SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period to
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
incorporation or organization) Identification No.)
250 North American Court
Houma, LA 70363
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (504) 851-3833
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,
and (2) has been subject to such filing requirements for the past
90 days.
Yes (X) No
As of August 12, 1998 there were 20,351,416 shares outstanding of
the Registrant's Common Stock, par value $.01 per share
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
__________ ____________
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,971 $ 10,940
Accounts receivable, net 40,391 34,519
Prepaid expenses and other current assets 3,310 3,486
__________ ____________
Total current assets 58,672 48,945
__________ ____________
Property and equipment, at cost:
Land and buildings 2,973 2,429
Marine vessels 503,568 480,920
Construction-in-progress 71,623 42,256
Transportation and other 3,176 2,433
__________ ____________
581,340 528,038
Less accumulated depreciation and amortization 34,896 22,982
__________ ____________
Net property and equipment 546,444 505,056
__________ ____________
Goodwill, net 117,242 118,737
Other assets 37,757 26,043
__________ ____________
$ 760,115 $ 698,781
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 14,445 $ 12,701
Accounts payable 11,806 9,114
Accrued expenses 8,428 10,012
Accrued interest 10,620 5,514
Income taxes payable - 3,773
__________ ____________
Total current liabilities 45,299 41,114
__________ ____________
Long-term debt 391,006 359,385
Deferred income taxes, net 42,016 32,561
Other non-current liabilities 2,598 4,221
__________ ____________
Total liabilities 480,919 437,281
__________ ____________
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, authorized 40,000,000 shares, issued
20,423,448 and 20,367,098 shares, outstanding 20,351,416 and
20,295,066 shares at June 30, 1998 and December 31, 1997,
respectively 204 204
Additional paid-in capital 218,770 218,528
Retained earnings 66,874 45,306
Accumulated other comprehensive expense (6,651) (2,537)
Treasury stock, at par value, 72,032 shares (1) (1)
__________ ____________
Total stockholders' equity 279,196 261,500
__________ ____________
$ 760,115 $ 698,781
========== ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
_______________________ ______________________
1998 1997 1998 1997
________ ________ ________ ________
<S> <C> <C> <C> <C>
Revenues:
Charter hire $52,906 $26,293 $101,772 $49,781
Other vessel income 36 - 57 4
________ ________ ________ ________
Total revenues 52,942 26,293 101,829 49,785
________ ________ ________ ________
Operating expenses:
Direct vessel operating expenses and other 17,197 9,139 34,016 17,357
General and administrative 2,476 1,314 4,770 2,732
Amortization of marine inspection costs 2,282 692 3,730 1,274
________ ________ ________ ________
Total operating expenses 21,955 11,145 42,516 21,363
________ ________ ________ ________
Depreciation and amortization expense 7,401 2,394 14,344 4,676
________ ________ ________ ________
Operating income 23,586 12,754 44,969 23,746
Interest expense 7,029 788 13,581 1,514
Amortization of deferred financing costs 427 18 855 35
Gain on sale of assets, net (610) (260) (608) (253)
Other income, net (418) (59) (741) (80)
________ ________ ________ ________
Income before income taxes 17,158 12,267 31,882 22,530
Income tax expense 5,434 4,293 10,314 7,885
________ ________ ________ ________
Net income $11,724 $ 7,974 $21,568 $14,645
======== ======== ======== ========
Basic earnings per common share:
Net income $ 0.58 $ 0.51 $ 1.06 $ 0.94
========== =========== ========== ==========
Average common shares outstanding 20,335,702 15,568,863 20,317,926 15,551,176
========== =========== ========== ==========
Diluted earnings per common share:
Net income $ 0.56 $ 0.47 $ 1.02 $ 0.87
=========== ========== ========== ==========
Average common shares outstanding 21,102,455 16,854,189 21,097,988 16,859,430
=========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
________________________
1998 1997
__________ __________
<S> <C> <C>
Net income $ 21,568 $ 14,645
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 19,458 5,985
Deferred income taxes 10,013 5,717
Gain on sales of assets (608) (253)
Provision for doubtful accounts 60 60
Changes in operating assets and liabilities:
Accounts receivable (6,402) (4,047)
Prepaid expenses and other current assets 155 (192)
Accounts payable and accrued expenses 2,617 1,807
Other, net 239 (216)
__________ __________
Net cash provided by operating activities 47,100 23,506
__________ __________
Cash flows from investing activities:
Purchases of property and equipment (61,568) (42,558)
Deferred marine inspection costs (15,834) (5,455)
Proceeds from sales of assets 1,274 1,115
Investment in and advances to unconsolidated company (1,219) (264)
Other (1,493) -
__________ __________
Net cash used in investing activities (78,840) (47,162)
__________ __________
Cash flows from financing activities:
Proceeds from issuance of common stock 243 75
Proceeds from issuance of long-term debt 125,962 33,500
Repayment of long-term debt (89,459) (5,000)
Deferred financing costs and other (661) (48)
__________ __________
Net cash provided by financing activities 36,085 28,527
__________ __________
Effect of exchange rate changes on cash and cash equivalents (314) -
__________ __________
Net increase in cash and cash equivalents 4,031 4,871
Cash and cash equivalents at beginning of period 10,940 1,047
__________ __________
Cash and cash equivalents at end of period $ 14,971 $ 5,918
========== ==========
Supplemental information:
Income taxes paid $ 3,746 $ 1,493
========== ==========
Income taxes refunded $ 3 $ -
========== ==========
Interest paid $ 11,277 $ 1,622
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30
____________________ __________________
1998 1997 1998 1997
_________ _________ _______ _________
<S> <C> <C> <C> <C>
Net income $11,724 $ 7,974 $21,568 $14,645
_________ _________ _______ _________
Other comprehensive expense, net of tax:
Foreign currency translation adjustments (815) - (4,114) -
_________ _________ _______ _________
Comprehensive income $10,909 $ 7,974 $17,454 $14,645
========= ========= ======== =========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
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 nature of the Company's business. The
results of operations for the six months ended June 30, 1998 are
not necessarily indicative of the results that may be expected
for the full fiscal year or any future periods. 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,
1997.
Certain prior period amounts have been reclassified to conform
with the presentation shown in the interim consolidated financial
statements. These reclassifications had no effect on net income,
total stockholders' equity or cash flows.
2. Bank Credit Agreements:
Effective March 13, 1998, the Company amended its agreement with
its bank lenders (the "Amended Facility") to remove certain
subsidiaries as participants in the agreement, to release a
portion of the assets pledged as collateral, to reduce the
interest rate and to reduce the commitment fee on the unused
portion of the Amended Facility. Effective July 16, 1998, the
Company reduced the total commitment available under the Amended
Facility from $150,000,000 to $100,000,000.
On June 23, 1998, the Company amended the Saevik Supply bank
credit facilities creating one revolving credit facility in the
amount of NOK 650 million, or $84.8 million (the "Saevik Bank
Facility"), and a term loan in the amount of NOK 29.7 million
($3.9 million). As of June 30, 1998, the Company had
approximately NOK 610 million ($79.6 million) of debt outstanding
under the Saevik Bank Facility. The Saevik Bank Facility is
collateralized by a security interest in certain of the Company's
North Sea vessels, requires Saevik Supply to maintain certain
financial ratios and limits the ability of Saevik Supply to
create liens, or merge or consolidate with other entities.
Amounts borrowed under the Saevik Bank Facility bear interest at
NIBOR (Norwegian Interbank Offered Rate) plus a margin. The
weighted average interest rate for the Saevik Bank Facility was
5.76% as of June 30, 1998. The commitment amount for the Saevik
Bank Facility reduces by NOK 50 million ($6.5 million) every six
months beginning December 1998, with the balance of the
commitment to expire in June 2003.
3. Separate Financial Statements For Subsidiary Guarantors:
During 1997, the Company issued three Series of 82% Senior Notes
due 2005, Series A/B Notes -- $110,000,000, Series C/D Notes --
$100,000,000 and Series E/F Notes -- $70,000,000 (the "Senior
Notes"). The Senior Notes are uncollateralized and guaranteed by
Trico Marine Assets, Inc., Trico Marine Operators, Inc., Trico
Marine International Holdings, B.V., Saevik Supply ASA and Saevik
Shipping AS (the "Subsidiary Guarantors"). Separate financial
statements of 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 constitute all of the
Company's direct and indirect subsidiaries (other than
insignificant subsidiaries), (c) the aggregate assets,
liabilities, earnings and equity of the Subsidiary Guarantors are
substantially equivalent to the assets, liabilities, earnings and
equity of the Company on a consolidated basis, (d) the Subsidiary
Guarantors have jointly and severally guaranteed the Company's
obligations under the Notes on a full and unconditional basis and
(e) management has determined that separate financial statements
and disclosures concerning the Subsidiary Guarantors are not
material to investors.
4.United States Government Guaranteed Ship Financing Bonds:
On April 8, 1998 the Company issued $10,000,000 principal amount
of 8 year United States Government Guaranteed Ship Financing
Bonds, SWATH Series I, at an interest rate of 6.08% (the
"Bonds"). The Bonds are due in 16 semi-annual installments of
principal and interest. The Bonds are collateralized by a first
preferred ship mortgage on the Stillwater River, a Small
Waterplane Area Twin Hull ("SWATH") vessel, and by an assignment
of the charter contract that the vessel will commence upon its
completion. The proceeds from the Bonds were placed in escrow at
the closing and will be distributed to the Company upon
completion and delivery of the vessel.
5. Foreign Exchange:
In June 1998, Saevik Supply ASA entered into several forward
foreign currency exchange contracts to hedge certain of its
exposures relating to fluctuations in the Great Britain pound.
These contracts generally expire within one year. Gains and
losses on the contracts are deferred until the hedged transaction
is recognized. As of June 30, 1998, deferred gains and losses on
forward foreign currency exchange contracts were not material to
the consolidated financial statements.
6. Income Taxes:
The Company's effective income tax rate for the three-month and
six-month periods ended June 30, 1998 was 32%. The variance from
the Company's statutory rate is due to income contributed by
Saevik Supply ASA, which is deferred at the Norwegian statutory
rate of 28%, due to the Company's intent to permanently reinvest
the unremitted earnings and postpone their repatriation
indefinitely.
7. New Accounting Standards:
During the year, the Company adopted Statement of Financial
Accounting Standards, No. 130, "Reporting Comprehensive Income"
(FASB No. 130). FASB No. 130 requires the reporting of
comprehensive income in addition to net income from operations.
Comprehensive income is a more inclusive financial reporting
methodology that includes disclosure of certain financial
information that historically has not been recognized in the
calculation of net income. Prior periods presented herein have
been reclassified in accordance with FASB No. 130.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards, No. 131,
"Disclosures about Segments of an Enterprise and Related
Information," effective for fiscal years beginning after December
15, 1997. In February 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards, No.
132, "Employer's Disclosures about Pensions and Other Retirement
Benefits," effective for fiscal years beginning after December
15, 1997. Management believes adoption of these statements will
have a financial statement disclosure impact only and will not
have a material effect on the Company's financial position,
operations or cash flows.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards, No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (FASB No.
133), effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. The Company is currently evaluating the
impact FASB No. 133 will have on its financial statements, if
any.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of financial condition and
results of operations should be read in conjunction with the
unaudited consolidated financial statements and the related
disclosures included elsewhere herein.
RESULTS OF OPERATIONS
Revenues for the second quarter and six months ended June 30,
1998 were $52.9 million and $101.8 million, respectively, an
increase of 101.4% and 104.5% compared to the $26.3 million
and $49.8 million in revenues for the second quarter and first
six months of 1997, respectively. This increase was
principally due to the inclusion, for the full 1998 periods,
of the Company's North Sea operations, which commenced as a
result of the acquisition of Saevik Supply ASA in December
1997, the growth in the Company's fleet of marine vessels in
the U.S. Gulf of Mexico ("Gulf") and the improved average
vessel day rates for all the Company's vessel classes. The
table below sets forth by vessel class, the average day rates
and utilization of the Company's vessels and the average
number of vessels owned during the periods indicated.
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
<S> <C> <C> <C> <C>
1998 1997 1998 1997
Average Day Rates:
Supply $ 8,065 $ 7,077 $ 8,111 $ 6,833
Supply/Anchor Handling (N. Sea) 15,142 - 14,320 -
Lift 6,072 5,528 6,434 5,507
Crew/Line Handling 2,081 1,993 2,081 1,919
Utilization (1):
Supply 70% 84% 70% 86%
Supply/Anchor Handling (N. Sea) 96% - 94% -
Lift 54% 71% 61% 69%
Crew/Line Handling 91% 100% 95% 97%
Average Number of Vessels:
Supply 50.0 38.0 49.4 36.9
Supply/Anchor Handling (N. Sea) 17.0 - 16.6 -
Lift 6.0 6.0 6.0 6.0
Crew/Line Handling 22.3 24.4 22.6 24.5
</TABLE>
Supply boat day rates in the Gulf for the second quarter and
first six months of 1998 rose 14.0% to $8,065 and 18.7% to
$8,111, respectively, compared to $7,077 and $6,833 for the
comparable 1997 periods. Utilization for the supply boat fleet
decreased for the second quarter and six-month period due
primarily to vessel downtime resulting from of the Company's
extensive fleet upgrade and refurbishment program which is
intended to enhance vessel capacities and extend their service
lives. Toward the end of the second quarter of 1998, however,
the Company began to experience a decrease in average day
rates and utilization for its Gulf supply boat fleet as a
result of decreased activity in the Gulf due to lower oil
prices and increased overall fleet capacity due to newly-
constructed supply boats entering the market. These factors
have led to increased competition in the Gulf supply boat
market.
**ENDNOTES**
(1) 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.
Day rates for the Company's North Sea vessels averaged $15,142
and $14,320 for the second quarter and first six months of
1998, respectively. Utilization was 96% for the second
quarter of 1998, and 94% for the six-month period of 1998. In
mid-March 1998, the Company took delivery of a new 276-foot
platform supply vessel ("PSV"), which commenced a three-year
contract in the U.K. sector of the North Sea.
Lift boat day rates averaged $6,072 for the quarter and $6,434
for the first six months of 1998, an increase of 9.8% and
16.8%, respectively, compared to $5,528 and $5,507 for the
comparable 1997 periods. Utilization for the Company's lift
boats decreased to 54% and 61% for the second quarter and
first six months of 1998, respectively, compared to 71% and
69% for the year-ago periods, due to the scheduled drydocking
in the second quarter of the Company's two 170-foot class lift
boats for an aggregate of 93 days of downtime during the
quarter. The improvement in day rates for lift boats during
the first six months of 1998 was due to favorable market
conditions in the Gulf for offshore platform repair and
maintenance and well servicing activities.
Day rates for crew boats and line handling vessels increased
4.4% to $2,081 for the second quarter, from $1,993 for the
second quarter of 1997, due to the increase in day rates for
crew boats in the Gulf. Utilization for the crew boats and
line handling vessels decreased to 91% for the second quarter
of 1998, compared to 100% for the comparable 1997 period, due
to vessel downtime resulting from the scheduled drydocking of
four of the Company's crew boats in the Gulf.
During the second quarter and first six months of 1998, direct
vessel operating expenses increased to $17.1 million (32.2% of
revenues) and $33.8 million (33.2% of revenues), respectively,
compared to $9.1 million (34.5% of revenues) and $17.2 million
(34.6% of revenues) for the second quarter and first six
months of 1997. This increase was primarily due to the
acquisition of Saevik Supply and the expanded vessel fleet.
Direct vessel operating expenses as a percentage of revenues
decreased, however, due to the increase in average vessel day
rates during the first six months of 1998.
Depreciation and amortization expense increased to $7.4
million and $14.3 million for the second quarter and first six
months of 1998, respectively, up from $2.4 million and $4.7
million for the year-ago periods as a result of the Company's
expanded vessel fleet. Amortization of marine inspection
costs increased to $2.3 million and $3.7 million for the
quarter and six month period ended June 30,1998, respectively,
from $692,000 and $1.3 million in the comparable 1997 periods,
due to the amortization of increased dry docking and marine
inspection costs associated with the Company's expanded vessel
fleet and the Company's fleet refurbishment program.
General and administrative expenses increased to $2.5 million
(4.7% of revenues) and $4.8 million (4.7% of revenues) in the
second quarter and first six months of 1998, respectively,
from $1.3 million (5.0% of revenues) and $2.7 million (5.5% of
revenues) for the 1997 periods due to additions of personnel
in connection with the growth in the Company's vessel fleet
and the addition of the North Sea operations. General and
administrative expenses, as a percentage of revenues,
decreased in the 1998 periods as the increase in revenues and
expansion of the Company's vessel fleet did not require
proportionate increases in administrative expenses.
Interest expense increased to $7.0 million for the second
quarter of 1998 from $788,000 for the second quarter of 1997.
This increase was due to increased borrowings in 1997 that
were used to fund the Company's acquisition of supply boats in
the Gulf, the Company's various vessel construction and
upgrade projects and the acquisition of Saevik Supply. In
July 1997, the Company issued $110 million principal amount of
82% Senior Notes due 2005 (the "Notes"), the proceeds of which
were used to purchase 11 supply boats in the Gulf and to repay
outstanding amounts under the Company's revolving credit
facility. In November and December 1997, the Company issued
an additional $170 million principal amount of the Notes ($100
million in November and $70 million in December), the proceeds
of which were used to fund a portion of the acquisition of
Saevik Supply and to repay outstanding amounts under the
Company's Bank Credit Facility (as defined below). Interest
expense was low for the first six months of 1997 because the
Company had reduced its borrowings under its credit facility
with proceeds from the Company's equity offering that was
completed in November 1996.
In the second quarter and first six months of 1998, the
Company had income tax expenses of $5.4 million and $10.3
million, respectively, compared to income tax expense of $4.3
million and $7.9 million in the 1997 periods. The Company's
effective income tax rate for the three-month and six-month
periods ended June 30, 1998 was 32%. The variance from the
Company's statutory rate is due to income contributed by
Saevik Supply ASA, which is deferred at the Norwegian
statutory rate of 28%, due to the Company's intent to
permanently reinvest the unremitted earnings and postpone
their repatriation indefinitely.
LIQUIDITY AND CAPITAL RESOURCES
Since its initial public offering in May 1996, the Company has
focused on growth through acquisitions. In December 1997, the
Company significantly expanded its international operations by
acquiring Saevik Supply for approximately $289.0 million in
cash. Since its initial public offering, the Company also
acquired 37 supply boats for use in the Gulf at an aggregate
cost of $177.0 million. As a result of this growth, Trico is
now the second largest owner and operator of supply boats in
the Gulf and a leading operator in the North Sea. This
strategy of growth through acquisitions, together with
increased vessel day rates, has enabled the Company to
significantly increase total revenues and achieve strong
operating results.
Funds during the first six months of 1998 were provided by
$126.0 million in borrowings under the Company's bank credit
facilities and $47.1 million in funds from operating
activities. During the period, the Company repaid $89.5
million of debt and made capital expenditures, including
deferred marine inspection costs, totaling $77.4 million.
During the first six months of 1998, the Company spent
approximately $60.4 million on vessel upgrade or construction
projects. To expand its North Sea operations, the company
took delivery in the first quarter of a 276-foot PSV which
began a three-year charter for a U.K. oil and gas operator in
March 1998. The Company also continued construction in Norway
of a 275-foot, technologically advanced anchor handling towing
and supply vessel ("AHTS") with 23,800 horsepower that is
scheduled to be delivered no later than May 1999. The Company
also has two 230-foot supply vessels currently under
construction at a shipyard on the U.S. Gulf Coast. The first
vessel is expected to be completed in September 1998 and has
been committed to a three-year charter to an oil and gas
company active in the Gulf. The second vessel is expected to
be delivered at the end of 1998. Other capital expenditures
for vessel upgrade and construction projects during the period
included: (i) costs to lengthen and upgrade two supply boats
for the Gulf, the Elkhorn River and Kings River, both of which
were placed in service in March 1998; (ii) costs for the
construction of a supply boat for use in the Brazilian market
which was placed in service in July 1998, and the continued
construction of the SWATH vessel and (iii) U.S. Coast Guard
drydocking costs and vessel refurbishment costs.
In 1997, the Company issued $280.0 million in aggregate
principal amount of the Notes, which were used to fund certain
acquisitions of supply boats in the Gulf, to repay outstanding
borrowings under the Company's revolving credit facility and
to fund a portion of the acquisition of Saevik Supply. The
Notes are uncollateralized and are required to be guaranteed
by all of the Company's Significant Subsidiaries (as such term
is defined in the indentures governing the Notes, the
"Subsidiary Guarantors"). Except in certain circumstances,
the Notes may not be prepaid until August 1, 2001, at which
time they may be redeemed, at the option of the Company, in
whole or in part, at a redemption price equal to 104.25% plus
accrued and unpaid interest, with the redemption price
declining ratably on August 1 of each of the succeeding three
years. The indentures governing the Notes contain certain
covenants that, among other things, limit the ability of the
Company to incur additional indebtedness, pay dividends or
make other distributions, create certain liens, sell assets,
or enter into certain mergers or acquisitions.
To provide funding for the acquisition of Saevik Supply,
effective December 1, 1997, the Company amended and restated
its existing bank credit facility to provide for a $150.0
million revolving credit facility and $200.0 million in term
loans (collectively, the "Bank Credit Facility"). The term
loans were repaid with the net proceeds of the Company's
issuance of 4,600,000 shares of common stock (approximately
$123.7 million) that was completed in December 1997 (the
"Common Stock Offering"). Proceeds from the $70 million
issuance of Notes completed in December 1997 were used to
repay outstanding amounts under the revolving portion of the
Bank Credit Facility.
As a result of the repayment of substantially all of its
borrowings under the Bank Credit Facility as discussed above,
the Company renegotiated and amended the terms of the Bank
Credit Facility (the "Amended Facility") in March 1998. The
Amended Facility provides a $150.0 million revolving line of
credit that can be used for acquisitions and general corporate
purposes. The Amended Facility is collateralized by a
mortgage on certain of the Company's vessels. Amounts
borrowed under the Amended Facility mature on December 1, 2002
and bear interest at LIBOR plus a margin that depends on the
Company's leverage ratio (currently approximately 7.16%). The
Amended Facility requires the Company to maintain certain
financial ratios and limits the ability of the Company to
incur additional indebtedness, pay dividends or make certain
other distributions, create certain liens, sell assets or
enter into certain mergers or acquisitions. Although the
Amended Facility does impose some limitations on the ability
of the Company's subsidiaries to make distributions to the
Company, it expressly permits distributions to the Company by
the Subsidiary Guarantors for scheduled principal and interest
payments on the Notes. In July 1998, the Company reduced the
committed amount of the Amended Facility to $100 million.
In addition to the Notes and the Amended Facility, as a result
of the acquisition of Saevik Supply, the Company incurred debt
under several bank facilities that were originally established
by Saevik Supply to make vessel acquisitions. In June 1998,
the Company amended the existing Saevik Supply bank credit
facilities creating one revolving credit facility in the
amount of NOK 650 million, or $84.8 million (the "Saevik Bank
Facility"), and a term loan in the amount of NOK 29.7 million
($3.9 million). As of June 30, 1998, the Company had
approximately NOK 610 million ($79.6 million) of debt
outstanding under the Saevik Bank Facility. The Saevik Bank
Facility is collateralized by a security interest in certain
of the Company's North Sea vessels, requires Saevik Supply to
maintain certain financial ratios and limits the ability of
Saevik Supply to create liens, or merge or consolidate with
other entities. Amounts borrowed under the Saevik Bank
Facility bear interest at NIBOR (Norwegian Interbank Offered
Rate) plus a margin. The weighted average interest rate for
the Saevik Bank Facility was 5.76% as of June 30, 1998. The
commitment amount for the Saevik Bank Facility reduces by NOK
50 million ($6.5 million) every six months beginning December
1998, with the balance of the commitment to expire in June
2003.
In connection with the construction of the SWATH vessel, in
April 1998, the Company issued $10.0 million aggregate
principal amount of 8 year, 6.08% Ship Financing Bonds (the
"Ship Bonds") guaranteed by the United States Government. The
Ship Bonds are due in 16 semi-annual installments of principal
and interest and are secured by first preferred ship mortgage
on the SWATH vessel and by an assignment of the vessel's
charter. The proceeds from the Ship Bonds were placed in
escrow at the indenture closing and will be distributed to the
Company upon completion and delivery of the SWATH vessel. The
proceeds will be used to reduce the amounts outstanding under
the Company's Amended Facility.
Capital expenditures planned for the remainder of 1998 are
expected to total $35.0 million, consisting primarily of the
existing vessel construction projects, scheduled vessel
drydockings and expenditures associated with the Company's
fleet refurbishment program. Existing vessel construction
projects include: (i) completion of the SWATH vessel for the
Brazilian market; (ii) completion of the two 230-foot supply
vessels; and (iii) continuation of the construction of the
275-foot AHTS in Norway to be completed no later than May
1999.
The Company believes that cash generated from operations
together with available borrowings under the Amended Facility
will be sufficient to fund the Company's currently planned
capital projects and working capital requirements. The
Company's strategy, however, is to make other acquisitions and
to selectively construct new special-purpose vessels as part
of an effort to expand its worldwide presence. To the extent
the Company is successful in identifying such opportunities,
it most likely will require additional debt or equity
financing depending on the size of the investments required.
During 1997 the Company began an evaluation of its existing
software systems to determine which computer programs need to
be upgraded or modified to become year 2000 compliant. The
Company has determined that the cost to upgrade or modify
those software systems which are not already year 2000
compliant will not have a material effect on the Company's
financial position, operations or cash flow.
CAUTIONARY STATEMENTS
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" includes certain "forward-looking
statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact included
in this section regarding the Company's financial position and
liquidity, its strategic alternatives, future capital needs,
business strategies, scheduled drydockings and related vessel
downtime, and other plans and objectives of management of the
Company for future operations and activities, are forward-
looking statements. These statements are based on certain
assumptions and analyses made by the Company's management in
light of its experience and its perception of historical
trends, current conditions, expected future developments and
other factors it believes are appropriate under the
circumstances. Such statements are subject to risks and
uncertainties, including the risks involved with the Company's
acquisition of Saevik Supply and the integration thereof, the
Company's dependence on the oil and gas industry and the
volatility of that industry, the Company's ability to manage
growth, competition in its industry, the risk of international
operations and currency fluctuations, general economic and
business conditions, the business opportunities that may be
presented to and pursued by the Company, changes in law or
regulations and other factors, many of which are beyond the
control of the Company. Although the Company believes that
the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such
expectations will prove to have been correct. Such statements
are not guarantees of future performance and the actual
results or developments may differ materially from those
projected in the forward-looking statements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Company was held
on May 27, 1998 (the "Annual Meeting").
(b) At the Annual Meeting, H.K. Acord and Edward C. Hutcheson,
Jr. were re-elected to serve until the annual meeting of
stockholders for the year 2001. In addition to the
directors elected at the Annual Meeting, the terms of Thomas
E. Fairley, Benjamin F. Bailar, Ronald O. Palmer and Garth
H. Greimann continued after the Annual Meeting.
(c) At the Annual Meeting, holders of shares of the Company's
Common Stock elected two directors with the number of votes
cast for and withheld for such nominees as follows:
Name For Withheld
H. K. Acord 17,392,040 134,580
Edward C. Hutcheson, Jr. 17,393,740 132,880
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Certificate of Incorporation of the Company. 1
3.2 By Laws of the Company.1
4.1 Specimen Common Stock Certificate.2
4.2 Indenture dated July 21, 1997 by and among the
Company, Trico Marine Operators, Inc., Trico Marine
Assets, Inc. and Texas Commerce Bank National
Association, as Trustee ("July Indenture").1
4.3 Form of Note and Subsidiary Guarantee under the
July Indenture. 1
4.4 First Supplemental Indenture to the July
Indenture.3
4.5 Indenture dated November 14, 1997 by and among the
Company, Trico Marine Operators, Inc., Trico Marine
Assets, Inc. and Texas Commerce Bank National
Association, as Trustee, including form of Note
and Subsidiary Guarantee (the "November Indenture").4
4.6 First Supplemental Indenture to the November
Indenture.3
4.7 Indenture dated December 24, 1997 by and among the
Company, Trico Marine Operators, Inc., Trico Marine
Assets, Inc. and Texas Commerce Bank National Association,
as Trustee (the "December Indenture").5
4.8 Form of Note and Subsidiary Guarantee under the
December Indenture.5
4.9 First Supplemental Indenture to the December
Indenture.3
4.10 Certificate of Designations for the Company's
Series AA Participating Cumulative Preference Stock.6
4.11 Rights Agreement dated as of February 19, 1998, by
and between the Company and ChaseMellon Shareholder
Services, L.L.C.6
11.1 Computation of Earnings Per Share.
27.1 Financial Data Schedule.
1 Incorporated by reference to the Company's Current
Report on Form 8-K dated July 21, 1997 and filed with the
Commission on August 1, 1997
2 Incorporated by reference to the Company's
Registration Statement on Form S-1 (Registration
Statement No. 333-2990).
3 Incorporated by refernce to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997
4 Incorporated by reference to the Company's Current
Report on Form 8-K dated November 14, 1997 and filed with the
Commission on November 21, 1997.
5 Incorporated by reference to the Company's Current
Report on Form 8-K dated December 24, 1997 and filed with the
Commission on January 14, 1998.
6 Incorporated by reference to the Company's Registration
Statement on Form 8-A dated March 3, 1998.
(b) Reports on Form 8-K: None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TRICO MARINE SERVICES, INC.
By: /s/ Kenneth W. Bourgeois
Kenneth W. Bourgeois
Chief Accounting Officer and
duly authorized officer
Date: August 14, 1998
TRICO MARINE SERVICES, INC.
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998 Three Months Ended June 30, 1997
_____________________________________ ____________________________________
Per- Per-
Income Shares share Income Shares share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
____________ _____________ _______ ___________ _____________ _______
<S> <C> <C> <C> <C> <C> <C>
Net income $ 11,724 $ 7,974
____________ ____________
Basic earnings per share
Income available to common shareholders 11,724 20,335,702 $0.58 7,974 15,568,863 $0.51
===== =====
Effect of Dilutive Securities
Stock option grants - 766,753 - 1,285,326
____________ ____________ ___________ ____________
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 11,724 21,102,455 $0.56 $ 7,974 16,854,189 $0.47
============== ============= ====== ============ ============= =====
Six Months Ended June 30, 1998 Six Months Ended June 30, 1997
____________________________________ _________________________________
Per- Per-
Income Shares share Income Shares share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
___________ _____________ _______ ___________ _____________ ______
Net income $ 21,568 $ 14,645
____________ ____________
Basic earnings per share
Income available to common shareholders 21,568 20,317,926 $1.06 14,645 15,551,176 $0.94
====== =====
Effect of Dilutive Securities
Stock option grants - 780,062 - 1,308,254
____________ ____________ ____________ ____________
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 21,568 21,097,988 $1.02 $ 14,645 16,859,430 $0.87
============== ============= ===== ============ =========== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from consolidated financial
statements for the period ending June 30, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 14,971
<SECURITIES> 0
<RECEIVABLES> 40,751
<ALLOWANCES> 360
<INVENTORY> 0
<CURRENT-ASSETS> 58,672
<PP&E> 581,340
<DEPRECIATION> 34,896
<TOTAL-ASSETS> 760,115
<CURRENT-LIABILITIES> 45,299
<BONDS> 391,006
<COMMON> 204
0
0
<OTHER-SE> 278,992
<TOTAL-LIABILITY-AND-EQUITY> 760,115
<SALES> 101,829
<TOTAL-REVENUES> 101,829
<CGS> 56,860
<TOTAL-COSTS> 56,860
<OTHER-EXPENSES> 855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,581
<INCOME-PRETAX> 31,882
<INCOME-TAX> 10,314
<INCOME-CONTINUING> 21,568
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,568
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.02
</TABLE>
