SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-6967
HALTER MARINE GROUP, INC.
(Exact name of registrant as specified in its charter)
Incorporated Under the Laws 75-2656828
of the State of Delaware (I.R.S. Employer
Identification No.)
13085 Seaway Road
Gulfport, MS 39503
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number,
Including Area Code (601) 896-0029
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
18,450,000
(Number of shares of common stock outstanding as of October 29, 1996)
Part I
Item 1 - Financial Statements
Halter Marine Group, Inc.
Consolidated Balance Sheet
(unaudited)
(in millions)
September 30 March 31
1996 1996
Assets
Current Assets
Cash . . . . . . . . . . . . . . . . . . $ 0.7 $ 0.7
Contract receivables . . . . . . . . . . 20.5 8.3
Costs and estimated earnings in excess
of billings on uncompleted contracts . 83.1 67.9
Inventories. . . . . . . . . . . . . . . 8.7 6.0
Deferred tax benefit . . . . . . . . . . 3.9 2.9
Other current assets . . . . . . . . . . 1.0 0.4
Total current assets 117.9 86.2
Property, plant and equipment, net . . . . 55.9 54.9
Other assets . . . . . . . . . . . . . . . 0.3 0.3
$174.1 $141.4
Liabilities and Stockholder's Net Investment
Current Liabilities
Accounts payable and accrued liabilities $ 5.3 $ 3.8
Due to an affiliate. . . . . . . . . . . 28.5 17.5
Income taxes payable to an affiliate . . 21.6 15.8
Billings in excess of cost and estimated
earnings on uncompleted contracts. . . 19.8 12.6
Total current liabilities 75.2 49.7
Long-term note due to an affiliate . . . . 25.0 25.0
Stockholder's net investment . . . . . . . 73.9 66.7
$174.1 $141.4
See accompanying notes to consolidated financial statements.
Halter Marine Group, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Six Months
Ended September 30
1996 1995
Contract revenue earned. . . . . . . . . . $180.4 $125.9
Cost of revenue earned . . . . . . . . . . 156.3 106.8
Gross profit. . . . . . . . . . . . . . 24.1 19.1
Selling, general and administrative
expenses. . . . . . . . . . . . . . . . . 10.4 7.3
Operating income. . . . . . . . . . . . 13.7 11.8
Interest expense, net. . . . . . . . . . . 1.7 1.7
Income before income taxes . . . . . . . . 12.0 10.1
Provision (benefit) for income taxes:
Current. . . . . . . . . . . . . . . . . 5.8 7.7
Deferred . . . . . . . . . . . . . . . . (1.0) (3.7)
4.8 4.0
Net income . . . . . . . . . . . . . . . . 7.2 6.1
Stockholder's net investment:
Beginning of period. . . . . . . . . . . 66.7 54.3
End of period. . . . . . . . . . . . . . $ 73.9 $ 60.4
Pro forma net income per share . . . . . . $ 0.40 $ 0.34
Pro forma weighted average number of
shares outstanding . . . . . . . . . . . 18.0 18.0
See accompanying notes to consolidated financial statements.
<PAGE>
Halter Marine Group, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Three Months
Ended September 30
1996 1995
Contract revenue earned. . . . . . . . . . $ 94.5 $ 53.9
Cost of revenue earned . . . . . . . . . . 81.7 46.0
Gross profit. . . . . . . . . . . . . . 12.8 7.9
Selling, general and administrative
expenses. . . . . . . . . . . . . . . . . 5.6 3.2
Operating income. . . . . . . . . . . . 7.2 4.7
Interest expense, net. . . . . . . . . . . 0.8 0.7
Income before income taxes . . . . . . . . 6.4 4.0
Provision (benefit) for income taxes:
Current. . . . . . . . . . . . . . . . . 5.1 3.0
Deferred . . . . . . . . . . . . . . . . (2.6) (1.4)
2.5 1.6
Net income . . . . . . . . . . . . . . . . 3.9 2.4
Stockholder's net investment:
Beginning of period. . . . . . . . . . . 70.0 58.0
End of period. . . . . . . . . . . . . . $ 73.9 $ 60.4
Pro forma net income per share . . . . . . $ 0.22 $ 0.13
Pro forma weighted average number of
shares outstanding . . . . . . . . . . . 18.0 18.0
See accompanying notes to consolidated financial statements.
Halter Marine Group, Inc.
Consolidated Statement of Cash Flow s
(unaudited)
(in millions)
Six Months
Ended September 30
1996 1995
Net cash provided (required) by
operating activities . . . . . . . . . . $(7.0) $12.3
Cash flows from investing activities:
Capital expenditures. . . . . . . . . . . (4.6) (1.6)
Disposals of equipment. . . . . . . . . . 0.6 -
Payment for purchase of acqusisitions . . - (4.6)
Net cash required by investing
activities. . . . . . . . . . . . . . (4.0) (6.2)
Cash flows from financing activities -
net borrowings from (repayments to)
parent. . . . . . . . . . . . . . . . . 11.0 (6.2)
Net increase (decrease) in cash. . . . . . - (0.1)
Cash at beginning of period. . . . . . . . 0.7 0.5
Cash at end of period. . . . . . . . . . . $ 0.7 $ 0.4
See accompanying notes to consolidated financial statements.
The foregoing financial statements are unaudited and have been
prepared from the books and records of the Registrant. In the
opinion of the Registrant, all adjustments, consisting only of
normal and recurring adjustments necessary to a fair presentation
of the financial position of the Registrant as of September 30,
1996 and March 31, 1996 and the results of operations for the six
and three month periods ended September 30, 1996 and 1995 and
cash flows for the six month periods ended September 30, 1996 and
1995, in conformity with generally accepted accounting
principles, have been made.
Halter Marine Group, Inc.
Notes to Consolidated Financial Statements
1.General Information
Halter Marine Group, Inc. ("Halter" or the "Registrant") is a
Delaware corporation incorporated on June 24, 1996 as a wholly-
owned subsidiary of Trinity Industries, Inc. ("Trinity"). On
September 25, 1996, Halter commenced an initial public offering
(the "Offering") of Halter Marine Group, Inc. common stock.
Three million shares of common stock, representing approximately
17 percent of the total outstanding shares of common stock of
Halter, began trading on the American Stock Exchange. Prior to
the Offering, Halter and Trinity consummated the Consolidation
Transactions. These transactions include (i) the transfer to
Halter of the stock of each subsidiary of 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, (ii) the transfer to subsidiaries of Halter of certain
assets and liabilities of Trinity related to the businesses of
Halter, and (iii) the assumption by Halter of the indebtedness of
Trinity associated with Halter's businesses (which totalled $25.0
million as of September 30, 1996).
2. Basis of Presentation
On the Consolidated Income Statements for the six and three month
periods ended September 30, 1996 and 1995, pro forma net income
per share is based on the weighted average number of shares
outstanding as reflected in the Offering of Halter Marine Group,
Inc. common stock. From the cover page, the number of shares of
common stock outstanding as of October 29, 1996 includes the
over-allotment amount of 450,000 shares. See Footnote No. 3,
Subsequent Events
3. Subsequent Events
On October 1, 1996, Halter closed a new $105 million bank
revolving line of credit to be used for general corporate
purposes and working capital requirements ("Credit Facility").
The Credit Facility has a $50 million sublimit for letters of
credit, is due October 1, 1999 and bears interest at variable
rates based upon the London Interbank Offered Rate plus 0.625% to
1.25% per annum depending upon certain ratios. Halter borrowed
$50 million under the Credit Facility to refinance debt of
Trinity associated with the Registrant's business and assumed in
connection with the Offering, as well as refinance Halter's
long-term intercompany note to Trinity.
Also on October 1, 1996, Halter closed the previously announced
sale of 3,000,000 shares (16.7%) of its common stock to the
public at a price of $11 per share. The net proceeds of the
Offering were used to repay a portion of the above described
advances under the Credit Facility and to repay income tax
liabilities of Halter owed to Trinity.
On October 29, 1996, the underwriters of the Offering exercised
their over-allotment option in full for 450,000 shares of common
stock. The net proceeds from the over-allotment exercise of
approximately $4.6 million will be used for general corporate
purposes.
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
The increase in contract receivables of $12.2 million from March
31, 1996 to September 30, 1996 was directly related to the increase
in revenue for the period.
Costs and estimated earnings in excess of billings on uncompleted
contracts increased $15.2 million from March 31, 1996 to September
30, 1996. This increase was primarily due to the increase in
construction activity and the resulting increase in contract
revenue.
Due to an affiliate increased $11.0 million in the current period
as borrowings from Trinity were used to finance working capital
requirements and to fund business expansion and capital
expenditures.
The increase in billings in excess of cost and estimated earnings
on uncompleted contracts of $7.2 million from March 31, 1996 to
September 30, 1996 relates primarily to advance billings on new
commercial contracts.
Income taxes payable to an affiliate increased by $5.8 million from
March 31, 1996 to September 30, 1996 as a result of additional
current taxes accrued on income for the six month period ended
September 30, 1996.
Results of Operations
Six Months Ended September 30, 1996 vs.
Six Months Ended September 30, 1995
Contract revenue earned increased 43.3% to $180.4 million in 1996
compared with $125.9 million in 1995. Revenues for the current
period were favorably affected by an increase in government revenue
($36.4 million), yacht revenue ($5.7 million), and other commercial
revenue ($12.6 million).
Gross profit margin declined to 13.4% during the six months ended
September 30, 1996 vs. 15.2% for the corresponding period in 1995.
This decrease resulted primarily from the substantial completion in
1995 of certain contracts for the construction of large vessels
under which the Registrant achieved higher than anticipated
profitability that was recognized in later stages of the contract.
Selling, general and administrative expenses increased to $10.4
million in the six months ended September 30, 1996 from $7.3
million for the same period in 1995. As a percent of contract
revenue earned, these expenses amounted to 5.7% for the six months
ended September 30, 1996 vs. 5.8% for the six months ended
September 30, 1995. The nature of the dollar increase related
substantially to the increased sales activity in the current fiscal
year. Further, during the three months ended September 30, 1995,
general and administrative expenses were credited with a $0.6
million reimbursement for research and development costs in
conjunction with a contract with the U.S. Government.
Three Months Ended September 30, 1996 vs.
Three Months Ended September 30, 1995
Contract revenue earned increased 75.3% to $94.5 million in 1996
compared with $53.9 million in 1995. Revenues for the current
period were favorably affected by an increase in government revenue
($31.3 million), yacht revenue ($5.7 million), and other commercial
revenue ($4.6 million).
Gross profit margin declined to 13.5% during the three months ended
September 30, 1996 vs. 14.7% for the corresponding period in 1995.
This decrease resulted primarily from the substantial completion in
1995 of certain contracts for the construction of large vessels
under which the Registrant achieved higher than anticipated
profitability that was recognized in later stages of the contract.
Selling, general and administrative expenses increased to $5.6
million in the three months ended September 30, 1996 from $3.2
million for the same period in 1995. As a percent of contract
revenue earned, expenses for both periods amounted to 5.9%. The
nature of the dollar increase related substantially to the
increased sales activity in the current fiscal year. Further,
during the three months ended September 30, 1995, general and
administrative expenses were credited with a $0.6 million
reimbursement for research and development costs in conjunction
with a contract with the U.S. Government.
PART II
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
27 Financial Data Schedule
(b) No Form 8-K was filed during the quarter.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Halter Marine Group, Inc.
(Registrant)
/S/ John Dane III
John Dane III, Chairman, President and CEO
/S/ Keith L Voigts
Keith L. Voigts, Vice President - Finance
October 30, 1996
Index to Exhibit
No. Description Page
27 Financial Data Schedule *
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 700,000
<SECURITIES> 0
<RECEIVABLES> 20,500,000
<ALLOWANCES> 0
<INVENTORY> 8,700,000
<CURRENT-ASSETS> 117,900,000
<PP&E> 55,900,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 174,100,000
<CURRENT-LIABILITIES> 75,200,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 73,900,000
<TOTAL-LIABILITY-AND-EQUITY> 174,100,000
<SALES> 0
<TOTAL-REVENUES> 180,400,000
<CGS> 0
<TOTAL-COSTS> 156,300,000
<OTHER-EXPENSES> 10,400,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,700,000
<INCOME-PRETAX> 12,000,000
<INCOME-TAX> 4,800,000
<INCOME-CONTINUING> 7,200,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,200,000
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0
</TABLE>
