-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8jrLLhTQ0GVpVhypZENxxzKaAFsSyjkZ6T0iJ/REMu88TShx8Tk7dr24FzqvaFG YuQAFgw+LjdWigYZdoKQMQ== 0000950137-96-001454.txt : 19960816 0000950137-96-001454.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950137-96-001454 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CLASSIC VOYAGES CO CENTRAL INDEX KEY: 0000315136 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 310303330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09264 FILM NUMBER: 96613085 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: 2ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3122581890 MAIL ADDRESS: STREET 1: TWO NORTH RIVERSIDE PLAZA STREET 2: 2ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 FORM 10-Q DATED JUNE 30, 1996 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ___________________________ FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 0-9264 AMERICAN CLASSIC VOYAGES CO. (Exact name of registrant as specified in its charter) DELAWARE 31-0303330 (State or other jurisdiction (I.R.S. Employer identification No.) of incorporation or organization) TWO NORTH RIVERSIDE PLAZA, CHICAGO, IL 60606 (Address of principal executive offices) (Zip Code) (312) 258-1890 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] As of July 31, 1996, there were 13,819,022 shares of Common Stock outstanding. ================================================================================ 2 AMERICAN CLASSIC VOYAGES CO. INDEX ITEM DESCRIPTION PAGE Part I. Financial Information: Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 1996 and 1995..... 3 Condensed Consolidated Balance Sheets at June 30, 1996 and December 31, 1995.................................. 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995................ 5 Notes to Condensed Consolidated Financial Statements... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 9 Part II. Other Information: Item 1. Legal Proceedings...................................... 15 Item 6. Exhibits and Reports on Form 8-K....................... 15
2 3 AMERICAN CLASSIC VOYAGES CO. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, --------------------- ------------------- 1996 1995 1996 1995 ---------- --------- -------- -------- Revenues............................................... $ 49,305 $ 45,731 $ 91,250 $ 89,984 Cost of operations (exclusive of depreciation and amortization shown below)............................ 31,584 36,365 59,973 72,677 -------- -------- -------- -------- Gross profit........................................... 17,721 9,366 31,277 17,307 Selling, general and administrative expenses........... 11,460 13,069 24,962 26,151 Depreciation and amortization expense.................. 3,938 2,489 7,386 4,947 Impairment write-down (Note 4)......................... -- -- 38,390 -- One-time pre-opening costs............................. -- 5,900 -- 5,900 -------- -------- -------- -------- Operating income (loss)................................ 2,323 (12,092) (39,461) (19,691) Interest income........................................ 210 581 451 1,108 Interest expense....................................... 2,204 625 4,329 900 -------- -------- -------- -------- Income (loss) before income taxes and minority interest 329 (12,136) (43,339) (19,483) Income tax benefit..................................... 52 3,520 449 6,100 Minority interest in loss.............................. -- 1,132 -- 1,862 -------- -------- -------- -------- Net income (loss)...................................... $ 381 $ (7,484) $(42,890) $(11,521) ======== ======== ======== ======== Per Share Information: Average common shares outstanding...................... 13,773 13,762 13,771 13,762 ======== ======== ======== ======== Earnings (loss) per share.............................. $ 0.03 $ (0.55) $ (3.11) $ (0.84) ======== ======== ======== ======== Cash dividends declared per share...................... -- $ 0.04 -- $ 0.08 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 3 4 AMERICAN CLASSIC VOYAGES CO. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except shares and par value) (Unaudited) June 30, December 31, 1996 1995 ASSETS ---------- ------------ Cash and cash equivalents.................................................. $ 7,108 $ 6,048 Restricted short-term investments.......................................... 3,003 10,681 Accounts receivable........................................................ 1,562 1,134 Prepaid expenses and other current assets.................................. 7,700 6,612 ---------- ------------ Total current assets................................................... 19,373 24,475 Property and equipment, net................................................ 181,831 211,959 Other assets............................................................... 6,462 6,320 Goodwill, net.............................................................. -- 4,719 ---------- ------------ Total assets........................................................... $207,666 $247,473 ========== ============ LIABILITIES Accounts payable........................................................... 10,501 13,073 Other accrued expenses..................................................... 23,240 27,437 Current portion of long-term debt.......................................... 4,100 3,746 Unearned passenger revenues................................................ 40,310 28,532 ---------- ------------ Total current liabilities............................................. 78,151 72,788 Long-term debt, less current maturities.................................... 100,948 103,272 ---------- ------------ Total liabilities..................................................... 179,099 176,060 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value (5,000,000 shares authorized, none issued and outstanding)......................................................... -- -- Common stock, $.01 par value (20,000,000 shares authorized; 13,776,122 and 13,769,512 shares issued and outstanding, respectively).............. 138 138 Additional paid-in capital................................................. 74,092 74,048 Retained deficit........................................................... (45,663) (2,773) ---------- ------------ Total stockholders' equity............................................ 28,567 71,413 ---------- ------------ $207,666 $247,473 ========== ============
The accompanying notes are an integral part of these consolidated financial statements. 4 5 AMERICAN CLASSIC VOYAGES CO. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
For the Six Months Ended June 30, ------------------------- 1996 1995 ----------- ------------ OPERATING ACTIVITIES: Net loss................................................... $ (42,890) $(11,521) Depreciation and amortization............................ 7,386 4,947 Minority interest........................................ -- (1,862) Impairment write-down (Note 4)........................... 38,390 -- Changes in working capital and other: Working capital changes and other..................... (5,667) (8,409) Unearned passenger revenues........................... 11,778 7,199 ----------- ------------ Net cash provided by (used in) operating activities...... 8,997 (9,646) ----------- ------------ INVESTING ACTIVITIES: Decrease in restricted short-term investments.............. 7,678 57 Capital expenditures....................................... (13,324) (20,546) ----------- ------------ Net cash used in investing activities.................... (5,646) (20,489) ----------- ------------ FINANCING ACTIVITIES: Proceeds from borrowings................................... 6,903 25,000 Repayment of borrowings.................................... (8,873) -- Issuance of common stock................................... 44 22 Dividends.................................................. -- (1,101) Deferred financing fees.................................... (365) (716) ----------- ------------ Net cash (used in) provided by financing activities...... (2,291) 23,205 ----------- ------------ Increase (decrease) in cash and cash equivalents............. 1,060 (6,930) Cash and cash equivalents, beginning of period............... 6,048 12,224 ----------- ------------ Cash and cash equivalents, end of period..................... $ 7,108 $ 5,294 =========== ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (refunded) during the period for: Interest (net of capitalized interest)................... $ 3,838 $ 490 Income taxes............................................. $ 404 $ (252)
The accompanying notes are an integral part of these consolidated financial statements. 5 6 AMERICAN CLASSIC VOYAGES CO. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 (Unaudited) 1. BASIS OF PRESENTATION: These accompanying unaudited Condensed Consolidated Financial Statements ("Financial Statements") have been prepared pursuant to Securities and Exchange Commission ("SEC") rules and regulations and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included on Form 10-K for the year ended December 31, 1995 (the "Annual Report") for American Classic Voyages Co. ("AMCV") and its subsidiaries. These Financial Statements include the accounts of AMCV and its wholly owned subsidiaries, The Delta Queen Steamboat Co. ("DQSC") and Great Hawaiian Cruise Line, Inc. ("GHCL") (collectively with such subsidiaries, the "Company"). The following notes to the Financial Statements highlight significant changes to the notes included in the Annual Report and such interim disclosures as required by the SEC. These Financial Statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. Certain previously reported amounts have been reclassified to conform to the 1996 presentation. 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 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. 2. PROPERTY AND EQUIPMENT: Property and equipment includes the estimated salvage value for the Constitution of $2.5 million. The Constitution will not be returned to service and will remain in wet berth at a shipyard in Portland, Oregon while the Company explores various other options for the vessel (see Note 4 for further information). 3. DEBT:
Long-term debt consisted of (in thousands): June 30, December 31, 1996 1995 -------- ------------ U.S. Government Guaranteed Ship Financing Note, American Queen Series, floating rate notes due semi-annually beginning February 24, 1996 through August 24, 2005......................................... $23,024 $24,236 U.S. Government Guaranteed Ship Financing Bond, American Queen Series, 7.68% fixed rate, sinking fund bonds due semi-annually beginning February 24, 2006 through June 2, 2020............................... 36,353 36,353 U.S. Government Guaranteed Ship Financing Note, Independence Series A, floating rate notes due semi-annually beginning June 7, 1996 through December 7, 2005........................................ 12,553 13,214 U.S. Government Guaranteed Ship Financing Bond, Independence Series A, 6.84% fixed rate sinking fund bonds due semi-annually beginning June 7, 2006 through December 7, 2015................................ 13,215 13,215 U.S. Government Guaranteed Ship Financing Note, Independence Series B, floating rate notes due semi-annually beginning December 7, 1996 through December 7, 2005........................................ 3,363 -- U.S. Government Guaranteed Ship Financing Bond, Independence Series B, 7.46% fixed rate sinking fund bonds due semi-annually beginning June 7, 2006 through December 7, 2015................................ 3,540 -- Revolving credit facility................................. 13,000 20,000 -------- -------- 105,048 107,018 Less current portion...................................... 4,100 3,746 -------- -------- $100,948 $103,272 ======== ========
6 7 On March 28, 1996, a subsidiary of GHCL issued $6.9 million of debt guaranteed by the U.S. Government through the U.S. Department of Transportation, Maritime Administration ("MARAD"). This debt is the second series ("Series B") of the $26.4 million issue that was completed on December 7, 1995 and therefore contains the same covenants and security as the original issue which was guaranteed by GHCL and secured by the first mortgage of the Independence. The Series B debt consists of $3.4 million of notes due December 7, 2005 with a floating interest rate equal to London Interbank Offered Rate ("LIBOR") plus .27% and $3.5 million of 7.46% fixed rate bonds due December 7, 2015. Interest payments on the notes and bonds, as well as principal payments on the notes, are payable semi-annually beginning December 7, 1996. Principal payments on the bonds are payable semi-annually beginning June 7, 2006. In addition, the Series B debt required the subsidiary to increase the six-month debt service deposit to $2.2 million. This deposit will be released when either GHCL or its subsidiary meets certain cash flow and debt-to-equity ratios. The Company used a portion of the proceeds from the Series B financing to fund amounts owed to the Newport News Shipbuilding and Dry Dock Company (the "Shipyard") as part of the litigation settlement as further discussed in Note 6. The remaining proceeds were used, in part, to pay down a portion of amounts outstanding under its revolving credit facility. On April 22, 1996, the Company modified the total borrowing availability under its amended and restated credit agreement with a group of financial institutions with The Chase Manhattan Bank (formerly Chemical Bank), as agent (the "Credit Agreement"). The Credit Agreement provides a revolving credit facility, subject to certain covenants, of up to $25.0 million with a final maturity on March 31, 1999. Borrowings bear interest, at the option of the Company, equal to either (i) the greater of The Chase Manhattan Bank's prime rate or certain alternative base rates plus a margin ranging from 0% to 1.25%, or (ii) LIBOR plus a margin ranging from 1.0% to 2.25%. The Company is also required to pay a commitment fee on the unused portion of the facility at a rate ranging from 0.375% to 0.5% per annum. The Credit Agreement is guaranteed by AMCV and secured by substantially all the assets of DQSC, excluding the American Queen. The Credit Agreement contains various limitations, restrictions and financial covenants which, among other things, requires maintenance of certain financial ratios, restricts additional indebtedness, limits intercompany advances to $20.0 million and limits the payment of dividends from DQSC to AMCV to $2.0 million per annum. The Company has complied with all covenants as of June 30, 1996. 4. IMPAIRMENT WRITE-DOWN: After evaluating the scope and cost of the Constitution reconstruction project as well as considering various alternatives, the Company announced on April 29, 1996 its decision not to renovate or return the Constitution to service. The Constitution was removed from service on June 27, 1995 and is currently in wet berth at a shipyard in Portland, Oregon. In the first quarter of 1996, in connection with the foregoing decision, the Company recognized an impairment write-down of $38.4 million, comprised of (a) $36.1 million directly related to the write-down of the vessel and its allocated goodwill to an estimated salvage value of $2.5 million, and (b) $2.3 million which represented the remaining goodwill balance from the GHCL acquisition. The Company reserved for the estimated costs to be incurred on behalf of the Constitution until its eventual disposition. These costs include insurance, wet berthing fees and general maintenance of the vessel. As of June 30, 1996, after recently performed maintenance work to ensure the integrity and watertightness of the vessel, the balance of this reserve was $4.0 million. The impairment write-down was recognized in accordance with the Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", which the Company adopted effective January 1, 1996. SFAS No. 121 establishes accounting standards for recognizing the impairment of long-lived assets, identifiable intangibles and goodwill, whether to be disposed of or to be held and used. In general, SFAS No. 121 requires recognition of an impairment loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such assets. 7 8 5. STOCK OPTIONS: Activity under the Company's stock option plans from December 31, 1995 through June 30, 1996 was:
Executive Stock Option Plan 1992 Plan Price Per Share -------------- ------------------------ --------------- Shares Shares Shares Subject to Subject to Subject to Options Options SARs -------------- ----------- ----------- Balance at December 31, 1995 323,971 1,179,410 280,000 $3.25 - $20.42 Options granted -- 106,500 -- 9.50 - 11.00 Options canceled -- (335,501) (55,000) 9.50 - 20.42 -------------- ---------- ----------- Balance at June 30, 1996 323,971 950,409 225,000 $3.25 - $20.42 ============== ========== ===========
With respect to SFAS 123, "Accounting for Stock-based Compensation", which became effective January 1, 1996, the Company will continue its current accounting for employee stock-based compensation plans in accordance with Accounting Principles Board Opinion No. 25, as permitted under SFAS 123. In addition, the Company will disclose the pro forma effect of the fair value accounting method in the notes to its annual consolidated financial statements, as required. 6. LITIGATION SETTLEMENT: As discussed in Note 10 to the Consolidated Financial Statements included in the Annual Report, in February 1996, the Company settled its dispute with the Shipyard which arose during the renovation of the Independence. In March 1996, the Company, in accordance with the settlement agreement, paid an additional $8.7 million comprised of (a) the remaining escrow balance of $6.4 million, and (b) $2.3 million upon the closing of the Series B debt as previously discussed in Note 3. 8 9 AMERICAN CLASSIC VOYAGES CO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL American Classic Voyages Co. ("AMCV," or along with its subsidiaries, the "Company"), is a holding company which owns and controls The Delta Queen Steamboat Co. ("DQSC") and Great Hawaiian Cruise Line, Inc. ("GHCL"). The following discusses the Company's consolidated results of operations and financial condition for the second quarter and six month period ended June 30, 1996 versus the comparable periods ended June 30, 1995. This section should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report for the year ended December 31, 1995. The Company, through its various subsidiaries, operates two cruise lines: "Delta Queen", which owns and operates the American Queen, Mississippi Queen and Delta Queen steamboats, and "American Hawaii", which owns and operates the Independence steamship. American Hawaii also owns the Constitution steamship which was removed from service on June 27, 1995. The Constitution will not be returned to service and will remain in wet berth at a shipyard in Portland, Oregon while the Company explores various other options for the vessel. The Company also owns and operates the Maison Dupuy Hotel located in New Orleans. The Company's operations are seasonal. Historically, there is greater passenger interest in the spring and fall months of the year at Delta Queen. Furthermore, the vessels are typically out of service in January of each year, undergoing a lay-up for routine repair and maintenance. American Hawaii experiences greater passenger interest in the spring and summer months of the year. Current interim results of operations include an impairment write-down as discussed in Note 4 of the Condensed Consolidated Financial Statements. In addition, the Delta Queen will be taken out of service for one month beginning in mid-December 1996 to undergo its scheduled U.S. Coast Guard hull inspection while this same procedure for the Independence will occur during its month-long drydocking beginning mid-May 1997. The American Queen, launched in mid-1995, will undergo its first annual lay-up during the month of January 1997. As a result of the factors mentioned above, interim results of operations are not necessarily indicative of results for a full year. RESULTS OF OPERATIONS The following tables set forth various financial results and operating statistics for the three months and six months ended June 30, 1996 and 1995 (in thousands): FINANCIAL DATA
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------- ------------------- 1996 1995 1996 1995 -------- --------- --------- -------- Revenues.................. $49,305 $ 45,731 $ 91,250 $ 89,984 ======== ========= ========= ======== Operating income (loss)... $ 2,323 $(12,092) $(39,461) $(19,691) ======== ========= ========= ======== Net income (loss)......... $ 381 $ (7,484) $(42,890) $(11,521) ======== ========= ========= ========
9 10 OPERATING STATISTICS
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------- ------------------ 1996 1995 1996 1995 --------- -------- -------- -------- Fare revenue per passenger night.......... $ 220 $ 199 $ 213 $ 193 Total revenue per passenger night......... $ 288 $ 275 $ 284 $ 276 Weighted average operating days (1): DELTA QUEEN............................ 91 54 166 91 AMERICAN HAWAII........................ 91 89 182 179 Vessels capacity per day (berths) (2): DELTA QUEEN............................ 1,024 1,024 1,024 1,024 AMERICAN HAWAII........................ 817 1,590 817 1,590 Capacity passenger nights (3)............. 167,531 196,790 318,880 377,238 Passenger nights (4)...................... 164,645 159,162 308,317 311,215 Physical occupancy percentage (berths) (5) 98% 81% 97% 82%
___________________ (1) Weighted average operating days for each cruise line is determined by dividing capacity passenger nights for each cruise line by the cruise line's total vessel capacity per day. (2) Vessel capacity per day represents the number of passengers each cruise line can carry assuming double occupancy for cabins which accommodate two or more passengers. Some cabins on the Independence and the American Queen can accommodate three or four passengers. (3) Capacity passenger nights is determined by multiplying, for the respective period, the actual operating days of each vessel by each vessel's capacity per day. (4) A passenger night represents one passenger spending one night on a vessel; for example, one passenger taking a three-night cruise would generate three passenger nights. (5) Physical occupancy percentage is passenger nights divided by capacity passenger nights. 10 11 QUARTER ENDED JUNE 30, 1996 COMPARED TO QUARTER ENDED JUNE 30, 1995 Consolidated second quarter 1996 revenues of $49.3 million represented a $3.6 million increase from second quarter 1995 revenues of $45.7 million. American Hawaii revenues decreased $4.2 million, reflecting a 47% decrease in capacity as a result of the Constitution's removal from service on June 27, 1995, offset by an increase of 6% in Independence fare revenue per passenger night ("fare per diems"). Due to high water levels on the Ohio River in April and May of 1996, certain cruise itineraries for the American Queen were changed. In an effort to maintain customer goodwill, refunds were issued to passengers electing to cancel their cruise, while vouchers for future complimentary cruises were issued to those remaining on the affected cruises. The net effect on revenue was not material and the Company believes a portion of the forgone revenue will be recovered through business interruption insurance. Despite the high water situation, Delta Queen's revenues increased $7.8 million reflecting the operation of the American Queen for the entire period in 1996 (the American Queen began her first cruise in the prior year on June 27, 1995). Delta Queen's fare per diems decreased by 11% from the prior year period as a result of management's strategy of discounting fares in the first half of 1996 in an effort to maintain historically high occupancy levels and to help shift the booking cycle to its optimal schedule of six to nine months in advance. The consolidated fare per diems for the second quarter of 1996 increased 11% to $220 as the increase in American Hawaii's fare per diems more than offset the decrease in Delta Queen's fare per diems. Consolidated total revenue per passenger night ("total revenue per diems") increased only 5% to $288 for the second quarter of 1996 due to a reduction in the percentage of passengers at both cruise lines electing to purchase air travel through the Company. Consolidated cost of operations decreased to $31.6 million for the second quarter of 1996 from $36.4 million for the same period in 1995. American Hawaii operating costs decreased $10.5 million primarily due to (a) the Constitution's removal from service at the end of the second quarter of 1995, and (b) realization of operating cost savings on the Independence as a result of cost cutting efforts undertaken since the second half of 1995. Delta Queen's operating costs increased $5.7 million which primarily reflected the addition of the American Queen. Consolidated selling, general and administrative expenses ("SG&A") decreased to $11.5 million for the second quarter of 1996 from $13.1 million for the same quarter in 1995. American Hawaii's SG&A decreased $3.0 million primarily due to reduced staff levels and lower marketing expenses prompted by the Constitution's removal from service. Delta Queen's additional capacity resulted in increased marketing, corporate overhead and selling costs. In addition, marketing costs at Delta Queen increased due to the efforts to lengthen the booking cycle. Consolidated depreciation and amortization expense increased to $3.9 million for the second quarter of 1996 from $2.5 million for the same period of 1995 primarily due to the addition of the American Queen. American Hawaii's depreciation remained unchanged as the increased depreciation on the Independence was offset by the suspension of depreciation on the Constitution upon its removal from service in the prior year. The increase in operating income over the prior year was due to the factors mentioned above and the inclusion of $5.9 million in one-time pre-opening costs related to the American Queen for the quarter ended June 30, 1995. Interest expense increased $1.6 million due to a greater outstanding debt balance in 1996 and because the Company capitalized interest in 1995 related to the American Queen construction. The Company's effective tax rate for the second quarter of 1996 represented a benefit for certain state taxes whereas in the same period for 1995, the effective tax rate also included a Federal tax benefit. For the first half of 1996, the Company recognized a valuation allowance for the full amount of the Federal tax benefit. As the minority interest in GHCL was redeemed in December 1995, net income for the quarter ended June 30, 1996 reflects 100% ownership of GHCL by the Company. 11 12 SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995 Consolidated first half 1996 revenues of $91.3 million represented a $1.3 million increase from first half 1995 revenues of $90.0 million. American Hawaii's revenues decreased $12.2 million, or 20%. This decrease was mainly due to a 48% decrease in capacity as a result of the Constitution's removal from service on June 27, 1995, partially offset by improvements on the Independence in fare per diems and occupancy, which increased by 13% and 18%, respectively, compared to 1995. Delta Queen's revenues increased $13.5 million, or 44%, reflecting an 80% increase in passenger nights for the period, offset by a 14% decrease in fare per diems. The decrease in fare per diems as compared to 1995 is attributable to management's strategy of discounting fares in the first half of 1996 in an effort to maintain historically high occupancy levels and to help shift the booking cycle to its optimal schedule of six to nine months in advance. The consolidated fare per diems for the first half of 1996 increased 10% to $213 as the increase in American Hawaii's fare per diems more than offset the decrease in Delta Queen's fare per diems. Consolidated total revenue per diems increased by only 3% to $284 due to a reduction in the percentage of passengers at both cruise lines electing to purchase air travel through the Company. Consolidated cost of operations decreased to $60.0 million for the first half of 1996 from $72.7 million for the first half of 1995. American Hawaii's operating costs decreased $22.9 million primarily due to the Constitution's removal from service and realization of operating cost savings on the Independence as a result of cost cutting efforts undertaken since the second half of 1995. Delta Queen's operating costs increased $10.2 million, or 56%, primarily due to the addition of the American Queen. Consolidated SG&A decreased to $25.0 million for the first half of 1996 from $26.1 million for the same period in 1995. Delta Queen's additional capacity resulted in increased marketing and corporate overhead expenditures but was offset by the reduction in American Hawaii's marketing and corporate overhead expenditures as only one ship was in operation. The $2.4 million increase in depreciation expense was due to the addition of the American Queen while American Hawaii's remained unchanged as the increased depreciation on the Independence was offset by the suspension of depreciation on the Constitution upon its removal from service in the prior year. After evaluating the scope and cost of the Constitution reconstruction project as well as considering various alternatives, the Company announced on April 29, 1996 its decision not to renovate or return the Constitution to service. In connection with this decision, the Company recognized an impairment write-down of $38.4 million in the first quarter of 1996. Excluding this write-down, the consolidated operating loss for the first half of 1996 was $1.1 million as compared to an operating loss, before one-time pre-opening costs of $5.9 million, of $13.8 million in 1995. The $38.4 million impairment write-down was comprised of (a) $36.1 million directly related to the write-down of the vessel and its allocated goodwill to an estimated salvage value of $2.5 million, and (b) $2.3 million which represented the remaining goodwill balance from the American Hawaii acquisition. The Company has reserved for the estimated costs to be incurred on behalf of the Constitution until its eventual disposition. These costs include insurance, wet berthing fees and general maintenance of the vessel. As of June 30, 1996, after recently performed maintenance work to ensure the integrity and watertightness of the vessel, the balance of this reserve was $4.0 million. The impairment write-down was recognized in accordance with the Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", which the Company adopted effective January 1, 1996. Interest expense increased $3.4 million due to a greater outstanding debt balance in 1996 and capitalization of interest costs in 1995 related to the American Queen construction. The Company's effective tax rate for the first half of 1996 represented a benefit for certain state taxes. A valuation allowance was recognized for the full amount of the Federal tax benefit recorded in the first half of 1996 due to the possibility that the deferred tax asset created may not be realized in the future. As the minority interest in GHCL was redeemed in December 1995, the net loss for the first half of 1996 reflects 100% ownership of GHCL by the Company. 12 13 LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION Operating Activities For the six months ended June 30, 1996, cash used in operations before changes in unearned passenger revenues ("Operating Cash Flow") was $2.8 million compared to $16.8 million in the prior year. Operating Cash Flow reflected the improved operating performance of American Hawaii in the first half of 1996, as discussed previously under Results of Operations. Unearned passenger revenues, representing passenger cruise deposits, increased $11.8 million in the first half of 1996 reflecting the seasonal increase in advance reservation levels typically experienced at Delta Queen. Capital Expenditures Capital expenditures of $13.3 million in the first half of 1996 included $10.5 million related to the Independence, of which $8.7 million represented amounts paid to Newport News Shipbuilding and Dry Dock Company (the "Shipyard") in March 1996 as part of the litigation settlement. Other significant capital expenditures included $2.6 million for the Delta Queen and Mississippi Queen lay-ups, including completion of the Mississippi Queen cosmetic renovation. Debt On March 28, 1996, a subsidiary of GHCL issued $6.9 million of debt guaranteed by the U.S. Government through the U.S. Department of Transportation, Maritime Administration ("MARAD"). This debt is the second series ("Series B") of the $26.4 million issue that was completed on December 7, 1995 and therefore contains the same covenants and security as the original issue which was guaranteed by GHCL and secured by the first mortgage of the Independence. The Series B debt consists of $3.4 million of notes due December 7, 2005 with a floating interest rate equal to London Interbank Offered Rate ("LIBOR") plus .27% and $3.5 million of 7.46% fixed rate bonds due December 7, 2015. Interest payments on the notes and bonds, as well as principal payments on the notes are payable semi-annually beginning December 7, 1996. Principal payments on the bonds are payable semi-annually beginning June 7, 2006. In addition, the Series B debt required the subsidiary to increase the six-month debt service deposit to $2.2 million. This deposit will be released when either GHCL or its subsidiary meets certain cash flow and debt-to-equity ratios. The Company used a portion of the proceeds from the Series B financing to fund amounts owed to the Shipyard as part of the litigation settlement as discussed above. The remaining proceeds were used, in part, to pay down amounts outstanding under its revolving credit facility. On April 22, 1996, the Company modified the total borrowing availability under its amended and restated credit agreement with a group of financial institutions with The Chase Manhattan Bank (formerly Chemical Bank), as agent (the "Credit Agreement"). The Credit Agreement provides a revolving credit facility, subject to certain covenants, of up to $25.0 million with a final maturity on March 31, 1999. Borrowings bear interest, at the option of the Company, equal to either (i) the greater of The Chase Manhattan Bank's prime rate or certain alternative base rates plus a margin ranging from 0% to 1.25%, or (ii) LIBOR plus a margin ranging from 1.0% to 2.25%. The Company is also required to pay a commitment fee on the unused portion of the facility at a rate ranging from 0.375% to 0.5% per annum. The Credit Agreement is guaranteed by AMCV and secured by substantially all the assets of DQSC, excluding the American Queen. The Credit Agreement contains various limitations, restrictions and financial covenants which, among other things, requires maintenance of certain financial ratios, restricts additional indebtedness, limits intercompany advances to $20.0 million and limits the payment of dividends from DQSC to AMCV to $2.0 million per annum. The Company has complied with all covenants as of June 30, 1996. The Company believes it will have adequate access to capital resources, both internally and externally, to meet its short-term and long-term capital commitments. Such resources may include cash on hand, the ability to secure additional financing through the capital markets or the sale of certain non-strategic assets. The Company has no immediate plans to increase capacity at either of its two cruise lines. However, the Company continually evaluates opportunities to increase capacity, particularly with regard to the American Hawaii business. If it would elect to increase capacity, the Company may seek to secure additional financing. Notwithstanding, there can be no assurances that the Company will choose to increase capacity or, if it elects to do so, that it will obtain additional financing. 13 14 Dividends In the second half of 1995, the Company's board of directors elected not to declare a dividend and determined that any future dividend declarations will be based on the Company's operating performance and its planned capital needs. Other In March 1996, as part of the litigation settlement, the remaining balance of $6.4 million maintained in an escrow account was released to the Shipyard. In addition, during the first half of 1996, $1.8 million was released to the Company from the escrow account maintained for remaining American Queen construction costs. The Federal Maritime Commission ("FMC") regulates passenger vessels with 50 or more berths departing from U.S. ports and requires that such operators post security with the FMC to be used in the event the operator fails to provide cruise services or otherwise satisfy certain financial standards. The Company has been approved as a self-insurer by the FMC, and therefore is not required to post security for passenger cruise deposits. In light of a recent bankruptcy of a cruise operator, the FMC has reviewed its financial safeguards for passenger cruise deposits, and in June 1996, the FMC issued its proposed regulations to increase the financial responsibility requirements on cruise operators. If implemented, these proposed regulations would, among other things, require operators qualifying as a self-insurer, such as the Company, to satisfy a working capital test, in addition to the existing net worth test, and to provide third-party coverage for 25% of its unearned passenger revenue in the form of a surety bond or similar instrument. The FMC has asked that operators submit comments to the proposals. The Company will file its objections to the proposals as it believes that the FMC's current standards provide passengers with adequate protection in the event of an operator's non-performance, and that further requirements would impose an undue burden on operators. If the FMC implements the proposed changes, they will be phased in over time. The Company cannot at this time predict if the proposed changes will be approved as currently constituted, or at all. If they are implemented, it will require that the Company establish a bond to cover a portion of its passenger deposits and payments at some future date. Factors Concerning Forward-Looking Statements Certain statements in "Management's Discussion and Analysis of Financial Condition and Results of Operations" constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the Reform Act). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which may impact passenger yields and occupancy; weather patterns affecting either the inland waterways in the Continental U.S. or the Hawaiian Islands; unscheduled repairs and drydocking of the Company's vessels; the impact of changes in laws and implementation of government regulations, such as those proposed by the FMC; the recognition of a valuation allowance for Federal taxes; the increase in capacity at American Hawaii; and the ability to obtain additional financing or sell non-strategic assets. 14 15 AMERICAN CLASSIC VOYAGES CO. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings As discussed in Note 10 to the Consolidated Financial Statements included in the Annual Report, in February 1996, the Company settled its dispute with the Shipyard which arose during the renovation of the Independence. In March 1996, the Company, in accordance with the settlement agreement, paid an additional $8.7 million comprised of (a) the remaining escrow balance of $6.4 million, and (b) $2.3 million upon the closing of the Series B debt as previously discussed in Note 3 of the Condensed Consolidated Financial Statements. There are no other material legal proceedings, to which the Company is a party or of which any of its property is the subject, other than ordinary routine litigation and claims incidental to the business. The Company believes it maintains adequate insurance coverage and reserves for such claims. ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits: 4.(ii)(a)(26) Acknowledgment of Trust Indenture dated as of April 22, 1996 entered into by and among Great River Cruise Line, Inc. and Chemical Bank as Agent for the Lenders. 4.(ii)(a)(27) Acknowledgment of Trust Indenture dated as of April 22, 1996 entered into by and among Great Ocean Cruise Line, Inc. and Chemical Bank as Agent for the Lenders. 4.(ii)(d)(19) Amendment No. 1 to Title XI Reserve Fund and Financial Agreement between Great AQ Steamboat Co. and the United States of America effective as of January 1, 1996. 27. Financial data schedule. b) Reports on Form 8-K: Form 8-K dated April 29, 1996 announcing the decision not to renovate or return to service American Hawaii Cruises' steamship, the Constitution. 15 16 SIGNATURES Pursuant to the requirements 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 CLASSIC VOYAGES CO. By: /s/ Philip C. Calian ------------------------ Philip C. Calian Chief Executive Officer By: /s/ Kathryn F. Gray ------------------------ Kathryn F. Gray Controller and Treasurer Dated: August 13, 1996 ------------------- 16 EX-4.(II)(A)(26) 2 ACKNOWLEDGMENT OF TRUST INDENTURE 1 EXHIBIT 4.(ii)(a)(26) ACKNOWLEDGMENT OF TRUST INDENTURE This ACKNOWLEDGMENT OF TRUST INDENTURE (this "Acknowledgment") dated as of the 22nd day of April, 1996 is entered into by and among GREAT RIVER CRUISE LINE, INC., a Delaware corporation ("Mortgagor"), CHEMICAL BANK, a New York banking corporation, as agent (in such capacity, the "Agent") for itself and the Lenders (as referred to and as defined in the "Credit Agreement" described below), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES of the Credit Agreement described below, each other financial institution which from time to becomes a party thereto in accordance with the provisions thereof (together with their respective successors and assigns individually, a "Lender" and, collectively, the "Lenders") (the "Lenders" and the "Mortgagor" being sometimes referred to individually as a "Settlor" and collectively "Settlors"), the FINANCIAL INSTITUTIONS LISTED AS EXITING LENDERS ON THE SIGNATURE PAGES of this Acknowledgment (the "Exiting Lenders"), and Chemical Bank, not in its individual capacity but as trustee under that certain Trust Indenture (in such capacity, the "Trustee") dated as of August 3, 1993 by and among the parties hereto (the "Original Trust Indenture", and together with any amendments, modifications, or acknowledgments thereto, the "Trust Indenture"). WHEREAS, the parties hereto have previously entered into the Original Trust Indenture whereunder the Trustee agreed on behalf of the Settlors to hold that certain Preferred Ship Mortgage dated as of August 3, 1993, by Mortgagor in favor of Trustee (the "Original Mortgage", and as amended, restated, supplemented, or otherwise modified from time to time, the "Mortgage"), which Original Mortgage was recorded with the 8th Coast Guard District in PM Book 245, Instrument 65, and which Original Mortgage affected 100% of the interest of Mortgagor in the vessel "Delta Queen", Official No. 225875, as amended by that certain Amendment to Preferred Ship Mortgage dated as of March 31, 1995 ("First Amendment") which Amendment was recorded with the 8th Coast Guard District in PM Book 9504, Instrument 227 and as amended by that certain Second Amendment to Preferred Ship Mortgage dated as of August 31, 1995 ("Second Amendment") which Second Amendment was recorded with the National Vessel Documentation Center in Book 9603, Page/Instrument 673; 2 WHEREAS, Mortgagor has amended the Mortgage pursuant to a Third Amendment to Preferred Ship Mortgage ("Third Amendment") of even date herewith by and between Mortgagor and Trustee to reflect a decrease in the credit facility arising under the Third Amended and Restated Credit Agreement dated of even date herewith by and among The Delta Queen Steamboat Co. (formerly known as DQSC-2, Inc., "DQSC"), American Classic Voyages Co. (formerly known as The Delta Queen Steamboat Co., "ACVC"), Agent and Lenders (the "Credit Agreement"); and WHEREAS, pursuant to the Credit Agreement, the Exiting Lenders, which were certain of the "Lenders" under and as defined in that certain Second Amended and Restated Credit Agreement dated as of August 31, 1995 by and among DQSC, ACVC, Agent, and the "Lenders" thereunder, shall not participate in the credit facilities anticipated to be provided pursuant to the Credit Agreement, and hereafter shall thus cease to be Settlors under and with respect to the Trust Indenture. NOW THEREFORE, the parties hereto agree and acknowledge that the "Mortgage" subject to the Original Trust Indenture was intended to include, does now and will hereafter include, in addition to the Original Mortgage, any amendments, acknowledgments and supplements to the Original Mortgage, including the Third Amendment. IN ADDITION, (a) each of the Exiting Lenders hereby conveys and assigns, without recourse, any and all rights and interests, including, without limitation, any reversionary interests, such Exiting Lenders hold under the Trust Indenture, to each of the Lenders on pro-rata basis based upon their respective "Commitments" under and as defined in the Credit Agreement. (b) the parties hereto agree and acknowledge that, pursuant to the Credit Agreement, (i) each of the Exiting Lenders shall hereafter cease to be Settlors under the Trust Indenture, (ii) any and all references to "Lenders" or "Settlors" in the Trust Indenture shall hereafter be deemed to exclude the Exiting Lenders, and (iii) the Exiting Lenders shall hereafter, for all purposes, cease to be parties to the Trust Indenture and shall have no rights, duties, or interests thereunder. ****Intentionally Left Blank**** 3 All of the terms and provisions of the Original Trust Indenture, except as may be affected hereby, shall remain in full force and effect. TRUSTEE: CHEMICAL BANK as Trustee under the Trust Indenture By: /s/ Lisa D. Benitez ------------------------------- Name: Lisa D. Benitez ----------------------------- Title: Vice President ---------------------------- SETTLORS: CHEMICAL BANK as Agent and as a Lender By: /s/ Lisa D. Benitez ------------------------------- Name: Lisa D. Benitez ----------------------------- Title: Vice President ---------------------------- HIBERNIA NATIONAL BANK By: /s/ Lizette M. Terral ------------------------------- Name: Lizette M. Terral ----------------------------- Title: Vice President ---------------------------- DEPOSIT GUARANTY NATIONAL BANK By: /s/ Gregory A. Moore ------------------------------- Name: Gregory A. Moore ----------------------------- Title: Vice President ---------------------------- 4 GREAT RIVER CRUISE LINE, INC. By: /s/ Jordan B. Allen ------------------------------- Name: Jordan B. Allen ----------------------------- Title: Vice President ---------------------------- EXITING LENDERS: THE FIRST NATIONAL BANK OF BOSTON By: /s/ Brian F.X. Geraghty ------------------------------- Name: Brian F.X. Geraghty ----------------------------- Title: Vice President ---------------------------- THE BANK OF NEW YORK By: /s/ John C. Lambert ------------------------------- Name: John C. Lambert ----------------------------- Title: Vice President ---------------------------- CAISSE NATIONALE DE CREDIT AGRICOLE By: /s/ David Bouhl, F.V.P. ------------------------------- Name: David Bouhl, F.V.P. ----------------------------- Title: Head of Corporate ---------------------------- Banking Chicago ---------------------------- PNC BANK, NATIONAL ASSOCIATION By: /s/ Kenneth Sweder ------------------------------- Name: Kenneth Sweder ----------------------------- Title: Asst. Vice President ---------------------------- EX-4.(II)(A)(27) 3 ACKNOWLEDGMENT OF TRUST INDENTURE 1 EXHIBIT 4.(ii)(a)(27) The Mississippi Queen ACKNOWLEDGMENT OF TRUST INDENTURE This ACKNOWLEDGMENT OF TRUST INDENTURE (this "Acknowledgment") dated as of the 22nd day of April, 1996 is entered into by and among GREAT OCEAN CRUISE LINE, INC., a Delaware corporation ("Mortgagor"), CHEMICAL BANK, a New York banking corporation, as agent (in such capacity, the "Agent") for itself and the Lenders (as referred to and as defined in the "Credit Agreement" described below), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES of the Credit Agreement described below, each other financial institution which from time to becomes a party thereto in accordance with the provisions thereof (together with their respective successors and assigns individually, a "Lender" and, collectively, the "Lenders") (the "Lenders" and the "Mortgagor" being sometimes referred to individually as a "Settlor" and collectively "Settlors"), the FINANCIAL INSTITUTIONS LISTED AS EXITING LENDERS ON THE SIGNATURE PAGES of this Acknowledgment (the "Exiting Lenders"), and Chemical Bank, not in its individual capacity but as trustee under that certain Trust Indenture (in such capacity, the "Trustee") dated as of August 3, 1993 by and among the parties hereto (the "Original Trust Indenture", and together with any amendments, modifications, or acknowledgments thereto, the "Trust Indenture"). WHEREAS, the parties hereto have previously entered into the Original Trust Indenture whereunder the Trustee agreed on behalf of the Settlors to hold that certain Preferred Ship Mortgage dated as of August 3, 1993, by Mortgagor in favor of Trustee (the "Original Mortgage", and as amended, restated, supplemented, or otherwise modified from time to time, the "Mortgage"), which Original Mortgage was recorded with the 8th Coast Guard District in PM Book 245, Instrument 64, and which Original Mortgage affected 100% of the interest of Mortgagor in the vessel "Mississippi Queen", Official No. 574200, as amended by that certain Amendment to Preferred Ship Mortgage dated as of March 31, 1995 ("First Amendment") which Amendment was recorded with the 8th Coast Guard District in PM Book 9504, Instrument 226 and as amended by that certain Second Amendment to Preferred Ship Mortgage dated as of August 31, 1995 ("Second Amendment") which Second Amendment was recorded with the National Vessel Documentation Center in Book 9605, Page/Instrument 659; 2 WHEREAS, Mortgagor has amended the Mortgage pursuant to a Third Amendment to Preferred Ship Mortgage ("Third Amendment") of even date herewith by and between Mortgagor and Trustee to reflect a decrease in the credit facility arising under the Third Amended and Restated Credit Agreement dated of even date herewith by and among The Delta Queen Steamboat Co. (formerly known as DQSC-2, Inc., "DQSC"), American Classic Voyages Co. (formerly known as The Delta Queen Steamboat Co., "ACVC"), Agent and Lenders (the "Credit Agreement"); and WHEREAS, pursuant to the Credit Agreement, the Exiting Lenders, which were certain of the "Lenders" under and as defined in that certain Second Amended and Restated Credit Agreement dated as of August 31, 1995 by and among DQSC, ACVC, Agent, and the "Lenders" thereunder, shall not participate in the credit facilities anticipated to be provided pursuant to the Credit Agreement, and hereafter shall thus cease to be Settlors under and with respect to the Trust Indenture. NOW THEREFORE, the parties hereto agree and acknowledge that the "Mortgage" subject to the Original Trust Indenture was intended to include, does now and will hereafter include, in addition to the Original Mortgage, any amendments, acknowledgments and supplements to the Original Mortgage, including the Third Amendment. IN ADDITION, (a) each of the Exiting Lenders hereby conveys and assigns, without recourse, any and all rights and interests, including, without limitation, any reversionary interests, such Exiting Lenders hold under the Trust Indenture, to each of the Lenders on pro-rata basis based upon their respective "Commitments" under and as defined in the Credit Agreement. (b) the parties hereto agree and acknowledge that, pursuant to the Credit Agreement, (i) each of the Exiting Lenders shall hereafter cease to be Settlors under the Trust Indenture, (ii) any and all references to "Lenders" or "Settlors" in the Trust Indenture shall hereafter be deemed to exclude the Exiting Lenders, and (iii) the Exiting Lenders shall hereafter, for all purposes, cease to be parties to the Trust Indenture and shall have no rights, duties, or interests thereunder. ****Intentionally Left Blank**** 3 All of the terms and provisions of the Original Trust Indenture, except as may be affected hereby, shall remain in full force and effect. TRUSTEE: CHEMICAL BANK as Trustee under the Trust Indenture By: /s/ Lisa D. Benitez ------------------------------- Name: Lisa D. Benitez ----------------------------- Title: Vice President ---------------------------- SETTLORS: CHEMICAL BANK as Agent and as a Lender By: /s/ Lisa D. Benitez ------------------------------- Name: Lisa D. Benitez ----------------------------- Title: Vice President ---------------------------- HIBERNIA NATIONAL BANK By: /s/ Lizette M. Terral ------------------------------- Name: Lizette M. Terral ----------------------------- Title: Vice President ---------------------------- DEPOSIT GUARANTY NATIONAL BANK By: /s/ Gregory A. Moore ------------------------------- Name: Gregory A. Moore ----------------------------- Title: Vice President ---------------------------- 4 GREAT OCEAN CRUISE LINE, INC. By: /s/ Jordan B. Allen ------------------------------- Name: Jordan B. Allen ----------------------------- Title: Vice President ---------------------------- EXITING LENDERS: THE FIRST NATIONAL BANK OF BOSTON By: /s/ Brian F.X. Geraghty ------------------------------- Name: Brian F.X. Geraghty ----------------------------- Title: Vice President ---------------------------- THE BANK OF NEW YORK By: /s/ John C. Lambert ------------------------------- Name: John C. Lambert ----------------------------- Title: Vice President ---------------------------- CAISSE NATIONALE DE CREDIT AGRICOLE By: /s/ David Bouhl, F.V.P. ------------------------------- Name: David Bouhl, F.V.P. ----------------------------- Title: Head of Corporate ---------------------------- Banking Chicago ---------------------------- PNC BANK, NATIONAL ASSOCIATION By: /s/ Kenneth Sweder ------------------------------- Name: Kenneth Sweder ----------------------------- Title: Asst. Vice President ---------------------------- EX-4.(II)(D)(19) 4 AMENDMENT #1 TO TITLE XI RESERVED FUND 1 EXHIBIT 4.(ii)(d)(19) Contract No. MA-13050 AMENDMENT NUMBER I TO TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT This Amendment Number 1 to Title XI Reserve Fund and Financial Agreement effective as of January 1, 1996 (this "Amendment"), between Great AQ Steamboat Co. (the "Company") and the United States of America, represented by the Secretary of Transportation, acting by and through the Maritime Administrator (the "Secretary"). Recitals: A. On August 24, 1995, the Company and the Secretary entered into a Title XI Reserve Fund and Financial Agreement, Contract No. MA-13050; B. The Delta Queen Steamboat Company ("DQSC"), parent organization of the Company, requested that the Secretary consent to the merger of Creative Endeavors, Inc. ("CEI") with and into the Company, effective as of January 1, 1996, at 12:01 a.m. (the "Merger"); C. On December 29, 1995, the Secretary consented to the Merger, subject to the following conditions: (1) the Company and the Secretary enter into this Amendment, (2) the Company and DQSC amend their tax sharing agreement (the "Tax Agreement") to provide that the Company will receive credits against future tax payments owed under the Tax Agreement to the extent that the Company loses any tax benefits as a result of the Merger or the related distributions and (3) the Company and American Classic Voyages Co. ("AMCV") enter into an agreement that provides that AMCV shall reimburse the Company for any loss or adverse financial effect caused by the Merger, the distribution of any of the CEI Assets (as defined in Section 2 below) or the application of any of the Company's tax rights to shelter the income of CEI (the "Reimbursement Agreement"). D. In consideration of the continuing Guarantees by the Secretary, the benefits to the Company in connection with the Merger and for other valuable consideration, the Company has agreed to enter into this Amendment Number I to Title XI Reserve Fund and Financial Agreement. NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt of which is hereby acknowledged, the Company and the Secretary are hereby entering into this amendment, subject to the terms and conditions herein set forth. 2 1. Notwithstanding any provision to the contrary contained in the Title XI Reserve Fund and Financial Agreement, including Sections 13 (c)(6) and (7) of Exhibit 1 thereto, said agreement is hereby amended in order to provide for and permit the Merger and the distribution of the CEI Assets, including all proceeds from any sale thereof, whether by dividend, distribution, advance or otherwise. 2. The Secretary hereby waives those provisions of the Title XI Reserve Fund and Financial Agreement that govern, limit and/or restrict distributions to the extent the provisions relate to the CEI assets, as defined below, and permits the Company to distribute, whether by dividend, distribution, advance or otherwise, all properties or assets owned by CEI immediately prior to the Merger and all cash derived from the operations of CEI's properties or assets (the "CEI Assets"), including all proceeds from any sale thereof, so long as (i) the aggregate net sale proceeds of the CEI Assets exceed the liabilities of CEI existing immediately prior to the Merger (the "CEI Liabilities"), (ii) the merged company pays or satisfies all of the CEI Liabilities from the proceeds of the CEI Assets prior to making any other use of the sales proceeds of the CEI Assets, (iii) the Company incurs no adverse financial effect from the Merger. 3. The Secretary hereby agrees that the financial effect of the Merger and any sales or distribution of the CEI Assets are not subject to the depository and reporting requirements of the Title XI Reserve Fund and Financial Agreement, except to the extent that the Secretary may request information for the purpose of enforcing or reviewing the provisions of this Amendment, the Title XI Reserve Fund and Financial Agreement, the Tax Agreement or the Reimbursement Agreement. 4. The Company hereby certifies and agrees that, upon the Merger, the Company shall certify to the Secretary that (i) the aggregate net sale proceeds of the CEI Assets exceed the CEI Liabilities, (ii) the merged company has paid or satisfied all of the CEI Liabilities from the proceeds of the CEI Assets prior to making any other use of the sales proceeds of the CEI Assets and (iii) the Company has incurred no adverse financial effect from the Merger. 5. In the event of any inconsistency between this Amendment, the Title XI Reserve Fund and Financial Agreement as originally executed or with Exhibit I thereto, this Amendment shall control. This Amendment may be executed in any number of counterparts. All such counterparts shall be deemed to be originals and shall together constitute but one and the same instrument. - 2 - 3 IN WITNESS WHEREOF, this Amendment Number I to Title XI Reserve Fund and Financial Agreement has been executed by the parties hereto as of the day and year first above written. GREAT AQ STEAMBOAT CO. By: /s/ Jordan B. Allen -------------------------------- Vice President -------------------------------- Attest: /s/ Robin Mariella ------------------------ Title: Assistant Secretary ------------------------- UNITED STATES OF AMERICA SECRETARY OF TRANSPORTATION By: MARITIME ADMINISTRATOR By: /s/ Joel C. Richard -------------------------------- Secretary Maritime Administration -------------------------------- Attest: /s/ Patricia C. Byrne ------------------------- Title: Assistant Secretary Maritime Administration ------------------------- EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 10,111 0 1,562 0 0 19,373 225,145 43,314 207,666 78,151 100,948 138 0 0 28,567 207,666 0 91,250 0 59,973 38,390 0 4,329 (43,339) (449) (42,890) 0 0 0 (42,890) (3.11) (3.11) Includes restricted short-term investments of $3,003.
EX-99 6 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 April 29, 1996 ---------------- (Date of Report) AMERICAN CLASSIC VOYAGES CO. (Exact name of Registrant as specified in its charter) Delaware --------------------------- (State or other jurisdiction) 0-9264 31-0303330 -------------------------- ------------------------------------ (Commission file number) (IRS employer identification number) Two North Riverside Plaza, Chicago, IL 60606 ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) (312) 258-1890 -------------------------------------------------- (Registrant's telephone number, include area code) 2 ITEM 5--OTHER EVENTS American Classic Voyages Co. (the "Company"), which owns and operates two cruise lines, American Hawaii Cruises and The Delta Queen Steamboat Co., announced on April 29, 1996 its decision not to renovate or return to service American Hawaii Cruises' steamship, the Constitution. The Constitution was removed from service on June 27, 1995 and is currently in wet berth in Portland, Oregon. In connection with the foregoing decision, in the first quarter of 1996, the Company recognized an impairment write-down of $38.4 million which includes a reduction in the book value of the vessel and a write-off of the remaining goodwill related to the acquisition of American Hawaii Cruises. In addition, the Company established a reserve for future storage and maintenance costs for the Constitution as it explores various other options for the vessel. The impairment write-down was recognized in accordance with the Statement of Financial Accounting Standards ("SFAS"), No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", which the Company adopted effective January 1, 1996. SFAS No. 121 establishes accounting standards for recognizing the impairment of long-lived assets, identifiable intangibles and goodwill, whether to be disposed of or to be held and used. In general, SFAS No. 121 requires recognition of an impairment loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such assets. -2- 3 SIGNATURES Pursuant to the requirements 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 CLASSIC VOYAGES CO. By: /s/ Kathryn F. Gray --------------------------------------- Kathryn F. Gray Controller and Chief Accounting Officer Dated: May 7, 1996 -3- -----END PRIVACY-ENHANCED MESSAGE-----