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
and Exchange Act of 1934
For the quarter ended March 31, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
and 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)
1775 St. James Place, Suite 300, Houston, TX 77056-3453
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(Address of principal executive offices) (Zip Code)
(713) 629-9370
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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, $.10 par
value per share, on May 6, 1996 was 26,261,636.
2
PART 1 - FINANCIAL INFORMATION
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
-------- ------------
($ in thousands)
Current assets:
Cash and invested cash $ 1,828 1,457
Available-for-sale securities 16,984 15,692
Accounts and notes receivable, net of allowance for doubtful accounts 62,064 65,755
Inventory - finished goods, at lower of average cost or market 10,135 9,555
Prepaid expenses and other 10,885 11,968
Deferred taxes 723 677
-------- -------
Total current assets 102,619 105,104
-------- -------
Property and equipment, at cost 506,917 500,454
Less allowance for depreciation 182,224 178,119
-------- -------
324,693 322,335
-------- -------
Investments in affiliates:
Insurance affiliate 43,303 44,785
Marine affiliates 12,121 11,985
-------- -------
55,424 56,770
-------- -------
Excess cost of consolidated subsidiaries 3,516 3,605
Noncompete agreements, net of accumulated amortization 1,150 1,438
Sundry 8,804 8,832
-------- -------
$496,206 498,084
======== =======
See accompanying notes to condensed financial statements.
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3
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
Current liabilities:
Current portion of long-term debt $ 5,333 5,676
Accounts payable 14,125 21,691
Accrued liabilities 46,083 36,112
Deferred revenues 6,500 5,947
--------- -------
Total current liabilities 72,041 69,426
--------- -------
Long-term debt, less current portion 164,867 173,550
Deferred taxes 44,463 43,615
Other long-term liabilities 6,276 6,160
--------- -------
287,647 292,751
--------- -------
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 158,397 158,383
Unrealized net gains (losses) in value of investments (117) 1,978
Retained earnings 93,274 88,034
--------- -------
254,645 251,486
Less cost of 4,646,000 shares in treasury (4,653,000 at 46,086 46,153
December 31, 1995) --------- -------
208,559 205,333
--------- -------
$ 496,206 498,084
========= =======
See accompanying notes to condensed financial statements.
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4
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended March 31,
----------------------------
1996 1995
------------- ----------
($ in thousands, except
per share amounts)
Revenues:
Transportation $ 77,472 79,209
Diesel repair 14,935 14,025
Net premiums earned - 21,067
Commissions earned on reinsurance - 912
Investment income 512 3,159
Gain (loss) on disposition of assets (16) 13
Realized gain on investments - 233
--------- -------
92,903 118,618
--------- -------
Costs and expenses:
Costs of sales and operating expenses (except as shown below) 61,462 63,595
Losses, claims and settlement expenses - 14,569
Policy acquisition costs - 4,752
Selling, general and administrative 10,151 11,829
Taxes, other than on income 1,925 2,590
Depreciation and amortization 9,388 9,730
Minority interest expense - 1,173
--------- -------
82,926 108,238
--------- -------
Operating income 9,977 10,380
Equity in earnings of insurance affiliate 969 -
Equity in earnings of marine affiliates 748 159
Interest expense (3,315) (2,910)
--------- -------
Earnings before taxes on income 8,379 7,629
Provision for taxes on income 3,139 2,820
--------- -------
Net earnings $ 5,240 4,809
========= =======
Earnings per share of common stock $ .20 .17
========= =======
See accompanying notes to condensed financial statements.
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5
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
----------------------------
1996 1995
----------- ------------
($ in thousands)
Net earnings $ 5,240 4,809
Adjustments to reconcile net earnings to net cash provided by operating
activities:
(Gain) loss on disposition of assets 16 (13)
Realized gain on investments - (233)
Depreciation and amortization 9,388 9,730
Increase in deferred taxes 983 1,403
Deferred scheduled maintenance costs 1,421 3,148
Equity in earnings of insurance affiliate (969) -
Equity in earnings of marine affiliates (748) (159)
Minority interest expense - 1,161
Other noncash adjustments to earnings 628 (1,427)
Increase in cash from other changes in operating working capital for:
Marine transportation, diesel repair and other 6,200 7,778
Insurance - 3,835
-------- -------
Net cash provided by operating activities 22,159 30,032
-------- -------
Cash flow from investing activities:
Proceeds from sale and maturities of investments - 15,260
Purchase of investments (1,793) (22,213)
Increase in short-term investments - (11,563)
Capital expenditures (13,787) (12,570)
Proceeds from disposition of assets 2,737 1,047
-------- -------
Net cash used in investing activities (12,843) (30,039)
-------- -------
Cash flow from financing activities:
Payments on bank revolving credit agreements, net (8,600) (22,800)
Increase in long-term debt - 37,548
Payments under long-term debt (426) (21,368)
Proceeds from exercise of stock options 81 24
-------- -------
Net cash used in financing activities (8,945) (6,596)
-------- -------
Increase (decrease) in cash and invested cash 371 (6,603)
Cash and invested cash, beginning of year 1,457 11,840
-------- -------
Cash and invested cash, end of period $ 1,828 5,237
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,138 2,206
Income taxes $ 300 -
See accompanying notes to condensed financial statements.
5
6
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
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,
1996 and December 31, 1995, and the results of operations for the three months
ended March 31, 1996 and 1995.
(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) COMPARABILITY OF FINANCIAL STATEMENTS
In July 1995, the Company's ownership of Universal Insurance Company
("Universal") was reduced to 47% as a result of a redemption of a portion of
Universal's common stock owned by the Company. Accordingly, effective July 1,
1995, the Company began accounting for its investment in Universal under the
equity method of accounting. Prior period financial statements have not been
restated.
The following pro forma condensed statement of earnings is based on
historical information of the Company and assumes the Company was accounting
for its investment in Universal on an equity basis as of the beginning of the
three months ended March 31, 1995 (in thousands):
Three months ended
March 31, 1995
--------------
Revenues $ 93,549
Costs and expenses 84,902
--------
Operating income 8,647
Equity in earnings of insurance affiliate 1,733
Equity in earnings of marine affiliates 159
Interest expense (2,910)
--------
Earnings before taxes on income 7,629
Provision for taxes on income 2,820
--------
Net earnings $ 4,809
========
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KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(3) TAXES ON INCOME
Earnings before taxes on income and details of the provision for taxes
on income for the three months ended March 31, 1996 and 1995 are as follows (in
thousands):
Three months ended March 31,
----------------------------
1996 1995
---------- ---------
Earnings before taxes on income:
United States $7,410 $5,870
Foreign 969 1,759
------ ------
$8,379 $7,629
====== ======
Provision for taxes on income:
Current $2,016 $1,699
Deferred 983 1,067
State and municipal 140 54
------ ------
$3,139 $2,820
====== ======
(4) LONG-TERM DEBT
At December 31, 1995, the Company had two separate revolving credit
agreements with Texas Commerce Bank National Association, as agent bank,
providing for aggregate borrowings of up to $50,000,000 by the Company and
$50,000,000 by the Company's principal marine transportation subsidiary (the
"Credit Agreements"). On March 18, 1996, the Company agreed to new terms with
the agent bank regarding the Credit Agreements. Under the new terms, the
$50,000,000 Credit Agreement with the Company and the $50,000,000 Credit
Agreement with the Company's principal marine transportation subsidiary were
combined into a single $100,000,000 Credit Agreement with the Company. The new
Credit Agreement eliminates certain negative pledges and rights to priority
liens included in the original terms of the marine transportation subsidiary's
Credit Agreement. The new terms contain covenants substantially similar to the
original terms of the Credit Agreements including the maintenance of certain
financial ratios and certain other convenants. Interest on the new Credit
Agreement, subject to an applicable margin ratio and type of loan, is floating
prime rate or, at the Company's option, rates based on Eurodollar interbank or
certificate of deposit rates. Proceeds from the new Credit Agreement may be
used for general corporate purposes, the purchase of existing or new equipment
or for possible business acquisitions.
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8
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The Company conducts operations in marine transportation and diesel
repair business segments. The Company also owns a 47% voting interest in a
property and casualty insurance company.
The Company reported net earnings of $5,240,000, or $.20 per share,
for the 1996 first quarter, compared with $4,809,000, or $.17 per share, for
the 1995 first quarter.
The Company's marine transportation segment's consolidated revenues
totaled $77,472,000, or 83% of total revenues for the 1996 first quarter.
Consolidated diesel repair revenues totaled $14,935,000, or 16% of total first
quarter 1996 revenues.
Effective July 1, 1995, the Company began accounting for its
investment in Universal, its property and casualty insurance subsidiary, under
the equity method of accounting as a result of a redemption of a portion of the
Company's common stock in Universal, reducing the Company's ownership to 47%.
Prior period financial statements were not restated. For the 1995 first six
months and prior years, results for Universal were consolidated, with a
minority interest expense recorded for Universal's minority shareholder.
MARINE TRANSPORTATION
The Company's marine transportation segment reported transportation
revenues for the 1996 first quarter of $77,472,000, a decrease of 2% when
compared with $79,209,000 reported for the 1995 first quarter. Operating
income for the marine transportation segment for the 1996 first quarter totaled
$9,949,000. The results represent a 20% increase when compared with 1995 first
quarter operating income of $8,318,000.
As a provider of service for both the inland and offshore United
States markets, the marine transportation segment is divided into three
divisions organized around the markets they serve: the Inland Chemical
Division, serving the inland industrial and agricultural chemical markets; the
Inland Refined Products Division, serving the inland refined products market;
and the Offshore Division, which serves the offshore petroleum products,
container, dry-bulk and palletized cargo markets. A division analysis of
marine transportation revenues follows.
Marine Transportation Revenues
The Inland Chemical Division's transportation revenues for the 1996
first quarter totaled $42,167,000, or 54% of total transportation revenues.
Such amount represents a 5% increase compared with $39,986,000 reported in the
1995 first quarter. The Inland Chemical Division operates under long-term
contracts, short-term contracts and spot movements of products. As of March
31, 1996 and 1995, approximately 80% of such movements were under contracts and
approximately 20% were spot movements.
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9
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS, Continued
The adverse winter weather in January and February in the Midwest and
East Coast affected driving, which in turn, reduced the demand for gasoline.
Therefore, the movements of chemicals used in gasoline blending declined
slightly. The negative effect of a softer economy also resulted in lower
volumes of chemical and petrochemical spot market movements and caused a slight
decline in spot market rates.
The movements of liquid fertilizer and anhydrous ammonia by the Inland
Chemical Division are normally seasonal, coinciding with the spring and fall
fertilizer season. Revenues for the 1996 and 1995 first quarter reflect such
seasonality.
Transportation revenues from the Inland Refined Products Division for
the 1996 first quarter declined to $14,687,000, or 19% of the total
transportation revenues, a decrease of 8% compared with 1995 first quarter
revenues of $15,989,000. The Inland Refined Products Division also operates
under long-term contracts, short-term contracts and spot market movements. For
the 1996 first quarter, approximately 45% of such movements were under term
contracts and 55% were spot market movements. As noted above, adverse winter
weather conditions in the Midwest and East Coast effected efficiencies of
operations, and affected driving, which reduced the demand for gasoline. In
addition, there was a significant inventory drawdown of gasoline in the Midwest
which reduced the demand for gasoline movements, which are generally comprised
of movements from Gulf Coast refineries for distribution in the Midwest.
Transportation revenues from the Offshore Division for the 1996 first
quarter decreased 11% to $20,618,000, representing 27% of total transportation
revenues, from the $23,234,000 reported in the 1995 first quarter. The
Offshore Division participates in movements of both refined petroleum products
and dry cargo. Even though the offshore revenues of refined petroleum products
continued to experience weaknesses, the market for such movements did reflect
improvements during the 1996 first quarter. Four of the Company's tankers
operated under long-term contracts and three operated in the spot market. Full
utilization was achieved during the 1996 first quarter with the exception of
one spot market tanker that was idle for a portion of February. Spot market
rates also improved during the quarter. Full recovery of the offshore tanker
market is anticipated to be gradual, over the next few years, as offshore
tankers are removed from service under the Oil Pollution Act of 1990. The
Company operated seven refined product tankers during the 1996 first quarter as
compared with nine in the first quarter of 1995. Two tankers were removed from
service in accordance with the Oil Pollution Act of 1990 effective January 1,
1996.
Movements for the transportation of food aid and related
products under the United States Government's preference aid cargo programs and
military cargo movements continued to be sporadic during the 1996 first
quarter. During the 1996 first quarter, one of the Company's three
break-bulk freighters was employed the entire quarter, one for a portion of the
quarter and one was idle the entire quarter. Excess equipment capacity and
reduction in available movements continue to plague this offshore segment. The
Company is prepared to exit the preference aid and military cargo markets if
demand and rates do not return to profitable levels.
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10
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS, Continued
Marine Transportation Costs and Expenses
Costs and expenses, excluding interest expense, for the marine
transportation segment for the 1996 first quarter totaled $67,700,000, a
decrease of 5% compared with $70,876,000 reported for the 1995 first quarter.
The 5% decrease reflects the reduction in equipment utilization in both the
Inland Refined Products Division and the Offshore Division. As noted above,
during the 1996 first quarter, the Company operated seven offshore tankers
compared with nine tankers in the 1995 first quarter. During the 1996 first
quarter, one of the Company's three break-bulk freighters was idle the entire
quarter and one was idle for a portion of the quarter as compared to full
utilization during the 1995 first quarter. In addition, the write-down of the
Company's three break-bulk freighters in September 1995, in accordance with
Statement of Financial Accounting Standards No. 121, substantially reduced
depreciation expense applicable to the three freighters. Partially offsetting
the reductions noted above were increased costs as a result of higher equipment
costs, health and welfare costs, general and administrative costs and
inflationary increases in costs and expenses.
Marine Transportation Operating Income
The Company's Inland Chemical and Refined Products Divisions'
operating income for the 1996 first quarter totaled $7,134,000, reflecting a
decrease of 5% compared with 1995 first quarter operating income of $7,535,000.
The operating margin for the 1996 first quarter decreased to 12.6% compared
with an operating margin of 13.5% for the first quarter of 1995. The reduction
in the operating margin was driven by the lower refined products revenues. The
operating margin for chemical movements increased over the first quarter 1995
margin.
The Offshore Division's operating income totaled $2,815,000 for the
1996 first quarter, an increase of 260% when compared with $783,000 of
operating income for the 1995 first quarter. The operating margin for the 1996
first quarter increased to 13.7% compared with 3.4% for the 1995 first quarter.
Although revenues were reduced 11% as noted above, the Offshore Division's
expenses were down as certain vessels were idle.
The Company's investment in two offshore marine partnerships,
accounted for under the equity method, recorded earnings of $748,000 for the
1996 first quarter compared with $159,000 for the first quarter of 1995. The
increase in earnings reflects the partnerships enhanced coal and limestone rock
contract movements, as the 1995 first quarter was negatively affected by
scheduled maintenance of certain partnership vessels.
DIESEL REPAIR
The Company's diesel repair segment reported record diesel repair
revenues for the 1996 first quarter of $14,935,000, reflecting a 6% increase
compared with $14,025,000 for the 1995 first quarter. The diesel repair
segment is divided into two divisions organized around the markets they serve.
The Marine Diesel Repair Division operates on all three coasts and in
the Midwest through five facilities that
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11
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS, Continued
repair and overhaul marine diesel engines and reduction gears, and sell related
parts and accessories. The Rail Diesel Repair Division, which commenced
operations in January, 1994, provides replacement parts, service and support
nationwide to shortline railroads and industrial companies that operate
locomotives.
Diesel Repair Revenues
Revenues for the Marine Diesel Repair Division increased to
$12,418,000, contributing 83% of the diesel repair segment's total revenues
during the 1996 first quarter. Such revenues represented a 7% increase
compared with the $11,617,000 reported in the 1995 first quarter. During the
1996 first quarter, the division continued to operate in a very competitive
market; however, the Gulf Coast and Midwest markets benefited from the general
health of the inland tank barge and dry cargo industry. In addition, the Gulf
Coast market benefited from the offshore drilling activity and well service
industry.
The Rail Diesel Repair Division's revenues for the 1996 first quarter
increased to $2,517,000, contributing 17% of the diesel repair segment
total revenues for the period. Such revenues represented a 5% increase
compared with $2,408,000 of revenues for the 1995 first quarter. The division
continues to expand its aftermarket parts sales as the exclusive distributor to
shortline and industrial railroads for the Electro-Motive Division of General
Motors.
Diesel Repair Costs and Expenses
Costs and expenses, excluding interest expense, for the diesel repair
segment for the 1996 first quarter totaled $13,752,000 compared with
$12,988,000 for the 1995 first quarter. The 6% increase reflected the overall
continued growth in revenue from both the Marine and Diesel Repair Divisions.
Diesel Repair Operating Income
The diesel repair operating income for the 1996 first quarter was
$1,217,000, an increase of 13% compared with first quarter 1995 operating
income of $1,076,000. The operating margin for the 1996 first quarter was 8.1%
compared with 7.7% for the first quarter of 1995.
PROPERTY AND CASUALTY INSURANCE
The Company currently owns 47% of the voting common stock of
Universal, a full service property and casualty insurance company, which
operates exclusively in the Commonwealth of Puerto Rico. Eastern America
Financial Group, Inc. owns 53% of the voting common stock of Universal.
Effective July 1, 1995, upon the reduction of the Company's voting
ownership to 47%, the Company is accounting for its investment in Universal
under the equity in earnings method of accounting. Prior period financial
statements were not restated. For the 1995 first six months, results for
Universal
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12
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS, Continued
were consolidated with a minority interest expense recorded for Eastern
America's minority interest. For the last six months of 1995 and the first
quarter of 1996, the Company's investment in Universal was recorded on the
equity in earnings method of accounting.
Comparability of net premiums earned, commissions earned on
reinsurance, investment income, losses, claims and settlement expenses,
policy acquisition costs, minority interest expense and, to a lesser extent,
selling, general and administrative expenses, taxes, other than on income and
depreciation and amortization were affected by the change in the method of
accounting for the Company's investment in Universal effective July 1, 1995.
Universal has continued to expand its vehicle single-interest and
double-interest lines of business, primarily the result of strong automobile
sales in Puerto Rico and from Universal's expanded market share.
The amount recorded by the Company as equity in earnings for the
Company's investment in Universal is influenced to the extent that anticipated
future redemptions by Universal of its common stock exceed the Company's
investment in Universal's stock. The Company also has an investment in
Universal's nonvoting preferred stock (100%). Because the preferred stock
controls a separate portfolio of U.S. Treasury Securities, the Company accounts
for this preferred stock under SFAS 115. Therefore, the interest earned, as
well as the realized gains from the sale of U.S. Treasury Securities
collateralizing the preferred stock, are included as part of equity in earnings
of insurance affiliate. During the 1996 first quarter, the Company recognized
$582,000 of realized gains from the sale of such U.S. Treasury Securities,
which are included in equity in earnings of insurance affiliate.
The Company's portion of Universal's pretax earnings for 1996 first
quarter totaled $969,000 compared with consolidated operating income of
$1,759,000 for the first quarter of 1995.
FINANCIAL CONDITIONS, CAPITAL RESOURCES AND LIQUIDITY
Balance Sheet
Total assets as of March 31, 1996 were $496,206,000 compared with
$498,084,000 as of December 31, 1995. The available-for-sale securities of
$16,984,000 as of March 31, 1996 and $15,692,000 as of December 31, 1995 are
investments of the Company's wholly owned captive insurance subsidiary, Oceanic
Insurance Limited ("Oceanic"). Oceanic insures risks of the Company and its
transportation and diesel repair subsidiaries. To limit its exposure to
losses, Oceanic procures reinsurance in international markets.
Total liabilities as of March 31, 1996 totaled $287,647,000 compared
with $292,751,000 as of December 31, 1995. During the 1996 first quarter, the
Company's proceeds from net cash provided by operating activities were used to
reduce long-term debt by $9,026,000.
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13
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITIONS, CAPITAL RESOURCES AND LIQUIDITY
Balance Sheet, Continued
Stockholders' equity as of March 31, 1996 totaled $208,559,000
compared with $205,333,000 as of December 31, 1995. Unrealized net gains
(losses) in value of investments declined by $2,095,000, as the market value
for certain investments of Universal of which the Company has a 100%
ownership declined in value.
Long-Term Debt
On March 18, 1996, the Company and Texas Commerce Bank National
Association, as agent bank, agreed to new terms regarding the Company's and the
Company's principal marine transportation subsidiary's separate $50,000,000
revolving Credit Agreements. Under the new terms, the existing $50,000,000
Credit Agreement with the Company and the existing $50,000,000 Credit Agreement
with the Company's principal marine transportation subsidiary were combined
into a single $100,000,000 Credit Agreement with the Company. The new Credit
Agreement eliminates certain negative pledges and rights to priority liens
which were included in the marine transportation subsidiary's existing
Credit Agreement. Interest on the new Credit Agreement, subject to an
applicable margin ratio and type of loan, is floating prime rate or, at the
Company's option, rates based on a Eurodollar interbank or certificate of
deposit rates. Proceeds under the new Credit Agreement may be used for general
corporate purposes, the purchase of existing or new equipment or for possible
business acquisitions. The new Credit Agreement contains covenants that
require the maintenance of certain financial ratios and certain other
covenants.
Capital Expenditures
In May 1994, the Company entered into a contract for the construction
of 12 double skin 29,000 barrel capacity inland tank barges for use in the
movement of industrial chemicals and refined products. In February 1995, the
Company exercised the option under the contract to construct 12 additional
barges. As of May 2, 1996, the Company had received 17 barges and the
remaining seven barges are scheduled to be delivered one each month thereafter.
A third option for the construction of 12 additional barges was not exercised.
The new construction program, estimated to total approximately $18,000,000
during the 1996 year, is consistent with the Company's long-term strategy of
upgrading its equipment to service the needs of its customers and to enhance
its market position. Funds for the continuing construction project are
anticipated to be available through 1996 net cash provided by operating
activities.
Liquidity
The Company generated net cash provided by operating activities of
$22,159,000 for the 1996 first quarter. Universal, accounted for under the
equity method for the 1996 first quarter, did not contribute cash flow to the
1996 first quarter results. Under the equity method, the Company will
recognize cash flow from Universal only upon receipt of actual distributions or
redemptions, none of which were recorded in the
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14
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITIONS, CAPITAL RESOURCES AND LIQUIDITY
Liquidity, Continued
1996 first quarter. The results for Universal were consolidated and included
in operating income for the 1995 first quarter, resulting in $6,888,000 of the
$30,032,000 of net cash provided by operating activities during the 1995 first
quarter.
The funds generated are available for capital construction projects,
treasury stock repurchases, asset acquisitions, repayment of borrowings
associated with treasury stock acquisitions or asset acquisitions and for other
operating requirements. In addition to its net cash flow provided by operating
activities, the Company also has available as of May 3, 1996 $50,000,000 under
its revolving credit agreement and $171,000,000 available under its medium term
note program.
The Company's Board of Directors has authorized the repurchase of
4,250,000 shares of the Company's common stock. As of May 3, 1996, the Company
had 2,026,000 shares available under the repurchase authorization. During the
1996 first quarter, the Company did not purchase any of its common stock. The
Company is authorized to purchase its common stock on the American 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.
During the last three years, 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
through rate adjusted formulas, while the transportation assets acquired and
accounted for using the purchase method of accounting were adjusted to a fair
market value and, therefore, the cumulative long-term effect on inflation was
reduced. The repair portion of the diesel repair segment is based on
prevailing current market rates. The Company does not presently use financial
derivatives, but uses a mix of floating and fixed rate debt. The Company has
no foreign exchange risks.
The Company has no present plan to pay dividends on its common stock.
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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, 1995.
Item 4. Results of Votes of Security Holders
(a) The Registrant held its Annual Meeting of Stockholders on
April 16, 1996.
(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 George F. Clements, Jr., C. Sean Day,
William M. Lamont, Jr., George A. Peterkin, Jr., J. H. Pyne,
Robert G. Stone, Jr., Thomas M. Taylor and J. Virgil Waggoner.
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:
10.0 Credit Agreement, dated March 18, 1996, among Kirby
Corporation, the Banks named therein, and Texas
Commerce Bank National Association as Agent and Funds
Administrator.
11.0 Computation of Earnings per Common Share.
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, 1996.
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
May 6, 1996 Vice President and Controller
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