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 June 30, 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
-------------------------------- -------------------
(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, 10,219,803 shares outstanding as of August 7, 2001
1
MARITRANS INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - June 30, 2001 and December 31, 2000 3
Condensed Consolidated Statements of Income - Three months ended June 30, 2001
and 2000 4
Condensed Consolidated Statements of Income - Six months ended June 30, 2001
and 2000 5
Condensed Consolidated Statements of Cash Flows - Six months
ended June 30, 2001 and 2000 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
PART I: FINANCIAL INFORMATION
MARITRANS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000)
June 30, December 31,
2001 2000
-------------------------
(Unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 29,834 $ 36,598
Cash and cash equivalents - restricted 4,457 11,400
Trade accounts receivable 9,030 9,505
Other accounts receivable 4,866 4,279
Inventories 2,850 3,182
Deferred income tax benefit 9,176 9,176
Prepaid expenses 2,693 2,067
-------- --------
Total current assets 62,906 76,207
Vessels and equipment 285,350 289,447
Less accumulated depreciation 135,341 133,838
-------- --------
Net vessels and equipment 150,009 155,609
Note receivable 4,431 4,724
Other 4,360 5,820
-------- --------
Total assets $221,706 $242,360
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year $ 6,896 $ 7,872
Trade accounts payable 1,156 1,242
Accrued interest 763 1,052
Accrued shipyard costs 7,303 7,971
Accrued wages and benefits 3,132 2,527
Other accrued liabilities 4,562 8,552
-------- --------
Total current liabilities 23,812 29,216
Long-term debt 55,784 67,988
Deferred shipyard costs 10,954 11,956
Other liabilities 3,723 3,757
Deferred income taxes 38,997 38,997
Stockholders' equity 88,436 90,446
-------- --------
Total liabilities and stockholders' equity $221,706 $242,360
======== ========
See notes to financial statements.
3
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($000, except per share amounts)
April 1 to April 1 to
June 30, 2001 June 30, 2000
-------------------------------
Revenues $ 31,834 $ 28,053
Costs and expenses:
Operation expense 16,325 15,797
Maintenance expense 3,780 4,567
General and administrative 1,911 2,016
Depreciation and amortization 4,482 4,308
-------- --------
Total operating expense 26,498 26,688
-------- --------
Operating income 5,336 1,365
Interest expense (1,392) (1,580)
Other income 820 376
-------- --------
Income before income taxes 4,764 161
Income tax provision 1,810 85
-------- --------
Net income $ 2,954 $ 76
======== ========
Basic earnings per share $ 0.29 $ 0.01
Diluted earnings per share $ 0.28 $ 0.01
Dividends declared per share $ 0.10 $ 0.10
See notes to financial statements.
4
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($000, except per share amounts)
January 1 to January 1 to
June 30, 2001 June 30, 2000
---------------------------------
Revenues $ 63,401 $ 58,724
Costs and expenses:
Operation expense 32,966 33,975
Maintenance expense 7,488 10,056
General and administrative 3,801 4,105
Depreciation and amortization 8,913 8,557
-------- --------
Total operating expense 53,168 56,693
-------- --------
Operating income 10,233 2,031
Interest expense (2,987) (3,313)
Other income, net 1,809 1,391
-------- --------
Income before income taxes 9,055 109
Income tax provision 3,441 100
-------- --------
Net income $ 5,614 $ 9
======== ========
Basic earnings per share $ 0.55 $ 0.00
Diluted earnings per share $ 0.52 $ 0.00
Dividends declared per share $ 0.20 $ 0.20
See notes to financial statements.
5
MARITRANS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($000)
Six Months Ended June 30,
2001 2000
------------------------
Cash flows from operating activities:
Net income $ 5,614 $ 9
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 8,913 8,557
Deferred income tax provision -- 110
Stock compensation 311 492
Changes in receivables, inventories and prepaid expenses (406) 5,431
Changes in current liabilities, other than debt (4,427) (2,586)
Non-current changes, net (1,756) 2,096
(Gain) loss on sale of fixed assets (172) 637
-------- --------
2,463 14,737
-------- --------
Net cash provided by operating activities 8,077 14,746
Cash flows from investing activities:
Release of cash and cash equivalents - restricted 9,043 11,174
Collections on notes receivable 233 --
Cash proceeds from sale of equipment 175 165
Purchase of vessels and equipment (3,177) (3,796)
-------- --------
Net cash provided by investing activities 6,274 7,543
-------- --------
Cash flows from financing activities:
Payment of long-term debt (13,180) (9,605)
Purchase of treasury stock (5,826) (2,810)
Proceeds from exercise of stock options 4 129
Dividends declared and paid (2,113) (2,299)
-------- --------
Net cash used in financing activities (21,115) (14,585)
-------- --------
Net increase (decrease) in cash and cash equivalents (6,764) 7,704
Cash and cash equivalents at beginning of period 36,598 13,232
-------- --------
Cash and cash equivalents at end of period $ 29,834 $ 20,936
======== ========
See notes to financial statements
6
MARITRANS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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.
7
2. Earnings per Common Share
The following data show the amounts used in computing basic and diluted
earnings per share ("EPS"):
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
(000's) (000's)
Income available to common stockholders
used in basic EPS $ 2,954 $ 76 $ 5,614 $ 9
Weighted average number of common
shares used in basic EPS 10,023 11,018 10,175 11,229
Effect of dilutive securities:
Stock options and restricted shares 537 334 598 279
Weighted number of common shares
and dilutive potential common
stock used in diluted EPS 10,560 11,352 10,773 11,508
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. This amount represented approximately 8 percent of the
12.1 million shares outstanding at the beginning of the program. 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 June 30, 2001, 2,258,700 shares have been repurchased
under the plan and were 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 adoption was not material to the Company.
8
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.
9
Results of Operations
---------------------
Three Month Comparison
----------------------
Revenues of $31.8 million in the second quarter of 2001 increased $3.7 million
or 13 percent compared to $28.1 million in the second quarter of 2000. Revenues
increased as a result of high utilization and market rates. Vessel utilization,
as measured by revenue days divided by calendar days available, increased from
81.5 percent in the second quarter of 2000 to 87.1 percent in the second quarter
of 2001. This increase was due primarily to the MARITRANS 244, which was working
during the second quarter of 2001 and was out of service in the second quarter
of 2000 for its double hull rebuild. The average daily rate was higher than in
the comparable period in 2000 as a result of higher market rates, which began
late in 2000 and continued through the second quarter of 2001. Barrels of cargo
transported increased from 47.5 million in the second quarter of 2000 to 48.9
million in the second quarter of 2001. Looking forward to the third quarter of
2001, the Company expects the market rates will be at a level consistent with
the same period in 2000. The OCEAN CITIES went out of service late in the second
quarter of 2001 for its double hull rebuild and is expected to return to service
late in the fourth quarter. The Company expects this out of service time to
decrease utilization and possibly cause a reduction of revenues for the
remainder of 2001.
Operating expenses decreased from $26.7 million in the second quarter of 2000 to
$26.5 million in the first quarter of 2001, a decrease of $0.2 million or 1
percent. Crew costs increased as a result of a higher volume of seminars and
training that took place in 2001 compared to 2000. Due to the increase in
utilization discussed in revenue above, port charges and fuel costs increased
compared to the same quarter of 2000. Fuel prices also increased 9% over the
comparable quarter in 2000. During the second quarter of 2001 but at different
non-overlapping times, two of the Company's tankers were under contracts that
pass through fuel and other voyage costs directly to the customer, offsetting
the above mentioned increases. The tankers were not under the same form of
contract in the comparable period of 2000. Overall 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. In the second quarter of 2000, the Company
had incurred $0.2 million in relocation costs as a result of moving the
corporate headquarters from Philadelphia, PA to Tampa, FL.
Operating income increased as a result of the aforementioned changes in revenue
and expenses.
Other income in the second quarter of 2001 includes interest income of $0.6
million and a pre-tax gain of $0.2 million on the sale of a barge. Other income
in the second quarter of 2000 included interest income of $1.0 million offset by
a pre-tax loss of $0.7 million on the sale of Philadelphia real estate and
equipment. Interest income decreased as a result of lower interest rates and a
lower cash balance compared to the same period in 2000.
10
Net income for the second quarter of 2001 increased compared to the second
quarter of 2000 due to the aforementioned changes in revenue and expenses.
Six Month Comparison
--------------------
Revenues of $63.4 million in the six months ended June 30, 2001 increased
compared to $58.7 million in the six months ended June 30, 2000, an increase of
$4.7 million or 8 percent. Vessel utilization, as measured by revenue days
divided by calendar days available, of 87.4 percent in the six months ended June
30, 2001 remained consistent with the comparable period of 2000 utilization of
86.4 percent. The average daily rate was higher than in the comparable period in
2000 as a result of higher market rates, which began late in 2000 and has
continued in the first half of 2001. Barrels of cargo transported decreased from
96.0 million in the six months ended June 30, 2000 to 95.1 million in the six
months ended June 30, 2001. Looking forward to the remainder of 2001, the
Company believes steady gasoline inventories and distillate demand will cause
market rates to be at a level consistent with the second half of 2000,
reflecting the continuing strong market. The OCEAN CITIES went out of service
late in the second quarter of 2001 for its double hull rebuild and is expected
to return to service late in the fourth quarter. The Company expects this out of
service time to decrease utilization and possibly cause a reduction of revenues
for the remainder of 2001.
Operating expenses decreased from $56.7 million in the six months ended June 30,
2000 to $53.2 million in the six months ended June 30, 2001, a decrease of $3.5
million or 6 percent. Crew costs increased as a result of a higher volume of
seminars and training that took place in 2001 compared to 2000. During the first
half of 2001 but at different non-overlapping times, two of the Company's
tankers were under a contract that passes through fuel and other voyage costs
directly to the customer, resulting in a reduction of these expenses. The
tankers were not under the same form of contract in the comparable period of
2000. Offsetting this decrease was a 10% increase in fuel prices over the
comparable period in 2000. Overall 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. In the first half of 2000, the Company had incurred $0.6 million
in relocation costs as a result of moving the corporate headquarters from
Philadelphia, PA to Tampa, FL.
Operating income increased as a result of the aforementioned changes in revenue
and expenses.
Other income in the six months ended June 30, 2001 includes interest income of
$1.6 million and a pre-tax gain of $0.2 million on the sale of a barge. Other
income in the six months ended June 30, 2000 included interest income of $2.0
million offset by a pre-tax loss of $0.7 million on the sale of Philadelphia
real estate and equipment.
Net income for the six months ended June 30, 2001 increased compared to the six
months ended June 30, 2000 due to the aforementioned changes in revenue and
expenses.
11
Liquidity and Capital Resources
-------------------------------
For the six months ended June 30, 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, to
prepay $6 million of long term debt 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 .41:1 at June 30, 2001.
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 June 30, 2001, 2,258,700 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 June 30,
2001, $6.9 million has been paid to the shipyard contractor. The vessel entered
the shipyard in the second quarter of 2001 and is expected to return to service
late 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 June 30, 2001, the Company had $62.7 million in total outstanding debt,
secured by mortgages on most of the fixed assets of the Company. The current
portion of this debt at June 30, 2001 was $6.9 million.
The Company has a $33 million revolving credit facility with Mellon Bank, N.A.
that expires in October 2002. This facility is collateralized by mortgages on
the tankers. At June 30, 2001, $22 million was outstanding under this facility.
12
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 adoption was not material to the Company.
13
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 by the end of
2001. 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) Exhibits
10.7 Employment Agreement as amended and restated effective April 1,
2001, between Maritrans Inc. and Stephen A. Van Dyck
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the quarter ended June 30, 2001.
14
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: August 10, 2001
---------------------------------------
H. William Brown
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Walter T. Bromfield Dated: August 10, 2001
------------------------------------------
Walter T. Bromfield
Treasurer and Controller
(Principal Accounting Officer)
15