UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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 March 31, 2001
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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 1-9063
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MARITRANS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 51-0343903
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(State or other jurisdiction of (Identification No.
incorporation or organization) I.R.S. Employer)
TWO HARBOUR PLACE
302 KNIGHTS RUN AVENUE
SUITE 1200
TAMPA, FLORIDA 33602
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(Address of principal executive offices)
(Zip Code)
(813) 209-0600
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Registrant's telephone number, including area code
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes X No
--- ---
Common Stock $.01 par value, 10,503,143 shares outstanding as of May 3, 2001
MARITRANS INC.
INDEX
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 2001 and December 31, 2000 3
Condensed Consolidated Statements of Operations - Three months ended March 31,
2001 and 2000 4
Condensed Consolidated Statements of Cash Flows - Three months ended March 31,
2001 and 2000 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000)
March 31, December 31,
2001 2000
-------------------------------
(Unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 46,197 $ 36,598
Cash and cash equivalents - restricted 3,880 11,400
Trade accounts receivable 8,998 9,505
Other accounts receivable 4,643 4,279
Inventories 2,793 3,182
Deferred income tax benefit 9,176 9,176
Prepaid expenses 1,676 2,067
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Total current assets 77,363 76,207
Vessels and equipment 290,462 289,447
Less accumulated depreciation 138,201 133,838
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Net vessels and equipment 152,261 155,609
Note receivable 4,607 4,724
Other 3,958 5,820
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Total assets $ 238,189 $ 242,360
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year $ 7,884 $ 7,872
Trade accounts payable 954 1,242
Accrued interest 2,104 1,052
Accrued shipyard costs 7,673 7,971
Accrued wages and benefits 3,192 2,527
Other accrued liabilities 5,500 8,552
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Total current liabilities 27,307 29,216
Long-term debt 67,638 67,988
Deferred shipyard costs 11,509 11,956
Other liabilities 3,674 3,757
Deferred income taxes 38,997 38,997
Stockholders' equity 89,064 90,446
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Total liabilities and stockholders' equity $ 238,189 $ 242,360
========= =========
See notes to financial statements.
3
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($000, except per share amounts)
Three Months Ended March 31,
2001 2000
----------------------------------
Revenues $ 31,567 $ 30,671
Costs and expenses:
Operation expense 16,641 18,178
Maintenance expense 3,708 5,489
General and administrative 1,890 2,089
Depreciation and amortization 4,431 4,248
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Total operating expense 26,670 30,004
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Operating income 4,897 667
Interest expense (1,595) (1,733)
Other income 989 1,014
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Income (loss) before income taxes 4,291 (52)
Income tax provision 1,631 15
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Net income (loss) $ 2,660 $ (67)
Basic earnings (loss) per share $ 0.26 $ (0.01)
Diluted earnings (loss) per share $ 0.24 $ (0.01)
Dividends declared per share $ 0.10 $ 0.10
See notes to financial statements.
4
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000)
Three Months Ended March 31,
2001 2000
----------------------------
Cash flows from operating activities:
Net income (loss) $ 2,660 $ (67)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,431 4,248
Deferred income tax provision - 24
Stock compensation 269 211
Changes in receivables, inventories and prepaid expenses 923 5,918
Changes in current liabilities, other than debt (1,920) (1,206)
Non-current changes, net (837) 2,182
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2,866 11,377
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Net cash provided by operating activities 5,526 11,310
Cash flows from investing activities:
Release of cash and cash equivalents - restricted 9,620 -
Collections on notes receivable 117 -
Purchase of vessels and equipment (1,015) (267)
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Net cash provided by (used in) investing activities 8,722 (267)
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Cash flows from financing activities:
Payment of long-term debt (338) (274)
Purchase of treasury stock (3,238) (1,443)
Proceeds from exercise of stock options 4 129
Dividends declared and paid (1,077) (1,152)
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Net cash provided by (used in) financing activities (4,649) (2,740)
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Net increase in cash and cash equivalents 9,599 8,303
Cash and cash equivalents at beginning of period 36,598 13,232
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Cash and cash equivalents at end of period $ 46,197 $ 21,535
======== ========
See notes to financial statements
5
MARITRANS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
1. Basis of Presentation/Organization
Maritrans Inc. owns Maritrans Operating Partners L.P. ("the Operating
Partnership"), Maritrans General Partner Inc., Maritrans Tankers Inc.,
Maritrans Barge Co., Maritrans Holdings Inc. and other Maritrans entities
(collectively, the "Company"). These subsidiaries, directly and indirectly,
own and operate oil tankers, tugboats and oceangoing petroleum tank barges
principally used in the transportation of oil and related products, along the
Gulf and Atlantic coasts.
In the opinion of management, the accompanying condensed consolidated
financial statements of Maritrans Inc., which are unaudited (except for the
Condensed Consolidated Balance Sheet as of December 31, 2000, which is
derived from audited financial statements), include all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial statements of the consolidated entities.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the unaudited condensed consolidated financial statements do not
include all of the information and notes normally included with annual
financial statements prepared in accordance with generally accepted
accounting principles. These financial statements should be read in
conjunction with the consolidated historical financial statements and notes
thereto included in the Company's Form 10-K for the period ended December 31,
2000.
6
2. Earnings per Common Share
The following data shows the amounts used in computing basic and diluted
earnings per share ("EPS"):
Three Months Ended March 31,
2001 2000
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(000's)
Income (loss) available to common stockholders
used in basic EPS $ 2,660 $ (67)
Weighted average number of common
shares used in basic EPS 10,328 11,308
Effect of dilutive securities:
Stock options and restricted shares 660 0
Weighted number of common shares
and dilutive potential common
stock used in diluted EPS 10,988 11,308
3. Income Taxes
The Company's effective tax rate differs from the federal statutory rate due
primarily to state income taxes and certain nondeductible items.
4. Share Buyback Program
On February 9, 1999, the Board of Directors authorized a share buyback
program for the acquisition of up to one million shares of the Company's
common stock. In February 2000 and again in February 2001, the Board of
Directors authorized the acquisition of an additional one million shares in
the program. The total authorized shares under the program are three million.
As of March 31, 2001, 1,966,700 shares have been repurchased under the plan
and have been financed from internally generated funds.
5. Impact of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("Statement 133"). Statement 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. The Company adopted
Statement 133 on January 1, 2001, and the effect of the adoption was not
material to the Company.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Information
---------------------------
Some of the statements in this Form 10-Q (this "10-Q") constitute
forward-looking statements under Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements made with respect to present or anticipated utilization,
future revenues and customer relationships, capital expenditures, future
financings, and other statements regarding matters that are not historical
facts, and involve predictions. These statements involve known and unknown
risks, uncertainties and other factors that may cause actual results, levels of
activity, growth, performance, earnings per share or achievements to be
materially different from any future results, levels of activity, growth,
performance, earnings per share or achievements expressed in or implied by such
forward-looking statements.
The forward-looking statements included in this 10-Q relate to future events or
the Company's future financial performance. In some cases, the reader can
identify forward-looking statements by terminology such as "may," "believe,"
"future," "potential," "estimate," "expect," "intend," "plan," "through,"
"provide," "meet," "allow," "represent," "result," "seek," "increase," "work,"
"perform," "make," "continue," "will," "include," or the negative of such terms
or comparable terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the Company's
current plans or assessments that are believed to be reasonable as of the date
of this 10-Q. Factors that may cause actual results, goals, targets or
objectives to differ materially from those contemplated, projected, forecast,
estimated, anticipated, planned or budgeted in such forward-looking statements
include, among others, the factors outlined in this 10-Q and general financial,
economic, environmental and regulatory conditions affecting the oil and marine
transportation industry in general. These factors may cause the Company's actual
results to differ materially from any forward-looking statement. Given such
uncertainties, current or prospective investors are cautioned not to place undue
reliance on any such forward-looking statements.
Although the Company believes that the expectations in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance, growth, earnings per share or achievements. However,
neither the Company nor any other person assumes responsibility for the accuracy
and completeness of such statements. The Company is under no duty to update any
of the forward-looking statements after the date of this 10-Q to conform such
statements to actual results.
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I Item 1 of this Form
10-Q and the audited financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 2000 contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
8
Results of Operations
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Three Month Comparison
----------------------
Revenues of $31.6 million in the first quarter of 2001 increased compared to
$30.7 million in the first quarter of 2000, an increase of $0.9 million or 3
percent. Vessel utilization, as measured by revenue days divided by calendar
days available, decreased from 91.2 percent in the first quarter of 2000 to 87.9
percent in the first quarter of 2001. The majority of the decrease in
utilization resulted from vessels being out of service for scheduled
maintenance. Although vessel utilization decreased, the average daily rate
increased over the same period in 2000. This increase is the result of higher
market rates, which began late in 2000 and continued into 2001. Rates increased
primarily due to the amount of capacity already under contract to customers and
to low distillate inventories in the United States. Barrels of cargo transported
decreased from 48.5 million in the first quarter of 2000 to 46.2 million in the
first quarter of 2001. Looking forward to the remainder of 2001, the Company
expects the market rates to continue at levels greater than those in 2000. We
believe this to be the result of low gasoline inventories in the United States,
high distillate demand and the continuation of the amount of capacity under
contract to customers. The OCEAN CITIES will be going out of service late in the
second quarter for its double hull rebuild. In addition, other vessels will be
in the shipyard for scheduled maintenance. This out of service time will
decrease the Company's utilization and could cause a reduction of revenues in
2001.
Operating expenses decreased from $30.0 million in the first quarter of 2000 to
$26.7 million in the first quarter of 2001, a decrease of $3.3 million or 11
percent. In the first quarter of 2001, one of the Company's tankers was under a
contract that passes through fuel and other voyage costs directly to the
customer. The tanker was not under the same form of contract in the comparable
period of 2000. As a result of this contract, fuel costs and port charges
decreased during the quarter. Port charges also decreased as a result of the
decrease in utilization discussed above. Maintenance expense decreased as a
result of the rebuilding of the single-hulled barges to double-hulled barges,
which allows certain procedures to be performed while the vessel is in the
shipyard for its double-hulling.
Operating income increased as a result of the aforementioned changes in revenue
and expenses.
Net income for the first quarter of 2001 increased compared to the first quarter
of 2000 due to the aforementioned changes in revenue and expenses.
Liquidity and Capital Resources
-------------------------------
For the three months ended March 31, 2001, funds provided by operating
activities were sufficient to meet debt service obligations and loan agreement
restrictions, to make capital acquisitions and improvements, to allow Maritrans
Inc. to pay a dividend of $0.10 per common share in the current quarter and to
make share repurchases. While dividends have been made quarterly in each of the
last three years, there can be no assurance that the dividend will continue. The
ratio of total debt to capitalization is .46:1 at March 31, 2001.
9
Management believes that in 2001, funds provided by operating activities,
augmented by financing and investing transactions, will be sufficient to finance
operations, anticipated capital expenditures, lease payments and required debt
repayments.
On February 9, 1999, the Board of Directors authorized a share buyback program
for the acquisition of up to one million shares of the Company's common stock.
This amount represented approximately 8 percent of the 12.1 million shares
outstanding at that time. In February 2000 and again in February 2001, the Board
of Directors authorized the acquisition of an additional one million shares in
the program. The total authorized shares under the buyback program are three
million. As of March 31, 2001, 1,966,700 shares have been repurchased under the
plan and have been financed from internally generated funds. The Company intends
to hold the majority of the shares as treasury stock, although some shares will
be used for employee compensation plans and others may be used for acquisition
currency and/or other corporate purposes.
On August 17, 2000, the Company awarded a contract to rebuild a third large
single hull barge, the OCEAN CITIES, to a double hull configuration, which is
expected to have a total cost of approximately $15.5 million. As of March 31,
2001, the Company has advanced $4.8 million on this project to the shipyard
contractor for prefabrication and other design work. The vessel is scheduled to
enter the shipyard in the second quarter of 2001 and is expected to return to
service in the fourth quarter of 2001. The Company has and expects to continue
the financing of this project from internally generated funds.
Debt Obligations and Borrowing Facility
---------------------------------------
At March 31, 2001, the Company had $75.5 million in total outstanding debt,
secured by mortgages on most of the fixed assets of the Company. The current
portion of this debt at March 31, 2001 was $7.9 million.
In 1997, Maritrans entered into a multi-year revolving credit facility for
amounts up to $33 million with Mellon Bank, N.A. This facility is collateralized
by mortgages on the tankers. In 2000, this facility was extended to October 30,
2002. At March 31, 2001, $22 million was outstanding under this facility.
10
Impact of Recent Accounting Pronouncements
------------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("Statement 133"). Statement 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Company adopted Statement 133 on
January 1, 2001, and the effect of the adoption was not material to the Company.
11
Part II: OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
In Maritrans Inc., et al v. United States, Maritrans sued the
United States in 1996 alleging that the double hull requirement
of the Oil Pollution Act of 1990 ("OPA") which requires
retirement of Maritrans' fleet of single-hulled barges, is a
"taking" under the fifth amendment to the U.S. Constitution.
Maritrans is seeking a total of approximately $200 million in
compensation for this taking. A trial was held in July 1997 on
the preliminary issue of whether Maritrans had a cognizable
property interest that could be subject to taking. The Court
ruled in favor of Maritrans.
In April 1999, the United States Court of Federal Claims ("the
Court") ruled that the case was "ripe" only with respect to
vessels that OPA had forced out of service, which would include
vessels that Maritrans had sold, scrapped, or rebuilt. A trial
was held in January 2001, with respect to eight of the Company's
barges that are "ripe". Maritrans alleges that the value of
these assets, for which compensation is currently due, is
approximately $73 million. The trial concluded on February 13,
2001. A decision is expected from the Court within the next few
months. If Maritrans prevails, claims for other of the Company's
barges will be the subject of future legal proceedings as the
vessels are forced from service by OPA.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Reports on Form 8-K
No reports on Form 8-K were filed in the quarter ended March 31,
2001.
12
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.
MARITRANS INC.
(Registrant)
By: /s/ H. William Brown Dated: May 8, 2001
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H. William Brown
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: May 8, 2001
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Walter T. Bromfield
Treasurer and Controller
(Principal Accounting Officer)
13