<PAGE>
<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-457
GULFMARK INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-1203713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 POST OAK PARK, SUITE 1170 77027
Houston, Texas
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(713) 963-9522
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 / /
Number of shares of Common Stock, $1.00 Par Value, outstanding as of
May 11, 1995: 3,321,385.<PAGE>
<PAGE>2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited consolidated financial statements included herein
have been prepared by the Registrant (the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission.
These consolidated financial statements reflect all adjustments,
consisting of normal recurring adjustments, which the Company
considers necessary for the fair presentation of such financial
statements for the periods indicated. Certain information relating to
the Company's organization and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted in this Form 10-Q
pursuant to such rules and regulations. However, the Company believes
that the disclosures herein are adequate to make the information
presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and the information included in the
Proxy Statement dated April 10, 1995.
2<PAGE>
<PAGE>3
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited) (Audited)
--------- -------
<S> <C> <C>
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 2,425 $ 2,989
Accounts and notes receivable........................................... 6,973 7,938
Inventory, prepaids and other........................................... 1,515 1,781
------ ------
Total current assets.................................................. 10,913 12,708
------ ------
INVESTMENT IN ENERGY VENTURES, INC........................................ 21,693 21,588
------ ------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $12,379,000 in 1995 and $11,179,000 in 1994............. 52,997 51,405
------ ------
OTHER ASSETS.............................................................. 3,127 2,975
------ ------
$88,730 $88,676
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt............. $ 1,980 $ 1,487
Accounts payable........................................................ 1,585 1,540
Accrued payroll and related expenses.................................... 585 1,009
Other accrued liabilities............................................... 1,436 1,738
------ ------
Total current labilities.............................................. 5,586 5,774
------ ------
LONG-TERM DEBT............................................................ 26,842 26,727
------ ------
DEFERRED TAXES AND OTHER.................................................. 2,606 2,629
------ ------
MINORITY INTEREST......................................................... 439 521
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized;
3,321,385 shares issued and outstanding............................... 3,321 3,321
Additional paid-in capital.............................................. 23,338 23,338
Retained earnings....................................................... 29,918 30,139
Cumulative translation adjustment....................................... (3,320) (3,773)
------ ------
Total stockholders' equity............................................ 53,257 53,025
------ ------
$88,730 $88,676
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3<PAGE>
<PAGE>4
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1995 1994
-------- --------
(In thousands, except
per share amounts)
<S> <C> <C>
REVENUES.......................................................... $ 7,500 $ 8,047
COSTS AND EXPENSES:
Direct operating expenses....................................... 6,334 5,737
Selling, general and administrative expenses.................... 1,348 1,187
------- -------
7,682 6,924
------- -------
OPERATING INCOME (LOSS)........................................... (182) 1,123
------- -------
OTHER INCOME (EXPENSES):
Equity in earnings of Energy Ventures, Inc...................... 368 192
Interest expense................................................ (587) (596)
Interest income................................................. 48 49
Minority interest............................................... 82 (41)
Other........................................................... (2) 12
------- -------
(91) (384)
------- -------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM.......... (273) 739
INCOME TAX PROVISION (BENEFIT).................................... (52) 240
------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM........................... (221) 499
EXTRAORDINARY ITEM ATTRIBUTABLE TO ENERGY VENTURES, INC.
(Less applicable income tax benefit of $51)..................... -- (706)
------- -------
NET INCOME (LOSS)................................................. $ (221) $ (207)
======= =======
EARNINGS (LOSS) PER SHARE:
Income (loss) before extraordinary item......................... $ (0.07) $ 0.15
Extraordinary item attributable to Energy Ventures, Inc......... -- (0.21)
------- -------
Net income (loss)............................................... $ (0.07) $ (0.06)
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING............................... 3,321 3,320
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4<PAGE>
<PAGE>5
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
------- --------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ (221) $ (207)
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization............................................ 1,335 1,198
Equity in (earnings) loss of Energy Ventures, Inc........................ (368) 565
Deferred and other income tax provision (benefit)........................ (70) 175
Minority interest........................................................ (82) 41
Change in assets and liabilities:
Accounts and notes receivable.......................................... 1,105 (567)
Inventory, prepaids and other.......................................... (160) (109)
Accounts payable, accrued payroll and related expenses................. (409) (29)
Other accrued liabilities.............................................. (316) 475
Other, net............................................................... 10 (41)
------ ------
Net cash provided by operating activities.................................. 824 1,501
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment...................................... (648) (122)
Expenditures for drydocking and main engine overhaul..................... (429) (544)
Proceeds from sales of property and equipment............................ -- 173
------ ------
Net cash used in investing activities...................................... (1,077) (493)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt....................................................... (751) (781)
Proceeds from debt, net.................................................. 440 893
Other.................................................................... -- 5
------ ------
Net cash provided by (used in) financing activities........................ (311) 117
------ ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (564) 1,125
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD....................... 2,989 5,510
------ ------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD............................. $ 2,425 $ 6,635
====== ======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.............................................................. $ 844 $ 595
====== ======
Income taxes paid.......................................................... $ 22 $ 24
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5<PAGE>
<PAGE>6
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) INVESTMENT IN ENERGY VENTURES, INC.
At March 31, 1995, the Company owned 20% of the outstanding stock
of Energy Ventures, Inc. ("Energy Ventures"), a publicly-traded (NYSE
trading symbol "EVI") international oilfield equipment and service
company which manufactures artificial lift and completion systems,
drill pipe and premium tubulars and provides rig contracting services.
The Company accounts for Energy Ventures using the equity method.
The following represents unaudited summarized income statements
for Energy Ventures. For more information regarding Energy Ventures'
financial condition and operations, reference is made to Energy
Ventures' March 31, 1995 Form 10-Q filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
SUMMARIZED INCOME STATEMENTS
(Unaudited)
------------------------------------------------------------------------
Three Months Ended
March 31,
--------------------
1995 1994
-------- --------
(In thousands)
<S> <C> <C>
Revenues.......................................... $ 72,660 $ 55,118
Expenses.......................................... (66,006) (51,696)
Other expenses, net............................... (4,024) (2,086)
------- -------
Income before income taxes........................ 2,630 1,336
Income tax provision.............................. 999 481
------- -------
Income before extraordinary charge................ 1,631 855
Extraordinary charge, net of taxes................ -- (3,784)
------- -------
Net income (loss)................................. $ 1,631 $ (2,929)
======= =======
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At March 31, 1995, the Company had $2.4 million in cash and cash
equivalents as compared to $3.0 million at December 31, 1994.
6<PAGE>
<PAGE>7
The Company has fulfilled final conditions for contracts with a
shipyard to construct two supply vessels at an anticipated cost of
$14.2 million each. These vessels are planned for service in the
North Sea with delivery expected in the first quarter of 1996 for one
vessel and the fourth quarter of 1996 for the other. The Company is
required to make interim construction payments of $5.0 million in 1995
and $0.8 million in 1996 representing approximately 20% of the vessel
cost. Final payment is due upon delivery of each vessel. In addition
the Company expects to receive a 9.5% subsidy, $1.5 million per
vessel, from the Norwegian government within twelve months of
delivery. The Company anticipates financing the cost of these vessels
primarily through additional borrowings. Approximately $11.6 million
is expected to be provided under a new bank loan and $11.0 million
through a combination of drawing on unused borrowing capacity and
increased borrowing capacity under an existing revolving credit
facility.
During the period ended March 31, 1995, expenditures for
scheduled drydockings of vessels were $429,000 and for vessel upgrades
and modifications $534,000. The latter is primarily attributable to
modifications required under a new two year contract for a vessel to
work in Brazil. The Company estimates that capital and maintenance
expenditures, excluding any expenditures to acquire additional
vessels, will be approximately $1.7 million for the remainder of 1995,
of which $0.9 million is related to scheduled drydockings. The
remainder primarily represents vessel upgrades and non-marine
expenditures which are not subject to firm commitments, and the
Company may modify its plans as appropriate.
At March 31, 1995, the Company had outstanding long-term debt of
$28.4 million borrowed under various facilities. These facilities are
secured by first preferred ship mortgages on ten of the Company's
vessels and assignments of such vessels' earnings. Interest on the
borrowings accrues at LIBOR plus 1 3/4% per annum. Scheduled debt
repayments are expected to be $1.5 million in 1995. The loan facility
agreements place certain restrictions on the ability of the
subsidiaries subject to these agreements to pay dividends. Cash held
by these subsidiaries was $1,928,000 as of March 31, 1995. As of May
1, 1995, the Company could borrow up to $5.4 million under its short-
term credit facilities and $1.5 million under its long-term credit
facility without providing additional security to its lenders. An
additional $4.6 million is available under a revolving credit facility
with the provision of further security either through vessel mortgages
or securing long-term charters or a combination thereof. This
available credit is expected to be used in connection with the
building of the two new vessels discussed above.
Substantially all of the Company's tax provision is for deferred
taxes. As of December 31, 1994, the Company had net operating loss
carryforwards for tax purposes which are available to offset taxable
7<PAGE>
<PAGE>8
income generated of $6,999,000 for United States tax purposes and of
$16,991,000 for United Kingdom tax purposes in future years. The
Company also has foreign tax credits of $512,000 and alternative
minimum tax credits of $292,000 available to offset taxable income
generated for United States tax purposes.
The Company believes that current reserves of cash and short-term
investments, cash flows from operations and access to various credit
arrangements will provide sufficient resources to finance internal
operating requirements. The Company continues, however, to actively
seek further investment opportunities. Such investments may require
the expenditure of significant resources, either in cash, notes, stock
or a combination thereof.
RESULTS OF OPERATIONS
The Company incurred a loss before extraordinary item of $221,000
or $0.07 per share for the quarter ended March 31, 1995 as compared to
income of $499,000 or $0.15 per share in the same period last year.
Revenues for the quarter were $7,500,000 as compared to $8,047,000 for
the comparative prior year period.
Marine results were impacted by softer markets in both of its
primary operating regions. In addition, anticipating a pickup in
market demand later in the year, the Company accelerated otherwise
required survey and drydock activity to the first quarter in order to
take full advantage of the improvements expected in the balance of the
year. In Southeast Asia results were affected by the increased
offhire days caused by four of the eight vessels in the region being
in drydock including two of the region's most productive units.
Charter rates in the North Sea were particularly soft in January and
February, but began to firm significantly in March. All of the North
Sea fleet is under charter until late 1995. The market is continuing
to improve as drilling activity in the region has increased and oil
companies are beginning to experience difficulty finding suitable
supply vessels available for summer charter.
Results for the quarter were further impacted by acceptance of a
two year contract for the Seapower with Petrobras, the state owned
Brazilian oil company, which required the vessel's removal from
service during the first quarter for modifications to substantially
upgrade the vessel for duties largely related to the carriage of bulk
material products. The vessel is in route to Brazil, and the benefit
of this two year contract will be reflected beginning mid-year.
8<PAGE>
<PAGE>9
The erosion control segment reported a loss for the 1995 first
quarter in contrast to the income for the 1994 first quarter, which
had been its highest in four years. Despite an increase in revenues
for this segment, gross margins were down significantly from 31% for
the 1994 first quarter to 8% for the 1995 first quarter. At Energy
Ventures, Inc., the Company's 20% owned affiliate, income, excluding
extraordinary items, nearly doubled with the Company reporting equity
in Energy Ventures' earnings of $368,000 for the 1995 first quarter as
compared to $192,000 for the 1994 first quarter. Results for the
prior year period also included an extraordinary charge of $706,000 or
$0.21 per share attributable to Energy Ventures, which incurred a
penalty of $3.8 million, net of tax, from the prepayment of certain
debt.
CURRENCY FLUCTUATIONS AND INFLATION
A significant portion of the Company's operations are overseas,
therefore the Company is potentially exposed to currency fluctuations
and exchange risks. Charters for vessels in the Company's North Sea
fleet are primarily denominated in British Pounds Sterling ("GBP") as
are substantially all the operating costs. North Sea operations are
expected to account for approximately $6.5 million of cash flows from
operations in 1995. Fluctuations in the GBP/Dollar exchange rate for
1995 thus far have been minimal as was also the case in 1994 with a
high of GBP=U.S.$1.64 to a low of GBP=U.S.$1.55 for the period from
January 1,, 1995 to May 1, 1995 for an average of GBP = $1.59 for the
period. The Company hedged the effect on cash flows of these
fluctuations in the GBP/Dollar exchange rates through GBP denominated
borrowings which account for 89% or $25.4 million of total debt. All
of the estimated $1.5 million in debt repayments for 1995 are
attributable to GBP denominated debt.
Reflected in the accompanying balance sheet for March 31, 1995,
is a $(3,320,000) cumulative translation adjustment relating to the
lower GBP exchange rate as of March 31, 1995 and to the Company's
equity share of translation adjustments reported by Energy Ventures,
its equity investee. Changes in the cumulative translation adjustment
are non-cash items.
Where currency risks are high, as in Brazil, the Company has
generally accepted only a small percentage of charterhire in the local
currency and the remainder is paid in U.S. Dollars. Under the two
year vessel charter for service in Brazil, the Company anticipates
that expenses in the local currency will approximate the portion of
charterhire paid in local currency.
9
<PAGE>
<PAGE>10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GulfMark International, Inc.
(Registrant)
By: /s/ Frank R. Pierce
-----------------------------
Frank R. Pierce
Executive Vice President
(Principal Financial Officer)
By: /s/ Elizabeth D. Brumley
------------------------------
Elizabeth D. Brumley
Controller
(Principal Accounting Officer)
Date: May 12, 1995
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2425000
<SECURITIES> 0
<RECEIVABLES> 6973000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10913000
<PP&E> 65376000
<DEPRECIATION> 12379000
<TOTAL-ASSETS> 88730000
<CURRENT-LIABILITIES> 5586000
<BONDS> 0
<COMMON> 26659000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 88730000
<SALES> 7500000
<TOTAL-REVENUES> 7500000
<CGS> 6334000
<TOTAL-COSTS> 7682000
<OTHER-EXPENSES> 2000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 587000
<INCOME-PRETAX> (273000)
<INCOME-TAX> (52000)
<INCOME-CONTINUING> (221000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (221000)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
