UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly period ended June 30, 1998
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
to
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COMMISSION FILE NUMBER 0-23383
OMNI ENERGY SERVICES CORP.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-1395273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4500 N.E. EVANGELINE THRUWAY
CARENCRO, LOUISIANA
(Address of principal executive offices) 70520
(Zip Code)
Registrant's telephone number, including area code: (318) 896-6664
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of August 10, 1998 there were 15,791,867 shares of the Registrant's
common stock, $0.01 par value per share, outstanding.
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets as of June 30, 1998 and December 31,
1997........................................................... 1
Consolidated Statements of Income for the three and six months
ended June 30, 1998
and 1997.................................................. 3
Consolidated Statements of Cash Flows for the six months ended
June 30, 1998 and 1997.................................... 4
Notes to Financial Statements................................. 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 7
Item 3 - Quantitative and Qualitative Disclosures About Market Risk.. 11
Part II - Other Information
Item 2 - Changes in Securities and Use of Proceeds................... 11
Item 4 - Submission of Matters to a Vote of Security Holders......... 12
Item 6 - Exhibits and Reports on Form 8-K............................ 12
Signatures.................................................................S-1
Exhibit Index..............................................................E-1
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(Thousands of dollars)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1998 1997
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,295 $ 8,723
Accounts receivable, net 20,102 11,958
Parts and supplies inventory 6,566 2,988
Deferred tax asset 212 212
Prepaid expenses and other 3,074 1,753
---------- ----------
Total current assets 31,249 25,634
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PROPERTY AND EQUIPMENT:
Land 359 359
Building and improvements 4,726 3,949
Drilling, field and support equipment 27,251 21,940
Shop equipment 707 408
Office equipment 749 582
Aircraft 9,830 9,266
Vehicles 4,078 3,448
Construction in progress 1,552 800
---------- ----------
49,252 40,752
Less: accumulated depreciation 4,808 2,909
---------- ----------
Total property and equipment 44,444 37,843
---------- ----------
OTHER ASSETS:
Goodwill, net 12,214 10,680
Other 1,696 756
---------- ----------
Total other assets 13,910 11,436
---------- ----------
Total assets $ 89,603 $ 74,913
</TABLE> ========== ==========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(Thousands of dollars)
<TABLE>
<CAPTION>
LIABILITIES AND EQUITY June 30, December 31,
1998 1997
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 4,482 $ 5,713
Accounts payable 5,488 5,998
Accrued expenses 2,960 1,772
Unearned revenue 1 637
----------- ------------
Total current liabilities 12,931 14,120
----------- ------------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 15,705 14,558
Line of credit 8,547 ---
Deferred taxes 1,650 1,650
----------- ------------
Total long-term liabilities 25,902 16,208
----------- ------------
EQUITY:
Common Stock, $.01 par value, 45,000,000
shares authorized; 15,791,867 and 15,726,282
issued and outstanding 158 157
Additional paid-in capital 44,886 44,038
Retained earnings 5,746 390
Cumulative translation adjustment (20) ---
----------- ------------
Total equity 50,770 44,585
----------- ------------
Total liabilities and equity $ 89,603 $ 74,913
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenue $ 24,250 $ 11,594 $ 42,579 $ 17,014
Operating expenses 15,632 8,175 28,360 12,503
---------- ---------- ---------- ----------
Gross profit 8,618 3,419 14,219 4,511
General and administrative expenses 2,565 544 4,836 1,274
---------- ---------- ---------- ----------
Operating income 6,053 2,875 9,383 3,237
Interest expense 429 344 736 622
Other income 229 12 281 16
---------- ---------- ---------- ----------
200 332 455 606
---------- ---------- ---------- ----------
Income before taxes 5,853 2,543 8,928 2,631
Income tax expense 2,342 --- 3,572 ---
---------- ---------- ---------- ----------
Net income $ 3,511 2,543 $ 5,356 2,634
========== ==========
Pro forma tax provision 1,017 1,052
---------- ----------
Pro forma net income S 1,526 $ 1,579
========== ==========
Net income per share:
Basic $ 0.22 $ 0.24 $ 0.34 $ 0.25
Diluted (a) $ 0.22 $ 0.24 $ 0.34 $ 0.25
Pro forma income per share:
Basic $ 0.14 $ 0.15
Diluted (a) $ 0.13 $ 0.12
Weighted average shares outstanding:
Basic 15,769 10,709 15,748 10,709
Diluted 16,163 10,750 15,991 10,729
</TABLE>
- --------------
(a)Gives effect to the payment of dividends on the outstanding preferred units
of OMNI Geophysical, L.L.C. of approximately $137,500 and $275,000,
respectively, for the three and six month periods ended June 30, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,356 $ 2,631
Adjustments to reconcile net income to net cash provided by (used
in) operating activities-
Depreciation 2,044 845
Amortization 319 35
Loss on fixed asset disposition 42 10
Deferred compensation 72 ---
Provision for bad debts 275 ---
Changes in operating assets and liabilities-
Decrease (increase) in assets-
Receivables-
Trade (7,525) (3,716)
Other 210 (61)
Inventory (2,553) (901)
Prepaid expenses 320 206
Other (2,540) (196)
Increase (decrease) in liabilities-
Accounts payable (277) 2,269
Unearned revenue (637) ---
Due to affiliates and stockholders/members --- 3
--------- ---------
Net cash provided by (used in) operating activities (4,894) 1,125
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of fixed assets 2,984 ---
Purchase of fixed assets (10,472) (5,768)
Acquisitions, net of cash received (2,856) ---
--------- ---------
Net cash used in investing activities (10,344) (5,768)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 6,754 3,255
Principal payments on long-term debt (7,491) (1,378)
Net borrowings on line of credit 8,547 3,942
Capital contributions --- 1,078
Distributions to members --- (321)
--------- ---------
Net cash provided by financing activities 7,810 6,576
NET INCREASE (DECREASE) IN CASH (7,428) 1,933
CASH, at beginning of period 8,723 39
--------- ---------
CASH, at end of period $ 1,295 $ 1,972
SUPPLEMENTAL CASH FLOW DISCLOSURES: ========= =========
CASH PAID FOR INTEREST $ 769 $ 558
========= =========
CASH PAID FOR TAXES $ 1,911 $ ---
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared without audit as permitted by the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to such rules and
regulations. However, the management of OMNI Energy Services Corp. (the
"Company") believes that this information is fairly presented. These unaudited
condensed consolidated financial statements and notes thereto should be read in
conjunction with the financial statements contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Certain reclassifications have been made to the prior year's financial
statements in order to conform with the classifications adopted for reporting
in fiscal 1998.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary to fairly present the financial results for
the interim periods presented.
SEASONALITY AND WEATHER RISKS
Results of operations for interim periods are not necessarily indicative of the
operating results that may be expected for the full fiscal year. The Company's
operations are subject to seasonal variations in weather conditions and
daylight hours. Since the Company's activities take place outdoors, on average
fewer hours are worked per day and fewer holes are generally drilled or
surveyed per day in winter months than in summer months, due to an increase in
rainy, foggy, and cold conditions and a decrease in daylight hours.
Furthermore, demand for seismic data acquisition activity by oil and gas
companies in the first quarter is generally lower than at other times of the
year. As a result, the Company's revenue and gross profit during the first
quarter of each year are typically low as compared to the other quarters.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2. EARNINGS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards No.
128, "Earnings Per Share," which simplifies the standards required under
existing accounting rules for computing earnings per share and replaces the
presentation of primary earnings per share and fully diluted earnings per share
with basic earnings per share ("basic EPS") and diluted earnings per share
("diluted EPS"), respectively. Basic EPS excludes dilution and is determined
by dividing income available to common stockholders by the weighted average
number of shares of common stock outstanding during the period. Diluted EPS
reflects the potential dilution that could occur if options and other contracts
to issue shares of common stock were exercised or converted into common stock.
Dilutive common equivalent shares for the three and six month periods ended
June 30, 1998 and 1997 are 16,163,329; 15,991,435; 10,750,016 and 10,729,404,
respectively, all attributable to stock options.
NOTE 3. LONG-TERM DEBT
On January 20, 1998, the Company restructured its credit arrangements with
Hibernia National Bank. Under the restructured facility (the "Credit
Facility"), the Company refinanced an $11.0 million loan, obtained a $10.0
million revolving line of credit to finance working capital requirements, and
obtained a $9.0 million line of credit to finance capital expenditures and
acquisitions. As of June 30, 1998, the Company had approximately $22.1 million
outstanding under the Credit Facility. The Credit Facility has a final
maturity of January 20, 2000, and bears interest at LIBOR plus an applicable
margin, ranging from 1.25% to 2.25% (7.125% at June 30, 1998).
NOTE 4. ACQUISITIONS
In April 1998, the Company acquired Eagle Surveys International, Inc., a
seismic survey support company, headquartered in Houston, Texas. The aggregate
purchase price was $1.8 million consisting of $1.1 million in cash and 53,039
shares of common stock.
In April 1998, the Company acquired the assets of Coastal Turbines, Inc., a
helicopter support company, based in Lafayette, Louisiana. The aggregate
purchase price was approximately $1.2 million consisting of $1.1 million in
cash and 4,546 shares of common stock.
In May 1998, the Company acquired Hamilton Drill Tech, Inc., a specialty
seismic drilling support company, headquartered in Canada. The purchase price
was approximately $0.9 million in cash.
These acquisitions were accounted for using the purchase method of accounting.
The excess of cost over the estimated fair value of the net assets acquired
resulted in goodwill of approximately $1.6 million. The operating results of
each of the acquired companies have been included in the consolidated
statements of income from the date of acquisition. The pro forma effect of the
acquisitions as though they occurred as of the beginning of each period
presented is not material.
In July 1997, the Company acquired substantially all of the assets and
liabilities of American Aviation Incorporated ("American Aviation") for
approximately $7.9 million in cash, stock and assumed debt (approximately $6.7
million). In October 1997, the company acquired American Helicopter Drilling,
Inc. ("American Helicopter") for approximately $3.6 million in cash and stock.
The following summarized unaudited income statement data reflects the Company's
results of operations as if the American Aviation and American Helicopter
transactions had taken place on January 1, 1997:
UNAUDITED PRO FORMA RESULTS
------------------------------
SIX MONTHS ENDED JUNE 30, 1997
------------------------------
(Thousands of dollars)
Revenue $ 21,353
Net income $ 2,369
Basic income per share $ 0.22
NOTE 5. RECENT PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for fiscal years
beginning after June 15, 1999. Management believes the implementation of this
statement will not have a material effect on its results of operations or
financial statement disclosures.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in conjunction with the financial
statements and the accompanying notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
GENERAL
Demand. Demand for the Company's services is principally affected by
conditions affecting geophysical companies engaged in the acquisition of 3-D
seismic data. The level of activity among geophysical companies is primarily
affected by the level of capital expenditures by oil and gas companies for
seismic data acquisition activities. A number of factors influence the
decision of oil and gas companies to pursue the acquisition of seismic data,
including (i) prevailing and expected oil and gas demand and prices; (ii) the
cost of exploring for, producing and developing oil and gas reserves; (iii) the
discovery rate of new oil and gas reserves; (iv) the availability and cost of
permits and consents from landowners to conduct seismic activity; (v) local and
international political and economic conditions; (vi) governmental regulations;
and (vii) the availability and cost of capital. The ability to finance the
acquisition of seismic data in the absence of oil and gas companies' interest
in obtaining the information is also a factor as some geophysical companies
will acquire seismic data on a speculative basis. Onshore 3-D seismic data
acquisition activity has substantially increased over the past few years;
however, any significant reduction in seismic exploration activity in the areas
where the Company operates would result in a reduction in the demand for the
Company's services and could have a material adverse effect on the Company's
financial condition and results of operations.
Within the last decade, improvements in drilling and production
techniques and the acceptance of 3-D imaging as an exploration tool have
resulted in significantly increased seismic activity throughout the Transition
Zone (the marsh, swamp, shallow water and contiguous dryland areas along the
U.S. Gulf Coast). Due to this increased demand, the Company has significantly
increased its capacity, as measured by drilling units, support equipment and
employees. In addition, the Company has expanded the geographic scope of its
operations to Alaska, the Rocky Mountain region and Western states, the U.S.
plains areas and Canada. Recently, the Company also announced its intention to
expand into the South American market, initially in Bolivia. This expansion
has led to significant increases in the Company's revenue and generally
commensurate increases in operating expenses and selling, general and
administrative expenses. If anticipated expansion plans are realized,
management would expect these expenses to continue to increase as a direct
correlation to the growth in its operations.
Backlog. Most of the Company's seismic drilling projects are awarded
pursuant to a competitive bidding process. Once the Company's bid on a
particular project has been accepted and a start date for the project has been
scheduled, the Company will include the project in its backlog. As of June 30,
1998, the Company's backlog was $87.8 million, compared to $70.0 million at
December 31, 1997. Typically, the Company's backlog is higher at the end of
the first and fourth quarters as the Company's customers tend to plan their
exploration budgets for the coming year and award projects accordingly during
the first and fourth quarters of each year. Projects currently included in the
Company's backlog are subject to rescheduling or termination without penalty at
the option of the customer, which could substantially reduce the amount of
backlog currently reported and the revenue generated from the backlog.
Historically, the Company has not experienced a large volume of project delays
or terminations, and those projects that have been delayed or terminated have
typically been replaced by unscheduled projects. Nevertheless, delay or
termination of a number of large projects in the Company's existing backlog
could have a material adverse effect on the Company's revenue, net income and
cash flow.
Seasonality and Weather. The Company's operations are subject to
seasonal variations in weather conditions and daylight hours. Since the
Company's activities take place outdoors, on average fewer hours are worked per
day and fewer holes are generally drilled or surveyed per day in the winter
months than in summer months. Furthermore, demand for seismic data acquisition
activity by oil and gas companies in the first quarter is generally lower than
at other times of the year. In addition, the Company's operations in the Rocky
Mountain area and in Alaska and Canada are subject to the seasonal climatic
conditions of those areas. As a result, the Company's revenue and gross profit
during the first quarter of each year are typically less as compared to the
other quarters.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ---------------------------
1998 1997 1998 1997
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenue $ 24,250 $ 11,594 $ 42,579 $ 17,014
Operating expense 15,632 8,175 28,360 12,503
----------- ----------- --------- ---------
Gross profit 8,618 3,419 14,219 4,511
General and administrative expenses 2,565 544 4,836 1,274
----------- ----------- --------- ---------
Operating income 6,053 2,875 9,383 3,237
Interest expense 429 344 736 622
Other income 229 12 281 16
----------- ----------- --------- ---------
Income before taxes 5,853 2,543 8,928 2,631
Income tax expense 2,342 --- 3,572 ---
----------- ----------- --------- ---------
Net income $ 3,511 $ 2,543 $ 5,356 $ 2,631
=========== =========== ========= =========
</TABLE>
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Operating revenues increased 109%, from $11.6 million for the three month
period ended June 30, 1997 to $24.3 million for the three month period ended
June 30, 1998. Internal growth resulting from the increase in industry demand
for 3-D seismic data accounted for approximately $4.9 million, or 39%, of this
increase. The remaining increase was due to the acquisition of six companies
in 1997 and three in the second quarter of 1998 and an increase in the rates
charged by the Company on selected drilling projects. In the second quarter of
1998, the Company's aviation division contributed approximately $2.9 million in
revenues, while the Company's survey division generated revenues of
approximately $5.1 million, a $4.9 million increase over June 30, 1997 survey
revenues of $0.2 million. The Company employed 760 employees for both field
and administrative operations at June 30, 1998 compared to 455 at June 30,
1997, a 67% increase. As of June 30, 1998, the Company's drilling capacity, as
measured by drilling units, had increased 132% to 202 units compared to 87
units at June 30, 1997. At June 30, 1997, the Company operated one helicopter,
compared to 20 at June 30, 1998, of which 19 were owned by the Company.
Operating expenses increased 90%, from $8.2 million in the three month
period ended June 30, 1997 to $15.6 million in the three month period ended
June 30, 1998, due to both the internal growth of the Company in 1997 and in
the first six months of 1998 and the expanded scope of the Company's operations
that resulted from the acquisitions described above. Total payroll expense
increased 81% from $3.7 million in the second quarter of 1997 to $6.7 million
in the second quarter of 1998, due to the significant increase in the size of
the Company's workforce. Repairs and maintenance costs were $1.7 million in
the three month period ended June 30, 1998, a 70% increase over the three month
period ended June 30, 1997 costs of $1.0 million, primarily due to the increase
in the number and utilization of the Company's seismic drilling and
transportation equipment. The Company's surveying division incurred $1.9
million in contract service expenses from third party survey companies during
the second quarter of 1998, an increase of $1.8 million over the second quarter
of 1997. Explosives costs increased from $1.1 million to $1.6 million for the
three month periods ended June 30, 1997 and 1998, respectively, due to the
increased number of projects for which the Company provided explosives.
Depreciation expense increased 120% to $1.1 million in the second quarter of
1998, from $0.5 million in the second quarter of 1997, primarily due to the
increased number of seismic drilling and support equipment units owned by the
Company, and the substantial increase in the number of aircraft owned by the
Company.
Gross profit increased 153%, from $3.4 million to $8.6 million in the
three months ended June 30, 1997 and 1998, respectively. Gross margins
increased from 29% in the second quarter of 1997 to 35% in the second quarter
of 1998. The lower margins in the second quarter of 1997 were a result of a
decreased utilization of assets, which was not matched with decreases in the
Company's workforce.
General and administrative expenses were $2.6 million for the three
months ended June 30, 1998, compared to $0.5 million for the three months ended
June 30, 1997, a 420% increase. Increases in office personnel, payroll taxes
and insurance accounted for $1.1 million of this increase. Demands of being a
public company and expanded operations contributed to this increase. Other
components of general and administrative expenses, including business
promotions, travel and entertainment, utilities, office and rentals increased
$0.7 million from $0.3 million in the second quarter of 1997 to $1.0 million in
the second quarter of 1998. Additionally, bad debt and amortization expense
totaled $0.3 million for the three month period ended June 30, 1998, compared
to a negligible amount in the second quarter of 1997.
Income tax expense was $2.3 million for the second quarter of 1998. The
Company converted to a taxable entity on December 4, 1997. Accordingly, no
provision was made for income taxes during the first six months of 1997. The
proforma adjustment included in the Company's statement of income reflects a
provision for income taxes at a combined 40% federal and state income tax rate.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Operating revenues increased 151% from $17.0 million for the six month
period ended June 30, 1997 to $42.6 million for the six month period ended June
30, 1998. Drilling revenues increased $13.5 million, or 80%, from $16.8
million to $30.3 million for the six month periods ended June 30, 1997 and
1998, respectively. Survey revenues increased $7.1 million from $0.2 million
in the six month period ended June 30, 1997 to $7.3 million for the six month
period ended June 30, 1998. Aviation revenues were $5.0 million for the six
months ended June 30, 1998; there were no similar revenues for the first six
months of 1997. The acquisition of six companies in 1997 and three companies
in 1998 is the primary factor contributing to the significant increase in the
Company's revenues. These acquisitions contributed $0.2 million in revenues
for the six months ended June 30, 1997, compared to $15.4 million in the six
months ended June 30, 1998, a $15.2 million increase. Internal growth
resulting from increased industry demand for 3-D seismic data accounted for
$10.4 million, or 41%, of the increase in revenues.
Operating expenses increased $15.9 million, or 127%, from $12.5 million
to $28.4 million in the six months ended June 30, 1997 and 1998, respectively.
Total payroll expense increased $7.5 million to $13.1 million in the six months
ended June 30, 1998. Contract services increased from $0.2 million in the
first six months of 1997 to $3.1 million in the first six months of 1998.
Repairs and maintenance costs were $3.4 million in the six month period ended
June 30, 1998, a 100% increase over the six month period ended June 30, 1997
costs of $1.7 million. Explosives costs increased $1.3 million, or 93%, from
$1.4 million to $2.7 million in the first six months ended June 30, 1997 and
1998, respectively. Depreciation expense increased 150% from $0.8 million in
the first six months of 1997 to $2.0 million in the first six months of 1998.
These increases were the result of increases in the size of the Company's
workforce, increases in the number and utilization of the Company's drilling
and support equipment, and the expanded scope of the Company's operations due
primarily to the acquisitions described above. Although operating expenses
increased significantly, as a percentage of revenue operating expenses
decreased from 74% to 67% for the first six months ended June 30, 1997 and
1998, respectively.
Gross profit increased 216% from $4.5 million in the first six months
ended June 30, 1997 to $14.2 million in the first six months ended June 30,
1998. The nine acquired companies contributed $5.9 million in gross profit and
had gross margins of 38% for the six months ended June 30, 1998. Combined
gross margins for the Company increased from 26% to 33% for the six month
periods ended June 30, 1997 and 1998.
General and administrative expenses were $4.8 million for the six months
ended June 30, 1998, a 269% increase over the six months ended June 30, 1997
expenses of $1.3 million. Increases in office personnel, payroll taxes and
insurance accounted for $1.6 million, or 46%, of this increase. Other
components of general and administrative expenses, including office and
supplies, travel and entertainment, business promotions, rent and professional
services increased $1.3 million from $0.5 million for the first six months of
1997 to $1.8 million for the first six months of 1998. Additionally, bad debt
and amortization expense totaled $0.6 million for the six month period ended
June 30, 1998, with generally no similar expense in the first six months ended
June 30, 1997.
Income tax expense was $3.6 million for the first six months of 1998.
The Company converted to a taxable entity on December 4, 1997. Accordingly, no
provision was made for income taxes during the first six months of 1997.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had approximately $1.3 million in cash,
compared to approximately $8.7 million at December 31, 1997. The decrease in
cash was primarily due to capital expenditures in the first six months of 1998,
totaling approximately $13.3 million, including the cash portion of the
consideration paid for the three acquisitions completed in the second quarter
of 1998, which totaled approximately $2.9 million. Expenditures during the
first six months of 1998 were partially offset by the sale of the Company's
fixed-wing charter division for approximately $2.9 million in cash and by net
cash provided by financing activities of $7.8 million. The remaining decrease
in cash is attributable to the increase in accounts receivable for the six
month period ended June 30, 1998. The Company's cash position at December 31,
1997 was also higher than normal due to the receipt of the net proceeds of the
Company's initial public offering of common stock that was completed in
December 1997. The Company had working capital of $18.3 million at June 30,
1998 compared to approximately $11.5 million at December 31, 1997. This
increase was primarily due to increased accounts receivable generated from
operations.
On January 20, 1998, the Company restructured its credit arrangements
with its commercial lender, Hibernia National Bank. Under the restructured
facility (the "Credit Facility"), the Company refinanced an $11.0 million term
loan, obtained a $10.0 million revolving line of credit to finance working
capital requirements, and obtained a $9.0 million line of credit to finance
capital expenditures and acquisitions. As of June 30, 1998, the Company had
approximately $22.1 million of indebtedness outstanding under the Credit
Facility. Outstanding indebtedness under the Credit Facility bears interest at
LIBOR plus an applicable margin, ranging from 1.25% to 2.25% (7.125% at June
30, 1998). The Credit Facility has a final maturity of January 20, 2000, is
required to be guaranteed by all of the Company's U.S. subsidiaries, requires
the Company to maintain certain financial ratios, imposes certain limitations
on the Company's ability to pay cash dividends and is collateralized by a
mortgage on the Company's land and buildings and by substantially all of the
Company's assets not used as collateral for the Company's asset-based loans.
The Company had approximately $6.6 million in outstanding indebtedness in
addition to outstanding indebtedness under the Credit Facility at June 30,
1998. The majority of this debt (approximately $5.9 million) consists of
several asset-based financing loans with another lender. Of the principal
outstanding under these loans, approximately $4.9 million bears interest at
LIBOR plus 3.75% and matures on July 19, 2001. The remaining portion of this
loan bears interest at LIBOR plus 3.0% and is collateralized by various seismic
drilling, support equipment and aircraft. Remaining indebtedness at June 30,
1998 was approximately $0.7 million, including approximately $0.5 million owed
to finance companies incurred to finance certain of the Company's insurance
premiums.
In the second quarter of 1998, the Company made capital expenditures of
approximately $5.8 million, including $3.8 million for the purchase or
construction of seismic drilling and support equipment, $1.4 million for the
purchase of three helicopters, $0.2 million for the purchase of support
vehicles and $0.4 for various building and leasehold improvements. Currently,
the Company is committed to additional estimated capital expenditures for the
remainder of 1998 totaling approximately $11.0 million, including $7.1 million
for additional drilling, survey and other support equipment, $2.2 million for
helicopters, $0.5 million for vehicles, $0.5 million for the acquisition of
currently leased property and $0.4 million for computers and improvements.
In addition to the capital expenditures mentioned above, the Company
spent approximately $2.9 million in cash (net of cash received) for the
acquisition of three companies during the second quarter of 1998. In April
1998, the Company acquired by merger Eagle Surveys International, Inc., a
seismic survey support company headquartered in Houston, Texas, for $1.1
million in cash and $0.7 million in common stock. In April 1998, the Company
acquired the assets of Coastal Turbines, Inc., a helicopter support company
based in Lafayette, Louisiana, for approximately $1.1 million in cash and $0.1
million in common stock. In May 1998, the Company acquired Hamilton Drill
Tech, Inc., a specialty drilling support company headquartered in Canada, for
approximately $0.9 million in cash. These acquisitions added total revenues of
$1.9 million during the second quarter of 1998, consisting primarily of $1.8
million in survey revenue.
In June 1998, the Company executed a letter of intent with Edwin Waldman
Attie outlining a potential joint venture with Mr. Waldman that would
facilitate the Company's expansion into the South American Market. The letter
of intent provides that the Company and Mr. Waldman would establish a Cayman
Islands corporation (the "JV Company"), which would be owned 60% by the Company
and 40% by Mr. Waldman. In exchange for a 40% interest in the JV Company, Mr.
Waldman would transfer to the JV Company (i) all of the physical assets of
Liderco, Ltda. ("Liderco"), a Bolivian-based seismic support company that
primarily conducts line-cutting and survey operations, and (ii) 40% of the
goodwill and executory contracts of Liderco. Mr. Waldman would sell the
remaining 60% of Liderco's goodwill and executory contracts to the Company for
approximately $2.3 million in cash and shares of the Company's common stock,
which the Company would then contribute to the JV Company. The Company would
also contribute $0.5 million in cash to the JV Company and agree to contribute
an additional $2.0 million in cash or equipment by the end of the year. In
addition, the Company would provide a $525,000 line of credit to the JV
Company. This transaction is subject to the Company's entering into definitive
agreements with Mr. Waldman with respect to these matters, completion of the
Company's due diligence review of Liderco and its operations and approval of
these transactions of the Company's Board of Directors. There can be no
assurance that the Company will consummate this transaction or that its final
terms, if consummated, will be the same as those disclosed herein.
Management believes that cash generated from operations and the Company's
Credit Facility will be sufficient to meet the Company's anticipated capital
expenditures for 1998. However, part of the Company's strategy is to acquire
companies with operations related or complementary to the Company's current
operations. Depending on the size of such future acquisitions, the Company may
require additional debt financing, possibly in excess of the limits of the
Credit Facility, or equity financing.
FORWARD-LOOKING STATEMENTS AND ASSUMPTIONS
This quarterly report on Form 10-Q may contain certain forward-looking
statements, including by way of illustration and not of limitation, statements
relating to the Company's liquidity, revenues, expenses and margins. Any
statement made herein that is not a historical fact is a forward-looking
statement. The Company strongly encourages readers to note that such
statements are based on assumptions made about the Company's financial
position, operations and industry which management considers reasonable at this
time. Most of the factors upon which such assumptions are made are beyond the
Company's ability to control or estimate precisely, and may in some cases be
subject to rapid and material changes.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
ITEM 2.CHANGES IN SECURITIES AND USE OF PROCEEDS
Sales of Unregistered Securities. As part of the consideration paid by
the Company for the assets of Coastal Turbines, Inc. ("Coastal Turbines"),
which were acquired on April 17, 1998, the Company issued 4,546 shares of its
common stock, $0.01 par value per share (the "Common Stock") to Coastal
Turbines. In addition, on May 5, 1998, the Company issued 53,039 shares of
Common Stock to Timothy J. Flaman, the sole shareholder of Eagle Surveys
International, Inc. ("Eagle"), as part of the consideration for the merger of
Eagle with and into the Company.
All of these shares of Common Stock were offered and sold without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), inasmuch as they were deemed not subject to the registration
requirements thereof pursuant to the exception provided in Section 4(2) of the
Securities Act for securities sold in transactions not involving any public
offering.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 28,
1998 (the "Annual Meeting"). Proxies for the Annual Meeting were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended.
At the Annual Meeting, David A. Jeansonne, Roger E. Thomas, Allen R.
Woodard, David E. Crays, Steven T. Stull, Crichton W. Brown and William W.
Rucks, IV were elected to serve as directors of the Company until the next
annual meeting of the Company's shareholders. The votes cast for or withheld
for each of the foregoing by the Company's shareholders are set forth below:
NAME FOR WITHHELD
- ----------------- ---------- --------
David A. Jeansonne 14,212,462 3,300
Roger E. Thomas 14,212,462 3,300
Allen R. Woodard 14,212,462 3,300
David E. Crays 14,212,462 3,300
Steven T. Stull 14,212,462 3,300
Crichton W. Brown 14,212,462 3,300
William W. Rucks, IV 14,212,462 3,300
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. See Exhibit Index on Page E-1
(b) REPORTS ON FORM 8-K. None.
<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 thereunto duly authorized.
OMNI ENERGY SERVICES CORP.
Dated: August 14, 1998 /S/ DAVID A. JEANSONNE
----------------------
David A. Jeansonne
Chief Executive Officer
Dated: August 14, 1998 /S/ JOHN H. UNTEREKER
---------------------
John H. Untereker
Executive Vice President
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the
Company.(1)
3.2 By-laws of the Company.(1)
10.1 Second Amendment to Amended and Restated Loan Agreement, by
and among the Company, certain of its subsidiaries and
Hibernia National Bank.
10.2 Employment Agreement and Non-Competition Agreement between
John H. Untereker and the Company.
27.1 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (Registration Statement No. 333-36561).
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is dated
and effective as of July 31, 1998 (the "Second Amendment"), among OMNI
ENERGY SERVICES CORP., a Louisiana corporation (the "Borrower"), AMERICAN
AVIATION L.L.C., a Missouri limited liability company ("Aviation"), OMNI
MARINE & SUPPLY, INC., a Louisiana corporation ("Marine"), HAMILTON DRILL
TECH INC., an Alberta, Canada corporation ("Hamilton"), and HIBERNIA
NATIONAL BANK, a national banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower, Aviation, Marine, and the Bank have heretofore
entered into an Amended and Restated Loan Agreement dated as of January 20,
1998, as amended by First Amendment thereto dated as of March 31, 1998 (as
so amended, the "Loan Agreement"), pursuant to which the Bank established
in favor of the Borrower certain credit facilities consisting of
Acquisition Loans, Revolving Loans, and a Term Loan;
WHEREAS, subsequent to the execution of the Loan Agreement, Hamilton
became a wholly-owned subsidiary of the Borrower;
WHEREAS, the Loans by the Bank to the Borrower are guaranteed, IN
SOLIDO, by Aviation, Marine, and Hamilton as the Guarantors;
WHEREAS, the parties desire to amend and supplement the Loan Agreement
to allow Revolving Loans by the Bank to the Borrower under the Revolving
Loan Commitment to finance the Borrower's acquisition of parts and
supplies;
WHEREAS, the Borrower, with the consent of the Guarantors, has
requested that the Bank make Revolving Loans to the Borrower, the proceeds
of which shall be used by the Borrower to capitalize Omni International
Energy Services, Ltd., a Cayman Islands corporation, and said corporation's
participation in a foreign joint venture; and
WHEREAS, subject to the terms and conditions of the Loan Agreement, as
amended by this Second Amendment, the Bank is willing to make the Revolving
Loan(s) mentioned in the preceding paragraph.
NOW, THEREFORE, THE PARTIES HERETO, IN CONSIDERATION OF THE MUTUAL
COVENANTS HEREINAFTER SET FORTH AND INTENDING TO BE LEGALLY BOUND HEREBY,
AGREE AS FOLLOWS:
1. DEFINED TERMS. Capitalized terms used herein which are defined
in the Loan Agreement are used herein with such defined meanings.
2. DEFINED TERMS REVISION.
(a) The definition of the term "Borrowing Base Amount" appearing
in Section 1.1 on page 3 of the Loan Agreement is hereby deleted and
restated as follows:
"BORROWING BASE AMOUNT" shall mean: (a) for the
Revolving Loan Commitment, at any time, based upon
the most recent timely submitted borrowing base
certificate submitted by or on behalf of the
Borrower (but not less than on a weekly basis), as
the same may be adjusted by the Bank on a daily
basis upon review of the Borrower's sales journals
and cash receipts and as a result of field
examinations of the Collateral (using reasonable
lending discretion), the lesser of (i)
$10,000,000.00, or (ii) the sum of (x) the amount
of Qualified Receivables at such time and (y)
advances, using reasonable lending discretion and
up to the sublimit (in the aggregate) of
$5,000,000.00, to finance the Borrower's
acquisition of Eligible Parts and Supplies, which
advances are limited to a loan to value ratio of
50%; or (b) for the Acquisition Loan Commitment,
the lesser of (i) $9,000,000.00 or (ii) advances
for acquisitions of entities by the Borrower are
limited to an earnings multiple of less than or
equal to 5x projected EBITDA of the entity to be
acquired (based upon the Borrower's current
dayrates or contracts) and advances for capital
expenditures are limited to a loan to value ratio
of 75% for geophysical equipment and 80% for
aviation equipment. Further, for the Acquisition
Loan Commitment, advances to finance the purchase
of geophysical equipment are subject to a sublimit
(in the aggregate) of $4,000,000.00.
(b) The definition of the term "Guarantor" appearing in Section
1.1 on page 6 of the Loan Agreement is hereby deleted and restated as
follows:
"GUARANTOR" shall mean individually,
interchangeably, and collectively, Omni Marine &
Supply, Inc., a Louisiana corporation, and its
successors and assigns, American Aviation L.L.C.,
a Missouri limited liability company, and its
successors and assigns, and Hamilton Drill Tech
Inc., an Alberta corporation, and its successors
and assigns, and any wholly-owned Subsidiary of
Borrower that the Borrower may hereafter acquire.
(c) The definition of the term "Guaranty" appearing in Section
1.1 on page 6 of the Loan Agreement is hereby deleted and restated as
follows:
"GUARANTY" shall mean, collectively, that certain
Commercial Guaranty dated January 20, 1998 by
Aviation in favor of the Bank, that certain
Commercial Guaranty dated January 20, 1998 by Omni
Marine in favor of the Bank, and that certain
Commercial Guaranty dated May 19, 1998 by Hamilton
in favor of the Bank.
(d) The definition of the term "Security Agreements" appearing
in Section 1.1 on pages 9-10 of the Loan Agreement is hereby deleted and
restated as follows:
"SECURITY AGREEMENTS" shall mean (i) that certain
Commercial Security Agreement dated July 19, 1996,
by Omni Geophysical in favor of the Bank, as
amended by First Amendment thereto dated as of
June 13, 1997, by Second Amendment thereto dated
as of August 6, 1997, by Third Amendment thereto
dated as of September 30, 1997, by Fourth
Amendment thereto dated as of November 21, 1997,
and by Fifth Amendment thereto dated as of January
20, 1998, affecting all of the properties
described therein, (ii) that certain Security
Agreement (Fixtures) by Omni Geophysical dated as
of June 13, 1997 in favor of the Bank, as amended
by First Amendment thereto dated as of January 20,
1998, (iii) the Aircraft Security Agreement, as
amended by First Amendment thereto dated as of
December 29, 1997, and by Second Amendment thereto
dated as of January 20, 1998, (iv) Commercial
Security Agreement dated August 6, 1997 by
Aviation in favor of the Bank, as amended by First
Amendment thereto dated as of January 20, 1998,
(v) Commercial Security Agreement by the Borrower
in favor of the Bank dated as of January 20, 1998,
(vi) Commercial Security Agreement by Omni Marine
dated as of January 20, 1998 in favor of the Bank,
(vii) Commercial Security Agreement by Hamilton
dated as of May 19, 1998 in favor of the Bank,
(viii) all UCC-1 financing statements, and related
documents required by the Bank in connection with
any of the foregoing, (ix) all amendments or
modifications to any of the foregoing, and (x) all
additional security agreements hereafter granted
by any Person as security for the Indebtedness,
together with any and all amendments or
modifications to any of the foregoing.
(e) The definition of the term "Subsidiaries" appearing in
Section 1.1 on page 10 of the Loan Agreement is hereby deleted and restated
as follows:
"SUBSIDIARIES" shall mean at any date with respect
to any Person all the corporations of which such
Person at such date, directly or indirectly, owns
50% or more of the outstanding capital stock
(excluding directors' qualifying shares), and
"SUBSIDIARY" means any one of the Subsidiaries;
PROVIDED, HOWEVER, the terms Subsidiary and
Subsidiaries shall not include Omni International
and Omni South America.
(f) The following definitions are hereby added to Section 1.1 of
the Loan Agreement:
"ELIGIBLE PARTS AND SUPPLIES" shall mean that
portion of the Borrower's equipment consisting of
Parts and Supplies in which Bank has a first
priority security interest.
"HAMILTON" shall mean Hamilton Drill Tech Inc., an
Alberta corporation, together with its successors
and assigns.
"OMNI INTERNATIONAL" shall mean Omni International
Energy Services, Ltd., a Cayman Islands
corporation, and its successors and assigns.
"OMNI SOUTH AMERICA" shall mean Omni International
Energy Services-South America, Ltd., a Cayman
Islands corporation, and its successors and
assigns.
"PARTS AND SUPPLIES" shall mean all parts and
supplies purchased by Borrower for use with or
integration into Borrower's equipment, of whatever
kind. For example, all replacement parts and
supplies for Borrower's marsh and/or swamp buggies
shall constitute Parts and Supplies.
3. REVISIONS TO AFFIRMATIVE COVENANTS.
(a) Section 11.1(f) of the Loan Agreement is hereby deleted and
restated as follows:
(f) within fifteen (15) days following the end of
each calendar month, (i) an aging of each the
Borrower's and the Guarantor's Receivables and
accounts payable, together with a certificate
executed by the chief financial officer(s) of the
Borrower and the Guarantor, identifying the amount
of Qualified Receivables as of the end of such
month, in such form and containing such
representations and warranties regarding the
Receivables as the Bank may reasonably require and
(ii) a collateral schedule identifying the
Borrower's Eligible Parts and Supplies and
itemizing the quantity, cost and extended value of
such Eligible Parts and Supplies, certified by the
Borrower's chief financial officer, and containing
such representations and warranties as the Bank
may reasonably require.
(b) Article XI of the Loan Agreement is hereby amended and
supplemented to include the following new covenant as Section 11.19:
SECTION 11.19. The Borrower agrees that it shall
cause Omni International and Omni South America to
maintain at all times their respective registers
of shareholders at a location in the Cayman
Islands.
4. REVOLVING LOANS FOR ELIGIBLE PARTS AND SUPPLIES. Subject to the
terms and conditions of the Loan Agreement, as amended by this Second
Amendment, the Bank agrees to make Revolving Loans to the Borrower up to
the applicable Borrowing Base Amount and sublimit then in effect to finance
the Borrower's acquisition of Eligible Parts and Supplies. For each such
requested Revolving Loan by the Borrower, the Borrower shall provide the
Bank with a Request for Advance together with a copy of the invoice for the
Parts and Supplies to be purchased by the Borrower. The Bank reserves the
right (i) to verify and revise, if necessary, the Borrower's computation of
the applicable Borrowing Base Amount and sublimit then in effect and (ii)
to reject, using reasonable lending discretion, any such Request for
Advance. The Bank agrees that its reasonable lending discretion will be
exercised in a manner similar to the Bank's review and verification of
Qualified Receivables.
5. REVOLVING LOANS FOR INVESTMENT IN OMNI INTERNATIONAL ENERGY
SERVICES, LTD. Subject to the terms and conditions of the Loan Agreement,
as amended by this Second Amendment, the Bank agrees to make Revolving
Loans to the Borrower in an amount not to exceed $4,200,000.00 (in the
aggregate), the proceeds of which shall be used by the Borrower to
capitalize Omni International and/or Omni International's participation in
a foreign joint venture; PROVIDED, HOWEVER, it is agreed and understood
that the availability of such Revolving Loans shall be subject to the
Borrowing Base Amount as determined by Qualified Receivables. For each
such requested Revolving Loan, the Borrower shall provide the Bank with a
Request for Advance. The Bank reserves the right to verify and revise, if
necessary, the Borrower's computation of the amount available for advances
under the applicable Borrowing Base Amount then in effect, subject to the
sublimit. Further, the Bank shall not be obligated to make any such
Revolving Loan for the purposes described in this paragraph 5 unless and
until all applicable conditions precedent are satisfied, including the
conditions specified in the last two sentences of paragraph 9.
6. REVISION TO USE OF PROCEEDS. Section 2.2.7 of the Loan Agreement
is hereby amended and supplemented to permit the use of proceeds from
Revolving Loans pursuant to paragraphs 4 and 5 above.
7. REVISION TO NEGATIVE COVENANTS. Section 12.6 of the Loan
Agreement is hereby amended and supplemented to include the following as
subparagraph (g) of Section 12.6:
(g) Investment in Omni International and/or in a
foreign joint venture participated in by Omni
International, in an amount not to exceed
$4,200,000.00 (in the aggregate).
8. REPRESENTATION: NO DEFAULT. Pursuant to the Security
Agreements, the Borrower and the Guarantors agree and acknowledge that any
Revolving Loan by the Bank to the Borrower to finance the acquisition of
Eligible Parts and Supplies shall be secured, among other Collateral, by a
first ranking security interest affecting such Eligible Parts and Supplies
in favor of the Bank. Further, on and as of the effective date hereof, and
after giving effect to this Second Amendment, the Borrower and the
Guarantors confirm, reaffirm and restate the representations and warranties
set forth in the Loan Agreement and the Collateral Documents; provided,
that each reference to the Loan Agreement herein shall be deemed to include
the Loan Agreement as amended by this Second Amendment. The Borrower and
the Guarantors also represent and warrant that no Default or Event of
Default has occurred and is continuing under the Loan Agreement.
9. CONFIRMATION OF COLLATERAL DOCUMENTS. All of the liens,
privileges, priorities and equities existing and to exist under and in
accordance with the terms of the Collateral Documents are hereby renewed,
extended and carried forward as security for all of the Loans and all other
debts, obligations and liabilities of the Borrower to the Bank. In
addition, the parties acknowledge that the Loans are guaranteed IN SOLIDO
by Hamilton pursuant to that certain Commercial Guaranty dated as of May
19, 1998 by Hamilton in favor of the Bank. Further, in the event the Bank
makes a Revolving Loan(s) to the Borrower (pursuant to a Request(s) for
Advance by the Borrower) as set forth in paragraph 5 above, then the Loans
shall also be secured by a first priority security interest affecting not
less than 65% of all outstanding stock issued by Omni International,
granted by the Borrower to the Lender, all in form and substance
satisfactory to the Bank and its counsel. In addition, the Borrower agrees
to provide the Bank with an opinion of Borrower's counsel regarding the
first priority security interest affecting not less than 65% of all
outstanding stock issued by Omni International, in form and substance
satisfactory to the Bank and its counsel.
10. PAYMENT OF EXPENSES. The Borrower agrees to pay or reimburse the
Bank for all legal fees and expenses of counsel to the Bank in connection
with the transactions contemplated by this Second Amendment.
11. WAIVER OF DEFENSES. In consideration of the Bank's execution of
this Second Amendment, the Borrower and the Guarantors do hereby
irrevocably waive any and all claims and/or defenses to payment on any
indebtedness owed by any of them to the Bank that may exist as of the date
of execution of this Second Amendment.
12. AMENDMENTS. THE LOAN AGREEMENT AND THIS SECOND AMENDMENT ARE
CREDIT OR LOAN AGREEMENTS AS DESCRIBED IN LA. R.S. 6:<section>1121, ET SEQ.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE BANK, THE BORROWER, MARINE,
AVIATION, AND HAMILTON. THE LOAN AGREEMENT, AS AMENDED BY THIS SECOND
AMENDMENT, SETS FORTH THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR WRITTEN AND ORAL
UNDERSTANDINGS BETWEEN THE BORROWER, AVIATION, MARINE, HAMILTON AND THE
BANK, WITH RESPECT TO THE MATTERS HEREIN SET FORTH. THE LOAN AGREEMENT, AS
AMENDED BY THIS SECOND AMENDMENT, MAY NOT BE MODIFIED OR AMENDED EXCEPT BY
A WRITING SIGNED AND DELIVERED BY THE BORROWER, AVIATION, MARINE, HAMILTON
AND THE BANK.
13. GOVERNING LAW: COUNTERPARTS. This Second Amendment shall be
governed by and construed in accordance with the laws of the State of
Louisiana. This Second Amendment may be executed in any number of
counterparts, all of which counterparts, when taken together, shall
constitute one and the same instrument.
14. CONTINUED EFFECT. Except as expressly modified herein, the Loan
Agreement shall continue in full force and effect. The Loan Agreement as
amended herein is hereby ratified and confirmed by the parties hereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed and delivered as of the date hereinabove provided
by the authorized officers each hereunto duly authorized.
OMNI ENERGY SERVICES CORP.
By: /s/ David A. Jeansonne
------------------------
Name: David A. Jeansonne
Title: Chairman of the Board and
Chief Executive Officer
AMERICAN AVIATION L.L.C.
BY: OMNI ENERGY SERVICES CORP.,
AS SOLE MEMBER
By: /s/ David A. Jeansonne
------------------------
Name: David A. Jeansonne
Title: Chairman of the Board and
Chief Executive Officer
OMNI MARINE & SUPPLY, INC.
By: /s/ David A. Jeansonne
------------------------
Name: David A. Jeansonne
Title: Chairman of the Board and
Chief Executive Officer
HAMILTON DRILL TECH INC.
By: /s/ David A. Jeansonne
------------------------
Name: David A. Jeansonne
Title: Chairman of the Board and
Chief Executive Officer
HIBERNIA NATIONAL BANK
By: /s/ Tammy M. Angelety
------------------------
Name: Tammy M. Angelety
Title: Assistant Vice President
OMNI ENERGY SERVICES CORP.
AND
JOHN H. UNTEREKER
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT
(the "Agreement") is made and entered into on this twenty-first (21st) day
of July, 1998, by and between OMNI ENERGY SERVICES CORP., a Louisiana
corporation (hereinafter referred to as the "Company"), and JOHN H.
UNTEREKER, a resident of the State of Louisiana (hereinafter referred to as
"Employee").
WHEREAS, the Company desires to obtain the services of the Employee
upon the terms and conditions contained herein; and
WHEREAS, the Employee desires to provide his services to the Company
upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT The Company has agreed to hire Employee and the Employee
has agreed to be employed by the Company upon the terms and conditions
hereinafter set forth.
2. TERM. Subject to the provisions for termination as hereinafter
provided, the term of Employee's employment with the Company shall commence
on August 4, 1998 and shall expire on August 4, 2001, except that the
provisions of Sections 7 and 8 of this Agreement shall survive the
termination of this Agreement for a period of two (2) years thereafter.
3. COMPENSATION. The Company shall compensate the Employee as
follows:
(a) Base salary of One Hundred Fifty Thousand Dollars
($150,000.00) per annum during the term of this Agreement.
(b) Guaranteed bonus of Seventy-five Thousand Dollars ($75,000)
per annum payable annually on or before the 30th day following each fiscal
year end of the Company during the term of this Agreement or, at the
Employee's option, payable in equal monthly installments of $6,250.
(c) Options to acquire 55,000 shares of common stock, $.01 par
value per share, of the Company (the "Common Stock"), which shall be
granted within three business days of August 4, 1998, shall have an
exercise price equal to the fair market value of such stock on the date of
grant, and shall be granted under the Stock Incentive Plan of the Company
and pursuant to that certain option agreement attached hereto as Exhibit
"A."
(d) Of the 55,000 options granted pursuant to paragraph 3(c),
5,000 will be designated guaranteed return options (the "Guaranteed Return
Options"). If on the third anniversary of the date of grant, the closing
price of the Common Stock, as reported on the Nasdaq National Market
System, or such other exchange on which the Common Stock is then traded, is
not at least $10.00 greater than the per share exercise price of such
Guaranteed Return Options, then as to each Guaranteed Return Option
remaining unexercised at such date, the Company shall pay Employee the
difference between $10.00 and such exercise price.
4. OTHER BENEFITS. Employee shall be entitled to participate in all
employee benefit plans or arrangements that the Company makes generally
available now or in the future to its executive officers, such as vacation,
sick leave, life insurance, health insurance, long-term disability
insurance, retirement and incentive bonus plans. Any payments or benefits
payable to Employee hereunder in respect of any calendar year during which
Employee is employed by the Company for less than the entire year shall,
unless otherwise provided in the applicable Benefit Plan, be prorated in
accordance with the number of days in such calendar year during which he is
so employed. For purposes of the Benefit Plans and to the extent
consistent with each such Benefit Plan, Employee's base salary shall be
considered the base salary and guaranteed bonus set forth in Sections 3(a)
and (b) of this Agreement.
Employee shall be entitled in each year, at a time convenient to the
Company, to a vacation of two weeks per year on the same policies as
applicable to employees of the Company generally and during which his
salary will be paid in full.
5. DUTIES. During the term of this Agreement, Employee shall serve
as Executive Vice President (with responsibilities which shall include but
shall not be limited to all accounting and financial reporting functions)
or in a more senior position, shall report to the Chairman and Chief
Executive Officer or Board of Directors, and shall perform such duties,
commensurate with such positions, as are assigned to him by the Chairman
and Chief Executive Officer or Board of Directors.
6. TERMINATION. This Agreement may be terminated at any time by the
Company, without prior notice, for cause or for breach of any obligation of
Employee to Company, in which case this Agreement shall terminate without
further obligation to the Company other than for obligations that have
accrued to the date of termination, which obligations shall be paid in a
lump sum in cash within 30 days of the date of termination. Upon
termination of this Agreement by the Company without cause or in the
absence of a breach of an obligation of Employee to the Company, the
Company shall pay to Employee, in addition to all amounts or compensation
to which he is entitled pursuant to the Company's termination policies and
plans then in effect, if any, as severance pay, an amount equal to the
remaining base salary and guaranteed bonus pursuant to Sections 3(a) and
(b) of this Agreement, for the remainder of the term set forth in Paragraph
2 hereof (but in no event less than $112,500) in one payment within 10
business days of such termination.
For purposes of this Agreement, the Company shall have "cause" for
termination of Employee's employment hereunder upon the occurrence of any
of the following: (i) the continued failure by Employee to substantially
perform his material duties hereunder according to objective written
standard(s) as provided from time to time by the Board of Directors
consistent with Employee's duties as set forth in Paragraph 5, and with
generally accepted industry standards for executive vice-presidents in
similar companies, after demand for substantial performance is delivered by
the Company to Employee in writing, which demand shall set forth the
objective standard(s) which the Company believes have not been met, and
after a reasonable period of time, not less than thirty (30) days, shall
have elapsed after said Notice during which Employee shall have an
opportunity to cure the alleged deficiency, (ii) the Employee's conviction
of a felony, (iii) any acts of dishonesty or deceit by the Employee
involving the Company's business or his performance of his duties
hereunder, or (iv) a material breach of any fiduciary duty of loyalty owed
to the Company by the Employee. Any act, or failure to act, by Employee
that is based upon authority given pursuant to instructions from the Chief
Executive Officer or pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall not constitute
"cause" for termination of Employee's employment with the Company.
7. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Employee
agrees that the names of the Company's customers and its pricing structure,
processes, operations, marketing programs, sales techniques, designs,
specifications and other trade secrets which are not part of the public
domain and not reasonably discoverable except by virtue of employment with
the Company, (collectively referred to herein as "Proprietary Information")
are valuable, special and unique assets of the Company. Employee will not,
during the term of Employee's employment hereunder and for a period
expiring two (2) years after the termination of Employee's employment under
this Agreement (whether such termination occurs because of a breach of this
Agreement by the Company or by Employee, because of a termination of this
Agreement by the Company, or otherwise), directly or indirectly, utilize
for the benefit of any person, business, enterprise or entity other than
the Company or disclose any portion or part of the Company's Proprietary
Information to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever. Furthermore, it is agreed that all
data, lists, papers, memoranda, documents, and all products of Employee's
skill, resulting from Employee's employment hereunder, shall be and remain
the sole and exclusive property of the Company, and Employee shall execute
any and all agreements and instruments that may be necessary to evidence
the Company's ownership of such property.
8. COVENANT OF NON-COMPETITION. For the period beginning on the date
hereof and expiring two (2) years after the termination of Employee's
employment under this Agreement (whether such termination occurs because of
a breach of this Agreement by the Company or by Employee, because of a
termination of this Agreement by the Company, or otherwise), (a) Employee
will not, directly or indirectly, within any parish or municipality in
Louisiana set forth on Exhibit "B" or in any county or municipality of any
other state or foreign jurisdiction in which customers of the Company are
located or reside, solicit, induce or otherwise contact customers of the
Company for the purpose of soliciting business from the Company's
customers, or any other purpose whatsoever which is detrimental to the
Company or its business; and (b) Employee will not, directly or indirectly,
within any parish or municipality in Louisiana set forth on Exhibit "B" or
in any other state or foreign jurisdiction in which the Company engages in
or has engaged in business, own, manage, operate, control, be employed by,
consult with, or participate in, any business, enterprise, or entity
(including a sole proprietorship of Employee) which owns, operates or
controls any geophysical services business, which business includes but is
not limited to the provision of seismic drilling, seismic surveying, and
services which are material and integral to those businesses, including
aviation operations.
9. REFORMATION/SAVINGS CLAUSE. The parties agree that if either the
length of time or the geographical area of Employee's covenants contained
herein are deemed too restrictive by any court of competent jurisdiction in
any proceeding involving the validity of said covenants, then the court may
reduce the offending restriction to the maximum restriction it deems
reasonable under the circumstances so as to give the maximum permissible
effect to the intentions of the parties as set forth herein, and the court
may enforce such provisions as so reformed.
10. REMEDIES AND EQUITABLE PROVISIONS. The following provisions
shall apply in respect of Employee's covenants and agreements contained in
this Agreement:
(a) Employee acknowledges and agrees that Employee's covenants
contained in this Agreement are reasonable and necessary for the proper
protection of the Company and that the Employee's agreements herein not to
compete with the Company shall not hinder Employee in obtaining gainful
employment at the termination of this Agreement in the event Employee shall
desire such employment.
(b) Employee acknowledges and agrees that the Company does not
have an adequate remedy at law for the breach or threatened breach of
Employee's covenants contained in this Agreement, and Employee therefore
agrees that the Company, in addition to any other remedy which may be
available to it, shall be entitled to enforce Employee's covenants by
injunction or other equitable means.
11. COMPANY INDEMNIFICATION. Company agrees to defend, indemnify and
hold harmless Employee from any demand, loss, cost or expense, including,
but not limited to attorney's fees, arising from or related to any claim by
any former employer of Employee based on any alleged breach of any
purported covenant of confidentiality and/or non-competition agreement.
12. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail:
If to Employee: John H. Untereker
422 W. Farrel Road
Lafayette, LA 70508
If to Company: Omni Energy Services Corp.
4500 N.E. Evangeline Thruway
Carencro, LA 70520
13. WAIVER OF BREACH. The waiver or nonenforcement by the Company of
a breach of any provision of this Agreement by the Employee shall not
operate or be construed as a waiver of any subsequent breach by the
Employee.
14. ASSIGNMENT. Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Employee may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.
15. SEVERABILITY. Every provision of this Agreement is entitled to
be severable. The parties agree that if any term or provision hereof is
held to be illegal, invalid, against public policy or unenforceable for any
reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of the Agreement, and the remaining provisions
of this Agreement shall not be affected thereby.
16. AMENDMENTS. No alterations, modifications, amendments or changes
herein shall be effective or binding upon the parties unless the same shall
have been agreed in writing by all the parties.
17. SECTION HEADINGS. Section and other headings in this Agreement
are for reference purposes only, and are in no way intended to describe,
interpret, define or limit the scope or extent of any provision hereof.
18. COUNTERPART EXECUTION. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had
signed the same document. All counterparts shall be construed together and
shall constitute one agreement.
19. APPLICABLE LAW. The Company and Employee acknowledge and agree
that the law of several states could, conceivably, apply to the terms of
this Agreement. In order to provide certainty with respect to the
construction, interpretation and enforcement of this Agreement, it is the
intention of the parties that the internal laws of the State of Louisiana
shall govern the construction, interpretation, validity and enforcement of
each term of this Agreement.
20. RIGHTS CUMULATIVE. The rights of the Company hereunder shall be
cumulative and the enforcement by Company of any right shall not affect in
any way the ability of the Company to enforce any other right hereunder or
any right or remedy of the Company at law or in equity.
21. ENTIRE AGREEMENT. This instrument contains the entire agreement
of the parties and may not be changed orally but only by agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Employee has hereunto set his hand as of the day and year
first above written.
COMPANY
OMNI ENERGY SERVICES CORP.
BY: /s/ David A. Jeansonne
------------------------
DAVID A. JEANSONNE
Chairman and Chief Executive Officer
EMPLOYEE
/s/ John H. Untereker
------------------------
JOHN H. UNTEREKER
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information form consolidated financial
statements for the second quarter ended June 30, 1998, filed on Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,295
<SECURITIES> 0
<RECEIVABLES> 20,702
<ALLOWANCES> 600
<INVENTORY> 6,566
<CURRENT-ASSETS> 31,249
<PP&E> 49,252
<DEPRECIATION> (4,808)
<TOTAL-ASSETS> 89,603
<CURRENT-LIABILITIES> 12,931
<BONDS> 0
<COMMON> 158
0
0
<OTHER-SE> 50,612
<TOTAL-LIABILITY-AND-EQUITY> 89,603
<SALES> 24,250
<TOTAL-REVENUES> 24,250
<CGS> 15,632
<TOTAL-COSTS> 18,197
<OTHER-EXPENSES> (229)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 429
<INCOME-PRETAX> 5,853
<INCOME-TAX> 2,342
<INCOME-CONTINUING> 3,511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,511
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
