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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1997
COMMISSION FILE NUMBER 0-21742
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STOLT COMEX SEAWAY S.A.
(Exact name of Registrant as specified in its charter)
LUXEMBOURG
(Jurisdiction of incorporation or organization)
C/O STOLT COMEX SEAWAY M.S. LTD
BUCKSBURN HOUSE
HOWES ROAD
BUCKSBURN
ABERDEEN AB21 9RQ, SCOTLAND
(Address of principal executive offices)
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Shares, $2.00 par value
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(D)
OF THE ACT:
None
INDICATE THE NUMBER OF OUTSTANDING SHARES OF EACH OF THE ISSUER'S CLASSES OF
CAPITAL OR COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE ANNUAL
REPORT:
<TABLE>
<S> <C>
Common Shares, $2.00 par value:................................. 22,291,576*
Class B Shares, $2.00 par value:................................ 34,000,000*
</TABLE>
* The above figures reflect the 1:1 stock dividend effected on January 9, 1998.
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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 which financial statement item the registrant has
elected to follow.
Item 17 / / Item 18 /X/
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C> <C>
PART I
Item 1. Description of Business......................................................... 1
General......................................................................... 1
History......................................................................... 1
Business Strategy............................................................... 2
Description of Operations....................................................... 2
Geographic Distribution......................................................... 4
Customers....................................................................... 5
Regulation...................................................................... 5
Competition..................................................................... 5
Other Matters................................................................... 6
Co-Operation Arrangements....................................................... 6
Employees....................................................................... 6
Safety and Quality Assurance.................................................... 6
Risks and Insurance............................................................. 6
Inspection by a Classification Society and Drydocking........................... 7
Item 2. Description of Property......................................................... 8
Major Assets.................................................................... 8
Other Properties................................................................ 9
Item 3. Legal Proceedings............................................................... 9
Item 4. Control of Registrant........................................................... 10
Item 5. Nature of Trading Market........................................................ 10
Item 6. Exchange Controls and Other Limitations Affecting
Security Holders................................................................ 11
Exchange Controls............................................................... 11
Limitations Affecting Shareholders.............................................. 11
Item 7. Taxation........................................................................ 12
U.S. Taxation................................................................... 12
Luxembourg Taxation............................................................. 12
Item 8. Selected Financial Data......................................................... 12
Dividends....................................................................... 12
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................... 12
Recent Developments............................................................. 13
The Year 2000 Issue............................................................. 13
Forward-looking Statements...................................................... 14
Factors Affecting Revenues and Costs............................................ 14
Item 10. Directors and Officers of Registrant............................................ 19
Item 11. Compensation of Directors and Officers.......................................... 21
Profit Sharing Plan............................................................. 21
Item 12. Options to Purchase Securities From Registrant or Subsidiaries.................. 21
Item 13. Interest of Management in Certain Transactions.................................. 22
PART III
Item 15. Defaults Upon Senior Securities................................................. 23
Item 16. Changes in Securities and Changes in Security for Registered Securities......... 23
PART IV
Item 17. Financial Statements............................................................ 24
Item 18. Financial Statements............................................................ 24
Item 19. Financial Statements and Exhibits............................................... 25
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Note: Omitted items are inapplicable.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Stolt Comex Seaway S.A. ("SCS" or "the Company") is among the largest subsea
services contractors in the world, providing technologically sophisticated
subsea engineering, flexible and rigid flowline lay and subsea construction,
inspection, maintenance and repair services to its customers in the offshore oil
and gas industry. The Company operates in more than 20 countries in Europe, the
Middle East, West Africa, Asia Pacific, South America and the United States.
Stolt Comex Seaway S.A. is an indirect subsidiary of Stolt-Nielsen S.A.
("SNSA"), a Luxembourg holding company which, through its subsidiaries, is
engaged in the worldwide transportation, storage and distribution of bulk liquid
chemicals, edible oils, acids and other specialty liquids; marine and subsea
construction and engineering services to the offshore oil and gas industries;
and aquaculture, the production, marketing, and distribution of farmed fish.
SNSA retains an economic interest of 43.3% and voting rights of 60.4% in SCS.
The Company's Common Shares are currently traded on the Nasdaq National
Market System ("Nasdaq") and on the Oslo Stock Exchange.
The registered office of Stolt Comex Seaway S.A. is located at 11, rue
Aldringen, Luxembourg and it is registered in the Companies' Registrar of the
Luxembourg District Court under the designation "R.C. Luxembourg B 43172." The
principal executive offices of the Company are c/o Stolt Comex Seaway M.S. Ltd.,
Bucksburn House, Howes Road, Bucksburn, Aberdeen AB21 9RQ, Scotland, telephone
no. (44) 1224-718200.
HISTORY
The subsea services industry developed as a support service to the oil and
gas industry and has grown as that industry has increasingly relied upon the
development of offshore fields to meet higher demands for oil and gas using cost
efficient technology. The offshore production of oil began in the Gulf of Mexico
in the mid-1960s and, by the end of the decade, had spread to the more hostile
and deeper waters of the North Sea. Although oil and gas producing companies
perform some of their own subsea construction, maintenance and repair work,
subsea services has developed as a separate industry, principally because of the
need to develop new and advanced technologies, expertise and custom-designed
equipment and because of the oil industry's refocus on its core oil and gas
production business.
A publicly-traded company since May 1993, SCS was established through the
merger of the businesses of two leading diving support services companies, Comex
Services S.A. ("Comex") and Stolt-Nielsen Seaway A/S ("Seaway"), which were
acquired by SNSA in separate transactions in 1992. At the time of acquisition,
Comex was a leading worldwide subsea services contractor, which pioneered deep
water saturation diving and subsea construction using both manned and unmanned
techniques. Seaway operated principally in the North Sea and pioneered the
development and use of specially designed, technologically sophisticated diving
support ships and remotely operated vehicles ("ROVs") to support operations in
hostile deep water environments.
SCS completed an initial public offering of 6,000,000 Common Shares in May
1993, raising additional share capital of approximately $43 million. During 1997
SCS raised additional share capital of approximately $240 million by means of
two equity offerings. These proceeds are net of offering expenses of $11
million. In March 1997, 8,050,000 Common Shares were sold by the Company and
during November 1997 an additional 4,000,000 Common Shares were sold. Concurrent
with the March offering the Company
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exchanged debt due to an affiliate of SNSA for 14,000,000 Class B Shares.
Concurrent with the November offering SNSA sold 4,000,000 Common Shares which
had been converted from 8,000,000 Class B Shares.
With effect from January 9, 1998 Stolt Comex Seaway S.A. completed a
two-for-one stock split which was effected by means of a stock dividend
distribution.
All share data and per share data have been restated to reflect this.
BUSINESS STRATEGY
The Company's strategy is to enhance its position as a leading full-service
subsea contractor providing technologically advanced and cost effective
life-of-field subsea services to its customers.
The Company has consistently expanded and upgraded its fleet in order to
provide cost effective solutions to its customers and to enable the development
of offshore fields that otherwise might not be commercially viable. Between 1993
and March 31, 1998, the Company invested $251.1 million in new technology and
equipment to respond to growing demand in the market, with an additional $90.0
million committed or planned for the remainder of 1998. These investments
include the acquisition and completion of the newly constructed SEAWAY EAGLE, a
multi-purpose flowline lay and subsea construction ship, the conversion of the
SEAWAY OSPREY to lay flexible flowlines and flowline bundles, the acquisition of
the SEAWAY FALCON and its conversion to a rigid and flexible flowline lay ship,
the conversion of the SEAWAY CONDOR to a flexible flowline and umbilical lay
ship, the acquisition of the SEAWAY HAWK, a temperate climate subsea
construction ship for use in the Middle East and Gulf of Mexico markets and
continuous investment in new ROV technology and construction equipment.
Stolt Comex Seaway S.A. is one of three major subsea services contractors
that operate on a worldwide basis. The Company intends to maintain its market
position in the North Sea and build upon its expertise developed in this
difficult operating environment to expand in other major international markets
where the use of subsea technology is increasing as oil exploration and
development moves into deeper waters. Since 1994, Stolt Comex Seaway S.A. has
been awarded 57 contracts in the Asia Pacific region, 147 contracts in West
Africa, six contracts in the Gulf of Mexico region and 20 contracts in the South
America region. As part of its strategy to further expand its business in
international markets, the Company has acquired and adapted the SEAWAY EAGLE for
deep water field developments. Other recent additions to the fleet included the
SEAWAY HAWK and the DISCOVERY, a subsea construction ship.
SCS combines centralized product line profit centres and asset management
with regional management of customer relationships and project support, to
improve the utilization of assets and their allocation to projects to achieve
higher returns, improve risk management, provide superior customer service and
develop and share advanced technical expertise among regions.
DESCRIPTION OF OPERATIONS
Stolt Comex Seaway S.A. is one of the largest subsea services contractors in
the world, providing technologically sophisticated subsea engineering, flexible
and rigid flowline lay, subsea construction, inspection, maintenance and repair
services to its customers in the offshore oil and gas industry. SCS is a leader
in developing and applying innovative and cost efficient subsea techniques
addressing the evolving technical needs of oil and gas companies which are
increasingly developing oil and gas fields in deeper and more demanding offshore
environments. Stolt Comex Seaway S.A. operates in more than 20 countries in
Europe, the Middle East, West Africa, Asia Pacific, South America and the United
States. At March 31, 1998 and March 31, 1997, the Company's backlog was
approximately $734 million and $512 million, respectively.
The Company's services cover all phases of offshore oil and gas operations
from exploration to decommissioning. During the exploration phase, the Company
provides seabed survey and drilling support
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services. During the development phase, the Company provides, with partners when
appropriate, engineering design, component procurement, and the installation of
subsea equipment, well control umbilicals, flowlines and production risers.
During the production phase, which may continue for many years, the Company
inspects, maintains and repairs platforms, pipelines, flowlines and subsea
equipment. Following the production phase, the Company provides field
decommissioning services including the removal of offshore structures and subsea
equipment.
Stolt Comex Seaway S.A. offers four principal product lines. Field
development provides complete subsea production systems from engineering and
design through procurement and installation of components and the commissioning
of completed systems. Flowline lay provides installation of rigid and flexible
flowlines, small-diameter pipelines and well control umbilicals. Subsea
construction provides pipeline tie-ins, installation of structures and moorings,
hyperbaric welding, piling, decommissioning, dredging, hot tapping, cold cutting
and pipeline stabilization. Subsea services provides pipeline and flowline
survey, construction support, drilling support and inspection, maintenance and
repair.
In addition to these main product lines, the Company offers heavy lift
services through a joint venture company, Seaway Heavy Lifting Limited ("SHL"),
which operates a heavy lift ship chartered from a subsidiary of the Company's
indirect joint venture partner Lukoil-Kaliningradmorneft Plc. ("LKMN"), a
subsidiary of a major Russian oil company, Lukoil.
The Company operates one of the world's most advanced fleets of subsea
construction and flowline lay ships, from which the majority of SCS's subsea
activities are performed. SCS owns or charters a fleet consisting of four
flexible flowline and umbilical lay ships, one rigid and flexible flowline lay
ship, five construction ships, 59 ROVs, two survey ships and one marine
construction support barge. In addition, a heavy lift ship is operated through
SHL.
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GEOGRAPHIC DISTRIBUTION
The Company's operations are managed through six regional offices including:
Aberdeen, Scotland for the UK and Southern North Sea; Stavanger, Norway for
Norway; Perth, Australia for Asia Pacific; Marseille, France for Southern
Europe, Africa and the Middle East ("SEAME"); Macae City, Brazil for South
America and New Orleans, Louisiana for the Gulf of Mexico.
The following table sets forth the net operating revenue in the principal
areas of operations for the Company's six geographical regions for the periods
indicated.
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<CAPTION>
FOR THE YEARS ENDED
NOVEMBER 30,
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1997 1996 1995
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<S> <C> <C> <C>
(IN MILLIONS)
UK................................................................................... $ 153.0 $ 90.8 $ 68.5
Norway............................................................................... 90.1 111.6 144.7
Other North Sea...................................................................... 19.8 4.7 4.0
Asia Pacific......................................................................... 39.6 39.2 34.9
SEAME................................................................................ 75.7 44.6 59.8
South America........................................................................ 43.7 14.3 15.1
Gulf of Mexico....................................................................... 9.2 8.2 N/A
--------- --------- ---------
Total................................................................................ $ 431.1 $ 313.4 $ 327.0
--------- --------- ---------
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</TABLE>
The UK region's major clients are oil and gas producing companies and large
offshore engineering and construction companies. The UK region currently serves
58 customers, 34 of which are oil and gas companies. The majority of contracts
are short-term in nature with a long-term construction and maintenance contract
for British Petroleum and a long-term construction framework agreement for Arco
British Ltd.
Significant projects in the UK backlog include the Amerada Hess Triton
engineering, procurement, installation and commissioning ("EPIC") field
development with a value of $150 million, which is the largest contract ever
awarded to the Company, the Chevron Alba EPIC gas export flowline installation,
the Mobil Mallory flowline installation and the Phillips Renee and Rubie
flowline installation.
The Company's Norwegian business is primarily related to flowline lay,
subsea construction and subsea services, with a customer base consisting of all
of the oil and gas companies operating in Norway. Stolt Comex Seaway S.A.
manages its survey activities for the North Sea from Norway, where it has two
long-term survey and pipeline inspection contracts with Statoil.
The Company also has a long-term contract with Statoil for subsea
construction services which is conducted by a project alliance between the
Company and Brown and Root Energy Services A/S. Other significant contracts in
Norway's backlog include the flowline installation of the Asgard umbilicals and
service lines for Statoil from 1998 to 2000, the Amerada Hess Mjolner flowline
installation, the installation of the moorings for the Esso Jotun FPSO, the
Eldfisk riser project and the Maersk caisson installation.
The Asia Pacific region is characterized by long distances between areas of
offshore oil operations and from other areas of the world with subsea
development activities. The Company is active in ROV work and drilling support
in this region. In Indonesia, the Company's operations are performed through PT
Komaritim, which carries out shallow water pipelay and construction work.
Significant contracts in the backlog include the Total Tunu phase 6 pipelay
contract.
The majority of the business conducted by the SEAME region is offshore West
Africa and the Middle East. Significant contracts in the backlog include the
Chevron Nemba South flowline installation and the Occidental riser spool
installation contract in Qatar.
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Stolt Comex Seaway S.A. commenced operations in South America in 1978. The
majority of these operations are located in Brazil which currently operates as a
single customer market controlled by Petrobras, the Brazilian state oil company.
Current production in Brazil occurs at water depths down to 2,600 feet. The
Brazilian market contains a number of potentially large field developments which
are located in deep water (between 2,300 and 6,000 feet), and will require
extensive use of diverless subsea construction techniques. The Company believes
it is well positioned to capitalize upon its expertise in these techniques.
The Company currently has a three-year contract for the SEAWAY OSPREY with
Petrobras through September 1999, with an optional one-year extension, and a
four-year contract with Petrobras which started in May 1997 for the SEAWAY
HARRIER. These contracts are for flowline lay, diving support and ROV services.
The Company also operates a number of ROVs to provide construction and drilling
support services, usually under long-term contracts. The backlog also includes
seven long-term ROV contracts and the installation of the offshore loading buoy
for Termap in Argentina.
The Company maintained an office in Houston to manage Gulf of Mexico
operations from 1995 to the end of 1997 at which time the office was relocated
to New Orleans to be closer to the day to day ship operations in this region.
The SEAWAY HAWK, purchased in May 1997, started a two year contract offshore
Mexico in April 1998. The Company recently announced that it will deploy the
SEAWAY CONDOR to the Gulf of Mexico in September 1998.
CUSTOMERS
In 1997, the Company had over 70 customers worldwide, primarily major
national and international oil and gas companies. The level of construction
services required by any particular customer depends on the size of that
customer's capital expenditure budget devoted to construction plans in a
particular year. Consequently, customers that account for a significant portion
of contract revenue in one fiscal year may represent an immaterial portion of
contract revenue in subsequent fiscal years. One customer, Statoil, accounted
for more than 12% of the Company's net operating revenue and the seven largest
customers were responsible for 50% of the Company's net operating revenue in
1997.
REGULATION
The Company's businesses are subject to international conventions and
governmental regulations, which strictly regulate various aspects of its
operations. In addition, Stolt Comex Seaway S.A. is required by various
governmental and other regulatory agencies to obtain certain permits, licenses
and certificates with respect to its equipment and operations. The kinds of
permits, licenses and certificates required in the operations of the Company
depend upon a number of factors. The Company believes that it has or can readily
obtain all permits, licenses and certificates necessary to conduct its
operations. Some countries require that the Company enter into a joint venture
or similar business arrangement with local individuals or businesses in order to
conduct business in such countries.
The Company's operations are affected from time to time and to varying
degrees by political developments and federal and local laws and regulations. In
particular, oil and gas production, operations and economics are affected by
price control, tax and other laws relating to the petroleum industry, by changes
in such laws and by constantly changing administrative regulations. Such
developments directly or indirectly may affect the Company's operations and
those of its customers.
COMPETITION
The subsea contracting business is highly competitive. The consolidation in
the offshore oil and gas services industry in the last few years has resulted in
fewer but more substantial competitors. Although the Company believes customers
consider, among other things, the availability and technical capabilities of
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equipment and personnel, efficiency, condition of equipment, safety record and
reputation, price competition is the primary factor in determining which
qualified contractor with available equipment will be awarded a contract. SCS's
ships are specialized and have few alternative uses and, because of their nature
and the environment in which they work, have relatively high maintenance costs
whether or not operating. Because these costs are essentially fixed, and in
order to avoid additional expenses associated with temporarily idling its ships,
the Company may from time to time be required to bid its ships in projects at
lower margins depending on the prevailing contractual rates in a given region.
Stolt Comex Seaway S.A. believes that it is one of only three companies
capable of providing the full range of subsea services on a worldwide basis in
the major offshore oil and gas producing regions. Competition across all main
product lines is limited to Stolt Comex Seaway S.A. and two competitors,
Coflexip Stena Offshore and Rockwater, a subsidiary of Brown and Root, itself a
division of Halliburton. The Company is subject to intense competition from
these offshore contractors, particularly in the North Sea. In certain
geographical regions, and in certain product lines, Stolt Comex Seaway S.A. also
competes with J. Ray McDermott, S.A. and Global Industries Ltd. The Company also
faces substantial competition from smaller regional competitors and less
integrated providers of subsea services.
OTHER MATTERS
CO-OPERATION ARRANGEMENTS
In certain project specific situations, the Company has entered into
alliances with its customers, engineering companies and other subsea services
providers. The Company has alliances with the RMI Titanium Company to promote
the use of metallic risers in deep water applications and with NKT Cables, who
manufacture flexible flowlines and risers.
EMPLOYEES
The Company's workforce varies based on the Company's workload at any
particular time. As of March 31, 1998, the Company had approximately 3,000
employees. A significant number of the Company's offshore employees are
represented by labor unions. As part of normal business, a number of union
agreements come up for annual renegotiation in 1998. Stolt Comex Seaway S.A.
believes that it maintains a good relationship with its employees and their
unions. In addition, many workers are hired on a contract basis and are
available on short notice.
SAFETY AND QUALITY ASSURANCE
The Company maintains a stringent quality assurance program in accordance
with ISO 9001 which encompasses all areas of its operations. Each of the
Company's regional operations has dedicated safety and quality assurance staff
who are responsible for overseeing the projects in that particular region. In
addition, a quality assurance manager located in Aberdeen, Scotland formulates
corporate policies with respect to quality assurance and oversees the
implementation and enforcement of such policies on a Company-wide basis.
RISKS AND INSURANCE
The Company's operations are subject to all the risks normally associated
with offshore development and production and could result in damage to or loss
of property, suspension of operations or injury or death to personnel or third
parties. The Company insures its assets at levels which management believes
reflect their current market value. Such assets include all capital items, such
as ships, major equipment and land-based property. The only assets not insured
are those where the cost of such insurance would be disproportionate to their
value. The Company believes its insurance should protect it against, among other
things, the cost of replacing its ships as a result of total or constructive
total loss.
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The Company's operations are conducted in hazardous environments where
accidents involving catastrophic damage or loss of life could result, and
litigation arising from such an event may result in the Company being named a
defendant in lawsuits asserting large claims. The Company insures itself for
liability arising from its operations, both onshore and offshore, including loss
of or damage to third-party property, death or injury to employees or third
parties, statutory workers compensation protection and pollution. Although there
can be no assurance that the amount of insurance carried by the Company is
sufficient to protect it fully in all events, all such insurance is carried at
levels of coverage and deductibles that the Company considers financially
prudent. A successful liability claim for which the Company is underinsured or
uninsured could have a material adverse effect on the Company.
INSPECTION BY A CLASSIFICATION SOCIETY AND DRYDOCKING
The hull and machinery (including diving equipment) of each SCS ship must be
"classed" by a classification society authorized by its country of registry. The
classification society certifies that the ship is safe and seaworthy in
accordance with the classification rules as well as with applicable rules and
regulations of the country of registry of the ship and the international
conventions of which that country is a member.
Each ship is inspected by a surveyor of the classification society every
year, every two years and every four years. A one-year grace period may be
granted by the classification society to the shipowner for completion of the
four-year survey. Management generally seeks such a grace period for the ships
in order to reduce operating costs. A ship is also required to be drydocked
every 30 to 36 months for inspection of the underwater parts of the ship. As a
general policy, the Company drydocks its ships every second year during the
winter off-season. Should any defect be found, the classification society
surveyor will issue its report as to appropriate repairs which must be made by
the shipowner within the time limit prescribed. Insurance underwriters make it a
condition of insurance coverage that a ship be "in class," and all of the
Company's major ships currently meet that condition.
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ITEM 2. DESCRIPTION OF PROPERTY
MAJOR ASSETS
Stolt Comex Seaway S.A. operates one of the world's most advanced fleets of
subsea construction support and flowline lay ships from which the majority of
SCS's subsea activities are performed. The following table describes the
Company's major assets, as of March 31, 1998.
<TABLE>
<CAPTION>
YEAR BUILT/ LENGTH OWNED/
NAME CAPABILITIES MAJOR UPGRADE ROVS (METERS) CHARTERED
- -------------------------------- -------------------------------- ----------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
SEAWAY EAGLE.................... Flexible flowline lay, multi-
purpose subsea construction 1997 3 140 Owned(1)
SEAWAY FALCON................... Rigid and flexible flowline and
umbilical lay 1976/1995/1997 2 162 Owned
SEAWAY CONDOR................... Flexible flowline and umbilical
lay, module handling system,
trenching 1982/1994 2 101 Owned(1)
SEAWAY OSPREY................... Flexible flowline and umbilical
lay, accepts coiled tubing,
straightener for tubing, stern
roller 1984/1992 2 102 Owned(1)
DISCOVERY....................... Flexible flowline lay, subsea
construction 1990 2 120 Chartered(2)
SEAWAY HARRIER.................. Subsea construction 1985 3 84 Owned(1)
SEAWAY PELICAN.................. Subsea construction 1986/1990 2 94 Chartered(3)
SEAWAY HAWK..................... Subsea construction 1978 2 94 Owned(1)
TOISA PUMA...................... Subsea construction 1985 2 77 Chartered(4)
STANISLAV YUDIN................. Heavy lift, 2,500-ton crane 1985 1 183 See(5)
SEAWAY SURVEYOR................. Survey 1987/1991 2 66 Chartered(6)
SEAWAY COMMANDER................ Survey 1982/1988 2 75 Chartered(7)
SEAWAY KINGFISHER............... Diverless inspection, repair and
maintenance 1990/1998 2 90 Chartered(8)
ANNETTE......................... Marine construction 1977 0 61 Owned
</TABLE>
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(1) Subject to mortgage under the Company's current credit facilities.
(2) Chartered from Friary Ocean Surveyor NV through 2002, with options to extend
through 2011 and with options to purchase.
(3) Chartered from DSND Shipping AS through 1999.
(4) Chartered from Toisa Ltd through December 1998.
(5) Chartered to SHL by a subsidiary of the ship's owner, LKMN until October 15,
2001 with a possibility for extensions.
(6) Chartered from DSND Chartering I KS through December 1998, with options to
extend through 1999.
(7) Chartered from DSND Chartering I KS through 1999, with options to extend
through 2002.
(8) Chartered from Kingfisher DA in which the Company has a 50% ownership, for
five years starting in 1998, with options to extend through 2013 and with
options to purchase.
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OTHER PROPERTIES
As of March 31, 1998, Stolt Comex Seaway S.A. owns or holds under long-term
leases real estate property as described below:
<TABLE>
<CAPTION>
WORK OR STORAGE
OFFICE SPACE SPACE OR LAND
(SQUARE METERS) (SQUARE METERS) STATUS
----------------- --------------- -----------------
<S> <C> <C> <C>
Aberdeen, Scotland........................................... 3,873 57,279 Owned/Leased
Al Khobar, Saudi Arabia (2).................................. 250 433 Leased
Dundee, Scotland............................................. 300 40,925 Leased
Garennes, France............................................. 2,110 9,500 Owned
Handil, Indonesia............................................ 1,000 125,175 Owned
Haugesund, Norway (1)........................................ 2,280 21,200 Owned/Leased
New Orleans, Louisiana....................................... 735 0 Leased
Jakarta, Indonesia........................................... 1417 1304 Leased
Macae City, Brazil........................................... 2,000 1,630 Owned
Marseille, France............................................ 900 1,000 Leased
Perth, Australia............................................. 1116 600 Leased
Port Gentil, Gabon........................................... 100 1,000 Leased
Rio de Janeiro, Brazil....................................... 350 300 Leased
Singapore.................................................... 1,010 2,965 Leased
Stavanger, Norway............................................ 3,430 1,070 Leased
</TABLE>
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(1) Owned subject to mortgage.
(2) Shared space.
ITEM 3. LEGAL PROCEEDINGS
The Swiss Court of Insurance "Tribunal Federal des Assurances" entered a
judgement on April 29, 1992 against Sogexpat S.A. ("Sogexpat"), a subsidiary of
the Company, in litigation brought by a Swiss governmental entity claiming
payment of social security contributions in arrears. During the year ended
November 30, 1993, the Company started the process of winding up Sogexpat and
transferred the employees to other group companies. The French government has
investigated Stolt Comex Seaway S.A. of France alleging violations of French
labor and social security legislation and has filed criminal charges against two
former managers of such company which have resulted in a court decision against
them. The decision has been appealed to the French Supreme Court. In addition, a
number of former and present employees have started proceedings against certain
subsidiaries of the Company alleging loss of employment and social security
benefits. Some of the proceedings have recently commenced while some have
already resulted in court decisions. One such decision has been appealed to the
French Supreme Court. While the Company believes that its subsidiaries have
meritorious defenses in these cases, there can be no assurance as to the number
of claims which may be brought or the amount for which the Company may
eventually be liable with respect thereto. Comex S.A., a former shareholder of
Comex, in an agreement with Stolt-Nielsen S.A. executed on June 5, 1992 for the
sale of Comex, agreed to indemnify the Company with respect to certain aspects
of the foregoing. There can be no assurance, however, as to the amount which the
Company may ultimately recover from Comex S.A. pursuant to such indemnity.
Coflexip S.A. have commenced legal proceedings against three subsidiaries of
the Company claiming infringement of a certain patent relating to flexible
flowline laying technology in the U.K.. Management is of the opinion that
Coflexip S.A.'s said patent is not valid and, therefore, has made no provision
in the financial statements relating to these proceedings.
9
<PAGE>
The Company is a party to various other legal proceedings arising in the
ordinary course of business. The Company believes that such legal proceedings
will not have a material adverse effect on the Company's business or financial
condition.
In the ordinary course of business, various claims, suits and complaints
have been filed against the Company. In the opinion of management, all such
matters are adequately covered by indemnity agreements, recorded provisions in
the financial statements and insurance or, if not so covered, would not have a
material effect on the financial position, results of operations or cash flows
of the Company if resolved unfavorably.
ITEM 4. CONTROL OF REGISTRANT
Except as set forth below, SCS is not, directly or indirectly, owned by
another corporation or by any government. There are no arrangements known to the
Company, the operation of which may at a subsequent date result in a change in
control of SCS.
Set forth below is information concerning the share ownership of all persons
who owned beneficially 10% or more of the Common Share equivalents, and the
beneficial ownership of all Directors and persons employed by the Company's
subsidiaries who perform executive and administrative functions for the
Company's combined businesses, as a group, as of April 30, 1998:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
COMMON SHARES COMMON SHARES
AND COMMON SHARE AND COMMON SHARE
NAME OF BENEFICIAL OWNER OR EQUIVALENTS EQUIVALENTS
IDENTITY OF GROUP OWNED OWNED
- ----------------------------------------------------------------------- -------------------- -----------------------
<S> <C> <C>
Stolt Parcel Tankers Inc. ("SPTI")(1).................................. 17,000,000 60.4%
Directors and officers as a group (18 persons)......................... 59,100 0.2%
</TABLE>
- ------------------------
(1) SPTI owns 34,000,000 Class B Shares, constituting 100% of that class. Each
Class B Share represents one-half of the economic interest of one Common
Share (with dividend and liquidation rights equivalent to one-half of a
Common Share) and is convertible into Common Shares on a two-for-one basis.
If SNSA or its affiliates dispose of Class B Shares to a third party, such
Class B Shares shall automatically convert into Common Shares on such
two-for-one basis.
SNSA is the 100% owner of SPTI. Fiducia Ltd., a company owned by trusts of
which the Stolt-Nielsen family are beneficiaries, owns approximately 61% of the
outstanding Common Shares of SNSA. Jacob Stolt-Nielsen, Jr. owns all of the
Founder's Shares of SNSA. Fiducia Ltd.'s Common Shares represent approximately
48.5% of SNSA's outstanding voting securities and the Founder's Shares owned by
Mr. Stolt-Nielsen represent approximately 21% of SNSA's outstanding voting
securities. The Common Shares of SNSA are traded on Nasdaq.
ITEM 5. NATURE OF TRADING MARKET
SCS's Common Shares are primarily traded in the U.S. in the over-the-counter
market and quoted through Nasdaq under the symbol "SCSWF". On April 15, 1997 the
Board of the Oslo Stock Exchange approved the listing and trading of the
Company's Common Shares under the symbol "SCS".
10
<PAGE>
The following table sets forth, for the fiscal periods indicated, the range
of high and low closing sale prices per Common Share.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
NASDAQ
1997
1st Quarter............................................................. $ 9.875 $ 7.438
2nd Quarter............................................................. 11.594 8.812
3rd Quarter............................................................. 26.688 11.312
4th Quarter............................................................. 33.188 24.562
1996
1st Quarter............................................................. $ 5.000 $ 3.938
2nd Quarter............................................................. 7.688 4.062
3rd Quarter............................................................. 7.062 4.938
4th Quarter............................................................. 9.375 5.438
OSLO STOCK EXCHANGE (NORWEGIAN KRONER)
1997
1st Quarter............................................................. -- --
2nd Quarter............................................................. -- --
3rd Quarter............................................................. 190.00 86.00
4th Quarter............................................................. 272.50 179.25
</TABLE>
As of March 2, 1998 (the record date for voting at the Annual General
Meeting), 21,018,692 Common Shares, representing 94.27% of the outstanding
Common Shares, were registered in the names of 33 shareholders having U.S.
addresses (although some of such shares may be held on behalf of non-U.S.
persons). The Common Shares were held by a total of 37 shareholders of record.
Based on communications with banks and securities dealers who hold the Common
Shares in street name for individuals, the Company estimates that the number of
beneficial owners of the Common Shares exceeds 1,400.
As of March 2, 1998, approximately 1,276,000 Common Shares were registered
in the Norwegian Verdipapirsentralen ("VPS") system for trading on the Oslo
Stock Exchange.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
EXCHANGE CONTROLS
Stolt Comex Seaway S.A. has been advised by Elvinger, Hoss & Prussen,
Luxembourg counsel to the Company, that at the present time there are no
exchange controls in existence in Luxembourg which would impact the Company's
operations or affect the Company's ability to pay dividends to non-resident
shareholders.
LIMITATIONS AFFECTING SHAREHOLDERS
The Company's Articles provide restrictions on the shareholdings of certain
"U.S. Persons." Persons includes any individual, firm, corporation or other
entity, and certain associates and affiliates thereof. The Articles provide that
no one U.S. Person (including any Person who is a citizen or resident of the
U.S., a corporation organized under the laws of the U.S. or any State thereof, a
corporation organized under the laws of any other jurisdiction whose shares are
owned by U.S. Persons, a partnership organized under the laws of any State of
the U.S., and certain trusts and estates) may own, directly or indirectly, more
than 9.9% of the Company's total outstanding shares at any particular time.
In addition, the Board is authorized to restrict, reduce or prevent the
ownership of the Company's shares if it appears to the Board that such ownership
may threaten the Company with "imminent and grave
11
<PAGE>
damage." Luxembourg company law does not provide a specific definition of
imminent and grave damage, but instead leaves the interpretation of the phrase
within the Board's discretion. The Company has been advised by its Luxembourg
counsel, Elvinger, Hoss & Prussen, that there are no Luxembourg judicial
interpretations of the phrase, but that situations involving hostile takeovers,
adverse tax consequences to the Company or governmental sanctions are likely to
be among the situations covered by such phrase.
In order to enforce the foregoing restrictions, the Articles empower the
Board to take certain remedial action including causing the Company: (i) to
decline to register any prohibited transfer; (ii) to decline to recognize any
vote of a shareholder precluded from holding shares; (iii) to require any
shareholder on the Company's Register of Shareholders or any prospective
shareholder to provide information to determine whether such person is precluded
from holding shares and (iv) upon the issuance of a notice, to require the sale
of shares to the Company at the lesser of (A) the amount paid for the shares if
acquired within the twelve months immediately preceding the date of the notice,
and (B) the last quoted sale price for the shares on the day immediately
preceding the day on which the notice is served (provided that the Board may in
its discretion pay the amount calculated under (B) in situations where (A) would
otherwise apply and result in a lower purchase price, if the Board determines it
equitable after taking into account specified factors); and to remove the name
of any shareholder from the Register of Shareholders immediately after the close
of business on the day the notice is issued and payment is made available. The
foregoing defensive measures may have the effect of making more difficult a
merger involving the Company, or a tender offer, open-market purchase program or
other purchase of the Company's shares, in circumstances that could give
shareholders the opportunity to realize a premium over the then prevailing
market price for their shares.
There are no limitations currently imposed by Luxembourg law on the rights
of non-resident holders of Common Shares to hold or vote their shares.
ITEM 7. TAXATION
U.S. TAXATION
U.S. corporations, citizens and residents will be subject to U.S. income
taxation on dividends and other distributions paid by SCS and on any gains
derived from the sale of SCS's Common Shares.
LUXEMBOURG TAXATION
Other than certain former Luxembourg residents, current Luxembourg residents
and those non-residents who maintain a permanent establishment in Luxembourg
with which the holding of SCS Common Shares is connected, SCS shareholders are
not subject to taxation in Luxembourg.
ITEM 8. SELECTED FINANCIAL DATA
The information under the caption "Selected Consolidated Financial Data" on
page 24 of the Company's 1997 Annual Report filed with the Securities and
Exchange Commission on Form 6-K is incorporated herein by reference.
DIVIDENDS
The Company has made no cash dividend payments since going public in May
1993.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information included under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 19 through
23 of the Company's 1997 Annual Report filed with the Commission on Form 6-K is
incorporated herein by reference.
12
<PAGE>
RECENT DEVELOPMENTS
For the first quarter of 1998 Stolt Comex Seaway S.A. reported a net income
of $0.6 million on net operating revenue of $92.4 million. This compared to a
net loss of $2.5 million on net operating revenue of $75.1 million for the
comparable period in 1997.
The profit in the first quarter reflected the continuing subsea construction
activity in the North Sea throughout the winter months. During this time the
SEAWAY CONDOR was employed on the Foinaven field to the West of the Shetlands
and the SEAWAY PELICAN and the DISCOVERY also worked in the North Sea. After
completing installation work for Statoil in the South China Sea, the SEAWAY
EAGLE moved to the Middle East where the SEAWAY HAWK had been working during the
first quarter.
Since the year end the Company concluded an agreement with Midland Bank plc
and Den norske Bank ASA to provide a five year revolving credit facility. This
facility is secured by first priority mortgages over certain of the Company's
ships.
On January 9, 1998 Stolt Comex Seaway S.A. completed a two-for-one stock
split which was effected by means of a stock dividend distribution to all
shareholders of record on January 6, 1998 to enhance the marketability of our
shares.
Stolt Comex Seaway S.A. has further expanded its fleet in 1998 with the
acquisition of the SEAWAY KINGFISHER. She will be the first dedicated deep water
diverless inspection, maintenance and repair ship with remote module handling
capabilities.
On May 6, 1998 the Company announced it had extended the cooperation
agreement with LKMN under which the heavy lift ship STANISLAV YUDIN is chartered
to SHL.
On May 11, 1998 Stolt Comex Seaway S.A. announced that, subject to
shareholder approval, it will distribute one Class A Share, represented in the
United States by one American Depository Share ("ADS"), for each two Common
Shares and each four Class B Shares issued and outstanding. SNSA desires to
maintain its control of SCS, but does not wish to restrict the potential growth
of SCS. The creation and distribution of the Class A Shares was designed to
provide flexibility in pursuing strategic opportunities, without disturbing the
existing voting structure.
While the current economic problems in Asia Pacific have resulted in a
worldwide decreased demand for oil and gas, to date this has not impacted the
exploration and operating expenditure plans for deep water work by oil and gas
companies outside of the Asia Pacific region. The exploration and operating
expenditure plans for Asia Pacific national oil and gas companies have been
impacted by the economic situation. To date there has been little impact on the
expenditure plans of the international firms operating within Asia Pacific
(which form the bulk of SCS's revenue base in the region). Most of the Company's
revenue in Asia Pacific is U.S. dollar based.
THE YEAR 2000 ISSUE
The Company continues its comprehensive review of the potential impact of
the Year 2000 issue on its operations. For business system applications, this
review is complete and required modifications are scheduled to be complete by
1998 with testing to occur later during the year. A review of the impact of the
Year 2000 issue on operating equipment and assets is currently underway and is
anticipated to be complete by early 1999. At that time, the full impact of this
technology issue on the Company's operating equipment and assets will be
assessed and appropriate action will be taken.
The review of the Company's systems, and all systems modifications to be
undertaken as a consequence of this review, will be performed using the
Company's internal resources, as part of the Company's ongoing software
maintenance and development process.
13
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements in this Report constitute "forward-looking statements" as
defined in the U.S. Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance, or
achievements of the Company, or industry results, to differ materially from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties or other important factors
include, among others: general economic and business conditions; industry
capacity; industry trends; competition; raw material costs and availability;
currency fluctuations; the loss of any significant customers; changes in
business strategy or development plans; availability, terms and deployment of
capital; availability of qualified personnel; changes in, or the failure or
inability to comply with, government regulations; adverse weather conditions;
and other factors referenced in this Report.
FACTORS AFFECTING REVENUES AND COSTS
INDUSTRY CONDITIONS
Demand for the Company's subsea services depends upon the condition of the
oil and gas industry and particularly upon capital expenditure budgets of the
companies engaged in the exploration, development and production of offshore oil
and gas. The prices of oil and gas and their uncertainty in the future, along
with forecasted growth in world oil and gas demand, will strongly influence the
extent of offshore exploration and development activities. Offshore oil and gas
field capital expenditures also are influenced by the sale and expiration dates
of offshore leases, the discovery rate of new oil and gas reserves in offshore
areas, local and international political and economic conditions and the ability
of oil and gas companies to access or generate capital. These factors are beyond
the control of SCS.
OPERATING RISKS
Subsea services involves operational risk and is increasingly dependent on
large, expensive, special-purpose ships and equipment. Hazards, such as ships
capsizing, sinking, grounding, colliding and sustaining damage from severe
weather conditions are inherent in the marine operations of subsea services.
These hazards can cause personal injury and loss of life, severe damage to, and
destruction of, property and equipment, pollution or environmental damage and
suspension of operations. All employees engaged in SCS's offshore operations are
covered by provisions of local and maritime laws, which generally provide that
employees or their representatives can bring actions against SCS for damages for
job-related injuries. In addition, although SCS generally seeks to obtain
indemnity agreements whenever possible from the SCS's customers requiring such
customers to hold SCS harmless in the event of structural damage, loss of
production or liability for pollution that originates below the water surface,
when obtained such contractual indemnification does not generally cover
liability resulting from the gross negligence or willful misconduct of or
violation of law by employees or subcontractors of SCS and may not in all cases
be supported by adequate insurance maintained by the customer.
CONTRACT BIDDING RISKS
Reflecting market practice, a significant proportion of SCS's business is
performed on a fixed-price or turnkey basis. Management estimates that the
proportion of SCS's revenue from fixed-price or turnkey contracts increased from
approximately 46% in 1994 to 60% in 1997. Gross profits realized on such
contracts vary, sometimes substantially, from the estimated amounts because of
changes in offshore job conditions, the risks inherent in marine construction
and variations in labor and equipment productivity from those originally
projected, and significant losses can result from performing fixed-price or
turnkey contracts. Under such contracts, SCS also typically bears a proportion
of the risk of delays and extra costs caused by adverse weather conditions or
other circumstances.
14
<PAGE>
On some projects the Company may be performing work under joint venture
agreements where the Company and its partner are jointly and severally liable
towards the customer for the performance of the contract while they between
themselves carry the full responsibility only for their own share of the work.
If the Company's joint venture partner in such arrangement fails to fulfil its
obligations, the Company could have to carry the resultant liability towards the
customer.
PERCENTAGE-OF-COMPLETION PROJECT ACCOUNTING
As most of SCS's contract revenue is recognized on a
percentage-of-completion basis, based on the ratio of costs incurred to the
total estimated costs at completion, contract revenues and gross profits for a
project may be adjusted in subsequent reporting periods from those originally
reported in prior periods. To the extent that these adjustments result in a
reduction or elimination of previously reported profits, SCS would recognize a
charge against current earnings that may be significant depending on the size of
the project or the adjustment.
POLITICAL AND ECONOMIC RISK
SCS's operations are geographically spread throughout the world, and are
therefore subject to various political, economic and other uncertainties,
including, among others, political instability, civil unrest, the risks of war,
asset seizure, nationalization of assets, renegotiation or nullification of
existing contracts, taxation policies, foreign exchange restrictions or
fluctuations and changing political conditions. Additionally, the ability of SCS
to compete in international markets may be adversely affected by governmental
regulations that favor or require the awarding of contracts to local
contractors, or by regulations requiring foreign contractors to employ citizens
of, or purchase supplies from, a particular jurisdiction. Furthermore, SCS's
subsidiaries may face governmentally imposed restrictions from time to time on
their ability to transfer funds to the Company. No predictions can be made as to
what governmental regulations applicable to SCS's operations may be enacted in
the future.
SEASONALITY OF ACTIVITY IN THE NORTH SEA
SCS's subsea contracting business in the North Sea has consistently
accounted for the largest part of SCS's revenue (approximately 60% in 1997).
SCS's business in this region is seasonal and dependent on weather conditions. A
substantial portion of the SCS's contracts for subsea services are performed
between April and October due to adverse weather conditions during the winter
months.
DEPENDENCE ON SIGNIFICANT CUSTOMERS
SCS's major customers are oil companies and large offshore contractors.
During 1997, the SCS's top seven customers accounted for over 50% of SCS's net
operating revenue. The loss of any one or more of these significant customers
could have a material adverse effect on SCS.
COMPETITION
The subsea business is highly competitive, and offshore subsea contractors
compete intensely for available projects. Contracts for SCS's services are
generally awarded on a competitive bid basis, and although customers may
consider, among other things, the availability and capability of equipment, and
the reputation and experience of the contractor, price is a primary factor in
determining which contractor is awarded a contract. Several of SCS's competitors
and potential competitors are larger and have greater financial and other
resources than SCS. In addition, increased activity levels may attract
additional competitors or equipment to the market.
15
<PAGE>
HAZARDOUS ACTIVITIES
The operation of any ocean-going ship carries an inherent risk of
catastrophic marine disasters and property losses caused by adverse weather
conditions, mechanical failures, human error, war, terrorism, piracy, labor
stoppages and other circumstances or events. Any such event may result in loss
of revenues or increased costs.
The Company carries insurance to protect against most of the
accident-related risks involved in the conduct of its business and it maintains
environmental damage and pollution insurance coverage. There can be no
assurance, however, that all risks are adequately insured against, that any
particular claim will be paid or that the Company will be able to procure
adequate insurance coverage at commercially reasonable rates in the future. In
particular, more stringent environmental regulations may result in increased
costs for, or the lack of availability of, insurance against the risks of
environmental damage or pollution.
While the Company currently insures its ships against property loss due to a
catastrophic marine disaster, mechanical failure or collision, the loss of any
ship as a result of such an event could result in a substantial loss of
revenues, increased costs and other liabilities and could have a material
adverse effect on operating performance. Litigation arising from such an
occurrence may result in the Company being named as a defendant in lawsuits
asserting large claims.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company operates in a number of different jurisdictions and is subject
to and affected by various types of governmental regulation, including national
laws and regulations and international conventions relating to ship safety and
design requirements, disposal of hazardous materials, discharge of oil or
hazardous substances, protection of the environment, food safety, and various
import and export requirements. These laws and regulations are becoming
increasingly complex, stringent and expensive to comply with, and there can be
no assurance that continued compliance with existing or future laws or
regulations will not adversely affect the operations of the Company. Significant
fines and penalties may be imposed for non-compliance.
In addition, the Company could be held liable for remediation of pollution
caused by its ships and for releases of oil and hazardous substances and debris
from offshore production platforms, pipelines, subsea facilities and other
assets owned or operated by its customers, and for releases resulting from
activities of, or equipment owned by, its subcontractors. Although the Company
generally negotiates contractual provisions requiring customers to indemnify the
Company in the event any such liability is imposed, the Company has not obtained
such indemnification in all cases. Moreover, such indemnification does not
generally cover liability resulting from the gross negligence or willful
misconduct of, or violation of law by, employees or subcontractors of the
Company.
CERTAIN FINANCIAL REQUIREMENTS
The Company is party to material bank credit and other financing agreements
which impose certain financial requirements such as limitations on debt and the
types of businesses the Company may engage in. At the end of 1997, the Company
was in compliance with all of these credit/financing agreements. Except for
these financial requirements, none of these agreements imposes material
restrictions on the ability of the Company to incur additional indebtedness or
operate its businesses. Although management believes that current operating
plans will not be restricted by these requirements in the future, changes in
economic or business conditions, results of operations or other factors may in
the future result in circumstances in which the requirements restrict the
Company's plans or business operations
16
<PAGE>
LEVERAGE
The degree to which the Company is leveraged may affect its ability to
obtain additional financing in the future for working capital, capital
expenditures, product and service development, and general corporate purposes,
to utilize cash flow from operations for purposes other than debt service, and
to overcome seasonal or other cyclical variations in its business. The ability
of the Company to satisfy its obligations and to reduce its debt is dependent on
the future performance of the Company, which will be subject to the prevailing
economic conditions and to financial, business, and other factors including
those beyond the Company's control.
CAPITAL REQUIREMENTS
The acquisition of new assets and properties, both for growth as well as
replacement, is capital intensive. The availability of new capital to finance
these expenditures depends on the prevailing market conditions and the
acceptability of financing terms offered to the Company. Management believes
that capital expected to be available under the various lines of credit,
financing agreements, and other sources and from disposition of existing assets
and properties as well as cash generated from operations, should be sufficient
to meet its capital requirements for the foreseeable future. No assurance,
however, can be given that financing will continue to be available on attractive
terms.
FOREIGN CURRENCY FLUCTUATIONS
Substantial portions of the Company's revenue and expenses are denominated
in currencies other than dollars. Fluctuations in these currencies can have a
significant impact on the Company's financial results. The Company engages in
hedging programs intended to reduce part of the Company's short-term exposure to
currency fluctuations. However, there can be no assurances that such efforts
will be successful. Hedging is limited to known and foreseeable exposures that
develop through normal business operations and to long-term business
investments. The Company does not attempt to hedge foreign earnings that are
translated into dollars for reporting purposes. Foreign currency fluctuations
have had and will continue to have an impact on reported financial results.
TAXES
The Company's operations are conducted in Norway and the United Kingdom as
well as certain other countries in Europe, Africa, the Middle East, Asia
Pacific, North America and South America. Net income earned from operations in
most of such countries are subject to corporate income taxes and withholding
taxes on dividends paid to other members of the Company's group.
Certain of the Company's subsidiaries may be subject to income tax in the
U.S. and other jurisdictions. The subsidiaries which are incorporated in the
U.S. file a consolidated Federal income tax return, and other subsidiaries file
separate tax returns if and as required.
RESTRUCTURING
To operate in a price competitive manner, the Company regularly reviews its
operations. This review process may result in the closure of offices or
departments, the sale of assets or business lines, the termination of personnel,
or the reassessment of the useful life of assets or technology. Such actions may
affect the Company's results.
LABOR RELATIONS
The Company considers its relations with its employees and their unions to
be good and has not experienced any significant work stoppages. There can be no
assurances however that disruption of the
17
<PAGE>
Company's services or production, or that larger labor disputes involving the
industries the Company operates in will not adversely affect the Company's
results.
ACQUISITION AND EXPANSION STRATEGY
One element of the Company's strategy is to continue to grow through
selected acquisitions that further consolidate the markets in which the Company
operates. Likewise the Company plans on expanding its operations at existing or
new locations. There can be no assurance that any currently planned acquisitions
or expansions will be completed or that any currently planned or any additional
acquisitions or expansions will be successful in enhancing the operations or
profitability of the Company; that the Company will be able to identify suitable
additional acquisition candidates or areas for expansion; that it will have the
financial ability to consummate additional acquisitions or expansions; or that
it will be able to consummate such additional acquisitions or expansions on
terms favorable to the Company.
RISK OF LOSS AND INSURANCE
The business of the Company is affected by a number of risks, including the
mechanical failure of its ships, collisions, ship loss or damage, cargo loss or
damage, hostilities, and labor strikes. In addition, the operation of any ship
is subject to the inherent possibility of a catastrophic marine disaster,
including oil, fuel, or chemical spills and other environmental mishaps, as well
as other liabilities arising from owning and operating ships. Any such event may
result in loss of revenues and increased costs and other liabilities. Although
the Company's losses from such hazards have not historically exceeded its
insurance coverage, there can be no assurance that this will continue to be the
case.
18
<PAGE>
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
Stolt Comex Seaway S.A. is a Luxembourg holding company and does not have
officers as such. The following is a list of the Directors of the Company and
persons employed by its subsidiaries who perform the indicated executive and
administrative functions for the combined business of the Company's
subsidiaries:
<TABLE>
<CAPTION>
NAME AGE* POSITION
- ---------------------------------------------------- ----- ----------------------------------------------------
<S> <C> <C>
Jacob Stolt-Nielsen, Jr............................. 66 Chairman of the Board of Directors
Christopher J. Wright............................... 63 Deputy Chairman of the Board of Directors
J. Frithjof Skouveroe............................... 54 Director and Acting Vice President, Norway
John P. Laborde..................................... 73 Director
Mark Woolveridge.................................... 63 Director
Fernand Poimboeuf................................... 65 Director
Bernard Vossier..................................... 53 Chief Executive Officer
Paul Frikstad....................................... 47 Chief Financial Officer
Stephen Vorley...................................... 43 Vice President, Field Development
Tom Welsh........................................... 40 Vice President, Flowline Laying
Alan West........................................... 39 Vice President, Subsea Construction
Malcolm Seeley...................................... 46 Vice President, Assets and Engineering
Alan Brunnen........................................ 36 Vice President, UK and Organization and Process
Development
Brian Butler........................................ 48 Vice President, Asia Pacific
Andre Bursaux....................................... 46 Vice President, SEAME
Phillippe Lamoure................................... 45 Vice President, South America
Bruno Chabas........................................ 33 Vice President, Gulf of Mexico
Julian Thomson...................................... 49 Group Manager, Marketing and Communications
</TABLE>
- ------------------------
* As of April 30, 1998.
Under the terms of the Company's Articles of Incorporation, its Directors
may be elected for terms of up to six years and serve until their successors are
elected. Under the Articles, the Board consists of not fewer than three
Directors. The Company's Board of Directors currently consists of six members.
Mr. Stolt-Nielsen has served as Chairman of the Board since 1993. Mr.
Stolt-Nielsen also serves as Chairman and Chief Executive Officer of SNSA. He
founded Seaway in 1973. Mr. Stolt-Nielsen is a Norwegian citizen.
Mr. Wright has served as Deputy Chairman of the Board since 1993. He has
served as President and Chief Operating Officer of SNSA since 1986. Mr. Wright
was employed by British Petroleum plc ("BP") from 1958 until the time he joined
SNSA. Mr. Wright held a variety of positions at BP including Senior Vice
President of BP North America from 1982 to 1986. He is a British citizen.
19
<PAGE>
Mr. Skouveroe has been a Director since 1993, he is currently Acting Vice
President, Norway. He was Chairman of the Board and Chief Executive Officer of
Seaway from 1990 until it was acquired by SNSA in 1992. From 1985 to 1990, he
was President and Second Vice Chairman of Seaway. From 1982 until 1985, Mr.
Skouveroe served as President of Stolt-Nielsen Seaway Contracting A/S, a
predecessor of Seaway. Mr. Skouveroe is a Norwegian citizen.
Mr. Laborde has been a Director since 1993. He retired in 1995 as Chairman
of the Board, President and Chief Executive Officer of Tidewater Inc. and
continues to serve as member of the Board of Directors of Tidewater. He is now
Chief Executive Officer of Laborde Marine Lifts, Inc. and also serves on the
boards of Stone Energy Corporation and Stewart Enterprises as well as the
Council of the American Bureau of Shipping. Mr. Laborde is a U.S. citizen.
Mr. Woolveridge has been a Director since 1993. He held a number of
positions with BP since 1968 and most recently served as Chief Executive of BP
Engineering from 1989 until his retirement in 1992. He also was General Manager,
Oil and Gas Developments, responsible for field development projects in the UK
and Norwegian sectors of the North Sea, and served on the board of BP Oil Ltd.
Mr. Woolveridge is a British citizen.
Mr. Poimboeuf was appointed as a Director to the Company on April 16, 1998.
He has had a career of 33 years with Elf Aquitaine which included periods as
Deputy General Manager in Gabon, Executive Vice-President of Texasgulf Inc in
Houston and General Manager in Angola. Mr Poimboeuf is a French citizen.
Mr. Vossier was appointed Chief Executive Officer of the Company as of May
23, 1995. He previously served as Chief Operating Officer of the Company from
December 1994 to May 1995. He joined Comex in 1974 and has held numerous
management positions in operations and marketing.
Mr. Frikstad joined the Company as Chief Financial Officer of the Company in
June 1995. He was previously Vice President, Offshore, in Mosvold Shipping A.S.
and has more than twenty years of experience in the offshore industry working
for oil companies and oil service contractors.
Mr. Vorley was appointed Vice President, Field Development, as of July 17,
1995. He joined Comex in 1983 and prior to 1995 worked in engineering, project
and commercial posts in the UK and Norway.
Mr. Welsh was appointed Vice President, Flowline Laying, as of July 17,
1995. He first worked for Comex from 1985 to 1988. After working as a consultant
for a number of years he rejoined the Company in 1992 and worked in engineering
and project management roles on a number of important projects.
Mr. West was appointed Vice President, Subsea Construction, as of July 17,
1995. He joined Comex in 1982 and has worked in engineering and the management
of major projects in the North Sea and overseas.
Mr. Seeley was appointed Vice President, Assets and Engineering, as of
September 27, 1996. He joined Comex in 1976 and was initially involved in
engineering and design engineering projects prior to being appointed Manager for
a number of major subsea construction and development projects.
Mr. Brunnen was appointed Vice President, UK, as of July 17, 1995. He joined
Seaway in 1992 and had been involved in managing several major projects prior to
his appointment as Vice President, UK. He has more than fifteen years of
experience in the offshore subsea industry. As of February 15, 1998, he was
appointed to the role of Vice President, Organization and Process Development.
Mr. Butler joined the Company as Vice President, Asia Pacific, as of
September 15, 1995. He was previously Managing Director of Swire Pacific
Offshore in Singapore and had held various technical and management positions in
the Swire Group involved with the oil and gas industry in the Middle East and
Far East.
Mr. Bursaux rejoined the Company in 1995 and was appointed Vice President,
SEAME, as of April 3, 1995. He came from a consulting firm specializing in
strategic marketing and management of company
20
<PAGE>
mergers. When previously with Comex between the years of 1971-1985, he held
various positions in engineering and commercial activities, ultimately as Vice
President, North Sea.
Mr. Lamoure was appointed Vice President, South America, as of March 1,
1995. He has been employed by the Company since 1974 when he joined Comex, most
recently General Manager for the Company's operations in France, Africa and
South America from 1994 to March 1995 and Operations Manager in Brazil from 1981
to 1994.
Mr. Chabas was appointed Vice President, Gulf of Mexico, as of January 1,
1998. He joined Stolt Comex Seaway in 1992 and has held management positions in
France and the U.K. before being appointed to the Gulf of Mexico.
Mr. Thomson first joined Seaway in September 1990 as Business Development
Manager. He rejoined the Company in November 1995 as Group Manager, Marketing
and Communications. A former Royal Navy officer, he has 20 years of experience,
most of which have been in the offshore and subsea industry.
There is no family relationship among any of the individuals listed above.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
As described above, SCS does not have officers, but certain persons employed
by its subsidiaries perform executive and administrative functions for the
combined business of the Company's subsidiaries. The aggregate annual
compensation paid to the 12 officers performing such executive functions for
SCS, as a group, for the fiscal year ended November 30, 1997 (including certain
benefits) was $1,880,000. In addition, $110,000 was contributed on behalf of
such officers to defined contribution pension plans. During 1997, Directors of
Stolt Comex Seaway S.A. who were affiliated with the Company or a subsidiary of
SNSA received no compensation for their services, as such, but received
reimbursement of their out-of-pocket expenses. All non-executive directors of
Stolt Comex Seaway S.A. received an annual fee of $15,000, plus expenses in
1997.
PROFIT SHARING PLAN
Stolt Comex Seaway S.A. has a Profit Sharing Plan which pays 10% of the
Company's net profit (after specified adjustments) to its officers and employees
worldwide other than those covered by collective bargaining agreements. The
determination of an employee's individual award is based on performance, salary
and overall contribution to the Company. The Profit Sharing Plan is administered
by a Compensation Committee appointed by the SCS Board of Directors. For the
fiscal year ended November 30, 1997, a total provision of $3,800,000 has been
made for payment under the Profit Sharing Plan. The payment of Profit Sharing
for 1997 will not be made until 1998 and the portion to be allocated to officers
has not yet been determined.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
Stolt Comex Seaway S.A. has a Stock Option Plan (the "Plan") covering
2,150,000 Common Shares. Options may be granted under the Plan exercisable for
periods of up to ten years. The options granted under the Plan will be at an
exercise price not less than the fair market value per share at the time the
option is granted. The Plan is administered by a Compensation Committee
appointed by the SCS Board of Directors. The Compensation Committee awards
options based on the grantee's position in the Company, degree of
responsibility, seniority, contribution to the Company and such other factors as
it deems relevant under the circumstances.
As of April 30, 1998, a total of 881,400 options exercisable for Common
Shares had been granted to the Company's subsidiaries' employees, of which
439,254 remain outstanding and 249,324 are currently exercisable. Of the total
remaining outstanding, options for 47,500 Common Shares have been granted to
21
<PAGE>
employees who are Directors and executive officers of SCS. The outstanding
options are exercisable at the respective prices set forth below and expire on
the dates indicated:
<TABLE>
<CAPTION>
OPTIONS
AWARD OPTIONS CURRENTLY
YEAR OUTSTANDING EXERCISABLE EXERCISE PRICE EXPIRATION DATE
- ----------------------------------------------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
1993................................................. 10,580 11,580 $ 7.7500 May 2003
1994................................................. 33,754 37,754 4.5000 April 2004
1995................................................. 120,820 91,365 3.5000-5.2500 June 2005
1996................................................. 102,750 62,250 4.0625 May 2006
1997................................................. 171,350 46,375 8.6875 March 2007
----------- -----------
Total.............................................. 439,254 249,324
----------- -----------
</TABLE>
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The discussion of related party transactions appearing as Note 13 to
Consolidated Financial Statements, which is part of Item 18 of this Report, is
incorporated herein by reference.
22
<PAGE>
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR
REGISTERED SECURITIES
None.
23
<PAGE>
PART IV
ITEM 17. FINANCIAL STATEMENTS
Stolt Comex Seaway S.A. has elected to provide financial statements for the
fiscal year ended November 30, 1997 and the related information pursuant to Item
18.
ITEM 18. FINANCIAL STATEMENTS
1. Consolidated Financial Statements of Stolt Comex Seaway S.A. and
Subsidiaries
Report of Independent Public Accountants.
Consolidated Balance Sheets as of November 30, 1997 and 1996.
Consolidated Statements of Income for the years ended November 30, 1997,
1996 and 1995.
Consolidated Statements of Shareholders' Equity for the years ended
November 30, 1997, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended November 30,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
The consolidated financial statements and related notes referred to above
and the report of Arthur Andersen, the Company's independent public accountants,
appearing on pages 24 through 39 of the Company's 1997 Annual Report filed with
the Securities and Exchange Commission on Form 6-K are incorporated herein by
reference.
2. Report and Financial Statements of Seaway Heavy Lifting Limited
Report of Independent Public Accountants.
Profit and Loss Accounts for the years ended November 30, 1997, 1996 and
1995.
Balance Sheets as of November 30, 1997, 1996 and 1995.
Statements of Cash Flows for the years ended November 30, 1997, 1996 and
1995.
Notes to Financial Statements.
3. Report and Financial Statements of Transfield-Stolt Comex Seaway Joint
Venture
Report of Independent Public Accountants.
Profit and Loss Accounts for the years ended June 30, 1997 and 1996 and
for the 17-month period ended June 30, 1995.
Balance Sheets as of June 30, 1997, 1996 and 1995.
Statements of Cash Flows for the years ended June 30, 1997, 1996 and for
the 17-month period ended June 30, 1995.
Notes to Financial Statements.
4. Report of Independent Public Accountants on Schedules
Supplementary Schedules
Schedule II Valuation and Qualifying Accounts
24
<PAGE>
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
See list in Item 18.
(b) Exhibits.
<TABLE>
<C> <S>
2.1 Consent of Arthur Andersen, Independent Public Accountants.
2.2 Consent of Elvinger, Hoss & Prussen.
2.3 Statement re: computation of per share earnings.
2.4 Amended Articles of Incorporation.
2.5 Company's 1997 Annual Report, pages 19 through 39.
2.6 Consent of Coopers & Lybrand, Australia, Independent Public Accountants
2.7 Financial statements of Seaway Heavy Lifting Limited for the years ended November 30,
1997, 1996 and 1995.
2.8 Financial statements of the Transfield-Stolt Comex Seaway Joint Venture for the years
ended June 30, 1997 and 1996 and for the 17-month period ended June 30, 1995.
27 Financial Data Schedule.
</TABLE>
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
STOLT COMEX SEAWAY S.A.
By: /s/ CHRISTOPHER J. WRIGHT
-----------------------------------------
Name: Christopher J. Wright
Title:Deputy Chairman of the Board of
Directors
By: /s/ PAUL FRIKSTAD
-----------------------------------------
Name: Paul Frikstad
Title: Chief Financial Officer
</TABLE>
Date: May 28, 1998
26
<PAGE>
INDEX TO REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
AND SUPPLEMENTARY SCHEDULES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Supplementary Schedules
Schedule II--Valuation and Qualifying Accounts........................................................... F-3
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO STOLT COMEX SEAWAY S.A.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Stolt Comex Seaway S.A.'s
Annual Report to Shareholders incorporated by reference in this Form 20-F, and
have issued our report thereon dated February 20, 1998. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedules listed in the Index on page F-1 are the responsibility of the
Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN
Glasgow, Scotland
May 28, 1998
F-2
<PAGE>
SCHEDULE II
STOLT COMEX SEAWAY S.A. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO WRITE-OFFS
BEGINNING OF COSTS AND AGAINST THE OTHER ADD BALANCE AT
PERIOD EXPENSES RESERVE (DEDUCT) (A) END OF PERIOD
------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
For the year ended November 30, 1995:
Allowance for doubtful accounts............... $ 977 $ 601 $ (207) $ 78 $ 1,449
------ ----------- ----- ----- ------
------ ----------- ----- ----- ------
Other......................................... $ 4,093 $ 1,689 $ -- $ (210) $ 5,572
------ ----------- ----- ----- ------
For the year ended November 30, 1996:
Allowance for doubtful accounts............... $ 1,449 $ 1,123 $ (124) $ (24) $ 2,424
------ ----------- ----- ----- ------
------ ----------- ----- ----- ------
Other......................................... $ 5,572 $ (2,595) $ (248) $ (69) $ 2,660
------ ----------- ----- ----- ------
For the year ended November 30, 1997:
Allowance for doubtful accounts............... $ 2,424 $ 222 $ (137) $ (300) $ 2,209
------ ----------- ----- ----- ------
------ ----------- ----- ----- ------
Other......................................... $ 2,660 $ 1,884 $ (91) $ 155 $ 4,608
------ ----------- ----- ----- ------
</TABLE>
- ------------------------
(a) Includes the effect of exchange rate changes on beginning balances of
valuation and qualifying accounts, except as otherwise noted.
F-3
<PAGE>
Exhibit 2.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 20-F of our Report dated February 18, 1998, and to the
incorporation of our reports included and incorporated by reference to this
Form 20-F, into the Company's previously filed Registration Statement on Form
S-8, File No. 33-85168, and of our report dated November 10, 1997 on the
financial statements of Seaway Heavy Lifting Limited. It should be noted that
we have not audited any financial statements of the Company subsequent to
November 30, 1997 or performed any audit procedures subsequent to the date of
our report.
ARTHUR ANDERSEN
Glasgow, Scotland
May 28, 1998
<PAGE>
Exhibit 2.2
[LETTERHEAD OF ELVINGER, HOSS & PRUSSEN]
We hereby consent to being named and to the summarization of advice
attributed to us in the response to Item 6 of the Annual Report on Form 20-F
of Stolt Comex Seaway S.A. for the fiscal year ended November 30, 1997.
ELVINGER, HOSS & PRUSSEN
/s/ Elvinger, Hoss & Prussen
Luxembourg,
May 28, 1998
<PAGE>
Exhibit 2.3
STOLT COMEX SEAWAY S.A. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Earnings
Net Income (Loss) $ 39,001 $ (14,902)
--------- ------------
--------- ------------
Primary Earnings Per Share:
Weighted Average Common Shares Outstanding 31,582 20,000
Net Effect of Dilutive Stock Options - based
on the treasury stock method using average prices 162 -
--------- ------------
Weighted Average Common Shares and
Common Share Equivalents 31,744 20,000
--------- ------------
--------- ------------
Net Income (Loss) $ 1.23 $ (0.75)
--------- ------------
Primary Earnings Per Share $ 1.23 $ (0.75)
--------- ------------
--------- ------------
Fully Diluted Earnings Per Share:
Weighted Average Common Shares Outstanding 31,582 20,000
Net Effect of Dilutive Stock Options - based
on the treasury stock method using the
year-end market price if higher than the
average market price 195 -
--------- ------------
Fully Diluted Weighted Average Common Shares
and Common Share Equivalents 31,777 20,000
--------- ------------
--------- ------------
Net Income (Loss) $ 1.23 $ (0.75)
--------- ------------
Fully Diluted Earnings Per Share $ 1.23 $ (0.75)
--------- ------------
</TABLE>
<PAGE>
Exhibit 2.4
[LOGO]
Amended Articles of Incorporation
E T U D E
D E
Me PAUL FRIEDERS
N O T A I R E
A
L U X E M B O U R G
STATUTS COORDONNES
STOLT COMEX SEAWAY S.A.
ARTICLES OF INCORPORATION
RESTATED EFFECTIVE FEBRUARY 18,1998
(CERTIFIED BY NOTARY MARCH 5, 1998)
<PAGE>
STOLT COMEX SEAWAY S.A.
Societe anonyme
Luxembourg, 11, rue Aldringen
RC Luxembourg B 43 172
-----------------------------
Constituee suivant acte recu par Maitre Paul FRIEDERS, notaire
de residence a Luxembourg, en date du 10 mars 1993, publie au Recueil Special du
Memorial C, numero 190 du 28 avril 1993.
Les statuts ont ete modifies suivant actes recus par ledit
notaire Paul FRIEDERS, en date du 28 avril 1993, publie au Recueil Special du
Memorial C, numero 300 du 22 juin 1993, en date du 27 juillet 1994, publie au
Recueil Special du Memorial C, numero 491 du 29 novembre 1994, en date des 25 et
26 fevrier 1997, publies au Recueil Special du Memorial C, numero 305 du 18 juin
1997, en date du 2 mai 1997, publie au Recueil Special du Memorial C, numero 418
du ler aout 1997, en date du 13 juin 1997, publie au Recueil Special du Memorial
C, numero 524 du 25 septembre 1997, en date du 29 juillet 1997, publie au
Recueil Special du Memorial C, numero 650 du 21 novembre 1997, en date du 10
novembre 1997, publie au Recueil Special du Memorial C, numero 112 du 20 fevrier
1998, en date du 20 novembre 1997, publie au Recueil Special du Memorial C,
numero du , en date du 16 decembre 1997, publie au Recueil Special du Memorial
C, numero du et en date du 18 fevrier 1998, publie au Recueil Special du
Memorial C, numero du
---------------------------------------------
STATUTS COORDONNES
---------------------------------------------
<PAGE>
CHAPTER 1. NAME, REGISTERED OFFICE, OBJECTS, DURATION
Article 1: There is incorporated by these presents a
Luxembourg holding company in the form of a limited liability company.
It will be styled "STOLT COMEX SEAWAY S.A."
Article 2: The registered office of the Company is situated in
Luxembourg. It may be transferred to any other place in the Grand Duchy of
Luxembourg by resolution of the Board of Directors.
When extraordinary events of political, economic or social
policy occur or shall be imminent, which might interfere with the normal
business at the registered office or with the easy communication between such
office and foreign parts, the registered office may be declared to have been
transferred abroad provisionally until the complete cessation of these abnormal
circumstances; without this measure, however, having any effect on the
nationality of the Company, which, notwithstanding this provisional transfer of
the registered office, shall remain of Luxembourg nationality.
A similar declaration of the transfer of the registered office
of the Company shall be made and brought to the attention of third parties by
one of the executive departments of the Company, which has power to bind it for
current and everyday acts of management.
The Board of Directors shall also have the right to set up
offices, administrative centers, agencies and subsidiaries wherever it shall see
fit, either within or outside the Grand Duchy of Luxembourg.
<PAGE>
Article 3: The objects of the Company are to invest in
subsidiaries which will provide subsea construction, maintenance, inspection,
survey and engineering services, predominantly for the offshore oil and gas
industry.
More generally, the Company may participate in any manner in
all commercial, industrial, financial and other enterprises of Luxembourg or
foreign nationality through the acquisition by participation, subscription,
purchase, option or by any other means of all shares, stocks, debentures, bonds
or securities; the acquisition of patents and licenses which it will administer
and exploit; it may lend or borrow with or without security, provided that any
monies so borrowed may only be used for the purposes of the Company, or
companies which are subsidiaries of or associated with or affiliated to the
Company; in general it may undertake any operations directly or indirectly
connected with these objects whilst nevertheless remaining within the limits set
out by the law on holding companies of the thirty-first of July, nineteen
hundred and twenty-nine.
Article 4: The Company is incorporated for an unlimited
period. It may be wound up in accordance with legal requirements.
CHAPTER 2. CAPITAL, SHARES, BOND-ISSUES
Article 5:
The authorized capital of the Company is fixed at One Hundred
and Eighteen Million United States Dollars (U.S. $ 118,000,000) to be
represented by (a) Twenty-Five Million (25,000,000) Common Shares, par value
U.S. $ 2.00 per share, and (b) Thirty-Four Million (34,000,000) Class B Shares,
par value U.S. $ 2.00 per share. Any authorised but unissued Common Shares or
Class B Shares shall lapse five (5)
<PAGE>
years after publication of the Articles of Incorporation, or any amendment
thereto, in the Memorial.
The issued capital of the Company is set at Fifty-Six Million
Two Hundred and Ninety-One Thousand Five Hundred and Seventy-Six United States
Dollars (U.S.$ 56,291,576) represented by (a) Eleven Million One Hundred and
Forty-Five Thousand Seven Hundred and Eighty-Eight (11,145,788) Common Shares,
par value U.S. $ 2.00 per share, and (b) Seventeen Million (17,000,000) Class B
Shares, par value U.S. $ 2.00 per share, all of said shares being fully paid.
The Board of Directors or delegates(s) duly appointed by the
Board may from time to time issue shares out of the total authorised shares at
such times and on such terms and conditions, including issue price, as the Board
or its delegate(s) may in its or their discretion resolve. The holders of Common
Shares shall be entitled to pre-emptive rights in respect of any future issuance
of Common Shares for cash. The holders of Class B Shares shall be entitled to
pre-emptive rights in respect of any future issue of Class B Shares for cash.
The holders of any class of shares shall not be entitled to pre-emptive rights
with respect to any other class of shares. In each case, the Board of Directors
may suppress the pre-emptive rights of shareholders to the extent it deems
advisable.
Each time the Board of Directors or its delegate(s) shall have
issued authorised Common Shares or Class B Shares and accepted payment therefor,
this Article shall be amended to reflect the result of such issue and the
amendment will be recorded by notarial deed at the requests of the Board of
Directors or its delegate(s).
Article 6: Any share premium which shall be paid in addition
to the par value of the Common Shares or the Class B Shares shall be transferred
to paid-in surplus.
<PAGE>
Article 7: Common Shares and Class B Shares being fully paid
up shall not be subject to any restriction in respect of their transfer, but
such shares shall be subject to the restrictions on shareholdings set forth in
Article 34 hereof.
Article 8: The Common Shares and the Class B Shares shall be
issued in registered form only.
Share certificates or other evidence of ownership will be
issued for Common Shares and Class B Shares in such denominations as the Board
of Directors shall prescribe. The share certificates or other evidence of
ownership shall be in such form and shall bear such legends and such numbers of
identification as shall be determined by the Board of Directors. The forms of
share certificates, or other evidence of ownership, may be different in respect
of the Common Shares and Class B Shares entered in the various Registers which
may be established in accordance with this Article 8. The share certificates
shall be signed manually or by facsimile by two directors of the Company. The
Board of Directors may provide for compulsory authentication of the share
certificates by the Registrar(s).
All Common Shares and Class B Shares in the Company shall be
registered in the Register(s) of Shareholders which shall be kept by the persons
designated therefor by the Company and such Register(s) of Shareholders shall
contain the name of each holder of Common Shares or Class B Shares, his
residence and/or elected domicile and the number of Common Shares or Class B
Shares held by him and other information as may be required from time to time by
applicable law. Every transfer or devolution of Common Shares and Class B Shares
shall be entered into the Register(s) of Shareholders and every such entry shall
be
<PAGE>
signed by one or more officers of the Company or by one or more persons
designated by the Board of Directors.
The Company may appoint Registrars in different jurisdictions
who will each maintain a separate Register for the Common Shares and Class B
Shares entered therein and the holders of Common Shares or Class B Shares may
elect to be entered in one of the Registers and to be transferred from time to
time from one Register to another Register. The Board of Directors may, however,
restrict the ability to transfer Common Shares and Class B Shares that are
registered, listed, quoted, dealt in, or have been placed in certain
jurisdictions. The transfer to the Register kept at the registered office of the
company in Luxembourg may always be requested by any shareholder.
On transfers of Common Shares or Class B Shares, new
certificates or other evidence of ownership in respect of Common Shares or Class
B Shares transferred and retained, respectively, shall be issued in each case
without charge to the holder thereof.
Transfers of Common Shares and Class B Shares shall be
effected upon delivery of the certificate or certificates or other evidence of
ownership representing such Common Shares and Class B Shares to the Registrar
together with (i) a stock power or other instrument of transfer satisfactory to
the Company, (ii) with the form of endorsement which may be provided on the
certificate duly completed and executed, (iii) a written declaration of transfer
inscribed in the Register of Shareholders, dated and signed by the transferor
and transferee, or by persons holding suitable powers of attorney to act
therefor, in each case in such form and with such evidence of authority as shall
be satisfactory to the Company.
<PAGE>
Except as provided in Article 12 hereof, the Company may
consider the Person in whose name the Common Shares or Class B Shares are
registered in the Register(s) of Shareholders as the full owner of such Common
Shares or Class B Shares. The Company shall be completely free of responsibility
in dealing with such Common Shares or Class B Shares towards third parties and
shall be justified in considering any right, interest or claims of such third
parties in or upon such Common Shares or Class B Shares to be non-existent,
subject, however, to any right which such person might have, to demand the
registration or change in registration of Common Shares and Class B Shares.
In the event that a holder of Common Shares or Class B Shares
does not provide any address to which all notices or announcements from the
Company may be sent, the Company may permit a notice to this effect to be
entered into the Register(s) of Shareholders and such holder's address will be
deemed to be at the registered office of the Company or such other address as
may be so entered by the Company from time to time, until a different address
shall be provided to the Company by such holder. The holder may, at any time,
change his address as entered in the Register(s) of Shareholders by means of
written notification to the Registrar.
Lost, stolen or mutilated share certificates for Common Shares
or Class B Shares will be replaced by the Registrar who issued the share
certificates in the first place upon such evidence, undertakings and indemnities
as may be deemed satisfactory to the Company, provided that mutilated share
certificates shall be delivered before new share certificates are issued.
<PAGE>
Article 9: Except for matters where applicable law requires
the approval of both classes voting as a separate class and as otherwise
provided for in these Articles, Common Shares and Class B Shares shall vote as a
single class on all matters submitted to a vote of shareholders, with each share
entitled to one vote.
Furthermore, for so long as Stolt Parcel Tankers Inc. (or any
entity controlling, controlled by or under common control with said Stolt Parcel
Tankers Inc.) owns shares representing a majority of the combined voting power
of the then-outstanding shares of the Company, any proposed amendment to the
Company's Articles in respect of a recapitalisation, reclassification and
similar transactions affecting the relative rights, preferences and priorities
of the Common Shares and Class B Shares shall also require (x) the simple
majority vote of those Common Shares not so owned by Stolt Parcel Tankers Inc.
and (y) when the meeting is first convened, a quorum of 50% of the then-
outstanding Common Shares not so owned by Stolt Parcel Tankers Inc. is present
or represented.
Article 10: Class B Shares are convertible into Common Shares
on a two-for-one basis, at any time at the option of the holders thereof. In
addition, in the event that any Class B Share ceases to be owned by Stolt Parcel
Tankers Inc. (or any entity controlling, controlled by or under common control
with said Stolt Parcel Tankers Inc.), then, without any action on the part of
the holder(s) thereof, each such Class B Share shall automatically convert into
one-half of one Common Share. Furthermore, in the event that Stolt Parcel
Tankers Inc. (or any entity controlling, controlled by or under common control
with said Stolt Parcel Tankers Inc.), shall own shares (whether Class B Shares
or
<PAGE>
Common Shares) representing less than a majority of the combined voting power
of the then-outstanding shares of the Company, then, without any action on the
part of the holder(s) thereof, each such Class B Share shall automatically
convert into one-half of one Common Share.
Article 11: Without prejudice to the provisions of Article 5
hereof, the authorised or issued capital of the Company may be increased in one
or more installments by resolution of shareholders adopted in the manner
required for amendment of these Articles of Incorporation or as otherwise
provided by applicable law.
Article 12: The Common Shares and Class B Shares shall be
indivisible as far as the Company is concerned. Only one titleholder will be
recognised in connection with each Common Shares or Class B Shares.
If any Common Shares or Class B Shares shall be held by more
than one person, the Company has the right to suspend the exercise of all rights
attached to such share(s) until one person has been appointed titleholder with
regard to such share(s).
The same rule shall apply in the case of a conflict between an
usufructuary and a bare owner or between a pledgor and a pledgee.
The Company shall not issue fractions of either Common Shares
or Class B Shares. The Board of Directors shall be authorised at its discretion
to provide for the payment of cash or the issuance of script in lieu of any
fraction of a Common Share or Class B Share.
Article 13: The Board of Directors may decide the issuance of
bonds and debentures not containing an element of stock, which may be in bearer
or other form
<PAGE>
in any denomination or denominations and payable in any currency or currencies.
The Board of Directors shall fix the rate of interest,
conditions of issue and repayment and all other terms and conditions thereof.
The bonds and debentures must be signed by two Directors of
the Company, manually or by facsimile.
CHAPTER 3. ADMINISTRATION AND CONTROL
Article 14: The Company shall be managed by a Board of
Directors composed of members who need not be shareholders of the Company.
The business of the Company shall be supervised by one or more
Statutory Auditors, whether shareholders or not.
The Board of Directors shall be composed of not less than
three (3) persons who shall be elected in accordance with the provisions of this
Article 14.
The Directors and Statutory Auditors shall be appointed by the
general meeting of shareholders for such term not to exceed six years as the
meeting may decide.
The Company may, by a resolution of the general meeting of
shareholders, dismiss any Director before the expiry of the term of his office,
notwithstanding any agreement between the Company and such Director. Such
dismissal may not prejudice the claims that such Director may have for a breach
of any contract existing between him and the Company.
The Directors may be re-elected. The term of office of
Directors shall end immediately after the ordinary general meeting in the year
of the expiry thereof.
In the case where the office of a Director shall become vacant
following death, resignation or other-
<PAGE>
wise, the remainder of the Directors may convene and elect on the majority of
votes thereat, a Director to carry out the duties attaching to the office
becoming vacant, to hold such office until the next meeting of shareholders.
With the exception of a candidate recommended by the Board of
Directors or a Director whose term of office shall expire at a general meeting
of shareholders, no candidate may be appointed unless three days at least before
the date fixed for the meeting and twenty-one days at the most before this date
a written declaration, signed by a shareholder duly authorised, shall have been
deposited at the registered office of the Company, and in the terms of which he
intends to propose the appointment of this person together with a written
declaration, signed by the candidate in question, expressing the wish of the
candidate to be appointed.
Article 15: The Board of Directors shall elect a Chairman from
among its members. Should the Chairman not be available at a meeting, the Deputy
Chairman, or, in his absence, the Managing Director (if there is one), or in his
absence, the oldest Director present at the meeting, shall act in his stead.
Article 16: The Board of Directors shall convene on the notice
of the Chairman of the Board of Directors, of the Managing Director (if there is
one) or of any two Directors.
Meetings shall be held at the place, on the day and at the
time set out in the convening notice.
The Board of Directors may only deliberate validly if the
majority of its members shall take part in the proceedings by voting personally
or by proxy given in writing, by telegram, fax or telex.
<PAGE>
A proxy may only be given to another Director.
Decisions of the Board of Directors shall be taken by a
majority of the votes cast by the Directors present or represented at a meeting.
Resolutions signed by all members of the Board will be as
valid and effective as if passed at a meeting duly convened and held. Such
signatures may appear on a single document or multiple copies of an identical
resolution and may be evidenced by letters, cables, telexes or faxes.
Any Director may, simultaneously with his office of Director,
be employed by the Company in any other capacity (except the office of Statutory
Auditor) or remunerated for a duration and on conditions that the Board of
Directors shall determine and shall receive in respect thereof a special
remuneration (by way of salary, commission, share in the profits or otherwise)
to be determined by the Board, subject to ratification by the general meeting of
shareholders, and such special remuneration shall be added to any remuneration
provided for by virtue of, or arising from any other provision of, these
Articles of Incorporation or pursuant to resolutions of shareholders adopted in
a general meeting.
No Director may be counted for the quorum present, nor cast a
vote in respect of Board resolutions, that shall relate to his own appointment
to an office or position being remunerated within the Company or which shall lay
down or amend the conditions thereof.
Any Director who, when a contract or an agreement shall be
submitted for approval of the Board of Directors, has a personal interest
contrary to that of the Company, must inform the Board of Directors and require
that this information be entered in the minutes
<PAGE>
of the meeting. This Director may not deliberate or vote in respect of such
contract or agreement and he shall not be counted for purposes of whether a
quorum is present. At the next meeting of shareholders and before any vote in
respect of any other resolution, a report must be made on any contract or
agreement in respect of which a Director shall have had an interest contrary to
that of the Company. The provisions of this paragraph shall not apply where a
Director owns less than five percent of the company or other entity whose
contract or agreement with the Company is submitted for approval by the Board of
Directors.
Article 17: The minutes of any meeting of the Board of
Directors shall be signed by the Chairman and the Secretary of such meeting.
Copies of or extracts from such minutes or of resolutions
signed by all members of the Board shall be signed by the Chairman of the Board
of Directors or by the Managing Director (if there is one) or by two Directors.
Article 18: The Board of Directors has the widest powers to
carry out any acts of management or of disposition that shall interest the
Company. All that is not expressly reserved for the general meeting by law or by
these Articles of Incorporation is intra vires the Board.
The Board may more particularly, and without the enumeration
which follows being in any way exhaustive, make and enter into any contracts and
acts necessary for the performance of any undertakings or business that shall
interest the Company, decide upon any contributions, assignments subscriptions,
sleeping partnerships, associations, participation or financial interests
relating to such business, receive any sums
<PAGE>
due and belonging to the Company, give a valid receipt therefor, make and
authorise any withdrawals, transfers and disposition of funds, income, debts
receivable or securities belonging to the Company.
The Board may take on lease, acquire, dispose of and exchange
any immovable property and movable property necessary for its operations, lend
or borrow on short or long term, even by way of the issue of debentures, with or
without guarantee, assume any surety undertakings, constitute and accept any
mortgage guarantee and otherwise, with or without stipulation of a similar
procedure, waive any preferential rights, mortgage rights, avoidance actions and
real rights in general; waive, with or without payment, any preferential
mortgages or entries, as well as in respect of any orders, registrations,
distraints, attachments and other encumbrances whatsoever; discharge all
official registrations, all of which with or without payment.
The Board shall represent the Company vis-a-vis third parties,
authorities and governments and exercise any actions, both as plaintiff and as
defendant, before any courts, obtain any judgments, decrees, decisions, awards
and proceed therewith to execution, acquiesce, compound and compromise, in any
event, in respect of any corporate interests.
Article 19: The Board of Directors may delegate all or part of
its powers, including the power to represent the Company in its daily business
either to an executive committee, whether formed from among its own members or
not, or to one or more Directors, managers or other agents, who need not be
shareholders in the Company. The Board shall decide the powers and remuneration
attached to any such delegation of authority.
<PAGE>
If authority is delegated to a member of the Board for
day-to-day management, the prior consent of the general meeting of shareholders
is required. Any Director designated as the Managing Director of the Company
shall be given all necessary powers as are required for purposes of the daily
business and affairs of the Company.
The Board may also confer any special powers upon one or more
attorneys of its choice.
Article 20: Without prejudice to the performance of the duties
delegated, any transaction which binds the Company must, to be valid, be signed
by either the Chairman, the Managing Director (if there is one) or by two
Directors. These signatories shall not be required to prove to third parties
that they hold the powers under which they are acting.
Article 21: No contract or other transaction between the
Company and any other corporation or entity shall be affected or invalidated by
the fact that any one or more of the Directors or officers of the Company is
interested in or is a Director or employee of such other corporation or entity.
Any Director or officer of the Company who serves as director, officer or
employee of any corporation or entity with which the Company shall contract or
otherwise engage in business shall not by reason of such affiliation with such
other corporation or entity be prevented from considering and voting or acting
upon any matters with respect to such contracts or other business.
All transactions, deeds and acts between the Company and any
shareholder, or with any company which is directly or indirectly controlled by a
shareholder, or in which a shareholder has a direct or indirect
<PAGE>
interest in or a commercial relationship with, shall be carried out on an arm's
length basis.
Article 22: Subject to the exceptions and limitations listed
below:
(i) Every Person who is, or has been, a Director or officer of
the Company shall be indemnified by the Company to the fullest extent
permitted by law against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been such Director or officer and against
amounts paid or incurred by him in the settlement thereof.
(ii) The words "claim", "action", "suit" or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
otherwise, including appeals), actual or threatened and the words
"liability" and "expenses" shall include without limitation attorney's
fees, costs, judgements, amounts paid in settlement and other
liabilities.
No indemnification shall be provided to any Director or
officer:
(i) Against any liability to the Company or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) With respect to any matter as to which he shall have been
finally adjudicated to have acted in bad faith and not in the interest
of the Company; or
<PAGE>
(iii) In the event of a settlement, unless the settlement has
been approved by a Court of competent jurisdiction or by the Board of
Directors of the Company.
The right of indemnification herein provided shall be
severable, shall not affect any other rights to which any Director or officer of
the Company may now or hereafter be entitled, shall continue as to a person who
has ceased to be such Director or officer of the Company and shall inure to the
benefit of the heirs, executors and administrators of such person. Nothing
contained herein shall affect any rights to indemnification to which corporate
personnel, including Directors and officers, may be entitled by contract or
otherwise under law.
Expenses in connection with the preparation and representation
of a defense of any claim, action, suit or proceeding of the character described
in this Article 22 may be advanced by the Company prior to final disposition
thereof upon receipt of any undertaking by or on behalf of the officer or
Director, to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article 22.
Article 23: The general meeting may allot to the Directors and
the Statutory Auditors fixed or proportional emoluments and Directors' fees
which shall, if they arise, be entered in the books under the heading of general
expenses.
CHAPTER 4. GENERAL MEETING
Article 24: The general meeting properly constituted
represents the whole body of shareholders. Its decisions are binding on
shareholders who are absent, opposed or abstaining from voting.
<PAGE>
The general meeting has the broadest powers to do or ratify
all acts which concern the Company.
Article 25: The annual general meeting shall ipso facto
convene in the municipality of the registered office on the second Wednesday in
the month of June at 3:00 p.m. and for the first time in 1994. Should this be a
holiday, the meeting will take place on the first working day following, at the
same time.
The annual general meeting will hear the statement of the
Board of Directors and the Statutory Auditors, vote on the adoption of such
report and the accounts and on the distribution of profits, proceed to make all
nominations required by the Articles of Incorporation, act on the discharge of
the Directors and the Statutory Auditors, and take such further action on other
matters that may properly come before such meeting.
Any other general meetings shall be held either at the
registered office or at any other place stated in the convening notice made by
the Board of Directors.
Article 26: The Board of Directors shall be responsible for
calling both ordinary and extraordinary general meetings.
The Board shall be obligated to call a general meeting, to be
held within thirty (30) days after receipt of such request, whenever a group of
shareholders representing at least one-fifth of the issued and outstanding
shares entitled to vote thereat requests such a meeting in writing indicating
the agenda thereof.
General meetings may also be called by the Chairman or any two Directors.
Article 27: Ordinary general meetings shall be chaired by the
Chairman or, in his absence, by a Director or other person appointed by the
Board.
<PAGE>
The agenda of ordinary general meetings shall be prepared by
the Board. The agenda must be set forth in the convening notice for the meeting
and no point not appearing on the agenda may be considered, including the
dismissal and appointment of Directors or the Statutory Auditors.
The participants in the meeting may, if they deem fit, choose
from their own number, two scrutineers. The other members of the Board of
Directors present will complete the bureau of the meeting. A record will be
taken of those shareholders present and represented, which will be certified as
correct by the bureau.
Annual general meetings or extraordinary general meetings
shall only be validly constituted and may only validly deliberate by complying
with applicable legal provisions.
Notices for general meetings shall be given by mail, first
class, postage prepaid, to all holders of Common Shares and Class B Shares, sent
to the address recorded in the Register(s), and posted not later than twenty
(20) days before the date set for the meeting. Notices shall be deemed to be
given when deposited in the mail as aforesaid.
General meetings, both ordinary and extraordinary, may convene
and their discussions shall be valid, even if no previous notice of meeting has
been given, on any occasion when all the shareholders entitled to vote thereat
shall be present or represented and agree to discuss the matters shown in the
agenda.
A shareholder may be represented at a general meeting by a
proxy who need not be a shareholder. Written proxies for any general meeting of
shareholders shall be deposited with the Company at its registered
<PAGE>
office or with any Director at least five (5) days before the date set for the
meeting.
During meetings, each member of the meeting shall have as many
votes as the number of Common Shares or Class B shares that he represents, both
in his name and as proxy.
Article 28: The Board of Directors may close the Register(s)
of Shareholders of the Company for a period not exceeding sixty (60) days
preceding the date of any meeting of shareholders or the date for payment of any
dividend or the date for the allotment of rights or the date when any change or
conversion or exchange of shares shall go into effect, or for a period of not
exceeding sixty (60) days in connection with obtaining the consent of
shareholders for any purpose.
In lieu of closing the Registers of Shareholders as aforesaid,
the Board of Directors may fix in advance a date, not exceeding sixty (60) days
preceding the date of any meeting of shareholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any change
or conversion or exchange of shares shall go into effect, or may fix a date in
connection with obtaining any consent of shareholders, as a record date for the
determination of the shareholders entitled to notice and to vote at any such
meeting or any adjournment thereof, or to receive payment of any such dividend,
or to receive any such allotment of rights, or to exercise the rights in respect
of any such change, conversion or exchange of shares or to give such consent.
Only such shareholders as shall be shareholders of record at
the close of business on the date of such closing of the Registers of
Shareholders or on such record date shall be entitled to notice of and to vote
<PAGE>
at such meeting and any adjournment thereof, or to receive payment of such
dividend, or to give such allotment of rights, or to exercise such rights or to
give such consent, as the case may be, notwithstanding any transfer of any
shares on the register of the Company after any such closing or record date.
Notwithstanding the provisions of the foregoing paragraph of
this Article 28, the closing of the Register(s) of Shareholders and/or fixing of
a record date in respect of determination of shareholders entitled to vote at
any such meeting and any adjournment thereof shall be in conformity with the
requirements of any exchange(s) on which the Common Shares or Class B Shares of
the Company may be listed.
Any shareholder who is not a natural person may give a power
of attorney to an authorised agent duly authorised for this purpose.
CHAPTER 5. TRADING YEAR, ANNUAL REPORT, DISTRIBUTION OF PROFITS AND THE
RESERVES
Article 29: The Company's financial year shall begin on the
first day of December and end on the 30th day of November in each year.
As an exception to the above, the first financial year shall
begin on the day of the date hereof and end on the 30th day of November, 1993.
Article 30: Each year, and for the first time as of and for
the financial year ended on the 30th day of November, 1993, the Board of
Directors shall prepare a balance sheet of assets and liabilities and a profit
and loss account. The necessary amortisations must be made.
The Board of Directors report shall be annexed to such balance
sheet and profit and loss account and these reports and documents shall contain
the details
<PAGE>
required by the law applicable to the Company. A copy of all such documents
shall be forwarded, at least twenty (20) days before the date fixed for the
general meeting to which they are to be submitted, to all shareholders.
Article 31: The favorable surplus on the balance sheet, after
deduction of general and operational expenses, corporate charges and necessary
amortisation, shall be the profit of the Company.
The net profit thus arrived at, shall be subject to a
deduction of five (5) percent, to be allocated to a legal reserve fund; this
deduction will cease to be obligatory when the reserve fund reaches one-tenth of
the issued stated share capital. Any paid-in surplus may be allocated to the
legal reserve or may be applied towards the payment of dividends on Common
Shares or Class B Shares or to offset capital losses (whether realised or
unrealised) or to capitalise the par value of any free Common Shares or Class B
Shares.
The allocation of the balance of the profit shall be
determined annually by the ordinary general meeting on the basis of
recommendations made by the Board of Directors.
This allocation may include the distribution of dividends, of
bonus shares or of subscription rights, the creation or maintenance of reserve
funds, contingency provisions, and also carrying the balance forward to the
account for the next financial year.
Dividends which may be allocated shall be paid at the places
and on the dates decided by the Board of Directors. Common Shares and Class B
Shares shall participate in annual dividends, if any are declared by the
Company, provided that, in the case of cash or property dividends, each Class B
Share shall receive
<PAGE>
$0.005 per share for each $0.01 per share in cash or value paid on each Common
Share. No dividend, in cash or property, may be paid separately on either class
of shares. If share dividends are declared, holders of Common Shares will
receive Common Shares and holders of Class B Shares will receive Class B Shares.
The General Meeting may authorise the Board of Directors to
pay dividends in any other currency from that in which the balance sheet is
drawn up and make to a final decision on the exchange rate of the dividend into
the currency in which payment will actually be made.
The Board of Directors may also under the conditions laid down
by law pay interim dividends in cash or in kind (including by way of free
shares).
Article 32: The general meeting shall hear the reports of the
Board of Directors and the Statutory Auditors and shall discuss the balance
sheet.
After the balance sheet has been approved, the general meeting
shall take a special vote on the discharge of the Directors and Auditors. This
discharge is only valid if the balance sheet contains no omission or false
declaration which conceals or misrepresents the true situation of the Company,
and as to acts made ultra vires the Articles of Incorporation or the law, only
if such acts have been specifically pointed out in the convening notice.
CHAPTER 6. DISSOLUTION, WINDING UP
Article 33: At any time an extraordinary general meeting may,
on the recommendation of the Board of Directors, resolve upon the liquidation
and winding up of the Company. In such an event, the extraordinary general
meeting shall decide upon the method of liquidation and nominate one or more
liquidators whose
<PAGE>
task shall be to realise all movable and immovable assets of the Company and to
extinguish all liabilities. It shall, after the discharge and satisfaction of
all liabilities, set aside from the net assets resulting from liquidation the
sum needed to reimburse the amount of the shares paid up and unredeemed. Any
balance resulting shall be paid to the holders of Common Shares and Class B
Shares, provided that each Class B Share shall receive $0.005 per share for each
$0.01 per share in cash or value paid to each Common Share.
CHAPTER 7. RESTRICTION ON CERTAIN SHAREHOLDINGS
Article 34:
(a) In recognition of the fact that certain shareholdings may
threaten the Company with Imminent and Grave Damage (as defined hereinafter),
including, but not limited to, that arising from adverse tax consequences, a
hostile takeover attempt or adverse governmental sanctions, no U.S. Person (as
defined hereinafter) shall own, directly or indirectly, more than 9.9% of the
total Common Shares and Class B Shares outstanding at any particular time. The
foregoing restriction shall apply to all Persons who become shareholders after
March 10, 1993.
In addition, the Board of Directors may, in its sole
discretion, further restrict, reduce or prevent the ownership of Common Shares
and Class B Shares by any Person or by one or more Persons of a given
nationality and/or domiciled in a given country, if it appears to the Board that
such ownership may threaten the Company with Imminent and Grave Damage.
(b) For the purposes of implementing and enforcing the terms
hereof the Board of Directors may, and may instruct any Director, officer or
employee of the
<PAGE>
Company, to do any one or more of the following to the extent deemed
appropriate:
(i) decline to issue any shares and decline to register any
transfer of shares where it appears to it that such registration or
transfer would or might result in beneficial ownership of such shares
by a Person who is precluded from holding shares or acquiring
additional shares in the Company;
(ii) at any time require any Person whose name is entered in,
or any Person seeking to register the transfer of shares on, the
Register(s) of Shareholders to furnish it with any information,
supported by affidavit, which it may consider necessary for the purpose
of determining whether or not beneficial ownership of such
shareholder's shares rests or will rest in a Person who is precluded
from holding shares or a proportion of the capital of the Company;
(iii) where it appears to the Board that any Person who is
precluded in whole or in part from holding shares in the Company,
either alone or in conjunction with any other Person, is a beneficial
owner of shares in excess of the amount such Person is permitted to
hold, compulsorily purchase from any such shareholder or shareholders
any or all shares held by such shareholder as the Board may deem
necessary or advisable in order to satisfy the terms of these Articles
of Incorporation; and
(iv) decline to accept the vote of any Person who is precluded
from holding shares in the Company at any meeting of shareholders of
the
<PAGE>
Company in respect of the shares which he is precluded from holding.
(c) Any purchase pursuant to subsection (b) above shall be
effected in the following manner:
(i) The Company shall serve a notice (hereinafter called a
"Purchase Notice") upon the shareholder or shareholders appearing in
the Register(s) of Shareholders as the owner of the shares to be
purchased, specifying the shares to be purchased as aforesaid, the
price to be paid for such shares, and the place at which the purchase
price in respect for such shares is payable. Any such notice may be
served upon such shareholder or shareholders by posting the same in a
prepaid registered envelope addressed to each such shareholder at his
latest address known to or appearing in the books of the Company. The
said shareholders shall thereupon forthwith be obliged to deliver to
the Company the share certificate or certificates representing the
shares specified in the Purchase Notice. Immediately after the close of
business on the date specified in the Purchase Notice, each such
shareholder shall cease to be the owner of the shares specified in such
notice and his name shall be removed from the Company's Register of
Shareholders.
(ii) The price at which the shares specified in any Purchase
Notice shall be purchased (herein called the "purchase price") shall be
an amount equal to the lesser of (A) the aggregate amount paid for the
shares (if acquired within the preceding twelve months
<PAGE>
from the date of any such Purchase Notice) or (B) in case the shares of
the Company shall be listed on any exchange or otherwise quoted in any
market (including, but not limited to, the National Association of
Securities Dealers Automated Quotation System in the United States),
the last price quoted for the shares on the business day immediately
preceding the day on which the notice is served, or if the shares shall
not be so listed or quoted, the book value per share determined by the
auditors of the Company for the time being on the date as of which a
balance sheet was most recently prepared prior to the day of service of
the Purchase Notice; provided, however, that the Board may cause the
amount calculated under clause (B) hereof to be paid in situations
where clause (A) would otherwise apply and would result in a lower
purchase price if the Board determines that inequities would otherwise
result after taking into account the following as to any such
shareholder so affected: (1) length of time the affected shares were
held; (2) the number of shares so affected; (3) whether such
shareholdings would have resulted in Imminent and Grave Damage to the
Company and the circumstances relating thereto; and (4) any other
situations or circumstances which the Board may legally consider in
making such a determination.
(iii) Payment of the purchase price will be made to the owner
of such shares in U.S. Dollars except during periods of U.S. Dollar
exchange
<PAGE>
restrictions (in which case the currency of payment shall be at the
Board's discretion) and will be deposited by the Company with a bank in
Luxembourg, the United States or elsewhere (as specified in the
Purchase Notice) for payment to such owner upon surrender of the share
certificate or certificates representing the shares specified in such
notice. Upon deposit of such price as aforesaid, no Person interested
in the shares specified in such Purchase Notice shall have any further
interest in such shares or any of them, or any claim against the
Company or its assets in respect thereof, except the right of the
shareholder appearing as the owner thereof to receive the price so
deposited (without interest) from such bank upon effective surrender of
the share certificate or certificates as aforesaid.
(d) For the purposes of this Article 34, any Person holding
shares in its name solely as depositary or nominee in the ordinary course of its
business and without any beneficial interest therein shall not be deemed to be a
holder of such shares, provided such depositary shall disclose the name and
particulars of the beneficial owner of such shares immediately upon request by
the Company.
Article 35: For the purpose of these Articles of
Incorporation:
(a) An "Affiliate" of, or a Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
<PAGE>
(b) The term "Associate" used to indicate a relationship with
any Person, means (i) any corporation or organisation (other than the
Company or a subsidiary of the Company) of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner
of ten (10) percent or more of any class of equity securities, (ii) any
trust or other estate in which such Person serves as trustee or in a
similar fiduciary capacity, and (3) any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such
Person or who is a director or officer of the Company or any of its
parents or subsidiaries.
(c) "Imminent and Grave Damage" shall have the meaning given
thereto under the Luxembourg Company Law of August 10, 1915, as
amended.
(d) "Person" means any individual, firm, corporation or other
entity, and shall include any Affiliate or Associate of such Person and
any Group comprised of any Person and any other Person with whom such
Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding, directly or indirectly, for the purpose
of acquiring, holding, voting or disposing of Common Shares or Class B
Shares.
(e) "Subsidiary" means any corporation with respect to which
the Company beneficially owns securities that represent a majority of
the votes that all holders of securities of such corporation can cast
with respect to elections of directors.
(f) "U.S. Person" means (a) an individual who is a citizen or
resident of the United States; (b) a corporation, partnership,
association or other entity organised or created under the laws of the
United
<PAGE>
States or any state or subdivision thereof; (c) an estate or trust
subject to United States federal income tax without regard to the
source of its income; (d) any corporation or partnership organised or
created under the laws of any jurisdiction outside of the United States
if any of its shareholders or partners are, directly or indirectly,
U.S. Persons as defined under clauses (a) through (c) above; (e) any
trust or estate, the income of which from sources without the United
States which is not effectively connected with the conduct of a trade
or business within the United States is not inclusive in gross income
for United States Federal income tax purposes, with respect to which
there is a beneficiary which is a U.S. Person as defined under clauses
(a) through (c) above; or (f) any corporation organised or created
under the laws of any jurisdiction outside the United States, any of
the outstanding capital stock of which is subject to an option to
acquire such stock held directly by a U.S. Person as defined in clauses
(a) through (c) above, and "United States" and "U.S." means the United
States of America, its territories, possessions and areas subject to
its jurisdiction.
(g) References to "dollars", "U.S. dollars" or to "cents"
shall mean the currency of the United States of America.
(h) References to "free" shares, whether Common Shares or
Class B Shares, shall be to shares issued pursuant to the terms hereof
without cash consideration, e.g., in the case of share dividends.
CHAPTER 8. MISCELLANEOUS
Article 36: In any case not governed by these Articles of
Incorporation, ordinary and extraordinary general meetings of the shareholders
of the Company
<PAGE>
shall be governed by the Luxembourg Company Law of August 10, 1915, as amended.
In the event that any one or more provisions contained in
these Articles of Incorporation shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of these Articles, and the
Articles shall be construed as if such invalid, illegal or unenforceable
provision were not contained herein.
Article 37: In the event that Stolt Parcel Tankers Inc. (or
any entity controlling, controlled by or under common control with said Stolt
Parcel Tankers Inc.) no longer owns at least thirty-three and one-third percent
(33 1/3%) of the Common Shares of the Company, the Company shall, if requested
by said Stolt Parcel Tankers Inc., immediately take steps to change its
corporate name (and any service mark(s)) so that the word "Stolt" no longer
forms a part thereof.
These articles of incorporation are worded in English followed
by a French translation and in case of any divergence between the English and
the French text, the English text shall prevail.
FOLLOWS THE FRENCH VERSION:
<PAGE>
Exhibit 2.5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
OVERVIEW
The Company is one of the largest subsea contractors in the world with
services covering all phases of subsea offshore oil and gas operations from
exploration to decommissioning. The Company operates in more than 20
countries worldwide and maintains regional offices in the U.K., Norway, Asia
Pacific, Southern Europe, Africa and the Middle East ("SEAME"), South America
and the Gulf of Mexico.
The rate of growth of world demand for energy has caused the oil and gas
industry to increase the level of offshore exploration in recent years.
Technological advances have increased the success rate of exploration and
contributed to reducing the costs of subsea development. Subsea technology,
where the well head is on the seabed and process plant usually on a ship, is
now the first choice for all deep water new field development worldwide. This
technology is also applied to tie-back smaller deposits to existing
production platforms in mature oil production areas. With the growth in the
use of this technology the market for the Company's services is growing by
what is estimated to be 20% per annum.
The North Sea and the area to the West of the Shetlands, which currently
accounts for 61% of the Company's revenue, is expected to account for 45% of
the worldwide market for new field developments over the next three years.
West Africa and Brazil are also expected to experience rapid growth during
this same period. The Gulf of Mexico also has considerable development
potential in the medium-term with the deep water subsea construction activity
in this area growing rapidly from 2001.
The market for the Company's services is dependent upon the success of
exploration and the level of production expenditure in the oil and gas
industry. Traditionally, such expenditure is cyclical in nature and
influenced by development costs and prevailing oil and gas prices as well as
expectations about future supply and demand developments.
SEASONALITY
Over the past three years, approximately two-thirds of the Company's revenue
has been generated from work performed in the North Sea. Although this is
less apparent than in the past due to advances in technology, adverse weather
conditions in the North Sea generally result in less activity in this region
during the winter months. Therefore, full year results are not likely to be a
direct multiple of any particular quarter or combination of quarters.
SUBSEA CONSTRUCTION SUPPORT SHIP UTILIZATION
The following table sets forth average ship utilization rates for the
Company's fleet of construction support ships for each quarterly period
through November 30, 1997. Ship utilization rate is calculated by dividing
the total number of days for which the ships are engaged in project-related
work in a quarter by the total number of days that the ships were owned or
chartered by the Company in such quarter, expressed as a percentage.
- --------------------------------------------------------------
Ship Days Available
Years ended --------------------------------------------
November 30, Qtr.1 Qtr.2 Qtr.3 Qtr.4 Year
- --------------------------------------------------------------
1997 630 759 895 970 3,254
1996 668 644 644 637 2,593
1995 630 644 644 637 2,555
- --------------------------------------------------------------
% Utilization
--------------------------------------------
Qtr.1 Qtr.2 Qtr.3 Qtr.4 Year
- --------------------------------------------------------------
1997 81% 93% 94% 96% 92%
1996 45% 72% 73% 92% 70%
1995 37% 75% 98% 77% 72%
- --------------------------------------------------------------
Utilization in 1997 was greatly increased due to improvements in market
conditions and the Company's success in securing contracts worldwide.
Utilization was down slightly in 1996 compared to 1995 primarily due to the
repair and upgrade of the Seaway Osprey in 1996 following its grounding in
the Gulf of Suez. The installation of flexible flowline lay systems in the
first half of 1995 and the installation of rigid flowline lay systems in the
first half of 1996 on the Seaway Falcon also contributed to lower utilization
averages in 1995 and 1996.
19
<PAGE>
RESULTS OF OPERATIONS
The following table shows annual net operating revenue and gross profit
(loss) earned by each region for the past three fiscal years.
<TABLE>
<CAPTION>
===========================================================================================================================
For the years ended November 30, (in millions) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
NET OPERATING REVENUE
<S> <C> <C> <C> <C> <C> <C>
North Sea $262.9 61% $207.1 66% $217.2 66%
Asia Pacific 39.6 9 39.2 12 34.9 11
SEAME 75.7 18 44.6 14 59.8 18
South America 43.7 10 14.3 5 15.1 5
Gulf of Mexico 9.2 2 8.2 3 n/a n/a
Total $431.1 100% $313.4 100% $327.0 100%
===========================================================================================================================
GROSS PROFIT (LOSS)
North Sea $ 45.2 59% $ 16.3 77% $ 28.0 61%
Asia Pacific 10.5 13 3.0 14 11.7 26
SEAME 12.1 15 0.1 0 1.2 3
South America 9.0 12 4.6 22 4.7 10
Gulf of Mexico 1.0 1 (2.8) (13) n/a n/a
Total $ 77.8 100% $ 21.2 100% $ 45.6 100%
===========================================================================================================================
</TABLE>
Net operating revenue increased to $431.1 million in 1997 from $313.4 million
in 1996 largely as a result of improved market conditions in the North Sea,
West Africa and Brazil and increased ship capacity. During the year four
additional ships SEAWAY EAGLE, SEAWAY HAWK, DISCOVERY and TOISA PUMA were
brought into service. Gross profit increased to $77.8 million in 1997 from
$21.2 million in 1996 in line with the above.
Net operating revenue in 1996 decreased by $13.6 million from $327.0 million
in 1995 to $313.4 million largely as a result of the unavailability of ship
days during the peak season in the North Sea. The decline in the gross profit
of $24.4 million from $45.6 million in 1995 to $21.2 million in 1996 was the
result of the problems encountered on the first rigid lay project in the
North Sea, the unavailability of the SEAWAY OSPREY for an extended period
after it grounded in the Gulf of Suez and reduced margins in Asia Pacific.
NORTH SEA
Net operating revenue increased to $262.9 million in 1997 from $207.1 million
in 1996, mainly as a result of improved market conditions, increased project
activity and the increase in the fleet. This also impacted gross profit which
improved from $16.3 million in 1996 to $45.2 million in 1997. Improvements in
project performance also contributed to the increase in the gross profit.
The decrease of $10.1 million in net operating revenue from $217.2 million in
1995 to $207.1 million in 1996 was largely due to the unavailability of ship
days during the summer months as well as the fact that a greater amount of
activity in the region was channeled through non-consolidated joint ventures
in which the Company participates. The decrease in gross profit of $11.7
million is mainly explained by the loss of ship revenue and greater than
anticipated costs incurred on the Statoil Yme Beta project.
ASIA PACIFIC
Net operating revenue for the region in 1997 of $39.6 million was comparable
with $39.2 million in 1996. Gross profit increased to $10.5 million in 1997
from $3.0 million in 1996 largely as a result of improved project margins and
executions. Due to the current economic problems in Asia a number of the
national oil and gas companies in the region are forecasting a reduction in
their level of exploration and production expenditure. The international
nature of the Company's business means that this is not expected to have a
material impact on the Company's anticipated revenue or results in the region
with the majority of revenue denominated in U.S. dollars.
Net operating revenue for 1996 was $39.2 million compared to $34.9 million in
1995. Revenues grew because of increased activity in Indonesia and ROV
(remotely operated vehicles) activity resulting from the acquisition of an
Australian business at the end of 1995. The reduction in gross profit to $3.0
million from $11.7 million is partly due to the contribution made by a major
subsea development project on the Wanaea and Cossack fields undertaken in
1995 and partly due to cost overruns on one project in Indonesia in 1996.
SOUTHERN EUROPE, AFRICA AND MIDDLE EAST (SEAME)
Net operating revenue increased by $31.1 million from $44.6 million in 1996
to $75.7 million in 1997. This high level of activity was due to the delay of
projects from 1996 and improved ship availability due to the increases in the
Company's fleet. The Seaway Hawk has been deployed in this region since she
entered service in June 1997 and the Seaway Falcon has been active in this
region on a variety of flowline lay projects during the year. The gross
profit has also
20
<PAGE>
improved by $12.0 million to $12.1 million in 1997 as a result of an increase
in market demand which has led to improved margins on flowline lay projects
in the region.
Net operating revenue decreased by $15.2 million to $44.6 million in 1996 to
$59.8 million in 1995. The reduction in revenue largely resulted from the
delayed start of projects in West Africa as a consequence of the
unavailability of assets deployed on other projects. Gross profit declined
from $1.2 million in 1995 to $0.1 million in 1996. This decline predominantly
arose from poorer than anticipated execution of projects in the Gulf of Suez
in 1996.
SOUTH AMERICA
Net operating revenue increased by $29.4 million to $43.7 million in 1997
from $14.3 million. This increase was due to the deployment of the Seaway
Osprey and Seaway Harrier in the region on three and four year dayrate
contracts, respectively. The $4.4 million increase in the gross profit to
$9.0 million in 1997 from $4.6 million in 1996 was also attributable to the
activities of the ships.
Net operating revenue of $14.3 million in 1996 compared to $15.1 million in
1995. Gross profit in 1996 was $4.6 million compared to $4.7 million in 1995.
GULF OF MEXICO
Net operating revenue of $9.2 million represented an increase of $1.0 million
compared with 1996. Gross profit increased by $3.8 million from a gross loss
of $2.8 million to a gross profit of $1.0 million. Both these increases were
the result of the successful completion of the Mensa project for Shell which
was completed ahead of time and under budget. With the expansion of the deep
water market in the Gulf of Mexico the Company is strengthening its presence
in this region by establishing a new office in New Orleans and assigning the
SEAWAY HAWK to the region on completion of projects in the Middle East.
1996 represented the first year of operations in the region, where the
Company earned net operating revenue of $8.2 million at a gross loss of $2.8
million in 1996. The first project was for the SEAWAY PELICAN, in relatively
shallow water, repairing hurricane damage during the first quarter of 1996.
This project was undertaken during the winter months when the ship was unable
to work in the harsher environment of the North Sea and therefore this work
was taken at margins lower than those normally considered acceptable.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization of $25.5 million in 1997 compared to $25.6
million in 1996. The increase in depreciation charges due to capital
expenditure has been offset by the effect of the strengthening of the U.S.
dollar as the majority of fixed assets were denominated in currencies other
than the U.S. dollar in 1997.
In 1996 depreciation and amortization decreased $1.8 million from 1995 as the
upgrade to the SEAWAY OSPREY led to an extension of her estimated useful life
and therefore a lower depreciation charge.
EQUITY IN NET INCOME OF NON-CONSOLIDATED JOINT VENTURES
The Company's equity in the net income of joint ventures in 1997 was $12.2
million compared to $5.5 million in 1996. This increase resulted from
increased profitability of Seaway Heavy Lifting Limited ("SHL"), a joint
venture with a subsidiary of the Russian oil company
Lukoil-Kaliningradmorneft plc ("Lukoil"). The venture's chartered heavy-lift
ship, the STANISLAV YUDIN, performs installation work. The commencement of
operations of an additional North Sea joint venture project in 1997 also
contributed to the increase.
The Company's equity in the net income of joint ventures was $5.5 million in
1996 compared to $6.4 million in 1995. The decrease was due to the completion
of a profitable Australian joint venture project with Transfield in 1995
which was not replaced, partially offset by the profit contributed from the
Company's three new joint ventures in the North Sea, two of which commenced
operations in 1996. A substantial proportion of equity income in 1996 was
contributed by SHL.
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative and general expenses in 1997 were $31.4 million compared to
$30.1 million in 1996. This increase was primarily due to the provision for
profit sharing offset in part by the impact of strengthening of the U.S.
dollar on the translation of the administrative and general expenses of the
various non U.S. dollar functional subsidiaries.
Administrative and general expenses were $30.1 million in 1996, a decrease of
$2.7 million from 1995. The decrease is due to a number of one-off charges
incurred in 1995 for redundancies and other costs associated with the
restructuring of certain of the Company's administrative functions.
WRITE DOWN OF CERTAIN ASSETS
During 1997 there was a write down of certain assets amounting to $4.2
million. In accordance with SFAS No. 121 the write down of assets was largely
the result of management's assessment that certain subsea assets were
unlikely to generate sufficient cashflows to justify their current book
value. These assets have been written down to fair market value.
NON-OPERATING INCOME (EXPENSE)
NET INTEREST EXPENSE In 1997 net interest expense decreased from $11.0
million in 1996 to $9.5 million as a result of lower borrowings subsequent to
the successful equity offerings during the year. Net interest expense
decreased by
21
<PAGE>
approximately $0.3 million to $11.0 million in 1996 due to lower borrowing
rates following the refinancing of the Company's ship mortgages.
OTHER INCOME (EXPENSE) In 1997 the income of $5.0 million comprises pre-tax
gains of $4.8 million realized on the swap of assets with third parties at
fair market value, together with an insurance recovery of $0.4 million. The
1996 expense of $2.3 million largely represented provisions relating to the
disposal of the Company's French civil engineering business. In 1995 the
expense of $1.5 million included costs associated with the reassessment of
asset lives and values.
INCOME TAXES The Company recorded a net tax provision of $11.1 million in
1997, compared with a net tax benefit of $1.8 million in 1996 and a net tax
provision of $4.2 million in 1995. The principle cause of the variations
between years has been the level of pre-tax income or loss recognized in
Norwegian and U.K. tax jurisdictions.
The Company has recognized tax benefits of $1.4 million in 1997 compared to
$1.8 million in 1996 and $0.5 million in 1995 related to net operating loss
carryforwards which will be utilized to offset taxable income in future
years. As of November 30, 1997 deferred tax assets related only to losses
incurred by the Company's U.K. and Australian resident subsidiaries where
management expect taxable profits to arise in the future.
CAPITAL STOCK AND EARNINGS PER SHARE
During the year the Company completed two public offerings. In March 1997
8,050,000 Common Shares were sold by the Company and during November 1997 an
additional 4,000,000 Common Shares were sold. Concurrent with the first
offering the Company exchanged approximately $57.6 million of debt due to an
affiliate of Stolt-Nielsen S.A. ("SNSA") for 14,000,000 of Class B Shares.
Concurrent with the second offering SNSA sold 4,000,000 of Common Shares
which had been converted from 8,000,000 Class B Shares. The cash effect of
these transactions are discussed below.
On January 9, 1998 the Company completed a two-for-one stock split by means
of a stock dividend distribution. All share and earnings per share
information contained within the Annual Report have been restated to reflect
the stock split.
LIQUIDITY AND CAPITAL RESOURCES
The primary liquidity needs of the Company are to fund project working
capital requirements as well as funding capital expenditures to acquire,
improve and maintain the Company's fleet of ships and ROVs. The Company's
principal sources of funds have been borrowings from commercial banks, SNSA
and cash generated by operations. The Company uses short-term overdraft
facilities and lines of credit to cover working capital and other short-term
requirements. To finance capital expenditure the Company has relied on
commercial banks, SNSA and equity funding.
As of November 30, 1997 the Company had available short-term bank facilities
amounting to $60.3 million, of which $13.4 million were utilized. Most of
these facilities are guaranteed by SNSA.
As of November 30, 1997, the Company had a total of $16.0 million of
outstanding bank debt and other notes payable, of which $12.0 million was
guaranteed by SNSA.
Subsequent to November 30, 1997 the Company obtained a new credit facility
with Midland Bank plc and Den norske Bank ASA, which provides for a five year
revolving credit line in the principal amount of $125.0 million, such
principal reducing to $100.0 million and $75.0 million in years four and five
respectively. This facility is secured by first priority mortgages on five of
the Company's construction support ships. This facility does not require an
SNSA guarantee. The interest on the facility will be based on the ratio of
the Company's debt to EBITDA (as defined) and will range from LIBOR + 0.40%
to LIBOR + 0.80% per annum.
The Company expects to make capital expenditures of about $130.0 million
during 1998, of which about $20.0 million was committed at November 30, 1997.
Debt service is expected to be about $6.0 million. Based on the current level
of activity, cash from operations is expected to be approximately $80.0
million which results in a funding requirement of about $56.0 million. The
Company believes that it has adequate facilities to meet this funding
requirement.
Net cash provided by operating activities during the year ended November 30,
1997 was $2.9 million compared to net cash used by operations of $1.0 million
during 1996. The variation of $3.9 million is due to the changes in income
from operations offset by a larger working capital requirement resulting from
the increased activity level. At November 30, 1997 average accounts
receivable days outstanding were approximately 124 days compared to 135 days
at November 30, 1996. This decrease is a result of improved credit terms
being negotiated with customers.
Net cash used by operating activities in 1996 was $1.0 million compared to
net cash provided by operations of $24.9 million in 1995. The year-to-year
variations in the cash from operations are due to the fluctuations in net
operating income as discussed above under "Results of operations".
Net cash used in investing activities was $101.3 million in 1997 compared to
$33.6 million in 1996. In 1997 the expenditure was mainly on capital
expenditure of $108.6 million which included the acquisition and completion
of the SEAWAY EAGLE and the acquisition of the SEAWAY HAWK of $73.7 million,
$8.5 million for ROVs, and $15.0 million on rigid flowline lay capabilities.
Cash distributions from non-consolidated joint ventures were $7.0 million.
22
<PAGE>
In 1996 the net cash used in investing activities was largely $40.2 million
of capital expenditure including $28.8 million of expenditure on the SEAWAY
FALCON, SEAWAY OSPREY and SEAWAY EAGLE. Cash distributions from
non-consolidated joint ventures were $10.4 million.
In 1995 investing activities used cash of $32.8 million comprising $39.8
million of capital expenditure which was partially offset with the proceeds
from the sale of fixed assets and the divestment of certain holdings in
non-consolidated joint ventures.
Net cash provided by financing activities in the year ended November 30, 1997
was $102.3 million compared to $36.5 million in 1996. The increase in 1997
was due to the net proceeds from two public offerings of Common Shares during
the year, offset by the repayment of long-term debt and a decrease in funding
from SNSA. Concurrent with the first of those offerings, the Company
exchanged approximately $57.6 million of debt due to SNSA into 14,000,000
Class B Shares. This exchange was a non-cash transaction.
In 1996 financing provided net cash of $36.5 million which consisted
principally of borrowing from SNSA of $42.4 million, drawdowns on the
Company's overdraft facilities of approximately $7.4 million, and principal
repayments on long-term debt of $17.7 million.
In 1995 financing activities provided net cash of $5.5 million. Proceeds of
$43.8 million from the refinancing of certain of the Company's fleet of
construction support ships were offset by repayments of borrowings from SNSA
of $22.7 million and repayments of long-term debt and other items of
approximately $15.6 million.
MULTI-CURRENCY ACTIVITIES
While the functional and reporting currency of the Company is the U.S.
dollar, the functional currencies of the activities in the North Sea region,
which is the most significant part of the business, are the Norwegian krone
and the British pound. The majority of net operating revenue and expenses are
denominated in the functional currency of the individual operating
subsidiaries.
In the year ended November 30, 1997 and in prior periods the Company's
activities in Brazil have been accounted for in accordance with SFAS No. 52
as activities taking place in a hyperinflationary environment. Changes in the
economic environment suggest that the conditions normally associated with a
hyperinflationary economy no longer exist within Brazil. The Company will
therefore cease to treat activities in Brazil as occurring in a
hyperinflationary environment with effect from December 1, 1997. As the
majority of the Company's activities in Brazil are U.S. dollar denominated it
is not anticipated that there will be any material effect on the Company's
financial statements.
The Company enters into forward exchange and options contracts to hedge
capital expenditures and operational non-functional currency exposures on a
continuing basis for periods consistent with its committed exposures. The
Company does not engage in foreign currency speculation.
THE YEAR 2000 ISSUE
During 1997, the Company appointed a project manager to assess the impact of
this technology issue. This project will be completed during May 1998 and any
impact on the Company's operations will be assessed at this time.
IMPACT OF NEW ACCOUNTING STANDARDS
In June 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities". SFAS No. 125 requires that entities recognize the financial
servicing of assets they control and liabilities they have incurred, and not
recognize assets when control has been surrendered, and liabilities when
extinguished. Certain provisions of this Standard are effective for transfers
and servicing of financial assets and extinguishment of liabilities occurring
after December 31, 1996 and are to be applied prospectively. The Company did
not incur material transactions which will have a significant impact on the
Company's financial statements. The remaining provisions of SFAS No. 125 will
become effective for transactions occurring after December 15, 1997. The
Company does not expect the adoption of the remaining provisions of this
Standard to have a significant impact on its financial statements.
In February 1997, the FASB issued SFAS No. 128 "Earnings per Share" which is
effective for financial statements issued in periods ending after December
15, 1997. The new standard requires changes in the computation, presentation
and disclosure requirements for earnings per share calculations. Assuming the
Company had adopted SFAS No. 128, the pro forma effect on the Company's
earnings per share calculation for the three years ended November 30, 1997 is
as follows:
For the years ended November 30,
================================================================================
1997 1996 1995
- --------------------------------------------------------------------------------
Earnings per share
Basic $1.26 $(0.75) $0.10
Diluted $1.25 $(0.75) $0.10
================================================================================
FORWARD LOOKING STATEMENTS The preceding discussion contains forward-looking
statements as defined in the U.S. Private Securities Litigation Reform Act of
1995. Actual and future results and trends could differ materially from those
set forth in such statements due to various factors. Additional information
concerning these factors is contained from time to time in the Company's U.S.
Securities and Exchange Commission ("SEC") filings, including but not limited
to the Company's report on Form 20-F for the year ended November 30, 1996.
Copies of these filings may be obtained by contacting the Company or the U.S.
SEC.
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
For the years ended November 30 (in millions, except per share data) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net operating revenue $431.1 $ 313.4 $327.0 $ 266.9 $378.0
Non-recurring items $ (3.1) - $ (9.0) - -
Net operating income (loss) $ 54.5 $ (3.4) $ 19.2 $ (22.7) $ 17.5
Net income (loss) $ 39.0 $ (14.9) $ 2.0 $ (16.6) $ 7.1
Net income (loss) per Common Share(a) $ 1.23 $ (0.75) $ 0.10 $ (0.83) $ 0.42
Weighted average number of Common Shares and
Common Share equivalents outstanding(a) 31.7 20.0 20.0 20.0 20.0
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
November 30 (in millions, except per share data) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets less current liabilities (including
current portion of long-term debt and capital
leases and debt due to SNSA) $ 78.7 $ (20.0) $ 12.2 $(21.5) $ 19.2
Long-term assets $275.0 $ 207.7 $196.6 $177.9 $147.1
Long-term debt, including long-term debt
due to SNSA, and capital lease obligations
(including current portion) $ 2.6 $ 154.5 $128.3 $112.8 $ 70.7
Other long-term liabilities $ 3.5 $ 4.2 $ 6.6 $ 4.6 $ 11.0
Shareholders' equity $348.0 $ 76.9 $ 90.9 $ 87.6 $ 99.9
Book value per Common Share and
Common Share equivalents(a) $ 8.85 $ 3.84 $ 4.54 $ 4.38 $ 5.0
Total number of Common Shares and
Common Share equivalents outstanding(a) 39.3 20.0 20.0 20.0 20.0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) All share data and per share data have been restated to reflect the
two-for-one stock split completed on January 9, 1998
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO STOLT COMEX SEAWAY S.A.
We have audited the accompanying consolidated balance sheets of Stolt Comex
Seaway S.A. (a Luxembourg company) and its subsidiaries as of November 30,
1997 and 1996, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended November 30, 1997. 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 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 financial position of Stolt Comex Seaway S.A. and
subsidiaries as of November 30, 1997 and 1996 and the results of their
operations and their cash flows for each of the three years in the period
ended November 30, 1997, in conformity with accounting principles generally
accepted in the United States.
As discussed in Note 6 to the consolidated financial statements, effective
December 1, 1996 the Company adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to Be Disposed Of".
ARTHUR ANDERSEN
Edinburgh, Scotland
February 20th, 1998
24
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
===========================================================================================================================
For the years ended November 30 (in thousands, except per share data) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenue $ 431,126 $ 313,358 $ 327,042
Operating expenses (353,361) (292,177) (281,402)
- ---------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT- $ 77,765 21,181 45,640
- % 18.0% 6.8% 14.0%
Equity in net income of non-consolidated joint ventures 12,242 5,483 6,439
Administrative and general expenses (31,363) (30,101) (32,887)
Write down of certain assets (Note 6) (4,157) - -
- ---------------------------------------------------------------------------------------------------------------------------
NET OPERATING INCOME (LOSS) 54,487 (3,437) 19,192
NON-OPERATING (EXPENSE) INCOME:
Interest expense (10,209) (11,452) (11,951)
Interest income 758 486 679
Foreign currency exchange gain (loss), net 65 53 (179)
Other income (expense), net 5,038 (2,310) (1,519)
- ---------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 50,139 (16,660) 6,222
Income tax (provision) benefit (Note 8) (11,138) 1,758 (4,208)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 39,001 $ (14,902) $ 2,014
Earnings per Common Share:
Net income (loss) per Common Share (Note 2) $ 1.23 $ (0.75) $ 0.10
- ---------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING (NOTE 2) 31,744 20,000 20,000
===========================================================================================================================
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements. All share data and
per share data have been restated to reflect the two-for-one stock split
completed on January 9, 1998.
25
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
===========================================================================================================================
November 30 (in thousands) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,345 $ 4,026
Restricted cash deposits (Note 3) 762 5,521
Trade receivables (Note 4) 146,704 116,057
Inventories and work-in-progress (Note 5) 10,882 9,477
Prepaid expenses and other current assets 15,707 12,677
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 182,400 147,758
- ---------------------------------------------------------------------------------------------------------------------------
Fixed assets, at cost (Note 6) 356,249 278,578
Less accumulated depreciation and amortization (Note 6) 111,850 106,135
- ---------------------------------------------------------------------------------------------------------------------------
244,399 172,443
- ---------------------------------------------------------------------------------------------------------------------------
Restricted cash deposits (Note 3) - 192
Deposits and long-term receivables 1,386 1,669
Investments in and advances to non-consolidated joint ventures (Note 7) 8,357 2,868
Deferred taxes (Note 8) 4,973 14,003
Goodwill and other intangible assets (Note 2) 12,046 12,572
Prepaid pension asset (Note 9) 3,815 3,930
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $457,376 $355,435
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdrafts (Note 10) $ 13,399 $ 7,799
Current maturities of long-term debt and capital lease obligations (Note 11) 395 12,725
Short-term debt due to SNSA (Note 13) - 35,152
Accounts payable and accrued liabilities (Note 12) 57,346 70,747
Accrued salaries and benefits 17,360 17,272
Other current liabilities 15,242 24,030
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 103,742 167,725
- ---------------------------------------------------------------------------------------------------------------------------
Long-term debt and capital lease obligations (Note 11) 2,174 58,712
Long-term debt due to SNSA (Note 13) - 47,878
Minority interests (Note 20) 618 468
Other non-current liabilities 2,850 3,721
- ---------------------------------------------------------------------------------------------------------------------------
5,642 110,779
- ---------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 15 and 21)
SHAREHOLDERS' EQUITY (NOTE
17): Common Shares, $2.00 par value -- 25,000,000 shares authorized
(1996: 25,000,000), 22,291,576 (1996: 6,007,000) shares issued
and outstanding at November 30, 1997 and 1996, respectively 44,584 12,014
Class B Shares, $2.00 par value-- 34,000,000 shares authorized
(1996: 28,000,000), 34,000,000 (1996: 28,000,000) shares issued
and outstanding at November 30, 1997 and 1996, respectively 68,000 56,000
Paid-in surplus 217,770 23,812
Retained earnings 27,561 (11,440)
Cumulative translation adjustments (9,923) (3,455)
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 347,992 76,931
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $457,376 $355,435
===========================================================================================================================
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements. All share data and
per share data have been restated to reflect the two-for-one stock split
completed on January 9, 1998.
26
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
===========================================================================================================================
Cumulative
Common Class B Paid-in Retained translation
(in thousands) Shares Shares surplus earnings adjustments
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1993 $12,000 $56,000 $23,795 $18,035 $(9,919)
Net loss - - - (16,587) -
Translation adjustments, net - - - - 4,242
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, NOVEMBER 30, 1994 12,000 56,000 23,795 1,448 (5,677)
Net income - - - 2,014 -
Translation adjustments, net - - - - 1,367
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, NOVEMBER 30, 1995 12,000 56,000 23,795 3,462 (4,310)
Net loss - - - (14,902) -
Translation adjustments, net - - - - 855
Exercise of stock options 14 - 17 - -
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, NOVEMBER 30, 1996 12,014 56,000 23,812 (11,440) (3,455)
Issuance of 8,050,000 Common Shares
by way of Public Offering 16,100 - 48,640 - -
Exchange of debt for 14,000,000 Class B Shares - 28,000 29,593 - -
Issuance of 4,000,000 Common Shares
by way of Public Offering 8,000 - 107,057 - -
Conversion of 8,000,000 Class B
Shares into Common Shares 8,000 (16,000) 8,000 - -
Net income - - - 39,001 -
Translation adjustments, net - - - - (6,468)
Exercise of stock options 470 - 668 - -
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, NOVEMBER 30, 1997 $44,584 $68,000 $217,770 $27,561 $(9,923)
===========================================================================================================================
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements. All share data and
per share data have been restated to reflect the two-for-one stock split
completed on January 9, 1998.
27
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
===========================================================================================================================
For the years ended November 30 (in thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 39,001 $(14,902) $ 2,014
Adjustments to convert from net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 25,480 25,550 27,346
Equity in earnings of non-consolidated joint ventures (12,242) (5,483) (6,439)
Gain on sale of non-consolidated joint ventures - - (732)
Minority interest in consolidated subsidiaries 150 (37) 4
Deferred tax provision (benefit) 9,147 (2,821) 3,342
Loss on disposal of subsidiary - 2,180 -
(Gain) loss on sale of assets (4,856) (231) 254
Write down of certain assets 4,157 - -
Other, net 2,534 (2,197) (1,370)
Changes in assets and liabilities:
Increase in trade receivables (39,130) (24,751) (18,286)
(Increase) decrease in prepaid expenses and other current assets (3,599) (2,795) 1,852
(Increase) decrease in inventories and work-in-progress (2,427) (1,348) 456
(Decrease) increase in accounts and notes payable (10,094) 22,493 15,117
Increase in accrued salaries and benefits 1,467 1,126 1,960
(Decrease) increase in other current liabilities (6,659) 2,228 (627)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 2,929 (988) 24,891
Cash flows from investing activities:
Purchase of fixed assets (108,609) (40,216) (39,781)
Increase in restricted cash deposits for purchase of fixed asset - (3,878) -
Proceeds from sale of assets 157 500 1,526
Increase in investments and other long-term financial assets 117 (367) 3,310
Dividends from non-consolidated joint ventures 7,031 10,380 -
Proceeds from disposal of non-consolidated joint venture - - 2,165
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (101,304) (33,581) (32,780)
Cash flows from financing activities:
Net increase (decrease) in bank overdrafts 5,745 7,356 (787)
Proceeds from issuance of long-term debt - 600 43,793
Repayments of long-term debt (65,097) (17,731) (7,714)
Decrease (increase) in restricted cash deposits securing capital
lease obligations and long-term debt 4,550 4,670 (5,090)
Repayments of capital lease obligations (257) (887) (1,977)
(Decrease) increase in funding from SNSA (23,541) 42,411 (22,738)
Proceeds from the issuance of Common Shares 179,797 - -
Exercise of stock options 1,138 31 -
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 102,335 36,450 5,487
Effect of exchange rate changes on cash 359 (18) 96
Net increase (decrease) in cash and cash equivalents 4,319 1,863 (2,306)
Cash and cash equivalents at beginning of year 4,026 2,163 4,469
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 8,345 $ 4,026 $ 2,163
===========================================================================================================================
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements.
28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 THE COMPANY
Stolt Comex Seaway S.A. ("SCS"), a Luxembourg company, and subsidiaries (the
"Company") is one of the largest subsea services contractors in the world with
services covering all phases of offshore oil and gas operations from
exploration to decommissioning. The Company operates in more than 20 countries
worldwide and maintains regional offices in the U.K., Norway, Asia Pacific,
Southern Europe, Africa and the Middle East ("SEAME"), South America and the
Gulf of Mexico.
The market for the Company's services is dependent upon the success of
exploration and the level of production expenditure in the oil and gas
industry. Traditionally, such expenditure is cyclical in nature and influenced
by development costs and prevailing oil and gas prices as well as expectations
about future supply and demand developments.
Over the past three years over sixty per cent of the Company's revenue has
been generated from work performed in the North Sea. During the year, revenue
from one customer represented $39.3 million or 9.1% (1996: $41.1 million or
13.1% and 1995: $69.1 million or 21.1%) of net operating revenue.
The Company has investments in several joint ventures, the most significant of
which is Seaway Heavy Lifting Limited, a 50-50 joint venture between the
Company and Lukoil-Kaliningradmorneft plc ("Lukoil"), a Russian Oil Company.
This joint venture conducts installation, construction support and
decommissioning activities with its heavy lift ship, the STANISLAV YUDIN. The
remainder of the joint ventures in which the Company has interests have been
entered into on project specific bases to enhance the range of services
provided to the customer. In these joint ventures the Company will typically
have interests ranging from 25% to 50%.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the period. Actual
results could differ from those estimates. Estimates are used in the
determination of allowances for doubtful accounts, depreciation and
amor-tization, employee benefit plans, taxes and contingencies among others.
2 ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in the
U.S. and include the accounts of all majority-owned companies. All signifi
cant intercompany transactions and balances have been eliminated. The Company
equity accounts for its non-consolidated joint ventures.
FOREIGN CURRENCY TRANSLATION The Company, incorporated in Luxembourg, has U.S.
dollar ("$") share capital, and dividends are expected to be paid in U.S.
dollars. As a result the Company's reporting currency is the U.S. dollar.
The Company translates the financial statements of its subsidiaries from their
functional currencies (usually local currencies) into U.S. dollars, in
accordance with the provisions of Statement of Financial Accounting Standards
No. 52 ("SFAS" No. 52"). Under SFAS No. 52, assets and liabilities denominated
in foreign currencies are generally translated at the exchange rates in effect
at the balance sheet date. Revenue and expenses are translated at exchange
rates which approximate the average exchange rates prevailing during the
period. The resulting translation adjustments are recorded in a separate
component of shareholders' equity as "Cumulative translation adjustments"
("CTA"). Exchange gains and losses resulting from transactions denominated in
a currency other than that of the functional currency are included in "Foreign
currency exchange (loss) gain, net" in the accompanying consolidated
statements of income. The functional currencies of the companies that comprise
the North Sea region are Norwegian kroner and British pounds, while the more
significant subsidiaries in the SEAME region have the French franc as their
functional currency. The U.S. dollar is the functional currency of the most
significant subsidiaries within the Asia Pacific, Gulf of Mexico and South
America regions.
In the year ended November 30, 1997 and in prior periods the Company's
activities in Brazil have been accounted for in accordance with SFAS No. 52 as
activities taking place in a hyperinflationary environment. Changes in the
economic environment suggest that the conditions normally associated with a
hyperinflationary economy no longer exist within Brazil. The Company will
therefore cease to treat activities in Brazil as occurring in a
hyperinflationary environment with effect from December 1, 1997. As the
majority of the Company's activities in Brazil are U.S. dollar functional it
is not anticipated that there will be any material effect on the Company's
financial statements.
Certain loans made to subsidiary companies are considered as being of a
long-term investment nature and exchange gains and losses thereon are reported
within the CTA component of shareholders' equity. For each of these loans, no
settlement is planned nor anticipated in the foreseeable future.
The Company uses various financial instruments to reduce its exposure to
currency fluctuations. All of the instruments used are hedges against
underlying operating or balance sheet exposures and the Company does not enter
into open speculative positions. Accordingly, the Company recognizes gains
29
<PAGE>
or losses only on the completion of the underlying transaction. Losses are not
deferred if it is estimated that deferral would lead to recognizing losses in
later periods. As of November 30, 1997, the Company had entered into various
forward exchange contracts to hedge identifiable foreign currency commitments
totalling approximately $10.2 million (1996: $30.1 million and 1995: $21.0
million).
REVENUE RECOGNITION Long-term contracts are accounted for using the percentage
of completion method. Revenue and gross profit are recognized each period
based upon the advancement of the work-in-progress unless the stage of
completion is insufficient to enable a reasonably certain forecast of gross
profit to be established. In such cases, no gross profit is recognized during
the period. Provisions for anticipated losses are made in the period in which
they become known.
A major portion of the Company's revenue is billed under fixed-price
contracts. However, due to the nature of the services performed, variation
orders are commonly billed to the customers in the normal course of business.
The majority of such items are settled by the customers, but occasionally
there is a time lag between the end of the project and the agreement of such
variation orders. In these instances management make estimates of the
recoverability of the sums involved and establish a reserve against related
contract receivables. The net amounts recoverable at November 30, 1997
amounted to $3.8 million (1996: $12.0 million).
FIXED ASSETS Fixed assets are recorded at cost. Interest costs incurred
between the date that financing is provided for an asset and the date that the
asset is ready for use are capitalized. Capitalized interest was $1.1 million
for the year ended November 30, 1997 (1996: $nil and 1995: $0.8 million).
Assets acquired pursuant to capital leases are capitalized at the present
value of the underlying lease obligations and amortized on the same basis as
described below.
Depreciation of fixed assets is recorded on a straight-line basis over the
useful lives of the assets as follows:
Construction support ships 6 to 25 years
Operating equipment 7 to 10 years
Buildings 20 to 33 years
Other assets 5 to 10 years
Ships are depreciated to a residual value of 10% of acquisition cost which
reflects management's estimate of salvage or otherwise recoverable value. No
residual value is assumed with respect to other fixed assets.
Costs for fitting out construction support ships are capitalized and amortized
over a period similar to the remaining useful life of the related equipment.
Permanent marine stocks on ships are depreciated in a manner similar to their
related ships.
Depreciation expense, which includes amortization of assets under capital
leases, was approximately $25.0 million for the year ended November 30, 1997
(1996 and 1995: $25.0 and $26.8 million respectively).
Maintenance and repair costs, which are expensed as incurred, were $21.4
million for the year ended November 30, 1997 (1996 and 1995: $19.6 million and
$10.9 million respectively).
Provisions for future ship related drydocking expenses are accrued evenly over
the expected period between drydockings. At November 30, 1997 the provision
amounted to $3.7 million (1996: $1.9 million). Such accrued drydocking
expenses include only estimated costs that will be payable to third-party
shipyards, technicians and materials and parts vendors.
GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of the
purchase price over the fair value of net assets acquired and is being
amortized, on a straight-line basis, over periods of 15 to 30 years. Patents
and brand names are being amortized over 5 and 30 years, respectively. At
November 30, 1997 accumulated amortization of goodwill and other intangible
assets was $2.8 million (1996: $2.3 million).
CASH AND CASH EQUIVALENTS Cash and cash equivalents include time deposits and
certificates of deposit with an original maturity of three months or less.
EARNINGS PER SHARE Earnings per share is computed using the weighted average
number of Common and Class B Shares and equivalents outstanding during each
period. The computation for the year ended November 30, 1997 is based upon
Class B Shares 37,676,712 (1996 and 1995: 28,000,000), and Common Shares
12,905,644 (1996 and 1995: 6,000,000).
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128 "Earnings per Share" which is effective for financial statements
issued in periods ending after December 15, 1997. The new standard requires
changes in the computation, presentation and disclosure requirements for
earnings per share calculations. Assuming the Company had adopted SFAS No.
128, the pro forma effect on the Company's earnings per share calculation for
the three years ended November 30, 1997 is as follows:
For the years ended November 30,
================================================================================
1997 1996 1995
- --------------------------------------------------------------------------------
Earnings per share
Basic $1.26 $(0.75) $0.10
Diluted $1.25 $(0.75) $0.10
================================================================================
All earnings per share information has been restated to reflect the
two-for-one stock split completed on January 9, 1998.
STOCK BASED COMPENSATION In October 1995, the FASB issued SFAS No. 123
"Accounting for Stock Based Compensation". This statement establishes a fair
value based method of accounting for an employee stock option or similar
equity instrument, but allows companies to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees". The Company has elected to con-
30
<PAGE>
tinue accounting for its stock based compensation awards to employees and
directors under APB Opinion No. 25 and to provide the disclosures required by
SFAS No. 123 in Note 18.
CONSOLIDATED STATEMENT OF CASH FLOWS Cash interest payments (net of amount
capitalized) and cash payments for income taxes during the year ended November
30, 1997 were respectively $9.2 million and $0.9 million, (1996: $8.0 million
and ($0.9) million respectively and 1995: $11.1 million and ($0.2) million
respectively).
Debt due to Stolt-Nielsen S.A. ("SNSA"), of $57.6 million was converted into
14,000,000 Class B Shares concurrent with the March 1997 equity offering. This
has been treated as a non-cash transaction.
During the year ended November 30, 1997 the Company completed two non-cash,
asset swap transactions with third parties. The fair value of the assets
received was $9.1 million.
3 RESTRICTED CASH DEPOSITS
Restricted cash balances comprise both funds held in a separate Company bank
account, which will be used to settle accrued taxation liabilities, and
deposits made by the Company as security for certain third-party obligations.
4 TRADE RECEIVABLES
Trade receivables at November 30, 1997 of $146.7 million (1996: $116.1
million) are net of allowances for doubtful accounts of $2.2 million (1996:
$2.4 million).
5 INVENTORIES AND WORK-IN-PROGRESS
Inventories and work-in-progress are stated at the lower of cost or market
value and comprise the following:
November 30
===============================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------------
Materials and supplies $ 1,290 $2,865
Spare parts 2,868 3,236
Fuels 1,044 1,132
Work-in-progress and mobilizations 5,680 2,244
- -------------------------------------------------------------------------------
$10,882 $9,477
===============================================================================
Costs are generally determined in accordance with the weighted-average cost
method. Costs of fitting out and preparing equipment for specific contracts
are included in work-in-progress. Such costs, principally labor and materials,
are amortized over the shorter of the expected duration of the contracts or
the estimated useful life of the asset. Progress payments relating to
work-in-progress were $2.0 million at November 30, 1997 (1996: $2.1 million).
6 FIXED ASSETS, NET
Fixed assets comprise the following:
November 30
===============================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------------
Operating equipment $116,818 33% $124,600 45%
Construction support
ships 215,302 60 128,304 46
Land and buildings 15,310 4 15,622 6
Other assets 8,819 3 10,052 3
- -------------------------------------------------------------------------------
$356,249 100% $278,578 100%
- -------------------------------------------------------------------------------
Less: Accumulated
depreciation and
amortization 111,850 106,135
- -------------------------------------------------------------------------------
$244,399 $172,443
- -------------------------------------------------------------------------------
During the year the Company recognized a SFAS No. 121 impairment loss of $4.2
million. This loss related to certain subsea assets developed by the Company
which were unable to generate sufficient utilization and therefore cashflows
to support their net book value at this time. These assets were written down
to values considered by management to be their fair market value. In addition
a small number of obsolete items were also written down to $nil as management
consider it unlikely that they will be utilized in 1998 and beyond.
During the year the Company completed two asset swap transactions with
third-parties and recognized a gain of $4.9 million. This gain is included in
other income (expense), net in the income statement.
7 INVESTMENTS IN AND ADVANCES TO NON-CONSOLIDATED JOINT VENTURES
Investments in and advances to non-consolidated joint ventures comprise the
following:
November 30
===============================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------------
Seaway Heavy Lifting $5,488 $2,918
Project joint ventures 2,671 (50)
Other 198 -
- -------------------------------------------------------------------------------
$8,357 $2,868
===============================================================================
Taxation in respect of project joint ventures has been included in the results
of the relevant subsidiaries. Undistributed reserves of all other joint
ventures will suffer no further taxation on distribution.
31
<PAGE>
Summarized financial information for the Company's non-consolidated joint
ventures, representing 100% of the respective amounts included in the joint
ventures' financial statements is as follows:
Income statement data:
For the years ended November 30
===============================================================================
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------
Net operating revenue $150,758 $90,272 $114,679
Gross profit 43,909 20,598 23,410
Net income 32,822 11,224 13,710
- -------------------------------------------------------------------------------
Balance sheet data:
November 30
===============================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------------
Current assets $50,721 $15,035
Non-current assets 834 11,063
Current liabilities 31,287 19,988
Non-current liabilities 3,000 3,000
- -------------------------------------------------------------------------------
For commercial reasons, the Company has structured certain contractual
services through its joint ventures. The income statement data for the
non-consolidated joint ventures presented above includes the following
expenses related to transactions with the Company in 1997, 1996 and 1995
respectively; charter hire of $11.0 million, $2.8 million, $17.0 million and
other expenses $3.8 million, $19.1 million, $6.2 million. The joint ventures
also received revenue of $2.1 million, $nil, $nil from the Company. The
balance sheet data includes amounts payable to joint ventures by the Company
of $nil and $9.8 million and amounts receivable by the Company of $8.3
million and $3.9 million at November 30, 1997 and 1996 respectively.
8 INCOME TAXES
The income tax (provision) benefit is as follows:
Year ended November 30
================================================================================
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Current $ (1,991) $(1,063) $ (866)
Deferred (9,147) 2,821 (3,342)
- --------------------------------------------------------------------------------
Income tax (provision)
benefit $(11,138) $ 1,758 $ (4,208)
================================================================================
The tax effects of temporary differences and net operating loss carryforwards
at November 30, 1997 and 1996 are as follows:
November 30
===============================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------------
Net operating loss carryforwards $ 30,240 $ 47,389
Other accruals--net 568 (8,091)
Fixed assets (15,865) (12,364)
- -------------------------------------------------------------------------------
Net deferred tax asset before
valuation allowance 14,943 26,934
Valuation allowance (9,970) (12,931)
- -------------------------------------------------------------------------------
Net deferred tax asset $ 4,973 $ 14,003
Being:
Deferred tax asset $ 9,949 $ 15,853
Deferred tax liability (4,976) (1,850)
- -------------------------------------------------------------------------------
$ 4,973 $ 14,003
===============================================================================
A valuation allowance has been recorded to reduce the deferred tax assets to
an amount that management believe is more likely than not to be realized.
French and U.K. companies have unused net operating loss carryforwards, on a
tax-effected basis, of $13.2 million and $14.5 million respectively. The U.K.
tax losses may be carried forward indefinitely. The French unused net
operating loss carryforwards may be carried forward as follows:
November 30, 1997
===============================================================================
Expires 1998 $ 104
1999 5,648
2000 1,059
2003 1,832
2004 51
Unlimited 4,471
- -------------------------------------------------------------------------------
$13,165
===============================================================================
The Company also had, at November 30, 1997 approximately $1.0 million of net
operating loss carryforwards in Norway which will expire in 2006, $0.7 million
of net operating loss carryforwards in Brazil which can be carried forward
indefinitely and $0.9 million of net operating loss carryforwards in Australia
which can also be carried forward indefinitely.
32
<PAGE>
The income tax (provision) benefit at the Company's effective tax rate differs
from the income tax (provision) benefit at the statutory rate. Principal
reconciling items include the following:
<TABLE>
<CAPTION>
=====================================================================================================
Year ended November 30, 1997 (in thousands) Norway U.K. Other Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pretax income $ 12,257 $ 22,226 $ 15,656 $ 50,139
Utilization of prior year losses - - (8,784) (8,784)
Income in non-taxable areas - - (5,777) (5,777)
Losses for which no benefit is recognized - - 4,816 4,816
- -----------------------------------------------------------------------------------------------------
Taxable income 12,257 22,226 5,911 40,394
Statutory tax rate 28% 31% 20% 28%
- -----------------------------------------------------------------------------------------------------
Tax at statutory rate (3,432) (6,890) (1,154) (11,476)
Non-deductible depreciation and amortization (53) (98) (202) (353)
Non-taxable dividend income from joint ventures - - 1,131 1,131
Changes in tax rates - (918) - (918)
Exchange gain - - 179 179
Other 174 (181) 306 299
- -----------------------------------------------------------------------------------------------------
Income tax (provision) benefit $ (3,311) $ (8,087) $ 260 $(11,138)
=====================================================================================================
Year ended November 30, 1996 (in thousands)
- -----------------------------------------------------------------------------------------------------
Pretax loss $ (1,640) $ (8,090) $ (6,930) $(16,660)
Utilization of prior year losses - - (2,229) (2,229)
Losses for which no benefit is recognized - 1,051 16,137 17,188
- -----------------------------------------------------------------------------------------------------
Taxable (loss) income (1,640) (7,039) 6,978 (1,701)
Statutory tax rate 28% 33% 37% 13%
- -----------------------------------------------------------------------------------------------------
Tax at statutory rate 459 2,323 (2,559) 223
Non-deductible depreciation and amortization (60) (25) (202) (287)
Exchange gain (85) - 315 230
Non-taxable dividend income from joint ventures - - 1,554 1,554
Other (208) (583) 829 38
- -----------------------------------------------------------------------------------------------------
Income tax benefit (provision) $ 106 $ 1,715 $ (63) $ 1,758
=====================================================================================================
Year ended November 30, 1995 (in thousands)
- -----------------------------------------------------------------------------------------------------
Pretax income (loss) $ 12,901 $ (1,319) $ (5,360) $ 6,222
Utilization of prior year losses - - (3,190) (3,190)
Losses for which no benefit is recognized - - 11,295 11,295
- -----------------------------------------------------------------------------------------------------
Taxable income (loss) 12,901 (1,319) 2,745 14,327
Statutory tax rate 28% 33% 32% 28%
- -----------------------------------------------------------------------------------------------------
Tax at statutory rate (3,612) 435 (892) (4,069)
Non-deductible depreciation and amortization (14) (20) (202) (236)
Other 10 59 28 97
- -----------------------------------------------------------------------------------------------------
Income tax (provision) benefit $ (3,616) $ 474 $ (1,066) $ (4,208)
- -----------------------------------------------------------------------------------------------------
</TABLE>
The reported utilization of prior year losses against current year profits is
in respect of entities where deferred tax assets had not previously been
recognized in respect of those losses.
33
<PAGE>
9 PENSION COMMITMENTS
The Company operates both defined contribution and defined benefit pension
plans, depending on location, covering certain qualifying employees.
Contributions under the defined contribution pension plans are determined as
a percentage of gross salary. The expense relative to these plans for the
years ended November 30, 1997, 1996 and 1995, was $0.4 million, $nil and $0.3
million respectively. The benefits under the defined benefit pension plans
are based on years of service and salary levels. Plan assets primarily
comprise of marketable securities.
Net periodic pension cost for the defined benefit pension plan for the years
ended November 30, 1997, 1996 and 1995 comprised the following:
Year ended November 30
=======================================================================
(in thousands) 1997 1996 1995
=======================================================================
- -----------------------------------------------------------------------
Service costs--
benefits earned
during the period $ 1,617 $ 1,238 $ 1,138
Interest cost on
benefit obligation 1,029 946 730
Actual return on plan
assets (1,211) (1,052) (913)
Contribution by employees (123) (132) -
Net amortization and
deferral 143 213 50
- -----------------------------------------------------------------------
Net periodic pension cost $ 1,455 $ 1,213 $ 1,005
- -----------------------------------------------------------------------
The following table sets forth the funded status of the pension plans:
November 30
========================================================================
(in thousands) 1997 1996
========================================================================
- ------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested benefit obligation $13,268 $11,040
Accumulated benefit obligation 13,268 11,040
Projected benefit obligation 16,479 14,601
Plan assets at fair value 17,214 15,979
- ------------------------------------------------------------------------
Projected benefit obligation less
than plan assets 735 1,378
Unrecognized net loss 3,080 2,552
- ------------------------------------------------------------------------
Prepaid pension asset $ 3,815 $ 3,930
- ------------------------------------------------------------------------
The weighted average assumptions used in determining the funded status of the
pension plans in 1997, 1996 and 1995 are as follows:
===================================================================
1997 1996 1995
- -------------------------------------------------------------------
Discount rate 7.5% 7.4% 7.25%
Expected rate of return
on assets 7.8% 7.4% 7.5%
Assumed rate of increase
in compensation level 4.5% 4.3% 4.5%
- -------------------------------------------------------------------
In France and Asia Pacific, retirement indemnities, for which the Company has
accrued $0.3 million at November 30, 1997 and $0.6 million at November 30,
1996 are paid as a lump sum upon retirement. They are primarily based upon the
employees' years of service and salary levels.
10 BANK OVERDRAFT AND LINES OF CREDIT FACILITIES
The Company has external, third-party bank overdraft and line of credit
facilities and short-term loan notes totalling $60.3 million (1996: $61.6
million). Amounts borrowed pursuant to these facilities bear interest at rates
ranging from 4.75% to 8.25%, excluding Brazil where interest rates were 3.26%
per month at November 30, 1997. As of November 30, 1997 borrowings under these
facilities totalled $13.4 million (1996: $7.8 million).
11 LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt, excluding borrowings from SNSA, comprises of the following:
November 30
=========================================================================
(in thousands) 1997 1996
- -------------------------------------------------------------------------
Borrowing from bank, at a London-based
borrowing rate plus 1%, payable in semi-annual
installments, maturing in November 2000,
collateralized by certain construction ships
and guaranteed by SNSA $ - $ 67,958
Other collateralized borrowings from banks 2,538 3,206
- -------------------------------------------------------------------------
2,538 71,164
Less: Current portion 387 12,452
- -------------------------------------------------------------------------
Long-term debt $ 2,151 $ 58,712
- -------------------------------------------------------------------------
The net book value of assets collateralizing this debt is $4.6 million.
34
<PAGE>
Total debt outstanding at November 30, 1997 is repayable in the following
currencies:
===================================================
(in thousands)
- ---------------------------------------------------
Norwegian kroner $1,469
U.S. dollars 716
French francs 353
- ---------------------------------------------------
$2,538
- ---------------------------------------------------
Scheduled annual principal repayments of debt for the fiscal years subsequent
to November 30, 1997 are as follows:
===================================================
(in thousands)
- ---------------------------------------------------
Within one year $ 387
Between one and two years 163
Between two and three years 98
Between three and four years 98
Between four and five years 95
Thereafter 1,697
- ---------------------------------------------------
$2,538
- ---------------------------------------------------
At November 30, 1997 property under capital leases, comprising operating and
other equipment, amounts to $0.1 million at cost. Accumulated amortization of
these leases is $nil.
Minimum payments under capital leases at November 30, 1997, which are due
primarily in Australian dollars, are as follows:
===================================================
(in thousands)
- ---------------------------------------------------
Within one year $10
Outwith one year 26
- ---------------------------------------------------
Total minimum lease payments 36
Less: Amount representing interest and
executory costs (5)
- ---------------------------------------------------
Present value of net minimum lease
payments $31
- ---------------------------------------------------
12 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities comprise of the following:
November 30
===============================================================
(in thousands) 1997 1996
- ---------------------------------------------------------------
Trade payables $30,360 $39,762
Invoice accruals 24,530 29,659
Short-term payable due to SNSA 1,855 -
Trade notes payable 5 1,319
Other 596 7
- ---------------------------------------------------------------
$57,346 $70,747
- ---------------------------------------------------------------
13 RELATED PARTY TRANSACTIONS
Related party transactions for the years 1997, 1996 and 1995 consisted of the
following:
Year ended November 30
================================================================
(in thousands) 1997 1996 1995
- ----------------------------------------------------------------
Interest charges $3,829 $3,942 $5,534
Guarantee fees $ 756 $ 764 $ 624
Management services $1,600 $1,601 $1,200
- ----------------------------------------------------------------
The interest rate charged on the SNSA debt classified long-term was 7.5%.
Interest on short-term debt was priced according to market rates at the time.
The Company pay a guarantee fee of 0.5% to SNSA. The latter provide guarantees
in respect of banking and performance bond facilities. Management service
charges represent charges for various management services including legal,
treasury and administrative services performed by SNSA on behalf of the
Company.
Amounts due to SNSA:
November 30
==========================================================
(in thousands) 1997 1996
- ----------------------------------------------------------
Short-term payable $1,855 $ -
Short-term debt - 35,152
Long-term debt - 47,878
- ----------------------------------------------------------
$1,855 $ 83,030
- ----------------------------------------------------------
The short-term payable to SNSA relates to outstanding interest charges and
guarantee fees.
Concurrent with the March 1997 equity offering, the Company exchanged
approximately $57.6 million of debt due to SNSA for 14,000,000 Class B Shares.
14 RESTRUCTURING AND REORGANIZATION PROGRAM
During 1995, the Company incurred certain non-recurring costs related to
changes in the business environment. These included (i) $2.6 million
associated with the reassessment of asset lives and values; (ii) $2.3 million
in connection with redundancy costs; and (iii) $4.1 million relating to
relocation and lease termination charges. These costs were included in
operating expenses ($4.7 million), administrative and general expenses ($2.0
million) and other expense ($2.3 million) in 1995.
As part of the plan to streamline the Asia Pacific region, the disposal of the
Company's minority share in the Malaysian joint ventures Sarku Comex and Sarku
Comex Marine, was successfully completed during the first quarter of 1995.
In 1996, a provision of approximately $2.2 million was made for a loss on the
disposal of the Company's French civil engineering business. This charge was
included in other expense.
35
<PAGE>
As of November 30, 1997 there was no material remaining liability relating to
the 1995 non-recurring charges. As of November 30, 1997 there was a remaining
liability of $0.6 million relating to non-recurring charges for the disposal
of the Company's French civil engineering business.
15 OPERATING LEASES
Total operating lease commitments as of November 30, 1997 amount to $56.5
million. Charter obligations towards certain construction support, diving
support, survey and inspection ships account for $53.4 million of these. The
remaining obligations relate to office facilities and equipment.
Total minimum annual lease commitments which are payable are as follows:
- ------------------------------------------------------
(in thousands)
- ------------------------------------------------------
Within one year $15,331
Between one and two years 14,907
Between two and three years 9,390
Between three and four years 9,536
Between four and five years 7,183
Thereafter 118
- ------------------------------------------------------
$56,465
- ------------------------------------------------------
- ------------------------------------------------------
(in thousands)
- ------------------------------------------------------
Belgian francs $31,114
Norwegian kroner 23,462
British pounds 964
Australian dollars 645
Singapore dollars 280
- ------------------------------------------------------
$56,465
- ------------------------------------------------------
In October 1991, the Company entered into an agreement with the Russian owner
of a heavy lift support ship to establish a 50-50 joint venture which will
timecharter the ship from the owner and operate the ship in projects in which
heavy lifting is a major part of the total work scope. In accordance with the
agreement, the joint venture has timechartered the ship since 1992. In 1997
charterhire was $3.96 million. The charterparty has been extended until
October 1998. A proposal has been made to extend this charterparty. This
commitment is not included in the amounts shown above.
Total operating lease rentals charged as an expense for the year ended
November 30, 1997 were $11.4 million (1996: $10.9 million and 1995:
$14.3 million).
16 OPERATIONS BY GEOGRAPHICAL AREAS AND BUSINESS SEGMENT
The Company operates in one business segment. The following table presents
information by geographical areas:
- --------------------------------------------------------------------------
Year ended Net Net
November 30, Net operating operating
1997 operating % of income margin
(in thousands) revenue total (loss) (%)
- --------------------------------------------------------------------------
U.K. $153,019 36% $25,220 17%
Norway 90,146 21 11,932 13
Other North Sea 19,806 5 (41) 0
SEAME(a) 75,738 17 6,330 8
Asia Pacific 39,555 9 5,931 15
South America 43,699 10 5,001 11
Gulf of Mexico 9,163 2 114 1
- --------------------------------------------------------------------------
Total $431,126 100% $54,487 13%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Year ended Net Net
November 30, Net operating operating
1996 operating % of income margin
(in thousands) revenue total (loss) (%)
- --------------------------------------------------------------------------
U.K. $ 90,805 29% $13,051 14%
Norway 111,619 36 (7,953) (7)
Other North Sea 4,678 1 469 10
SEAME(a) 44,612 14 (6,189) (14)
Asia Pacific 39,136 12 (1,724) (4)
South America 14,316 5 2,109 15
Gulf of Mexico 8,192 3 (3,200) (39)
- --------------------------------------------------------------------------
Total $313,358 100% $(3,437) (1)%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Year ended Net Net
November 30, Net operating operating
1995 operating % of income margin
(in thousands) revenue total (loss) (%)
- --------------------------------------------------------------------------
U.K. $ 68,486 21% $10,814 16%
Norway 144,722 44 13,656 9
Other North Sea 4,030 1 531 13
SEAME(a) 59,782 18 (5,660) (10)
Asia Pacific 34,914 11 (2,141) (6)
South America 15,108 5 1,992 13
- --------------------------------------------------------------------------
Total $327,042 100% $19,192 6%
- --------------------------------------------------------------------------
(a) Southern Europe, Africa and the Middle East.
The Company operates its property, plant and equipment on a worldwide basis
without restriction to specific locations. Accordingly the allocation of
capital expenditures and identifiable assets to specific geographic areas is
not possible. Inter-regional revenue was not significant.
36
<PAGE>
17 COMMON SHARES AND CLASS B SHARES
The Company has authorized Share Capital consisting of 25,000,000 Common
Shares, par value $2.00 per share, and 34,000,000 Class B Shares, par value
$2.00 per share. Class B Shares are convertible into Common Shares, on a
two-for-one basis, at any time at the option of the Class B shareholders. On
March 17, 1997 the Company completed a public offering of 8,050,000 Common
Shares. Concurrent with the offering, the Company exchanged 14,000,000 Class B
Shares for approximately $57.6 million of indebtedness owed to SNSA. On
November 20, 1997 the Company completed a public offering of 8,000,000 Common
Shares, of which 4,000,000 were sold by the Company and 4,000,000 were sold by
SNSA. The shares sold by SNSA were initially converted to 4,000,000 Common
Shares from 8,000,000 Class B Shares. On January 9, 1998 the Company completed
a two-for-one stock split which was effected by means of a stock dividend
distribution. All share data has been restated to reflect this transaction.
At November 30, 1997, 22,291,576 Common Shares were outstanding and 34,000,000
Class B Shares were outstanding. SNSA hold 100% of the Class B Shares which
represents an economic interest of 43% of the Company and 60% of the voting
rights.
Common and Class B Shares vote as a single class on all matters submitted to
a vote of shareholders, with each share entitled to one vote, with the
exception of a recapitalization, reclassification or similar transactions
affecting the relative rights, preferences and priorities of the Common
Shares and Class B Shares, which require an affirmative vote of the holders
of a majority of the outstanding Common Shares and Class B Shares each voting
as a separate class. With respect to liquidation and dividend rights, the
Class B Shares receive $0.005 per share for each $0.01 per Common Share.
Luxembourg law requires that 5% of the Company's unconsolidated net profits
each year be allocated to a legal reserve before declaration of dividends.
This requirement continues until the reserve is 10% of the stated capital of
the Company, as represented by Common Shares and Class B Shares, after which
no further allocations are required until further issuance of shares.
The legal reserve may also be satisfied by allocation of the required amount
at the issuance of shares or by a transfer from paid-in surplus. The legal
reserve is not available for dividends. The legal reserve for all outstanding
Common Shares and Class B Shares has heretofore been satisfied and appropriate
allocations are made to the legal reserve account at the time of each issuance
of new shares.
Retained earnings that represent undistributed earnings of non-consolidated
joint ventures amounted to $6.0 million at November 30, 1997 (1996: $4.1
million).
18 STOCK OPTION PLAN
On April 28, 1993 the Company adopted a stock option plan ("the Plan") under
which 2,150,000 Common Shares are reserved for issuance. The Company accounts
for awards granted to directors and key employees under APB Opinion No. 25,
under which compensation cost will be recognized for any stock options
granted at an exercise price less than the market value of the options on the
grant date. Had compensation cost for all stock option grants in fiscal years
1997 and 1996 been determined consistent with SFAS No. 123, the Company's net
income and earnings per share would have been decreased to the following pro
forma amounts:
November 30
================================================================
(in thousands) 1997 1996
- ----------------------------------------------------------------
Net income (loss) as reported $39,001 $(14,902)
Net income (loss) pro forma 38,560 (15,019)
Primary earnings per share as reported 1.23 (0.75)
Primary earnings per share pro forma 1.21 (0.75)
- ----------------------------------------------------------------
Options may be granted under the Plan which are exercisable during periods of
up to ten years. The options granted under the Plan will be at an exercise
price not less than the fair market value per share at the time the option is
granted. The Plan is administered by a Compensation Committee appointed by the
Company's Board of Directors. Options are awarded at the discretion of the
Company to directors and key employees.
The following table reflects activity under the plan for the two year period
ended November 30, 1997:
Year ended November 30
================================================================================
1997 1996
- --------------------------------------------------------------------------------
WEIGHTED Weighted
AVERAGE Average
EXERCISE Exercise
SHARES PRICE Shares Price
- --------------------------------------------------------------------------------
Outstanding at
beginning of year 562,660 $ 4.565 430,820 $ 4.86
Granted 200,000 8.6875 180,000 4.0625
Exercised (234,576) 4.91 (7,000) 4.41
Cancelled (22,680) 5.40 (41,160) 5.50
- --------------------------------------------------------------------------------
Outstanding at end
of year 505,404 $ 5.995 562,660 $ 4.565
Exercisable at end
of year 139,118 $ 4.545 154,618 $ 5.255
Weighted average fair
value of options
granted $15.1625 $6.9125
- --------------------------------------------------------------------------------
37
<PAGE>
The fair price of each stock option grant is estimated as of the date of grant
using the Black Scholes option pricing model with the following weighted
average assumptions:
================================================================
1997 1996
- ----------------------------------------------------------------
Risk free interest rates 6.25% 6.81%
Expected lives 10 YEARS 10 years
Expected volatility 50.8% 56.6%
Expected dividend yields 0% 0%
- ----------------------------------------------------------------
The following table summarizes information about stock options outstanding at
November 30, 1997:
- --------------------------------------------------------------------------
Options
Award Options currently Exercise Expiration
year outstanding exercisable price date
- --------------------------------------------------------------------------
1993 12,580 12,580 $ 7.75 May 2003
1994 39,754 29,814 $ 4.50 April 2004
1995 127,820 63,912 $4.1875 June 2005
1996 131,250 32,812 $4.0625 March 2006
1997 194,000 - $8.6875 March 2007
- --------------------------------------------------------------------------
505,404 139,118
- --------------------------------------------------------------------------
19 PROFIT SHARING PLAN
During 1993, the Company adopted a profit sharing plan which distributes 10%
of the Company's net income after specified adjustments, to certain of its
employees worldwide, excluding those covered by collective bargaining
agreements. The determination of an employee's individual award will be based
on salary and overall contribution to the Company. This plan is administered
by the Compensation Committee appointed by the Company's Board of Directors.
For the year ended November 30, 1997 $3.8 million (1996 and 1995: $nil) has
been included in the income statement.
20 SALE OF SHARES IN SUBSIDIARY
In September 1995, the Company disposed of 20% of the shares in its subsidiary
in Brazil for a non-cash consideration of $0.5 million. The minority interest
in the subsidiary amounted to $0.6 million at November 30, 1997 (1996: $0.5
million).
21 COMMITMENTS AND CONTINGENCIES
The Company has guaranteed long-term debt, short-term lines of credit and
performance bonds amounting to $5.5 million at November 30, 1997. In addition,
SNSA has given guarantees covering short-term lines of credit and performance
bonds on behalf of the Company totalling $75.9 million at November 30, 1997.
During 1997, the Company incurred capital expenditure of $108.6 million with
an additional $19.7 million being committed for 1998.
Kingfisher D.A., a newly formed 50-50 joint venture is to acquire a ship to be
named the Seaway Kingfisher at an approximate cost of $17.0 million.
The Swiss Court of Insurance "Tribunal Federal des Assurances" entered a
judgement on April 29, 1992 against Sogexpat S.A. ("Sogexpat"), a subsidiary
of the Company, in litigation brought by a Swiss governmental entity claiming
payment of social security contributions in arrears. During the year ended
November 30, 1993, the Company wound up Sogexpat and transferred the employees
to other Group companies.
The French government has investigated Stolt Comex Seaway S.A. of France
alleging violations of French labor and social security legislation. Civil
complaints have been filed against certain subsidiaries of the Company which
have resulted in court decisions against them. Such decisions have been
appealed. In addition, a number of former and present employees have started
civil proceedings against certain subsidiaries of the Company alleging loss of
employment and social security benefits. Some of the proceedings have recently
commenced while some have already resulted in court decisions. One such
decision has been appealed to the French Supreme Court. While the Company
believes that its subsidiaries have meritorious defences in these cases, there
can be no certainty as to the number of claims which may be brought or the
amount for which the Company may eventually be liable with respect thereto.
Comex S.A., a former shareholder of Comex Services S.A. ("Comex"), in an
agreement with SNSA executed on June 5, 1992 for the sale of Comex, agreed to
indemnify the Company with respect to certain aspects of the foregoing. There
can be no assurance, however, as to the amount which the Company may
ultimately recover from Comex S.A. pursuant to such indemnity.
38
<PAGE>
Coflexip S.A. have commenced legal proceedings against three subsidiaries of
the Company claiming infringement of a certain patent relating to flexible
flowline laying technology in the U.K.. Management is of the opinion that
Coflexip S.A.'s said patent is not valid and, therefore, has made no provision
in the financial statements relating to these proceedings.
The Company believes that such legal proceedings will not have a material
adverse affect on the Company's business or financial condition.
In the ordinary course of business, various claims, suits and complaints have
been filed against the Company. In the opinion of management, all such matters
are adequately covered by indemnity agreements, recorded provisions in the
financial statements and insurance or, if not so covered, would not have a
material effect on the financial position, results of operations or cash flows
of the Company if resolved unfavourably.
22 FAIR VALUE OF FINANCIAL INSTRUMENTS
All of the Company's derivative activities are over the counter instruments
entered into with major financial credit institutions to hedge the Company's
committed exposures. All of the Company's derivative instruments are straight
forward foreign exchange forward and option contracts which subject the
Company to a minimum level of exposure risk. The Company does not consider it
has a material exposure to credit risk from third-parties failing to perform
according to the terms of hedge instruments.
The following foreign exchange contracts, maturing between December 22, 1997
and December 29, 1998 were outstanding at November 30, 1997:
- ---------------------------------------------------
(in thousands) Purchase Sell
- ---------------------------------------------------
French francs 17,064 -
Belgian francs 71,839 -
Danish kroner 5,054 -
British pounds 2,601 1,693
U.S. dollars - 7,329
- ---------------------------------------------------
The table above includes certain currency positions which effectively have
been closed by entering into offsetting foreign exchange contracts.
The U.S. dollar equivalent of the currencies which the Company had contracted
to purchase was $10.1 million and to sell was $10.2 million at November 30,
1997.
The following estimated fair value amounts of the Company's financial
instruments have been determined by the Company, using appropriate market
information and valuation methodologies. Considerable judgement is required to
develop these estimates of fair values, thus the estimated provided herein are
not necessarily indicative of the amounts that could be realized in a current
market exchange:
November 30, 1997
- ----------------------------------------------------------------
(in millions) Carrying amount Fair value
- ----------------------------------------------------------------
FINANCIAL ASSETS
Cash and cash equivalents $ 8.3 $ 8.3
FINANCIAL LIABILITIES
Bank overdrafts 13.4 13.4
Long-term debt 2.5 2.5
OFF BALANCE SHEET FINANCIAL
INSTRUMENTS
Foreign exchange forward contracts - 0.1
- ----------------------------------------------------------------
The carrying amounts of cash and cash equivalents, bank overdrafts and all
other financial instruments are a reasonable estimate of their fair value. The
estimated value of the Company's long-term debt is based on interest rates at
November 30, 1997 using debt instruments of similar risk. The fair values of
the Company's foreign exchange forward hedge contracts are based on their
estimated termination values at November 30, 1997.
23 SUBSEQUENT EVENTS
With effect from January 9, 1998 the Company completed a two-for-one stock
split which was effected by means of a stock dividend distribution. The
Company now has approximately 39.3 million Common Shares and Common Share
equivalents outstanding.
Subsequent to November 30, 1997 the Company concluded an agreement with
Midland Bank plc and Den norske Bank ASA to provide a five year revolving
credit facility. This facility is secured by first priority mortgages over
certain of the Company's ships.
39
<PAGE>
CORPORATE INFORMATION
STOLT COMEX SEAWAY LTD. STOLT COMEX SEAWAY AUSTRALIA PTY LTD.
Bucksburn House Level 2
Howes Road 30 Hasler Road
Bucksburn Herdsman Business Park
Aberdeen AB21 9RQ, Scotland Osborne Park WA 6017, Australia
Tel: +44 (0) 1224 718200 Tel: +61 (0) 8 9446 6700
Fax: +44 (0) 1224 715129 Fax: +61 (0) 8 9446 4822
STOLT COMEX SEAWAY A/S STOLT COMEX SEAWAY TECNOLOGIA SUBMARINA S.A.
Skogst0straen 37 Av. Prefeito Aristeu Ferreira da Silva
P.O. Box 740 1661 Novo Cavaleiros - Macae - RJ
N-4001 Stavanger, Norway 27930-070, Brazil
Tel: +47 51 84 50 00 Tel: +55 (0) 24 773 3131
Fax: +47 51 83 59 00 Fax: +55 (0) 24 773 4578
STOLT COMEX SEAWAY S.A. SEAWAY HEAVY LIFTING
B.P. 69 ENGINEERING B.V.
467 Chemin du Littoral Wiltonstraat 11-13
13321 Marseille Cedex 16, France 2722 NG Zoetermeer, The Netherlands
Tel: +33 (0) 4 91 09 68 01 Tel: +31 (0) 79 341 7114
Fax: +33 (0) 4 91 09 68 00 Fax: +31 (0) 79 342 8404
STOLT COMEX SEAWAY INC.
1340 Poydras Street
Suite 2100
New Orleans, LA 70112, U.S.
Tel: +1 504 566 1900
Fax: +1 504 566 9383
STOCK TRADING HISTORY
NASDAQ
============================================================================
For the years ended QTR. 1 QTR. 2 QTR. 3 QTR. 4
- ----------------------------------------------------------------------------
1997
HIGH $ 9 7/8 $11 19/32 $26 11/16 $33 3/16
LOW $ 7 7/16 $ 8 13/16 $11 5/16 $24 8/16
- ----------------------------------------------------------------------------
1996
High $ 5 $ 7 11/16 $ 7 1/16 $ 9 3/8
Low $ 3 15/16 $ 4 1/16 $ 4 15/16 $ 5 7/16
- ----------------------------------------------------------------------------
1995
High $ 4 11/16 $ 4 11/16 $ 5 9/16 $ 5 3/4
Low $ 3 1/8 $ 3 1/4 $ 4 3/16 $ 4 3/8
- ----------------------------------------------------------------------------
Oslo Stock Exchange (Norwegian kroner)
============================================================================
QTR. 1 QTR. 2 QTR. 3 QTR. 4
- ----------------------------------------------------------------------------
1997
HIGH - - 190.00 272.50
LOW - - 86.00 179.25
- ----------------------------------------------------------------------------
All stock price data has been restated to reflect the two-for-one stock split
completed on January 9, 1998.
40
<PAGE>
SHAREHOLDER INFORMATION INVESTOR RELATIONS AND PRESS INQUIRIES
STOCK LISTINGS Shareholders, securities analysts,
portfolio managers, representatives
COMMON SHARES - On Nasdaq under of financial institutions, and the
symbol SCSWF and on the Oslo Stock press may contact:
Exchange under symbol SCS
Wlliam W. Galvin
SHARES OUTSTANDING (as of Galvin Partnership
November 30, 1997 adjusted for two 515 Madison Avenue
for one share split in January 1998) 37th Floor
New Yrok, NY 10022 U.S.
Common Shares - 22,291,276 Telephone: +1 212 838 5454
Fax: +1 212 755 3204
Class B Shares - 34,000,000 E-Mail: [email protected]
Each Common Share and each Class B Julian Thomson
Share carry one voting right. Each Group Manager Marketing & Communications
Class B Share represents one-half of Stolt Comex Seaway M.S. Ltd.
the economic interest of one Common Bucksburn House
Share. Therefore there are a total of Howes Road
39,291,576 Common Share equivalents Bucksburn
outstanding. All of the Class B Aberdeen AB21 9RQ Scotland
Shares are owned by Stolt Parcel Telephone: +44 (0)1224 718436
Tankers Inc., a wholly owned Fax: +44 (0)1224 715125
subsidiary of Stolt-Neilsen S.A. E-Mail: [email protected]
COUNTRY OF INCORPORATION - Luxembourg TRANSFER AGENTS AND REGISTRARS
SHAREHOLDER INFORMATION MEETINGS COMMON SHARES
First Chicago Trust Company
March 26, 1998 at 10:30 AM PO Box 2500
Citibank N.A. Jersey City, NJ 07303 U.S.
399 Park Avenue Telephone +1 201 324 0498
Twelfth Floor
New York, NY 10043 U.S. COMMON SHARES - VPS
Den norske Bank ASA
April 15, 1998 at 9:30 AM Stranden 21
Den norske Bank ASA N-0250 Oslo 2, Norway
Auditory Telephone: +47 22 48 12 17
Stranden 21
N-0250 Oslo 2, Norway AUDITORS
ANNUAL GENERAL MEETING Arthur Andersen
18 Charlotte Square
April 16, 1998 at 11:00 AM Edenburgh EH2 4DF Scotland
Kredietrust
11, rue Aldringen DIVIDENDS
L-2960 Luxembourg
The Company currently intends to
FINANCIAL INFORMATION retain any earnings for the future
operation and growth of the business.
Copies of press releases, quarterly The Board of Directors will review
earnings releases, annual report, and this policy from time to time in
SEC Form 20-F are available free of light of the Company's earnings,
charge by contacting: financial condition, prospects, tax
considerations, and foreign exchange
Samira Ashraf rates. The Company will pay
Stolt-Neilsen Ltd. dividends, if an, in U.S. dollars.
Aldwych House
71-91 Aldwych
London WC2B 4HN England
Telephone +44 (0)171 611 8963
Fax +44 (0)171 611 8952
E-Mail: [email protected]
This information is also available on the internet at:
http://www.huginonline.com/HOL/SCS/index_e.html
<PAGE>
Ex. 2.6
CONSENT OF INDEPENDENT ACCOUNTANT
We consent to the incorporation by reference in the registration statement of
Stolt Comex Seaway S.A. on Form S-8 (file No. 33-85168) of our reports dated
10 November 1997 on our audits of the financial statements of Transfield -
Stolt Comex Seaway Joint Venture as of 30 June 1997, 1996 and 1995, and for
the years ended 30 June 1997 and 1996 and period ended 30 June 1995 which
reports are included in the 1997 Stolt Comex Seaway S.A. Form 20-F.
COOPERS & LYBRAND
28 May 1998
Perth, Western Australia
<PAGE>
Exhibit 2.7
SEAWAY HEAVY LIFTING LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997
CONTENTS
<TABLE>
<CAPTION>
PAGES
---------
<S> <C>
Directors and advisers................................................................................... 1
Directors' report........................................................................................ 2
Auditors' report......................................................................................... 3
Profit and loss account.................................................................................. 4
Balance sheet............................................................................................ 5
Cash flow statement...................................................................................... 6
Notes to the financial statements........................................................................ 7--12
Additional information to the profit and loss account.................................................... 13
</TABLE>
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
DIRECTORS AND ADVISERS
<TABLE>
<S> <C>
Directors Registered office
Gilles de Naurois 284 Arch Makarios III Avenue
Oleg Strashnov Fortuna Court,
Agis Agapiou Block B, 2nd Floor
Chris Georgiades CY-3105 Limassol
Alternate Directors Cyprus
Johan Rasmussen Auditors
(for Gilles de Naurois) COOPERS & LYBRAND
Guennady Sobolev Nora Court
(for Oleg Strashnov) 86 Athinon Street
Joseph Christou CY-3040 Limassol
(for Agis Agapiou) P O Box 3034
Pambos Papas CY-3300 Limassol
(for Chris Georgiades) Cyprus
Company secretary
CYPROSERVUS CO LIMITED
284 Arch Makarios III Avenue
Fortuna Court, Block B
3rd Floor, Flat 32
CY-3105 Limassol
Cyprus
</TABLE>
1
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 NOVEMBER 1997
1 The directors present their report and audited financial statements for
the year ended 30 November 1997.
PRINCIPAL ACTIVITIES
2 The principal activity of the company is the provision of offshore
heavylifting services. As stated in note 16, the charter party for the Stanislav
Yudin expires in October 1998. A proposal has been put to the shipowner to
further extend the charterparty beyond this date.
RESULTS
3 The profit and loss account for the year is set out on page 4.
DIVIDENDS
4 The directors have declared and recommended the following dividends in
respect of the year ended 30 November 1997:
<TABLE>
<CAPTION>
US$
----------
<S> <C>
Ordinary dividends:
Proposed final of US$7.000 per share............................................. 7.000.000
----------
----------
</TABLE>
DIRECTORS
5 The directors have resigned and have been re-elected at the company's
Annual General Meeting. The directors will continue in office.
AUDITORS
6 The auditors, Coopers & Lybrand, have expressed their willingness to
continue in office.
BY ORDER OF THE BOARD
CHRIS GEORGIADES
DIRECTOR
Limassol
10 March 1998
2
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
AUDITORS' REPORT TO THE MEMBERS OF
SEAWAY HEAVY LIFTING LIMITED
1 We have audited the financial statements on pages 4 to 12 and have
obtained all the information and explanations we considered necessary. 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 audit.
2 We conducted our audit in accordance with International Standards on
Auditing. These 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
3 In our opinion, proper books of account have been kept by the company
and the financial statements, which are in agreement therewith, give a true and
fair view of the state of affairs of Seaway Heavy Lifting Limited at 30 November
1997 and of its profit and cash flows for the year then ended in accordance with
International Accounting Standards and comply with the Companies Law, Chapter
113.
Coopers & Lybrand
Chartered Accountants
Limassol
10 March 1998
3
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 NOVEMBER 1997
<TABLE>
<CAPTION>
1997 1996
NOTE US$ US$
----- ------------- -------------
<S> <C> <C> <C>
TURNOVER..................................................................... 2 38.969.926 49.531.022
COST OF SALES,............................................................... (27.191.248) (40.135.700)
------------- -------------
GROSS PROFIT................................................................. 11.778.678 9.395.322
Interest receivable.......................................................... 706.362 533.766
------------- -------------
12.485.040 9.929.088
General and administration expenses.......................................... (4.742.307) (4.794.110)
Interest payable............................................................. (245.440) (254.910)
Bank charges................................................................. (48.817) (38.676)
Bad debts recovered.......................................................... -- 217.871
Foreign exchange (loss)/gain................................................. (13.273) 1.047.093
------------- -------------
PROFIT BEFORE TAXATION....................................................... 3 7.435.203 6.106.356
Taxation..................................................................... 4 (293.882) (296.999)
------------- -------------
PROFIT AFTER TAXATION........................................................ 7.141.321 5.809.357
Dividends paid or proposed................................................... 14 (7.000.000) (5.809.357)
------------- -------------
RETAINED PROFIT FOR THE YEAR................................................. 141.321 --
------------- -------------
------------- -------------
STATEMENT OF RETAINED PROFITS
Retained profit for the year................................................. 141.321 --
Retained profits at 1 December............................................... -- --
------------- -------------
RETAINED PROFITS AT 30 NOVEMBER.............................................. 141.321 --
------------- -------------
------------- -------------
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
4
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
BALANCE SHEET
AT 30 NOVEMBER 1997
<TABLE>
<CAPTION>
1997 1996
NOTE US$ US$
----- ------------ ------------
<S> <C> <C> <C>
ASSETS
FIXED ASSETS
Tangible assets................................................................ 5 7.385 252.647
------------ ------------
CURRENT ASSETS
Trade debtors.................................................................. 816.291 3.009.669
Other debtors.................................................................. 73.359 48.136
Stocks......................................................................... 6 244.893 361.627
Amounts due from related companies............................................. 7 39.736 2.265.117
Loan to related company........................................................ 8 -- 11.148.920
Bank balances.................................................................. 15.595.341 53.931
------------ ------------
TOTAL CURRENT ASSETS........................................................... 16.769.620 16.887.400
------------ ------------
TOTAL ASSETS................................................................... 16.777.005 17.140.047
------------ ------------
------------ ------------
LIABILITIES
LONG TERM LIABILITIES
Amounts due to related companies--long term.................................... 9 3.000.000 3.000.000
------------ ------------
CURRENT LIABILITIES
Trade creditors................................................................ 215.404 824.141
Amounts due to related companies............................................... 9 3.372.271 4.481.109
Obligations under finance leases and hire purchase agreements.................. 10 -- 305.435
Accruals....................................................................... 2.921.796 5.329.510
Other creditors................................................................ -- 6.968
Taxation....................................................................... 124.035 381.349
Proposed dividend.............................................................. 7.000.000 2.809.357
------------ ------------
TOTAL CURRENT LIABILITIES...................................................... 13.633.506 14.137.869
------------ ------------
TOTAL LIABILITIES.............................................................. 16.633.506 17.137.869
------------ ------------
SHAREHOLDERS' EQUITY
Share capital.................................................................. 11 2.178 2.178
Retained profits............................................................... 141.321 --
------------ ------------
TOTAL SHAREHOLDERS' EQUITY..................................................... 143.499 2.178
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' INTEREST................................... 16.777.005 17.140.047
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<S> <C>
Agis Agapiou )
) Directors
Chris Georgiades )
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
5
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 1997
<TABLE>
<CAPTION>
1997 1996
US$ US$
------------ -----------
<S> <C> <C>
Cash flows from operating activities (Note 12)........................................ 19.079.794 7.299.630
Taxation paid......................................................................... (551.196) (187.866)
Purchase of fixed asset............................................................... (15.185) --
------------ -----------
NET CASH FROM OPERATING ACTIVITIES.................................................... 18.513.413 7.111.764
------------ -----------
Cash flows from returns on investment and servicing of finance
Interest element of finance lease rentals............................................. (21.272) (43.798)
Interest received..................................................................... 164.061 21.484
------------ -----------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE.................. 142.789 (22.314)
------------ -----------
Cash flows from financing activities
Capital element of finance lease payments (Note 12)................................... (305.435) (267.099)
Dividends paid........................................................................ (2.809.357) (8.681.117)
------------ -----------
NET CASH OUTFLOW FROM FINANCING ACTIVITIES............................................ (3.114.792) (8.948.216)
------------ -----------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS...................................... 15.541.410 (1.858.766)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........................................ 53.931 1.912.697
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR (NOTE 13).................................... 15.595.341 53.931
------------ -----------
------------ -----------
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
6
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997
1 PRINCIPAL ACCOUNTING POLICIES
The financial statements, which are expressed in United States dollars, have
been prepared in accordance with applicable International Accounting Standards.
The financial statements have been prepared using the historical cost
convention. A summary of the significant accounting policies adopted by the
company is as follows:
FIXED ASSETS
The cost of fixed assets represent their purchase cost together with any
incidental costs of acquisition.
DEPRECIATION
Depreciation is calculated to write off the cost or amount of the valuation
of fixed assets on a straight line basis over the expected useful lives of the
assets concerned. The principal annual rates used for this purpose, which are
consistent with those of the previous year, are:
<TABLE>
<S> <C>
Plant and machinery............................................. 3--5 years
Motor vehicle................................................... 2 years
</TABLE>
STOCKS
Stocks are stated at the lower of cost and net realisable value. In general,
cost is determined on a first in first out basis and includes transport and
handling costs. Net realisable value is the price at which the stock can be
realised in the normal course of business after allowing for the costs of
realisation and, where appropriate, the cost of conversion from its existing
state to a finished condition. Provision is made for obsolescent, slow moving
and defective stocks.
TAXATION
Corporation tax payable is provided on taxable profits at the current rate
of 4,25%. Provision for deferred taxation is made at the income tax rate of
4,25%, except where there is reasonable evidence that timing differences will
not reverse.
LEASES
The company enters into finance leases. Assets held under finance leases are
initially reported at the fair value of the asset, with an equivalent liability
categorised as appropriate under creditors due within or after one year. The
asset is depreciated over the shorter of the lease term and its useful economic
life. Finance charges are allocated to accounting periods over the period of the
lease to produce a constant rate of return on the outstanding balance. Rentals
are apportioned between finance charge and reduction of the liability and
allocated to cost of sales and other operating expenses as appropriate.
FOREIGN CURRENCY
Foreign currency transactions are translated into United States dollars at
the rate of exchange ruling at the time of the transaction. Assets and
liabilities expressed in foreign currencies are translated into United States
dollars at the rates of exchange ruling at the end of the financial year.
Differences on exchange are included in operating profit.
7
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997 (CONTINUED)
1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash in hand and balances with banks
and short term investments with maturity not exceeding three months from the
date of acquisition.
RELATED COMPANIES
Related companies represent common ownership companies.
2 TURNOVER
Turnover represents income from the provision of offshore heavy lifting
services at invoice value.
3 PROFIT BEFORE TAXATION
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ----------
<S> <C> <C>
Profit is stated after charging:
Depreciation of tangible fixed assets:
- -owned................................................................ 7.942 2.633
- -leased............................................................... 252.505 434.309
Auditors' remuneration................................................ 7.915 5.500
Exchange loss......................................................... 13.273 --
Interest payable to related companies................................. 223.750 209.374
Interest payable to third parties..................................... 21.690 45.536
and after crediting:
Interest receivable from related companies............................ 542.301 512.282
Bank interest receivable.............................................. 164.061 21.484
Exchange gain......................................................... -- 1.047.093
</TABLE>
4 TAXATION
The tax charge is based on the adjusted profit for the year and comprises:
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ---------
<S> <C> <C>
Corporation tax at 4,25 per cent--1996 (1 month)........................ 29.272 47.515
Corporation tax--provision for 1997 (11 months)......................... 264.610 249.484
--------- ---------
293.882 296.999
--------- ---------
--------- ---------
</TABLE>
8
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997 (CONTINUED)
5 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
PLANT
MOTOR AND LEASED
VEHICLES MACHINERY PLANT TOTAL
US$ US$ US$ US$
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Cost
At 1 December 1996................................................. -- 182.213 1.212.026 1.394.239
Additions.......................................................... 15.185 -- -- 15.185
--------- ----------- ---------- ----------
AT 30 NOVEMBER 1997................................................ 15.185 182.213 1.212.026 1.409.424
--------- ----------- ---------- ----------
Depreciation
At 1 December 1996................................................. -- 182.071 959.521 1.141.592
Charge for the year................................................ 7.800 142 252.505 260.447
--------- ----------- ---------- ----------
AT 30 NOVEMBER 1997................................................ 7.800 182.213 1.212.026 1.402.039
--------- ----------- ---------- ----------
NET BOOK VALUE AT 30 NOVEMBER 1997................................. 7.385 -- -- 7.385
--------- ----------- ---------- ----------
--------- ----------- ---------- ----------
At 30 November 1996................................................ -- 142 252.505 252.647
--------- ----------- ---------- ----------
--------- ----------- ---------- ----------
</TABLE>
6 STOCK
The following are included in the net book value of stock:
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ---------
<S> <C> <C>
Raw materials and consumables........................................... 46.878 41.520
Work in progress........................................................ 198.015 320.107
--------- ---------
244.893 361.627
--------- ---------
--------- ---------
</TABLE>
7 AMOUNTS DUE FROM RELATED COMPANIES
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ----------
<S> <C> <C>
FALLING DUE WITHIN ONE YEAR:
Stolt Comex Seaway Limited.............................................. -- 906.463
Lukoil-Kaliningradmorneft plc........................................... -- 1.358.654
Stolt Comex Seaway SA................................................... 39.736 --
--------- ----------
39.736 2.265.117
--------- ----------
--------- ----------
</TABLE>
The above balances result from transactions on an arm's length basis with
related companies, in the ordinary course of business.
9
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997 (CONTINUED)
8 LOAN TO RELATED COMPANY
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ------------
<S> <C> <C>
Stolt Comex Seaway SA................................................. -- 11.148.920
--------- ------------
--------- ------------
</TABLE>
Interest is charged on the daily balance of the loan using the UK base rate
plus 1% and is repayable on demand.
9 AMOUNTS DUE TO RELATED COMPANIES
<TABLE>
<CAPTION>
1997 1996
US$ US$
---------- ----------
<S> <C> <C>
FALLING DUE WITHIN ONE YEAR:
Stolt Comex Seaway SA............................................... 1.331.165 1.319.513
Seaway Heavy Lifting Engineering BV................................. 29.360 1.806.908
Baltic Offshore Limited............................................. -- 1.354.688
Lukoil Kaliningradmorneft plc....................................... 1.562.632 --
Stolt Comex Seaway Limited.......................................... 449.114 --
---------- ----------
3.372.271 4.481.109
---------- ----------
---------- ----------
FALLING DUE AFTER ONE YEAR:
Baltic Offshore Limited............................................. 1.500.000 1.500.000
Stolt Comex Seaway SA............................................... 1.500.000 1.500.000
---------- ----------
3.000.000 3.000.000
---------- ----------
---------- ----------
</TABLE>
Interest is charged on the amounts due to related companies falling due
after one year using the UK base rate plus 1%.
The above balances result from transactions on an arm's length basis with
related companies, in the ordinary course of business.
10 OBLIGATIONS UNDER FINANCE LEASES AND HIRE PURCHASE AGREEMENTS
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ---------
<S> <C> <C>
Due within one year..................................................... -- 305.435
--------- ---------
--------- ---------
</TABLE>
11 SHARE CAPITAL
<TABLE>
<CAPTION>
1997 1996
US$ US$
--------- ---------
<S> <C> <C>
AUTHORISED, ISSUED AND FULLY PAID
1 000 ordinary shares of CL1 each--CL1.000................................... 2.178 2.178
--------- ---------
--------- ---------
</TABLE>
10
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997 (CONTINUED)
12 (A) RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH FLOWS FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1997 1996
US$ US$
------------ -----------
<S> <C> <C>
Profit before taxation............................................ 7.435.203 6.106.356
Depreciation charges.............................................. 260.447 436.942
Interest payable and bank charges................................. 294.257 293.586
Interest receivable............................................... (706.362) (533.766)
------------ -----------
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES................... 7.283.545 6.303.118
Decrease in stocks................................................ 116.734 6.865
Movement in amounts due from/to related companies................. 12.265.463 (2.475.805)
(Decrease)/Increase in accruals and deferred income excluding
interest........................................................ (2.680.699) 1.480.505
(Decrease)/Increase in creditors.................................. (615.705) 411.887
Decrease in debtors excluding interest............................ 2.710.456 1.573.060
------------ -----------
CASH GENERATED FROM OPERATIONS.................................... 19.079.794 7.299.630
------------ -----------
------------ -----------
</TABLE>
(B) ANALYSIS OF CHANGES IN FINANCING DURING THE PERIOD
<TABLE>
<CAPTION>
LOANS AND
FINANCE
SHARE LEASE
CAPITAL OBLIGATIONS
US$ US$
----------- ------------
<S> <C> <C>
Balance at beginning of the year....................................... 2.178 305.435
Capital element of finance lease repayments............................ -- (305.435)
----- ------------
Balance at end of year................................................. 2.178 --
----- ------------
----- ------------
</TABLE>
13 CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash flow statement comprise the
following amounts:
<TABLE>
<CAPTION>
1997 1996
US$ US$
------------ ---------
<S> <C> <C>
Bank balance at 30 November 1997...................................... 15.595.341 53.931
------------ ---------
------------ ---------
</TABLE>
14 DIVIDENDS
<TABLE>
<CAPTION>
1997 1996
US$ US$
---------- ----------
<S> <C> <C>
Interim dividend (1996--US$3.000 per share)......................... -- 3.000.000
Proposed final dividend of US$7.000 per share (1996:
US$2.809,357)..................................................... 7.000.000 2.809.357
---------- ----------
7.000.000 5.809.357
---------- ----------
---------- ----------
</TABLE>
11
<PAGE>
SEAWAY HEAVY LIFTING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 1997 (CONTINUED)
15 GUARANTEES AND OTHER FINANCIAL COMMITMENTS
(a) CAPITAL COMMITMENTS
There are no capital commitments at the end of the year.
(b) CONTINGENT LIABILITIES
There are no contingent liabilities at the end of the year.
16 RELATED PARTY TRANSACTIONS
The company's sales to related companies during the year amounted to 51% of
total sales. Also 34% of cost of sales relate to expenses which were charged to
the company from related companies.
Since 1992 the company has time chartered the heavy lifting support ship
Stanislav Yudin from the Russian owner Lukoil-Kaliningradmorneft plc. In 1997
the charterhire was US$3,96 million. The charterparty has been extended until
October 1998. A proposal has been put to the ship owner to further extend the
charterparty beyond this date but no firm decision has been taken yet.
Auditors' report page 3.
SEAWAY HEAVY LIFTING LIMITED
ADDITIONAL INFORMATION TO THE PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 NOVEMBER 1997
<TABLE>
<CAPTION>
1997 1996
US$ US$
------------ ------------
<S> <C> <C>
COST OF SALES
Project expenses...................................................................... 18.829.890 31.001.943
Vessel charter........................................................................ 3.960.000 3.960.000
Other operating expenses.............................................................. 4.140.911 4.736.815
Depreciation.......................................................................... 260.447 436.942
------------ ------------
27.191.248 40.135.700
------------ ------------
------------ ------------
GENERAL AND ADMINISTRATION EXPENSES
Personnel............................................................................. 1.138.980 1.277.779
Administration and office supplies.................................................... 468.132 414.363
Travel and entertainment.............................................................. 250.786 141.023
Insurance............................................................................. 9.150 17.420
Fees, commissions and supplies........................................................ 2.544.784 2.549.555
Repairs and maintenance............................................................... 9.826 7.719
Training and development.............................................................. 20.203 44.319
Telephones, telexes and facsimiles.................................................... 83.307 112.638
Sub-contracting....................................................................... 217.139 229.294
------------ ------------
4.742.307 4.794.110
------------ ------------
------------ ------------
</TABLE>
12
<PAGE>
Seaway Heavy Lifting Limited
Financial statements
for the year ended 30 November 1996
<PAGE>
Seaway Heavy Lifting Limited
Report and financial statements
for the year ended 30 November 1996
Contents
<TABLE>
<CAPTION>
Pages
<S> <C>
Directors and advisers 1
Directors' report 2
Auditors' report 3
Profit and loss account 4
Balance sheet 5
Cash flow statement 6
Notes to the financial statements 7 - 12
Additional information to the profit and loss account 13
</TABLE>
<PAGE>
Seaway Heavy Lifting Limited
Directors and advisers
Directors Registered office
Gilles de Naurois 284 Arch Makarios III Avenue
Oleg Strashnov Fortuna Court,
Agis Agapiou Block B, 2nd Floor
Chris Georgiades CY-3105 Limassol
Cyprus
Alternate Directors Auditors
Johan Rasmussen Coopers & Lybrand
(for Gilles de Naurois) Nora Court
Guennady Sobolev 86 Athinon Street
(for Oleg Strashnov) CY-3040 Limassol
Joseph Christou P O Box 3034
(for Agis Agapiou) CY-3300 Limassol
Pambos Papas Cyprus
(for Chris Georgiades)
Company secretary
Cyproservus Co Limited
284 Arch Makarios III Avenue
Fortuna Court, Block B
3rd Floor, Flat 32
CY-3105 Limassol
Cyprus
1
<PAGE>
Seaway Heavy Lifting Limited
Directors' report
for the year ended 30 November 1996
1 The directors present their report and audited financial statements for the
year ended 30 November 1996.
Principal activities
2 The principal activity of the company is the provision of offshore
heavylifting services.
Results
3 The profit and loss account for the year is set out on page 4.
Dividends
4 The directors have declared and recommend the following dividends in
respect of the year ended 30 November 1996: US$
Ordinary dividends:
<TABLE>
<S> <C>
Interim of US$3.000 per share paid on 31 October 1996 3.000.000
Proposed final of US$2.809,357 per share 2.809.357
---------
5.809.357
---------
---------
</TABLE>
Directors
5 The directors have resigned and have been re-elected at the company's Annual
General Meeting. The directors will continue in office.
Auditors
6 The auditors, Coopers & Lybrand, have expressed their willingness to continue
in office.
By order of the board
Chris Georgiades
Director
Limassol
31 January 1997
2
<PAGE>
Seaway Heavy Lifting Limited
Report of the auditors to the members of
Seaway Heavy Lifting Limited
1 We have audited the financial statements on pages 4 to 12 and have obtained
all the information and explanations we considered necessary. 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 audit.
2 We conducted our audit in accordance with International Standards on Auditing.
These 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
3 In our opinion, proper books of account have been kept by the company and the
financial statements, which are in agreement therewith, give a true and fair
view of the state of affairs of Seaway Heavy Lifting Limited at 30 November 1996
and of its profit and cash flows for the year then ended in accordance with
International Accounting Standards and comply with the Companies Law, Chapter
113.
Coopers & Lybrand
Chartered Accountants
Limassol
31 January 1997
<PAGE>
Seaway Heavy Lifting Limited
Profit and loss account
for the year ended 30 November 1996
<TABLE>
<CAPTION>
Note 1996 1995
US$ US$
<S> <C> <C> <C>
Turnover 2 49.531.022 37.724.624
Cost of sales 40.135.700 27.684.979
---------- ----------
Gross profit 9.395.322 10.039.645
Interest receivable 533.766 481.080
---------- ----------
9.929.088 10.520.725
General and administration expenses (4.794.110) (3.800.242)
Interest payable (293.586) (326.938)
Bad debts recovered/(Provision for bad debts) 217.871 (447.603)
Foreign exchange gain/(loss) 1.047.093 (410.876)
---------- ----------
Profit before taxation 3 6.106.356 5.535.066
Taxation 4 (296.999) (249.123)
---------- ----------
Profit after taxation 5.809.357 5.285.943
Dividends paid or proposed 14 (5.809.357) (5.681.117)
---------- ----------
Retained profit/(loss) for the year - (395.174)
---------- ----------
---------- ----------
Statement of retained profits
Retained profit/(loss) for the year - (395.174)
Retained profits at 1 December - 395.174
---------- ----------
Retained profits at 30 November - -
---------- ----------
---------- ----------
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
4
<PAGE>
Seaway Heavy Lifting Limited
Balance sheet
at 30 November 1996
<TABLE>
<CAPTION>
Note 1996 1995
US$ US$
<S> <C> <C> <C>
Employment of capital
Fixed assets
Tangible assets 5 252.647 689.589
---------- ----------
Current assets
Trade debtors 3.009.669 4.107.367
Other debtors 48.136 11.216
Stocks 6 361.627 368.492
Amounts due from related companies 7 2.265.117 2.229.715
Loan to related company 8 11.148.920 7.652.551
Bank balances 53.931 1.912.697
---------- ----------
16.887.400 16.282.038
---------- ----------
Current liabilities
Trade creditors 824.141 203.039
Amounts due to related companies 9 4.481.109 3.425.143
Obligations under finance leases and
hire purchase agreements 10 305.435 333.453
Accruals 5.329.510 3.599.217
Other creditors 6.968 216.183
Taxation 381.349 272.216
Proposed dividend 2.809.357 5.681.117
---------- ----------
14.137.869 13.730.368
---------- ----------
Net current assets 2.749.531 2.551.670
---------- ----------
3.002.178 3.241.259
---------- ----------
---------- ----------
Capital employed
Share capital 11 2.178 2.178
---------- ----------
Shareholders' interest 2.178 2.178
Obligations under finance leases and
hire purchase agreements - long term 10 - 239.081
Amounts due to related companies - long term 9 3.000.000 3.000.000
Agis Agapiou )
)
)
)
)
Chris Georgiades )
---------- ----------
3.002.178 3.241.259
---------- ----------
---------- ----------
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
5
<PAGE>
Seaway Heavy Lifting Limited
Cash flow statement
for the year ended 30 November 1996
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Cash flows from operating activities (Note 12) 7.299.630 2.305.416
Taxation paid (187.866) -
--------- ---------
Net cash from operating activities 7.111.764 2.305.416
--------- ---------
Cash flows from returns on investment and
servicing of finance
Interest element of finance lease rentals (43.798) (72.491)
Interest received 21.484 6.601
--------- ---------
Net cash outflow from returns on investment
and servicing of finance (22.314) (65.890)
--------- ---------
Cash flows from financing activities
Capital element of finance lease payments (Note 12) (267.099) (326.829)
Dividends paid (8.681.117) -
--------- ---------
Net cash outflow from financing activities (8.948.216) (326.829)
--------- ---------
(Decrease)/Increase in cash and cash equivalents (1.858.766) 1.912.697
Cash and cash equivalents at beginning of year 1.912.697 -
--------- ---------
Cash and cash equivalents at end of year (Note 13) 53.931 1.912.697
--------- ---------
--------- ---------
</TABLE>
The notes on pages 7 to 12 form part of these financial statements.
Auditors' report page 3.
6
<PAGE>
Seaway Heavy Lifting Limited
Notes to the financial statements
for the year ended 30 November 1996
1 Principal accounting policies
As in the previous years, the financial statements are prepared under the
historical cost convention. The following is a summary of the most important
accounting policies used by the company.
Tangible fixed assets
All tangible fixed assets are shown at original historical cost less accumulated
depreciation. Depreciation is provided at rates calculated to write off the cost
less estimated residual value of fixed assets on a straight line basis over
their expected useful lives as follows:
Plant and machinery 3 - 5 years
Residual value is calculated on prices prevailing at the date of acquisition or
revaluation where this has taken place.
Stocks
Stocks are stated at the lower of cost and net realisable value. Costs incurred
in bringing each product to its present location and condition is based on
purchase cost on a weighted average basis. Net realisable value is based on
estimated normal selling price, less further costs expected to be incurred to
completion and disposal. Provision is made for obsolete, slow moving or
defective items where appropriate.
Taxation
Income tax payable is provided on taxable profits at the current rate of 4,25%.
Provision for deferred taxation is made at the income tax rate of 4,25%, except
where there is reasonable evidence that timing differences will not reverse.
Leases
The company enters into finance leases. Assets held under finance leases are
initially reported at the fair value of the asset, with an equivalent liability
categorised as appropriate under creditors due within or after one year. The
asset is depreciated over the shorter of the lease term and its useful economic
life. Finance charges are allocated to accounting periods over the period of the
lease to produce a constant rate of return on the outstanding balance. Rentals
are apportioned between finance charge and reduction of the liability and
allocated to cost of sales and other operating expenses as appropriate.
7
<PAGE>
Seaway Heavy Lifting Limited
Foreign currency
Normal trading activities denominated in foreign currencies are recorded in
United States Dollars at the actual exchange rates as of the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
at the year end are reported at the rates of exchange prevailing at the year
end. Any gain or loss arising from a change in exchange rates subsequent to the
date of the transaction is included as an exchange gain or loss in the profit
and loss account.
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and balances with banks.
Related companies
Related companies represent common ownership companies.
2 Turnover
Turnover represents income from the provision of offshore heavy lifting services
at invoice value.
3 Profit before taxation
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Profit is stated after charging:
Depreciation of tangible fixed assets:
- owned 2.633 32.992
- leased 434.309 242.406
Auditors' remuneration 5.500 4.000
Exchange loss - 410.876
Interest payable to related companies 209.374 232.500
Interest payable to third parties 84.212 94.438
and after crediting:
Interest receivable from related companies 512.282 474.479
Bank interest receivable 21.484 6.601
Exchange gain 1.047 -
</TABLE>
4 Taxation
The tax charge is based on the adjusted profit for the year and comprises:
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Income tax at 4,25 per cent - 1995 47.515 28.189
Income tax - provision for 1996 (11 months) 249.484 220.934
------- -------
296.999 249.123
------- -------
------- -------
</TABLE>
8
<PAGE>
Seaway Heavy Lifting Limited
5 Tangible fixed assets
<TABLE>
<CAPTION>
Plant Leased Total
and plant
machinery
US$ US$ US$
<S> <C> <C> <C>
Cost
At 1 December 1995 182.213 1.212.026 1.394.239
--------- ---------- ---------
At 30 November 1996 182.213 1.212.026 1.394.239
--------- ---------- ---------
Depreciation
At 1 December 1995 179.438 525.212 704.650
Charge for the year 2.633 434.309 436.942
--------- ---------- ---------
At 30 November 1996 182.071 959.521 1.141.592
--------- ---------- ---------
Net book value
At 30 November 1996 142 252.505 252.647
--------- --------- --------
--------- --------- --------
At 30 November 1995 2.775 686.814 689.589
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
6 Stock
The following are included in the net book value of stock:
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Raw materials and consumables 41.520 44.161
Work in progress 320.107 324.331
-------- -------
361.627 368.492
-------- -------
-------- -------
</TABLE>
9
<PAGE>
Seaway Heavy Lifting Limited
7 Amounts due from related companies
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Falling due within one year:
Stolt Comex Seaway Limited 906.463 684.233
Lukoil-Kaliningradmorneft plc 1.358.654 -
Stolt Comex Seaway SA - 1.545.482
--------- ----------
2.265.117 2.229.715
--------- ----------
--------- ----------
</TABLE>
The above balances result from transactions on an arm's length basis with
related companies, in the ordinary course of business.
8 Loan to related company
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Stolt Comex Seaway SA 11.148.920 7.652.651
---------- ----------
---------- ----------
</TABLE>
Interest is charged on the daily balance of the loan using the UK base rate plus
1% and is repayable on demand.
9 Amounts due to related companies
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Falling due within one year:
Stolt Comex Seaway SA 1.319.513 825.591
Seaway Heavy Lifting Engineering BV 1.806.908 1.543.311
Baltic Offshore Limited 1.354.688 -
Lukoil Kaliningradmorneft plc - 1.056.241
--------- ---------
4.481.109 3.425.143
--------- ---------
--------- ---------
Falling due after one year:
Baltic Offshore Limited 1.500.000 1.500.000
Stolt Comex Seaway SA 1.500.000 1.500.000
--------- ---------
3.000.000 3.000.000
--------- ---------
--------- ---------
</TABLE>
Interest is charged on the amounts due to related companies falling due after
one year using the UK base rate plus 1%.
The above balances result from transactions on an arm's length basis with
related companies, in the ordinary course of business.
10
<PAGE>
Seaway Heavy Lifting Limited
10 Obligations under finance leases and hire purchase agreements
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Due within one year 305.435 333.453
Due after one year - 239.081
--------- -------
305.435 572.534
--------- -------
--------- -------
</TABLE>
11 Share capital
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Authorised, issued and fully paid
1 000 ordinary shares of C(pound)1
each - C(pound)1.000 2.178 2.178
------ -----
------ -----
</TABLE>
12(a) Reconciliation of profit before taxation to cash flows from operating
activities
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Profit before taxation 6.106.356 5.535.066
Depreciation charges 436.942 275.398
Interest payable and similar charges 293.586 326.938
Interest receivable (533.766) (481.080)
------------- ----------
Operating profit before working capital changes 6.303.118 5.656.322
Decrease in stocks 6.865 88.836
Movement in amounts due from/to related companies (2.475.805) (3.126.542)
Increase in accruals and deferred
income excluding interest 1.480.505 2.470.934
Increase/(Decrease) in creditors 411.887 (1.045.018)
Decrease/(Increase) in debtors excluding interest 1.573.060 (1.739.116)
------------- ---------
Cash generated from operations 7.299.630 2.305.416
------------- ---------
--------- ---
</TABLE>
(b) Analysis of changes in financing during the period
<TABLE>
<CAPTION>
Share Loans and
capital finance lease
obligations
US$ US$
<S> <C> <C>
Balance at beginning of the year 2.178 572.534
Capital element of finance lease repayments - (267.099)
---------- ---------
Balance at end of year 2.178 305.435
--------- ----------
--------- ----------
</TABLE>
11
<PAGE>
Seaway Heavy Lifting Limited
13 Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement comprise the
following amounts:
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Bank balance at 30 November 1996 53.931 1.912.697
--------- ----------
--------- ---------
</TABLE>
14 Dividends
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C>
Interim dividend of US$3.000 per share 3.000.000 -
Proposed final dividend of US$2.809,357
per share (1995: US$5.681,117) 2.809.357 5.681.117
--------- ------------
5.809.357 5.681.117
--------- ---------
--------- ---------
</TABLE>
15 Guarantees and other financial commitments
(a) Capital commitments
There are no capital commitments at the end of the year.
(b) Contingent liabilities
There are no contingent liabilities at the end of the year.
16 Related party transactions
The company's sales to related companies during the year amounted to
99% of total sales. Also 40% of cost of sales relate to expenses which
were charged to the company from related companies.
Auditors' report page 3.
12
<PAGE>
Seaway Heavy Lifting Limited
Analysis of expenses
for the year ended 30 November 1996
<TABLE>
<CAPTION>
1996 1995
US$ US$
<S> <C> <C>
Cost of sales
Project expenses 31.001.943 19.700.394
Vessel charter 3.980.000 3.880.000
Other operating expenses 4.736.815 3.829.187
Depreciation 436.942 275.398
-------------- -----------
40.135.700 27.684.979
-------------- ------------
-------------- ------------
General and administration expenses
Personnel 1.277.779 993.411
Administration and office supplies 414.363 321.836
Travel and entertainment 141.023 67.755
Insurance 17.420 1.462
Fees, commissions and supplies 2.549.555 2.010.179
Repairs and maintenance 7.719 16.634
Training and development 44.319 12.526
Telephones, telexes and facsimiles 112.638 139.347
Sub-contracting 229.294 237.092
-------------- ------------
(4.794.110) (3.800.242)
---------- ----------
---------- ----------
</TABLE>
13
<PAGE>
Seaway Heavy Lifting Limited
Profit and loss account
for the year ended 30 November 1995
<TABLE>
<CAPTION>
Note 1995 1994
US$ US$
<S> <C> <C> <C>
Turnover 2 37.724.624 13.773.354
----------------- ------------------
----------------- ------------------
Profit before taxation 3 5.535.066 7.126
Taxation 4 (249.123) (8.367)
----------------- ------------------
Profit/(Loss) after taxation 5.285.943 (1.241)
Dividend proposed 12 (5.681.117) -
----------------- ------------------
----------------- ------------------
Loss for the year (395.174) (1.241)
----------------- ------------------
----------------- ------------------
Statement of retained profits
Retained profits at 1 December 395.174 396.415
Loss for the year (395.174) (1.241)
----------------- ------------------
----------------- ------------------
Retained profits at 30 November - 395.174
----------------- ------------------
----------------- ------------------
</TABLE>
The notes on pages 7 to 11 form part of these financial statements.
Auditors' report page 3.
<PAGE>
Seaway Heavy Lifting Limited
Balance sheet
at 30 November 1995
<TABLE>
<CAPTION>
Note 1995 1994
US$ US$
Employment of capital
Fixed assets
<S> <C> <C> <C>
Tangible assets 5 689.589 964.987
----------------- ------------------
Amounts due by related companies - long term 7 7.652 .551 6.542.765
----------------- ------------------
Current assets
Trade debtors 4.107.367 1.862.973
Other debtors 11.216 42.014
Stocks 6 368.492 457.328
Amounts due from related companies 7 2.229.715 1.155.256
Bank balances 1.912.697 -
----------------- ------------------
8.629.487 3..517.571
----------------- ------------------
Current liabilities
Trade creditors 203.039 410.866
Amounts due to related companies 7 3.425.143 4.367.440
Obligations under finance leases and
hire purchase agreements 8 333.453 298.587
Accruals and deferred income 3.599.217 873.836
Other creditors 216.183 1.053.374
Taxation 272.216 23.093
Proposed dividend 5.681.117 -
----------------- ------------------
13.730.368 7.027.196
----------------- ------------------
Net current liabilities (5.100.881) (3.509.625)
----------------- ------------------
----------------- ------------------
3.241.259 3.998.127
----------------- ------------------
----------------- ------------------
Capital employed
Share capital 9 2.178 2.178
Profit and loss account - 395.173
----------------- ------------------
Interests of shareholders 2.178 397.351
Obligations under finance leases and
hire purchase agreements - long term 8 239.081 600.776
Amounts due to related companies - long term 7 3.000.000 3.000.000
Agis Agapiou )Directors
Chris Georgiades )
----------------- ------------------
----------------- ------------------
3.241.259 3.998.127
----------------- ------------------
----------------- ------------------
</TABLE>
The notes on pages 7 to 11 form part of these financial statements.
<PAGE>
Seaway Heavy Lifting Limited
Cash flow statement
for the year ended 30 November 1995
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Cash flows from operating activities (Note 10) 2.305.416 331.371
----------------- ------------------
Cash flows from returns on investment and
servicing of finance
Interest element of finance lease rentals (72.491) (90.196)
Interest received 6.601 22.629
----------------- ------------------
Net cash outflow from returns on investment
and servicing of finance (65.890) (67.567)
----------------- ------------------
Cash flows from investing activities
Purchase of fixed assets - (1.697)
----------------- ------------------
Net cash used in investing activities - (1.697)
----------------- ------------------
Cash flows from financing activities
Capital element of finance lease payments (Note 10) (326.829) (262.107)
----------------- ------------------
Net cash outflow from financing activities (326.829) (262.107)
----------------- ------------------
----------------- ------------------
Increase in cash and cash equivalents (Note 11) 1.912.697 -
----------------- ------------------
----------------- ------------------
</TABLE>
The notes on pages 7 to 11 form part of these financial statements.
Auditors' report page 3.
<PAGE>
Seaway Heavy Lifting Limited
Notes to the financial statements
for the year ended 30 November 1995
1 Principal accounting policies
The financial statements are prepared under the historical cost convention. The
following is a summary of the most important accounting policies used by the
company:
Tangible fixed assets
All tangible fixed assets are shown at original historical cost less accumulated
depreciation. Depreciation is provided at rates calculated to write off the cost
less estimated residual value of fixed assets on a straight line basis over
their expected useful lives as follows:
Plant and machinery 3 - 5 years
Residual value is calculated on prices prevailing at the date of acquisition or
revaluation where this has taken place.
Stocks
Stocks are stated at the lower of cost and net realisable value. Costs incurred
in bringing each product to its present location and condition is based on
purchase cost on a weighted average basis. Net realisable value is based on
estimated normal selling price, less further costs expected to be incurred to
completion and disposal. Provision is made for obsolete, slow moving or
defective items where appropriate.
Taxation
Income tax payable is provided on taxable profits at the current rate. Deferred
taxation (which arises from differences in the timing of the recognition of
items, principally depreciation, in the accounts and by the tax authorities) has
been calculated on the liability method. Deferred taxation is provided on timing
differences which will probably reverse, at the rates of tax likely to be in
force at the time of the reversal. Deferred tax is not provided on timing
differences which, in the opinion of the directors, will probably not reverse.
Leases
The company enters into finance leases. Assets held under finance leases are
initially reported at the fair value of the asset, with an equivalent liability
categorised as appropriate under creditors due within or after one year. The
asset is depreciated over the shorter of the lease term and its useful economic
life. Finance charges are allocated to accounting periods over the period of the
lease to produce a constant rate of return on the outstanding balance. Rentals
are apportioned between finance charge and reduction of the liability and
allocated to cost of sales and other operating expenses as appropriate.
<PAGE>
Seaway Heavy Lifting Limited
Foreign currency
Normal trading activities denominated in foreign currencies are recorded in
United States Dollars at the actual exchange rates as of the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
at the year end are reported at the rates of exchange prevailing at the year
end. Any gain or loss arising from a change in exchange rates subsequent to the
date of the transaction is included as an exchange gain or loss in the profit
and loss account.
Change of reporting currency
The reporting currency of the company has been changed from Sterling Pounds to
United States Dollars using an exchange rate of STGL1 = US$1,56446 to
convert all opening balances.
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and balances with banks.
2 Turnover
Turnover represents income from the provision of offshore heavy lifting services
at invoice value.
3 Profit before taxation
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Profit is stated after charging/(crediting):
Depreciation of tangible fixed assets:
- - owned 32.992 60.596
- - leased 242.406 242.405
Auditors' remuneration 4.000 4.604
Exchange loss/(gain) 410.876 (71.033)
</TABLE>
4 Taxation
The tax charge is based on the adjusted profit for the year and comprises:
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Income tax at 4,25% per cent - 1994 28.189 8.367
Income tax - provision for 1995 (11 months) 220.934 -
----------------- ------------------
249.123 8.367
----------------- ------------------
----------------- ------------------
</TABLE>
<PAGE>
Seaway Heavy Lifting Limited
5 Tangible fixed assets
<TABLE>
<CAPTION>
Plant Leased Total
and plant
machinery
US$ US$ US$
<S> <C> <C> <C>
Cost
At 1 December 1994 182.213 1.212.026 1.394.239
----------------- ---------------- ------------------
At 30 November 1995 182.213 1.212.026 1.394.239
----------------- ---------------- ------------------
Depreciation
At 1 December 1994 146.446 282.806 429.252
Charge for the year 32.992 242.406 275.398
----------------- ---------------- ------------------
At 30 November 1995 179.438 525.212 704.650
----------------- ---------------- ------------------
Net book value
At 30 November 1995 2.775 686.814 689.589
----------------- ---------------- ------------------
----------------- ---------------- ------------------
At 30 November 1994 35.767 929.220 964.987
----------------- ---------------- ------------------
----------------- ---------------- ------------------
</TABLE>
6 Stock
The following are included in the net book value of stock:
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Raw materials and consumables 44.161 128.896
Work in progress 324.331 328.432
---------------- ------------------
368.492 457.328
---------------- ------------------
---------------- ------------------
</TABLE>
7 Amounts due from/(to) related companies
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Amounts due from related companies:
Falling due after one year 7.652.551 6.542.765
Falling due within one year 2.229.715 1.155.256
----------------- ------------------
9.882.266 7.698.021
----------------- ------------------
----------------- ------------------
Amounts due to related companies:
Falling due after one year 3.000.000 3.000.000
Falling due within one year 3.425.143 4.367.440
----------------- ------------------
6.425.143 7.367.440
----------------- ------------------
----------------- ------------------
</TABLE>
The above balances result from transactions on an arm's length basis with
related companies, in the ordinary course of business.
<PAGE>
Seaway Heavy Lifting Limited
8 Obligations under finance leases and hire purchase agreements
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Due within one year 333.453 298.587
Due after one year 239.081 600.776
----------------- ------------------
----------------- ------------------
572.534 899.363
----------------- ------------------
----------------- ------------------
</TABLE>
9 Share capital
<TABLE>
<CAPTION>
1995 1994
US$ US$
Authorised, issued and fully paid
<C> <S> <S>
1.000 ordinary shares of C(pound)1 each - C(pound)1.000 2.178 2.178
----------------- ------------------
----------------- ------------------
</TABLE>
10(a) Reconciliation of profit before taxation to net cash inflow from
operating activities
<TABLE>
<CAPTION>
1995 1994
US$ US$
<C> <S> <S>
Profit before taxation 5.535.066 7.126
Depreciation charges 275.398 303.001
Decrease/(Increase) in stocks 88.836 (30.477)
Movement in amounts due from/to related companies (3.126.542) 1.702.053
Decrease in accruals and deferred income
excluding interest 2.470.934 (2.385.523)
(Decrease)/Increase in creditors (1.045.018) 2.835.812
Interest payable and similar charges 326.938 96.854
Interest receivable (481.080) (292.488)
Increase in debtors excluding interest (1.739.116) (1.904.987)
----------------- ------------------
Net cash inflow from operating activities 2.305.416 331.371
----------------- ------------------
----------------- ------------------
(b) Analysis of changes in financing during the period
Share Loans and
capital finance lease
obligations
US$ US$
Balance at beginning of the year 2.178 899.363
Capital element of finance lease repayments - (326.829)
----------------- ------------------
Balance at end of year 2.178 572.534
----------------- ------------------
----------------- ------------------
</TABLE>
<PAGE>
Seaway Heavy Lifting Limited
11 Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement comprise the
following amounts:
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Bank balance at 30 November 1995 1.912.697 -
----------------- ------------------
----------------- ------------------
</TABLE>
12 Dividends
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Proposed dividends
US$5.681,117 per share 5.681.117 -
----------------- ------------------
----------------- ------------------
</TABLE>
13 Guarantees and other financial commitments
(a) Capital commitments
There are no capital commitments at the end of the year.
(b) Contingent liabilities
There are no contingent liabilities at the end of the year.
Auditors' report page 3.
<PAGE>
Seaway Heavy Lifting Limited
Detailed profit and loss account
for the year ended 30 November 1995
<TABLE>
<CAPTION>
1995 1994
US$ US$
<S> <C> <C>
Turnover 37.724.624 13.773.354
----------------- ------------------
Cost of sales
Project expenses 19.700.394 6.466.522
Vessel charter 3.880.000 3.082.955
Other operating expenses 3.829.187 808.599
Depreciation 275.398 303.001
----------------- ------------------
27.684.979 10.661.077
----------------- ------------------
Gross profit 10.039.645 3.112.277
----------------- ------------------
Expenditure
Personnel 993.411 709.397
Administration and office supplies 321.836 296.875
Travel and entertainment 67.755 203.995
Insurance 1.462 8.894
Fees, commissions and supplies 2.010.179 1.811.117
Repairs and maintenance 16.634 3.642
Training and development 12.526 15.868
Telephones, telexes and facsimiles 139.347 62.455
Sub-contracting 237.092 103.129
----------------- ------------------
(3.800.242) (3.215.372)
----------------- ------------------
Profit/(Loss) before financial items 6.239.403 (103.095)
Exchange loss (410.876) 71.033
Interest payable (326.938) (96.854)
Interest receivable 481.080 292.488
Bad debts provision (447.603) (156.446)
----------------- ------------------
----------------- ------------------
Profit before taxation 5.535.066 7.126
----------------- ------------------
----------------- ------------------
</TABLE>
<PAGE>
Exhibit 2.8
TRANSFIELD - STOLT COMEX SEAWAY
JOINT VENTURE
JOINT VENTURE ACCOUNTS
30 JUNE 1997
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
INDEPENDENT AUDIT REPORT TO THE JOINT VENTURE PARTIES
Scope
We have audited the financial statements of the Transfield-Stolt Comex Seaway
Joint Venture for the financial year ended 30 June 1997 as set out on pages 2 to
11 pursuant to Clause 8.1 of the Joint Venture Agreement. The Joint Venture
Manager is responsible for the financial statements. We have conducted an
independent audit of these financial statements in order to express an opinion
on them to the Joint Venture Parties.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial statements are free of
material misstatement.. Our procedures included examination, on a test basis, of
evidence supporting the amounts and other disclosures in the financial
statements, and the evaluation of accounting policies and significant accounting
estimates. These procedures have been undertaken to form an opinion as to
whether, in all material respects, the financial statements are presented fairly
in accordance with Accounting Standards and other professional reporting
requirements (Urgent Issues Group Consensus Views) so as to present a view which
is consistent with our understanding of the Joint Venture's financial position,
the results of its operations and its cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
In our opinion, the financial statements of the Transfield - Stolt Comex Seaway
Joint Venture are properly drawn up :
(a) so as to give a true and fair view of the Joint Venture's state of
affairs as at 30 June 1997 and its loss and cash flows for the
financial year ended on that date;
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
COOPERS & LYBRAND
Chartered Accountants
Mark C Turner
Partner
Perth, Western Australia
10 November 1997
1
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT BY THE MANAGER
In the opinion of the Joint Venture Management Committee:
(a) the Joint Venture accounts have been prepared in accordance with the
terms of Clause 8.1 of the Joint Venture Agreement dated 11 January
1994 and are properly drawn up in accordance with the provisions of the
Agreement so as to present fairly the financial position of the Joint
Venture as at 30 June 1997 and its loss for the year then ended; and
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement.
Representative
Joint Venture Management Committee
TRANSFIELD CONSTRUCTION PTY LTD
10 November 1997
Representative
Joint Venture Management Committee
STOLT COMEX SEAWAY AUSTRALIA PTY LTD
10 November 1997
2
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
Year Ended Year Ended
30 June 1997 30 June 1996
A $' 000 A $' 000
<S> <C> <C>
Operating (loss)/profit (228) 3,093
---- -------
Retained profits at the beginning of the financial year 747 8,654
---- -------
Total profits available for appropriation 519 11,747
Profit distributions made during the year (300) (11,000)
---- -------
Retained profits at the end of the year 219 747
---- -------
---- -------
</TABLE>
The above profit and loss account should be read in conjunction with the
accompanying notes.
3
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
BALANCE SHEET
AS AT 30 JUNE 1997
<TABLE>
<CAPTION>
Year ended Year ended
Notes 30 June 1997 30 June 1996
CURRENT ASSETS A $' 000 A $' 000
<S> <C> <C> <C>
Cash 3 296 832
Receivables 4 4 104
------- -------
Total Current Assets 300 936
------- -------
NON-CURRENT ASSETS
Plant and equipment 5 - 36
------- -------
TOTAL ASSETS 300 972
------- -------
CURRENT LIABILITIES
Creditors and borrowings 6 81 220
Provisions 7 - 5
------- -------
Total Current Liabilities 81 225
------- -------
NET ASSETS UNDER THE CONTROL
OF THE JOINT VENTURE COMMITTEE 219 747
------- -------
------- -------
JOINT VENTURE PARTIES' EQUITY
Retained profits 219 747
------- -------
TOTAL JOINT VENTURE PARTIES' EQUITY 219 747
------- -------
------- -------
Contingent liabilities 8
Capital commitments 11
</TABLE>
The above balance sheet should be read in conjunction with the accompanying
notes.
4
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT OF CASHFLOWS
YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
1997 1996
Notes A $'000 A $'000
<S> <C> <C> <C>
Cash Flows from Operating Activities
Receipts from Customers 1,124 55,399
Payments to suppliers and employees (1,418) (47,068)
------ -------
(294) 8,331
Interest received 27 175
Net cash (outflow) inflow from operating activies 12 (267) 8,506
------ -------
Cash Flows from Investing Activities
Payments for property, plant and equipment - (8)
Proceeds from sale of property, plant and equipment 31 17
------ -------
Net cash inflow from investing activies 31 9
------ -------
Cash Flows from Financing Activities
Distributions to Joint Venture Parties (300) (11,000)
------ -------
Net cash outflow from financing activities (300) (11,000)
------ -------
Net Decrease in Cash Held (536) (2,485)
Cash at the beginning of the financial year 832 3,317
------ -------
Cash at the End of the Financial Year 296 832
------ -------
------ -------
</TABLE>
The above statement of cash flows should be read in conjunction with the
accompanying notes.
5
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
1. JOINT VENTURE AGREEMENT
(a) Commencement
The Transfield - Stolt Comex Seaway Joint Venture was formed
under the Joint Venture Agreement dated 11 January 1994 between
Transfield Construction Pty Ltd and Stolt Comex Seaway Australia
Pty Ltd.
(b) The Participants
Under the terms of the Joint Venture Agreement the
participating interests of the Joint Venture Parties are equal.
(c) Current Position
At 30 June 1997 the Joint Venture has completed all its projects
including the maintenance period on the major project completed in
November 1995. There are no immediate projects in view and the
Joint Venture Management Committee have decided to leave the Joint
Venture in a dormant state until the market for its services picks
up.
2. ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance
with Accounting Standards and other mandatory professional reporting
requirements (Urgent Issues Group Consensus Views).
It has been prepared by the Joint Venture Management Committee in
accordance with the historical cost convention, for distribution to the
participants in accordance with the Joint Venture Agreement dated 11
January 1994. The accounting policies adopted are consistent with those
of the previous year.
Significant accounting policies are described below.
(a) US GAAP
In Australia, financial statements of joint ventures are
prepared in accordance with accounting standards issued by the
Australian Accounting Research Foundation ("A GAAP"). Financial
statements in the United States are prepared in accordance with
accounting principles generally accepted in the United States
("US GAAP").
These financial statements have been drawn up in compliance
with A GAAP, however, no material measurement differences have
been noted that would impact the reported financial position,
operating profit/(Loss) and cash flows if such financial
statements were prepared in accordance with US GAAP.
6
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
(b) Foreign Currency Translation
The financial statements to which these notes relate are
presented in Australian dollars ('$').
Foreign currency transactions are initially translated into
Australian currency at the rate of exchange at the date of the
transaction. At balance date, amounts payable to and by the
company in foreign currencies are translated to Australian
currency at the rates of exchange current at balance date.
Resulting exchange differences are brought to account in
determining the profit or loss for the period.
(c) Employee Entitlement
Liabilities for wages, salaries, annual leave, long service
leave, termination payments, other payments prescribed by the
contracts of employment and superannuation are measured as the
amounts unpaid at the reporting date at current pay rates in
respect of employees' service to that date.
(d) Depreciation of Plant and Equipment.
Depreciation is calculated on a diminishing value basis to write
off the net cost of each item of property, plant and equipment
over its expected useful life.
(e) Inventories
Inventories of consumable items are recorded at the lower of cost
and net realisable value.
(f) Work in Progress
Work in progress is calculated on the percentage complete basis
of each construction millstone, less progress billings at the
balance sheet date.
(g) Provision for Losses
Due provisions made in full to provide for any estimated losses
on parts of all offshore works to be completed after the end of
the current period.
(h) Income Tax
As the Joint Venture is not a separate legal entity no income
tax is payable by the Joint Venture and accordingly no provision
for income tax has been raised in this financial report. Any tax
payable is to be accounted for by each Joint Venture Party.
(i) Cash
For purposes of the statement of cash flows, cash includes
deposits at call which are readily convertible to cash on hand
and which are used in the cash management function on a
day-to-day basis, where applicable, net of outstanding bank
overdrafts.
7
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
Year ended Year ended
30 June 30 June
1997 1996
A $' 000 A $' 000
---------- ----------
<S> <C> <C>
3. CURRENT ASSETS - Cash
Cash at bank and on hand.................................. 296 832
---------- ----------
---------- ----------
4. CURRENT ASSETS - Receivables
Trade debtors - SCS Group Related......................... 2 85
Trade debtors - Transfield Group Related.................. 2 17
Other debtors............................................. - 2
---------- ----------
4 104
---------- ----------
---------- ----------
5. PLANT AND EQUIPMENT
Plant and equipment - at cost............................. - 179
Less: Accumulated depreciation............................ - 143
---------- ----------
- 36
---------- ----------
---------- ----------
6. CURRENT LIABILITIES - Creditors and Borrowings
Trade creditors - external................................ 1 28
Trade creditors - SCS Group related....................... 33 (25)
Trade creditors - Transfield Group related................ 27 19
Accrued Charges........................................... 20 198
---------- ----------
81 220
---------- ----------
---------- ----------
7. CURRENT LIABILITIES - Provisions
Payroll provisions and accruals........................... - 5
---------- ----------
- 5
---------- ----------
---------- ----------
8. CONTINGENT LIABILITIES
None
9. LEASE COMMITMENTS
There were no operating leases in place during the period or at the year end.
</TABLE>
8
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
Year ended Year ended
30 June 30 June
A $' 000 A $' 000
---------- ----------
<S> <C> <C>
10. AUDITORS REMUNERATION
Amounts due to the Auditors for the year ended 30 June 1997
Auditing the Accounts of the Joint Venture...................... 4 4
Other Services.................................................. 6 6
---------- ----------
10 10
---------- ----------
---------- ----------
11. CAPITAL COMMITMENTS
The Joint Venture had no outstanding capital commitments at the end of the
period
12. RECONCILIATION OF OPERATING (LOSS) PROFIT TO NET CASH (OUTFLOW)
INFLOW FROM OPERATING ACTIVITIES
1997 1996
$'000 $'000
---------- ----------
<S> <C> <C>
Operating (loss) profit (228) 3,093
Depreciation and amortisation 4 20
Net loss (profit) on sale of non-current assets 1 (7)
Changes in operating assets and liabilities (44) 5,400
---------- ----------
Net cash (outflow) inflow from operating activities (267) 8,506
---------- ----------
---------- ----------
</TABLE>
9
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
13. RELATED PARTIES
Joint Venture Operations
The Joint Venture was formed between Transfield Construction Pty Ltd
and Stolt Comex Seaway (Australia) Pty Ltd in 1994. The Joint Venture
is owned 50% by each of the parties, and the profits and losses arising
from the Joint Venture are distributed according to their ownership
percentages. In 1995, the Joint Venture was created with a capital
contribution by Stolt Comex Seaway (Australia) Pty Ltd in the amount of
$650,000 and an amount of $854,000 from Transfield Construction Pty Ltd
which was repaid during the first year of operations.
Managers
The following entities acted as manager of the Joint Venture during the
financial year:
Transfield Construction Pty Ltd
Stolt Comex Seaway (Australia) Pty Ltd
Other Related Parties
A Joint Venture Party, Transfield Construction Pty Ltd, has provided
construction services to the Transfield - Stolt Comex Seaway Joint
Venture for several years on commercial terms and conditions.
A Joint Venture Party, Stolt Comex Seaway (Australia) Pty Ltd, has
provided vessel services to the Transfield - Stolt Comex Seaway Joint
Venture for several years on commercial terms and conditions.
The Joint Venture has traded with other related parties as follows:
The aggregate amounts included in the determination of operating profit
before income tax that resulted from transactions with the related
parties were:
10
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1997
<TABLE>
<CAPTION>
1997 1996
A$'000 A$'000
---------- ----------
<S> <C> <C>
Fabrication and Construction Expenditure
Transfield Construction Pty Ltd.................... 48 284
Transfield Holdings Pty Ltd........................ - 23
Transfield Property Pty Ltd........................ - 56
Transfield Shipping Pty Ltd........................ - 54
Vessel and Equipment Expenditure
Stolt Comex Seaway Australia Pty Ltd............... 687 11,440
Stolt Comex Seaway SA.............................. - 263
Stolt Comex Seaway Limited......................... - 1,183
The aggregate amounts brought to account in relation to other
transactions with each of the related parties
Trade Creditors
Transfield Construction Pty Ltd.................... 27 19
Transfield Holdings Pty Ltd........................ - -
Transfield Property Pty Ltd........................ - -
Transfield Ship Building Pty Ltd................... - -
Transfield Victoria Pty Ltd........................ - -
Stolt Comex Seaway Australia Pty Ltd............... 33 (25)
Stolt Comex Seaway SA.............................. -
Stolt Comex Seaway Limited......................... -
Trade Debtors
Transfield Construction Pty Ltd.................... 2 17
Stolt Comex Seaway Australia Pty Ltd............... 2 85
Distribution to Joint Parties
Transfield Construction Pty Ltd.................... 150 5,500
Stolt Comex Seaway Australia Pty Ltd............... 150 5,500
</TABLE>
11
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY
JOINT VENTURE
JOINT VENTURE ACCOUNTS
30 JUNE 1996
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
INDEPENDENT AUDIT REPORT TO THE JOINT VENTURE PARTIES
Scope
We have audited the financial statements of the Transfield - Stolt Comex Seaway
Joint Venture for the financial year ended 30 June 1996 as set out on pages 2 to
11 pursuant to Clause 8.1 of the Joint Venture Agreement. The Joint Venture
Manager is responsible for the financial statements. We have conducted an
independent audit of these financial statements in order to express an opinion
on them to the Joint Venture Parties.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial statements are free of
material misstatement.. Our procedures included examination, on a test basis, of
evidence supporting the amounts and other disclosures in the financial
statements, and the evaluation of accounting policies and significant accounting
estimates. These procedures have been undertaken to form an opinion as to
whether, in all material respects, the financial statements are presented fairly
in accordance with Accounting Standards and other professional reporting
requirements (Urgent Issues Group Consensus Views) so as to present a view which
is consistent with our understanding of the Joint Venture's financial position,
the results of its operations and its cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
In our opinion, the financial statements of the Transfield - Stolt Comex Seaway
Joint Venture are properly drawn up :
(a) so as to give a true and fair view of the Joint Venture's state of
affairs as at 30 June 1996 and its profit and cash flows for the
financial year ended on that date;
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
COOPERS & LYBRAND
Chartered Accountants
Mark C Turner
Partner
Perth, Western Australia
10 November 1997
1
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT BY THE MANAGER
In the opinion of the Joint Venture Management Committee:
(a) the Joint Venture accounts have been prepared in accordance with the
terms of Clause 8.1 of the Joint Venture Agreement dated 11 January
1994 and are properly drawn up in accordance with the provisions of the
Agreement so as to present fairly the financial position of the Joint
Venture as at 30 June 1996 and its profit for the year then ended; and
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement.
Representative
Joint Venture Management Committee
TRANSFIELD CONSTRUCTION PTY LTD
10 November 1997
Representative
Joint Venture Management Committee
STOLT COMEX SEAWAY AUSTRALIA PTY LTD
Perth, Western Australia
10 November 1997
2
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
Year Ended Period from
30 June 1996 11 January 1994
to 30 June 1995
A $' 000 A $' 000
<S> <C> <C>
Operating profit 3,093 8,654
Retained profits at the beginning of the financial
year/period
8,654 -
---------------- -----------------
Total profits available for appropriation 11,747 8,654
Profit distributions made during the year/period (11,000) -
---------------- -----------------
Retained profits at the end of the year/period 747 8,654
---------------- -----------------
---------------- -----------------
</TABLE>
The above profit and loss account should be read in conjunction with the
accompanying notes.
3
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
BALANCE SHEET
AS AT 30 JUNE 1996
<TABLE>
<CAPTION>
Notes 30 June 1996 30 June 1995
CURRENT ASSETS A $'000 A $'000
<S> <C> <C> <C>
Cash 3 832 3,317
Receivables 4 104 6,327
Work in Progress 5 - 13,298
Inventories 6 - 658
----------------- -----------------
Total Current Assets 936 23,600
----------------- -----------------
NON-CURRENT ASSETS
Plant and equipment 7 36 58
----------------- -----------------
TOTAL ASSETS 972 23,658
----------------- -----------------
CURRENT LIABILITIES
Creditors and borrowings 8 220 14,074
Provisions 9 5 930
----------------- -----------------
Total Current Liabilities 225 15,004
----------------- -----------------
NET ASSETS UNDER THE CONTROL
OF THE JOINT VENTURE COMMITTEE 747 8,654
----------------- -----------------
----------------- -----------------
JOINT VENTURE PARTIES' EQUITY
Retained profits 747 8,654
----------------- -----------------
747 8,654
TOTAL JOINT VENTURE PARTIES' EQUITY 747 8,654
----------------- -----------------
----------------- -----------------
Contingent liabilities 10
Capital commitments 13
</TABLE>
The above balance sheet should be read in conjunction with the accompanying
notes.
4
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT OF CASHFLOWS
YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
Period from
11 January 1994
to 30
1996 June 1995
Notes A$'000 A$'000
<S> <C> <C> <C>
Cash Flows from Operating Activities
Receipts from Customers 55,399 54,801
Payments to suppliers and employees (47,068) (51,363)
-------------- ------------------
8,331 3,438
Interest received 175 82
-------------- ------------------
Net cash inflow from operating activies 14 8,506 3,520
-------------- ------------------
Cash Flows from Investing Activities
Payments for property, plant and equipment (8) (203)
Proceeds from sale of property, plant and equipment 17 -
-------------- ------------------
Net cash inflow (outflow) from investing activies 9 (203)
-------------- ------------------
Cash Flows from Financing Activities
Distributions to Joint Venture Parties (11,000) -
-------------- ------------------
Net cash outflow from financing activities (11,000) -
-------------- ------------------
Net (Decrease) Increase in Cash Held (2,485) 3,317
Cash at the beginning of the financial year 3,317 -
-------------- ------------------
-------------- ------------------
Cash at the End of the Financial Year 832 3,317
-------------- ------------------
-------------- ------------------
</TABLE>
The above statement of cash flows should be read in conjunction with the
accompanying notes.
5
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
1. JOINT VENTURE AGREEMENT
(a) Commencement
The Transfield - Stolt Comex Seaway Joint Venture was formed under
the Joint Venture Agreement dated 11 January 1994 between
Transfield Construction Pty Ltd and Stolt Comex Seaway Australia
Pty Ltd.
(b) The Participants
Under the terms of the Joint Venture Agreement the participating
interests of the Joint Venture Parties are equal.
2. ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance
with Accounting Standards and other mandatory professional reporting
requirements (Urgent Issues Group Consensus Views).
It has been prepared by the Joint Venture Management Committee in
accordance with the historical cost convention, for distribution to the
participants in accordance with the Joint Venture Agreement dated 11
January 1994. The accounting policies adopted are consistent with those
of the previous year.
Significant accounting policies are described below.
(a) US GAAP
In Australia, financial statements of joint ventures are prepared
in accordance with accounting standards issued by the Australian
Accounting Research Foundation ("A GAAP"). Financial statements in
the United States are prepared in accordance with accounting
principles generally accepted in the United States ("US GAAP").
These financial statements have been drawn up in compliance with A
GAAP, however, no material measurement differences have been noted
that would impact the reported financial position, operating
profit or cash flows
(b) Foreign Currency Translation
The financial statements to which these notes relate are presented
in Australian dollars ($').
Foreign currency transactions are initially translated into
Australian currency at the rate of exchange at the date of the
transaction. At balance date, amounts payable to and by the
company in foreign currencies are translated to Australian
currency at the rates of exchange current at balance date.
Resulting exchange differences are brought to account in
determining the profit or loss for the period.
6
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
(c) Employee Entitlement
Liabilities for wages, salaries, annual leave, long service leave,
termination payments, other payments prescribed by the contracts
of employment and superannuation are measured as the amounts
unpaid at the reporting date at current pay rates in respect of
employees' service to that date.
(d) Depreciation of Plant and Equipment.
Depreciation is calculated on a diminishing value basis to write
off the net cost of each item of property, plant and equipment
over its expected useful life.
(e) Inventories
Inventories of consumable items are recorded at the lower of cost
and net realisable value.
(f) Work in Progress
Work in progress is calculated on the percentage complete basis of
each construction millstone, less progress billings at the balance
sheet date.
(g) Provision for Losses
Due provisions made in full to provide for any estimated losses on
parts of all offshore works to be completed after the end of the
current period.
(h) Income Tax
As the Joint Venture is not a separate legal entity no income tax
is payable by the Joint Venture and accordingly no provision for
income tax has been raised in this financial report. Any tax
payable is to be accounted for by each Joint Venture Party.
(i) Cash
For purposes of the statement of cash flows, cash includes
deposits at call which are readily convertible to cash on hand and
which are used in the cash management function on a day-to-day
basis, where applicable, net of outstanding bank overdrafts.
7
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
30 June 1996 30 June 1995
A $' 000 A $' 000
<S> <C> <C>
3. CURRENT ASSETS - Cash
Cash at bank and on hand 832 3,317
----------------- ------------------
----------------- ------------------
4. CURRENT ASSETS - Receivables
Trade debtors - External - 5,976
Trade debtors - SCS Group Related 85 234
Trade debtors - Transfield Group Related 17 14
Other debtors 2 103
----------------- ------------------
104 6,327
----------------- ------------------
----------------- ------------------
5. CURRENT ASSETS - Work in Progress
Gross amount - 74,421
Less: Progress payments billed - 61,123
----------------- ------------------
- 13,298
----------------- ------------------
----------------- ------------------
6. CURRENT ASSETS - Inventories
Fuel and gas stocks - 658
----------------- ------------------
----------------- ------------------
7. PLANT AND EQUIPMENT
Plant and equipment - at cost 179 203
Less: Accumulated depreciation 143 145
----------------- ------------------
36 58
----------------- ------------------
----------------- ------------------
8. CURRENT LIABILITIES - Creditors and Borrowings
Trade creditors - external 28 6,486
Trade creditors - SCS Group related (25) 7,178
Trade creditors - Transfield Group related 19 410
Accrued Charges 198 -
----------------- ------------------
220 14,074
----------------- ------------------
----------------- ------------------
</TABLE>
8
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
30 June 1996 30 June 1995
A $' 000 A $' 000
<S> <C> <C>
9. CURRENT LIABILITIES - Provisions
Payroll provisions and accruals 5 930
----------------- ------------------
----------------- ------------------
10. CONTINGENT LIABILITIES
The Joint Venture Principals maintain the defects liability guarantees in
their own names.
11. LEASE COMMITMENTS
There were no operating leases in place during the period or at the year
end.
12. AUDITORS REMUNERATION
Amounts due to the Auditors for the year ended 30 June 1996
Auditing the Accounts of the Joint Venture 4 4
Other Services 6 6
----------------- ------------------
10 10
----------------- ------------------
----------------- ------------------
13. CAPITAL COMMITMENTS
The Joint Venture had no outstanding capital commitments at the end of
the period
</TABLE>
9
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
14 RECONCILIATION OF OPERATING (LOSS) PROFIT TO NET CASH (OUTFLOW) INFLOW
FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1996 1995
$'000 $'000
<S> <C> <C>
Operating profit 3,093 8,654
Depreciation and amortisation 20 145
Net loss (profit) on sale of non-current assets (7) -
Changes in operating assets and liabilities 5,400 (5,279)
------------ ----------------
Net cash (outflow) inflow from operating activities 8,506 3,520
------------ ----------------
------------ ----------------
</TABLE>
15. RELATED PARTIES
Joint Venture Operations
The Joint Venture was formed between Transfield Construction Pty Ltd and
Stolt Comex Seaway (Australia) Pty Ltd in 1994. The Joint Venture is owned
50% by each of the parties, and the profits and losses arising from the
Joint Venture are distributed according to their ownership percentages. In
1995, the Joint Venture was created with a capital contribution by Stolt
Comex Seaway (Australia) Pty Ltd in the amount of $650,000 and an amount
of $854,000 from Transfield Construction Pty Ltd which was repaid during
the first year of operations.
Managers
The following entities acted as manager of the Joint Venture during the
financial year:
Transfield Construction Pty Ltd
Stolt Comex Seaway (Australia) Pty Ltd
Other Related Parties
A Joint Venture Party, Transfield Construction Pty Ltd, has provided
construction services to the Transfield - Stolt Comex Seaway Joint Venture
for several years on commercial terms and conditions.
10
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
A Joint Venture Party, Stolt Comex Seaway (Australia) Pty Ltd, has
provided vessel services to the Transfield - Stolt Comex Seaway Joint
Venture for several years on commercial terms and conditions.
The Joint Venture has traded with other related parties as follows:
The aggregate amounts included in the determination of operating profit
before income tax that resulted from transactions with the related parties
were:
<TABLE>
<CAPTION>
1996 1995
A$'000 A$'000
<S> <C> <C>
Fabrication and Construction Expenditure
Transfield Construction Pty Ltd 284 1,214
Transfield Holdings Pty Ltd 23 -
Transfield Property Pty Ltd 56 19
Transfield Shipping Pty Ltd 54 26
Vessel and Equipment Expenditure
Stolt Comex Seaway Australia Pty Ltd 11,440 9,503
Stolt Comex Seaway SA 263 3,907
Stolt Comex Seaway Limited 1,183 1,966
The aggregate amounts brought to account in relation to other
transactions with each of the related parties
Trade Creditors
Transfield Construction Pty Ltd 19 372
Transfield Property Pty Ltd - 21
Transfield Ship Building Pty Ltd - 16
Stolt Comex Seaway Australia Pty Ltd (25) 4,780
Stolt Comex Seaway SA - 1,875
Stolt Comex Seaway Limited - 523
Trade Debtors
Transfield Construction Pty Ltd 17 14
Stolt Comex Seaway Australia Pty Ltd 85 234
Distribution to Joint Parties
Transfield Construction Pty Ltd 5,500 -
Stolt Comex Seaway Australia Pty Ltd 5,500 -
</TABLE>
11
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY
JOINT VENTURE
JOINT VENTURE ACCOUNTS
30 JUNE 1995
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
INDEPENDENT AUDIT REPORT TO THE JOINT VENTURE PARTIES
Scope
We have audited the financial statements of the Transfield - Stolt Comex Seaway
Joint Venture for the period ended 30 June 1995 as set out on pages 2 to 11
pursuant to Clause 8.1 of the Joint Venture Agreement. The Joint Venture Manager
is responsible for the financial statements. We have conducted an independent
audit of these financial statements in order to express an opinion on them to
the Joint Venture Parties.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial statements are free of
material misstatement. Our procedures included examination, on a test basis, of
evidence supporting the amounts and other disclosures in the financial
statements, and the evaluation of accounting policies and significant accounting
estimates. These procedures have been undertaken to form an opinion as to
whether, in all material respects, the financial statements are presented fairly
in accordance with Accounting Standards and other professional reporting
requirements (Urgent Issues Group Consensus Views) so as to present a view which
is consistent with our understanding of the Joint Venture's financial position,
the results of its operations and its cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
In our opinion, the financial statements of the Transfield - Stolt Comex Seaway
Joint Venture are properly drawn up :
(a) so as to give a true and fair view of the Joint Venture's state of
affairs as at 30 June 1995 and its profit and cash flows for the period
ended on that date;
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
COOPERS & LYBRAND
Chartered Accountants
Mark C Turner
Partner
Perth, Western Australia
10 November 1997
1
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT BY THE MANAGER
In the opinion of the Joint Venture Management Committee:
(a) the Joint Venture accounts have been prepared in accordance with the
terms of Clause 8.1 of the Joint Venture Agreement dated 11 January
1994 and are properly drawn up in accordance with the provisions of the
Agreement so as to present fairly the financial position of the Joint
Venture as at 30 June 1995 and its profit for the period then ended;
and
(b) the accounting records of the Joint Venture have been properly
maintained in accordance with the requirements of the Joint Venture
Agreement.
Representative
Joint Venture Management Committee
TRANSFIELD CONSTRUCTION PTY LTD
10 November 1997
Representative
Joint Venture Management Committee
STOLT COMEX SEAWAY AUSTRALIA PTY LTD
Perth, Western Australia
10 November 1997
2
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995
A$' 000
<S> <C>
Operating profit 8,654
-----
Total profits available for appropriation 8,654
Profit distributions made during the period -
-----
Retained profits at the end of the period 8,654
-----
-----
</TABLE>
The above profit and loss account should be read in conjunction with the
accompanying notes.
The accounts are for the period 11 January 1994 to 30 June 1995
3
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
BALANCE SHEET
AS AT 30 JUNE 1995
<TABLE>
<CAPTION>
Notes 1995
A$'000
<S> <C> <C>
CURRENT ASSETS
Cash 3 3,317
Receivables 4 6,327
Work in Progress 5 13,298
Inventories 6 658
- ---
Total Current Assets 23,600
------
NON-CURRENT ASSETS
Plant and equipment 7 58
- --
Total Non-current Assets 58
--
TOTAL ASSETS 23,658
------
CURRENT LIABILITIES
Creditors and borrowings 8 14,074
Provisions 9 930
- ---
Total Current Liabilities 15,004
------
NET ASSETS UNDER THE CONTROL
OF THE JOINT VENTURE COMMITTEE 8,654
-----
-----
JOINT VENTURE PARTIES' EQUITY
Retained profits 8,654
-----
8,654
TOTAL JOINT VENTURE PARTIES' EQUITY 8,654
-----
-----
Contingent liabilities 10
Capital commitments 14
</TABLE>
The above balance sheet should be read in conjunction with the accompanying
notes.
4
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
STATEMENT OF CASHFLOWS
PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995
Notes A$'000
<S> <C> <C>
Cash Flows from Operating Activities
Receipts from Customers 54,801
Payments to suppliers and employees (51,363)
-------
3,438
Interest received 82
--
Net cash inflow from operating activies 15 3,520
-- -----
Cash Flows from Investing Activities
Proceeds from sale of property, plant and equipment (203)
----
Net cash outflow from investing activies (203)
----
Net Increase in Cash Held 3,317
Cash at the beginning of the financial period -
-----
Cash at the End of the Financial Period 3,317
-----
-----
</TABLE>
The above statement of cash flows should be read in conjunction with the
accompanying notes.
5
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
1. JOINT VENTURE AGREEMENT
(a) Commencement
The Transfield - Stolt Comex Seaway Joint Venture was formed under
the Joint Venture Agreement dated 11 January 1994 between
Transfield Construction Pty Ltd and Stolt Comex Seaway Australia
Pty Ltd. The financial statements of the Joint Venture cover the
period 11 January 1994 to 30 June 1995.
(b) The Participants
Under the terms of the Joint Venture Agreement the participating
interests of the Joint Venture Parties are equal.
2. ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance
with Accounting Standards and other mandatory professional reporting
requirements (Urgent Issues Group Consensus Views).
It has been prepared by the Joint Venture Management Committee in
accordance with the historical cost convention, for distribution to the
participants in accordance with the Joint Venture Agreement dated 11
January 1994.
Significant accounting policies are described below.
(a) US GAAP
In Australia, financial statements of joint ventures are prepared
in accordance with accounting standards issued by the Australian
Accounting Research Foundation ("A GAAP"). Financial statements in
the United States are prepared in accordance with accounting
principles generally accepted in the United States ("US GAAP").
These financial statements have been drawn up in compliance with A
GAAP, however, no material measurement differences have been noted
that would impact the financial position, operating profit or cash
flows if such financial statements were prepared in accordance
with US GAAP.
(b) Foreign Currency Translation
The financial statements to which these notes relate are presented
in Australian dollars (`$').
Foreign currency transactions are initially translated into
Australian currency at the rate of exchange at the date of the
transaction. At balance date, amounts payable to and by the
company in foreign currencies are translated to Australian
currency at the rates of exchange current at balance date.
Resulting exchange differences are brought to account in
determining the profit or loss for the period.
6
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
(c) Employee Entitlement
Liabilities for wages, salaries, annual leave, long service leave,
termination payments, other payments prescribed by the contracts
of employment and superannuation are measured as the amounts
unpaid at the reporting date at current pay rates in respect of
employees' service to that date.
(d) Depreciation of Plant and Equipment.
Depreciation is calculated on a diminishing value basis to write
off the net cost of each item of property, plant and equipment
over its expected useful life.
(e) Inventories
Inventories of consumable items are recorded at the lower of cost
and net realisable value.
(f) Work in Progress
Work in progress is calculated on the percentage complete basis of
each construction milestone, less progress billings at the balance
sheet date.
(g) Provision for Losses
Due provisions made in full to provide for any estimated losses on
parts of all offshore works to be completed after the end of the
current period.
(h) Income Tax
As the Joint Venture is not a separate legal entity no income tax
is payable by the Joint Venture and accordingly no provision for
income tax has been raised in this financial report. Any tax
payable is to be accounted for by each Joint Venture Party.
(i) Cash
For purposes of the statement of cash flows, cash includes
deposits at call which are readily convertible to cash on hand and
which are used in the cash management function on a day-to-day
basis, where applicable, net of outstanding bank overdrafts.
7
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995
A$' 000
<S> <C>
3. CURRENT ASSETS - Cash
Cash at bank and on hand 3,317
-----
-----
4. CURRENT ASSETS - Receivables
Trade debtors 5,976
Other debtors 351
---
6,327
-----
-----
5. CURRENT ASSETS - Work in Progress
Gross amount 74,421
Less: Progress payments billed (61,123)
-------
13,298
------
------
6. CURRENT ASSETS - Inventories
Fuel and gas stocks 658
---
---
7. PLANT AND EQUIPMENT
Plant and equipment - at cost 203
Less: Accumulated depreciation 145
---
58
--
--
8. CURRENT LIABILITIES - Creditors and Borrowings
Trade creditors - external 6,486
Trade creditors - SCS Group related 7,178
Trade creditors - Transfield Group related 410
---
14,074
------
------
</TABLE>
8
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995
A$' 000
<S> <C>
9. CURRENT LIABILITIES - Provisions
Payroll provisions and accruals 930
---
---
10. CONTINGENT LIABILITIES
Estimated costs associated with workers compensation
claim 50
--
--
11. LEASE COMMITMENTS
There were no operating leases in place during the period or at the period
end.
12. RECEIVABLES AND PAYABLES DENOMINATED IN FOREIGN CURRENCIES
All such receivables and payables are either effectively hedged through
the banks of the Joint Venturers or receivables will match payables in the
relevant currencies when paid out.
13. AUDITORS REMUNERATION
Amounts due to the Auditors for the period 11 January 1994 to 30 June 1995
for:
Auditing the Accounts of the Joint Venture 6
Other Services -
----
6
-
-
</TABLE>
14. CAPITAL COMMITMENTS
The Joint Venture had no outstanding capital commitments at the end of the
period
9
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
15. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1995
A$'000
<S> <C>
Operating profit 8,654
Depreciation and amortisation 145
Change in operating assets and liabilities (5,279)
------
Net cash inflow from operating activities 3,520
-----
-----
</TABLE>
16. RELATED PARTIES
Joint Venture Operations
The Joint Venture was formed between Transfield Construction Pty Ltd and
Stolt Comex Seaway (Australia) Pty Ltd in 1994. The Joint Venture is owned
50% by each of its parties, and the profits and losses arising from the
Joint Venture are distributed according to their ownership percentage. The
Joint Venture was created with a capital contribution by Stolt Comex
Seaway (Australia) Pty Ltd in the amount of $650,000 and an amount of
$854,000 from Transfield Construction Pty Ltd which was repaid during the
first year of operations.
Managers
The following entities acted as manager of the Joint Venture during the
period:
Transfield Construction Pty Ltd
Stolt Comex Seaway (Australia) Pty Ltd
Other Related Parties
A Joint Venture Party, Transfield Construction Pty Ltd, has provided
construction services to the Transfield - Stolt Comex Seaway Joint Venture
for several years on commercial terms and conditions.
10
<PAGE>
TRANSFIELD - STOLT COMEX SEAWAY JOINT VENTURE
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED 30 JUNE 1995
A Joint Venture Party, Stolt Comex Seaway (Australia) Pty Ltd, has
provided vessel services to the Transfield - Stolt Comex Seaway Joint
Venture for several years on commercial terms and conditions.
The Joint Venture has traded with other related parties as follows:
The aggregate amounts included in the determination of operating profit
before income tax that resulted from transactions with the related parties
were:
<TABLE>
<CAPTION>
1995
A$'000
<S> <C>
Fabrication and Construction Expenditure
Transfield Construction Pty Ltd 1,214
Transfield Property Pty Ltd 19
Transfield Shipping Pty Ltd 26
Vessel and Equipment Expenditure
Stolt Comex Seaway (Australia) Pty Ltd 9,503
Stolt Comex Seaway SA 3,907
Stolt Comex Seaway Limited 1,966
The aggregate amounts brought to account in relation to other
transactions with each of the related parties:
Trade Creditors
Transfield Construction Pty Ltd 372
Transfield Property Pty Ltd 21
Transfield Ship Building Pty Ltd 16
Stolt Comex Seaway (Australia) Pty Ltd 4,780
Stolt Comex Seaway SA 1,875
Stolt Comex Seaway Limited 523
Other Debtors
Transfield Construction Pty Ltd 14
Stolt Comex Seaway (Australia) Pty Ltd 234
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STOLT COMEX
SEAWAY S.A. CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<CASH> 8,345
<SECURITIES> 0
<RECEIVABLES> 146,704
<ALLOWANCES> 2,200
<INVENTORY> 10,882
<CURRENT-ASSETS> 182,400
<PP&E> 356,249
<DEPRECIATION> 111,850
<TOTAL-ASSETS> 457,376
<CURRENT-LIABILITIES> 103,742
<BONDS> 2,174
0
0
<COMMON> 44,584
<OTHER-SE> 303,408
<TOTAL-LIABILITY-AND-EQUITY> 457,376
<SALES> 0
<TOTAL-REVENUES> 431,126
<CGS> 0
<TOTAL-COSTS> 353,361
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 137
<INTEREST-EXPENSE> 10,209
<INCOME-PRETAX> 50,139
<INCOME-TAX> 11,138
<INCOME-CONTINUING> 39,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,001
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
</TABLE>
