<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-25990
INTRAV, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1323155
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7711 BONHOMME, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
(314) 727-0500
Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT OF SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of each class
--------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
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 and Exchange
Act of 1934 during the preceding 12 months (or for 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non affiliates of the
registrant as of February 28, 1998 was approximately $16.6 million. The
amount shown is based on the closing price of $14.125 per share of Common
Stock on the NASDAQ Stock Market on February 28, 1998.
As of February 28, 1998, there were 5,100,850 shares of the registrants
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV of this Form 10-K incorporate by reference certain
information from the registrant's 1997 Annual Report to Shareholders. Part
III of this Form 10-K incorporates by reference certain information from the
registrant's Proxy Statement for its Annual Meeting of Shareholders to be
held on May 21, 1998.
<PAGE> 2
PART I
Item 1. BUSINESS
INTRAV, Inc. ("INTRAV") is a leading designer, organizer, marketer and
operator of deluxe, escorted, international and domestic travel programs and
cruises. Its programs and cruises are designed to attract affluent,
well-educated individuals desiring first-class travel and cruise experiences.
In 1997, INTRAV offered and operated 82 travel programs with 305 departures,
generating an average revenue of $4,879 per person. These programs included
cruises aboard its subsidiary Clipper Cruise Line's 100-passenger M/V
Nantucket Clipper and 138-passenger M/V Yorktown Clipper ranging from $1,200
for a 5-day cruise in Northern California to $5,380 for a 14-day cruise in
British Columbia and Alaska. Also included were INTRAV's Around the World by
Private Concorde which sold for $55,800 per person, as well as other land and
cruise programs to Europe, Asia, Africa, Australia, Antarctica, the Caribbean
and South America. Since 1959, over 400,000 travelers have participated in
INTRAV's worldwide travel programs.
The tour and cruise industry in the U.S. comprises wholesale tour operators
and cruise operators which package tours and cruises using retail travel
agency outlets as their primary distribution system. INTRAV, however, has
historically functioned as a designer, packager and retailer of its own
products, marketing to "affinity groups" in the educational, cultural and
professional market, i.e., university alumni associations, museums, medical
associations, etc., through the use of direct mail.
The increased costs of postage, paper and printing, and the deteriorating
direct-mail conversions of promotions sponsored by affinity groups warranted
an adjustment in INTRAV's marketing strategy to include distribution through
retail travel agents. With the acquisition of Clipper Cruise Line, Inc., and
related companies on December 31, 1996, INTRAV was able to utilize Clipper's
established travel agent relationships to market to the general public,
without losing its established position in the affinity group market.
COMPANY BACKGROUND
Throughout its history, INTRAV has been a leader in creating unique tours for
travelers. From inception until 1967, INTRAV operated a regional group tour
business. INTRAV was a pioneer in the field of comprehensive international
air charter leisure holidays, launching a back-to-back (multiple charters of
the same tour) charter series of nine Boeing 707 flights to Tokyo and Hong
Kong in 1967. After the successful operation to the Orient, INTRAV expanded
the concept of back-to-back air charter operations to South America, Africa,
the South Pacific, Scandinavia and Europe.
In 1971, INTRAV introduced its "air/sea cruise" travel concept.
All-inclusive travel package tours were developed, offering a combination of
round-trip charter flights plus a two-week cruise in the Mediterranean Sea.
In 1977, INTRAV again expanded the concept of back-to-back charter operations
when it operated a series of five Boeing 707 back-to-back charter flights
around the world.
With deregulation of the airline industry in the late 1970s, INTRAV converted
all of its travel programs to scheduled air carriers utilizing its strength
in itinerary planning, customer base, strong financial condition and high
service reputation. INTRAV also adopted and further developed the "river
cruise" concept. These programs include cruising on the inland waterways of
Europe, Russia and China, including the Danube River/Black Sea Cruise which
it has offered since 1979.
In 1987, INTRAV developed the first "Around the World by Supersonic Concorde"
travel program. For this program, customers are flown on a chartered
supersonic Concorde jet to various attractive locations while
circumnavigating the globe. Since 1987, INTRAV has operated 22 of these
tours, and is again offering two departures of this travel opportunity in
1998.
On December 31, 1996, INTRAV acquired Clipper Cruise Line, Inc. ("Clipper,"
which term also includes the INTRAV subsidiaries Clipper Adventure Cruises,
Inc., Republic Cruise Line, Inc., Liberty Cruise Line, Inc., and the recently
organized Clipper Adventurer Ltd.), which is a leading designer, organizer,
marketer and operator of deluxe escorted domestic and international
small-ship cruises and tours. Clipper's programs currently are operated
aboard two ships, the Yorktown Clipper and the Nantucket Clipper, and a third
ship, the 122-passenger Clipper Adventurer, is scheduled to begin service in
April 1998. All three ships are owned by INTRAV through certain of its
Clipper subsidiaries.
<PAGE> 3
BUSINESS STRATEGY
The Company operates its business as follows:
SOURCING OF CUSTOMERS.
a) Affinity Groups
INTRAV's sales force operates in the U.S. and Canada soliciting
sponsorship of INTRAV tours and cruises by affinity groups in the
educational, cultural and professional market. Working closely with
administrative staff at such organizations, a direct-mail campaign is
designed after the demographic makeup of the membership list is
analyzed in an effort to ensure compatibility with the tour and cruise
programs offered. A targeted prospect base is thus established and
promotional brochure quantities fixed.
b) Travel Agents
INTRAV's sales force also solicits travel agents in the U.S. and Canada
on a targeted basis, contacting those agents that are deemed to have
clients that are likely to purchase INTRAV tours and cruises. Direct
mail plays an important role in joint promotional mailings to the
travel agents' client lists.
c) Direct-Mail Advertising
INTRAV also uses its internal database of past and prospective
travelers to reach potential new customers. INTRAV maintains detailed
traveler information in its proprietary database, WISDM, a customized
software application designed to facilitate targeted marketing,
customer service, program design and profitability analysis. Data on
every customer traveling with INTRAV is maintained within the database.
In addition, with a client association's permission, the Company
contacts past travelers through its marketing services department to
secure referrals of individuals who may also be interested in traveling
on deluxe international travel programs. This referral system results
in a high-quality mailing list of potential new customers to which the
Company markets its travel programs.
d) Public Relations
As INTRAV began to establish a presence in the general marketplace, a
vigorous public relations effort, largely based on Clipper's existing
strategy, has been and continues to be made to publicize the company's
tour and cruise offerings in the consumer and trade press. It is
estimated that in 1997, this effort resulted in approximately 177
million impressions in consumer media, and 6 million impressions in
travel trade publications.
e) The Internet
The company recognizes the increasing importance of the Internet as a
source of information and has established Web sites for both INTRAV and
Clipper brands containing detailed descriptions of tours and cruises.
DEVELOPMENT OF TRAVEL PROGRAMS. The Company believes that new markets
are opening for the travel industry. The widespread fall of Communism,
the increasing number of democracies throughout the world, and the
development of infrastructures in underdeveloped lands are lowering
barriers and providing more opportunities for international travel. To
service these new markets, the Company intends to continue developing
and offering travel programs not available from other travel providers.
INTRAV designs, organizes and executes each of its travel programs,
although to varying degrees it may purchase certain components of a
program from another travel provider. The Company's travel planners
and operations personnel select and design each travel program, make
all of the travel and accommodation arrangements from the point of
departure and arrange for exclusive parties, sightseeing opportunities
and other special events. During the program-design process, the
Company may charter ships or aircraft and commit to purchase large
blocks of hotel rooms and other accommodations. The Company believes
its ability to make "bulk" purchases and commitments, as well as its
established industry position, results in suppliers providing the best
available rates for these services and allows the Company to provide
its customers with travel programs with good value and competitive
prices.
CUSTOMER SERVICE. A high level of customer satisfaction is critical to
the Company's business, and at least one third of the travelers from
1993 through 1997 were repeat customers. The Company's operations
department is responsible for implementing its quality control program.
The Company inspects each hotel at which customers will be staying, as
well as the ship or other means of transportation being utilized on
each program. An INTRAV travel or cruise director accompanies each
tour throughout its duration to provide incremental customer service
and to
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ensure that the highest possible quality of service is maintained. At
each destination, the Company hires local hosts and the best available
professional guides. In certain geographic areas, the Company employs
destination managers to assist with service and quality control as needed.
Travel arrangements are also monitored by a team of experienced travel
planners under the supervision of senior management.
At the conclusion of each travel program, the Company distributes
questionnaires to its travelers to solicit their input on the quality of
the program and responds to concerns identified. The Company has
experienced a response rate of more than 90% of questionnaires
distributed, which the Company believes is important in order to respond
to traveler needs. Results of responses to the questionnaires show that
travelers consistently rate their INTRAV travel experience between "good"
and "excellent."
TRAVEL PROGRAMS
The Company attempts to develop exclusive travel programs not available from
other travel providers. In order to achieve its goal of offering exclusive
programs, INTRAV coordinates three elements in planning its travel programs:
choosing unique and attractive destinations; planning the day-to-day
itinerary; and determining which travel components will be included in the
travel program. The Company's program-planning personnel stay current with
consumer demand trends in the travel industry by researching trade journals,
travel brochures, consumer publications, attending trade shows, consulting
with overseas suppliers, responding to sponsoring associations and by
reviewing the responses to the questionnaires distributed by the Company at
the conclusion of each travel program. As destinations are selected,
INTRAV's program-planning personnel work closely with local experts to
develop the itinerary for the specific destination. INTRAV oversees all
aspects of ground operations, including the inspection of ships, trains,
hotels and other services. Based on industry standards, location, value,
availability, past customer ratings and other relevant criteria, the Company
negotiates with suppliers, including commercial airlines and other commercial
carriers, and then selects hotels, ships, trains, aircraft and other
components of its travel programs. Once a travel program has been developed,
INTRAV personnel systematically visit each proposed destination to ensure
that all accommodations and services meet the Company's standards for an
INTRAV travel program.
The acquisition of Clipper on December 31, 1996, broadened and enhanced
INTRAV's inventory of unique travel programs. The highly maneuverable,
shallow-draft M/V Nantucket Clipper and M/V Yorktown Clipper, carrying less
than 140 passengers each, offer an unregimented and nonfrenetic ambience,
leisurely single-seating dining, and personalized service. These small ships
travel the historic waterways of North America from March to November.
Winter months find the ships in the Caribbean and Central America. The
addition of the M/S Clipper Adventurer in April 1998, will further expand
INTRAV's small-ship adventure cruise programs to remote and exotic
destinations such as Antarctica, Greenland, Spitsbergen, Hudson Bay,
Scandinavia, Western Europe and the Amazon.
MARKETING AND SALES
The Company's travel and cruise programs are targeted to upper-income
travelers. An important part of the Company's marketing is done through
direct-mail solicitation of these travelers. In 1997, the Company
distributed approximately 25 million copies of four-color sales brochures and
catalogs. Affinity groups sponsor INTRAV travel programs and offer trips to
their members. The groups do not guarantee a minimum level of participation
on the part of their members, nor do they assume the costs of marketing
travel programs to their members. INTRAV also maintains a database of the
names of approximately 180,000 past and prospective customers to which it
directly markets its travel programs.
Although some of the Company's mailings are handled through a sponsoring
association or affinity group, the majority of the Company's mailings are
done through a third-party mailing facility. The Company's proprietary
software, and software licensed from third parties, allows the Company to
avoid duplication of addresses and to standardize addresses according to
postal requirements to obtain savings on mailing costs. By barcoding the
mailings and complying with other postal regulations, the Company believes,
based upon surveys it performs, that it has been able to achieve a high
delivery rate on low-cost, third-class bulk mailings.
Marketing materials are generally mailed nine to 15 months in advance of a
scheduled departure date. Travelers generally book their INTRAV travel
programs six to 12 months in advance of the scheduled departure date. Final
payment for the program is generally due 70 days in advance of the scheduled
departure date. This process allows the Company to monitor closely the
booking patterns of each program and successfully estimate the traveler
demand for its programs. Concurrently, the Company reviews the
accommodation/service commitments it has made with each supplier to ensure
they are adequate. Periodically, adjustments are made to the allotments
which allows the Company's suppliers to maximize the utilization of their
resources. As a result, the Company is able to negotiate generally favorable
prices and cancellation provisions for the space
<PAGE> 5
it reserves. Cancellation penalties can include payment of 100% of the full
charter price if the charter is canceled within the number of days of the
scheduled departure as specified in the charter contract.
COMPETITION
The travel industry is highly competitive. The Company believes that the
principal competitive factors are (i) the uniqueness of the travel and cruise
programs offered, (ii) the quality of the travel programs offered, and (iii)
customer service. Although its competition is highly fragmented, the Company
recognizes four direct competitors that compete with INTRAV in the affinity
group travel market. INTRAV's programs also compete against a wide range of
vacation alternatives, including large-ship cruises, destination resorts and
other travel programs. Certain companies that engage in the travel business,
but all of which are not necessarily the direct competitors of the Company,
have greater financial, marketing and sales resources than the Company.
There can be no assurance that INTRAV's present competitors or competitors
that choose to enter the marketplace in the future will not exert significant
competitive pressures on INTRAV.
SEASONALITY
Demand for INTRAV's travel and cruise programs is subject to seasonal
fluctuations. Higher activity generally is experienced in the summer, early
fall, and winter months. Demand is typically lower during April, May,
November and December due to decreased international travel during these
periods. Clipper offers various cruises throughout the year with scheduled
maintenance occurring in the fourth quarter for the Nantucket Clipper and
Yorktown Clipper and in the first quarter for the Clipper Adventurer.
GOVERNMENT REGULATION
The Company's operations are affected by laws and regulations relating to
public charters, principally regulations issued by the United States
Department of Transportation. Among other requirements, such regulations
require the Company to file and receive approval of a charter prospectus and
other materials prior to the Company's selling or offering to sell travel
programs which utilize chartered aircraft originating or terminating in the
United States. Such regulations also require the Company to maintain
financial protection for traveler advance payments for Company operated
charters originating or terminating in the United States. The Company has
established escrow arrangements to comply with the regulations. Under the
arrangements, monies received from travelers are held in escrow accounts
until charter payments have been made. Management believes that the Company
is in material compliance with these laws and regulations and does not
believe that future compliance with such laws and regulations will have a
material adverse impact on the Company's financial condition or results of
operations.
U.S. law requires the Company to maintain financial protection for passenger
advance payments for Company-operated cruises embarking in U.S. ports. The
Company has established escrow arrangements to comply with the law. Under
the arrangements, monies received from passengers for cruises are held in
escrow accounts until the respective cruises have been completed.
Both the Nantucket Clipper and Yorktown Clipper are classified +A1 Passenger
Vessels+AMS by the American Bureau of Shipping. They are certified for
coastwise and international service by the United States Coast Guard. They
carry Passenger Ship Safety Certificates issued under the provisions of the
International Convention for the Safety of Life at Sea (SOLAS), as well as
Certificates of Sanitary Construction issued by the FDA. The Clipper
Adventurer is classified A-1 ice class for unrestricted passenger service by
the Lloyd's Register. She carries a Passenger Ship Safety Certificate issued
under the provisions of the International Convention for the Safety of Life
at Sea (SOLAS).
EMPLOYEES
As of February 28, 1998, the Company had approximately 300 employees. None
of the Company's employees is represented by a labor union. Management
believes that its employee relations are good.
Item 2. PROPERTIES
The headquarters and principal operations of INTRAV are located in St. Louis,
Missouri, where the Company leases approximately 36,400 square feet of office
space under leases expiring December 31, 2001. Each lease provides an option
to renew, at the Company's discretion, for an additional five-year period.
Windsor Management Corporation, as agent for Windsor Real Estate, Inc., an
affiliated entity, was lessor of the office space through July 1997. During
1997, the office building was sold to an unrelated third party. Amounts paid
in 1997 totaled $683,000. The leases provide for annual rentals
<PAGE> 6
totaling $683,000 in 1998, subject to certain adjustments for taxes, insurance,
operating expenses and utilities. Management believes that the Company's
facilities are adequate for its current needs and that suitable additional
space would be available as required.
Item 3. LEGAL PROCEEDINGS
The Company currently is not a party to any pending legal proceedings, other
than ordinary routine litigation incidental to its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of its fiscal year ended December 31, 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding executive officers is contained in Item 10 Part III of
this Report (General Instruction G) and is incorporated herein by reference.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by this Item is set forth under the caption "General
Corporate Information" of the Company's 1997 Annual Report to Shareholders
and is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information required by this item is set forth under the caption
"Five-Year Financial Highlights" of the Company's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is set forth under the caption
"Management's Discussion and Analysis" of the Company's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this Item is not applicable to the Registrant
pursuant to General Instruction 1 to paragraphs 305(a), 305(b), 305(c),
305(d) and 305(e) of Regulation S-K.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth in the Company's 1997
Annual Report to Shareholders and is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 7
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is set forth under the heading
"Proposal 1: Election of Director" of the Company's Proxy Statement for the
1998 Annual Meeting of Shareholders and is incorporated herein by reference.
The following information with respect to the executive officers of the
Company on February 28, 1998, is included pursuant to Instruction 3 of Item
401(b) of Regulation S-K.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
executive officers, including their respective ages.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Paul H. Duynhouwer 63 President and Chief Executive Officer and Director
Wayne L. Smith II 48 Executive Vice President & Chief Financial Officer and Director
Richard J. Hefler 48 Senior Vice President Marketing and Sales
</TABLE>
PAUL H. DUYNHOUWER became President, Chief Executive Officer, and a Director
of INTRAV in January 1997. He has served as President of Clipper Cruise
Line since 1989 and retains this position in addition to his responsibilities
at INTRAV. Prior to becoming President of Clipper Cruise Line, Mr.
Duynhouwer served as Executive Vice President of Special Expeditions from
December 1986 until August 1989, and as Senior Vice President of Clipper
Cruise Line from June 1982 through November 1986.
WAYNE L. SMITH II has served as Executive Vice President & Chief Financial
Officer, and a Director of INTRAV since September 1997. Mr. Smith also
served as Chairman, President and Chief Executive Officer of Bekins
Distribution Services, Inc., from January 1993 through December 1997. Mr.
Smith has also served as President of Windsor Real Estate and Windsor Capital
from October 1989 through September 1997. Prior to joining Windsor, Mr.
Smith was a Vice President of Citicorp from September 1980 through September
1989.
RICHARD J. HEFLER became Senior Vice President Marketing and Sales of INTRAV
in december 1997. Mr. Hefler had served as Vice President of Marketing of
the Company since September 1990. Prior to joining the Company, Mr. Hefler
served as Director for North America of the Victorian Tourist Commission of
Australia and earlier as Director of Marketing for the AARP Travel Service
Division of Olson-Travelworld.
Item 11. EXECUTIVE COMPENSATION
The information contained in the Proxy Statement for the 1998 Annual Meeting
of Shareholders under the caption "Executive Compensation" is incorporated
herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth under the heading,
"Holdings of Principal Shareholder and Management," of the Company's Proxy
Statement for the 1998 Annual Meeting of Shareholders and is incorporated
herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth under the heading,
"Compensation Committee Interlock and Insider Participation," of the
Company's Proxy Statement for the 1998 Annual Meeting of Shareholders and is
incorporated herein by reference.
<PAGE> 8
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON 8-K
The following is an index of the financial statements, schedules and exhibits
including this Report or incorporated herein by reference.
(a) 1. Financial Statements:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheets -- December 31, 1997 and December 31, 1996 <F*>
Consolidated Statements of Income -- For the years 1997, 1996 and 1995 <F*>
Consolidated Statements of Cash Flows -- For the years 1997, 1996 and 1995 <F*>
Consolidated Statements of Shareholders' Equity -- For the years 1997, 1996 and 1995 <F*>
Notes to Consolidated Financial Statements <F*>
<FN>
<F*> Incorporated in this Report by reference to the Company's 1997 Annual Report to
Shareholders.
</TABLE>
2. Financial Statement Schedules:
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
3. Exhibits -- see the following Exhibit Index of this report.
The following exhibits listed in the Exhibit Index are filed with
this report:
4(i) Amendments one, two, three and four to Revolving Credit
Agreement between Registrant and NationsBank, N.A.
10(iii) (A) (5) Amended Intrav, Inc. 1995 Incentive Stock Plan
10(iii) (A) (8) First Amendment to Deferred Compensation Agreement
between Clipper Cruise Line and Paul H. Duynhouwer
10(iii) (A) (9) Employment Agreement between Intrav, Inc. and
Wayne L. Smith II
13 Annual Report to Shareholders for the Fiscal Year Ended
December 31, 1997
21 Subsidiaries of the registrant
23 Consent of Deloitte & Touche LLP
(b) Reports on Form 8-K during the quarter ended December 31, 1997
The Company did not file any reports on Form 8-K during the fourth
quarter ended December 31, 1997.
(c) Exhibits -- see the exhibits attached hereto:
Management Contracts and Compensatory Plans -- the following
exhibits listed in the Exhibit Index are listed below pursuant to
item 14(a)-3 of Form 10-K.
Employment Agreement by and between Intrav, Inc. and Larry R.
Nolan
Employment Agreement by and between Intrav, Inc. and Richard L.
Burkemper
Employment Agreement by and between Intrav, Inc. and Brenda J.
Stehle
Employment Agreement by and between Intrav, Inc. and Michael A.
DiRaimondo
Amended Intrav, Inc. 1995 Incentive Stock Plan
Form of Option Agreement for Awards under 1995 Stock Plan
Deferred Compensation Agreement between Clipper Cruise Line and
Paul H. Duynhouwer
First Amendment to Deferred Compensation Agreement between Clipper
Cruise Line and Paul H. Duynhouwer
Employment Agreement between Intrav, Inc., and Wayne L. Smith II
<PAGE> 9
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) 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.
INTRAV, Inc.
Date March 27, 1998 By: /s/ Paul H. Duynhouwer
-- -------------------------------
Paul H. Duynhouwer
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Barney A. Ebsworth, Paul H. Duynhouwer and
Wayne L. Smith II, and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this report on Form
10-K for the fiscal year ended December 31, 1997, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on the 27th day of March, 1998, by the following
persons on behalf of the registrant and in the capacities indicated.
SIGNATURE TITLE
/s/ Paul H. Duynhouwer President, Chief Executive
- -------------------------------- Officer and Director
Paul H. Duynhouwer (Principal Executive
Officer)
/s/ Wayne L. Smith II Executive Vice President &
- -------------------------------- Chief Financial Officer and Director
Wayne L. Smith II (Principal Financial and
Accounting Officer)
/s/ Barney A. Ebsworth Chairman of the Board
- --------------------------------
Barney A. Ebsworth
/s/ William H. T. Bush Director
- --------------------------------
William H.T. Bush
Director
- --------------------------------
Robert H. Chapman
Director
- --------------------------------
John B. Biggs, Jr.
<PAGE> 10
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of
Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
3(i) Restated Articles of Incorporation of Intrav, Inc. (Incorporated by reference to Exhibit 3(i) of
the Company's Form S-1 Registration Statement No. 33-90444)
3(ii) Amended and Restated Bylaws of Intrav, Inc., as amended (Incorporated by reference to Exhibit 3(ii)
of the Company's Form 10-K for the year ended December 31, 1995)
4 Revolving Credit Agreement dated December 31, 1996, between the Registrant and Boatmen's National
Bank of St. Louis (Incorporated by reference to Exhibit 4 to the Registrant's Form 8-K dated
January 14, 1996)
4(i) Amendments One, Two, Three and Four to Revolving Credit Agreement between Registrant and NationsBank,
N.A., successor by merger to Boatmen's National Bank of St. Louis
9 Omitted -- Inapplicable
10(i) Agreement for Purchase and Sale of Stock by and among Intrav, Inc., Clipper Cruise Line, Inc.,
Republic Cruise Line, Inc., Liberty Cruise Line, Inc., Clipper Adventure Cruises, Inc. and Windsor,
Inc. dated November 13, 1996, as amended by that certain First Amendment, dated December 18, 1996
(Incorporated by reference to Exhibit 10 to the Registrant's Form 8-K dated January 14, 1996)
10(ii)(D)(1) Lease between Windsor Management Corporation, as agent for Windsor Real Estate, Inc., and Intrav,
Inc. dated June 25, 1993 (Incorporated by reference to Exhibit 10(ii)(D)(1) of the Company's
Form S-1 Registration Statement No. 33-90444)
10(ii)(D)(2) Lease between Windsor Management Corporation, as agent for Windsor Real Estate Inc., and Windsor,
Inc. dated June 23, 1993; assigned to Intrav, Inc. by assignment dated March 17, 1995 between
Windsor, Inc. and Intrav, Inc. (Incorporated by reference to Exhibit 10(ii)(D)(2) of the Company's
Form S-1 Registration Statement No. 33-90444)
10(iii)(A)(1) Employment Agreement by and between Intrav, Inc. and Larry R. Nolan (Incorporated by reference to
Exhibit 10(iii)(A)(1) of the Company's Form S-1 Registration Statement No. 33-90444)
10(iii)(A)(2) Employment Agreement by and between Intrav, Inc. and Richard L. Burkemper (Incorporated by
reference to Exhibit 10(iii)(A)(2) of the Company's Form S-1 Registration Statement No. 33-90444)
10(iii)(A)(3) Employment Agreement by and between Intrav, Inc. and Brenda J. Stehle (Incorporated by reference to
Exhibit 10(iii)(A)(3) of the Company's Form S-1 Registration Statement No. 33-90444)
10(iii)(A)(4) Employment Agreement by and between Intrav, Inc. and Michael A. DiRaimondo (Incorporated by
reference to Exhibit 10(iii)(A)(4) of the Company's Form S-1 Registration Statement No. 33-90444)
<PAGE> 11
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
10(iii)(A)(5) Amended Intrav, Inc. 1995 Incentive Stock Plan
10(iii)(A)(6) Form of Option Agreement for Awards of Options under 1995 Incentive Stock Plan (Incorporated by
reference to Exhibit 10(iii)(A)(6) of Amendment No. 1 to the Company's Form S-1 Registration
Statement No. 33-90444)
10(iii)(A)(7) Deferred Compensation Agreement by and between Clipper Cruise Line, Inc. and Paul H. Duynhouwer
dated December 23, 1996 (Incorporated by reference to Exhibit 10(iii)(A)(7) to the Company's
Annual Report on Form 10-K For The Fiscal Year-ended December 31, 1996)
10(iii)(A)(8) First Amendment to Deferred Compensation Agreement between Clipper Cruise Line and Paul H. Duynhouwer
10(iii)(A)(9) Employment Agreement between Intrav, Inc. and Wayne L. Smith II
11 Omitted -- Inapplicable
12 Omitted -- Inapplicable
13 The Registrant's Annual Report to Shareholders for the Fiscal Year Ended December 31, 1996. Only
those portions expressly incorporated by reference into this Form 10-K are deemed filed.
16 Omitted -- Inapplicable
18 Omitted -- Inapplicable
19 Omitted -- Inapplicable
21 Subsidiaries of the Registrant
22 Omitted -- Inapplicable
23 Consent of Deloitte & Touche LLP
24 Power of Attorney, contained in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 27, 1998
28 Omitted -- Inapplicable
29 Omitted -- Inapplicable
</TABLE>
<PAGE> 1
EXHIBIT 4(i)
AMENDMENT NUMBER ONE
TO
LOAN AGREEMENT
BETWEEN
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(TO WHICH NATIONSBANK, N.A. IS THE SUCCESSOR BY MERGER)
AS "LENDER"
AND
INTRAV, INC.
AS "BORROWER"
AN AMENDMENT ("this Amendment") by INTRAV, INC., as "Borrower", and
NATIONSBANK, N.A., successor by merger to The Boatmen's National Bank of St.
Louis, as "Lender", to the Loan Agreement between them executed as of
December 31, 1996 (the "Original Loan Agreement").
In consideration of the mutual agreements herein and other sufficient
consideration, the receipt of which is hereby acknowledged, Borrower and
Lender agree as follows:
1. DEFINITIONS. Capitalized Terms used and not otherwise defined
herein have the meanings given them in the Loan Agreement. All references to
the "Loan Agreement" in the Original Loan Agreement and in this Amendment
shall be deemed to be references to the Original Loan Agreement as it is
amended hereby and as it may be further amended, restated, extended, renewed,
replaced, or otherwise modified from time to time.
2. EFFECTIVE DATE OF AMENDMENT. This Amendment shall become
effective as of January 1, 1997, and is intended to evidence the actual
conduct of Lender and Borrower with respect to certain matters and their
continuing agreement with respect to those matters.
3. AMENDMENT TO ORIGINAL LOAN AGREEMENT.
3.1 LETTER OF CREDIT COMMITMENT. Section 3.2 of the Original
Loan Agreement is hereby amended by substituting the following therefor in
its entirety:
3.2 LETTER OF CREDIT COMMITMENT Lender commits to issue
standby letters of credit and commercial letters of credit for the
account of Borrower or any Subsidiary of Borrower from time to
time from the Effective Date to the Maturity Date, but only in
connection with transactions satisfactory to Lender and only if
the Letter of Credit Exposure for all Letters of Credit will not
as a result of such issuance exceed the lesser of (i) $5,000,000
or (ii) any excess of the Maximum Available Amount over the
Revolving Loan, and in the case of Letters of Credit requested to
be issued for the account of Subsidiaries of Borrower, the Letter
of Credit Exposure with respect to all Letters of Credit issued
for the account of such Subsidiaries will not as a result of such
issuance exceed $400,000. The expiration date of any Letter of
Credit will be a Business Day that is not more than one year
1
<PAGE> 2
after its issuance date and is not later than the Maturity Date;
provided, however, that the expiration date for a Letter of Credit
may be later than the Maturity Date if Borrower provides cash
collateral satisfactory to Lender as security for Borrower's
obligation to reimburse Lender for all draws thereunder.
3.2 DEFINITION OF LETTER OF CREDIT EXPOSURE. The definition of "Letter
of Credit Exposure" in Appendix 1.1 to the Original Loan Agreement is hereby
amended by substituting the following therefor in its entirety:
"Letter of Credit Exposure": the undrawn amount of all outstanding
Letters of Credit issued by Lender under the Letter of Credit
Commitment plus all unreimbursed amounts drawn on such Letters of
Credit.
3.3 SECURITY AND GUARANTIES. The following sentence is
hereby added at the end of Section 10 of the Original Loan Agreement:
Borrower also hereby unconditionally and irrevocably guaranties the
reimbursement to Lender of, and will cause to be reimbursed to
Lender, all amounts drawn on any Letter of Credit issued for the
account of any Subsidiary of Borrower.
4. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power or remedy of
Lender under the Original Loan Agreement or any of the other Loan Documents,
nor constitute a waiver of any provision of the Original Loan Agreement, any
of the other Loan Documents or any existing Default or Event of Default, nor
act as a release or subordination of the Security Interests of Lender under
the Security Documents. Each reference in the Original Loan Agreement to "the
Agreement", "hereunder", "hereof", "herein", or words of like import, and the
term "Loan Agreement" herein and in any of the Loan Documents shall be deemed
to mean the Original Loan Agreement as amended by this Amendment.
5. REAFFIRMATION. Borrower Hereby acknowledges and confirms that (i)
except as expressly amended hereby the Original Loan Agreement remains in
full force and effect, (ii) Borrower has no defenses to its obligations under
the Loan Agreement and the other Loan Documents, (iii) the Security Interests
of Lender under the Security Documents secure all the Loan Obligations under
the Loan Agreement, continue in full force and effect and have the same
priority as before this Amendment, (iv) Borrower has no claim against Lender
arising from or in connection with the Loan Agreement or the other Loan
Documents, and (v) all of the representations and warranties in Section 13 of
the Original Loan Agreement remain true and correct as of the date of this
Amendment as if made on and as of the date of this Amendment.
6. GOVERNING LAW. This Amendment has been executed and delivered in
St. Louis, Missouri, and shall be governed by and construed under the laws of
the State of Missouri without giving effect to choice or conflicts of law
principles thereunder.
7. SECTION TITLES. The section titles in this Amendment are for
convenience of reference only and shall not be construed so as to modify any
provisions of this Amendment.
2
<PAGE> 3
8. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Amendment may be
executed in one or more counterparts and on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures to this Amendment may be given by
facsimile or other electronic transmission, and such signatures shall be
fully binding on the party sending the same.
9. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that
all of the terms of the Loan Documents are incorporated in and made a part of
this Amendment by this reference.
10. STATUTORY NOTICE. The following notice is given pursuant to Section
432.045 of the Missouri Revised Statutes; nothing contained in such notice
will be deemed to limit or modify the terms of the Loan Documents or this
Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
Borrower and Lender hereby affirm that there is no unwritten oral credit
agreement between Borrower and Lender with respect to the subject matter of
this Amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed on behalf of
Borrower and Lender by their duly authorized officers.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President and Chief By its Senior Vice President
Financial Officer
/s/ Wayne S. Smith II /s/ Keith M. Schmelder
- --------------------------------- -------------------------------
Wayne S. Smith II Keith M. Schmelder
3
<PAGE> 4
EXHIBIT A
Supplemental Disclosure Schedule
No supplemental disclosures if no items listed below:
<PAGE> 5
AMENDMENT NUMBER TWO
TO
LOAN AGREEMENT
EFFECTIVE DECEMBER 31, 1996
BY AND BETWEEN
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(PREDECESSOR BY MERGER TO NATIONSBANK, N.A.)
AND
INTRAV, INC.
In consideration of their mutual agreements herein and for other sufficient
consideration, the receipt of which is hereby acknowledged, INTRAV, INC.
("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's
National Bank of St. Louis ("Lender") agree as follows:
1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan
Agreement" means the Loan Agreement Effective December 31, 1996, between
Borrower and Lender, as amended by Amendment Number One thereto effective as
of January 1, 1997. The term "this Amendment" means this Amendment. The term
Loan Agreement means the Original Loan Agreement as amended by this
Amendment. Capitalized terms used and not otherwise defined herein have the
meanings defined in the Loan Agreement.
2. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be
effective on November 14, 1997, provided that all of the conditions in
Section 4 of this Amendment have been satisfied on or before such date.
3. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the
conditions in Section 4 of this Amendment, the Original Loan Agreement is
amended as follows:
A. The table in Section 4.5 is amended to read in its entirety as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
If the ratio of The LIBOR Increment shall be: The CBR Increment shall be:
Borrower's
Funded Debt to
EBITDA is:
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Equal to or 2.25% 0%
greater than 2.00
but less than 3.00
- ---------------------------------------------------------------------------------------
Equal to or 2.00% 0%
greater than 1.00
but less than 2.00
- ---------------------------------------------------------------------------------------
Less than 1.00 1.75% 0%
- ---------------------------------------------------------------------------------------
</TABLE>
C. Section 5.2 is amended to read in its entirety as follows:
"Borrower shall pay to Lender a "Non-Use Fee" calculated by applying the
daily equivalent of the Non-Use Fee Rate to the Unused Revolving
Commitment on
1
<PAGE> 6
each day during the period from the Effective Date to the Maturity
Date. The "Unused Revolving Commitment" on any day shall be the
amount of the Revolving Commitment minus the sum of the Revolving
Loan and the Letter of Credit Exposure. The Non-Use Fee shall be
payable quarterly in arrears, commencing on the first day of the
first calendar quarterly beginning after the Effective Date and
continuing on the first day of each calendar quarter thereafter
and on the Maturity Date. The applicable "Non-Use Fee Rate" is
0.5% per annum.
D. Section 5.3 of the Original Loan Agreement is amended to read in
its entirety as follows:
"5.3 Borrower shall pay to Lender a one-time Letter of Credit Fee for
each Letter of Credit issued by Lender. The "Letter of Credit Fee"
shall be an amount equal to 1.0% per annum of the original face
amount of each Letter of Credit and is payable quarterly in
arrears. Borrower shall also pay Lender's other customary fees for
amendment and renewal of a Letter of Credit, for negotiation of
drafts drawn under Letters of Credit, and similar fees, all in
accordance with Lender's normal practice at the time."
E. The term "Corporate Base Rate" in the Glossary and Index of
Defined Terms is changed to read in its entirety as follows:
"Corporate Base Rate": the per annum interest rate designated from time
to time by Lender as its 'prime rate', which is a reference rate
and does not necessarily represent the lowest or best rate
charged to any customer of Lender."
4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall
not become effective, and the Loan Agreement shall continue in full force and
effect as it existed in the absence of this Amendment unless:
4.1 CERTAIN DOCUMENTS. Borrower shall before November 14,
1997, deliver to Lender a certificate of the Secretary of Borrower
certifying (i) that the articles or certificate of incorporation
and bylaws of Borrower previously certified to Lender in
connection with the execution of the Loan Agreement have not been
amended, (ii) that resolutions adopted by the Board of Directors
of Borrower authorizing the execution, delivery and performance of
this Amendment by Borrower are attached to the certificate and
remain in full force and effect, and (iii) the names, titles, and
true signatures of the incumbent corporate officers who are
authorized to sign this Amendment or attest signatures or seals on
this Amendment on behalf of Borrower.
4.2 NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred
from December 31, 1996, to the date of execution hereof that is
reasonable likely to have a Material Adverse Effect.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender that (i) execution of this Amendment has
been duly authorized by all requisite action of Borrower; (ii) no consents
are necessary from any third parties for Borrower's execution, delivery
2
<PAGE> 7
or performance of this Amendment, (iii) this Amendment and the Loan Agreement
as amended hereby constitute the legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their terms, except
to the extent that the enforceability thereof against Borrower may be limited
by bankruptcy, insolvency or other laws affecting the enforceability of
creditors rights generally or by equity principles of general application,
(iv) except as disclosed on the supplemental disclosure schedule attached
hereto as Exhibit A and the disclosure schedule attached to the Original Loan
Agreement, all of the representations and warranties contained in Section 13
of the Original Loan Agreement, as amended hereby, are true and correct in
all material respects with the same force and effect as if made on and as of
the effective date of this Amendment, (v) there is no Existing Default, and
(vi) no Default or Event or Default will occur immediately or with the
passage of time or giving of notice as a consequence of this Amendment
becoming effective.
6. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power or remedy of
Lender under the Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision of the Loan Agreement, any of the other
Loan Documents or any Existing Default, nor act as a release or subordination
of the Security Interests of Lender under the Security Documents. Each
reference in the Loan Agreement to "the Agreement", "hereunder", "hereof",
"herein", or words of like import, shall be read as referring to the Loan
Agreement as amended hereby.
7. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i)
except as expressly amended hereby the Original Loan Agreement and other Loan
Documents remain in full force and effect, (ii) the Original Loan Agreement,
as amended hereby, is in full force and effect, (iii) Borrower has no
defenses to its obligations under the Loan Agreement and the other Loan
Documents, (iv) the Security Interests of Lender under the Security Documents
continue in full force and effect and have the same priority as before this
Amendment, and (v) Borrower has no claim against Lender arising from or in
connection with the Loan Agreement or the other Loan Documents.
8. COUNTERPARTS. This Amendment may be executed by the parties hereto
on any number of separate counterparts, and all such counterparts taken
together shall constitute one and the same instrument. It shall not be
necessary in making proof of this Amendment to produce or account for more
than one counterpart signed by the party to be charged.
9. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature
page thereto intended to be attached to a copy of this Amendment, signed and
transmitted by facsimile machine or telecopier shall be deemed and treated as
an original document. The signature of any person thereon, for purposes
hereof, is to be considered as an original signature, and the document
transmitted is to be considered to have the same binding effect as an
original signature on an original document. At the request of any party
hereto, any facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy document. No party
hereto may raise the use of a facsimile machine or telecopier or the fact
that any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Amendment.
10. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the
rights and
3
<PAGE> 8
obligations of the parties hereunder shall be governed by and construed and
interpreted in accordance with the internal laws of the State of Missouri
applicable to contracts made and to be performed wholly within such state,
without regard to choice or conflict of laws provisions.
11. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that
all of the terms of the Loan Documents are incorporated in and made a part of
this Amendment by this reference.
12. STATUTORY NOTICE. The following notice is given pursuant to Section
432.045 of the Missouri Revised Statutes; nothing contained in such notice
will be deemed to limit or modify the terms of the Loan Documents or this
Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
[SIGNATURE PAGE FOLLOWS]
4
<PAGE> 9
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by appropriate duly authorized officers as of the effective date
first above written.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President and Chief By its Senior Vice President
Financial Officer
/s/ Wayne L. Smith II /s/ Keith M. Schmelder
- ------------------------------------ --------------------------
Wayne L. Smith II Keith M. Schmelder
Notice Address: Notice Address:
7711 Bonhomme Avenue 800 Market Street
St. Louis, MO 63105 St. Louis, MO 63101
FAX # 314-727-2533 FAX # 314-466-7783
TEL # 314-727-0500 TEL # 314-466-6642
5
<PAGE> 10
EXHIBIT A
SUPPLEMENTAL DISCLOSURE SCHEDULE
No supplemental disclosures if no items listed below:
6
<PAGE> 11
AMENDMENT NUMBER THREE
TO
LOAN AGREEMENT
EFFECTIVE DECEMBER 31, 1996
BY AND BETWEEN
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(PREDECESSOR BY MERGER TO NATIONSBANK, N.A.)
AND
INTRAV, INC.
In consideration of their mutual agreements herein and for other sufficient
consideration, the receipt of which is hereby acknowledged, INTRAV, INC.
("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's
National Bank of St. Louis ("Lender") agree as follows:
1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan Agreement"
means the Loan Agreement effective December 31, 1996, between
Borrower and Lender, as amended by Amendment Number One thereto effective as
of December 31, 1996, and Amendment Number Two thereto effective as of
November 14, 1997. The term "this Amendment" means this Amendment. The term
Loan Agreement means the Original Loan Agreement as amended by this
Amendment. Capitalized terms used and not otherwise defined herein have the
meanings defined in the Loan Agreement.
2. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be
effective on the earlier of December 31, 1997, or the date when all of the
conditions in Section 4 of this Amendment have been satisfied. Lender will
give written notice to Borrower when such conditions have been satisfied.
3. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the
conditions in Section 4 of this Amendment, the Loan Agreement is amended as
follows:
A. The amount of the Revolving Commitment stated in Section 3.1.1 is
changed from $10,000,000 to $15,000,000 and the table in Section
3.1.1 is amended to read in its entirety as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------
Effective Date of Reduction New
Reduction Revolving
Commitment
- --------------------------------------------------------
<S> <C> <C>
December 31, 1998 $2,000,000 $13,000,000
- --------------------------------------------------------
December 31, 1999 $2,000,000 $11,000,000
- --------------------------------------------------------
</TABLE>
B. The following sentence is added at the end of Section 3.1.2:
1
<PAGE> 12
"No Advance will be made which would result in the Revolving Loan exceeding
$11,000,000 unless and until Lender has a first priority Security
Interest in the Bahamian registered vessel Clipper Adventurer and
all of her machinery and equipment and a valid and effective
assignment of all income and proceeds thereof, subject to no other
Security Interests except those that will be fully discharged by
appropriate contemporaneous application of the proceeds of such
Advance in a manner satisfactory to Lender."
C. Section 15.1 is amended to read in its entirety as follows:
"15.1 Use of Proceeds. All proceeds of the Loan shall be used
for permitted Investments, Capital Expenditures related to
Borrower's business (including acquisitions of the vessel Clipper
Adventure), working capital and general corporate purposes.
D. Section 5.2 is amended to read in its entirety as follows:
"Borrower shall pay to Lender a "Non-Use Fee" calculated by
applying the daily equivalent of the Non-Use Fee Rate to the
Unused Revolving Commitment on each day during the period from the
Effective Date to the Maturity Date. The "Unused Revolving
Commitment" on any day shall be the amount of the Revolving
Commitment minus the sum of the Revolving Loan and the Letter of
Credit Exposure. The Non-Use Fee shall be payable quarterly in
arrears, commencing on the first day of the first calendar
quarterly beginning after the Effective Date and continuing on the
first day of each calendar quarter thereafter and on the Maturity
Date. The applicable "Non-Use Fee Rate is 0.15% per annum."
E. Section 6.1 is amended to read in its entirety as follows:
"6.1 MATURITY DATE. Borrower shall repay the Revolving Loan
and all unpaid accrued interest thereon on December 31, 2000."
F. The last sentence of Section 9.1 is amended to read in its
entirety as follows:
"Such funds will be deposited in an demand deposit account of
Borrower's at the Lending Office."
G. Section 10.1 is amended to read in its entirety as follows:
"10.1 SHIP MORTGAGES. Ship mortgages satisfactory to Lender
and (i) granting to Lender a Security Interest in each of the
United States registered vessels Nantucket Clipper, Yorktown
Clipper and the Bahamian registered vessel Clipper Adventurer, and
(ii) assigning to Lender all income and proceeds thereof, which
Security Interests shall be subject only to Permitted Security
Interests that exist on the Execution Date and affect the
foregoing."
2
<PAGE> 13
H. Section 17.3 is amended to read in its entirety as follows:
"17.3 MINIMUM TANGIBLE NET WORTH. Borrower's Tangible Net
Worth as of the end of each fiscal quarter of Borrower beginning
December 31, 1997, shall at no time be less than $2,000,000 plus
(i) 25% of Borrower's cumulative net income (but not any net loss)
for such fiscal periods and (ii) 25% of the net proceeds from the
issuance by Borrower of any equity securities."
I. Section 17.5 is amended to read in its entirety as follows:
"17.5 CAPITAL EXPENDITURES. Borrower shall not make Capital
Expenditures that in the aggregate exceed $2,500,000 in any one
fiscal year of Borrower, provided, however, that if Borrower's
Capital Expenditures in any one fiscal year are less than
$2,500,000, Borrower may expend the difference in the next ensuing
fiscal year in addition to the Capital Expenditures otherwise
permitted hereunder; further provided, that Borrower may make
Capital Expenditures of up to a total of $12,700,000 for acquiring
and refitting the vessel Clipper Adventure in Borrower's fiscal
years ended in 1997 and 1998 in addition to the Capital
Expenditures permitted in the prior clauses of this sentence. Any
portion of the additional $12,700,000 not expended in Borrower's
fiscal year ended in 1997 may be expended in Borrower's fiscal
year ended in 1998."
J. Clauses (v) and (vi) of Section 18.3 is amended to read in its
entirety as follows:
"(v)" fifth, to payment of interest accrued on the Revolving Loan
and to all Interest Hedge Obligations (if any), pro rata; (vi)
sixth, to payment of the Revolving Loan and all remaining Interest
Hedge Obligations (if any), pro rata;"
4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall
not become effective, and the Loan Agreement shall continue in full force and
effect as it existed in the absence of this Amendment unless:
4.1 CERTAIN DOCUMENTS. Borrower shall deliver to Lender the
following, all in form and substance satisfactory to Lender and (if
applicable) executed by Borrower:
4.1.1. GOOD STANDING CERTIFICATES. Certificates of good
standing of Borrower in Borrower's states of incorporation and
qualification, issued by the Secretary of State of such states.
4.1.2. CERTIFICATE OF SECRETARY OF BORROWER. A Certificate of
the Secretary of Borrower certifying (i) that the articles or
certificate of incorporation and bylaws of Borrower previously
certified to Lender in connection with the execution of the Loan
Agreement have not been amended, (ii) that resolutions adopted by
the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Amendment by Borrower are attached
to the certificate and remain in full force and effect, and (iii)
the names, titles, and true signatures of the incumbent corporate
officers who are authorized to sign this Amendment, or attest
signatures or seals on this Amendment on behalf of Borrower.
3
<PAGE> 14
4.1.3. PROOF OF INSURANCE Certificates of insurance showing
that Borrower has insurance on the vessel Clipper Adventurer that
meets the requirements for such insurance in the Loan Agreement.
4.1.4. LEGAL OPINION. An opinion of Borrower's counsel
regarding the good standing of Borrower, its due authorization of
the execution and delivery of this Amendment and such other matters
as Lender may require.
4.2 NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred from June
30, 1997, to the date of execution hereof that is reasonable likely to
have a Material Adverse Effect.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents
and warrants to Lender that (i) execution of this Amendment has been duly
authorized by all requisite action of Borrower, (ii) no consents are necessary
from any third parties for Borrower's execution, delivery or performance of
this Amendment, (iii) this Amendment and the Loan Agreement as amended hereby
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their terms, except to the extent that the
enforceability thereof against Borrower may be limited by bankruptcy,
insolvency or other laws affecting the enforceability of creditors rights
generally or by equity principles of general application, (iv) except as
disclosed on the supplemental disclosure schedule attached hereto as Exhibit A
and the disclosure schedule attached to the Original Loan Agreement, all of the
representations and warranties contained in Section 13 of the Original Loan
Agreement, as amended hereby, are true and correct in all material respects
with the same force and effect as if made on and as of the effective date of
this Amendment, (v) there is no Existing Default, and (vi) no Default or Event
or Default will occur immediately or with the passage of time or giving of
notice as a consequence of this Amendment becoming effective.
6. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of Lender
under the Loan Agreement or any of the other Loan Documents, nor constitute a
waiver of any provision of the Loan Agreement, any of the other Loan Documents
or any Existing Default, nor act as a release or subordination of the Security
Interests of Lender under the Security Documents. Each reference in the Loan
Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like
import, shall be read as referring to the Loan Agreement as amended hereby.
7. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i)
except as expressly amended hereby the Original Loan Agreement and other Loan
Documents remain in full force and effect, (ii) the Original Loan Agreement,
as amended hereby, is in full force and effect, (iii) Borrower has no
defenses to its obligations under the Loan Agreement and the other Loan
Documents, (iv) the Security Interests of Lender under the Security Documents
continue in full force and effect and have the same priority as before this
Amendment, and (v) Borrower has no claim against Lender arising from or in
connection with the Loan Agreement or the other Loan Documents.
8. COUNTERPARTS. This Amendment may be executed by the parties hereto
on any number of separate counterparts, and all such counterparts taken
together shall constitute one and the same instrument. it shall not be
necessary in making proof of this Amendment to produce or account
4
<PAGE> 15
for more than one counterpart signed by the party to be charged.
9. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature
page thereto intended to be attached to a copy of this Amendment, signed and
transmitted by facsimile machine or telecopier shall be deemed and treated as
an original document. The signature of any person thereon, for purposes
hereof, is to be considered as an original signature, and the document
transmitted is to be considered to have the same binding effect as an
original signature on an original document. At the request of any party
hereto, any facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy document. No
party hereto may raise the use of a facsimile machine or telecopier or the
fact that any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Amendment.
10. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the
rights and obligations of the parties hereunder shall be governed by and
construed and interpreted in accordance with the internal laws of the State
of Missouri applicable to contracts made and to be performed wholly within
such state, without regard to choice or conflict of laws provisions.
11. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that
all of the terms of the Loan Documents are incorporated in and made a part of
this Amendment by this reference.
12. STATUTORY NOTICE. The following notice is given pursuant to Section
432.045 of the Missouri Revised Statutes; nothing contained in such notice
will be deemed to limit or modify the terms of the Loan Documents of this
Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
5
<PAGE> 16
IN WITNESS WHEREOF the parties have caused this Agreement to
be executed by appropriate duly authorized officers as of the
effective date first above written.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President and Chief By its Senior Vice President
Financial Officer
/s/ Wayne L. Smith II /s/ Keith M. Schmelder
- ------------------------------------ -------------------------------
Wayne L. Smith II Keith M. Schmelder
Notice Address: Notice Address:
7711 Bonhomme Avenue 800 Market Street
St. Louis, MO 63105 St. Louis, MO 63101
FAX # 314-727-2533 FAX # 314-466-7783
TEL # 314-727-0500 TEL # 314-466-6642
<PAGE> 17
EXHIBIT A
SUPPLEMENTAL DISCLOSURE SCHEDULE
No supplemental disclosures if no items listed below:
<PAGE> 18
AMENDMENT NUMBER FOUR
to
LOAN AGREEMENT
Effective December 31, 1996
by and between
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(Predecessor by merger to NationsBank, N.A.)
and
INTRAV, INC.
In consideration of their mutual agreements herein and for other sufficient
consideration, the receipt of which is hereby acknowledged, INTRAV, INC.
("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's
National Bank of St. Louis ("Lender") agree as follows:
1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan
Agreement" means the Loan Agreement Effective December 31, 1996 between
Borrower and Lender, as amended by Amendment Number One thereto effective as
of January 1, 1997, Amendment Number Two thereto effective as of November 14,
1997, and Amendment Number Three thereto effective as of December 31, 1997
("Amendment Number Three"). The term "this Amendment" means this Amendment.
The term Loan Agreement means the Original Loan Agreement as amended by this
Amendment. Capitalized terms used and not otherwise defined herein have the
meanings defined in the Loan Agreement.
2. SCRIVENER'S ERROR IN AMENDMENT NUMBER THREE. The parties
acknowledge that in Section 1 of Amendment Number Three, the reference to
"Amendment Number One thereto effective as of December 31, 1996" is a
scrivener's error. The parties agree that such reference should be deemed to
state "Amendment Number One thereto effective as of January 1, 1997."
3. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be
effective as of February 12, 1998, but only if all of the conditions in
Section 5 of this Amendment have been satisfied.
4. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the
conditions in Section 5 of this Amendment, the Loan Agreement is amended as
follows:
4.1 REVOLVING COMMITMENT. The amount of the Revolving Commitment
stated in Section 3.1.1 is changed from $15,000,000 to $20,000,000 and the
table in Section 3.1.1 is amended to read in its entirety as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
EFFECTIVE DATE OF REDUCTION NEW
REDUCTION REVOLVING
COMMITMENT
- ------------------------------------------------------------------------
<S> <C> <C>
December 31, 1998 $2,000,000 $18,000,000
- ------------------------------------------------------------------------
December 31, 1999 $2,000,000 $16,000,000
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 19
4.2 LAST SENTENCE OF SECTION 3.1.2. The last sentence of Section
3.1.2 (which was added in connection with Amendment Number Three) is hereby
deleted in its entirety and the following sentence is substituted in lieu
thereof: "No Advance will be made which would result in the Revolving Loan
exceeding $13,000,000 unless and until Lender has a first priority Security
Interest in the Bahamian registered vessel Clipper Adventurer and all of her
machinery and equipment and a valid and effective assignment of all income
and proceeds thereof, subject to no other Security Interests except those
that will be fully discharged by appropriate contemporaneous application of
the proceeds of such Advance in a manner satisfactory to Lender."
4.3 CAPITAL EXPENDITURES. The text of Section 17.5 of the Loan
Agreement is hereby deleted in its entirety and the following is substituted
in lieu thereof: "Borrower shall not make Capital Expenditures that in the
aggregate exceed $2,500,000 in any one fiscal year of Borrower; provided,
however, that Borrower may make Capital Expenditures of up to a total of
$16,700,000 for acquiring and refitting the vessel Clipper Adventurer in
Borrower's fiscal years ended in 1997 and 1998 in addition to the Capital
Expenditures permitted in the prior clause of this sentence. Any portion of
the additional $16,700,000 not expended in Borrower's fiscal year ended in
1997 may be expended in Borrower's fiscal year ended in 1998."
5. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall
not become effective, and the Loan Agreement shall continue in full force and
effect as it existed in the absence of this Amendment unless:
5.1 CERTAIN DOCUMENTS. Borrower shall deliver to Lender the following,
all in form and substance satisfactory to Lender and (if applicable) executed
by Borrower:
5.1.1. AMENDED AND RESTATED REVOLVING NOTE. An Amended
and Restated Revolving Note in the principal amount of $20,000,000.00.
5.1.2. AMENDMENTS TO SHIP MORTGAGES. An amendment to
each of the Ship Mortgages, increasing the amount secured to $20,000,000.00.
5.1.3. CERTIFICATE OF SECRETARY OF BORROWER. A
Certificate of the Secretary of Borrower certifying that resolutions adopted
by the Board of Directors of Borrower authorizing the execution, delivery and
performance of this Amendment by Borrower are attached to the certificate and
remain in full force and effect.
5.1.4. LEGAL OPINION. An opinion of Borrower's counsel
regarding the good standing of Borrower, its due authorization of the
execution and delivery of this Amendment and such other matters as Lender may
require.
5.2. NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred from
December 31, 1997, to the date of execution hereof that is reasonably likely
to have a Material Adverse Effect.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender that (i) execution of this Amendment has
been duly authorized by all requisite action of Borrower; (ii) no consents
are necessary from any third parties for Borrower's execution, delivery or
performance of this Amendment, (iii) this Amendment and the Loan Agreement as
amended hereby constitute the legal, valid and binding obligations of
Borrower enforceable against
<PAGE> 20
Borrower in accordance with their terms, except to the extent that the
enforceability thereof against Borrower may be limited by bankruptcy, insolvency
or other laws affecting the enforceability of creditors rights generally or by
equity principles of general application, (iv) except as disclosed on the
supplemental disclosure schedule attached hereto as Exhibit A and the disclosure
schedule attached to the Original Loan Agreement, all of the representations and
warranties contained in Section 13 of the Original Loan Agreement, as amended
hereby, are true and correct in all material respects with the same force and
effect as if made on and as of the effective date of this Amendment, (v) there
is no Existing Default, and (vi) no Default or Event or Default will occur
immediately or with the passage of time or giving of notice as a consequence of
this Amendment becoming effective.
7. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of
Lender under the Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision of the Loan Agreement, any of the other
Loan Documents or any Existing Default, nor act as a release or subordination
of the Security Interests of Lender under the Security Documents. Each
reference in the Loan Agreement to "the Agreement", "hereunder", "hereof",
"herein", or words of like import, shall be read as referring to the Loan
Agreement as amended hereby.
8. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except
as expressly amended hereby the Original Loan Agreement and other Loan
Documents remain in full force and effect, (ii) the Original Loan Agreement,
as amended hereby, is in full force and effect, (iii) Borrower has no
defenses to its obligations under the Loan Agreement and the other Loan
Documents, (iv) the Security Interests of Lender under the Security Documents
continue in full force and effect and have the same priority as before this
Amendment, and (v) Borrower has no claim against Lender arising from or in
connection with the Loan Agreement or the other Loan Documents.
9. COUNTERPARTS. This Amendment may be executed by the parties hereto on any
number of separate counterparts, and all such counterparts taken together
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Amendment to produce or account for more than one
counterpart signed by the party to be charged.
10. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature page
thereto intended to be attached to a copy of this Amendment, signed and
transmitted by facsimile machine or telecopier shall be deemed and treated as
an original document. The signature of any person thereon, for purposes
hereof, is to be considered as an original signature, and the document
transmitted is to be considered to have the same binding effect as an
original signature on an original document. At the request of any party
hereto, any facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy document. No party
hereto may raise the use of a facsimile machine or telecopier or the fact
that any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Amendment.
11. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the rights
and obligations of the parties hereunder shall be governed by and construed
and interpreted in accordance with
<PAGE> 21
the internal laws of the State of Missouri applicable to contracts made and to
be performed wholly within such state, without regard to choice or conflict of
laws provisions.
12. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that all
of the terms of the Loan Documents are incorporated in and made a part of
this Amendment by this reference.
13. STATUTORY NOTICE. The following notice is given pursuant to Section
432.045 of the Missouri Revised Statutes; nothing contained in such notice
will be deemed to limit or modify the terms of the Loan Documents or this
Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND
OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S))
AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
14. STATUTORY NOTICE--INSURANCE. The following notice is given pursuant to
Section 427.120 of the Missouri Revised Statutes; is deemed incorporated into
the Loan Agreement and nothing contained in such notice shall be deemed to
limit or modify the terms of the Loan Documents
UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR
AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT
OUR INTERESTS IN YOUR COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT,
PROTECT YOUR INTERESTS. THE COVERAGE THAT WE PURCHASE MAY NOT PAY ANY
CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION
WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY
US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE
AS REQUIRED BY OUR AGREEMENT. IF WE PURCHASE INSURANCE FOR THE
COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY
IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE
EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE
COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE
OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF
INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.
[the next page is the signature page]
<PAGE> 22
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by appropriate duly authorized officers as of the effective date first above
written.
TEL # 314-466-6642
<PAGE> 23
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President and Chief By its Senior Vice President
Financial Officer
/s/ Wayne L. Smith II /s/ Keith M. Schmelder
- ------------------------------------ ------------------------
Wayne L. Smith II Keith M. Schmelder
Notice Address: Notice Address:
7711 Bonhomme Avenue 800 Market Street
St. Louis, MO 63105 St. Louis, MO 63101
FAX # 314-727-2533 FAX # 314-466-7783
TEL # 314-727-0500 TEL # 314-466-6642
<PAGE> 24
EXHIBIT A
Supplemental Disclosure Schedule
No supplemental disclosures if no items listed below:
<PAGE> 25
AMENDED AND RESTATED REVOLVING NOTE
$20,000,000.00 St. Louis, Missouri
February 12, 1998
For value received, INTRAV, INC., a Missouri corporation ("Borrower"),
promises to pay to the order of NATIONSBANK, N.A. (successor by merger to The
Boatmen's National Bank of St. Louis) ("Lender") the principal sum of TWENTY
MILLION DOLLARS ($20,000,000.00) or such lesser aggregate unpaid principal
amount as shall be outstanding under this Revolving Note (this "Note"), plus
all interest accrued thereon, on the Maturity Date.
Borrower further promises to pay interest from the date hereof on the
balance of said principal from time to time outstanding at a per annum rate
or rates determined pursuant to the Loan Agreement (defined below). Upon the
occurrence of any Event of Default as defined in the Loan Agreement, or at
the option of Lender upon the occurrence of a Default as defined in the Loan
Agreement, all outstanding principal and, to the extent permitted by law,
accrued interest in respect of this Note and all other amounts owing
hereunder shall bear interest, payable on demand, at the rate payable on the
Revolving Loan after maturity, as set forth in the Loan Agreement. In
addition, such higher rate of interest shall apply after Maturity, whether by
acceleration or otherwise. All such interest shall be computed on the basis
of a year deemed to consist of 360 days and paid for the actual number of
days elapsed. Interest shall be payable on such dates as are provided under
the Loan Agreement.
Both principal and interest are payable in Dollars to Lender at the
Lending Office.
This Note is issued under the terms of, and pursuant to the provisions
of, that certain Loan Agreement dated as of December 31, 1996, between Lender
and Borrower, as amended through the date hereof (as it may be further
amended, restated, extended, renewed, replaced, or otherwise modified from
time to time, the "Loan Agreement"). All capitalized terms used and not
otherwise defined herein shall have the same meanings as given them in the
Loan Agreement.
This Note is secured by the Collateral described in the Loan Documents,
executed from time to time by Borrower in favor of Lender as set forth in the
Loan Agreement and reference to the Loan Documents and the Loan Agreement is
made for a statement of the rights of the Lender with respect to such
Collateral.
Borrower shall prepay the principal amount of this Note to the extent
provided in the Loan Agreement. Borrower may prepay the principal amount of
this Note to the extent and upon the conditions provided in the Loan
Agreement.
The date and amount of all disbursements and receipts of principal and
receipts of interest with respect to this Note will be recorded in the
records that Lender normally maintains for instruments and agreements similar
to this Note and the other Loan Documents. The failure to record, or any
error in recording, any of the foregoing shall not, however, affect the
obligation of Borrower to pay principal, interest and other amounts as
required under the Loan Documents.
<PAGE> 26
Borrower shall have the burden of proving that Lender's records are not correct.
Borrower agrees that Lender's books and records showing disbursements and
receipts shall be admissible in any action or proceeding arising therefrom, and
shall constitute prima facie proof thereof. Such records shall be deemed
correct, accurate and binding on Borrower and an account stated, except as
expressly provided otherwise in the Loan Agreement.
Reference is made to the Loan Agreement for provisions regarding the
acceleration of the maturity hereof on the occurrence of any Event of
Default, which provisions are incorporated herein by this reference.
If Borrower sells, assigns, transfers or conveys all or any part of the
Real Property Collateral or any interest therein without the prior written
consent of Lender as required by the Loan Agreement, all outstanding
principal and accrued interest under this Note shall become immediately due
and payable.
If any payment required under this Note or the Loan Agreement is not
made when due, or upon any other Event of Default, Borrower shall pay all
costs of collection on this Note, including but not limited to court costs
and reasonable attorneys fees and actual expenses of such attorneys, whether
or not litigation is commenced, including representation of Lender in
connection with any bankruptcy or insolvency proceeding of Borrower.
Demand for payment, protest, notice of dishonor, and all other notices
and demands under this Note and any and all lack of diligence in the
enforcement of this Note are hereby waived by all who are or shall become
parties to this Note and the same hereby assent to each and every extension
or postponement of the time of payment, at or after demand, or other
indulgence, and hereby waive any and all notice thereof. Every such party by
becoming a party to this Note further waives any and all defenses which such
party may have based on suretyship or impairment of collateral with respect
to this Note.
No amendment, modification or waiver of any provision of this Note, nor
consent to any departure by Borrower herefrom, shall be effective unless the
same shall be in writing signed by an authorized officer of Lender, and then
only in the specific instance and for the purpose for which given. No failure
on the part of Lender to exercise, and no delay in exercising, any right
under this Note shall operate as a waiver thereof, nor shall any single or
partial exercise by Lender of any right under this Note preclude any other or
further exercise thereof, or the exercise of any other right. Each and every
right granted to Lender under this Note or allowed to it at law or in equity
shall be deemed cumulative and such remedies may be exercised from time to
time concurrently or consecutively at Lender's option.
All notices required to be given or which may be given in connection
with this Note shall be given in the manner required for notices under the
Loan Agreement.
This Note is governed by and shall be interpreted in accordance with
the laws of the State of Missouri, without regard to choice or conflict of
laws rules.
<PAGE> 27
This Note is an amendment and restatement, but not a novation or
refinancing, of the Revolving Note from Borrower to Lender dated as of
December 31, 1996 in the original principal amount of $10,000,000, as it has
been amended and restated from time to time. This Note does not evidence or
effect a release or relinquishment of the priority of the Security Interests
of Lender in any of the Collateral.
INTRAV, INC.
By: /s/ Wayne L. Smith II
----------------------------
Name: Wayne L. Smith II
----------------------------
Title: Executive Vice President
----------------------------
<PAGE> 1
EXHIBIT 10(III)(A)(5)
INTRAV, INC.
AMENDED INCENTIVE STOCK PLAN
1. PURPOSE. The purpose of the INTRAV, Inc. Incentive Stock Plan
(the "Plan") is to aid in attracting and retaining strong management capable
of assuring the future success of INTRAV, Inc. (the "Company"). The Plan is
designed to secure for the Company and its shareholders the benefits inherent
in common stock ownership by the key employees of the Company, who are
largely responsible for the Company's future growth and continued financial
success; and to afford such persons the opportunity to obtain or increase a
proprietary interest in the Company on a favorable basis and, thereby, to
have an opportunity to share in its success.
2. DEFINITIONS.
As used in this Plan, the following words shall have the
following meanings:
(a) "Board of Directors" means the Board of Directors of the
Company;
(b) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes that section.
(c) "Common Stock" means common stock of the Company;
(d) "Disinterested Person" shall have the meaning set forth in
Rule 16b-3(c)(2)(i) of the Securities Exchange Act of 1934, as amended.
(e) "Incentive Stock Option" means an option to purchase shares
of Common Stock at the times and at the price determined by the Administrator
in accordance with Paragraph 7 which is intended to qualify as an incentive
stock option as defined in Section 422 of the Code;
(f) "Nonqualified Stock Option" means an option to purchase
shares of Common Stock at the times and at the price determined by the
Administrator in accordance with Paragraph 7 which is not intended to qualify
as an Incentive Stock Option;
(g) "Option" means an Incentive Stock Option or Nonqualified
Stock Option;
<PAGE> 2
(h) "Outside Director" means a member of the Board of Directors
who is not an employee of the Company.
(i) "Participant" means an employee of the Company or its
subsidiaries or an Outside Director who has been awarded Benefits under the
Plan.
(j) "Restricted Stock" means Common Stock that is subject to
certain restrictions on its disposition and rights of the Company to
reacquire the stock upon the occurrence of certain events during a specified
period as determined by the Administrator in accordance with Paragraph 8;
(k) "Subsidiary" means any corporation, partnership, joint
venture or business trust, fifty percent (50%) or more of the control of
which is owned, directly or indirectly, by the Company; provided that for the
purpose of Incentive Stock Options "Subsidiary" shall have the same meaning
as the term "subsidiary corporation," as defined in Section 425 of the Code;
provided further that "Subsidiary" includes any entity or arrangement that
first becomes described in this subparagraph after the effective date of this
Plan.
(l) "Reporting Person" means any person who is the beneficial
owner, directly or indirectly, of more than ten percent (10%) of any class of
equity securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended; any director or officer of the issuer of
such securities; and any person specified in Section 17(a) of the Public
Utility Holding Company Act of 1935 or Section 30(f) of the Investment
Company Act of 1940.
3. ADMINISTRATION.
(a) General. The Plan shall be administered by the Board of
Directors or by a committee or committees appointed by the Board of Directors
as Administrator of the Plan. The Board of Directors may appoint a committee
to act as Administrator with respect to one or more classes of employees, and
another committee or committees to act as Administrator with respect to other
classes of employees; or appoint a committee to serve as Administrator with
respect to one category of benefits, and another committee to serve as
Administrator with respect to a different category of benefits.
(b) Reporting Persons. Anything in subparagraph (a) of this
Paragraph 3 to the contrary notwithstanding, selection of Reporting Persons
for participation in the Plan and decisions concerning the timing, pricing,
and amount of a grant or award to Reporting Persons must be made solely by a
committee of two or more directors, each of whom is a Disinterested Person.
2
<PAGE> 3
(c) Administrator. References throughout this Plan to the
"Administrator" shall refer to (i) the administrative committee described in
subparagraph (b) of this Paragraph, with respect to selection of Reporting
Persons for participation in the Plan and decisions concerning the timing,
pricing, and amount of a grant or award to Reporting Persons; and (ii) the
Board of Directors or the committee or committees described in subparagraph
(a) of this Paragraph, with respect to all other administrative functions.
Subject to the provisions of this Plan, the Administrator shall have
exclusive authority to interpret and administer the Plan, to establish
appropriate rules relating to the Plan, to select persons to receive awards
under the Plan, to grant Incentive Stock Options, Non-qualified Stock Options
and Restricted Stock in accordance with the Plan, to delegate its authority
and duties under the Plan and to take all such steps and make all such
determinations in connection with the Plan and the Incentive Stock Options,
Nonqualified Stock Options and Restricted Stock as it may deem necessary or
advisable.
4. ELIGIBILITY.
Key employees of the Company and Outside Directors, who are
responsible for contributing to the management and the profitability of the
business of the Company, are eligible for awards under the Plan. The
Administrator shall from time to time determine and designate the employees
and Outside Directors who shall receive awards under the Plan, and the number
of Incentive Stock Options, Nonqualified Stock Options and the Restricted
Stock to be awarded to each such person. In making any such award, the
Administrator may take into account the nature of services rendered by the
person, the capacity of the person to contribute to the success of the
Company, and other factors that the Administrator may consider relevant.
5. TYPES OF BENEFITS.
Benefits that may be awarded under the Plan include (a) Incentive
Stock Options; (b) Nonqualified Stock Options; and (c) Restricted Stock, as
described in this Plan ("Benefits").
The Administrator may: (a) make the grant of Benefits conditional
upon an election by a Participant to defer payment of a portion of his
compensation; (b) give a participant a choice between two Benefits or
combinations of Benefits; (c) award Benefits in the alternative so that
acceptance of or exercise of one Benefit cancels the right of a Participant
to another; and (d) award Benefits in any combination or combinations and
subject to any condition or conditions consistent with the terms of the Plan
that the Administrator in its sole discretion shall determine.
The Administrator in its discretion may offer Outside Directors
the option to elect to receive all or any portion of their fees for services
on the Board of Directors in the
3
<PAGE> 4
form of Restricted Stock in lieu of cash on such terms and conditions as the
Administrator shall determine.
6. SHARES SUBJECT TO PLAN.
Subject to the provisions of Section 9 (relating to adjustment for
changes in capital stock), the maximum number of shares that may be issued
under this Plan shall not exceed in the aggregate 750,000 shares of Common
Stock. Such shares may be unissued shares, or issued shares that have been
reacquired. If any Incentive Stock Options or Non-Qualified Stock Options
granted under the Plan shall for any reason terminate or expire, or be
surrendered without having been exercised in full, the shares not purchased
under such options shall be available again for option or grant under the
Plan. If any Restricted Stock is granted hereunder, such shares shall be
available again for option or grant under the Plan even though such shares
are forfeited prior to the end of the Restricted Period.
Notwithstanding the above, the maximum number of shares that may
be awarded in any calendar year to a "covered employee" for such year, as
defined in Section 162(m) of the Code, shall not exceed 500,000 shares (as
adjusted in accordance with Paragraph 9).
7. STOCK OPTIONS.
The Administrator from time to time may grant options ("Options")
to Participants to purchase shares of Common Stock from the Company. An
Option may be granted in the form of an "Incentive Stock Option," which is
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
in the form of a "Non-Qualified Stock Option," which is not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code. Each Participant who is awarded a Stock Option shall enter into an
agreement with the Company in a form specified by the Administrator agreeing
to the terms and conditions of the award and such other matters consistent
with the Plan as the Administrator in its sole discretion shall determine.
Option agreements need not be identical, but each Option agreement shall
include the substance of all of the provisions set forth in subsections (a)
through (e) below:
(a) The purchase price shall be payable in full in cash upon
exercise of the Option. In lieu of cash a Participant may, to the extent
permitted by and subject to the conditions contained in the terms of the
Option agreement, make payment in whole or in part by tendering shares of
Common Stock of the Company valued at fair market value on the date of
exercise, or in the form of any other property or note permitted by the
Option agreement.
(b) An Option shall not be transferable by the individual to
whom granted except by will or by the laws of descent and distribution; and
may be exercised during the
4
<PAGE> 5
individual's lifetime only by such individual or, in the case of a
Non-Qualified Option, such individual's guardian or legal representative.
(c) The Administrator in its discretion may provide in any
Option agreement that the Option shall be exercisable in full at any time or
from time to time during the term of the Option, or may provide for the
exercise of the Option in such installments and at such times during the term
of the Option as the Administrator may determine; provided however that no
option granted to a Reporting Person shall be exercisable for at least six
months from the date of acquisition of the Option.
(d) The maximum term of an Option shall be ten years from the
date it was granted, except that the maximum term of an Incentive Stock
Option granted to a person who owns more than ten percent of the total
combined voting power of all classes of the stock of the Company shall be
five years.
(e) The purchase price of the shares covered by each Option
shall be not less than 100% of the fair market value of the stock subject to
the Option at the time the Option is granted. Fair Market Value means the
closing price on the Nasdaq National Market or any other stock exchange on
which shares of Common Stock are traded on the valuation date, and if there
is no sale of such shares on such date, the price determined by the
Administrator.
(f) The aggregate fair market value (as determined by the
Administrator as of the time an Incentive Stock Option is granted) of the
Common Stock covered by an Incentive Stock Option awarded a Participant under
the Plan (or any plan of a parent corporation or Subsidiary) that becomes
exercisable for the first time during any calendar year shall not exceed One
Hundred Thousand Dollars ($100,000.00) or such other maximum applicable to
Incentive Stock Options as may be in effect from time to time under the Code.
(g) No Incentive Stock Option shall be awarded after the day
preceding the tenth anniversary of the effective date of the Plan.
(h) No person entitled to exercise any Option granted under the
Plan shall have any of the rights or privileges of a shareholder of the
Company with respect to shares issuable upon exercise of such Option until
certificates representing such shares shall have been issued and delivered to
such person.
(i) An Incentive Stock Option may be granted only to a person
who is an employee of the Company at the time of the grant.
8. RESTRICTED STOCK.
Restricted Stock consists of Common Stock that is subject to
certain restrictions
5
<PAGE> 6
on the disposition of such share and rights of the Company to reacquire the
share upon specified terms upon the occurrence of certain events during a
specified period, as determined by the Administrator. Each Participant who is
awarded Restricted Stock shall enter into an agreement with the Company in a
form specified by the Administrator agreeing to the terms and conditions of the
award and such other matters consistent with the Plan as the Administrator in
its sole discretion shall determine.
Restricted Stock may not be sold, transferred, pledged or
otherwise encumbered during a Restricted Period. A Restricted Period shall
commence on the date of the award and end at such later date as the
Administrator may designate at the time of the award. In the case of a
Participant subject to Section 16 of the 1934 Act, the Restricted Period
shall be at least six months after acquisition of the Restricted Stock,
except in case of death or disability. A Participant shall have the entire
beneficial ownership and most of the rights and privileges of a shareholder
with respect to Restricted Stock awarded to him, including the right to
receive dividends and the right to vote such Restricted Stock.
The Administrator in its sole discretion from time to time may
establish the terms and conditions under which Restricted Stock shall be
forfeited by the Participant during the Restricted Period.
Notwithstanding anything in this Section to the contrary, the
Administrator may make an award of "phantom stock credits" to any Participant
which shall serve as a basis for an award of Restricted Stock at a later
point in time.
The Participant shall not be entitled to delivery of the
certificate representing shares of Common Stock until the expiration of the
Restricted Period applicable to such Restricted Stock.
9. ADJUSTMENT UPON CHANGES IN STOCK.
If any change is made in the shares of Common Stock of the Company
by reason of any merger, consolidation, separation, reorganization, partial
or complete liquidation, stock dividend, stock split, combination of shares,
recapitalization, change in corporate structure, or otherwise, appropriate
adjustments shall be made by the Administrator to the kind and maximum number
of shares subject to the Plan and the kind and number of shares and price per
share of stock subject to each outstanding Benefit. Any increase in the
shares, or the right to acquire shares, as the result of such an adjustment
shall be subject to the same terms and conditions that apply to the Benefit
for which such increase was received. No fractional shares of Common Stock
shall be issued under the Plan on account of any such adjustment, and rights
to shares always shall be limited after such an adjustment to the lower full
share.
6
<PAGE> 7
10. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may at any time amend the
Plan, provided that the Board may not, without approval (within twelve months
before or after the date of such change) of such number of the stockholders
as may be required by federal income tax or federal securities laws for any
particular amendment: (a) increase the maximum number of shares of Common
Stock in the aggregate which may be issued under the Plan, except as may be
permitted under the adjustment provisions of Section 9, (b) change the class
of persons eligible to participate in the Plan, or (c) adopt any other
amendment for which shareholder approval is required by federal income tax or
federal securities laws. The Board of Directors may not alter or impair any
Benefit previously granted under the Plan without the consent of the person
to whom the Benefit was granted.
11. TERMINATION OF THE PLAN.
The Plan shall terminate upon the expiration of the ten year
period which commences on the earlier of (a) the date the Plan is adopted by
the Board of Directors of the Company, or (b) the date on which the Plan is
approved by the stockholders of the Company; provided, however, that the
Board of Directors may terminate or suspend the Plan at any time. No Benefit
shall be awarded after termination of the Plan.
Rights and obligations under a Benefit awarded while the Plan is
in effect shall not be altered or impaired by termination or suspension of
the Plan except by consent of the person to whom the Benefit was awarded.
12. WITHHOLDING TAX.
The Company shall have the right to withhold with respect to any
distribution made to Participants under the Plan any taxes required by law to
be withheld because of such distribution (the "Tax Requirements"). The
Administrator may require or permit a Participant to satisfy any Tax
Requirements with Company stock. If the Administrator permits a Participant
to satisfy the Tax Requirements in Company stock, the election by a
Participant to do so shall be made prior to the date the withholding
obligation arises (the "Tax Date"), shall be irrevocable and shall be subject
to the disapproval of the Administrator. Additionally, if a Participant is
subject to Section 16 of the 1934 Act the Participant's election (a) may not
be made until at least six months after the award to which it relates except
in the case of death or disability; and (b) must be made six months prior to
the Tax Date or during the period beginning on the third business day
following the date of release for publication of quarterly and annual summary
statements of sales and ending on the twelfth business day following the date
of such release.
7
<PAGE> 8
13. RULES OF CONSTRUCTION.
The terms of the Plan shall be construed in accordance with the
laws of the State of Missouri, provided that the terms of the Plan as they
relate to Incentive Stock Options shall be construed first in accordance with
the meaning under and in a manner that will result in the Plan satisfying the
requirements of the provisions of the Code governing incentive stock options.
14. COMPLIANCE WITH 1934 ACT.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
provisions of Rule 16b-3 or its successors under the 1934 Act. To the extent
any provision of the Plan or action by the Administrator fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Administrator.
15. NONTRANSFERABILITY.
Each Option or similar right granted under this Plan shall not be
transferable other than by will or the laws of descent and distribution, and
shall be exercisable during the holder's lifetime only by the holder or the
holder's guardian or legal representative.
16. EFFECTIVE DATE.
The Plan shall become effective as of the date it is adopted by
the Board of Directors of the Company subject only to approval by the holders
of a majority of the outstanding voting stock of the Company within twelve
(12) months before or after the adoption of the Plan by the Board of
Directors.
17. STOCK APPRECIATION RIGHTS (SARs).
(a) A Stock Appreciation Right (SAR) is the right of the
Participant to receive all or a portion of the difference between the fair
market value of a share of common stock at the time of exercise of the SAR
and the exercise price of the SAR established by the Administrator. Such
difference may be payable in cash, or in common stock, as determined by the
terms of the SAR Agreement.
The Administrator from time to time may grant SARs to Participants
exercisable upon such terms and conditions as the Administrator may establish
at the time of the grant of the SAR. Each Participant who is awarded a SAR
shall enter into an agreement with the Company in a form specified by the
Administrator agreeing to the terms and conditions of the award and such
other matters consistent with the Plan as the Administrator at its sole
discretion shall determine.
8
<PAGE> 9
(b) A SAR granted pursuant to this Section to a person subject
to Section 16 of the 1934 Act (i) shall not be exercisable for at least six
months from the date of the grant; (ii) shall not be transferable other than
by will or the laws of descent and distribution; and (iii) shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's guardian or legal representative.
(c) A Participant subject to Section 16 of the 1934 Act may
surrender an option pursuant to this Section only during the period beginning
on the third business day following the date of release for publication of
quarterly and annual summary statements of sales and earnings and ending on
the twelfth business day following the date of such release.
(d) The following additional provisions shall be applicable to
any SAR granted in tandem with an Incentive Stock Option where the exercise
of the SAR affects the right to exercise the Incentive Stock Option:
(i) The SAR may not be exercised at any time after the
expiration or termination of the underlying Incentive Stock Option;
(ii) The SAR may be for no more than the difference between
the exercise price of the underlying Incentive Stock Option and the market
price of the common stock subject to the underlying option at the time the
SAR is exercised;
(iii) The SAR is transferable only when the underlying
Incentive Stock Option is transferable, and under the same conditions;
(iv) The SAR may be exercised only when the underlying
Incentive Stock Option may be exercised; and
(v) The SAR may be exercised only when the market price of
the common stock subject to the underlying Incentive Stock Option exceeds the
exercise price of the Incentive Stock Option.
9
<PAGE> 1
Exhibit 10(iii)(A)(8)
FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
--------------------------------------------------
First Amendment to Deferred Compensation Agreement ("First Amendment"),
entered into and effective as of November 7, 1997, by and between CLIPPER
CRUISE LINE, INC., a Delaware corporation (hereinafter referred to as
"Corporation"), and PAUL H. DUYNHOUWER, an individual, residing in the
County of St. Louis, State of Missouri (hereinafter referred to as
"Employee").
WHEREAS, Corporation and Employee are parties to a certain Deferred
Compensation Agreement, dated December 23, 1996 ("Agreement"), which sets
forth certain terms relative to Employee's employment with the Corporation;
and
WHEREAS, the parties wish to amend the Agreement, pursuant to the terms
and provisions set forth hereinbelow.
NOW, THEREFORE, in consideration of the above premises and the mutual
promises and covenants below, the parties agree as follows:
1. Revised Deferred Compensation Amount. In lieu of the bonus and
------------------------------------
the Deferred Compensation Amount referred to in paragraphs 3, 4, and 5 of the
Agreement, the Corporation agrees to pay to Employee, and Employee agrees to
accept from the Corporation, as deferred compensation, the following amount:
The amount which would have been accrued in favor of Employee, i.e., credited
----
to Employee's Deferred Compensation Account, as of December 31, 1997, under
paragraphs 3, 4, and 5 of the Agreement, for calendar years 1990 through
1997, only, computed in the manner set forth in paragraphs 3, 4, and 5 of the
Agreement, if not for this First Amendment. In calculating the amount due to
the Employee under this paragraph 1, the vested percentage applied under
paragraph 4(c) of the Agreement shall be one hundred percent (100%).
2. Revised Deferred Compensation Payment Schedule. The amount set
----------------------------------------------
forth in paragraph 1 hereinabove shall be paid in full by the Corporation on
the later of the following:
(a) January 15, 1998; or
(b) Three (3) business days following the date upon which the
Corporation calculates the amount due and owing under paragraph 1
hereinabove, using reasonable diligence and promptness in making such
calculation.
3. Release of Previous Deferred Compensation Obligations Under the
---------------------------------------------------------------
Agreement. Other than for the obligations expressly incurred by the
- ---------
Corporation under paragraphs 1 and 2 of this First Amendment, the Employee
hereby releases, remises, and forever discharges the Corporation and its
affiliates, officers, directors, shareholders, employees, and all of their
respective successors and assigns, of and from any and all liabilities,
<PAGE> 2
obligations, or claims with respect to the payment of any bonus or Deferred
assigns, of and from any and all liabilities, obligations, or claims with
respect to the payment of any bonus or Deferred Compensation Amount to
Employee under paragraphs 3, 4, or 5 of the Agreement. Any and all
references to benefits, payments, or deferred compensation under paragraphs 7
through 15 of the Agreement, shall refer only to the payments described in
paragraphs 1 and 2 of this First Amendment and not to the bonus or Deferred
Compensation Amount referred to in paragraphs 3, 4 or 5 of the Agreement,
which have hereby been terminated in full and replaced by the amount and
payment schedule set forth in paragraphs 1 and 2 of this First Amendment.
Employee further acknowledges that all of Corporation's obligations under
paragraph 6 of the Agreement and the Memorandum of Agreement referred to in
such paragraph 6, have been satisfied and discharged in full.
4. Ratification of Agreement in all Other Respects. Other than as
-----------------------------------------------
set forth in paragraphs 1, 2 and 3 of this First Amendment, the Agreement is
in all other respects ratified and confirmed to remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed and delivered this First
Amendment, intending to be legally bound thereby, on and as of the date first
hereinabove stated.
CLIPPER CRUISE LINE, INC.
By: /s/ Michael F. Doiron
------------------------------
Print Name: Michael F. Doiron
------------------------------
Title: Executive Vice President
------------------------------
/s/ Paul H. Duynhouwer
------------------------------------------
Paul H. Duynhouwer
2
<PAGE> 1
Exhibit 10(iii)(A)(9)
DATE: September 18, 1997
TO: BAE
FROM: WLS
RE: Intrav Employment
The following sets forth the agreement we made today.
I will become CFO of Intrav/Clipper ASAP but no later than Friday, September
26, 1997. I will also go on the Board of Directors. My annual salary will
be $140,000, and I will be granted 100,000 options to buy Intrav stock at the
market price prevailing on the day I become CFO. Upon termination of my
employment with Intrav, I will receive a severance payment of $100,000.
I will retain all of my existing advisory, consulting, and director
relationships and continue to receive compensation therefrom, but I will
agree not to enter into any new relationships without your specific consent.
Acknowledged & Agreed:
/s/ Barney A. Ebsworth
- ------------------------------------------
Barney A. Ebsworth
/s/ Wayne L. Smith II
- ------------------------------------------------
Wayne L. Smith II
<PAGE> 1
General Corporate Information
- -------------------------------------------------------------------------------
EXECUTIVE OFFICERS
Paul H. Duynhouwer
President and Chief Executive Officer
Wayne L. Smith II
Executive Vice President and Chief Financial Officer
Richard J. Hefler
Senior Vice President -- Marketing and Sales
DIRECTORS
Barney A. Ebsworth
Chairman of the Board
Intrav, Inc.
Paul H. Duynhouwer
President and Chief Executive Officer
Intrav, Inc.
Wayne L. Smith II
Executive Vice President and Chief Financial Officer
Intrav, Inc.
John B. Biggs, Jr.
Senior Vice President -- Private Client Group
NationsBank
William H.T. Bush
Chairman of the Board
Bush, O'Donnell & Co., Inc.
Robert H. Chapman
Chairman of the Board & Chief Executive Officer
Barry-Wehmiller Companies, Inc.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholders Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
888-213-0965
www.chasemellon.com
INDEPENDENT AUDITORS
Deloitte & Touche LLP
One City Centre
St. Louis, MO 63101
<PAGE> 2
GENERAL COUNSEL
- -------------------------------------------------------------------------------
Peper, Martin, Jensen, Maichel and Hetlage
720 Olive Street
St. Louis, MO 63101
INVESTOR RELATIONS
Shareholders may obtain, without charge, a copy of the Company's 1997 Annual
Report on Form 10-K, as filed with the Securities and Exchange Commission, by
directing inquiries to:
Intrav, Inc.
Investor Relations
7711 Bonhomme Avenue
St. Louis, MO 63105-1961
Telephone: (314) 727-0500, extension 299
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of Shareholders
will be held at the St. Louis Club, located at
7701 Forsyth, St. Louis, MO, at 11:00 a.m. on
Thursday, May 21, 1998.
STOCK LISTING
The common shares of Intrav, Inc., are traded on the NASDAQ Stock Market
under the trading symbol TRAV. As of February 28, 1998, there were 133
shareholders of record, and approximately 1,300 beneficial shareholders.
<TABLE>
MARKET PRICE RANGE
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------------
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
First Quarter 9 9/16 7 1/4 81 9/32 6 17/32
Second Quarter 9 3/8 7 8 7/8 7 1/4
Third Quarter 12 1/4 8 5/8 8 1/2 6 3/4
Fourth Quarter 15 1/2 11 7/8 81 1/32 5 3/4
- --------------------------------------------------------------------------------------
</TABLE>
Note: Company commenced trading on NASDAQ Stock Market on May 18, 1995.
<TABLE>
DIVIDENDS PAID PER SHARE
(to Intrav, Inc., shareholders)
<CAPTION>
1997 1996
- ---------------------------------------------------------
<S> <C> <C>
First Quarter $0.125 0.125
Second Quarter 0.125 0.125
Third Quarter 0.125 0.125
Fourth Quarter 0.125 0.125
- ---------------------------------------------------------
Year $0.50 $0.50
=========================================================
</TABLE>
<PAGE> 3
Five-Year Financial Highlights
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands except per share data)
YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Program revenues $122,523 $126,081 $114,845 $108,876 $85,900
Cost of operations 99,007 101,651 91,035 83,934 69,712
- ---------------------------------------------------------------------------------------------------------------------
Gross profit 23,516 24,430 23,810 24,942 16,188
Operating income 6,827 5,657 6,888 7,502 2,132
Net income (loss) 4,940 3,165 4,147 4,379 (2)
Basic earnings per common share 0.97 0.61 0.80 0.88 --
Diluted earnings per common share 0.96 0.61 0.80 0.88 --
Dividends per common share 0.50 0.60 0.25 0.90 --
BALANCE SHEET DATA:
Cash, cash equivalents andmarketable securities $ 15,416 $ 14,114 $ 31,224 $ 28,180 $18,932
Total current assets 25,365 26,323 41,495 37,280 29,887
Total assets 56,801 52,594 68,966 62,285 57,711
Total current liabilities 36,846 39,738 47,730 46,557 33,466
Total long-term debt 7,450 3,000 10,317 11,019 11,731
Shareholders equity (deficit) 5,517 3,781 4,970 (265) (389)
PERFORMANCE RATIOS:
Gross margin on sales 19.2% 19.4% 20.7% 22.9% 18.8%
Operating margin on sales 5.6% 4.5% 6.0% 6.9% 2.5%
Net income on sales 4.0% 2.5% 3.6% 4.0% n/a
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
Management's Discussion and Analysis
Overview
- -------------------------------------------------------------------------------
INTRAV is a leading designer, organizer, marketer, and operator of
deluxe, escorted, worldwide travel programs. These programs are designed to
appeal to higher-income individuals desiring first-class travel experiences
and have been primarily marketed via direct mail through sponsoring "affinity
groups" and directly to the ultimate traveler. Since 1959, more than 400,000
travelers have participated in the Company's travel programs.
On December 31, 1996, INTRAV acquired all the outstanding common stock
of Clipper Cruise Line from Windsor, Inc., a company controlled by Barney A.
Ebsworth, INTRAV's Chairman of the Board and majority stockholder. The Stock
Purchase Agreement included an initial payment of approximately $9.9 million
and the assumption of indebtedness of $5.5 million owed by Clipper to
Windsor, with an additional $0.2 million paid on March 14, 1997. Additional
cash consideration of up to $3.0 million may be paid to the extent the
cumulative net cruise revenues of Clipper exceed $70.0 million in the period
January 1, 1997, through December 31, 2000. Due to the common ownership and
control of Mr. Ebsworth over both INTRAV and Clipper, the acquisition was
accounted for in a manner similar to the pooling-of-interests method and,
accordingly, all financial data has been restated to include the accounts and
results of operations of Clipper for all periods prior to the acquisition.
Clipper is a leading designer, organizer, marketer and operator of
small-ship adventure cruises. Similar to INTRAV, its programs are designed
to appeal to higher-income individuals desiring first-class travel
experiences and have been primarily marketed via carriage trade travel
agents, direct mail through sponsoring "affinity groups," and directly to the
ultimate traveler. Clipper's travelers cruise primarily on its two cruise
ships, the M/V Yorktown Clipper and the M/V Nantucket Clipper. A third ship,
the M/S Clipper Adventurer, will commence service in the spring of 1998.
Results of Operations
- -------------------------------------------------------------------------------
The following table sets forth for the periods indicated the actual
percentages which certain items in the Consolidated Statements of Income bear
to program revenues:
<TABLE>
Percentage of Program Revenues
<CAPTION>
Year Ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Program revenues 100.0% 100.0% 100.0%
Cost of operations 80.8 80.6 79.3
- -------------------------------------------------------------------------
Gross profit 19.2 19.4 20.7
Selling, general and administrative 12.5 13.4 13.2
Depreciation and amortization 1.1 1.5 1.5
- -------------------------------------------------------------------------
Operating income 5.6 4.5 6.0
Investment income .8 1.3 1.6
Interest expense (.1) (1.8) (2.0)
- -------------------------------------------------------------------------
Income before income taxes 6.3 4.0 5.6
Income taxes 2.3 1.5 2.0
- -------------------------------------------------------------------------
Net income 4.0% 2.5% 3.6%
=========================================================================
</TABLE>
- -------------------------------------------------------------------------
<PAGE> 5
Program Revenues
- -------------------------------------------------------------------------------
Program revenues in 1997 were $122.5 million, compared to $126.1
million and $114.8 million in 1996 and 1995, respectively.
The 2.9% decrease in 1997 from 1996 was due to 2,220 fewer travelers, a
decrease of 8.1%, from 27,334 travelers in 1996 to 25,114 in 1997. The
decrease in travelers was partially offset by an increase in the average
revenue per traveler, from $4,613 in 1996 to $4,879 in 1997. The reduction
in travelers on our big-ship cruises accounted for the decrease in travelers.
But since these big-ship cruises are lower priced trips, average revenue per
traveler actually increased.
The 9.8% increase in 1996 from 1995 was primarily due to 2,765
additional travelers, representing an 11.3% increase from 24,569 travelers in
1995 to 27,334 travelers in 1996. The average revenue per traveler decreased
from $4,674 in 1995 to $4,613 in 1996.
Cost of Operations
- -------------------------------------------------------------------------------
Cost of operations includes the costs of airfare, ship, hotel and other
accommodations and services included in the base program, as well as costs of
optional products and services including sightseeing, program extensions,
additional airfare, and medical and educational seminars. Also included are
the costs of creating and distributing promotional materials, commissions
paid in connection with booking travelers, and other promotional expenses for
each program.
Cost of operations totaled $99.0 million in 1997, compared to $101.7
million in 1996 and $91.0 million in 1995. The decrease in 1997 and increase
in 1996 were primarily due to the decreased and increased sales levels,
respectively.
In 1997 as in 1996, the Company experienced increases in the costs of
promoting the programs compared to the prior year. Promotional expenses were
$19.8 million, $19.1 million and $15.2 million in 1997, 1996 and 1995,
respectively. The increase in promotional expenses in 1997 was primarily
attributable to increased postage and commission expenses compared to 1996.
And the increase in 1996 was primarily attributable to higher postage rates
and a greater number of brochures mailed than in 1995.
Management's increased focus on finely targeted promotions to increase
the number of travelers per promotion dollar expended should reduce overall
promotion expenses as a percent of revenues in 1998 and beyond.
Gross Profit
- -------------------------------------------------------------------------------
Gross profit totaled $23.5 million, or 19.2% of program revenue, in
1997. This compares to $24.4 million, or 19.4% of program revenue, in 1996
and $23.8 million, or 20.7% of program revenue, in 1995, respectively.
The decrease in 1997 was due to the decreased sales level and higher
promotional expenses as a percent of revenues. Actions taken by management
in 1997 to reduce promotional expenses as a percent of revenue are expected
to improve profit margins. The 1996 increase from 1995 was primarily due to
the increased sales levels, partially offset by increased promotional
expenses and program costs associated with certain cruise programs.
Selling, General and Administrative Expenses
- -------------------------------------------------------------------------------
Selling, general and administrative expenses, consisting primarily of
compensation and related expenses, and office operating expenses, totaled
$15.4 million, $16.9 million and $15.1 million in 1997, 1996 and 1995,
respectively. These amounts represented 12.5%, 13.4% and 13.2% of program
revenues. The 1996 amount included approximately $1.0 million paid to a key
Clipper employee, pursuant to an existing employment agreement, prior to
INTRAV's acquisition of Clipper. Furthermore, contractual severance expenses
relating to departed executives totaled $.430 million and $.225 million in
1997 and 1996, respectively. Personnel changes made in 1997, as well as the
increased use of stock purchase options as part of the incentive compensation
program for key employees, are expected to further reduce SG&A expense as a
percent of revenues in 1998.
Depreciation and Amortization
- -------------------------------------------------------------------------------
Depreciation and amortization, primarily relating to the cruise ships
and internally developed software, totaled $1.3 million, $1.9 million and
$1.8 million in 1997, 1996 and 1995, respectively. These amounts represented
1.1%, 1.5% and 1.6% of program revenues. The reduction in 1997 was
attributable to management's determination, based on updated appraisals
obtained at the time of the Clipper acquisition, that the remaining useful
lives of the M/V Yorktown Clipper and M/V Nantucket Clipper are each 30
years. The effect of the change in the estimated useful lives of the ships
was to reduce depreciation expense for the year ended December 31, 1997, by
approximately $.623 million and to
<PAGE> 6
increase net income for the year ended December 31, 1997, by approximately $.400
million, an $0.08 increase in both basic and diluted earnings per share of
common stock.
Investment Income
- -------------------------------------------------------------------------------
Investment income totaled $1.0 million, $1.6 million and $1.9 million
in 1997, 1996 and 1995, respectively. The reduced level of investment income
in 1997 was due to decreased levels of investable cash due to the use of
funds to acquire Clipper Cruise Line ($9.9 million) and Clipper's payoff of
its ship mortgages ($10.9 million). The reduced level of investment income
in 1996 was due to decreased levels of investable cash generated from
operations. The Company's average monthly balance of cash and marketable
securities was $17 million and $29.3 million, earning a 5.8% and 5.6% rate of
return for 1997 and 1996, respectively.
The anticipated level of investment income for 1998 will be less than
1997 amounts due to the reduced level of investable cash and marketable
securities resulting from the Company's projected $16 million investment in
the M/S Clipper Adventurer which is to be placed in service in the spring of
1998.
Interest Expense
- -------------------------------------------------------------------------------
Interest expense, consisting of amounts paid by Clipper on the U.S.
Government Guaranteed Financing Bonds, relating to the cruise ships, the
outstanding loan balance owed Windsor and amounts outstanding under the
revolving credit facility, totaled $.1 million, $1.9 million and $2.4 million
in 1997, 1996 and 1995, respectively.
The reduced level of interest expense in 1997 is due to the payoff of
the U.S. Government Bonds and the outstanding loan to Windsor. Interest
expense in 1998 is expected to consist of amounts paid on borrowings under
the Company's $20.0 million revolving credit facility. The borrowings are
necessary due to the projected $16 million investment in the M/S Clipper
Adventurer.
Income Taxes
- -------------------------------------------------------------------------------
The Company's effective tax rates were 36.0%, 35.0% and 35.2% for 1997,
1996 and 1995, respectively. The inclusion of nontaxable interest income and
effects of state taxes are the primary factors for the effective tax rate to
differ from the statutory federal income tax rate.
Liquidity and Capital Resources
- -------------------------------------------------------------------------------
During 1997, INTRAV continued to fund its operations, capital
expenditures and dividend payments through cash flows generated from
operations and its revolving credit facility.
Net cash provided by operations was $7.6 million, $1.8 million and $5.2
million in 1997, 1996 and 1995, respectively. The $5.8 million increase in
1997 compared to 1996 was primarily due to a $6.2 million decrease in prepaid
expenses and a $1.8 million increase in net income, partially offset by a
$2.3 million decrease in deferred revenue.
Deferred revenue, representing payments received from travelers for
tour departures that have not been completed, amounted to $26.8 million at
December 31, 1997, representing an 8.0% decrease from $29.1 million at
December 31, 1996. This decrease is due to the reduced number of travelers
booked for departures in the first half of 1998 compared to 1997. Of this
amount, 85.2%, or $22.9 million, relates to tour departures that will be
completed by March 31, 1998. The remaining balance relates to tour departures
that will be completed after April 1, 1998.
Net cash used in investing activities of $9.2 million in 1997,
represents a $19.2 million change from the $10.0 million provided in 1996.
In 1996, the sale of marketable securities net of purchases generated $11.1
million of positive cash flow. Of that amount, $9.7 million was used to
purchase Clipper Cruise Line. In 1997, the sale of marketable securities net
of purchases generated $.8 million of positive cash flow while the investment
in the M/S Clipper Adventurer as of December 31, 1997, totaled $7.8 million.
The Company expects that in 1998, the additional costs to complete the M/S
Clipper Adventurer together with routine purchases of property and equipment
will exceed cash generated by the sale of marketable securities net of
purchases. This net use of cash in investing activities will be funded from
positive cash flows from operations and financing activities.
The Company paid dividends of $2.6 million, $3.2 million and $2.8
million during 1997, 1996 and 1995, respectively. During 1997, the Company
repurchased 96,750 shares in the open market for an aggregate of $.8 million.
<PAGE> 7
INTRAV completed the acquisition of Clipper Cruise Line on December 31,
1996. In connection with that transaction, INTRAV entered into a $10.0
million revolving credit facility agreement. INTRAV financed the acquisition
primarily from its cash on hand, which had the effect of significantly
reducing cash and marketable securities at December 31, 1996, and included a
$3.0 million draw on its revolving credit facility. In November 1997, the
Company amended the credit facility and increased permitted borrowings to
$15.0 million and extended the maturity to December 31, 2000. In February
1998, the Company amended the credit facility and increased permitted
borrowings to $20.0 million. Cash flow from operations together with draws
against the revolving credit facility will provide funding for the Company's
investment in the M/S Clipper Adventurer and other capital expenditures as
needed.
Foreign Currency Hedging Program
- -------------------------------------------------------------------------------
Many of the Company's travel programs necessitate the purchase of
services from suppliers located outside the United States and certain of its
arrangements with suppliers are denominated in foreign currencies. As a
result, the Company is exposed to the risk of fluctuating currency values.
To protect the U.S. dollar value of its foreign currency transactions, the
Company may enter into "forward contracts" which are commitments to buy foreign
currencies in the future at a contracted rate. The Company uses forward and
option contracts solely to hedge its foreign currency exposure and does not
speculate for future profits. The Company does not believe that fluctuations
in the value of the U.S. dollar in relation to the currency of its suppliers
has had a material adverse effect on the Company's results of operations.
Inflation
- -------------------------------------------------------------------------------
Inflation affects the costs incurred by the Company in its purchases of
program components from its suppliers and in certain portions of its selling,
general and administrative expenses. The Company has offset the effects of
inflation through price increases and by controlling its expenses. The
Company's ability to increase prices is limited by competitive factors as well
as the need to maintain acceptable pricing for the markets to which it sells
its programs. In management's opinion, inflation has not had a significant
impact on the operations in the three years ended December 31, 1997.
Safe Harbor Statement
- -------------------------------------------------------------------------------
Except for the historical information contained herein, the matters
discussed herein are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. Potential risks and uncertainties
include such factors as the Company's ability to successfully integrate the
operations and distribution network of Clipper; overall economic conditions;
reduced demand for the Company's travel programs due to periods of widespread
international unrest or other factors; fluctuations in travel program costs
after the Company has established the selling prices of such programs;
competitor's actions and other risks described in the Company's filings with
the Securities and Exchange Commission. In addition, the forward-looking
statements assume the continued operation of the two Clipper Cruise Line
ships consistent with their recent capacities and cruise price levels and the
launching of the M/S Clipper Adventurer in the spring of 1998. These
forward-looking statements represent the Company's judgment as of the date
hereof.
- -------------------------------------------------------------------------------
<PAGE> 8
<TABLE>
Consolidated Statements of Income
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands except share data)
YEARS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
<S> <C> <C> <C>
Program revenues $ 114,845 $ 126,081 $ 122,523
Cost of operations 91,035 101,651 99,007
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 23,810 24,430 23,516
Selling, general and administrative 15,135 16,924 15,353
Depreciation and amortization 1,787 1,849 1,336
- --------------------------------------------------------------------------------------------------------------------------
Operating income 6,888 5,657 6,827
Investment income 1,883 1,643 978
Interest expense (including related party expenses of $1,086, $813, $0) (2,370) (1,904) (85)
- --------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes and extraordinary item 6,401 5,396 7,720
Provision for income taxes (Note 6) 2,254 1,887 2,780
- --------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 4,147 3,509 4,940
Extraordinary item-loss related to early extinguishment
of debt (net of tax benefit of $194) (Note 10) -- (344) --
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 4,147 $ 3,165 $ 4,940
==========================================================================================================================
Basic earnings per share of common stock:
Income before extraordinary item $ 0.80 $ 0.68 $ 0.97
Extraordinary item -- (0.07) --
- --------------------------------------------------------------------------------------------------------------------------
Net income per common share $ 0.80 $ 0.61 $ 0.97
==========================================================================================================================
Weighted average number of common shares outstanding 5,200,000 5,195,000 5,100,186
Diluted earnings per share of common stock:
Income before extraordinary item $ 0.80 $ 0.68 $ 0.96
Extraordinary item -- (0.07) --
- --------------------------------------------------------------------------------------------------------------------------
Net income per common share $ 0.80 $ 0.61 $ 0.96
==========================================================================================================================
Weighted average number of common shares outstanding 5,200,000 5,195,000 5,127,250
==========================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 9
<TABLE>
Consolidated Balance Sheets
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands except share data)
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------
1996 1997
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 6,670 $ 5,951
Restricted cash (Note 3) 1,917 4,720
Marketable securities (Note 8) 776 --
Restricted marketable securities (Notes 3 and 8) 4,751 4,745
Prepaid program costs 9,821 7,182
Prepaid expenses 868 811
Deferred income taxes (Note 6) -- 716
Other current assets 1,520 1,241
- ------------------------------------------------------------------------------------------------------------------
Total current assets 26,323 25,365
Property and equipment - net (Note 4) 17,569 26,198
Prepaid promotion costs 8,575 5,155
Other assets 127 83
- ------------------------------------------------------------------------------------------------------------------
Total $ 52,594 $ 56,801
==================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,298 $ 3,455
Accrued expenses 4,940 5,102
Deferred revenue 29,096 26,838
Deferred compensation (Note 9) -- 1,451
Deferred income taxes (Note 6) 2,404 --
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 39,738 36,846
Deferred compensation (Note 9) 1,012 --
Deferred income taxes (Note 6) 5,063 6,988
Long-term debt - less current maturities (Note 10) 3,000 7,450
Commitments and contingencies (Note 7) -- --
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized,
issued and outstanding - none -- --
Common stock, $.01 par value; 20,000,000 shares authorized,
issued - 5,325,000 shares; outstanding - 5,151,600 shares in 1996
and 5,071,850 in 1997 53 53
Additional paid-in capital 22,189 22,231
Retained earnings (accumulated deficit) (17,055) (14,660)
Unrealized gain (loss) on marketable securities (Note 8) (2) (3)
- ------------------------------------------------------------------------------------------------------------------
Total 5,185 7,621
Treasury stock - at cost; 173,400 and 253,150 shares in 1996 and 1997 (1,404) (2,104)
Total shareholders' equity 3,781 5,517
- ------------------------------------------------------------------------------------------------------------------
Total $ 52,594 $ 56,801
==================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 10
<TABLE>
Consolidated Statements of Cash Flows
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands)
YEARS ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,147 $ 3,165 $ 4,940
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary item -- 122 --
Depreciation and amortization 1,787 1,849 1,336
Amortization of bond premium 53 68 11
Amortization of deferred financing costs 17 15 --
Gain on sale of marketable securities (249) (62) (21)
Loss on disposal of equipment 35 -- --
Deferred income taxes 1,181 (415) (1,195)
Changes in assets and liabilities which provided (used) cash:
Restricted cash 2,810 366 (2,803)
Prepaid expenses and other assets (5,522) (1,864) 6,160
Other current assets 169 66 278
Accounts payable and accrued expenses (1,111) 1,038 747
Deferred revenue 1,632 (2,880) (2,258)
Deferred compensation 285 340 439
Net cash provided by operating activities 5,236 1,808 7,635
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (944) (1,120) (9,965)
Proceeds from sales of marketable securities 17,052 28,200 5,781
Purchases of marketable securities (19,737) (17,093) (4,990)
Net cash provided by (used in) investing activities (3,629) 9,987 (9,174)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (712) (11,019) (3,000)
Proceeds from revolving line of credit -- 3,000 7,450
Net proceeds from issuance of common stock 2,669 -- --
Purchase of common stock for treasury -- (1,404) (838)
Proceeds from sale of treasury stock -- -- 180
Dividends paid (2,831) (3,182) (2,546)
Proceeds from short-term borrowings 3,000 -- --
Payments on short-term borrowings (3,000) -- --
Payment to Windsor, Inc., for acquisition of Clipper Cruise Line -- (9,727) --
Net cash received from (paid to) Windsor, Inc. 1,337 5,029 (426)
Net cash provided by (used in) financing activities 463 (17,303) 820
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,070 (5,508) (719)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,108 12,178 6,670
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,178 $ 6,670 $ 5,951
========================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes $ 580 $ 1,582 $ 4,350
Noncash contribution of capital -- 10,249 --
Cash paid for interest 2,317 1,847 298
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 11
<TABLE>
Consolidated Statements of Shareholders' Equity
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands except share data)
COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------------------
UNREALIZED TOTAL
NUMBER OF ADDITIONAL GAIN (LOSS) SHARE-
SHARES PAID-IN ACCUMULATED ON MARKET TREASURY HOLDERS'
ISSUED AMOUNT CAPITAL DEFICIT SECURITIES STOCK EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1995 5,000,000 $50 $ 9,274 $ (9,915) $(502) $(1.093)
Issuance of common stock 325,000 3 2,666 2,669
Net Income 4,147 4,147
Dividends (1,331) (1,331)
Unrealized gain on investment
securities (Note 8) 578 578
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1995 5,325,000 53 11,940 (7,099) 76 -- 4,970
Contributed capital (Note 1) -- -- 10,249 -- -- -- 10,249
Acquisition of Clipper Cruise Line (Note 1) -- -- -- (9,939) -- -- (9,939)
Net income -- -- -- 3,165 -- -- 3,165
Dividends paid to Intrav, Inc., shareholders -- -- -- (2,596) -- -- (2,596)
Dividends paid to Windsor, Inc. -- -- -- (586) -- -- (586)
Unrealized loss on marketable
securities (Note 8) -- -- -- -- (78) -- (78)
Purchase of 173,400 shares of common
stock for treasury -- -- -- -- -- (1,404) (1,404)
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31,1996 5,325,000 53 22,189 (17,055) (2) (1,404) 3,781
Net income -- -- -- 4,940 -- -- 4,940
Cash dividends paid to shareholders -- -- -- (2,546) -- -- (2,546)
Unrealized loss on marketable
securities (Note 8) -- -- -- -- (1) -- (1)
Purchase of 96,750 shares of common stock
for treasury -- -- -- -- -- (838) (838)
Issuance of 17,000 shares of treasury stock
related to exercise of stock options -- -- 41 -- -- 138 180
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1997 5,325,000 $53 $22,231 $(14,660) $ (3) $(2,104) $ 5,517
============================================================================================================================
See accompanying notes to consolidated financial statements.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
1. Description of Business and Basis of Presentation
- -------------------------------------------------------------------------------
Intrav, Inc. ("INTRAV" or the "Company"), is a leading designer,
organizer, marketer and operator of deluxe, escorted, international travel
programs. The Company's programs are designed to appeal to higher-income
individuals desiring first-class travel experiences. The Company markets
substantially all of its programs via direct mail through sponsoring "affinity
groups," or directly to the ultimate traveler.
On December 31, 1996, the Company acquired all the outstanding common
stock of Clipper Cruise Line ("Clipper") consisting of Clipper Cruise Line,
Inc. ("CCL"), Clipper Adventure Cruises, Inc. ("CAC"), Republic Cruise Line,
Inc. ("RCL"), and Liberty Cruise Line, Inc. ("LCL"), from Windsor, Inc.
("Windsor"), a company controlled by Barney A. Ebsworth, the Company's Chairman
of the Board and majority stockholder. The Stock Purchase Agreement included
an initial payment of approximately $9,900 and the assumption of indebtedness
of $5,500 owed by Clipper to Windsor, with an additional $213 paid to Windsor
during 1997. Additional consideration of up to $3,000 may be paid to the
extent the cumulative net cruise revenues ("as defined") of Clipper exceed
$70,000 in the period January 1, 1997, through December 31, 2000. Net cruise
revenues, as defined, were $21,561 in 1997. Due to the common ownership and
control of Mr. Ebsworth over both INTRAV and Clipper, the acquisition has been
accounted for in a manner similar to the pooling-of-interests method and,
accordingly, all financial data has been restated to include the accounts and
results of operations of Clipper for all periods prior to the acquisition.
Clipper is a leading designer, organizer, marketer and operator of
deluxe, escorted, domestic and international travel cruises. Similar to
INTRAV, its programs are designed to appeal to higher-income individuals
desiring first-class travel experiences and are primarily marketed via
carriage trade travel agents, direct mail through sponsoring "affinity groups,"
or directly to the ultimate traveler. Clipper's travelers cruise primarily on
its two cruise ships from RCL and LCL, and in the past, Clipper has chartered
an additional ship from Discoverer Reederei. As used herein, the term
"Company" refers to both INTRAV, Inc., and Clipper.
2. Summary of Significant Accounting Policies
- -------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of
the Company include the accounts of INTRAV and its wholly-owned subsidiaries
CCL, CAC, RCL, LCL and Clipper Adventurer Ltd. (CAL). All significant
intercompany accounts and transactions have been eliminated.
REVENUE RECOGNITION - Program revenues are recognized as income upon
completion of a tour. Deferred revenue consists of amounts received for
tours which have not yet been completed.
PROMOTION AND PROGRAM COSTS - The Company expenses promotion costs as
incurred, except for direct-response advertising. Direct-response
advertising and program costs are deferred until the revenue from the related
program is recognized. Promotion expenses were $15,212, $19,075 and $19,767
for 1995, 1996 and 1997, respectively.
CURRENCY HEDGES - The Company may enter into contracts to buy foreign
currencies in the future to protect the U.S. dollar value of certain foreign
currency transactions. Except in the infrequent instance of cancellation of
non-U.S. currency cost commitments, the Company's practices relating to these
contracts do not expose the Company to currency risk from exchange-rate
movements because the gains and losses on them offset losses and gains on the
cost commitments being hedged. Gains and losses on currency forward
contracts are deferred and recognized in the same period as the hedged
transactions (See Note 7).
CASH EQUIVALENTS - For purposes of reporting cash flows, the Company
considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
MARKETABLE SECURITIES - The Company's marketable securities, including
restricted amounts, have been classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
holding gains and losses, net of taxes, reported as a separate component of
shareholder's equity.
PROPERTY, AMORTIZATION AND DEPRECIATION - Property and equipment is
recorded at cost. Amortization and depreciation is computed using accelerated
and straight-line methods over the estimated useful lives of the individual
assets. Capitalized software costs are
<PAGE> 13
amortized over 5 to 8 years, office furniture and equipment is depreciated over
5 to 7 years, and leasehold improvements are amortized over the life of the
related lease. The cruise ships are depreciated over 25 years prior to 1997,
over 30 years beginning in 1997, and cruise ship equipment over 5 to 7 years.
Effective January 1, 1997, the Company changed its estimates of the useful lives
of the Clipper Cruise Line ships. As a result of the appraisals of the Clipper
ships, which were performed in connection with INTRAV's acquisition of Clipper,
the Company determined that 30 years better reflects the estimated periods
during which such assets will remain in service. The effect of the change in
the estimated useful lives of the ships was to reduce depreciation expense for
the year ended December 31, 1997, by approximately $623 and to increase net
income for the year ended December 31, 1997, by approximately $400, an $0.08
increase in both basic and diluted earnings per share of common stock.
INCOME TAXES - Deferred income taxes reflect the tax consequences on
future years of differences between tax and financial reporting amounts.
Under this method, deferred tax assets and liabilities are determined based
on temporary differences between the financial statement and tax bases of
assets and liabilities by applying enacted tax rates applicable to future
years in which the differences are expected to reverse.
Prior to the acquisition discussed in Note 1, Clipper's results of
operations were included in the consolidated U.S. Corporate income tax return
of Windsor. Prior to the acquisition, Clipper's provision for income taxes
had been computed as if it filed an annual return on a separate company
basis. Clipper will be included in the consolidated return of INTRAV for the
year ended December 31, 1997.
USE OF MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
STOCK-BASED COMPENSATION PLANS - Effective January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The
new standard defines a fair value method of accounting for stock options and
similar equity instruments. Under the fair value method, compensation cost
is measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting period.
Pursuant to the new standard, companies are encouraged, but not required, to
adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25 ("APB 25"),
Accounting for Stock Issued to Employees, but are required to disclose pro
forma net income and, if presented, earnings per share as if the company had
applied the new method of accounting. The accounting requirements of the new
method are effective for all employee awards granted after the beginning of
the fiscal year of adoption, whereas the disclosure requirements apply to all
awards granted subsequent to December 31, 1994. The Company has adopted the
disclosure requirements of SFAS 123 in fiscal year 1996 but will continue to
recognize and measure compensation for its restricted stock and stock option
plans in accordance with the existing provisions of APB 25.
EARNINGS PER SHARE OF STOCK - Effective December 15, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
Earnings Per Share. This statement simplifies the standards for computing
earnings per share ("EPS"), making them comparable to international standards,
and supersedes Accounting Principles Board Opinion No. 15 ("APB 15"), Earnings
Per Share. SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS. The statement also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. As required by SFAS 128, diluted
EPS has been computed for all prior periods presented to conform to the
provisions of the new statement. Basic earnings per share under SFAS 128 for
prior periods is the same as earnings per share previously reported by the
Company under APB 15.
Basic earnings per share of stock is computed using the weighted
average number of Common shares outstanding during the applicable period.
Diluted earnings per share of stock is computed using the weighted average
number of Common shares outstanding and common stock equivalents. (See Note
12).
3. Restricted Cash and Marketable Securities
- -------------------------------------------------------------------------------
U.S. law requires the Company to maintain financial protection for
passenger advance payments for Company-operated cruises and chartered flights
embarking from the U.S. The Company has established escrow arrangements to
comply with the law. Under the arrangements, monies received from passengers
for cruises and chartered flights are held in escrow accounts
<PAGE> 14
until the respective cruises have been completed or charter payments have been
made. At December 31, 1996 and 1997, cash equivalents and marketable securities
amounting to $6,669 and $9,465, respectively, were held in escrow.
4. Property and Equipment
- -------------------------------------------------------------------------------
Property and equipment at December 31, 1996 and 1997, consist of the
following:
<TABLE>
<CAPTION>
1996 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Cruise ships $ 26,885 $ 28,356
Computer hardware and software 4,574 5,187
Office furniture and equipment 1,610 1,638
Cruise ship equipment 559 469
Leasehold improvements 107 107
Warehouse facilities 46 48
Construction in progress -- 7,816
- ------------------------------------------------------------------------------
Total property and equipment 33,781 43,621
Less accumulated depreciation (16,212) (17,424)
- ------------------------------------------------------------------------------
Property and equipment - net $ 17,569 $ 26,197
==============================================================================
</TABLE>
5. Operating Leases
- -------------------------------------------------------------------------------
The Company leases various office facilities and equipment under
noncancellable operating leases. At December 31, 1997, future minimum
payments under these leases with initial or remaining terms of one year or
more were:
<TABLE>
<CAPTION>
OFFICE
SPACE OTHER TOTAL
- ----------------------------------------------------
<S> <C> <C> <C>
1998 $ 683 $153 $ 836
1999 697 141 838
2000 710 83 793
2001 725 29 754
- ----------------------------------------------------
Total $2,815 $406 $3,221
====================================================
</TABLE>
Windsor Management Corporation, as agent for Windsor Real Estate, Inc.,
an affiliated entity, was the lessor of the office space through July 1997.
During 1997, the office building was sold to an unrelated third party.
Rental expense for the years ended December 31, 1995, 1996 and 1997,
was $955, $866 and $1,061, respectively.
6. Income Taxes
- -------------------------------------------------------------------------------
Provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1996 1997
- -------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $1,005 $2,174 $3,754
State 68 128 221
Deferred:
Federal 1,087 (393) (1,129)
State 94 (22) (66)
- -------------------------------------------------------------
Total $2,254 $1,887 $2,780
=============================================================
</TABLE>
<PAGE> 15
Factors causing the effective tax rate to differ from the statutory
federal income tax rate were:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1996 1997
- -------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 34.0% 34.0% 34.0%
Nontaxable
interest income (1.4) (0.1) --
State and local income
taxes, net of U.S.
federal income tax
benefit 2.6 1.1 2.0
- -------------------------------------------------------------
Effective rate 35.2% 35.0% 36.0%
=============================================================
</TABLE>
The Company's current and noncurrent deferred taxes included in the
balance sheets as of December 31, 1996 and 1997, consisted of the following
deferred tax assets and liabilities:
<TABLE>
<CAPTION>
1996
- -------------------------------------------------------------------------------------
DEFERRED DEFERRED NET
TAX TAX LIABILITY
ASSETS LIABILITIES (ASSET)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property and equipment $ -- $4,919 $4,919
Promotional costs -- 2,912 2,912
Accruals 221 -- (221)
Deferred compensation 311 -- (311)
Unrealized loss on
marketable securities 1 -- (1)
Other -- 169 169
- -------------------------------------------------------------------------------------
Total $533 $8,000 $7,467
=====================================================================================
Current deferred taxes $222 $2,626 $2,404
Noncurrent deferred taxes 311 5,374 5,063
- -------------------------------------------------------------------------------------
Total $533 $8,000 $7,467
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
- -------------------------------------------------------------------------------------
DEFERRED DEFERRED NET
TAX TAX LIABILITY
ASSETS LIABILITIES (ASSET)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property and equipment $ 6 $5,259 $5,253
Promotional costs -- 1,735 1,735
Accruals 416 134 (282)
Deferred compensation 434 -- (434)
- -------------------------------------------------------------------------------------
Total $856 $7,128 $6,272
=====================================================================================
Current deferred taxes $850 $ 134 $ (716)
Noncurrent deferred taxes 6 6,994 6,988
- -------------------------------------------------------------------------------------
Total $856 $7,128 $6,272
=====================================================================================
</TABLE>
<PAGE> 16
7. Commitments and Contingencies
- -------------------------------------------------------------------------------
CRUISE SHIP - During 1997, the Company purchased and is renovating a
cruise ship, the M/S Clipper Adventurer. Expenditures through December 31,
1997, aggregated approximately $7,816 and are reflected in the financial
statements as construction in progress in property and equipment. Management
estimates the minimum commitment associated with the completion of this
cruise ship to be approximately $12,225, subject to potential change orders.
The cruise ship is expected to be placed in service in early April 1998.
CHARTER AGREEMENTS - As of December 31, 1997, the Company has agreements
to charter cruise ships and aircraft for its group travel programs in 1998
and 1999 amounting to $8,273. Commitments generally may be canceled with
penalties from 10 percent to 100 percent.
PROFIT-SHARING PLAN - INTRAV sponsors a profit-sharing plan covering
substantially all employees. Clipper participates in a multi-employer
profit-sharing plan sponsored by Windsor, Inc., an affiliated company,
covering substantially all employees. At their discretion, each Company may
match a percentage of the employees' before-tax contributions and may also
make a nonmatching contribution. An employee is not required to make
before-tax contributions in order to receive a company nonmatching
contribution. Company contributions for both companies, which are subject to
the discretion of the Board of Directors, amounted to approximately $482,
$372 and $242 for 1995, 1996 and 1997, respectively. Effective January 1,
1998, all assets of the Clipper profit-sharing plan were merged into the
INTRAV Plan. In addition, the INTRAV Plan was renamed the INTRAV-Clipper
401(k) Plan.
STANDBY LETTERS OF CREDIT - As of December 31, 1997, the Company had
standby letters of credit in place totaling approximately $660. The Company
expects that none of its standby letters of credit will be drawn on.
CURRENCY CONTRACTS - The Company has utilized foreign currency forward
contracts to hedge against fluctuations in the costs of the currencies used
for its international travel programs. At December 31, 1997, the Company had
contracts to purchase $1,520 and $4,641 (U.S. equivalents) of non-U.S.
currencies for 1998 program operations and expenditures associated with the
cruise ship referred to above.
8. Marketable Securities
- -------------------------------------------------------------------------------
At December 31, 1996 and 1997, the Company's investments in marketable
securities (including restricted amounts) are classified as
available-for-sale and include the following:
<TABLE>
<CAPTION>
1996
- ---------------------------------------------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
and agency
securities $4,759 $-- $(7) $4,752
State and local
government
debt securities 772 4 -- 776
- ---------------------------------------------------------------------------------------------
Total $5,531 $ 4 $(7) $5,528
=============================================================================================
<CAPTION>
1997
- ---------------------------------------------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
and agency
securities $4,750 $-- $(5) $4,745
=============================================================================================
</TABLE>
The contractual maturities of debt securities as of December 31, 1997,
are as follows:
<PAGE> 17
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
- ------------------------------------------------------
<S> <C> <C>
One to five years $4,750 $4,750
======================================================
</TABLE>
The proceeds from sales of securities were $17,052, $28,200 and $5,781
for 1995, 1996 and 1997, respectively. The gross realized gains and (losses)
were $279 and ($30) for 1995, $67 and ($4) for 1996, $23 and ($2) for 1997,
respectively. The changes in net unrealized holding gain or (loss) that have
been included in shareholders equity were $905, ($123) and ($2) for 1995,
1996 and 1997, respectively. For the purposes of determining gross realized
gains and losses, the cost of securities sold is based upon specific
identification.
9. Deferred Compensation
- -------------------------------------------------------------------------------
Clipper entered into a Deferred Compensation Agreement with one of its
key employees on January 1, 1990 (as amended in December 1996) (the "Deferred
Compensation Agreement"). On November 7, 1997, the Deferred Compensation
Agreement was amended whereas the key employee released Clipper from certain
future bonus or deferred compensation obligations pursuant thereto. The key
employee will receive deferred compensation, earned through December 31,
1997, amounting to $1,451. Such amount is expected to be paid in early 1998.
In addition, under terms of a Stock Option Agreement, the key employee was
granted options to purchase 100,000 shares of common stock, pursuant to the
Company's 1995 Incentive Stock Plan, as amended (See Note 11). The option
price was set at the then fair market value of the Company's common stock of
$13.25 and the options vest 50% on December 31, 1998, and the remaining 50%
on December 31, 1999, subject to continuation of employment. Additionally,
all the options vest immediately upon a change in control, as defined.
The Company recognized expense under the Deferred Compensation
Agreement of $285, $340 and $439 for 1995, 1996 and 1997, respectively.
The Deferred Compensation Agreement also provided for a bonus upon
the sale of Clipper (See Note 1). In connection with the acquisition discussed
in Note 1, the key employee received a bonus of approximately $1,000 in 1996.
10. Long-Term Debt
- -------------------------------------------------------------------------------
In December 1996, the Company prepaid $10,518 to retire the outstanding
principal of both series of the United States Government Guaranteed Financing
Bonds related to the cruise ships. As required under the bond agreements,
the Company paid an additional $416 prepayment premium for the early
retirement of the bonds. Accordingly, the Company recorded an extraordinary
loss of $538 ($344 net of taxes) consisting of the prepayment premium and the
write-off of deferred financing costs related to the early extinguishment of
the debt.
On December 31, 1996, the Company entered into a $10,000 revolving
credit facility agreement with Boatmen's National Bank of St. Louis. The
agreement, as amended, includes a provision for a $1,250 reduction of the
available amount on the first anniversary date of the agreement, and expires
on December 31, 2000. In November 1997, the Company amended the agreement
and increased permitted borrowings to $15,000. The Company had outstanding
borrowings of $3,000 and $7,450 at December 31, 1996 and 1997, respectively.
The agreement provides that the Company may select among various draw
arrangements with varying maturities and interest rates. At December 31,
1997, the interest rates on the borrowings ranged from 7.3% to 7.7%. The
Company has pledged its personal property, including the cruise ships, as
collateral and must comply with certain financial covenants, under the terms
of the agreement.
11. Incentive Stock Plan
- -------------------------------------------------------------------------------
On April 21, 1995, the Company's shareholders adopted the 1995 Incentive
Stock Plan (the "Plan"); whereby, incentive stock options, nonqualifying stock
options, restricted stock and stock appreciation rights may be granted to
officers, key employees and outside directors to purchase a specified number
of shares of common stock at a price not less than the fair market value at
the date of grant and for a term not to exceed 10 years. During 1997, the
Plan was amended, subject to shareholder approval, to increase the maximum
number of shares available for issuance thereunder to 750,000. Each such
option, except for 100,000 stock options granted to a key employee (See Note
9), vests over a five-year period with 20% vesting each year.
Stock option transactions are summarized as follows:
<PAGE> 18
<TABLE>
<CAPTION>
WEIGHTED
PRICE AVERAGE
SHARES RANGE PRICE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock options:
Outstanding,
January 1, 1995 -- $ -- $ --
Granted 300,000 $ 10.50 $10.50
- -------------------------------------------------------------------------------------------------------------
Outstanding,
December 31, 1995 300,000 $ 10.50 $10.50
Granted 200,000 $7.66-$ 8.50 $ 8.08
- -------------------------------------------------------------------------------------------------------------
Outstanding,
December 31, 1996 500,000 $7.38-$10.25 $ 9.53
Granted 475,000 $7.38-$13.25 $10.11
Canceled (390,000) $7.66-$10.50 $ 9.26
Exercised (17,000) $ 10.50 $10.50
- -------------------------------------------------------------------------------------------------------------
Outstanding,
December 31, 1997 568,000 $7.38-$10.50 $10.42
Exercisable at:
December 31, 1996 60,000 $ 10.50 $10.50
December 31, 1997 81,000 $ 10.50 $10.50
Shares available for grant
at December 31, 1997 165,000
=============================================================================================================
</TABLE>
The Company has adopted the disclosure-only provisions of SFAS 123.
Accordingly, no compensation cost has been recognized for the stock option
plan. Had compensation cost for the Company's stock option plan been
determined based on the fair value at the grant dates for awards consistent
with the provisions of SFAS 123, the Company's net income and net income per
share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1997
- -------------------------------------------------------------------------
<S> <C> <C>
Net income - as reported $4,147 $4,940
========================================================================
Net income - pro forma $3,709 $4,766
========================================================================
Net income per common share -
as reported:
Basic $ 0.80 $ 0.97
=====================================================================
Diluted $ 0.80 $ 0.96
=====================================================================
Net income per common share -
pro forma:
Basic $ 0.71 $ 0.93
=====================================================================
Diluted $ 0.71 $ 0.93
=====================================================================
========================================================================
</TABLE>
The pro forma compensation effects of this calculation were not
material and therefore have not been disclosed for the year ended December
31, 1996.
The Company has estimated the fair values of its option grants since
1995 by using the binomial options pricing model with the following
assumptions:
<PAGE> 19
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1996 1997
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Expected life (years) 10 10 10
Risk-free interest rate 6.50% 6.50% 5.62%
Volatility 37.50% 37.50% 28.01%
Dividend yield 4.76% 4.76% 3.78%
</TABLE>
12. Earnings Per Share
- -------------------------------------------------------------------------------
Weighted average shares of common stock and common stock equivalents
used in the calculation of basic and diluted earnings per share are
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
ANNUAL DATA 1995 1996 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average number
of common shares
outstanding (Basic EPS) 5,200,000 5,195,000 5,100,186
Stock option equivalents -- -- 27,064
- ------------------------------------------------------------------------------------------
Weighted average number
of common shares and
equivalents outstanding
(Diluted EPS) 5,200,000 5,195,000 5,127,250
==========================================================================================
</TABLE>
Stock option equivalents included in the Diluted EPS calculation were
determined using the treasury stock method. Under the treasury stock method
and SFAS 128, outstanding stock options are dilutive when the average market
price of the Companys common stock exceeds the option price during a period.
In addition, proceeds from the assumed exercise of dilutive options along
with the related tax benefit are assumed to be used to repurchase common
shares at the average market price of such stock during the period.
13. Quarterly Results of Operations (Unaudited)
- -------------------------------------------------------------------------------
The results of operations for 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
QUARTER ENDED
1996
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Program revenues $31,363 $16,449 $42,181 $36,088
Cost of operations 25,369 13,126 34,230 28,926
- ------------------------------------------------------------------------------------------------------------
Gross profit $ 5,994 $ 3,323 $ 7,951 $ 7,162
Net income (loss) $ 1,023 $ (751) $ 2,310 $ 582
Basic net income
(loss) per share $ 0.20 $ (0.15) $ 0.44 $ 0.12
Diluted net income
(loss) per share $ 0.20 $ (0.15) $ 0.44 $ 0.12
============================================================================================================
<CAPTION>
1997
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Program revenues $27,174 $23,905 $36,423 $35,021
Cost of operations 22,023 18,892 29,806 28,286
- ------------------------------------------------------------------------------------------------------------
Gross profit $ 5,151 $ 5,013 $ 6,617 $ 6,735
============================================================================================================
Net income $ 792 $ 801 $ 1,600 $ 1,747
Basic net income
per share $ 0.15 $ 0.16 $ 0.32 $ 0.34
Diluted net income
per share $ 0.15 $ 0.16 $ 0.31 $ 0.34
============================================================================================================
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
Independent Auditors' Report
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders
Intrav, Inc.
We have audited the accompanying consolidated balance sheets of Intrav,
Inc., and subsidiaries as of December 31, 1996 and 1997, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Intrav, Inc., and
subsidiaries at December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
February 2, 1998
- -------------------------------------------------------------------------------
<PAGE> 1
Exhibit 21
Subsidiaries of Registrant
<TABLE>
<CAPTION>
Jurisdiction of Incorporation or
--------------------------------
Name Organization
- ---- ------------
<S> <C>
Clipper Cruise Line, Inc. Delaware
Republic Cruise Line, Inc. Delaware
Liberty Cruise Line, Inc. Delaware
Clipper Adventure Cruises, Inc. Delaware
Clipper Adventurer Ltd. Commonwealth of Bahamas
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-05361 of Intrav, Inc. on Form S-8 of our reports dated February 2, 1998
appearing in this Form 10-K of Intrav, Inc. for the year ended December 31,
1997.
/s/ DELOITTE & TOUCHE LLP
St. Louis, Missouri
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 10,671
<SECURITIES> 11,927
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,365
<PP&E> 43,621
<DEPRECIATION> 17,423
<TOTAL-ASSETS> 56,801
<CURRENT-LIABILITIES> 36,846
<BONDS> 0
<COMMON> 53
0
0
<OTHER-SE> 5,464
<TOTAL-LIABILITY-AND-EQUITY> 56,801
<SALES> 122,523
<TOTAL-REVENUES> 123,501
<CGS> 99,007
<TOTAL-COSTS> 99,007
<OTHER-EXPENSES> 16,689
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85
<INCOME-PRETAX> 7,720
<INCOME-TAX> 2,780
<INCOME-CONTINUING> 4,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,940
<EPS-PRIMARY> 0.97
<EPS-DILUTED> .96
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,836
<SECURITIES> 4,730
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,742
<PP&E> 37,226
<DEPRECIATION> 17,172
<TOTAL-ASSETS> 60,572
<CURRENT-LIABILITIES> 49,992
<BONDS> 0
<COMMON> 53
0
0
<OTHER-SE> 4,146
<TOTAL-LIABILITY-AND-EQUITY> 60,572
<SALES> 87,502
<TOTAL-REVENUES> 88,245
<CGS> 70,721
<TOTAL-COSTS> 70,721
<OTHER-EXPENSES> 12,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85
<INCOME-PRETAX> 4,990
<INCOME-TAX> 1,796
<INCOME-CONTINUING> 3,194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,194
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.62
</TABLE>
