<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 September 30, 1996
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
November 11, 1996: 3,338,852.<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, 1995, and the information included in the
Proxy Statement dated April 1, 1996.
2<PAGE>
<PAGE>3
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
--------- --------
<S> <C> <C>
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 14,108 $ 5,163
Accounts and notes receivable........................................... 10,646 6,148
Inventory, prepaids and other........................................... 798 1,399
------- -------
Total current assets.................................................. 25,552 12,710
------- -------
INVESTMENT IN ENERGY VENTURES, INC........................................ 51,520 34,321
------- -------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $17,577,000 in 1996 and $14,959,000 in 1995............. 81,865 61,582
------- -------
OTHER ASSETS.............................................................. 2,496 2,322
------- -------
$161,433 $110,935
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt............. $ 9,588 $ 4,066
Accounts payable........................................................ 1,427 1,779
Accrued payroll and related expenses.................................... 529 564
Other accrued liabilities............................................... 1,519 1,245
------- -------
Total current labilities.............................................. 13,063 7,654
------- -------
LONG-TERM DEBT............................................................ 48,873 33,600
------- -------
DEFERRED TAXES AND OTHER.................................................. 20,297 10,308
------- -------
MINORITY INTEREST......................................................... 431 415
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized;
3,338,852 and 3,336,352 shares issued and outstanding................. 3,339 3,336
Additional paid-in capital.............................................. 23,515 23,501
Retained earnings....................................................... 34,751 28,237
Cumulative translation adjustment....................................... (3,943) (4,146)
Unrealized gain on investment, net of tax............................... 21,107 8,030
------- -------
Total stockholders' equity............................................ 78,769 58,958
------- -------
$161,433 $110,935
======= =======
</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 Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1996 1995 1996 1995
-------- -------- ------- ------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES............................................... $11,778 $10,547 $27,917 $27,582
COSTS AND EXPENSES:
Direct operating expenses............................ 6,572 7,168 17,064 20,363
Selling, general and administrative expenses......... 1,840 1,912 4,842 4,608
------- ------- ------- -------
8,412 9,080 21,906 24,971
------- ------- ------- -------
OPERATING INCOME....................................... 3,366 1,467 6,011 2,611
------- ------- ------- -------
OTHER INCOME (EXPENSES):
Interest expense..................................... (1,049) (676) (2,793) (2,119)
Interest income...................................... 132 42 263 127
Equity in earnings of Energy Ventures, Inc........... -- -- -- 761
Gain on sale of Energy Ventures, Inc stock........... 6,264 -- 6,264 --
Other................................................ (39) (7) 36 89
------- ------- ------- -------
5,308 (641) 3,770 (1,142)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES............................. 8,674 826 9,781 1,469
INCOME TAX PROVISION................................... (2,963) (149) (3,267) (3,725)
------- ------- ------- -------
NET INCOME (LOSS)....................................... $ 5,711 $ 677 $ 6,514 $ (2,256)
======= ======= ======= =======
EARNINGS (LOSS) PER SHARE.............................. $ 1.71 $ 0.20 $ 1.95 $ (0.68)
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING..................... 3,339 3,321 3,338 3,321
======= ======= ======= =======
</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>
Nine Months Ended
September 30,
----------------------
1996 1995
------- --------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ 6,514 $(2,256)
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization............................................ 3,681 4,183
Deferred and other income tax provision.................................. 3,215 3,654
Equity in earnings of Energy Ventures, Inc............................... -- (761)
Gain on sale of Energy Ventures, Inc. stock.............................. (6,264) --
Change in assets and liabilities......................................... (2,843) 1,115
Other, net............................................................... 79 (102)
------- -------
Net cash provided by operating activities.................................. 4,382 5,833
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment...................................... (23,582) (5,170)
Expenditures for drydocking and main engine overhaul..................... (1,062) (1,040)
Proceeds from sales of property and equipment............................ -- 29
Proceeds from sale of Energy Ventures, Inc. stock........................ 8,888 --
------ ------
Net cash used in investing activities...................................... (15,756) (6,181)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt....................................................... (1,925) (14,308)
Proceeds from debt, net.................................................. 22,227 15,508
Other.................................................................... 17 21
------ -------
Net cash provided by financing activities.................................. 20,319 1,221
------ -------
NET INCREASE IN CASH AND CASH EQUIVALENTS.................................. 8,945 873
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD....................... 5,163 2,989
------ -------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD............................. $ 14,108 $ 3,862
====== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.............................................................. $ 2,467 $ 2,180
====== =======
Income taxes paid.......................................................... $ 59 $ 72
====== =======
</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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment
During the first quarter of 1996, management completed an
evaluation of the useful life used for depreciating vessels in light
of recent vessel performance, changes in the materials available to
protect vessel hulls and industry practice. Based on the results, it
was determined that a useful life of twenty-five years for its vessels
was a better estimate than the twenty years used previously.
Therefore effective January 1, 1996, the useful life was extended to
twenty-five years. For the quarter ended September 30, 1996, the
effect of this change in accounting estimate lowered depreciation
expense by $468,000. The impact of the change on net income for the
quarter ended September 30, 1996 was $313,000 or $0.09 per share. For
the nine months ended September 30, 1996, the effect of this change
lowered depreciation expense by $1,404,000. The impact of the change
on net income for the nine months ended September 30, 1996 was
$938,000 or $0.28 per share.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued
SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", which was effective for the
Company on January 1, 1996. The statement sets forth guidelines
regarding when to recognize an impairment of long-lived assets,
including goodwill, and how to measure such impairment. Adoption of
SFAS No. 121 did not have any effect on the Company's consolidated
financial statements.
As of January 1, 1996, SFAS No. 123, "Accounting for Stock-Based
Compensation", was effective for the Company. SFAS No. 123 permits,
but does not require, a fair value based method of accounting for
employee stock option plans which results in compensation expense
recognition when stock options are granted. The Company will continue
the use of its current intrinsic value based method of accounting for
such plans.
6<PAGE>
<PAGE>7
(2) VESSEL ACQUISITIONS
In 1995, the Company contracted with a shipyard in Norway for the
construction of two new UT 755 design vessels for deployment in the
North Sea. The first vessel, named the Highland Piper, was delivered
on March 15, 1996. The second vessel, to be named the Highland
Drummer, is expected to be delivered in early 1997. Included in
capital expenditures for the nine months ended September 30, 1996 is a
total of $11,508,000 related to the final construction payment on the
Highland Piper and interim construction payments on the Highland
Drummer. Funding for these payments was provided through additional
borrowings of approximately $12,400,000 under a British Pound Sterling
("GBP") 16,500,000 facility with a bank.
In connection with the final payment to a shipyard for the
Highland Drummer, the Company entered into a forward contract to hedge
approximately $12,266,000 of the commitment to pay in Norwegian Kroner
against unfavorable fluctuations in the exchange rate to GBP which
will be used to fund the payment. The unrealized loss of $195,000 as
of September 30, 1996, is not reflected in the accompanying financial
statements. The vessel is expected to be delivered in early 1997 at
which time any realized gain or loss will be included in the cost of
the vessel.
On August 2, 1996, the Company purchased six offshore supply
vessels from Maritime (Pte) Limited which operate in Southeast Asia.
Funding for this acquisition was provided through a new $7,000,000
facility with a bank and drawdown available under existing facilities.
The new facility requires ten semi-annual payments beginning in 1997.
The Company has entered into a contract with a shipyard to
construct an enhanced UT 755 design, supply vessel at a price of
approximately $18 million. The new ship will be a modified version of
the Company's recently delivered Highland Piper (March 1996) and the
soon to be delivered, Highland Drummer (January 1997). This vessel,
scheduled for delivery in the first quarter of 1998, will be available
to participate in the growing demand for deep water, remotely operated
vehicle (ROV) support, standard supply duties and specialized services
in the North Sea. The Company is required to make interim
construction payments of $.9 million in 1996 and $2.7 million in 1997.
Final payment is due upon delivery of the vessel. The Company
anticipates financing the cost of the vessel through additional
borrowings and existing funds.
(3) INVESTMENT IN ENERGY VENTURES, INC.
At September 30, 1996, the Company owned 2,235,572 shares of
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. On July 26, 1996, the Company sold 300,000 of its 2,535,572
7<PAGE>
<PAGE>8
share holding in Energy Ventures in conjunction with a public offering
by Energy Ventures of 3,000,000 newly issued shares. As a result, the
Company received net proceeds of approximately $8.9 million resulting
in an after-tax gain of approximately $4.1 million or $1.24 per share.
As a result of this sale and offering, the Company's ownership
interest in Energy Ventures decreased to approximately 10%.
The Company's ownership interest was previously diluted from 20%
to 17% on June 30, 1995 as a result of Energy Ventures' issuing 2.25
million shares in connection with an acquisition and from 17% to 14%
in September 1995 with the issuance of 3.45 million shares through a
public stock offering in September 1995.
Prior to June 30, 1995, the Company accounted for Energy Ventures
on the equity method; however, the reduction in the Company's
ownership interest on June 30, 1995, necessitated a change from the
equity method to the cost method and the application of certain
requirements of Statement of Financial Accounting Standards No. 115 -
"Accounting for Certain Investments in Debt and Equity Securities"
("SFAS No. 115"). Under the cost method the Company no longer records
its proportionate share of Energy Ventures' earnings as was done prior
to June 30, 1995, under the equity method.
Any dividends paid by an investee under the cost method are
reported as income to the extent that such amounts are not in excess
of net accumulated earnings subsequent to the date the Company began
following the cost method. In addition, under SFAS No. 115, "...the
portion of the security that can reasonably be expected to qualify for
sale within one year..." must be reported at its "fair value". If the
Company is considered an "affiliate" under the federal securities
rules and regulations, approximately 1,007,000 shares represents the
number of shares which may be sold by the Company without restriction
pursuant to Rule 144 promulgated under the Securities Act of 1933.
However, in connection with the sale of the 300,000 shares discussed
above, the Company agreed not to sell any additional shares of Energy
Ventures stock for 90 days after July 22, 1996, the effective date of
Energy Ventures' registration statement. Accordingly, the Company has
reflected in the accompanying balance sheet approximately 1,007,000
shares of the Energy Ventures holding at the closing price quoted on
the New York Stock Exchange as of September 30, 1996. The related
unrealized gains and losses on those shares are reflected as a
separate component of stockholders' equity, net of the related
deferred taxes until realized. The remaining 1,228,572 shares are
carried at historical cost.
The quoted market value of Energy Ventures' shares held by the
Company may not be the value that would be realized should the Company
dispose of some or all of the shares. As of November 11, 1996, the
quoted market value of Energy Ventures' shares held by the Company was
$105,072,000.
The following represents unaudited summarized income statements
8<PAGE>
<PAGE>9
for Energy Ventures. For more information regarding Energy Ventures'
financial condition and operations, reference is made to Energy
Ventures' September 30, 1996 Form 10-Q filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
SUMMARIZED INCOME STATEMENTS
(Unaudited)
---------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Revenues................................ $160,632 $ 93,797 $390,560 $246,204
Expenses................................ (141,563) (84,602) (347,730) (223,468)
Other expenses, net..................... (4,056) (4,510) (12,215) (12,678)
-------- -------- -------- --------
Income before income taxes.............. 15,013 4,685 30,615 10,058
Income tax provision.................... (5,254) (1,129) (10,715) (3,118)
-------- -------- -------- --------
Income before extraordinary charge...... 9,759 3,556 19,900 6,940
Extraordinary charge, net of taxes...... -- -- (731) --
-------- -------- -------- --------
Net income .............................. $ 9,759 $ 3,556 $ 19,169 $ 6,940
======== ======== ======== ========
</TABLE>
(4) CONTINGENCIES
The Company along with a major railroad was named in a lawsuit in
which the Plaintiffs are claiming damages resulting from flooding and
erosion allegedly caused by the railroad and/or the Company. During
the third quarter 1996, the Company was discharged from all claims by
the Plaintiffs in exchange for consideration which was immaterial to
the financial statements of the Company.
On November 14, 1995, an arbitration panel in Houston awarded a
customer of Ercon Development Co. ("Ercon"), the Company's subsidiary,
$468,000 in connection with an erosion control system installed on the
customer's property. The amount of the award is reflected in the
accompanying statements of income. The Company made a claim to its
insurance carrier for the award and associated legal fees; however,
the insurance company has denied coverage. Coverage of the claim and
related costs of defense are the subject of ongoing litigation.
The Company is subject to legal proceedings and claims that arise
in the ordinary course of its business. Management believes, based on
discussions with its legal counsel and in consideration of reserves
recorded, that the outcome of these legal actions will not have a
material adverse effect upon the consolidated financial position and
results of operations of the Company.
9<PAGE>
<PAGE>10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At September 30, 1996, the Company had $14.1 million in cash and
cash equivalents as compared to $5.2 million at December 31, 1995.
In 1995, the Company contracted with a shipyard in Norway for the
construction of two UT 755 design vessels for deployment in the North
Sea. The first vessel, named the Highland Piper, was delivered March
15, 1996. The second vessel, to be named the Highland Drummer, is
expected to be delivered in early 1997. The Company made a final
construction payment and interim construction payments during the nine
months ended September 30, 1996, totaling $11,508,000. No further
payments on the second vessel are expected in 1996. A final payment
of $12.2 million is due upon delivery of the Drummer. Funding was
provided by additional borrowings under an existing credit facility.
On August 2, 1996, the Company purchased six offshore supply
vessels from Maritime (Pte) Limited which operate in Southeast Asia.
Funding for this acquisition was provided through a new $7,000,000
facility with a bank and drawdown available under existing facilities.
The new facility requires ten semi-annual payments beginning in 1997.
The Company has entered into a contract with a shipyard to
construct an enhanced UT 755 design, supply vessel at a price of
approximately $18 million. The new ship will be a modified version of
the Company's recently delivered Highland Piper (March 1996) and the
soon to be delivered, Highland Drummer (January 1997). This vessel,
scheduled for delivery in the first quarter of 1998, will be available
to participate in the growing demand for deep water, remotely operated
vehicle (ROV) support, standard supply duties and specialized services
in the North Sea. The Company is required to make interim
construction payments of $.9 million in 1996 and $2.7 million in 1997.
Final payment is due upon delivery of the vessel. The Company
anticipates financing the cost of the vessel through additional
borrowings and existing funds.
During the nine month period ended September 30, 1996,
expenditures for scheduled drydockings of vessels were $1,062,000 and
$57,000 for vessel upgrades and modifications. The Company estimates
that capital and maintenance expenditures, excluding any
expenditures to build or acquire additional vessels, will be
approximately $0.5 million for the remainder of 1996, of which $0.4
million is related to scheduled drydockings.
At September 30, 1996, the Company had outstanding long-term debt
of $53.8 million borrowed under various facilities. These facilities
are secured by first preferred ship mortgages on nineteen of the
Company's vessels and assignments of such vessels' earnings. Interest
on the borrowings accrues at between LIBOR plus 1 1/4% and LIBOR plus
2 1/4% per annum. Scheduled debt repayments are expected to be $2.5
10<PAGE>
<PAGE>11
million for the remainder of 1996. 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 $4.6 million as of September 30, 1996. As of November 11, 1996,
the Company could borrow up to $2.0 million under its short-term
credit facilities without providing additional security to its
lenders. An additional $9.7 million is available under a revolving
credit facility with the provision of further security through vessel
mortgages. This available credit is expected to be used in connection
with the completion of the Highland Drummer discussed above.
On July 26, 1996, the Company sold 300,000 shares of Energy
Ventures stock for approximately $8.9 million in cash. Such cash is
available for future investment opportunities.
Substantially all of the Company's tax provision is for deferred
taxes. As of December 31, 1995, the Company had net operating loss
carryforwards for tax purposes which are available to offset taxable
income generated of $8,021,000 for United States tax purposes and of
$19,498,000 for United Kingdom tax purposes in future years. As a
result of the sale of 300,000 shares of Energy Ventures stock
substantially all of the net operating loss carryforward available for
United States tax purposes was utilized.
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's operating income was $3,366,000 for the quarter
ended September 30, 1996 as compared to $1,467,000 in the same period
last year. Revenues for the quarter were $11,778,000 as compared to
$10,547,000 for the comparative prior year period.
Improvements in revenues and operating income for the marine
segment are primarily attributable to the addition of two vessels to
the North Sea fleet: the newly constructed Highland Piper (delivered
March 1996) and the Atlantic Warrior (previously was under bareboat
charter and purchased December 1995). Results were also favorably
impacted by an upturn in North Sea spot market day rates late in the
quarter as well as the August 1996 acquisition of six offshore supply
vessels in Southeast Asia. In addition, earnings for the current
quarter benefitted from reduced depreciation resulting from the
Company's change (effective January 1, 1996) to conform its estimate
of vessel useful life to the industry standard of 25 years.
11<PAGE>
<PAGE>12
The erosion control segment reported earnings for the 1996 third
quarter which were $420,000 more than the 1995 third quarter. While
revenues for this segment were $538,000 less than the 1995 third
quarter, total expenses for the third quarter 1996 were $957,000 less
than the 1995 third quarter. Total 1995 third quarter expenses
included over $400,000 in expenses related to additional taxes owed
and expenses related to pending litigation.
Net income for the quarter ended September 30, 1996 was
$5,711,000 or $1.71 per share of which $4,134,000 (net of tax) or
$1.24 per share is related to the sale of 300,000 shares of Energy
Ventures' stock. Excluding the impact of the stock sale, net income
for the quarter was $1,577,000 or $0.47 per share as compared to
$677,000 or $0.20 per share for the comparable 1995 period.
The Company's operating income for the nine months ended
September 30, 1996 was $6,011,000 versus $2,611,000 for the
comparative prior year period. Marine operating income improved as a
result of the vessel additions and reduction in depreciation due to
the change in the estimated useful life of the vessels.
The Company had net income of $6,514,000 or $1.95 per share for
the nine months ended September 30, 1996 versus a net loss of
$(2,256,000) or $(0.68) per share for the nine months ended September
30, 1995. Included in the prior year nine months ended September 30,
1995 was a $3,374,000 non-cash charge for additional taxes associated
with the change from the equity method to the cost method of
accounting for the Company's investment in Energy Ventures. Also
included in results for the nine months ended September 30, 1995 was
$761,000 or 0.22 per share of income attributable to equity in
earnings of Energy Ventures.
As discussed in the notes to consolidated financial statements
and "Liquidity and Capital Resources", the Company sold 300,000 shares
of Energy Ventures common stock on July 26, 1996 in a public offering
for approximately $8.9 million resulting in an after-tax gain of
approximately $4.1 million or $1.24 per share.
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 Pound Sterling ("GBP") as
are substantially all of the operating costs. North Sea operations
generated $17,736,000 in revenues, $6,443,000 in operating income and
$4,092,000 of cash flows from operations during the nine months ended
September 30, 1996. Fluctuations in the GBP/Dollar exchange rate for
1996 have been minimal as was also the case in 1995 with a high of
GBP=U.S.$1.65 to a low of GBP=U.S.$1.49 for the period from January 1,
1996 to November 11, 1996 for an average of GBP = $1.54 for the
12<PAGE>
<PAGE>13
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 78% or $45.6 million of total debt. All
of the estimated $2.5 million in debt repayments for the remainder of
1996 are attributable to GBP denominated debt.
Reflected in the accompanying balance sheet for September 30,
1996, is a cumulative translation adjustment of $3,943,000 relating to
the GBP exchange rate as of September 30, 1996 and the Company's
share of translation adjustments reported by Energy Ventures. Changes
in the cumulative translation adjustment are non-cash items that are
primarily attributable to investments in vessels and are partially
offset by GBP denominated debt in the North Sea.
To date, general inflationary pressures have not had a material
effect on the Company's operating revenues or expenses.
PART 2. OTHER INFORMATION
None
13<PAGE>
<PAGE>14
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:
-----------------------------
Frank R. Pierce
Executive Vice President
(Principal Financial Officer)
By:
------------------------------
Kevin Mitchell
Controller
(Principal Accounting Officer)
Date: November 14, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SETS FORTH CERTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF GULFMARK INTERNATIONAL, INC.
AS OF SEPTEMBER 30, 1996, AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,108
<SECURITIES> 0
<RECEIVABLES> 10,646
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,552
<PP&E> 99,442
<DEPRECIATION> 17,577
<TOTAL-ASSETS> 161,433
<CURRENT-LIABILITIES> 13,063
<BONDS> 0
0
0
<COMMON> 26,854
<OTHER-SE> 17,164
<TOTAL-LIABILITY-AND-EQUITY> 161,433
<SALES> 27,917
<TOTAL-REVENUES> 27,917
<CGS> 17,064
<TOTAL-COSTS> 21,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,793
<INCOME-PRETAX> 9,781
<INCOME-TAX> 3,267
<INCOME-CONTINUING> 6,514
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,514
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.95
</TABLE>
