-----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, EHbag1s5eUC263bmvbHU620hNHFjH4eMyMmS8eponjAvNChfY8ePPuKH6rjmLYjs RbyHBvr85qTDwZixhUVGLA== 0001068800-99-000336.txt : 19990805 0001068800-99-000336.hdr.sgml : 19990805 ACCESSION NUMBER: 0001068800-99-000336 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990804 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-Q SEC ACT: SEC FILE NUMBER: 000-25990 FILM NUMBER: 99677195 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-Q 1 INTRAV, INC. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q (Mark One) / x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1999 ------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ------------ COMMISSION FILE NUMBER 0-25990 ---------------------------------- INTRAV, INC. (Exact name of registrant as specified in its charter) ------------------------------------------------------ MISSOURI 43-1323155 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 7711 BONHOMME AVENUE, ST. LOUIS, MISSOURI 63105 (Address of principal executive offices) (314) 727-0500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES / x / NO / / ---------------------------------- The Company had 5,114,200 shares of common stock outstanding at August 3, 1999. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ INTRAV, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in thousands except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------- ------------------ 1999 1998 1999 1998 ------- ------- ------- ------- Revenues $26,696 $22,057 $52,571 $48,776 Cost of operations 19,916 16,615 39,902 38,216 ------- ------- ------- ------- Gross profit 6,780 5,442 12,669 10,560 Selling, general and administrative 4,156 3,482 8,099 6,852 Depreciation and amortization 756 513 1,477 869 ------- ------- ------- ------- Operating income 1,868 1,447 3,093 2,839 Investment income 212 290 342 438 Interest expense (219) (263) (535) (263) ------- ------- ------- ------- Income before provision for income taxes 1,861 1,474 2,900 3,014 Provision for income taxes 670 531 1,044 1,085 ------- ------- ------- ------- Net income $ 1,191 $ 943 $ 1,856 $ 1,929 ======= ======= ======= ======= Basic earnings per share of common stock $ 0.23 $ 0.18 $ 0.36 $ 0.38 ------- ------- ------- ------- Weighted average number of common shares outstanding 5,114 5,112 5,117 5,101 ------- ------- ------- ------- Diluted earnings per share of common stock $ 0.23 $ 0.18 $ 0.35 $ 0.37 ------- ------- ------- ------- Weighted average number of common shares outstanding 5,224 5,240 5,237 5,212 ------- ------- ------- ------- See accompanying notes to consolidated financial statements.
2 INTRAV, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands except share data)
JUNE 30, DECEMBER 31, -------- ------------ ASSETS 1999 1998 -------- ------------ Current assets: Cash and cash equivalents $ 5,374 $ 845 Restricted cash 7,806 10,582 Restricted marketable securities - 4,025 Prepaid program costs 11,665 8,348 Other current assets 3,637 2,818 -------- -------- Total current assets 28,482 26,618 Property and equipment - net 54,035 54,655 Prepaid promotion costs 5,160 4,961 Other assets 396 324 -------- -------- Total $ 88,073 $ 86,558 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,564 $ 5,347 Accrued expenses 6,676 6,606 Notes payable 8,500 5,500 Deferred revenue 53,151 29,836 -------- -------- Total current liabilities 72,891 47,289 -------- -------- Deferred income taxes 7,867 7,867 -------- -------- Long-term debt - 20,800 -------- -------- Shareholders' equity: Preferred stock, $0.01 par value; 5,000,000 shares authorized; issued and outstanding - none - - Common stock, $0.01 par value; 20,000,000 shares authorized; issued - 5,325,000 shares; outstanding - 5,114,200 shares in 1999 and 5,155,450 shares in 1998 53 53 Additional paid-in capital 22,694 22,694 Accumulated deficit (12,912) (10,449) -------- -------- Total 9,835 12,298 Treasury stock - at cost; 210,800 and 169,550 shares of common stock in 1999 and 1998 (2,520) (1,696) -------- -------- Total shareholders' equity 7,315 10,602 -------- -------- Total $ 88,073 $ 86,558 ======== ======== See accompanying notes to consolidated financial statements.
3 INTRAV, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands)
SIX MONTHS ENDED JUNE 30, ------------------- 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,856 $ 1,929 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,477 879 Changes in assets and liabilities which provided (used) cash: Restricted cash 2,776 (13,641) Prepaid expenses and other assets (3,650) (6,504) Other current assets (819) (567) Accounts payable and accrued expenses (753) (333) Deferred revenue 23,315 24,295 -------- -------- Net cash provided by operating activities 24,202 6,058 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (795) (10,953) Proceeds from sales of marketable securities 4,025 2,500 Purchases of marketable securities - (2,555) -------- -------- Net cash provided by (used in) investing activities 3,230 (11,008) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds (payments) of long-term debt (20,800) 5,350 Purchase of common stock for treasury (824) - Proceeds from sale of treasury stock - 766 Dividends paid (1,279) (1,277) -------- -------- Net cash (used in) provided by financing activities (22,903) 4,839 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,529 (111) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 845 5,951 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,374 $ 5,840 ======== ======== See accompanying notes to consolidated financial statements.
4 - ------------------------------------------------------------------------ INTRAV, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) DESCRIPTION OF BUSINESS Intrav, Inc. ("INTRAV" or the "Company") designs, markets and operates deluxe, escorted, worldwide travel programs and cruises. The Company provides a diverse offering of programs primarily to affluent, well- educated, mature individuals in the United States who desire substantive travel experiences. Its small cruise ship programs allow its travelers to visit secluded places of natural beauty and cultural interest aboard four Company owned and operated ships and others that it charters. The Company also offers programs that use privately chartered jet aircraft, which allow its travelers to visit locations not as conveniently or comfortably served by commercial airlines. In December 1996, the Company acquired Clipper Cruise Line, Inc. ("Clipper") which offered cruise programs in the United States, Central America and the Caribbean Islands on its two small cruise ships, the M/V Nantucket Clipper and the M/V Yorktown Clipper. The acquisition of Clipper provided the Company with additional products and expertise in the small-ship cruise market and expanded its distribution capabilities through Clipper's travel agent network. Since the Clipper acquisition, the Company has expanded its small-ship programs through the acquisition of two additional small cruise ships, the M/S Clipper Adventurer, which began operations in April 1998, and the M/S Clipper Odyssey, which it will begin operating in November 1999. The Stock Purchase Agreement in connection with the 1996 acquisition of Clipper from Windsor, Inc., a company controlled by Barney A. Ebsworth, the Company's founder, Chairman of the Board and majority shareholder, included additional consideration of up to $3,000 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. During the second quarter of 1999, net cruise revenues exceeded $73,000, and therefore, a promissory note in the amount of $3,000 due to Barney A. Ebsworth payable in February 2000 has been recorded in notes payable as of June 30, 1999. 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, the additional consideration of $3,000 has been charged directly against shareholders' equity as of June 30, 1999. On July 16, 1999, the Company, Kuoni Reisen Holding AG ("Kuoni"), Kuoni Holding Delaware, Inc. (formerly known as Diamond Holding Delaware, Inc.), a wholly-owned subsidiary of Kuoni ("Kuoni Holding"), and Kuoni Acquisition Subsidiary Missouri, Inc. (formerly known as Diamond Acquisition Subsidiary Missouri, Inc.), a wholly-owned subsidiary of Kuoni Holding ("Kuoni Acquisition Subsidiary") entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Kuoni will acquire control of, and the entire equity interest in, the Company and replace the Board of Directors of the Company. INTRAV will be acquired by Kuoni through the merger of Kuoni Acquisition Subsidiary with and into the Company. As a result of the merger, each INTRAV common share issued and outstanding when the merger becomes effective will be converted into the right to receive $21.32 in cash. Additionally, INTRAV has agreed to cause outstanding options to become payable for cash, equal to the difference between $21.32 and the per share exercise prices of such options. The aggregate purchase price for all of the equity will be approximately $115,000. 5 Pursuant to U.S. federal law, INTRAV'S two U.S. flag vessels (the M/V Yorktown Clipper and M/V Nantucket Clipper) must be owned by U.S. citizens in order to carry passengers on domestic cruises. A corporation is deemed to be a citizen if, among other things, at least 75% of its shares are owned by U.S. citizens. Kuoni is not a U.S. citizen, and as a result Kuoni Holding is deemed not to be a U.S. citizen. In order to maintain the coastwise trade privileges of the two U.S. flag vessels and provide Kuoni with the use of them, the Merger Agreement requires that, immediately prior to the effective time of the merger, INTRAV sell or otherwise dispose of its U.S. flag vessels to such person or persons designated by Kuoni who are qualified to own and operate them in the coastwise trade. In addition, immediately prior to the effective time of the merger, INTRAV is required to enter into a time charter of the U.S. flag vessels, an operating agreement with respect to INTRAV's two non-U.S. flag vessels, and a transitional services agreement providing for certain transition services with the acquiror of the U.S. flag vessels. Simultaneously with the execution of the Merger Agreement, Kuoni entered into a letter agreement with Paul H. Duynhouwer, INTRAV's President and Chief Executive Officer and an INTRAV director, which letter agreement outlines the proposed sale of the U.S. flag vessels to entities controlled by Mr. Duynhouwer. The letter agreement anticipates that INTRAV will sell the U.S. flag vessels to New World Ships, LLC. New World Ships, LLC will be 75.1% owned by Mr. Duynhouwer, and 24.9% owned by INTRAV or an affiliate. The total purchase price for the two U.S. flag vessels will be approximately $16,600 which represents the book value of the U.S. flag vessels. Kuoni, founded in 1906 in Zurich, Switzerland, is one of Europe's largest travel companies with subsidiaries in 11 European countries, the Far East, India and the United States. A substantial part of the business volume is generated in the home country which makes Kuoni a market leader of the travel industry in Switzerland. The Board of Directors of INTRAV unanimously approved the Merger Agreement, and received an opinion from its financial adviser, Stifel, Nicolaus & Company, Incorporated, that the consideration to be received by INTRAV's shareholders in the merger is fair to the INTRAV shareholders from a financial point of view. The transaction is subject to the approval of INTRAV's shareholders, the expiration of the waiting period under the applicable antitrust laws and other customary conditions. Mr. Ebsworth, who currently owns approximately 74.8% of INTRAV's outstanding common stock, agreed to vote his shares in favor of approval of the merger. It is expected that the merger will be completed on or about September 30, 1999. ACCOUNTING POLICIES Interim Adjustments - The unaudited financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management of the Company, the financial statements include all adjustments, which consist of normal recurring accruals, necessary to present fairly the financial information for such periods. These financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 1998 contained in the Company's Annual Report on Form 10-K, dated March 31, 1999, as filed with the Securities and Exchange Commission. Results of operations for the six months ended June 30, 1999 are not necessarily indicative of the results which may be expected for the full year ending December 31, 1999. 6 Earnings Per Share of Stock - 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 (outstanding stock options). 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:
Three Months Ended Six Months Ended June 30, June 30, ------------------ ----------------- 1999 1998 1999 1998 -------- -------- -------- -------- Weighted average number of common shares outstanding (Basic EPS) 5,114 5,112 5,117 5,101 Stock option equivalents 110 128 120 111 ----- ----- ----- ----- Weighted average number of common shares and equivalents outstanding (Diluted EPS) 5,224 5,240 5,237 5,212 ===== ===== ===== =====
Stock option equivalents included in the diluted earnings per share calculation were determined using the treasury stock method. Under the treasury stock method and Statement of Financial Accounting Standards No. 128 ("SFAS 128"), outstanding stock options are dilutive when the average market price of the Company's 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. LONG-TERM DEBT The Company has amended its revolving credit facility agreement with NationsBank, N.A., to increase available borrowings from $30,000 to $32,500 effective as of June 15, 1999 and allows for up to $17,500 in Letters of Credit. This agreement expires on November 1, 2003. The agreement includes provisions for periodic reductions of the available amount from $30,500 beginning December 31, 1999 to $17,500 at December 31, 2002. The Company had no borrowings and $9,192 in Letters of Credit outstanding under this facility as of June 30, 1999. DIVIDEND DECLARATION On July 29, 1999, the Company declared a dividend of $0.125 per share, for shareholders of record on September 30, 1999, to be paid October 15, 1999. On May 3, 1999, the Company declared a regular quarterly dividend of $0.125 per share, for shareholders of record on May 28, 1999, paid on June 15, 1999. On August 3, 1998, the Company declared a regular quarterly dividend of $0.125 per share, for shareholders of record on August 31, 1998, paid on September 15, 1998. On May 1, 1998, the Company declared a regular quarterly dividend of $0.125 per share, for shareholders of record on May 29, 1998, paid on June 15, 1998. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION - ----------------------------------------------------------------------- GENERAL The Company recognizes the revenues and related costs of operations as services are provided, generally upon completion of a tour; however, revenues for certain significant or long duration tours are recognized on a proportionate basis based on number of days traveled. Revenues include revenues from the sale of base travel programs, as well as optional products and services, including sightseeing, program extensions, airfare, and medical and educational seminars. Cost of operations include the costs of airfare, ship, hotel and other accommodations and services included in the base programs and optional products and services. Also included are the costs of creating and distributing promotional materials for each program and promotional expenses, including commissions paid to travel agents and others. RECENT EVENTS On July 16, 1999, the Company, Kuoni Reisen Holding AG ("Kuoni"), Kuoni Holding Delaware, Inc. (formerly known as Diamond Holding Delaware, Inc.), a wholly-owned subsidiary of Kuoni ("Kuoni Holding"), and Kuoni Acquisition Subsidiary Missouri, Inc. (formerly known as Diamond Acquisition Subsidiary Missouri, Inc.), a wholly-owned subsidiary of Kuoni Holding ("Kuoni Acquisition Subsidiary") entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Kuoni will acquire control of, and the entire equity interest in, the Company and replace the Board of Directors of the Company. INTRAV will be acquired by Kuoni through the merger of Kuoni Acquisition Subsidiary with and into the Company. As a result of the merger, each INTRAV common share issued and outstanding when the merger becomes effective will be converted into the right to receive $21.32 in cash. Additionally, INTRAV has agreed to cause outstanding options to become payable for cash, equal to the difference between $21.32 and the per share exercise prices of such options. The aggregate purchase price will be approximately $115.0 million. Pursuant to U.S. federal law, INTRAV'S two U.S. flag vessels (the M/V Yorktown Clipper and M/V Nantucket Clipper) must be owned by U.S. citizens in order to carry passengers on domestic cruises. A corporation is deemed to be a citizen if, among other things, at least 75% of its shares are owned by U.S. citizens. Kuoni is not a U.S. citizen, and as a result Kuoni Holding is deemed not to be a U.S. citizen. In order to maintain the coastwise trade privileges of the two U.S. flag vessels and provide Kuoni with the use of them, the Merger Agreement requires that, immediately prior to the effective time of the merger, INTRAV sell or otherwise dispose of its U.S. flag vessels to such person or persons designated by Kuoni who are qualified to own and operate them in the coastwise trade. In addition, immediately prior to the effective time of the merger, INTRAV is required to enter into a time charter of the U.S. flag vessels, an operating agreement with respect to INTRAV's two non-U.S. flag vessels, and a transitional services agreement providing for certain transition services with the acquiror of the U.S. flag vessels. Simultaneously with the execution of the Merger Agreement, Kuoni entered into a letter agreement with Paul H. Duynhouwer, INTRAV's President and Chief Executive Officer and an INTRAV director, which letter agreement outlines the proposed sale of the U.S. flag vessels to entities controlled by Mr. Duynhouwer. The letter agreement anticipates that INTRAV will sell the U.S. flag vessels to New World Ships, LLC. New World Ships, LLC will be 75.1% owned by Mr. Duynhouwer, and 24.9% owned by INTRAV or an affiliate. 8 The total purchase price for the two U.S. flag vessels will be approximately $16.6 million, which represents the book value of the U.S. flag vessels. Kuoni, founded in 1906 in Zurich, Switzerland, is one of Europe's largest travel companies with subsidiaries in 11 European countries, the Far East, India and the United States. A substantial part of the business volume is generated in the home country which makes Kuoni a market leader of the travel industry in Switzerland. The Board of Directors of INTRAV has unanimously approved the Merger Agreement, and received an opinion from its financial adviser, Stifel, Nicolaus & Company Incorporated, that the consideration to be received by INTRAV's shareholders in the merger is fair to the INTRAV shareholders from a financial point of view. The transaction is subject to the approval of INTRAV's shareholders, the expiration of the waiting period under the applicable antitrust laws and other customary conditions. INTRAV's founding shareholder, who currently owns approximately 74.8% of INTRAV's outstanding common stock, has agreed to vote his shares in favor of approval of the merger. It is expected that the merger will be completed by September 30, 1999. REVENUES Revenues for the three months ended June 30, 1999 compared to the second quarter of 1998 increased $4.6 million, or 21.0%, from $22.1 million to $26.7 million. The increase in revenues was primarily attributable to a new private jet program operating in June of 1999 and an increase in the number of travelers from 4,835 in 1998 to 4,911 in 1999. The average revenue per traveler increased $874, from $4,562 in 1998 to $5,436 in 1999, due to a higher percentage of revenues derived from small-ship programs and the private jet program mentioned above. Revenues included $0.4 million of charter hire revenue pertaining to our bareboat charter of the M/S Clipper Odyssey to Spice Islands Cruises Ltd., former owner of the M/S Clipper Odyssey. Revenues for the six months ended June 30, 1999 compared to the first six months of 1998 increased $3.8 million, or 7.8%, from $48.8 million to $52.6 million. The average revenue per traveler increased $843, from $4,501 in 1998 to $5,344 in 1999, due to a higher percentage of revenues derived from private jet programs and small-ship programs replacing certain big-ship programs. The following table presents for the periods indicated the Company's revenues by mode of transportation:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------- ----------------------- 1999 1998 1999 1998 ------- ------- ------- ------- (in thousands) (in thousands) Small ships $19,698 $17,048 $35,368 $30,485 Private jets 2,541 - 5,506 3,009 Big ships 2,355 1,259 6,921 10,012 Other 2,102 3,750 4,776 5,270 ------- ------- ------- ------- Total $26,696 $22,057 $52,571 $48,776 ======= ======= ======= =======
9 COST OF OPERATIONS Cost of operations for the three months ended June 30, 1999 compared to the second quarter of 1998 increased $3.3 million, or 19.9%, from $16.6 million to $19.9 million. This increase was primarily attributable to the new private jet program and increased number of travelers mentioned above. Cost of operations declined as a percentage of revenues from 75.3% in 1998 to 74.6% in 1999 due primarily to the increase in revenues from higher margin small-ship and private jet programs. Cost of operations for the six months ended June 30, 1999 compared to the corresponding period of 1998 increased $1.7 million, or 4.4%, from $38.2 million to $39.9 million. This increase was primarily attributable to the new private jet program and the additional three months of operating activity of the M/S Clipper Adventurer in the 1999 period. Cost of operations declined as a percentage of revenues from 78.4% in 1998 to 75.9% in 1999 due primarily to the Company's reducing its lower yielding big-ship cruise programs and increasing its higher margin small-ship and private jet programs. GROSS PROFIT Gross profit for the three months ended June 30, 1999 compared to the second quarter of 1998 increased $1.3 million, or 24.6%, from $5.4 million to $6.8 million. Gross profit as a percentage of program revenues increased from 24.7% in 1998 to 25.4% in 1999. Gross profit for the six months ended June 30, 1999 compared to the first six months of 1998 increased $2.1 million, or 20.0%, from $10.6 million to $12.7 million. Gross profit as a percentage of program revenues increased from 21.6% in 1998 to 24.1% in 1999. The increases in gross profit and gross profit margin for both the second quarter and six months were attributable to the Company's continued focus on higher margin travel programs and the M/S Clipper Odyssey charter hire revenue. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the three months ended June 30, 1999 compared to the second quarter of 1998 increased $0.7 million, or 19.4%, from $3.5 million to $4.2 million. This increase was primarily attributable to additional administrative personnel associated with the planned start-up of M/S Clipper Odyssey programs in November 1999 and $0.2 million of non-recurring transaction expenses relating to our attempted secondary common stock offering in April 1999. Nonetheless, selling, general and administrative expenses decreased as a percentage of revenues from 15.8% in 1998 to 15.6% in 1999 as a result of increased revenues. Selling, general and administrative expenses for the six months ended June 30, 1999 compared to the first six months of 1998 increased $1.2 million, or 18.2%, from $6.9 million to $8.1 million. Selling, general and administrative expenses increased as a percentage of revenues from 14.0% in 1998 to 15.4% in 1999. This increase for the six months was primarily attributable to additional administrative personnel associated with the M/S Clipper Adventurer and the planned start-up of the M/S Clipper Odyssey, additional selling expenses associated with special Millennium trips, and $0.2 million of non-recurring transaction expenses relating to our attempted secondary common stock offering in April 1999. DEPRECIATION AND AMORTIZATION Depreciation and amortization, primarily relating to the Company-owned cruise ships and internally developed software, for the three months ended June 30, 1999 compared to the second quarter of 1998 increased $0.3 million, or 47.4%, from $0.5 million to $0.8 million. The increase was primarily due to the 10 depreciation of the M/S Clipper Odyssey, which was acquired in November 1998 and is currently on charter to its former owners. Depreciation and amortization increased as a percentage of program revenues from 2.3% in 1998 to 2.8% in 1999. Depreciation and amortization for the six months ended June 30, 1999 compared to the first six months of 1998 increased $0.6 million, or 70.0%, from $0.9 million to $1.5 million. The increase was primarily due to the depreciation of the M/S Clipper Adventurer which began operations in April 1998 and the M/S Clipper Odyssey which was acquired in November 1998. Depreciation and amortization increased as a percentage of program revenues from 1.8% in 1998 to 2.8% in 1999. INVESTMENT INCOME Investment income for the three months ended June 30, 1999 compared to the second quarter of 1998 decreased $78 thousand from $290 thousand to $212 thousand. This decrease was due primarily to a decrease in investable cash balances. The Company replaced certain escrowed funds with a surety bond and letters of credit, and used those previously escrowed funds to repay the outstanding borrowings under the revolving credit facility. The average monthly balance of cash and marketable securities decreased from $23.2 million in the second quarter of 1998 to $15.0 million in the second quarter of 1999, while the average interest rate was 5.0% in 1998 and 5.7% in 1999. Investment income for the six months ended June 30, 1999 compared to the first six months of 1998 decreased $96 thousand from $438 thousand to $342 thousand. This decrease was due primarily to a decrease in investable cash balances as noted above. The average monthly balance of cash and marketable securities decreased from $18.1 million in the first six months of 1998 to $13.4 million in the first six months of 1999, while the average interest rate was 4.8% in 1998 and 5.1% in 1999. INTEREST EXPENSE Interest expense incurred for the three months ended June 30, 1999 was $219 thousand, of which $165 thousand was attributable to the Company's bank revolving credit facility and $54 thousand was attributable to the $5.5 million one-year promissory note to Spice Islands (the seller of the Oceanic Odyssey). In 1998, the Company capitalized $30 thousand of interest expense incurred in the second quarter related to the conversion of the M/S Clipper Adventurer. Interest expense incurred for the six months ended June 30, 1999 was $535 thousand, of which $426 thousand was attributable to the Company's bank revolving credit facility and $109 thousand was attributable to the $5.5 million one-year promissory note to Spice Islands. In 1998, the Company capitalized $270 thousand of interest expense incurred in the first six months related to the conversion of the M/S Clipper Adventurer, and expensed $263 thousand. LIQUIDITY AND CAPITAL RESOURCES The Company has funded its operations, capital expenditures and dividend payments primarily through cash flows generated from operations and its bank revolving credit facility. Net cash provided by operating activities for the six months ended June 30, 1999 and 1998 was $24.2 million and $6.1 million, respectively. Included in cash provided by operating activities for the six months ended June 30, 1999 was $1.9 million from net income, $2.8 million from restricted cash and $23.3 million from 11 deferred revenue, partially offset by $3.7 million used for prepaid expenses and other assets, $0.8 million used to reduce accounts payable and accrued expenses and $0.8 million used for other current assets. The Company generally recognizes revenues as income upon the completion of each tour or cruise. Deferred revenue balances consist of amounts received from travelers for tours and cruises which have not been completed. Of the $53.2 million of deferred revenue at June 30, 1999, approximately $21.7 million, or 40.9%, related to tour and cruise departures, scheduled to be completed by September 30, 1999, and $7.0 million or 13.2% related to specially promoted Millennium programs scheduled to be completed by January 17, 2000. Net cash provided by (used in) investing activities for the six months ended June 30, 1999 and 1998 was $3.2 million and ($11.0 million), respectively. Included in cash provided by investing activities for the six months ended June 30, 1999 was $4.0 million provided by proceeds from the sale of marketable securities, offset by $0.8 million used in the purchase of property and equipment. Net cash provided by (used in) financing activities for the six months ended June 30, 1999 and 1998 was ($22.9 million) and $4.8 million, respectively. During the six months ended June 30, 1999, the Company repaid $20.8 million of its borrowings under the revolving credit facility, with cash made available primarily by replacing certain cash escrow requirements with a surety bond and letters of credit. The Company also paid dividends of $1.3 million and repurchased 41,250 shares of common stock in the open market, for an aggregate of $0.8 million during the first quarter of 1999. In November 1998, the Company completed the purchase of the 120-passenger luxury cruise ship Oceanic Odyssey from Spice Islands, a non-affiliated third party for a purchase price of $16.0 million. The Company made a cash payment of $10.5 million, funded by borrowings from its revolving credit facility, and delivered its one-year promissory note in the amount of $5.5 million at the time of closing. Cash flow from operations together with draws against the revolving credit facility will provide an additional $3.6 million for renovation of the M/S Clipper Odyssey, for retirement of the $5.5 million one-year note payable to the seller of the M/S Clipper Odyssey, for payment of the $3.0 million note payable to Barney A. Ebsworth as additional consideration for the acquisition of Clipper and for other capital expenditures as needed. In March 1999, the Company filed with the Securities and Exchange Commission a registration statement for the proposed public offering by the Company of 500,000 shares of common stock and by the Revocable Trust of Barney A. Ebsworth of 2,000,000 shares of common stock (plus an aggregate of up to 375,000 shares which may be sold pursuant to an over- allotment option granted to the underwriters). The Company withdrew the registration statement due to adverse market conditions. YEAR 2000 COMPATIBILITY The Company relies on computer systems, related software applications and other control devices in operating and monitoring certain aspects of its business, including but not limited to, its financial systems (such as general ledger and accounts payable modules), billing and reservations systems, internal networks, telecommunications equipment and shipboard navigational systems and equipment. The Company also relies, directly and indirectly, on the internal and external systems of various independent business enterprises, such as its suppliers, third- party contractors, customers and financial organizations for their accurate exchange with the Company and use in general operations of date related information. The Company has initiated a Year 2000 compliance program. As part of its compliance program, the Company has developed a plan to: (1) identify all "business-critical" software that requires modification for the Year 2000 and complete an estimate of the time and other resources required to complete software 12 modifications; (2) receive written or oral confirmation from its "business-critical" vendors that the services or equipment supplied by such vendors is or will be Year 2000 compliant; (3) institute a formal communication process to keep senior management and the Board of Directors of the Company apprised of significant Year 2000 issues; and (4) develop a schedule for completing necessary Year 2000 modifications in a timely manner. The Company has completed the inventory and assessment phases and is in progress with the remediation, testing, and implementation phases of its Year 2000 plan for "business- critical" infrastructure and application software. The Company's plan has been implemented through various phases, depending upon the functional area and the internal or external nature of the system involved. For internal systems, the Company has progressed furthest and is generally in the testing and implementation phase, notably for its internally-developed passenger billing and reservation system. Much of this application has been tested and implemented. The remaining "business critical" modules are in the testing phase and will be implemented during the third quarter of 1999. A substantial portion of the other office-based software and hardware is believed to be Year 2000 compliant based upon vendor representations, with systems testing in progress. The Company has completed the inventory, assessment and detailed analysis phases of its Year 2000 plan for ship-based "business-critical" navigational and operational equipment and systems. Management believes these "business-critical" systems for the Company's four ships were Year 2000 compliant as of June 30, 1999. The Company believes that the final phases of its Year 2000 plan will be completed in advance of December 31, 1999. The Company has not incurred and, based upon the information available to the Company at this time, does not expect to incur significant expenditures to address the Year 2000 issue. Year 2000 expenses to the Company, consisting primarily of personnel time, the accelerated replacement of systems and software, and outside consultation have totaled less than $0.2 million for the three years ended December 31, 1998. Year 2000 expenses for the six months ended June 30, 1999, totaled less than $0.1 million. Projected costs to the Company for the completion of its Year 2000 program are expected to be less than $0.6 million. The Company does not believe that its Year 2000 program has resulted in or will result in the postponement of its other significant information technology projects. As part of its Year 2000 program, the Company plans to complete a contingency plan in 1999 which addresses the most reasonably likely "business-critical" worst-case scenarios. However, the Company cannot be certain that third parties supporting the Company's systems or providing goods and services to the Company have resolved or will resolve all Year 2000 issues in a timely manner. There can be no assurance that third parties will achieve timely Year 2000 compliance. Failure by the Company or any such third party to successfully address the relevant Year 2000 issues could result in disruptions to the Company's business and the incurrence of significant expenses by the Company. Additionally, the Company could be adversely affected by any disruption to third parties with which the Company does business if suppliers of goods and services to those third parties have not successfully addressed their Year 2000 issues. * * * SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements in this Form 10-Q which contain more than historical information may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) which are subject to risks and uncertainties. Forward-looking statements 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 unanticipated catastrophic events; changes in program costs and fluctuations of currency exchange 13 rates; loss of key travel suppliers; ongoing access to the Concorde in the United States; competition within the travel industry; loss of key personnel; liability claims by travelers; loss of one or more of the Company's ships; regulations relative to the operation of passenger vessels and charters; Year 2000 risks; general economic conditions; and other risks described from time to time in the Company's filings with the Securities and Exchange Commission. In addition, the forward- looking statements assume the continued operation of our three ships consistent with their recent capacities and cruise price levels, and the commencement of operations of the M/S Clipper Odyssey in November 1999. These forward-looking statements represent the Company's judgment as of the date hereof. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------------------------------------------------------------------- (a) The Company's principal interest rate risk is associated with its long-term debt. The Company has a $32.5 million revolving credit facility with a bank which expires on November 1, 2003. The Company may select among various borrowing arrangements with varying maturities and interest rates. During the first six months of 1999, the annual interest rates on the borrowings ranged from 6.4% to 6.9%. Assuming a hypothetical 1% increase in the weighted-average interest rate during the first six months of 1999, interest expense would have increased $63 thousand. The Company enters into non-U.S. currency commitments for the charter of cruise ships and aircraft for its international travel programs. The Company may enter into forward contracts to buy foreign currency at a stated U.S. dollar amount to hedge against fluctuating currency values. As of June 30, 1999, the Company had non-U.S. currency commitments equivalent to $1.5 million, of which the Company has purchased forward contracts with a U.S. dollar equivalency of $1.5 million. Therefore, management believes the fluctuations in currency values would not have a material effect on the Company's cash flows or earnings. 14 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS - ------------------------------------------------------------------------------ (a) The Annual Meeting of Shareholders of Registrant was held on May 21, 1999. Of 5,114,200 shares issued, outstanding and eligible to be voted at the meeting, more than a majority of the shares, constituting a quorum, were represented in person or by proxy at the meeting. One matter was submitted to a vote of the security holders at the meeting, the election of two Class I directors, each to continue in office until the year 2002. Upon tabulation of the votes cast, it was determined that both nominees had been elected. The voting results are as set forth below: (b) Because Registrant has a staggered Board, the term of office of the following named Class II and Class III directors, who were not up for election at the 1999 Annual Meeting, continued after the meeting: Class II (to continue in office until 2000): Paul H. Duynhouwer Robert H. Chapman Class III (to continue in office until 2001): Barney A. Ebsworth John B. Biggs, Jr. (c) The following nominees for election as director received the votes indicated: Name For Withheld Abstain ---- --- -------- ------- William H. T. Bush 4,995,191 18,074 0 Wayne L. Smith II 4,994,791 18,474 0 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------------ (a) EXHIBITS. 2(i) Agreement and Plan of Merger, dated as of July 16, 1999, by and among Kuoni Reisen Holding AG, Diamond Holding Delaware, Inc., Diamond Acquisition Subsidiary Missouri, Inc. and Intrav, Inc., filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K, dated July 16, 1999, is incorporated herein by reference. 15 3(i)(a) Restated Articles of Incorporation of the Registrant, filed as Exhibit 3(i) to the Registrant's Registration Statement on Form S-1 (No. 33-90444), is incorporated herein by reference. 3(i)(b) Amendment to Restated Articles of Incorporation of the Registrant, filed as Exhibit 3(i)(b) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated herein by reference. 3(ii)(a) Amended and Restated Bylaws of the Registrant, filed as Exhibit 3(ii) to the Registrant's Registration Statement on Form S-1 (No. 33-90444), is incorporated herein by reference. 3(ii)(b) Amendment to Amended and Restated Bylaws of the Registrant. 10(i) Amendment No. 2 to Loan Agreement, dated June 15, 1999, by and between the Registrant and Nations Bank, N.A. 27(i) Financial Data Schedule. (b) REPORTS ON FORM 8-K. The Registrant filed no Current Reports on Form 8-K during the quarter ended June 30, 1999. However, a Current Report on Form 8-K was filed on July 22, 1999. Under Item 5 in that Report, the Registrant disclosed that on July 16, 1999, the Registrant entered into an Agreement and Plan of Merger with Kuoni Reisen Holding AG, a Swiss corporation incorporated in the Canton of Zurich, Switzerland ("Kuoni"), Diamond Holding Delaware, Inc., a Delaware corporation, and Diamond Acquisition Subsidiary Missouri, Inc., a Missouri corporation and wholly owned subsidiary of Kuoni ("Acquisition"), pursuant to which Acquisition will be merged with and into Intrav (the "Merger"). In accordance with the Merger Agreement, each share of Intrav common stock, $.01 par value (the "Intrav Common Stock"), outstanding immediately prior to the effective time of the Merger (the "Effective Time") will be converted into the right to receive $21.32 (the "Merger Consideration"). In addition, at the Effective Time, each right with respect to Intrav Common Stock pursuant to a stock option outstanding at the Effective Time, whether or not then exercisable, will be converted into the right to receive an amount in cash equal to the product of the number of shares of Intrav Common Stock subject to the option and the difference, if any, between the Merger Consideration and the exercise price of such option. The Form 8-K also briefly described the terms of a Majority Shareholder Agreement, dated as of July 16, 1999, pursuant to which The Revocable Trust of Barney A. Ebsworth, dated July 23, 1986, as amended (the "Trust"), which has voting power over approximately 74.8% of the outstanding shares of Intrav Common Stock, based upon 5,114,200 shares of Intrav Common Stock outstanding on July 16, 1999, agreed to vote all shares of Intrav Common Stock held by the Trust in favor of the Merger Agreement and the Merger. In addition, the Trust granted to Kuoni an irrevocable option to purchase at a price of $21.32 per share, under certain circumstances, up to 24.9% of the total number of shares of Intrav Common Stock outstanding on the date of exercise of the option. 16 Under Item 7 of the Form 8-K, the following documents were filed as exhibits thereto: 2.1 Agreement and Plan of Merger, dated as of July 16, 1999, by and among Kuoni Reisen Holding AG, Diamond Holding Delaware, Inc., Diamond Acquisition Subsidiary Missouri, Inc. and Intrav, Inc. 2.2 Majority Shareholder Agreement, dated as of July 16, 1999, by and among Kuoni Reisen Holding AG and The Revocable Trust of Barney A. Ebsworth, dated July 23, 1986, as amended and Barney A. Ebsworth. 99.1 Text of press release, dated July 16, 1999, issued by Intrav, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTRAV, INC. (Registrant) Date: August 3, 1999 /s/ Wayne L. Smith II ------------------------------------- Wayne L. Smith II Executive Vice President and Chief Financial Officer (Principal Financial Officer) 17 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 2(i) Agreement and Plan of Merger, dated as of July 16, 1999, by and among Kuoni Reisen Holding AG, Diamond Holding Delaware, Inc., Diamond Acquisition Subsidiary Missouri, Inc. and Intrav, Inc., filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K, dated July 16, 1999, is incorporated herein by reference. 3(i)(a) Restated Articles of Incorporation of the Registrant, filed as Exhibit 3(i) to the Registrant's Registration Statement on Form S-1 (No. 33-90444), is incorporated herein by reference. 3(i)(b) Amendment to Restated Articles of Incorporation of the Registrant, filed as Exhibit 3(i)(b) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated herein by reference. 3(ii)(a) Amended and Restated Bylaws of the Registrant, filed as Exhibit 3(ii) to the Registrant's Registration Statement on Form S-1 (No. 33-90444), is incorporated herein by reference. 3(ii)(b) Amendment to Amended and Restated Bylaws of the Registrant. 10(i) Amendment No. 2 to Loan Agreement, dated June 15, 1999, by and between the Registrant and Nations Bank, N.A. 27(i) Financial Data Schedule. 18 EX-3.(II)(B) 2 AMENDMENT TO AMENDED AND RESTATED BYLAWS OF THE REGISTRANT AMENDMENT TO THE AMENDED AND RESTATED BY-LAWS OF INTRAV, INC. The undersigned, being the duly appointed Assistant Secretary of Intrav, Inc., a Missouri corporation, hereby certifies that, as of this 16th day of July, 1999, the Amended and Restated By-Laws, as amended, of Intrav, Inc. (the "Amended and Restated Bylaws") were amended as follows: 1. Article XV of the Amended and Restated Bylaws is deleted and replaced in its entirety to read as follows: ARTICLE XV ---------- FOREIGN OWNERSHIP OF STOCK -------------------------- For purposes of determining compliance with the citizenship requirements of the Merchant Marine Act of 1936, as amended, the Shipping Act of 1916, as amended, and the regulations promulgated thereunder, pursuant to Section H of Article Eleven of the Amended and Restated Articles of Incorporation of the Corporation, as amended (the "Restated Articles"), the following regulations and procedures shall apply: 1. Beneficial Ownership. The Majority Shareholder Agreement, -------------------- dated as of July 16, 1999, by and among Kuoni Reisen Holding AG ("Kuoni"), Diamond Holding Delaware, Inc. ("Diamond Holding"), Diamond Acquisition Subsidiary Missouri, Inc. ("Diamond Acquisition"), The Revocable Trust of Barney A. Ebsworth, dated July 23, 1986, as amended (the "Trust"), and Barney A. Ebsworth (the "Majority Shareholder Agreement") and any amendment thereto or any similar agreement to vote by the Trust which is entered into in conjunction with the Corporation's execution and delivery of the Agreement and Plan of Merger, dated as of July 16, 1999, by and among Kuoni, Diamond Holding, Diamond Acquisition and the Corporation or any amendment thereto (the "Merger Agreement"), shall not result in Kuoni, Diamond Holding, Diamond Acquisition or any affiliate thereof being deemed a "Beneficial Owner" of the shares of the Corporation's capital stock held by the Trust for purposes of Article Eleven of the Restated Articles. 2. Excess Shares. For purposes of calculating "Excess ------------- Shares" pursuant to Section D of Article 11 of the Restated Articles, if Kuoni, Diamond Holding or Diamond Acquisition exercises the option granted to it by the Trust, July 16, 1999 (the date of the Majority Shareholder Agreement) shall be deemed to be the date of acquisition of the shares of the Corporation's common stock purchased by Kuoni, Diamond Holding or Diamond Acquisition pursuant to that option. 2. The following Article is added to the Amended and Restated Bylaws as Article XVI: ARTICLE XVI ----------- CONTROL SHARE ACQUISITION STATUTE --------------------------------- The acquisition of shares of the Corporation's common stock by Diamond Acquisition, Diamond Holding or Kuoni pursuant to the Merger Agreement or pursuant to the exercise of the option granted by the Trust pursuant to the Majority Shareholder Agreement shall be deemed not to constitute a "control share acquisition" of the Corporation's common stock for purposes of Section 351.407 of The General and Business Corporation Law of Missouri. /s/ Vanessa M. Tegethoff ----------------------------------------------- Vanessa M. Tegethoff, Assistant Secretary - 2 - EX-10.(I) 3 AMENDMENT NO. 2 TO LOAN AGREEMENT AMENDMENT NUMBER TWO TO LOAN AGREEMENT EFFECTIVE OCTOBER 30, 1998 BY AND BETWEEN 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. ("Lender") agree as follows: 1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan Agreement" means the Loan Agreement effective October 30, 1998, between Borrower and Lender, as amended by Amendment Number One thereto effective January 18, 1999. 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 as of June 15, 1999. 3. AMENDMENTS TO ORIGINAL LOAN AGREEMENT. The Original Loan Agreement is amended as follows: 3.1. REVOLVING COMMITMENT. Sections 3.1.1 and 3.1.2 of the Original Loan agreement is replaced entirely with the following: "3.1.1 ADVANCES. Subject to the limitations in Section 3.1.2 and elsewhere herein, Lender commits to make available from the Effective Date to the Maturity Date, a revolving credit facility available as Advances made from time to time as provided herein. Subject to the limitations in Section 3.1.2 and elsewhere herein, payments and prepayments that are applied to reduce the Revolving Loan may be re-borrowed. The amount of the Revolving Commitment initially will be $32,500,000, but will reduce automatically to a lesser Dollar amount on certain dates as listed in the table below:
------------------------------------------------------------------------ Effective Date of Reduction Reduction New Revolving Commitment ------------------------------------------------------------------------ December 31, 1999 $2,000,000 $30,500,000 ------------------------------------------------------------------------ December 31, 2000 $5,000,000 $25,500,000 ------------------------------------------------------------------------ December 31, 2001 $5,000,000 $20,500,000 ------------------------------------------------------------------------ December 31, 2002 $3,000,000 $17,500,000 ------------------------------------------------------------------------
1 Borrower may also reduce the amount of the Revolving Commitment in whole multiples of $1,000,000 at any time and from time to time, but only if (i) Borrower gives Lender written notice of Borrower's intention to make such reduction at least one Business Day prior to the effective date of the reduction, and (ii) Borrower makes on the effective date of the reduction any payment on the Revolving Loan required under Section 7.2 as a consequence of the reduction and any amount that may be due to Lender under Section 18.4. Any such reduction of the amount of the Revolving Commitment, whether scheduled or voluntary, shall be permanent. 3.1.2 LIMITATION ON ADVANCES. No Advance will be made which would result in the Revolving Loan exceeding the Maximum Available Amount and no Advance will be made on or after the Maturity Date. Lender may, however, in its absolute discretion make such Advances, but shall not be deemed by doing so to have increased the Maximum Available Amount and shall not be obligated to make any such Advances thereafter. At any time that there is an Existing Default, the Revolving Commitment may be canceled as provided in Section 17.2. The "Maximum Available Amount" on any date shall be a Dollar amount equal to (i) the amount of the Revolving Commitment on such date, minus (ii) the Letter of Credit Exposure (except to the extent that such Advance will be used immediately to reimburse Lender for unreimbursed draws on a Letter of Credit). No Advance will be made which would cause the ratio of the Revolving Loan to the from time to time most recently appraised value of the Vessels in which Lender has a first priority Security Interest to exceed 2/3." 3.2. LETTER OF CREDIT COMMITMENT. The amount of the Letter of Credit Commitment stated in Section 3.2 of the Original Loan Agreement is changed from $2,500,000 to $17,500,000. 3.3. SECURITY AND GUARANTIES. The following covenant is added as Section 14.16A to the Original Loan Agreement: "14.16A. Borrower covenants and agrees that prior to October 15, 1999, (i) Borrower shall execute and deliver to Lender, or cause to be executed and delivered to Lender by the appropriate Person, ratifications of the existing guaranties, satisfactory to Lender, by all of the domestic Subsidiaries of Borrower under which they have guarantied the timely and full payment and performance of all of the Loan Obligations, and (ii) Borrower shall execute and deliver to Lender one or more Security Agreements, or amendments of existing security agreements, that are satisfactory to Lender and grant or confirm existing grants to Lender of Security Interests under the UCC in all stock held by Borrower of the domestic Subsidiaries of Borrower and 65% of the outstanding stock of the non-domestic Subsidiaries of Borrower." 4. 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) all of the representations and warranties contained in Section 12 of the Original Loan Agreement 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 2 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. 5. 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. 6. 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) 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 continue in full force and effect and have the same priority as before this Amendment, and (iv) Borrower has no claim against Lender arising from or in connection with the Loan Agreement or the other Loan Documents. 7. 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. 8. 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. 9. REPRODUCTIONS AS EVIDENCE. This Amendment, the Original Loan Agreement, and the other Loan Documents, including but not limited to (a) consents, waivers, amendments, and modifications which may hereafter be executed, and (b) financial statements, certificates and other - information previously or hereafter furnished to Lender, may be reproduced by Lender by any photographic, photostatic, microfilm, microcard, miniature photographic, computer imaging or other similar process and may destroy any original document so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business of lender) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 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. 3 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. 13. 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. [SIGNATURE PAGE FOLLOWS] 4 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. INTRAV, INC. NATIONSBANK, N.A. by its Executive Vice President by its Senior Vice President and Chief 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 EX-27.(I) 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 13,180 0 0 0 0 28,482 74,846 20,811 88,073 72,891 0 53 0 0 7,262 88,073 52,571 52,913 39,902 39,902 9,576 0 535 2,900 1,044 1,856 0 0 0 1,856 .36 .35
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