<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period ended June 30, 2000
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
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(State or other jurisdiction of (Identification No.
incorporation or organization) I.R.S. Employer)
TWO HARBOUR PLACE
302 KNIGHTS RUN ROAD
SUITE 1200
TAMPA, FLORIDA 33602
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(Address of principal executive offices)
(Zip Code)
(813) 209-0600
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Registrant's telephone number, including area code
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 $.01 par value, 11,233,901 shares outstanding as of August 9, 2000
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MARITRANS INC.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income - Three months ended June 30, 2000
and 1999 4
Condensed Consolidated Statements of Income - Six months ended June 30, 2000
and 1999 5
Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
2
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4
PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------------------------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,936 $ 13,232
Cash and cash equivalents - restricted 9,826 21,000
Trade accounts receivable 9,763 14,676
Other accounts receivable 4,763 5,782
Inventories 3,035 3,355
Deferred income tax benefit 4,003 4,013
Prepaid expenses 4,080 3,101
-------- --------
Total current assets 56,406 65,159
Vessels and equipment 277,824 278,471
Less accumulated depreciation 125,359 119,013
-------- --------
Net vessels and equipment 152,465 159,458
Notes receivable 3,538 3,692
Other 23,676 22,712
-------- --------
Total assets $236,085 $251,021
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year $ 7,849 $ 7,773
Trade accounts payable 756 1,686
Accrued interest 1,052 1,203
Accrued shipyard cost 7,846 6,961
Accrued wages and benefits 3,621 2,727
Other accrued liabilities 6,367 9,651
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Total current liabilities 27,491 30,001
Long-term debt 66,180 75,861
Deferred shipyard costs 11,770 10,442
Other liabilities 4,401 4,095
Deferred income taxes 36,025 35,925
Stockholders' equity 90,218 94,697
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Total liabilities and stockholders' equity $236,085 $251,021
======== ========
</TABLE>
See notes to financial statements.
3
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MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($000, except per share amounts)
<TABLE>
<CAPTION>
April 1 to April 1 to
June 30, 2000 June 30, 1999
-------------------------------
<S> <C> <C>
Revenues $ 28,053 $ 39,834
Costs and expenses:
Operation expense 15,797 21,999
Maintenance expense 4,567 7,433
General and administrative 2,016 2,493
Depreciation and amortization 4,308 5,129
-------- --------
Total operating expense 26,688 37,054
-------- --------
Operating income 1,365 2,780
Interest expense (1,580) (1,614)
Other income, net 376 290
-------- --------
Income before income taxes 161 1,456
Income tax provision 85 556
-------- --------
Net income
$ 76 $ 900
======== ========
Basic and diluted earnings per share $ 0.01 $ 0.08
Dividends declared per share $ 0.10 $ 0.10
</TABLE>
See notes to financial statements.
4
<PAGE>
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($000, except per share amounts)
<TABLE>
<CAPTION>
January 1 to January 1 to
June 30, 2000 June 30, 1999
------------------------------
<S> <C> <C>
Revenues $ 58,724 $ 78,232
Costs and expenses:
Operation expense 33,975 43,974
Maintenance expense 10,056 14,912
General and administrative 4,105 4,822
Depreciation and amortization 8,557 10,289
-------- --------
Total operating expense 56,693 73,997
-------- --------
Operating income 2,031 4,235
Interest expense (3,313) (3,547)
Other income, net 1,391 4,142
-------- --------
Income before income taxes 109 4,830
Income tax provision 100 1,845
-------- --------
Net income $ 9 $ 2,985
======== ========
Basic and diluted earnings per share $ 0.00 $ 0.25
Dividends declared per share $ 0.20 $ 0.20
</TABLE>
See notes to financial statements.
5
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MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000)
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999
---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9 $ 2,985
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,557 10,289
Deferred income tax provision 110 1,570
Stock compensation 492 396
Changes in receivables, inventories and prepaid expenses 5,431 5,815
Changes in current liabilities, other than debt (2,586) 779
Non-current changes, net 2,096 1,735
(Gain) loss on sale of fixed assets 637 (3,970)
-------- --------
14,737 16,614
-------- --------
Net cash provided by operating activities 14,746 19,599
Cash flows from investing activities:
Release of cash and cash equivalents - restricted 11,174 --
Cash proceeds from sale of equipment 165 11,458
Purchase of vessels, terminals and equipment (3,796) (2,408)
-------- --------
Net cash provided by investing activities 7,543 9,050
-------- --------
Cash flows from financing activities:
Payment of long-term debt (9,605) (7,100)
Borrowings under revolving credit facility -- 14,908
Repayments of borrowing under revolving credit facilities -- (25,481)
Proceeds from exercise of stock options 129 --
Purchase of treasury stock (2,810) (1,658)
Dividends declared and paid (2,299) (2,430)
-------- --------
Net cash provided by (used in) financing activities (14,585) (21,761)
-------- --------
Net increase in cash and cash equivalents 7,704 6,888
Cash and cash equivalents at beginning of period 13,232 1,214
-------- --------
Cash and cash equivalents at end of period $ 20,936 $ 8,102
======== ========
</TABLE>
See notes to financial statements
6
<PAGE>
MARITRANS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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.
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, 1999, 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. These financial statements should 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, 1999.
7
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2. Earnings per Common Share
The following data show the amounts used in computing basic and diluted
earnings per share ("EPS"):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(000's) (000's)
<S> <C> <C> <C> <C>
Income available to common stockholders
used in basic EPS $ 76 $ 900 $ 9 $ 2,985
Weighted average number of common
shares used in basic EPS 11,018 11,788 11,229 11,902
Effect of dilutive securities:
Stock options and restricted shares 334 132 279 125
Weighted number of common shares
and dilutive potential common
stock used in diluted EPS 11,352 11,920 11,508 12,027
</TABLE>
3. Income Taxes
The Company's effective tax rate differs from the federal statutory rate
due primarily to state income taxes and certain nondeductible items.
4. Share Buyback Program
On February 9, 1999, the Board of Directors authorized a share buyback
program for the acquisition of up to one million shares of the Company's
common stock. This amount represented approximately 8 percent of the
12.1 million shares outstanding at the beginning of the program. In
February 2000, the Board of Directors authorized the acquisition of an
additional one million shares in the program. As of June 30, 2000,
1,101,700 shares have been repurchased under the plan and were financed
from internally generated funds.
5. Corporate Relocation and Downsizing
In September 1999, the Company announced its intent to relocate the
corporate headquarters from Philadelphia, PA to Tampa, FL. In April
2000, this move occurred. The Company expenses costs associated with the
move as incurred. As of June 30, 2000 the Company has incurred $0.6
million of costs associated with the move. Also, in September 1999, the
Company announced a reduction in its shoreside staff. The Company
accrued $0.9 million of severance costs in September 1999 for the cash
benefits to be paid to the employees who were terminated. Of this
amount, approximately $0.7 million has been paid through June 30, 2000.
6. Sale of Assets
In June 2000, the Company sold real estate and equipment located in
Philadelphia, PA. The proceeds of the sale totaled $1.75 million of
which $1.575 million was received in the form of a note. The pre-tax
loss on the sale was $0.7 million and is included in other income in the
statement of income.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Information
Some of the statements in this Form 10-Q (the "10-Q") constitute forward-looking
statements under Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements made with respect to present or anticipated utilization, future
revenues and customer relationships, capital expenditures, future financings,
and other statements regarding matters that are not historical facts and involve
predictions. These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, levels of activity, growth,
performance, earnings per share or achievements to be materially different from
any future results, levels of activity, growth, performance, earnings per share
or achievements expressed in or implied by such forward-looking statements.
The forward-looking statements included in this 10-Q relate to future events or
the Company's future financial performance. In some cases, the reader can
identify forward-looking statements by terminology such as "may," "believe,"
"future," "potential," "estimate," "expect," "intend," "plan," "through,"
"provide," "meet," "allow," "represent," "result," "seek," "increase," "work,"
"perform," "make," "continue," "will," "include," or the negative of such terms
or comparable terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the Company's
current plans or assessments that we believe are reasonable as of the date of
this 10-Q. Factors that may cause actual results, goals, targets or objectives
to differ materially from those contemplated, projected, forecast, estimated,
anticipated, planned or budgeted in such forward-looking statements include,
among others, the factors outlined in this 10-Q and general financial, economic,
environmental and regulatory conditions affecting the oil and marine
transportation industries in general. These factors may cause the Company's
actual results to differ materially from any forward-looking statement. Given
such uncertainties, current or prospective investors are cautioned not to place
undue reliance on any such forward-looking statements.
Although the Company believes that the expectations in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance, growth, earnings per share or achievements. However,
neither the Company nor any other person assumes responsibility for the accuracy
and completeness of such statements. The Company is under no duty to update any
of the forward-looking statements after the date of this 10-Q to conform such
statements to actual results.
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I Item 1 of this Form
10-Q and the audited financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 1999 contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
9
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Results of Operations
Three Month Comparison
Revenue in the second quarter of 2000 was $28.1 million compared to $39.8
million in the second quarter of 1999, a decrease of $11.7 million or 29.4
percent. Revenue in the quarter decreased $10.4 million as a result of the
thirty-one vessels and the petroleum storage terminals that were sold in 1999.
Revenue on the remaining fleet was impacted by a decrease in utilization
compared to the same fleet in the second quarter of 1999. Although barrels of
cargo transported increased from 46.7 million in the second quarter of 1999 to
47.5 million in the second quarter of 2000, for the remaining comparable fleets,
vessel utilization decreased. Vessel utilization, as measured by revenue days
divided by calendar days available, decreased from 89 percent in the second
quarter of 1999 to 81.5 percent in the second quarter of 2000. This decrease was
the result of vessels being out of service in the quarter, two for normal
maintenance and the OCEAN 244 for its double hull rebuild. The OCEAN 244 will
continue to be out of service in the third quarter. The average daily rate
charged to customers increased over the comparable period in 1999 primarily due
to increased fuel costs, discussed in operating expenses below, most of which
the Company was able to pass through to customers under its contractual
agreements.
Total operating expenses in the second quarter of 2000 were $26.7 million
compared to $37.1 million in the second quarter of 1999, a decrease of $10.4
million or 28 percent. This decrease was due primarily to the sale of assets
discussed above. Offsetting this decrease was an increase in fuel expense for
fuel used on the vessels. The average price per gallon in the second quarter of
2000 was significantly higher than in the second quarter of 1999. The increased
fuel costs were offset by decreases in maintenance costs and overhead costs in
the second quarter of 2000 compared to the second quarter of 1999 for the
remaining fleet. In addition, the Company incurred $0.2 million in relocation
costs in the current quarter for the move of the corporate headquarters from
Philadelphia, PA to Tampa, FL.
Operating income decreased as a result of the aforementioned changes in revenue
and expenses.
Other income includes interest income of $1.0 million offset by a pre-tax loss
on the sale of Philadelphia real estate and equipment of $0.7 million.
Net income for the second quarter of 2000 decreased compared to the second
quarter of 1999 due to the aforementioned changes in revenue and expenses.
10
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Six Month Comparison
Revenue for the six months ended June 30, 2000 was $58.7 million compared to
$78.2 million for the six months ended June 30, 1999, a decrease of $19.5
million or 24.9 percent. Revenue for the six months ended June 30, 2000
decreased $22.2 million due to the sale of assets discussed above. This decrease
was offset by an increase in revenue on the remaining fleet in the same period.
The average daily rate charged to customers increased compared to the same
period in 1999. This increase was primarily the result of an increase in fuel
costs, discussed in operating expenses below, that the Company was able to pass
through to its customers under its contractual agreements. Although barrels of
cargo transported increased from 87.7 million to 96.0 million, vessel
utilization decreased. Overall vessel utilization, including changes in the
fleet, as measured by revenue days divided by calendar days available, decreased
from 88.0 percent in the first half of 1999 to 86.4 percent for the first half
of 2000. This decrease is due to the shipyard schedules for the vessels, which
consisted of vessels that were in the shipyard for normal maintenance and the
OCEAN 244 which was in the shipyard for the entire second quarter of 2000
undergoing its double hull rebuild.
Total operating expenses for the six months ended June 30, 2000 were $56.7
million compared to $74.0 for the six months ended June 30, 1999, a decrease of
$17.3 million or 23 percent due primarily to the sale of assets in 1999
discussed above. The cost of fuel used on the vessels increased because the
average fuel price per gallon was significantly higher than in the same period
of 1999. The increased fuel costs were offset by decreases in maintenance costs
and overhead costs for the comparable six month periods for the remaining fleet.
Relocation costs for moving the corporate headquarters from Tampa, FL to
Philadelphia, PA were $0.6 million in 2000.
Operating income decreased as a result of the aforementioned changes in revenue
and expenses.
Other income includes interest income of $2.0 million offset by a pre-tax loss
on the sale of Philadelphia real estate and equipment of $0.7 million. Other
income for the first six months of 1999 includes a gain of $3.7 million, net of
noncash adjustments, on the disposition of five vessels. These vessels consisted
of two tug and barge units, which were working in Puerto Rico and a tugboat
working on the Atlantic Coast.
Net income for the first six months of 2000 decreased compared to the first six
months of 1999 due to the aforementioned changes in revenue and expenses.
Liquidity and Capital Resources
For the six months ended June 30, 2000, 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 Inc. to pay a dividend of $0.10 per common share in the current
quarter. The ratio of total debt to the sum of total debt and stockholders
equity was 0.45:1 at June 30, 2000.
11
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Management believes that in 2000, funds provided by operating activities,
augmented by financing and investing transactions, will be sufficient to finance
operations, anticipated capital expenditures, lease payments and required debt
repayments. While dividends were paid quarterly in each of the last two years,
there can be no assurances that dividend payments will continue.
On February 9, 1999, the Board of Directors authorized a share buyback program
for the acquisition of up to one million shares of the Company's common stock.
This amount represented approximately 8 percent of the 12.1 million shares
outstanding at the beginning of the program. In February 2000, the Board of
Directors authorized the acquisition of an additional one million shares in the
program. As of June 30, 2000, 1,101,700 shares have been repurchased under the
plan and have been financed from internally generated funds. The Company intends
to hold the majority of the repurchased shares as treasury stock, although some
shares will be used for employee compensation plans and others may be used for
acquisition currency and/or other corporate purposes.
On July 30, 1999, the Company awarded a contract to rebuild a second large
single hull barge, the OCEAN 244, to a double hull configuration. The rebuild is
expected to have a total cost of approximately $12 million. As of June 30, 2000,
$7.2 million has been paid to the shipyard contractor. The vessel went into the
shipyard late in the first quarter of 2000 and is expected to return to service
early in the fourth quarter of 2000. The Company has been and expects to
continue financing this project from internally generated funds.
In September 1999, the Company announced its intent to relocate the corporate
headquarters from Philadelphia, PA to Tampa, FL. In April 2000, this move
occurred. Although most of the employees who are relocating have moved as of
June 30, 2000, some employees will be moving in the third quarter of 2000. As of
June 30, 2000, the Company has incurred $0.6 million of costs associated with
the move. These costs will continue to be incurred into the third quarter of
2000. The Company maintains a Philadelphia office that supports the lightering
operations.
Also in September 1999, the Company announced a reduction in its shoreside
staff. The Company accrued $0.9 million of severance costs in September 1999 for
the cash benefits to be paid to the employees who were terminated. At June 30,
2000, approximately $0.7 million of the severance costs have been paid to the
terminated employees.
Debt Obligations and Borrowing Facility
At June 30, 2000, the Company had $74.0 million in total outstanding debt,
secured by mortgages on most of the fixed assets of the Company. The current
portion of this debt at June 30, 2000 was $7.8 million.
In 1997, Maritrans entered into a multi-year revolving credit facility for
amounts up to $33 million with Mellon Bank, N.A. that are collateralized by
mortgages on tankers. In 2000, this facility was extended to October 30, 2002.
At June 30, 2000, $19.5 million was outstanding under this facility.
12
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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 the Oil Pollution Act of 1990 ("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 cleared
the way for further proceedings which will determine whether
OPA's double-hull requirements 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. On
April 30, 1999, the Court ruled that the case was ripe only with
respect to vessels that OPA had forced out of service, which
would include vessels that Maritrans had sold, scrapped or
rebuilt.
Maritrans and the United States have agreed on a joint proposed
schedule, which calls for discovery on the remaining issues to
commence in December 1999 and for the trial to occur in January
2001. The parties are awaiting a court response to the proposed
scheduling order.
13
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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
June 30, 2000.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARITRANS INC.
(Registrant)
By: /s/ H. William Brown Dated: August 11, 2000
-----------------------------------
H. William Brown
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: August 11, 2000
-----------------------------------
Walter T. Bromfield
Treasurer and Controller
(Principal Accounting Officer)
15
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EXHIBIT INDEX
Exhibit Page Number
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27 Financial Data Schedule --
16
