SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
December 31, 1996
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-28316
Trico Marine Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 72-1252405
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 North American Court 70363
Houma, Louisiana (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (504)851-3833
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
Preferred Stock Purchase Rights
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes No X
The aggregate market value of the voting stock held by non-
affiliates (affiliates being directors, executive officers and
holders of more than 5% of the Company's common stock) of the
Registrant at March 11, 1998 was approximately $404,860,000.
The number of shares of the Registrant's common stock, $0.01
par value per share, outstanding at March 11, 1998 was
20,295,066.
EXPLANATORY NOTE
This Form 10-K/A amends Item 7 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) and
Item 8 (Consolidated Financial Statements), of the Annual Report
on Form 10-K of Trico Marine Services, Inc. (the "Company") for
the fiscal year ended December 31, 1996, in order to add the
following:
(a) an additional paragraph, appearing at the end of
"Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and
Capital Resources," that describes the limitations on
the ability of the Company's subsidiaries to pay
dividends and make other distributions to the Company.
(b) an additional paragraph at the end of footnote 15 to
the Company's consolidated financial statements that
sets forth the following:
(i) The Company is a holding company with no assets or
operations other than investments in its
subsidiaries;
(ii) The Subsidiary Guarantors (as defined in the new
disclosure) are wholly-owned subsidiaries of the
Company, comprise all of the direct and indirect
subsidiaries of the Company (other than
inconsequential subsidiaries) and, on a
consolidated basis, represent substantially all of
the assets, liabilities, earnings and equity of
the Company;
(iii)Each of the Subsidiary Guarantors must fully and
unconditionally guarantee the Company's
obligations under the Senior Notes (as defined in
the new disclosure) on a joint and several basis;
and
(iv) Management has determined that separate financial
statements and disclosures concerning the
Subsidiary Guarantors are not material to
investors.
These items are being added in connection with an
application by the Company to the Securities and Exchange
Commission (granted in February 1998) for a determination that
the Company need not include in its consolidated financial
statements separate financial information regarding the
Subsidiary Guarantors.
Item 7. 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. 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 crane capacity add versatility and
marketability.
During 1996 the Company acquired 18 supply boats for an
aggregate of $66.3 million. In May 1996, the Company acquired
four supply boats for $11.0 million with a portion of the
proceeds of the initial public offering. In September, October
and December of 1996, the Company acquired, in three separate
transactions, a total of 13 supply boats for $55.1 million.
These acquisitions, coupled with the acquisition in March 1996 of
the Stones River, which was refurbished, upgraded and placed into
service in March 1997, have increased the Company's supply boat
fleet from 16 at the end of 1995 to 34 at the end of 1996.
Additionally, in January 1997, the Company acquired five supply
boats and one utility boat and executed a definitive agreement to
purchase two additional supply boats for a combined total of
$36.2 million. The Company anticipates closing the acquisition
of the two additional supply boats in the second quarter of 1997.
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 ABS certification for its vessels. Maintenance
and repair 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.
Results of Operations
The table below sets forth by vessel class, the average day
rates and utilization for the Company's vessels and the average
number of vessels owned during the periods indicated. The six
boats acquired by the Company in January 1997 and the Stones
River are not included in the financial or operating data for the
periods presented below.
Year ended December 31,
1996 1995 1994
Average vessel day rates:
Supply boats . . . . . . . . . . .. $4,917 $3,060 $3,057
Lift boats . . . . . . . . . . . . 4,995 4,656 5,017
Crew/line handling boats (1)(2). . . 1,579 1,480 1,465
Average vessel utilization rate:
Supply boats . . . . . . . . . . .. 94% 78% 77%
Lift boats . . . . . . . . . . . . 67% 45% 57%
Crew/line handling boats (1)(2) . . 95% 85% 82%
Average number of vessels:
Supply boats . . . . . . . . . . .. 21.2 16.0 16.0
Lift boats . . . . . . . . . . . . 6.0 5.9 5.0
Crew/line handling boats(2) . . . . 23.3 16.8 22.3
__________
(1) Average utilization and day rates for all line handling
vessels reflect the contract rates for the Company's 40%-
owned, unconsolidated Brazilian affiliate.
(2) Includes one line-handling vessel owned by the Company's 40%-
owned, unconsolidated Brazilian affiliate.
Comparison of Year Ended 1996 to Year Ended 1995
Revenues for 1996 were $53.5 million, an increase of 100%
compared to $26.7 million in revenues for 1995. This increase
was primarily due to the expansion in the Company's vessel fleet,
both in the Gulf and offshore Brazil, the strong improvement in
average day rates and utilization for the Company's supply boats,
and the increase in utilization for the Company's lift boats.
In 1996, the Company added 26 vessels to its total fleet.
In March 1996, the Company acquired 8 line handling vessels,
including one vessel owned by the Company's 40%-owned affiliate,
that currently operate under long-term charters offshore Brazil.
In May 1996 with the proceeds from the Company's initial public
offering, the Company acquired four supply boats and in
September, October and December 1996, the Company acquired a
total of 13 additional supply boats in three separate
transactions.
All classes of vessels in the Company's fleet reported
higher utilization during 1996 compared to 1995. The greatest
increase in utilization was experienced by the Company's supply
boats and lift boats. Supply boat utilization averaged 94% for
1996, up from 78% for 1995. Average supply boat day rates for
1996 increased 60.7% to $4,917 compared to $3,060 for 1995.
These increases reflect strong market conditions in the Gulf
during 1996 and the substantial downtime incurred in 1995 for the
vessel upgrade program, during which three of the Company's
supply boats were lengthened from 165 feet to 180, one was
lengthened from 165 feet to 190 feet, and the boats' capacities
for liquid mud and bulk cargo were increased. Additionally, the
Company rebuilt and lengthened a crew boat which was placed in
service late in 1995.
Utilization of the Company's lift boats increased to 67% for
1996, from 45% during 1995. The lift boats experienced unusually
low utilization in 1995 due to drydocking related downtime and
weak market conditions which existed in the first half of 1995.
The Company's lift boats are operated by Power Offshore, a
leading operator of lift boats in the Gulf. Management and
incentive fees payable to Power Offshore in 1996 totaled $979,000
as compared to $468,000 for 1995 due to the increased revenue and
operating income generated by the lift boats.
Utilization of the crew boats and line handling vessels
increased to 95% for 1996, compared to 85% during the same period
in 1995, due to the improved market conditions in the Gulf for
crew boats and the additional eight line handling vessels
acquired in March 1996, which operate under long-term charters
offshore Brazil.
During 1996, direct vessel operating expenses increased to
$24.2 million from $17.0 million during 1995, due to the expanded
vessel fleet and increased labor, repair and maintenance costs.
Due to the increase in average vessel day rates, direct vessel
operating expenses decreased as a percentage of revenues from
63.6% during 1995 to 45.2% during 1996.
Depreciation expense increased to $4.5 million during 1996
from $2.7 million for the 1995 period due to the expanded vessel
fleet. Amortization of marine inspection costs increased to $2.2
million during 1996 from $1.9 million for 1995 due to the
amortization of increased drydocking and marine inspection costs.
General and administrative expense increased to $3.3 million
during 1996 from $2.5 million during 1995 due to the additional
personnel needed in connection with the growth in the Company's
vessel fleet and the addition of operations in Brazil. General
and administrative expenses, as a percentage of revenues,
decreased from 9.4% during 1995 to 6.1% in 1996 because the
increase in revenues and additions to the vessel fleet did not
require proportionate increases in administrative expenses.
Interest expense decreased to $2.3 million for 1996, from
$3.9 million for 1995. The decrease in interest expense was due
to a reduction in the Company's average bank debt outstanding and
lower borrowing costs for the Company in 1996 as compared to
1995. As a result of the Company's two public offerings of
common stock completed in May and November 1996, respectively,
average bank debt outstanding decreased to $18.5 million for
1996, compared to $26.6 million for 1995. In 1995 the Company
recorded gains on the sales of certain crew boats of $247,000
versus gains of $50,000 in 1996.
In 1996, the Company had income tax expense of $5.8 million
compared to an income tax benefit of $670,000 in 1995.
As a result of the prepayment of all debt outstanding under
the Company's previous bank credit facility and its subordinated
debt in the second quarter of 1996, the Company recorded an
extraordinary charge of $917,000, net of taxes of $494,000, for
the write-off of unamortized debt issuance costs.
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 days vessels are available
for charter and not being drydocked, repaired or upgraded,
decreased 12.3% from a total of 14,530 in 1994 to 12,738 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 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. Management and incentive fees paid to Power
Offshore in 1995 decreased to $468,000 from $707,000 paid in 1994
as a result of the lower level of revenues and operating income
for the lift boats during the year.
Direct vessel operating expenses decreased 1.0% from $17.2
million in 1994 to $17.0 million in 1995 (59.1% and 63.6% of
revenues, respectively). 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. The decrease in direct vessel operating
expenses was due primarily to decreases in management and
incentive fees incurred in connection with the lift boats and
other 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 (7.1% of revenues) to $2.5 million (9.4% of
revenues) 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 $30.1 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
lift boat. Interest expense on the 9% subordinated notes
originally issued by the Company in October 1993 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.
Liquidity and Capital Resources
Since its initial public offering in May 1996, the Company's
strategy has been to enhance its position as a leading supplier
of marine support services in the Gulf by pursuing opportunities
to acquire vessel fleets or single vessels and by diversifying
into international markets where management believes growth
opportunities exist. Proceeds from the initial public offering
improved the Company's financial condition by enabling the
Company to prepay all of its senior debt and $6.1 million of
subordinated debt and to establish a revolving line of credit
with the Company's commercial lenders, which, as amended,
currently provides a $65.0 million line of credit (the "Bank
Credit Facility") that can be used for additional vessel
acquisitions, vessel improvements and working capital. The
Company also used proceeds of the initial public offering to
acquire four supply vessels. As part of the Company's
recapitalization completed through its initial public offering,
the Company was also able to convert into common stock the $7.5
million in subordinated debt not repaid with proceeds of the
offering. In November 1996 the Company completed a second public
offering of common stock, the proceeds of which were used to
repay debt incurred under the Bank Credit Facility to fund a
portion of the purchase price of ten supply boats acquired in
September and October 1996. During 1996, the Company acquired a
total of 18 supply boats for $66.3 million.
Funds during 1996 were provided by $48.4 million in net
proceeds from the initial public offering, $31.1 million from the
secondary equity offering, $6.2 million in borrowings prior to
the initial public offering under the Company's previous bank
credit facility, $51.5 million in borrowings under the Bank
Credit Facility and $15.0 million in cash provided by operating
activities. During the period, the Company repaid $69.4 million
of debt and made capital expenditures totaling $79.5 million for
vessel acquisitions, vessel upgrade projects and vessel
drydocking costs.
The Company's cash provided by operating activities
increased by $8.6 million in 1996 to $15.0 million, compared to
$6.4 million for 1995. This increase was due primarily to net
income of $10.0 million compared to a net loss of $1.3 million
for last year and a $1.4 million non-cash extraordinary charge
for the writeoff of deferred financing costs in 1996. This
increase was offset in part by an increase in accounts receivable
of $10.1 million.
Capital expenditures in 1996 consisted primarily of $66.3
million for the acquisition of 18 supply boats in the Gulf, and
$4.5 million for the Company's acquisition of line handling boats
and a 40% interest in a marine operating company in Brazil in
March 1996. Other expenditures consisted primarily of U.S. Coast
Guard drydocking and marine inspection costs of $2.3 million, a
portion of the upgrade costs of the Stones River, a portion of
the initial construction costs of the SWATH vessel and the
acquisition of a larger docking and maintenance facility in
Houma, Louisiana to replace a rented facility. The Stones River
is a 180-foot supply boat, acquired in March 1996, which was
lengthened to 220 feet and outfitted with bulk capacity of 7,800
cubic feet and liquid mud capacity of 2,300 barrels. This
vessel, at an estimated total cost of $4.5 million, began
operations under a long-term charter in March 1997.
In July 1996, the Company entered into the Bank Credit
Facility, which was subsequently increased and now provides a
revolving line of credit up to $65.0 million, which matures in
October 2002 and bears interest at LIBOR plus 1 1/2% per annum
(currently approximately 7%), with a fee of 3/8% per annum on the
undrawn portion. The Bank Credit Facility is collateralized by a
fleet mortgage covering a portion of the Company's vessel fleet
and related assets and requires the Company to maintain certain
financial ratios. As of December 31, 1996, the Company had $21.0
million in outstanding borrowings under the Bank Credit Facility
which were used to fund vessel acquisitions and, in January 1997,
borrowed an additional $22.0 million to fund a portion of the
purchase price of five supply boats and one utility vessel.
Capital expenditures in 1997, excluding vessel acquisitions,
are expected to be primarily for the construction or upgrade of
vessels pursuant to previously awarded contracts. In the first
quarter of 1997, the upgrade of the Stones River was completed
and it began operations under a long-term charter. In connection
with the acquisition completed in January 1997, the Company is
upgrading one of the acquired vessels, renamed the Elkhorn River,
from 180 to 220 feet and adding a dynamic positioning system.
This vessel will begin a three-year charter contract for a well
stimulation company upon completion of its upgrade in mid 1997.
Additionally, the Company entered into a contract with a
Brazilian shipyard to acquire and complete construction of a 200-
foot supply boat to be used offshore Brazil. The Company also
will continue construction of the SWATH vessel which is expected
to be placed into operation in the first quarter of 1998. The
Company plans to obtain long-term financing for construction of
the SWATH vessel through the Maritime Administration's Title XI
ship financing program, for which the Company has a pending
application.
As of March 1, 1997, the Company had $45.5 million of
outstanding borrowings under its $65.0 million Bank Credit
Facility. The Company believes its capital expenditures for 1997
will total approximately $30.0 million, excluding vessel
acquisitions, but including U.S. Coast Guard drydocking costs and
the Company's currently planned vessel construction and upgrade
projects. The Company believes that cash generated from
operations, funds available under the Bank Credit Facility and
funds expected to be raised under the Maritime Administration's
Title XI ship financing program for the SWATH construction will
be sufficient to fund the Company's currently planned capital
projects and working capital requirements. The Company's
strategy, however, is to acquire other vessel fleets or single
vessels as part of an effort to expand its presence in the Gulf
and diversify into selected international markets. To the extent
the Company is successful in identifying such acquisition
opportunities, it most likely will require additional debt or
equity financing, depending on the size of such acquisitions.
In three separate transactions during 1997, the Company
issued an aggregate of $280.0 million principal amount of 8-1/2%
Senior Notes due 2005 (the "Senior Notes"). Pursuant to the
terms of the indentures governing the Senior Notes, the Senior
Notes must be guaranteed by each of the Company's "significant
subsidiaries" (the "Subsidiary Guarantors"), whether such
subsidiary was a "significant subsidiary" at the time of the
issuance of the Senior Notes or becomes a "significant
subsidiary" after the date of issue. Although the Bank Credit
Facility, which was amended and restated during 1997, does impose
some limitations on the ability of certain of the Company's
subsidiaries to make distributions to the Company, it expressly
permits distributions to the Company by those subsidiaries that
are Subsidiary Guarantors for scheduled principal and interest
payments on the Senior Notes.
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements Page
Report of Independent Accountants 7
Consolidated Balance Sheet as of December 31, 1996 and 1995 8
Consolidated Statement of Operations for the Years Ended
December 1996, 1995 and 1994 9
Consolidated Statement of Stockholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994 10
Consolidated Statement of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994 11
Notes to Consolidated Financial Statements 12
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, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for
the three years ended December 31, 1996. 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.
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, 1996 and 1995, and the results of
their operations and their cash flows for the three years ended
December 31, 1996, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
February 12, 1997
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1996 and 1995
(Dollars in thousands)
ASSETS 1996 1995
Current assets:
Cash and cash equivalents $ 1,047 $ 1,117
Accounts receivable, net 17,409 7,417
Prepaid expenses and other current assets 591 156
Total current assets 19,047 8,690
Property and equipment, at cost:
Land and buildings 1,565 -
Marine vessels 120,403 44,257
Construction-in-progress 7,135 346
Transportation and other 853 856
129,956 45,459
Less accumulated depreciation and amortization 10,814 6,195
Net property and equipment 119,142 39,264
Other assets 5,166 4,159
$143,355 $ 52,113
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,162 $ 3,656
Accrued expenses 3,812 2,878
Current portion of long-term debt - 3,000
Total current liabilities 8,974 9,534
Long-term debt 21,000 23,695
Subordinated debt and accrued interest thereon - 13,085
Deferred income taxes 9,401 87
Total liabilities 39,375 46,401
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 15,000,000 shares
authorized,issued 7,836,996 and 3,123,358 shares,
outstanding 7,764,964 and 3,051,326 shares at
December 31, 1996 and 1995, respectively 78 31
Additional paid-in capital 93,896 5,649
Retained earnings 10,007 33
Treasury stock, at par value, 72,032 shares at
December 31, 1996 and 1995, respectively (1) (1)
Total stockholders' equity 103,980 5,712
$143,355 $ 52,113
The accompanying notes are an integral part of these consolidated
financial statements.
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
for the years ended December 31, 1996, 1995 and 1994
(Dollars in thousands, except share and per share amounts)
1996 1995 1994
Revenues:
Charter Fees $ 53,442 $ 26,657 $ 28,895
Other vessel income 42 41 139
Total revenues 53,484 26,698 29,034
Operating expenses:
Direct vessel operating expenses 24,150 16,988 17,165
General and administrative 3,277 2,509 2,057
Amortization of marine inspection costs 2,158 1,930 1,490
Other 309 545 764
Total operating expenses 29,894 21,972 21,476
Depreciation expense 4,478 2,740 2,786
Operating income 19,112 1,986 4,772
Interest expense 2,282 3,850 3,767
Amortization of deferred financing costs 263 381 344
Gain on sales of assets (59) (244) -
Other income, net (79) (32) (51)
Income (loss) before income taxes 16,705 (1,969) 712
Income tax expense (benefit) 5,814 (670) 226
Income (loss) before extraordinary item 10,891 (1,299) 486
Extraordinary item, net of taxes (917) - -
Net income (loss) $ 9,974 $ (1,299) $ 486
Weighted average common shares outstanding 6,190,451 3,050,521 3,010,285
Primary and fully diluted earnings per
share:
Income (loss) before extraordinary item 1.76 (0.43) 0.16
Extraordinary item, net of tax (0.15) - -
Net income (loss) per average common share
outstanding $ 1.61 $ (0.43) $ 0.16
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
<CAPTION>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
for the years ended December 31, 1996, 1995 and 1994
(Dollars in thousands)
Additional Treasury Stock
Common Stock Paid-in Retained Par
Shares Dollars Capital Earnings Shares Value
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 3,082,103 $ 31 $ 5,574 $ 846 72,032 $ (1)
Issuance of common stock 36,672 - 66 - - -
Net income - - - 486 - -
Balance, December 31, 1994 3,118,775 31 5,640 1,332 72,032 (1)
Issuance of common stock 4,583 - 9 - - -
Net loss - - - (1,299) - -
Balance, December 31, 1994 3,123,358 31 5,649 33 72,032 (1)
Issuance of common stock 4,142,500 41 79,497 - - -
Debt conversion 467,613 5 7,476 - - -
Stock options exercised 103,525 1 1,274 - - -
Net income - - - 9,974 - -
Balance, December 31, 1996 7,836,996 $ 78 $ 93,896 $10,007 72,032 $ (1)
Share amounts have been adjusted to reflect a 3.0253-for-1 common
stock split effective April 26, 1996.
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
<CAPTION>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
(Dollars in thousands)
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) $ 9,974 $ (1,299) $ 486
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 6,899 5,051 4,620
Deferred income taxes 3,811 (670) 577
Interest on subordinated debt 461 1,117 1,009
Extraordinary item 1,411 - -
Gain on sales of assets (59) (244) -
Provision for doubtful accounts 130 240 240
Equity in loss of affiliate 18 - -
Change in operating assets and liabilities:
Accounts receivable (10,123) 91 (549)
Prepaid expenses and other current assets (435) 25 72
Accounts payable and accrued expenses 3,526 2,327 191
Other, net (661) (227) 20
Net cash provided by operating activities 14,952 6,411 6,666
Cash flows from investing activities:
Purchases of property and equipment (79,135) (5,343) (379)
Deferred marine inspection costs (2,292) (2,115) (1,792)
Proceeds from sales of assets 439 1,337 3,139
Investment in unconsolidated affiliate (1,293) - -
Net cash provided by (used in) investing activities (82,281) (6,121) 968
Cash flows from financing activities:
Proceeds from issuance of common stock 79,726 9 66
Proceeds from issuance of long-term debt and subordinated debt 57,669 4,517 2,883
Repayment of long-term debt (63,364) (5,305) (9,000)
Deferred financing costs and other (707) (164) (8)
Payments of subordinated debt and accrued interest thereon (6,065) - -
Net cash provided by (used in) financing activities 67,259 (943) (6,059)
Net increase (decrease) in cash and cash equivalents (70) (653) 1,575
Cash and cash equivalents at beginning of period 1,117 1,770 195
Cash and cash equivalents at end of period $ 1,047 $ 1,117 $ 1,770
Supplemental information:
Income taxes paid $ 6 $ 2 $ 396
Income taxes refunded $ - $ 330 $ 38
Interest paid $ 4,737 $ 2,865 $ 2,079
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation:
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"). 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
from Marine Asset Management Corporation, 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.
The Company is engaged in the ownership and operation of a
diversified fleet that, as of December 31, 1996, includes 34
supply boats, 6 lift boats, 15 crew boats, and 9 other
specialty service vessels, providing support services to the
offshore oil and gas industry primarily in the Gulf of
Mexico and offshore 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 ultimately is dependent upon both short-term
and long-term trends in oil and natural gas prices.
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. The Company's 40% interest in Walker Servicos
Maritimos, Ltd. ("Walker") is accounted for using the equity
method.
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
generally depreciated over a useful life of fifteen years
from the date of acquisition. 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).
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
the effective interest method over the life of the related
debt agreement.
Goodwill
Goodwill, or cost in excess of net assets of companies
acquired, is amortized over 10 years by the straight-line
method. The Company continually evaluates the
recoverability of this intangible asset by assessing whether
the amortization of the goodwill balance over its remaining
life can be recovered through expected future cash flows.
Direct Vessel Operating Expenses
Direct vessel operating expenses principally include crew
costs, insurance, repairs and maintenance, management fees,
and casualty losses.
Earnings Per Share
The Company's earnings per share has been calculated using
the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding during the
year. Stock options are considered to be common stock
equivalents. Weighted average options of 668,009 were
included as common stock equivalents for the year ended
December 31, 1996. Common stock equivalents during the
years ended December 31, 1995 and 1994 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.
Stock Split
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. The financial statements have
been restated to reflect all effects of this stock split,
including all share amounts and per share data.
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), total stockholders' equity or cash
flows.
3. Public Offerings of Common Stock:
In May 1996, the Company completed an initial public
offering of 3,292,500 shares of common stock, $.01 par
value. The proceeds received from the offering were
$48,394,000, net of underwriting discounts and other costs
of $4,286,000. Of the proceeds, the Company used
$31,150,000 to repay senior debt, $6,065,000 to repay
subordinated debt and $11,000,000 to acquire four supply
vessels. The balance of the proceeds was used by the
Company for additional working capital.
In November 1996, the Company completed a second offering
that included the issuance of 850,000 shares of common
stock, $.01 par value, by the Company. The proceeds from
the offering were $31,144,000, net of underwriting discounts
and other costs of $2,006,000. The proceeds were used to
repay $30,500,000 of the Company's revolving line of credit,
with the balance of the proceeds used for working capital
and other purposes.
4. Accounts Receivable:
The Company's accounts receivable, net consists of the
following at December 31, 1996 and 1995 (in thousands):
1996 1995
Trade receivables, net of allowance for doubtful accounts
of $610 and $480 in 1996 and 1995, respectively $ 16,172 $ 6,975
Insurance and other 1,237 442
Accounts receivable, net $ 17,409 $ 7,417
The Company, as agent, bills trade accounts receivables on
behalf of the vessels it operates under agreements with
third parties. As of December 31, 1996, the Company operated
one utility vessel for a third party. The Company's
receivables are primarily due from entities operating in the
oil and gas industry in the Gulf of Mexico and Brazil and
are dollar denominated.
5. Other Assets:
<TABLE>
<CAPTION>
The Company's other assets, net consists of the following at
December 31, 1996 and 1995 (in thousands):
1996 1995
<S> <C> <C>
Deferred marine inspection costs, net of accumulated
amortization of $3,335 and $1,459 in 1996 and 1995,respectively $ 2,667 $ 2,378
Deferred financing costs, net of accumulated
amortization of $28 and $785 in 1996 and 1995, respectively 205 1,104
Marine vessels spare parts 939 386
Goodwill, net of accumulated amortization of $43 in 1996 664 -
Investment in and advances to unconsolidated subsidiary 568 -
Other 123 291
Other assets, net $ 5,166 $ 4,159
</TABLE>
6. Long-Term Debt and Subordinated Debt:
The Company's long-term debt and subordinated debt consist
of the following at December 31, 1996 and 1995 (in
thousands):
<TABLE>
1995 1996
<S> <C> <C>
Revolving loan, interest at a base interest rate plus a
margin, as defined, on the date of borrowing (weighted
average rate of 7.089% and 10.25% at December 31, 1996
and 1995, respectively) payable at the end of the
interest period or quarterly, principal due October 8, 2002 $ 21,000 $ 800
Term loan A, interest at a base interest rate plus 1.75%
(10.25% at December 31, 1995) - 21,195
Term loan B, interest at a base rate plus 2.75% (11.25% at
December 31, 1995) - 4,700
21,000 26,695
Less current maturities - (3,000)
23,695
9% Subordinated Notes and accrued interest thereon, due
March 31, 2001 - 13,085
$ 21,000 $ 36,780
</TABLE>
On October 29, 1993 the Company entered into a revolving
credit and term loan agreement with The First National Bank
of Boston (the "Credit Agreement"). Availability under the
revolving loan was based on the Company's accounts
receivable and was limited to $4 million during 1994 and was
to be reduced by $1 million at both December 31, 1995 and
1996. On December 30, 1994, the Company amended its Credit
Agreement ("First Amendment"). Availability under the First
Amendment 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
incurred a commitment fee of 0.5% per annum on the unused
amount. Substantially all of the Company's assets served as
collateral for 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. The
Company converted $1.7 million of its outstanding revolving
credit loan into its Term Loan B in November 1995 and
$300,000 of amounts outstanding under the revolving credit
loan were converted into its Term Loan B in January 1996.
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 contained a revolving credit facility and
term loan provisions. The $3 million revolving credit
facility, which would have matured in July 1997, bore
interest at 1.75% above a base rate. The Third Amendment
contained $33,000,000 of term loans in three separate
tranches which all bore interest at 1.75% above a base rate.
Concurrent with the Third Amendment, the Company also
amended its Subordinated Notes agreement whereby the
maturities of its 9% Subordinated Notes and accrued interest
thereon were extended to March 31, 2001. Concurrent with
the Company's initial public offering in May 1996, the
Company converted $7,482,000 of the 9% Subordinated Notes
into 467,613 shares of common stock.
The outstanding principal balance of the Credit Agreement of
$31,150,000 was repaid on May 21, 1996, together with a
prepayment fee of $75,000, from the proceeds of the
Company's initial public offering of common stock. The
balance of $6,065,000 of the 9% Subordinated Notes and
accrued interest thereon was also retired with proceeds from
the initial public offering. As a result of the prepayment
of all of the Company's senior and subordinated debt, the
Company recorded an extraordinary charge of $917,000, net of
taxes of $494,000, for the write-off of the unamortized
balance of related debt issuance costs.
Effective July 26, 1996, the Company executed a new
$30,000,000 revolving credit agreement (the "Bank Credit
Facility") with the same group of lenders that provided the
Company's previous Credit Agreement which was prepaid on May
21, 1996 with proceeds from the initial public offering.
The Bank Credit Facility was increased to $35,000,000
effective August 26, 1996 and to $50,000,000 effective
October 8, 1996. The Bank Credit Facility bears interest at
LIBOR plus 1-1/2% per annum with a commitment fee of 3/8%
per annum on the undrawn portion. The Bank Credit Facility
also provides for interest payments only until October 8,
1998 when all outstanding amounts under the Bank Credit
Facility will be converted into a term loan. Upon
conversion, principal and interest payments will be due
quarterly beginning December 31, 1998 until maturity on
October 8, 2002. The Bank Credit Facility is collateralized
by certain of the Company's vessels and related assets. The
Bank Credit Facility contains certain covenants which
require the Company to maintain certain debt coverage ratios
and net worth levels, limit capital expenditures and
prohibit equity distributions.
In order to minimize floating interest rate risk, the
Company 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% with quarterly
interest settlements. The agreement was terminated in
January 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 has been amortized to interest expense over the two
year life of the agreement, to enter into an interest rate
corridor agreement on a notional amount of $15 million.
7. Income Taxes:
The components of income tax expense (benefit) of the
Company for the periods ended December 31, 1996, 1995 and
1994, are as follows (in thousands):
1996 1995 1994
Current income taxes:
U.S. federal income taxes $ 1,505 $ - $ (317)
State income taxes 4 - (34)
Deferred income taxes:
U.S. federal income taxes 3,713 (667) 572
State income taxes 98 (3) 5
$ 5,320 $ (670) $ 226
The Company's deferred income taxes at December 31, 1996 and
1995 represent the tax effect of the following temporary
differences between the financial reporting and income tax
accounting bases of its assets and liabilities (in
thousands):
1996 1995
Accumulated depreciation and amortization $15,108 $ 7,811
P&I insurance reserves (680) (474)
Alternative minimum tax credit carryforwards (451) (29)
Net operating loss carryforward (5,199) (7,300)
Other (257) 79
Deferred income tax liability, net $ 8,521 $ 87
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.
A tax benefit for the exercise of stock options in the
amount of $1,088,000 that was not included in income for
financial reporting purposes was credited directly to
additional paid-in capital.
The net operating loss carryforwards for Federal and state
tax purposes are approximately $14.8 million and $1.4
million respectively and begin to expire in 2009. The
Company had an initial public offering in May 1996, which is
considered a change of control for federal income tax
purposes. This will limit the utilization of net operating
loss carryforwards to a set level as provided by
regulations.
8. Common Stock Option Plans:
Pursuant to the Company's 1993 Stock Option Plan, 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.
Options to purchase 576,244 shares of the Company's common
stock were granted to officers and key members of management
of the Company on October 29, 1993 at $1.82 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. In April 1996, the
Company modified its 1993 Stock 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.
Pursuant to the Company's 1996 Incentive Compensation Plan,
options to purchase 104,875 shares of the Company's common
stock have been granted to officers, key members of
management and certain long-term employees at exercise
prices equal to the fair value of the Company's stock at
that time, which ranged from $16.00 to $21.88 per share.
Options to purchase 103,000 shares vested and became
exercisable upon the attainment of certain performance goals
during the year. Of the remaining options, 468 vested and
were exercisable at the date of grant with 469 options
vesting and becoming exercisable in each of the next three
years. All options expire no later than ten years from the
date of grant.
As of December 31, 1996, 1995 and 1994, 727,452, 90,039 and
45,020, respectively of the option shares were exercisable;
options for 103,525 shares were exercised in 1996. None
were exercised in 1995 or 1994.
The Company applies APB Opinion 25 and related
interpretations in accounting for its Stock Option Plans.
In 1995, the Financial Accounting Standards Board issued
SFAS No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123") which, if fully adopted by the Company, would
change the methods the Company applied in recognizing the
cost of the Stock Option Plans. Adoption of the cost
recognition provisions of SFAS 123 is optional and the
Company has decided not to elect these provisions of SFAS
123. However, pro forma disclosures as if the Company
adopted the cost recognition provisions of SFAS 123 in 1995
are required by SFAS 123 and are presented below:
As Reported Pro Forma As Reported Pro Forma
12/31/96 12/31/96 12/31/95 12/31/95
SFAS 123 Charge $ - $ 628 $ - $ 8
APB 25 Charge $ - $ - $ - $ -
Net income (loss) $ 9,974 $ 9,560 $ (1,299) $ (1,304)
Net income (loss) per
average common share $ 1.61 $ 1.54 $ (0.43) $ (0.43)
9. Other Related Party Transactions:
Pursuant to an agreement effective October 29, 1993,
Berkshire Partners was entitled to receive $16,666 each
month for five years for providing certain management and
other consulting services (the "Berkshire Agreement"). The
Berkshire Agreement was automatically renewable on an annual
basis after the initial five year period upon agreement of
the parties. The Berkshire Agreement was terminated upon
the successful completion of the Company's initial public
offering in May 1996.
During December 1994, the Company appointed two independent
directors. These two directors purchased 36,672 shares of
the Company's common stock at the 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. 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.
10. 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 in this plan. In 1996
and 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. In 1994, the
Company's contribution was discretionary. The Company
expensed contributions to the plan for the years ended
December 31, 1996, 1995 and 1994 of $113,000, $66,000 and
$60,000, respectively.
11. Commitment and Contingencies:
Effective October 29, 1993, Trico Assets entered into an
agreement with an unrelated company to provide management
and operating services for certain lift boats. The agreement
provides for management and incentive fees to be paid to the
unrelated company based on percentages of gross monthly
income and net operating income, respectively. Management
fees of $979,000, $468,000 and $707,000 were included in
direct vessel operating expenses for the years ended
December 31, 1996, 1995 and 1994, 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, 1996 and
1995, the Company has accrued a liability in the amount of
$1,963,000 and $1,570,000, 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.
On August 15, 1996, the Company entered into a five year
contract with Petroleo Brasileiro S.A. ("Petrobras"), to
build and operate an advanced "small water area twin hull"
crew boat (the "SWATH vessel") which will be used to
transport personnel to offshore platforms. On October 7,
1996, the Company entered into an agreement with a shipyard
to construct the SWATH vessel. In addition, the Company is
refurbishing and upgrading two additional supply vessels.
The total cost of the three vessels, including equipment
provided by the Company, is expected to be approximately
$20,900,000. The Company expects the supply vessels to be
completed and operations to commence in the first and third
quarters of 1997. The Company expects the SWATH vessel to
commence operations in the first quarter of 1998.
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
loan approximates fair value because it bears interest rates
currently available to the Company for debt with similar
terms and remaining maturities. At December 31, 1995, it
was 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. Vessel Acquisitions:
On March 15, 1996, the Company acquired seven line handling
vessels and a 40% interest in Walker, a marine operating
company located in Brazil, for a combined price of
$4,200,000. Walker owns an eighth line handling vessel and
operates it and the seven other acquired 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 acquired vessels based upon their relative
fair value, $270,000 has been allocated to the Company's
investment in the stock of Walker with the remaining
$365,000 allocated to goodwill. In addition to the purchase
price above, $300,000 of contingent purchase price was paid
on August 27, 1996 based upon the attainment by the Company
of a certain contract to provide offshore marine services in
Brazil. This amount has been recorded as additional
goodwill.
On May 22, 1996, the Company acquired for $11,000,000 all of
the outstanding capital stock of HOS Marine Partners, Inc.
("HOS"), a special purpose company whose sole assets consist
of four supply vessels. In addition to the purchase price,
the Company recognized, in accordance with Statement of
Financial Accounting Standards No. 109, a deferred income
tax liability of $5,780,000 for the deferred tax
consequences of the differences between the assigned values
and the tax bases of the assets owned by HOS. The
acquisition was accounted for using the purchase method of
accounting and the results of operations from the date of
acquisition are included on the accompanying consolidated
financial statements.
On September 30, 1996, the Company acquired from
subsidiaries of OMI Corp. three supply vessels for
$11,600,000. The Company borrowed $10,000,000 under the
Bank Credit Facility to fund a portion of the purchase.
On October 10, 1996, the Company acquired from Kim Susan,
Inc. and affiliated companies seven supply vessels for
approximately $32,000,000. The Company borrowed $30,500,000
under the Bank Credit Facility to fund a portion of the
purchase.
In December 1996, the Company purchased three supply vessels
from a subsidiary of SEACOR Holdings, Inc. for $11,450,000
in cash. The acquisition was funded with borrowings under
the Bank Credit Facility and cash generated from operations.
14. Quarterly Financial Data (Unaudited):
<TABLE>
<CAPTION>
First Second Third Fourth
Year ended December 31, 1996
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues $ 8,384 $ 11,111 $ 13,390 $ 20,599
Operating income 1,678 3,165 5,000 9,269
Income before extraordinary item 364 1,618 3,218 5,691
Extraordinary item - (917) - -
Net income 364 701 3,218 5,691
Income per average common share
before extraordinary item 0.12 0.29 0.43 0.72
Extraordinary item, net of tax - (0.16) - -
Net income per average common share
outstanding 0.12 0.13 0.43 0.72
Year ended December 31, 1995
(Dollars in thousands, except per share amounts)
Revenues $ 6,360 $ 5,792 $ 6,763 $ 7,783
Operating income (loss) (38) (234) 818 1,440
Net income (loss) (671) (703) (129) 204
Net income (loss) per average common
share outstanding (0.22) (0.23) (0.04) 0.07
</TABLE>
15. Subsequent Events:
In January 1997, the Company entered into agreements with
two companies to acquire seven supply vessels and one
utility vessel for $36,200,000. The first transaction for
the acquisition of five of the supply vessels and the
utility vessel was completed on January 31, 1997, with the
Company borrowing $22,000,000 under the Bank Credit Facility
to fund a portion of the purchase price. The Company
expects the acquisition of the other two supply vessels to
be completed in the second quarter of 1997. The Company
will borrow under its Bank Credit Facility to fund a portion
of the purchase price.
Effective February 7, 1997, the Company increased its Bank
Credit Facility to $65,000,000.
16. Event (Unaudited) Subsequent to the Date of the Report of
Independent Accountants:
In three separate transactions during 1997, the Company
issued an aggregate of $280,000,000 of 8-1/2% Senior Notes
due 2005 (the "Senior Notes"). Pursuant to the terms of the
indentures governing the Senior Notes, the Senior Notes must
be guaranteed by each of the Company's "significant
subsidiaries" (the "Subsidiary Guarantors"), whether such
subsidiary was a "significant subsidiary" at the time of the
issuance of the Senior Notes or becomes a "significant
subsidiary" thereafter. Separate financial statements of
the Subsidiary Guarantors are not included in this report
because (a) the Company is a holding company with no assets
or operations other than its investments in its
subsidiaries, (b) the Subsidiary Guarantors are wholly-owned
subsidiaries of the Company, comprise all of the Company's
direct and indirect subsidiaries (other than inconsequential
subsidiaries) and, on a consolidated basis, represent
substantially all of the assets, liabilities, earnings and
equity of the Company, (c) each of the Subsidiary Guarantors
must fully and unconditionally guarantee the Company's
obligations under the Senior Notes on a joint and several
basis (subject to a standard fraudulent conveyance savings
clause) and (d) management has determined that separate
financial statements and disclosures concerning the
Subsidiary Guarantors are not material to investors.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Annual Report on Form 10-K/A to be signed on its behalf by
the undersigned, thereunto duly authorized.
TRICO MARINE SERVICES, INC.
(Registrant)
By: /s/ Thomas E. Fairley
Thomas E. Fairley
President and Chief Executive
Officer
Date: March 11, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Annual Report on Form 10-K/A has been signed below
by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Title Date
/s/ Thomas E. Fairley President and Chief March 11, 1998
Thomas E. Fairley Executive Officer
(Principal Executive Officer)
/s/ Ronald O. Palmer Chairman of the Board March 11, 1998
Ronald O. Palmer
/s/ Victor M. Perez Vice President, Chief Financial March 11, 1998
Victor M. Perez Officer and Treasurer
(Principal Financial Officer)
/s/ Kenneth W. Bourgeois Vice President and Controller March 11, 1998
Kenneth W. Bourgeois (Principal Accounting Officer)
/s/ Garth H. Greimann Director March 11, 1998
Garth H. Greimann
/s/ H. K. Acord Director March 11, 1998
H. K. Acord
/s/ Benjamin F. Bailar Director March 11, 1998
Benjamin F. Bailar
/s/ Edward C. Hutcheson, Jr. Director March 11, 1998
Edward C. Hutcheson, Jr.
