UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended March 31, 1997
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
________________________
Commission File Number: 0-22032
________________________
AMERICAN OILFIELD DIVERS, INC.
(Exact Name of Registrant as Specified in its Charter)
Louisiana 72-0918249
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
130 East Kaliste Saloom Road 70508
Lafayette, Louisiana (Zip Code)
(Address of Principal Executive Offices)
318/234-4590
(Registrants telephone number,
including area code)
________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13(b) or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or 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 [ ]
At May 15, 1997 there were 10,531,440 shares of common stock, no par
value, outstanding.
<PAGE>
AMERICAN OILFIELD DIVERS, INC.
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996........................ 1
Consolidated Statements of Income -
Three Months Ended March 31, 1997 and
March 31, 1996............................................ 2
Consolidated Statements of Changes in Stockholders' Equity -
Three Months Ended March 31, 1997 and
March 31, 1996............................................ 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and
March 31, 1996............................................ 4
Notes to Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K..................... 12
Signatures.................................................... 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
American Oilfield Divers, Inc.
Consolidated Balance Sheets
---------------------------
(in thousands)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,397 $ 1,322
Accounts receivable, net of allowance for
doubtful accounts of $480 and $500 18,832 20,095
Unbilled revenue 9,466 5,929
Other receivables 2,225 2,171
Inventories 4,592 4,651
Prepaid expenses 3,233 1,566
____________ ___________
Total current assets 57,745 35,734
Property, plant and equipment, net of
accumulated
depreciation of $24,286 and $22,428 43,505 43,041
Trademarks and patents, net of accumulated
amortization 8,977 9,307
Other assets, net of accumulated
amortization 5,040 4,825
____________ ___________
$115,267 $92,907
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,214 $ 9,609
Income taxes payable 1,818 1,756
Other liabilities 10,352 9,139
Short-term borrowings --- 1,306
Current portion of long-term debt 1,648 1,702
___________ ___________
Total current liabilities 18,032 23,512
Deferred tax liability 2,653 2,601
Borrowings under a line of credit agreement --- 12,450
Long-term debt, less current portion 8,071 8,459
Other liabilities 40 40
___________ ___________
Total liabilities 28,796 47,062
Stockholders' equity:
Common stock, no par value 1,807 1,373
Other stockholders' equity 84,664 44,472
___________ ___________
Total stockholders' equity 86,471 45,845
___________ ___________
$115,267 $92,907
============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
American Oilfield Divers, Inc.
Consolidated Statements of Income
----------------------------------
(in thousands, except per share data)
Three Months Ended
March 31,
__________________
(unaudited) 1997 1996
---- ----
Diving and related revenues $28,576 $19,228
------- --------
Costs and expenses:
Diving and related expenses 19,822 12,621
Selling, general and administrative
expenses 5,835 4,720
Depreciation and amortization 2,318 1,862
-------- --------
Total costs and expenses 27,975 19,203
-------- --------
Operating income 601 25
Other income (expense), net (205) 149
-------- --------
Income before income taxes 396 174
Income tax provision 170 70
-------- --------
Net income $ 226 $ 104
======== ========
Net income per share $ .03 $ .02
======== ========
Weighted average common shares outstanding 8,890 6,709
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
American Oilfield Divers, Inc.
Consolidated Statements of Changes in Stockholders' Equity
-----------------------------------------------------------
(in thousands, except share data)
<TABLE>
<CAPTION>
Foreign (Accumulated
Additional Currency Deficit)
Common Stock Paid-in Translation Retained
(unaudited) Shares Amount Capital Adjustment Earnings Total
------ ------ --------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 6,709,497 $1,360 $40,837 $(132) $ (2,510) $39,555
Adjustment to
valuation of common
stock issued in
connection with an
acquisition (52) (52)
Exercise of stock
options 24,000 2 135 137
Net effects of
translation of
foreign currency (8) (8)
Net income 104 104
____________ _________ ________ _________ __________ _________
Balance at
March 31, 1996 6,733,497 $1,362 $40,920 $(140) $ (2,406) $39,736
============ ========= ======== ========= =========== =========
Balance at
December 31, 1996 6,879,867 $1,373 $42,059 $ (98) $ 2,511 $45,845
Issuance of common
stock in a secondary
stock offering 3,128,315 379 34,871 35,250
Issuance of common
stock from
underwriter's exercise
of overallotment option 425,000 52 4,818 4,870
Exercise of stock options 35,399 3 323 326
Net effects of translation
of foreign currency (46) (46)
Net income 226 226
----------- ---------- -------- -------- ----------- -----------
Balance at
March 31, 1997 10,468,581 $1,807 $82,071 $(144) $ 2,737 $86,471
=========== ========== ======== ======== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
American Oilfield Divers, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
March 31,
-------------------
1997 1996
---- ----
(unaudited)
Net cash flows from operating
activities:
Net income 226 104
Non-cash items included in net
income:
Depreciation and amortization 2,318 1,862
Net (gain) loss on disposition of
assets --- (398)
Other (8,248) 3,783
________ ________
Net cash provided by (used
by) operating activities (5,704) 5,351
Cash flows from investing activities:
Capital expenditures (2,346) (2,286)
Proceeds from sale of assets --- 5,462
Proceeds from insurance claim --- 535
Other (331) 989
_________ _________
Net cash provided by (used by)
investing activities (2,677) 4,700
Cash flows from financing activities:
Proceeds from issuance of common
stock 40,446 136
Repayments of term debt (1,372) (500)
Net payments under line-of-credit
agreement (12,618) (7,875)
___________ __________
Net cash provided by (used by)
financing activities 26,456 (8,239)
___________ __________
Net increase in cash 18,075 1,812
Cash and cash equivalents at
beginning of period 1,322 788
__________ __________
Cash and cash equivalents at end of
period $19,397 $ 2,600
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
American Oilfield Divers, Inc.
Notes to Consolidated Financial Statements
------------------------------------------
Note 1 - Organization and Significant Accounting Principles
---------------------------------------------------
The consolidated financial statements include the accounts of American
Oilfield Divers, Inc. and its wholly-owned and majority-owned subsidiaries
(the "Company"). The Company provides undersea construction, installation,
and repair and maintenance services to the offshore oil and gas industry,
primarily in the United States Gulf of Mexico, the U.S. West Coast and
select international areas, and to inland industrial and governmental
customers. In addition, the Company manufactures and markets subsea
pipeline connectors and a patented marginal well production system to the
domestic and international oilfield industry. All material intercompany
transactions and balances have been eliminated in consolidation.
In June 1996, the Board of Directors of the Company changed the Company's
fiscal year end from October 31 to December 31 so as to report its quarterly
and annual results of operations on a comparable basis with other companies
in the oil and gas industry. As a result of this change in fiscal year end,
this quarterly report on Form 10-Q includes results of operations as of and
for the three months ended March 31, 1997 and 1996.
In February 1997, the Company completed a secondary stock offering of
3,553,315 shares of common stock which provided the Company with net
proceeds of approximately $40 million. The Company used approximately $16
million to repay borrowings outstanding under its line of credit and intends
to use the remaining proceeds for general corporate purposes, including
working capital requirements and to fund any future capital expenditures
and strategic asset acquisitions.
A description of the organization and operations of the Company, the
significant accounting policies followed, and the financial condition and
results of operations as of December 31, 1996, are contained in the audited
consolidated financial statements included in the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1996. These unaudited
first quarter financial statements should be read in conjunction with the
audited 1996 financial statements.
The unaudited financial statements at March 31, 1997 and for the three
months ended March 31, 1997 and 1996 and the notes thereto have been
prepared in accordance with generally accepted accounting principles for
interim financial information and Rule 10-01 for Regulation S-X. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair statement of the results of
operations have been included.
Operating results for interim periods are not necessarily indicative of the
results that can be expected for full fiscal years. The offshore oilfield
services industry in the Gulf of Mexico is highly seasonal as a result of
weather conditions and the timing of capital expenditures by the oil and gas
industry. Utilization of the company's dive crews and diving support vessels
("DSV") and therefore the related scope and extent of the company's offshore
diving operations are limited by winter weather conditions generally
prevailing in the Gulf of Mexico and in certain of the Company's inland
markets from December to April. Although adverse weather conditions
occurring from time to time from May through November may also adversely
affect vessel utilization and diving operations, historically, a
disproportionate amount of the Company's diving services have been performed
during the period from May through November. The Company expects a higher
concentration of its total revenues and net income to be earned during the
third (July through September) and fourth (October through December)
quarters of its fiscal year compared to the first (January through March)
and second (April through June) quarters.
Effective January 1, 1996, the Company implemented Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," (SFAS 121). This
pronouncement requires a review for impairment whenever circumstances
indicate that the carrying amount of long-lived assets, certain identifiable
intangibles and goodwill may not be recoverable through future cash flows.
In accordance with SFAS 121, the Company recognized a pre-tax charge of
$500,000 ($290,000 after tax, or $.04 per share), effective January 1, 1996.
The charge is included in depreciation and amortization in the consolidated
statement of income for the three months ended March 31, 1996.
Effective March 1,1996, the Company sold its pipelay/bury barge, the "American
Enterprise," for proceeds of $5,400,000. The gain on the sale is included in
other income in the consolidated statement of income for the three month period
ended March 31, 1996.
Note 2 - Inventories
- ---------------------
The major classes of inventories consist of the following (in thousands):
March 31, December 31,
1997 1996
---- ----
(Unaudited)
Fuel 133 152
Supplies 641 659
Work-in-process 1,730 2491
Finished goods 2,088 1,349
----- -----
$4,592 $4,651
===== =====
Note 3 - Earnings per Share
- ------------------------------
Earnings per share is calculated by dividing net income by the weighted average
number of common shares,including redeemable common shares, outstanding during
each period. Outstanding stock options are common stock equivalents but are
excluded from earnings per common share as the effect would not be materially
dilutive.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share". This Statement
replaces APB No. 15 "Earnings per Share", establishes standards for computing
and presenting earnings per share ("EPS") and is effective for the year ended
December 31, 1997. This statement is not expected to have a material effect on
the Company's reported EPS amount.
Note 4 - Commitments and Contingencies
- ----------------------------------------
Legal Matters
A large oil and gas company has instituted litigation against subsidiaries
of the Company in Edinburgh, Scotland seeking damages of approximately
U.S. $3,000,000, plus interest and costs, on the basis of allegations that
a product supplied by the subsidiaries exhibited design faults upon
installation in a North Sea pipeline. Prior to installation the product
was hydrostatically tested onshore and during the test it did not leak or
otherwise malfunction. After installation but before oil or gas flowed
through the pipeline under pressure the product was removed and replaced
by the customer against the recommendations of the Company's subsidiaries.
The product did not leak and no environmental damage is alleged. The Company
believes that the product was fully suitable for service and intends to defend
the claim vigorously, although no assurance can be given as to the ultimate
outcome of the litigation.
The Company and certain of its subsidiaries are also parties to various
routine legal proceedings primarily involving claims for personal injury
under the General Maritime Laws of the United States and the Jones Act as a
result of alleged negligence or alleged "unseaworthiness" of the Company's
vessels. While the outcome of these lawsuits cannot be predicted with
certainty, the Company believes that its insurance coverage with respect to
such claims is adequate and that the outcome of all such proceedings, even
if determined adversely, would not have a material adverse effect on its
business or financial condition or results of operations.
Insurance
Although the Company's operations involve a higher degree of risk than found
in some other service industries, management is of the opinion that it
maintains insurance at levels generally at or above industry standards
to insure itself against the normal risks of operations.
Note 5 - Subsequent Events
- --------------------------
On April 27, 1997, the Company's jackup derrick barge, the American
Intrepid, sank in the Gulf of Mexico. The Company believes its level of
insurance is adequate and, at this time, believes the loss of the vessel
will not have a material adverse effect on its financial condition or results
of operations.
During April 1997, the Company reached an agreement in principle with the owners
to acquire for cash substantially all of the assets of Contract Diving Services,
Pty. Ltd., and its affiliates, a subsea services provider based in Perth,
Western Australia. The transaction is expected to close during the second
quarter of 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following tables set forth, for the periods indicated, additional
information on the operating results of the Company in its geographic and
product markets:
Three Months Ended March 31, 1997
Inland and
Gulf International West Coast Subsea
(Unaudited) Services(1) Services(2) Services(3) Products(4) Total
---------- ------------- ------------ ------------ ------
Diving and related
revenues $13,461 $ 2,841 $ 7,789 $ 4,485 $ 28,576
Diving and
related expenses $ 9,942 $ 1,607 $ 5,837 $ 2,436 $ 19,822
Gross profit $ 3,519 $ 1,234 $ 1,952 $ 2,049 $ 8,754
Gross profit
percentage 26.1% 43.4% 25.1% 45.7% 30.6%
Three Months Ended March 31, 1996
---------------------------------
Inland and
Gulf International West Coast Subsea
(Unaudited) Services(1) Services(2) Services(3) Products(4) Total
---------- ------------- ------------ ------------ ------
Diving and
related revenues $10,804 $2,300 $4,965 $1,159 $19,228
Diving and
related expenses $ 7,688 $1,022 $3,345 $ 566 $12,621
Gross profit $ 3,116 $1,278 $1,620 $ 593 $ 6,607
Gross profit
percentage 28.8% 55.6% 32.6% 51.2% 34.4%
__________________
(1) Includes diving and related services, pipelay/bury and derrick barge
services provided by American Marine Construction, Inc. and
environmental remediation and oil spill response services provided by
American Pollution Control, Inc., all of which were performed in the
Gulf of Mexico. The pipelay/bury barge was sold effective March 1,
1996.
(2) Includes all diving and related services performed outside of the
United States and its coastal waters except for Latin America, which is
included in Inland and West Coast Services.
(3) Includes diving and related services off the U.S. West Coast provided
by American Pacific Marine, Inc. and diving and related services
provided by American Inland Divers, Inc.
(4) Includes manufacturing and marketing of Big Inch pipeline connectors
and Tarpon marginal well production systems. The three months ended
March 31, 1997 also includes manufacturing and marketing of Tarpon
Concrete Storage Systems and Hard Suits Inc. products.
The following discussion of the Company's financial condition,
results of operations, and liquidity and capital resources should be
read in conjunction with the Company's consolidated financial
statements and the notes thereto included elsewhere in this
Quarterly Report on Form 10-Q.
Results of Operations
In the first quarter ended March 31, 1997, the Company
experienced strong demand for its subsea services and related
products in spite of the fact that this period is not traditionally
associated with uniformly high activity, particularly in the Gulf of
Mexico. Revenue increased from $19.2 million in the first quarter
of 1996 to $28.6 million in the current quarter due to (i) increased
utilization of the Company's dive crews and vessels in the Gulf
Services sector; (ii) increased sales of Big Inch pipeline
connectors and tie-ins; (iii) sales of concrete storage barges
manufactured by newly-acquired Tarpon Concrete Storage Systems;
and (iv) increased demand for the Company's diving and marine
construction services in the U.S. Inland market.
However, the overall gross profit margin of 30.6% for the three
months ended March 31, 1997 was lower than the same period in 1996
due to (i) seasonally flat, year-over-year rates for the Company's
personnel and vessels, despite increasing costs in these areas; (ii)
low utilization of the jackup derrick barge American Intrepid; and
(iii) operating losses incurred at Hard Suits Inc. Losses incurred
at Hard Suits, however, were at a lower rate than the losses
incurred during the fourth quarter of 1996 when AOD acquired Hard
Suits. Management continues to implement measures to minimize these
losses going forward.
The oil and gas industry in the Gulf of Mexico has continued to
strengthen, resulting in an increase in both the demand and the day
rates charged for the Company's divers and DSVs. The improved industry
trends have also contributed to increased demand for the Company's
subsea pipeline connector products in the Gulf of Mexico. The
Company anticipates that this trend will continue as long as supply
and demand fundamentals for oil and gas and demand for infrastructure-
related projects remain strong in the Gulf of Mexico.
The Company's results of operations will generally vary from
reporting period to reporting period depending in large part on the
location and type of work being performed, the mix of the marine
services being performed, the season of the year and the job
conditions encountered. Also, weather conditions in the Gulf of
Mexico and in certain of the Company's inland markets, particularly
the winter weather conditions that are generally present from
December through April, substantially reduce the work that could
otherwise be performed by the Company's dive crews and limit the
utilization of the Company's support vessels in the Gulf of Mexico.
The Company expects winter weather patterns and other adverse
weather conditions to continue to have an adverse effect on the
Company's diving operations, both in the Gulf of Mexico and
elsewhere.
On April 27, 1997, the Company's jackup derrick barge, the
American Intrepid, sank in the Gulf of Mexico. The Company believes
its level of insurance is adequate and, at this time, believes the
loss of the vessel will not have a material adverse effect on its
financial condition or results of operations.
During April 1997, the Company reached an agreement in principle
with the owners to acquire for cash substantially all of the assets
of Contract Diving Services, Pty. Ltd., and its affiliates, a subsea
services provider based in Perth, Western Australia. The transaction
is expected to close during the second quarter or 1997.
Three Months Ended March 31, 1997 Compared to Three Months Ended
March 31, 1996
Total revenues. The Company's consolidated revenues increased
$9.4 million or 49%, from $19.2 million in the three months ended
March 31, 1996 to $28.6 million in the current quarter. Of the $9.4
million increase, (i) approximately $4.0 million was attributable
to increased diving and vessel activity in the Gulf of Mexico;
(ii) approximately $2.8 million was attributable to increased diving
activity in the Inland and West Coast Services markets; (iii)
approximately $3.3 million was due to revenue from the Company's
manufactured products; and (iv) approximately $540,000 was
attributable to increased activity of the International Services Group.
These revenue increases were offset by a revenue decrease of
approximately $1.1 million attributable to the American Enterprise,
the Company's pipelay/bury barge that was sold on March 1, 1996.
Diving and related expenses. The Company's consolidated diving
and related expenses increased $7.2 million or 57%, from $12.6
million in the three months ended March 31, 1996 to $19.8 million in
the current quarter. Of the $7.2 million increase, (i) approximately
$3.2 million was attributable to increased diving and vessel activity
in the Gulf of Mexico; (ii) approximately $2.5 million was attributable
to increased diving activity in the Inland and West Coast Services
markets; (iii) approximately $1.8 million was due to expenses
related to the Company's manufactured products; and (vi) approximately
$585,000 was attributable to increased activity of the International
Services Group. These expense increases were offset by an expense
decrease of approximately $1.0 million attributable to the American
Enterprise, the Company's pipelay/bury barge that was sold on
March 1, 1996.
Selling, general and administrative expenses. Selling,
general and administrative expenses increased 24%, or $1.1 million
to $5.8 million during the first quarter of 1997 compared to $4.7
million for the first three months of 1996. The increase was primarily
attributable to supporting higher diving and vessel activity in
the Gulf of Mexico; increased activity of the Inland and West Coast
Services group; and manufacturing operations of the Company's new Tarpon
Concrete Storage Systems and Hard Suits divisions. The remaining
increase was attributable to supporting the increased activity of the
Company's other operating groups. This increase was offset by an
overall decrease in selling, general and administrative expenses of the
Company's other groups as a result of ongoing focused cost-cutting
efforts. Although there was an overall increase in the level of
selling, general and administrative expenses during the first
quarter of fiscal 1997, selling, general and administrative
expenses, as a percentage of revenues, decreased to 20% compared to
25% for the first quarter in fiscal 1996. As previously indicated,
the increase in diving and related expenses was greater than that for
diving and related revenue due to seasonally lower rates for the
Company's personnel and vessels, low utilization of the Company's
jack up derrick barge and operating losses of Hard Suits Inc.
Depreciation and amortization. Depreciation and amortization
increased $456,000, or 24%, to $2.3 million in the first quarter of
fiscal 1997 compared to $1.9 million in the first three months of 1996.
The increase was attributable to the addition of Hard Suits Inc., and
other additions and improvements to the Company's operational and
administrative assets primarily in the Gulf Services group, offset
by a $105,000 reduction in depreciation expense of the American
Enterprise which was sold in March 1996. Depreciation and amortization
expense for the three months ended March 31, 1996 includes a
pre-tax charge of $500,000, $290,000 after tax, attributable
to the implementation of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets to be Disposed Of".
Operating income. During the three months ended March 31, 1997,
operating income was $601,000 compared to an operating income of
$25,000 for the comparable period in 1996. The positive change in
operating income was due primarily to overall increase in revenue
offset by a reduction in the Company's gross profit margin from
34.4% to 30.6% and increases in both selling, general and administrative
expense and depreciation and amortization expense.
Other income/expense. During the current quarter, other expense
(net) of $205,000 was comprised of net interest expense of $311,000,
offset by other income of $106,000. This compares to other income
(net) of $149,000 in the first three months of 1996, which was comprised
of net interest expense of $283,000 offset by a net gain on the disposal
of assets, including the sale of the American Enterprise, of $399,000 and
other income of $33,000.
Net income. As a result of the conditions discussed above, the
Company recorded net income of $226,000, or $.03 per share, in the
three months ended March 31, 1997 compared to net income of
$104,000, or $.02 per share, in the three months ended March 31, 1996.
Liquidity and Capital Resources
The Company's primary liquidity needs are, generally, to fund
working capital requirements and to make capital expenditures for
acquisitions of, and improvements to, its facilities and to its DSVs
and diving and related equipment. The Company also incurs expenses
for mobilization and project execution on an ongoing basis
throughout the course of its contracts, while collections from
customers typically do not occur until approximately ninety days
after invoicing. The Company has traditionally supported these
working capital requirements by using a combination of internally
generated funds and short-term and long-term debt.
The Company has a $15 million revolving line of credit with a
bank at the prime rate. No amounts are outstanding at March 31,
1997. At March 31, 1997 the Company has a long-term note payable
with a bank in the amount of $9,250,000 at a fixed interest rate of
7.9%. The terms of the note require monthly principal payments of
$125,000, plus interest, with a balloon payment of $3.1 million due
on May 31, 2001. This debt is secured by eleven DSVs and certain
diving equipment. Also at March 31, 1997, the Company has various
government assistance notes which are non-interest bearing, unsecured
and are payable in various installments through July 1999.
In February 1997, the Company completed a secondary stock
offering of 3,553,315 shares of common stock which provided the
Company with net proceeds of approximately $40 million. The Company
used approximately $16 million to repay borrowings outstanding under
its line of credit and intends to use the remaining proceeds for
general corporate purposes, including working capital requirements
and to fund any future capital expenditures and strategic asset
acquisitions.
The Company believes that cash flows from operations and
borrowings available under its bank credit facility will provide
sufficient funds for the next twelve to eighteen months to meet its
working capital and capital expenditure requirements and to fund any
further expansion into new geographic markets or development of new
product lines.
Net cash used by operations was $5.7 million for the three
months ended March 31, 1997 compared to $5.4 million provided by
operations in the comparable prior year period. Changes in cash
flows from operating activities are primarily due to timing
differences in cash received from customers and cash paid to
employees and suppliers.
In the most recent three month period, net cash used by
investing activities was approximately $2.7 million which consisted
of $2.3 million expended for the acquisition of and improvements to
operating assets to be used in the Company's operations. In the
prior three month period, net cash provided by investing activities
was approximately $4.7 million which consisted of $5.5 million
received from the sale of the American Enterprise and other operating
assets, and the receipt of $535,000 related to an insurance claim,
offset by $2.3 million expended for the acquisition of and improvements
to operating assets to be used in the Company's operations.
Cash flows provided by financing activities of $26.5 million in
the three months ended March 31, 1997 were primarily attributable to
proceeds of $40.4 million from the sale of stock in a secondary
offering and through the exercise of stock options offset by
payments of short-term and long-term debt totalling $14.0 million.
In the first three months of 1996, cash used by financing activities
of approximately $8.2 million was primarily attributable to net payments
of short-term and long-term debt totalling $8.4 million, offset by
proceeds from issuance of common stock totalling $136,000.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings.
A large oil and gas company has instituted litigation against subsidiaries
of the Company in Edinburgh, Scotland seeking damages of approximately
U.S. $3,000,000, plus interest and costs, on the basis of allegations that
a product supplied by the subsidiaries exhibited design faults upon
installation in a North Sea pipeline. Prior to installation the product
was hydrostatically tested onshore and during the test it did not leak or
otherwise malfunction. After installation but before oil or gas flowed
through the pipeline under pressure the product was removed and replaced
by the customer against the recommendations of the Company's subsidiaries.
The product did not leak and no environmental damage is alleged. The Company
believes that the product was fully suitable for service and intends to defend
the claim vigorously, although no assurance can be given as to the ultimate
outcome of the litigation.
The Company and certain of its subsidiaries are also parties to various
routine legal proceedings primarily involving claims for personal injury
under the General Maritime Laws of the United States and the Jones Act as a
result of alleged negligence or alleged "unseaworthiness" of the Company's
vessels. While the outcome of these lawsuits cannot be predicted with
certainty, the Company believes that its insurance coverage with respect to
such claims is adequate and that the outcome of all such proceedings, even
if determined adversely, would not have a material adverse effect on its
business or financial condition or results of operations.
Item 6.Exhibits and Reports on Form 8-K.
(a) 27.1 Financial Data Schedule.
The Company filed a Current Report on Form 8-K, dated
February 25, 1997, with respect to its earnings release for the
three months and year ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN OILFIELD DIVERS,INC.
Date: May 15, 1997 /s/ Cathy M. Green
_____________________________________
Cathy M. Green
Vice President - Finance, Chief
Financial Officer (Principal
Financial and Accounting Officer)
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROMCONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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