1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended March 31, 2000
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-7615
Kirby Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 74-1884980
--------------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
55 Waugh Drive, Suite 1000, Houston, TX 77007
--------------------------------------- -----------------------------------
(Address of principal executive offices) (Zip Code)
(713) 435-1000
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(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the registrant's Common Stock, $.10 par
value per share, on May 9, 2000 was 24,524,468.
2
PART 1 - FINANCIAL INFORMATION
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2000 1999
------------ ------------
($ in thousands)
Current assets:
Cash and cash equivalents $ 5,523 $ 3,571
Available-for-sale securities 10,957 13,091
Accounts receivable:
Trade - less allowance for doubtful accounts 76,144 71,755
Insurance claims and other 7,901 6,637
Inventory - finished goods 12,216 13,127
Prepaid expenses 8,650 9,684
Deferred income taxes 3,511 4,958
------------ ------------
Total current assets 124,902 122,823
------------ ------------
Property and equipment 694,784 688,555
Less accumulated depreciation 242,123 236,704
------------ ------------
452,661 451,851
------------ ------------
Investments in marine affiliates 14,944 14,941
Goodwill - less accumulated amortization 160,577 161,095
Other assets 2,123 2,687
------------ ------------
$ 755,207 $ 753,397
============ ============
See accompanying notes to condensed financial statements.
2
3
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2000 1999
------------ ------------
($ in thousands)
Current liabilities:
Current portion of long-term debt $ 5,335 $ 5,335
Income taxes payable 4,334 517
Accounts payable 39,634 29,909
Accrued liabilities 49,550 51,731
Deferred revenues 1,487 4,073
------------ ------------
Total current liabilities 100,340 91,565
------------ ------------
Long-term debt - less current portion 305,188 316,272
Deferred income taxes 90,522 92,794
Other long-term liabilities 12,990 12,730
------------ ------------
408,700 421,796
------------ ------------
Contingencies and commitments -- --
Stockholders' equity:
Preferred stock, $1.00 par value per share. Authorized
20,000,000 shares -- --
Common stock, $.10 par value per share. Authorized
60,000,000 shares, issued 30,907,000 shares 3,091 3,091
Additional paid-in capital 175,530 175,231
Accumulated other comprehensive income (216) (317)
Retained earnings 174,562 168,495
------------ ------------
352,967 346,500
Less cost of 6,394,000 shares in treasury (6,383,000 at
December 31, 1999) 106,800 106,464
------------ ------------
246,167 240,036
------------ ------------
$ 755,207 $ 753,397
============ ============
See accompanying notes to condensed financial statements.
3
4
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended
March 31,
-------------------------
2000 1999
--------- ---------
($ in thousands, except
per share amounts)
Revenues:
Marine transportation $ 107,502 $ 57,729
Diesel engine services 18,954 20,752
--------- ---------
126,456 78,481
--------- ---------
Costs and expenses:
Costs of sales and operating expenses 81,533 52,938
Selling, general and administrative 15,171 9,239
Taxes, other than on income 2,575 1,725
Depreciation and amortization 11,761 6,680
--------- ---------
111,040 70,582
--------- ---------
Operating income 15,416 7,899
Equity in earnings of marine affiliates 837 881
Other (expense) income (107) 187
Interest expense (5,863) (2,545)
--------- ---------
Earnings before taxes on income 10,283 6,422
Provision for taxes on income (4,216) (2,421)
--------- ---------
Net earnings $ 6,067 $ 4,001
========= =========
Net earnings per share of common stock:
Basic $ .25 $ .20
========= =========
Diluted $ .25 $ .20
========= =========
See accompanying notes to condensed financial statements.
4
5
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
----------------------------
2000 1999
--------- ---------
($ in thousands)
Cash flows from operating activities:
Net earnings $ 6,067 $ 4,001
Adjustments to reconcile net earnings to net cash provided by
operations:
Depreciation and amortization 11,761 6,680
Provision for deferred income taxes 398 754
Equity in earnings of marine affiliates, net of distributions and
contributions 38 (195)
Other 387 (105)
Increase in cash flows resulting from changes in operating
working capital 5,628 13,292
--------- ---------
Net cash provided by operating activities 24,279 24,427
--------- ---------
Cash flows from investing activities:
Proceeds from sale and maturities of investments 2,277 500
Purchase of investments -- (439)
Capital expenditures (13,311) (5,457)
Proceeds from disposition of assets 1,869 636
Other (40) --
--------- ---------
Net cash used in investing activities (9,205) (4,760)
--------- ---------
Cash flows from financing activities:
Payments on bank revolving credit agreements, net (11,000) (8,500)
Payments on long-term debt (84) (83)
Purchase of treasury stock (1,879) (11,429)
Other (159) 130
--------- ---------
Net cash used in financing activities (13,122) (19,882)
--------- ---------
Increase (decrease) in cash and cash equivalents 1,952 (215)
Cash and cash equivalents, beginning of year 3,571 861
--------- ---------
Cash and cash equivalents, end of period $ 5,523 $ 646
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $ 3,915 $ 343
Income taxes $ 28 $ 879
See accompanying notes to condensed financial statements.
5
6
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, the accompanying unaudited condensed
financial statements of Kirby Corporation and consolidated subsidiaries (the
"Company") contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March 31,
2000 and December 31, 1999, and the results of operations for the three months
ended March 31, 2000 and 1999.
(1) BASIS FOR PREPARATION OF THE CONDENSED FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the Company believes that the
disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant accounting
policies normally included in annual financial statements, have been condensed
or omitted pursuant to such rules and regulations. It is suggested that these
condensed financial statements be read in conjunction with the Company's latest
Annual Report on Form 10-K.
(2) ACQUISITION
On October 12, 1999, the Company completed the acquisition of Hollywood
Marine, Inc. ("Hollywood"), by means of a merger of Hollywood into Kirby Inland
Marine, Inc., a wholly owned subsidiary of the Company. Pursuant to the
Agreement and Plan of Merger, the Company acquired Hollywood for an aggregate
consideration (before post-closing adjustments) of $320,788,000, consisting of
$89,586,000 in common stock (4,384,000 shares at $20.44 per share), $128,658,000
in cash, the assumption and refinancing of $99,185,000 of Hollywood's existing
debt and $3,359,000 of merger costs. A final post-closing working capital
adjustment was completed on February 29, 2000 for an additional $1,802,000 in
common stock (88,178 shares at $20.44 per share). The final total purchase
consideration for the Hollywood acquisition was $322,590,000. C. Berdon Lawrence
was the principal shareholder of Hollywood. Hollywood's operations were included
as part of the Company's operations effective October 12, 1999 in accordance
with the purchase method of accounting. Goodwill is amortized over 30 years.
Hollywood, located in Houston, Texas, was engaged in the inland tank
barge transportation of chemicals and petrochemicals, refined petroleum
products, pressurized products and black oil products primarily along the Gulf
Intracoastal Waterway, the Houston Ship Channel and the lower Mississippi River.
Hollywood operated a fleet of 270 inland tank barges, with 4.8 million barrels
of capacity, and 104 inland towboats.
Financing for the cash portion of the transaction and the repayment of
Hollywood's existing debt was through the Company's existing $100,000,000
undrawn bank revolving credit agreement with Chase Bank of Texas, N.A. ("Chase")
as agent bank and through a new $200,000,000 credit facility with Bank of
America, N.A. as syndication agent bank; Chase as administrative agent; and Bank
One, Texas, N.A. as documentation agent.
6
7
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(2) ACQUISITION - (Continued)
The following unaudited pro forma combined financial information for
the three months ended March 31, 1999 is based on historical financial
information of the Company and Hollywood. The financial information assumes the
merger was completed as of the beginning of the year indicated. The unaudited
pro forma financial information is not necessarily indicative of the results of
operations that would have occurred had the merger been consummated at the
beginning of the year indicated, nor is the information indicative of the future
results of operations (in thousands, except per share amounts):
Three months
ended March 31, 1999
--------------------
Revenues $ 118,912
Earnings before taxes on income $ 7,633
Net earnings $ 4,340
Net earnings per share of common stock -- diluted $ .17
(3) ADOPTION OF ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS No. 133")
issued in June 1998, establishes accounting and reporting standards for
derivative instruments and hedging activities. This statement requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
With the issuance of SFAS No. 137, SFAS No. 133 is now effective for all
quarters of fiscal years beginnings after June 15, 2000. SFAS No. 133 is
effective for the Company's year ending December 31, 2001 and is not expected to
have a material effect on the Company's financial position or results of
operations.
(4) COMPREHENSIVE INCOME
The Company's total comprehensive income for the three months ended
March 31, 2000 and 1999 were as follows (in thousands):
Three months ended March 31,
----------------------------
2000 1999
--------- ---------
Net earnings $ 6,067 $ 4,001
Other comprehensive income (loss), net of tax 101 (338)
--------- ---------
Total comprehensive income $ 6,168 $ 3,663
========= =========
7
8
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(5) SEGMENT INFORMATION
The following table sets forth the Company's revenues and profit (loss)
by reportable segment for the three months ended March 31, 2000 and 1999 and
total assets as of March 31, 2000 and December 31, 1999 (in thousands):
Three months ended March 31,
----------------------------
2000 1999
----------- ----------
Revenues:
Marine transportation $ 107,502 $ 57,729
Diesel engine services 18,954 20,752
---------- ----------
$ 126,456 $ 78,481
========== ==========
Segment profit (loss):
Marine transportation $ 15,030 $ 6,903
Diesel engine services 2,037 2,117
Other (6,784) (2,598)
---------- ----------
$ 10,283 $ 6,422
========== ==========
March 31, December 31,
2000 1999
---------- ----------
Total assets:
Marine transportation $ 676,640 $ 673,882
Diesel engine services 36,865 32,890
Other 41,702 46,625
---------- ----------
$ 755,207 $ 753,397
========== ==========
The following table presents the details of "Other" segment profit
(loss) for the three months ended March 31, 2000 and 1999 (in thousands):
Three months ended March 31,
----------------------------
2000 1999
---------- ----------
General corporate expenses $ (1,651) $ (1,121)
Interest expense (5,863) (2,545)
Equity in earnings of marine affiliates 837 881
Other (expense) income (107) 187
---------- ----------
$ (6,784) $ (2,598)
========== ==========
8
9
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(5) SEGMENT INFORMATION - (Continued)
The following table presents the details of "Other" total assets as of
March 31, 2000 and December 31, 1999 (in thousands):
March 31, December 31,
2000 1999
---------- ----------
General corporate assets $ 26,758 $ 31,684
Investments in affiliates 14,944 14,941
---------- ----------
$ 41,702 $ 46,625
========== ==========
(6) TAXES ON INCOME
Details of the provision for taxes on income for the three months ended
March 31, 2000 and 1999 were as follows (in thousands):
Three months ended
March 31,
------------------------------
2000 1999
---------- ----------
Provision for taxes on income:
Current $ 3,503 $ 1,406
Deferred 423 754
State and local 290 261
---------- ----------
$ 4,216 $ 2,421
========== ==========
9
10
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS - (Continued)
(7) EARNINGS PER SHARE
The following table presents the components of basic and diluted
earnings per share for the three months ended March 31, 2000 and 1999 (in
thousands, except per share amounts):
Three months ended
March 31,
---------------------------
2000 1999
---------- ----------
(in thousands, except
per share amounts)
Net earnings $ 6,067 $ 4,001
========== ==========
Basic earnings per share:
Weighted average number of common shares outstanding 24,493 20,341
========== ==========
Basic earnings per share $ .25 $ .20
========== ==========
Diluted earnings per share:
Weighted average number of common shares outstanding 24,493 20,341
Dilutive shares applicable to stock options 101 106
---------- ----------
Shares applicable to diluted earnings 24,594 20,447
========== ==========
Diluted earnings per share $ .25 $ .20
========== ==========
Certain outstanding options to purchase approximately 1.0 million and
1.2 million shares of common stock were outstanding at March 31, 2000 and
March 31, 1999, respectively. Such options were excluded in the computation of
diluted earnings per share because they would have been antidilutive.
10
11
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Statements contained in this Form 10-Q that are not historical facts,
including, but not limited to, any projections contained herein, are
forward-looking statements and involve a number of risks and uncertainties. Such
statements can be identified by the use of forward-looking terminology such as
"may," "will," "expect," "anticipate," "estimate," or "continue" or the negative
thereof or other variations thereon or comparable terminology. The actual
results of the future events described in such forward-looking statements in
this Form 10-Q could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to differ
materially are: adverse economic conditions; industry competition and other
competitive factors; adverse weather conditions such as high water, low water,
fog and ice; marine accidents; construction of new equipment by competitors,
including construction with government assisted financing; government and
environmental laws and regulations; and the timing, magnitude and number of
acquisitions made by the Company.
The Company, through its subsidiaries, is a provider of marine
transportation services, operating a fleet of 774 inland tank barges, with 14.0
million barrels of capacity, and 229 inland towing vessels, transporting
industrial chemicals and petrochemicals, refined petroleum products, black oil
and agricultural chemicals along the United States inland waterways. The
Company's marine transportation operation also includes one offshore dry-bulk
barge and tug unit. The Company serves as managing partner of a 35% owned
offshore marine partnership, consisting of four dry-bulk barge and tug units.
The Company also serves as the managing partner of a 50% owned offshore marine
partnership, consisting of one dry-bulk barge and tug unit, which is currently
in lay-up and is for sale. The partnerships are accounted for under the equity
method of accounting.
The Company, through its subsidiaries, is also a provider of diesel
engine services, engaged in the overhaul and servicing of large medium-speed
diesel engines employed in marine, power generation and rail applications. The
Company's diesel engine services operation is divided into three subsidiaries
organized around the markets they serve: Marine Systems, an authorized dealer
for EMD; Rail Systems, an exclusive EMD distributor of aftermarket parts to
shortline and industrial railroads; and Engine Systems, an authorized EMD
distributor for 17 eastern states and the Caribbean, and the exclusive worldwide
distributor for EMD to the nuclear industry.
On October 12, 1999, the Company completed the acquisition of Hollywood
by means of a merger of Hollywood into Kirby Inland Marine, Inc., a wholly owned
subsidiary of the Company. Pursuant to the Agreement and Plan of Merger, the
Company acquired Hollywood for an aggregate consideration of $322,590,000,
including post-closing adjustments. Hollywood's operations were included as part
of the Company operations effective October 12, 1999 in accordance with the
purchase method of accounting.
RESULTS OF OPERATIONS
The Company reported net earnings of $6,067,000, or $.25 per share, on
revenues of $126,456,000 for the 2000 first quarter, compared with net earnings
of $4,001,000, or $.20 per share, on revenues of $78,481,000 for the 1999 first
quarter.
11
12
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - (CONTINUED)
For purposes of this Management's Discussion, all earnings per share
are "Diluted earnings per share." The weighted average number of common shares
for the 2000 and 1999 first quarter were 24,594,000 and 20,447,000,
respectively. The increase in the weighted average number of common shares for
the 2000 first quarter compared with the 1999 first quarter primarily reflected
the issuance of common stock associated with the acquisition of Hollywood in
October 1999.
The following table sets forth the Company's revenues and percentage of
such revenues for the three months ended March 31, 2000 compared with the three
months ended March 31, 1999 (dollars in thousands):
Three months ended March 31,
---------------------------------------------------------
2000 1999 Increase (decrease)
------------------------- ------------------------- -------------------------
Amounts % Amounts % Amounts %
--------- --------- --------- --------- --------- ---------
Revenues:
Marine transportation $ 107,502 85% $ 57,729 74% $ 49,773 86%
Diesel engine services 18,954 15 20,752 26 (1,798) (9)
--------- --------- --------- --------- --------- ---------
$ 126,456 100% $ 78,481 100% $ 47,975 61%
========= ========= ========= ========= ========= =========
Revenues for the marine transportation segment increased 86% for the
2000 first quarter compared with the 1999 first quarter, primarily due to the
acquisition of Hollywood in October 1999. In the 2000 first quarter, chemical,
petrochemical and black oil movements were strong. Refined products and
fertilizer movements to the Midwest were unseasonably strong, with the slower
part of the season normally occurring during the first and fourth quarters. The
strong refined products movements were the result of low Midwest inventory
levels and favorable price differentials between the Gulf Coast and Chicago. The
stronger than normal fertilizer movements were the result of low inventory
levels in the Midwest terminals.
During the 2000 first quarter, revenues reflected a modest continual
upward trend in spot market rates and contract renewals were generally at
modestly higher rates. The marine transportation segment operates under
long-term contracts, short-term contracts and spot transactions for movements of
liquid products. During the 2000 first quarter, approximately 70% of movements
were under term contracts and 30% were spot transactions, compared with the 1999
first quarter when approximately 75% of movements were under term contracts and
25% were spot transactions.
The 2000 first quarter was negatively impacted by weather, but, not to
the degree as the first quarter of 1999. Low water conditions on the
Mississippi, Ohio and Illinois Rivers through mid-February 2000 resulted in
longer transit times and restricted drafts for upriver movements, both of which
negatively impacted revenues.
For the 1999 first quarter, chemical and petrochemical movements were
strong, while refined product movements and fertilizer movements were seasonably
soft. Spot market rates reflected modest
12
13
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - (CONTINUED)
increases and contracts were generally renewed at modestly higher rates.
However, the effect of the rate increases was offset by navigational delays
(weather, locks and other restrictions), which lowered the 1999 first quarter's
revenues due to increased transit times.
The diesel engine services segment's revenues for the 2000 first
quarter decreased 9% compared with the segment's 1999 first quarter revenues, as
the prior year first quarter included accelerated service demands from certain
Midwest and East Coast customers. For the 2000 first quarter, the segment
benefited from the slowly mending Gulf Coast oil and gas services sector, a
strong inland river market and a strong nuclear market. During the 1999 first
quarter, the Gulf Coast oil and gas services sector was weak, however, the Gulf
Coast mechanics were dispatched to the Midwest and the East Coast to meet the
accelerated service demands noted above.
The following table sets forth the costs and expenses and percentage of
each for the three months ended March 31, 2000 compared with the three months
ended March 31, 1999 (dollars in thousands):
Three months ended March 31,
-----------------------------------------------------
2000 1999 Increase (decrease)
----------------------- ----------------------- -----------------------
Amounts % Amounts % Amounts %
-------- -------- -------- -------- -------- --------
Costs and expenses
Costs of sales and operating expenses $ 81,533 73% $ 52,938 75% $ 28,595 54%
Selling, general and administrative 15,171 14 9,239 13 5,932 64
Taxes, other than on income 2,575 2 1,725 2 850 49
Depreciation and amortization 11,761 11 6,680 10 5,081 76
-------- -------- -------- -------- -------- --------
$111,040 100% $ 70,582 100% $ 40,458 57%
======== ======== ======== ======== ======== ========
Total costs and expenses, excluding interest expense, for the 2000
first quarter increased 57% compared with the 1999 first quarter. The 2000 first
quarter costs and expenses included the expenses of Hollywood. In addition, the
2000 first quarter reflected higher equipment costs, labor, health and welfare
costs.
The 2000 first quarter costs and expenses also reflected higher fuel
costs, with the average price per gallon consumed 36 cents higher than the
average price per gallon consumed during the 1999 first quarter. As stated
above, both the 2000 and the 1999 first quarters were negatively impacted by
weather conditions, which decreased revenues and increased operating expenses.
Ice conditions, and low and high water conditions require additional horsepower
to complete movements, additional fuel and other variable expenses associated
with longer transit times.
13
14
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - (CONTINUED)
The following tables set forth the operating income and operating
margins by segment for the three months ended March 31, 2000 compared with the
three months ended March 31, 1999 (dollars in thousands):
Three months ended March 31,
------------------------------------------------------------
2000 1999
------------------------------ ---------------------------
Operating Operating Increase (decrease)
income Operating income Operating -------------------------
(loss) margin (loss) margin Amounts %
--------- ---------- --------- --------- --------- ---------
Marine transportation $ 15,030 14.0% $ 6,903 12.0% $ 8,127 118%
Diesel engine services 2,037 10.7% 2,117 10.2% (80) (4)%
Corporate (1,651) (1,121) (530) (47)%
--------- --------- --------- ---------
$ 15,416 $ 7,899 $ 7,517 95%
========= ========= ========= =========
The following table sets forth the equity in earnings of affiliates,
other expense and income, and interest expense for the three months ended March
31, 2000 compared with the three months ended March 31, 1999 (dollars in
thousands):
Three months ended March 31, Increase (decrease)
--------------------------- ---------------------------
2000 1999 Amount %
-------- -------- -------- ---------
Equity in earnings of marine affiliates $ 837 $ 881 $ (44) (5)%
Other (expense) income $ (107) $ 187 $ (294) (157)%
Interest expense $ (5,863) $ (2,545) $ 3,318 130%
Other expense of $107,000 for the 2000 first quarter reflected
investment income, a net gain on disposition of assets and the recording of
minority interest from approximately 25 inland tank barges in partnerships
acquired with the Hollywood acquisition. During the 2000 first quarter, the
Company sold three inland towboats and six single-skin tank barges for a $49,000
net gain, which generated $1,869,000 of cash. Other income of $187,000 for the
1999 first quarter was primarily from investment income.
The 130% increase in interest expense for the 2000 first quarter over
the 1999 first quarter primarily reflected interest expense on the borrowings to
finance the Hollywood acquisition. The average debt and average interest rate
for the 2000 first quarter was $316,359,000 and 7.33%, compared with
$135,800,000 and 7.23% for the 1999 first quarter, respectively.
14
15
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
Balance Sheet
Total assets as of March 31, 2000 were $755,207,000, compared with
$753,397,000 as of December 31, 1999. The following table sets forth the
significant components of the balance sheet as of March 31, 2000 compared with
December 31, 1999 (dollars in thousands):
Increase (decrease)
March 31, December 31, -------------------------
2000 1999 Amount %
--------- --------- --------- ---------
Assets:
Current assets $ 124,902 $ 122,823 $ 2,079 2%
Property and equipment, net 452,661 451,851 810 --
Investments in marine affiliates 14,944 14,941 3 --
Goodwill, net 160,577 161,095 (518) --
Other assets 2,123 2,687 (564) (21)
--------- --------- --------- ---------
$ 755,207 $ 753,397 $ 1,810 --%
========= ========= ========= =========
Liabilities and stockholders' equity:
Current liabilities $ 100,340 $ 91,565 $ 8,775 10%
Long-term debt 305,188 316,272 (11,084) (4)
Deferred taxes 90,522 92,794 (2,272) (2)
Other long-term liabilities 12,990 12,730 260 2
Stockholders' equity 246,167 240,036 6,131 3
--------- --------- --------- ---------
$ 755,207 $ 753,397 $ 1,810 --%
========= ========= ========= =========
Working capital as of March 31, 2000 totaled $24,562,000 compared with
$31,258,000 as December 31, 1999. The decrease was primarily attributable to 33%
increase in accounts payable, partially offset by a 6% increase in trade
accounts receivable. The increase in accounts payable is primarily due to
increased shipyard activity during the 2000 first quarter versus the 1999 fourth
quarter. The increase in trade accounts receivable was driven by higher marine
transportation and diesel engine services revenues in the 2000 first quarter
versus the 1999 fourth quarter.
Long-term debt, less current portion, decreased 4% during the 2000
first quarter, reflecting the payment of $11,084,000 of long-term debt, the
result of the favorable cash flow provided by operating activities during the
quarter, discussed below under Liquidity.
Stockholders' equity as of March 31, 2000 increased 3% during the 2000
first quarter, primarily reflecting the Company's net earnings of $6,067,000,
the issuance of $1,802,000 of common stock as a final post-closing adjustment of
the Hollywood acquisition and the repurchase of $1,879,000 of common stock by
the Company.
15
16
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY - (CONTINUED)
Merger Related Charge - 1999
In connection with the acquisition of Hollywood, the Company recorded
$4,502,000 of pre-tax merger related charges to combine the acquired operations
with those of the Company. The cash portion of the merger related charges
totaled $3,248,000. The components of the cash charge incurred, the actual cash
payments made, and the accrued balances at March 31, 2000 are as follows (in
thousands):
Total cash Paid in Paid in Accrued
portion 1999 2000 at 3/31/00
---------- ---------- ---------- ----------
Severance for Company employees $ 1,555 $ 13 $ 242 $ 1,300
Exit of insurance mutual 870 -- 870 --
Corporate headquarters lease abandonment 823 106 117 600
---------- ---------- ---------- ----------
$ 3,248 $ 119 $ 1,229 $ 1,900
========== ========== ========== ==========
The Company expects that the accrued severance remaining will be paid
by the end of 2000. The duplicate facilities reserve remaining is expected to be
paid throughout the lease term which expires in August 2003.
Capital Expenditures
During the 2000 first quarter and the 1999 first quarter, the Company
purchased no new or existing marine transportation equipment. The capital
expenditures for the 2000 first quarter of $13,311,000 and for the 1999 first
quarter of $5,457,000 were primarily for upgrading the Company's existing marine
transportation fleet. As of March 31, 2000, the Company had no material
commitments for capital expenditures.
Treasury Stock Purchases
During the 2000 first quarter, the Company purchased in the open market
103,000 shares of common stock at a total purchase price of $1,879,000, for an
average price of $18.24 per share. As of May 9, 2000, the Company had 2,259,000
shares available under its repurchase authorization. The Company is authorized
to purchase its common stock on the New York Stock Exchange and in privately
negotiated transactions. When purchasing its common stock, the Company is
subject to price, trading volume and other market considerations. Shares
purchased may be used for reissuance upon the exercise of stock options, in
future acquisitions for stock or for other appropriate corporate purposes.
16
17
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY - (CONTINUED)
Liquidity
The Company generated net cash provided by operating activities of
$24,279,000 and $24,427,000 for the three months ended March 31, 2000 and 1999,
respectively. Both comparable quarters were positively impacted by favorable
cash flow from working capital, $5,628,000 for the 2000 first quarter and
$13,292,000 for the 1999 first quarter.
Funds generated are available for acquisitions of core businesses,
capital construction projects, treasury stock repurchases, repayment of
borrowings associated with each of the above, and for other operating
requirements. In addition to its net cash flow provided by operating activities,
the Company also has available as of May 9, 2000, $93,500,000 under its
$100,000,000 revolving credit agreement, $5,000,000 under its $200,000,000
senior credit facility and $121,000,000 under its medium term note program. The
Company's scheduled principal payments during the next 12 months are
$50,335,000. On June 1, 2000, $45,000,000 of the Company's medium term notes
mature. These notes were classified as long-term at March 31, 2000 and December
31, 1999, as the Company has the ability and the intent to refinance the notes
on a long-term basis through available credit facilities.
During the last three months, inflation has had a relatively minor
effect on the financial results of the Company. The marine transportation
segment has long-term contracts which generally contain cost escalation clauses
whereby certain costs, including fuel, can be passed through to its customers.
The repair portion of the diesel engine services segment is based on prevailing
current market rates.
The Company does not have an established dividend policy. Decisions
regarding the payment of future dividends will be made by the Board of Directors
based on the facts and circumstances that exist at that time. Since 1989, the
Company has not paid any dividends on its common stock.
Accounting Standards
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS No. 133")
issued in June 1998, establishes accounting and reporting standards for
derivative instruments and hedging activities. This statement requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
With the issuance of SFAS No. 137, SFAS No. 133 is now effective for
all quarters of fiscal years beginnings after June 15, 2000. SFAS No. 133 is
effective for the Company's year ending December 31, 2001 and is not expected to
have a material effect on the Company's financial position or results of
operations
YEAR 2000
During 1999, the Company initiated a program to prepare the Company's
land-based and vessel-based computer systems for the "Year 2000 Issue." The
Company designed and implemented an action plan to determine the likely
exposure of the Company and its subsidiaries to the Year 2000 Issue and to take
the necessary action to minimize the impact of those exposures. The Company's
Year 2000 Issue action plan addressed both internal and external exposures. The
Company incurred approximately $100,000 of expenses related to the Year 2000
Issue. The Company did not encounter any critical system application or
hardware failures during the date rollover to the Year 2000, and has not
experienced any disruptions of business activities as a result of Year 2000
Issue failures encountered by customers, suppliers and service providers.
17
18
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For a detailed explanation of the material pending legal proceedings
against the Company, please refer to the Form 10-K for the year ended
December 31, 1999.
Item 4. Results of Votes of Security Holders
(a) The Registrant held its Annual Meeting of Stockholders on April 18,
2000.
(b) Proxies for the meeting were solicited pursuant to Regulation 14; there
was no solicitation in opposition to management's nominees for
directors as listed in the Proxy Statement, and all such nominees were
elected.
Directors elected were Philip J. Burguieres, C. Sean Day, Bob G. Gower,
William M. Lamont, Jr., C. Berdon Lawrence, George A. Peterkin, Jr., J.
H. Pyne and Robert G. Stone, Jr. No other directors previously in
office continued as a director or continued in office after the
meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.0 Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months ended
March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
KIRBY CORPORATION
(Registrant)
By: /s/ G. STEPHEN HOLCOMB
---------------------------------
G. Stephen Holcomb
Vice President and Controller
Dated: May 9, 2000
18
19
EXHIBIT INDEX
Exhibit Description
- ------- -----------
27.0 Financial Data Schedule
5
1,000
3-MOS
DEC-31-2000
MAR-31-2000
5,523
10,957
84,709
664
12,216
124,902
694,784
242,123
755,207
100,340
305,188
0
0
3,091
243,076
755,207
14,551
126,456
11,190
81,533
29,507
1
5,863
10,283
4,216
6,067
0
0
0
6,067
.25
.25
