March 31, 2000
TRAILER BRIDGE INC (TRBR)
Annual Report (SEC form 10-K)
Item 7. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations
RESULTS OF OPERATIONS
Year ended December 31, 1999 Compared to Year ended December 31, 1998
Operating revenues increased $11.4 million, or 14.6%, to $88.6 million during
1999 from $77.2 million during 1998. This increase was due to a $10.7 million or
14.8% increase in total Puerto Rico revenue to $83.5 million through the
utilization of additional capacity in the Puerto Rico market. Non-Puerto Rico
revenue increased $575,627 or 12.9% compared to 1998. Core trailer volume to
Puerto Rico increased 25.9% in 1999 compared to 1998, and total car and other
volume increased 47.5% compared to 1998. As a result, core trailer revenue to
Puerto Rico increased $9.3 million or 21.3% and car and other revenue increased
$6.3 million or 40.7% compared to 1998. Revenue from shipper owned or leased
equipment moving to Puerto Rico decreased $411,776 or 8.4% from 1998. Revenue
from northbound shipments from Puerto Rico increased $853,386 or 10.2% from
1998.
While overall volume to and from Puerto Rico increased 16.4% in 1999, related
revenue increased only $10.7 million or 14.8% compared to 1998 implying, an
overall yield reduction of 1.4%. Vessel capacity deployed on the core
continental U.S. to Puerto Rico traffic lane increased 7.6% during 1999 compared
to 1998. Vessel capacity utilization on the core continental U.S. to Puerto Rico
traffic lane was 83.3% during 1999, compared to 77.4% during 1998.
In September 1998, Hurricane Georges struck Puerto Rico causing extensive
damage on the island. During this storm, the Company's floating loading ramp was
damaged. The Company contracted for the ramp to be re-floated and repaired. The
top section of the structure was partially removed. In January 1999 the ramp was
successfully re-floated. The ramp was repaired and returned to active cargo
operations for the first two decks in March 1999 and the third deck in May 1999
at which time normal operations resumed. The cost of re-floating the ramp
structure and its repair was insured and the Company received reimbursement of
these expenses, less a $50,000 deductible.
The inability to utilize the San Juan ramp necessitated alternative methods
of discharging and re-loading the two roll-on, roll-off vessels that nearly
quadrupled cargo operations time while at the same time reducing available
vessel space. The resulting schedule tightness and uncertainty exacerbated costs
beyond those directly related to San Juan cargo operations, including trucking
costs on the mainland. The Company's goal during this period of disruption was
to continue to provide a high level of service to customers despite certain
adverse cost consequences. Such additional operating cost in the first quarter
of 1999 was $2.4 million and in the second quarter of 1999 $700,000. The $3.1
million of estimated additional costs related to the hurricane situation
included $1.6 million in operating and maintenance costs (comprised primarily of
stevedoring and port related items), $1.3 million in rent and purchased
transportation (comprised primarily of terminal equipment rental, trucking
expense in San Juan and the U.S. and revenue equipment rental), $150,852 in
salaries and wages, $17,449 in insurance and claims and $61,885 in
communications and other operating expenses.
During the third quarter of 1999 the Company had one less voyage than
scheduled of its large roll-on, roll-off vessels due to Hurricane Floyd. The
tugboat that was towing the Company's vessel the week of the storm suffered a
casualty and needed to be replaced. While neither the Company's vessel nor its
cargo was damaged by this marine casualty, the time and recovery efforts of
substituting a new tug caused a major schedule disruption that resulted in one
less roll-on, roll-off voyage.
During the fourth quarter of 1999 the Company recognized a recovery of
certain operating and maintenance expenses from an affiliate in the amount of
$3,710,000 related to non-recurring excess costs associated with the
unavailability of the floating ramp system that the Company utilizes pursuant to
the charter of its large roll-on, roll-off vessels from that affiliate.
During the first nine months of 1999 three of the Company's Triplestack Box
Carrier (TM) vessels were utilized in a Newark, New Jersey - Jacksonville,
Florida - San Juan service. As two vessels can provide weekly service between
Jacksonville, Florida and San Juan, Puerto Rico, the addition of the third
vessel permitted the addition of a Newark, New Jersey/Jacksonville, Florida leg.
At the beginning of the fourth quarter of 1999 this deployment was realigned
with two of the vessels providing direct service between Jacksonville, Florida
and San Juan, Puerto Rico. The third Triplestack Box Carrier(TM) was utilized to
provide a sailing on alternate weeks directly between Newark, New Jersey and San
Juan, Puerto Rico.
Operating expenses for 1999 increased $8.4 million or 10.4% from 1998 to
$88.7 million. This increase was due to an increase in expenses associated with
an overall 21.8% increase in Puerto Rico volume, and the $3.1 million in
additional costs related to the inefficiency of servicing the ro/ro vessels
while the San Juan ramp structure was out of service and/or being repaired,
partially offset by the $3.7 million non-recurring reimbursement of floating
ramp system expenses. As a result, the Company's operating ratio decreased to
100.1% during 1999 from 103.9% during 1998.
Interest expense (net) increased $2.3 million or 222.4% in 1999 to $3.3
million in 1998 from $1.0 million in 1998 due to increased average long- term
debt outstanding, increased amounts outstanding under the Company's revolv- ing
line of credit, a reduction of capitalized interest related to Title XI debt,
higher interest rates and less interest income earned on short-term investments.
As a result of the factors described above and after application of income
taxes, the Company reported a net loss of $2.1 million for 1999 compared to net
loss of $2.5 million in 1998.
Year ended December 31, 1998 Compared to Year ended December 31, 1997
Operating revenues increased $10.8 million, or 16.3%, to $77.2 million during
1998 from $66.4 million during 1997. This increase was due to an $11.8 million
or 19.4% increase in total Puerto Rico revenue to $72.8 million through the
utilization of additional capacity in the Puerto Rico market, offset by a $1.0
million or 18.5% decrease in non-Puerto Rico revenue. Core trailer volume to
Puerto Rico increased 38.8% in 1998 compared to 1997, and total car and other
volume increased 20.6% compared to 1997. As a result, core trailer revenue to
Puerto Rico increased $9.5 million or 27.6% and car and other revenue increased
$1.5 million or 10.6% compared to 1997. Revenue from shipper owned or leased
equipment moving to Puerto Rico increased $796,187 or 19.3% from 1997. Revenue
from northbound shipments from Puerto Rico increased $65,591 or .8% from 1997.
While trailer volume to and from Puerto Rico increased 30.0% in 1998, related
revenue increased only $11.8 million or 19.4% compared to 1997 implying, an
overall yield reduction of 8.1%. Vessel capacity deployed on the core
continental U.S. to Puerto Rico traffic lane increased 47.3% during 1998
compared to 1997. Vessel capacity utilization on the core continental U.S. to
Puerto Rico traffic lane was 75.1% during 1998, compared to 84.1% during 1997.
In September 1998, Hurricane Georges struck Puerto Rico causing extensive
damage on the island. During this storm, the Company's floating loading ramp was
damaged. The Company contracted for the ramp to be re-floated and repaired. The
top section of the structure was partially removed. In January 1999 the ramp was
successfully re-floated. The ramp was repaired and returned to active cargo
operations for the first two decks in March 1999 and the third deck in May 1999
at which time normal operations resumed. The cost of re-floating the ramp
structure and its repair was insured and the Company received reimbursement of
these expenses, less a $50,000 deductible.
The owner of the San Juan ramp structure waived $600,000 in charter hire
payments in the third quarter of 1998 to partially offset the expected
additional costs incurred by the Company due to the unavailability of the San
Juan ramp structure.
The Company reported an operating loss of $3.0 million for 1998 compared to
operating income, excluding the nonrecurring, non-cash charge for compensation,
of $6.7 million for 1997. The Company recorded a nonrecurring, non-cash charge
for compensation and a credit to paid- in capital of $8.5 million during 1997.
This charge represented the difference between the exercise price of the option
and the initial public offering price of $10.00 per share.
Operating income was negatively impacted by $3.4 million of additional costs
related to the disruption caused by the loss of use of the San Juan ramp
structure resulting from Hurricane Georges. The $3.4 million of estimated
additional costs included $1,622,613 in additional operating and maintenance
costs (comprised primarily of stevedoring and port related items), $1,450,427 in
additional rent and purchased transportation expense (comprised primarily of
terminal equipment rental, trucking expense in San Juan and the U.S. and revenue
equipment rental), $117,954 in salaries and wages, $102,374 in insurance and
claims and $67,715 in communications and other operating expenses.
The inability to utilize the San Juan ramp structure necessitated alternative
methods of discharging and re-loading the two ro/ro vessels. Instead of typical
cargo operations of between 14 and 16 hours at the Company's San Juan terminal,
the two ro/ro vessels utilized other terminals where total cargo operations
required between 48 and 50 hours. While the ramp was out of service, the middle
deck of the ro/ro vessels remained inaccessible to trailers and could be used
only for vehicles, which resulted in sub-optimum utilization of one-third of
vessel space.
The additional time required to service the ro/ro vessels in San Juan
resulted in schedule tightness that required most cargo operations to be
performed during weekends where higher overtime rates applied. This schedule
tightness and the resultant uncertainty affected costs in addition to those
directly related to San Juan cargo operations, including trucking costs on the
mainland. The Company's goal during this period of disruption, which lasted
longer than expected, was to continue to provide a high level of service to
customers despite certain adverse cost consequences. The Triplestack Box
Carriers(TM) do not utilize the floating ramp structure and were not adversely
affected by Hurricane Georges.
Operating expenses for 1998 increased $20.6 million or 34.5% from 1997
exclusive of the charge for compensation in 1997 discussed above. This increase
was due to an increase in expenses associated with an overall 30.0% increase in
Puerto Rico volume, and the $3.4 million in additional costs related to the
inefficiency of servicing the ro/ro vessels while the San Juan ramp structure
was out of service and the impact of the commencement of the new coastwise
service. As a result, the Company's operating ratio increased to 103.9% during
1998 from 89.9% during 1997 exclusive of the charge for compensation in 1997.
Interest expense (net) increased $487,138 or 88.8% to $1.1 million in 1998
from $548,631 in 1997 due to increased average long-term debt outstanding,
increased amounts outstanding under the Company's revolving line of credit and
less interest income earned on short-term investments.
As a result of the factors described above including the charge for
compensation in 1997 and after application of income taxes, the Company reported
a net loss of $2.5 million for 1998 compared to pro forma net loss of $2.4
million in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operations was $1.0 million in 1999 compared to net cash
provided by operations of $40,447 in 1998. This represented a decrease of $1.1
million from 1998. Net cash used in investing activities of $5.0 million in 1999
reflects $6.5 million of capital expenditures, which were primarily attributable
to payments for the purchase of containers and chassis, partially offset by $1.0
million in proceeds from the sale of older equipment. Net cash provided from
financing activities was $2.9 million compared to $6.6 million in 1998
representing a decrease of $3.7 million. Net cash provided from financing
activities of $2.9 million consisted of $7.0 million in borrowing under a
revolving line of credit, partially offset by payments of $4.0 million of notes
payable. The Company received a waiver of certain financial ratios related to
its revolving line of credit at December 31, 1999. New financial covenants have
been established based upon the Company's 2000 business plan. The Company is
current on all payments related to all of its financial obligations and
anticipates remaining so in the future without any extension of scheduled
payments necessary. The Company will make no further draws under the revolving
line of credit.
At December 31, 1999 cash amounted to $2.4 million, working capital was
$613,246, and stockholders' equity amounted to $29.2 million. Management
believes that cash flow generated from operations and transactions with an
affiliate will allow the Company to meet its working capital requirements,
anticipated capital expenditures and other obligations at least through calendar
2000.
YEAR 2000
Management recognized the potential effect Year 2000 could have on the
Company's operations and, as a result, implemented a Year 2000 Compliance
Project.
The Company's computer hardware, operating systems, dispatch applications, PC
network and other desktop applications are Year 2000 compliant as certified by
the various vendors and application consultants. Year 2000 compliance for
general accounting applications were implemented throughout the year. Total
costs incurred with the Company's Year 2000 compliance project have been
reflected in the Company's income statement throughout 1998 and 1999, and were
approximately $75,000 in 1998 and $15,000 in 1999. Additional costs of the
Company's Year 2000 are not expected to be significant.
The Company has not experienced Year 2000 problems with any of its
information systems, or with any of its customers, suppliers or other third
parties. Business is continuing as usual, and the Company will continue to
monitor its information systems and third parties for any possible disruption.
The Company does not anticipate any problems, although there can be no
assurance that the Company will continue to be successful in avoiding all
possible problems. In particular, there can be no assurance that the Company
will not be affected adversely by the failure of a vendor, customer, or other
third party that is affected by Year 2000 issues arising later. However, in
dealing with the remaining Year 2000 issues, the Company believes, based on the
absence of any Year 2000 problems to date, that the impact of the Year 2000
issue and its associated costs will not have a material impact on the Company's
results of operations, liquidity and financial condition.
INFLATION
Inflation has had a minimal effect upon the Company's profitability in recent
years. Most of the Company's operating expenses are inflation-sensitive, with
inflation generally producing increased costs of operation. The Company expects
that inflation will affect its costs no more than it affects those of other
truckload and marine carriers.
SEASONALITY
The Company's marine operations are subject to the seasonality of the Puerto
Rico freight market where shipments are generally reduced during the first
calendar quarter and increased during the fourth calendar quarter of each year
in anticipation of Christmas. This seasonality was not as pronounced in 1999 as
it had been in previous years.
The following table sets forth certain unaudited financial information for
the Company for each of the last eight quarters (in thousands except per share
amounts):
1998 1999
---- ----
By Quarter
First Second Third Fourth First Second Third Fourth
----- ------ ----- ------ ----- ------ ----- ------
Operating revenues $16,347 $18,408 $18,852 $23,633 $22,751 $22,686 $20,626 $22,489
Operating income (loss) 286 411 (398) (3,345) (2,078) 140 (2,246) 4,063(1)
Net income (loss) 69 149 (436) (2,299) (1,684) (399) (1,955) 1,901
(1) See Notes 4 and 15 to the Financial Statements.
This 10-K contains statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The
matters discussed in this Report include statements regarding the intent, belief
or current expectations of the Company, its directors or its officers with
respect to the future operating performance of the Company. Investors are
cautioned that any such forward looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward looking statements as a result of
various factors. Without limitation, these risks and uncertainties include the
risks of economic recessions, severe weather, changes in demand for
transportation services offered by the Company, and changes in rate levels for
transportation services offered by the Company.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates. For
certain debt instruments, a change in interest rates affects the amount of
interest expense incurred. The debt instruments subject to changes in interest
rates are the $15,550,000 revolving line of credit with a weighted average
interest rate of 8.3%.
Item 8. Financial Statements and Supplementary Data
TRAILER BRIDGE, INC.
Financial Statements for the Three Years in the Period Ended December 31, 1999
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders Trailer Bridge, Inc. Jacksonville,
Florida
We have audited the accompanying balance sheets of Trailer Bridge, Inc. (the
"Company") as of December 31, 1999 and 1998, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Trailer Bridge, Inc. as of December 31, 1999
and 1998, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche, LLP
Certified Public Accountants Jacksonville, Florida March 30, 2000
TRAILER BRIDGE, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
1999 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,445,750 $ 5,561,996 Trade receivables, less
allowance for doubtful
accounts of $1,368,514 and $1,093,403 12,535,138 13,491,451
Other receivables 76,498 1,376,576
Due from affiliate 2,750,200 552,134
Prepaid expenses 1,202,443 840,887
----------- -----------
Total current assets 19,010,029 21,823,044
PROPERTY AND EQUIPMENT, net 63,086,924 62,054,638
GOODWILL, less accumulated amortization of
$358,101 and $311,322 810,841 857,620
RESTRICTED CASH AND INVESTMENTS 691,419 1,190,918
OTHER ASSETS 4,463,425 3,302,869
----------- -----------
TOTAL ASSETS $ 88,062,638 $ 89,229,089
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,460,770 $ 7,341,141
Accrued liabilities 3,793,885 6,017,108
Current portion of notes payable 4,615,862 3,988,067
Current Portion of Revolving Line of Credit 1,942,750 -
Current portion of capital lease obligations 83,010 42,945
Unearned revenue 499,506 470,684
----------- -----------
Total current liabilities 16,453,033 17,859,945
NOTES PAYABLE, less current portion 26,762,440 31,399,115
REVOLVING LINE OF CREDIT, less current portion 13,606,250 8,550,000
CAPITAL LEASE OBLIGATIONS, less current portion 89,657 76,102
----------- -----------
TOTAL LIABILITIES 18,396,783 57,885,162
----------- -----------
COMMITMENTS (Notes 4, 7 and 12)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares authorized; no shares issued
or outstanding Common stock, $.01 par value, 20,000,000 authorized
shares; 9,777,500 shares outstanding 97,775 97,775
Additional paid-in capital 37,982,818 37,982,818
Accumulated deficit (8,873,085) (6,736,666)
----------- -----------
Total stockholders' equity 29,207,508 31,343,927
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 88,062,638 $ 89,229,089
=========== ===========
See notes to financial statements.
TRAILER BRIDGE, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
OPERATING REVENUES $ 88,552,088 $ 77,240,644 $ 66,388,577
OPERATING EXPENSES:
Salaries, wages, and benefits 16,171,939 16,284,073 14,722,568
Compensation expense recognized
for stock option 8,528,670
Rent and purchased transportation:
Related party 7,336,500 6,736,500 7,500,000
Other 27,449,734 20,305,185 10,019,705
Fuel 6,645,479 5,701,701 5,617,199
Operating and maintenance (exclusive of
depreciation shown separately below) 18,541,337 19,849,857 12,869,034
Taxes and licenses 610,669 558,866 452,275
Insurance and claims 1,962,541 2,061,199 1,900,334
Communications and utilities 820,735 825,309 587,655
Depreciation and amortization 4,731,153 3,527,662 2,597,887
Other operating expenses 4,402,351 4,435,941 3,409,127
----------- ----------- -----------
88,672,438 80,286,293 68,204,454
----------- ----------- -----------
OPERATING LOSS (120,350) (3,045,649) (1,815,877)
NONOPERATING INCOME (EXPENSE):
Interest expense, net:
Related party (278,641)
Other (3,339,382) (1,035,769) (269,990)
Gain (loss) on sale of equipment, net 81,499 207,255 (80,851)
----------- ----------- ------------
(3,257,883) (828,514) (629,482)
----------- ----------- ------------
LOSS BEFORE PROVISION AND PRO FORMA
PROVISION FOR INCOME TAXES (3,378,233) (3,874,163) (2,445,359)
BENEFIT FOR INCOME TAXES 1,241,814 1,358,133 426,566
----------- ----------- -----------
NET LOSS BEFORE PRO FORMA PROVISION
FOR INCOME TAXES (2,136,419) (2,516,030) (2,018,793)
PRO FORMA PROVISION FOR INCOME TAXES (NOTE 2) (397,329)
----------- ----------- -----------
PRO FORMA NET LOSS (NOTE 2) $ (2,136,419) $ (2,516,030) $ (2,416,122)
=========== =========== ===========
PRO FORMA NET LOSS
PER COMMON SHARE
Basic $ (0.22) $ (0.26) $ (0.30)
=========== =========== ===========
Diluted $ (0.22) $ (0.26) $ (0.30)
=========== =========== ===========
See notes to financial statements.
TRAILER BRIDGE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Retained
Common Stock Additional Earnings
---------------------------- Paid-in (Accumulated
Shares Amount Capital Deficit) Total
-------------- ------------- ---------------- ----------------- ----------------
BALANCE, JANUARY 1, 1997 6,672,500 $ 66,725 $ (66,300) $ 6,044,119 $ 6,044,544
Compensation expense recognized
for stock options 8,528,670 8,528,670
Distributions to stockholders 1,060,212 (8,245,962) (7,185,750)
Net proceeds from initial public
offering of common stock 3,105,000 31,050 28,460,236 28,491,286
Net loss (2,018,793) (2,018,793)
---------- ------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 9,777,500 97,775 37,982,818 (4,220,636) 33,859,957
Net loss (2,516,030) (2,516,030)
---------- ------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 9,777,500 97,775 37,982,818 (6,736,666) 31,343,927
Net loss (2,136,419) (2,136,419)
---------- ------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1999 9,777,500 $ 97,775 $ 37,982,818 $ (8,873,085) $ 29,207,508
========== ======= =========== =========== ===========
See notes to financial statements.
TRAILER BRIDGE, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
OPERATING ACTIVITIES:
Net loss $ (2,136,419) $ (2,516,030) $ (2,018,793)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 4,731,153 3,574,132 2,597,887
Provision for uncollectible accounts 2,001,439 1,040,721 381,691
(Gain) loss on sale of equipment (81,499) (207,255) 80,851
Compensation expense recognized for stock options 8,528,670
Deferred income taxes (1,241,814) (1,332,642) (652,876)
Change in assets and liabilities:
(Increase) decrease in:
Trade receivables (1,045,126) (6,784,572) 176,581
Other receivables 1,300,078 (1,235,237) (141,339)
Due from affiliate (2,198,066) (612,434)
Prepaid expenses (361,556) (75,912) 199,996
Other assets 81,258 59,936 67,014
Increase (decrease) in:
Accounts payable 119,629 5,203,890 155,830
Accrued liabilities (2,223,223) 2,618,250 763,759
Unearned revenue 28,822 307,600 (60,543)
------------ ------------ ------------
Net cash (used in) provided by operating activities (1,025,324) 40,447 10,078,728
------------ ------------ ------------
INVESTING ACTIVITIES:
Due to affiliate (4,592,892)
Purchases and construction of property and equipment (6,548,900) (36,172,044 (20,434,204)
Proceeds from the sale of equipment 1,039,370 1,126,390 31,764
Decrease (increase) in restricted cash and investments 499,499 19,718,986 (20,909,904)
------------ ------------ ------------
Net cash used in investing activities (5,010,031) (15,326,668) (45,905,236)
------------ ------------ ------------
FINANCING ACTIVITIES:
Proceeds from borrowings on notes payables 1,746,591 31,740,797
Proceeds from borrowings on revolving line of credit 7,000,000 8,550,000
Proceeds from sale of common stock 28,491,286
Payments on notes payable (4,008,880) (3,476,069) (3,650,278)
Payments of dividends (7,185,750)
Debt issue costs (210,450) (909,729)
Payments on capital lease obligations (72,011) (39,300) (41,294)
------------ ------------ ------------
Net cash provided by financing activities 2,919,109 6,570,772 48,445,032
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (3,116,246) (8,715,449) 12,618,524
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,561,996 14,277,445 1,658,921
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,445,750 $ 5,561,996 $ 14,277,445
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH
INVESTING AND FINANCING ACTIVITIES:
Cash paid for state income taxes $ 25,673 $ 134,127 $ 46,145
============ ============ ============
Cash paid for interest, net of amount capitalized:
Related party $ 283,653
Other $ 2,982,349 $ 2,249,445 419,739
------------ ------------ ------------
$ 2,982,349 $ 2,249,445 $ 703,392
============ ============ ============
Book value of like kind assets exchanged $ 610,041
============
Equipment acquired under capital lease agreements $ 125,631
============
See notes to financial statements.
TRAILER BRIDGE, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Trailer Bridge, Inc. (the "Company") is a domestic
trucking and marine transportation company with contract and common carrier
authority. Highway transportation services are offered in the continental United
States, while marine transportation is offered primarily between Newark, New
Jersey, Jacksonville, Florida and San Juan, Puerto Rico.
Cash and Cash Equivalents - The Company considers cash on hand and amounts on
deposit with financial institutions with original maturities of three months or
less to be cash equivalents.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Allowance for Doubtful Accounts - The Company provides an allowance for
doubtful accounts on trade receivables based upon estimated collectibility and
collection experience.
Property and Equipment - Property and equipment are stated at cost and the
capitalized interest costs associated with significant capital additions less
accumulated depreciation. Property and equipment are depreciated on a
straight-line method based on the following estimated useful lives:
Years
Buildings and structures 40
Office furniture and equipment 6-10
Freight equipment 4-25
Leasehold improvements 2-5
Equipment under capital leases 5
Tires on revenue equipment purchased are capitalized as part of the equipment
cost and depreciated over the life of the vehicle. Replacement tires are
expensed when placed in service.
Leasehold improvements and equipment under capital leases are amortized over
the lesser of the estimated lives of the asset or the lease terms. Maintenance
and repairs which do not materially extend useful life and minor replacements
are charged to earnings as incurred.
The Company periodically reviews property and equipment for potential impair-
ment. If this review indicates that the carrying amount of these assets may not
be recoverable, the Company estimates the future cash flows expected with
regards to the asset and its eventual disposition. If the sum of these future
cash flows (undiscounted and without interest charges) is less than the carrying
amounts of the assets, the Company records an impairment loss based on the fair
value of the asset.
Goodwill - Goodwill is being amortized on a straight-line basis over
twenty-five years.
Restricted Cash and Investments Restricted cash and investments consist of
cash and investments held in trust and committed for the construction of the
Company's Triplestack Box Carrier(TM) vessels and investments held by a letter
of credit for the continued use of a land-based ramp. These funds have been
invested in highly liquid interest bearing deposits, U.S. Treasury bills and
money market accounts and are carried at cost which approximates market.
Insurance - The Company is self-insured for employee medical coverage above
deductible amounts. Reinsurance is obtained to cover losses in excess of certain
limits. Provisions for losses are determined on the basis of claims reported and
an estimate of claims incurred but not reported.
Revenue Recognition - Common carrier operations revenue is recorded on the
percentage-of-completion basis and direct costs are expensed as incurred.
Income Taxes - Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities.
The Company was organized under Subchapter S of the Internal Revenue Code
until this election was terminated effective with the Company's initial public
offering in July 1997. Under Subchapter S, the Company was not subject to
federal income taxes.
Earnings Per Share - Basic earnings per share ("EPS") is computed
by dividing earnings available to common shareholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution of securities that could share in the earnings.
Stock-Based Compensation - In accordance with SFAS No. 123, "Accounting
for Stock-Based Compensation," ("SFAS No. 123") the Company has
elected to continue to account for its employee stock compensation plans under
APB Opinion No. 25 with pro-forma disclosures of net earnings and earnings per
share, as if the fair value based method of accounting defined in SFAS No. 123
had been applied. Under the intrinsic value based method, compensation cost is
the excess, if any, of the quoted market price of the stock at the grant date or
other measurement date over the amount an employee must pay to acquire the
stock. Under the fair value based method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period.
New Accounting Standards - In June 1998, the Financial Accounting Standards
Board (the "FASB") issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133").
This statement establishes accounting and reporting standards for derivative
instruments and hedging activities. In June 1999, the FASB issued SFAS No. 137,
which deferred the effective date of adoption of SFAS No. 133 for one year. SFAS
No. 133 will be effective for the first quarter of the year ending December 31,
2001. Retroactive application to financial statements of prior periods is not
required. The Company has determined that the implementation of this statement
will not have a material impact on the financial statements.
2. PRO FORMA INCOME TAXES
For informational purposes, the statement of operations for year ended December
31, 1997 contains a pro forma adjustment for income tax expense which would have
been recorded if the Company had not been an S Corporation and had been subject
to corporate income taxes based on the tax laws in effect during the period.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1999 and 1998 consist of the following:
1999 1998
Land $ 917,885 $ 917,885
Construction in progress 182,993 6,739,792
Buildings and structures 2,575,070 2,542,581
Office furniture and equipment 2,842,401 2,396,311
Freight equipment 65,515,215 54,677,780
Leasehold improvements 1,939,969 1,355,871
Equipment under capital leases 388,736 263,105
Less accumulated depreciation and amortization (11,275,345) (6,838,687)
----------- -----------
Fixed assets, net $ 63,086,924 $ 62,054,638
=========== ===========
Depreciation and amortization expense on property and equipment and equipment
under capital leases was $4,684,374, $3,480,882 and $2,551,108 in 1999, 1998 and
1997, respectively. Interest cost of $108,866 and $918,838 was capitalized
during 1999 and 1998, respectively.
4. TRANSACTIONS WITH AFFILIATED COMPANY
The Company leases two roll-on/roll-off barge vessels and the use of a ramp
system from an affiliate under operating lease agreements. The lease payments
are $10,050 per day for each vessel. The leases expire at the later of September
1, 2010 or the repayment of all obligations under an affiliate's construction
loan related to the vessel renovations. Such construction loan is scheduled to
be repaid in quarterly installments with a final maturity of April 1, 2001. The
leases provide the Company the option to extend the leases through September 1,
2018 for total payments of $11,000 per vessel per day or, alternatively, the
Company may purchase the vessels at their then fair market values. Total lease
expense under these leases from affiliate totaled $7,336,500, $6,736,500 and
$7,500,000 in 1999, 1998 and 1997, respectively. In the third quarter of 1998,
the lease payments to affiliate were reduced by a $600,000 non-recurring
forgiveness in recognition of the impact of Hurricane Georges and in
consideration of the efforts of the Company to recover and repair the San Juan
triple-deck ramp structure utilized by the two triple-deck barges.
In December 1999, the Company recovered from the affiliate $3,710,000 of
excess operating and maintenance expenses incurred during the period that the
Company had limited use of the floating ramp system. In return, the Company
waived any right to any insurance proceeds from the casualty to the floating
ramp system. The Company received $1,000,000 in December 1999 and the balance
was received in February and March 2000. Additional amounts included in due from
affiliate in 1999 and 1998 include prepaid barge charter hire lease rent and
reimbursable miscellaneous repair payments made by the Company related to assets
of the affiliate.
5. CAPITALIZED LEASE OBLIGATIONS
Future minimum lease payments under capitalized computer equipment leases as of
December 31, 1999 are as follows:
2000 $ 96,540
2001 94,496
--------
Total minimum lease payments 191,036
Interest portion (18,369)
--------
Present value of minimum lease payments 172,667
Less current portion (83,010)
--------
$ 89,657
========
6. NOTES PAYABLE
Following is a summary of notes payable at December 31, 1999 and 1998:
1999 1998
Ship-financing bonds and notes (Title XI) totaling $16,918,000 maturing on March
30, 2023; payable in 50 semi-annual installments of principal and interest;
interest is fixed at 6.52%; collateralized by vessels with a carrying value of
$19,197,049 at December 31, 1999; amount is guaranteed by The United States of
America
under the Title XI Federal Ship Financing Program $ 15,902,920 $ 16,579,640
Ship-financing bonds and notes (Title XI) totaling $10,515,000 maturing on
September 30, 2022; payable in 50 semi-annual installments of principal and
interest; interest is fixed at 7.07%; collateralized by vessels with a carrying
value of $12,475,601 at December 31, 1999; amount is guaranteed by The United
States of America
under the Title XI Federal Ship Financing Program 9,673,800 10,094,400
Borrowings under a $25 million revolving credit and term loan agreement maturing
between April 1, 2000 and April 1, 2001; payable in monthly installments of
principal and interest; interest at fixed rates ranging from 7.38% to 8.08%;
collateralized by tractors with a carrying value of
$4,765,791 at December 31, 1999 2,757,975 4,292,729
Notes payable to finance company totaling $4,957,569 maturing from June to
October 2001; payable in 60 monthly installments of principal and interest;
interest at fixed rates ranging from 8.867% to 9.290%; collateralized by
trailers with a carrying value of
$3,456,843 at December 31, 1999 1,810,383 2,814,648
Note payable to bank totaling $1,680,000 maturing
October 2006; payable in 120 monthly installments
of principal and interest; interest is fixed at 7.95%;
collateralized by land and buildings and structures
with a carrying value of $2,272,049 at
December 31, 1999 1,148,000 1,316,000
Notes payable to finance company totaling $1,032,500 maturing June 2000; payable
in 60 monthly installments of principal and interest;
interest at a rate of 3.5% above LIBOR
(9.32% at December 31, 1999); collateralized
by trailers with a carrying value of $353,675 at
December 31, 1999 85,224 289,765
----------- -----------
31,378,302 35,387,182
Less current portion (4,615,862) (3,988,067)
----------- -----------
$ 26,762,440 $ 31,399,115
=========== ===========
The revolving line of credit requires principal payments of $971,875 quarterly
beginning in September 2000 and matures on April 1, 2001. In August 1998, the
Company entered into a revolving credit and term loan agreement. At the election
of the Company, interest on each borrowing under the line of credit will accrue
at (a) a variable interest rate of the financial institution's Base Rate plus
the Applicable Margin then applicable to Base Rate Loans, or (b) the Eurodollar
Rate determined for such Interest Period plus the Applicable Margin then
applicable to Eurodollar Rate Loans. The following is a summary of borrowings
outstanding under the agreement at December 31, 1999 and 1998:
1999 1998
Revolving credit $ 15,550,000 $ 8,550,000
Term loan 2,757,975 4,292,729
----------- -----------
$ 18,307,975 $ 12,842,729
=========== ===========
The debt agreements contain certain restrictive covenants, including
requirements to maintain tangible net worth (as defined), a debt ratio, interest
coverage and debt service coverage at certain levels.
At December 31, 1999, the Company was in non-compliance with certain
restrictive financial covenants related to the revolving credit and term loan
agreement. Effective March 30, 2000, the Company entered into a limited waiver
and amendment to the revolving credit and term loan agreement (the
"Amendment"). The Amendment provides for a waiver of compliance with
such covenants for the December 31, 1999 and earlier measurement periods and
revises each of the financial covenants for future periods. The Amendment
removes any additional borrowing capacity under the revolving credit and term
loan agreement, increases the interest rate by .50% on June 30, 2000 and an
additional .50% on September 30, 2000, converts the oustanding revolving line of
credit to a term loan on August 31, 2000 and resets the maturity date of the
agreement to April 1, 2001. The Company expects to be in compliance with the
restrictive covenants for 2000.
Following are maturities of long-term debt for each of the next five years:
2000 $ 6,559,612
2001 16,164,435
2002 1,265,320
2003 1,265,320
2004 1,265,320
Thereafter 20,408,295
-----------
$ 46,928,302
===========
7. OPERATING LEASES
The Company has various operating lease agreements, principally for its office
facilities, terminals and equipment. Certain of the leases contain provisions
calling for additional contingent rentals based on volume of transportation
activity.
Future minimum rental payments required under operating leases that have
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1999 are as follows:
2000 $ 25,485,000
2001 25,829,000
2002 25,287,000
2003 36,249,000
2004 14,363,000
Thereafter 60,049,000
------------
Total minimum payments required $ 187,262,000
------------
Lease expense for all operating leases, including leases with terms of less than
one year, was $23,484,809, $19,027,272 and $16,879,647 for 1999, 1998 and 1997.
8. ACCRUED LIABILITIES
1999 1998
Fringe benefits $ 903,661 $ 901,573
Marine expense 689,293 3,149,861
Salaries and wages 324,372 336,510
Other 1,876,559 1,629,164
---------- ----------
$ 3,793,885 $ 6,017,108
---------- ----------
9. INCOME TAXES
The components of the benefit (expense) for income taxes is comprised of the
following as of December 31, 1999, 1998 and 1997:
1999 1998 1997
Current:
Federal $ 22,808 $ (201,164)
State 2,683 (25,146)
---------- ----------
25,491 (226,310)
---------- ----------
Deferred:
Federal $ 1,111,051 1,192,364 580,334
State 130,763 140,278 72,542
---------- ---------- ----------
1,241,814 1,332,642 652,876
---------- ---------- ----------
$ 1,241,814 $ 1,358,133 $ 426,566
========== ========== ==========
Income taxes for the year ended December 31, 1999, 1998 and 1997 differ from the
amount computed by applying the statutory Federal corporate rate to income
before income taxes. The differences are reconciled as follows:
1999 1998 1997
Tax benefit at statutory Federal rate $ 1,148,599 $ 1,317,216 $ 831,422
Valuation allowance (900,000)
Nondeductible expenses (41,914) (51,136) (68,693)
State income taxes, net of federal benefit 135,129 154,966 39,334
Pro rata income allocated to S Corporation year (428,382)
Recognition of deferred tax liability 994,060
Other (62,913) (41,175)
---------- ---------- ----------
Total income tax benefit $ 1,241,814 $ 1,358,133 $ 426,566
========== ========== ==========
The components of the Company's net deferred tax asset at December 31, 1999
and 1998 is as follows:
1999 1998
Deferred tax assets:
Employee stock option $ 3,240,895 $ 3,240,895
Net operating loss 8,347,920 4,297,455
Accrued expense 165,091 189,475
Allowance for bad debts 520,035 415,493
----------- ----------
Gross deferred assets 12,273,941 8,143,318
Deferred tax liabilities:
Fixed asset basis 8,055,753 5,178,795
Other 90,856 79,005
----------- ----------
Gross deferred tax liabilities 8,146,609 5,257,800
Deferred tax asset valuation allowance 900,000 900,000
----------- ----------
Net deferred tax asset $ 3,227,332 $ 1,985,518
=========== ==========
Prior to July 23, 1997, the Company was organized under Subchapter S of the
Internal Revenue Code for income tax purposes and therefore, all Federal and
certain state income taxes were the responsibility of the Company's
stockholders. The Company was subject to state income taxes in those states that
do not recognize Subchapter S elections. State income tax expense for 1999, 1998
and 1997 was not significant.
At December 31, 1999, the Company had available net operating loss ("NOL")
carryforwards for federal income tax purposes of approximately $21,968,000, of
which $489,000 will expire beginning in the year 2004. Under Internal Revenue
code Section 382, the $489,000 of NOL's become available in equal amounts
through the year of expiration. The remaining NOL's expire beginning in 2018.
10. COMMON STOCKHOLDERS' EQUITY
Common Stock:
In July 1997, the Company completed an underwritten initial public offering
("IPO") of 3,105,000 shares of its common stock at an initial offering
price of $10.00 per share, yielding gross proceeds of $31,050,000. Net proceeds
to the Company as a result of the IPO were $28,491,286 after deduction of
underwriting, legal, accounting and other offering related expenses totaling
$2,558,714.
Also in July 1997, the Company's Board of Directors and stockholders
authorized the following which became effective in connection with the Company's
initial public offering: (i) a 15,700-for-1 stock split, (ii) an increase in the
authorized number of common shares from 2,000 to 20,000,000, (iii) a change in
the par value of common stock from $1.00 to $.01 and (iv) 1,000,000 shares of
preferred stock with a par value of $.01 per share. Stockholder's equity has
been restated to give retroactive recognition to the stock split and change in
par value in prior periods. In addition, all references in the financial
statements to the number of shares and per share amounts have been restated.
Earnings Per Share:
For the years ended December 31, 1999, 1998 and 1997, outstanding options to
purchase shares of common stock at an exercise price of $2.25, $10.00 and $10.00
per share, respectively, were not included in the computation to arrive at
diluted EPS because the options' exercise price exceeded the average market
price of the common shares.
Stock Options:
In May 1997, the majority stockholder of the Company granted to the Company's
Chairman and Chief Executive Officer, an option to purchase up to 942,000 shares
of common stock (adjusted for the 15,700-for-1 stock split) owned by him at an
exercise price of $.95 per share. The option was immediately exercisable with a
term of 10 years. In connection with this option, the Company recorded a
non-recurring, non-cash charge to compensation expense of $8,528,670 during the
year ended December 31, 1997. This option does not involve the issuance of
additional shares of common stock by the Company and therefore, any purchase of
shares under the option will not have a dilutive effect on the Company's book
value or earnings per share amounts.
The Company's Board of Directors and stockholders authorized the
establishment of an Incentive Stock Plan (the "Plan"). The purpose of
the Plan is to promote the interests of the Company and its shareholders by
retaining the services of outstanding key management members and employees and
encouraging them to have a greater financial investment in the Company and
increase their personal interest in its continued success. The Company has
reserved 785,000 shares of common stock for issuance pursuant to the Plan to
eligible employees under the Plan. Awarded options that expire unexercised or
are forfeited become available again for issuance under the Plan. The options
vest equally over a period of five years.
A summary of the status of options under the Company's stock-based
compensation plans as of December 31, 1999, 1998 and 1997 is presented below:
1999 1998 1997
-------------------------- -------------------------- --------------------------
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding at beginning of year 521,182 $ 10.00 468,126 $ 10.00
Granted 212,600 2.25 130,000 10.00 471,000 $ 10.00
Forfeited (22,524) 9.60 (76,944) 10.00 (2,874) 10.00
Outstanding at end of year 711,258 7.70 521,182 10.00 468,126 10.00
Grants exercisable at year-end 178,923 93,262
Weighted-average fair value of
options granted during the year $ 1.87 $ 7.36 $ 7.13
The following table summarizes information about the outstanding grants at
December 31, 1999:
Weighted-Average
Exercise Options Remaining Options
Price Outstanding Contractual Life Exercisable
-------- ----------- ---------------- ------------
$ 10.00 499,808 7.8 years 178,923
2.25 211,450 9.2 years
Remaining non-exercisable options as of December 31, 1999 become exercisable
as follows:
2000 142,252
2001 142,252
2002 142,252
2003 63,290
2004 42,289
-------
532,335
=======
Had compensation expense for stock options been determined based upon the
fair value at the grant date, consistent with the methodology prescribed under
SFAS No. 123, the Company's net earnings and net earnings per share would have
changed to the pro forma amounts indicated below.
1999 1998 1997
As reported
Pro forma net loss $ (2,136,419) $ (2,516,030) $ (2,416,122)
Net loss per share - basic and diluted (0.22) (0.26) (0.30)
Pro forma for SFAS No. 123
Net loss $ (2,649,307) $ (2,930,148) $ (2,588,671)
Net loss per share - basic and diluted (0.27) (0.30) (0.32)
The Company used the Black-Scholes option-pricing model to determine the fair
value of grants made. The following assumptions were applied in determining the
pro forma compensation cost:
Years ended December 31 1999 1998 1997
Risk-free interest rate 5.34% 5.76% 6.16%
Expected dividend yield 0% 0% 0%
Expected option life 7 years 7 years 7 years
Expected stock price volatility 96.17% 81.93% 69.32%
11. EMPLOYEE BENEFIT PLANS
The Company has a 401(k) Plan which covers substantially all employees in he
United States. Participants are allowed to make contributions of up to 15% of
their compensation not to exceed certain limits. The Company makes matching
contributions to the Plan at a rate not in excess of 3.0% of compensation. The
Company contributed approximately $175,000, $214,000 and $176,000 to the Plan
during 1999, 1998 and 1997. The Company made an optional contribution of $0, $0
and $39,000 in December 1999, 1998 and 1997.
In addition, the Company has a 165(e) Plan that covers substantially all
employees in Puerto Rico. The Company made contributions of approximately
$18,000, $15,000 and $13,000 to the Plan during 1999, 1998, and 1997.
In March 1998, the Board of Directors authorized an Employee Stock Purchase
Plan which covers substantially all employees. The Plan allows employees to
invest up to 10% of their base compensation through payroll deductions. The
purchase price will be 15% less than the fair market value on the last day of
the purchase period. The Company made contributions of approximately $15,000 and
$6,000 to the Plan during 1999 and 1998.
The Company has a Profit Sharing Plan in which they contributed approximately
$0, $24,000 and $688,000 to the Plan during 1999, 1998, and 1997.
12. CONTINGENCIES
The Company is involved in litigation on a number of matters and is subject to
certain claims which arise in the normal course of business, none of which, in
the opinion of management, are expected to have a materially adverse effect on
the Company's financial statements.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and Cash Equivalents - For those short-term instruments, the carrying
amount is a reasonable estimate of fair value.
Restricted Cash and Investments - For those interest bearing deposits and
short-term investments, the carrying amount is a reasonable estimate of fair
value.
Notes Payable - Interest rates that are currently available to the Company
for issuance of debt with similar terms and remaining maturities are used to
estimate fair value for debt instruments. The Company believes the carrying
amount is a reasonable estimate of such fair value.
In the normal course of business, the Company uses an interest rate collar
agreement, to manage its interest rate risk for purposes other than trading. The
Company does not use derivative financial instruments for speculative purposes.
As is customary for these types of instruments, the Company does not require
collateral or other security from other parties to these instruments. By their
nature all such instruments involve risk, including the credit risk of
nonperformance by counterparties. However, at December 31, 1999, in management's
opinion there was no significant risk of loss in the event of nonperformance of
the counterparties to these financial instruments.
Interest Rate Collar Agreement - The Company enters into an interest rate
contract to manage its exposure to changes in interest rates and to fix the
overall cost of one of its variable rate financings. The contract has no
carrying value with gains and losses recognized as a component of interest
expense.
The contract/notional amount and estimated fair value of the Company's off-
balance-sheet financial instrument are as follows:
1999 1998
------------------------------------ -------------------------------------
Contact/Notional Fair Contact/Notional Fair
Amount Value Amount Value
------------------- --------------- ------------------- ----------------
Interest rate collar agreement $ 1,148,000 $ 26,737 $ 1,316,000 $(38,760)
14. SEGMENTS
The Company's primary business is to transport freight from its origination
point in the continental United States to San Juan, Puerto Rico and from San
Juan, Puerto Rico to its destination point in the continental United States. The
Company provides a domestic trucking system and a barge vessel system, which
work in conjunction with each other to service its customers. The Company would
not employ either system separately; therefore segment reporting was not
necessary.
15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
March 31, June 30, September 30, December 31,
Quarter Ended 1999 1999 1999 1999
------------------ ------------------ ------------------ ------------------
Operating revenues $ 22,750,604 $ 22,686,417 $ 20,625,799 $ 22,489,268
Operating (loss) income (2,078,435) 140,417 (2,245,826) 4,063,494 (1)
Net (loss) income before
income tax (2,700,811) (627,412) (3,131,241) 3,081,231
Net (loss) income (1,683,679) (399,377) (1,954,583) 1,901,220
Net (loss) income
per share - basic (0.17) (0.04) (0.20) 0.19
March 31, June 30, September 30, December 31,
Quarter Ended 1998 1998 1998 1998
------------------ ------------------ ------------------ ------------------
Operating revenues $ 16,347,403 $ 18,408,322 $ 18,851,977 $ 23,632,942
Operating income (loss) 286,042 410,872 (397,792) (3,344,771)(2)
Net income (loss) before
income tax 128,995 308,227 (641,217) (3,670,168)
Net income (loss) 69,156 149,098 (435,605) (2,298,679)
Net income
(loss) per share - basic 0.01 0.02 (0.04) (0.24)
(1) Operating income was favorably impacted by a $3.71 million recovery from an
affiliate of excess operating and maintenance costs incurred and expensed during
the period that the Company had limited use of the floating ramp system.
(2) Operating income was negatively impacted by $3.4 million of additional
costs related to the disruption caused by the loss of use of the San Juan ramp
structure resulting from Hurricane Georges. The $3.4 million of estimated
additional costs included $1,622,613 in additional operating and maintenance
costs (comprised primarily of stevedoring and port related items), $1,450,427 in
additional rent and purchased transportation expense (comprised primarily of
terminal equipment rental, trucking expense in San Juan and the U.S. and revenue
equipment rental), $117,954 in salaries and wages, $102,374 in insurance and
claims and $67,715 in communications and other operating expenses.
* * * * * *
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1999
BALANCE AT CHARGED TO
BEGINNING COSTS AND DEDUCTIONS BALANCE AT
YEAR OF YEAR EXPENSES (CHARGEOFFS) END OF YEAR
---- ---------- --------- ------------ -----------
Allowance for Doubtful Accounts -
1997 905,581 381,691 (121,398) 1,165,874
1998 1,165,874 1,040,721 (1,113,192) 1,093,403
1999 1,093,403 2,001,439 (1,726,328) 1,368,514
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not Applicable
©1998 Trailer Bridge, Inc.
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