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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-38157
FIRST WAVE MARINE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 76-0461352
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
2102 Broadway
Houston, Texas 77012
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's Telephone Number, Including Area Code: (713) 847-4600
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [ ] NOT APPLICABLE
Number of shares of common stock outstanding as of March 1, 1999:
11,756,955.
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This report on Form 10-K contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts, included in this Form 10-K, and as
may be made by management, orally or in writing, are forward-looking
statements. Such forward-looking statements are subject to certain risks,
uncertainties and assumptions, including (i) risks of reduced levels of demand
for the Company's products and services resulting from reduced levels of
capital expenditures of oil and gas companies relating to offshore drilling and
exploration activity and reduced levels of capital expenditures of the
Company's customers in the offshore drilling rig, offshore support vessel,
offshore barge, ship and inland marine industries, (ii) risks related to the
expansion of operations, (iii) operating risks relating to conversion and
repair of drilling rigs, offshore support vessels, offshore barges, ships and
inland marine vessels, (iv) contract bidding risks, (v) risks related to
dependence on significant customers, and (vi) risks related to regulatory and
environmental matters. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. 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 to have been correct.
PART I
ITEMS 1 - 2. BUSINESS AND PROPERTIES
THE COMPANY
First Wave Marine, Inc. is a leading provider of shipyard services to
the inland marine, offshore petroleum and commercial shipping industries. The
Company offers a full range of repair, conversion, new construction and related
environmental services. The Company is the largest shipyard operator in the
Houston-Galveston area with six major shipyard facilities.
The Company was incorporated in Delaware in September 1997. The
Company's predecessor, a Texas corporation, merged into the Company on
September 30, 1997. The Company's principal executive offices are located at
2102 Broadway, Houston, Texas 77012, and its telephone number is (713)
847-4600.
Since it acquired its first facility in December 1993, First Wave has
significantly improved revenues and income from operations. The Company's
success has been the product of a focused strategy to build a high quality,
dedicated workforce, provide a high level of customer service, diversify the
markets it serves and optimize the mix of its services to maximize capacity
utilization.
BACKGROUND
Brady Island. The Company's Brady Island facility was originally
acquired through a 1993 lease of the facilities and equipment from Newpark
Resources, Inc., an unrelated corporation. In August 1996, the Company
purchased the Brady Island leased assets from Newpark Resources. The Brady
Island shipyard provides repair, conversions, new construction and related
environmental services for the inland and offshore barge and boat markets, as
well as conversions and repairs for the offshore support vessel industry. In
1996, the Brady Island shipyard added a service line to its environmental
services division, by providing non-hazardous wastewater treatment on a fee
basis. The Brady Island facility provides accounting, training, sales,
estimating, risk management and general administrative functions to the Greens
Bayou and Pasadena shipyards. Additionally, the potential interchangeability of
the labor force among the Brady Island facility, the Greens Bayou facility and
the Pasadena facility, and in some instances, the Galveston facilities, as well
as the ability of the Greens Bayou and Pasadena barge customers to use Brady
Island's environmental services, has resulted in economic benefits for the
Company.
Greens Bayou. In August 1997, the Company acquired, through a capital
lease, certain repair and new construction assets of Platzer Shipyard, Inc.
(the Greens Bayou facility), a subsidiary of Trinity Industries, Inc. This
facility is specifically designed to service the barge industry with eight
haul-up facilities, including a major six position rail transfer system. The
Company believes it efficiently operates this Houston area shipyard by using
the Brady Island facility to provide most of its administrative services.
Pasadena and West Pelican Island Facilities. In February 1998, the
Company acquired all of the outstanding capital stock of John Bludworth Marine,
Inc. The acquisition provided the Company with the Newpark
Shipbuilding-Pasadena
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facility in Pasadena, Texas, which is near the Company's other Houston
shipyards, and the West Pelican Island facility which is adjacent to the
Company's East Pelican Island facility in Galveston, Texas. Newpark
Shipbuilding-Pasadena is an established regional shipbuilder focusing on inland
barge repair and inland boat construction and repair, as well as offshore
support vessel repair. To increase efficiencies, the Company operates this
Houston area shipyard by using the Brady Island facility to provide most of its
administrative services. As part of this acquisition, the Company gained
significant new drydock capacity within its area of operation and diversified
its mix of services to include expanded capabilities in the inland boat and
offshore support vessel segment of the marine industry. The West Pelican Island
facility now forms part of the Company's Galveston operations. The West Pelican
Island facility uses the East Pelican Island facility to provide most of its
administrative services, making it an efficient low cost operation. The West
Pelican facility has over two acres of covered fabrication area enabling the
Company to provide 24-hour all weather shipyard and fabrication services.
East Pelican Island Facility. After acquiring PMB Engineering Inc.'s
lease of the 110-acre East Pelican Island facility in Galveston, Texas, the
Company signed an amendment to such lease with Galveston Wharves, providing
for, among other things, a term of 15 years with 28 three-year options (for up
to 99 years) at an annual rate of $700,000, subject to adjustment. Pursuant to
the terms of the amended lease, the Company committed to make $20 million in
capital improvements and equipment at the East Pelican Island shipyard over a
three year period. The Company has satisfied this commitment with approximately
$23 million for capital improvements and equipment expended in 1998. The
capital investment included the construction and commissioning of a drydock
with approximately 10,000 tons of lifting capacity, the addition of substantial
crane capacity, extensive refurbishment to the existing piers and bulkheads,
dredging to increase water depth and the addition of other infrastructures and
support facilities. This facility provides accounting, human resources,
training, sales estimating, risk management and other general administrative
functions to the nearby West Pelican Island facility and the Galveston Island
facility. The East Pelican Island facility currently provides repair and
conversion services to offshore drilling equipment, including jack-ups,
semi-submersible drilling rigs, drillships and exploration vessels, offshore
support vessels, offshore barges and small commercial ships. Upon completion of
certain capital improvements to the East Pelican Island shipyard, the
Company intends to offer shipyard services for larger commercial ships.
Galveston Island Facility. In May 1998, the Company acquired land,
buildings and certain new construction assets of the barge building division of
Galveston Shipbuilding Company. This facility is specifically designed for
inland and offshore barge new construction with a fully automated panel line,
automated cutting equipment and a side-launch system. The Galveston Island
shipyard uses the nearby East Pelican Island facility to provide most of its
administrative services.
INDUSTRY OVERVIEW
The Company's business is impacted by fundamentals and trends specific
to the inland and offshore transportation market and the offshore drilling
industry. At present, the U.S. inland water transportation markets make up a
majority of the Company's revenues. The Company anticipates the offshore
transportation market, including commercial ships, offshore barges and
integrated tug-barges will have more of an impact on its revenues in 1999 than
in 1998. The offshore drilling industry which is comprised of the offshore
drilling rig market and the offshore support vessel market is primarily
dependent upon the demand for offshore drilling and related services in the Gulf
of Mexico which has experienced a significant decline in activity during the
last six to nine months. Detailed descriptions of industry fundamentals and
trends influencing these markets are summarized below.
INLAND AND OFFSHORE TRANSPORTATION MARKET
Inland Barges. Tank barges, hopper barges and deck barges transport a
wide range of commodities including petroleum, petrochemicals, fuels,
construction materials and other bulk products. The Company provides shipyard
services primarily to the tank barge segment of this market. Domestic
production of petrochemicals has continued to increase annually, attributable
to growth in the economy, continued growth of the United States population and
the continued substitution of plastics and synthetics in a wide variety of
products. Texas and Louisiana currently account for approximately 80% of the
total United States production of petrochemicals. This strong petrochemical
presence in the Texas - Louisiana area provides the Company with a large and
stable market for tank barge services.
Based on industry sources, the Company estimates that the total number
of tank barges that operate in the inland waters of the United States has
declined from an estimate of approximately 4,200 in 1981 (1,600 of which were
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double skinned barges) to approximately 2,800 in 1997 (2,300 of which were
double skinned barges). The Company believes this decrease primarily resulted
from: (i) increasing age of the domestic tank barge fleet resulting in
scrapping; (ii) rates inadequate to justify new construction; (iii) a reduction
in financial and tax incentives which previously encouraged speculative
construction of new equipment; (iv) more stringent operating standards to
adequately cope with safety and environmental risks; and (v) an increase in
environmental regulations that mandate expensive equipment modification which
some owners are unwilling or unable to undertake given current rate levels and
the age of their fleet.
The U.S. Maritime Administration ("MARAD") has estimated that by the
year 2000, approximately 25% of the current domestic tank barge fleet between
10,000 and 30,000 barrels in capacity will be more than 25 years old and more
than 8% will be at least 30 years old. Due to the average age of the fleet and
the consolidation of the barge transportation industry by well capitalized
towing companies, demand for tank barge repair and deck barge repair has been
steady over the past few years and is expected to remain relatively the same in
the near future. Although well-maintained tank barges can be efficiently
operated for more than 30 years, the cost of hull work for required annual U.S.
Coast Guard certificates, as well as general safety and environmental concerns,
force operators to periodically reassess their ability to recover maintenance
costs. The Company's demand for new barge construction services has materially
increased over the last year as a result of the Company's new capacity, general
positive economic conditions, lower prices for steel, as well as the other
factors described above.
Towboats and Tug Boats. Towboats or "pushboats" are "brown water"
vessels used on rivers and intracoastal waterways to push barges. Barge
transportation companies own and operate the majority of the towboat fleet used
for this purpose, and much of the independent fleet of towboats is under
contract to these towing companies. These towboats typically transport multiple
barges. Because towboats and barges provide transportation for a wide variety
of commodities, the Company believes this segment is less dependent on
fluctuations in the price of oil. Tug boats are typically used to guide ships
through a ship channel or other narrow, heavily trafficked waterway to their
destination and assist in the docking at ports. The demand for repair services
for these boats is relatively stable as Houston is one of the busiest ports in
the United States and a major hub in the inland transportation segment.
Ocean Barges and Integrated Tug-Barges (ITB). Ocean barges and
integrated tug barges are much larger than inland barges and are built to more
rigorous specifications. Consequently, they cost much more to build than inland
barges. Most of the existing worldwide fleet of ocean barges is single-hulled.
The Oil Pollution Act of 1990 ("OPA '90") mandates that all tank barges over
5000 gross tons be double-hulled by 2010. Given the size of the fleet, the
small number of conversions done to date by shipyards, and the lead times for
conversion work, this market is expected to become increasingly active in the
near future. The Company successfully performed one of the first such
conversions on an ITB. As an alternative to these conversions, barge owners may
also consider the feasibility of building new and improved ITBs to replace the
aging single hull fleet.
Commercial Ships. Commercial ships include freighters, tankers, car
carriers, and passenger vessels. In 1998 during a six-month period 3,288
commercial ships made 11,795 calls at Gulf of Mexico ports (including the port
of Houston). Based on industry statistics, the Company believes commercial
shipping is affected more by global economies than the price of oil and gas, as
these vessels transport a wide variety of commodities. Other factors
influencing the potential volume of commercial ship repair services are: (i)
annual growth in the volume of trade and shipping traffic; (ii) certain
reductions in subsidies to overseas shipyards which may make prices at U.S.
shipyards more attractive to foreign owners; (iii) the lack of a substantial
ship repair presence in the western Gulf of Mexico; (iv) the aging U.S. fleet
which is in need of repair; and (v) the Company's proximity to the Port of
Houston which ranks first in the United States for foreign tonnage and second
in total tonnage. Demand for ship repair services has remained strong despite a
slowdown in Asian and South American economies. The Company expects the demand
should continue to grow as these economies recover.
Specialty Vessels. Specialty vessels like power barges, crane barges
and dredges form an important market niche for repair and new construction.
This market is growing rapidly due to a strong economy and an aging fleet. The
Company has previously successfully built and delivered a power barge hull.
These vessels are typically larger and more complex than inland barges and cost
more to build and outfit. With the acquisition of the two Pelican Island
facilities and the Galveston Island facility, the Company has gained additional
capacity and capability to build and outfit these type of vessels.
Government-owned Vessels. Repair and new construction of
Government-owned ferries, MARAD vessels, Department of Defense ("DOD") vessels,
United States Coast Guard ("USCG") vessels, Army Corps of Engineers
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vessels and other federal and state owned vessels is another specialized market.
Due to an aging fleet, the Company believes there is significant demand for
repair services to these vessels as well as new construction. The Company has
experience in providing repair services to federal and state owned vessels. The
Company is actively pursuing this market and believes it has in place the
necessary engineering and production experience required to build
Government-owned vessels.
OFFSHORE PETROLEUM OPERATIONS
Offshore Drilling Rigs and Drill Ships. The Company believes that the
existing supply of offshore drilling rigs is more than adequate to satisfy
current demand. While the level of worldwide offshore drilling activity has
increased substantially over the last two years, peaking with a Gulf of Mexico
offshore drilling rig utilization of 97% in 1998, recent utilization and
demand, both worldwide and in the Gulf of Mexico, has decreased dramatically.
The offshore drilling industry has experienced a significant decline
in activity during the last six to nine months. This decline follows two years
of high activity during which oil and gas companies had increased their
exploration and production budgets in response to increasing demand and
stronger oil and gas prices. The first half of 1998 reflected this increased
demand with offshore drilling rig capacity in the Gulf of Mexico at or near
full utilization. During the second half of 1998, oil prices declined to their
lowest level in 25 years (adjusted for inflation).
The Company believes, based on industry sources, that the sharp drop
in oil prices is the result of a surplus of crude oil in worldwide markets,
which has been brought about by reduced demand, particularly in Southeast Asia,
an increase in crude oil production by OPEC producing countries in mid to late
1997, and a relatively warm winter in the United States and Europe. The decline
in crude oil prices has adversely impacted the revenues and profits of oil
operators, who have responded by reducing exploration and development
expenditures. This decline in spending has adversely affected the level of oil
field activity, and in turn, the revenues of most companies in the offshore
drilling and offshore support vessel industries. While the Company's rig repair
business has not been significantly affected to date, the Company may
experience reduced opportunities at its East Pelican Island facility in 1999 as
a result of reduced spending by drilling contractors. The Company is not able
to predict when and to what extent the level of oil field activity will
recover.
The demand for deep water (deeper than 1,000 feet) drilling services
worldwide and in the Gulf of Mexico which had increased substantially in recent
years, has not been affected as dramatically to date as the shallow water
offshore drilling market by the sharp drop in oil prices. The prior increase in
demand was a result of reserve discoveries and technological advances which
have made development and production of reserves in deep water economically
viable. Deep water drilling requires larger and more technically advanced
drilling rigs. Despite the limited number of offshore drilling rigs with deep
water capabilities, due to the slowdown of spending by oil and gas operators
and the resulting slowdown of capital expenditures by drilling contractors,
there are fewer offshore drilling contractors entering into agreements to
upgrade or convert existing offshore drilling rigs to meet deep water drilling
demand.
While the Company cannot predict when the offshore drilling industry
fundamentals will improve, industry information states that the average age of
the mobile worldwide drilling fleet is over seventeen years. The Company
believes that many rigs will continue to require repairs, though the demand for
major upgrades and conversions of offshore drilling rigs to meet deep water
specifications will remain slow in 1999.
Offshore Support Vessels. The primary role of offshore support vessels
("OSVs") is to deliver equipment, personnel and supplies to offshore drilling
rigs and production facilities. In recent years, a few offshore support
vessel operators have significantly consolidated the offshore support
vessel market.
Although there has been recent construction of new offshore support
vessels, a majority of the support vessels currently in service in the Gulf of
Mexico are 16 or more years old and a majority of the remainder are between 11
and 16 years old. As these vessels age, maintenance, repair and vessel
certification costs increase significantly and eventually require replacement.
During 1998, offshore support vessel day rates declined dramatically.
Average day rates in the Gulf of Mexico for a 180 foot offshore support vessel
declined from a high of approximately $9,000 per day down to a recent low of
$2,800 per day. The result of the decline in rates has been that older, less
maintained equipment has been stacked. Over the past several years, many
operators upgraded their vessels while cash flow was good. Others, however,
either did not
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have any scheduled drydocks or if drydocked, minimal maintenance was performed
to enable the vessel to quickly return to generating revenues at high day
rates. It is estimated that approximately half of the supply boat fleet in the
Gulf of Mexico has had extensive work done while the other half is not in good
repair due to low maintenance and high utilization. At the current time for
many operators, the day rates may not justify the significant drydock expense
for repairs and inspections. Vessels continue to be stacked.
While the operating fleet still must pass U.S. Coast Guard inspections
every two years which generally require shipyard services, the Company does not
expect to see significant improvement in this market until day rates for
offshore support vessels improve. At that time, a significant portion of the
currently stacked vessels should require shipyard service.
While deep water offshore drilling remains active, the Company
believes that most fleet operators will not convert and "stretch" existing
support vessels for deep water service due to the number of newly constructed
or recently upgraded vessels available for such service.
Liftboats. Liftboats, a hybrid class of service vessel that combines
the characteristics of workboats, crane or deck barges, and jackup drilling
rigs, were first developed for operating in the Gulf of Mexico. There are
approximately 225 liftboats in the worldwide fleet, a majority of which are
located in the Gulf of Mexico. They are positioned adjacent to offshore
drilling rigs and provide a stable foundation for repair, maintenance, and
loading/unloading operations in sea conditions that would cause excess movement
in a normal boat. The operational advantages of liftboats should cause the use
to increase, although growth in utilization is related to shallow-water
drilling and production activity in the Gulf of Mexico, which market is
currently depressed.
FPSO (Floating, Production Storage, and Offloading) Vessel
Conversions. When oil prices recover and deep water drilling and production
moves further offshore and away from established infrastructure, the Company
believes the use of FPSOs should increase. Single hull tankers are typically
converted to FPSOs at a much lower cost than new construction. More single hull
tankers will become available for such conversions as they are phased out due
to OPA `90 regulations. FPSO conversions involve large amounts of steel
replacement and piping systems installation.
SERVICES
The Company earns approximately 77.5% of its revenues from repair and
maintenance services to inland barges, boats, ocean barges, integrated
tug-barges, commercial ships, specialty vessels, offshore drilling rigs,
offshore support vessels and liftboats. The balance of its revenues are earned
from new construction, conversions and environmental services.
REPAIR
Inland barges. The Company's inland barge repairs involve tasks as
simple as minor hull or outfitting repairs to more complex services such as
re-skinning with new bottom plates, side shells and knuckles, including surface
preparation and painting. The vessels in the aging domestic coastwise fleet are
in frequent need of repairs as they reach the end of their useful lives.
Further, U.S. Coast Guard regulations require that double-skinned inland barges
be drydocked for bottom gauging to detect thickness and structural fatigue
every 10 years. Other inland barges require both an inspection of the
internal structures and drydocking once every five years. Normally at this
time, the customer will request removal and replacement of pitted and
deteriorated steel as well as blasting and coating services.
Boats. The Company offers a comprehensive range of services to the
boat repair market, from minor hull repairs to engine and propeller system
replacement. Boat repair work requires a high level of precision and expertise
in machinery and equipment repairs. Frequent unscheduled repairs requiring fast
turnarounds characterize this segment.
Ocean barges and Integrated Tug-Barges (ITBs). Ocean barges and ITBs
are subject to drydock inspections every five years as well as annual
inspections for which drydocking is not required. These vessels are subjected
to a higher standard of maintenance than inland barges. Additionally, salt
water operation requires more frequent hull coating than fresh water vessels.
During the course of these mandated inspections, in addition to routine
scheduled maintenance, the Company's customers often discover the need for
additional repairs. Because ocean barges and ITBs are larger and more complex
than inland barges, repair costs tend to be higher. Due to high day rates for
these vessels, fast
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turnarounds are a key success factor in this segment. OPA `90 regulations
mandate that tank vessels be double hulled over the next fifteen years, the
exact dates dependent upon the size and age of the vessel. Most ocean barges and
ITBs must be double-hulled by 2010. Since most existing ocean barges are single
hulled, the Company believes that conversions to double hull in this market
segment may become increasingly active. Conversion of these single hull vessels
is complex, expensive, and can require long lead times. The Company has
performed one of the first such double-hull conversions of an ITB in 1995.
Commercial Ships. The Company offers topside and on-board repair
services for commercial ships and drydock services for small ships. On-board
services involve transporting workers, materials and equipment to a vessel
located away from a shipyard or other infrastructure. Typical topside work
includes minor structural repairs, outfitting repairs, and repairs to machinery
and equipment. Drydock repairs include hull steel replacement, propeller and
thruster repairs and vessel coating. Since the loss of revenue to a commercial
ship during a shipyard visit can be significant, these vessels typically come
into a shipyard only for major repairs, emergency repairs or mandatory
maintenance. At this time, minor repairs are also performed. In this sector,
ship owners place a high priority on fast turnaround as well as high-quality
work. The Company is actively pursuing a strategy to service large ships with
drydocking services in Galveston.
Specialty Vessels. The Company provides a full range of repair and
maintenance services to a variety of specialty vessels such as crane barges and
dredges. Typical topside work includes minor structural repairs, outfitting
repairs and repairs to machinery and equipment. Drydock repairs include hull
steel replacement, equipment/machinery replacement and vessel coating.
Government-Owned Vessels. The Company provides repair and maintenance
services for Government-owned ferries, MARAD vessels, DOD vessels, USCG vessels,
Army Corps of Engineers vessels and other federal and state owned vessels.
Repair services to Government-owned ferries are sometimes provided under
multi-year contracts. The Company has experience in providing services to the
Texas Department of Transportation (TXDOT) ferries, Military Sea-Lift Command
vessels and other vessels owned and operated by the Army Corps of Engineers.
Many of the vessels in this sector demand a high level of quality and
craftsmanship as these vessels must be maintained to a high regulatory
standard. Typical topside work includes minor structural repairs, outfitting
repairs and machinery and equipment repairs. Drydock repairs include hull steel
replacement, engine replacement, propeller repairs or replacement and vessel
coating.
Offshore Drilling Rigs and Drillships. The Company performs repairs
for offshore drilling rigs and drillships at its East Pelican Island facility.
The Company also performs on-board repair services, which involve transporting
workers, materials and equipment to a vessel located away from a shipyard or
other infrastructure. These are highly complex vessels that operate in remote
areas. Consequently, drilling vessels typically come in to a shipyard
only for major repairs, emergency repairs, or mandatory maintenance. The
Company's services include repairs and maintenance to the vessel hull, on-board
equipment and various systems, as well as upgrading and repowering to improve
vessel performance or capability. Shipyard location in proximity to the rig's
operating area is important to the drilling contractor so the cost of
transit time is reduced and lost revenue is minimized. Other key success
factors in rig and drillship repair include unrestricted access to the
shipyard, ample water depth, complete dock-side facilities, sufficient
cranage and experience in managing large-scale projects.
Offshore Support Vessels (OSVs). The Company offers a comprehensive
range of services for OSVs, from minor hull repairs to conversion jobs. These
vessels require a high level of precision and expertise in machinery and
equipment repairs. OSVs are subject to higher regulatory standards than the
inland boats. These vessels are also larger and repairs are usually more
complex than the inland boats.
Liftboats. Liftboats share some of the characteristics of OSVs and
jack-up drilling rigs. They are self-propelled like OSVs and have the ability
to lift their hulls on legs like jack-up rigs. The Company offers a complete
range of repair and maintenance services for these vessels. The Company's
experience in repairing jack-up drilling rigs and OSVs is applicable to
liftboats.
NEW CONSTRUCTION
Inland barges. During 1998, the Company earned approximately 16.1% of
its current revenues from barge new construction. Historically, the Company's
new construction activities have been primarily for inland tank and deck
barges. New construction is performed under fixed-price contracts, with prices
depending on the size and type of barge. The acquisition of the Greens Bayou
facility in August 1997, the West Pelican Island facility in February 1998 and
the Galveston Island facility in May 1998 provided the Company the capacity to
build up to 40 barges per year depending on the mix of barge types.
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Boats. Acquisitions provided the Company with the capability to
compete for new construction of tow boats (pushboats) and tug boats. The
presence of a large number of boat builders on the Gulf Coast makes this a
highly competitive market. However, the Company believes that with its
engineering, technical and production capabilities it is well-positioned to
successfully compete in this market.
Ocean barges and Integrated Tug-Barges (ITBs). Ocean barges and ITBs
are similar to, but larger than, inland tank barges. These vessels are more
expensive to build and are built to a higher regulatory standard than inland
barges. Because they are larger than inland barges, average construction time
of these vessels is longer and prices are higher. OPA `90 mandates that any new
tank vessels be double hulled. Ocean barges and ITBs were built and delivered
at the Galveston Island facility under its previous ownership.
Specialty Vessels. Specialty vessels like power barges, crane barges
and dredges are complex and require much more work in the design and
engineering phase than other types of vessels. Due to their size and
complexity, these vessels typically cost substantially more to build than
inland barges. The Company has successfully built and delivered a power barge
hull in 1995.
Government-Owned Vessels. Historically, the Company has not
participated in the new construction of Government-owned vessels. Federal and
state owned ferries, barges, dredges and other specialty vessels owned and
operated by the Army Corps of Engineers, USCG vessels and other federal and
state owned vessels form a large part of this market. Most government owned
vessels demand a high level of craftsmanship as these vessels must be maintained
to a high regulatory standard. The Company believes that the necessary
engineering and production experience required to build Government-owned vessels
is in place and is actively pursuing certain sectors of this market.
Offshore Drilling Rigs. The Company's current management team has
considerable experience in building jack-up drilling rigs and has the facilities
to build them at its East Pelican Island facility. The Company is considering
various engineering and design options and relationships in order to pursue rig
construction when market demand returns. Since this market is dependent on the
price of oil, new construction activity has currently slowed considerably. This
trend is expected to continue as long as the price of oil remains weak.
Offshore Support Vessels. Historically, the Company has not been in
the new construction sector for offshore support vessels. The recent
acquisitions add the expertise, experience and capacity necessary to provide
the Company the ability to compete for the new construction of these vessels.
The presence of a large number of shipyards building OSVs in the United States
makes this a highly competitive market. The Company believes that the
engineering, technical and production expertise is in place to build and
deliver OSVs. Since this market is dependent on the price of oil, new
construction activity has currently slowed considerably. This trend is expected
to continue as long as the price of oil remains weak.
CONVERSIONS
Offshore Drilling Rigs. Conversions of offshore drilling rigs can
involve converting a slot jack-up rig to a cantilevered jack-up rig,
strengthening and extending rig legs, reinforcing spud cans on existing legs
and modifying older designs to incorporate newer technology. Drilling rigs can
be converted to production rigs and vice versa. The Company has the experience
and is well positioned to perform conversions.
Offshore Support Vessels. As oil and gas operations move to deeper
waters, demand for a larger class of offshore support vessels has grown. In
response, over the last two years owners of offshore support vessel fleets have
built new vessels or have converted existing vessels in their fleet into
vessels capable of operating further offshore. This trend resulted in an
increase in conversion projects for the Company during 1997 and the first half
of 1998. These conversions typically consist of lengthening the vessels and
installing liquid mud tanks, dynamic positioning and other specialized
features. The Company has also widened offshore support vessels to
significantly increase their deck and cargo capacity.
FPSO Vessel Conversion. Floating Production, Storage and Offloading
vessels are used for petroleum production operations in remote areas with no
existing infrastructure. FPSOs remain onsite and are periodically lightered by
shuttle tankers. Certain tankers can be converted to FPSO use at a much lower
cost than new construction. An FPSO conversion was performed successfully at
the East Pelican Island facility before its acquisition by the Company.
8
<PAGE> 9
ENVIRONMENTAL
Environmental Services - Degassing/Cleaning Operations. These
services are provided at the Company's Brady Island facility. In order for a
barge to change the type of cargo it holds, the barge generally requires
cleaning. The Company provides cleaning services for change of cargo as well as
in preparation for repairs and maintenance at the shipyard. The cleaning
process begins with vapor recovery of gasses, if necessary. The barge is then
cleaned with water using special industrial cleaning equipment. The water is
vacuumed into the Company's wastewater treatment facility for proper treatment
and disposal. If the barge requires "hot work" (cutting or welding) while in
the shipyard, safety regulations require that it be "gas free" (non-explosive)
as certified by a marine chemist. The Company employs its own certified marine
chemist.
Environmental Services-Wastewater Treatment Services. The Company
provides non-hazardous wastewater treatment services on a fee basis. The
Company's two million gallon wastewater storage tank, completed in January 1998,
allows the Company to increase, under its existing permit, its current volume
of wastewater. In an average job, a tank truck arriving at the facility pumps
out approximately 5,000 gallons of wastewater into the Company's tanks after
being tested. The non-hazardous wastewater is then treated at the Company's
bio-treatment plant and disposed of in accordance with applicable regulations.
SHIPYARD PROPERTIES
The Company currently operates the following six shipyard facilities:
Brady Island. The Brady Island shipyard was originally acquired in
December 1993 and is located on the Houston Ship Channel on approximately 23
acres. The shipyard has the capability to handle the repair, construction and
related environmental services for both offshore and inland vessels. It
provides repair and conversion services for offshore support vessels and offers
repair, conversion and new construction services for offshore and inland barges
and boats. In addition to the traditional shipyard assets described below, the
Brady Island facility has a high capacity bio-treatment plant, state-of-the-art
vapor control equipment and a two million gallon wastewater storage tank. The
shipyard has six haul-up facilities that include three dry docks, two marine
rails and one transfer system from drydock to rail. The drydock lifting
capacities range from 300 to 3,200 tons. Over 2,200 feet of pier space is
available for topside and outfitting repairs. The facility's equipment consists
of three crawler cranes, two tower cranes and one cherry picker. The
fabrication facility has over 13,000 square feet under roof, which enables the
Company to provide all-weather, 24-hour fabrication services for new
construction and repair work. Two 20 ton overhead cranes service the
fabrication shop.
Pasadena. The Pasadena facility is conveniently located on the Houston
Ship Channel in Pasadena, Texas on approximately 63 acres. The shipyard performs
repair services for offshore support vessels, inland and offshore barges, inland
and offshore boats, and small ships. The shipyard has five drydocks, with
lifting capacities ranging from 300 to 3,000 tons. Over 2,500 feet of pier space
is available for top-side and outfitting repairs. The facility's equipment
consists of five mobile cranes, with lifting capacities ranging from 19 to 85
tons.
Greens Bayou. The Greens Bayou shipyard was acquired on August 11,
1997. The shipyard is located near Houston, Texas on approximately 25 acres,
near the Houston Ship Channel and Brady Island. The shipyard performs repair,
conversion and new construction services for barges. The shipyard has eight
haul-up facilities, which includes a single rail and the main rails with seven
transfer positions. The barge lifting capacities range from 300 to 1,200 tons.
Over 1,400 feet of pier space is available for top-side and outfitting repairs.
The facility's equipment consists of two crawler cranes, two tower cranes and
two cherry pickers. The fabrication facility has over 50,000 square feet under
roof, which enables the Company to provide all-weather, 24-hour fabrication
services for new construction and repair work. Seven overhead cranes ranging
from 10 to 40 tons service the fabrication shops. The fabrication equipment
includes an NC plate cutting machine, a 750 ton press brake, angle rolls and
several semi-automatic welders.
East Pelican Island. The Company acquired the East Pelican Island
shipyard through an assignment of the PMB Engineering, Inc. lease with
Galveston Wharves. Galveston Wharves has amended the PMB Engineering, Inc.
lease, extending the possible eight years remaining on such term of the lease
to a lease with a potential 99-year term, among other things. This facility can
serve most classes of offshore drilling rigs, offshore support vessels,
offshore barges and small and large ships. Located in Galveston, Texas on
approximately 110 acres, this facility is located on the Galveston Ship channel
and offers unlimited accessibility to all types of vessels from the Gulf of
Mexico and beyond. With a
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<PAGE> 10
10,000 ton drydock and over 3,000 feet of full service piers, this shipyard
offers turn-key services to most vessels. Available water depth at this
facility ranges from 25 to 50 feet, which is ideally suited for large offshore
drilling rigs and other offshore vessels, including ships. The lifting
equipment consists of nine cranes ranging from 22 to 250 tons, including
several mobile cranes servicing the piers and the drydock. The shipyard has
over 30,000 square feet under roof, providing efficient fabrication services
for repairs and conversions. A 10 ton and a 5 ton crane service the fabrication
shops. Management has a program for the capital improvements to this shipyard.
The Company committed to making $20 million in capital improvements to the
facility over a three year period. Approximately $23 million was expended in
1998. The capital investment included the construction and commissioning of a
drydock with approximately 10,000 tons of lifting capacity, and extensive
refurbishments to the existing piers. Extensive repairs were also made to the
existing bulkheads. A new slip and bulkhead are being constructed, that will
provide additional capacity for topside repair work. Maintenance dredging was
performed in all of the slips and wet berths to provide the required water
depth for the offshore rigs, vessels and ships. Utility services are being
installed to provide full service at several locations in the assembly area and
on the piers. A portion of the capital investment was applied towards the
purchase of operational equipment such as mobile and gantry cranes, rolling
stock, production equipment and tools.
West Pelican Island. This shipyard is located at Pelican Island in
Galveston, Texas on approximately 23 acres. Located on the Galveston Ship
Channel, this facility offers easy accessibility from the Gulf of Mexico and
beyond. The renovated fabrication facility has over two acres under roof, which
enables the Company to provide all-weather, 24-hour service for fabrication,
assembly conversions and new construction. The plate and pipe shops are
serviced by two 30 ton and two 5 ton overhead cranes. Two 200 ton overhead
cranes, providing the capability to lift modules or vessels up to 400 tons,
service the main fabrication shop. Part of this main fabrication shop extends
over a 180 foot slip way (wet berth), providing the facility with a unique
advantage of lifting and launching modules and vessels up to 400 tons. The
lifting equipment outside the fabrication area consists of a 150 ton crawler
crane and a 28 ton cherry picker.
Galveston Island. This shipyard is located in Galveston, Texas on
approximately 28 acres. Located off the Galveston Ship Channel, this facility
offers easy accessibility from the Gulf of Mexico and beyond. The Company uses
this facility primarily for new construction of all types of barges. In
addition, this facility is used for the fabrication of panels and modules for
the other five facilities. This fabrication facility has over 35,000 square
feet under roof, which enables the Company to provide all-weather, 24-hour
service for fabrication of panels and modules for new construction, conversions
and repair services. The fabrication shops are serviced by one 11 ton and two 5
ton overhead cranes. The fabrication equipment at this facility include two NC
plasma plate cutting machines, an automatic panel line, 6000 ton press brake
and several semi-automatic welders. The lifting equipment outside the assembly
and erection area consists of two 120 ton gantry cranes, one 120 ton crawler
crane and a 20 ton cherry picker. The compact, but efficient layout of the
assembly area enables the shipyard to assemble and erect up to 4 vessels
simultaneously, resulting in reduced construction duration and hence increasing
the new construction capacity of the Company. The launching of barges is
accomplished by a side-launch that is capable of launching vessels up to 600
feet long and 100 feet wide.
PRINCIPAL CUSTOMERS
Following the consolidation of the inland barge industry, a large
portion of the Company's revenue has been generated by a relatively small number
of customers, although not necessarily the same customers from year to year. For
1998, the Company derived 11.6% of its revenue from Hollywood Marine, Inc. and
33.6% from its five largest customers. Because the level of services that the
Company may provide to any particular customer depends on that customer's needs
for repairs in a particular year, customers that account for a significant
portion of revenue in one fiscal year may represent an immaterial portion of
revenue in subsequent years. However, the loss of a significant customer for any
reason, including a sustained decline in that customer's capital expenditure
budget or competitive factors, could result in a substantial loss of revenue and
could have a material adverse effect on the Company's operating performance.
CONTRACT PROCEDURE, STRUCTURE AND PRICING
In performing its repair and conversion services, the Company seeks to
achieve a balance between fixed-price projects and time and materials work in
order to optimize the risk and reward of its project portfolio. More than 50%
of the Company's commercial projects are currently performed on a fixed-priced
basis. The Company attempts to cover anticipated increased costs of labor and
material through an estimation of such costs, which is reflected in the
original price. Despite these attempts, however, the revenue, cost and gross
profit realized on a fixed-price arrangement will often vary from the estimated
amounts because of changes in job conditions and variations in labor and
material costs
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<PAGE> 11
over the term of the project. These variations and the risks generally inherent
in the shipbuilding and repair industry may result in gross profits realized by
the Company being different from those originally estimated and may result in
the Company experiencing reduced profitability or losses on projects. Revenues
from repair and conversion services performed under time and material and
fixed-price arrangements are recognized as the services are provided.
Adjustments to such revenues and costs recognized on fixed-price arrangements
are made in the period in which the adjustments are determined. Depending on
the size of the project, variations from estimated fixed-price arrangements
could have a significant effect on the Company's operating results for any
particular fiscal quarter or year.
The Company has developed a "contract rate" system used to form
strategic alliances with its key customers for repair and conversion services.
Under this system, the Company and the customer discuss the customer's planned
shipyard projects for the ensuing year and then develop a schedule of labor
rates and other charges applicable to the customer's projects for the year.
When the actual project date nears, the Company submits to its alliance partner
the estimated manhour budget for the particular job. The Company then agrees
with the customer on the budget and the delivery requirements. Most contract
rate arrangements are on a fixed-price basis with most change orders to such
arrangements performed on a time and material basis. Under the contract rate
system, the Company is responsible for all cost overruns; in some instances the
Company shares a portion of the cost savings with its contract rate alliance
partners. The contract rate system is a departure from the traditional shipyard
competitive bid process which requires that for each job a customer submits
specifications which the shipyard then uses to bid against other shipyards to
obtain the work. Under a competitive bid process, a customer's effective labor
and material mark-up rates may vary from job to job depending on fluctuating
market conditions and the customer does not share in any cost savings achieved
by the Company as they might under the contract rate system. In contrast, under
the contract rate system a customer is charged the same hourly rates and
material mark-ups for a period of time, typically a year. The contract rate
system enables the Company to baseload its facilities with pre-booked work,
improve planning and execution of jobs through a cooperative process with the
customer and more effectively project its revenues and labor needs for the
year. The alliance partner receives volume based pricing, assures itself of
needed drydock capacity, gains the ability to accurately budget its work,
benefits from improved turnaround on jobs and receives other services on a
preferred basis.
The Company's new construction (lump-sum) contract revenues are
recognized on a percentage of completion basis. Accordingly, contract price and
cost estimates are reviewed periodically as the work progresses, and
adjustments proportionate to the percentage of completion are reflected in the
income of the period when such estimates are revised. To the extent that these
adjustments result in a loss or a reduction or elimination of previously
reported profits with respect to a project, the Company recognizes a charge
against current earnings, which could be material.
SALES AND MARKETING
The Company's marketing efforts are coordinated in Houston, Texas.
Marketing efforts historically were focused in three areas: traditional
shipyard services including repair and conversion; new construction
opportunities and environmental services including barge cleaning and
wastewater treatment. Recently the Company has added a fourth marketing focus
with the Company's entry into onboard repair services for the commercial ship
and rig sector.
COMPETITION
The Company principally competes in each of its service lines with
multiple companies, based on the scope of work to be performed and the type of
projects. Some of these competitors have significantly greater financial
resources than the Company. Although the Company believes customers consider,
among other things, the availability and technical capabilities of equipment
and personnel, efficiency, condition of equipment, safety record and
reputation, price competition is still a primary factor in determining which
qualified shipbuilder is awarded a job.
INSURANCE
The Company maintains insurance against property damage caused by
fire, explosion and similar catastrophic events that may result in physical
damage or disruption to the Company's premises or properties. The Company also
maintains general liability and umbrella liability insurance in amounts it
deems appropriate for the Company's business.
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<PAGE> 12
EMPLOYEES
At December 31, 1998, the Company had approximately 1,110 employees.
None of the Company's employees are represented by any collective bargaining
unit. Management believes that the Company's relationship with its employees is
excellent. The Company has not experienced any significant labor problems.
Management also believes the Company should invest in its people and has
implemented improvements in the work environment which benefit the workers.
These improvements, as well as active communication with employees, have helped
to foster a closely-knit, supportive culture at the Company.
HEALTH AND SAFETY
The Company has one of the best safety records in its industry. For
the last five consecutive years, Newpark Shipbuilding was recognized with the
national safety award given annually by the Shipyard Council of America
(formerly, National Shipyard Association) designating it as one of the safest
shipyards in the country. Management is concerned with the safety and health of
the Company's employees and maintains a safety assurance program to reduce the
possibility of costly accidents. The Company's safety department establishes
guidelines for compliance with all applicable state and federal safety
regulations. Such laws and regulations are complex, stringent and are often
changed. The Company provides training and safety education through
orientations for new employees and regular employee safety meetings. The
Company also has a comprehensive drug testing program. The Company's commitment
to the safety of its employees supports its labor management strategy and
translates into reduced costs for workers' compensation benefits.
ENVIRONMENTAL REGULATION
General. The Company's operations are subject to a variety of federal,
state and local laws and regulations governing the discharge of materials into
the environment or otherwise relating to environmental protection
("Environmental Laws"). Like other members of the industry, the Company is
periodically subject to governmental compliance inspections in the ordinary
course of business. The Company is committed to full compliance with applicable
environmental laws and has instituted an environmental compliance program to
ensure such compliance on an ongoing basis. The Company is presently integrating
this compliance program with the practices associated with recently acquired
operational assets. Although no assurance can be given, Management believes that
the Company and its operations are in compliance in all material respects with
all Environmental Laws. However, stricter interpretation and enforcement of
Environmental Laws and compliance with potentially more stringent future
Environmental Laws could materially and adversely affect the Company's
operation. To the extent laws are enacted or other governmental action is taken
that imposes environmental protection requirements that result in increased
costs to the shipbuilding and repair business in general, the business and
prospects of the Company could be adversely affected. With respect to air
emissions, the Company anticipates that additional expenditures may be required
if federal or state air emissions requirements were to be more strictly
interpreted or strengthened. The Company has taken a leadership position in a
shipyard industry group that has been working with the Texas Natural Resources
Conservation Commission ("TNRCC") to determine additional controls that could be
required on abrasive blasting particulate air emissions from shipyards. This
initiative has been successful, as no additional control requirements will be
required in the agency's implementation of "Best Available Control Technology".
The Company is continuing to work with the agency to define modifications to
existing regulations that will allow shipyard facilities that currently have
"grandfathered" status which allows such facilities to operate without an air
permit, to now obtain air permits. The Company cannot predict with certainty
whether new requirements will be proposed in the future, or the extent of an
effect on the Company.
Permits. Under federal and state environmental laws, the Company's
operations are subject to a variety of requirements for permits or other
governmental authorizations governing emissions to air; discharges to water;
dredging of waterways (for example, to maintain or improve access by vessels);
generation, storage, and shipment of wastes; and other operational aspects of
the business.
Certain operational assets of the Company are subject to the terms of
agreed orders negotiated with governmental agencies with enforcement authority
under environmental laws. The State of Texas has allowed Newpark
Shipbuilding--Pasadena, Inc. to operate under an agreed order on an interim
basis pending issuance of a final permit that addresses Newpark Pasadena's
change in blast medium. The State of Texas has also allowed Newpark
Shipbuilding - Galveston Island, Inc. to operate under an agreed order on an
interim basis pending issuance of a final permit covering painting and abrasive
blasting operations. Finally, the Board of Trustees of Galveston Wharves, the
Company's lessor at
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<PAGE> 13
the East Pelican Island facility, is also operating under an agreed order with
the TNRCC with respect to the discharge from its sewage collection system and
septic tank wastewater treatment plant at such facility. The Company has
installed, at the East Pelican Island facility, an upgraded sewage treatment
plant and submitted to the TNRCC an application for wastewater discharge. The
Company believes these actions should satisfy the issues listed in the agreed
order.
RCRA. The Federal Resource Conservation and Recovery Act ("RCRA") and
similar state laws regulate the generation, treatment, storage, disposal and
other handling of hazardous and non-hazardous solid wastes, with the most
stringent regulations applying to solid wastes that are considered hazardous.
The Company generates both hazardous and non-hazardous wastes in connection
with routine operations. Management believes that the wastes it generates are
handled in substantial compliance with RCRA and analogous state statutes. The
Greens Bayou property contains a solid waste landfill which was closed in
compliance with applicable federal and state laws as a non-hazardous industrial
solid waste site. Management believes that any environmental liability arising
from this landfill will be the primary responsibility of the previous owners;
however, there can be no assurances that the Company will not be subject to
liability for this matter in the future.
CERCLA. The Federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA" or the "Superfund
Law") and analogous state laws, impose liability without regard to fault or the
legality of the original conduct, on certain classes of persons with respect to
the release or imminent threat of release of a "hazardous substance" into the
environment. The classes of persons potentially held responsible include all
owners and operators of a site where a hazardous substance was released since
the time of disposal and any party that disposed of, or arranged for the
disposal of, or transported the hazardous substance found at the site. CERCLA
has been interpreted to create strict, joint and several liability for the cost
of removal and remediation, other necessary response costs and damages for
injury to natural resources unless there is a reasonable basis for divisibility
of the harm done by the potentially responsible party. The Company has never
been named as a potentially responsible party in any CERCLA action, and the
Company does not believe that there is any basis for such a claim. However,
because industrial operations have been conducted at some of the Company's
properties by the Company and previous owners and operators for years, various
materials from these operations might have been disposed of at such properties
or at other locations. The identification of one or more sites at which cleanup
action is required or has been completed could subject the Company to
liabilities that could have a material adverse effect on the Company's
business, financial condition and results of operation.
OPA '90. The Oil Pollution Act of 1990 ("OPA `90") and similar state
laws, and regulations promulgated thereunder impose a variety of regulations on
"responsible parties: related to the prevention of oil spills and liability for
damages resulting from such spills in the waters of the U.S. A "responsible
party" includes the owner or operator of a facility or vessel from which the
spill occurs. OPA '90 assigns liability, which can be joint and several, to
each responsible party for oil spill removal costs and for a variety of public
and private damages from oil spills. While OPA '90 defined "oil" to include
petroleum, fuel oil, sludge, oil refuse and oil mixed with other water wastes,
it specifically excludes any material defined as a hazardous substance under
CERCLA. While liability limits apply in some circumstances, a party cannot take
advantage of liability limits if the spill is caused by gross negligence or
willful misconduct, if the spill resulted from violation of a federal safety,
construction or operation regulation, or if a party fails to report a spill or
to cooperate fully in the cleanup. Few defenses exist to the liability imposed
under OPA `90 for oil spills. Management is currently unaware of any oil spills
for which the Company has been designated as a responsible party under OPA '90
which would have a material adverse impact on the Company.
CWA. The Federal Clean Water Act ("CWA") and similar state laws
regulate the discharge of pollutants into all navigable waters of the U.S. They
also establish a system of standards, permits and enforcement procedures for
the discharge of pollutants from industrial and municipal wastewater sources.
The Company has federal and Texas state permits that allow it to discharge the
non-hazardous wastewater collected by its environmental services division.
Management believes that the non-hazardous wastewater it collects is handled in
substantial compliance with the CWA and analogous state statutes and its
discharge permits. The CWA also requires persons who dredge or fill wetlands in
navigable waters of the U.S. to obtain a permit or meet management practice
standards to qualify for an exemption from permitting requirements. The Company
must obtain such a permit or qualify for an exemption if it needs to dredge or
place fill material in wetlands in order to continue or modify operations at
any of its facilities in the future.
CAA. The Federal Clean Air Act and its 1990 Amendments ("CAA") and
similar state laws govern the control of emissions from sources of air
pollution. Amendments to the CAA were adopted in 1990 and contain provisions
that
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may result in the gradual imposition of certain pollution amendments could
increase the Company's capital and operational expenses after the U.S.
Environmental Protection Agency and similar state agencies fully implement
regulations authorized by the Amendments. Although the Company does not expect
these CAA amendments to result in material expenses at its properties, the
amount of increased expenses, if any, resulting from such amendments is not
presently determinable. There can be no assurance that the Company will not
incur material expenses in connection with these amendments in the future.
Additionally, the Company has a tank cleaning and degassing operation at its
Brady Island facility that involves removal of residue fumes from vapor spaces
in barges. Federal laws requires the Company to identify, prepare for and
respond to risks associated with this operation, including possible explosion
and emission of hazardous substances to the environment.
OTHER REGULATION
Health and Safety Regulations. The Company's facilities and operations
are governed by laws and regulations, including the federal Occupational Safety
and Health Act ("OSHA"), relating to worker health and workplace safety. The
Company believes that appropriate precautions are taken to protect employees
and others from workplace injuries and harmful exposure to materials handled
and managed at its facilities. While it is not anticipated that the Company
will be required in the near future to expend material amounts by reason of
such health and safety laws and regulations, the Company is unable to predict
the ultimate cost of compliance with these changing regulations.
Jones Act. The Jones Act requires that all vessels transporting
products between U.S. Ports must be constructed and repaired in U.S. shipyards,
owned and crewed by U.S. citizens and registered under U.S. law, thereby
eliminating competition from foreign shipbuilders with respect to vessels to be
constructed for the U.S. coastwise trade. Many customers elect to have vessels
constructed at U.S. shipyards, even if such vessels are intended for
international use, in order to maintain flexibility to use such vessel in the
U.S. coastwise trade in the future. A legislative bill seeking to substantially
modify the provisions of the Jones Act mandating the use of ships constructed
in the United States for U.S. coastwise trade has been introduced in Congress.
Similar bills seeking to rescind or substantially modify the Jones Act and
eliminate or adversely affect the competitive advantages it affords to U.S.
shipbuilders have been introduced in Congress from time to time and are
expected to be introduced in the future. Although management believes it is
unlikely that the Jones Act requirements will be rescinded or materially
modified in the foreseeable future, there can be no assurance that such will
not occur. Many foreign shipyards are heavily subsidized by their governments
and, as a results, there can be no assurance that the Company would be able to
effectively compete with such shipyards if they were permitted to construct and
repair vessels for use in the U.S. coastwise trade.
ITEM 3. LEGAL PROCEEDINGS
On August 13, 1998, one of the Company's subsidiaries, Newpark
Shipbuilding--Brady Island, Inc., was the subject of a search warrant executed
by a multi-agency environmental task force. The government's search warrant was
primarily directed at the facility's wastewater treatment plant. The Board of
Directors of the Company authorized outside legal counsel to conduct an internal
corporate investigation of the matters raised by the agencies in their
investigation. In addition, the Company promptly undertook aggressive measures
to assure environmental compliance. As of December, 1998, the internal
investigation concluded that no officer or director of Newpark or the Company
participated in or had knowledge of any non-compliance. The investigation did
find some evidence of past instances of non-compliance with environmental laws
and regulations in connection with Newpark's operation and monitoring of the
facility's wastewater treatment system. A state grand jury investigation into
these matters has been ongoing since early February 1999. At this time, the
Company cannot estimate the impact that may result from enforcement action, if
any, related to the government's investigation. The Company does not believe
that any aspects of the matters described above will subject the parent company,
First Wave Marine, Inc., to criminal liability.
The Company is a party to various routine legal proceedings primarily
involving commercial claims and workers' compensation claims. While the outcome
of these lawsuits, legal proceedings and claims cannot be predicted with
certainty, management believes that the outcome of all such proceedings, even
if determined adversely, would not have a material adverse effect on the
Company's business or financial condition. Also, the Company has entered into
certain agreed orders with which it believes it is in compliance in all
material respects.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON , EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION
There is no established public trading market for the Company's common
stock. As of March 1, 1999, the Company had 11,756,955 shares outstanding which
was held of record by 27 stockholders. The Company has not paid any dividends
on the First Wave common stock and anticipates that for the foreseeable future,
any earnings will be retained for the development of the Company's business.
USE OF PROCEEDS
The Company completed an offering of $90 million of 11% Senior Notes
on February 2, 1998. The underwriter was Schroder & Co., Inc.
Expenses incurred by the Company in connection with the senior notes
offering were as follows (in thousands):
<TABLE>
<S> <C>
Underwriting discounts and commissions $3,150
Legal and accounting fees 637
Printing 252
Other 363
------
$4,402
======
</TABLE>
The Company used offering proceeds as follows (in thousands):
<TABLE>
<S> <C>
John Bludworth Marine, Inc. acquisition $15,000
Pledged securities - first year's interest 9,542
Repayment of indebtedness, including prepayment
penalties 25,172
Payment of promissory note to former owner of
John Bludworth Marine, Inc. 10,853
Newpark Shipbuilding-Galveston Island acquisition 5,503
Capital expenditures 19,528
Expenses of offering (see above) 4,402
-------
Total proceeds $90,000
=======
</TABLE>
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data for the dates
and periods indicated. The selected financial data have been derived from
audited consolidated financial statements of the Company. The selected
consolidated financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related notes
included elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Repair and upgrades $ 63,587 $ 28,331 $ 20,997 $ 15,392 $ 11,693
New construction 13,206 1,002 2,841 3,321 1,391
Environmental services 5,229 5,283 4,119 3,287 2,263
---------- ---------- ---------- ---------- ----------
Total revenues 82,022 34,616 27,957 22,000 15,347
Cost of revenues 57,305 19,952 18,623 17,043 12,591
---------- ---------- ---------- ---------- ----------
Gross profit 24,717 14,664 9,334 4,957 2,756
General and administrative 14,227 7,437 5,629 3,623 2,827
Interest expense - net 8,390 1,815 829 247 186
Minority interest -- 750 219 76 --
Income tax expense 945 2,001 1,098 283 2
Extraordinary item (933) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 222 $ 2,661 $ 1,559 $ 728 $ (259)
========== ========== ========== ========== ==========
Basic and diluted earnings per share:
Income (loss) before extraordinary item $ 0.10 $ 0.25 $ 0.15 $ 0.07 $ (0.02)
Extraordinary item (0.08) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 0.02 $ 0.25 $ 0.15 $ 0.07 $ (0.02)
========== ========== ========== ========== ==========
Weighted-average shares:
Basic and diluted 11,757 10,680 10,650 10,650 10,650
========== ========== ========== ========== ==========
AT YEAR-END DATA:
Cash and cash equivalents $ 1,654 $ 378 $ -- $ 66 $ 79
Total assets $ 128,383 $ 39,546 $ 24,932 $ 6,794 $ 5,017
Long-term debt $ 99,736 $ 24,872 $ 18,663 $ 1,128 $ 1,434
Stockholders' equity $ 8,276 $ 8,054 $ 1,893 $ 334 $ (258)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following discussion of the Company's financial condition, results
of operations, liquidity and capital resources should be read in conjunction
with the "Consolidated Financial Statements" and the "Notes to the Consolidated
Financial Statements" included elsewhere in this report.
The Company's business is primarily derived from providing repair and
upgrade services to inland and offshore marine vessels, including barges,
boats, drilling rigs and commercial ships. To a lesser extent the Company
engages in new construction of such inland and offshore marine vessels. The
Company believes the demand for repair and upgrade services is generally less
cyclical than the demand for new construction, but recognizes the need to
continually monitor the mix of new construction and repair services. While
trends in oil and natural gas prices can affect the demand for offshore support
vessels and drilling rigs, the Company believes demand should exist for repair
activity even with a short-term downturn in oil and gas prices. Any prolonged
depression in oil and natural gas prices could have an adverse effect on the
Company's results of operations if the number of offshore support vessels and
drilling rigs in active service in the Gulf of Mexico remains depressed.
16
<PAGE> 17
The Company also provides related environmental services, including
cleaning, degassing and wastewater treatment. Although this business comprises
a small percentage of the Company's total revenues, it generates high margins
and enhances the Company's strategy to be the only one-stop source of all
shipyard services for all segments of the inland marine and offshore markets in
Texas.
On February 2, 1998, the Company completed an offering of $90 million
of senior notes. The senior notes bear interest at the rate of 11% per annum
with principal due at maturity in February 2008. The senior notes are fully
guaranteed, jointly and severally, by all of the Company's direct and indirect
subsidiaries.
Simultaneously with closing the senior notes offering, the Company
completed the acquisition of all of the outstanding shares of John Bludworth
Marine, Inc. ("Newpark Shipbuilding-Pasadena"). The Newpark
Shipbuilding-Pasadena acquisition provided the Company with the Pasadena
facility near Houston, Texas and the West Pelican Island facility in Galveston,
Texas. The Company paid $15.0 million in cash and issued a promissory note in
the amount of $4.0 million. The purchase price and promissory note were
adjustable upward or downward based upon outstanding debt and a final
calculation of earnings before interest, taxes, depreciation and amortization
("EBITDA") of the acquired company. The final calculation of the applicable
outstanding debt of John Bludworth Marine, Inc. at closing resulted in an
increase to the purchase price of approximately $5.2 million. The final
calculation of EBITDA resulted in an increase to the purchase price of
approximately $1.5 million. The promissory note as adjusted for outstanding
debt and EBITDA bore interest at 8.5% per annum and was paid in full prior to
July 31, 1998.
On May 15, 1998, the Company acquired the Galveston Island shipyard
with its completion of the acquisition of certain assets of the Barge Building
Division of Galveston Shipbuilding Company ("Newpark Shipbuilding-Galveston
Island"). The Company acquired the fixed assets, including land, a contract to
build four tank barges and up to five barge covers, and the name "Galveston
Shipbuilding Company" for $5.5 million, subject to a final purchase price
adjustment based upon the performance of the business. The acquisition has been
accounted for as a purchase and the results of Newpark Shipbuilding-Galveston
Island have been included in the accompanying consolidated financial statements
since the date of acquisition.
The Company currently operates three shipyards in the Houston, Texas
area (Brady Island, Greens Bayou and Pasadena) and three in the Galveston,
Texas area (East Pelican Island, West Pelican Island and Galveston Island). At
December 31, 1998, the Company employed approximately 1,110 employees.
RESULTS OF OPERATIONS
Comparison of Year Ended December 31, 1998 to Year Ended December 31,
1997
Revenues increased 137% to $82.0 million in 1998 compared to $34.6
million in 1997 primarily due to additional shipyards in operation during 1998.
The Greens Bayou facility, a start-up, began generating revenues in the third
quarter of 1997. The East Pelican Island facility, another start-up, began
generating revenues in the first quarter of 1998. As discussed above, the
Pasadena and West Pelican Island facilities were acquired on February 2, 1998
and the Galveston Island facility was acquired on May 15, 1998. Overall growth
in repair and upgrade activity, which accounted for approximately 78% of total
revenues in 1998, rose 124% over 1997.
Cost of revenues rose 187% to $57.3 million in 1998 from $20.0 million
in 1997 as a result of the additional shipyards in operation during 1998.
Gross profits increased by 69% to $24.7 million in 1998 from $14.7
million in 1997 due to the additional shipyards in operation during 1998. The
gross profit margin decreased to 30% in 1998 from 42% in 1997, due in part to
certain operational inefficiencies associated with the start-up nature of the
East Pelican Island shipyard and Greens Bayou shipyard which affected gross
profit margins, the decrease in higher margin environmental services revenue as
a percentage of total revenue, the increase in lower margin new construction
revenue as a percentage of total revenue, significant training expenses at all
acquired facilities and a decline in higher margin OSV repair and conversion
work.
General and administrative expenses increased 91% to $14.2 million in
1998 from $7.4 million in 1997. General and administrative expenses as a
percentage of revenue for 1998 represented 17% of total revenues, as compared
to 21% for 1997. The decrease in general and administrative expenses as a
percentage of revenue is due in part to the leveraging of overhead expense over
greater revenues and approximately $430,000 in bonuses paid to three
17
<PAGE> 18
executive officers in 1998 as opposed to approximately $1.3 million in bonuses
paid to three executive officers in 1997. General and administrative expenses
as a percentage of revenues were negatively impacted by the full staffing and
certain overhead expenses incurred at start-up operations in advance of revenue
generation, as well as expenses related to development of the Company's
strategy for future expansion.
Depreciation and amortization expense increased to $4.2 million in
1998 from $1.5 million in 1997. The increase is due to the additional
facilities acquired in late 1997 and 1998. See "Revenue" discussion above.
Net interest expense rose to $8.4 million in 1998 from $1.8 million in
1997 due primarily to eleven months of interest expense on the $90 million 11%
Senior Notes reflected in the 1998 period, which was partially offset by
interest earned on the unused proceeds of the Senior Notes Offering.
The elimination of minority interest in 1998 from approximately
$750,000 in 1997 is due to all minority shareholders of Brady Island exchanging
their shares for shares in First Wave effective December 31, 1997.
The decrease in income tax expense to $945,000 in 1998 from $2.0
million in 1997 is directly attributable to the decrease in income before
income taxes.
The extraordinary item reflected in 1998 of approximately $933,000,
net of income tax benefit of approximately $559,000, relates to approximately
$1,022,000 of prepayment penalties and the write-off of approximately $470,000
in loan origination costs as a result of the early extinguishment of debt.
The decrease in net income from 1997 to 1998 is primarily due to the
loss on the extinguishment of debt, the additional interest expense related to
the $90 million 11% Senior Notes, the increase in depreciation and amortization
as a result of the acquisitions, and higher general and administrative
expenses.
Comparison of Year Ended December 31, 1997 to Year Ended December 31,
1996
Revenues increased 24% to $34.6 million in 1997 compared with $28.0
million in 1996 primarily due to growth in offshore support vessel repair and
upgrade activity. Overall growth in repair and upgrade activity, which
accounted for approximately 82% of total revenues in 1997, rose 35% over 1996,
based on labor hours.
Cost of revenues rose 7% to $20.0 million in 1997 from $18.6 million
in 1996 as a result of the overall growth in labor hours.
Gross profits increased by 57% to $14.7 million in 1997 from $9.3
million in 1996 primarily due to generally higher billing and bid rates, and an
increase in higher margin OSV repair on upgrade activity. This is reflected in
an increase in gross profit margin for 1997 to 42% from 33% for 1996.
General and administrative expenses increased 32% to $7.4 million in
1997 from $5.6 million in 1996. The increase is due primarily to approximately
$1.3 million in bonuses paid to three executive officers and additional costs
related to the two new facilities put in service in 1997. General and
administrative expenses as a percentage of revenues for 1997 represented 21% of
total revenues, as compared to 20% for 1996.
Depreciation and amortization expense increased to $1.5 million in
1997 from $680,000 in 1996 primarily due to the effect of a full year of
depreciation in 1997 on the assets acquired at the Brady Island facility in
August 1996, and due to the acquisition of the Greens Bayou Facility in August
1997.
Interest expense rose to $1.8 million in 1997 from $829,000 in 1996
due primarily to additional financing costs associated with the debt incurred
to finance the acquisition of the Brady Island assets acquired in August 1996.
As a result of the increased earnings, income tax expense increased to
$2.0 million in 1997 from $1.1 million in 1996.
Net earnings rose 71% to $2.7 million in 1997 from $1.6 million in
1996.
18
<PAGE> 19
INFLATION AND CHANGING PRICES
The Company does not believe that general price inflation has had a
significant impact on the Company's results of operations during the periods
presented. To the extent that the effects of inflation are not offset by
improvements in manufacturing and purchasing efficiency and labor productivity,
the Company generally has been able to take such effects into account in
pricing its contracts with customers. There can be no assurance, however, that
inflation will not have a material effect on the Company's business in the
future.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily from its
need to service debt, fund working capital, acquire additional shipyard
facilities and make capital improvements to its facilities. Prior to the
Company's senior notes offering discussed below, bank financing and internally
generated funds provided funding for these activities.
The Company completed its $90 million 11% Senior Notes offering on
February 2, 1998. Simultaneous with the senior notes offering, the Company used
$15.0 million of the net proceeds of the offering to complete the Newpark
Shipbuilding--Pasadena acquisition. As a provision of the senior notes
offering, the Company was required to deposit sufficient funds in a trust
account to cover the first two semi-annual interest payments on the senior
notes. The expenses incurred by the Company in connection with the senior notes
offering were approximately $4.4 million. Subsequent to the senior notes
offering and the Newpark Shipbuilding-Pasadena acquisition, approximately
$25.2 million was used to prepay indebtedness of the Company. On May 15, 1998,
$5.5 million of the net proceeds of the offering was used to complete the
Newpark Shipbuilding-Galveston Island acquisition. On May 27, 1998, $5.2
million was used to pay down the promissory note to the former owner of Newpark
Shipbuilding-Pasadena. On July 30, 1998, $5.5 million was used to pay the
balance of the promissory note.
Excluding the acquisition of the Pasadena facility, the West Pelican
Island facility and the Galveston Island facility, the Company has used
approximately $19.5 million of proceeds from the senior notes offering on
capital expenditures during the year ended December 31, 1998.
Under its indenture entered into in connection with the senior notes
offering, the Company is permitted to borrow up to the greater of $20 million
or 85% of its accounts receivable. On June 9, 1998, the Company obtained a
$10.0 million revolving line of credit collateralized by accounts receivable of
all but one of the Company's subsidiaries. Additionally, the Company has $1.75
million in borrowing capacity under another revolving line of credit
collateralized by accounts receivables of one of the Company's subsidiaries.
There were no borrowings outstanding on either of the lines of credit at
December 31, 1998.
Net cash provided by operating activities for the year ended December
31, 1998 and 1997 was $1.5 million and $4.9 million, respectively. The decrease
in cash generated from operations is primarily due to the lower earnings during
1998 (as discussed above), and the substantial growth in accounts receivable,
net of accounts receivable acquired in the Newpark Shipbuilding-Pasadena
acquisition.
Net cash used in investing activities was $52.3 million and $3.5
million for the year ending December 31, 1998 and 1997, respectively. During
the year ending December 31, 1998, cash used in investing activities was for
the completion of the Newpark Shipbuilding-Pasadena and Newpark
Shipbuilding-Galveston Island acquisitions, capital expenditures and the
purchase of investments.
Net cash provided by (used in) financing activities was $52.1 million
and $(1.0) million for the year ending December 31, 1998 and 1997,
respectively. Cash provided by financing activities resulted from the
completion of the $90 million 11% Senior Notes offering during 1998. Cash
generated from the senior notes offering was used to prepay indebtedness of the
Company, pay the promissory note to the former owner of Newpark
Shipbuilding-Pasadena, and pay the remainder of the financing costs related to
the senior notes offering.
The Company has taken aggressive measures to reduce capital
requirements for 1999 due to market conditions in the oil and gas sectors.
Although the Company anticipates additional capital expenditures during 1999,
as of December 31, 1998, the Company had commitments for 1999 capital
expenditures of approximately $2.5 million. The
19
<PAGE> 20
capital expenditures relate primarily to the purchases of equipment and
facility improvements at the East Pelican Island and Galveston Island
facilities.
Management believes that with the cash generated from operations, and,
if necessary, borrowings under the Company's lines of credit, the Company will
have sufficient resources available to meet its anticipated requirements for
capital expenditures, working capital needs and debt service for fiscal year
1999.
YEAR 2000 DISCLOSURES
Many computer software systems, as well as certain hardware and
equipment containing date sensitive data, were structured to utilize a
two-digit date field meaning that they may not be able to properly recognize
dates in the Year 2000 and beyond. This could result in significant system and
equipment failures. The Company has completed a detailed process to identify
potential Year 2000 problems and to implement solutions for all of its
information technology ("IT") as well as non-IT systems. Necessary actions are
being taken to ensure that both IT and non-IT systems and services will
continue to operate on and after January 1, 2000. The Company's technology
projects are addressing the Year 2000 issue in those areas where replacement
systems are being installed for other business reasons. Where existing systems
are expected to remain in place beyond 1999, the Company is implementing
changes utilizing a combination of internal and external resources. In
addition, the Company has begun to communicate with its major customers,
suppliers and financial institutions to coordinate year 2000 readiness.
Based on the steps the Company is taking to address this issue and its
progress to date, the Company does not expect the financial impact of Year 2000
date conversion to be material to its financial statements. However, the
Company can give no assurance that the systems of other companies on which the
Company's systems rely will be modified or otherwise addressed in a timely
manner, or that any failure by another company would not have a material impact
on the Company's financial statements.
Based upon current estimates, First Wave believes that it will incur
costs of approximately $20,000 to $50,000 during 1999 to complete the
implementation of the necessary changes to its existing systems. These costs
will be expensed as incurred.
Though the Company's existing accounting system and associated
hardware was determined to be Year 2000 compliant, the Company has decided to
replace its existing accounting system and associated hardware to become more
efficient, effective, and to gain additional functionality. Replacement costs
of this new system and hardware is being capitalized and current estimates
indicate that the total cost of the new system and hardware will be $500,000 to
$700,000.
ITEM 7.A QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is only minimally exposed to market risk which could
result from adverse changes in interest rates.
Total long-term debt at December 31, 1998 included two floating rate
facilities in the amounts of $10.0 million and $1.75 million. The Company had
net borrowings of approximately $1.0 million on one of the facilities in January
1998, which were paid in full in February 1998. The Company had no other
borrowings on either facility in 1998. As a result, there was minimal impact on
1998 cash flows as a result of market risks. In the future, the Company's annual
interest could fluctuate because the interest rate on both of the facilities is
a floating rate. The Company did not have any open derivative contracts relating
to its floating rate debt.
20
<PAGE> 21
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Certified Public Accountants 22
Consolidated Balance Sheets as of December 31, 1998 and 1997 23
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 24
Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1996, 1997 and 1998 25
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 26
Notes to Consolidated Financial Statements 27
</TABLE>
21
<PAGE> 22
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
First Wave Marine, Inc.
We have audited the accompanying consolidated balance sheets of First Wave
Marine, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company'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 consolidated financial position of First Wave
Marine, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
Houston, Texas
March 12, 1999
22
<PAGE> 23
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
December 31,
------------
ASSETS 1998 1997
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,654 $ 378
Investments available-for-sale 2,102 --
Investments held-to-maturity 6,262 --
Accounts receivable, less allowance of $145 in 1998
and $37 in 1997 19,369 8,488
Inventories 857 792
Costs and estimated earnings in excess of billings on
uncompleted contracts 2,615 793
Prepaids and other 785 341
Income tax receivable 492 773
Deferred income taxes 826 281
--------- ---------
Total current assets 34,962 11,846
Property and equipment, net 73,067 23,326
Financing costs, net 4,021 1,438
Goodwill and other intangibles, net 15,214 2,726
Deposits and other 1,119 210
--------- ---------
$ 128,383 $ 39,546
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,944 $ 1,354
Accrued liabilities 6,041 3,319
Billings in excess of costs and estimated earnings on
uncompleted contracts 255 --
Accrued interest payable 4,125 637
Current portion of capital lease obligation 167 --
Notes payable 199 215
--------- ---------
Total current liabilities 13,731 5,525
Long-term obligations 3,042 17,781
Subordinated debt 6,328 6,876
Senior notes 90,000 --
Deferred income taxes 5,727 632
Other liabilities 1,279 678
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value, 2,000 shares
authorized, no shares issued -- --
Common stock, $.01 par value, 21,000 shares
authorized, 11,757 shares issued and outstanding
at December 31, 1998 and 1997 118 118
Additional paid-in capital 3,490 3,490
Retained earnings 4,668 4,446
--------- ---------
Total stockholders' equity 8,276 8,054
--------- ---------
$ 128,383 $ 39,546
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 24
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Repair and upgrade $ 63,587 $ 28,331 $ 20,997
New construction 13,206 1,002 2,841
Environmental services 5,229 5,283 4,119
---------- ---------- ----------
82,022 34,616 27,957
Cost of revenues 57,305 19,952 18,623
---------- ---------- ----------
Gross profit 24,717 14,664 9,334
General and administrative expenses 14,227 7,437 5,629
---------- ---------- ----------
Income from operations 10,490 7,227 3,705
Interest expense - net 8,390 1,815 829
Minority interest in net earnings of subsidiary -- 750 219
---------- ---------- ----------
Income before income taxes and extraordinary item 2,100 4,662 2,657
Income tax expense 945 2,001 1,098
---------- ---------- ----------
Income before extraordinary item 1,155 2,661 1,559
Extraordinary item - loss on extinguishment of debt,
net of income tax benefit of $559 (933) -- --
---------- ---------- ----------
Net income $ 222 $ 2,661 $ 1,559
========== ========== ==========
Basic and diluted earnings per share:
Income before extraordinary item $ 0.10 $ 0.25 $ 0.15
Extraordinary item (0.08) -- --
---------- ---------- ----------
Net income $ 0.02 $ 0.25 $ 0.15
========== ========== ==========
Weighted-average shares:
Basic and diluted 11,757 10,680 10,650
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
24
<PAGE> 25
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------ PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 10,650 $ 1 $ -- $ 333 $ 334
Net income -- -- -- 1,559 1,559
------ -------- -------- -------- --------
Balance at December 31, 1996 10,650 1 -- 1,892 1,893
Change in par value -- 9 -- (9) --
Issuance of common stock 108 -- 2 -- 2
Stock split effected in the form
of a dividend -- 98 -- (98) --
Issuance of common stock in
exchange for minority interest
of subsidiary 999 10 3,488 -- 3,498
Net income -- -- -- 2,661 2,661
------ -------- -------- -------- --------
Balance at December 31, 1997 11,757 118 3,490 4,446 8,054
Net income -- -- -- 222 222
------ -------- -------- -------- --------
Balance at December 31, 1998 11,757 $ 118 $ 3,490 $ 4,668 $ 8,276
====== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
25
<PAGE> 26
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 222 $ 2,661 $ 1,559
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,209 1,521 680
Accretion of discounts on investments held-to-maturity (521) -- --
Minority interest on earnings -- 750 219
Provision for doubtful accounts 149 37 --
Loss on sale of property and equipment 4 4 --
Write-off of property and equipment 128 -- --
Write-off of financing costs 469 -- --
Deferred income tax provision 315 138 242
Change in assets and liabilities, net of effects from acquisitions:
Accounts receivable (7,402) (3,378) (1,263)
Inventories (35) (226) (256)
Costs and estimated earnings in excess of billings on
uncompleted contracts (1,125) 332 (251)
Prepaids and other assets 317 (58) (150)
Income tax receivable (761) (634) (139)
Deposits and other (767) 22 58
Due to bank -- (88) 88
Accounts payable 490 457 44
Accrued liabilities 1,473 2,768 317
Billings in excess of costs and estimated earnings on
uncompleted contracts 255 -- --
Accrued interest payable 3,488 -- --
Other liabilities 621 621 36
---------- ---------- ----------
Net cash provided by operating activities 1,529 4,927 1,184
---------- ---------- ----------
Cash flows from investing activities:
Acquisition of property and equipment (25,008) (3,256) (1,425)
Acquisition of businesses, net of cash acquired (19,399) -- --
Purchase of investments held-to-maturity (10,792) -- --
Purchase of investments available-for-sale (2,000) -- --
Proceeds from maturity of investments held-to-maturity 4,950 -- --
Proceeds from sales of property and equipment 34 12 --
Asset acquisition costs (103) (298) --
---------- ---------- ----------
Net cash used in investing activities (52,318) (3,542) (1,425)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of debt 90,000 1,130 3,435
Payments on long-term debt and notes payable (33,415) (1,251) (2,113)
Net (payments) proceeds on revolving lines of credit (1,027) 81 (567)
Financing costs (3,493) (969) (580)
Issuance of common stock -- 2 --
---------- ---------- ----------
Net cash provided by (used in) financing activities 52,065 (1,007) 175
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 1,276 378 (66)
Cash and cash equivalents at beginning of period 378 -- 66
---------- ---------- ----------
Cash and cash equivalents at end of period $ 1,654 $ 378 $ --
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE> 27
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND NATURE OF BUSINESS. The accompanying
consolidated financial statements include the accounts of First Wave Marine,
Inc. and its wholly-owned subsidiaries (the "Company"). The minority interest
stockholders of one of the Company's subsidiaries, Newpark Shipbuilding--Brady
Island, Inc. ("Brady Island") exchanged their shares of Brady Island for shares
of the Company effective December 31, 1997 (see Note C ). Material intercompany
balances and transactions have been eliminated in consolidation.
The Company's business is concentrated in providing shipyard and
related environmental services to the inland marine, offshore barge, commercial
ship, offshore drilling and offshore barge industries, and the Company
customarily extends credit to such customers. The Company provides a full range
of repair and construction services as well as environmental services including
cleaning, degassing and wastewater disposal from its six locations along the
Houston Ship Channel in Houston, Texas and in Galveston, Texas.
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.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair values of all
significant financial instruments have been developed based on available market
information and appropriate valuation methodologies. However, considerable
judgment is required in developing the estimates of fair value. Therefore, such
estimates are not necessarily indicative of the amounts that could be realized
in a current market exchange. After such analysis, management believes the
carrying values of the Company's receivables and payables approximate fair
values at December 31, 1998 and 1997. The fair values of other significant
financial instruments are disclosed in the appropriate footnotes.
REVENUE RECOGNITION. Revenues from construction performed under
lump-sum contracts are recognized on the percentage-of-completion method based
upon current estimates to complete such contracts, commencing where progress
reaches a point where experience is sufficient to estimate final results with
reasonable accuracy. That portion of the total contract price is accrued which
is allocable, on the basis of engineering estimates of the percentage of
completion, to contract expenditures incurred and work performed, or on the
basis of labor hours incurred to date to estimated total labor hours, whichever
method is determined to be most appropriate by management.
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. The Company attempts to
recover costs of labor and material through an estimation of such costs, which
is reflected in the original price. Despite these attempts, however, the
revenue, cost and gross profit realized on a fixed-price arrangement will often
vary from the estimated amounts because of changes in job conditions and
variations in labor and materials costs over the term of the project. These
variations and the risks generally inherent in the shipbuilding and repair
industry may result in gross profits realized by the Company being different
from those originally estimated and may result in the Company experiencing
reduced profitability or losses on projects. Adjustments to revenues and costs
recognized on fixed-price arrangements are made in the period in which the
adjustments are determined. Variations from estimated fixed-price arrangements
could have a significant effect on the Company's operating results for any
particular fiscal quarter or year.
Revenues from repairs, upgrades and environmental services performed
under time-and-materials arrangements are recognized as the services are
provided.
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.
Included in accounts receivable are unbilled receivables in the
amounts of $3,913 and $2,450 at December 31, 1998 and 1997, respectively, all
of which are due within a one year period.
27
<PAGE> 28
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
short-term investments purchased with an original maturity of three months or
less to be cash equivalents.
The Company maintains cash and cash equivalents with various financial
institutions. At times, the balances in these accounts could exceed the FDIC
insured balance limit of $100 per bank. The Company has not experienced any
losses in such accounts and believes it is not exposed to any significant
credit risks on cash and cash equivalents.
INVENTORIES. Inventories consist of raw materials and repair parts.
Inventories are valued at the lower of cost or market using the first-in,
first-out method.
DEPRECIATION AND AMORTIZATION. 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.
Interest is capitalized in connection with qualifying construction
projects. The capitalized interest is recorded as part of the asset to which it
relates and is amortized over the asset's estimated useful life. In 1998, $958
of interest cost was capitalized. No interest was capitalized in 1997 or 1996.
Goodwill resulting from acquisitions is being amortized on a
straight-line method over 40 years. Organizational costs are amortized on a
straight-line method over a period of five years. Accumulated amortization on
goodwill and other intangibles at December 31, 1998 and 1997 was $688 and $146,
respectively.
Financing costs are amortized over the life of the related obligation.
Accumulated amortization on financing costs at December 31, 1998 and 1997 was
$433 and $111, respectively.
When events and circumstances so indicate that the net book value of a
long-lived asset may not be recoverable, the asset is reviewed for impairment.
An impairment loss will be recognized if the sum of the expected future cash
flows (undiscounted and before interest) from the use of the asset is less than
the net book value of the asset. The amount of the impairment loss will
generally be measured as the difference between the net book value of the
assets and the estimated fair value of the related assets. No impairment losses
have been recognized in any of the periods presented.
INCOME TAXES. Deferred tax assets and liabilities are determined based
on the differences between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense (benefit) is the result of
changes in deferred tax assets and liabilities.
EARNINGS PER SHARE. Basic earnings per share is calculated by dividing
net income by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is calculated by dividing net income by
the weighted-average number of common shares outstanding during the period,
adjusted for any dilutive potential common shares outstanding during the
period.
On September 30, 1997, the Company merged into and became a Delaware
corporation which effectively resulted in a stock split of 1,000 for 1 and the
establishment of a $.01 par value on the common stock. All share and per share
data have been restated to give effect to the stock split.
On November 20, 1997, the Company's common stock was split 10.65 for 1
to stockholders of record on that date, and was effected as a stock dividend.
All share and per share data have been restated to give effect to the stock
split.
RECLASSIFICATIONS. Certain reclassifications have been made to the
prior year financial statements to conform to the current year presentation.
NOTE B - SENIOR NOTES OFFERING
On February 2, 1998, the Company completed a registered offering of
$90,000 aggregate principal amount of senior notes. The senior notes bear
interest at the rate of 11% per annum; interest due semi-annually on February 1
and August 1; principal due at maturity in February 2008. The senior notes are
fully and unconditionally guaranteed,
28
<PAGE> 29
jointly and severally, by all of the Company's direct and indirect
subsidiaries. Each subsidiary guarantor is 100% owned by the Company.
The Company is subject to restrictive covenants under the related
trust indenture. The indenture contains covenants that, among other things,
limit the ability of the Company and its subsidiaries to incur additional
indebtedness, make certain investments, create some types of liens, enter into
certain transactions with affiliates, sell assets, enter into some types of
mergers and consolidations, allow subsidiaries to create certain dividend and
other payment restrictions, enter into sale and leaseback transactions, and
issue or sell capital stock of subsidiaries.
Separate financial statements and other disclosures concerning the
subsidiary guarantors are not presented because management has determined such
financial statements and other disclosures are not material to investors. The
combined condensed income statement information for the Company's subsidiary
guarantors is the same as the Company's. The combined condensed balance sheet
information of the Company's subsidiary guarantors is as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ -- $ 373
Accounts receivable 19,255 8,425
Other 5,647 2,269
---------- ----------
24,902 11,067
Property and equipment 71,883 23,304
Intangible assets 12,895 1,105
Other 377 1,141
---------- ----------
Total assets $ 110,057 $ 36,617
========== ==========
Current liabilities $ 10,480 $ 4,228
Non-current liabilities 77,536 25,565
Stockholders' equity 22,041 6,824
---------- ----------
Total liabilities and stockholders'
equity $ 110,057 $ 36,617
========== ==========
</TABLE>
NOTE C - ACQUISITIONS
On February 2, 1998, the Company completed the acquisition of all of
the outstanding capital stock of John Bludworth Marine, Inc., ("Newpark
Shipbuilding--Pasadena") a company that owns and operates shipyard facilities
in Pasadena, Texas and Galveston, Texas. The Company paid $15,000 in cash and
issued a promissory note in the amount of $4,000. The Company used a portion of
the proceeds from its $90,000 senior notes offering (discussed above) to fund
the cash portion of the acquisition. The purchase price and promissory note
were adjustable upward or downward based upon outstanding debt and a final
calculation of earning before interest, taxes, depreciation and amortization
("EBITDA") of the acquired company. The final calculation of the applicable
outstanding debt of Newpark Shipbuilding--Pasadena. resulted in an increase to
the purchase price of approximately $5,157. The final calculation of EBITDA
resulted in an increase to the purchase price of approximately $1,480. The
promissory note bore interest at 8.5% per annum and was paid in full by July
31, 1998.
The acquisition has been accounted for as a purchase and the results
of Newpark Shipbuilding--Pasadena have been included in the accompanying
consolidated financial statements since the date of the acquisition. The
allocation of the purchase price resulted in intangibles, primarily goodwill,
of approximately $14,100 which are being amortized on a straight-line basis
over a forty year period.
On May 15, 1998, the Company completed the acquisition of certain
assets of the Barge Building Division of Galveston Shipbuilding Company
("Newpark Shipbuilding--Galveston Island"). The Company acquired the fixed
assets, including land, a contract to build four tank barges and up to five
barge covers, and the name "Galveston Shipbuilding Company" for $5,500, subject
to a final purchase price adjustment based upon the performance of the
business. The acquisition has been accounted for as a purchase and the results
of Newpark Shipbuilding--Galveston Island have been included in the
accompanying consolidated financial statements since the date of the
acquisition.
29
<PAGE> 30
The following unaudited pro forma consolidated results of operations
have been prepared as if Newpark Shipbuilding--Pasadena and Newpark
Shipbuilding--Galveston Island had been acquired as of January 1 of fiscal 1998
and 1997. This pro forma information is not necessarily indicative of the
results of operations that would have occurred had the acquisitions been made
on those dates or of results which may occur in the future.
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Revenues $90,004 $77,402
Income before extraordinary item 2,082 6,191
Net income 1,149 6,191
Basic and diluted earnings per share:
Before extraordinary item $ 0.18 $ 0.58
Net income $ 0.10 $ 0.58
</TABLE>
In conjunction with the Newpark Shipbuilding--Pasadena acquisition,
the Company acquired assets with a fair value of $41,315 and assumed
liabilities of $26,315. In conjunction with the Newpark
Shipbuilding-Galveston Island acquisition, the Company acquired assets with a
fair value of $5,796 and assumed liabilities of $296.
Effective December 31, 1997, the Company completed the acquisition of
all the minority interests of one of its subsidiaries, Brady Island, pursuant
to a Stock Exchange Agreement dated October 16, 1997. The minority shareholders
of Brady Island exchanged shares representing 17% ownership in Brady Island for
a total of 999 shares of common stock of the Company. The 999 shares of the
Company were valued at $3.50 per share based on the fair value of the Company.
Goodwill resulting from the exchange of approximately $2,400 is being amortized
over a period of 40 years.
NOTE D - INVESTMENTS AVAILABLE-FOR-SALE
Included in investments available-for-sale is an investment in a
mutual fund which invests in another portfolio that invests primarily in "loan
interest" - portions of senior, floating-rate loans made by U.S. banks and
other financial institutions to large corporate customers. The fund seeks to
achieve a high level of current income while minimizing fluctuations in net
asset values. The carrying value approximates the estimated fair value of the
investment at December 31, 1998.
NOTE E - INVESTMENTS HELD-TO-MATURITY
As a result of the 11% Senior Notes Offering, the Company was required
to deposit funds into a trust account to pay the first and second semi-annual
interest payments on the notes. Two securities were purchased with maturity
dates as near as possible to the interest payment dates. At maturity, the value
of both securities will approximate the amount of the semi-annual interest
payment, which is $4,950. A Fannie Mae Discount Note which matured on July 27,
1998 was purchased for approximately $4,824 to cover the August 1, 1998
interest payment. A U.S. Treasury Bill with a maturity date of January 7, 1999
was purchased for approximately $4,718 to cover the February 1, 1999 interest
payment. The approximate fair value of the U.S. Treasury Bill at December 31,
1998 was $4,949.
Also included in "Investments held-to-maturity" are a certificate of
deposit with a financial institution in the amount of $1,000 with a maturity
date of February 4, 1999, and another certificate of deposit with another
financial institution in the amount of $250 with a maturity date of February 3,
1999. The balances of both certificates of deposit exceed the FDIC insured
balance limit of $100 per bank. The carrying value of both certificates of
deposit approximates fair value at December 31, 1998.
30
<PAGE> 31
NOTE F - CONTRACTS IN PROGRESS
Information regarding construction under lump-sum contracts in
progress as of December 31, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Expenditures on uncompleted contracts $ 3,731 $ 1,379 $ 2,276
Estimated earnings 1,172 1,123 1,377
--------- --------- ---------
4,903 2,502 3,653
Less billings applicable thereto 2,543 1,709 2,528
--------- --------- ---------
$ 2,360 $ 793 $ 1,125
========= ========= =========
Included in the accompanying balance
sheets under the following captions:
Costs and estimated earnings in excess
of billings on uncompleted contracts $ 2,615 $ 793 $ 1,125
Billings in excess of costs and
estimated earnings on uncompleted contracts (255) -- --
--------- --------- ---------
$ 2,360 $ 793 $ 1,125
========= ========= =========
</TABLE>
NOTE G- PROPERTY AND EQUIPMENT
Property and equipment as of December 31 is as follows:
<TABLE>
<CAPTION>
Estimated useful
lives in years 1998 1997
-------------- -------- --------
<S> <C> <C> <C>
Land -- $ 15,704 $ 4,843
Buildings 31-40 7,510 6,453
Transportation 5-7 581 188
Office furniture, fixtures and equipment 3-5 1,258 365
Machinery and equipment 5-20 38,177 12,321
Leasehold improvements 3-15 9,056 --
Construction in progress -- 6,237 1,397
-------- --------
78,523 25,567
Less accumulated depreciation (5,456) (2,241)
-------- --------
$ 73,067 $ 23,326
======== ========
</TABLE>
31
<PAGE> 32
NOTE H - LONG-TERM OBLIGATIONS AND NOTES PAYABLE
Long-term obligations and notes payable as of December 31, consist of
the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
11% Senior Notes; interest due semi-annually;
principal due at maturity in February 2008;
guaranteed by all subsidiaries of the Company $ 90,000 $ --
Revolving line of credit of $10,000 at a bank;
interest at prime plus 1/2%; collateralized by
receivables of all but one of the Company's
subsidiaries; unpaid principal due April 30, 1999 -- --
Revolving line of credit of $1,750 at a bank;
interest at bank prime plus 1% due monthly;
principal due on demand; collateralized by
receivables of one of the Company's subsidiaries,
and guaranteed by the chairman of the Company -- 1,027
Note payable to an affiliated corporation;
unsecured; due on demand; interest at 7% 199 215
Subordinated note payable to a corporation;
interest at 5%; principal and interest due
September 2003, collateralized by all assets,
stock issued, and guaranteed by the chairman of
the Company 6,328 6,328
Various notes payable to banks and corporations;
all paid in full in 1998 -- 14,093
Capital lease obligation 3,209 3,209
---------- ----------
99,736 24,872
Less current portion (366) (215)
---------- ----------
$ 99,370 $ 24,657
========== ==========
</TABLE>
In February 1998, several debt obligations of the Company were paid in
full with proceeds from the $90 million senior notes offering. In connection
with the early extinguishment of these obligations, the Company incurred
prepayment penalties of approximately $1,022 and the write-off of approximately
$470 in loan origination costs.
Certain obligations are subject to loan agreements which contain,
among other things, provisions restricting other borrowings, acquisitions,
capital expenditures, redemption of the Company's stock and dividends, and
require the Company to maintain certain financial ratios.
The $6,328 subordinated note payable contains a default penalty of
$2,206 if the note is not fully paid by the maturity date, September 30, 2003.
The fair value of the Company's long-term debt at December 31, 1998
and 1997 was $93,876 and $24,059, respectively.
NOTE I - INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
----- ------ ------
<S> <C> <C> <C>
Current tax expense 630 $1,863 $ 856
Deferred tax expense 315 138 242
----- ------ ------
$ 945 $2,001 $1,098
===== ====== ======
</TABLE>
32
<PAGE> 33
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Reserves and allowances $ 129 $ --
Bonus accrual 52 206
Expenses not currently deductible 136 --
Intangibles 21 --
Net operating losses 437 --
Other 51 75
---------- ----------
$ 826 $ 281
========== ==========
Deferred tax liabilities:
Capitalized small tools $ -- $ (40)
Depreciation (5,727) (592)
---------- ----------
$ (5,727) $ (632)
========== ==========
</TABLE>
The Company has federal net operating loss carryforwards of
approximately $1,000 expiring in 2018, and Texas net operating loss
carryforwards of approximately $5,000 expiring in 2002 and 2003.
The reconciliation between the Company's effective income tax rate and
the statutory federal income tax rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Statutory federal income tax rate 34.00% 34.00% 34.00%
Non-deductible goodwill amortization 6.01 -- --
Minority interest -- 5.47 2.80
State taxes 1.67 3.99 3.61
Other 3.32 (.53) 0.91
----- ----- -----
45.00% 42.93% 41.32%
===== ===== =====
</TABLE>
NOTE J - LEASING ARRANGEMENTS
In October 1997, the Company entered into a lease agreement for its
East Pelican Island facility in Galveston, Texas. The lease agreement provides
for an initial term of fifteen years with options to renew up to a total term
of ninety-nine years, and monthly payments of $58.
Effective December 1, 1997, the Company entered into an agreement to
lease an airplane from an entity that is owned by two directors of the Company.
The lease provides for a term of five years at a monthly rental of $5. Under
the terms of the lease, the Company is required to maintain the airplane in
good working condition, to pay all operating expenses related to the airplane
and to maintain insurance on the airplane. Company policy requires that any
direct costs related to personal use of the airplane be reimbursed to the
Company.
33
<PAGE> 34
Future minimum lease payments for all noncancelable operating leases
having a remaining term in excess of one year at December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Year ended
December 31,
------------
<S> <C>
1999 $ 760
2000 760
2001 760
2002 755
2003 700
Thereafter 6,183
-------
$ 9,918
=======
</TABLE>
Total rent expense for all operating leases amounted to $1,799 for
1998, $278 for 1997 and $1,202 for 1996.
In August 1997, the Company commenced operations of its Greens Bayou
shipyard in a leased facility. For financial reporting purposes, minimum lease
rentals relating to the building and land have been capitalized. The related
assets and obligations have been recorded using the Company's incremental
borrowing rate at the inception of the lease. The lease, which is
noncancelable, expires in August 2002, at which time ownership of the assets
will transfer to the Company. The following is a schedule of leased property
under capital leases at December 31, 1998:
<TABLE>
<S> <C>
Land $ 1,417
Buildings and Equipment 1,792
----------
3,209
Less accumulated depreciation (127)
----------
$ 3,082
==========
</TABLE>
The following is a schedule by years of future minimum lease payments
under capital leases together with present value of the net minimum lease
payments as of December 31, 1998:
<TABLE>
<CAPTION>
Year ended
December 31,
- ------------
<S> <C>
1999 $ 200
2000 595
2001 655
2002 3,323
----------
Total minimum lease payments 4,773
Less amount representing interest 1,564
----------
3,209
Current portion 167
----------
Noncurrent portion $ 3,042
==========
</TABLE>
NOTE K- CONTINGENCIES
The Company 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 Company.
The Company is subject to extensive and changing federal, state and
local laws and regulations designed to protect the environment. The Company
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 Company is unable to predict the future costs
or other future impact of environmental laws on its operations.
On August 13, 1998, one of the Company's subsidiaries, Newpark
Shipbuilding--Brady Island, Inc., was the subject of a search warrant executed
by a multi-agency environmental task force. The government's search warrant was
34
<PAGE> 35
primarily directed at the facility's wastewater treatment plant. The Board of
Directors of the Company authorized outside legal counsel to conduct an internal
corporate investigation of the matters raised by the agencies in their
investigation. In addition, the Company promptly undertook aggressive measures
to assure environmental compliance. As of December, 1998, the internal
investigation concluded that no officer or director of Newpark or the Company
participated in or had knowledge of any non-compliance. The investigation did
find some evidence of past instances of non-compliance with environmental laws
and regulations in connection with Newpark's operation and monitoring of the
facility's wastewater treatment system. A state grand jury investigation into
these matters has been ongoing since early February 1999. At this time, the
Company cannot estimate the impact that may result from enforcement action, if
any, related to the government's investigation. The Company does not believe
that any aspects of the matters described above will subject the parent company,
First Wave Marine, Inc., to criminal liability.
The Internal Revenue Service (IRS) is in the process of examining the
Company's 1996 Federal income tax return. All information requested by the
examiners has been provided. No official assessment report has been issued by
the agent. Although the outcome of the exam cannot be predicted at this time,
the Company does not anticipate any material adverse effects from the results
of this examination.
NOTE L - BENEFIT PLAN
Eligible employees of the Company participate in a 401(k) deferred
savings plan (the Plan). Under the Plan, participating employees may allocate
up to 15% of their salary and the Company, at its direction, may make
contributions to the Plan. The Company contributed approximately $89 and $39
and $42 for the years ended December 31, 1998, 1997 and 1996.
NOTE M - RELATED PARTY TRANSACTIONS
The Company's Louisiana-based employees share office space with an
entity that is owned 100% by two directors. During 1998, the Company paid
$110,000 to this entity for the use of office space, office equipment and
administrative support personnel.
In February 1998, the Board of Directors of the Company approved a
maximum $1,000 line of credit available to three employee director shareholders
of the Company. The line of credit allows borrowings of up to $600 to one of
the shareholders and up to $200 to each of the other two shareholders.
Borrowings under the line of credit bear an interest rate of 6% per annum with
interest payable annually and principal to be amortized over a ten year period
through the pro rata reduction of the line of credit commencing March 2001. At
December 31, 1998, the principal balance due on the line of credit was $715
which is included in "Deposits and other" on the consolidated balance sheet.
As discussed in "Note J - Leasing Arrangements," the Company leases an
airplane from an entity that is owned by two directors of the Company.
Three employee directors have agreed to enter into employment
agreements with the Company. The agreements provide for base salaries
aggregating $630 per year and semi-annual incentive bonuses aggregating 3% of
EBITDA. The contracts provide for a term of three years from January 1998.
Although the Company has not formally entered into these agreements, it is
operating under those terms.
The Company paid management fees to stockholders and entities related
by common ownership for the years ended December 31, 1997 and 1996 totaling
$180 and $1,346.
During 1997, the Company loaned $185 to a company related by common
ownership. The loan was due on demand and bore an interest rate of 12%.
Additionally, the Company pledged a $100 certificate of deposit to secure a
bank loan of this related company. In October 1997, when the principal balance
on the loan was $165, the Company sold the notes receivable and the certificate
of deposit to two shareholders of the Company at book value. Subsequent to the
sale, the two shareholders received a bonus equal to the amount of their
payable to the Company and receivables from the two shareholders were
eliminated.
35
<PAGE> 36
NOTE N - MAJOR CUSTOMERS
The Company had the following customers to which it had sales
exceeding 10% of total Company sales for the year ended December 31,:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Company A 11.6% (a) (a)
Company B (a) 11.0% 22.1%
Company C (a) 20.7% 15.3%
</TABLE>
- ----------------
(a) less than 10%
NOTE O - SUPPLEMENTAL CASH FLOW INFORMATION
Interest of $4,709 was paid in 1998, net of capitalized interest of
$958. Interest of $1,389 and $619 was paid in 1997 and 1996, respectively.
Income taxes of $1,575 were paid in 1998. Income tax refunds of $773
were received in 1998. Income taxes of $2,107 and $952 were paid in 1997 and
1996, respectively.
During 1997, the Company financed the purchase of assets with term
debt and notes payable in the amount of $4,730.
NOTE P - INCENTIVE EQUITY PLAN
On November 20, 1997, the Board of Directors of the Company approved
the 1997 Incentive Equity Plan. The plan provides for the issuance of a maximum
of 1,800 shares at an exercise price of not less than 100% of the fair market
value of a share of common stock of the Company at the date of grant. Certain
options under the plan provide for an annual vesting of 20% per year beginning
with the first anniversary of the date of grant. Other options under the plan
provide for an annual vesting of 33-1/3% per year beginning with the first
anniversary of the date of grant. All options under the plan provide for a term
of ten years. On December 30, 1997, through Board of Director approval, the
1997 Incentive Equity Plan was amended and became the 1997 Amended and Restated
Incentive Equity Plan.
The Company applies Accounting Principles Board Opinion 25 (APB 25)
and related Interpretations in accounting for its plan. Accordingly, no
compensation cost has been recognized for its stock option plan, as the
exercise price of all stock options granted thereunder is equal to the fair
value at the date of grant. Had compensation costs for the Company's
stock-based plan been determined based on the fair value at the grant date,
consistent with the method of Statement of Financing Accounting Standard No 123
(SFAS 123), the Company's net income and earnings per share would have been as
follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net income (loss)
As reported $ 222 $2,661
Proforma $(348) $2,658
Basic and diluted earnings per share
As reported $ 0.02 $ .25
Proforma $(0.03) $ .25
</TABLE>
The fair value of options granted in 1998 and 1997 was estimated using
the minimum value method as permitted by SFAS 123 for a nonpublic company. The
following assumptions were used for the options granted in 1998: no dividend
yield; weighted-average risk-free interest rate of 5.10%; and an expected
life of 7 1/2 years. The following assumptions were used for the options granted
in 1997: no dividend yield; risk-free interest rate of 5.725%; and an expected
life of 7 1/2 years.
36
<PAGE> 37
A summary of the status of the Company's stock option plan as of
December 31, 1998 and 1997, and changes during the years ending on those dates
is presented below:
<TABLE>
<CAPTION>
1998 1997
----------------------------- -------------------------------
Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price
--------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 1,482,201 $ 3.50 -- --
Granted 135,021 $ 2.78 1,482,201 $ 3.50
Exercised -- -- -- --
Cancelled (21,997) $ 3.50 -- --
--------- ---------
Outstanding at end of year 1,595,225 $ 3.44 1,482,201 $ 3.50
========= =========
Weighted-average fair value of
options granted during the year $ 0.90 $ 1.22
====== ======
</TABLE>
The following table summarizes information about stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------------- ----------------------------------
Weighted-Average
Number Remaining Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$2.00 64,500 9.945 $2.00 -- --
$3.50 1,530,725 9.007 $3.50 367,423 $3.50
--------- -------
1,595,225 367,423
========= =======
</TABLE>
NOTE Q - YEAR 2000
The Year 2000 issue relates to limitations in computer systems and
applications that may prevent proper recognition of the Year 2000. The
potential effect of the Year 2000 issue on the Company and its business
partners will not be fully determinable until the Year 2000 and thereafter. If
Year 2000 modifications are not properly completed either by the Company or
entities with which the Company conducts business, the Company's revenues and
financial condition could be adversely impacted.
NOTE R - SUPPLEMENTAL SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR 1998
----------------
<S> <C> <C> <C> <C>
Revenues $15,767 $21,379 $25,460 $19,416
Gross profit 5,585 7,630 8,163 3,339
Income from operations 1,881 3,895 3,696 1,018
Income before extraordinary item 72 911 788 (616)
Net income (loss) (861) 911 788 (616)
Basic and diluted earnings per share:
Income (loss) before extraordinary item $0.01 $0.08 $0.07 $ (0.05)
Net income (loss) (0.07) 0.08 0.07 (0.05)
Weighted-average shares:
Basic and diluted 11,757 11,757 11,757 11,757
</TABLE>
37
<PAGE> 38
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR 1997
----------------
<S> <C> <C> <C> <C>
Revenues $ 8,925 $ 8,016 $ 7,525 $10,150
Gross profit 3,645 3,803 2,688 4,528
Income from operations 1,832 2,809 1,552 1,034
Income before extraordinary item 755 1,277 508 121
Net income 755 1,277 508 121
Basic and diluted earnings per share:
Income before extraordinary item $ 0.07 $ 0.12 $ 0.05 $ 0.01
Net income 0.07 0.12 0.05 0.01
Weighted-average shares:
Basic and diluted 10,650 10,650 10,651 10,768
</TABLE>
Interest capitalized on self-constructed assets was adjusted to actual
in the fourth quarter of 1998, resulting in an increase to net earnings of
approximately $207.
38
<PAGE> 39
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's Board of Directors currently has five directors. In
accordance with the Certificate of Incorporation of the Company (the
"Charter"), the members of the Board of Directors are divided into three
classes and are elected for a term of three years, or until a successor is duly
elected and qualified. The terms of office of the Class I, Class II and Class
III directors expire at the annual meeting of stockholders to be held in 2001,
1999 and 2000, respectively. All officers serve at the discretion of the Board
of Directors.
The following table sets forth certain information with respect to the
Company's executive officers and directors.
<TABLE>
<S> <C>
Samuel F. Eakin 44 Chairman of the Board, Chief Executive Officer (a)
Frank W. Eakin 38 President and Chief Operating Officer, Director (b)
David B. Ammons 48 Executive Vice President, Chief Financial Officer,
Secretary, Treasurer, Director (b)
James D. Cole 57 Director (c)
Paul E. O'Neill, II 48 Director (c)
Joseph O'Toole 65 Executive Vice President-Operations
Suzanne B. Kean 42 Vice President and General Counsel
Dale E. Schexnayder 33 Corporate Controller
</TABLE>
-------------------
(a) Class III Director
(b) Class II Director
(c) Class I Director
Set forth below is a description of the backgrounds of each of the
executive officers and directors of the Company:
Samuel F. Eakin has served as Chairman of the Board and Chief
Executive Officer of the Company since December 1993 and has been an investor
and energy sector advisor since the 1970s. From 1976 to 1980, Mr. Eakin advised
E.F. Hutton, the U.S. Department of Energy and other governmental agencies and
major corporations on energy issues. From 1980 to 1986, he negotiated mergers
and acquisitions of Gulf Coast companies on behalf of private investors and
corporations. In 1987, he founded Eakin & Co. for the purpose of acquiring
distressed companies and restructuring complex credits and continues to be a
principal in that company. Mr. Eakin is the brother of Frank W. Eakin,
President of the Company.
Frank W. Eakin has served as President, Chief Operating Officer and
Director of the Company since October 1997. Prior to that he served as
President of Newpark Shipbuilding--Brady Island, Inc. and has been in charge of
daily operations since December 1993. In 1989 Mr. Eakin became a principal in
Eakin & Co., with merger and acquisition responsibilities. Mr. Eakin left that
company in 1994 to dedicate his full energies and focus to managing the Brady
Island shipyard operations. From 1983 to 1989, he founded and operated a
successful international food processing and distribution company. Mr. Eakin is
the brother of Samuel F. Eakin, Chairman of the Company.
David B. Ammons has served as Executive Vice President, Chief
Financial Officer, Secretary and Director of the Company since December 1993.
Mr. Ammons is a Certified Public Accountant with a background in public
accounting and has owned and operated several businesses. In 1987, Mr. Ammons
became a principal in Eakin & Co. and continues to serve in that capacity.
James D. Cole has served as a Director of Newpark Shipbuilding--Brady
Island, Inc., a subsidiary of the Company since late 1993. Mr. Cole is the
Chairman of the Board, President and a Director of Newpark Resources, Inc.,
39
<PAGE> 40
an unaffiliated public company listed on the New York Stock Exchange. He has
served in various positions in that company since 1976.
Paul E. O'Neill, II has served as a Director of the Company since
October 1997. Mr. O'Neill is President, Director and Chief Operating Officer of
Acadian Group, Ltd., a holding company formed in 1996 to oversee various
construction and service companies. Prior to joining Acadian Group, Ltd., Mr.
O'Neill served for two years as President and four years as a Director of C-K
Associates, Inc., a regional Gulf Coast environmental engineering and
consulting firm. Mr. O'Neill spent 17 years in various positions, including
Vice President and General Manager with TEAM, Inc., a public company listed on
the American Stock Exchange, which provides various industrial and
environmental services in the U.S. and 13 foreign countries.
Joseph P. O'Toole has served as Executive Vice President-Operations of
the Company since October 1997. Mr. O'Toole joined the Company as Repair
Manager in 1990 and has served as Executive Vice President-Operations of
Newpark Shipbuilding--Brady Island, Inc. since 1994. Mr. O'Toole's career in
marine fabrication spans over forty years, punctuated with long periods at
large blue water shipyards including General Dynamics' Quincy, Massachusetts
shipyard and Electric Boat Division. He has held senior positions with Marathon
LeTourneau's Gulf Marine Division shipyard in Brownsville, Texas and Pyramid
Manufacturing in Houston, Texas. Mr. O'Toole has been responsible for managing
large shipyard operations and has supervised major projects such as
construction of semisubmersible rigs, commercial and naval ships and nuclear
submarines.
Suzanne B. Kean has served as Vice President and General Counsel of
the Company since October 1998. Ms. Kean served as a shareholder and director
of Griggs & Harrison, P.C., a Houston law firm, from 1987 through September
1998. Ms. Kean was employed as an associate with Griggs & Harrison from 1981
through 1987.
Dale E. Schexnayder joined the Company in December 1997 as Corporate
Controller. Prior to joining the Company, Mr. Schexnayder was employed as an
auditor by Deloitte & Touche LLP from 1988 through December 1997. In 1996 he
was promoted to Audit Senior Manager at Deloitte & Touche LLP. Mr. Schexnayder
is a certified public accountant.
COMMITTEES AND MEETINGS OF DIRECTORS
The standing committees of the Board of Directors of the Company
include an Executive Committee and an Audit Committee. The function of each of
these two committees is described and the members of each are listed below.
Messrs. O'Neill, Cole and Ammons are the current members of the
Company's Audit Committee. The Audit Committee makes recommendations to the
Board concerning the selection and discharge of the Company's independent
auditors, reviews professional services performed by the auditors, the results
of their audit engagement and the fees charged for services performed by the
auditors and evaluates the Company's system of internal accounting controls.
Messrs. S. Eakin, F. Eakin and Ammons are the current members of the
Executive Committee, which acts on behalf of the Board of Directors between
regularly scheduled meetings of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Paul E. O'Neill, President and Director of Acadian Group, Ltd., serves
on the Board of Directors of the Company which Board determines the
compensation for the executive officers of the Company, including David B.
Ammons and Samuel F. Eakin. Messrs. S. Eakin and Ammons serve on the Board of
Directors of Acadian Group, Ltd. which Board determines the compensation of Mr.
O'Neill.
ITEM 11. DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
Director Compensation. Directors who are employees of the Company are
not entitled to receive additional compensation for serving as directors. Each
non-employee director of the Company is paid $1,000 for each meeting of the
Board of Directors he attends, $500 for each telephonic meeting participated
in, and $500 for each committee meeting he attends which does not fall on the
same day as a Board of Directors meeting. In addition, a $1,250 retainer is
paid to each non-employee director of the Company for each quarter of the year
in which such director serves as a director, plus such director's direct
out-of-pocket expenses for attendance at meetings. Total compensation paid in
1998
40
<PAGE> 41
to the non-employee directors, including directors' fees and retainers was
$7,500 for Mr. Cole and $8,500 for Mr. O'Neill.
Executive Officer Compensation. The following table sets forth the
aggregate compensation for each of the Company's last three fiscal years of (i)
the Company's chief executive officer and (ii) for the four most highly
compensated executive officers of the Company whose total annual salary during
1998 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
------------------------------------------------
NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (a) COMPENSATION(b)(c)
- ------------------ ---- --------- --------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Samuel F. Eakin 1998 $ 250,000 $ 169,000 $18,755
Chief Executive 1997 153,000 370,000 13,275
Officer 1996 96,000 200,000 12,965
Frank W. Eakin 1998 200,000 135,000 3,540
President and Chief 1997 154,000 275,000 2,040
Operating Officer 1996 134,000 135,000 1,839
David B. Ammons 1998 180,000 122,000 5,300
Executive Vice President, 1997 125,000 190,000 4,220
Chief Financial Officer 1996 88,000 125,000 3,691
Joseph O'Toole 1998 108,000 35,000 9,035
Executive Vice President- 1997 90,000 33,000 1,852
Operations 1996 90,000 33,000 1,852
</TABLE>
(a) Other annual compensation excludes perquisites and other benefits
because the aggregate amount of such compensation was less than 10% of
the combined total for salary and bonus.
(b) Amounts shown in this column for the last fiscal year include
matching contributions made by the Company pursuant to its 401(k)
savings plan of $1,080, $1,080 and $1,300 for Messrs. S. Eakin, Ammons
and O'Toole, respectively, and premiums associated with a term life
insurance policy of $13,275, $2,040, $4,220 and $3,835 for Messrs. S.
Eakin, F. Eakin, Ammons and O'Toole, respectively.
(c) Amounts shown in this column for the last fiscal year include $4,400,
$1,500 and $3,900 for a car allowance for Messrs. S. Eakin, F. Eakin
and O'Toole, respectively.
EMPLOYMENT AGREEMENTS
The Company previously had agreed to enter into employment agreements
with Messrs. S. Eakin, F. Eakin and Ammons which would provide for annual base
salaries of $250,000, $200,000 and $180,000, respectively. The employment
agreements will provide for semi-annual incentive bonuses equal to 1.19%, 0.95%
and 0.86% of semi-annual EBITDA for Messrs. S. Eakin, F. Eakin and Ammons,
respectively. The employment agreements will also provide for payment of
premiums of $12,965, $1,839 and $3,691 annually for term life insurance
policies for Messrs. S. Eakin, F. Eakin and Ammons, respectively. The contracts
will provide for a term of three years from January 1998, with three months
severance upon termination by the Company without cause. Although the Company
has not formally entered into these agreements, it is operating under those
terms. The terms of the employment agreements between Messrs. S. Eakin, F.
Eakin and Ammons, respectively, cannot be considered to have been determined
through arms-length negotiations.
CASH BONUS PLANS
The Company has approved the payment of bonuses to key employees of
the Company for 1999 under several different bonus plans and formulas.
Generally, bonuses paid to vice presidents of the Company and its subsidiaries
are at the discretion of the Board of Directors. Repair services
superintendents, gas free services superintendents and certain managers are
also paid cash bonus compensation based on a formula which includes the
following factors
41
<PAGE> 42
(i) productivity/quality, (ii) customer relations, (iii) environmental, safety
and work rules compliance, (iv) goals and (v) leadership. The Director of
Safety and his assistant earn bonuses based on the Company's safety and claims
performance. The Company also pays discretionary bonuses to its non-executive
employees based upon project performance.
RETIREMENT PLAN
The Company has adopted a 401(k) plan for its employees. Employees are
eligible to participate in the plan after six months of service with the
Company, provided they work at least 1,000 hours during that first year and are
at least 21 years of age. Under the plan, eligible employees are permitted to
contribute up to 15% of compensation. The plan provides that the Company will
match an amount equal to a percentage set by the Company of up to 6% of an
employee's contribution prior to the end of each calendar year. The Company is
also permitted to make qualified non-elective and discretionary contributions
in proportion to each eligible employee's compensation as a ratio of the
aggregate compensation of all eligible employees. The amounts held under the
plan are invested in investment funds maintained under the plan in accordance
with the directions of each participant.
All employee contributions are immediately 100% vested. Contributions
by the Company vest at a rate of 10% beginning one year after the anniversary
date of employment, an additional 10% after year two and 20% each additional
year thereafter. Upon attaining age 65, participants are automatically 100%
vested, even with respect to Company contributions. Subject to certain
limitations imposed under the Internal Revenue Code, participants or their
designated beneficiaries are entitled to payment of vested benefits upon
termination of employment. On attaining age 65, participants are entitled to
distribution of the full value of their benefits even if they continue to be
employed by the Company. Such employees also have the option of deferring
payment until April 1 following the year they attain the age of 70 1/2. In
addition, hardship and other in-service distributions and loans to participants
from the plan are available under certain circumstances and subject to certain
conditions. The amount of benefits ultimately payable to a participant under
the plan depends on the level of the participant's salary deferral
contributions under the plan, the amount of Company discretionary and matching
contributions made to the plan and the performance of the investment funds
maintained under the plan in which participants are invested.
AMENDED AND RESTATED 1997 PLAN
The Board of Directors of the Company has adopted an Incentive Equity
Plan for employees. The Amended and Restated 1997 Incentive Equity Plan (the
"1997 Plan") permits the granting of any or all of the following types of
awards ("Awards"): stock appreciation rights, stock options and restricted
stock. Under the 1997 Plan, all officers and employees of the Company, or any
affiliates of the Company, are eligible for participation in all Awards.
An aggregate of 1,800,000 shares of Common Stock have been authorized
and reserved for issuance pursuant to the 1997 Plan. At December, 31, 1998,
options to purchase an aggregate of 1,595,225 shares of Common Stock have been
granted under the 1997 Plan, at varying exercise prices based upon the fair
market value determined by the Board of Directors on the date of grant. The
1997 Plan is administered by the entire Board of Directors. The 1997 Plan
contains appropriate provisions to assure that it complies with the provisions
of Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules promulgated thereunder. The Board of Directors, as a whole, will
have sole authority to select employees who are to be granted Awards, as well
as the amount, type and terms of the Awards to be granted. The Board of
Directors, as a whole, will be authorized to interpret the 1997 Plan. All
decisions made by the Board of Directors, as a whole, in selecting employees
for Awards are final.
42
<PAGE> 43
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth, as of March 1, 1999, the number and
percentage of shares of common stock beneficially owned by each of the
Company's directors, each executive officer named in the Summary Compensation
Table and all directors and officers as a group.
<TABLE>
<CAPTION>
NO. OF SHARES BENEFICIALLY
NAME OWNED AS OF MARCH 31, 1999(a)(b) PERCENT OF CLASS
---- -------------------------------- ----------------
<S> <C> <C>
Samuel F. Eakin........................ 6,514,539 55.4%
David B. Ammons........................ 2,211,513(c)(d) 18.8%
Frank W. Eakin......................... 2,211,513(e) 18.8%
Joseph O'Toole......................... 203,065 2%
All directors and officers as
a group (6 persons)................. 11,140,630 94.7%
</TABLE>
(a) Unless otherwise indicated below, the persons listed have sole voting
and investment power with respect to their shares of common stock.
(b) The amounts in this column include the following shares of common
stock considered to be beneficially owned through the holders' ability
to exercise stock options for such shares: Messrs. S. Eakin 60,000
shares, F. Eakin 60,000 shares, Ammons 60,000 shares and O'Toole
35,272 shares.
(c) This amount includes 9,872 shares of common stock beneficially owned
by Mr. Ammons' wife, 5,714 shares of common stock beneficially owned
by Mr. Ammons' wife, as custodian for David B. Ammons II, and 5,714
shares of common stock beneficially owned by Mr. Ammons' wife, as
custodian for Blake A. Ammons. Mr. Ammons disclaims any beneficial
interest in the shares owned by his wife individually and such shares
owned by his wife as custodian for his children.
(d) This amount includes 777,800 shares owned by a Louisiana Limited
Liability Company in which Mr. Ammons controls. Mr. Ammons has sole
voting and investment power with respect to all such shares.
(e) This amount includes 5,714 shares of common stock beneficially owned
by Mr. F. Eakin's wife, as custodian for Amanda C. Eakin. Mr. F. Eakin
disclaims any beneficial interest in shares owned by his wife as
custodian for his daughter.
ITEM 13. CERTAIN TRANSACTIONS
In February 1998, the Board of Directors of the Company approved a
maximum $1,000,000 line of credit available to three employee director
shareholders of the Company. The line of credit allows borrowings of up to
$600,000 to Mr. S. Eakin and up to $200,000 to each of Messrs. F. Eakin and
Ammons. Borrowings under the line of credit bear an interest rate of 6% per
annum with interest payable annually and principal to be amortized over a ten
year period through the pro rata reduction of the line of credit commencing
March 2001. At December 31, 1998, $384,510, $200,000 and $130,000 were
outstanding from Messrs. S. Eakin, F. Eakin and Ammons, respectively.
The Company's Louisiana-based employees share office space with Eakin
& Co. ("Eakin-Co"), an affiliated company owned 80% by Samuel F. Eakin and 20%
by David B. Ammons. During 1998, the Company paid $110,000 to Eakin-Co for use
of office space, office equipment and administrative support personnel.
The Company paid management fees to Eakin-Co in 1996, 1997 and 1998 of
$177,000, 195,000 and $30,000. These fees were paid pursuant to an
understanding between the Company and Eakin-Co under which Eakin-Co provided
financial advisory services to the Company for a monthly fee of $20,000 up to
early 1996. The fee was reduced to $15,000 per month in mid-1996. The Company
ceased payment of monthly management fees to Eakin-Co in March 1998.
At December 31, 1998, the Company had outstanding indebtedness owed to
Newpark Resources, an unrelated corporation, in the amount of $7.1 million.
James D. Cole, a director of the Company is the Chief Executive Officer and
Chairman of the Board of Newpark Resources.
Samuel F. Eakin is the guarantor of one of the credit facilities of
the Company. Mr. S. Eakin is also the guarantor of the notes payable to Newpark
Resources.
The Company paid SFA $32,500 and $7,500 in 1998 and 1997 in payments
under a demand promissory note in the original principal amount of $230,000
bearing interest at 7% per annum.
In August 1997, Samuel F. Eakin and David B. Ammons formed a limited
liability company which owns a Cessna 310 twin engine airplane. The Company
leases the airplane from such entity at a market lease rate of $5,000 per
43
<PAGE> 44
month. In addition, under the lease agreement, the Company is required to
maintain the airplane in good working condition, to pay all operating expenses
related to the airplane and to maintain insurance on the airplane. The lease
agreement has a term of five years. The Company believes that the terms of such
agreement are no less favorable than the Company could have received from an
unrelated party. The Company adopted a policy which requires an individual to
reimburse the Company for the Company's direct costs resulting from any trip on
the airplane for personal use.
The Company was the payee under two promissory notes from J.B. Talley
& Co., Inc. a company owned indirectly by Samuel F. Eakin and David B. Ammons,
each dated March 1997 in the original principal amounts of $100,000 and
$85,000, respectively. The Company also had pledged collateral in the amount of
$100,000 to secure a bank loan to such affiliated company. The aggregate
outstanding balances on the notes at October 1997 were $165,000. In October
1997, Samuel F. Eakin and David B. Ammons purchased the promissory notes and
collateral from the Company in exchange for demand notes to the Company in the
aggregate amount of $265,000. The Company subsequently bonused the notes to
such shareholders as additional compensation in 1997.
The Company paid management fees to SFA Industries, Inc. ("SFA"), an
affiliated company, the Common Stock of which is owned 60% by Samuel F. Eakin,
20% by Frank W. Eakin and 20% by David B. Ammons, in 1996 of $218,000. The fees
paid to SFA were also paid pursuant to an understanding between the Company and
SFA under which SFA provided insurance benefits from a consolidation of the
Company's insurance plans which fees were billed to the Company on a monthly
basis.
In August 1996, the Company paid Eakin-Co a fee of $110,000 for
arranging a senior credit facility in connection with the Company's purchase of
the Brady Island assets.
In 1996, the Company paid SFA the final nonrecurring fee of $700,000
related to a reduction in costs resulting from a consolidation of the Company's
insurance plans.
The Company paid management fees of $251,000 in 1996 to NLCH
Consultants, Ltd. ("NLCH"), an affiliated company owned 48% by Samuel F. Eakin,
16% by Frank W. Eakin and 16% by David B. Ammons. These fees were paid pursuant
to an understanding between the Company and NLCH under which NLCH provided
certain financial advisory services to the Company in 1996.
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements of the
Company are included in Item 8.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statement of Stockholders' Equity for the years
ended December 31, 1996, 1997 and 1998
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
44
<PAGE> 45
(b) REPORTS ON FORM 8-K
None
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
2.1 Stock Exchange Agreement dated as of October 16, 1997 between the Exhibit 2.1 to Form S-1 Registration
Company and certain shareholders of Newpark Shipbuilding and Repair, Statement No. 333-38157, filed
Inc. January 26, 1998
2.2 Distribution of Stock Agreement between John Bludworth Marine, Inc. Exhibit 2.1 to Company's Quarterly
(now known as Newpark Shipbuilding--Pasadena, Inc.), EAE Services, Report on Form 10-Q for period ending
Inc., First Wave Marine, Inc., and Newpark Marine Fabricators, Inc. June 30, 1998, filed on August 13,
(now known as Newpark Shipbuilding-Pelican Island, Inc.), dated as of 1998
July 29, 1998.
2.3 Articles of Merger of Bludworth Shipyard and Fabrication, Inc. into Exhibit 2.2 to Company's Quarterly
Newpark Marine Fabricators, Inc.(now known as Newpark Report on Form 10-Q for period ending
Shipbuilding-Pelican Island, Inc.), effective as of August 6, 1998. June 30, 1998, filed on August 13,
1998
3.1 Certificate of Incorporation of the Company Exhibit 3.1 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.2 Bylaws of the Company Exhibit 3.2 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.3 Articles of Incorporation Newpark Shipbuilding and Repair, Inc. Exhibit 3.13 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.3.1 Articles of Amendment dated February 3, 1994 to the Articles of Exhibit 3.14 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.2 Articles of Amendment dated April 25, 1994 to the Articles of Exhibit 3.15 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.3 Articles of Amendment dated August 29, 1996 to the Articles of Exhibit 3.17 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.4 Articles of Amendment to the Articles of Incorporation of Newpark Exhibit 3.3 to Company's Quarterly
Shipbuilding and Repair, Inc. now known as Newpark Report on Form 10-Q for period ending
(Shipbuilding-Brady Island, Inc.), effective as June 30, 1998, filed on August 13, 1998
of August 7, 1998.
3.4 Amended and Restated Bylaws of Newpark Shipbuilding and Repair, Inc. Exhibit 3.16 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<S> <C> <C>
3.5 Articles of Incorporation of Louisiana Ship, Inc. Exhibit 3.3 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.5.1 Articles of Amendment to the Articles of Incorporation of Louisiana Exhibit 3.4 to Form S-1 Registration
Ship, Inc. Statement No. 333-38157, filed
January 26, 1998
3.5.2 Articles of Amendment to the Articles of Incorporation of Exhibit 3.1 to Company's Quarterly
Louisiana Ship, Inc. (now known as Newpark Report on Form 10-Q for period ending
Shipbuilding-Greens Bayou, Inc.), effective as of August 7, 1998. June 30, 1998, filed on August 13, 1998
3.6 Amended and Restated Bylaws of Louisiana Ship, Inc. Exhibit 3.5 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.7 Articles of Incorporation of EAE Services, Inc. Exhibit 3.6 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.8 Bylaws of EAE Services, Inc. Exhibit 3.7 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.9 Articles of Incorporation of EAE Industries, Inc. Exhibit 3.8 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.10 Articles of Amendment to the Articles of Incorporation of EAE Exhibit 3.9 to Form S-1 Registration
Industries, Inc. Statement No. 333-38157, filed
January 26, 1998
3.11 Amended and Restated Bylaws of EAE Industries, Inc. Exhibit 3.10 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.12 Articles of Incorporation of Newpark Marine Fabricators, Inc. Exhibit 3.11 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.12.1 Articles of Amendment to the Articles of Incorporation of Newpark Exhibit 3.2 to Company's Quarterly
Marine Fabricators, Inc. (now known as Newpark Shipbuilding-Pelican Report on Form 10-Q for period ending
Island, Inc.), effective as of August 7, 1998. June 30, 1998, filed on August 13,
1998
3.13 Bylaws of Newpark Marine Fabricators, Inc. (now known as Newpark Exhibit 3.12 to Form S-1 Registration
Shipbuilding-Pelican Island, Inc.) Statement No. 333-38157, filed
January 26, 1998
3.14 Articles of Incorporation of John Bludworth Marine, Inc. Filed herewith
(now known as Newpark Shipbuilding-Pasadena, Inc.)
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
3.14.1 Articles of Amendment to the Articles of Incorporation of John Filed herewith
Bludworth Marine, Inc. (now known as Newpark Shipbuilding-Pasadena,
Inc.), effective as of August 7, 1998.
3.15 Bylaws of John Bludworth Marine, Inc. (now known as Newpark Filed herewith
Shipbuilding-Pasadena, Inc.)
3.16 Certificate of Incorporation of FirstWave Management, Inc. Filed herewith
3.17 Bylaws of FirstWave Management, Inc. Filed herewith
4.1 Indenture between First Wave Marine, Inc., as Issuer and Newpark Exhibit 4.1 to Company's Quarterly
Shipbuilding and Repair, Inc. (now known as Newpark Shipbuilding-Brady Report on Form 10-Q for period ending
Island, Inc.), EAE Services, Inc., EAE Industries, Inc., Newpark June 30, 1998 filed on August 13, 1998
Marine Fabricators, Inc. (now known as Newpark Shipbuilding-Pelican
Island, Inc.) and Louisiana Ship, Inc. (now known as Newpark
Shipbuilding-Greens Bayou, Inc.), as Subsidiary Guarantors and Bank
One, N.A., as Trustee, dated as of February 2, 1998.
4.1.1 First Supplemental Indenture between First Wave Marine, Inc., as Exhibit 4.3 to Company's Quarterly
Issuer, Subsidiary Guarantors named therein and Report on Form 10-Q for period ending
Bank One, N.A., as Trustee, dated as of February 3, 1998 June 30, 1998 filed on August 13, 1998
4.1.2 Second Supplemental Indenture between First Wave Marine, Inc., as Exhibit 4.3 to Company's Quarterly
Issuer, Subsidiary Guarantors named therein and Report on Form 10-Q for period ending
Bank One, N.A., as Trustee, dated as of May 18, 1998. June 30, 1998 filed on August 13, 1998
4.1.3 Third Supplemental Indenture between First Wave Marine, Inc., as Filed herewith
Issuer, Subsidiary Guarantors named therein and Bank One, N.A., as
Trustee, dated as of December 11, 1998.
10.1 Stock Purchase Agreement dated October 15, 1997 between the Company Exhibit 10.1 to Form S-1 Registration
and John L. Bludworth, III et al. Statement No. 333-38157, filed
January 26, 1998
10.1.1 First Amendment to Stock Purchase Agreement dated October 17, 1997 Exhibit 10.5 to Form S-1 Registration
between the Company and John L. Bludworth, III et al. Statement No. 333-38157, filed
January 26, 1998
10.1.2 Second Amendment to Stock Purchase Agreement dated January 30, Exhibit 2.3 to the Company's Current
1998 between the Company and John L. Bludworth, III et al. report on Form 8-K, as filed until
the Commission on February 13, 1998
10.2 Amended and Restated Lease and Development Agreement between the Board Exhibit 10.2 to Form S-1 Registration
of Trustees of the Galveston Wharves as Lessor and Newpark Marine Statement No. 333-38157, filed
Fabricators, Inc. as Lessee and PM Engineering, Inc. as Assignor dated January 26, 1998
October 17, 1997 and effective the first day of November 1997.
10.3 Assignment and Assumption of Lease from PMB Engineering, Inc. as Exhibit 10.3 to Form S-1 Registration
Assignor and Newpark Marine Fabricators, Inc. as Assignee effective Statement No. 333-38157, filed
the first day of November 1997. January 26, 1998
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
10.4 Attornment Agreement by and between Newpark Marine Fabricators, Inc., Exhibit 10.7 to Form S-1 Registration
The Board of Trustees of the Galveston Wharves and The City of Statement No. 333-38157, filed
Galveston dated effective as of November 1, 1997. January 26, 1998
10.5 Amended and Restated 1997 Incentive Equity Plan effective as of Exhibit 10.8 to Form S-1 Registration
December 30, 1997. Statement No. 333-38157, filed
January 26, 1998
10.6 Form of Stock Option Agreement for certain options granted by the Exhibit 10.9 to Form S-1 Registration
Company to Messrs. S. Eakin, F. Eakin and D. Ammons dated December 30, Statement No. 333-38157, filed
1997 January 26, 1998
10.7 Form of Stock Option Agreement for certain options granted by the Exhibit 10.10 to Form S-1
company to certain executives and other employees dated December 30, Registration Statement No. 333-38157,
1997 filed January 26, 1998
10.8 Pledge and Security Agreement between First Wave Marine, Inc. and Bank Exhibit 10.1 to Company's Quarterly
One, N.A., as Pledge Agent and Trustee, dated as of February 2, 1998. Report on Form 10-Q for period ending
June 30, 1998, filed on August 13,
1998
10.9 Promissory Note of Samuel F. Eakin Exhibit 10.1 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.10 Promissory Note of Frank W. Eakin Exhibit 10.2 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.11 Promissory Note of David B. Ammons Exhibit 10.3 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.12 Sale and Purchase Agreement between FW Marine Properties, Inc. (now Exhibit 2.1 to the Company's Current
known as Newpark Shipbuilding-Galveston Island, Inc.) and Galveston Report on Form 8-K, as filed with the
Shipbuilding Company, dated as of May 1, 1998. Commission May 29, 1998
10.13 Credit Agreement between First Wave Marine, Inc., as Borrower, Exhibit 10.3 to Company's Quarterly
each of the banks or lending institutions from time to time party Report on Form 10-Q for period ending
thereto, as Banks and Southwest Bank of Texas, N.A., as Agent, June 30, 1998, filed on August 13, 1998.
dated as of June 9,1998.
21.1 Subsidiaries of Registrant Filed herewith
27.1 Financial Data Schedule Filed herewith
</TABLE>
48
<PAGE> 49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIRST WAVE MARINE, INC.
By: /s/ Suzanne B. Kean
-------------------------------------------
Suzanne B. Kean
Vice President and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Samuel F. Eakin
- --------------------------------
Samuel F. Eakin Chairman of the Board, Chief Executive Officer March 18, 1999
and Director (Principal Executive Officer)
/s/ Frank W. Eakin
- --------------------------------
Frank W. Eakin President, Chief Operating Officer March 18, 1999
and Director
/s/ David B. Ammons
- --------------------------------
David B. Ammons Executive Vice President, Chief March 18, 1999
Financial Officer, Secretary and Director
(Principal Financial Officer)
/s/ Dale E. Schexnayder
- --------------------------------
Dale E. Schexnayder Corporate Controller March 18, 1999
(Principal Accounting Officer)
/s/ James D. Cole
- --------------------------------
James D. Cole Director March 18, 1999
/s/ Paul E. O'Neill, II
- --------------------------------
Paul E. O'Neill, II Director March 18, 1999
</TABLE>
49
<PAGE> 50
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
No Annual Report or proxy material has been sent to security holders.
50
<PAGE> 51
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
2.1 Stock Exchange Agreement dated as of October 16, 1997 between the Exhibit 2.1 to Form S-1 Registration
Company and certain shareholders of Newpark Shipbuilding and Repair, Statement No. 333-38157, filed
Inc. January 26, 1998
2.2 Distribution of Stock Agreement between John Bludworth Marine, Inc. Exhibit 2.1 to Company's Quarterly
(now known as Newpark Shipbuilding--Pasadena, Inc.), EAE Services, Report on Form 10-Q for period ending
Inc., First Wave Marine, Inc., and Newpark Marine Fabricators, Inc. June 30, 1998, filed on August 13,
(now known as Newpark Shipbuilding-Pelican Island, Inc.), dated as of 1998
July 29, 1998.
2.3 Articles of Merger of Bludworth Shipyard and Fabrication, Inc. into Exhibit 2.2 to Company's Quarterly
Newpark Marine Fabricators, Inc.(now known as Newpark Report on Form 10-Q for period ending
Shipbuilding-Pelican Island, Inc.), effective as of August 6, 1998. June 30, 1998, filed on August 13,
1998
3.1 Certificate of Incorporation of the Company Exhibit 3.1 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.2 Bylaws of the Company Exhibit 3.2 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.3 Articles of Incorporation Newpark Shipbuilding and Repair, Inc. Exhibit 3.13 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.3.1 Articles of Amendment dated February 3, 1994 to the Articles of Exhibit 3.14 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.2 Articles of Amendment dated April 25, 1994 to the Articles of Exhibit 3.15 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.3 Articles of Amendment dated August 29, 1996 to the Articles of Exhibit 3.17 to Form S-1 Registration
Incorporation of Newpark Shipbuilding and Repair, Inc. Statement No. 333-38157, filed
January 26, 1998
3.3.4 Articles of Amendment to the Articles of Incorporation of Newpark Exhibit 3.3 to Company's Quarterly
Shipbuilding and Repair, Inc. now known as Newpark Report on Form 10-Q for period ending
(Shipbuilding-Brady Island, Inc.), effective as June 30, 1998, filed on August 13, 1998
of August 7, 1998.
3.4 Amended and Restated Bylaws of Newpark Shipbuilding and Repair, Inc. Exhibit 3.16 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
</TABLE>
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<S> <C> <C>
3.5 Articles of Incorporation of Louisiana Ship, Inc. Exhibit 3.3 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.5.1 Articles of Amendment to the Articles of Incorporation of Louisiana Exhibit 3.4 to Form S-1 Registration
Ship, Inc. Statement No. 333-38157, filed
January 26, 1998
3.5.2 Articles of Amendment to the Articles of Incorporation of Exhibit 3.1 to Company's Quarterly
Louisiana Ship, Inc. (now known as Newpark Report on Form 10-Q for period ending
Shipbuilding-Greens Bayou, Inc.), effective as of August 7, 1998. June 30, 1998, filed on August 13, 1998
3.6 Amended and Restated Bylaws of Louisiana Ship, Inc. Exhibit 3.5 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.7 Articles of Incorporation of EAE Services, Inc. Exhibit 3.6 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.8 Bylaws of EAE Services, Inc. Exhibit 3.7 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.9 Articles of Incorporation of EAE Industries, Inc. Exhibit 3.8 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.10 Articles of Amendment to the Articles of Incorporation of EAE Exhibit 3.9 to Form S-1 Registration
Industries, Inc. Statement No. 333-38157, filed
January 26, 1998
3.11 Amended and Restated Bylaws of EAE Industries, Inc. Exhibit 3.10 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.12 Articles of Incorporation of Newpark Marine Fabricators, Inc. Exhibit 3.11 to Form S-1 Registration
Statement No. 333-38157, filed
January 26, 1998
3.12.1 Articles of Amendment to the Articles of Incorporation of Newpark Exhibit 3.2 to Company's Quarterly
Marine Fabricators, Inc. (now known as Newpark Shipbuilding-Pelican Report on Form 10-Q for period ending
Island, Inc.), effective as of August 7, 1998. June 30, 1998, filed on August 13,
1998
3.13 Bylaws of Newpark Marine Fabricators, Inc. (now known as Newpark Exhibit 3.12 to Form S-1 Registration
Shipbuilding-Pelican Island, Inc. Statement No. 333-38157, filed
January 26, 1998
3.14 Articles of Incorporation of John Bludworth Marine, Inc. Filed herewith
(now known as Newpark Shipbuilding-Pasadena, Inc.)
</TABLE>
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
3.14.1 Articles of Amendment to the Articles of Incorporation of John Filed herewith
Bludworth Marine, Inc. (now known as Newpark Shipbuilding-Pasadena,
Inc.), effective as of August 7, 1998.
3.15 Bylaws of John Bludworth Marine, Inc. (now known as Newpark Filed herewith
Shipbuilding-Pasadena, Inc.)
3.16 Certificate of Incorporation of FirstWave Management, Inc. Filed herewith
3.17 Bylaws of FirstWave Management, Inc. Filed herewith
4.1 Indenture between First Wave Marine, Inc., as Issuer and Newpark Exhibit 4.1 to Company's Quarterly
Shipbuilding and Repair, Inc. (now known as Newpark Shipbuilding-Brady Report on Form 10-Q for period ending
Island, Inc.), EAE Services, Inc., EAE Industries, Inc., Newpark June 30, 1998 filed on August 13, 1998
Marine Fabricators, Inc. (now known as Newpark Shipbuilding-Pelican
Island, Inc.) and Louisiana Ship, Inc. (now known as Newpark
Shipbuilding-Greens Bayou, Inc.), as Subsidiary Guarantors and Bank
One, N.A., as Trustee, dated as of February 2, 1998.
4.1.1 First Supplemental Indenture between First Wave Marine, Inc., as Exhibit 4.3 to Company's Quarterly
Issuer, Subsidiary Guarantors named therein and Report on Form 10-Q for period ending
Bank One, N.A., as Trustee, dated as of February 3, 1998 June 30, 1998 filed on August 13, 1998
4.1.2 Second Supplemental Indenture between First Wave Marine, Inc., as Exhibit 4.3 to Company's Quarterly
Issuer, Subsidiary Guarantors named therein and Report on Form 10-Q for period ending
Bank One, N.A., as Trustee, dated as of May 18, 1998. June 30, 1998 filed on August 13, 1998
4.1.3 Third Supplemental Indenture between First Wave Marine, Inc., as Filed herewith
Issuer, Subsidiary Guarantors named therein and Bank One, N.A., as
Trustee, dated as of December 11, 1998.
10.1 Stock Purchase Agreement dated October 15, 1997 between the Company Exhibit 10.1 to Form S-1 Registration
and John L. Bludworth, III et al. Statement No. 333-38157, filed
January 26, 1998
10.1.1 First Amendment to Stock Purchase Agreement dated October 17, 1997 Exhibit 10.5 to Form S-1 Registration
between the Company and John L. Bludworth, III et al. Statement No. 333-38157, filed
January 26, 1998
10.1.2 Second Amendment to Stock Purchase Agreement dated January 30, Exhibit 2.3 to the Company's Current
1998 between the Company and John L. Bludworth, III et al. report on Form 8-K, as filed until
the Commission on February 13, 1998
10.2 Amended and Restated Lease and Development Agreement between the Board Exhibit 10.2 to Form S-1 Registration
of Trustees of the Galveston Wharves as Lessor and Newpark Marine Statement No. 333-38157, filed
Fabricators, Inc. as Lessee and PM Engineering, Inc. as Assignor dated January 26, 1998
October 17, 1997 and effective the first day of November 1997.
10.3 Assignment and Assumption of Lease from PMB Engineering, Inc. as Exhibit 10.3 to Form S-1 Registration
Assignor and Newpark Marine Fabricators, Inc. as Assignee effective Statement No. 333-38157, filed
the first day of November 1997. January 26, 1998
</TABLE>
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE FROM THE
NO. DESCRIPTION FOLLOWING DOCUMENTS:
- ------- ------------- ------------------------------------
<C> <C> <C>
10.4 Attornment Agreement by and between Newpark Marine Fabricators, Inc., Exhibit 10.7 to Form S-1 Registration
The Board of Trustees of the Galveston Wharves and The City of Statement No. 333-38157, filed
Galveston dated effective as of November 1, 1997. January 26, 1998
10.5 Amended and Restated 1997 Incentive Equity Plan effective as of Exhibit 10.8 to Form S-1 Registration
December 30, 1997. Statement No. 333-38157, filed
January 26, 1998
10.6 Form of Stock Option Agreement for certain options granted by the Exhibit 10.9 to Form S-1 Registration
Company to Messrs. S. Eakin, F. Eakin and D. Ammons dated December 30, Statement No. 333-38157, filed
1997 January 26, 1998
10.7 Form of Stock Option Agreement for certain options granted by the Exhibit 10.10 to Form S-1
company to certain executives and other employees dated December 30, Registration Statement No. 333-38157,
1997 filed January 26, 1998
10.8 Pledge and Security Agreement between First Wave Marine, Inc. and Bank Exhibit 10.1 to Company's Quarterly
One, N.A., as Pledge Agent and Trustee, dated as of February 2, 1998. Report on Form 10-Q for period ending
June 30, 1998, filed on August 13,
1998
10.9 Promissory Note of Samuel F. Eakin Exhibit 10.1 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.10 Promissory Note of Frank W. Eakin Exhibit 10.2 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.11 Promissory Note of David B. Ammons Exhibit 10.3 to Company's Quarterly
Report on Form 10-Q for period ending
March 31, 1998, filed May 15, 1998
10.12 Sale and Purchase Agreement between FW Marine Properties, Inc. (now Exhibit 2.1 to the Company's Current
known as Newpark Shipbuilding-Galveston Island, Inc.) and Galveston Report on Form 8-K, as filed with the
Shipbuilding Company, dated as of May 1, 1998. Commission May 29, 1998
10.13 Credit Agreement between First Wave Marine, Inc., as Borrower, Exhibit 10.3 to Company's Quarterly
each of the banks or lending Report on Form 10-Q for period ending
institutions from time to time party thereto, as June 30, 1998, filed on August 13, 1998.
Banks and Southwest Bank of Texas, N.A.,
as Agent, dated as of June 9,1998.
21.1 Subsidiaries of Registrant Filed herewith
27.1 Financial Data Schedule Filed herewith
</TABLE>
<PAGE> 1
EXHIBIT 3.14
ARTICLES OF INCORPORATION
OF
JOHN BLUDWORTH MARINE, INC.
We, the undersigned natural persons of the age of twenty-one or more,
at least two of whom are citizens of the State of Texas, acting as incorporators
of a corporation under the Texas Business Corporation Act, do hereby adopt the
following articles of incorporation:
ARTICLE ONE
The name of the corporation is John Bludworth Marine, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized is to transact any
or all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have
authority to issue is Three Hundred Thousand (300,000) shares without par value.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00) consisting of money, labor done or property actually received, which
sum is not less than One Thousand Dollars ($1,000.00).
ARTICLE SIX
The post office address of its initial registered office is North End
of Witter Road, Pasadena, Texas 77506, and the name of its initial registered
agent at such address is John Bludworth.
ARTICLE SEVEN
The number of directors constituting the initial board of Directors is
three (3) and the names and addresses of the persons who are to serve as
directors
<PAGE> 2
until the first annual meeting of the shareholders or until their successors are
elected and qualified are:
John Bludworth 8322 Wynbrook
Houston, Texas 77017
Frances E. Bludworth 8322 Wynbrook
Houston, Texas 77017
Cleo Ray Etheridge 9407 Hollock, Apt. C
Houston, Texas 77034
ARTICLE EIGHT
The names and addresses of the incorporators are:
John Bludworth 8322 Wynbrook
Houston, Texas 77017
Alan S. Dale 1321 Post Oak Park Drive, Apt. F
Houston, Texas 77027
JoAnn M. Dahl 12601 Mossycup
Houston, Texas 77024
IN WITNESS WHEREOF, we have hereunto set our hands this 31st day of
July, 1975.
/s/ John Bludworth
-----------------------------------------
John Bludworth
/s/ Alan S. Dale
-----------------------------------------
Alan S. Dale
/s/ JoAnn M. Dahl
-----------------------------------------
JoAnn M. Dahl
<PAGE> 3
STATE OF TEXAS
COUNTY OF HARRIS
I, a Notary Public, do hereby certify that on this 31st day of July,
1975, personally appeared before me John Bludworth, Alan S. Dale and JoAnn M.
Dahl, who each being by me first duly sworn, severally declared that they are
the persons who signed the foregoing document as incorporators that the
statement therein contained are true.
/s/ Marion E. McDaniel, Jr.
-----------------------------------------
Notary Public in and for
Harris County, Texas
<PAGE> 1
EXHIBIT 3.14.1
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
JOHN BLUDWORTH MARINE, INC.
Pursuant to the terms and provisions of Article 4.04 of the Texas
Business Corporation Act, John Bludworth Marine, Inc., a Texas corporation,
adopts the following Articles of Amendment to its Articles of Incorporation.
I.
The name of the corporation is John Bludworth Marine, Inc.
II.
The Articles of Incorporation are amended as follows:
Article One of the Articles of Incorporation shall be amended in its
entirety by substituting the following therefor:
"The name of the corporation is Newpark ShipbuildingCPasadena, Inc."
III.
Each amendment made by the Articles of Amendment to the Articles of
Incorporation has been effected in conformity with the provisions of the Texas
Business Corporation Act. The Articles of Amendment to the Articles of
Incorporation, including each amendment set forth above, were adopted by the
shareholders of the corporation on July 31, 1998.
-1-
<PAGE> 2
IV.
The number of shares of the corporation outstanding at the time of the
adoption of, and entitled to vote on, these amendments was One Hundred (100).
V.
The number of shares that voted for these amendments was One Hundred
(100), and no shares were voted against the amendment.
VI.
The Articles of Amendment to the Articles of Incorporation do not
provide for an exchange, reclassification or cancellation of issued shares.
VII.
The Articles of Amendment to the Articles of Incorporation do not
effect a change in the amount of stated capital.
Dated: July 31, 1998.
JOHN BLUDWORTH MARINE, INC.
BY: /s/ FRANK W. EAKIN
--------------------------------------
FRANK W. EAKIN
PRESIDENT
<PAGE> 1
EXHIBIT 3.15
BYLAWS
OF
JOHN BLUDWORTH MARINE, INC.
A Texas corporation
ARTICLE I
OFFICES
Section 1.1. Principal Place of Business. The principal business
office of the Corporation shall be located in Pasadena, Texas.
Section 1.2. Other Places of Business. The Corporation may also
have offices at such other places both within and without the State of Texas as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
Section 1.3. Registered Agent. The Corporation shall have and
continuously maintain in the State of Texas a registered office, and a
registered agent whose office is identical with such registered office, as
required by the Texas Business Corporation Act. The registered office may be,
but need not be, identical with the principal office of the Corporation in the
State of Texas, and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 2.1. Annual Meeting. Commencing in calendar year 1979, the
Annual Meeting of the Shareholders for the election of Directors and for the
transaction of such other business as may properly come before the meeting shall
be held at the principal business office of the Corporation as herein set forth
or at such other place within or without the State of Texas may be designated by
the caller of the meeting, at 10:00 o'clock a.m., on the 4th of August in
Pasadena, Texas of each such calendar year unless such day is a legal holiday,
in which case such meeting shall be held at such hour on the first day
thereafter which is not a legal holiday.
Section 2.2. Special Meetings. Except as otherwise provided by law
or by the Articles of Incorporation, special meetings of the Shareholders may be
called by the Chairman of the Board of Directors, the President, a majority of
the Board of Directors, or the holders of not less than fifty-one percent (51%)
of all the shares having voting power at such meeting, and shall be held at the
principal business office of the Corporation as herein set forth, at such time
as is stated in the notice calling such meeting, or at such other place and day
or time as the Board of Directors may determine and state in such notice.
<PAGE> 2
Section 2.3. Notice of Meetings--Waiver. Written or printed notice
stating the place, day and hour of any meeting of Shareholders and, in case of a
special meeting of Shareholders, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than fifty (50)
days before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the Officer or person calling the
meeting, to each Shareholder of record entitled to vote at such meeting. Such
further or earlier notice shall be given as may be required by law. Waiver by a
Shareholder of notice of a Shareholder's meeting by attendance at the meeting,
unless such attendance is to object to the notice herein required, or in writing
signed by him, whether before or after the time stated therein, shall be
equivalent to the giving of such notice. No notice shall be necessary for any
adjourned meeting.
Section 2.4. Closing of Transfer Books and Fixing Record Date. For
the purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of Shareholders for
any other proper purpose, the Board of Directors of the Corporation may provide
that the stock transfer books of the Corporation shall be closed for a stated
period not to exceed, in any case, fifty (50) days. If the stock transfer books
shall be closed for the purpose of determining Shareholders entitled to notice
of or to vote at a meeting of Shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting. In lieu of closing the
stock transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of Shareholders, such date in any case to
be not more than fifty (50) days and, in case of a meeting of Shareholders, not
less than ten (10) days prior to the date on which the particular action
requiring such determination of Shareholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the determination
of Shareholders or Shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of Shareholders.
When a determination of Shareholders entitled to vote at any meeting of
Shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of stock transfer books and the stated period of closing has
expired.
Section 2.5. Voting List. The Officer or agent having charge of the
stock transfer books for shared of the Corporation shall make, at least ten (10)
days before each meeting of Shareholders, a complete list of the Shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten (10) days prior to such meeting, shall be kept
on file at the registered office of the Corporation and shall be subject to
inspection by any Shareholder at any time during the usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any Shareholder during the whole time
of the meeting. Failure to comply with this Section shall not affect the
validity of any action taken at such meeting.
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Section 2.6. Quorum. Except as otherwise provided by law, by the
Articles of Incorporated or by these Bylaws,, the holders of a majority of the
shares entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of Shareholders, but the Shareholders present at any
meeting, although less than a quorum, may from time to time adjourn the meeting
to some other day and hour, without notice other than announcement at the
meeting. The vote of the holders of a majority of the shares entitled to vote
and thus represented at a meeting at which a quorum is present shall be the act
of the Shareholders' meeting, unless the vote of a greater number is required by
law. The President shall preside at, and the Secretary shall keep the records
of, each meeting of Shareholders, and in the absence of either such Officer, his
duties shall be performed by some person appointed by the meeting.
Section 2.7. Proxies. A Shareholder may vote either in person or by
proxy executed in writing by the Shareholder, or by his duly authorized attorney
in fact. Proxies shall be dated but need not be sealed, witnessed or
acknowledged. No proxy shall be valid after eleven (11) months from the date of
its execution unless otherwise provided in the proxy. Each proxy shall be
revocable, unless provided expressly therein to be irrevocable, and in no event
shall it remain irrevocable for a period of more than eleven (11) months from
the date thereof. Proxies shall be filed with the Secretary of the Corporation
before or at the time of the meeting.
Section 2.8. Balloting. Upon the demand of any Shareholder, the
vote upon any question before the meeting shall be by ballot. At each meeting
inspectors of election may be appointed by the presiding officer of the meeting,
and at any meeting for the election of Directors, inspectors shall be so
appointed on the demand of any Shareholder present or represented by proxy and
entitled to vote at the election of Directors. No Director or candidate for the
office of Director shall be appointed as such inspector. The number of votes
cast by shares in the election of Directors shall be recorded in the minutes.
Section 2.9. Record of Shareholders. The Corporation shall keep at
its principal business office, or the office of its transfer agents or
registrars, a record of its Shareholders, giving the names and addresses of all
Shareholders and the number and class of the shares held by each.
Section 2.10. Preemptive Rights. Shareholders of the Corporation
shall have preemptive rights to subscribe for or to purchase, or to have offered
to them for subscription or purchase, any additional securities of the
Corporation.
Section 2.11. Voting Rights; Cumulative Voting for the Directors.
Each outstanding share of common stock shall be entitled to one (1) vote upon
each matter submitted to a vote at a meeting of Shareholders. Each fractional
share shall be entitled to a fraction of one (1) vote in the proportion which
such fractional share bears to a full share. Each Shareholder shall have the
right to cumulate his votes for the election of Director, and in such elections
each Shareholder shall be entitled to a number of votes
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<PAGE> 4
equal to the number of shares that he holds multiplied by the number of
Directors to be elected.
ARTICLE III
DIRECTORS
Section 3.1. Number, Qualifications and Term. The business and
affairs of the Corporation shall be managed and controlled by the Board of
Directors, and, subject to any restrictions imposed by applicable law, by the
Articles of Incorporation or by these Bylaws, the Board of Directors may
exercise all the powers of the Corporation. The number of Directors which shall
constitute the whole Board shall be not less than one nor more than five as
determined by the Board of Directors, none of whom need be residents of the
State of Texas or Shareholders of the Corporation. The Directors shall be
elected at the Annual Meeting of the Shareholders, and each Director elected
shall serve until such Director's successor shall have been duly elected and
qualified. The number of Directors may be increased or decreased from time to
time by Board of Directors, but no decrease shall have the effect of shortening
the term of any incumbent Director. Any directorship to be filled by reason of
an increase in the number of Directors shall be filled by election at an Annual
Meeting of Shareholders.
Section 3.2. Vacancy. Any vacancy occurring in the Board of
Directors for whatsoever reason may be filled by a majority of the remaining
Directors, though less than a quorum of the Board of Directors. A Director
elected to fill a vacancy shall be elected for the unexpired term of such
Director's predecessor in office.
Section 3.3. Removal. Any Director may be removed either for or
without cause at any duly constituted meeting of Shareholders duly called and
held for such purpose, by the affirmative vote of Shareholders present in person
or by proxy at such meeting representing sixty-eight percent (68%) of all the
shares entitled to vote in elections of Directors.
Section 3.4. Meeting Place. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Texas at
whatsoever place is specified by the Director or Officer calling the meeting.
Section 3.5. Regular Meetings. Regular meetings of the Board of
Directors may be held with or without notice, and at such time and at such
place, as shall from time to time be determined by the Board. The first meeting
of each newly elected Board of Directors shall be held at such time and place as
shall be fixed by the vote of the Shareholders at the Annual Meeting and no
notice of such meeting shall be necessary to the newly elected Directors in
order legally to constitute the meeting, provided a quorum shall be present. In
the event that the Shareholders fail to fix the time and place of such first
meeting, it shall be held without notice immediately following the Annual
Meeting of Shareholders, and at the same place, unless by the unanimous consent
of the Directors then elected and serving such time or place shall be changed.
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Section 3.6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or the
President and shall be called by the President or Secretary on the written
request of any of the Directors. Notice of each special meeting of the Board of
Directors shall be given to each Director at least seven (7) days before the
date of the meeting.
Section 3.7. Notice. Attendance of a Director at any meeting shall
constitute a waiver of notice of such meeting, except where a Director attends
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened. Except as may be
otherwise provided by law or by the Articles of Incorporation or by the Bylaws,
neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 3.8. Quorum. At all meetings of the Board of Directors a
majority of the Directors shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, unless
otherwise specifically provided by law, the Articles of Incorporation or the
Bylaws. If a quorum shall not be present at any meeting of the Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 3.9. Procedure at Meetings. The Board of Directors, at each
regular meeting held immediately following the Annual Meeting of Shareholders,
shall appoint one of their number to act as Chairman of the Board of Directors,
who may also be an Officer of the Corporation, and who shall preside at meetings
of the Board. In his absence at any meeting, a member of the Board to be
selected by the members present shall preside. The Secretary of the Corporation
shall act as Secretary at all meetings of the Board or, in his absence, the
presiding Officer of the meeting shall designate any person in attendance to act
as Secretary. At meetings of the Board of Directors, business shall be
transacted in such order as from time to time the Board may determine.
Section 3.10. Board Committees. The Board of Directors, by
resolution passed by a majority of the whole Board, may from time to time
designate members of the Board to constitute committees, including, without
limitation, an Executive Committee, which shall in each case consist of such
number of Directors, not less than one, and shall have and may exercise such
powers as a majority of the whole Board may determine and specify in the
respective resolutions appointing them. A majority of all the members of any
such committee may determine its action and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. A majority of
the whole Board of Directors shall have power at any time to change number,
subject as aforesaid, members of any such committee, or to fill vacancies or to
discharge any such committee.
Section 3.11. Consent. Any action required or permitted to be taken
at a meeting of the Board of Directors or any executive committee may be taken
without a meeting if a
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<PAGE> 6
consent in writing, setting forth the action so taken, is signed by all the
members of the Board of Directors or executive committee, as the case may be.
Section 3.12. Compensation. By resolution of the Board of Directors,
the Directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors and a fixed sum as a stated salary as
Director. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
Section 4.1. Number. The Officers of the Corporation shall consist
of the President, a Secretary and a Treasurer, and, in addition, such other
Officers including one or more Vice-Presidents, and assistant Officers and
agents as may be deemed necessary and elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person except that
the President and Secretary shall not be the same person. In its discretion, the
Board of Directors may leave unfilled any office except those of President,
Treasurer and Secretary.
Section 4.2. Election; Term; Qualifications. Officers shall be
chosen by the Board of Directors annually at the meeting of the board of
Directors following the Annual Meeting of Shareholders. Each Officer shall hold
office until his successor has been duly chosen and qualified, or until his
death, resignation or removal.
Section 4.3. Removal. Any Officer or agent elected or appointed by
the Board of Directors may be removed by the Board of Directors at its pleasure,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed. Election or appointment of an Officer or agent shall not
of itself create any contract rights.
Section 4.4. Vacancies. Any vacancy in any office for any cause may
be filled by the Board of Directors.
Section 4.5. Duties. The Officers of the Corporation shall have
such powers and duties, except as modified by the Board of Directors, as
generally pertain to their offices, respectively, as well as such powers and
duties as from time to time shall be conferred by the Board of Directors and by
these Bylaws.
Section 4.6. Chairman of the Board. The Chairman of the Board, if
one be elected, shall preside at all meetings of the Board of Directors and
shall have such other powers and duties as may from time to time be prescribed
by the Board of Directors, upon written directions given to him pursuant to
resolutions duly adopted by the Board of Directors.
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Section 4.7. President. The President shall be the Chief Executive
Officer of the Corporation, and shall have general direction of the affairs of
the Corporation, and shall have general direction of the affairs of the
Corporation and general supervision over its several Officers, subject however,
to the control of the Board of Directors. He shall at each Annual Meeting, and
from time to time, report to the Shareholders and to the Board of Directors all
matters within his knowledge, which, in his opinion, the interest of the
Corporation may require to be brought to their notice; may sign with the
Secretary or an Assistant Secretary any or all certificates of stock of the
Corporation; shall preside at all meetings of the Shareholders; shall sign and
execute in the name of the Corporation all contracts or other instruments
authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly delegated or permitted by the Board or by
these Bylaws to some other Officer or agent of the Corporation; and in general,
shall perform all duties incident to the office of President, and such other
duties as from time to time may be assigned to him by the Board of Directors or
as are prescribed by these Bylaws.
Section 4.8. Vice-Presidents. At the request of the President, or
in his absence or disability, the Vice-Presidents in the order of their election
shall perform the duties of the President, and, when so acting, shall have all
the powers of, and be subject to all restrictions upon, the President. Any
action taken by a Vice-President in the performance of the duties of the
President shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken. The Vice-Presidents shall perform
such other duties as may, from time to time, be assigned to them by the Board of
Directors or the President. A Vice-President may also sign with the Secretary or
any Assistant Secretary certificates of stock of the Corporation.
Section 4.9. Secretary. The Secretary shall: (a) keep the minutes
of all meetings of the Shareholders, of the Board of Directors and of all
committees of the Board of Directors, in one or more books provided that for
purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and the seal of the Corporation, and see that the seal of the
Corporation is affixed to all documents the execution of which on behalf of the
Corporation under its seal is duly authorized; (d) have general charge of stock
certificate books, transfer books, stock ledgers and such other books and papers
as the Board of Directors may direct, for the Corporation, all of which shall,
at all reasonable times, be open to the examination of any Director, upon
application at the office of the Corporation during business hours; and (e) in
general, perform all duties and exercise all powers incident to the office of
the Secretary and such other duties and powers as the Board of Directors or the
President from time to time may assign or confer.
Section 4.10. Treasurer. The Treasurer shall: (a) keep complete and
accurate records of account, showing accurately at all times the financial
condition of the Corporation; (b) shall be the legal custodian of all monies,
notes, securities and other valuables which may from time to time come into the
possession of the Corporation; (c) shall furnish at meetings of the Board of
Directors, or whenever requested, a statement of
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the financial condition of the Corporation; and (d) shall perform such other
duties as the Bylaws may require or the Board of Directors may prescribe.
Section 4.11. Assistant Officers. Any Assistant Secretary or
Assistant Treasurer appointed by the Board of Directors shall have power to
perform, and shall perform, all duties incumbent upon the Secretary or the
Treasurer of the Corporation, respectively, subject to the general direction of
such Officers, and shall perform such other duties as the Bylaws may require or
the Board of Directs may prescribe.
Section 4.12. Salaries. The salaries or other compensation of the
Officers shall be fixed from time to time by the Board of Directors. No Officer
shall be prevented from receiving such salary or other compensation by reason of
the fact that he is also a Director of the Corporation.
Section 4.13. Bonds of Officers. The Board of Directors may secure
the fidelity of any or all of such Officers by bond or otherwise, in such terms
and with such surety or sureties, conditions, penalties or securities as shall
be required by the Board of Directors.
Section 4.14. Delegation. The Board of Directors may delegate
temporarily the powers and duties of any Officer of the Corporation, in case of
his absence or for any other reason, to any other Officer, and may authorize the
delegation by any Officer of the Corporation of any of his powers and duties of
any agent or employee subject to the general supervision of such Officer.
ARTICLE V
CAPITAL STOCK
Section 5.1. Certificates Representing Shares. Certificates
representing shares of stock of the corporation shall be in such form or forms
as comply with the requirements of law and the Articles of Incorporation and as
the Board of Directors shall approve. Such certificates shall be signed by the
President or a Vice-President, and the Secretary or Assistant Secretary of the
Corporation, and may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the President or Vice-President and the Secretary or
Assistant Secretary may be facsimiles, engraved or printed, if the certificate
is countersigned by a transfer agent, or registered by a registrar, other than
the Corporation itself or an employee of the Corporation. In case any Officer or
Officers who have signed or whose facsimile signature or signatures have been
placed upon such certificate shall have ceased to be such Officer or Officers as
of the date of its issuance, and issuance and delivery thereof by the
Corporation shall constitute adoption thereof by the Corporation. The
certificates shall be consecutively numbered and a record thereof shall be
entered in the books of the Corporation as they are issued.
Section 5.2. Stock Certificate Book and Shareholders of Record. The
Secretary of the Corporation shall maintain among other records a stock
certificate book, the stubs in which shall set forth the names and addresses of
the holders of all issued shares of the
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Corporation, the number of shares held by each, the certificate numbers
representing such shares, the date of issue of the certificate representing such
shares, and whether or not such shares originate from original issue or from
transfer. The names and addresses of Shareholders as they appear on the stock
certificate book shall be the official list of Shareholders of record of the
Corporation for all purposes. The Corporation shall be entitled to treat the
holder of record of any shares of the Corporation as the owner thereof for all
purposes, and shall no t be bound to recognize any equitable or other claim to,
or interest in, such shares or any rights deriving from such shares on the part
of any other person, including (but without limitation) a purchaser, assignee,
or transferee, unless and until such other person becomes the holder of record
of such shares, whether or not the Corporation shall have either actual or
constructive notice of the interest of such other person, except as otherwise
provided by applicable law.
Section 5.3. Transfer of Stock. The shares represented by any share
certificates of the Corporation are transferable only on the books of the
Corporation by the holder of record thereof in person or by a duly authorized
attorney or legal representative upon surrender of the certificate for such
shares properly endorsed or assigned. The Board of Directors may make such rules
and regulations as they deem desirable or necessary concerning the issue,
transfer and registration or replacement of share certificates.
Section 5.4. Transfer Agent and Registrar. The Board of Directors
may appoint one or more transfer agents or registrars of the shares, or both,
and may require all share certificates to bear the signature of a transfer agent
or registrar or both.
Section 5.5. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate for shares of stock in the place of any
certificate theretofore issued and alleged to have been lost, stolen or
destroyed, but the Board of Directors may require the owner of such lost, stolen
or destroyed certificate, or his legal representative, to furnish an affidavit
as to such loss, theft or destruction and to give a bond in such form and
substance, and with such surety or sureties, with fixed or open penalty, as it
may direct, to indemnify the Corporation, and the transfer agents and
registrars, if any, against any claim that may be made on account of the alleged
loss, theft or destruction of such certificate.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Contracts. The Board of Directors may authorize any
Officer or Officers, agent or agents, of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances; and, unless so authorized by the Board of Directors or by these
Bylaws, no Officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement, or to pledge its credit or to
render it liable pecuniarily for any purpose of to any amount.
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Section 6.2. Checks, Drafts, etc. All checks, drafts, or other
orders for the payment of money, notes, or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such Officer or
Officers of the Corporation and in such manner as shall from time to time be
authorized pursuant to these Bylaws or by resolution of the Board of Directors.
Section 6.3. Depositories. All funds of the Corporation shall be
deposited from time to time to the credit of the Corporation in one or more such
banks, trust companies or other depositories as the Board of Directors may from
time to time designate, upon such terms and conditions as shall be fixed by the
Board of Directors. The Board of Directors may from time to time authorize the
opening and keeping with any such depository as it may designate of general and
special bank accounts and may make such special rules and regulations with
respect thereto, not inconsistent with the provisions of these Bylaws, as it may
deem necessary.
Section 6.4. Endorsement of Stock Certificates. Subject to the
specific directions of the Board of Directors, any share or shares of stock
issued by any corporation and owned by the Corporation (including required
shares of the Corporation) may, for sale or transfer, be endorsed in the name of
the Corporation by the President or any Vice-President, and attested or
witnessed by the Secretary or any Assistant Secretary either with or without
affixing the corporation seal.
Section 6.5. Voting of Shares Owned by the Corporation. Unless
otherwise ordered by the Board of Directors, the President, the Secretary and
the Treasurer, or any of them, shall have full power and authority on behalf of
the Corporation to attend, to vote and to grant proxies to be used at any
meeting of shareholders of such corporation in which the Corporation may hold
stock. The Board of Directors may confer like powers upon any other person or
persons.
Section 6.6. Corporate Seal. The corporate seal shall be in such
form as the Board of Directors shall approve, and such seal, or a facsimile
thereof, may be impressed on, affixed to or in any manner reproduced upon
instruments of any nature required to be executed by Officers of the
Corporation.
Section 6.7. Fiscal Year; Accounting Election. The fiscal year of
and the method of accounting for the Corporation shall be as the Board of
Directors shall at any time determine.
Section 6.8. Resignations. Any Director or Officer may resign at
any time. Such resignations shall be made in writing and shall take effect at
the time specified therein, or, if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall not
be necessary to make it effective, unless expressly so provided in the
resignation.
Section 6.9. Indemnification of Officers and Directors. Each person
who may have served as a Director or Officer of this Corporation, or at its
request as director or
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officer of another corporation in which it has owned shares of capital stock or
of which it has been a creditor, shall be indemnified by the Corporation against
liabilities imposed upon him and expenses reasonably incurred by him in
connection with any claim made against him, or any action, suit or proceeding to
which he may be a party be reason of his being, or having been, such Director or
Officer, and against such sums as counsel reasonably selected by the Board of
Directors shall deem reasonable payment made in settlement of any such claim,
action, suit or proceeding primarily with a view to avoiding expenses of
litigation; provided, however, that no Director or Officer shall be indemnified
with respect to matters for which such indemnification shall be in addition to
any other rights to which Directors or Officers may be in addition to any other
rights to which Directors or Officers may be entitled.
Section 6.10. Dividend. Subject to the provisions of law and the
Articles of Incorporation relating thereto, if any, dividends may be declared by
the Board of Directors, in its discretion, at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or in the
Corporation's own shares, subject to any provisions of law and the Articles of
Incorporation. Before payment of any Dividend there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve fund for meeting contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
Section 6.11. Transfer Restrictions. Before there can be a valid
sale or transfer of any of the common shares of this Corporation by any holder
thereof (the "Offering Shareholder"), the Offering Shareholder shall first offer
said shares to the Corporation and then to the other holders of common shares in
the following manner:
(1) Such Offering Shareholder shall deliver a notice by mail or
otherwise to the Secretary of the Corporation stating the prices, terms and
conditions of such proposed sale or transfer, the number of shares to be sold or
transferred, and his intention to so sell or transfer such shares. Within ten
(10) days thereafter, the Corporation shall have the prior right to purchase
such shares so offered at a price equal to the lower of the offered price or the
sum of the book value thereof and ten percent (10%) of such book value (the
"Purchase Price"); provided, however, that the Corporation shall not at any time
be permitted to purchase all of its outstanding voting shares. Should the
Corporation fail to purchase the shares at the expiration of the ten (10) day
period, or prior thereto decline to purchase the shares, the Secretary of the
Corporation shall, within five (5) days thereafter, mail or deliver to each of
the other Shareholders of record a copy of the notice given by the Offering
Shareholder to the Secretary. Such notice may be delivered to the Shareholders
personally, or may be mailed to them at their last known address as such address
may appear on the books of the Corporation. Within ten (10) days after the
mailing or delivering of the copies of the offer to the Shareholders, any such
Shareholder or Shareholders desiring to acquire any part or all of the shares
referred to in the notice shall deliver by mail, or otherwise, to the Secretary
of the Corporation a written offer or
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offers, expressed to be acceptable immediately, to purchase a specified number
of such shares at the Purchase Price on the terms stated therein. Each such
offer shall be accompanied by an amount equal to the Purchase Price on the terms
stated therein. Each such offer shall be accompanied by an amount equal to the
Purchase Price with authorization to pay such price against delivery of the
shares.
(2) If the total number of shares specified in the offers to purchase
exceeds the number of shares to be sold or transferred, each purchasing
Shareholder shall be entitled to purchase such proportion of such shares as the
number of shares of the Corporation which he holds bears to the total number of
shares held by all Shareholders desiring to purchase the shares.
(3) If all the shares to be sold or transferred are not disposed of
under such apportionment, each Shareholder desiring to purchase shares in a
number in excess of his proportionate share, as provided above, shall be
entitled to purchase such proportion of those shares which remain thus
undisposed of, as the total number of shares which he holds bears to the total
number of shares held by all of the Shareholders desiring to purchase shares in
excess of those to which they are entitled under such apportionment.
(4) If within said ten (10) day period, the offer or offers to purchase
aggregate less than the number of shares to be sold or transferred, the Offering
Shareholder shall not be obligated to accept any such offer or offers and may
dispose of all of the shares referred to in his notice to any person or persons
whomsoever; provided, however, that he shall not sell or transfer such shares at
a lower price or in terms more favorable to the purchaser or transferee than
those specified in his notice to the Secretary of the Corporation.
ARTICLE VII
AMENDMENTS
Section 7.1. Amendments. The power to alter, amend, or repeal the
Bylaws or to adopt new Bylaws shall be vested in the Board of Directors.
/s/ T.L. Moser
-------------------------------
T.L. MOSER, Secretary
Adopted: August 3, 1979
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EXHIBIT 3.16
CERTIFICATE OF INCORPORATION
OF
FIRSTWAVE MANAGEMENT, INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby certify as follows:
FIRST: NAME. The name of the Corporation is FirstWave Management, Inc.
(hereinafter referred to as the "Corporation").
SECOND: REGISTERED OFFICE AND AGENT. The registered office of the
Corporation in the State of Delaware is located at Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware,
19801. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: PURPOSE. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: SERIES OF STOCK. The Corporation is authorized to issue only
one (1) class of stock. The total number of shares of stock which the
Corporation shall have authority to issue is 1,000, consisting of 1,000 shares
of common stock, of the par value of $.01 per share (hereinafter referred to as
the "Common Stock").
The Corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest
in, such share on the part of any other person, whether or not the Corporation
shall have notice thereof, except as expressly provided by applicable laws.
FIFTH: DIRECTORS. The number of Directors of the Corporation shall be
fixed by the Bylaws of the Corporation and may be increased or decreased from
time to time in such a manner as may be prescribed by the Bylaws, but in no
case shall the number be less than three (3) nor more than five (5).
The names and mailing addresses of the persons who are to serve as
Directors of the Corporation until the first annual meeting of stockholders or
until their successors are elected and qualified are as follows:
<TABLE>
<CAPTION>
Director's Name Mailing Address
--------------- ---------------
<S> <C>
Samuel F. Eakin 4324 S. Sherwood Forest Blvd., Ste. 110
Baton Rouge, Louisiana 70816
Frank W. Eakin 4324 S. Sherwood Forest Blvd., Ste. 110
Baton Rouge, Louisiana 70816
David B. Ammons 4324 S. Sherwood Forest Blvd., Ste. 110
Baton Rouge, Louisiana 70816
</TABLE>
<PAGE> 2
SIXTH: INDEMNIFICATION. Each person who is or was or had agreed to
become a Director or officer of the Corporation, or each such person who is or
was serving or who had agreed to serve at the request of the Board of Directors
or an officer of the Corporation as an employee or agent of the Corporation or
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person), shall be indemnified by the
Corporation to the full extent permitted from time to time by the General
Corporation Law of the State of Delaware or any other applicable law as
presently or hereafter in effect. Without limiting the generality or the effect
of the foregoing, the Corporation may enter into one or more agreements with
any person which provide for indemnification greater or different that provided
in this Article SIXTH. Any amendment or repeal or this Article SIXTH shall not
adversely affect any right or protection existing hereunder immediately prior
to such amendment or repeal.
SEVENTH: DIRECTOR LIABILITY. To the full extent permitted by the
General Corporation Law of the State of Delaware or any other applicable laws
presently or hereafter in effect, no Director of the Corporation shall be
personally liable to the Corporation or its stockholders for or with respect to
any acts or omissions in the performance of his or her duties as a Director of
the Corporation. Any amendment or repeal this Article SEVENTH shall not
adversely affect any right or protection of a Director of the Corporation
existing immediately prior to such amendment or repeal.
EIGHTH: AMENDMENT. The Corporation reserves the right to amend or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are created
subject to this reservation.
NINTH: INCORPORATOR. The name and mailing address of the incorporator
is Robert T. Bowsher, One American Place, Suite 2300, Baton Rouge, Louisiana,
70825.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinabove named, do hereby execute this Certificate of Incorporation this
12th day of November, 1998.
/s/ Robert T. Bowsher
-----------------------------------
Robert T. Bowsher, Incorporator
<PAGE> 1
EXHIBIT 3.17
BYLAWS
OF
FIRSTWAVE MANAGEMENT, INC.
ARTICLE I: STOCKHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS.
Meeting of the stockholders shall be held at such place as the Board
of Directors shall determine and as shall be designated in the notice of said
meeting.
SECTION 2. ANNUAL MEETING.
There shall be an annual meeting of the stockholders on the last
Thursday in May of each year at 11:00 a.m., or at such other date or time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, for the election of directors and for the
transaction of such other business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS.
Special meetings of the stockholders for any purpose may be called by
the Board of Directors or by such person or persons as may be authorized by the
Certificate of Incorporation.
SECTION 4. NOTICE OF STOCKHOLDER MEETINGS.
Whenever stockholders are required or permitted to take any action at
a meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the special meeting is called.
Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, notice is deemed to be given when deposited in the United States Mail,
postage prepaid, directed to the stockholder at his address as it appears on
the record of the Corporation.
SECTION 5. INSPECTORS.
The Board of Directors shall, in advance of any meeting of
stockholders, appoint one (1) or more inspectors to act as judges of the voting
at the meeting and to determine those entitled to vote at any stockholders
meeting, or any adjournment thereof, and to make a written report thereof. If
-1-
<PAGE> 2
the Board of Directors fails to make such appointment(s) or if an appointee(s)
fail to serve, the presiding officer of the stockholders' meeting shall appoint
one (1) or more substitute inspectors to act at the meeting. Each Inspector
shall take the oath provided by Section 231 of the Delaware General Corporation
Law.
SECTION 6. QUORUM AND ADJOURNMENTS.
Except as otherwise provided by law, the holders of stock of record
entitled to exercise a majority of the voting power of the Corporation present
in person or by proxy shall constitute a quorum for the transaction of business
thereat. If, however, such majority shall not be present in person or by proxy,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have the power to adjourn the meeting from time to time and from place to place
without notice, other than an announcement at the meeting of the time and place
of the adjourned meeting, until the requisite amount of voting power shall be
present or the meeting has been adjourned permanently. At such adjourned
meeting, at which the requisite amount of voting power shall be present, any
business which might have been transacted at the original meeting may be
transacted.
SECTION 7. VOTING.
At every meeting of stockholders, every stockholder having the right
to vote shall be entitled to vote in person or by proxy appointed by a legally
sufficient instrument. Unless otherwise provided in the Certificate of
Incorporation and subject to Section 213 of the General Corporation Law of the
State of Delaware, each stockholder shall be entitled to one (1) vote for each
share of capital stock held by such stockholder. All elections of Directors
shall be by written ballot, unless otherwise provided in the Certificate of
Incorporation. In all matters other than the election or removal of Directors
or as otherwise provided in these Bylaws, the Certificate of Incorporation, or
the laws of the State of Delaware, the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting and entitled to
vote on the subject matter shall be the act of the stockholders.
ARTICLE II: BOARD OF DIRECTORS
SECTION 1. NUMBER, QUALIFICATION, ELECTION AND TERMS.
The number of Directors shall be fixed from time to time by the Board
of Directors, but shall not be less than three (3) nor more than five (5)
persons.
SECTION 2. RESIGNATION.
Any Director may resign at any time by giving written notice of his
resignation to the Chairman or the Secretary, to be effective upon its
acceptance by the Board or at the time specified in such writing.
-2-
<PAGE> 3
SECTION 3. RESPONSIBILITIES AND POWERS.
The business and affairs of the Corporation shall be managed under the
direction of the Board of Directors. In addition to the powers and authorities
expressly conferred by these Bylaws, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
SECTION 4. ORGANIZATION MEETING.
Immediately after the adjournment of the annual meeting of the
stockholders each year, or special meeting held in lieu thereof, the Directors
elected thereat shall, without notice, convene the annual meeting of Directors
for the organization of the Board of Directors, the election of officers and
members of committees and the transaction of any other business which may
properly come before the meeting. If a quorum of the Board of Directors shall
not be present, the Chairman shall call a meeting for such purposes as promptly
as is practicable. Except as otherwise provided in this Section, Directors may
hold their regular and special meetings at such times and places and have one
or more offices and keep the books of the Corporation at such places as the
Board of Directors determines.
SECTION 5. NOTICE OF BOARD MEETINGS.
No notice of regular meetings of the Board of Directors need be given.
Special meetings of the Board of Directors may be called by the Chairman or the
President of the Corporation upon notice to each Director, given either in
person or by mail, telephone, telegram, telex, or similar medium of
communication: provided, however, that such notice shall be deemed to have ben
waived by the Directors attending or voting at any such meeting, without
protesting the lack of proper notice, and may be waived in writing or by
telegram, telex, or similar medium of communication by any Director either
before or after such meeting. Special meetings shall be called by the Chairman,
the President or the Secretary on like notice, on the written request of two
(2) Directors. A minimum of 24 hours' notice of special meetings shall be given
to each Director. Unless otherwise indicated in the notice thereof, any
business may be transacted at any such special meeting.
SECTION 6. QUORUM AND ACTS OF THE BOARD.
At all meetings of Directors a majority of the total number of
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
is not present, a majority of the Directors present may adjourn the meeting
without notice other than announcement until a quorum shall attend.
SECTION 7. COMMITTEES OF THE BOARD OF DIRECTORS.
-3-
<PAGE> 4
The Board of Directors, by resolution passed by a majority of the
Board may designate one or more committees. No committee shall consist of less
than one (1) Director. The Board of Directors may appoint one or more Directors
as alternate members of any such committee, who may take the place of any
absent member or members at any meeting of such committee. Except as otherwise
provided by statute, a committee shall have and exercise the powers of the
Board of Directors in the direction of the management of the business and
affairs of the Corporation to the extent provided in the enabling resolution.
Each committee shall have such name as may be determined by the Board of
Directors. A majority of the members of a committee shall constitute a quorum
and a majority vote of the members at a meeting at which a quorum is present
shall be the act of the committee. A committee shall keep minutes of its
proceedings, and shall report its proceedings to the Board of Directors when
required or when requested by a Director to do so.
SECTION 8. COMPENSATION.
The Board of Directors may establish such compensation for, and
reimbursement of the expenses of, Directors for attendance at meetings of the
Board of Directors or committees, or for other services by Directors to the
Corporation, as the Board of Directors may determine. Such compensation may be
in addition to that received by any Director or any member of a committee as an
officer or employee or agent of the Corporation.
ARTICLE III: OFFICERS
SECTION 1. NUMBER AND TERM OF OFFICE.
The officers of the Corporation shall be a Chairman of the Board of
Directors, a President, a Secretary, and a Treasurer, and such other officers
as may from time to time be appointed by the Board of Directors. Any two (2) or
more offices may be held by the same person.
The officers of the Corporation shall be elected or appointed annually
by the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of stockholders. Vacancies or new offices may be
filled at any time. Each officer shall hold office until his successor shall
have been duly elected or appointed or until his death or until he shall resign
or shall have been removed by a majority of the Board of Directors.
SECTION 2. THE CHAIRMAN OF THE BOARD.
The Chairman of the Board shall be the chief executive officer of the
Corporation and as such shall have, subject to the supervision and direction of
the Board of Directors or of the Executive Committee, if any, general
supervision of the business, property and affairs of the Corporation and the
powers vested in him by the Board of Directors, by law or by these Bylaws or
which usually attach or pertain to such office. He shall preside at meetings of
the stockholders and of the Board
-4-
<PAGE> 5
of Directors and of the Executive Committee, if any. The Chairman may sign,
with the Secretary or an Assistant Secretary, certificates for shares of the
Corporation.
SECTION 3. THE PRESIDENT.
The President shall have such powers as are vested in him by the Board
of Directors, by law or by these Bylaws. In the absence or inability of the
Chairman of the Board to act, the President shall have and exercise all the
powers and duties of the Chairman of the Board.
SECTION 4. THE TREASURER.
If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine. The Treasurer shall: (a)
have charge and custody of and be responsible for all funds and securities of
the Corporation, receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositaries as
shall be selected in accordance with the provisions of Article V of these
Bylaws; (b) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the Chairman of the Board, the President, the Board of Directors, or these
Bylaws.
SECTION 5. THE SECRETARY.
The Secretary shall have the custody of the corporate seal and the
Secretary or any Assistant Secretary shall affix the same to all instruments or
papers requiring the seal of the Corporation. The Secretary, or in his absence,
any Assistant Secretary, shall see that proper notices are sent of the meetings
of the stockholders, the Board of Directors and the Executive Committee, and
shall see that all proper notices are given as required by these Bylaws. The
Secretary or any Assistant Secretary shall keep the minutes of all meetings of
stockholders and Board of Directors and all committees which may request the
Secretary's services.
SECTION 6. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such
sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries as thereunto authorized by the Board of Directors may
sign with the Chairman of the Board, or the President, certificates for shares
of the Corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers and Assistant
Secretaries, in general, shall perform such duties as shall be assigned to them
by the Treasurer or the Secretary, respectively, or by the Chairman of the
Board, the President, the Board of Directors or these Bylaws.
SECTION 7. SALARIES.
-5-
<PAGE> 6
The salaries of the officers shall be fixed from time to time by the
Board of Directors, and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a Director of the Corporation.
SECTION 8. REMOVAL.
Any officer may be removed by a majority of the Board of Directors
whenever in its judgment the best interest of the Corporation would be
served thereby.
ARTICLE IV: STOCK RECORDS
SECTION 1. FORM OF CERTIFICATES.
The shares of the Corporation shall be represented by certificates.
The certificates representing stock of the Corporation shall be numbered and
shall be entered in the books of the Corporation as they are issued. They shall
exhibit the holder's name and number of shares and may be mechanically signed
with a facsimile of the signature of the Chairman of the Board, the President
or a Vice President, and a facsimile of the signature of a duly authorized
officer or agent of any properly designated transfer agent of the Corporation.
Such certificates may be issued and delivered notwithstanding that the person
whose facsimile signature appears thereon shall have ceased to be such officer
at the time the certificates are issued and delivered.
SECTION 2. CLASSES OF STOCK.
The designations, preferences and relative participating, optional or
other special rights of the various classes of stock or series thereof, and the
qualifications, limitations or restrictions thereof, shall be set forth in full
or summarized on the face or back of the certificates which the Corporation
issues to represent its stock, or in lieu thereof, such certificates shall set
forth the office of the Corporation from which the holders of certificates may
obtain a copy of such information.
SECTION 3. TRANSFERS.
Subject to restrictions on the transfer of stock, the Corporation
shall make transfers of stock on its books upon surrender of the certificate
for the shares to the Corporation or its duly appointed transfer agent duly
endorsed by the stockholder named in the certificate or his duly authorized
attorney.
SECTION 4. LOST CERTIFICATES.
An officer may direct that a new certificate be issued in place of
certificates previously issued by the Corporation and alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or destroyed.
-6-
<PAGE> 7
As a condition precedent to the issuance thereof, the officer may require the
claimant to advertise the alleged loss, theft or destruction in such manner as
the officer may require to give the Corporation a bond in such sum as he may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed
or the issuance of the new certificate.
ARTICLE V: GENERAL
SECTION 1. CORPORATE SEAL.
The seal of the Corporation shall be circular in form with the name of
the Corporation and the words "Corporate Seal, Delaware" stamped across the
center. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
SECTION 2. FISCAL YEAR.
The fiscal year of the Corporation shall be the calendar year, except
as otherwise determined from time to time by the Board of Directors.
SECTION 3. AMENDMENTS.
Subject to the restrictions set forth in the Certificate of
Incorporation, these Bylaws may be amended or repealed at any regular meeting
of the stockholders or at any special meeting thereof duly called for that
purpose by a majority vote of the shares represented and entitled to vote at
such meeting provided that in the notice of such special meeting notice of such
purpose shall be given.
Subject to the laws of the State of Delaware, the restrictions set
forth in the Certificate of Incorporation and these Bylaws, the Board of
Directors may by majority vote of those present at any meeting at which a
quorum is present amend or repeal these Bylaws, or adopt such other Bylaws as
in their judgment may be advisable for the regulation of the conduct of the
affairs of the Corporation.
-7-
<PAGE> 1
EXHIBIT 4.1.3
- -------------------------------------------------------------------------------
FIRST WAVE MARINE, INC.
as Issuer
SUBSIDIARY GUARANTORS
named herein
and
BANK ONE, N.A.
as Trustee
THIRD SUPPLEMENTAL INDENTURE
Dated as of December 11, 1998
-----------------
Supplementing and Amending the Indenture
dated as of February 2, 1998
as amended by the First Supplemental Indenture
dated as of February 3, 1998
and the Second Supplemental Indenture
dated as of May 18, 1998
$90,000,000 11% Senior Notes due 2008
- -------------------------------------------------------------------------------
<PAGE> 2
This THIRD SUPPLEMENTAL INDENTURE, dated as of December 11, 1998, is
by and among FIRST WAVE MARINE, INC., a Delaware corporation (the "Company"),
NEWPARK SHIPBUILDING--BRADY ISLAND, INC., a Texas corporation formerly known as
Newpark Shipbuilding and Repair, Inc. ("Brady Island"), EAE SERVICES, INC., a
Texas corporation ("EAE Services"), EAE INDUSTRIES, INC., a Texas corporation
("EAE Industries"), NEWPARK SHIPBUILDING--PELICAN ISLAND, INC., a Texas
corporation formerly known as Newpark Marine Fabricators, Inc. ("Pelican
Island"), NEWPARK SHIPBUILDING--GREENS BAYOU, INC., a Texas corporation formerly
known as Louisiana Ship, Inc. ("Greens Bayou"), NEWPARK SHIPBUILDING--GALVESTON
ISLAND, INC., a Texas corporation formerly known as FW Marine Properties, Inc.
("Galveston Island"), NEWPARK SHIPBUILDING--PASADENA, INC., a Texas corporation
formerly known as John Bludworth Marine, Inc. ("Pasadena" and, together with
Brady Island, EAE Services, EAE Industries, Pelican Island, Greens Bayou and
Galveston Island, the "Existing Subsidiary Guarantors"), FIRST WAVE MANAGEMENT,
INC., a Delaware corporation ("FW Management") and BANK ONE, N.A., as trustee
(the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company, the Existing Subsidiary Guarantors and the
Trustee are parties to that certain Indenture, dated as of February 2, 1998, as
amended by that certain First Supplemental Indenture dated February 3, 1998 and
that certain Second Supplemental Indenture dated as of May 18, 1998 (as
supplemented and amended, the "Indenture"), pursuant to which the 11% Senior
Notes due 2008 (the "Notes") were issued; and
WHEREAS, on August 6, 1998, Bludworth Shipyard and Fabrication, Inc.,
which was added as a Subsidiary Guarantor pursuant to the First Supplemental
Indenture, was merged with and into Newpark Marine Fabricators, Inc., now known
as Newpark ShipbuildingBPelican Island, Inc.; and
WHEREAS, on August 7, 1998, certain of the Existing Subsidiary
Guarantors amended their respective Articles of Incorporation in order to
change their corporate names and, as a result,
(i) Newpark Shipbuilding and Repair, Inc. is now known as Newpark
Shipbuilding--Brady Island, Inc.;
(ii) Newpark Marine Fabricators, Inc. is now know as Newpark
Shipbuilding--Pelican Island, Inc.;
(iii) Louisiana Ship, Inc. is now known as Newpark
Shipbuilding--Greens Bayou, Inc.;
(iv) FW Marine Properties, Inc. is now known as Newpark
Shipbuilding--Galveston Island, Inc.; and
(v) John Bludworth Marine, Inc. is now known as Newpark
Shipbuilding--Pasadena, Inc.; and
2
<PAGE> 3
WHEREAS, FW Management was incorporated on November 13, 1998 and the
Company has been issued all of the authorized stock of FW Management, thereby
causing FW Management to be a wholly owned subsidiary of the Company; and
WHEREAS, FW Management is now a Restricted Subsidiary of the Company;
and
WHEREAS, FW Management will provide accounting, administrative and
other management services to the Company; and
WHEREAS, Section 10.8 of the Indenture provides that the Company shall
cause any Person that becomes a Restricted Subsidiary after the Closing Date to
promptly execute and deliver to the Trustee a supplemental indenture pursuant
to which such Restricted Subsidiary shall become a Subsidiary Guarantor under
Article 10 of the Indenture and shall guarantee the Notes pursuant to the terms
thereof.
NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company, the Existing Subsidiary Guarantors and FW Management
agree as follows for the benefit of each other, the Trustee and the equal and
ratable benefit of the Holders of the Notes, and hereby amend and supplement
the Indenture as follows:
SECTION 1. ADDITION OF SUBSIDIARY GUARANTORS. In accordance with
Section 10.8 of the Indenture, FW Management agrees to become a Subsidiary
Guarantor under Article 10 of the Indenture and hereby guarantees the Notes
pursuant to the terms thereof.
SECTION 2. MODIFICATION OF INDENTURE. Upon the execution and delivery
of this Third Supplemental Indenture, the Indenture shall be modified to
reflect the addition of FW Management as a Subsidiary Guarantor under the
Indenture, and this Third Supplemental Indenture shall form a part of the
Indenture for all purposes.
SECTION 3. RATIFICATION. Except to the extent amended by or
inconsistent with this Third Supplemental Indenture, the Company, the Existing
Subsidiary Guarantors, FW Management and the Trustee hereby ratify and
reconfirm the Indenture in its entirety.
SECTION 4. MISCELLANEOUS.
A. Counterparts. This Third Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
B. Meaning of Terms. Any capitalized terms used in this Third
Supplemental Indenture and not defined herein that are defined in the Indenture
shall have the meanings specified in the Indenture, unless the context shall
otherwise require.
3
<PAGE> 4
C. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAW OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the date first above written.
FIRST WAVE MARINE, INC.
By: /s/ Frank W. Eakin
-------------------------------------
Frank W. Eakin
President
NEWPARK SHIPBUILDING--BRADY ISLAND, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
EAE SERVICES, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
EAE INDUSTRIES, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
NEWPARK SHIPBUILDING--PELICAN ISLAND, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
4
<PAGE> 5
NEWPARK SHIPBUILDING--GREENS BAYOU, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
NEWPARK SHIPBUILDING--PASADENA, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
NEWPARK SHIPBUILDING--GALVESTON ISLAND, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
FIRST WAVE MANAGEMENT, INC.
By: /s/ David B. Ammons
-------------------------------------
David B. Ammons
Executive Vice President
BANK ONE, N.A.,
as Trustee
By: /s/ David B. Knox
-------------------------------------
Authorized Signer
5
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF FIRST WAVE MARINE, INC.
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY OR ORGANIZATION STATE OF INCORPORATION
---------------------------------- ----------------------
<S> <C>
Newpark Shipbuilding-Brady Island, Inc.* Texas
Newpark Shipbuilding-Greens Bayou, Inc.* Texas
Newpark Shipbuilding-Pasadena, Inc.* Texas
Newpark Shipbuilding-Pelican Island, Inc.* Texas
Newpark Shipbuilding-Galveston Island, Inc.* Texas
EAE Industries, Inc. Texas
EAE Services, Inc. Texas
FirstWave Management, Inc. Delaware
</TABLE>
* Doing business under the assumed name of "Newpark Shipbuilding".
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,654
<SECURITIES> 8,364
<RECEIVABLES> 19,514
<ALLOWANCES> 145
<INVENTORY> 857
<CURRENT-ASSETS> 34,962
<PP&E> 78,523
<DEPRECIATION> 5,456
<TOTAL-ASSETS> 128,383
<CURRENT-LIABILITIES> 13,731
<BONDS> 0
0
0
<COMMON> 118
<OTHER-SE> 8,158
<TOTAL-LIABILITY-AND-EQUITY> 128,383
<SALES> 82,022
<TOTAL-REVENUES> 82,022
<CGS> 57,305
<TOTAL-COSTS> 57,305
<OTHER-EXPENSES> 14,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,390
<INCOME-PRETAX> 2,100
<INCOME-TAX> 945
<INCOME-CONTINUING> 1,155
<DISCONTINUED> 0
<EXTRAORDINARY> 933
<CHANGES> 0
<NET-INCOME> 222
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
