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, 2000
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 9, 2000 there were 36,236,585 shares outstanding of the
Registrant's Common Stock, par value $.01 per share.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, December 31,
2000 1999
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,189 $ 5,898
Restricted cash 330 566
Accounts receivable, net 28,426 24,141
Prepaid expenses and other current assets 4,333 4,740
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Total current assets 50,278 35,345
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Property and equipment, at cost:
Land and buildings 3,771 3,727
Marine vessels 576,584 619,544
Construction-in-progress 4,025 3,250
Transportation and other 2,542 3,960
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586,922 630,481
Less accumulated depreciation and amortization 93,496 77,093
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Net property and equipment 493,426 553,388
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Goodwill, net 88,029 101,762
Other assets 31,880 40,084
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$ 663,613 $ 730,579
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 4,540 $ 7,618
Accounts payable 7,678 9,467
Accrued expenses 7,055 7,935
Accrued interest 5,236 11,746
Income taxes payable 46 57
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Total current liabilities 24,555 36,823
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Long-term debt 326,828 393,510
Deferred income taxes, net 17,723 27,279
Other non-current liabilities 2,135 2,859
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Total liabilities 371,241 460,471
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Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 55,000,000 and 40,000,000 shares authorized,
36,105,242 and 28,462,448 shares issued and 36,033,210 and 28,390,416
shares outstanding at September 30, 2000 and December 31, 1999, respectively 361 285
Additional paid-in capital 335,540 265,031
Retained earnings 23,062 37,176
Accumulated other comprehensive loss (66,590) (32,383)
Treasury stock, at par value, 72,032 shares (1) (1)
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Total stockholders' equity 292,372 270,108
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$ 663,613 $ 730,579
============= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------
2000 1999 2000 1999
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Charter hire $ 35,260 $ 27,560 $ 91,072 $ 82,463
Other vessel income 25 54 76 133
-------------- -------------- -------------- ------------
Total revenues 35,285 27,614 91,148 82,596
-------------- -------------- -------------- ------------
Operating expenses:
Direct vessel operating expenses and other 16,509 16,739 49,471 50,813
Asset write-down - - - 1,111
General and administrative 2,660 2,097 7,965 7,552
Amortization of marine inspection costs 3,268 3,492 10,702 10,188
-------------- ------------- -------------- ------------
Total operating expenses 22,437 22,328 68,138 69,664
-------------- -------------- -------------- ------------
Depreciation and amortization expense 8,227 8,739 25,283 24,841
-------------- -------------- -------------- ------------
Operating income (loss) 4,621 (3,453) (2,273) (11,909)
Interest expense 7,038 8,172 23,109 23,685
Amortization of deferred financing costs 337 323 1,053 1,292
Loss (gain) on sale of assets 2 13 (3,921) 13
Other income, net (386) (237) (718) (532)
-------------- -------------- -------------- ------------
Loss before income taxes and extraordinary item (2,370) (11,724) (21,796) (36,367)
Income tax benefit (776) (3,908) (6,966) (12,202)
-------------- -------------- -------------- ------------
Loss before extraordinary item (1,594) (7,816) (14,830) (24,165)
Extraordinary item, net of taxes - - 715 (1,830)
-------------- -------------- -------------- ------------
Net loss $ (1,594) $ (7,816) $ (14,115) $ (25,995)
============== ============== ============== ============
Basic and diluted earnings per common share:
Loss before extraordinary item $ (0.04) $ (0.28) $ (0.47) $ (1.01)
Extraordinary item, net of taxes - - 0.02 (0.08)
-------------- -------------- -------------- ------------
Net loss $ (0.04) $ (0.28) $ (0.45) $ (1.09)
============== ============== ============== ============
Average common shares outstanding 36,004,202 28,385,079 31,708,358 23,942,273
============== ============== ============== ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
--------------------------
2000 1999
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<S> <C> <C>
Net loss $ (14,115) $ (25,995)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 36,966 36,128
Deferred income taxes (6,581) (12,219)
Loss (gain) on sales of assets (3,921) 13
Asset write-off - 1,111
Extraordinary item (715) 1,830
Changes in operating assets and liabilities:
Restricted cash 209 470
Accounts receivable (5,132) 2,842
Prepaid expenses and other current assets (501) (1,540)
Accounts payable and accrued expenses (7,944) (7,066)
Other, net 123 (862)
------------ ------------
Net cash used in operating activities (1,611) (5,288)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (4,108) (31,673)
Deferred marine inspection costs (5,343) (11,157)
Proceeds from sales of assets 14,000 46
Other (186) 131
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Net cash provided by (used in) investing activities 4,363 (42,653)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses 39,020 46,455
Proceeds from issuance of long-term debt 28,400 89,852
Repayment of long-term debt (58,128) (85,835)
Deferred financing costs and other (154) (1,761)
------------ ------------
Net cash provided by financing activities 9,138 48,711
------------ ------------
Effect of exchange rate changes on cash and cash equivalents (599) (68)
------------ ------------
Net increase in cash and cash equivalents 11,291 702
Cash and cash equivalents at beginning of period 5,898 8,737
------------ ------------
Cash and cash equivalents at end of period $ 17,189 $ 9,439
============ ============
Supplemental information:
Income taxes paid $ 48 $ 149
============ ============
Interest paid $ 28,600 $ 29,614
============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
________________________ ________________________
2000 1999 2000 1999
__________ __________ _________ _________
<S> <C> <C> <C> <C>
Net loss $ (1,594) $ (7,816) $ (14,115) $ (25,995)
__________ _________ __________ __________
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (14,164) 2,388 (34,207) (3,072)
__________ _________ __________ __________
Comprehensive loss $ (15,758) $ (5,428) $ (48,322) $ (29,067)
========== ========= ========== ==========
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 three and nine months ended
September 30, 2000 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, 1999.
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 loss, total stockholders' equity or
cash flows.
2. EARNINGS PER SHARE:
For the three-month and nine-month periods ending September 30, 2000 and
1999, options to purchase 2,086,793 and 1,816,480 common shares,
respectively, 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 rates for the three-month periods ended
September 30, 2000 and 1999 were 33%, and for the nine-month periods ended
September 30, 2000 and 1999, 32% and 34%, respectively. The variance from
the Company's statutory rate is primarily due to income contributed by the
Company's wholly-owned Norwegian subsidiary, 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"). SFAS No. 133
establishes accounting and reporting standards for derivative instruments
and is, as amended, 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.
The Company has reviewed SEC Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements" and has determined that the
effect of the pronouncement will not be material to its consolidated
financial condition and results of operations.
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 primarily includes operations in the North Sea
offshore Norway and the United Kingdom, and the Other segment mainly
represents the Company's Brazilian operations. Segment data as of and for
the three-month and nine-month periods ended September 30, 2000 and 1999
are as follows:
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<S> <C> <C> <C> <C>
Three Months Ended September 30, 2000 U.S. NORTH SEA OTHER TOTALS
-------- --------- -------- --------
Revenues from external customers $ 17,166 $ 15,445 $ 2,674 $ 35,285
Intersegment revenues 36 -- -- 36
Segment net income (loss) (3,859) 2,541 (276) (1,594)
Three Months Ended September 30, 1999 U.S. NORTH SEA OTHER TOTALS
-------- --------- -------- -------
Revenues from external customers $ 11,459 $ 14,029 $ 2,126 $ 27,614
Intersegment revenues 36 -- -- 36
Segment net income (loss) (9,172) 1,953 (597) (7,816)
Nine Months Ended September 30, 2000 U.S. NORTH SEA OTHER TOTALS
-------- --------- -------- -------
Revenues from external customers $ 44,997 $ 39,008 $ 7,143 $ 91,148
Intersegment revenues 108 -- -- 108
Segment net income(loss) (15,326) 2,534 (1,323) (14,115)
Segment total assets 566,139 340,615 40,278 947,032
Nine Months Ended September 30, 1999 U.S. NORTH SEA OTHER TOTALS
-------- --------- -------- -------
Revenues from external customers $ 32,581 $ 43,626 $ 6,389 $ 82,596
Intersegment revenues 288 -- -- 288
Segment net income (loss) (30,980) 6,533 (1,548) (25,995)
Segment total assets 593,009 424,170 41,915 1,059,094
</TABLE>
6. SEGMENT AND GEOGRAPHIC INFORMATION (IN THOUSANDS) CONTINUED:
A reconciliation of segment data to consolidated data as of and for the
three-month and nine-month periods ended September 30, 2000 and 1999 is as
follows:
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Three months
ended
September 30,
------------------------
2000 1999
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<S> <C> <C>
Revenues
Total revenues from external customers and intersegment
revenues for reportable segments............................ $ 35,321 $ 27,650
Elimination of intersegment revenues........................ (36) (36)
--------- ----------
Total consolidated revenues........................... $ 35,285 $ 27,614
========= ==========
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<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
------------------------
2000 1999
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<S> <C> <C>
Revenues
Total revenues from external customers and intersegment
revenues for reportable segments........................... $ 91,256 $ 82,884
Elimination of intersegment revenues....................... (108) (288)
---------- ----------
Total consolidated revenues.......................... $ 91,148 $ 82,596
========== ==========
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<CAPTION>
AS OF SEPTEMBER 30,
-----------------------
2000 1999
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<S> <C> <C>
Assets
Total assets for reportable segments......................... $ 947,032 $ 1,059,094
Elimination of intersegment receivables...................... (2,790) (1,391)
Elimination of investment in subsidiaries (280,629) (288,894)
---------- ------------
Total consolidated assets $ 663,613 $ 768,809
========== ============
</TABLE>
7. Sale of Liftboats:
In May 2000, the Company sold its six liftboats for $14,000,000 in cash.
The Company recognized a gain of approximately $3,923,000, before taxes, on
the sale and all proceeds from the sale were used to reduce outstanding
debt under the Company's bank credit facility.
8. PUBLIC OFFERING OF COMMON STOCK:
In May 2000, the Company completed a public offering of 4,500,000 shares of
its common stock that generated proceeds of $39,006,000, net of
underwriting discounts and other costs of $1,494,000. Of the net proceeds,
$31,624,000 was used to repay amounts outstanding under the Company's bank
credit facility plus related accrued interest and the balance was used for
working capital.
9. EXCHANGE OF COMMON STOCK FOR SENIOR NOTES:
In June 2000, the Company exchanged 3,109,857 shares of its common stock
for $32,140,000 principal amount, plus accrued interest, of its 8 1/2 %
senior notes due 2005. In connection with the exchange, the Company
recognized an extraordinary gain of approximately $715,000, after taxes of
$386,000 and the write-off of unamortized debt issuance costs.
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, 2000
were $35.3 million and $91.1 million, respectively, compared to the $27.6
million and $82.6 million for the third quarter and first nine months of
1999, respectively. This increase in revenues was principally due the
increase in utilization for our supply boats in the U.S. Gulf and the
increase in average vessel day rates for all our vessel classes. The
increase in revenues for the 2000 period was achieved in spite of the sale
of our lift boats in May 2000. The lift boats contributed approximately
$1.5 million and $4.0 million in revenues for the third quarter and first
nine months of 1999, respectively. Low oil prices experienced in 1998 and
early 1999 resulted in a decrease in offshore industry activity, which
resulted in decreases in average day rates and utilization of our vessels.
Such decreases in day rates and utilization were most pronounced during the
first two quarters of 1999, in the case of the Gulf, and in late 1999 and
the first quarter of 2000 for the North Sea. As a result of the increase in
oil and natural gas prices in the last half of 1999 and 2000, offshore
industry activity has increased in all of our market areas resulting in
improved average day rates and utilization for our vessels. The table
below sets forth by vessel class, the average day rates and utilization for
our vessels and the average number of vessels we owned during the periods
indicated.
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THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
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<S> <C> <C> <C> <C>
2000 1999 2000 1999
---------- ---------- --------- ----------
Average Day Rate:
Supply $ 4,224 $ 3,143 $ 3,672 $ 3,310
Supply/Anchor Handling (North Sea) 10,518 9,998 9,719 10,474
Lift - 4,372 3,942 4,325
Crew/Line Handling 2,600 1,561 2,530 1,559
Utilization:
Supply 74% 57% 71% 55%
Supply/Anchor Handling (North Sea) 88% 85% 81% 88%
Lift - 54% 46% 49%
Crew/Line Handling 84% 85% 78% 82%
Average Number of Vessels:
Supply 53.0 52.9 53.0 52.3
Supply/Anchor Handling (North Sea) 18.0 18.0 18.0 17.3
Lift - 6.0 3.0 6.0
Crew/Line Handling 22.0 21.0 22.0 21.0
</TABLE>
Supply boat day rates in the Gulf for the third quarter and first nine
months of 2000 increased 34.4% to $4,224, and 10.9% to $3,672,
respectively, compared to $3,143 and $3,310 for the comparable 1999
periods. Utilization for the Gulf supply boat fleet increased for the
third quarter and nine-month period to 74% and 71%, respectively, compared
to 57% and 55% for the year-ago periods, due to improved market conditions
in the Gulf and reduced vessel downtime for dry-docking.
Average day rates for our North Sea vessels for the third quarter of 2000
increased 5.2% to $10,518, compared to $9,998 for the 1999 third quarter,
due to increased demand in the North Sea compared to the year-ago period.
For the first nine months of 2000, however, average day rates for the North
Sea vessels decreased 7.2% from $10,474 in 1999 to $9,719 in 2000, due to
the weak market conditions which existed in the first quarter of 2000.
Utilization of our North Sea vessels was 88% and 81% for the third quarter
and first nine months of 2000, respectively, compared to 85% and 88% for
the year-ago periods. Utilization in the North Sea increased in the third
quarter due to improved market conditions and the re-activation, at the
beginning of the third quarter, of two of the three previously inactive
PSV's.
Day rates for crew boats and line handling vessels for the third quarter
and first nine months of 2000 increased 66.6% to $2,600 and 62.3% to
$2,530, respectively, compared to $1,561 and $1,559 for the comparable 1999
periods. Day rates for the crew boats and line handling vessels increased
due to new contracts we were awarded at higher day rates for several of our
line handling vessels in Brazil, and improved market conditions for our
crew boats in the Gulf. Utilization for the crew boats and line handling
vessels was 84% for both the third quarter of 2000 and the comparable 1999
period.
During the third quarter and first nine months of 2000, direct vessel
operating expenses were $16.5 million (46.8% of revenues) and $49.5 million
(54.3% of revenues), respectively, compared to $16.7 million (60.6% of
revenues) and $50.8 million (61.5% of revenues), for the third quarter and
first nine months of 1999. Direct vessel operating expenses decreased in
the third quarter and first nine months of 2000 compared to the year-ago
periods due to cost controls that we implemented, the sale of our liftboats
in May 2000 and the increase in value of the U.S. dollar versus the
Norwegian Kroner, which reduced expenses for our North Sea fleet. Direct
vessel operating expenses decreased as a percentage of revenues due to the
increase in utilization for our Gulf supply boats and the increase in
average day rates for all our vessel classes in the 2000 third quarter.
Depreciation and amortization expense decreased to $8.2 million in the
third quarter of 2000 from $8.7 million last year due to the sale of our
lift boats in May 2000 and the increase in value of the U.S. dollar versus
the Norwegian Kroner, which reduced depreciation expense of the North Sea
fleet. For the first nine months of 2000, however, depreciation and
amortization expense increased to $25.3 million compared to $24.8 million
in the 1999 period, due to new vessels added to the fleet in July 1999.
Amortization of marine inspection costs decreased to $3.3 million in the
third quarter of 2000, from $3.5 million in the comparable 1999 period, due
to reduced dry-docking and marine inspection costs.
General and administrative expense increased to $2.7 million (7.5% of
revenues) and $8.0 million (8.7% of revenues) in the third quarter and
first nine months of 2000, respectively, from $2.1 million (7.6% of
revenues) and $7.6 million (9.1% of revenues) for the 1999 periods. General
and administrative expense, as a percentage of revenues, decreased in the
2000 periods due to the increase in revenues resulting from the increase in
utilization for our Gulf supply boats and the increase in average day rates
for all our vessel classes in the third quarter of 2000.
Interest expense decreased to $7.0 million for the third quarter of 2000
from $8.2 million for the third quarter of 1999 due to the reduction of our
bank debt and 8.5% senior notes in the second quarter of 2000.
In the third quarter and first nine months of 2000, we had income tax
benefits of $776,000 and $7.0 million, respectively, compared to income tax
benefits of $3.9 million and $12.2 million in the 1999 periods. Our
effective income tax rate for the three-month period ended September 30,
2000 was 32.7%.
LIQUIDITY AND CAPITAL RESOURCES
Our ongoing capital requirements arise primarily from our need to service
debt, fund working capital, acquire, maintain or improve equipment and make
other investments. Due to the reduction in industry activity, which
occurred in 1998 and 1999, and the resulting decreases in day rates and
utilization rates, we experienced a net loss during 1999 and the first nine
months of 2000. As a result, our capital requirements were primarily
funded through the issuance of additional equity and the incurrence of
debt.
During 1999, we completed vessel construction and upgrade projects that we
committed to prior to the downturn in industry activity. Additionally,
during the second quarter of 1999 we completed our vessel improvement
program that consisted of the extensive upgrade and refurbishment
of a significant portion of our Gulf supply boat fleet. While this
refurbishment program resulted in significant vessel downtime in 1998 and
in the first half of 1999, we believe that it extended the service lives
of many of our vessels and has enabled us to significantly reduce required
capital expenditures in 2000 and beyond. Capital expenditures for the first
nine months of 2000 consisted principally of $4.0 million for vessel
improvements and $5.3 million of deferred marine inspection costs. Capital
expenditures for the remainder of 2000 will be primarily limited to
regulatory-mandated vessel dry-docking costs.
Funds during the first nine months of 2000 were provided by $39.0 million
in net proceeds from the issuance of common equity in a public offering,
$14.0 million in proceeds from asset sales, and $28.4 million in borrowings
under our bank credit facilities. During the first nine months of 2000, we
used $1.6 million in funds for operating activities, repaid $58.1 million
of debt and made capital expenditures totaling $9.5 million, which included
$5.3 million of deferred marine inspection costs. Other capital
expenditures during the period consisted primarily of vessel improvements.
In May 2000, we closed on the sale of our six liftboats for $14.0 million
in cash. As a result of the sale, we recognized a gain, before taxes, of
approximately $3.9 million in the second quarter. Proceeds of the sale
were used to reduce amounts outstanding under our bank credit facility.
In June 2000, we exchanged 3.1 million shares of our common stock for $32.1
million principal amount, plus accrued interest, of our 8-1/2% senior notes
due 2005. We now have outstanding approximately $247.9 million in senior
notes. The senior notes are unsecured and are required to be guaranteed by
all of our significant subsidiaries. Except in certain circumstances, the
senior notes may not be prepaid until August 1, 2001, at which time they
may be redeemed, at our option, 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 our ability to incur additional debt, pay
dividends or make other distributions, create certain liens, sell assets,
or enter into certain mergers or acquisitions.
We maintain a bank credit facility that provides a revolving line of credit
that can be used for acquisitions and general corporate purposes. In
August 2000, we amended our $52.5 million revolving line of credit to
reduce the facility amount to $45.0 million, decrease the interest margin
and modify certain covenants. The bank credit facility is collateralized by
a mortgage on substantially all of our vessels other than those located in
the North Sea and Brazil. Amounts borrowed under the bank credit facility
mature on July 19, 2002 and bear interest at a Eurocurrency rate plus a
margin that depends on our leverage ratio. As of November 10, 2000, we had
no outstanding borrowings under the bank credit facility. The bank credit
facility requires us to maintain certain financial ratios and limits our
ability 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. Although the bank
credit facility does impose some limitations on the ability of our
subsidiaries to make distributions to us, it expressly permits
distributions to us by our significant subsidiaries for scheduled principal
and interest payments on the senior notes.
We also maintain a Norwegian revolving credit facility in the amount of NOK
500 million ($55.1 million). The commitment amount for this Norwegian bank
facility reduces by NOK 50 million ($5.5 million) every six months, with
the balance of the commitment to expire in June 2003. As of November 10,
2000, we had approximately NOK 390 million ($43.0 million) of debt
outstanding under the facility. The weighted average interest rate for the
Norwegian bank facility was 7.83% as of September 30, 2000. In April 2000,
we executed a new loan agreement for an additional Norwegian bank facility
in the amount of NOK 125 million ($13.8 million). The commitment amount
for this additional facility reduces by NOK 12.5 million ($1.4 million)
every six months beginning June 2001, with the balance of the commitment to
expire June 2003. As of November 10, 2000, this additional facility was
fully drawn. The weighted average interest rate for this bank facility was
8.06% as of September 30, 2000. The two Norwegian bank facilities are
collateralized by security interests in certain of our 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 these credit facilities bear interest at
NIBOR (Norwegian Interbank Offered Rate) plus a margin.
We believe that cash generated from our operations, together with available
borrowings under our bank credit facilities, will be sufficient to fund our
working capital requirements and currently planned capital expenditures.
As we previously disclosed, it was one of our objectives at the beginning
of this year to improve our financial flexibility by taking steps to reduce
financial leverage and improve liquidity. As part of that objective, we
completed the transactions described above during the second quarter of
2000, including the issuance of common stock and the senior note exchange,
as well as the sale of the lift boats. It has also been our objective to
position ourselves to pursue any acquisition opportunities that we believe
may be presented in our selected market areas. Depending upon the size of
any acquisition, it is likely that we would require additional equity or
debt financing. However, we can give no assurances regarding the
availability or terms of any possible transactions and the related debt and
equity financing.
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Account Standards, No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133
establishes account and reporting standards for derivative instruments and
is, as amended, effective for all fiscal years beginning after June 15,
2000. We are currently evaluating the impact SFAS No. 133 will have on our
financial statements, if any.
We have reviewed SEC Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements" and have determined that the effect of
the pronouncement will not be material to our consolidated financial
condition and results of operations.
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 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
Our market risk exposures primarily include interest rate and exchange rate
fluctuations on derivative and financial instruments as detailed below.
Our market risk sensitive instruments are classified as "other than
trading".
We have 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. We manage this risk by monitoring our ratio of fixed and
variable rate debt obligations in view of changing market conditions and
from time to time altering that ratio. We also enter into interest rate
swap agreements, when considered appropriate, in order to manage our
interest rate exposure.
Our foreign subsidiaries collect revenues and pay expenses in several
different foreign currencies. We monitor the exchange rate of our foreign
currencies and, when deemed appropriate, enter into hedging transactions in
order to mitigate the risk from foreign currency fluctuations. We also
manage our foreign currency risk by attempting to contract foreign revenue
in U.S. Dollars whenever practicable. At September 30, 2000, we had no
open foreign currency forward exchange contracts.
Our market risk estimates have not changed materially from those disclosed
in our 1999 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 Amendment to the Amended and Restated Certificate of
Incorporation of the Company.
3.3 By Laws of the Company. 1
4.1 Specimen Common Stock Certificate. 2
10.1 Fourth Amendment dated as of August 11,2000 to the Third Amended
and Restated Credit Agreement by and among Trico Marine
Services, Inc. and the other parties specified therein.
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.
By: /s/ Kenneth W. Bourgeois
----------------------------------
Kenneth W. Bourgeois
Chief Accounting Officer and
duly authorized officer
Date: November 13, 2000
