HALTER MARINE GROUP INC, S-1, 1996-06-27

HALTER MARINE GROUP INC
S-1, 1996-06-27

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
HALTER MARINE GROUP, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3731 75-2656828
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)

JOHN DANE III
13085 INDUSTRIAL SEAWAY ROAD PRESIDENT AND CHIEF EXECUTIVE OFFICER
GULFPORT, MISSISSIPPI 39503 HALTER MARINE GROUP, INC.
(601) 896-0029 13085 INDUSTRIAL SEAWAY ROAD
(Address, including zip code, and telephone GULFPORT, MISSISSIPPI 39503
number, including area code, of Registrant's (601) 896-0029
principal executive offices) (Name, address, including zip code, and
telephone number, including area code, of
agent for service)
</TABLE>

---------------------
Copies to:

<TABLE>
<S> <C>
KERRY C. L. NORTH JACK M. LITTLE
BAKER & BOTTS, L.L.P. THOMPSON & KNIGHT, P.C.
2001 ROSS AVENUE 1700 PACIFIC AVENUE, SUITE 3300
DALLAS, TEXAS 75201 DALLAS, TEXAS 75201
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
---------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==============================================================================================
PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $0.01 per share.............. $300,000,000 $103,449
- ----------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights(2)................... -- --
==============================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(2) No additional fee is payable in respect of the Preferred Stock Purchase
Rights associated with shares of Common Stock.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in connection with a concurrent offering outside
of the United States and Canada (the "International Prospectus"). The U.S.
Prospectus and the International Prospectus are identical except that they
contain different outside front and outside back cover pages. The form of U.S.
Prospectus is included herein and is followed by those pages for use in the
International Prospectus which differ from, or are in addition to, the pages for
use in the U.S. Prospectus. Each of the pages included herein for use in the
International Prospectus is labeled "Alternate Page for International
Prospectus."
<PAGE> 3

CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)

<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING LOCATION OR CAPTION IN PROSPECTUS
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus....................................... Inside Front and Outside Back Cover
Pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors;
The Company; Selected Consolidated
Financial Data
4. Use of Proceeds..................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price..................... Outside Front Cover Page;
Underwriting
6. Dilution............................................ Risk Factors; Dilution
7. Selling Security Holders............................ Principal Stockholders and Selling
Stockholder
8. Plan of Distribution................................ Outside Front Cover Page;
Underwriting
9. Description of Securities to be Registered.......... Outside Front Cover Page;
Description of Capital Stock;
Certain United States Tax
Considerations for Non-U.S. Holders
(in the case of the International
Prospectus)
10. Interests of Named Experts and Counsel.............. *
11. Information with Respect to the Registrant.......... Prospectus Summary; Risk Factors;
The Company; Dividend Policy;
Capitalization; Selected
Consolidated Financial Data;
Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions
and Related Arrangements; Principal
Stockholders and Selling
Stockholder; Description of Capital
Stock; Shares Eligible for Future
Sale; Consolidated Financial
Statements
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... *
</TABLE>

- ---------------

* Omitted because item is not applicable.
<PAGE> 4

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JUNE 27, 1996

PROSPECTUS
, 1996

15,000,000 SHARES

HALTER MARINE GROUP, INC.

COMMON STOCK

All of the 15,000,000 shares of Common Stock offered hereby are being sold
by Trinity Industries, Inc. ("Trinity" or the "Selling Stockholder"). Of the
shares being offered hereby, 12,000,000 shares are being offered initially in
the United States and Canada by the U.S. Underwriters and 3,000,000 shares are
being offered initially outside of the United States and Canada by the
International Managers (collectively, the "Offerings").

Prior to the Offerings, Halter Marine Group, Inc. (the "Company") has
operated as a wholly owned subsidiary of Trinity. Following the Offerings,
Trinity will not own any shares of Common Stock of the Company. The Company will
not receive any of the proceeds of the Offerings.

Prior to the Offerings, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price of the
Common Stock will be between $ and $ per share. See
"Underwriting" for information relating to the factors to be considered in
determining the initial public offering price.

Application will be made to list the Common Stock on the New York Stock
Exchange under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================================
PROCEEDS
PRICE UNDERWRITING TO THE
TO THE DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)

- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
Total(3)......................... $ $ $
================================================================================================
</TABLE>

(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting expenses payable by the Selling Stockholder estimated at
$ .
(3) The Company has granted the U.S. Underwriters an over-allotment option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
2,250,000 additional shares of Common Stock on the same terms as set forth
above solely to cover over-allotments, if any. If such option is exercised
in full, the total Price to the Public, Underwriting Discounts and
Commissions, Proceeds to the Selling Stockholder and Proceeds to the Company
will be $ , $ , $ and $ , respectively.
See "Underwriting."

The shares of Common Stock are offered by the several Underwriters, when,
as and if delivered to and accepted by the Underwriters, and subject to various
conditions, including their right to reject any order in whole or in part. It is
expected that delivery of share certificates will be made in New York, New York,
on or about , 1996.

<TABLE>
<S> <C>
DONALDSON, LUFKIN & JENRETTE HOWARD, WEIL, LABOUISSE, FRIEDRICHS
SECURITIES CORPORATION INCORPORATED
</TABLE>
<PAGE> 5

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information contained in this
Prospectus (i) gives effect to the consolidation of the assets and liabilities
of the Company Businesses (as defined herein) described under "The
Company -- Consolidation Transactions" and (ii) assumes that the U.S.
Underwriters will not exercise their over-allotment option (the "Over-Allotment
Option").

THE COMPANY

The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in the
United States. The Company, which has built more than 2,000 vessels in the past
40 years, specializes in the construction, repair and conversion of a wide
variety of vessels for the governmental and commercial markets. The Company's
principal products during the past five years have included oceanographic survey
and research ships, high speed patrol boats and ferries for government use and
offshore double hull tank barges, offshore tug boats and oil spill recovery
vessels for commercial use.

The Company has ten shipyards (including one that currently is not in
operation) which are strategically located along the Gulf Coast from Louisiana
to Florida. The Company's multiple shipyards employ advanced manufacturing
techniques, including modular construction and zone outfitting methods, and
provide the Company significant flexibility and efficiency in manufacturing a
wide variety of vessels. The Company believes that these factors, together with
its large and experienced engineering team and work force, make the Company one
of the most versatile and cost-efficient shipbuilders in the United States.

As of June 30, 1996, the Company had firm shipbuilding contracts with an
aggregate remaining value of approximately $601 million (excluding unexercised
options held by customers), covering a total of 97 vessels (including 50 inland
hopper barges). Of this contract value, approximately $216 million was
attributable to contracts to build ships for the U.S. Navy.

The Company's strategy is to enhance its position as a leading manufacturer
of small to medium sized vessels, to respond to anticipated new shipbuilding
construction opportunities and to increase its revenues and profitability. The
following are the key elements of the Company's strategy:

- Wide Variety of Products for Diversified Markets. The Company's
shipbuilding versatility is one of its principal competitive strengths,
not only reducing its dependence on particular types of products, but
also providing engineering and manufacturing benefits across product
lines. The Company intends to continue to serve diversified markets,
including a balance of governmental and commercial shipbuilding projects.
In fiscal 1996, the Company delivered 59 vessels, with governmental and
commercial projects accounting for 53.8% and 46.2% of revenues,
respectively.

- Multiple, Strategically Located Shipyards. The Company's multiple
shipyards, which are strategically located along the Gulf Coast, provide
it with significant flexibility and efficiency in manufacturing a wide
variety of vessels. The Company utilizes certain shipyards with
specialized machinery to centrally manufacture various components for its
other shipyards, helping to reduce costs and equipment redundancy. The
Company has spent approximately $46.9 million in the past five years to
acquire, expand and improve its shipyard facilities, which are well
maintained.

- New Construction Opportunities. The Company believes that it is well
positioned to take advantage of the expected upturn in the market for
offshore support vessels to service oil and gas drilling rigs and
production platforms and the expected increase in offshore tank barge
construction and conversion resulting from the requirements of the Oil
Pollution Act of 1990 ("OPA '90").

- Offshore Support Vessels. The Company has built more offshore support
vessels (including supply boats, anchor handling tug supply boats and
anchor handling tugs) than any shipbuilder in the United States. As a
result of the severe downturn in the oil and gas industry in the
mid-1980's,

3
<PAGE> 7

there has been very limited construction of offshore support vessels
in the United States since 1985. The Company expects that substantial
orders for new offshore support vessels may be made in the next
several years due to the demand for larger vessels to support deep
water exploration and production activities, as well as the
substantial worldwide fleet attrition over the past ten years and the
aging of the remaining fleet. The Company currently has two offshore
support vessels under construction, has outstanding options from one
customer for five additional vessels and is bidding on a number of
substantial potential orders for such vessels.

- Offshore Double Hull Tank Barges. OPA '90 generally requires certain
U.S. and foreign vessels carrying fuel or other hazardous cargos and
entering U.S. ports to have double hulls by 2015. OPA '90 establishes
a phase-out schedule that began January 1, 1995 for all existing
single hull vessels based on the vessel's age and gross tonnage. The
Company estimates that OPA '90 will require approximately 125 barges
engaged in domestic trade to be retrofitted or replaced by 2005 and
another approximately 70 such barges to be retrofitted or replaced by
2010. During the past three years, the Company has built eight large
offshore double hull tank barges, more than any other U.S.
shipbuilder. The Company has firm orders for two such barges, of which
one is currently under construction, and has an outstanding option
from a customer for one additional barge. In addition, the Company is
bidding on a number of other substantial barge construction projects.

- Low Cost Structure. The Company believes it is one of the most
cost-efficient shipbuilders in the United States. The Company's shipyards
employ many advanced manufacturing techniques including modular
construction methods, which the Company was among the first U.S.
shipbuilders to use, zone outfitting methods, advanced welding
techniques, panel line fabrication, computerized plasma arc metal cutting
and automatic sandblasting and painting.

- Additional Capacity at Existing Facilities. The Company has the ability
to significantly increase production at its existing shipyards. As of May
31, 1996, the Company employed 2,478 shipyard workers and estimates that
it could employ a maximum of approximately 3,770 workers without
significant expansion of its plant facilities. While some of its
principal competitors are experiencing a severe shortage of skilled
shipyard workers in southern Louisiana (which has also affected one of
the Company's shipyards), the Company's other shipyards currently have
access to additional shipyard labor in their respective markets along the
Gulf Coast. Significant excess capacity is available at the Company's
Pascagoula, Mississippi yard, which was acquired in late 1995 and at
which production has recently commenced, and its Panama City, Florida
yard, which currently is idle.

- Increased Repair and Conversion Capacity. The Company recently has
significantly increased its capacity for repair and conversion work
through three acquisitions beginning in late 1994. Depending on demand
for such services, the Company may, at some time in the future, relocate
a 115 foot wide dry dock from its Gulf Repair shipyard in New Orleans to
its Pascagoula yard in order to undertake large repair and conversion
projects, such as those for large barges, cargo ships and drilling rigs.

- Strategic Acquisitions. The Company has grown substantially through nine
acquisitions since 1972. Although the Company currently has additional
capacity at its existing facilities, the Company expects to consider
strategic acquisitions of additional shipyards in the future depending on
a variety of factors, including demand for new construction, conversion
and repair, the advantages offered by the facilities and the acquisition
terms.

OFFERING RELATED TRANSACTIONS

Prior to the consummation of the Offerings, the Company will enter into a
new bank credit facility (the "Credit Facility") providing for borrowings of up
to $ million. Immediately prior to the consummation of the Offerings,
the Company will borrow under the Credit Facility to repay a $25.0 million
intercompany note to Trinity. See "The Company -- Offering Related
Transactions."

4
<PAGE> 8

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered in the Offerings:
U.S. Offering......................................... 12,000,000 shares
International Offering................................ 3,000,000 shares
----------
Total......................................... 15,000,000 shares
==========
Common Stock to be outstanding after the Offerings...... 15,000,000 shares(1)

Use of proceeds......................................... The Company will not receive any of
the proceeds of the Offerings
(other than the net proceeds, if
any, received as a result of the
exercise of the Over-Allotment
Option granted to the U.S. Under-
writers). Any proceeds received as
a result of the exercise of the
Over-Allotment Option will be used
first to repay $15.8 million to
Trinity for income taxes incurred
in connection with the Company
Businesses prior to the Offerings,
and the balance of such proceeds,
if any, will be used to repay a
portion of the indebtedness
incurred under the Credit Facility
immediately prior to the Offer-
ings. See "The Company -- Offering
Related Transactions" and "Use of
Proceeds."

Proposed NYSE Symbol.................................... " "
</TABLE>

- ---------------

(1) Does not include 1,200,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option and Incentive Plan (the "1996
Stock Option and Incentive Plan"). It is expected that options for an
aggregate of 430,000 shares of Common Stock will be granted under the 1996
Stock Option and Incentive Plan at the time of the Offerings. In addition,
at the time of the Offerings, the Company will assume certain outstanding
stock options exercisable for shares of Trinity Common Stock (as defined
herein) granted to the Company's employees under certain Trinity stock
compensation plans and such options will become exercisable for shares of
Common Stock. See "Management -- Incentive and Other Employee Benefit
Plans."

5
<PAGE> 9

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth summary consolidated financial data for the
Company for the five fiscal years ended March 31, 1996 and as of March 31, 1996.
See "Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenue earned................... $219,228 $304,385 $275,310 $250,586 $254,294
Cost of revenue earned.................... 206,959 259,819 228,833 207,398 214,559
Gross profit.............................. 12,269 44,566 46,477 43,188 39,735
Selling, general and administrative
expenses............................... 8,242 12,363 12,874 13,471 15,911
Operating income.......................... 4,027 32,203 33,603 29,717 23,824
Interest expense, net..................... 5,766 1,937 1,902 3,844 3,268
Income (loss) before income taxes......... (1,734) 30,290 31,734 25,878 20,567
Provision (benefit) for income taxes...... (100) 10,704 12,227 10,170 8,102
Net income (loss)(1)(2)................... (1,634) 19,586 19,507 15,708 12,465
OTHER DATA:
EBITDA(3)................................. $ 6,416 $ 35,543 $ 38,266 $ 35,136 $ 30,579
Depreciation and amortization............. 2,384 3,316 4,630 5,414 6,744
Capital expenditures(4)................... 1,825 5,064 3,529 6,405 5,568
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................. $ 36,601 $ 36,601
Total assets..................................................... 141,374 141,374
Long-term debt(6)................................................ 25,000 25,000
Stockholder's net investment..................................... 66,743 --
Stockholders' equity............................................. -- 66,743
</TABLE>

- ---------------

(1) Because the Company was a wholly owned subsidiary of Trinity prior to the
Offerings, earnings per share have been omitted. Pro forma net income per
share would have been $ per share for fiscal 1996 based on the
15,000,000 shares that will be outstanding immediately after the Offerings.

(2) If the Over-Allotment Option is exercised in full, pro forma net income and
pro forma net income per share for fiscal 1996 would be $ million and
$ per share, respectively. See "Use of Proceeds."

(3) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but rather
as a measure of the Company's operating performance and ability to service
debt and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.

(4) Excludes payments for business acquisitions.

(5) Adjusted to give effect to the Offering Related Transactions (as defined
herein) and the Offerings. If the Over-Allotment Option is exercised in
full, pro forma working capital, long-term debt and stockholders' equity
would be $ million, $ million and $ million, respectively. See
"The Company -- Offering Related Transactions" and "Use of Proceeds."

(6) Long-term debt represents a long-term note due to Trinity on an actual basis
and borrowings under the Credit Facility on an as adjusted basis. See "The
Company -- Offering Related Transactions."

6
<PAGE> 10

RISK FACTORS

Prospective investors should carefully consider and evaluate the following
factors relating to the Company and the Offerings, together with the information
and financial data set forth elsewhere in this Prospectus, prior to purchasing
any shares of Common Stock in the Offerings.

LACK OF INDEPENDENT OPERATING HISTORY

Prior to the consummation of the Offerings, the Company has operated as a
part of a business segment of Trinity, a large publicly traded company. As a
result, the Company has from time to time relied upon Trinity to provide credit
and other financial support, including performance guarantees of shipbuilding
contracts, to provide assistance in purchasing goods and services from third
parties, to provide technological assistance with respect to manufacturing
processes and to make available certain administrative and other services.
Following the consummation of the Offerings, the Company will not be able to
rely on Trinity for such support, services and assistance or be able to benefit
from its relationship with Trinity. See "-- Certain Financial Requirements;
Absence of Trinity Financial Support." If the Company is unable to obtain such
support, services or assistance on its own or from third parties on terms that
it regards as satisfactory, its business, financial condition and results of
operations could be adversely affected.

CERTAIN FINANCIAL REQUIREMENTS; ABSENCE OF TRINITY FINANCIAL SUPPORT

In the past, the Company has relied upon Trinity to provide funding for
working capital, capital expenditures and acquisitions. As of March 31, 1996,
the aggregate amount of the intercompany indebtedness owed by the Company to
Trinity was $58.3 million, consisting of $17.5 million of net current
liabilities, $15.8 million of income taxes payable and a $25.0 million long-term
note. Such net current liabilities are expected to be repaid in the ordinary
course of business after the Offerings. Such income taxes payable will be paid
either out of the net proceeds from the exercise of the Over-Allotment Option,
if any, or by November 15, 1996. The long-term note will be repaid immediately
prior to the Offerings using the proceeds of borrowings under the Credit
Facility. See "The Company -- Offering Related Transactions" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

In addition, a significant portion of the Company's existing contracts for
the construction, repair or conversion of vessels require that the Company's
performance be guaranteed by Trinity or by a surety company or other third party
pursuant to a contract bid or performance bond, letter of credit or similar
obligation. As of March 31, 1996, Trinity had guaranteed contract bid and
performance obligations of the Company in the aggregate amount of $99.6 million
and the Company had outstanding contract bid and performance bonds, letters of
credit and similar obligations issued by third parties with Trinity as the
obligor, with an aggregate face amount of approximately $52.9 million. These
guarantees, bonds, letters of credit and similar obligations will remain in
effect after the Offerings until the obligations expire, and the Company will be
obligated to indemnify Trinity and to provide other financial assurances to
Trinity against any liability under such obligations. See "Business -- Bonding
and Guarantee Requirements" and "Certain Transactions and Related
Agreements -- Arrangements Between the Company and Trinity -- Performance Bond
and Guarantee Arrangements."

After the Offerings, Trinity will not provide any further credit or other
financial support to the Company. From time to time after the Offerings, the
Company will need to continue to obtain contract bid and performance bonds,
letters of credit and similar obligations in connection with its business. As a
result of the discontinuance by Trinity of financial support of the Company,
customers may increasingly require such bonding and other arrangements. Although
the Company believes that it will be able to obtain bid and contract performance
bonds, letters of credit and similar obligations on terms it regards as
acceptable, there can be no assurance it will be successful in doing so. In
addition, the cost of obtaining such bonds, letters of credit and similar
obligations may increase. The inability of the Company to obtain such bonds,
letters of credit and similar obligations, or the inability of the Company to
obtain such bonds, letters of credit and

7
<PAGE> 11

similar obligations on terms (including cost) that are as favorable as those
historically obtained by the Company, could have a material adverse effect on
the Company's business, financial condition and results of operations. Under the
terms of the Credit Facility, the Company will be entitled, subject to certain
conditions, to borrow up to $ million on a revolving basis. In general,
whether the Company's capital resources after the Offerings, including available
borrowings under the Credit Facility, will be sufficient to satisfy its future
working capital, capital expenditure and other requirements will depend on
numerous factors, including general economic and other conditions, shipbuilding
industry conditions and the Company's financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

BENEFITS TO TRINITY IN CONNECTION WITH THE OFFERINGS

Trinity will receive all of the net proceeds of the Offerings (other than
any proceeds received by the Company upon exercise of the Over-Allotment
Option), which are estimated to be approximately $ million. See "Use of
Proceeds." In addition, immediately prior to the consummation of the Offerings,
the Company will borrow under the Credit Facility to repay a $25.0 million
intercompany note to Trinity. After the Offerings, $17.5 million of net current
liabilities to Trinity will be paid in the ordinary course of business. See "The
Company -- Offering Related Transactions."

At the time of the consummation of the Offerings, the Company and Trinity
will enter into a Separation Agreement (the "Separation Agreement"), pursuant to
which, among other things, the Company and Trinity will indemnify each other
against certain liabilities specified therein. The Company and Trinity will also
enter into a Tax Sharing and Tax Reimbursement Agreement (the "Tax Allocation
Agreement"), pursuant to which the Company and Trinity will agree upon the
allocation of certain tax liabilities and benefits. Under the Tax Allocation
Agreement, the Company has agreed to pay $15.8 million to Trinity for income
taxes incurred in connection with the Company Businesses prior to the Offerings.
Under the Tax Allocation Agreement, the Company also will agree to pay Trinity
(as realized) an amount equal to the federal, state and local tax benefit
realized by the Company as a result of an increase in the tax basis of its
tangible and intangible assets that is expected to occur in connection with the
Consolidation Transactions (as defined herein). The tax benefit related amounts
to be paid will be subject to certain adjustments if certain business
combinations or other acquisitions involving the Company occur.

The terms of the Offerings, the Consolidation Transactions, the Offering
Related Transactions and such intercompany agreements were negotiated between
affiliated parties and do not reflect arms'-length dealings. See "Certain
Transactions and Related Arrangements."

DEPENDENCE ON U.S. NAVY CONTRACTS

Revenues derived from the construction of U.S. Navy vessels accounted for
approximately 30.2%, 38.8%, and 47.3% of the Company's revenues in fiscal 1994,
1995 and 1996, respectively. There can be no assurance that the Company will be
successful in obtaining new U.S. Navy contracts, all of which are subject to
strict competitive bidding requirements. Although the U.S. Navy has options to
purchase 12 additional vessels from the Company under two of the U.S. Navy's
shipbuilding programs, the U.S. Navy is not required to exercise any such
options. Any future purchases of vessels by the U.S. Navy are subject to the
uncertainties inherent in the U.S. government's budgeting and appropriations
processes, which are affected by political events over which the Company has no
control.

With the end of the Cold War and the pressure of domestic budget
constraints, overall U.S. Navy spending for new vessel construction has declined
significantly since 1991 (from 88 vessels in 1990 to 46 in 1995). U.S. Navy
shipbuilding is expected to continue to decline during the remainder of the
decade. Although the Company believes that the small to medium sized U.S. Navy
vessels for which it competes are less likely to be cut back and, in some cases,
do not require specific Congressional appropriations, the Company generally
expects revenues and gross profit attributable to its current and any future
U.S. Navy contracts to decline over the next several years. Such decreases, if
not offset by increased revenues and profit

8
<PAGE> 12

from contracts with other customers, could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Principal Products -- Governmental Vessels."

DEPENDENCE ON MANAGEMENT

The Company's future success will depend to a significant extent upon its
ability to attract and retain skilled managers, including the Company's current
executive officers. The Company currently does not have employment agreements
with any of its executive officers. The loss of the services of one or more of
the Company's executive officers could have a material adverse effect on the
Company. See "Management."

HIGHLY COMPETITIVE INDUSTRY

The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity because of the significant decline in U.S. Navy
shipbuilding spending and the difficulties experienced by U.S. shipbuilders in
competing successfully for international commercial projects against foreign
shipyards, many of which are heavily subsidized by their governments. As a
result of these factors, competition by U.S. shipbuilders for domestic
commercial projects has increased significantly. Such increased competition has
resulted in substantial pressure on pricing and profit margins.

Contracts for the construction of vessels are usually awarded on a
competitive bid basis. Although the Company believes customers consider, among
other things, the availability and technical capabilities of equipment and
personnel, efficiency, condition of equipment, safety record and reputation,
price competition is currently a primary factor in determining which qualified
shipbuilder is awarded a contract.

Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. The Company does not compete for U.S.
Navy large vessel construction projects. The Company competes for U.S.
government shipbuilding contracts on small to medium sized vessels principally
with approximately six to 12 U.S. shipbuilders, which may include one or more of
the six largest shipbuilders. The Company competes for domestic commercial
shipbuilding contracts principally with approximately ten to 15 U.S.
shipbuilders. The number and identity of competitors on particular projects vary
greatly, depending on the type of vessel and size of project. See
"Business -- Competition."

Under the Separation Agreement, the Company is precluded for a period of
four years following the consummation of the Offerings from engaging in the
construction, repair or conversion of inland hopper barges and inland tank
barges, except for any such activity as may occur under existing or future
arrangements with Trinity. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Non-Competition
Covenants."

RISKS ASSOCIATED WITH CONTRACTUAL PRICING IN THE SHIPBUILDING INDUSTRY

Because of the nature of the shipbuilding industry, all of the Company's
commercial contracts and a substantial majority of the Company's government
contracts are currently performed on a fixed-priced basis. The Company attempts
to cover anticipated increased costs of labor and materials through an
estimation of such costs, which is reflected in the original price. Despite
these attempts, however, the revenue, cost and gross profit realized on a
fixed-price contract will often vary from the estimated amounts because of
changes in job conditions and variations in labor and equipment productivity
over the term of the contract. These variations and the risks generally inherent
in the shipbuilding industry may result in gross profits realized by the Company
being different from those originally estimated and may result in the Company
experiencing reduced profitability or losses on projects. Depending on the size
of the project, these variations from estimated contract performance could have
a significant effect on the Company's operating results for any particular
fiscal quarter or year.

9
<PAGE> 13

In addition, the Company's contract revenues are recognized on a percentage
of completion basis. Accordingly, contract price and cost estimates are reviewed
periodically as the work progresses, and adjustments proportionate to the
percentage of completion are reflected in income in the period when such
estimates are revised. To the extent that these adjustments result in a loss or
a reduction or elimination of previously reported profits with respect to a
project, the Company would recognize a charge against current earnings, which
could be material. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General."

LEGISLATIVE PROPOSALS TO RESCIND PROVISIONS OF JONES ACT

Pursuant to the requirements of the Merchant Marine Act of 1920 (the "Jones
Act"), all vessels transporting products between U.S. ports must be constructed
in U.S. shipyards, owned and crewed by U.S. citizens and registered under U.S.
law. Many customers elect to have vessels constructed at U.S. shipyards, even if
such vessels are intended for international use, in order to maintain
flexibility to use such vessels in the U.S. coastwise trade in the future. The
Company believes that substantially all of its revenues from U.S. commercial
contracts (which represented 40.9% of the Company's total revenues for fiscal
1996) result from the sale of vessels capable of being used for U.S. coastwise
trade. In 1996, proposed legislation was introduced in Congress to substantially
modify the provisions of the Jones Act mandating the use of ships constructed in
the United States for U.S. coastwise trade. Similar bills seeking to rescind or
substantially modify the Jones Act have been introduced in Congress from time to
time and are expected to be introduced in the future. Although management
believes it is unlikely that the Jones Act requirements will be rescinded or
materially modified in the foreseeable future, there can be no assurance that
this will not occur. Many foreign shipyards are heavily subsidized by their
governments and, as a result, there can be no assurance that the Company would
be able to effectively compete with such shipyards if they were permitted to
construct vessels for use in the U.S. coastwise trade. See
"Business -- Regulation -- Jones Act" and "Business -- Regulation -- Title XI
Loan Guarantee Amendments and OECD."

SHORTAGE OF TRAINED SHIPYARD WORKERS

Shipyards located in certain portions of Louisiana, including the Company's
Lockport, Louisiana facility, are experiencing severe shortages of skilled
shipyard labor as a result of recent labor demands brought about by increases in
offshore drilling activities, the construction of offshore rig platforms and
crewing of offshore vessels. This labor shortage has resulted in increased costs
of labor, and limitations on production capacity, for shipyards in such portions
of southern Louisiana. However, of the Company's ten shipyards, only its
Lockport shipyard is located within the affected areas of southern Louisiana.
Accordingly, the labor shortage has not impacted the Company to the same degree
that it has affected many of the Company's competitors. The areas in which the
Company's other shipyards are located are not currently experiencing any such
labor shortages, although no assurances can be given regarding whether shortages
will be experienced at other shipyards in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations" and "Business -- Operations."

DEPENDENCE OF OFFSHORE SUPPORT VESSEL MARKET ON OFFSHORE EXPLORATION ACTIVITY

Offshore support vessels currently do not account for a significant portion
of the vessels constructed by the Company. However, such vessels have accounted
for a significant portion of the Company's production in the past, and are
expected to again in the future. Customer demand for offshore support vessels is
dependent on, among other things, the levels of activity in offshore oil and gas
exploration, development and production, particularly in the Gulf of Mexico
where many of the offshore support vessels manufactured by the Company have been
put into service. The level of activity in offshore oil and gas exploration,
development and production is affected by such factors as prevailing oil and gas
prices, expectations about future prices, the cost of exploring for, producing
and delivering oil and gas, the sale and expiration dates of available offshore
leases, the discovery rate of new oil and gas reserves in offshore areas, local
and international political and economic conditions, technological advances and
the ability of oil and gas companies to generate or otherwise obtain funds for
capital expenditures. Although the Company believes there will be an increase in
demand for

10
<PAGE> 14

offshore support vessels, the Company cannot predict future levels of activity
in offshore oil and gas exploration, development and production.

UNCERTAINTY REGARDING CONSTRUCTION STANDARDS FOR OFFSHORE SUPPORT VESSELS

As currently in force, OPA '90 generally requires certain U.S. and foreign
vessels carrying fuel or other hazardous cargos and entering U.S. ports to have
double hulls by 2015. OPA '90, which establishes a phase-out schedule that began
January 1, 1995 for all existing single hull vessels based on the vessel's age
and gross tonnage, applies to oil and gas industry supply vessels over 500 gross
tons operated in U.S. waters. All offshore support vessels presently in
operation in U.S. waters either are less than 500 gross tons or have received a
Congressional waiver exempting such vessels from the OPA '90 double hull
requirements. However, as offshore oil and gas exploration and production enter
deeper waters, the Company anticipates that it will be necessary to construct a
significant number of new offshore support vessels in excess of 500 gross tons
to support such exploration and production activities. Proposed legislation is
pending in Congress which would impose, in lieu of the OPA '90 double hull
requirements, certain less onerous standards for the construction of these new
offshore support vessels (the "New Offshore Support Vessel Legislation").
Although management believes that the New Offshore Support Vessel Legislation is
likely to be enacted in its current form, there can be no assurance as to when
the New Offshore Support Vessel Legislation will be enacted or that such
legislation, if enacted, will not differ materially from its current form.
Management believes that the current uncertainty regarding construction
standards has caused certain operators to postpone placing new orders for
offshore support vessels in excess of 500 gross tons. See
"Business -- Regulation -- OPA '90."

IMPACT OF ENVIRONMENTAL LAWS

The Company is subject to extensive and changing federal, state and local
laws (including common law) and regulations designed to protect the environment
("Environmental Laws"). The Company from time to time is involved in
administrative and other proceedings under Environmental Laws involving its
operations and facilities. Environmental Laws could impose liability for
remediation costs or result in civil or criminal penalties in cases of
non-compliance. Compliance with Environmental Laws increases the Company's costs
of doing business. Additionally, Environmental Laws have been subject to
frequent change; therefore, the Company is unable to predict the future costs or
other future impact of Environmental Laws on its operations. There can be no
assurance that the Company will not incur material liability related to the
Company's operations and properties under Environmental Laws. See
"Business -- Regulation -- Environmental Regulation."

CERTAIN ANTI-TAKEOVER EFFECTS

The Restated Certificate of Incorporation of the Company (the
"Certificate"), the By-Laws of the Company (the "By-Laws"), the Rights (as
defined herein) and applicable provisions of the Delaware General Corporation
Law (the "DGCL"), contain various provisions that may hinder, delay or prevent
the acquisition of control of the Company without the approval of the Board of
Directors of the Company (the "Company Board"). Certain provisions of the
Certificate and the By-Laws, among other things, will (i) authorize the issuance
of "blank check" preferred stock, (ii) divide the Company Board into three
classes, the members of which (after an initial transition period) will serve
for three-year terms, (iii) establish advance notice requirements for director
nominations and stockholder proposals to be considered at annual meetings and
(iv) prohibit stockholder action by written consent. In addition, the Company
has entered into a Rights Agreement (as defined herein), pursuant to which each
share of Common Stock has attached one Right which will initially trade together
with such share. The Rights would cause substantial dilution to a person or
group that attempts to acquire the Company on terms not approved in advance by
the Company Board. In addition, Section 203 of the DGCL imposes certain
restrictions on mergers and other business combinations between the Company and
any holder of 15% or more of the Common Stock. See "Description of Capital
Stock -- Anti-takeover Provisions of the Certificate and By-Laws," "Description
of Capital Stock -- Stockholder Rights Plan" and "Description of Capital
Stock -- Delaware Business Combination Statute."

11
<PAGE> 15

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. See "Dividend Policy."

IMMEDIATE AND SUBSTANTIAL DILUTION TO INVESTORS

Investors purchasing shares of Common Stock in the Offerings will
experience immediate and substantial dilution in net tangible book value of
approximately $ per share of Common Stock. See "Dilution."

ABSENCE OF A PRIOR PUBLIC MARKET FOR THE COMMON STOCK

Prior to the Offerings, there has been no public market for the Common
Stock. Although application will be made to list the Common Stock on the New
York Stock Exchange, Inc. (the "NYSE"), there can be no assurance that an active
public market for the Common Stock will develop or be sustained or that the
price at which the Common Stock will trade after the Offerings will not be lower
than the initial public offering price. The initial public offering price of the
Common Stock in the Offerings will be determined through negotiations between
the Company and the Representatives (as defined herein). See "Underwriting."
Market prices for the Common Stock following the Offerings will be influenced by
a number of factors, including the depth and liquidity of the market for the
Common Stock, investor perceptions of the Company and general economic and other
conditions.

12
<PAGE> 16

THE COMPANY

Prior to the consummation of the Offerings, the Company has operated as a
part of a business segment of Trinity, whose common stock is traded on the NYSE.
Following the Offerings, Trinity will not own any shares of Common Stock of the
Company.

The principal offices of the Company are located at 13085 Industrial Seaway
Road, Gulfport, Mississippi 39503, and its telephone number at such offices is
(601) 896-0029.

CONSOLIDATION TRANSACTIONS

Halter Marine Group, Inc. is a Delaware corporation incorporated on June
24, 1996. Prior to or concurrently with the Offerings, the Company will
consummate the Consolidation Transactions. These transactions (the
"Consolidation Transactions") include: (i) the transfer to the Company of the
stock of each subsidiary of Trinity that has assets and liabilities related to
the Company Businesses and (ii) the transfer to subsidiaries of the Company of
certain assets and liabilities of Trinity related to the Company Businesses. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Transactions and
Related Arrangements -- Consolidation Transactions."

For purposes of this Prospectus, unless the context otherwise requires, the
term "Company" gives effect to the Consolidation Transactions and includes
Halter Marine Group, Inc. and its subsidiaries and predecessors.

OFFERING RELATED TRANSACTIONS

Prior to or concurrently with the consummation of the Offerings, the
Company will engage in certain other transactions (the "Offering Related
Transactions"). The Offering Related Transactions include (i) the entering into
by the Company of the new $ million Credit Facility and (ii) the borrowing
by the Company under the Credit Facility to repay a $25.0 million intercompany
note to Trinity. See "Risk Factors -- Benefits to Trinity of the Offerings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Transactions and
Related Arrangements -- Offering Related Transactions."

ARRANGEMENTS BETWEEN THE COMPANY AND TRINITY

Prior to or concurrently with the Offerings, the Company and Trinity will
enter into various agreements with respect to ongoing arrangements and
relationships between the two companies, including a Separation Agreement, an
Administrative Services Agreement, a Tax Allocation Agreement and a Trademark
License Agreement. The Company also will build inland hopper barges and may
build inland tank barges under a limited arrangement with Trinity. See "Certain
Transactions and Related Arrangements -- Arrangements Between the Company and
Trinity."

13
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Selling Stockholder from the sale of shares of
Common Stock in the Offerings are estimated to be $ million (assuming an
initial public offering price of $ per share, the mid-point of the range
set forth on the cover page of this Prospectus), after deducting underwriting
discounts and commissions and the estimated expenses of the Offerings, assuming
all such expenses will be paid by the Selling Stockholder.

The Company will not receive any of the proceeds of the Offerings, unless
the Over-Allotment Option is exercised. If the Over-Allotment Option is
exercised in full, the Company will receive estimated net proceeds of $
million, after deducting underwriting discounts and commissions and the pro rata
portion of the estimated expenses of the Offerings to be paid by the Company.
The Company plans to use any such proceeds to repay $15.8 million to Trinity for
income taxes incurred in connection with the Company Businesses prior to the
Offerings. The balance of such proceeds, if any, will be used to repay a portion
of the indebtedness incurred under the Credit Facility in connection with the
Offering Related Transactions. After such repayment, the Company may reborrow
under the Credit Facility for general corporate purposes. See "The
Company -- Offering Related Transactions," "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Certain Transactions and Related Arrangements -- Offering Related
Transactions" and "Certain Transactions and Related Arrangements -- Arrangements
Between the Company and Trinity."

DIVIDEND POLICY

The Company expects that it will retain all available earnings generated by
its operations for the development and growth of its business and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. Any future determination as to dividend policy will be made in the
discretion of the Company Board and will depend on a number of factors,
including future earnings, capital requirements, financial condition and
business prospects of the Company and such other factors as the Company Board
may deem relevant. The payment of cash dividends on Common Stock is expected to
be restricted under the terms of the Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DILUTION

As of March 31, 1996, the net tangible book value attributable to the
Common Stock was $66.7 million, or $4.45 per share. Net tangible book value per
share represents the amount of total tangible assets less total liabilities,
divided by the total number of shares of Common Stock outstanding. The sale of
shares of Common Stock by Trinity in the Offerings will not affect the net
tangible book value of the Company. However, new investors purchasing shares in
the Offerings will experience immediate dilution of $ per share, which is
equal to the difference between the initial public offering price and the net
tangible book value per share of Common Stock as of March 31, 1996. If the
Over-Allotment Option is exercised in full, new investors purchasing shares of
Common Stock in the Offerings will experience immediate dilution of $ per
share.

14
<PAGE> 18

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1996 on an historical basis and as adjusted to give effect to the
Offering Related Transactions and the Offerings. This table should be read in
conjunction with "The Company -- Offering Related Transactions," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements and related
notes included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
AS
ACTUAL ADJUSTED(1)
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-Term Debt:
Due to an affiliate(2)............................................. $25,000 $ --
Credit Facility.................................................... -- 25,000(3)
------- -------
Total long-term debt....................................... 25,000 25,000
------- -------
Stockholder's Equity(4):
Stockholder's net investment....................................... 66,743 --
Common stock, par value $0.01 per share; 50,000 shares authorized,
15,000 shares issued and outstanding(5)......................... -- 150
Additional paid-in capital......................................... -- 66,593
------- -------
Total stockholder's equity................................. 66,743 66,743
------- -------
Total capitalization....................................... $91,743 $91,743
======= =======
</TABLE>

- ---------------

(1) If the Over-Allotment Option is exercised in full, pro forma long-term debt
and total stockholder's equity will be $ million and $ million,
respectively.

(2) Excludes (i) $17.5 million of indebtedness to Trinity which is classified as
a current liability and expected to be repaid to Trinity in the ordinary
course of business as the Company replaces such liabilities with its own
direct trade payables and (ii) $15.8 million of income taxes payable to
Trinity that will be paid either from proceeds of the exercise of the
Over-Allotment Option, if any, or by November 15, 1996.

(3) Reflects borrowings under the Credit Facility to repay a $25.0 million
intercompany note to Trinity in connection with the Offering Related
Transactions. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" for
additional information regarding the Credit Facility.

(4) The Company Board has authorized the creation of a series of Preferred Stock
designated as "Series A Junior Participating Preferred Stock." An aggregate
of shares of Preferred Stock have been reserved for issuance as such
series of Preferred Stock. No shares are issued and outstanding.

(5) Does not include 1,200,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option and Incentive Plan. It is
expected that options for an aggregate of 430,000 shares will be granted at
the time of the Offerings. See "Management -- Incentive and Other Employee
Benefit Plans -- 1996 Stock Option and Incentive Plan."

15
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the
Company as of the dates and for the periods indicated. The selected consolidated
income statement data for the fiscal years ended March 31, 1994, 1995 and 1996
and the selected balance sheet data as of March 31, 1995 and 1996 have been
derived from the audited consolidated financial statements of the Company. The
selected consolidated income statement data for the fiscal years ended March 31,
1992 and 1993 and the selected consolidated balance sheet data as of March 31,
1992, 1993 and 1994 have been derived from unaudited financial information of
the Company but in the opinion of management includes all adjustments necessary
for a fair presentation of the financial information. The selected consolidated
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenue earned............... $219,228 $304,385 $275,310 $250,586 $254,294
Cost of revenue earned................ 206,959 259,819 228,833 207,398 214,559
-------- -------- -------- -------- --------
Gross profit.......................... 12,269 44,566 46,477 43,188 39,735
Selling, general and administrative
expenses........................... 8,242 12,363 12,874 13,471 15,911
-------- -------- -------- -------- --------
Operating income...................... 4,027 32,203 33,603 29,717 23,824
Interest expense, net................. 5,766 1,937 1,902 3,844 3,268
Other, net............................ (5) (24) (33) (5) (11)
-------- -------- -------- -------- --------
Income (loss) before income taxes..... (1,734) 30,290 31,734 25,878 20,567
Provision (benefit) for income
taxes.............................. (100) 10,704 12,227 10,170 8,102
-------- -------- -------- -------- --------
Net income (loss)(1).................. $ (1,634) $ 19,586 $ 19,507 $ 15,708 $ 12,465
======== ======== ======== ======== ========
OTHER DATA:
EBITDA(2)............................. $ 6,416 $ 35,543 $ 38,266 $ 35,136 $ 30,579
Depreciation and amortization......... 2,384 3,316 4,630 5,414 6,744
Capital expenditures(3)............... 1,825 5,064 3,529 6,405 5,568
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............. $ (4,761) $ 8,972 $ 31,296 $ 40,855 $ 36,601
Total assets.......................... 109,448 94,056 120,784 124,271 141,374
Long-term debt(4)..................... 25,000 25,000 25,000 25,000 25,000
Stockholder's net investment.......... (523) 19,063 38,570 54,278 66,743
</TABLE>

- ---------------

(1) Because the Company was a wholly owned subsidiary of Trinity prior to the
Offerings, earnings per share have been omitted.

(2) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but rather
as a measure of the Company's operating performance and ability to service
debt and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.

(3) Excludes payments for business acquisitions.

(4) Represents long-term note due to Trinity.

16
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in the
United States. The Company, which has built more than 2,000 vessels in the past
40 years, specializes in the construction, repair and conversion of a wide
variety of vessels for the governmental and commercial markets. The Company's
principal products during the past five years have included oceanographic survey
and research ships, high speed patrol boats and ferries for government use and
offshore double hull tank barges, large offshore tug boats and oil spill
recovery vessels for commercial use. The Company has ten shipyards (including
one that currently is not in operation), which are strategically located along
the Gulf Coast from Louisiana to Florida.

As of June 30, 1996, the Company had firm contracts with an aggregate
remaining value of approximately $601 million (excluding unexercised options
held by customers), covering a total of 97 vessels (including 50 inland hopper
barges). Of this contract value, approximately $216 million was attributable to
contracts to build ships for the U.S. Navy. The Company anticipates that
approximately $382 million of the aggregate remaining value of the firm
contracts as of June 30, 1996 will be filled during fiscal 1997.

Revenues derived from the construction of U.S. Navy vessels accounted for
approximately 30.2%, 38.8% and 47.3% of the Company's revenues in fiscal 1994,
1995 and 1996, respectively. There can be no assurance that the Company will be
successful in obtaining new U.S. Navy contracts, all of which are competitively
bid. Overall U.S. Navy spending for new vessel construction has declined
significantly since 1991. Although the Company believes that the small to medium
sized U.S. Navy vessels for which it competes are less likely to be cut back
and, in some cases, do not require specific Congressional appropriations, the
Company generally expects revenues and gross profit attributable to its current
and any future U.S. Navy contracts to decline over the next several years. Such
decreases, if not offset by increased revenues and profit from contracts with
other customers, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors -- Dependence
on U.S. Navy Contracts."

All of the Company's commercial contracts and a substantial majority of its
government contracts to build ships are currently performed on a fixed-price
basis. The Company attempts to cover anticipated increased costs of labor and
materials through an estimation of such costs, which is reflected in the
original contract price. Despite these attempts, however, the revenue, costs and
gross profit realized on a fixed-price contract will often vary from the
estimated amounts because of changes in job conditions and in labor and plant
productivity over the contract term or other unanticipated changes. As a result,
the Company may experience reduced profitability or losses on projects.

The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues of construction contracts are
measured by the percentage of labor hours incurred as compared to estimated
total labor hours for each contract. Revenue and income are not recognized until
20% of estimated labor hours have been incurred. The timing of recognition of
revenues and expenses for financial reporting purposes may differ materially
from the timing of actual cash flows from contract payments received and
expenses paid. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined. See "Risk Factors -- Risks
Associated with Contractual Pricing in the Shipbuilding Industry" and Note 2 of
Notes to Consolidated Financial Statements.

The Company believes it is well positioned to take advantage of the
expected upturn in the market for new offshore support vessels. The Company
expects that substantial orders for new offshore support vessels may be made in
the next several years due to the demand for larger vessels to support deep
water exploration and production activities, as well as the substantial
worldwide fleet attrition over the past ten years and the

17
<PAGE> 21

aging of the remaining fleet. The Company has two offshore support vessels under
construction, has outstanding options from one customer for five additional
vessels and is bidding on a number of substantial potential orders for such
vessels. The timing of the expected upturn in the offshore support market will
depend principally upon conditions in the offshore oil and gas industry,
particularly an increase in drilling activity and dayrates for offshore support
vessels, which in turn depend upon oil and gas prices. No assurances can be
given regarding the timing or magnitude of an upturn in the market for offshore
support vessels. See "Risk Factors -- Dependence of Offshore Support Vessel
Market on Offshore Exploration Activity," "Business -- General" and
"Business -- Principal Products -- Offshore Support Vessels."

The Company also expects to capitalize on the anticipated increase in
offshore tank barge construction and conversion resulting from OPA '90 and the
aging of the worldwide fleet. The Company has firm orders for two offshore
double hull tank barges meeting the OPA '90 requirements, of which one is
currently under construction, and has an outstanding option from a customer for
one additional barge. In addition, the Company is bidding on a number of other
substantial barge construction projects. See "Business -- General" and
"Business -- Principal Products -- Offshore Barges."

Shipyards in certain portions of southern Louisiana, including the
Company's Lockport yard, are experiencing severe shortages of skilled shipyard
labor. This labor shortage has resulted in increased costs of labor at this
shipyard and may in the future limit the Company's ability to expand operations
at such shipyard. In addition to the wage increases during fiscal 1996 described
below, in May 1996, the Company was required to increase wages at this shipyard
by 4% (approximately $250,000 on an annualized basis based on current staffing
levels). The areas in which the Company's other shipyards are located are not
currently experiencing any such labor shortages, although no assurances can be
given regarding whether shortages will be experienced at other shipyards in the
future. See "Risk Factors -- Shortage of Trained Shipyard Workers."

The Company anticipates that selling, general and administrative costs will
be somewhat higher after the Offerings than previously as a result of new and
additional costs the Company will incur as a result of becoming a stand-alone
enterprise. Such cost increases will include additional contract bid and
performance bonding fees, administrative personnel costs and third party fees.
In addition, interest expense will increase as a result of higher borrowing
levels and higher interest rates charged by third party lenders. See "Risk
Factors -- Lack of Independent Operating History" and "-- Certain Financial
Requirements; Absence of Trinity Financial Support."

All statements other than statements of historical fact contained in this
Prospectus, including statements in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations" concerning the Company's
financial position and liquidity, results of operations, prospects for U.S. Navy
contracts, ability to take advantage of new vessel construction and conversion
opportunities, labor supply and costs, selling, general and administrative costs
and other matters are forward looking statements. Although the Company believes
that the expectations reflected in such forward looking statements are
reasonable, no assurance can be given that such expectations will prove correct.
Factors that could cause the Company's results to differ materially from the
results discussed in such forward looking statements include the risks described
under "Risk Factors," such as lack of independent operating history, absence of
Trinity support to meet certain financial requirements, benefits to Trinity of
the Offerings, dependence on U.S. Navy contracts, intense competition and
contractual, labor, regulatory and other risks in the shipbuilding industry, and
risks relating to the market for offshore support vessels and offshore double
hull tank barges. All forward looking statements in this Prospectus are
expressly qualified in their entirety by the cautionary statements in this
paragraph.

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<PAGE> 22

RESULTS OF OPERATIONS

The following table sets forth certain statement of income information as a
percentage of the Company's revenues for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------------------------------
1994 1995 1996
------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- ------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Contract revenue earned:
U.S. Navy......................... $ 83,075 30.2% $ 97,122 38.8% $120,361 47.3%
Other U.S. government............. 38,380 13.9% 7,165 2.8% -- 0.0%
State governments................. 3,995 1.5% 13,478 5.4% 6,454 2.6%
Foreign governments............... 35,495 12.9% 33,985 13.6% 9,819 3.9%
U.S. commercial................... 102,779 37.3% 98,836 39.4% 104,132 40.9%
Foreign commercial................ 11,586 4.2% -- 0.0% 13,528 5.3%
-------- ----- -------- ----- -------- -----
Total..................... 275,310 100.0% 250,586 100.0% 254,294 100.0%
Cost of revenue earned.............. 228,833 83.1% 207,398 82.8% 214,559 84.4%
-------- ----- -------- ----- -------- -----
Gross profit...................... 46,477 16.9% 43,188 17.2% 39,735 15.6%
Selling, general and administrative
expense........................... 12,874 4.7% 13,471 5.3% 15,911 6.2%
-------- ----- -------- ----- -------- -----
Operating income.................. $ 33,603 12.2% $ 29,717 11.9% $ 23,824 9.4%
======== ===== ======== ===== ======== =====
</TABLE>

Fiscal 1996 Compared with Fiscal 1995

Contract revenue earned increased 1.5% to $254.3 million in the fiscal year
ended March 31, 1996 compared with $250.6 million in the fiscal year ended March
31, 1995. Fiscal 1996 revenues were favorably affected principally by (i) a
$17.1 million increase attributable to the inclusion of results of the Gulf
Coast Fabrication shipyard for a full year in fiscal 1996 compared to five
months in fiscal 1995, (ii) a $14.9 million increase attributable to new
contracts at the Gulfport yard and (iii) a $13.5 million increase in foreign
commercial contracts. These increases were largely offset by a $24.2 million
decrease in revenue from foreign governmental contracts and a $20.7 million
decrease in revenue from casino vessel contracts. The decrease in foreign
governmental revenue was principally attributable to completion in fiscal 1995
of a large portion of the Company's contract with the U.S. Navy to build patrol
vessels for the Philippine government. The Company entered the casino vessel
construction market in fiscal 1994 after being awarded contracts for the
construction of three large paddle wheel casino boats. By the end of fiscal
1995, these contracts were substantially completed. The Company believes that
existing demand for casino vessels has been satisfied and that it is unlikely
that the Company will continue to construct casino vessels in the foreseeable
future.

Gross profit margin declined in fiscal 1996 to 15.6% of contract revenue
earned compared to 17.2% in fiscal 1995. The decrease in the gross profit margin
principally resulted from (i) the completion in fiscal 1995 of a contract for
the construction of a large U.S. Navy vessel under which the Company achieved
higher than anticipated profitability that was recognized in later stages of the
contract, (ii) wage increases totaling $1.0 million at the Lockport shipyard and
(iii) reduced margins resulting from the re-entry of certain Company shipyards
into the general commercial market following the completion of casino vessel
construction contracts.

Selling, general and administrative expenses increased 18.1% to $15.9
million during fiscal 1996 from $13.5 million in fiscal 1995. Of such increase,
approximately $1.0 million resulted from the addition of new employees and
normal salary increases for existing employees. The remainder of such increase
resulted primarily from increased selling efforts relating to foreign
shipbuilding contracts.

Interest expense decreased 15.0% to $3.3 million during fiscal 1996 from
$3.8 million during fiscal 1995 due to lower levels of intercompany borrowings.
Historically, Trinity charged the Company interest on outstanding intercompany
balances at market rates based on Trinity's borrowing cost.

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<PAGE> 23

Taxes decreased approximately 20.3% to $8.1 million in fiscal 1996 from
$10.2 million in fiscal 1995. See Note 9 of Notes to Consolidated Financial
Statements.

Fiscal 1995 Compared with Fiscal 1994

Contract revenue earned decreased 9.0% to $250.6 million in the fiscal year
ended March 31, 1995 compared with $275.3 million in the fiscal year ended March
31, 1994. Fiscal 1995 revenues were adversely affected by (i) a $31.2 million
reduction in other U.S. governmental (non-U.S. Navy) contracts, (ii) a $19.6
million decrease in revenue from casino vessel construction contracts and (iii)
a $11.6 million decrease in foreign commercial contracts. The reduction in
revenue from other U.S. government contracts resulted principally from a
decrease of $40.2 million due to the substantial completion of certain large
U.S. Army contracts in fiscal 1994. The reduction in revenue from casino vessel
construction resulted from the completion in fiscal 1994 of a substantial
portion of three large paddle wheel casino boats. The decrease in foreign
commercial contract revenue resulted principally from the completion during
fiscal 1994 of a foreign commercial contract for the construction of an anchor
handling supply vessel. These decreases were partially offset by (i) a $14.0
million increase in U.S. Navy contracts due to increased oceanographic survey
and research ship construction activity, (ii) a $9.5 million increase in state
government contracts due to increased revenues from the construction of an
additional ferry boat and from increased activity under construction contracts
for two other ferry boats, and (iii) a $6.3 million increase in revenue from
five months of operations of the Company's Gulf Coast Fabrication Shipyard which
was acquired on October 31, 1994.

Gross profit margin increased in fiscal 1995 to 17.2% of contract revenue
earned compared to 16.9% in fiscal 1994. The increase in gross profit margin
resulted principally from the completion in fiscal 1995 of a contract for the
construction of a large U.S. Navy vessel under which the Company achieved higher
than anticipated profitability that was recognized in later stages of the
contract.

Selling, general and administrative expenses increased 4.6% to $13.5
million during fiscal 1995 from $12.9 million in fiscal 1994, principally as a
result of normal salary increases for existing employees.

Interest expense increased $1.7 million to $3.8 million during fiscal 1995
from $2.1 million during fiscal 1994 due to higher levels of intercompany
borrowings to support operations as well as higher average interest rates.

Taxes decreased approximately 16.8% to $10.2 million in fiscal 1995 from
$12.2 million in fiscal 1994. See Note 9 of Notes to Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal needs for capital, in addition to the funding of
ongoing shipbuilding operations, have been capital expenditures, acquisitions
and the repayment of intercompany advances. The Company's principal sources of
liquidity have been net cash provided by operating activities and intercompany
advances from Trinity.

Prior to the Offerings, the Company has relied upon Trinity to provide
funding for working capital, capital expenditures and acquisitions. In addition,
a significant portion of the Company's existing contracts for the construction,
repair or conversion of vessels require that the Company's performance be
guaranteed by Trinity or by a surety company or other third party pursuant to a
contract bid or performance bond, letter of credit or similar obligation. As of
March 31, 1996, Trinity had guaranteed contract performance obligations of the
Company in the aggregate amount of $99.6 million and the Company had outstanding
contract bid and performance bonds, letters of credit and similar obligations
issued by third parties with Trinity as the obligor, with an aggregate face
amount of approximately $52.9 million. These guarantees, bonds, letters of
credit and similar obligations will remain in effect after the Offerings until
the obligations expire, and the Company will be obligated to indemnify Trinity
and to provide other financial assurances to Trinity against any liability under
such obligations. See "Business -- Bonding and Guarantee Requirements" and
"Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity -- Performance Bond and Guarantee Arrangements."

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<PAGE> 24

After the Offerings, Trinity will not provide any further credit or other
financial support to the Company. See "Risk Factors -- Certain Financial
Requirements; Absence of Trinity Financial Support." The Company has received a
commitment, subject to customary conditions, from a commercial bank to provide
the Credit Facility. The Credit Facility will provide a $ million revolving
line of credit for general corporate purposes, working capital and letters of
credit. Immediately prior to the Offerings, the Company expects to borrow under
the Credit Facility to repay a $25.0 million intercompany note to Trinity. If
the proceeds from the exercise of the Over-Allotment Option are sufficient to
enable it to do so, the Company plans to use a portion of such proceeds to repay
a portion of such borrowings under the Credit Facility. See "The
Company -- Offering Related Transactions" and "Use of Proceeds."

As of March 31, 1996, the Company had approximately $17.5 million of net
current liabilities to Trinity resulting from Trinity's centralized cash
management system. Such liabilities bear interest at market rates. After the
consummation of the Offerings, the Company expects to repay the outstanding net
current liabilities to Trinity in the ordinary course of business as it replaces
such liabilities with its own direct trade payables and similar obligations. See
Note 6 of Notes to Consolidated Financial Statements.

As of March 31, 1996, the Company was obligated to reimburse Trinity for
income taxes incurred in connection with the Company Businesses in an aggregate
amount of $15.8 million. Under the Tax Allocation Agreement, the Company has
agreed to pay such outstanding amount by November 15, 1996. The Company expects
to use cash flow from operations or borrowings under the Credit Facility to fund
this payment to the extent not previously repaid with the proceeds of the
exercise of the Over-Allotment Option. See "Use of Proceeds."

At the time of the consummation of the Offerings, the Company estimates
that it will have approximately $ million of borrowings available under the
Credit Facility. Borrowings under the Credit Facility will bear interest, at the
Company's option, at . Under the Credit
Facility the Company will be obligated to pay certain fees, including an annual
commitment fee in an amount equal to % of the unused portion of the
commitment. The Credit Facility will contain customary restrictive covenants
(including ) and will require the Company to maintain certain
financial ratios. The Credit Facility will expire on the anniversary
of the date of consummation of the Offerings, subject to extension at the option
of the lenders.

The Company made capital expenditures of $6.4 million and $5.6 million in
fiscal 1995 and 1996, respectively. The Company currently has budgeted
approximately $6.0 million for planned capital projects at its current operating
facilities in fiscal 1997, including $3 million to $4 million for projects at
its Pascagoula shipyard. These expenditures are required to meet existing
contractual commitments. In addition, although not currently budgeted for fiscal
1997, the Company estimates that additional capital expenditures of
approximately $4 million to $5 million may be made to relocate a dry dock to its
Pascagoula shipyard and additional capital expenditures of approximately $8
million to $12 million may be made to make other improvements to enable such
yard to do large vessel and drilling rig construction, conversion and repair
projects. The Mississippi Business Finance Corporation has authorized the
issuance of up to $25 million of revenue bonds for the Company in connection
with proposed improvements at the Pascagoula facility. If the Company decides to
reopen its Panama City yard, which is currently inactive, startup costs are
expected to be approximately $3.0 million. See
"Business -- Operations -- Shipyards."

The Company believes that cash flow from operations, together with funds
available under the Credit Facility and the Pascagoula revenue bonds, will be
sufficient to fund its foreseeable requirements for working capital, capital
expenditures and other capital needs.

INFLATION AND CHANGING PRICES

The Company does not believe that general price inflation has had a
significant impact on the Company's results of operations during the periods
presented. To the extent that the effects of inflation are not offset by

21
<PAGE> 25

improvements in manufacturing and purchasing efficiency and labor productivity,
the Company generally has been able to take such effects into account in pricing
its contracts with customers. There can be no assurance, however, that inflation
will not have a material effect on the Company's business in the future. For
information regarding the effects of increases in labor costs on the Company's
results of operations in recent periods, see "-- General" and "-- Results of
Operations."

22
<PAGE> 26

BUSINESS

GENERAL

The Company is the seventh largest shipbuilder in the United States,
specializing in the construction, repair and conversion of ocean-going and
inland waterway vessels for the governmental and commercial markets. The Company
is the largest U.S. builder of small to medium sized (from 50 to 400 feet)
ocean-going ships and barges and inland tow boats for these markets. The Company
and its predecessors have built more than 2,000 of these vessels in the past 40
years. The Company has ten shipyards (including one that currently is not in
operation), all of which are strategically located along the Gulf Coast from
Louisiana to Florida. The Company's shipyards employ advanced manufacturing
techniques, including modular construction methods which the Company was among
the first U.S. shipbuilders to use, zone outfitting methods, advanced welding
techniques, panel line fabrication, computerized plasma arc metal cutting and
automated sandblasting and painting. The Company's multiple shipyards provide
the Company significant flexibility and efficiency in manufacturing a wide
variety of vessels. The Company believes that these factors, together with its
skilled and experienced work force, make the Company one of the most versatile
and cost-efficient shipbuilders in the United States.

The Company provides a wide variety of products for diversified markets.
The Company has a large engineering team which has enabled it to build hundreds
of vessels for governmental and commercial customers. The Company's principal
products in the past five years have included oceanographic survey and research
ships, high speed patrol boats and ferries for government use and offshore
double hull tank barges designed to meet the requirements of OPA '90, offshore
tug boats and oil spill recovery vessels for commercial use. Other Company
products include inland tow boats, specialty inland barges and private yachts.
During fiscal 1994, following the legalization of casino gambling in Louisiana,
the Company was awarded contracts to construct three large paddle wheel casino
boats. These contracts were substantially completed during fiscal 1995. The
Company believes that the existing demand for casino vessels has been satisfied
and that it is unlikely that the Company will continue to construct casino
vessels in the foreseeable future. The Company will build inland hopper barges
under a limited arrangement with Trinity. At June 30, 1996, the Company had firm
shipbuilding contracts with an aggregate remaining value of approximately $601
million (excluding unexercised options held by customers), representing 97
vessels (including 50 inland hopper barges). Of this value, approximately $216
million was attributable to contracts to build ships for the U.S. Navy.

The Company has built more offshore support vessels, including supply
boats, anchor handling tug supply boats and anchor handling tugs (collectively,
"offshore support vessels"), to service offshore oil and gas drilling rigs and
production platforms than any shipbuilder in the United States. The Company has
built a total of 501 offshore support vessels from 1965 through 1995 (including
267 built from 1978 through 1985), which the Company believes account for
approximately 23% of the world fleet of offshore support vessels manufactured
during such period. Vessels built by the Company and known to be in service
represented, as of March 31, 1996, 34.4% of the approximately 395 total offshore
support vessels operated by the two largest worldwide fleet operators. As a
result of the severe downturn in the oil and gas industry in the mid-1980's,
there has been very limited construction of offshore support vessels in the
United States since 1985. During the period from 1985 through 1995, the Company
built a total of eight new 200-foot or longer offshore support vessels, more
than any other U.S. shipbuilder. The Company's offshore support vessel
manufacturing activities during this period have enabled it to gain a
competitive advantage through experience with recent advances in vessel
engineering and construction techniques. The Company currently has two offshore
support vessels under construction, has outstanding options from one customer
for five additional vessels, and is bidding on a number of substantial potential
orders for such vessels.

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<PAGE> 27

the Gulf of Mexico decreased from a peak of approximately 700 in 1985 to
approximately 280 in March 1996. A majority of the offshore support vessels
currently in service worldwide are 16 or more years old and a majority of the
others are between 11 and 16 years old. As these vessels age, maintenance,
repair and vessel certification costs increase significantly and eventually
require their replacement. New offshore support vessels incorporating advances
in engineering, technology and outfitting are expected to cost between $6
million and $25 million each, depending on the vessel's size and capability. The
timing of the expected upturn in the offshore support vessel market will depend
principally upon conditions in the offshore oil and gas industry, particularly
an increase in drilling activity and dayrates for offshore support vessels,
which in turn depend upon oil and gas prices. Because of its extensive
experience in manufacturing offshore support vessels and its ability to expand
its production at its existing shipyards, the Company believes it is well
positioned to take advantage of the expected upturn in the offshore support
vessel business.

The Company similarly has positioned itself to benefit from the expected
increase in offshore tank barge construction and conversion. Demand for offshore
tank barges has been created by OPA '90, which generally requires U.S. and
foreign vessels carrying fuel and certain other hazardous cargos and entering
U.S. ports to have double hulls by 2015. OPA '90 establishes a phase-out
schedule that began January 1, 1995 for all existing single hull vessels based
on the vessel's age and gross tonnage. The Company estimates that OPA '90 will
require approximately 125 barges engaged in domestic trade to be retrofitted or
replaced by 2005 and another approximately 70 such barges to be retrofitted or
replaced by 2010. Demand for new vessels is also created by the aging of the
worldwide fleet. According to estimates of the United States Maritime
Administration ("MARAD"), by 2000 approximately 40% of the current world
offshore tank barge fleet will be more than 25 years old and more than 20% will
be at least 30 years old. New double hull barges generally range in cost from $6
million to $25 million each (with an estimated average cost of $15 million).
During the past three years, the Company has built eight large offshore double
hull tank barges, more than any other U.S. shipbuilder. The Company has firm
orders for two such barges, of which one is currently under construction, and
has an outstanding option from a customer for one additional barge. In addition,
the Company is bidding on a number of other substantial barge construction
projects.

BACKGROUND

Since 1972, the Company has grown substantially through a series of nine
acquisitions. The Company acquired its first shipyard (Equitable in New Orleans,
Louisiana) in 1972 and another (Gretna Machine & Iron Works in Harvey,
Louisiana) in 1980. From 1972 to 1983, almost all of the Company's shipbuilding
projects were for the commercial market (such as lighter aboard ship (LASH)
container barges, anchor handling tugboats, ocean-going barges, inland hopper
barges and two Staten Island ferries).

In 1983, the Company acquired Halter Marine, Inc., including the Halter
shipyards in Moss Point and Lockport, Louisiana (and several other shipyards
that have been subsequently closed). As a result of this acquisition, the
Company entered the markets for construction of offshore support vessels and of
U.S. government vessels. The Halter Moss Point and Lockport yards were
principally engaged in building a large number of offshore support vessels from
1978 to 1985, when the downturn in the offshore oil and gas industry severely
curtailed demand for these vessels. A large majority of the Company's
shipbuilding business was for the U.S. government from 1983 to 1989, a period
during which the U.S. Navy was engaged in a large shipbuilding program.

In 1987, the Company acquired Moss Point Marine, Inc. in Escatawpa,
Mississippi, which was then owned and operated by the Company's current Chief
Executive Officer, John Dane III, and the Company's shipyards were reorganized
to centralize sales, engineering, production, administrative and other functions
in order to increase their efficiency and reduce costs. In 1990, as U.S. Navy
shipbuilding activities were beginning to decline, the Company began to expand
its commercial business again and obtained a large commercial contract to build
12 oil spill recovery vessels.

In 1991, the Company acquired its Gulfport, Mississippi shipyard, which
initially brought additional governmental projects. In 1992, the Company
acquired its Panama City, Florida yard, which was closed at the

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<PAGE> 28

time of acquisition. The Panama City yard was purchased on advantageous terms to
provide additional capacity when needed.

From late 1994 to late 1995, the Company purchased three shipyards that
significantly increased its capacity to do repair and conversion work. In late
1994, the Company acquired the Gulf Coast Fabrication shipyard in Pearlington,
Mississippi. This yard, which has the widest graving dock on the Gulf Coast,
specializes in large barge construction and conversion projects, including
construction and retrofitting of barges with double hulls to meet the
requirements of OPA '90. At the time of the acquisition by the Company, the Gulf
Coast Fabrication shipyard also was engaged in the construction of casino
vessels. In mid-1995, the Company acquired the Gulf Repair yard in New Orleans,
which now has five large dry docks for repair of offshore vessels. In late 1995,
the Company acquired its Pascagoula, Mississippi shipyard, which provides deep
water access and currently has the capacity to build large vessels (up to 800
feet in length, 115 feet in width and of an unlimited height).

See "-- Operations" for additional information about the Company's
shipyards and recent shipbuilding, repair and conversion activities.

INDUSTRY OVERVIEW

Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. Included in the second category are ten
shipbuilders, including the Company, that are capable of building vessels of 400
feet or more. This category also includes several hundred companies engaged in
shipbuilding and repair activities in the United States, many of which are
smaller than the Company, having one or two shipyards and specializing in the
construction or repair of one or a small number of types of vessels.

In general, during the 1990's, the U.S. shipbuilding industry has been
characterized by substantial excess capacity because of the significant decline
in U.S. Navy shipbuilding spending and the difficulties experienced by U.S.
shipbuilders in competing successfully for international commercial projects
against foreign shipyards, many of which are heavily subsidized by their
governments. As a result of these factors, competition by U.S. shipbuilders for
domestic commercial projects has increased significantly.

The U.S. shipbuilding industry has two distinct markets: (i) contracts with
domestic and foreign governments, principally the U.S. Navy, and (ii) commercial
contracts for domestic and international customers. See "-- Contract Procedure,
Structure and Pricing" and "-- Competition."

BUSINESS STRATEGY

The Company's strategy is to enhance its position as a leading manufacturer
of small to medium sized vessels, to respond to anticipated new shipbuilding
construction opportunities and to increase its revenues and profitability. In
order to implement this strategy, the Company intends to:

Provide a Wide Variety of Products to Diversified Markets

The Company's shipbuilding versatility is one of its principal competitive
strengths, not only reducing its dependence on particular types of products, but
also providing engineering and manufacturing benefits across product lines. The
Company intends to continue to serve diversified markets, including a balance of
governmental and commercial shipbuilding projects. See "-- Operations" and
"-- Principal Products."

Utilize Multiple, Strategically Located Shipyard Facilities

The Company's multiple shipyards will continue to provide it with
significant flexibility and efficiency in manufacturing a wide variety of
ocean-going vessels. The Company utilizes certain shipyards with specialized
machinery to centrally manufacture various components for its other shipyards,
helping to reduce costs and equipment redundancy. The Company is often able to
enhance its production efficiency and accelerate vessel delivery schedules by
allocating projects among multiple shipyards based on capability and capacity.
The

25
<PAGE> 29

Company's shipyards are strategically located along the Gulf Coast, in close
proximity to many commercial customers and with access to additional
shipbuilding labor as the Company's business expands (except in southern
Louisiana, where shipyards, including the Company's Lockport facility, are
experiencing a severe shortage of skilled shipyard labor). The Company has spent
approximately $46.9 million in the past five years to acquire, expand and
improve its shipyard facilities, which are well maintained. See "-- Operations."

Take Advantage of New Construction Opportunities

The Company intends to anticipate and position itself to take advantage of
significant new vessel construction opportunities, including the following:

Expected Upturn in Market for Offshore Support Vessels. Because of its
extensive experience in manufacturing offshore support vessels (including
those incorporating recent advances in vessel engineering, construction and
outfitting) and its ability to expand its production at its existing
shipyards, the Company believes it is well positioned to take advantage of
the expected upturn in the market for new offshore support vessels. The
Company has built more offshore support vessels than any shipbuilder in the
United States. As a result of the severe downturn in the oil and gas
industry in the mid-1980's, there has been very limited construction of
offshore support vessels in the United States since 1985. The Company
expects that substantial orders for new offshore support vessels may be
made in the next several years due to the need for larger vessels to
support deep water exploration and production activities, as well as the
substantial worldwide fleet attrition over the past ten years and the aging
of the remaining fleet. The timing of the expected upturn in the offshore
support vessel market will depend principally upon conditions in the
offshore oil and gas industry, particularly an increase in drilling
activity and dayrates for offshore support vessels, which in turn depend
upon oil and gas prices. The Company currently has two offshore support
vessels under construction, has outstanding options from one customer for
five additional vessels, and is bidding on a number of substantial
potential orders for such vessels. See "Risk Factors -- Dependence of
Offshore Support Vessel Market on Offshore Exploration Activity,"
"-- General" and "-- Principal Products -- Offshore Support Vessels."

Current and Future Demand for Offshore Double Hull Tank Barges. The
Company expects to capitalize on the increase in offshore tank barge
construction and conversion resulting from OPA '90 and the aging of the
worldwide fleet. OPA '90 establishes a phase-out schedule that began
January 1, 1995 for all existing U.S. and foreign single hull vessels
carrying fuel and certain other hazardous cargos and entering U.S. ports.
Operators will be required either to retrofit existing single hull vessels
or construct new double hull vessels in order to comply with the law's
requirement that such vessels have double hulls by 2015. The Company
estimates that OPA '90 will require approximately 125 barges engaged in
domestic trade to be retrofitted or replaced by 2005 and another
approximately 70 such barges to be retrofitted or replaced by 2010.
According to MARAD estimates, by 2000 approximately 40% of the world
offshore tank barge fleet will be more than 25 years old and more than 20%
will be at least 30 years old. During the past three years, the Company has
built eight large offshore double hull tank barges, more than any other
U.S. shipbuilder. The Company has firm orders for two such barges, of which
one is currently under construction, and has an outstanding option from a
customer for one additional barge. In addition, the Company is bidding on a
number of other substantial barge construction projects. See "-- Principal
Products -- Offshore Barges."

Continue To Be a Low Cost Shipbuilder

The Company intends to continue to enhance its position as one of the most
cost-efficient shipbuilders in the United States. The Company's shipyards employ
advanced manufacturing techniques, including modular construction methods which
the Company was among the first U.S. shipbuilders to use, zone outfitting
methods, advanced welding techniques, panel line fabrication, computerized
plasma arc metal cutting and automated sandblasting and painting. The Company
believes that these factors make the Company one of the most versatile and
cost-efficient shipbuilders in the United States. See "-- General" and
"-- Operations -- Shipbuilding."

26
<PAGE> 30

Increase Output at the Company's Existing Facilities

The Company has the ability to significantly increase production at almost
all of its existing shipyards. As of May 31, 1996, the Company employed 2,478
shipyard workers and estimates that it could employ a maximum of approximately
3,770 workers without significant expansion of its plant facilities. While some
of its principal competitors are experiencing a severe shortage of skilled
shipyard workers in southern Louisiana (which has also affected the Company's
Lockport, Louisiana yard), the Company's other shipyards currently have access
to additional shipyard labor in their respective markets along the Gulf Coast.
Significant excess capacity is available at the Company's Pascagoula yard, which
was acquired in late 1995 and at which production has recently commenced, and
its Panama City yard, which currently is idle. See "Risk Factors -- Shortage of
Trained Shipyard Workers" and "-- Operations."

Increase Foreign Government Shipbuilding Activities

During the past six years, the Company has completed a significant amount
of shipbuilding projects for foreign governments, especially projects requiring
specialized expertise, such as high speed patrol boats. Depending on the project
and other circumstances, factors that can help the Company compete for foreign
government shipbuilding projects include its advanced technology, higher
productivity, vessel delivery schedules and prevailing exchange rates. See
"-- Principal Products -- Governmental Vessels."

Expand Repair and Conversion Activities

Since October 1994, the Company has acquired the Gulf Coast Fabrication,
Gulf Repair and Pascagoula shipyards in order to increase its capacity for
repair and conversion work. Depending on demand for such services, the Company
also may, at some time in the future, relocate a 115 foot wide dry dock from its
Gulf Repair shipyard in New Orleans to its Pascagoula, Mississippi yard in order
to undertake large repair and conversion projects, such as those for large
barges, cargo ships and drilling rigs. The Pascagoula yard's deep water access
and expandable capacity to handle large vessels will enable the Pascagoula yard
to perform repair and conversion (as well as construction) services for very
large vessels and repair and construct offshore drilling rigs. See
"-- Operations -- Shipyards" and "-- Operations -- Repair and Conversion
Services."

Provide Sophisticated Engineering Services

Engineering services are a key part of the complete shipbuilding services
offered by the Company. The Company maintains a large marine engineering
department, consisting of approximately 140 employees, 45 of whom are engineers
or naval architects. The Company has built hundreds of vessels for the
governmental and commercial markets. This capability allows the Company's
customers to select from standard configurations, modify a standard
configuration, or have the Company build a vessel to the customer's
specifications or design. See "-- Engineering."

Acquire Additional Shipyards Opportunistically

The Company has grown substantially through nine acquisitions since 1972.
Although the Company currently has additional capacity at its existing
facilities, the Company expects to consider strategic acquisitions of additional
shipyards in the future depending on a variety of factors, including demand for
new construction, conversion and repairs, the advantages offered by the
facilities and the acquisition terms. The Company expects that consolidation
will continue to occur among small to medium sized shipbuilders in light of
increasing costs of meeting environmental and other legal requirements and other
changes in the markets for various types of governmental and commercial vessels.

27
<PAGE> 31

OPERATIONS

Shipbuilding

Projects. The Company's current shipbuilding projects consist of 97 vessels
(including 50 inland hopper barges). The Company had firm contracts (excluding
unexercised options held by customers) with an aggregate remaining value of
approximately $601 million as of June 30, 1996. Of this contract value,
approximately $216 million was attributable to contracts to build ships for the
U.S. Navy. The Company anticipates that approximately $382 million of the
aggregate remaining value of the firm contracts as of June 30, 1996 will be
filled during fiscal 1997. The following chart includes a description of the
current shipbuilding projects as of June 30, 1996.

<TABLE>
<CAPTION>
NUMBER OF TYPE(S) OF
TYPE OF VESSEL SHIPYARD(S) VESSELS CUSTOMER
- ------------------------------- ------------------------------ ----------------- -----------------------------
<S> <C> <C> <C>
Governmental:
Oceanographic Survey and Halter Moss Point; Pascagoula 6 U.S. Government
Research Ships
Patrol Boats Equitable 5 U.S. Government;
Foreign Governments
Ferries Halter Moss Point; Moss Point 2 State Governments
Marine
Miscellaneous, governmental Equitable; Lockport; Gulf 4 U.S. Government;
Coast Fabrication; Gulfport State Governments
Offshore Barges:
Tank Barges Gretna 2 Private Fleet Operators
Deck Barges Gulf Coast Fabrication; 2 Private Fleet Operators
Lockport
Offshore Support Vessels:
Anchor Handling Tug Moss Point Marine 1 Marine Support Service
Supply Boats Companies
Supply Boats Pascagoula 1 Marine Support Service
Companies
Tug Boats Moss Point Marine; Lockport 6 Private Fleet Operators
Inland Tow Boats Lockport 3 Private Fleet Operators
Yachts Equitable 2 Individuals
Inland Hopper Barges Gulfport 50(1) Private Fleet Operators
Inland Double Hull Tank Barges Gulfport 11 Private Fleet Operators
Miscellaneous, commercial Lockport 2 Foreign Operators
--
Total 97
==

</TABLE>

- ---------------

(1) The Company has a firm contract to construct 50 inland hopper barges under a
limited arrangement with Trinity. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Inland Barge
Arrangements."

Shipyards. The Company conducts its shipbuilding operations at nine active
shipyards. None of the Company's principal U.S. competitors for new construction
of small to medium sized vessels, by contrast, has more than two active
shipyards used for new construction. The Company also owns a shipyard in Panama
City, Florida that was closed when acquired. The Panama City yard is not
currently operational but may be reopened, if justified by customer demand, late
in fiscal 1997.

Management believes that the Company's focus on the operation of a
relatively large number of smaller shipyards and the diversity of location and
function of its various shipyards enable the Company to maintain significant
flexibility and to achieve substantial operating efficiencies. The number and
diversity of function of the Company's shipyards allow the Company to achieve
operating efficiencies by permitting each of its shipyards to focus on
construction of particular types of vessels. Additionally, the Company's
Equitable and Gulfport shipyards manufacture components or modules that are
shipped to the Company's other shipyards for inclusion in vessels, thereby
eliminating the need to maintain certain costly manufacturing equipment at each
shipyard. The Company anticipates that the component manufacturing function
currently performed by its Gulfport shipyard will be shifted to its Pascagoula
shipyard and that the Gulfport facility will be temporarily converted primarily
to the production of inland hopper barges under an arrangement with Trinity.

28
<PAGE> 32

See "Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity -- Inland Barge Arrangements."

The location of the Company's shipyards at various sites along the Gulf
Coast generally alleviates problems that can arise from labor shortages in
particular locations. Shipyards located in certain portions of southern
Louisiana currently are experiencing severe shortages of skilled shipyard labor
as a result of labor demands brought about by increases in offshore drilling
activities, the construction of offshore rig platforms and crewing of offshore
vessels. This labor shortage has resulted in increased costs of labor and
limitations on production capacity for shipyards in such portions of southern
Louisiana. However, of the Company's ten shipyards, only Lockport is located
within the affected areas of southern Louisiana. Accordingly, the labor shortage
has not impacted the Company to the same degree that it has affected many of the
Company's competitors.

The Company's shipyards are well maintained facilities. During the past
five years, the Company made, in the aggregate, approximately $46.9 million of
capital expenditures in order to acquire, expand and improve its shipyard
facilities. These expenditures have allowed the Company to solidify its position
as a low cost producer of high quality vessels. In the 1970's, the Company was
one of the first U.S. builders of small to medium sized ships to adopt modular
construction techniques. The Company now employs the latest in modular
construction techniques, zone outfitting, which involves the installation of
pipe, electrical wiring and other systems at the modular stage, thereby reducing
construction time while at the same time simplifying systems integration and
improving quality. The Company also uses panel line fabrication for efficiently
attaching stiffeners to shell and bulkheads, computerized plasma arc metal
cutting for close tolerances and automated sandblasting and painting processes
for efficiency and high quality.

The Company has capacity, with the addition of new employees, to expand
production significantly at almost all of its existing shipyards. In addition,
the Pascagoula shipyard, which was acquired by the Company as a closed facility
in November 1995, is still in the start-up phase. The Pascagoula shipyard
provides deep water access and currently has the capacity to build large vessels
(up to 800 feet in length, 115 feet in width and of an unlimited height). The
Company believes that the Pascagoula area offers a good supply of skilled labor
and that the Pascagoula facility could become the Company's largest shipyard.
The Company estimates that additional capital expenditures totaling
approximately $3 million to $4 million will be required in fiscal 1997 for
improvements at the Pascagoula facility necessary to meet existing contractual
requirements. However, the Company estimates that, although not currently
budgeted for fiscal 1997, additional capital expenditures totaling approximately
$4 million to $5 million may be made to relocate a 115 foot wide drydock from
its Gulf Repair shipyard in New Orleans to the Pascagoula yard and additional
capital expenditures of approximately $8 million to $12 million may be made to
permit the Pascagoula facility to offer large vessel construction, repair and
conversion services and drilling rig construction. The Company also may reopen
its shipyard in Panama City, Florida late in fiscal 1997, if justified by
customer demand. The Panama City shipyard has been closed since its acquisition
by the Company in October 1992. The Company estimates that initial capital
expenditures totaling approximately $3 million would be necessary to reopen the
Panama City facility.

29
<PAGE> 33

The following chart contains certain information, as of May 31, 1996,
regarding each of the Company's shipyards.

<TABLE>
<CAPTION>
PRIMARY PRODUCTS/ CURRENT MAXIMUM
SHIPYARD LOCATION DATE ACQUIRED OPERATIONS(1) EMPLOYEES EMPLOYEES(2)
- ------------------ ---------------- -------------- ---------------------------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Equitable New Orleans, LA December 1972 Patrol Boats; Yachts; 378 500
Crew Boats; Manufacturing of
Components for Other
Company Shipyards
Gretna Harvey, LA December 1980 Offshore Barges; Minor 175 250
Repairs; Gas Freeing and
Cleaning
Halter Moss Point Moss Point, MS October 1983 Oceanographic Survey and 354 450
Research Ships; Other
Specialized Navy Vessels;
Offshore Support Vessels;
Large Ferries
Lockport Lockport, LA October 1983 Tug Boats; Offshore Deck 231 300
Barges; Offshore Support
Vessels; Patrol Boats
Moss Point Marine Escatawpa, MS August 1987 Ferries; Large Offshore Tug 315 400
Boats; Landing Craft;
Offshore Support Vessels
Gulfport Gulfport, MS December 1991 Roll On-Roll Off Ramps for 423 500
U.S. Government; Inland Double
Hull Tank Barges; Inland Hopper
Barges; Manufacturing of
Components for Other Company
Shipyards; Offshore Deck Barges
Panama City Panama City, FL October 1992 Closed; To be Reopened 1 400
(Depending on Market
Conditions)
Gulf Coast Pearlington, MS October 1994 Offshore Container and Deck 209 250
Fabrication Barges; Offshore Double Hull
Tank Barges; Repair and
Conversion
Gulf Repair New Orleans, LA July 1995 Repairs; Offshore Deck Barges 200 220
Pascagoula Pascagoula, MS November 1995 Offshore Support Vessels; 192 500
Oceanographic Survey and Research
Ships; Containerships; Repairs;
Offshore Double Hull Tank Barges
----- -----
Total Number of Employees(3) 2,478 3,770
===== =====
</TABLE>

- ---------

(1) Includes operations currently conducted and products currently produced or
contemplated to be produced at the applicable shipyard.
(2) Represents management's estimate of the maximum number of persons that could
be employed at the existing plant facilities without significant expansion.
For information regarding related capital expenditures, see discussion
above. Because of a severe labor shortage affecting shipyards in certain
portions of southern Louisiana (including the Lockport shipyard), it is
doubtful that the Company could increase the number of employees at its
Lockport shipyard at the present time. See "Risk Factors -- Shortage of
Trained Shipyard Workers."
(3) Excludes employees at corporate headquarters and engineering employees.

30
<PAGE> 34

Repair and Conversion Services

Since October 1994, the Company has acquired two shipyards that currently
provide major vessel repair and conversion services. The Company's Gulf Coast
Fabrication shipyard in Pearlington, Mississippi has the widest graving dock on
the Gulf Coast, capable of accommodating vessels up to 140 feet in width. The
Company's Gulf Repair facility in New Orleans, Louisiana has five floating dry
docks capable of accommodating vessels up to 770 feet in length. Depending on
demand for such services, the Company may, at some time in the future, relocate
a 115 foot wide dry dock from the Gulf Repair shipyard to the Pascagoula yard in
order to undertake large repair and conversion projects, such as those for large
barges, cargo ships and drilling rigs. The Pascagoula shipyard provides deep
water access and currently has the capacity to build large vessels (up to 800
feet in length, 115 feet in width and of an unlimited height). The Company also
performs minor vessel repairs at its Gretna facility in Harvey, Louisiana, where
it has two graving docks.

The enactment of OPA '90 has created a demand for retrofitting existing
offshore barges to double hulls to comply with the law's single hull phase-out
requirements (in addition to the construction of new double hull vessels
complying with OPA '90). Additionally, demand for vessel repair and conversion
services has increased in recent years as vessel owners have attempted to extend
the useful lives of offshore barges and offshore support vessels, as a
significant portion of their fleets approach the end of their useful lives.
Management believes that the Company is well positioned to benefit from these
demand trends and that these trends should continue for at least the next ten
years.

Other Services

The Company offers 24-hour a day vessel parts supply service to its
customers throughout the world and offers crew training services in the
customers' native languages. At its Gretna yard, the Company also offers gas
freeing and cleaning services for vessels that carry fuels or other hazardous
cargos. See "-- Regulation -- Environmental Regulation."

PRINCIPAL PRODUCTS

The Company manufactures a variety of small and medium sized vessels
principally for the governmental and commercial markets. Certain of the
principal types of vessels manufactured by the Company are described below.

Governmental Vessels

The Company builds several types of vessels for the U.S. Navy.
Oceanographic survey and research ships are built by the Company to study and
explore the ocean and its phenomena. These vessels are built to meet demanding
performance and reliability criteria as well as critical noise, vibration and
shock parameters. Oceanographic survey and research ships range in length from
210 feet to 325 feet and range in price from $8 million to $70 million. The
Company also constructs patrol boats for the U.S. Navy, which range in length
from 26 feet to 120 feet and range in price from $300,000 to $10 million. After
head-to-head competition between a Company prototype vessel and vessels from
several competitors, a Company vessel was selected as the new Mark V high speed
special operations craft for the U.S. Navy Seal and Special Operations Forces.
These 45 knot special operations craft are 82 feet in length and sell for
approximately $5 million.

The U.S. Navy has options to purchase, over a period of years, up to an
additional two oceanographic survey and research ships and ten Mark V patrol
craft. The continuation of any U.S. Navy shipbuilding program is dependent upon
the continuing availability of Congressional appropriations for that program.
Because Congress usually appropriates funds on a fiscal year basis, funds may
never be appropriated to permit the U.S. Navy to exercise options that have been
awarded. In addition, even if funds are appropriated, the U.S. Navy is not
required to exercise the options. With the end of the Cold War and the pressure
of domestic budget constraints, overall U.S. Navy spending for new vessel
construction has declined significantly since 1991 (from 88 vessels in 1990 to
46 in 1995). Although the Company believes that the small to medium sized U.S.
Navy vessels for which it competes are less likely to be cut back and, in some
cases, do not require

31
<PAGE> 35

specific Congressional appropriations, the Company generally expects revenues
and gross profit attributable to its current and any future U.S. Navy contracts
to decline over the next several years.

The Company believes that its relationship with the U.S. government is
good. Since 1989, the U.S. Navy has chosen the Company to complete construction
on certain vessels pursuant to three contracts that were originally awarded to
other shipyards, and which in the aggregate totaled over $250 million in value.

The Company constructs 78 foot patrol craft fast ("PCFs") for foreign
navies. The Company has delivered 25 of these boats to the Philippine and Saudi
Arabian governments. The Company has firm contracts with the U.S. Navy to supply
an additional 11 PCFs to the Philippine government and has contracted with a
private shipyard in the Philippines to construct these vessels.

Company-built passenger/vehicle ferries are used by governmental operators
on all three U.S. coasts. These vessels range in length from 90 feet to 383 feet
and range in price from $1 million to $76 million. In 1995, the Company
developed and model-tested an "E-Cat" catamaran ferry to carry passengers on
lakes, bays, sounds and other partially protected waters. When built, the E-Cat
will be a high speed, low wake, fuel efficient vessel that will carry 150 to 240
passengers at 30 knots and produce only minimal wake. In addition, the Company
has been awarded a contract to build a 383 foot ferry for the State of Alaska.
Construction is scheduled to begin in August 1996.

Offshore Barges

The Company builds a variety of offshore barges, including tank, container
and deck barges. Contract prices for barges range from $1 million to $25
million. The Company's barges are used by operators to carry large cargo such as
liquefied petroleum gas, molten sulfur, propane, butane, propylene, heavy oil,
phenol, jet fuel and other petroleum products as well as commodities including
grain, coal, wood products, containers and rail cars. Other barges function as
pipe laying barges, drilling barges, cement unloaders and split-hull dump scows.
The Company's barges range from 110 feet to 580 feet in length, with as many
cargo tanks, decks and support systems as necessary for the barge to be used for
its intended function.

The Company has positioned itself to benefit from the expected increase in
offshore tank barge construction and conversion. Demand for double hull barges
has been created by OPA '90, which generally requires U.S. and foreign vessels
carrying fuel and certain other hazardous cargos and entering U.S. ports to have
double hulls by 2015. Operators will be required either to retrofit existing
vessels or construct new double hull vessels in order to comply with the law's
single hull phase-out requirements that began January 1, 1995. The Company
estimates that OPA '90 will require approximately 125 barges engaged in domestic
trade to be retrofitted or replaced by 2005 and another approximately 70 such
barges to be retrofitted or replaced by 2010. Demand for new vessels is also
created by the aging of the worldwide fleet. According to MARAD estimates, by
2000 approximately 40% of the current world offshore tank barge fleet will be
more than 25 years old and more than 20% will be at least 30 years old. During
the past three years, the Company has built eight large offshore double hull
tank barges, more than any other U.S. shipbuilder. The Company has firm orders
for two such barges, of which one is currently under construction, and has an
outstanding option from a customer for one additional barge. In addition, the
Company is bidding on a number of other substantial barge construction projects.
See "-- Regulation -- OPA '90."

Offshore Support Vessels

The offshore support vessels built by the Company serve oil and gas
drilling and production facilities and support offshore construction and
maintenance work. The Company's supply boats range from 85 feet to 254 feet in
length with conventional or diesel electric power and feature functional pilot
houses with unencumbered visibility and large aft decks with high cargo
capacities. In addition to transporting deck cargo, such as pipe or drummed
materials, supply boats transport liquid mud, potable water, diesel fuel, dry
bulk cement and dry bulk mud. Supply boats constructed by the Company range from
standard supply boats to multi-purpose sophisticated ships with high horsepower
and bollard pull, automated controls, dynamic positioning, controllable pitch
propellers, articulated rudders, Kort nozzles and any type of auxiliary, deck or
towing equipment. Anchor handling tugs and anchor handling tug supply boats
constitute a separate class of

32
<PAGE> 36

offshore support vessels. These vessels have more powerful engines and deck
mounted winches and are capable of towing and positioning offshore drilling rigs
and their anchors as well as providing supply vessel services.

The Company has built more offshore support vessels to service oil and gas
drilling rigs and production platforms than any shipbuilder in the United
States. The Company has built a total of 501 offshore support vessels from 1965
through 1995 (including 267 built from 1978 through 1984), which the Company
believes account for approximately 23% of the world fleet of offshore support
vessels manufactured during such period. Vessels built by the Company and known
to be in service represented, as of March 31, 1996, 34.4% of the approximately
395 total offshore support vessels operated by the two largest worldwide fleet
operators. As a result of the severe downturn in the oil and gas industry in the
mid-1980's, there has been very limited construction of offshore support vessels
in the United States since 1985. During the period from 1985 through 1995, the
Company built eight new 200-foot or longer offshore support vessels, more than
any other U.S. shipbuilder. The Company's offshore support vessel manufacturing
activities during this period have enabled it to gain a competitive advantage
through experience with recent advances in vessel engineering and construction
techniques. The Company currently has two offshore support vessels under
construction, has outstanding options from one customer for five additional
vessels and is bidding on a number of substantial potential orders for such
vessels.

The Company expects that substantial orders for new offshore support
vessels may be made in the next several years due to the need for larger
offshore support vessels to service deep water exploration and production
activities, the substantial worldwide fleet attrition over the past ten years
and the aging of the remaining fleet. The demand for deep water (deeper than
1,000 feet) drilling services has increased substantially in recent years as a
result of large reserve discoveries and technological advances which have made
development and production of reserves in deepwater economically viable. A
number of offshore contract drillers have entered into long-term agreements to
upgrade or convert existing drilling rigs or build new drilling rigs capable of
drilling in deep water. The Company believes that the increase in drilling
activity in deep water will require the construction of larger, more powerful
offshore support vessels. The Company believes that the number of offshore
support vessels available for service worldwide decreased substantially during
the last ten years. The number of such vessels available for service in the Gulf
of Mexico decreased from a peak of approximately 700 in 1985 to approximately
280 in March 1996. A majority of the offshore support vessels currently in
service worldwide are 16 or more years old and a majority of the others are
between 11 and 16 years old. As these vessels age, maintenance, repair and
vessel certification costs increase significantly and eventually require their
replacement. New offshore support vessels incorporating advances in engineering,
technology and outfitting are expected to cost between $6 million and $25
million each depending on the vessel's size and capabilities. The timing of the
expected upturn in the offshore support vessel market will depend principally
upon conditions in the offshore oil and gas industry, particularly an increase
in drilling activity and dayrates for offshore support vessels, which in turn
depend upon oil and gas prices. Because of its extensive experience in
manufacturing offshore support vessels and its ability to expand its production
at its existing shipyards, the Company believes it is well positioned to take
advantage of the expected upturn in the offshore support vessel business.

Tug Boats

The Company builds tug boats for towing and pushing, anchor handling,
mooring and positioning, dredging assistance, tanker escort, port management,
shipping, piloting, fire fighting and salvage. For each offshore barge that is
built in the United States pursuant to OPA '90, a tug boat is generally added to
the purchaser's fleet. Tug boats are built with two or three engines, standard
propellers, controllable pitch propellers, azimuthing Z-drives, cycloidal
propulsion and with or without steerable or fixed nozzles. Tug boats range from
85 feet to 155 feet in length and range in price from $2 million to $12 million.
The Company has built some of the world's largest, most powerful tug boats
fitted with Voith-Schneider cycloidal propulsion units.

33
<PAGE> 37

Inland Tow Boats

Inland tow boats are used by waterway operators to push inland barges. The
Company manufactures a full line of tow or push boats. The Company offers the
complete line of the St. Louis Ship designs, including the "Super Hydrodyne"
hull shapes optimized for push towing service on the western river system and
the Nashville Bridge, "NABRICO" tow boat design. Seventy-two vessels based on
the Company's Hydrodyne hulls have been delivered to owners since 1959. Inland
tow boats range from 70 feet to 200 feet in length and range in price from $1.3
million to $13 million. The Company recently completed the tow boat
"Mississippi" for the U.S. Army Corp of Engineers, which is the fifth largest
tow boat operating in the United States today.

Yachts

In response to increased demand, the Company has begun placing a greater
emphasis on its custom yacht business and has increased its marketing efforts,
added a separate engineering department and improved its yacht construction
facilities. The Company is currently one of two U.S. shipbuilders that currently
build yachts over 150 feet in length. The Company either can custom build a
yacht or construct a yacht in accordance with a customer's specifications and to
the certification and survey requirements of the American Bureau of Shipping. In
building a yacht, the Company uses technology developed by it in the engineering
and construction of high speed military patrol boats and special purpose
vessels. Advanced techniques of acoustic insulation, noise/vibration reduction
and diesel/electric propulsion have all been utilized in yachts built by the
Company. Construction is available in aluminum, steel, fiberglass, composites
and any combination of those materials. Interior outfitting and finishing are
completed by the shipyard and specialized sub-contractors working under the
supervision of the Company. The Company has built yacht tenders from 30 feet in
length and has completed repairs and conversions of super yachts that are up to
260 feet in length. The Company recently was awarded contracts for the
construction of two 155 foot mega yachts and one 118 foot mega yacht.

Inland Barges

Although the Company generally is restricted under the Separation Agreement
from constructing inland hopper barges and inland tank barges, the Company will
construct inland hopper barges under a limited arrangement with Trinity. The
Company plans to construct these barges at its Gulfport facility. The Company
also will be permitted to complete the construction of ten inland double hull
tank barges for which it has existing contracts. In addition, it is contemplated
that the Company from time to time may construct other inland hopper barges and
inland tank barges under future arrangements with Trinity. Hopper barges
generally are priced at approximately $300,000 each and inland double hull tank
barges generally range in price from approximately $600,000 to $1.8 million
each. See "Certain Transactions and Related Arrangements -- Arrangements Between
the Company and Trinity -- Inland Barge Arrangements."

Miscellaneous

In addition to the vessels described above, the Company has built crew
boats, excursion and casino vessels and barges, fire/rescue, pollution control
and oil recovery vessels, utility boats and fishing trawler processors, and
other small to medium sized vessels. From time to time, the Company has
performed work as a subcontractor.

CONTRACT PROCEDURE, STRUCTURE AND PRICING

The Company's contracts for vessels generally are obtained through a
competitive bidding process. A potential buyer ordinarily provides
specifications and performance criteria for a proposed vessel and will invite
numerous shipbuilders to place bids for the construction of the vessel. After
being invited to place a vessel bid, the Company generally assigns a team of
specialists from its estimating department and its engineering or research and
development department to project costs of completion. Management then
determines the applicable profit margin and finalizes the bid. All contracts for
the construction and conversion of U.S. Navy vessels are subject to competitive
bidding. As a safeguard to anti-competitive bidding practices, the U.S. Navy has
recently employed the concept of "cost realism," which requires that each bidder
submit information on

34
<PAGE> 38

pricing, estimated costs of completion and anticipated profit margins. The U.S.
Navy uses this and other data to determine an estimated cost for each bidder.
The U.S. Navy then reevaluates the bids by using the higher of the bidder's and
the U.S. Navy's cost estimates.

The Company makes a large number of bids in the commercial market. However,
in the case of U.S. government contracts for which the bidding process is
significantly more detailed and costly, the Company tends to be far more
selective regarding the projects on which it chooses to bid. As a result of this
selectivity, the Company has been awarded contracts with respect to
approximately 50% of the U.S. government projects on which it has made bids
during the period from fiscal 1990 to 1996.

Most of the contracts entered into by the Company, whether governmental or
commercial, are fixed-price contracts under which the Company retains all cost
savings on completed contracts but is also liable for the full amount of all
cost overruns. Historically, cost overruns on fixed price contracts have not
been a significant problem for the Company. See "Risk Factors -- Risks
Associated with Contractual Pricing in the Shipbuilding Industry."

A limited number of the Company's contracts with the U.S. Navy are
fixed-price incentive contracts, which provide for sharing between the
government and the Company of cost savings and cost overruns based primarily on
a specified formula that compares the contract target cost with actual cost. In
addition, such fixed-priced incentive contracts generally provide for payment of
escalation of costs based on published indices relating to the shipbuilding
industry. Although all cost savings are shared under fixed-price incentive
contracts, costs overruns in excess of a specified amount must be borne entirely
by the Company. Under government regulations, certain costs, including certain
financing costs, portions of research and development costs and certain
marketing expenses, are not allowable costs under fixed-price incentive
contracts. The only current U.S. Navy fixed-price incentive contracts of the
Company relate to three oceanographic survey and research ships. One of these
vessels is close to completion, and the two others have been launched and are
scheduled for delivery in the third quarter of fiscal 1997.

Contracts with the U.S. Navy are subject to termination by the government
either for its convenience or upon default by the Company. If the termination is
for the government's convenience, the contracts provide for payment upon
termination for items delivered to and accepted by the government, payment of
the Company's costs incurred plus the costs of settling and paying claims by
terminated subcontractors, other settlement expenses and a reasonable profit.

Although varying contract terms may be negotiated on a case-by-case basis,
commercial contracts entered into by the Company ordinarily provide for a down
payment in a negotiated amount, with five or more progress payments at various
stages of construction and a final payment upon delivery, which final payment
may be subject to deductions if the vessel fails to meet certain performance
specifications based on tests conducted by the Company prior to delivery. U.S.
Navy contracts typically provide for bi-weekly progress payments. Some foreign
governments have small warranty reserve holdbacks which are payable at the end
of the warranty period.

Under commercial contracts, the Company generally provides either a six
month or one year warranty with respect to workmanship. In the majority of
commercial contracts, the Company does not warrant materials acquired from its
suppliers but, instead, passes through the suppliers' warranties to the
customer. The Company's government contracts typically contain one year
warranties covering both materials and workmanship. Expenses of the Company to
fulfill warranty obligations have not been material in the aggregate.

BONDING AND GUARANTEE REQUIREMENTS

A significant portion of the Company's contracts for the construction,
repair or conversion of vessels require that the Company's performance be
guaranteed by Trinity or by a surety company or other third party pursuant to a
contract bid or performance bond, letter of credit or similar obligation.
Generally, contracts with state or local governments require contract bid or
performance bonds and foreign governmental contracts generally require bank
letters of credit or similar obligations. Commercial contracts may require
contract bid

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<PAGE> 39

and performance bonds if requested by the customer. As of March 31, 1996,
Trinity had guaranteed contract performance obligations of the Company in the
aggregate amount of $99.6 million and the Company had outstanding contract bid
and performance bonds, letters of credit and similar obligations issued by third
parties with Trinity as the obligor, with an aggregate face amount of
approximately $52.9 million. These guarantees, bonds, letters of credit and
similar obligations will remain in effect after the Offerings until the
obligations expire, and the Company will be obligated to indemnify Trinity and
to provide other financial assurances to Trinity against any liability under
such obligations. See "Business -- Bonding and Guarantee Requirements," "Certain
Transactions and Related Arrangements -- Arrangements Between the Company and
Trinity -- Performance Bond and Guarantee Arrangements."

After the Offerings, Trinity will not provide any further credit or other
financial support to the Company. From time to time after the Offerings, the
Company will need to continue to obtain contract bid and performance bonds,
letters of credit and similar obligations in connection with its business. As a
result of the discontinuance by Trinity of financial support of the Company,
such bonding and other arrangements may increase. Although the Company believes
that it will be able to obtain contract bid and performance bonds, letters of
credit and similar obligations on terms it regards as acceptable, there can be
no assurance it will be successful in doing so. In addition, the cost of
obtaining such bonds, letters of credit and similar obligations may increase.
See "Risk Factors -- Certain Financial Requirements; Absence of Trinity
Financial Support."

ENGINEERING

Customers can select from standard configurations, modify standard
configurations or have the Company build to the customer's specifications or
design. The Company can utilize, at its customer's request, advanced technology
to create a computer generated model of the vessel that allows the customer to
"walk through" the entire vessel. All major equipment and machinery is in place,
in scale, in the computer model. The Company believes that generating this type
of computer model helps to prevent engineering mistakes and costly re-work or
change orders and helps to ensure the vessel's functionality and ergonomics.

The Company maintains a large marine engineering department, consisting of
approximately 140 employees, 45 of whom are engineers or naval architects. The
Company has developed and produced several innovative vessels. Together with a
joint venture partner, the Company developed and produced the first governmental
and commercial use surface effect ships in the United States. The Company also
built the first gas turbine and diesel powered water jet crew boat. The Company
has built more small and medium sized vessels with diesel electric propulsion
than any other U.S. shipbuilder. MARAD and the U.S. Department of Defense have
teamed with the Company to develop a 23,000 ton container/bulk carrier, a medium
sized multi-purpose ship and a high-speed, low wake, fuel efficient passenger
ferry. Additionally, after head-to-head competition between a Company prototype
vessel and vessels from several competitors, a Company vessel was selected as
the new 82 foot, 45 knot Mark V high speed special operations craft for U.S.
Navy Seal and Special Operations Forces personnel.

MATERIALS AND SUPPLIES

The principal materials used by the Company in its shipbuilding, conversion
and repair business are standard steel shapes, steel plate and paint. Other
materials used in large quantities include aluminum, copper-nickel and steel
pipe, electrical cable and fittings. The Company also purchases component parts
such as propulsion systems, boilers, generators and other equipment. All these
materials and parts are currently available in adequate supply from domestic and
foreign sources. The Company's Equitable and Gulfport shipyards are located on
rail lines and typically obtain materials and supplies by rail, truck or barge.
The remainder of the Company's shipyards ordinarily obtain materials and
supplies by truck. The Company seeks to obtain favorable pricing and payment
terms for its purchases by coordinating purchases among all of its shipyards and
buying in large quantities. In the past, as a result of the Company's
relationship with Trinity, the Company has been able to purchase steel at
favorable prices relative to those available to shipbuilders in general. While
management believes that the Company will continue to be able to obtain steel at
relatively

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<PAGE> 40

favorable prices, there can be no assurance that this will be the case. See
"Risk Factors -- Lack of Independent Operating History."

MANUFACTURING PROCESS

Once a contract has been awarded to the Company, a project manager is
assigned to supervise all aspects of the project from the date the contract was
signed through delivery of the vessel. The project manager oversees the
engineering department in its completion of the vessel's drawings and supervises
the planning of the vessel's construction. The project manager also oversees the
purchasing of all supplies and equipment needed to construct the vessel, as well
as the actual construction of the vessel.

The Company constructs each vessel from flat steel, which is then
fabricated by yard workers into the necessary shapes to construct the hull and
vessel superstructure. Component parts, such as propulsion systems, boilers and
generators, are purchased separately by the Company and installed in the vessel.
The Company utilizes job scheduling and costing systems to track progress of the
construction of the vessel, which allows the customer and the Company to remain
apprised of the status of the vessel's construction.

For vessels over 150 tons, the Company generally utilizes modular
construction techniques. A vessel is divided into modules of approximately 100
tons each. With the assistance of computers, separate manufacturing drawings and
bills of materials are prepared for each module, and each module is separately
built and fully equipped with the piping, electrical and ventilation systems and
other equipment. Fully fabricated modules are cleaned, painted and transported
to the building ways for erection. After the modules are welded to each other to
form the ship, all piping, ventilation and other systems are connected between
modules, electrical cables are strung, and the ship is launched and ready for
final outfitting and delivery.

SALES AND MARKETING

The Company's marketing efforts are geographically centralized at the
Company's headquarters in Gulfport, Mississippi. The Company's Sales and
Marketing Department consists of a commercial marketing section, which employs
six persons, and an international marketing section, which employs four persons.
The Company's Government Department includes 12 persons who engage in marketing
and sales activities.

COMPETITION

Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. Included in the second category are ten
shipbuilders, including the Company, that are capable of building vessels of 400
feet or more. This category also includes several hundred companies engaged in
shipbuilding and repair activities in the United States, many of which are
smaller than the Company, having one or two shipyards and specializing in the
construction or repair of one or a small number of types of vessels.

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<PAGE> 41

The Company does not compete for U.S. Navy large vessel construction
projects. The Company generally competes for U.S. government shipbuilding
contracts on small to medium sized vessels principally with approximately six to
12 U.S. shipbuilders, which occasionally includes one or more of the six largest
shipbuilders. The number and identity of competitors on particular projects vary
greatly, depending on the type of vessel and size of project. The Company
competes for foreign government shipbuilding contracts principally with numerous
shipyards in several countries, many of which are heavily subsidized by their
governments. Competition for both U.S. and foreign government contracts is
intense.

Most of the commercial ships built in the United States since 1981 have
been constructed principally for domestic customers operating under the Jones
Act requirement that all vessels transporting products between U.S. ports be
constructed by U.S. shipyards. From time to time Congressional proposals have
been introduced in the past, and may be introduced in the future, in order to
repeal the Jones Act and eliminate the competitive advantages it affords to U.S.
shipbuilders. See "Risk Factors -- Legislative Proposals to Rescind Provisions
of Jones Act."

In recent years, U.S. commercial shipbuilding opportunities have been
enhanced by two legislative initiatives. OPA '90 generally requires certain U.S.
and foreign vessels carrying fuel or other hazardous cargos and entering U.S.
ports to have double hulls by 2015. OPA '90 establishes a phase-out schedule
that began January 1, 1995 for all existing single hull vessels based on the
vessel's age and gross tonnage. This law has created a demand for the
retrofitting of existing single hull vessels and the construction of new double
hull vessels as operators upgrade their fleets to comply with the law. See
"-- Regulation -- OPA '90."

In addition, opportunities for U.S. shipyards to build foreign-flagged
vessels for foreign owners were significantly increased in late 1993, when
Congress amended Title XI of the Merchant Marine Act of 1936. As a result of
these amendments, MARAD was authorized to guarantee loan obligations of foreign
owners for foreign-flagged vessels that are built in U.S. shipyards on terms
generally more advantageous than available under guarantee or subsidy programs
of foreign countries. Under a December 1994 trade accord (the "OECD Accord")
among the United States and other major shipbuilding nations, the Title XI
guarantee program would need to be modified to eliminate the competitive
advantages provided by the 1993 amendments. See "-- Regulation -- Title XI Loan
Guarantee Amendments and OECD."

The OECD Accord, which is scheduled to go into effect in July 1996, would
virtually eliminate all direct and indirect government shipbuilding subsidies,
which should significantly improve the ability of U.S. shipbuilders to compete
successfully for international commercial contracts with foreign shipbuilders,
many of which are heavily subsidized by their governments. Some of the subsidies
range as high as 25% of the vessel construction cost. The ability of U.S.
shipbuilders to compete effectively with subsidized foreign shipbuilders for
commercial contracts has been greatly impaired since the termination in 1981 of
the U.S. construction differential subsidy program, which had provided subsidies
to U.S. shipbuilders with respect to the construction of vessels for
international markets. See "Regulation -- Title XI Loan Guarantee Amendments and
OECD."

The Company competes for domestic commercial shipbuilding contracts
principally with approximately ten to 15 U.S. shipbuilders. The number and
identity of competitors on particular projects vary greatly, depending on the
type of vessel and size of project. The Company competes for foreign commercial
shipbuilding contracts principally with numerous shipyards in several countries,
many of which are heavily subsidized by their governments. Competition for both
U.S. and foreign commercial contracts is intense.

INSURANCE

Trinity has maintained, on behalf of the Company, insurance against
property damage caused by fire, explosion and similar catastrophic events that
may result in physical damage or destruction to the Company's premises or
properties. Trinity has also maintained, on behalf of the Company, general
liability and product liability insurance in amounts it deemed appropriate for
the Company's business. Upon consummation of the Offerings, the Company will
secure its own property, general liability and product liability insurance in
replacement of the insurance formerly maintained by Trinity.

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<PAGE> 42

EMPLOYEES

As of May 31, 1996, the Company had 2,721 employees, of which 295 were
salaried and 2,426 were employed on an hourly basis. None of the Company's
employees is represented by any collective bargaining unit. Management believes
that the Company's relationship with its employees is good. Most of the
Company's shipyards have implemented in-house training programs or participate
in training programs through local vocational-technical schools.

REGULATION

Environmental Regulation

The Company is subject to extensive and changing Environmental Laws,
including laws and regulations that relate to air and water quality, impose
limitations on the discharge of pollutants into the environment and establish
standards for the treatment, storage and disposal of toxic and hazardous wastes.
Stringent fines and penalties may be imposed for non-compliance with these
Environmental Laws. Additionally, these laws require the acquisition of permits
or other governmental authorizations before undertaking certain activities,
limit or prohibit other activities because of protected areas or species and
impose substantial liabilities for pollution related to Company operations or
properties.

The Company's operations are potentially affected by the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"). CERCLA (also known as the "Superfund" law) imposes liability
(without regard to fault) on certain categories of persons for particular costs
related to releases of hazardous substances at a facility into the environment
and for liability for natural resource damages. Categories of responsible
persons under CERCLA include certain owners and operators of industrial
facilities and certain other persons who generate or transport hazardous
substances. Liability under CERCLA is strict and generally is joint and several.
In addition to CERCLA, similar state or other Environmental Laws may impose the
same or even broader liability for the discharge, release or the mere presence
of certain substances into and in the environment.

In the 1980's, the Company was identified as a Potentially Responsible
Party or "PRP" under CERCLA at the Dutchtown Oil Treatment site ("Dutchtown
Site") in Dutchtown, Louisiana because it allegedly sent hazardous substances
from its Gretna shipyard to that site for disposal. The Dutchtown Site is on the
National Priorities List under CERCLA. The Company signed a consent decree with
other PRPs in 1989 to settle its liability and spent approximately $800,000
remediating the Dutchtown Site. Remediation is complete at the Dutchtown Site.

Because industrial operations have been conducted at some of the Company's
properties by the Company and previous owners and operators for many years,
various materials from these operations might have been disposed of at such
properties. This could result in obligations under Environmental Laws, such as
requirements to remediate environmental impacts. During the last five years, the
Company has been remediating environmental impacts from historical waste
disposal practices at the Company's Gretna shipyard in Harvey, Louisiana. These
disposal practices (including the alleged shipments to the Dutchtown Site)
relate to practices of previous owners in connection with the Gretna shipyard's
tank cleaning and gas-freeing operations. The Company, which discontinued such
disposal practices shortly after the shipyard's acquisition, has spent
approximately $3 million during the past five years on this remediation under
the direction of the Louisiana Department of Environmental Quality. Currently,
the Company is in the final stages of post-remediation groundwater monitoring.
The Company expects the groundwater monitoring and all other remediation
requirements for this site to be completed by the end of August 1996. There
could be additional environmental impact from historical operations at the
Company's properties that require remediation under Environmental Laws in the
future. However, the Company currently is not aware of any such circumstances
that are likely to result in any such impact under Environmental Laws.

The Company performs a tank cleaning and gas-freeing operation at its
Gretna facility that involves removal of residual fumes from vapor spaces in
barges. There are risks associated with the operation, including possible
explosion and emission of hazardous substances to the environment.

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<PAGE> 43

An example of an Environmental Law impacting the Company is the federal
Resource Conservation and Recovery Act ("RCRA"). RCRA and similar state laws
regulate the generation, treatment, storage, disposal, and other handling of
solid wastes, with the most stringent regulations applying to solid wastes that
are considered hazardous wastes. The Company generates solid waste, including
hazardous and non-hazardous waste, in connection with its routine operations.
Management believes that the Company's wastes are handled properly under RCRA.

Another Environmental Law impacting the Company's operations is the federal
Clean Air Act. Amendments in 1990 to this act resulted in numerous changes that
could increase the Company's capital and operational expenses after the
Environmental Protection Agency and similar state agencies fully implement
regulations authorized by the amendments. Although the Company does not expect
these Clean Air Act amendments to result in material expenses at its properties,
the amount of increased expenses, if any, resulting from such amendments is not
presently determinable. There can be no assurance that the Company will not
incur material expenses in connection with these amendments in the future.

Although no assurances can be given, management believes that the Company
and its operations are in compliance in all material respects with all
Environmental Laws. However, stricter interpretation and enforcement of
Environmental Laws (including the Clean Air Act) and compliance with potentially
more stringent future Environmental Laws could materially affect the Company's
operations.

Health and Safety Matters

The Company's facilities and operations are governed by laws and
regulations, including the federal Occupational Safety and Health Act, relating
to worker health and workplace safety. The Company believes that appropriate
precautions are taken to protect employees and others from workplace injuries
and harmful exposure to materials handled and managed at its facilities. While
it is not anticipated that the Company will be required in the near future to
expend material amounts by reason of such health and safety laws and
regulations, the Company is unable to predict the ultimate cost of compliance
with these changing regulations.

Jones Act

The Jones Act requires that all vessels transporting products between U.S.
ports must be constructed in U.S. shipyards, owned and crewed by U.S. citizens
and registered under U.S. law, thereby eliminating competition from foreign
shipbuilders with respect to vessels to be constructed for the U.S. coastwise
trade. Many customers elect to have vessels constructed at U.S. shipyards, even
if such vessels are intended for international use, in order to maintain
flexibility to use such vessel in the U.S. coastwise trade in the future. A
legislative bill seeking to substantially modify the provisions of the Jones Act
mandating the use of ships constructed in the United States for U.S. coastwise
trade has been introduced in Congress. Similar bills seeking to rescind or
substantially modify the Jones Act have been introduced in Congress from time to
time and are expected to be introduced in the future. Although management
believes it is unlikely that the Jones Act requirements will be rescinded or
materially modified in the foreseeable future, there can be no assurance that
such will not occur. Many foreign shipyards are heavily subsidized by their
governments and, as a result, there can be no assurance that the Company would
be able to effectively compete with such shipyards if they were permitted to
construct vessels for use in the U.S. coastwise trade.

OPA '90

Demand for double hull carriers has been created by OPA '90, which
generally requires U.S. and foreign vessels carrying fuel and certain other
hazardous cargos and entering U.S. ports to have double hulls by 2015. OPA '90
establishes a phase-out schedule that began January 1, 1995 for all existing
single hull vessels based on the vessel's age and gross tonnage. The Company
estimates that OPA '90 will require approximately 125 barges engaged in domestic
trade to be retrofitted or replaced by 2005 and another approximately 70 such
barges to be retrofitted or replaced by 2010. Demand for new vessels is also
created by the aging of the worldwide fleet. According to MARAD estimates, by
2000 approximately 40% of the current world offshore

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<PAGE> 44

tank barge fleet will be more than 25 years old and more than 20% will be at
least 30 years old. New offshore double hull tank barges generally range in cost
between $6 million and $25 million each.

OPA '90's single hull phase-out requirements may be deemed to apply to oil
and gas industry supply vessels over 500 gross tons operated in U.S. waters. All
offshore support vessels presently in operation in U.S. waters either are less
than 500 gross tons or have received a Congressional waiver exempting such
vessels from the OPA '90 double hull requirements. Proposed New Offshore Support
Vessel Legislation, which is currently pending in Congress, would impose, in
lieu of the OPA '90 double hull requirements, certain less onerous standards for
the construction of supply vessels operated in U.S. waters. There can be no
assurance as to when the New Offshore Support Vessel Legislation will be enacted
into law, if at all, or that the New Offshore Support Vessel Legislation, if
enacted, will not differ materially from its current form. Management believes
that the current uncertainty regarding construction standards has caused many
operators to refrain from placing new orders for offshore supply vessels.

Title XI Loan Guarantee Amendments and OECD

In late 1993, Congress amended the loan guarantee program under Title XI of
the Merchant Marine Act of 1936, to permit MARAD to guarantee loan obligations
of foreign vessel owners. As a result of these amendments, MARAD was authorized
to guarantee loan obligations of foreign owners for foreign-flagged vessels that
are built in U.S. shipyards on terms generally more advantageous than available
under guarantee or subsidy programs of foreign countries. Under the OECD Accord,
which was negotiated in December 1994, among the United States, the European
Union, Finland, Japan, Korea, Norway and Sweden (which collectively control over
75% of the market share for worldwide vessel construction), the Title XI
guarantee program will be required to be amended, once the OECD Accord is
ratified by the United States, to eliminate the competitive advantages provided
by the 1993 amendments to Title XI. In December 1995, a subcommittee of the Ways
and Means Committee of the U.S. House of Representatives passed a bill providing
for the implementation of the OECD Accord and elimination of the competitive
advantages provided by the 1993 amendments to Title XI.

Assuming that the OECD Accord is ratified, as expected, by the U.S. and
Japan (the only remaining parties to the OECD Accord that have not yet ratified
the OECD Accord), the OECD Accord is expected to go into effect by July 15,
1996. The OECD Accord would virtually eliminate all direct and indirect
governmental shipbuilding subsidies by the party nations. Despite the fact that
the OECD Accord will require the elimination of the competitive advantages
provided to U.S. shipbuilders by the 1993 amendments to Title XI, management
believes that the OECD Accord should significantly improve the ability of U.S.
shipbuilders to compete successfully for international commercial contracts with
foreign shipbuilders, many of which currently are heavily subsidized by their
governments. Some of the governmental subsidies to foreign shipbuilders
currently range as high as 25% of the vessel construction cost. The ability of
U.S. shipbuilders to compete effectively with subsidized foreign shipbuilders
for commercial contracts has been greatly impaired since the termination in 1981
of the U.S. construction differential subsidy program, which had provided
subsidies to U.S. shipbuilders with respect to the construction of vessels for
international markets.

PROPERTIES

Equitable New Orleans Shipyard

The Equitable shipyard is located on the Industrial Canal in New Orleans,
Louisiana. The yard has the capacity to build vessels up to the following
dimensions: 350 foot length; 90 foot beam; 25 foot water depth; and 110 foot
height. The shipyard has over 225,000 square feet of under-cover production
facilities divided between a fabrication shop, mold loft, pipe shop, carpentry
shop, electrical shop and a machine shop. The facility has two crawler cranes,
one barge mounted crane and 12 track mounted overhead cranes. The shipyard is
served by direct rail access.

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Gretna Machine & Iron Works Shipyard

The Gretna shipyard is located in Harvey, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 600 foot length; 95
foot beam; 5.5 foot water depth; and 70 foot height. The shipyard contains over
15,500 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop and electrical shop. The facility
has two graving docks, one with a length of 700 feet and the other with a length
of 300 feet, and has three crawler cranes, two track mounted gantry cranes and
two tower cranes.

Halter Moss Point Shipyard

The Halter Moss Point shipyard is located in Moss Point, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 400 foot
length; 85 foot beam; 18 foot water depth; and 85 foot height. The facility
consists of approximately 58 acres of property with 61,500 square feet of shops,
offices and warehouses and 60,165 square feet of outside concrete construction
platforms. The facility has six crawler cranes and six track mounted gantry
cranes.

Lockport Shipyard

The Lockport shipyard is located in Lockport, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 310 foot length; 80
foot beam; 10 foot water depth; and 68 foot height. This facility contains over
35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, pipe shop, carpentry shop, electrical shop and a
machine shop and has 46,000 square feet of outside concrete construction
platforms and a 16,000 square foot warehouse. The yard has four crawler cranes
and six track mounted gantry cranes.

Moss Point Marine Shipyard

The Moss Point Marine shipyard is located in Escatawpa, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 420 foot
length; 85 foot beam; 14 foot water depth; and 44 foot height. The yard contains
over 35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop, electrical shop and warehouse, and
has 40,000 square feet of outside construction platforms. The yard has four
crawler cranes and nine track mounted gantry cranes.

Gulfport Shipyard

The Gulfport shipyard is located in Gulfport, Mississippi and has the
capacity to build vessels up to the following dimensions: 360 foot length; 80
foot beam; 12 foot water depth; and 90 foot height. The facility consists of 113
acres on Bernard Bayou Industrial Park and includes an environmentally
controlled 38,000 square foot sandblasting and painting facility and 400,000
square feet of under-cover production facilities. The yard has 16,500 square
feet of outside concrete erection ways, two crawler cranes, 15 track mounted
overhead cranes and two truck mounted gantry cranes. The shipyard is served by
direct rail access.

Panama City Shipyard

The Panama City shipyard is located in Panama City, Florida and contains
over 35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop, electrical shop and warehouse. The
yard has the capacity to build vessels up to the following dimensions: 420 foot
length; 75 foot beam; 14 foot water depth; and 44 foot height. The facility has
not been operational since its acquisition by the Company in 1992.

Gulf Coast Fabrication Shipyard

The Gulf Coast Fabrication shipyard is located in Pearlington, Mississippi.
The facility contains over 15,000 square feet of under-cover production
facilities divided between a shear shop, mechanical shop, electrical shop and
warehouse. The facility has a 460 foot graving dock. The yard has the capacity
to build

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vessels up to the following dimensions: 460 foot length; 140 foot beam; 10 foot
water depth; and unlimited height. The yard has two crawler cranes, two track
mounted gantry cranes and one tower crane.

Gulf Repair Shipyard

The Gulf Repair shipyard is located on the Industrial Canal across from the
Company's Equitable New Orleans shipyard. The facility contains 72,000 square
feet of under-cover production facilities divided between a fabrication shop,
pipe shop, carpentry shop, electrical shop and a machine shop. The facility has
a 586 foot dry dock with 20,000 ton capacity, a 200 foot dry dock with 3,750 ton
capacity, a 285 foot drydock with 3,700 ton capacity, a 162 foot drydock with
1,500 ton capacity, and a 240 foot drydock with 5,000 ton capacity. The yard has
the capacity to build vessels up to the following dimensions: 325 foot length;
120 foot beam; 21 foot water depth; and 137 foot height. The yard has one
crawler crane, seven track mounted gantry cranes and two barge mounted cranes.

Pascagoula Shipyard

The Pascagoula shipyard was acquired by the Company in 1995 and is located
in Pascagoula, Mississippi. The yard consists of approximately 88 acres of
property and has the capacity to build vessels up to the following dimensions:
800 foot length; 115 foot beam; 20 foot water depth; and unlimited height. The
yard has over 42,000 square feet of under-cover production facilities divided
between a fabrication shop, paint shop, maintenance shop, and warehouse. The
yard has a 900 foot slip for wet dock work and a 300 ton shore mounted crane.
The yard has three crawler cranes and two track mounted gantry cranes.

Corporate Headquarters

The Company's corporate headquarters are located at the same site as the
Company's Gulfport shipyard. The headquarters occupy approximately 39,660 square
feet of such site. The Company's engineering headquarters are located one-half
mile from the corporate headquarters and contains approximately 33,600 square
feet of offices and a separate secure office for classified work.

LEGAL PROCEEDINGS

The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the aggregate
will not have a material adverse effect on the Company's business, financial
condition or results of operations.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the Company's
directors and executive officers, including their respective ages as of May 31,
1996.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------- ----- ------------------------------------------------
<S> <C> <C>
John Dane III............................ 45 Chairman of the Board, President and Chief
Executive Officer
Vincent R. Almerico...................... 56 Senior Vice President
Harvey B. Walpert........................ 63 Senior Vice President
Wayne Bourgeois.......................... 42 Vice President
Sidney C. Mizell......................... 53 Vice President
Anil Raj................................. 45 Vice President
Keith L. Voigts.......................... 52 Vice President
</TABLE>

John Dane III has served as President of the Company since 1987. Mr. Dane
directed the growth of the Company from four active shipyards to nine active
yards and is responsible for the total management of the

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shipyards. Mr. Dane graduated from Tulane University with a Ph.D. in civil
engineering and began his 22 year career in the marine industry by entering the
junior executive training program of Halter Marine, Inc. ("Halter Marine"). He
remained with Halter Marine for six years and eventually became Assistant Vice
President of Production. In addition, Mr. Dane formed Moss Point Marine, Inc. in
1980, which he sold to Trinity in 1987.

Vincent R. Almerico, Jr. joined the Company in 1987 and has served as the
Senior Vice President of Development of the Company since 1992. Mr. Almerico was
employed by Moss Point Marine, Inc. from 1984 to 1987, where he served as Vice
President, Operations until it was acquired by Trinity in 1987.

Harvey B. Walpert joined the Company in 1983 and has served as Senior Vice
President, Administration/Corporate Operations of the Company since 1992. Mr.
Walpert served as Project Manager at Halter Marine from 1978 until it was
acquired by Trinity in 1983. From 1957 to 1978, Mr. Walpert worked in the
Electric Boat Division of General Dynamics Corporation, where he served as
Assistant Materials Director. Mr. Walpert graduated from Columbia University
with an M.B.A. in Business and received a B.S. in Engineering from John Hopkins
University. He is Chairman of the American Waterways Shipyard Conference and
President of the New Orleans Chapter Navy League of the United States.

Wayne Bourgeois joined the Company in 1987 and has served as Vice
President, Operations of the Company since 1994. From 1977 to 1987, Mr.
Bourgeois was employed by Halter Marine where he served in various positions,
including Shipyard General Manager.

Sidney C. Mizell has served as Vice President, Sales and Marketing of the
Company since 1988. Mr. Mizell joined Halter Marine in 1972, where he served as
its Vice President of Sales from 1978 to 1980. He resigned from Halter Marine in
1980 to co-found Champion Shipyards in Pass Christian, Mississippi where he
served as Vice President and General Manager. Mr. Mizell served as a Management
Consultant Program Manager for Moss Point Marine, Inc. from 1982 to 1988.

Anil Raj joined the Company in 1987 and has served as Vice President,
Government Projects of the Company since 1994. Mr. Raj also serves as the
Company's Small and Disadvantaged Business Liaison officer. Prior to joining the
Company, Mr. Raj was an Engineering Manager for Brown & Root, a publicly held
construction and fabrication company, from 1982 to 1987. Mr. Raj served as
Senior Staff Naval Architect and as area manager from 1977 to 1980 and from 1980
to 1982, respectively, for Gulf Fleet Marine Corporation.

Keith L. Voigts has served as Vice President, Finance of the Company since
1995. Mr. Voigts was employed by the accounting firm of KPMG Peat Marwick from
1965 to 1975 and was a partner of KPMG Peat Marwick from 1975 to 1991. Mr.
Voigts was a director of Healthcare Communications, Inc. from 1991 to 1995 and
was its Chief Financial Officer from 1994 to 1995. From 1991 to 1994, Mr. Voigts
owned and managed the accounting, consulting and investments firm of The KLV
Group. Mr. Voigts was a partial owner and Chairman of the consulting firm
Adelson, Voigts & Associates, Inc. from 1992 to 1993. In addition, from 1992 to
1993, Mr. Voigts was a director and Vice President of Comp-U-Check, Inc., a
publicly held check guarantee company. Mr. Voigts is a member of AICPA, a past
director of National Association of Accountants, Chairman of the Board of Texas
Information Network System and a Board Member and Vice President of Texas
Computer Industry Council.

The Company is in the process of identifying director nominees who
will commence to serve on the Company Board prior to the Offerings, of whom at
least two will not be employed by or affiliated with the Company or Trinity.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has established two standing committees of the Company Board:
an Audit Committee and a Compensation Committee. The current members of the
Compensation Committee (the "Compensation Committee") are and
. The current members of the Audit Committee are and
. The Audit Committee will review the functions of the Company's
management and independent auditors pertaining to the Company's financial
statements and perform such other related duties and functions as are deemed
appropriate by the Audit Committee or the Company Board.

44
<PAGE> 48

The Compensation Committee will recommend to the Company Board the base salaries
and incentive bonuses for the officers of the Company and will grant stock
options and make other awards under the 1996 Stock Option and Incentive Plan.
The Company Board does not have a standing nominating committee or other
committee performing similar functions.

COMPENSATION OF DIRECTORS

Following the consummation of the Offerings, each director will receive
$750 for each director's meeting attended and reimbursement for reasonable
out-of-pocket expenses. In addition, each director who is not a compensated
officer or employee of the Company or its subsidiaries will receive a fee of
$20,000 per year for serving as a director (and the Chairman of the Audit
Committee and the Chairman of the Compensation Committee will receive an
additional $1,000 per year in those capacities) and $750 for each Audit
Committee or Compensation Committee meeting attended. Non-employee directors
will participate in, and will be granted options under, the Company's 1996 Stock
Option and Incentive Plan. See "Incentive and Other Employee Benefit
Plans -- Director Awards."

EXECUTIVE COMPENSATION

The following table sets forth the compensation for fiscal 1996 awarded to
or earned by the chief executive officer of the Company and the five other most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 for services rendered in all capacities.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION TRINITY
--------------------------------------- STOCK
OTHER OPTION
NAME AND ANNUAL AWARDS ALL OTHER
PRINCIPAL POSITION(1) SALARY BONUS(2) COMPENSATION(3) (SHARES) COMPENSATION(4)
- -------------------------------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John Dane III................... $450,000 $36,810 $48,681 -- $19,699
President and Chief Executive
Officer
Daniel J. Mortimer(5)........... $337,500 $88,020 -- -- $ 4,833
President, Gulf Coast
Fabrication, Inc.
Vincent R. Almerico............. $143,500 $39,833 -- 800 $ 6,071
Senior Vice President
Sidney C. Mizell................ $120,660 $61,172 -- 750 $ 8,740
Vice President
Anil Raj........................ $117,720 $40,789 -- 750 $ 8,671
Vice President
Harvey B. Walpert............... $106,250 $40,789 -- 800 $ 8,505
Senior Vice President
</TABLE>

- ---------------

(1) Represents such persons' current titles with the Company, except for Mr.
Mortimer who is no longer employed by the Company.

(2) Annual incentive bonuses are paid by Trinity only upon the achievement of a
predetermined financial goal set for each executive at the beginning of
Trinity's fiscal year. One half (50%) of the incentive bonus is paid within
90 days after the close of Trinity's fiscal year. The remaining 50% of the
incentive bonus is paid in one, two or three equal annual installments in
the succeeding years provided the executive's employment with Trinity has
not been terminated prior to the payment for any reason other than death,
disability, retirement or a change of control of Trinity. The amounts shown
for bonus in the foregoing table include the deferred installments payable
to the executive in the succeeding year if still employed by Trinity at that
time and were $18,405 for Mr. Dane, $0 for Mr. Almerico, $30,586 for Mr.
Mizell, $20,394 for Mr. Raj and $20,394 for Mr. Walpert.

45
<PAGE> 49

(3) An amount equal to ten percent of the salary and bonus of Mr. Dane is set
aside annually pursuant to a Trinity long-term deferred compensation plan.

(4) All Other Compensation includes matching amounts under Trinity's
Supplemental Profit Sharing Plan and Profit Sharing Plan (as defined
herein), automobile allowance and in the case of John Dane III,
reimbursement for medical insurance premiums.

(5) Mr. Mortimer resigned from the Company on May 31, 1996. The salary shown was
paid to him between April 1, 1995 and March 31, 1996. The bonus shown
represents amounts paid to him prior to leaving the Company.

The following table sets forth certain information regarding the options
("Trinity Options") to purchase common stock, par value $1.00 per share, of
Trinity ("Trinity Common Stock") granted to the named executive officers during
fiscal 1996.

TRINITY OPTION GRANTS IN FISCAL 1996

<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL
GRANTS REALIZABLE VALUE
------------ AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
TOTAL PRICE APPRECIATION
OPTIONS FOR OPTION TERM
GRANTED TO EXERCISE MARKET ------------------
OPTIONS TRINITY OR BASE PRICE ON AT 5% AT 10%
GRANTED EMPLOYEES IN PRICE DATE OF EXPIRATION ANNUAL ANNUAL
NAME (SHARES) FISCAL YEAR ($/SH) GRANT DATE GROWTH GROWTH
- ----------------------------- -------- ------------ -------- -------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
John Dane III................ -- -- -- -- -- -- --
Daniel J. Mortimer........... -- -- -- -- -- -- --
Vincent R. Almerico.......... 800 0.7% $32.50 $32.50 08/16/05 $16,000 $41,000
Sidney C. Mizell............. 750 0.6% $32.50 $32.50 08/16/05 $15,000 $39,000
Anil Raj..................... 750 0.6% $32.50 $32.50 08/16/05 $15,000 $39,000
Harvey B. Walpert............ 800 0.7% $32.50 $32.50 08/16/05 $16,000 $41,000
</TABLE>

Most of the option agreements relating to Trinity Options provide that such
options may be surrendered for cash for the difference between the then market
value of the shares and the option exercise price within 30 days after the
acquisition of 50% or more of the outstanding shares of Trinity Common Stock
pursuant to a tender or exchange offer other than one made by Trinity.

The table below sets forth information concerning each exercise of Trinity
Options by each of the named executive officers during fiscal 1996 and the
number of exercisable and unexercisable Trinity Options held by them and the
fiscal year-end value of the exercisable and unexercisable options.

AGGREGATED TRINITY OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John Dane III.............. 0 $0 88,030 103,250 $922,624 $910,841
Daniel J. Mortimer......... -- -- -- -- -- --
Vincent R. Almerico........ 0 $0 9,000 5,000 $119,100 $39,375
Sidney C. Mizell........... 0 $0 3,150 2,850 $41,963 $20,519
Anil Raj................... 0 $0 2,193 2,307 $28,738 $15,562
Harvey B. Walpert.......... 0 $0 2,565 1,010 $42,042 $5,024
</TABLE>

46
<PAGE> 50

INCENTIVE AND OTHER EMPLOYEE BENEFIT PLANS

Salary and Annual Incentive Bonus

It is contemplated that the Company will establish initial annual base
salaries for Messrs. Dane, Almerico, Mizell, Raj and Walpert in the amounts of
$550,000, $150,000, $138,000, $138,000 and $115,000, respectively, effective
upon completion of the Offerings.

The Company will also establish an annual incentive compensation plan for
key employees under which bonuses will be paid based on the Company's success in
achieving certain significant performance goals that are set each year. An
incentive bonus will be determined for each executive upon the basis of the
achievement of certain financial goals set each year by the Compensation
Committee at the beginning of the year. The Company's performance targets for
its executives are directly related to the Company's earnings before federal
income taxes. The performance goals will be predetermined by the Compensation
Committee on the basis of the Company's past performance and anticipated future
performance. The total amount of incentive compensation that may be earned by an
executive in any year will be limited to a predetermined maximum percentage
(200%) of base salary. If the amount of the incentive bonus for the year would
exceed a certain percentage of the base salary, 50% of the incentive
compensation amount will be paid currently and the balance will be deferred and
paid within 90 days after the close of the next succeeding fiscal year. Any
unpaid deferred portion will be forfeited if the executive leaves the employ of
the Company for any reason other than death, disability or retirement or a
change in control of the Company. In the first year of the Company's operations,
certain executives may be guaranteed a minimum percentage (75%) of base salary.

1996 Stock Option and Incentive Plan

The description set forth below represents a summary of the principal terms
and conditions of the Company's 1996 Stock Option and Incentive Plan and does
not purport to be complete.

The objectives of the 1996 Stock Option and Incentive Plan are to attract
and retain key employees of the Company, to encourage the sense of
proprietorship of such employees and to stimulate the active interest of such
persons in the development and financial success of the Company. These
objectives are to be accomplished by making awards ("Awards") under the 1996
Stock Option and Incentive Plan and thereby providing participants with a
proprietary interest in the growth and performance of the Company.

Key employees eligible for Awards under the 1996 Stock Option and Incentive
Plan (the "Employees") are those who hold positions of responsibility and whose
performance can have a significant effect on the success of the Company.

Awards to Employees under the 1996 Stock Option and Incentive Plan may be
made in the form of grants of stock options ("Options"), stock appreciation
rights ("SARs"), restricted or non-restricted stock or units denominated in
stock ("Stock Awards"), performance awards ("Performance Awards") or any
combination of the foregoing.

The 1996 Stock Option and Incentive Plan provides for Awards to be made in
respect of a maximum of 1,200,000 shares of Common Stock. Shares of Common Stock
which are the subject of Awards that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the shares covered thereby are not issued or are exchanged
for Awards that do not involve Common Stock will again immediately become
available for Awards under the 1996 Stock Option and Incentive Plan.

The 1996 Stock Option and Incentive Plan will be administered by a
Compensation Committee of the Company Board, or such other committee as may in
the future be appointed by the Company Board (the "Committee"). To the extent
required pursuant to Rule 16b-3 under the Securities Exchange Act of 1934 in
order for the grant of Awards to be exempt under Section 16, the Committee will
at all times consist of at least two members of the Company Board who qualify as
Non-Employee Directors, as defined in Rule 16b-3(b)(3)(i).

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<PAGE> 51

The Committee will have the exclusive power to administer the 1996 Stock
Option and Incentive Plan and to take all actions which are specifically
contemplated thereby or are necessary or appropriate in connection with the
administration thereof. The Committee also will have the exclusive power to
interpret the 1996 Stock Option and Incentive Plan and to adopt such rules,
regulations and guidelines for carrying out the purposes of the 1996 Stock
Option and Incentive Plan as it may deem necessary or proper in keeping with the
objectives thereof. The Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of the 1996
Stock Option and Incentive Plan or in any Award or otherwise amend or modify an
Award in any manner that is either (i) not adverse to the Employee holding the
Award or (ii) consented to by such Employee.

The Committee will determine the type or types of Awards made under the
1996 Stock Option and Incentive Plan and will designate the Employees who are to
be recipients of such Awards. Each Award may be embodied in an agreement, which
will contain such terms, conditions and limitations as are determined by the
Committee. Awards may be granted singly or in combination. All or part of an
Award may be subject to conditions established by the Committee, which may
include continuous service with the Company, achievement of specific business
objectives, increases in specified indices, attainment of specified growth rates
and other comparable measurements of performance.

The types of Awards that may be made under the 1996 Stock Option and
Incentive Plan are as follows:

Options. Options are rights to purchase a specified number of shares of
Common Stock at a specified price. An option granted pursuant to the 1996 Stock
Option and Incentive Plan may consist of either an incentive stock option that
complies with the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") or a non-qualified stock option that does not
comply with such requirements. Options must have an exercise price per share
that is not less than the fair market value of Common Stock on the date of
grant. In either case, the exercise price must be paid in full at the time an
Option is exercised in cash or, if the Employee so elects, by means of tendering
Common Stock that the Employee already owns. The Committee will determine
acceptable methods for tendering Common Stock by an Employee to exercise an
Option. Subject to the foregoing, the terms, conditions and limitations
applicable to any Options, including the term of any Options and the date or
dates upon which they become exercisable, will be determined by the Committee.

SARs. SARs are rights to receive a payment, in cash or Common Stock, equal
to the excess of the fair market value or other specified valuation of a
specified number of shares of Common Stock on the date the rights are exercised
over a specified strike price. An SAR may be granted under the 1996 Stock Option
and Incentive Plan to the holder of an Option with respect to all or a portion
of the shares of Common Stock subject to such Option or may be granted
separately. The terms, conditions and limitations applicable to any SARs,
including the term of any SARs and the date or dates upon which they become
exercisable, will be determined by the Committee.

Stock Awards. Stock Awards consist of restricted and non-restricted grants
of Common Stock or units denominated in Common Stock. The terms, conditions and
limitations applicable to any Stock Awards will be determined by the Committee.
Without limiting the foregoing, rights to dividends or dividend equivalents may
be extended to and made part of any Stock Award in the discretion of the
Committee.

Performance Awards. Performance Awards consist of grants made to an
Employee subject to the attainment of one or more performance goals. A
Performance Award will be paid, vested or otherwise deliverable solely upon the
attainment of one or more pre-established, objective performance goals
established by the Committee prior to the earlier of (i) 90 days after the
commencement of the period of service to which the performance goals relate and
(ii) the lapse of 25% of the period of service, and in any event while the
outcome is substantially uncertain. A performance goal may be based upon one or
more business criteria that apply to the Employee, one or more business units of
the Company or the Company as a whole, and may include any of the following:
increased revenue, net income, stock price, market share, earnings per share,
return on equity, return on assets or decrease in costs. Subject to the
foregoing, the terms, conditions and limitations applicable to any Performance
Awards will be determined by the Committee.

48
<PAGE> 52

Upon consummation of the Offerings, it is expected that the Compensation
Committee will grant Options to purchase an aggregate of 430,000 shares of
Common Stock under the 1996 Stock Option and Incentive Plan. In particular, it
is expected that Messrs. Dane, Almerico, Mizell, Raj, and Walpert will be
granted Options to purchase 200,000, 20,000, 20,000, 20,000 and 20,000 shares of
Common Stock, respectively. The exercise price of these Options will be equal to
the initial public offering price per share of Common Stock set forth on the
cover page of this Prospectus. These Options will become vested and exercisable
as to one-fifth of such Options on each of the first five anniversaries of the
date of grant. The Options will expire ten years after the date of grant. All
unvested portions of such Options will terminate upon termination of the
optionee's employment with the Company or its subsidiaries, unless such
termination results from retirement at age 65 or older, disability or death, in
which case the unvested portions of such Options will vest automatically.

Director Awards

Under the 1996 Stock Option and Incentive Plan, each nonemployee director
of the Company will receive the Awards described below, which will be granted
automatically. On the date of the consummation of the Offerings, each
nonemployee director will automatically receive a grant of non-qualified stock
options that provide for the purchase of 5,000 shares of Common Stock. In
addition, on the first business day of the month following the date on which
each annual meeting of the stockholders of the Company is held (each, an "Annual
Director Award Date"), each nonemployee director will automatically receive a
grant of non-qualified stock options that provide for the purchase of 5,000
shares of Common Stock. A nonemployee director who is elected after the date of
the consummation of the Offerings otherwise than by election at an annual
meeting of stockholders of the Company will automatically receive, on the date
of his or her election, a grant of non-qualified stock options that provides for
the purchase of a number of shares of Common Stock equal to the product of (i)
5,000 and (ii) a fraction the numerator of which is the number of days between
the election of such nonemployee director and the next scheduled Annual Director
Award Date and the denominator of which is 365. The term of the non-qualified
stock options granted to nonemployee directors will be for a period of ten years
from the date of grant. The exercise price of such non-qualified stock options
will be equal to the fair market value of the Common Stock on the date of grant.
Such exercise price must be paid in full in cash at the time a non-qualified
stock option is exercised. All non-qualified stock options granted to
nonemployee directors under the 1996 Stock Option and Incentive Plan will become
exercisable in increments of one-third of the total number of shares of Common
Stock that are subject thereto on the first, second and third anniversaries of
the date of grant. All unvested non-qualified stock options granted to a
nonemployee director will be forfeited if the nonemployee director resigns from
the Company Board without the consent of a majority of the other directors.

Conversion of Trinity Stock Options

As of March 31, 1996, there were approximately 248,770 shares of Trinity
Common Stock subject to outstanding Trinity Options granted by Trinity to
employees of the Company and its subsidiaries pursuant to certain Trinity stock
compensation plans. Upon consummation of the Offerings, the Company will assume
such stock options (the "Converted Options") held by individuals employed by the
Company or other members of the Company Group (as defined herein) (the "Company
Employees"). Each Converted Option will provide for the purchase of a number of
shares of Common Stock equal to the number of shares of Trinity Common Stock
subject to the applicable Trinity Option as of the date of the consummation of
the Offerings, multiplied by the Conversion Ratio (as defined herein), rounded
down to the nearest whole share. Furthermore, the per share exercise price of
each Converted Option will equal the per share exercise price of the applicable
Trinity Option as of the date of consummation of the Offerings divided by the
Conversion Ratio. The Company will not issue Converted Options for the purchase
of any fractional shares of Common Stock, but will instead pay the holders of
Converted Options cash in lieu of any such fractional shares. As used herein,
the term "Conversion Ratio" means the amount obtained by dividing (i) the
average of the daily high and low per share prices of Trinity Common Stock as
reported on the NYSE during a specified five day period preceding the
consummation of the Offerings by (ii) the initial public offering price per
share of Common Stock set forth on the cover page of this Prospectus.

49
<PAGE> 53

At the present time, it is not possible to determine how many shares of
Common Stock will be subject to Converted Options issued by the Company upon
consummation of the Offerings. This results from the fact that some Trinity
Options may be exercised and other Trinity Options may be granted prior to such
time. In addition, the number of Converted Options will depend upon the
Conversion Ratio, which will not be known until the Offerings are consummated.
Stockholders of the Company are, however, likely to experience some dilution
from the issuance of Converted Options. For example, assuming that the
Conversion Ratio was (calculated based on the closing price of Trinity
Common Stock on the NYSE on June , 1996 and the mid-point of the price range
for the Common Stock set forth on the cover page of this Prospectus) and the
number of shares of Trinity Common Stock subject to Trinity Options held by
Company Employees was (based on the numbers of shares subject thereto as of
, 1996), the number of shares of Common Stock subject to Converted
Options upon consummation of the Offerings would be approximately .

Deferred Compensation

The Company has established a deferred compensation plan for certain key
officers of the Company. Under the deferred compensation plan, 10% of the
participant's annual base salary and incentive compensation is accrued on the
books of the Company, together with interest at the prime rate of a specified
national bank, to be paid, as determined by the Company Board after consultation
with the participant in annual installments over five years or other periods as
determined by the Company Board. Payment of the deferred compensation commences
one year and one day after termination of the participant's employment with the
Company. If the participant dies, the installments are paid to his or her
designated beneficiary. The installment payments terminate if the participant,
without the prior written consent of the Company, directly or indirectly,
becomes or serves as an officer, employee, owner or partner of any business
which competes in a material manner with the Company.

Pension Plan

The Company is a participating employer in the Trinity Industries, Inc.
Marine Group Pension Plan (the "Pension Plan") maintained by Trinity. The
Pension Plan is a noncontributory, defined benefit plan that provides retirement
and death benefits to persons employed by the Company who are not covered by
another pension plan maintained by Trinity. The Pension Plan is not available to
employees covered by a collective bargaining agreement, unless that agreement
provides that the employees will be eligible, or to leased employees. Benefits
under the Pension Plan are determined based on the participant's years of
service and final compensation from the Company. The Pension Plan provides for
five-year cliff vesting, or vesting upon attainment of age 65. The Company's
contributions for fiscal years 1994, 1995 and 1996 have been approximately
$850,000, $1,050,000 and $996,000, respectively.

Benefits that may be provided under the Pension Plan are limited under the
Code. The amount of compensation that may be considered in calculating benefits
is limited under the Code, as is the amount that may be distributed to a
participant.

The Pension Plan covers, in addition to employees of the Company Group,
employees of the Trinity Group (as defined herein). The assets of the Pension
Plan are currently held in the Trinity Industries, Inc. Master Retirement Trust.
Upon consummation of the Offerings, a separate pension plan will be established
for the Company's employees and the assets attributable to benefits accrued by
employees of the Company under the Pension Plan will be transferred to a
separate trust.

Profit Sharing Plan

The Company is a participating employer in the Profit Sharing Plan for
Employees of Trinity Industries, Inc. and Certain Affiliates (the "Profit
Sharing Plan"). The Profit Sharing Plan permits contributions under Section
401(k) of the Code of at least 2% but no more than 10% of compensation,
determined in whole percentages. For participants with at least five years of
service, 50% of these contributions are matched, up to 6% of the participant's
compensation. For participants with less than five years of service, 25% of
these

50
<PAGE> 54

contributions are matched, up to 6% of compensation. Participants are 100%
vested in salary reduction contributions, and vest in employer contributions
pursuant to a five-year graded schedule or upon normal retirement, death or
disability. The Company's contributions, exclusive of salary reduction
contributions, for fiscal years 1994, 1995 and 1996 have been approximately
$372,000, $500,000 and $589,000, respectively.

Upon consummation of the Offerings, the Company will terminate its
participation in the Profit Sharing Plan and establish a comparable plan.
Company employees who are participants in the Profit Sharing Plan, and assets
attributable to their accounts, will be transferred to the new plan. All Company
employees currently participating in the Profit Sharing Plan who are transferred
to the new plan will be automatically credited under the new plan with years of
service credited under the Profit Sharing Plan.

Supplemental Retirement Plan

The Company is a participating employer in the Trinity Industries, Inc.
Supplemental Retirement Plan (the "Supplemental Retirement Plan"). This is a
nonqualified, deferred compensation plan that provides benefits to a select
group of management or highly compensated employees equal to the amount that the
participants would have received under the qualified retirement plan in which
they participate but for the limitations of Sections 401(a)(17) and 415 of the
Code. A participant is entitled to benefits under the Supplemental Retirement
Plan upon his retirement from the Company. All benefits under the Supplemental
Retirement Plan are paid out of general Trinity assets. Upon consummation of the
Offerings, the Company will terminate its participation in the Supplemental
Retirement Plan and establish a comparable plan, and the obligation to provide
benefits under the Supplemental Retirement Plan attributable to employees of the
Company will be transferred to the Company.

Supplemental Profit Sharing Plan

The Company is also a participating employer in the Supplemental Profit
Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates
(the "Supplemental Profit Sharing Plan"). Under this nonqualified deferred
compensation plan, certain highly compensated employees are permitted to defer
compensation. Assets intended by Trinity to be used to pay benefits under the
Supplemental Plan are maintained in the Supplemental Profit Sharing Trust for
Employee of Trinity Industries, Inc. and Certain Affiliates. Upon consummation
of the Offerings, the Company will terminate its participation in this plan and
establish a comparable plan, and the assets attributable to benefits accumulated
for Company employees under the Supplemental Profit Sharing Plan will be
transferred from an existing Trinity grantor trust to a separate grantor trust
to be established by the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 1996, the Company had no Compensation Committee or other
committee of the Company Board performing similar functions. Decisions
concerning compensation of executive officers were made by certain executive
officers of Trinity and members of Trinity's Compensation Committee, none of
whom is an executive officer of the Company. The Company Board has established a
Compensation Committee, all of the members of which are nonemployee directors.
See "-- Committees of the Board of Directors."

NONCOMPETITION AGREEMENTS

Prior to the Offering, John Dane III, the Chief Executive Officer of the
Company, will enter into an agreement with the Company under which he will agree
not to compete with the Company in its present line of business in the Gulf
Coast region of the United States (including the States of Mississippi,
Louisiana, Florida, Texas and Alabama) for a period of three years from the date
of this Prospectus. In order to enable Mr. Dane to serve as President and Chief
Executive Officer of the Company, to the extent such covenant relates to the
Company Businesses, Trinity has released Mr. Dane from a noncompetition covenant
that Mr. Dane entered into in connection with his sale of Moss Point Marine,
Inc. to Trinity in 1987. Under such agreement as modified, Mr. Dane will
continue to be precluded from competing with Trinity in the Excluded Businesses
(as defined herein) for four years from the date of consummation of the
Offerings.

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<PAGE> 55

CHANGE OF CONTROL AGREEMENTS

The Company intends to enter into agreements (the "Change of Control
Agreements") with each of the current executive officers named in the Summary
Compensation Table and others to provide certain severance benefits to them in
the event of a termination of employment following a change of control (as
defined in the Change of Control Agreements) of the Company. Each Change of
Control Agreement will provide that, following a change of control of the
Company, if the Company terminates the executive's employment other than as a
result of the executive's death, disability or retirement, or for cause (as
defined in the Change of Control Agreements), or if the executive terminates his
employment for good reasons (as defined in the Change of Control Agreements),
then the Company will pay to such executive a lump sum equal to three times the
amount of the executive's base salary and bonus paid by the Company and its
subsidiaries to the executive during the 12 months prior to termination or, if
higher, the 12 months prior to the change of control.

The severance benefits to be provided by the Change of Control Agreements
also will include (i) for 36 months following the executive's termination,
certain fringe benefits to which the executive would have been entitled if he
had remained in the employment of the Company and (ii) a supplemental benefit
based on the Company's retirement plan, which benefit will be payable in a
series of cash payments.

The Change of Control Agreements will further provide that if any payment
to which the executive is entitled is subject to the excise tax imposed by
Section 4999 of the Code, then the Company will pay to the executive an
additional amount so that the net amount retained by the executive is equal to
the amount that otherwise would be payable to the executive if no such excise
tax had been imposed.

CERTAIN TRANSACTIONS AND RELATED ARRANGEMENTS

CONSOLIDATION TRANSACTIONS

Prior to or concurrently with the Offerings, the Company will consummate
the Consolidation Transactions. These transactions include: (i) the transfer to
the Company of the stock of each subsidiary of Trinity that has assets and
liabilities related to the Company Businesses and (ii) the transfer to
subsidiaries of the Company of certain assets and liabilities of Trinity related
to the Company Businesses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

OFFERING RELATED TRANSACTIONS

Prior to or concurrently with the consummation of the Offerings, the
Company will engage in the Offering Related Transactions. The Offering Related
Transactions include (i) the entering into by the Company of the new $
million Credit Facility and (ii) the borrowing by the Company under the Credit
Facility to repay a $25 million intercompany note to Trinity. See "Risk
Factors -- Benefits to Trinity of the Offerings" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

ARRANGEMENTS BETWEEN THE COMPANY AND TRINITY

Prior to the consummation of the Offerings, the Company and Trinity will
enter into various agreements for the purpose of establishing the terms
governing their on-going arrangements and relationships. These agreements
include a Separation Agreement, an Administrative Services Agreement, a Tax
Allocation Agreement and a Trademark License Agreement (collectively, the
"Separation and Related Agreements"). The form of each such agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part and the summary of the terms and provisions of such agreements set forth
below is qualified in its entirety by reference to the full text of such
agreements. See "Available Information."

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<PAGE> 56

Separation Agreement

Releases. The Separation Agreement provides for a full and complete release
and discharge as of the date of consummation of the Offerings of all liabilities
and obligations existing or arising from all acts and events occurring or
failing to occur or alleged to have occurred or to have failed to occur and all
conditions existing or alleged to have existed on or before the consummation of
the Offerings, between or among the Company or any other member of the Company
Group (as defined herein), on the one hand, and Trinity or any other member of
the Trinity Group (as defined herein), on the other hand (including any
contractual agreements or arrangements existing or alleged to exist between or
among any such members on or before the consummation of the Offerings), except
as expressly set forth in the Separation and Related Agreements.

Indemnification. Trinity will agree to indemnify and hold harmless the
Company and each other member of the Company Group, and each of their respective
directors, officers and employees, from and against all liabilities and
obligations relating to, arising out of or resulting from (i) the failure of
Trinity or any member of the Trinity Group to pay, perform or otherwise promptly
discharge any of its liabilities and obligations, other than liabilities and
obligations assumed by the Company in connection with the Consolidation
Transactions, (ii) the Trinity Businesses or (iii) any breach by Trinity of the
terms of the Separation and Related Agreements.

Except as provided in the Separation Agreement, the Company will agree to
indemnify and hold harmless Trinity and each other member of the Trinity Group,
and each of their respective directors, officers and employees, from and against
all liabilities and obligations relating to, arising out of or resulting from
(i) the failure of the Company or any member of the Company Group to pay,
perform or otherwise promptly discharge any of its liabilities and obligations,
including, but not limited to, the liabilities and obligations assumed by it in
connection with the Consolidation Transactions, (ii) the Company Businesses,
(iii) any breach by the Company or any other member of the Company Group of the
terms of the Separation and Related Agreements and (iv) any untrue statement or
alleged untrue statement of a material fact in this Prospectus or the
Registration Statement of which it forms a part or any omission or alleged
omission to state a material fact required to be stated herein or therein or
necessary to make the statements herein or therein not misleading (except for
any such untrue statement or alleged untrue statement arising from information
regarding Trinity and supplied in writing by Trinity expressly for inclusion in
this Prospectus or the Registration Statement). Without limiting the foregoing,
the Company will agree to indemnify and hold harmless each of Trinity and any
other member of the Trinity Group from and against any liability that any of
them may have in respect of guarantees by Trinity or any other member of the
Trinity Group of any contract bid and performance obligations of the Company or
any other member of the Company Group. As of March 31, 1996, Trinity had
guaranteed contract performance obligations of the Company in the aggregate
amount of approximately $99.6 million. The Company also had outstanding contract
bid and performance bonds, letters of credit and similar obligations issued by
third parties (for which Trinity is the obligor) with an aggregate face amount
of $52.9 million.

The forgoing indemnification provisions will not apply to liabilities and
obligations in respect of federal, state and local taxes, which will be
addressed elsewhere in the Separation Agreement and in the Tax Allocation
Agreement described below.

The Separation Agreement will also set forth certain procedures with
respect to third-party claims for which indemnification is available and related
matters.

Non-Competition Covenants. The Separation Agreement will provide that, for
a period of four years after the consummation of the Offerings, neither Trinity
nor any other member of the Trinity Group will engage in any of the Company
Businesses; provided, that neither Trinity nor any member of the Trinity Group
will be prohibited from engaging in the construction, conversion or repair of
deck barges (whether offshore or inland).

The Separation Agreement also will provide that, for a period of four years
after the consummation of the Offerings, neither the Company nor any other
member of the Company Group will engage in any of the Excluded Businesses (as
defined herein); provided, that neither the Company nor any other member of the
Company Group will be prohibited from engaging in the construction, conversion
or repair of deck barges

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<PAGE> 57

(whether offshore or inland). In the event that the Company fails to comply with
the foregoing covenant related to competition with the Excluded Businesses, then
Trinity may, in addition to any other remedies that may be available to it, (i)
terminate all or any portion of its obligations under the Administrative
Services Agreement and (ii) terminate all or any portion of the rights granted
to the Company under the Trademark License Agreement.

Fees and Expenses. The Separation Agreement will provide that Trinity will
pay all third party costs, fees and expenses relating to the Offerings, all of
the reimbursable expenses of the Underwriters pursuant to the Underwriting
Agreement, all of the costs of producing, printing, mailing and otherwise
distributing this Prospectus, as well as the Underwriters' discounts and
commissions as provided in the Underwriting Agreement. Notwithstanding the
foregoing, to the extent that the Over-Allotment Option is exercised, (i) the
Company will pay a portion of such costs, fees and expenses equal to the
proportion that the shares of Common Stock sold pursuant to the Over-Allotment
Option bear to all shares of Common Stock sold in the Offerings and pursuant to
the Over-Allotment Option, and (ii) the Company will pay all Underwriters'
discounts and commissions relating to the shares of Common Stock sold pursuant
to the exercise of the Over-Allotment Option. See "Underwriting."

Certain Definitions. As used in this Prospectus and in the Separation
Agreement, the terms set forth below have the following respective meanings:

"Company Businesses" means the business and operations conducted prior
to the date hereof by Trinity and certain of its subsidiaries, which relate
to the construction, repair and conversion of ocean-going and inland
vessels (other than inland tank barges and inland hopper barges and the
construction of accessories for such barges).

"Company Group" means the group consisting of the Company and all of
its subsidiaries.

"Excluded Businesses" means all Trinity Businesses other than the
Company Businesses.

"Trinity Businesses" means all businesses and operations conducted
prior to the date hereof by Trinity and any other members of the Trinity
Group other than the Company Businesses.

"Trinity Group" means the group consisting of Trinity and all of its
subsidiaries (other than any member of the Company Group).

Administrative Services Agreement

The Company and Trinity will enter into the Administrative Services
Agreement, pursuant to which Trinity will furnish certain services to the
Company. Such services will consist primarily of accounting, tax, legal,
treasury, insurance, personnel and other corporate support services, which the
Company believes can be performed on an interim basis more economically through
the use of shared personnel than by the establishment of separate personnel and
facilities. The type and scope of these services and the term during which they
are to be provided are described in the Administrative Services Agreement. With
limited exceptions, these services are not expected to be provided by Trinity
beyond December 31, 1996. Under the terms of the Administrative Services
Agreement, the Company will be obligated to pay Trinity a flat monthly fee for
ordinary services of the types described above. Additional services (which are
not of the types described above) may be performed by Trinity for the Company at
an hourly rate to be negotiated by the Company and Trinity.

Tax Sharing and Tax Benefit Reimbursement Agreement

In connection with the Offerings, Trinity and the Company will enter into
the Tax Allocation Agreement. Pursuant to the Tax Allocation Agreement, the
Company will be responsible for, and shall indemnify and hold Trinity harmless
against, all U.S. federal, state and local, and foreign taxes relating to the
business, operations and assets of the Company which are attributable to periods
ending on, prior to, or after, the date of the consummation of the Offerings and
for any audit adjustments to such taxes. Trinity will be responsible for, and
shall indemnify and hold the Company harmless against, all U.S. federal, state
and local, and foreign taxes

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<PAGE> 58

relating to the business, operations and assets of Trinity and its subsidiaries
(other than the Company and its respective businesses and operations) and for
any audit adjustments to such taxes.

The Company and Trinity will make elections under Section 338(h)(10) of the
Code with respect to certain of the subsidiaries whose stock is transferred by
Trinity to the Company in the Consolidation Transactions with the result that
the assets of such subsidiaries will be deemed to have been sold to the Company.
The tax basis of the assets which are deemed to have been sold by reason of the
Section 338(h)(10) elections, as well as the tax basis of the assets transferred
directly by Trinity to the Company in the Consolidation Transactions, will be
increased to an amount equal to the deemed purchase price of the assets, and an
amount equal to such increase will be taxed as income in the consolidated
federal income tax return filed by Trinity. It is expected that this additional
tax basis will result in increased income tax deductions for the Company and,
accordingly, will reduce the amount of future income taxes payable by the
Company. Pursuant to the Tax Allocation Agreement, the Company will pay Trinity
an amount equal to the tax benefit (i.e., reduction in income taxes) resulting
from such additional tax basis, as such tax benefit is realized on a quarterly
basis, calculated by comparing the actual tax liabilities of the Company with
the amount of taxes that the Company would have owed in the absence of such
additional tax basis. Consequently, the Company's earnings and cash flow, after
taking into account such payments, should not be materially less than they would
have been in the absence of the Tax Allocation Agreement and additional tax
basis. In the event of certain business combinations or other acquisitions
involving the Company, the tax benefit calculation thereafter will be made
without giving effect to any items of income, expense, loss, deduction, credit
or related carryovers or carrybacks of businesses other than those conducted by
the Company immediately prior to such combination or acquisition. The Tax
Allocation Agreement provides that the Company will not enter into any
transaction a significant purpose of which is to reduce the amount payable to
Trinity under the agreement.

As of March 31, 1996, the Company was obligated to reimburse Trinity for
income taxes incurred in connection with the Company Businesses in an aggregate
amount of $15.8 million. The Company expects to use cash flow from operations or
borrowings under the Credit Facility to fund this payment to the extent not
previously repaid with the proceeds of the exercise of the Over-Allotment
Option. See "Use of Proceeds." Under the Tax Allocation Agreement, the Company
has agreed to pay any unpaid balance of such income tax liabilities on or before
November 15, 1996.

Trademark License Agreement

The Company and Trinity will also enter into the Trademark License
Agreement, pursuant to which Trinity will grant to the Company and the other
members of the Company Group a long-term, limited, royalty-free license to allow
the Company to use the "Trinity Yachts" trademark in connection with its yacht
business.

Inland Barge Arrangements

The Company has a firm contract to construct 50 inland hopper barges for
Trinity. Such barges will be constructed at the Company's Gulfport shipyard over
approximately the next six months. In general, under the Separation Agreement
the Company will be precluded from constructing inland hopper barges and inland
double hull tank barges (both of which will constitute a portion of the Excluded
Businesses) for four years after the consummation of the Offerings. However, the
Company anticipates that from time to time in the future it may enter into
discussions with Trinity regarding manufacturing additional inland hopper barges
or inland double hull tank barges, or both, for Trinity or its customers. The
terms of any such future arrangements will be negotiated by the Company and
Trinity at that time.

Performance Bond and Guarantee Arrangements

A significant portion of the Company's contracts for the construction,
repair or conversion of vessels require that the Company's performance be
guaranteed by Trinity or by a surety company or other third party pursuant to a
contract bid or performance bond, letter of credit or similar obligation.
Generally, contracts with state or local governments require contract bid and
performance bonds, and foreign governmental contracts

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<PAGE> 59

generally require bank letters of credit or similar obligations. Commercial
contracts may require contract bid and performance bonds if requested by the
customer. As of March 31, 1996, Trinity had guaranteed contract bid and
performance obligations of the Company in the aggregate amount of $99.6 million
and the Company had outstanding contract bid and performance bonds, letters of
credit and similar obligations issued by third parties (and for which Trinity is
the obligor) with an aggregate face amount of approximately $52.9 million. These
guarantees, bonds, letters of credit and similar obligations will remain in
effect after the Offerings until the obligations expire, and the Company will be
obligated to indemnify Trinity and to provide other financial assurances to
Trinity against any liability under such obligations. See "Business -- Bonding
and Guarantee Requirements."

CERTAIN OTHER TRANSACTIONS

John Dane III, the President, Chief Executive Officer and a director of the
Company, acquired 25% of the stock of United States Marine, Inc. ("USMI") in
June 1996. Mr. Dane has the option to acquire up to an additional 50% of the
stock of USMI over the next five years. USMI performs services for the Company
as a subcontractor with respect to the production of high speed composite
vessels for the U.S. Navy. The Company paid USMI approximately $10.6 million,
$3.9 million and $5.5 million during fiscal 1994, 1995 and 1996, respectively,
for subcontractor services. The Company believes that the terms on which the
Company is supplied such subcontractor services by USMI are at least as
favorable as those that could be obtained by the Company in arm's-length
transactions with unrelated parties.

PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDER

Prior to the Offerings, all of the outstanding shares of Common Stock will
be owned by Trinity. Upon consummation of the Offerings, Trinity will own no
shares of Common Stock. The Company is not aware of any person or group that
will beneficially own more than 5% of the outstanding shares of Common Stock
immediately following the Offerings.

The following table sets forth, as of the time immediately following the
consummation of the Offerings, certain information regarding the ownership of
Common Stock by (i) each director of the Company, (ii) each executive officer of
the Company and (iii) all directors and executive officers of the Company as a
group. The shares of Common Stock described below as beneficially owned by such
persons consist solely of Common Stock issuable upon the exercise of the
Converted Options. Each of the stockholders shown in the table below has sole
voting and investment power with respect to the shares beneficially owned.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES PERCENT
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
John Dane III.......................................................... *%
Vincent R. Almerico.................................................... *
Harvey P. Walpert...................................................... *
Wayne Bourgeois........................................................ *
Sidney C. Mizell....................................................... *
Anil Raj............................................................... *
Keith L. Voigts........................................................ *
All directors and executive officers as a group (7 persons)............ *
</TABLE>

- ---------------

* Less than 1%.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 50,000,000
shares of Common Stock, par value $0.01 per share, and (ii) shares of
preferred stock, par value $0.01 per share ("Preferred Stock"). Upon the
consummation of the Offerings, 15,000,000 shares of Common Stock (17,250,000
shares if the Over-Allotment Option is exercised in full) and no shares of
Preferred Stock will be outstanding.

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<PAGE> 60

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share on all
matters submitted to a vote of the stockholders and, except as otherwise
required by law or provided in any resolution adopted by the Company Board with
respect to any series of Preferred Stock, the holders of Common Stock will
possess all voting power. Cumulative voting of shares of Common Stock in the
election of directors is not permitted. The holders of Common Stock are entitled
to receive ratably such dividends, if any, as may be declared from time to time
by the Company Board out of funds legally available therefor, subject to the
payment of any preferential dividends with respect to any series of Preferred
Stock created by the Company Board from time to time. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities, after distribution to the holders of any outstanding Preferred
Stock created by the Company Board from time to time of the amounts to which
they are entitled. The holders of Common Stock have no preemptive or other
subscription rights. All of the shares of Common Stock offered hereby are or
will be, when issued, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Certificate authorizes the Company Board to establish one or more
series of Preferred Stock and to determine, with respect to any series of
Preferred Stock, the terms and rights of such series, including (i) the
designation of the series, (ii) the number of shares of the series, which number
the Company Board may thereafter (except where otherwise provided in the
applicable Certificate of Designations) increase or decrease (but not below the
number of shares thereof then outstanding), (iii) whether dividends, if any,
will be cumulative or noncumulative, and, in the case of shares of any series
having cumulative dividend rights, the date or dates or method of determining
the date or dates from which dividends on the shares of such series shall be
cumulative, (iv) the rate of any dividends (or method of determining such
dividends) payable to the holders of the shares of such series, any conditions
upon which such dividends will be paid and the date or dates or the method for
determining the date or dates upon which such dividends will be payable; (v) the
redemption rights and price or prices, if any, for shares of the series, (vi)
the terms and amount of any sinking fund provided for the purchase or redemption
of shares of the series, (vii) the amounts payable on and the preferences, if
any, of shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, (viii)
whether the shares of the series will be convertible or exchangeable into shares
of any other class or series, or any other security, of the Company or any other
corporation, and, if so, the specification of such other class or series or such
other security, the conversion or exchange price or prices or rate or rates, any
adjustments thereof, the date or dates as of which such shares will be
convertible or exchangeable and all other terms and conditions upon which such
conversion or exchange may be made, (ix) restrictions on the issuance of shares
of the same series or of any other class or series, (x) the voting rights, if
any, of the holders of the shares of the series and (xi) any other relative
rights, preferences and limitations of such series.

The Company believes that the ability of the Company Board to issue one or
more series of Preferred Stock will provide the Company with flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise from time to time. The authorized shares of
Preferred Stock, as well as shares of Common Stock, will be available for
issuance without further action by the Company's stockholders, unless such
action is required by applicable law or the rules of any stock exchange or
automated quotation system on which the Company's securities may be listed or
traded. If the approval of the Company's stockholders is not required for the
issuance of shares of Preferred Stock or Common Stock, the Company Board may
determine not to seek stockholder approval.

Although the Company Board has no intention at the present time of doing
so, it could issue a series of Preferred Stock that may, depending on the terms
of such series, hinder, delay or prevent the completion of a merger, tender
offer or other takeover attempt. Among other things, the Company Board could
issue a series of Preferred Stock having terms that could discourage an
acquisition attempt through which an acquirer may be able to change the
composition of the Company Board, including a tender offer or other transaction
that

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some, or a majority, of the Company's stockholders might believe to be in their
best interests or in which stockholders might receive a premium for their stock
over the then current market price of such stock.

For purposes of the Rights Agreement described below, the Company Board has
authorized the creation of a series of Preferred Stock designated as "Series A
Junior Participating Preferred Stock" (the "Series A Preferred Stock"). An
aggregate of shares of Preferred Stock have been reserved for issuance
as Series A Preferred Stock. Series A Preferred Stock will rank junior to all
other series of Preferred Stock that have been or may be established by the
Company Board with respect to the payment of dividends and the distribution of
assets upon liquidation. In general, the voting, dividend and liquidation rights
of Series A Preferred Stock are designed in such a way that one one-hundredth of
a share of Series A Preferred Stock will be substantially equivalent from an
economic point of view to one share of Common Stock. For a statement of the
rights and privileges of Series A Preferred Stock, reference is made to the form
of Certificate of Designations which is included as an exhibit to this
Registration Statement.

ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE AND BY-LAWS

Classified Board of Directors

Effective upon the consummation of the Offerings, the members of the
Company Board, other than those who may be elected by the holders of Preferred
Stock, will be classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as possible, one
class to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 1997, another class to be originally elected for a
term expiring at the annual meeting of stockholders to be held in 1998 and
another class to be originally elected for a term expiring at the annual meeting
of stockholders to be held in 1999, with each director to hold office until its
successor is duly elected and qualified. Commencing with the 1997 annual meeting
of stockholders, directors elected to succeed directors whose terms then expire
will be elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, with each director to hold office
until such person's successor is duly elected and qualified.

Removal of Directors

Subject to the rights of holders of Preferred Stock, after the consummation
of the Offerings, any director may be removed from office only for cause by the
affirmative vote of the holders of at least a majority of the voting power of
all shares of stock of the Company ("Voting Stock") entitled to vote generally
in the election of directors then outstanding, voting together as a single
class.

No Stockholder Action by Written Consent

The Certificate and By-Laws provide that, after the consummation of the
Offerings, any action required or permitted to be taken by the stockholders of
the Company must be taken at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such holders.

Special Meetings

Effective upon the consummation of the Offerings, except as otherwise
required by law and subject to the rights of the holders of any Preferred Stock,
special meetings of stockholders of the Company for any purpose or purposes may
be called only by the Company Board pursuant to a resolution stating the purpose
or purposes thereof approved by a majority of the whole Company Board or by the
Chairman of the Board and, effective upon the consummation of the Offerings, any
power of stockholders to call a special meeting is specifically denied.

Advance Notice Procedures

The By-Laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or to bring other business
before an annual meeting of stockholders of the Company (the "Stockholder Notice
Procedure"). The Stockholder Notice Procedure provides that only persons who are

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nominated by, or at the direction of, the Chairman of the Board, or by a
stockholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure also
provides that at an annual meeting only such business may be conducted as has
been brought before the meeting by, or at the direction of, the Chairman of the
Board or the Company Board, or by a stockholder who has given timely written
notice to the Secretary of the Company of such stockholder's intention to bring
such business before such meeting. Under the Stockholder Notice Procedure, for
notice of stockholder nominations to be made at an annual meeting to be timely,
such notice must be received by the Company not later than the close of business
on the 90th calendar day nor earlier than the close of business on the 120th
calendar day prior to the first anniversary of the preceding year's annual
meeting (except that, in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 120th calendar day prior to such
annual meeting and not later than the close of business on the later of the 90th
calendar day prior to such annual meeting or the 10th calendar day following the
day on which public announcement of a meeting date is first made by the
Company).

In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate a person for election as a director or
relating to the conduct of business other than the nomination of directors must
contain certain specified information. If the chairman of a meeting determines
that an individual was not nominated, or other business was not brought before
the meeting, in accordance with the Stockholder Notice Procedure, such
individual will not be eligible for election as a director or such business will
not be conducted at such meeting, as the case may be.

Amendment

The Certificate provides that the affirmative vote of the holders of at
least 80% of the Voting Stock, voting together as a single class, is required to
amend certain provisions of the Certificate, including those relating to (i)
stockholder action without a meeting, (ii) the calling of special meetings and
(iii) the number, election and term of the Company's directors. The Certificate
further provides that the related By-Laws described above (including the
Stockholder Notice Procedure) may be amended only by the Company Board or by the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding shares of Voting Stock, voting together as a single class.

STOCKHOLDER RIGHTS PLAN

Prior to the consummation of the Offerings, the Company will adopt a
Stockholder Rights Plan pursuant to which one right ("Right") will be issued
with respect to each share of Common Stock. Each Right will entitle the
registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Series A Preferred Stock, at a purchase
price per Unit to be determined by the Company Board when the issuance of the
Rights is approved, subject to adjustment in certain events (the "Purchase
Price"). The Purchase Price may be paid, at the option of the holder, in cash or
shares of Common Stock having a value at the time of exercise equal to the
Purchase Price. The terms of the Rights are set forth in a Stockholder Rights
Agreement (the "Rights Agreement") to be entered into between the Company and
as rights agent (the "Rights Agent"). Although the summary
description of the Rights set forth below briefly describes the material
provisions of the Rights, it does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.

Initially, the Rights will be attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Rights Distribution Date" will occur upon the earlier of (i)
ten days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the date of the announcement being the "Stock Acquisition Date")
or (ii) ten business days following the commencement of a tender offer or
exchange offer that would result in a

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person's becoming an Acquiring Person. In certain circumstances, the Rights
Distribution Date may be deferred by the Board of Directors. Certain inadvertent
acquisitions will not result in a person's becoming an Acquiring Person if the
person promptly divests itself of sufficient Common Stock. Until the Rights
Distribution Date, (a) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (b) Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference and (c) the surrender for
transfer of any certificate for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.

The Rights are not exercisable until the Rights Distribution Date and will
expire ten years from the date the Rights are first issued, unless earlier
redeemed or exchanged by the Company as described below.

As soon as practicable after the Rights Distribution Date, Rights
Certificates will be mailed to holders of record of Common Stock as of the close
of business on the Rights Distribution Date and, from and after the Rights
Distribution Date, the separate Rights Certificates alone will represent the
Rights. All shares of Common Stock issued prior to the Rights Distribution Date
will be issued with Rights. Shares of Common Stock issued after the Rights
Distribution Date in connection with certain employee benefit plans or upon
conversion of certain securities will be issued with Rights. Except as otherwise
determined by the Company Board, no other shares of Common Stock issued after
the Rights Distribution Date will be issued with Rights.

In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the independent
directors of the Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (a "Permitted Offer")), each
holder of a Right will thereafter have the right to receive, upon exercise of
such Right, a number of shares of Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a Current Market Price
(as defined in the Rights Agreement) equal to two times the exercise price of
the Right. Notwithstanding the foregoing, following the occurrence of any
Flip-In Event, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by or transferred to any
Acquiring Person (or by certain related parties) will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-in Event until such time as the
Rights are no longer redeemable by the Company as set forth below.

In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer) or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, a number of shares of common stock of the acquiring
company having a Current Market Price equal to two times the Purchase Price of
the Right. Flip-In Events and Flip-Over Events are collectively referred to as
"Triggering Events."

The Purchase Price payable, and the number of Units of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series A Preferred Stock, (ii) if holders of the Series A Preferred Stock are
granted certain rights or warrants to subscribe for Series A Preferred Stock or
convertible securities at less than the current market price of the Series A
Preferred Stock, or (iii) upon the distribution to holders of the Series A
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Series A
Preferred Stock on the last trading date prior to the date of exercise. Pursuant
to the Rights Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Series A Preferred Stock will
be issued.

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<PAGE> 64

At any time until ten days following the first date of public announcement
of the occurrence of a Flip-In Event, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable, at the option of
the Company, in cash, shares of Common Stock or such other consideration as the
Company Board may determine. Immediately upon the effectiveness of the action of
the Company Board ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.

At any time after the occurrence of a Flip-In Event and prior to a person's
becoming the beneficial owner of 50% or more of the shares of Common Stock then
outstanding, the Company may exchange the Rights (other than Rights owned by an
Acquiring Person or an affiliate or an associate of an Acquiring Person, which
will have become void), in whole or in part, at an exchange ratio of one share
of Common Stock, and/or other equity securities deemed to have the same value as
one share of Common Stock, per Right, subject to adjustment.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Company Board prior to the Rights Distribution
Date as long as the Rights are redeemable. Thereafter, the provisions of the
Rights Agreement may be amended by the Company Board in order to cure any
ambiguity, defect or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption shall be made at such time as the Rights are not
redeemable.

The Rights will have certain anti-takeover effects. The Rights may result
in substantial dilution to any person or group that attempts to acquire the
Company without the approval of the Company Board. As a result, the overall
effect of the Rights may be to render more difficult or to discourage any
attempt to acquire the Company even if such acquisition may be on terms
favorable to the Company's stockholders.

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the DGCL provides that, subject to certain exceptions
specified therein, an "interested stockholder" of a Delaware corporation shall
not engage in any business combination, including mergers or consolidations or
acquisitions of additional shares of the corporation, with the corporation for a
three-year period following the date that such stockholder becomes an interested
stockholder unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares), or (iii) on or subsequent to such date,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested stockholder. Except as otherwise specified in
Section 203, an interested stockholder is defined to include (x) any person that
is the owner of 15% or more of the outstanding voting stock of the corporation,
or is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time within three
years immediately prior to the date of determination and (y) the affiliates and
associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. The Company has not
elected to be exempt from the restrictions imposed under Section 203. The
provisions of Section 203 may encourage persons interested in acquiring the
Company to negotiate in advance with the Company Board, since the stockholder
approval requirement would be avoided if a majority of the directors then in
office approves either the business combination or the transaction which results
in any such person becoming an interested shareholder. Such provisions also may
have the effect of preventing changes in the management of

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<PAGE> 65

the Company. It is possible that such provisions could make it more difficult to
accomplish transactions which the Company's stockholders may otherwise deem to
be in their best interests.

LIABILITY OF DIRECTORS; INDEMNIFICATION

The Certificate provides that a director of the Company will not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by the DGCL as
amended from time to time, for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. Neither the amendment
nor repeal of such provision will eliminate or reduce the effect of such
provision in respect of any matter occurring, or any cause of action, suit or
claim that, but for such provision, would accrue or arise prior to such
amendment or repeal.

While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.

The Certificate provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, will be indemnified and held harmless by
the Company to the fullest extent authorized by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith. Such right to indemnification
includes the right to have the Company pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the DGCL. Such rights are not exclusive of any other right which
any person may have or thereafter acquire under any statute, provision of the
Certificate, By-Law, agreement, vote of stockholders or disinterested directors
or otherwise. No repeal or modification of such provision will in any way
diminish or adversely affect the rights of any director, officer, employee or
agent of the Company thereunder in respect of any occurrence or matter arising
prior to any such repeal or modification. The Certificate also specifically
authorizes the Company to maintain insurance and to grant similar
indemnification rights to employees or agents of the Company.

TRANSFER AGENT AND REGISTRAR

will be the transfer agent and registrar for the Common
Stock.

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<PAGE> 66

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of the Offerings, the Company will have 15,000,000
shares of Common Stock outstanding (17,250,000 shares if the Over-Allotment
Option is exercised in full). All of these shares will be freely tradeable in
the public market without restriction or limitation under the Securities Act of
1933, as amended (the "Securities Act"), except for any shares purchased by an
"affiliate" (as defined in the Securities Act) of the Company. Shares of Common
Stock that are purchased by "affiliates" of the Company in the Offerings or
otherwise may not be sold other than in compliance with the registration
requirements of the Securities Act or pursuant to an available exemption
therefrom, including the exemption provided by Rule 144.

In general, under Rule 144 as currently in effect, an "affiliate" of the
Company may sell within any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of such class or
(ii) the average weekly trading volume on the NYSE during the four calendar
weeks preceding the date on which a notice of sale is filed with the Securities
and Exchange Commission (the "Commission") with respect to the proposed sale.
Sales under Rule 144 are subject to certain restrictions relating to the manner
of sale, notice and the availability of current public information about the
issuer. A person who has not been an affiliate of the Company at any time during
the 90 days preceding a sale, and who has beneficially owned shares for at least
three years (including the holding period of any prior owner other than an
affiliate), would be entitled to sell such shares without regard to the volume
limitations, manner of sale provisions, notice or other requirements of Rule
144.

The Company and its directors and executive officers have agreed that they
will not offer or sell any shares of Common Stock for a period of 180 days from
the date of this Prospectus without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation (except, in the case of the Company,
for the grant of options under the 1996 Stock Option and Incentive Plan or
issuances of stock upon exercise of such options or the Converted Options).

The Company has reserved an aggregate of 1,200,000 shares of Common Stock
for issuance pursuant to the 1996 Stock Option and Incentive Plan. Following the
Offerings, such shares will be registered under the Securities Act through the
filing of a registration statement on Form S-8. Accordingly, shares of Common
Stock issued pursuant to the 1996 Stock Option and Incentive Plan will be
available for sale in the public market without restriction or limitation under
the Securities Act, except for any shares purchased by an "affiliate" of the
Company.

The Company is unable to predict whether substantial amounts of Common
Stock will be sold, under Rule 144 or otherwise, in the open market following
the Offerings. Any sales of substantial amounts of Common Stock in the public
market, or the perception that such sales might occur, could have a material
adverse effect on the market price of the Common Stock.

CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

This is a general discussion of certain U.S. federal income and estate tax
consequences of the purchase, ownership and disposition of Common Stock by a
"Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S.
federal income tax purposes, is a nonresident alien individual, a foreign
corporation, a foreign partnership, or a nonresident fiduciary of a foreign
estate or trust.

This discussion is based on the Code and administrative interpretations as
of the date hereof, all of which may be changed either retroactively or
prospectively. This discussion does not address all aspects of U.S. federal
income and estate taxation that may be relevant to Non-U.S. Holders under their
particular circumstances (such as, for example, the direct or indirect ownership
of more than 5% of the outstanding Common Stock) and does not address any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.

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The following summary does not constitute, and should not be considered as,
legal or tax advice to prospective investors. Prospective holders should consult
their tax advisers about the particular tax consequences to them of holding and
disposing of Common Stock.

DIVIDENDS

Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to the withholding of U.S. income tax at
a rate of 30% of the amount of the dividend or such lower rate as may be
specified by an applicable income tax treaty. For purposes of determining
whether tax is to be withheld at a 30% rate or at a reduced rate as specified by
an income tax treaty, the Company ordinarily will presume, pursuant to currently
applicable law, that dividends paid to an address in a foreign country are paid
to a resident of such country absent actual knowledge that such presumption is
not warranted. However, under proposed U.S. Treasury regulations which have not
yet been put into effect, the benefits of a tax treaty may be claimed by a
Non-U.S. Holder of Common Stock only upon filing prescribed forms that must
include a taxpayer identification number obtained from the Internal Revenue
Service and may be required to include a certification of residence in the
treaty country by a competent authority of the treaty country.

If a Non-U.S. Holder files an Internal Revenue Service Form 4224 with the
Company, no withholding tax will be withheld on dividends that are effectively
connected with the Non-U.S. Holder's conduct of a trade or business within the
United States. Instead, the effectively connected dividends will be subject to
regular U.S. income tax in the same manner as if the Non-U.S. Holder were a U.S.
resident. Effectively connected dividends received by a non-U.S. corporation may
be subject to an additional "branch profits tax" at a rate of 30% (or such lower
rate as may be specified by an applicable treaty) of its effectively connected
earnings and profits, subject to certain adjustments.

Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the amount,
if any, of tax withheld. A similar report is sent to the Non-U.S. Holder.
Pursuant to tax treaties or other agreements, the U.S. Internal Revenue Service
may make its reports available to tax authorities in the recipient's country of
residence. U.S. backup withholding tax generally will not apply to dividends
paid to Non-U.S. Holders at a residence outside the United States unless the
payor has knowledge that the payee is a United States person.

GAIN ON DISPOSITION

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States (ii) in the case of certain Non-U.S. Holders who are
nonresident alien individuals and hold Common Stock as a capital asset, such
individuals are present in the United States for 183 or more days in the taxable
year of the disposition, (iii) such holder is subject to tax pursuant to the
provision of the Code applicable to certain United States expatriates or (iv)
the Company is or has been a "United States real property holding corporation"
for United States federal income tax purposes (which the Company does not
believe it is or is likely to become) and the Non-U.S. Holder holds or has held,
directly or indirectly, at any time during the five year period ending on the
date of the disposition, more than five percent of the Common Stock.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

If the proceeds of a disposition of Common Stock are paid over by or
through a U.S. office of a broker, the payment is subject to information
reporting and to backup withholding at a rate of 31% unless the disposing holder
certifies as to his name, address, and non-U.S. status under penalty of perjury
or otherwise establishes an exemption. Generally, U.S. information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the United States through a non-U.S. office of a
non-U.S. broker. However, U.S. information reporting requirements (but not
back-up withholding) will apply to a payment of disposition proceeds outside the
United States if (A) the payment is made through an office outside the United
States of a broker that is either (i) a U.S. person, (ii) a foreign person which
derives

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<PAGE> 68

50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States or (iii) a "controlled foreign corporation" for
U.S. federal income tax purposes and (B) the broker fails to maintain
documentary evidence that the holder is a Non-U.S. Holder and that certain
conditions are met, or that the holder otherwise is entitled to an exemption.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.

FEDERAL ESTATE TAX

An individual Non-U.S. Holder who is treated as the owner of or has made
certain lifetime transfers of an interest in Common Stock will be required to
include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax (even though the
individual at the time of death is neither a citizen of nor domiciled in the
United States) unless an applicable estate tax treaty provides otherwise.

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement (the
"Underwriting Agreement"), the United States underwriters named below (the "U.S.
Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation and
Howard, Weil, Labouisse, Friedrichs Incorporated are acting as representatives
(the "U.S. Representatives"), and each of the international managers named below
(the "International Managers" and, together with the U.S. Underwriters, the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation
and Howard, Weil, Labouisse, Freidrichs Incorporated are acting as
representatives (the "International Representatives" and, together with the U.S.
Representatives, the "Representatives"), have severally agreed to purchase from
the Selling Stockholder an aggregate of 15,000,000 shares of Common Stock. The
respective number of shares of Common Stock that each of the Underwriters have
agreed to purchase is set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS U.S. SHARES
-------------------------------------------------------------------- --------------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.................
Howard, Weil, Labouisse, Friedrichs Incorporated....................
----------
U.S. Offering Subtotal.................................... 12,000,000
==========
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS INTERNATIONAL SHARES
-------------------------------------------------------------------- --------------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.................
Howard, Weil, Labouisse, Freidrichs Incorporated....................
International Offering Subtotal........................... 3,000,000
----------
Total..................................................... 15,000,000
==========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to certain conditions precedent. The nature of the Underwriters'
obligations under the Underwriting Agreement is such that they are obligated to
purchase all of the shares of Common Stock offered (other than the shares
subject to the Over-Allotment Option described

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<PAGE> 69

below) if any are purchased. The offering price and underwriting discounts and
commissions per share for the U.S. Offering and the International Offering are
identical.

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public initially at the Price to the
Public set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share and that the
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share on sales to other dealers. After the initial public
offering of the shares of Common Stock, the offering price and the concessions
and discounts to dealers may be changed by the Representatives.

Pursuant to the Underwriting Agreement, the Company has granted to the U.S.
Underwriters the Over-Allotment Option, exercisable for 30 days from the date of
this Prospectus, to purchase up to an aggregate of 2,250,000 additional shares
of Common Stock from the Company at the Price to the Public set forth on the
cover page hereof, less underwriting discounts and commissions. The U.S.
Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with the sale of the shares of
Common Stock in the Offerings. To the extent that such option is exercised, each
U.S. Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of additional shares as the number of
shares set forth opposite the name of such U.S. Underwriter in the above table
bears to 12,000,000 shares, on the same terms as those on which the 12,000,000
shares are being sold.

The Company and the Selling Stockholder will agree to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to losses in respect thereof, as provided in
the Underwriting Agreement.

The Representatives have advised the Company that the Underwriters will not
confirm sales of shares of Common Stock to accounts over which they exercise
discretionary authority.

Pursuant to an Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented and agreed that, with respect to
the shares included in the U.S. Offering and with certain exceptions, (a) it is
not purchasing any Common Stock for the account of anyone other than a U.S. or
Canadian Person (as defined below) and (b) it has not offered or sold, and will
not offer or sell, directly or indirectly, any Common Stock or distribute this
Prospectus outside of the U.S. or Canada or to anyone other than a U.S. or
Canadian Person. Pursuant to the Agreement Between U.S. Underwriters and
International Managers, each International Manager has represented and agreed
that, with respect to the shares included in the International Offering and with
certain exceptions, (a) it is not purchasing any Common Stock for the account of
any U.S. or Canadian Person and (b) it has not offered or sold, and will not
offer to sell, directly or indirectly, any Common Stock or distribute this
Prospectus within the U.S. or Canada or to any U.S. or Canadian Person. The
foregoing limitations do not apply to stabilization transactions and to certain
other transactions among the U.S. Underwriters and the International Managers.
As used herein, "U.S. or Canadian Person" means any national or resident of the
U.S. or Canada or any corporation, pension, profit-sharing or other trust or
other entity organized under the laws of the U.S. or Canada or of any political
subdivision thereof (other than a branch located outside the U.S. or Canada of
any U.S. or Canadian Person) and includes any U.S. or Canadian branch of a
person who is not otherwise a U.S. or Canadian Person, and "U.S." means the
United States of America, its territories, its possessions and all areas subject
to its jurisdiction.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price and
currency of settlement of any shares so sold shall be the Price to the Public
set forth on the cover page of this Prospectus, in U.S. dollars, less an amount
not greater than the per share amount of the concession to the dealers set forth
above.

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Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented that it has not offered or sold,
and has agreed not to offer or sell, any Common Stock, directly or indirectly,
in Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of Common Stock in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send to any dealer who purchases
from it any Common Stock a notice stating in substance that, by purchasing such
Common Stock, such dealer represents and agrees that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of such Common Stock in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and that any offer of Common Stock in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealers will deliver to any other dealer to whom it sells any of such Common
Stock a notice to the foregoing effect.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each International Manager has represented that (i) it has not offered
or sold and during the period of six months from the date of this Prospectus
will not offer or sell any shares of Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding managing or disposing of investments (as principal or agent) for the
purposes of their business or otherwise in circumstances which do not constitute
an offer to the public in the United Kingdom for the purposes of the Public
Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has complied
and will comply with all applicable provisions of the Financial services Act
1986 of the United Kingdom and the Regulations with respect to anything done by
it in relation to the Common Stock in, from or otherwise involving the United
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with the
issue of the Common Stock to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 of the United Kingdom or is a person to whom such
document may otherwise lawfully be issued or passed on.

Prior to the Offerings, there has been no public market for the Common
Stock. The initial public offering price for the shares of Common Stock will be
determined by negotiations among the Selling Stockholder, the U.S.
Representatives and the International Representatives. Among the principal
factors to be considered in determining the initial public offering price will
be prevailing economic prospects, the sales, earnings and financial and
operating performance of the Company in recent periods, the estimates of future
business potential and earnings prospects, market valuations of companies in
related businesses and the history and prospects for the industries in which the
Company competes. Additionally, consideration will be given to the general
condition of the securities markets, the market for new issues of securities and
the demand for securities of comparable companies at the time the Offerings are
made. There can be no assurance that an active trading market will develop for
the Common Stock or that the Common Stock will trade in the public market
subsequent to the Offerings at or above the initial public offering price.

Application will be made to list the Common Stock on the NYSE under the
symbol " ."

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Baker & Botts, L.L.P., Dallas,
Texas. Certain legal matters in connection with the sale of the Common Stock
offered hereby will be passed upon for the Underwriters by Thompson & Knight, a
Professional Corporation, Dallas, Texas.

EXPERTS

The consolidated financial statements of the Company as of March 31, 1995
and 1996 and for the fiscal years ended March 31, 1994, 1995 and 1996, included
in this Prospectus and the Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as stated in their report thereon appearing
elsewhere herein and in the Registration Statement, and are so included in
reliance on such report given upon the authority of such firm as experts in
auditing and accounting.

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AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
shares of Common Stock offered by this Prospectus. This Prospectus constitutes a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted from
this Prospectus as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus regarding the contents of any contract,
agreement or other document are not necessarily complete. With respect to each
contract, agreement or other document filed with the Commission as an exhibit to
the Registration Statement, reference is made to the exhibit for further
information regarding the contents thereof, and each such statement is qualified
in its entirety by such reference. For further information regarding the Company
and the shares of Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto.

The Registration Statement, including the exhibits and schedules thereto,
are available for inspection at, and copies of such materials may be obtained at
prescribed rates from, the public reference facilities maintained by the
Commission at its principal offices located at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at its regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60601 and 7 World Trade Center, New York, New York 10048.

The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934. As a result of the Offerings, the Company
will become subject to the informational requirements of such act. The Company
will fulfill its obligations with respect to such requirements by filing
periodic reports and other information with the Commission. In addition, the
Company intends to furnish to its stockholders annual reports containing
consolidated financial statements examined by an independent public accounting
firm.

68
<PAGE> 72

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets as of March 31, 1995 and 1996............................. F-3
Consolidated Statements of Income and Stockholder's Net Investment for the Fiscal
Years Ended March 31, 1994, 1995 and 1996........................................... F-4
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 1994, 1995
and 1996............................................................................ F-5
Notes to Consolidated Financial Statements............................................ F-6
</TABLE>

F-1
<PAGE> 73

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholder
Halter Marine Group, Inc.

We have audited the accompanying consolidated balance sheets of Halter
Marine Group, Inc. and subsidiaries as of March 31, 1995 and 1996, and the
related consolidated statements of income and stockholder's net investment and
cash flows for each of the three years in the period ended March 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Halter Marine
Group, Inc. and subsidiaries as of March 31, 1995 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended March 31, 1996, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Dallas, Texas
, 1996

The foregoing report is in the form that will be signed upon the completion
of the organization of Halter Marine Group, Inc. and subsidiaries as described
in Note 1 to the consolidated financial statements.

ERNST & YOUNG LLP

Dallas, Texas
June 25, 1996

F-2
<PAGE> 74

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31
---------------------
1995 1996
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash................................................................. $ 524 $ 672
Contract receivables................................................. 7,287 8,340
Costs and estimated earnings in excess of billings on uncompleted
contracts......................................................... 71,025 67,905
Inventories.......................................................... 6,518 6,063
Deferred tax benefit................................................. -- 2,865
Other current assets................................................. 494 387
-------- --------
Total current assets.............................................. 85,848 86,232
Property, plant and equipment, net..................................... 38,138 54,857
Other assets........................................................... 285 285
-------- --------
$124,271 $141,374
======== ========
LIABILITIES AND STOCKHOLDER'S NET INVESTMENT
Current Liabilities:
Accounts payable and accrued liabilities............................. $ 3,379 $ 3,799
Due to an affiliate.................................................. 25,426 17,519
Income taxes payable to an affiliate................................. 9,836 15,785
Billings in excess of cost and estimated earnings on uncompleted
contracts......................................................... 1,534 12,528
Deferred income taxes................................................ 4,818 --
-------- --------
Total current liabilities......................................... 44,993 49,631
Long-term note to an affiliate......................................... 25,000 25,000
Stockholder's net investment........................................... 54,278 66,743
-------- --------
$124,271 $141,374
======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-3
<PAGE> 75

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND STOCKHOLDER'S NET INVESTMENT
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
----------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Contract revenue earned.................................... $275,310 $250,586 $254,294
Cost of revenue earned..................................... 228,833 207,398 214,559
-------- -------- --------
Gross profit............................................... 46,477 43,188 39,735
Selling, general and administrative expenses............... 12,874 13,471 15,911
-------- -------- --------
Operating income........................................... 33,603 29,717 23,824
Other (income) expenses:
Interest income.......................................... (246) -- --
Interest expense......................................... 2,148 3,844 3,268
Other, net............................................... (33) (5) (11)
-------- -------- --------
1,869 3,839 3,257
-------- -------- --------
Income before income taxes................................. 31,734 25,878 20,567
Provision (benefit) for income taxes:
Current.................................................. 13,057 9,836 15,785
Deferred................................................. (830) 334 (7,683)
-------- -------- --------
12,227 10,170 8,102
-------- -------- --------
Net income................................................. 19,507 15,708 12,465
Beginning stockholder's net investment..................... 19,063 38,570 54,278
-------- -------- --------
Ending stockholder's net investment........................ $ 38,570 $ 54,278 $ 66,743
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-4
<PAGE> 76

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
----------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 19,507 $ 15,708 $ 12,465
Adjustments to reconcile net income to net cash provided
(required) by operating activities:
Depreciation.......................................... 4,630 5,414 6,744
Deferred provision (benefit) for income taxes......... (830) 334 (7,683)
Net equipment transfers to/from affiliates............ 374 (1,120) (7,776)
Changes in assets and liabilities:
(Increase) decrease in contract receivables......... (21,676) 19,954 (1,053)
(Increase) decrease in costs and estimated earnings
in excess of billings on uncompleted contracts... (10,655) (12,825) 3,120
(Increase) decrease in inventories.................. (1,089) (3,823) 455
(Increase) decrease in other current assets......... 1,743 (341) 107
Decrease in other assets............................ 1,253 -- --
Increase (decrease) in accounts payable and accrued
liabilities...................................... (1,574) 1,132 420
Increase (decrease) in income taxes payable......... 2,713 (3,221) 5,949
Increase (decrease) in billings in excess of cost
and estimated earnings on uncompleted
contracts........................................ (22,571) (6,409) 10,994
-------- -------- --------
Total adjustments.............................. (47,682) (905) 11,277
-------- -------- --------
Net cash provided (required) by operating
activities.......................................... (28,175) 14,803 23,742
Cash flows from investing activities:
Capital expenditures..................................... (3,529) (6,405) (5,568)
Disposals of equipment................................... 89 68 --
Payment for purchase of acquisitions..................... -- (4,106) (10,119)
-------- -------- --------
Net cash required by investing activities............. (3,440) (10,443) (15,687)
Cash flows from financing activities:
Net borrowings from parent............................... 31,300 (4,057) (7,907)
-------- -------- --------
Net cash provided (required) by financing
activities.......................................... 31,300 (4,057) (7,907)
-------- -------- --------
Net increase (decrease) in cash............................ (315) 303 148
Cash at beginning of period................................ 536 221 524
-------- -------- --------
Cash at end of period...................................... $ 221 $ 524 $ 672
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-5
<PAGE> 77

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Halter Marine Group, Inc. (the "Company") is a Delaware corporation
incorporated on June 24, 1996. Prior to or concurrently with the initial public
offering (the "Offerings") of shares of common stock of the Company (the "Common
Stock"), the Company will consummate the Consolidation Transactions. These
transactions include (i) the transfer to the Company of the stock of each
subsidiary of Trinity Industries, Inc. ("Trinity") that has assets and
liabilities through which Trinity has historically conducted its businesses of
construction, repair, and conversion of primarily ocean-going vessels for the
governmental and commercial markets and (ii) the transfer to subsidiaries of the
Company of certain assets and liabilities of Trinity related to the businesses
of the Company.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The Consolidated Financial Statements include the accounts of the Company
and its wholly owned subsidiaries, and have been prepared using Trinity's
historical basis in the assets and liabilities of the Company. All significant
intercompany accounts and transactions have been eliminated. The consolidated
financial statements reflect the results of operations, financial condition and
cash flows of the Company as a component of Trinity and may not be indicative of
actual results of operations and financial position of the Company under other
ownership. Management believes that the consolidated income statements include a
reasonable allocation of the administrative costs incurred by Trinity on the
Company's behalf. These costs include payroll services, benefits administration,
and cash management. The allocations of such costs to the Company were
approximately $1.4 million, $1.7 million, and $1.8 million in 1994, 1995 and
1996, respectively.

Additionally, the Company provides administrative services for Trinity's
Inland Marine division in the areas of accounting, human resources, marketing
and public relations. The allocation of such costs to the Inland Marine division
were approximately $2.0 million, $2.0 million and $2.6 million in 1994, 1995 and
1996, respectively.

(b) Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues of construction contracts are
measured by the percentage of labor hours incurred to date to estimated total
labor hours for each contract. Management considers expended labor hours to be
the best available measure of progress on these contracts. Revenue is not
recognized until 20% of estimated labor hours have been incurred. Changes in
estimated profitability may result in revisions to income and costs and are
recognized in the period in which the revisions are determined. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Other changes, including those arising from contract
penalty provisions, and final contract settlements are recognized in the period
in which the revisions are determined.

Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs and depreciation costs. Selling, general, and
administrative costs are charged to expense as incurred.

F-6
<PAGE> 78

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of amounts
billed. The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenues recognized.

For income tax purposes, the Company reports contract profits as earned
under the percentage of completion capitalized cost method as originally
prescribed by the Tax Reform Act of 1986 and subsequently modified by the
Revenue Act of 1987 and the Technical and Miscellaneous Revenue Act of 1988.

(d) Inventories

Inventories are valued at the lower of cost or market. Inventory cost is
determined principally on the specific identification method. Market is
replacement cost or net realizable value.

(e) Depreciation

Additions to property, plant and equipment are recorded at cost.
Depreciation and amortization are generally computed by the straight-line method
on the estimated useful lives of the assets. The costs of ordinary maintenance
and repair are charged to expense, while renewals and major replacements are
capitalized.

(f) New Accounting Standards

In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be disposed of," was issued. Adoption is required for the Company beginning in
fiscal 1997. The Company does not believe that the adoption of this Statement
will have a significant impact on the Company.

In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," was issued. The disclosure
requirements of this Statement are effective for the Company's financial
statements beginning in fiscal 1997. The Company intends to continue to apply
the accounting provisions of APB Opinion 25, "Accounting for Stock Issued to
Employees." With the Company's plan of adoption, the impact will be limited to
additional footnote disclosure.

F-7
<PAGE> 79

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(g) Allocation of Expenses

Indirect manufacturing costs are allocated on the basis of labor hours
incurred on the respective contracts.

3. BUSINESS ACQUISITIONS

The Company made certain business acquisitions during fiscal 1995 and 1996.
All have been accounted for by the purchase method. The operations of these
companies have been included in the consolidated financial statements from the
effective dates of the acquisitions.

In fiscal 1995, the Company acquired 100 percent of the common stock of
Gulf Coast Fabrication, Inc., a company engaged in the manufacture and repair of
marine vessels. The purchase price of approximately $4.1 million was allocated
entirely to assets acquired.

In fiscal 1996, the Company acquired the assets of American Marine
Corporation (now known as Gulf Repair) and CBI NA-Con, Inc. (now known as
Pascagoula). The assets of these businesses are utilized in the manufacture and
repair of marine products. The aggregate purchase price of approximately $10.1
million was allocated entirely to the assets acquired. Contribution of these
acquisitions to revenues and operating profit during fiscal 1996 is not
material.

4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Costs incurred on uncompleted contracts........................ $364,426 $479,811
Estimated earnings............................................. 82,275 110,558
-------- --------
446,701 590,369
Less billings to date.......................................... 377,210 534,992
-------- --------
$ 69,491 $ 55,377
======== ========
Included in accompanying balance sheet under the following captions:
Costs and estimated earnings in excess of billings on
uncompleted contracts..................................... $ 71,025 $ 67,905
Billings in excess of costs and estimated earnings on
uncompleted contracts..................................... 1,534 12,528
-------- --------
$ 69,491 $ 55,377
======== ========
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land............................................................. $ 3,266 $ 5,686
Buildings and improvements....................................... 17,608 21,970
Machinery and equipment.......................................... 42,272 60,564
Construction in progress......................................... 5,881 3,688
------- -------
69,027 91,908
Less accumulated depreciation.................................... 30,889 37,051
------- -------
Property, plant and equipment, net............................... $38,138 $54,857
======= =======
</TABLE>

F-8
<PAGE> 80

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. RELATED PARTY TRANSACTIONS

John Dane III, Chief Executive Officer and a director of the Company
acquired 25% of the stock of United States Marine, Inc. ("USMI") in June 1996.
Mr. Dane has the option to acquire up to an additional 50% of the stock of USMI
over the next five years. USMI performs services for the Company as a
subcontractor with respect to the production of high speed composite vessels for
the U.S. Navy. During 1994, 1995 and 1996, the Company paid USMI fees of
approximately $10.6 million, $3.9 million and $5.5 million for subcontractor
services.

The aggregate amount of intercompany indebtedness owed by the Company to
Trinity at March 31, 1996 was $42.5 million (excluding income taxes payable) of
which $25 million represents a long-term note due September 30, 1997 at an
interest rate of prime minus 1% (7.25% at March 31, 1996) and approximately
$17.5 million, due upon demand, which represents the net current liability from
Trinity's cash management practices of centralizing payment of accounts payable
and accrued liabilities, and centralizing cash receipts. Trinity charges the
Company interest on the net current liability at prime minus 1%. Subsequent to
the Offering it is anticipated that the Company will repay the net current
liability through cash generated by operations as it replaces such liability
with its own direct trade payables and similar obligations.

In connection with the Offerings, the Company and Trinity will enter into
various agreements for the purpose of establishing the terms governing their
ongoing arrangements and relationships, including a mutual discharge of certain
liabilities and potential liabilities, an administrative services agreement, an
income tax allocation agreement and a trademark license agreement.

7. STOCK OPTIONS

Trinity has a Stock Option and Incentive Plan (the "Trinity Plan") which
provides that incentive or non-qualified stock options for a maximum of
1,500,000 shares of common stock may be granted to directors, officers and key
employees. Incentive options may be granted over a period not to exceed ten
years at a price not less than fair market value on the date of grant. The
Trinity Plan provides that to the extent options granted are forfeited, expire
or canceled, they may again be granted pursuant to the provisions of the Trinity
Plan. The Trinity Plan provides that if shares already owned by the optionee are
surrendered as full or partial payment of the exercise price of an option, a new
option (the "Reload Option") may be granted equal to the number of shares
surrendered. The exercise price of Reload Options shall be the fair market value
of Trinity common stock on the effective date of the grant.

As of March 31, 1996, there were 86,415 incentive and 162,355 non-incentive
Trinity stock options outstanding to employees of the Company with a total
exercise value of $6,221,948 at exercise prices ranging from $16.00 to $38.38
per share of which 105,392 options were exercisable.

At the time of consummation of the Offerings, the Company will assume such
Trinity stock options ("Converted Options") held by employees of the Company.
The converted options will provide for the purchase of a number of shares of
Common Stock equal to the number of shares of Trinity Stock multiplied by the
Conversion Ratio, as defined. Furthermore, the per share exercise price of each
Converted Option will equal the per share exercise price of the applicable
Trinity Option as of the date the Offerings are consummated divided by the
Conversion Ratio.

The Company will establish the 1996 Stock Option and Incentive Plan (the
"1996 Plan") which will provide for awards to employees in the form of grants of
stock options, stock appreciation rights ("SARs"),

F-9
<PAGE> 81

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

restricted or non-restricted stock or units denominated in stock ("Stock
Awards"), collectively "Awards". The 1996 Plan will provide that, shares of
common stock which are the subject of Awards granted under the 1996 Plan that
are forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the shares covered thereby
are not issued or are exchanged for Awards that do not involve Common Stock will
again immediately become available for Awards under the 1996 Plan.

8. EMPLOYEE BENEFIT PLANS

The Company's employees are included in pension plans sponsored by Trinity
which provide income and death benefits for eligible employees. Trinity's policy
is to fund retirement costs accrued to the extent such amounts are deductible
for income tax purposes. Plan assets include cash, short-term debt securities,
and other investments. Benefits are based on years of credited service and
compensation.

The Company's share of net periodic pension expense for fiscal 1996
included the following components:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Service cost-benefits earned during the period....................... $ 598
Interest cost on projected benefit obligation........................ 386
Actual return on assets.............................................. (1,112)
Net amortization and deferral........................................ 699
Accrual of profit sharing contribution............................... 614
--------
Net periodic pension expense......................................... $ 1,185
========
</TABLE>

The Company's share of net periodic pension expense for 1994 and 1995 was
approximately $875 and $1,101, respectively. Included in these amounts is the
accrual of profit sharing contribution.

Amounts recognized in the Company's consolidated balance sheet and included
in due to an affiliate follow:

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation............................................ $3,484
======
Accumulated benefit obligation....................................... $4,452
======
Projected benefit obligation........................................... $6,306
Plan assets at fair value.............................................. 5,931
------
Projected benefit obligation in excess of plan assets.................. (375)
Unrecognized net asset at April 1, 1985................................ (75)
Unrecognized net loss.................................................. 1,741
------
Prepaid pension expense................................................ $1,291
======
</TABLE>

Assumptions used for the valuation of the projected benefit obligation for
1996 were a discount rate of 7.75%, 4.75% increase in compensation levels and a
9% expected long-term rate of return on assets.

Upon consummation of the Offerings, a separate pension plan will be
established for the Company's employees and the assets attributable to benefits
accrued by employees of the Company under the Trinity pension plans will be
transferred to a separate trust.

F-10
<PAGE> 82

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Trinity has a contributory profit sharing plan in which employees of the
Company may participate. Under the plan, eligible employees are allowed to make
voluntary pre-tax contributions. The contribution to this plan, as defined, is
based on consolidated earnings and dividends of Trinity.

9. INCOME TAXES

Effective April 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." This Statement
requires a change from the deferred to the liability method of computing income
taxes. The cumulative effect of applying FAS 109 at the date of adoption was
insignificant.

The entities comprising the Company are included in the consolidated
federal income tax return of Trinity. Trinity has charged an amount equal to the
income tax payments that the Company would have been obligated to pay if it had
filed a separate tax return. At the time of the consummation of the Offerings,
the Company and Trinity will enter into a Tax Allocation Agreement pursuant to
which the Company and Trinity will agree upon the allocation of certain tax
liabilities and benefits. Under the Tax Allocation Agreement the balance
reflected as income tax payable is due Trinity upon the earlier of the receipt
by the Company of the net proceeds from the exercise of the Over-Allotment
Option, if exercised, or November 15, 1996. Furthermore the Company will agree
to pay Trinity (as realized) an amount equal to the federal, state and local tax
benefit realized by the Company as a result of an increase in the tax basis of
its tangible and intangible assets that is expected to occur in connection with
the Consolidation Transactions. This amount to be paid will be subject to
certain adjustments if certain business combinations or other acquisitions
involving the Company occur.

The significant components of the provision (benefit) for income taxes
follow:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
-----------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal............................................... $11,285 $ 8,174 $13,475
State................................................. 1,772 1,662 2,310
------- ------- -------
13,057 9,836 15,785
Deferred
Federal............................................... (830) 334 (6,692)
State................................................. -- -- (991)
------- ------- -------
(830) 334 (7,683)
------- ------- -------
Total......................................... $12,227 $10,170 $ 8,102
======= ======= =======
</TABLE>

F-11
<PAGE> 83

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income tax was provided in the financial statements for temporary
differences between financial and taxable income. The components of deferred
liabilities and assets follow:

<TABLE>
<CAPTION>
AT MARCH 31
-------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Excess of tax depreciation over financial statement
depreciation................................................ $(3,221) $(2,771)
Profits on long-term contracts recorded on the percentage of
completion method for financial purposes and related
items....................................................... (984) --
Pensions and other benefits.................................... (579) (711)
------- ------
Total deferred tax liabilities......................... (4,784) (3,482)
------- ------
Deferred tax assets:
Profits on long-term contracts recorded on the percentage of
completion method for financial purposes and related
items....................................................... -- 5,406
State taxes.................................................... -- 991
Other.......................................................... (34) (50)
------- ------
Total deferred tax assets.............................. (34) 6,347
------- ------
Net deferred tax asset (liability)............................... $(4,818) $2,865
======= ======
</TABLE>

The reconciliation between the effective tax rate and the statutory tax
rate is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory rate................................................. 35.0% 35.0% 35.0%
State taxes.................................................... 3.7 4.2 4.2
Other.......................................................... (0.2) 0.1 0.2
---- ---- ----
Effective tax rate............................................. 38.5% 39.3% 39.4%
==== ==== ====
</TABLE>

10. STOCKHOLDER'S RIGHTS PLAN

Prior to the consummation of the Offerings, the Company will adopt a
Stockholder's Rights Plan pursuant to which one right will be issued with
respect to each share of Common Stock. Each right entitles the stockholder to
purchase from the Company one one-hundredth of a share of Series A Preferred
Stock at an exercise price to be determined by the Board when the rights are
issued. The rights are not exercisable or detachable from the common stock until
ten business days after a person acquires beneficial ownership of fifteen
percent or more of the Common Stock or if a person or group commences a tender
or exchange offer upon consummation of which that person or group would
beneficially own fifteen percent or more of the common stock.

If any person becomes a beneficial owner of fifteen percent or more of the
Common Stock other than pursuant to an offer, as defined, for all shares
determined by certain directors to be fair to the stockholders and otherwise in
the best interests of both the Company and its stockholders (other than by
reason of share purchases by the Company), each right not owned by that person
or related parties enables its holder to purchase, at the right's then current
exercise price, shares of the Company's common stock having a calculated value
of twice the right's exercise price.

The rights which are subject to adjustment, may be redeemed by the Company
at a price of one cent per right at any time prior to their expiration ten years
from issuance or the point at which they become exercisable.

F-12
<PAGE> 84

HALTER MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. SIGNIFICANT CUSTOMERS

In fiscal 1994, contract revenue earned includes revenues from three
customers which accounted for 30.2%, 18.8%, and 14.7%, respectively, of
consolidated contract revenue earned. Also in fiscal 1994, contract revenue
earned includes revenues from foreign governments which accounted for 12.9% of
consolidated contract revenue earned.

In fiscal 1995, contract revenue earned includes revenues from two
customers which accounted for 38.8% and 10.2%, respectively, of consolidated
contract revenue earned. Also in fiscal 1995, contract revenue earned includes
revenues from foreign governments which accounted for 13.6% of consolidated
contract revenue earned.

Contract revenue earned includes revenues from one customer which accounted
for 47.3% of consolidated contract revenue earned in fiscal 1996.

12. COMMITMENTS AND CONTINGENCIES

As of March 31, 1996, Trinity has guaranteed contract performance
obligations of the Company in the aggregate amount of $99.6 million and the
Company has outstanding contract bid and performance bonds and similar
obligations issued by third parties with Trinity as the obligor with an
aggregate face amount of approximately $52.9 million. After the Offerings, the
Company will be obligated to indemnify Trinity and to provide other financial
assurances to Trinity against any liability under its outstanding guarantees and
any liability under the bonds, letters of credit and similar obligations under
which Trinity is the obligor of the Company's contract performance obligations.

13. SUPPLEMENTARY UNAUDITED QUARTERLY DATA

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1995:
Contract revenue earned................... $64,871 $49,026 $82,608 $54,081 $250,586
Gross profit.............................. 11,135 10,131 10,604 11,318 43,188
Net income................................ 4,237 3,674 3,805 3,992 15,708
Year ended March 31, 1996:
Contract revenue earned................... $72,009 $53,903 $56,625 $71,757 $254,294
Gross profit.............................. 11,133 7,942 10,848 9,812 39,735
Net income................................ 3,781 2,382 3,720 2,582 12,465
</TABLE>

F-13
<PAGE> 85

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
The Company........................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 14
Dilution.............................. 14
Capitalization........................ 15
Selected Consolidated Financial
Data................................ 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 23
Management............................ 43
Certain Transactions and Related
Arrangements........................ 52
Principal Stockholders and Selling
Stockholder......................... 56
Description of Capital Stock.......... 56
Shares Eligible for Future Sale....... 63
Certain United States Tax
Considerations for Non-U.S.
Holders............................. 63
Underwriting.......................... 65
Legal Matters......................... 67
Experts............................... 67
Available Information................. 68
Index to Financial Statements......... F-1
</TABLE>

---------------------

UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

15,000,000 SHARES

HALTER MARINE GROUP, INC.

COMMON STOCK

-----------------------

PROSPECTUS

-----------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 86

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

SUBJECT TO COMPLETION, DATED JUNE 27, 1996

PROSPECTUS
, 1996

15,000,000 SHARES

HALTER MARINE GROUP, INC.

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by Trinity
Industries, Inc. ("Trinity" or the "Selling Stockholder"). Of the 15,000,000
shares being offered hereby, 3,000,000 shares are being offered initially
outside the United States and Canada by the International Managers and
12,000,000 shares are being offered initially in the United States and Canada by
the U.S. Underwriters (collectively, the "Offerings"). See "Underwriting."

Application will be made to list the Common Stock on the New York Stock
Exchange under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

<TABLE>
<CAPTION>
==============================================================================================
PROCEEDS
PRICE UNDERWRITING TO THE
TO THE DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
Total(3)......................... $ $ $
==============================================================================================
</TABLE>

<TABLE>
<S> <C>
DONALDSON, LUFKIN & JENRETTE HOWARD, WEIL, LABOUISSE, FRIEDRICHS
SECURITIES CORPORATION INCORPORATED
</TABLE>
<PAGE> 87

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF COMMON STOCK OFFERED HEREBY IN
THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT OF
1986 AND THE COMPANIES ACT 1985 WITH RESPECT TO ANYTHING DONE BY ANY PERSON IN
RELATION TO THE COMMON STOCK IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM
MUST BE COMPLIED WITH.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 7
The Company..................................... 13
Use of Proceeds................................. 14
Dividend Policy................................. 14
Dilution........................................ 14
Capitalization.................................. 15
Selected Consolidated Financial Data............ 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 17
Business........................................ 23
Management...................................... 43
Certain Transactions and Related Arrangements... 52
Principal Stockholders and Selling
Stockholder................................... 56
Description of Capital Stock.................... 56
Shares Eligible for Future Sale................. 63
Certain United States Tax Considerations for
Non-U.S. Holders.............................. 63
Underwriting.................................... 65
Legal Matters................................... 67
Experts......................................... 67
Available Information........................... 68
Index to Financial Statements................... F-1
</TABLE>

---------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

15,000,000 SHARES

HALTER MARINE GROUP, INC.

COMMON STOCK
-----------------------

PROSPECTUS

-----------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 88

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a statement of estimated expenses to be incurred in
connection with the issuance and distribution of the securities being registered
pursuant to this Registration Statement, other than underwriting discounts and
commissions.

<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission registration fee........................ $103,449
National Association of Securities Dealers, Inc. filing fee................ 30,500
Printing and engraving fees and expenses................................... *
Legal fees and expenses.................................................... *
Accounting fees and expenses............................................... *
Transfer agent and registrar fees and expenses............................. *
Blue sky fees and expenses................................................. *
NYSE listing fee........................................................... *
Miscellaneous.............................................................. *
--------
Total............................................................ $ *
========
</TABLE>

- ---------------

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Delaware General Corporation Law

Section 145(a) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred

II-1
<PAGE> 89

to in subsections (a) and (b) of Section 145, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.

Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of Section 145. Such determination shall be
made (1) by the board of directors by a majority vote of directors who were not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.

Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

Certificate of Incorporation

The Certificate of Incorporation of the Company, a copy of which is filed
as Exhibit 3.1 to the Registration Statement, provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except, if required
by the DGCL as amended from time to time, for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, which concerns
unlawful payments of dividends, stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of such provision will eliminate or reduce the
effect of such provision in respect of any matter occurring, or any cause of
action, suit or claim that, but for such provision, would accrue or arise, prior
to such amendment or repeal.

II-2
<PAGE> 90

provision will in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the Company thereunder in respect of any
occurrence or matter arising prior to any such repeal or modification. The
Certificate also specifically authorizes the Company to maintain insurance and
to grant similar indemnification rights to employees or agents of the Company.

Bylaws

The Bylaws of the Company, a copy of which is filed as Exhibit 3.2 to the
Registration Statement, provide that each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she or a person of whom he or she is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceedings is
alleged action in an official capacity as a director or officer or in any other
capacity while serving or having agreed to serve as a director or officer, shall
be indemnified and held harmless by the Company to the fullest extent authorized
by the DGCL, as in effect or as it may be amended from time to time, against all
expense, liability and loss (including without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person who has ceased
to serve in the capacity which initially entitled such person to indemnity
thereunder and shall inure to the benefit of his or her heirs, executors and
administrators.

Underwriting Agreement

The Underwriting Agreement, the form of which is filed as Exhibit 1.1 to
the Registration Statement, provides for the indemnification of the directors
and officers of the Company against certain liabilities, including liabilities
arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Immediately prior to the Offerings, the Company will issue 15,000,000
shares of Common Stock to Trinity in consideration of the transfer by Trinity to
the Company of the assets and liabilities of the Company Businesses as part of
the Consolidation Transactions. The Company will rely on the exemption from
registration set forth in Section 4(2) of the Securities Act for this
transaction.

II-3
<PAGE> 91

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
1* -- Form of Underwriting Agreement
3.1* -- Certificate of Incorporation of Halter Marine Group, Inc. (the
"Company")
3.2* -- Bylaws of the Company
4.1* -- Form of Certificate evidencing Common Stock
5* -- Opinion of Baker & Botts, L.L.P.
10.1* -- 1996 Stock Option and Incentive Plan of the Company
10.2* -- Form of Separation Agreement dated as of , 1996 between
the Company and Trinity Industries, Inc.
10.3* -- Form of Administrative Services Agreement dated as of ,
1996 between the Company and Trinity Industries, Inc.
10.4* -- Form of Tax Sharing and Tax Benefit Reimbursement Agreement dated as
of , 1996 between the Company and Trinity Industries,
Inc.
10.5* -- Form of Trademark License Agreement dated as of , 1996
between the Company and Trinity Industries, Inc.
10.6* -- Form of Rights Agreement dated as of , 1996 between the
Company and , as Rights Agent
10.7* -- Form of Noncompetition Agreement to be entered into between the
Company and John Dane III
21* -- Subsidiaries of the Company
23.1 -- Consent of Ernst & Young LLP
23.2* -- Consent of Baker & Botts, L.L.P. (contained in the opinion filed as
Exhibit 5 to this Registration Statement)
27 -- Financial Data Schedule
</TABLE>

- ---------------

* To be filed by amendment

(b) Financial Statement Schedules

NONE

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-4
<PAGE> 92

The undersigned Registrant also undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 93

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on June 27, 1996.

HALTER MARINE GROUP, INC.

By: /s/ JOHN DANE III
--------------------------------
John Dane III
Chairman of the Board, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ---------------
<C> <S> <C>
/s/ JOHN DANE III Chairman of the Board, June 27, 1996
---------------------------------- President and Chief
John Dane III Executive Officer (Principal
Executive Officer)

/s/ KEITH L. VOIGTS Vice President (Principal June 27, 1996
---------------------------------- Financial and
Keith L. Voigts Accounting Officer)

</TABLE>
<PAGE> 94

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
1* -- Form of Underwriting Agreement
3.1* -- Certificate of Incorporation of Halter Marine Group, Inc. (the
"Company")
3.2* -- Bylaws of the Company
4.1* -- Form of Certificate evidencing Common Stock
5* -- Opinion of Baker & Botts, L.L.P.
10.1* -- 1996 Stock Option and Incentive Plan of the Company
10.2* -- Form of Separation Agreement dated as of , 1996 between
the Company and Trinity Industries, Inc.
10.3* -- Form of Administrative Services Agreement dated as of ,
1996 between the Company and Trinity industries, Inc.
10.4* -- Form of Tax Sharing and Tax Benefit Reimbursement Agreement dated as
of , 1996 between the Company and Trinity Industries,
Inc.
10.5* -- Form of Trademark License Agreement dated as of , 1996
between the Company and Trinity Industries, Inc.
10.6* -- Form of Rights Agreement dated as of , 1996 between the
Company and , as Rights Agent
10.7* -- Form of Noncompetition Agreement to be entered into between the
Company and John Dane III
21* -- Subsidiaries of the Company
23.1 -- Consent of Ernst & Young LLP
23.2* -- Consent of Baker & Botts, L.L.P. (contained in the opinion filed as
Exhibit 5 to this Registration Statement)
27 -- Financial Data Schedule
</TABLE>

- ---------------

* To be filed by amendment

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated , 1996, in the Registration Statement
(Form S-1) and related Prospectus of Halter Marine Group, Inc. for the
registration of 17,250,000 shares of its common stock.

ERNST & YOUNG LLP

Dallas, Texas
, 1996

The foregoing consent is in the form that will be signed upon the
completion of the organization of Halter Marine Group, Inc. as described in Note
1 to the consolidated financial statements.

ERNST & YOUNG LLP

Dallas, Texas
June 25, 1996

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 672,000
<SECURITIES> 0
<RECEIVABLES> 8,340,000
<ALLOWANCES> 0
<INVENTORY> 6,063,000
<CURRENT-ASSETS> 86,232,000
<PP&E> 54,857,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 141,374,000
<CURRENT-LIABILITIES> 49,631,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 66,743,000
<TOTAL-LIABILITY-AND-EQUITY> 141,374,000
<SALES> 0
<TOTAL-REVENUES> 254,294,000
<CGS> 0
<TOTAL-COSTS> 214,559,000
<OTHER-EXPENSES> 15,911,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,268,000
<INCOME-PRETAX> 20,567,000
<INCOME-TAX> 8,102,000
<INCOME-CONTINUING> 12,465,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,465,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>