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 December 31, 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 December 31, 1996)
Part I
Item 1 - Financial Statements
Halter Marine Group, Inc.
Consolidated Balance Sheet
(unaudited)
(in millions)
December 31 March 31
1996 1996
Assets
Current Assets
Cash . . . . . . . . . . . . . . . . . . $ 5.8 $ 0.7
Contract receivables . . . . . . . . . . 27.3 8.3
Costs and estimated earnings in excess
of billings on uncompleted contracts . 73.7 67.9
Inventories. . . . . . . . . . . . . . . 10.0 6.0
Deferred tax benefit . . . . . . . . . . 3.2 2.9
Other current assets . . . . . . . . . . 1.9 0.4
Total current assets 121.9 86.2
Property, plant and equipment, net . . . . 58.4 54.9
Other assets . . . . . . . . . . . . . . . 0.3 0.3
$180.6 $141.4
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 19.2 $ 3.8
Due to affiliate . . . . . . . . . . . . 5.1 17.5
Income taxes payable to affiliate. . . . 2.0 15.8
Billings in excess of cost and estimated
earnings on uncompleted contracts. . . 23.4 12.6
Total current liabilities 49.7 49.7
Long-term debt . . . . . . . . . . . . . . 44.0 -
Long-term note due to affiliate. . . . . . - 25.0
Total liabilities 93.7 74.7
Stockholders' equity:
Common stock. . . . . . . . . . . . . . . 0.2 -
Additional pain in capital. . . . . . . . 82.5 -
Retained earnings . . . . . . . . . . . . 4.2 -
Stockholder's net investment. . . . . . . - 66.7
Total equity 86.9 66.7
$180.6 $141.4
See accompanying notes to consolidated financial statements.
Halter Marine Group, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Nine Months
Ended December 31
1996 1995
Contract revenues earned . . . . . . . . . $292.9 $182.5
Operating costs:
Cost of revenues earned. . . . . . . . . 256.2 152.6
Selling, general and administrative
expenses . . . . . . . . . . . . . . . 15.5 11.1
271.7 163.7
Operating profit . . . . . . . . . . . . . 21.2 18.8
Interest expense, net. . . . . . . . . . . 2.4 2.6
Income before income taxes . . . . . . . . 18.8 16.2
Provision (benefit) for income taxes:
Current. . . . . . . . . . . . . . . . . 7.8 12.4
Deferred . . . . . . . . . . . . . . . . (0.4) (6.0)
7.4 6.4
Net income . . . . . . . . . . . . . . . . $ 11.4 $ 9.8
Net income per share (pro forma prior
to October 1, 1996). . . . . . . . . . . $ 0.63 $ 0.55
Weighted average number of shares
outstanding (pro forma prior to
October 1, 1996). . . . . . . . . . . . 18.1 18.0
See accompanying notes to consolidated financial statements.
Halter Marine Group, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Three Months
Ended December 31
1996 1995
Contract revenues earned . . . . . . . . . $112.5 $ 56.6
Operating costs:
Cost of revenues earned. . . . . . . . . 100.0 45.8
Selling, general and administrative
expenses . . . . . . . . . . . . . . . 5.0 3.8
105.0 49.6
Operating profit . . . . . . . . . . . . . 7.5 7.0
Interest expense, net. . . . . . . . . . . 0.7 0.9
Income before income taxes . . . . . . . . 6.8 6.1
Provision (benefit) for income taxes:
Current. . . . . . . . . . . . . . . . . 2.0 4.7
Deferred . . . . . . . . . . . . . . . . 0.6 (2.3)
2.6 2.4
Net income . . . . . . . . . . . . . . . . $ 4.2 $ 3.7
Net income per share (pro forma prior
to October 1, 1996). . . . . . . . . . . $ 0.23 $ 0.20
Weighted average number of shares
outstanding (pro forma prior to
October 1, 1996). . . . . . . . . . . . 18.3 18.0
See accompanying notes to consolidated financial statements.
Halter Marine Group, Inc.
Consolidated Statement of Cash Flow s
(unaudited)
(in millions)
Nine Months
Ended December 31
1996 1995
Net cash provided (required) by
operating activities . . . . . . . . . . $(12.0) $ 27.2
Cash flows from investing activities:
Proceeds from sale of stock . . . . . . . 33.8 -
Capital expenditures. . . . . . . . . . . (10.1) (3.0)
Disposals of equipment. . . . . . . . . . 0.6 -
Payment for purchase of acquisitions. . . - (4.6)
Net cash provided (required) by
investing activities. . . . . . . . . 24.3 (7.6)
Cash flows from financing activities:
Net repayments to parent. . . . . . . . . (51.2) (19.6)
Net borrowings under line of credit . . . 44.0 -
Net cash required by financing
activities. . . . . . . . . . . . . . (7.2) (19.6)
Net increase in cash . . . . . . . . . . . 5.1 -
Cash at beginning of period. . . . . . . . 0.7 0.5
Cash at end of period. . . . . . . . . . . $ 5.8 $ 0.5
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 December 31,
1996 and March 31, 1996 and the results of operations for the
nine and three month periods ended December 31, 1996 and 1995 and
cash flows for the nine month periods ended December 31, 1996 and
1995, in conformity with generally accepted accounting
principles, have been made.
Halter Marine Group, Inc.
Notes to Consolidated Financial Statements
General Information
Halter Marine Group, Inc. (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, the Registrant 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 the
Registrant, are traded on the American Stock Exchange. Prior to
the Offering, the Registrant and Trinity consummated certain
Consolidation Transactions. These transactions, among other
matters, include (i) the transfer to the Registrant 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 the Registrant of certain assets and
liabilities of Trinity related to the businesses of the
Registrant, and (iii) the assumption by the Registrant of $25.0
million of indebtedness of Trinity associated with the
Registrant's businesses.
On October 1, 1996, the Registrant completed the sale of
3,000,000 shares of its common stock in the Offering at a price
of $11 per share. The net proceeds of the Offering were used to
repay borrowings under the Credit Facility (see Long-term Debt in
Notes to Consolidated Financial Statements) and to repay income
tax liabilities of the Registrant owed to Trinity.
On October 29, 1996, the underwriters of the Offering exercised
their over-allotment option for 450,000 shares of common stock.
The net proceeds from the over-allotment exercise of
approximately $4.6 million were used for general corporate
purposes.
A summary of the transactions described in the preceding
paragraphs is presented in the following table:(in millions)
<TABLE>
<CAPTION>
Stock- Total
Additional holder's Stock-
Common Paid in net Retained holders'
Stock Capital Investment Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996. . . . . . $ - $ - $ 66.7 $ - $ 66.7
Net earnings prior to Offering . . . - - 7.2 - 7.2
Debt assumed from parent . . . . . . - - (25.0) - (25.0)
Transfer stockholder's net
investment to common stock and
additional paid in capital . . . . 0.2 48.7 (48.9) - -
Sale of common stock . . . . . . . . - 33.8 - - 33.8
Net earnings subsequent to Offering. - - - 4.2 4.2
Balance December 31, 1996. . . . . . $ 0.2 $82.5 $ - $ 4.2 $ 86.9
</TABLE>
Basis of Presentation
On the Consolidated Income Statements for periods prior to
October 1, 1996, pro forma net income per share is based on 18
million shares outstanding. Subsequent to the Offering, the
number of shares is based on the actual weighted average of
shares outstanding.
Long-term Debt
On October 1, 1996, the Registrant entered into a $105 million
bank revolving line of credit 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, depending upon certain
ratios, at variable rates which are based upon the London
Interbank Offered Rate plus 0.625% to 1.25% per annum. The
Registrant borrowed $50 million under the Credit Facility to
refinance certain debt of Trinity associated with the
Registrant's business and assumed in connection with the
Offering, as well as refinance the Registrant's long-term
intercompany note to Trinity.
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
Contracts receivable increased to $27.3 million at December 31,
1996 from $8.3 million at March 31, 1996. This increase was
directly related to the increase in revenues for the period.
Inventories increased by $4.0 million (67%) as a result of orders
of materials to support the Registrant's growing revenues base.
Accounts payable and accrued liabilities increased by $16.6 million
from March 31, 1996 to December 31, 1996 primarily as a result of
the Registrant's growth from operations.
Due to affiliate decreased by $12.4 million and income taxes
payable to affiliate decreased by $15.8 million as a result of
payments made from proceeds of the Offering and the Credit
Facility.
Billings in excess of cost and estimated earnings on uncompleted
contracts increased from $12.6 million at March 31, 1996 to $23.4
million at December 31, 1996 primarily from advance billings on new
commercial contracts.
Long-term debt increased ($44.0 million) and long-term note due to
affiliate decreased ($25.0 million) as a result of the
Consolidation Transactions, the Offering and the closing of the
Credit Facility.
Results of Operations
Nine Months Ended December 31, 1996 vs.
Nine Months Ended December 31, 1995
Contract revenues earned increased by $110.4 million or 60.5% in
fiscal 1997 over fiscal 1996. This increase is primarily the
result of the Registrant's successful response to increasing new
shipbuilding construction opportunities. There is a broad increase
in demand for the type of vessels built by the Registrant,
including governmental and commercial vessels.
Operating profit as a percent of contract revenues earned decreased
from 10.3% in fiscal 1996 to 7.2% for the same period in fiscal
1997. Fiscal 1996 was positively impacted by certain contracts
which achieved higher than average margins.
Selling, general and administrative expenses increased by $4.4
million in fiscal 1997 as compared to fiscal 1996. As a percent of
contract revenues earned, these expenses decreased to 5.3% for the
nine months ended December 31, 1996 compared to 6.1% for the same
period a year ago. The dollar increase resulted from increased
activities related to the growth of the Registrant.
Three Months Ended December 31, 1996 vs.
Three Months Ended December 31, 1995
Contract revenues earned increased by $55.9 million or 98.8% in
fiscal 1997 over fiscal 1996. This increase is primarily the
result of the Registrant's successful response to increasing new
shipbuilding construction opportunities. There is a broad increase
in demand for the type of vessels built by the Registrant,
including governmental and commercial vessels.
Operating profit as a percent of contract revenues earned decreased
from 12.4% in fiscal 1996 to 6.7% for the same period in fiscal
1997. The fiscal 1996 period was positively impacted by certain
contracts which achieved higher than average margins.
Selling, general and administrative expenses increased by $1.2
million in fiscal 1997 as compared to fiscal 1996. As a percent of
contract revenues earned, these expenses decreased to 4.4% for the
three months ended December 31, 1996 compared to 6.7% for the same
period a year ago. The dollar increase resulted primarily from the
growth of the Company.
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/ Keith L. Voigts
Keith L. Voigts,
Vice President - Finance
January 23, 1997
Index to Exhibit
No. Description Page
27 Financial Data Schedule *
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 5,800,000
<SECURITIES> 0
<RECEIVABLES> 27,300,000
<ALLOWANCES> 0
<INVENTORY> 10,000,000
<CURRENT-ASSETS> 121,900,000
<PP&E> 58,400,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 180,600,000
<CURRENT-LIABILITIES> 49,700,000
<BONDS> 0
<COMMON> 200,000
0
0
<OTHER-SE> 86,700,000
<TOTAL-LIABILITY-AND-EQUITY> 180,600,000
<SALES> 0
<TOTAL-REVENUES> 292,900,000
<CGS> 0
<TOTAL-COSTS> 256,200,000
<OTHER-EXPENSES> 15,500,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,400,000
<INCOME-PRETAX> 18,800,000
<INCOME-TAX> 7,400,000
<INCOME-CONTINUING> 11,400,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,400,000
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
