<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, 1999
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, 1999, all of the registrants' 44,600 issued and
outstanding shares of Common Stock, par value $0.01 per share, were
held by Moran Enterprises Corporation.
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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, 1998 and
March 31, 1999 3
Consolidated Statements of Income for the three
months ended March 31, 1998 and March 31, 1999 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and March 31, 1999 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>
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,
1998 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,349 $ 3,739
Accounts receivable, less allowance for doubtful
accounts of $448 and $398 at December 31, 1998
and March 31, 1999, respectively 14,973 15,867
Inventory 3,669 3,680
Unexpired insurance and other prepaid expenses 3,701 3,136
-------- --------
Total current assets 26,692 26,422
Investment in joint venture 3,340 2,749
Insurance claims receivable 3,176 3,601
Fixed assets, net 125,359 125,093
Other assets 2,967 2,755
-------- --------
Total assets $161,534 $160,620
======== ========
</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,
1998 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Trade accounts payable $ 6,617 $ 6,071
Accounts payable to joint venture 2,295 1,347
Accrued interest payable 4,254 1,934
Other accrued liabilities 2,441 3,915
Backpay liability 787 787
Income taxes payable 243 1,247
-------- --------
Total current liabilities 16,637 15,301
Long-term debt 78,997 78,997
Insurance claims reserves 7,984 8,251
Deferred income taxes 31,768 31,552
Postretirement benefits other than pensions 4,729 4,836
Other liabilities 4,060 3,881
-------- --------
Total liabilities 144,175 142,818
-------- --------
Stockholder's Equity
Common stock, par value $0.01 per share authorized-100,000 shares
issued and outstanding 44,600 shares 1
1
Capital surplus 11,149 11,149
Retained earnings 6,209 6,652
-------- --------
Total stockholder's equity 17,359 17,802
-------- --------
Total liabilities and stockholder's equity $161,534 $160,620
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
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>
1998 1999
-------- --------
<S> <C> <C>
Operating revenue $ 25,712 $ 27,650
Cost of operations
Operating expenses 16,412 18,562
Depreciation 1,977 2,122
-------- --------
Total cost of operations 18,389 20,684
-------- --------
Gross profit 7,323 6,966
General and administrative expenses 3,757 3,747
-------- --------
Operating income 3,566 3,219
Interest expense (2,559) (2,463)
Interest income 119 32
Equity in loss from joint venture (56) (90)
Other income 15 51
-------- --------
Income before provision for income taxes 1,085 749
Provision for income taxes 389 306
-------- --------
Net income $ 696 $ 443
======== ========
Earnings per share
Basic $ 15.61 $ 9.93
======== ========
Diluted $ 15.13 $ 9.93
======== ========
Weighted average number of shares outstanding (in thousands)
Basic 44.6 44.6
======== ========
Diluted 46.0 44.6
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1999
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 696 $ 443
-------- -------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 3,106 3,831
Deferred income taxes -- (216)
Equity in loss from joint venture 56 90
Changes in operating assets and liabilities:
Accounts receivable 931 (894)
Other current assets 664 554
Accounts payable and accrued expenses (937) (2,340)
Income taxes payable 865 1,004
Insurance claims receivable (1,278) (425)
Insurance claims reserves 192 267
Other assets and liabilities (83) (72)
-------- -------
Net cash provided by operating activities 4,212 2,242
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,569) (3,352)
Distribution from joint venture -- 500
-------- -------
Net cash used for investing activities (2,569) (2,852)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (41) --
-------- -------
Net cash used for financing activities (41) --
-------- -------
Net increase/(decrease) in cash and cash equivalents 1,602 (610)
Cash and cash equivalents at beginning of period 9,945 4,349
-------- -------
Cash and cash equivalents at end of period $ 11,547 $ 3,739
======== =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
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, 1998.
NOTE 2 - CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED
STOCK SURPLUS EARNINGS TOTAL
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ 1 $ 11,149 $6,209 $17,359
Net Income - - 443 443
--- -------- ------ -------
Balance at March 31, 1999 $ 1 $ 11,149 $6,652 $17,802
=== ======== ====== =======
</TABLE>
NOTE 3 - INCOME TAXES
The Company and its wholly owned domestic subsidiaries file a consolidated
Federal income tax return with its parent, Moran Enterprises Corporation. 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>
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 a subsidiary of 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.
The Court has ruled that the Company's subsidiary is liable in contribution
only, not jointly and severally. The Company believes that its subsidiary's
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
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>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
OPERATING REVENUES: Operating revenues increased by $1.9 million, or 7.5% during
the first quarter of 1999 versus the comparable period in 1998. Tug services
revenues increased by 9.5%, to $16.9 million, primarily due to increased harbor
docking and coastwise towing revenues. Marine transportation revenues increased
by 4.1% to $10.6 million reflecting a new petroleum transportation contract in
Florida and increased movements of scrap and other products. These increases
were partially offset by lower coal transportation primarily due to one of the
Company's utility customers switching to coal to oil at two of their
generating plants due to lower oil prices. If oil prices increase, management
expects coal shipments to resume.
OPERATING EXPENSES: Operating expenses increased by $2.2 million, or 13.1%, to
$18.6 million in the first quarter of 1999. The increase is primarily due to
increased costs for labor, outside charterhire and drydocking amortization
expense. The labor and outside charter increase is driven by the increased
activity discussed above, partially offset by a decrease in fuel prices during
the first three months as compared to last year.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
remained effectively flat in the first quarter of 1999, at $3.7 million,
compared to $3.8 million in the first quarter of 1998. No individual expense
categories have increased or decreased materially.
OPERATING INCOME: Operating income decreased by $0.3 million, or 9.7%, to $3.2
million in the first quarter of 1999. This decrease is primarily due to the
increased operating expenses discussed above, partially offset by the increase
in revenues.
INTEREST EXPENSE: Interest expense decreased by $0.1 million, or 3.8%, to $2.5
million in the first quarter of 1999 due to a lower debt balance outstanding.
NET INCOME: Net income decreased by $0.3 million, to $0.4 million in the first
quarter of 1999. The reduction in overall profitability was principally driven
by lower operating profit.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents for the three months ended March 31, 1999 decreased by
$0.6 million. This decrease was attributable to the factors discussed below:
In the three months ending March 31, 1999, net cash provided by operating
activities was $2.2 million. This cash, together with a $0.5 million
distribution from the Company's joint venture, was used to fund capital
expenditures of $3.4 million and resulted in a decrease of cash and cash
equivalents of $0.6 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.
The Company currently intends to redeem the Notes on or about July 15, 1999
at 108% of their principal amount using funds advanced from its parent company.
In connection with the redemption, the Company expects to incur an
extraordinary charge of $8.3 million, comprised of $6.3 million in prepayment
penalties and a write-off of related debt placement costs of $2.0 million.
The net of tax charge is expected to be $5.4 million or $121.08 per share.
<PAGE>
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 25, 1999, the stockholder of the Company at its annual
meeting 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>
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: May 14, 1999 By: /s/ Jeffrey J. McAulay
---------------------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance and
Administration (principal financial officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORAN
TRANSPORTATION COMPANY'S AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR
THE YEAR ENDED MARCH 31, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,739
<SECURITIES> 0
<RECEIVABLES> 15,867
<ALLOWANCES> 398
<INVENTORY> 3,680
<CURRENT-ASSETS> 26,422
<PP&E> 125,093
<DEPRECIATION> 43,836
<TOTAL-ASSETS> 160,620
<CURRENT-LIABILITIES> 15,301
<BONDS> 78,997
0
0
<COMMON> 1
<OTHER-SE> 17,802
<TOTAL-LIABILITY-AND-EQUITY> 160,620
<SALES> 27,650
<TOTAL-REVENUES> 27,650
<CGS> 20,684
<TOTAL-COSTS> 24,431
<OTHER-EXPENSES> (51)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,463
<INCOME-PRETAX> 749
<INCOME-TAX> 306
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 9.93
<EPS-DILUTED> 9.63
</TABLE>
