<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission file number: 33-82624
MORAN TRANSPORTATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 06-1399280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
Two Greenwich Plaza
Greenwich, Connecticut 06830
(Address of principal executive offices)
(Zip Code)
(203) 625-7800
(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 filing
requirements for the past 90 days.
Yes X No
________ ________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 10, 1996, 44,600 shares of the common stock, par value $0.01
per share, of Moran Transportation Company, were issued and
outstanding.
Page 1
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MORAN TRANSPORTATION COMPANY
FORM 10 - Q
INDEX
PAGE
----
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements of Moran Transportation
Company and Subsidiaries
Consolidated Balance Sheets at December 31, 1995 and
March 31, 1996 3
Consolidated Statements of Income for the three
months ended March 31, 1995 and March 31, 1996 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and March 31, 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
Dec 31, Mar 31,
1995 1996
--------- -----------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents.......................... $ 3,006 $ 2,568
Accounts receivable, less allowance for doubtful
accounts of $263 and $363 at December 31, 1995
and March 31, 1996, respectively................ 12,047 11,483
Inventory.......................................... 4,330 4,229
Unexpired insurance and other prepaid expenses..... 1,364 1,934
-------- --------
Total Current Assets............................ 20,747 20,214
Investment in joint venture.......................... 2,959 2,922
Insurance claims receivable.......................... 1,717 1,714
Fixed assets, net.................................... 126,771 124,584
Shipyard assets held for sale (Note 5)............... 2,648 2,731
Restricted funds held for
contingent consideration (Note 1).................. 13,600 13,600
Other Assets......................................... 5,068 4,925
-------- --------
Total Assets.................................... $173,510 $170,690
======== ========
See accompanying notes to consolidated financial statements
Page 3
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
Dec 31, Mar 31,
1995 1996
--------- -----------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long term debt......................... $ 566 $ 580
Trade accounts payable.................................... 3,468 2,604
Accrued insurance payable................................. 132 1,664
Accrued interest payable.................................. 4,309 1,958
Other accrued liabilities................................. 3,368 3,027
Backpay liability......................................... 885 885
Income taxes payable...................................... 883 1,656
-------- --------
Total Current Liabilities.............................. 13,611 12,374
Long-term debt.............................................. 82,848 82,698
Insurance claims reserves................................... 4,331 4,398
Deferred income taxes....................................... 35,576 35,096
Postretirement benefits other than pensions................. 3,729 3,774
Liability for contingent consideration (Note 1)............. 13,600 13,600
Other liabilities........................................... 8,095 6,969
-------- --------
Total Liabilities...................................... 161,790 158,909
Commitments and contingencies (Note 4)
Mandatorily redeemable capital stock
(4,600 and 4,000 shares outstanding, at December 31, 1995
and March 31, 1996, respectively)...................... 1,150 1,000
Stockholders' Equity
Common stock, par value $0.01 per share
Authorized - 100,000 shares
Issued and outstanding - 40,000 shares................. 1 1
Capital surplus........................................... 9,999 10,149
Retained earnings......................................... 570 631
-------- --------
Total Stockholders' Equity 10,570 10,781
-------- --------
Total Liabilities and Stockholders' Equity.................. $173,510 $170,690
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
Page 4
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in Thousands, except per share amounts)
For the Three Months Ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Operating revenue............................................. $18,080 $20,809
Cost of operations
Operating expenses.......................................... 11,335 12,666
Depreciation................................................ 1,796 1,922
------- -------
Total cost of operations...................................... 13,131 14,588
------- -------
Gross profit.................................................. 4,949 6,221
General and administrative expenses........................... 3,498 3,497
------- -------
Operating income.............................................. 1,451 2,724
Interest expense.............................................. (2,474) (2,564)
Interest income............................................... 2 -
Equity in income/(loss) from joint venture.................... 27 (37)
Other (expense)/income........................................ (263) 15
------- -------
(Loss)/income before provision for income taxes............... (1,257) 138
Provision for income taxes.................................... (359) 77
------- -------
Net (loss)/income........................................... $ (898) $ 61
======= =======
Per share of common stock outstanding:
Net (loss)/income........................................... $(20.13) $1.33
======= =======
Weighted average number of shares outstanding (in thousands).. 44.6 45.8
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
Page 5
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Dollars in Thousands)
(Unaudited)
1995 1996
---- ----
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C> <C>
Net (loss)/income................................ $ (898) $ 61
------- -------
Adjustments to reconcile net (loss)/income to net
cash provided by operating activities:
Depreciation and amortization.................... 2,209 2,707
Deferred income taxes............................ (155) (480)
Equity in (income)/loss from joint venture....... (27) 37
Loss on disposal of fixed asset.................. - 128
Changes in operating assets and liabilities:
Accounts receivable, net......................... 1,355 564
Other current assets............................. (169) (469)
Accounts payable and accrued expenses............ (2,297) (2,010)
Income taxes payable............................. (324) 773
Insurance claims receivable...................... (138) 3
Insurance claims reserves........................ 734 67
Other assets and liabilities..................... 263 (1,228)
------- -------
Net cash provided by operating activities.......... 553 153
Cash flows from investing activities:
Capital expenditures............................. (734) (441)
------- -------
Net cash used for investing activities............. (734) (441)
Cash flows from financing activities:
Proceeds from borrowings......................... 1,000 2,250
Repayment of debt................................ (1,123) (2,400)
Debt issuance costs.............................. (140) -
------- -------
Net cash used for financing activities............. (263) (150)
Net decrease in cash and
cash equivalents................................. (444) (438)
Cash and cash equivalents at beginning of period... 3,999 3,006
------- -------
Cash and cash equivalents at end of period $ 3,555 $ 2,568
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
Page 6
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, unless otherwise noted)
(UNAUDITED)
NOTE 1 - MORAN TRANSPORTATION COMPANY
Moran Transportation Company ("Moran" or the "Company") is a Delaware
corporation, incorporated on June 2, 1994. Moran was organized to acquire (the
"Acquisition") all of the outstanding common stock of Moran Towing Corporation
(the "Predecessor"), a company whose subsidiaries provided tug services and
marine transportation services, primarily on the East and Gulf coasts of the
United States. On July 11, 1994, the Acquisition was consummated and was
accounted for as a purchase. In connection with the Acquisition, the
Predecessor transferred its 20% equity interest in four partnerships to entities
formed by the stockholders of Predecessor. When the company acquired the
Predecessor, certain contingent liabilities of the Predecessor, primarily
related to certain limited and defined guarantees given by the Predecessor, were
assumed. These liabilities were fully reserved and funded by placing $13.6
million in escrow. If these liabilities become due, the escrowed funds will be
used to satisfy the liability. If the guarantees expire without being called,
the funds will be paid to stockholders of Predecessor. There will be no impact
on the Company other than assets and liabilities being reduced.
The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Interim results are not necessarily
indicative of the results that may be expected for a full year. These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 1995.
NOTE 2 - CHANGES IN STOCKHOLDERS' EQUITY
Common Capital Retained
Stock Surplus Earnings Total
------ -------- -------- --------
Balance at December 31, 1995 $1 $ 9,999 $570 $10,570
Net Income - - 61 61
Transfer of Mandatorily Redeemable Stock - 150 - 150
------ ------- ---- -------
Balance at March 31, 1996 $1 $10,149 $631 $10,781
====== ======= ==== =======
Page 7
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NOTE 3 - INCOME TAXES
The Company and its wholly owned domestic subsidiaries file a consolidated
Federal income tax return. The Company accounts for deferred income taxes using
the asset and liability method as prescribed under Financial Accounting Standard
No. 109, "Accounting for Income Taxes". The Company provides a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized.
NOTE 4 - CONTINGENT LIABILITIES
On September 25, 1995, Local 333, United Marine Division, I.L.A., AFL-CIO
("Local 333") ratified the terms of a three year collective bargaining agreement
with a New York operating subsidiary of the Company. The agreement is effective
as of September 26, 1995. This subsidiary had been subject to several pending
legal proceedings arising out of a 1988 strike in New York harbor. These
proceedings will be terminated pursuant to a formal settlement agreement
executed by the subsidiary, the union and the regional office of the National
labor Relations Board ("NLRB"). The settlement agreement was approved by the
NLRB on March 29, 1996 and the resulting NLRB order was enforced by the United
States Court of Appeals for the Second Circuit on May 3, 1996.
In February 1994, a lawsuit was filed in the United States District Court for
the Eastern District of New York by the Town of Oyster Bay (the "town"), New
York, against the Company and several other potentially responsible parties
("PRP"). The Town is seeking indemnification for remediation and investigation
costs that have been or will be incurred for a Federal Superfund site in
Syosset, New York, which served as a Town owned and operated landfill between
1933 and 1975. In a Record of Decision, issued on or about September 27, 1990,
the EPA set forth a remedial design plan, the cost of which was estimated at
$25,000 and is reflected in the Town's lawsuit. In an Administrative Consent
Decree entered into between the EPA and the Town on December 6, 1990, the Town
agreed to undertake remediation at the site.
While the current state of law imposes joint and several liability upon PRPs, as
a practical matter costs of these sites are typically shared with other PRPs.
The Company believes that its portion of the hazardous materials disposed at the
site if any, is insignificant when compared to that of the other PRPs. While
management is unable to estimate the Company's future liability, if any, it does
not believe such liability would have a material adverse effect on the Company's
financial position or results of operations.
Bouchard Transportation Co., Inc. ("Bouchard") a customer of the Company, has
commenced suit in the United States District Court for the Eastern District of
New York seeking damages arising out of an alleged collision in February, 1996
between an unknown object and a Bouchard barge in tow of a tug operated by a New
York subsidiary of the Company, which collision resulted in barge damage and the
release of approximately 35 barrels of oil from the barge. In a letter received
by the Company in March, 1996, Bouchard listed its damages at approximately $1.1
million. The Company is investigating the incident, and believes, based upon
the current status of its investigation, that the Company
Pages 8
<PAGE>
has meritorious defenses to the claim. Should Bouchard continue to pursue and
prevail in its allegations, some or all of the amount payable by the Company
would not be covered by insurance because of applicable deductibles. Management
believes that any liability arising out of this incident would not have a
material adverse effect on the Company's financial condition.
NOTE 5 - SHIPYARD ASSETS HELD FOR SALE
In 1992, the operations of a subsidiary of the Company, Jakobson Shipyard, Inc.
were discontinued. Discussions have been held with the Town of Oyster Bay
concerning the purchase of Jakobson's leasehold interest in the shipyard
property. Management expects to enter into an agreement in principle for the
sale of its property within a year. In anticipation of this sale, the Company
has capitalized $2,731 of environmental remediation costs which, based upon the
Company's estimates, are expected to be recovered from the proceeds of the sale.
Management believes that there will not be a material adverse effect on the
Company's financial position or results from operations upon sale.
NOTE 6 - FINANCIAL STATEMENTS OF GUARANTORS
All of the Company's subsidiaries ("the Guarantors") have guaranteed the $80,000
of First Preferred Ship Mortgage Notes which were issued on July 11, 1994 and
the First Preferred Ship Mortgage Notes to be issued in exchange therefor.
Accordingly, the financial statements of the Guarantors have not been included,
individually or on a combined basis, because the Guarantors have fully and
unconditionally guaranteed such Notes on a joint and several basis, and because
the aggregate net assets, earnings and equity of the Guarantors are
substantially equivalent to the net assets, earnings and equity of the Company
on a consolidated basis and, therefore, separate financial statements concerning
the Guarantors are not deemed material to investors.
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Operating Revenues: Operating revenues increased 15.1% during the first quarter
of 1996 as compared to the comparable period in 1995. Tug services revenues
increased by 11.9%, to $12.8 million, primarily as a result of increased barge
towing revenues. Marine transportation revenues increased by 20.5% to $8.0
million reflecting both the colder winter weather in the Northeast which
increased demand for coal and a general improvement in the barge markets served
by the Company.
Operating Expenses: Operating expenses increased by $1.3 million, or 11.7%, to
$12.7 million in the first quarter of 1996. The increase is primarily due to
increased costs from higher asset utilization as a result of the increased
activity discussed above. In addition, fuel prices increased during the first
quarter as compared to last year. The Company also had higher drydocking
amortization expense, compared to the first quarter of 1995.
Depreciation: Depreciation expense increased by $0.1 million, to $1.9 million,
in the first quarter of 1996. This increase was due to additional depreciation
arising from final purchase price adjustments and on improvements made to assets
since the first quarter of 1995.
General and Administrative Expenses: General and administrative expenses
remained essentially unchanged at $3.5 million during the first quarter, as
modest increases in compensation were fully offset by reductions in employee
benefit expenses.
Operating Income: Operating income increased by $1.3 million, or 87.7%, to $2.7
million in the first quarter of 1996. This improvement is primarily due to the
increased revenues described above, partially offset by higher operating costs.
Interest Expense: Interest expense increased modestly reflecting higher short
term revolving credit usage at higher interest rates.
Equity in Income/(Loss) from Joint Venture: Equity in income (loss) from joint
venture declined from a profit of $27,000 in the first quarter of 1995 to a loss
of $37,000 during the first quarter of 1996.
Net Income/(Loss): Net income increased by $959,000 as the Company posted a
first quarter net profit of $61,000 during 1996 as compared to a first quarter
loss of $898,000 during 1995. The improvement in overall profitability was
principally driven by higher operating profit.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents for the three months ended March 31, 1996 decreased by
$0.4 million. This decrease was attributable to the factors discussed below:
Page 10
<PAGE>
In the three months ending March 31, 1996, net cash provided by operating
activities was $0.2 million. The $0.2 million in net cash provided by operating
activities combined with a reduction in cash balances of $0.4 million was used
to repay debt of $0.2 million and fund capital expenditures of $0.4 million.
As more fully discussed in footnote 4 to the financial statements, the Company's
New York operating subsidiary has reached an agreement with the union
representing its striking marine workers. The Company expects to have
sufficient cash flow to meet any obligations imposed by the agreement, which
among other things, requires payment of $5.6 million in settlement of claims
against it for back pay liability in approximately equal quarterly installments
over a seven year period, which commenced in April 1996.
The Company believes that cash flow from current levels of operations and, to a
lesser extent, the availability under the Senior Credit Facility, will be
adequate to make required payments of interest on the Company's indebtedness, as
well as to fund ongoing capital expenditures.
In December 1995, a wholly owned subsidiary of the Company signed a contract
with Trinity Marine Group to build a 14,500 ton bulk barge for approximately
$8.2 million. The barge is scheduled for delivery during the fourth quarter of
1996. The barge will be financed by a construction loan and is expected to be
refinanced in whole or in part using external funding. The Company is presently
negotiating a construction loan which it expects to close during the second
quarter for $7.7 million. The guaranty by the Company's subsidiary of the
Company's obligations under the Notes will not be secured by the newly
constructed barge.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Supplemental Indenture No. 2, dated January 2, 1996 among the
Registrant, the Guarantors listed on Exhibits F-1, F-2, and F-3 to the
Indenture, Barge Pennsylvania Corporation, Fleet National Bank of
Connecticut, as trustee, and Moran Bulk Corporation.
10.2 Instrument of Adherence, dated January 2, 1996, of Moran Bulk
Corporation.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
Page 12
<PAGE>
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.
MORAN TRANSPORTATION COMPANY
By:/s/ Malcolm W. MacLeod
----------------------
Name: Malcolm W. MacLeod
Title: President and Chief Executive Officer
Date: 5/10/96 By:/s/ Jeffrey J. McAulay
------- ----------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance and
Administration
(principal financial officer)
Page 13
<PAGE>
EXHIBIT INDEX
10.1 Supplemental Indenture No. 2, dated January 2, 1996 among the
Registrant, the Guarantors listed on Exhibits F-1, F-2, and F-3 to the
Indenture, Barge Pennsylvania Corporation, Fleet National Bank of
Connecticut, as trustee, and Moran Bulk Corporation.
10.2 Instrument of Adherence, dated January 2, 1996, of Moran Bulk
Corporation.
27 Financial Data Schedule
Page 14
<PAGE>
SUPPLEMENTAL INDENTURE NO. 2
This SUPPLEMENTAL INDENTURE NO. 2, dated January 2, 1996, among Moran
Transportation Company, a Delaware corporation (the "Company"), the Guarantors
listed on Exhibits F-1, F-2 and F-3 to the Indenture, and Barge Pennsylvania
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
(collectively, the "Guarantors"), Fleet National Bank of Connecticut (formerly
known as Shawmut Bank Connecticut, National Association), as trustee (the
"Trustee"), and Moran Bulk Corporation, a Delaware corporation and a wholly-
owned subsidiary of the Company (the "New Guarantor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, the Trustee and the Guarantors are parties to that
certain Indenture dated July 11, 1994, as amended by Supplemental Indenture No.
1 dated December 29, 1994 (as so supplemented, the "Indenture"), pertaining to
the Company's 11-3/4% Series B First Preferred Ship Mortgage Notes due 2004
issued under the Indenture (the "Notes");
WHEREAS, the Company has organized the New Guarantor as a subsidiary with
the intention that the New Guarantor become a Guarantor under the Indenture and
a Qualified Restricted Subsidiary pursuant to the terms of the Indenture;
WHEREAS, Section 5.23 of the Indenture provides that any Person that was
not a Guarantor on the date of the Indenture may become a Guarantor by executing
and delivering to the Trustee, among other things, a supplemental indenture in
form and substance satisfactory to the Trustee, which subject such Person to the
provisions (including the representations and warranties) of the Indenture as a
Guarantor;
WHEREAS, Section 10.01(h) of the Indenture provides that the Trustee, the
Company, the Guarantors and a Subsidiary, as applicable, may amend or supplement
the Indenture without the consent of any Holder to supplement the Indenture to
provide for additional Guarantors pursuant to Section 5.23; and
WHEREAS, the Company and the New Guarantor intend that this Supplemental
Indenture fulfill the requirements of such Section 5.23, thereby making the New
Guarantor a Guarantor under the Indenture.
NOW THEREFORE, the parties agree as follows, for the benefit of each other
and for the equal and ratable benefit of the Holders of the Notes:
Section 1.01 Definitions. Capitalized terms used in this Supplemental
-----------
Indenture but not defined herein shall have the meanings given such terms in the
Indenture.
<PAGE>
Section 2.01 The Trustee accepts the modifications of the Indenture hereby
effected only upon the terms and conditions set forth in the Indenture as
supplemented by this Supplemental Indenture No. 2. Without limiting the
generality of the foregoing, the Trustee shall not be responsible for the
correctness of the recitals contained herein, which shall be taken as statements
of the Company, and the Trustee makes no representations and shall have no
responsibility for, or in respect of, the validity or sufficiency of this
Supplemental Indenture No. 2.
Section 2.02 This Supplemental Indenture No. 2 is executed as and shall
constitute an instrument supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.
Section 2.03 Except as modified and expressly amended by this Supplemental
Indenture No. 2, the Indenture is, in all respects, ratified and confirmed and
all the terms, provisions and conditions thereof shall be and remain in full
force and effect.
Section 2.04 The New Guarantor hereby agrees to be bound by and subject to
all the terms of the Indenture (including representations and warranties) as a
Guarantor, including without limitation the provisions of Article 3 of the
Indenture, as if the New Guarantor were a signatory to the Indenture.
Section 2.05 This Supplemental Indenture No. 2 may be executed in any
number of counterparts; each signed copy shall be any original, but all of them
together represent the same agreement.
Section 2.06 This Supplemental Indenture No. 2 shall be subject to the
governing law and choice of forum provisions of Section 13.09 of the Indenture.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 2 to be duly executed as of the day and year first above written.
MORAN TRANSPORTATION COMPANY
By: /s/ Lee R. Christensen
-----------------------------------------------
Name: Lee R. Christensen
Title: Vice President
THE GUARANTORS LISTED ON EXHIBIT F-1 TO THE INDENTURE
By: /s/ Lee R. Christensen
------------------------------------------------
Name: Lee R. Christensen
Title: As to each of the Guarantors
listed in Exhibit F-1, as Vice
President.
THE GUARANTORS LISTED ON EXHIBIT F-2 TO THE INDENTURE
By: /s/ Lee R. Christensen
-----------------------------------------------------
Name: Lee R. Christensen
Title: As to each of the Guarantors
listed in Exhibit F-2 in the
capacities set forth in Schedule
F-2.
-3-
<PAGE>
MORAN SERVICES CORPORATION
By: /s/ William P. Muller
----------------------------------------------------
Name: William P. Muller
Title: President
BARGE PENNSYLVANIA CORPORATION
By: /s/ Lee R. Christensen
----------------------------------------------------
Name: Lee R. Christensen
Title: Vice President
MORAN BULK CORPORATION
By: /s/ Lee R. Christensen
----------------------------------------------------
Name: Lee R. Christensen
Title: Vice President
FLEET NATIONAL BANK OF CONNECTICUT,
as Trustee
By: /s/ Michael M. Hopkins
----------------------------------------------------
Name: Michael M. Hopkins
Title: Vice President
F:\WPFILES\4633\01\SUPPNO2.V1
-4-
<PAGE>
INSTRUMENT OF ADHERENCE
-----------------------
January 2, 1996
To the Banks Referred to Below
c/o The First National Bank of Boston, as Agent
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of July 11,
1994, as the same is amended, restated, modified or supplemented from time to
time (such agreement, as in effect from time to time, the "Credit Agreement"),
among Moran Transportation Company, each of the other Borrowers (as defined in
the Credit Agreement) (each of the foregoing, individually, a "Borrower," and,
collectively the "Borrowers"), The First National Bank of Boston, such other
lenders as are or may become parties thereto from time to time (collectively,
the "Banks") and The First National Bank of Boston as agent for the Banks (the
"Agent"). Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
The undersigned Moran Bulk Corporation, a Delaware corporation, hereby
agrees to become a Borrower under the Credit Agreement and to comply with and be
bound by all of the terms, conditions and covenants thereof. Without limiting
the generality of the preceding sentence, the undersigned agrees that it shall
be jointly and severally liable, together with the Borrowers, for the payment
and performance of all obligations of the Borrowers under the Credit Agreement
as supplemented hereby. Concurrently, the undersigned has endorsed each original
Note.
The undersigned represents and warrants to the Banks and the Agent that:
(a) it is a Restricted Subsidiary of Moran;
(b) no provision of its charter, other incorporation papers, by-laws or
stock provisions prohibits the undersigned from making distributions to
the Borrowers;
(c) it is capable of complying with and is in compliance with all of the
provisions of the Credit Agreement;
(d) its chief executive office and principal place of business is located
at Two Greenwich Plaza, Greenwich, Connecticut 06830, at which location
its book and records are kept.
<PAGE>
2
The undersigned hereby affirms that each of the representations and
warranties set forth in (S)7 of the Credit Agreement is true and correct with
respect to the undersigned as of the date hereof.
The following documents are delivered to the Agent concurrently with
this Instrument of Adherence:
(a) a legal opinion of Finn, Dixon & Herling as to the legal, valid
and binding nature of the Loan Documents, as supplemented hereby, with respect
to the Borrowers, including, without limitation, the undersigned;
(b) copies, certified by a duly authorized officer of the undersigned
to be true and complete as of the date hereof, of each of (i) the charter
documents of the undersigned as in effect on the date hereof, (ii) the by-laws
of the undersigned as in effect on the date hereof, (iii) the resolutions of the
Board of Directors of the undersigned authorizing the execution and delivery of
this Instrument of Adherence and the undersigned's performance of all of the
transactions contemplated hereby and by the Credit Agreement as supplemented
hereby, and (iv) an incumbency certificate giving the name and bearing a
specimen signature of each individual who shall be authorized to sign, in the
undersigned's name and on its behalf, each of this Instrument of Adherence, the
Notes and the other Loan Documents, and to give notices and to take other action
on its behalf under the Loan Documents; and
(c) a certificate of the Secretary of State of Delaware of a recent
date as to the undersigned's corporate existence, good standing and tax payment
status.
This Instrument of Adherence shall take effect as a sealed instrument
and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
Very truly yours,
MORAN BULK CORPORATION
By: /s/ Lee R. Christensen
----------------------
Title: Vice President
<PAGE>
3
ACCEPTED AND AGREED:
THE FIRST NATIONAL BANK OF
BOSTON, INDIVIDUALLY AND AS AGENT
By: /s/ Victor Garcia
--------------------------
Title: Assistant Vice
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,568
<SECURITIES> 0
<RECEIVABLES> 11,846
<ALLOWANCES> 363
<INVENTORY> 4,229
<CURRENT-ASSETS> 20,214
<PP&E> 139,475
<DEPRECIATION> 14,891
<TOTAL-ASSETS> 170,690
<CURRENT-LIABILITIES> 12,374
<BONDS> 82,698
1,000
0
<COMMON> 1
<OTHER-SE> 10,780
<TOTAL-LIABILITY-AND-EQUITY> 170,690
<SALES> 20,809
<TOTAL-REVENUES> 20,809
<CGS> 0
<TOTAL-COSTS> 12,666
<OTHER-EXPENSES> 5,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,564
<INCOME-PRETAX> 138
<INCOME-TAX> 77
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 0
</TABLE>
