds for such investments. No material commitments existed at December 31,
1994, for capital expenditures.
WORKING CAPITAL AND OTHER BALANCE SHEET CHANGES
Working capital increased $13.6 million from December 31, 1993 to December
31, 1994. Current assets increased $9.8 million during the same period. The
improvement was due primarily to the increases in cash and investments
held-to-maturity, partially offset by the decreases in all other current
assets. The decrease in trade receivables was due in part to the decline in
revenues and improved cash-collection efforts. Payments received from
insurance carriers for claims submitted caused the decline in other
receivables. Current liabilities decreased $3.8 million. The ratio of current
assets to current liabilities increased to 2.56 at December 31, 1994 from
1.94 at December 31, 1993.
DEBT OBLIGATIONS AND BORROWING FACILITY
At December 31, 1994, Maritrans had $120.7 million in total outstanding
debt, secured by mortgages on substantially all of the fixed assets of the
subsidiaries of the Corporation. The current portion of this debt at December
31, 1994, was $7.7 million. Maritrans has a $10 million working capital
facility, secured by its marine receivables and inventories, which expires
June 30, 1995 and which it expects to renew. This facility was not used in
1994.
16
<PAGE>
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTAL DATA
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
Maritrans Inc.
We have audited the accompanying consolidated balance sheets of Maritrans
Inc. as of December 31, 1994 and 1993, and the related consolidated
statements of income and cash flows for each of the three years in the period
ended December 31, 1994. Our audits also included the financial statement
schedule listed in the Index at Item 14(A). These financial statements and
schedule are the responsibility of the management of Maritrans Inc. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Maritrans Inc.
at December 31, 1994 and 1993, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 20, 1995
17
<PAGE>
MARITRANS INC.
CONSOLIDATED BALANCE SHEETS
($000)
<TABLE>
<CAPTION>
December 31,
-----------------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 33,824 $ 22,422
Investments held-to-maturity ..................................... 8,000 --
Trade accounts receivable (net of allowance for doubtful accounts
of $453 and $605, respectively) ................................ 11,974 14,094
Other accounts receivable ........................................ 6,833 9,748
Inventories ...................................................... 3,669 4,968
Deferred income tax benefit ...................................... 1,181 3,396
Prepaid expenses ................................................. 4,970 6,061
-------- ---------
Total current assets ........................................ 70,451 60,689
Vessels terminals and equipment ................................... 270,553 262,176
Less accumulated depreciation .................................... 91,761 78,966
-------- ---------
Net vessels terminals and equipment ......................... 178,792 183,210
Other ............................................................. 8,366 9,139
-------- ---------
Total assets ................................................ $257,609 $253,038
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year ......................................... $ 7,654 $ 6,311
Trade accounts payable ........................................... 1,733 3,492
Accrued interest ................................................. 2,298 2,382
Accrued shipyard costs ........................................... 5,550 6,562
Accrued wages and benefits ....................................... 5,928 5,649
Other accrued liabilities ........................................ 4,343 6,954
-------- --------
Total current liabilities ................................... 27,506 31,350
Long-term debt .................................................... 113,008 110,556
Deferred shipyard costs ........................................... 8,325 9,843
Other liabilities ................................................. 5,161 5,353
Deferred income taxes ............................................. 22,436 21,062
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000 shares; none
issued ......................................................... -- --
Common stock, $.01 par value, authorized 30,000,000 shares;
issued: 1994 -- 12,526,692 shares, 1993 -- 12,523,000 shares ... 125 125
Capital in excess of par value ................................... 74,332 74,315
Retained earnings ................................................ 6,716 434
-------- --------
Total stockholders' equity .................................. 81,173 74,874
-------- --------
Total liabilities and stockholders' equity .................. $257,609 $253,038
======== ========
</TABLE>
See accompanying notes.
18
<PAGE>
MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
($000 EXCEPT PER SHARE/UNIT AMOUNTS)
<TABLE>
<CAPTION>
January 1 to December 31,
-------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues .............................................. $ 124,846 $ 132,539 $ 133,051
Costs and expenses:
Operation expense .................................... 62,488 75,196 70,485
Maintenance expense .................................. 20,355 21,062 23,662
General and administrative ........................... 7,753 11,772 13,328
Depreciation and amortization ........................ 15,797 15,868 15,578
---------- ----------- -----------
106,393 123,898 123,053
---------- ----------- -----------
Operating income ...................................... 18,453 8,641 9,998
Interest expense ...................................... (9,934) (10,373) (10,958)
Other income, net ..................................... 1,836 6,918 4,379
---------- ----------- -----------
Income before income taxes ............................ 10,355 5,186 3,419
Income tax provision ................................. 3,823 407 --
Deferred income taxes-resulting from Conversion ...... -- 16,568 --
---------- ----------- -----------
Net income (loss) ..................................... $ 6,532 $ (11,789) $ 3,419
========== =========== ===========
Net income allocated to General Partners .............. n/a n/a $ 69
Net income allocated to Limited Partners .............. n/a n/a 3,350
Net income allocated to Limited Partners per Limited
Partner unit ......................................... n/a n/a .27
Pro forma loss per share .............................. n/a $ (.94) n/a
Earnings per share .................................... $ 0.52 n/a n/a
Average common shares/Limited Partner units outstanding 12,524,861 12,523,000 12,250,000
</TABLE>
See accompanying notes.
19
<PAGE>
MARITRANS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
($000)
<TABLE>
<CAPTION>
January 1 to December 31,
-------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................... $ 6,532 $(11,789) $ 3,419
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ..................... 15,797 15,868 15,578
Deferred income taxes ............................. 3,589 16,975 --
Changes in receivables, inventories and prepaid
expenses ........................................ 7,425 (11,314) 900
Changes in current liabilities other than debt .... (5,187) 686 (178)
Non-current changes, net .......................... (1,316) (982) 4,531
(Gain) loss on sale of equipment .................. 249 (5,910) (694)
-------- -------- --------
Total adjustments to net income (loss) ............... 20,557 15,323 20,137
-------- -------- --------
Net cash provided by (used in) operating activities . 27,089 3,534 23,556
Cash flows from investing activities: ................
Acquisition of investments held-to-maturity ......... (8,000) -- --
Cash proceeds from sale of marine vessels and
equipment ......................................... 2,985 19,287 1,803
Purchase of marine vessels and equipment ............ (14,217) (17,541) (10,120)
-------- -------- --------
Net cash provided by (used in) investing activities (19,232) 1,746 (8,317)
Cash flows from financing activities: ................
Proceeds from issuance of long-term debt ............ 10,250 -- 2,000
Payment of long-term debt ........................... (6,455) (6,032) (3,100)
Proceeds from issuance of short-term debt ........... -- -- 5,500
Payment of short-term debt .......................... -- -- (12,500)
Dividends/distributions declared and paid ........... (250) -- (7,187)
-------- -------- --------
Net cash provided by (used in) financing activities 3,545 (6,032) (15,287)
Net increase (decrease) in cash and cash equivalents . 11,402 (752) (48)
Cash and cash equivalents at beginning of period ..... 22,422 23,174 23,222
-------- -------- --------
Cash and cash equivalents at end of period ........... $ 33,824 $ 22,422 $ 23,174
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Interest paid ........................................ $ 9,917 $ 10,355 $ 10,888
Income taxes paid .................................... $ 250 $ 300 $ --
</TABLE>
See accompanying notes.
20
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Maritrans Inc. owns Maritrans Operating Partners L.P. (the "Operating
Partnership") and Maritrans Holdings Inc. (collectively, the "Company").
These subsidiaries, directly and indirectly, own and operate tugs and barges
principally used in the transportation of oil and related products, and own
and operate petroleum storage facilities.
On March 31, 1993, the limited partners of Maritrans Partners L.P. (the
"Partnership") voted on a proposal to convert the Partnership to corporate
form (the "Conversion"). The proposal was approved, and on April 1, 1993,
Maritrans Inc., then a newly-formed Delaware corporation (the "Corporation")
succeeded to all assets and liabilities of the Partnership. The holders of
general and limited partnership interests in the Partnership and the
Operating Partnership were issued shares of common stock, par value $.01 per
share ("Common Stock"), of the Corporation, representing substantially the
same percentage equity interest in the Corporation as they had in the
Partnership, directly or indirectly, in exchange for their partnership
interest. Each previously held unit of limited partnership interest in the
Partnership was exchanged for one share of Common Stock of the Corporation.
For financial accounting purposes, the conversion to corporate form has been
treated as a reorganization of affiliated entities, with the assets and
liabilities recorded at their historical costs. In addition, the Partnership
recognized a net deferred income tax liability for temporary differences in
accordance with Statement of Financial Accounting Standard ("FAS") No. 109,
Accounting for Income Taxes, which resulted in a one-time charge to earnings
of $16.6 million in the first quarter of 1993.
Principles of Consolidation
The consolidated financial statements include the accounts of Maritrans
Inc. and subsidiaries, all of which are wholly owned. Prior to the
Conversion, the financial statements included the accounts of the
Partnership, the Operating Partnership and subsidiaries. All significant
intercompany transactions and accounts have been eliminated in consolidation.
Marine Vessels and Equipment
Equipment, which is carried at cost, is depreciated using the
straight-line method. Vessels are depreciated over a period of up to 30
years. Certain electronic equipment is depreciated over periods of 7 to 10
years. Petroleum storage tanks are depreciated over periods of up to 25
years. Other equipment is depreciated over periods ranging from 3 to 20
years. Gains or losses on dispositions of fixed assets are included in other
income in the accompanying consolidated statements of income.
The Oil Pollution Act, passed in 1990, requires all newly constructed
petroleum tank vessels engaged in marine transportation of oil and petroleum
products in the U.S. to be double hulled and all such existing single- hulled
vessels to be retrofitted with double hulls or phased out of the industry
beginning January 1, 1995. Because of the age and size of Maritrans'
individual barges, the first of its operating vessels will be required to be
retired or retrofitted by January 2003, and most of its large oceangoing,
single-hulled vessels will be similarly affected on January 1, 2005. During
1990, the depreciable lives of certain marine vessels and equipment were
revised to reflect more closely expected remaining lives.
Maintenance and Repairs
Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. The current portion of this estimated cost is included in accrued
shipyard costs while the portion of this estimated cost not expected to be
incurred within one year is classified as long-term. Both the provisions for
major periodic overhauls as well as non-overhaul maintenance and repairs are
expensed as incurred.
21
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - (Continued)
Inventories
Inventories, consisting of materials, supplies and fuel, are carried at
specific cost which does not exceed net realizable value.
Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and the amount used for income tax purposes.
Significant Customers
During the years ended December 31, 1994, 1993 and 1992, the Company
derived revenues of $18,483,000, $22,232,000 and $24,169,000 from one
customer aggregating 15 percent, 17 percent and 18 percent of total revenues,
respectively. Also during 1994, 1993 and 1992, the Company derived revenues
of $13,581,000, $19,720,000 and $19,855,000 from another customer aggregating
11 percent, 15 percent and 15 percent of total revenues. In addition, during
1994 two other customers accounted for $16,845,000 and $12,957,000 of
revenues aggregating 13 percent and 10 percent, respectively. Credit is
extended to various companies in the petroleum industry in the normal course
of business. This concentration of credit risk within this industry may be
affected by changes in economic or other conditions and may, accordingly,
affect overall credit risk of the Company.
Related Parties
The Company obtained protection and indemnity insurance coverage from a
mutual insurance association, whose chairman is also the chairman of
Maritrans Inc. The related insurance expense was $2,501,000, $2,472,000 and
$3,365,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
Earnings Per Common Share/Limited Partner Unit
Earnings per common share/Limited Partner unit are based on the average
number of common shares or Limited Partner units outstanding. The potential
effect of outstanding stock options is not dilutive.
Adoption of Authoritative Statements
Effective January 1, 1994, the Company adopted FAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities. FAS 115 established the
accounting and reporting requirements for investments in equity securities
that have readily determinable fair values and for all investments in debt
securities. All affected investment securities must be classified as either
held-to-maturity, trading or available-for-sale. Held-to-maturity securities
are carried at amortized cost. Trading securities are carried at fair value
with unrealized holding gains and losses reported in the income statement.
Available-for-sale securities are carried at fair value with unrealized
holding gains and losses reported as a component of stockholders' equity.
Investments held-to-maturity, which consist of debt securities, are
carried at cost. The Company has both the ability and positive intent to hold
these securities until maturity. Held-to-maturity securities had a carrying
value of $8 million at December 31, 1994, which approximates market value.
The securities all mature within one year.
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at December 31, 1994, and 1993 consisted of cash
and commercial paper, the carrying value of which approximates fair value. For
purposes of the consolidated financial statements, short- term highly liquid
debt instruments with maturities of three months or less are considered to be
cash equivalents.
22
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
3. PARTNERSHIP AND STOCKHOLDERS' EQUITY
Changes in partnership equity prior to the Conversion are summarized
below:
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- --------
($000 except per unit amounts)
<S> <C> <C> <C>
Balance at January 1, 1992 ....................... $(304) $ 90,643 $ 90,339
Net income, January 1, 1992 to December 31, 1992 . 69 3,350 3,419
Distributions declared and paid ($0.575 per
Limited Partner unit) ........................... (144) (7,043) (7,187)
----- -------- --------
Balance at December 31, 1992 ..................... (379) 86,950 86,571
Net loss, January 1, 1993 to March 31, 1993 ...... (244) (11,979) (12,223)
----- -------- --------
Balance at March 31, 1993 ........................ $(623) $ 74,971 $ 74,348
===== ======== ========
</TABLE>
Consolidated income statement data for the period January 1 to March 31,
1993 (prior to the Conversion) and for the period April 1 to December 31,
1993 (after the Conversion) is as follows:
<TABLE>
<CAPTION>
Maritrans Partners L.P. Maritrans Inc.
January 1, 1993 April 1, 1993 to
to March 31, 1993 December 31, 1993
----------------------- ------------------
($000)
<S> <C> <C>
Revenues ........................................ $ 32,217 $100,322
Costs and expenses: .............................
Operation expense ............................ 17,968 57,228
Maintenance expense .......................... 4,964 16,098
General and administrative ................... 2,609 9,163
Depreciation and amortization ................ 3,954 11,914
--------- ---------
29,495 94,403
--------- ---------
Operating income ................................ 2,722 5,919
Interest expense ................................ (2,672) (7,701)
Other income, net ............................... 4,295 2,623
--------- ---------
Income before income taxes ...................... 4,345 841
Income tax provision .......................... -- 407
Deferred income taxes-resulting from Conversion 16,568 --
--------- ---------
Net income (loss) ............................... $ (12,223) $ 434
========= =========
</TABLE>
23
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
3. PARTNERSHIP AND STOCKHOLDERS' EQUITY - (Continued)
Changes in stockholders' equity since the Conversion are summarized below:
<TABLE>
<CAPTION>
Common Capital in
Stock, $.01 excess of Retained
Par Value Par Value Earnings Total
------------- ------------- ---------- ---------
($000)
<S> <C> <C> <C> <C>
April 1, 1993, Conversion to Corporate
Form ................................... $125 $74,315(1) -- $74,440
Net income, April 1, 1993 to December 31,
1993 ................................... -- -- $ 434 434
----- ------- -------- -------
Balance at December 31, 1993 ............ 125 74,315 434 74,874
Net income January 1, 1994 to December
31, 1994 ............................... -- -- 6,532 6,532
Dividends declared and paid ($0.02 per
share of Common Stock) ................. -- -- (250) (250)
Directors compensation .................. 17 -- 17
----- ------- ------- -------
Balance at December 31, 1994 ............ $125 $74,332 $6,716 $81,173
===== ======= ======= =======
</TABLE>
------
(1) Includes $92,000 related to grant of shares.
Maritrans Inc. established a stock incentive plan (the "Plan") concurrent
with the Conversion whereby key employees may be granted stock, stock options
and, in certain cases receive cash under the Plan. Any outstanding options
granted under the Plan are exercisable at a price not less than market value
on the date of grant. There are 1,250,000 shares of Common Stock authorized
for issuance under the Plan, of which 23,000 shares were issued in 1993.
Compensation expense equal to the fair market value on the date of the grant
is included in general and administrative expense in the consolidated
statement of income. At December 31, 1994 and 1993, 654,491 and 803,597
remaining shares were reserved for grant.
Information on stock options for 1994 follows:
Exercise Number of
Price Shares
--------- ---------
Outstanding at beginning of year $4.00 423,403
Granted ........................ $4.75-5.00 168,727
Exercised ...................... -- --
Cancelled ...................... -- --
Expired ........................ $4.00 23,313
Outstanding at end of year ..... $4.00-5.00 568,817
Exercisable at end of year ..... $4.00-5.00 79,676
Outstanding options are exercisable in installments over two to four years
and expire in 2002.
4. INCOME TAXES
In connection with the Conversion to corporate form, the Partnership
recognized a net deferred income tax liability for temporary differences in
accordance with FAS No. 109, "Accounting for Income Taxes", which resulted in a
one-time charge to earnings of $16.6 million in the first quarter of 1993. Prior
to the Conversion, Maritrans Partners L.P. and Maritrans Operating Partners
L.P., as partnerships, were not subject to income taxation at the partnership
level. However, income taxes, which were not significant, were provided for the
incorporated subsidiaries of the partnerships prior to the Conversion.
24
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
4. INCOME TAXES - (Continued)
The income tax provision consists of:
1994 1993
------ ------
($000)
Current: ..........................
Federal ........................ $ 123 --
State .......................... 111 --
Deferred: .........................
Federal ........................ 3,493 $ 291
State .......................... 96 116
Deferred-resulting from Conversion -- 16,568
------ -------
$3,823 $16,975
====== =======
The differences between the federal income tax rate of 35 percent in 1994
and 34 percent in 1993 and the effective tax rates were as follows:
1994 1993
------ -------
($000)
[S] [C] [C]
Statutory federal tax provision ....................... $3,624 $ 1,764
State income taxes, net of federal income tax benefit . 135 116
Partnership income for the first quarter, not subject
to income tax ........................................ -- (1,388)
Recognition of tax liability for cumulative temporary
differences .......................................... -- 16,568
Non-deductible items .................................. 27 --
Other ................................................. 37 (85)
------ --------
$3,823 $16,975
====== ========
Principal items comprising deferred income tax liabilities and assets as
of December 31, 1994 and 1993 are:
1994 1993
------ ------
($000)
Deferred tax liabilities: .......
Tax over book depreciation ... $29,567 $28,519
Prepaids ..................... 2,365 --
Other ........................ 449 1,203
------- -------
32,381 29,722
------- -------
Deferred tax assets: ............
Reserves and accruals ........ 6,890 8,092
Net operating loss
carryforwards .............. 4,236 3,116
Other ........................ -- 848
------- -------
11,126 12,056
------- -------
Net deferred tax liabilities .... $21,255 $17,666
======= =======
At December 31, 1994, Maritrans Inc. has net operating loss carry forwards
of approximately $25.7 million for income tax reporting purposes which expire
in the year 2005 and thereafter.
25
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
5. RETIREMENT PLANS
Most of the shoreside employees and substantially all of the seagoing
supervisors participate in a qualified defined benefit retirement plan of
Maritrans Inc. Net periodic pension costs were $1,362,000, $1,232,000 and
$1,400,000 for the years ended December 31, 1994, 1993 and 1992, respectively,
and were determined under the projected unit credit actuarial method. Pension
benefits are primarily based on years of service and begin to vest after two
years. Employees covered by collective bargaining agreements and employees of
Maritrans Holdings Inc. or its subsidiaries are not eligible to participate in
the qualified defined benefit retirement plan of Maritrans Inc.
The weighted average discount rate, used to determine the actuarial present
value of the projected benefit obligation, and the expected long-term rate of
return on plan assets for the period were each 6.75 percent in 1994 and
7 percent in 1993 and 1992. The weighted average assumed rate of compensation
increase used to determine the actuarial present value of the projected benefit
obligation was 5 percent for all periods.
Net periodic pension costs included the following components for the
respective periods:
<TABLE>
<CAPTION>
1/1 to 1/1 to 1/1 to
12/31/94 12/31/93 12/31/92
-------- -------- --------
($000)
<S> <C> <C> <C>
Service cost of current period ............... $ 1,568 $ 1,625 $1,628
Interest cost on projected benefit obligation 1,119 906 887
Actual (gain) loss on plan assets ............ 352 (1,165) (938)
Net (amortization) and deferral .............. (1,677) (134) (177)
------- ------- ------
Net pension cost ............................. $ 1,362 $ 1,232 $1,400
======= ======= ======
</TABLE>
The following table sets forth the plan's funded status at December 31,
1994 and 1993:
<TABLE>
<CAPTION>
December 31,
-------------
1994 1993
---- ----
($000)
<S> <C> <C>
Actuarial present value of benefit obligations: ..........
Accumulated benefit obligation, including vested benefits
of $14,557 and $10,449, respectively .................... $15,466 $11,534
Projected benefit obligation for service rendered to date 3,695 3,851
------- --------
Projected benefit obligation ............................. 19,161 15,385
Plan assets at fair value, primarily publicly traded
stocks and bonds ........................................ 16,567 16,110
------- -------
Plan assets greater than (less than) projected benefit
obligation .............................................. (2,594) 725
Unrecognized net gain (loss) on plan's assets ............ (256) 2,723
Net assets being amortized over 15 years ................. 1,413 1,616
------- -------
Accrued pension cost recognized in the financial
statements .............................................. $ 3,751 $ 3,614
======= =======
</TABLE>
Substantially all of the shoreside employees and seagoing supervisors also
participate in a qualified defined contribution plan. Contributions under the
plan are determined annually by the Board of Directors of Maritrans Inc. The
cost of the plan was $742,000, $685,000 and $609,000 for the years ended
December 31, 1994, 1993 and 1992, respectively.
Contributions to industry-wide, multi-employer seamen's pension plans,
which cover substantially all seagoing personnel covered under collective
bargaining agreements, were approximately $399,000, $423,000 and
26
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
5. RETIREMENT PLANS - (Continued)
$515,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
These contributions include funding for current service costs and
amortization of prior service costs of the various plans over periods of 30
to 40 years. The pension trusts and union agreements provide that
contributions be made at a contractually determined rate per man-day worked.
Maritrans Inc. and its subsidiaries are not administrators of the multi-
employer seamen's pension plans.
6. DEBT
At December 31, 1994, total outstanding debt of the subsidiaries of Maritrans
Inc. is $120.7 million, $113.0 million of which is long-term. At December 31,
1993, total outstanding debt was $116.9 million, $110.6 million of which was
long-term. The debt is secured by mortgages on substantially all of the fixed
assets of those subsidiaries. The debt consists of several series -- $0.6
million maturing through 1995, $30.0 million maturing through 1997, $10.1
million maturing through 2005, and $80 million maturing from 1998 through 2007.
The weighted average interest rate on this indebtedness is 8.91 percent. Terms
of the indebtedness require the subsidiaries to maintain their properties in a
specific manner, maintain specified insurance on their properties and business,
and abide by other covenants which are customary with respect to such
borrowings. At December 31, 1993, the total outstanding debt consisted of $1.7
million maturing through 1995, $35.2 million maturing through 1997, and $80
million maturing from 1998 through 2007.
The Operating Partnership has a $10 million working capital facility secured
by its receivables and inventories. There were no borrowings under this
facility during fiscal 1994.
Based on the borrowing rates currently available for loans with similar terms
and maturities, the fair value of long term debt was $120.6 million and $122.1
million at December 31, 1994 and 1993, respectively. The maturity schedule for
outstanding indebtedness under existing debt agreements at December 31, 1994,
is as follows:
($000)
--------
1995 .................... $ 7,654
1996 .................... 8,671
1997 .................... 15,613
1998 .................... 8,558
1999 .................... 8,608
2000 -- 2007 ............. 71,558
--------
$120,662
========
7. COMMITMENTS AND CONTINGENCIES
Minimum future rental payments under noncancellable operating leases at
December 31, 1994, are as follows:
<TABLE>
<CAPTION>
($000)
-------
<S> <C>
1995 .................... $ 2,357
1996 .................... 2,291
1997 .................... 2,113
1998 .................... 2,030
1999 .................... 1,863
2000 -- 2005 ............. 11,236
-------
$21,890
=======
</TABLE>
27
<PAGE>
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
7. COMMITMENTS AND CONTINGENCIES -- (Continued)
The indenture governing the Operating Partnership's long-term debt permits
cash distributions by Maritrans Operating Partners L.P. to Maritrans Inc. so
long as no default exists under the indenture and provided that such
distributions do not exceed contractually prescribed amounts.
On August 10, 1993, one of the Company's tug/barge units was involved in a
collision off the coast of Florida. Claims resulting from this incident have
been and are expected to be covered by insurance. In 1993, Maritrans received
insurance proceeds in excess of the barge's net book value for the
constructive total loss of the barge.
In November 1992, the Partnership dismissed its suit against its former
law firm and a partner of that firm pursuant to a settlement agreement among
the parties. As part of the settlement, the Partnership received a payment of
$3 million and the trial court dissolved the preliminary injunction which
previously barred the defendants from representing certain of Maritrans'
economic competitors in labor negotiations. The payment received is reflected
in other income for the year ended December 31, 1992.
In the ordinary course of its business, claims are filed against the
Company for alleged damages in connection with its operations. Management is
of the opinion that the ultimate outcome of such claims at December 31, 1994,
will not have a material adverse effect on the consolidated financial
statements.
8. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------- --------- --------- ---------- ---------
($000, except per share/unit amounts)
<S> <C> <C> <C> <C> <C>
1994
Revenue ........................... $ 33,098 $29,522 $30,106 $32,120 $124,846
Operating income .................. 5,583 3,264 4,392 5,214 $ 18,453
Net income ........................ $ 2,026 $ 1,016 $ 1,482 $ 2,008 $ 6,532
Earnings per share ................ $ 0.16 $ 0.08 $ 0.12 $ 0.16 $ 0.52
1993
Revenues .......................... $ 32,217 $33,603 $31,044 $35,675 $132,539
Operating income .................. 2,722 2,572 1,222 2,125 8,641
Provision for (benefit from) income
taxes ............................ 16,568 533 14 (140) 16,975
Net income (loss) ................. $(12,223) $ 639 $ 24 $ (229) $(11,789)
Per unit effect of income tax
provision-resulting from
Conversion ....................... $ (1.32) n/a n/a n/a $ (1.32)
Income (loss) per share/unit ...... $ (0.98) $ 0.05 $ 0.00 $ (0.02) $ (0.94)
</TABLE>
28
<PAGE>
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
Information with respect to directors of the Registrant, and information
with respect to compliance with Section 16(a) of the Securities Exchange Act
of 1934, is incorporated herein by reference to the Registrant's definitive
Proxy Statement to be filed with the Securities and Exchange Commission not
later than 120 days after the close of the year ended December 31, 1994,
under the captions "Information Regarding Nominees For Election As Directors
And Regarding Continuing Directors" and "Section 16 Requirements."
The individuals listed below are directors and executive officers of
Maritrans Inc. or its subsidiaries.
<TABLE>
<CAPTION>
Name Age(1) Position
----- ------ --------
<S> <C> <C>
Stephen A. Van Dyck (4) ...... 51 Chairman of the Board of Directors and Chief Executive Officer
Dr. Robert E. Boni (2)(3)(4) . 67 Director
Dr. Craig E. Dorman (3) ...... 54 Director
Bruce C. Lindsay (2)(3)(4)(5) 53 Director
James H. Sanborn ............. 57 Director
Edward R. Sheridan ........... 56 President, Distribution Services Division --
Operating Partnership
Brian J. Telford ............. 48 President, Gulf Division -- Operating Partnership
John C. Newcomb .............. 56 Vice President, General Counsel and Secretary
Gary L. Schaefer ............. 45 Vice President, Chief Financial Officer and
Treasurer of Maritrans Inc. and President of Maritank Inc.
Charles R. Ward .............. 43 President, Eastern Division -- Operating Partnership
Robert B. York ............... 39 President, Inland Division -- Operating Partnership
Walter T. Bromfield .......... 39 Controller
</TABLE>
------
(1) As of March 1, 1995
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Finance Committee
(5) Mr. Lindsay's term of office as director expires in 1995 and he is not
standing for reelection.
29
<PAGE>
Mr. Van Dyck has been Chairman of the Board and Chief Executive Officer of
the Company and its predecessor since April 1987. For the previous year, he
was a Senior Vice President -- Oil Services, of Sonat Inc. and Chairman of
the Boards of the Sonat Marine Group, another predecessor, and Sonat Offshore
Drilling Inc. For more than five years prior to April 1986, Mr. Van Dyck was
the President and a director of the Sonat Marine Group and Vice President of
Sonat Inc. Mr. Van Dyck is also the Chairman of the Board and a director of
the West of England Ship Owners Mutual Insurance Association (Luxembourg), a
mutual insurance association. He is a member of the Company's Finance
Committee of the Board of Directors. See "Certain Transactions."
Dr. Boni retired as Chairman of Armco Inc., a steel, oil field equipment
and insurance corporation on November 30, 1990. Dr. Boni became Chief
Executive Officer of Armco Inc. in 1985 and Chairman in 1986. He also served
as Non-Executive Chairman of the Board of and consultant for Alexander &
Alexander Services Inc., an insurances services company, in 1994 and he
continues to serve on that Board of Directors. He is a member of the
Company's Compensation (Chairman), Audit and Finance Committees of the Board
of Directors.
Dr. Dorman is serving as Deputy Director Defense Research and Engineering
for Laboratory Management, U.S. Department of Defense on an Intergovernmental
Personnel Act assignment from the Woods Hole Oceanographic Institution. He
was Director and Chief Executive Officer of Woods Hole Oceanographic
Institution from 1989 until 1993. From 1962 to 1989, Dr. Dorman was an
officer in the U.S. Navy, most recently Rear Admiral and Program Director for
Anti-Submarine Warfare. He is a member of the Company's Audit Committee of
the Board of Directors.
Mr. Lindsay has been Managing Director of Brind-Lindsay & Co. Inc., an
investment corporation, since 1986. From 1983 through 1986, Mr. Lindsay was
Group Vice President, Industrial Services, of Sun Company, Inc., an
integrated oil corporation. During that time, he also served as a director
and officer of various subsidiaries of Sun Company, Inc. He is a director of
several closely-held corporations. He is a member of the Company's Audit
(Chairman), Finance (Chairman) and Compensation Committees of the Board of
Directors.
Mr. Sanborn is a principal in Polaris Associates, maritime consultants. He
was Executive Vice President of the Company and its predecessor since April
1987, until his retirement in December 1993. Prior to April 1987, he was
President of the Sonat Marine Group, another predecessor, a position he held
since April 1986. Prior to this position, he served as Vice
President-Operations and Vice President - East Coast Group of the Sonat
Marine Group. Mr. Sanborn was employed in various capacities by the Company
and its predecessors since 1978.
Mr. Sheridan was named President of the Distribution Services Division of
the Operating Partnership in February 1993. He previously held various
positions with Star Enterprise and Texaco since 1963.
Mr. Telford was named President of the Gulf Division of the Operating
Partnership in September 1992. He previously held various positions with
Stolt-Nielson Inc. from 1988 to 1992.
Mr. Newcomb has been Vice President, General Counsel and Secretary of
Maritrans Inc. since April 1993, and previously held these titles with
Maritrans GP Inc. since 1987. He held a similar position with the Sonat
Marine Group since 1983. Mr. Newcomb has been employed in various capacities
by Maritrans or its predecessors since 1975.
Mr. Schaefer has been Vice President, Chief Financial Officer and
Treasurer of Maritrans Inc. since April 1993, and previously held these
titles with Maritrans GP Inc. since January 1990. Additionally, since August
1994, Mr. Schaefer has served as President of Maritank Inc. and its operating
affiliates MPI and MMI. Prior to January 1990, Mr. Schaefer was Vice
President, Controller and Treasurer of Maritrans GP Inc. He held a similar
position with the Sonat Marine Group since 1986. Prior to this position, Mr.
Schaefer was Assistant Vice President and Controller. Mr. Schaefer has been
employed in various capacities by Maritrans or its predecessors since 1976.
Mr. Ward was named President of the Eastern Division of the Operating
Partnership in May 1993. Previously, Mr. Ward was President of the Inland
Division of the Operating Partnership since February 1992 and prior to that
was Manager, Traffic, a position he held since September 1990. Mr. Ward was
East Coast Chartering Manager from June 1989 to September 1990. Prior to that
position, Mr. Ward was Traffic Manager -- Black Oil. He held a similar
position with the Sonat Marine Group. Mr. Ward has been employed in various
capacities by Maritrans or its predecessors since 1975.
30
<PAGE>
Mr. York was named President of the Inland Division of the Operating
Partnership in May 1993. Previously, Mr. York was continuously employed since
1985 by the Company or its predecessors in various capacities including
Manager, Market Planning; Manager, Corporate Planning; and Business Leader
(Information Services).
Mr. Bromfield has been Controller of Maritrans Inc. since April 1993, and
previously held that title with Maritrans GP Inc. since February 1992.
Previously, Mr. Bromfield was Assistant Controller. He held a similar
position with the Sonat Marine Group since October 1986. Mr. Bromfield has
been employed in various capacities by Maritrans or its predecessors since
1981.
ITEMS 11, 12 AND 13.
The information required by Item 11, Executive Compensation, by Item 12,
Security Ownership of Certain Beneficial Owners and Management, and by Item
13, Certain Relationships and Related Transactions, is incorporated herein by
reference to the Company's definitive Proxy Statement to be filed with the
Commission not later than 120 days after the close of the fiscal year ended
December 31, 1994, under the headings "Compensation of Directors and
Executive Officers", "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Transactions".
31
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page
----
Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
<S> <C> <C>
(a) (1) Financial Statements
Report of Independent Auditors 17
Maritrans Inc. Consolidated Balance Sheets at December 31, 1994, and
December 31, 1993. 18
Maritrans Inc. Consolidated Statements of Income for the years ending
December 31, 1994, 1993, and 1992. 19
Maritrans Inc. Consolidated Statements of Cash Flows for the years ending
December 31, 1994, 1993, and 1992. 20
Notes to the Consolidated Financial Statements. 21
(2) Financial Statement Schedules
Schedule II Maritrans Inc. Valuation Account for the years ended December
31, 1994, 1993, and 1992. 36
All other schedules called for under Regulation S-X are not submitted because
they are not applicable, not required, or because the required information is
not material, or is included in the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1994.
</TABLE>
32
<PAGE>
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Index Page
------------- ----
<S> <C> <C>
3.1# Certificate of Incorporation of the Registrant, as amended.
3.2# By Laws of the Registrant.
4.1 Certain instruments with respect to long-term debt of the Registrant or Maritrans
Operating Partners L.P. or Maritrans Barge Company which relate to debt that does not
exceed 10 percent of the total assets of the Registrant are omitted pursuant to Item
601(b) (4) (iii) (A) of Regulation S-K. Maritrans hereby agrees to furnish
supplementally to the Securities and Exchange Commission a copy of each such
instrument upon request.
10.1* Amended and Restated Agreement of Limited Partnership of Maritrans Operating Partners
L.P., dated as of April 14, 1987 (Exhibit 3.2).
10.2+ Certificate of Limited Partnership of Maritrans Operating Partners L.P., dated
January 29, 1987 (Exhibit 3.4).
10.3* Form of Maritrans Capital Corporation Note Purchase Agreement, dated as of March 15,
1987 (Exhibit 10.6).
10.3(a)* Indenture of Trust and Security Agreement, dated as of March 15, 1987 from
Maritrans Operating Partners L.P. and Maritrans Capital Corporation to The Wilmington
Trust Company (Exhibit 10.6(a)).
10.3(b)* Form of First Preferred Ship Mortgage, dated April 14, 1987 from Maritrans
Operating Partners L.P., mortgagor, to The Wilmington Trust Company, mortgagee
(Exhibit 10.6(b)).
10.3(c)* Guaranty Agreement by Maritrans Operating Partners L.P. regarding $35,000,000 Series A
Notes Due April 1, 1997 and $80,000,000 Series B Notes Due April 1, 2007 of Maritrans
Capital Corporation (Exhibit 10.6(c)).
Executive Compensation Plans and Arrangements
10.4^ Agreement, dated October 4, 1993 between Maritrans Inc. and John C. Newcomb.
10.5^ Agreement, dated October 4, 1993 between Maritrans Inc. and Gary L. Schaefer.
10.6^ Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Stephen A. Van Dyck.
10.7^ Mutual Separation Agreement and General Release, dated November 22, 1993 between
Maritrans Inc. and Craig N. Johnson.
10.8^ Retirement Agreement, dated November 22, 1993 between Maritrans Inc. and James H.
Sanborn.
10.9^ Employment Agreement, dated November 15, 1993 between Maritrans Holdings Inc. and
Edward J. Flood.
10.10^ Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Charles R. Ward.
10.11^ Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Brian J. Telford.
10.12^ Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Edward R. Sheridan.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index Page
------------- ----
<S> <C> <C>
10.13^ Profit Sharing and Savings Plan of Maritrans Inc. as amended and restated effective
November 1, 1993.
10.14@ Executive Award Plan of Maritrans GP Inc. (Exhibit 10.31).
10.15@ Excess Benefit Plan of Maritrans GP Inc. as amended and restated effective January 1,
1988 (Exhibit 10.32).
10.16@ Retirement Plan of Maritrans GP Inc. as amended and restated effective January 1, 1989
(Exhibit 10.33).
10.17^ Performance Unit Plan of Maritrans Inc. effective April 1, 1993.
10.18& Executive Compensation Plan as amended and restated effective January 27, 1994.
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of Maritrans Inc. 1
27 Financial Data Schedule
</TABLE>
* Incorporated by reference herein to the Exhibit number in parentheses filed
on March 24, 1988 as Amendment No. 1 to Maritrans Partners L. P. Form 10-K
Annual Report, dated March 3, 1988, for the fiscal year ended December 31,
1987.
+ Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Partners L. P. Form S-1 Registration Statement No. 33-11652
dated January 30, 1987 or Amendment No. 1 thereto dated March 20, 1987.
# Incorporated by reference herein to the Exhibit of the same number filed with
the Registrant's Post-Effective Amendment No. 1 to Form S-4 Registration
Statement No. 33-57378 dated January 26, 1993.
& Incorporated by reference herein to Exhibit A of the Registrant's definitive
Proxy Statement to be filed with the Commission not later than 120 days after
the close of the fiscal year ended December 31, 1993.
@ Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Partners L. P. Form 10-K Annual Report, dated March 29, 1993
for the fiscal year ended December 31, 1992.
^ Incorporated by reference herein to the Exhibit of the same number filed with
Maritrans Inc. Form 10-K Annual Report, dated March 30, 1994 for the fiscal
year ended December 31, 1993.
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MARITRANS INC.
(Registrant)
By: /s/ Stephen A. Van Dyck
------------------------ Dated: March 30, 1995
Stephen A. Van Dyck
Chairman of the Board
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 and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
By: /s/ Stephen A. Van Dyck
-------------------------- Chairman of the Board Dated: March 30, 1995
Stephen A. Van Dyck and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Dr. Robert E. Boni
-------------------------- Director Dated: March 30, 1995
Dr. Robert E. Boni
By: /s/ Dr. Craig E. Dorman
-------------------------- Director Dated: March 30, 1995
Dr. Craig E. Dorman
By: /s/ Bruce C. Lindsay
-------------------------- Director Dated: March 30, 1995
Bruce C. Lindsay
By: /s/ James H. Sanborn
-------------------------- Director Dated: March 30, 1995
James H. Sanborn
By: /s/ Gary L. Schaefer
-------------------------- Vice President, Chief Financial Dated: March 30, 1995
Gary L. Schaefer Officer and Treasurer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield
-------------------------- Controller Dated: March 30, 1995
Walter T. Bromfield (Principal Accounting Officer)
</TABLE>
35
<PAGE>
MARITRANS INC.
SCHEDULE II -- VALUATION ACCOUNT
($000)
<TABLE>
<CAPTION>
CHARGED
BALANCE AT TO COSTS BALANCE
BEGINNING AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------ ---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
JANUARY 1 TO DECEMBER 31, 1992
Allowance for doubtful accounts $702 $ 60 $221(a) $541
JANUARY 1 TO DECEMBER 31, 1993
Allowance for doubtful accounts $541 $136 $ 72(a) $605
JANUARY 1 TO DECEMBER 31, 1994
Allowance for doubtful accounts $605 $123 $275(a) $453
</TABLE>
------
(a) Deductions are a result of write-offs of uncollectible accounts receivable
for which allowances were previously provided.
36
<PAGE>
EXHIBIT 11.1
MARITRANS INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
YEARS ENDED DECEMBER 31*
<TABLE>
<CAPTION>
1994 1993
----------- --------------
<S> <C> <C>
Primary:
Income (loss): ......................................
Net income (loss) ................................ $ 6,532,000 $(11,789,000)
=========== ============
Shares:
Weighted average number of common shares
outstanding .................................... 12,524,861 12,523,000
=========== ============
Primary income (loss) per common share ................. $ .5215 $ (.9414)
=========== ============
Assuming full dilution:
Income (loss):
Net income (loss) ................................ $ 6,532,000 $(11,789,000)
=========== ============
Shares:
Weighted average number of common shares
outstanding .................................... 12,524,861 12,523,000
Assuming exercise of options reduced by the number
of shares which could have been purchased with
the proceeds from the exercise of such options . 80,842 3,474
---------- -----------
Weighted average number of common shares
outstanding as adjusted ........................ 12,605,703 12,526,474
========== ===========
Net income (loss) per common share
Fully diluted income (loss) per common share ........... $.5182# $ (.9411)**
========== ===========
</TABLE>
------
* See notes 1 and 3 of the notes to the consolidated financial statements.
** This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
# This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3 percent.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<LEGEND>
<RESTATED>
<CIK> 0000810113
<NAME> Maritrans, Inc
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> 12-MOS
<CASH> 33,824
<SECURITIES> 8,000
<RECEIVABLES> 11,974
<ALLOWANCES> 453
<INVENTORY> 3,669
<CURRENT-ASSETS> 70,451
<PP&E> 270,553
<DEPRECIATION> 91,761
<TOTAL-ASSETS> 257,609
<CURRENT-LIABILITIES> 27,506
<BONDS> 113,008
<COMMON> 125
0
0
<OTHER-SE> 81,048
<TOTAL-LIABILITY-AND-EQUITY> 257,609
<SALES> 0
<TOTAL-REVENUES> 124,846
<CGS> 0
<TOTAL-COSTS> 106,393
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,934
<INCOME-PRETAX> 10,355
<INCOME-TAX> 3,823
<INCOME-CONTINUING> 6,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,532
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
