<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
/ x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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COMMISSION FILE NUMBER 0-25990
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INTRAV, INC.
(Exact name of registrant as specified in its charter)
------------------------------------------------------
MISSOURI 43-1323155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7711 BONHOMME AVENUE, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
(314) 727-0500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
YES / x / NO / /
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The Company had 5,114,200 shares of common stock outstanding at
August 3, 1999.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands except per share data)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $26,696 $22,057 $52,571 $48,776
Cost of operations 19,916 16,615 39,902 38,216
------- ------- ------- -------
Gross profit 6,780 5,442 12,669 10,560
Selling, general and administrative 4,156 3,482 8,099 6,852
Depreciation and amortization 756 513 1,477 869
------- ------- ------- -------
Operating income 1,868 1,447 3,093 2,839
Investment income 212 290 342 438
Interest expense (219) (263) (535) (263)
------- ------- ------- -------
Income before provision for income taxes 1,861 1,474 2,900 3,014
Provision for income taxes 670 531 1,044 1,085
------- ------- ------- -------
Net income $ 1,191 $ 943 $ 1,856 $ 1,929
======= ======= ======= =======
Basic earnings per share of common stock $ 0.23 $ 0.18 $ 0.36 $ 0.38
------- ------- ------- -------
Weighted average number of common shares
outstanding 5,114 5,112 5,117 5,101
------- ------- ------- -------
Diluted earnings per share of common stock $ 0.23 $ 0.18 $ 0.35 $ 0.37
------- ------- ------- -------
Weighted average number of common shares
outstanding 5,224 5,240 5,237 5,212
------- ------- ------- -------
See accompanying notes to consolidated financial statements.
</TABLE>
2
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<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands except share data)
<CAPTION>
JUNE 30, DECEMBER 31,
-------- ------------
ASSETS 1999 1998
-------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,374 $ 845
Restricted cash 7,806 10,582
Restricted marketable securities - 4,025
Prepaid program costs 11,665 8,348
Other current assets 3,637 2,818
-------- --------
Total current assets 28,482 26,618
Property and equipment - net 54,035 54,655
Prepaid promotion costs 5,160 4,961
Other assets 396 324
-------- --------
Total $ 88,073 $ 86,558
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,564 $ 5,347
Accrued expenses 6,676 6,606
Notes payable 8,500 5,500
Deferred revenue 53,151 29,836
-------- --------
Total current liabilities 72,891 47,289
-------- --------
Deferred income taxes 7,867 7,867
-------- --------
Long-term debt - 20,800
-------- --------
Shareholders' equity:
Preferred stock, $0.01 par value;
5,000,000 shares authorized; issued
and outstanding - none - -
Common stock, $0.01 par value; 20,000,000
shares authorized; issued - 5,325,000
shares; outstanding - 5,114,200 shares
in 1999 and 5,155,450 shares in 1998 53 53
Additional paid-in capital 22,694 22,694
Accumulated deficit (12,912) (10,449)
-------- --------
Total 9,835 12,298
Treasury stock - at cost; 210,800 and
169,550 shares of common stock in
1999 and 1998 (2,520) (1,696)
-------- --------
Total shareholders' equity 7,315 10,602
-------- --------
Total $ 88,073 $ 86,558
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,856 $ 1,929
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,477 879
Changes in assets and liabilities which provided
(used) cash:
Restricted cash 2,776 (13,641)
Prepaid expenses and other assets (3,650) (6,504)
Other current assets (819) (567)
Accounts payable and accrued expenses (753) (333)
Deferred revenue 23,315 24,295
-------- --------
Net cash provided by operating activities 24,202 6,058
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (795) (10,953)
Proceeds from sales of marketable securities 4,025 2,500
Purchases of marketable securities - (2,555)
-------- --------
Net cash provided by (used in) investing
activities 3,230 (11,008)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) of long-term debt (20,800) 5,350
Purchase of common stock for treasury (824) -
Proceeds from sale of treasury stock - 766
Dividends paid (1,279) (1,277)
-------- --------
Net cash (used in) provided by financing
activities (22,903) 4,839
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,529 (111)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 845 5,951
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,374 $ 5,840
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
4
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INTRAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
DESCRIPTION OF BUSINESS
Intrav, Inc. ("INTRAV" or the "Company") designs, markets and operates
deluxe, escorted, worldwide travel programs and cruises. The Company
provides a diverse offering of programs primarily to affluent, well-
educated, mature individuals in the United States who desire substantive
travel experiences. Its small cruise ship programs allow its travelers
to visit secluded places of natural beauty and cultural interest aboard
four Company owned and operated ships and others that it charters. The
Company also offers programs that use privately chartered jet aircraft,
which allow its travelers to visit locations not as conveniently or
comfortably served by commercial airlines.
In December 1996, the Company acquired Clipper Cruise Line, Inc.
("Clipper") which offered cruise programs in the United States, Central
America and the Caribbean Islands on its two small cruise ships, the M/V
Nantucket Clipper and the M/V Yorktown Clipper. The acquisition of
Clipper provided the Company with additional products and expertise in
the small-ship cruise market and expanded its distribution capabilities
through Clipper's travel agent network. Since the Clipper acquisition,
the Company has expanded its small-ship programs through the acquisition
of two additional small cruise ships, the M/S Clipper Adventurer, which
began operations in April 1998, and the M/S Clipper Odyssey, which it
will begin operating in November 1999.
The Stock Purchase Agreement in connection with the 1996 acquisition of
Clipper from Windsor, Inc., a company controlled by Barney A. Ebsworth,
the Company's founder, Chairman of the Board and majority shareholder,
included additional consideration of up to $3,000 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. During the
second quarter of 1999, net cruise revenues exceeded $73,000, and
therefore, a promissory note in the amount of $3,000 due to Barney A.
Ebsworth payable in February 2000 has been recorded in notes payable as
of June 30, 1999. 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,
the additional consideration of $3,000 has been charged directly against
shareholders' equity as of June 30, 1999.
On July 16, 1999, the Company, Kuoni Reisen Holding AG ("Kuoni"),
Kuoni Holding Delaware, Inc. (formerly known as Diamond Holding Delaware,
Inc.), a wholly-owned subsidiary of Kuoni ("Kuoni Holding"), and Kuoni
Acquisition Subsidiary Missouri, Inc. (formerly known as Diamond
Acquisition Subsidiary Missouri, Inc.), a wholly-owned subsidiary of Kuoni
Holding ("Kuoni Acquisition Subsidiary") entered into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Kuoni will
acquire control of, and the entire equity interest in, the Company and
replace the Board of Directors of the Company. INTRAV will be acquired
by Kuoni through the merger of Kuoni Acquisition Subsidiary with and
into the Company. As a result of the merger, each INTRAV common share
issued and outstanding when the merger becomes effective will be converted
into the right to receive $21.32 in cash. Additionally, INTRAV has agreed
to cause outstanding options to become payable for cash, equal to the
difference between $21.32 and the per share exercise prices of such options.
The aggregate purchase price for all of the equity will be approximately
$115,000.
5
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Pursuant to U.S. federal law, INTRAV'S two U.S. flag vessels (the M/V
Yorktown Clipper and M/V Nantucket Clipper) must be owned by U.S.
citizens in order to carry passengers on domestic cruises. A
corporation is deemed to be a citizen if, among other things, at least
75% of its shares are owned by U.S. citizens. Kuoni is not a U.S.
citizen, and as a result Kuoni Holding is deemed not to be a U.S.
citizen.
In order to maintain the coastwise trade privileges of the two U.S. flag
vessels and provide Kuoni with the use of them, the Merger Agreement
requires that, immediately prior to the effective time of the merger,
INTRAV sell or otherwise dispose of its U.S. flag vessels to such person
or persons designated by Kuoni who are qualified to own and operate them
in the coastwise trade. In addition, immediately prior to the effective
time of the merger, INTRAV is required to enter into a time charter of
the U.S. flag vessels, an operating agreement with respect to INTRAV's
two non-U.S. flag vessels, and a transitional services agreement
providing for certain transition services with the acquiror of the U.S.
flag vessels.
Simultaneously with the execution of the Merger Agreement, Kuoni entered
into a letter agreement with Paul H. Duynhouwer, INTRAV's President and
Chief Executive Officer and an INTRAV director, which letter agreement
outlines the proposed sale of the U.S. flag vessels to entities
controlled by Mr. Duynhouwer. The letter agreement anticipates that
INTRAV will sell the U.S. flag vessels to New World Ships, LLC. New
World Ships, LLC will be 75.1% owned by Mr. Duynhouwer, and 24.9% owned
by INTRAV or an affiliate. The total purchase price for the two U.S.
flag vessels will be approximately $16,600 which represents the book
value of the U.S. flag vessels.
Kuoni, founded in 1906 in Zurich, Switzerland, is one of Europe's
largest travel companies with subsidiaries in 11 European countries, the
Far East, India and the United States. A substantial part of the
business volume is generated in the home country which makes Kuoni a
market leader of the travel industry in Switzerland.
The Board of Directors of INTRAV unanimously approved the Merger
Agreement, and received an opinion from its financial adviser, Stifel,
Nicolaus & Company, Incorporated, that the consideration to be received
by INTRAV's shareholders in the merger is fair to the INTRAV
shareholders from a financial point of view. The transaction is subject
to the approval of INTRAV's shareholders, the expiration of the waiting
period under the applicable antitrust laws and other customary
conditions.
Mr. Ebsworth, who currently owns approximately 74.8% of INTRAV's
outstanding common stock, agreed to vote his shares in favor of approval
of the merger. It is expected that the merger will be completed on or
about September 30, 1999.
ACCOUNTING POLICIES
Interim Adjustments - The unaudited financial statements included herein
have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. However,
in the opinion of management of the Company, the financial statements
include all adjustments, which consist of normal recurring accruals,
necessary to present fairly the financial information for such periods.
These financial statements should be read in conjunction with the
audited financial statements for the year ended December 31, 1998
contained in the Company's Annual Report on Form 10-K, dated March 31,
1999, as filed with the Securities and Exchange Commission. Results of
operations for the six months ended June 30, 1999 are not necessarily
indicative of the results which may be expected for the full year ending
December 31, 1999.
6
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Earnings Per Share of Stock - 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 (outstanding stock options). 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>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average number of common shares
outstanding (Basic EPS) 5,114 5,112 5,117 5,101
Stock option equivalents 110 128 120 111
----- ----- ----- -----
Weighted average number of common shares
and equivalents outstanding (Diluted EPS) 5,224 5,240 5,237 5,212
===== ===== ===== =====
</TABLE>
Stock option equivalents included in the diluted earnings per share
calculation were determined using the treasury stock method. Under the
treasury stock method and Statement of Financial Accounting Standards
No. 128 ("SFAS 128"), outstanding stock options are dilutive when the
average market price of the Company's 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.
LONG-TERM DEBT
The Company has amended its revolving credit facility agreement with
NationsBank, N.A., to increase available borrowings from $30,000 to
$32,500 effective as of June 15, 1999 and allows for up to $17,500 in
Letters of Credit. This agreement expires on November 1, 2003. The
agreement includes provisions for periodic reductions of the available
amount from $30,500 beginning December 31, 1999 to $17,500 at December
31, 2002. The Company had no borrowings and $9,192 in Letters of Credit
outstanding under this facility as of June 30, 1999.
DIVIDEND DECLARATION
On July 29, 1999, the Company declared a dividend of $0.125 per share,
for shareholders of record on September 30, 1999, to be paid October 15,
1999. On May 3, 1999, the Company declared a regular quarterly dividend
of $0.125 per share, for shareholders of record on May 28, 1999, paid on
June 15, 1999.
On August 3, 1998, the Company declared a regular quarterly dividend of
$0.125 per share, for shareholders of record on August 31, 1998, paid on
September 15, 1998. On May 1, 1998, the Company declared a regular
quarterly dividend of $0.125 per share, for shareholders of record on
May 29, 1998, paid on June 15, 1998.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
- -----------------------------------------------------------------------
GENERAL
The Company recognizes the revenues and related costs of operations as
services are provided, generally upon completion of a tour; however,
revenues for certain significant or long duration tours are recognized
on a proportionate basis based on number of days traveled.
Revenues include revenues from the sale of base travel programs, as well
as optional products and services, including sightseeing, program
extensions, airfare, and medical and educational seminars.
Cost of operations include the costs of airfare, ship, hotel and other
accommodations and services included in the base programs and optional
products and services. Also included are the costs of creating and
distributing promotional materials for each program and promotional
expenses, including commissions paid to travel agents and others.
RECENT EVENTS
On July 16, 1999, the Company, Kuoni Reisen Holding AG ("Kuoni"),
Kuoni Holding Delaware, Inc. (formerly known as Diamond Holding Delaware,
Inc.), a wholly-owned subsidiary of Kuoni ("Kuoni Holding"), and Kuoni
Acquisition Subsidiary Missouri, Inc. (formerly known as Diamond
Acquisition Subsidiary Missouri, Inc.), a wholly-owned subsidiary of Kuoni
Holding ("Kuoni Acquisition Subsidiary") entered into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Kuoni will
acquire control of, and the entire equity interest in, the Company and
replace the Board of Directors of the Company. INTRAV will be acquired
by Kuoni through the merger of Kuoni Acquisition Subsidiary with and
into the Company. As a result of the merger, each INTRAV common share
issued and outstanding when the merger becomes effective will be converted
into the right to receive $21.32 in cash. Additionally, INTRAV has agreed
to cause outstanding options to become payable for cash, equal to the
difference between $21.32 and the per share exercise prices of such options.
The aggregate purchase price will be approximately $115.0 million.
Pursuant to U.S. federal law, INTRAV'S two U.S. flag vessels (the M/V
Yorktown Clipper and M/V Nantucket Clipper) must be owned by U.S.
citizens in order to carry passengers on domestic cruises. A
corporation is deemed to be a citizen if, among other things, at least
75% of its shares are owned by U.S. citizens. Kuoni is not a U.S.
citizen, and as a result Kuoni Holding is deemed not to be a U.S.
citizen.
In order to maintain the coastwise trade privileges of the two U.S. flag
vessels and provide Kuoni with the use of them, the Merger Agreement
requires that, immediately prior to the effective time of the merger,
INTRAV sell or otherwise dispose of its U.S. flag vessels to such person
or persons designated by Kuoni who are qualified to own and operate them
in the coastwise trade. In addition, immediately prior to the effective
time of the merger, INTRAV is required to enter into a time charter of
the U.S. flag vessels, an operating agreement with respect to INTRAV's
two non-U.S. flag vessels, and a transitional services agreement
providing for certain transition services with the acquiror of the U.S.
flag vessels.
Simultaneously with the execution of the Merger Agreement, Kuoni entered
into a letter agreement with Paul H. Duynhouwer, INTRAV's President and
Chief Executive Officer and an INTRAV director, which letter agreement
outlines the proposed sale of the U.S. flag vessels to entities
controlled by Mr. Duynhouwer. The letter agreement anticipates that
INTRAV will sell the U.S. flag vessels to New World Ships, LLC. New
World Ships, LLC will be 75.1% owned by Mr. Duynhouwer, and 24.9% owned
by INTRAV or an affiliate.
8
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The total purchase price for the two U.S. flag vessels will be
approximately $16.6 million, which represents the book value of the U.S.
flag vessels.
Kuoni, founded in 1906 in Zurich, Switzerland, is one of Europe's
largest travel companies with subsidiaries in 11 European countries, the
Far East, India and the United States. A substantial part of the
business volume is generated in the home country which makes Kuoni a
market leader of the travel industry in Switzerland.
The Board of Directors of INTRAV has unanimously approved the Merger
Agreement, and received an opinion from its financial adviser, Stifel,
Nicolaus & Company Incorporated, that the consideration to be received
by INTRAV's shareholders in the merger is fair to the INTRAV
shareholders from a financial point of view. The transaction is subject
to the approval of INTRAV's shareholders, the expiration of the waiting
period under the applicable antitrust laws and other customary
conditions.
INTRAV's founding shareholder, who currently owns approximately 74.8% of
INTRAV's outstanding common stock, has agreed to vote his shares in
favor of approval of the merger. It is expected that the merger will be
completed by September 30, 1999.
REVENUES
Revenues for the three months ended June 30, 1999 compared to the second
quarter of 1998 increased $4.6 million, or 21.0%, from $22.1 million to
$26.7 million. The increase in revenues was primarily attributable to a
new private jet program operating in June of 1999 and an increase in the
number of travelers from 4,835 in 1998 to 4,911 in 1999. The average
revenue per traveler increased $874, from $4,562 in 1998 to $5,436 in
1999, due to a higher percentage of revenues derived from small-ship
programs and the private jet program mentioned above. Revenues included
$0.4 million of charter hire revenue pertaining to our bareboat charter
of the M/S Clipper Odyssey to Spice Islands Cruises Ltd., former owner
of the M/S Clipper Odyssey.
Revenues for the six months ended June 30, 1999 compared to the first
six months of 1998 increased $3.8 million, or 7.8%, from $48.8 million
to $52.6 million. The average revenue per traveler increased $843, from
$4,501 in 1998 to $5,344 in 1999, due to a higher percentage of revenues
derived from private jet programs and small-ship programs replacing
certain big-ship programs.
The following table presents for the periods indicated the Company's
revenues by mode of transportation:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1999 1998 1999 1998
------- ------- ------- -------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Small ships $19,698 $17,048 $35,368 $30,485
Private jets 2,541 - 5,506 3,009
Big ships 2,355 1,259 6,921 10,012
Other 2,102 3,750 4,776 5,270
------- ------- ------- -------
Total $26,696 $22,057 $52,571 $48,776
======= ======= ======= =======
</TABLE>
9
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COST OF OPERATIONS
Cost of operations for the three months ended June 30, 1999 compared to
the second quarter of 1998 increased $3.3 million, or 19.9%, from $16.6
million to $19.9 million. This increase was primarily attributable to
the new private jet program and increased number of travelers mentioned
above. Cost of operations declined as a percentage of revenues from
75.3% in 1998 to 74.6% in 1999 due primarily to the increase in revenues
from higher margin small-ship and private jet programs.
Cost of operations for the six months ended June 30, 1999 compared to
the corresponding period of 1998 increased $1.7 million, or 4.4%, from
$38.2 million to $39.9 million. This increase was primarily
attributable to the new private jet program and the additional three
months of operating activity of the M/S Clipper Adventurer in the 1999
period. Cost of operations declined as a percentage of revenues from
78.4% in 1998 to 75.9% in 1999 due primarily to the Company's reducing
its lower yielding big-ship cruise programs and increasing its higher
margin small-ship and private jet programs.
GROSS PROFIT
Gross profit for the three months ended June 30, 1999 compared to the
second quarter of 1998 increased $1.3 million, or 24.6%, from $5.4
million to $6.8 million. Gross profit as a percentage of program
revenues increased from 24.7% in 1998 to 25.4% in 1999.
Gross profit for the six months ended June 30, 1999 compared to the
first six months of 1998 increased $2.1 million, or 20.0%, from $10.6
million to $12.7 million. Gross profit as a percentage of program
revenues increased from 21.6% in 1998 to 24.1% in 1999. The increases
in gross profit and gross profit margin for both the second quarter and
six months were attributable to the Company's continued focus on higher
margin travel programs and the M/S Clipper Odyssey charter hire revenue.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended
June 30, 1999 compared to the second quarter of 1998 increased $0.7
million, or 19.4%, from $3.5 million to $4.2 million. This increase was
primarily attributable to additional administrative personnel associated
with the planned start-up of M/S Clipper Odyssey programs in November
1999 and $0.2 million of non-recurring transaction expenses relating to
our attempted secondary common stock offering in April 1999.
Nonetheless, selling, general and administrative expenses decreased as a
percentage of revenues from 15.8% in 1998 to 15.6% in 1999 as a result
of increased revenues.
Selling, general and administrative expenses for the six months ended
June 30, 1999 compared to the first six months of 1998 increased $1.2
million, or 18.2%, from $6.9 million to $8.1 million. Selling, general
and administrative expenses increased as a percentage of revenues from
14.0% in 1998 to 15.4% in 1999. This increase for the six months was
primarily attributable to additional administrative personnel associated
with the M/S Clipper Adventurer and the planned start-up of the M/S
Clipper Odyssey, additional selling expenses associated with special
Millennium trips, and $0.2 million of non-recurring transaction expenses
relating to our attempted secondary common stock offering in April 1999.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization, primarily relating to the Company-owned
cruise ships and internally developed software, for the three months
ended June 30, 1999 compared to the second quarter of 1998 increased
$0.3 million, or 47.4%, from $0.5 million to $0.8 million. The increase
was primarily due to the
10
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<PAGE>
depreciation of the M/S Clipper Odyssey, which was acquired in November
1998 and is currently on charter to its former owners. Depreciation and
amortization increased as a percentage of program revenues from 2.3% in
1998 to 2.8% in 1999.
Depreciation and amortization for the six months ended June 30, 1999
compared to the first six months of 1998 increased $0.6 million, or
70.0%, from $0.9 million to $1.5 million. The increase was primarily
due to the depreciation of the M/S Clipper Adventurer which began
operations in April 1998 and the M/S Clipper Odyssey which was acquired
in November 1998. Depreciation and amortization increased as a
percentage of program revenues from 1.8% in 1998 to 2.8% in 1999.
INVESTMENT INCOME
Investment income for the three months ended June 30, 1999 compared to
the second quarter of 1998 decreased $78 thousand from $290 thousand to
$212 thousand. This decrease was due primarily to a decrease in
investable cash balances. The Company replaced certain escrowed funds
with a surety bond and letters of credit, and used those previously
escrowed funds to repay the outstanding borrowings under the revolving
credit facility. The average monthly balance of cash and marketable
securities decreased from $23.2 million in the second quarter of 1998 to
$15.0 million in the second quarter of 1999, while the average interest
rate was 5.0% in 1998 and 5.7% in 1999.
Investment income for the six months ended June 30, 1999 compared to the
first six months of 1998 decreased $96 thousand from $438 thousand to
$342 thousand. This decrease was due primarily to a decrease in
investable cash balances as noted above. The average monthly balance of
cash and marketable securities decreased from $18.1 million in the first
six months of 1998 to $13.4 million in the first six months of 1999,
while the average interest rate was 4.8% in 1998 and 5.1% in 1999.
INTEREST EXPENSE
Interest expense incurred for the three months ended June 30, 1999 was
$219 thousand, of which $165 thousand was attributable to the Company's
bank revolving credit facility and $54 thousand was attributable to the
$5.5 million one-year promissory note to Spice Islands (the seller of
the Oceanic Odyssey). In 1998, the Company capitalized $30 thousand of
interest expense incurred in the second quarter related to the
conversion of the M/S Clipper Adventurer.
Interest expense incurred for the six months ended June 30, 1999 was
$535 thousand, of which $426 thousand was attributable to the Company's
bank revolving credit facility and $109 thousand was attributable to the
$5.5 million one-year promissory note to Spice Islands. In 1998, the
Company capitalized $270 thousand of interest expense incurred in the
first six months related to the conversion of the M/S Clipper
Adventurer, and expensed $263 thousand.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations, capital expenditures and dividend
payments primarily through cash flows generated from operations and its
bank revolving credit facility.
Net cash provided by operating activities for the six months ended June
30, 1999 and 1998 was $24.2 million and $6.1 million, respectively.
Included in cash provided by operating activities for the six months
ended June 30, 1999 was $1.9 million from net income, $2.8 million from
restricted cash and $23.3 million from
11
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<PAGE>
deferred revenue, partially offset by $3.7 million used for prepaid
expenses and other assets, $0.8 million used to reduce accounts payable
and accrued expenses and $0.8 million used for other current assets.
The Company generally recognizes revenues as income upon the completion
of each tour or cruise. Deferred revenue balances consist of amounts
received from travelers for tours and cruises which have not been
completed. Of the $53.2 million of deferred revenue at June 30, 1999,
approximately $21.7 million, or 40.9%, related to tour and cruise
departures, scheduled to be completed by September 30, 1999, and $7.0
million or 13.2% related to specially promoted Millennium programs
scheduled to be completed by January 17, 2000.
Net cash provided by (used in) investing activities for the six months
ended June 30, 1999 and 1998 was $3.2 million and ($11.0 million),
respectively. Included in cash provided by investing activities for the
six months ended June 30, 1999 was $4.0 million provided by proceeds
from the sale of marketable securities, offset by $0.8 million used in
the purchase of property and equipment.
Net cash provided by (used in) financing activities for the six months
ended June 30, 1999 and 1998 was ($22.9 million) and $4.8 million,
respectively. During the six months ended June 30, 1999, the Company
repaid $20.8 million of its borrowings under the revolving credit
facility, with cash made available primarily by replacing certain cash
escrow requirements with a surety bond and letters of credit. The
Company also paid dividends of $1.3 million and repurchased 41,250
shares of common stock in the open market, for an aggregate of $0.8
million during the first quarter of 1999.
In November 1998, the Company completed the purchase of the
120-passenger luxury cruise ship Oceanic Odyssey from Spice Islands,
a non-affiliated third party for a purchase price of $16.0 million. The
Company made a cash payment of $10.5 million, funded by borrowings from
its revolving credit facility, and delivered its one-year promissory
note in the amount of $5.5 million at the time of closing. Cash flow
from operations together with draws against the revolving credit
facility will provide an additional $3.6 million for renovation of the
M/S Clipper Odyssey, for retirement of the $5.5 million one-year note
payable to the seller of the M/S Clipper Odyssey, for payment of the
$3.0 million note payable to Barney A. Ebsworth as additional
consideration for the acquisition of Clipper and for other capital
expenditures as needed.
In March 1999, the Company filed with the Securities and Exchange
Commission a registration statement for the proposed public offering by
the Company of 500,000 shares of common stock and by the Revocable Trust
of Barney A. Ebsworth of 2,000,000 shares of common stock (plus an
aggregate of up to 375,000 shares which may be sold pursuant to an over-
allotment option granted to the underwriters). The Company withdrew the
registration statement due to adverse market conditions.
YEAR 2000 COMPATIBILITY
The Company relies on computer systems, related software applications
and other control devices in operating and monitoring certain aspects of
its business, including but not limited to, its financial systems (such
as general ledger and accounts payable modules), billing and
reservations systems, internal networks, telecommunications equipment
and shipboard navigational systems and equipment. The Company also
relies, directly and indirectly, on the internal and external systems of
various independent business enterprises, such as its suppliers, third-
party contractors, customers and financial organizations for their
accurate exchange with the Company and use in general operations of date
related information.
The Company has initiated a Year 2000 compliance program. As part of
its compliance program, the Company has developed a plan to: (1)
identify all "business-critical" software that requires modification for
the Year 2000 and complete an estimate of the time and other resources
required to complete software
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<PAGE>
modifications; (2) receive written or oral confirmation from its
"business-critical" vendors that the services or equipment supplied by
such vendors is or will be Year 2000 compliant; (3) institute a formal
communication process to keep senior management and the Board of
Directors of the Company apprised of significant Year 2000 issues; and
(4) develop a schedule for completing necessary Year 2000 modifications
in a timely manner. The Company has completed the inventory and
assessment phases and is in progress with the remediation, testing,
and implementation phases of its Year 2000 plan for "business-
critical" infrastructure and application software.
The Company's plan has been implemented through various phases,
depending upon the functional area and the internal or external nature
of the system involved. For internal systems, the Company has
progressed furthest and is generally in the testing and implementation
phase, notably for its internally-developed passenger billing and
reservation system. Much of this application has been tested and
implemented. The remaining "business critical" modules are in the
testing phase and will be implemented during the third quarter of 1999.
A substantial portion of the other office-based software and hardware is
believed to be Year 2000 compliant based upon vendor representations,
with systems testing in progress. The Company has completed the
inventory, assessment and detailed analysis phases of its Year 2000 plan
for ship-based "business-critical" navigational and operational
equipment and systems. Management believes these "business-critical"
systems for the Company's four ships were Year 2000 compliant as of June
30, 1999.
The Company believes that the final phases of its Year 2000 plan will be
completed in advance of December 31, 1999. The Company has not incurred
and, based upon the information available to the Company at this time,
does not expect to incur significant expenditures to address the Year
2000 issue. Year 2000 expenses to the Company, consisting primarily of
personnel time, the accelerated replacement of systems and software, and
outside consultation have totaled less than $0.2 million for the three
years ended December 31, 1998. Year 2000 expenses for the six months
ended June 30, 1999, totaled less than $0.1 million. Projected costs to
the Company for the completion of its Year 2000 program are expected to
be less than $0.6 million. The Company does not believe that its Year
2000 program has resulted in or will result in the postponement of its
other significant information technology projects.
As part of its Year 2000 program, the Company plans to complete a
contingency plan in 1999 which addresses the most reasonably likely
"business-critical" worst-case scenarios. However, the Company cannot
be certain that third parties supporting the Company's systems or
providing goods and services to the Company have resolved or will
resolve all Year 2000 issues in a timely manner. There can be no
assurance that third parties will achieve timely Year 2000 compliance.
Failure by the Company or any such third party to successfully address
the relevant Year 2000 issues could result in disruptions to the
Company's business and the incurrence of significant expenses by the
Company. Additionally, the Company could be adversely affected by any
disruption to third parties with which the Company does business if
suppliers of goods and services to those third parties have not
successfully addressed their Year 2000 issues.
* * *
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this Form 10-Q which contain more than historical
information may be considered forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995)
which are subject to risks and uncertainties.
Forward-looking statements 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 unanticipated catastrophic events; changes in program
costs and fluctuations of currency exchange
13
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<PAGE>
rates; loss of key travel suppliers; ongoing access to the Concorde in
the United States; competition within the travel industry; loss of key
personnel; liability claims by travelers; loss of one or more of the
Company's ships; regulations relative to the operation of passenger
vessels and charters; Year 2000 risks; general economic conditions; and
other risks described from time to time in the Company's filings with
the Securities and Exchange Commission. In addition, the forward-
looking statements assume the continued operation of our three ships
consistent with their recent capacities and cruise price levels, and the
commencement of operations of the M/S Clipper Odyssey in November 1999.
These forward-looking statements represent the Company's judgment as of
the date hereof.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
(a) The Company's principal interest rate risk is associated with its
long-term debt. The Company has a $32.5 million revolving credit
facility with a bank which expires on November 1, 2003. The
Company may select among various borrowing arrangements with
varying maturities and interest rates. During the first six
months of 1999, the annual interest rates on the borrowings ranged
from 6.4% to 6.9%. Assuming a hypothetical 1% increase in the
weighted-average interest rate during the first six months of
1999, interest expense would have increased $63 thousand.
The Company enters into non-U.S. currency commitments for the
charter of cruise ships and aircraft for its international travel
programs. The Company may enter into forward contracts to buy
foreign currency at a stated U.S. dollar amount to hedge against
fluctuating currency values. As of June 30, 1999, the Company had
non-U.S. currency commitments equivalent to $1.5 million, of which
the Company has purchased forward contracts with a U.S. dollar
equivalency of $1.5 million. Therefore, management believes the
fluctuations in currency values would not have a material effect
on the Company's cash flows or earnings.
14
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<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
- ------------------------------------------------------------------------------
(a) The Annual Meeting of Shareholders of Registrant was held on
May 21, 1999. Of 5,114,200 shares issued, outstanding and
eligible to be voted at the meeting, more than a majority of
the shares, constituting a quorum, were represented in
person or by proxy at the meeting. One matter was submitted
to a vote of the security holders at the meeting, the
election of two Class I directors, each to continue in
office until the year 2002. Upon tabulation of the votes
cast, it was determined that both nominees had been elected.
The voting results are as set forth below:
(b) Because Registrant has a staggered Board, the term of office
of the following named Class II and Class III directors, who
were not up for election at the 1999 Annual Meeting,
continued after the meeting:
Class II (to continue in office until 2000):
Paul H. Duynhouwer
Robert H. Chapman
Class III (to continue in office until 2001):
Barney A. Ebsworth
John B. Biggs, Jr.
(c) The following nominees for election as director received the
votes indicated:
Name For Withheld Abstain
---- --- -------- -------
William H. T. Bush 4,995,191 18,074 0
Wayne L. Smith II 4,994,791 18,474 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------------
(a) EXHIBITS.
2(i) Agreement and Plan of Merger, dated as of July 16, 1999, by
and among Kuoni Reisen Holding AG, Diamond Holding Delaware,
Inc., Diamond Acquisition Subsidiary Missouri, Inc. and
Intrav, Inc., filed as Exhibit 2.1 to the Registrant's
Current Report on Form 8-K, dated July 16, 1999, is
incorporated herein by reference.
15
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<PAGE>
3(i)(a) Restated Articles of Incorporation of the Registrant, filed
as Exhibit 3(i) to the Registrant's Registration Statement
on Form S-1 (No. 33-90444), is incorporated herein by
reference.
3(i)(b) Amendment to Restated Articles of Incorporation of the
Registrant, filed as Exhibit 3(i)(b) to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.
3(ii)(a) Amended and Restated Bylaws of the Registrant, filed as
Exhibit 3(ii) to the Registrant's Registration Statement on
Form S-1 (No. 33-90444), is incorporated herein by
reference.
3(ii)(b) Amendment to Amended and Restated Bylaws of the Registrant.
10(i) Amendment No. 2 to Loan Agreement, dated June 15, 1999, by
and between the Registrant and Nations Bank, N.A.
27(i) Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
The Registrant filed no Current Reports on Form 8-K during the
quarter ended June 30, 1999. However, a Current Report on Form 8-K was
filed on July 22, 1999. Under Item 5 in that Report, the Registrant
disclosed that on July 16, 1999, the Registrant entered into an
Agreement and Plan of Merger with Kuoni Reisen Holding AG, a Swiss
corporation incorporated in the Canton of Zurich, Switzerland ("Kuoni"),
Diamond Holding Delaware, Inc., a Delaware corporation, and Diamond
Acquisition Subsidiary Missouri, Inc., a Missouri corporation and wholly
owned subsidiary of Kuoni ("Acquisition"), pursuant to which Acquisition
will be merged with and into Intrav (the "Merger"). In accordance with
the Merger Agreement, each share of Intrav common stock, $.01 par value
(the "Intrav Common Stock"), outstanding immediately prior to the
effective time of the Merger (the "Effective Time") will be converted
into the right to receive $21.32 (the "Merger Consideration"). In
addition, at the Effective Time, each right with respect to Intrav
Common Stock pursuant to a stock option outstanding at the Effective
Time, whether or not then exercisable, will be converted into the right
to receive an amount in cash equal to the product of the number of
shares of Intrav Common Stock subject to the option and the difference,
if any, between the Merger Consideration and the exercise price of such
option. The Form 8-K also briefly described the terms of a Majority
Shareholder Agreement, dated as of July 16, 1999, pursuant to which The
Revocable Trust of Barney A. Ebsworth, dated July 23, 1986, as amended
(the "Trust"), which has voting power over approximately 74.8% of the
outstanding shares of Intrav Common Stock, based upon 5,114,200 shares
of Intrav Common Stock outstanding on July 16, 1999, agreed to vote all
shares of Intrav Common Stock held by the Trust in favor of the Merger
Agreement and the Merger. In addition, the Trust granted to Kuoni an
irrevocable option to purchase at a price of $21.32 per share, under
certain circumstances, up to 24.9% of the total number of shares of
Intrav Common Stock outstanding on the date of exercise of the option.
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<PAGE>
Under Item 7 of the Form 8-K, the following documents were filed as
exhibits thereto:
2.1 Agreement and Plan of Merger, dated as of July 16, 1999, by
and among Kuoni Reisen Holding AG, Diamond Holding Delaware,
Inc., Diamond Acquisition Subsidiary Missouri, Inc. and
Intrav, Inc.
2.2 Majority Shareholder Agreement, dated as of July 16, 1999,
by and among Kuoni Reisen Holding AG and The Revocable Trust
of Barney A. Ebsworth, dated July 23, 1986, as amended and
Barney A. Ebsworth.
99.1 Text of press release, dated July 16, 1999, issued by
Intrav, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTRAV, INC.
(Registrant)
Date: August 3, 1999 /s/ Wayne L. Smith II
-------------------------------------
Wayne L. Smith II
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
17
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2(i) Agreement and Plan of Merger, dated as of July 16, 1999, by
and among Kuoni Reisen Holding AG, Diamond Holding Delaware,
Inc., Diamond Acquisition Subsidiary Missouri, Inc. and
Intrav, Inc., filed as Exhibit 2.1 to the Registrant's
Current Report on Form 8-K, dated July 16, 1999, is
incorporated herein by reference.
3(i)(a) Restated Articles of Incorporation of the Registrant, filed
as Exhibit 3(i) to the Registrant's Registration Statement
on Form S-1 (No. 33-90444), is incorporated herein by
reference.
3(i)(b) Amendment to Restated Articles of Incorporation of the
Registrant, filed as Exhibit 3(i)(b) to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.
3(ii)(a) Amended and Restated Bylaws of the Registrant, filed as
Exhibit 3(ii) to the Registrant's Registration Statement on
Form S-1 (No. 33-90444), is incorporated herein by
reference.
3(ii)(b) Amendment to Amended and Restated Bylaws of the Registrant.
10(i) Amendment No. 2 to Loan Agreement, dated June 15, 1999, by
and between the Registrant and Nations Bank, N.A.
27(i) Financial Data Schedule.
18
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AMENDMENT TO THE AMENDED AND RESTATED BY-LAWS
OF INTRAV, INC.
The undersigned, being the duly appointed Assistant Secretary of
Intrav, Inc., a Missouri corporation, hereby certifies that, as of this
16th day of July, 1999, the Amended and Restated By-Laws, as amended, of
Intrav, Inc. (the "Amended and Restated Bylaws") were amended as
follows:
1. Article XV of the Amended and Restated Bylaws is deleted and
replaced in its entirety to read as follows:
ARTICLE XV
----------
FOREIGN OWNERSHIP OF STOCK
--------------------------
For purposes of determining compliance with the citizenship
requirements of the Merchant Marine Act of 1936, as amended, the
Shipping Act of 1916, as amended, and the regulations promulgated
thereunder, pursuant to Section H of Article Eleven of the Amended
and Restated Articles of Incorporation of the Corporation, as amended
(the "Restated Articles"), the following regulations and procedures
shall apply:
1. Beneficial Ownership. The Majority Shareholder Agreement,
--------------------
dated as of July 16, 1999, by and among Kuoni Reisen Holding AG
("Kuoni"), Diamond Holding Delaware, Inc. ("Diamond Holding"),
Diamond Acquisition Subsidiary Missouri, Inc. ("Diamond Acquisition"),
The Revocable Trust of Barney A. Ebsworth, dated July 23, 1986, as
amended (the "Trust"), and Barney A. Ebsworth (the "Majority Shareholder
Agreement") and any amendment thereto or any similar agreement to vote
by the Trust which is entered into in conjunction with the Corporation's
execution and delivery of the Agreement and Plan of Merger, dated as of
July 16, 1999, by and among Kuoni, Diamond Holding, Diamond Acquisition
and the Corporation or any amendment thereto (the "Merger Agreement"),
shall not result in Kuoni, Diamond Holding, Diamond Acquisition or
any affiliate thereof being deemed a "Beneficial Owner" of the
shares of the Corporation's capital stock held by the Trust for
purposes of Article Eleven of the Restated Articles.
2. Excess Shares. For purposes of calculating "Excess
-------------
Shares" pursuant to Section D of Article 11 of the Restated
Articles, if Kuoni, Diamond Holding or Diamond Acquisition
exercises the option granted to it by the Trust, July 16, 1999
(the date of the Majority Shareholder Agreement) shall be deemed
to be the date of acquisition of the shares of the Corporation's
common stock
<PAGE>
<PAGE>
purchased by Kuoni, Diamond Holding or Diamond Acquisition
pursuant to that option.
2. The following Article is added to the Amended and Restated
Bylaws as Article XVI:
ARTICLE XVI
-----------
CONTROL SHARE ACQUISITION STATUTE
---------------------------------
The acquisition of shares of the Corporation's common stock by Diamond
Acquisition, Diamond Holding or Kuoni pursuant to the Merger Agreement
or pursuant to the exercise of the option granted by the Trust pursuant
to the Majority Shareholder Agreement shall be deemed not to constitute
a "control share acquisition" of the Corporation's common stock for
purposes of Section 351.407 of The General and Business Corporation Law
of Missouri.
/s/ Vanessa M. Tegethoff
-----------------------------------------------
Vanessa M. Tegethoff, Assistant Secretary
- 2 -
<PAGE>
AMENDMENT NUMBER TWO
TO
LOAN AGREEMENT
EFFECTIVE OCTOBER 30, 1998
BY AND BETWEEN
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. ("Lender") agree as
follows:
1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan
Agreement" means the Loan Agreement effective October 30, 1998, between
Borrower and Lender, as amended by Amendment Number One thereto
effective January 18, 1999. 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 as of June 15, 1999.
3. AMENDMENTS TO ORIGINAL LOAN AGREEMENT. The Original Loan
Agreement is amended as follows:
3.1. REVOLVING COMMITMENT. Sections 3.1.1 and 3.1.2 of the
Original Loan agreement is replaced entirely with the following:
"3.1.1 ADVANCES. Subject to the limitations in Section
3.1.2 and elsewhere herein, Lender commits to make available
from the Effective Date to the Maturity Date, a revolving
credit facility available as Advances made from time to time
as provided herein. Subject to the limitations in Section
3.1.2 and elsewhere herein, payments and prepayments that
are applied to reduce the Revolving Loan may be re-borrowed.
The amount of the Revolving Commitment initially will be
$32,500,000, but will reduce automatically to a lesser
Dollar amount on certain dates as listed in the table below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Effective Date of Reduction Reduction New Revolving Commitment
------------------------------------------------------------------------
<S> <C> <C>
December 31, 1999 $2,000,000 $30,500,000
------------------------------------------------------------------------
December 31, 2000 $5,000,000 $25,500,000
------------------------------------------------------------------------
December 31, 2001 $5,000,000 $20,500,000
------------------------------------------------------------------------
December 31, 2002 $3,000,000 $17,500,000
------------------------------------------------------------------------
</TABLE>
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Borrower may also reduce the amount of the Revolving
Commitment in whole multiples of $1,000,000 at any time and
from time to time, but only if (i) Borrower gives Lender
written notice of Borrower's intention to make such
reduction at least one Business Day prior to the effective
date of the reduction, and (ii) Borrower makes on the
effective date of the reduction any payment on the Revolving
Loan required under Section 7.2 as a consequence of the
reduction and any amount that may be due to Lender under
Section 18.4. Any such reduction of the amount of the
Revolving Commitment, whether scheduled or voluntary, shall
be permanent.
3.1.2 LIMITATION ON ADVANCES. No Advance will be made which
would result in the Revolving Loan exceeding the Maximum
Available Amount and no Advance will be made on or after the
Maturity Date. Lender may, however, in its absolute
discretion make such Advances, but shall not be deemed by
doing so to have increased the Maximum Available Amount and
shall not be obligated to make any such Advances thereafter.
At any time that there is an Existing Default, the Revolving
Commitment may be canceled as provided in Section 17.2. The
"Maximum Available Amount" on any date shall be a Dollar
amount equal to (i) the amount of the Revolving Commitment
on such date, minus (ii) the Letter of Credit Exposure
(except to the extent that such Advance will be used
immediately to reimburse Lender for unreimbursed draws on a
Letter of Credit). No Advance will be made which would
cause the ratio of the Revolving Loan to the from time to
time most recently appraised value of the Vessels in which
Lender has a first priority Security Interest to exceed
2/3."
3.2. LETTER OF CREDIT COMMITMENT. The amount of the Letter of
Credit Commitment stated in Section 3.2 of the Original Loan
Agreement is changed from $2,500,000 to $17,500,000.
3.3. SECURITY AND GUARANTIES. The following covenant is added as
Section 14.16A to the Original Loan Agreement:
"14.16A. Borrower covenants and agrees that prior to
October 15, 1999, (i) Borrower shall execute and deliver to
Lender, or cause to be executed and delivered to Lender by
the appropriate Person, ratifications of the existing
guaranties, satisfactory to Lender, by all of the domestic
Subsidiaries of Borrower under which they have guarantied
the timely and full payment and performance of all of the
Loan Obligations, and (ii) Borrower shall execute and
deliver to Lender one or more Security Agreements, or
amendments of existing security agreements, that are
satisfactory to Lender and grant or confirm existing grants
to Lender of Security Interests under the UCC in all stock
held by Borrower of the domestic Subsidiaries of Borrower
and 65% of the outstanding stock of the non-domestic
Subsidiaries of Borrower."
4. 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) all of the representations and
warranties contained in Section 12 of the Original Loan Agreement 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
2
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<PAGE>
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.
5. 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.
6. 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) 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 continue in full force and effect and have the same priority
as before this Amendment, and (iv) Borrower has no claim against Lender
arising from or in connection with the Loan Agreement or the other Loan
Documents.
7. 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.
8. 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.
9. REPRODUCTIONS AS EVIDENCE. This Amendment, the Original Loan
Agreement, and the other Loan Documents, including but not limited to
(a) consents, waivers, amendments, and modifications which may hereafter
be executed, and (b) financial statements, certificates and other
-
information previously or hereafter furnished to Lender, may be
reproduced by Lender by any photographic, photostatic, microfilm,
microcard, miniature photographic, computer imaging or other similar
process and may destroy any original document so reproduced. Any such
reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made in the
regular course of business of lender) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
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.
3
<PAGE>
<PAGE>
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.
13. 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.
[SIGNATURE PAGE FOLLOWS]
4
<PAGE>
<PAGE>
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.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President by its Senior Vice President
and Chief 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
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0
0
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