SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (date of earliest event reported): May 23, 1997
HVIDE MARINE INCORPORATED
(Exact name of registrant as specified in its charter)
FLORIDA 0-28732 65-0524593
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
2200 ELLER DRIVE, P.O. BOX 13038
FORT LAUDERDALE, FLORIDA 33316
(Address of principal executive offices, including zip code)
(954) 523-2200
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
As reported on Form 8-K dated May 23, 1997, filed June 9, 1997, the
Company acquired 35 oilfield service vessels from Gulf Marine Maintenance and
Offshore Service Company of Dubai, United Arab Emirates on May 23, 1997. The
vessels, which will be operated by the Company in the Arabian Gulf, consist of
nine anchor-handling tug supply vessels, nine anchor-handling tugs, seven crew
boats, four offshore supply vessels, three large specialized construction and
maintenance vessels, two utility vessels, and one accommodation jack-up rig.
The purchase price of the vessels was $58.7 million, consisting of
$49.0 million of cash, a note in the amount of $6.0 million, and Company Class A
Common Stock valued at $3.7 million. The sources of the cash portion of the
purchase price was the Company's available cash and cash drawn under its Credit
Facility with Citibank, N.A.
This Form 8-K/A includes the financial statements and pro forma
financial information required by Items 7(a) and 7(b) to Form 8-K.
- 2 -
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(A) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet (March 31, 1997) Pro
Forma Condensed Consolidated Statement of Operations (March 31, 1997)
Pro Forma Condensed Consolidated Statement of Operation (December 31,
1996)
(B) Financial Statements of Business Acquired
Statement of Net Assets to be Acquired (March 31, 1997)
Statements of Revenues, Direct Expenses and Departmental Overheads
Before Corporate Expenses and Interest for the Three Months Ended
March 31, 1997
Statements of Net Assets to be Acquired (December 31, 1996
and 1995)
Statements of Revenues, Direct Expenses and Departmental
Overheads Before Corporate Expenses and Interest for the Years Ended
December 31, 1996 and 1995
(C) Exhibits
Exhibit 23.1 -- Consent of Deloitte & Touche
- 3 -
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA COMPANY
COMPANY ADJUSTMENT FOR PRO FORMA
AS THE ACQUISITION FOR CONDENSED
REPORTED GMMOS(1) CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents......................... $ 54,206 $ (11,100) $ 43,106
Accounts receivable, net.......................... 18,890 18,890
Spare parts and supplies.......................... 6,931 905 7,836
Prepaid expenses and other........................ 5,481 98 5,579
----------- ------------------- --------------
Total Current Assets........................... 85,508 (10,097) 75,411
Property, net..................................... 230,666 59,187 289,853
Goodwill, net..................................... 8,486 8,486
Deferred costs, net............................... 2,930 60 2,990
Investment in affiliates.......................... 1,297 1,297
Other............................................. 3,822 3,822
----------- ------------------- --------------
Total Assets................................... $ 332,709 $ 49,150 $ 381,859
=========== =================== ==============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current maturities of debt........................ $ 14,267 $ 2,000 $ 16,267
Current obligation under capital lease............ 1,472 1,472
Accounts payable.................................. 3,897 3,897
Other............................................. 14,149 1,000 15,149
----------- ------------------- --------------
Total Current Liabilities...................... 33,785 3,000 36,785
Long-term debt.................................... 82,857 42,500 125,357
Obligations under capital lease................... 7,113 7,113
Deferred income taxes............................. 7,968 7,968
Other liabilities................................. 2,482 2,482
----------- ------------------- --------------
Total Liabilities.............................. 134,205 45,500 179,705
Minority partners' equity......................... 910 910
Common stock, paid-in capital retained
earnings and treasury stock.................... 197,594 3,650 201,244
----------- ------------------- --------------
Total stockholders' equity........................ 197,594 3,650 201,244
Total stockholders' and minority partners'
equity......................................... 198,504 3,650 202,154
----------- ------------------- --------------
Total liabilities and equity...................... $ 332,709 $ 49,150 $ 381,859
=========== =================== ==============
</TABLE>
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<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY
PRO FORMA
COMPANY AS GMMOS PRO FORMA CONDENSED
REPORTED (A) ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues............................ $ 39,652 $ 7,035 $ $ 46,687
Operating expenses.................. 21,131 3,083 24,214
Overhead expenses................... 5,105 296 5,401
Depreciation and amortization....... 3,679 2,288 (1,534) (2) 4,433
------------- ----------- -------------- -------------
Income from operations.............. 9,737 1,368 1,534 12,639
Net interest........................ 2,139 830 (3) 2,969
Other expense:
Minority interest and equity in
subsidiaries.................... (69) (69)
Other............................ (186) (186)
------------- ----------- -------------- -------------
Total other expenses............. (255) (255)
------------- ----------- -------------- -------------
Income before provision for income
taxes and extraordinary item..... 7,343 1,368 704 9,415
Provision for income taxes.......... 2,717 767 (4) 3,484
------------- ----------- -------------- -------------
Net income (loss) before non-
recurring items directly
attributable to the transaction.. $ 4,626 $ 1,368 $ (63) $ 5,931
============= =========== ============== =============
Earnings per common and
common equivalent share --
primary and assuming
full dilution.................... $ 0.33 $ 0.42
============= =============
Weighted average number of
common shares and common
share equivalents outstanding.... 13,835,722 13,977,482
============= =============
</TABLE>
(a) Amounts represent the results of operations for the three month period ended
March 31, 1997 for Gulf Marine Maintenance and Offshore Company (GMMOS).
- 5 -
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) The Company expects the purchase price of $60.25 million, including
transaction and other costs of approximately $1.55 million, of the
GMMOS acquisition to be allocated to acquired assets and liabilities as
follows:
Prepaid expenses and other (a).............................. $ 98
Property, net............................................... 59,187
Spare parts and supplies.................................... 905
Deferred costs (net) (a).................................... 60
--------------
$ 60,250
Other current liabilities................................... $ 1,000
Long-term debt.............................................. 38,500
Payment of cash............................................. 11,100
Issuance of debt:
Current.................................................. 2,000
Long-term................................................ 4,000
Issuance of common stock.................................... 3,650
--------------
Investment in Acquisitions.................................. 20,750
--------------
$ 60,250
(a) Primarily represents an allocation of the purchase price to reflect
deferred drydocking costs in accordance with the Company's policies.
(2) Depreciation adjustment to reflect the Company's policies
applied to the acquired cost of assets:............... $ (1,534)
============
(3) The adjustment to net interest is comprised of:
Interest expense on note payable issued pursuant to
GMMOS acquisition...................................... $ 150
Interest expense on additional borrowings pursuant to
GMMOS acquisition...................................... 680
------------
$ 830
(4) To adjust pro forma income taxes to combined federal and
state statutory rates.................................. $ 767
============
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<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY
PRO FORMA
COMPANY AS GMMOS PRO FORMA CONDENSED
REPORTED (A) ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues.............................. $ 109,356 $ 21,733 $ $ 131,089
Operating expenses.................... 63,777 10,767 74,544
Overhead expenses..................... 14,979 1,244 16,223
Depreciation and amortization......... 9,830 6,390 (3,376) (1) 12,844
------------- ---------- -------------- -------------
Income from operations................ 20,770 3,332 3,376 27,478
Net interest.......................... 11,631 3,365 (2) 14,996
Other income (expense):
Minority interest and equity in
subsidiaries...................... 894 894
Other.............................. (457) (457)
------------- ---------- -------------- -------------
Total other income (expense).......... 437 437
------------- ---------- -------------- -------------
Income before provision for
income taxes and extraordinary
item............................... 9,576 3,332 11 12,919
Provision for income taxes............ 3,543 1,237 (3) 4,780
------------- ---------- -------------- -------------
Net income (loss) before
non-recurring items directly
attributable to the transaction.... $ 6,033 $ 3,332 $ (1,226) $ 8,139
============= ========== ============== =============
Earnings per common share............. $ 1.04 $ 1.37
============= =============
Weighted average number of
common and common share
equivalents outstanding............ 5,818,076 5,959,836
============= =============
Earnings per common share
assuming full dilution............. $ 0.99 $ 1.28
============= =============
Weighted average number of
common and common share
equivalents outstanding
assuming full dilution............. 6,644,963 6,786,723
============= =============
</TABLE>
(a) Amounts represent the results of operations for the year ended December 31,
1996 for Gulf Marine Maintenance and Offshore Company(GMMOS).
- 7 -
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) The adjustment to depreciation and amortization is comprised of:
Depreciation adjustment to reflect the Company's policies applied to the
acquired cost of the vessels:
GMMOS.................................................... $ (3,376)
===========
(2) The adjustment to net interest is comprised of:
Interest expense on note payable issued
pursuant to GMMOS acquisition................... $ 608
Interest expense on additional borrowings
pursuant to GMMOS acquisition................. 2,757
-----------
$ 3,365
(3) To adjust pro forma income taxes to combined federal and state statutory
rates...................................................... $ 1,237
===========
- 8 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
STATEMENT OF NET ASSETS TO BE ACQUIRED
MARCH 31, 1997
(UNAUDITED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
MARCH 31,
NOTE 1997
<S> <C> <C>
ASSETS
CURRENTS ASSETS:
Inventories...................................................................... $ 546
Claim receivable................................................................. 50
----------
TOTAL CURRENT ASSETS......................................................... 596
----------
PROPERTY, PLANT AND EQUIPMENT (Net)................................................. 5 $ 32,377
----------
TOTAL ASSETS........................................................................ $ 32,973
==========
LIABILITIES
CURRENT LIABILITIES................................................................. None
NET ASSETS TO BE ACQUIRED........................................................... $ 32,973
==========
</TABLE>
See notes to financial statements
- 9 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
STATEMENTS OF REVENUES, DIRECT EXPENSES AND
DEPARTMENTAL OVERHEADS BEFORE CORPORATE EXPENSES AND
INTEREST FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(UNAUDITED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1996 1997
----------- -------
<S> <C> <C>
Charter hire revenue................................................................ $ 4,542 $ 7,035
Operating expenses.................................................................. (2,060) (3,083)
----------- ----------
Gross margin................................................................. 2,482 3,952
Expenses:
Depreciation..................................................................... (1,563) (2,288)
Marine Department overheads...................................................... (258) (296)
----------- ----------
Income before corporate expenses and interest....................................... $ 661 $ 1,368
=========== ==========
</TABLE>
See notes to financial statements
- 10 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(UNAUDITED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
1. STATUS AND PRINCIPAL ACTIVITIES
The Marine Division "or the Marine Business" is a division of Gulf
Maintenance and Offshore Services Company, a company incorporated in
Dubai, U.A.E., GMMOS, a wholly owned subsidiary of Wellington Capital
Limited, a Company incorporated in the Cayman Islands.
The main activities of Marine Division relate to Charter Hire of Marine
Vessels for the oil industry.
2. BASIS OF PRESENTATION
Marine Division is not a stand-alone division or subsidiary of GMMOS
and was not generally accounted for separately. As a result, the
distinct and separate accounts necessary to present individual Marine
Division income statements for the three months ended March 31, 1996
and 1997 have not been maintained.
Marine Division does not maintain stand-alone corporate treasure, legal
and other similar corporate support functions. Corporate general and
administrative expenses have not been previously allocated to Marine
Division. GMMOS systems and procedures do not provide sufficient
information to develop a reasonable cost allocation of corporate
general and administrative expenses and corporate debt and interest
expenses. Marine Division departmental overheads include such costs as
selling, secretarial and administrative expenses.
With respect to cash flows, purchases of inventory along with payroll,
capital and other expenditures are funded by Gulf Marine Maintenance
and Offshore Services Company L.L.C. (GMMOS), Dubai. Charter Hire
Revenue is billed and collected by GMMOS.
Accordingly, Marine Division maintains only a minimal Petty Cash
balance.
As per GMMOS' books and records, the marine vessels are carried at
revaluation. However, for the purpose of presenting these financial
statements, as per GAAP, depreciation is calculated on cost on the
straight line method based on their anticipated useful lives.
3. FINANCIAL STATEMENT PRESENTATION
Based upon the above information, the following financial information
is presented:
(a) Statement of net assets to be acquired. This statement
includes only the net assets of Marine Division being
purchased by Hvide Marine Incorporated.
- 11 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
(b) Statement of revenues, direct expenses and
departmental overheads before corporate expenses and
interest (see note 8).
Statement of Cash Flows is not presented as Marine Division has
essentially no cash flow.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Inventories:
Inventories consist of materials and spares and are valued at
the lower of FIFO cost or market.
(b) Property, Plant and Equipment:
Property, plant and equipment are carried at cost and
depreciation is provided on the straight line method based on
the anticipated useful lives as follows:
YEARS
Marine vessels.................................... 5 to 15
Equipment on board................................ 2
Motor vehicles.................................... 3
Furniture and office equipment.................... 3
Plant, machinery, equipment and tools............. 1 to 3
(c) Revenue Recognition:
Charter hire revenue is recognized in the period the related
service is rendered. Charges for charter hire is billable on a
daily basis.
(c) Taxes:
In U.A.E. there are no enforced tax laws and hence no
corporate taxes on Company's profit or personal taxes on
employees' salaries is applicable.
- 12 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
5. PROPERTY, PLANT AND EQUIPMENT
MARCH 31,
1997
US$
COST:
Marine vessels........................................ 64,613
Equipment on board.................................... 3,117
Motor vehicles........................................ 153
Furniture and office equipment........................ 33
Plant, machinery, equipment and tools................. 73
Other assets (GMMOS Queen under modification)......... 360
----------
68,349
ACCUMULATED DEPRECIATION.............................. 35,972
----------
NET BOOK VALUE........................................ 32,377
==========
The Division does not record capitalized interest on construction
(modification) in process as interest expenses are not allocated by
GMMOS to the Division.
6. CURRENCY
The Company's books are kept in U.A.E. Dirhams. For the purpose of
producing the above financial statements U.A.E. Dirhams are converted
to U.S. Dollars using an exchange rate of Dhs 3.67 the exchange rate
in effect since the inception of the Division's operations.
7. EMPLOYEES BENEFITS
The only benefits of the employees, other than salary, is that which
accrues under the UAE Labour Law. This law requires the payment of a
number of days salary as end of service indemnity based on the length
of service of each employee.
As per the terms of agreement, all benefits to the employees at the
date of sale will be paid by the seller. The buyer will not have any
liability towards the employees before the acquisition.
8 CORPORATE ALLOCATION
The Marine Division does not maintain stand-alone corporate, treasury
and other similar corporate support functions. The Division records
operating costs of the marine vessels and expenses related primarily to
the Division, such as Marine Office salaries, utilities and supplies.
- 13 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI -- UNITED ARAB EMIRATES
The Company's corporate function is not directly involved in the Marine
Division operations and accordingly no attempt is made to allocate
corporate costs to the Division.
9. SALE OF MARINE DIVISION
On May 14, 1997, Wellington Capital Limited entered into an agreement
with Hvide Marine Inc. whereby Hvide Marine Inc. will buy certain
assets of the Marine Division and the charter hire agreements without
assuming any liabilities. In consideration for these net assets,
Wellington Capital Limited will receive upon closing $52,000 in cash,
seller note of $6,000 and 141,776 shares of Hvide Marine, Inc. common
stock with a fair market value of $3,000.
10. TRANSACTIONS WITH RELATED PARTIES
There was no revenue generated from related parties. Expenses from
related parties in terms of costs of renovation of marine vessels and
other expenditure amounted to US$ 514 in 1997.
- 14 -
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Independent Auditor's Report
Gulf Marine Maintenance and Offshore Services Company L.L.C.
Dubai
United Arab Emirates
We have audited the accompanying statements of net assets to be acquired of
Marine Division of Gulf Marine Maintenance and Offshore Service Company L.L.C.,
Dubai as at December 31, 1996 and 1995 and the related statements of revenues,
direct expenses and departmental overheads before corporate expenses and
interest for the years then ended. These financial statements are the
responsibility of the management of Gulf Marine Maintenance and Offshore
Services Company L.L.C. Dubai, (GMMOS). Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with Generally Accepted Auditing Standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets to be acquired of the Marine Division as of December
31, 1996 and 1995 and the results of its revenue, direct expenses and
departmental overheads before corporate expenses and interest for the years then
ended, in conformity with United States Generally Accepted Accounting
Principles.
As described in Note 2 to the financial statements, Marine Division is owned by
GMMOS. Marine Division receives managerial and administrative support from
GMMOS. GMMOS accounting systems and procedures do not provide sufficient
information to develop a reasonable cost allocation of corporate general and
administrative expenses and such expenses are not included in the financial
statements. As a result, Marine Division net assets to be acquired and the
results of revenues, direct expenses and departmental overheads before corporate
expenses and interest may not be indicative of conditions that would have
existed or results that would have occurred had Marine Division operated as an
un-affiliated entity.
Deloitte & Touch
Dubai
May 19, 1997
- 15 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
STATEMENTS OF NET ASSETS TO BE ACQUIRED
DECEMBER 31, 1996 AND 1995
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
NOTE 1996 1995
---------- ----------- -------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Inventories.................................................. $ 563 $ 680
Claim receivables............................................ 50 --
----------- -----------
TOTAL CURRENT ASSETS....................................... 613 680
----------- -----------
PROPERTY, PLANT AND EQUIPMENT (Net)............................. 5 33,824 29,855
----------- -----------
TOTAL ASSETS.................................................... $ 34,437 $ 30,535
=========== ===========
LIABILITIES
CURRENT LIABILITIES............................................. None None
NET ASSETS TO BE ACQUIRED....................................... $ 34,437 $ 30,535
=========== ===========
</TABLE>
- 16 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
STATEMENTS OF REVENUES, DIRECT EXPENSES AND
DEPARTMENTAL OVERHEADS BEFORE CORPORATE EXPENSES
AND INTEREST FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1996 1995
------------- --------
<S> <C> <C>
CHARTER HIRE REVENUE................................................... $ 21,733 $ 15,944
OPERATING EXPENSES..................................................... (10,767) (10,240)
------------ ------------
GROSS MARGIN........................................................ 10,966 5,704
EXPENSES:
Depreciation........................................................... (6,390) (4,786)
Marine Department overheads............................................ (1,244) (910)
------------ ------------
INCOME BEFORE CORPORATE EXPENSES
AND INTEREST........................................................ $ 3,332 $ 8
============ ============
</TABLE>
See notes to financial statements
- 17 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
1. STATUS AND PRINCIPAL ACTIVITIES:
The Marine Division (or the Marine Business) is a division of Gulf
Marine Maintenance and Offshore Services Company, a Company
incorporated in Dubai, U.A.E. (GMMOS), a wholly owned subsidiary of
Wellington Capital Limited, a Company incorporated in the Cayman
Islands.
The main activities of Marine Division relate to Charter Hire of Marine
Vessels for the oil industry.
2. BASIS OF PRESENTATION:
Marine Division is not a stand-alone division or subsidiary of GMMOS
and was not generally accounted for separately. As a result, the
distinct and separate accounts necessary to present individual Marine
Division balance sheets and income statements as of December 31, 1996
and 1995 have not been maintained.
Marine Division does not maintain stand-alone corporate treasury, legal
and other similar corporate support functions. Corporate general and
administrative expenses have not been previously allocated to Marine
Division. GMMOS accounting systems and procedures do not provide
sufficient information to develop a reasonable cost allocation of
corporate general and administrative expenses and corporate debt and
interest expenses. Marine Division departmental overheads include such
costs as selling, secretarial and administrative expenses.
With respect to cash flows, purchases of inventory along with payroll,
capital and other expenditures are funded by Gulf Marine Maintenance
and Offshore Services Company L.L.C. (GMMOS), Dubai. Charter Hire
Revenue is billed and collected by GMMOS.
Accordingly, Marine Division maintains only a minimal Petty Cash
balance.
As per GMMOS books and records the marine vessels are carried at
revaluation. However, for the purpose of presenting these financial
statements as per U.S. GAAP, the marine vessels were restated at cost.
Depreciation and accumulated depreciation is restated accordingly.
3. FINANCIAL STATEMENT PRESENTATION:
Based upon the above information, the following financial information
is presented:
(a) Statements of net assets to be acquired. These statements
include only the net assets of Marine Division being
purchased by Hvide Marine Incorporated.
- 18 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
(b) Statements of revenues, direct expenses and departmental
overheads before corporate expenses and interest (see note 8).
Statements of Cash Flows are not presented as Marine Division has
essentially no cash flow.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Inventories:
Inventories consist of materials and spares and are valued at
the lower of FIFO cost or market.
(b) Property, Plant and Equipment:
Property, plant and equipment are carried at cost and
depreciation is provided on the straight line method based on
the anticipated useful lives as follows:
Years
Marine vessels 5 to 15
Equipment on board 2
Motor vehicles 3
Furniture and office equipment 3
Plant, machinery, equipment and tools 1 to 3
(c) Revenue Recognition:
Charter hire revenue is recognized in the period the related
service is rendered. Charges for charter hire is billable on a
daily basis.
(d) Taxes:
In U.A.E. there are no enforced tax laws and hence no
corporate taxes on Company's profit or personal taxes on
employees' salaries is applicable.
- 19 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
5. PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
------------ ---------
US$ US$
<S> <C> <C>
COST:
Marine vessels.............................................................. 63,863 54,394
Equipment on board.......................................................... 3,039 2,182
Motor vehicles.............................................................. 153 140
Furniture and office equipment.............................................. 20 18
Plant, machinery, equipment and tools....................................... 73 73
Other assets (GMMOS Queen under modification)............................... 360 360
------------ -------------
67,508 57,167
------------ -------------
ACCUMULATED DEPRECIATION.................................................... 33,684 27,312
------------ -------------
NET BOOK VALUE.............................................................. 33,824 29,855
============ =============
</TABLE>
The Division does not record capitalized interest on construction (modification)
in process as interest expenses are not allocated by GMMOS to the Division.
6. CURRENCY:
The Company's books are kept in U.A.E. Dirhams. For the purpose of
producing the above financial statements U.A.E. Dirhams are converted
to U.S. Dollars using an exchange rate of Dhs 3.67 the exchange rate
in effect since the inception of the Division's operations.
7. EMPLOYEES BENEFITS:
The only benefits of the employees, other than salary, is that which
accrues under the UAE Labor Law. This law requires the payment of a
number of days salary as end of service indemnity based on the length
of service of each employee.
As per the terms of agreement, all benefits to the employees at the
date of sale will be paid by the seller. The buyer will not have any
liability towards the employees before the acquisition.
8. CORPORATE ALLOCATION:
The Marine Division does not maintain stand-alone corporate, treasury
and other similar corporate support functions. The Division records
operating costs of the marine vessels and expenses related primarily to
the Division, such as Marine Office salaries, utilities and supplies.
- 20 -
<PAGE>
MARINE DIVISION OF GULF MARINE MAINTENANCE AND
OFFSHORE SERVICE COMPANY L.L.C.
DUBAI--UNITED ARAB EMIRATES
The company's corporate function is not directly involved in the Marine
Division operations and accordingly no attempt is made to allocate
corporate costs to the Division.
9. SALE OF MARINE DIVISION:
On May 14, 1997, Wellington Capital Limited entered into an agreement
with Hvide Marine Inc. whereby Hvide Marine Inc. will buy certain
assets of the Marine Division and the charter hire agreements without
assuming any liabilities. In consideration for these net assets,
Wellington Capital Limited will receive upon closing $52,000 in cash,
seller note of $6,000 and 141,776 shares of Hvide Marine, Inc. common
stock with a fair market value of $3,000.
10. TRANSACTIONS WITH RELATED PARTIES:
There was no revenue generated from related parties. Expenses from
related parties in terms of costs of renovation of marine vessels and
other expenditure amounted to US$ 1,108 in 1996 and US$ 164 in 1995
respectively.
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<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 hereunto duly authorized.
HVIDE MARINE INCORPORATED
By: /S/ GENE DOUGLAS
Gene Douglas
Vice President-Legal,
General Counsel and Secretary
Date: June 25, 1997
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Exhibit 23.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hvide Marine Incorporated:
We consent to the incorporation by reference in the Registration Statements
pertaining to the Retirement Plan and Trust (No. 333-19543), the Stock Option
Plan for Directors, Equity Ownership Plan and 1996 Employee Stock Purchase Plan
(No. 333-17621), and the Board of Directors Stock Compensation Plan and Key
Employee Stock Compensation Plan (No. 333-28949) of Hvide Marine Incorporated on
Form S-8 of our report dated May 19, 1997 appearing in the Current Report on
Form 8-K of Hvide Marine Incorporated dated June 25, 1997.
Deloitte Touche
Dubai
June 25, 1997
