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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
(Mark One)
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the Fiscal Year Ended December 31, 1993
or
/ / Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the Transition Period from to
Commission File Number 1-9063
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MARITRANS INC.*
(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)
ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 864-1200
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, Par Value $.01 Per Share New York Stock Exchange
Preferred Stock, Par Value $.01 Per Share None
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. /X/
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 / /
As of March 14, 1994, the aggregate market value of the voting stock held
by non-affiliates of the registrant was $63,005,515. As of March 14, 1994,
Maritrans Inc. had 12,523,000 shares of common stock outstanding.
Documents Incorporated By Reference
Part III incorporates information by reference from the Proxy Statement
for Annual Meeting of Stockholders to be held on May 12, 1994.
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* Successor to Maritrans Partners L.P.
Exhibit Index is located on page 34.
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FORM 10-K
MARITRANS INC.
TABLE OF CONTENTS
PART I
Page
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Item 1. Business ............................................... 1
Item 2. Properties ............................................. 10
Item 3. Legal Proceedings....................................... 11
Item 4. Submission of Matters to a Vote of Security Holders..... 12
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters..................................... 13
Item 6. Selected Financial Data................................. 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 14
Item 8. Financial Statements and Supplementary Data............. 18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..................... 30
PART III
Item 10. Directors and Executive Officers of the Registrant...... 30
Item 11. Executive Compensation.................................. 32
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................. 32
Item 13. Certain Relationships and Related Transactions.......... 32
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................ 33
Signatures ........................................................ 36
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PART I
Item 1. BUSINESS
General
Maritrans Inc. (the "Corporation" or the "Registrant"), together
with its predecessor, Maritrans Partners L.P. (the "Partnership"),
herein called "Maritrans," has historically served the petroleum and
petroleum product distribution industry by providing marine transportation
services along the East and Gulf Coasts of the United States utilizing its
barges and tugboats. Maritrans has recently broadened its participation in
distribution services by adding marine terminal facilities, distribution
coordination and oil spill contingency management services.
Structure
The Registrant is a Delaware corporation whose common stock ("Common
Stock") is publicly traded. The Registrant conducts most of its marine
transportation business activities through Maritrans Operating Partners
L.P. and Maritrans General Partner Inc., wholly owned subsidiaries of the
Registrant. Most of the Registrant's terminalling, spill contingency and
ancillary services are conducted through subsidiaries of Maritrans
Holdings Inc., a wholly owned subsidiary of the Registrant.
Direct and indirect subsidiaries of the Registrant include:
Maritrans Operating Partners L.P. (the "Operating Partnership")
Maritrans General Partner Inc.
Maritrans Holdings Inc.
Response Members Inc.
Maritrans Capital Corp.
Response Services Inc.
CCF Acquisition Corp.
Maritank Philadelphia Inc.
Inter-Cities Navigation (Texas) Corp.
Maritank Maryland Inc.
Interstate Towing (Texas) Co.
Marispond Inc.
Maritrans Eastern Inc.
Maritrans Inland Inc.
Maritrans Gulf Inc.
Based on its internal research regarding Maritrans' competition,
Maritrans believes that it is one of the largest United States marine
transporters of petroleum and petroleum products in the U.S. Coastwise
trade (i.e. from port to port within the United States), excluding
affiliates of integrated oil companies, and that it owns one of the
largest domestic fleets of U.S. flag oceangoing tank barges. Founded in
the 1850's and incorporated in 1928 under the name Interstate Oil
Transport Company, Maritrans' predecessor was one of the first tank barge
operators in the United States, with a fleet which increased in size and
capacity as United States consumption of petroleum products increased. On
December 31, 1980, Maritrans' predecessor operations and its tugboat and
barge affiliates were acquired by Sonat Inc. ("Sonat"). On April 14,
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1987, Maritrans acquired the tug and barge business and related assets of
the tug and barge affiliates of Sonat. Since 1981, Maritrans and its
predecessors have transported annually over 200 million barrels of crude
oil and refined petroleum products.
On March 31, 1993, the limited partners of the Partnership voted on a
proposal to convert the Partnership to corporate form (the
"Conversion"). The proposal was approved, and on April 1, 1993,
Maritrans Inc., then a newly-formed Delaware corporation, succeeded to all
assets and liabilities of the Partnership. The holders of general and
limited partnership interests in the Partnership and in the Operating
Partnership were issued shares of Common Stock, par value $.01 per share,
of the Corporation, representing substantially the same percentage equity
interest in the Corporation as they had in the Partnership, directly or
indirectly, in exchange for their partnership interest. Each previously
held Unit of Limited Partnership Interest in the Partnership was exchanged
for one share of Common Stock of the Corporation. For financial accounting
purposes, the conversion to corporate form has been treated as a
reorganization of affiliated entities, with the assets and liabilities
recorded at their historical costs. In addition, the Partnership
recognized a net deferred income tax liability for temporary differences
in accordance with Statement of Financial Accounting Standard ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993.
Maritrans' present business plan for complying with the Oil Pollution
Act of 1990, (the "OPA"), includes the implementation of an on-going,
company-wide Quality Improvement Program, which focuses on improving each
area of vessel operations in order to eliminate oil spills, increased
training and awareness of marine personnel (including recertification of
masters and mates, watchstanding procedures and cargo transfer
operations), improved vessel maintenance procedures to address repairs
before an accident occurs, maintaining a comprehensive risk- management
program, including $700 million in oil spill pollution liability insurance
coverage on its fleet of petroleum barges, the maximum amount of such
coverage generally carried at commercial rates, and implementing an
in-house oil pollution regulatory program designed to keep management and
operating personnel knowledgeable about all pertinent developments in
regulations promulgated under the OPA and in state oil pollution laws and
regulations.
Since the double-hull requirements of the OPA do not begin to impact
materially on Maritrans' present barge fleet until January 1, 2005, it is
difficult to say precisely how Maritrans will finance the conversion of
its fleet to double-hull vessels. However, Maritrans expects that, where
economically feasible, it will take steps to construct new, double-hulled
vessels and/or convert its present single-hull vessels. The timing of the
construction or conversion of such vessels will depend in large measure on
market conditions, particularly demand for double-hulled vessels and the
rates which petroleum shippers are willing to pay to use such vessels.
Maritrans expects to finance such construction or conversion primarily
from internally generated funds and outside sources, including the equity
market, borrowing from conventional sources such as banks and insurance
companies and U.S. Government- guaranteed ship financing, if available,
and financial leases. There is no assurance that such financing will be
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available in the amounts and at interest rates which will allow Maritrans
to replace its current single-hull barge fleet. For a further description
of Maritrans' present business plan for complying with the OPA, see
"Regulation - Oil Pollution Legislation."
In January 1992, Maritrans restructured its marine operations into
three divisions - Eastern, Inland and Gulf, supported by executive and
service units. The three divisions also provide marketing, logistical, and
operational support for Maritrans' vessels, which are assigned to
divisions based on market conditions. This divisional restructuring was
designed to move Maritrans closer to its markets and customers, improve
productivity and efficiency in operations and permit more rapid decisions
and responses to changing conditions.
The Gulf Division, headquartered in Tampa, Florida, provides marine
transportation services for petroleum products from refineries located in
Texas, Louisiana and Mississippi to distribution points along the Gulf and
Atlantic Coasts generally south of Cape Hatteras, North Carolina and
particularly into Florida. The Eastern Division, supported by a major
fleet center in Philadelphia, Pennsylvania, transports petroleum products
from East Coast refineries (primarily located in and near Philadelphia)
and pipeline terminals located in the New York Harbor area to distribution
terminals primarily located along the Eastern Seaboard between the
Canadian Maritime Provinces and Cape Hatteras, North Carolina. Maritrans
also provides, as part of its Eastern Division, lightering services for
large tank ships (a process of off-loading crude oil or petroleum products
from an inbound tanker into barges, thereby enabling the tanker to
navigate draft-restricted rivers and ports to discharge cargo at a
refinery or storage and distribution terminal). The Inland Division is
also supported by fleet center operations in Philadelphia, Pennsylvania,
and transports petroleum products and chemicals between refineries and
distribution points along the Delaware River and in the Chesapeake Bay. In
1993, the Inland Division and Maritank Maryland Inc., which owns a marine
terminal in Salisbury, Maryland, began to deliver distribution services
through petroleum exchange agreements with customers requiring both marine
transportation and terminalling services. The petroleum exchange
agreements are structured so that Maritrans bears none of the exposure to
fluctuations in inventory price movements.
Maritrans operates a fleet of tank barges and tugboats. Its largest
barge has a capacity of approximately 400,000 barrels, and its current
operating barge fleet capacity aggregates approximately 4 million barrels.
Demand for Maritrans' services is dependent primarily upon general
demand for petroleum and petroleum products in the geographic areas served
by its vessels. Management believes that United States petroleum
consumption, and particularly consumption in New England and Florida, are
significant indicators of demand for Maritrans' services. Increases in
product consumption generally increase demand for Maritrans' services;
conversely, decreases in consumption generally lessen demand for
Maritrans' services.
Management further believes that the level of domestic consumption of
imported product is also significant to Maritrans' business. Imported
petroleum products generally can be shipped on foreign-flag vessels
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directly into United States ports for storage, distribution and eventual
consumption. These shipments reduce the need for domestic marine
transportation service providers such as Maritrans to carry products from
United States refineries to such ports. While Maritrans does benefit
somewhat from the increase in demand for domestic redistribution services
that results from the delivery of excess product to terminals by
foreign-flag vessels, the overall effect of refined product imports on the
demand for Maritrans' services is generally negative.
In June 1991, Maritrans, through a subsidiary, Maritank Philadelphia
Inc., acquired a one-million barrel, deepwater marine terminal located in
Philadelphia. This facility is a full-service petroleum product terminal
able to receive, store and subsequently redistribute product by pipeline,
marine vessel and truck. This facility is also capable of performing
cleaning of Maritrans' petroleum carrying vessels. Under current law, a
vessel owner is jointly and severally liable with the barge cleaning
contractor and the waste disposal contractor in the event that either such
contractor improperly disposes of any portion of tank cleaning residues
from the vessel which is hazardous. Not only have the tank cleaning rates
paid by Maritrans to third parties been increasing substantially, but, in
addition, Maritrans believes that at least some of these sources for tank
cleaning will not be available in the near future. Management believes the
ability to control the cleaning of its vessels will lessen its
environmental exposure, as discussed above, since it can then control this
activity. Maritrans also believes that this facility will provide it with
a long-term strategic advantage since it will be able to assure itself of
the availability of these services at a reasonable cost and, by
controlling the facility, it will be able to ensure that it can manage
vessel turn-around time, thereby increasing vessel availability, and that
the facility is run in an environmentally sound manner.
In early 1993, Maritank Maryland Inc. ("MMI") and Marispond Inc.
("Marispond") were established as indirect subsidiaries of the
Registrant. MMI provides marine terminalling and, together with the Inland
Division, distribution services in Salisbury, Maryland. Marispond provides
a series of services, most of which arise from requirements of the OPA.
These services include oil spill contingency planning, response management
and other services on a contract basis to Maritrans and other vessel
owners from around the world whose vessels call on United States ports.
Maritrans also established an office in Houston, Texas in 1993 in
conjunction with efforts it is undertaking to expand its distribution
services.
Sales and Marketing
Maritrans provides marine transportation, storage, and distribution
coordination services primarily to integrated oil companies, independent
oil companies, and petroleum distributors in the southern and eastern
United States. Maritrans relies primarily on direct sales efforts,
minimizing its use of chartering brokers. Maritrans monitors the supply
and distribution patterns of its actual and prospective customers and
focuses its efforts on providing services that are responsive to the
current and future needs of these customers.
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Maritrans does business on a spot market basis, a term contract basis
and, more recently, on a product exchange basis. Maritrans strives to
maintain an appropriate mix of contracted business, based on current
market conditions.
In light of the potential liabilities of oil companies and other
shippers of petroleum products under the OPA and analogous state laws,
management believes that some shippers have begun to select transporters
in larger measure than in the past on the basis of a demonstrated record
of safe operations. Therefore, Maritrans has implemented a number of
measures in order to promote higher quality operations and continues to
stress its longstanding commitment to safe transportation of petroleum
products in its marketing efforts.
In 1993, approximately 71% of Maritrans' revenues were generated from
ten customers. In 1993, contracts with Chevron U.S.A., Inc. (including
affiliates, "Chevron"), and British Petroleum Corp. (including
affiliates) accounted in the aggregate for approximately 17% and 15%,
respectively, of Maritrans' revenues. There could be a material adverse
effect on Maritrans if either of these customers were to cancel or
terminate their various agreements with Maritrans. Management believes
that cancellation or termination of all of its business with any of its
larger customers is unlikely. In February 1994, Chevron announced a
tentative agreement to sell its refinery along the Delaware River in
Philadelphia, Pennsylvania, to Sun Company, Inc., a Maritrans customer.
Based on public announcements by the prospective buyer, Maritrans believes
such a sale would not have a material adverse effect on its business.
Competition and Competitive Factors
Overview. The maritime petroleum transportation industry is highly
competitive. The Jones Act, a federal law, restricts United States
port-to-port maritime shipping to vessels built in the United States,
owned by U.S. citizens and manned by U.S. crews. In Maritrans' market
areas, its primary direct competitors are the operators of U.S. flag
oceangoing barges and U.S. flag tankers. In the Gulf market, the primary
competitors are the fleets of both other independent petroleum
transporters and integrated oil companies. In the Eastern and Inland
market, management believes, based on its extensive knowledge and
experience in the industry, that Maritrans primarily competes with other
independent oceangoing barge operators and with the captive fleets of
integrated oil companies and, in lightering operations, has competed with
foreign-flag operators which lighter offshore. Some of the integrated oil
company fleets with which Maritrans competes are larger than Maritrans'
fleet. Additionally, in certain geographic areas and in certain business
activities, Maritrans competes with the operators of petroleum product
pipelines. Competitive factors which also affect Maritrans include the
output of United States refineries and the importation of petroleum
products.
The primary competition for Maritrans' marine terminals is proprietary
storage capacity of integrated oil companies, merchant refiners, and
independent marine terminal operators.
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U.S. Flag Barges and Tankers. Maritrans' most direct competitors are
the other operators of U.S. flag oceangoing barges and tankers. Because of
the restrictions imposed by the Jones Act, there is a finite number of
vessels that are currently eligible to engage in U.S. maritime petroleum
transport. Therefore, the size and capacity of Maritrans' fleet relative
to those of others in the industry is an important factor in competing for
business on the basis of safety and service. The number of vessels
eligible to engage in Jones Act trade has declined significantly over the
past several years. The gradual implementation of regulations requiring
significant capital modifications and in some cases loss of vessel
capacity, as well as a decrease in the number of new vessels constructed
since 1982, have been the major causes of this decline. Competition in the
industry is based upon price and service (including vessel availability)
and is intense.
Maritrans is engaged in several different market activities. A
significant portion of its revenues in 1993 was generated in the coastal
transportation of petroleum products from refineries or pipeline terminals
in the Gulf of Mexico to ports which are not served by pipelines.
Management believes that the optimal vessel size suited to serve these
ports is between 20,000 deadweight tons ("DWT") (approximately 160,000
barrels) and 40,000 DWT (approximately 320,000 barrels). Maritrans
currently operates six barges in this size range in this market, which
comprises a significant number of the vessels able to compete in this
market. The relatively large size of Maritrans' fleet generally provides
greater flexibility in meeting customers' needs.
Maritrans competes with operators of generally smaller vessels in its
Inland and Eastern transportation activities. In this activity Maritrans
is competing primarily with other barge operators. This is a diverse
market allowing a broader size range of vessels to participate than in the
Gulf of Mexico.
Management believes that, for the most part, Maritrans' independent
competitors do not provide the same level of service, quality performance,
or attention to safe operations as Maritrans due to its fleet size,
maintenance and training programs, and spill record.
General Agreement on Trade in Services ("GATS") and North American
Free Trade Agreement ("NAFTA").
The possible inclusion of maritime services within the scope of the
GATS and the NAFTA was the subject of discussion in the recently concluded
Uruguay Round of GATS negotiations and NAFTA negotiations. If maritime
services were deemed to include cabotage and were included in either of
these multi-national trade agreements, the result would have been to open
the Jones Act trade, (i.e., transportation of maritime cargo between U.S.
ports in which Maritrans and other U.S. vessel owners operate) to
foreign-flag vessels which would operate at lower costs. Maritrans
understands that cabotage (vessel trade or marine transportation between
two points within the same country) will not be included in the GATS and
the NAFTA in the foreseeable future; however, the possibility exists that
cabotage could be included in either the GATS or the NAFTA, or both, in
the future. In the meantime, Maritrans and the maritime industry will
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continue to resist vigorously the inclusion of cabotage in the GATS and
the NAFTA.
Refined Product Pipelines. Existing refined product pipelines
generally are the lowest incremental cost method for the long-haul
movement of petroleum and refined petroleum products. Other than the
Colonial Pipeline system, which originates in Texas and terminates at New
York Harbor, and smaller regional pipelines between Philadelphia and New
York, there are no pipelines carrying refined petroleum products to the
major storage and distribution facilities currently served by Maritrans.
While the Colonial Pipeline system reduces the amount of refined product
transported into the New York area by ship, it provides an origination
point for Maritrans' business of transporting such products from New York
Harbor to New England ports. Management believes that high capital costs,
tariff regulation and environmental considerations make it unlikely that a
new refined product pipeline system which would have a material adverse
effect on Maritrans' business will be built in its market areas in the
foreseeable future. It is possible, however, that, as noted above, new
pipeline segments (including pipeline segments that connect with existing
pipeline systems) could be built or that existing pipelines could be
converted to carry refined petroleum products, either of which could
effectively compete with Maritrans in particular locations.
Natural Gas Pipelines. In December 1991, a 370 mile natural gas
pipeline from the Canadian border to the northeastern United States
markets was completed. The operation of this pipeline increases the amount
of natural gas supplied to the northeastern United States, thus
potentially reducing the demand for residual fuel for power generation and
ultimately reducing the demand for marine transportation of residual fuel
and other petroleum products to and within the area. Whether this
reduction occurs will depend on the relative prices between residual fuel
and natural gas, including transportation costs, in the future. If these
pipelines cause a reduction in demand for marine transportation of
petroleum products, Maritrans and other carriers active in the trade would
suffer negative effects to their business in this market area.
Imported Refined Petroleum Products. A significant factor affecting
the level of Maritrans' business operations is the level of refined
petroleum product imports, particularly in Florida and New England.
Imported refined petroleum products may be transported on foreign-flag
vessels, which are generally less costly to operate than U.S. flag
vessels. To the extent that there is an increase in the importation of
refined petroleum products to any of the markets served by Maritrans,
there could be a decrease in the demand for the transportation of refined
products from United States refineries, which would likely have an adverse
impact upon Maritrans. One possible outcome of the Clean Air Act could be
the importing of more refined product from outside the United States in
order to avoid the expense of upgrading United States refineries to comply
with such Act. In this case, while there would still be a need for marine
petroleum transportation, the demand would decrease, thereby possibly
materially adversely affecting the coastwise business of Maritrans and its
competitors. On the other hand, this development could prove beneficial to
Maritrans' terminalling business, due to the likely increased demand for
storage capacity for the imported refined product.
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Delaware River Channel Depth. Legislation has been approved by the
United States Congress which authorizes the U.S. Army Corps of Engineers
to deepen the channel of the Delaware River between the river's mouth and
Philadelphia from forty to forty-five feet late in the 1990's. If further
legislation appropriating the funds for this project should become law and
this project is implemented and used by vessels calling on the Delaware
Valley refineries, it would have a material adverse effect on Maritrans'
lightering business which currently transports crude oil which is
off-loaded from deeply laden tankers from the mouth of the Delaware Bay up
the Delaware River to the Delaware Valley refineries.
Employees and Employee Relations
At December 31, 1993, Maritrans and its subsidiaries employed a total
of 605 persons. Of these employees, 100 are employed at the Philadelphia,
Pennsylvania headquarters of the Registrant or at the Philadelphia and
Tampa fleet centers, 465 are seagoing employees who work aboard the tugs
and barges, and 40 are employed by Maritrans' non-marine affiliates.
Maritrans and its predecessors have had collective bargaining agreements
with the Seafarers' International Union of North America, Atlantic, Gulf
and Inland District, AFL-CIO ("SIU"), and with American Maritime
Officers ("AMO"), formerly District 2 Marine Engineers Beneficial
Association, Associated Maritime Officers, AFL-CIO, for approximately 31
years. Approximately one-half of the total number of seagoing employees
employed are supervisors and, hence, as part of management, are not
represented by maritime unions. The collective bargaining agreement with
the SIU covers approximately 194 employees. The collective bargaining
agreement with the AMO covers approximately 44 employees. Each expires on
May 31, 1996. The employees of the subsidiaries of Maritrans Holdings Inc.
are not covered by any collective bargaining agreement.
Management believes that the seagoing supervisory and non-supervisory
personnel contribute significantly to responsive customer service.
Maritrans maintains a policy of seeking to promote from within, where
possible, and generally seeks to draw from its union and non-union
personnel to fill supervisory and other management positions as vacancies
occur.
Management believes that an extensive training program and operational
audit program (performed by Tidewater School of Navigation, Inc.) is
essential to insure that its employees are knowledgeable and highly
skilled in the performance of their duties as well as in their
preparedness for any unforeseen emergency situations that may arise.
Consequently, various training sessions and additional skill improvement
seminars are held throughout the year on subjects including deck officer
training, tankerman training, substance abuse awareness, fire fighting,
emergency response and personal professional development. In 1991,
Maritrans introduced its Quality Improvement Program. All employees
participate in quality training seminars in addition to the skills
improvement training mentioned above.
Regulation
Marine Transportation - General. The Interstate Commerce Act exempts
from economic regulation the water transportation of petroleum cargos in
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bulk. Accordingly, Maritrans' transportation rates, which are negotiated
with its customers, are not subject to special rate regulation under the
provisions of such act or otherwise. The operation of tugboats and barges
is subject to regulation under various federal laws and international
conventions, as interpreted and implemented by the United States Coast
Guard, as well as certain state and local laws. Tugboats and barges are
required to meet construction and repair standards established by the
American Bureau of Shipping, a private organization, and the United States
Coast Guard and to meet operational and safety standards presently
established by the United States Coast Guard. Maritrans' seagoing
supervisory personnel are licensed by the United States Coast Guard.
Seamen and tankermen are certificated by the United States Coast Guard.
Jones Act. The Jones Act, a federal law, restricts maritime
transportation between United States points to vessels built and
registered in the United States and owned by United States citizens. The
entities in the Maritrans organizational structure engaged in maritime
transportation between United States points are subject to the provisions
of the law. Therefore, it is the responsibility of Maritrans to monitor
ownership of these entities and take any remedial action necessary to
insure that no violation of the Jones Act occurs. In addition, the Jones
Act requires that all United States flag vessels be manned by United
States citizens, which significantly increases the labor and certain other
operating costs of United States flag vessel operations compared to
foreign-flag vessel operations. Foreign-flag seamen generally receive
lower wages and benefits than those received by United States citizen
seamen. In addition, a significant number of foreign governments
subsidize, at least to some extent, the wages and/or benefits received by
the seamen of those nations. Furthermore, certain of these foreign
governments subsidize those nations' shipyards, resulting in lower
shipyard costs both for new vessels and repairs than those paid by United
States-flag vessel owners such as Maritrans to United States shipyards.
Finally, the United States Coast Guard and American Bureau of Shipping
maintain the most stringent regime of vessel inspection in the world,
which tends to result in higher regulatory compliance costs for United
States-flag operators than those paid by owners of vessels registered
under foreign flags of convenience. Because Maritrans transports petroleum
and petroleum products between United States ports, most of its business
depends upon the Jones Act remaining in effect. There have been various
unsuccessful attempts in the past by foreign governments and companies to
gain access to the Jones Act trade. Management expects that efforts of
this type will continue.
Environmental Matters. Maritrans is subject to various legislation and
regulations enacted to protect the environment.
Marine Storage Terminal Regulation. Maritrans marine terminal
subsidiaries are subject to various federal, state and local environmental
laws and regulations, particularly with respect to air quality, the
handling of materials removed from the tanks of vessels which are cleaned,
and any spillage of petroleum products on or adjoining marine terminal
premises. Management believes that this regulatory scheme will become
progressively stricter in the future, resulting in greater capital
expenditures by Maritrans for environmentally related equipment. Also,
there are significant fines and penalties for any violations of this
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scheme. Management intends to reflect any such additional expenditures, to
the extent they are able, in the rates which are charged to customers from
time to time for services.
Oil Pollution Legislation. Many of the states in which Maritrans does
business have enacted laws providing for strict, unlimited liability for
vessel owners in the event of an oil spill. In addition, numerous states
have enacted or are considering legislation or regulations involving at
least some of the following provisions: tank- vessel-free zones,
contingency planning, state inspection of vessels, additional operating,
maintenance and safety requirements, and state financial responsibility
requirements. As a result of this legislation and regulation, Maritrans
has curtailed its carriage of persistent oils, primarily crude and #6 oil,
to or through portions of several of these states. Persistent oils are
those which continue to exist longer in the water when spilled, thus
making them more difficult to clean up.
In August 1990, the OPA became law. The OPA substantially changes the
liability exposure of owners and operators of vessels, oil terminals and
pipelines from that imposed under prior law. Under the OPA, each
responsible party for a vessel or facility from which oil is discharged
will be jointly, strictly and severally liable for all oil spill
containment and clean-up costs and certain other damages arising from the
discharge. These other damages are defined broadly to include (i) natural
resource damage (recoverable only by government entities), (ii) real and
personal property damage, (iii) net loss of taxes, royalties, rents, fees
and other lost revenues (recoverable only by government entities), (iv)
lost profits or impairment of earning capacity due to property or natural
resource damage, and (v) net cost of public services necessitated by a
spill response, such as protection from fire, safety or health hazards.
The owner or operator of a vessel from which oil is discharged will be
liable under the OPA unless it can be demonstrated that the spill was
caused solely by an act of God, an act of war, or the act or omission of a
third party unrelated by contract to the responsible party. Even if the
spill is caused solely by a third party, the owner or operator must pay
all removal cost and damage claims and then seek reimbursement from the
third party or the trust fund established under the OPA.
The OPA establishes a federal limit of liability of the greater of
$1,200 per gross ton or $10 million per tank vessel. A vessel owner's
liability is not limited, however, if the spill results from a violation
of federal safety, construction or operating regulations. In addition, the
OPA does not preclude states from adopting their own liability laws.
Numerous states in which Maritrans operates have adopted legislation
imposing unlimited strict liability for vessel owners and operators.
Management believes that the liability provisions of the OPA and similar
state laws have greatly expanded Maritrans' potential liability in the
event of an oil spill, even where Maritrans is not at fault.
The OPA requires all vessels to maintain a certificate of financial
responsibility for oil pollution in an amount equal to the greater of
$1,200 per gross ton per vessel, or $10 million per vessel in conformance
with regulations that have not been promulgated in final form by the U.S.
Coast Guard. Additional financial responsibility in the amount of $300 per
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gross ton will be required under regulations to be promulgated by the U.S.
Coast Guard under the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), the federal Superfund law. The previous
requirement was $150 per gross ton per vessel, or $250,000, whichever is
larger. Owners of more than one tank vessel, such as Maritrans, however,
will only be required to demonstrate financial responsibility in an amount
equal to cover the vessel having the greatest maximum liability
(approximately $40 million in Maritrans' case). It is uncertain, however,
whether Maritrans or other vessel operators will be able to acquire such
certificates through existing international insurance underwriters or any
other source. This uncertainty is due to the fact that the final federal
financial responsibility regulations have not been issued by the U.S.
Coast Guard, and if such regulations require the international insurance
underwriters to in effect guarantee the payment of clean-up costs and
damages up to the OPA statutory limit, they have stated that they are
going to refuse to do so. Since the final regulations have not been
issued, this position threatened by the international insurance
underwriters has not been taken. The operation of tank vessels in marine
transportation of oil and petroleum products without such certificates is
unlawful and such unlawful operation would not be conducted by Maritrans.
This could result in materially adverse effects on Maritrans.
The OPA requires all newly constructed petroleum tank vessels engaged
in marine transportation of oil and petroleum products in the U.S. to be
double-hulled and all such existing single-hulled vessels to be
retrofitted with double hulls or phased out of the industry beginning
January 1, 1995, in order to comply with new standards for such vessels.
Because of the age and size of Maritrans' individual barges, the first of
its operating vessels will be required to be retired or retrofitted by
January 1, 2003, and most of its large ocean-going, single-hulled vessels
will be similarly affected on January 1, 2005. As a result of this
legislation, the expected lives of some of Maritrans' barges have been
shortened, thus forcing Maritrans to accelerate the depreciation of these
vessels. This change in depreciation calculation began in September 1990
and caused an increase of Maritrans' annual depreciation expense by
approximately $1.4 million.
The OPA directs the Coast Guard to develop interim measures for single
hull tank vessels over 5,000 gross tons "that provide as substantial
protection to the environment as is economically and technologically
feasible." The Coast Guard issued a Notice of Proposed Rulemaking which
proposed the adoption of several alternative structural measures to meet
this requirement. The regulation would have required substantial
modification of 14 of Maritrans' largest barges, with a significant cost
impact. However, in response to comments from industry, the Coast Guard is
reexamining these structural proposals, and further action on structural
requirements has been deferred. In the meantime, the Coast Guard is
expected to adopt a series of operational measures which, while increasing
current standards, should not have an appreciable effect on Maritrans.
The double-hulled or double-bottomed tank barges currently owned by
Maritrans account for approximately 15% of its fleet capacity. None of
these vessels, however, comply with the current regulations promulgated
under the OPA for double-hulled vessels, although it is possible that some
of these vessels may be grandfathered under changes in these regulations
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which may be adopted in the future. Management believes that it would, for
example, cost approximately $20 million to build a 20,000 DWT
double-hulled barge. The cost of retrofitting an existing 20,000 DWT barge
with a double hull may be somewhat less than the cost of a new barge, but
the retrofitting cost would depend upon a variety of construction and
engineering factors. Therefore, retrofitting may not be a viable economic
alternative to the purchase of a new double-hulled barge. The prices of
retrofitting and constructing new vessels may increase materially as a
result of increased demand for shipyard capacity arising from the OPA.
The OPA further required all tank vessel operators to submit, by
February 18, 1993, for federal approval, detailed vessel oil spill
contingency plans setting forth their capacity to respond to a worst case
spill situation. Maritrans filed its plans prior to that deadline. Several
states have similar contingency or response plan requirements. Because of
the large number of ports served by Maritrans, the cost of compliance may
be substantial, and, while Maritrans is presently in compliance, there is
no assurance that Maritrans will be able to remain in compliance with all
the federal requirements or those of one or more states.
The OPA is expected to have a continuing adverse effect on the entire
U.S. oil and petroleum marine transportation industry, including
Maritrans. The effects on the industry could include, among others, (i)
increased requirements for capital expenditures, which the independent
marine transporters of petroleum may not be able to finance, to fund the
cost of double-hulled vessels, (ii) increased maintenance, training,
insurance and other operating costs, (iii) civil penalties and liability,
(iv) decreased operating revenues as a result of a further reduction of
volumes transported by vessels and (v) increased difficulty in obtaining
sufficient insurance, particularly oil pollution coverage. These effects
could adversely affect Maritrans' profitability and liquidity.
The following table sets forth Maritrans' quantifiable oil spill
record for the period January 1, 1988 through December 31, 1993:
Gallons Spilled
No. of No. of No. of Per Million
Period Gals. Carried Spills Gals. Spilled Gals. Carried
- ------------------------------------------------------------------------------------------------
(000) (000)
1/1/1988 - 12/31/1988 10,954,000 7 17.55 1.601
1/1/1989 - 12/31/1989 11,315,000 15 11.26 .995
1/1/1990 - 12/31/1990 12,222,000 20 189.37 15.494
1/1/1991 - 12/31/1991 10,710,000 18 1.28 .119
1/1/1992 - 12/31/1992 10,272,000 8 .02 .002
1/1/1993 - 12/31/1993* 10,433,000 4 .02 .002
----------
* Results for 1993 exclude the product lost, mostly burned, in the
collision of Maritrans' barge, the OCEAN 255, with vessels owned by
others off the coast of Florida in August 1993. Management believes that
Maritrans was not at fault in this incident.
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Maritrans believes that its spill ratio compares favorably with the
other independent, coastwise operators in the Jones Act trade.
Water Pollution Regulations. The Federal Water Pollution Control Act
of 1972 ("FWPCA"), as amended by the Clean Water Act of 1977, imposes
strict prohibitions against the discharge of oil (and its derivatives) and
hazardous substances into navigable waters of the United States. FWPCA
provides civil and criminal penalties for any discharge of petroleum
products in harmful quantities and imposes substantial liability for the
clean-up costs of removing an oil spill. State laws for the control of
water pollution also provide varying civil and criminal penalties and
clean-up cost liabilities in the case of a release of petroleum or its
derivatives into surface waters. In the course of its vessel operations,
Maritrans engages contractors in addition to Maritank Philadelphia Inc. to
remove and dispose of waste material, including tank residue. In the event
that any of such waste is deemed "hazardous," as defined in FWPCA or the
Resource Conservation and Recovery Act, and is disposed of in violation of
applicable law, Maritrans could be jointly and severally liable with the
disposal contractor for the clean-up costs and any resulting damages. The
United States Environmental Protection Agency ("EPA") previously
determined not to classify most common types of "used oil" as a
"hazardous waste," provided that certain recycling standards are met,
but has since decided to review this issue again. While it is unlikely
that used oil will be classified as hazardous, the management of used oil
under EPA's proposed regulations will increase the cost of disposing of or
recycling used oil from Maritrans' vessels. Some states in which Maritrans
operates, however, have classified "used oil" as hazardous. Maritrans
has found it increasingly expensive to manage the wastes generated in its
operations.
Air Pollution Regulations. The 1990 amendments to the Clean Air Act
give the EPA and the states the authority to regulate emissions of
volatile organic compounds ("VOCs") and any other air pollutant from
tank vessels in all ports served by Maritrans. Several states with ports
served by Maritrans already have established regulations to require the
installation of vapor recovery equipment on petroleum-carrying vessels to
reduce the emissions of VOCs. Compliance with these federal and state
regulations has required material capital expenditures for the
retrofitting of Maritrans' barges and has increased operating costs. The
EPA also has the authority to regulate emissions from marine vessel
engines; however, with the possible exception of the use of low sulfur
fuels, direct regulation of marine engine emissions is not likely in the
near future in ports served by Maritrans. However, it is possible that the
EPA and/or various state environmental agencies ultimately may require
that additional air pollution abatement equipment be installed in tug
boats, including those owned by Maritrans. Such a requirement could result
in a material expenditure by Maritrans, which could have an adverse effect
on Maritrans' profitability if it is not able to recoup these costs
through increased charter rates.
Port and Tanker Safety Act; Interim Measures. The Port and Tanker
Safety Act of 1978 ("PTSA") required certain oil-carrying tankships to
be fitted with segregated ballast tanks. PTSA required self-propelled
vessels to be retrofitted to meet these standards. Barges were not
generally affected by such requirements. However, if the environmental
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standards of PTSA were to be made applicable to the large barges operated
by Maritrans, Maritrans would be required to make significant capital
expenditures to retrofit such barges, and the cargo-carrying capacity of
such barges would also be decreased. There have been no recent regulatory
efforts to apply the PTSA standards to large barges such as those operated
by Maritrans.
User Fees and Taxes. The Water Resources Development Act of 1986
permits local non-federal entities to recover a portion of the costs of
new port and harbor improvements from vessel operators with vessels
benefitting from such improvements. Management does not believe that
Maritrans' vessels currently benefit from such improvements. However,
there can be no assurance that such entities will not seek to recover a
portion of such costs from Maritrans. Federal legislation has been enacted
imposing user fees on vessel operators such as Maritrans to help fund the
United States Coast Guard's regulatory activities. Other federal, state
and local agencies or authorities could also seek to impose additional
user fees or taxes on vessel operators or their vessels. The approved U.S.
budget for its 1992 fiscal year directs the Coast Guard to collect fees
for vessel inspection and documentation, licensing and tank vessel
examinations. Maritrans does not expect that initially these fees will be
material to it. There can be no assurance that user fees, which could have
a material adverse effect upon the financial condition and results of
operations of Maritrans, will not be imposed in the future.
Item 2. PROPERTIES
Vessels. The Operating Partnership owned, at December 31, 1993, a
fleet of 67 vessels, of which 39 are barges and 28 are tugboats. Two
additional tugs are operated under long-term leases.
The barge fleet consists of a variety of vessels falling within six
different barge classifications. The largest vessels in the fleet are the
14 superbarges ranging in capacity from 188,065 to 400,000 barrels. The
oldest vessel in that class is the OCEAN 250 which was constructed in
1970, while the largest and most recently reconstructed vessel is the
OCEAN 400, for which modifications were completed as recently as 1990. For
the most part, however, the bulk of the superbarge fleet was constructed
during the 1970's and early 1980's.
The fleet's next ten largest barges range in capacity from 61,638
barrels to 165,881 barrels and were constructed or substantially renovated
between 1967 and 1981. The fleet also includes two specially equipped
chemical barges. The remainder of the barge fleet is comprised of three
vessels falling in the 50,000 barrel class, seven vessels in the 30,000
barrel class and three vessels in the small barge classification. The
majority of these vessels were constructed between 1961 and 1977.
The Operating Partnership's tugboat fleet is comprised of one 11,000
horsepower class vessel, eleven 5,600 horsepower class vessels, four 4,000
horsepower class vessels, five 3,200 horsepower class vessels, six 2,200
horsepower class vessels and two pusher class vessels. One of the 4,000
horsepower class vessels was sold in January 1994. The year of
construction or substantial renovation of these vessels ranges from 1962
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to 1990 with the bulk of the tugboats having been constructed sometime
between 1967 and 1981.
Substantially all of the vessels in the fleet are subject to first
preferred ship mortgages to secure payment of the notes of the Operating
Partnership. These mortgages require the Operating Partnership to maintain
the vessels at a high standard and continue a life-extension program for
certain of its larger barges. At December 31, 1993 Maritrans is not in
violation of the Operating Partnership's mortgage covenants. At December
31, 1993 Maritrans owns ten barges and one tugboat which were not in a
state of operational readiness. Most of these vessels were too small to
achieve satisfactory returns in current market conditions, or were
purchased as non-operating hulls for potential refurbishment in the event
market conditions were to improve sufficiently to merit additional
expenditures. Maritrans does not believe market conditions in 1994 will
merit such refurbishments.
Marine Terminals. MPI owns 35 acres on the west bank of the Schuylkill
River in Philadelphia where twelve storage tanks with a total capacity of
1,040,000 barrels, truck loading racks, office space and related equipment
used in MPI's marine terminal and tank cleaning operations are located. In
early 1993, MMI acquired 25 acres on the Wicomico River in Salisbury,
Maryland where fourteen storage tanks with a total capacity of 170,000
barrels, office space and related equipment used in MMI's marine terminal
operations are located.
Other Real Property. The Registrant's operations are headquartered in
Philadelphia, Pennsylvania, where it leases office space, expiring in
1998. Eastern fleet operations are located on the west bank of the
Schuylkill River in Philadelphia, Pennsylvania where the Operating
Partnership owns approximately six acres of improved land. In addition, it
also leases a bulkhead of approximately 430 feet from the federal
government for purposes of mooring vessels adjacent to the owned land.
This lease was renewed in 1993 and expires in 1998. The Inland Division
leases space from MPI. In the Philadelphia area, the Operating Partnership
has several short term (one year or less) leases for nearby pier space for
the purpose of mooring vessels and warehouse space for the purpose of
storage and shop facilities. The Operating Partnership also leases four
acres of Port Authority land in Tampa, Florida for use as its Gulf
Division fleet center, which lease expires in 2004, with three renewal
options of ten years each and a limited amount of office space in
Wilmington, Delaware for itself and its affiliated entities. The Operating
Partnership also has an office space agreement in Houston, Texas for its
distribution services business.
Item 3. LEGAL PROCEEDINGS
Maritrans is a party to routine, marine-related lawsuits and labor
arbitrations arising in the ordinary course of its business. The claims
made in connection with Maritrans' marine operations are covered by marine
insurance, subject to applicable policy deductibles which are not material
as to any type of insurance coverage. Management believes, based on its
current knowledge, that such lawsuits and claims, even if the outcomes
were to be adverse, would not have a material adverse effect on Maritrans'
financial condition.
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In connection with the sale of Main Iron Works, Inc. ("MIW"),
Maritrans' predecessor agreed to reimburse MIW for certain ongoing
workmen's compensation claims arising prior to the sale of MIW, and
retained an assignment of the shipyard's rights against its former
workmen's compensation insurance carrier, which has been in liquidation
proceedings. Due to the size and complexity of the liquidation proceeding,
it is unlikely that this matter will be resolved for several years.
Maritrans assumed its predecessor's reimbursement obligations to MIW and
obtained an assignment of the predecessor's rights against the workmen's
compensation insurance carrier. Maritrans' predecessor originally accrued
a liability of $1.3 million for claim payments pursuant to such
reimbursement agreement with MIW. Management believes, based on its
current knowledge, that such accrual will be adequate. However, there is a
possibility that future claims could exceed such amount. Management
believes, based on its current knowledge, that the ultimate resolution of
these claims, even if in excess of the amount accrued, would not have a
material adverse effect on Maritrans' financial condition.
Maritrans' predecessor was sued in the U.S. District Court in Ohio by
nine individuals, eight who at most worked briefly for such predecessor
and a ninth who still works for Maritrans, alleging unspecified damages
for exposure to asbestos. Maritrans has been sued in a similar suit in New
Orleans by a plaintiff and Philadelphia by two plaintiffs with whom
Maritrans has no employment records, and in Philadelphia by an employee of
Maritrans' predecessor which suit was settled by a payment of $4,000 by
Maritrans. Although Maritrans believes these claims are without merit, it
is impossible at this juncture to express a definitive opinion on the
final outcome of any such suit. Management believes that any liability
would not have a material adverse effect as it is adequately covered by
applicable insurance.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security
holders, through the solicitation of proxies or otherwise, during the last
quarter of the year ended December 31, 1993.
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PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information and Holders
Maritrans Inc. Common Shares (and prior to April 1, 1993, Maritrans
Partners L.P. Depositary Units) trade on the New York Stock Exchange under
the symbol "TUG." The following table sets forth, for the periods
indicated, the high and low sales prices per share/unit as reported by the
New York Stock Exchange.
QUARTERS ENDING IN 1993: HIGH LOW
----------------------- ---------------
March 31, 1993 $4.125 $2.500
June 30, 1993 4.250 3.375
September 30, 1993 4.250 3.250
December 31, 1993 4.250 3.625
QUARTERS ENDING IN 1992: HIGH LOW
----------------------- ----------------
March 31, 1992 $4.875 $ 3.625
June 30, 1992 4.000 2.750
September 30, 1992 3.375 2.500
December 31, 1992 2.750 1.750
As of January 31, 1994, the Registrant had 12,523,000 Common Shares
outstanding and approximately 1,212 shareholders of record.
Dividends and Distributions
For the period April 1, 1993 to December 31, 1993, Maritrans Inc. paid
no dividends to stockholders. While dividend policy is determined at the
discretion of the Board of Directors of Maritrans Inc., management
believes that it is not likely Maritrans will pay any dividends in the
near future.
For the period January 1, 1992 to March 31, 1993, Maritrans Partners
L.P. paid the following cash distributions to the unitholders:
PAYMENTS IN 1992: PER UNIT
---------------- --------
February 24, 1992 $ .2875
May 26, 1992 .2875
--------
TOTAL $ .5750
========
Maritrans Partners L.P. cash distributions should not be compared with
dividends paid on common stock by corporations. Dividends paid by
corporations are taxable as ordinary income, while distributions from
partnerships may be treated partially or fully as a nontaxable return of
capital.
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Item 6. SELECTED FINANCIAL DATA ($000)
MARITRANS INC.
--------------------------------------------------------
JANUARY 1 TO DECEMBER 31
1993 1992 1991 1990 1989
--------------------------------------------------------
CONSOLIDATED INCOME STATEMENT DATA:
Revenues ..................................... $132,539 $133,051 $146,560 $152,368 $135,592
Operating income before depreciation and
amortization ............................... 24,509 25,576 23,394 31,725 31,983
Depreciation and amortization ................ 15,868 15,578 15,962 13,747 12,261
Operating income (excludes interest expense).. 8,641 9,998 7,432 17,978 19,722
Interest expense, net ........................ 10,373 10,958 10,890 10,299 10,088
Income (loss) before income taxes and
extraordinary item ......................... 5,186 3,419 (1,576) 10,031 12,584
Provision for income taxes ................... 16,975(1) - - - -
Extraordinary item ........................... - - - 1,784 -
Net income (loss) ............................ (11,789)(1) 3,419 (1,576) 11,815 12,584
CONSOLIDATED BALANCE SHEET DATA (at period end):
Total assets ................................. $253,038 $251,344 $258,957 $258,481 $259,649
Long-term debt ............................... 110,556 116,866 120,423 114,000 115,500
Partnership equity ........................... - 86,571 90,339 106,290 108,850
Stockholders' equity ......................... 74,874 - - - -
----------
(1) Maritrans Inc., the successor to Maritrans Partners L.P. effective
April 1, 1993, is subject to income taxation. See note 1 and 4 to
Financial Statements.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition
and results of operations of Maritrans Inc. (the "Corporation"), and,
together with its subsidiaries and Maritrans Partners L.P.(the
"Partnership"), herein called "Maritrans."
Overview
Historically, Maritrans has served the petroleum and petroleum product
distribution industry by providing marine transportation services along
the East and Gulf Coasts of the United States utilizing its barges and
tugboats. Maritrans has recently broadened its participation in
distribution services by adding marine terminal facilities and oil spill
contingency management services.
Over the last several years, Maritrans has been implementing steps to
become more competitive and more customer-oriented. In the fourth quarter
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of 1993, Maritrans announced a corporate streamlining which is expected to
lower its costs by $5 million in 1994 as compared to 1993. This
streamlining resulted in a $2 million charge in the fourth quarter of
1993, with $1 million being charged to general and administrative costs
and $1 million charged to operation expense. Most of these charges related
to severance costs and other continuation benefits for the terminating and
retiring employees.
Increased United States oil consumption, as well as a shortening of
average voyage length, contributed to Maritrans transporting an increasing
number of barrels from 1988 through 1990. Volumes transported by Maritrans
declined approximately 14% in 1991 and were relatively stable in 1992 and
1993, declining less than 3% in 1992 and increasing less than 2% in 1993.
Maritrans increased vessel capacity from 1988 to 1990, particularly by
placing in service the OCEAN 400, Maritrans' largest barge, in May 1990.
In 1993, Maritrans reduced owned capacity through the disposal of vessels
excess to its long-term business needs. In addition, a barge involved in a
collision off the coast of Florida in August 1993 was declared a
constructive total loss. During most of 1993, Maritrans had one or more
large barges out of service for vessel performance improvements, resulting
in Maritrans utilizing, to a greater extent than in 1992, vessels
chartered from third parties.
Operating income declined in 1989 and 1990 from previous levels as
increased costs, particularly in maintenance and insurance, could not be
fully offset by rate increases. Lower business activity levels in 1991
through 1993 exacerbated this effect. Maintenance costs had increased
markedly in 1989 through 1991 due to three factors: (1) response to the
Oil Pollution Act of 1990 (the "OPA"), through management's proactive
stepping up of maintenance to achieve even higher quality operations than
existed previously, as measured by less work time lost due to critical
equipment malfunctions; (2) additions to the fleet in that period; and (3)
the effects of inflation and an aging fleet. Lower activity levels and
improved maintenance processes lowered maintenance expense levels in 1992
and 1993. Costs related to measures taken to reduce the risk of oil
spills, as well as inflation, have also reduced operating income in the
years 1990 through 1993.
In June 1991, Maritrans purchased a one-million barrel, deepwater
marine terminal facility located on the Schuylkill River in Philadelphia,
which provides terminalling services to outside customers and
vessel-cleaning services for Maritrans. The facility was purchased for $12
million, mainly with the proceeds of a bank loan. In 1992, more than $2
million was spent to increase vessel cleaning capability.
In February 1993, Maritrans purchased adjoining terminals in
Salisbury, Maryland, with storage capacity totalling 170,000 barrels, to
provide marine terminalling services. The facilities were purchased for
less than $2 million, and Maritrans now operates the merged facilities as
a single terminal and has distribution service agreements with the former
owners.
Factors that will affect future results of Maritrans include: overall
U.S. oil consumption, particularly oil consumption in Florida and the
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Northeastern United States, environmental laws and regulations, oil
companies' operating and sourcing decisions, competition and labor costs,
training costs, liability insurance costs, and Maritrans' recent
broadening of its participation in petroleum distribution services.
Legislation
The enactment of the OPA in 1990 significantly increased the liability
exposure of marine transporters of petroleum in the event of an oil spill.
In addition, most states in which Maritrans operates have enacted (and the
others in which it operates may enact) legislation increasing the
liability for oil spills in their waters. Maritrans maintains oil
pollution liability insurance of $700 million on its vessels which is
generally the maximum amount of oil spill liability insurance carried by
marine transporters of petroleum. There can be no assurance that such
insurance will be adequate to cover potential liabilities in the event of
a catastrophic spill, that additional premium costs will be recoverable
through increased rates, or that such insurance will continue to be
available in satisfactory amounts.
Moreover, this legislation has increased other operating costs as
Maritrans has taken steps to minimize the risk of potential spills, such
as costs for additional training, safety and contingency programs that
have not yet been fully recovered through increased rates. Additionally,
management believes that the legislation has had the effect of reducing
the total volume of waterborne petroleum transportation as shippers of
petroleum have attempted to reduce their exposure to the impact of the
OPA. Therefore, although management cannot predict the continuing adverse
impact of this legislation on Maritrans, the legislation has had a
material adverse effect on Maritrans' operations and financial results,
including an increase in depreciation expense due to the shortening of
expected lives of some of Maritrans' barges as a result of the OPA.
The OPA is expected to have a continuing adverse effect on the entire
U.S. oil and petroleum marine transportation industry, including
Maritrans. The effects on the industry could include, among others, (i)
increased requirements for capital expenditures, which the independent
marine transporters of petroleum may not be able to finance, to fund the
cost of double-hulled vessels, (ii) increased maintenance, training,
insurance and other operating costs, (iii) civil penalties and liability,
(iv) decreased operating revenues as a result of a further reduction of
volumes transported on vessels and (v) increased difficulty in obtaining
sufficient insurance, particularly oil pollution coverage. These effects
could adversely affect Maritrans' profitability and liquidity.
The OPA requires the retirement or retrofitting of most of Maritrans'
existing barges beginning in 2003 through 2005. Some of Maritrans' barges
are not scheduled for retirement until 2015. A small number of barges may
be treated as meeting the double-hull requirements and, therefore, be
allowed to continue operating without modification. If Maritrans were to
rebuild its entire barge capacity with double-hulls, the estimated cost
would be approximately $500 million. This estimate could be higher as
shipyard costs increase.
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An investment banking firm was retained in 1991 to assist in
evaluating Maritrans' ongoing financial strategies and company structural
issues in light of strategic considerations at that time. In April 1992,
the Board of Directors of the managing general partner of the Partnership,
a master limited partnership, decided to seek unitholder approval to
convert from the master limited partnership form to corporate form. On
April 1, 1993, after a vote of the unitholders, the Partnership was
converted to Maritrans Inc., a corporation.
Results of Operations
1993 Compared With 1992
Revenues of $132.5 million for the year ended December 31, 1993
decreased by $0.6 million, or less than one percent, from $133.1 million
for the year ended December 31, 1992. Barrels of cargo transported
increased by 3.8 million barrels, from 244.6 million to 248.4 million,
respectively. Severe price competition for oil transportation services has
existed in the markets served by Maritrans in recent years, and is
expected to continue. In 1993, more barrels were transported shorter
distances, lowering the fleet's average revenue per barrel. Revenue from
sources other than marine transportation increased from 2.8% of total
revenue in 1992 to 4.9% in 1993, due to additional terminalling
operations, contingency management activities, and other services supplied
to third-party vessel owners.
Operating expenses of $123.9 million for the year ended December 31,
1993, increased by $0.8 million, or less than one percent, from operating
expenses of $123.1 million for the year ended December 31, 1992. Lower
vessel activity levels, due in part to time out of service for vessel
improvements, and improvements in maintenance processes have decreased
operation and maintenance expense levels. During most of 1993, Maritrans
utilized vessels chartered from others while one or more of its large
barges were out of service for vessel performance improvements and
maintenance. Crew costs were lower as a result of lower activity levels,
including shipyarding periods, and the previously described disposal of
equipment throughout the year. Fuel expense decreased due to a decline in
price per gallon and fewer gallons consumed. General and administrative
costs decreased from the comparable prior period when general and
administrative costs included the early termination of a lease for office
space and costs related to the transaction to convert from partnership to
corporate form. In 1993, general and administrative costs and operation
expense each included a charge of $1 million (for a total of $2 million)
for corporate streamlining costs, most of which relates to severance costs
and other continuation benefits for terminating and retiring employees. A
charge of $0.6 million was recorded in 1992 for workforce reduction
related costs.
In 1993, Maritrans recorded $5.9 million in gains on the sales and
liquidation of fixed assets as part of other income. In 1992, $3 million
was recorded in other income as a result of a settlement of outstanding
litigation, discussed further below in "1992 Compared With 1991."
The adoption of FAS No. 109, Accounting for Income Taxes, caused the
Partnership to recognize a net deferred income tax provision of $16.6
21
24
million in the first quarter of 1993. The adoption of this accounting rule
was prescribed by the conversion of the Partnership to corporate status,
which occurred April 1, 1993.
The net loss for the year ended December 31, 1993, was $11.8 million
as compared with net income of $3.4 million for the year ended December
31, 1992. The loss was the result of the previously noted provision of
$16.6 million for income taxes. Income before income taxes for the period
increased to $5.2 million from $3.4 million in the comparable period in
1992. While the change in operating income reflected the small decline in
revenues and small increase in operating expenses, the most significant
factors affecting income before income taxes were the gains on
sales/liquidation of vessels in 1993 and the settlement receipts from
litigation in 1992.
1992 Compared With 1991
Revenues of $133.1 million for the year ended December 31, 1992
decreased by $13.5 million, or 9%, from $146.6 million for the year ended
December 31, 1991. Barrels of cargo transported decreased by 5.8 million
barrels, from 250.4 million to 244.6 million, respectively. Lower revenue
levels resulted from lower average daily charter rates and decreased
volumes. The continuing period of lower oil consumption has caused severe
price competition for oil transportation services.
Operating expenses of $123.0 million for the year ended December 31,
1992, decreased by $16.1 million, or 12%, from operating expenses of
$139.1 million for the year ended December 31, 1991. Lower activity levels
and improvements in maintenance processes have lowered maintenance expense
levels. Management believes that these practices have not caused the
condition of vessels to deteriorate. Personnel training costs were higher
in 1991 due to the initiation and implementation of comprehensive training
programs. Crew costs were lower as a result of lower utilization of marine
personnel. Fuel expense decreased due to a decline in price per gallon and
fewer gallons consumed. General and administrative costs increased due to
the early termination of a lease for office space and costs related to the
potential transaction to convert to corporate form. A charge of $0.6
million was recorded in the third quarter for workforce reduction related
costs.
In November, 1992, the Partnership dismissed its suit against its
former law firm and a partner of that firm pursuant to a settlement
agreement among the parties. As part of the settlement the Partnership
received a payment of $3 million, and the trial court dissolved the
preliminary injunction which previously barred the defendants from
representing certain of Maritrans' economic competitors in labor
negotiations. The payment received is reflected in other income for the
year ended December 31, 1992.
Net income of $3.4 million for the year ended December 31, 1992,
increased by $5.0 million from a net loss of $1.6 million for the year
ended December 31, 1991. While revenues have declined from levels in the
comparable period in 1991, larger declines in operating expenses and the
settlement of litigation mentioned above in the same period have caused
the improvement in results.
22
25
Liquidity and Capital Resources
In 1993, funds provided by investing and operating activities were
sufficient to fully meet debt service obligations and loan agreement
restrictions. The total of $19.3 million in proceeds from the disposal of
equipment was generated by the sale of non-strategic assets and from the
insurance proceeds for the constructive total loss of a barge involved in
a collision. The net funds provided by operating activities of $3.5
million included $16.6 million from the provision for deferred income
taxes recorded for the Conversion in conjunction with the adoption of FAS
No. 109 Accounting for Income Taxes. The primary uses of funds were $17.5
million in capital expenditures, principally for vessel improvements and
marine terminal purchases, and $6.0 million in long-term debt repayment.
Maritrans believes that in 1994 funds provided by operating
activities, augmented by financing transactions and investing activities,
will be sufficient to provide the funds necessary for operations,
anticipated capital expenditures, lease payments and required debt
repayments. No dividends are expected to be made in 1994.
Maritrans believes capital expenditures in 1994 for improvements to
its currently operating vessels and existing marine terminals will be
approximately $3 million. However, Maritrans will continue to evaluate the
potential purchase of marine storage terminal and other investments
consistent with its long-term strategic interests, and the potential
sources of funds for those potential investments. No material commitments
existed at December 31, 1993, for capital expenditures.
Working Capital and Other Balance Sheet Changes
Working capital increased approximately $13.0 million from December
31, 1992 to December 31, 1993. Current assets increased $14.0 million from
the prior comparable period. These increases were largest in other
accounts receivable, due to increases in outstanding insurance claims
receivable. Maritrans expects these claims to be fully recoverable from
insurance underwriters. Additionally, the current benefit of deferred
income taxes recognized on temporary differences are shown on the
financial statements for December 31, 1993 but were not included in the
financial statements for December 31, 1992, because of the then current
partnership status of Maritrans. Prepaid expenses also increased due to an
increase in advance payments to shipyards for their services and a change
in the timing of payments for certain insurance premiums. Current
liabilities increased approximately $1 million. The ratio of current
assets to current liabilities increased to 1.94 at December 31, 1993 from
1.54 at December 31, 1992.
Debt Obligations and Borrowing Facility
At December 31, 1993, Maritrans had $116.9 million in total
outstanding debt, secured by mortgages on substantially all of the fixed
assets of the subsidiaries of the Corporation. The current portion of this
debt at December 31, 1993, is $6.3 million. Maritrans has a $10 million
working capital facility, secured by its marine receivables and
inventories, which expires June 30, 1994 and which it expects to renew.
23
26
Item 8. FINANCIAL STATEMENTS & SUPPLEMENTAL DATA
Report of Independent Auditors
Stockholders and Board of Directors
Maritrans Inc.
We have audited the accompanying consolidated balance sheets of Maritrans
Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of income and cash flows for each of the three years in the
period ended December 31, 1993. Our audits also included the financial
statement schedules listed in the Index at Item 14(A). These financial
statements and schedules are the responsibility of the management of
Maritrans Inc. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Maritrans
Inc. at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information
set forth therein.
ERNST & YOUNG
Philadelphia, Pennsylvania
January 25, 1994
24
27
MARITRANS INC.
CONSOLIDATED BALANCE SHEETS
($000)
December 31,
--------------------
1993 1992
--------------------
ASSETS
Current assets:
Cash and cash equivalents ............................................ $ 22,422 $ 23,174
Trade accounts receivable (net of allowance for doubtful accounts of
$605 and $541, respectively) ....................................... 14,094 13,431
Other accounts receivable ............................................ 9,748 3,146
Inventories .......................................................... 4,968 4,467
Deferred income tax benefit .......................................... 3,396 -
Prepaid expenses ..................................................... 6,061 2,513
--------------------
Total current assets ........................................... 60,689 46,731
Marine vessels and equipment ........................................... 262,176 264,160
Less accumulated depreciation ........................................ 78,966 69,727
--------------------
Net marine vessels and equipment ............................... 183,210 194,433
Other .................................................................. 9,139 10,180
--------------------
Total assets ................................................... $253,038 $251,344
====================
LIABILITIES AND EQUITY
Current liabilities:
Debt due within one year ............................................. $ 6,311 $ 6,033
Trade accounts payable ............................................... 3,492 1,718
Accrued interest ..................................................... 2,382 2,470
Accrued shipyard costs ............................................... 6,562 9,385
Accrued wages and benefits............................................ 5,649 5,244
Other accrued liabilities............................................. 6,954 5,536
--------------------
Total current liabilities....................................... 31,350 30,386
Long-term debt ......................................................... 110,556 116,866
Deferred shipyard costs ................................................ 9,843 10,272
Other liabilities ...................................................... 5,353 7,249
Deferred income taxes .................................................. 21,062 -
Equity:
Partnership equity:
General partners ..................................................... (379)
Limited partners (12,250,000 authorized and outstanding units) ....... 86,950
--------------------
Total partnership equity ....................................... 86,571
--------------------
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000 shares; none
issued ............................................................. -
Common stock, $.01 par value, authorized 30,000,000 shares; issued:
12,523,000.......................................................... 125
Capital in excess of par value ....................................... 74,315
Retained earnings .................................................... 434
--------
Total stockholders' equity ..................................... 74,874
--------
Total liabilities and equity ................................... $253,038 $251,344
====================
See accompanying notes.
25
28
MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
($000 except per share/unit amounts)
January 1 to December 31,
-----------------------------------------
1993 1992 1991
-----------------------------------------
Revenues ................................................... $ 132,539 $ 133,051 $ 146,560
Costs and expenses:
Operation expense ........................................ 75,196 70,485 80,458
Maintenance expense ...................................... 21,062 23,662 30,755
General and administrative ............................... 11,772 13,328 11,953
Depreciation and amortization ............................ 15,868 15,578 15,962
-----------------------------------------
123,898 123,053 139,128
-----------------------------------------
Operating income ........................................... 8,641 9,998 7,432
Interest expense ........................................... (10,373) (10,958) (10,890)
Other income, net .......................................... 6,918 4,379 1,882
-----------------------------------------
Income (loss) before income taxes .......................... 5,186 3,419 (1,576)
Income tax provision ..................................... 407 - -
Deferred income taxes-resulting from Conversion .......... 16,568 - -
-----------------------------------------
Net income (loss) .......................................... $ (11,789) $ 3,419 $ (1,576)
=========================================
Net income (loss) allocated to General Partners ............ n/a 69 (32)
Net income (loss) allocated to Limited Partners ............ n/a 3,350 (1,544)
Net income (loss) allocated to Limited Partners per Limited
Partner unit ............................................. n/a .27 (.13)
Pro forma (loss) per share ................................. (.94) n/a n/a
Average common shares/Limited Partner units outstanding..... 12,523,000 12,250,000 12,250,000
See accompanying notes.
26
29
MARITRANS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
($000)
January 1 to December 31,
--------------------------------
1993 1992 1991
--------------------------------
Cash flows from operating activities:
Net income (loss) ........................................ $(11,789) $ 3,419 $ (1,576)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization .......................... 15,868 15,578 15,962
Deferred income taxes .................................. 16,975 - -
Changes in receivables, inventories and prepaid expenses (11,314) 900 2,690
Changes in current liabilities other than debt ......... 686 (178) (669)
Non-current changes, net ............................... (982) 4,531 1,351
(Gain) loss on sale of equipment ....................... (5,910) (694) (123)
--------------------------------
Total adjustments to net income (loss)...................... 15,323 20,137 19,211
--------------------------------
Net cash provided by (used in) operating activities ...... 3,534 23,556 17,635
Cash flows from investing activities:
Cash proceeds from sale of marine vessels and equipment... 19,287 1,803 9,275
Non-current changes related to investing activities ...... - - (2,138)
Purchase of marine vessels and equipment ................. (17,541) (10,120) (22,514)
--------------------------------
Net cash provided by (used in) investing activities .... 1,746 (8,317) (15,377)
Cash flows from financing activities:
Proceeds from issuance of long-term debt ................. - 2,000 10,000
Payment of long-term debt ................................ (6,032) (3,100) (1,500)
Proceeds from issuance of short-term debt ................ - 5,500 7,000
Payment of short-term debt ............................... - (12,500) -
Distributions declared and paid .......................... - (7,187) (14,375)
--------------------------------
Net cash provided by (used in) financing activities .... (6,032) (15,287) 1,125
Net increase (decrease) in cash and cash equivalents ....... (752) (48) 3,383
Cash and cash equivalents at beginning of period ........... 23,174 23,222 19,839
--------------------------------
Cash and cash equivalents at end of period ................. $ 22,422 $ 23,174 $ 23,222
================================
Supplemental Disclosure of Cash Flow Information:
Interest paid .............................................. $ 10,355 $ 10,888 $ 10,763
Income taxes paid .......................................... $ 300 $ - $ -
See accompanying notes.
27
30
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
At December 31, 1993, Martrans Inc. owns Maritrans Operating Partners
L.P. (the "Operating Partnership") and Maritrans Holdings Inc.
(collectively, the "Company"). These subsidiaries, directly and
indirectly, own and operate tugs and barges principally used in the
transportation of oil and related products, and own and operate petroleum
storage facilities.
On March 31, 1993, the limited partners of Maritrans Partners L.P.
(the "Partnership") voted on a proposal to convert the Partnership to
corporate form (the "Conversion"). The proposal was approved, and on
April 1, 1993, Maritrans Inc., then a newly-formed Delaware corporation
(the "Corporation") succeeded to all assets and liabilities of the
Partnership. The holders of general and limited partnership interests in
the Partnership and the Operating Partnership were issued shares of common
stock, par value $.01 per share ("Common Stock"), of the Corporation,
representing substantially the same percentage equity interest in the
Corporation as they had in the Partnership, directly or indirectly, in
exchange for their partnership interest. Each previously held unit of
limited partnership interest in the Partnership was exchanged for one
share of Common Stock of the Corporation. For financial accounting
purposes, the conversion to corporate form has been treated as a
reorganization of affiliated entities, with the assets and liabilities
recorded at their historical costs. In addition, the Partnership
recognized a net deferred income tax liability for temporary differences
in accordance with Statement of Financial Accounting Standard ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993.
Principles of Consolidation
The consolidated financial statements include the accounts of
Maritrans Inc. and subsidiaries, all of which are wholly owned. Prior to
the Conversion, the financial statements included the accounts of the
Partnership, the Operating Partnership and subsidiaries. All significant
intercompany transactions and accounts have been eliminated in
consolidation.
Marine Vessels and Equipment
Equipment, which is carried at cost, is depreciated using the
straight-line method. Vessels are depreciated over a period of up to 30
years. Certain electronic equipment is depreciated over periods of 7 to 10
years. Petroleum storage tanks are depreciated over periods of up to 25
years. Other equipment is depreciated over periods ranging from 3 to 20
years. Gains or losses on dispositions of fixed assets are included in
other income in the accompanying consolidated statements of income. During
the year ended December 31, 1991, two vessels were sold and subsequently
leased back. The resulting deferred gain is included in the consolidated
28
31
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
1. Organization and Significant Accounting Policies -- (Continued)
statement of cash flows as non-current changes related to investing
activities and is being amortized into income over the life of the related
leases.
The Oil Pollution Act, passed in 1990, requires all newly constructed
petroleum tank vessels engaged in marine transportation of oil and
petroleum products in the U.S. to be double hulled and all such existing
single-hulled vessels to be retrofitted with double hulls or phased out of
the industry beginning January 1, 1995. Because of the age and size of
Maritrans' individual barges, the first of its operating vessels will be
required to be retired or retrofitted by January 2003, and most of its
large oceangoing, single-hulled vessels will be similarly affected on
January 1, 2005. During 1990, the depreciable lives of certain marine
vessels and equipment were revised to reflect more closely expected
remaining lives.
Maintenance and Repairs
Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. The current portion of this estimated cost is included in accrued
shipyard costs while the portion of this estimated cost not expected to be
incurred within one year is classified as long-term. Both the provisions
for major periodic overhauls as well as non-overhaul maintenance and
repairs are expensed as incurred.
Inventories
Inventories, consisting of materials, supplies and fuel, are carried
at specific cost which does not exceed net realizable value.
Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the amount of assets and liabilities for financial
reporting purposes and the amount used for income tax purposes.
Significant Customers
During the years ended December 31, 1993, 1992 and 1991, the Company
derived revenues of $22,232,000, $24,169,000 and $27,219,000 from one
customer aggregating 17%, 18% and 19% of total revenues, respectively.
Also during 1993, 1992 and 1991, the Company derived revenues of
$19,720,000, $19,855,000 and $16,691,000 from another customer aggregating
15%, 15% and 11% of total revenues. Credit is extended to various
companies in the petroleum industry in the normal course of business. This
concentration of credit risk within this industry may be affected by
changes in economic or other conditions and may, accordingly, affect
overall credit risk of the Company.
29
32
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
1. Organization and Significant Accounting Policies -- (Continued)
Related Parties
The Company obtained protection and indemnity insurance coverage from
a mutual insurance association, whose chairman is also the chairman of
Maritrans Inc. The related insurance expense was $2,472,000, $3,365,000
and $3,034,000 for the years ended December 31, 1993, 1992 and 1991,
respectively.
Earnings per common share/Limited Partner unit
Earnings per common share/Limited Partner unit are based on the
average number of common shares or Limited Partner units outstanding. The
potential effect of outstanding stock options is not dilutive.
2. Cash and Cash Equivalents
Cash and cash equivalents at December 31, 1993, and 1992 consisted of
cash and commercial paper, the carrying value of which approximates fair
value. For purposes of the consolidated statements of cash flows,
short-term highly liquid debt instruments with maturities of three months
or less are considered to be cash equivalents.
3. Partnership and Stockholders' Equity
Changes in partnership equity prior to the Conversion are summarized
below:
General Limited
Partners Partners Total
--------------------------------
($000 except per unit amounts)
Balance at January 1, 1991 ................................. $ 16 $106,274 $106,290
Net (loss), January 1, 1991 to December 31, 1991 ........... (32) (1,544) (1,576)
Distributions declared and paid ($1.15 per Limited Partner
unit)..................................................... (288) (14,087) (14,375)
-------------------------------
Balance at December 31, 1991................................ (304) 90,643 90,339
Net income, January 1, 1992 to December 31, 1992 ........... 69 3,350 3,419
Distributions declared and paid ($0.575 per Limited Partner
unit)..................................................... (144) (7,043) (7,187)
-------------------------------
Balance at December 31, 1992 ............................... (379) 86,950 86,571
Net (loss), January 1, 1993 to March 31, 1993 .............. (244) (11,979) (12,223)
-------------------------------
Balance at March 31, 1993 .................................. $(623) $ 74,971 $ 74,348
===============================
30
33
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
3. Partnership and Stockholders' Equity -- (Continued)
Consolidated income statement data for the period January 1 to March
31, 1993 (prior to the Conversion) and for the period April 1 to December
31, 1993 (after the Conversion) is as follows:
Maritrans Partners L.P. Maritrans Inc.
January 1, 1993 April 1, 1993 to
to March 31, 1993 December 31, 1993
--------------------------------------------
($000)
Revenues ............................... $ 32,217 $100,322
Costs and expenses:
Operation expense .................. 17,968 57,228
Maintenance expense ................ 4,964 16,098
General and administrative ......... 2,609 9,163
Depreciation and amortization ...... 3,954 11,914
-------------------------------------
29,495 94,403
-------------------------------------
Operating income ....................... 2,722 5,919
Interest expense ....................... (2,672) (7,701)
Other income, net ...................... 4,295 2,623
-------------------------------------
Income before income taxes ............. 4,345 841
Income tax provision ................. - 407
Deferred income taxes-resulting from
Conversion............................ 16,568 -
-------------------------------------
Net income (loss) ...................... $(12,223) $ 434
=====================================
31
34
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
3. Partnership and Stockholders' Equity -- (Continued)
Changes in stockholders' equity since the Conversion are summarized
below:
Common Capital in
Stock, $.01 excess of Retained
Par Value Par Value Earnings Total
------------------------------------------------
($000)
April 1, 1993, Conversion to Corporate Form. $125 $74,315(1) - $74,440
Net income, April 1, 1993 to December 31,
1993 ..................................... - - $434 434
---------------------------------------------
Balance at December 31, 1993................ $125 $74,315 $434 $74,874
=============================================
----------
(1) Includes $92,000 related to grant of shares.
Maritrans Inc. established a stock incentive plan (the "Plan")
concurrent with the Conversion whereby key employees may be granted stock,
stock options and, in certain cases receive cash under the Plan. Any
outstanding options granted under the Plan are exercisable at a price not
less than market value on the date of grant. There are 1,250,000 shares of
Common Stock authorized for issuance under the Plan, of which 23,000
shares were issued in 1993. Compensation expense equal to the fair market
value on the date of the grant is included in general and administrative
expense in the consolidated statement of income. At December 31, 1993,
803,597 remaining shares were reserved for grant.
Information on stock options for 1993 follows:
Exercise Number of
Price Shares
------------------------
Outstanding at beginning of year........ - -
Granted................................. $4.00 476,074
Exercised .............................. - -
Cancelled .............................. $4.00 52,671
Outstanding at end of year ............. $4.00 423,403
Exercisable at end of year ............. - -
Outstanding options are exercisable in installments over two to four
years and expire in 2002.
4. INCOME TAXES
In connection with the Conversion to corporate form, the Partnership
recognized a net deferred income tax liability for temporary differences
32
35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
4. INCOME TAXES -- (Continued)
in accordance with Statement of Financial Accounting Standards ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993. Prior to the
Conversion, Maritrans Partners L.P. and Maritrans Operating Partners L.P.,
as partnerships, were not subject to income taxation at the partnership
level. However, income taxes, which were not significant, were provided
for the incorporated subsidiaries of the partnerships prior to the
Conversion.
The income tax provision consists of:
1993
--------
($000)
Current:
Federal ................................................ -
State .................................................. -
Deferred ................................................... $ 407
Deferred-resulting from Conversion ......................... 16,568
--------
$16,975
========
The differences between the federal income tax rate of 34% and the
effective tax rate was as follows:
1993
--------
($000)
Statutory federal tax provision ............................ $ 1,764
State income taxes, net of federal income tax benefit ...... 116
Partnership income for the first quarter, not subject to
income tax ............................................... (1,388)
Recognition of tax liability for cumulative temporary
differences .............................................. 16,568
Other ...................................................... (85)
-------
$16,975
=======
33
36
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
4. INCOME TAXES -- (Continued)
Principal items comprising deferred income tax liabilities and assets
as of December 31, 1993 are:
1993
--------
($000)
Deferred tax liabilities:
Tax over book depreciation ............................. $28,519
Other .................................................. 1,203
-------
29,722
-------
Deferred tax assets:
Reserves and accruals .................................. 8,092
Net operating loss carryforwards ....................... 3,116
Other .................................................. 848
-------
12,056
-------
Net deferred tax liabilities ............................... $17,666
=======
At December 31, 1993, Maritrans Inc. has net operating loss carry
forwards of approximately $9.2 million for income tax purposes which
expire in the year 2005 and thereafter.
5. Retirement Plans
Most of the shoreside employees and substantially all of the seagoing
supervisors participate in a qualified defined benefit retirement plan of
Maritrans Inc. Net periodic pension costs were $1,232,000, $1,400,000 and
$1,529,000 for the years ended December 31, 1993, 1992 and 1991,
respectively, and were determined under the projected unit credit
actuarial method. Pension benefits are primarily based on years of service
and begin to vest after two years. Employees covered by collective
bargaining agreements and employees of Maritrans Holdings Inc. or its
subsidiaries are not eligible to participate in the qualified defined
benefit retirement plan of Maritrans Inc.
The weighted average discount rate, used to determine the actuarial
present value of the projected benefit obligation, and the expected
long-term rate of return on plan assets for the period were each 7%. The
weighted average assumed rate of compensation increase used to determine
the actuarial present value of the projected benefit obligation was 5%.
34
37
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
5. Retirement Plans -- (Continued)
Net periodic pension costs included the following components for the
respective periods:
1/1 to 1/1 to 1/1 to
12/31/93 12/31/92 12/31/91
--------------------------------
($000)
Service cost of current period ............................. $ 1,625 $1,628 $ 1,675
Interest cost on projected benefit obligation .............. 906 887 772
Actual (gain) loss on plan assets .......................... (1,165) (938) (2,403)
Net (amortization) and deferral ............................ (134) (177) 1,485
--------------------------------
Net pension cost ........................................... $ 1,232 $1,400 $ 1,529
================================
The following table sets forth the plan's funded status at December
31, 1993 and 1992:
December 31,
------------------
1993 1992
------------------
($000)
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $10,449 and $9,675, respectively ... $11,534 $ 9,801
Projected benefit obligation for service rendered
to date ........................................ 3,851 4,895
------------------
Projected benefit obligation ..................... 15,385 14,696
Plan assets at fair value, primarily publicly
traded stocks and bonds ........................ 16,110 13,718
------------------
Plan assets greater than (less than) projected
benefit obligation ............................. 725 (978)
Unrecognized net gain on plan's assets ........... 2,723 997
Net assets being amortized over 15 years ......... 1,616 1,818
------------------
Accrued pension cost recognized in the financial
statements ..................................... $ 3,614 $ 3,793
==================
Substantially all of the shoreside employees and seagoing supervisors
also participate in a qualified defined contribution plan. Contributions
under the plan are determined annually by the Board of Directors of
35
38
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
5. Retirement Plans -- (Continued)
Maritrans Inc. The cost of the plan was $685,000, $609,000 and $61,000 for
the years ended December 31, 1993, 1992 and 1991, respectively.
Contributions to industry-wide, multi-employer seamen's pension plans
which cover substantially all seagoing personnel covered under collective
bargaining agreements were approximately $423,000, $515,000 and $1,016,000
for the years ended December 31, 1993, 1992 and 1991, respectively. These
contributions include funding for current service costs and amortization
of prior service costs of the various plans over periods of 30 to 40
years. The pension trusts and union agreements provide that contributions
be made at a contractually determined rate per man-day worked. Maritrans
Inc. and its subsidiaries are not administrators of the multi-employer
seamen's pension plans.
6. Debt
At December 31, 1993, total outstanding debt of the subsidiaries of
Maritrans Inc. is $116.9 million, $110.6 million of which is long-term. At
December 31, 1992, total outstanding debt was $122.9 million, $116.9
million of which was long-term. The debt is secured by mortgages on
substantially all of the fixed assets of those subsidiaries. The debt
consists of $1.7 million maturing through 1995, $35.2 million maturing
through 1997, and $80 million maturing from 1998 through 2007. The
weighted average interest rate on this indebtedness is 8.63%. Terms of the
indebtedness require the subsidiaries to maintain their properties in a
specific manner, maintain specified insurance on their properties and
business, and abide by other covenants which are customary with respect to
such borrowings. At December 31, 1992, the total outstanding debt
consisted of $2.5 million maturing through 1995, $40.4 million maturing
through 1997, and $80 million maturing from 1998 through 2007.
The Operating Partnership has a $10 million working capital facility
secured by its receivables and inventories. There were no borrowings under
this facility during fiscal 1993.
Based on the borrowing rates currently available for loans with
similar terms and maturities, the fair value of long term debt was $122.1
million and $121.8 million at December 31, 1993 and 1992, respectively.
The maturity schedule for outstanding indebtedness under existing debt
agreements at December 31, 1993, is as follows:
36
39
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
6. Debt -- (Continued)
($000)
--------
1994 ................................... $ 6,311
1995 ................................... 7,256
1996 ................................... 8,200
1997 ................................... 15,100
1998 ................................... 8,000
1999 - 2007 ............................ 72,000
--------
$116,867
========
7. Commitments and Contingencies
Minimum future rental payments under noncancelable operating leases at
December 31, 1993, are as follows:
($000)
-------
1994.................................... $ 1,200
1995.................................... 1,200
1996.................................... 1,200
1997 ................................... 1,200
1998 ................................... 1,117
1999 - 2005 ............................ 7,544
-------
$13,461
=======
The indenture governing the Operating Partnership's long-term debt
permits cash distributions by Maritrans Operating Partners L.P. to
Maritrans Inc. so long as no default exists under the indenture and
provided that such distributions do not exceed contractually prescribed
amounts.
On August 10, 1993, one of the Company's tug/barge units was involved
in a collision off the coast of Florida. Claims resulting from this
incident have been and are expected to be covered by insurance. In 1993,
Maritrans received insurance proceeds in excess of the barge's net book
value for the constructive total loss of the barge.
In November 1992, the Partnership dismissed its suit against its
former law firm and a partner of that firm pursuant to a settlement
agreement among the parties. As part of the settlement, the Partnership
received a payment of $3 million and the trial court dissolved the
preliminary injunction which previously barred the defendants from
representing certain of Maritrans' economic competitors in labor
37
40
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
7. Commitments and Contingencies -- (Continued)
negotiations. The payment received is reflected in other income for the
year ended December 31, 1992.
In the ordinary course of its business, claims are filed against the
Company for alleged damages in connection with its operations Management
is of the opinion that the ultimate outcome of such claims at December 31,
1993, will not have a material adverse effect on the consolidated
financial statements.
8. Quarterly Financial Data (Unaudited)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
-----------------------------------------------------
($000, except per share/unit amounts)
1993
Revenues ........................... $ 32,217 $33,603 $31,044 $35,675 $132,539
Operating income ................... 2,722 2,572 1,222 2,125 8,641
Provision for (benefit from) income
taxes ............................ 16,568 533 14 (140) 16,975
Net income (loss)................... $(12,223) $ 639 $ 24 $ (229) $(11,789)
Per unit effect of income tax
provision-resulting from
Conversion........................ $ (1.32) n/a n/a n/a $ (1.32)
Income (loss) per share/unit........ $ (0.98) $ 0.05 $ 0.00 $ (0.02) $ (0.94)
1992
Revenue ............................ $ 33,973 $32,268 $32,186 $34,624 $133,051
Operating income ................... 2,691 2,353 2,204 2,750 $ 9,998
Net income (loss)................... $ 74 $ 350 $ (343) $ 3,338 $ 3,419
Income (loss) allocated to Limited
Partners per Limited Partner Unit. $ 0.01 $ 0.03 $ (0.03) $ 0.27 $ 0.27
38
41
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to directors of the Registrant, and
information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, is incorporated herein by reference to
the Registrant's definitive Proxy Statement to be filed with the
Securities and Exchange Commission not later than 120 days after the close
of the year ended December 31, 1993, under the captions "Information
Regarding Nominees For Election As Directors And Regarding Continuing
Directors" and "Section 16 Requirements."
The individuals listed below are directors and executive officers of
Maritrans Inc. or its subsidiaries.
39
42
Name Age(1) Position
- -------------------------------------------------------------------------------------------------
Stephen A. Van Dyck (4) .................. 50 Chairman of the Board of Directors and
Chief Executive Officer
Dr. Robert E. Boni (2)(3)(4) ............. 66 Director
Dr. Craig E. Dorman (3) .................. 53 Director
Craig N. Johnson ......................... 52 Director
Bruce C. Lindsay (2)(3)(4) ............... 52 Director
James H. Sanborn ......................... 56 Director
Edward R. Sheridan........................ 55 President, Distribution Services
Division - Operating Partnership
Brian J. Telford ......................... 47 President, Gulf Division - Operating
Partnership
John C. Newcomb .......................... 55 Vice President, General Counsel and
Secretary
Gary L. Schaefer.......................... 44 Vice President, Chief Financial Officer
and Treasurer
Edward J. Flood........................... 42 Chairman of the Board of Maritrans
Holdings Inc.
Charles R. Ward........................... 42 President, Eastern Division - Operating
Partnership
Robert B. York............................ 38 President, Inland Division - Operating
Partnership
Gerard T. Gillon.......................... 51 Chairman of the Board of Marispond Inc.
Walter T. Bromfield....................... 38 Controller
----------
(1) As of March 1, 1994
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Finance Committee
Mr. Van Dyck has been Chairman of the Board and Chief Executive
Officer of the Company and its predecessor since April 1987. For the
previous year, he was a Senior Vice President - Oil Services, of Sonat
Inc. and Chairman of the Boards of the Sonat Marine Group, another
predecessor, and Sonat Offshore Drilling Inc. For more than five years
prior to April 1986, Mr. Van Dyck was the President and a director of the
40
43
Sonat Marine Group and Vice President of Sonat Inc. Mr. Van Dyck is also
the Chairman of the Board and a director of the West of England Ship
Owners Mutual Insurance Association (Luxembourg), a mutual insurance
association. He is a member of the Company's Finance Committee of the
Board of Directors. See "Certain Transactions."
Dr. Boni retired as Chairman of Armco Inc., a steel, oil field
equipment and insurance corporation on November 30, 1990. Dr. Boni became
Chief Executive Officer of Armco Inc. in 1985 and Chairman in 1986. He
became Non-Executive Chairman of the Board of Alexander & Alexander
Services Inc., an insurances services company, in January 1994. He is a
member of the Company's Compensation (Chairman), Audit and Finance
Committees of the Board of Directors.
Dr. Dorman is serving as Deputy Director Defense Research and
Engineering for Laboratory Management, U.S. Department of Defense on an
Intergovernmental Personnel Act assignment from the Woods Hole
Oceanographic Institution. He was Director and Chief Executive Officer of
Woods Hole Oceanographic Institution from 1989 until 1993. From 1962 to
1989, Dr. Dorman was an officer in the U.S. Navy, most recently Rear
Admiral and Program Director for Anti-Submarine Warfare. He is a member of
the Company's Audit Committee of the Board of Directors.
Mr. Johnson recently became Managing Director of Glenthorne Capital
Inc., investment bankers. He was President and Chief Operating Officer of
the Company and its predecessor from February 1, 1990 until December 17,
1993. For the four years prior to joining Maritrans, Mr. Johnson was
President of Lavino Shipping Company, a terminalling and stevedoring
corporation. Neither Lavino nor any of the companies invested in by
Glenthorne Capital Inc. compete with Maritrans. He is a director of
several closely-held companies.
Mr. Lindsay has been Managing Director of Brind-Lindsay & Co. Inc., an
investment corporation, since 1986. From 1983 through 1986, Mr. Lindsay
was Group Vice President, Industrial Services, of Sun Company, Inc., an
integrated oil corporation. During that time, he also served as a director
and officer of various subsidiaries of Sun Company, Inc. He is a director
of several closely-held corporations. He is a member of the Company's
Audit (Chairman), Finance (Chairman) and Compensation Committees of the
Board of Directors.
Mr. Sanborn was Executive Vice President of the Company and its
predecessor since April 1987, until his retirement in December 1993. Prior
to April 1987, he was President of the Sonat Marine Group, another
predecessor, a position he held since April 1986. Prior to this position,
he served as Vice President-Operations and Vice President - East Coast
Group of the Sonat Marine Group. Mr. Sanborn was employed in various
capacities by the Company and its predecessors since 1978.
Mr. Sheridan was named President of the Distribution Services Division
of the Operating Partnership in February 1993. He previously held various
positions with Star Enterprise and Texaco since 1963.
41
44
Mr. Telford was named President of the Gulf Division of the Operating
Partnership in September 1992. He previously held various positions with
Stolt-Nielson Inc. from 1988 to 1992.
Mr. Newcomb has been Vice President, General Counsel and Secretary of
Maritrans Inc. since April 1993, and previously held these titles with
Maritrans GP Inc. since 1987. He held a similar position with the Sonat
Marine Group since 1983. Mr. Newcomb has been employed in various
capacities by Maritrans or its predecessors since 1975.
Mr. Schaefer has been Vice President, Chief Financial Officer and
Treasurer of Maritrans Inc. since April 1993, and previously held these
titles with Maritrans GP Inc. since January 1990. Previously, Mr. Schaefer
was Vice President, Controller and Treasurer. He held a similar position
with the Sonat Marine Group since 1986. Prior to this position, Mr.
Schaefer was Assistant Vice President and Controller. Mr. Schaefer has
been employed in various capacities by Maritrans or its predecessors since
1976.
Mr. Flood has been Chairman of Maritrans Holdings Inc. since February
4, 1991. Mr. Flood is also Chairman of MPI and MMI. Previously, Mr. Flood
was Vice President of Maritrans GP Inc. from October 1990 to February
1991. Prior to October 1990, he was President and Chief Operating Officer
of Unitank, a Philadelphia-based terminal company, which was sold and
merged with GATX, which does not compete with Maritrans.
Mr. Ward was named President of the Eastern Division of the Operating
Partnershp in May 1993. Previously, Mr. Ward was President of the Inland
Division of the Operating Partnership since February 1992 and prior to
that was Manager, Traffic, a position he held since September 1990. Mr.
Ward was East Coast Chartering Manager from June 1989 to September 1990.
Prior to that position, Mr. Ward was Traffic Manager - Black Oil. He held
a similar position with the Sonat Marine Group. Mr. Ward has been employed
in various capacities by Maritrans or its predecessors since 1975.
Mr. York was named President of the Inland Division of the Operating
Partnership in May 1993. Previously, Mr. York was continuously employed
since 1985 by the Company or its predecessors in various capacities
including Manager, Market Planning; Manager, Corporate Planning; and
Business Leader (Information Services).
Mr. Gillon was named Chairman of the Board of Marispond Inc. in
February 1993. Previously, Mr. Gillon was a consultant to the Company
since November 1992. Prior to that, he was President, Chief Executive
Officer and a Director of Wescol Shipping Inc. from July 1990. From April
1980 until July 1989, he was President of Lavino Agency Group, and served
as a Director of Lavino Shipping Company.
Mr. Bromfield has been Controller of Maritrans Inc. since April 1993,
and previously held that title with Maritrans GP Inc. since February 1992.
Previously, Mr. Bromfield was Assistant Controller. He held a similar
position with the Sonat Marine Group since October 1986. Mr. Bromfield has
been employed in various capacities by Maritrans or its predecessors since
1981.
42
45
Items 11, 12 and 13.
The information required by Item 11, Executive Compensation, by Item
12, Security Ownership of Certain Beneficial Owners and Management, and by
Item 13, Certain Relationships and Related Transactions, is incorporated
herein by reference to the Company's definitive Proxy Statement to be
filed with the Commission not later than 120 days after the close of the
fiscal year ended December 31, 1993, under the headings "Compensation of
Directors and Executive Officers", "Security Ownership of Certain
Beneficial Owners and Management" and "Certain Transactions".
PART IV
Page
- -------------------------------------------------------------------------------------------------------------
Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Report of Independent Auditors 18
Maritrans Inc. Consolidated Balance Sheets at December 31, 1993, and December 31,
1992. 19
Maritrans Inc. Consolidated Statements of Income for the years ending December 31,
1993, 1992, and 1991. 20
Maritrans Inc. Consolidated Statements of Cash Flows for the years ending December 31,
1993, 1992, and 1991. 21
Notes to the Consolidated Financial Statements. 22
(2) Financial Statement Schedules
Schedule V Maritrans Inc. Property, Plant and Equipment for the years ended
December 31, 1993, 1992, and 1991. 37
Schedule VI Maritrans Inc. Accumulated Depreciation for the years ended December 31,
1993, 1992, and 1991. 38
Schedule VIII Maritrans Inc. Valuation Account for the years ended December 31, 1993,
1992, and 1991. 39
All other schedules called for under Regulation S-X are not submitted because they are not
applicable, not required, or because the required information is not material, or is included in
the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1993.
(c) Exhibits
43
46
Exhibit Index Page
- -----------------------------------------------------------------------------------------------------------------
3.1# Certificate of Incorporation of the Registrant, as amended.
3.2# By Laws of the Registrant.
4.1 Certain instruments with respect to long-term debt of the Registrant or Maritrans
Operating Partners L.P. which relate to debt that does not exceed 10% of the total assets
of the Registrant are omitted pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.
Maritrans hereby agrees to furnish supplementally to the Securities and Exchange
Commission a copy of each such instrument upon request.
10.1* Amended and Restated Agreement of Limited Partnership of Maritrans Operating Partners
L.P., dated as of April 14, 1987 (Exhibit 3.2).
10.2+ Certificate of Limited Partnership of Maritrans Operating Partners L.P., dated January 29,
1987 (Exhibit 3.4).
10.3* Form of Maritrans Capital Corporation Note Purchase Agreement, dated as of March 15, 1987
(Exhibit 10.6).
10.3(a)* Indenture of Trust and Security Agreement, dated as of March 15, 1987 from Maritrans
Operating Partners L.P. and Maritrans Capital Corporation to The Wilmington Trust Company
(Exhibit 10.6(a)).
10.3(b)* Form of First Preferred Ship Mortgage, dated April 14, 1987 from Maritrans Operating
Partners L.P., mortgagor, to The Wilmington Trust Company, mortgagee (Exhibit 10.6(b)).
10.3(c)* Guaranty Agreement by Maritrans Operating Partners L.P. regarding $35,000,000 Series A
Notes Due April 1, 1997 and $80,000,000 Series B Notes Due April 1, 2007 of Maritrans
Capital Corporation (Exhibit 10.6(c)).
Executive Compensation Plans and Arrangements
10.4 Agreement, dated October 4, 1993 between Maritrans Inc. and John C. Newcomb.
10.5 Agreement, dated October 4, 1993 between Maritrans Inc. and Gary L. Schaefer.
10.6 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Stephen A. Van Dyck.
10.7 Mutual Separation Agreement and General Release, dated November 22, 1993 between Maritrans
Inc. and Craig N. Johnson.
10.8 Retirement Agreement, dated November 22, 1993 between Maritrans Inc. and James H. Sanborn.
10.9 Employment Agreement, dated November 15, 1993 between Maritrans Holdings Inc. and Edward
J. Flood.
10.10 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Charles R. Ward.
44
47
Exhibit Index Page
- -----------------------------------------------------------------------------------------------------------------
10.11 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Brian J. Telford.
10.12 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Edward R. Sheridan.
10.13 Profit Sharing and Savings Plan of Maritrans Inc. as amended and restated effective
November 1, 1993.
10.14@ Executive Award Plan of Maritrans GP Inc. (Exhibit 10.31).
10.15@ Excess Benefit Plan of Maritrans GP Inc. as amended and restated effective January 1, 1988
(Exhibit 10.32).
10.16@ Retirement Plan of Maritrans GP Inc. as amended and restated effective January 1, 1989
(Exhibit 10.33).
10.17 Performance Unit Plan of Maritrans Inc. effective April 1, 1993
10.18& Executive Compensation Plan as amended and restated effective January 27, 1994.
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of Maritrans Inc. 1
* Incorporated by reference herein to the Exhibit number in parentheses
filed on March 24, 1988 as Amendment No. 1 to Maritrans Partners L. P.
Form 10-K Annual Report, dated March 3, 1988, for the fiscal year ended
December 31, 1987.
+ Incorporated by reference herein to the Exhibit number in parentheses
filed with Maritrans Partners L. P. Form S-1 Registration Statement No.
33-11652 dated January 30, 1987 or Amendment No. 1 thereto dated March
20, 1987.
# Incorporated by reference herein to the Exhibit of the same number filed
with the Registrant's Post-Effective Amendment No. 1 to Form S-4
Registration Statement No. 33-57378 dated January 26, 1993.
& Incorporated by reference herein to Exhibit A of the Registrant's
definitive Proxy Statement to be filed with the Commission not later
than 120 days after the close of the fiscal year ended December 31,
1993.
@ Incorporated by reference herein to the Exhibit number in parentheses
filed with Maritrans Partners L. P. Form 10-K Annual Report, dated March
29, 1993 for the fiscal year ended December 31, 1992.
45
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/ Stephen A. Van Dyck
------------------------
Stephen A. Van Dyck
Chairman of the Board
Dated: March 30 , 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By: /s/ Stephen A. Van Dyck Chairman of the Board Dated: March 30, 1994
-------------------------------- and Chief Executive Officer
Stephen A. Van Dyck (Principal Executive Officer)
By: /s/ Dr. Robert E. Boni Director Dated: March 30, 1994
--------------------------------
Dr. Robert E. Boni
By: /s/ Dr. Craig E. Dorman Director Dated: March 30, 1994
--------------------------------
Dr. Craig E. Dorman
By: /s/ Craig N. Johnson Director Dated: March 30, 1994
--------------------------------
Craig N. Johnson
By: /s/ Bruce C. Lindsay Director Dated: March 30, 1994
--------------------------------
Bruce C. Lindsay
By: /s/ James H. Sanborn Director Dated: March 30, 1994
--------------------------------
James H. Sanborn
By: /s/ Gary L. Schaefer Vice President, Chief Dated: March 30, 1994
-------------------------------- Financial Officer and
Gary L. Schaefer Treasurer (Principal
Financial Officer)
By: /s/ Walter T. Bromfield Controller (Principal Dated: March 30, 1994
-------------------------------- Accounting Officer)
Walter T. Bromfield
46
49
MARITRANS INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
($000)
BALANCE AT ADDITIONS
BEGINNING AND TRANSFERS RETIREMENTS OTHER CHANGES BALANCE AT
DESCRIPTION OF PERIOD AT COST OR SALES ADD (DEDUCT) END OF PERIOD
----------------------------------------------------------------------------
JANUARY 1 TO
DECEMBER 31, 1991
Land.......................... $ 350 $ 976 $ - $ - $ 1,326
Marine vessels and equipment.. 242,989 13,462 (9,658) - 246,793
Construction in progress...... 1,430 8,076 - - 9,506
---------------------------------------------------------------------------
Total....................... $244,769 $22,514 $ (9,658) $ - $257,625
===========================================================================
JANUARY 1 TO
DECEMBER 31, 1992
Land.......................... $ 1,326 $ - $ - $ - $ 1,326
Marine vessels and equipment.. 246,793 11,046 (3,585) - 254,254
Construction in progress...... 9,506 (926) - - 8,580
---------------------------------------------------------------------------
Total....................... $257,625 $10,120 $ (3,585) $ - $264,160
===========================================================================
JANUARY 1 TO
DECEMBER 31, 1993
Land.......................... $ 1,326 $ 360 $ - $ - $ 1,686
Marine vessels and equipment.. 254,254 18,366 (19,525) - 253,095
Construction in progress...... 8,580 (1,185) - - 7,395
---------------------------------------------------------------------------
Total....................... $264,160 $17,541 $(19,525) $ - $262,176
===========================================================================
47
50
MARITRANS INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION
($000)
BALANCE AT ADDITIONS
BEGINNING AND TRANSFERS RETIREMENTS OTHER CHANGES BALANCE AT
DESCRIPTION OF PERIOD AT COST OR SALES ADD (DEDUCT) END OF PERIOD
-------------------------------------------------------------------------------------------
JANUARY 1 TO
DECEMBER 31, 1991
Marine vessels and equipment.. $44,084 $15,574 $(2,644) $ - $57,014
===========================================================================================
JANUARY 1 TO
DECEMBER 31, 1992
Marine vessels and equipment.. $57,014 $15,190 $(2,477) $ - $69,727
===========================================================================================
JANUARY 1 TO
DECEMBER 31, 1993
Marine vessels and equipment.. $69,727 $15,387 $(6,148) $ - $78,966
===========================================================================================
49
51
MARITRANS INC.
SCHEDULE VIII - VALUATION ACCOUNT
($000)
CHARGED
BALANCE AT TO COSTS BALANCE
BEGINNING AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
-------------------------------------------------
JANUARY 1 TO DECEMBER 31, 1991
Allowance for doubtful accounts............. $1,030 $160 $488(a) $702
===============================================
JANUARY 1 TO DECEMBER 31, 1992
Allowance for doubtful accounts............. $ 702 $ 60 $221(a) $541
===============================================
JANUARY 1 TO DECEMBER 31, 1993
Allowance for doubtful accounts............. $ 541 $136 $ 72(a) $605
===============================================
----------
(a) Deductions are a result of write-offs of uncollectible accounts
receivable for which allowances were previously provided.
50