<PAGE> 1
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1997
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 _______________
TRANSTAR HOLDINGS, L.P.
TRANSTAR CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3486874
DELAWARE 13-3745313
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
345 PARK AVENUE
NEW YORK, NY 10154
(Address and zip code of principal executive offices)
(212) 935-2626
(Registrant's telephone number, including area code)
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
filing requirements for the past 90 days.
Yes __X__ No _____
- -------------------------------------------------------------------------------
<PAGE> 2
Transtar Holdings, L.P.
Transtar Capital Corporation
Form 10-Q
Quarterly Period Ended June 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
A. TRANSTAR HOLDINGS, L.P.
Consolidated Balance Sheet 3
Consolidated Statements of Income and Partners' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
B. TRANSTAR, INC.
Consolidated Balance Sheet 9
Consolidated Statements of Income and Retained Earnings 10
Consolidated Statement of Cash Flows 11
Notes to Consolidated Financial Statements 12
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II - OTHER INFORMATION 15
SIGNATURE 16
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
A. TRANSTAR HOLDINGS, L.P.
TRANSTAR HOLDINGS, L.P.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------------ --------------
(dollars in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 253 $ 386
Other current assets 157 329
--------- ---------
Total current assets 410 715
Restricted cash 40,181 44,579
Investment in Transtar 12,311 491
Other assets 4,736 5,105
--------- ---------
Total assets $ 57,638 $ 50,890
========= =========
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities $ 367 $ 729
Long-term debt 159,537 148,767
--------- ---------
Total liabilities 149,904 149,767
---------
PARTNERS' EQUITY (DEFICIT) (102,266) (98,606)
--------- ---------
Total liabilities and partners' equity $ 57,638 $ 50,890
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
TRANSTAR HOLDINGS, L.P.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------ ------------------------------
1997 1996 1997 1996
-------- -------- -------- --------
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
------- ------- -------- -------
Operating expenses:
Selling, general and administrative expenses 133 152 247 282
------- ------- -------- -------
Operating (loss) (133) (152) (247) (282)
Interest income 561 292 1,157 597
Interest and other financial expenses (6,009) (4,577) (11,139) (9,106)
------- ------- -------- -------
(Loss) before equity in earnings of Transtar (5,581) (4,437) (10,229) (8,791)
Equity in earnings of Transtar 11,055 10,061 11,990 10,408
------- ------- -------- -------
Net income $ 5,474 $ 5,624 $ 1,761 $ 1,617
======= ======= ======== =======
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
(UNAUDITED)
Partners' equity (deficit), beginning of period ($107,569) ($122,213) ($98,606) ($117,306)
Distribution to partners -- -- (5,250) (900)
Net income 5,474 5,624 1,761 1,617
Other adjustments to partners' equity (171) -- (171) --
--------- --------- --------- ---------
Partners' equity (deficit), end of period ($102,066) ($116,589) ($102,066) ($116,589)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
TRANSTAR HOLDINGS, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
------------------------------------------
1997 1996
--------------- ---------------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,761 $ 1,617
Adjustments to reconcile to net cash (used)
by operating activities:
Amortization 172 199
Non-cash interest and other financial expenses 11,139 9,106
Non-cash interest income (1,152) (595)
Equity in earnings of Transtar (11,990) (10,408)
Changes in:
Accounts payable (363) (317)
-------- --------
Net cash (used) by operating activities (433) (398)
-------- --------
INVESTING ACTIVITIES:
Net cash provided by investing activities -- --
-------- --------
FINANCING ACTIVITIES:
Distribution to partners (5,250) (900)
Withdrawal from restricted cash 5,550 1,225
-------- --------
Net cash provided by financing activities 300 325
-------- --------
(Decrease) in cash and cash equivalents (133) (73)
Cash and cash equivalents at beginning of period 386 95
-------- --------
Cash and cash equivalents at end of period $ 253 $ 22
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
TRANSTAR HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1997
NOTE 1: BASIS OF FINANCIAL STATEMENT PRESENTATION:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all normal recurring adjustments
considered necessary for a fair statement of the results of operations for the
three and six month periods ended June 30, 1997 have been included. The results
of operations for the three and six month periods ended June 30, 1997 are not
necessarily indicative of the results of operations for the full year. When
reading the financial information contained in this Quarterly Report, reference
should be made to the financial statements, schedules and notes contained in
Transtar Holdings, L.P.'s (Holdings) Annual Report on Form 10-K for the year
ended December 31, 1996. Transtar Capital Corporation (TCC), a subsidiary of
Holdings, is a shell corporation which has nominal assets and no liabilities,
operations or cash flows. Accordingly, the financial statements of TCC are not
presented because they do not provide material information to investors.
NOTE 2: LONG-TERM DEBT:
On December 7, 1993, Holdings and TCC (Issuers) issued $218 million aggregate
principal amount of 13.375% Senior Discount Notes due December 15, 2003
(Notes). The Notes are the joint and several obligations of the Issuers. An
original issue discount of $118 million will be amortized over a six year
period commencing December 15, 1993 and ending December 15, 1999. Interest will
be payable semi-annually in arrears on June 15 and December 15 commencing on
June 15, 2000. The Notes have a principal at maturity of $218 million. The
carrying value represents the principal at maturity less the unamortized
discount. The Notes are not guaranteed by Transtar, Inc. (Transtar) or any of
its subsidiaries and are subordinated to all existing and future liabilities of
the Issuers' subsidiaries. Interest expense attributable to the Notes was $10.8
million and $8.7 million in the first half of 1997 and 1996, respectively, and
was $5.8 million and $4.4 million in the second quarter of 1997 and 1996,
respectively.
NOTE 3: RELATED PARTY TRANSACTIONS:
On August 29, 1996, Transtar declared a cash dividend in the amount of
$850 per share on both its Class A Voting Common Stock (Voting Stock) and its
Class B Nonvoting Common Stock (Nonvoting Stock) to holders of record of the
stock on August 27, 1996. Holdings received $8.7 million on August 29, 1996,
representing its 53% economic interest in the Transtar dividend. Pursuant to an
Indenture relating to the issuance of the Notes (the Notes Indenture), the
dividend payment was paid into an escrow account. On November 26, 1996,
Transtar declared a cash dividend of $1,275 per share on both its Voting Stock
and its Nonvoting Stock to holders of record of the stock on November 22, 1996.
Holdings received $13.0 million on November 26, 1996, representing its 53%
economic interest in the Transtar dividend. In accordance with the Notes
Indenture, this dividend was paid into the escrow account.
In February, 1997, in accordance with the Notes Indenture, Holdings
offered to repurchase a portion of the Notes at an offer price equal to 101% of
the accreted value of such Notes on the date of purchase. The offer to purchase
the Notes was made by a notice to holders of the Notes and was held open for 20
business days. No Notes were tendered for repurchase. In the first half of
1997, in accordance with the Notes Indenture and an agreement governing the
escrow account, Holdings withdrew from the escrow account $5.3 million to
distribute to its partners and $0.3 million to pay certain administrative
expenses.
In 1995, Transtar declared two cash dividends, each in the amount of
$1,450 per share, on both its Voting Stock and its Nonvoting Stock to holders
of record of the stock on October 27, 1995. The first dividend was paid on
October 31, 1995 and the second was paid on December 29, 1995. Holdings
received $14.8 million on October 31, 1995 and $14.8 million on December 29,
1995, representing its 53% economic interest in the Transtar dividend.
6
<PAGE> 7
TRANSTAR HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In accordance with the Notes Indenture, both dividend payments were
paid into an escrow account. In the first half of 1996, Holdings distributed
$0.9 million to its partners, and used $0.3 million to pay administrative
expenses. Holdings offered to repurchase a portion of the Notes at an offer
price equal to 101% of the accreted value of such Notes on the date of
purchase. The offer to purchase the Notes was made by a notice to holders of
the Notes and was held open for 20 business days. No Notes were tendered for
repurchase.
Funds in the escrow account are invested in cash equivalents and may
only be released to pay interest and principal on the Notes, make a Restricted
Payment (as defined by the Notes Indenture), purchase or optionally redeem
Notes or to pay administrative expenses of Holdings. Interest earned on the
escrow balance was $1.2 million and $0.6 million in the first half of 1997 and
1996, respectively, and was $0.6 million and $0.3 million in the second quarter
of 1997 and 1996, respectively.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes an analysis of Holdings' equity investment in Transtar.
Holdings is a Delaware limited partnership. It was originally formed in 1988 as
Blackstone Transportation Partners L. P. ("BTP") for the sole purpose of
holding voting and non-voting stock of Transtar. BTP was renamed Transtar
Holdings, L.P. in November 1993. Holdings earnings are derived solely from its
53.0 percent economic interest in Transtar. The following discussion should be
read in conjunction with Holdings' Consolidated Financial Statements and the
notes related hereto included within this filing.
Transtar Holdings Results
For the Three and Six Months ended June 30, 1997
Compared to
Three and Six Months ended June 30, 1996
Overall
Holdings recorded net income for the second quarter and the first half of 1997
of $5.5 and $1.8 million, respectively. This represents a $0.1 million decrease
and $0.2 million increase, respectively, from the $5.6 million and $1.6 million
of net income recorded during the second quarter and the first half of 1996.
Holdings' results reflect its equity investment in Transtar. For a discussion
of results of operations of Transtar, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for Transtar, Inc.
Revenues and Expenses
Holdings did not record any revenues in either 1997 or 1996. Holdings' selling,
general and administrative expenses in 1997 were slightly lower than those
incurred in both periods of 1996. Both the equity earnings of Transtar and
interest income improved from 1996 levels, as equity earnings increased by $1.0
million and $1.6 million and interest income by $0.3 million and $0.6 million
from the second quarter and first half of 1996, respectively. Interest and
other financial expenses increased by $1.4 million and $2.0 million,
respectively, during the second quarter and first half to $6.0 and $11.1
million in 1997.
Liquidity and Capital Resources
During 1996, Transtar declared two cash dividends, the first in the amount of
$850 per share and the second in the amount of $1,275 per share, on both its
Class A Voting Common Stock and its Class B Nonvoting Common Stock. Holdings
received dividends totaling $21.7 million, representing its 53 percent economic
interest in the Transtar dividend. Pursuant to an Indenture relating to the
issuance of the Notes (Notes Indenture), both dividends were deposited into an
escrow account. In accordance with the Notes Indenture and an agreement
governing the escrow account, during the first quarter of 1997 Holdings
withdrew from the escrow account $5.3 million to distribute to its partners and
$0.3 million to pay administrative expenses. In the first quarter of 1996,
Holdings distributed $0.9 million to its partners and paid $0.3 million of
administrative expenses from dividends received from Transtar in 1995. There
were no further distributions during the second quarter of either 1996 or 1997.
In February 1997 and January 1996, Holdings offered to repurchase a portion of
its Senior Discount Notes at an offer price equal to 101% of the accreted value
of such notes on the date of purchase. These offers to purchase the notes were
made by a notice to holders of the Senior Discount Notes and were held open for
20 business days. No notes were tendered for repurchase. Holdings earned
interest from the balance in the escrow account for the second quarter and the
first half of 1997 of $0.6 million and $1.2 million, respectively.
The only business activity of Holdings is its investment in Transtar. It is not
anticipated that Holdings will require any additional liquidity or capital,
other than for professional fees and certain other administrative expenses,
until the first cash interest payment is due on the Notes on June 15, 2000.
8
<PAGE> 9
B. TRANSTAR, INC.
TRANSTAR, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------------- ------------------
(dollars in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,936 $ 24,691
Accounts receivable from related parties 20,642 18,611
Accounts receivable from others 46,098 46,335
Other current assets 9,372 5,513
-------- --------
Total current assets 103,048 95,150
Property, plant, and equipment,
less accumulated depreciation 378,326 385,637
Operating parts and supplies 19,199 15,896
Other assets 18,974 18,452
-------- --------
Total assets $519,547 $515,135
======== ========
LIABILITIES
Current liabilities:
Accounts payable $ 68,438 $66,030
Payroll and benefits payable 38,349 37,318
Accrued taxes 17,529 10,328
Accrued interest 1,433 2,906
Current portion of long-term debt 53,000 61,603
Other current liabilities 4,127 1,526
-------- --------
Total current liabilities 182,876 179,711
Long-term debt less current portion 169,000 196,400
Postretirement benefits other than pensions 104,731 102,707
Deferred credits and other liabilities 39,601 35,412
-------- --------
Total liabilities 496,208 514,230
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock 1,000 1,000
Paid-in capital 24,130 24,000
Retained earnings (deficit) 4,807 (17,822)
Treasury stock (6,598) (6,273)
-------- --------
Total stockholders' equity 23,339 905
-------- --------
Total liabilities and stockholders' equity $519,547 $515,135
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE> 10
TRANSTAR, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------- ---------------------------------
1997 1996 1997 1996
---- ---- ---- ----
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C>
Revenues from related parties $ 85,558 $ 81,834 $135,313 $131,647
Revenues from others 56,992 53,385 103,318 99,339
-------- -------- -------- --------
Total revenues 142,550 135,219 238,631 230,986
-------- -------- -------- --------
Operating expenses (excluding items shown below) 96,005 90,752 175,332 170,441
Selling, general, and administrative expenses 2,598 2,649 5,218 5,406
Depreciation and amortization 6,741 6,677 13,374 13,401
-------- -------- -------- --------
Total operating expenses 105,344 100,078 193,924 189,248
-------- -------- -------- --------
Operating income 37,206 35,141 44,707 41,738
Other income 675 240 864 474
Interest income 276 201 409 339
Interest and other financial expenses (4,657) (5,385) (9,311) (10,963)
-------- -------- -------- --------
Income before income taxes 33,500 30,197 36,669 31,588
Less provision for income taxes 12,635 11,209 14,040 11,945
-------- -------- -------- --------
Net income $ 20,865 $ 18,988 $ 22,629 $ 19,643
======== ======== ======== ========
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)
Retained earnings (deficit), beginning of period ($16,058) ($47,192) ($17,822) ($47,847)
Net income 20,865 18,988 22,629 19,643
-------- -------- -------- --------
Retained earnings (deficit), end of period $ 4,807 ($28,204) $ 4,807 ($28,204)
======== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<PAGE> 11
TRANSTAR, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------------------------------
1997 1996
------------------ ------------------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 22,629 $ 19,643
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 13,374 13,401
Amortization 332 371
Deferred taxes 1,070 1,347
(Gain) on sale of assets (252) (1)
Changes in other assets and liabilities 7,232 (5,500)
-------- ---------
Net cash provided by operating activities 44,385 29,261
-------- ---------
INVESTING ACTIVITIES:
Capital expenditures (6,434) (8,081)
Proceeds from the sale of assets 622 1,013
-------- ---------
Net cash used for investing activities (5,812) (7,068)
-------- ---------
FINANCING ACTIVITIES:
Repayment of debt (36,003) (26,008)
Treasury Stock, net (325) --
-------- ---------
Net cash used for financing activities (36,328) (26,008)
-------- ---------
Increase (Decrease) in cash and cash equivalents 2,245 (3,815)
Cash and cash equivalents at beginning of period 24,691 10,618
-------- ---------
Cash and cash equivalents at end of period $ 26,936 $ 6,803
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
11
<PAGE> 12
TRANSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
NOTE 1: BASIS OF FINANCIAL STATEMENT PRESENTATION:
Separate consolidated financial statements of Transtar are included in this
10-Q because Transtar is a majority owned subsidiary of Holdings which is not
consolidated in the consolidated financial statements of Holdings. The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial statements
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all normal recurring adjustments considered
necessary for a fair statement of the results of operations for the three and
six month periods ended June 30, 1997 have been included. The results of
operations for the three and six month periods ended June 30, 1997 are not
necessarily indicative of the results of operations for the full year. When
reading the financial information contained in this Quarterly Report, reference
should be made to the Transtar financial statements, schedules and notes
contained in Holdings' Annual Report on Form 10-K for the year ended December
31, 1996.
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Transtar Results
For the Three and Six Months ended June 30, 1997
Compared to the
Three and Six Months ended June 30, 1996
Overall
Transtar is a transportation holding company composed of three business groups:
the Railroad Group, the Great Lakes Fleet (Fleet) and the Barge Group.
Transtar's net income for the quarter ending June 30, 1997 totaled $20.9
million, or an increase of $1.9 million compared with the same period of 1996.
Operating income of $37.2 million recorded for the second quarter of 1997 was
$2.1 million greater than the comparable period of 1996. Net income for the six
months ended June 30, 1997 was $22.6 million, a $3.0 million increase from the
first half of 1996. Operating income of $44.7 million during the first half of
1997 was $3.0 million greater than the same period of 1996. The second quarter
operating results were influenced by significant increases in operating
revenues and the impact of a limited early retirement program.
Operating Revenues
Operating revenues totaled $142.6 million for the second quarter of 1997, or an
increase of $7.3 million over the second quarter of 1996. During the first six
months of 1997, Transtar's operating revenues were $238.6 million, reflecting
an improvement of $7.6 million over the same period of 1996. The first half
revenue increase was driven by the Railroad and Fleet Groups, while Barge
revenues were 4.7% behind last year's first half. The Railroad Group's
improvement was achieved as a result of increased traffic volumes of ore, coal
and coke. Railroad Group revenues in the second quarter of 1997 were $6.4
million greater than the $90.9 million earned in the same period last year.
These improvements are the result of: mild weather and solid production at
Minnesota taconite plants increasing ore shipments; additional coal movements
to utility companies; and increased coke shipments to steel producing
facilities. Fleet revenues increased by $2.5 million in the second quarter of
1997 when compared with the same period of 1996. The Fleet's first half of 1997
volumes increased $1.8 million from the levels earned in the first half of 1996
primarily due to the relatively mild weather and ice conditions when compared
with the severe conditions that adversely impacted navigation during the first
four months of 1996. The Barge Group first half revenue decline was primarily a
result of decreased coal movements. Barge Group revenues of $14.9 million for
the second quarter of 1997 recognized a $1.8 million reduction from the same
period of 1996. This decrease is attributable to handling lower coal volumes
due to changed routing, as well as, production problems at origin mines.
Operating Expenses
Transtar's operating expenses increased $5.3 million and $4.7 million,
respectively, during the second quarter and the first half of 1997, when
compared to the same periods of 1996. The Railroad Group's second quarter 1997
expenses increased by $6.3 million over the $66.6 million incurred for the same
period of 1996, while increasing $8.3 million during the first six months of
1997 to $140.9 million. These net increases were primarily the result of three
major items: increased materials expenditures for repairs to freight cars,
locomotives and track structure; recognition of expenses associated with a
limited early retirement program during June 1997; and a credit to cost in the
second quarter of 1996 resulting from the settlement of environmental
litigation. Fleet operating expenses totaled $23.2 million and $34.6 million,
respectively, during the second quarter and the first half of 1997, and reflect
decreases of $1.0 million and $3.2 million, respectively. These cost reductions
can be traced to less severe ice conditions on the Great Lakes in 1997 than
1996 and lower health and medical insurance expenses. Additionally, expenses
associated with fuel and outside contractor services have declined from 1996
levels. Operating costs for the Barge Group remained virtually unchanged from
the $12.5 million incurred in the second quarter of 1996. Barge Group expenses
decreased by $0.3 million to $24.3 million during the first half of 1997,
primarily due to reduced traffic levels and improved river operating
conditions.
13
<PAGE> 14
Other Income, net
Transtar's other income, net, increased by $1.2 million and $2.1 million,
respectively, during the second quarter and the first half of 1997, when
compared to the same periods of 1996. The major factor contributing to this
improvement in both periods was a reduction in interest expense due to lower
outstanding debt.
Provision for Income Taxes
Transtar's provision for income taxes increased $1.4 million during the second
quarter of 1997 and $2.1 million in the first half, when compared to the same
periods of 1996. These changes are directly a result of the increase in
Transtar's income before taxes for both of 1997 periods when compared to 1996.
Liquidity and Capital Resources
Transtar's cash and temporary investments were $26.9 million at June 30, 1997,
or $2.2 million greater than the balance at the end of 1996, and $20.1 million
greater than the balance at June 30, 1996. Cash flow from operating activities
during the six months ended June 30, 1997 amounted to $44.4 million, or $15.1
million greater than comparable periods of 1996. These improvements were
primarily caused by an industry-wide change in the methodology for settling
freight divisions between Railroad carriers that occurred in the second half of
1996. Cash flow used for investing activities during the first half of 1997
totaled $5.8 million, or $1.3 million less than was utilized during the same
periods of 1996. Gross capital expenditures amounted to $6.4 million for the
first six months of 1997, a decrease of $1.6 million versus the same period of
1996. Proceeds from the sale of property amounted to $0.6 during the first half
of 1997 versus the $1.0 million that was generated in the comparable period of
1996.
During the second quarter of 1997, Transtar repaid $26.0 million of debt, or
$10.0 million more than last year's second quarter. This repayment was for
Transtar's Term Loan facility obligation. For the first six months of 1997,
Transtar retired $36.0 million of Term Loan obligation, versus the $16.0
million Term Loan retirement in the same period of 1996. During the first six
months of 1996, Transtar repaid $10.0 million of its revolving credit facility.
Since its December 7, 1993 refinancing, Transtar has retired $223.0 million of
its long-term obligations. Transtar, as of June 30, 1997, has $24.0 million of
availability under its Revolving Credit Facility.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Holdings and TCC had no reportable events of material pending legal proceedings
other than ordinary routine litigation incidental to the business during the
six month period ended June 30, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on 8-K
Holdings and TCC did not file any reports on Form 8-K during the quarter
ended June 30, 1997.
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 13, 1997
TRANSTAR HOLDINGS, L.P.
TRANSTAR CAPITAL CORPORATION
By: /s/ Howard A. Lipson
---------------------------
Howard A. Lipson, Treasurer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 253
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 410
<PP&E> 0
<DEPRECIATION> 0
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0
0
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</TABLE>
