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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 9, 1999
HALTER MARINE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12159 72-2656828
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
13085 INDUSTRIAL SEAWAY ROAD 39503
GULFPORT, MISSISSIPPI
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 228/896-0029
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ITEM 5. OTHER EVENTS
On August 9, 1999, the Audit Committee (the "Committee") of the Board of
Directors of Halter Marine Group, Inc. (the "Company") presented to the Board a
report of an investigation conducted by the Committee, utilizing outside
investigators and attorneys to assist it, into the operations of one of the
Company's facilities in Mississippi.
The Committee reported that the investigation indicated that six former
employees of the Company, one of whom was a senior officer of the Company until
May 1999 and a director of the Company until June 1999, another of whom was a
senior officer of a subsidiary of the Company until November, 1998 and four
of whom were management or administrative personnel assigned to the Mississippi
facility, appear to have engaged in one or more schemes to defraud the Company
and to convert assets of the Company to their own use. In particular, the
investigation revealed that the two former officers had a relationship with two
vendors of the Company that was not disclosed to the Company; that the Company
had paid to these vendors amounts totaling approximately $6.2 million over a
three-year period; and that services purportedly provided by these vendors were
in fact provided, in whole or substantial part, by the Company's own workforce.
All amounts paid to these vendors were included as expenses in the financial
statements of the Company in the fiscal quarters in which they were incurred.
The investigation also indicated that certain of the six former employees,
including the two former officers, had engaged in other improprieties, including
utilizing the Company's workforce for personal use and other similar breaches of
duty. All persons employed by or associated with the Company currently believed
to have knowingly participated in these schemes have been terminated or have
resigned their positions with the Company.
The Committee concluded that the activities that were investigated (i)
circumvented the Company's policies and procedures, (ii) involved deliberate
collusion by a group of individuals including officers of the Company whose
responsibilities included administration of internal controls and (iii) did not
result from material weaknesses in the Company's internal control policies. The
Committee also concluded, however, and the Board recommended, that the Company's
internal audit function be strengthened, and the Committee made other specific
recommendations designed to minimize such risks in the future, all of which were
unanimously adopted by the Board.
As a result of the Committee's report and its recommendations, the Company
intends, among other measures, (i) to seek restitution from all responsible
individuals and entities, as well as recovery under available insurance, (ii)
with the advice and guidance of its outside auditors, to augment the Company's
internal audit controls by, among other things, instituting an annual risk
assessment program and accelerating internal audit of those functions assessed
as high risk and (iii) to strengthen the Company's Policies on Business Ethics
and Compliance with Laws through wider publication and training of employees,
including those persons responsible for procuring goods or services for the
Company.
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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 thereunto duly authorized.
Date: August 9, 1999 HALTER MARINE GROUP, INC.
By: /s/ RICK S. REES
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Rick S. Rees
Executive Vice President and
As a Duly Authorized Officer
and Chief Financial Officer
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