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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, 1998
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 14, 1998, 44,600 shares of the common stock, par value $0.01 per
share, of Moran Transportation Company, were issued and outstanding.
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MORAN TRANSPORTATION COMPANY
FORM 10-Q
INDEX
PAGE
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements of Moran Transportation
Company and Subsidiaries
Consolidated Balance Sheets at December 31, 1997 and
March 31, 1998 3
Consolidated Statements of Income for the three
months ended March 31, 1997 and March 31, 1998 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1997 and March 31, 1998 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
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PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
DEC 31, MARCH 31,
1997 1998
-------- --------
(unaudited)
ASSETS
------
Current assets
Cash and cash equivalents $ 9,945 $ 11,547
Accounts receivable, less allowance for doubtful
accounts of $288 and $292 at December 31, 1997
and March 31, 1998, respectively 14,319 13,388
Inventory 4,161 4,104
Unexpired insurance and other prepaid expenses 2,487 1,880
-------- --------
Total current assets 30,912 30,919
Investment in joint venture 3,164 3,108
Insurance claims receivable 2,563 3,841
Fixed assets, net 119,920 119,569
Other assets 3,731 3,545
-------- --------
Total assets $160,290 $160,982
-------- --------
-------- --------
See accompanying notes to consolidated financial statements
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
DEC 31, MARCH 31,
1997 1998
-------- --------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Trade accounts payable $ 3,602 $ 6,301
Current portion of long-term debt 168 172
Accounts payable to joint venture 477 1,045
Accrued interest payable 4,331 1,990
Other accrued liabilities 3,936 2,073
Backpay liability 837 837
Income taxes payable - 865
-------- --------
Total current liabilities 13,351 13,283
Long-term debt 83,252 83,207
Insurance claims reserves 7,227 7,419
Deferred income taxes 32,450 32,450
Postretirement benefits other than pensions 4,321 4,430
Other liabilities 5,045 4,853
-------- --------
Total liabilities 145,646 145,642
-------- --------
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 3,494 4,190
-------- --------
Total stockholders' equity 13,644 14,340
-------- --------
Total liabilities and stockholders' equity $160,290 $160,982
-------- --------
-------- --------
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)
1997 1998
-------- --------
Operating revenue $ 24,829 $ 25,712
Cost of operations
Operating expenses 15,982 16,412
Depreciation 1,954 1,977
-------- --------
Total cost of operations 17,936 18,389
-------- --------
Gross profit 6,893 7,323
General and administrative expenses 3,671 3,757
-------- --------
Operating income 3,222 3,566
Interest expense (2,512) (2,559)
Interest income 31 119
Equity in loss from joint venture (97) (56)
Other income 1 15
-------- --------
Income before provision for income taxes 645 1,085
Provision for income taxes 240 389
-------- --------
Net income $ 405 $ 696
-------- --------
-------- --------
Earnings per share
Basic $ 9.08 $ 15.61
-------- --------
-------- --------
Diluted $ 8.84 $ 15.13
-------- --------
-------- --------
Weighted average number of shares
outstanding (in thousands)
Basic 44.6 44.6
-------- --------
-------- --------
Diluted 45.8 46.0
-------- --------
-------- --------
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)
1997 1998
-------- --------
Cash flows from operating activities:
Net income $ 405 $ 696
-------- --------
Adjustments to reconcile net income to net
cash (used for) provided by operating activities:
Depreciation and amortization 2,922 3,106
Deferred income taxes (524) -
Equity in loss from joint venture 97 56
Changes in operating assets and liabilities:
Accounts receivable (1,280) 931
Other current assets (160) 664
Accounts payable and accrued expenses (1,820) (937)
Income taxes payable 738 865
Insurance claims receivable (634) (1,278)
Insurance claims reserves 182 192
Other assets and liabilities (146) (83)
-------- --------
Net cash (used for) provided by operating activities (220) 4,212
Cash flows from investing activities:
Capital expenditures (1,954) (2,569)
-------- --------
Net cash used for investing activities (1,954) (2,569)
Cash flows from financing activities:
Repayment of debt - (41)
-------- --------
Net cash used for financing activities - (41)
Net (decrease)/increase in cash and cash
equivalents cash equivalents (2,174) 1,602
Cash and cash equivalents at beginning of period 5,827 9,945
-------- --------
Cash and cash equivalents at end of period $ 3,653 $ 11,547
-------- --------
-------- --------
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
- -------------------------------------
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, 1997.
NOTE 2 - CHANGES IN STOCKHOLDERS' EQUITY
- ----------------------------------------
COMMON CAPITAL RETAINED
STOCK SURPLUS EARNINGS TOTAL
----- ------- -------- -----
Balance at December 31, 1997 $ 1 $ 10,149 $3,494 $13,644
Net Income - - 696 696
--- -------- ------ -------
Balance at March 31, 1998 $ 1 $ 10,149 $4,190 $14,340
--- -------- ------ -------
--- -------- ------ -------
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 - 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.
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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, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
OPERATING REVENUES: Operating revenues increased by $0.9 million, or 3.6%
during the first quarter of 1998 as compared to the comparable period in
1997. Tug services revenues increased by 1.8%, to $15.4 million, primarily
due to increased harbor docking revenues, partially offset by lower coastwise
towing. The Company also won a two-year renewal of the New York City
Department of Transportation contract that began on July 1, 1996 and will now
expire on June 30, 2000. Marine transportation revenues increased by 6.3% to
$10.3 million reflecting increased revenues from the transportation of oil,
scrap and other bulk products, which were partially offset by lower coal
transportation.
OPERATING EXPENSES: Operating expenses increased by $0.4 million, or 2.7%, to
$16.4 million in the first quarter of 1998. The increase is primarily due to
increased costs for outside towing due to the increased activity discussed
above, partially offset by a decrease in fuel prices during the first three
months as compared to last year. The Company also had higher drydocking
amortization expense, compared to the first quarter of 1997.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
increased by $0.1 million, or 2.3%, to $3.8 million in the first quarter of
1998. No individual expense categories have increased or decreased materially.
OPERATING INCOME: Operating income increased by $0.3 million, or 10.7%, to
$3.6 million in the first quarter of 1998. This improvement is primarily due
to the increased revenues described above, partially offset by higher
operating and general and administrative costs.
INTEREST INCOME: Interest income increased by $0.1 million, or 283.9%, to
$0.1 million in 1998 due to higher invested cash.
NET INCOME: Net income increased by $0.3 million, to $0.7 million in the
first quarter of 1998. 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, 1998 increased
by $1.6 million. This increase was attributable to the factors discussed
below:
In the three months ending March 31, 1998, net cash provided by operating
activities was $4.2 million. This was used to fund capital expenditures of
$2.6 million and resulted in an increase of cash and cash equivalents of $1.6
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.
A subsidiary of the Company has entered into a long-term contract to provide
tug and barge services to Florida Power & Light, a major Florida utility. The
five year contract begins on October 1, 1998. Under the terms of the
contract, the subsidiary is building a number of tug and barge units. Capital
expenditures associated with the project is expected to be $10 million. The
Company is currently exploring various financing alternatives.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
(a) None
(b) None
(c) None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 27, 1998, 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
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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: 5/14/98 By: /s/ Jeffrey J. McAulay
----------------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance and
Administration
(principal financial officer)
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<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 THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,547
<SECURITIES> 0
<RECEIVABLES> 13,388
<ALLOWANCES> 292
<INVENTORY> 4,104
<CURRENT-ASSETS> 30,919
<PP&E> 119,569
<DEPRECIATION> 32,916
<TOTAL-ASSETS> 160,982
<CURRENT-LIABILITIES> 13,283
<BONDS> 80,000
1,000
0
<COMMON> 1
<OTHER-SE> 14,339
<TOTAL-LIABILITY-AND-EQUITY> 160,982
<SALES> 25,712
<TOTAL-REVENUES> 25,712
<CGS> 18,389
<TOTAL-COSTS> 22,146
<OTHER-EXPENSES> 15
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,559
<INCOME-PRETAX> 1,085
<INCOME-TAX> 389
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 696
<EPS-PRIMARY> 15.58
<EPS-DILUTED> 15.17
</TABLE>
