<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 16, 1997
HALTER MARINE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12159 75-2656828
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
13085 INDUSTRIAL SEAWAY ROAD,
GULFPORT, MISSISSIPPI 39503
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 601/896-0029
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 4, 1997, Halter Marine, Inc., a wholly owned subsidiary of the
Registrant, purchased fifty-one percent of the issued and outstanding capital
stock of Maritime Holdings, Inc., a Delaware corporation ("MHI"), of which the
primary asset of MHI is eighty percent of the issued and outstanding capital
stock of Texas Drydock, Inc., a Texas corporation ("Texas Drydock").
Simultaneously, Halter Marine, Inc. purchased fifty-one percent of the other
twenty percent of the issued and outstanding capital stock of Texas Drydock. At
the same time Halter Marine, Inc. obtained options to acquire the remaining
forty-nine percent of the MHI stock and the remaining forty-nine percent of the
other twenty percent of the Texas Drydock stock.
On May 16, 1997, Halter Marine, Inc. purchased the remaining forty-nine
percent (49%) of the issued and outstanding stock of MHI from Messrs. Thomas C.
Weller, Jr., Ronald J. Stevens and Rick S. Rees for $21,600,000 and the
remaining forty-nine percent (49%) of the other twenty percent (20%) of Texas
Drydock (the name of which has been changed to TDI-Halter, Inc.) from Mr. Don O.
Covington for $5,400,000. Halter Marine, Inc. executed its promissory notes
payable to or for the benefit of the Sellers bearing interest at, seven and one-
tenth percent (7.1%) per annum, both principal and interest due January 15,
1998, in payment of the purchase price. Mr. Rick S. Rees, Executive Vice
President and director of the Registrant, was a recipient of one of the notes in
the principal amount of $4,070,942 and has a 15.18% interest in the $1,000,000
delivered to the escrow agent.
TDI-Halter, Inc. is engaged in marine repair and manufacturing of offshore
drilling and workover units, operating six shipyards in southeast Texas. Halter
intends to continue and expand the operations of TDI-Halter, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
List below the financial statements, pro forma financial information
and exhibits, if any, filed as a part of this report.
(a) Financial Statements of Business Acquired.
99.11 Financial Statements of Texas Drydock, Inc. and Subsidiary
at September 30, 1996 and 1995 (included herein as an
exhibit and incorporated herein by this reference).
99.12 Financial Statements (Unaudited) of Texas Drydock, Inc.
and Subsidiary at March 31, 1997 and 1996 (included herein
as an exhibit and incorporated herein by this reference).
-2-
<PAGE>
(b) Pro Forma Financial Information.
99.13 Pro Forma Financial Information (Unaudited) of Halter
Marine Group, Inc. and Texas Drydock, Inc. at March 31,
1997 (included herein as an exhibit and incorporated
herein by this reference).
(c) Exhibits.
99.9 Amendment No. 2 to Stock Purchase Agreement by and among
Thomas C. Weller, Jr., Ronald J. Stevens, Rick S. Rees,
Don O. Covington and Halter Marine, Inc., dated May 15,
1997 (included herein as an exhibit and incorporated
herein by this reference).
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HALTER MARINE GROUP, INC.
Date: October 21, 1997 By: /s/ Keith L. Voigts
----------------------
Keith L. Voigts
Senior Vice President
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
99.9* Amendment No. 2 to Stock Purchase Agreement by and among
Thomas C. Weller, Jr., Ronald J. Stevens, Rick S. Rees, Don O.
Covington and Halter Marine, Inc., dated May 15, 1997.
99.11 Financial Statements of Texas Drydock, Inc. and Subsidiary
at September 30, 1996 and 1995.
99.12* Financial Statements (Unaudited) of Texas Drydock, Inc. and
Subsidiary at March 31, 1997 and 1996.
99.13* Pro Forma Financial Information (Unaudited) of Halter Marine
Group, Inc. and Texas Drydock, Inc. at March 31, 1997
___________
* Previously filed with Current Report on Form 8-K/A filed with the
Commission on July 31, 1997.
<PAGE>
EXHIBIT 99.11
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Texas Drydock, Inc. and Subsidiary:
We have audited the accompanying consolidated balance sheets of Texas
Drydock, Inc. and subsidiary (the Company) as of September 30, 1995 and 1996,
and the related consolidated statements of earnings, shareholders' equity and
cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those 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 evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of September 30, 1995 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
New Orleans, Louisiana
November 22, 1996, except as to
Note 9, which is as of May 16, 1997
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $10,665,101 2,837,019
Contract receivables (notes 4 and 6).................. 2,194,466 14,021,636
Other receivables..................................... 20,603 267,810
Costs and estimated earnings in excess of billings on
uncompleted contracts (note 2)....................... 467,916 1,135,966
Other current assets.................................. 65,393 50,000
----------- ----------
Total current assets................................ 13,413,479 18,312,431
Property and equipment, net (notes 3 and 4)............. 9,070,509 12,238,184
Investment in joint venture............................. 238,477 279,278
----------- ----------
$22,722,465 30,829,893
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable--trade............................... $ 207,435 4,585,538
Billings in excess of costs on uncompleted contracts
(note 2)............................................. -- 1,072,152
Estimated loss on uncompleted contract................ -- 1,250,000
Accrued expenses...................................... 1,287,267 2,543,834
Current portion of long-term debt (note 4)............ 326,919 353,967
Due to shareholder, net............................... 200,888 38,023
----------- ----------
Total current liabilities........................... 2,022,509 9,843,514
----------- ----------
Long-term debt, net (note 4)............................ 4,134,318 3,784,341
Deferred income taxes (note 5).......................... 428,836 519,767
Other liabilities....................................... 377,769 667,693
Shareholders' equity:
Common stock, $1 par value; 1,000 shares authorized,
issued and outstanding............................... 1,000 1,000
Retained earnings..................................... 15,758,033 16,013,578
----------- ----------
Total shareholders' equity.......................... 15,759,033 16,014,578
Commitments, contingencies and other matters (notes 7
and 8)
----------- ----------
$22,722,465 30,829,893
=========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Revenues (notes 2 and 6):
Ship and rig repair.................................. $28,045,773 30,532,845
Rig modification..................................... -- 40,542,561
New construction..................................... 6,803,340 --
Fabrication and other................................ 5,796,563 2,745,692
----------- ----------
Total revenues..................................... 40,645,676 73,821,098
Cost of revenues....................................... 29,580,693 70,306,107
----------- ----------
Gross profit......................................... 11,064,983 3,514,991
General and administrative expenses.................... 4,041,992 3,929,895
----------- ----------
Operating (loss) profit.............................. 7,022,991 (414,904)
----------- ----------
Other income (expense):
Interest income...................................... 567,479 333,351
Interest expense..................................... (289,999) (364,544)
Gain on sale or disposition of assets................ 237,152 351,045
Gain on settlement of lawsuit (note 8)............... -- 1,731,927
Loss on joint venture................................ (92,541) (9,199)
Other, net........................................... (6,988) --
----------- ----------
Total other income................................. 415,103 2,042,580
----------- ----------
Earnings before income taxes........................... 7,438,094 1,627,676
Income taxes (note 5).................................. 2,697,194 572,131
----------- ----------
Net earnings......................................... $4,740,900 1,055,545
=========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED SHAREHOLDERS'
STOCK EARNINGS EQUITY
------ ---------- -------------
<S> <C> <C> <C>
Balance at September 30, 1994.................. $1,000 13,267,133 13,268,133
Net earnings................................... -- 4,740,900 4,740,900
Dividends declared ($2,250 per share).......... -- (2,250,000) (2,250,000)
------ ---------- ----------
Balance at September 30, 1995.................. 1,000 15,758,033 15,759,033
Net earnings................................... -- 1,055,545 1,055,545
Dividends declared ($800 per share)............ -- (800,000) (800,000)
------ ---------- ----------
Balance at September 30, 1996.................. $1,000 16,013,578 16,014,578
====== ========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings........................................ $ 4,740,900 1,055,545
Adjustments to reconcile net earnings to net cash
(used) provided by operating activities:
Depreciation...................................... 682,423 1,064,536
Deferred income taxes............................. 145,620 90,931
Loss on joint venture............................. 92,541 9,199
Increase (decrease) in cash flows resulting from
changes in the following operating assets and
liabilities:
Receivables..................................... 3,251,915 (12,074,377)
Costs and estimated earnings in excess of
billings on uncompleted contracts.............. 1,805,825 (668,050)
Other current assets............................ (9,603) 15,393
Accounts payable--trade......................... (2,675,978) 4,378,103
Billings in excess of costs on uncompleted con-
tracts......................................... (1,792,852) 1,072,152
Accrued expenses................................ (170,406) 1,257,197
Other liabilities............................... -- 289,294
Estimated loss on uncompleted contract.......... -- 1,250,000
Due to shareholder, net......................... 158,818 (162,865)
----------- ------------
Total adjustments............................... 1,488,303 3,478,487
----------- ------------
Net cash (used) provided by operating activi-
ties........................................... 6,229,203 (2,422,942)
----------- ------------
Cash flows used in investing activities:
Capital expenditures.............................. (2,681,420) (4,232,211)
Investment in joint venture....................... (193,518) (50,000)
----------- ------------
Net cash used in investing activities........... (2,874,938) (4,282,211)
----------- ------------
Cash flows used in financing activities:
Principal payments on long-term debt.............. (253,667) (322,929)
Dividends paid.................................... (2,250,000) (800,000)
----------- ------------
Net cash used in financing activities........... (2,503,667) (1,122,929)
----------- ------------
Net (decrease) increase in cash and cash equiva-
lents.......................................... 850,598 (7,828,082)
Cash and cash equivalents:
Beginning of year................................. 9,814,503 10,665,101
End of year....................................... $10,665,101 2,837,019
=========== ============
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest........................................ $ 237,499 373,084
=========== ============
Income taxes.................................... $ 2,930,000 218,561
=========== ============
Supplemental schedules of noncash financing and
investing activities--property and equipment
acquired through assumption of debt.............. $ 3,200,000 --
=========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Texas Drydock, Inc. and subsidiary (the Company) is engaged primarily in the
business of ship and rig repair and heavy steel fabrication. The Company is
affiliated with various other entities in the same general line of business
through common ownership. The Company is an 80%-owned subsidiary of Maritime
Holdings, Inc. (MHI). The Company was previously an 80%-owned subsidiary of
City Capital Corporation (CCC). CCC transferred its stock in Texas Drydock,
Inc. to its parent company Maritime Holdings, Inc. in March 1996.
The Company's wholly-owned subsidiary, TDI International, Inc. (TDII), was
formed in April 1994 in the Cayman Islands. TDII has a 49% interest in a
corporate joint venture organized under the laws of Bahrain to provide
fabrication, repair, modification and new construction of offshore drilling
rigs, platforms, and related marine crafts. The investment in the common stock
of the joint venture is accounted for by the equity method. The joint venture
has not commenced significant operations as of September 30, 1996.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of Texas Drydock,
Inc. and its subsidiary after eliminating all significant intercompany
transactions.
(c) Revenue Recognition
Revenues from long-term contracts, except those contracts negotiated on a
time and material basis, are recognized on the percentage-of-completion
method, measured by the percentage of labor dollars incurred to date to
estimated total labor dollars for each contract. This method is used because
management considers expended labor dollars to be the best available measure
on the progress of contracts.
Revenues from nonmajor ship and rig repair and steel fabrication are
recognized on the completed contract method. This method is used because the
typical contract is completed in three months or less; therefore, financial
position and results of operations do not vary significantly from those which
would result from the use of the percentage-of-completion method.
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.
Provisions for estimated losses on uncompleted contracts are recorded in the
period such losses become determinable. Revisions to estimated costs and
contract profitability are recognized in the period the revisions become
determinable.
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.
(d) Property and Equipment
Property and equipment is stated at cost, and depreciation and amortization
are computed using the straight-line method over the estimated useful service
lives of the related assets. Estimated useful lives assigned for major
categories of property and equipment are as follows:
<TABLE>
<S> <C>
Buildings, docking facilities and improve-
ments...................................... 20 years
Machinery and equipment..................... 5-10 years
Autos....................................... 3-5 years
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(e) Income Taxes
Since its formation in 1986, the taxable income or loss of the Company has
been included in the consolidated Federal income tax return of its majority
stockholder. Under the intercompany tax-sharing agreement, income taxes are
provided by the Company on a separate return basis, all of which are
considered payable to the parent and recorded through the intercompany
accounts.
The Company utilizes the asset and liability method of Statement 109 to
account for income taxes. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(f) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, certificates of deposit and all
highly-liquid instruments with an original maturity of three months or less.
(g) Environmental Expenditures
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Generally, the timing of these accruals coincides with
the completion of a feasibility study or the Company's commitment to a formal
plan of action. The liabilities for environmental costs recorded in accrued
expenses were $271,000 and $404,000 at September 30, 1995 and 1996,
respectively.
(h) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses to prepare these financial
statements in conformity with generally accepted accounting principles. In
preparing the financial statements, management is required to make significant
judgments that affect the reported revenues, gross profit, and percentage of
completion. Actual results could differ from these estimates.
(i) Earnings per Share
Information with respect to earnings per share has not been presented as
such information is not considered meaningful since the company is privately
held by a limited number of shareholders.
(j) Reclassification
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Uncompleted contracts at September 30, 1995 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Costs incurred on uncompleted contracts............... 467,916 $21,084,124
Estimated loss on uncompleted contract................ -- (1,250,000)
Estimated earnings on uncompleted contracts........... -- 371,508
---------- -----------
467,916 20,205,632
Less billings to date................................. -- 21,391,818
---------- -----------
467,916 $(1,186,186)
========== ===========
Uncompleted contracts are included in the accompanying consolidated balance
sheets under the following captions:
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 467,916 $ 1,135,966
Estimated loss on uncompleted contract................ -- (1,250,000)
Billings in excess of costs on incomplete contracts... -- (1,072,152)
---------- -----------
467,916 $(1,186,186)
========== ===========
(3) PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1995 and 1996 consisted of the
following:
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Land.................................................. 2,161,862 $ 2,161,862
Buildings, docking facilities and improvements........ 5,401,275 8,071,695
Machinery and equipment............................... 3,762,136 5,225,870
Automobiles........................................... 87,301 185,358
---------- -----------
11,412,574 15,644,785
Accumulated depreciation and amortization............. (2,342,065) (3,406,601)
---------- -----------
Net property and equipment............................ 9,070,509 $12,238,184
========== ===========
</TABLE>
(4) LONG-TERM DEBT
Long-term debt of $4,461,237 and $4,138,308 at September 30, 1995 and 1996,
respectively, consists principally of promissory notes due in monthly
installments. The notes have fixed interest rates ranging from 7% to 10% and
variable rates of prime plus 1%. The notes are secured by land, building,
docking facilities, and improvements and machinery and equipment with a net
book value approximating $8 million. The notes have final maturities ranging
from the year 2000 through 2013.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Scheduled maturities of long-term debt are as follow:
<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
----------- ----------
<S> <C>
1997........................................ $ 353,967
1998........................................ 388,940
1999........................................ 427,628
2000........................................ 280,351
2001........................................ 120,234
Thereafter.................................. 2,567,188
----------
$4,138,308
==========
</TABLE>
The Company has a revolving credit agreement with a bank which provides for
borrowings up to $5,000,000 and expires in October 1997. Availability of funds
under the agreement is limited by the level of eligible accounts receivable,
inventories and the assessed value of a docking facility. Outstanding
borrowings under this agreement are collateralized by accounts receivable,
inventory and a collateral mortgage on a docking facility and bear interest at
a varying rate determined at the time of each cash draw. In addition, the
agreement is supported by the guaranty of the Company's parent company
Maritime Holdings, Inc. Provisions of the agreement require that the Company
be in compliance with certain covenants. At September 30, 1996, the Company
obtained a waiver from the bank for noncompliance with certain covenants. At
September 30, 1996, the funds available under the revolving credit agreement
are reduced by a stand-by letter of credit securing certain of the Company's
insurance premiums in the amount of $502,045. At September 30, 1996, no
amounts were drawn under the revolving credit agreement.
At September 30, 1996, the fair value of debt outstanding approximates its
carrying value based on interest rates currently available to the Company.
(5) INCOME TAXES
The components of income tax expense are:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
---------- -------- ---------
<S> <C> <C> <C>
Year ended September 30, 1995:
U.S. Federal................................. $2,551,574 145,620 2,697,194
State and local.............................. -- -- --
---------- ------- ---------
$2,551,574 145,620 2,697,194
========== ======= =========
Year ended September 30, 1996:
U.S. Federal................................. $ 481,200 90,931 572,131
State and local.............................. -- -- --
---------- ------- ---------
$ 481,200 90,931 572,131
========== ======= =========
</TABLE>
Income tax expense differs from amounts computed by applying the U.S.
federal tax rate of 34% in 1995 and 1996 to earnings before income taxes
primarily due to equity in losses on joint venture, meals and entertainment
exclusions, benefits of lower tax bracket rate, and adjustments of prior
year's estimated liabilities.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at September
30, 1995 and 1996 are presented below:
<TABLE>
<CAPTION>
1995 1996
--------- --------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities deductible for tax purposes when
paid................................................ $ 150,269 248,843
Less valuation allowance........................... -- --
--------- --------
Net deferred tax assets............................ 150,269 248,843
--------- --------
Deferred tax liabilities:
Plant and equipment, principally due to differences (559,540)
in depreciation..................................... (751,610)
Other................................................ (19,565) (17,000)
--------- --------
Total gross deferred tax liabilities............... (579,105) (768,610)
--------- --------
Net deferred tax liability......................... $(428,836) (519,767)
========= ========
</TABLE>
(6) BUSINESS AND CREDIT CONCENTRATION
Three of the Company's largest customers accounted for 56% and 84% of total
revenues for the years ended September 30, 1995 and 1996, respectively.
Included in contract receivables at September 30, 1995 and 1996 are amounts
due from these customers totaling approximately $1,600,000 and $12,500,000,
respectively.
(7) RELATED PARTY TRANSACTIONS
CCC charged the Company $997,102 and 496,211 for consulting and other
administrative services during the years ended September 30, 1995 and 1996,
respectively. These fees are included in cost of revenues.
(8) COMMITMENTS, CONTINGENCIES AND OTHER
In 1996, the Company settled a lawsuit against a former liability insurance
carrier, Liberty Mutual Fire Insurance Company (Liberty) for approximately
$1,732,000. The lawsuit was originally filed in 1992 as a result of Liberty's
refusal to participate in the settlement of a lawsuit brought by the family of
a former employee. The settlement award has been recorded as other income in
the accompanying consolidated statement of earnings.
The Company has entered into various operating lease agreements with
unrelated parties for the use of certain real estate, a pier and equipment. At
September 30, 1996, future minimum lease payments under noncancelable
operating leases are as follows:
<TABLE>
<S> <C>
1997........................................ $ 292,260
1998........................................ 237,260
1999........................................ 214,104
2000........................................ 212,000
2001........................................ 212,000
Thereafter.................................. 1,850,000
==========
</TABLE>
In addition to minimum lease payments, the Company pays a usage fee based on
gross registered tons per day for each vessel moored or on drydock at the
leased premises. The Company incurred rent expense of approximately $913,000
and $1,133,000 for the years ended September 30, 1995 and 1996, respectively.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following is a detail of amounts iuncluded in Accrued expenses at
September 30, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Accrued property
taxes $ 107,395 220,938
Accrued
insurance 223,224 706,666
Accrued
franchise tax 450,816 262,136
Accrued
remediation
costs 271,141 404,070
Other 234,691 950,024
---------- ---------
Accrued
expenses $1,287,267 2,543,834
========== =========
</TABLE>
Beginning in January 1994, the Company obtained workers' compensation
coverage through its participation in a mutual indemnity association. The
Company pays annual premiums (calls) to the association. In addition to
amounts paid, the association has advised the Company of supplemental calls
for each policy year covered. The Company has accrued for the supplemental
calls as advised by the association. The association has purchased reinsurance
for the years in which the Company has participated. Accordingly, the
association has taken into account the stop-loss threshold of the reinsurance
in the computation of the estimated supplemental calls.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. While the resolution of these matters cannot
be predicted with certainty, management believes the final outcome of such
matters will not have a materially adverse effect on the Company's
consolidated financial position or results of operations.
The Company participates in a deferred contribution pension plan sponsored
by the parent. Employees participating in the plan may contribute up to 15% of
their base salary, subject to federal limitations on absolute amounts
contributed. The Company will match up to 6% of their base salary, with
matching contributions of 50% of employee contributions. The amount
contributed by the Company for 1995 and 1996 is not material.
(9) SUBSEQUENT EVENTS
Included in TDI's backlog of contracts as of September 30, 1996 was a $14
million contract to construct a liftboat. Subsequent to year-end, this
contract was assigned to TDI's wholly-owned subsidiary, TDII. In conjunction
with this assignment, TDI will remain liable for the contract performance and
has indemnified the customer for any legal or financial liability.
In April 1997, the shareholders of the Company sold 51% of their interest in
the Company and an option to sell the remaining 49% to Halter Marine Group,
Inc. In May 1997, the option to sell was exercised and the remaining 49%
interest was sold to Halter Marine Group, Inc.
