-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NsqcQU8yu6dU9M3vt4Yn2+cZhvd2O9F0BaVTfOeWu9EuxpBGccG30ufDe0suF07A 2X+ysDf+LsCrooYwTW1XrA== 0000906280-98-000062.txt : 19980319 0000906280-98-000062.hdr.sgml : 19980319 ACCESSION NUMBER: 0000906280-98-000062 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19980318 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRICO MARINE SERVICES INC CENTRAL INDEX KEY: 0000921549 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 721252405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 033-77512 FILM NUMBER: 98567787 BUSINESS ADDRESS: STREET 1: 250 NORTH AMERICAN COURT CITY: HOUMA STATE: LA ZIP: 70364 BUSINESS PHONE: 5048513833 MAIL ADDRESS: STREET 1: P.O. BOX 2468 CITY: HOUMA STATE: LA ZIP: 70361 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K/A (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1996 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-28316 Trico Marine Services, Inc. (Exact name of registrant as specified in its charter) Delaware 72-1252405 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 250 North American Court 70363 Houma, Louisiana (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (504)851-3833 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value per share Preferred Stock Purchase Rights 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 (or for such shorter period that the registrant was required to file such reports) 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. Yes No X The aggregate market value of the voting stock held by non- affiliates (affiliates being directors, executive officers and holders of more than 5% of the Company's common stock) of the Registrant at March 11, 1998 was approximately $404,860,000. The number of shares of the Registrant's common stock, $0.01 par value per share, outstanding at March 11, 1998 was 20,295,066. EXPLANATORY NOTE This Form 10-K/A amends Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and Item 8 (Consolidated Financial Statements), of the Annual Report on Form 10-K of Trico Marine Services, Inc. (the "Company") for the fiscal year ended December 31, 1996, in order to add the following: (a) an additional paragraph, appearing at the end of "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," that describes the limitations on the ability of the Company's subsidiaries to pay dividends and make other distributions to the Company. (b) an additional paragraph at the end of footnote 15 to the Company's consolidated financial statements that sets forth the following: (i) The Company is a holding company with no assets or operations other than investments in its subsidiaries; (ii) The Subsidiary Guarantors (as defined in the new disclosure) are wholly-owned subsidiaries of the Company, comprise all of the direct and indirect subsidiaries of the Company (other than inconsequential subsidiaries) and, on a consolidated basis, represent substantially all of the assets, liabilities, earnings and equity of the Company; (iii)Each of the Subsidiary Guarantors must fully and unconditionally guarantee the Company's obligations under the Senior Notes (as defined in the new disclosure) on a joint and several basis; and (iv) Management has determined that separate financial statements and disclosures concerning the Subsidiary Guarantors are not material to investors. These items are being added in connection with an application by the Company to the Securities and Exchange Commission (granted in February 1998) for a determination that the Company need not include in its consolidated financial statements separate financial information regarding the Subsidiary Guarantors. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations General The Company's results of operations are affected primarily by day rates and fleet utilization. While marine support vessels service existing oil and gas production platforms as well as exploration and development activities, incremental demand depends primarily upon the level of drilling activity, which in turn is related to both short-term and long-term trends in oil and gas prices. As a result, trends in oil and gas prices may significantly affect utilization and day rates. The Company's day rates and utilization rates are also affected by the size, configuration and capabilities of the Company's fleet. In the case of supply boats, the deck space and liquid mud and dry bulk cement capacity are important attributes. For crew boats, size and speed are important factors, and in the case of lift boats, longer leg length and greater crane capacity add versatility and marketability. During 1996 the Company acquired 18 supply boats for an aggregate of $66.3 million. In May 1996, the Company acquired four supply boats for $11.0 million with a portion of the proceeds of the initial public offering. In September, October and December of 1996, the Company acquired, in three separate transactions, a total of 13 supply boats for $55.1 million. These acquisitions, coupled with the acquisition in March 1996 of the Stones River, which was refurbished, upgraded and placed into service in March 1997, have increased the Company's supply boat fleet from 16 at the end of 1995 to 34 at the end of 1996. Additionally, in January 1997, the Company acquired five supply boats and one utility boat and executed a definitive agreement to purchase two additional supply boats for a combined total of $36.2 million. The Company anticipates closing the acquisition of the two additional supply boats in the second quarter of 1997. The Company's operating costs primarily are a function of fleet size and utilization levels. The most significant direct operating costs are wages paid to vessel crews, maintenance and repairs and marine insurance. Generally, increases or decreases in vessel utilization only affect that portion of the Company's direct operating costs that is incurred when the vessels are active. As a result, direct operating costs as a percentage of revenues may vary substantially due to changes in day rates and utilization. In addition to these variable costs, the Company incurs fixed charges related to the depreciation of its fleet and costs for the routine drydock inspection, maintenance and repair designed to ensure compliance with U.S. Coast Guard regulations and to maintain ABS certification for its vessels. Maintenance and repair expense and marine inspection amortization charges are generally determined by the aggregate number of drydockings and other repairs undertaken in a given period. Costs incurred for drydock inspection and regulatory compliance are capitalized and amortized over the period between such drydockings, typically two to three years. Results of Operations The table below sets forth by vessel class, the average day rates and utilization for the Company's vessels and the average number of vessels owned during the periods indicated. The six boats acquired by the Company in January 1997 and the Stones River are not included in the financial or operating data for the periods presented below. Year ended December 31, 1996 1995 1994 Average vessel day rates: Supply boats . . . . . . . . . . .. $4,917 $3,060 $3,057 Lift boats . . . . . . . . . . . . 4,995 4,656 5,017 Crew/line handling boats (1)(2). . . 1,579 1,480 1,465 Average vessel utilization rate: Supply boats . . . . . . . . . . .. 94% 78% 77% Lift boats . . . . . . . . . . . . 67% 45% 57% Crew/line handling boats (1)(2) . . 95% 85% 82% Average number of vessels: Supply boats . . . . . . . . . . .. 21.2 16.0 16.0 Lift boats . . . . . . . . . . . . 6.0 5.9 5.0 Crew/line handling boats(2) . . . . 23.3 16.8 22.3 __________ (1) Average utilization and day rates for all line handling vessels reflect the contract rates for the Company's 40%- owned, unconsolidated Brazilian affiliate. (2) Includes one line-handling vessel owned by the Company's 40%- owned, unconsolidated Brazilian affiliate. Comparison of Year Ended 1996 to Year Ended 1995 Revenues for 1996 were $53.5 million, an increase of 100% compared to $26.7 million in revenues for 1995. This increase was primarily due to the expansion in the Company's vessel fleet, both in the Gulf and offshore Brazil, the strong improvement in average day rates and utilization for the Company's supply boats, and the increase in utilization for the Company's lift boats. In 1996, the Company added 26 vessels to its total fleet. In March 1996, the Company acquired 8 line handling vessels, including one vessel owned by the Company's 40%-owned affiliate, that currently operate under long-term charters offshore Brazil. In May 1996 with the proceeds from the Company's initial public offering, the Company acquired four supply boats and in September, October and December 1996, the Company acquired a total of 13 additional supply boats in three separate transactions. All classes of vessels in the Company's fleet reported higher utilization during 1996 compared to 1995. The greatest increase in utilization was experienced by the Company's supply boats and lift boats. Supply boat utilization averaged 94% for 1996, up from 78% for 1995. Average supply boat day rates for 1996 increased 60.7% to $4,917 compared to $3,060 for 1995. These increases reflect strong market conditions in the Gulf during 1996 and the substantial downtime incurred in 1995 for the vessel upgrade program, during which three of the Company's supply boats were lengthened from 165 feet to 180, one was lengthened from 165 feet to 190 feet, and the boats' capacities for liquid mud and bulk cargo were increased. Additionally, the Company rebuilt and lengthened a crew boat which was placed in service late in 1995. Utilization of the Company's lift boats increased to 67% for 1996, from 45% during 1995. The lift boats experienced unusually low utilization in 1995 due to drydocking related downtime and weak market conditions which existed in the first half of 1995. The Company's lift boats are operated by Power Offshore, a leading operator of lift boats in the Gulf. Management and incentive fees payable to Power Offshore in 1996 totaled $979,000 as compared to $468,000 for 1995 due to the increased revenue and operating income generated by the lift boats. Utilization of the crew boats and line handling vessels increased to 95% for 1996, compared to 85% during the same period in 1995, due to the improved market conditions in the Gulf for crew boats and the additional eight line handling vessels acquired in March 1996, which operate under long-term charters offshore Brazil. During 1996, direct vessel operating expenses increased to $24.2 million from $17.0 million during 1995, due to the expanded vessel fleet and increased labor, repair and maintenance costs. Due to the increase in average vessel day rates, direct vessel operating expenses decreased as a percentage of revenues from 63.6% during 1995 to 45.2% during 1996. Depreciation expense increased to $4.5 million during 1996 from $2.7 million for the 1995 period due to the expanded vessel fleet. Amortization of marine inspection costs increased to $2.2 million during 1996 from $1.9 million for 1995 due to the amortization of increased drydocking and marine inspection costs. General and administrative expense increased to $3.3 million during 1996 from $2.5 million during 1995 due to the additional personnel needed in connection with the growth in the Company's vessel fleet and the addition of operations in Brazil. General and administrative expenses, as a percentage of revenues, decreased from 9.4% during 1995 to 6.1% in 1996 because the increase in revenues and additions to the vessel fleet did not require proportionate increases in administrative expenses. Interest expense decreased to $2.3 million for 1996, from $3.9 million for 1995. The decrease in interest expense was due to a reduction in the Company's average bank debt outstanding and lower borrowing costs for the Company in 1996 as compared to 1995. As a result of the Company's two public offerings of common stock completed in May and November 1996, respectively, average bank debt outstanding decreased to $18.5 million for 1996, compared to $26.6 million for 1995. In 1995 the Company recorded gains on the sales of certain crew boats of $247,000 versus gains of $50,000 in 1996. In 1996, the Company had income tax expense of $5.8 million compared to an income tax benefit of $670,000 in 1995. As a result of the prepayment of all debt outstanding under the Company's previous bank credit facility and its subordinated debt in the second quarter of 1996, the Company recorded an extraordinary charge of $917,000, net of taxes of $494,000, for the write-off of unamortized debt issuance costs. Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994 The Company's revenues declined 8.0% to $26.7 million in 1995, compared to $29.0 million in 1994. This decrease was primarily due to a reduction in the number of total days that the Company's vessels were available for work due to the Company's capital upgrade program, lower lift boat utilization and the reduction in the size of the fleet of crew boats. Total available vessel days, which are the days vessels are available for charter and not being drydocked, repaired or upgraded, decreased 12.3% from a total of 14,530 in 1994 to 12,738 in 1995. During 1995, four of the Company's supply boats were temporarily removed from service, drydocked and lengthened from 165 feet to 180 feet or greater as part of the Company's capital upgrade program. Available vessel days were also reduced by the sale of several small crew boats during 1994 and 1995 as part of the Company's strategy to focus on larger, more profitable vessels. The Company's lift boats experienced unusually low utilization rates in 1995 due to weather-related downtime from an abnormally large number of tropical storms and hurricanes which entered the Gulf during the year. The reduction in the average day rates for the lift boats was due to the acquisition of a sixth lift boat at the beginning of the fiscal year which was smaller than other lift boats in the fleet, thereby commanding a lower day rate. Management and incentive fees paid to Power Offshore in 1995 decreased to $468,000 from $707,000 paid in 1994 as a result of the lower level of revenues and operating income for the lift boats during the year. Direct vessel operating expenses decreased 1.0% from $17.2 million in 1994 to $17.0 million in 1995 (59.1% and 63.6% of revenues, respectively). Generally, direct operating expenses do not change in direct proportion to revenues because vessel day rates may increase or decrease without corresponding changes in operating expenses. The decrease in direct vessel operating expenses was due primarily to decreases in management and incentive fees incurred in connection with the lift boats and other operating expenses. Depreciation expense decreased slightly from $2.8 million in 1994 to $2.7 million in 1995, as the capital improvements made on the Company's vessels and the acquisition of a lift boat at the beginning of the year were offset by the sale of several vessels in 1994 and 1995. Amortization of marine inspection costs increased 29.5% in 1995 to $1.9 million from $1.5 million in the prior year due to the increase in drydocking and marine inspection costs for the year. General and administrative expenses rose 22.0% from $2.1 million in 1994 (7.1% of revenues) to $2.5 million (9.4% of revenues) in 1995 because of an increase in administrative and other shore-based personnel in anticipation of higher activity levels, and personnel required to support the Company's capital upgrade program and on-going operations. Interest expense from the Company's bank debt was $2.7 million in 1995 as compared to $2.8 million in 1994, due to lower average bank debt outstanding of $26.6 million in 1995, as compared to $30.1 million in 1994, and $278,000 in compensation received for the early termination of an interest rate swap arrangement. While the Company repaid $5.3 million of outstanding indebtedness during the year, additional bank borrowings of $4.5 million were used to partially fund the Company's 1995 capital upgrade program and the acquisition of a lift boat. Interest expense on the 9% subordinated notes originally issued by the Company in October 1993 increased from $1.0 million to $1.1 million. In 1995 the Company had $381,000 in amortization expense for deferred financing costs, compared to $344,000 in 1994, from the 1993 vessel acquisition financing. The Company recorded a $670,000 income tax benefit in 1995, as compared to a $226,000 income tax expense in 1994 due to the loss before income taxes for the year. Liquidity and Capital Resources Since its initial public offering in May 1996, the Company's strategy has been to enhance its position as a leading supplier of marine support services in the Gulf by pursuing opportunities to acquire vessel fleets or single vessels and by diversifying into international markets where management believes growth opportunities exist. Proceeds from the initial public offering improved the Company's financial condition by enabling the Company to prepay all of its senior debt and $6.1 million of subordinated debt and to establish a revolving line of credit with the Company's commercial lenders, which, as amended, currently provides a $65.0 million line of credit (the "Bank Credit Facility") that can be used for additional vessel acquisitions, vessel improvements and working capital. The Company also used proceeds of the initial public offering to acquire four supply vessels. As part of the Company's recapitalization completed through its initial public offering, the Company was also able to convert into common stock the $7.5 million in subordinated debt not repaid with proceeds of the offering. In November 1996 the Company completed a second public offering of common stock, the proceeds of which were used to repay debt incurred under the Bank Credit Facility to fund a portion of the purchase price of ten supply boats acquired in September and October 1996. During 1996, the Company acquired a total of 18 supply boats for $66.3 million. Funds during 1996 were provided by $48.4 million in net proceeds from the initial public offering, $31.1 million from the secondary equity offering, $6.2 million in borrowings prior to the initial public offering under the Company's previous bank credit facility, $51.5 million in borrowings under the Bank Credit Facility and $15.0 million in cash provided by operating activities. During the period, the Company repaid $69.4 million of debt and made capital expenditures totaling $79.5 million for vessel acquisitions, vessel upgrade projects and vessel drydocking costs. The Company's cash provided by operating activities increased by $8.6 million in 1996 to $15.0 million, compared to $6.4 million for 1995. This increase was due primarily to net income of $10.0 million compared to a net loss of $1.3 million for last year and a $1.4 million non-cash extraordinary charge for the writeoff of deferred financing costs in 1996. This increase was offset in part by an increase in accounts receivable of $10.1 million. Capital expenditures in 1996 consisted primarily of $66.3 million for the acquisition of 18 supply boats in the Gulf, and $4.5 million for the Company's acquisition of line handling boats and a 40% interest in a marine operating company in Brazil in March 1996. Other expenditures consisted primarily of U.S. Coast Guard drydocking and marine inspection costs of $2.3 million, a portion of the upgrade costs of the Stones River, a portion of the initial construction costs of the SWATH vessel and the acquisition of a larger docking and maintenance facility in Houma, Louisiana to replace a rented facility. The Stones River is a 180-foot supply boat, acquired in March 1996, which was lengthened to 220 feet and outfitted with bulk capacity of 7,800 cubic feet and liquid mud capacity of 2,300 barrels. This vessel, at an estimated total cost of $4.5 million, began operations under a long-term charter in March 1997. In July 1996, the Company entered into the Bank Credit Facility, which was subsequently increased and now provides a revolving line of credit up to $65.0 million, which matures in October 2002 and bears interest at LIBOR plus 1 1/2% per annum (currently approximately 7%), with a fee of 3/8% per annum on the undrawn portion. The Bank Credit Facility is collateralized by a fleet mortgage covering a portion of the Company's vessel fleet and related assets and requires the Company to maintain certain financial ratios. As of December 31, 1996, the Company had $21.0 million in outstanding borrowings under the Bank Credit Facility which were used to fund vessel acquisitions and, in January 1997, borrowed an additional $22.0 million to fund a portion of the purchase price of five supply boats and one utility vessel. Capital expenditures in 1997, excluding vessel acquisitions, are expected to be primarily for the construction or upgrade of vessels pursuant to previously awarded contracts. In the first quarter of 1997, the upgrade of the Stones River was completed and it began operations under a long-term charter. In connection with the acquisition completed in January 1997, the Company is upgrading one of the acquired vessels, renamed the Elkhorn River, from 180 to 220 feet and adding a dynamic positioning system. This vessel will begin a three-year charter contract for a well stimulation company upon completion of its upgrade in mid 1997. Additionally, the Company entered into a contract with a Brazilian shipyard to acquire and complete construction of a 200- foot supply boat to be used offshore Brazil. The Company also will continue construction of the SWATH vessel which is expected to be placed into operation in the first quarter of 1998. The Company plans to obtain long-term financing for construction of the SWATH vessel through the Maritime Administration's Title XI ship financing program, for which the Company has a pending application. As of March 1, 1997, the Company had $45.5 million of outstanding borrowings under its $65.0 million Bank Credit Facility. The Company believes its capital expenditures for 1997 will total approximately $30.0 million, excluding vessel acquisitions, but including U.S. Coast Guard drydocking costs and the Company's currently planned vessel construction and upgrade projects. The Company believes that cash generated from operations, funds available under the Bank Credit Facility and funds expected to be raised under the Maritime Administration's Title XI ship financing program for the SWATH construction will be sufficient to fund the Company's currently planned capital projects and working capital requirements. The Company's strategy, however, is to acquire other vessel fleets or single vessels as part of an effort to expand its presence in the Gulf and diversify into selected international markets. To the extent the Company is successful in identifying such acquisition opportunities, it most likely will require additional debt or equity financing, depending on the size of such acquisitions. In three separate transactions during 1997, the Company issued an aggregate of $280.0 million principal amount of 8-1/2% Senior Notes due 2005 (the "Senior Notes"). Pursuant to the terms of the indentures governing the Senior Notes, the Senior Notes must be guaranteed by each of the Company's "significant subsidiaries" (the "Subsidiary Guarantors"), whether such subsidiary was a "significant subsidiary" at the time of the issuance of the Senior Notes or becomes a "significant subsidiary" after the date of issue. Although the Bank Credit Facility, which was amended and restated during 1997, does impose some limitations on the ability of certain of the Company's subsidiaries to make distributions to the Company, it expressly permits distributions to the Company by those subsidiaries that are Subsidiary Guarantors for scheduled principal and interest payments on the Senior Notes. Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Report of Independent Accountants 7 Consolidated Balance Sheet as of December 31, 1996 and 1995 8 Consolidated Statement of Operations for the Years Ended December 1996, 1995 and 1994 9 Consolidated Statement of Stockholders' Equity for the Years Ended December 31, 1996, 1995 and 1994 10 Consolidated Statement of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 11 Notes to Consolidated Financial Statements 12 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Trico Marine Services, Inc.: We have audited the accompanying consolidated balance sheet of Trico Marine Services, Inc. and Subsidiaries (the "Company") as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for the three years ended December 31, 1996. 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 generally accepted auditing standards. Those standards require that we plan and perform the audits 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trico Marine Services, Inc. and Subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for the three years ended December 31, 1996, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. New Orleans, Louisiana February 12, 1997 TRICO MARINE SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET December 31, 1996 and 1995 (Dollars in thousands) ASSETS 1996 1995 Current assets: Cash and cash equivalents $ 1,047 $ 1,117 Accounts receivable, net 17,409 7,417 Prepaid expenses and other current assets 591 156 Total current assets 19,047 8,690 Property and equipment, at cost: Land and buildings 1,565 - Marine vessels 120,403 44,257 Construction-in-progress 7,135 346 Transportation and other 853 856 129,956 45,459 Less accumulated depreciation and amortization 10,814 6,195 Net property and equipment 119,142 39,264 Other assets 5,166 4,159 $143,355 $ 52,113 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,162 $ 3,656 Accrued expenses 3,812 2,878 Current portion of long-term debt - 3,000 Total current liabilities 8,974 9,534 Long-term debt 21,000 23,695 Subordinated debt and accrued interest thereon - 13,085 Deferred income taxes 9,401 87 Total liabilities 39,375 46,401 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value, 15,000,000 shares authorized,issued 7,836,996 and 3,123,358 shares, outstanding 7,764,964 and 3,051,326 shares at December 31, 1996 and 1995, respectively 78 31 Additional paid-in capital 93,896 5,649 Retained earnings 10,007 33 Treasury stock, at par value, 72,032 shares at December 31, 1996 and 1995, respectively (1) (1) Total stockholders' equity 103,980 5,712 $143,355 $ 52,113 The accompanying notes are an integral part of these consolidated financial statements. TRICO MARINE SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS for the years ended December 31, 1996, 1995 and 1994 (Dollars in thousands, except share and per share amounts) 1996 1995 1994 Revenues: Charter Fees $ 53,442 $ 26,657 $ 28,895 Other vessel income 42 41 139 Total revenues 53,484 26,698 29,034 Operating expenses: Direct vessel operating expenses 24,150 16,988 17,165 General and administrative 3,277 2,509 2,057 Amortization of marine inspection costs 2,158 1,930 1,490 Other 309 545 764 Total operating expenses 29,894 21,972 21,476 Depreciation expense 4,478 2,740 2,786 Operating income 19,112 1,986 4,772 Interest expense 2,282 3,850 3,767 Amortization of deferred financing costs 263 381 344 Gain on sales of assets (59) (244) - Other income, net (79) (32) (51) Income (loss) before income taxes 16,705 (1,969) 712 Income tax expense (benefit) 5,814 (670) 226 Income (loss) before extraordinary item 10,891 (1,299) 486 Extraordinary item, net of taxes (917) - - Net income (loss) $ 9,974 $ (1,299) $ 486 Weighted average common shares outstanding 6,190,451 3,050,521 3,010,285 Primary and fully diluted earnings per share: Income (loss) before extraordinary item 1.76 (0.43) 0.16 Extraordinary item, net of tax (0.15) - - Net income (loss) per average common share outstanding $ 1.61 $ (0.43) $ 0.16 The accompanying notes are an integral part of these consolidated financial statements.
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY for the years ended December 31, 1996, 1995 and 1994 (Dollars in thousands) Additional Treasury Stock Common Stock Paid-in Retained Par Shares Dollars Capital Earnings Shares Value Balance, January 1, 1994 3,082,103 $ 31 $ 5,574 $ 846 72,032 $ (1) Issuance of common stock 36,672 - 66 - - - Net income - - - 486 - - Balance, December 31, 1994 3,118,775 31 5,640 1,332 72,032 (1) Issuance of common stock 4,583 - 9 - - - Net loss - - - (1,299) - - Balance, December 31, 1994 3,123,358 31 5,649 33 72,032 (1) Issuance of common stock 4,142,500 41 79,497 - - - Debt conversion 467,613 5 7,476 - - - Stock options exercised 103,525 1 1,274 - - - Net income - - - 9,974 - - Balance, December 31, 1996 7,836,996 $ 78 $ 93,896 $10,007 72,032 $ (1) Share amounts have been adjusted to reflect a 3.0253-for-1 common stock split effective April 26, 1996. The accompanying notes are an integral part of these consolidated financial statements.
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS for the years ended December 31, 1996, 1995 and 1994 (Dollars in thousands) 1996 1995 1994 Net income (loss) $ 9,974 $ (1,299) $ 486 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 6,899 5,051 4,620 Deferred income taxes 3,811 (670) 577 Interest on subordinated debt 461 1,117 1,009 Extraordinary item 1,411 - - Gain on sales of assets (59) (244) - Provision for doubtful accounts 130 240 240 Equity in loss of affiliate 18 - - Change in operating assets and liabilities: Accounts receivable (10,123) 91 (549) Prepaid expenses and other current assets (435) 25 72 Accounts payable and accrued expenses 3,526 2,327 191 Other, net (661) (227) 20 Net cash provided by operating activities 14,952 6,411 6,666 Cash flows from investing activities: Purchases of property and equipment (79,135) (5,343) (379) Deferred marine inspection costs (2,292) (2,115) (1,792) Proceeds from sales of assets 439 1,337 3,139 Investment in unconsolidated affiliate (1,293) - - Net cash provided by (used in) investing activities (82,281) (6,121) 968 Cash flows from financing activities: Proceeds from issuance of common stock 79,726 9 66 Proceeds from issuance of long-term debt and subordinated debt 57,669 4,517 2,883 Repayment of long-term debt (63,364) (5,305) (9,000) Deferred financing costs and other (707) (164) (8) Payments of subordinated debt and accrued interest thereon (6,065) - - Net cash provided by (used in) financing activities 67,259 (943) (6,059) Net increase (decrease) in cash and cash equivalents (70) (653) 1,575 Cash and cash equivalents at beginning of period 1,117 1,770 195 Cash and cash equivalents at end of period $ 1,047 $ 1,117 $ 1,770 Supplemental information: Income taxes paid $ 6 $ 2 $ 396 Income taxes refunded $ - $ 330 $ 38 Interest paid $ 4,737 $ 2,865 $ 2,079 The accompanying notes are an integral part of these consolidated financial statements.
TRICO MARINE SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation: Trico Marine Services, Inc. (the "Company") commenced operations on October 29, 1993 at which time it acquired a wholly-owned subsidiary of the Company, Trico Marine Assets, Inc. ("Trico Assets"). Trico Assets purchased a fleet of 49 vessels including forty supply and crew boats, five lift boats, and four other vessels, including a tug and a barge from Marine Asset Management Corporation, a wholly-owned subsidiary of Chrysler Capital Corporation, pursuant to a Purchase Agreement dated as of October 29, 1993. Concurrently, the Company acquired 100% of the common stock of Trico Marine Operators, Inc. The Company is engaged in the ownership and operation of a diversified fleet that, as of December 31, 1996, includes 34 supply boats, 6 lift boats, 15 crew boats, and 9 other specialty service vessels, providing support services to the offshore oil and gas industry primarily in the Gulf of Mexico and offshore Brazil. The Company's financial position, results of operations and cash flows are affected primarily by day rates and fleet utilization in the Gulf of Mexico which primarily depend on the level of drilling activity, which ultimately is dependent upon both short-term and long-term trends in oil and natural gas prices. 2. Summary of Significant Accounting Policies: Consolidation Policy The consolidated financial statements of the Company include the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company's 40% interest in Walker Servicos Maritimos, Ltd. ("Walker") is accounted for using the equity method. Cash and Cash Equivalents All highly liquid debt instruments with original maturity dates of less than three months when purchased are considered to be cash equivalents. Property and Equipment Marine vessels, transportation and other equipment are stated at cost. Depreciation for financial statement purposes is provided on the straight-line method, assuming 10% salvage value for marine vessels. Marine vessels are generally depreciated over a useful life of fifteen years from the date of acquisition. Major modifications which extend the useful life of marine vessels are capitalized and amortized over the adjusted remaining useful life of the vessel. Maintenance and repair cost is charged to expense as incurred. When marine vessels or equipment are sold or otherwise disposed of, their cost and the accumulated depreciation are removed from the accounts and any gain or loss is recognized. Marine vessel spare parts are stated at average cost. Drydocking expenditures in conjunction with marine inspections are capitalized and amortized on a straight-line basis over the period to be benefited (generally 24 to 36 months). Income Taxes The Company accounts for income taxes using the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Deferred income taxes are provided at the currently enacted income tax rates for the difference between the financial statement and income tax bases of assets and liabilities. Revenue and Expense Recognition Charter revenue is earned and recognized on a daily rate basis. Operating costs are expensed as incurred. Deferred Financing Costs Deferred financing costs include costs associated with the issuance of the Company's debt and are being amortized on the effective interest method over the life of the related debt agreement. Goodwill Goodwill, or cost in excess of net assets of companies acquired, is amortized over 10 years by the straight-line method. The Company continually evaluates the recoverability of this intangible asset by assessing whether the amortization of the goodwill balance over its remaining life can be recovered through expected future cash flows. Direct Vessel Operating Expenses Direct vessel operating expenses principally include crew costs, insurance, repairs and maintenance, management fees, and casualty losses. Earnings Per Share The Company's earnings per share has been calculated using the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the year. Stock options are considered to be common stock equivalents. Weighted average options of 668,009 were included as common stock equivalents for the year ended December 31, 1996. Common stock equivalents during the years ended December 31, 1995 and 1994 had no material dilutive effect on net income per average common share. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Stock Split On April 26, 1996, the Company's Board of Directors approved a 3.0253-for-1 split of the Company's common stock in the form of a stock dividend. The financial statements have been restated to reflect all effects of this stock split, including all share amounts and per share data. Reclassifications Certain prior-period amounts have been reclassified to conform with the presentation shown in the current year's financial statements. These reclassifications had no effect on net income (loss), total stockholders' equity or cash flows. 3. Public Offerings of Common Stock: In May 1996, the Company completed an initial public offering of 3,292,500 shares of common stock, $.01 par value. The proceeds received from the offering were $48,394,000, net of underwriting discounts and other costs of $4,286,000. Of the proceeds, the Company used $31,150,000 to repay senior debt, $6,065,000 to repay subordinated debt and $11,000,000 to acquire four supply vessels. The balance of the proceeds was used by the Company for additional working capital. In November 1996, the Company completed a second offering that included the issuance of 850,000 shares of common stock, $.01 par value, by the Company. The proceeds from the offering were $31,144,000, net of underwriting discounts and other costs of $2,006,000. The proceeds were used to repay $30,500,000 of the Company's revolving line of credit, with the balance of the proceeds used for working capital and other purposes. 4. Accounts Receivable: The Company's accounts receivable, net consists of the following at December 31, 1996 and 1995 (in thousands): 1996 1995 Trade receivables, net of allowance for doubtful accounts of $610 and $480 in 1996 and 1995, respectively $ 16,172 $ 6,975 Insurance and other 1,237 442 Accounts receivable, net $ 17,409 $ 7,417 The Company, as agent, bills trade accounts receivables on behalf of the vessels it operates under agreements with third parties. As of December 31, 1996, the Company operated one utility vessel for a third party. The Company's receivables are primarily due from entities operating in the oil and gas industry in the Gulf of Mexico and Brazil and are dollar denominated. 5. Other Assets:
The Company's other assets, net consists of the following at December 31, 1996 and 1995 (in thousands): 1996 1995 Deferred marine inspection costs, net of accumulated amortization of $3,335 and $1,459 in 1996 and 1995,respectively $ 2,667 $ 2,378 Deferred financing costs, net of accumulated amortization of $28 and $785 in 1996 and 1995, respectively 205 1,104 Marine vessels spare parts 939 386 Goodwill, net of accumulated amortization of $43 in 1996 664 - Investment in and advances to unconsolidated subsidiary 568 - Other 123 291 Other assets, net $ 5,166 $ 4,159
6. Long-Term Debt and Subordinated Debt: The Company's long-term debt and subordinated debt consist of the following at December 31, 1996 and 1995 (in thousands): 1995 1996 Revolving loan, interest at a base interest rate plus a margin, as defined, on the date of borrowing (weighted average rate of 7.089% and 10.25% at December 31, 1996 and 1995, respectively) payable at the end of the interest period or quarterly, principal due October 8, 2002 $ 21,000 $ 800 Term loan A, interest at a base interest rate plus 1.75% (10.25% at December 31, 1995) - 21,195 Term loan B, interest at a base rate plus 2.75% (11.25% at December 31, 1995) - 4,700 21,000 26,695 Less current maturities - (3,000) 23,695 9% Subordinated Notes and accrued interest thereon, due March 31, 2001 - 13,085 $ 21,000 $ 36,780
On October 29, 1993 the Company entered into a revolving credit and term loan agreement with The First National Bank of Boston (the "Credit Agreement"). Availability under the revolving loan was based on the Company's accounts receivable and was limited to $4 million during 1994 and was to be reduced by $1 million at both December 31, 1995 and 1996. On December 30, 1994, the Company amended its Credit Agreement ("First Amendment"). Availability under the First Amendment was increased to $6 million, with a reduction of $2 million effective June 29, 1995 at which time the Company had the right to convert the revolving loan into its Term Loan B. Principal repayments of the Term Loans A and B and the revolving credit were also extended. The Company incurred a commitment fee of 0.5% per annum on the unused amount. Substantially all of the Company's assets served as collateral for the Credit Agreement. Effective June 28, 1995, the Company amended its Credit Agreement ("Second Amendment") to establish $5 million of availability under the revolving credit loan and extend principal payments. Under the Second Amendment, the Company had the right to convert $2 million of outstanding amounts under the revolving credit loan into its Term Loan B. The Company converted $1.7 million of its outstanding revolving credit loan into its Term Loan B in November 1995 and $300,000 of amounts outstanding under the revolving credit loan were converted into its Term Loan B in January 1996. Effective March 6, 1996, the Company amended its Credit Agreement ("Third Amendment") to provide for an increased total credit facility, extend principal payments and restructure other portions of the Credit Agreement. The Third Amendment contained a revolving credit facility and term loan provisions. The $3 million revolving credit facility, which would have matured in July 1997, bore interest at 1.75% above a base rate. The Third Amendment contained $33,000,000 of term loans in three separate tranches which all bore interest at 1.75% above a base rate. Concurrent with the Third Amendment, the Company also amended its Subordinated Notes agreement whereby the maturities of its 9% Subordinated Notes and accrued interest thereon were extended to March 31, 2001. Concurrent with the Company's initial public offering in May 1996, the Company converted $7,482,000 of the 9% Subordinated Notes into 467,613 shares of common stock. The outstanding principal balance of the Credit Agreement of $31,150,000 was repaid on May 21, 1996, together with a prepayment fee of $75,000, from the proceeds of the Company's initial public offering of common stock. The balance of $6,065,000 of the 9% Subordinated Notes and accrued interest thereon was also retired with proceeds from the initial public offering. As a result of the prepayment of all of the Company's senior and subordinated debt, the Company recorded an extraordinary charge of $917,000, net of taxes of $494,000, for the write-off of the unamortized balance of related debt issuance costs. Effective July 26, 1996, the Company executed a new $30,000,000 revolving credit agreement (the "Bank Credit Facility") with the same group of lenders that provided the Company's previous Credit Agreement which was prepaid on May 21, 1996 with proceeds from the initial public offering. The Bank Credit Facility was increased to $35,000,000 effective August 26, 1996 and to $50,000,000 effective October 8, 1996. The Bank Credit Facility bears interest at LIBOR plus 1-1/2% per annum with a commitment fee of 3/8% per annum on the undrawn portion. The Bank Credit Facility also provides for interest payments only until October 8, 1998 when all outstanding amounts under the Bank Credit Facility will be converted into a term loan. Upon conversion, principal and interest payments will be due quarterly beginning December 31, 1998 until maturity on October 8, 2002. The Bank Credit Facility is collateralized by certain of the Company's vessels and related assets. The Bank Credit Facility contains certain covenants which require the Company to maintain certain debt coverage ratios and net worth levels, limit capital expenditures and prohibit equity distributions. In order to minimize floating interest rate risk, the Company entered into the following agreements. During 1993, the Company purchased an interest rate swap on a notional amount of $10 million. Under the swap, the Company received a floating interest rate based on the Company's Term Loan A interest rate and paid a fixed rate of 8.25% with quarterly interest settlements. The agreement was terminated in January 1995 and the Company received $278,000 as compensation for the early termination of its interest rate swap which was amortized into interest expense over the remaining original life of the swap. Concurrent with the termination of the above swap, the Company paid $125,000, which has been amortized to interest expense over the two year life of the agreement, to enter into an interest rate corridor agreement on a notional amount of $15 million. 7. Income Taxes: The components of income tax expense (benefit) of the Company for the periods ended December 31, 1996, 1995 and 1994, are as follows (in thousands): 1996 1995 1994 Current income taxes: U.S. federal income taxes $ 1,505 $ - $ (317) State income taxes 4 - (34) Deferred income taxes: U.S. federal income taxes 3,713 (667) 572 State income taxes 98 (3) 5 $ 5,320 $ (670) $ 226 The Company's deferred income taxes at December 31, 1996 and 1995 represent the tax effect of the following temporary differences between the financial reporting and income tax accounting bases of its assets and liabilities (in thousands): 1996 1995 Accumulated depreciation and amortization $15,108 $ 7,811 P&I insurance reserves (680) (474) Alternative minimum tax credit carryforwards (451) (29) Net operating loss carryforward (5,199) (7,300) Other (257) 79 Deferred income tax liability, net $ 8,521 $ 87 Reconciling items which represent the difference between income taxes computed at the Federal statutory tax rate and the provision for income taxes are primarily the result of state income taxes. A tax benefit for the exercise of stock options in the amount of $1,088,000 that was not included in income for financial reporting purposes was credited directly to additional paid-in capital. The net operating loss carryforwards for Federal and state tax purposes are approximately $14.8 million and $1.4 million respectively and begin to expire in 2009. The Company had an initial public offering in May 1996, which is considered a change of control for federal income tax purposes. This will limit the utilization of net operating loss carryforwards to a set level as provided by regulations. 8. Common Stock Option Plans: Pursuant to the Company's 1993 Stock Option Plan, the Company is authorized to grant incentive and nonqualified stock options to selected officers and other key employees of the Company. The Compensation Committee of the Board of Directors has the discretionary authority, subject to certain plan specifications, to determine the amounts and other terms of such stock options. Options to purchase 576,244 shares of the Company's common stock were granted to officers and key members of management of the Company on October 29, 1993 at $1.82 per share, the original purchase price of the common stock, and accordingly, no expense was recognized. Options to purchase 151,265 shares of the Company's common stock were granted to an officer of the Company on February 22, 1995 at the October 29, 1993 original cost of the common stock, which was determined by the Board of Directors to be the fair market value of the Company's stock at that time, and accordingly, no expense was recognized. In April 1996, the Company modified its 1993 Stock Option Plan to include a provision for the 140,459 options not already containing a provision to become exercisable at the consummation of an "Initial Public Offering" to become exercisable upon such a transaction. Pursuant to the Company's 1996 Incentive Compensation Plan, options to purchase 104,875 shares of the Company's common stock have been granted to officers, key members of management and certain long-term employees at exercise prices equal to the fair value of the Company's stock at that time, which ranged from $16.00 to $21.88 per share. Options to purchase 103,000 shares vested and became exercisable upon the attainment of certain performance goals during the year. Of the remaining options, 468 vested and were exercisable at the date of grant with 469 options vesting and becoming exercisable in each of the next three years. All options expire no later than ten years from the date of grant. As of December 31, 1996, 1995 and 1994, 727,452, 90,039 and 45,020, respectively of the option shares were exercisable; options for 103,525 shares were exercised in 1996. None were exercised in 1995 or 1994. The Company applies APB Opinion 25 and related interpretations in accounting for its Stock Option Plans. In 1995, the Financial Accounting Standards Board issued SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123") which, if fully adopted by the Company, would change the methods the Company applied in recognizing the cost of the Stock Option Plans. Adoption of the cost recognition provisions of SFAS 123 is optional and the Company has decided not to elect these provisions of SFAS 123. However, pro forma disclosures as if the Company adopted the cost recognition provisions of SFAS 123 in 1995 are required by SFAS 123 and are presented below: As Reported Pro Forma As Reported Pro Forma 12/31/96 12/31/96 12/31/95 12/31/95 SFAS 123 Charge $ - $ 628 $ - $ 8 APB 25 Charge $ - $ - $ - $ - Net income (loss) $ 9,974 $ 9,560 $ (1,299) $ (1,304) Net income (loss) per average common share $ 1.61 $ 1.54 $ (0.43) $ (0.43) 9. Other Related Party Transactions: Pursuant to an agreement effective October 29, 1993, Berkshire Partners was entitled to receive $16,666 each month for five years for providing certain management and other consulting services (the "Berkshire Agreement"). The Berkshire Agreement was automatically renewable on an annual basis after the initial five year period upon agreement of the parties. The Berkshire Agreement was terminated upon the successful completion of the Company's initial public offering in May 1996. During December 1994, the Company appointed two independent directors. These two directors purchased 36,672 shares of the Company's common stock at the original cost of the common stock which was determined by the Board of Directors to be the fair market value of the Company's stock at that time. The two directors also each purchased approximately $67,000 of the Company's 9% Subordinated Notes. During February 1995, an officer of the Company purchased 4,583 shares of the Company's common stock at the original cost of the common stock and approximately $17,000 of the Company's 9% Subordinated Notes. 10. Profit Sharing Plan: The Company has a defined contribution profit sharing plan that covers substantially all employees who qualify as to age and length of service. As of January 1, 1995, the Company included 401(k) provisions in this plan. In 1996 and 1995, the Company's contributions to the plan were based on one quarter of the first five percent of participant contributions plus a discretionary amount. In 1994, the Company's contribution was discretionary. The Company expensed contributions to the plan for the years ended December 31, 1996, 1995 and 1994 of $113,000, $66,000 and $60,000, respectively. 11. Commitment and Contingencies: Effective October 29, 1993, Trico Assets entered into an agreement with an unrelated company to provide management and operating services for certain lift boats. The agreement provides for management and incentive fees to be paid to the unrelated company based on percentages of gross monthly income and net operating income, respectively. Management fees of $979,000, $468,000 and $707,000 were included in direct vessel operating expenses for the years ended December 31, 1996, 1995 and 1994, respectively. Pursuant to the agreement, the operator has been granted a right of first refusal on any sale of the lift boats. In the ordinary course of business, the Company is involved in certain personal injury, pollution and property damage claims and related threatened or pending legal proceedings. Management, after review with legal counsel and insurance representatives, is of the opinion these claims and legal proceedings will be settled within the limits of the Company's insurance coverages. At December 31, 1996 and 1995, the Company has accrued a liability in the amount of $1,963,000 and $1,570,000, respectively, based upon the insurance deductibles that management believes it may be responsible for paying in connection with these matters. The amounts the Company will ultimately be responsible for paying in connection with these matters could differ materially in the near term from amounts accrued. On August 15, 1996, the Company entered into a five year contract with Petroleo Brasileiro S.A. ("Petrobras"), to build and operate an advanced "small water area twin hull" crew boat (the "SWATH vessel") which will be used to transport personnel to offshore platforms. On October 7, 1996, the Company entered into an agreement with a shipyard to construct the SWATH vessel. In addition, the Company is refurbishing and upgrading two additional supply vessels. The total cost of the three vessels, including equipment provided by the Company, is expected to be approximately $20,900,000. The Company expects the supply vessels to be completed and operations to commence in the first and third quarters of 1997. The Company expects the SWATH vessel to commence operations in the first quarter of 1998. 12. Fair Value of Financial Instruments: The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosures About Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and valuation methodologies described below. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein may not be indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts of cash and cash equivalents approximate fair value due to the short-term nature of these instruments. The carrying amount of the revolving credit loan approximates fair value because it bears interest rates currently available to the Company for debt with similar terms and remaining maturities. At December 31, 1995, it was not practicable to estimate the fair value of the subordinated debt and accrued interest thereon since quoted prices are not readily available and valuation techniques would not be practicable due to the subordination and uncertainty regarding timing of repayment. 13. Vessel Acquisitions: On March 15, 1996, the Company acquired seven line handling vessels and a 40% interest in Walker, a marine operating company located in Brazil, for a combined price of $4,200,000. Walker owns an eighth line handling vessel and operates it and the seven other acquired vessels under long-term contracts with a customer located in Brazil. The acquisition has been accounted for by the purchase method of accounting. Of the purchase price, $3,565,000 has been allocated to the acquired vessels based upon their relative fair value, $270,000 has been allocated to the Company's investment in the stock of Walker with the remaining $365,000 allocated to goodwill. In addition to the purchase price above, $300,000 of contingent purchase price was paid on August 27, 1996 based upon the attainment by the Company of a certain contract to provide offshore marine services in Brazil. This amount has been recorded as additional goodwill. On May 22, 1996, the Company acquired for $11,000,000 all of the outstanding capital stock of HOS Marine Partners, Inc. ("HOS"), a special purpose company whose sole assets consist of four supply vessels. In addition to the purchase price, the Company recognized, in accordance with Statement of Financial Accounting Standards No. 109, a deferred income tax liability of $5,780,000 for the deferred tax consequences of the differences between the assigned values and the tax bases of the assets owned by HOS. The acquisition was accounted for using the purchase method of accounting and the results of operations from the date of acquisition are included on the accompanying consolidated financial statements. On September 30, 1996, the Company acquired from subsidiaries of OMI Corp. three supply vessels for $11,600,000. The Company borrowed $10,000,000 under the Bank Credit Facility to fund a portion of the purchase. On October 10, 1996, the Company acquired from Kim Susan, Inc. and affiliated companies seven supply vessels for approximately $32,000,000. The Company borrowed $30,500,000 under the Bank Credit Facility to fund a portion of the purchase. In December 1996, the Company purchased three supply vessels from a subsidiary of SEACOR Holdings, Inc. for $11,450,000 in cash. The acquisition was funded with borrowings under the Bank Credit Facility and cash generated from operations. 14. Quarterly Financial Data (Unaudited):
First Second Third Fourth Year ended December 31, 1996 (Dollars in thousands, except per share amounts) Revenues $ 8,384 $ 11,111 $ 13,390 $ 20,599 Operating income 1,678 3,165 5,000 9,269 Income before extraordinary item 364 1,618 3,218 5,691 Extraordinary item - (917) - - Net income 364 701 3,218 5,691 Income per average common share before extraordinary item 0.12 0.29 0.43 0.72 Extraordinary item, net of tax - (0.16) - - Net income per average common share outstanding 0.12 0.13 0.43 0.72 Year ended December 31, 1995 (Dollars in thousands, except per share amounts) Revenues $ 6,360 $ 5,792 $ 6,763 $ 7,783 Operating income (loss) (38) (234) 818 1,440 Net income (loss) (671) (703) (129) 204 Net income (loss) per average common share outstanding (0.22) (0.23) (0.04) 0.07
15. Subsequent Events: In January 1997, the Company entered into agreements with two companies to acquire seven supply vessels and one utility vessel for $36,200,000. The first transaction for the acquisition of five of the supply vessels and the utility vessel was completed on January 31, 1997, with the Company borrowing $22,000,000 under the Bank Credit Facility to fund a portion of the purchase price. The Company expects the acquisition of the other two supply vessels to be completed in the second quarter of 1997. The Company will borrow under its Bank Credit Facility to fund a portion of the purchase price. Effective February 7, 1997, the Company increased its Bank Credit Facility to $65,000,000. 16. Event (Unaudited) Subsequent to the Date of the Report of Independent Accountants: In three separate transactions during 1997, the Company issued an aggregate of $280,000,000 of 8-1/2% Senior Notes due 2005 (the "Senior Notes"). Pursuant to the terms of the indentures governing the Senior Notes, the Senior Notes must be guaranteed by each of the Company's "significant subsidiaries" (the "Subsidiary Guarantors"), whether such subsidiary was a "significant subsidiary" at the time of the issuance of the Senior Notes or becomes a "significant subsidiary" thereafter. Separate financial statements of the Subsidiary Guarantors are not included in this report because (a) the Company is a holding company with no assets or operations other than its investments in its subsidiaries, (b) the Subsidiary Guarantors are wholly-owned subsidiaries of the Company, comprise all of the Company's direct and indirect subsidiaries (other than inconsequential subsidiaries) and, on a consolidated basis, represent substantially all of the assets, liabilities, earnings and equity of the Company, (c) each of the Subsidiary Guarantors must fully and unconditionally guarantee the Company's obligations under the Senior Notes on a joint and several basis (subject to a standard fraudulent conveyance savings clause) and (d) management has determined that separate financial statements and disclosures concerning the Subsidiary Guarantors are not material to investors. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized. TRICO MARINE SERVICES, INC. (Registrant) By: /s/ Thomas E. Fairley Thomas E. Fairley President and Chief Executive Officer Date: March 11, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Thomas E. Fairley President and Chief March 11, 1998 Thomas E. Fairley Executive Officer (Principal Executive Officer) /s/ Ronald O. Palmer Chairman of the Board March 11, 1998 Ronald O. Palmer /s/ Victor M. Perez Vice President, Chief Financial March 11, 1998 Victor M. Perez Officer and Treasurer (Principal Financial Officer) /s/ Kenneth W. Bourgeois Vice President and Controller March 11, 1998 Kenneth W. Bourgeois (Principal Accounting Officer) /s/ Garth H. Greimann Director March 11, 1998 Garth H. Greimann /s/ H. K. Acord Director March 11, 1998 H. K. Acord /s/ Benjamin F. Bailar Director March 11, 1998 Benjamin F. Bailar /s/ Edward C. Hutcheson, Jr. Director March 11, 1998 Edward C. Hutcheson, Jr. -----END PRIVACY-ENHANCED MESSAGE-----