-----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, Ott5d0n5g0pRqtoHdUeMyKGyHPCzcbNHjln9nPj3jjmrxLJp1O59VekrthhT9UW+ 1Hhy16n4ADK5IXD7vY+bQw== 0000950114-98-000159.txt : 19980330 0000950114-98-000159.hdr.sgml : 19980330 ACCESSION NUMBER: 0000950114-98-000159 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTRAV INC CENTRAL INDEX KEY: 0000942317 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 431323155 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-25990 FILM NUMBER: 98575734 BUSINESS ADDRESS: STREET 1: 7711 BONHOMME AVE CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3147270500 MAIL ADDRESS: STREET 1: 7711 BONHOMME AVE CITY: ST LOUIS STATE: MO ZIP: 63105-1961 10-K405 1 FORM 10-K OF INTRAV, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-25990 INTRAV, INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1323155 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7711 BONHOMME, ST. LOUIS, MISSOURI 63105 (Address of principal executive offices) (314) 727-0500 Registrant's telephone number, including area code SECURITIES REGISTERED PURSUANT OF SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Title of each class -------------------- COMMON STOCK, PAR VALUE $.01 PER SHARE 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 and Exchange Act of 1934 during the preceding 12 months (or for 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non affiliates of the registrant as of February 28, 1998 was approximately $16.6 million. The amount shown is based on the closing price of $14.125 per share of Common Stock on the NASDAQ Stock Market on February 28, 1998. As of February 28, 1998, there were 5,100,850 shares of the registrants Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts I, II and IV of this Form 10-K incorporate by reference certain information from the registrant's 1997 Annual Report to Shareholders. Part III of this Form 10-K incorporates by reference certain information from the registrant's Proxy Statement for its Annual Meeting of Shareholders to be held on May 21, 1998. 2 PART I Item 1. BUSINESS INTRAV, Inc. ("INTRAV") is a leading designer, organizer, marketer and operator of deluxe, escorted, international and domestic travel programs and cruises. Its programs and cruises are designed to attract affluent, well-educated individuals desiring first-class travel and cruise experiences. In 1997, INTRAV offered and operated 82 travel programs with 305 departures, generating an average revenue of $4,879 per person. These programs included cruises aboard its subsidiary Clipper Cruise Line's 100-passenger M/V Nantucket Clipper and 138-passenger M/V Yorktown Clipper ranging from $1,200 for a 5-day cruise in Northern California to $5,380 for a 14-day cruise in British Columbia and Alaska. Also included were INTRAV's Around the World by Private Concorde which sold for $55,800 per person, as well as other land and cruise programs to Europe, Asia, Africa, Australia, Antarctica, the Caribbean and South America. Since 1959, over 400,000 travelers have participated in INTRAV's worldwide travel programs. The tour and cruise industry in the U.S. comprises wholesale tour operators and cruise operators which package tours and cruises using retail travel agency outlets as their primary distribution system. INTRAV, however, has historically functioned as a designer, packager and retailer of its own products, marketing to "affinity groups" in the educational, cultural and professional market, i.e., university alumni associations, museums, medical associations, etc., through the use of direct mail. The increased costs of postage, paper and printing, and the deteriorating direct-mail conversions of promotions sponsored by affinity groups warranted an adjustment in INTRAV's marketing strategy to include distribution through retail travel agents. With the acquisition of Clipper Cruise Line, Inc., and related companies on December 31, 1996, INTRAV was able to utilize Clipper's established travel agent relationships to market to the general public, without losing its established position in the affinity group market. COMPANY BACKGROUND Throughout its history, INTRAV has been a leader in creating unique tours for travelers. From inception until 1967, INTRAV operated a regional group tour business. INTRAV was a pioneer in the field of comprehensive international air charter leisure holidays, launching a back-to-back (multiple charters of the same tour) charter series of nine Boeing 707 flights to Tokyo and Hong Kong in 1967. After the successful operation to the Orient, INTRAV expanded the concept of back-to-back air charter operations to South America, Africa, the South Pacific, Scandinavia and Europe. In 1971, INTRAV introduced its "air/sea cruise" travel concept. All-inclusive travel package tours were developed, offering a combination of round-trip charter flights plus a two-week cruise in the Mediterranean Sea. In 1977, INTRAV again expanded the concept of back-to-back charter operations when it operated a series of five Boeing 707 back-to-back charter flights around the world. With deregulation of the airline industry in the late 1970s, INTRAV converted all of its travel programs to scheduled air carriers utilizing its strength in itinerary planning, customer base, strong financial condition and high service reputation. INTRAV also adopted and further developed the "river cruise" concept. These programs include cruising on the inland waterways of Europe, Russia and China, including the Danube River/Black Sea Cruise which it has offered since 1979. In 1987, INTRAV developed the first "Around the World by Supersonic Concorde" travel program. For this program, customers are flown on a chartered supersonic Concorde jet to various attractive locations while circumnavigating the globe. Since 1987, INTRAV has operated 22 of these tours, and is again offering two departures of this travel opportunity in 1998. On December 31, 1996, INTRAV acquired Clipper Cruise Line, Inc. ("Clipper," which term also includes the INTRAV subsidiaries Clipper Adventure Cruises, Inc., Republic Cruise Line, Inc., Liberty Cruise Line, Inc., and the recently organized Clipper Adventurer Ltd.), which is a leading designer, organizer, marketer and operator of deluxe escorted domestic and international small-ship cruises and tours. Clipper's programs currently are operated aboard two ships, the Yorktown Clipper and the Nantucket Clipper, and a third ship, the 122-passenger Clipper Adventurer, is scheduled to begin service in April 1998. All three ships are owned by INTRAV through certain of its Clipper subsidiaries. 3 BUSINESS STRATEGY The Company operates its business as follows: SOURCING OF CUSTOMERS. a) Affinity Groups INTRAV's sales force operates in the U.S. and Canada soliciting sponsorship of INTRAV tours and cruises by affinity groups in the educational, cultural and professional market. Working closely with administrative staff at such organizations, a direct-mail campaign is designed after the demographic makeup of the membership list is analyzed in an effort to ensure compatibility with the tour and cruise programs offered. A targeted prospect base is thus established and promotional brochure quantities fixed. b) Travel Agents INTRAV's sales force also solicits travel agents in the U.S. and Canada on a targeted basis, contacting those agents that are deemed to have clients that are likely to purchase INTRAV tours and cruises. Direct mail plays an important role in joint promotional mailings to the travel agents' client lists. c) Direct-Mail Advertising INTRAV also uses its internal database of past and prospective travelers to reach potential new customers. INTRAV maintains detailed traveler information in its proprietary database, WISDM, a customized software application designed to facilitate targeted marketing, customer service, program design and profitability analysis. Data on every customer traveling with INTRAV is maintained within the database. In addition, with a client association's permission, the Company contacts past travelers through its marketing services department to secure referrals of individuals who may also be interested in traveling on deluxe international travel programs. This referral system results in a high-quality mailing list of potential new customers to which the Company markets its travel programs. d) Public Relations As INTRAV began to establish a presence in the general marketplace, a vigorous public relations effort, largely based on Clipper's existing strategy, has been and continues to be made to publicize the company's tour and cruise offerings in the consumer and trade press. It is estimated that in 1997, this effort resulted in approximately 177 million impressions in consumer media, and 6 million impressions in travel trade publications. e) The Internet The company recognizes the increasing importance of the Internet as a source of information and has established Web sites for both INTRAV and Clipper brands containing detailed descriptions of tours and cruises. DEVELOPMENT OF TRAVEL PROGRAMS. The Company believes that new markets are opening for the travel industry. The widespread fall of Communism, the increasing number of democracies throughout the world, and the development of infrastructures in underdeveloped lands are lowering barriers and providing more opportunities for international travel. To service these new markets, the Company intends to continue developing and offering travel programs not available from other travel providers. INTRAV designs, organizes and executes each of its travel programs, although to varying degrees it may purchase certain components of a program from another travel provider. The Company's travel planners and operations personnel select and design each travel program, make all of the travel and accommodation arrangements from the point of departure and arrange for exclusive parties, sightseeing opportunities and other special events. During the program-design process, the Company may charter ships or aircraft and commit to purchase large blocks of hotel rooms and other accommodations. The Company believes its ability to make "bulk" purchases and commitments, as well as its established industry position, results in suppliers providing the best available rates for these services and allows the Company to provide its customers with travel programs with good value and competitive prices. CUSTOMER SERVICE. A high level of customer satisfaction is critical to the Company's business, and at least one third of the travelers from 1993 through 1997 were repeat customers. The Company's operations department is responsible for implementing its quality control program. The Company inspects each hotel at which customers will be staying, as well as the ship or other means of transportation being utilized on each program. An INTRAV travel or cruise director accompanies each tour throughout its duration to provide incremental customer service and to 4 ensure that the highest possible quality of service is maintained. At each destination, the Company hires local hosts and the best available professional guides. In certain geographic areas, the Company employs destination managers to assist with service and quality control as needed. Travel arrangements are also monitored by a team of experienced travel planners under the supervision of senior management. At the conclusion of each travel program, the Company distributes questionnaires to its travelers to solicit their input on the quality of the program and responds to concerns identified. The Company has experienced a response rate of more than 90% of questionnaires distributed, which the Company believes is important in order to respond to traveler needs. Results of responses to the questionnaires show that travelers consistently rate their INTRAV travel experience between "good" and "excellent." TRAVEL PROGRAMS The Company attempts to develop exclusive travel programs not available from other travel providers. In order to achieve its goal of offering exclusive programs, INTRAV coordinates three elements in planning its travel programs: choosing unique and attractive destinations; planning the day-to-day itinerary; and determining which travel components will be included in the travel program. The Company's program-planning personnel stay current with consumer demand trends in the travel industry by researching trade journals, travel brochures, consumer publications, attending trade shows, consulting with overseas suppliers, responding to sponsoring associations and by reviewing the responses to the questionnaires distributed by the Company at the conclusion of each travel program. As destinations are selected, INTRAV's program-planning personnel work closely with local experts to develop the itinerary for the specific destination. INTRAV oversees all aspects of ground operations, including the inspection of ships, trains, hotels and other services. Based on industry standards, location, value, availability, past customer ratings and other relevant criteria, the Company negotiates with suppliers, including commercial airlines and other commercial carriers, and then selects hotels, ships, trains, aircraft and other components of its travel programs. Once a travel program has been developed, INTRAV personnel systematically visit each proposed destination to ensure that all accommodations and services meet the Company's standards for an INTRAV travel program. The acquisition of Clipper on December 31, 1996, broadened and enhanced INTRAV's inventory of unique travel programs. The highly maneuverable, shallow-draft M/V Nantucket Clipper and M/V Yorktown Clipper, carrying less than 140 passengers each, offer an unregimented and nonfrenetic ambience, leisurely single-seating dining, and personalized service. These small ships travel the historic waterways of North America from March to November. Winter months find the ships in the Caribbean and Central America. The addition of the M/S Clipper Adventurer in April 1998, will further expand INTRAV's small-ship adventure cruise programs to remote and exotic destinations such as Antarctica, Greenland, Spitsbergen, Hudson Bay, Scandinavia, Western Europe and the Amazon. MARKETING AND SALES The Company's travel and cruise programs are targeted to upper-income travelers. An important part of the Company's marketing is done through direct-mail solicitation of these travelers. In 1997, the Company distributed approximately 25 million copies of four-color sales brochures and catalogs. Affinity groups sponsor INTRAV travel programs and offer trips to their members. The groups do not guarantee a minimum level of participation on the part of their members, nor do they assume the costs of marketing travel programs to their members. INTRAV also maintains a database of the names of approximately 180,000 past and prospective customers to which it directly markets its travel programs. Although some of the Company's mailings are handled through a sponsoring association or affinity group, the majority of the Company's mailings are done through a third-party mailing facility. The Company's proprietary software, and software licensed from third parties, allows the Company to avoid duplication of addresses and to standardize addresses according to postal requirements to obtain savings on mailing costs. By barcoding the mailings and complying with other postal regulations, the Company believes, based upon surveys it performs, that it has been able to achieve a high delivery rate on low-cost, third-class bulk mailings. Marketing materials are generally mailed nine to 15 months in advance of a scheduled departure date. Travelers generally book their INTRAV travel programs six to 12 months in advance of the scheduled departure date. Final payment for the program is generally due 70 days in advance of the scheduled departure date. This process allows the Company to monitor closely the booking patterns of each program and successfully estimate the traveler demand for its programs. Concurrently, the Company reviews the accommodation/service commitments it has made with each supplier to ensure they are adequate. Periodically, adjustments are made to the allotments which allows the Company's suppliers to maximize the utilization of their resources. As a result, the Company is able to negotiate generally favorable prices and cancellation provisions for the space 5 it reserves. Cancellation penalties can include payment of 100% of the full charter price if the charter is canceled within the number of days of the scheduled departure as specified in the charter contract. COMPETITION The travel industry is highly competitive. The Company believes that the principal competitive factors are (i) the uniqueness of the travel and cruise programs offered, (ii) the quality of the travel programs offered, and (iii) customer service. Although its competition is highly fragmented, the Company recognizes four direct competitors that compete with INTRAV in the affinity group travel market. INTRAV's programs also compete against a wide range of vacation alternatives, including large-ship cruises, destination resorts and other travel programs. Certain companies that engage in the travel business, but all of which are not necessarily the direct competitors of the Company, have greater financial, marketing and sales resources than the Company. There can be no assurance that INTRAV's present competitors or competitors that choose to enter the marketplace in the future will not exert significant competitive pressures on INTRAV. SEASONALITY Demand for INTRAV's travel and cruise programs is subject to seasonal fluctuations. Higher activity generally is experienced in the summer, early fall, and winter months. Demand is typically lower during April, May, November and December due to decreased international travel during these periods. Clipper offers various cruises throughout the year with scheduled maintenance occurring in the fourth quarter for the Nantucket Clipper and Yorktown Clipper and in the first quarter for the Clipper Adventurer. GOVERNMENT REGULATION The Company's operations are affected by laws and regulations relating to public charters, principally regulations issued by the United States Department of Transportation. Among other requirements, such regulations require the Company to file and receive approval of a charter prospectus and other materials prior to the Company's selling or offering to sell travel programs which utilize chartered aircraft originating or terminating in the United States. Such regulations also require the Company to maintain financial protection for traveler advance payments for Company operated charters originating or terminating in the United States. The Company has established escrow arrangements to comply with the regulations. Under the arrangements, monies received from travelers are held in escrow accounts until charter payments have been made. Management believes that the Company is in material compliance with these laws and regulations and does not believe that future compliance with such laws and regulations will have a material adverse impact on the Company's financial condition or results of operations. U.S. law requires the Company to maintain financial protection for passenger advance payments for Company-operated cruises embarking in U.S. ports. The Company has established escrow arrangements to comply with the law. Under the arrangements, monies received from passengers for cruises are held in escrow accounts until the respective cruises have been completed. Both the Nantucket Clipper and Yorktown Clipper are classified +A1 Passenger Vessels+AMS by the American Bureau of Shipping. They are certified for coastwise and international service by the United States Coast Guard. They carry Passenger Ship Safety Certificates issued under the provisions of the International Convention for the Safety of Life at Sea (SOLAS), as well as Certificates of Sanitary Construction issued by the FDA. The Clipper Adventurer is classified A-1 ice class for unrestricted passenger service by the Lloyd's Register. She carries a Passenger Ship Safety Certificate issued under the provisions of the International Convention for the Safety of Life at Sea (SOLAS). EMPLOYEES As of February 28, 1998, the Company had approximately 300 employees. None of the Company's employees is represented by a labor union. Management believes that its employee relations are good. Item 2. PROPERTIES The headquarters and principal operations of INTRAV are located in St. Louis, Missouri, where the Company leases approximately 36,400 square feet of office space under leases expiring December 31, 2001. Each lease provides an option to renew, at the Company's discretion, for an additional five-year period. Windsor Management Corporation, as agent for Windsor Real Estate, Inc., an affiliated entity, was lessor of the office space through July 1997. During 1997, the office building was sold to an unrelated third party. Amounts paid in 1997 totaled $683,000. The leases provide for annual rentals 6 totaling $683,000 in 1998, subject to certain adjustments for taxes, insurance, operating expenses and utilities. Management believes that the Company's facilities are adequate for its current needs and that suitable additional space would be available as required. Item 3. LEGAL PROCEEDINGS The Company currently is not a party to any pending legal proceedings, other than ordinary routine litigation incidental to its business. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Company's shareholders during the fourth quarter of its fiscal year ended December 31, 1997. EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers is contained in Item 10 Part III of this Report (General Instruction G) and is incorporated herein by reference. PART II Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The information required by this Item is set forth under the caption "General Corporate Information" of the Company's 1997 Annual Report to Shareholders and is incorporated herein by reference. Item 6. SELECTED FINANCIAL DATA The information required by this item is set forth under the caption "Five-Year Financial Highlights" of the Company's 1997 Annual Report to Shareholders and is incorporated herein by reference. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this Item is set forth under the caption "Management's Discussion and Analysis" of the Company's 1997 Annual Report to Shareholders and is incorporated herein by reference. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information required by this Item is not applicable to the Registrant pursuant to General Instruction 1 to paragraphs 305(a), 305(b), 305(c), 305(d) and 305(e) of Regulation S-K. Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item is set forth in the Company's 1997 Annual Report to Shareholders and is incorporated herein by reference. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 7 Part III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item is set forth under the heading "Proposal 1: Election of Director" of the Company's Proxy Statement for the 1998 Annual Meeting of Shareholders and is incorporated herein by reference. The following information with respect to the executive officers of the Company on February 28, 1998, is included pursuant to Instruction 3 of Item 401(b) of Regulation S-K. MANAGEMENT EXECUTIVE OFFICERS The following table sets forth certain information regarding the Company's executive officers, including their respective ages.
NAME AGE POSITION Paul H. Duynhouwer 63 President and Chief Executive Officer and Director Wayne L. Smith II 48 Executive Vice President & Chief Financial Officer and Director Richard J. Hefler 48 Senior Vice President Marketing and Sales
PAUL H. DUYNHOUWER became President, Chief Executive Officer, and a Director of INTRAV in January 1997. He has served as President of Clipper Cruise Line since 1989 and retains this position in addition to his responsibilities at INTRAV. Prior to becoming President of Clipper Cruise Line, Mr. Duynhouwer served as Executive Vice President of Special Expeditions from December 1986 until August 1989, and as Senior Vice President of Clipper Cruise Line from June 1982 through November 1986. WAYNE L. SMITH II has served as Executive Vice President & Chief Financial Officer, and a Director of INTRAV since September 1997. Mr. Smith also served as Chairman, President and Chief Executive Officer of Bekins Distribution Services, Inc., from January 1993 through December 1997. Mr. Smith has also served as President of Windsor Real Estate and Windsor Capital from October 1989 through September 1997. Prior to joining Windsor, Mr. Smith was a Vice President of Citicorp from September 1980 through September 1989. RICHARD J. HEFLER became Senior Vice President Marketing and Sales of INTRAV in december 1997. Mr. Hefler had served as Vice President of Marketing of the Company since September 1990. Prior to joining the Company, Mr. Hefler served as Director for North America of the Victorian Tourist Commission of Australia and earlier as Director of Marketing for the AARP Travel Service Division of Olson-Travelworld. Item 11. EXECUTIVE COMPENSATION The information contained in the Proxy Statement for the 1998 Annual Meeting of Shareholders under the caption "Executive Compensation" is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is set forth under the heading, "Holdings of Principal Shareholder and Management," of the Company's Proxy Statement for the 1998 Annual Meeting of Shareholders and is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is set forth under the heading, "Compensation Committee Interlock and Insider Participation," of the Company's Proxy Statement for the 1998 Annual Meeting of Shareholders and is incorporated herein by reference. 8 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON 8-K The following is an index of the financial statements, schedules and exhibits including this Report or incorporated herein by reference. (a) 1. Financial Statements:
Page ---- Consolidated Balance Sheets -- December 31, 1997 and December 31, 1996 Consolidated Statements of Income -- For the years 1997, 1996 and 1995 Consolidated Statements of Cash Flows -- For the years 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity -- For the years 1997, 1996 and 1995 Notes to Consolidated Financial Statements Incorporated in this Report by reference to the Company's 1997 Annual Report to Shareholders.
2. Financial Statement Schedules: All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 3. Exhibits -- see the following Exhibit Index of this report. The following exhibits listed in the Exhibit Index are filed with this report: 4(i) Amendments one, two, three and four to Revolving Credit Agreement between Registrant and NationsBank, N.A. 10(iii) (A) (5) Amended Intrav, Inc. 1995 Incentive Stock Plan 10(iii) (A) (8) First Amendment to Deferred Compensation Agreement between Clipper Cruise Line and Paul H. Duynhouwer 10(iii) (A) (9) Employment Agreement between Intrav, Inc. and Wayne L. Smith II 13 Annual Report to Shareholders for the Fiscal Year Ended December 31, 1997 21 Subsidiaries of the registrant 23 Consent of Deloitte & Touche LLP (b) Reports on Form 8-K during the quarter ended December 31, 1997 The Company did not file any reports on Form 8-K during the fourth quarter ended December 31, 1997. (c) Exhibits -- see the exhibits attached hereto: Management Contracts and Compensatory Plans -- the following exhibits listed in the Exhibit Index are listed below pursuant to item 14(a)-3 of Form 10-K. Employment Agreement by and between Intrav, Inc. and Larry R. Nolan Employment Agreement by and between Intrav, Inc. and Richard L. Burkemper Employment Agreement by and between Intrav, Inc. and Brenda J. Stehle Employment Agreement by and between Intrav, Inc. and Michael A. DiRaimondo Amended Intrav, Inc. 1995 Incentive Stock Plan Form of Option Agreement for Awards under 1995 Stock Plan Deferred Compensation Agreement between Clipper Cruise Line and Paul H. Duynhouwer First Amendment to Deferred Compensation Agreement between Clipper Cruise Line and Paul H. Duynhouwer Employment Agreement between Intrav, Inc., and Wayne L. Smith II 9 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. INTRAV, Inc. Date March 27, 1998 By: /s/ Paul H. Duynhouwer -- ------------------------------- Paul H. Duynhouwer President, Chief Executive Officer and Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Barney A. Ebsworth, Paul H. Duynhouwer and Wayne L. Smith II, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this report on Form 10-K for the fiscal year ended December 31, 1997, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the 27th day of March, 1998, by the following persons on behalf of the registrant and in the capacities indicated. SIGNATURE TITLE /s/ Paul H. Duynhouwer President, Chief Executive - -------------------------------- Officer and Director Paul H. Duynhouwer (Principal Executive Officer) /s/ Wayne L. Smith II Executive Vice President & - -------------------------------- Chief Financial Officer and Director Wayne L. Smith II (Principal Financial and Accounting Officer) /s/ Barney A. Ebsworth Chairman of the Board - -------------------------------- Barney A. Ebsworth /s/ William H. T. Bush Director - -------------------------------- William H.T. Bush Director - -------------------------------- Robert H. Chapman Director - -------------------------------- John B. Biggs, Jr. 10 EXHIBIT INDEX These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
Exhibit Number Description - ------- ----------- 3(i) Restated Articles of Incorporation of Intrav, Inc. (Incorporated by reference to Exhibit 3(i) of the Company's Form S-1 Registration Statement No. 33-90444) 3(ii) Amended and Restated Bylaws of Intrav, Inc., as amended (Incorporated by reference to Exhibit 3(ii) of the Company's Form 10-K for the year ended December 31, 1995) 4 Revolving Credit Agreement dated December 31, 1996, between the Registrant and Boatmen's National Bank of St. Louis (Incorporated by reference to Exhibit 4 to the Registrant's Form 8-K dated January 14, 1996) 4(i) Amendments One, Two, Three and Four to Revolving Credit Agreement between Registrant and NationsBank, N.A., successor by merger to Boatmen's National Bank of St. Louis 9 Omitted -- Inapplicable 10(i) Agreement for Purchase and Sale of Stock by and among Intrav, Inc., Clipper Cruise Line, Inc., Republic Cruise Line, Inc., Liberty Cruise Line, Inc., Clipper Adventure Cruises, Inc. and Windsor, Inc. dated November 13, 1996, as amended by that certain First Amendment, dated December 18, 1996 (Incorporated by reference to Exhibit 10 to the Registrant's Form 8-K dated January 14, 1996) 10(ii)(D)(1) Lease between Windsor Management Corporation, as agent for Windsor Real Estate, Inc., and Intrav, Inc. dated June 25, 1993 (Incorporated by reference to Exhibit 10(ii)(D)(1) of the Company's Form S-1 Registration Statement No. 33-90444) 10(ii)(D)(2) Lease between Windsor Management Corporation, as agent for Windsor Real Estate Inc., and Windsor, Inc. dated June 23, 1993; assigned to Intrav, Inc. by assignment dated March 17, 1995 between Windsor, Inc. and Intrav, Inc. (Incorporated by reference to Exhibit 10(ii)(D)(2) of the Company's Form S-1 Registration Statement No. 33-90444) 10(iii)(A)(1) Employment Agreement by and between Intrav, Inc. and Larry R. Nolan (Incorporated by reference to Exhibit 10(iii)(A)(1) of the Company's Form S-1 Registration Statement No. 33-90444) 10(iii)(A)(2) Employment Agreement by and between Intrav, Inc. and Richard L. Burkemper (Incorporated by reference to Exhibit 10(iii)(A)(2) of the Company's Form S-1 Registration Statement No. 33-90444) 10(iii)(A)(3) Employment Agreement by and between Intrav, Inc. and Brenda J. Stehle (Incorporated by reference to Exhibit 10(iii)(A)(3) of the Company's Form S-1 Registration Statement No. 33-90444) 10(iii)(A)(4) Employment Agreement by and between Intrav, Inc. and Michael A. DiRaimondo (Incorporated by reference to Exhibit 10(iii)(A)(4) of the Company's Form S-1 Registration Statement No. 33-90444) 11 Exhibit Number Description - ------- ----------- 10(iii)(A)(5) Amended Intrav, Inc. 1995 Incentive Stock Plan 10(iii)(A)(6) Form of Option Agreement for Awards of Options under 1995 Incentive Stock Plan (Incorporated by reference to Exhibit 10(iii)(A)(6) of Amendment No. 1 to the Company's Form S-1 Registration Statement No. 33-90444) 10(iii)(A)(7) Deferred Compensation Agreement by and between Clipper Cruise Line, Inc. and Paul H. Duynhouwer dated December 23, 1996 (Incorporated by reference to Exhibit 10(iii)(A)(7) to the Company's Annual Report on Form 10-K For The Fiscal Year-ended December 31, 1996) 10(iii)(A)(8) First Amendment to Deferred Compensation Agreement between Clipper Cruise Line and Paul H. Duynhouwer 10(iii)(A)(9) Employment Agreement between Intrav, Inc. and Wayne L. Smith II 11 Omitted -- Inapplicable 12 Omitted -- Inapplicable 13 The Registrant's Annual Report to Shareholders for the Fiscal Year Ended December 31, 1996. Only those portions expressly incorporated by reference into this Form 10-K are deemed filed. 16 Omitted -- Inapplicable 18 Omitted -- Inapplicable 19 Omitted -- Inapplicable 21 Subsidiaries of the Registrant 22 Omitted -- Inapplicable 23 Consent of Deloitte & Touche LLP 24 Power of Attorney, contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 1998 28 Omitted -- Inapplicable 29 Omitted -- Inapplicable
EX-4.(I) 2 AMENDMENT TO LOAN AGREEMENT BOATMEN'S NATIONAL BANK 1 EXHIBIT 4(i) AMENDMENT NUMBER ONE TO LOAN AGREEMENT BETWEEN THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (TO WHICH NATIONSBANK, N.A. IS THE SUCCESSOR BY MERGER) AS "LENDER" AND INTRAV, INC. AS "BORROWER" AN AMENDMENT ("this Amendment") by INTRAV, INC., as "Borrower", and NATIONSBANK, N.A., successor by merger to The Boatmen's National Bank of St. Louis, as "Lender", to the Loan Agreement between them executed as of December 31, 1996 (the "Original Loan Agreement"). In consideration of the mutual agreements herein and other sufficient consideration, the receipt of which is hereby acknowledged, Borrower and Lender agree as follows: 1. DEFINITIONS. Capitalized Terms used and not otherwise defined herein have the meanings given them in the Loan Agreement. All references to the "Loan Agreement" in the Original Loan Agreement and in this Amendment shall be deemed to be references to the Original Loan Agreement as it is amended hereby and as it may be further amended, restated, extended, renewed, replaced, or otherwise modified from time to time. 2. EFFECTIVE DATE OF AMENDMENT. This Amendment shall become effective as of January 1, 1997, and is intended to evidence the actual conduct of Lender and Borrower with respect to certain matters and their continuing agreement with respect to those matters. 3. AMENDMENT TO ORIGINAL LOAN AGREEMENT. 3.1 LETTER OF CREDIT COMMITMENT. Section 3.2 of the Original Loan Agreement is hereby amended by substituting the following therefor in its entirety: 3.2 LETTER OF CREDIT COMMITMENT Lender commits to issue standby letters of credit and commercial letters of credit for the account of Borrower or any Subsidiary of Borrower from time to time from the Effective Date to the Maturity Date, but only in connection with transactions satisfactory to Lender and only if the Letter of Credit Exposure for all Letters of Credit will not as a result of such issuance exceed the lesser of (i) $5,000,000 or (ii) any excess of the Maximum Available Amount over the Revolving Loan, and in the case of Letters of Credit requested to be issued for the account of Subsidiaries of Borrower, the Letter of Credit Exposure with respect to all Letters of Credit issued for the account of such Subsidiaries will not as a result of such issuance exceed $400,000. The expiration date of any Letter of Credit will be a Business Day that is not more than one year 1 2 after its issuance date and is not later than the Maturity Date; provided, however, that the expiration date for a Letter of Credit may be later than the Maturity Date if Borrower provides cash collateral satisfactory to Lender as security for Borrower's obligation to reimburse Lender for all draws thereunder. 3.2 DEFINITION OF LETTER OF CREDIT EXPOSURE. The definition of "Letter of Credit Exposure" in Appendix 1.1 to the Original Loan Agreement is hereby amended by substituting the following therefor in its entirety: "Letter of Credit Exposure": the undrawn amount of all outstanding Letters of Credit issued by Lender under the Letter of Credit Commitment plus all unreimbursed amounts drawn on such Letters of Credit. 3.3 SECURITY AND GUARANTIES. The following sentence is hereby added at the end of Section 10 of the Original Loan Agreement: Borrower also hereby unconditionally and irrevocably guaranties the reimbursement to Lender of, and will cause to be reimbursed to Lender, all amounts drawn on any Letter of Credit issued for the account of any Subsidiary of Borrower. 4. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Original Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Original Loan Agreement, any of the other Loan Documents or any existing Default or Event of Default, nor act as a release or subordination of the Security Interests of Lender under the Security Documents. Each reference in the Original Loan Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like import, and the term "Loan Agreement" herein and in any of the Loan Documents shall be deemed to mean the Original Loan Agreement as amended by this Amendment. 5. REAFFIRMATION. Borrower Hereby acknowledges and confirms that (i) except as expressly amended hereby the Original Loan Agreement remains in full force and effect, (ii) Borrower has no defenses to its obligations under the Loan Agreement and the other Loan Documents, (iii) the Security Interests of Lender under the Security Documents secure all the Loan Obligations under the Loan Agreement, continue in full force and effect and have the same priority as before this Amendment, (iv) Borrower has no claim against Lender arising from or in connection with the Loan Agreement or the other Loan Documents, and (v) all of the representations and warranties in Section 13 of the Original Loan Agreement remain true and correct as of the date of this Amendment as if made on and as of the date of this Amendment. 6. GOVERNING LAW. This Amendment has been executed and delivered in St. Louis, Missouri, and shall be governed by and construed under the laws of the State of Missouri without giving effect to choice or conflicts of law principles thereunder. 7. SECTION TITLES. The section titles in this Amendment are for convenience of reference only and shall not be construed so as to modify any provisions of this Amendment. 2 3 8. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Amendment may be executed in one or more counterparts and on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures to this Amendment may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. 9. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that all of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this reference. 10. STATUTORY NOTICE. The following notice is given pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained in such notice will be deemed to limit or modify the terms of the Loan Documents or this Amendment: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. Borrower and Lender hereby affirm that there is no unwritten oral credit agreement between Borrower and Lender with respect to the subject matter of this Amendment. IN WITNESS WHEREOF, this Amendment has been duly executed on behalf of Borrower and Lender by their duly authorized officers. INTRAV, INC. NATIONSBANK, N.A. by its Executive Vice President and Chief By its Senior Vice President Financial Officer /s/ Wayne S. Smith II /s/ Keith M. Schmelder - --------------------------------- ------------------------------- Wayne S. Smith II Keith M. Schmelder 3 4 EXHIBIT A Supplemental Disclosure Schedule No supplemental disclosures if no items listed below: 5 AMENDMENT NUMBER TWO TO LOAN AGREEMENT EFFECTIVE DECEMBER 31, 1996 BY AND BETWEEN THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (PREDECESSOR BY MERGER TO NATIONSBANK, N.A.) AND INTRAV, INC. In consideration of their mutual agreements herein and for other sufficient consideration, the receipt of which is hereby acknowledged, INTRAV, INC. ("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's National Bank of St. Louis ("Lender") agree as follows: 1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan Agreement" means the Loan Agreement Effective December 31, 1996, between Borrower and Lender, as amended by Amendment Number One thereto effective as of January 1, 1997. The term "this Amendment" means this Amendment. The term Loan Agreement means the Original Loan Agreement as amended by this Amendment. Capitalized terms used and not otherwise defined herein have the meanings defined in the Loan Agreement. 2. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be effective on November 14, 1997, provided that all of the conditions in Section 4 of this Amendment have been satisfied on or before such date. 3. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the conditions in Section 4 of this Amendment, the Original Loan Agreement is amended as follows: A. The table in Section 4.5 is amended to read in its entirety as follows:
- --------------------------------------------------------------------------------------- If the ratio of The LIBOR Increment shall be: The CBR Increment shall be: Borrower's Funded Debt to EBITDA is: - --------------------------------------------------------------------------------------- Equal to or 2.25% 0% greater than 2.00 but less than 3.00 - --------------------------------------------------------------------------------------- Equal to or 2.00% 0% greater than 1.00 but less than 2.00 - --------------------------------------------------------------------------------------- Less than 1.00 1.75% 0% - ---------------------------------------------------------------------------------------
C. Section 5.2 is amended to read in its entirety as follows: "Borrower shall pay to Lender a "Non-Use Fee" calculated by applying the daily equivalent of the Non-Use Fee Rate to the Unused Revolving Commitment on 1 6 each day during the period from the Effective Date to the Maturity Date. The "Unused Revolving Commitment" on any day shall be the amount of the Revolving Commitment minus the sum of the Revolving Loan and the Letter of Credit Exposure. The Non-Use Fee shall be payable quarterly in arrears, commencing on the first day of the first calendar quarterly beginning after the Effective Date and continuing on the first day of each calendar quarter thereafter and on the Maturity Date. The applicable "Non-Use Fee Rate" is 0.5% per annum. D. Section 5.3 of the Original Loan Agreement is amended to read in its entirety as follows: "5.3 Borrower shall pay to Lender a one-time Letter of Credit Fee for each Letter of Credit issued by Lender. The "Letter of Credit Fee" shall be an amount equal to 1.0% per annum of the original face amount of each Letter of Credit and is payable quarterly in arrears. Borrower shall also pay Lender's other customary fees for amendment and renewal of a Letter of Credit, for negotiation of drafts drawn under Letters of Credit, and similar fees, all in accordance with Lender's normal practice at the time." E. The term "Corporate Base Rate" in the Glossary and Index of Defined Terms is changed to read in its entirety as follows: "Corporate Base Rate": the per annum interest rate designated from time to time by Lender as its 'prime rate', which is a reference rate and does not necessarily represent the lowest or best rate charged to any customer of Lender." 4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall not become effective, and the Loan Agreement shall continue in full force and effect as it existed in the absence of this Amendment unless: 4.1 CERTAIN DOCUMENTS. Borrower shall before November 14, 1997, deliver to Lender a certificate of the Secretary of Borrower certifying (i) that the articles or certificate of incorporation and bylaws of Borrower previously certified to Lender in connection with the execution of the Loan Agreement have not been amended, (ii) that resolutions adopted by the Board of Directors of Borrower authorizing the execution, delivery and performance of this Amendment by Borrower are attached to the certificate and remain in full force and effect, and (iii) the names, titles, and true signatures of the incumbent corporate officers who are authorized to sign this Amendment or attest signatures or seals on this Amendment on behalf of Borrower. 4.2 NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred from December 31, 1996, to the date of execution hereof that is reasonable likely to have a Material Adverse Effect. 5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and warrants to Lender that (i) execution of this Amendment has been duly authorized by all requisite action of Borrower; (ii) no consents are necessary from any third parties for Borrower's execution, delivery 2 7 or performance of this Amendment, (iii) this Amendment and the Loan Agreement as amended hereby constitute the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except to the extent that the enforceability thereof against Borrower may be limited by bankruptcy, insolvency or other laws affecting the enforceability of creditors rights generally or by equity principles of general application, (iv) except as disclosed on the supplemental disclosure schedule attached hereto as Exhibit A and the disclosure schedule attached to the Original Loan Agreement, all of the representations and warranties contained in Section 13 of the Original Loan Agreement, as amended hereby, are true and correct in all material respects with the same force and effect as if made on and as of the effective date of this Amendment, (v) there is no Existing Default, and (vi) no Default or Event or Default will occur immediately or with the passage of time or giving of notice as a consequence of this Amendment becoming effective. 6. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement, any of the other Loan Documents or any Existing Default, nor act as a release or subordination of the Security Interests of Lender under the Security Documents. Each reference in the Loan Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like import, shall be read as referring to the Loan Agreement as amended hereby. 7. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except as expressly amended hereby the Original Loan Agreement and other Loan Documents remain in full force and effect, (ii) the Original Loan Agreement, as amended hereby, is in full force and effect, (iii) Borrower has no defenses to its obligations under the Loan Agreement and the other Loan Documents, (iv) the Security Interests of Lender under the Security Documents continue in full force and effect and have the same priority as before this Amendment, and (v) Borrower has no claim against Lender arising from or in connection with the Loan Agreement or the other Loan Documents. 8. COUNTERPARTS. This Amendment may be executed by the parties hereto on any number of separate counterparts, and all such counterparts taken together shall constitute one and the same instrument. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged. 9. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature page thereto intended to be attached to a copy of this Amendment, signed and transmitted by facsimile machine or telecopier shall be deemed and treated as an original document. The signature of any person thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party hereto, any facsimile or telecopy document is to be re-executed in original form by the Persons who executed the facsimile or telecopy document. No party hereto may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Amendment. 10. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the rights and 3 8 obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with the internal laws of the State of Missouri applicable to contracts made and to be performed wholly within such state, without regard to choice or conflict of laws provisions. 11. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that all of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this reference. 12. STATUTORY NOTICE. The following notice is given pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained in such notice will be deemed to limit or modify the terms of the Loan Documents or this Amendment: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. [SIGNATURE PAGE FOLLOWS] 4 9 IN WITNESS WHEREOF the parties have caused this Agreement to be executed by appropriate duly authorized officers as of the effective date first above written. INTRAV, INC. NATIONSBANK, N.A. by its Executive Vice President and Chief By its Senior Vice President Financial Officer /s/ Wayne L. Smith II /s/ Keith M. Schmelder - ------------------------------------ -------------------------- Wayne L. Smith II Keith M. Schmelder Notice Address: Notice Address: 7711 Bonhomme Avenue 800 Market Street St. Louis, MO 63105 St. Louis, MO 63101 FAX # 314-727-2533 FAX # 314-466-7783 TEL # 314-727-0500 TEL # 314-466-6642 5 10 EXHIBIT A SUPPLEMENTAL DISCLOSURE SCHEDULE No supplemental disclosures if no items listed below: 6 11 AMENDMENT NUMBER THREE TO LOAN AGREEMENT EFFECTIVE DECEMBER 31, 1996 BY AND BETWEEN THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (PREDECESSOR BY MERGER TO NATIONSBANK, N.A.) AND INTRAV, INC. In consideration of their mutual agreements herein and for other sufficient consideration, the receipt of which is hereby acknowledged, INTRAV, INC. ("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's National Bank of St. Louis ("Lender") agree as follows: 1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan Agreement" means the Loan Agreement effective December 31, 1996, between Borrower and Lender, as amended by Amendment Number One thereto effective as of December 31, 1996, and Amendment Number Two thereto effective as of November 14, 1997. The term "this Amendment" means this Amendment. The term Loan Agreement means the Original Loan Agreement as amended by this Amendment. Capitalized terms used and not otherwise defined herein have the meanings defined in the Loan Agreement. 2. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be effective on the earlier of December 31, 1997, or the date when all of the conditions in Section 4 of this Amendment have been satisfied. Lender will give written notice to Borrower when such conditions have been satisfied. 3. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the conditions in Section 4 of this Amendment, the Loan Agreement is amended as follows: A. The amount of the Revolving Commitment stated in Section 3.1.1 is changed from $10,000,000 to $15,000,000 and the table in Section 3.1.1 is amended to read in its entirety as follows:
- -------------------------------------------------------- Effective Date of Reduction New Reduction Revolving Commitment - -------------------------------------------------------- December 31, 1998 $2,000,000 $13,000,000 - -------------------------------------------------------- December 31, 1999 $2,000,000 $11,000,000 - --------------------------------------------------------
B. The following sentence is added at the end of Section 3.1.2: 1 12 "No Advance will be made which would result in the Revolving Loan exceeding $11,000,000 unless and until Lender has a first priority Security Interest in the Bahamian registered vessel Clipper Adventurer and all of her machinery and equipment and a valid and effective assignment of all income and proceeds thereof, subject to no other Security Interests except those that will be fully discharged by appropriate contemporaneous application of the proceeds of such Advance in a manner satisfactory to Lender." C. Section 15.1 is amended to read in its entirety as follows: "15.1 Use of Proceeds. All proceeds of the Loan shall be used for permitted Investments, Capital Expenditures related to Borrower's business (including acquisitions of the vessel Clipper Adventure), working capital and general corporate purposes. D. Section 5.2 is amended to read in its entirety as follows: "Borrower shall pay to Lender a "Non-Use Fee" calculated by applying the daily equivalent of the Non-Use Fee Rate to the Unused Revolving Commitment on each day during the period from the Effective Date to the Maturity Date. The "Unused Revolving Commitment" on any day shall be the amount of the Revolving Commitment minus the sum of the Revolving Loan and the Letter of Credit Exposure. The Non-Use Fee shall be payable quarterly in arrears, commencing on the first day of the first calendar quarterly beginning after the Effective Date and continuing on the first day of each calendar quarter thereafter and on the Maturity Date. The applicable "Non-Use Fee Rate is 0.15% per annum." E. Section 6.1 is amended to read in its entirety as follows: "6.1 MATURITY DATE. Borrower shall repay the Revolving Loan and all unpaid accrued interest thereon on December 31, 2000." F. The last sentence of Section 9.1 is amended to read in its entirety as follows: "Such funds will be deposited in an demand deposit account of Borrower's at the Lending Office." G. Section 10.1 is amended to read in its entirety as follows: "10.1 SHIP MORTGAGES. Ship mortgages satisfactory to Lender and (i) granting to Lender a Security Interest in each of the United States registered vessels Nantucket Clipper, Yorktown Clipper and the Bahamian registered vessel Clipper Adventurer, and (ii) assigning to Lender all income and proceeds thereof, which Security Interests shall be subject only to Permitted Security Interests that exist on the Execution Date and affect the foregoing." 2 13 H. Section 17.3 is amended to read in its entirety as follows: "17.3 MINIMUM TANGIBLE NET WORTH. Borrower's Tangible Net Worth as of the end of each fiscal quarter of Borrower beginning December 31, 1997, shall at no time be less than $2,000,000 plus (i) 25% of Borrower's cumulative net income (but not any net loss) for such fiscal periods and (ii) 25% of the net proceeds from the issuance by Borrower of any equity securities." I. Section 17.5 is amended to read in its entirety as follows: "17.5 CAPITAL EXPENDITURES. Borrower shall not make Capital Expenditures that in the aggregate exceed $2,500,000 in any one fiscal year of Borrower, provided, however, that if Borrower's Capital Expenditures in any one fiscal year are less than $2,500,000, Borrower may expend the difference in the next ensuing fiscal year in addition to the Capital Expenditures otherwise permitted hereunder; further provided, that Borrower may make Capital Expenditures of up to a total of $12,700,000 for acquiring and refitting the vessel Clipper Adventure in Borrower's fiscal years ended in 1997 and 1998 in addition to the Capital Expenditures permitted in the prior clauses of this sentence. Any portion of the additional $12,700,000 not expended in Borrower's fiscal year ended in 1997 may be expended in Borrower's fiscal year ended in 1998." J. Clauses (v) and (vi) of Section 18.3 is amended to read in its entirety as follows: "(v)" fifth, to payment of interest accrued on the Revolving Loan and to all Interest Hedge Obligations (if any), pro rata; (vi) sixth, to payment of the Revolving Loan and all remaining Interest Hedge Obligations (if any), pro rata;" 4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall not become effective, and the Loan Agreement shall continue in full force and effect as it existed in the absence of this Amendment unless: 4.1 CERTAIN DOCUMENTS. Borrower shall deliver to Lender the following, all in form and substance satisfactory to Lender and (if applicable) executed by Borrower: 4.1.1. GOOD STANDING CERTIFICATES. Certificates of good standing of Borrower in Borrower's states of incorporation and qualification, issued by the Secretary of State of such states. 4.1.2. CERTIFICATE OF SECRETARY OF BORROWER. A Certificate of the Secretary of Borrower certifying (i) that the articles or certificate of incorporation and bylaws of Borrower previously certified to Lender in connection with the execution of the Loan Agreement have not been amended, (ii) that resolutions adopted by the Board of Directors of Borrower authorizing the execution, delivery and performance of this Amendment by Borrower are attached to the certificate and remain in full force and effect, and (iii) the names, titles, and true signatures of the incumbent corporate officers who are authorized to sign this Amendment, or attest signatures or seals on this Amendment on behalf of Borrower. 3 14 4.1.3. PROOF OF INSURANCE Certificates of insurance showing that Borrower has insurance on the vessel Clipper Adventurer that meets the requirements for such insurance in the Loan Agreement. 4.1.4. LEGAL OPINION. An opinion of Borrower's counsel regarding the good standing of Borrower, its due authorization of the execution and delivery of this Amendment and such other matters as Lender may require. 4.2 NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred from June 30, 1997, to the date of execution hereof that is reasonable likely to have a Material Adverse Effect. 5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and warrants to Lender that (i) execution of this Amendment has been duly authorized by all requisite action of Borrower, (ii) no consents are necessary from any third parties for Borrower's execution, delivery or performance of this Amendment, (iii) this Amendment and the Loan Agreement as amended hereby constitute the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except to the extent that the enforceability thereof against Borrower may be limited by bankruptcy, insolvency or other laws affecting the enforceability of creditors rights generally or by equity principles of general application, (iv) except as disclosed on the supplemental disclosure schedule attached hereto as Exhibit A and the disclosure schedule attached to the Original Loan Agreement, all of the representations and warranties contained in Section 13 of the Original Loan Agreement, as amended hereby, are true and correct in all material respects with the same force and effect as if made on and as of the effective date of this Amendment, (v) there is no Existing Default, and (vi) no Default or Event or Default will occur immediately or with the passage of time or giving of notice as a consequence of this Amendment becoming effective. 6. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement, any of the other Loan Documents or any Existing Default, nor act as a release or subordination of the Security Interests of Lender under the Security Documents. Each reference in the Loan Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like import, shall be read as referring to the Loan Agreement as amended hereby. 7. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except as expressly amended hereby the Original Loan Agreement and other Loan Documents remain in full force and effect, (ii) the Original Loan Agreement, as amended hereby, is in full force and effect, (iii) Borrower has no defenses to its obligations under the Loan Agreement and the other Loan Documents, (iv) the Security Interests of Lender under the Security Documents continue in full force and effect and have the same priority as before this Amendment, and (v) Borrower has no claim against Lender arising from or in connection with the Loan Agreement or the other Loan Documents. 8. COUNTERPARTS. This Amendment may be executed by the parties hereto on any number of separate counterparts, and all such counterparts taken together shall constitute one and the same instrument. it shall not be necessary in making proof of this Amendment to produce or account 4 15 for more than one counterpart signed by the party to be charged. 9. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature page thereto intended to be attached to a copy of this Amendment, signed and transmitted by facsimile machine or telecopier shall be deemed and treated as an original document. The signature of any person thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party hereto, any facsimile or telecopy document is to be re-executed in original form by the Persons who executed the facsimile or telecopy document. No party hereto may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Amendment. 10. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the rights and obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with the internal laws of the State of Missouri applicable to contracts made and to be performed wholly within such state, without regard to choice or conflict of laws provisions. 11. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that all of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this reference. 12. STATUTORY NOTICE. The following notice is given pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained in such notice will be deemed to limit or modify the terms of the Loan Documents of this Amendment: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. 5 16 IN WITNESS WHEREOF the parties have caused this Agreement to be executed by appropriate duly authorized officers as of the effective date first above written. INTRAV, INC. NATIONSBANK, N.A. by its Executive Vice President and Chief By its Senior Vice President Financial Officer /s/ Wayne L. Smith II /s/ Keith M. Schmelder - ------------------------------------ ------------------------------- Wayne L. Smith II Keith M. Schmelder Notice Address: Notice Address: 7711 Bonhomme Avenue 800 Market Street St. Louis, MO 63105 St. Louis, MO 63101 FAX # 314-727-2533 FAX # 314-466-7783 TEL # 314-727-0500 TEL # 314-466-6642 17 EXHIBIT A SUPPLEMENTAL DISCLOSURE SCHEDULE No supplemental disclosures if no items listed below: 18 AMENDMENT NUMBER FOUR to LOAN AGREEMENT Effective December 31, 1996 by and between THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (Predecessor by merger to NationsBank, N.A.) and INTRAV, INC. In consideration of their mutual agreements herein and for other sufficient consideration, the receipt of which is hereby acknowledged, INTRAV, INC. ("Borrower") and NATIONSBANK, N.A., successor by merger to The Boatmen's National Bank of St. Louis ("Lender") agree as follows: 1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan Agreement" means the Loan Agreement Effective December 31, 1996 between Borrower and Lender, as amended by Amendment Number One thereto effective as of January 1, 1997, Amendment Number Two thereto effective as of November 14, 1997, and Amendment Number Three thereto effective as of December 31, 1997 ("Amendment Number Three"). The term "this Amendment" means this Amendment. The term Loan Agreement means the Original Loan Agreement as amended by this Amendment. Capitalized terms used and not otherwise defined herein have the meanings defined in the Loan Agreement. 2. SCRIVENER'S ERROR IN AMENDMENT NUMBER THREE. The parties acknowledge that in Section 1 of Amendment Number Three, the reference to "Amendment Number One thereto effective as of December 31, 1996" is a scrivener's error. The parties agree that such reference should be deemed to state "Amendment Number One thereto effective as of January 1, 1997." 3. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be effective as of February 12, 1998, but only if all of the conditions in Section 5 of this Amendment have been satisfied. 4. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the conditions in Section 5 of this Amendment, the Loan Agreement is amended as follows: 4.1 REVOLVING COMMITMENT. The amount of the Revolving Commitment stated in Section 3.1.1 is changed from $15,000,000 to $20,000,000 and the table in Section 3.1.1 is amended to read in its entirety as follows:
- ------------------------------------------------------------------------ EFFECTIVE DATE OF REDUCTION NEW REDUCTION REVOLVING COMMITMENT - ------------------------------------------------------------------------ December 31, 1998 $2,000,000 $18,000,000 - ------------------------------------------------------------------------ December 31, 1999 $2,000,000 $16,000,000 - ------------------------------------------------------------------------
19 4.2 LAST SENTENCE OF SECTION 3.1.2. The last sentence of Section 3.1.2 (which was added in connection with Amendment Number Three) is hereby deleted in its entirety and the following sentence is substituted in lieu thereof: "No Advance will be made which would result in the Revolving Loan exceeding $13,000,000 unless and until Lender has a first priority Security Interest in the Bahamian registered vessel Clipper Adventurer and all of her machinery and equipment and a valid and effective assignment of all income and proceeds thereof, subject to no other Security Interests except those that will be fully discharged by appropriate contemporaneous application of the proceeds of such Advance in a manner satisfactory to Lender." 4.3 CAPITAL EXPENDITURES. The text of Section 17.5 of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "Borrower shall not make Capital Expenditures that in the aggregate exceed $2,500,000 in any one fiscal year of Borrower; provided, however, that Borrower may make Capital Expenditures of up to a total of $16,700,000 for acquiring and refitting the vessel Clipper Adventurer in Borrower's fiscal years ended in 1997 and 1998 in addition to the Capital Expenditures permitted in the prior clause of this sentence. Any portion of the additional $16,700,000 not expended in Borrower's fiscal year ended in 1997 may be expended in Borrower's fiscal year ended in 1998." 5. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment shall not become effective, and the Loan Agreement shall continue in full force and effect as it existed in the absence of this Amendment unless: 5.1 CERTAIN DOCUMENTS. Borrower shall deliver to Lender the following, all in form and substance satisfactory to Lender and (if applicable) executed by Borrower: 5.1.1. AMENDED AND RESTATED REVOLVING NOTE. An Amended and Restated Revolving Note in the principal amount of $20,000,000.00. 5.1.2. AMENDMENTS TO SHIP MORTGAGES. An amendment to each of the Ship Mortgages, increasing the amount secured to $20,000,000.00. 5.1.3. CERTIFICATE OF SECRETARY OF BORROWER. A Certificate of the Secretary of Borrower certifying that resolutions adopted by the Board of Directors of Borrower authorizing the execution, delivery and performance of this Amendment by Borrower are attached to the certificate and remain in full force and effect. 5.1.4. LEGAL OPINION. An opinion of Borrower's counsel regarding the good standing of Borrower, its due authorization of the execution and delivery of this Amendment and such other matters as Lender may require. 5.2. NO MATERIAL ADVERSE CHANGE. Nothing shall have occurred from December 31, 1997, to the date of execution hereof that is reasonably likely to have a Material Adverse Effect. 6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and warrants to Lender that (i) execution of this Amendment has been duly authorized by all requisite action of Borrower; (ii) no consents are necessary from any third parties for Borrower's execution, delivery or performance of this Amendment, (iii) this Amendment and the Loan Agreement as amended hereby constitute the legal, valid and binding obligations of Borrower enforceable against 20 Borrower in accordance with their terms, except to the extent that the enforceability thereof against Borrower may be limited by bankruptcy, insolvency or other laws affecting the enforceability of creditors rights generally or by equity principles of general application, (iv) except as disclosed on the supplemental disclosure schedule attached hereto as Exhibit A and the disclosure schedule attached to the Original Loan Agreement, all of the representations and warranties contained in Section 13 of the Original Loan Agreement, as amended hereby, are true and correct in all material respects with the same force and effect as if made on and as of the effective date of this Amendment, (v) there is no Existing Default, and (vi) no Default or Event or Default will occur immediately or with the passage of time or giving of notice as a consequence of this Amendment becoming effective. 7. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement, any of the other Loan Documents or any Existing Default, nor act as a release or subordination of the Security Interests of Lender under the Security Documents. Each reference in the Loan Agreement to "the Agreement", "hereunder", "hereof", "herein", or words of like import, shall be read as referring to the Loan Agreement as amended hereby. 8. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i) except as expressly amended hereby the Original Loan Agreement and other Loan Documents remain in full force and effect, (ii) the Original Loan Agreement, as amended hereby, is in full force and effect, (iii) Borrower has no defenses to its obligations under the Loan Agreement and the other Loan Documents, (iv) the Security Interests of Lender under the Security Documents continue in full force and effect and have the same priority as before this Amendment, and (v) Borrower has no claim against Lender arising from or in connection with the Loan Agreement or the other Loan Documents. 9. COUNTERPARTS. This Amendment may be executed by the parties hereto on any number of separate counterparts, and all such counterparts taken together shall constitute one and the same instrument. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged. 10. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature page thereto intended to be attached to a copy of this Amendment, signed and transmitted by facsimile machine or telecopier shall be deemed and treated as an original document. The signature of any person thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party hereto, any facsimile or telecopy document is to be re-executed in original form by the Persons who executed the facsimile or telecopy document. No party hereto may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Amendment. 11. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the rights and obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with 21 the internal laws of the State of Missouri applicable to contracts made and to be performed wholly within such state, without regard to choice or conflict of laws provisions. 12. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that all of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this reference. 13. STATUTORY NOTICE. The following notice is given pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained in such notice will be deemed to limit or modify the terms of the Loan Documents or this Amendment: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. 14. STATUTORY NOTICE--INSURANCE. The following notice is given pursuant to Section 427.120 of the Missouri Revised Statutes; is deemed incorporated into the Loan Agreement and nothing contained in such notice shall be deemed to limit or modify the terms of the Loan Documents UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN. [the next page is the signature page] 22 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by appropriate duly authorized officers as of the effective date first above written. TEL # 314-466-6642 23 INTRAV, INC. NATIONSBANK, N.A. by its Executive Vice President and Chief By its Senior Vice President Financial Officer /s/ Wayne L. Smith II /s/ Keith M. Schmelder - ------------------------------------ ------------------------ Wayne L. Smith II Keith M. Schmelder Notice Address: Notice Address: 7711 Bonhomme Avenue 800 Market Street St. Louis, MO 63105 St. Louis, MO 63101 FAX # 314-727-2533 FAX # 314-466-7783 TEL # 314-727-0500 TEL # 314-466-6642 24 EXHIBIT A Supplemental Disclosure Schedule No supplemental disclosures if no items listed below: 25 AMENDED AND RESTATED REVOLVING NOTE $20,000,000.00 St. Louis, Missouri February 12, 1998 For value received, INTRAV, INC., a Missouri corporation ("Borrower"), promises to pay to the order of NATIONSBANK, N.A. (successor by merger to The Boatmen's National Bank of St. Louis) ("Lender") the principal sum of TWENTY MILLION DOLLARS ($20,000,000.00) or such lesser aggregate unpaid principal amount as shall be outstanding under this Revolving Note (this "Note"), plus all interest accrued thereon, on the Maturity Date. Borrower further promises to pay interest from the date hereof on the balance of said principal from time to time outstanding at a per annum rate or rates determined pursuant to the Loan Agreement (defined below). Upon the occurrence of any Event of Default as defined in the Loan Agreement, or at the option of Lender upon the occurrence of a Default as defined in the Loan Agreement, all outstanding principal and, to the extent permitted by law, accrued interest in respect of this Note and all other amounts owing hereunder shall bear interest, payable on demand, at the rate payable on the Revolving Loan after maturity, as set forth in the Loan Agreement. In addition, such higher rate of interest shall apply after Maturity, whether by acceleration or otherwise. All such interest shall be computed on the basis of a year deemed to consist of 360 days and paid for the actual number of days elapsed. Interest shall be payable on such dates as are provided under the Loan Agreement. Both principal and interest are payable in Dollars to Lender at the Lending Office. This Note is issued under the terms of, and pursuant to the provisions of, that certain Loan Agreement dated as of December 31, 1996, between Lender and Borrower, as amended through the date hereof (as it may be further amended, restated, extended, renewed, replaced, or otherwise modified from time to time, the "Loan Agreement"). All capitalized terms used and not otherwise defined herein shall have the same meanings as given them in the Loan Agreement. This Note is secured by the Collateral described in the Loan Documents, executed from time to time by Borrower in favor of Lender as set forth in the Loan Agreement and reference to the Loan Documents and the Loan Agreement is made for a statement of the rights of the Lender with respect to such Collateral. Borrower shall prepay the principal amount of this Note to the extent provided in the Loan Agreement. Borrower may prepay the principal amount of this Note to the extent and upon the conditions provided in the Loan Agreement. The date and amount of all disbursements and receipts of principal and receipts of interest with respect to this Note will be recorded in the records that Lender normally maintains for instruments and agreements similar to this Note and the other Loan Documents. The failure to record, or any error in recording, any of the foregoing shall not, however, affect the obligation of Borrower to pay principal, interest and other amounts as required under the Loan Documents. 26 Borrower shall have the burden of proving that Lender's records are not correct. Borrower agrees that Lender's books and records showing disbursements and receipts shall be admissible in any action or proceeding arising therefrom, and shall constitute prima facie proof thereof. Such records shall be deemed correct, accurate and binding on Borrower and an account stated, except as expressly provided otherwise in the Loan Agreement. Reference is made to the Loan Agreement for provisions regarding the acceleration of the maturity hereof on the occurrence of any Event of Default, which provisions are incorporated herein by this reference. If Borrower sells, assigns, transfers or conveys all or any part of the Real Property Collateral or any interest therein without the prior written consent of Lender as required by the Loan Agreement, all outstanding principal and accrued interest under this Note shall become immediately due and payable. If any payment required under this Note or the Loan Agreement is not made when due, or upon any other Event of Default, Borrower shall pay all costs of collection on this Note, including but not limited to court costs and reasonable attorneys fees and actual expenses of such attorneys, whether or not litigation is commenced, including representation of Lender in connection with any bankruptcy or insolvency proceeding of Borrower. Demand for payment, protest, notice of dishonor, and all other notices and demands under this Note and any and all lack of diligence in the enforcement of this Note are hereby waived by all who are or shall become parties to this Note and the same hereby assent to each and every extension or postponement of the time of payment, at or after demand, or other indulgence, and hereby waive any and all notice thereof. Every such party by becoming a party to this Note further waives any and all defenses which such party may have based on suretyship or impairment of collateral with respect to this Note. No amendment, modification or waiver of any provision of this Note, nor consent to any departure by Borrower herefrom, shall be effective unless the same shall be in writing signed by an authorized officer of Lender, and then only in the specific instance and for the purpose for which given. No failure on the part of Lender to exercise, and no delay in exercising, any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right under this Note preclude any other or further exercise thereof, or the exercise of any other right. Each and every right granted to Lender under this Note or allowed to it at law or in equity shall be deemed cumulative and such remedies may be exercised from time to time concurrently or consecutively at Lender's option. All notices required to be given or which may be given in connection with this Note shall be given in the manner required for notices under the Loan Agreement. This Note is governed by and shall be interpreted in accordance with the laws of the State of Missouri, without regard to choice or conflict of laws rules. 27 This Note is an amendment and restatement, but not a novation or refinancing, of the Revolving Note from Borrower to Lender dated as of December 31, 1996 in the original principal amount of $10,000,000, as it has been amended and restated from time to time. This Note does not evidence or effect a release or relinquishment of the priority of the Security Interests of Lender in any of the Collateral. INTRAV, INC. By: /s/ Wayne L. Smith II ---------------------------- Name: Wayne L. Smith II ---------------------------- Title: Executive Vice President ---------------------------- EX-10.(III)(A)(5) 3 AMENDED INCENTIVE STOCK PLAN 1 EXHIBIT 10(III)(A)(5) INTRAV, INC. AMENDED INCENTIVE STOCK PLAN 1. PURPOSE. The purpose of the INTRAV, Inc. Incentive Stock Plan (the "Plan") is to aid in attracting and retaining strong management capable of assuring the future success of INTRAV, Inc. (the "Company"). The Plan is designed to secure for the Company and its shareholders the benefits inherent in common stock ownership by the key employees of the Company, who are largely responsible for the Company's future growth and continued financial success; and to afford such persons the opportunity to obtain or increase a proprietary interest in the Company on a favorable basis and, thereby, to have an opportunity to share in its success. 2. DEFINITIONS. As used in this Plan, the following words shall have the following meanings: (a) "Board of Directors" means the Board of Directors of the Company; (b) "Code" means the Internal Revenue Code of 1986, as amended. Reference to a section of the Code shall include that section and any comparable section or sections of any future legislation that amends, supplements or supersedes that section. (c) "Common Stock" means common stock of the Company; (d) "Disinterested Person" shall have the meaning set forth in Rule 16b-3(c)(2)(i) of the Securities Exchange Act of 1934, as amended. (e) "Incentive Stock Option" means an option to purchase shares of Common Stock at the times and at the price determined by the Administrator in accordance with Paragraph 7 which is intended to qualify as an incentive stock option as defined in Section 422 of the Code; (f) "Nonqualified Stock Option" means an option to purchase shares of Common Stock at the times and at the price determined by the Administrator in accordance with Paragraph 7 which is not intended to qualify as an Incentive Stock Option; (g) "Option" means an Incentive Stock Option or Nonqualified Stock Option; 2 (h) "Outside Director" means a member of the Board of Directors who is not an employee of the Company. (i) "Participant" means an employee of the Company or its subsidiaries or an Outside Director who has been awarded Benefits under the Plan. (j) "Restricted Stock" means Common Stock that is subject to certain restrictions on its disposition and rights of the Company to reacquire the stock upon the occurrence of certain events during a specified period as determined by the Administrator in accordance with Paragraph 8; (k) "Subsidiary" means any corporation, partnership, joint venture or business trust, fifty percent (50%) or more of the control of which is owned, directly or indirectly, by the Company; provided that for the purpose of Incentive Stock Options "Subsidiary" shall have the same meaning as the term "subsidiary corporation," as defined in Section 425 of the Code; provided further that "Subsidiary" includes any entity or arrangement that first becomes described in this subparagraph after the effective date of this Plan. (l) "Reporting Person" means any person who is the beneficial owner, directly or indirectly, of more than ten percent (10%) of any class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended; any director or officer of the issuer of such securities; and any person specified in Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(f) of the Investment Company Act of 1940. 3. ADMINISTRATION. (a) General. The Plan shall be administered by the Board of Directors or by a committee or committees appointed by the Board of Directors as Administrator of the Plan. The Board of Directors may appoint a committee to act as Administrator with respect to one or more classes of employees, and another committee or committees to act as Administrator with respect to other classes of employees; or appoint a committee to serve as Administrator with respect to one category of benefits, and another committee to serve as Administrator with respect to a different category of benefits. (b) Reporting Persons. Anything in subparagraph (a) of this Paragraph 3 to the contrary notwithstanding, selection of Reporting Persons for participation in the Plan and decisions concerning the timing, pricing, and amount of a grant or award to Reporting Persons must be made solely by a committee of two or more directors, each of whom is a Disinterested Person. 2 3 (c) Administrator. References throughout this Plan to the "Administrator" shall refer to (i) the administrative committee described in subparagraph (b) of this Paragraph, with respect to selection of Reporting Persons for participation in the Plan and decisions concerning the timing, pricing, and amount of a grant or award to Reporting Persons; and (ii) the Board of Directors or the committee or committees described in subparagraph (a) of this Paragraph, with respect to all other administrative functions. Subject to the provisions of this Plan, the Administrator shall have exclusive authority to interpret and administer the Plan, to establish appropriate rules relating to the Plan, to select persons to receive awards under the Plan, to grant Incentive Stock Options, Non-qualified Stock Options and Restricted Stock in accordance with the Plan, to delegate its authority and duties under the Plan and to take all such steps and make all such determinations in connection with the Plan and the Incentive Stock Options, Nonqualified Stock Options and Restricted Stock as it may deem necessary or advisable. 4. ELIGIBILITY. Key employees of the Company and Outside Directors, who are responsible for contributing to the management and the profitability of the business of the Company, are eligible for awards under the Plan. The Administrator shall from time to time determine and designate the employees and Outside Directors who shall receive awards under the Plan, and the number of Incentive Stock Options, Nonqualified Stock Options and the Restricted Stock to be awarded to each such person. In making any such award, the Administrator may take into account the nature of services rendered by the person, the capacity of the person to contribute to the success of the Company, and other factors that the Administrator may consider relevant. 5. TYPES OF BENEFITS. Benefits that may be awarded under the Plan include (a) Incentive Stock Options; (b) Nonqualified Stock Options; and (c) Restricted Stock, as described in this Plan ("Benefits"). The Administrator may: (a) make the grant of Benefits conditional upon an election by a Participant to defer payment of a portion of his compensation; (b) give a participant a choice between two Benefits or combinations of Benefits; (c) award Benefits in the alternative so that acceptance of or exercise of one Benefit cancels the right of a Participant to another; and (d) award Benefits in any combination or combinations and subject to any condition or conditions consistent with the terms of the Plan that the Administrator in its sole discretion shall determine. The Administrator in its discretion may offer Outside Directors the option to elect to receive all or any portion of their fees for services on the Board of Directors in the 3 4 form of Restricted Stock in lieu of cash on such terms and conditions as the Administrator shall determine. 6. SHARES SUBJECT TO PLAN. Subject to the provisions of Section 9 (relating to adjustment for changes in capital stock), the maximum number of shares that may be issued under this Plan shall not exceed in the aggregate 750,000 shares of Common Stock. Such shares may be unissued shares, or issued shares that have been reacquired. If any Incentive Stock Options or Non-Qualified Stock Options granted under the Plan shall for any reason terminate or expire, or be surrendered without having been exercised in full, the shares not purchased under such options shall be available again for option or grant under the Plan. If any Restricted Stock is granted hereunder, such shares shall be available again for option or grant under the Plan even though such shares are forfeited prior to the end of the Restricted Period. Notwithstanding the above, the maximum number of shares that may be awarded in any calendar year to a "covered employee" for such year, as defined in Section 162(m) of the Code, shall not exceed 500,000 shares (as adjusted in accordance with Paragraph 9). 7. STOCK OPTIONS. The Administrator from time to time may grant options ("Options") to Participants to purchase shares of Common Stock from the Company. An Option may be granted in the form of an "Incentive Stock Option," which is intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or in the form of a "Non-Qualified Stock Option," which is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. Each Participant who is awarded a Stock Option shall enter into an agreement with the Company in a form specified by the Administrator agreeing to the terms and conditions of the award and such other matters consistent with the Plan as the Administrator in its sole discretion shall determine. Option agreements need not be identical, but each Option agreement shall include the substance of all of the provisions set forth in subsections (a) through (e) below: (a) The purchase price shall be payable in full in cash upon exercise of the Option. In lieu of cash a Participant may, to the extent permitted by and subject to the conditions contained in the terms of the Option agreement, make payment in whole or in part by tendering shares of Common Stock of the Company valued at fair market value on the date of exercise, or in the form of any other property or note permitted by the Option agreement. (b) An Option shall not be transferable by the individual to whom granted except by will or by the laws of descent and distribution; and may be exercised during the 4 5 individual's lifetime only by such individual or, in the case of a Non-Qualified Option, such individual's guardian or legal representative. (c) The Administrator in its discretion may provide in any Option agreement that the Option shall be exercisable in full at any time or from time to time during the term of the Option, or may provide for the exercise of the Option in such installments and at such times during the term of the Option as the Administrator may determine; provided however that no option granted to a Reporting Person shall be exercisable for at least six months from the date of acquisition of the Option. (d) The maximum term of an Option shall be ten years from the date it was granted, except that the maximum term of an Incentive Stock Option granted to a person who owns more than ten percent of the total combined voting power of all classes of the stock of the Company shall be five years. (e) The purchase price of the shares covered by each Option shall be not less than 100% of the fair market value of the stock subject to the Option at the time the Option is granted. Fair Market Value means the closing price on the Nasdaq National Market or any other stock exchange on which shares of Common Stock are traded on the valuation date, and if there is no sale of such shares on such date, the price determined by the Administrator. (f) The aggregate fair market value (as determined by the Administrator as of the time an Incentive Stock Option is granted) of the Common Stock covered by an Incentive Stock Option awarded a Participant under the Plan (or any plan of a parent corporation or Subsidiary) that becomes exercisable for the first time during any calendar year shall not exceed One Hundred Thousand Dollars ($100,000.00) or such other maximum applicable to Incentive Stock Options as may be in effect from time to time under the Code. (g) No Incentive Stock Option shall be awarded after the day preceding the tenth anniversary of the effective date of the Plan. (h) No person entitled to exercise any Option granted under the Plan shall have any of the rights or privileges of a shareholder of the Company with respect to shares issuable upon exercise of such Option until certificates representing such shares shall have been issued and delivered to such person. (i) An Incentive Stock Option may be granted only to a person who is an employee of the Company at the time of the grant. 8. RESTRICTED STOCK. Restricted Stock consists of Common Stock that is subject to certain restrictions 5 6 on the disposition of such share and rights of the Company to reacquire the share upon specified terms upon the occurrence of certain events during a specified period, as determined by the Administrator. Each Participant who is awarded Restricted Stock shall enter into an agreement with the Company in a form specified by the Administrator agreeing to the terms and conditions of the award and such other matters consistent with the Plan as the Administrator in its sole discretion shall determine. Restricted Stock may not be sold, transferred, pledged or otherwise encumbered during a Restricted Period. A Restricted Period shall commence on the date of the award and end at such later date as the Administrator may designate at the time of the award. In the case of a Participant subject to Section 16 of the 1934 Act, the Restricted Period shall be at least six months after acquisition of the Restricted Stock, except in case of death or disability. A Participant shall have the entire beneficial ownership and most of the rights and privileges of a shareholder with respect to Restricted Stock awarded to him, including the right to receive dividends and the right to vote such Restricted Stock. The Administrator in its sole discretion from time to time may establish the terms and conditions under which Restricted Stock shall be forfeited by the Participant during the Restricted Period. Notwithstanding anything in this Section to the contrary, the Administrator may make an award of "phantom stock credits" to any Participant which shall serve as a basis for an award of Restricted Stock at a later point in time. The Participant shall not be entitled to delivery of the certificate representing shares of Common Stock until the expiration of the Restricted Period applicable to such Restricted Stock. 9. ADJUSTMENT UPON CHANGES IN STOCK. If any change is made in the shares of Common Stock of the Company by reason of any merger, consolidation, separation, reorganization, partial or complete liquidation, stock dividend, stock split, combination of shares, recapitalization, change in corporate structure, or otherwise, appropriate adjustments shall be made by the Administrator to the kind and maximum number of shares subject to the Plan and the kind and number of shares and price per share of stock subject to each outstanding Benefit. Any increase in the shares, or the right to acquire shares, as the result of such an adjustment shall be subject to the same terms and conditions that apply to the Benefit for which such increase was received. No fractional shares of Common Stock shall be issued under the Plan on account of any such adjustment, and rights to shares always shall be limited after such an adjustment to the lower full share. 6 7 10. AMENDMENT OF THE PLAN. The Board of Directors of the Company may at any time amend the Plan, provided that the Board may not, without approval (within twelve months before or after the date of such change) of such number of the stockholders as may be required by federal income tax or federal securities laws for any particular amendment: (a) increase the maximum number of shares of Common Stock in the aggregate which may be issued under the Plan, except as may be permitted under the adjustment provisions of Section 9, (b) change the class of persons eligible to participate in the Plan, or (c) adopt any other amendment for which shareholder approval is required by federal income tax or federal securities laws. The Board of Directors may not alter or impair any Benefit previously granted under the Plan without the consent of the person to whom the Benefit was granted. 11. TERMINATION OF THE PLAN. The Plan shall terminate upon the expiration of the ten year period which commences on the earlier of (a) the date the Plan is adopted by the Board of Directors of the Company, or (b) the date on which the Plan is approved by the stockholders of the Company; provided, however, that the Board of Directors may terminate or suspend the Plan at any time. No Benefit shall be awarded after termination of the Plan. Rights and obligations under a Benefit awarded while the Plan is in effect shall not be altered or impaired by termination or suspension of the Plan except by consent of the person to whom the Benefit was awarded. 12. WITHHOLDING TAX. The Company shall have the right to withhold with respect to any distribution made to Participants under the Plan any taxes required by law to be withheld because of such distribution (the "Tax Requirements"). The Administrator may require or permit a Participant to satisfy any Tax Requirements with Company stock. If the Administrator permits a Participant to satisfy the Tax Requirements in Company stock, the election by a Participant to do so shall be made prior to the date the withholding obligation arises (the "Tax Date"), shall be irrevocable and shall be subject to the disapproval of the Administrator. Additionally, if a Participant is subject to Section 16 of the 1934 Act the Participant's election (a) may not be made until at least six months after the award to which it relates except in the case of death or disability; and (b) must be made six months prior to the Tax Date or during the period beginning on the third business day following the date of release for publication of quarterly and annual summary statements of sales and ending on the twelfth business day following the date of such release. 7 8 13. RULES OF CONSTRUCTION. The terms of the Plan shall be construed in accordance with the laws of the State of Missouri, provided that the terms of the Plan as they relate to Incentive Stock Options shall be construed first in accordance with the meaning under and in a manner that will result in the Plan satisfying the requirements of the provisions of the Code governing incentive stock options. 14. COMPLIANCE WITH 1934 ACT. With respect to persons subject to Section 16 of the 1934 Act, transactions under this Plan are intended to comply with all applicable provisions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Administrator fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Administrator. 15. NONTRANSFERABILITY. Each Option or similar right granted under this Plan shall not be transferable other than by will or the laws of descent and distribution, and shall be exercisable during the holder's lifetime only by the holder or the holder's guardian or legal representative. 16. EFFECTIVE DATE. The Plan shall become effective as of the date it is adopted by the Board of Directors of the Company subject only to approval by the holders of a majority of the outstanding voting stock of the Company within twelve (12) months before or after the adoption of the Plan by the Board of Directors. 17. STOCK APPRECIATION RIGHTS (SARs). (a) A Stock Appreciation Right (SAR) is the right of the Participant to receive all or a portion of the difference between the fair market value of a share of common stock at the time of exercise of the SAR and the exercise price of the SAR established by the Administrator. Such difference may be payable in cash, or in common stock, as determined by the terms of the SAR Agreement. The Administrator from time to time may grant SARs to Participants exercisable upon such terms and conditions as the Administrator may establish at the time of the grant of the SAR. Each Participant who is awarded a SAR shall enter into an agreement with the Company in a form specified by the Administrator agreeing to the terms and conditions of the award and such other matters consistent with the Plan as the Administrator at its sole discretion shall determine. 8 9 (b) A SAR granted pursuant to this Section to a person subject to Section 16 of the 1934 Act (i) shall not be exercisable for at least six months from the date of the grant; (ii) shall not be transferable other than by will or the laws of descent and distribution; and (iii) shall be exercisable during the Participant's lifetime only by the Participant or the Participant's guardian or legal representative. (c) A Participant subject to Section 16 of the 1934 Act may surrender an option pursuant to this Section only during the period beginning on the third business day following the date of release for publication of quarterly and annual summary statements of sales and earnings and ending on the twelfth business day following the date of such release. (d) The following additional provisions shall be applicable to any SAR granted in tandem with an Incentive Stock Option where the exercise of the SAR affects the right to exercise the Incentive Stock Option: (i) The SAR may not be exercised at any time after the expiration or termination of the underlying Incentive Stock Option; (ii) The SAR may be for no more than the difference between the exercise price of the underlying Incentive Stock Option and the market price of the common stock subject to the underlying option at the time the SAR is exercised; (iii) The SAR is transferable only when the underlying Incentive Stock Option is transferable, and under the same conditions; (iv) The SAR may be exercised only when the underlying Incentive Stock Option may be exercised; and (v) The SAR may be exercised only when the market price of the common stock subject to the underlying Incentive Stock Option exceeds the exercise price of the Incentive Stock Option. 9 EX-10.(III)(A)(8) 4 FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT 1 Exhibit 10(iii)(A)(8) FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT -------------------------------------------------- First Amendment to Deferred Compensation Agreement ("First Amendment"), entered into and effective as of November 7, 1997, by and between CLIPPER CRUISE LINE, INC., a Delaware corporation (hereinafter referred to as "Corporation"), and PAUL H. DUYNHOUWER, an individual, residing in the County of St. Louis, State of Missouri (hereinafter referred to as "Employee"). WHEREAS, Corporation and Employee are parties to a certain Deferred Compensation Agreement, dated December 23, 1996 ("Agreement"), which sets forth certain terms relative to Employee's employment with the Corporation; and WHEREAS, the parties wish to amend the Agreement, pursuant to the terms and provisions set forth hereinbelow. NOW, THEREFORE, in consideration of the above premises and the mutual promises and covenants below, the parties agree as follows: 1. Revised Deferred Compensation Amount. In lieu of the bonus and ------------------------------------ the Deferred Compensation Amount referred to in paragraphs 3, 4, and 5 of the Agreement, the Corporation agrees to pay to Employee, and Employee agrees to accept from the Corporation, as deferred compensation, the following amount: The amount which would have been accrued in favor of Employee, i.e., credited ---- to Employee's Deferred Compensation Account, as of December 31, 1997, under paragraphs 3, 4, and 5 of the Agreement, for calendar years 1990 through 1997, only, computed in the manner set forth in paragraphs 3, 4, and 5 of the Agreement, if not for this First Amendment. In calculating the amount due to the Employee under this paragraph 1, the vested percentage applied under paragraph 4(c) of the Agreement shall be one hundred percent (100%). 2. Revised Deferred Compensation Payment Schedule. The amount set ---------------------------------------------- forth in paragraph 1 hereinabove shall be paid in full by the Corporation on the later of the following: (a) January 15, 1998; or (b) Three (3) business days following the date upon which the Corporation calculates the amount due and owing under paragraph 1 hereinabove, using reasonable diligence and promptness in making such calculation. 3. Release of Previous Deferred Compensation Obligations Under the --------------------------------------------------------------- Agreement. Other than for the obligations expressly incurred by the - --------- Corporation under paragraphs 1 and 2 of this First Amendment, the Employee hereby releases, remises, and forever discharges the Corporation and its affiliates, officers, directors, shareholders, employees, and all of their respective successors and assigns, of and from any and all liabilities, 2 obligations, or claims with respect to the payment of any bonus or Deferred assigns, of and from any and all liabilities, obligations, or claims with respect to the payment of any bonus or Deferred Compensation Amount to Employee under paragraphs 3, 4, or 5 of the Agreement. Any and all references to benefits, payments, or deferred compensation under paragraphs 7 through 15 of the Agreement, shall refer only to the payments described in paragraphs 1 and 2 of this First Amendment and not to the bonus or Deferred Compensation Amount referred to in paragraphs 3, 4 or 5 of the Agreement, which have hereby been terminated in full and replaced by the amount and payment schedule set forth in paragraphs 1 and 2 of this First Amendment. Employee further acknowledges that all of Corporation's obligations under paragraph 6 of the Agreement and the Memorandum of Agreement referred to in such paragraph 6, have been satisfied and discharged in full. 4. Ratification of Agreement in all Other Respects. Other than as ----------------------------------------------- set forth in paragraphs 1, 2 and 3 of this First Amendment, the Agreement is in all other respects ratified and confirmed to remain in full force and effect. IN WITNESS WHEREOF, the parties have executed and delivered this First Amendment, intending to be legally bound thereby, on and as of the date first hereinabove stated. CLIPPER CRUISE LINE, INC. By: /s/ Michael F. Doiron ------------------------------ Print Name: Michael F. Doiron ------------------------------ Title: Executive Vice President ------------------------------ /s/ Paul H. Duynhouwer ------------------------------------------ Paul H. Duynhouwer 2 EX-10.(III)(A)(9) 5 EMPLOYMENT AGREEMENT 1 Exhibit 10(iii)(A)(9) DATE: September 18, 1997 TO: BAE FROM: WLS RE: Intrav Employment The following sets forth the agreement we made today. I will become CFO of Intrav/Clipper ASAP but no later than Friday, September 26, 1997. I will also go on the Board of Directors. My annual salary will be $140,000, and I will be granted 100,000 options to buy Intrav stock at the market price prevailing on the day I become CFO. Upon termination of my employment with Intrav, I will receive a severance payment of $100,000. I will retain all of my existing advisory, consulting, and director relationships and continue to receive compensation therefrom, but I will agree not to enter into any new relationships without your specific consent. Acknowledged & Agreed: /s/ Barney A. Ebsworth - ------------------------------------------ Barney A. Ebsworth /s/ Wayne L. Smith II - ------------------------------------------------ Wayne L. Smith II EX-13 6 PORTIONS OF ANNUAL REPORT 1 General Corporate Information - ------------------------------------------------------------------------------- EXECUTIVE OFFICERS Paul H. Duynhouwer President and Chief Executive Officer Wayne L. Smith II Executive Vice President and Chief Financial Officer Richard J. Hefler Senior Vice President -- Marketing and Sales DIRECTORS Barney A. Ebsworth Chairman of the Board Intrav, Inc. Paul H. Duynhouwer President and Chief Executive Officer Intrav, Inc. Wayne L. Smith II Executive Vice President and Chief Financial Officer Intrav, Inc. John B. Biggs, Jr. Senior Vice President -- Private Client Group NationsBank William H.T. Bush Chairman of the Board Bush, O'Donnell & Co., Inc. Robert H. Chapman Chairman of the Board & Chief Executive Officer Barry-Wehmiller Companies, Inc. TRANSFER AGENT AND REGISTRAR ChaseMellon Shareholders Services, L.L.C. Overpeck Centre 85 Challenger Road Ridgefield Park, NJ 07660 888-213-0965 www.chasemellon.com INDEPENDENT AUDITORS Deloitte & Touche LLP One City Centre St. Louis, MO 63101 2 GENERAL COUNSEL - ------------------------------------------------------------------------------- Peper, Martin, Jensen, Maichel and Hetlage 720 Olive Street St. Louis, MO 63101 INVESTOR RELATIONS Shareholders may obtain, without charge, a copy of the Company's 1997 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, by directing inquiries to: Intrav, Inc. Investor Relations 7711 Bonhomme Avenue St. Louis, MO 63105-1961 Telephone: (314) 727-0500, extension 299 NOTICE OF ANNUAL MEETING The 1998 Annual Meeting of Shareholders will be held at the St. Louis Club, located at 7701 Forsyth, St. Louis, MO, at 11:00 a.m. on Thursday, May 21, 1998. STOCK LISTING The common shares of Intrav, Inc., are traded on the NASDAQ Stock Market under the trading symbol TRAV. As of February 28, 1998, there were 133 shareholders of record, and approximately 1,300 beneficial shareholders. MARKET PRICE RANGE
1997 1996 - -------------------------------------------------------------------------------------- HIGH LOW HIGH LOW First Quarter 9 9/16 7 1/4 81 9/32 6 17/32 Second Quarter 9 3/8 7 8 7/8 7 1/4 Third Quarter 12 1/4 8 5/8 8 1/2 6 3/4 Fourth Quarter 15 1/2 11 7/8 81 1/32 5 3/4 - --------------------------------------------------------------------------------------
Note: Company commenced trading on NASDAQ Stock Market on May 18, 1995. DIVIDENDS PAID PER SHARE (to Intrav, Inc., shareholders)
1997 1996 - --------------------------------------------------------- First Quarter $0.125 0.125 Second Quarter 0.125 0.125 Third Quarter 0.125 0.125 Fourth Quarter 0.125 0.125 - --------------------------------------------------------- Year $0.50 $0.50 =========================================================
3 Five-Year Financial Highlights - ---------------------------------------------------------------------------------------------------------------------
(Amounts in thousands except per share data) YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 INCOME STATEMENT DATA: Program revenues $122,523 $126,081 $114,845 $108,876 $85,900 Cost of operations 99,007 101,651 91,035 83,934 69,712 - --------------------------------------------------------------------------------------------------------------------- Gross profit 23,516 24,430 23,810 24,942 16,188 Operating income 6,827 5,657 6,888 7,502 2,132 Net income (loss) 4,940 3,165 4,147 4,379 (2) Basic earnings per common share 0.97 0.61 0.80 0.88 -- Diluted earnings per common share 0.96 0.61 0.80 0.88 -- Dividends per common share 0.50 0.60 0.25 0.90 -- BALANCE SHEET DATA: Cash, cash equivalents andmarketable securities $ 15,416 $ 14,114 $ 31,224 $ 28,180 $18,932 Total current assets 25,365 26,323 41,495 37,280 29,887 Total assets 56,801 52,594 68,966 62,285 57,711 Total current liabilities 36,846 39,738 47,730 46,557 33,466 Total long-term debt 7,450 3,000 10,317 11,019 11,731 Shareholders equity (deficit) 5,517 3,781 4,970 (265) (389) PERFORMANCE RATIOS: Gross margin on sales 19.2% 19.4% 20.7% 22.9% 18.8% Operating margin on sales 5.6% 4.5% 6.0% 6.9% 2.5% Net income on sales 4.0% 2.5% 3.6% 4.0% n/a - ---------------------------------------------------------------------------------------------------------------------
4 Management's Discussion and Analysis Overview - ------------------------------------------------------------------------------- INTRAV is a leading designer, organizer, marketer, and operator of deluxe, escorted, worldwide travel programs. These programs are designed to appeal to higher-income individuals desiring first-class travel experiences and have been primarily marketed via direct mail through sponsoring "affinity groups" and directly to the ultimate traveler. Since 1959, more than 400,000 travelers have participated in the Company's travel programs. On December 31, 1996, INTRAV acquired all the outstanding common stock of Clipper Cruise Line from Windsor, Inc., a company controlled by Barney A. Ebsworth, INTRAV's Chairman of the Board and majority stockholder. The Stock Purchase Agreement included an initial payment of approximately $9.9 million and the assumption of indebtedness of $5.5 million owed by Clipper to Windsor, with an additional $0.2 million paid on March 14, 1997. Additional cash consideration of up to $3.0 million may be paid to the extent the cumulative net cruise revenues of Clipper exceed $70.0 million in the period January 1, 1997, through December 31, 2000. Due to the common ownership and control of Mr. Ebsworth over both INTRAV and Clipper, the acquisition was accounted for in a manner similar to the pooling-of-interests method and, accordingly, all financial data has been restated to include the accounts and results of operations of Clipper for all periods prior to the acquisition. Clipper is a leading designer, organizer, marketer and operator of small-ship adventure cruises. Similar to INTRAV, its programs are designed to appeal to higher-income individuals desiring first-class travel experiences and have been primarily marketed via carriage trade travel agents, direct mail through sponsoring "affinity groups," and directly to the ultimate traveler. Clipper's travelers cruise primarily on its two cruise ships, the M/V Yorktown Clipper and the M/V Nantucket Clipper. A third ship, the M/S Clipper Adventurer, will commence service in the spring of 1998. Results of Operations - ------------------------------------------------------------------------------- The following table sets forth for the periods indicated the actual percentages which certain items in the Consolidated Statements of Income bear to program revenues: Percentage of Program Revenues
Year Ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------- Program revenues 100.0% 100.0% 100.0% Cost of operations 80.8 80.6 79.3 - ------------------------------------------------------------------------- Gross profit 19.2 19.4 20.7 Selling, general and administrative 12.5 13.4 13.2 Depreciation and amortization 1.1 1.5 1.5 - ------------------------------------------------------------------------- Operating income 5.6 4.5 6.0 Investment income .8 1.3 1.6 Interest expense (.1) (1.8) (2.0) - ------------------------------------------------------------------------- Income before income taxes 6.3 4.0 5.6 Income taxes 2.3 1.5 2.0 - ------------------------------------------------------------------------- Net income 4.0% 2.5% 3.6% =========================================================================
- ------------------------------------------------------------------------- 5 Program Revenues - ------------------------------------------------------------------------------- Program revenues in 1997 were $122.5 million, compared to $126.1 million and $114.8 million in 1996 and 1995, respectively. The 2.9% decrease in 1997 from 1996 was due to 2,220 fewer travelers, a decrease of 8.1%, from 27,334 travelers in 1996 to 25,114 in 1997. The decrease in travelers was partially offset by an increase in the average revenue per traveler, from $4,613 in 1996 to $4,879 in 1997. The reduction in travelers on our big-ship cruises accounted for the decrease in travelers. But since these big-ship cruises are lower priced trips, average revenue per traveler actually increased. The 9.8% increase in 1996 from 1995 was primarily due to 2,765 additional travelers, representing an 11.3% increase from 24,569 travelers in 1995 to 27,334 travelers in 1996. The average revenue per traveler decreased from $4,674 in 1995 to $4,613 in 1996. Cost of Operations - ------------------------------------------------------------------------------- Cost of operations includes the costs of airfare, ship, hotel and other accommodations and services included in the base program, as well as costs of optional products and services including sightseeing, program extensions, additional airfare, and medical and educational seminars. Also included are the costs of creating and distributing promotional materials, commissions paid in connection with booking travelers, and other promotional expenses for each program. Cost of operations totaled $99.0 million in 1997, compared to $101.7 million in 1996 and $91.0 million in 1995. The decrease in 1997 and increase in 1996 were primarily due to the decreased and increased sales levels, respectively. In 1997 as in 1996, the Company experienced increases in the costs of promoting the programs compared to the prior year. Promotional expenses were $19.8 million, $19.1 million and $15.2 million in 1997, 1996 and 1995, respectively. The increase in promotional expenses in 1997 was primarily attributable to increased postage and commission expenses compared to 1996. And the increase in 1996 was primarily attributable to higher postage rates and a greater number of brochures mailed than in 1995. Management's increased focus on finely targeted promotions to increase the number of travelers per promotion dollar expended should reduce overall promotion expenses as a percent of revenues in 1998 and beyond. Gross Profit - ------------------------------------------------------------------------------- Gross profit totaled $23.5 million, or 19.2% of program revenue, in 1997. This compares to $24.4 million, or 19.4% of program revenue, in 1996 and $23.8 million, or 20.7% of program revenue, in 1995, respectively. The decrease in 1997 was due to the decreased sales level and higher promotional expenses as a percent of revenues. Actions taken by management in 1997 to reduce promotional expenses as a percent of revenue are expected to improve profit margins. The 1996 increase from 1995 was primarily due to the increased sales levels, partially offset by increased promotional expenses and program costs associated with certain cruise programs. Selling, General and Administrative Expenses - ------------------------------------------------------------------------------- Selling, general and administrative expenses, consisting primarily of compensation and related expenses, and office operating expenses, totaled $15.4 million, $16.9 million and $15.1 million in 1997, 1996 and 1995, respectively. These amounts represented 12.5%, 13.4% and 13.2% of program revenues. The 1996 amount included approximately $1.0 million paid to a key Clipper employee, pursuant to an existing employment agreement, prior to INTRAV's acquisition of Clipper. Furthermore, contractual severance expenses relating to departed executives totaled $.430 million and $.225 million in 1997 and 1996, respectively. Personnel changes made in 1997, as well as the increased use of stock purchase options as part of the incentive compensation program for key employees, are expected to further reduce SG&A expense as a percent of revenues in 1998. Depreciation and Amortization - ------------------------------------------------------------------------------- Depreciation and amortization, primarily relating to the cruise ships and internally developed software, totaled $1.3 million, $1.9 million and $1.8 million in 1997, 1996 and 1995, respectively. These amounts represented 1.1%, 1.5% and 1.6% of program revenues. The reduction in 1997 was attributable to management's determination, based on updated appraisals obtained at the time of the Clipper acquisition, that the remaining useful lives of the M/V Yorktown Clipper and M/V Nantucket Clipper are each 30 years. The effect of the change in the estimated useful lives of the ships was to reduce depreciation expense for the year ended December 31, 1997, by approximately $.623 million and to 6 increase net income for the year ended December 31, 1997, by approximately $.400 million, an $0.08 increase in both basic and diluted earnings per share of common stock. Investment Income - ------------------------------------------------------------------------------- Investment income totaled $1.0 million, $1.6 million and $1.9 million in 1997, 1996 and 1995, respectively. The reduced level of investment income in 1997 was due to decreased levels of investable cash due to the use of funds to acquire Clipper Cruise Line ($9.9 million) and Clipper's payoff of its ship mortgages ($10.9 million). The reduced level of investment income in 1996 was due to decreased levels of investable cash generated from operations. The Company's average monthly balance of cash and marketable securities was $17 million and $29.3 million, earning a 5.8% and 5.6% rate of return for 1997 and 1996, respectively. The anticipated level of investment income for 1998 will be less than 1997 amounts due to the reduced level of investable cash and marketable securities resulting from the Company's projected $16 million investment in the M/S Clipper Adventurer which is to be placed in service in the spring of 1998. Interest Expense - ------------------------------------------------------------------------------- Interest expense, consisting of amounts paid by Clipper on the U.S. Government Guaranteed Financing Bonds, relating to the cruise ships, the outstanding loan balance owed Windsor and amounts outstanding under the revolving credit facility, totaled $.1 million, $1.9 million and $2.4 million in 1997, 1996 and 1995, respectively. The reduced level of interest expense in 1997 is due to the payoff of the U.S. Government Bonds and the outstanding loan to Windsor. Interest expense in 1998 is expected to consist of amounts paid on borrowings under the Company's $20.0 million revolving credit facility. The borrowings are necessary due to the projected $16 million investment in the M/S Clipper Adventurer. Income Taxes - ------------------------------------------------------------------------------- The Company's effective tax rates were 36.0%, 35.0% and 35.2% for 1997, 1996 and 1995, respectively. The inclusion of nontaxable interest income and effects of state taxes are the primary factors for the effective tax rate to differ from the statutory federal income tax rate. Liquidity and Capital Resources - ------------------------------------------------------------------------------- During 1997, INTRAV continued to fund its operations, capital expenditures and dividend payments through cash flows generated from operations and its revolving credit facility. Net cash provided by operations was $7.6 million, $1.8 million and $5.2 million in 1997, 1996 and 1995, respectively. The $5.8 million increase in 1997 compared to 1996 was primarily due to a $6.2 million decrease in prepaid expenses and a $1.8 million increase in net income, partially offset by a $2.3 million decrease in deferred revenue. Deferred revenue, representing payments received from travelers for tour departures that have not been completed, amounted to $26.8 million at December 31, 1997, representing an 8.0% decrease from $29.1 million at December 31, 1996. This decrease is due to the reduced number of travelers booked for departures in the first half of 1998 compared to 1997. Of this amount, 85.2%, or $22.9 million, relates to tour departures that will be completed by March 31, 1998. The remaining balance relates to tour departures that will be completed after April 1, 1998. Net cash used in investing activities of $9.2 million in 1997, represents a $19.2 million change from the $10.0 million provided in 1996. In 1996, the sale of marketable securities net of purchases generated $11.1 million of positive cash flow. Of that amount, $9.7 million was used to purchase Clipper Cruise Line. In 1997, the sale of marketable securities net of purchases generated $.8 million of positive cash flow while the investment in the M/S Clipper Adventurer as of December 31, 1997, totaled $7.8 million. The Company expects that in 1998, the additional costs to complete the M/S Clipper Adventurer together with routine purchases of property and equipment will exceed cash generated by the sale of marketable securities net of purchases. This net use of cash in investing activities will be funded from positive cash flows from operations and financing activities. The Company paid dividends of $2.6 million, $3.2 million and $2.8 million during 1997, 1996 and 1995, respectively. During 1997, the Company repurchased 96,750 shares in the open market for an aggregate of $.8 million. 7 INTRAV completed the acquisition of Clipper Cruise Line on December 31, 1996. In connection with that transaction, INTRAV entered into a $10.0 million revolving credit facility agreement. INTRAV financed the acquisition primarily from its cash on hand, which had the effect of significantly reducing cash and marketable securities at December 31, 1996, and included a $3.0 million draw on its revolving credit facility. In November 1997, the Company amended the credit facility and increased permitted borrowings to $15.0 million and extended the maturity to December 31, 2000. In February 1998, the Company amended the credit facility and increased permitted borrowings to $20.0 million. Cash flow from operations together with draws against the revolving credit facility will provide funding for the Company's investment in the M/S Clipper Adventurer and other capital expenditures as needed. Foreign Currency Hedging Program - ------------------------------------------------------------------------------- Many of the Company's travel programs necessitate the purchase of services from suppliers located outside the United States and certain of its arrangements with suppliers are denominated in foreign currencies. As a result, the Company is exposed to the risk of fluctuating currency values. To protect the U.S. dollar value of its foreign currency transactions, the Company may enter into "forward contracts" which are commitments to buy foreign currencies in the future at a contracted rate. The Company uses forward and option contracts solely to hedge its foreign currency exposure and does not speculate for future profits. The Company does not believe that fluctuations in the value of the U.S. dollar in relation to the currency of its suppliers has had a material adverse effect on the Company's results of operations. Inflation - ------------------------------------------------------------------------------- Inflation affects the costs incurred by the Company in its purchases of program components from its suppliers and in certain portions of its selling, general and administrative expenses. The Company has offset the effects of inflation through price increases and by controlling its expenses. The Company's ability to increase prices is limited by competitive factors as well as the need to maintain acceptable pricing for the markets to which it sells its programs. In management's opinion, inflation has not had a significant impact on the operations in the three years ended December 31, 1997. Safe Harbor Statement - ------------------------------------------------------------------------------- Except for the historical information contained herein, the matters discussed herein are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as the Company's ability to successfully integrate the operations and distribution network of Clipper; overall economic conditions; reduced demand for the Company's travel programs due to periods of widespread international unrest or other factors; fluctuations in travel program costs after the Company has established the selling prices of such programs; competitor's actions and other risks described in the Company's filings with the Securities and Exchange Commission. In addition, the forward-looking statements assume the continued operation of the two Clipper Cruise Line ships consistent with their recent capacities and cruise price levels and the launching of the M/S Clipper Adventurer in the spring of 1998. These forward-looking statements represent the Company's judgment as of the date hereof. - ------------------------------------------------------------------------------- 8 Consolidated Statements of Income - --------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands except share data) YEARS ENDED DECEMBER 31, - -------------------------------------------------------------------------------------------------------------------------- 1995 1996 1997 Program revenues $ 114,845 $ 126,081 $ 122,523 Cost of operations 91,035 101,651 99,007 - -------------------------------------------------------------------------------------------------------------------------- Gross profit 23,810 24,430 23,516 Selling, general and administrative 15,135 16,924 15,353 Depreciation and amortization 1,787 1,849 1,336 - -------------------------------------------------------------------------------------------------------------------------- Operating income 6,888 5,657 6,827 Investment income 1,883 1,643 978 Interest expense (including related party expenses of $1,086, $813, $0) (2,370) (1,904) (85) - -------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes and extraordinary item 6,401 5,396 7,720 Provision for income taxes (Note 6) 2,254 1,887 2,780 - -------------------------------------------------------------------------------------------------------------------------- Income before extraordinary item 4,147 3,509 4,940 Extraordinary item-loss related to early extinguishment of debt (net of tax benefit of $194) (Note 10) -- (344) -- - -------------------------------------------------------------------------------------------------------------------------- Net income $ 4,147 $ 3,165 $ 4,940 ========================================================================================================================== Basic earnings per share of common stock: Income before extraordinary item $ 0.80 $ 0.68 $ 0.97 Extraordinary item -- (0.07) -- - -------------------------------------------------------------------------------------------------------------------------- Net income per common share $ 0.80 $ 0.61 $ 0.97 ========================================================================================================================== Weighted average number of common shares outstanding 5,200,000 5,195,000 5,100,186 Diluted earnings per share of common stock: Income before extraordinary item $ 0.80 $ 0.68 $ 0.96 Extraordinary item -- (0.07) -- - -------------------------------------------------------------------------------------------------------------------------- Net income per common share $ 0.80 $ 0.61 $ 0.96 ========================================================================================================================== Weighted average number of common shares outstanding 5,200,000 5,195,000 5,127,250 ========================================================================================================================== See accompanying notes to consolidated financial statements.
9 Consolidated Balance Sheets - ------------------------------------------------------------------------------------------------------------------
(Amounts in thousands except share data) DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------ 1996 1997 ASSETS: Current assets: Cash and cash equivalents $ 6,670 $ 5,951 Restricted cash (Note 3) 1,917 4,720 Marketable securities (Note 8) 776 -- Restricted marketable securities (Notes 3 and 8) 4,751 4,745 Prepaid program costs 9,821 7,182 Prepaid expenses 868 811 Deferred income taxes (Note 6) -- 716 Other current assets 1,520 1,241 - ------------------------------------------------------------------------------------------------------------------ Total current assets 26,323 25,365 Property and equipment - net (Note 4) 17,569 26,198 Prepaid promotion costs 8,575 5,155 Other assets 127 83 - ------------------------------------------------------------------------------------------------------------------ Total $ 52,594 $ 56,801 ================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $ 3,298 $ 3,455 Accrued expenses 4,940 5,102 Deferred revenue 29,096 26,838 Deferred compensation (Note 9) -- 1,451 Deferred income taxes (Note 6) 2,404 -- - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 39,738 36,846 Deferred compensation (Note 9) 1,012 -- Deferred income taxes (Note 6) 5,063 6,988 Long-term debt - less current maturities (Note 10) 3,000 7,450 Commitments and contingencies (Note 7) -- -- Shareholders' equity: Preferred stock, $.01 par value; 5,000,000 shares authorized, issued and outstanding - none -- -- Common stock, $.01 par value; 20,000,000 shares authorized, issued - 5,325,000 shares; outstanding - 5,151,600 shares in 1996 and 5,071,850 in 1997 53 53 Additional paid-in capital 22,189 22,231 Retained earnings (accumulated deficit) (17,055) (14,660) Unrealized gain (loss) on marketable securities (Note 8) (2) (3) - ------------------------------------------------------------------------------------------------------------------ Total 5,185 7,621 Treasury stock - at cost; 173,400 and 253,150 shares in 1996 and 1997 (1,404) (2,104) Total shareholders' equity 3,781 5,517 - ------------------------------------------------------------------------------------------------------------------ Total $ 52,594 $ 56,801 ================================================================================================================== See accompanying notes to consolidated financial statements.
10 Consolidated Statements of Cash Flows - ------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands) YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------ 1995 1996 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,147 $ 3,165 $ 4,940 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary item -- 122 -- Depreciation and amortization 1,787 1,849 1,336 Amortization of bond premium 53 68 11 Amortization of deferred financing costs 17 15 -- Gain on sale of marketable securities (249) (62) (21) Loss on disposal of equipment 35 -- -- Deferred income taxes 1,181 (415) (1,195) Changes in assets and liabilities which provided (used) cash: Restricted cash 2,810 366 (2,803) Prepaid expenses and other assets (5,522) (1,864) 6,160 Other current assets 169 66 278 Accounts payable and accrued expenses (1,111) 1,038 747 Deferred revenue 1,632 (2,880) (2,258) Deferred compensation 285 340 439 Net cash provided by operating activities 5,236 1,808 7,635 - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (944) (1,120) (9,965) Proceeds from sales of marketable securities 17,052 28,200 5,781 Purchases of marketable securities (19,737) (17,093) (4,990) Net cash provided by (used in) investing activities (3,629) 9,987 (9,174) - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Payments of long-term debt (712) (11,019) (3,000) Proceeds from revolving line of credit -- 3,000 7,450 Net proceeds from issuance of common stock 2,669 -- -- Purchase of common stock for treasury -- (1,404) (838) Proceeds from sale of treasury stock -- -- 180 Dividends paid (2,831) (3,182) (2,546) Proceeds from short-term borrowings 3,000 -- -- Payments on short-term borrowings (3,000) -- -- Payment to Windsor, Inc., for acquisition of Clipper Cruise Line -- (9,727) -- Net cash received from (paid to) Windsor, Inc. 1,337 5,029 (426) Net cash provided by (used in) financing activities 463 (17,303) 820 - ------------------------------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,070 (5,508) (719) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,108 12,178 6,670 - ------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,178 $ 6,670 $ 5,951 ======================================================================================================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for taxes $ 580 $ 1,582 $ 4,350 Noncash contribution of capital -- 10,249 -- Cash paid for interest 2,317 1,847 298 See accompanying notes to consolidated financial statements.
11 Consolidated Statements of Shareholders' Equity - ---------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands except share data) COMMON STOCK - --------------------------------------------------------------------------------------------------------------------------- UNREALIZED TOTAL NUMBER OF ADDITIONAL GAIN (LOSS) SHARE- SHARES PAID-IN ACCUMULATED ON MARKET TREASURY HOLDERS' ISSUED AMOUNT CAPITAL DEFICIT SECURITIES STOCK EQUITY - ---------------------------------------------------------------------------------------------------------------------------- BALANCES AT JANUARY 1, 1995 5,000,000 $50 $ 9,274 $ (9,915) $(502) $(1.093) Issuance of common stock 325,000 3 2,666 2,669 Net Income 4,147 4,147 Dividends (1,331) (1,331) Unrealized gain on investment securities (Note 8) 578 578 - ---------------------------------------------------------------------------------------------------------------------------- BALANCES AT DECEMBER 31, 1995 5,325,000 53 11,940 (7,099) 76 -- 4,970 Contributed capital (Note 1) -- -- 10,249 -- -- -- 10,249 Acquisition of Clipper Cruise Line (Note 1) -- -- -- (9,939) -- -- (9,939) Net income -- -- -- 3,165 -- -- 3,165 Dividends paid to Intrav, Inc., shareholders -- -- -- (2,596) -- -- (2,596) Dividends paid to Windsor, Inc. -- -- -- (586) -- -- (586) Unrealized loss on marketable securities (Note 8) -- -- -- -- (78) -- (78) Purchase of 173,400 shares of common stock for treasury -- -- -- -- -- (1,404) (1,404) - ---------------------------------------------------------------------------------------------------------------------------- BALANCES AT DECEMBER 31,1996 5,325,000 53 22,189 (17,055) (2) (1,404) 3,781 Net income -- -- -- 4,940 -- -- 4,940 Cash dividends paid to shareholders -- -- -- (2,546) -- -- (2,546) Unrealized loss on marketable securities (Note 8) -- -- -- -- (1) -- (1) Purchase of 96,750 shares of common stock for treasury -- -- -- -- -- (838) (838) Issuance of 17,000 shares of treasury stock related to exercise of stock options -- -- 41 -- -- 138 180 - ---------------------------------------------------------------------------------------------------------------------------- BALANCES AT DECEMBER 31, 1997 5,325,000 $53 $22,231 $(14,660) $ (3) $(2,104) $ 5,517 ============================================================================================================================ See accompanying notes to consolidated financial statements. - ---------------------------------------------------------------------------------------------------------------------------
12 Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------- YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA) 1. Description of Business and Basis of Presentation - ------------------------------------------------------------------------------- Intrav, Inc. ("INTRAV" or the "Company"), is a leading designer, organizer, marketer and operator of deluxe, escorted, international travel programs. The Company's programs are designed to appeal to higher-income individuals desiring first-class travel experiences. The Company markets substantially all of its programs via direct mail through sponsoring "affinity groups," or directly to the ultimate traveler. On December 31, 1996, the Company acquired all the outstanding common stock of Clipper Cruise Line ("Clipper") consisting of Clipper Cruise Line, Inc. ("CCL"), Clipper Adventure Cruises, Inc. ("CAC"), Republic Cruise Line, Inc. ("RCL"), and Liberty Cruise Line, Inc. ("LCL"), from Windsor, Inc. ("Windsor"), a company controlled by Barney A. Ebsworth, the Company's Chairman of the Board and majority stockholder. The Stock Purchase Agreement included an initial payment of approximately $9,900 and the assumption of indebtedness of $5,500 owed by Clipper to Windsor, with an additional $213 paid to Windsor during 1997. Additional consideration of up to $3,000 may be paid to the extent the cumulative net cruise revenues ("as defined") of Clipper exceed $70,000 in the period January 1, 1997, through December 31, 2000. Net cruise revenues, as defined, were $21,561 in 1997. Due to the common ownership and control of Mr. Ebsworth over both INTRAV and Clipper, the acquisition has been accounted for in a manner similar to the pooling-of-interests method and, accordingly, all financial data has been restated to include the accounts and results of operations of Clipper for all periods prior to the acquisition. Clipper is a leading designer, organizer, marketer and operator of deluxe, escorted, domestic and international travel cruises. Similar to INTRAV, its programs are designed to appeal to higher-income individuals desiring first-class travel experiences and are primarily marketed via carriage trade travel agents, direct mail through sponsoring "affinity groups," or directly to the ultimate traveler. Clipper's travelers cruise primarily on its two cruise ships from RCL and LCL, and in the past, Clipper has chartered an additional ship from Discoverer Reederei. As used herein, the term "Company" refers to both INTRAV, Inc., and Clipper. 2. Summary of Significant Accounting Policies - ------------------------------------------------------------------------------- PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of the Company include the accounts of INTRAV and its wholly-owned subsidiaries CCL, CAC, RCL, LCL and Clipper Adventurer Ltd. (CAL). All significant intercompany accounts and transactions have been eliminated. REVENUE RECOGNITION - Program revenues are recognized as income upon completion of a tour. Deferred revenue consists of amounts received for tours which have not yet been completed. PROMOTION AND PROGRAM COSTS - The Company expenses promotion costs as incurred, except for direct-response advertising. Direct-response advertising and program costs are deferred until the revenue from the related program is recognized. Promotion expenses were $15,212, $19,075 and $19,767 for 1995, 1996 and 1997, respectively. CURRENCY HEDGES - The Company may enter into contracts to buy foreign currencies in the future to protect the U.S. dollar value of certain foreign currency transactions. Except in the infrequent instance of cancellation of non-U.S. currency cost commitments, the Company's practices relating to these contracts do not expose the Company to currency risk from exchange-rate movements because the gains and losses on them offset losses and gains on the cost commitments being hedged. Gains and losses on currency forward contracts are deferred and recognized in the same period as the hedged transactions (See Note 7). CASH EQUIVALENTS - For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. MARKETABLE SECURITIES - The Company's marketable securities, including restricted amounts, have been classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized holding gains and losses, net of taxes, reported as a separate component of shareholder's equity. PROPERTY, AMORTIZATION AND DEPRECIATION - Property and equipment is recorded at cost. Amortization and depreciation is computed using accelerated and straight-line methods over the estimated useful lives of the individual assets. Capitalized software costs are 13 amortized over 5 to 8 years, office furniture and equipment is depreciated over 5 to 7 years, and leasehold improvements are amortized over the life of the related lease. The cruise ships are depreciated over 25 years prior to 1997, over 30 years beginning in 1997, and cruise ship equipment over 5 to 7 years. Effective January 1, 1997, the Company changed its estimates of the useful lives of the Clipper Cruise Line ships. As a result of the appraisals of the Clipper ships, which were performed in connection with INTRAV's acquisition of Clipper, the Company determined that 30 years better reflects the estimated periods during which such assets will remain in service. The effect of the change in the estimated useful lives of the ships was to reduce depreciation expense for the year ended December 31, 1997, by approximately $623 and to increase net income for the year ended December 31, 1997, by approximately $400, an $0.08 increase in both basic and diluted earnings per share of common stock. INCOME TAXES - Deferred income taxes reflect the tax consequences on future years of differences between tax and financial reporting amounts. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax bases of assets and liabilities by applying enacted tax rates applicable to future years in which the differences are expected to reverse. Prior to the acquisition discussed in Note 1, Clipper's results of operations were included in the consolidated U.S. Corporate income tax return of Windsor. Prior to the acquisition, Clipper's provision for income taxes had been computed as if it filed an annual return on a separate company basis. Clipper will be included in the consolidated return of INTRAV for the year ended December 31, 1997. USE OF MANAGEMENT ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires that management make certain 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. The reported amounts of revenues and expenses during the reporting period may also be affected by the estimates and assumptions management is required to make. Actual results may differ from those estimates. STOCK-BASED COMPENSATION PLANS - Effective January 1, 1996, the Company adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The new standard defines a fair value method of accounting for stock options and similar equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. Pursuant to the new standard, companies are encouraged, but not required, to adopt the fair value method of accounting for employee stock-based transactions. Companies are also permitted to continue to account for such transactions under Accounting Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to Employees, but are required to disclose pro forma net income and, if presented, earnings per share as if the company had applied the new method of accounting. The accounting requirements of the new method are effective for all employee awards granted after the beginning of the fiscal year of adoption, whereas the disclosure requirements apply to all awards granted subsequent to December 31, 1994. The Company has adopted the disclosure requirements of SFAS 123 in fiscal year 1996 but will continue to recognize and measure compensation for its restricted stock and stock option plans in accordance with the existing provisions of APB 25. EARNINGS PER SHARE OF STOCK - Effective December 15, 1997, the Company adopted Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share. This statement simplifies the standards for computing earnings per share ("EPS"), making them comparable to international standards, and supersedes Accounting Principles Board Opinion No. 15 ("APB 15"), Earnings Per Share. SFAS 128 replaces the presentation of primary EPS with a presentation of basic EPS. The statement also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. As required by SFAS 128, diluted EPS has been computed for all prior periods presented to conform to the provisions of the new statement. Basic earnings per share under SFAS 128 for prior periods is the same as earnings per share previously reported by the Company under APB 15. Basic earnings per share of stock is computed using the weighted average number of Common shares outstanding during the applicable period. Diluted earnings per share of stock is computed using the weighted average number of Common shares outstanding and common stock equivalents. (See Note 12). 3. Restricted Cash and Marketable Securities - ------------------------------------------------------------------------------- U.S. law requires the Company to maintain financial protection for passenger advance payments for Company-operated cruises and chartered flights embarking from the U.S. The Company has established escrow arrangements to comply with the law. Under the arrangements, monies received from passengers for cruises and chartered flights are held in escrow accounts 14 until the respective cruises have been completed or charter payments have been made. At December 31, 1996 and 1997, cash equivalents and marketable securities amounting to $6,669 and $9,465, respectively, were held in escrow. 4. Property and Equipment - ------------------------------------------------------------------------------- Property and equipment at December 31, 1996 and 1997, consist of the following:
1996 1997 - ------------------------------------------------------------------------------ Cruise ships $ 26,885 $ 28,356 Computer hardware and software 4,574 5,187 Office furniture and equipment 1,610 1,638 Cruise ship equipment 559 469 Leasehold improvements 107 107 Warehouse facilities 46 48 Construction in progress -- 7,816 - ------------------------------------------------------------------------------ Total property and equipment 33,781 43,621 Less accumulated depreciation (16,212) (17,424) - ------------------------------------------------------------------------------ Property and equipment - net $ 17,569 $ 26,197 ==============================================================================
5. Operating Leases - ------------------------------------------------------------------------------- The Company leases various office facilities and equipment under noncancellable operating leases. At December 31, 1997, future minimum payments under these leases with initial or remaining terms of one year or more were:
OFFICE SPACE OTHER TOTAL - ---------------------------------------------------- 1998 $ 683 $153 $ 836 1999 697 141 838 2000 710 83 793 2001 725 29 754 - ---------------------------------------------------- Total $2,815 $406 $3,221 ====================================================
Windsor Management Corporation, as agent for Windsor Real Estate, Inc., an affiliated entity, was the lessor of the office space through July 1997. During 1997, the office building was sold to an unrelated third party. Rental expense for the years ended December 31, 1995, 1996 and 1997, was $955, $866 and $1,061, respectively. 6. Income Taxes - ------------------------------------------------------------------------------- Provisions for income taxes consist of the following:
YEARS ENDED DECEMBER 31, 1995 1996 1997 - ------------------------------------------------------------- Current: Federal $1,005 $2,174 $3,754 State 68 128 221 Deferred: Federal 1,087 (393) (1,129) State 94 (22) (66) - ------------------------------------------------------------- Total $2,254 $1,887 $2,780 =============================================================
15 Factors causing the effective tax rate to differ from the statutory federal income tax rate were:
YEARS ENDED DECEMBER 31, 1995 1996 1997 - ------------------------------------------------------------- Statutory rate 34.0% 34.0% 34.0% Nontaxable interest income (1.4) (0.1) -- State and local income taxes, net of U.S. federal income tax benefit 2.6 1.1 2.0 - ------------------------------------------------------------- Effective rate 35.2% 35.0% 36.0% =============================================================
The Company's current and noncurrent deferred taxes included in the balance sheets as of December 31, 1996 and 1997, consisted of the following deferred tax assets and liabilities:
1996 - ------------------------------------------------------------------------------------- DEFERRED DEFERRED NET TAX TAX LIABILITY ASSETS LIABILITIES (ASSET) - ------------------------------------------------------------------------------------- Property and equipment $ -- $4,919 $4,919 Promotional costs -- 2,912 2,912 Accruals 221 -- (221) Deferred compensation 311 -- (311) Unrealized loss on marketable securities 1 -- (1) Other -- 169 169 - ------------------------------------------------------------------------------------- Total $533 $8,000 $7,467 ===================================================================================== Current deferred taxes $222 $2,626 $2,404 Noncurrent deferred taxes 311 5,374 5,063 - ------------------------------------------------------------------------------------- Total $533 $8,000 $7,467 =====================================================================================
1997 - ------------------------------------------------------------------------------------- DEFERRED DEFERRED NET TAX TAX LIABILITY ASSETS LIABILITIES (ASSET) - ------------------------------------------------------------------------------------- Property and equipment $ 6 $5,259 $5,253 Promotional costs -- 1,735 1,735 Accruals 416 134 (282) Deferred compensation 434 -- (434) - ------------------------------------------------------------------------------------- Total $856 $7,128 $6,272 ===================================================================================== Current deferred taxes $850 $ 134 $ (716) Noncurrent deferred taxes 6 6,994 6,988 - ------------------------------------------------------------------------------------- Total $856 $7,128 $6,272 =====================================================================================
16 7. Commitments and Contingencies - ------------------------------------------------------------------------------- CRUISE SHIP - During 1997, the Company purchased and is renovating a cruise ship, the M/S Clipper Adventurer. Expenditures through December 31, 1997, aggregated approximately $7,816 and are reflected in the financial statements as construction in progress in property and equipment. Management estimates the minimum commitment associated with the completion of this cruise ship to be approximately $12,225, subject to potential change orders. The cruise ship is expected to be placed in service in early April 1998. CHARTER AGREEMENTS - As of December 31, 1997, the Company has agreements to charter cruise ships and aircraft for its group travel programs in 1998 and 1999 amounting to $8,273. Commitments generally may be canceled with penalties from 10 percent to 100 percent. PROFIT-SHARING PLAN - INTRAV sponsors a profit-sharing plan covering substantially all employees. Clipper participates in a multi-employer profit-sharing plan sponsored by Windsor, Inc., an affiliated company, covering substantially all employees. At their discretion, each Company may match a percentage of the employees' before-tax contributions and may also make a nonmatching contribution. An employee is not required to make before-tax contributions in order to receive a company nonmatching contribution. Company contributions for both companies, which are subject to the discretion of the Board of Directors, amounted to approximately $482, $372 and $242 for 1995, 1996 and 1997, respectively. Effective January 1, 1998, all assets of the Clipper profit-sharing plan were merged into the INTRAV Plan. In addition, the INTRAV Plan was renamed the INTRAV-Clipper 401(k) Plan. STANDBY LETTERS OF CREDIT - As of December 31, 1997, the Company had standby letters of credit in place totaling approximately $660. The Company expects that none of its standby letters of credit will be drawn on. CURRENCY CONTRACTS - The Company has utilized foreign currency forward contracts to hedge against fluctuations in the costs of the currencies used for its international travel programs. At December 31, 1997, the Company had contracts to purchase $1,520 and $4,641 (U.S. equivalents) of non-U.S. currencies for 1998 program operations and expenditures associated with the cruise ship referred to above. 8. Marketable Securities - ------------------------------------------------------------------------------- At December 31, 1996 and 1997, the Company's investments in marketable securities (including restricted amounts) are classified as available-for-sale and include the following:
1996 - --------------------------------------------------------------------------------------------- AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE - --------------------------------------------------------------------------------------------- U.S. Treasury and agency securities $4,759 $-- $(7) $4,752 State and local government debt securities 772 4 -- 776 - --------------------------------------------------------------------------------------------- Total $5,531 $ 4 $(7) $5,528 ============================================================================================= 1997 - --------------------------------------------------------------------------------------------- AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE - --------------------------------------------------------------------------------------------- U.S. Treasury and agency securities $4,750 $-- $(5) $4,745 =============================================================================================
The contractual maturities of debt securities as of December 31, 1997, are as follows: 17
AMORTIZED FAIR COST VALUE - ------------------------------------------------------ One to five years $4,750 $4,750 ======================================================
The proceeds from sales of securities were $17,052, $28,200 and $5,781 for 1995, 1996 and 1997, respectively. The gross realized gains and (losses) were $279 and ($30) for 1995, $67 and ($4) for 1996, $23 and ($2) for 1997, respectively. The changes in net unrealized holding gain or (loss) that have been included in shareholders equity were $905, ($123) and ($2) for 1995, 1996 and 1997, respectively. For the purposes of determining gross realized gains and losses, the cost of securities sold is based upon specific identification. 9. Deferred Compensation - ------------------------------------------------------------------------------- Clipper entered into a Deferred Compensation Agreement with one of its key employees on January 1, 1990 (as amended in December 1996) (the "Deferred Compensation Agreement"). On November 7, 1997, the Deferred Compensation Agreement was amended whereas the key employee released Clipper from certain future bonus or deferred compensation obligations pursuant thereto. The key employee will receive deferred compensation, earned through December 31, 1997, amounting to $1,451. Such amount is expected to be paid in early 1998. In addition, under terms of a Stock Option Agreement, the key employee was granted options to purchase 100,000 shares of common stock, pursuant to the Company's 1995 Incentive Stock Plan, as amended (See Note 11). The option price was set at the then fair market value of the Company's common stock of $13.25 and the options vest 50% on December 31, 1998, and the remaining 50% on December 31, 1999, subject to continuation of employment. Additionally, all the options vest immediately upon a change in control, as defined. The Company recognized expense under the Deferred Compensation Agreement of $285, $340 and $439 for 1995, 1996 and 1997, respectively. The Deferred Compensation Agreement also provided for a bonus upon the sale of Clipper (See Note 1). In connection with the acquisition discussed in Note 1, the key employee received a bonus of approximately $1,000 in 1996. 10. Long-Term Debt - ------------------------------------------------------------------------------- In December 1996, the Company prepaid $10,518 to retire the outstanding principal of both series of the United States Government Guaranteed Financing Bonds related to the cruise ships. As required under the bond agreements, the Company paid an additional $416 prepayment premium for the early retirement of the bonds. Accordingly, the Company recorded an extraordinary loss of $538 ($344 net of taxes) consisting of the prepayment premium and the write-off of deferred financing costs related to the early extinguishment of the debt. On December 31, 1996, the Company entered into a $10,000 revolving credit facility agreement with Boatmen's National Bank of St. Louis. The agreement, as amended, includes a provision for a $1,250 reduction of the available amount on the first anniversary date of the agreement, and expires on December 31, 2000. In November 1997, the Company amended the agreement and increased permitted borrowings to $15,000. The Company had outstanding borrowings of $3,000 and $7,450 at December 31, 1996 and 1997, respectively. The agreement provides that the Company may select among various draw arrangements with varying maturities and interest rates. At December 31, 1997, the interest rates on the borrowings ranged from 7.3% to 7.7%. The Company has pledged its personal property, including the cruise ships, as collateral and must comply with certain financial covenants, under the terms of the agreement. 11. Incentive Stock Plan - ------------------------------------------------------------------------------- On April 21, 1995, the Company's shareholders adopted the 1995 Incentive Stock Plan (the "Plan"); whereby, incentive stock options, nonqualifying stock options, restricted stock and stock appreciation rights may be granted to officers, key employees and outside directors to purchase a specified number of shares of common stock at a price not less than the fair market value at the date of grant and for a term not to exceed 10 years. During 1997, the Plan was amended, subject to shareholder approval, to increase the maximum number of shares available for issuance thereunder to 750,000. Each such option, except for 100,000 stock options granted to a key employee (See Note 9), vests over a five-year period with 20% vesting each year. Stock option transactions are summarized as follows: 18
WEIGHTED PRICE AVERAGE SHARES RANGE PRICE - ------------------------------------------------------------------------------------------------------------- Common stock options: Outstanding, January 1, 1995 -- $ -- $ -- Granted 300,000 $ 10.50 $10.50 - ------------------------------------------------------------------------------------------------------------- Outstanding, December 31, 1995 300,000 $ 10.50 $10.50 Granted 200,000 $7.66-$ 8.50 $ 8.08 - ------------------------------------------------------------------------------------------------------------- Outstanding, December 31, 1996 500,000 $7.38-$10.25 $ 9.53 Granted 475,000 $7.38-$13.25 $10.11 Canceled (390,000) $7.66-$10.50 $ 9.26 Exercised (17,000) $ 10.50 $10.50 - ------------------------------------------------------------------------------------------------------------- Outstanding, December 31, 1997 568,000 $7.38-$10.50 $10.42 Exercisable at: December 31, 1996 60,000 $ 10.50 $10.50 December 31, 1997 81,000 $ 10.50 $10.50 Shares available for grant at December 31, 1997 165,000 =============================================================================================================
The Company has adopted the disclosure-only provisions of SFAS 123. Accordingly, no compensation cost has been recognized for the stock option plan. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant dates for awards consistent with the provisions of SFAS 123, the Company's net income and net income per share would have been reduced to the pro forma amounts indicated below:
YEARS ENDED DECEMBER 31, 1995 1997 - ------------------------------------------------------------------------- Net income - as reported $4,147 $4,940 ======================================================================== Net income - pro forma $3,709 $4,766 ======================================================================== Net income per common share - as reported: Basic $ 0.80 $ 0.97 ===================================================================== Diluted $ 0.80 $ 0.96 ===================================================================== Net income per common share - pro forma: Basic $ 0.71 $ 0.93 ===================================================================== Diluted $ 0.71 $ 0.93 ===================================================================== ========================================================================
The pro forma compensation effects of this calculation were not material and therefore have not been disclosed for the year ended December 31, 1996. The Company has estimated the fair values of its option grants since 1995 by using the binomial options pricing model with the following assumptions: 19
YEARS ENDED DECEMBER 31, 1995 1996 1997 - ------------------------------------------------------------------------- Expected life (years) 10 10 10 Risk-free interest rate 6.50% 6.50% 5.62% Volatility 37.50% 37.50% 28.01% Dividend yield 4.76% 4.76% 3.78%
12. Earnings Per Share - ------------------------------------------------------------------------------- Weighted average shares of common stock and common stock equivalents used in the calculation of basic and diluted earnings per share are summarized as follows:
YEARS ENDED DECEMBER 31, ANNUAL DATA 1995 1996 1997 - ------------------------------------------------------------------------------------------ Weighted average number of common shares outstanding (Basic EPS) 5,200,000 5,195,000 5,100,186 Stock option equivalents -- -- 27,064 - ------------------------------------------------------------------------------------------ Weighted average number of common shares and equivalents outstanding (Diluted EPS) 5,200,000 5,195,000 5,127,250 ==========================================================================================
Stock option equivalents included in the Diluted EPS calculation were determined using the treasury stock method. Under the treasury stock method and SFAS 128, outstanding stock options are dilutive when the average market price of the Companys common stock exceeds the option price during a period. In addition, proceeds from the assumed exercise of dilutive options along with the related tax benefit are assumed to be used to repurchase common shares at the average market price of such stock during the period. 13. Quarterly Results of Operations (Unaudited) - ------------------------------------------------------------------------------- The results of operations for 1996 and 1997 were as follows:
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA) QUARTER ENDED 1996 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 - ------------------------------------------------------------------------------------------------------------ Program revenues $31,363 $16,449 $42,181 $36,088 Cost of operations 25,369 13,126 34,230 28,926 - ------------------------------------------------------------------------------------------------------------ Gross profit $ 5,994 $ 3,323 $ 7,951 $ 7,162 Net income (loss) $ 1,023 $ (751) $ 2,310 $ 582 Basic net income (loss) per share $ 0.20 $ (0.15) $ 0.44 $ 0.12 Diluted net income (loss) per share $ 0.20 $ (0.15) $ 0.44 $ 0.12 ============================================================================================================ 1997 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 - ------------------------------------------------------------------------------------------------------------ Program revenues $27,174 $23,905 $36,423 $35,021 Cost of operations 22,023 18,892 29,806 28,286 - ------------------------------------------------------------------------------------------------------------ Gross profit $ 5,151 $ 5,013 $ 6,617 $ 6,735 ============================================================================================================ Net income $ 792 $ 801 $ 1,600 $ 1,747 Basic net income per share $ 0.15 $ 0.16 $ 0.32 $ 0.34 Diluted net income per share $ 0.15 $ 0.16 $ 0.31 $ 0.34 ============================================================================================================ - ------------------------------------------------------------------------------------------------------------
20 Independent Auditors' Report - ------------------------------------------------------------------------------- To the Board of Directors and Shareholders Intrav, Inc. We have audited the accompanying consolidated balance sheets of Intrav, Inc., and subsidiaries as of December 31, 1996 and 1997, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Intrav, Inc., and subsidiaries at December 31, 1996 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP St. Louis, Missouri February 2, 1998 - ------------------------------------------------------------------------------- EX-21 7 SUBSIDIARIES OF REGISTRANT 1 Exhibit 21 Subsidiaries of Registrant
Jurisdiction of Incorporation or -------------------------------- Name Organization - ---- ------------ Clipper Cruise Line, Inc. Delaware Republic Cruise Line, Inc. Delaware Liberty Cruise Line, Inc. Delaware Clipper Adventure Cruises, Inc. Delaware Clipper Adventurer Ltd. Commonwealth of Bahamas
EX-23 8 CONSENT OF EXPERT 1 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-05361 of Intrav, Inc. on Form S-8 of our reports dated February 2, 1998 appearing in this Form 10-K of Intrav, Inc. for the year ended December 31, 1997. /s/ DELOITTE & TOUCHE LLP St. Louis, Missouri March 27, 1998 EX-27.1 9 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 10,671 11,927 0 0 0 25,365 43,621 17,423 56,801 36,846 0 53 0 0 5,464 56,801 122,523 123,501 99,007 99,007 16,689 0 85 7,720 2,780 4,940 0 0 0 4,940 0.97 .96
EX-27.2 10 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 10,836 4,730 0 0 0 33,742 37,226 17,172 60,572 49,992 0 53 0 0 4,146 60,572 87,502 88,245 70,721 70,721 12,449 0 85 4,990 1,796 3,194 0 0 0 3,194 0.63 0.62
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