Item 1 elsewhere herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
ACL 's membership interests are not registered or traded on any stock exchange.
ITEM 6: SELECTED FINANCIAL DATA
(1)ACL acquired Continental Grain Company's barging operations in 1996, the barging operations of National Marine, Inc. in 1998 and purchased Peavey in 2000. The results of operations and cash flows of these companies have been included from the date of the respective acquisition. (2)Includes $11,418 gain from the sale of Waterways Communications System LLC ("Watercom") in 2000. (3)ACL paid $734 for the early redemption premium on the Terminal Revenue bonds in 2000. (4)ACL adopted American Institute of Certified Public Accountants Statement of Position 97-3 in the first quarter 1999, with a cumulative effect adjustment of $1,737 in non-cash expense for workers' compensation second injury funds. (5)EBITDA represents earnings before interest, income taxes, depreciation, amortization and, in 2000, $734 of extraordinary loss, $3,688 of deferred profit, $11,418 of gain on sale of Watercom and $3,865 impairment loss on barges, and, in 1998, $7,958 of non-recurring, non-cash compensation expense related to the Recapitalization. EBITDA is presented because management believes it is a widely accepted financial indicator used by certain investors and securities analysts to analyze and compare companies on the basis of operating performance. EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to operating income as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. ACL understands that while EBITDA is frequently used by securities analysts in the evaluation of companies, EBITDA, as used herein, is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. See the historical financial statements of ACL and the related notes thereto included elsewhere herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
ACL is an integrated marine transportation and service company, providing barge transportation and ancillary services. ACL supports its barging operations by providing marine vessel design and construction along with inter-modal cargo transfer services to ACBL and third parties. ACBL is the leading provider of river barge transportation throughout the Inland Waterways. In addition, since expanding its barge transportation operations to South America in 1993, ACL International has become the leading provider of barge transportation services on the Orinoco River in Venezuela and, through UABL, on the Parana/Paraguay River system serving Argentina, Brazil, Paraguay, Uruguay and Bolivia.
ACL derives its revenues primarily from the barge transportation of steel/other bulk commodities, grain, coal and liquids in the United States and South America. While ACL's customer base has remained relatively stable and certain of its operations provide steady rate levels and profit margins, its results of operations can be impacted by a variety of external factors. These factors include fluctuations in rates for shipping grain, which in turn affect rates for shipping other dry cargoes, weather and river conditions and fluctuations in fuel prices. Although revenues from ACL's international operations are typically denominated in U.S. dollars, its results could be impacted by currency fluctuations.
ACL seeks to enter into multi-year contracts at fixed prices (with inflation-indexed escalation and fuel adjustment clauses) with its customers. Approximately 65% of contracts in effect as of December 29, 2000 were for periods of greater than one year.
Due to less than anticipated financial results relating to poor river operating conditions in the domestic barging operation in the fourth quarter of 2000 and an adverse barging freight market largely due to the introduction of a genetically altered seed into the U.S. corn supply, ACL sought and received an amendment to its Senior Credit Facilities.
Subject to the return of more favorable market and operating conditions and ACL's continued compliance under its Senior Credit Facilities and the amended financial covenants, ACL intends to continue to pursue a strategy of growth in its core business units. The historical pursuit of growth through strategic acquisitions has created value through synergies and economies of scale that have enhanced ACL's long term results of operations. ACL's previous acquisitions have included SCNO Barge Lines, Inc. in 1988, Hines American Lines, Inc. in 1991, The Valley Line Company in 1992, Continental Grain's barging operations in 1996 and National Marine's barging operations in 1998.
On May 26, 2000, ACL entered into an agreement to purchase or lease substantially all of the long-term assets of Peavey Barge Line and other inland marine transport divisions of ConAgra, Inc. ("Peavey"). This added more than 900 covered hopper barges to ACL's existing fleet of inland marine barges.
On September 6, 2000, ACL sold its 100% membership interest in Waterway Communications System LLC ("Watercom") to Mobex Network Services Company ("Mobex"). The sale of Watercom will not significantly affect ACL's expected future operating income or cash flow from operating activities.
On October 24, 2000, an ACL 80% owned subsidiary, ACBL Hidrovias, Ltd. ("ACBLH") entered into an agreement with UP River (Holdings) Ltd. ("Ultrapetrol") to combine the inland river barge transportation divisions of ACBLH and Ultrapetrol which operate on the Parana/Paraguay River system in South America. ACBLH has a 50% ownership interest in the newly formed company, UABL Limited ("UABL"). UABL operates 20 towboats and a combined fleet of 332 dry cargo and tank barges. UABL serves commodity shippers in Argentina, Bolivia, Brazil, Paraguay and Uruguay.
The size of ACL's combined domestic and international fleet over the past three years is as follows:
Domestic and International Fleet
(Number of Barges)
*In addition ACL operates 267 covered hoppers, 40 open hoppers and 25 tankers through its participation in UABL. The average age of ACL's domestic barge fleet is currently 18 years, compared with an industry average of 16 years. These barges have an expected life of approximately 25 to 30 years. In addition, ACBL operates 200 towboats domestically, with an average age of 26 years. ACL International operates 109 barges, with an average age of 17 years, six towboats and in addition, through UABL, 332 barges with an average age of 16 years and 20 towboats.
ACL is a limited liability company and its operations are conducted mainly through a series of limited liability company subsidiaries, and, as a result, ACL will not itself generally be subject to U.S. federal or state income tax. Taxable income will be allocated to the equity holders of the Parent and such holders will be responsible for income taxes on such taxable income. ACL intends to make distributions to the Parent which, in turn, will make distributions to its equity holders to enable them to meet all or a portion of their tax obligations with respect to taxable income allocated to them by ACL. The Amended and Restated Limited Liability Company Agreement of the Parent (the "LLC Agreement") reduces the amount of tax distributions to CSX (or its affiliate) during the first nine years, which may make additional funds available for use by ACL, subject to the discretion of the Parent. Notwithstanding the foregoing, in certain circumstances the tax distribution provisions of the LLC Agreement permit distributions which could exceed the combined federal, state, local and foreign income taxes that would be payable with respect to taxable income of ACL for any given period if it were a Delaware corporation filing separate tax returns. Such distributions are permitted under the Indenture. See Item 13, "Certain Relationships and Related Transactions."
RESULTS OF OPERATIONS
Year Ended December 29, 2000 Compared With Year Ended December 31, 1999
ACL follows a 52/53 week fiscal year ending on the last Friday in December of each year. 2000 was a 52 week year compared with prior year 1999 of 53 weeks.
Operating Revenue. Operating revenue for the year ended December 29, 2000 increased 5% to $773.8 million from $739.1 million for the year ended December 31, 1999. The revenue increase was due to higher barge freight volumes as a result of the addition of Peavey and higher freight rates on certain domestic barging commodities largely due to the effect of contract, fuel price adjustment clauses. The increase was partially offset by lower contract coal freight rates, one less week in the reporting period and reduced revenue due to the sale of Watercom.
Domestic barging revenue increased $37.9 million to $591.8 million despite the effect of the shorter reporting period. The increase is primarily due to increased volume as a result of the larger
fleet, higher contract freight rates from fuel price adjustment clauses, higher market rates for bulk, steel and liquid commodities and adverse operating conditions in the prior year. The increase was partially offset by lost volume as a result of grain inspection delays in the fourth quarter of 2000 due to the introduction of a new type of genetically altered seed into the U.S. corn supply and the closure of the Illinois River due to ice in December 2000. Domestic fleet velocity was further reduced by customers holding barge equipment at loading and unloading ports for longer than usual during the second and third quarters of 2000. International revenues fell $0.1 million to $40.0 million as charter revenue from UABL offset volume shortfalls in Venezuela due to a customer's unloading dock accident. A large portion of the Venezuelan volume shortfall earlier in the year was recovered in the fourth quarter from cargo transfer revenue and increased freight volumes attributable to ACL's start up of a new crane barge cargo unloading facility. Revenue at Jeffboat, ACL's marine construction subsidiary, fell $0.3 million to $124.1 million, reflecting reduced hopper barge construction for third-party customers, offset by increased construction of tank barges. The profit portion of revenue from third party purchases of equipment that was subsequently leased to the barge operating division has been deferred and will be recognized over the life of the operating leases.
Operating Expense. Operating expense for the year ended December 29, 2000 rose 8% to $717.5 million from $664.5 million for the year ended December 31, 1999. Domestic barging expenses increased $51.8 million primarily due to operating the Peavey barges and higher fuel prices. Approximately 75% of the Peavey barges were rented under operating leases. This has the impact of disproportionately raising operating expense in relation to operating revenue as compared to the fleet prior to the addition of Peavey. Average fuel prices increased from 50 cents per gallon in 1999 to 84 cents per gallon in 2000. The increase in operating expense due to the change in fuel price from the prior year was $35 million. The net impact of rising fuel prices offset by contract revenue adjustments and hedging is estimated to be a $7 million reduction in operating income compared to the prior year. Record cold temperatures in the United States resulted in an unusual December closing of the Illinois River that also contributed to the increase in 2000 operating expenses. Operating expenses for 2000 include non-cash, non-recurring impairment loss on inactive barges of $3.8 million. Operating expenses for 1999 include non-recurring charges of $1.6 million for a partially deferred employment contract payment to a former ACL executive. International barging expenses fell $0.6 million to $39.1 million, largely due to the contribution of the Argentine based operation to UABL and lower barge freight volume in Venezuela. Jeffboat's expenses increased $3.8 million to $115.8 million, due to increased tank barge construction. The volume related increase was partially offset by improved productivity and lower steel prices.
ACL implemented a number of changes in 2000, including staff reductions that resulted in cost savings of approximately $1 million per year, and reassignment of senior level responsibilities. Changes in health and benefit plans, including the American Commercial Lines LLC Pension Plan, that affect salaried employees covered by the plans, were also implemented and resulted in annual cost savings of approximately $5 million. Management of ACL's tank barge cleaning facility at Baton Rouge has been contracted to a non-affiliated third party whose core business is barge cleaning. ACL is receiving a variable monthly fee that is linked to the facility's operating profit. Management of ACL's boat and barge repair yard in New Orleans and its fleeting facility in Mobile have also been contracted to non-affiliated third parties with ACL receiving monthly fees containing both fixed and variable components.
Operating Income. Operating income for the year decreased 25% to $56.3 million from $74.6 million for 1999, due to the reasons discussed above.
Interest Expense. Interest expense for 2000 decreased to $70.8 million from $71.3 million for the same period in 1999. The decrease is due to lower outstanding balances and lower LIBOR base interest on the Senior Credit Facility.
Gain on Sale of Watercom. The gain on the sale of the membership interest in Watercom was $11.4 million. The gain results from a purchase price of $16.0 million, which consist of $13.6 million in cash and $2.4 million in Mobex preferred stock, less $4.6 million, which was the total of ACL's net investment in Watercom and transaction related costs.
(Loss) Earnings Before Income Taxes, Extraordinary Item and Cumulative Effect of Accounting Change. The loss before income taxes, extraordinary item and cumulative effect of accounting change for the year was $4.1 million compared to earnings of $6.4 million in 1999, due to the reasons discussed above.
Income Taxes. Income taxes for the year increased to $4.3 million from $1.7 million for 1999 due to additional withholding tax on foreign source income. ACL's domestic corporate subsidiaries, except ACL Capital Corp., were converted to limited liability companies as of June 30, 1998. ACL passes its U.S. federal and state taxable income to its Parent, whose equity holders are responsible for those income taxes.
(Loss) Earnings Before Extraordinary Item and Cumulative Effect of Accounting Change. The loss before extraordinary item and the cumulative effect of an accounting change was $8.4 million for 2000 compared with an earnings of $4.7 million for the same period in 1999, due to the reasons discussed above.
Extraordinary Item-Loss on Early Extinguishment of Debt. ACL recognized $0.7 million as an extraordinary loss in the second quarter of 2000 reflecting the redemption premium on the Terminal Revenue Refunding Bonds. This amount was paid out of an escrow account previously established as an irrevocable trust.
Cumulative Effect of Accounting Change. ACL recognized $1.7 million in non-cash expense related to a workers' compensation second injury fund in accordance with adoption of the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments" in the first quarter of 1999.
Net (Loss) Earnings. Net loss for 2000 was $9.1 million compared to net earnings of $3.0 million in 1999, due to the reasons discussed above.
Year Ended December 31, 1999 Compared With Year Ended December 25, 1998
ACL follows a 52/53 week fiscal year ending on the last Friday in December of each year. 1999 was a 53 week year compared with prior year 1998 of 52 weeks.
Operating Revenue. Operating revenue for the year ended December 31, 1999 increased 16% to $739.1 million from $638.5 million for the year ended December 25, 1998. The revenue increase was due to higher volumes from the full year effect of the combination of National Marine's barging operations with those of ACL, higher freight rates and increased public sales at Jeffboat. The positive impact from these items was partially offset by unfavorable operating conditions caused by unusually heavy ice in January in North America and low water during the last half of the year in North and South America.
Domestic barging revenue increased $84.9 million to $553.9 million primarily due to increased volumes as a result of the larger fleet. An increase in barge freight rates due to increased U.S. grain export demand also contributed to the positive results. The average freight rate per ton-mile increased 5%, increasing domestic revenue $15.0 million for the year, with most of the impact occurring in the last half of the year. These improvements were partially offset by lost volume as a result of the closure of the Illinois River and portions of the Upper Mississippi River due to ice in January, delays caused by major lock repairs during the third quarter, and reduced tonnage and slower speeds as a result of
low water attributable to drought conditions in the last half of the year. Domestic fleet velocity was further reduced by customers holding barge equipment at loading and unloading ports for longer than usual during the last half of 1999. International revenues fell $7.3 million to $40.1 million, due to severe drought conditions along the Parana/Paraguay River system and the cancellation of a barge charter agreement in Venezuela. Revenue at Jeffboat, ACL's marine construction subsidiary, rose $27.5 million to $124.4 million, reflecting increased hopper barge construction for third-party customers, offset somewhat by reduced construction of tank barges.
Operating Expense. Operating expense for the year ended December 31, 1999 rose 15% to $664.5 million from $575.7 million in the year ended December 25, 1998. Domestic barging expenses increased $77.2 million primarily due to operating the larger fleet and because of the adverse operating conditions discussed above. Operating expenses for 1999 also include non-recurring charges of $1.6 million for a partially deferred employment contract payment to a former ACL executive. Operating expenses in 1998 include an $8.0 million non-cash, non-recurring compensation charge related to the Recapitalization, which was payable by CSX to certain executive officers of ACL. Average fuel prices increased from 46 cents per gallon in 1998 to 50 cents per gallon in 1999. International barging expenses fell $4.4 million to $39.7 million, largely due to drought related reduced volumes in the Argentine based operation and the cancellation of the charter agreement in Venezuela offset by higher wage rates and increased fringe benefit costs in Venezuela. Jeffboat's expenses increased $24.1 million to $112.0 million, due to increased barge construction. The volume related increase was partially offset by improved productivity and lower steel prices.
Operating Income. Operating income for the year increased 19% to $74.6 million from $62.7 million for 1998, due to the reasons discussed above.
Interest Expense. Interest expense for 1999 increased to $71.3 million from $41.0 million for the same period in 1998. The increase is due to $735 million of long-term debt obtained by ACL in connection with the Recapitalization being outstanding for a full year in 1999 compared to a half year in 1998.
Earnings Before Income Taxes and Cumulative effect of Accounting Change. Earnings before income taxes for the year declined to $6.4 million from $21.2 million in 1998 for the reasons discussed above.
Income Taxes (Benefit). Income taxes for the year increased to an expense of $1.7 million from a benefit of $64.3 million for 1998. ACL's domestic corporate subsidiaries, except ACL Capital Corp., were converted to limited liability companies as of June 30, 1998. Due to the change in tax status, previously recognized deferred income taxes were reversed in 1998, resulting in a benefit of $72 million.
Cumulative effect of Accounting Change. ACL recognized $1.7 million in non-cash expense related to workers compensation, secondary injury fund in accordance with adoption of the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-3 in the first quarter of 1999.
Net Earnings. Net earnings for 1999 decreased to $3.0 million from $85.4 million in 1998, due to the reasons discussed above.
Outlook
Domestic barging demand and spot rates for grain, bulk, steel and liquids are expected to improve in 2001 as compared to 2000 levels. The U.S. Department of Agriculture currently forecasts 2001 crop year corn exports of 2.0 billion bushels compared to 1.9 billion bushels in the 2000 crop year.
In the first quarter of 2001, the average price of fuel consumed by ACBL vessels is expected to decrease $.03 per gallon over the fourth quarter of 2000 but still be $.18 per gallon higher than the first
quarter of 2000. With the addition of boats required to move the Peavey barges, ACBL vessels will consume approximately 120 million gallons annually and generally ratably throughout the year. ACBL has contract price adjustment clauses and a fuel-hedging program, which provide protection for approximately 70% of gallons consumed. Contract adjustments are deferred one quarter.
Liquidity and Capital Resources
As of December 29, 2000 ACL had outstanding indebtedness of $724.8 million, including $353.3 million drawn under two Term Loans and $300.0 million aggregate principal amount of Senior Notes. ACL had other notes outstanding, including a note in connection with the purchase of two formerly leased towboats, of $4.7 million at year end. In addition, ACL had $3.7 million in outstanding capital lease obligations and had securitized $56.0 million of the trade receivables of two subsidiaries.
ACL also has available borrowings of up to $100.0 million under a Revolving Credit Facility. At the end of 2000, $17.9 million of letters of credit had been issued and $66.8 million revolving loans were outstanding. ACL had $59.6 million cash on deposit in bank accounts as of December 29, 2000.
The Senior Credit Facilities and the Indenture contain a number of covenants with specified financial ratios and tests including, with respect to the Senior Credit Facilities, maximum leverage ratios which could lead to an event of default which could result in acceleration of the debt, higher interest rates or other adverse consequences. The Indenture also contains certain cross default provisions. Compliance with financial ratios is measured at the end of each quarter. ACL's ability to meet the financial ratios is affected by adverse weather conditions, seasonal market conditions and other risk factors inherent in its business. These and other risk factors are discussed in and incorporated by reference from "Risk Factors," Exhibit 99.1, appended hereto.
ACL completed an agreement with its lenders to amend the Senior Credit Facility effective December 29, 2000 through December 31, 2001 (Amendment No. 5). The amendment also adds a rent adjusted consolidated leverage ratio, a limitation on annual rent expense, reduces allowable capital expenditures, increases the interest rates on the Term Loans and the Revolving Credit Facility and requires a $40 million reduction of the Term Loans by October 30, 2001, to be funded primarily through the sale of assets. As a result of the $40 million required reduction in Term Loans, this amount has been classified as current portion of long-term debt on the consolidated statement of financial position. Other Notes in the amount of $4.3 million have also been reclassified to current debt due to a repayment transaction.
Absent Amendment No. 5, ACL would not have complied with the consolidated leverage ratio and the consolidated interest coverage ratio covenants as defined in the Senior Credit Facility. This was due to less than anticipated fourth quarter 2000 financial results relating primarily to an adverse barging freight market. This adverse market was largely due to the introduction of a genetically altered seed into the U.S. Corn supply which caused terminal delays in barge unloading as well as harvest delays, and poor river operating conditions in the upper Midwest due to icing.
Management has operating and financial plans in place to comply with the requirements of the amendment. Commitment letters to purchase assets of $40 million have been received, $20 million of which was received from Vectura. 2001 operational plans which allow the Company to comply with its debt covenants consider current market conditions and historical operational information. Management expects these plans to be realized; however, economic events or weather related conditions could occur and negatively impact the Company's ability to meet its plan for 2001. Subsequent to December 31, 2001, the covenant requirements revert to those specified in the original Senior Credit Facility which are more restrictive than the amended covenants. Certain covenants added in the amendment also become more restrictive. There is no assurance that the Company will be able to meet these covenant requirements in 2001 or 2002. Failure to meet these covenants could have a material adverse effect on the Company.
Net cash provided by operating activities was $30.8 million, $94.6 million and $78.7 million for fiscal 2000, 1999 and 1998, respectively. The decrease in net cash from operating activities in 2000 compared with 1999 was primarily due to the $50.0 million provided by the initial sale of the trade receivables of two subsidiaries in 1999, the timing of cash disbursements related to accounts payable and the lower net earnings. The increase in net cash from operating activities in 1999 compared with 1998 was primarily due to the $50.0 million provided by the proceeds from the initial sale of the trade receivables of two subsidiaries in 1999, offset by the reduction in net earnings and one additional interest payment in 1999 due to the ending date of ACL's fiscal year.
Net cash from operating activities was used primarily for capital expenditures and repayment of third-party debt. Net cash from operating activities also was used to pay cash dividends to CSX of $9.5 million in 1998.
Capital expenditures were $57.0 million, $55.9 million and $45.4 million in 2000, 1999 and 1998, respectively. Cash expenditures included $48.0 million, $23.9 million and $13.5 million for domestic marine equipment and $2.9 million, $8.9 million and $21.0 million for foreign investments in 2000, 1999 and 1998, respectively. Expenditures in 2000 also include $6.1 million in additional capital lease obligations of which $3.7 million remains due at year-end.
Of the $50.9 million in cash capital expenditures in 2000, $20.3 million was for Peavey property, $19.5 million was for equipment maintenance, $10.0 million was for the buyout of unfavorable to market lease obligations and $1.1 million was for the purchase of two new tank barges.
The $31.5 cash outflow for the purchase of Peavey assets consisted of $20.3 million for Peavey property and $11.2 million for the purchase of favorable lease commitments and inventory. In addition, ACL assumed a short-term capital lease with a present value obligation of $3.8 million as of acquisition date in connection with the Peavey purchase.
ACL expects capital expenditures in 2001 to be approximately $33 million primarily for fleet maintenance. Additional operating lease expense of approximately $5 million will be incurred to provide fleet replacement equipment.
Management believes that cash generated from operations is sufficient to fund its cash requirements, including capital expenditures for fleet maintenance, working capital, interest payments and scheduled principal payments. ACL may from time to time, borrow under the Revolving Credit Facility. ACL currently plans to use excess cash provided by operations to pay down the Revolving Credit Facility and the Term Loans.
ACL has various environmental liabilities that could have an impact on its financial condition and results of operations. These environmental matters are discussed in Item 1, "Legal Proceedings," contained herein.
Backlog
ACL's backlog represents firm orders for barge transportation and marine equipment. The backlog for barge transportation was approximately $1,124 million and $1,070 million at December 29, 2000 and December 31, 1999, respectively. This backlog ranges from one to nine years with approximately 35% expected to be filled in 2001. The backlog for marine equipment was approximately $24 million and $38 million at December 29, 2000 and December 31, 1999, respectively. The backlog is one year with 100% expected to be filled in 2001. The reduction in backlog for public marine equipment is due to a general softening in demand for hopper barges.
Seasonality
ACL's business is seasonal, and its quarterly revenues and profits historically have been lower during the first and second fiscal quarters of the year (January through June) and higher during the third and fourth fiscal quarters (July through December) due to the North American grain harvest. In addition, working capital requirements fluctuate throughout the year. Adverse market or operating conditions during the last four months of the year could have a greater effect on ACL's business, financial condition and results of operations than during other periods.
Changes in Accounting Standards
In December 1997, the AICPA issued Statement of Position No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments" (SOP 97-3) which provides guidance on recognition, measurement, and disclosure of liabilities for guaranty-fund and certain other insurance- related assessments, including workers' compensation second-injury funds. SOP 97-3 is effective for fiscal years beginning after December 15, 1998. ACL adopted SOP 97-3 in the first quarter of 1999, with a cumulative effect adjustment of $1.7 million in non-cash expense.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It 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. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and resulting designation. This statement is effective for ACL's financial statements for fiscal years beginning January 1, 2001, but earlier application is encouraged. ACL will adopt statement No.133 as of December 30, 2000. The adoption will not have a significant effect on its consolidated financial statements.
In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB 101 summarizes some of the staff's interpretations of the application of generally accepted accounting principles to revenue recognition. All registrants are expected to apply the accounting and disclosure requirements that are described in SAB 101 no later than the fourth quarter of the fiscal year beginning after December 15, 1999. ACL is currently in compliance with the requirements of SAB 101.
In September 2000, the FASB issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS No. 140"). The Statement is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. SFAS No. 140 also includes provisions that require additional disclosures in the financial statements for fiscal years ending after December 15, 2000. Additional disclosures have been included in Note 4 to the consolidated financial statements. This Statement is not expected to have a significant effect on its consolidated financial statements.
Forward Looking Statements
This Annual Report on Form 10-K contains certain forward-looking statements about ACL's financial position and results of operations. These statements include words such as "believe", "expect", "anticipate", "intend", "estimate" or other similar words. Any statements that express or involve
discussions as to expectations, beliefs or plans arenot historical facts and involve known and unknown risks, uncertainties and other factors that may cause the actual results to materially differ from those considered by the forward-looking statements. Such factors include:
•substantial leverage and ability to service debt;
•changing market, labor, legal and regulatory conditions and trends in the barge and inland shipping industries;
•general economic and business conditions, including a prolonged or substantial recession in the United States or certain international commodity markets such as the market for grain exports;
•annual worldwide weather conditions, particularly those affecting North and South America; and
As a result of these and other factors discussed in and incorporated by reference from "Risk Factors," Exhibit 99.1, and incorporated herein by reference, no assurances can be given as to future results, levels of activity and achievements. Any forward-looking statements speak only as of the date the statement was made. ACL undertakes no obligation to update or revise any forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ACL is exposed to certain market risks which are inherent in its financial instruments and which arise from transactions entered into in the normal course of business. A discussion of ACL's primary market exposures in financial instruments is presented below.
Fuel Price Risk.
Fuel consumed in 2000 represented approximately 12% of ACL's operating expenses. Most of ACL's long-term contracts contain clauses under which increases in fuel costs are passed on to customers thereby reducing the fuel price risk. In addition, ACL has entered into fuel rate swap agreements for short-term protection. As a result of ACL's fuel hedging strategy, it might not fully benefit from certain fuel price declines.
Based on ACL's 2001 projected fuel consumption, a one cent change in the average annual price per gallon of fuel would impact its annual operating income by approximately $0.3 million (compared to the 2000 projection of $0.2 million), after the effect of escalation clauses in long-term contracts and fuel rate swap agreements in place as of December 29, 2000. As of December 29, 2000, ACL had hedged approximately 9% of its projected 2001 fuel requirements using fuel rate swap agreements. ACL estimates that at December 29, 2000, a 10% change in the price per gallon of fuel would have changed the fair value of the existing fuel rate swap contracts by $0.8 million. As of December 31, 1999 ACL hedged approximately 21% of its fuel requirements and the fair value of ACL's fuel rate swap contracts would have changed by $1.2 million assuming a 10% change in per gallon fuel price. A discussion of ACL's accounting policies for fuel rate swaps is included in Note 10 to the consolidated financial statements.
Interest Rate and Other Risks.
At December 29, 2000, ACL had $420.1 million of floating rate debt outstanding, which represented the outstanding balance of the Senior Credit Facilities. A 1% change in interest rates would change interest expense by $4.2 million annually. ACL had $382.0 million of floating rate debt outstanding at the end of its 1999 fiscal year, which represented the outstanding balance of the Senior Credit Facilities at that time. A 1% change in interest rates in 1999 would have changed interest expense by $3.8 million annually.
On August 11, 2000, ACL entered into an interest rate cap agreement which limits ACL's base LIBOR to 7.5% on a notional amount of $201.8 million, corresponding to that amount of floating rate debt outstanding which is based on LIBOR. The agreement is designed to hedge ACL's exposure to future increases in market interest rates.
At December 29, 2000, ACL had sold at a discount based upon commercial paper rates, $56.0 million of the accounts receivable of two subsidiaries. ACL has the right to repurchase these receivables. At this amount outstanding, a 1% change in the commercial paper rates would change other expense by $0.6 million annually. At December 31, 1999 ACL had sold at a discount based upon commercial paper rates, $50.0 million of the accounts receivable of two subsidiaries. At that time a 1% change in the commercial paper rates would have changed other expense by $0.5 million.
Foreign Currency Exchange Rate Risks.
As in 1999, all of ACL's significant transportation contracts in South America are currently denominated in U.S. dollars. However, many expenses incurred in the performance of such contracts, such as crew wages and fuel, are, by necessity, denominated in a foreign currency. Therefore, ACL is affected by fluctuations in the value of the U.S. dollar as compared to certain foreign currencies. Additionally, ACL's investments in foreign affiliates subject it to foreign currency exchange rate and equity price risks. Management does not consider its exposure to exchange rate risks to be material and considers its investments in foreign affiliates to be denominated in relatively stable currencies and of a long-term nature. Accordingly, ACL does not typically manage its related foreign currency exchange rate and equity price risks through the use of financial instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
AMERICAN COMMERCIAL LINES LLC
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in Thousands)
See accompanying Notes to Consolidated Financial Statements.
AMERICAN COMMERCIAL LINES LLC
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
See accompanying Notes to Consolidated Financial Statements.
AMERICAN COMMERCIAL LINES LLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in Thousands)
See accompanying Notes to Consolidated Financial Statements.
AMERICAN COMMERCIAL LINES LLC
CONSOLIDATED STATEMENT OF MEMBER'S DEFICIT/SHAREHOLDER'S EQUITY
(Dollars in Thousands)
See accompanying Notes to Consolidated Financial Statements.
AMERICAN COMMERCIAL LINES LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The operations of American Commercial Lines LLC ("ACL") (formerly American Commercial Lines, Inc. which was converted to a limited liability company in the second quarter of 1998) include barge transportation together with related terminal, marine construction and repair along inland waterways. Barge transportation services include the movement of steel and other bulk products, grain, coal, and liquids in the United States and South America and account for the majority of ACL's revenues. Marine construction, repair and terminal services are provided to customers in marine transportation and other related industries in the United States. ACL has long term contracts with some customers.
ACL was a wholly-owned subsidiary of CSX Corporation ("CSX") until June 30, 1998. On June 30, 1998 ACL's parent, American Commercial Lines Holdings LLC (the "Parent") completed a recapitalization in a series of transactions in which the barge business of Vectura Group, Inc. ("Vectura") and its subsidiaries ("NMI" or the "NMI Contribution") were combined with that of ACL (See Note 2).
Principles of Consolidation
The Consolidated Financial Statements reflect the results of operations, cash flows and financial position of ACL and its majority-owned subsidiaries as a single entity. All significant intercompany accounts and transactions have been eliminated. Investments in companies that are not majority-owned are carried at either cost or equity, depending on the extent of control.
Fiscal Year
ACL follows an annual fiscal reporting period, which ends on the last Friday in December. The consolidated financial statements presented are for the fiscal years ended December 29, 2000 and December 31, 1999 and December 25, 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include short-term investments with a maturity of less than three months when purchased. ACL has from time to time, cash in banks in excess of federally insured limits.
Accounts Receivable
Accounts Receivable consist of the following:
ACL maintains an allowance for doubtful accounts based upon the expected collectibility of accounts receivable.
Materials and Supplies
Materials and Supplies are carried at the lower of cost (average) or market and consist of the following:
Restricted Investments
Restricted Investments were U.S. government obligations purchased and deposited into an escrow fund which were used to repay $24.4 million principal of the Terminal Revenue Bonds plus redemption premium and interest in 2000. ACL recognized $0.7 million as an extraordinary loss in 2000 due to the early redemption premium on the Terminal Revenue Bonds.
Properties
Properties, at cost, consist of the following:
Provisions for depreciation of properties are based on the estimated useful service lives computed on the straight-line method. Buildings and Improvements are depreciated from 15 to 45 years. Equipment is depreciated from 5 to 30 years. Depreciation expense was $53,457 in 2000, $49,779 in 1999 and $44,606 in 1998.
Properties and other long-lived assets are reviewed for impairment whenever events or business conditions indicate the carrying amount of such assets may not be fully recoverable. Initial assessments of recoverability are based on estimates of undiscounted future net cash flows associated with an asset or a group of assets. Where impairment is indicated, the assets are evaluated for sale or other disposition, and their carrying amount is reduced to fair value based on discounted net cash flows or other estimates of fair value. Fixed asset impairment losses of $3,865 and $230 were recorded in 2000 and 1999 respectively in Materials, Supplies and Other on the Consolidated Statement of Operations. These losses affect the barging segment. No impairment losses were recorded in 1998.
Global Materials Services LLC
ACL's ownership interest in Global Materials Services LLC (GMS) was 50% at December 29, 2000 and at December 31, 1999. ACL accounts for this investment by the equity method. ACL's investment in GMS at December 29, 2000 and December 31, 1999 of $9,124 and $6,816 respectively, is included in other assets on the consolidated statement of financial position. Earnings related to ACL's investment in GMS for the year ended December 29, 2000 and December 31, 1999 were $1,138 and $1,341, respectively, and are included in other income in the consolidated statement of operations. During 2000, ACL contributed $500 in cash to GMS and converted $1,000 in GMS notes to equity. Other comprehensive loss related to ACL's investment in GMS for the year ended December 29, 2000 and December 31, 1999 was $329 and $337.
UABL Limited
On October 24, 2000, ACL contributed certain assets to UABL Limited (UABL), an Argentine company. ACL accounts for it's 50% ownership in UABL by the equity method. ACL's investment in UABL of $49,686 at December 29, 2000, is included in other assets on the consolidated statement of financial position. ACL's loss of $1,440 net of minority interest of $400 at December 29, 2000 is included in other income in the consolidated statement of operations.
Debt Amortization
ACL amortizes debt costs over the term of the debt. Amortization expense was $2,801 in 2000, $2,802 in 1999 and $1,540 in 1998 and is included in interest expense.
Revenue Recognition
Barge transportation revenue is recognized proportionately as shipments move from origin to destination. Terminal, repair and other revenue is recognized as services are provided. Marine construction revenue and related expense is primarily recognized on the completed-contract method, due to the short-term nature of contracts. Revenue from sale/leaseback transactions is deferred and recognized over the life of the lease.
Comprehensive Income
Accumulated other comprehensive loss was $484 at December 29, 2000 and $337 at December 31, 1999 related to foreign currency translation. The difference between net income and comprehensive income was not significant in 1998.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2. BUSINESS COMBINATIONS
ACL was a wholly-owned subsidiary of CSX until June 30, 1998. On June 30, 1998, the Parent completed a recapitalization in a series of transactions in which the barge business of Vectura and its subsidiaries was combined with that of ACL. ACL issued $735 million in new debt, Vectura contributed certain of its assets and liabilities (referred to as the NMI Contribution) plus $60 million in cash, and ACL paid a $695 million distribution to CSX and $75 million of existing liabilities of Vectura. In addition, CSX contributed to the capital of the Parent approximately $163 million of existing liabilities owed to CSX. The distributions to CSX pursuant to the recapitalization include $11,814 for certain barges, $7,304 in net assets of certain terminal operations, and $1,650 in taxes. In the third quarter of 1998, ACL recognized non-recurring, non-cash compensation expense of $7,958 related to the recapitalization and payable by CSX to certain executive officers of ACL.
The transactions described above have been accounted for as a recapitalizaiton of ACL with the National Marine Contribution accounted for by the purchase method of accounting. The purchase price of $5 million was less than the fair value of the tangible and intangible net assets acquired, which resulted in a reduction from fair value of long-term assets.
If the recapitalization of ACL and the purchase of National Marine had occurred as of the beginning of 1997, the unaudited pro forma consolidated results of operations would have been:
The unaudited pro forma information may not necessarily reflect future results of operations or what the results of operations would have been had the transaction been consummated at the beginning of the year proceeding the year of acquisition.
NOTE 3. PURCHASE AND DISPOSITION
On May 26, 2000, ACL purchased certain barging assets of the Peavey Barge Line (Peavey) from ConAgra, Inc. for $31,500 in cash. The purchase price was financed with existing credit facilities and cash flows from operations. ACL also assumed $3.8 million in capital leases. The transaction has been
accounted for under the purchase method of accounting. The results of operations from the Peavey barge assets are included in the accompanying consolidated financial statements since the date of purchase.
ACL sold its 100% membership interest in Waterway Communications System LLC (Watercom) on September 6, 2000 to Mobex Communications, Inc. (Mobex) for $13,600 in cash and $2,400 in Mobex preferred stock. The sale resulted in a gain of $11,418. Cash proceeds were used to pay existing ACL debt.
NOTE 4. ACCOUNTS RECEIVABLE SECURITIZATION
On December 30, 1999, ACL sold accounts receivables of two subsidiaries to a 100% owned subsidiary, American Commercial Lines Funding Corporation (ACLF). Simultaneously, ACLF entered into a three year accounts receivable securitization facility with a financial institution and its affiliate whereby ACLF can sell, on a revolving basis, an undivided interest in certain of its receivables and receive up to $50.0 million from an unrelated third party purchaser at a cost of funds linked to commercial paper rates plus a charge for administrative and credit support services. The facility was increased to $60.0 million in 2000. At December 29, 2000 and December 31, 1999, ACL had $56.0 million and $50.0 million, respectively, outstanding under the agreement and had $15.3 and $14.6 million, respectively, of net residual interest in the securitized receivables which is included in Accounts Receivable, Net in ACL's consolidated financial statements. The fair value of the net residual interest is measured at the time of the sale and is based on the sale of similar assets. In 2000, ACL received gross proceeds of $35.8 million from the sale of receivables and made gross payments of $29.0 million under the Agreement.
NOTE 5. DEBT
Debt consists of the following:
ACL has a Revolving Credit Facility, which provides for revolving loans and letters of credit not to exceed the aggregate principal amount of $100 million, maturing in June, 2005, but each loan must be repaid within one year. The Revolving Credit Facility bears an interest rate equal to LIBOR plus a
margin based on ACL's performance. Borrowings on the facility at December 29, 2000 were $66,750 with an interest rate of 8.75%. The borrowing base was reduced by outstanding letters of credit of $17.9 million at December 29, 2000.
The $235 million Term Loan matures in 2001 through 2007. The $200 million Term Loan matures in 2001 through 2006. The two Term Loans bear interest at a rate equal to LIBOR plus a margin based on ACL's performance. The interest rates at December 29, 2000 ranged from 9.5% to 9.6875% for the $235 million and 9.25% to 9.4375% for the $200 million term loans. Interest on the Term Loans is payable quarterly. The Senior Notes require no principal payments until maturity in 2008 and have a fixed interest rate of 10.25%. Interest is payable semi-annually. The Term Loans and Revolving Credit Facility are collateralized by most of ACL's assets. The Senior Notes are not collateralized. ACL has Other Notes totaling $4,726 which mature in 2002 with rates of 6.75% and 9.0%, of which $4,323 have been reclassified to current debt as a result of a repayment transaction.
The Term Loans, Revolving Credit Facility, Indenture and one of the Other Notes contain a number of covenants including specified financial ratios. The Indenture also contains certain cross default provisions. ACL completed an agreement with its lenders to amend the Senior Credit Facility effective December 29, 2000 through December 31, 2001 (Amendment No. 5). The amendment also adds a rent adjusted consolidated leverage ratio, a limitation on annual rent expense, reduces allowable capital expenditures, increases the interest rates on the Term Loans and the Revolving Credit Facility and requires a $40 million reduction of the Term Loans by October 30, 2001, to be funded primarily through the sale of assets. As a result of the $40 million required reduction in Term Loans, this amount has been classified as current portion of long-term debt on the consolidated statement of financial position.
Absent Amendment No. 5, ACL would not have complied with the consolidated leverage ratio and the consolidated interest coverage ratio covenants as defined in the Senior Credit Facility. This was due to less than anticipated fourth quarter 2000 financial results relating primarily to an adverse barging freight market. This adverse market was largely due to the introduction of a genetically altered seed into the U.S. corn supply which caused terminal delays in barge unloading as well as harvest delays, and poor river operating conditions in the upper Midwest due to icing.
Management has operating and financial plans in place to comply with the requirements of the amendment. Commitment letters to purchase assets of $40 million have been received, $20 million of which was received from Vectura. 2001 operational plans which allow the Company to comply with its debt covenants consider current market conditions and historical operational information. Management expects these plans to be realized; however, economic events or weather related conditions could occur and negatively impact the Company's ability to meet its plan for 2001. Subsequent to December 31, 2001, the covenant requirements revert to those specified in the original Senior Credit Facility which are more restrictive than the amended covenants. Certain covenants added in the amendment also become more restrictive. There is no assurance that the Company will be able to meet these covenant requirements in 2001 or 2002. Failure to meet these covenants could have a material adverse effect on the Company.
In June, 1998, ACL deposited $26.1 million into an escrow fund which, together with future income earned on such amount, was used to repay $24.4 million principal of the Terminal Revenue Refunding Bonds ("Revenue Bonds") plus redemption premium and interest in 2000.
Long-term debt due in the next five years under the revised Term Loan agreement, the Senior Notes and Other Notes is $44,579 in 2001, $147 in 2002, $4,962 in 2003, $39,526 in 2004, $46,511 in 2005 and $522,330 thereafter.
NOTE 6. INCOME TAXES
ACL was included in the consolidated federal income tax return of CSX through June 30, 1998. The consolidated federal income tax liability was allocated to ACL as though ACL has filed a separate consolidated return subject to certain consolidated elections determined by CSX.
ACL was reorganized as a limited liability company in the second quarter of 1998. As such, ACL passes through its U.S. federal and state (but not foreign) taxable income to its member who is responsible for income taxes on such taxable income. All of ACL's corporate subsidiaries were converted to limited liability companies (except for ACL Capital Corp. and the foreign subsidiaries) on June 30, 1998 prior to the recapitalization (see Note 2). Due to the change in the tax status, ACL reversed previously recognized deferred income taxes resulting in a benefit of $72 million.
Components of income tax expense (benefit) follow:
Income tax computed at federal statutory rates reconciled to income tax expense (benefit) follows:
The significant components of the tax effect of temporary differences of assets and liabilities as of December 29, 2000 and December 31, 1999 follow:
Due to the investment in UABL Limited (See Note 1) in 2000, ACL no longer has net foreign operating loss carryforwards.
ACL has not recorded domestic deferred or additional foreign income taxes applicable to undistributed earnings of foreign subsidiaries that are considered to be indefinitely reinvested. Such earnings as of December 29, 2000 and December 31, 1999 amounted to $5,314 and $4,208 respectively.
The basis of assets and liabilities for financial reporting purposes is more than the tax basis of such assets and liabilities at December 29, 2000 and December 31, 1999 as follows:
NOTE 7. EMPLOYEE BENEFIT PLANS
ACL sponsors or participates in defined benefit plans covering both salaried and hourly employees. The plans provide for eligible employees to receive benefits based on years of service and either compensation rates near retirement or at a predetermined multiplier factor. Contributions to the plans are sufficient to meet the minimum funding standards set forth in the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended. Plan assets consist primarily of common stocks, corporate bonds and cash and cash equivalents.
As of January 31, 2000, the accrued benefit obligation under the American Commercial Lines LLC Pension Plan was frozen. The past service benefit obligation is complemented by a new prospective annual benefit obligation. This change affects salaried employees covered by this plan and will result in future cost savings to ACL.
In 1999 the National Marine Pension Plan was merged into the ACL Pension Plan. Prior to January 1, 1998, certain employees of ACL participated in the combined CSX Pension Plan for which ACL was allocated a portion of the annual net pension expense. CSX determined that it would spin off the assets and liabilities in the CSX Pension Plan attributable to ACL employees to a newly created plan sponsored by ACL. The plan spin-off was completed in June 1998. This transfer of assets and benefit liabilities resulted in ACL recording a pension liability of approximately $24 million and a corresponding reduction to other capital. The assets transferred to the new plan of approximately $52 million were determined based on regulations established under ERISA.
In addition to the defined benefit pension and related plans, ACL has a defined benefit post-retirement plan covering most full-time employees. The plan provides medical benefits and is
contributory, with retiree contributions adjusted annually, and contains other cost-sharing features such as deductibles and coinsurance. The accounting for the health care plan anticipates future cost-sharing changes to the written plan that are consistent with ACL's expressed intent to increase the retiree contribution rate annually.
A summary of the pension and post-retirement plan components at September 30 (valuation date) follows:
Components of net periodic benefit cost
Weighted-average assumptions as of September 30
The net post-retirement benefit obligation was determined using the assumption that the health care cost trend rate for retirees was 8.5% for 2000-2001, decreasing gradually to a 5.5% trend rate by 2007 and remaining at that level thereafter. A 1% increase in the assumed health care cost trend rate would have increased the accumulated post-retirement benefit obligation as of December 29, 2000 and December 31, 1999 by $747 and $673, respectively, and the aggregate of the service and interest cost components of net periodic post-retirement benefit expense for 2000 and 1999 by $123 and $149, respectively.
ACL also sponsors certain contributory defined contribution plans covering eligible employee groups. Contributions to such plans are based upon a percentage of employee contributions and were $1,456, $2,028 and $1,799 in 2000, 1999 and 1998, respectively.
Certain employees are covered by union-sponsored, collectively-bargained, multi-employer defined benefit pension plans. Contributions to such plans, which are based upon union contracts, were approximately $84, $76 and $98 in 2000, 1999 and 1998, respectively.
NOTE 8. LEASE OBLIGATIONS
ACL leases buildings, data processing hardware and operating equipment under various operating leases and charter agreements, which expire from 2000 to 2015 and which generally have renewal options at similar terms. Certain vessel leases also contain purchase options at prices approximating fair value of the leased vessels. Rental expense under continuing obligations was approximately $49,463 in 2000, $43,978 in 1999 and $39,595 in 1998.
At December 29, 2000 minimum future lease payments under non-cancelable operating leases total $43,776 for 2001, $34,246 for 2002, $28,919 for 2003, $26,012 for 2004, $20,285 for 2005 and $103,054 thereafter.
NOTE 9. RELATED PARTIES
Prior to July 1, 1998, ACL was a wholly-owned subsidiary of CSX and participated in the CSX cash management plan. Under the plan, excess cash was advanced to CSX for investment and CSX made cash funds available to its subsidiaries as needed for use in their operations. The subsidiaries were charged for borrowings or compensated for investments based on returns earned by the plan portfolio. Interest expense related to ACL's borrowings from the plan was $1,052 in 1998. There was no interest expense from the plan in 1999 and 2000.
ACL maintains insurance coverage which transfers substantially all risk of loss, subject to coverage limits, related to various personal injury and property damage claims, to an insurance company. Prior to July 1, 1998 ACL maintained coverage with an insurance company owned by CSX. Accordingly, loss reserve accruals for such claims are not required, except for per claim deductible amounts. ACL paid
premiums of approximately $3,560 to a CSX affiliate during 1998. There were no premiums paid to CSX in 1999 and 2000.
Included in Materials, Supplies and Other operating expenses are amounts related to a management service fee charged by CSX of $7,410 in 1998. There were no CSX management fees charged in 1999 and 2000. Also included is $1,070 in 1999 and $717 in 1998, for charter expense related to a new equipment charter effective July 1, 1998 with a subsidiary of CSX. The charter was bought out for $2,419 in 1999.
In the third quarter of 1998, ACL recognized non-recurring non-cash compensation expense of $7,958 related to the recapitalization and payable by CSX to certain executive officers of ACL.
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS
ACL's restricted investments, long-term debt and fuel hedge agreements are the only financial instruments with a fair value significantly different than their carrying amounts.
The fair values of the Restricted Investments, Prepaid Rate Cap and Senior Notes payable are based on quoted market values. The carrying values of the Term Loans, all of which bear interest at floating rates, approximate their fair values. The fair value of the Terminal Revenue Refunding Bonds and the Other Notes have been estimated using discounted cash flow analyses based on ACL's current incremental borrowing rates for similar types of borrowing arrangements.
On August 11, 2000 ACL entered into an interest rate cap agreement which limits ACL's base LIBOR on a notional amount of $201.8 million to 7.5%, corresponding to that amount of floating rate debt outstanding which is based on LIBOR. The agreement is designed to hedge ACL's exposure to future increases in market interest rates.
ACL enters into fuel rate swaps, to reduce the effects of fluctuations in fuel prices and does not use them for trading purposes. At December 29, 2000, ACL had fuel rate swap agreements with a major financial institution. Under these agreements, ACL will pay fixed prices ranging from $0.58 to
$1.00 per gallon. Since the agreements qualify as a hedge and correlate to price movement of fuel, any gains or losses resulting from market changes are recognized as fuel expense. As of December 29, 2000 there were 10,540,000 gallons remaining on the contract. The agreements terminate December 31, 2001. Because of the institution's high credit rating, management believes that these agreements do not present significant credit risk to ACL.
NOTE 11. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Pursuant to the Recapitalization (see Note 2), CSX contributed to the capital of the Parent $163.3 million of existing debt, including a long-term loan with a principal balance of $67.2 million and short-term borrowings of $96.0 million. Additionally, ACL distributed to CSX $11.8 million of barges and $7.3 million in net assets in certain terminal operations. The NMI Contribution was financed through the issuance of $5.0 million of membership interests. ACL recorded a pension liability of $23.9 million and a corresponding charge to other capital as a result of the CSX Pension Plan spin-off (See Note 7). In the third quarter of 1998, ACL recognized non-recurring, non-cash compensation expense of $7,958 related to the recapitalization and payable by CSX to certain executive officers of ACL.
Cash interest payments on debt amounted to $57,107, $84,084 and $13,715 in 2000, 1999 and 1998, respectively.
ACL made income tax payments of $5,685 in 2000, $3,987 in 1999 and $15,479 in 1998.
NOTE 12. CONTINGENCIES
A number of legal actions are pending against ACL in which claims are made in substantial amounts. While the ultimate results of pending litigation cannot be predicted with certainty, management does not currently expect that resolution of these matters will have a material adverse effect on the consolidated results of operations, financial position and cash flows.
NOTE 13. BUSINESS SEGMENTS
ACL has two reportable business segments-barging and construction. ACL's barging segment includes barge transportation operations in North and South America and domestic fleeting facilities that provide fleeting, shifting, cleaning and repair services at various locations along the inland waterways. The construction segment constructs marine equipment for ACL's domestic and international fleets as well as external customers.
Management evaluates performance based on segment earnings, which is defined as operating income, before income taxes and excluding the management services fee paid to CSX in 1998. The accounting policies of the reportable segments are consistent with those described in the summary of significant accounting policies. Intercompany sales are transferred at cost.
Reportable segments are business units that offer different products or services. The reportable segments are managed separately because they provide distinct products and services to internal and external customers.
*Barging includes $20,307 of purchased Barging Assets but excludes $6,163 of assets acquired by capital leases.
Financial data for segments below the reporting thresholds are attributable to two operating segments-a segment operating terminals along the U.S. inland waterways and a segment providing voice and data communications to marine companies operating on the U.S. inland waterways. The segment providing voice and data communications was sold in 2000.
The following is a reconciliation of ACL's revenues from external customers and segment earnings to ACL's consolidated totals.
Geographic Information
Revenues are attributed to countries based on the location of the service provided. Properties represent the only long lived assets of ACL.
Major Customer
Revenues from one customer of the barging segment represented approximately 14% in 2000, 14% in 1999 and 11% in 1998 of ACL's consolidated revenues.
NOTE 14. QUARTERLY DATA (UNAUDITED)
(1)The profit portion of revenue from third party purchases of equipment that was subsequently leased to the barge operating division has been deferred and will be recognized over the life of the operating leases.
In order to comply with this accounting treatment, amounts in the second and third quarters were restated as follows:
ACL's business is seasonal, and its quarterly revenues and profits historically are lower during the first and second fiscal quarters of the year (January through June) and higher during the third and fourth fiscal quarters (July through December) due to the North American grain harvest.
The year 2000 included a second quarter extraordinary item charge of $734 for the Terminal Bond redemption premium, the gain on the sale of Watercom of $11,418 is included in the third quarter and an impairment loss of $3,865 is included in the fourth quarter. The first quarter of 1999 includes a non-cash charge of $1,737 for the workers' compensation second-injury funds due to the adoption of Statement of Position (SOP) 97-3 as described in Note 15. The second quarter 1998 results include a one time tax benefit from the conversion of taxable corporations to limited liability companies. ACL's recapitalization and acquisition of National Marine both occurred on June 30, 1998 and are included in the third quarter 1998 results and quarters thereafter. The third quarter of 1998 includes non-recurring,
non-cash compensation expense of $8 million related to the recapitalization and payable by CSX to certain officers of ACL.
NOTE 15. CHANGES IN ACCOUNTING STANDARDS
In December 1997, the American Institute of Certified Public Accountants (AICPA) issued SOP No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments" (SOP 97-3) which provides guidance on recognition, measurement, and disclosure of liabilities for guaranty-fund and certain other insurance-related assessments, including workers' compensation second-injury funds. SOP 97-3 is effective for fiscal years beginning after December 15, 1998. ACL adopted SOP 97-3 in the first quarter of 1999, with a cumulative effect adjustment of $1,737 in non-cash expense.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It 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. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-dominated forecasted transaction. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation. This statement is effective for ACL's financial statements for fiscal years beginning after January 1, 2001, but earlier application is encouraged. ACL will adopt statement No. 133 as of December 30, 2000. The adoption will not have a significant effect on its consolidated financial statements.
In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB 101 summarizes some of the staff's interpretations of the application of generally accepted accounting principles to revenue recognition. All registrants are expected to apply the accounting and disclosure requirements that are described in SAB 101 no later than the fourth quarter of the fiscal year beginning after December 15, 1999. ACL is currently in compliance with the requirements of SAB 101.
In September 2000, the FASB issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS No. 140"). The Statement is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. SFAS No. 140 also includes provisions that require additional disclosures in the financial statements for fiscal years ending after December 15, 2000. Additional disclosures have been included in Note 4 to the consolidated financial statements. This Statement is not expected to have a significant effect on its consolidated financial statements.
NOTE 16. GUARANTOR FINANCIAL STATEMENTS
The $735 million of debt issued by ACL and a revolving credit facility, which provides for revolving loans and the issuance of letters of credit in an aggregate amount up to $100 million, are guaranteed by ACL's wholly-owned domestic subsidiaries, other than ACL Capital Corp. (which was formed in connection with the transaction), any Accounts Receivable Subsidiary (as defined in the Indentures with respect to such debt) and certain subsidiaries of ACL without substantial assets or operations (collectively the "Guarantor Subsidiaries"). Such guarantees are full, unconditional and joint and several. Separate financial statements of the Guarantor Subsidiaries are not presented because management has determined that they would not be material to investors. The following supplemental financial information sets forth on a combined basis, combining statements of financial position, statements of operations and statements of cash flows for the Guarantor Subsidiaries, non-guarantor subsidiaries and for ACL as of December 29, 2000 and December 31, 1999 and for the fiscal years ended December 29, 2000, December 31, 1999 and December 25, 1998.
Combining Statement of Operations for the Year Ended December 29, 2000
(Dollars in Thousands)
Combining Statement of Operations for the Year Ended December 31, 1999
(Dollars in Thousands)
Combining Statement of Operations for the Year Ended December 25, 1998
(Dollars in Thousands)
Combining Statement of Cash Flows for the Year Ended December 29, 2000
(Dollars in Thousands)
Combining Statement of Cash Flows for the Year Ended December 31, 1999
(Dollars in Thousands)
Combining Statement of Cash Flows for the Year Ended December 25, 1998
(Dollars in Thousands)
Combining Statement of Financial Position at December 29, 2000
(Dollars in Thousands)
Combining Statement of Financial Position at December 31, 1999
(Dollars in Thousands)
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Managers
American Commercial Lines LLC
In our opinion, based on our audits and the report of other auditors, the accompanying consolidated financial statements listed in the index appearing under Item 14(a)(1) present fairly, in all material respects, the financial position of American Commercial Lines LLC (ACL) at December 29, 2000 and December 31, 1999, and the results of their operations and their cash flows for each of the three fiscal years in the period ended December 29, 2000, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements are the responsibility of the ACL's management; our responsibility is to express an opinion on these financial statements, based on our audits. We did not audit the financial statements of Global Materials Services LLC (GMS), a fifty percent owned subsidiary, which statements constitutes 1% of total assets as of December 31, 1999 and 45% of net earnings for the fiscal year in the period ended December 31, 1999. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for GMS, is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
As more fully described in Note 5, the Company completed an agreement with its lenders to amend its lending facility, which revised certain covenants through December 31, 2001 and added certain covenants. Absent this amendment, ACL would not have complied with the debt covenants at December 29, 2000. Management's plans to comply with these amended covenants are also described in Note 5.
PricewaterhouseCoopers LLP
Louisville, Kentucky
February 2, 2001, except for certain information contained in Note 5, as to which the date is March 28, 2001.
Schedule II-Valuation and Qualifying Accounts
(In Thousands)
(1)Contribution of assets to UABL.
(2)Securitization of accounts receivable.
(3)Combination with National Marine.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There were no disagreements with accountants during 1999 or 2000.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
MANAGEMENT
Executive Officers of the Parent, ACL and/or its Subsidiaries; Board of Managers of the Parent
The Executive Officers of ACL and/or its subsidiaries and the Parent are:
Executive Officers
The members of the Board of Managers of the Parent (the "Board of Managers") are as follows.
Board of Managers of the Parent
Michael C. Hagan is President and Chief Executive Officer and joined ACL in 1970. He has served as President and Chief Executive Officer of ACL and its subsidiaries since 1991. Prior to that, he held a series of positions of increasing responsibility within ACL and CSX.
Paul S. Besson is Senior Vice President-Human Resources and Corporate Services for ACL and its subsidiaries. Prior to joining ACL in 1998, he was most recently Director, Talent Negotiations and Labor Relations with the National Broadcasting Company, Inc. ("NBC"), a wholly-owned subsidiary of General Electric Company, and earlier held several other human resource positions at NBC since 1984.
James F. Farley was named Senior Vice President-Marketing Services of ACBL in March 2000, moving from his position as Vice President-Liquid Sales, which he held from 1998. Mr. Farley joined ACBL in 1992 and served in various positions, including Vice President, Distribution Services. Prior to joining ACL Mr. Farley was Vice President, Operations with The Valley Line-Sequa Corporation.
Robert W. Greene III serves as President of Jeffboat and ACT. Mr. Greene began his career with ACL in 1968. In 1980 he was named President of Jeffboat and was appointed President-Chief Operating Officer of American Commercial Marine Service Company (now ACT) in 1986.
Michael A. Khouri was named Senior Vice President-Transportation Services for ACBL and LDC in March 2000. He had served as Senior Vice President-Corporate Services for ACL and its subsidiaries from August 1998 through March 2000 and before that as Senior Vice President and General Counsel since 1990. Prior to joining ACL in 1979, he worked at the Crounse Corporation.
Martin K. Pepper was appointed Senior Vice President-International for American Commercial Lines International LLC in August 1998. Prior to joining ACL in 1997 as Vice President for Fleet Maintenance, he served for sixteen years as an operations officer with Canal Barge Line and served in sales and marketing for Tidewater Barge Line from 1990 to 1997.
William N. Whitlock was named Senior Vice President-Logistic Services for ACBL and LDC in March 2000. He had served as Senior Vice President-Transportation Services from 1982 through March 2000. Prior to joining ACL in 1979 Mr. Whitlock devoted fifteen years of his career to the U.S. Army Corps of Engineers in positions of increasing authority.
James J. Wolff serves as Senior Vice President-Finance/Administration and Chief Financial Officer of ACL and its subsidiaries. Mr. Wolff was with Texas Gas Exploration, a former CSX subsidiary, from 1979 to 1986. In 1986, he joined CSX and transferred to ACL in 1992 as Senior Vice President-Finance. He was appointed chief of international business development in 1996 and returned to the CFO position in August 1998.
David Wagstaff III has served as President and Chief Executive Officer of Vectura since 1993. He was previously the Principal in a private consulting business and has worked in various executive capacities at the Equitable Life Assurance Company and Citicorp. He is currently a director of Great Lakes Dredge and Dock Company and a number of private companies.
David H. Baggs is Assistant Vice President-Corporate Treasury for CSX. He has held various finance and planning positions with CSX since 1985.
Ellen M. Fitzsimmons is Senior Vice President-Law of CSX. She has served in various legal positions with CSX since 1991.
Paul R. Goodwin is Vice Chairman and Chief Financial Officer of CSX. He has served in various executive positions with CSX since 1995. From February to April, 1995, he was Executive Vice President, Finance & Administration of CSX's principal subsidiary, CSX Transportation, Inc. ("CSXT"), which provides rail transportation services. Prior thereto he served as Senior Vice President-Finance of CSXT since 1991.
Ernest A. Häberli has been Executive Vice President and Chief Financial Officer of Fort James Corporation since the 1997 merger of Fort Howard Corporation and James River Corporation. Prior to the merger, he was Senior Vice President, Strategy, for James River, since 1996. From 1990 to 1995, he served as President of Pet International. He also held various executive positions in strategic planning
and development and international business management with Kraft General Foods, Kraft International and Kraft, Inc. since 1985. He is currently a director of Fort James Corporation.
Richard L. Huber has been Managing Director, Chief Executive Officer and Principal of the Latin American direct investment group Norte-Sur Partners and Senior Director of Kissinger McLarty Associates, a strategic advisory firm that assists international businesses since January 2001. Mr. Huber, has approximately forty years of investment and merchant banking, international business, and management experience, and was most recently Chief Executive Officer of Aetna, Inc. Before joining Aetna in 1995, he held executive positions with Chase Manhattan Bank, Citibank, Bank of Boston, and Continental Bank. Mr. Huber is also a Director of Perez Companc S.A., the largest publicly traded company in Argentina, and Chairman of UABL.
Richard E. Mayberry, Jr. has been a Managing Director of Citicorp Capital Investors, Ltd. for over five years. Mr. Mayberry is currently a director of Brunner Mond Group plc and a number of private companies.
James P. Peter is Vice President-Taxes for CSX. He has served in various executive positions with CSX since 1987.
David F. Thomas has been President of 399 Venture Partners, Inc. since December 1994. In addition, Mr. Thomas has been a Managing Director of Citicorp Venture Capital, Ltd., an affiliate of 399 Venture Partners, Inc., for over five years. Mr. Thomas is currently a director of Lifestyles Furnishings International Ltd., Anvil Knitwear, Inc., Neenah Foundry Company, Plainwell, Inc. and Sleepmaster LLC.
ITEM 11. EXECUTIVE COMPENSATION.
Executive Compensation
The following table sets forth information concerning the annual and long-term compensation for services in all capacities to ACL, or its subsidiary companies or their predecessors for 1998 through 2000 of those persons who served as (i) the chief executive officer during 2000 and (ii) the other four most highly compensated executive officers for 2000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
(1)No Named Executive Officer earned an ACL incentive award for 2000, however, Messrs. Marquitz and Farley were paid $300,000 and $40,000 bonuses, respectively, as part of employment agreements. 1999 Bonus amounts consist entirely of bonus payments paid by CSX in connection with the Recapitalization ("CSX Bonus Payments"). 1998 Bonus amounts include CSX Bonus Payments and ACL incentive awards of $767,525 and $117,653, respectively, for Mr. Hagan; $407,459 and $66,727, respectively, for Mr. Marquitz; $332,157 and $47,000, respectively for Mr. Whitlock; $293,164 and $42,500, respectively, for Mr. Khouri; and $285,737 and $42,000, respectively, for Mr. Wolff.
(2)Consists of automobile payments only in 2000, and automobile payments and medical examinations in 1999 and 1998.
(3)Represents options to acquire CSX Shares granted during 1998.
(4)Long-term incentive plan payouts ("LTIP Plan Payouts") for 1998 represent the fair market value of $40.9688 per share of performance shares awarded for the 1996-1998 performance cycle on February 10, 1999, pursuant to the CSX 1987 Long-Term Performance Stock Plan. Mr. Hagan was the only ACL Named Executive Officer eligible to participate in 1998 LTIP Plan Payouts.
(5)Amounts shown include the above-market portion of earnings on a CSX deferred compensation program available to Mr. Hagan and Mr. Whitlock. For 2000, those amounts were $22,013 for Mr. Hagan and $6,124 for Mr. Whitlock. Amounts shown also include life insurance premium payments made on behalf of the Named Executive Officers in the following amounts for 2000: for Mr. Hagan, $2,798, for Mr. Marquitz, $928, for Mr. Farley, $824, for Mr. Whitlock, $2,546, for Mr. Khouri, $1,282, and for Mr. Wolff, $568. Amounts shown also include matching contributions made by ACL in 2000 in conjunction with deferral of salary or bonus to a supplementary savings plan on behalf of Mr. Hagan of $4,200 and actual payment of the same by CSX pursuant to certain CSX supplementary savings plans for Mr. Marquitz of $707,522. Amounts shown also include payment for the provision of tax services for Messrs. Hagan, Whitlock, Khouri and Wolff in the amount of $1,907 for each in 2000.
(6)Following the Recapitalization, CSX became obligated to pay Mr. Hagan certain benefits aggregating $3.75 million pursuant to an employment agreement. No Named Executive Officer received option grants in 2000.
The following table sets forth the number of securities underlying unexercised options held by each of the Named Executive Officers and the value of such options at the end of fiscal 2000:
FISCAL YEAR END OPTION VALUES
(1)Represents options to purchase CSX Shares.
(2)Value of unexercised options at fiscal year-end represents the difference between the exercise price of any outstanding in-the-money options and $26.13, the mean value of CSX Shares on December 29, 2000. Each of the Named Executive Officers and certain other management employees of ACL are beneficiaries of a severance pay plan of ACL (the "Severance Plan") pursuant to which those employees under certain circumstances will receive either one year or two years' of base salary, bonus and benefits upon their termination of employment with ACL. This plan by its terms remained in effect until April 17, 2000. ACL also has a salary continuation plan (the "Salary Continuation Plan") whereby supplemental retirement benefits are paid as a function of final pay, some of which are paid in lieu of a former life insurance benefit.
Prior to the Recapitalization, the Named Executive Officers, and other eligible employees, were beneficiaries of certain benefit plans established by CSX. ACL intends to continue these benefit plans, which consist of (i) a special retirement plan (the "Special Retirement Plan") whereby certain employees have certain additional compensation covered, and can obtain past or extra service credits for purposes of the qualified pension plan described below in the "Pension Plan Table;" and (ii) a supplementary savings plan (the "Supplementary Savings Plan") which permits deferrals of a portion of salary and bonus payments and matching contributions for those deferrals to negate the effect of Internal Revenue Code limits on qualified plan contributions.
Pension Plans
The pension plan table provided below sets forth estimated annual benefits payable, before offset for the Social Security annuity, by ACL to any officer or salaried employee upon retirement at the normal retirement age after selected periods of service and in specified compensation groups.
PENSION PLAN TABLE(1)
(1)Retirement benefits from ACL's funded and unfunded non-contributory Pension Plans are based on both length of service and compensation. The compensation covered by the Pension Plans is compensation paid by ACL to a participant on a regular monthly or annual salary basis, including bonuses or similar awards for personal services rendered in a position that is not under the scope of a labor agreement prior to 2000. Compensation items listed in the Summary Compensation Table covered by the Pension Plans are Base Salary and Bonus. (In the case of employees who elect to receive their Bonus in Company Stock, the amount of the Bonus for Pension Plan computations is the cash value of the Bonus prior to addition of the premium for receipt of Bonus in stock.) Benefits earned before February 1, 2000 are computed at the time of retirement under a defined benefit formula based on years of service and average salary and bonus for the highest 60 consecutive months of service, computed without regard to additional payments in stock. Benefits earned after February 1, 2000 are computed based on career-average base salary only. The Pension Plans provide for normal retirement at age 65 and, subject to certain eligibility requirements, early retirement beginning at age 55 is permitted with reduced pension payments.
The above table sets forth the estimated annual benefits payable, before offset for the Social Security annuity, by ACL to any officer or salaried employee upon retirement at the normal retirement age after selected periods of service and in specified compensation groups. The normal form of the benefit is a straight-life annuity. As of April 1, 2001, the individuals named in the Summary Compensation Table had the following years of credited service: Mr. Hagan, 30.64 years; Mr. Marquitz, 8.86 years; Mr. Whitlock, 21.88 years; Mr. Wolff, 21.57 years; Mr. Khouri, 21.65 years; Mr. Farley, 8.86 years.
The Internal Revenue Code imposes certain limitations on compensation and benefits payable from tax-qualified pension plans. Pension amounts in excess of such limitations are payable from the non- qualified Pension Plan, which is not funded.
Benefit Plans
ACL maintains various qualified and non-qualified benefit plans for its employees. All salaried, full time employees are covered or will be covered by an ERISA qualified defined benefit retirement plan
and are eligible to participate in a 401(k) savings plan that includes a partial company match feature. Hourly employees with certain of ACL's subsidiaries have separate ERISA qualified defined benefit plans and are eligible to participate in separate 401(k) savings plans.
ACL maintains a self-insured general welfare health plan for employees. The plan has appropriate levels of employee deductible, and maximum benefit levels. Employees may elect to participate in certain approved HMO plans in lieu of ACL sponsored plan.
ACL has provided to certain members of management various non-qualified benefit and deferred compensation plans. These plans include deferred salary plans, deferred bonus plans, salary continuation with whole life plans and, prior to the Recapitalization, participation in certain CSX stock bonus plans, stock option plans and stock purchase/loan plans.
ACL reserves the right to add, amend, change, tie off and/or terminate any or all qualified or non-qualified benefit plans at any time and to alter, amend, add to and/or restrict employee participation to the extent permitted by applicable federal or state law or regulation.
Compensation of Board of Managers
ACL will reimburse members of the Board of Managers for any out-of-pocket expenses incurred by them in connection with services provided in such capacity. In addition, ACL may compensate members of the Board of Managers for services provided in such capacity. Mr. Wagstaff received a salary from ACL for duties performed as an employee during 1998 and 1999.
ITEM 12. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Security Ownership
The Parent owns all of the outstanding equity interests of ACL. The following table sets forth certain information regarding the approximate beneficial ownership of the Parent's equity interests at year end held by (i) each person (other than members of the Board of Managers and executive officers of ACL) known to ACL to be the owner of more than 5% of the outstanding voting membership interests of the Parent, (ii) the Named Executive Officers, (iii) members of the Board of Managers of ACL and (iv) members of the Board of Managers and executive officers of ACL as a group.
*Less than one percent.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Affiliate Agreements
ACL has entered into agreements or arrangements with CSX, subsidiaries of CSX and Vectura. These agreements and business arrangements are for the purpose of either providing or obtaining rail services for multi-modal transportation packages, real estate and office lease arrangements (of approximately $40,000 from CSX to ACL for certain office lease payments) and provision of certain transitional administrative services (of approximately $200,000 from ACL to CSX for transition services), as described herein. Also, ACL leases certain barges from JEM Transportation, Inc., which received payments from ACL in the amount of $347,700 in 2000. Daniel J. Marquitz, a former executive officer of ACL, is a principal in JEM Transportation, Inc.
ACL's arrangements described above are each on terms and conditions that ACL believes are in the aggregate not materially more burdensome to ACL than would be obtained on an arm's-length basis among unaffiliated parties.
Parent Limited Liability Company Agreement
Upon the consummation of the Recapitalization, CSX and other investors (collectively, the "Members") entered into the LLC Agreement. The LLC Agreement governs the relative rights and duties of the Members. The following description summarizes certain terms of the LLC Agreement. The following description does not purport to be complete and is qualified in its entirety by reference to the LLC Agreement.
The business and affairs of the Parent are managed by a Board of Managers having duties comparable to a corporate board of directors. The Board of Managers is composed of ten individuals as follows: four shall be designated by CSX, two shall be designated by Vectura and National Marine collectively (the "Vectura Parties"), one shall be the current CEO of the Parent, one shall be the current CEO of Vectura and two shall be independent of CSX and Vectura (and their affiliates) designated by holders of a majority of the voting Junior Common Membership Interests. CSX's and the Vectura Parties' rights to designate individuals to the Board of Managers is dependent in part on such party's continuing to hold membership interests of the Parent in specified amounts.
As long as CSX holds specified amounts of Parent membership interests, CSX is entitled to veto rights with respect to the following transactions, howsoever directly or indirectly structured, subject to certain exceptions: (i) any merger or other acquisition transaction (other than the acquisition of new capital assets as part of the regular capital budgeting process) involving consideration of $250 million or more; (ii) any transaction through which the Parent, ACL or its subsidiary would become a Subchapter C corporation (other than certain specified transactions); (iii) any amendment to the limited liability company agreement of the Parent, ACL or its subsidiary which would adversely affect CSX; (iv) any definition of "Excess Cash Flow," "Restricted Payments" and "Change of Control" (and related definitions regarding the Senior Preferred Membership Interests) in financing agreements; and (v) transactions with affiliates.
As long as the Vectura Parties hold specified amounts of Parent membership interests and subject to CSX's veto rights described above, the Vectura Parties are entitled to veto rights with respect to the following transactions, howsoever directly or indirectly structured, subject to certain exceptions: (i) certain material financings, acquisitions, divestitures, public equity offerings or capital expenditures; (ii) equity investment programs for management of the Parent and its subsidiaries; and (iii) transactions with affiliates. In addition, the Vectura Parties will have the right, subject to CSX's veto rights, to cause an Initial Public Offering or Sale of ACL (each as defined in the LLC Agreement).
Membership Interests. The Parent issued Senior Preferred Membership Interests, Junior Preferred Membership Interests, Senior Common Membership Interests and Junior Common Membership
Interests in amounts sufficient to consummate the Recapitalization. The Senior Preferred Membership Interests and the Junior Preferred Membership Interests are collectively referred to as the "Preferred Membership Interests" and the Senior Common Membership Interests and the Junior Common Membership Interests are collectively referred to as the "Common Membership Interests." The Junior Common Membership Interests are divided into voting membership interests and non-voting membership interests of the Parent, and collectively represent the residual future profits interests in the Parent. The holders of non-voting Junior Common Membership Interests may at any time, by a majority vote of such holders, convert all such interests into voting Junior Common Membership Interests. Holders of the Preferred Membership Interests are entitled to return of capital contributions prior to any distributions made to holders of the Common Membership Interests. Each Preferred Membership Interest has an initial Redemption Value of $100, which compounds annually at the rate per year of 11.02% (the "Preferred Rate"). The Senior Common Membership Interests represent an aggregate capital interest of $3,389,091 and an aggregate future profits interest in the Parent of $32,500,000 (subject to certain adjustments) and accrue a compounded annual yield at the Preferred Rate on a notional principal amount of $35,889,091. As to dividends, distributions and liquidations, except as otherwise provided and except with respect to redemptions of Membership Interests held by Management Investors upon their termination, Senior Preferred Membership Interests rank senior to Junior Preferred Membership Interests, Junior Preferred Membership Interests rank senior to Senior Common Membership Interests and Senior Common Membership Interests rank senior to Junior Common Membership Interests. At the Parent's option, Senior Preferred Membership Interests may be exchanged into current-pay subordinated notes containing the same features as such Membership Interests at any time contemporaneously with or following the Parent's conversion to a Subchapter C corporation. Senior Preferred Membership Interests have the benefit of covenants respecting restricted payments (providing that the Parent may pay no cash in respect of any membership interests ranking junior in priority to the Senior Preferred Membership Interests until all Senior Preferred Membership Interests have been redeemed, except with respect to redemptions of membership interests held by Management Investors upon their termination or tax distributions pursuant to the LLC Agreement), affiliate transactions, no issuance of membership interests senior in priority to the Senior Preferred Membership Interests and delivery of financial statements. Junior Common Membership Interests are allocated into voting and non-voting interests. All other classes of membership interests will be non-voting, except as otherwise explicitly provided or as provided by law. The Parent will mandatorily redeem all Senior Preferred Membership Interests and Junior Preferred Membership Interests in year 15 at the amount of the Redemption Value (plus accrued and unpaid yield thereon) of such membership interests at such time. Optional redemptions of such membership interests and Senior Common Membership Interests shall be permitted at the Parent's option at any time, subject to the priority of such membership interests (other than in certain cases), without premium or penalty, provided that CSX's consent will be required to redeem its Senior Preferred Membership Interests in certain cases. Holders of Preferred Membership Interests have the option to have such interests redeemed at the Redemption Value as defined in the LLC Agreement (plus accrued but unpaid yield thereon) upon consummation of a Change of Control.
In addition, the LLC Agreement: (i) restricts the transfer of the equity interests of the Parent; (ii) grants tag-along rights on certain transfers of equity interests of the Parent (as described below); (iii) requires CSX and the Investors to consent to a sale of the Parent to an independent third party if such sale is approved by the Board of Managers of the Parent (as described below); and (iv) grants preemptive rights on certain issuances of equity interests of the Parent. Certain of the foregoing provisions of the LLC Agreement will terminate upon the consummation of a Qualified Public Offering or a Sale of ACL (each as defined in the LLC Agreement).
The Vectura Parties and CSX may participate pro rata (based on ownership of Junior Common Membership Interests) in any sale or transfer of Parent equity securities by the other (other than certain specified transactions) and in any control transaction howsoever structured, subject to certain
limitations. In addition, CSX may participate pro rata (based on ownership of Junior Preferred Membership Interests) in any sale or transfer of Junior Preferred Membership Interests by the Vectura Parties, subject to certain limitations. In the event of a sale of all of the Parent approved by its Board of Managers (whether by sale of membership interests, all or substantially all assets or businesses, merger or otherwise), each holder of membership interests shall consent to, approve and participate in such transaction on the same terms and conditions. Any such transaction shall also be a Change of Control, and any such transaction which would not also otherwise trigger tag-along rights shall trigger a liquidation of the Parent.
Distributions. The holders of Senior Preferred Membership Interests are entitled to receive distributions from the Parent in an amount equal to the Redemption Value (plus accrued and unpaid yield thereon) of such interests prior to distributions (other than Tax Distributions described below) in respect of any other membership interests of the Parent. The holders of Junior Preferred Membership Interests are entitled to receive distributions from the Parent in an amount equal to the Redemption Value (plus accrued and unpaid yield thereon) of such interests prior to distributions (other than Tax Distributions described below) in respect of any other membership interests of the Parent, except Senior Preferred Membership Interests.
Subject to certain restrictions contained in the LLC Agreement and any restrictions contained in any financing agreements to which the Parent is a party, and subject to the requirement of quarterly Tax Distributions described below, the Board of Managers may make distributions, whether in cash, property or securities of the Parent, at any time or from time to time, in the following order of priority: first, to the holders of Senior Preferred Membership Interests, an amount determined by the Redemption Value (plus accrued and unpaid yield thereon) of such interests (as defined and described in the LLC Agreement); second, to the holders of Junior Preferred Membership Interests, an amount determined by the Redemption Value (plus accrued and unpaid yield thereon) of such interests (as defined and described in the LLC Agreement); third, pro rata to the holders of the Senior Common Membership Interests to the extent of any unpaid yield (based on a notional principal amount of $35.9 million) and principal (based on a notional principal amount of $35.9 million) thereon; and fourth, thereafter, pro rata in accordance with Capital Accounts (as defined in the LLC Agreement) or a cash waterfall producing identical results.
ACL's operations are conducted in the form of a limited liability company. As a result, in general, neither ACL nor the Parent is subject to U.S. federal or state income taxes. Instead, taxable income from the operations of ACL and its noncorporate subsidiaries are allocated to the equity holders of the Parent, and such holders are directly liable for income taxes on such income. The LLC Agreement requires the Parent to make quarterly distributions ("Tax Distributions") to its members to enable each member to satisfy some or all of its tax liability resulting from its equity interest in the Parent. Tax Distributions to each member generally will be computed by multiplying the taxable income allocated to the member from the Parent by the assumed tax rate applicable to that member. The assumed tax rate (i) for a corporate member will be the highest marginal federal income tax rate applicable to a corporation plus 2.3%, and (ii) for each other member will be an assumed highest marginal blended federal, state and local income tax rate applicable to an individual. Such distributions are permitted under the Indenture.
Tax Distributions otherwise payable to CSX under the above formula may be reduced (to not below zero) in three ways. First, CSX's tax distributions will be reduced by $4.0 million in each of ACL's first five years of operation and by $6 million in each of its following four years of operation (the "Annual Exclusion"). Second, any income allocated by the Parent to CSX in respect of the accruing yield on the Senior Preferred Membership Interests held by CSX will be excluded from the computation of CSX's tax distributions. Third, taxes incurred by CSX attributable to the recognition of Built-In Gain (through asset sales or otherwise) will in some circumstances be excluded from the computation of CSX's tax distributions. For this purpose, "Built-In Gain" means the excess of the fair
market value of the assets originally contributed by CSX to ACL as of the date of the Recapitalization over the tax basis of those assets measured as of the date of contribution. In general, subject to certain exceptions and limitations, upon the recognition of any Built-In Gain by CSX, the Parent may elect to either (i) accelerate the Annual Exclusion to the extent of any resulting tax in inverse chronological order beginning with year nine, (ii) distribute to CSX in the year in which the Built-In Gain is recognized an additional Tax Distribution equal to one-half of the resulting tax to CSX, or (iii) make additional distributions to CSX on its Senior Preferred Membership Interests (in the amount of the resulting Built-In Gain tax) by accelerating prior to year nine the time at which such distributions would otherwise be required to commence under the LLC Agreement.
CSX is also entitled to Tax Distributions in such amount as is required so that CSX's "unreimbursed tax amount" does not exceed $85.0 million. CSX's unreimbursed tax amount is the excess of its taxes at the assumed corporate tax rate on taxable income allocated to CSX by the Parent (excluding allocations in respect of the accruing yield on the Senior Preferred Membership Interests and allocations of Built-In Gain arising by reason of certain extraordinary transactions) over Tax Distributions. In addition, CSX is entitled to Tax Distributions equal to the tax at the assumed corporate tax rate on any Built-In Gain arising from a sale-leaseback transaction. Further, as part of the tax distribution provisions of the LLC Agreement, the Senior Preferred Membership Interests are entitled to distributions beginning at the end of year nine in an amount equal to the product of the assumed corporate tax rate and the Senior Preferred Membership Interest annual accrual, including the full annual accrual for year nine.
In certain circumstances, it is possible that the distributions referred to in the foregoing paragraphs could exceed the combined federal, state, local and foreign income taxes that would be payable with respect to taxable income of ACL for any given period if it were a Delaware corporation filing separate tax returns. Such distributions are permitted under the Indenture.
The Senior Preferred Membership Interests are entitled to distributions beginning in year six equal to the lesser of excess cash flow and an annual limit. The annual limit is $7.5 million in each of years six through ten and $10 million in each of years 11 through 15, increased in any year by the excess, if any, of the annual limit for prior years over the amounts distributed in such prior years as described in this paragraph.
Liquidating distributions will be made among the members pro rata in accordance with capital accounts or a cash waterfall producing identical results.
Parent Registration Rights Agreements
The Parent, CSX Brown Corp. ("CSX Brown"), an affiliate of CSX, and the Investors, entered into a registration rights agreement (the "Parent Registration Rights Agreement"). Under the Parent Registration Rights Agreement, CSX Brown and the Vectura Parties have the right, subject to certain conditions, to require the Parent to register any or all of their common equity interests of the Parent under the U.S. Securities Act of 1933, as amended (the "Securities Act") at the Parent's expense. In addition, all holders of registrable securities are entitled to request the inclusion of any Common Membership Interests of the Parent subject to the Parent Registration Rights Agreement in any registration statement (excluding certain registration statements, including any registration statement in connection with an Initial Public Offering (as defined in the Parent Registration Rights Agreement)) at the Parent's expense whenever the Parent proposes to register any of its Common Membership Interests under the Securities Act. In connection with all such registrations, the Parent has agreed to indemnify all holders of registrable securities against certain liabilities, including liabilities under the Securities Act.
Transition Services Agreement
ACL and CSX entered into a transition services agreement (the "Transition Services Agreement"), pursuant to which CSX provided to ACL certain services that it had previously provided to its predecessor. Such transitional services have been provided since the Recapitalization and have included general accounting, legal and computer systems support, tax planning and benefits administration, as well as various other transitional services.
Other Arrangements
ACL, CSX and Vectura and their respective affiliates have agreed to indemnify each other with respect to liabilities related to their respective businesses pursuant to the Recapitalization.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)Documents filed as part of this report:
(1)Consolidated Financial Statements:
Included in Part II of this report:
Consolidated Statement of Operations, for the years ended December 29, 2000, December 31, 1999 and December 25, 1998.
Consolidated Statement of Cash Flows, for the years ended December 29, 2000, December 31, 1999 and December 25, 1998.
Consolidated Statement of Financial Position as of December 29, 2000 and December 31, 1999.
Consolidated Statement of Member's Deficit/Stockholder's Equity, for the years ended December 29, 2000, December 31, 1999 and December 25, 1998.
Notes to Consolidated Financial Statements, for the years ended December 29, 2000, December 31, 1999 and December 25, 1998.
Report of PricewaterhouseCoopers LLP, Independent Accountants, on the consolidated financial statements of American Commercial Lines LLC at December 29, 2000 and December 31, 1999 and for each of the three fiscal years in the period ended December 29, 2000.
(2)Financial Statement Schedule
Included in Part II of this report:
Schedule II-Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, not significant or not required, or because the required information is included in the financial statement notes thereto.
(3)Exhibits
Exhibit
No.
Description
2.1
Recapitalization Agreement dated as of April 17, 1998 by and among CSX, Vectura, the Parent, ACL and National Marine (incorporated by reference to Exhibit 2.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
3.1
Certificate of Formation of the Parent (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
3.2
Form of Certificate of Formation of ACL and the Subsidiary Guarantors (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
3.3
Form of Limited Liability Company Agreement for the Subsidiary Guarantors (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227) ).
3.4
Amended and Restated Limited Liability Company Agreement of the Parent (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227) ).
3.5
Amended and Restated Limited Liability Company Agreement of ACL (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
3.6
Certificate of Incorporation of ACL Capital (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
3.7
By-laws of ACL Capital (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
4.1
Indenture dated as of June 30, 1998 by and among ACL, ACL Capital and the Subsidiary Guarantors and the United States Trust Company of New York, as trustee (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
4.2
Purchase Agreement dated as of June 23, 1998 among ACL, ACL Capital and the Subsidiary Guarantors, Wasserstein Perella Securities, Inc. and Chase Securities Inc. (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
4.3
Registration Rights Agreement dated as of June 23, 1998 by and among ACL, ACL Capital and the Subsidiary Guarantors, Wasserstein Perella Securities, Inc. and Chase Securities Inc. (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
4.4
Registration Rights Agreement dated as of June 30, 1998 by and among ACL, Vectura, National Marine, CSX Brown, Stuart Agranoff and Steven Anderson and each Person whose name is set forth on Schedule I therein (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
10.1
Credit Agreement dated as of June 30, 1998 among ACL, the Parent, the Lenders (as defined therein) and The Chase Manhattan Bank, as issuing bank, as administrative agent, as security trustee and as collateral agent (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
*10.2
Employment Agreement between ACL and Daniel J. Marquitz dated October 19, 1998 (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227) ).
*10.3
Employment Agreement between CSX and Michael C. Hagan dated February 1, 1995 (incorporated by reference to Exhibit 10.3 of the registrant's 1998 Annual report on Form 10-K dated March 25, 1999 (Registration No. 333-62227) ).
*10.4
Stock Purchase and Loan Plan, as amended (incorporated by reference to Exhibit 10.14 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1999 (File No. 333-28523)).
*10.5
1987 Long-Term Performance Stock Plan, as amended (incorporated by reference to Exhibit 10.15 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1999 (File No. 333-28523)).
*10.6
1985 Deferred Compensation Program for Executives of CSX Corporation and Affiliated Companies, as amended (incorporated by reference to Exhibit 10.16 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1999 (File No. 333-28523)).
*10.7
Supplementary Savings Plan and Incentive Award Deferral Plan for Eligible Executives of CSX Corporation and Affiliated Companies, as amended (incorporated by reference to Exhibit 10.17 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1999 (File No. 333-28523)).
*10.8
Special Retirement Plan of CSX Corporation and Affiliated Companies, as amended (incorporated by reference to Exhibit 10.18 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1999 (File No. 333-28523)).
*10.9
Supplemental Retirement Plan of CSX Corporation and Affiliated Companies, as amended (incorporated herein by reference to Exhibit 10.19 of CSX's 1998 Annual Report on Form 10-K dated March 3, 1998 (File No. 333-28523) ).
*10.10
American Commercial Lines, Inc. Severance Pay Plan (incorporated by reference to Exhibit 2.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227)).
*10.11
American Commercial Barge Line Company Salary Continuation Plan, as amended Plan (incorporated by reference to Exhibit 2.1 of the registrant's Registration Statement on Form S-4, as amended (Registration No. 333-62227) ).
*10.12
Employment Agreement between ACL and David Wagstaff III dated June 25,1999 (incorporated by reference to Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q for the period ending July 2, 1999 dated August 10, 1999 (File No. 333-62227)).
*10.13
Consulting Agreement between ACL and David Wagstaff III dated October 1, 1999.
10.14
Amendment No. 1, Waiver and Agreement to Credit Agreement.
10.15
Amendment and Waiver No. 2 to Credit Agreement.
10.16
Consent and Waiver No. 3 to Credit Agreement.
10.17
Amendment No. 4, Consent and Waiver to Credit Agreement.
10.18
Amendment No. 5, Waiver and Agreement to Credit Agreement.
21.1
Subsidiaries of ACL.
99.1
Risk Factors.
99.2
Report of Arthur Anderson LLP, Independent Public Accountants, on the financial statements of Global Materials Services LLC for the year ended December 31, 1999.
Not filed herewith. In accordance with Rule 12b-32 of the General Rules and Regulations under the Securities and Exchange Act of 1934, reference is made to the document previously filed with the Commission.
*Management Contract or Compensatory Plan or Arrangement.
(b)Reports on Form 8-K: There were no reports on Form 8-K filed for the three months ended December 29, 2000.
(c)Exhibits: See Index to Exhibits
(d)All financial statements and schedules except those items listed under Item 14(a)(1) and (2) above are omitted because they are not applicable, or are not required, or because the required information is included in the financial statements or notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN COMMERCIAL LINES LLC
(Registrant)
By:
/s/ MICHAEL C. HAGAN Michael C. Hagan
President and Chief Executive Officer
March 29, 2001
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 indicated on March 30, 2000.
Name
Title
/s/ MICHAEL C. HAGAN Michael C. Hagan
President, Chief Executive Officer, and Member of Board of Representatives of the Parent (Principal Executive Officer)
/s/ JAMES J. WOLFF James J. Wolff
Senior Vice President-Finance and Administration, Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ DAVID WAGSTAFF III David Wagstaff III
Chairman of Board of Representatives of Parent
/s/ DAVID H. BAGGS David H. Baggs
Member of Board of Representatives of Parent
/s/ ELLEN M. FITZSIMMONS Ellen M. Fitzsimmons
Member of Board of Representatives of Parent
/s/ PAUL R. GOODWIN Paul R. Goodwin
Member of Board of Representatives of Parent
/s/ ERNEST A. HÄBERLI Ernest A. Häberli
Member of Board of Representatives of Parent
/s/ RICHARD L. HUBER Richard L. Huber
Member of Board of Representatives of Parent
/s/ RICHARD E. MAYBERRY, JR. Richard E. Mayberry, Jr.
Member of Board of Representatives of Parent
/s/ JAMES P. PETER James P. Peter
Member of Board of Representatives of Parent
/s/ DAVID F. THOMAS David F. Thomas
Member of Board of Representatives of Parent
INDEX TO EXHIBITS
Exhibit No.
Description
10.14
Amendment No. 1, Waiver and Agreement to Credit Agreement.
10.15
Amendment and Waiver No. 2 to Credit Agreement.
10.16
Consent and Waiver No. 3 to Credit Agreement.
10.17
Amendment No. 4, Consent and Waiver to Credit Agreement.
10.18
Amendment No. 5, Waiver and Agreement to Credit Agreement.
21.1
Subsidiaries of ACL
99.1
Risk Factors
99.2
Report of Arthur Anderson LLP, Independent Public Accounts, on the financial statements of Global Materials Services LLC for the year ended December 31, 1999
PART I
ITEM 1. BUSINESS.
ITEM 2.
ITEM 2. PROPERTIES.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
CONSOLIDATED STATEMENT OF OPERATIONS
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF MEMBERS DEFICIT/SHAREHOLDERS EQUITY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
Schedule II-Valuation and Qualifying Accounts (In Thousands)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
SIGNATURES
INDEX TO EXHIBITS