TUG Maritrans Part

Maritrans Inc. (NYSE:TUG), a leading U.S. flag marine petroleum transport company, today announced its third quarter financial results. Net income for the quarter ended September 30, 2006 was $4.0 million, or $0.33 diluted earnings per share, on revenues of $49.2 million. This compares with net income of $6.4 million, or $0.74 diluted earnings per share, on revenues of $44.9 million for the quarter ended September 30, 2005. For the third quarter ended September 30, 2006, net income included the reversal of an income tax reserve of $1.3 million, or $0.11 diluted earnings per share. In the prior year, net income for the quarter ended September 30, 2005 included a reversal of an income tax reserve of $1.2 million, or $0.14 diluted earnings per share. As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. An appendix is included at the end of this release that details the effect of the accounting change on Maritrans� results from January 1, 2004 and each period thereafter. Operating income for the quarter ended September 30, 2006, was $3.6 million compared to $8.7 million for the quarter ended September 30, 2005. Operating expenses increased to $45.6 million in the third quarter of 2006 from $36.2 million for the third quarter of 2005 primarily due to charter hire costs related to the charters of the vessels SEABROOK and SEA SWIFT, which charters did not exist in 2005. Additionally, the Company�s vessel insurance expenses increased $1.3 million compared to the same period of 2005 due to additional premiums for open policy periods from 2004 through 2006 due to a general call on all policyholders by the Company�s mutual insurance club. During the third quarter, rates in the U.S. Jones Act spot market increased compared to the second quarter of 2006, as a result of fewer vessels available in the market and higher refinery output. During the third quarter of 2006 the Company delivered 23 million barrels of crude oil to lightering customers compared to 21 million barrels delivered during the second quarter of 2006, which was primarily a result of increased production from a Delaware River refinery that was undergoing maintenance during the second quarter of 2006. On a Time Charter Equivalent (�TCE�) basis, a commonly used industry measure where direct voyage costs are deducted from voyage revenue, TCE revenue was $35.0 million for the quarter ended September 30, 2006 compared to $34.8 million for the quarter ended September 30, 2005, an increase of $0.2 million, or 0.6%. TCE revenue is a non-GAAP financial measure and a reconciliation of TCE revenue to revenue calculated in accordance with GAAP is attached hereto. During the third quarter of 2006, the Company experienced lower overall utilization than in the third quarter of 2005. Utilization for the third quarter of 2006 was 77.2% compared to 83.8% in the third quarter of 2005. In the quarter ended September 30, 2006, the Company experienced 203 days of out of service time for capital projects, including barge rebuilding, and vessel maintenance. This compares to out of service time for maintenance and capital projects, including barge rebuilding, of 123 days in the third quarter of 2005. The Company expects to have at least 92 days out of service time during the fourth quarter of 2006 for capital projects, including barge rebuilding. In the quarter ended September 30, 2006, the Company did not experience any days out of service due to weather related events. In the quarter ended September 30, 2005, the Company experienced four significant storms that resulted in approximately 49 days of out of service time. In the quarter ended September 30, 2006, the Company did not experience any idle days in its spot fleet, compared to 17 days in the comparable period in 2005. In the quarter ended September 30, 2006, the Company experienced 63 idle days for the ALLEGIANCE and PERSEVERANCE while awaiting orders for grain voyages. The Company had no vessels in grain service in the comparable period in 2005. PENDING TRANSACTION WITH OVERSEAS SHIPHOLDING GROUP INC. On September 25, 2006, the Company and Overseas Shipholding Group Inc., or OSG, announced that OSG had entered into a definitive agreement pursuant to which OSG will acquire all of the outstanding stock of Maritrans Inc. for $37.50 per share. The transaction is valued at approximately $455 million based on approximately 12 million shares outstanding and the assumption of net debt outstanding as of June 30, 2006. The transaction, which is expected to close by year-end 2006, is subject to approval by a majority of Maritrans� stockholders and other customary closing conditions, including regulatory approvals. On October 17, 2006, the Federal Trade Commission, on behalf of itself and the Antitrust Division of the Department of Justice, granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Acts of 1976 with respect to the proposed acquisition. The special meeting of Maritrans� stockholders to consider the proposed transaction has been scheduled for November 28, 2006. Stockholders of record at the close of business on October 20, 2006 will be entitled to vote at the meeting. FLEET AND MARKET REPORT Maritrans operates a fleet of oil tankers and oceangoing married tug/barge units. In the third quarter of 2006, the Company operated its fleet at approximately 35% spot and 65% contract and intends to maintain similar spot market exposure in the fourth quarter of 2006. In September, the ALLEGIANCE entered into a charter to transport grain from Portland, Oregon to Kenya. The vessel is scheduled to complete this voyage in mid-December. The current grain cargo is the vessel�s fourth charter since being removed from petroleum transportation service in December 2005 in accordance with the Oil Pollution Act of 1990 (�OPA�). In July 2006, the Company�s tanker PERSEVERANCE reached its mandatory oil retirement date. In September 2006, the PERSEVERANCE entered into a charter to transport grain from Corpus Christi, Texas to Djibouti and Georgia. The vessel is scheduled to complete this voyage in November. The Company expects to incur approximately 15 days of idle time on each of these tankers in the fourth quarter of 2006. FLEET REBUlLDING AND CONSTRUCTION PROGRAM Since 1998, Maritrans has been actively engaged in a double-hull rebuilding program aimed at ensuring that the Company�s Jones Act fleet is compliant with the Oil Pollution Act of 1990. Maritrans� patented barge rebuilding process enables the Company to convert its vessels for significantly less cost than building new vessels. During 2006, the Company has continued to successfully implement its rebuilding program. The rebuild of the Company�s seventh barge, the M 210, commenced on January 26, 2006. The M 210 rebuild is expected to have a total cost of approximately $30 million. The rebuild of the Company�s eighth barge, the OCEAN 211, is expected to commence following the return to service of the M 210. The OCEAN 211�s rebuild is also expected to have a total cost of approximately $30 million. The rebuilds of the M 210 and OCEAN 211 will also include the insertions of mid-bodies that will increase each of their respective capacities by approximately 38,000 barrels, or 17%. The rebuilds of the M 210 and the OCEAN 211 are expected to be completed early in 2007 and in the late summer of 2007, respectively. Upon completion of their double-hulling, and reflecting their larger carrying capacities, the M 210 and OCEAN 211 will be renamed the M 242 and M 243, respectively. The Company has three 350,000 barrel articulated tug-barge units under construction, with deliveries scheduled for the fourth quarter of 2007, the second quarter of 2008 and the fourth quarter of 2008, respectively. The cost of each ATB is expected to be approximately $77.5 million. The Company also has two 8,000-horsepower tugboats under construction. One tugboat is expected to be delivered in the fourth quarter of 2008 with the second delivered in the first quarter of 2009. The cost of each tugboat is expected to be approximately $16 million. ABOUT MARITRANS Maritrans Inc. is a U.S.-based company with a 78-year commitment to building and operating petroleum transport vessels for the U.S. domestic trade. Maritrans employs a fleet of 11 tug/barge units and 5 tankers. Two of these tankers were redeployed to the transportation of non-petroleum cargo. Approximately 75 percent of our oil carrying fleet capacity is double-hulled. Our current oil carrying fleet capacity aggregates approximately 3.4 million barrels, 79 percent of which is barge capacity. Maritrans is headquartered in Tampa, Florida, and maintains an office in the Philadelphia area. SAFE HARBOR STATEMENT Certain statements in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to present or anticipated utilization, future revenues and customer relationships, capital expenditures, future financings, and other statements regarding matters that are not historical facts, and involve predictions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, growth, performance, earnings per share or achievements to be materially different from any future results, levels of activity, growth, performance, earnings per share or achievements expressed in or implied by such forward-looking statements. In some cases you can identify forward-looking statements by terminology such as "may," "seem," "should," "believe," "future," "potential," "estimate," "offer," "opportunity," "quality," "growth," "expect," "intend," "plan," "focus," "through," "strategy," "provide," "meet," "allow," "represent," "commitment," "create," "implement," "result," "seek," "increase," "establish," "work," "perform," "make," "continue," "can," "will," "include," or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments that are believed to be reasonable as of the date of this prospectus supplement. The forward-looking statements are subject to a number of risks and uncertainties and include the following: satisfaction of conditions to closing of the proposed merger with OSG, demand for, or level of consumption of, oil and petroleum products; future spot market charter rates; ability to attract and retain experienced, qualified and skilled crewmembers; competition that could affect our market share and revenues; risks inherent in marine transportation; the cost and availability of insurance coverage; delays or cost overruns in the building of new vessels, the double-hulling of our remaining single hulled vessels and scheduled shipyard maintenance; decrease in demand for lightering services; environmental and regulatory conditions; reliance on a limited number of customers for revenue; the continuation of federal law restricting United States point-to-point maritime shipping to US vessels (the Jones Act); asbestos-related lawsuits; fluctuating fuel prices; high fixed costs; capital expenditures required to operate and maintain a vessel may increase due to government regulations; reliance on unionized labor; federal laws covering our employees that may subject us to job-related claims; and significant fluctuations of our stock price. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should read this news release completely and with the understanding that our actual future results may be materially different from what the Company expects. These forward-looking statements represent our estimates and assumptions only as of the date of this news release. Except for our ongoing obligations to disclose material information under the federal securities laws, the Company is not obligated to update these forward-looking statements, even though our situation may change in the future. The Company qualifies all of its forward-looking statements by these cautionary statements. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ Thousands) � Three Months Ended Nine Months Ended September 30, September 30, 2006� 2005� 2006� 2005� � Revenue $ 49,161� $ 44,930� $ 140,448� $ 134,800� Voyage Costs � 14,210� � 10,095� � 36,219� � 30,691� Time Charter Equivalent $ 34,951� $ 34,835� $ 104,229� $ 104,109� � � UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($ Thousands, Except Per Share Amounts) � Three Months Ended Nine Months Ended September 30, September 30, 2006� 2005� 2006� 2005� � Revenue $ 49,161� $ 44,930� $ 140,448� $ 134,800� Operations expense Operations expense 14,210� 10,095� 36,219� 30,691� Charter hire 3,087� --� 8,624� --� Voyage costs 15,765� 13,138� 44,289� 39,827� Maintenance expense 2,072� 1,804� 5,894� 4,623� General and administrative expense 2,231� 2,208� 6,823� 10,017� Depreciation and amortization expense 8,209� 8,963� 25,267� 27,179� Gain on sale of assets --� --� (2,868) (647) Operating Income 3,587� 8,722� 16,200� 23,110� Other Income 738� 173� 2,316� 4,432� Interest Expense (43) (838) (425) (2,259) Pre-tax income 4,282� 8,057� 18,091� 25,283� Income Tax Provision 272� 1,654� 5,122� 7,941� Net Income $ 4,010� $ 6,403� $ 12,969� $ 17,342� � Diluted Earnings Per Share $ 0.33� $ 0.74� $ 1.08� $ 2.03� Diluted Shares Outstanding 12,068� 8,596� 12,049� 8,562� Capital Expenditures $ 11,843� $ 25,824� $ 38,407� $ 39,828� Utilization of Calendar days 77.2% 83.8% 78.0% 82.5% Barrels carried (in millions) 41.6� 42.5� 126.0� 132.1� Available days 1,253� 1,250� 3,869� 3,642� NOTE: All periods presented are conformed to the new major maintenance accounting treatment.��See also Appendix I. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION ($ Thousands) � September 30, 2006 December 31, 2005 � Cash and cash equivalents $42,782� $58,794� Other current assets 35,603� 29,522� Net vessels and equipment 255,562� 233,641� Other assets 22,972� 24,479� Total assets $356,919� $346,436� � Current portion of debt $4,144� $3,973� Total other current liabilities 25,556� 21,311� Long-term debt 52,271� 55,400� Deferred other liabilities 8,552� 9,435� Deferred income taxes 43,481� 42,321� Stockholders' equity 222,915� 213,996� Total liabilities and stockholders' equity $356,919� $346,436� NOTE: All periods presented are conformed to the new major maintenance accounting treatment. See also Appendix I. � � � UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION ($ Thousands) Nine Months Ended September 30, 2006� 2005� � Cash flows from operating activities: Net income $12,969� $17,342� Depreciation and amortization 25,267� 27,179� Other (13,073) (6,797) Total adjustments to net income 12,194� 20,382� Net cash provided by operating activities 25,163� 37,724� � Net cash used in investing activities (34,407) (39,181) � Net cash used in financing activities (6,768) (4,079) � Net increase in cash and cash equivalents (16,012) (5,536) Cash and cash equivalents at beginning of period 58,794� 6,347� Cash and cash equivalents at end of period $42,782� $811� NOTE: All periods presented are conformed to the new major maintenance accounting treatment. See also Appendix I. Barges/Tugs Capacity in Barrels(1) Double-Hull Barge or Tanker Initial Construction/ Rebuild Date � M 400/Constitution 410,000� Yes� 1981� Originally built with double-hull M 300/Liberty 263,000� Yes� 1979� Originally built with double-hull M 254/Intrepid 250,000� Yes� 2002� Double-hull rebuild M 252/Navigator 250,000� Yes� 2002� Double-hull rebuild M 244/Seafarer 240,000� Yes� 2000� Double-hull rebuild M 215/Sea Swift (5) 214,000� No� 1975� Decision to rebuild has not yet been made(2) Ocean 211/Freedom 212,000� No� 2007� Scheduled double-hull delivery(3) M 210/Columbia 213,000� No� 2006� Scheduled double-hull delivery(3) M 214/Honour 208,000� Yes� 2004� Double-hull rebuild(4) M 209/Enterprise 206,000� Yes� 2005� Double-hull rebuild(4) M 192/Independence 172,000� Yes� 1998� Double-hull rebuild Total oil carrying capacity 2,638,000� � Oil Tankers � � � � Integrity 270,000� Yes� 1975� Originally built with double-hull Diligence 270,000� Yes� 1977� Originally built with double-hull Seabrook (6) 224,000� No� 1983� Total oil carrying capacity 764,000� � Other � � � � Allegiance 251,000� No� 1980� Redeployed in transport of grain Perseverance 251,000� No� 1981� Prepared to transport grain 502,000� � Total capacity 3,904,000� � (1) Represents 98% capacity, which is the effective carrying capacity of a tank vessel. (2) If rebuilt, the Company anticipates that a 30,000 barrel mid-body would be inserted. (3) Vessels are being rebuilt with 38,000 barrel mid-body insertions. (4) Completion of the double-hull rebuild included a 30,000 barrel mid-body insertion. (5) Sea Swift chartered in from Crowley Maritime Corporation. (6) Chartered in from Seabrook Carriers Inc. APPENDIX I ACCOUNTING CHANGE FOR PLANNED MAJOR MAINTENANCE ACTIVITIES As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. Previously, the Company made provisions for the cost of upcoming major periodic overhauls of vessels and equipment in advance of performing the related maintenance and repairs. The costs expected to be paid in the upcoming year were included in accrued shipyard costs as a current liability with the remainder classified as a long-term liability. Under the deferral method, costs actually incurred are amortized on a straight-line basis over the period beginning at the completion of the maintenance event and ending at the commencement of the next scheduled regulatory drydocking. Management believes the deferral method is the preferable method for accounting for planned major maintenance activities because (i) it better matches the expenses incurred with the revenues generated, (ii) the deferral method improves comparability with the Company�s industry since the majority of the Company�s competitors use this method and (iii) the deferral method best fits the Company�s business circumstances because the Company has a small fleet of vessels, the expenditures for planned major maintenance activities are not continuous and the expenditures are not consistent across periods due to the timing of regulatory drydockings. The Company recorded this change in accounting principle in accordance with SFAS No. 154, Accounting Changes and Error Corrections, which provides guidance on the accounting for and the reporting of accounting changes, including changes in accounting principles. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. This statement requires retrospective application of accounting changes which is defined as the application of a different accounting principle to prior accounting periods as if that principle had always been used. Pursuant to SFAS No. 154, the Company is required to apply the new accounting principle to all prior periods that the Company will report upon in the Annual Report on Form 10-K for the year ended December 31, 2006. Therefore, this accounting principle was retrospectively applied to the period of January 1, 2004 and to each period thereafter. The cumulative effect of the retrospective change to this accounting principle as of January 1, 2004 was a $17.9 million increase in total assets, a $2.7 million decrease in total liabilities and a $20.6 million increase in retained earnings. The following presents the effect of the retrospective application of this change in accounting principle on the Company�s income statement and balance sheet as of and for the respective periods. Three Months Ended Sept. 30, 2006 Pre Adoption Effect of Change in Accounting Principle Three Months Ended Sept. 30, 2006 as Reported � Revenues $ 49,161� $ 49,161� Costs and expenses: Operation expense 33,062� 33,062� Maintenance expense 5,457� (3,385) 2,072� General and administrative 2,231� 2,231� Depreciation and amortization 5,154� 3,055� 8,209� Total operating expenses 45,904� (330) 45,574� Operating income 3,257� 330� 3,587� Interest expense (43) (43) Interest income 680� 680� Other income, net 58� � 58� Income before income taxes 3,952� 330� 4,282� Income tax provision 153� 119� 272� Net income $ 3,799� $ 211� $ 4,010� � Basic earnings per share $ 0.32� $ 0.02� $ 0.34� Diluted earnings per share $ 0.31� $ 0.02� $ 0.33� Three Months Ended June 30, 2006 Pre Adoption Effect of Change in Accounting Principle Three Months Ended June 30, 2006 as Reported � Revenues $ 43,903� $ 43,903� Costs and expenses: Operation expense 27,094� 27,094� Maintenance expense 4,931� (3,282) 1,649� General and administrative 2,287� 2,287� Depreciation and amortization 4,958� 3,098� 8,056� Total operating expenses 39,270� (184) 39,086� Operating income 4,633� 184� 4,817� Interest expense (108) (108) Interest income 761� 761� Other income, net 63� � 63� Income before income taxes 5,349� 184� 5,533� Income tax provision 1,862� 66� 1,928� Net income $ 3,487� $ 118� $ 3,605� � Basic earnings per share $ 0.29� $ 0.01� $ 0.30� Diluted earnings per share $ 0.29� $ 0.01� $ 0.30� Three Months Ended March 31, 2006 as Reported Effect of Change in Accounting Principle Three Months Ended March 31, 2006 as Adjusted � Revenues $ 47,384� $ 47,384� Costs and expenses: Operation expense 28,976� 28,976� Maintenance expense 5,277� (3,103) 2,174� General and administrative 2,305� 2,305� Depreciation and amortization 5,244� 3,759� 9,003� Gain on involuntary conversion of assets (2,868) � (2,868) Total operating expenses 38,934� 656� 39,590� Operating income 8,450� (656) 7,794� Interest expense (273) (273) Interest income 678� 678� Other income, net 76� � 76� Income before income taxes 8,931� (656) 8,275� Income tax provision 3,157� (236) 2,921� Net income $ 5,774� $ (420) $ 5,354� � Basic earnings per share $ 0.49� $ (0.04) $ 0.45� Diluted earnings per share $ 0.48� $ (0.03) $ 0.45� Nine Months Ended Sept. 30, 2006 Pre Adoption Effect of Change in Accounting Principle Nine Months Ended Sept. 30, 2006 as Reported � Revenues $ 140,448� $ 140,448� Costs and expenses: Operation expense 89,132� 89,132� Maintenance expense 15,664� (9,770) 5,894� General and administrative 6,823� 6,823� Depreciation and amortization 15,355� 9,912� 25,267� Gain on involuntary conversion of assets (2,868) -� (2,868) Total operating expenses 124,106� 142� 124,248� Operating income 16,342� (142) 16,200� Interest expense (425) (425) Interest income 2,119� 2,119� Other income, net 197� � 197� Income before income taxes 18,233� (142) 18,091� Income tax provision 5,173� (51) 5,122� Net income $ 13,060� $ (91) $ 12,969� � Basic earnings per share $ 1.10� $ (0.01) $ 1.09� Diluted earnings per share $ 1.09� $ (0.01) $ 1.08� Three Months Ended Sept. 30, 2005 as Reported Effect of Change in Accounting Principle Three Months Ended Sept. 30, 2005 as Adjusted � Revenues $ 44,930� $ 44,930� Costs and expenses: Operation expense 23,233� 23,233� Maintenance expense 5,221� (3,417) 1,804� General and administrative 2,208� 2,208� Depreciation and amortization 5,947� 3,016� 8,963� Total operating expenses 36,609� (401) 36,208� Operating income 8,321� 401� 8,722� Interest expense (838) (838) Interest income 114� 114� Other income, net 59� � 59� Income before income taxes 7,656� 401� 8,057� Income tax provision 1,510� 144� 1,654� Net income $ 6,146� $ 257� $ 6,403� � Basic earnings per share $ 0.73� $ 0.03� $ 0.76� Diluted earnings per share $ 0.71� $ 0.03� $ 0.74� Nine Months Ended Sept. 30, 2005 as Reported Effect of Change in Accounting Principle Nine Months Ended Sept. 30, 2005 as Adjusted � Revenues $ 134,800� $ 134,800� Costs and expenses: Operation expense 70,518� 70,518� Maintenance expense 15,312� (10,689) 4,623� General and administrative 10,017� 10,017� Depreciation and amortization 17,162� 10,017� 27,179� Gain on sale of assets (647) � (647) Total operating expenses 112,362� (672) 111,690� Operating income 22,438� 672� 23,110� Interest expense (2,259) (2,259) Interest income 281� 281� Other income, net 4,151� � 4,151� Income before income taxes 24,611� 672� 25,283� Income tax provision 7,699� 242� 7,941� Net income $ 16,912� $ 430� $ 17,342� � Basic earnings per share $ 2.02� $ 0.05� $ 2.07� Diluted earnings per share $ 1.98� $ 0.05� $ 2.03� Sept. 30, 2006 Pre Adoption Effect of Change in Accounting Principle Sept. 30, 2006 as Reported � ASSETS Current assets $ 84,387� $ (6,002) $ 78,385� Vessels and equipment, net 255,562� 255,562� Deferred costs, net -� 19,913� 19,913� Goodwill 2,863� 2,863� Other 1,372� (1,176) 196� Total assets $ 344,184� $ 12,735� $ 356,919� � LIABILITIES AND STOCKHOLDERS� EQUITY Current liabilities $ 34,812� $ (5,112) $ 29,700� Non-current liabilities 105,264� (960) 104,304� Stockholders� equity 204,108� 18,807� 222,915� Total liabilities and stockholders� equity $ 344,184� $ 12,735� $ 356,919� Dec. 31, 2005 as Reported Effect of Change in Accounting Principle Dec. 31 2005 as Adjusted � ASSETS Current assets $ 94,474� $ (6,158) $ 88,316� Vessels and equipment, net 233,572� 69� 233,641� Deferred costs, net -� 21,405� 21,405� Goodwill 2,863� 2,863� Other 1,094� (883) 211� Total assets $ 332,003� $ 14,433� $ 346,436� � LIABILITIES AND STOCKHOLDERS� EQUITY Current liabilities $ 31,867� $ (6,583) $ 25,284� Non-current liabilities 106,153� 1,003� 107,156� Stockholders� equity 193,983� 20,013� 213,996� Total liabilities and stockholders� equity $ 332,003� $ 14,433� $ 346,436� Nine Months Ended Sept. 30, 2006 Pre Adoption Effect of Change in Accounting Principle Nine Months Ended Sept. 30, 2006 as Reported � Cash flows from operating activities: Net income $ 13,060� $ (91) $ 12,969� Total adjustments to net income 12,172� 22� 12,194� Net cash provided by operating activities 25,232� (69) 25,163� Cash flows from investing activities: Net cash used in investing activities (34,476) 69� (34,407) Cash flows from financing activities: Net cash used in financing activities (6,768) --� (6,768) � Net increase in cash and cash equivalents (16,012) (16,012) Cash and cash equivalents at beginning of period 58,794� --� 58,794� Cash and cash equivalents at end of period $ 42,782� $ --� $ 42,782� Nine Months Ended Sept. 30, 2005 as Reported Effect of Change in Accounting Principle Nine Months Ended Sept. 30, 2005 as Adjusted � Cash flows from operating activities: Net income $ 16,912� $ 430� $ 17,342� Total adjustments to net income 20,812� (430) 20,382� Net cash provided by operating activities 37,724� --� 37,724� Cash flows from investing activities: Net cash used in investing activities (39,181) (13,357) Cash flows from financing activities: Net cash used in financing activities (4,079) --� (3,694) � Net increase in cash and cash equivalents (5,536) (5,536) Cash and cash equivalents at beginning of period 6,347� --� 6,347� Cash and cash equivalents at end of period $ 811� $ --� $ 811� Twelve Months Ended Dec. 31, 2005 as Reported Effect of Change in Accounting Principle Twelve Months Ended Dec. 31, 2005 as Adjusted � Revenues $ 180,710� $ 180,710� Costs and expenses: Operation expense 98,701� 98,701� Maintenance expense 20,320� (14,075) 6,245� General and administrative 12,478� 12,478� Depreciation and amortization 23,201� 12,711� 35,912� Gain on sale of assets (628) � (628) Total operating expenses 154,072� (1,364) 152,708� Operating income 26,638� 1,364� 28,002� Interest expense (2,846) (2,846) Interest income 393� 393� Other income, net 4,203� � 4,203� Income before income taxes 28,388� 1,364� 29,752� Income tax provision 8,509� 491� 9,000� Net income $ 19,879� $ 873� $ 20,752� � Basic earnings per share $ 2.33� $ 0.10� $ 2.43� Diluted earnings per share $ 2.28� $ 0.10� $ 2.38� Twelve Months Ended Dec. 31, 2005 as Reported Effect of Change in Accounting Principle Twelve Months Ended Dec. 31, 2005 as Adjusted � Cash flows from operating activities: Net income $ 19,879� $ 873� $ 20,752� Total adjustments to net income 19,731� (804) 18,927� Net cash provided by operating activities 39,610� 69� 39,679� Cash flows from investing activities: Net cash used in investing activities (64,222) (69) (64,291) Cash flows from financing activities: Net cash provided by financing activities 77,059� --� 77,059� � Net increase in cash and cash equivalents 52,447� 52,447� Cash and cash equivalents at beginning of year 6,347� --� 6,347� Cash and cash equivalents at end of year $ 58,794� $ --� $ 58,794� Twelve Months Ended Dec. 31, 2004 as Reported Effect of Change in Accounting Principle Twelve Months Ended Dec. 31, 2004 as Adjusted � Revenues $ 149,718� $ 149,718� Costs and expenses: Operation expense 80,517� 80,517� Maintenance expense 20,761� (13,073) 7,688� General and administrative 11,709� 11,709� Depreciation and amortization 22,193� 15,582� 37,775� Total operating expenses 135,180� 2,509� 137,689� Operating income 14,538� (2,509) 12,029� Interest expense (2,318) (2,318) Interest income 254� 254� Other income, net 333� � 333� Income before income taxes 12,807� (2,509) 10,298� Income tax provision 2,975� (903) 2,072� Net income $ 9,832� $ (1,606) $ 8,226� � Basic earnings per share $ 1.20� $ (0.20) $ 1.00� Diluted earnings per share $ 1.16� $ (0.19) $ 0.97� Twelve Months Ended Dec. 31, 2004 as Reported Effect of Change in Accounting Principle Twelve Months Ended Dec. 31, 2004 as Adjusted � Cash flows from operating activities: Net income $ 9,832� $ (1,606) $ 8,226� Total adjustments to net income 18,578� 1,606� 20,184� Net cash provided by operating activities 28,410� --� 28,410� Cash flows from investing activities: Net cash used in investing activities (25,111) (25,111) Cash flows from financing activities: Net cash provided by in financing activities (566) --� (566) � Net increase in cash and cash equivalents 2,733� 2,733� Cash and cash equivalents at beginning of year 3,614� --� 3,614� Cash and cash equivalents at end of year $ 6,347� $ --� $ 6,347� Maritrans Inc. (NYSE:TUG), a leading U.S. flag marine petroleum transport company, today announced its third quarter financial results. Net income for the quarter ended September 30, 2006 was $4.0 million, or $0.33 diluted earnings per share, on revenues of $49.2 million. This compares with net income of $6.4 million, or $0.74 diluted earnings per share, on revenues of $44.9 million for the quarter ended September 30, 2005. For the third quarter ended September 30, 2006, net income included the reversal of an income tax reserve of $1.3 million, or $0.11 diluted earnings per share. In the prior year, net income for the quarter ended September 30, 2005 included a reversal of an income tax reserve of $1.2 million, or $0.14 diluted earnings per share. As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. An appendix is included at the end of this release that details the effect of the accounting change on Maritrans' results from January 1, 2004 and each period thereafter. Operating income for the quarter ended September 30, 2006, was $3.6 million compared to $8.7 million for the quarter ended September 30, 2005. Operating expenses increased to $45.6 million in the third quarter of 2006 from $36.2 million for the third quarter of 2005 primarily due to charter hire costs related to the charters of the vessels SEABROOK and SEA SWIFT, which charters did not exist in 2005. Additionally, the Company's vessel insurance expenses increased $1.3 million compared to the same period of 2005 due to additional premiums for open policy periods from 2004 through 2006 due to a general call on all policyholders by the Company's mutual insurance club. During the third quarter, rates in the U.S. Jones Act spot market increased compared to the second quarter of 2006, as a result of fewer vessels available in the market and higher refinery output. During the third quarter of 2006 the Company delivered 23 million barrels of crude oil to lightering customers compared to 21 million barrels delivered during the second quarter of 2006, which was primarily a result of increased production from a Delaware River refinery that was undergoing maintenance during the second quarter of 2006. On a Time Charter Equivalent ("TCE") basis, a commonly used industry measure where direct voyage costs are deducted from voyage revenue, TCE revenue was $35.0 million for the quarter ended September 30, 2006 compared to $34.8 million for the quarter ended September 30, 2005, an increase of $0.2 million, or 0.6%. TCE revenue is a non-GAAP financial measure and a reconciliation of TCE revenue to revenue calculated in accordance with GAAP is attached hereto. During the third quarter of 2006, the Company experienced lower overall utilization than in the third quarter of 2005. Utilization for the third quarter of 2006 was 77.2% compared to 83.8% in the third quarter of 2005. In the quarter ended September 30, 2006, the Company experienced 203 days of out of service time for capital projects, including barge rebuilding, and vessel maintenance. This compares to out of service time for maintenance and capital projects, including barge rebuilding, of 123 days in the third quarter of 2005. The Company expects to have at least 92 days out of service time during the fourth quarter of 2006 for capital projects, including barge rebuilding. In the quarter ended September 30, 2006, the Company did not experience any days out of service due to weather related events. In the quarter ended September 30, 2005, the Company experienced four significant storms that resulted in approximately 49 days of out of service time. In the quarter ended September 30, 2006, the Company did not experience any idle days in its spot fleet, compared to 17 days in the comparable period in 2005. In the quarter ended September 30, 2006, the Company experienced 63 idle days for the ALLEGIANCE and PERSEVERANCE while awaiting orders for grain voyages. The Company had no vessels in grain service in the comparable period in 2005. PENDING TRANSACTION WITH OVERSEAS SHIPHOLDING GROUP INC. On September 25, 2006, the Company and Overseas Shipholding Group Inc., or OSG, announced that OSG had entered into a definitive agreement pursuant to which OSG will acquire all of the outstanding stock of Maritrans Inc. for $37.50 per share. The transaction is valued at approximately $455 million based on approximately 12 million shares outstanding and the assumption of net debt outstanding as of June 30, 2006. The transaction, which is expected to close by year-end 2006, is subject to approval by a majority of Maritrans' stockholders and other customary closing conditions, including regulatory approvals. On October 17, 2006, the Federal Trade Commission, on behalf of itself and the Antitrust Division of the Department of Justice, granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Acts of 1976 with respect to the proposed acquisition. The special meeting of Maritrans' stockholders to consider the proposed transaction has been scheduled for November 28, 2006. Stockholders of record at the close of business on October 20, 2006 will be entitled to vote at the meeting. FLEET AND MARKET REPORT Maritrans operates a fleet of oil tankers and oceangoing married tug/barge units. In the third quarter of 2006, the Company operated its fleet at approximately 35% spot and 65% contract and intends to maintain similar spot market exposure in the fourth quarter of 2006. In September, the ALLEGIANCE entered into a charter to transport grain from Portland, Oregon to Kenya. The vessel is scheduled to complete this voyage in mid-December. The current grain cargo is the vessel's fourth charter since being removed from petroleum transportation service in December 2005 in accordance with the Oil Pollution Act of 1990 ("OPA"). In July 2006, the Company's tanker PERSEVERANCE reached its mandatory oil retirement date. In September 2006, the PERSEVERANCE entered into a charter to transport grain from Corpus Christi, Texas to Djibouti and Georgia. The vessel is scheduled to complete this voyage in November. The Company expects to incur approximately 15 days of idle time on each of these tankers in the fourth quarter of 2006. FLEET REBUlLDING AND CONSTRUCTION PROGRAM Since 1998, Maritrans has been actively engaged in a double-hull rebuilding program aimed at ensuring that the Company's Jones Act fleet is compliant with the Oil Pollution Act of 1990. Maritrans' patented barge rebuilding process enables the Company to convert its vessels for significantly less cost than building new vessels. During 2006, the Company has continued to successfully implement its rebuilding program. The rebuild of the Company's seventh barge, the M 210, commenced on January 26, 2006. The M 210 rebuild is expected to have a total cost of approximately $30 million. The rebuild of the Company's eighth barge, the OCEAN 211, is expected to commence following the return to service of the M 210. The OCEAN 211's rebuild is also expected to have a total cost of approximately $30 million. The rebuilds of the M 210 and OCEAN 211 will also include the insertions of mid-bodies that will increase each of their respective capacities by approximately 38,000 barrels, or 17%. The rebuilds of the M 210 and the OCEAN 211 are expected to be completed early in 2007 and in the late summer of 2007, respectively. Upon completion of their double-hulling, and reflecting their larger carrying capacities, the M 210 and OCEAN 211 will be renamed the M 242 and M 243, respectively. The Company has three 350,000 barrel articulated tug-barge units under construction, with deliveries scheduled for the fourth quarter of 2007, the second quarter of 2008 and the fourth quarter of 2008, respectively. The cost of each ATB is expected to be approximately $77.5 million. The Company also has two 8,000-horsepower tugboats under construction. One tugboat is expected to be delivered in the fourth quarter of 2008 with the second delivered in the first quarter of 2009. The cost of each tugboat is expected to be approximately $16 million. ABOUT MARITRANS Maritrans Inc. is a U.S.-based company with a 78-year commitment to building and operating petroleum transport vessels for the U.S. domestic trade. Maritrans employs a fleet of 11 tug/barge units and 5 tankers. Two of these tankers were redeployed to the transportation of non-petroleum cargo. Approximately 75 percent of our oil carrying fleet capacity is double-hulled. Our current oil carrying fleet capacity aggregates approximately 3.4 million barrels, 79 percent of which is barge capacity. Maritrans is headquartered in Tampa, Florida, and maintains an office in the Philadelphia area. SAFE HARBOR STATEMENT Certain statements in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to present or anticipated utilization, future revenues and customer relationships, capital expenditures, future financings, and other statements regarding matters that are not historical facts, and involve predictions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, growth, performance, earnings per share or achievements to be materially different from any future results, levels of activity, growth, performance, earnings per share or achievements expressed in or implied by such forward-looking statements. In some cases you can identify forward-looking statements by terminology such as "may," "seem," "should," "believe," "future," "potential," "estimate," "offer," "opportunity," "quality," "growth," "expect," "intend," "plan," "focus," "through," "strategy," "provide," "meet," "allow," "represent," "commitment," "create," "implement," "result," "seek," "increase," "establish," "work," "perform," "make," "continue," "can," "will," "include," or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments that are believed to be reasonable as of the date of this prospectus supplement. The forward-looking statements are subject to a number of risks and uncertainties and include the following: satisfaction of conditions to closing of the proposed merger with OSG, demand for, or level of consumption of, oil and petroleum products; future spot market charter rates; ability to attract and retain experienced, qualified and skilled crewmembers; competition that could affect our market share and revenues; risks inherent in marine transportation; the cost and availability of insurance coverage; delays or cost overruns in the building of new vessels, the double-hulling of our remaining single hulled vessels and scheduled shipyard maintenance; decrease in demand for lightering services; environmental and regulatory conditions; reliance on a limited number of customers for revenue; the continuation of federal law restricting United States point-to-point maritime shipping to US vessels (the Jones Act); asbestos-related lawsuits; fluctuating fuel prices; high fixed costs; capital expenditures required to operate and maintain a vessel may increase due to government regulations; reliance on unionized labor; federal laws covering our employees that may subject us to job-related claims; and significant fluctuations of our stock price. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should read this news release completely and with the understanding that our actual future results may be materially different from what the Company expects. These forward-looking statements represent our estimates and assumptions only as of the date of this news release. Except for our ongoing obligations to disclose material information under the federal securities laws, the Company is not obligated to update these forward-looking statements, even though our situation may change in the future. The Company qualifies all of its forward-looking statements by these cautionary statements. -0- *T RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ Thousands) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 --------- -------- --------- --------- Revenue $ 49,161 $44,930 $140,448 $134,800 Voyage Costs 14,210 10,095 36,219 30,691 --------- -------- --------- --------- Time Charter Equivalent $ 34,951 $34,835 $104,229 $104,109 ========= ======== ========= ========= UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($ Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 --------- -------- --------- --------- Revenue $ 49,161 $44,930 $140,448 $134,800 Operations expense Operations expense 14,210 10,095 36,219 30,691 Charter hire 3,087 -- 8,624 -- Voyage costs 15,765 13,138 44,289 39,827 Maintenance expense 2,072 1,804 5,894 4,623 General and administrative expense 2,231 2,208 6,823 10,017 Depreciation and amortization expense 8,209 8,963 25,267 27,179 Gain on sale of assets -- -- (2,868) (647) -------- ------- -------- -------- Operating Income 3,587 8,722 16,200 23,110 Other Income 738 173 2,316 4,432 Interest Expense (43) (838) (425) (2,259) -------- ------- -------- -------- Pre-tax income 4,282 8,057 18,091 25,283 Income Tax Provision 272 1,654 5,122 7,941 -------- ------- -------- -------- Net Income $ 4,010 $ 6,403 $ 12,969 $ 17,342 ========= ======== ========= ========= Diluted Earnings Per Share $ 0.33 $ 0.74 $ 1.08 $ 2.03 Diluted Shares Outstanding 12,068 8,596 12,049 8,562 Capital Expenditures $ 11,843 $25,824 $ 38,407 $ 39,828 Utilization of Calendar days 77.2% 83.8% 78.0% 82.5% Barrels carried (in millions) 41.6 42.5 126.0 132.1 Available days 1,253 1,250 3,869 3,642 NOTE: All periods presented are conformed to the new major maintenance accounting treatment. See also Appendix I. *T -0- *T UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION ($ Thousands) ---------------------------------------------------------------------- September 30, 2006 December 31, 2005 ------------------ ----------------- Cash and cash equivalents $42,782 $58,794 Other current assets 35,603 29,522 Net vessels and equipment 255,562 233,641 Other assets 22,972 24,479 ------------------ ----------------- Total assets $356,919 $346,436 ================== ================= Current portion of debt $4,144 $3,973 Total other current liabilities 25,556 21,311 Long-term debt 52,271 55,400 Deferred other liabilities 8,552 9,435 Deferred income taxes 43,481 42,321 Stockholders' equity 222,915 213,996 ------------------ ----------------- Total liabilities and stockholders' equity $356,919 $346,436 ================== ================= NOTE: All periods presented are conformed to the new major maintenance accounting treatment. See also Appendix I. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION ($ Thousands) ---------------------------------------------------------------------- Nine Months Ended September 30, 2006 2005 ------------------ ----------------- Cash flows from operating activities: Net income $12,969 $17,342 Depreciation and amortization 25,267 27,179 Other (13,073) (6,797) ------------------ ----------------- Total adjustments to net income 12,194 20,382 ------------------ ----------------- Net cash provided by operating activities 25,163 37,724 Net cash used in investing activities (34,407) (39,181) ------------------ ----------------- Net cash used in financing activities (6,768) (4,079) ------------------ ----------------- Net increase in cash and cash equivalents (16,012) (5,536) Cash and cash equivalents at beginning of period 58,794 6,347 ------------------ ----------------- Cash and cash equivalents at end of period $42,782 $811 ================== ================= NOTE: All periods presented are conformed to the new major maintenance accounting treatment. See also Appendix I. *T -0- *T Barge or Tanker Initial Capacity in Double- Construction/ Barges/Tugs Barrels(1) Hull Rebuild Date ---------------------------------------------------------------------- M 400/Constitution 410,000 Yes 1981 Originally built with double-hull M 300/Liberty 263,000 Yes 1979 Originally built with double-hull M 254/Intrepid 250,000 Yes 2002 Double-hull rebuild M 252/Navigator 250,000 Yes 2002 Double-hull rebuild M 244/Seafarer 240,000 Yes 2000 Double-hull rebuild M 215/Sea Swift (5) 214,000 No 1975 Decision to rebuild has not yet been made(2) Ocean 211/Freedom 212,000 No 2007 Scheduled double-hull delivery(3) M 210/Columbia 213,000 No 2006 Scheduled double-hull delivery(3) M 214/Honour 208,000 Yes 2004 Double-hull rebuild(4) M 209/Enterprise 206,000 Yes 2005 Double-hull rebuild(4) M 192/Independence 172,000 Yes 1998 Double-hull rebuild ----------- Total oil carrying 2,638,000 capacity ----------- Oil Tankers ---------------------------------------------------------------------- Integrity 270,000 Yes 1975 Originally built with double-hull Diligence 270,000 Yes 1977 Originally built with double-hull Seabrook (6) 224,000 No 1983 ----------- Total oil carrying 764,000 capacity ----------- Other ---------------------------------------------------------------------- Allegiance 251,000 No 1980 Redeployed in transport of grain Perseverance 251,000 No 1981 Prepared to transport grain ----------- 502,000 ----------- =========== Total capacity 3,904,000 =========== (1) Represents 98% capacity, which is the effective carrying capacity of a tank vessel. (2) If rebuilt, the Company anticipates that a 30,000 barrel mid-body would be inserted. (3) Vessels are being rebuilt with 38,000 barrel mid-body insertions. (4) Completion of the double-hull rebuild included a 30,000 barrel mid-body insertion. (5) Sea Swift chartered in from Crowley Maritime Corporation. (6) Chartered in from Seabrook Carriers Inc. *T APPENDIX I ACCOUNTING CHANGE FOR PLANNED MAJOR MAINTENANCE ACTIVITIES As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. Previously, the Company made provisions for the cost of upcoming major periodic overhauls of vessels and equipment in advance of performing the related maintenance and repairs. The costs expected to be paid in the upcoming year were included in accrued shipyard costs as a current liability with the remainder classified as a long-term liability. Under the deferral method, costs actually incurred are amortized on a straight-line basis over the period beginning at the completion of the maintenance event and ending at the commencement of the next scheduled regulatory drydocking. Management believes the deferral method is the preferable method for accounting for planned major maintenance activities because (i) it better matches the expenses incurred with the revenues generated, (ii) the deferral method improves comparability with the Company's industry since the majority of the Company's competitors use this method and (iii) the deferral method best fits the Company's business circumstances because the Company has a small fleet of vessels, the expenditures for planned major maintenance activities are not continuous and the expenditures are not consistent across periods due to the timing of regulatory drydockings. The Company recorded this change in accounting principle in accordance with SFAS No. 154, Accounting Changes and Error Corrections, which provides guidance on the accounting for and the reporting of accounting changes, including changes in accounting principles. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. This statement requires retrospective application of accounting changes which is defined as the application of a different accounting principle to prior accounting periods as if that principle had always been used. Pursuant to SFAS No. 154, the Company is required to apply the new accounting principle to all prior periods that the Company will report upon in the Annual Report on Form 10-K for the year ended December 31, 2006. Therefore, this accounting principle was retrospectively applied to the period of January 1, 2004 and to each period thereafter. The cumulative effect of the retrospective change to this accounting principle as of January 1, 2004 was a $17.9 million increase in total assets, a $2.7 million decrease in total liabilities and a $20.6 million increase in retained earnings. The following presents the effect of the retrospective application of this change in accounting principle on the Company's income statement and balance sheet as of and for the respective periods. -0- *T Three Three Months Months Ended Effect of Ended Sept. 30, Change in Sept. 30, 2006 Pre Accounting 2006 as Adoption Principle Reported ---------- ----------- ---------- Revenues $49,161 $49,161 Costs and expenses: Operation expense 33,062 33,062 Maintenance expense 5,457 (3,385) 2,072 General and administrative 2,231 2,231 Depreciation and amortization 5,154 3,055 8,209 ---------- ----------- ---------- Total operating expenses 45,904 (330) 45,574 Operating income 3,257 330 3,587 Interest expense (43) (43) Interest income 680 680 Other income, net 58 58 ---------- ----------- ---------- Income before income taxes 3,952 330 4,282 Income tax provision 153 119 272 ---------- ----------- ---------- Net income $3,799 $211 $4,010 ========== =========== ========== Basic earnings per share $0.32 $0.02 $0.34 Diluted earnings per share $0.31 $0.02 $0.33 *T -0- *T Three Three Months Months Ended Effect of Ended June 30, Change in June 30, 2006 Pre Accounting 2006 as Adoption Principle Reported --------- ----------- --------- Revenues $43,903 $43,903 Costs and expenses: Operation expense 27,094 27,094 Maintenance expense 4,931 (3,282) 1,649 General and administrative 2,287 2,287 Depreciation and amortization 4,958 3,098 8,056 --------- ----------- --------- Total operating expenses 39,270 (184) 39,086 Operating income 4,633 184 4,817 Interest expense (108) (108) Interest income 761 761 Other income, net 63 63 --------- ----------- --------- Income before income taxes 5,349 184 5,533 Income tax provision 1,862 66 1,928 --------- ----------- --------- Net income $3,487 $118 $3,605 ========= =========== ========= Basic earnings per share $0.29 $0.01 $0.30 Diluted earnings per share $0.29 $0.01 $0.30 *T -0- *T Three Three Months Months Ended Ended March Effect of March 31, 2006 Change in 31, 2006 as Accounting as Reported Principle Adjusted --------- ----------- --------- Revenues $47,384 $47,384 Costs and expenses: Operation expense 28,976 28,976 Maintenance expense 5,277 (3,103) 2,174 General and administrative 2,305 2,305 Depreciation and amortization 5,244 3,759 9,003 Gain on involuntary conversion of assets (2,868) (2,868) --------- ----------- --------- Total operating expenses 38,934 656 39,590 Operating income 8,450 (656) 7,794 Interest expense (273) (273) Interest income 678 678 Other income, net 76 76 --------- ----------- --------- Income before income taxes 8,931 (656) 8,275 Income tax provision 3,157 (236) 2,921 --------- ----------- --------- Net income $5,774 $(420) $5,354 ========= =========== ========= Basic earnings per share $0.49 $(0.04) $0.45 Diluted earnings per share $0.48 $(0.03) $0.45 *T -0- *T Nine Nine Months Months Ended Ended Sept. Effect of Sept. 30, 2006 Change in 30, 2006 Pre Accounting as Adoption Principle Reported --------- ----------- --------- Revenues $140,448 $140,448 Costs and expenses: Operation expense 89,132 89,132 Maintenance expense 15,664 (9,770) 5,894 General and administrative 6,823 6,823 Depreciation and amortization 15,355 9,912 25,267 Gain on involuntary conversion of assets (2,868) - (2,868) --------- ----------- --------- Total operating expenses 124,106 142 124,248 Operating income 16,342 (142) 16,200 Interest expense (425) (425) Interest income 2,119 2,119 Other income, net 197 197 --------- ----------- --------- Income before income taxes 18,233 (142) 18,091 Income tax provision 5,173 (51) 5,122 --------- ----------- --------- Net income $13,060 $(91) $12,969 ========= =========== ========= Basic earnings per share $1.10 $(0.01) $1.09 Diluted earnings per share $1.09 $(0.01) $1.08 *T -0- *T Three Three Months Months Ended Ended Sept. Effect of Sept. 30, 2005 Change in 30, 2005 as Accounting as Reported Principle Adjusted --------- ----------- --------- Revenues $44,930 $44,930 Costs and expenses: Operation expense 23,233 23,233 Maintenance expense 5,221 (3,417) 1,804 General and administrative 2,208 2,208 Depreciation and amortization 5,947 3,016 8,963 --------- ----------- --------- Total operating expenses 36,609 (401) 36,208 Operating income 8,321 401 8,722 Interest expense (838) (838) Interest income 114 114 Other income, net 59 59 --------- ----------- --------- Income before income taxes 7,656 401 8,057 Income tax provision 1,510 144 1,654 --------- ----------- --------- Net income $6,146 $257 $6,403 ========= =========== ========= Basic earnings per share $0.73 $0.03 $0.76 Diluted earnings per share $0.71 $0.03 $0.74 *T -0- *T Nine Nine Months Months Ended Ended Sept. Effect of Sept. 30, 2005 Change in 30, 2005 as Accounting as Reported Principle Adjusted --------- ----------- --------- Revenues $134,800 $134,800 Costs and expenses: Operation expense 70,518 70,518 Maintenance expense 15,312 (10,689) 4,623 General and administrative 10,017 10,017 Depreciation and amortization 17,162 10,017 27,179 Gain on sale of assets (647) (647) --------- ----------- --------- Total operating expenses 112,362 (672) 111,690 Operating income 22,438 672 23,110 Interest expense (2,259) (2,259) Interest income 281 281 Other income, net 4,151 4,151 --------- ----------- --------- Income before income taxes 24,611 672 25,283 Income tax provision 7,699 242 7,941 --------- ----------- --------- Net income $16,912 $430 $17,342 ========= =========== ========= Basic earnings per share $2.02 $0.05 $2.07 Diluted earnings per share $1.98 $0.05 $2.03 *T -0- *T Effect of Sept. 30, Change in Sept. 30, 2006 Pre Accounting 2006 as Adoption Principle Reported --------- ----------- --------- ASSETS Current assets $84,387 $(6,002) $78,385 Vessels and equipment, net 255,562 255,562 Deferred costs, net - 19,913 19,913 Goodwill 2,863 2,863 Other 1,372 (1,176) 196 --------- ----------- --------- Total assets $344,184 $12,735 $356,919 ========= =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $34,812 $(5,112) $29,700 Non-current liabilities 105,264 (960) 104,304 Stockholders' equity 204,108 18,807 222,915 --------- ----------- --------- Total liabilities and stockholders' equity $344,184 $12,735 $356,919 ========= =========== ========= *T -0- *T Effect of Dec. 31, Change in Dec. 31 2005 as Accounting 2005 as Reported Principle Adjusted --------- ----------- --------- ASSETS Current assets $94,474 $(6,158) $88,316 Vessels and equipment, net 233,572 69 233,641 Deferred costs, net - 21,405 21,405 Goodwill 2,863 2,863 Other 1,094 (883) 211 --------- ----------- --------- Total assets $332,003 $14,433 $346,436 ========= =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $31,867 $(6,583) $25,284 Non-current liabilities 106,153 1,003 107,156 Stockholders' equity 193,983 20,013 213,996 --------- ----------- --------- Total liabilities and stockholders' equity $332,003 $14,433 $346,436 ========= =========== ========= *T -0- *T Nine Nine Months Months Ended Ended Sept. Effect of Sept. 30, 2006 Change in 30, 2006 Pre Accounting as Adoption Principle Reported --------- ----------- --------- Cash flows from operating activities: Net income $13,060 $(91) $12,969 Total adjustments to net income 12,172 22 12,194 --------- ----------- --------- Net cash provided by operating activities 25,232 (69) 25,163 Cash flows from investing activities: Net cash used in investing activities (34,476) 69 (34,407) Cash flows from financing activities: Net cash used in financing activities (6,768) -- (6,768) --------- ----------- --------- Net increase in cash and cash equivalents (16,012) (16,012) Cash and cash equivalents at beginning of period 58,794 -- 58,794 --------- ----------- --------- Cash and cash equivalents at end of period $42,782 $-- $42,782 ========= =========== ========= *T -0- *T Nine Nine Months Months Ended Ended Sept. Effect of Sept. 30, 2005 Change in 30, 2005 as Accounting as Reported Principle Adjusted --------- ----------- --------- Cash flows from operating activities: Net income $16,912 $430 $17,342 Total adjustments to net income 20,812 (430) 20,382 --------- ----------- --------- Net cash provided by operating activities 37,724 -- 37,724 Cash flows from investing activities: Net cash used in investing activities (39,181) (13,357) Cash flows from financing activities: Net cash used in financing activities (4,079) -- (3,694) --------- ----------- --------- Net increase in cash and cash equivalents (5,536) (5,536) Cash and cash equivalents at beginning of period 6,347 -- 6,347 --------- ----------- --------- Cash and cash equivalents at end of period $811 $-- $811 ========= =========== ========= *T -0- *T Twelve Twelve Months Months Ended Effect of Ended Dec. 31, Change in Dec. 31, 2005 as Accounting 2005 as Reported Principle Adjusted --------- ----------- --------- Revenues $180,710 $180,710 Costs and expenses: Operation expense 98,701 98,701 Maintenance expense 20,320 (14,075) 6,245 General and administrative 12,478 12,478 Depreciation and amortization 23,201 12,711 35,912 Gain on sale of assets (628) (628) --------- ----------- --------- Total operating expenses 154,072 (1,364) 152,708 Operating income 26,638 1,364 28,002 Interest expense (2,846) (2,846) Interest income 393 393 Other income, net 4,203 4,203 --------- ----------- --------- Income before income taxes 28,388 1,364 29,752 Income tax provision 8,509 491 9,000 --------- ----------- --------- Net income $19,879 $873 $20,752 ========= =========== ========= Basic earnings per share $2.33 $0.10 $2.43 Diluted earnings per share $2.28 $0.10 $2.38 *T -0- *T Twelve Twelve Months Months Ended Effect of Ended Dec. 31, Change in Dec. 31, 2005 as Accounting 2005 as Reported Principle Adjusted --------- ----------- --------- Cash flows from operating activities: Net income $19,879 $873 $20,752 Total adjustments to net income 19,731 (804) 18,927 --------- ----------- --------- Net cash provided by operating activities 39,610 69 39,679 Cash flows from investing activities: Net cash used in investing activities (64,222) (69) (64,291) Cash flows from financing activities: Net cash provided by financing activities 77,059 -- 77,059 --------- ----------- --------- Net increase in cash and cash equivalents 52,447 52,447 Cash and cash equivalents at beginning of year 6,347 -- 6,347 --------- ----------- --------- Cash and cash equivalents at end of year $58,794 $-- $58,794 ========= =========== ========= *T -0- *T Twelve Twelve Months Months Ended Effect of Ended Dec. 31, Change in Dec. 31, 2004 as Accounting 2004 as Reported Principle Adjusted --------- ----------- --------- Revenues $149,718 $149,718 Costs and expenses: Operation expense 80,517 80,517 Maintenance expense 20,761 (13,073) 7,688 General and administrative 11,709 11,709 Depreciation and amortization 22,193 15,582 37,775 --------- ----------- --------- Total operating expenses 135,180 2,509 137,689 Operating income 14,538 (2,509) 12,029 Interest expense (2,318) (2,318) Interest income 254 254 Other income, net 333 333 --------- ----------- --------- Income before income taxes 12,807 (2,509) 10,298 Income tax provision 2,975 (903) 2,072 --------- ----------- --------- Net income $9,832 $(1,606) $8,226 ========= =========== ========= Basic earnings per share $1.20 $(0.20) $1.00 Diluted earnings per share $1.16 $(0.19) $0.97 *T -0- *T Twelve Twelve Months Months Ended Effect of Ended Dec. 31, Change in Dec. 31, 2004 as Accounting 2004 as Reported Principle Adjusted --------- ----------- --------- Cash flows from operating activities: Net income $9,832 $(1,606) $8,226 Total adjustments to net income 18,578 1,606 20,184 --------- ----------- --------- Net cash provided by operating activities 28,410 -- 28,410 Cash flows from investing activities: Net cash used in investing activities (25,111) (25,111) Cash flows from financing activities: Net cash provided by in financing activities (566) -- (566) --------- ----------- --------- Net increase in cash and cash equivalents 2,733 2,733 Cash and cash equivalents at beginning of year 3,614 -- 3,614 --------- ----------- --------- Cash and cash equivalents at end of year $6,347 $-- $6,347 ========= =========== ========= *T