<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, 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 May 10, 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
March 31, 1997 3
Consolidated Statements of Income for the three
months ended March 31, 1996 and March 31, 1997 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and March 31, 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
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, MARCH 31,
ASSETS 1996 1997
- ------ ---------- ----------
(unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents............................................. $ 5,827 $ 3,653
Accounts receivable, less allowance for doubtful
accounts of $323 and $383 at December 31, 1996
and March 31, 1997, respectively...................................... 12,744 14,024
Inventory............................................................. 4,395 4,434
Unexpired insurance and other prepaid expenses........................ 2,065 2,186
Shipyard assets held for sale (Note 5)................................ -- 3,120
Restricted funds held for contingent consideration (Note 1)........... 12,000 1,600
---------- ----------
Total Current Assets.................................................. 37,031 29,017
Investment in joint venture........................................... 2,892 2,795
Insurance claims receivable........................................... 2,346 2,980
Fixed assets, net..................................................... 121,325 120,564
Shipyard assets held for sale (Note 5)................................ 3,036 --
Restricted funds held for contingent consideration (Note 1)........... 1,600 --
Other Assets.......................................................... 4,487 4,237
---------- ----------
Total Assets.......................................................... $172,717 $159,593
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
DEC 31, MARCH 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1997
- ---------------------------------------------------------------------- ---------- ----------
(UNAUDITED)
<S> <C> <C>
Current Liabilities
Trade accounts payable.............................................. $ 4,486 $ 4,591
Accounts payable to joint venture................................... 1,066 994
Accrued insurance payable........................................... 359 639
Accrued interest payable............................................ 4,308 1,958
Other accrued liabilities........................................... 3,868 4,085
Backpay liability................................................... 885 885
Income taxes payable................................................ 926 1,664
Liability for contingent consideration (Note 1)..................... 12,000 1,600
---------- ----------
Total Current Liabilities....................................... 27,898 16,416
Long-term debt........................................................ 80,000 80,000
Insurance claims reserves............................................. 5,989 6,171
Deferred income taxes................................................. 34,150 33,626
Postretirement benefits other than pensions........................... 3,995 4,075
Liability for contingent consideration (Note 1)....................... 1,600 --
Other liabilities..................................................... 6,060 5,875
---------- ----------
Total Liabilities............................................... 159,692 146,163
---------- ----------
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 2,280
---------- ----------
Total Stockholders' Equity...................................... 12,025 12,430
---------- ----------
Total Liabilities and Stockholders' Equity............................ $ 172,717 $ 159,593
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended March 31,
(Dollars in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Operating revenue....................................................... $ 20,809 $ 24,829
Cost of operations
Operating expenses.................................................. 12,666 15,982
Depreciation........................................................ 1,922 1,954
--------- ---------
Total cost of operations................................................ 14,588 17,936
--------- ---------
Gross profit............................................................ 6,221 6,893
General and administrative expenses..................................... 3,497 3,671
--------- ---------
Operating income........................................................ 2,724 3,222
Interest expense........................................................ (2,564) (2,512)
Interest income......................................................... -- 31
Equity in loss from joint venture....................................... (37) (97)
Other income............................................................ 15 1
--------- ---------
Income before provision for income taxes................................ 138 645
Provision for income taxes.............................................. 77 240
--------- ---------
Net income.......................................................... $ 61 $ 405
--------- ---------
--------- ---------
Per share of common stock outstanding:
Net income.......................................................... $ 1.34 $ 8.84
Weighted average number of shares outstanding (in thousands)............ 45.6 45.8
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................. $ 61 $ 405
Adjustments to reconcile net income to net --------- ---------
cash provided by (used for)
operating activities:
Depreciation and amortization........................................... 2,707 2,922
Deferred income taxes................................................... (480) (524)
Equity in loss from joint venture....................................... 37 97
Loss on disposal of fixed asset......................................... 128 --
Changes in operating assets and liabilities:
Accounts receivable..................................................... 564 (1,280)
Other current assets.................................................... (469) (160)
Accounts payable and accrued expenses................................... (2,010) (1,820)
Income taxes payable.................................................... 773 738
Insurance claims receivable............................................. 3 (634)
Insurance claims reserves............................................... 67 182
Other assets and liabilities............................................ (1,228) (146)
--------- ---------
Net cash provided by (used for) operating activities....................... 153 (220)
Cash flows from investing activities:
Capital expenditures.................................................... (441) (1,954)
--------- ---------
Net cash used for investing activities..................................... (441) (1,954)
Cash flows from financing activities:
Proceeds from borrowings................................................ 2,250 --
Repayment of debt....................................................... (2,400) --
--------- ---------
Net cash used for financing activities..................................... (150) --
--------- ---------
Net decrease in cash and
cash equivalents........................................................ (438) (2,174)
Cash and cash equivalents at beginning of period........................... 3,006 5,827
--------- ---------
Cash and cash equivalents at end of period................................. $ 2,568 $ 3,653
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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 six 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
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED
STOCK SURPLUS EARNINGS TOTAL
------------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1996........................................... $ 1 $ 10,149 $ 1,875 $ 12,025
Net Income............................................................. -- -- 405 405
------------- --------- ----------- ---------
Balance at March 31, 1997.............................................. $ 1 $ 10,149 $ 2,280 $ 12,430
------------- --------- ----------- ---------
------------- --------- ----------- ---------
</TABLE>
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.
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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 expects to enter into an agreement with the Town of
Oyster Bay for the sale of the property. In connection with consummation of
that transaction, 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 8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Three months ended March 31, 1996 compared to three months ended March 31,
1997
OPERATING REVENUES: Operating revenues increased 19.3% during the first
quarter of 1997 as compared to the comparable period in 1996. Tug services
revenues increased by 18.6%, to $15.1 million, primarily due to increased
coastwise towing and revenue from the New York City Department of
Transportation contract which began on July 1, 1996. Marine transportation
revenues increased by 20.5% to $9.7 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 $3.3 million, or 26.2%,
to $16.0 million in the first quarter of 1997. The increase is primarily due
to increased costs for labor, outside towing and charterhire due to the
increased activity discussed above. In addition, fuel prices increased during
the first three months as compared to last year and insurance expense
increased because of a favorable adjustment in the first quarter of 1996. The
Company also had higher drydocking amortization expense, compared to the
first quarter of 1996.
DEPRECIATION: Depreciation expense increased by $0.1 million, to $2.0
million, in the first quarter of 1997. This increase was due to additional
depreciation arising from final purchase price adjustments and depreciation
on improvements made to assets.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
increased by $0.1 million, or 5.0%, to $3.7 million in the first quarter of
1997. No individual expense categories have increased or decreased materially.
OPERATING INCOME: Operating income increased by $0.5 million, or 18.3%, to
$3.2 million in the first quarter 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.
NET INCOME: Net income increased by $0.3 million, to $0.4 million in the
first quarter. 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, 1997
decreased by $2.2 million. This decrease was attributable to the factors
discussed below:
In the three months ending March 31, 1997, net cash used for operating
activities was $0.2 million. This amount, together with capital expenditures of
$2.0 million, (including the purchase of the barge Massachusetts), resulted in a
decrease of cash and cash equivalents of $2.2 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 is currently reviewing
a proposal to renew the Senior Credit Facility, which expires in July, 1997.
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PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
(a) None
(b) None
(c) On April 21, 1997, the Company issued options to purchase an
aggregate of 350 shares of Common Stock to two executives of the
Company. The exercise price of such options is $250. All
transactions described in this Item 2(c) were effected in reliance
upon the exemption from the registration requirements of the
Securities Act of 1933, as amended, contained in Section 4(2)
thereof on the basis that such transactions did not involve any
public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 21, 1997, the stockholders of the Company, at their annual
meeting unanimously elected the following persons to serve as directors:
Paul R. Tregurtha, James R. Barker, Malcolm W. MacLeod, Jeffrey J.
McAulay, Edmond J. Moran, Jr., Andrew Langlois and Mort Lowenthal
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial data schedule
(b) Reports on Form 8-K.
None
Page 10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORAN TRANSPORTATION COMPANY
By: /s/ Malcolm W. MacLeod
------------------------
Name: Malcolm W. MacLeod
Title: President and Chief Executive Officer
Date: 5/14/97 By: /s/ Jeffrey J. McAulay
-----------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance
and Administration
(principal financial officer)
Page 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,653
<SECURITIES> 0
<RECEIVABLES> 14,024
<ALLOWANCES> 383
<INVENTORY> 4,434
<CURRENT-ASSETS> 29,017
<PP&E> 120,564
<DEPRECIATION> 23,978
<TOTAL-ASSETS> 159,593
<CURRENT-LIABILITIES> 16,416
<BONDS> 80,000
1,000
0
<COMMON> 1
<OTHER-SE> 12,430
<TOTAL-LIABILITY-AND-EQUITY> 159,593
<SALES> 24,829
<TOTAL-REVENUES> 24,829
<CGS> 15,982
<TOTAL-COSTS> 21,607
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,512
<INCOME-PRETAX> 645
<INCOME-TAX> 240
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 405
<EPS-PRIMARY> 8.84
<EPS-DILUTED> 0
</TABLE>
