<PAGE> 1
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 15, 1998
FIRST WAVE MARINE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
33-38157 76-0461352
(Commission File Number) (I.R.S. Employer Identification No.)
4000 S. SHERWOOD FOREST BOULEVARD
SUITE 603
BATON ROUGE, LOUISIANA 70816
(Address of principal executive offices) (Zip Code)
(504) 292-8800
(Registrant's telephone number, including area code)
<PAGE> 2
EXPLANATORY NOTE
This current report on Form 8-K/A amends and restates in its entirety
Item 7 of the current report on Form 8-K of First Wave Marine, Inc (the
"Company") dated May 15, 1998 and filed with the Securities and Exchange
Commission on May 29, 1998 (the "Original Form 8-K")
All statements other than statements of historical fact contained in
this document, concerning future expansion plans and other matters are forward-
looking statements. Forward-looking statements in this document generally are
accompanied by words such as "anticipate," "believe," "intend," "estimate" or
"expect" or similar statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove correct. Factors that
could cause the Company's results to differ materially from the results
discussed in such forward-looking statements include risks such as the
dependence on the oil and gas industry, difficulties related to managing growth
in operations, the risks associated with the recent expansion into the offshore
drilling rig segment, and labor, operating, regulatory and other risks in the
shipbuilding industry. All forward-looking statements in this document are
expressly qualified in their entirety by the cautionary statements in this
paragraph.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The audited Consolidated Statements of Earnings of the Barge
Building Division of Galveston Shipbuilding Company ("GSC-BBD") for the
years ending December 31, 1996 and 1997 and the unaudited Consolidated
Statements of Earnings of GSC-BBD for the three-month periods ending
March 31, 1997 and 1998 are attached hereto as Annex I. Additionally,
the audited accompanying Balance Sheets of GSC-BBD as of December 31,
1996 and 1997 and the unaudited Balance Sheet of GSC-BBD as of March 31,
1998 are attached hereto as Annex I. These statements are filed in
compliance with Rule 3.05 of Regulation S-X.
(b) Pro Forma Financial Information.
Pro forma financial information of the Company is attached hereto
as Annex II. This pro forma financial information is filed in compliance
with Article 11 of Regulation S-X.
(c) Exhibits.
*2.1 -- Sale and Purchase Agreement dated May 1, 1998 between FW
Marine Properties, Inc. and Galveston Shipbuilding Company.
*99.1 -- Press Release dated May 27, 1998.
*Previously filed as an Exhibit to the Original Form 8-K.
2
<PAGE> 3
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.
FIRST WAVE MARINE, INC.
Date: July 29, 1998
By: /s/ David B. Ammons
-----------------------------------------
David B. Ammons
Executive Vice President,
CFO and Secretary
EXHIBIT INDEX
*2.1 -- Sale and Purchase Agreement dated May 1, 1998 between FW
Marine Properties, Inc. and Galveston Shipbuilding Company.
*99.1 -- Press Release dated May 27, 1998.
*Previously filed as an Exhibit to the Original Form 8-K.
3
<PAGE> 4
ANNEX I
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Galveston Shipbuilding Company
We have audited the accompanying balance sheets of the Barge Building
Division of Galveston Shipbuilding Company as of December 31, 1997 and 1996, and
the related statements of earnings, divisional equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Division's management. Our responsibility is to express an opinion on these
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 financial statements referred to above, present
fairly, in all material respects, the financial position of the Barge Building
Division of Galveston Shipbuilding Company as of December 31, 1997 and 1996, and
the results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
Grant Thornton LLP
Houston, Texas
June 12, 1998
4
<PAGE> 5
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS
December 31,
--------------------- March 31,
1996 1997 1998
--------- --------- ---------
CURRENT ASSETS (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 272 $ 300 $ 300
Certificates of deposit 1,303 1,658 1,057
Accounts receivable 31 13 7
Inventories 986 776 238
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,183 1,295 1,123
Prepaid expenses 229 608 594
--------- --------- ---------
Total current assets 4,004 4,650 3,319
PROPERTY AND EQUIPMENT, NET 2,707 2,443 2,349
OTHER 35 22 21
--------- --------- ---------
$ 6,746 $ 7,115 $ 5,689
========= ========= =========
LIABILITIES AND DIVISIONAL EQUITY
CURRENT LIABILITIES
Notes payable $ 2,404 $ 1,316 $ 473
Current portion of long-term debt 205 491 275
Trade accounts payable 1,036 1,205 322
Accrued liabilities 343 477 382
Billings in excess of costs and estimated earnings on
uncompleted contracts -- 488 293
--------- --------- ---------
Total current liabilities 3,988 3,977 1,745
LONG-TERM DEBT, net of current portion 1,769 1,278 1,340
COMMITMENTS AND CONTINGENCIES -- -- --
DIVISIONAL EQUITY 989 1,860 2,604
--------- --------- ---------
$ 6,746 $ 7,115 $ 5,689
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
STATEMENTS OF EARNINGS
(In thousands)
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, March 31,
---------------------- ----------------------
1996 1997 1997 1998
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 10,724 $ 14,825 $ 3,706 $ 3,919
COST OF REVENUES 9,270 11,611 3,028 2,780
--------- --------- --------- ---------
Gross margin 1,454 3,214 678 1,139
GENERAL AND ADMINISTRATIVE
EXPENSES 390 512 89 80
--------- --------- --------- ---------
Earnings from operations 1,064 2,702 589 1,059
OTHER INCOME (EXPENSE)
Other income (expense) 569 (7) (99) (208)
Interest expense (296) (307) (94) (21)
--------- --------- --------- ---------
273 (314) (193) (229)
--------- --------- --------- ---------
Earnings before income taxes 1,337 2,388 396 830
INTERDIVISIONAL INCOME TAX
PROVISION 501 896 148 312
--------- --------- --------- ---------
NET EARNINGS $ 836 $ 1,492 $ 248 $ 518
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
STATEMENT OF DIVISIONAL EQUITY
(In thousands)
<TABLE>
<CAPTION>
Additional
Common paid-in Retained Divisional
stock capital earnings equity
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1996 $ 1 $ 99 $ (129) $ --
Reorganization (1) (99) 129 (29)
Interdivisional transfers -- -- -- 182
Net earnings -- -- -- 836
--------- --------- --------- ---------
Balance at December 31, 1996 -- -- -- 989
Interdivisional transfers -- -- -- (621)
Net earnings -- -- -- 1,492
--------- --------- --------- ---------
Balance at December 31, 1997 -- -- -- 1,860
Interdivisional transfers (unaudited) -- -- -- 226
Net earnings (unaudited) -- -- -- 518
--------- --------- --------- ---------
Balance at March 31, 1998 (unaudited) $ -- $ -- $ -- $ 2,604
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE> 8
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, March 31,
---------------------- ----------------------
1996 1997 1997 1998
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net earnings $ 836 $ 1,492 $ 248 $ 518
Adjustments to reconcile net earnings
to net cash (used) provided by
operating activities
Depreciation and amortization 170 294 103 128
Change in assets and liabilities
Decrease in accounts receivable 121 18 -- 6
(Increase) decrease in inventories (960) 210 914 538
(Increase) decrease in costs and
estimated earnings in excess of
billings on uncompleted contracts (898) (112) (55) 172
(Increase) decrease in prepaid
expenses (101) (379) (72) 14
(Increase) decrease in other assets (4) 4 (9) --
Increase (decrease) in trade
accounts payable 710 169 (714) (883)
(Decrease) increase in accrued
liabilities (277) 134 (6) (95)
Increase (decrease) in billings in
excess of costs and estimated
earnings on uncompleted
contracts -- 488 -- (195)
--------- --------- --------- ---------
Net cash (used) provided by
operating activities (403) 2,318 409 203
Cash flows from investing activities
Acquisition of property and equipment (1,090) (21) (6) (33)
Net (purchase) proceeds of certificates
of deposit (653) (355) 201 601
--------- --------- --------- ---------
Net cash (used) provided by
investing activities (1,743) (376) 195 568
</TABLE>
8
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BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
STATEMENTS OF CASH FLOWS - CONTINUED
(In thousands)
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, March 31,
---------------------- ----------------------
1996 1997 1997 1998
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from financing activities
Proceeds from issuance of long-term debt $ 1,450 $ -- $ -- $ --
Payments on long-term debt (179) (205) (62) (154)
Proceeds from issuance of notes payable 1,885 -- -- --
Payments on notes payable (885) (65) (13) --
Net payments on revolving line of credit -- (1,023) (381) (843)
Interdivisional transfers 182 (621) (327) 226
Loan origination costs (39) -- -- --
--------- --------- --------- ---------
Net cash provided (used) by
financing activities 2,414 (1,914) (783) (771)
--------- --------- --------- ---------
Net increase (decrease) in cash 268 28 (179) --
Cash and cash equivalents at beginning
of period 4 272 272 300
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 272 $ 300 $ 93 $ 300
========= ========= ========= =========
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest $ 282 $ 312 $ 94 $ 22
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE> 10
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Barge Building Division of Galveston Shipbuilding Company's (the Division)
business is concentrated in building river-going barges, and the Division
customarily extends credit to such customers. The Division provides
construction services from its location along the Intracoastal Waterway in
Galveston, Texas.
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements follows.
1. DIVISIONAL EXPENSES
The financial statements of the Division reflect all of its costs of doing
business. Cost of revenues reflects actual costs of production, including a
rental charge for equipment owned by Galveston Shipbuilding Company (the
Parent) used in the Division's production.
The Division's financial statements include an allocation, which management
believes to be reasonable, of general, administrative and selling expenses
(including payroll and related costs, office rental and supplies and similar
expenses) which have been allocated to the Division based upon the levels of
production in each of the Parent's divisions.
The Division has recorded an interdivisional provision for income taxes
based upon the tax rate of the Division, calculated on a stand alone basis,
which has been recorded through a charge to interdivisional equity.
2. ACCOUNTS RECEIVABLE
Management considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is recorded. If collection
of amounts becomes uncertain, an allowance will be established.
3. REVENUE COST AND RECOGNITION
Revenues from lump-sum construction contracts are recognized on the
percentage-of-completion method, measured by the input hours-to-hours
method. This method is used because management considers this method to be
the best available measure of progress on these contracts.
10
<PAGE> 11
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs, and depreciation costs. Selling, general, and
administrative costs are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in the period in which
such losses are determined. Changes in job performance, job conditions, and
estimated profitability, including those arising from contract penalty
provisions, and final contract settlements may result in revisions to costs
and income and are recognized in the period in which the revisions are
determined.
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.
4. INVENTORIES
Inventories consist of raw materials, repair parts and assets under
construction but not under contract. Inventories are valued at the lower of
cost or market using the first-in, first-out method.
5. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
provided principally on the straight-line method over the estimated useful
lives of the assets.
6. USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
11
<PAGE> 12
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED
7. CASH EQUIVALENTS
The Division considers all highly liquid short-term investments purchased
with an original maturity of three months or less to be cash equivalents.
The Division maintains a deposit account with a federally insured financial
institution which at times may exceed the insured amount of $100. The
Division has not experienced any losses in this account and believes it is
not exposed to any significant credit risk on cash and cash equivalents.
8. INTERIM FINANCIAL INFORMATION
Financial information as of March 31, 1998 and for the three months ended
March 31, 1997 and 1998, included herein, is unaudited. Such information
includes all adjustments (consisting only of normal recurring adjustments),
which are, in the opinion of management, necessary for a fair presentation
of the financial information in the interim periods. The results of
operations for the three months ended March 31, 1998 are not necessarily
indicative of the results of the full fiscal year.
NOTE B - COSTS AND ESTIMATED EARNINGS ON LUMP-SUM CONTRACTS IN
PROGRESS
Costs and estimated earnings on lump-sum contracts in progress are as
follows:
<TABLE>
<CAPTION>
December 31,
--------------------- March 31,
1996 1997 1998
--------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Cost incurred on uncompleted contracts $ 6,870 $ 2,095 $ 4,837
Estimated earnings 1,016 988 2,140
--------- --------- ---------
7,886 3,083 6,977
Less billings applicable thereto 6,703 2,276 6,147
--------- --------- ---------
$ 1,183 $ 807 $ 830
========= ========= =========
Included in the accompanying balance sheets
under the following captions:
Cost and estimated earnings in excess of
billings on uncompleted contracts $ 1,183 $ 1,295 $ 1,123
Billings in excess of costs and estimated
earnings on uncompleted contracts -- 488 293
--------- --------- ---------
$ 1,183 $ 807 $ 830
========= ========= =========
</TABLE>
12
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BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
Estimated useful -------------------------- March 31,
lives in years 1996 1997 1998
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Land $ 712 $ 712 $ 712
Buildings and shipyard improvements 5-20 1,046 1,046 1,046
Automobiles 3-5 11 11 11
Office furniture, fixtures and
equipment 5-10 5 9 9
Machinery and equipment 5-15 1,343 2,854 2,795
----------- ----------- -----------
3,117 4,632 4,573
Less accumulated depreciation (1,955) (2,189) (2,304)
----------- ----------- -----------
1,162 2,443 2,269
Construction in progress 1,545 -- 80
----------- ----------- -----------
$ 2,707 $ 2,443 $ 2,349
=========== =========== ===========
</TABLE>
NOTE D - NOTES PAYABLE
Notes payable consists of the following:
<TABLE>
<CAPTION>
December 31,
------------------------ March 31,
1996 1997 1998
------ ------- -------
(Unaudited)
<S> <C> <C> <C>
Revolving line of credit of $1,500 at a bank;
interest at prime plus 1.5% (9% at December
31, 1997) due monthly; maturing January 28,
1998; collateralized by property $1,488 $ 943 $ 250
Revolving line of credit of $500 at a bank;
interest at 7.25%; due monthly; maturing
May 3, 1998; collateralized by certificates
of deposit 500 315 165
Revolving line of credit of $200 at a bank;
interest at 6%; principal and interest due
at maturity date of February 20, 1997 or
on demand; collateralized by certificates
of deposit. Paid in 1997. 200 -- --
</TABLE>
13
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BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE D - NOTES PAYABLE - CONTINUED
<TABLE>
<CAPTION>
December 31,
--------------------- March 31,
1996 1997 1998
--------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Note payable to a bank; principal of $3 plus
interest at 11% due monthly or on demand;
maturing August 2, 1998; collateralized by
property. Paid in 1997. $ 66 $ -- $ --
Revolving line of credit of $300 at a bank;
interest at 6.95%; due monthly; maturing
February 7, 1998; collateralized by
certificates of deposit. Paid in 1997. 92 -- --
Other notes payable 58 58 58
--------- --------- ---------
$ 2,404 $ 1,316 $ 473
========= ========= =========
</TABLE>
NOTE E - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------- March 31,
1996 1997 1998
--------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Note payable to a business; principal and interest
at 6% for payments of $1 for the first twelve
months; $4 for the next twenty-three months;
and last payment for balance plus accrued
interest; maturing on February 15, 2001;
unsecured. Paid off during first quarter of
1998. $ 82 $ 82 $ --
Note payable to a business; principal and interest
at 6% for payments of $2 due monthly; maturing
on December 12, 2000; collateralized by certain
equipment. 86 68 62
Note payable to a bank; principal of $6 plus interest
at prime plus 1% (9.5% at December 31, 1997)
due monthly; maturing on December 15, 1999;
collateralized by certain vehicles. 210 138 109
</TABLE>
14
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BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE E - LONG-TERM DEBT - CONTINUED
<TABLE>
<CAPTION>
December 31,
--------------------- March 31,
1996 1997 1998
--------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Note payable to a bank; principal and interest at
prime plus 1% (9.5% at December 31, 1997)
for total payments of $19 due monthly; maturing
in February 2001; collateralized by property $ 1,371 $ 1,274 $ 1,244
Note payable to a bank; principal and interest at
prime plus 1% (9.5% at December 31, 1997)
for payments of $3 due monthly; maturing on
June 27, 1998; collateralized by property 225 207 200
--------- --------- ---------
1,974 1,769 1,615
Less current portion 205 491 275
--------- --------- ---------
$ 1,769 $ 1,278 $ 1,340
========= ========= =========
</TABLE>
Maturities of long-term debt at December 31, 1997 are:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ------
<S> <C>
1998 $ 491
1999 213
2000 162
2001 903
------
$1,769
======
</TABLE>
The fair value of long-term debt and notes payable approximates book value.
15
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BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE F - COMMITMENTS AND CONTINGENCIES
The Division leases cranes under noncancelable operating leases expiring at
various dates through 1999 in the approximate amount of $240 in 1998 and $32
in 1999. Rent expense for the years ended December 31, 1997 and 1996 was
approximately $250 and $200 and for the three months ended March 31, 1998
and 1997 was approximately $80.
The Division is involved in certain claims and lawsuits occurring in the
normal course of business. Management, after consultation with outside legal
counsel, does not believe the outcome of these actions will have a material
impact on the financial statements of the Division.
The Division is subject to extensive and changing federal, state and local
laws and regulations designed to protect the environment. The Division from
time to time is involved in administrative and other proceedings under
environmental laws involving its operations and facilities. Environmental
laws could impose liability for remediation costs or result in civil or
criminal penalties in cases of noncompliance. Environmental laws have been
subject to frequent change; therefore, the Division is unable to predict the
future costs or other future impact of environmental laws on its operations.
NOTE G - BENEFIT PLAN
Eligible employees of the Division participate in a 401(k) deferred savings
plan (the Plan) as of October 1, 1997. Under the Plan, a participating
employee may allocate a percentage of their salary and the Division makes
matching contributions to the Plan of 25% of participant contributions up to
6% of compensation. Contributions for the year ended December 31, 1997 has
approximately $6 and for the three months ended March 31, 1998 was
approximately $4.
16
<PAGE> 17
BARGE BUILDING DIVISION OF GALVESTON SHIPBUILDING COMPANY
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Information as of and for the three months ended March 31, 1997
and March 31, 1998 is unaudited)
(In thousands)
NOTE H - MAJOR CUSTOMERS
The Division had the following customers to which it had sales exceeding 10%
of total Division sales:
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, March 31,
------------------- --------------------
1996 1997 1997 1998
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Customer A 64% 24% 33% (a)
Customer B 26% (a) (a) (a)
Customer C (a) 29% 45% (a)
Customer D (a) 21% (a) 75%
Customer E (a) (a) 10% (a)
Customer F (a) (a) 10% (a)
Customer G (a) (a) (a) 25%
</TABLE>
(a) Less than 10%.
NOTE I - RELATED PARTY TRANSACTIONS
The Division engages in transactions with others divisions of the Parent and
other related parties.
As a result of the aforementioned transactions, included in notes payable on
the accompanying balance sheets at December 31, 1996 and 1997 and March 31,
1998 are $58, $58 and $58 for a note payable to a related party. Included in
costs of revenue on the accompanying income statements at December 31, 1996
and 1997 and March 31, 1998 are $55, $34 and $8 of rental expense to related
parties.
Interdivisional rent expense for the years ended December 31, 1996 and 1997
was $55 and $34, and for the three months ended March 31, 1997 and 1998 was
$8 and $8.
17
<PAGE> 18
ANNEX II.
UNAUDITED PRO FORM CONSOLIDATED COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma consolidated combined financial information
gives pro forma effect to: (i) the completion of the acquisition of certain
assets of the Barge Building Division of Galveston Shipbuilding Company
("GSC-BBD" or "GSC-BBD Acquisition"), (ii) the completion of the acquisition of
100% of the outstanding capital stock of John Bludworth Marine, Inc. ("JBM" or
"JBM Acquisition"), (iii) the completion of the acquisition of all of the
minority interest of one of its subsidiaries ("Minority Interest Exchange"), and
(iv) the completion of a $90 million 11% Senior Notes Offering (the "Offering"),
as if they had occurred at January 1, 1997 with respect to the unaudited pro
forma consolidated combined statements of operations and as if the GSC-BBD
Acquisition had occurred March 31, 1998 with respect to the unaudited pro forma
consolidated combined balance sheet. This pro forma information should be read
in conjunction with the historical financial statements (including notes
thereto) of GSC-BBD appearing elsewhere herein, and the consolidated historical
financial statements (including notes thereto) of the Company and JBM included
in previous filings of the Company with the Securities and Exchange Commission.
The pro forma adjustments reflecting the consummation of the GSC-BBD Acquisition
and the JBM Acquisition on the purchase method of accounting are based on
available financial information and certain estimates and assumptions set forth
in the Notes to the Unaudited Pro Forma Consolidated Combined Financial
Statements. The assumptions include the acquisition of GSC-BBD with $5.5 million
in cash available from the Offering, and the acquisition of 100% of the
outstanding capital stock of JBM for $15.0 million in cash and the issuance of a
$4.0 million promissory note. The pro forma adjustments do not reflect any
operating efficiencies and cost savings that may be achievable with respect to
the combined businesses.
The following information is not necessarily indicative of the future financial
position or operating results of the combined businesses or the financial
position or operating results of the combined businesses had the JBM
Acquisition, the GSC-BBD Acquisition, the Minority Interest Exchange, and the
Offering occurred on the dates discussed above. For purposes of preparing its
Consolidated Financial Statements, the Company will establish a new basis for
the GSC-BBD assets, based upon the fair values thereof and the Company's
purchase price thereof, including the costs of the GSC-BBD Acquisition. The
Unaudited Pro Forma Consolidated Combined Financial Information reflects the
Company's best estimates; however, the actual financial position and the results
of operations may differ from the pro forma amounts reflected herein because of
various factors, including, without limitation, access to additional
information, changes in value and changes in operating results between the date
of preparation of the Unaudited Pro Forma Consolidated Combined Financial
Information and the date on which the GSC-BBD Acquisition actually closed.
18
<PAGE> 19
FIRST WAVE MARINE, INC.
PRO FORMA CONSOLIDATED COMBINED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
FIRST WAVE PRO FORMA PRO FORMA PRO FORMA
MARINE, INC. GSC-BBD ADJUSTMENTS NOTES COMBINED
-------- -------- -------- ------ --------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 33,821 $ 300 $ (300) (a) $ 28,321
(5,500) (a)
Investments held-to-maturity 11,017 1,057 (1,057) (a) 11,017
Accounts receivable, less allowance 17,504 7 (7) (a) 17,504
Inventories 786 238 (238) (a) 786
Costs and estimated earnings in excess
of billings on uncompleted contracts 117 1,123 (1,123) (a) 117
Income tax receivable 111 -- 111
Deferred income taxes 81 -- 81
Prepaids and other 263 594 (610) (a) 247
-------- -------- -------- --------
Total current assets 63,700 3,319 (8,835) 58,184
Property and equipment, net 47,891 2,349 3,151 (a) 53,391
Financing costs, net 4,302 -- 4,302
Goodwill and other intangibles, net 16,629 -- 16,629
Deposits and other 623 21 (21) (a) 623
-------- -------- -------- --------
Total assets $133,145 $ 5,689 $ (5,705) $133,129
======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Notes payable $ 10,847 $ 473 $ (473) (a) $ 10,847
Current portion of long-term obligations -- 275 (275) (a) --
Trade accounts payable 2,973 322 (322) (a) 2,973
Accrued liabilities 6,214 382 (382) (a) 6,214
Billings in excess of costs and estimated --
earnings on uncompleted contracts -- 293 (293) (a) --
-------- -------- -------- --------
Total current liabilities 20,034 1,745 (1,745) 20,034
Long-term obligations 3,209 1,340 (1,340) (a) 3,209
Subordinated debt 6,328 -- 6,328
Senior notes 90,000 -- 90,000
Deferred income taxes 5,229 -- 5,229
Other liabilities 1,152 -- 1,152
-------- -------- -------- --------
Total liabilities 125,952 3,085 (3,085) 125,952
-------- -------- -------- --------
Stockholders' equity 7,193 2,604 (2,620) (a) 7,177
-------- -------- -------- --------
Total liabilities and stockholders' equity $133,145 $ 5,689 $ (5,705) $133,129
======== ======== ======== ========
</TABLE>
19
<PAGE> 20
FIRST WAVE MARINE, INC.
PRO FORMA CONSOLIDATED COMBINED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
JOHN PRO FORMA
FIRST WAVE BLUDWORTH PRO FORMA PRO FORMA TOTAL PRIOR
MARINE, INC. MARINE, INC. ADJUSTMENTS NOTES TO GSC-BBD
------------ ------------ ----------- ----- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 34,616 $ 27,961 $ -- $ 62,577
Cost of revenues 19,952 20,115 352 (d) 40,419
-------- ------- -------- --------
Gross profit 14,664 7,846 (352) 22,158
General and administrative expenses 7,437 2,960 403 (d) 10,800
-------- ------- -------- --------
Income from operations 7,227 4,886 (755) 11,358
Interest expense - net 1,815 883 (2,698) (c) 10,338
9,900 (b)
438 (b)
Minority interest in net earnings of subsidiary 750 -- (750) (h) --
-------- ------- -------- --------
Income before income taxes
and extraordinary item 4,662 4,003 (7,645) 1,020
Income tax expense 2,001 1,521 3,522
-------- ------- -------- --------
Income before extraordinary item 2,661 2,482 (7,645) (2,502)
Extraordinary item, net of tax (933) (f) (933)
-------- ------- -------- --------
Net income (loss) $ 2,661 $ 2,482 $ (8,578) $ (3,435)
======== ======= ======== ========
Basic and diluted earnings per share:
Before extraordinary item $ 0.25
Extraordinary item --
--------
Net income (loss) $ 0.25
========
Weighted-average shares outstanding 10,680
========
<CAPTION>
TOTAL
PRO FORMA PRO FORMA PRO FORMA
GSC-BBD ADJUSTMENTS NOTES COMBINED
------- ----------- ----- --------
<S> <C> <C> <C> <C>
Revenues $ 14,825 $ 77,402
Cost of revenues 11,611 99 (e) 52,129
-------- ------- --------
Gross profit 3,214 (99) 25,273
General and administrative expenses 519 11,319
-------- ------- --------
Income from operations 2,695 (99) 13,954
Interest expense - net 307 (307) (c) 10,338
Minority interest in net earnings of subsidiary -- --
-------- ------- --------
Income before income taxes
and extraordinary item 2,388 208 3,616
Income tax expense 896 (2,866) (g) 1,552
-------- ------- --------
Income before extraordinary item
Extraordinary item, net of tax 1,492 3,074 2,064
(933)
-------- ------- --------
Net income (loss) $ 1,492 $ 3,074 $ 1,131
======== ======= ========
Basic and diluted earnings per share:
Before extraordinary item $ 0.18
Extraordinary item (0.08)
--------
Net income (loss) $ 0.10
========
Weighted-average shares outstanding (h) 11,649
========
</TABLE>
20
<PAGE> 21
FIRST WAVE MARINE, INC.
PRO FORMA CONSOLIDATED COMBINED STATEMENT OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
JOHN
BLUDWORTH PRO FORMA
FIRST WAVE MARINE, INC. PRO FORMA PRO FORMA TOTAL PRIOR
MARINE, INC. JANUARY 1998 ADJUSTMENTS NOTES TO GSC-BBD
------------ ------------ ----------- ----- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 15,767 $ 2,104 $ -- $ 17,871
Cost of revenues 10,182 1,398 29 (d) 11,609
-------- ------- ----- --------
Gross profit 5,585 706 (29) 6,262
General and administrative expenses 3,704 270 34 (d) 4,008
-------- ------- ----- --------
Income from operations 1,881 436 (63) 2,254
Interest expense - net 1,726 115 (115) (c) 2,587
825 (b)
36 (b)
Other -- -- -- --
-------- ------- ----- --------
Income before income taxes
and extraordinary item 155 321 (809) (333)
Income tax expense 83 122 -- 205
-------- ------- ----- --------
Income before extraordinary item 72 199 (809) (538)
Extraordinary item, net of tax (933) -- 933 (f) --
======== ======= ===== ========
Net income (loss) $ (861) $ 199 $ 124 $ (538)
======== ===== ===== ========
Basic and diluted earnings per share:
Before extraordinary item $ 0.01
Extraordinary item (0.08)
========
Net income (loss) $ (0.07)
========
Weighted-average shares outstanding 11,757
========
<CAPTION>
TOTAL
PRO FORMA PRO FORMA PRO FORMA
GSC-BBD ADJUSTMENTS NOTES COMBINED
------- ----------- ----- --------
<S> <C> <C> <C> <C>
Revenues $ 3,919 $ 21,790
Cost of revenues 2,780 24 (e) 14,413
------- ----- --------
Gross profit 1,139 (24) 7,377
General and administrative expenses 80 4,088
------- ----- --------
Income from operations 1,059 (24) 3,289
Interest expense - net 21 (21) (c) 2,587
Other 208 -- 208
------- ----- --------
Income before income taxes
and extraordinary item 830 (3) 494
Income tax expense 312 (332) (g) 185
------- ----- --------
Income before extraordinary item 518 329 309
Extraordinary item, net of tax -- -- --
======= ===== ========
Net income (loss) $ 518 $ 329 $ 309
======= ===== ========
Basic and diluted earnings per share:
Before extraordinary item $ 0.03
Extraordinary item --
========
Net income (loss) $ 0.03
========
Weighted-average shares
outstanding 11,757
========
</TABLE>
21
<PAGE> 22
FIRST WAVE MARINE, INC.
NOTES TO PRO FORMA CONSOLIDATED COMBINED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AND PER SHARE DATA)
(a) On May 15, 1998, the Company purchased certain assets, primarily
property and equipment, of the Barge Building Division of Galveston
Shipbuilding Company. This adjustment reflects the purchase of the
assets for $5.5 million in cash, the write-up of the property and
equipment to appraised value and the reversal of those assets,
liabilities and equity that were not acquired by the Company.
(b) On February 2, 1998, the Company completed the offering of $90 million
of 11% Senior Notes. This adjustment reflects the additional interest
expense and financing costs amortization that the Company would have
incurred had the Offering been completed on January 1, 1997.
(c) To record the decrease in interest expense related to the reduction of
long-term debt with proceeds of the Offering.
(d) On February 2, 1998, the Company completed the JBM Acquisition. This
adjustment reflects the additional depreciation expense related to the
increase in value of property and equipment, and the additional
goodwill and other intangibles amortization.
(e) To record additional depreciation expense related to the increase in
value of property and equipment acquired in the GSC-BBD Acquisition.
(f) To reverse the extraordinary item related to the early extinguishment
of debt that was reflected in 1998 and record it as if it had occurred
on January 1, 1997.
(g) To record reduction in income tax expense, resulting from the decrease
in pro forma earnings resulting from both sets of pro forma
adjustments. This adjustment was computed using Statement of Financial
Accounting Standard No. 109.
(h) Effective December 31, 1997, the Company completed the acquisition of
all of the minority interest of one of its subsidiaries. The minority
shareholders of that subsidiary received 999,390 shares of the Company.
This adjustment reflects the reversal of minority interest for 1997.
The pro forma combined weighted average shares outstanding includes the
999,390 shares issued in the exchange.
22
