SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934.
For the quarterly period ended June 30, 1997
Commission File Number: 0-28732
HVIDE MARINE INCORPORATED
State of Incorporation: Florida I.R.S. Employer I.D. 65-0524593
2200 Eller Drive
P.O. Box 13038
Ft. Lauderdale, Florida 33316
(954) 524-4200
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 twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
There were 12,040,388 and 3,181,936 shares of Class A Common Stock, par value
$0.001 per share, and Class B Common Stock, par value $0.001 per share,
respectively, outstanding at August 1, 1997.
<PAGE>
HVIDE MARINE INCORPORATED
QUARTER ENDED JUNE 30, 1997
INDEX
- --------------------------------------------------------------------------------
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................1
Condensed Consolidated Balance Sheets as of
December 31, 1996 and June 30, 1997 (unaudited).....................2
Condensed Consolidated Income Statements
for the three and six months ended June 30,
1996 and 1997 (unaudited)...........................................4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1997 (unaudited).................5
Notes to Condensed Consolidated Financial Statements................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................11
PART II. OTHER INFORMATION
Item 2. Changes in Securities...........................................20
Item 6. Exhibits and Reports on Form 8-K................................20
Signature................................................................21
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (the "Commission"), although the
Company believes that the disclosures made are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the financial statements and related notes contained in the
Company's 1996 consolidated financial statements previously filed with the
Commission. Other than as indicated herein, there have been no significant
changes from the financial data published in said report. In the opinion of
management, such unaudited information reflects all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation of the unaudited
information shown.
Results for the interim period presented herein are not necessarily
indicative of results expected for the full year.
1
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
<TABLE>
<CAPTION>
December 31 June 30
1996 1997
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 9,617 $ 18,368
Accounts receivable:
Trade, net............................................................... 16,049 23,730
Insurance claims and other............................................... 1,717 1,992
Spare parts and supplies................................................... 5,517 9,910
Prepaid expenses........................................................... 1,253 2,104
Deferred costs, net........................................................ 4,173 4,907
------------ -----------
Total current assets................................................... 38,326 61,011
Property:
Construction in progress................................................... 8,041 23,514
Vessels and improvements................................................... 229,776 334,182
Less accumulated depreciation.......................................... (27,480) (34,686)
Furniture and equipment.................................................... 4,502 5,346
Less accumulated depreciation.......................................... (1,409) (1,556)
------------ -----------
Net property........................................................ 213,430 326,800
Other assets:
Deferred costs, net........................................................ 4,645 5,309
Due from affiliates........................................................ 49 434
Investment in affiliates................................................... 1,291 1,400
Goodwill, net.............................................................. 8,612 8,360
Deposits and other......................................................... 7,120 918
------------ -----------
Total other assets..................................................... 21,717 16,421
------------ -----------
Total assets........................................................ $ 273,473 $ 404,232
============ ===========
</TABLE>
See accompanying notes.
2
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1996 1997
------------- -----------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt......................................... $ 24,375 $ 6,809
Current obligations under capital leases..................................... 1,443 1,502
Accounts payable............................................................. 6,278 2,403
Deferred income.............................................................. 2,001 1,538
Other ................................................................... 12,933 16,658
------------- -----------
Total current liabilities............................................. 47,030 28,910
Long-term liabilities:
Long-term debt............................................................... 108,154 31,947
Notes payable to related parties............................................. 178 --
Obligations under capital leases............................................. 7,492 6,758
Deferred income taxes........................................................ 6,385 11,001
Other ................................................................... 2,245 2,973
------------- -----------
Total long-term liabilities............................................... 124,454 52,679
------------- -----------
Total liabilities......................................................... 171,484 81,589
Company-obligated mandatorily redeemable preferred
securities issued by a consolidated subsidiary............................... -- 115,000
Minority partners' equity in subsidiaries....................................... 898 868
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1.00 par value authorized 10,000,000 shares,
issued and outstanding, none.............................................. -- --
Class A Common Stock--$.001 par value, authorized 100,000,000
shares, issued and outstanding, 7,647,791 and 12,040,388.................. 8 12
Class B Common Stock--$.001 par value, authorized 5,000,000
shares, issued and outstanding, 3,419,577 and 3,181,936................... 3 3
Additional paid-in capital................................................... 97,153 194,619
Retained earnings............................................................ 3,927 12,141
------------- -----------
Total stockholders' equity................................................ 101,091 206,775
------------- -----------
Total.............................................................. $ 273,473 $ 404,232
============= ===========
</TABLE>
See accompanying notes.
3
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- -----------------------
1996 1997 1996 1997
------------- ----------- ------------ ----------
(IN THOUSANDS,
EXCEPT SHARE AND
PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues.............................................. $ 21,540 $ 46,295 $ 41,751 $ 85,947
Operating Expenses:
Crew payroll and benefits.......................... 6,175 11,275 12,138 21,094
Charter hire and bond guarantee fee................ 1,139 2,386 2,225 3,889
Repairs and maintenance............................ 1,838 3,248 3,572 6,369
Insurance.......................................... 1,552 2,180 3,032 4,242
Consumables........................................ 1,361 2,947 2,492 5,132
Other.............................................. 1,250 3,150 2,072 5,591
----------- ----------- ----------- ----------
Total operating expenses......................... 13,315 25,186 25,531 46,317
Selling, general and administrative
expenses......................................... 3,400 5,947 7,013 11,052
Depreciation and amortization......................... 1,750 4,173 3,427 7,852
----------- ----------- ----------- ----------
Income from operations............................. 3,075 10,989 5,780 20,726
Net interest....................................... 2,958 2,007 5,840 4,146
Other income (expense):
Minority interest and equity in earnings
of subsidiaries.................................. 214 63 368 (6)
Other.............................................. 27 34 50 (152)
----------- ----------- ----------- ----------
Total other income (expense)..................... 241 97 418 (158)
----------- ----------- ----------- ----------
Income before provision for
income taxes and extraordinary item................ 358 9,079 358 16,422
Provision for income taxes............................ 98 3,359 132 6,076
----------- ----------- ----------- ----------
Income before extraordinary item...................... 260 5,720 226 10,346
Loss on early extinguishment of debt, net
of applicable income taxes of $222 and
$1,252, respectively............................... -- 378 -- 2,132
----------- ----------- ----------- ----------
Net income........................................ $ 260 $ 5,342 $ 226 $ 8,214
=========== =========== =========== ==========
Earnings per common and common equivalent share:
Income applicable to common shares
before extraordinary item.......................... $ 0.10 $ 0.37 $ 0.09 $ 0.71
Loss on early extinguishment of debt.................. -- (0.03) -- (0.15)
----------- ----------- ----------- ----------
Net income applicable to common shares........... $ 0.10 $ 0.34 $ 0.09 $ 0.56
=========== =========== =========== ==========
Weighted average number of common
shares and common share equivalents
outstanding........................................ 2,534,840 15,506,734 2,534,840 14,667,398
=========== ========== =========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1997
(IN THOUSANDS)
<S> <C> <C>
Operating Activities:
Net Income........................................................................ $ 226 $ 8,214
Adjustments to reconcile net income to net cash provided by operating
activities:
Loss on early extinguishment of debt, net...................................... -- 2,132
Depreciation and amortization.................................................. 3,427 7,852
Provision for bad debts........................................................ 65 262
Loss on disposal of property................................................... 12 12
Amortization of drydocking costs............................................... 1,078 2,447
Amortization of discount on long-term debt..................................... 112 5
(Benefit from) provision for deferred taxes.................................... (25) 5,868
Minority partners' equity in losses of subsidiaries, net....................... (405) (30)
Undistributed losses of affiliates, net........................................ 37 36
Other non-cash items........................................................... -- 276
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable............................................................ 774 (8,218)
Due from affiliates............................................................ 9 (385)
Current and other assets....................................................... (1,418) (6,282)
Accounts payable and other liabilities......................................... 2,743 (5,005)
--------- ---------
Net cash provided by operating activities.................................... 6,635 7,184
Investing Activities:
Purchase of property.............................................................. (4,480) (17,743)
Proceeds from disposal of property................................................ 8 1,633
Capital contribution to affiliates................................................ (602) (145)
Acquisitions, net of $2,819 escrow deposit utilized in 1997....................... -- (85,305)
--------- ---------
Net cash used in investing activities........................................ (5,074) (101,560)
Financing Activities:
Proceeds from revolving line of credit, net of repayment.......................... 5,000 (8,000)
Proceeds from long-term debt...................................................... 2,500 42,210
Principal payments of long-term debt.............................................. (4,550) (134,640)
Payment of debt and other financing costs......................................... (1,602) (630)
Payment of obligations under capital leases....................................... (462) (676)
Payment of notes payable to related parties....................................... -- (178)
Proceeds from issuance of common stock, net of offering costs..................... -- 93,520
Proceeds from issuance of preferred securities, net of offering costs............. -- 111,521
Net cash provided by financing activities...................................... 886 103,127
--------- ---------
Increase in cash and cash equivalents................................................ 2,447 8,751
Cash and cash equivalents at beginning of period..................................... 3,050 9,617
--------- ---------
Cash and cash equivalents at end of period........................................... $ 5,497 $ 18,368
========= =========
Supplemental schedule of noncash investing and financing activities:
Capital leases assumed for the acquisition of vessels............................. $ 5,410 $ --
========= =========
Capital stock issued for the acquisition of vessels............................... $ -- $ 3,650
========= =========
Notes payable issued for the acquisition of vessels............................... $ -- $ 6,000
========= =========
</TABLE>
See accompanying notes.
5
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. OFFERINGS OF EQUITY SECURITIES
On August 14, 1996, the Company completed the initial public offering
(the "IPO") of 7,000,000 shares of its Class A Common Stock at $12.00 per share.
The net proceeds to the Company were approximately $74,821,000, after deducting
underwriting commissions and other offering expenses. A portion of the net
proceeds was used primarily to repay certain indebtedness that was outstanding
prior to the IPO and for the cash portion of the purchase price of certain
acquisitions consummated subsequent to the IPO. On September 12, 1996, the
underwriters' over-allotment option was exercised, in part, pursuant to which an
additional 159,000 shares were issued. The net proceeds of approximately
$1,774,000 were used by the Company to repay certain outstanding indebtedness.
In addition, on August 14, 1996, the Company issued 182,000 and 1,188,000 shares
of Class A and Class B Common Stock, respectively, in payment of certain
outstanding indebtedness.
On February 5, 1997, the Company completed a second public offering
(the "Second Offering") of 4,000,000 shares of its Class A Common Stock at
$24.875 per share. The net proceeds to the Company were $94,300,000, after
deducting underwriting commissions. Of such amount, approximately $36.2 million
was used to repay certain indebtedness. Of the balance of approximately $58.1
million, $5.5 million was used to fund vessel acquisitions, $20.9 million was
used to fund the remainder of the purchase price of four supply boats and one
crew boat acquired in the second quarter of 1997, $1.8 million was designated to
fund the purchase of one crew boat in the third quarter of 1997, $6.9 million
was designated to fund the refurbishment and lengthening of two supply boats
expected to be put into service during the third quarter of 1997, and the
remaining $23.0 million was available for general corporate purposes and to fund
a portion of the costs of the vessels to be constructed.
On June 24, 1997, the Company completed a private offering (the
"Private Offering") of 2,300,000, 6 1/2% Trust Convertible Preferred Securities
(the "Preferred Securities"). The Preferred Securities were issued by Hvide
Capital Trust (the "Trust"), a 100%-owned subsidiary of the Company. The Trust
exists for the sole purpose of issuing the Preferred Securities and investing
the proceeds from the issuance thereof in 6 1/2% Convertible Subordinated
Debentures due June 15, 2012 (the "Debentures") issued by the Company. The net
proceeds to the Company were $111,550,000 after deducting underwriting
commissions. Of such amount, approximately $94.2 million was used to repay
principal and interest outstanding under the Company's credit agreement (the
"Credit Facility"), and $6.0 million was used to repay other indebtedness. The
remaining $11.4 million is available for general corporate purposes.
Holders of the Preferred Securities are entitled to receive
preferential cumulative cash distribution from the Trust at an annual rate of 6
1/2% of the liquidation preference of $50 per Preferred Security accruing from
the date of the original issuance of the Preferred Securities and payable
quarterly in arrears on January 1, April 1, July 1 and October 1 of each year,
commencing on October 1, 1997. The distribution rate and the distribution and
other payment dates for the Preferred Securities correspond to the interest rate
and interest and other payment dates for the Debentures, which are the sole
assets of the Trust.
6
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Preferred Securities are convertible, beginning September 25, 1997
and prior to the maturity date of the Debentures or, in the case of Preferred
Securities called for redemption, prior to the close of business on the business
day prior to the redemption date, at the option of the holder into shares of
Hvide Class A Common Stock at the rate of 1.7544 shares of Hvide Class A Common
Stock for each Preferred Security (equivalent to a conversion price of $28.50
per share of Hvide Class A Common Stock), subject to adjustment in certain
circumstances.
2. DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1996 1997
---------- -----------
(UNAUDITED)
<S> <C> <C>
Borrowings outstanding under lines of credit......................... $ 10,647 $ --
Term Loan............................................................ 58,500 --
Acquisition Line..................................................... 9,700 --
Senior Note.......................................................... 9,153 --
Title XI Debt........................................................ 32,243 29,835
Notes payable........................................................ 12,286 8,921
---------- -----------
132,529 38,756
Less: Current maturities............................................ (24,375) (6,809)
---------- -----------
$ 108,154 $ 31,947
========== ===========
</TABLE>
The Company's Credit Facility, as amended on February 3, 1997, provides
for a revolving working capital credit line of $20,000,000 through January 15,
2002 (the "Revolving Line") and a stand-by letter of credit of $5,600,000.
Borrowings under the Revolving Line bear interest at the prime rate or LIBOR, at
the option of the Company, plus an applicable margin based upon the Company's
compliance with certain financial covenants and are subject to a quarterly
commitment fee of 0.50% of the unused portion of the credit line. Borrowings
outstanding under the Revolving Line totaled $8,000,000 and $0 at December 31,
1996 and June 30, 1997, respectively. Additionally, the Credit Facility provides
for a letter of credit in an amount equal to the greater of amounts available to
be drawn under the Revolving Line or $6,000,000. Amounts drawn under either
letter of credit are due on demand or the ultimate maturity date of January 15,
2002. There were no amounts outstanding under the letters of credit at December
31, 1996 or June 30, 1997.
The Credit Facility provides for a term loan (the "Term Loan") of up to
$56,750,000 payable in quarterly principal and interest payments. Borrowings
under the Term Loan bear interest at the prime rate or LIBOR, at the option of
the Company, plus an applicable margin based upon the Company's compliance with
certain financial covenants. Borrowings outstanding under the Term Loan were
repaid with a portion of the proceeds from the Private Offering on June 27,
1997.
7
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Credit Facility also provides for a $50,000,000 Acquisition Line of
Credit (the "Acquisition Line") to fund the cash portion of acquisitions.
Borrowings under the Acquisition Line are limited to the lesser of 65% of the
purchase price or a multiple of six times projected EBITDA from the acquisition,
as defined. The Acquisition Line bears interest at the prime rate or LIBOR, at
the option of the Company, plus an applicable margin based upon the Company's
compliance with certain financial covenants. Principal amounts outstanding under
the Acquisition Line are due in quarterly payments beginning in January, 1998.
Borrowings outstanding under the Acquisition Line were repaid with a portion of
the proceeds from the Second Offering on February 5, 1997.
The terms of the Credit Facility restrict the Company or any of its
wholly owned subsidiaries from paying dividends on any class of common stock and
also restrict, among other things, the Company's ability to enter into new
commitments or borrowings over specified amounts and dispose of assets outside
the ordinary course of business. In addition, the Company is required to
maintain a minimum level of tangible net worth, as defined.
The collateral for the Company's debt includes all Company-owned
vessels, outstanding common stock, partnership interests in Seabulk Tankers,
Ltd. and Seabulk Transmarine Partnership, Ltd., spare parts, fuel and supplies,
and eligible accounts receivable.
On September 30, 1994, and as amended on May 24, 1995, the Company
issued a $25,000,000 senior subordinated note (the "Senior Note"). The Company
received proceeds of approximately $23,072,000, net of discount of $1,928,000
which was being amortized as interest expense over the term of the Senior Note.
On August 14, 1996 and September 12, 1996, the Company repaid $13,490,000, and
$1,700,000, respectively, of the principal balance of the Senior Note with a
portion of the proceeds from the IPO and the exercise of the underwriters'
related over-allotment option. The remaining balance of $9,810,000, including
interest, was repaid with a portion of the proceeds of the Second Offering on
February 5, 1997.
On August 14, 1996, the Company assumed $34,650,000 of Title XI Debt in
connection with the acquisitions of certain vessels. The Title XI Debt is
collateralized by first preferred mortgages on certain vessels and bears
interest at rates ranging from 5.4% to 10.1%. The debt is due in semi-annual
principal and interest payments through December 1, 2006. Under the terms of the
Title XI Debt, the Company is required to maintain a minimum level of working
capital, as defined, and comply with certain other financial covenants.
In connection with redemption of the outstanding preferred stock of the
predecessor company in 1994, the Company issued notes payable totaling
approximately $3,561,000 to the former stockholder. On August 14, 1996,
approximately $1,548,000 was repaid with a portion of the proceeds from the IPO.
The remaining balance of approximately $2,013,000 was repaid with a portion of
the proceeds from the Second Offering on February 5, 1997.
In connection with the acquisition of the outstanding common stock of
its previously unconsolidated 50%-owned affiliate, Ocean Specialty Tankers
Corporation ("OSTC"), on August 14, 1996, the Company assumed OSTC's obligations
under a $4,000,000 revolving line of credit secured by
8
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
the outstanding accounts receivables generated by three chemical tankers. The
revolving line of credit bears interest monthly at LIBOR + 1.5 % (7.3% at
December 31, 1996). At December 31, 1996 and June 30, 1997, $2,647,000 and $0
was outstanding under the line of credit.
The Company made interest payments of approximately $5,663,000 and
$5,840,000 for the six months ended June 30, 1996 and 1997, respectively.
3. INCOME TAXES
For the six months ended June 30, 1996 and 1997, the provision for
income taxes was computed using an estimated annual effective tax rate of 37%,
adjusted principally for depreciation on vessels built with capital construction
funds.
4. ACQUISITIONS
In January 1997, the Company purchased a supply boat and two tug boats
for cash of approximately $4.7 million and $600,000, respectively.
In February 1997, the Company purchased three crew boats for cash of
approximately $5.6 million.
In February 1997, the Company purchased the outstanding common stock of
an entity for cash of approximately $1.5 million. Pursuant to the purchase
agreement, the Company assumed the entity's commitments to fund the remaining
construction costs of three crew boats, two which are currently under
construction, and one which was completed in June 1997 for an additional cost of
approximately $1.0 million. The aggregate remaining construction cost of the two
vessels under construction is approximately $4.8 million. The fair value of net
assets acquired approximates the purchase price paid by the Company.
In April 1997, the Company purchased two supply boats for cash of
approximately $10.5 million.
In May 1997, the Company acquired 35 offshore energy support vessels
for consideration valued at $58.7 million, consisting of cash of $49.0 million,
a note payable in the amount of $6.0 million, and 141,760 shares of Class A
Common Stock valued by the Company at $3.7 million. Of the cash portion of the
purchase price, $10.5 million was funded from the Company's available cash and
$38.5 million was drawn under the Credit Facility. The $6.0 million note payable
and the $38.5 million of debt incurred to fund the acquisition were repaid with
the proceeds of the Private Offering. The Company has also agreed to purchase an
additional utility and supply vessel for an aggregate price of approximately
$2.9 million.
In May 1997, the Company purchased a supply boat for cash of
approximately $2.8 million.
In June 1997, the Company purchased two supply boats and a crew boat
for cash of approximately $13.2 million.
9
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
5. EXTRAORDINARY ITEM
In February and June 1997, the Company repaid $33,220,000 and
$93,500,000, respectively, of its outstanding debt and amended its Credit
Facility. As a result, the Company recorded extraordinary losses of $1,754,000
and $378,000, respectively, for the write-off of deferred financing costs
associated with the early extinguishment of debt, net of income tax benefits of
$1,030 and $222, respectively.
6. SUBSEQUENT EVENTS
In July 1997, the Company purchased four double skin barges for cash of
approximately $2.4 million.
In August 1997, the Company purchased one anchor-handling vessel for
cash of approximately $1.7 million.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and analysis of the Company's financial condition and
historical results of operations should be read in conjunction with the
condensed consolidated financial statements and the related notes thereto
included elsewhere in this report and the Company's 1996 consolidated financial
statements and the related notes thereto previously filed with the Commission.
RECENT ACQUISITIONS
The Company's results of operations have been and will be significantly
affected by a series of acquisitions, aggregating 75 vessels, during 1996 and
1997 as summarized in the following table.
<TABLE>
<CAPTION>
NUMBER OF ASSETS AGGREGATE
PERIOD TRANSACTIONS ACQUIRED INVESTMENT
<S> <C> <C> <C> <C>
Offshore Energy Support........ 1996 7 12 supply boats $46.6 million(1)
11 crew boats(2)
1997 5 10 supply boats $97.8 million
18 anchor-handling vessels
12 crew boats
2 utility boats
4 other vessels
Offshore and Harbor Towing..... 1996 1 1 offshore tug $3.4 million
1997 1 2 harbor tugs $0.6 million
Chemical Transportation........ 1996 1 3 chemical carriers $64.7 million
</TABLE>
(1) Includes two vessels that are currently being upgraded, lengthened, and
refurbished and are expected to enter service during the third quarter
of 1997. Aggregate investment includes the estimated cost of such
upgrading, lengthening, and refurbishment.
(2) Includes nine vessels acquired under capital lease obligations.
11
<PAGE>
AREA OF OPERATIONS OVERVIEW
The financial information presented below represents historical results
by major areas of operations.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues:
Marine Support Services:
Offshore Energy Support........................................... $ 8,878 $ 23,545 $ 16,245 $ 40,936
Offshore & Harbor Towing.......................................... 3,258 4,754 6,883 8,485
--------- --------- --------- ---------
Marine Support Services Revenues................................ 12,136 28,299 23,128 49,421
Marine Transportation Services:
Chemical Transportation........................................... 4,706 13,740 9,262 27,943
Petroleum Product Transportation.................................. 4,698 4,256 9,361 8,583
--------- --------- --------- ---------
Marine Transportation Services.................................. 9,404 17,996 18,623 36,526
--------- --------- --------- ---------
Total Revenues........................................................ 21,540 46,295 41,751 85,947
--------- --------- --------- ---------
Operating Costs:
Marine Support Services:
Offshore Energy Support........................................... 5,118 9,585 9,621 16,974
Offshore & Harbor Towing.......................................... 1,889 3,118 3,705 5,468
--------- --------- --------- ---------
Marine Support Services Operating Costs......................... 7,007 12,703 13,326 22,442
Marine Transportation Services:
Chemical Transportation........................................... 2,896 9,546 5,696 18,249
Petroleum Product Transportation.................................. 3,412 2,937 6,509 5,626
--------- --------- --------- ---------
Marine Transportation Operating Costs........................... 6,308 12,483 12,205 23,875
--------- --------- --------- ---------
Total Operating Costs................................................. 13,315 25,186 25,531 46,317
--------- --------- --------- ---------
Direct Overhead Expense:
Marine Support Services:
Offshore Energy Support........................................... 623 1,159 1,200 1,999
Offshore & Harbor Towing.......................................... 303 442 655 816
--------- --------- --------- ---------
Marine Support Services Direct Overhead......................... 926 1,601 1,855 2,815
Marine Transportation Services:
Chemical Transportation........................................... 477 1,298 1,095 2,338
Petroleum Product Transportation.................................. 204 232 451 528
--------- --------- --------- ---------
Marine Transportation Direct Overhead........................... 681 1,530 1,546 2,866
--------- --------- --------- ---------
Total Direct Overhead................................................. 1,607 3,131 3,401 5,681
--------- --------- --------- ---------
Fleet Operating EBITDA
Marine Support Services:
Offshore Energy Support........................................... 3,137 12,801 5,424 21,963
Offshore & Harbor Towing.......................................... 1,066 1,194 2,523 2,201
--------- --------- --------- ---------
Marine Support Services Fleet EBITDA............................ 4,203 13,995 7,947 24,164
Marine Transportation Services:
Chemical Transportation........................................... 1,333 2,896 2,471 7,356
Petroleum Product Transportation.................................. 1,082 1,087 2,401 2,429
--------- --------- --------- ---------
Marine Transportation Fleet EBITDA.............................. 2,415 3,983 4,872 9,785
--------- --------- --------- ---------
Total Fleet EBITDA.................................................... 6,618 17,978 12,819 33,949
--------- --------- --------- ---------
Corporate Overhead Expense............................................ 1,793 2,816 3,612 5,371
--------- --------- --------- ---------
EBITDA................................................................ 4,825 15,162 9,207 28,578
Depreciation and Amortization Expense................................. 1,750 4,173 3,427 7,852
--------- --------- --------- ---------
Income from Operations................................................ $ 3,075 $ 10,989 $ 5,780 $ 20,726
========= ========= ========= =========
</TABLE>
12
<PAGE>
REVENUE OVERVIEW
MARINE SUPPORT SERVICES
Revenue derived from vessels providing marine support services is
attributable to the Company's offshore energy support fleet and its offshore and
harbor towing operations. Revenue derived from the Company's offshore energy
support services is primarily a function of the size of the Company's fleet,
vessel day rates or charter rates, and fleet utilization. Rates and utilization
are primarily a function of offshore drilling production and construction
activities.
The following table sets forth average day rates achieved by the
offshore supply boats and crew boats owned or operated by the Company in the
Gulf of Mexico and their average utilization for the periods indicated.
<TABLE>
<CAPTION>
1996 1997
----------------------------------------- ---------------------
Q1 Q2 Q3 Q4 Q1 Q2
<S> <C> <C> <C> <C> <C> <C>
Number of supply boats at end of period....... 10 11 16 18 19 21
Average supply boat day rates(1).............. $ 3,468 $ 4,095 $ 5,034 $ 5,776 $ 6,483 $ 7,176
Average supply boat utilization rates(2)...... 92% 100% 97% 90% 86% 90%
Number of crew boats at end of period(3)...... 35 35 36 36 39 39
Average crew boat day rates(1)(3)............. $ 1,469 $ 1,466 $ 1,528 $ 1,531 $ 1,782 $ 1,940
Average crew boat utilization rates(2)(3)..... 89% 93% 96% 96% 95% 93%
</TABLE>
(1) Average day rates are calculated by dividing total vessel revenue by the
total number of days the vessel worked. (2) Utilization rates are calculated by
dividing the fleet average number of days worked by 365.
(3) Excludes utility boats.
MARINE TRANSPORTATION SERVICES
Chemical Transportation. Generally, demand for industrial chemical
transportation services coincides with overall economic activity. Since 1989,
revenue derived from chemical transportation operations has been entirely
attributable to the operations of OSTC, a company owned equally by OMI Corp.
("OMI") and the Company until August 1996, when the Company acquired OMI's
interest in OSTC along with three chemical carriers owned by OMI (the "OMI
Chemical Carriers"). Prior to the acquisition, the Company's chemical
transportation revenue consisted of distributions from OSTC attributable to the
Company's two chemical carriers marketed by OSTC based upon a formula that took
into account individual vessel performance characteristics applied to OSTC's
revenue (net of fuel costs, port charges, and overhead). Since the acquisition,
the Company continues to have OSTC market the five chemical carriers and
receives the revenue attributable to all five of the vessels.
Petroleum Product Transportation. Since entering service in 1975, the
product carrier Seabulk Challenger has derived all of its revenue from
successive voyage and time charters to Shell Oil Company. Under the current
charter, fuel and port costs are for the account of the charterer, charter hire
escalates based upon changes in the consumer price index, and charter hire is
suspended while the vessel is unavailable to transport cargo, as when it is
undergoing repairs or regularly scheduled maintenance. The charter extends to
January 2000, with the charterer retaining the right to early termination upon
the payment to the Company of a significant penalty. In the fourth quarter of
1996, the charter rate was renegotiated and reduced by approximately 6% to
reflect the lower current market rate. Revenue from
13
<PAGE>
the Company's towboats and fuel barges has been derived primarily from contracts
of affreightment with Florida Power & Light Co. ("FPL") and Steuart Petroleum
Co. that require the Company to transport fuel as needed by those two customers
with the FPL contract having a guaranteed minimum utilization.
OVERVIEW OF OPERATING EXPENSES AND CAPITAL EXPENDITURES
The Company's operating expenses are primarily a function of fleet size
and utilization levels. The most significant expense categories are crew payroll
and benefits, depreciation and amortization, charter hire, maintenance and
repairs, fuel, and insurance.
The crews of the Company's chemical and product carriers are paid on a
time-for-time basis by which they receive paid leave in proportion to time
served aboard a vessel. The crews of certain tugs, towboats, and offshore energy
support vessels are paid only for days worked.
The Company capitalizes expenditures exceeding $5,000 for product and
chemical tankers and $3,000 for all other vessels where the item acquired has a
useful life of three years or greater. Vessel improvements and vessel
maintenance and repair are capitalized only if they also extend the useful life
of the vessel or increase its value. The Company overhauls main engines and key
auxiliary equipment in accordance with a continuous planned maintenance program.
Under applicable regulations, the Company's chemical and product carriers,
offshore service vessels, and its four largest tugs are required to be drydocked
twice in a five-year period for inspection and routine maintenance and repairs.
These vessels are also required to undergo special surveys every five years
involving comprehensive inspection and corrective measures to insure their
structural integrity and proper functioning of their cargo and ballast piping
systems, critical machinery and equipment, and coatings. The Company's fuel
barges, because they are operated in fresh water, are required to be drydocked
only twice in each ten-year period. The Company's harbor tugs and towboats
generally are not required to be drydocked on a specific schedule. During the
three and six months ended June 30, 1997, the Company drydocked 11 and 19
vessels, respectively, at an aggregate cost (exclusive of lost revenue) of $1.1
and $1.6 million, respectively, compared with five and 12 vessels drydocked at
an aggregate cost of $0.1 and $0.2 million, respectively, for the three and six
months ended June 30, 1996. In addition to variable expenses associated with
vessel operations, the Company incurs fixed charges to depreciate its marine
assets. The Company calculates depreciation based on a useful life ranging from
25 years for its steel-hull offshore energy support vessels to 30 years for
aluminum-hull vessels, the lesser of any applicable lease term life or the Oil
Pollution Act of 1990 life for its product and chemical carriers, ten years for
its fuel barges, and 40 years for its towboats and tugs.
Charter hire consists primarily of payments made with respect to the
bareboat charters of the Seabulk Challenger and Seabulk Magnachem which were
acquired pursuant to leveraged lease transactions. The Company has entered into
mortgage financing arrangements for one of the chemical carriers acquired from
OMI. The Company also pays charter hire when it charters harbor tugs to meet
requirements in excess of its own tugs' availability. This typically occurs in
Mobile when the Company charters one or two tugs to assist with the docking or
undocking of a particular vessel.
Insurance costs consist primarily of premiums paid for (i) protection
and indemnity insurance for the Company's marine liability risks, which are
insured by a mutual insurance association of which the Company is a member and
through the commercial insurance markets; (ii) hull and machinery insurance and
other maritime-related insurance, which are provided through the commercial
marine insurance markets; and (iii) general liability and other traditional
insurance, which is provided through the
14
<PAGE>
commercial insurance markets. Insurance costs, particularly costs of marine
insurance, are directly related to overall insurance market conditions and
industry and individual loss records, which vary from year to year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED
JUNE 30, 1996
Revenue. Revenue increased 115% to $46.3 million for the three months
ended June 30, 1997 from $21.5 million for the three months ended June 30, 1996
primarily due to increased revenue in the Company's offshore energy support and
chemical transportation operations.
Revenue from offshore energy operations increased 165% for the three
months ended June 30, 1997 primarily due to acquisitions and higher day rates
for supply and crew boats resulting from increased offshore exploration and
production activity. Utilization of supply boats decreased to 90% for the 1997
period from 100% for the 1996 period due to a program of regularly scheduled
drydocking, and utilization of crew boats remained constant at 93% for both
periods. During the 1997 period, day rates for supply boats owned, operated, or
managed by the Company increased 75% from the 1996 period, while day rates for
crew boats owned, operated, or managed by the Company increased 32% from the
1996 period.
Petroleum product transportation revenue decreased 9% to $4.3 million
for the three months ended June 30, 1997 from $4.7 million for the three months
ended June 30, 1996 primarily due to the reduced charter rate on the Seabulk
Challenger.
Chemical transportation revenue increased 192% to $13.7 million for the
three months ended June 30, 1997 from $4.7 million for the three months ended
June 30, 1996 primarily due to the August 1996 acquisition of the OMI Chemical
Carriers and the remaining 50% interest in OSTC.
Revenue from offshore and harbor towing operations increased 46% for
the three months ended June 30, 1997 to $4.8 million compared to $3.3 million
for the three months ended June 30, 1996 due to acquisitions and the
redeployment of certain vessels in the offshore towing sector.
Operating Expenses. Operating expenses increased 89% to $25.2 million
for the three months ended June 30, 1997 from $13.3 million for the three months
ended June 30, 1996 primarily due to increases in crew payroll and benefits,
maintenance and repair, and supplies and consumables resulting from acquisitions
and increased business activity. As a percentage of revenue, operating expenses
decreased to 54% for the three months ended June 30, 1997 from 62% for the three
months ended June 30, 1996.
Overhead Expenses. Overhead expenses increased 75% to $5.9 million for
the three months ended June 30, 1997 from $3.4 million for the three months
ended June 30, 1996 primarily due to increased staffing requirements due to
acquisitions. As a percentage of revenue, overhead expenses decreased to 13% for
the three months ended June 30, 1997 from 16% for the three months ended June
30, 1996.
15
<PAGE>
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 139% to $4.2 million for the three months ended June 30, 1997
compared with $1.8 million for the three months ended June 30, 1996 as a result
of an increase in fleet size due to acquisitions.
Income from Operations. Income from operations increased 257% to $11
million, or 24 % of revenue, for the three months ended June 30, 1997 from $3.1
million, or 14% of revenue, for the three months ended June 30, 1996 as a result
of the factors noted above.
Net Interest Expense. Net interest expense decreased 32% to $2.0
million, or 4% of revenue, for the three months ended June 30, 1997 from $3.0
million, or 14% of revenue, for the three months ended June 30, 1996 primarily
as a result of debt retirement.
Net Income (Loss). The Company had net income of $5.3 million for the
three months ended June 30, 1997 as compared to net income of $0.3 million for
the three months ended June 30, 1996 primarily as a result of the factors noted
above.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE
30, 1996
Revenue. Revenue increased 106% to $85.9 million for the six months
ended June 30, 1997 from $41.8 million for the six months ended June 30, 1996
primarily due to increased revenue in the Company's offshore energy and chemical
transportation operations.
Revenue from offshore energy operations increased 152% for the six
months ended June 30, 1997 primarily due to acquisitions and greater utilization
of crew boats and higher day rates resulting from increased offshore exploration
and productions activity. Utilization of supply boats decreased to 88% for the
1997 period from 96% for the 1996 period due to a program of regularly scheduled
dry-docking, and utilization of crew boats increased to 94% for the 1997 period
from 91% for the 1996 period. During the 1997 period, day rates for supply boats
owned, operated or managed by the Company increased 81% from the 1996 period,
and day rates for crew boats owned, operated or managed by the Company increased
27% from the 1996 period.
Petroleum product transportation revenue decreased 8% to $8.6 million
for the six months ended June 30, 1997 from $9.4 million for the six months
ended June 30, 1996 primarily due to the reduced charter rate on the Seabulk
Challenger.
Chemical transportation revenue increased 202% to $27.9 million for the
six months ended June 30, 1997 from $9.3 million for the six months ended June
30, 1996, primarily due to the August 1996 acquisition of the OMI Chemical
Carriers and the remaining 50% interest in OSTC.
Revenue from offshore and harbor tug operations increased 23% to $8.5
million for the six months ended June 30, 1997 from $6.9 million for the six
months ended June 30, 1996 primarily as a result of acquisitions and the
redeployment of certain vessels in the offshore towing sector.
Operating Expenses. Operating expenses increased 81% to $46.3 million
for the six months ended June 30, 1997 from $25.5 million for the six months
ended June 30, 1996 primarily due to increases in crew payroll and benefits,
maintenance and repair, and supplies and consumables resulting from
16
<PAGE>
acquisitions and increased business activity. As a percentage of revenue,
operating expenses decreased to 54% for the six months ended June 30, 1997 from
61% for the six months ended June 30, 1996.
Overhead Expenses. Overhead expenses increased 58% to $11.1 million for
the six months ended June 30, 1997 from $7.0 million for the six months ended
June 30, 1996, primarily due to increased staffing requirements due to
acquisitions. As a percentage of revenue, overhead expenses decreased to 13% for
the six months ended June 30, 1997 from 17% for the six months ended June 30,
1996.
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 129% to $7.9 million for the six months ended June 30, 1997
compared with $3.4 million for the six months ended June 30, 1996 as a result of
an increase in fleet size due to acquisitions.
Income from Operations. Income from operations increased 259% to $20.7
million, or 24% of revenue, for the six months ended June 30, 1997 from $5.8
million, or 14% of revenue, for the six months ended June 30, 1996 as a result
of the factors noted above.
Net Interest Expense. Net interest expense decreased 29% to $4.1
million, 5% of revenue, for the six months ended June 30, 1997 from $5.8
million, or 14% of revenue, for the six months ended June 30, 1996 primarily as
a result of debt retirement.
Net Income (Loss). The Company had net income of $8.2 million for the
six months ended June 30, 1997 as compared to net income of $0.2 million for the
six months ended June 30, 1996 primarily as a result of the factors noted above.
SEASONALITY
The Company has experienced slight seasonality in its overall
operations. The first half of the year is generally not as strong as the second
half due to lower activity in offshore energy support activity and petroleum
product transportation during the months of February, March, and April.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements historically have arisen primarily
from its working capital needs, acquisition of vessels, improvements to vessels,
and debt service requirements. The Company's principal sources of cash have been
borrowings, cash provided by operating activities, proceeds from the August 1996
IPO, proceeds from the Second Offering in February 1997, and proceeds from the
Private Offering in June 1997.
The Company's Credit Facility, as amended, currently provides for a
$20.0 million Revolving Line, a $50.0 million Acquisition Line, and a $5.6
million letter of credit. Borrowings under the Credit Facility bear interest at
the prime rate or LIBOR, at the Company's option, plus a margin based on the
Company's compliance with certain financial ratios. At June 30, 1997, there were
no amounts outstanding under the Credit Facility.
In August 1996, the Company completed the IPO, which resulted in net
proceeds to the Company of approximately $76.7 million. Of such net proceeds,
approximately $34.7 million was used to fund the $35.5 million cash portion of
the $97.5 million aggregate purchase price of three chemical carriers,
17
<PAGE>
ten supply boats and one crew boat (the "August 1996 Acquisitions") and
approximately $42.0 million was used to repay certain indebtedness. The balance
of the purchase price of the August 1996 Acquisitions was paid by the assumption
or incurrence of $62.0 million of debt obligations. In addition, the Company
agreed to indemnify certain affiliates of one of the sellers for certain
liabilities up to a maximum of $7.0 million.
On February 5, 1997, the Company completed its Second Offering of
4,000,000 shares of its Class A Common Stock at $24.875 per share. The net
proceeds to the Company were $94,300,000, after deducting underwriting
commissions. Of such amount, approximately $36.2 million was used to repay
certain indebtedness. Of the balance of approximately $58.1 million, $5.5
million was used to fund vessel acquisitions, $20.9 million was used to fund the
remainder of the purchase price of four supply boats and one crew boat acquired
in the second quarter of 1997, $1.8 million was designated to fund the purchase
of one crew boat in the third quarter of 1997, $6.9 million was designated to
fund the refurbishment and lengthening of two supply boats expected to be put
into service during the third quarter of 1997, and the remaining $23.0 million
was available for general corporate purposes and to fund a portion of the costs
of the vessels to be constructed.
In May 1997, the Company acquired 35 offshore energy support vessels
for consideration valued at $58.7 million, consisting of cash of $49.0 million,
a note payable in the amount of $6.0 million, and 141,760 shares of Class A
Common Stock valued by the Company at $3.7 million. Of the cash portion of the
purchase price, $10.5 million was funded from the Company's available cash and
$38.5 million was drawn under the Credit Facility. The Company has also agreed
to purchase an additional utility and supply vessel for an aggregate cost of
approximately $2.9 million in cash.
In June 1997, the Company completed the Private Offering, which
resulted in net proceeds to the Trust of approximately $111.6 million. Of such
amount, approximately $94.2 million was used to repay amounts outstanding under
the Credit Facility including interest, and $6.0 million was used to repay the
$6.0 million note issued in connection with the May 1997 acquisition. The
remaining $11.4 million is available for general corporate purposes.
The Company's future capital needs are expected to relate primarily to
debt service obligations, maintenance and improvements of its fleet, and
acquisitions. The Company's outstanding indebtedness at June 30, 1997 was
approximately $47.0 million. After giving effect to repayments of an aggregate
of $144.8 million of indebtedness through June 30, 1997 with a portion of the
proceeds of the Second Offering and the Private Offering, the Company's
principal and interest payment obligations for the remainder of 1997 are
estimated to be approximately $4.5 and $5.6 million, respectively, and operating
lease obligations for the remainder of 1997 are estimated to be approximately
$2.1 million.
Capital requirements for vessel improvements are estimated to be
approximately $17.3 million for 1997, of which $10.3 million had been expended
as of June 30, 1997.
The Company has contracted for the construction of three ship docking
modules ("SDMs(TM)") at an estimated aggregate cost of approximately $14.5
million with delivery expected in late 1997 or early 1998. The Company is
constructing one double-hull barge at a cost of $1.0 million and has entered
into an agreement to purchase four additional double-hull barges for an
aggregate of $2.4 million. These four barges will be refurbished for an
estimated aggregate cost of $2.6 million prior to operation. The Company has
contracted for the construction of four supply boats for delivery during 1997
and 1998 at a cost of $34.0 million. The Company has also agreed to purchase for
an estimated aggregate cost of
18
<PAGE>
$15.3 million, six newly constructed 152-foot crew boats, one of which is
scheduled for delivery in the third quarter of 1997 and the remainder in 1998
and 1999. The Company currently intends to fund the aggregate costs of the
SDMs(TM), the crew boats, the supply boats, and the barges from available
working capital, borrowings under the Credit Facility, lease financing, or a
combination of such sources.
The Company has a 2.4% equity interest in five 45,300 dwt double-hull
petroleum product carriers currently under construction. The aggregate costs of
the five carriers is estimated to be $255.0 million, of which approximately
$40.0 million will constitute equity investment and $215.0 million will be
financed with the proceeds of government-guaranteed Title XI ship financing
bonds issued in March 1996. Subject to certain conditions, the Company has an
option, exercisable through 2002, to purchase a 49.2% interest at a price equal
to (i) the investor's equity investment plus a stated annual return, or (ii) if
exercised after December 31, 1997, the greater of the fair market value of the
interest or the amount set forth in (i). The Company also has an option,
exercisable on January 15, 1998, to purchase an additional 23.4% interest at a
price equal to the investor's equity investment plus a stated return. Should the
Company fail to exercise the latter option, the investor has the option to
acquire 1.6% of the ownership interest from the Company for nominal
consideration. The total estimated cost of exercising the Company's options is
up to $32.0 million (assuming the options are exercised prior to January 1,
1998). The Company currently has no understanding or agreements with respect to
the financing that it would require if it were to exercise either or both of
these options, and there can be no assurance that such financing will be
available.
The Company is party to litigation with one of the shipyards that
contracted to complete the Seabulk America for the Company, which shipyard is
seeking to recover from the Company approximately $6.1 million for alleged
additions and changes to the contract work and costs of alleged delay and
disruption, in addition to $2.4 million of the $5.9 million contract price that
the Company has withheld. In addition, the shipyard is seeking legal fees and
expenses. The Company has asserted counterclaims aggregating $5.6 million for
contract deletions, unfinished and defective work, and liquidated damages for
late delivery. The Company has obtained a $5.6 million letter of credit to
finance any additional payment that it might ultimately be required to make
pursuant to this litigation.
The Company believes that the remaining proceeds of the Second Offering
and Private Offering, cash generated from operations, and amounts available
under the Credit Facility will be sufficient to fund debt service requirements,
planned capital expenditures, and working capital requirements for the
foreseeable future. The Company also believes that such resources together with
the potential future use of debt or equity financing, will allow the Company to
pursue its strategy of growth through acquisitions. However, since future cash
flows are subject to a number of uncertainties, including the condition of the
markets served by the Company, there can be no assurance that these resources
will continue to be sufficient to fund the Company's cash requirements.
EFFECT OF INFLATION
The Company does not consider inflation a significant business risk in
the current and foreseeable future although the Company has experienced some
cost increases. In some cases, these increases have been offset by charter hire
escalation clauses.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
On June 27, 1997, Hvide Capital Trust, a Delaware statutory business
trust (the "Trust"), sold an aggregate of 2,300,000 6 1/2% trust convertible
preferred securities (the "Convertible Preferred Securities") for a total sales
price of $115,000,000 in cash. Hvide Marine Incorporated (the "Company") owns
all of the common securities of the Trust. The proceeds received by the Trust
from the sale of the Convertible Preferred Securities were used by the Trust to
acquire $115,000,000 of 6 1/2% Convertible Subordinated Debentures due June 15,
2012 of the Company.
The Convertible Preferred Securities are convertible at any time from
and after September 25, 1997 and prior to June 15, 2012 into shares of Class A
Common Stock of the Company at the rate of 1.7544 shares of Company Class A
Common Stock for each Convertible Preferred Security (equivalent to a conversion
price of $28.50 per share of Company Class A Common Stock.)
The Convertible Preferred Securities were sold primarily to
institutions in a private offering exempt from registration under the Securities
Act of 1933 (the "Securities Act"). In connection with the offering of the
Convertible Preferred Securities, the Trust and the Company relied upon the
exemptions from registration provided by Section 4(2) of the Securities Act and
Rule 144A under the Securities Act. Donaldson, Lufkin & Jenrette Securities
Corporation, Howard Weil, Labouisse, Friedrichs Incorporated, and Raymond James
and Associates were the initial purchasers of the Convertible Preferred
Securities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
None
b. Reports on Form 8-K.
The Company's Current Report on Form 8-K dated May 23, 1997 reporting on
the acquisition of 35 oil field service vessels from Gulf Marine
Maintenance and Offshore Service Company of Dubai, United Arab Emirates,
filed with the Securities and Exchange Commission on June 9, 1997.
The Company's Current Report on Form 8-K/A dated May 23, 1997 reporting
on the financial statements and pro forma financial information required
by Items 7(a) and 7(b) to Form 8-K, filed with the Securities and
Exchange Commission on June 26, 1997.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HVIDE MARINE INCORPORATED
/s/ JOHN J. KRUMENACKER
- -----------------------------------------------------
John J. Krumenacker
Controller and Chief Accounting Officer
August 12, 1997
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 18,368
<SECURITIES> 0
<RECEIVABLES> 23,730
<ALLOWANCES> 0
<INVENTORY> 9,910
<CURRENT-ASSETS> 61,011
<PP&E> 363,042
<DEPRECIATION> 36,242
<TOTAL-ASSETS> 404,232
<CURRENT-LIABILITIES> 28,910
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 206,760
<TOTAL-LIABILITY-AND-EQUITY> 404,232
<SALES> 0
<TOTAL-REVENUES> 85,947
<CGS> 0
<TOTAL-COSTS> 65,221
<OTHER-EXPENSES> 158
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,146
<INCOME-PRETAX> 16,422
<INCOME-TAX> 6,076
<INCOME-CONTINUING> 10,346
<DISCONTINUED> 0
<EXTRAORDINARY> 2,132
<CHANGES> 0
<NET-INCOME> 8,214
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
