<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 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: 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 August 11, 1997, 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, 1996 and
June 30, 1997 3
Consolidated Statements of Income for the six
months ended June 30, 1996 and June 30, 1997 5
Consolidated Statements of Income for the three
months ended June 30, 1996 and June 30, 1997 6
Consolidated Statements of Cash Flows for the six
months ended June 30, 1996 and June 30, 1997 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
Caption>
Dec 31, June 30,
1996 1997
---- ----
(unaudited)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 5,827 $ 6,558
Accounts receivable, less allowance for doubtful
accounts of $323 and $460 at December 31, 1996
and June 30, 1997, respectively 12,744 13,362
Inventory 4,395 4,443
Unexpired insurance and other prepaid expenses 2,065 1,766
Shipyard assets held for sale (Note 5) - 3,029
Restricted funds held for contingent consideration (Note 1) 12,000 1,600
-------- --------
Total Current Assets 37,031 30,758
Investment in joint venture 2,892 2,624
Insurance claims receivable 2,346 3,442
Fixed assets, net 121,325 118,900
Shipyard assets held for sale (Note 5) 3,036 -
Restricted funds held for contingent consideration (Note 1) 1,600 -
Other assets 4,487 4,008
-------- --------
Total Assets $172,717 $159,732
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
Page 3
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
Dec 31, June 30,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 4,486 $ 3,201
Accounts payable to joint venture 1,066 351
Accrued insurance payable 359 803
Accrued interest payable 4,308 4,308
Other accrued liabilities 3,868 4,503
Backpay liability 885 885
Income taxes payable 926 974
Liability for contingent consideration (Note 1) 12,000 1,600
-------- --------
Total Current Liabilities 27,898 16,625
Long-term debt 80,000 80,000
Insurance claims reserves 5,989 6,424
Deferred income taxes 34,150 33,063
Postretirement benefits other than pensions 3,995 4,154
Liability for contingent consideration (Note 1) 1,600 -
Other liabilities 6,060 5,486
-------- --------
Total Liabilities 159,692 145,752
-------- --------
Commitments and contingencies (Note 4)
Mandatorily redeemable capital stock-
4,000 shares outstanding 1,000 1,000
-------- --------
Stockholders' Equity
Common stock, par value $0.01 per share
Authorized - 100,000 shares
Issued and outstanding - 40,600 shares 1 1
Capital surplus 10,149 10,149
Retained earnings 1,875 2,830
-------- --------
Total Stockholders' Equity 12,025 12,980
-------- --------
Total Liabilities and Stockholders' Equity $172,717 $159,732
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
Page 4
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
1996 1997
<S> <C> <C>
Operating revenue $ 42,105 $ 50,048
Cost of operations
Operating expenses 25,039 32,108
Depreciation 3,846 3,923
--------- ---------
Total cost of operations 28,885 36,031
--------- ---------
Gross profit 13,220 14,017
General and administrative expenses 7,066 7,335
--------- ---------
Operating income 6,154 6,682
Interest expense (5,159) (5,020)
Interest income 59 96
Equity in income/(loss)
from joint venture 17 (268)
Other income 205 1
--------- ---------
Income before provision for
income taxes 1,276 1,491
Provision for income taxes 501 536
--------- ---------
Net income $ 775 $ 955
--------- ---------
--------- ---------
Per share of common stock outstanding:
Net income $ 17.0 $20.85
Weighted average number of shares
outstanding (in thousands) 45.6 45.8
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements
Page 5
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
1996 1997
---- ----
<S> <C> <C>
Operating revenue $ 21,296 $ 25,219
Cost of operations
Operating expenses 12,373 16,126
Depreciation 1,924 1,969
--------- ---------
Total cost of operations 14,297 18,095
--------- ---------
Gross profit 6,999 7,124
General and administrative expenses 3,569 3,664
--------- ---------
Operating income 3,430 3,460
Interest expense (2,594) (2,508)
Interest income 59 65
Equity in income/(loss)
from joint venture 54 (171)
Other income 189 -
--------- ---------
Income before provision for
income taxes 1,138 846
Provision for income taxes 424 296
--------- ---------
Net income $ 714 $ 550
--------- ---------
--------- ---------
Per share of common stock outstanding:
Net income $ 15.66 $12.01
Weighted average number of shares
outstanding (in thousands) 45.6 45.8
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements
Page 6
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
1996 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 775 $ 955
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,565 5,894
Deferred income taxes (788) (1,087)
Equity in (income)/loss from joint venture (17) 268
Loss on disposal of fixed asset 128 -
Changes in operating assets and liabilities:
Accounts receivable 257 (618)
Other current assets 122 251
Accounts payable and accrued expenses 1,590 (921)
Income taxes payable 737 48
Insurance claims receivable (896) (1,096)
Insurance claims reserves 502 435
Other assets and liabilities (1,690) (345)
-------- --------
Net cash provided by operating activities 6,285 3,784
Cash flows from investing activities:
Capital expenditures (2,824) (3,053)
-------- --------
Net cash used for investing activities (2,824) (3,053)
Cash flows from financing activities:
Proceeds from borrowings 2,250 -
Repayment of debt (2,554) -
Debt issuance costs (42) -
-------- --------
Net cash used for financing activities (346) -
-------- --------
Net increase in cash and cash equivalents 3,115 731
Cash and cash equivalents at
beginning of period 3,006 5,827
-------- --------
Cash and cash equivalents at
end of period $ 6,121 $ 6,558
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
Page 7
<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 the 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 in
connection with the partnerships, were assumed. These liabilities were fully
reserved and funded by placing in escrow $13.6 million of the purchase price
paid by Moran to the stockholders of the Predecessors. In February, 1997, $12.0
million of the escrow amount was released to the former stockholders upon the
release of the Company from the partnership guarantees. There was no impact on
the Company other than assets and liabilities being reduced. The Company expects
the remaining $1.6 million to be released from escrow during the next three
months.
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, 1996.
NOTE 2 - CHANGES IN STOCKHOLDERS' EQUITY
Common Capital Retained
Stock Surplus Earnings Total
----- ------- -------- -----
Balance at December 31, 1996 $ 1 $ 10,149 $ 1,875 $12,025
Net Income - - 955 955
----- --------- -------- -------
Balance at June 30, 1997 $ 1 $ 10,149 $ 2,830 $12,980
----- --------- -------- -------
----- --------- -------- -------
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.
Page 8
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NOTE 4 - CONTINGENT LIABILITIES
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.
NOTE 5 - SHIPYARD ASSETS HELD FOR SALE
In 1992, the operations of Jakobson Shipyard, Inc. were discontinued. The owner
of the Jakobson Shipyard site has entered into agreements with the State of New
York and with the Town of Oyster Bay for the sale of the property. In
connection with consummation of those transactions, Jakobson Shipyard, Inc. will
terminate its leasehold interest in the property in return for a payment from
the seller of the property. In anticipation of this transaction, the Company
has capitalized $2.4 million of environmental remediation costs which, based
upon the Company's estimates, are expected to be realized as a result of the
termination of Jakobson's leasehold interest. Management believes that this
transaction will not have a material adverse effect on the Company's financial
position or results from operations.
NOTE 6 - FINANCIAL STATEMENTS OF GUARANTORS
All of the Company's subsidiaries ("Guarantors") have guaranteed the Company's
$80 million of First Preferred Ship Mortgage Notes. 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. 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
Six months ended June 30, 1996 compared to six months ended June 30, 1997
OPERATING REVENUES: Operating revenues increased 18.9% during the first six
months of 1997 as compared to the comparable period in 1996. Tug services
revenues increased by 16.1%, to $29.3 million, primarily due to increased
coastwise towing and revenue from the New York City Department of Sanitation
contract which began on July 1, 1996. Marine transportation revenues increased
by 22.9% to $20.7 million reflecting a general improvement in the barge markets
served by the Company, as well as the revenues generated by two new barges
operated by the Company, the barge PORTSMOUTH (placed in service November, 1996)
and the barge MASSACHUSETTS (acquired in February, 1997).
OPERATING EXPENSES: Operating expenses increased by $7.1 million, or 28.2%, to
$32.1 million in the first six months of 1997. The increase is primarily due to
increased costs for labor, fuel and outside towing due to the increased activity
discussed above. In addition, operating expenses include lease payments for the
barge Portsmouth, which was placed in service in November 1996. The Company
also had higher drydocking amortization expense, compared to the first half of
1996.
DEPRECIATION: Depreciation expense increased by $0.1 million, to $3.9 million,
in the first six months of 1997. This increase was due to additional
depreciation arising from improvements made to assets.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
increased by $0.3 million, or 3.8%, to $7.3 million in the first six months of
1997. No individual expense categories have increased or decreased materially.
OPERATING INCOME: Operating income increased by $0.5 million, or 8.6%, to $6.7
million in the first six months of 1997. This improvement is primarily due to
the increased revenues described above, partially offset by higher operating and
general and administrative costs.
INTEREST EXPENSE: Interest expense decreased modestly due to the December, 1996
repayment of a term loan entered into in December, 1994.
EQUITY IN INCOME/(LOSS) IN JOINT VENTURE - Equity income/(loss) from the
Company's joint venture decreased from income of $17,000 in the first half of
1996 to a loss of $268,000 in the first half of 1997. This decrease was due to
lower rates as well as a drydocking of the vessel, which began in the second
quarter of 1997.
NET INCOME: Net income increased by $0.2 million, to $1.0 million in the first
six months. The improvement in overall profitability was principally driven by
higher operating profit.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
OPERATING REVENUES: Operating revenues increased 18.4% during the second
quarter of 1997 as compared to the comparable period in 1996. Tug services
revenues increased by 11.1%, to $13.9 million, primarily due to revenue from the
New York City Department of Sanitation contract which began on July 1, 1996.
Marine transportation revenues increased by 16.2% to $24.7 million reflecting a
general improvement in the barge markets served by the Company, as well as the
revenues generated by two new barges operated by the Company, the barge
PORTSMOUTH (placed in service November, 1996) and the barge MASSACHUSETTS
(acquired in February, 1997).
Page 10
<PAGE>
OPERATING EXPENSES: Operating expenses increased by $3.8 million, or 30.3%, to
$16.1 million in the second quarter of 1997. The increase is primarily due to
increased costs for labor, fuel and outside towing due to the increased activity
discussed above. In addition, operating expenses contain the lease payments for
the barge Portsmouth, which was placed in service in November 1996.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
increased by $0.1 million, or 2.7%, to $3.7 million in the second quarter of
1997. No individual expense categories have increased or decreased materially.
OPERATING INCOME: Operating income increased slightly ($30,000), due to the
increased revenues described above, partially offset by higher operating and
general and administrative costs.
INTEREST EXPENSE: Interest expense decreased modestly due to the December, 1996
repayment of a term loan entered into in December, 1994.
EQUITY IN INCOME/(LOSS) IN JOINT VENTURE - Equity income/(loss) from the
Company's joint venture decreased from income of $54,000 in the second quarter
of 1996 to a loss of $171,000 in the second quarter of 1997. This decrease was
due to lower rates as well as a drydocking of the vessel, which began in the
second quarter of 1997.
NET INCOME: Net income decreased by $0.2 million, to $0.6 million in the second
quarter as the result of lower equity in income /(loss) in joint venture,
partially offset by slightly higher operating income and lower interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents for the six months ended June 30, 1997 increased by
$0.7 million. This increase was attributable to the factors discussed below:
In the six months ending June 30, 1997, net cash provided by operating
activities was $3.8 million. This was used to fund capital expenditures of $3.1
million, (including the purchase of the barge MASSACHUSETTS), resulting in a net
increase of cash and cash equivalents of $0.7 million.
The Company believes that cash flow from current levels of operations and, to a
lesser extent, 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. The Company renewed its Senior Credit
Facility during the second quarter. It now expires in July, 2000. In
connection with this renewal, the parties agreed to certain interest rate
reductions and the addition of a new net worth covenant, among other changes.
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 Second Amendment to the Revolving Credit Agreement , dated as of
July 11, 1994, among the Company, the Restricted Subsidiaries
named therein and BankBoston, N.A. (formerly known as The First
National Bank of Boston), individually and as agent.
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: 8/11/97 By:/s/ Jeffrey J. McAulay
-------------------------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance
and Administration
(principal financial officer)
Page 13
<PAGE>
Exhibit Index
Exhibit No. Description of the Document
- ----------- -------------------------------------------------------------
10.1 Second Amendment to the Revolving Credit Agreement , dated as of
July 11, 1994, among the Company, the Restricted Subsidiaries
named therein and BankBoston, N.A. (formerly known as the First
National Bank of Boston), individually and as agent. (1)
27 Financial Data Schedule (1)
- -----------------------------------
(1) Submitted separately, electronically
Page 14
<PAGE>
EXHIBIT 10.1
AMENDMENT AGREEMENT NO. 2
MORAN TRANSPORTATION COMPANY
This AMENDMENT AGREEMENT No. 2 (this "Amendment"), is made as of June 4,
1997, among Moran Transportation Company ("Moran"), each of its Restricted
Subsidiaries (collectively with Moran, the "Borrowers"), BankBoston, N.A. (f/k/a
The First National Bank of Boston), such other lenders that are or may become
parties to the Credit Agreement referred to below (each, a "Bank" and,
collectively, the "Banks") and BankBoston, N.A., as agent for the Banks (the
"Agent").
WHEREAS, the Borrowers, the Banks and the Agent are parties to that certain
Revolving Credit Agreement, dated as of July 11, 1994, (as amended, restated,
modified and in effect from time to time, the "Credit Agreement"), pursuant to
which the Banks, upon certain terms and conditions, have agreed to make
Revolving Credit Loans to the Borrowers; and
WHEREAS, the parties hereto wish to amend certain provisions of the Credit
Agreement;
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. 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.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT.
(a) Section 1.1 of the Credit Agreement is here by amended by adding the
following new definitions thereto in the correct alphabetical sequence:
CONSOLIDATED EBITDA. For any Person and for any fiscal period, anamount
equal to the sum of (a) Earnings Before Interest and Taxes for such Person and
its consolidated Restricted Subsidiaries for such period, plus (b) depreciation
and amortization for such Persons for such period, in each case determined on a
consolidated basis for such Persons in accordance with generally accepted
accounting principles.
CONSOLIDATED FUNDED INDEBTEDNESS. For any Person and s of any date of
determination, all Indebtedness of such Person and its consolidated Restricted
Subsidiaries for borrowed money, the deferred purchase price of assets and
Capitalized Leases.
<PAGE>
(b) Section 1. 1 of the Credit Agreement is hereby amended by deleting the
definition of "Revolving Credit Loan Maturity Date" set forth therein in its
entirety, and substituting in lieu thereof the following new definition:
REVOLVING CREDIT LOAN MATURITY DATE. July 11, 2000.
(c) Section 2.2 of the Credit Agreement is hereby amended by deleting the
text "three quarters of one percent (3/4%)" occurring in the fourth line thereof
and substituting in lieu thereof the text: "three-eighths of one percent
(3/8%)".
(d) Section 2.5(a)(ii) of the Credit Agreement is hereby amended by
deleting the text "two and one quarter percent (2-1/4%)" occurring in the third
and fourth lines thereof, and substituting in lieu thereof the text: "one and
three quarters percent (1-3/4%)".
(e) Section 4.6 of the Credit Agreement is hereby amended by deleting the
text "2-1/4%" occurring in the third line thereof, and substituting in lieu
thereof the text: "one and three-quarters percent (1-3/4%)".
(f) Section 10 of the Credit Agreement is hereby amended by adding the
following new section thereto:
Section 10.2 MAXIMUM LEVERAGE RATIO. The Borrowers will not permit the
ratio of Consolidated Funded Indebtedness of Moran and its Restricted
Subsidiaries to Consolidated EBITDA of Moran and its Restricted Subsidiaries, as
measured at the end of each fiscal quarter of Moran for the period of the four
immediately preceding fiscal quarters, to be greater than 6.00: 1.
(g) Exhibit E to the Credit Agreement is hereby amended by deleting such
exhibit in its entirety, and substituting in lieu thereof Exhibit E attached
hereto.
Section 3. AFFIRMATION OF THE BORROWERS. The Borrowers hereby affirm their
joint and several, absolute and unconditional promise to pay to the Banks the
Revolving Credit loans and all other amounts due under the Credit Agreement, as
amended hereby, and the other Loan Documents. The Borrowers hereby represent,
warrant and confirm that the Obligations, as amended hereby, are and remain
secured pursuant to the Security Documents.
Section 4. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby jointly
and severally represent and warrant to the Banks as follows:
(a) The execution and delivery by the Borrowers of this Amendment and all
other instruments and agreements required to be executed and delivered by the
<PAGE>
Borrowers in connection with the transactions contemplated hereby or referred to
herein (collectively, the "Amendment Documents"), and the performance by the
Borrowers of their obligations and agreements under the Amendment Documents and
the Credit Agreement as amended hereby, are within the corporate authority of
each of the Borrowers, have been authorized by all necessary corporate
proceedings on behalf of each such Person, and do not and will not contravene
any provision of law or any of such Person's charter, other incorporation
papers, by-laws or any stock provision or any amendment thereof or of any
indenture, agreement, instrument or undertaking binding upon any such Persons.
(b) This Amendment and the Credit Agreement as amended hereby constitute
legal, valid and binding obligations of the Borrowers, enforceable in accordance
with their respective terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights.
(c) No approval or consent of, or filing with, any governmental agency or
authority is required to make valid and legally binding the execution, delivery
or performance by the Borrowers of the Amendment Documents or the Credit
Agreement as amended hereby, or the consummation by the Borrowers of the
transactions contemplated hereby and thereby or referred to herein.
(d) The representations and warranties contained in Section 7 of the
Credit Agreement were correct at and as of the date made and are also correct at
and as of the date hereof, with the same effect as if made at and as of the date
hereof (except to the extent of changes (i) resulting from transactions
contemplated or permitted by the Credit Agreement, as amended hereby, and the
other Loan Documents or (ii) occurring in the ordinary course of business that
singly or in the aggregate would not have a materially adverse effect on the
business or financial condition of Moran and its Restricted Subsidiaries on a
consolidated basis, or to the extent that such representations and warranties
relate expressly to an earlier date or have been waived by the Banks).
(e) As of the date here of there exists no Default or Event of Default or
condition which, with either or both the giving of notice or the lapse of time,
would result in a Default or an Event of Default, both before and after giving
effect to the Amendment Documents.
SECTION 5. EFFECTIVENESS. This Amendment shall become effective as of the
date here of upon the satisfaction, on or prior to June 13, 1997, of each of the
conditions precedent set forth in this Section 5.
(a) DELIVERY. The Borrowers, the Banks and the Agent shall have executed
and delivered this Amendment.
<PAGE>
(b) PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Amendment and all documents incident thereto
shall be reasonably satisfactory in substance and form to the Agent and its
counsel, and the Agent shall have received all information and such counterpart
originals or certified or other copies of such documents as the Agent may
reasonably request.
(c) CLOSING FEE. The Borrowers shall have paid to the Agent, for the pro
rata accounts of the Banks, a closing fee equal to $25,000.
(d) COMMERCIAL FINANCE EXAMINATION. The Agent shall have received a
commercial finance examination of the Borrower's Accounts Receivable and
inventory and such commercial finance examination shall be satisfactory to the
Agent in all respects.
(e) FINANCIAL CONDITION. No material adverse change, in the judgment of
the Banks, shall have occurred in the financial condition, business or prospects
of the Borrowers since the most recent financial statements provided to the
Banks pursuant to Section 8.4 of the Credit Agreement.
SECTION 6. MISCELLANEOUS PROVISIONS.
(a) Except as otherwise expressly provided by this Amendment, an of the
terms, conditions and provisions of the Credit Agreement (including without
limitation the affirmative covenants of the Borrowers contained in Section 8 of
the Credit Agreement, the negative covenants of the Borrowers contained in
Section 9 of the Credit Agreement and the financial covenants of the Borrowers
contained in Section 10 of the Credit Agreement) shall remain the same. It is
declared and agreed by each of the parties hereto that the Credit Agreement, as
amended hereby, shall continue in full force and effect, and that this Amendment
and the Credit Agreement shall be read and construed as one instrument.
(b) This Amendment is intended to take effect as an agreement under seal
and shall be construed according to and governed by the internal laws of The
Commonwealth of Massachusetts.
(c) This Amendment may be executed in any number of counterparts, but all
such counterparts shall together constitute but one instrument. In making proof
of this Amendment it shall not be necessary to produce or account for more than
one counterpart signed by each party hereto by and against which enforcement
hereof is sought.
(d) The Borrowers hereby agree to pay to the Agent, on demand by the
Agent, all reasonable out-of-pocket costs and expenses incurred or sustained by
the Agent in connection with the preparation of this Amendment (including
without limitation reasonable legal fees and expenses, and the costs of a
commercial finance examination and, inventory appraisal).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed his Amendment as of
the date first written above.
MORAN TRANSPORTATION COMPANY
MORAN TOWING CORPORATION
CURTIS BAY TOWING COMPANY OF
PENNSYLVANIA
CURTIS BAY TOWING COMPANY OF
VIRGINIA
FLORIDA TOWING COMPANY
JAKOBSON SHIPYARD,INC.
MORAN BARGE CORP.
MORAN SHIPYARD CORPORATION
MORAN TOWING OF TEXAS INC.
By: /s/ Malcolm W. MacLeod
President
MORAN TOWING OF DELAWARE, INC. MORAN
BULK CORPORATION
HAMPTON ROADS LAND COMPANY,INC. MORAN
INSURANCE COMPANY LIMITED PORTSMOUTH
NAVIGATION
CORPORATION
By: /s/ Jeffrey J. McAulay
Vice President - Moran Bulk
Vice President - Moran Towing Delaware, Inc.
Vice President of Hampton Roads
Lands Company, Inc.
Chairman and President of Moran
Insurance Company Limited
Vice President of Portsmouth
Navigation Corporation
<PAGE>
MORAN SERVICES CORPORATION
PETROLEUM TRANSPORT CORPORATION
SEABOARD BARGE CORPORATION
By: /s/ William P. Muller
Title: President
BANKBOSTON, N.A. (F/K/A THE FIRST NATIONAL BANK OF
BOSTON), INDIVIDUALLY AND AS AGENT
By: /s/ Victor Garcia
Title: Vice President
<PAGE>
EXHIBIT E
---------
FORM OF
COMPLIANCE CERTIFICATE
----------------------
[Date]
To the Banks Party to the
Credit Agreement Referred to Below
c/o BankBoston, N.A., (f/k/a The First
National Bank of Boston), as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Transportation Division
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of July 11,
1994 (as amended and in effect from time to time, the "Credit Agreement"), by
and among Moran Transportation Company ("Moran") and the other Borrowers named
therein (the "Borrowers"), BankBoston, N.A. (f/k/a The First National Bank of
Boston), such other lenders that are or may become parties thereto from time to
time (collectively, the "Banks") and BankBoston, N.A. (f(k/a The First National
Bank of Boston) as agent for the Banks (the "Agent"). Capitalized terms used
herein without definition and which are defined in the Credit Agreement shall
have the respective meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 8.4(d) of the Credit Agreement, Moran, by the
undersigned officers of Moran (who have reviewed the Loan Documents), hereby
certifies to each of you, on behalf of itself and each of the other Borrowers,
as follows: (a) the information furnished in the calculations attached hereto
was true and correct as of the last day of the fiscal year] [quarter] next
preceding the date of this certificate; (b) as of the date of this certificate,
there exists no Default or Event of Default or condition which would, with
either or both the giving of notice or the lapse of time, result in a Default or
an Event of Default; and (c) the financial statements delivered herewith were
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods (except, in the case of quarterly
statements, for provisions for footnotes and, in all cases, except as disclosed
therein).
<PAGE>
Compliance Certificate Worksheet
I. SECTION 10. OPERATING CASH FLOW TO DEBT SERVICE:
(calculated on a consolidated basis)
A. Earnings Before Interest and Taxes: $
B. Plus: depreciation and amortization: $
C. Less: cash taxes: $
D. Operating Cash Flow
(A+B+C):
E. Total Financial Obligations
due FOR period: $
F. Plus: Total Interest Expense: $
G. Total Debt Service (E+F): $
COMPUTED RATIO (D / G):
Minimum ratio required: 1.35:1.00
Excess (deficiency) in ratio
II. SECTION 10.2 MAXIMUM LEVERAGE RATIO:
(calculated on a consolidated basis)
A. Consolidated Funded Indebtedness: $
B. Earnings Before Interest and Taxes: $
C. Plus: depreciation and amortization: $
D. Consolidated EBITDA (B+C): $
COMPUTED RATIO (A--. D):
Maximum ratio permitted: 6.00:1
Excess (deficiency) in ratio:
<PAGE>
IN WITNESS THEREOF, each of the undersigned has executed this Compliance
Certificate as of the date first written above.
MORAN TRANSPORTATION COMPANY
By:
Name:
Title:
By:
Name:
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORAN
TRANSPORTATION COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF
AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<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> 6,558
<SECURITIES> 0
<RECEIVABLES> 13,362
<ALLOWANCES> 460
<INVENTORY> 4,443
<CURRENT-ASSETS> 30,758
<PP&E> 118,900
<DEPRECIATION> 25,947
<TOTAL-ASSETS> 159,732
<CURRENT-LIABILITIES> 16,625
<BONDS> 80,000
1,000
0
<COMMON> 1
<OTHER-SE> 12,980
<TOTAL-LIABILITY-AND-EQUITY> 159,732
<SALES> 50,048
<TOTAL-REVENUES> 50,048
<CGS> 32,108
<TOTAL-COSTS> 43,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,020
<INCOME-PRETAX> 1,491
<INCOME-TAX> 536
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 955
<EPS-PRIMARY> 20.85
<EPS-DILUTED> 0
</TABLE>
