-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GmLkpp2maw/pzfugDMUqfBAVNVUen0KOn2nfvfkQ7j47ibS89GcJlT4FsKuk+/a/ JOzDpxOFIN1H6NtOTGDHDg== /in/edgar/work/20000814/0000925328-00-000062/0000925328-00-000062.txt : 20000921 0000925328-00-000062.hdr.sgml : 20000921 ACCESSION NUMBER: 0000925328-00-000062 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HVIDE MARINE INC CENTRAL INDEX KEY: 0000922341 STANDARD INDUSTRIAL CLASSIFICATION: [4412 ] IRS NUMBER: 650524593 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28732 FILM NUMBER: 700809 BUSINESS ADDRESS: STREET 1: 2200 ELLER DR BLDG 27 STREET 2: PO BOX 13038 CITY: FORT LAUDERDALE STATE: FL ZIP: 33316 BUSINESS PHONE: 3055232200 MAIL ADDRESS: STREET 1: 2200 ELLER DR BLDG 27 CITY: FT LAUDERDALE STATE: FL ZIP: 33316 10-Q 1 0001.txt FORM 10-Q FOR 2ND QUARTER 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, 2000 Commission File Number: 0-28732 HVIDE MARINE INCORPORATED State of Incorporation: Delaware I.R.S. Employer I.D. 65-0966399 2200 Eller Drive P.O. Box 13038 Ft. Lauderdale, Florida 33316 (954) 523-2200 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, and (2) has been subject to such filing requirements for the past ninety days. Yes X No --------------------- -------------------- There were 10,001,696 shares of Class A Common Stock, par value $0.01 per share outstanding at August 1, 2000. HVIDE MARINE INCORPORATED Quarter ended June 30, 2000 Index
Page Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited)............................................... 1 Condensed Consolidated Balance Sheets at December 31, 1999 and June 30, 2000......................................................................... 1 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1999 (Predecessor Company) and 2000 (Successor Company)...................................... 3 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 (Predecessor Company) and 2000 (Successor Company)....................................... 4 Notes to Condensed Consolidated Financial Statements......................................................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................20 Part II. Other Information Item 1. Legal Proceedings......................................................................................30 Item 4. Submission of Matters to a Vote of Security Holders....................................................30 Item 6. Exhibits and Reports on Form 8-K.......................................................................30 Signature.......................................................................................................31
As used in this Report, the term "Parent" means Hvide Marine Incorporated, and the term "Company" means the Parent and/or one or more of its consolidated subsidiaries. PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Hvide Marine Incorporated and Subsidiaries Condensed Consolidated Balance Sheets
December 31, June 30, 1999 2000 --------------- -------------- (Note 1) (Unaudited) (in thousands) ASSETS Current assets: Cash and cash equivalents................................................ $ 19,046 $ 12,050 Restricted cash.......................................................... 15,217 8,892 Accounts receivable: Trade, net of allowance for doubtful accounts of $5,799 and $5,717, respectively................................................. 47,555 48,993 Insurance claims and other............................................. 6,775 6,238 Marine operating supplies................................................ 10,632 11,654 Prepaid expenses......................................................... 4,013 7,009 --------------- --------------- Total current assets................................................. 103,238 94,836 Property: Construction-in-progress................................................. 1,345 1,290 Vessels and improvements................................................. 698,979 690,665 Furniture and equipment.................................................. 11,643 11,721 Less accumulated depreciation............................................ (22,087) (43,043) --------------- --------------- Net property......................................................... 689,880 660,633 Other assets: Deferred costs, net...................................................... 29,464 33,458 Vessels held for sale.................................................... -- 10,699 Restricted investments................................................... 3,752 1,660 Other.................................................................... 4,406 5,341 --------------- --------------- $ 830,740 $ 806,627 =============== ===============
Continued. Hvide Marine Incorporated and Subsidiaries Condensed Consolidated Balance Sheets
December 31, June 30, 1999 2000 ----------------- --------------- (Note 1) (Unaudited) (in thousands, except par value) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable......................................................... $ 10,895 $ 9,995 Current maturities of long-term debt..................................... 17,775 29,169 Current obligations under capital leases................................. 3,332 3,722 Accrued interest......................................................... 3,102 1,740 Accrued liabilities and other............................................ 37,489 29,719 --------------- --------------- Total current liabilities.............................................. 72,593 74,345 Long-term debt.............................................................. 465,769 453,454 Obligations under capital leases............................................ 33,934 37,037 Senior notes................................................................ 76,709 77,938 Other liabilities........................................................... 5,952 5,266 Minority interest........................................................... 10,457 9,392 Commitments and contingencies Stockholders' equity: Class A Common Stock -- $.01 par value, 20,000 shares authorized, 10,002 shares issued outstanding 100 100 Additional paid-in capital............................................... 166,791 166,820 Accumulated deficit...................................................... (1,565) (17,725) --------------- --------------- Total stockholders' equity............................................. 165,326 149,195 --------------- --------------- $ 830,740 $ 806,627 =============== ===============
See accompanying notes. Hvide Marine Incorporated and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, Predecessor Successor Predecessor Successor Company Company Company Company ------------ ------------ ------------ ----------- 1999 2000 1999 2000 Revenues.................................................... $ 89,004 $ 80,211 $ 179,404 $ 158,818 Operating expenses: Crew payroll and benefits.............................. 23,360 22,501 48,203 45,715 Charter hire and bond guarantee fee.................... 4,960 3,193 8,522 7,427 Repairs and maintenance................................ 7,622 5,779 13,960 12,178 Insurance.............................................. 3,262 3,225 6,759 6,195 Fuel................................................... 4,326 6,701 7,946 14,658 Consumables............................................ 4,368 4,314 9,606 7,623 Rent and utilities..................................... 8,521 6,528 16,259 12,955 ---------- ------------ ------------- ------------ Total operating expenses............................. 56,419 52,241 111,255 106,751 Selling, general and administrative expenses: Salaries and benefits.................................. 4,255 5,113 9,628 10,362 Office................................................. 1,680 1,528 3,547 3,074 Professional fees...................................... 3,497 1,360 4,894 2,756 Other.................................................. 2,011 1,835 4,176 3,443 ---------- ------------ ------------- ------------ Total overhead expenses.............................. 11,443 9,836 22,245 19,635 Depreciation, amortization and drydocking................... 21,393 12,157 41,727 24,443 ---------- ------------ ------------- ------------ Income (loss) from operations............................... (251) 5,977 4,177 7,989 Other income (expense): Interest expense....................................... (19,302) (16,436) (37,605) (30,888) Interest income........................................ 427 184 490 443 Minority interest and equity in earnings of subsidiaries............................ (1,923) 596 (2,940) 1,065 Gain (loss) on asset sales............................. (14,130) 643 (14,130) 643 Other.................................................. (188) 6,869 (7) 6,695 ---------- ------------ ------------- ------------ Total other income (expense)......................... (35,116) (8,144) (54,192) (22,042) ---------- ------------ ------------- ------------ Loss before provision for (benefit from) income taxes....... (35,367) (2,167) (50,015) (14,053) Provision for (benefit from) income taxes................... (11,649) 1,083 (17,230) 2,107 ---------- ------------ ------------- ------------ Net loss............................................... (23,718) (3,250) (32,785) (16,160) ========== ============ ============= ============ Net loss per common share - basic and diluted............... * $ (0.33) * $ (1.62) ========== ============ ============= ============ Weighted average common shares outstanding - basic and diluted ............................................... * 10,002 * 10,001 ========== ============ ============= ============
* Earnings per share is not presented for the three months ended June 30, 1999 and for the six months ended June 30, 1999 because such presentation would not be meaningful. The Company's old common stock was cancelled and new common stock was issued on December 15, 1999 pursuant to the Plan. See accompanying notes. Hvide Marine Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)
Six Months Ended June 30, Predecessor Successor Company Company 1999 2000 ---------------- ---------------- Operating activities: Net loss................................................................ $ (32,785) $ (16,160) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of property........................... 33,836 21,368 Amortization of drydocking costs.................................... 6,048 3,075 Amortization of goodwill............................................ 1,843 -- Amortization of discount on long-term debt and financing costs...... 1,543 2,619 Provision for bad debts............................................. 471 143 Loss (gain) on disposal of property................................. 14,130 (643) Deferred income tax benefit......................................... (17,230) -- Minority partners' equity in earnings of subsidiaries, net.......... (797) (1,065) Undistributed earnings losses of affiliates......................... -- -- Other non-cash items................................................ 104 439 Changes in operating assets and liabilities: Accounts receivable............................................... 14,506 (1,248) Other current and long-term assets................................ (6,996) (7,978) Payment of reorganization items................................... -- (4,494) Accounts payable and other liabilities............................ (8,728) (5,915) --------------- --------------- Net cash provided by (used in) operating activities............. 5,945 (9,859) Investing activities: Purchases of property................................................. (36,845) (5,404) Proceeds from disposal of property.................................... -- 7,598 Payments on vessels under construction................................ (5,102) -- Capital contribution to affiliates.................................... (3,164) -- Redemption of restricted investments.................................. 19,592 2,092 -------------- -------------- Net cash (used in) provided by investing activities................. (25,519) 4,286 Financing activities: Proceeds from short-term borrowings................................... 5,000 -- Proceeds from revolving credit facility............................... -- 14,353 Repayment of revolving credit facility................................ -- (4,000) Proceeds from long-term borrowings.................................... 45,479 -- Repayment of long-term borrowings..................................... (21,768) (11,059) Proceeds from issuance of Title XI bonds, net of offering costs....... 5,428 -- Repayment of Title XI bonds........................................... (617) (4,715) Redemption of restricted cash......................................... -- 6,433 Payment of financing costs............................................ -- (596) Payment of obligations under capital leases........................... (1,391) (1,839) Proceeds from issuance of common stock................................ 252 -- Repayment of short-term debt.......................................... (5,000) -- --------------- --------------- Net cash provided by (used in) financing activities................. 27,383 (1,423) --------------- --------------- Change in cash and cash equivalents........................................ 7,809 (6,996) Cash and cash equivalents at beginning of period........................... 10,106 19,046 --------------- --------------- Cash and cash equivalents at end of period................................. $ 17,915 $ 12,050 =============== ===============
See accompanying notes. HVIDE MARINE INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2000 (Unaudited) 1. Basis of Presentation The condensed consolidated financial statements in this Report are unaudited for the periods indicated herein. In accordance with the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures have been condensed or omitted; therefore, such financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1999, as amended on Form 10-K/A (the "1999 Form 10-K"). The condensed consolidated financial statements in this Report reflect all adjustments and accruals that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented; all such adjustments were of a normal recurring nature. The results of operations for the six-month interim period ended June 30, 2000 are not necessarily indicative of the results of operations for the year ending December 31, 2000. Hvide Marine Incorporated and substantially all of its wholly-owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on September 8, 1999. The Bankruptcy Court confirmed the Company's Joint Plan of Reorganization (the "Plan") on December 9, 1999, and the Plan became effective on December 15, 1999 (the "Effective Date"). The Company emerged from bankruptcy on December 15, 1999 (see Note 3 for additional information). The unaudited consolidated financial statements as of and for the periods after the effective date, reflect accounting principles and practices set forth in American Institute of Certified Public Accountants Statement of Position ("SOP") 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code, which provides guidance for financial reporting by entities that have filed voluntary petitions for relief under, and have reorganized in accordance with the Bankruptcy Code. In accordance with SOP 90-7 the Company adopted "fresh start reporting" as of December 15, 1999. The Company's emergence from its Chapter 11 proceedings resulted in a new reporting entity. The assets and liabilities of the Company were restated as of December 15, 1999, in accordance with SOP 90-7, and therefore the accompanying condensed consolidated statements of operations and cash flows for periods prior to the Company's emergence from bankruptcy (the "Predecessor Company") are not comparable to the results of operations and cash flows of the Company subsequent to emergence from bankruptcy and the adoption of fresh-start reporting (the "Successor Company"). In June 1998, the Company paid $18.5 million to increase its equity interest in entities that own five double-hull carriers (collectively the "Lightship Tankers") from 0.8% to 50.8%. Three of these carriers were delivered in the fourth quarter of 1998, and two others were delivered during 1999. At the time of the increase in its equity interest, the Company intended to reduce its equity interest to less than 50% and therefore continued to account for investments in Lightship Tankers under the equity method. During 1999, the Company was not able to reduce its equity investment in Lightship Tankers and was required to consolidate the Lightship Tankers as of September 30, 1999, in accordance with the Financial Accounting Standards Board Statement No. 94, Consolidation of All Majority-Owned Subsidiaries. The consolidation of the Lightship Tankers was accounted for as a change in reporting entity, and the financial statements have been retroactively restated to include the accounts of the Lightship Tankers as if they were consolidated as of the date majority ownership was obtained. The Successor Company increased its ownership in the Lightship Tankers at December 30, 1999 from 50.8% to 75.8%. The Lightship Tankers were not party to the Chapter 11 proceedings. Certain amounts in the 1999 condensed consolidated financial statements have been reclassified to conform with the 2000 presentation. These reclassifications had no effect on the Company's net income. 2. Issues Affecting Liquidity Due to continuing weakness in day rates and utilization in the offshore energy support business, as well as adverse market conditions in the Company's towing and transport businesses, the Company was not in compliance as of March 31, 2000 with certain covenants contained in its Credit Facility and anticipated that it would not be in compliance with certain covenants throughout 2000. Accordingly, on April 14, 2000, the Company entered into an amendment to the Credit Facility (the "First Amendment") with the lending banks under which the relevant covenants have been modified through March 31, 2001 and the Company was required to prepay principal under the term loans of $10.0 million before June 30, 2000 and is required to prepay an additional $25.0 million before August 31, 2000, and $25.0 million before January 1, 2001. The Company is selling vessels and other assets to obtain the funds with which to make these payments and may sell certain vessels at amounts below their carrying values. The First Amendment further provides that, in the event the Company has not made the required principal payments as scheduled or achieved certain target levels of EBITDA for the third and fourth quarters of 2000, the lending banks may require the Company to sell additional vessels, to be selected by the lending banks, with an aggregate fair market value of $35.0 million. The amounts that the Company has agreed to prepay in 2000 have not been reclassified to current maturities of long-term debt, because the prepayments will be made with the proceeds from sales of long-term assets. Through June 30, 2000, the Company sold 12 vessels for net proceeds of $7.6 million, which were applied to the repayment obligation. Additionally, the Company is required to obtain the consent of the lending banks to borrow in excess of $17.5 million under the revolving loan portion of the Credit Facility. In connection with the First Amendment the Company paid a fee of $4.5 million to the lending banks in the form of a promissory note, accruing interest at 15% per annum, due the earlier of (i) April 2002 or (ii) the date on which the ratio of funded indebtedness to EBITDA for any quarter is less than four to one. On June 29, 2000, the Company entered into a second amendment to the Credit Facility (the "Second Amendment") which extended the deadline for prepayment of $10.0 million under the term loans from June 30, 2000 to July 17, 2000. The Company has met this deadline. The Second Amendment also expanded the Company's flexibility in determining which assets to sell to obtain the funds to make the principal payments of term loans required under the First Amendment. The Company believes that operating cash flow, amounts available under its revolving credit facility and anticipated proceeds from the sale of vessels will be sufficient for it to meet its debt service obligations, apart from the prepayments described above, and other capital requirements through 2000. It is uncertain, however, whether proceeds from the sale of assets will be sufficient to enable it to satisfy the prepayment obligations as currently scheduled or whether it will be required to seek further extension of the prepayment deadlines. As the Company's operating cash flow is dependent on factors beyond the Company's control, moreover, including general economic conditions and conditions in the markets the Company serves, there can be no assurance that actual operating cash flow will meet expectations. 3. Plan of Reorganization In September 1999, the Company filed the Plan with the Bankruptcy Court which set forth a plan for repaying or otherwise compensating the Company's creditors in order of relative seniority of their respective claims while seeking to maintain the Company as a going concern. The Plan specifically provided for the conversion of the Company's previously outstanding senior notes and preferred securities into equity interests in the Successor Company and cancellation of all of the prepetition equity interests, as more fully described in the Plan. Substantially all of the Company's other pre- and post petition unsecured liabilities were unaffected by the Plan. 4. Long Term Debt Because the Company's senior notes did not receive the rating required by the note indenture by April 15, 2000, the interest rate on the senior notes increased from 12 1/2% to 13 1/2%, effective as of December 15, 1999. The additional interest is payable in the form of additional senior notes, of which notes in the principal amount of $514,517 were issued on April 15, 2000. The Company is currently seeking the ratings necessary to return the interest rate to 12 1/2%. 5. Income Taxes For the six months ended June 30, 2000, the deferred provision for income taxes was computed using a net estimated annual effective tax rate of 0%. For the six months ended June 30, 2000, a gross deferred benefit was computed using an estimated annual effective tax rate of 36%. Management has determined that a tax valuation allowance is necessary at June 30, 2000 to reduce the deferred tax assets to the amount that will more likely than not be realized. After application of the valuation allowance, the Company's net deferred tax assets and liabilities are zero. The current provision for income taxes represents taxes withheld on foreign source revenue. For the six months ended June 30, 1999, the benefit for income taxes was computed using an estimated annual effective tax rate of 34%, adjusted principally for depreciation on vessels built with capital construction funds. 6. Comprehensive Income The Company has no other component of comprehensive (income) loss except net loss. 7. Earnings Per Share (EPS) Pursuant to the Plan, 10,000,000 new shares of common stock were issued at the Effective Date. In April 2000, warrants to purchase 1,696 shares of common stock were exercised by the holders. Common stock equivalents outstanding during the period ending June 30, 2000, which consist principally of warrants and employee stock options, have not been included in the computation of diluted loss per share, as their effect is antidilutive. 8. Segment Information Revenues by segment and geographic area consist only of services provided to external customers, as reported in the condensed consolidated statements of operations. Consolidated income (loss) from operations by geographic area represents net revenues less applicable costs and expenses related to those revenues. The Company does not have significant intersegment transactions. The following schedule presents information about the Company's operations in its three segments (in thousands):
Predecessor Successor Predecessor Successor Company Company Company Company Three Months Ended Six Months Ended June 30, June 30, ------------------------------- -------------------------------- 1999 2000 1999 2000 -------------- -------------- -------------- -------------- Revenues: Offshore energy support..................... $ 39,097 $ 37,510 $ 84,835 $ 71,729 Harbor and offshore towing.................. 11,252 8,315 22,401 17,046 Marine transportation services.............. 38,655 34,386 72,168 70,043 --------------- --------------- --------------- --------------- Consolidated revenues............................ $ 89,004 $ 80,211 $ 179,404 $ 158,818 ============== ============== ============== ============== Income (loss) from operations: Offshore energy support..................... $ (4,115) $ 2,814 $ (3,236) $ 1,010 Harbor and offshore and towing.............. 3,442 1,309 6,338 2,963 Marine transportation services.............. 5,641 5,379 10,036 10,986 General corporate........................... (5,219) (3,525) (8,961) (6,970) --------------- --------------- --------------- --------------- Consolidated income (loss) from operations....... $ (251) $ 5,977 $ 4,177 $ 7,989 ============== ============== ============== ============== Income (loss) before income taxes: Offshore energy support..................... $ (31,757) $ (7,313) $ (43,514) $ (18,365) Harbor and offshore and towing.............. 2,288 (98) 3,807 388 Marine transportation services.............. 2,902 1,065 (518) 2,352 General corporate........................... (8,800) 4,179 (9,790) 1,572 --------------- --------------- --------------- --------------- Consolidated loss before income taxes............ $ (35,367) $ (2,167) $ (50,015) $ (14,053) ============== ============== ============== ==============
9. Supplemental Condensed Consolidated Financial Information The Senior Notes are fully and unconditionally guaranteed on a joint and several basis by certain of the Company's wholly owned consolidated subsidiaries. A substantial portion of the Company's cash flows are generated by these subsidiaries. As a result, the funds necessary to meet the Company's obligations are provided in substantial part by distributions or advances from these subsidiaries. Under certain circumstances, contractual or legal restrictions, as well as the financial and operating requirements of the Company's subsidiaries, could limit the Company's ability to obtain cash from these subsidiaries for the purpose of meeting its obligations, including the payments of principal and interest on the Senior Notes. The Company has not presented separate financial statements or other discussions concerning the guarantor subsidiaries because management has determined that such information is not material to investors. The following is summarized condensed consolidating financial information for the Company, segregating the parent, the combined guarantor subsidiaries, the combined non-guarantor subsidiaries and eliminations. Condensed Consolidating Balance Sheet (unaudited) (in thousands)
December 31, 1999 ----------------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Assets Current assets: Cash and cash equivalents....... $ 4,830 $ 2,908 $ 7,816 $ 3,492 $ -- $ 19,046 Restricted cash................. 15,027 190 -- -- -- 15,217 Accounts receivable: Trade, net.................... 1,804 23,728 17,579 5,132 (688) 47,555 Insurance claims and other.... 1,866 2,150 3,028 516 (785) 6,775 Marine operating supplies....... (465) 2,481 3,810 4,806 -- 10,632 Prepaid expenses................ 933 918 1,675 487 -- 4,013 ------------ ------------ ------------- ------------ ------------ ------------ Total current assets.......... 23,995 32,375 33,908 14,433 (1,473) 103,238 Property: Construction-in-progress........ -- 541 664 140 -- 1,345 Vessels and improvements........ 9,292 177,938 206,764 304,985 -- 698,979 Furniture and equipment......... 5,822 3,051 2,135 635 -- 11,643 Less accumulated depreciation... (196) (533) (671) (20,687) -- (22,087) ------------ ------------- ------------- ------------ ------------ ------------ Net property.................. 14,918 180,997 208,892 285,073 -- 689,880 Other assets: Deferred costs, net.............. 14,962 4,615 1,454 8,433 -- 29,464 Restricted investments........... -- -- -- 3,752 -- 3,752 Other............................ 455,560 406,592 70,888 8,303 (936,937) 4,406 ------------ ------------- ------------- ------------ ------------ ------------ $ 509,435 $ 624,579 $ 315,142 $ 319,994 $ (938,410) $ 830,740 ============ ============= ============= ============ ============ ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable................ $ 1,383 $ 4,236 $ 4,329 $ 947 $ -- $ 10,895 Current maturities of long-term debt ......................... 12,065 1,891 -- 3,820 (1) 17,775 Current obligations under capital leases................ 555 2,777 -- -- -- 3,332 Accrued interest................ 2,418 -- -- 684 -- 3,102 Accrued liabilities and other... 18,685 7,579 9,635 3,063 (1,473) 37,489 ------------ ------------- ------------- ------------ ------------ ------------ Total current liabilities..... 35,106 16,483 13,964 8,514 (1,474) 72,593 Long-term debt................... 214,212 27,410 -- 224,147 -- 465,769 Obligations under capital leases. 13,662 20,272 -- -- -- 33,934 Senior notes..................... 76,709 -- -- -- -- 76,709 Other............................ 4,425 559 740 226 2 5,952 Minority interest................ -- -- -- -- 10,457 10,457 Commitment and contingencies Stockholders equity: Common stock.................... 100 -- -- -- -- 100 Additional paid-in capital...... 166,786 332,837 301,148 11,143 (645,123) 166,791 Retained earnings (accumulated deficit)....................... (1,565) 227,018 (710) 75,964 (302,272) (1,565) ------------ ------------- ------------- ------------ ------------ ------------ Total stockholders' equity.... 165,321 559,855 300,438 87,107 (947,395) 165,326 ------------ ------------- ------------- ------------ ------------ ------------ $ 509,435 $ 624,579 $ 315,142 $ 319,994 $ (938,410) $ 830,740 ============ ============= ============= ============ ============ ============
Condensed Consolidating Balance Sheet (unaudited) (in thousands)
June 30, 2000 -------------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Assets Current assets: Cash and cash equivalents........... $ 1,142 $ (354) $ 6,817 $ 4,445 $ -- $ 12,050 Restricted cash..................... 8,892 -- -- -- -- 8,892 Accounts receivable: Trade, net........................ 1,428 21,098 24,073 2,931 (537) 48,993 Insurance claims and other........ 618 3,054 2,427 139 -- 6,238 Marine operating supplies........... (349) 2,407 3,287 6,496 (187) 11,654 Prepaid expenses.................... 764 1,801 1,637 2,807 -- 7,009 ----------- ------------ ----------- ----------- ----------- ----------- Total current assets.............. 12,495 28,006 38,241 16,818 (724) 94,836 Property: Construction-in-progress............ 11 349 107 636 187 1,290 Vessels and improvements............ 7,905 171,321 205,667 305,772 -- 690,665 Furniture and equipment............. 5,828 3,107 2,151 635 -- 11,721 Less accumulated depreciation....... (1,702) (7,185) (8,763) (25,393) -- (43,043) ----------- ------------ ------------ ----------- ----------- ----------- Net property...................... 12,042 167,592 199,162 281,650 187 660,633 Other assets: Deferred costs, net.................. 18,747 4,946 1,712 8,053 -- 33,458 Vessels held for sale................ -- 9,720 979 -- -- 10,699 Restricted investments............... -- -- -- 1,660 -- 1,660 Other................................ 444,732 392,180 65,232 3,070 (899,873) 5,341 ----------- ------------ ------------ ----------- ----------- ----------- $ 488,016 $ 602,444 $ 305,326 $ 311,251 $ (900,410) $ 806,627 =========== ============ ============ =========== =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable.................... $ 1,349 $ 3,659 $ 3,436 $ 1,551 $ -- $ 9,995 Current maturities of long-term debt 23,399 1,950 -- 3,820 -- 29,169 Current obligations under capital leases............................ 813 2,909 -- -- -- 3,722 Accrued interest.................... 987 74 -- 679 -- 1,740 Accrued liabilities and other....... 7,339 5,817 13,781 3,319 (537) 29,719 ----------- ------------ ------------ ----------- ----------- ----------- Total current liabilities......... 33,887 14,409 17,217 9,369 (537) 74,345 Long-term debt....................... 204,883 26,301 -- 222,270 -- 453,454 Obligations under capital leases..... 18,449 18,588 -- -- -- 37,037 Senior notes......................... 77,938 -- -- -- -- 77,938 Other................................ 3,690 474 864 238 -- 5,266 Minority interest.................... -- -- -- -- 9,392 9,392 Commitment and contingencies Stockholders equity: Common stock........................ 100 20 -- -- (20) 100 Additional paid-in capital.......... 166,794 333,204 301,169 10,756 (645,103) 166,820 Retained earnings (accumulated deficit).......................... (17,725) 209,448 (13,924) 68,618 (264,142) (17,725) ----------- ------------ ------------ ----------- ----------- ----------- Total stockholders' equity........ 149,169 542,672 287,245 79,374 (909,265) 149,195 ----------- ------------ ------------ ----------- ----------- ----------- $ 488,016 $ 602,444 $ 305,326 $ 311,251 $ (900,410) $ 806,627 =========== ============ ============ =========== =========== ===========
Condensed Consolidating Statement of Operations (unaudited) (in thousands)
Three Months Ended June 30, 1999 ---------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Predecessor Company Revenues................................ $ 12,656 $ 47,203 $ 28,540 $ 14,684 $ (14,079) $ 89,004 Operating expenses: Crew payroll and benefits............. 4,492 8,153 7,273 3,456 (14) 23,360 Charter hire and bond guarantee fee... 486 15,168 -- -- (10,694) 4,960 Repairs and maintenance............... 646 1,984 4,765 241 (14) 7,622 Insurance............................. 325 1,482 1,117 338 -- 3,262 Fuel.................................. 702 1,338 1,370 916 -- 4,326 Consumables........................... 415 2,185 1,542 351 (125) 4,368 Rent and utilities.................... 333 4,452 1,864 2,854 (982) 8,521 ---------- ------------- ------------- ------------- ------------- ---------- Total operating expenses.......... 7,399 34,762 17,931 8,156 (11,829) 56,419 Selling, general and administrative expenses: Salaries and benefits................. 1,271 1,007 1,325 652 -- 4,255 Office................................ 536 288 656 200 -- 1,680 Professional fees..................... 2,495 598 57 347 -- 3,497 Other................................. 654 (21) 2,540 400 (1,562) 2,011 ---------- ------------- ------------- ------------- ------------- ---------- Total overhead expenses............ 4,956 1,872 4,578 1,599 (1,562) 11,443 Depreciation, amortization and drydocking 3,502 6,373 9,205 2,313 -- 21,393 ---------- ------------- ------------- ------------- ------------- ---------- Income (loss) from operations........... (3,201) 4,196 (3,174) 2,616 (688) (251) Other income (expense): Interest expense...................... (379) (9,222) (9,501) (2,882) 2,682 (19,302) Interest income....................... 703 2,041 -- 365 (2,682) 427 Minority interest and equity in earnings of subsidiaries............. (30,513) (25,013) -- 240 53,363 (1,923) Other................................. 738 284 (1,654) (242) 686 (188) Net loss on asset sales............... (2,715) (11,415) -- -- -- (14,130) ---------- ------------- ------------- ------------- ------------- ---------- Total other expense, net.......... (32,166) (43,325) (11,155) (2,519) 54,049 (35,116) ---------- ------------- ------------- ------------- ------------- ---------- Income (loss) before income taxes....... (35,367) (39,129) (14,329) 97 53,361 (35,367) Benefit from income taxes............... (11,649) -- -- -- -- (11,649) ---------- ------------- ------------- ------------- ------------- ---------- Net income (loss)....................... $ (23,718) $ (39,129) $ (14,329) $ 97 $ 53,361 $ (23,718) ========== ============= ============= ============= ============= ==========
Condensed Consolidating Statement of Operations (unaudited) (in thousands)
Three Months Ended June 30, 2000 ---------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Successor Company Revenues................................ $ 8,091 $ 38,775 $ 25,072 $ 16,674 $ (8,401) $ 80,211 Operating expenses: Crew payroll and benefits............. 3,964 8,256 5,747 4,545 (11) 22,501 Charter hire and bond guarantee fee... 498 10,182 -- -- (7,487) 3,193 Repairs and maintenance............... 357 1,618 3,098 712 (6) 5,779 Insurance............................. 263 1,493 999 470 -- 3,225 Fuel.................................. 1,039 2,872 1,549 1,241 -- 6,701 Consumables........................... 399 1,975 1,646 322 (28) 4,314 Rent and utilities.................... 497 2,713 1,875 2,663 (1,220) 6,528 ---------- ------------- ------------- ------------- ------------- ---------- Total operating expenses............ 7,017 29,109 14,914 9,953 (8,752) 52,241 Selling, general and administrative expenses: Salaries and benefits.................. 1,699 1,219 1,521 674 -- 5,113 Office................................. 517 299 551 161 -- 1,528 Professional fees...................... 847 326 134 53 -- 1,360 Other.................................. 469 532 1,353 445 (964) 1,835 ---------- ------------- ------------- ------------- ------------- ---------- Total overhead expenses............... 3,532 2,376 3,559 1,333 (964) 9,836 Depreciation, amortization and drydocking............................ 676 4,066 4,830 2,585 -- 12,157 ---------- ------------- ------------- ------------- ------------- ---------- Income from operations.................. (3,134) 3,224 1,769 2,803 1,315 5,977 Other income (expense): Interest expense...................... (1,065) (5,574) (5,542) (4,847) 592 (16,436) Interest income....................... 735 10 -- 31 (592) 184 Minority interest and equity in earnings of subsidiaries............. (6,576) (20,859) -- (1,490) 29,521 596 Net gain (loss) on asset sales........ -- 776 (133) -- -- 643 Other................................. 7,873 4 305 2 (1,315) 6,869 ---------- ------------- ------------- ------------- ------------- ---------- Total other expense, net.......... 967 (25,643) (5,370) (6,304) 28,206 (8,144) ---------- ------------- ------------- ------------- ------------- ---------- Loss before income taxes................ (2,167) (22,419) (3,601) (3,501) 29,521 (2,167) Provision for income taxes.............. 1,083 -- -- -- -- 1,083 ---------- ------------- ------------- ------------- ------------- ---------- Net loss................................ $ (3,250) $ (22,419) $ (3,601) $ (3,501) $ 29,521 $ (3,250) ========== ============= ============= ============= ============= ==========
Condensed Consolidating Statement of Operations (unaudited) (in thousands)
Six Months Ended June 30, 1999 ---------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Predecessor Company Revenues................................ $ 25,794 $ 95,668 $ 65,783 $ 27,196 $ (35,037) $ 179,404 Operating expenses: Crew payroll and benefits............. 9,127 17,139 15,445 6,514 (22) 48,203 Charter hire and bond guarantee fee... 957 31,891 -- -- (24,326) 8,522 Repairs and maintenance............... 1,116 4,133 8,400 340 (29) 13,960 Insurance............................. 744 3,089 2,276 650 -- 6,759 Fuel.................................. 1,375 2,614 2,512 1,445 -- 7,946 Consumables........................... 747 3,952 4,633 535 (261) 9,606 Rent and utilities.................... 1,262 8,795 3,398 4,568 (1,764) 16,259 ---------- ------------- ------------- ------------- ------------- ---------- Total operating expenses.......... 15,328 71,613 36,664 14,052 (26,402) 111,255 Selling, general and administrative expenses: Salaries and benefits................. 3,055 2,426 2,827 1,320 -- 9,628 Office................................ 1,374 584 1,168 421 -- 3,547 Professional fees..................... 3,161 1,164 206 363 -- 4,894 Other................................. 1,316 724 4,698 702 (3,264) 4,176 ---------- ------------- ------------- ------------- ------------- ---------- Total overhead expenses............ 8,906 4,898 8,899 2,806 (3,264) 22,245 Depreciation, amortization and drydocking....................... 6,917 12,607 17,899 4,304 -- 41,727 ---------- ------------- ------------- ------------- ------------- ---------- Income (loss) from operations........... (5,357) 6,550 2,321 6,034 (5,371) 4,177 Other income (expense): Interest expense...................... (685) (17,222) (17,175) (7,702) 5,179 (37,605) Interest income....................... 1,335 3,965 -- 369 (5,179) 490 Minority interest and equity in earnings of subsidiaries............. (44,442) (24,654) -- 606 65,550 (2,940) Net loss on asset sales............... (2,715) (8,093) (3,322) -- -- (14,130) Other................................. 1,849 103 (7,306) (24) 5,371 (7) ---------- ------------- ------------- ------------- ------------- ---------- Total other expense, net.......... (44,658) (45,901) (27,803) (6,751) 70,921 (54,192) ---------- ------------- ------------- ------------- ------------- ---------- Income (loss) before income taxes....... (50,015) (39,351) (25,482) (717) 65,000 (50,015) Benefit from income taxes............... (17,230) -- -- -- -- (17,230) ---------- ------------- ------------- ------------- ------------- ---------- Net income (loss)....................... $ (32,785) $ (39,351) $ (25,482) $ (717) $ 65,000 $ (32,785) ========== ============= ============= ============= ============= ==========
Condensed Consolidating Statement of Operations (unaudited) (in thousands)
Six Months Ended June 30, 2000 ---------------------------------------------------------------------------------------- Domestic Foreign Non-Guarantor Condensed Guarantor Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Successor Company Revenues................................ $ 19,544 $ 79,303 $ 49,481 $ 33,219 $ (22,729) $ 158,818 Operating expenses: Crew payroll and benefits............. 8,108 17,243 11,684 8,701 (21) 45,715 Charter hire and bond guarantee fee... 989 23,761 49 1,000 (18,372) 7,427 Repairs and maintenance............... 778 3,581 6,660 1,174 (15) 12,178 Insurance............................. 660 2,870 1,935 730 -- 6,195 Fuel.................................. 2,267 5,884 3,322 3,185 -- 14,658 Consumables........................... 659 3,113 3,483 506 (138) 7,623 Rent and utilities.................... 974 4,913 3,639 5,749 (2,320) 12,955 ----------- ------------- ------------- ----------- ------------ ----------- Total operating expenses............ 14,435 61,365 30,772 21,045 (20,866) 106,751 Selling, general and administrative expenses: Salaries and benefits.................. 3,164 2,664 3,190 1,344 -- 10,362 Office................................. 1,002 598 1,131 343 -- 3,074 Professional fees...................... 1,773 525 319 139 -- 2,756 Other.................................. 824 942 3,439 639 (2,401) 3,443 ----------- ------------- ------------- ----------- ------------ ----------- Total overhead expenses............... 6,763 4,729 8,079 2,465 (2,401) 19,635 Depreciation, amortization and drydocking.......................... 1,464 8,608 9,638 4,733 -- 24,443 ----------- ------------- ------------- ----------- ------------ ----------- Income (loss) from operations........... (3,118) 4,601 992 4,976 538 7,989 Other income (expense): Interest expense...................... (1,260) (9,209) (12,644) (8,972) 1,197 (30,888) Interest income....................... 1,559 8 -- 73 (1,197) 443 Minority interest and equity in earnings of subsidiaries............ (19,877) (14,014) -- (3,173) 38,129 1,065 Net gain (loss) on asset sales........ -- 776 (133) -- -- 643 Other................................. 8,643 17 (1,430) 2 (537) 6,695 ----------- ------------- ------------- ----------- ------------ ----------- Total other expense, net.......... (10,935) (22,422) (14,207) (12,070) 37,592 (22,042) ----------- ------------- ------------- ----------- ------------ ----------- Loss before income taxes................ (14,053) (17,821) (13,215) (7,094) 38,130 (14,053) Provision for income taxes.............. 2,107 -- -- -- -- 2,107 ----------- ------------- ------------- ----------- ------------ ----------- Net loss................................ $ (16,160) $ (17,821) $ (13,215) $ (7,094) $ 38,130 $ (16,160) =========== ============= ============= =========== ============ ===========
Condensed Consolidating Statement of Cash Flows (unaudited) (in thousands)
Six Months Ended June 30, 1999 ------------------------------------------------------------------------------ Domestic Foreign Condensed Guarantor Guarantor Non-Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Predecessor Company Operating activities: Net income (loss)................................ $ (32,785) $ (39,351) $ (25,482) $ (717) $ 65,550 $(32,785) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization of property...... 5,380 9,552 14,934 3,970 -- 33,836 Amortization of drydocking costs............... 1,532 2,454 1,942 120 -- 6,048 Amortization of goodwill....................... 6 583 1,023 214 17 1,843 Amortization of discount on long-term debt and financing costs......................... 892 -- -- 651 -- 1,543 Provision for bad debts........................ 19 349 103 -- -- 471 Loss (gain) on disposal of property............ 2,715 8,093 3,322 -- -- 14,130 Deferred income tax benefit.................... (17,230) -- -- -- -- (17,230) Minority partners' equity in earnings loss of subsidiaries, net......................... -- -- -- -- (797) (797) Undistributed earnings of affiliates........... 10,292 24,654 -- (606) (34,340) Other non-cash items........................... 104 -- -- (1) 1 104 Changes in operating assets and liabilities: Accounts receivable......................... 5,319 1,927 7,935 (681) 6 14,506 Other current and long-term assets.......... 27,973 35,817 2,762 (17,322) (56,226) (6,996) Accounts payable and other liabilities...... (2,102) (77) (6,467) (3,138) 3,056 (8,728) ----------- ----------- ----------- ----------- -------- -------- Net cash provided by (used in) operating activities.................... 2,115 44,001 72 (17,510) (22,733) 5,945 Investing activities: Purchases of property.......................... (21,331) (12,325) 1,752 (12,689) 7,748 (36,845) Payments on vessels under construction......... -- (5,102) -- -- -- (5,102) Capital contribution to affiliates............. 9,177 (37,772) 1,364 9,082 14,985 (3,164) Redemption of restricted investments........... -- -- -- 19,592 -- 19,592 ----------- ----------- ----------- ----------- -------- -------- Net cash provided by (used in) investing activities...................... (12,154) (55,199) 3,116 15,985 (22,733) (25,519) Financing activities: Proceeds from short-term borrowings............ -- 5,000 -- -- -- 5,000 Proceeds from long-term borrowings............. 31,008 14,200 -- -- -- 45,208 Repayment of long-term borrowings.............. (21,142) (626) -- -- -- (21,768) Proceeds from issuance of Title XI bonds, net of offering costs.......................... -- -- -- 5,428 -- 5,428 Repayment of Title XI debt..................... (1) -- -- (616) -- (617) Proceeds from sale leaseback................... -- 271 -- -- -- 271 Payment of obligations under capital leases.... (317) (1,074) -- -- -- (1,391) Proceeds from option exercise & ESPP........... 252 -- -- -- -- 252 Repayments of short-term borrowings............ -- (5,000) -- -- -- (5,000) ----------- ----------- ----------- ----------- -------- -------- Net cash provided by financing activities................................. 9,800 12,771 -- 4,812 -- 27,383 ----------- ----------- ----------- ----------- -------- -------- Change in cash and cash equivalents.............. (239) 1,573 3,188 3,287 -- 7,809 Cash and cash equivalents at beginning of period. 1,401 2,099 5,002 1,604 -- 10,106 ----------- ----------- ----------- ----------- -------- -------- Cash and cash equivalents at end of period....... $ 1,162 $ 3,672 $ 8,190 $ 4,891 $ -- $ 17,915 =========== =========== =========== =========== ======== ========
Condensed Consolidating Statement of Cash Flows (unaudited) (in thousands)
Six Months Ended June 30, 2000 ------------------------------------------------------------------------------- Domestic Foreign Condensed Guarantor Guarantor Non-Guarantor Consolidated Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total Successor Company Operating activities: Net loss......................................... $ (16,160) $ (17,821) $ (13,215) $ (7,094) $ 38,130 $ (16,160) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of property... 1,167 6,833 8,794 4,574 -- 21,368 Amortization of drydocking costs............ 297 1,775 844 159 -- 3,075 Amortization of discount on long-term debt and financing costs...................... 2,264 19 -- 336 -- 2,619 Provision for bad debts........................ (208) 112 90 149 -- 143 Gain (loss) on disposal of assets.............. -- (776) 133 -- -- (643) Minority partners' equity in earnings of subsidiaries, net........................... 19,878 14,014 -- 3,173 (38,130) (1,065) Other non-cash items........................... 418 -- 21 -- -- 439 Changes in operating assets and liabilities: Accounts receivable......................... 1,628 1,614 (5,982) 2,428 (936) (1,248) Other current and long-term assets.......... (14,540) 3,368 5,115 (2,107) 186 (7,978) Payment of reorganization items............. (4,494) -- -- -- -- (4,494) Accounts payable and other liabilities...... (8,743) (2,351) 3,377 866 936 (5,915) ----------- --------- ----------- ----------- --------- --------- Net cash provided by (used in) operating activities.................... (18,493) 6,787 (823) 2,484 186 (9,859) Investing activity: Purchases of property.......................... 4,342 (8,276) (176) (1,108) (186) (5,404) Proceeds from disposal of property............. 7,598 -- -- -- -- 7,598 Redemption of restricted investments........... -- -- -- 2,092 -- 2,092 Capital contribution to affiliate.............. -- 639 -- (639) -- -- ----------- --------- ----------- ----------- --------- --------- Net cash provided by (used in) investing activity................................. 11,940 (7,637) (176) 345 (186) 4,286 Financing activities: Proceeds from revolving credit facility........ 14,353 -- -- -- -- 14,353 Repayment of revolving credit facility......... (4,000) -- -- -- -- (4,000) Repayment of long-term borrowings.............. (10,546) (513) -- -- -- (11,059) Repayment of Title XI bonds.................... (2,302) (537) -- (1,876) -- (4,715) Redemption of restricted cash.................. 6,243 190 -- -- -- 6,433 Payment of financing costs..................... (596) -- -- -- -- (596) Payment of obligations under capital leases.... (287) (1,552) -- -- -- (1,839) ----------- --------- ----------- ----------- --------- --------- Net cash provided by (used in) financing activities..................... 2,865 (2,412) -- (1,876) -- (1,423) ----------- ---------- ----------- ------------ --------- ---------- Change in cash and cash equivalents.............. (3,688) (3,262) (999) 953 -- (6,996) Cash and cash equivalents at beginning of period. 4,830 2,908 7,816 3,492 -- 19,046 ----------- --------- ----------- ----------- --------- --------- Cash and cash equivalents at end of period....... $ 1,142 $ (354) $ 6,817 $ 4,445 $ -- $ 12,050 =========== ========= =========== =========== ========= =========
10. Contingencies Under United States law, "United States persons" are prohibited from performing contracts in support of an industrial, commercial, public utility or governmental project in the Republic of Sudan, or facilitating such activities. During 1999, two vessels owned by subsidiaries of the Company performed services for third parties in support of energy exploration activities in Sudan; one of these vessels continued to perform such services until January 31, 2000. The Company has reported these activities to the Office of Foreign Assets Control of the United States Department of the Treasury and to the Bureau of Export Administration of the United States Department of Commerce. Should either of the agencies determine that these activities constituted violations of the laws or regulations administered by them, civil and/or criminal penalties, including fines, could be assessed against the Company and/or certain individuals who knowingly participated in such activities. The Company cannot predict whether any such penalties will be imposed or the nature or extent of any such penalties. In J. Erik Hvide and Betsy Hvide v. Hvide Marine Incorporated, No. 00-5640-02, a civil action filed in March 2000 in the Circuit Court of Broward County, Florida, the Company's former chief executive officer and his wife allege that the Company has breached an agreement to provide Mr. Hvide with severance benefits valued at approximately $1.0 million. Mr. Hvide further alleges that the Company fraudulently induced him to enter into the agreement by making false representations concerning its intention to provide him with benefits. In connection with his fraud claim, Mr. Hvide also seeks unspecified punitive damages. The Company believes that it never reached any agreement with Mr. Hvide concerning compensation relating to his severance, that it did not make any false representations to Mr. Hvide, and that the suit has no merit. The Company intends to vigorously defend the suit. Equal Employment Opportunity Commission Notice of Charge of Discrimination No. 150A024Q. On April 6, 2000, J. Erik Hvide, the Company's former chief executive officer, filed a complaint with the Florida Commission of Human Relations alleging that he was forced to resign from the Company because he is disabled with post-polio syndrome. The complaint was transferred to the Equal Employment Opportunity Commission on May 15, 2000, for administrative reasons. The Company believes that Mr. Hvide was not forced to resign because of his affliction with post-polio syndrome and that his claim has no merit. The Company intends to vigorously defend the claim. From time to time the Company is also party to litigation arising in the ordinary course of its business, most of which is covered by insurance. The holder of voting and disposition rights with respect to approximately 60% of the Company's outstanding common stock has advised the Company that the holder's parent organization is to be acquired by a French company in a transaction scheduled to close in the fourth quarter of this year. Such transaction may be deemed to be a transfer to the French company of the holder's rights for purposes of the U.S.-citizenship requirements of section 27 of the Merchant Marine Act, 1920, commonly referred to as the "Jones Act," in which event the Company would no longer meet the Jones Act's citizenship requirements. The transaction may also be deemed to be a change of control under the Company's debt obligations. The Company and the holder are working to structure the manner in which the rights are held in order to avoid these consequences. While there can be no assurance that such efforts will be successful, the Company believes that they will be. Any failure of the Company to meet the citizenship requirements of the Jones Act would result in its vessels being prohibited from engaging in the U.S. domestic trade, which accounts for the majority of the Company's revenues, and would also result in covenant defaults under all of the company's outstanding debt instruments. A change in control as defined in the Company's credit agreement and senior note indenture would result in a default under the credit agreement and a repurchase obligation with respect to the outstanding senior notes. 11. Recent Accounting Pronouncements In June 1999, the Financial Standards Boards ("FASB") issued SFAS 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement 133. The Statement defers the effective date of SFAS 133 to fiscal 2001. Management is evaluating SFAS 133 and does not believe that adoption of the Statement will have a material impact on its financial statements. In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes the requirements that must be met in order to recognize revenue and provides guidance for disclosure of revenue recognition policies. In June 2000, the SEC issued SAB No. 101B which delays the implementation date of SAB 101 until no later than the fourth quarter of fiscal 2000. The Company does not expect the adoption of SAB 101 to have a material effect of its financial position or results of operation. In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), " Accounting for Certain Transactions Involving Stock Compensation", an interpretation of APB Opinion No. 25 ("APB 25"). FIN 44 clarifies the application of APB 25 with respect to: the definition of an employee for the purposes of applying APB 25, the criteria for determining whether a plan qualifies as a non-compensatory plan, the accounting consequences of various modifications of the terms of a previously fixed stock option or awards, and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions cover specific events that occur after either December 15, 1998 or January 12, 2000. The Company does not expect the adoption of FIN 44 to have a material effect of its financial position or results of operations. 12. Subsequent Events In July and August 2000, the Company sold three barges and three tugs for aggregate cash proceeds of $11.2 million. Substantially all of the cash proceeds were used to repay principal under the term loans of the Credit Facility. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" in this report for additional information. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Report and the 1999 Form 10-K. The MD&A contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact, included in the MD&A are forward-looking statements. Although the Company believes that the expectations and beliefs reflected in such forward-looking statements are reasonable, it can give no assurance that they will prove correct. For information regarding the risks and uncertainties that could cause such forward-looking statements to prove incorrect, see "Projections and Other Forward-Looking Information" in Item 1 of the 1999 Form 10-K. 21 Revenue Overview Marine Support Services Revenue is derived from marine support services provided by the Company's offshore energy support fleet and offshore and harbor towing operations. Offshore Energy Support. 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, which are in turn heavily dependent upon the price of crude oil. Further, in many areas where the Company conducts offshore energy support operations (particularly the U.S. Gulf of Mexico), contracts for the utilization of offshore service vessels commonly include termination provisions with three- to five-day notice requirements and no termination penalty. As a result, companies engaged in offshore energy support operations (including the Company) are particularly sensitive to changes in market demand. The following table sets forth average day rates achieved by the offshore supply boats and crew boats owned and operated by the Company in the U.S. Gulf of Mexico and their average utilization for the periods indicated.
1999 2000 ------------------------------------------- ---------------------- Q1 Q2 Q3 Q4 Q1 Q2 Number of supply boats at end of period... 21 21 21 21 21 23 Average supply boat day rates(1) ......... $4,530 $4,049 $3,596 $3,379 $3,740 $3,895 Average supply boat utilization(2)........ 70% 69% 75% 73% 71% 63% Number of crew boats at end of period(3).. 33 33 33 33 33 32 Average crew boat day rates(1)(3)......... $2,097 $1,864 $1,754 $1,827 $1,850 $1,926 Average crew boat utilization(2)(3)....... 69% 72% 75% 87% 78% 77%
- ---------------------------- (1) Average day rates are calculated based on vessels operating domestically by dividing total vessel revenue by the total number of days of vessel utilization. (2) Utilization is based on vessels operating domestically and determined on the basis of a 365-day year. Vessels are considered utilized when they are generating charter revenue. (3) Excludes utility boats. As indicated in the above table, supply boat average day rates declined during 1999 but improved during the first half of 2000; the increase was due to an increase in offshore exploration and production activities. Supply boat utilization declined during the second quarter of 2000 as several vessels were out of service for repair and several vessels were transferred to the U.S. Gulf from other markets. At July 15, 2000, supply boat day rates averaged approximately $4,300. This reflects a continued increase over levels experienced in the first half of 2000 and results from increased exploration and production activities. Crew boat day rates also declined during 1999 and have improved slightly during the first half of 2000. Utilization decreased during the first quarter of 2000 due to weather conditions and a seasonal decline in demand which began to reverse towards the end of the second quarter. At July 15, 2000, crew boat day rates averaged approximately $2,000. The following table shows average rate and average utilization information for foreign operations:
1999 2000 ------------------------------------------- --------------------- Q1 Q2 Q3 Q4 Q1 Q2 --------- --------- --------- --------- -------------------- Number of anchor handling tug/supply boats........ 67 69 67 67 67 67 Average anchor handling tug/supply boat day rates. $4,817 $5,433 $4,662 $4,803 $4,290 $4,471 Average anchor handling tug/supply boat utilization(1)................................. 61% 49% 49% 47% 56% 63% Number of crew/utility boats...................... 38 39 39 39 39 39 Average crew/utility boat day rates(1)............ $1,543 $1,559 $1,629 $1,749 $1,551 $1,618 Average crew/utility boat utilization(2).......... 65% 48% 47% 52% 40% 41%
- ------------------------------- (1) Average day rates are calculated based on vessels operating internationally by dividing total vessel revenue by the total number of days of vessel utilization. (2) Utilization is based on vessels operating internationally and determined on the basis of a 365-day year. Vessels are considered utilized when they are generating charter revenue. As indicated in the above table, foreign anchor handling tug/supply boat average date rates fluctuated during 1999 and declined during the first quarter of 2000; the fluctuations and decline were primarily due to lower rates in West Africa. Average day rates improved slightly during the second quarter of 2000 due to overall increased activity. Utilization declined during 1999 and increased during the first quarter of 2000 primarily due to fluctuations in drilling activity in the Middle East and West Africa. Utilization improved during the second quarter of 2000 due to overall increased activity. At July 15, 2000, day rates for foreign anchor handling tug/supply boats averaged approximately $4,300. Foreign crew/utility boat average day rates declined during the first quarter of 2000 and improved slightly during the second quarter of 2000. The lower utilization since the first quarter of 2000 is primarily due to the political and civil unrest in parts of Africa. At July 15, 2000, day rates for foreign crew/utility boats averaged approximately $1,700. Harbor and Offshore Towing. Revenue derived from the Company's tug operations is primarily a function of the number of tugs available to provide services, the rates charged for their services, and the volume of vessel traffic requiring docking and other ship-assist services. Vessel traffic, in turn, is largely a function of the general trade activity in the region served by the port. Marine Transportation Services Generally, demand for industrial petrochemical transportation services coincides with overall economic activity. Overview of Operating Expenses and Capital Expenditures The Company's operating expenses are primarily a function of fleet size and utilization. The most significant expense categories are crew payroll and benefits, charter hire, maintenance and repairs, fuel, and insurance. For general information concerning these categories of operating expenses as well as capital expenditures, see the corresponding section in the 1999 Form 10-K. Results of Operations Upon the Effective Date of its Chapter 11 reorganization the Company adopted fresh start accounting in accordance with SOP 90-7. See Note 1 to the condensed consolidated financial statements. Thus the Company's balance sheets and statements of operations and cash flows after the Effective Date reflect a new reporting Company and are not comparable to periods prior to the Effective Date. The three months ended June 30, 1999 and 2000 include the results of the Predecessor Company and the Successor Company, respectively. The principal difference between these periods relate to reporting changes regarding the Company's capital structure, changes in indebtedness and the revaluation of the Company's long-term assets to reflect reorganization value at the Effective Date. These changes primarily affect depreciation, amortization and drydocking expense and interest expense in the Company's result of operations. The following table sets forth certain selected financial data and percentages of net revenue for the periods indicated:
Three Months ended June 30, Six Months ended June 30, --------------------------------------------- --------------------------------------------- 1999 2000 1999 2000 -------------------- -------------------- -------------------- -------------------- (in millions) Revenues.................. $ 89.0 100% $ 80.2 100% $ 179.4 100% $ 158.8 100% Operating expenses........ 56.4 63 52.2 65 111.3 62 106.8 67 Overhead expenses......... 11.4 13 9.8 12 22.2 12 19.6 12 Depreciation, amortization And drydocking expense.. 21.4 24 12.2 15 41.7 23 24.4 15 ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- Income from operations.... $ 0.3 0% $ 6.0 7% $ 4.2 2% $ 8.0 5% ========== ========== ========== ========== ========== ========== ========== ========== Interest expense, net..... $ 18.9 21% $ 16.4 20% $ 37.1 21% $ 30.9 20% ========== ========== ========== ========== ========== ========== ========== ========== Net loss.................. $ (23.7) (27)% $ (3.3) (4)% $ (32.8) (18)% $ (16.2) (10)% ========== ========== ========== ========== ========== ========== ========== ==========
Three months ended June 30, 2000 compared with the three months ended June 30, 1999 Revenues. Revenues decreased 10% to $80.2 million for the three months ended June 30, 2000, from $89.0 million for the three months ended June 30, 1999, primarily due to lower revenue from the Company's harbor and offshore towing and marine transportation services operations. Revenue from offshore energy operations decreased 4% for the three months ended June 30, 2000 compared to the 1999 period, primarily due to lower day rates and utilization resulting from the decline in offshore exploration and production activity. During the 2000 period, average domestic day rates for supply boats owned, operated, or managed by the Company declined 4% from the 1999 period, while average domestic day rates for crew boats owned, operated, or managed by the Company increased 3% from the 1999 period. Average international day rates for anchor handling tug/supply boats fell 18% to $4,471 from $5,433, while average international day rates for crew/utility boats increased less than 4% to $1,618 from $1,559. Harbor and offshore towing revenue decreased 26% to $8.3 million from $11.3 million primarily due to a decline in the Company's offshore towing operations and overall decreased activity in harbor towing operations resulting from increased competition in the Port of Tampa and decreased activity in Port Everglades, Lake Charles and Port Arthur. Marine transportation revenue decreased 11% to $34.4 million from $38.7 million, primarily due to the retirement of two vessels, the scheduled drydocking of the Seabulk America and the installation of modifications to the HMI Cape Lookout Shoals required for its service in Alaska. Operating Expenses. Operating expenses decreased 7% to $52.2 million for the three months ended June 30, 2000 from $56.4 million for the corresponding 1999 period, primarily due to decreases in crew payroll and benefits, maintenance and repair, and supplies and consumables resulting from decreased business activity. As a percentage of revenue, operating expenses increased to 65% for the three months ended June 30, 2000 from 63% for the corresponding 1999 period, due to a reduction in the Company's marine transportation services fleet resulting in a decrease in revenue and an increase in ongoing expenses such as fuel and insurance costs. Overhead Expenses. Overhead expenses decreased 14% to $9.8 million from $11.4 million, primarily due to a reduction in professional fees. As a percentage of revenue, overhead expenses decreased to only 12% from 13%, due to the corresponding decrease in revenue. Depreciation, Amortization and Drydocking Expense. Depreciation, amortization and drydocking expense decreased 43% to $12.2 million for the three months ended June 30, 2000, compared with $21.4 million for the three months ended June 30, 1999 due to the decrease in book value of property, goodwill and deferred costs as a result of the reorganization. Income (loss) from Operations. Operations resulted in income of $6.0 million, or 7% of revenue, for the three months ended June 30, 2000 compared to a loss of $0.3 million for the three months ended June 30, 1999, as a result of the factors noted above. Net Interest Expense. Net interest expense decreased 15% to $16.0 million, for the three months ended June 30, 2000 from $18.9 million, for the corresponding 1999 period, primarily as a result of the reorganization and conversion of the Predecessor Company senior notes and preferred securities to the Successor Company's common stock. Net Income (Loss). The Company had a net loss of $3.0 million for the three months ended June 30, 2000, compared to a net loss of $23.7 million for the three months ended June 30, 1999, primarily as a result of the factors noted above and the loss in the 1999 period of $14.1 million on asset sales. Six months ended June 30, 2000 compared with the six months ended June 30, 1999 Revenues. Revenues decreased 11% to $158.8 million for the six months ended June 30, 2000, from $179.4 million for the six months ended June 30, 1999, primarily due to lower revenue from offshore energy support and harbor and offshore towing operations. Revenue from offshore energy operations decreased 15% to $71.7 from $84.8, primarily due to lower utilization and day rates resulting from the decline in offshore exploration and production activity. Harbor and offshore towing revenue decreased 24% to $17.0 from $22.4 million, primarily due to vessel sales and the decline in the Company's offshore towing operations and overall decreased activity in harbor towing operations resulting from increased competition in the Port of Tampa and decreased activity in Port Everglades, Lake Charles and Port Arthur. Marine transportation revenue decreased 3% to $70.0 million from $72.2, primarily due to a decrease in rates and the drydocking of one tanker and modification of another, the shifting of one vessel from grain transportation which is a higher revenue generator, and the reduction of the tanker fleet. Operating Expenses. Operating expenses decreased 4% to $106.8 million for the six months ended June 30, 2000 from $111.3 million for corresponding 1999 period, primarily due to decreases in crew payroll and benefits, maintenance and repair, and supplies and consumables resulting from decreased business activity. As a percentage of revenue, operating expenses increased to 67% for the six months ended June 30, 2000 from 62% for the six months ended June 30, 1999, due to the decline in revenues from the Company's marine transportation services business and an increase in ongoing expenses such as fuel and insurance costs. Overhead Expenses. Overhead expenses decreased 12% to $19.6 million from $22.2 million, primarily due to a reduction in professional fees. As a percentage of revenue, overhead expenses was 12% for the six month period ended June 30, 2000 and the corresponding 1999 period. Depreciation, Amortization and Drydocking Expense. Depreciation, amortization and drydocking expense decreased 41% to $24.4 million from $41.7 million, due to the decrease in book value of property, and the write-off of goodwill and deferred costs as a result of the reorganization. Income from Operations. Income from operations increased 52% to $8.0 million, or 5% of revenue, from $4.2 million, as a result of the factors noted above. Net Interest Expense. Net interest expense decreased 18% to $30.4 million from $37.1 million, primarily as a result of the reorganization and conversion of the Predecessor Company senior notes and preferred securities to shares of the Successor Company's common stock. Net Income (Loss). The Company had a net loss of $16.2 million for the six months ended June 30, 2000 compared to a net loss of $32.8 million for the six months ended June 30, 1999 primarily as a result of the factors noted above. Liquidity and Capital Resources Background. The Company's capital requirements arise primarily from its need to service debt, fund working capital, and maintain and improve its vessels. Historically, the Company's principal sources of cash have been equity and debt financing and cash provided by operations. As a result of the declines in rates and utilization of its offshore energy support vessels that led to its Chapter 11 reorganization operating income was substantially reduced in 1999 and the first six months of 2000 reducing the availability of cash from operations to fund the Company's capital requirements. The Company's principal and interest payment obligations and operating lease obligations for the last two quarters of 2000 are estimated to be approximately $79.6 million $2.0 million, respectively. Capital requirements for fleet maintenance and improvements are currently expected to aggregate $15.0 million during the remainder of 2000. In view of declines in day rates, particularly in the U.S. Gulf of Mexico, and the possibility that rates will remain at low levels, the Company has curtailed or deferred certain capital and other expenditures. The above amounts do not include capital and other expenditures relating to the five Lightship Tankers in which the Company currently holds a 75.8% equity interest (see Note 1 to the condensed consolidated financial statements). During the remainder of 2000, an estimated $9.7 million of principal and interest payments are due on the Title XI ship financing bonds for these vessels. During the first six months of 2000, the Company used $9.9 million of cash from operations primarily reflecting the net loss for the period, after elimination of noncash items. Cash provided by investing activities was approximately $4.3 million for the period, primarily reflecting the costs of capital improvements to vessels and proceeds from the sale of vessels. Cash used in financing activities was approximately $1.4 million consisting primarily of proceeds from the revolving credit facility, offset by repayments of borrowings. Liquidity Concerns. As a result of the severe worldwide downturn in offshore oil and gas exploration, development and production activities beginning in 1998 and continuing and deepening during 1999, substantial declines in offshore energy support vessel day rates and utilization adversely affected the Company's operating results during 1999 and led to its Chapter 11 reorganization. The results for the first six months of 2000 continue to be adversely affected by the weak market conditions in the offshore markets although this situation appears to be improving. The Reorganization. The Company's reorganization plan became effective on December 15, 1999. The details of the plan are reported in the 1999 Form 10-K In connection with the restructuring 10,000,000 shares of common stock were issued. The 9,800,000 shares received by the holders of the Predecessor Company's senior notes represent 98.0% of the Company's currently outstanding common stock and 89.3% of its common stock assuming exercise of all outstanding warrants. The 200,000 shares received by holders of the Predecessor Company's trust preferred securities represent 2.0% of the Company's currently outstanding common stock and 1.8% of its common stock assuming exercise of the warrants. The Company also obtained new credit facilities from a group of financial institutions. The new facilities, totaling $320.0 million, consist of $200.0 million in term loans, a $25.0 million revolving credit facility, and $95.0 million in aggregate principal amount at maturity of 12 1/2% senior secured notes due 2007. A portion of the proceeds from these facilities was used to repay all outstanding borrowings under the Predecessor Company's bank loans and to pay administrative and other fees and expenses. The balance of the proceeds is being used for working capital and general corporate purposes. The terms of the term loans and revolving credit facility are contained in a credit agreement between the Company and the financial institutions. The credit agreement provides for the following facilities:
Interest Rate as of Facility Amount Maturity August 1, 2000 -------- ------ -------- -------------- Tranche A term loan $75 million 2004 9.89% Tranche B term loan $30 million 2005 10.39% Tranche C term loan $95 million 2006 10.89% Revolving credit facility $25 million 2004 9.89%
The interest rate for borrowings under the credit agreement is set from time to time at the Company's option, subject to certain conditions set forth in the credit agreement, at either: o the higher of the rate that the administrative agent announces from time to time as its prime lending rate and 1/2 of 1% in excess of the overnight federal funds rate, plus a margin ranging from 2.25% to 4.25% or o a rate based on a percentage of the administrative agent's quotation to first-class banks in the New York interbank Eurodollar market for dollar deposits, plus a margin ranging from 3.25% to 4.25%. Borrowings under the credit agreement are secured by first priority perfected security interests in equity of certain of the Company's subsidiaries and by first priority perfected security interests in certain of the vessels and other assets owned by the Company and its subsidiaries. In addition, certain of the Company's subsidiaries have guaranteed its obligations under the credit agreement. The credit agreement contains customary covenants that require the Company, among other things, to meet certain financial ratios and that prohibit it from taking certain actions and entering into certain transactions. At June 30, 2000, approximately $10.4 million was outstanding under the revolving credit facility. On June 30, 2000, the Company made the following payments under the term loans: Tranche A, $5.2 million, Tranche B, $1.3 million and Tranche C, $4.0 million. The senior secured notes are senior obligations and are secured by a second priority lien on the same assets that secure borrowings under the credit agreement. The notes are unconditionally guaranteed by all of the Company's subsidiaries that have guaranteed borrowings under the credit agreement. The notes were issued at 90.0% of their face value, for gross proceeds of $85.5 million. The notes were issued under an indenture among the Company, the subsidiary guarantors and financial institutions serving as trustee and collateral agent. The indenture contains customary covenants that, among other things, restrict the Company's ability to incur additional debt, sell assets, and engage in mergers and transactions with affiliates. As consideration for the purchase of the notes and as compensation for certain financial services, the Company issued to the purchasers of the notes noteholder warrants to purchase 6.75% of the Company's common stock on a fully diluted basis after giving effect to the exercise of these warrants at an exercise price of $.01 per share for a term of seven and one-half years. Recent Developments. Because the senior secured notes did not receive the rating from the rating agencies required under the note indenture, to have been received by April 15, 2000, the interest rate of the notes has increased from 12 1/2% to 13 1/2% effective December 15, 1999. The indenture requires that such additional interest be paid in the form of additional notes, of which notes in aggregate principal amount of $514,517 were issued on April 15, 2000. The Company is currently seeking the required ratings which would return the interest rate to 12 1/2%. Due to continuing weakness in day rates and utilization in the offshore energy support business, as well as adverse market conditions in the Company's towing and transportation businesses, the Company was not in compliance with certain covenants in its bank credit agreement as of March 31, 2000, and anticipated that it would not be in compliance on future dates if market conditions did not improve. The Company entered into an amendment to the credit agreement with the lending banks under which the relevant covenants were modified through March 31, 2001 and the Company was required to prepay principal under the term loans of $10.0 million before June 30, 2000, and will be required to prepay an additional $25.0 million before August 31, 2000, and $25.0 million before January 1, 2001. The Company is selling vessels and other assets to obtain the funds with which to make these payments. Some of these sales may be at less than book value. The amended credit agreement further provides that, in the event the Company has not made the required principal payments as scheduled or achieved certain target levels of EBITDA for the third and fourth quarters of 2000, the lending banks may require the Company to sell additional vessels, to be selected by the lending banks, with an aggregate fair market value of $35.0 million on a timetable specified by the lending banks. Additionally, the Company is required to obtain the consent of the lending banks to borrow in excess of $17.5 million under the revolving loan portion of the credit facility. In connection with the amendment of the credit agreement, the Company paid a fee of $4.5 million to the lending banks in the form of a promissory note, accruing interest at 15% per annum, due the earlier of (i) April 2002 or (ii) the date on which the ratio of funded indebtedness to EBITDA for any quarter is less than four to one. On June 29, 2000, the Company entered into a second amendment to the Credit Facility which extended the deadline for prepayment of $10.0 million under the term loans from June 30, 2000 to July 17, 2000. The Company has met this deadline. The Second Amendment also expanded the Company's flexibility in determining which assets to sell to obtain the funds to make the principal payments of term loans required under the first amendment. As of August 7, 2000, the Company had prepaid term loans of $18.6 million from the proceeds of asset sales and expects to receive at least $2.3 million of proceeds from additional assets sales by the end of August. The Company believes that operating cash flow, amounts available under its revolving credit facility and anticipated proceeds from the sale of vessels will be sufficient for it to meet its debt service obligations, apart from the prepayments described above, and other capital requirements through 2000. It is uncertain, however, whether proceeds from the sale of assets will be sufficient to enable it to satisfy the prepayment obligations as currently scheduled or whether it will be required to seek further extension of the prepayment deadlines. As the Company's operating cash flow is dependent on factors beyond the Company's control, moreover, including general economic conditions and conditions in the markets the Company serves, there can be no assurance that actual operating cash flow will meet expectations. Recent Developments The holder of voting and disposition rights with respect to approximately 60% of the Company's outstanding common stock has advised the Company that the holder's parent organization is to be acquired by a French company in a transaction scheduled to close in the fourth quarter of this year. Such transaction may be deemed to be a transfer to the French company of the holder's rights for purposes of the U.S.-citizenship requirements of section 27 of the Merchant Marine Act, 1920, commonly referred to as the "Jones Act," in which event the Company would no longer meet the Jones Act's citizenship requirements. The transaction may also be deemed to be a change of control under the Company's debt obligations. The Company and the holder are working to structure the manner in which the rights are held in order to avoid these consequences. While there can be no assurance that such efforts will be successful, the Company believes that they will be. Any failure of the Company to meet the citizenship requirements of the Jones Act would result in its vessels being prohibited from engaging in the U.S. domestic trade, which accounts for the majority of the Company's revenues, and would also result in covenant defaults under all of the company's outstanding debt instruments. A change in control as defined in the Company's credit agreement and senior note indenture would result in a default under the credit agreement and a repurchase obligation with respect to the outstanding senior notes. PART II. OTHER INFORMATION Item 1. Legal Proceedings For information concerning certain legal proceedings see Note 10 of the financial statements. Item 4. Submission of Matters to a Vote of Security Holders The Company held its annual meeting of shareholders on June 15, 2000. At the meeting, the shareholders elected the following individuals to three-year terms as Class I members of the Board of Directors: James J. Gaffney and Robert L. Keiser. The voting results of the election of directors and the other matters voted upon at the meeting are as follows: Election of Directors:
Votes Withheld Nominee: For Authority James J. Gaffney........................................ 4,984,958 32,050 Robert L. Keiser........................................ 4,984,958 32,050
Other Matters:
Abstentions and Description of Votes Votes Broker Matter For Against Non-Votes Approval of the Company's Amended and Restated Equity Ownership Plan...................... 4,029,322 741,840 43 Approval of the Company's Stock Option Plan for Directors.................................. 4,465,776 305,386 43 Approval of the appointment of Ernst & Young LLP as the Company's independent public accountants............................... 5,012,599 4,409 0
Item 6. Exhibits and Reports on Form 8-K. None 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 Date: August 14, 2000 EX-27 2 0002.txt FDS --
5 1000 U.S. DOLLARS 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 12,050 0 54,710 (5,717) 0 94,836 703,676 (43,043) 806,627 74,345 601,320 0 0 100 149,095 806,627 0 158,818 0 106,751 0 143 30,888 (14,053) 2,107 (16,160) 0 0 0 (16,160) (1.62) (1.62)
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