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 September 30, 1999
_____ 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 Identification No.)
incorporation or organization)
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 November 3, 1999 there were 28,386,416 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)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,468 $ 9,236
Accounts receivable, net 27,681 30,936
Prepaid expenses and other current assets 4,356 2,911
--------------- --------------
Total current assets 41,505 43,083
--------------- --------------
Property and equipment, at cost:
Land and buildings 3,699 3,402
Marine vessels 631,585 565,397
Construction-in-progress 3,767 45,861
Transportation and other 5,679 3,604
--------------- --------------
644,730 618,264
Less accumulated depreciation and amortization 69,875 47,855
--------------- --------------
Net property and equipment 574,855 570,409
--------------- --------------
Goodwill, net 113,754 116,170
Other assets 38,695 39,228
--------------- --------------
$ 768,809 $ 768,890
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 13,611 $ 2,033
Accounts payable 9,622 11,058
Accrued expenses 8,646 9,894
Accrued interest 5,925 10,674
Income taxes payable 48 66
--------------- --------------
Total current liabilities 37,852 33,725
--------------- --------------
Long-term debt 394,170 402,518
Deferred income taxes, net 32,215 45,622
Other non-current liabilities 2,944 2,785
--------------- --------------
Total liabilities 467,181 484,650
--------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 100,000 shares
authorized, no shares issued - -
Common stock, $.01 par value, authorized 40,000,000
shares, issued 28,458,448 and 20,450,448 shares,
outstanding 28,386,416 and 20,378,416 shares at
September 30, 1999 and December 31, 1998, respectively 285 205
Additional paid-in capital 265,182 218,807
Retained earnings 44,591 70,586
Accumulated other comprehensive loss (8,429) (5,357)
Treasury stock, at par value, 72,032 shares (1) (1)
--------------- --------------
Total stockholders' equity 301,628 284,240
--------------- --------------
$ 768,809 $ 768,890
=============== ==============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Charter hire $ 27,560 $ 43,017 $ 82,463 $ 144,789
Other vessel income 54 27 133 84
---------- ---------- ---------- ----------
Total revenues 27,614 43,044 82,596 144,873
---------- ---------- ---------- ----------
Operating expenses:
Direct vessel operating expenses and other 16,739 19,188 50,813 53,204
Asset write-down - - 1,111 -
General and administrative 2,097 2,738 7,552 7,508
Amortization of marine inspection costs 3,492 2,452 10,188 6,182
---------- ---------- ---------- ----------
Total operating expenses 22,328 24,378 69,664 66,894
---------- ---------- ---------- ----------
Depreciation and amortization expense 8,739 7,642 24,841 21,986
---------- ---------- ---------- ----------
Operating income (loss) (3,453) 11,024 (11,909) 55,993
Interest expense 8,172 7,172 23,685 20,753
Amortization of deferred financing costs 323 459 1,292 1,314
Loss (gain) on sale of assets, net 13 (301) 13 (909)
Other income, net (237) (99) (532) (840)
---------- ---------- ---------- ----------
Income (loss) before income taxes and extraordinary item (11,724) 3,793 (36,367) 35,675
Income tax expense (benefit) (3,908) 1,166 (12,202) 11,480
---------- ---------- ---------- ----------
Income (loss) before extraordinary item (7,816) 2,627 (24,165) 24,195
Extraordinary item, net of taxes - - (1,830) -
---------- ---------- ---------- ----------
Net income (loss) $ (7,816) $ 2,627 $ (25,995) $ 24,195
========== ========== ========== ==========
Basic earnings per common share:
Income (loss) before extraordinary item $ (0.28) $ 0.13 $ (1.01) $ 1.19
Extraordinary item, net of taxes - - (0.08) -
---------- ---------- ---------- ----------
Net income (loss) $ (0.28) $ 0.13 $ (1.09) $ 1.19
========== ========== ========== ==========
Average common shares outstanding 28,385,079 20,357,612 23,942,273 20,331,300
========== ========== ========== ==========
Diluted earnings per common share:
Income (loss) before extraordinary item $ (0.28) $ 0.13 $ (1.01) $ 1.15
Extraordinary item, net of taxes - - (0.08) -
---------- ---------- ---------- ----------
Net income (loss) $ (0.28) $ 0.13 $ (1.09) $ 1.15
========== ========== ========== ==========
Average common shares outstanding 28,385,079 21,012,249 23,942,273 21,069,094
========== ========== ========== ==========
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)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1999 1998
----------- ----------
<S> <C> <C>
Net income (loss) $ (25,995) $ 24,195
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 36,128 29,763
Deferred income taxes (12,219) 13,176
Loss (gain) on sales of assets 13 (909)
Provision for doubtful accounts - 90
Asset write-off 1,111 -
Extraordinary item 1,830 -
Changes in operating assets and liabilities:
Accounts receivable 2,842 3,268
Prepaid expenses and other current assets (1,540) 715
Accounts payable and accrued expenses (7,066) (1,885)
Other, net (862) (1,189)
----------- ----------
Net cash provided by (used in) operating activities (5,758) 67,224
----------- ----------
Cash flows from investing activities:
Purchases of property and equipment (31,673) (80,581)
Deferred marine inspection costs (11,157) (22,247)
Proceeds from sales of assets 46 6,874
Other 131 (1,824)
----------- ----------
Net cash used in investing activities (42,653) (97,778)
----------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses 46,455 265
Proceeds from issuance of long-term debt 89,852 147,957
Repayment of long-term debt (85,835) (103,326)
Deferred financing costs and other (1,761) (820)
----------- ----------
Net cash provided by financing activities 48,711 44,076
----------- ----------
Effect of exchange rate changes on cash and cash equivalents (68) (27)
----------- ----------
Net increase in cash and cash equivalents 232 13,495
Cash and cash equivalents at beginning of period 9,236 10,940
----------- ----------
Cash and cash equivalents at end of period $ 9,468 $ 24,435
=========== ==========
Supplemental information:
Income taxes paid $ 149 $ 3,757
=========== ==========
Income taxes refunded $ - $ 3
=========== ==========
Interest paid $ 29,614 $ 24,148
=========== ==========
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)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- --------------------
1999 1998 1999 1998
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net Income (loss) $ (7,816) $ 2,627 $ (25,995) $ 24,195
---------- -------- ---------- --------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 2,388 4,278 (3,072) 164
---------- -------- ---------- --------
Comprehensive income (loss) $ (5,428) $ 6,905 $ (29,067) $ 24,359
========== ======== ========== ========
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 nine months ended September 30, 1999 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,
1998.
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. EARNINGS PER SHARE:
For the three-month and nine-month periods ending September 30, 1999, options
to purchase 1,831,355 common shares at prices ranging from $0.91 to $23.13 have
been excluded from the computation of diluted earnings per share because
inclusion of these shares would have been antidilutive.
3. SEPARATE FINANCIAL STATEMENTS FOR SUBSIDIARY GUARANTORS:
During 1997, the Company issued $280,000,000 of 8 1/2 % senior notes due 2005
in three different series. In November 1998, the Company completed an exchange
offer of all the existing series of senior notes for one series of senior notes
(the "Senior Notes"). The terms and conditions of the Senior Notes are
identical to the predecessor senior notes.
Pursuant to the terms of the indenture 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.
4. INCOME TAXES:
The Company's effective income tax rate for the three-month and nine-month
periods ended September 30, 1999 was 33% and 34%, respectively, and for the
three-month and nine-month periods ended September 30, 1998 was 31% and 32%,
respectively. The variance from the Company's statutory rate is due to income
contributed by Trico 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.
5. NEW ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards, No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"), effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The effective date of SFAS No.
133 was deferred for one year with the issuance of Statement of Financial
Accounting Standards, No. 137, "Deferral of the Effective Date of SFAS No.
133," (SFAS No. 137). Accordingly, SFAS No. 133, as amended by SFAS No. 137,
is effective for all fiscal years beginning after June 15, 2000. The Company
is currently evaluating the impact SFAS No. 133 will have on its financial
statements, if any.
6. SEGMENT AND GEOGRAPHIC INFORMATION (IN THOUSANDS):
The Company is a provider of marine support services to the oil and gas
industry. Substantially all revenues result from the charter of vessels owned
by the Company. The Company's three reportable segments are based on
geographic area, consistent with the Company's management structure. The
accounting policies of the segments are the same, except for purposes of income
taxes and intercompany transactions and balances. The North Sea segment
provides for a flat tax rate of 28%, which is the Norwegian statutory tax rate.
Additionally, segment data includes intersegment revenues, receivables and
payables, and investments in consolidated subsidiaries. The Company evaluates
performance based on net income (loss). The U.S. segment represents the
Company's domestic operations. The North Sea segment includes Norway and the
United Kingdom, and the Other segment primarily represents the Company's
Brazilian operations. Segment data as of and for the three-month and nine-
month periods ended September 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999 U.S. North Sea Other Totals
- ------------------------------------- ------- ----------- ------- --------
<S> <C> <C> <C> <C>
Revenues from external customers 11,690 14,030 1,894 27,614
Intersegment revenues 36 -- -- 36
Segment net income (loss) (9,225) 1,940 (531) (7,816)
Three Months Ended September 30, 1998 U.S. North Sea Other Totals
- ------------------------------------- ------- ----------- ------- --------
Revenues from external customers 20,281 21,207 1,556 43,044
Intersegment revenues 216 -- -- 216
Segment net income (4,653) 7,827 (547) 2,627
Nine Months Ended September 30, 1999 U.S. North Sea Other Totals
- ------------------------------------ ------- ----------- ------- --------
Revenues from external customers 33,834 43,626 5,136 82,596
Intersegment revenues 288 -- -- 288
Segment net income (loss) (31,047) 6,496 (1,444) (25,995)
Segment total assets 530,472 311,383 33,068 874,923
Nine Months Ended September 30, 1998 U.S. North Sea Other Totals
- ------------------------------------ ------- ----------- ------- --------
Revenues from external customers 81,624 61,693 1,556 144,873
Intersegment revenues 216 -- -- 216
Segment net income 2,425 22,317 (547) 24,195
Segment total assets 565,569 302,212 12,465 880,246
</TABLE>
A reconciliation of segment data to consolidated data as of and for the three-
month and nine-month periods ended September 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1999 1998
------ ------
Revenues
<S> <C> <C>
Total revenues from external customers and intersegment revenues
for reportable segments............................................... 27,650 43,260
Elimination of intersegment revenues..................................... (36) (216)
------- -------
Total consolidated revenues....................................... 27,614 43,044
======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
------ ------
<S> <C> <C>
Revenues
Total revenues from external customers and intersegment revenues
for reportable segments............................................... 82,884 145,089
Elimination of intersegment revenues..................................... (288) (216)
------- --------
Total consolidated revenues 82,596 144,873
======= ========
</TABLE>
<TABLE>
<CAPTION>
As of September 30,
---------------------
1999 1998
------ ------
<S> <C> <C>
Assets
Total assets for reportable segments..................................... 874,923 880,246
Elimination of intersegment receivables.................................. (3,913) (1,939)
Elimination of investment in subsidiaries................................ (102,201) (100,545)
--------- ---------
Total consolidated assets......................................... 768,809 777,762
========= =========
</TABLE>
7. Stock Sale:
On April 16, 1999, the Company entered into a definitive agreement whereby
affiliates of Inverness Management LLC ("Inverness") agreed to purchase
$50,000,000 of the Company's common shares in a private placement. Under the
terms of the agreement, Inverness purchased an aggregate of 8,000,000 shares of
the Company's common stock in two tranches at $6.25 per share. The first
tranche was closed on May 6, 1999, and the second tranche was closed on June
28, 1999. The net proceeds from both tranches were primarily used to pay down
amounts outstanding under the Company's bank credit facility.
8. UNITED STATES GOVERNMENT GUARANTEED SHIP FINANCING BONDS:
On April 21, 1999, the Company issued $18,867,000 principal amount of 15 year
United States Government Guaranteed Ship Financing Bonds (the "Ship Bonds")
at an interest rate of 6.11% per annum. The Ship Bonds are due in 30 semi-
annual installments of principal and interest. The Ship Bonds are secured
by first preferred ship mortgages on two supply boats, the Spirit River and
the Hondo River.
9. BANK CREDIT AGREEMENT:
Effective July 19, 1999, the Company executed a new $52,500,000 revolving
credit agreement (the "Bank Credit Facility"). The Bank Credit Facility bears
interest at a Eurocurrency rate plus a margin that depends on the Company's
leverage ratio and a commitment fee on the undrawn portion. The Bank Credit
Facility does not require any principal payments until July 19, 2002,
when all amounts outstanding under the Bank Credit Facility will mature. The
Bank Credit Facility is collateralized by substantially all of the Company's
U.S. flagged vessels located in the Gulf of Mexico. The Bank Credit
Facility contains certain covenants which require the Company to maintain
certain debt coverage and leverage ratios and net worth levels, limit capital
expenditures, prohibit equity distributions, limit the ability of the Company
to create liens or merge or consolidate with other entities. As a result of
the prepayment of all amounts outstanding under the Company's previous credit
facility, the Company recorded in the second quarter of 1999 an extraordinary
charge of $1,830,000, net of taxes of $985,000, for the write-off of the
unamortized balance of related debt issuance costs.
10. ASSET WRITE-DOWN:
In June 1997, the Company acquired 12 supply vessels for the U.S. Gulf of
Mexico (the "Gulf") market area. The acquisition was accounted for using the
purchase method and the entire purchase price was allocated to the value of the
vessels. One of the vessels, acquired as part of this larger acquisition, was
deemed by Company management to be in a condition incapable of operation at the
time of acquisition and has never been activated. Due to the substantially
lower day rates available for its vessels, in general, and the overall
condition and age of this vessel, the Company determined that it would not be
economically feasible to refurbish and activate this vessel. Accordingly,
during the second quarter of 1999, the Company adjusted the net book value of
the vessel to an estimated value of $100,000, resulting in a non-cash asset
write-down of $1,111,000. The estimated value was determined using discounted
cash flows anticipated in connection with scrapping the vessel. Operating
losses, including depreciation, generated by the vessel during the nine-month
periods ended September 30, 1999 and September 30, 1998 were $52,000 and
$63,000, respectively.
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 third quarter and nine months ended September 30, 1999 were
$27.6 million and $82.6 million, respectively, compared to the $43.0 million
and $144.9 million in revenues for the third quarter and first nine months of
1998, respectively. This decrease in revenues was due to the decrease in
average vessel day rates for all the Company's vessel classes. Day rates and
utilization for the Company's vessels are impacted by the level of offshore oil
and gas drilling, which is influenced by a number of factors, including oil and
gas prices. The weakness in oil and gas prices experienced in 1998 and early
1999, which resulted in the lowest price for oil and gas in recent years, led
to a significant decline in most areas of the Company's business and materially
adversely affected the Company's results for the first nine months of 1999.
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 September 30, Nine months ended September 30,
---------------------------------- ---------------------------------
1999 1998 1999 1998
------ ------ ------ ------
Average Day Rates:
<S> <C> <C> <C> <C>
Supply $ 3,143 $ 6,408 $ 3,310 $ 7,625
Supply/Anchor Handling (N. Sea) 9,998 14,072 10,474 14,234
Lift 4,372 6,218 4,325 6,366
Crew/Line Handling 1,561 2,070 1,559 2,078
Utilization (1):
Supply 57% 53% 55% 64%
Supply/Anchor Handling (N. Sea) 85% 96% 88% 94%
Lift 54% 55% 49% 59%
Crew/Line Handling 84% 93% 82% 94%
Average Number of Vessels:
Supply 52.9 51.3 52.3 50.1
Supply/Anchor Handling (N. Sea) 18.0 17.0 17.3 16.8
Lift 6.0 6.0 6.0 6.0
Crew/Line Handling 21.0 21.0 21.0 22.1
</TABLE>
**FOOTNOTES**
(1) Average utilization rates are average rates for all vessels, including de-
activated vessels, based on a 365-day year. Vessels are considered utilized
when they are being operated or mobilized/demobilized under contracts with
customers.
Supply boat day rates in the Gulf for the third quarter and first nine months
of 1999 decreased 50.9% to $3,143 and 56.6% to $3,310, respectively, compared
to $6,408 and $7,625 for the comparable 1998 periods. Utilization for the Gulf
supply boat fleet increased to 57% for the third quarter of 1999 compared to
53% for the third quarter of 1998, due to increased drilling activity in the
Gulf and reduced vessel downtime for dry-docking. Utilization for the Gulf
supply boat fleet decreased for the nine-month period due to weak market
conditions in the Gulf compared to the year-ago nine-month period and the de-
activation or "stacking" of 10 supply vessels. Vessel downtime for dry-docking
and refurbishment impacted the Company's supply boat utilization rates for both
the 1999 and 1998 periods.
Toward the end of the second quarter of 1998, the Company began to experience
decreases 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. Lower oil prices and the entry of newly-constructed vessels also
impacted day rates and utilization for the Company's North Sea fleet beginning
in the first quarter of 1999. As a result of recent increases in oil and gas
prices and increased levels of drilling activity in the Gulf, late in the third
quarter the Company began to experience improvement in utilization and modest
increases in day rates for its Gulf fleet. However, no such improvement has
been experienced by the Company in the international areas.
Average day rates for the Company's North Sea vessels for the third quarter and
first nine months of 1999, decreased 28.9% to $9,998 and 26.4% to $10,474,
respectively, compared to $14,072 and $14,234 for the comparable 1998 periods.
Utilization was 85% and 88% for third quarter and first nine months of 1999,
compared to 96% and 94% for the year-ago periods. In the third quarter of
1999, the Company elected to de-activate two of its North Sea platform supply
vessels.
Lift boat day rates averaged $4,372 for the quarter and $4,325 for the first
nine months of 1999, a decrease of 29.7% and 32.1%, respectively, compared to
$6,218 and $6,366 for the comparable 1998 periods. Utilization for the
Company's lift boats decreased to 54% and 49% for the third quarter and first
nine months of 1999, respectively, compared to 55% and 59% for the year-ago
periods.
Day rates for crew boats and line handling vessels decreased 24.6% to $1,561
for the third quarter, from $2,070 for the third quarter of 1998, due to the
decrease in day rates for crew boats in the Gulf, and the devaluation of the
Brazilian Real which affected the average day rates for the line handling
vessels operating in Brazil. Utilization for the crew boats and line handling
vessels decreased to 84% for the third quarter of 1999, compared to 93% for the
comparable 1998 period, due to the contract expiration of two of the line
handling vessels in Brazil.
During the third quarter and first nine months of 1999, direct vessel operating
expenses were $16.6 million (60.2% of revenues) and $50.5 million (61.2% of
revenues), respectively, compared to $19.1 million (44.3% of revenues) and
$52.9 million (36.5% of revenues), for the third quarter and first nine months
of 1998. Direct vessel operating expenses decreased in the third quarter of
1999 compared to the year-ago quarter due to cost reduction measures
implemented by the Company, including the de-activation of 10 supply vessels in
the Gulf and two North Sea platform supply vessels. The decrease in direct
vessel operating expenses was partially offset by additional expenses
associated with four new vessels that were placed into service in the fourth
quarter of 1998 and in the first half of 1999. Direct vessel operating expenses
as a percentage of revenues increased due to the decrease in utilization and
average vessel day rates for the Company's vessel fleet.
Depreciation and amortization expense increased to $8.7 million and $24.8
million for the third quarter and first nine months of 1999, respectively, up
from $7.6 million and $22.0 million for the year-ago periods as a result of the
Company's expanded vessel fleet and vessel upgrade program. Amortization of
marine inspection costs increased to $3.5 million and $10.2 million for the
quarter and nine month period ended September 30,1999, respectively, from $2.5
million and $6.2 million in the comparable 1998 periods, due to the
amortization of increased drydocking and marine inspection costs associated
with the Company's fleet upgrade and refurbishment program.
General and administrative expenses were $2.1 million (7.6% of revenues) and
$7.6 million (9.1% of revenues) in the third quarter and first nine months of
1999, respectively, compared to $2.7 million (6.4% of revenues) and $7.5
million (5.2% of revenues) for the 1998 periods. General and administrative
expenses, as a percentage of revenues, increased in the 1999 periods due to the
decrease in utilization and average day rates for the Company's vessel fleet.
Interest expense increased to $8.2 million for the third quarter of 1999 from
$7.2 million for the third quarter of 1998 due to higher average interest rates
and $772,000 of capitalized interest in the 1998 period associated with
the various vessel construction projects.
In the third quarter and first nine months of 1999, the Company had an income
tax benefit of $3.9 million and $12.2 million, respectively, compared to income
tax expense of $1.2 million and $11.5 million in the 1998 periods. The
Company's effective income tax rate for the three-month period ended September
30, 1999 was 33%. The variance from the Company's statutory rate is due to
income contributed by Trico Supply, 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
The Company's strategy is to continue to enhance its position as a leading
supplier of marine support services by pursuing opportunities to acquire vessel
fleets and continuing to diversify into international markets.
Primarily as a result of acquisitions and the Company's recently completed
vessel construction and upgrade programs, the Company's total assets have grown
from $52.1 million at December 31, 1995, to $768.8 million at September 30,
1999. During the 1996 to 1997 period, the Company completed the acquisition of
Trico Supply, a then publicly traded Norwegian company, for approximately
$293.7 million (including transaction costs) and acquired 37 supply boats in
the Gulf at an aggregate cost of $177.0 million. During 1997 and 1998 the
Company spent $78.6 million to construct six new vessels to increase its
international market presence and deepwater capabilities, the last of which was
delivered in July 1999 when the Company took delivery in Norway of a 275-foot
technologically advanced multipurpose anchor handling towing and supply vessel
with 23,800 horsepower. During the first nine months of 1999, the Company
spent approximately $31.7 million to complete its vessel construction and
upgrade projects. Additionally, the Company completed during the second
quarter of 1999 its vessel improvement program consisting of the extensive
upgrade and refurbishment of a significant portion of its Gulf supply boat
fleet. While this refurbishment program resulted in significant vessel
downtime in 1998, which extended into the first half of 1999, the Company
believes it has extended the service lives of many of its vessels and has
significantly reduced required maintenance spending in the future. Capital
expenditures planned for the remainder of 1999 consist principally of
regulatory-mandated drydocking costs.
As a result of the reduction in industry activity and resulting decreases in
day rates and utilization, the Company has limited capital expenditures in 1999
to those that were necessary to complete existing vessels under construction
and vessels which were being refurbished as of the end of 1998, and regulatory-
mandated dry-docking costs. Due to the decreased day rates for the Gulf supply
boats, as part of this reduced capital expenditure plan, the Company has de-
activated or "stacked" 10 of its Gulf supply vessels during 1999. As a result
of market conditions in the North Sea, during the third quarter of 1999, the
Company also de-activated two of its platform supply vessels.
Funds during the first nine months of 1999 were provided by $71.0 million in
borrowings under the Company's bank credit facilities, $18.9 million of
principal amount of 15 year 6.11% Ship Financing Bonds guaranteed by the United
States Government, and $46.5 million in net proceeds from the issuance of
common equity. During the period, the Company repaid $85.8 million of debt,
made capital expenditures totaling $42.8 million, which included $11.2 million
of deferred marine inspection costs, and used $5.8 million to support its
operating activities. Cash on hand increased by $232,000 during the period.
The Company has outstanding $280.0 million in aggregate principal amount of
8 1/2 % Senior Notes due 2005 (the "Senior Notes"). The Senior Notes are
unsecured and are required to be guaranteed by all of the Company's Significant
Subsidiaries (as such term is defined in the indenture governing the Senior
Notes, the "Subsidiary Guarantors"). Except in certain circumstances, the
Senior 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
indenture governing the Senior Notes contains 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.
In June 1998, the Company refinanced Trico Supply's existing bank credit
facilities with a revolving credit facility in the amount of NOK 650 million,
or $84.1 million (the "Norwegian Bank Facility"). As of September 30, 1999, the
Company had approximately NOK 530 million ($68.5 million) of debt outstanding
under the Norwegian Bank Facility. The Norwegian Bank Facility is
collateralized by a security interest in certain of the Company's North Sea
vessels, requires Trico Supply to maintain certain financial ratios and limits
the ability of Trico Supply to create liens, or merge or consolidate with other
entities. Amounts borrowed under the Norwegian Bank Facility bear interest at
NIBOR (Norwegian Interbank Offered Rate) plus a margin. The weighted average
interest rate for the Norwegian Bank Facility was 7.0% as of September 30,
1999. The commitment amount for the Norwegian 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.
On April 16, 1999, the Company entered into a definitive agreement whereby
affiliates of Inverness Management LLC ("Inverness") agreed to purchase $50
million of the Company's common shares in a private placement. Under the terms
of the agreement, Inverness purchased an aggregate of eight million shares of
the Company's common stock in two tranches at $6.25 per share. The first
tranche was closed on May 6, 1999, and the second tranche was closed on June
28, 1999. The net proceeds from both tranches were primarily used to pay down
amounts outstanding under the Company's bank credit facility.
On April 21, 1999, the Company issued $18.9 million principal amount of 15 year
6.11% Ship Financing Bonds guaranteed by the United States Government. The
Ship Bonds are due in 30 semi-annual installments of principal and interest,
with the first principal payment beginning October 21, 1999, and are secured by
first preferred ship mortgages on two vessels, the Spirit River and Hondo
River.
The Company maintains a bank credit facility that provides a revolving line of
credit that can be used for acquisitions and general corporate purposes. On
July 19, 1999, the Company replaced its $85 million revolving line of credit
with a $52.5 million revolving facility (the "Bank Credit Facility"). The Bank
Credit Facility is collateralized by a mortgage on substantially all of the
Company's Gulf of Mexico vessels. Amounts borrowed mature on July 19, 2002 and
bear interest at a Eurocurrency rate plus a margin that depends on the
Company's leverage ratio. The Bank Credit Facility requires the Company to
maintain certain financial ratios and limits the ability of the Company to
incur additional indebtedness, make capital expenditures, pay dividends or make
certain other distributions, create certain liens, sell assets or enter into
certain mergers or acquisitions. The interest rate payable under the Bank
Credit Facility was increased and certain of the financial ratios were amended
effective as of September 30, 1999. Although the Bank Credit 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 Senior Notes.
The Company believes that cash generated from operations together with
available borrowings under the amended Bank Credit Facility will be sufficient
to fund the Company's currently planned capital expenditures and working
capital requirements. The Company historically has grown through acquisitions,
and intends to pursue opportunities to make strategic acquisitions and
selectively construct other vessels in the future. To the extent the Company
is successful in identifying such opportunities, it most likely would require
additional equity and/or debt financing depending on the size of the
investments acquired. There can be no assurance regarding the availability or
terms of any such additional equity or debt financing, and the Company could be
adversely affected if it is unable to obtain such additional financing or if
the terms of any such additional financing are not favorable to the Company.
YEAR 2000 COMPLIANCE
In accordance with the U.S. Securities and Exchange Commission's ("SEC") Staff
Legal Bulletin No. 5 and the SEC's subsequent interpretive release, the Company
has assessed both the cost of addressing and the cost or the consequence of
incomplete or untimely resolution of the Year 2000 ("Y2K") issue. This process
includes (i) the development of Y2K awareness, (ii) a comprehensive review to
identify systems that could be affected by the Y2K issue, (iii) an assessment
of potential risk factors (including non-compliance by the Company's suppliers,
subcontractors and customers), (iv) the allocation of required resources, (v) a
determination of the extent of remediation work required, (vi) the development
of an implementation plan and time table, and (vii) the development of
contingency plans.
The Company, in the normal course of business, has substantially completed the
replacement of its accounting and certain other information systems. While the
Company's growth was the driving force in the Company's efforts to replace
these systems, the Company does expect the implementation of the new systems to
mitigate any potential Y2K issues related to any of its existing systems.
In addition, the Company's information systems personnel have completed their
review and remedial work with third party vendors to resolve the potential
problems associated with the year 2000 and the processing of date sensitive
information by the Company's computer and other systems. The Company has
completed evaluating the Y2K effect on non-information technology systems,
including telephone systems, office based electronic equipment and devices with
embedded microprocessors and has completed all remedial work where required.
The Company has also completed its review and substantially completed all
remedial work on all vessel based electronic equipment and devices with
embedded microprocessors. Additionally, the Company has contacted key vendors
and suppliers to ensure that they have a Y2K compliance plan in an effort to
minimize the Company's exposure to their potential Y2K problems. The Company
has completed its evaluation of vessel based non-information technology
equipment, key vendors and suppliers and has substantially completed all
remedial action where necessary.
Because of the Company's purchase of new software and conversions to new
software, the Y2K issue is not expected to pose significant operational
problems for the Company's computer systems. However, if such modifications or
conversions are not made or are not completed on time, the Y2K issue could have
an adverse impact on the Company's operations. Among other things the Company
could be impacted by: the inability of the Company to retain qualified
personnel and outside consultants to successfully remediate Y2K issues and
implement a new business system as demand for their services rises; the
inability of the Company's customers to accurately and timely pay invoices; the
inability of the Company to access necessary capital from lenders or other
sources when required; and the inability of the Company's significant
suppliers, subcontractors and others to provide the necessary materials,
services or systems required to operate the Company's business.
The Company believes that it will be able to implement successfully the changes
necessary to address the Y2K issues with reliance on its third party vendors
and does not expect the cost of such changes to have a material impact on the
Company's financial position, results of operations or cash flows in future
periods.
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 Trico 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk exposures primarily include interest rate and
exchange rate fluctuation on derivative and financial instruments as summarized
below. The Company's market risk sensitive instruments are classified as
"other than trading."
The Company has entered into a number of variable and fixed rate debt
obligations, denominated in both the U.S. Dollar and the Norwegian Kroner
(Norwegian debt payable in Norwegian Kroner). The instruments are subject to
interest rate risk. The Company manages this risk by monitoring its ratio of
fixed and variable rate debt obligations in view of changing market conditions
and from time to time altering that ratio. The Company has also entered into
an interest rate swap agreement in order to manage its interest rate exposure.
The Company's foreign subsidiaries collect revenues and pay expenses in several
different foreign currencies. The Company monitors the exchange rate of its
foreign currencies and, when deemed appropriate, enters into hedging
transactions in order to mitigate the risk from foreign currency fluctuations.
The Company also manages its foreign currency risk by attempting to contract
foreign revenue in U.S. Dollars whenever practicable. At September 30, 1999,
there were no material unrealized gains or losses on open foreign currency
forward exchange contracts.
The Company's market risk estimates have not changed materially from those
disclosed in the Company's 1998 Form 10-K, incorporated herein by reference.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Amended and Restated Certificate of Incorporation of the Company.{1}
3.2 By Laws of the Company.{1}
4.1 Specimen Common Stock Certificate.{2}
4.2 First Amendment effective as of September 30, 1999 to the Third
Amended and Restated Revolving Credit Agreement dated as of July 19,
1999 by and among the Company, Trico Marine Operators, Inc., Trico
Marine Assets, Inc. and Wells Fargo Bank, N.A. as agent for itself
and the other lending institutions that may become party thereto
from time to time in accordance with the terms thereof.
11.1 Computation of Earnings Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
None.
__________________________
{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).
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.
Date: November 12, 1999 By:/s/ Kenneth W. Bourgeois
-----------------------------
Kenneth W. Bourgeois
Chief Accounting Officer and
duly authorized officer
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (hereinafter called this "Amendment") is entered into effective
as of September 30, 1999, among (a) TRICO MARINE OPERATORS, INC. ("Marine
Operators"), a Louisiana corporation, TRICO MARINE ASSETS, INC. ("Marine
Assets"), a Delaware corporation (each of Marine Operators and Marine Assets
a "Borrower" and, collectively "Borrowers"), (b) TRICO MARINE SERVICES, INC.
(the "Parent"), a Delaware corporation, (c) the financial institutions listed
on SCHEDULE 1.1 of the Agreement (hereinafter described) and such other
financial institutions as may become parties to the Agreement from time to time
(individually a "Bank" and collectively the "Banks"), (d) WELLS FARGO BANK,
N.A., as issuing bank (the "Issuing Bank"), and (e) WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as administrative agent for itself, the Issuing Bank
and such financial institutions (the "Administrative Agent"), CHRISTIANIA
BANK OG KREDITKASSE ASA, New York Branch, as documentation agent for itself and
such financial institutions (the "Documentation Agent") (collectively the
"Agents" and/or "Arrangers").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Parent, the Banks, the Issuing Bank, the
Documentation Agent and the Administrative Agent entered into a Third Amended
and Restated Revolving Credit Agreement dated as of July 19, 1999 (hereinafter
called the "Agreement"), whereby, upon the terms and conditions therein stated,
the Banks and the Issuing Bank agreed to make available to the Borrowers a
credit facility upon the terms and conditions set forth in the Agreement;
and
WHEREAS, the Company has requested that the Banks, the Issuing Bank and
the Agents agree to certain amendments to the Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties to this Amendment hereby agree as
follows:
SECTION 1. TERMS DEFINED IN AGREEMENT. As used in this Amendment, except
as may otherwise be provided herein, all capitalized terms which are defined in
the Agreement shall have the same meaning herein as therein, all of such terms
and their definitions being incorporated herein by reference.
SECTION 2. AMENDMENTS TO AGREEMENT. The Agreement hereby is amended as
follows:
(a) The definition of "Pricing Grid" hereby is amended by deleting
from the last row (labeled "Level VII") of the third column (labeled
"Eurocurrency Rate Loan (bps)") the number "275.0" and inserting in lieu
thereof the number "325.0."
(b) SECTION 10.1 of the Agreement hereby is amended by deleting
the table therefrom and inserting the following table in lieu thereof:
<TABLE>
<CAPTION>
PERIOD MINIMUM RATIO
<S> <C>
9/30/99 through 12/30/99 0.60:1.00
12/31/99 through 3/30/00 1.00:1.00
3/31/00 through 12/30/00 1.20:1.00
12/31/00 and thereafter 1.35:1.00
</TABLE>
(c) SECTION 10.2 of the Agreement hereby is amended by deleting
from the first row (labeled "9/30/99 through 12/30/99") of the second column
(labeled "Maximum Ratio") the ratio "8.75:1.00" and inserting in lieu thereof
the ratio "12.00:1.00."
SECTION 3. CONDITIONS OF EFFECTIVENESS.
(a) The Administrative Agent, the Issuing Bank and the Banks have
relied upon the representations and warranties in this Amendment in agreeing to
the amendments to the Agreement set forth herein and the amendments to the
Agreement set forth herein are conditioned upon and subject to the accuracy of
each and every representation and warranty of each of the Borrowers and the
Parent made or referred to herein, and performance by each of the Borrowers and
the Parent of its obligations to be performed under the Agreement on or before
the date of this Amendment (except to the extent amended herein).
(b) The amendments to the Agreement set forth herein are further
conditioned upon receipt by the Administrative Agent of certificates of the
Secretary or Assistant Secretary of each of the Borrowers and the Parent
certifying those certain resolutions of each respective Board of Directors
delivered to the Banks as of July 19, 1999 in connection with the Credit
Agreement have not been amended, rescinded or revoked and are in full force and
effect as of the date hereof.
(c) The amendments to the Agreement set forth herein are further
conditioned upon the Borrowers having paid to each of the Banks that have
approved the terms of this Amendment an amendment fee equal to the product of
twenty-five basis points multiplied by such Bank=s Commitment.
(d) The amendments to the Agreement set forth herein are further
conditioned upon the Borrowers having paid all accrued and unpaid legal fees
and expenses referred to in SECTION 16 of the Agreement and SECTION 7 hereof.
(e) The amendments to the Agreement set forth herein are further
conditioned upon the Borrowers having delivered to the Administrative Agent an
original executed copy of that certain Consent to Assignment of Charter dated
as of July 19, 1999 by and among Trico Marine Assets, Inc. and Trico Marine
Operators, Inc.
(f) The amendments to the Agreement set forth herein are further
conditioned upon the Borrowers having delivered to the Administrative Agent a
favorable opinion addressed to the Banks and the Administrative Agent, dated as
of even date hereof, in form and substance satisfactory to the Banks and the
Administrative Agent, from: Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., counsel to the Borrowers and the Parent.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS AND PARENT.
The Borrowers and Parent jointly and severally represent and warrant to the
Administrative Agent, the Issuing Bank and each Bank, with full knowledge that
the Administrative Agent, the Issuing Bank and each Bank is relying on the
following representations and warranties in executing this Amendment, as
follows:
(a) Each of the Borrowers and the Parent has corporate power and
authority to execute, deliver and perform this Amendment, and all corporate
action on the part of each of the Borrowers and the Parent requisite for the
due execution, delivery and performance of this Amendment has been duly and
effectively taken.
(b) The Agreement as amended by this Amendment and the Loan
Documents and each and every other document executed and delivered in
connection with this Amendment to which any of the Borrowers or the Parent, or
any Subsidiary thereof, is a party constitute the legal, valid and binding
obligations of such Person to the extent it is a party thereto, enforceable
against such Person in accordance with its respective terms.
(c) This Amendment does not and will not violate any provisions of
the articles or certificate of incorporation or bylaws of any of the Borrowers
or the Parent, or any contract, agreement, instrument or requirement of any
Governmental Authority to which any such Person is subject. The execution of
this Amendment by each of the Borrowers and the Parent will not result in the
creation or imposition of any lien upon any properties of any of the Borrowers
or the Parent, other than those permitted by the Agreement and this Amendment.
(d) The execution, delivery and performance by each of the
Borrowers and the Parent of this Amendment do not require the consent or
approval of any other Person, including, without limitation, any regulatory
authority or governmental body of the United States of America or any state
thereof or any political subdivision of the United States of America or any
state thereof.
(e) The quarterly unaudited consolidated balance sheet of the
Parent and the Borrowers as of June 30, 1999, the related consolidated
statements of earnings, capital accounts, and cash flows for the quarter then
ended which have been furnished to the Administrative Agent, the Issuing Bank
and the Banks, fairly present the financial condition of the Parent and the
Borrowers as at such date and the results of the operations of the Parent and
the Borrowers for the periods ended on such date, all in accordance with
generally accepted accounting principles applied on a consistent basis, and
since June 30, 1999 there has been no material adverse change in such condition
or operations.
(f) Each of the Borrowers and the Parent has performed and complied
with all agreements and conditions contained in the Agreement required to be
performed or complied with by each such Person prior to or at the time of
delivery of this Amendment.
(g) No Default or Event of Default exists and, after giving effect
to this Amendment, no Default or Event of Default will exist and all of the
representations and warranties contained in the Agreement and all instruments
and documents executed pursuant thereto or contemplated thereby are true and
correct in all material respects on and as of this date.
(h) Nothing in this Section 4 of this Amendment is intended to
amend any of the representations or warranties contained in the Agreement or of
the Loan Documents to which any of the Borrowers or the Parent or any
Subsidiary thereof is a party.
SECTION 5. REFERENCE TO AND EFFECT ON THE AGREEMENT.
(a) Upon the effectiveness of Sections 1 and 2 hereof, on and after
the date hereof, each reference in the Agreement to "this
Agreement", "hereunder", "hereof", "herein", or words of like import, shall
mean and be a reference to the Agreement as amended hereby.
(b) Except as specifically amended by this Amendment, the Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
SECTION 6. NO WAIVER. Except as specifically amended hereby, each of the
Borrowers and the Parent agrees that no Event of Default and no Default has
been waived or remedied by the execution of this Amendment by the
Administrative Agent, the Issuing Bank and the Banks and any such Default or
Event or Default heretofore arising and currently continuing shall continue
after the execution and delivery hereof.
SECTION 7. COST, EXPENSES AND TAXES. Each of the Borrowers and the
Parent agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Issuing Bank and the Banks in connection with the
preparation, reproduction, execution and delivery of this Amendment and the
other instruments and documents to be delivered hereunder, including reasonable
attorneys's fees and out-of-pocket expenses of the Administrative Agent, the
Issuing Bank and the Banks. In addition, each of the Borrowers and the Parent
shall pay any and all stamp and other taxes and fees payable or determined to
be payable in connection with the execution and delivery, filing or recording
of this Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save each of the Administrative Agent, the Issuing
Bank and the Banks harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
SECTION 8. EXTENT OF AMENDMENTS. Except as otherwise expressly provided
herein, the Agreement and the other Loan Documents are not amended, modified or
affected by this Amendment. Each of the Borrowers and the Parent ratifies and
confirms that (i) except as expressly amended hereby, all of the terms,
conditions, covenants, representations, warranties and all other provisions of
the Agreement remain in full force and effect, (ii) each of the other Loan
Documents are and remain in full force and effect in accordance with their
respective terms, and (iii) the Collateral is unimpaired by this Amendment.
SECTION 9. WAIVERS AND RELEASE OF CLAIMS. As additional consideration
for the execution, delivery, and performance of this Amendment by the parties
hereto and to induce each of the Administrative Agent, the Issuing Bank and the
Banks to enter into this Amendment, each of the Borrowers and the Parent
represents and warrants that none of the Borrowers and the Parent know of any
facts, events, statuses or conditions which, either now or with the passage of
time or the giving of notice, or both, constitute or will constitute a basis
for any claim or cause of action against any of the Administrative Agent, the
Issuing Bank and the Banks or any defense, counterclaim or right of setoff to
the payment or performance of any obligations or indebtedness of any of the
Borrowers or the Parent to any of the Administrative Agent, the Issuing Bank or
the Banks, and in the event any such facts, events, statuses or conditions
exist or have existed, whether known or unknown, WHETHER DUE TO THE
ADMINISTRATIVE AGENT'S, THE ISSUING BANK'S OR ANY BANK'S, ANY OF THEIR
REPRESENTATIVE'S, AGENT'S, OFFICER'S, DIRECTOR'S, EMPLOYEE'S, SHAREHOLDER'S, OR
SUCCESSOR'S OR ASSIGN'S OWN NEGLIGENCE, each of the Borrowers and the Parent
for each of themselves, their respective Subsidiaries, their respective
representatives, agents, officers, directors, employees, shareholders, and
successors and assigns (collectively called the "INDEMNIFYING
PARTIES"), hereby fully, finally, completely, generally and forever releases,
discharges, acquits, and relinquishes the Administrative Agent, the Issuing
Bank and each Bank and each of their respective representatives, agents,
officers, directors, employees, shareholders, and successors and assigns
(collectively called the "INDEMNIFIED PARTIES"), from any and all claims,
actions, demands, and causes of action of whatever kind or character, whether
joint or several, whether known or unknown, WHETHER DUE TO ANY OF THE
INDEMNIFIED PARTIES' OWN NEGLIGENCE, which may have arisen or accrued prior
to the date of execution of this Amendment, for any and all injuries, harm,
damages, penalties, costs, losses, expenses, attorneys' fees, and/or
liabilities whatsoever and whenever incurre d or suffered by any of them,
including, without limitation, any claim, demand, action, damage, liability,
loss, cost, expense, and/or detriment, of any kind or character, growing out
of or in any way connected with or in any way resulting from any breach of any
duty of loyalty, fair dealing, care, fiduciary duty, or any other duty,
confidence, or commitment, undue influence, duress, economic coercion,
conflict of interest, negligence, bad faith, violations of the racketeer
influence and corrupt organizations act, intentional or negligent infliction
of distress or harm, tortious interference with contractual relations, tortious
interference with corporate governance or prospective business advantage,
breach of contract, failure to perform any obligation under any of the
Loan Documents, deceptive trade practices, libel, slander, conspiracy,
interference with business, usury, strict liability, lender liability,
breach of warranty or representation, fraud, or any other claim or cause of
action (herein being collectively referred to as "Claims"). IT IS
EXPRESSLY AGREED THAT THE CLAIMS RELEASED HEREBY INCLUDE THOSE ARISING FROM OR
IN ANY MANNER ATTRIBUTABLE TO THE NEGLIGENCE (SOLE, CONCURRENT, ORDINARY, OR
OTHERWISE), OR OTHER TORTIOUS CONDUCT OF ANY OF THE INDEMNIFIED PARTIES (other
than any claims arising solely out of an Indemnified Party's willful
misconduct or gross negligence). Notwithstanding any provision of this
Amendment or any other Loan Document, this Section shall remain in full force
and effect and shall survive the delivery and payment of the Notes, this
Amendment and the other Loan Documents and the making, extension, renewal,
modification, amendment or restatement of any thereof.
SECTION 10. INDEMNIFICATION. As additional consideration to the
execution, delivery, and performance of this Amendment by the parties hereto
and to induce the Administrative Agent, the Issuing Bank and each Bank to
enter into this Amendment, the Indemnifying Parties hereby agree to indemnify,
hold harmless, and defend each of the Indemnified Parties from and against any
and all Claims of any nature or character, at law or in equity, known or
unknown, which may have arisen prior to the date hereof, or accrued to, or
could be claimed or asserted by, any third party prior to the date hereof,
INCLUDING WITHOUT LIMITATION, ANY CLAIMS ARISING OUT OF OR IN ANY MANNER
ATTRIBUTABLE TO THE NEGLIGENCE (SOLE, CONCURRENT, ORDINARY OR OTHERWISE), OR
OTHER TORTIOUS CONDUCT OF ANY OF THE INDEMNIFIED PARTIES (other than any claims
arising solely out of an Indemnified Party's willful misconduct or gross
negligence). Notwithstanding any provision of this Amendment or any other
Loan Document, this Section shall remain in full force and effect and shall
survive the delivery and payment of the Notes, this Agreement and the other
Loan Documents and the making, extension, renewal, modification, amendment or
restatement of any thereof.
SECTION 11. GRANT AND AFFIRMATION OF SECURITY INTEREST. Each of the
Borrowers and the Parent hereby grants a security interest in and lien on the
Collateral to secure payment and performance of the Notes and the obligations
described in the Agreement and all documents and instruments executed in
connection therewith and, each of the Borrowers and the Parent hereby confirms
and agrees that any and all liens, security interests and other security or
Collateral now or hereafter held by the Administrative Agent for the benefit
of, and as representative of, the Issuing Bank and the Banks as security for
payment and performance of the Obligations hereby are renewed and carried forth
to secure payment and performance of all of the Obligations. The Security
Documents are and remain legal, valid and binding obligations of the parties
thereto, enforceable in accordance with their respective terms.
SECTION 12. GUARANTIES. The Parent hereby consents to and accepts the
terms and conditions of this Amendment, agrees to be bound by the terms and
conditions hereof and ratifies and confirms that its Guaranty, executed and
delivered to the Administrative Agent for the benefit of and as representative
of each of the Issuing Bank and the Banks on July 19, 1999, guaranteeing
payment of the Obligations, is and remains in full force and effect and secures
payment of the Obligations, including, among other things, the Notes.
SECTION 13. EXECUTION AND COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of the signature page of
this Amendment by facsimile shall be equally as effective as delivery of a
manually executed counterpart of this Amendment.
SECTION 14. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 15. HEADINGS. Section headings in this Amendment are included
herein for convenience and reference only and shall not constitute a part of
this Amendment for any other purpose.
SECTION 16. ARBITRATION. The parties agree to be bound by the terms and
provisions of the arbitration provisions set forth in Section 33 of the
Agreement.
SECTION 17. NO ORAL AGREEMENTS. THE AGREEMENT (AS AMENDED BY THIS
AMENDMENT) AND THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized.
TRICO MARINE OPERATORS, INC, a
Louisiana corporation
By___________________________
Name:
Title:
TRICO MARINE ASSETS, INC., a
Delaware corporation
By___________________________
Name:
Title:
TRICO MARINE SERVICES, INC, a
Delaware corporation
By___________________________
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION,
individually and as
Administrative Agent
By___________________________
Name:
Title:
WELLS FARGO BANK, N.A., as
Issuing Bank
By___________________________
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
CHRISTIANIA BANK OG
KREDITKASSE ASA, NEW YORK
BRANCH, individually and as
Documentation Agent
By___________________________
Name:
Title:
By___________________________
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
BANK ONE LOUISIANA, N.A.,
individually and as
Syndication Agent
By___________________________
Name:
Title:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
HIBERNIA NATIONAL BANK
By___________________________
Name:
Title:
<TABLE>
<CAPTION>
TRICO MARINE SERVICES, INC.
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except share and per share amounts)
Three Months Ended September 30, 1999 Nine Months Ended September 30, 1999
--------------------------------------- --------------------------------------
Per- Per-
Loss Shares share Loss Shares share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------ --------------- --------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Loss before extraordinary item $ (7,816) $ (24,165)
------------- -------------
Basic earnings per share
Loss before extraordinary item available to
common shareholders (7,816) 28,385,079 ($0.28) (24,165) 23,942,273 ($1.01)
========= ========
Effect of Dilutive Securities
Stock option grants - - - -
------------ -------------- ------------- --------------
Diluted earnings per share
Loss before extraordinary item available to
common shareholders plus assumed
conversions $ (7,816) 28,385,079 ($0.28) $ (24,165) 23,942,273 ($1.01)
============= ============= ========= ============= ============ =========
Extraordinary item $ - $ (1,830)
------------- -------------
Basic earnings per share
Extraordinary item available to
common shareholders - 28,385,079 $0.00 (1,830) 23,942,273 ($0.08)
======= ========
Effect of Dilutive Securities
Stock option grants - - - -
------------- ------------- ------------- -------------
Diluted earnings per share
Extraordinary item available to common
shareholders plus assumed conversions $ - 28,385,079 $0.00 $ (1,830) 23,942,273 ($0.08)
============== ============ ======= ============= ============= ========
Net loss $ (7,816) $ (25,995)
-------------- --------------
Basic earnings per share
Net loss available to common
shareholders (7,816) 28,385,079 ($0.28) (25,995) 23,942,273 ($1.09)
========= ========
Effect of Dilutive Securities
Stock option grants - - - -
------------ ------------- ----------- -------------
Diluted earnings per share
Net loss available to common
shareholders plus assumed conversions $ (7,816) 28,385,079 ($0.28) $ (25,995) 23,942,273 ($1.09)
============= ============ ======== ============= ============ ========
</TABLE>
<TABLE>
<CAPTION>
TRICO MARINE SERVICES, INC.
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except share and per share amounts)
Three Months Ended September 30, 1999 Nine Months Ended September 30, 1998
--------------------------------------- --------------------------------------
Per- Per-
Income Shares share Income Shares share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------- --------------- --------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 2,627 $ 24,195
------------- -------------
Basic earnings per share
Net income available to common
shareholders 2,627 20,357,612 $0.13 24,195 20,331,300 $1.19
======= =======
Effect of Dilutive Securities
Stock option grants - 654,637 - 737,794
------------ ----------- ------------- ------------
Diluted earnings per share
Net income available to common
shareholders plus assumed conversions $ 2,627 21,012,249 $0.13 $ 24,195 21,069,094 $1.15
============ ============ ======== ============= ============ ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from consolidated financial
statements for the period ending September 30, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 9468
<SECURITIES> 0
<RECEIVABLES> 28121
<ALLOWANCES> 440
<INVENTORY> 0
<CURRENT-ASSETS> 41505
<PP&E> 644730
<DEPRECIATION> 69875
<TOTAL-ASSETS> 768809
<CURRENT-LIABILITIES> 37852
<BONDS> 394170
<COMMON> 285
0
0
<OTHER-SE> 301343
<TOTAL-LIABILITY-AND-EQUITY> 768809
<SALES> 82596
<TOTAL-REVENUES> 82596
<CGS> 94505
<TOTAL-COSTS> 94505
<OTHER-EXPENSES> 1292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23685
<INCOME-PRETAX> (36367)
<INCOME-TAX> (12202)
<INCOME-CONTINUING> (24165)
<DISCONTINUED> 0
<EXTRAORDINARY> (1830)
<CHANGES> 0
<NET-INCOME> (25995)
<EPS-BASIC> (1.09)
<EPS-DILUTED> (1.09)
</TABLE>
