SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 4, 1998
TRICO MARINE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 28316 72-1252405
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
250 North American Court, Houma, Louisiana 70363
(Address of principal executive office) (Zip Code)
(504) 851-3833
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING
STATEMENTS
From time to time, Trico Marine Services, Inc. (the "Company") may
make certain written and oral statements that may be deemed "forward-
looking statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements other than statements of historical fact,
that relate to business plans or strategies, projected or anticipated
benefits or other consequences of such plans or strategies, objectives,
projected or anticipated benefits from acquisitions made by or to be made
by the Company or projections involving anticipated capital expenditures,
revenues, earnings or other aspects of capital projects or operating
results are forward-looking statements. The words "expect," "believed,"
"anticipate," "project," "estimate" and similar expressions are intended to
identify forward looking statements. The Company cautions readers that
such statements are not guarantees of future performance or events and are
subject to a number of factors that would tend to influence the accuracy of
the statements and the projections upon which the statements are based,
including but not limited to those discussed below.
As noted elsewhere, all phases of the Company's operations are subject
to a number of uncertainties, risks and other influences, many of which are
outside the control of the Company, any one of which, or a combination,
could materially affect the results of the Company's operations and the
accuracy of forward-looking statements made by the Company. Some important
factors that could cause actual results to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements include the following: dependence on the oil and
gas industry; prices of oil and gas and their effect on industry
conditions; industry volatility, including the level of offshore drilling
and development activity and changes in the size of the offshore vessel
fleet in areas where the Company operates due to new vessel construction
and the mobilization of vessels between market areas; risks of the
Company's growth strategy, including the risks of rapid growth; changes in
competitive factors affecting the Company's operations; operating hazards,
including the significant possibility of accidents resulting in personal
injury, property damage or environmental damage; the effect on the
Company's performance of regulatory programs and environmental matters; the
highly competitive nature of the offshore vessel industry; the age of the
Company's fleet; seasonality of the offshore industry in the Gulf of Mexico
(the "Gulf"); the risks of international operations including currency
fluctuations, risk of vessel seizure and political instability; and the
continued active participation of the Company's executive officers and key
operating personnel.
Many of these factors are beyond the Company's ability to control or
predict. Investors are cautioned not to place undue reliance upon
forward-looking statements. The Company disclaims any intent or obligation
to update its forward-looking statements, whether as a result of receiving
new information, the occurrence of future events or otherwise.
A more detailed discussion of certain of the foregoing factors
follows:
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DEPENDENCE ON OIL AND GAS INDUSTRY; MARKET VOLATILITY
The Company's operations depend on activity in offshore oil and gas
exploration, development and production. The level of exploration and
development activity has traditionally been volatile as a result of
fluctuations in oil or natural gas prices and their uncertainty in the
future. A significant or prolonged reduction in oil or natural gas prices
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 and other areas where the Company
operates could have a material adverse effect on the Company's financial
condition and results of operations. Oil and natural gas prices have
recently declined significantly, which has had an adverse impact on day
rates and utilization of the Company's Gulf fleet.
Charter rates for marine support vessels also depend on the supply of
vessels. Excess vessel capacity in the industry can result primarily from
the construction of new vessels and the mobilization of vessels between
market areas. During the last two years there has been a significant
increase in construction of vessels of the type operated by the Company,
for use both in the Gulf and the North Sea. The addition of new capacity
to the worldwide offshore marine fleet has increased competition in those
markets where the Company operates. This new capacity coupled with a
prolonged period of low oil and gas prices could have a material adverse
effect on the Company's financial condition and results of operations.
MANAGEMENT OF GROWTH
The Company has rapidly expanded its operations through acquisitions
in the past two years. In December 1997, the Company completed the
acquisition of Saevik Supply ASA ("Saevik Supply"), which significantly
increased the geographic scope of the Company's operations and its overall
size. The Company's growth has placed, and is expected to continue to
place, substantial demands on the Company's managerial, operational,
financial and other resources. Management of this growth will require the
Company to continue to invest in its operations, including its financial
and management information systems, and to increase its efforts to retain,
motivate and effectively manage its employees, all of which may increase
the Company's operating expenses. Any failure by the Company to achieve
and manage this growth as planned could have a material adverse effect on
the Company's business, financial condition and results of operations.
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. Certain of the Company's competitors have
significantly greater financial resources than the Company and more
experience operating in international areas.
OPERATING RISKS AND INSURANCE
Marine support vessels are subject to operating 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.
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.
GOVERNMENT REGULATION
The Company's operations are materially affected by federal, state and
local regulation, as well as certain international conventions, private
industry organizations and laws and regulations in jurisdictions where the
Company's vessels operate and are registered. 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.
The Company's operations also are subject to federal, state and local
laws and regulations and laws and regulations in jurisdictions where the
Company's vessels operate and are registered, which control the discharge
of pollutants into the environment and which otherwise relate to
environmental protection. While the Company's insurance policies provide
coverage for accidental occurrence of seepage and pollution or clean-up and
containment of the foregoing, pollution and similar environmental risks
generally are not fully insurable. 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, or that the laws and
regulations applicable to the Company and its operations will not change.
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.
SEASONALITY
The Company's marine operations are seasonal and depend, in part, on
weather conditions. Historically, the Company has enjoyed its highest
utilization rates during the second and third quarters, as mild weather
provides favorable conditions for offshore exploration, development and
construction in the Gulf. Adverse weather conditions during the winter
months generally curtail offshore development operations and can
particularly impact lift boat utilization rates. Activity in the North Sea
is also subject to delays during periods of adverse weather, but is not
affected by seasonality to the extent activity in the Gulf is.
Accordingly, the results of any one quarter are not necessarily indicative
of annual results or continuing trends.
AGE OF FLEET
As of June 30, 1998, the average age of the Company's Gulf fleet
vessels (based on the date of construction) was approximately 17 years
(approximately 11 years for its North Sea fleet). 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.
INTERNATIONAL OPERATIONS
The acquisition of Saevik Supply substantially increased the
percentage of the Company's operations conducted in currencies other than
the United States dollar. Changes in the value of foreign currencies
relative to the United States dollar could adversely affect the Company's
results of operations and financial position, and transaction gains and
losses could contribute to fluctuations in the Company's results of
operations. There can be no assurance that fluctuations in foreign
currency rates will not have a material adverse effect on the Company's
results of 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. 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.
DEPENDENCE ON KEY PERSONNEL
The Company depends on the continued services of Thomas E. Fairley,
its President and Chief Executive Officer, Ronald O. Palmer, its Chairman
of the Board, 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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRICO MARINE SERVICES, INC.
By: /S/ VICTOR M. PEREZ
Victor M. Perez
Vice President and
Chief Financial Officer
Dated: September 4, 1998
