<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 March 31, 2000
--------------
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
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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)
TWO HARBOUR PLACE
302 KNIGHTS RUN AVENUE
SUITE 1200
TAMPA, FLORIDA 33602
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(813) 209-0600
--------------------------------------------------
Registrant's telephone number, including area code
1818 MARKET STREET, SUITE 3540
PHILADELPHIA, PENNSYLVANIA 19103
---------------------------------------------------
(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, 11,495,210 shares outstanding as of May 11, 2000
1
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MARITRANS INC.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations - Three months ended March 31,
2000 and 1999 4
Condensed Consolidated Statements of Cash Flows - Three months ended March 31,
2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
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PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------- ------------------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 21,535 $ 13,232
Cash and cash equivalents - restricted 21,000 21,000
Trade accounts receivable 10,789 14,676
Other accounts receivable 4,798 5,782
Inventories 3,377 3,355
Deferred income tax benefit 4,003 4,013
Prepaid expenses 2,032 3,101
--------- ---------
Total current assets 67,534 65,159
Vessels and equipment 278,739 278,471
Less accumulated depreciation 123,187 119,013
--------- ---------
Net vessels and equipment 155,552 159,458
Note receivable 3,615 3,692
Other 22,461 22,712
--------- ---------
Total assets $ 249,162 $ 251,021
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year $ 7,838 $ 7,773
Trade accounts payable 1,378 1,686
Accrued interest 2,405 1,203
Accrued shipyard costs 8,147 6,961
Accrued wages and benefits 3,596 2,727
Other accrued liabilities 5,496 9,651
--------- ---------
Total current liabilities 28,860 30,001
Long-term debt 75,522 75,861
Deferred shipyard costs 12,221 10,442
Other liabilities 4,245 4,095
Deferred income taxes 35,939 35,925
Stockholders' equity 92,375 94,697
--------- ---------
Total liabilities and stockholders' equity $ 249,162 $ 251,021
========= =========
</TABLE>
See notes to financial statements.
3
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MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($000, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
----------------------------
<S> <C> <C>
Revenues $30,671 $38,398
Costs and expenses:
Operation expense 18,178 21,975
Maintenance expense 5,489 7,479
General and administrative 2,089 2,329
Depreciation and amortization 4,248 5,160
------- -------
Total operating expense 30,004 36,943
------- -------
Operating income 667 1,455
Interest expense (1,733) (1,933)
Other income 1,014 3,852
------- -------
Income (loss) before income taxes (52) 3,374
Income tax provision 15 1,289
------- -------
Net income (loss) $ (67) $ 2,085
======= =======
Basic and diluted earnings (loss) per share $ (0.01) $ 0.17
Dividends declared per share $ 0.10 $ 0.10
</TABLE>
See notes to financial statements.
4
<PAGE>
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (67) $ 2,085
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,248 5,160
Deferred income tax provision 24 1,289
Stock compensation 211 164
Changes in receivables, inventories and prepaid expenses 5,918 6,074
Changes in current liabilities, other than debt (1,206) 1,265
Non-current changes, net 2,182 1,541
(Gain) loss on sale of fixed assets - (3,962)
-------- -------
11,377 11,531
-------- -------
Net cash provided by operating activities 11,310 13,616
Cash flows from investing activities:
Cash proceeds from sale of equipment - 11,449
Purchase of vessels and equipment (267) (1,772)
-------- -------
Net cash provided by (used in) investing activities (267) 9,677
-------- -------
Cash flows from financing activities:
Payment of long-term debt (274) (300)
Borrowings under revolving credit facilities - 6,018
Repayments of borrowing under revolving credit facilities - (16,591)
Purchase of treasury stock (1,443) (329)
Proceeds from exercise of stock options 129 -
Dividends declared and paid (1,152) (1,214)
-------- -------
Net cash provided by (used in) financing activities (2,740) (12,416)
-------- -------
Net increase in cash and cash equivalents 8,303 10,877
Cash and cash equivalents at beginning of period 13,232 1,214
-------- -------
Cash and cash equivalents at end of period $ 21,535 $12,091
======== =======
</TABLE>
See notes to financial statements
5
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MARITRANS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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.
6
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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"):
Three Months Ended March 31,
2000 1999
---- ----
(000's)
Income (loss) available to common
stockholders used in basic EPS $ (67) $ 2,085
Weighted average number of common
shares used in basic EPS 11,308 11,941
Effect of dilutive securities:
Stock options and restricted shares 0 115
Weighted number of common shares
and dilutive potential common
stock used in diluted EPS 11,308 12,056
3. Income Taxes
The Company's effective tax rate differs from the federal statutory rate
due primarily to state and local 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 represents 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 March 31, 2000, 869,400 shares
have been repurchased under the plan and have been 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 March 31, 2000 the Company has incurred $0.4
million of costs associated with the move. Also, in September 1999, the
Company announced a reduction of approximately twenty-five percent of
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 $0.5 million has been
paid through March 31, 2000.
7
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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 (this "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 are believed to be 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 industry in general. Given such uncertainties, current or
prospective investors are cautioned not to place undue reliance on any such
forward-looking statements. These factors may cause the Company's actual results
to differ materially from any forward-looking statement.
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.
8
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Results of Operations
- ---------------------
Three Month Comparison
- ----------------------
Revenue of $30.7 million in the first quarter of 2000 decreased from $38.4
million in the first quarter of 1999, a decrease of $7.7 million or 20 percent.
Revenue for the quarter decreased $11.8 million as a result of the thirty-one
vessels and the petroleum storage terminals that were sold in 1999. Of the
remaining fleet, there was a $4.1 million increase in revenue compared to the
same quarter in the prior year. This is due to an increase in utilization and in
the average daily rate charged to customers. Vessel utilization, as measured by
revenue days divided by calendar days available, for the remaining fleet
compared to that same fleet for the first quarter of 1999, increased from 87.2
percent to 91.2 percent in the first quarter of 2000. The majority of this
increased utilization resulted from one of the Company's tankers that had been
in the shipyard for a majority of the first quarter of 1999, operating during
the first quarter of 2000. Additionally, most of the increase in the average
daily rate over the same period in 1999 resulted from the increase in fuel
costs, discussed in operating expenses below, which the Company was able to pass
through to its customers under its contractual agreements. Barrels of cargo
transported increased from 41.0 million in the first quarter of 1999 to 48.5
million in the first quarter of 2000, for the remaining comparable fleets.
Looking forward, nearly 12% of the Company's total fleet capacity will be out of
service in the second quarter of 2000. The out of service capacity consists of
the Ocean 244 double hull rebuild project, discussed below, and other vessels
that will be in the shipyard for normal maintenance. This out of service time
will decrease the Company's utilization resulting in a reduction of revenues.
Operating expenses decreased from $36.9 million in the first quarter of 1999 to
$30.0 million in the first quarter of 2000, a decrease of $6.9 million or 19
percent primarily due to the sale of assets discussed above. In the first
quarter of 1999, the Company experienced a shortage of qualified seagoing
personnel and, as a result, incurred costs for the chartering in of third party
tugboats. The Company did not incur these costs in the first quarter of 2000.
Offsetting these decreases was an increase in fuel expenses for fuel used on the
vessels. The average fuel price per gallon almost doubled from the same quarter
of last year. In addition, one of the Company's tankers that had been in the
shipyard for a majority of the first quarter of 1999 was operating during the
first quarter of 2000. The Company incurred $0.4 million of 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 decreased from $3.9 million in the first quarter of 1999 to $1.0
million in the first quarter of 2000, a decrease of $2.9 million or 74 percent.
Included in the first quarter of 1999 is a $3.7 million gain on the sale of five
vessels, consisting of two tug and barge units which were working in Puerto Rico
and a tugboat working on the Atlantic Coast. The Company had no similar
transactions in the comparable period of 2000. Other income in the first quarter
of 2000 consisted of interest income earned on investments, which increased
compared to the same period of 1999 primarily due to the proceeds generated on
the sales of assets in 1999.
9
<PAGE>
Net income for the first quarter of 2000 decreased compared to the first quarter
of 1999 due to the aforementioned changes in revenue and expenses.
Liquidity and Capital Resources
- -------------------------------
For the three months ended March 31, 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 capitalization is .47:1 at March 31, 2000.
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 have been made quarterly in each of the last two
years, there can be no assurances that the dividend 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 represents 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 March 31, 2000, 869,400 shares have been repurchased under the
plan and have been financed from internally generated funds. The Company intends
to hold the majority of the 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, which is
expected to have a total cost of approximately $12 million. Of this amount, $4.0
million has been paid to the shipyard contractor as of March 31, 2000. The
vessel went into the shipyard late in the first quarter of 2000 and is expected
to return to service near the end of the third quarter of 2000. The Company has
and expects to continue the financing of 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 some of the employees who are relocating moved in April, the
remaining employees will be moving in the second and third quarters of 2000. As
of March 31, 2000, the Company has incurred $0.4 million of costs associated
with the move. These costs will continue into the second and third quarters of
2000. The Company maintains a Philadelphia office that supports the lightering
operations.
10
<PAGE>
Also in September 1999, the Company announced a reduction of approximately
twenty-five percent of the 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 March 31, 2000, approximately $0.5 million of
the severance costs have been paid to the terminated employees.
Debt Obligations and Borrowing Facility
- ---------------------------------------
At March 31, 2000, the Company had $83.3 million in total outstanding debt,
secured by mortgages on most of the fixed assets of the Company. The current
portion of this debt at March 31, 2000 was $7.8 million.
The Company has a $10 million working capital facility, secured by its
receivables and inventories. At March 31, 2000, there is no balance outstanding
under this facility, although the Company utilizes this facility from time to
time for working capital and other business needs.
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 February 2000, this facility was extended to October
30, 2002. At March 31, 2000, $22 million was outstanding under this facility.
Impact of Year 2000
- -------------------
Prior to December 31, 1999, the Company completed an assessment of its computing
systems, commercial off-the-shelf systems and embedded systems, had developed
new software programs and replaced commercial systems to take advantage of newer
technologies. As a result of this initiative, the Company's operating systems,
critical embedded systems and commercial off-the-shelf systems were Year 2000
compliant. The Company did not experience any significant problems with its
internal systems nor with its key service providers and customers during the
change to the Year 2000. The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the Year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
11
<PAGE>
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.
12
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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) A report on Form 8-K was filed on January 5, 2000 to report
the disposition of twenty-six barges and tugboats.
(2) A report on Form 8-K/A was filed on March 6, 2000 which
included the Pro Forma Condensed Consolidated Statements of
Operations for the Year Ended December 31, 1998 and for the
Nine Months Ended September 30, 1999 and the Pro Forma
Condensed Consolidated Balance Sheet as of September 30,
1999 for the disposition of assets filed on Form 8-K on
January 5, 2000, (1) above.
13
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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: May 12, 2000
---------------------------------
H. William Brown
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: May 12, 2000
----------------------------------
Walter T. Bromfield
Treasurer and Controller
(Principal Accounting Officer)
14
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EXHIBIT INDEX
- -------------
Exhibit Page Number
- ------- -----------
27 Financial Data Schedule --
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 21,535
<SECURITIES> 0
<RECEIVABLES> 12,215
<ALLOWANCES> 1,426
<INVENTORY> 3,377
<CURRENT-ASSETS> 67,534
<PP&E> 278,739
<DEPRECIATION> 123,187
<TOTAL-ASSETS> 249,162
<CURRENT-LIABILITIES> 28,860
<BONDS> 75,522
0
0
<COMMON> 132
<OTHER-SE> 92,243
<TOTAL-LIABILITY-AND-EQUITY> 249,162
<SALES> 0
<TOTAL-REVENUES> 30,671
<CGS> 0
<TOTAL-COSTS> 30,004
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,733
<INCOME-PRETAX> (52)
<INCOME-TAX> 15
<INCOME-CONTINUING> (67)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
