SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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HORIZON OFFSHORE, INC. 401(K) PLAN
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HORIZON OFFSHORE, INC.
2500 CITYWEST BOULEVARD, SUITE 2200
HOUSTON, TEXAS 77042
<PAGE>
HORIZON OFFSHORE, INC. 401(K) PLAN
Financial Statements
As of December 31, 1999
Together With Auditors' Report
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
Horizon Offshore, Inc. 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits for Horizon Offshore, Inc. 401(k) Plan (the Plan), as of December 31,
1999 and 1998, and the related statements of changes in net assets available for
plan benefits for the years ended December 31, 1999 and 1998. These financial
statements and the supplemental schedules referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and supplemental schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 net assets available for the Plan benefits for the
Plan as of December 31, 1999 and 1998, and the changes in its net assets
available for Plan benefits for the year ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1999, and nonexempt transactions for
the year ended December 31, 1999 are presented for purposes of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Houston, Texas
June 14, 2000
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HORIZON OFFSHORE, INC. 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
1999 1998
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ASSETS:
INVESTMENTS, at fair value .................... $ 2,254,931 $ 1,141,701
EMPLOYER CONTRIBUTIONS RECEIVABLE ............. 802 --
EXCESS CONTRIBUTIONS PAYABLE .................. (2,181) --
DISTRIBUTIONS PAYABLE ......................... (15,378) --
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NET ASSETS AVAILABLE FOR PLAN BENEFITS ........ $ 2,238,174 $ 1,143,024
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The accompanying notes are an integral part of these financial statements.
<PAGE>
HORIZON OFFSHORE, INC. 401(K) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
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INVESTMENT INCOME:
Net appreciation in fair value of investments .... $ 155,792 $ 23,491
Interest and dividends ........................... 54,576 108,586
CONTRIBUTIONS:
Participants ..................................... 729,781 387,930
Rollovers ........................................ 196,887 218,275
Employer ......................................... 239,011 123,292
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Total additions ........... 1,376,047 861,574
EXCESS CONTRIBUTIONS PAYABLE ....................... 2,181
DISTRIBUTIONS AND WITHDRAWALS ...................... 273,958 160,021
ADMINISTRATIVE EXPENSES ............................ 4,758 95
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Net increase ............. 1,095,150 701,458
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year ................................ 1,143,024 441,566
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End of year ...................................... $2,238,174 $1,143,024
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The accompanying notes are an integral part of these financial statements.
<PAGE>
HORIZON OFFSHORE, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF THE PLAN:
GENERAL
Horizon Offshore, Inc. 401(k) Plan (the Plan) is a defined contribution plan.
The Plan is for the exclusive benefit of all employees of Horizon Offshore,
Inc., and subsidiaries (the Company).
ELIGIBILITY AND CONTRIBUTIONS
All employees who were previously not covered by a benefit plan established
pursuant to a certain collective bargaining agreement and who have been employed
by the Company for six months and have attained the age of 18 are eligible to
participate in the Plan.
Participant contributions cannot be less than 1 percent nor more than 15 percent
of a participant's annual compensation up to the maximum deferrable amount
allowed by the Internal Revenue Service (IRS) ($10,000 for 1999 and 1998).
The Company contributed a matching contribution (Employer Matching Contribution)
in 1999 and 1998, equal to 50 percent and 20 percent of participant
contributions, respectively, not to exceed 6 percent of participant compensation
in any Plan year. The Company may also contribute additional amounts at its sole
discretion. No discretionary amounts were contributed in 1999 and 1998.
Each participant's account is credited with the participant's contribution, the
Employer Matching Contribution and the participant's share of the income and any
appreciation or depreciation of the funds invested.
EXCESS CONTRIBUTIONS
Employee contributions include excess contributions which will be refunded to
participants subsequent to year-end as the contributions were determined to be
in excess of maximum contribution levels for certain participants. A liability
for excess contributions payable in the amount of $2,181 and $- has been
reflected in the statements of net assets available for plan benefits as of
December 31, 1999 and 1998.
VESTED BENEFITS
Participants are immediately vested in their contributions plus actual earnings
thereon. Participants become vested in the remainder of their accounts based on
years of service with the Company in accordance with the following schedule:
YEARS OF VESTED
VESTED SERVICE PERCENTAGE
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Less than 2 0%
2 20
3 40
4 60
5 80
6 100
The Plan provides for participants to be fully vested upon death, permanent
disability or the employee's normal retirement date. The Plan also provides that
forfeitures, if any, will reduce the amount of the Employer Matching
Contribution or Plan expenses. At December 31, 1999 and 1998, $13,629 and
$3,486, respectively, of unallocated forfeitures are available to reduce future
Employer Matching Contributions or Plan expenses.
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ADMINISTRATION
The general administration of the Plan is vested with a Plan administrator. The
Plan administrator is given all powers necessary to enable it to carry out its
duties including, but not limited to, the power to interpret the Plan, decide on
all questions of eligibility and the status and rights of participants, and
direct disbursements of benefits in accordance with the provisions of the Plan.
TRUSTEE AND CUSTODIAN OF PLAN ASSETS
The board of directors of the Company entered into a contract, effective January
1, 1999, with Reliance Trust Company whereby Reliance Trust Company serves as
trustee and asset custodian of the Plan. Benefit Services Corporation serves as
recordkeeper of the Plan. Prior to January 1, 1999, Fidelity Management Trust
Company served as the trustee, asset custodian and as recordkeeper of the Plan.
Fidelity Management Trust Company liquidated the funds based on fair market
value at the date of the liquidation and transferred the value of the liquidated
funds via wire transfer to Reliance Trust Company. Participants were allowed to
renew their investment elections based on available investment options. The
trustee is authorized to receive contributions, manage, invest and reinvest the
trust fund and authorize payments to such persons, as it deems appropriate in
accordance with the Plan. The term "trust fund" refers to all assets of
whatsoever kind or nature that at any time, or from time to time, may be
acquired or held by the trustee under the trust forming a part of the Plan.
FUNDS
Each participant has the right upon enrollment to select fund(s) in which the
balance in the participant account will be invested. During 1999, participants
could direct their investment balances into various guaranteed investment
contracts, pooled separate accounts offered by Metropolitan Life Insurance
Company and the Company's common stock. During 1998, participants could direct
their investment balances among six mutual funds and a common trust fund.
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LOANS
As of January 1, 1999, participants were not allowed to borrow from the Plan. In
1998, the Plan had $1,323 in outstanding participants' loans.
FEDERAL INCOME TAXES
The Plan received a determination letter from the Internal Revenue Service dated
November 18, 1997, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the Code) and, therefore, the
related trust is exempt from taxation. However, the Plan has been amended
subsequent to the issuance of the determination. The Plan administrator believes
the Plan is being operated in compliance with the applicable requirements of the
Code and, therefore, believes that the Plan is qualified and the related trust
is tax exempt.
BENEFITS
Upon death, permanent disability or retirement, each participant may elect to
receive either a lump-sum amount equal to the value of his or her account, net
of any outstanding loans, or annuity payments over a period elected by the
participant. Terminated employees are not required to withdraw amounts from
their Plan accounts if such accounts are greater than $5,000.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
BASIS OF ACCOUNTING AND
INVESTMENT VALUATION
The financial statements of the Plan are presented on the accrual basis of
accounting. Investment securities are recorded at cost when purchased but are
adjusted to market value at the end of each month for financial reporting
purposes.
Guaranteed investment contracts are recorded at their contract values, which
represent contributions and reinvested income, less any withdrawals plus accrued
interest, because these investments have fully benefit-responsive features. For
example, participants may ordinarily direct the withdrawal or transfer of all or
a portion of their investment at contract value. There are no reserves against
contract values for credit risk of contract issues or otherwise. The average
yield was approximately 5.0 percent in 1999. The crediting interest rate for
these investment contracts is reset annually by the issuer but cannot be less
than 3 percent and was 5.0 percent at December 31, 1999. The Plan did not have a
guaranteed investment contract as an investment option in 1998.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to use estimates and
assumptions that affect the accompanying financial statements and disclosures.
Actual results could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investments in guaranteed investment contracts,
pooled separate accounts and the Company's common stock. Investment securities,
in general, are exposed to various risks, such as interest rate, credit and
overall market volatility risks. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term.
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EXPENSES
All administrative expenses, including legal, trustee and accounting fees, have
been paid by forfeitures. Forfeitures are the portion of an employer's
contribution that may be lost when the participant separates from service before
becoming 100% vested. Only the non-vested portions of employer contributions are
subject to forfeiture.
TERMINATION OF THE PLAN
The Plan is intended as a long-range permanent program; however, the Company
reserves the right to change, suspend or discontinue the Plan at any time. In
the event the Plan is discontinued, the participants will become 100 percent
vested in their account value at the time of such discontinuance.
ADOPTION OF STATEMENT OF POSITION 99-3
The Accounting Standards Executive Committee issued Statement of Position (SOP)
99-3, "Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters," which eliminates the requirement for
a defined contribution plan to disclose participate-directed investment
programs. During 1999, the Plan adopted SOP 99-3 and, as such, the 1998
financial statements have been reclassified to eliminate the
participant-directed fund investment program disclosures.
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3. INVESTMENTS:
The carrying values of individual investments that represent 5 percent or more
of the Plan's net assets as of December 31, 1999, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Fair value as determined by the trustee based on market value-
Metropolitan Insurance Company, guaranteed investment contract, 5.0% $216,691
MetLife/UAM Medium-Term (Balanced Lifestyle Option) 142,243
MetLife/UAM Long-Term (Aggressive Lifestyle Option) 139,439
Janus Balanced 399,045
Metlife Stock Market Index Guaranteed 295,206
Dreyfus Founders Growth 155,977
American Century: 20th Century Ultra 391,174
Janus Worldwide 180,046
Horizon Offshore, Inc. Common Stock 289,201
The carrying values of individual investments that represent 5 percent or more
of the Plan's net assets as of December 31, 1998, are as follows:
Fair value as determined by quoted market value-
Fidelity Emerging Growth Fund 307,050
Fidelity Managed Income Portfolio 195,568
Fidelity Dividend Growth Fund 191,159
Fidelity Asset Manager Fund 186,637
Fidelity Low-priced Stock Fund 130,680
Fidelity Government Securities Fund 86,603
During the year ended December 31, 1999, the Plan's investments appreciated in
fair value by $155,792, as follows:
Pooled Separate Accounts $234,431
Metropolitan Insurance Company, guaranteed investment contract, 5.0% 7,095
Horizon Offshore, Inc. Common Stock (85,734)
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$155,792
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</TABLE>
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4. NONEXEMPT TRANSACTIONS:
For the year ended December 31, 1999, the Company's failed to remit participant
contributions for the months of January and February 1999 to the Plan within the
time frame specified by Department of Labor's Rules and Regulations for
Reporting and Disclosure CFR 2510. 3-102. As such, these transactions
represented nonexempt transactions between the Company and the Plan as
identified in Schedule II. The deemed loans were paid to the Plan on March 18,
1999, and April 4, 1999.
5. SUBSEQUENT EVENTS:
As of January 1, 2000, the Company is no longer funding employer matching
contributions with cash. The Company is now issuing its own common stock as
payment of its employer matching contribution.
<PAGE>
SCHEDULE I
HORIZON OFFSHORE, INC. 401(K) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
CURRENT
IDENTITY OF ISSUE AND DESCRIPTION OF INVESTMENT COST VALUE
----------------------------------------------- ---- ---------
<S> <C> <C>
METROPOLITAN LIFE INSURANCE COMPANY:
guaranteed investment contract, 5.0% (a) $ 216,691
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Total guaranteed investment contract 216,691
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Pooled Separate Accounts
MetLife/UAM Extended Short-Term (Conservative Lifestyle
Option) (a) 45,909
MetLife/UAM Medium-Term (Balanced Lifestyle Option) (a) 142,243
MetLife/UAM Long-Term (Aggressive Lifestyle Option) (a) 139,439
Janus Balanced (a) 399,045
Metlife Stock Market Index Guaranteed (a) 295,206
Dreyfus Founders Growth (a) 155,977
American Century: 20th Century Ultra (a) 391,174
Janus Worldwide (a) 180,046
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Total pooled separate accounts 1,749,039
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HORIZON OFFSHORE, Inc.*; common stock, $1 par, 38,526 shares (a) 289,201
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Total assets held for investment purposes $2,254,931
==========
</TABLE>
*Indicated party in interest.
(a) Cost omitted for participant directed investments
<PAGE>
SCHEDULE II
HORIZON OFFSHORE, INC. 401(K) PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
RELATIONSHIP TO PLAN, DESCRIPTION OF TRANSACTIONS, INCLUDING INTEREST
IDENTITY OF EMPLOYER OR OTHER MATURITY DATE, RATE OF INTEREST, AMOUNT INCURRED
PARTY INVOLVED PARTY IN INTEREST COLLATERAL AND MATURITY LOANED ON LOAN
----------------- ----------------------- ---------------------------------------- ----------- --------
<S> <C> <C> <C> <C>
Horizon
Offshore, Inc. Employer Lending of monies from the Plan to the
employer (contributions not timely
remitted to the Plan) as follows-
Deemed loan dated February 22, 1999,
maturity of March 18, 1999, with
interest at 8% per annum 84,665 $ 489
Deemed loan dated March 22, 1999,
maturity of April 6, 1999, with
interest at 8% per annum $ 100,753 313
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$ 802*
======
</TABLE>
*Interest of $802 was remitted to the Plan by the employer subsequent to
year-end.
