<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 March 31, 1998
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or
Transition Report Pursuant to Section 13 or 15(d) of the
- --- Securities Exchange Act of 1934
For the Transition Period from to
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Commission File Number 1-9063
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MARITRANS INC.
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(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
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Not Applicable
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(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
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Common Stock outstanding as of March 31, 1998: 12,100,919
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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.......................3
Notes to Condensed Consolidated Financial Statements........4
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...............5
PART II. OTHER INFORMATION
- -------- -----------------
ITEM 1. Legal Proceedings...........................................9
ITEM 6. Exhibits and Reports on Form 8-K............................9
Signature................................................................10
<PAGE>
PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
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ASSETS
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,360 $ 13,312
Trade accounts receivable 15,601 18,073
Other accounts receivable 5,153 4,447
Inventories 3,697 5,066
Deferred income tax benefit 3,994 3,491
Prepaid expenses 1,988 3,257
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Total current assets 50,793 47,646
Vessels, terminals and equipment 330,638 329,032
Less accumulated depreciation 136,852 132,316
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Net vessels, terminals and equipment 193,786 196,716
Other 6,455 6,661
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Total assets $251,034 $251,023
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Debt due within one year $ 8,270 $ 9,758
Trade accounts payable 1,666 2,390
Accrued interest 3,065 1,563
Accrued shipyard costs 9,444 8,723
Accrued wages and benefits 4,173 5,208
Other accrued liabilities 8,731 9,825
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Total current liabilities 35,349 37,467
Long-term debt 76,418 75,365
Deferred shipyard costs 14,166 13,085
Other liabilities 5,509 5,326
Deferred income taxes 28,985 28,985
Stockholders' equity 90,607 90,795
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Total liabilities and stockholders'
equity $251,034 $251,023
======== ========
</TABLE>
See accompanying notes.
1
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MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
($000, except per share amounts)
JANUARY 1 TO JANUARY 1 TO
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
Revenues $ 35,830 $ 31,812
Costs and expenses:
Operation expense 19,652 16,152
Maintenance expense 6,416 4,365
General and administrative 2,389 2,150
Depreciation and amortization 4,633 3,973
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Total operating expenses 33,090 26,640
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Operating income 2,740 5,172
Interest expense, net (1,895) (2,133)
Other income, net 307 11
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Income before income taxes 1,152 3,050
Income tax provision 432 1,159
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Net income $ 720 $ 1,891
============ ============
Basic earnings per share $ 0.06 $ 0.16
Diluted earnings per share $ 0.06 $ 0.16
Average common shares outstanding 12,062,047 11,921,475
============ ============
See accompanying notes.
2
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MARITRANS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
($000)
<TABLE>
<CAPTION>
JANUARY 1 TO JANUARY 1 TO
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 720 $ 1,891
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,633 3,973
Deferred income tax provision (503) (340)
Stock compensation 182 103
Changes in receivables, inventories
and prepaid expenses 4,404 5,595
Changes in current liabilities
other than debt (630) 2,543
Non-current changes, net 1,373 1,673
(Gain)/loss on sale of equipment -- 514
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Total adjustments to net income 9,459 14,061
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Net cash provided by (used in)
operating activities 10,179 15,952
Cash flows from investing activities:
Proceeds from litigation settlement 1,025 --
Cash proceeds from sale of equipment -- 1,632
Purchase of vessels, terminals and equipment (2,631) (1,230)
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Net cash provided by (used in)
investing activities (1,606) 402
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Cash flows from financing activities:
Proceeds from stock option exercises -- 45
Payment of long-term debt (435) (424)
Dividends declared and paid (1,090) (898)
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Net cash provided by (used in)
financing activities (1,525) (1,277)
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Net increase (decrease)
in cash and cash equivalents 7,048 15,077
Cash and cash equivalents at beginning of
period 13,312 33,174
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Cash and cash equivalents at end of period $ 20,360 $ 48,251
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</TABLE>
See accompanying notes.
3
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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 General Partner Inc., Maritrans Tankers Inc.,
Maritrans Barge Co., Maritrans Holdings Inc. and other Maritrans
entities (collectively, the "Company"). These subsidiaries, directly and
indirectly, own and operate oil tankers, tugboats, and oceangoing
petroleum tank 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, 1997, 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, 1997.
4
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2. Earnings per Common Share
-------------------------
The following data show the amounts used in computing earnings per share
("EPS") and the effect on income and the weighted average number of
shares of dilutive potential common stock.
1998 1997
---- ----
(thousands)
Income available to common stockholders
used in basic EPS $ 720 $1,891
Weighted average number of common
shares used in basic EPS 12,062 11,921
Effect of dilutive securities:
Stock options 252 127
Weighted number of common shares
and dilutive potential common
stock used in diluted EPS 12,314 12,048
3. Income Taxes
------------
The Company's effective tax rate differs from the federal statutory rate
due primarily to state income taxes.
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 and expected
capital expenditures. 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 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, 1997.
Liquidity and Capital Resources
- -------------------------------
For the three months ended March 31, 1998, funds provided by operating
activities were sufficient to meet debt service obligations and loan agreement
restrictions, to make capital acquisitions and improvements and to allow
Maritrans to pay a dividend of $0.09 per common share in the current quarter.
Dividend payments are expected to continue quarterly in 1998.
5
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Management believes that in 1998 funds provided by operating activities,
augmented by financing and investing transactions, will be sufficient to provide
funds necessary for operations, anticipated capital expenditures, lease
payments, dividend payments and required debt repayments.
In the first quarter, the Company began a pilot project to rebuild and to coat
the tanks of its single-hull barge, the OCEAN 192, as a double-hulled barge. In
the current quarter, the Company had expenditures for this project of
approximately $1.2 million. The total expenditures to date on this project are
$3.2 million. Additionally, the Company has a purchase commitment in 1998 on the
previously announced acquisition of a second 40,000 deadweight ton, double-hull
oil tanker from Chevron USA, Inc. which complies with all International Maritime
Organization ("IMO") and Oil Pollution Act of 1990 ("OPA") design criteria for
future oil trading.
The Company expects total expenditures for these projects will be approximately
$24 million. Management believes that total capital expenditures in 1998 will be
approximately $28 million compared to approximately $50 million in 1997.
Additionally, the Company will continue to evaluate additional potential
investments consistent with its long-term strategic interests, and the potential
sources of funds for those potential investments.
Liquidity and Capital Indicators
- --------------------------------
As of March 31, 1998:
Ratio of current assets to current liabilities 1.44:1
Working Capital (in Thousands) $15,444
Ratio of total debt to the sum of total debt
and stockholders' equity .48
Working Capital Position
- ------------------------
Working capital increased by $5.3 million from December 31, 1997 to March 31,
1998. This was due to cash generated from operating activities reduced by
capital expenditures and dividend payments. The ratio of current assets to
current liabilities increased from 1.27:1 at December 31, 1997 to 1.44:1 at
March 31, 1998.
6
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Debt Obligations and Borrowing Facility
- ---------------------------------------
At March 31, 1998, the Company had $84.7 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 March 31, 1998
was $8.3 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 three months ended March 31, 1998.
On October 17, 1997, Maritrans entered into a multi-year revolving credit
facility for amounts up to $33 million with Mellon Bank, N.A. This agreement is
collateralized by mortgages on tankers acquired in 1997. At March 31, 1998, $6
million was outstanding under this facility.
Results of Operations
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Three Month Comparison
- ----------------------
Revenues
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Revenues for the first quarter totaled $35.8 million compared with $31.8 million
in the first quarter of 1997, an increase of $4.0 million or 12.6 percent.
Barrels of cargo transported increased by 5.9 million, from 56.1 million to 62.0
million or 10.5 percent. Volumes in the current quarter as compared to the same
quarter in 1997 were positively impacted by the addition of three tankers and
two tug/barge units to the fleet. Utilization, as measured by revenue days
divided by calendar days available, totaled 81.2 percent compared to 79.7
percent in the first quarter of 1997. Utilization for the fleet, excluding the
new vessels, decreased by one percentage point to 78.8 percent. In the first
quarter of 1998 the fleet was impacted by heavier than normal weather delays in
its two largest market areas of the Gulf of Mexico and the northeastern United
States. Revenues from sources other than marine transportation decreased from
2.8 percent of revenues in the first quarter of 1997 to 2.6 percent in the
current quarter.
Results
- -------
Operating expenses of $33.1 million increased by $6.4 million or 24.0 percent
from $26.7 million in the first quarter of 1997. This increase was due to the
addition of three tankers and two tug/barge units to the fleet. Expenses
excluding the new vessels decreased reflecting lower utilization, which impacts
certain vessel operating expenses and reductions in owned capacity. General and
administrative expenses increased as a result of higher professional fees and
shoreside training and staffing expenses.
7
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Interest expense decreased from $2.1 million in the first quarter of 1997 to
$1.9 million in the first quarter of 1998. The reduction was due to lower levels
of principal outstanding. Other income increased by $0.3 million to $0.3 million
in the current quarter. The first quarter of 1997 included a $0.5 million loss
on the disposal of certain assets that offset interest income in that quarter.
Interest income in the current quarter decreased to $0.3 million as the Company
had less cash equivalents on hand due to asset acquisitions late in 1997.
Net income for the first quarter decreased by $1.2 million from $1.9 million in
the first quarter of 1997 to $0.7 million in the first quarter of 1998 as a
result of aforementioned changes in revenues and operating expenses.
Maritrans expects that margins in upcoming quarters will continue to be
negatively impacted by several factors, including costs related to integrating
Maritrans' vessel additions to its fleet, and by the utilization impact which
may result from expected higher cyclical fleet maintenance and the related out
of service time. Included in the out of service time is the OCEAN 192
double-hull rebuild project, discussed more fully in the "Liquidity and Capital
Resources" section of this report.
8
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Part II: OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
In Maritrans Inc., et al v. United States, Maritrans sued the
United States in 1996 alleging that the double hull requirement
of OPA which requires retirement of Maritrans' fleet of
single-hulled barges, is a "taking" under the fifth amendment to
the U.S. Constitution. Maritrans is seeking in excess of $250
million in compensation for this taking. A trial was held in
July 1997 on the preliminary issue of whether Maritrans had a
cognizable property interest that could be subject to taking.
In an Order dated October 29, 1997, the United States Court of
Federal Claims held that, at the time Maritrans built or
acquired its single-hulled tank barges, it could not have
reasonably anticipated that double hulls would be required
within the working lifetime of the vessels. This Order clears
the way for further proceedings which will determine whether
OPA's double-hull requirement does constitute a taking, and, if
so, the amount of compensation to be paid to Maritrans. The
written opinion of this Order was handed down on April 24, 1998.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
No. 27 - Financial Data Schedule.
(b) Reports on Form 8-K
(1) No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
9
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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/ H. William Brown Dated: May 14, 1998
----------------------------------
H. William Brown
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: May 14, 1998
----------------------------------
Walter T. Bromfield
Treasurer and Controller
(Principal Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810113
<NAME> MARITRANS INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 20,360
<SECURITIES> 0
<RECEIVABLES> 15,601
<ALLOWANCES> 1,294
<INVENTORY> 3,697
<CURRENT-ASSETS> 50,793
<PP&E> 330,638
<DEPRECIATION> 136,852
<TOTAL-ASSETS> 251,034
<CURRENT-LIABILITIES> 35,349
<BONDS> 76,418
0
0
<COMMON> 130
<OTHER-SE> 90,477
<TOTAL-LIABILITY-AND-EQUITY> 251,034
<SALES> 0
<TOTAL-REVENUES> 35,830
<CGS> 0
<TOTAL-COSTS> 33,090
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,895
<INCOME-PRETAX> 1,152
<INCOME-TAX> 432
<INCOME-CONTINUING> 720
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
