<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
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 001-12159 75-2656828
- --------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
13085 Industrial Seaway Road, Gulfport, Mississippi 39503
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601)896-0029
-------------
(Not Applicable)
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
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
(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 note 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.
<PAGE>
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.
99.12 Financial Statements (Unaudited) of Texas Drydock, Inc. and
Subsidiary at March 31, 1997 and 1996.
(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.
(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
<PAGE>
SIGNATURES
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.
(Registrant)
By: /s/ John Dane, III
John Dane, III
Chairman, President and
Chief Executive Officer
Date: July 30, 1997
<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.
<PAGE>
EXHIBIT 99.9
AMENDMENT NO. 2 TO
STOCK PURCHASE AGREEMENT
------------------------
THIS AMENDMENT NO. 2 ("Amendment No. 2"), dated this 15th day of May, 1997,
amends the STOCK PURCHASE AGREEMENT dated as of February 14, 1997, as amended by
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT dated as of April 4, 1997, (as
amended, the "Agreement") by and among THOMAS C. WELLER, JR., RONALD J. STEVENS,
RICK S. REES and DON O. COVINGTON as Sellers and HALTER MARINE, INC. as
Purchaser,
W I T N E S S E T H:
WHEREAS, Article 12 of the Agreement grants to Purchaser an irrevocable
option to purchase from the MHI Sellers the MHI Option Shares and an option to
purchase from the Texas Drydock Seller the Texas Drydock Option Shares
(collectively, the "Purchase Option") exercisable no earlier than twelve (12)
months after the Closing Date and no later than twenty-four (24) months after
the Closing Date, at the Purchase Option Total Exercise Price to be determined
by negotiations but not less than Twenty Million Five Hundred Eighty Thousand
Dollars ($20,580,000.00) and not exceeding Thirty Million Dollars
($30,000,000.00); and
WHEREAS, the parties desire to amend the Agreement to provide (a) that the
Purchase Option Total Exercise Price shall be Twenty-Seven Million Dollars
($27,000,000.00) payable as provided herein, and (b) that the time of exercise
of the options shall be at any time on or before twenty-four (24) months after
the Closing Date; and
WHEREAS, Purchaser desires to exercise the Purchase Option and the parties
desire to provide for the Purchase Option Closing upon such exercise;
NOW, THEREFORE, the parties do hereby agree as follows:
1.
Capitalized terms used in this Amendment No. 2 shall have the same meanings
as set forth in the Agreement, unless otherwise specifically defined herein or
the context shall clearly indicate otherwise.
2.
Section 12.5 of the Agreement is hereby amended to read in its entirety as
follows:
"12.5 Purchase Option Total Exercise Price. The total consideration
------------------------------------
(the "Purchase Option Total Exercise Price") to be paid by Purchaser upon
exercise of the
<PAGE>
options granted to Purchaser to purchase the MHI Option Shares and the
Texas Drydock Option Shares shall be Twenty-Seven Million Dollars
($27,000,000.00)" which shall be payable by Purchaser's execution and
delivery of five promissory notes (the "Promissory Notes"), each dated the
Purchase Option Closing Date, substantially in the form of Exhibits 1
through 5 attached hereto.
3.
Section 12.6 of the Agreement is amended to read in its entirety as
follows:
"12.6 Time of Exercise of Purchase Options. The options granted to
------------------------------------
Purchaser to purchase the MHI Option Shares and the Texas Drydock Option
Shares must be exercised at the same time and may not be separately
exercised and shall be exercised, if at all, at any time after the Closing
Date and no later than twenty-four (24) months after the Closing Date.
Time is of the essence hereof."
4.
Purchaser hereby exercises the Purchase Option for the Purchase Option
Total Exercise Price. It is understood and agreed by and among the parties that
notwithstanding the provisions of Section 12.7 of the Agreement regarding the
Notice of Exercise, this Amendment No. 2 is hereby substituted for, and shall
serve as, the Purchaser's Notice of Exercise as defined in Section 12.7 of the
Agreement.
5.
It is further understood and agreed by and among the parties that
notwithstanding the provisions of Section 12.7 and Section 12.8 of the Agreement
regarding the Purchase Option Closing Date and the Purchase Option Closing, the
place for the Purchase Option Closing shall be the offices of Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., 201 St. Charles Avenue, New
Orleans, Louisiana 70170-5100 and that the date for the Purchase Option Closing
Date shall be May 15, 1997, or at such other date, time or place as the parties
may agree.
6.
Section 12.9 of the Agreement is amended to read in its entirety as
follows:
"12.9 Deliveries at Purchase Option Closing. At the Purchase Option
-------------------------------------
Closing:
<PAGE>
(a) The Purchaser will execute and deliver to the Escrow Agent and
the Sellers the Promissory Notes bearing their respective names as Payees.
(b) The Escrow Agent will deliver to the Purchaser the certificates
representing the MHI Option Shares, duly endorsed (or accompanied by duly
executed stock powers), for transfer to Purchaser and the certificates
representing the Texas Drydock Option Shares, duly endorsed (or accompanied
by duly executed stock powers), for transfer to Purchaser, that have been
deposited with the Escrow Agent."
7.
It is also understood and agreed by and among the parties that the
provisions of Article 17 of the Agreement, which provide for meetings of the
stockholders and Boards of Directors of MHI, Texas Drydock and TDI
International, Ltd., are hereby deleted in their entirety.
8.
This Amendment No. 2 is subject to the receipt by Halter Marine Group,
Inc., the parent company of Purchaser, of a waiver or other approval from its
lending banks, of which Whitney National Bank is the lead lender, that this
Amendment No. 2 and the consummation of the transactions hereby, including
particularly the execution and delivery of the Promissory Notes, will not be
deemed a violation or default of the loan documents. If such waiver or other
approval is not received by Halter Marine Group, Inc. on or before the Purchase
Option Closing Date, this Amendment No. 2 shall be deemed null and void ab
initio; no party shall have any liability or responsibility to or be liable for
damages to any other party; and the Agreement and Escrow Agreement shall remain
in full force and effect as if this Amendment No. 2 never existed.
9.
The parties by their execution hereof reaffirm their intention to be bound
by the terms, provisions and conditions of the Agreement, as amended by this
Amendment No. 2.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first written above.
SELLERS:
/s/ Thomas C. Weller, Jr.
--------------------------------------------
THOMAS C. WELLER, JR.
/s/ Ronald J. Stevens
--------------------------------------------
RONALD J. STEVENS
/s/ Rick S. Rees
--------------------------------------------
RICK S. REES
/s/ Don O. Covington
--------------------------------------------
DON O. COVINGTON
PURCHASER:
HALTER MARINE, INC.
By:/s/ John Dane, III
-----------------------------------------
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 5
PROMISSORY NOTE DUE 1998
$1,000,000.00 New Orleans, Louisiana
May 15, 1997
The undersigned unconditionally promises to pay to the order of Bank One,
Louisiana, National Association, as escrow agent, at its offices at 200
Carondelet St., Suite 404, New Orleans, LA 70130, or at such other location as
is designated by the holder hereof, in lawful money of the United States of
America, the principal amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00),
all of which shall be payable in full on January 15, 1998 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the rate
of SEVEN AND ONE TENTH PERCENT (7.1%) per annum. Interest shall be calculated
on a 365 day per year basis and shall be payable on the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday, or
any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next business
day.
This Note is not subject to any right of offset or compensation in favor of
the undersigned.
Any amounts payable pursuant to this Note, whether principal or interest,
which are not paid on the date due shall bear interest ("Default Interest") at a
rate equal to twelve percent (12%) per annum from such due date until paid in
full.
All payments on this Note shall be applied first to attorneys' fees and
other costs then accrued, if any; second, to the Default Interest then accrued,
if any; third, to Ordinary Interest then accrued, if any; and, finally, to the
principal.
This Note shall become immediately due and payable at the option of the
holder hereof, without presentment or demand or any notice to the undersigned or
any other person obligated hereon, upon (a) the undersigned's failure to pay
principal or interest under this Note on or before the due date thereof, (b) the
undersigned becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether under
federal, state or foreign law or (c) the undersigned making a general assignment
for the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or any
judicial proceedings, or if this Note is not paid at
<PAGE>
maturity, however such maturity may be brought about, and it is placed in the
hands of an attorney for collection, then the undersigned unconditionally
promises to pay all reasonable attorneys' fees and court costs associated with
the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this Note
waive demand, presentment for payment, notice of non-payment, protest, notice of
protest, all pleas of division and discussion and all other notice, filing of
suit and diligence in collecting this Note or enforcing any security herefor,
and agree to any substitution, exchange or release of any of such security or
the release of any party primarily or secondarily liable hereon and further
agree that it will not be necessary for any holder hereof, in order to enforce
payment of this Note, to first institute suit or exhaust its remedies against
any maker or others liable herefor, or to enforce its rights against any
security herefor, and consent to any extensions or postponements of the time of
payment of this Note or any other indulgences with respect hereto, without
notice thereof to any of them and hereby bind themselves in solido for the
-- ------
payment hereof in principal, interest, costs and attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of Louisiana, United States of America.
HALTER MARINE, INC.
By:
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 1
PROMISSORY NOTE DUE 1998
$4,070,942.00 New Orleans, Louisiana
May 15, 1997
The undersigned unconditionally promises to pay to the order of Rick S.
Rees, at 80 Tern St., New Orleans, LA 70124, or at such other location as is
designated by the holder hereof, in lawful money of the United States of
America, the principal amount of FOUR MILLION SEVENTY THOUSAND NINE HUNDRED
FORTY-TWO AND NO/100 DOLLARS ($4,070,942.00), all of which shall be payable in
full on January 15, 1998 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the rate
of SEVEN AND ONE TENTH PERCENT (7.1%) per annum. Interest shall be calculated
on a 365 day per year basis and shall be payable on the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday, or
any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next business
day.
This Note is not subject to any right of offset or compensation in favor of
the undersigned.
Any amounts payable pursuant to this Note, whether principal or interest,
which are not paid on the date due shall bear interest ("Default Interest") at a
rate equal to twelve percent (12%) per annum from such due date until paid in
full.
All payments on this Note shall be applied first to attorneys' fees and
other costs then accrued, if any; second, to the Default Interest then accrued,
if any; third, to Ordinary Interest then accrued, if any; and, finally, to the
principal.
This Note shall become immediately due and payable at the option of the
holder hereof, without presentment or demand or any notice to the undersigned or
any other person obligated hereon, upon (a) the undersigned's failure to pay
principal or interest under this Note on or before the due date thereof, (b) the
undersigned becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether under
federal, state or foreign law or (c) the undersigned making a general assignment
for the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or any
judicial proceedings, or if this Note is not paid at maturity, however such
maturity may be brought about, and it is placed in the hands of an attorney for
collection, then the undersigned unconditionally
<PAGE>
promises to pay all reasonable attorneys' fees and court costs associated with
the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this Note
waive demand, presentment for payment, notice of non-payment, protest, notice of
protest, all pleas of division and discussion and all other notice, filing of
suit and diligence in collecting this Note or enforcing any security herefor,
and agree to any substitution, exchange or release of any of such security or
the release of any party primarily or secondarily liable hereon and further
agree that it will not be necessary for any holder hereof, in order to enforce
payment of this Note, to first institute suit or exhaust its remedies against
any maker or others liable herefor, or to enforce its rights against any
security herefor, and consent to any extensions or postponements of the time of
payment of this Note or any other indulgences with respect hereto, without
notice thereof to any of them and hereby bind themselves in solido for the
-- ------
payment hereof in principal, interest, costs and attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of Louisiana, United States of America.
HALTER MARINE, INC.
By:
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 3
PROMISSORY NOTE DUE 1998
$4,956,982.00 New Orleans, Louisiana
May 15, 1997
The undersigned unconditionally promises to pay to the order of Ronald J.
Stevens, at 2009 Old Country Road, Daphne, AL 36526, or at such other location
as is designated by the holder hereof, in lawful money of the United States of
America, the principal amount of FOUR MILLION NINE HUNDRED FIFTY-SIX THOUSAND
NINE HUNDRED EIGHTY-TWO AND NO/100 DOLLARS ($4,956,982.00), all of which shall
be payable in full on January 15, 1998 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the rate
of SEVEN AND ONE TENTH PERCENT (7.1%) per annum. Interest shall be calculated
on a 365 day per year basis and shall be payable on the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday, or
any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next business
day.
This Note is not subject to any right of offset or compensation in favor of
the undersigned.
Any amounts payable pursuant to this Note, whether principal or interest,
which are not paid on the date due shall bear interest ("Default Interest") at a
rate equal to twelve percent (12%) per annum from such due date until paid in
full.
All payments on this Note shall be applied first to attorneys' fees and
other costs then accrued, if any; second, to the Default Interest then accrued,
if any; third, to Ordinary Interest then accrued, if any; and, finally, to the
principal.
This Note shall become immediately due and payable at the option of the
holder hereof, without presentment or demand or any notice to the undersigned or
any other person obligated hereon, upon (a) the undersigned's failure to pay
principal or interest under this Note on or before the due date thereof, (b) the
undersigned becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether under
federal, state or foreign law or (c) the undersigned making a general assignment
for the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or any
judicial proceedings, or if this Note is not paid at maturity, however such
maturity may be brought about, and it is placed in the hands of an attorney for
collection, then the undersigned unconditionally
<PAGE>
promises to pay all reasonable attorneys' fees and court costs associated with
the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this Note
waive demand, presentment for payment, notice of non-payment, protest, notice of
protest, all pleas of division and discussion and all other notice, filing of
suit and diligence in collecting this Note or enforcing any security herefor,
and agree to any substitution, exchange or release of any of such security or
the release of any party primarily or secondarily liable hereon and further
agree that it will not be necessary for any holder hereof, in order to enforce
payment of this Note, to first institute suit or exhaust its remedies against
any maker or others liable herefor, or to enforce its rights against any
security herefor, and consent to any extensions or postponements of the time of
payment of this Note or any other indulgences with respect hereto, without
notice thereof to any of them and hereby bind themselves in solido for the
-- ------
payment hereof in principal, interest, costs and attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of Louisiana, United States of America.
HALTER MARINE, INC.
By:
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 2
PROMISSORY NOTE DUE 1998
$11,772,076.00 New Orleans, Louisiana
May 15, 1997
The undersigned unconditionally promises to pay to the order of Thomas C.
Weller, at 2595 Woodword Way, N.W., Atlanta, GA 30305, or at such other
location as is designated by the holder hereof, in lawful money of the United
States of America, the principal amount of ELEVEN MILLION SEVEN HUNDRED SEVENTY-
TWO THOUSAND SEVENTY-SIX AND NO/100 DOLLARS ($11,772,076.00), all of which shall
be payable in full on January 15, 1998 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the rate
of SEVEN AND ONE TENTH PERCENT (7.1%) per annum. Interest shall be calculated
on a 365 day per year basis and shall be payable on the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday, or
any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next business
day.
This Note is not subject to any right of offset or compensation in favor of
the undersigned.
Any amounts payable pursuant to this Note, whether principal or interest,
which are not paid on the date due shall bear interest ("Default Interest") at a
rate equal to twelve percent (12%) per annum from such due date until paid in
full.
All payments on this Note shall be applied first to attorneys' fees and
other costs then accrued, if any; second, to the Default Interest then accrued,
if any; third, to Ordinary Interest then accrued, if any; and, finally, to the
principal.
This Note shall become immediately due and payable at the option of the
holder hereof, without presentment or demand or any notice to the undersigned or
any other person obligated hereon, upon (a) the undersigned's failure to pay
principal or interest under this Note on or before the due date thereof, (b) the
undersigned becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether under
federal, state or foreign law or (c) the undersigned making a general assignment
for the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or any
judicial proceedings, or if this Note is not paid at maturity, however such
maturity may be brought about, and it is placed in the hands of an attorney for
collection, then the undersigned unconditionally
<PAGE>
promises to pay all reasonable attorneys' fees and court costs associated with
the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this Note
waive demand, presentment for payment, notice of non-payment, protest, notice of
protest, all pleas of division and discussion and all other notice, filing of
suit and diligence in collecting this Note or enforcing any security herefor,
and agree to any substitution, exchange or release of any of such security or
the release of any party primarily or secondarily liable hereon and further
agree that it will not be necessary for any holder hereof, in order to enforce
payment of this Note, to first institute suit or exhaust its remedies against
any maker or others liable herefor, or to enforce its rights against any
security herefor, and consent to any extensions or postponements of the time of
payment of this Note or any other indulgences with respect hereto, without
notice thereof to any of them and hereby bind themselves in solido for the
-- ------
payment hereof in principal, interest, costs and attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of Louisiana, United States of America.
HALTER MARINE, INC.
By:
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 4
PROMISSORY NOTE DUE 1998
$5,200,000.00 New Orleans, Louisiana
May 15, 1997
The undersigned unconditionally promises to pay to the order of Don O.
Covington, at 4322 Memorial Drive, Orange, TX 77632, or at such other location
as is designated by the holder hereof, in lawful money of the United States of
America, the principal amount of FIVE MILLION TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($5,200,000.00), all of which shall be payable in full on January 15,
1998 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the rate
of SEVEN AND ONE TENTH PERCENT (7.1%) per annum. Interest shall be calculated
on a 365 day per year basis and shall be payable on the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday, or
any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next business
day.
This Note is not subject to any right of offset or compensation in favor of
the undersigned.
Any amounts payable pursuant to this Note, whether principal or interest,
which are not paid on the date due shall bear interest ("Default Interest") at a
rate equal to twelve percent (12%) per annum from such due date until paid in
full.
All payments on this Note shall be applied first to attorneys' fees and
other costs then accrued, if any; second, to the Default Interest then accrued,
if any; third, to Ordinary Interest then accrued, if any; and, finally, to the
principal.
This Note shall become immediately due and payable at the option of the
holder hereof, without presentment or demand or any notice to the undersigned or
any other person obligated hereon, upon (a) the undersigned's failure to pay
principal or interest under this Note on or before the due date thereof, (b) the
undersigned becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether under
federal, state or foreign law or (c) the undersigned making a general assignment
for the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or any
judicial proceedings, or if this Note is not paid at maturity, however such
maturity may be brought about, and it is placed in the hands of an attorney for
collection, then the undersigned unconditionally promises to pay all reasonable
<PAGE>
attorneys' fees and court costs associated with the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this Note
waive demand, presentment for payment, notice of non-payment, protest, notice of
protest, all pleas of division and discussion and all other notice, filing of
suit and diligence in collecting this Note or enforcing any security herefor,
and agree to any substitution, exchange or release of any of such security or
the release of any party primarily or secondarily liable hereon and further
agree that it will not be necessary for any holder hereof, in order to enforce
payment of this Note, to first institute suit or exhaust its remedies against
any maker or others liable herefor, or to enforce its rights against any
security herefor, and consent to any extensions or postponements of the time of
payment of this Note or any other indulgences with respect hereto, without
notice thereof to any of them and hereby bind themselves in solido for the
-- ------
payment hereof in principal, interest, costs and attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of Louisiana, United States of America.
HALTER MARINE, INC.
By:
John Dane, III
Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 99.11
[LOGO OF KPMG PEAT MARWICK LLP APPEARS HERE]
Suite 3500 One Shell Square
New Orleans, LA 70139-3599
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, 1996 and 1995, and the
related consolidated statements of earnings, retained earnings 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, 1996 and 1995, 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
November 22, 1996
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,837,019 10,665,101
Accounts receivable:
Contract receivables (notes 4 and 6) 14,021,636 2,194,466
Other receivables 267,810 20,603
Costs and estimated earnings in excess of
billings on uncompleted contracts (note 2) 1,135,966 467,916
Other current assets 50,000 65,393
----------- -----------
Total current assets 18,312,431 13,413,479
Property and equipment, net (notes 3 and 4) 12,238,184 9,070,509
Investment in joint venture 279,278 238,477
----------- -----------
$30,829,893 $22,722,465
=========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable - trade 4,585,538 207,435
Billings in excess of costs on uncompleted
contracts (note 2) 1,072,152 -
Estimated loss on uncompleted contract 1,250,000 -
Accrued expenses 2,543,834 1,287,267
Current portion of long-term debt (note 4) 353,967 326,919
Due to shareholder, net 38,023 200,888
----------- -----------
Total current liabilities 9,843,514 2,022,509
----------- -----------
Long-term debt, net (note 4) 3,784,341 4,134,318
Deferred income taxes (note 5) 519,767 428,836
Other liabilities 667,693 377,769
Shareholders' equity:
Common stock, $1 par value; 1,000
shares authorized, issued and outstanding 1,000 1,000
Retained earnings 16,013,578 15,758,033
----------- -----------
Total shareholders' equity 16,014,578 15,759,033
Commitments, contingencies and other
matters (notes 7 and 8) ----------- -----------
$30,829,893 22,722,465
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Consolidated Statements of Earnings and Retained Earnings
Years ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues (notes 2 and 6):
Ship and rig repair $30,532,845 28,045,773
Rig modification 40,542,561 -
New construction - 6,803,340
Fabrication and other 2,745,692 5,796,563
----------- -----------
Total revenues 73,821,098 40,645,676
Cost of revenues 70,306,107 29,580,693
----------- -----------
Gross profit 3,514,991 11,064,983
General and administrative expenses 3,929,895 4,041,992
----------- -----------
Operating (loss) profit (414,904) 7,022,991
----------- -----------
Other income (expense):
Interest income 333,351 567,479
Interest expense (364,544) (289,999)
Gain on sale or disposition of assets 351,045 237,152
Gain on settlement of lawsuit (note 8) 1,731,927 -
Loss on joint venture (9,199) (92,541)
Other, net - (6,988)
----------- -----------
Total other income 2,042,580 415,103
----------- -----------
Earnings before income taxes 1,627,676 7,438,094
Income taxes (note 5) 572,131 2,697,194
----------- -----------
Net earnings 1,055,545 4,740,900
Retained earnings:
Beginning of year 15,758,033 13,267,133
Cash dividends paid (800,000) (2,250,000)
----------- -----------
End of year $16,013,578 15,758,033
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,055,545 4,740,900
Adjustments to reconcile net earnings to
net cash (used) provided by operating activities:
Depreciation 1,064,536 682,423
Deferred income taxes 90,931 145,620
Loss on joint venture 9,199 92,541
Increase (decrease) in cash flows resulting
from changes in the following operating
assets and liabilities:
Receivables (12,074,377) 3,251,915
Costs and estimated earnings in
excess of billings on
uncompleted contracts (668,050) 1,805,825
Other current assets 15,393 (9,603)
Accounts payable - trade 4,378,103 (2,675,978)
Billings in excess of costs on
uncompleted contracts 1,072,152 (1,792,852)
Accrued expenses 1,257,197 (170,406)
Other liabilities 289,294 -
Estimated loss on uncompleted
contract 1,250,000 -
Due to shareholder, net (162,865) 158,818
------------ ----------
Total adjustments 3,478,487 1,488,303
------------ ----------
Net cash (used) provided by operating
activities (2,422,942) 6,229,203
------------ ----------
Cash flows used in investing activities:
Capital expenditures (4,232,211) (2,681,420)
Investment in joint venture (50,000) (193,518)
------------ ----------
Net cash used in investing activities (4,282,211) (2,874,938)
Cash flows used in financing activities:
Principal payments on long-term debt (322,929) (253,667)
Dividends paid (800,000) (2,250,000)
------------ ----------
Net cash used in financing activities (1,122,929) (2,503,667)
------------ ----------
Net (decrease) increase in cash and cash
equivalents (7,828,082) 850,598
Cash and cash equivalents:
Beginning of year 10,665,101 9,814,503
------------ ----------
End of year $ 2,837,019 10,665,101
============ ==========
</TABLE>
(Continued)
<PAGE>
2
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest $373,084 237,499
======== =========
Income taxes $218,561 2,930,000
======== =========
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, 1996 and 1995
(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.
(Continued)
<PAGE>
2
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
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:
Buildings, docking facilities and
improvements 20 years
Machinery and equipment 5-10 years
Autos 3-5 years
(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.
(Continued)
<PAGE>
3
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(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 $404,000 and $271,000 at September
30, 1996 and 1995, 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) Fair Value of Financial Investments
-----------------------------------
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
. Cash and cash equivalents, trade accounts receivable, other
receivables, other current assets, trade accounts payable, accrued
expenses, due to shareholder. The carrying amounts approximate fair
value because of the short maturity of those instruments.
. Long-term debt. The fair value of the Company's long-term debt is
estimated by discounting the future cash flows of each instrument
at rates currently offered to the Company for similar debt
instruments of comparable maturities by the Company's bankers.
(Continued)
<PAGE>
4
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(j) Reclassification
----------------
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
(2) Costs and Estimated Earnings on Uncompleted Contracts
-----------------------------------------------------
Uncompleted contracts at September 30, 1996 and 1995 are summarized as
follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Costs incurred on uncompleted contracts $21,084,124 467,916
Estimated loss on uncompleted contract (1,250,000) -
Estimated earnings on uncompleted contracts 371,508 -
----------- -------
20,205,632 467,916
Less billings to date 21,391,818 -
----------- -------
$(1,186,186) 467,916
=========== =======
</TABLE>
Uncompleted contracts are included in the accompanying consolidated balance
sheets under the following captions:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Costs and estimated earnings in excess
of billings on uncompleted contracts $ 1,135,966 467,916
Estimated loss on uncompleted contract (1,250,000) -
Billings in excess of costs on
uncompleted contracts (1,072,152) -
----------- -------
$(1,186,186) 467,916
=========== =======
</TABLE>
(3) Property and Equipment
----------------------
Property and equipment at September 30, 1996 and 1995 consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 2,161,862 2,161,862
Buildings, docking facilities and
improvements 8,071,695 5,401,275
Machinery and equipment 5,225,870 3,762,136
Automobiles 185,358 87,301
----------- ----------
15,644,785 11,412,574
Accumulated depreciation and amortization (3,406,601) (2,342,065)
----------- ----------
Net property and equipment $12,238,184 9,070,509
=========== ==========
</TABLE>
(Continued)
<PAGE>
5
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(4) Long-term Debt
--------------
Long-term debt of $4,138,308 and $4,461,237 at September 30, 1996 and 1995,
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.
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 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.
(Continued)
<PAGE>
6
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(5) Income Taxes
------------
The components of income tax expense are:
<TABLE>
<CAPTION>
Current Deferred Total
-------- -------- -------
<S> <C> <C> <C>
Year ended September 30, 1996:
U.S. Federal $ 481,200 90,931 572,131
State and local - - -
---------- ------- ---------
$ 48l,200 90,931 572,131
========== ======= =========
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
========== ======= =========
</TABLE>
Income tax expense differs from amounts computed by applying the U.S.
federal tax rate of 34% in 1996 and 1995 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.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1996 and 1995 are presented below:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets -
Accrued liabilities deductible for tax
purposes when paid $248,843 150,269
Less valuation allowance - -
-------- -------
Net deferred tax assets 248,843 150,269
-------- -------
Deferred tax liabilities:
Plant and equipment, principally due
to differences in depreciation (751,610) (559,540)
Other (17,000) (19,565)
-------- -------
Total gross deferred tax liabilities (768,610) (579,105)
-------- -------
Net deferred tax liability $(519,767) (428,836)
======== =======
</TABLE>
(Continued)
<PAGE>
7
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) Business and Credit Concentration
---------------------------------
Three of the Company's largest customers accounted for 84% and 56% of total
revenues for the years ended September 30, 1996 and 1995, respectively.
Included in contract receivables at September 30, 1996 and 1995 are amounts
due from these customers totaling approximately $12,500,000 and $1,600,000,
respectively.
(7) Related Party Transactions
--------------------------
CCC charged the Company $496,211 and $997,102 for consulting and other
administrative services during the years ended September 30, 1996 and 1995,
respectively. These fees are included in cost of revenues.
(8) Commitments and Contingencies
-----------------------------
In February 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 and retained 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
$1,133,000 and $913,000 for the years ended September 30, 1996 and 1995,
respectively.
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
(Continued)
<PAGE>
8
TEXAS DRYDOCK, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
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 1996 and 1995 is not material.
(9) Subsequent Events (Unaudited)
-----------------------------
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.
<PAGE>
EXHIBIT 99.12
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31,1997 AND 1996
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
MARCH 31, MARCH 31,
ASSETS: 1997 1996
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 609,688 $ 4,330,928
ACCOUNTS RECEIVABLE, NET:
CONTRACT RECEIVABLES 18,926,160 6,104,270
OTHER RECEIVABLES 19,704 9,228
COSTS & ESTIMATED EARNINGS IN EXCESS
OF BILLINGS ON UNCOMPLETED CONTRACTS 822,523 4,168,468
OTHER CURRENT ASSETS 234,948 29,747
----------------------------
TOTAL CURRENT ASSETS 20,613,023 14,642,641
PROPERTY, PLANT AND EQUIPMENT: 16,899,098 14,295,893
ACCUMULATED DEPRECIATION (4,102,184) (2,757,084)
----------------------------
NET PROPERTY, PLANT AND EQUIPMENT 12,796,914 11,538,809
DUE FROM INTERCOMPANY 0 226,971
OTHER ASSETS 451,690 238,477
----------------------------
TOTAL ASSETS $ 33,861,627 $ 26,646,898
============================
CURRENT LIABILITIES:
CURRENT MATURITIES OF LONG TERM DEBT $ 372,266 $ 336,808
ACCOUNTS PAYABLE 4,499,330 2,931,667
ACCRUED EXPENSES 5,863,990 2,327,551
BILLINGS IN EXCESS OF COSTS ON
UNCOMPLETED CONTRACTS 940,779 560,694
ESTIMATED LOSS ON UNCOMPLETED
CONTRACT 500,000 0
INCOME TAXES PAYABLE 307,881 113,000
----------------------------
TOTAL CURRENT LIABILITIES 12,484,246 6,269,720
LONG TERM DEBT - LESS CURRENT MATURITIES 3,577,692 3,951,957
DEFERRED INCOME TAXES 519,767 428,836
OTHER LIABILITIES 667,693 0
SHAREHOLDERS'EQUITY:
COMMON STOCK 1,000 1,000
RETAINED EARNINGS 16,611,229 15,995,385
----------------------------
TOTAL SHAREHOLDERS'EQUITY 16,612,229 15,996,385
----------------------------
TOTAL LIABILITIES & EQUITY $ 33,861,627 $ 26,646,898
============================
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31,1997 MARCH 31,1996
<S> <C> <C>
REVENUES:
NEW CONSTRUCTION $ 0 $ 0
SHIP AND RIG REPAIR 21,654,067 16,268,546
FABRICATION AND OTHER 2,205,559 925,419
----------------------------
TOTAL REVENUES 23,859,626 17,193,965
COSTS OF REVENUES 20,495,612 15,079,981
----------------------------
GROSS PROFIT 3,364,014 2,113,984
GENERAL AND ADMINSTRATIVE EXPENSES 4,212,246 927,286
----------------------------
OPERATING PROFIT (848,232) 1,186,698
OTHER INCOME (EXPENSE):
GAIN ON DISPOSITION OF ASSETS 126,263 110,894
CONSULTING FEES - INTERCOMPANY (85,800) (90,000)
INTEREST INCOME, NET (64,967) (18,214)
OTHER,NET 0 1,851
----------------------------
TOTAL OTHER INCOME (EXPENSE) (24,504) 4,531
----------------------------
(LOSS) EARNINGS BEFORE INCOME TAXES (872,736) 1,191,229
INCOME TAX (BENEFIT) EXPENSE (296,730) 398,898
----------------------------
NET (LOSS) EARNINGS ($ 576,006) $ 792,331
============================
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED
MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
MARCH 31,1997 MARCH 31,1996
<S> <C> <C>
REVENUES:
NEW CONSTRUCTION $ - $ -
SHIP AND RIG REPAIR 46,755,430 18,310,604
FABRICATION AND OTHER 5,090,018 1,649,759
--------------------------------
TOTAL REVENUES 51,845,448 19,960,363
COSTS OF REVENUES 45,199,553 18,079,439
--------------------------------
GROSS PROFIT 6,645,895 1,880,924
GENERAL AND ADMINSTRATIVE EXPENSES 5,710,684 1,515,360
--------------------------------
OPERATING PROFIT 935,211 365,564
OTHER INCOME (EXPENSE):
GAIN ON DISPOSITION OF ASSETS 253,071 141,953
CONSULTING FEES - INTERCOMPANY (171,600) (180,000)
INTEREST INCOME, NET (111,150) 22,425
OTHER,NET 0 410
--------------------------------
TOTAL OTHER INCOME (EXPENSE) (29,679) (15,212)
--------------------------------
EARNINGS BEFORE INCOME TAXES 905,532 350,352
INCOME TAXES 307,881 113,000
--------------------------------
NET EARNINGS $ 597,651 $ 237,352
================================
RETAINED EARNINGS:
BEGINNING OF PERIOD 16,013,578 15,758,033
CASH DIVIDENDS PAID 0 0
--------------------------------
END OF PERIOD 16,611,229 15,995,385
================================
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31,1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
<S> <C> <C>
OPERATING ACTIVITIES:
NET (LOSS) INCOME $ (576,006) $ 792,331
ADJUSTMENTS TO RECONCILE NET (LOSS) INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 358,213 215,637
CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED
(USED)CASH:
CONTRACT RECEIVABLES (6,434,458) (4,764,589)
OTHER RECEIVABLES 22,425 0
COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS 4,876,087 (2,555,324)
OTHER CURRENT ASSETS (172,413) (16,709)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 3,605,829 2,552,200
BILLINGS IN EXCESS OF COSTS ON
UNCOMPLETED CONTRACTS (397,683) 560,694
ESTIMATED LOSS ON UNCOMPLETED CONTRACT (900,000)
INCOME TAXES PAYABLE (334,753) 398,898
-----------------------------
TOTAL ADJUSTMENTS 623,247 (3,609,193)
-----------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 47,241 (2,816,862)
-----------------------------
INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (943,652) (1,224,079)
-----------------------------
NET CASH USED IN INVESTING ACTIVITIES (943,652) (1,224,079)
-----------------------------
FINANCING ACTIVITIES:
PAYMENTS ON LONG-TERM DEBT (109,829) (100,375)
-----------------------------
NET CASH USED BY FINANCING ACTIVITIES (109,829) (100,375)
-----------------------------
DECREASE IN CASH (1,006,240) (4,141,316)
CASH, BEGINNING OF PERIOD 1,615,928 8,472,244
-----------------------------
CASH, END OF PERIOD $ 609,688 $ 4,330,928
=============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR INTEREST $ 152,365 $ 109,120
=============================
CASH PAID DURING THE PERIOD FOR INCOME TAXES $ 0 $ 0
=============================
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 597,651 $ 237,352
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
USED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 695,583 415,019
CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED
(USED)CASH:
CONTRACT RECEIVABLES (4,904,524) (3,909,804)
OTHER RECEIVABLES 248,106 11,375
COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS 313,443 (3,700,552)
DUE FROM INTERCOMPANY, NET 0 (427,859)
OTHER CURRENT ASSETS (357,360) 35,646
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 3,233,948 3,386,747
BILLINGS IN EXCESS OF COSTS ON
UNCOMPLETED CONTRACTS (131,373) 560,694
ESTIMATED LOSS ON UNCOMPLETED CONTRACT (750,000)
INCOME TAXES PAYABLE 307,881 113,000
DUE TO INTERCOMPANY (38,023)
----------------------------
TOTAL ADJUSTMENTS (1,382,319) (3,515,734)
----------------------------
NET CASH USED BY OPERATING ACTIVITIES (784,668) (3,278)
----------------------------
INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (1,254,313) (2,883,319)
----------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,254,313) (2,883,319)
----------------------------
FINANCING ACTIVITIES:
PAYMENTS ON LONG-TERM DEBT (188,350) (172,472)
----------------------------
NET CASH USED BY FINANCING ACTIVITIES (188,350) (172,472)
----------------------------
DECREASE IN CASH (2,227,331) (6,334,173)
CASH, BEGINNING OF PERIOD 2,837,019 10,665,101
----------------------------
CASH, END OF PERIOD $ 609,688 $ 4,330,928
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR INTEREST $ 219,672 $ 183,271
============================
CASH PAID DURING THE PERIOD FOR INCOME TAXES $ - $ -
============================
</TABLE>
<PAGE>
TEXAS DRYDOCK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
NOTE 1---BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements and
footnotes thereto included elsewhere in this 8K filing for Texas Drydock, Inc.
for the year ending September 30, 1996.
<PAGE>
EXHIBIT 99.13
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following pro forma summary financial information has been prepared giving
effect to the acquisition of Texas Drydock, Inc. as if the transaction had taken
place at March 31, 1997 for the pro forma consolidated balance sheet, and April
1, 1996 for the pro forma consolidated income statements for the year ended
March 31, 1997.
The purchase was accomplished by the acquisition of 20% of the capital stock
directly from shareholders of Texas Drydock, Inc. and 100% of the stock of
Maritime Holdings, Inc., which held 80% of the stock of Texas Drydock, Inc.
Maritime Holdings, Inc. formerly owned several companies including Texas
Drydock, Inc. Prior to the sale of its stock to the Registrant, as a condition
of the purchase agreement, Maritime Holdings, Inc. divested all of its assets,
except for the stock of Texas Drydock, Inc. and all of its liabilities, so that
when the Registrant purchased Maritime Holdings, Inc., its only asset was 80% of
the stock of Texas Drydock, Inc. and it had no liabilities or contigent
liabilities.
The pro forma consolidated income statement has been prepared giving
consideration to the audited income statement of Texas Drydock, Inc. for fiscal
year ended September 30, 1996 adjusted accordingly by unaudited income
statements for the six month periods ended March 31, 1996 and March 31, 1997.
<PAGE>
The pro forma financial information is not necessarily indicative of the results
of operations or the financial position which would have been attained had the
acquisition been consummated at either of the foregoing dates or which may be
attained in the future. The pro forma financial information should be read in
conjunction with the historical consolidated financial statements of Halter
Marine Group, Inc. and the historical financial statements of Texas Drydock,
Inc.
<PAGE>
Halter Marine Group, Inc.
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
March 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Halter Texas Pro Forma
Marine Drydock Adjustments Pro Forma
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 7,079 610 3,185 (B) 10,874
Contract receivables 36,053 18,946 54,999
Due from affiliate 11,513 11,513
Costs and estimated earnings in excess
of billings on uncompleted contracts 77,704 822 78,526
Inventories 10,827 10,827
Other current assets 4,501 235 4,736
---------------------------------------------
Total current assets 147,677 20,613 3,185 171,475
Property, plant and equipment, net 61,449 12,797 3,203 (B) 77,449
Excess of cost over net assets acquired 28,121 (B) 28,121
Other assets 285 452 737
---------------------------------------------
$209,411 33,862 34,509 277,782
=============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 39,290 11,043 50,333
Billings in excess of costs and estimated
earnings on uncompleted contracts 19,956 1,441 21,397
Short - term notes payable 27,000 (A) 27,000
Deferred income taxes 2,897 520 1,121 (B) 4,538
---------------------------------------------
Total current liabilities 62,143 13,004 28,121 103,268
Long - term debt 52,000 3,578 23,000 (A) 78,578
Other noncurrent liabilities 1,967 668 2,635
Stockholders' equity:
Common stock 185 1 (1)(B) 185
Additional paid-in capital 84,213 0 84,213
---------------------------------------------
Retained earnings 8,903 16,611 (16,611)(B) 8,903
---------------------------------------------
Total equity 93,301 16,612 (16,612) 93,301
---------------------------------------------
$209,411 33,862 34,509 277,782
=============================================
</TABLE>
<PAGE>
Halter Marine Group, Inc.
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended March 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Halter Texas Pro Forma
Marine Drydock Adjustments Pro Forma
<S> <C> <C> <C> <C>
Contract revenues earned $ 406,797 105,706 512,503
Cost of revenue earned 355,209 96,930 320 (F) 452,459
---------------------------------------------------
Gross profit 51,588 8,776 (320) 60,044
Selling, general and administrative expenses 21,361 8,613 29,974
---------------------------------------------------
Operating income 30,227 163 (320) 30,070
Other (income) expenses:
Interest expense 3,232 165 3,355 (C) 6,752
Gain on disposition of assets - (462) (462)
Gain on settlement of lawsuit - (1,732) (1,732)
Amortization of excess costs over net assets acquired 1,406 (D) 1,406
Other, net (8) 9 1
---------------------------------------------------
3,224 (2,020) 4,761 5,965
---------------------------------------------------
Income before income taxes 27,003 2,183 (5,081) 24,105
Income taxes 10,887 767 (1,342)(E) 10,312
---------------------------------------------------
Net income $ 16,116 1,416 (3,739) 13,793
===================================================
Net income per share $ 0.88 0.76
Weighted average shares outstanding 18,255 18,255
</TABLE>
<PAGE>
HALTER MARINE GROUP, INC.
Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)
(A) On April 4, 1997, Halter Marine, Inc., a wholly owned subsidiary of Halter
Marine Group, Inc. (the company) 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.
Simultaneously, Halter Marine, Inc. purchased fifty-one percent of the other
twenty percent of the issued and outstanding capital stock of Texas
Drydock. The purchase price of approximately $23 million was funded by
borrowing under the Company's general line of credit from its lender banks.
On May 16, 1997, the Company purchased the remaining forty-nine percent
(49%) of the issued and outstanding stock of MHI and the remaining forty-
nine percent (49%) of the other twenty percent (20%) of Texas Drydock. The
purchase price of $27 million was financed by the issuance of promissory
notes payable bearing interest at seven and one-tenth percent (7.1%) per
annum, both principal and interest due January 15, 1998.
(B) The additional pro forma balance sheet effects of the above (A) transaction
are as follows:
1) The creation of approximately $28.1 million of intangible assets (Excess
cost over net assets acquired). The assumed amortization period is twenty
years.
2) An estimated increase of $3.2 million of property, plant and equipment to
reflect fair values of assets acquired.
3) Advance of $3.2 million to Texas Drydock for working capital needs.
<PAGE>
4) The creation of approximately $1.1 million of deferred income taxes due
to increase in property, plant and equipment. Amount calculated using
Texas Drydock effective rate of approximately 35%.
(C) Pro forma income statement effect of 51% purchase of Texas Drydock, Inc.
described in (A) above includes twelve month estimated interest expense
increase of $1.4 million calculated at prevailing interest rate of company's
line of credit during fiscal year of 6.25% on principal amount of $23
million. Pro forma income statement effect of 49% purchase of Texas Drydock,
Inc. described in (A) above includes twelve month interest expense increase
of approximately $1.9 million calculated at promissory note interest rate of
7.1% on principal amount of $27 million.
(D) Pro forma income statement effect of amortization of excess cost over net
assets acquired of Texas Drydock calculated by assuming a twenty year
straight line amortization period.
(E) Pro forma income statement effect of tax effect of increased interest
expense only. Amount calculated by using Halter Marine Group's effective
rate of approximately 40%.
(F) Pro forma income statement effect of twelve month depreciation expense
relating to increase in property, plant and equipment described in (B)
above. Amount calculated by assuming an average straight line depreciation
period of ten years.
