SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File Number 0-28732
SEABULK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0966399
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2200 Eller Drive, P.O. Box 13038
Ft. Lauderdale, Florida 33316
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 523-2200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant at March 1, 2001 (based on the closing price of
such stock on the Nasdaq National Market) was $85,525,469.
At March 1, 2001 there were 10,145,370 shares of the registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
Proxy Statement for Annual Meeting
to be held May 17, 2001 (specified portions) Part III
SEABULK INTERNATIONAL, INC.
2000 FORM 10-K
Table of Contents
Item Page
---- ----
Part I
1 Business........................................................................................... 3
2 Properties......................................................................................... 17
3 Legal Proceedings.................................................................................. 17
4 Submission of Matters to a Vote of Security Holders................................................ 18
4A Executive Officers of the Registrant............................................................... 18
Part II
5 Market for Registrant's Common Equity and Related Stockholder Matters.............................. 21
6 Selected Financial Data............................................................................ 22
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................................... 25
7A Quantitative and Qualitative Disclosures About Market Risk......................................... 38
8 Financial Statements............................................................................... 38
9 Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure......................................................................................... 38
Part III
10 Directors and Executive Officers of the Registrant................................................. 39
11 Executive Compensation............................................................................. 39
12 Security Ownership of Certain Beneficial Owners and Management..................................... 39
13 Certain Relationships and Related Transactions..................................................... 39
Part IV
14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................... 40
Financial Supplement
Consolidated Financial Statements and Schedules.................................................... F-1
PART I
Item 1. Business
General
Seabulk International, Inc. is the new name for Hvide Marine
Incorporated. The change was effective March 19, 2001 and symbolizes the
Company's transformation under new management and new ownership into a strong
competitor in each of its three main businesses - offshore energy support,
marine transportation, and towing. We have been an active consolidator in each
of the markets in which we operate, increasing our fleet from 23 vessels in 1993
to 238 vessels at year-end 2000. Our offshore energy services fleet, numbering
173 vessels, is one of the world's largest and provides services to operators of
offshore oil and gas exploration, development and production facilities in the
Gulf of Mexico, the Arabian Gulf, offshore West Africa, and Southeast Asia. Our
marine transportation fleet, numbering ten tankers, eight towboats, and fourteen
barges, carries petroleum products, crude oil, and specialty chemicals in the
U.S. domestic trade and includes five new double-hull petroleum product and
chemical carriers delivered in 1998 and 1999. Our towing fleet numbers 33
vessels and is one of the largest and most modern in the United States. We are
the sole provider of commercial tug services at Port Everglades and Port
Canaveral, Florida; and a leading provider of those services in Tampa, Florida;
Mobile, Alabama; Lake Charles, Louisiana; and Port Arthur, Texas. We also
provide offshore towing services primarily in the Gulf of Mexico.
From September 9 to December 15, 1999, we operated under the protection
of the reorganization provisions of Chapter 11 of the U.S. Bankruptcy Code. For
more information on this subject, see "Our Reorganization." As used in this
Report, the terms "we" and "the Company" refer to Seabulk International, Inc., a
Delaware corporation, formerly known as Hvide Marine Incorporated, and its
subsidiaries. Our principal executive offices are located at 2200 Eller Drive,
P.O. Box 13038, Fort Lauderdale, Florida 33316, and our telephone number is
(954) 523-2200.
Projections and Other Forward-Looking Information
This Report contains, and other communications by us may contain,
projections or other "forward-looking" information. Forward-looking information
includes all statements regarding our expected financial position, results of
operations, cash flows, financing plans, business strategy, budgets, capital and
other expenditures, competitive position, growth opportunities for existing or
new services, management plans and objectives, and markets for securities. Like
other businesses, we are subject to risks and other uncertainties that could
cause our actual results to differ materially from any projections or that could
cause other forward-looking information to prove incorrect. In addition to
general economic and business risks, some of the specific risks to which our
business is subject are:
o declines in oil or gas prices, which tend to cause reductions in
exploration, development and production activities and, in turn, reductions
in the use of offshore energy support vessels and in the rates paid for
their use;
o increased construction of new offshore energy support vessels or
construction of new Jones Act tankers by competitors, which can cause
oversupply in the market and consequent reductions in the use of our
offshore energy support vessels and Jones Act tankers and reductions in the
rates paid for their use;
o international political instability, which can lead to reductions in
exploration, development and production activities, particularly in less
developed regions;
o fluctuations in weather, which can lead to declines in energy consumption
and resulting declines in oil or gas prices;
o changes in laws and regulations affecting the marine transportation
industry, including any possible weakening of the Jones Act, which could
result in increased competition from non-U.S. companies in our domestic
offshore energy support, towing, and petroleum and chemical product
transportation businesses; and
o changes in environmental laws and regulations, including any possible
weakening of the U.S. Oil Pollution Act of 1990 ("OPA 90"), which could
result in increased competition for the petroleum and chemical product
transportation services provided by our modern double-hull fleet.
o risks associated with potential oil spills or other environmental pollution
incidents which, although believed to be covered by liability insurance,
may result in adverse market reaction and loss of business.
Additional information regarding these and other factors affecting our
business appears elsewhere in this Report.
Our Reorganization
Under our reorganization plan, which became effective on December 15,
1999 ("Effective Date"):
o the holders of the $300.0 million of senior notes received 9,800,000 shares
of our common stock (representing 98.0% of our then-outstanding common
stock) in exchange for their notes;
o the holders of the $115.0 million of trust preferred securities received
200,000 shares of our common stock (representing 2.0% of our
then-outstanding common stock), as well as Class A Warrants to purchase an
additional 125,000 shares at $38.49 per share, in exchange for those
securities;
o our former stockholders received Class A Warrants to purchase a total
of 125,000 shares of our common stock;
o claims of general and trade creditors were unaffected; and
o we reincorporated from Florida to Delaware.
We 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 new 12.5% senior secured
notes due 2007. As consideration for the purchase of the senior secured notes
and as compensation for certain financial services, we issued to the purchasers
of the notes and to the investment advisors Noteholder Warrants to purchase
723,861 shares of our common stock at an exercise price of $.01 per share.
Substantially all of the proceeds from these facilities were used to repay all
outstanding borrowings under our prior bank loans and to pay administrative and
other fees and expenses. The balance of the proceeds, $7.8 million, and the
$25.0 million revolving credit facility were designated to be used for working
capital and general corporate purposes.
The Reorganized Company. Although our reorganization significantly
reduced our debt, we still have substantial debt and debt service requirements,
both in absolute terms and in relation to stockholders' equity. Our ability to
meet our debt service obligations depends on a number of factors, including our
ability to maintain operating cash flow, which in turn depends in large part
upon day rates and utilization in the offshore energy support business. Despite
substantial increases in oil and gas prices over the last eighteen months, day
rates for our offshore energy services fleet did not improve significantly until
the second half of 2000, resulting in a series of amendments to the Company's
credit agreement, as follows:
1) In April 2000, anticipating that we would not be in compliance with certain
covenants in our credit agreement as of March 31, 2000, we entered into an
amendment to the credit agreement under which the relevant covenants were
modified through March 31, 2001, and we were required to repay principal
under the term loans aggregating $10.0 million before June 30, 2000, $35.0
million before August 31, 2000, and $60.0 million before January 1, 2001.
The amended credit agreement further provided that, in the event we did not
make the required principal payments as scheduled or achieve certain target
levels of EBITDA for the third and fourth quarters of 2000, the lending
banks could require us 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, we are 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. The
Company paid a fee of $4.5 million to the lending banks in connection with
the amendment of the credit agreement in the form of a promissory note
accruing interest quarterly at 15.0% per annum, due the earlier of (i)
April 2002 or (ii) the date on which the ratio of our funded indebtedness
to EBITDA for any quarter is less than four to one.
2) In June 2000, the Company entered into an amendment to the credit agreement
that provided the Company with additional flexibility in selecting which
vessels it could sell and extended the first prepayment date from June 30,
2000 to July 17, 2000. The Company complied with this revised repayment
date.
3) In August 2000, as industry conditions in the offshore segment continued to
improve, the Company entered into a further amendment to the credit
agreement that reduced the year-end repayment obligation from $60.0 million
to $40.0 million and expanded the Company's flexibility in determining
which assets to sell.
4) In December 2000, the Company entered into a further amendment to the
credit agreement whereby the obligation to repay $40.0 million of term loan
debt by year-end was eliminated. The Company repaid a total of $25.3
million in 2000 from the sale of 39 surplus or underutilized vessels.
In addition, the senior secured notes did not receive by April 15, 2000
the rating from the rating agencies required under the note indenture. As a
result, the interest rate for the notes increased from 12.5% to 13.5% effective
December 15, 1999. The indenture requires that the additional interest be paid
in the form of additional notes, of which notes in the amount of $514,583;
$238,786; and $239,383 were issued on June 30, September 30, and December 31,
2000, respectively. The Company is currently seeking the required ratings that
would return the interest rate to 12.5%.
Recent Developments
New Name and Stock Symbol: On March 19, 2001, the Company changed its
name to Seabulk International, Inc. from Hvide Marine Incorporated. On March 21,
2001, the Company's stock symbol on the Nasdaq National Market changed to SBLK
from HVDM. Throughout 2000, the Company's stock traded on the OTC Bulletin Board
under the symbol HVDM. On January 2, 2001, it began trading on the Nasdaq
National Market.
New Warrant Symbol: On March 21, 2001, the symbol for the Company's
Class A Warrants changed to SBLKW from HVDMW. The Class A Warrants trade on the
OTC Bulletin Board.
Lightship Tankers LLC: On January 15, 2001, the Company completed the
purchase of the remaining 24.25% interest in Lightship Tankers I - V LLC, the
vessel-owning companies of the five double-hull tankers (formerly known as the
Lightship Tankers), previously held by Newport News Shipbuilding for
approximately $11.0 million, of which $0.5 million was paid in cash and the
balance was paid by a promissory note of $10.5 million. The Company now has
100.0% equity ownership of these five double-hull tankers.
Fleet Overview
The following table lists the types of vessels we owned, operated, or
chartered as of March 1, 2001:
Vessels
in Fleet
------------
Offshore Energy Support
Domestic Offshore Energy Support:
Anchor Handling Tug Supply/Supply Boats.............. 26
Crew/Utility Boats................................. 34
Geophysical Boats.................................. 3
-----
Total Domestic Offshore Energy Support.......... 63
----
International Offshore Energy Support:
Anchor Handling Tug Supply/Supply Boats............ 47
Anchor Handling Tugs/Tugs.......................... 22
Crew/Utility Boats................................. 27
Other.............................................. 11
----
Total International Offshore Energy Support..... 107
---
Total Offshore Energy Support................... 170
---
Marine Transportation
Petroleum/Chemical Product Carriers.................. 10
Fuel Barges.......................................... 14
Towboats............................................. 8
-----
Total Marine Transportation..................... 32
----
Towing.................................................... 31
----
Total vessels.................... 233
===
The total vessels referred to above include 229 vessels that we own and
operate; one vessel that we own but is operated by others; two vessels owned by
others but operated by us, under various chartering and operating arrangements;
and one vessel chartered to a third party that is neither owned nor operated by
us. We are actively marketing 10 of the offshore energy support vessels, located
in the Middle East, for sale.
For financial information about our business segments and geographic
areas of operation, see Note 13 to our consolidated financial statements.
Lines of Business
(1) Offshore Energy Support
This is our biggest business, accounting for approximately 47.0% of our
total revenues in 2000. Offshore energy support vessels are used primarily to
transport materials, supplies, equipment, and personnel to drilling rigs and to
support the construction, positioning and ongoing operation of oil and gas
production platforms. Offshore energy support vessels are hired, or "chartered,"
by oil companies and others engaged in offshore exploration and production
activities.
The market for these services is fundamentally driven by the offshore
exploration, development, and production activities of oil and gas companies
worldwide. The level of these activities depends primarily on the capital
expenditures of oil and gas producers, which is largely a function of current
and anticipated oil and gas prices. Oil and gas prices are influenced by a
variety of factors, including worldwide demand, production levels, inventory
levels, governmental policies regarding exploration and development of reserves,
and political factors in producing countries.
Offshore energy support services are provided primarily by the
following types of vessels:
o Supply boats (also called workboats) are generally steel-hull vessels of at
least 150 feet in length. They serve exploration and production facilities
and support offshore construction and maintenance activities and are
differentiated from other vessel types by cargo flexibility and capacity.
In addition to transporting deck cargo, such as drill pipe and heavy
equipment, supply boats transport liquid mud, potable, and drilling water,
diesel fuel, dry bulk cement, and dry bulk mud. With their relatively large
liquid mud and dry bulk cement capacity and large areas of open deck space,
they are generally in greater demand than other types of support vessels
for exploration and workover drilling activities.
o Anchor handling vessels, which include anchor handling tug/supply vessels
and some tugs, are more powerful than supply boats and are used to tow and
position drilling rigs, production facilities and construction barges. Some
are specially equipped to assist tankers while they are loading from
single-point buoy mooring systems, and some are used in place of supply
boats when not performing towing and positioning functions.
o Crewboats (also called crew/supply boats) are faster and smaller than
supply boats and are used primarily to transport personnel and light cargo,
including food and supplies, to and among production platforms, rigs and
other offshore installations. They are chartered together with supply boats
to support drilling or construction operations or, separately, to serve the
various requirements of offshore production platforms. Crewboats are
typically aluminum-hull vessels and generally have longer useful lives than
steel-hull supply boats. Crewboats also provide a cost-effective
alternative to helicopter transportation services and can operate reliably
in all but the most severe weather conditions.
About one-third of offshore revenues is derived from domestic
operations under U.S.-flag vessel registration in the Gulf of Mexico, directed
from offices in Lafayette, Louisiana. The balance is derived from international
operations, including offshore West Africa, the Arabian Gulf and adjacent areas,
Southeast Asia and Mexico. We also operate offshore energy support vessels in
other regions, including Central and South America and, to a limited extent,
Europe. Operations in the Arabian Gulf, Southeast Asia and adjacent areas are
directed from facilities in Dubai, United Arab Emirates; operations in offshore
West Africa and certain other international areas are directed from facilities
in Nyon, Switzerland; and operations in Mexico are directed from our Lafayette,
Louisiana facilities. We also have sales offices and/or maintenance and other
facilities in many of the countries where our vessels operate.
The following table shows the deployment of our offshore energy support
fleet at March 1, 2001.
Location Vessels
-------- -------
Domestic Offshore Energy Support
U.S. Gulf of Mexico 57
Mexico 3
Other 3
----
Total Domestic Offshore Energy Support 63
----
International Offshore Energy Support
Middle East 51
West Africa 31
Southeast Asia 20
Other 5
----
Total International Offshore Energy Support 107
----
Total 170
====
The average age of our offshore energy support vessels, based on the
later of the date of construction or rebuilding, is approximately 19 years, and
approximately 40.0% of them are more than 20 years old. After a vessel has been
in service for approximately 30 years, the costs of repair, vessel certification
and maintenance may not be economically justifiable.
(2) Marine Transportation
We provide marine transportation services, principally for petroleum
products and specialty chemicals, in the U.S. domestic or "coastwise" trade, a
market largely insulated from international competition under the Jones Act.
Marine transportation includes our ten tankers, five of which are double-hulled,
and our inland tug-and-barge operation, Sun State Marine Services. This is our
second largest business, accounting for approximately 43.0% of our total
revenues in 2000.
Petroleum Product Transportation. In the domestic energy transportation
trade, oceangoing and inland-waterway vessels transport fuel and other petroleum
products, primarily from refineries and storage facilities along the coast of
the U.S. Gulf of Mexico to utilities, waterfront industrial facilities and
distribution facilities along the U.S. Gulf of Mexico, the Atlantic and Pacific
coasts and inland rivers. The inventory of U.S.-flag oceangoing vessels eligible
to participate in the U.S. domestic trade and capable of transporting fuel or
petroleum products has steadily decreased since 1980, as vessels have reached
the end of their useful lives and the cost of constructing vessels in the United
States (a requirement for U.S. domestic trade participation) has substantially
increased.
At March 1, 2001 we operated the following petroleum product carriers:
Tonnage (in dead
Name of Vessel Capacity (in barrels) weight tons or "dwt")
-------------- --------------------- ----------------------
HMI Dynachem 360,000 49,900
HMI Petrochem 360,000 49,900
HMI Ambrose Channel 341,000 45,000
HMI Cape Lookout Shoals 340,000 46,000
HMI Diamond Shoals 340,000 46,000
HMI Nantucket Shoals 340,000 46,000
HMI Defender 260,000 36,600
The HMI Ambrose Channel, HMI Cape Lookout Shoals, HMI Diamond Shoals,
and HMI Nantucket Shoals are four of our five new double-hull carriers.
Delivered in 1998 (HMI Cape Lookout Shoals, HMI Diamond Shoals and HMI Nantucket
Shoals) and 1999 (HMI Ambrose Channel, which is also capable of transporting
chemicals), these are the newest and most technologically advanced product
carriers in the Jones Act market. We own a 100.0% equity interest in the five
carriers. The fifth double-hull, HMI Brenton Reef, is listed below under
chemical carriers.
We acquired the HMI Defender in March 1998. Under OPA 90, this vessel
cannot be used to transport petroleum and petroleum products in U.S. commerce
after 2008. We acquired the HMI Dynachem and HMI Petrochem in August 1996. Their
OPA 90 retirement date is 2011. The four double-hulls have no retirement date
under OPA 90.
Our petroleum product carriers operate under short-term spot charters
or longer-term charters, depending upon market conditions. Cape Lookout Shoals
began a three-year charter commencing in the second quarter of 2000 with a
subsidiary of Tesoro Petroleum Corporation to transport crude oil and petroleum
products in Alaska and other locations.
Chemical Transportation. In the U.S. domestic chemical transportation
trade, vessels carry chemicals, primarily from chemical manufacturing plants and
storage tank facilities along the coast of the U.S. Gulf of Mexico to industrial
users in and around Atlantic and Pacific coast ports. The chemicals transported
consist primarily of caustic soda, alcohol, chlorinated solvents, paraxylene,
alkylates, toluene, methyl tertiary butyl ether (MTBE), phosphoric acid and
lubricating oils. Coastwise chemical tonnage demand has increased in recent
years as a result of the general expansion of the U.S. economy and as gasoline
additives have begun to move coastwise. Some of the chemicals transported must
be carried in vessels with specially coated or stainless steel cargo tanks; many
of them are very sensitive to contamination and require special cargo-handling
equipment.
At March 1, 2001, we operated three vessels in the chemical trade:
Tonnage (in dead
Name of Vessel Capacity (in barrels) weight tons or "dwt")
-------------- --------------------- ---------------------
HMI Brenton Reef 341,000 45,000
Seabulk Magnachem 298,000 39,300
Seabulk America 297,000 46,300
Delivered in 1999, the HMI Brenton Reef is a new double-hull carrier in
which we have a 100.0% equity interest. We operate the Seabulk Magnachem under a
bareboat charter expiring in February 2002. We have both a purchase option at
fair market value and yearly extension options at fair market value under the
bareboat charter. We own a 67.0% equity interest in the Seabulk America; the
remaining 33.0% interest is owned by Stolt Tankers (U.S.A.), Inc.
The Seabulk Magnachem and Seabulk America have full double bottoms (as
distinct from double hulls). Double bottoms provide increased protection over
single-hull vessels in the event of a grounding. Delivered in 1977, the Seabulk
Magnachem is a CATUG (or catamaran tug) integrated tug and barge, or ITB, which
has a higher level of dependability, propulsion efficiency and performance than
an ordinary tug and barge. Delivered in 1990, the Seabulk America is the only
vessel in the U.S. domestic trade capable of carrying large cargoes of acid, as
a result of its large high-grade alloy stainless steel tanks, and the only such
vessel strengthened to carry relatively heavy cargoes such as phosphoric and
other acids. The Seabulk America's stainless steel tanks were constructed
without internal structure, which greatly reduces cargo residue from
transportation and results in less cargo degradation. Stainless steel tanks,
unlike epoxy-coated tanks, also do not require periodic sandblasting and
recoating.
All three chemical carriers have from 13 to 24 cargo segregations which
are configured, strengthened, and coated to handle various sized parcels of a
wide variety of industrial chemical and petroleum products, giving them the
ability to handle a broader range of chemicals than chemical-capable product
carriers. Many of the chemicals we transport are hazardous substances. Voyages
are currently generally conducted from the Houston and Corpus Christi, Texas,
and Lake Charles, Louisiana areas to such ports as New York, Philadelphia,
Baltimore, Wilmington, North Carolina, Charleston, South Carolina, Los Angeles,
San Francisco, and Kalama, Washington. Our chemical carriers are also suitable
for transporting other cargoes, including grain.
Pursuant to OPA 90, the Seabulk America and Seabulk Magnachem cannot be
used to transport petroleum and petroleum products in U.S. commerce after 2015
and 2007, respectively. The HMI Brenton Reef has no retirement date under OPA
90.
We believe that the total capacity of these carriers represents a
substantial portion of the capacity of the domestic specialty chemical carrier
fleet. The two chemical carriers, Seabulk America and Seabulk Magnachem, can
also be used as petroleum tankers. They are among the last independently owned
carriers scheduled to be retired under OPA 90 for carrying petroleum products.
We book cargoes either on a spot (movement-by-movement) or time basis.
Approximately 75.0% of contracts for cargo are committed on a 12- to 30-month
basis, with minimum and maximum cargo tonnages specified over the period at
fixed or escalating rates per ton. We are often able to generate additional
revenues by chartering cargo space on competitors' vessels.
Sun State. Our Sun State Marine Services subsidiary owns and operates a
petroleum transportation fleet of eight towboats and 14 barges, all of which are
primarily engaged in fuel transportation along the Atlantic intracoastal
waterway and the St. Johns River in Florida.
The majority of Sun State's revenue is derived from a fuel
transportation contract with Steuart Petroleum Company ("Steuart"), in which Sun
State is responsible for handling all marine deliveries including the servicing
of Steuart's paper mill, electric utility and vessel bunker customers. Sun State
renewed the contract with Steuart on January 31, 2001 for four years with an
additional seven-year renewal option. This renewal option is contingent on
Steuart's ability to renew a related contract. The remainder of Sun State's
marine transportation revenue is derived from fuel transportation and towing
contracts with other customers along with its marine maintenance, repair,
drydocking and construction facility.
OPA 90 requires all single-hull barges, including those owned by Sun
State, to discontinue transporting fuel and other petroleum products in 2015.
Eight of Sun State's 14 barges are single-hulled.
Other Services
Sun State also owns and operates a small vessel maintenance, repair and
construction drydocking facility in Green Cove Springs, Florida, which is
engaged principally in the maintenance and construction of tugs and barges,
offshore support vessels, and other small vessels. The lease for the facility,
including optional renewals, expires in 2005. This facility is capable of
drydocking vessels up to 300 feet in length for repair and can make dockside
repairs on vessels up to 320 feet in length. Since 1994, when we acquired Sun
State, the facility has been utilized to overhaul or rebuild a number of our
harbor tugs and offshore energy support vessels. It also services vessels owned
by others. The facility (originally a U.S. government naval repair and
operations station) has covered steel fabrication facilities, workshops and
office spaces adjacent to a 1,840-foot finger pier and mooring basins, where the
facility's three floating drydocks are located. Sun State also maintains another
yard, primarily for use in new construction projects and vessels requiring
long-term repairs. The yard has a marine railway capable of lifting and
launching vessels weighing up to 600 tons, and a 600-foot finger pier with
adjacent covered steel fabrication facilities, workshops and office space.
We also own a 40-acre facility in Port Arthur, Texas that serves as a
regional office, storage and supply base, and a facility for topside repairs of
ocean going vessels.
(3) Towing
Towing is the smallest of our three businesses, representing about
10.0% of our total revenues. Our harbor tugs serve seven ports in Florida,
Alabama, Texas and Louisiana, where they assist petroleum product carriers,
barges, container ships, other cargo vessels and cruise ships in docking and
undocking and in proceeding within the port areas and harbors. We also operate
three tugs with offshore towing capabilities that conduct a variety of offshore
towing services in the Gulf of Mexico, Guayanilla, Puerto Rico, and the Atlantic
Ocean. Our tug fleet consists of 20 conventional tugs, seven tractor tugs, and
four Ship Docking Modules(TM), known as SDMs(TM). SDMs(TM) are innovative ship
docking vessels, designed and patented by us, that are more maneuverable,
efficient and flexible, and require fewer crew members, than conventional harbor
tugs.
Harbor Tug Operations. In most U.S. ports, competition is unregulated.
However, a few ports grant non-exclusive franchises to harbor tug operators;
these include Port Canaveral and Port Everglades, Florida, where we are
currently the sole franchisee, and Port Manatee (near Tampa), Florida, where we
are currently a leading provider of commercial tug services. Rates are
unregulated in all ports that we serve, including the franchised ports. Each
port is generally a distinct market for harbor tugs, even though harbor tugs can
be moved from port to port.
Port Everglades. Port Everglades has the second largest petroleum
----------------
non-refining storage and distribution center in the United States, providing
substantially all of the petroleum products for South Florida. Since 1958, when
our tug operations commenced, we have operated the franchise as the sole
provider of docking services in the port. The franchise specifies, among other
things, that four tugs serve the port with a fifth available if needed, and that
three be less than 90 feet in length because of the narrowness of slips in the
port, and that tugs have firefighting capability. The franchise is not exclusive
and expires in 2007. While we are regarded as a high-standard operator, there is
no assurance that it will be renewed. At March 1, 2001, we operated five tugs in
Port Everglades and were the port's sole provider of harbor towing services.
Tampa. We expanded our harbor towing services to Tampa through the
-----
October 1997 acquisition of an established operator in the port. Because the
port is comprised of three "sub-ports" (including Port Manatee) and a distant
sea buoy, a greater number of tugs is required to be a competitive operator in
Tampa than in other ports of similar size. At March 1, 2001, we operated 8 tugs,
including two tractor tugs and two SDMs(TM), in the port (including Port
Manatee). We were the sole harbor tug operator in the port until October 1999,
when another company began operations in the port. We currently maintain an
approximate 70.0% market share in Tampa.
Port Canaveral. In Port Canaveral, like Port Everglades, we have the
--------------
sole franchise to provide harbor docking services. In this port, we provide
docking and undocking services for commercial cargo vessels serving central
Florida and for cruise ships visiting the Orlando/Kennedy Space Center
attractions. Our franchise can be canceled with 60 days notice, and there can be
no assurance that we will be able to retain our franchise in Port Canaveral. At
March 1, 2001, we operated four tugs in Port Canaveral and were the port's sole
provider of harbor towing services.
Mobile. At this port, we provide docking and undocking services
------
primarily to commercial cargo vessels, including vessels transporting coal and
other bulk exports. We believe that we provide about 50.0% of the harbor tug
business in this port, where we operated three tugs at March 1, 2001.
Port Arthur and Lake Charles. At these ports we operate eight harbor
-----------------------------
tugs. Currently, five of these tugs serve Port Arthur, Texas; two serve Lake
Charles, Louisiana, and one serves both harbors. Each of these ports has a
competing provider of harbor tug services. We estimate our market share in both
ports at 50.0%.
Offshore Towing Operations. We currently have three tugs working in the
offshore towing market that conduct a variety of offshore towing services in the
Gulf of Mexico, Guayanilla, Puerto Rico, and the Atlantic Ocean. Demand for
towing services depends on vessel traffic and oilfield activity, which is in
turn generally dependent on local and national economic conditions.
Customers and Charter Terms
We offer our offshore energy support services primarily to oil
companies and large drilling companies. Consistent with industry practice, our
U.S. Gulf of Mexico operations are conducted primarily in the "term" market
pursuant to short-term (less than six months) charters at varying day rates.
Generally, such short-term charters can be terminated either by us or our
customers upon notice of five days or less. Charters in our international
markets have terms ranging from a few days to several years.
The primary purchasers of petroleum product transportation services are
utilities, oil companies, and large industrial consumers of fuel with waterfront
facilities. The primary purchasers of chemical transportation services are
chemical and oil companies. Both services are generally contracted for on the
basis of short- or long-term time charters, voyage charters, contracts of
affreightment, or other transportation agreements tailored to the shipper's
requirements. CITGO, which accounted for 12.0% of our 2000 revenues, is
currently our largest single customer with a contract of affreightment
commitment utilizing up to three tankers of their choosing through December
2001.
Our towing services are offered to vessel owners and operators and
their agents. Our rates for harbor towing services are set forth in published
tariffs and may be modified at any time, subject to competitive factors. We also
grant volume discounts to major users of harbor services. Offshore towing
services are priced based upon the service required on an ad hoc basis.
On a segment basis in 2000, National Petroleum Construction Company
(NPCC) accounted for 6.3% of our offshore energy support revenues; CITGO
accounted for 28.4%, ARCO Products for 10.0%, and SeaRiver Maritime for 10.0%,
respectively, of our marine transportation services revenues; Oceanografia, S.A.
accounted for 5.7% of our towing revenues.
Competition
We operate in a highly competitive environment in all our operations.
The principal competitive factors in each of the markets in which we operate are
suitability and reliability of equipment, safety record, personnel, price,
service, and reputation. Competitive factors in the offshore energy support
segment also include operating conditions and intended vessel use (both of which
determine the suitability of vessel type), shallow water versus deepwater needs,
the complexity of maintaining logistical support and the cost of transferring
equipment from one market to another. Our vessels that provide marine
transportation services compete with both other vessel operators and, in some
areas and markets, with alternative modes of transportation, such as pipelines,
rail tank cars, and tank trucks. Moreover, the users of such services are
placing increased emphasis on safety, the environment and quality, partly due to
heightened liability for the cargo owner in addition to the vessel
owner/operator under OPA 90. With respect to towing services, we compete not
only with other providers of tug services in the ports in which we operate, but
with the providers of tug services in nearby ports. Many of our competitors have
substantially greater financial and other resources than we do. A new competitor
entered the harbor tug market in Tampa in 1999, and additional competitors may
enter our markets in the future. Moreover, should U.S. coastwise laws be
repealed, foreign-built, foreign-manned and foreign-owned vessels could be
eligible to compete with our vessels operating in the domestic trade.
Environmental and Other Regulation
Our operations are subject to significant federal, state, and local
regulation, the principal provisions of which are described below.
Environmental. Our operations are subject to federal, state and local
laws and regulations relating to safety and health and environmental protection,
including the generation, storage, handling, emission, transportation, and
discharge of hazardous and non-hazardous materials. The recent trend in
environmental legislation and regulation is generally toward stricter standards,
and this trend will likely continue. We believe that our operations currently
are in substantial compliance with applicable environmental regulations.
Governmental authorities have the power to enforce compliance with
applicable regulations, and violations are subject to fines, injunction, or
both. We do not expect that we will be required in the near future to expend
amounts that are material to our financial condition or operations by reason of
environmental laws and regulations; however, because such laws and regulations
are frequently changed and may impose increasingly stricter requirements, we
cannot predict the ultimate cost of complying with these laws and regulations.
OPA 90. OPA 90 established an extensive regulatory and liability regime
for the protection of the environment from oil spills. OPA 90 affects owners and
operators of facilities operating near navigable waters and owners and operators
of vessels operating in United States waters, which include the navigable waters
of the United States and the 200-mile exclusive economic zone of the United
States. Although it applies in general to all vessels, for purposes of its
liability limits and financial-responsibility and response-planning
requirements, OPA 90 differentiates between tank vessels (which include our
chemical and petroleum product carriers and fuel barges) and "other vessels"
(which include our tugs and offshore energy support vessels).
Under OPA 90, owners and operators of facilities and owners, operators
and certain charterers of vessels are "responsible parties" and are jointly,
severally and strictly liable for removal costs and damages arising from oil
spills relating to their facilities and vessels, unless the spill results solely
from the act or omission of a third party, an act of God or an act of war.
Damages are defined broadly to include (i) natural resources damages and the
costs of assessment thereof; (ii) damages for injury to, or economic losses
resulting from the destruction of, real and personal property; (iii) the net
loss of taxes, royalties, rents, fees and profits by the U.S. government, a
state or political subdivision thereof; (iv) lost profits or impairment of
earning capacity due to property or natural resources damage; (v) the net costs
of providing increased or additional public services necessitated by a spill
response, such as protection from fire, safety or other hazards; and (vi) the
loss of subsistence use of natural resources.
For facilities, the statutory liability of responsible parties is
limited to $350.0 million. For tank vessels, the statutory liability of
responsible parties is limited to the greater of $1,200 per gross ton or $10.0
million ($2.0 million for a vessel of 3,000 gross tons or less) per vessel; for
any "other vessel," such liability is limited to the greater of $600 per gross
ton or $500,000 per vessel. Such liability limits do not apply, however, to an
incident proximately caused by violation of federal safety, construction or
operating regulations or by the responsible party's gross negligence or willful
misconduct, or if the responsible party fails to report the incident or provide
reasonable cooperation and assistance as required by a responsible official in
connection with oil removal activities. Although we currently maintain maximum
available pollution liability insurance, a catastrophic spill could result in
liability in excess of available insurance coverage, resulting in a material
adverse effect on our business.
Under OPA 90, with certain limited exceptions, all newly built or
converted oil tankers operating in United States waters must be built with
double hulls, and existing single-hull, double-side or double-bottom vessels
must be phased out at some point, depending upon their size, age and place of
discharge, through 2015 unless retrofitted with double hulls. As a result of
this phase-out requirement, as interpreted by the U.S. Coast Guard, our
single-hull chemical and petroleum product carriers will be required to cease
transporting petroleum products over the next 14 years, and our "single-skinned"
fuel barges will cease transporting fuel in 2015.
OPA 90 expanded pre-existing financial responsibility requirements and
requires vessel owners and operators to establish and maintain with the United
States Coast Guard evidence of insurance or qualification as a self-insurer or
other evidence of financial responsibility sufficient to meet their potential
liabilities under OPA 90. Coast Guard regulations require evidence of financial
responsibility demonstrated by insurance, surety bond, self-insurance, or
guaranty. The regulations also implement the financial responsibility
requirements of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), which imposes liability for discharges of
hazardous substances such as chemicals, in an amount equal to $300 per gross
ton, thus increasing the overall amount of financial responsibility from $1,200
to $1,500 per gross ton. We have obtained "Certificates of Financial
Responsibility" pursuant to the Coast Guard regulations for our product and
chemical carriers through self-insurance and commercial insurance and as
guarantor for the fuel barges.
OPA 90 also amended the federal Water Pollution Control Act to require
the owner or operator of certain facilities or the owner or operator of a tank
vessel to prepare facility or vessel response plans and to contract with oil
spill removal organizations to remove to the maximum extent practicable a
worst-case discharge. We have complied with these requirements. As is customary,
our oil spill response contracts are executory in nature and are not activated
unless required. Once activated, our pollution liability insurance covers the
cost of spill removal subject to overall coverage limitations and deductibles.
OPA 90 does not prevent individual states from imposing their own
liability regimes with respect to oil pollution incidents occurring within their
boundaries, and many states have enacted legislation providing for unlimited
liability for oil spills. Some states have issued implementing regulations
addressing oil spill liability, financial responsibility, and vessel and
facility response planning requirements. We do not anticipate that such
legislation or regulations will have any material impact on our operations.
In addition to OPA 90, the following are examples of environmental,
safety and health laws that relate to our operations:
Water. The Federal Water Pollution Control Act ("FWPCA") or Clean Water
Act ("CWA") imposes restrictions and strict controls on the discharge of
pollutants into navigable waters. Such discharges are typically authorized by
National Pollutant Discharge Elimination System ("NPDES") permits. The FWPCA
provides for civil, criminal and administrative penalties for any unauthorized
discharges and imposes substantial potential liability for the costs of removal,
remediation, and damages. State laws for the control of water pollution also
provide varying civil, criminal and administrative penalties and liabilities in
the case of a discharge of petroleum, its derivatives, hazardous substances,
wastes and pollutants into state waters. In addition, the Coastal Zone
Management Act authorizes state implementation and development of programs of
management measures for non-point source pollution to restore and protect
coastal waters.
We manage our exposure to losses from potential discharges of
pollutants through the use of well-maintained and well-managed facilities;
well-maintained and well-equipped vessels; safety and environmental programs,
including a maritime compliance program and our insurance program; and we
believe we will be able to accommodate reasonably foreseeable environmental
regulatory changes. There can be no assurance, however, that any new regulations
or requirements or any discharge of pollutants by the Company will not have an
adverse effect on us.
Solid Waste. Our operations may generate and result in the
transportation, treatment and disposal of both hazardous and non-hazardous solid
wastes that are subject to the requirements of the federal Resource Conservation
and Recovery Act ("RCRA") and comparable state and local requirements. In August
1998, the EPA added four petroleum refining wastes to the list of RCRA hazardous
wastes.
Clean Air Regulations. The federal Clean Air Act of 1970, as amended by
the Clean Air Act Amendments of 1990, requires the EPA to promulgate standards
applicable to the emission of volatile organic compounds and other air
pollutants. Our vessels are subject to vapor control and recovery requirements
when loading, unloading, ballasting, cleaning and conducting other operations in
certain ports. Our chemical and petroleum product carriers are equipped with
vapor control systems that satisfy these requirements. The fuel barges are not
equipped with, and are not operated in areas that require, such systems. In
addition, it is anticipated that the EPA will issue regulations addressing air
emission requirements applicable to marine engines. Adoption of such standards
could require modifications to existing marine diesel engines in some cases.
Coastwise Laws. A substantial portion of our operations are conducted
in the U.S. domestic trade, which is governed by the coastwise laws of the
United States (commonly referred to as the Jones Act). The coastwise laws
reserve marine transportation (including harbor tug services) between points in
the United States (including drilling rigs fixed to the ocean floor on the U.S.
outer continental shelf) to vessels built in and documented under the laws of
the United States (U.S. flag) and owned and manned by U.S. citizens. Generally,
a corporation is deemed a citizen for these purposes so long as (i) it is
organized under the laws of the U.S. or a state, (ii) each of its president or
other chief executive officer and the chairman of its board of directors is a
citizen, (iii) no more than a minority of the number of its directors necessary
to constitute a quorum for the transaction of business are non-citizens, and
(iv) 75.0% of the interest and voting power in the corporation is held by
citizens. Because we could lose our privilege of operating our vessels in the
U.S. domestic trade if non-citizens were to own or control in excess of 25.0% of
our outstanding capital stock, our Certificate of Incorporation contains
restrictions concerning foreign ownership and control of our stock.
There have been repeated efforts aimed at repeal or significant change
of the Jones Act. Although we believe it is unlikely that the Jones Act will be
substantially modified or repealed, there can be no assurance that Congress will
not substantially modify or repeal it. Such changes could have a material
adverse effect on our operations and financial condition.
Occupational Health Regulations. Our shoreside facilities are subject
to occupational safety and health regulations issued by the U.S. Occupational
Safety and Health Administration (OSHA) and comparable state programs. Such
regulations currently require us to maintain a workplace free of recognized
hazards, observe safety and health regulations, maintain records and keep
employees informed of safety and health practices and duties. Our vessel
operations are also subject to occupational safety and health regulations issued
by the U.S. Coast Guard and, to an extent, OSHA. Such regulations currently
require us to perform monitoring, medical testing and recordkeeping with respect
to mariners engaged in the handling of the various cargoes transported by our
chemical and petroleum product carriers.
Vessel Condition. Our chemical and petroleum product carriers, offshore
energy support vessels, certain of our tugs and our fuel barges are subject to
periodic inspection and survey by, and drydocking and maintenance requirements
of, the Coast Guard and/or the American Bureau of Shipping and other marine
classification societies.
Oil Tanker Escort Requirements. Implementation of oil tanker escort
requirements of OPA 90 and pending state legislation are expected to introduce
certain performance or engineering standards on tugs to be employed as tanker
escorts. We believe our tractor tugs will be able to comply with any existing or
currently anticipated requirements for escort tugs. Adoption of such new
standards could require modification or refitting of the conventional tugs we
currently operate to the extent they are employed as tanker escorts.
We believe we are currently in compliance in all material respects with
the environmental and other laws and regulations, including health and safety
requirements, to which our operations are subject and are unaware of any pending
or threatened litigation or other judicial, administrative or arbitration
proceedings against us occasioned by any alleged non-compliance with such laws
or regulations. The risks of substantial costs, liabilities, and penalties are,
however, inherent in marine operations, and there can be no assurance that
significant costs, liabilities or penalties will not be incurred by or imposed
on us in the future.
International Laws and Regulations. Our vessels that operate
internationally are subject to various international conventions, including
certain safety, environmental and construction standards. Among the more
significant of the conventions applicable to the fleet are: (i) the
International Convention for the Prevention of Pollution from Ships, 1973, 1978
Protocol, (ii) the International Convention on the Safety of Life at Sea, 1978
Protocol, including the International Management Code for the Safe Operation of
Ships and for Pollution Prevention, which went into effect for tank vessels on
July 1, 1998, and (iii) the International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers, 1978, as amended in 1995. These
conventions govern oil spills and other matters of environmental protection,
worker health and safety, and the manning, construction and operation of
vessels. Generally, surveys and inspections are performed by internationally
recognized classification societies. The vessels that operate internationally
are registered primarily in the Marshall Islands, Panama, St. Vincent and the
Grenadines.
Although we believe we are in substantial compliance with all
applicable requirements, the risks of incurring substantial compliance costs and
liabilities and penalties for noncompliance are inherent in offshore energy
support operations and there can be no assurance that significant costs,
liabilities and penalties will not be incurred by or imposed on us in the
future.
Insurance
Our marine transportation operations are subject to the normal hazards
associated with operating vessels carrying large volumes of cargo and rendering
services in a marine environment. These hazards include the risk of loss of or
damage to our vessels, damage to third parties as a result of collision, loss,
or contamination of cargo, personal injury of employees, and pollution, and
other environmental damages. We maintain insurance coverage against these
hazards with certain deductibles for which we are responsible. Risk of loss of
or damage to our vessels is insured through hull insurance policies in amounts
that approximate fair market value, also subject to certain deductibles. Vessel
operating liabilities, such as collision, cargo, environmental, and personal
injury, are insured primarily through our participation in a mutual insurance
association, Steamship Mutual Underwriting Association (Bermuda) Limited.
Because we maintain mutual insurance, we are subject to funding requirements and
coverage shortfalls in the event claims exceed available funds and reinsurance
and to premium increases based on prior loss experience.
Employees
As of March 1, 2001, we had 2,604 employees. Management considers
relations with employees to be satisfactory. The Seabulk America and Seabulk
Magnachem are manned by approximately 80 officers and crew who are subject to
two collective bargaining arrangements that expire on December 31, 2003 and
2001, respectively. In addition, the HMI Dynachem, HMI Petrochem, HMI Defender,
the five new double-hull carriers, and thirty-one harbor tugs are manned by
approximately 418 members of national maritime labor unions. The five
double-hull carriers are crewed by a third party employer until June 21, 2001,
at which time the Company will assume crewing responsibility for all five
vessels.
Item 2. Properties
The Company's principal offices are located in Fort Lauderdale,
Florida, where the Company leases approximately 36,000 square feet of office and
shop space under a lease expiring in 2009. The Company owns a 40-acre facility
in Port Arthur, Texas that serves as a regional office and includes 1,200 feet
of dock space. The Company also leases office and other facilities in Lafayette,
Louisiana; Green Cove Springs, Florida; the United Arab Emirates; and Nyon,
Switzerland. In addition, the Company leases sales offices and/or maintenance
and other facilities in many of the locations where its vessels operate. The
Company believes that its facilities are generally adequate for current and
anticipated future use, although the Company may from time to time close or
consolidate facilities or lease additional facilities as operations require.
Item 3. Legal Proceedings
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 several months in 1999, three vessels owned by subsidiaries of the
Company performed services for third parties in support of energy exploration
activities in Sudan; one of these vessels performed such services until January
31, 2000. The Company has filed a report of these activities with the Office of
Foreign Asset Control of the United States Department of the Treasury. The
Company had also reported these activities to the Bureau of Export
Administration of the U.S. 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 such penalties.
In J. Erik Hvide and Betsy Hvide v. Hvide Marine Incorporated, No.
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
alleged that the Company had breached an agreement to provide Mr. Hvide with
severance benefits valued at approximately $1.0 million. In addition, Mr. and
Mrs. Hvide alleged that the Company engaged in conduct calculated to cause them
emotional and public humiliation for which they sought unspecified punitive
damages. In January 2001, the Company and Mr. and Mrs. Hvide settled the lawsuit
for an amount which the Company does not believe to be material.
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,
subject to certain deductibles. We do not believe such litigation to be
material.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 4A. Executive Officers of the Registrant
The executive officers of the Company are:
Name Age Current Positions
---- --- -----------------
Gerhard E. Kurz 61 President & Chief Executive Officer
J. Stephen Nouss 46 Senior Vice President & Chief Financial Officer
Alan R. Twaits 53 Senior Vice President, General Counsel & Secretary
Andrew W. Brauninger 54 Senior Vice President - Offshore
William R. Ludt 53 Senior Vice President - Towing
John J. O'Connell, Jr. 57 Senior Vice President - Corporate Communications and Investor
Relations & Assistant Secretary
L. Stephen Willrich 48 Senior Vice President - Marine Transportation
A. Thomas Denning 46 Vice President - Engineering
Kevin S. Boyle 27 Treasurer
Michael J. Pellicci 37 Controller
Mr. Kurz has been Chief Executive Officer and a director of the Company
since April 2000 and was appointed President in September 2000. He formerly
served as President of Mobil Shipping and Transportation Company (MOSAT), a
Mobil Oil-affiliated company from which he retired in March 2000. Mr. Kurz
joined Mobil in London in 1964 as a Chartering Assistant. In 1965 he was
transferred to Mobil's Marine Division in New York. After a series of
promotions, he was named Vice President of Planning, Middle East and Marine
Transportation, and then President of MOSAT in 1989. Mr. Kurz is past Chairman
of the Marine Preservation Association and the Oil Companies International
Marine Forum. He previously served on the Board of Directors of the American
Bureau of Shipping and chaired its Finance and Nominating Committees. He
currently serves on the Boards of the Seamen's Church Institute, the Coast Guard
Foundation, and the Newport News Mariners' Museum. He is the Chairman of the
Massachusetts Maritime Academy's International Business Advisory Council and a
member of the International Advisory Board to the Panama Canal Authority. He is
the recipient of numerous awards and honors, including the International
Maritime Hall of Fame Award, the 1999 SeaTrade "Personality of the Year" award,
the Seamen's Church Institute Silver Bell Award, and the U. S. Coast Guard Award
and Medal for Meritorious Public Service. He holds an Honorary Doctorate Degree
from Massachusetts Maritime Academy.
Mr. Nouss has been Senior Vice President and Chief Financial Officer
since August 2000. He was previously Vice President of Finance and
Administration for Certified Vacations Group, Inc. Prior to that he served on
the management teams of two Fortune 500 companies - W. R. Grace & Co., where he
was Assistant Vice President, and Ryder System, Inc., in International Finance.
He is a Certified Public Accountant and has 16 years of public accounting
experience with Price Waterhouse LLP and Coopers & Lybrand LLP. Mr. Nouss is
President-Elect of the Florida Institute of Certified Public Accountants; serves
on the Council for the American Institute of CPAs, and is a former Director of
the University of Florida Athletic Association, Inc., where he also served as
Vice President. He is a past President of the Mental Health Resource Center,
Inc. and the University of Florida National Alumni Association.
Mr. Twaits has been Senior Vice President, General Counsel and
Secretary since November 2000. He was previously Senior Vice President, General
Counsel and Secretary of Premier Cruise Lines. Prior to his experience at
Premier, he was in private practice and served as General Counsel and Secretary
for Carnival Corporation as well as a Director and Vice President, General
Counsel and Secretary of Carnival Air Lines. Mr. Twaits has also held senior
counsel positions with Crowley Maritime Corporation, Trusthouse Forte, Inc.,
United States Lines, Inc., and a staff counsel position at Pan American World
Airways. He is a member of the Florida Bar, the District of Columbia Bar, the
American Bar Association and its International Law Section, and the American
Corporate Counsel Association.
Mr. Brauninger has been Senior Vice President - Offshore Division since
August 1997. He was Vice President - Offshore Division from 1990 until July 1997
and has been President of Seabulk Offshore, Ltd., the Company's offshore energy
services subsidiary, since September 1994. He was Vice President of Offshore
Operations from 1990 to September 1994 and Vice President - Development from
1989 to 1990. From 1987 to 1989, Mr. Brauninger was President of OMI Offshore
Services, Inc., an operator of offshore service vessels. Previously, he was
employed by Sabine Towing and Transportation Company, where he held a variety of
posts including Vice President - Harbor Division.
Mr. Ludt has been Senior Vice President - Towing Division since
February 2000 and the President of Sun State Marine Services, Inc., the
Company's inland tug and barge subsidiary and shipyard, since 1994. From
September 1998 to February 2000, he was managing director of Seabulk Offshore,
Ltd. He was elected Vice President of the Company in January 1995. He was
Director - Fleet Operations of the Company from 1982 to 1994. Since joining the
Company in 1979, he has also served as Fleet Manager and Port Engineer. He
served as President of the Chemical Carriers Association from 1989 to 1990 and
as its Vice President from 1990 to 1992. Mr. Ludt has also served on various
working groups within the U.S. Coast Guard's Chemical Transportation Advisory
Committee concerning issues such as vapor control and marine occupational safety
and health. Mr. Ludt holds a dual license as a Third Mate and Third Assistant
Engineer, Steam and Motor Vessels.
Mr. O'Connell has been Senior Vice President - Corporate Communications
and Investor Relations since January 2000 and Assistant Secretary since February
2000. He was elected Vice President - Corporate Communications upon joining the
Company in August 1996. From September 1995 to August 1996 he was an independent
consultant. Previously, he served in a variety of management positions with W.
R. Grace & Co. for 20 years, most recently as Director of Public Affairs. Prior
to that, he was Instructor in English at George Washington University. Mr.
O'Connell was a member of the President's Private Sector Survey on Cost Control
in the Federal Government (Grace Commission) from 1982 to 1984.
Mr. Willrich has been Senior Vice President - Tankers since June 2000
and President of Ocean Specialty Tankers Corporation (OSTC), the Company's
marine transportation subsidiary, since March 1998, when he was also elected
Vice President. He was appointed Senior Vice President of OSTC in August 1996.
He joined the Company as Vice President of Chartering for OSTC in January 1988.
Prior to joining the Company, Mr. Willrich was employed by Diamond Shamrock
Chemical Company from 1975 to 1988, where he rose to Division General Manager.
Prior to his service with Diamond Shamrock, he worked for Gulf Oil Corporation
as a Third Assistant Engineer on various company tankers. He has more than 25
years of experience in the management of Jones Act product tankers.
Mr. Denning has been Vice President - Engineering since August 1997. He
previously served as Director of Engineering of the Company from November 1994
to July 1997, and as Superintendent Engineer from September 1986 to October
1994.
Mr. Boyle has been Treasurer since January 2000. He was previously
Director - Finance and Treasury. He joined the Company as Manager - Corporate
Development in March 1998. Prior to that, he served as an Associate in the
Investment Banking division of Parker/Hunter, an investment bank based in
Pittsburgh. Mr. Boyle graduated with a J.D. from the University of Pennsylvania
and a B.S. from Carnegie Mellon University. He is a member of the Pennsylvania
Bar and the American Bar Association.
Mr. Pellicci has been Controller since January 2001. He previously
served as Director of Corporate Finance and Corporate Controller of Caraustar
Industries, Inc. in Atlanta, which he joined in 1989. Prior to that, he was a
Senior Auditor with Arthur Andersen & Co. He is a Certified Public Accountant.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Common Stock of Seabulk International, Inc. trades on the Nasdaq
National Market under the symbol SBLK. Between January 2, 2001 and March 20,
2001, the stock traded on the Nasdaq National Market under the symbol HVDM. In
2000, the common stock traded on the OTC Bulletin Board under the symbol HVDM.
In 1999, the Class A Common Stock of Hvide Marine Incorporated (the
predecessor company) traded on the Nasdaq National Market under the symbol HMAR
until September 28, when it was delisted. Between September 29 and December 15,
when the Company emerged from Chapter 11 under its Plan of Reorganization, the
Class A Common Stock traded on the OTC Bulletin Board under the symbol HMARQ.
Pursuant to the Plan of Reorganization, the Class A Common Stock was canceled as
of December 15, 1999, and shareholders received Class A Warrants at the rate of
approximately one warrant for every 124 shares previously held.
The Class A Warrants trade on the OTC Bulletin Board under the symbol
SBLKW. In 2000 and through March 20, 2001, they traded under the symbol HVDMW.
The warrants expire December 14, 2003 and entitle the holder, for each warrant
held, to purchase one share of the Common Stock of the Company for $38.49.
There is no established market for another series of warrants issued to
noteholders (the Noteholder Warrants) to purchase 723,861 shares of common stock
at an exercise price of $0.01 per share.
The Company has not paid and does not expect to pay any dividends on
its Common Stock.
The following tables set forth the high and low closing prices of the
Company's Common Stock and Class A Warrants, as reported by the Nasdaq National
Market and the OTC Bulletin Board.
Common Stock
High Low
---- ---
2001
First Quarter (through March 1)............ $ 9.06 $ 7.75
2000
First Quarter ............................. 16.00 9.75
Second Quarter............................. 12.50 4.88
Third Quarter.............................. 8.25 5.44
Fourth Quarter............................. 12.44 7.19
1999
Predecessor Company
First Quarter.............................. 6.13 3.94
Second Quarter............................. 3.50 1.59
Third Quarter.............................. 2.34 0.53
Fourth Quarter (through December 15)....... 0.47 0.11
Successor Company
Fourth Quarter (after December 15)......... -- --
Class A Warrants
High Low
---- ---
2001
First Quarter (through March 1)............ $ 3.00 $ 0.38
2000
First Quarter ............................. 5.00 0.25
Second Quarter............................. 3.50 1.50
Third Quarter.............................. 2.75 1.75
Fourth Quarter............................. 4.00 0.38
1999
Fourth Quarter (after December 15)......... -- --
As of March 1, 2001 there were 284 holders of record of the Company's
Common Stock.
Item 6. Selected Financial Data.
Upon emergence from its Chapter 11 proceeding the Company adopted Fresh
Start Accounting, see "--- Fresh Start Reporting." Thus the Company's
consolidated 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 financial data presented below include the results of the
Predecessor Company for the periods through December 15, 1999 and the Successor
Company for the periods subsequent to December 15, 1999. The principal
differences 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.
The selected consolidated financial data presented below should be
read in conjunction with the consolidated financial statements and notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this Report.
Successor Company Predecessor Company
Period from Period from
December 16 January 1
Year Ended to to
December 31, December 31, December 15, Year Ended December 31,
------------- ------------ ------------ ----------------------------------
2000 1999 1999(6) 1998(5) 1997 1996
(in thousands)
Consolidated Statement of Operations Data:
Revenue..................................... $ 320,483 $ 13,479 $ 328,751 $ 404,793 $ 210,257 $ 109,356
Operating expenses.......................... 205,226 8,047 212,753 213,601 104,933 60,720
Overhead expenses........................... 39,630 1,643 47,814 43,179 24,791 14,979
Depreciation, amortization and drydocking... 50,271 2,069 79,410 64,244 25,200 12,887
----------- ----------- ----------- ---------- ---------- ----------
Income (loss) from operations............... 25,356 1,720 (11,226) 83,769 55,333 20,770
Interest expense, net(1).................... 62,010 2,688 70,374 41,238 7,024 11,631
Other income (expense)...................... 12,574 (597) (32,129) (5,692) (3,704) 437
Reorganization items(2)..................... -- -- (433,273) -- -- --
----------- ----------- ----------- ---------- ---------- ----------
Income (loss) before income taxes and
extraordinary item....................... (24,080) (1,565) (547,002) 36,839 44,605 9,576
Provision for (benefit from) income taxes... 4,872 -- (32,004) 13,489 16,950 3,543
----------- ----------- ----------- ---------- ---------- ----------
Income (loss) before extraordinary item..... (28,952) (1,565) (514,998) 23,350 27,655 6,033
Gain (loss) on extinguishment of debt(3).... -- -- 266,643 (1,602) (2,132) (8,108)
----------- ----------- ----------- ---------- ---------- ----------
Net income (loss)........................... $ (28,952) $ (1,565) $ (248,355) $ 21,748 $ 25,523 $ (2,075)
=========== =========== =========== ========== ========== ==========
Diluted earnings (loss) per common share:
Income (loss) before extraordinary item.. $ (2.89) $ (0.16) $ (33.22) $ 1.43 $ 1.75 $ 0.99
========== =========== =========== ========== ========== ==========
Net income (loss)........................ $ (2.89) $ (0.16) $ (16.02) $ 1.35 $ 1.63 $ (0.24)
=========== =========== =========== ========== ========== ===========
Weighted average number of shares and
common equivalent shares outstanding... 10,034 10,000 15,503 19,451 17,120 6,590
=========== =========== =========== ========== ========== ==========
Other Financial Data:
EBITDA(4)................................ $ 75,627 $ 3,789 $ 68,184 $ 148,013 $ 80,533 $ 33,657
=========== =========== =========== ========== ========== ==========
Consolidated Statement of Cash Flows Data:
Net cash provided by (used in):
Operating activities..................... $ 26,276 $ 2,561 $ 14,927 $ 90,853 $ 42,596 $ 23,140
Investing activities..................... 2,228 (3,021) (14,862) (525,652) (263,897) (84,910)
Financing activities..................... (33,317) (1,491) 10,826 429,550 226,636 68,337
Successor Company Predecessor Company
---------------------------- ------------------------------------------
As of December 31,
------------------------------------------------------------------------
2000 1999(5)(6) 1998(5) 1997 1996
------------ --------------------------- ------------ -------------
Consolidated Balance Sheet Data:
Working capital (deficit)................... $ 8,686 $ 33,498 $ (216,802) $ 25,790 $ (8,704)
Total assets................................ 775,476 830,740 1,355,267 604,561 273,473
Total long-term obligations................. 544,870 582,364 631,416 217,217 124,454
Convertible preferred securities of a
subsidiary trust......................... -- -- 115,000 115,000 --
Stockholders' equity........................ 136,514 165,326 248,035 224,987 101,091
-----------------------------
(1)Interest expense for the period from January 1, 1999 through December 15,
1999 excludes $8.8 million of contractual interest that was not accrued
during the Company's Chapter 11 proceeding. See Notes to the Company's
consolidated financial statements.
(2)Reorganization items are comprised of items directly related to the
Predecessor Company's Chapter 11 proceeding. See Notes to the Company's
consolidated financial statements.
(3)Reflects gains and losses on the extinguishment of debt, net of applicable
income taxes of $413, $1,252, and $1,474, in 1998, 1997, and 1996,
respectively.
(4)EBITDA (net income from continuing operations before interest expense, income
tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's EBITDA operations. EBITDA is not recognized by generally accepted
accounting principles, should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows from operations as a measure of liquidity, and
does not represent funds available for management's use. Further, the
Company's EBITDA may not be comparable to similarly titled measures
reported by other companies.
(5)Reflects the acquisition of a 50.0% ownership interest in 1998, and an
additional 25.0% interest in 1999, of five newly constructed double-hull
tankers. See Notes to the Company's consolidated financial statements.
(6) Reflects the Chapter 11 reorganization and the application of fresh-start
accounting. See Notes to the Company's consolidated financial statements.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This discussion and analysis of the Company's financial condition and
historical results of operations should be read in conjunction with the
Company's consolidated historical financial statements and the related notes
thereto included elsewhere in this Report.
On December 15, 1999 (the "Effective Date"), the Company emerged from
its Chapter 11 proceeding and adopted Fresh Start Accounting. 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.
For purposes of comparative analysis, the twelve months ended December
31, 1999 include the results of the Predecessor Company for the period from
January 1, 1999 to December 15, 1999, and the Successor Company for the period
from December 16, 1999 to December 31, 1999. The principal differences 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 the reorganization value at the Effective Date.
These changes primarily affect depreciation and amortization expense and
interest expense in the Company's results of operations.
Revenue Overview
The Company derives its revenue from three main lines of business -
offshore energy support, marine transportation, and towing. Seabulk Offshore,
the Company's domestic and international offshore energy support business,
accounted for approximately 47.0% of Company revenues in 2000. Marine
transportation under the new name Seabulk Tankers consists of (1) the Company's
Jones Act tanker business, in which it operates ten petroleum product and
chemical carriers in the coastwise trade, and (2) its inland tug and barge
operation and shipyard, Sun State Marine Services. Together, they accounted for
approximately 43.0% of Company revenues in 2000. Seabulk Towing, the Company's
domestic harbor and offshore towing business, accounted for approximately 10.0%
of the Company's 2000 revenues.
Offshore Energy Support
Revenue from the Company's offshore energy support operations 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 exploration, development, and production activities, which
are in turn heavily dependent upon the price of crude oil and natural gas.
Further, in certain areas where the Company conducts offshore energy support
operations (particularly the U.S. Gulf of Mexico), contracts for the utilization
of offshore energy support 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 represents revenues for the Offshore Energy Support
by major operating area as of December 31 (in thousands):
2000 1999 1998
------------- ------------- -------------
Domestic(1)............................... $ 54,491 $ 50,188 $ 90,979
West Africa............................... 48,268 46,953 69,736
Middle East............................... 34,242 40,335 55,878
Southeast Asia............................ 14,394 12,836 26,062
------------- ------------- -------------
Total Offshore Revenues................. $ 151,395 $ 150,312 $ 242,655
============= ============= =============
(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
The following tables set forth, by primary area of operation, average
day rates achieved by the offshore energy fleet owned or operated by the Company
and their average utilization for the periods indicated. Average day rates are
calculated by dividing total revenues by the number of days worked. Utilization
percentages are based upon the number of working days over a 365/366-day year
and the number of vessels in the fleet on the last day of the quarter.
-------------------------------------------------------------------------------------------------------------------
Q1 2000 Q2 2000 Q3 2000 Q4 2000
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other
-------------------------------------------------------------------------------------------------------------------
Domestic(1)
Vessels(2)(3) 25 - 33 2 26 - 33 2 26 - 31 2 26 - 32 2
Bareboat-out(4) - - 6 1 - - 2 1 - - 2 1 - - 2 1
Laid-Up 3 - 1 2 5 - 2 2 3 - - 2 2 - - 2
Effective
Utilization(5) 80% - 79% - 79% - 81% - 76% - 86% - 68% - 86% -
Fleet
Utilization(5) 74% - 76% - 67% - 76% - 67% - 86% - 62% - 86% -
$
Day Rate $3,663 - $1,894 - $4,024 - $1,921 - 4,821 - $2,117 - $6,174 - $2,403 -
West Africa
Vessels(3) 24 4 5 1 25 4 5 1 26 4 6 1 26 4 6 1
Laid-Up 2 1 1 1 2 1 1 1 1 2 1 1 1 2 1 1
Effective
Utilization(5) 85% 57% 53% - 83% 60% 59% - 85% 81% 62% - 87% 95% 84% -
Fleet
Utilization(5) 79% 43% 44% - 76% 45% 48% - 82% 44% 51% - 83% 48% 70% -
Day Rate $5,304 $4,289 $2,450 - $5,618 $5,200 $2,460 - $5,887 $5,122 $2,809 - $5,820 $5,103$2,978 -
Middle East
Vessels(6)(7) 24 21 29 8 21 21 29 8 18 21 24 8 12 16 19 8
Laid-Up 10 5 15 - 10 5 12 - 10 6 12 - 6 5 8 -
Effective
Utilization(5) 62% 72% 69% 69% 83% 74% 61% 70% 83% 50% 61% 55% 69% 45% 63% 55%
Fleet
Utilization(5) 36% 54% 38% 69% 45% 55% 36% 70% 39% 35% 31% 55% 36% 31% 34% 55%
Day Rate $2,899 $2,809 $1,373 $6,988 $2,995 $2,960 $1,446 $6,302 $2,634 $3,345 $1,483 $5,510 $3,544 $3,841$1,543 $5,669
Southeast Asia
Vessels 9 2 5 2 9 2 5 2 10 2 5 2 10 2 5 2
Laid-Up 3 - - 1 2 1 - - 2 1 - - 2 1 - -
Effective
Utilization(4) 49% 7% 46% 33% 90% 96% 66% 85% 85% 60% 69% 83% 68% 41% 83% 61%
Fleet
Utilization(4) 38% 7% 46% 17% 70% 48% 66% 85% 73% 30% 69% 83% 55% 21% 83% 61%
Day Rate $4,031 $8,516 $1,540 $8,086 $4,358 $4,569 $1,549 $5,268 $3,765 $7,364 $1,330 $5,474 $5,380 $4,775$1,655 $5,085
------------------------------------
(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
(2) One vessel was sold in Q4 2000 from the Crew/Utility category. Since she
earned substantial revenues during the quarter, she was included in the
statistics.
(3) One vessel in the Crew/Utility category changed reporting area from
Domestic to West Africa after Q2 2000. The statistics reflected this move.
(4) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(5) Fleet utilization includes laid-up vessels of which 10 are being actively
marketed for a sale in the Middle East and effective utilization excludes
laid-up vessels.
(6) As of March 1, 2001, the Company sold one vessel from the AHTS/Supply
category and two vessels from the Crew/Utility category. These vessels are
included in the Fleet Utilization as of December 31, 2000.
(7) The Middle East Other and AHT/Tugs categories include a vessel that is in a
50/50 joint venture and a 44-foot harbor tug, respectively, which are not
included in the day rate and utilization statistics.
-------------------------------------------------------------------------------------------------------------------
Q1 1999 Q2 1999 Q3 1999 Q4 1999
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other
-------------------------------------------------------------------------------------------------------------------
Domestic(1)
Vessels 25 - 35 2 24 - 34 3 25 - 34 2 25 - 34 2
Bareboat-out(2) 1 - 5 - 1 - 5 - - - 5 1 - - 5 1
Laid-Up(3) 1 - 1 1 2 - 1 2 2 - 2 2 2 - 2 2
Effective
Utilization(4) 73% - 68% 77% 81% - 75% 50% 84% - 78% 100% 83% - 91% -
Fleet
Utilization(4) 70% - 66% 77% 74% - 73% 33% 77% - 73% 43% 77% - 85% -
Day Rate $4,842 - $2,142 $5,765 $4,027 - $1,881 $5,259 $3,392 - $1,755 $1,317 $3,520 - $1,823 -
West Africa
Vessels 24 4 5 1 25 4 5 1 24 4 5 1 24 4 5 1
Laid-Up - - - - - - - - - - - 1 1 1 - 1
Effective
Utilization(4) 74% 89% 71% - 61% 88% 44% 41% 52% 60% 49% - 66% 67% 77% -
Fleet
Utilization(4) 74% 89% 71% - 61% 88% 44% 41% 52% 60% 49% - 63% 50% 77% -
Day Rate $7,838 $6,414 $2,910 - $7,189 $5,508 $2,622 $5,218 $6,056 $5,094 $2,675 - $6,145 $4,734 $2,351 -
Middle East
Vessels(5)(6) 24 23 29 10 24 23 30 9 24 21 30 8 24 21 29 8
Laid-Up 5 2 12 1 7 2 13 - 8 4 13 - 8 5 13 -
Effective
Utilization(4) 53% 50% 87% 60% 46% 39% 74% 72% 47% 61% 70% 68% 44% 51% 78% 64%
Fleet
Utilization(4) 42% 46% 52% 54% 33% 36% 42% 72% 31% 49% 40% 68% 29% 38% 43% 64%
Day Rate $4,127 $2,905 $1,385 $7,127 $3,382 $2,889 $1,364 $6,383 $3,308 $2,822 $1,407 $5,828 $3,304 $3,193 $1,629 $6,048
Southeast Asia
Vessels 9 2 4 2 9 2 4 2 9 2 4 2 9 2 5 2
Laid-Up 2 - - - 2 - - - 3 - - - 3 - - -
Effective
Utilization(4) 59% 73% 100% 39% 63% 40% 100% 76% 61% 54% 99% 50% 48% 37% 81% -
Fleet
Utilization(4) 46% 73% 100% 39% 49% 40% 100% 76% 43% 54% 99% 50% 32% 37% 81% -
Day Rate $5,565 $5,308 $1,577 $5,029 $4,593 $7,042 $1,586 $7,079 $4,753 $6,546 $1,645 $4,295 $3,187 $8,227 $1,549 -
------------------------------------
(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
(2) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(3) One vessel in the Other category was laid-up during 1999 after her contract
was terminated. She continued to collect charter hire, which was included
in the day rate and utilization statistics.
(4) Fleet utilization includes laid-up vessels and effective utilization
excludes laid-up vessels.
(5) The Middle East AHTS/Supply category includes two vessels in Q1 1999 that
were on bareboat-out charter. They are not included in the day rate and
utilization statistics.
(6) The Middle East Other and AHT/Tugs categories include a vessel that is in a
50/50 joint venture and a 44-foot harbor tug, respectively, which are not
included in the day rate and utilization statistics.
-------------------------------------------------------------------------------------------------------------------
Q1 1998 Q2 1998 Q3 1998 Q4 1998
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other Supply Tugs Utility Other
-------------------------------------------------------------------------------------------------------------------
Domestic(1)
Vessels 28 - 42 3 28 - 42 4 26 - 40 4 25 - 38 4
Bareboat-out(2) - - - - - - 1 - - - 2 - - - 3 -
Laid-Up - - - - - - - - - - - - - - - -
Effective
Utilization(3) 85% - 89% 93% 79% - 91% 76% 54% - 78% 95% 70% - 83% 82%
Fleet
Utilization(3) 85% - 89% 93% 79% - 91% 76% 54% - 78% 95% 70% - 83% 82%
Day Rate $8,264 - $2,348 $5,885 $8,378 - $2,446 $5,824 $7,235 - $2,397 $5,957 $5,638 - $2,375 $6,027
West Africa
Vessels 21 5 3 1 21 5 3 1 21 5 3 1 24 5 5 1
Laid-Up - - - - - - - - - - - - - - - -
Effective
Utilization(3) 76% 92% 72% 66% 86% 92% 65% 80% 90% 78% 77% 65% 80% 92% 60% 36%
Fleet
Utilization(3) 76% 92% 72% 66% 86% 92% 65% 80% 90% 78% 77% 65% 80% 92% 60% 36%
Day Rate $6,873 $4,453 $3,252 $6,976 $8,973 $6,625 $4,126 $6,952 $9,185 $6,844 $3,607 $6,048 $8,571 $5,986 $2,951 $6,801
Middle East
Vessels(4) 19 20 27 9 19 20 27 9 22 20 28 9 23 22 28 9
Laid-Up - - - - - - - - - - - - - - - -
Effective
Utilization(3) 54% 71% 69% 41% 72% 66% 73% 39% 81% 61% 67% 47% 61% 71% 63% 44%
Fleet
Utilization(3) 54% 71% 69% 41% 72% 66% 73% 39% 81% 61% 67% 47% 61% 71% 63% 44%
Day Rate $3,596 $3,319 $1,303 $6,129 $4,136 $3,687 $1,362 $7,826 $3,393 $3,635 $1,449 $6,406 $3,883 $3,129 $1,398 $7,872
Southeast Asia
Vessels(5) 10 2 4 2 10 2 4 2 9 2 4 2 9 2 4 2
Laid-Up - - - - - - - - - - - - - - - -
Effective
Utilization(3) 76% 74% 83% 55% 83% 77% 99% 74% 79% 77% 100% 95% 85% 79% 100% 82%
Fleet
Utilization(3) 76% 74% 83% 55% 83% 77% 99% 74% 79% 77% 100% 95% 85% 79% 100% 82%
Day Rate $5,343 $5,185 $1,557 $5,843 $7,041 $7,481 $1,590 $7,571 $6,296 $7,030 $1,592 $7,507 $6,645 $7,105 $1,570 $5,484
-------------------------------
(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
(2) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(3) Fleet utilization includes laid-up vessels and effective utilization
excludes laid-up vessels.
(4) The Middle East Other and AHT/Tugs categories include a vessel that is in a
50/50 joint venture and a 44-foot harbor tug, respectively, which are not
included in the day rate and utilization statistics.
(5) The Southeast Asia AHTS/Supply categoary in Q1 and Q2 1998 includes two
vessels on bareboat-out charter. These vessels are not included in the day
rate and utilization statistics.
As indicated in the above tables, average day rates for Domestic
operating area improved steadily in 2000 due to sharply higher oil and gas
prices and a resulting increase in offshore exploration and production
activities. These rates are now approaching levels last seen in 1998. The
Company took delivery of a 1996-built, 152-foot crewboat in the fourth quarter
of 2000 and expects delivery of a similar vessel in the second quarter of 2001.
Demand for these larger crewboats is increasing as exploration companies move
farther and farther offshore.
Average day rates for the Company's fleet operated in overseas markets
have steadily rebounded, with the exception of the Middle East. The rebound,
while not as dramatic as the Domestic, was led by improved performance in West
Africa and, to a lesser extent, Southeast Asia. The Middle East remained
depressed. Continued low utilization reflects the large number of laid-up
vessels (including 10 vessels held for sale) primarily in the Middle East.
Average day rates for the Company's anchor handling tug supply and supply boats
at March 1, 2001 for Domestic, West Africa, the Middle East, and Southeast Asia
were $7,100, $6,400, $2,600, and $5,000, respectively.
Marine Transportation
Revenues from the Company's marine transportation services are derived
principally from the operations of petroleum product and chemical carriers in
the U.S. Jones Act Trade, and to a lesser extent from towboat and fuel barge
operations in Jacksonville, Florida.
Petroleum Product Tankers. Demand for petroleum product transportation
services is dependent both on the level of production and refining, as well as
consumer use of petroleum-based products. The Company operated seven petroleum
tankers at December 31, 2000. Four of the Company's petroleum tankers (including
one that is also a chemical carrier) are newly built, double-hull vessels
delivered in late 1998 and the first half of 1999.
Chemical Tankers. Generally, demand for industrial chemical
transportation services coincides with overall economic activity. The Company
operated two chemical tankers and one multipurpose vessel in the chemical trade
as of December 31, 2000. This tanker is a newly built, double-hull,
state-of-the-art vessel delivered in the first half of 1999. The other two are
double-bottom ships.
The Company's tanker fleet operates on either long-term voyage and time
charters or pursuant to short-term arrangements. During 2000, five of the
Company's tankers operated under long-term contracts.
The following table sets forth the number of vessels and revenues for
the Company's chemical and product carriers:
Year Ended December 31,
2000(1)(4) 1999(2)(4) 1998(3)(4)
Number of vessels owned...................................................... 10 11 11
Revenues (in thousands)...................................................... $126,670 $143,401 $98,930
--------------------------
(1) During 2000, the Company scrapped one tanker that was at the end of its OPA
90-mandated useful life.
(2) During 1999, the Company took delivery of the final two newly built
double-hull tankers, scrapped one tanker that was at the end of its useful
life, and returned one tanker to the lessor pursuant to the expiration of
the lease.
(3) During 1998, the Company acquired two tankers and took delivery of three of
the newly built double-hull tankers.
(4) Includes revenues from chartered in vessels of $9.7 million, $15.9 million,
and $26.2 million in 2000, 1999, and 1998, respectively.
Inland Tugs and Barges. Revenue from the Company's Sun State Marine
Services subsidiary has been derived primarily from contracts of affreightment
with Steuart Petroleum Co. and FPL that require the Company to transport fuel as
needed. Revenue is also derived from Sun State's ship construction and repair
activities. Revenues from these operations were $9.3 million in 2000 and $8.6
million in 1999. The increase in revenue was due mainly to increased ship
construction and repair activity in 2000 and a decline in revenues in 1999 from
the FPL contract.
Towing
Revenue derived from the Company's tug operations is primarily a
function of the number of tugs available to provide services, the rates charged
for their services, and the volume of vessel traffic requiring docking and other
ship-assist services. Vessel traffic, in turn, is largely a function of the
general trade activity in the region served by the port.
The following table summarizes certain operating information for the
Company's tugs.
Year Ended December 31,
-------------------------------------
2000 1999 1998
Number of tugs at end of period............. 33 37 41
Total towing revenue (in thousands).........$ 33,106 $ 42,959 $ 46,368
Towing revenues declined in 2000 due mainly to the sale of five
vessels, the proceeds from which were used to pay down debt. The decrease in
revenues was also partially due to increased competition in the Port of Tampa
and lower revenues in Port Everglades. In November 1999, certain of the
Company's former personnel began a competing harbor towing operation in the Port
of Tampa. The Company took delivery of its fourth SDM(TM), the Suwannee River,
during the year. Revenues in 1999 reflected the sale of certain underutilized
tugboats, decreased offshore towing opportunities and less shipping activity in
ports served by the Company.
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, depreciation and amortization, fuel, maintenance and repairs, and
insurance. During periods of decreased demand for vessels, such as during 1999
and early 2000, the Company temporarily ceases using certain vessels, i.e.,
stacks, to minimize investments in marine operating supplies, crew payroll and
maintenance costs. At December 31, 2000, 31 of the Company's 173 offshore energy
support vessels were stacked or held for sale. The Company took other steps
during 2000 to reduce operating costs, including the shutdown of the Sharjah
shipyard; the relocation and downsizing of the Lausanne office to Nyon,
Switzerland; the consolidation of certain international offshore functions in
Dubai, United Arab Emirates; and the consolidation of tanker and purchasing
functions in Port Arthur, Texas.
The crews of Company-manned chemical and product carriers are paid on a
time-for-time basis under which they receive paid leave in proportion to time
served aboard a vessel. The crews of offshore energy support vessels and certain
tugs and towboats are paid only for days worked.
In addition to variable expenses associated with vessel operations, the
Company incurs fixed charges to depreciate its vessels and other assets. The
Company provides for depreciation on a straight-line basis over the estimated
useful lives of the related assets. OPA 90 mandates the useful life of the
Company's product and chemical carriers, except for the newly constructed
double-hull carriers. The Company evaluates the expected remaining useful lives
of its assets when changes occur in current and anticipated market conditions
and customer demand. During 2000, the Company reduced the estimated remaining
useful lives of certain of its offshore energy and support vessels in response
to changes in customer demand and marketability of the vessels. See Note 2 to
the Company's Consolidated Financial Statements.
The Company overhauls main engines and key auxiliary equipment in
accordance with a continuous planned maintenance program. Under applicable
regulations, the Company's chemical and product carriers and offshore service
vessels and its four largest tugs are required to be drydocked twice in each
five-year period for inspection and routine maintenance and repairs. These
vessels are also required to undergo special surveys every five years involving
comprehensive inspection and corrective measures to insure their structural
integrity and proper functioning of their cargo and ballast piping systems,
critical machinery and equipment, and coatings. The Company's fuel barges,
because they are operated in fresh water, are required to be drydocked only
twice in each ten-year period. The Company's harbor tugs and towboats generally
are not required to be drydocked on a specific schedule. During the years ended
December 31, 2000, 1999, and 1998, the Company drydocked 62, 47, and 90 vessels,
respectively, at an aggregate cost (exclusive of lost revenue) of $14.4 million,
$7.6 million, and $21.3 million, respectively. The Company accounts for its
drydocking costs under the deferral method, under which capitalized drydocking
costs are expensed over the period preceding the next scheduled drydocking.
Amortization primarily represents drydocking and finance costs. See Note 2 to
the Company's consolidated financial statements.
The Company had capital expenditures in the years ended December 31,
2000 and 1999 of $31.5 million and $64.2 million, respectively.
The cost of fuel is an item having significant impact on the Company's
operating results. Although market conditions can significantly impact the price
of fuel, at present, these conditions have not resulted in an inadequate supply.
Insurance costs consist primarily of premiums paid for (i) protection
and indemnity insurance for the Company's marine liability risks, which are
insured by a mutual insurance association of which the Company is a member and
through the commercial insurance markets; (ii) hull and machinery insurance and
other maritime-related insurance, which are provided through the commercial
marine insurance markets; and (iii) general liability and other traditional
insurance, which is provided through the commercial insurance markets. Insurance
costs, particularly costs of marine insurance, are directly related to overall
insurance market conditions and industry and individual loss records, which vary
from year to year.
Results of Operations
Results for 2000 reflect the first full year of operation under Fresh
Start Accounting, which the Company adopted following its emergence from Chapter
11 on December 15, 1999 (the Effective Date). See Note 3 to the Company's
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 twelve months ended December 31, 1999 include the results of the
Predecessor Company for the period from January 1, 1999 to December 15, 1999 and
the Successor Company for the period from December 16, 1999 to December 31,
1999. The principal differences 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 and
amortization expense and interest expense in the Company's results of
operations.
The following table sets forth certain selected financial data and
percentages of net revenue for the periods indicated:
Year Ended December 31,
----------------------------------------------------------------------
2000 1999 1998
---------------------- ---------------------- ----------------------
(Dollars in millions)
Net revenues................................... $ 320.5 100.0% $ 342.2 100.0% $ 404.8 100.0%
Operating expenses............................. 205.2 64.0% 220.8 65.0% 213.6 53.0%
Overhead expenses.............................. 39.6 12.0% 49.4 14.0% 43.2 10.0%
Depreciation, amortization and drydocking...... 50.3 16.0% 81.5 24.0% 64.2 16.0%
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from operations.................. $ 25.4 8% $ (9.5) (3.0)% $ 83.8 21.0%
========== ========== ========== ========== ========== ==========
Interest expense, net.......................... $ 62.0 19.0% $ 73.1 21.0% $ 41.2 10.0%
========== ========== ========== ========== ========== ==========
Other income (expense)......................... $ 12.6 4.0% $ (32.7) (10.0)% $ (5.7) (1.0)%
========== ========== ========== ========== ========== ==========
Reorganization items........................... $ -- -- $ (433.3) (127.0)% -- --
========== ========== ========== ========== ========== ==========
Net income (loss).............................. $ (29.0) (9.0)% $ (249.9) (73.0)% $ 21.7 5.0%
========= ========== ========== ========== ========== ==========
2000 Compared with 1999
Net Revenue. Net revenue decreased 6.0% to $320.5 million for 2000 from
$342.2 million for 1999 primarily due to decreased revenue from the Company's
marine transportation services and towing operations.
Offshore energy support revenue increased 1.0% to $151.4 million for
2000 from $150.3 million for 1999 primarily due to the increase in day rates for
both supply and crew boats. This increase began in the first quarter of 2000 and
continued throughout the year as a result of an increase in energy prices and
exploration and production activity. During 2000, a total of 29 offshore energy
support vessels were sold of which six were sold during the first half of the
year and 23 during the second half of the year.
Marine transportation services revenue decreased $12.9 million, or
9.0%, to $136.0 million for 2000 from $148.9 million for 1999. This decrease is
primarily due to the mandated retirement of three of the Company's Jones Act
tankers, two in the last quarter of 1999 and one in the third quarter of 2000.
Additionally, the Company had chartered in two tankers in 1999 and one tanker
through October 2000. Revenue from these tankers was $28.9 million in 1999
compared to $9.7 million in 2000. This decrease was partially offset by the
operation of two of the Company's double-hull tankers for the entire year 2000.
The HMI Ambrose Channel and HMI Brenton Reef were placed in service in March and
June of 1999, respectively. Revenue from these two double-hull tankers was $14.9
million in 1999 compared to $27.2 million in 2000.
Towing revenue decreased 23.0% to $33.1 million for 2000 from $43.0
million for 1999. This decrease is primarily due to the sale of five tugs during
2000 and increased competition in the Port of Tampa as well as decreased
activity in some of the other remaining ports in which the Company operates.
Operating Expenses. Operating expenses decreased 7.0% to $205.2 million
for 2000 from $220.8 million for 1999, primarily due to decreases in charter
hire expenses and port charges in the Company's marine transportation services
operations and crew payroll expenses in the Company's offshore energy support
operations, offset in part by increased fuel expense.
Overhead Expenses. Overhead expenses decreased 20.0% to $39.6 million
for 2000 from $49.4 million for 1999 primarily due to a decrease in professional
fees related to the Company's Chapter 11 proceeding in 1999.
Depreciation, Amortization and Drydocking Expenses. Depreciation,
amortization and drydocking expenses decreased 38.0% to $50.3 million in 2000
from $81.5 million in 1999 primarily due to the write-down of the book value of
property and deferred drydocking costs, and the write-off of goodwill as a
result of the reorganization in 1999. Drydocking expense decreased 41.0% to $6.8
million in 2000 from $11.5 million in 1999. The reduction in drydocking expense
was a direct result of reduced drydocking expenditures in late 1998 and through
1999 as drydocking expenditures were deferred on non-working vessels. In
response to increased activity in the offshore segment in 2000, the Company
increased the level of drydocking expenditures, which will increase through
2001. The Company expects that drydocking amortization expense will increase in
the future as a result of the additional level of expenditures. As previously
indicated, the Company revised the estimated remaining useful lives of certain
offshore energy and support vessels. As a result of this change, offset in part
by the impact of vessels sold in 2000, total depreciation expense for 2001 is
expected to increase by approximately $4.0 million to approximately $46.4
million in 2001 versus $42.4 million in 2000.
Income (loss) from Operations. Income (loss) from operations increased
367.0% to income of $25.4 million in 2000 from a loss of $(9.5) in 1999 as a
result of the factors noted above.
Net Interest Expense. Net interest expense decreased 15.0% to $62.0
million in 2000 from $73.0 million in 1999 primarily due to the reorganization
and conversion of the Predecessor Company's senior notes and preferred
securities to shares in the Successor Company's common stock.
Other Income (expense). Other income totaled $12.6 million in 2000
compared to other expense of $(32.7) million in 1999 primarily due to a net gain
of $3.9 million on vessel sales and a $7.0 million favorable settlement of a
disputed liability in 2000 compared to a net loss of $(25.7) million on vessel
sales in 1999.
Net Income (loss). The Company's net loss decreased 88% to $(29.0)
million for 2000 compared to a loss of $(249.9) million for 1999 as a result of
the factors noted above and reorganization items incurred in 1999.
1999 Compared with 1998
Net Revenue. Net revenue decreased 15.0% to $342.2 for 1999 from $404.8
for 1998 primarily due to decreased revenue from the Company's offshore energy
support operations.
Offshore energy support revenue decreased 38.0% to $150.3 million for
1999 from $242.7 million for 1998 due primarily to the worldwide decrease in day
rates and utilization for both supply and crewboats. This decline, as described
above, began in 1998 and continued in 1999 as a result of a steep decline in
energy prices and exploration and production activity. During 1999, a total of
four offshore energy support vessels were sold.
Marine transportation services revenue increased 29.0% to $148.9
million for 1999 from $115.8 million for 1998 primarily due to revenue earned by
the five new double-hull tankers, which were brought into service between
October 1998 and June 1999. These new tankers operate more efficiently and in
some cases demand higher rates than the Company's other tankers. Revenue from
the double-hull tankers was $49.5 million in 1999 compared to $3.2 million for
the three months in 1998. These increases were offset in part because the
Company returned the Seabulk Challenger to the lessor at the expiration of the
lease in October 1999 and scrapped the HMI Astrachem, in November 1999 in
anticipation of its OPA 90-mandated retirement date. Combined revenues for these
tankers were $14.9 million in 1999 compared to $17.2 million in 1998.
Towing revenue decreased 7.0% to $43.0 million for 1999 from $46.4
million for 1998 due to reduced shipping activity in the ports that the Company
serves, decreased offshore towing activities and increased competition in the
Port of Tampa, as described above.
Operating Expenses. Operating expenses increased 3.0% to $220.8 million
for 1999 from $213.6 million for 1998, primarily due to increases in maintenance
and repairs of $7.0 million. As a percentage of revenue, operating expenses
increased to 65.0% for 1999 from 53.0% for 1998 due primarily to the decline in
revenue from the offshore energy support operations and the other factors noted
above.
Overhead Expenses. Overhead expenses increased 14.0% to $49.4 million
for 1999 from $43.2 for 1998 primarily due to an increase in consulting and
professional fees of 53.0% in 1999 over 1998 incurred as a result of the
Company's Chapter 11 proceeding. As a percentage of revenue, overhead expenses
were 14.0% and 11.0% for 1999 and 1998, respectively. The increase as a
percentage of revenue reflects the combined effects of increased expenditures
and lower revenues.
Depreciation, Amortization and Drydocking Expenses. Depreciation,
amortization and drydocking expenses increased 27.0% to $81.5 million in 1999
from $64.2 million in 1998. Approximately $7.7 million of the increase is
attributable to an increase in the marine transportation operation resulting
from the addition of the double-hull tankers. Also, the Company acquired 37
offshore energy support vessels in the first quarter of 1998 and the results of
operations for 1999 reflect a full year of depreciation expense for those
acquired vessels, which had the effect of increasing depreciation expense by
approximately $9.6 million. Drydocking expense increased 1.0% to $11.5 million
in 1999 from $11.4 million in 1998.
Income (loss) from Operations. Income (loss) from operations decreased
117.0% to $(9.5) million in 1999 from $83.8 million in 1998, as a result of the
factors indicated above.
Net Interest Expense. Net interest expense increased $31.8 million from
$41.2 million in 1998 to $73.0 million in 1999 as a result of additional
borrowings under the Company's revolving credit facility and additional interest
payable at default rates of interest from March 31, 1999 through the September
8, 1999 bankruptcy filing date. Besides these increases, the Company did not
accrue approximately $8.8 million of contractual interest subsequent to the
bankruptcy filing on debt that was ultimately extinguished at the Effective Date
of the Plan of Reorganization. Interest expense was partially offset by interest
income of $0.9 million and $8.5 million in 1999 and 1998, respectively. Interest
income in 1998 primarily reflects earnings on the proceeds of the double-hull
tankers Title XI ship financing bonds that were invested pursuant to Maritime
Administration (MARAD) regulations and restricted to fund the remaining
construction costs of the double-hull tankers.
Other Expenses. Other expenses increased $27.0 million, from $5.7
million in 1998 to $32.7 million in 1999. The increase was primarily the result
of the loss on the sale of vessels.
Reorganization Items. Reorganization items in 1999 represent items
directly related to the Company's Chapter 11 proceeding. These expenses consist
primarily of the write-down of long-term assets and goodwill to reflect the
reorganization value of the Company and professional fees.
Net Income (loss). The Company had a net loss of $(249.9) million for
1999 compared to net income of $21.7 million for 1998 as a result of the factors
noted above.
Seasonality
The Company has experienced some slight seasonality in its operations.
The first half of the year is generally not as strong as the second half due to
lower activity in offshore energy support services and petroleum product
transportation during the months of February, March, and April.
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 nine months of 2000 as compared to previous years, reducing the
availability of cash from operations to fund the Company's capital requirements.
Cash Flows. During 2000, the Company generated $26.3 million of cash in
operating activities, primarily reflecting net income adjusted by changes in
working capital and normal recurring non-cash items such as depreciation. Cash
provided by investing activities was approximately $2.2 million for the period,
resulting primarily from the disposal of vessels and the redemption of
investments from restricted MARAD accounts used for the final outfitting of the
double-hull tankers. Cash used in financing activities was approximately $33.3
million, consisting primarily of principal payments under the loan agreement and
capital lease obligations, offset by borrowings under the revolver.
During 1999, the Company generated $17.5 million of cash from
operations before reorganization items, primarily reflecting the net loss for
the period, after elimination of reorganization expense of $433.3 million and
non-cash items. Cash used in investing activities was approximately $17.9
million for the period, primarily reflecting the disposal of vessels and the
redemption of restricted investments, offset by the costs of construction of and
capital improvements to other vessels. Cash generated by financing activities
was approximately $9.3 million, consisting primarily of payments under the
existing loan agreement, offset by borrowings.
Recent Expenditures and Future Cash Requirements. After the Company's
emergence from bankruptcy in December 1999, covenants set forth in the new bank
credit agreement restricted the purchase of any additional vessels or equipment
over a set principal amount without prior bank permission. In June 2000, the
Company had its fourth tractor tug delivered as settlement of an outstanding
claim by the builder. A cash deposit of $750,000 was paid in February 2000 with
the remaining balance of $4.6 million financed under a capital lease through
April 2008.
With the market upswing during the second half of 2000, the Company
elected to purchase two modern 152' crewboats for a total price of $5.0 million.
Deposits totaling $175,000 were made during October 2000. In December 2000, the
first crewboat was delivered and the remaining balance of $2.4 million was paid
at the time of delivery. The expected delivery date for the second crewboat is
April 2001, along with a cash payment for the remaining balance of $2.5 million.
The Company's current and future capital needs relate primarily to debt
service and maintenance and improvements of its fleet. Excluding the five
double-hull product and chemical tankers, the Company's principal obligations
for 2000 were $42.4 million; cash interest obligations were $40.2 million of the
$45.8 million in total interest expense, which includes amortization of bank
fees and discounts on notes. Operating lease obligations were $4.4 million in
2000. Excluding the five double-hull product and chemical tankers, the Company's
principal obligations for 2001 are estimated to be approximately $20.6 million;
cash interest obligations will be approximately $37.8 million of the estimated
$42.4 million in total interest expense, and operating lease obligations for
2001 are estimated to be $4.3 million.
During 2000, the Company paid $3.8 million in principal and $15.7
million in interest on the five double-hull tankers. For 2001, an estimated $4.1
million of principal and $15.4 million in interest payments are due on the Title
XI ship financing bonds associated with the five double-hull product and
chemical tankers.
During 2000, the Company incurred $22.8 million in capital improvements
to its fleet, including drydock expenditures for 62 vessels. For 2001, these
improvements are expected to aggregate $25.4 million.
In December 2000, the Company signed an agreement to purchase the
remaining 24.25% equity interest in its five 45,300 dwt double-hull product and
chemical tankers. The purchase was completed in January 2001, and was funded by
$0.5 million in cash and a promissory note in the amount of $10.5 million at an
interest rate of 8.5%. The aggregate cost of the five carriers was approximately
$280.0 million, a substantial portion of which was financed with the proceeds of
U.S. government-guaranteed Title XI ship financing bonds.
The Reorganization. The Company's reorganization plan became effective
on December 15, 1999. The details of the plan are summarized in Note 3 to the
Financial Statements.
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 96.9% 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 12.5% 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 March 26, 2001
-------- ------ -------- --------------
Tranche A term loan $75 million 2004 8.67%
Tranche B term loan $30 million 2005 9.17%
Tranche C term loan $95 million 2006 9.67%
Revolving credit facility $25 million 2004 8.67%
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 (9.5% as of December 31, 2000) or 1/2 of
1.0% in excess of the overnight federal funds rate, plus a margin ranging
from 2.25% to 3.25% 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 (LIBOR: 6.7% as of December 31, 2000), plus a margin ranging from
3.25% to 4.25%.
During the twelve months of 2000, the Company made the following
principal payments under the term loans: Tranche A, $14.0 million, Tranche B,
$4.1 million and Tranche C, $13.0 million. Interest payments on the term loans
for 2000 were: Tranche A, $7.1 million, Tranche B, $3.0 million and Tranche C,
$10.1 million. At December 31, 2000, $14.3 million was outstanding under the
revolving credit facility, although this balance was completely paid down as of
March 1, 2001. In addition to the revolver balance, there are $1.7 million in
outstanding letters of credit as of March 1, 2001.
Borrowings under the credit agreement are secured by first priority
perfected security interests in substantially all of the equity 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.
Recent Developments. 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. As a result, the interest rate for the notes
increased from 12.5% to 13.5% 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 $514,583, $238,786 and $239,383
were issued on June 30, 2000, September 30, 2000 and December 31, 2000,
respectively. The Company is currently seeking the required ratings that would
return the interest rate to 12.5%.
In connection with the first 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 15.0% 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. Additionally, the Company is required
to obtain the consent of the lending banks to borrow in excess of $17.5 million
under the revolving credit portion of the credit facility.
The first amendment to the credit agreement, entered into during April
2000, required a cumulative $60.0 million prepayment of the term loans prior to
January 1, 2001, reduced the available revolver withdraw without prior bank
permission from $25.0 million to $17.5 million, and lowered the minimum
quarterly EBITDA requirements through March 2001. The second amendment changed
the first prepayment date from June 30, 2000 to July 17, 2000 and gave greater
flexibility to the asset sale process. In August 2000, the Company entered into
a third amendment to the credit agreement that reduced the January 1, 2001
prepayment obligation from $60.0 million to $40.0 million. The Company finalized
its fourth amendment to the credit agreement in December 2000. This amendment
eliminated the requirement of the Company to prepay $40.0 million of term loan
debt by January 1, 2001 and reduced the fixed charge coverage ratio from
1.00:1.00 to 0.75:1.00 through December 31, 2001, at which time the ratio would
adjust to a minimum of 1.00:1.00 thereafter. In addition, the amendment modified
certain definitions with regard to the calculation of the fixed charge coverage
ratio.
The Company believes that operating cash flow and amounts available
under its revolving credit facility will be sufficient to meet its debt service
obligations and other capital requirements through 2001. As the Company's
operating cash flow is dependent on factors beyond the Company's control,
however, 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.
Effects of Inflation
The Company does not consider inflation a significant business risk in
the current and foreseeable future, although the Company has experienced some
cost increases, most have been offset by charter hire escalation clauses.
Prospective Accounting Changes
In September 1998, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended by statement No. 137 which is required to be adopted by the Company
in fiscal 2001. Because of the Company's minimal use of derivatives, management
does not anticipate that the adoption of the new Statement will have a
significant effect on the Company's earnings or financial position.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates
which may adversely affect its results of operations and financial condition.
The Company's policy is not to use financial instruments for trading or other
speculative purposes and the Company is not a party to any leveraged financial
instruments. Except as set forth below, the Company manages market risk by
restricting the use of derivative financial instruments to infrequent purchases
of forward contracts for the purchase of fuel oil for its carrier fleet. The
Company does not have any open contracts at December 31, 2000. A discussion of
the Company's credit risk and the fair value of financial instruments is
included in Notes 2 and 14 of the Company's consolidated financial statements.
Exposure To Short-Term Interest Rates. Short-term variable rate debt,
primarily borrowings under the credit agreement, comprised approximately $183.1
million of the Company's total debt at December 31, 2000. The Company's variable
rate debt had an average interest rate of 10.42% at December 31, 2000. A
hypothetical 2.0% increase in interest rates on $183.1 million of debt would
cause the Company's interest expense to increase approximately $3.7 million per
year, with a corresponding decrease in income before taxes.
Item 8. Financial Statements
The Company's Consolidated Financial Statements are listed in Item
14(a), included at the end of this Report on Form 10-K beginning on page F-1,
and incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 is contained in the Company's Proxy
Statement for the 2001 Annual Meeting of Shareholders under the captions
"Directors and Nominees" and "Compliance with Section 16(a) of the Securities
Exchange Act of 1934," and in Item 4a of this Report on Form 10-K, and is
incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 is contained in the Company's Proxy
Statement for the 2001 Annual Meeting of Shareholders under the caption
"Executive Compensation," and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is contained in the Company's Proxy
Statement for the 2001 Annual Meeting of Shareholders under the caption "Common
Stock Ownership of Certain Beneficial Owners and Management," and is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is contained in the Company's Proxy
Statement for the 2001 Annual Meeting of Shareholders under the caption
"External Affairs Committee Interlocks and Insider Participation" and "Certain
Transactions," and is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements and Schedules. See Index to Consolidated Financial
Statements and Schedules which appear on page F-1 herein.
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K for
the fourth quarter ended December 31, 2000.
(c) Lists of Exhibits. The following is a list of exhibits furnished. Copies of
exhibits will be furnished upon request of any stockholder at a charge of $0.25
per page plus postage. The Company hereby files as part of this Form 10-K the
exhibits listed in Item 14(c) below. Exhibits which are incorporated herein by
reference can be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street N.W., Room 1024, Washington, D.C.
29549 and at the Commission's regional office at CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, IL 60661-2511 and Seven World Trade Center,
Suite 1300, New York, NY 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission, 450 Fifth Street N.W.,
Washington, D.C. 29549, at prescribed rates.
Exhibit
Number Exhibit
2.1* Debtor's First Amended Joint Plan of Reorganization, dated November 1, 1999
and related Disclosure Statement filed with the U.S. Bankruptcy Court for
the District of Delaware [incorporated by reference to Exhibits 1 and 2 to
the Schedule 13D/A filed with the Commission on December 29, 1999 by Loomis
Sales & Company, L.P. (Commission File No. 000-28732)].
3.1(a)* Certificate of Incorporation (incorporated by reference to the Company's
Form 10-K for the fiscal year ended December 31, 1999).
3.1(b)* Certificate of Merger (incorporated by reference to the Company's Form
10-K for the fiscal year ended December 31, 1999).
3.1(c) Certificate of Merger changing the name of the Company.
3.2* By-laws of the Company.
4.1* Form of Common Stock Certificate of the Company.
4.1(a) Form of Common Stock Certificate reflecting new name of the Company.
4.2* Form of Class A Warrant Certificate of the Company.
4.2(a) Form of Class A Warrant Certificate reflecting new name of the Company.
4.3* Indenture for the 12.5% Senior Secured Notes due 2007, dated December 15,
1999 among Hvide Marine Incorporated as the Issuer, the Subsidiary
Guarantors named therein, State Street Bank and Trust Company as the
Trustee and Bankers Trust Company as the Collateral Agent [incorporated by
reference to Exhibit 4.1 to the Company's Form 8-K filed with the
Commission on December 27, 1999 (Commission File No. 000-28732)].
4.4* Warrant Agreement dated December 15, 1999 between Hvide Marine Incorporated
and State Street Bank and Trust Company as Warrant Agent [incorporated by
reference to Exhibit 4.2 to the Company's Form 8-K filed with the
Commission on December 27, 1999 (Commission File No. 000-28732)].
4.5* Class A Warrant Agreement dated as of December 15, 1999 by and between
Hvide Marine Incorporated and State Street Bank and Trust Company
(incorporated by reference to the Company's Form 10-K for the fiscal year
ended December 31, 1999).
4.6* Amended and Restated Equity Ownership Plan (incorporated by reference to
the Company's definitive Proxy Statement dated May 15, 2000).
4.7* Stock Option Plan for Directors (incorporated by reference to the Company's
definitive Proxy Statement dated May 15, 2000).
10.1*Credit Agreement dated December 15, 1999 among Hvide Marine Incorporated,
Bankers Trust Company as Administrative Agent, Deutsche Bank Securities,
Inc. as Lead Arranger and Book Manager, Meespierson Capital Corp. as
Syndication Agent and Co-Arranger and the various persons from time to time
parties to the Agreement as Lenders [incorporated by reference to Exhibit
10.1 of the Company's Form 8-K filed with the Commission on December 27,
1999 (Commission File No. 000-28732)].
10.2*Common Stock Registration Rights Agreement dated December 15, 1999 among
Hvide Marine Incorporated, Bankers Trust Corporation and Great American
Life Insurance Company, Great American Insurance Company, New Energy Corp.,
American Empire Surplus Lines Insurance Company, Worldwide Insurance
Company and American National Fire Insurance Company as Purchasers
[incorporated by reference to Exhibit 10.2 of the Company's Form 8-K filed
with the Commission on December 27, 1999 (Commission File No. 000-28732)].
10.3*Registration Rights Agreement for the 12.5% Senior Secured Notes due 2007
dated December 15, 1999 among Hvide Marine Incorporated, Bankers Trust
Corporation and Great American Life Insurance Company, Great American
Insurance Company, New Energy Corp., American Empire Surplus Lines
Insurance Company, Worldwide Insurance Company and American National Fire
Insurance Company as Purchasers [incorporated by reference to Exhibit 10.3
of the Company's Form 8-K filed with the Commission on December 27, 1999
(Commission File No. 000-28732)].
10.4*Registration Rights Agreement by and between Loomis, Sayles & Company,
L.P. and Hvide Marine Incorporated dated as of December 15, 1999
[incorporated by reference to Exhibit 4 of the Schedule 13D/A filed with
the Commission on December 29, 1999 by Loomis, Sayles & Company, L.P.
(Commission File No. 005-46833)].
10.5*First Amendment dated as of April 13, 2000 among Hvide Marine
Incorporated, the financial institutions party to the credit agreement and
Bankers Trust Company as Administrative Agent (incorporated by reference to
the Company's Form 10-K for the fiscal year ended December 31, 1999).
10.6 Second Amendment dated June 29, 2000 among Hvide Marine Incorporated, the
financial institutions party to the credit agreement and Bankers Trust
Company, as Administrative Agent.
10.7 Third Amendment dated August 30, 2000 among Hvide Marine Incorporated, the
financial institutions party to the credit agreement and Bankers Trust
Company, as Administrative Agent.
10.8 Fourth Amendment dated December 22, 2000 among Hvide Marine Incorporated,
the financial institutions party to the credit agreement and Bankers Trust
Company, as Administrative Agent.
10.9 Employment Agreement dated as of April 18, 2000 between the Company and
Gerhard E. Kurz.
21* Subsidiary List.
21(a) Revised Subsidiary List.
23.1* Consent of Ernst & Young LLP.
99.1*Order dated December 9, 1999 of the United States Bankruptcy Court for the
District of Delaware confirming the First Amended Joint Plan of
Reorganization in In re: Hvide Marine Incorporated, et al., Case No.
99-3024 (PJW), including the Supplement to such Plan [incorporated by
reference to Exhibit 99.1 of the Company's Form 8-K filed with the
Commission on December 27, 1999 (Commission File No. 000-28732)].
--------------------------
* Incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEABULK INTERNATIONAL, INC.
By: /s/ GERHARD E. KURZ
---------------------------------
Gerhard E. Kurz
Chief Executive Officer, President, and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ JAMES J. GAFFNEY Chairman of the Board, and March 30, 2001
--------------------------------------
James J. Gaffney Director
/s/ GERHARD E. KURZ Chief Executive Officer, March 30, 2001
--------------------------------------
Gerhard E. Kurz President, and Director
/s/ J. STEPHEN NOUSS Senior Vice President and March 30, 2001
--------------------------------------
J. Stephen Nouss Chief Financial Officer
/s/ JEAN FITZGERALD Director March 30, 2001
--------------------------------------
Jean Fitzgerald
/s/ THOMAS P. MOORE, JR. Director March 30, 2001
--------------------------------------
Thomas P. Moore, Jr.
/s/ DONALD R. SHEPHERD Director March 30, 2001
--------------------------------------
Donald R. Shepherd
/s/ PETER H. CRESSY Director March 30, 2001
--------------------------------------
Peter H. Cressy
/s/ JOHN F. MCGOVERN Director March 30, 2001
--------------------------------------
John F. McGovern
/s/ ROBERT KEISER Director March 30, 2001
--------------------------------------
Robert Keiser
Seabulk International, Inc. and Subsidiaries
Index to Consolidated Financial Statements and Schedules
Report of Independent Certified Public Accountants.............................................................F-2
Consolidated Financial Statements:
Consolidated Statements of Operations for the year ended December 31, 2000, the
period from December 16, 1999 to December 31, 1999 (Successor Company), the
period from January 1, 1999 to December 15, 1999 and the year ended
December 31, 1998 (Predecessor Company)........................................................................F-3
Consolidated Statements of Cash Flows for the year ended December 31, 2000, the
period from December 16, 1999 to December 31, 1999 (Successor Company), the
period from January 1, 1999 to December 15, 1999 and the year
ended December 31, 1998 (Predecessor Company)..................................................................F-4
Consolidated Balance Sheets as of December 31, 2000 and December 31, 1999
(Successor Company)............................................................................................F-6
Consolidated Statements of Changes in Stockholders' Equity for the year ended
December 31, 2000, the period from December 16, 1999 to December 31, 1999
(Successor Company), the period from January 1, 1999 to December 15, 1999
and the year ended December 31, 1998 (Predecessor Company).....................................................F-7
Notes to Consolidated Financial Statements.....................................................................F-8
All schedules have been omitted because the information is not applicable or is
not material or because the information required is included in the consolidated
financial statements or the notes thereto.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Seabulk International, Inc.
We have audited the accompanying consolidated balance sheets of Seabulk
International, Inc. (formerly known as Hvide Marine Incorporated) as of December
31, 2000 and 1999 (Successor Company), and the related consolidated statements
of operations, changes in stockholders' equity, and cash flows for the year
ended December 31, 2000 and for the period from December 16, 1999 to December
31, 1999 (Successor Company) and for the period from January 1, 1999 to December
15, 1999 and the year ended December 31, 1998 (Predecessor Company). The
Predecessor Company and the Successor Company are hereinafter referred to as the
Company. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Seabulk
International, Inc. at December 31, 2000 and 1999 (Successor Company) and the
consolidated results of its operations and its cash flows for the year ended
December 31, 2000 and for the period from December 16, 1999 to December 31, 1999
(Successor Company), and for the period from January 1, 1999 to December 15,
1999 and the year ended December 31, 1998 (Predecessor Company), in conformity
with accounting principles generally accepted in the United States of America.
/s/ Ernst & Young LLP
Miami, Florida
February 22, 2001
SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Successor Company Predecessor Company
Period from
December 16 Period from
Year Ended to January 1 to Year Ended
December 31, December 31, December 15, December 31,
-------------- -------------- -------------- --------------
2000 1999 1999 1998
-------------- -------------- -------------- --------------
Revenue....................................................... $ 320,483 $ 13,479 $ 328,751 $ 404,793
Operating expenses:
Crew payroll and benefits.................................. 90,370 4,155 91,374 92,483
Charter hire and Title XI guarantee fee.................... 12,802 554 15,791 19,679
Repairs and maintenance.................................... 24,522 719 26,045 19,807
Insurance.................................................. 12,645 532 12,716 12,718
Consumables................................................ 40,605 1,660 35,966 39,628
Rent and utilities......................................... 24,282 427 30,861 29,286
-------------- -------------- -------------- --------------
Total operating expenses................................. 205,226 8,047 212,753 213,601
Overhead expenses:
Salaries and benefits...................................... 22,083 870 18,048 21,062
Office..................................................... 6,113 220 6,563 5,827
Professional fees.......................................... 4,629 211 10,447 6,963
Other...................................................... 6,805 342 12,756 9,327
-------------- -------------- -------------- --------------
Total overhead expenses.................................. 39,630 1,643 47,814 43,179
Depreciation, amortization and drydocking..................... 50,271 2,069 79,410 64,244
-------------- -------------- -------------- --------------
Income (loss) from operations................................. 25,356 1,720 (11,226) 83,769
Other income (expense):
Interest expense........................................... (62,714) (2,756) (71,215) (49,723)
Interest income............................................ 704 68 841 8,485
Minority interest and equity in earnings of subsidiaries... 1,639 (408) (2,596) (5,848)
Gain (loss) on disposal of assets.......................... 3,863 -- (25,658) --
Other...................................................... 7,072 (189) (3,875) 156
-------------- -------------- -------------- --------------
Total other expense, net................................. (49,436) (3,285) (102,503) (46,930)
-------------- -------------- -------------- --------------
Income (loss) before reorganization items, income taxes, and
extraordinary item......................................... (24,080) (1,565) (113,729) 36,839
Reorganization items:
Professional fees.......................................... -- -- (8,535) --
Write down of goodwill and property........................ -- -- (419,998) --
Other, net................................................. -- -- (4,740) --
-------------- -------------- -------------- --------------
Total reorganization items............................... -- -- (433,273) --
-------------- -------------- -------------- --------------
Income (loss) before income taxes and extraordinary item...... (24,080) (1,565) (547,002) 36,839
Provision for (benefit from) income taxes..................... 4,872 -- (32,004) 13,489
-------------- -------------- -------------- --------------
Income (loss) before extraordinary item....................... (28,952) (1,565) (514,998) 23,350
Gain (loss) on early extinguishment of debt, net of applicable
income taxes............................................... -- -- 266,643 (1,602)
-------------- -------------- -------------- --------------
Net income (loss)........................................ $ (28,952) $ (1,565) $ (248,355) $ 21,748
============== ============== ============== ==============
Earnings per common share:
Income (loss) before extraordinary item....................... $ (2.89) $ (0.16) $ (33.22) $ 1.52
Gain (loss) on early extinguishment of debt................... -- -- 17.20 (0.10)
-------------- -------------- -------------- --------------
Net income (loss) per common share......................... $ (2.89) $ (0.16) $ (16.02) $ 1.42
============== ============== ============== ==============
Earnings per common share--assuming dilution:
Income (loss) before extraordinary item....................... $ (2.89) $ (0.16) $ (33.22) $ 1.43
Gain (loss) on early extinguishment of debt................... -- -- 17.20 (0.08)
-------------- --------------- -------------- --------------
Net income (loss) per common share......................... $ (2.89) $ (0.16) $ (16.02) $ 1.35
============== ============== ============== ==============
Weighted average common shares outstanding.................... 10,034 10,000 15,503 15,324
============== ============== ============== ==============
Weighted average common and common equivalent shares
outstanding--assuming dilution............................. 10,034 10,000 15,503 19,451
============== ============== ============== ==============
See notes to consolidated financial statements.
SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Successor Company Predecessor Company
Period from
December 16 Period from
Year Ended to January 1 to Year Ended
December 31, December 31, December 15, December 31,
------------- ------------- ------------- -------------
2000 1999 1999 1998
------------ ------------ ------------ -------------
Operating activities:
Net income (loss).......................................... $ (28,952) $ (1,565) $ (248,355) $ 21,748
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Reorganization items:
Write-off of goodwill............................... -- -- 88,052 --
Revaluation of property and related assets.......... -- -- 331,946 --
Accrued reorganization expenses..................... (4,494) -- 5,828 --
Revaluation of other liabilities and assets......... -- -- 2,872 --
Loss (gain) on early extinguishment of debt........... -- -- (266,643) 1,602
Depreciation and amortization of property............. 43,498 1,801 64,220 49,106
Provision for bad debts............................... 1,021 56 6,180 1,087
Loss (gain) on disposal of assets..................... (3,863) -- 25,658 (26)
Amortization of drydocking costs...................... 6,773 268 11,249 11,354
Amortization of goodwill.............................. -- -- 3,940 3,784
Amortization of discount on long-term debt
and financing costs................................. 5,672 180 2,777 1,489
Deferred income tax provision (benefit)............... -- -- (32,004) 10,189
Minority partners' equity in (earnings)
loss of subsidiaries, net........................... (1,639) 408 (2,596) (1,627)
Undistributed losses of affiliates.................... -- -- -- (395)
Other non-cash items.................................. 1,418 -- (164) 217
Changes in operating assets and
liabilities, net of the effects
of acquisitions:
Accounts receivable............................... (13,394) 1,172 20,000 (41,110)
Marine operating supplies......................... 994 239 232 (4,270)
Other current and long-term assets................ 19,355 1,306 (1,349) 6,432
Accounts payable and other liabilities............ (113) (1,304) 3,084 31,273
------------ ------------ ------------- -----------
Net cash provided by operating activities....... 26,276 2,561 14,927 90,853
Investing activities:
Purchases of property...................................... (12,047) (597) (57,144) (114,521)
Acquisitions of businesses, net of
escrow deposits utilized of $6,349....................... -- -- -- (373,535)
Expenditures for drydocking................................ (14,366) (1,424) (5,060) (23,935)
Payments on vessels under construction..................... -- -- (5,102) (155,980)
Purchases of restricted investments........................ -- -- (45,790) (369,629)
Redemption of restricted investments....................... 2,931 -- 65,382 515,584
Capital contribution to unconsolidated affiliates.......... -- -- -- (3,233)
Proceeds from disposals of assets.......................... 25,710 -- 32,852 --
Purchase of minority interest in subsidiary................ -- (1,000) -- --
------------ ------------ ------------- -----------
Net cash provided by (used in)
investing activities.................................. 2,228 (3,021) (14,862) (525,249)
Financing activities:
Proceeds from revolving credit facility,
net of repayments....................................... 14,250 -- -- --
Proceeds from Debtor-in-Possession (DIP)
credit facility......................................... -- -- 26,690 --
Proceeds from long-term borrowings......................... -- -- 245,208 431,700
Repayment of long-term borrowings.......................... (33,390) (80) (288,205) (313,938)
Proceeds from issuance of Senior notes and warrants........ -- -- -- 292,500
Proceeds from issuance of Successor Company
senior secured notes and warrants....................... -- -- 85,500 --
Proceeds from issuance of Title XI bonds................... -- -- 5,428 139,023
Repayment of Title XI bonds................................ (9,282) (1,252) (6,643) (137,250)
Escrow of restricted cash.................................. -- -- (15,217) --
Payments of financing costs................................ (596) -- (12,678) (10,819)
Proceeds from sale/lease back of vessels................... -- -- -- 32,622
Payments of obligations under capital leases............... (4,300) (159) (2,820) (5,088)
Proceeds from issuance of common stock..................... 1 -- 253 800
Repayment of DIP credit facility........................... -- -- (26,690) --
------------ ------------ ------------- -----------
Net cash provided by (used in)
financing activities.................................. (33,317) (1,491) 10,826 429,550
------------ ------------ ------------- -----------
Change in cash and cash equivalents........................ (4,813) (1,951) 10,891 (4,846)
Cash and cash equivalents at beginning of period........... 19,046 20,997 10,106 14,952
------------ ------------ ------------- -----------
Cash and cash equivalents at end of period................. $ 14,233 $ 19,046 $ 20,997 $ 10,106
============ ============ ============= ===========
Supplemental schedule of noncash investing
and financing activities:
Note payable issued for amendment fee to
credit facility.......................................... $ 4,500 $ -- $ -- $ --
============ ============ ============= ===========
Notes payable issued for the acquisition of vessels........ $ -- $ 8,586 $ -- $ --
============ ============ ============= ===========
Capital lease obligations for the
acquisition of vessels and equipment..................... $ 5,332 $ -- $ -- $ 32,621
============ ============ ============= ===========
Supplemental disclosures:
Interest paid, net of interest capitalized................. $ 56,219 $ 739 $ 57,821 $ 44,972
============ ============ ============= ===========
Income taxes paid, net..................................... $ 4,478 $ -- $ 734 $ 3,214
============ ============ ============= ===========
Cash paid for professional fees in
connection with Chapter 11 proceeding.................... $ -- $ -- $ 4,575 $ --
============ ============ ============= ===========
See notes to consolidated financial statements.
SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
December 31, 2000 December 31, 1999
Assets
Current assets:
Cash and cash equivalents............................................................ $ 14,233 $ 19,046
Restricted cash...................................................................... 331 15,217
Accounts receivable:
Trade, net of allowance for doubtful accounts of $6,398 in
2000 and $5,799 in 1999.......................................................... 53,526 47,555
Insurance claims and other......................................................... 13,176 9,628
Marine operating supplies............................................................ 9,638 10,632
Prepaid expenses..................................................................... 3,055 4,013
------------- -------------
Total current assets............................................................... 93,959 106,091
Vessels and equipment, net.............................................................. 639,896 689,880
Deferred costs, net..................................................................... 38,159 29,464
Restricted investments.................................................................. 865 3,752
Other................................................................................... 2,597 1,553
------------- -------------
Total assets....................................................................... $ 775,476 $ 830,740
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable..................................................................... $ 12,906 $ 10,895
Current maturities of long-term debt................................................. 33,270 17,775
Current obligations under capital leases............................................. 3,580 3,332
Accrued interest..................................................................... 1,677 3,102
Accrued liabilities and other........................................................ 33,840 37,489
------------- -------------
Total current liabilities.......................................................... 85,273 72,593
Long-term debt.......................................................................... 426,849 465,769
Obligations under capital leases........................................................ 34,718 33,934
Senior notes............................................................................ 79,108 76,709
Other liabilities....................................................................... 4,195 5,952
------------- -------------
Total liabilities.................................................................. 630,143 654,957
Commitments and contingencies
Minority interest....................................................................... 8,819 10,457
Stockholders' equity:
Preferred stock, no par value--authorized 5,000; issued and outstanding, none........ -- --
Class A common stock--$.01 par value, authorized 20,000 shares; 10,117 and 10,000 ...
shares issued and outstanding, respectively........................................ 101 100
Additional paid-in capital........................................................... 166,930 166,791
Accumulated deficit.................................................................. (30,517) (1,565)
------------- -------------
Total stockholders' equity........................................................... 136,514 165,326
------------- -------------
Total liabilities and stockholders' equity......................................... $ 775,476 $ 830,740
============= =============
See notes to consolidated financial statements.
SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
Class A Class B Retained
Common Stock Common Stock Additional Earnings
--------------------- -------------------- Paid-In (Accumulated
Shares Amount Shares Amount Capital Deficit) Total
---------- --------- --------- ---------- ----------- ------------ -----------
PREDECESSOR COMPANY
Balance at December 31, 1997............. 12,382 $ 12 2,906 $ 3 $ 195,522 $ 29,450 $ 224,987
Conversion of common stock............... 360 1 (359) (1) -- -- --
Common stock issued upon exercise
of stock options...................... 1 -- -- -- 1 -- 1
Common stock issued pursuant to
employee stock purchase plan.......... 112 -- -- -- 889 -- 889
Common stock issued to directors......... 18 -- -- -- 216 -- 216
Stock compensation pursuant to
key employee stock plan............... -- -- -- -- 194 -- 194
Net income............................... -- -- -- -- -- 21,748 21,748
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1998............. 12,873 13 2,547 2 196,822 51,198 248,035
Common stock issued pursuant to
employee stock purchase plan........... 79 -- -- -- 253 -- 253
Stock compensation pursuant to
key employee stock plan................ -- -- -- -- 104 -- 104
Common stock issued to directors......... 55 -- -- -- 130 -- 130
Other.................................... -- -- -- -- (167) -- (167)
Conversion of common stock............... 2,020 2 (2,020) (2) -- -- --
Cancellation of Predecessor Company
common stock and elimination of
existing stockholders' equity
upon emergence from bankruptcy......... (15,027) (15) (527) -- (197,142) 197,157 --
Issuance of Successor Company
common stock........................... 10,000 100 -- -- 154,881 -- 154,981
Warrants issued in connection
with exit financing.................... -- -- -- -- 11,910 -- 11,910
Net loss............................. -- -- -- -- -- (248,355) (248,355)
---------- ---------- ---------- ---------- ---------- ---------- ----------
SUCCESSOR COMPANY
Balance at December 15, 1999............. 10,000 100 -- -- 166,791 -- 166,891
Net loss................................. -- -- -- -- -- (1,565) (1,565)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1999............. 10,000 100 -- -- 166,791 (1,565) 165,326
Common stock issued to employees......... 28 -- -- -- 177 -- 177
Common stock issued upon
exercise of warrants................... 89 1 -- -- -- -- 1
Translation adjustment................... -- -- -- -- (38) -- (38)
Net loss............................... -- -- -- -- -- (28,952) (28,952)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 2000............. 10,117 $ 101 -- $ -- $ 166,930 $ (30,517) $ 136,514
========== ========== ========== ========== ========== ========== ==========
See notes to consolidated financial statements.
SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
On March 12, 2001, Hvide Marine Incorporated (the "Issuer") filed a
"Certificate of Ownership and Merger" with the Secretary of State of the State
of Delaware that merged the Issuer's newly organized, wholly-owned subsidiary
Seabulk International, Inc. into the Issuer. This Certificate of Ownership and
Merger provided that from and after the effective date of the merger, the name
of the merged companies would be Seabulk International, Inc. The merger and name
change became effective on March 19, 2001, and the Issuer's common stock began
trading on the Nasdaq National Market under its new symbol "SBLK" on March 21,
2001. The Company's Class A Warrants began trading on the OTC Bulletin Board
under their new symbol "SBLKW" on March 21, 2001.
Seabulk International, Inc. and subsidiaries (collectively, the
"Company") is a provider of marine support and transportation services, serving
primarily the energy and chemical industries. The Company operates offshore
energy support vessels, principally in the U.S. Gulf of Mexico, the Arabian
Gulf, offshore West Africa, and Southeast Asia. The Company's fleet of tankers
transports petroleum products and specialty chemicals in the U.S. domestic
trade. The Company also provides commercial tug services in several ports in the
southeastern U.S.
The Company derives substantial revenue from international operations,
primarily under U.S. dollar-denominated contracts with major international oil
companies. Risks associated with operating in international markets include
vessel seizure, foreign exchange restrictions, foreign taxation, political
instability, nationalization, and civil disturbances, and other risks that may
limit or disrupt markets.
The accompanying consolidated financial statements include the accounts
of Seabulk International, Inc. and its majority-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in the consolidated
financial statements.
The Predecessor Company and substantially all of its wholly-owned
subsidiaries filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") on September 8, 1999
(the "Petition Date"). 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 consolidated financial statements 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. As discussed further
in Note 3, the assets and liabilities of the Company were restated as of
December 15, 1999 in accordance with SOP 90-7, and therefore the results of
operations and cash flows for periods prior to December 15, 1999 (the
"Predecessor Company") are not comparable to the results of operations and cash
flows of the Company subsequent to emergence from bankruptcy for the periods
subsequent to December 15, 1999 (the "Successor Company").
The first amendment to the credit agreement, entered into during April
2000, required a $60.0 million prepayment of the term loans prior to January 1,
2001, reduced the available revolving line of credit without prior bank
permission from $25.0 million to $17.5 million, and lowered the minimum
quarterly EBITDA requirements through March 2001. The second amendment changed
the first payment requirement date from June 30, 2000 to July 17, 2000. In
August 2000, the Company entered into a third amendment to the credit agreement
that reduced the January 1, 2001 prepayment obligation from $60.0 million to
$40.0 million. The Company finalized the fourth amendment to the credit
agreement in December 2000. This amendment eliminated the requirement of the
Company to prepay $40.0 million of term loan debt by January 1, 2001 and reduced
the fixed charge coverage ratio from 1.00:1.00 to 0.75:1.00 through December 31,
2001, at which time the ratio would adjust to a minimum of 1.00:1.00 thereafter.
In addition, the amendment modified certain definitions with regard to the
calculation of the fixed charge coverage ratio.
In June 1998, the Company paid $18.5 million to increase its equity
interest in five double-hull 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. The Successor Company increased its ownership in the double-hull
tankers at December 30, 1999 from 50.8% to 75.8%. On January 15, 2001, the
Company purchased the remaining 24.2% equity interest for approximately $11.0
million (See Note 16). The double-hull tankers were not a party to the Chapter
11 proceeding.
2. Summary of Significant Accounting Policies
Revenues. Revenues from time charters are earned and recognized on a
daily basis. Time charter rates are adjusted periodically based on changes in
specified price indices and market conditions. Revenues on voyage contracts are
recognized based upon the percentage of voyage completion.
Cash and Cash Equivalents. The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. The credit risk associated with cash and cash equivalents is
considered low due to the credit quality of the financial institutions.
Restricted Cash. At December 31, 2000, restricted cash consists of
fully funded letters of credit. At December 31, 1999, restricted cash primarily
represented proceeds from the exit financing deposited into escrow to fund
certain of the Company's contractual interest payments in 2000.
Accounts Receivable. Substantially all of the Company's accounts
receivable are due from entities that operate in the oilfield industry. The
Company performs ongoing credit evaluations of its trade customers and generally
does not require collateral. Credit losses are provided for in the consolidated
financial statements and have been within management's expectations. No
significant customer or group of customers within a certain geographical region
represents a significant concentration of credit risks. During the years ended
December 31, 2000, 1999, and 1998, the Company wrote off accounts receivable of
approximately $0.6 million, $2.6 million, and $0.2 million, respectively.
Insurance Claims Receivable. Insurance claims receivable represent
costs incurred in connection with insurable incidents for which the Company
expects to be reimbursed by the insurance carrier(s), subject to applicable
deductibles. Deductible amounts related to covered incidents are expensed in the
period of occurrence of the incident. The credit risk associated with insurance
claims receivable is considered low due to the credit quality and funded status
of the insurance clubs in which the Company participates.
Marine Operating Supplies. Such amounts consist of vessel spare parts,
fuel, and supplies that are recorded at cost and charged to vessel expenses as
consumed.
Impairment of Long-Lived Assets. The Company accounts for the
impairment of long-lived assets under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting For the Impairment of
Long-Lived Assets and for Long-Lived Assets to be disposed of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indications of impairment are present and the estimated undiscounted cash flows
to be generated by those assets are less than the assets carrying amounts. If
the carrying value of the assets will not be recoverable, as determined based on
the estimated undiscounted cash flows, the carrying value of the assets are
reduced to fair value. Generally, fair value will be determined using valuation
techniques such as expected discounted cash flows or appraisals, as appropriate.
The Company has not recorded any impairment losses.
Vessels and Equipment. Vessels and equipment are stated at cost less
accumulated depreciation. Depreciation is computed on the straight-line method
over the estimated useful lives of the assets.
Vessels under capital leases are amortized over the lesser of the lease
term or their estimated useful lives. Included in vessels and equipment at
December 31, 2000 and 1999 are vessels under capital leases of approximately
$44.4 million and $36.1 million, net of accumulated amortization of
approximately $1.6 million and $0.1 million, respectively.
During 2000, the Company increased capital expenditures on formerly
laid-up vessels in response to an increase in market demand and sold certain
other non-operating vessels to meet debt payment requirements. Through this
process, the Company determined that the useful lives previously assigned to
certain offshore vessels were in excess of the expected remaining service life
because of changes in customer demands and deterioration of the vessels while in
laid-up status. Based on this information, the Company performed a
vessel-by-vessel analysis to evaluate the remaining useful lives of its offshore
fleet. The analysis was completed in the fourth quarter of 2000 and the average
remaining useful life of the Company's offshore supply and crewboat fleet
decreased from approximately 16 years to 9 years. Management believes these
changes more accurately reflect the remaining economic lives of these vessels.
As a result of the change in estimated remaining useful lives, depreciation in
2000 increased $0.9 million. On a pro forma basis, depreciation expense in 2001
will increase by $5.4 million.
Listed below are the estimated remaining useful lives of vessels and
equipment at December 31, 2000:
Remaining
Useful Lives
-----------------
(in years)
Supply boats 5-26
Crewboats 2-22
Anchor handling tug/supply vessels 3-15
Other 1-12
Tankers(1) 6-28
Tugboats and barges 4-39
Furniture and equipment 3-10
--------------------------
(1) Range in years is determined by the Oil Pollution Act of
1990 and other factors.
Deferred Costs. Deferred costs primarily represent drydocking and
financing costs. Substantially all of the Company's vessels must be periodically
drydocked and pass certain inspections to maintain their operating
classification, as mandated by certain maritime regulations. Costs incurred to
drydock the vessels are deferred and amortized over the period to the next
drydocking, generally 30 to 36 months. Drydocking costs are comprised of
painting the vessel hull and sides, recoating cargo and fuel tanks, and
performing other engine and equipment maintenance activities to bring the
vessels into compliance with classification standards. Deferred financing costs
are amortized over the term of the related borrowings using the interest method.
At December 31, 2000 and 1999, deferred costs include unamortized drydocking
costs of approximately $14.8 million and $7.2 million, respectively, and net
deferred financing costs of $23.4 million and $22.3 million, respectively.
Restricted Investments. Pursuant to the Title XI Bond Financing
Agreements for the Company's five double-hull petroleum product tankers, the
Company is required to deposit all proceeds from the bond issuance into an
escrow account (restricted investments) with MARAD. Funds from the escrow
account are disbursed for qualifying expenses related to the construction of the
vessels after documentation is received and approved by MARAD.
Restricted investments primarily consists of U.S. Treasury bills and
notes stated at their amortized cost as they are expected to be held to
maturity. The maturity date of such investments range from March 2001 to August
2001. The average interest rates on these investments in 2000 and 1999 were
consistent with short-term U.S. Treasury note rates during such periods.
Interest earned on the investments is not restricted and may be used for general
working capital purposes for the double-hull tankers.
Accrued Liabilities. Accrued liabilities included in current
liabilities consist of the following at December 31 (in thousands):
2000 1999
-------------- --------------
Payroll and benefits............................................. $ 7,492 $ 6,134
Professional services............................................ 1,231 1,098
Reorganization items............................................. -- 4,437
Voyage operating expenses........................................ 8,099 7,218
Litigation, claims and settlements............................... 2,672 8,146
Foreign taxes.................................................... 9,408 4,890
Deferred voyage revenues......................................... 3,466 2,587
Other............................................................ 1,472 2,979
--------------- ---------------
Total.......................................................... $ 33,840 $ 37,489
=============== ===============
Stock-Based Compensation. As permitted by SFAS No. 123, Accounting for
Stock-Based Compensation ("SFAS 123"), the Company has elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees ("APB 25") and related interpretations in accounting for its employee
stock-based transactions and has complied with the disclosure requirement of
SFAS 123. Under APB 25, compensation expense is calculated at the time of option
grant based upon the difference between the exercise prices of the option and
the fair market value of the Company's common stock at the date of grant
recognized over the vesting period.
Income Taxes. The Company files a consolidated tax return with
substantially all corporate subsidiaries; the other subsidiaries file separate
income tax returns. Each partnership files a separate tax return. Deferred
income tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws in effect when the differences are expected
to reverse. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Foreign Currency Translation. In accordance with SFAS No. 52, Foreign
Currency Translation, assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the rate of exchange in effect at the
balance sheet date, while revenue and expenses are translated at the weighted
average rates prevailing during the respective years. Components of
shareholders' equity are translated at historical rates. The Company's foreign
subsidiaries use the U.S. dollar as their functional currency and substantially
all external transactions are denominated in U.S. dollars. Gains and losses
resulting from changes in exchange rates from year to year are insignificant for
all years presented.
Reorganization Items. In accordance with SOP 90-7, costs incurred
directly related to the bankruptcy proceeding are classified as Reorganization
Items in the accompanying statement of operations for the period from January 1,
1999 to December 15, 1999.
Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results will
differ from those estimates.
Comprehensive Income (loss). SFAS No. 130 establishes standards for
reporting and the display of comprehensive income, which is defined as the
change in equity arising from non-owner sources. Comprehensive income (loss) is
not significantly different from net income (loss) for all periods presented.
Recent Pronouncements. In June 1999, the Financial Accounting Standards
Board (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. The Company does not have
any derivative financial instruments and does not believe that adoption of the
Statement will have a material impact in the Company's financial statements.
Reclassifications. Certain amounts from prior periods' consolidated
financial statements have been reclassified to conform with the current period's
presentation.
3. Joint Plan of Reorganization and Fresh Start Reporting
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 Predecessor Company's senior notes and
Preferred Securities to equity interests in the Successor Company and
cancellation of all of the prepetition equity interests in the Predecessor
Company, 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.
On the Effective Date, the Predecessor Company's Senior Notes and
Preferred Securities were converted into 9.8 million and 0.2 million shares of
the Successor Company's common stock, respectively. As a result of the
transactions which occurred on the Effective Date, indebtedness of approximately
$266.6 million was discharged and is reflected as a gain on the early
extinguishment of debt in the accompanying consolidated statements of operations
for the 1999 Predecessor Company. This gain was not recognized for tax purposes
to the extent the Company was insolvent at the date of discharge. However, the
Company's net operating loss carry forwards, alternative minimum tax credits and
tax basis in fixed assets at the Effective Date were reduced by the amount of
the gain.
On the Effective Date, the Company raised an aggregate of approximately
$295.0 million through the issuance of term loans and 12.5% Senior Notes (the
"Senior Notes") with detachable common stock purchase warrants, resulting in
approximately $263.0 million of net proceeds to the Company after deducting
related offering costs and discount on the Senior Notes (the "Exit Financing").
The proceeds were used to repay the Company's debtor-in-possession credit
facilities, the Predecessor Company's Credit Facility and certain bankruptcy
administrative claims and reorganization costs incurred in connection with the
Company's bankruptcy proceeding.
Upon emergence from Chapter 11 Bankruptcy Protection as of the
Effective Date, the Company adopted Fresh Start Reporting pursuant to the
provisions of SOP 90-7. In accordance with SOP 90-7, assets of the entities in
Chapter 11 proceeding have been restated as of the Effective Date to reflect the
reorganization value of the Company, and liabilities have been recorded at the
present value of the future amounts expected to be paid. In addition, the
accumulated deficit of the Company through the Effective Date has been
eliminated, and the debt and capital structure of the Predecessor Company
reflects the application of the provisions of the Plan. Thus, the balance sheet
as of December 31, 1999 reflects reporting of the Successor Company and is not
comparable to the balance sheets of the Predecessor Company. Furthermore, the
accompanying consolidated statements of operations and cash flows of the
Predecessor Company reflect operations prior to the Effective Date and the
effect of adopting Fresh Start Reporting and are thus not comparable with the
results of operations and cash flows of the Successor Company.
The reorganization value of the Company of approximately $587.6 million
(excluding the double-hull tankers which were not part of the Chapter 11
proceeding) was determined by the Company with the assistance of financial
advisors. These advisors (1) reviewed certain historical financial information
of the Company; (2) reviewed certain internal operating reports, including
management-prepared financial projections and analyses; (3) discussed historical
and projected financial performance with senior management and industry experts;
(4) reviewed industry trends and operating statistics and analyzed the effects
of certain economic factors on the industry; (5) analyzed the capital
structures, financial performance and market valuations of the Company's
competitors, and (6) prepared such other analyses as they deemed necessary to
their valuation determination. Based upon the foregoing, the financial advisors
developed a range of values for the Company as of the Effective Date. In
developing this valuation estimate, the advisors, using a rate of approximately
14.0%, discounted the Company's five year forecasted free cash flows and an
estimate of sales proceeds assuming the Company would be sold at the end of the
five year period. In addition to relying on management's projections, the
valuation analysis included a number of assumptions including, but not limited
to, a successful and timely reorganization of the Company's capital structure
and the continuation of current market conditions through the forecast period.
The difference between the Company's reorganization value and the
historical carrying value of the Company's net assets resulted in the recording
of reorganization items of approximately $420.0 million for the period ended
December 15, 1999, which consisted of a write down of goodwill and property.
The effects of the Plan, Exit Financing, and fresh start adjustments on
the Company's condensed consolidated balance sheet at the Effective Date are as
follows (in thousands):
Pre- Discharge Reorganized
Emergence of Exit Fresh Start Balance
Balance Sheet Debt (1) Financing(2) Adjustments(3) Sheet
--------------- ------------- ------------ ------------- -------------
Assets
Current assets:
Cash and cash equivalents................... $ 13,229 $ -- $ 7,768 $ -- $ 20,997
Restricted cash............................. 190 -- 15,027 -- 15,217
Accounts receivable, net.................... 55,557 -- -- -- 55,557
Marine operating supplies................... 13,525 -- -- (2,654) 10,871
Prepaid expenses............................ 5,832 -- 125 -- 5,957
------------ ------------ ------------ ------------ ------------
Total current assets...................... 88,333 -- 22,920 (2,654) 108,599
Vessels and equipment, net.................. 1,017,600 -- -- (325,555) 692,045
Deferred costs, net......................... 32,309 (10,399) 11,194 (4,679) 28,425
Restricted investments...................... 3,752 -- -- -- 3,752
Goodwill, net............................... 88,052 -- -- (88,052) --
Other....................................... 3,996 -- -- (220) 3,776
------------ ------------ ------------ ------------ ------------
$ 1,234,042 $ (10,399) $ 34,114 $ (421,160) $ 836,597
============ ============ ============ ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable............................ $ 10,998 $ -- $ -- $ -- $ 10,998
Current maturities of long-term debt........ 30,041 -- (13,269) -- 16,772
Current obligations under capital leases.... 3,326 -- -- -- 3,326
Accrued interest............................ 21,073 (19,337) (322) -- 1,414
Accrued liabilities and other............... 40,625 -- (145) -- 40,480
------------ ------------ ------------ ------------ ------------
Total current liabilities................. 106,063 (19,337) (13,736) -- 72,990
Long-term debt................................. 497,909 -- (38,390) -- 459,519
Obligations under capital leases............... 34,098 -- -- -- 34,098
Senior notes................................... 300,000 (300,000) 76,644 -- 76,644
Other.......................................... 3,743 -- -- 2,109 5,852
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures issued by the
Predecessor Company......................... 115,000 (115,000) -- -- --
Minority interest.............................. 20,603 -- -- -- 20,603
Stockholders' equity:
(Predecessor Company)
Class A common stock.................... 13 -- -- (13) --
Class B common stock...................... 2 -- -- (2) --
(Successor Company)
Class A common stock...................... -- 100 -- -- 100
Additional paid-in capital..................... 197,142 154,881 11,910 (197,142) 166,791
Retained earnings (accumulated deficit)........ (40,531) 268,957 (2,314) (226,112) --
------------ ------------ ------------ ------------ ------------
Total stockholders' equity................ 156,626 423,938 9,596 (423,269) 166,891
------------ ------------ ------------ ------------ ------------
$ 1,234,042 $ (10,399) $ 34,114 $ (421,160) $ 836,597
============ ============ ============ ============ ============
(1) To record the discharge of prepetition obligations pursuant to the Plan.
(2) To record the repayment of the debtor-in-possession credit facility and the
issuance of the Exit Financing and related issuance costs.
(3) To record the assets and liabilities pursuant to fresh start reporting and
to eliminate the Predecessor Company historical equity accounts.
4. Debt
The Company's five double-hull product and chemical tankers are
financed through Title XI Government Guaranteed Ship Financing Bonds. There is a
total of seven bonds with interest rates ranging from 6.50% to 7.54% that
require principal amortization through June 2024. The aggregate outstanding
principal balance of the bonds was $224.2 million at December 31, 2000.
Principal payments during 2000 were $3.8 million and interest payments were
$15.7 million.
Covenants under the Title XI Bond agreements contain financial tests
which, if not met, among other things (1) restrict the withdrawal of capital;
(2) restrict certain payments, including dividends, increases in employee
compensation and payments of other indebtedness; (3) limit the incurrence of
additional indebtedness; and (4) prohibit the Company from making certain
investments or acquiring additional fixed assets. Vessels with a net book value
of $243.0 million, and all contract rights thereof, have been secured as
collateral in consideration of the United States Government guarantee of the
Title XI Bonds.
The Company is required to make deposits to a Title XI reserve fund
based on a percentage of net income attributable to the operations of the five
double-hull tankers, as defined by the Title XI Bond agreement. Cash held in a
Title XI reserve fund is invested by the trustee of the fund, and any income
earned thereon is either paid to the Company or retained in the reserve fund.
Withdrawals from the Title XI reserve fund may be made for limited purposes,
subject to prior approval from MARAD. To date, no deposits have been required.
As of December 2000, other Title XI debt of approximately $25.8 million
was collateralized by first preferred mortgages on certain vessels and bears
interest at rates ranging from 5.4% to 10.1%. The debt is due in semi-annual
principal and interest payments through June 2021. Under the terms of the Other
Title XI debt, the Company is required to maintain a minimum level of working
capital, as defined, and comply with certain other financial covenants. During
2000, $5.5 million in principal and $2.4 million in interest was repaid on this
debt.
In December 1999, the Company issued a promissory note of approximately
$8.6 million to increase its equity interest in its double-hull product and
chemical carriers from 50.8% to 75.75%. The note bears interest at 8.5%.
Semi-annual interest and principal payments are due through December 2003. In
December 2000, the Company signed an agreement to purchase the remaining 24.25%
equity interest. The purchase was completed in January 2001, and was funded by
$0.5 million in cash and a note payable in the amount of $10.5 million at an
interest rate of 8.5%. Quarterly principal and interest payments are due through
January 2006.
In December 1999, the Company entered into a Credit Facility ("the
Credit Facility"), consisting of $200.0 million of term loans and a $25.0
million revolving line of credit, and issued Senior Notes (see below). The term
loans consist of three facilities of $75.0 million, $30.0 million, and $95.0
million maturing over 5, 6, and 7 years, respectively. The revolving line of
credit is subject to a commitment fee of 0.5% on the unused portion. The
revolving line of credit matures on December 15, 2004. The $75.0 million term
loan and the revolving line of credit accrue interest at the Base Rate, as
defined, of 6.65% plus 3.25% (9.90% at December 31, 2000). The $30.0 million and
$95.0 million term loans accrue interest at the Base Rate plus 3.75% (10.40% at
December 31, 2000) and Base Rate plus 4.25% (10.90% at December 31, 2000),
respectively.
At December 31, 2000, the Company had letters of credit outstanding in
the amount of approximately $1.7 million, which expire on various dates through
December 2002. This amount is collateralized against the maximum amount
available under the revolving line of credit. The amount available to the
Company under the revolving line of credit, without prior approval of the bank
group, was decreased from $25.0 million to $17.5 million as part of the first
amendment to the credit agreement.
Covenants under the Credit Facility, among other things, (i) require
the Company to meet certain financial tests, including tests requiring the
maintenance of minimum leverage ratios, debt service coverage ratios, and
indebtedness to tangible worth ratios; (ii) limit the creation or incurrence of
certain liens; (iii) limit the incurrence of additional indebtedness; (iv) limit
the Company from making certain investments; (v) limit sales of assets; (vi)
require maintenance of certain appraised market collateral values; (vii) limit
transactions with affiliates and changes in business; and (viii) limit mergers
and consolidations.
The Company was not in compliance at March 31, 2000 with certain
covenants contained in its Credit Facility. An amendment to the credit agreement
was executed in April 2000 which required the Company to prepay an aggregate of
$60.0 million in principal under the term loans by the end of 2000. The Company
paid a fee of $4.5 million to the lending banks in connection with the amendment
in the form of a promissory note, accruing interest at 15.0% compounded
quarterly, 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 then four to one. The
$4.5 million loan fee was capitalized to deferred financing costs and is being
amortized over the remaining term of the Credit Facility using the interest
method. Subsequent amendments throughout the year reduced the prepayment
requirements and then abolished them all together. At December 31, 2000, the
Company was in compliance with the covenants contained in its Credit Facility.
Long-term debt consists of the following at December 31 (in thousands):
2000 1999
--------------- ---------------
Revolving line of credit............................................. $ 14,250 $ --
Term loan............................................................ 168,861 200,000
Title XI debt........................................................ 249,928 259,206
Notes payable........................................................ 27,080 24,338
--------------- ---------------
460,119 483,544
Less: Current maturities............................................ 33,270 17,775
--------------- ---------------
$ 426,849 $ 465,769
=============== ===============
Senior Notes
In December 1999, the Company issued $95.0 million face amount of 12.5%
senior secured lien notes, Series A (the "Senior Notes") with 536,193 detachable
common stock purchase warrants and an original issue discount of $9.5 million.
As determined by the Company's management, the fair value of the warrants was
estimated to be approximately $8.9 million and was recorded as an additional
discount on the Senior Notes. The Senior Notes were recorded at approximately
$76.6 million, net of discounts and offering costs of approximately $18.4
million. The discount is being amortized through the maturity date using the
effective interest method (amortization of $1.4 million in 2000). Interest on
the Senior Notes is payable quarterly in arrears.
Of the proceeds, approximately $69.8 million was used to repay a
portion of the Predecessor Company's indebtedness and approximately $15.2
million was used to establish an interest escrow account to fund interest
payments through December 2000.
The Senior Notes mature in June 2007 and are redeemable, in whole or in
part, at the Company's option at the redemption amount, as defined, plus accrued
and unpaid interest. In addition, upon a change in control, as defined, the
Company must redeem the Senior Notes at 101.0% of the stated principal amount,
plus accrued and unpaid interest.
In April 2000, the Company had not yet received a necessary rating from
the rating agencies required under the indenture, thus the interest rate was
increased from 12.5% to 13.5%. The incremental interest is to be paid by the
issuance of $514,583, $238,786, and $239,383 of additional Senior Notes on June
30, September 30, and December 31, 2000, respectively. The Company is currently
seeking the appropriate ratings, which would return the interest rate to 12.5%.
In August 2000, the Company consummated an exchange offer pursuant to
which the holders of the Senior Notes had the right to exchange them for Series
B Senior Notes that are registered under the Securities Act in like principal
amount and with identical terms.
The Senior Notes are secured by substantially all the assets of the
Company (See Note 17). Covenants require the Company to meet certain financial
tests and, among other things, (1) limit the incurrence of additional
indebtedness; (2) limit the creation or incurrence of certain liens; (3)
restrict certain payments and investments; and (4) restrict certain asset sales
and affiliate transactions.
The aggregate annual future payments due on the Debt and Senior Notes
as of December 31, 2000 are as follows (in thousands):
2001............................................... $ 33,270
2002............................................... 27,942
2003............................................... 32,915
2004............................................... 34,388
2005............................................... 35,034
Thereafter......................................... 392,563
---------------
556,112
Less discount on Senior Notes...................... 16,885
---------------
$ 539,227
===============
5. Capital Leases
The Company operates certain vessels and other equipment under leases
that are classified as capital leases. The following is a schedule of future
minimum lease payments under capital leases, including obligations under
sale-leaseback transactions, together with the present value of the net minimum
lease payments as of December 31, 2000 (in thousands):
2001..................................................... $ 6,117
2002..................................................... 5,269
2003..................................................... 5,128
2004..................................................... 4,897
2005..................................................... 4,876
Thereafter............................................... 27,551
---------------
Total minimum lease payments............................. 53,838
Less amount representing interest........................ 15,540
---------------
Present value of minimum lease payments (including
current portion of $3,580).......................... $ 38,298
===============
6. Commitments and Contingencies
Commitments
The Company leases its office facilities and certain vessels under
operating lease agreements which expire at various dates through 2013. Rent
expense was approximately $4.4 million, $5.6 million and $5.9 million for the
years ended December 31, 2000, 1999 and 1998, respectively. Aggregate annual
future payments due under non-cancelable operating leases with remaining terms
in excess of one year are as follows (in thousands):
2001............................... $ 4,254
2002............................... 3,224
2003............................... 2,180
2004............................... 2,109
2005............................... 1,996
Thereafter......................... 6,364
-------------------
$ 20,127
===================
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 several months in 1999, three vessels owned by subsidiaries of the
Company performed services for third parties in support of energy exploration
activities in Sudan; one of these vessels performed such services until January
31, 2000. The Company has filed a report of these activities with the Office of
Foreign Assets Control of the United States Department of the Treasury. The
Company had also reported these activities to the Bureau of Export
Administration of the U.S. 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 such penalties.
In J. Erik Hvide and Betsy Hvide v. Hvide Marine Incorporated, No.
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
alleged that the Company had breached an agreement to provide Mr. Hvide with
severance benefits valued at approximately $1.0 million. In addition, Mr. and
Mrs. Hvide alleged that the Company's conduct, constituted an intentional course
of conduct calculated to cause them emotional and public humiliation for which
they sought unspecified punitive damages. In January 2001, the Company and Mr.
and Mrs. Hvide settled the lawsuit, which did not have a material impact on the
Company's financial condition or results of operations.
The Company is sometimes named as a defendant in litigation, usually
relating to claims for bodily injuries or property damage. The Company maintains
insurance coverage against such claims to the extent deemed prudent by
management and applicable deductible amounts are accrued at the time of the
incident. The Company believes that there are no existing claims of a
potentially material adverse nature for which it has not already provided
appropriate accruals.
At December 31, 2000, approximately 16.0% of the Company's employees
were members of national maritime labor unions, or are subject to collective
bargaining agreements. Management considers relations with employees to be
satisfactory; however, the deterioration of these relations could have an
adverse effect on the Company's operating results.
7. Vessels and Equipment
Vessels and equipment are summarized below (in thousands):
Year ended December 31,
2000 1999
--------------------- --------------------
Vessels and improvements............................ $ 691,006 $ 700,324
Furniture and equipment............................. 12,516 11,643
-------------------- --------------------
703,522 711,967
Less accumulated depreciation and amortization...... 63,626 22,087
-------------------- --------------------
Vessels and equipment, net.......................... $ 639,896 $ 689,880
==================== ====================
In 2000, the Company acquired two vessels; one under a cash purchase
agreement and the other under a capital lease agreement, for total consideration
of approximately $7.6 million. The Company is also under contract to purchase an
additional vessel for approximately $2.5 million.
In 2000, the Company sold 39 vessels, and scrapped one tanker pursuant
to its OPA 90 mandated retirement date, for proceeds of approximately $25.7
million. The proceeds were used primarily to repay a portion of the Company's
term loans.
In 1999, the Predecessor Company sold ten vessels for net cash proceeds
of approximately $32.9 million. The proceeds were primarily used to repay
amounts outstanding under the Predecessor Company's Credit Facility. For 1999,
loss on disposal of assets includes loss on vessels sold and the forfeiture of
deposits and progress payments on, and settlement of, canceled shipbuilding
contracts.
During 1999 and 1998, the Company capitalized approximately $1.9
million and $5.4 million, respectively, in interest related to the construction
of vessels. There was no interest capitalized during 2000.
8. Stock Option Plans
In August 1996, the Predecessor Company adopted an Equity Ownership
Plan (the "EOP"), which provided for the issuance of a maximum of 2,000,000
shares of the Predecessor Company's Class A Common Stock. Under the terms of the
EOP, options were generally granted to employees at exercise prices not less
than the fair market value of the underlying common stock at the date of grant.
Option terms ranged from 5 to 10 years.
The Stock Option Plan for Directors provided for the issuance of a
maximum of 70,000 shares of the Predecessor Company's Class A common stock to
directors of the Predecessor Company. The exercise price for all options was
equal to the fair market value of the underlying common stock at the date of
grant, and the term of the options was 10 years.
On the Effective Date, all rights and awards granted under the EOP and
Stock Option Plan for Directors were canceled. The holders of options to
purchase common stock issuable under these plans received a pro rata share of
the 125,000 Class A warrants issued by the Successor Company (See Note 11).
On the Effective Date, the Successor Company adopted a new stock option
plan, which provides certain key employees of the Successor Company the right to
acquire shares of common stock. Pursuant to the plan, 500,000 shares of the
Successor Company's common stock are reserved for issuance to the participants
in the form of nonqualified stock options. Options may be granted at an exercise
price not less than 100.0% of the fair market value of the underlying common
stock on the date of grant. The options expire no later than 10 years from the
date of the grant.
Pursuant to the Successor plan, options to purchase 200,000 shares of
the Successor Company's common stock were granted to certain senior employees on
the Effective Date. One-half of these options vested automatically on the
Effective Date, and the remaining options vested 91 days thereafter. On March
13, 2000, the Compensation Committee approved the exercise price of these
options at $12.47 per share.
On June 15, 2000, the Company adopted the Amended and Restated Equity
Ownership Plan (the "Plan"). The Plan amends and restates in its entirety the
Hvide Marine Incorporated Stock Option Plan, which was adopted in December 1999
(the "1999 Plan"). Pursuant to the Plan, 800,000 shares of the Company's stock
are reserved for issuance to participants in the form of nonqualified stock
options. The vesting and certain other terms of the stock options granted under
the Plan will be determined by the Compensation Committee of the Board of
Directors (the "Compensation Committee"). The Plan requires that the option
price may not be less than 100% of the fair market value on the date of grant.
The options expire no later than 10 years from the date of grant. Options
granted under this Plan totaled 415,000 at December 31, 2000.
On June 15, 2000, the Company also adopted the Stock Option Plan for
Directors (the "Directors Plan"). Pursuant to the Directors Plan, an aggregate
of 175,000 shares of common stock are authorized and reserved for issuance,
subject to adjustments to reflect stock dividends, recapitalizations,
reorganizations, and other changes in the capital structure of the Company.
Eligible directors as of the effective date of the Plan were granted options to
purchase 10,000 shares of common stock on the first option date, and the
Chairman of the Board received 20,000 options, for a total granted of 80,000.
Eligible directors will receive 4,000 and the Chairman will receive 8,000
options to purchase shares of common stock annually, effective as of the Annual
Meeting of Shareholders of the Company commencing May 17, 2001. Under the Plan,
the option price for each option granted is required to be 100% of the fair
market value of common stock on the date of grant.
The following table of data is presented in connection with the stock
option plans:
Successor Company Predecessor Company
Period from Period from
Year Ended December 16, January 1 Year Ended
December 31, to December 31, to December 15, December 31,
2000 1999 1999 1998
--------------------- --------------------- --------------------- ---------------------
Weighted Weighted Weighted Weighted
Number average Number average Number average Number average
of exercise of exercise of exercise of exercise
options price options price options price options price
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Options outstanding at
beginning of period........ 200,000 $ 12.47 -- $ -- 987,675 $ 12.60 894,025 $ 14.83
Granted.................... 495,000 7.16 200,000 12.47 379,441 6.06 221,350 13.61
Exercised.................. -- -- -- -- -- -- (100) 12.00
Canceled................... (91,000) 11.33 -- -- (1,367,116) 10.78 (127,600) 29.35
---------- --------- ---------- --------- ---------- --------- ---------- ----------
Options outstanding
at end of period........... 604,000 $ 8.27 200,000 $ 12.47 -- $ -- 987,675 $ 12.60
========== ========= ========== ========== ========== ========== ========== ==========
Options exercisable
at end of period........... 207,000 12.11 100,000 -- -- -- 228,325 12.73
Options available for
future grants at end of
period..................... 371,000 -- 300,000 -- -- -- 891,700 --
Exercise prices for options outstanding as of December 31, 2000 range from $6.25
to $12.47.
The weighted average fair value of options granted under the Successor
Company's stock option plans during 2000 were $6.65. The weighted average fair
value of options granted under the Predecessor Company's stock option plans
during the period from January 1, 1999 through December 15, 1999 and for 1998
were $5.72 and $7.98, respectively. These values are based on the Black-Scholes
option valuation model. Had compensation expense for the stock option grants
been determined based on the fair value at the grant date for awards consistent
with the methods of SFAS No. 123, the Company's net income (loss) would have
decreased to the pro forma amounts presented below for 2000, the period from
January 1, 1999 to December 15, 1999 and 1998 (in thousands, except per share
amounts):
January 1 to
2000 December 15, 1999 1998
------------ --------------------- ------------
Net income (loss):
As reported........................................ $ (28,952) $ (248,355) $ 21,748
Pro forma.......................................... (31,823) (250,863) 20,261
Earnings (loss) per share--assuming dilution:
As reported........................................ (2.89) (16.02) 1.35
Pro forma.......................................... (3.17) (16.18) 1.27
The fair value of each option is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following assumptions
applied to grants in 2000, the period from January 1, 1999 to December 15, 1999,
and 1998:
January 1 to
2000 December 15, 1999 1998
------------ -------------------- ------------
Dividend yield.............................. 0.0% 0.0% 0.0%
Expected volatility factor.................. 1.21 1.39 0.68
Approximate risk-free interest rate......... 5.0% 6.5% 4.5%
Expected life (in years).................... 10 6 6
The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because changes in the subjective input assumptions can materially
affect the fair value estimate, the existing models, in management's opinion, do
not necessarily provide a reliable single measure of the fair value of the
Company's stock options.
9. Employee Benefit and Stock Plans
The Company sponsors a retirement plan and trust (the "Plan")
established pursuant to Section 401(k) of the Internal Revenue Code, which
covers substantially all employees. Subject to certain dollar limitations,
employees may contribute a percentage of their salaries to this Plan, and the
Company will match a portion of the employees' contributions. Profit sharing
contributions by the Company to the Plan are discretionary. For 2000, 1999, and
1998 the Company contributed approximately $2.0 million, $1.9 million and $2.7
million, respectively, to the Plan.
The 1996 Stock Purchase Plan (the "1996 Plan") provided for the sale of
a maximum of 500,000 shares of the Predecessor Company's Class A common stock to
employees of the Company at a price equal to 85.0% of the market value of the
Predecessor Company's common stock at the beginning or end of each purchase
period, whichever was lower. Participants under the 1996 Plan received 79,678
and 112,319 shares of Predecessor Company's common stock in 1999 and 1998,
respectively.
The Key Employee Stock Compensation Plan provided for the issuance of a
maximum of 65,000 shares of the Predecessor Company's Class A common stock to
key employees. Key employees could elect to receive up to 50.0% of their annual
incentive compensation denominated in shares of the Predecessor Company's common
stock at the fair value of the shares at the date of issuance. No shares of
common stock were issued under the Key Employee Stock Compensation Plan.
The Board of Directors Stock Compensation Plan was approved in 1997 and
provided for the issuance of a maximum of 30,000 shares of the Predecessor
Company's common stock to non-employee directors. Each eligible director could
elect to convert all or a portion of their fees for attendance at Board and
committee meetings into shares of the Predecessor Company's common stock at a
20.0% discount from the fair value of the shares at the date of issuance. Shares
issued pursuant to the plan were 14,374 and 55,048 in 1998 and 1999,
respectively.
On the Effective Date, all rights and awards granted under the 1996
Stock Purchase Plan, the Key Employee Stock Compensation Plan and the Board of
Directors Stock Compensation Plan were canceled. The holders of common stock
issuable under these plans received a pro rata share of 125,000 Class A warrants
issued by the Successor Company (See Note 11).
10. Income Taxes
The United States and foreign components of income (loss) before income
taxes and extraordinary item are as follows (in thousands):
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
----------------- ----------------- ----------------- -----------------
2000 1999 1999 1998
----------------- ----------------- ----------------- -----------------
United States............................ $ (1,502) $ (855) $ (314,447) $ (2,525)
Foreign.................................. (22,578) (710) (232,555) 39,364
----------------- ----------------- ----------------- -----------------
Total.................................. $ (24,080) $ (1,565) $ (547,002) $ 36,839
================= ================= ================= =================
The components of the provision for income tax expense (benefit) are as
follows (in thousands):
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
----------------- ----------------- ----------------- -----------------
2000 1999 1999 1998
----------------- ----------------- ----------------- -----------------
Current:
Federal................................ $ -- $ -- $ (2,234) $ --
Foreign................................ 4,872 -- 2,234 4,603
----------------- ----------------- ----------------- -----------------
Total current....................... 4,872 -- -- 4,603
----------------- ----------------- ----------------- -----------------
Deferred................................. -- -- (32,004) 8,886
----------------- ----------------- ----------------- -----------------
Total income tax expense (benefit)..... $ 4,872 $ -- $ (32,004) $ 13,489
================= ================= ================= =================
A reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
---------------- ----------------- ----------------- --------------
2000 1999 1999 1998
---------------- ----------------- ----------------- --------------
Income tax expense computed at the
federal statutory rate......................... (35)% (35)% (35)% 35%
State income taxes, net of Federal benefit....... (1) (1) (1) 1
Foreign taxes in excess of credits recognized.... 20 -- -- --
Reduction of tax attributes...................... -- -- 20 --
Change in valuation allowance.................... 35 36 8 --
Permanent, non deductible items.................. 1 -- 2 1
------------ ------------- --------------- -------------
20% 0% (6)% 37%
============ ============= =============== =============
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are as follows (in
thousands):
Year Ended December 31,
2000 1999
----------------- -----------------
Deferred income tax assets:
Allowances for doubtful accounts............................ $ 2,347 $ 1,978
Goodwill.................................................... 19,560 22,752
Property differences........................................ -- 12,804
Accrued compensation........................................ -- 840
Foreign tax credit carryforwards............................ 11,338 5,448
Net operating loss carryforwards............................ 53,068 --
Other....................................................... 2,939 4,007
----------------- -----------------
Total deferred income tax assets......................... 89,252 47,829
Less: valuation allowance............................... 57,396 43,252
----------------- -----------------
Net deferred income tax assets........................... 31,856 4,577
Deferred income tax liabilities:
Property differences........................................ 25,445 --
Deferred drydocking costs................................... 5,284 2,569
Other....................................................... 1,127 2,008
----------------- -----------------
Total deferred income tax liabilities.................... 31,856 4,577
----------------- -----------------
Net deferred income tax assets........................... $ -- $ --
================= =================
SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
determined that a valuation allowance of approximately $57.4 million and $43.2
million was necessary at December 31, 2000 and 1999, respectively, 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 at December 31, 2000 and 1999. The net change in
the total valuation allowance for the years ended December 31, 2000 and 1999,
was an increase of approximately $14.1 million and $43.2 million, respectively.
Subsequently, recognized tax benefits relating to the valuation
allowance for deferred tax assets as of December 31, 2000 will be allocated as
follows (in thousands):
Income tax benefit that would be reported in the consolidated statement of operations........... $ 14,144
Additional paid-in capital...................................................................... 43,252
----------
Total...................................................................................... $ 57,396
==========
At December 31, 2000, the Company has a net operating loss carryforward
of approximately $148.5 million, which is available to offset future federal
taxable income through 2020. The Company also has foreign tax credit
carryforwards, expiring in years 2002 through 2005, of approximately $11.3
million, which are available to reduce future federal income tax liabilities.
In 1999, the Company reported a gain of $266.6 million resulting from
the extinguishment of indebtedness that occurred from the bankruptcy discharge
on the Effective Date. Pursuant to Section 108 of the Internal Revenue Code,
this gain was excluded from income taxation and certain tax attributes of the
Company were eliminated or reduced, up to the amount of such income excluded
from taxation. As a result, the Company's net operating loss and alternative
minimum tax credit and capital loss carryforwards in the amounts of $242.5
million, $2.0 million and $2.7 million, respectively, were eliminated and the
tax basis in the Company's assets was reduced by $15.3 million, representing the
Company's discharge of indebtedness income in excess of its net operating loss,
alternative minimum tax credit and cpaital loss carryforwards as of the
Effective Date.
As of December 31, 1999, the Company had a tax basis in its assets in
excess of its basis for financial reporting purposes that will generate tax
deductions in future periods. As a result of a "change in ownership" under the
Internal Revenue Code Section 382, the Company's ability to utilize
depreciation, amortization and other tax attributes will be limited to
approximately $9.5 million per year through 2004. This limitation is applied to
all net built-in losses which existed on the "change of ownership" date (the
Effective Date), including all items giving rise to a deferred tax asset.
11. Stockholder's Equity
Pursuant to the Plan, prior to the effective date, shares of the
Predecessor Company's Class B common stock were converted to Class A common
stock. On the Effective Date, holders of Predecessor Company Class A common
stock and holders of certain rights to obtain common stock under the Predecessor
Company's compensation plans were issued 125,000 Class A warrants to purchase
common stock of the Successor Company on a pro rata basis. The warrants have a
four-year term and an exercise price of $38.49 per share. On the Effective Date,
all classes of the Predecessor Company's equity securities were canceled.
Pursuant to the articles of incorporation of the Successor, there are
20 million shares of common stock authorized for issuance, of which 10 million
were granted at the Effective Date in exchange for Predecessor Company
liabilities, as discussed in Note 3.
At the Effective Date, holders of the Predecessor Company's Preferred
Securities received 0.2 million shares of Successor Company common stock and
125,000 Class A warrants. The warrants have a four-year term and an exercise
price of $38.49 per share.
At the Effective Date, the holders of the Predecessor Company's Senior
Notes, discussed in Note 3, received 9.8 million shares of Successor Company
common stock.
As discussed in Note 4, the holders of Senior Notes received 536,193
common stock purchase warrants ("the Noteholder Warrants"). The warrants have a
six and one-half year term and an exercise price of $0.01 per warrant. As
determined by the Company's management, the fair value of the warrants was
approximately $8.9 million and was recorded as a component of additional paid-in
capital of the Successor.
Also in connection with the issuance of the Senior Notes, the Successor
Company issued an additional 187,668 Noteholder Warrants to an investment
advisor. They have a six and one-half year term and an exercise price of $0.01
per warrant. As determined by the Company's management, the fair value of these
warrants was estimated to be approximately $3.5 million and was recorded as
deferred financing costs. During the year ended December 31, 2000, 89,000
Noteholder Warrants were exercised.
All of the Successor Company's outstanding warrants contain customary
anti-dilution provisions for issuances of common stock, splits, combinations and
certain other events, as defined. In addition, the outstanding warrants have
certain registration rights, as defined.
The Successor Company is authorized to issue 5 million shares of
preferred stock, no par value per share. The Company has no present plans to
issue such shares.
At December 31, 2000, 1,859,712 shares of Common Stock were reserved
for issuance under the Successor Company's Amended and Restated Equity Ownership
Plan, the Stock Option Plan for Directors and outstanding warrants.
During 2000, the Company granted 28,200 shares of restricted common
stock to certain key employees. Compensation expense for this award was recorded
in salaries and benefits for approximately $174,000.
12. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings (loss) per share before extraordinary item (in thousands, except per
share amounts):
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
--------------- --------------- ----------------- ----------------
2000 1999 1999 1998
---------------- ---------------- ----------------- ----------------
Numerator:
Numerator for basic earnings per
share--income (loss) before
extraordinary item available
to common shareholders.......................... $ (28,952) $ (1,565) $ (514,998) $ 23,350
Effect of dilutive securities:
Payments on convertible preferred securities...... -- -- -- 4,635
---------------- ---------------- ---------------- ----------------
Numerator for diluted earnings per share--income
(loss) available to common shareholders
after assumed conversions....................... (28,952) $ (1,565) $ (514,998) $ 27,985
================ ================ ================ ================
Denominator:
Denominator for basic earnings per
share--weighted average shares.................. 10,034 10,000 15,503 15,324
Effect of dilutive securities:
Convertible preferred securities.................. -- -- -- 4,035
Deferred compensation(a).......................... -- -- -- 14
Stock options(b).................................. -- -- -- 78
Warrants(c)....................................... -- -- -- --
---------------- ---------------- ---------------- ----------------
Dilutive potential common shares.................. -- -- -- 4,127
---------------- ---------------- ---------------- ----------------
Denominator for diluted earnings
per share--adjusted weighted
average shares and assumed conversions.......... 10,034 10,000 15,503 19,451
================ ================ ================ ================
Earnings (loss) per share before
extraordinary item.............................. $ (2.89) $ (0.16) $ (33.22) $ 1.52
=============== =============== =============== ===============
Earnings (loss) per share before
extraordinary item--assuming
dilution........................................ $ (2.89) $ (0.16) $ (33.22) $ 1.43
=============== =============== =============== ===============
-----------------------------------------
(a) Includes shares contingently issuable pursuant to the Predecessor Company's
Key Employee Stock Plan (See Note 9).
(b) Does not include 604,000 and 200,000 stock options in 2000 and 1999,
respectively, as these would be antidilutive.
(c) Does not include 884,712 and 973,861 warrants in 2000 and 1999,
respectively, as these would be antidilutive.
13. Segment and Geographic Data
The Company organizes its business principally into three segments. The
accounting policies of the reportable segments are the same as those described
in Note 2. The Company does not have significant intersegment transactions.
These segments and their respective operations are as follows:
Offshore Energy Support - Offshore energy support includes vessels
operating in U.S. and foreign locations used primarily to transport
materials, supplies, equipment and personnel to drilling rigs and to
support the construction, positioning and ongoing operations of oil and
gas productions platforms.
Marine Transportation Services - Marine transportation services
included oceangoing and inland-waterway vessels used to transport
chemicals, fuel and other petroleum products, primarily from chemical
manufacturing plants, refineries and storage facilities along the U.S.
Gulf of Mexico coast to industrial users and distribution facilities in
and around the Gulf of Mexico, Atlantic and Pacific coast ports and
inland rivers. Marine transportation services also includes work
performed in the Company's shipyard facilities at Greencove Springs,
Florida.
Towing - Harbor and offshore towing services are provided by tugs to
vessels utilizing the ports in which the tugs operate, and to vessels
at sea to the extent required by environmental regulations, casualty or
other emergency.
The Company evaluates performance by operating segment. Also, within
the offshore energy support segment, the Company performs additional performance
evaluation of vessels marketed in U.S. and foreign locations. Resources are
allocated based on segment profit or loss from operations, before interest and
taxes.
Revenues by segment and geographic area consist only of services
provided to external customers, as reported in the Statements of Operations.
Income from operations by geographic area represents net revenues less
applicable costs and expenses related to those revenues. Unallocated expenses
are primarily comprised of general and administrative expenses of a corporate
nature. Identifiable assets represent those assets used in the operations of
each segment or geographic area and unallocated assets include corporate assets.
The following schedule presents information about the Company's
operations in these segments (in thousands):
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
----------------- ----------------- ----------------- ----------------
2000 1999 1999 1998
----------------- ----------------- ----------------- ----------------
Revenues
Offshore energy support...................... $ 151,395 $ 5,610 $ 144,702 $ 242,655
Marine transportation services............... 135,982 6,341 142,618 115,770
Towing....................................... 33,106 1,528 41,431 46,368
---------------- ---------------- ---------------- ----------------
Total..................................... $ 320,483 $ 13,479 $ 328,751 $ 404,793
================ ================ ================ ================
Operating expenses
Offshore energy support...................... $ 94,331 $ 4,168 $ 95,811 $ 114,369
Marine transportation services............... 91,104 3,134 96,993 77,674
Towing....................................... 19,791 745 19,949 21,558
---------------- ---------------- ---------------- ----------------
Total..................................... $ 205,226 $ 8,047 $ 212,753 $ 213,601
================ ================ ================ ================
Depreciation, amortization and drydocking
Offshore energy support...................... $ 31,478 $ 1,236 $ 49,893 $ 41,547
Marine transportation services............... 14,417 623 22,855 16,876
Towing....................................... 2,919 150 4,991 4,750
General corporate............................ 1,457 60 1,671 1,071
---------------- ---------------- ---------------- ----------------
Total..................................... $ 50,271 $ 2,069 $ 79,410 $ 64,244
================ ================ ================ ================
Income (loss) from operations
Offshore energy support...................... $ 10,389 $ (429) $ (20,686) $ 72,032
Marine transportation services............... 23,893 2,385 15,354 12,951
Towing....................................... 5,096 394 11,106 14,532
General corporate............................ (14,022) (630) (17,000) (15,746)
---------------- ---------------- ---------------- ----------------
Total..................................... $ 25,356 $ 1,720 $ (11,226) $ 83,769
================ ================ ================ ================
Consolidated Balance Sheet Information
as of December 31,
2000 1999
-------------------- -------------------
Identifiable assets
Offshore energy support............................ $ 334,614 $ 386,444
Marine transportation services..................... 347,466 325,936
Towing............................................. 68,446 81,364
Unallocated........................................ 24,950 36,996
------------------- -------------------
Total........................................... $ 775,476 $ 830,740
=================== ===================
Vessels and equipment
Offshore energy support............................ $ 284,652 $ 326,934
Marine transportation services..................... 345,005 302,767
Towing............................................. 61,100 69,278
------------------- -------------------
Total Vessels................................... 690,757 698,979
Construction in progress........................... 249 1,345
General corporate.................................. 12,516 11,643
------------------- -------------------
Gross vessels and equipment........................ 703,522 711,967
Less accumulated depreciation................... 63,626 22,087
------------------- -------------------
Total......................................... $ 639,896 $ 689,880
=================== ===================
Capital expenditures and drydocking
Offshore energy support............................ $ 17,596 $ 33,060
Marine transportation services..................... 8,341 29,035
Towing............................................. 5,530 1,992
Unallocated........................................ 26 138
------------------- -------------------
Total........................................... $ 31,493 $ 64,225
=================== ===================
The Company is engaged in providing marine support and transportation
services in the United States and foreign locations. The Company's foreign
operations are conducted on a worldwide basis, primarily in the Arabian Gulf,
West Africa, Southeast Asia and Mexico, with assets that are highly mobile.
These operations are subject to risks inherent in operating in such locations.
The vessels generating revenues from offshore and marine transportation
services move regularly and routinely from one country to another, sometimes in
different continents depending on the charter party. Because of this asset
mobility, revenues and long-lived assets attributable to the Company's foreign
operations in any one country are not material, as defined in SFAS No. 131.
One customer, CITGO Petroleum, accounted for 12.0% of the Company's
total revenue for the year ended December 31, 2000. The revenue received from
CITGO was approximately $38.6 million, which related to the marine
transportation services segment.
The following table presents selected financial information pertaining
to the Company's geographic operations for 2000, 1999 and 1998 (in thousands):
Successor Company Predecessor Company
Period from Period from
Year Ended December 16 to January 1 to Year Ended
December 31, December 31, December 15, December 31,
----------------- ----------------- ----------------- ----------------
2000 1999 1999 1998
----------------- ----------------- ----------------- ----------------
Revenues
Domestic.................................... $ 223,579 $ 10,039 $ 232,067 $ 253,117
Foreign
West Africa.............................. 48,268 1,658 45,295 69,736
Middle East.............................. 34,242 1,524 38,811 55,878
Southeast Asia........................... 14,394 258 12,578 26,062
---------------- ---------------- ---------------- ----------------
Consolidated revenues......................... $ 320,483 $ 13,479 $ 328,751 $ 404,793
================ ================ ================ ================
Consolidated Balance Sheet Information
as of December 31,
2000 1999
-------------------- -------------------
Identifiable assets
Domestic.......................................... $ 566,862 $ 544,317
Foreign
West Africa.................................... 102,926 113,174
Middle East.................................... 50,728 102,160
Southeast Asia................................. 30,009 34,093
Other............................................. 24,951 36,996
------------------- -------------------
Total.......................................... $ 775,476 $ 830,740
=================== ===================
Vessels and equipment
Domestic.......................................... $ 544,631 $ 491,641
Foreign
West Africa.................................... 85,942 94,349
Middle East.................................... 34,903 81,749
Southeast Asia................................. 25,530 32,585
------------------- -------------------
691,006 700,324
General corporate................................. 12,516 11,643
------------------- -------------------
703,522 711,967
Less accumulated depreciation..................... 63,626 22,087
------------------- -------------------
Total.......................................... $ 639,896 $ 689,880
=================== ===================
14. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair
value of financial instruments included in the following categories:
Cash, Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts
Payable and Accrued Liabilities. The carrying amounts reported in the balance
sheet approximates fair value due to the current maturity of such instruments.
Senior Notes, Term Loan, and Title XI. The Senior Notes, Term Loan and
Title XI obligations provide for interest and principal payments at various
rates and dates as discussed in Note 4. The Company estimates the fair value of
such obligations using a discounted cash flow analysis at estimated market
rates. The following table presents the carrying value and fair value of the
financial instruments at December 31, 2000 and 1999:
December 31,
2000 1999
----------------------------------------- ----------------------------------------
Issue Carrying Value Fair Value Carrying Value Fair Value
----------------------------------- ------------------- ------------------- ------------------- -------------------
Senior notes....................... $ 79.1 $ 99.9 $ 76.7 $ 95.0
Term loans......................... 168.9 168.9 200.0 200.0
Title XI........................... 249.9 262.8 259.2 252.4
Revolving Line of Credit. Amounts outstanding under the revolving line
of credit provide for interest at variable rates that are periodically adjusted
to reflect changes in overall market rates and therefore approximate fair value.
Notes Payable and Capital Lease Obligations. The carrying amounts
reported in the balance sheet approximates fair value determined using a
discounted cash flow analysis at estimated market rates.
Interest Rate Cap. In February 2000, the company entered into an
interest rate cap as a requirement of its Credit Agreement. The notional amount
of the cap was $75.0 million with a term of three years and a strike price of
8.5% based on an underlying index, which was the three-month LIBOR. At December
31, 2000, the Company determined that the interest rate cap was impaired and the
unamortized premium of $0.4 million was written off.
15. Extraordinary Items
In February 1998, the Predecessor Company repaid $268.0 million of its
outstanding debt. As a result, the Company recorded a loss on the early
extinguishment of approximately $0.7 million, net of an income tax benefit of
$0.4 million.
In 1999, the Predecessor Company was relieved of approximately $421.6
million of outstanding debt and related accrued interest in exchange for
approximately $155.0 million in equity interests in the Successor Company in
connection with the Plan. As a result, the Predecessor Company recorded a gain
on the early extinguishment of debt of approximately $266.6 million.
16. Subsequent Events
The Company completed the acquisition of the remaining 24.25% interest
in its five double-hull tankers on January 15, 2001, pursuant to the exercise of
its option with Newport News Shipbuilding, Inc. The purchase price was
approximately $11.0 million, of which $523,544 was paid in cash and the balance
was paid by a promissory note in the principal amount of $10.5 million payable
over five years in twenty quarterly installments of principal in the amount of
$525,000 each, plus accrued interest at 8.5% per annum. The Note is secured by a
pledge of certain securities of subsidiaries of the Company relating to the
ownership of the five tankers pursuant to an Amended and Restated Pledge and
Security Agreement.
17. Supplemental Condensed Consolidating Financial Information
The Senior Notes described in Note 4 are fully and unconditionally
guaranteed on a joint and several basis by certain of the Company's consolidated
subsidiaries. A substantial portion of the Company's cash flows are generated by
its subsidiaries. As a result, the funds necessary to meet the Company's
obligations are provided in substantial part by distributions or advances from
its 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
its subsidiaries for the purpose of meeting its obligations, including the
payments of principal and interest on the Senior Notes.
The following is summarized condensed consolidating financial
information for the Company, segregating the Parent, the domestic and foreign
guarantor subsidiaries, the combined non-guarantor subsidiaries and
eliminations.
Condensed Consolidating Statement of Operations
(in thousands)
Year Ended December 31, 2000
-----------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------- ------------- ------------- ------------- ------------- -------------
Revenue ......................... $ 36,763 $ 163,680 $ 99,380 $ 70,716 $ (50,056) $ 320,483
Operating expenses................ 26,877 119,086 61,557 41,797 (44,091) 205,226
Overhead expenses................. 14,120 12,387 12,923 4,879 (4,679) 39,630
Depreciation, amortization
and drydocking.................. 3,667 16,002 19,679 10,923 -- 50,271
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations..... (7,901) 16,205 5,221 13,117 (1,286) 25,356
Other expense, net................ (16,179) (19,903) (32,817) (24,475) 43,938 (49,436)
------------- ------------- ------------- ------------- ------------- -------------
Loss before income taxes.......... (24,080) (3,698) (27,596) (11,358) 42,652 (24,080)
Provision for income taxes........ 4,872 -- -- -- -- 4,872
------------- ------------- ------------- ------------- ------------- -------------
Net loss.......................... $ (28,952) $ (3,698) $ (27,596) $ (11,358) $ 42,652 $ (28,952)
============= ============= ============= = ============= ============= =============
Condensed Consolidating Statement of Operations
(in thousands)
For the Period from December 16, 1999 to December 31, 1999
-------------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------- ------------- ------------- ------------- ------------- -------------
Revenue ......................... $ 2,118 $ 7,050 $ 3,466 $ 3,203 $ (2,358) $ 13,479
Operating expenses................ 1,385 5,272 2,717 993 (2,320) 8,047
Overhead expenses................. 625 396 664 194 (236) 1,643
Depreciation, amortization
and drydocking.................. 222 663 782 402 -- 2,069
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations..... (114) 719 (697) 1,614 198 1,720
Other expense, net................ (1,451) 2,735 (1,080) (90) (3,399) (3,285)
------------- ------------- ------------- ------------- ------------- -------------
Net income (loss)................. $ (1,565) $ 3,454 $ (1,777) $ 1,524 $ (3,201) $ (1,565)
============= ============= ============= ============= ============= =============
Condensed Consolidating Statement of Operations
(in thousands)
For the Period from January 1, 1999 to December 15, 1999
-------------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
Revenue ......................... $ 48,598 $ 177,476 $ 101,879 $ 60,999 $ (60,201) $ 328,751
Operating expenses................ 30,122 138,469 65,204 33,666 (54,708) 212,753
Overhead expenses................. 16,842 13,210 16,879 6,499 (5,616) 47,814
Depreciation, amortization
and drydocking................. 12,105 23,945 33,848 9,524 (12) 79,410
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations..... (10,471) 1,852 (14,052) 11,310 135 (11,226)
Other expense, net................ (445,072) (331,884) (36,067) (17,963) 728,483 (102,503)
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) before
reorganization items,
income taxes.................... (455,543) (330,032) (50,119) (6,653) 728,618 (113,729)
Reorganization items:
Professional fees............... (8,535) -- -- -- -- (8,535)
Write down of goodwill
and property................... (79,868) (123,900) (209,099) (2,730) (4,401) (419,998)
Other, net...................... (4,154) (586) -- -- -- (4,740)
------------- ------------- ------------- ------------- ------------- -------------
Total reorganization items... (92,557) (124,486) (209,099) (2,730) (4,401) (433,273)
------------- ------------- ------------- ------------- ------------- -------------
Loss before income taxes and
extraordinary item.............. (548,100) (454,518) (259,218) (9,383) 724,217 (547,002)
Provision for income taxes........ (32,004) -- -- -- -- (32,004)
------------- ------------- ------------- ------------- ------------- -------------
Loss before extraordinary item.... (516,096) (454,518) (259,218) (9,383) 724,217 (514,998)
Gain (loss) on early
extinguishment of debt, net
of applicable income taxes...... 267,741 (1,098) -- -- -- 266,643
------------- ------------- ------------- ------------- ------------- -------------
Net loss.......................... $ (248,355) $ (455,616) $ (259,218) $ (9,383) $ 724,217 $ (248,355)
============= ============= ============= ============= ============= =============
Condensed Consolidating Statement of Operations
(in thousands)
Year Ended December 31, 1998
-------------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------- ------------- ------------- ------------- ------------- -------------
Revenue ........................... $ 69,616 $ 232,130 $ 220,133 $ 16,822 $ (133,908) $ 404,793
Operating expenses.................. 40,444 156,121 71,038 5,858 (59,860) 213,601
Overhead expenses................... 17,846 10,862 14,487 5,626 (5,642) 43,179
Depreciation, amortization
and drydocking.................... 13,690 20,928 26,120 3,506 -- 64,244
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations....... (2,364) 44,219 108,488 1,832 (68,406) 83,769
Other expense, net.................. 38,335 58,636 (94,447) (99) (49,355) (46,930)
------------- ------------- ------------- ------------- ------------- -------------
Income before income taxes and
extraordinary item................ 35,971 102,855 14,041 1,733 (117,761) 36,839
Provision for income taxes.......... 13,489 -- -- -- -- 13,489
------------- ------------- ------------- ------------- ------------- -------------
Income before extraordinary item.... 22,482 102,855 14,041 1,733 (117,761) 23,350
Loss on early extinguishment
of debt, net of applicable
income taxes...................... (734) -- -- (868) -- (1,602)
------------- ------------- ------------- ------------- ------------- -------------
Net income.......................... $ 21,748 $ 102,855 $ 14,041 $ 865 $ (117,761) $ 21,748
============= ============= ============= ============= ============= =============
Condensed Consolidating Statement of Cash Flows
(in thousands)
Year Ended December 31, 2000
------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ---------- ------------ ------------ ------------ -------------
Net cash provided by (used in)
operating activities....................... $ 46,864 $ 18,743 $ (55,387) $ 16,056 $ -- $ 26,276
Investing activities:
Purchases of property....................... (29,323) (34,559) 54,174 (2,339) -- (12,047)
Expenditures for drydocking................. (2,251) (6,110) (4,788) (1,217) -- (14,366)
Redemption of restricted investments........ -- -- -- 2,931 -- 2,931
Proceeds from disposals of assets........... -- 21,146 4,564 -- -- 25,710
--------- ---------- ------------ ------------ ------------ -------------
Net cash provided by (used in)
investing activities..................... (31,574) (19,523) 53,950 (625) -- 2,228
Financing activities:
Repayments of short-term borrowings.......... 14,250 -- -- -- -- 14,250
Repayment of long-term borrowings............ (32,390) -- -- (1,000) -- (33,390)
Repayment of Title XI bonds.................. -- -- -- (9,282) -- (9,282)
Payments of financing costs.................. -- (596) -- -- -- (596)
Proceeds from sale/leaseback of vessels...... -- -- -- -- -- --
Payments of obligations under
capital leases............................ (579) (3,721) -- -- -- (4,300)
Proceeds from issuance of common stock....... 1 -- -- -- -- 1
--------- ---------- ------------ ------------ ------------ -------------
Net cash used in financing activities...... (18,718) (4,317) -- (10,282) -- (33,317)
--------- ---------- ------------ ------------ ------------ -------------
Change in cash and cash equivalents.......... (3,428) (5,097) (1,437) 5,149 -- (4,813)
Cash and cash equivalents at
beginning of year......................... 4,830 2,907 7,817 3,492 -- 19,046
--------- ---------- ------------ ------------ ------------ -------------
Cash and cash equivalents at
end of year............................... $ 1,402 $ (2,190) $ 6,380 $ 8,641 $ -- $ 14,233
========= ========== ============ ============ ============ =============
Condensed Consolidating Statement of Cash Flows
(in thousands)
For the Period from December 16, 1999 to December 31, 1999
------------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------ -------------
Net cash provided by (used in)
operating activities.............. $ 21,151 $ (538) $ 1,971 $ 1,084 $ (21,107) $ 2,561
Investing activities:
Purchases of property............... -- 42 (500) (139) -- (597)
Acquisitions of businesses.......... (1,000) -- -- -- -- (1,000)
Expenditures for drydocking......... 65 (833) (656) -- -- (1,424)
------------ ------------ ------------ ------------ ------------ -------------
Net cash used in investing
activities....................... (935) (791) (1,156) (139) -- (3,021)
Financing activities:
Proceeds from long-term borrowings.. -- (80) -- -- -- (80)
Repayment of Title XI bonds......... (1,252) -- -- -- -- (1,252)
Payments of obligations under
capital leases.................... (36) (123) -- -- -- (159)
Capital contribution (to)
from consolidated
affiliates......................... (21,707) 279 -- 321 21,107 --
------------ ------------ ------------ ------------ ------------ -------------
Net cash used in financing
activities...................... (22,995) 76 -- 321 21,107 (1,491)
------------ ------------ ------------ ------------ ------------ -------------
Change in cash and cash equivalents. (2,779) (1,253) 815 1,266 -- (1,951)
Cash and cash equivalents
at beginning of period............. 7,609 4,160 7,002 2,226 -- 20,997
------------ ------------ ------------ ------------ ------------ -------------
Cash and cash equivalents
at end of period.................. $ 4,830 $ 2,907 $ 7,817 $ 3,492 $ -- $ 19,046
============ ============ ============ ============ ============ =============
Condensed Consolidating Statement of Cash Flows
(in thousands)
For the Period from January 1, 1999 to December 15, 1999
------------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------ -------------
Net cash provided by (used in)
operating activities.................. $ 193,780 $ (47,750) $ 21,953 $ (2,925) $ (150,131) $ 14,927
Investing activities:
Purchases of property................... (13,043) 171 (27,755) (13,672) (2,845) (57,144)
Expenditures for drydocking............. (1,481) (2,054) (1,305) (220) -- (5,060)
Payments on vessels under construction.. -- (5,102) -- -- -- (5,102)
Purchases of restricted investments..... -- -- -- (45,790) -- (45,790)
Redemption of restricted investments.... -- -- -- 65,382 -- 65,382
Proceeds from disposal of assets........ 15,045 8,700 9,107 -- -- 32,852
------------ ------------ ------------ ------------ ------------ -------------
Net cash provided by (used in)
investing activities................. 521 1,715 (19,953) 5,700 (2,845) (14,862)
Financing activities:
Proceeds from DIP credit facility....... 26,690 -- -- -- -- 26,690
Proceeds from long-term borrowings...... 231,008 14,200 -- -- -- 245,208
Repayment of long-term borrowings....... (287,299) (906) -- -- -- (288,205)
Proceeds from issuance of Senior
Notes and warrants..................... 85,500 -- -- -- -- 85,500
Proceeds from issuance of
Title XI bonds......................... -- -- -- 5,428 -- 5,428
Repayment of Title XI bonds............. (3,670) (539) (2,434) -- (6,643)
Escrow of restricted cash............... (15,027) (190) -- -- -- (15,217)
Payments of financing costs............. (12,186) -- -- (492) -- (12,678)
Payments of obligations
under capital leases................... (563) (2,257) -- -- -- (2,820)
Proceeds from issuance of
common stock........................... 253 -- -- -- -- 253
Repayment of DIP credit facility........ (26,690) -- -- -- -- (26,690)
Capital contribution (to)
from consolidated affiliates........... (186,109) 37,788 -- (4,655) 152,976 --
------------ ------------ ------------ ------------ ------------ -------------
Net cash provided by (used in)
financing activities................ (188,093) 48,096 -- (2,153) 152,976 10,826
------------ ------------ ------------ ------------ ------------ -------------
Change in cash and cash equivalents..... 6,208 2,061 2,000 622 -- 10,891
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.......................... $ 7,609 $ 4,160 $ 7,002 $ 2,226 $ -- $ 20,997
============ ============ ============ ============ ============ =============
Condensed Consolidating Statement of Cash Flows
(in thousands)
Year Ended December 31, 1998
----------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities.................... $ (34,283) $ 72,508 $ 23,671 $ 29,495 $ (538) $ 90,853
Investing activities:
Purchases of property.................... (15,803) (31,140) (44,917) (23,479) 818 (114,521)
Acquisitions of businesses............... (341,442) (61,070) (299,917) 44 328,850 (373,535)
Expenditures for drydocking.............. (9,019) (8,379) (5,611) (640) (286) (23,935)
Payments on vessels under construction... -- -- -- (155,980) -- (155,980)
Purchases of restricted investments...... -- -- -- (369,629) -- (369,629)
Redemption of restricted investments..... -- -- -- 515,584 -- 515,584
Capital contributions to
consolidated affiliates................. (3,233) -- -- -- -- (3,233)
------------ ------------ ------------ ------------ ------------ ------------
Net cash used in investing activities... (369,497) (100,589) (350,445) (34,100) 329,382 (525,249)
Financing activities:
Proceeds from long-term borrowings....... 431,700 -- -- -- -- 431,700
Repayment of long-term borrowings........ (313,746) (192) -- -- -- (313,938)
Proceeds from issuance of Senior
Notes and warrants...................... 292,500 -- -- -- -- 292,500
Proceeds from issuance of
Title XI bonds.......................... -- -- -- 139,023 -- 139,023
Repayment of Title XI bonds.............. (6,693) (647) -- (129,910) -- (137,250)
Payments of financing costs.............. (2,760) -- -- (8,059) -- (10,819)
Proceeds from sale-leaseback
of vessels.............................. 10,025 22,597 -- -- -- 32,622
Payments of obligations under
capital leases.......................... (552) (4,536) -- -- -- (5,088)
Proceeds from issuance of
common stock............................ 800 -- -- -- -- 800
Capital contribution (to) from
consolidated affiliates................. (8,603) 8,193 324,117 5,137 (328,844) --
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by financing
activities............................ 402,671 25,415 324,117 6,191 (328,844) 429,550
------------ ------------ ------------ ------------ ------------ ------------
Change in cash and cash equivalents...... (1,109) (2,666) (2,657) 1,586 -- (4,846)
Cash and cash equivalents at
beginning of year....................... 2,510 4,185 8,239 18 -- 14,952
------------ ------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at
end of year............................. $ 1,401 $ 1,519 $ 5,582 $ 1,604 $ -- $ 10,106
============ ============ ============ ============ ============ ============
Condensed Consolidating Balance Sheet
(in thousands)
As of December 31, 2000
-----------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------- ------------- ------------- ------------- ------------- -------------
Assets
Current assets:
Cash and cash equivalents.......... $ 1,402 $ (2,190) $ 6,380 $ 8,641 $ -- $ 14,233
Restricted cash.................... 331 -- -- -- -- 331
Accounts receivable:
Trade, net...................... 1,607 24,011 24,298 4,314 (704) 53,526
Insurance claims and other...... 1,029 3,060 8,751 336 -- 13,176
Marine operating supplies.......... (695) 2,466 3,503 4,364 -- 9,638
Prepaid expenses................... 568 920 1,177 390 -- 3,055
------------- ------------- ------------- ------------- ------------- -------------
Total current assets............ 4,242 28,267 44,109 18,045 (704) 93,959
Vessels and equipment, net........... 47,349 186,174 129,344 277,029 -- 639,896
Deferred costs, net.................. 17,268 7,926 4,427 8,538 -- 38,159
Restricted investments............... -- -- -- 865 -- 865
Due from affiliates.................. (141,953) 63,892 117,788 (36,247) (3,480) --
Other................................ 509,352 327,407 1,771 37,435 (873,368) 2,597
------------- ------------- ------------- ------------- ------------- -------------
Total assets....................... $ 436,258 $ 613,666 $ 297,439 $ 305,665 $ (877,552) $ 775,476
============= ============= ============= ============= ============= =============
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable................... $ 976 $ 4,847 $ 6,300 $ 783 $ -- $ 12,906
Current maturities of
long-term debt.................... 27,226 1,960 -- 4,084 -- 33,270
Current obligations under
capital leases................... -- 3,580 -- -- -- 3,580
Accrued interest................... 454 492 -- 731 -- 1,677
Accrued liabilities and other...... 7,552 4,676 17,719 4,597 (704) 33,840
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities....... 36,208 15,555 24,019 10,195 (704) 85,273
Long-term debt....................... 181,451 25,333 -- 220,065 -- 426,849
Obligations under capital leases..... -- 34,718 -- -- -- 34,718
Senior notes......................... 79,108 -- -- -- -- 79,108
Other liabilities.................... 2,944 424 785 42 -- 4,195
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities.................. 299,711 76,030 24,804 230,302 (704) 630,143
Commitment and contingencies
Minority interest.................... -- -- -- -- 8,819 8,819
Total stockholders' equity........... 136,547 537,636 272,635 75,363 (885,667) 136,514
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity............. $ 436,258 $ 613,666 $ 297,439 $ 305,665 $ (877,552) $ 775,476
============= ============= ============= ============= ============= =============
Condensed Consolidating Balance Sheet
(in thousands)
As of December 31, 1999
-----------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
------------- ------------- ------------- ------------- ------------- -------------
Assets
Current assets:
Cash and cash equivalents........... $ 4,830 $ 2,907 $ 7,817 $ 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 5,881 516 (785) 9,628
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 32,374 36,762 14,433 (1,473) 106,091
Vessels and equipment, net............ 14,918 180,997 208,892 285,073 -- 689,880
Deferred costs, net................... 14,962 4,615 1,454 8,433 -- 29,464
Restricted investments................ -- -- -- 3,752 -- 3,752
Due from affiliates................... (82,320) 52,899 67,633 (34,733) (3,479) --
Other................................. 537,880 353,694 400 43,038 (933,459) 1,553
------------- ------------- ------------- ------------- ------------- -------------
Total assets........................ $ 509,435 $ 624,579 $ 315,141 $ 319,996 $ (938,411) $ 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 -- 3,819 -- 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 8,513 (1,473) 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 liabilities..................... 4,425 561 738 228 -- 5,952
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities................... 344,114 64,726 14,702 232,888 (1,473) 654,957
Commitment and contingencies
Minority interest..................... -- -- -- -- 10,457 10,457
Total stockholders' equity............ 165,321 559,853 300,439 87,108 (947,395) 165,326
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity.............. $ 509,435 $ 624,579 $ 315,141 $ 319,996 $ (938,411) $ 830,740
============= ============= ============= ============= ============= =============
18. Selected Quarterly Financial Information (unaudited)
The following information is presented as supplementary financial
information for 2000 and 1999 (in thousands, except per share information):
Successor Company
----------------------------------------------------------------------
First Second Third Fourth
Year Ended December 31, 2000 Quarter Quarter Quarter Quarter
---------------------------- --------------- --------------- --------------- ---------------
Revenues................................. $ 78,607 $ 80,211 $ 81,623 $ 80,042
Income from operations................... 2,013 5,976 9,307 8,060
Net loss(1)(2)(3)........................ (12,909) (3,251) (3,142) (9,650)
Earnings per share--basic:
Loss before extraordinary item......... $ (1.29) $ (0.33) $ (0.31) $ (0.96)
Net loss............................... (1.29) (0.33) (0.31) (0.96)
Earnings per share--assuming dilution(4):
Loss before extraordinary item......... $ (1.29) $ (0.33) $ (0.31) $ (0.96)
Net loss............................... (1.29) (0.33) (0.31) (0.96)
Successor
Predecessor Company Company
---------------------------------------------------------------------- --------------
Period from Period from
First Second Third October 1 to December 16 to
Year Ended December 31, 1999 Quarter Quarter Quarter December 15, December 31,
---------------------------- --------------- --------------- --------------- ----------------- --------------
Revenues................................. $ 90,400 $ 89,004 $ 85,989 $ 63,358 $ 13,479
Income (loss) from operations............ 4,431 (250) (1,846) (13,561) 1,720
Loss before extraordinary item(5)........ (9,064) (23,718) (20,107) (462,109) (1,565)
Gain on early extinguishment of debt(5).. -- -- -- 266,643 --
Net loss................................. (9,064) (23,718) (20,107) (195,466) (1,565)
Earnings per share--basic:
Loss before extraordinary item......... $ (0.59) $ (1.53) $ (1.29) $ (29.81) $ (0.16)
Net loss............................... (0.59) (1.53) (1.29) (12.61) (0.16)
Earnings per share--assuming dilution(4):
Loss before extraordinary item......... $ (0.59) $ (1.53) $ (1.29) $ (29.81) $ (0.16)
Net loss............................... $ (0.59) (1.53) (1.29) (12.61) (0.16)
----------------------------
(1) Includes gains (losses) on the disposal of assets of $(0.2) million, $0.5
million, $4.0 million, and $(0.4) million in the first, second, third, and
fourth quarters of 2000, respectively.
(2) Includes gain of $7.0 million on the settlement of a contingent liability
in the third quarter of 2000.
(3) Includes approximately $0.9 million in additional depreciation expense in
the fourth quarter of 2000 as a result of the change in estimated useful
lives of certain vessels (See Note 2).
(4) The sum of the four quarters' earnings per share will not necessarily equal
the annual earnings per share, as the computations for each quarter are
independent of the annual computation.
(5) Reflects the application of Fresh Start Accounting in the period from
January 1, 1999 to December 15, 1999 (See Note 3).