<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
__X__ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 1996
-------------------------
or
_____ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period from __________ to __________________
Commission File Number 1-9063
------
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, 26TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103
-------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (215) 864-1200
--------------
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes __X__ No _____
Common Stock outstanding as of October 31, 1996: 11,959,912
---------------- ----------
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MARITRANS INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
- ------- --------------------- -----------
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets......................1
Consolidated Statements of Income..........................2
Consolidated Statements of Cash Flows......................4
Notes to Condensed Consolidated Financial Statements.......5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............6
PART II. OTHER INFORMATION
- -------- -----------------
ITEM 1. Legal Proceedings.........................................12
ITEM 6. Exhibits and Reports on Form 8-K..........................12
Signature ..........................................................13
<PAGE>
PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000)
SEPT. 30, 1996 DEC. 31, 1995
-------------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 29,934 $ 31,033
Investments held-to-maturity 9,869 7,544
Trade accounts receivable 12,780 12,722
Other accounts receivable 3,874 5,063
Inventories 4,395 4,586
Deferred income tax benefit 1,114 1,203
Prepaid expenses 5,243 3,909
-------- --------
Total current assets 67,209 66,060
Vessels, terminals and equipment 286,178 284,161
Less accumulated depreciation 117,616 106,169
-------- --------
Net vessels, terminals and equipment 168,562 177,992
Other 7,492 7,909
-------- --------
Total assets $243,263 $251,961
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year $ 10,202 $ 8,671
Trade accounts payable 1,096 2,614
Accrued interest 4,128 2,249
Accrued shipyard costs 4,957 5,134
Accrued wages and benefits 5,015 5,800
Other accrued liabilities 4,767 5,458
-------- --------
Total current liabilities 30,165 29,926
Long-term debt 94,556 104,337
Deferred shipyard costs 7,436 7,701
Other liabilities 5,183 5,365
Deferred income taxes 25,350 24,757
Stockholders' equity 80,573 79,875
-------- --------
Total liabilities and stockholders'
equity $243,263 $251,961
======== ========
See accompanying notes.
1
<PAGE>
MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
($000, except per share amounts)
JULY 1 TO JULY 1 TO
SEPT. 30, 1996 SEPT. 30, 1995
-------------- --------------
Revenues $ 31,831 $ 29,102
Costs and expenses:
Operation expense 16,336 16,132
Maintenance expense 4,874 4,570
General and administrative 2,202 2,242
Depreciation and amortization 4,093 3,905
------------ ------------
Total operating expenses 27,505 26,849
------------ ------------
Operating income 4,326 2,253
Interest expense, net (2,371) (2,352)
Other income, net 548 682
------------ ------------
Income before income taxes 2,503 583
Income tax provision 992 217
------------ ------------
Net income $ 1,511 $ 366
============ ============
Earnings per common share $ 0.13 $ 0.03
Average common shares outstanding 11,909,921 11,917,550
============ ============
See accompanying notes.
2
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MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
($000, except per share amounts)
JANUARY 1, TO JANUARY 1, TO
SEPT. 30 1996 SEPT. 30 1995
------------- -------------
Revenues $ 94,376 $ 92,010
Costs and expenses:
Operation expense 50,348 48,686
Maintenance expense 15,127 14,604
General and administrative 7,111 6,411
Depreciation and amortization 12,438 11,895
------------ ------------
Total operating expenses 85,024 81,596
------------ ------------
Operating income 9,352 10,414
Interest expense, net (7,281) (7,211)
Other income, net 1,859 2,687
------------ ------------
Income before income taxes 3,930 5,890
Income tax provision 1,495 2,161
------------ ------------
Net income $ 2,435 $ 3,729
============ ============
Earnings per common share $ 0.21 $ 0.30
Average common shares outstanding 11,768,589 12,309,957
============ ============
See accompanying notes.
3
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MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(unaudited)
($000)
JANUARY 1 TO JANUARY 1 TO
SEPT. 30, 1996 SEPT. 30, 1995
-------------- --------------
Cash flows from operating activities:
Net income $ 2,435 $ 3,729
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 12,438 11,895
Deferred income tax provision 682 2,161
Changes in receivables, inventories
and prepaid expenses (12) (2,901)
Changes in current liabilities
other than debt (1,292) 1,088
Non-current changes, net (54) 1,538
(Gain)/loss on sale of equipment 52 (37)
-------- --------
Total adjustments to net income 11,814 13,744
-------- --------
Net cash provided by (used in) operating
activities 14,249 17,473
Cash flows from investing activities:
Net change in investments held-to-maturity (2,325) 1,033
Cash proceeds from sale of equipment 101 40
Purchase of vessels, terminals and equipment (2,868) (8,159)
-------- --------
Net cash provided by (used in)
investing activities (5,092) (7,086)
-------- --------
Cash flows from financing activities:
Payment of long-term debt (8,250) (7,243)
Proceeds from stock option exercises 353 --
Dividends declared and paid (2,359) (735)
Purchase of treasury stock -- (5,034)
-------- --------
Net cash provided by (used in)
financing activities (10,256) (13,012)
-------- --------
Net increase (decrease)
in cash and cash equivalents (1,099) (2,625)
Cash and cash equivalents at beginning of
period 31,033 33,824
-------- --------
Cash and cash equivalents at end of period $ 29,934 $ 31,199
======== ========
See accompanying notes
4
<PAGE>
MARITRANS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation/Organization
----------------------------------
Maritrans Inc. owns Maritrans Operating Partners L.P. ("the Operating
Partnership"), Maritrans Barge Co. 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, along the Gulf and Atlantic
Coasts, and own and operate petroleum storage facilities on the Atlantic
Coast.
In the opinion of management, the accompanying condensed consolidated
financial statements of Maritrans Inc., which are unaudited (except for
the Condensed Consolidated Balance Sheet as of December 31, 1995, which
is derived from audited financial statements), include all adjustments
(consisting of normal recurring accruals) necessary to present fairly
the financial statements of the consolidated entities.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the unaudited condensed consolidated financial statements do
not include all of the information and notes normally included with
annual financial statements prepared in accordance with generally
accepted accounting principles. It is suggested that these financial
statements be read in conjunction with the consolidated historical
financial statements and notes thereto included in the Company's Form
10-K for the period ended December 31, 1995.
5
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2. Earnings per Common Share
-------------------------
The potential effect of outstanding stock options on earnings per common
share is not dilutive.
3. Income Taxes
------------
The Company's effective tax rate differs from the federal statutory rate
due primarily to state income taxes.
4. Debt
----
On November 1, 1996, the Company made an offer to purchase up to $20
million principal amount from the holders of $80 million aggregate
principal amount of debt due April 1, 2007, as further described in
"Debt Obligations and Borrowing Facility" within Management's
Discussion and Analysis of Financial Condition and Results of
Operations, below. The scheduled date for notification by holders who
desire to accept the offer is November 19, 1996. The Company intends to
pay the purchase price utilizing available working capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
This report contains, in addition to historical information,
statements by the Company with regard to its expectations as to
financial results and other aspects of its business that involve
risks and uncertainties and may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include statements regarding the Company's
liquidity and capital resources, expected dividends, expected capital
expenditures and potential construction of certain tankers. Such
statements are based on management's current expectations and are
subject to a number of uncertainties and risks that could cause
actual results to differ materially from those described in the
statements. Factors that may cause such a difference include, but are
not limited to, the continuation of federal law restricting United
States point-to-point
6
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maritime shipping to U.S. vessels (the Jones Act), 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, liability
insurance costs, and those described under "Item 1. BUSINESS" in the
Company's Annual Report on Form 10-K for the year ended December 31,
1995.
Liquidity and Capital Resources
-------------------------------
For the nine months ended September 30, 1996, funds provided by
operating activities, augmented by financing and investing
transactions, were, and for the remainder of the year, are expected
to be, sufficient to provide the funds necessary for operations,
anticipated capital expenditures, lease payments, required debt
repayments and anticipated common stock repurchases. A dividend will
be paid in the fourth quarter of 1996. As more fully described below,
on November 1, 1996, the Company made an offer to purchase up to $20
million in outstanding debt.
Management expects capital expenditures in 1996 for improvements to
its currently operating vessels and existing marine terminals will be
approximately $4 million compared to $15 million in 1995. However,
the Company will continue to evaluate potential investments
consistent with its long-term strategic interests, and the potential
sources of funds for those potential investments. In 1995 cash was
used for the purchase of marine vessels, terminals and equipment
including modifications to the MARITRANS 300, the acquisition of the
Baltimore terminal facility, and improvements to the existing fleet.
Total capital expenditures of the Company through September 30, 1996
were $2.9 million.
During the fourth quarter of 1995, the Company announced plans to
construct up to six new double-hulled petroleum tankers. During the
first quarter of 1996 the delivery dates for such tankers, the
construction of which is subject to receipt of U.S. Maritime
Administration financing guarantees, were extended from 1998 to 2000
to allow the Company to be more flexible in responding to developing
7
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market conditions in the future. This extension could be shortened by
the Organization for Economic Cooperation and Development (the
"OECD") shipyard subsidy legislation, which is expected to be
considered by the U.S. House and Senate.
Liquidity and Capital Indicators
--------------------------------
As of September 30, 1996:
Ratio of current assets to current liabilities 2.2:1
Working capital (in thousands) $37,044
Ratio of total debt to the sum of total debt
and stockholders' equity .57
Working Capital Position
------------------------
Working capital increased by $0.9 million from December 31, 1995
to September 30, 1996. Current assets increased as a result of
increases in investments held-to-maturity and prepaid expenses.
Current liabilities increased $0.2 million due primarily to
increases in accrued interest and currently maturing debt. The
ratio of current assets to current liabilities remained
consistent at 2.2:1 at December 31, 1995 and at September 30,
1996.
Debt Obligations and Borrowing Facility
---------------------------------------
At September 30, 1996, the Company had $104.8 million in total
outstanding debt, secured by mortgages on substantially all of
the fixed assets of the subsidiaries of the Company. The current
portion of this debt at September 30, 1996 is $10.2 million. The
Company has a $10 million working capital facility, secured by
its receivables and inventories. There were no borrowings
against this facility for the nine months ended September 30,
1996. Included in such debt is $80 million aggregate principal
amount of Series B Notes due April 1, 2007 ("Series B Notes")
held by institutional investors. The Series B Notes bear
interest at 9.25% per annum and
8
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are not presently prepayable at the option of the Company except
under certain limited circumstances and then only upon payment of a
yield maintenance premium to the holders. On November 1, 1996, the
Company made an offer to the holders of the Series B Notes to
purchase up to $20 million principal amount of Series B Notes at a
price equal to the principal amount thereof plus accrued interest.
The scheduled date for notification by holders of the Series B Notes
who desire to accept the offer is November 19, 1996. The Company
intends to pay the purchase price of the Series B Notes utilizing
available working capital.
RESULTS OF OPERATIONS
---------------------
Three Month Comparison
----------------------
Revenues
--------
Revenues of $31.8 million for the three months ended September 30,
1996, increased by $2.7 million, or 9.3%, from revenues of $29.1
million for the three months ended September 30, 1995. Barrels of
cargo transported were 53 million for both the three months ended
September 30, 1996 and 1995. The increase in revenue despite the
steadiness in volume is primarily the result of a greater percentage
of the barrels moving a longer distance in 1996, when more fleet
capacity was utilized in coastal moves, including the Gulf of Mexico,
than in shorter haul moves in and around the Delaware Valley refining
centers. Additionally, the Company was able to pass on selected
increased costs, particularly fuel price increases, under certain
contractual agreements. Revenue from sources other than marine
transportation decreased from 4.6% of total revenue, for the three
months ended September 30, 1995, to 3.9% for the three months ended
September 30, 1996.
Results
-------
Operating expenses of $27.5 million for the three months ended
September 30, 1996, increased by $0.7 million, or 2.6%, from
operating expenses of $26.8 million for the three months ended
September 30, 1995. This increase is primarily due to an increase in
fuel price per gallon coupled with an increase in fuel
9
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consumption, as a result of the aforementioned longer average trip
length. Additionally, increases in operating expenses including
maintenance and depreciation resulted from the MARITRANS 300 unit
being in service for the three months ended September 30, 1996 (the
MARITRANS 300 was in the shipyard for modifications during most of
1995).
Net income of $1.5 million for the quarter ended September 30, 1996
increased by $1.1 million from $0.4 million for the quarter ended
September 30, 1995 as the result of the aforementioned increases in
revenues.
Nine Month Comparison
---------------------
Revenues
--------
Revenues of $94.4 million for the nine months ended September 30,
1996 increased $2.4 million, or 2.6% from revenues of $92.0 million
for the nine months ended September 30, 1995. Barrels of cargo
transported decreased by 6 million barrels, from 168 million barrels
at September 30, 1995 to 162 million at September 30, 1996. The
increase in revenue despite the decrease in volumes resulted
primarily from the greater percentage of barrels moving longer
distances, described above. The earlier portion of the first half of
1996 was heavily impacted by refinery shutdowns in the Philadelphia
area. The Company has taken certain steps, including repositioning of
capacity, to mitigate the impact on a year-to-date basis. Revenue
from sources other than marine transportation decreased from 4.0% of
total revenue, for the nine months ended September 30, 1995, to 3.6%
for the nine months ended September 30, 1996.
Results
-------
Operating expenses of $85.0 million for the nine months ended
September 30, 1996 increased by $3.4 million, or 4.2% from operating
expenses of $81.6 million for the nine months ended September 30,
1995. This increase is primarily due to the aforementioned increase
in average fuel cost and consumption, as well as port charges and
10
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expenses associated with consulting fees for new business
opportunities. Additionally, increases in operating expenses
including maintenance and depreciation resulted from the MARITRANS
300 unit being in service for the nine months ended September 30,
1996 (the MARITRANS 300 was in the shipyard for modifications during
most of 1995). These increases were partially offset by a decrease in
the expenses associated with chartering vessels from others.
Other income for the nine months ended September 30, 1996 of $1.9
million decreased $0.8 million from $2.7 million for the nine months
ended September 30, 1995 primarily from a decrease in interest
income.
Net income of $2.4 million for the nine months ended September 30,
1996, decreased $1.3 million from the $3.7 million for the nine
months ended September 30, 1995. The decrease is the result of
increased operating expenses more than offsetting increased revenues.
Management currently expects operating results to continue near
third quarter levels.
11
<PAGE>
Part II: OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
None.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
No. 11 - Computation of Earnings Per Common Share.
(b) Reports on Form 8-K
(1) One report on Form 8-K was filed on August 22, 1996,
pertaining to Maritrans Inc. filing claim against the U.S.
Government for the unconstitutional taking of tank barges under
the Oil Pollution Act of 1990.
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARITRANS INC.
(Registrant)
By: /s/ Thomas C. Deas, Jr. Dated: November 13, 1996
-----------------------------------------
Thomas C. Deas, Jr.
Vice President, Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: November 13, 1996
-----------------------------------------
Walter T. Bromfield
Controller
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT 11
MARITRANS INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
QUARTER ENDED SEPTEMBER 30*
<TABLE>
<CAPTION>
1996 1995
-------- ------
Primary:
<S> <C> <C>
Income:
Net income $ 1,511,000 $ 366,000
=========== ===========
Shares:
Weighted average number of
common shares outstanding 11,909,921 11,917,550
=========== ===========
Primary earnings per common share $ .1269 $ .0307
=========== ===========
Assuming full dilution:
Income:
Net income $ 1,511,000 $ 366,000
=========== ===========
Shares:
Weighted average number of
common shares outstanding 11,909,921 11,917,550
Assuming exercise of options reduced
by the number of shares which
could have been purchased with the proceeds
from the exercise of such options 120,231 113,660
----------- -----------
Weighted average number of common
shares outstanding as adjusted 12,030,152 12,031,210
=========== ===========
Fully diluted earnings per common share $ .1256** $ .0304**
=========== ===========
</TABLE>
- ----------
* See notes 1 and 2 of the notes to the condensed consolidated financial
statements.
** 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%.
14
<PAGE>
EXHIBIT 11
MARITRANS INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
NINE MONTHS ENDED SEPTEMBER 30*
<TABLE>
<CAPTION>
1996 1995
-------- ------
Primary:
<S> <C> <C>
Income:
Net income $ 2,435,000 $ 3,729,000
=========== ===========
Shares:
Weighted average number of
common shares outstanding 11,768,589 12,309,957
=========== ===========
Primary earnings per common share $ .2069 $ .3029
=========== ===========
Assuming full dilution:
Income:
Net income $ 2,435,000 $ 3,729,000
=========== ===========
Shares:
Weighted average number of
common shares outstanding 11,768,589 12,309,957
Assuming exercise of options reduced
by the number of shares which
could have been purchased with the proceeds
from the exercise of such options 118,087 113,660
----------- -----------
Weighted average number of common
shares outstanding as adjusted 11,886,676 12,423,617
=========== ===========
Fully diluted earnings per common share $ .2049** $ .3002**
=========== ===========
</TABLE>
- ----------
* See notes 1 and 2 of the notes to the condensed consolidated financial
statements.
** 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%.
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810113
<NAME> MARITRANS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 29,934
<SECURITIES> 9,869
<RECEIVABLES> 12,780
<ALLOWANCES> 579
<INVENTORY> 4,395
<CURRENT-ASSETS> 67,209
<PP&E> 286,178
<DEPRECIATION> 117,616
<TOTAL-ASSETS> 243,263
<CURRENT-LIABILITIES> 30,165
<BONDS> 94,556
0
0
<COMMON> 128
<OTHER-SE> 80,445
<TOTAL-LIABILITY-AND-EQUITY> 243,263
<SALES> 0
<TOTAL-REVENUES> 94,376
<CGS> 0
<TOTAL-COSTS> 85,024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,281
<INCOME-PRETAX> 3,930
<INCOME-TAX> 1,495
<INCOME-CONTINUING> 2,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,435
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
