<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1996.
REGISTRATION NO. 333-2990
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TRICO MARINE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4424 72-1252405
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL CLASSIFICATION CODE)IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
610 PALM AVENUE
HOUMA, LOUISIANA 70364
(504) 851-3833
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
VICTOR M. PEREZ
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
TRICO MARINE SERVICES, INC.
2401 FOUNTAINVIEW DRIVE, SUITE 626
HOUSTON, TEXAS 77057
(713) 780-9926
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM B. MASTERS T. MARK KELLY
JONES, WALKER, WAECHTER, POITEVENT, VINSON & ELKINS L.L.P.
CARRERE & DENEGRE, L.L.P. 2300 FIRST CITY TOWER
201 ST. CHARLES AVENUE 1001 FANNIN STREET
NEW ORLEANS, LOUISIANA 70170 HOUSTON, TEXAS 77002
(504) 582-8000 (713) 758-2222
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value 4,025,000
$0.01 per share shares $15.00 $60,375,000 $20,820(3)
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</TABLE>
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(1) Includes an aggregate of 525,000 shares which the Underwriters have the
option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(3) The Registrant paid $17,844 of the registration fee in connection with the
filing of this Registration Statement on March 29, 1996 and Amendment No.
1 thereto on April 30, 1996.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED MAY 13, 1996
3,500,000 SHARES
[LOGO] TRICO MARINE SERVICES, INC.
COMMON STOCK
($.01 PAR VALUE)
Of the 3,500,000 shares of Common Stock, $.01 par value per share (the
"Common Stock"), of Trico Marine Services, Inc. ("Trico" or the "Company")
offered hereby, 3,000,000 shares are being sold by the Company and 500,000 by
the Selling Stockholders. See "Principal and Selling Stockholders." Prior to
this offering (the "Offering"), there has been no public market for the Common
Stock of the Company. It is currently estimated that the initial public
offering price will be between $13.00 and $15.00 per share. See "Underwriting"
for information relating to the method of determining the initial public
offering price.
The Common Stock has been approved for quotation and trading on the Nasdaq
National Market under the symbol "TMAR."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE DISCOUNTS AND PROCEEDS TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share......... $ $ $ $
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Total(3).......... $ $ $ $
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</TABLE>
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(1) See "Underwriting" for indemnification arrangements.
(2) Before deducting estimated expenses of $500,000 payable by the Company.
(3) The Company and certain of the Selling Stockholders have granted the
Underwriters a 30-day option to purchase up to an additional 262,500 and
262,500 shares of Common Stock, respectively, solely to cover over-
allotments, if any. If this option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ , and $ ,
respectively. The Company will not receive any proceeds from the over-
allotment shares sold by the Selling Stockholders. See "Underwriting" and
"Principal and Selling Stockholders."
The shares of Common Stock offered hereby are being offered by the several
Underwriters named herein, subject to prior sale and acceptance by the
Underwriters and subject to their right to reject any order in whole or in
part. It is expected that the Common Stock will be available for delivery on or
about May , 1996 at the offices of Schroder Wertheim & Co. Incorporated, New
York, New York.
SCHRODER WERTHEIM & CO.
RAYMOND JAMES & ASSOCIATES, INC.
SIMMONS & COMPANY
INTERNATIONAL
May , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and the consolidated financial statements and notes thereto appearing elsewhere
in this Prospectus. Unless the context indicates otherwise, any reference in
this Prospectus to "Trico" or the "Company" refers to Trico Marine Services,
Inc. and its predecessor, together with the consolidated subsidiaries of Trico
Marine Services, Inc. Unless otherwise indicated, all information in this
Prospectus assumes that the Underwriters' over-allotment option is not
exercised and has been adjusted to give effect to (i) a 3.0253-for-1 stock
split of Common Stock, and (ii) the conversion of approximately $7.5 million of
the Company's 9% Subordinated Notes (the "Subordinated Notes") into Common
Stock at the initial public offering price (collectively, the
"Recapitalization").
THE COMPANY
GENERAL
Trico provides a broad range of marine support services to companies in the
oil and gas industry conducting offshore exploration, production and
construction operations. The Company is a leading operator of marine support
vessels in the U.S. Gulf of Mexico (the "Gulf") and has, as a result of a
recently completed acquisition, commenced operations in Brazil. Following the
acquisition of four supply boats with a portion of the net proceeds from this
Offering, Trico will own a fleet of 51 vessels, including 20 supply boats, six
lift boats, 16 crew boats and nine line handling boats. All of Trico's vessels
are located in the Gulf with the exception of the line handling boats that
operate under long-term charters offshore Brazil. The services provided by
Trico's diversified fleet include transportation of drilling materials,
supplies and crews to offshore facilities and support for the construction,
installation, maintenance and removal of those facilities. Trico has focused on
providing high quality, responsive service while maintaining a low cost
structure. In addition, the quality of Trico's fleet and the strength of its
experienced management team have allowed the Company to develop and maintain
long-term customer relationships.
The Company is the successor to several companies formed in the 1980's by
Thomas E. Fairley and Ronald O. Palmer to own, manage and operate offshore
marine support vessels. In 1993, Messrs. Fairley and Palmer organized Trico
with Berkshire Partners LLC, a Boston-based private equity investment firm
(together with its affiliates, "Berkshire"), to acquire vessels owned by
Chrysler Capital Corporation ("Chrysler"), the majority of which were operated
by the Company. Messrs. Fairley and Palmer have over 40 years of combined
experience in the marine support services industry, during which they have been
responsible for the acquisition, construction or major refurbishment of more
than 80 vessels.
BUSINESS STRATEGY
The Company's strategy is to enhance its position as a leading supplier of
marine support services by pursuing acquisition opportunities in the Gulf and
selectively diversifying into certain international markets with additional
growth potential. The Company implements this strategy by:
Maintaining a large, diversified fleet. The size and diversity of Trico's
fleet enables the Company to provide oil and gas companies operating in the
Gulf a broad range of services, including marine support for exploration,
development, production, construction, repair operations and platform removal.
Reconfiguring and upgrading the fleet. Trico has reconfigured and upgraded
the capabilities of its vessel fleet to meet market demands for larger, better
equipped vessels. In particular, it has disposed of those vessels it considers
to be less profitable such as smaller crew boats, and upgraded certain other
vessels. In 1995, the Company completed a $6.0 million capital upgrade program
that included (i) lengthening three supply boats from 165 feet to 180 feet and
one from 165 feet to 190 feet and enhancing these boats' cargo capacity, (ii)
rebuilding
3
<PAGE>
a crew boat and (iii) drydocking and refurbishing several other vessels.
Substantial downtime was incurred in 1995 from this program, which adversely
impacted the Company's results of operations; however, the Company expects to
achieve higher day rates and utilization for these upgraded vessels in the
future. Additionally, in January 1995, Trico acquired a sixth lift boat to
further position the Company to participate in the oil and gas industry's
requirement to maintain, repair and salvage the more than 3,000 production
platforms in the Gulf.
Focusing on the Gulf of Mexico. Trico intends to maintain its current focus
on the Gulf. Levels of oil and gas exploration, development and production
activities in the Gulf have increased recently as a result of several factors,
including: (i) improvements in exploration technologies, such as computer-aided
exploration and 3-D seismic, have increased drilling success rates in the
region; (ii) improvements in subsea completion and production technologies have
led to increased deep water drilling and development; (iii) expansion of the
region's production infrastructure has improved the economics of developing
smaller oil and gas fields; and (iv) the short reserve life characteristic of
Gulf gas production which requires continuous drilling to replace reserves and
maintain production. Maintenance, repair and salvage activity related to older
production platforms and infrastructure in the shallow areas of the Gulf has
also increased, and based on the recent increase in applications for permits,
the Company also expects continued higher levels of these activities. These
higher overall activity levels have led to increased demand for the Company's
services and higher overall vessel utilization and dayrates in the Gulf.
Expanding into selected international markets. While Trico's primary market
is the Gulf, the Company seeks to expand into selected international markets
which management believes are attractive, long-term markets for the Company's
services. As part of this strategy, in March 1996 Trico acquired eight line
handling vessels and an operations facility in Brazil (the "Walker
Acquisition") and has redeployed one of its line handling vessels from the Gulf
to Brazil. These vessels operate under long-term charters for Petrobras, the
Brazilian national oil company, and support the oil offloading operations from
production facilities to tankers in the Campos Basin offshore Brazil, including
transporting supplies and materials to and between deep water platforms. In
addition, Trico has been notified by Petrobras, that subject to completing a
model tank test in accordance with the bid requirements, Trico is the
successful bidder for a contract to build and operate an advanced "small water
area twin hull" crew boat (the "SWATH vessel") for Petrobras under a five year
contract. The SWATH vessel, which would be used to transport up to 250
passengers to offshore platforms, is expected to commence operations in late
1997. The Company believes that Brazil presents an attractive long-term market
because of the Brazilian government's goal of increasing its offshore oil
production and the anticipated participation by foreign companies in its
exploration and production activities. The Company intends to pursue other
opportunities to expand its operations in this market.
Participating in the consolidation of the industry. The number of supply
boats available for service in the Gulf decreased from a peak of approximately
700 in 1985 to approximately 275 in March 1996. During the same period, the
number of companies operating supply boats of at least 150 feet in length
decreased from approximately 80 to 19. Trico's management believes that the
Company will benefit from the smaller overall supply boat fleet and
consolidation of industry competitors. Trico intends to participate in this
consolidation by pursuing fleet acquisition opportunities in the Gulf as well
as opportunistic purchases of individual vessels. As part of this strategy, in
April 1996, Trico agreed to acquire three 180 foot supply boats and one 190
foot supply boat located in the Gulf for $11.0 million. Trico expects to
complete this acquisition in May 1996 with a portion of the net proceeds from
the Offering. See "Use of Proceeds." In addition, in March 1996, Trico acquired
a 180 foot supply boat which will be available for service at the beginning of
1997 after the vessel has been refurbished and lengthened to 200 feet.
The Company also believes that legal, regulatory and economic barriers to
entry will limit the number of vessels that are capable of returning to the
Gulf from overseas markets. Although vessels may return to the Gulf from
overseas locations or from alternative uses, management believes that existing
U.S. government regulations, mobilization costs and overseas opportunities will
limit the number of such vessels for the foreseeable future.
4
<PAGE>
The Company believes that the financial flexibility provided by the Offering
will position the Company to benefit from any further consolidation of the Gulf
vessel fleet and to pursue incremental acquisitions in the Gulf. Management
believes the expansion of the Company's fleet and its capabilities, and the
recent entrance into the Brazilian market, as a result of the Walker
Acquisition, have positioned Trico to respond to improving conditions in the
offshore oil and gas industry.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered:
By the Company.............. 3,000,000 shares
By the Selling Stockholder.. 500,000 shares
Total....................... 3,500,000 shares
Common Stock outstanding after
the Offering................. 6,585,714 shares(1)
Use of proceeds............... To repay $21.6 million of indebtedness
outstanding under the Company's bank credit
facility, to acquire four supply boats for $11.0
million and to repay $6.0 million of
indebtedness outstanding under the Subordinated
Notes. The Company will not receive any of the
proceeds from the sale of common stock by the
Selling Stockholders. See "Use of Proceeds."
Nasdaq National Market symbol. TMAR
Risk factors.................. The Common Stock offered hereby involves a high
degree of risk. See "Risk Factors."
</TABLE>
- --------
(1) Gives effect to the Recapitalization (assuming an initial public offering
price of $14.00 per share), but does not include 830,512 shares of Common
Stock issuable upon exercise of outstanding options held by officers,
directors and employees. See "Management--Stock Incentive Plans."
5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth summary financial and operating data as of the
dates and for the periods indicated. The following data should be read in
conjunction with "Selected Consolidated Financial and Operating Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's consolidated financial statements and notes
thereto.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31, 1993(1)
---------------- ------------------- ----------------------------------
TWO MONTHS ENDED TEN MONTHS ENDED
1996 1995 1995 1994 DECEMBER 31, 1993 OCTOBER 28, 1993
------- ------- ------- ------- ----------------- ----------------
(FINANCIAL DATA IN THOUSANDS, EXCEPT PER SHARE
(UNAUDITED) AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues......... $ 8,384 $ 6,360 $26,698 $29,034 $ 6,145 $26,871
Direct operating
expenses
Direct labor and other
operating expenses.... 4,478 4,229 16,520 16,458 2,952 15,509
Management fees........ 209 138 468 707 90 1,002
General and
administrative........ 661 655 2,509 2,057 256 1,412
Amortization of marine
inspection costs...... 430 233 1,930 1,490 222 1,176
Other.................. 104 153 545 764 33 875
-------
Revenue less direct
operating expenses.... -- -- -- -- -- $ 6,897
=======
Depreciation........... 824 990 2,740 2,786 502
------- ------- ------- ------- --------
Operating income
(loss)................ 1,678 (38) 1,986 4,772 2,090
Interest expense....... 1,036 972 3,850 3,767 620
Amortization of
deferred financing
costs................. 102 93 381 344 60
Gain on sale of vessel. -- (56) (244) -- --
Other income, net...... (12) (30) (32) (51) --
Income tax expense
(benefit)............. 188 (346) (670) 226 564
------- ------- ------- ------- --------
Net income (loss)...... $ 364 $ (671) $(1,299) $ 486 $ 846
======= ======= ======= ======= ========
Net income (loss) per
share................. $ 0.12 $ (0.22) $ (0.43) $ 0.16 $ 0.28
======= ======= ======= ======= ========
Weighted average common
shares................ 3,051 3,049 3,051 3,010 3,020
======= ======= ======= ======= ========
PRO FORMA DATA(2):
Pro forma net
income(3)............. $ 993 $ 1,235
Pro forma net income
per share............. $ 0.15 $ 0.19
Fully diluted shares
outstanding........... 6,586 6,586
STATEMENT OF CASH FLOWS
DATA:
Net cash provided by
(used in) operating
activities............ $ 1,014 $ 2,027 $ 6,411 $ 6,666 $ (2,116)
Net cash provided by
(used in) investing
activities............ (5,054) (1,707) (6,121) 968 (45,511)
Net cash provided by
(used in) financing
activities............ 4,786 (1,080) (943) (6,059) 47,822
OTHER FINANCIAL DATA:
EBITDA(4).............. $ 2,932 $ 1,185 $ 6,656 $ 9,048 $ 2,814
OPERATING DATA:
Supply boats:
Average number of
vessels............... 16.0 16.0 16.0 16.0 16.0 16.0
180 feet and above.... 16.0 12.0 13.0 12.0 12.0 12.0
165 feet.............. -- 4.0 3.0 4.0 4.0 4.0
Average vessel
utilization rate(5)... 88% 79% 78% 77% 90% 85%
180 feet and above.... 88% 88% 89% 83% 89% 92%
165 feet.............. -- 52% 32%(6) 59% 95% 64%
Average vessel day
rate(7)............... $ 3,415 $ 2,981 $ 3,060 $ 3,057 $ 3,253 $ 2,833
Lift boats:
Average number of
vessels............... 6.0 5.7 5.9 5.0 5.0 5.0
Average vessel
utilization rate(5)... 58% 42% 45% 57% 57% 70%
Average vessel day
rate(7)............... $ 4,840 $ 4,624 $ 4,656 $ 5,017 $ 4,970 $ 4,735
Crew/line handling
boats:
Average number of
vessels............... 18.3 19.3 17.8 22.3 24.0 24.0
Average vessel
utilization rate(5)... 96% 79% 89% 82% 91% 93%
Average vessel day
rate(7)............... $ 1,530 $ 1,505 $ 1,482 $ 1,465 $ 1,500 $ 1,401
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------
ACTUAL PRO FORMA(8) AS ADJUSTED(9)
------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital, including current
maturities of long-term debt............ $ 32 $ 32 $3,282
Property and equipment, net.............. 42,555 42,555 53,555
Total assets............................. 57,553 57,553 67,803
Long-term and subordinated debt.......... 41,284 40,534 9,590
Stockholders' equity..................... 6,075 6,075 51,095
</TABLE>
- --------
(1) Reflects the historical results of operations of the Company for the two
months ended December 31, 1993 and the historical results of operations of
the vessels acquired by the Company from Chrysler on October 29, 1993, for
the ten months ended October 28, 1993. Accordingly, interest expense, other
income, net, income tax expense, depreciation and amortization and net
income are not presented for such vessels because such items would be based
on Chrysler's historical costs and borrowings and are not relevant to the
ongoing results of the Company. See Note 1 of the notes to the Company's
consolidated financial statements.
(2) Adjusted to give effect to the Recapitalization and the Offering (assuming
an initial public offering price of $14.00 per share) and the application
of the estimated net proceeds thereof as described under "Use of Proceeds,"
as if each of the foregoing had occurred on January 1, 1995 and January 1,
1996.
(3) Calculated using the Company's net income for the relevant period, as
adjusted for the assumed reduction of interest expense, net of related tax,
related to the repayment of amounts under the Bank Credit Facility and the
repayment and conversion of the Subordinated Notes. This calculation gives
no pro forma effect to the acquisition of the four supply vessels expected
to be completed with a portion of the net proceeds from the Offering or the
anticipated write-off of the Company's unamortized deferred financing costs
as a result of the replacement of the Company's existing Bank Credit
Facility with a new revolving credit facility and prepayment of outstanding
indebtedness. As a result, the Company's management believes that the pro
forma information is not indicative of operating results that would have
occurred if the Recapitalization, the Offering and the application of the
estimated net proceeds had occurred at the beginning of the relevant
periods. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(4) As used herein, EBITDA is operating income plus depreciation and
amortization of marine inspection costs. EBITDA is frequently used by
security analysts and is presented here to provide additional information
about the Company's operations. EBITDA should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flows as a better measure of the
Company's liquidity.
(5) Average utilization rates are average rates for all vessels based on a 365-
day year. Vessels are considered utilized when they are being operated or
mobilized/demobilized under contracts with customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(6) 1995 utilization of 165-foot supply boats was lower due primarily to the
Company's capital upgrade program, which resulted in approximately 500 lost
available vessel days while the vessels were being lengthened and upgraded.
(7) Average day rates are the average of revenue per day per vessel under
contract.
(8) Pro forma to reflect $750,000 principal payment under the Company's bank
credit facility in April 1996.
(9) As adjusted to give effect to the Recapitalization and the Offering
(assuming an initial public offering price of $14.00 per share), and the
application of the estimated net proceeds thereof as described under "Use
of Proceeds" and the anticipated write-off of the Company's unamortized
deferred financing costs as a result of the replacement of the Company's
existing Bank Credit Facility with a new revolving credit facility and
prepayment of outstanding indebtedness. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
7
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus.
INDUSTRY VOLATILITY; GEOGRAPHIC CONCENTRATION
The Company's operations depend on levels of activity in offshore oil and
gas exploration, development and production, particularly in the Gulf where
the majority of the Company's operations are conducted. The level of
exploration and development activity has traditionally been volatile as a
result of fluctuations in oil and gas prices and their uncertainty in the
future. A significant or prolonged reduction in oil or natural gas prices in
the future would likely depress offshore drilling and development activity and
reduce the demand for the Company's marine support services. A substantial
reduction of activity in the Gulf could have a material adverse effect on the
Company's financial condition and results of operations. See "Business--The
Industry."
COMPETITION
The Company's business is highly competitive. Competition in the marine
support services industry primarily involves factors such as (i) price,
service and reputation of vessel operators and crews, (ii) the availability of
vessels of the type and size needed by the customer and (iii) the quality of
equipment. In the Gulf, the Company competes with both large and small
companies. Certain of these competitors have significantly greater financial
resources than the Company. In addition, certain of the Company's competitors
are building new crew boats greater than 120 feet in length. Continued new
construction of crew boats by the Company's competitors could increase the
levels of competition within this vessel class. See "Business--Competition."
OPERATING RISKS AND INSURANCE
Marine support vessels are subject to operational risks such as catastrophic
marine disaster, adverse weather conditions, mechanical failure, collisions,
oil and hazardous substance spills and navigation errors. The occurrence of
any of these events may result in damage to or loss of Company vessels and
such vessels' tow or cargo or other property and injury to passengers and
personnel. Such occurrences may also result in a significant increase in
operating costs or liability to third parties. See "--Government Regulation."
The Company maintains insurance coverage against certain of these risks, which
management considers to be customary in the industry. There can be no
assurance, however, that the Company's existing insurance coverage can be
renewed at commercially reasonable rates or that such coverage will be
adequate to cover future claims that may arise. See "Business--Insurance."
GOVERNMENT REGULATION
The Company's operations are materially affected by federal, state and local
regulation, as well as certain international conventions and private industry
organizations. These regulations govern worker health and safety and the
manning, construction and operation of vessels. These organizations establish
safety criteria and are authorized to investigate vessel accidents and
recommend approved safety standards. The failure to comply with the
requirements of any of these laws or the rules or regulations of these
agencies and organizations could have a material adverse effect on the
Company. See "Business--Government Regulation."
The Company's operations also are subject to federal, state and local laws
and regulations which control the discharge of pollutants into the environment
and which otherwise relate to environmental protection. Substantial costs may
be incurred in complying with such laws and regulations, and noncompliance can
subject the Company to substantial liabilities. There can be no assurance that
such costs and liabilities will not be incurred. The Company's operations are
subject to the Outer Continental Shelf Lands Act, and regulations promulgated
thereunder, which regulate the activities of offshore service vessels, require
vessel owners and
8
<PAGE>
operators to demonstrate financial and operational responsibility and provide
for certain limitations on the liability of vessel owners and operators. The
Company's operations are also subject to the Federal Water Pollution Control
Act of 1972, as amended, which imposes strict controls against the discharge
of oil and other pollutants into surface waters within its jurisdiction. Any
hazardous substances transported by the Company are subject to regulation
under the Resource Conservation and Recovery Act and the Hazardous Materials
Transportation Act. Numerous other environmental laws and regulations also
apply to the operations of the Company, and such laws and regulations are
subject to frequent change. The Company's insurance policies provide coverage
for accidental occurrence of seepage and pollution or clean-up and containment
of the foregoing.
Any violation of such laws or regulations could result in significant
liability to the Company, and any amendment to such laws or regulations that
mandates more stringent compliance standards would likely cause an increase in
the Company's vessel maintenance expenses. See "Business--Environmental
Regulations."
SEASONALITY
Marine operations conducted in the Gulf are seasonal and depend, in part, on
weather conditions. Historically, Trico has enjoyed its highest utilization
rates during the second and third quarters, as mild weather provides favorable
conditions for offshore exploration, development and construction. Utilization
rates typically have reached their lowest levels in the first quarter, when
offshore marine activity generally declines as oil and gas companies complete
internal annual exploration budget reviews. Adverse weather conditions during
the winter months generally curtail offshore development operations and can
particularly impact lift boat utilization rates. Accordingly, the results of
any one quarter are not necessarily indicative of annual results or continuing
trends. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
AGE OF FLEET
Because of overcapacity within the marine support services industry on a
worldwide basis, there has been no significant construction of supply boats
since 1983. As of April 30, 1996, the average age of the Company's vessels
(based on the date of construction) was approximately 15 years. Management
believes that after a vessel has been in service for approximately 30 years,
repair, vessel certification and maintenance costs may become no longer
economically justifiable. There can be no assurance that the Company will be
able to maintain its fleet by extending the economic life of existing vessels
through major refurbishment or by acquiring new or used vessels. See
"Business--The Company's Fleet."
INTERNATIONAL OPERATIONS
The Company's international operations are subject to a number of risks
inherent with any business operating in foreign countries. These risks
include, among others, political instability, potential vessel seizure,
nationalization of assets, currency restrictions and exchange rate
fluctuations, import-export quotas and other forms of public and governmental
regulation, all of which are beyond the control of the Company. Historically,
the Company's operations have not been affected materially by such conditions
or events, but if the Company's international operations expand, the exposure
to these risks will also increase. Although it is impossible to predict the
nature and the likelihood of any events of these types, if such an event
should occur, it could have a material adverse effect on the Company's
financial condition and results of operations.
LIMITATIONS ON FOREIGN OWNERSHIP OF COMPANY STOCK
Under the Merchant Marine Act of 1920, as amended, if persons other than
U.S. citizens own in the aggregate in excess of 25% of the Company's
outstanding stock, the Company's U.S. flagged vessels would lose the privilege
of engaging in the transportation of merchandise in the U.S. coastwise trade.
To assure the Company's continued ability to engage in U.S. coastwise trade,
the Company's certificate of incorporation
9
<PAGE>
contains provisions designed to assure that not more than 24% of the
outstanding shares of Common Stock are owned by persons who are not U.S.
citizens. The certificate of incorporation provides that any transfer or
purported transfer of shares of Common Stock that would result in the
ownership by persons who are not U.S. citizens of more than 24% of the then
outstanding shares of Common Stock will not become effective against the
Company, and the Company has the power to deny voting and dividend rights with
respect to such shares and, at its option, to redeem such shares. See
"Business--Government Regulation" and "Description of Capital Stock--Certain
Charter and By-Law Provisions."
DEPENDENCE ON KEY PERSONNEL
The Company depends on the continued services of Thomas E. Fairley, its
Chairman of the Board and Chief Executive Officer, Ronald O. Palmer, its
Executive Vice President, Victor M. Perez, its Chief Financial Officer, and
other key management personnel. The loss of any of these persons could
adversely affect the Company's operations. See "Management."
SUBSTANTIAL CONTROL BY EXISTING STOCKHOLDERS
Upon completion of the Offering, Berkshire will beneficially own
approximately 43.0% (39.0% if the over-allotment option is exercised in full)
of the issued and outstanding shares of Common Stock, and therefore, will have
the ability to exercise substantial influence over the election of directors
and other corporate matters requiring stockholder approval. This may have the
effect of delaying, deferring or preventing a change in control of the
Company. See "Principal and Selling Stockholders."
NO PRIOR MARKET; POSSIBLE VOLATILITY OF MARKET PRICE; DILUTION
Prior to the Offering, there has been no public market for the Common Stock.
Although the Common Stock will be listed on the Nasdaq National Market, there
can be no assurance that a market for the Common Stock will develop or, if
developed, will be sustained. The initial public offering price of the Common
Stock will be determined by negotiations between the Company and the
Underwriters based upon several factors. See "Underwriting." There can be no
assurance that market prices at which the Common Stock will sell in the public
market after the Offering will not be lower than the initial public offering
price. Following the Offering, the market price of the Common Stock may
fluctuate depending on various factors, including the general economy, stock
market conditions, general trends in the oilfield services industry,
announcements by the Company or its competitors and variations in the
Company's quarterly and annual operating results. In addition, assuming an
initial public offering price of $14.00 per share, purchasers of the Common
Stock offered hereby will incur immediate dilution of $20.0 million ($6.68 per
share) in the net tangible book value of their investment. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
Following the Offering, the Company will have outstanding 6,585,714 shares
of Common Stock (excluding 830,512 shares issuable upon the exercise of
outstanding options). All of the 3,500,000 shares of Common Stock offered in
the Offering will be eligible for sale in the public market without
restriction upon completion of the Offering. All of the remaining 3,085,714
shares of Common Stock are "restricted securities" as that term is defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
In addition, the Company, each of its officers and directors and certain of
its stockholders have agreed not to sell or otherwise dispose of any of the
shares of Common Stock owned by them in the public market for a period of 180
days after the completion of the Offering without the prior consent of the
representatives of the Underwriters. As a result, commencing approximately 180
days after the completion of the Offering, substantially all of these
3,085,714 shares of Common Stock will be eligible for sale in the public
market pursuant to Rule 144. The remaining restricted shares of Common Stock
will be eligible for sale pursuant to Rule 144 thereafter. Sales of a
substantial amount of the Company's Common Stock in the public market could
adversely affect the prevailing market price for the Common Stock and could
impair the Company's ability to raise additional capital through the sale of
equity securities. See "Description of Capital Stock" and "Shares Eligible for
Future Sale."
10
<PAGE>
In connection with the Company's initial capitalization and its acquisition
of the Chrysler vessels, the Company entered into a Shareholders Agreement
(the "Shareholders Agreement") which provides certain demand and piggy-back
registration rights, on customary terms and conditions, to the Company's
existing stockholders who will hold an aggregate of 3,085,714 shares of Common
Stock after the Offering. Such registration rights are subject to certain
notice requirements, timing restrictions and volume limitations. See "Certain
Relationships and Related Transactions--Shareholders Agreement."
DIVIDENDS
The Company presently intends to retain any earnings to meet its working
capital requirements and finance the expansion of its business operations.
Therefore, the Company does not plan to pay cash dividends to its stockholders
in the foreseeable future. See "Dividend Policy."
11
<PAGE>
THE COMPANY
Trico provides a broad range of marine support services to companies in the
oil and gas industry conducting offshore exploration, production and
construction operations. The Company is a leading operator of marine support
vessels in the Gulf and has, as a result of a recently completed acquisition,
commenced operations in Brazil. Following the acquisition of four supply boats
with a portion of the net proceeds from this Offering, Trico will own a fleet
of 51 vessels, including 20 supply boats, six lift boats, 16 crew boats and
nine line handling boats. All of Trico's vessels are located in the Gulf with
the exception of the line handling boats that operate under long-term charters
offshore Brazil. The services provided by Trico's diversified fleet include
transportation of drilling materials, supplies and crews to offshore
facilities and support for the construction, installation, maintenance and
removal of those facilities. Trico has focused on providing high quality,
responsive service while maintaining a low cost structure. In addition, the
quality of Trico's fleet and the strength of its experienced management team
have allowed the Company to develop and maintain long-term customer
relationships.
The Company is the successor to several companies formed in the 1980's by
Thomas E. Fairley and Ronald O. Palmer to own, manage and operate offshore
marine support vessels. In 1993, Messrs. Fairley and Palmer organized Trico
with Berkshire to acquire vessels owned by Chrysler, the majority of which
were operated by the Company. Messrs. Fairley and Palmer have over 40 years of
combined experience in the marine support services industry, during which they
have been responsible for the acquisition, construction or major refurbishment
of more than 80 vessels. The Company's operations are conducted through its
two wholly-owned subsidiaries, Trico Marine Assets, Inc., a Delaware
corporation ("Trico Assets"), which holds title to the Company's vessels, and
Trico Marine Operators, Inc., a Louisiana corporation ("Trico Operators"),
which employs the Company's work force and operates the fleet.
The Company currently has outstanding an aggregate principal amount of
approximately $13.5 million of the Subordinated Notes, which bear interest at
9% per annum and mature on March 31, 2001. Approximately $6.0 million of the
indebtedness outstanding under the Subordinated Notes held by Berkshire and
another non-management holder will be repaid from the net proceeds of the
Offering. Berkshire and the other non-management holder have agreed to
exchange for Common Stock the remaining $6.7 million of indebtedness
outstanding under the Subordinated Notes they hold. All the Subordinated Notes
held by the Company's management and directors, totalling $804,000, will also
be exchanged for Common Stock. Such Subordinated Notes will be exchanged for a
number of shares of Common Stock equal to such aggregate principal amount,
plus any accrued and unpaid interest through April 30, 1996, divided by the
initial public offering price per share of Common Stock. Interest on the
Subordinated Notes accrued after April 30, 1996 will be paid in cash. Assuming
a $14.00 initial public offering price, Berkshire will receive approximately
467,797 of the approximately 534,411 shares received by the Company's existing
stockholders upon the conversion of their Subordinated Notes. In addition,
upon consummation of the Offering, the management agreement between the
Company and Berkshire (the "Management Agreement") will be terminated and, as
a result, the Company will no longer be required to pay an annual management
fee of approximately $200,000 to Berkshire. See "Certain Relationships and
Related Transactions--Management Agreement."
The Company is incorporated under the laws of the State of Delaware. Its
principal office is located at 610 Palm Avenue, Houma, Louisiana 70364 and its
telephone number is (504) 851-3833.
USE OF PROCEEDS
The estimated net proceeds to the Company from the Offering (assuming an
initial public offering price of $14.00 per share), after deducting the
estimated underwriting discount and offering expenses, will be approximately
$38.6 million ($41.5 million if the Underwriters' over-allotment option is
exercised in full).
The purpose of the Offering is to further strengthen the Company's financial
position and to provide it with the financial flexibility necessary to
implement its business strategy. The Company intends to use approximately
$21.6 million of the estimated net proceeds to repay a significant portion of
the indebtedness outstanding under the Amended and Restated Revolving Credit
and Term Loan Agreement (the "Bank Credit Facility") by and
12
<PAGE>
among the Company and First National Bank of Boston, Hibernia National Bank
and First National Bank of Commerce, including amounts used to finance the
Walker Acquisition ($4.2 million) and the Company's capital upgrade program
(approximately $6.0 million). The remaining net proceeds will be used to
purchase four supply boats for $11.0 million and repay approximately $6.0
million of indebtedness outstanding under the Subordinated Notes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-- Liquidity and Capital Resources," "The Company" and "Certain
Relationships and Related Transactions-- Stockholder Notes."
The Company has received a commitment from the same group of lenders to
provide a $30.0 million revolving credit facility that would replace the Bank
Credit Facility upon completion of the Offering. This new revolving facility
will be available to the Company to fund its working capital needs and to take
advantage of opportunities to acquire additional vessels as they arise. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
The Company will not receive any of the proceeds from the sale of any shares
of Common Stock sold by the Selling Stockholders. See "Principal and Selling
Stockholders" and "Underwriting."
DIVIDEND POLICY
The Company presently intends to retain its earnings to meet its working
capital requirements and finance the expansion of its business operations.
Therefore, the Company does not plan to pay cash dividends to its stockholders
in the foreseeable future. In addition, the Company's credit arrangements
contain provisions which prohibit the Company from paying dividends on its
Common Stock. The Company is also a holding company which conducts its
business through its two main subsidiaries. As a result, the Company's cash
flow and consequent ability to make dividend payments primarily depend on the
earnings of its subsidiaries and on dividends and other payments therefrom.
Any future determination to pay cash dividends will be made by the Board of
Directors in light of Company's earnings, financial position, capital
requirements, credit agreements and such other factors as the Board of
Directors deems relevant at that time. See "Risk Factors--Dividends."
13
<PAGE>
DILUTION
The net tangible book value of the Common Stock at March 31, 1996, was
approximately $2.1 million, or $0.70 per share. If the Recapitalization had
occurred as of March 31, 1996, the net tangible book value of the Common Stock
as of such date would have been $9.6 million, or $2.68 per share. After giving
effect to the Recapitalization and the Offering (at an assumed initial public
offering price of $14.00 per share) and after deducting the estimated
underwriting discount and offering expenses, the net tangible book value of
the Common Stock at March 31, 1996 would have been approximately $48.2
million, or $7.32 per share. This represents an immediate dilution in net
tangible book value to investors of $6.68 per share and an immediate increase
in net tangible book value to existing stockholders of $4.64 per share. The
following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price........................... $14.00
Net tangible book value per share at March 31, 1996(1)........ $2.68
Increase per share attributable to new investors in the
Offering..................................................... 4.64
Pro forma net tangible book value per share after the
Offering(2).................................................... 7.32
------
Dilution per share to new investors in the Offering(2).......... $ 6.68
======
</TABLE>
The following table summarizes as of March 31, 1996, on a pro forma basis,
the number of shares of Common Stock issued by the Company, the total
consideration received by the Company and the average price per share of
Common Stock paid by existing stockholders and by investors in the Offering
(at an assumed initial public offering price of $14.00 per share) before
deducting the estimated underwriting discounts and offering expenses.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(2)........ 3,085,714 50.7% $10,410,743 19.9% $ 3.37
New investors................... 3,000,000 49.3% 42,000,000 80.1% $14.00
--------- ----- ----------- -----
Total......................... 6,085,714 100.0% $52,410,743 100.0%
========= ===== =========== =====
</TABLE>
- --------
(1) Gives effect to the Recapitalization, but does not include an aggregate of
830,512 shares of Common Stock issuable upon the exercise of outstanding
options. See "Management--Stock Incentive Plans."
(2) Gives effect to the Recapitalization and the Offering, but does not
include an aggregate of 830,512 shares of Common Stock issuable upon the
exercise of outstanding options. See "Management--Stock Incentive Plans."
14
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated unaudited capitalization of
the Company at March 31, 1996, and on a pro forma basis giving effect to the
$750,000 principal payment made under the Bank Credit Facility in April 1996
and as adjusted to give effect to the Recapitalization and the sale of the
Common Stock offered hereby (at an assumed initial public offering price of
$14.00 per share) and the application of the proceeds thereof as described
under "Use of Proceeds." The information in the table should be read in
conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, including current maturities:
Bank Credit Facility
Revolving credit facility................. $ 400 $ 400 $ --
Term loan................................. 31,500 30,750 9,590
Subordinated Notes.......................... 13,384 13,384 --
------- ------- -------
Total long-term debt...................... 45,284 44,534 9,590
------- ------- -------
Stockholders' equity:
Preferred stock, $.01 par value per share;
5,000,000 shares authorized; no shares
outstanding................................ -- -- --
Common stock, $.01 par value per share;
15,000,000 shares authorized; 3,123,371
shares issued and 3,051,339 shares
outstanding (actual) and 6,657,746 shares
issued and 6,585,714 shares outstanding
(pro forma and as adjusted)(1)............. 31 31 66
Additional paid-in capital.................. 5,649 5,649 51,558
Retained earnings (deficit)................. 396 396 (528)(2)
Treasury stock (72,032 shares).............. (1) (1) (1)
------- ------- -------
Total stockholders' equity................ 6,075 6,075 51,095
------- ------- -------
Total capitalization.......................... $51,359 $50,609 $60,685
======= ======= =======
</TABLE>
- --------
(1) Gives effect to the Recapitalization and the Offering, but does not
include an aggregate of 830,512 shares of Common Stock issuable upon
exercise of outstanding options. See "Management--Stock Incentive Plans."
(2) This includes a charge for the write-off of unamortized deferred financing
costs, net of related tax, as a result of the replacement of the Company's
existing Bank Credit Facility with a new revolving credit facility and the
prepayment of outstanding indebtedness from a portion of the net proceeds
of the Offering. This charge is expected to be recognized in the quarter
ended June 30, 1996. The amount of the charge, net of related tax, is
expected to be approximately $924,000, or $0.14 per share on a pro forma,
fully-diluted basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation."
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth selected consolidated financial and operating
data for the dates and periods indicated. The financial information for each
of the years ended December 31, 1995 and 1994 and the two month period ended
December 31, 1993 and as of December 31, 1995, 1994 and 1993 is derived from
the Company's audited consolidated financial statements and notes thereto. The
selected consolidated financial data as of March 31, 1996 and 1995 and for the
three month periods then ended are derived from the unaudited consolidated
statements of the Company for such periods. In the opinion of management, the
unaudited financial statements of the Company reflect all adjustments
(consisting of only normal recurring adjustments) necessary for a fair
presentation of the financial condition and results of operations for these
periods. The financial information for the ten month period ending October 28,
1993 and each of the years ended December 31, 1992 and 1991 reflects operating
results for the vessels acquired by the Company from Chrysler in October 1993.
This information should be read in conjunction with the consolidated financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------------------------------------------------
THREE MONTHS
ENDED MARCH 31,
---------------- TWO MONTHS ENDED TEN MONTHS ENDED
1996 1995 1995 1994 DECEMBER 31, 1993(1) OCTOBER 28, 1993(1) 1992(1) 1991(1)
------- ------- ------- ------- -------------------- ------------------- ------- -------
(UNAUDITED) (FINANCIAL DATA IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues......... $ 8,384 $ 6,360 $26,698 $29,034 $ 6,145 $26,871 $17,988 $22,992
Direct operating
expenses:
Direct labor and other
operating expenses.... 4,478 4,229 16,520 16,458 2,952 15,509 12,611 13,412
Management fees........ 209 138 468 707 90 1,002 749 788
General and
administrative........ 661 655 2,509 2,057 256 1,412 1,338 1,404
Amortization of marine
inspection costs...... 430 233 1,930 1,490 222 1,176 1,099 1,041
Other.................. 104 153 545 764 33 875 367 22
------- ------- -------
Revenue less direct
operating expenses.... -- -- -- -- -- $ 6,897 $ 1,824 $ 6,325
======= ======= =======
Depreciation........... 824 990 2,740 2,786 502
------- ------- ------- ------- --------
Operating income
(loss)................ 1,678 (38) 1,986 4,772 2,090
Interest expense....... 1,036 972 3,850 3,767 620
Amortization of
deferred financing
costs................. 102 93 381 344 60
Gain on sale of vessel. -- (56) (244) -- --
Other income, net...... (12) (30) (32) (51) --
Income tax expense
(benefit)............. 188 (346) (670) 226 564
------- ------- ------- ------- --------
Net income (loss)...... $ 364 $ (671) $(1,299) $ 486 $ 846
======= ======= ======= ======= ========
Net income (loss) per
share................. $ 0.12 $ (0.22) $ (0.43) $ 0.16 $ 0.28
======= ======= ======= ======= ========
Weighted average common
shares................ 3,051 3,049 3,051 3,010 3,020
======= ======= ======= ======= ========
PRO FORMA DATA(2):
Pro forma net
income(3)............. $ 993 $ 1,235
Pro forma net income
per share............. $ 0.15 $ 0.19
Fully diluted shares
outstanding........... 6,586 6,586
STATEMENT OF CASH FLOWS
DATA:
Net cash provided by
(used in) operating
activities............ $ 1,014 $ 2,027 $ 6,411 $ 6,666 $ (2,116)
Net cash provided by
(used in) investing
activities............ (5,054) (1,707) (6,121) 968 (45,511)
Net cash provided by
(used in) financing
activities............ 4,786 (1,080) (943) (6,059) 47,822
OTHER FINANCIAL DATA:
EBITDA(4).............. $ 2,932 $ 1,185 $ 6,656 $ 9,048 $ 2,814
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH YEAR ENDED
31, DECEMBER 31, 1993(1)
-------------- ----------------- ---------------------------------
TWO MONTHS ENDED
DECEMBER 31, TEN MONTHS ENDED
1996 1995 1995 1994 1993 OCTOBER 28, 1993
------ ------ ------ ------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Supply boats:
Average number of
vessels............... 16.0 16.0 16.0 16.0 16.0 16.0
180 feet and above.... 16.0 12.0 13.0 12.0 12.0 12.0
165 feet.............. -- 4.0 3.0 4.0 4.0 4.0
Average vessel
utilization rate(5)... 88% 79% 78% 77% 90% 85%
180 feet and above.... 88% 88% 89% 83% 89% 92%
165 feet.............. -- 52% 32%(6) 59% 95% 64%
Average vessel day
rate(7)............... $3,415 $2,981 $3,060 $3,057 $3,253 $2,833
Lift boats:
Average number of
vessels............... 6.0 5.7 5.9 5.0 5.0 5.0
Average vessel
utilization rate(5)... 58% 42% 45% 57% 57% 70%
Average vessel day
rate(7)............... $4,840 $4,624 $4,656 $5,017 $4,970 $4,735
Crew/line handling
boats:
Average number of
vessels............... 18.3 19.3 17.8 22.3 23.0 24.0
Average vessel
utilization rate(5)... 96% 79% 89% 82% 91% 93%
Average vessel day
rate(7)............... $1,530 $1,505 $1,482 $1,465 $1,500 $1,401
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------------
1996 1995 1994 1993
--------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit), including
current maturities of long-term debt.... $ 32 $ (844) $ 1,550 $(2,704)
Property and equipment, net.............. 42,555 39,264 38,508 45,191
Total assets............................. 57,553 52,113 51,419 55,207
Long-term debt........................... 41,284 36,780 35,452 37,560
Stockholders' equity..................... 6,075 5,712 7,002 6,450
</TABLE>
- --------
(1) Reflects the historical results of operations of the Company for the two
months ended December 31, 1993 and the historical results of operations
for the vessels acquired by the Company from Chrysler on October 29, 1993,
for the ten months ended October 28, 1993 and each of the years ended
December 31, 1992 and 1991. Accordingly, interest expense, other income,
net, income tax expense, depreciation and amortization and net income are
not presented for such vessels because such items would be based on
Chrysler's historical cost and borrowings and are not relevant to the
ongoing results of the Company. See Note 1 to the Company's consolidated
financial statements.
(2) Adjusted to give effect to the Recapitalization and the completion of the
Offering (assuming an initial public offering price of $14.00 per share)
and the application of the estimated net proceeds thereof as described
under "Use of Proceeds," as if each of the foregoing had occurred on
January 1, 1995 and January 1, 1996.
(3) Calculated using the Company's net income for the relevant period, as
adjusted for the assumed reduction of interest expense, net of related
tax, related to the repayment of amounts under the Bank Credit Facility
and the repayment and conversion of the Subordinated Notes. This
calculation gives no pro forma effect to the acquisition of the four
supply vessels expected to be completed with a portion of the net proceeds
from the Offering or the anticipated write-off of the Company's
unamortized deferred financing costs as a result of the replacement of the
Company's existing Bank Credit Facility with a new revolving credit
facility and the prepayment of outstanding indebtedness. As a result, the
Company's management believes that the pro forma information is not
indicative of operating results that would have occurred if the
Recapitalization, the Offering and the application of the estimated net
proceeds had occurred at the beginning of the relevant periods. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(4) As used herein, EBITDA is operating income plus depreciation and
amortization of marine inspection costs. EBITDA is frequently used by
security analysts and is presented here to provide additional information
about the Company's operations. EBITDA should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flows as a better measure of the
Company's liquidity.
(5) Average utilization rates are average rates for all vessels based on a
365-day year. Vessels are considered utilized when they are being operated
or being mobilized/demobilized under contracts with customers. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operation."
(6) 1995 utilization of 165-foot supply boats was lower due primarily to the
Company's capital upgrade program, which resulted in approximately 500
lost available vessel days while the vessels were being lengthened and
upgraded.
(7) Average day rates are the average of revenue per day per vessel under
contract.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's results of operations are affected primarily by day rates and
fleet utilization. While marine support vessels service existing oil and gas
production platforms as well as exploration and development activities,
incremental demand depends primarily upon the level of drilling activity,
which in turn is related to both short-term and long-term trends in oil and
gas prices. As a result, trends in oil and gas prices may significantly affect
utilization and day rates. Due to the Company's concentration in the Gulf,
where natural gas comprises approximately 70% of oil and gas production, the
Company's activities are more affected by the price of natural gas than oil.
Generally, a decline in gas prices has led historically to a reduction in
offshore drilling and lower demand for offshore vessels. Recently, however,
this relationship has been less pronounced due to a number of industry trends,
including advances in technology that have increased drilling success rates
and efficiency, vessel attrition and a tightening of the gas market supply and
demand. In addition, over the past two years the Company has reconfigured its
fleet to more effectively service market demand and improve its profitability.
The following table sets forth (i) average U.S. natural gas prices, (ii) the
average number of offshore rigs under contract in the Gulf, (iii) vessel
utilization rates for the Company and (iv) vessel day rates for the Company
for each quarterly period through March 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1993(1) 1994 1995 1996
------------------------------ ------------------------------ ------------------------------ ------
QTR.1 QTR.2 QTR.3 QTR.4 QTR.1 QTR.2 QTR.3 QTR.4 QTR.1 QTR.2 QTR.3 QTR.4 QTR.1
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. natural gas
prices(2).............. $ 1.92 $ 2.16 $ 2.20 $ 2.21 $ 2.42 $ 1.95 $ 1.70 $ 1.60 $ 1.51 $ 1.63 $ 1.54 $ 2.06 $ 3.44
Rigs under contract in
the Gulf(3)............ 99 106 116 125 118 122 132 131 120 127 131 142 139
Average Company vessel
utilization rate(4):
Supply boats (total)... 87% 86% 87% 92% 77% 65% 79% 86% 79% 69% 75% 87% 88%
Supply boats (180 feet
and above)............ 92% 100% 95% 92% 78% 79% 88% 89% 88% 84% 86% 95% 88%
Supply boats (165
feet)(5).............. 70% 48% 67% 93% 76% 25% 55% 79% 52% 25% 28% -- --
Lift boats............. 57% 64% 80% 66% 58% 51% 64% 53% 42% 41% 48% 49% 58%
Crew/line handling
boats................. 91% 92% 94% 96% 79% 75% 83% 89% 79% 87% 91% 98% 96%
Average Company vessel
day rate(6):
Supply boats........... $2,709 $2,759 $2,992 $3,088 $3,277 $3,113 $2,888 $2,978 $2,981 $2,771 $3,101 $3,322 $3,415
Lift boats............. 4,754 4,718 4,659 4,999 5,099 4,879 4,985 5,098 4,624 4,735 4,523 4,718 4,840
Crew/line handling
boats................. 1,346 1,382 1,501 1,438 1,500 1,465 1,429 1,464 1,505 1,422 1,474 1,525 1,530
</TABLE>
- -------
(1) Reflects the historical operating statistics of the Company for the two
months ended December 31, 1993 and for the vessels acquired by the Company
from Chrysler on October 29, 1993, for the ten months ended October 28,
1993.
(2) Average monthly Henry Hub cash price in $/MMBtu, as reported in Natural
Gas Week.
(3) Average Gulf of Mexico mobile offshore rig count, as reported by Offshore
Data Services.
(4) Average vessel utilization rate for the Company is calculated by dividing
the total number of days for which a vessel is under contract in a quarter
by the total number of days in such quarter.
(5) Following the completion of the 1995 capital upgrade program, all of the
Company's supply boats are at least 180 feet in length.
(6) Average vessel day rate for the Company is calculated by dividing a
vessel's total quarterly revenues by the total number of days such vessel
was under contract during such quarter.
The Company's day rates and utilization rates are also affected by the size,
configuration and capabilities of the Company's fleet. In the case of supply
boats, the deck space and liquid mud and dry bulk cement capacity are
important attributes. For crew boats, size and speed are important factors,
and in the case of lift boats, longer leg length and greater
18
<PAGE>
crane capacity add versatility and marketability. During 1994 and 1995, the
Company reconfigured its fleet by disposing of several small crew boats (100
feet) and other vessels, the majority of which were sold to operators outside
the marine support industry. After the capital upgrade program, all of the
Company's supply boats are at least 180 feet and all have liquid mud and dry
bulk capacity.
The Company's operating costs primarily are a function of fleet size and
utilization levels. The most significant direct operating costs are wages paid
to vessel crews, maintenance and repairs and marine insurance. Generally,
increases or decreases in vessel utilization only affect that portion of the
Company's direct operating costs that is incurred when the vessels are active.
As a result, direct operating costs as a percentage of revenues may vary
substantially due to changes in day rates and utilization.
In addition to these variable costs, the Company incurs fixed charges
related to the depreciation of its fleet and costs for the routine drydock
inspection, maintenance and repair designed to ensure compliance with U.S.
Coast Guard regulations and to maintain American Bureau of Shipping ("ABS")
certification for its vessels. Maintenance and repairs expense and marine
inspection amortization charges are generally determined by the aggregate
number of drydockings and other repairs undertaken in a given period. Costs
incurred for drydock inspection and regulatory compliance are capitalized and
amortized over the period between such drydockings, typically two to three
years.
Upon completion of the Offering, the Company intends to, among other things,
prepay a significant portion of outstanding indebtedness and to replace the
Bank Credit Facility with a new $30.0 million revolving line of credit. Under
generally accepted accounting principles, the Company will be required to
expense the remaining unamortized balance of deferred financing costs in the
fiscal quarter when the repayment and restructuring is completed, as a one-
time, non-cash charge against the Company's earnings. This charge is expected
to be recognized in the quarter ended June 30, 1996. The amount of the charge
is expected to be approximately $924,000, net of related tax, or $0.14 per
share on a pro forma fully diluted basis.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH YEARS ENDED DECEMBER
31, 31,
-------------- ----------------------
1996 1995 1995 1994 1993(1)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Average vessel day rates:
Supply boat......................... $3,415 $2,981 $3,060 $3,057 $2,899
Lift boats.......................... 4,840 4,624 4,656 5,017 4,752
Crew/line handling boats............ 1,530 1,505 1,482 1,465 1,413
Average vessel utilization rate:
Supply boats........................ 88% 79% 78% 77% 86%
Supply boats (180 feet and
above)(2).......................... 88% 88% 89% 83% 92%
Supply boats (165 feet)............. -- 52% 32% 59% 70%
Lift boats.......................... 58% 42% 45% 57% 68%
Crew/line handling boats............ 96% 79% 89% 82% 92%
Average number of vessels:
Supply boats........................ 16.0 16.0 16.0 16.0 16.0
Lift boats.......................... 6.0 5.7 5.9 5.0 5.0
Crew/line handling boats............ 18.3 19.3 17.8 22.3 25.9
Total available vessel days(3):
Supply boats........................ 1,302 1,398 4,999 5,464 5,456
Lift boats.......................... 505 476 1,843 1,626 1,475
Crew/line handling boats............ 1,638 1,454 5,583 7,440 8,794
------ ------ ------ ------ ------
Total available vessel days....... 3,445 3,328 12,425 14,530 15,725
====== ====== ====== ====== ======
</TABLE>
19
<PAGE>
- --------
(1) Reflects the historical operating statistics of the Company for the two
months ended December 31, 1993 and for the vessels acquired by the Company
from Chrysler on October 29, 1993, for the ten months ended October 28,
1993.
(2) Following completion of the capital upgrade program, all of the Company's
supply boats are at least 180 feet in length.
(3) Total available vessel days are the total days that vessels are available
for charter and are not being drydocked, repaired or upgraded.
Comparison of Three Months Ended March 31, 1996 and 1995
During the three months ended March 31, 1996, the Company generated revenues
of $8.4 million, an increase of 31.8% compared to $6.4 million for the three
months ended March 31, 1995. This increase was principally due to higher
average day rates for the Company's supply boats following completion of the
1995 capital upgrade program and improved market conditions. All of the
Company's vessel classes achieved higher overall utilization during the period
due to the stronger market conditions in the Gulf.
During 1995, the Company began and completed a major capital upgrade
program, in which three of the supply boats were lengthened from 165 feet to
180 feet, and one from 165 feet to 190 feet, with the boats' capacity for
liquid mud and bulk cargo also increased. Additionally, the Company rebuilt
and lengthened a crew boat, which was placed in service in November 1995, and
acquired a sixth lift boat in January 1995. Completion of these capital
projects enabled the Company to begin fiscal 1996 with a larger, enhanced
fleet of vessels which, in addition to the benefit of improved market
conditions, has resulted in higher day rates and higher overall fleet
utilization. Average utilization for supply boats was 88% for the three months
ended March 31, 1996, compared to 79% for the same period of 1995, while
average day rates increased approximately 14.6% to $3,415 from $2,981. The
increase in utilization for the supply boats was achieved despite downtime for
repairs and maintenance of 155 days during the period, including the routine
drydocking of two supply boats for U.S. Coast Guard inspection.
Utilization for the Company's lift boats increased to 58% in the first
quarter of 1996 from 42% during the first quarter of 1995. The lift boats
experienced unusually low utilization in 1995 due to drydocking related
downtime and weak market conditions which existed at the beginning of 1995.
Finally, utilization for the crew boats increased to 96% from 79% in the
comparable 1995 period due to improved market conditions, the addition of the
rebuilt 125 foot crew boat and the sale of three small 100 foot crew boats, as
part of the Company's fleet upgrade program.
Direct labor and other operating expenses were $4.5 million during the first
quarter of 1996 (53% of revenues) compared to $4.2 million (66% of revenues)
during the first quarter of 1995, due to increased labor, supply and repair
and maintenance costs during the period. These increases were partially offset
by a decrease in vessel insurance costs.
Depreciation expense was $824,000 in the first quarter of 1996, a decrease
from $990,000 due to increased depreciation in 1994 and 1995 from a portion of
the purchase price allocated to the vessels as part of the 1993 vessel
acquisition. Amortization of marine inspection costs increased to $430,000 in
the first quarter of 1996 from $233,000 due to drydocking and marine
inspection costs incurred in 1995.
General and administrative expenses were flat at $661,000 for the first
quarter of 1996 as compared to $655,000 for the first quarter of 1995, but
decreased as a percent of revenues from 10% of revenues in the 1995 period to
8% in the first quarter of 1996.
Interest expense from the Company's bank debt increased to $738,000 in the
quarter from $703,000, due to the amortization of a gain on the sale of an
interest rate swap contract in the first quarter of 1995. Interest expense on
the Subordinated Notes increased to $298,000 from $269,000 due to the increase
in capitalized accrued
20
<PAGE>
interest on the Subordinated Notes. In the first quarter of 1996, the Company
had $102,000 in amortization expense for deferred financing costs, compared to
$93,000 in the 1995 period, from the 1993 vessel acquisition financing and the
subsequent financing for the 1995 capital upgrade program.
In the first quarter of 1996, the Company had income tax expense of $188,000
compared to an income tax benefit in the amount of $346,000 recorded in the
first quarter of 1995.
Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994
The Company's revenues declined 8.0% to $26.7 million in 1995, compared to
$29.0 million in 1994. This decrease was primarily due to a reduction in the
number of total days that the Company's vessels were available for work due to
the Company's capital upgrade program, lower lift boat utilization and the
reduction in the size of the fleet of crew boats. Total available vessel days,
which are the total days vessels are available for charter and not being
drydocked, repaired or upgraded, decreased 14.6% from a total of 14,530 in
1994 to 12,425 in 1995. During 1995, four of the Company's supply boats were
temporarily removed from service, drydocked and lengthened from 165 feet to
180 feet or greater as part of the Company's capital upgrade program.
Available vessel days were also reduced by the sale of several small crew
boats during 1994 and 1995 as part of the Company's strategy to focus on
larger, more profitable vessels. The larger crewboats (110 feet and above) and
the larger supply boats (180 feet and above) tend to be more profitable, as
they command higher day rates and enjoy higher utilization rates than the
smaller vessels, with approximately the same operating costs. Average
utilization for the 180 foot and larger supply boats was 89.0% in 1995 as
compared to 78.0% for the entire supply boat fleet. The Company's management
believes the completion of the capital upgrade program will result in higher
utilization and day rates for the Company's four supply boats which were
lengthened. The larger supply boats are also less vulnerable to decreases in
utilization rates during market downturns.
The Company's lift boats experienced unusually low utilization rates in 1995
due to weather-related downtime from an abnormally large number of tropical
storms and hurricanes which entered the Gulf during the year. The reduction in
the average day rates for the lift boats was due to the acquisition of a sixth
lift boat at the beginning of the fiscal year which was smaller than other
lift boats in the fleet, thereby commanding a lower day rate. The Company's
lift boats are operated by Power Offshore, Inc. ("Power Offshore"), a leading
operator of lift boats in the Gulf. Management and incentive fees paid to
Power Offshore in 1995 totalled $468,000 as compared to $707,000 for the year
ended December 31, 1994 due to the lower level of revenues and operating
income for the lift boats during the year. See "Business--Lift Boat
Management."
Direct labor and other operating expenses were unchanged from 1995 to 1994
at $16.5 million. Generally, direct operating expenses do not change in direct
proportion to revenues because vessel day rates may increase or decrease
without corresponding changes in operating expenses.
Depreciation expense decreased slightly from $2.8 million in 1994 to $2.7
million in 1995, as the capital improvements made on the Company's vessels and
the acquisition of a lift boat at the beginning of the year were offset by the
sale of several vessels in 1994 and 1995. Amortization of marine inspection
costs increased 29.5% in 1995 to $1.9 million from $1.5 million in the prior
year due to the increase in drydocking and marine inspection costs for the
year.
General and administrative expenses rose 22.0% from $2.1 million in 1994 to
$2.5 million in 1995 because of an increase in administrative and other shore-
based personnel in anticipation of higher activity levels, and personnel
required to support the Company's capital upgrade program and on-going
operations.
Interest expense from the Company's bank debt was $2.7 million in 1995 as
compared to $2.8 million in 1994, due to lower average bank debt outstanding
of $26.6 million in 1995, as compared to $30.5 million in 1994, and $278,000
in compensation received for the early termination of an interest rate swap
arrangement. While the Company repaid $5.3 million of outstanding indebtedness
during the year, additional bank borrowings of $4.5 million were used to
partially fund the Company's 1995 capital upgrade program and the acquisition
of a
21
<PAGE>
lift boat. Interest expense on the Subordinated Notes increased from $1.0
million to $1.1 million. In 1995 the Company had $381,000 in amortization
expense for deferred financing costs, compared to $344,000 in 1994, from the
1993 vessel acquisition financing.
The Company recorded a $670,000 income tax benefit in 1995, as compared to a
$226,000 income tax expense in 1994 due to the loss before income taxes for
the year.
Comparison of Year Ended December 31, 1994 to the Ten Months Ended October
28, 1993 and Two Months Ended December 31, 1993
The year ended December 31, 1994 reflected the first full year of the
Company's operations after the acquisition of the vessels from Chrysler on
October 29, 1993. Historical results for 1993 for the Company are for the two
months ended December 31, 1993 ("Two Month Period"). Prior to October 29,
1993, historical data represent the 10 month results of operations ("Ten Month
Period") for the vessels acquired from Chrysler. Accordingly, interest
expense, depreciation and amortization are not discussed below for the Ten
Month Period because such items would be based on Chrysler's historical costs
and borrowings and are not relevant to the ongoing results of the Company.
During the year ended December 31, 1994, revenues were $29.0 million,
compared to revenues for the Ten Month Period and the Two Month Period of
$26.9 million and $6.1 million. Vessel direct labor and other operating
expenses in 1994 were $16.5 million, compared to $15.5 million for the Ten
Month Period and $3.0 million for the Two Month Period. Management and
incentive fees paid to Power Offshore totalled $707,000 in 1994 as compared to
$1.0 million and $90,000 for the Ten Month Period and Two Month Period,
respectively.
General and administrative expenses were $2.1 million for 1994, reflecting
the first full year of the Company's operations, compared to $256,000 for the
Two Month Period and $1.4 million for the Ten Month Period.
Amortization expense for drydocking and marine inspection costs were $1.5
million for 1994 compared to $222,000 for the Two Month Period and $1.2
million for the Ten Month Period. Depreciation expense was $2.8 million
compared to $502,000 for the Two Month Period.
Interest expense for 1994 was $3.8 million, consisting of $2.8 million of
interest expense on the Company's bank credit facilities associated with the
acquisition of vessels and $1.0 million in unpaid, deferred interest on the
Company's Subordinated Notes, compared to $620,000 for the Two Month Period.
The Company had $344,000 in amortization of deferred financing costs in 1994,
compared to $60,000 for the Two Month Period, reflecting the amortization of
fees and expenses in connection with the vessel acquisition financing.
LIQUIDITY AND CAPITAL RESOURCES
The Company's strategy has been to reduce its financial leverage incurred in
connection with the 1993 vessel acquisition from Chrysler, while adding value
by reconfiguring and upgrading its vessel fleet to improve operating
capability. The Company's capital requirements historically have been for the
acquisition of marine equipment, maintenance and improvements to marine
equipment and debt service.
During the three months ended March 31, 1996, the Company made $5.1 million
of capital expenditures, including $4.2 million for the Walker Acquisition.
Other expenditures were principally for U.S. Coast Guard and drydocking costs
and the remaining expenditures on one supply vessel which was lengthened as
part of the Company's vessel upgrade program. During the quarter, the Company
amended and restructured the $27.3 million outstanding under its bank facility
and incurred $322,000 of debt issuance costs. Funds were provided from
additional borrowings under the Bank Credit Facility in the amount of $6.2
million and funds from operating activities of $1.0 million.
During the fiscal year ended December 31, 1995, the Company made $7.5
million in capital expenditures, consisting of approximately $6.0 million for
the upgrade, drydocking and improvement of its vessels and $1.5
22
<PAGE>
million for the acquisition of a lift boat. The Company also made $5.3 million
in required principal payments on its bank debt. Funds during the period were
provided from the Company's operating activities, which generated
approximately $6.4 million, borrowings of $4.5 million under the Company's
bank credit facility, and $1.3 million in proceeds from the sale of certain
vessels. As a result of the Company's significant capital improvements, the
Company was required to manage closely its cash position.
During 1994, following the acquisition from Chrysler, the Company repaid
$9.0 million of its long-term debt and incurred $2.2 million in marine
inspection costs and vessel improvements. In 1994, $6.7 million was provided
by operating activities, $3.1 million from the sale of certain smaller vessels
and $2.9 million from bank borrowings and the issuance of subordinated debt.
In December 1994, the Company amended its credit agreement with its bank
lenders to provide an additional $4.0 million credit facility for the purpose
of funding a portion of the Company's 1995 capital upgrade program. The
capital upgrade program consisted of the lengthening and upgrading of four
supply vessels, the acquisition of a sixth lift boat, and the complete
rebuilding and lengthening of a crew boat.
At December 31, 1993 the Company had approximately $44.6 million of
outstanding indebtedness, substantially all of which was incurred on October
29, 1993 to fund the acquisition of vessels. As part of its bank lending
arrangement, the Company established a $4.0 million revolving credit facility,
under which $750,000 was outstanding at December 31, 1993. The availability
under this facility was required to be reduced by $1.0 million on each of
December 31, 1995 and 1996. Scheduled principal payments during the next
twelve months under the term loan were approximately $7.0 million. In
connection with the acquisition of vessels from Chrysler, the Company issued
approximately $10.6 million in principal amount of its Subordinated Notes.
During the period from October 29, 1993 to December 31, 1993, the Company
used approximately $2.1 million of cash for operating activities. This deficit
resulted principally from the Company's funding of initial accounts receivable
balances and other working capital items following the vessel acquisition.
Cash used by investing activities represented the Company's purchase of the
vessels and a portion of the common stock of Trico Operators. Cash generated
from financing activities represented the proceeds from the issuance of the
Company's long-term debt and its sale of common stock.
The Company's bank credit facility, as amended in March 1996, consists of a
$33.0 million term loan and a $3.0 million revolving credit facility.
Additional proceeds of $6.2 million were utilized to fund the Walker
Acquisition ($4.2 million) and for working capital and expenses ($2.0
million). The term loan is to be repaid in quarterly installments beginning
March 31, 1996, in the amount of $750,000 per quarter, increasing to $1.0
million per quarter in 1997 and thereafter, with the remaining balance due
December 31, 2000. The revolving facility matures July 31, 1997 and may be
extended annually at the lenders' discretion. Both the term loan and the
revolving facility bear interest at the lenders' floating prime rate of
interest plus 1 3/4% per annum (currently 10.0%) and the Company incurs a fee
of 1/2% per annum on the undrawn portion. The Bank Credit Facility is secured
by substantially all of the Company's assets and contains certain covenants
which limit the Company's ability to incur additional indebtedness, limit
capital expenditures, prohibit the payment of dividends and require the
Company to maintain certain financial ratios. As of April 30, 1996, the
Company had $1.5 million remaining to be drawn under the term loan and $2.6
million available under its revolving line of credit.
The Company has received a commitment from the same group of lenders to
provide a $30.0 million revolving credit facility which would replace the Bank
Credit Facility upon completion of the Offering. The new revolving facility
will mature in three years but may be extended annually at the discretion of
the banks. Borrowings thereunder will bear interest at LIBOR plus 1 1/2%
(currently approximately 7.0%) with a fee of 3/8% per annum on the undrawn
portion. The new credit facility will be secured by substantially all of the
Company's existing assets and requires the Company to maintain certain
financial ratios.
The Company has been notified by Petrobras that, subject to completing a
model tank test in accordance with the bid requirements, the Company is the
successful bidder for a contract to build and operate the SWATH
23
<PAGE>
vessel under a five-year charter to Petrobras. The SWATH vessel would be used
to transport up to 250 passengers from the Petrobras base in Macae, Brazil to
offshore platforms in the Campos Basin pursuant to a day rate contract.
Assuming successful completion of the model tank test and subsequent execution
of a contract, the Company expects to begin vessel construction in the third
quarter of 1996 and commence service in the fourth quarter of 1997. The
Company plans to finance the major portion of the vessel's $8.5 million cost
through the Maritime Administration's Title XI ship financing program with
whom the Company has a pending application, and with available borrowings
under its Bank Credit Facility.
In April 1996, the Company entered into an agreement to acquire for $11.0
million four supply boats located in the Gulf. Pursuant to the terms of the
purchase agreement, the Company made a $400,000 advance payment with the
balance due no later than July 31, 1996 and, on May 1, 1996, the Company will
assume operation of the four boats under bareboat charter agreements which
call for the Company to pay a daily charter rate of $1,375 per boat until
closing. The Company plans to consummate the acquisition of the four supply
vessels with a portion of the net proceeds from the Offering.
Following the application of the net proceeds from the Offering to repay
indebtedness outstanding under the Bank Credit Facility, the Company will have
approximately $9.6 million of outstanding indebtedness under the Bank Credit
Facility which the Company has received a commitment to replace with the new
$30.0 million revolving line of credit mentioned above.
The Company does not believe further significant capital expenditures will
need to be made in connection with the upgrading of its fleet. The current
level of capital expenditures (other than costs incurred in connection with
the Walker Acquisition, the acquisition of the four supply boats, the SWATH
vessel and any other potential acquisition) for the fiscal year ending
December 31, 1996, is expected to be approximately $6.4 million, which
includes $3.4 million for the purchase, complete refurbishment and lengthening
of a 180-foot supply boat to 200 feet that the Company purchased in March 1996
for $140,000. The Company believes that its available funds, together with the
proceeds from the Offering and cash generated from operations, will be
sufficient to fund these anticipated capital expenditures and working capital
and debt service requirements. However, future capital expenditures for
additional marine vessels may require additional equity or debt financing.
NEW ACCOUNTING STANDARDS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued in March 1995 and is effective
for fiscal years beginning after December 15, 1995. SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. SFAS No. 123, "Accounting for Stock-Based Compensation" was
issued in October 1995 and is effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. The Statement requires
transactions to be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. The Statement does allow pro forma amounts to be
disclosed by companies which continue to apply the prior accounting provisions
for stock-based compensation. Management is currently evaluating the
alternatives available upon implementing this Statement, but expects to adopt
only the pro forma disclosure provisions. The Company does not believe that
implementation of these accounting standards, which have been issued but are
not yet effective, will have a material effect on the Company's financial
position, results of operations or cash flows.
24
<PAGE>
BUSINESS
GENERAL
Trico provides a broad range of marine support services to companies in the
oil and gas industry conducting offshore exploration, production and
construction operations. The Company is a leading operator of marine support
vessels in the Gulf and has, as a result of a recently completed acquisition,
commenced operations in Brazil. Following the acquisition of four supply boats
with a portion of the net proceeds from this Offering, Trico will own a fleet
of 51 vessels, including 20 supply boats, six lift boats, 16 crew boats and
nine line handling boats. All of Trico's vessels are located in the Gulf with
the exception of the line handling boats that operate under long-term charters
offshore Brazil. The services provided by Trico's diversified fleet include
transportation of drilling materials, supplies and crews to offshore
facilities and support for the construction, installation, maintenance and
removal of those facilities. Trico has focused on providing high quality,
responsive service while maintaining a low cost structure. In addition, the
quality of Trico's fleet and the strength of its experienced management team
have allowed the Company to develop and maintain long-term customer
relationships.
THE INDUSTRY
Marine Support Vessels
Marine support vessels are primarily used to transport personnel, equipment
and supplies to drilling rigs and to support the construction and ongoing
operation of offshore oil and gas production platforms. The principal services
provided are the transportation of equipment, fuel, water and supplies to
offshore facilities, transfer of personnel between shore bases and offshore
facilities, provision of work platforms and cranes for offshore construction
and towing services for drilling rigs and platforms. The principal types of
vessels operated by the Company and its competitors can be summarized as
follows:
Supply Boats. Supply boats are generally at least 150 feet in length and
serve drilling and production facilities and support offshore construction and
maintenance work. Supply boats are differentiated from other types of vessels
by cargo flexibility and capacity. In addition to transporting deck cargo,
such as pipe or drummed materials, supply boats transport liquid mud, potable
and drilling water, diesel fuel, dry bulk cement and dry bulk mud.
Accordingly, supply boats which have large liquid mud and dry bulk cement
capacity, as well as large areas of open deck space, are generally in higher
demand than vessels without those capabilities. However, other characteristics
such as maneuverability, fuel efficiency, anchor handling ability and
firefighting capacity may also be in demand in certain circumstances. All of
the supply boats owned or operated by the Company are at least 180 feet in
length and have liquid mud and dry bulk capacity.
Lift Boats. Lift boats are self-propelled, self-elevating and self-contained
vessels which can efficiently assist offshore platform construction and well
servicing tasks that traditionally have required the use of larger, more
expensive, mobile offshore drilling units or derrick barges. For example, lift
boats can dismantle offshore rigs, set production facilities and handle a
variety of tasks for existing platform upgrade work. These boats have also
been used successfully as the main work platform for applications such as
diving and salvaging, and have been used as an adjacent support platform for
applications ranging from crew accommodations to full workovers on existing
platforms. Typically lift boats command higher day rates but experience lower
average utilization rates than other classes of marine support vessels. Lift
boats have different water depth capacities, with leg lengths ranging from 65
to 200 feet. The Company's lift boats have leg lengths ranging from 130 to 170
feet enabling them to operate in water depths where the majority of the
offshore structures currently in the Gulf are located.
Crew Boats. Crew boats are generally at least 100 feet in length and are
chartered principally for the transportation of personnel and light cargo,
including food and supplies, to and among production platforms, rigs and other
offshore installations. These boats can be chartered together with supply
boats as support vessels for drilling or construction operations, and also can
be chartered on a stand-alone basis to support the various requirements of
offshore production platforms. Crew boats are constructed from aluminum, and
as a result generally have useful lives beyond those of steel-hulled supply
boats. Crew boats also provide a cost-effective
25
<PAGE>
alternative to airborne transportation services, and can operate reliably in
virtually all types of weather conditions. Generally, utilization and day
rates for crew boats are more stable than those of other types of vessels
because crew boats are typically used to provide services for production
platforms and construction projects, as well as for exploration and drilling
activities. The majority of the Company's crew boats are the larger 120-foot
vessels.
Line Handling Boats. Line handling boats are generally outfitted with
special equipment to assist tankers while they are loading from single buoy
mooring systems. These vessels support oil off-loading operations from
production facilities to tankers and transport supplies and materials to and
between deepwater platforms.
Market Supply and Demand Characteristics
There has been minimal new construction of offshore supply boats since the
early 1980s, resulting in substantial worldwide vessel attrition over the past
ten years as vessels have reached the end of their useful lives. The number of
offshore supply boats available for service in the Gulf decreased from a peak
of approximately 700 in 1985 to approximately 275 in March 1996. During the
same period, the number of companies operating supply boats of at least 150
feet in length decreased from approximately 80 to 19. Management believes that
existing U.S. Government regulations, mobilization costs and overseas
opportunities will limit the number of vessels that are capable of returning
to the Gulf from overseas in the foreseeable future. Management believes that
a reduction in the offshore supply fleet will lead to higher average vessel
day rates. Before any significant new construction begins, management believes
that day rates will need to increase substantially from current levels to
provide a satisfactory return on investment.
Management estimates that the worldwide fleet of lift boats totals 134
vessels, of which 90 operate in the Gulf. Of these 90 lift boats, only 12 are
160 feet or greater in leg length, two of which are owned by the Company, and
there are three lift boats greater than 200 feet in leg length presently under
construction.
Management also estimates that there are presently 34 crew boat operators in
the Gulf, with a total fleet of 248 vessels of 100 feet or greater in length.
Trico's management believes that there are approximately 14 crew boats greater
than 120 feet in length presently under construction.
While marine support service vessels service existing oil and gas production
platforms as well as exploration and development activities, incremental
vessel demand depends primarily upon the level of drilling activity, which in
turn depends on oil and gas prices. As a result, utilization and day rates
generally correlate to oil and gas prices. The Company's operations are
concentrated in the Gulf, which is one of the largest natural gas producing
areas in the United States. Natural gas currently accounts for approximately
three quarters of all hydrocarbon production in the Gulf, and as a result,
activity in this region is highly dependent upon natural gas prices.
Offshore exploration and production activity in Brazil is concentrated in
the deep water Campos Basin, located 60 to 100 miles from the Brazilian coast.
Over 50 fields have been discovered in this Basin, including an estimated 600
producing offshore oil wells. A number of fields in the Campos Basin are being
produced using floating production facilities. In addition, exploration
activity has expanded south to the Santos Basin and to the northeastern and
northern continental shelves. The establishment by the Brazilian government of
national requirements for self-sufficiency in oil production should ensure
that Petrobras' high level of exploration and production activity will
continue. The Brazilian government's intention to allow foreign participation
in such exploration and production should also result in additional activity.
26
<PAGE>
BUSINESS STRATEGY
The Company's strategy is to enhance its position as a leading supplier of
marine support services by pursuing acquisition opportunities in the Gulf and
selectively diversifying into certain international markets with additional
growth potential. The Company implements this strategy by:
Maintaining a large, diversified fleet. The size and diversity of Trico's
fleet enables the Company to provide oil and gas companies operating in the
Gulf a broad range of services, including marine support for exploration,
development, production, construction, repair operations and platform removal.
Reconfiguring and upgrading the fleet. Trico has reconfigured and upgraded
the capabilities of its vessel fleet to meet market demands for larger, better
equipped vessels. In particular, it has disposed of those vessels it considers
to be less profitable such as smaller crew boats, and upgraded certain other
vessels. In 1995, the Company completed a $6.0 million capital upgrade program
that included (i) lengthening three supply boats from 165 feet to 180 feet and
one from 165 feet to 190 feet and enhancing these boats' cargo capacity, (ii)
rebuilding of a crew boat and (iii) drydocking and refurbishing several other
vessels. Substantial downtime was incurred in 1995 from this program, which
adversely impacted the Company's results of operations; however, the Company
expects to achieve higher day rates and utilization for these upgraded vessels
in the future. Additionally, in January 1995, Trico acquired a sixth lift boat
to further position the Company to participate in the oil and gas industry's
requirement to maintain, repair and salvage the more than 3,000 production
platforms in the Gulf.
Focusing on the Gulf of Mexico. Trico intends to maintain its current focus
on the Gulf. Levels of oil and gas exploration, development and production
activities in the Gulf have increased recently as a result of several factors,
including: (i) improvements in exploration technologies, such as computer-
aided exploration and 3-D seismic, have increased drilling success rates in
the region; (ii) improvements in subsea completion and production technologies
have led to increased deep water drilling and development; (iii) expansion of
the region's production infrastructure has improved the economics of
developing smaller oil and gas fields; and (iv) the short reserve life
characteristic of Gulf gas production which requires continuous drilling to
replace reserves and maintain production. Maintenance, repair and salvage
activity related to older production platforms and infrastructure in the
shallow areas of the Gulf has also increased, and based on the recent increase
in applications for permits, the Company also expects continued higher levels
of these activities. These higher overall activity levels have led to
increased demand for the Company's services and higher overall vessel
utilization and dayrates in the Gulf.
Expanding into selected international markets. While Trico's primary market
is the Gulf, the Company seeks to expand into selected international markets
which management believes are attractive, long-term markets for the Company's
services. As part of this strategy, in March 1996 Trico acquired eight line
handling vessels and an operations facility in Brazil and has redeployed one
of its line handling vessels from the Gulf to Brazil. These vessels operate
under long-term charters for Petrobras, the Brazilian national oil company,
and support the oil offloading operations from production facilities to
tankers in the Campos Basin offshore Brazil, including transporting supplies
and materials to and between deep water platforms. In addition, Trico has been
notified by Petrobras that, subject to completing a model tank test in
accordance with the bid requirements, Trico is the successful bidder for a
contract to build and operate the SWATH vessel for Petrobras under a long-term
contract. The Company believes that Brazil presents an attractive long-term
market because of the Brazilian government's goal of increasing its offshore
oil production and the anticipated participation by foreign companies in its
exploration and production activities. The Company intends to pursue other
opportunities to expand its operations in this industry.
Participating in the consolidation of the industry. The number of supply
boats available for service in the Gulf decreased from a peak of approximately
700 in 1985 to approximately 275 in March 1996. During the same period, the
number of companies operating supply boats of at least 150 feet in length
decreased from approximately 80 to 19. Trico's management believes that the
Company will benefit from the smaller overall supply boat fleet and
consolidation of industry competitors. In addition, Trico intends to
participate in this
27
<PAGE>
consolidation by pursuing additional fleet acquisition opportunities in the
Gulf as well as opportunistic purchases of individual vessels. As part of this
strategy, in April 1996, Trico agreed to purchase three 180 foot and one 190
foot supply boat located in the Gulf for $11.0 million. Trico expects to
complete this acquisition in May 1996 with a portion of the net proceeds from
the Offering. See "Use of Proceeds." In addition, in March 1996, Trico
acquired a 180 foot supply boat which will be available for service at the
beginning of 1997, after the vessel has been refurbished and lengthened to 200
feet. Management believes improvements in the Company's fleet capabilities and
its recent entrance into the Brazilian market, as a result of the Walker
Acquisition, have positioned Trico to respond to improving conditions in the
offshore oil and gas market.
The Company also believes that legal, regulatory and economic barriers to
entry will limit the number of vessels that are capable of returning to the
Gulf from overseas markets. Although vessels may return to the Gulf from
overseas locations or from alternative uses, management believes that existing
U.S. government regulations, mobilization costs and overseas opportunities
will limit the number of such vessels for the foreseeable future.
The Company believes that the financial flexibility provided by the Offering
will position the Company to benefit from any further consolidation of the
Gulf vessel fleet and to pursue incremental acquisitions in the Gulf. In
addition, this flexibility will allow the Company to fund its capital
expenditure program, which includes the major refurbishment and lengthening of
a recently acquired 180 foot supply boat and, subject to receiving a long-term
contract with Petrobras, the construction of the SWATH vessel.
THE COMPANY'S FLEET
Set forth below is the Company's internal allocation of its charter revenues
and charter revenues less direct operating expenses for each of the periods
indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ------------------------
1996 % 1995 % 1995 % 1994 %
------ --- ------ --- ------- --- ------- ---
(UNAUDITED, IN
THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Revenues:
Supply boats.............. $4,411 53% $3,328 52% $13,868 52% $13,753 47%
Lift boats................ 1,702 20% 1,173 19% 5,054 19% 5,944 21%
Crew boats................ 2,263 27% 1,847 29% 7,735 29% 9,198 32%
------ --- ------ --- ------- --- ------- ---
Total Fleet............. $8,376 100% $6,348 100% $26,657 100% $28,895 100%
====== === ====== === ======= === ======= ===
Charter Revenues less direct
operating expenses:(1)
Supply boats.............. $2,414 66% $1,394 70% $ 6,599 68% $ 6,570 56%
Lift boats................ 671 18% 278 14% 1,125 12% 2,481 21%
Crew boats................ 604 16% 309 16% 1,945 20% 2,679 23%
------ --- ------ --- ------- --- ------- ---
Total Fleet............. $3,689 100% $1,981 100% $ 9,669 100% $11,730 100%
====== === ====== === ======= === ======= ===
</TABLE>
- --------
(1) Charter revenues less direct vessel labor and other operating expenses and
vessel management fees.
28
<PAGE>
The table set forth below provides information regarding the vessels
currently owned or operated by the Company and the four supply boats to be
acquired with a portion of the net proceeds of the Offering.
<TABLE>
<CAPTION>
HORSE
SUPPLY VESSELS(1) LENGTH POWER YEAR BUILT
- ----------------- ------ ----- ----------
<S> <C> <C> <C>
Roe River............................................. 211' 4300 1979 (1992)*
Cane River............................................ 192' 2200 1981 (1995)*
Big Horn River........................................ 191' 4000 1980
James River........................................... 190' 2200 1982 (1988)*
Buffalo River......................................... 185' 2400 1979 (1994)*
Rain River............................................ 185' 2200 1979 (1995)*
Miami River........................................... 181' 2200 1977 (1995)*
Savannah River........................................ 181' 2200 1977 (1996)*
Charles River......................................... 180' 2200 1982
Manatee River......................................... 180' 2200 1977
Powder River.......................................... 180' 2200 1982
Southern River........................................ 180' 3400 1977 (1995)*
Sun River............................................. 180' 3500 1980 (1991)*
Truckee River......................................... 180' 2200 1980
Wolf River............................................ 180' 2200 1983
White River........................................... 180' 3500 1980 (1991)*
Bold Venture(2)....................................... 192' 2250 1982
Citation(2)........................................... 187' 2250 1982
Centurion(2).......................................... 187' 2250 1982
Determine(2).......................................... 187' 2250 1982
<CAPTION>
LEG HORSE
LIFT BOATS: LENGTH POWER YEAR BUILT
- ----------- ------ ----- ----------
<S> <C> <C> <C>
Gulf Island I......................................... 170' N/A 1983
Gulf Island VIII...................................... 170' N/A 1985 (1990)*
Gulf Island VII....................................... 145' N/A 1986
Gulf Island IX........................................ 145' N/A 1982 (1991)*
Power V............................................... 135' N/A 1986
Gulf Island III....................................... 130' N/A 1985
<CAPTION>
HORSE
CREW BOATS: LENGTH POWER YEAR BUILT
- ----------- ------ ----- ----------
<S> <C> <C> <C>
Cimarron River........................................ 125' 2700 1980(1995)*
Battle River.......................................... 120' 2700 1979
Colorado River........................................ 120' 2700 1978
Concord River......................................... 120' 2700 1977
Firehold River........................................ 120' 2700 1979
Fox River............................................. 120' 2293 1980
Green River........................................... 120' 2293 1981
Platte River.......................................... 120' 2700 1980
Ramzi River........................................... 120' 2700 1980
Snake River........................................... 120' 2700 1980
Whiskey River......................................... 110' 2700 1982
Cumberland River...................................... 110' 2700 1980
Wabash River.......................................... 105' 2025 1982
Freedom River......................................... 105' 2025 1981
Angelina River........................................ 105' 2025 1980
American River........................................ 100' 2025 1980
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
HORSE YEAR
LINE HANDLING BOATS: LENGTH POWER BUILT
- -------------------- ------ ----- -----
<S> <C> <C> <C>
Silver River................................................. 125' 1500 1978
Red Fox(3)................................................... 116' 1200 1980
Alliance Trader(3)........................................... 110' 1200 1982
Alliance Tempest(3).......................................... 110' 1200 1982
Fernanda M.(3)............................................... 110' 1200 1984
Jesse O(3)................................................... 110' 1200 1982
Amazon River(3).............................................. 110' 1450 1976
Parana River(3).............................................. 110' 1450 1976
Islander IV (operated but not owned)......................... 110' 1200 1981
Walker I(3)(4)............................................... 105' 1350 1977
</TABLE>
- --------
* Year of major refurbishment (expenditures in excess of $350,000). Because
crew boats have aluminum hulls, major refurbishment is not necessary. In
1995, the Cimarron River crew boat was rebuilt and lengthened from 110 to
125 feet. In 1995 and 1996, four supply boats were refurbished and
lengthened.
(1) In March 1996, the Company acquired a 180-foot supply boat, which it
intends to rebuild and convert to a 200-foot vessel with added bulk
capacity. The Company expects the vessel, renamed the Stones River, to be
operational at the beginning of 1997; therefore, the vessel is not
included in any operating data included herein.
(2) In April 1996 the Company entered into an agreement to purchase this
vessel. On May 1, 1996, the Company will assume operations of this vessel;
therefore, this vessel is not included in any operating data included
herein.
(3) Acquired by the Company in March 1996 and not included in the results of
operations for the year ended December 31, 1995. All line handling boats,
except the Islander IV, are located in Brazil and operated by the Company
under long-term charters for Petrobras.
(4) The Walker I is owned by the Company's affiliate located in Brazil, of
which the Company owns a 40% interest.
VESSEL MAINTENANCE
The Company incurs routine drydock inspection, maintenance and repair costs
under U.S. Coast Guard Regulations and to maintain ABS certification for its
vessels. In addition to complying with these requirements, the Company has
implemented its own comprehensive vessel maintenance program which management
believes will help Trico to continue to provide its customers with well
maintained, reliable vessels. Every 30 to 60 days, independent mechanics
perform a preventive maintenance inspection on the engines in each vessel in
the Company's fleet. The Company then uses written reports prepared by such
independent mechanics to determine when it is necessary to overhaul a
particular engine. In addition, after every 300 to 600 hours of engine use,
engine oil samples are analyzed by an outside firm and reviewed by the Company
port engineer responsible for maintaining the vessel. Finally, a daily
computer-generated record of all services performed on each vessel allows
management to recognize and evaluate patterns in a particular engine's
performance, as does the written log kept daily by each vessel engineer. In
1995, the Company incurred approximately $2.1 million in dry-docking and
marine inspection costs. See "--Government Regulation."
CUSTOMERS AND CHARTER TERMS
The Company has entered into master service agreements with approximately
140 of its customers, including a majority of the major and independent oil
companies operating in the Gulf. Substantially all of the Company's charters
in the Gulf are short-term contracts (30-60 days) or spot contracts (less than
30 days) and all are cancelable upon short notice. Because of renewals, the
stated duration of charters frequently has little relationship to the actual
time vessels are chartered to a particular customer. Charters are obtained
through
30
<PAGE>
competitive bidding or, with certain customers, through negotiation. The
percentage of revenues attributable to an individual customer varies from time
to time, depending upon the level of oil and gas exploration and development
activities undertaken by a particular customer, the availability and
suitability of the Company's vessels for the customer's projects, and other
factors, many of which are beyond the Company's control. For the fiscal year
ended December 31, 1994, approximately 10% of the Company's total revenues
were received from Seagull Energy Corporation and for the year ended December
31, 1995, approximately 14% of the Company's total revenues were received from
Vastar Resources, Inc. and approximately 11% from Unocal Corporation.
LIFT BOAT MANAGEMENT
All of the Company's lift boats are managed by Power Offshore, a leading
operator of lift boats in the Gulf, pursuant to a management agreement that
expires in March 1999. Power Offshore receives a management fee of 10% of the
managed lift boats' monthly gross income and is eligible to receive an
incentive fee of up to three percent of gross monthly income, based on a
percentage of the managed vessels' net operating income. Total management and
incentive fees paid to Power Offshore cannot exceed 13% of the lift boats'
gross monthly income. The Company is also required to reimburse Power Offshore
for all operating expenses relating to the managed lift boats, excluding
marketing, general and administrative, and insurance expenses. In addition,
Power Offshore has a right of first refusal if the Company intends to sell any
of the vessels that are managed by Power Offshore to a third party. The
Company presently has no intention of selling any of its lift boats.
COMPETITION
The Company's business is highly competitive. Competition in the offshore
marine transportation industry primarily involves factors such as price,
service and reputation of vessel operators and crews, availability of vessels
of the type and size needed by the customer and quality of vessels. Although
some of the Company's principal competitors are significantly larger and have
significantly greater financial resources than the Company, management
believes that Trico's operating capabilities and reputation enable it to
compete effectively with other fleets in the markets in which the Company
operates. In addition, certain of the Company's competitors are building new
crew boats greater than 120 feet in length. Continued new construction of crew
boats by the Company's competitors could increase levels of competition within
the vessel class. See "Risk Factors-- Competition."
GOVERNMENT REGULATION
The Company's operations are materially affected by federal, state and local
regulation, as well as certain international conventions and private industry
organizations. These regulations govern worker health and safety and the
manning, construction and operation of vessels. For example, the Company is
subject to the jurisdiction of the U.S. Coast Guard, the National
Transportation Safety Board, the U.S. Customs Service and the Maritime
Administration of the U.S. Department of Transportation, as well as private
industry organizations such as the American Bureau of Shipping. These
organizations establish safety criteria and are authorized to investigate
vessel accidents and recommend improved safety standards. See "Risk Factors--
Government Regulation."
The U.S. Coast Guard regulates and enforces various aspects of marine
offshore vessel operations, such as classification, certification, routes,
drydocking intervals, manning requirements, tonnage requirements and
restrictions, hull and shafting requirements and vessel documentation. Coast
Guard regulations require that each of the Company's vessels be drydocked for
inspection at least twice within a five year period. Management believes the
Company is in compliance in all material respects with all U.S. Coast Guard
Regulations.
Under the Merchant Marine Act of 1920, as amended, the privilege of
transporting merchandise or passengers in domestic waters extends only to
vessels that are owned by U.S. citizens and are built in and registered under
the laws of the U.S. A corporation is not considered a U.S. citizen unless,
among other things, no more than 25% of any class of its voting securities are
owned by non-U.S. citizens. If Trico should fail to
31
<PAGE>
comply with these requirements, during the period of such noncompliance it
would not be permitted to continue operating its vessels in U.S. coastwise
trade. See "Risk Factors--Limitation on Foreign Ownership of Company Stock"
and "Description of Capital Stock--Certain Charter and By-Law Provisions."
ENVIRONMENTAL REGULATIONS
The Company's operations are subject to a variety of federal and state
statutes regarding protection of the environment. Included among these
statutes are the Clean Water Act, the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), the Outer Continental Shelf Lands Act ("OCSLA") and the Oil
Pollution Act of 1990 ("OPA"). See "Risk Factors--Government Regulation."
The Clean Water Act imposes strict controls on the discharge of pollutants
into the navigable waters of the U.S., and imposes potential liability for the
costs of remediating releases of petroleum and other substances. Many states
have laws which are analogous to the Clean Water Act and also require
remediation of accidental releases of petroleum in reportable quantities. The
Company's vessels routinely transport diesel fuel to offshore rigs and
platforms, and also carry diesel fuel for their own use. The Company's supply
boats transport bulk chemical materials used in drilling activities, and also
transport liquid mud which contains oil and oil by-products. All offshore
companies operating in the U.S. are required to have vessel response plans to
deal with potential oil spills.
RCRA regulates the generation, transportation, storage and disposal of
hazardous and non-hazardous wastes, and requires states to develop programs to
ensure the safe disposal of wastes. The Company generates non-hazardous wastes
and small quantities of hazardous wastes in connection with routine
operations, and management believes that all of the wastes it generates are
handled in compliance with RCRA and analogous state statutes.
CERCLA contains provisions dealing with remediation of releases of hazardous
substances into the environment and imposes strict, joint and several
liability for the costs of remediating environmental contamination upon owners
and operators of contaminated sites where the release occurred and those
companies who transport, dispose of or who arrange for disposal of hazardous
substances released at the sites. Although the Company handles hazardous
substances in the ordinary course of business, the Company is not aware of any
hazardous substance contamination for which it may be liable.
OCSLA provides the federal government with broad discretion in regulating
the release of offshore resources of oil and gas production. Because the
Company's operations rely on offshore oil and gas exploration and production,
if the government were to exercise its authority under OCSLA to restrict the
availability of offshore oil and gas leases, such an action could have a
material adverse effect on the Company's financial condition and the results
of operations.
OPA contains provisions specifying responsibility for removal costs and
damages resulting from discharges of oil into navigable waters or onto the
adjoining shorelines. Among other requirements, OPA requires owners and
operators of vessels over 300 gross tons to provide the U.S. Coast Guard with
evidence of financial responsibility to cover the costs of cleaning up oil
spills from such vessels. The Company currently owns and operates six vessels
over 300 gross tons. Satisfactory evidence of financial responsibility has
been provided to the U.S. Coast Guard for all of the Company's vessels.
Management believes the Company is in compliance in all material respects
with all applicable environmental laws and regulations to which it is subject.
Moreover, operation of Company vessels in foreign territories, such as the
nine line handling vessels which are operating under long-term charters
offshore Brazil, are potentially subject to similar regulatory controls
concerning environmental protection. Management of the Company believes that
compliance with any existing environmental requirements of foreign
governmental bodies has not materially affected the Company's capital
expenditures, earnings or competitive position.
32
<PAGE>
INSURANCE
The operation of the Company's vessels is subject to various risks, such as
catastrophic marine disaster, adverse weather conditions, mechanical failure,
collision and navigation errors, all of which represent a threat to personnel
safety and to Company vessels and cargo. The Company maintains insurance
coverage against certain of these risks, which management considers to be
customary in the industry. Although management believes that the Company's
insurance coverage is adequate and the Company has not experienced a loss in
excess of its policy limits, there can be no assurance that the Company will
be able to maintain adequate insurance at rates which management considers
commercially reasonable, nor can there be any assurance such coverage will be
adequate to cover all claims that may arise.
LEGAL PROCEEDINGS
The Company is involved in various legal and other proceedings which are
incidental to the conduct of its business. Management believes that none of
these proceedings, if adversely determined, would have a material adverse
effect on the Company's financial condition or results of operations.
EMPLOYEES
As of April 30, 1996, the Company had approximately 310 employees, including
approximately 281 operating personnel and approximately 29 corporate,
administrative and management personnel. These employees are not unionized or
employed pursuant to any collective bargaining agreement or any similar
arrangement. Management believes that the Company's relationship with its
employees is satisfactory.
33
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information as of April 30, 1996 with
respect to the Company's executive officers and directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C><C>
Thomas E. Fairley............... 48 Chairman of the Board, President and Chief
Executive Officer
Ronald O. Palmer................ 49 Executive Vice President, Director
Benjamin F. Bailar.............. 62 Director
Carl Ferenbach.................. 54 Director
Garth H. Greimann............... 41 Director and Assistant Secretary
Edward C. Hutcheson, Jr......... 50 Director
Victor M. Perez................. 43 Vice President, Chief Financial Officer and
Treasurer
Michael D. Cain................. 47 Vice President--Marketing
Kenneth W. Bourgeois............ 48 Vice President and Controller
</TABLE>
Thomas E. Fairley, who co-founded Trico Operators with Mr. Palmer in 1980,
has been Chairman of the Board and President of the Company since October
1993. From 1978 to 1980, Mr. Fairley served as Vice President of Trans Marine
International ("TMI"), an offshore marine service company and wholly-owned
subsidiary of GATX Leasing Corporation ("GATX"). From 1975 to 1978, Mr.
Fairley served as General Manager of International Logistics, Inc. ("ILI"), a
company engaged in the offshore marine industry. For more than five years
prior to joining ILI, Mr. Fairley held various positions with Petrol Marine
Company, an offshore marine service company.
Ronald O. Palmer has been a director of the Company since October 1993 and
Executive Vice President since February 1995. Mr. Palmer joined with Mr.
Fairley in founding Trico Operators in 1980, and served as Vice President,
Treasurer, and Chief Financial Officer until February 1995. From 1974 to 1980,
Mr. Palmer was employed by GATX Leasing where he was responsible for the
marketing of financial leases for industrial and marine equipment in eight
southwestern states and all marine activity of TMI in the Gulf.
Benjamin F. Bailar has been a director of the Company since 1994. Dean
Bailar has served as the Dean of the Jones Graduate School of Administration
at Rice University since 1987. Dean Bailar is also a director of U.S. Can
Corporation, Dana Corporation and Smith International, Inc.
Carl Ferenbach has been a director of the Company since 1994. He has been a
managing director of Berkshire and its predecessor since 1983, and serves as a
director of The Wisconsin Central Transportation Corporation, U.S. Can
Corporation and Tranz Rail Holdings Limited.
Garth H. Greimann has been a director of the Company since 1993. Mr.
Greimann was a Vice President of Berkshire's predecessor from 1989 through
1993 and has been a managing director of Berkshire and its predecessor since
1994. Prior to joining Berkshire, Mr. Greimann was a Vice President of the
First National Bank of Boston. Mr. Greimann also serves as a director of Image
Industries, Inc. and The Profit Recovery Group, Inc.
Edward C. Hutcheson, Jr. has been a director of the Company since 1994. Mr.
Hutcheson serves as President and Chief Executive Officer of Castle Tower
Corporation, one of the largest independent owners and operators of
communications towers in the U.S. From 1990 to 1993, he was President and
Chief Operating Officer of Baroid Corporation, an energy services and
equipment provider.
Victor M. Perez has served as Vice President, Chief Financial Officer and
Treasurer of the Company since February 1995. From 1990 to 1995, Mr. Perez
served as Senior Vice President--Corporate Finance of Offshore
34
<PAGE>
Pipelines, Inc. Mr. Perez was Vice President--Investments for Graham
Resources, Inc., from August 1987 to October 1990 and from January 1976 to
August 1987 served as a Vice President with InterFirst Bank Dallas in its
international and energy banking group.
Michael D. Cain has served as Trico's Vice President--Marketing since
February 1993. From 1986 to 1993, Mr. Cain served as Marketing Manager of
Trico Operators. Prior to 1986, Mr. Cain served in the same capacity for
Seahorse, Inc., an offshore marine services company.
Kenneth W. Bourgeois has served as Trico's Vice President and Controller
since October 1993. Mr. Bourgeois also served as Controller of Trico Operators
from December 1981 to October 1993. From 1972 to December 1981, Mr. Bourgeois
worked for George Engine Company, Inc., where he held the position of
Assistant Controller and subsequently, Director of Internal Auditing. From
1969 to 1972, Mr. Bourgeois was employed by Price Waterhouse & Co. Mr.
Bourgeois is a Certified Public Accountant.
The Company's Certificate and Bylaws provide for the Board of Directors to
be divided into three classes of directors with each class to be as nearly
equal in number of directors as possible, serving staggered three-year terms.
The terms of the Class I directors, Mr. Palmer and Mr. Greimann, will expire
in 1997. The terms of the Class II directors, Mr. Ferenbach and Mr. Hutcheson,
will expire in 1998. The terms of the Class III directors, Mr. Fairley and
Dean Bailar, will expire in 1999. Each director serves until the end of his
term or until his successor is elected and qualified. See "Description of
Capital Stock--Certain Charter and Bylaw Provisions--Classified Board of
Directors."
DIRECTOR COMPENSATION
Each director who is not an employee of the Company is paid an annual
director's fee of $12,500 plus $500 for each board or committee meeting
attended. All directors are reimbursed for reasonable out-of-pocket expenses
incurred in attending board and committee meetings.
COMMITTEES
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee, reviews the Company's annual
audit and meets with the Company's independent public accountants to review
the Company's internal controls and financial management practices. The
current members of the Audit Committee are Dean Bailar and Mr. Greimann.
The Compensation Committee recommends to the Board of Directors compensation
for the Company's key employees, administers the Company's stock incentive
plans and performs such other functions as may be prescribed by the Board of
Directors. The current members of the Compensation Committee are Messrs.
Ferenbach and Hutcheson.
35
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation that the Company paid to its
Chief Executive Officer and each of its most highly compensated executive
officers for the year ended December 31, 1995. No other employee of the
Company earned more than $100,000 in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
1995 ANNUAL COMPENSATION AWARDS
--------------------------- ---------------
NO. OF SHARES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION SALARY BONUS COMPENSATION OPTIONS GRANTED COMPENSATION
------------------ -------- ----- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Thomas E. Fairley...... $150,000 -- $3,750(2) -- --
President and Chief
Executive Officer
Ronald O. Palmer....... 150,000 -- 3,750(2) -- --
Executive Vice
President
Victor M. Perez........ 123,750 -- -- 151,265 --
Vice President, Chief
Financial Officer and
Treasurer(1)..........
</TABLE>
- --------
(1) Mr. Perez joined the Company in February 1995.
(2) Represents contributions to the Company's 401(k) Plan.
STOCK INCENTIVE PLANS
1996 Stock Incentive Plan. In April 1996, the Company adopted the 1996 Stock
Incentive Plan (the "1996 Plan") to provide long-term incentives to its key
employees, including officers and directors who are employees of the Company
(the "Eligible Employees"). Under the 1996 Plan, which is administered by the
Compensation Committee of the Board of Directors, the Company may grant
Eligible Employees incentive stock options, non-qualified stock options,
restricted stock, stock awards or any combination thereof (the "Incentives").
The Compensation Committee will establish the exercise price of any stock
options granted under the Incentive Plan, provided that the exercise price may
not be less than the fair market value of the Common Stock on the date of
grant. The option exercise price may be paid in cash, in Common Stock held for
at least six months, in a combination of cash and Common Stock, or through a
broker-assisted exercise arrangement approved by the Compensation Committee.
A total of 200,000 shares of Common Stock are available for issuance under
the 1996 Plan. Incentives with respect to no more than 50,000 shares of Common
Stock may be granted to any single Eligible Employee in one calendar year.
Proportionate adjustments will be made to the number of shares subject to the
1996 Plan, including the shares subject to outstanding Incentives, in the
event of any recapitalization, stock dividend, stock split, combination of
shares or other change in the Common Stock. In the event of such adjustments,
the purchase price of any outstanding option will be adjusted as and to the
extent appropriate, in the reasonable discretion of the Compensation
Committee, to provide participants with the same relative rights before and
after such adjustment.
All outstanding Incentives will automatically become exercisable and fully
vested and all performance criteria will be deemed to be waived by the Company
upon (a) a reorganization, merger or consolidation of the Company in which the
Company is not the surviving entity, (b) the sale of all or substantially all
of the assets of the Company, (c) a liquidation or dissolution of the Company,
(d) a person or group of persons, other than Berkshire and any employee
benefit plan of the Company, becoming the beneficial owner of 30% or more of
the Company's voting stock or (e) the replacement of a majority of the Board
in a contested election (a "Significant Transaction"). The Committee also has
the authority to take several actions regarding outstanding Incentives upon
the occurrence of a Significant Transaction, including requiring that
outstanding options remain exercisable only for a limited time, providing for
mandatory conversion of outstanding options in exchange for either a cash
payment or Common Stock, making equitable adjustments to Incentives or
providing that outstanding options will become options relating to securities
to which a participant would have been entitled in connection with the
Significant Transaction if the options had been exercised.
36
<PAGE>
As of the date of this Prospectus, options to purchase 103,000 shares of
Common Stock have been granted under the 1996 Plan to employees of the
Company, including options to purchase 10,000 shares to each of Messrs.
Fairley, Palmer and Perez. All of the options granted as of the date of this
Prospectus under the 1996 Plan have a ten year term, an exercise price equal
to the initial public offering price per share and will become exercisable in
50% increments, if the closing sales price of the Common Stock exceeds 125%
and 140%, respectively, of the initial public offering price for any 20
trading days within a 30-day trading period and, if not otherwise exercisable,
at the end of nine years and eleven months from the date of grant.
1993 Stock Option Plan. The Company's 1993 Stock Option Plan was adopted in
October 1993 (the "1993 Plan") and provides for the granting of "incentive
stock options," as such term is defined in Section 422 of the Internal Revenue
Code, and nonqualified stock options, each in such amounts, on such terms, and
to such Company employees as the Compensation Committee may determine. A total
of 727,512 shares are reserved for issuance pursuant to the 1993 Plan.
All options are nontransferable other than by will or pursuant to the laws
of descent and distribution. Options are exercisable only while the optionee
is employed by the Company (or under certain circumstances for a short time
thereafter). If an optionee becomes disabled or dies while employed by the
Company the option is exercisable prior to the last day of the twelfth month
following the date of termination of such optionee's employment. Any option
which is exercisable following termination of employment is exercisable only
to the extent that such option was exercisable on the termination date. All
options granted under the 1993 Plan expire ten years from the date of grant
and have an exercise price equal to the fair market value of the Common Stock
at the date of grant.
On October 29, 1993, pursuant to the 1993 Plan, the Company granted options
to purchase an aggregate of 576,247 shares of its Common Stock in equal
amounts to Messrs. Fairley and Palmer at a per share exercise price of $1.82.
As of November 30, 1993, Messrs. Fairley and Palmer surrendered 72,032 of such
options (36,016 each) to the Company, and the Company granted such options to
five other members of Company management. On February 22, 1995, the Company
granted 151,265 options to Mr. Perez at a per share exercise price of $1.82.
Upon the consummation of the Offering, all of the 727,512 options outstanding
under the 1993 Plan will be exercisable (of which 252,107 are held by Mr.
Fairley, 252,107 by Mr. Palmer and 151,265 by Mr. Perez). Options granted
under the 1993 Plan vest and become exercisable at the earlier of (i) ten
years from the date of grant or (ii) the achievement by Berkshire of certain
threshold returns on its initial investment. In April 1996 the Compensation
Committee amended certain of these options so that they would be immediately
exercisable upon completion of the Offering.
NONCOMPETITION, NONDISCLOSURE AND SEVERANCE AGREEMENTS
All officers of the Company serve at the discretion of the Company's Board
of Directors. However, the Company entered into Noncompetition, Nondisclosure
and Severance Agreements with certain members of senior management which
generally provide that such officers shall not, during the period of their
employment with the Company and for one year thereafter, engage in any
capacity in a business substantially similar to that of the Company, request
or cause any Company customer to cancel or terminate any business relationship
with the Company or attempt to persuade any Company employee or consultant to
terminate his, her or its relationship with the Company. These agreements also
prohibit the disclosure of confidential information and provide severance
benefits under certain circumstances. If the officer's employment is
terminated for any reason other than cause, defined as (i) a conviction or a
plea of nolo contendere to a felony, (ii) gross negligence in the performance
of the officer's duties, continuing after the officer's receipt of notice of
such gross negligence from the Company, (iii) a material violation of the
noncompetition, nondisclosure and severance agreement or (iv) gross misconduct
on the officer's part that is injurious to the Company, he will receive one
year's salary, any cash bonus still payable from the year preceding the
officer's termination and any non-cash benefits that he received prior to
termination. The officer will receive the same severance package in the event
of a change in
37
<PAGE>
control that is not initiated by someone who is or has been an employee of the
Company. In the case of a change in control initiated by a present or past
Trico employee, the officer has the option either to receive the severance
package or continue in his position with the Company.
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION
In accordance with the Delaware General Corporation Law, the Company's
Certificate of Incorporation (the "Certificate") contains provisions
eliminating the personal liability of the directors to the Company and its
stockholders for monetary damages for breaches of their fiduciary duties as
directors to the fullest extent permitted by Delaware law. By virtue of these
provisions, under current Delaware law a director of the Company will not be
personally liable for monetary damages for a breach of his or her fiduciary
duty except for liability for (a) a breach of his or her duty of loyalty to
the Company or to its stockholders, (b) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (c)
dividends or stock repurchases or redemptions that are unlawful under Delaware
law and (d) any transaction from which he or she receives an improper personal
benefit. In addition, the Certificate provides that if Delaware law is amended
to authorize the further elimination or limitation of the liability of a
director, then the liability of the directors shall be eliminated or limited
to the fullest extent permitted by Delaware law, as amended. These provisions
pertain only to breaches of duty by directors as directors and not in any
other corporate capacity, such as officers, and limit liability only for
breaches of fiduciary duties under Delaware corporate law and not for
violations of other laws such as the federal securities laws.
As a result of the inclusion of such provisions, stockholders may be unable
to recover monetary damages against directors for actions taken by them that
constitute negligence or gross negligence or that are in violation of their
fiduciary duties, even though it may be possible to obtain injunctive or other
equitable relief with respect to such actions. If equitable remedies are found
not to be available to stockholders in any particular case, stockholders may
not have any effective remedy against the challenged conduct. These provisions
may have the effect of reducing the likelihood of derivative litigation
against directors that might have benefitted the Company.
The Company believes that such provisions are necessary to attract and
retain qualified individuals to serve as directors. In addition, such
provisions will allow directors to perform their duties in good faith without
concern for the application of monetary liability on a retrospective basis in
the event that a court determines their conduct to have been negligent or
grossly negligent.
The Company's Bylaws require the Company to indemnify its officers and
directors against expenses and costs, judgments, settlements and fines
incurred in the defense of any claim, including any claim brought by or in the
right of the Company, to which they were made parties by reason of being or
having been officers or directors.
In addition, each of the Company's directors has entered into an indemnity
agreement that provides that the Company will indemnify the directors against
any costs and expenses, judgments, settlements and fines incurred in
connection with any claim involving a director by reason of his position as a
director; provided that the director meets certain standards of conduct for
claims that (i) have been successfully defended or (ii) two impartial
directors have determined with respect to the conduct giving rise to such
claim, that the officer or director acted in good faith. No indemnification
may be made, however, for claims in which the officer or director has been
adjudicated in a final judgment to be liable to the Company except to the
extent that the court finds indemnification to be proper.
38
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth as of April 30, 1996 certain information
regarding beneficial ownership of the Common Stock by (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock after giving effect to the Offering, (ii) each
director of the Company, (iii) each of the Company's executive officers, (iv)
all of the Company's directors and executive officers as a group and (v) the
Selling Stockholders. Unless otherwise indicated, the Company believes that
the stockholders listed below have sole investment and voting power with
respect to their shares based on information furnished to the Company by such
owners.
<TABLE>
<CAPTION>
SHARES SHARES BENEFICIALLY
BENEFICIALLY OWNED AFTER OFFERING
OWNED PRIOR TO AND
OFFERING(2) RECAPITALIZATION(2)(3)
-------------------- SHARES ----------------------------
NAME OF BENEFICIAL TO BE
OWNER(1) NUMBER PERCENT SOLD NUMBER PERCENT
------------------ --------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Berkshire Fund III, A
Limited Partnership.... 3,100,117 86.5% 416,962 2,683,155 40.7%
Thomas E. Fairley....... 350,737(4) 9.1% -- 350,737(4) 5.0%
Ronald O. Palmer........ 350,737(4) 9.1% -- 350,737(4) 5.0%
Benjamin F. Bailar...... 23,702 * -- 23,702 *
Carl Ferenbach.......... 3,267,385(5) 91.1% -- 2,833,365 43.0%
Garth H. Greimann....... 3,267,385(6) 91.1% -- 2,833,365 43.0%
Edward C. Hutcheson,
Jr..................... 23,702 * -- 23,702 *
Victor M. Perez......... 157,175(7) 4.2% -- 157,175(7) 2.2%
Michael D. Cain......... 19,461(8) * -- 19,461(8) *
Kenneth W. Bourgeois.... 19,461(8) * -- 19,461(8) *
Bradley M. Bloom........ 26,058 * 3,516 22,542 *
Caroline M. Clifford
Present Interest Trust. 8,687 * 1,172 7,515 *
Catherine K. Clifford
Present Interest Trust. 8,687 * 1,172 7,515 *
John C. Clifford Present
Interest Trust......... 8,684 * 1,172 7,512 *
Russell L. Epker........ 26,058 * 3,516 22,542 *
Richard K. Lubin
Daughters' Trusts...... 26,054 * 3,516 22,538 *
Kevin T. Callaghan...... 9,695 * 1,302 8,393 *
Jane Brock-Wilson....... 9,695 * 1,302 8,393 *
Robert J. Small......... 1,075 * 130 945 *
Ian K. Loring........... 1,075 * 130 945 *
Ross M. Jones........... 1,075 * 130 945 *
FSC Corp................ 65,980 1.8% 65,980 0 *
All directors and
executive officers as a
group (9 persons)...... 4,192,104(9) 98.2% -- 3,758,084(9) 51.7%
</TABLE>
- --------
* Less than one percent
(1) The address of Berkshire Fund III, A Limited Partnership, Mr. Ferenbach
and Mr. Greimann is c/o Berkshire Partners LLC, Suite 3425, One Boston
Place, Boston, Massachusetts 02108. The address of Mr. Fairley is c/o
Trico Marine Services, Inc., 610 Palm Avenue, Houma, Louisiana 70364. The
address of Mr. Palmer is c/o Trico Marine Services, Inc., 2401
Fountainview, Suite 626, Houston, Texas 77057.
(2) Includes shares to be received in the Recapitalization as a result of
conversion of the Subordinated Notes (assuming an initial public offering
price of $14.00). In addition, Shares subject to options exercisable
within 60 days of April 30, 1996 are deemed outstanding for computing the
percentage of Common Stock owned by a person holding such options and for
the percentage owned by all directors and executive officers as a group
but are not deemed outstanding for computing the ownership percentage of
any other person.
(3) The difference reflected in the table above from the amounts shown as
being owned prior to the Offering is attributable solely to shares of
Common Stock that will be sold by the Selling Stockholders in the
Offering. With the exception of FSC Corp., the Selling Stockholders have
also agreed to sell, collectively on a pro rata basis up to 262,500
(approximately 9.6% of the stock owned by each such Selling Stockholder)
shares to cover over-allotments upon exercise of the option granted to the
Underwriters. Each of the Selling Stockholders (other than FSC Corp.) is
an affiliate of Berkshire. FSC Corp. is a wholly-owned subsidiary of The
First National Bank of Boston.
(4) Includes options to purchase 252,107 shares which will become exercisable
upon consummation of the Offering, and 20,256 shares which will be issued
in the Recapitalization to Trico Nautical, Inc., a corporation controlled
by Messrs. Fairley and Palmer.
(5) Includes 3,100,117 and 2,683,155 shares, respectively, which may be deemed
to be beneficially owned by Mr. Ferenbach as a result of his relationship
with Berkshire Fund III, A Limited Partnership and 137,815 and 120,756
shares, respectively, held by Berkshire affiliates from whom Mr. Ferenbach
has a power of attorney with respect to such shares. Mr. Ferenbach
disclaims beneficial ownership of such shares.
(6) Includes 3,100,117 and 2,683,155 shares, respectively, which may be deemed
to be beneficially owned by Mr. Greimann as a result of his relationship
with Berkshire Fund III, A Limited Partnership and 156,310 and 139,252
shares, respectively, held by Berkshire affiliates from whom Mr. Greimann
has a power of attorney with respect to such shares. Mr. Greimann
disclaims beneficial ownership of such shares.
(7) Includes options to purchase 151,265 shares which will become exercisable
upon consummation of the Offering.
(8) Includes options to purchase 14,406 shares which will become exercisable
upon consummation of the Offering.
(9) Includes 3,226,974 and 2,792,954 shares, respectively, which may be deemed
to be beneficially owned by certain directors as a result of their
relationship with Berkshire Fund III, A Limited Partnership. Beneficial
ownership of such shares is disclaimed. Also includes options to purchase
684,291 shares which will become exercisable upon consummation of the
Offering.
39
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
On October 29, 1993, the Company entered into the Management Agreement with
Berkshire pursuant to which the Company pays a monthly fee of $16,666 and
reimburses Berkshire for its out of pocket expenses in exchange for management
and other consulting services rendered by Berkshire in the areas of financial
and strategic corporate planning. In addition, pursuant to the Management
Agreement, Berkshire received a financial advisory fee of $370,000 in October
1993. Upon consummation of the Offering, the Management Agreement will be
terminated, and the Company will no longer be required to pay the monthly fee.
STOCKHOLDER NOTES
The Company issued approximately $10.8 million in aggregate principal amount
of its Subordinated Notes to its current shareholders in amounts proportionate
to such stockholders' equity investment in the Company, of which $9,445,171
was issued to Berkshire Fund III, A Limited Partnership, $226,700 to Trico
Nautical Inc., a corporation owned by Messrs. Fairley and Palmer, $112,490 to
each of Messrs. Fairley and Palmer, $79,391 to Mr. Ferenbach, $66,665 to each
of Messrs. Bailar and Hutcheson, $29,538 to Mr. Greimann, $16,667 to Mr. Perez
and $12,900 to each of Messrs. Cain and Bourgeois. The Subordinated Notes are
due March 31, 2001, and do not contain a prepayment premium or penalty.
Interest on the Subordinated Notes is payable semiannually and may be paid by
issuing additional Subordinated Notes equal to 100% of the aggregate amount of
interest due, as long as debt of the Company, senior in rank to the
Subordinated Notes, remains outstanding. Since the issuance of the
Subordinated Notes, the Company has paid the interest due on the Subordinated
Notes by issuing additional Subordinated Notes. As a result, the Company had
approximately $13.5 million principal amount of Subordinated Notes outstanding
at April 30, 1996.
The Company intends to use a portion of the proceeds of the Offering to
repay approximately $6.0 million of indebtedness under the Subordinated Notes
owned by Berkshire. All of the approximately $7.5 million of indebtedness
remains under the Subordinated Notes will be exchanged for a number of shares
of Common Stock equal to such amount divided by the initial public offering
price per share. Assuming a $14.00 initial public offering price, Berkshire
will receive approximately 467,797 of the approximately 534,411 shares
received by the Company's existing stockholders upon the conversion of their
Subordinated Notes. See "Use of Proceeds" and "Capitalization."
SHAREHOLDERS AGREEMENT
The Company has entered into an agreement (the "Shareholders Agreement")
with all the holders of its Common Stock issued prior to the Offering,
pursuant to which such holders have limited rights to require the Company to
register such shares under the Securities Act. Under the Shareholders
Agreement, after the consummation of the Offering, Berkshire is entitled to
two demand registration rights, upon the request of holders of at least 50% of
the stock held by Berkshire; provided that Berkshire agrees to register at
least $10 million worth of Common Stock in such offering. If Berkshire makes
such a demand, all other holders of the Common Stock issued before the
Offering are entitled to include their shares in such registration.
If the Company proposes to register any Common Stock under the Securities
Act in connection with a public offering, all holders of Common Stock issued
prior to the Offering, including Berkshire, may require the Company to include
all or a portion of the holder's shares issued prior to the Offering. All of
the holders of the Company's Common Stock issued prior to the Offering have
executed a waiver of their rights under the Shareholders Agreement to register
Common Stock in connection with this Offering. The Company has agreed to pay
all the expenses of any registration under the Shareholders Agreement, other
than underwriters' discounts and commissions. See "Risk Factors--Shares
Eligible for Future Sale" and "Shares Eligible for Future Sale."
40
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 15 million shares of
common stock, $.01 par value per share (the "Common Stock"), and 5 million
shares of preferred stock, $.01 par value per share, issuable in series (the
"Preferred Stock"). As of April 30, 1996, 3,585,714 shares of Common Stock
were outstanding and held of record by approximately 27 persons, and no shares
of Preferred Stock were outstanding. Prior to the Offering, there has been no
public market for the Common Stock. Although the Common Stock has been
approved for quotation on the Nasdaq National Market, there can be no
assurance that a market for the Common Stock will develop or, if developed,
will be sustained. See "Risk Factors--No Prior Market; Possible Volatility of
Market Price; Dilution." The following description of the capital stock of the
Company is qualified in its entirety by reference to the Company's Certificate
of Incorporation (the "Certificate") and Bylaws, copies of which are filed as
exhibits to the registration statement of which this Prospectus forms a part.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share of Common
Stock held of record on all matters on which stockholders are entitled to
vote; stockholders may not cumulate votes for the election of directors.
Subject to any preferences accorded to the holders of the Preferred Stock, if
and when issued by the Board of Directors, holders of Common Stock are
entitled to dividends at such times and in such amounts as the Board of
Directors may determine. The Company has never paid cash dividends on its
Common Stock and does not intend to pay dividends for the foreseeable future.
In addition, the Company's credit arrangements contain provisions which
prohibit the Company from paying dividends on its Common Stock. See "Risk
Factors -- Dividends." Upon the dissolution, liquidation or winding up of the
Company, after payment of debts, expenses and the liquidation preference plus
any accrued dividends on any outstanding shares of Preferred Stock, the
holders of Common Stock will be entitled to receive all remaining assets of
the Company ratably in proportion to the number of shares held by them.
Holders of Common Stock have no preemptive, subscription or conversion rights
and are not subject to further calls or assessments, or rights of redemption
by the Company. The outstanding shares of Common Stock are, and the shares of
Common Stock being sold in the Offering will be, validly issued, fully paid
and nonassessable.
PREFERRED STOCK
The Company's Board of Directors has the authority, without approval of the
stockholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares and rights, preferences and limitations of each
series. Among the specific matters that may be determined by the Board of
Directors are the dividend rights, the redemption price, if any, the terms of
a sinking fund, if any, the amount payable in the event of any voluntary
liquidation, dissolution or winding up of the affairs of the Company,
conversion rights, if any, and voting powers, if any.
One of the effects of the existence of authorized but unissued Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors to
make more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby to protect the continuity of the Company's management. If, in the
exercise of its fiduciary obligations, the Board of Directors were to
determine that a takeover proposal was not in the Company's best interest,
such shares could be issued by the Board of Directors without stockholder
approval in one or more transactions that might prevent or make more difficult
or costly the completion of the takeover transaction by diluting the voting or
other rights of the proposed acquiror or insurgent stockholder group, by
creating a substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the takeover, or
otherwise. In this regard, the Company's Certificate grants the Board of
Directors broad power to establish the rights and preferences of the
authorized and unissued Preferred Stock, one or more series of which could be
issued entitling holders (i) to vote separately as a class on any proposed
merger or consolidation, (ii) to cast a proportionately larger vote together
with the
41
<PAGE>
Common Stock on any such transaction or for all purposes, (iii) to elect
directors having terms of office or voting rights greater than those of other
directors, (iv) to convert Preferred Stock into a greater number of shares of
Common Stock or other securities, (v) to demand redemption at a specified
price under prescribed circumstances related to a change of control or (vi) to
exercise other rights designated to impede a takeover. The issuance of shares
of Preferred Stock pursuant to the Board of Directors' authority described
above may adversely effect the rights of holders of the Common Stock.
In addition, certain other charter provisions that are described below may
have the effect of either alone, in combination with each other, or with the
existence of authorized but unissued capital stock of making more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors.
CERTAIN CHARTER AND BYLAW PROVISIONS
Classified Board of Directors. The Company's Certificate and Bylaws divide
the members of the Board of Directors into three classes of directors with
each class to be as nearly equal in number of directors as possible, serving
staggered three-year terms. See "Management--Executive Officers and
Directors."
Size of the Board of Directors; Removal of Directors; Filing of Vacancies on
the Board of Directors. The Company's Certificate and Bylaws provide that the
number of directors shall be fixed from time to time by the Board of
Directors, but shall not be fewer than the number required by Delaware law.
Under the Company's Certificate, a vote of 80% of the outstanding shares of
capital stock entitled to vote generally in an election of directors (the
"Voting Stock") is required to remove a director, and a director may only be
so removed for cause involving fraud or a violation of the duty of loyalty as
determined by a final judgment of a court of competent jurisdiction. The
Company's Certificate and Bylaws also provide that a newly created
directorship resulting from an increase in the number of directors may be
filled by the Board of Directors and any vacancies on the Board of Directors
resulting from death, resignation, removal or other cause may be filled only
by the affirmative vote of both (a) a majority of the remaining directors then
in office and (b) a majority of all Continuing Directors (as defined below),
voting as a separate group. In addition, these provisions specify that any
director elected to fill a vacancy on the Board of Directors will serve for
the remainder of the full term of the class of directors in which the new
directorship was created or in which the vacancy occurred.
Stockholder Action by Unanimous Consent. Under Delaware law, unless a
corporation's certificate of incorporation specifies otherwise, any action
that could be taken by its stockholders at an annual or special meeting may be
taken, instead, without a meeting and without notice to or a vote of other
stockholders, if a consent in writing is signed by holders of outstanding
stock having voting power that would be sufficient to take such action at a
meeting at which all outstanding shares were present and voted. The Company's
Certificate provides that stockholder action may be taken only at an annual or
special meeting of stockholders or by unanimous written consent. As a result,
stockholders may not act upon any matter except at a duly called meeting or by
unanimous written consent.
Amendment of the Bylaws. Under Delaware law, the power to adopt, amend or
repeal bylaws is conferred upon the stockholders; however, a corporation may
in its certificate of incorporation also confer upon the board of directors
the power to adopt, amend or repeal its bylaws. The Company's Certificate and
Bylaws grant the Board of Directors the power to adopt, amend and repeal the
Bylaws at any regular or special meeting of the Board of Directors but only
upon the affirmative vote of both (i) a majority of the directors then in
office and (ii) a majority of the Continuing Directors, voting as a separate
group. The Company's stockholders may adopt, amend or repeal the Bylaws but
only at any regular or special meeting of stockholders by an affirmative vote
of 80% of the Voting Stock.
Advance Notice of Stockholder Nominations and Stockholder Business. The
Company's Bylaws permit stockholders to nominate a person for election as a
director or bring other matters before a stockholders' meeting only if such
stockholder has been, for at least one year, the beneficial owner of at least
1% of Voting Stock and only if written notice of such intent to nominate or
bring business before a meeting is given as described below.
42
<PAGE>
The notice from a stockholder intending to nominate a person for election as
a director or to propose other matters at a stockholders' meeting must be
furnished to the Company's Secretary not more than 270 days and not less than
60 days in advance of the first anniversary of the preceding year's annual
stockholders' meeting, subject to certain exceptions applicable principally to
special meetings. In addition, the notice must contain information, including
the name, age and address of the stockholder proposing such action and any
persons acting in concert with such stockholder, the number of shares of
Voting Stock held by the stockholder and the dates such stock was acquired,
and a representation by such stockholder that he or she is a holder of record
of the Company's capital stock and intends to appear at the meeting in person
and make the nomination or bring up the specified matter.
In the case of nominations for directors, the notice must also include (i)
the name, age, address and principal occupation of each nominee, (ii) a
description of all arrangements between the nominating stockholder and each
nominee, (iii) other information required to be included in a proxy statement
pursuant to the proxy rules of the Securities and Exchange Commission and (iv)
the consent of each nominee to serve as a director of the Company if elected
and an affidavit of each such nominee certifying that such nominee meets the
qualifications necessary to serve as a director of the Company. In the case of
other proposed business, the notice must set forth a brief description of the
business, the reasons for conducting such business at the meeting and any
material interest of the stockholder therein. The Chairman of the
stockholders' meeting will have the power to disregard any nomination or other
matter that fails to comply with these procedures. In addition, the Company's
Secretary may require any stockholders submitting a notice of intent to make a
nomination or bring up other business to furnish such documentary information
as may be necessary to determine that such stockholder has been for at least
one year the beneficial owner of at least 1% of the Voting Stock.
With respect to any proposal by a stockholder to bring before a meeting any
matter other than the nomination of directors, the Company's Bylaws provide
that the Company may disregard proposals that (i) are substantially
duplicative of a prior-received proposal to be voted upon at an upcoming
meeting, (ii) deal with substantially the same subject matter as a prior
proposal that was voted upon within the preceding five years and that failed
to receive affirmative votes in excess of certain specified levels, which
range, depending on the circumstances, between 3% and 10% or (iii) in the
judgment of the Board of Directors, are not proper subjects for action by
stockholders under Delaware law.
Amendment of Certain Provisions of the Certificate of Incorporation. Under
Delaware law, unless the certificate of incorporation specifies otherwise, a
corporation's certificate of incorporation may be amended by the affirmative
vote of the majority of the stockholders. The Company's Certificate requires
the affirmative vote of 80% of the Voting Stock to amend, alter or repeal
certain provisions of the Certificate regarding (i) stockholder unanimous
written consents, (ii) the classification, filling of vacancies and removal of
members of the Board of Directors, (iii) the limitation of liability of
directors, (iv) business combinations and (v) amendments to the Certificate
and the Bylaws.
Special Meetings of the Stockholders. The Company's Bylaws permit the
stockholders to call special meetings of the stockholders only upon the
written request to the Company's Secretary of the beneficial owners of at
least 25% of the outstanding Voting Stock. This provision requires the request
to set forth a brief description of the action proposed to be taken at such
special meeting and the reasons for the action, the name and address of each
beneficial owner composing the group making the request, any material interest
that each such person making the request may have in the matter, the number of
shares of Voting Stock of which each such person is the beneficial owner and
the dates upon which each person acquired his or her stock, a representation
that at least one such beneficial owner or a representative thereof intends to
appear in person at such meeting to propose the action specified in the
request and, if the proposed action includes a proposal to amend the Company's
Certificate or Bylaws, the language of the proposed amendment. The Secretary
may require any person or persons submitting a request to furnish documentary
support of the claim that the person or persons as a group beneficially owns
at least 25% of the outstanding Voting Stock. The Secretary may also refuse to
call a special meeting unless the request is made in compliance with the
foregoing procedures.
43
<PAGE>
Business Combinations. Delaware law provides that a merger, sale of
substantially all of the assets or dissolution of a company requires the
approval of the holders of a majority of the outstanding capital stock.
Pursuant to the Company's Certificate, if one of these transactions or certain
issuances, reclassifications or other transactions affecting the Company's
capital stock involves an Interested Stockholder (as defined below), the
transaction must be approved (i) by a majority of both the directors then in
office and a majority of the Continuing Directors (as defined below), voting
as a separate group and (ii) by the affirmative vote of (A) the holders of 80%
of the Voting Stock, voting together as a single class, and (B) 75% of the
Voting Stock other than Voting Stock beneficially owned by the Interested
Stockholder. An Interested Stockholder is any person who (i) is a beneficial
owner of 10% of the Voting Stock or (ii) is an affiliate of the Company and,
at any time within two years prior to the date in question, was a beneficial
owner of 10% or more of the then outstanding Voting Stock, other than the
Company or its subsidiaries, or any person owning any shares of the capital
stock of the Company as of the date of filing of the Company's Certificate and
any person whose beneficial ownership of any capital of the Company arises
solely as a result of a trusteeship or a custodial relationship with any
employee stock ownership or other employee benefit plan of the Company. A
Continuing Director is any member of the Board of Directors who is not an
Interested Stockholder or an affiliate thereof and (i) was a director prior to
the time the Interested Stockholder became an Interested Stockholder or (ii)
was recommended or elected by a majority of the Continuing Directors at a
meeting at which a quorum consisting of a majority of the Continuing Directors
was present. In the absence of an Interested Stockholder, the Continuing
Directors shall mean all the directors then in office.
This additional voting requirement does not apply if the transaction has
been approved by a majority of the Continuing Directors, or if all of the
following conditions have been met: (i) the aggregate amount of consideration
received per share by the holders meet certain "fair price" criteria, (ii)
prior to the consummation of the transaction (a) there has been no failure to
declare or pay dividends on any outstanding Preferred Stock or Common Stock,
(b) the Interested Stockholder has not received the benefits (except
proportionately as a stockholder) of any loans, advances or other financial
assistance or tax advantages provided by the Company, and (c) the Interested
Stockholder has not caused any material change in the Company's equity capital
structure and (iii) the Interested Stockholder has not become the beneficial
owner of any additional shares of Voting Stock except as part of the
transaction that resulted in such Interested Stockholder becoming an
Interested Stockholder or as a result of a pro rata stock dividend.
The Company is also subject to Section 203 of the Delaware General
Corporation Law, which prohibits Delaware corporations from engaging in a wide
range of specified transactions with any interested stockholder, defined to
include, among others, any person other than such corporation and any of its
majority-owned subsidiaries who own 15% or more of any class or series of
stock entitled to vote generally in the election of directors, unless, among
other exceptions, the transaction is approved by (i) the Board of Directors
prior to the date the interested stockholder obtained such status or (ii) the
holders of two-thirds of the outstanding shares of each class or series of
stock entitled to vote generally in the election of directors, not including
those shares owned by the interested stockholder.
The provisions described above may tend to deter any potential unfriendly
offers or other efforts to obtain control of the Company that are not approved
by the Board of Directors and thereby deprive the stockholders of
opportunities to sell shares of Common Stock at prices higher than the
prevailing market price. On the other hand, these provisions will tend to
assure continuity of management and corporate policies and to induce any
person seeking control of the Company or a business combination with the
Company to negotiate on terms acceptable to the then elected Board of
Directors.
Limitations on Foreign Ownership of Company Stock. The Company's Certificate
contains provisions designed to assure that not more than 24% of its
outstanding shares of Common Stock are owned by persons who are not U.S.
citizens. The Certificate provides that any transfer or purported transfer of
shares of Common Stock that would result in the ownership by persons who are
not U.S. citizens of more than 24% of the then outstanding shares of Common
Stock will not become effective against the Company and the Company has the
power to deny voting and dividend rights with respect to such shares and, at
its option, to redeem such shares.
44
<PAGE>
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Chemical Mellon
Shareholder Services, L.L.C.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, each of
the Underwriters named below, and each of the Underwriters for whom Schroder
Wertheim & Co. Incorporated, Raymond James & Associates, Inc. and Simmons &
Company International are acting as Representatives (the "Representatives")
has severally agreed to purchase from the Company and the Selling Stockholders
an aggregate of 3,500,000 shares of Common Stock at the price to public less
the underwriting discounts set forth on the cover page of this Prospectus, in
the amounts set forth below opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
SHARES TO
UNDERWRITERS BE PURCHASED
------------ ------------
<S> <C>
Schroder Wertheim & Co. Incorporated.........................
Raymond James & Associates, Inc..............................
Simmons & Company International..............................
---------
Total...................................................... 3,500,000
=========
</TABLE>
The Underwriting Agreement provides that the Underwriters' obligation to pay
for and accept delivery of the shares of Common Stock offered hereby is
subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all such shares, excluding shares covered by the over-
allotment option, if any are purchased. The Underwriters have informed the
Company that no sales of Common Stock will be confirmed to discretionary
accounts.
The Company has been advised by the Underwriters that they propose initially
to offer the Common Stock to the public at the public offering price set forth
on the cover page of this Prospectus and to certain dealers at such price,
less a concession not in excess of $ per share. The Underwriters may
allow and such dealers may reallow a concession not in excess of $ per
share to certain other brokers and dealers. After the Offering, the public
offering price, the concession and reallowances to dealers and other selling
terms may be changed by the Underwriters.
The Company and the Selling Stockholders (except FSC Corp.) have severally
granted to the Underwriters an option exercisable for 30 days after the date
of this Prospectus to purchase up to an aggregate of 525,000 additional shares
of Common Stock (of which 262,500 additional shares would be sold by each of
the Company and the Selling Stockholders, collectively and pro rata) to cover
overallotments, if any, at the same price per share to be paid by the
Underwriters for the other shares of Common Stock offered hereby. If the
Underwriters purchase any such additional shares pursuant to the overallotment
option, each Underwriter will be committed, subject to certain conditions, to
purchase a number of the additional shares of Common Stock proportionate to
such Underwriter's initial commitment.
The Company, its directors and executive officers, and certain stockholders
who will beneficially own an aggregate of 3,073,793 shares of the Common Stock
outstanding after the Offering have agreed with the Representatives, for a
period of 180 days after the date of this Prospectus, not to issue, sell,
offer to sell, grant any options for the sale of, or otherwise dispose of any
shares of Common Stock or any rights to purchase shares of Common Stock (other
than stock issued or options granted pursuant to the Company's stock incentive
plans), without the prior written consent of the Representatives. See "Shares
Eligible for Future Sale."
45
<PAGE>
The Company and the Selling Stockholders have severally agreed to indemnify
the Underwriters against certain liabilities that may be incurred in
connection with the sale of the Common Stock, including liabilities arising
under the Securities Act, and to contribute to payments that the Underwriters
may be required to make with respect thereto.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock will be determined by
negotiation between the Company and the Representatives. Among other factors
considered in determining the initial public offering price will be prevailing
market and economic conditions, revenues and earnings of the Company, the
state of the Company's business operations, an assessment of the Company's
management, and consideration of the above factors in relation to market
valuation of companies in related businesses and other factors deemed
relevant. There can be no assurance, however, that the prices at which the
Common Stock will sell in the public market after the Offering will not be
lower than the Price to Public.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 6,585,714 shares of
Common Stock outstanding. The 3,500,000 shares of Common Stock sold in the
Offering (plus any additional shares sold upon the Underwriters' exercise of
their over-allotment option) will be freely transferable without restriction
under the Securities Act, by persons who are not deemed to be affiliates of
the Company or acting as underwriters, as those terms are defined in the
Securities Act. The remaining 3,085,714 shares of Common Stock held by
existing stockholders were acquired in transactions not requiring registration
under the Securities Act and will be "restricted stock" within the meaning of
Rule 144. Consequently, such shares may not be resold unless they are
registered under the Securities Act or are sold pursuant to an applicable
exemption from registration, such as Rule 144 under the Securities Act.
In general, under Rule 144 as currently in effect, if at least two years
have elapsed since shares of Common Stock that constitute restricted stock
were last acquired from the Company or an affiliate of the Company, the holder
is entitled to sell within any three-month period a number of shares that does
not exceed the greater of one percent of the total shares of Common Stock then
outstanding or the average weekly trading volume of the Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
Sales under Rule 144 are subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. If at least three years have elapsed since the shares were last
acquired from the Company or an affiliate, a person who has not been an
affiliate of the Company at any time during the three months preceding the
sale is entitled to sell such shares under Rule 144(k) without regard to
volume limitations, manner of sale provisions, notice requirements or the
availability of current public information concerning the Company.
If the Company, however, proposes to register securities for its own account
under the Securities Act following the Offering, the Company's existing
stockholders are entitled, subject to certain conditions and limitations, to
include shares owned by them in such registration. Additionally, after the
consummation of the Offering, Berkshire is entitled to two demand
registrations, subject to certain conditions and limitations, and, subject to
reduction as determined by the underwriters, the other existing stockholders
are entitled to include shares in such registration for Berkshire's account.
See "Certain Relationships and Related Transactions-- Shareholders Agreement."
Substantially all of the 3,085,714 shares of the restricted stock within the
meaning of Rule 144 held by existing shareholders will be eligible for sale
immediately following the Offering in reliance on Rule 144. The Company, its
directors and executive officers, the Selling Shareholders and certain other
stockholders holding an aggregate of approximately 3,073,793 shares, have
agreed that they will not, with certain limited exceptions, issue, offer for
sale, sell, transfer, grant options to purchase or otherwise dispose of any
shares of Common Stock (other than stock issued or options granted pursuant to
the Company's stock incentive plans) without the prior written consent of the
Representative for a period of 180 days from the date of this Prospectus.
46
<PAGE>
Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance that a significant public market for the Common
Stock will develop or be sustained after the Offering. Any future sale of
substantial amounts of Common Stock in the open market may adversely affect
the market price of the Common Stock offered hereby.
NOTICE TO ONTARIO RESIDENTS
The distribution of the shares of Common Stock in the Province of Ontario,
Canada is being made only on a private placement basis and is exempt from the
requirement that the Company prepare and file a prospectus with the relevant
Canadian securities regulatory authorities. Accordingly, any resale of the
shares of Common Stock must be made in accordance with applicable securities
laws, which may require resales to be made in accordance with exemptions from
registration and prospectus requirements. Purchasers are advised to seek legal
advice prior to any resale of the shares of Common Stock.
Each Ontario purchaser who receives a purchase confirmation regarding the
purchase of shares of Common Stock will be deemed to represent to the Company
and to the dealer from whom such confirmation is received that such purchaser
is entitled under applicable Ontario securities laws to purchase such shares
of Common Stock without the benefit of a prospectus qualified under such
securities laws.
Ontario purchasers of shares of Common Stock should consult their own legal
and tax advisors with respect to the tax consequences of an investment in the
shares of Common Stock in their particular circumstances and with respect to
the eligibility of the shares of Common Stock for investment by the purchaser
under relevant Canadian legislation.
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or recision or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada
upon the Company or such persons. All or a substantial portion of the assets
of the Company and such persons may be located outside of Canada and, as a
result, it may not be possible to satisfy a judgment against the Company or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against the Company or persons outside of Canada.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., New
Orleans, Louisiana. Vinson & Elkins L.L.P., Houston, Texas, will pass upon
certain legal matters for the Underwriters.
EXPERTS
The consolidated balance sheet as of December 31, 1995 and 1994 and the
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1995 and 1994 and the period from October 29,
1993 to December 31, 1993 of the Company and the statement of revenues less
direct operating expenses for the period January 1, 1993 through October 28,
1993 of the Acquired Vessels included in this Prospectus, and related
financial statement schedule has been included herein in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
47
<PAGE>
OTHER INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 under the Securities Act with respect to
the Common Stock being offered pursuant to this Prospectus. This Prospectus
does not contain all information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Registration Statement may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Statements contained herein concerning the provisions of any documents are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement.
48
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS:
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES AND THE ACQUIRED VESSELS
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet at December 31, 1995 and 1994.................. F-3
Consolidated Statement of Operations for the years ended December 31, 1995
and 1994 and the period October 29, 1993 through December 31, 1993....... F-4
Statement of Revenues less Direct Operating Expenses of the Acquired
Vessels for the period
January 1, 1993 through October 28, 1993................................. F-4
Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1995 and 1994 and the period October 29, 1993 through
December 31, 1993........................................................ F-5
Consolidated Statement of Cash Flows for the years ended December 31, 1995
and 1994 and the period October 29, 1993 through December 31, 1993....... F-6
Notes to Consolidated Financial Statements................................ F-7
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet at March 31, 1996 and December 31, 1995........ F-17
Consolidated Statement of Operations for the three months ended March 31,
1996 and 1995............................................................. F-18
Consolidated Statement of Cash Flows for the three months ended March 31,
1996 and 1995............................................................. F-19
Notes to Consolidated Financial Statements................................ F-20
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Trico Marine Services, Inc.:
We have audited the accompanying consolidated balance sheet of Trico Marine
Services, Inc. and Subsidiaries (the "Company") as of December 31, 1995 and
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1995 and 1994 and the
period October 29, 1993 through December 31, 1993, and the statement of
revenues less direct operating expenses of the fleet of forty-nine vessels
acquired by Trico Marine Services, Inc. ("Acquired Vessels") as more fully
described in Note 1 for the period January 1, 1993 through October 28, 1993.
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. Those standards require that we plan and perform the audits 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.
The accompanying statement of revenues less direct operating expenses of the
Acquired Vessels was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the
registration statement on Form S-1 of Trico Marine Services, Inc.) as
described in Note 1 and are not intended to be a complete presentation of the
results of operations for the Acquired Vessels.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Trico Marine Services, Inc. and Subsidiaries at December 31, 1995 and 1994,
and the results of their operations and their cash flows for the years ended
December 31, 1995 and 1994 and the period October 29, 1993 through December
31, 1993, and the revenues less direct operating expenses of the Acquired
Vessels for the period January 1, 1993 through October 28, 1993, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New Orleans, Louisiana March 27, 1996, except for Note 14 as to which the date
is April 29, 1996
F-2
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,117 $ 1,770
Accounts receivable, net.................................. 7,417 7,747
Prepaid expenses and other current assets................. 156 241
------- -------
Total current assets.................................... 8,690 9,758
------- -------
Property and equipment, at cost:
Marine vessels............................................ 44,603 42,494
Transportation and other.................................. 856 432
------- -------
45,459 42,926
Less accumulated depreciation and amortization.............. 6,195 4,418
------- -------
Net property and equipment................................ 39,264 38,508
------- -------
Other assets, net........................................... 4,159 3,153
------- -------
$52,113 $51,419
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable.......................................... $ 3,656 $ 1,988
Accrued expenses.......................................... 2,878 2,220
Current portion of long-term debt......................... 3,000 4,000
------- -------
Total current liabilities............................... 9,534 8,208
------- -------
Long-term debt.............................................. 23,695 23,500
Subordinated debt and accrued interest thereon.............. 13,085 11,952
Deferred income taxes, net.................................. 87 757
------- -------
Total liabilities....................................... 46,401 44,417
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 15,000,000 shares authorized,
issued 3,123,371 and 3,118,788 shares, outstanding
3,051,339 and 3,046,756 shares at December 31, 1995 and
1994, respectively......................................... 31 31
Additional paid-in capital................................ 5,649 5,640
Retained earnings......................................... 33 1,332
Treasury stock, at par value, 72,032 shares............... (1) (1)
------- -------
Total stockholders' equity.............................. 5,712 7,002
------- -------
$52,113 $51,419
======= =======
</TABLE>
The accompanying notes are integral part of these consolidated financial
statements.
F-3
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 AND THE PERIOD
OCTOBER 29, 1993 THROUGH DECEMBER 31, 1993
ACQUIRED VESSELS
STATEMENT OF REVENUES LESS DIRECT OPERATING EXPENSES
FOR THE PERIOD JANUARY 1, 1993 THROUGH OCTOBER 28, 1993
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMPANY ACQUIRED VESSELS
------------------------------------ ----------------
FOR THE PERIOD
FOR THE YEAR ENDED OCTOBER 29, FOR THE PERIOD
DECEMBER 31, 1993 THROUGH JANUARY 1, 1993
-------------------- DECEMBER 31, THROUGH
1995 1994 1993 OCTOBER 28, 1993
--------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Charter fees.......................................................... $ 26,657 $ 28,895 $ 6,125 $ 26,871
Other vessel income................................................... 41 139 20 --
--------- --------- --------- --------
Total revenues...................................................... 26,698 29,034 6,145 26,871
--------- --------- --------- --------
Operating expenses:
Direct labor and other operating expenses............................. 16,520 16,458 2,952 15,509
Management fees....................................................... 468 707 90 1,002
General and administrative............................................ 2,509 2,057 256 1,412
Amortization of marine inspection costs............................... 1,930 1,490 222 1,176
Other................................................................. 545 764 33 875
--------- --------- --------- --------
Total operating expenses............................................ 21,972 21,476 3,553 19,974
--------
Revenues less direct operating expenses................................. -- -- -- $ 6,897
========
Depreciating expense.................................................... 2,740 2,786 502
--------- --------- ---------
Operating income........................................................ 1,986 4,772 2,090
Interest expense........................................................ 3,850 3,767 620
Amortization of deferred financing costs................................ 381 344 60
Gain on sale of vessels................................................. (244) -- --
Other income, net....................................................... (32) (51) --
--------- --------- ---------
Income (loss) before income taxes....................................... (1,969) 712 1,410
Income tax expense (benefit)............................................ (670) 226 564
--------- --------- ---------
Net income (loss)....................................................... $ (1,299) $ 486 $ 846
========= ========= =========
Weighted average common shares outstanding.............................. 3,050,688 3,010,285 3,019,609
========= ========= =========
Net income (loss) per average common share outstanding.................. $ (0.43) $ 0.16 $ 0.28
========= ========= =========
</TABLE>
The accompanying notes are an integral part for these consolidated financial
statements
F-4
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
AND THE PERIOD OCTOBER 29, 1993 THROUGH DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
----------------- PAID-IN RETAINED ----------------
SHARES DOLLARS CAPITAL EARNINGS SHARES PAR VALUE
--------- ------- ---------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock
on October 29, 1993.... 3,025,300 $30 $5,472 $ -- -- $--
Issuance of common
stock.................. 56,815 1 102 -- -- --
Contribution of treasury
stock.................. -- -- -- -- 72,032 1
Net income.............. -- -- -- 846 -- --
--------- --- ------ ------- ------ ---
Balance, December 31,
1993................... 3,082,115 31 5,574 846 72,032 1
Issuance of common
stock.................. 36,673 -- 66 -- -- --
Net income.............. -- -- -- 486 -- --
--------- --- ------ ------- ------ ---
Balance, December 31,
1994................... 3,118,788 31 5,640 1,332 72,032 1
Issuance of common
stock.................. 4,583 -- 9 -- -- --
Net loss................ -- -- -- (1,299) -- --
--------- --- ------ ------- ------ ---
Balance, December 31,
1995................... 3,123,371 $31 $5,649 $ 33 72,032 $ 1
========= === ====== ======= ====== ===
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 AND THE PERIOD
OCTOBER 29, 1993 THROUGH DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 29,
1993 THROUGH
DECEMBER 31,
1995 1994 1993
------- ------ --------------
<S> <C> <C> <C>
Net income (loss)............................. $(1,299) $ 486 $ 846
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization............... 5,111 4,620 783
Deferred income taxes....................... (670) 577 180
Interest on subordinated debt............... 1,117 1,009 165
Gain on sale of vessels..................... (244) -- --
Provision for doubtful accounts............. 240 240 --
Change in operating assets and liabilities:
Accounts receivable......................... 91 (549) (7,438)
Prepaid expenses and other current assets... 25 72 (353)
Accounts payable and accrued expenses....... 2,327 191 4,018
Other, net.................................... (287) 20 (317)
------- ------ -------
Net cash provided by (used in) operating
activities............................... 6,411 6,666 (2,116)
------- ------ -------
Cash flows from investing activities:
Purchases of property and equipment......... (5,343) (379) (45,306)
Deferred marine inspection costs............ (2,115) (1,792) --
Proceeds from sale of vessels............... 1,337 3,139 --
Purchase of 50% of Trico Marine Operators,
Inc. common stock.......................... -- -- (205)
------- ------ -------
Net cash provided by (used in) investing
activities............................... (6,121) 968 (45,511)
------- ------ -------
Cash flows from financing activities:
Proceeds from issuance of common stock...... 9 66 5,390
Proceeds from issuance of long-term debt and
subordinated debt.......................... 4,517 2,883 44,136
Repayment of long-term debt................. (5,305) (9,000) --
Deferred financing costs and other.......... (164) (8) (1,704)
------- ------ -------
Net cash provided by (used in) financing
activities............................... (943) (6,059) 47,822
------- ------ -------
Net increase (decrease) in cash and cash
equivalents................................... (653) 1,575 195
Cash and cash equivalents at beginning of
period........................................ 1,770 195 --
------- ------ -------
Cash and cash equivalents at end of period.... $ 1,117 $1,770 $ 195
======= ====== =======
Supplemental information:
Income taxes paid........................... $ -- $ 396 $ --
======= ====== =======
Income taxes refunded....................... $ 326 $ 38 $ --
======= ====== =======
Interest paid............................... $ 2,187 $2,079 $ 456
======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND DESCRIPTION OF ACQUISITION:
Trico Marine Services, Inc. (the "Company") commenced operations on October
29, 1993 at which time it acquired a wholly-owned subsidiary of the Company,
Trico Marine Assets, Inc. ("Trico Assets") purchased a fleet of 49 vessels
including forty supply and crew boats, five lift boats, and four other
vessels, including a tug and a barge (collectively referred to as the
"Acquired Vessels") from Marine Asset Management Corporation ("MAMC"), a
wholly-owned subsidiary of Chrysler Capital Corporation, pursuant to a
Purchase Agreement dated as of October 29, 1993. Concurrently, the Company
acquired 100% of the common stock of Trico Marine Operators, Inc. ("Trico
Operators"). These acquisitions (the "Acquisition") were consummated in a
series of transactions as follows:
. Berkshire Fund III, a Limited Partnership, and other affiliated investors
purchased 2,871,615 shares of the Company's common stock for $5,220,600
cash. Concurrently, 148,845 shares of the Company's common stock were
purchased by certain members of Trico Operators' management for $65,600
cash and their 50% stock ownership in Trico Operators. An additional
4,840 shares of common stock were issued as payment of transaction fees
to a third party.
. Trico Assets entered into a Revolving Credit and Term Loan Agreement (the
"Credit Agreement") with The First National Bank of Boston and received
$33,000,000 of loan proceeds.
. The Company issued $10,432,580 of 9% Subordinated Notes proportionally to
the Company's stockholders for $10,189,316 cash and $243,264 of
inventories and other assets. An additional $16,000 of 9% Subordinated
Notes were issued as payment of transaction fees to a third party.
. Trico Assets purchased the Acquired Vessels and related inventories and
supplies for cash in the amount of $45,795,000 provided from proceeds of
the Credit Agreement and an intercompany loan from the Company.
Simultaneously, the Company purchased the remaining 50% stock ownership
in Trico Operators from MAMC for $205,000 cash.
. The Company and Berkshire Partners entered into a management agreement
pursuant to which Berkshire Partners received a financial advisory fee of
$370,000 on October 29, 1993.
The Acquisition has been accounted for by the purchase method of accounting
and substantially all of the purchase price has been allocated to the Acquired
Vessels based upon their relative fair value. There was no goodwill. The
operating results of the Acquired Vessels and Trico Operators are included in
the Company's consolidated results of operations from the acquisition date.
Subsequent to the Acquisition, management of Trico Operators continued
employment with the Company.
Concurrent with the Acquisition, the stockholders of the Company entered
into a Shareholders Agreement which contains provisions allowing members of
Trico Operators' management to require the Company to purchase their common
stock upon death or disability, retirement or termination. The Company's
requirement to repurchase these shares is eliminated upon a public stock
offering of the Company.
The Company is engaged in the ownership and operation of a diversified fleet
of supply boats, lift boats, crew boats, and other specialty service vessels,
providing support services to the offshore oil and gas industry primarily in
the Gulf of Mexico and also, offshore Mexico and Brazil. The Company's
financial position, results of operations and cash flows are affected
primarily by day rates and fleet utilization in the Gulf of Mexico which
primarily depend on the level of drilling activity, which in turn is dependent
upon both short-term and long-term trends in oil and natural gas prices.
The accompanying statement of revenues less direct operating expenses of the
Acquired Vessels was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission
F-7
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(for inclusion in the registration statement on Form S-1 of Trico Marine
Services, Inc.) and is not intended to be a complete presentation of the
results of operations for the Acquired Vessels.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation Policy
The consolidated financial statements of the Company include the accounts of
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Cash and Cash Equivalents
All highly liquid debt instruments with original maturity dates of less than
three months when purchased are considered to be cash equivalents.
Property and Equipment
Marine vessels, transportation and other equipment are stated at cost.
Depreciation for financial statement purposes is provided on the straight-line
method, assuming 10% salvage value for marine vessels. Marine vessels are
depreciated over a useful life of twenty-five to thirty years from the date of
construction. Remaining lives generally range from ten to fifteen years. Major
modifications which extend the useful life of marine vessels are capitalized
and amortized over the adjusted remaining useful life of the vessel.
Maintenance and repair cost is charged to expense as incurred. When marine
vessels or equipment are sold or otherwise disposed of, their cost and the
accumulated depreciation are removed from the accounts and any gain or loss is
recognized. Marine vessel spare parts are stated at average cost.
Drydocking expenditures in conjunction with marine inspections are
capitalized and amortized on a straight-line basis over the period to be
benefited (generally 24 to 36 months).
The Company allocated a portion of the purchase price of the Acquired
Vessels to marine inspection costs and is amortizing the costs over a period
of 19 to 39 months.
Income Taxes
The Company accounts for income taxes using the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." Deferred income taxes are provided at the currently enacted income tax
rates for the difference between the financial statement and income tax bases
of assets and liabilities.
Revenue and Expense Recognition
Charter revenue is earned and recognized on a daily rate basis. Operating
costs are expensed as incurred.
Deferred Financing Costs
Deferred financing costs include costs associated with the issuance of the
Company's debt and are being amortized on a straight-line basis over the life
of the related debt agreement.
F-8
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Direct Operating Expenses
Direct operating expenses principally include crew costs, insurance, repairs
and maintenance, drydocking charges, casualty losses and general and
administrative expense incurred by the management company.
Earnings Per Share
The Company's earnings per share has been calculated using the weighted
average number of shares of common stock outstanding during the year. Common
stock equivalents during the years ended December 31, 1995 and 1994 and the
period October 29, 1993 through December 31, 1993 had no material dilutive
effect on net income per average common share.
Use of Estimates
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain prior-period amounts have been reclassified to conform with the
presentation shown in the current year's financial statements. These
reclassifications had no effect on net income (loss) or total stockholders'
equity.
3. ACCOUNTS RECEIVABLE:
The Company's accounts receivable, net consists of the following at December
31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Trade receivables, net of allowance for doubtful accounts
of $480 and $240 in 1995 and 1994, respectively........... $6,975 $7,299
Insurance and other........................................ 442 448
------ ------
Accounts receivable, net................................... $7,417 $7,747
====== ======
</TABLE>
The Company, as agent, bills trade accounts receivables on behalf of the
vessels it operates under agreements with third parties. The Company's
receivables are primarily due from entities operating in the oil and gas
industry in the Gulf of Mexico.
Approximately $628,000 and $1,100,000 of accounts receivable at December 31,
1995 and 1994, respectively, is due from oil and gas drilling companies in
Mexico. These amounts are billed and collected in U.S. dollars.
F-9
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. OTHER ASSETS:
The Company's other assets, net consists of the following at December 31,
1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Deferred marine inspection costs, net of accumulated
amortization of $1,459 and $352 in 1995 and 1994,
respectively............................................. $2,378 $1,440
Deferred financing costs, net of accumulated amortization
of $785 and $404 in 1995 and 1994, respectively.......... 1,104 1,332
Marine vessels spare parts................................ 386 364
Other..................................................... 291 17
------ ------
Other assets, net......................................... $4,159 $3,153
====== ======
</TABLE>
5. LONG-TERM DEBT AND SUBORDINATED DEBT:
The Company's long-term debt and subordinated debt consists of the following
at December 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Revolving loan, interest at a base interest rate plus
1.75% (10.25% at December 31, 1995) payable quarterly,
principal due December 31, 1997....................... $ 800 $ 1,500
Term Loan A, interest at a base interest rate plus
1.75% (10.25% at December 31, 1995), interest and
principal installments payable quarterly with final
payment due December 31, 1999......................... 21,195 23,000
Term Loan B, interest at a base rate plus 2.75% (11.25%
at December 31, 1995) payable quarterly, principal due
December 31, 1999..................................... 4,700 3,000
------- -------
26,695 27,500
Less current maturities................................ (3,000) (4,000)
------- -------
23,695 23,500
9% Subordinated Notes and accrued interest thereon, due
March 31, 2001........................................ 13,085 11,952
------- -------
$36,780 $35,452
======= =======
</TABLE>
The annual maturities of long-term debt, as amended, are (in thousands):
<TABLE>
<S> <C>
1996.............................................................. $ 3,000
1997.............................................................. 4,800
1998.............................................................. 4,000
1999.............................................................. 4,000
2000.............................................................. 10,895
Thereafter........................................................ 13,085
-------
$39,780
=======
</TABLE>
On October 29, 1993 the Company entered into the Credit Agreement with The
First National Bank of Boston. Availability under the revolving loan is based
on the Company's accounts receivable and was limited to
F-10
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$4 million during 1993 and 1994 and was to be reduced by $1 million at both
December 31, 1995 and 1996. In 1993, the Company paid a closing fee of
$965,000 in connection with the Credit Agreement. On December 30, 1994, the
Company amended its Revolving Credit and Term Loan Agreement ("First
Amendment"). Availability under the revolving credit loan was increased to $6
million, with a reduction of $2 million effective June 29, 1995 at which time
the Company had the right to convert the revolving loan into its Term Loan B.
Principal repayments of the Term Loans A and B and the revolving credit were
also extended. The Company incurs a commitment fee of 0.5% per annum on the
unused amount. Substantially all of the Company's assets serve as collateral
for the Credit Agreement. The Credit Agreement contains certain covenants
requiring the Company to maintain debt coverage ratios and net worth levels,
limits capital expenditures and prohibits equity distributions. As of December
31, 1995, the Company was in compliance with these covenants or had obtained
appropriate effective waivers in the event of noncompliance through subsequent
amendment of the Credit Agreement.
Effective June 28, 1995, the Company amended its Credit Agreement ("Second
Amendment") to establish $5 million of availability under the revolving credit
loan and extend principal payments. Under the Second Amendment, the Company
had the right to convert $2 million of outstanding amounts under the revolving
credit loan into its Term Loan B effective October 31, 1995. The Company
converted $1.7 million of its outstanding revolving credit loan into its Term
Loan B prior to December 31, 1995 ($300,000 of amounts outstanding under the
revolving credit loan were converted into its Term Loan B subsequent to
December 31, 1995). Effective March 6, 1996, the Company amended its Credit
Agreement ("Third Amendment") to provide for an increased total credit
facility, extend principal payments and restructure other portions of the
Credit Agreement. The Third Amendment contains a revolving credit facility and
term loan provisions. A $3 million revolving credit facility, which matures in
July 1997 bears interest at 1.75% above a base rate. The Third Amendment
contains $33,000,000 of term loans in three separate tranches. Tranche A,
representing $27,300,000 bears interest at 1.75% above a base rate. Tranche B,
representing $4,200,000, which has been utilized by the Company to fund the
Brazilian Acquisition (see Note 13), bears interest at 1.75% above a base
rate. Tranche C, representing $1,500,000, bears interest at 1.75% above a base
rate and may be utilized to fund a specific project in Brazil described in the
Third Amendment. The term loans mature in December 2000. Interest on all
amounts outstanding under the Third Amendment is payable monthly with
quarterly principal payments beginning in March 1996. The Company incurs a 1/2
of 1% commitment fee on the unused portion of the amounts outstanding under
the Third Amendment. Beginning in April 1997, the Company must prepay amounts
outstanding under the term loans in the amount of 75% of excess cash flow, as
defined. The Third Amendment contains certain covenants requiring the Company
to maintain a certain debt coverage ratio and net worth levels, limits capital
expenditures and prohibits equity distributions. The Third Amendment contains
a maximum prepayment penalty of approximately $150,000 should the Company
prepay all amounts outstanding under this amendment. The maturities of debt
outstanding under the Credit Agreement as of December 31, 1995 have been
adjusted to reflect the maturities of the Company's obligations with respect
to the Third Amendment.
On October 29, 1993, the Company also sold a series of 9% Subordinated Notes
to its shareholders in the same proportion as their common stock ownership.
Holders of the 9% Subordinated Notes are only permitted to receive payments of
interest in the form of 9% Deferred Interest Notes on a semi-annual basis
until all debt under the Credit Agreement is retired. Concurrent with the
First Amendment, the Company also amended its Subordinated Notes agreement
whereby the maturities of its Subordinated Notes were extended to February 29,
2000. Concurrent with the Third Amendment, the Company also amended its
Subordinated Notes agreement whereby the maturities of its Subordinated Notes
were extended to March 31, 2001.
In December 1993, FSC Corp., a wholly-owned subsidiary of The First National
Bank of Boston, purchased 56,815 shares of the Company's common stock and
$196,710 of the 9% Subordinated Notes for $300,000.
F-11
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In order to minimize floating interest rate risk, the Company has entered
into the following agreements. During 1993, the Company purchased an interest
rate swap on a notional amount of $10 million. Under the swap, the Company
received a floating interest rate based on the Company's Term Loan A interest
rate and paid a fixed rate of 8.25%, interest settlements occurred quarterly.
The agreement was terminated in 1995 and the Company received $278,000 as
compensation for the early termination of its interest rate swap which was
amortized into interest expense over the remaining original life of the swap.
Concurrent with the termination of the above swap, the Company paid $125,000,
which will be amortized to interest expense over the two year life of the
agreement, to enter into an interest rate corridor on a notional amount of $15
million. Under the corridor, the Company's effective rate of interest on the
notional amount will not exceed 10.25%, as defined, if the floating rate does
not exceed 11.50%. If the floating rate exceeds 11.50%, the Company pays the
floating rate. The Company is exposed to certain losses in the event of non-
performance by the counter-party to the corridor. Management believes the
Company's exposure is not significant.
6. INCOME TAXES:
The components of income tax expense (benefit) of the Company for the
periods ended December 31, 1995, 1994 and 1993, are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- ----
<S> <C> <C> <C>
Current income taxes:
U.S. federal income taxes.......................... $ -- $(317) $346
State income taxes................................. -- (34) 38
Deferred income taxes:
U.S. federal income taxes.......................... (667) 572 157
State income taxes................................. (3) 5 23
------ ----- ----
$ (670) $ 226 $564
====== ===== ====
</TABLE>
The Company's deferred income taxes at December 31, 1995 and 1994 represents
the tax effect of the following temporary differences between the financial
reporting and income tax accounting bases of its assets and liabilities (in
thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Accumulated depreciation and amortization................. $7,811 $5,166
Alternative minimum tax credit carryforwards.............. (29) (29)
Net operating loss carryforward........................... (7,300) (3,998)
Other..................................................... (395) (382)
------ ------
Deferred income tax liability, net........................ $ 87 $ 757
====== ======
</TABLE>
Reconciling items which represent the difference between income taxes
computed at the Federal statutory tax rate and the provision for income taxes
are primarily the result of state income taxes.
The net operating loss carryforwards for Federal and state tax purposes of
approximately $21 million begin to expire in 2009. Realization is dependent on
generating sufficient taxable income prior to expiration of the loss
carryforwards. Although realization is not assured, management believes that
it is more likely than not that all net operating loss carryforwards will be
fully realized. The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable
income during the carryforward period are not achieved.
F-12
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. COMMON STOCK OPTION PLANS:
Pursuant to the Company's 1993 Stock Option Plan ("Option Plan") and the
Company's 1993 Key Employee Stock Option Plan ("Employee Option Plan," and
together with the Option Plan, the "Option Plans"), the Company is authorized
to grant incentive and nonqualified stock options to selected officers and
other key employees of the Company. The Compensation Committee of the Board of
Directors has the discretionary authority, subject to certain plan
specifications, to determine the amounts and other terms of such stock
options.
A total of 727,512 shares of the Company's common stock have been reserved
for issuance pursuant to the Option Plan. As of December 23, 1993, certain
affiliates of Berkshire Partners contributed 72,032 shares of the Company's
common stock to the Company. The Company reserved these shares for issuance
pursuant to the Employee Option Plan. These shares have been recorded as
treasury stock at par value.
Options to purchase 576,247 shares of the Company's common stock were
granted to officers and key members of management of the Company on October
29, 1993 at $1.818 per share, the original purchase price of the common stock,
and accordingly, no expense was recognized. Options to purchase 151,265 shares
of the Company's common stock were granted to an officer of the Company on
February 22, 1995 at the October 29, 1993 original cost of the common stock,
which was determined by the Board of Directors to be the fair market value of
the Company's stock at that time, and accordingly, no expense was recognized.
Of the options granted, 180,078 vest yearly in 25% increments beginning on
October 31, 1994, with the options fully vested upon the earlier of October
31, 1997, or at the time of a "Qualified Public Offering" of the Company's
stock, as defined. The remaining options vest and become exercisable upon the
earlier of ten years from the date of grant or the achievement of specified
returns on investment, as defined, for certain investors in the Company or,
for options representing 255,710 shares, the consummation of an "initial
public offering," as defined. The options all expire not later than ten years
from the date of grant. As of December 31, 1995, 1994 and 1993, 90,039, 45,020
and 0, respectively of the option shares were exercisable; no shares were
exercised.
8. OTHER RELATED PARTY TRANSACTIONS:
Prior to the Acquisition, Trico Operators and an affiliate of MAMC managed
certain of the Acquired Vessels owned by MAMC pursuant to operating and
management agreements. Trico Operators received management and incentive fees
from MAMC. Trico Operators and the affiliate were reimbursed for all direct
operating costs and allocated general, administrative and overhead expenses.
Amounts earned and reimbursed under these agreements were as follows (in
thousands):
<TABLE>
<CAPTION>
JANUARY 1, 1993
THROUGH
OCTOBER 28, 1993
----------------
<S> <C>
Management and incentive fees charged by Trico
Operators.............................................. $ 310
Reimbursed general and administrative costs to Trico
Operators.............................................. $1,086
Reimbursed general and administrative costs to an
affiliate of MAMC...................................... $ 326
</TABLE>
Pursuant to an agreement effective October 29, 1993 (the "Berkshire
Agreement"), Berkshire Partners is entitled to receive $16,666 each month for
five years for providing certain management and other consulting services. The
Berkshire Agreement is automatically renewable on an annual basis after the
initial five year period upon agreement of the parties. Upon consummation of a
public offering, the Berkshire Agreement will be terminated.
F-13
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During December 1994, the Company appointed two independent directors. These
two directors purchased 36,673 shares of the Company's common stock at the
original cost of the common stock. The two directors, also each purchased
approximately $67,000 of the Company's 9% Subordinated Notes.
During February 1995, an officer of the Company purchased 4,583 shares of
the Company's common stock at the original cost of the common stock and
approximately $17,000 of the Company's 9% Subordinated Notes.
9. PROFIT SHARING PLAN:
The Company has a defined contribution profit sharing plan that covers
substantially all employees who qualify as to age and length of service. As of
January 1, 1995, the Company included 401(k) provisions into this plan. In
1995, the Company's contributions to the plan were based on one quarter of the
first five percent of participant contributions plus a discretionary amount.
The Company expensed contributions to the plan for the periods ended December
31, 1995, 1994 and 1993 of $66,000, $60,500 and $9,300, respectively.
10. CONTINGENCIES:
Effective October 29, 1993, Trico Assets entered into an agreement with an
unrelated company to provide management and operating services for the five
lift boats purchased from MAMC. The agreement provides for management and
incentive fees to be paid to the unrelated company based on gross monthly
income and the achievement of specified returns, respectively. Pursuant to the
agreement, the operator has been granted a right of first refusal on any sale
of the lift boats.
In the ordinary course of business, the Company is involved in certain
personal injury, pollution and property damage claims and related threatened
or pending legal proceedings. Management, after review with legal counsel and
insurance representatives, is of the opinion these claims and legal
proceedings will be settled within the limits of the Company's insurance
coverages. At December 31, 1995 and 1994, the Company has accrued a liability
in the amount of $1,570,000 and $880,000, respectively, based upon the
insurance deductibles that management believes it may be responsible for
paying in connection with these matters. The amounts the Company will
ultimately be responsible for paying in connection with these matters could
differ materially in the near term from amounts accrued.
11. OTHER INFORMATION:
The Company maintains cash deposits with banks in excess of federally
insured limits. The Company has not experienced any losses in such accounts.
For the year ended December 31, 1995, approximately 14% and 11% of the
Company's total revenues were received from two oil and gas companies and 43%
of the Company's total revenues were from its top five customers. For the year
ended December 31, 1994, approximately 10% of the Company's total revenues
were received from another oil and gas company and 43% of the Company's total
revenues were from its top five customers.
Shortly after the Acquisition, in November 1993, one of the Acquired Vessels
was severely damaged during its use, which damage was fully insured. The
casualty loss settlement information related to this vessel was considered
when allocating the purchase price, and therefore, no gain related to this
damaged vessel was recognized. Additionally, at the time of the Acquisition,
the Company determined that certain vessels would be sold within one year. The
Company applied the difference between sales proceeds related to those vessels
sold during 1994 and the carrying value of these vessels (approximately
$200,000) to the remaining vessels' cost and did not recognize a gain on the
sale of those vessels.
F-14
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued in March 1995 and is effective
for fiscal years beginning after December 15, 1995. SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. SFAS No. 123, "Accounting for Stock-Based Compensation" was
issued in October 1995 and is effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. The Statement requires
transactions to be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. The Statement does allow pro forma amounts to be
disclosed by companies which continue to apply the prior accounting provisions
for stock-based compensation. Management is currently evaluating the
alternatives available upon implementing this Statement, but expects to adopt
only the pro forma disclosure provisions. The Company does not believe that
implementation of these accounting standards, which have been issued but are
not yet effective, will have a material effect on the Company's financial
position, results of operations or cash flows.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company using available market
information and valuation methodologies described below. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not be indicative
of the amounts that the Company could realize in a current market exchange.
The use of different market assumptions or valuation methodologies may have a
material effect on the estimated fair value amounts.
The carrying amounts of cash and cash equivalents approximate fair value due
to the short-term nature of these instruments. The carrying amount of the
revolving credit and term loans approximate fair value because they bear
interest rates currently available to the Company for debt with similar terms
and remaining maturities. It is not practicable to estimate the fair value of
the subordinated debt and accrued interest thereon since quoted prices are not
readily available and valuation techniques would not be practicable due to the
subordination and uncertainty regarding timing of repayment.
13. BRAZILIAN ACQUISITION:
Effective March 15, 1996, the Company purchased seven utility vessels and a
40% interest in a marine operating company located in Brazil for a combined
price of $4.2 million. The Brazilian operating company owns another utility
vessel and operates it and the seven other purchased utility vessels under
long-term contracts with a customer located in Brazil. The acquisition has
been accounted for by the purchase method of accounting and substantially all
of the purchase price has been allocated to the vessels purchased based upon
their relative fair value. In addition to the purchase price above, $300,000
of contingent purchase price is payable based upon the operating results of
the purchased utility vessels or the attainment by the Company of a certain
contract to provide offshore marine services in Brazil.
F-15
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
ACQUIRED VESSELS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUBSEQUENT EVENTS:
On April 26, 1996, the Company's Board of Directors approved a 3.0253-for-1
split of the Company's common stock in the form of a stock dividend. A total
of 2,123,372 shares of common stock, including shares subject to repurchase by
the Company, were issued in connection with the split. The par value of each
share was not changed. Approximately $21,000 was reclassified from the
Company's additional paid-in capital account to the Company's common stock
account. All effects of this stock split, including all share amounts, were
retroactively applied to October 29, 1993. In addition, the Company authorized
5,000,000 shares of $.01 par value per share preferred stock.
In April 1996, the Company signed a purchase agreement to acquire, for $11
million, all of the outstanding capital stock of a special purpose company
whose sole assets consist of four supply vessels that historically have been
bareboat chartered to an affiliated operating company. Pursuant to the terms
of the agreement, on April 29, 1996, the Company made a $400,000 advance
payment with the balance due on or before July 31, 1996, and, on May 1, 1996,
the Company will assume operation of the four boats under bareboat charter
agreements.
In April 1996, the Company modified its Option Plan to include a provision
for the 140,459 options not already containing a provision to become
exercisable at the consummation of an "initial public offering" to become
exercisable upon such a transaction.
F-16
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................. $ 1,863 $ 1,117
Accounts receivable, net................................... 7,568 7,417
Prepaid expenses and other current assets.................. 520 156
------- -------
Total current assets..................................... 9,951 8,690
------- -------
Property and equipment, at cost:
Marine vessels............................................. 49,028 44,603
Transportation and other................................... 547 856
------- -------
49,575 45,459
Less accumulated depreciation and amortization............... 7,020 6,195
------- -------
Net property and equipment................................. 42,555 39,264
------- -------
Other assets, net............................................ 5,047 4,159
------- -------
$57,553 $52,113
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable........................................... $ 3,144 $ 3,656
Accrued expenses........................................... 2,775 2,878
Current portion of long-term debt.......................... 4,000 3,000
------- -------
Total current liabilities................................ 9,919 9,534
------- -------
Long-term debt............................................... 27,900 23,695
Subordinated debt and accrued interest thereon............... 13,384 13,085
Deferred income taxes, net................................... 275 87
------- -------
Total liabilities........................................ 51,478 46,401
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 15,000,000 shares authorized,
issued 3,123,371, outstanding 3,051,339 shares at March 31,
1996 and December 31, 1995.................................. 31 31
Additional paid-in capital................................. 5,649 5,649
Retained earnings.......................................... 396 33
Treasury stock, at par value, 72,032 shares................ (1) (1)
------- -------
Total stockholders' equity............................... 6,075 5,712
------- -------
$57,553 $52,113
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-17
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Revenues:
Charter hire............................................ $ 8,376 $ 6,348
Other vessel income..................................... 8 12
--------- ---------
Total revenues........................................ 8,384 6,360
--------- ---------
Operating expenses:
Direct labor and other operating expenses............... 4,478 4,229
Management fees......................................... 209 138
General & administrative................................ 661 655
Amortization of marine inspection costs................. 430 233
Other................................................... 104 153
--------- ---------
Total operating expenses.............................. 5,882 5,408
Depreciation expense...................................... 824 990
--------- ---------
Operating income (loss)................................... 1,678 (38)
Interest expense.......................................... 1,036 972
Amortization of deferred financing costs.................. 102 93
Gain on sale of vessel.................................... -- (56)
Other income, net......................................... (12) (30)
--------- ---------
Income (loss) before income tax expense................. 552 (1,017)
Income tax expense (benefit).............................. 188 (346)
--------- ---------
Net income (loss)..................................... $ 364 $ (671)
========= =========
Weighted average common shares outstanding................ 3,051,339 3,048,691
========= =========
Net income (loss) per average common share outstanding.... $ 0.12 $ (0.22)
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-18
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
------ -------
<S> <C> <C>
Net income (loss)............................................. $ 364 $ (671)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................... 1,372 1,328
Deferred income taxes....................................... 188 (346)
Interest on subordinated debt............................... 298 269
Gain on sale of vessels..................................... -- (56)
Provision for doubtful accounts............................. 40 60
Change in operating assets and liabilities:
Accounts receivable......................................... (191) 1,855
Prepaid expenses and other current assets................... (379) (228)
Accounts payable and accrued expenses....................... (615) (187)
Other, net.................................................... (63) 3
------ -------
Net cash provided by operating activities................... 1,014 2,027
------ -------
Cash flows from investing activities:
Purchases of property and equipment......................... (4,115) (1,909)
Deferred USCG expenses...................................... (304) (198)
Proceeds from sales of vessels.............................. -- 400
Investment in unconsolidated company........................ (635) --
------ -------
Net cash used in investing activities....................... (5,054) (1,707)
------ -------
Cash flows from financing activities:
Proceeds from issuance of common stock...................... -- 9
Proceeds from issuance of long-term debt and subordinated
debt....................................................... 6,169 2,017
Repayment of long-term debt................................. (964) (2,884)
Deferred financing costs and other.......................... (322) (222)
Registration expenses....................................... (97) 0
------ -------
Net cash provided by (used in) financing activities....... 4,786 (1,080)
------ -------
Net increase (decrease) in cash and cash equivalents.......... 746 (760)
Cash and cash equivalents at beginning of period.............. 1,117 1,770
------ -------
Cash and cash equivalents at end of period.................... $1,863 $ 1,010
====== =======
Supplemental information:
Income taxes paid........................................... $ 2 $ --
====== =======
Income taxes refunded....................................... $ -- $ 11
====== =======
Interest paid............................................... $1,217 $ 1,409
====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-19
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENT PRESENTATION:
The consolidated financial statements for Trico Marine Services, Inc. (the
"Company") included herein are unaudited but reflect, in management's opinion,
all adjustments, consisting only of normal recurring adjustments, that are
necessary for a fair presentation of the Company's financial position and the
results of its operations for the interim periods presented. Because of the
nature of the Company's business, the results of operations for the three
months ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the full fiscal year. The financial statements included
herein should be read in conjunction with the financial statements and notes
thereto included in the Company's Consolidated Financial Statements for the
year ended December 31, 1995.
2. AMENDMENT OF CREDIT AGREEMENT:
Effective March 6, 1996, the Company amended its Credit Agreement (the
"Amendment") to provide for an increased total credit facility, extend
principal payments and restructure other portions of the Credit Agreement. The
Amendment contains a revolving credit facility and term loan provisions. A $3
million revolving credit facility, which matures in July 1997 bears interest
at 1.75% above a base rate. The Amendment contains $33,000,000 of term loans
in three separate tranches. Tranche A, representing $27,300,000 bears interest
at 1.75% above a base rate. Tranche B, representing $4,200,000, which has been
utilized by the Company to fund the Brazilian Acquisition (see Note C), bears
interest at 1.75% above a base rate. Tranche C, representing $1,500,000, bears
interest at 1.75% above a base rate and may be utilized to fund a specific
project in Brazil described in the Amendment. The term loans mature in
December 2000. Interest on all amounts outstanding under the Amendment is
payable monthly with quarterly principal payments beginning in March 1996. The
Company incurs a 1/2 of 1% commitment fee on the unused portion of the amounts
outstanding under the Amendment. Beginning in April 1997, the Company must
prepay amounts outstanding under the term loans in the amount of 75% of excess
cash flow, as defined. The Amendment contains certain covenants requiring the
Company to maintain a certain debt coverage ratio and net worth levels, limits
capital expenditures and prohibits equity distributions. The Amendment
contains a maximum prepayment penalty of approximately $150,000 should the
Company prepay all amounts outstanding under this Amendment.
3. BRAZILIAN ACQUISITION:
On March 15, 1996, the Company purchased seven utility vessels and a 40%
interest in a marine operating company located in Brazil for a combined price
of $4.2 million. The Brazilian operating company owns another utility vessel
and operates it and the seven other purchased utility vessels under long-term
contracts with a customer located in Brazil. The acquisition has been
accounted for by the purchase method of accounting. Of the purchase price,
$3,565,000 has been allocated to the vessels purchased based upon their
relative fair value, $270,000 has been allocated to the Company's investment
in the stock of the Brazilian operating company with the remaining $365,000
allocated to goodwill. In addition to the purchase price above, $300,000 of
contingent purchase price is payable based upon the operating results of the
purchased utility vessels or the attainment by the Company of a certain
contract to provide offshore marine service in Brazil.
4. SUBSEQUENT EVENTS:
In April 1996, the Company signed a purchase agreement to acquire, for $11
million, all of the outstanding capital stock of a special purpose company
whose sole assets consist of four supply vessels that historically have been
bareboat chartered to an affiliated operating company. Pursuant to the terms
of the agreement, on April 29, 1996, the Company made a $400,000 advance
payment with the balance due on or before July 31, 1996, and, on May 1, 1996,
the Company will assume operation of the four boats under bareboat charter
agreements.
F-20
<PAGE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
On April 26, 1996, the Company's Board of Directors approved a 3.0253-for-1
split of the Company's common stock in the form of a stock dividend. All
effects of this stock split, including all share amounts, were retroactively
applied to October 29, 1993.
In April 1996, the Company modified its Option Plan to include a provision
for the 140,459 options not already containing a provision to become
exercisable at the consummation of an "initial public offering" to become
exercisable upon such a transaction.
F-21
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER
TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
The Company............................................................... 12
Use of Proceeds........................................................... 12
Dividend Policy........................................................... 13
Dilution.................................................................. 14
Capitalization............................................................ 15
Selected Consolidated Financial and Operating Data........................ 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 25
Management................................................................ 34
Principal and Selling Stockholders........................................ 39
Certain Relationships and Related Transactions............................ 40
Description of Capital Stock.............................................. 41
Underwriting.............................................................. 45
Shares Eligible for Future Sale........................................... 46
Notice to Ontario Residents............................................... 47
Legal Matters............................................................. 47
Experts................................................................... 47
Other Information......................................................... 48
Index to Consolidated Financial Statements................................ F-1
</TABLE>
---------------
UNTIL JUNE , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,500,000
[PASTE-UP LOGO]
TRICO MARINE SERVICES, INC.
COMMON STOCK
($.01 PAR VALUE)
SCHRODER WERTHEIM & CO.
RAYMOND JAMES
& ASSOCIATES, INC.
SIMMONS & COMPANY
INTERNATIONAL
MAY , 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses payable in connection with the proposed sale of Common
Stock covered hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee............................................. $ 20,820
NASD filing fee.................................................. 6,538
Nasdaq National Market application fee........................... 30,804
Blue Sky fees and expenses Total................................. 10,000
Accounting fees.................................................. 110,000
Printing expenses................................................ 80,000
Legal fees and expenses.......................................... 150,000
Transfer agent fees.............................................. 5,000
Miscellaneous expenses........................................... 86,838
---------
Total............................................................ $ 500,000*
=========
</TABLE>
- --------
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify its directors and officers in a variety of
circumstances, which may include liabilities under the Securities Act of 1933,
as amended (the "Securities Act"). In addition, the Registrant's bylaws
provide for the indemnification of directors and officers against expenses and
liabilities incurred in connection with defending actions brought against them
for negligence or misconduct in their official capacities. The Registrant also
has indemnity agreements, a form of which is filed as Exhibit 10.1, with each
of its directors, which provide for indemnification of such directors. Prior
to the effectiveness of this Registration Statement, the Registrant will
purchase insurance permitted by the Delaware General Corporation Law on behalf
of directors and officers, which may cover liabilities under the Securities
Act. The Underwriting Agreement, a form of which is filed as Exhibit 1.1 and
incorporated herein by reference, also provides indemnification to directors
and officers of the Registrant under certain conditions.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On October 26, 1993, the Company issued 303 shares of its Common Stock to
Berkshire Fund III Investment Corp. (an affiliate of Berkshire) for an
aggregate purchase price of $550.
On October 29, 1993, the Company issued an aggregate of 2,953,268 (including
the 303 shares referred to in the preceding paragraph) shares of its Common
Stock and $10,448,580 in principal amount of its Notes for an aggregate
purchase price of $15,948,580 to Berkshire Fund III Investment Corp.,
affiliates of Berkshire, members of Company management and an intermediary.
Also on October 29, 1993, pursuant to its 1993 Stock Option Plan, the
Company granted options to buy an aggregate of 576,247 shares of its Common
Stock in equal amounts to Messrs. Fairley and Palmer at a per share exercise
price of $1.82. As of November 30, 1995, Messrs. Fairley and Palmer
surrendered 72,032 of such options (36,016 each) of the Company, and the
Company granted such options to five other members of Company management
(Messrs. Cain, Bourgeois, Edson, Bailey and Steele).
On December 27, 1993, the Company issued 56,815 shares of Common Stock and
$196,710 in principal amount of its Notes for an aggregate purchase price of
$300,000 to FSC Corp. ("FSC"), a wholly-owned subsidiary of the First National
Bank of Boston.
II-1
<PAGE>
On December 30, 1994, the Company issued to Benjamin F. Bailar 18,336 shares
of Common Stock and $66,664.50 in principal amount of its Notes for an
aggregate purchase price of $100,000. The Company also issued 18,336 shares of
Common Stock and $66,664.50 in principal amount of its Notes to Edward C.
Hutcheson, Jr. on the same day.
On February 22, 1995, the Company issued 4,583 shares of Common Stock and
$16,667.50 in principal amount of its Notes to Victor M. Perez for an
aggregate purchase price of $25,000. The Company also issued to Mr. Perez
options to buy 151,265 shares of Common Stock at an exercise price of $1.82.
All of the securities described above were offered and sold without
registration under the Securities Act inasmuch as they were deemed not subject
to registration pursuant to the exemptions provided in Section 4(2) of the
Securities Act, Regulation D and the other rules and regulations promulgated
thereunder as securities sold in transactions not involving any public
offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The exhibits filed as part of this Registration Statement are as
follows:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
3.3 Amended and Restated Certificate of Incorporation of the Company.(1)
3.4 Amended and Restated Bylaws of the Company.(1)
4 Specimen of Common Stock Certificate.(1)
5 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. as to the legality of the Company's Common Stock.
10.1* Form of Indemnity Agreement by and between the Company and each of the
Company's directors.
10.2* Note and Stock Purchase Agreement, dated as of October 29, 1993, by
and among the Company, Berkshire Fund III Investment Corp, and other
purchasers, as amended.
10.3* Amended and Related Revolving Credit and Term Loan Agreement among
Trico Marine Operators, Inc., Trico Marine Assets, Inc., the Company
and The First National Bank of Boston, the First National Bank of
Commerce, Hibernia National Bank, The First National Bank of Boston,
as Agent, and Co-Agent and Hibernia National Bank, as Co-Agent.
10.4* Management Agreement dated as of October 29, 1993 by and among
Berkshire Partners and the Company.
10.5* Management and Operating Agreement dated as of October 28, 1993 by and
among Power Offshore Services, Inc., Trico Marine Operators, Inc. and
Trico Marine Assets, Inc., as amended.
10.6* Form of Trico Marine Services, Inc. 1996 Incentive Compensation Plan.
10.7* Form of Trico Marine Services, Inc. 1993 Stock Option Plan.
10.8* Form of Stock Option Agreement under the 1993 Stock Option Plan.
10.9* Forms of Non-Qualified Time Accelerated Restricted Stock Option
Agreements.
10.10* Form of Option Agreement under the 1996 Incentive Compensation Plan.
10.11* Form of Noncompetition, Nondisclosure and Severance Agreements between
Trico Marine Operators, Inc. and each of its Executive Officers.
10.12* Stockholders Agreement by and among the Company, Berkshire Fund III
Investment Corp., various affiliates of Berkshire Partners, Eldon L.
Hinds, Ronald O. Palmer, Thomas E. Fairley, Kenneth W. Bourgeois,
Michael D. Cain, William O. Edison, Joseph O. Bailey and Frank L.
Steele dated as of October 29, 1993.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.13* Agreement by and among the Company and purchasers of its 9%
Subordinated Notes and Common Stock dated as of March 25, 1996
regarding the recapitalization of the Company.
10.14* Asset Purchase Agreement dated as of March 6, 1996 by and among the
Company, W&O Marine, Joseph A. Ollinger Co., Inc., Matthew Walker and
Joseph A. Ollinger.
10.15* Asset Purchase Agreement dated as of October 29, 1993 between Marine
Asset Management Corporation and the Company.
10.16* Purchase Agreement dated as of April 26, 1996 between the Company and
HOS Partners, L.P.
21* Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand L.L.P.(2)
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. (included in Exhibit 5).
24.1* Power of Attorney (included in Signature Page to the Registration
Statement).
24.2* Power of Attorney of Benjamin F. Bailar.
24.3* Power of Attorney of Carl Ferenbach
</TABLE>
- --------
* Previously filed.
(1) Incorporated by reference from the Company's Registration Statement on
Form 8-A filed with the Commission on April 25, 1996.
(2) Refiled by this Amendment.
(b) The financial statement schedule filed as a part of this Registration
Statement is included in this Registration Statement on pages S-1 and S-2.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act,
may be permitted to directors, officers and persons controlling the Registrant
pursuant to the provisions described in Item 14 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of said securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Trico Marine Services, Inc.:
In connection with our audits of the consolidated financial statements of
Trico Marine Services, Inc. and Subsidiaries as of December 31, 1995 and 1994
and for the years ended December 31, 1995 and 1994 and the period October 29,
1993 through December 31, 1993, which financial statements are included in the
Prospectus, we have also audited the financial statement schedule included on
page S-2 herein. This financial statement schedule is the responsibility of
the Company's management.
In our opinion, this financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
New Orleans, Louisiana
March 27, 1996, except for
Note 14 as to which the
date is April 29, 1996
S-1
<PAGE>
SCHEDULE II
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 AND THE PERIOD
OCTOBER 29, 1993 THROUGH DECEMBER 31, 1993
(IN THOUSANDS)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN C COLUMN D COLUMN E
- --------------------------------------------------------------------------------
BALANCE CHARGED BALANCE
AT TO COSTS CHARGED AT END
BEGINNING AND TO OTHER OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Deducted in balance sheet from
accounts receivable:
Allowance for doubtful
accounts--trade............ $240 $240 -- -- $480
==== ==== ==== ==== ====
1994
Deducted in balance sheet from
accounts receivable:
Allowance for doubtful
accounts--trade............ $ -- $240 -- -- $240
==== ==== ==== ==== ====
Allowance for doubtful
accounts--billed as agent.. $514 -- -- $514(1) $ --
==== ==== ==== ==== ====
1993
Deducted in balance sheet from
accounts receivable:
Allowance for doubtful
accounts--billed as agent.. $ -- -- $514(1) -- $514
==== ==== ==== ==== ====
</TABLE>
- --------
(1) Allowance for doubtful accounts--billed as agent is for receivables billed
as agent. Amount is due to the purchase of Trico Marine Operators, Inc., a
wholly-owned subsidiary. Deduction of amount was borne by the previous
owners of the vessels.
S-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO ITS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED IN THE CITY OF HOUMA,
STATE OF LOUISIANA, ON MAY 13, 1996.
TRICO MARINE SERVICES, INC.
/s/ Victor M. Perez
By___________________________________
Victor M. Perez,
Vice President, Chief Financial
Officer and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRANT'S REGISTRATION STATEMENT WAS SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------
Thomas E. Fairley Director, Chairman of the
Board, President and Chief
Executive Officer May 13, 1996
*
- ------------------------------------
Ronald O. Palmer Director, Executive Vice
President May 13, 1996
/s/ Victor M. Perez
- ------------------------------------
Victor M. Perez Vice President, Chief
Financial Officer and
Treasurer (Principal
Financial Officer) May 13, 1996
*
- ------------------------------------
Kenneth W. Bourgeois Vice President and
Controller (Principal
Accounting Officer) May 13, 1996
*
- ------------------------------------
Benjamin F. Bailar Director May 13, 1996
*
- ------------------------------------
Carl Ferenbach Director May 13, 1996
*
- ------------------------------------
Garth H. Greimann Director May 13, 1996
*
- ------------------------------------
Edward C. Hutcheson, Jr. Director May 13, 1996
</TABLE>
/s/ Victor M. Perez
*By____________________________
Victor M. Perez
Attorney-in-Fact
II-4
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE(+)
------- ----------------------- ------------
<C> <S> <C> <C>
1.1 Form of Underwriting Agreement. PF
3.1 Certificate of Incorporation of the Company. PF
3.2 Bylaws of the Company. PF
3.3 Amended and Restated Certificate of Incorporation I
of the Company.
3.4 Amended and Restated Bylaws of the Company. I
4 Specimen of Common Stock Certificate. I
5 Opinion of Jones, Walker, Waechter, Poitevent, F
Carrere & Denegre, L.L.P. as to the legality of the
Company's Common Stock.
10.1 Form of Indemnity Agreement by and between the PF
Company and each of the Company's directors.
10.2 Note and Stock Purchase Agreement, dated as of PF
October 29, 1993, by and among the Company,
Berkshire Fund III Investment Corp, and other
purchasers, as amended.
10.3 Amended and Related Revolving Credit and Term Loan PF
Agreement among Trico Marine Operators, Inc., Trico
Marine Assets, Inc., the Company and The First
National Bank of Boston, the First National Bank of
Commerce, Hibernia National Bank, The First
National Bank of Boston, as Agent, and Co-Agent and
Hibernia National Bank, as Co-Agent.
10.4 Management Agreement dated as of October 29, 1993 PF
by and among Berkshire Partners and the Company.
10.5 Management and Operating Agreement dated as of PF
October 28, 1993 by and among Power Offshore
Services, Inc., Trico Marine Operators, Inc. and
Trico Marine Assets, Inc., as amended.
10.6 Form of Trico Marine Services, Inc. 1996 Incentive PF
Compensation Plan.
10.7 Form of Trico Marine Services, Inc. 1993 Stock PF
Option Plan.
10.8 Form of Stock Option Agreement under the 1993 Stock PF
Option Plan.
10.9 Forms of Non-Qualified Time Accelerated Restricted PF
Stock Option Agreements.
10.10 Form of Option Agreement under the 1996 Incentive PF
Compensation Plan.
10.11 Form of Noncompetition, Nondisclosure and Severance PF
Agreements between Trico Marine Operators, Inc. and
each of its Executive Officers.
10.12 Stockholders Agreement by and among the Company, PF
Berkshire Fund III Investment Corp., various
affiliates of Berkshire Partners, Eldon L. Hinds,
Ronald O. Palmer, Thomas E. Fairley, Kenneth W.
Bourgeois, Michael D. Cain, William O. Edison,
Joseph O. Bailey and Frank L. Steele dated as of
October 29, 1993.
10.13 Agreement by and among the Company and purchasers PF
of its 9% Subordinated Notes and Common Stock dated
as of March 25, 1996 regarding the recapitalization
of the Company.
10.14 Asset Purchase Agreement dated as of March 6, 1996 PF
by and among the Company, W&O Marine, Joseph A.
Ollinger Co., Inc., Matthew Walker and Joseph A.
Ollinger.
10.15 Asset Purchase Agreement dated as of October 29, PF
1993 between Marine Asset Management Corporation
and the Company.
10.16 Purchase Agreement dated as of April 26, 1996 PF
between the Company and HOS Partners, L.P.
21 Subsidiaries of the Company. PF
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE(+)
------- ----------------------- ------------
<C> <S> <C> <C>
23.1 Consent of Coopers & Lybrand L.L.P. F
23.2 Consent of Jones, Walker, Waechter, Poitevent, F
Carrere & Denegre, L.L.P. (included in Exhibit 5).
24.1 Power of Attorney (included in Signature Page to PF
the Registration Statement).
24.2 Power of Attorney of Benjamin F. Bailar. PF
24.3 Power of Attorney of Carl Ferenbach PF
</TABLE>
- --------
(+)"I" indicates that the Exhibit is incorporated by reference herein. "F"
indicates that the Exhibit is filed herewith. "PF" indicates that the Exhibit
was previously filed as an Exhibit to the Registration Statement.
<PAGE>
EXHIBIT 5
Jones, Walker,
Waechter, Poitevent,
Carrere & Denegre, L.L.P.
May 13, 1996
Trico Marine Services, Inc.
610 Palm Avenue
Houma, Louisiana 70364
Dear Sirs:
We have acted as your counsel in connection with the preparation of the
Registration Statement No. 333-02990 on Form S-1, as amended by Amendments No.
1 and 2 thereto (as amended, the "Registration Statement"), filed by Trico
Marine Services, Inc. (the "Company") with the Securities and Exchange
Commission relating to the registration of the sale of up to 4,025,000 shares
of Common Stock, $0.01 par value per share (the "Shares"). In so acting, we
have examined original, or photostatic or certified copies, of such records of
the Company, certificates of officers of the Company and of public officials,
and such other documents as we have deemed relevant. In such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. In delivering the opinion set
forth below we have assumed and relied upon the matters of fact set forth in
such documents.
Based upon the foregoing, we are of the opinion that the Shares, when
issued, if not already outstanding, and sold upon the terms described in the
Registration Statement, will be validly issued and outstanding, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to us under the caption "Legal
Matters" as counsel for the Company. In giving this consent, we do not admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the general rules and
regulations of the Commission.
Very truly yours,
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 (File
No. 333-2990) of our report dated March 27, 1996, except for Note 14 as to
which the date is April 29, 1996 on our audits of the consolidated financial
statements and financial statement schedule of Trico Marine Services, Inc. and
Subsidiaries and the statement of revenues less direct operating expenses of
the Acquired Vessels. We also consent to the reference to our firm under the
caption "Experts."
Coopers & Lybrand L.L.P.
New Orleans, Louisiana
May 13, 1996
