SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission File Number: 0-28732
SEABULK INTERNATIONAL, INC.
State of Incorporation: Delaware I.R.S. Employer I.D.: 65-0966399
2200 Eller Drive
P.O. Box 13038
Ft. Lauderdale, Florida 33316
(954) 523-2200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past ninety days. YES |X| NO
There were 10,192,590 shares of Common Stock, par value $0.01 per share
outstanding at April 30, 2001.
SEABULK INTERNATIONAL, INC.
Quarter ended March 31, 2001
Index
Page
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)................................................ 1
Condensed Consolidated Statements of Operations for the three months ended
March 31, 2001 and 2000............................................................................1
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2001 and 2000............................................................................ 2
Condensed Consolidated Balance Sheets at March 31, 2001 and December 31, 2000...................... 3
Notes to Condensed Consolidated Financial Statements............................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................13
Item 3. Quantitative and Qualitative Disclosure of Market Risk..................................................22
Part II. Other Information
Item 1. Legal Proceedings.......................................................................................23
Item 6. Exhibits and Reports on Form 8-K........................................................................23
Signature........................................................................................................23
As used in this Report, the term "Parent" means Seabulk International, Inc., and
the term "Company" means the Parent and/or one or more of its consolidated
subsidiaries.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Seabulk International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
2001 2000
-------------- --------------
Revenue.......................................................................... $ 81,420 $ 78,607
Operating expenses:
Crew payroll and benefits..................................................... 23,930 23,214
Charter hire.................................................................. 1,491 4,234
Repairs and maintenance....................................................... 6,375 6,398
Insurance..................................................................... 2,900 2,970
Fuel and consumables.......................................................... 8,965 11,265
Rent, utilities and other..................................................... 5,208 6,428
-------------- --------------
Total operating expenses.................................................... 48,869 54,509
Overhead expenses:
Salaries and benefits......................................................... 5,652 5,249
Office........................................................................ 1,529 1,546
Professional fees............................................................. 1,278 1,396
Other......................................................................... 1,760 1,607
-------------- --------------
Total overhead expenses..................................................... 10,219 9,798
Depreciation, amortization and drydocking........................................ 13,923 12,287
-------------- --------------
Income from operations........................................................... 8,409 2,013
Other income (expense):
Interest expense.............................................................. (14,616) (14,451)
Interest income............................................................... 46 259
Minority interest in losses of subsidiaries................................... 208 294
Gain on disposal of assets.................................................... 250 --
Other......................................................................... (116) --
-------------- --------------
Total other expense, net.................................................... (14,228) (13,898)
-------------- --------------
Loss before provision for income taxes........................................... (5,819) (11,885)
Provision for income taxes....................................................... 1,414 1,024
-------------- --------------
Net loss.................................................................... $ (7,233) $ (12,909)
============== ==============
Loss per common share:
Net loss per common share - basic and diluted................................. $ (0.71) $ (1.29)
============== ==============
Weighted average common shares outstanding - basic and diluted................ 10,149 10,000
=============== ==============
See accompanying notes
Seabulk International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
------------- -------------
Operating activities:
Net loss.............................................................................. $ (7,233) $ (12,909)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization of property........................................ 11,345 10,739
Provision for bad debts.......................................................... 355 62
Gain on disposal of assets....................................................... (250) --
Amortization of drydocking costs................................................. 2,578 1,548
Amortization of discount on long-term debt and financing costs................... 1,258 958
Minority interest in losses of subsidiaries...................................... (208) (294)
Other non-cash items............................................................. 32 (243)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable.......................................................... (4,222) (3,813)
Other current and long-term assets........................................... 921 (3,910)
Accounts payable and other liabilities....................................... 8,051 1,364
------------ ------------
Net cash provided by (used in) operating activities........................ 12,627 (6,498)
Investing activities:
Expenditures for drydocking........................................................... (6,391) (2,432)
Proceeds from disposals of assets..................................................... 2,636 --
Purchases of property................................................................. (978) (1,222)
Acquisition of minority interest...................................................... (524) --
Redemption of restricted investments.................................................. 33 --
Purchase of restricted investments.................................................... (23) --
------------ ------------
Net cash used in investing activities.............................................. (5,247) (3,654)
Financing activities:
Proceeds from revolving credit facility............................................... 7,500 6,975
Repayments of revolving credit facility............................................... (15,750) (2,000)
Repayment of long-term borrowings..................................................... (4,260) (1,762)
Repayment of Title XI bonds........................................................... (1,263) (1,366)
Redemption of restricted cash......................................................... 331 3,464
Payments of financing costs........................................................... -- (563)
Payments of obligations under capital leases.......................................... (1,171) (817)
------------ ------------
Net cash (used in) provided by financing activities................................ (14,613) 3,931
------------ ------------
Change in cash and cash equivalents................................................... (7,233) (6,221)
Cash and cash equivalents at beginning of period...................................... 14,233 19,046
------------ ------------
Cash and cash equivalents at end of period............................................ $ 7,000 $ 12,825
============ ============
Supplemental schedule of noncash investing and financing activities:
Notes payable issued for the acquisition of minority interest......................... $ 10,500 $ --
============ ============
Notes payable issued for payment of accrued interest and fees......................... $ 425 $ --
============ ============
See accompanying notes
Seabulk International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except par value data)
March 31, December 31,
2001 2000
--------------- ------------
Assets
Current assets:
Cash and cash equivalents............................................................ $ 7,000 $ 14,233
Restricted cash...................................................................... -- 331
Accounts receivable:
Trade, net of allowance for doubtful accounts of $6,398
and $6,020 in 2001 and 2000, respectively......................................... 57,393 53,526
Insurance claims and other......................................................... 9,597 11,516
Marine operating supplies............................................................ 10,363 9,638
Prepaid expenses..................................................................... 3,519 3,055
------------ ------------
Total current assets............................................................... 87,872 92,299
Vessels and equipment, net.............................................................. 623,517 639,896
Deferred costs, net..................................................................... 41,080 38,159
Restricted investments.................................................................. 855 865
Other................................................................................... 10,465 4,257
------------ ------------
Total assets....................................................................... $ 763,789 $ 775,476
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable..................................................................... $ 11,351 $ 12,906
Current maturities of long-term debt................................................. 27,258 33,270
Current obligations under capital leases............................................. 3,483 3,580
Accrued interest..................................................................... 5,730 1,677
Accrued liabilities and other........................................................ 38,484 33,840
------------ ------------
Total current liabilities.......................................................... 86,306 85,273
Long-term debt.......................................................................... 429,770 426,849
Obligations under capital leases........................................................ 33,644 34,718
Senior notes............................................................................ 79,715 79,108
Other liabilities....................................................................... 4,432 4,195
------------ ------------
Total liabilities.................................................................. 633,867 630,143
Commitments and contingencies
Minority interest....................................................................... 669 8,819
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; 10,193 and 10,000 ...
shares issued and outstanding in 2001 and 2000, respectively........................ 101 101
Additional paid-in capital........................................................... 166,963 166,963
Accumulated other comprehensive loss................................................. (61) (33)
Accumulated deficit.................................................................. (37,750) (30,517)
------------ ------------
Total stockholders' equity........................................................... 129,253 136,514
------------ ------------
Total liabilities and stockholders' equity......................................... $ 763,789 $ 775,476
============ ============
See accompanying notes.
Seabulk International, Inc. and Subsidiaries
Notes To Condensed Consolidated Financial Statements
March 31, 2001
(Unaudited)
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.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and with
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. All
adjustments which, in the opinion of management, are considered necessary for a
fair presentation of the results of operations for the periods shown are of a
normal recurring nature and have been reflected in the unaudited condensed
consolidated financial statements. The results of operations for the periods
presented are not necessarily indicative of the results expected for the full
fiscal year or for any future period. The information included in these
unaudited condensed consolidated financial statements should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in this report and the consolidated financial
statements and accompanying notes included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required under accounting principles generally
accepted in the United States of America for complete financial statements.
The accompanying condensed 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
condensed consolidated financial statements.
The Company has no material components of comprehensive loss except net
loss.
Certain financial statement reclassifications have been made to conform
prior year's data to the 2001 financial statement presentation.
2. Use of 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 condensed consolidated financial statements and accompanying notes. While
the Company believes that such estimates are fair when considered in conjunction
with the condensed consolidated financial position and results of operations
taken as a whole, the actual amount of such estimates, when known, will vary
from these estimates.
3. Issues Affecting Liquidity
The Company's current and future capital needs relate primarily to debt
service, vessel maintenance and fleet improvement costs. The total expected
payments for debt service obligations and capital requirements approximate
$103.6 million for fiscal 2001. The Company believes that operating cash flow,
proceeds from sales of vessels 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.
4. Acquisition of Minority Interest
On January 15, 2001, the Company acquired the remaining 24.25% in its
five 46,000 dwt double-hull petroleum and chemical tankers. The purchase price
was approximately $11.0 million, of which $523,544 was paid in cash and the
remaining balance was paid by a promissory note in the principal amount of $10.5
million. The note is guaranteed by certain securities of certain subsidiaries of
the Company. The note accrues interest at 8.5% per annum. Principal and interest
is due in quarterly payments of $525,000 through January 2006. This transaction
resulted in the elimination of minority interest and an increase to vessels and
equipment of $3.1 million, representing the fair value of assets acquired over
the carrying value of the minority interest. The increase in vessels and
equipment will be depreciated over the remaining useful lives of the tankers.
5. Long-Term Debt
The Company's senior secured notes have not received the rating from
the rating agencies required by the note indenture. As a result, on April 15,
2000, the interest rate on the senior notes increased from 12.5% to 13.5%,
retroactively applied to December 15, 1999. The additional interest is payable
quarterly in the form of additional senior notes, of which a note in the
principal amount of $239,982 was issued for the three months ended March 31,
2001. The Company is currently seeking the ratings necessary to return the
interest rate to 12.5%.
6. Income Taxes
For the three months ended March 31, 2001 and 2000, there was no
provision for deferred income taxes. For the three months ended March 31, 2001
and 2000, a gross deferred tax benefit was computed using an estimated annual
effective tax rate of 36%. Management has determined that a valuation allowance
is necessary at March 31, 2001 and 2000 to reduce the net deferred tax assets to
an amount that will more likely than not be realized. After application of the
valuation allowance, the Company's net deferred tax assets are zero. The current
provision for income taxes for the three-month periods ended March 31, 2001 and
2000 represent taxes withheld on foreign source revenue.
7. Loss Per Share
Common stock equivalents include 711,000 and 189,000 stock options and
809,471 and 973,861 warrants as of March 31, 2001 and 2000, respectively, have
not been included in the computation of diluted loss per share as their effect
is antidilutive.
8. Segment Information
The Company organizes its business principally into three segments. 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 production platforms.
Marine Transportation Services - Marine transportation services
includes oceangoing and inland-waterway vessels used to transport crude
oil, petroleum products and chemicals between ports and terminals
within the U.S., 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 Green Cove Springs, Florida.
Towing - Harbor and offshore towing services are provided by tugs to
vessels utilizing the seven ports in which the tugs operate, and to
vessels at sea.
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.
Unallocated expenses are primarily comprised of general and administrative
expenses of a corporate nature.
The following schedule presents information about the Company's
operations in its three segments (in thousands):
Three Months Ended
-----------------------------
March 31,
2001 2000
-------------- ------------
Revenues
Offshore energy support...................... $ 43,159 $ 34,219
Marine transportation services............... 29,804 35,657
Towing....................................... 8,457 8,731
------------- -----------
Total..................................... $ 81,420 $ 78,607
============= ===========
Operating expenses
Offshore energy support...................... $ 24,608 $ 24,111
Marine transportation services............... 19,427 25,366
Towing....................................... 4,834 5,032
------------- -----------
Total..................................... $ 48,869 $ 54,509
============= ===========
Depreciation, amortization and drydocking
Offshore energy support...................... $ 8,456 $ 7,722
Marine transportation services............... 4,359 3,245
Towing....................................... 729 766
General corporate............................ 379 554
------------- -----------
Total..................................... $ 13,923 $ 12,287
============= ===========
Income (loss) from operations
Offshore energy support...................... $ 5,846 $ (1,803)
Marine transportation services............... 4,670 5,604
Towing....................................... 1,723 1,653
General corporate............................ (3,830) (3,441)
------------- -----------
Total..................................... $ 8,409 $ 2,013
============= ===========
Total income for reportable segments........... $ 8,409 $ 2,013
Interest expense............................... (14,616) (14,451)
Other income................................... 388 553
------------- -----------
Loss before provision for income taxes....... $ (5,819) $ (11,885)
============= ===========
The following schedule presents selected financial information
pertaining to the Company's geographic regions for the three months ended March
31, 2001 and 2000 (in thousands):
Three Months Ended
-----------------------------------
March 31,
2001 2000
----------------- ----------------
Revenues
Domestic......................... $ 57,670 $ 54,980
Foreign
West Africa................... 14,622 10,404
Middle East................... 5,002 10,860
Southeast Asia................ 4,126 2,363
---------------- ----------------
Consolidated revenues.............. $ 81,420 $ 78,607
================ ================
9. Contingencies
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. Management does not believe such litigation will
have a material effect on the Company's financial position, results of
operations or cash flows.
10. Recent Accounting Pronouncements
In September 1998, the Financial Accounting Standards Board issued the
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by Statement Nos. 137
and 138. The Company adopted SFAS No. 133, as amended, on January 1, 2001. Due
to the Company's minimal use of derivatives, this pronouncement did not have a
material impact on the Company's financial statements upon adoption.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain areas of the Staff's views in applying
accounting principles generally accepted in the United States of America to
revenue recognition in financial statements. There were no significant
adjustments posted as a result of the adoption of SAB 101.
11. Subsequent Event
On May 1, 2001, the Company took delivery of a 152' crewboat. The
purchase price for the crewboat was $2.5 million, of which $50,000 was paid in
cash and the remaining balance of $2.45 million was paid through borrowings
under the Company's revolving credit facility.
12. Supplemental Condensed Consolidated Financial Information (Unaudited)
The senior secured notes are fully and unconditionally guaranteed on a
joint and several basis by certain of the Company's wholly owned consolidated
subsidiaries. A substantial portion of the Company's cash flows are generated by
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 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 (unaudited)
(in thousands)
Three Months Ended March 31, 2001
-----------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries Total
Revenue...................................... $ 8,276 $ 43,608 $ 23,219 $ 17,560 $ (11,243) $ 81,420
Operating expenses........................... 6,331 29,546 13,929 10,204 (11,141) 48,869
Overhead expenses............................ 3,698 3,116 2,516 962 (73) 10,219
Depreciation, amortization and drydocking.... 1,614 4,238 5,242 2,829 -- 13,923
---------- ----------- ------------- ------------- ------------- ----------
Income (loss) from operations................ (3,367) 6,708 1,532 3,565 (29) 8,409
Other expense, net........................... (2,452) 303 (6,725) (5,018) (336) (14,228)
---------- ----------- ------------- ------------- ------------- ----------
Loss before income taxes..................... (5,819) 7,011 (5,193) (1,453) (365) (5,819)
Provision for income taxes................... 1,414 -- -- -- -- 1,414
---------- ----------- ------------- ------------- ------------- ----------
Net loss..................................... $ (7,233) $ 7,011 $ (5,193) $ (1,453) $ (365) $ (7,233)
========== =========== ============= ============= ============= ==========
Condensed Consolidating Statement of Cash Flows (unaudited)
(in thousands)
Three Months Ended March 31, 2001
-----------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries Total
Net cash provided by (used in) operating
activities................................. $ 13,312 $ 6,615 $ 478 $ (7,783) $ 5 $ 12,627
Investing activities:
Expenditures for drydocking................. (55) (2,754) (3,582) -- -- (6,391)
Proceeds from disposals of assets........... -- 820 1,816 -- -- 2,636
Purchases of property....................... (16) (407) (472) (78) (5) (978)
Acquisition of minority interest............ (524) -- -- -- -- (524)
Redemption of restricted investments........ -- -- -- 33 -- 33
Purchases of restricted investments......... -- -- -- (23) -- (23)
---------- ------------ ---------- ------------- ---------- ------------
Net cash used in investing
activities.............................. (595) (2,341) (2,238) (68) (5) (5,247)
Financing activities:
Proceeds from revolving credit facility....... 7,500 -- -- -- -- 7,500
Repayments of revolving credit facility....... (15,750) -- -- -- -- (15,750)
Repayment of long-term borrowings............. (3,931) (329) -- -- -- (4,260)
Repayment of Title XI bonds................... (1,263) -- -- -- -- (1,263)
Redemption of restricted cash................. 331 -- -- -- -- 331
Payments of obligations under capital leases.. -- (1,171) -- -- -- (1,171)
---------- ------------ ---------- ------------ ---------- -----------
Net cash used in financing activities........ (13,113) (1,500) -- -- -- (14,613)
Change in cash and cash equivalents............ (396) 2,774 (1,760) (7,851) -- (7,233)
Cash and cash equivalents at beginning of
period......................................... 1,402 (2,190) 6,380 8,641 -- 14,233
---------- ------------ ---------- ------------ ---------- -----------
Cash and cash equivalents at end of period..... $ 1,006 $ 584 $ 4,620 $ 790 $ -- $ 7,000
========== ============ ========== ============ ========== ===========
Condensed Consolidating Statement of Operations (unaudited)
(in thousands)
Three Months Ended March 31, 2000
-----------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries Total
Revenue...................................... $ 11,453 $ 38,042 $ 24,410 $ 19,030 $ (14,328) $ 78,607
Operating expenses........................... 7,417 31,081 15,859 12,266 (12,114) 54,509
Overhead expenses............................ 3,231 2,099 4,519 1,386 (1,437) 9,798
Depreciation, amortization and drydocking.... 788 3,992 4,807 2,700 -- 12,287
----------- ------------- ------------ ------------- ----------- -----------
Income (loss) from operations................ 17 870 (775) 2,678 (777) 2,013
Other expense, net........................... (11,902) (3,023) (1,735) (6,624) 9,386 (13,898)
----------- ------------- ------------ ------------- ----------- -----------
Loss before income taxes..................... (11,885) (2,153) (2,510) (3,946) 8,609 (11,885)
Provision for income taxes................... 1,024 -- -- -- -- 1,024
----------- ------------- ------------ ------------- ----------- -----------
Net loss..................................... $ (12,909) $ (2,153) $ (2,510) $ (3,946) $ 8,609 $ (12,909)
=========== ============= ============ ============= =========== ===========
Condensed Consolidating Statement of Cash Flows (unaudited)
(in thousands)
Three Months Ended March 31, 2000
-----------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries Total
Net cash (used in) provided by operating
activities.....................................$ (13,890) $ 4,165 $ (946) $ 4,134 $ 39 $ (6,498)
Investing activities:
Expenditures for drydocking...................... 23 (1,621) (813) (21) -- (2,432)
Purchases of property............................ 109 (415) (491) (386) (39) (1,222)
Capital contribution to affiliate................ 4,611 (4,866) -- 255 -- --
---------- --------- ------------ ------------ ---------- ----------
Net cash provided by (used in) investing
activities................................... 4,743 (6,902) (1,304) (152) (39) (3,654)
Financing activities:
Proceeds of revolving credit facility ......... 6,975 -- -- -- -- 6,975
Repayment of revolving credit facility......... (2,000) -- -- -- -- (2,000)
Repayment of long-term borrowings.............. (3,849) 2,115 -- (28) -- (1,762)
Repayment of Title XI bonds.................... -- (1,366) -- -- -- (1,366)
Redemption of restricted cash.................. 3,464 -- -- -- -- 3,464
Payments of financing costs.................... (141) (422) -- -- -- (563)
Payments of obligations under capital leases... -- (817) -- -- -- (817)
----------- --------- ------------ ------------ ---------- -----------
Net cash provided by (used in) financing
activities....................................... 4,449 (490) -- (28) -- 3,931
----------- --------- ------------ ------------ ---------- ----------
Change in cash and cash equivalents............ (4,698) (3,227) (2,250) 3,954 -- (6,221)
Cash and cash equivalents at beginning of
period......................................... 4,830 3,000 7,724 3,492 -- 19,046
----------- --------- ------------ ------------ ---------- ----------
Cash and cash equivalents at end of period..... $ 132 $ (227) $ 5,474 $ 7,446 $ -- $ 12,825
=========== ========= ============ ============ ========== ==========
Condensed Consolidating Balance Sheet
(in thousands)
As of March 31, 2001
------------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries Total
Assets
Current assets:
Cash and cash equivalents................ $ 1,006 $ 584 $ 4,620 $ 790 $ -- $ 7,000
Accounts receivable:
Trade, net............................ 657 27,467 25,054 4,413 (198) 57,393
Insurance claims and other............ 615 3,214 5,931 (163) -- 9,597
Marine operating supplies................ (528) 2,841 3,418 4,637 (5) 10,363
Prepaid expenses......................... 634 724 1,195 966 -- 3,519
----------- ---------- ------------- ------------- ------------- -------------
Total current assets.................. 2,384 34,830 40,218 10,643 (203) 87,872
Vessels and equipment, net................. 48,164 181,205 118,790 275,353 5 623,517
Deferred costs, net........................ 16,066 9,540 7,235 8,239 -- 41,080
Restricted investments..................... -- -- -- 855 -- 855
Due from affiliates........................ (150,463) (22,636) 176,710 (133) (3,478) --
Other...................................... 513,905 333,457 8,091 36,896 (881,884) 10,465
----------- ---------- ------------- ------------- ------------- -------------
Total assets............................. $ 430,056 $ 536,396 $ 351,044 $ 331,853 $ (885,560) $ 763,789
=========== ========== ============= ============= ============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable......................... $ 3,007 $ 1,743 $ 6,003 $ 598 $ -- $ 11,351
Current maturities of long-term debt..... 21,229 1,945 -- 4,084 -- 27,258
Current obligations under capital leases. -- 3,483 -- -- -- 3,483
Accrued interest......................... 722 423 -- 4,585 -- 5,730
Accrued liabilities and other............ 8,271 7,077 18,612 4,722 (198) 38,484
----------- ---------- ------------- ------------- ------------- -------------
Total current liabilities............. 33,229 14,671 24,615 13,989 (198) 86,306
Long-term debt............................. 184,685 25,019 -- 220,066 -- 429,770
Obligations under capital leases........... -- 33,644 -- -- -- 33,644
Senior notes............................... 79,715 -- -- -- -- 79,715
Other liabilities.......................... 3,143 (81,582) 58,986 23,885 -- 4,432
----------- ---------- ------------- ------------- ------------- -------------
Total liabilities........................ 300,772 (8,248) 83,601 257,940 (198) 633,867
Commitment and contingencies
Minority interest.......................... -- -- -- -- 669 669
Total stockholders' equity................. 129,284 544,644 267,443 73,913 (886,031) 129,253
----------- ---------- ------------- ------------- ------------- -------------
Total liabilities and stockholders' equity $ 430,056 $ 536,396 $ 351,044 $ 331,853 $ (885,560) $ 763,789
=========== ========== ============= ============= ============= =============
Condensed Consolidating Balance Sheet
(in thousands)
As of December 31, 2000
-------------------------------------------------------------------------------------
Parent Domestic Foreign Non- Eliminations Condensed
Guarantor Guarantor Guarantor Consolidated
Subsidiaries Subsidiaries Subsidiaries 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 7,121 336 -- 11,516
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 42,449 18,045 (704) 92,299
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 3,431 37,435 (873,368) 4,257
----------- ----------- ------------- ------------- ------------- ------------
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
=========== =========== ============= ============= ============= ============
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") should be read in conjunction with
the condensed consolidated financial statements and the related notes thereto
included elsewhere in this Report and the 2000 Form 10-K.
The MD&A contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in the MD&A are forward-looking
statements. Although the Company believes that the expectations and beliefs
reflected in such forward-looking statements are reasonable, it can give no
assurance that they will prove correct. For information regarding the risks and
uncertainties that could cause such forward-looking statements to prove
incorrect, see "Projections and Other Forward-Looking Information" in Item 1 of
the 2000 Form 10-K.
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 53% and 44% of Company revenues for the three months
ended March 31, 2001 and 2000, respectively. 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 37% and
45% of Company revenues for the three months ended March 31, 2001 and 2000,
respectively. Seabulk Towing, the Company's domestic harbor and offshore towing
business, accounted for approximately 10% and 11% of the Company's revenues for
the three months ended March 31, 2001 and 2000, respectively.
Offshore Energy Support
Revenues from the Company's offshore energy support operations are
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 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 2001
AHTS/ AHT/ Crew/
Supply Tugs UtilityOther
-----------------------------
Domestic(1)
Vessels(2) 26 - 31 1
Bareboat-out(3) - - 2 1
Laid-Up 1 - - 1
Effective
Utilization(4) 75% - 87% -
Fleet
Utilization(4) 72% - 87% -
Day Rate $6,946 - $2,709 -
West Africa
Vessels(2) (6) 27 3 6 1
Laid-Up - - - -
Effective
Utilization(4) 83% 46% 85% -
Fleet
Utilization(4) 83% 46% 85% -
Day Rate $6,325 $4,491 $2,754 -
Middle East
Vessels(2) (5) (6) 5 8 11 7
Laid-Up - - - -
Effective
Utilization(4) 77% 24% 66% 56%
Fleet
Utilization(4) 77% 24% 66% 56%
Day Rate $3,003 $4,129 $1,421 $5,197
Southeast Asia
Vessels(2) 8 1 5 1
Laid-Up - - 1 -
Effective
Utilization(4) 87% 37% 89% 33%
Fleet
Utilization(4) 87% 37% 71% 33%
Day Rate $5,347 $3,929 $1,429 $6,164
-------------------------------------------------
(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
(2) Held-for-sale vessels are excluded from the vessel count.
(3) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(4) Effective utilization excludes laid-up vessels. Fleet utilization includes
laid-up vessels.
(5) The Middle East - Other category includes a vessel that is in a 50/50 joint
venture and not included in the day rate and utilization statistics.
(6) During Q1 2001, one AHTS, one supply boat, and one specialty vessel
(other), transferred from the Middle East to West Africa.
-----------------------------------------------------------------------------------------------------------------------------------
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 UtilityOther
-------------------------------------------------------------------------------------------------------------------
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 the
vessel earned substantial revenues during the quarter, it 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) Effective utilization excludes laid-up vessels. Fleet utilization includes
laid-up vessels of which 10 are being actively marketed for sale in the
Middle East.
(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-AHT/Tugs and other categories include a vessel that is a
44-foot harbor tug and in a 50/50 joint venture, respectively, which are
not included in the day rate and utilization statistics.
As indicated in the above tables, average day rates for the Domestic
operating area improved steadily throughout 2000 and into the first quarter of
2001 due to sharply higher oil and gas prices and a resulting increase in
offshore exploration and production activities. The Company took delivery of a
1996-built, 152-foot crewboat in the fourth quarter of 2000 and took delivery of
a similar vessel on May 1, 2001. Demand for these larger crewboats is increasing
as oil and gas exploration moves to deepwater developments farther offshore.
Average day rates for the Company's fleet operating in overseas markets
have steadily rebounded, with the exception of the Middle East, where production
cutbacks by the Organization of Petroleum Exporting Countries ("OPEC") during
the first quarter of 2001, together with competition from local operators,
caused a decrease in day rates and utilization. However, the Company was able to
enter into long-term contracts for a number of its vessels, as part of a
package, with existing customers, which increased the utilization and day rates
for certain vessels. In addition, during the quarter an anchor handling tug
supply vessel, a supply boat (which was laid up in 2000) and a specialty vessel
were transferred from the Middle East to West Africa, where employment
opportunities and day rates have been increasing. Average day rates for the
Company's anchor handling tug supply vessels and supply boats at April 30, 2001
for Domestic, West Africa, the Middle East and Southeast Asia were $7,200,
$6,200, $3,000, and $4,000, respectively.
The Company reclassified 14 vessels to "held for sale" status during
the first quarter of 2001. The majority of these vessels were in the Middle East
region and previously laid up. These vessels were under-performing or
non-performing and will be offered for sale, mainly through brokers. The Company
currently has 24 vessels for sale, which are no longer considered part of the
offshore fleet.
In the U.S. Gulf of Mexico, the Company laid up a geophysical vessel
during the first quarter of 2001. This vessel worked in Southeast Asia during
the fourth quarter of 2000, but transferred to the domestic fleet as of January
1, 2001. The Company also reactivated one supply boat in the U.S. Gulf of
Mexico. In the Middle East, two tugs were laid up and one anchor handling tug
supply vessel, one supply boat and two utility boats were sold. In addition, a
previously working tug was also sold and one supply boat was reactivated. In
West Africa, an anchor handling tug and a crewboat were reactivated. In
Southeast Asia, a utility boat was laid up.
The reactivations during the first quarter of 2001 were mainly the
result of improving market conditions and certain contractual commitments with
customers. The cost to reactivate the four vessels was approximately $1.6
million and is expected to contribute approximately $2.1 million in EBITDA
during 2001.
Management continuously evaluates the profitability of the fleet and
may lay up or dispose of certain vessels if the cost to maintain and operate
them is not economically justified. As of March 31, 2001, the Company had three
vessels in lay-up, which are scheduled for reactivation during 2001 at a cost of
approximately $1.2 million.
Marine Transportation
Revenues from the Company's marine transportation services are derived
principally from the operations of 10 tankers carrying crude oil, petroleum
products and chemicals in the U.S. Jones Act trade, and to a lesser extent from
towboat and fuel barge operations in Jacksonville, Florida.
Petroleum Tankers. Demand for crude oil and petroleum product
transportation services is dependent both on the level of production and
refining, and on consumer and commercial use of petroleum-based products. The
Company operated seven petroleum tankers at March 31, 2001. Five of the
Company's petroleum tankers are newly built, double-hull state-of-the-art
vessels delivered in late 1998 and the first half of 1999. Two of these have
chemical-carrying capabilities.
Chemical Tankers. 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 March
31, 2001. The multi-purpose vessel is one of the five double-hull vessels. The
two straight chemical tankers are double-bottom ships.
The following table sets forth the number of vessels and revenues for
the Company's chemical and product carriers:
Three Months Ended March 31,
--------------------------------------
2001 2000(1)(2)
------------------- -----------------
Number of vessels owned............. 10 11
Revenues (in thousands)............. $ 28,035 $ 34,431
--------------------------
(1) During the third quarter of 2000, the Company scrapped one tanker that was
at the end of its OPA 90-mandated useful life.
(2) Includes revenues from chartered-in vessels of $0.0 million and $2.6
million for the three months ended March 31, 2001 and 2000, 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. On January 31, 2001, Sun State renewed the contract with Steuart for
four years with an additional seven-year renewal option. The renewal option is
contingent on Steuart's ability to renew a related contract. Revenue is also
derived from Sun State's ship maintenance, repair, drydocking and construction
activities. Revenues from these operations were $1.7 and $1.2 million for the
three months ended March 31, 2001 and 2000, respectively.
Towing
Revenues derived from the Company's tug operations are 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:
Three Months Ended March 31,
-----------------------------
2001 2000
--------------- ------------
Number of tugs at end of period............ 31 37
Total towing revenue (in thousands)........ $ 8,457 $ 8,731
Towing revenues decreased slightly in the three months ended March 31,
2001 as compared to the same period in the prior year mainly due to the sale of
vessels. The Company sold a total of five vessels in 2000, one in the second
quarter and four in the third quarter; and two vessels in the first quarter of
2001. The associated proceeds were used to pay down debt. In addition, the
Company took delivery of its fourth SDM(TM) in the second quarter of 2000.
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, maintenance and repairs, fuel, insurance and charter hire. For general
information concerning these categories of operating expenses as well as capital
expenditures, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations, Overview of Operating Expenses and Capital
Expenditures" in the 2000 Form 10-K.
Results of Operations
The following table sets forth certain selected financial data and
percentages of revenue for the periods indicated:
Three Months ended March 31,
-------------------------------------------------
2001 2000
--------------------- ------------------------
(in millions)
Revenues................................................. $ 81.4 100% $ 78.6 100%
Operating expenses....................................... 48.9 60 54.5 69
Overhead expenses........................................ 10.2 13 9.8 12
Depreciation, amortization and drydocking expense........ 13.9 17 12.3 16
---------- ----------- ---------- ------------
Income from operations................................... $ 8.4 10% $ 2 3%
========== =========== ========== ============
Interest expense, net.................................... $ 14.6 18% $ 14.2 18%
========== =========== ========== ============
Net loss................................................. $ (7.2) (9)% $ (12.9) (16)%
=========== ============ ========== ============
Three months ended March 31, 2001 compared with the three months ended March 31,
2000
Revenue. Revenues increased 3.6% to $81.4 million for the three months
ended March 31, 2001 from $78.6 million for the three months ended March 31,
2000. This increase is primarily due to an increase in utilization and day rates
in the Company's offshore energy support operations offset by decreases in
revenues in the marine transportation and towing segment. See discussion above.
Offshore energy support revenue increased 26.1% to $43.2 million for
the three months ended March 31, 2001 from $34.2 million for the same period in
2000, primarily due to increased day rates resulting from the increase in
offshore exploration and production activity.
Marine transportation revenue decreased 16.4% to $29.8 million for the
three months ended March 31, 2001 from $35.7 million for the three months ended
March 31, 2000. This decrease is primarily due to the mandated retirement of one
of the Company's Jones Act tankers in the third quarter of 2000, the Company's
chartering in of one tanker in the first quarter of 2000 through October, and
the redeployment of three tankers from spot trading to time charters. Under a
time charter, the cost of fuel and port charges is borne by the charterer. In
December 2001, three affreightment contracts will expire, at which time it is
expected the Company will enter into time charters under more favorable rates.
Towing revenue of $8.5 million decreased slightly for the three months
ended March 31, 2001 from $8.7 million for the three months ended March 31, 2000
due to vessel sales during 2000.
Operating Expenses. Operating expenses decreased 10.3% to $48.9 million
for the three months ended March 31, 2001 from $54.5 million in the 2000 period,
primarily due to reduced charter hire payments, fuel, and port charges. The
reduction in fuel and port charges is primarily due to the change of three
tankers from spot trading to time charters. As a percentage of revenue,
operating expenses decreased to 60% for the three months ended March 31, 2001
from 69% for the 2000 period.
Overhead Expenses. Overhead expenses increased 4% to $10.2 million for
the three months ended March 31, 2001 from $9.8 million for the three months
ended March 31, 2000. This is primarily due to increased in-house professional
staffing to save on third-party consulting fees and services. As a percentage of
revenue, overhead expenses increased to 13% for the three months ended March 31,
2001 from 12% for the 2000 period.
Depreciation, Amortization and Drydocking Expense. Depreciation,
amortization and drydocking expense increased 13.3% to $13.9 million for the
three months ended March 31, 2001 from $12.3 million for the three months ended
March 31, 2000, primarily due to increased drydocking expenditures.
Additionally, in the fourth quarter of 2000, the Company revised the useful
lives of certain offshore energy support vessels, thereby increasing
depreciation expense for the three months ended March 31, 2001 as compared to
the same period in 2000.
Income from Operations. Income from operations totaled $8.4 million, or
10% of revenue, for the three months ended March 31, 2001 compared to income of
$2.0 million, or 3% of revenue, for the three months ended March 31, 2000,
primarily due to factors discussed above.
Net Interest Expense. Net interest expense is relatively unchanged at
$14.6 million, or 18% of revenue, for the three months ended March 31, 2001 from
$14.2 million for the three months ended March 31, 2000.
Net Loss. The Company had a net loss of $7.2 million for the three
months ended March 31, 2001 compared to a net loss of $12.9 million for the
three months ended March 31, 2000, primarily as a result of the factors noted
above.
Liquidity and Capital Resources
Background. The Company's capital requirements arise primarily from its
need to service debt, fund working capital, and maintain and improve its
vessels. Historically, the Company's principal sources of cash have been equity
and debt financing and cash provided by operations. Although the Company's
ability to fund its capital requirements was affected by the decline in rates
and utilization of its offshore energy support vessels in 1999, the gradual
recovery of this market is reflected in the earnings for the first quarter of
2001.
Cash Flows. During the first three months of 2001, the Company had
$12.6 million of cash derived from operating activities after accounting for the
net loss for the period adjusted for changes in working capital as well as
depreciation and amortization of drydocking costs. Cash used in investing
activities was $5.2 million used primarily for the purchase of property and
drydocking expenditures offset by proceeds from the sale of vessels. Cash used
in financing activities was $14.6 million. It was primarily applied to principal
payments under the Company's long-term debt and capital lease obligations, and
repayments to the revolving credit facility, offset by proceeds from the
revolving credit facility.
During the first three months of 2000, the Company used $6.5 million of
cash from operations after accounting for the net loss for the period adjusted
for changes in recurring non-cash items. Cash used in investing activities was
$3.6 million for the period, primarily reflecting the costs of capital
improvements to vessels and drydocking expenditures. Cash provided by financing
activities was $3.9 million. It was primarily the receipt of proceeds from the
revolving credit facility and redemption of restricted cash, offset by principal
payments under the Company's long-term debt and capital lease obligations, and
repayments to the revolving credit facility.
Recent Expenditures and Future Cash Requirements. 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 second crewboat was delivered on May 1, 2001, for which the
Company made a cash payment of $2.45 million.
In December 2000, the Company signed an agreement to purchase the
remaining 24.25% equity interest in its five 46,000 dwt double-hull petroleum
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 principal 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
Company now has 100% equity ownership of all five double-hull tankers.
The Company's current and future capital needs relate primarily to debt
service, vessel maintenance and fleet improvement costs. Principal obligations
for the first quarter of 2001 were $6.7 million. Cash interest obligations were
$8.6 million of $14.6 million in total interest expense, which includes
amortization of bank fees and discounts on notes. The Company's principal
payments for the remainder of 2001 are estimated at $19.4 million. Estimated
cash interest obligations total $41.2 million.
During the first quarter of 2001, the Company incurred $7.4 million in
capital expenditures for fleet improvements and drydocking costs for 17 vessels.
For the remainder of 2001, these expenditures are expected to aggregate $20.3
million.
The Company believes that operating cash flow, proceeds from sales of
vessels 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, 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. In the meantime, we are
evaluating financing alternatives to support future growth and enhance
shareholder value.
The Reorganization. Under the reorganization plan effective December
15, 1999, the Company 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 April 30, 2001
-------- ------ -------- --------------
Tranche A term loan $75 million 2004 7.75%
Tranche B term loan $30 million 2005 8.25%
Tranche C term loan $95 million 2006 8.75%
Revolving credit facility $25 million 2004 -- (1)
.........
(1) Balance on revolving credit facility as of April 30, 2001 was zero.
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 (8.5% as of March 31, 2001) 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: 5.13% as of March 31, 2001), plus a margin ranging from
3.25% to 4.25%.
During the first three months of 2001, the Company made the following
principal payments under the term loans: Tranche A, $2.4 million, Tranche B,
$0.4 million and Tranche C, $1.2 million. Of these payments, $2.1 million was
derived from the sale of surplus vessels. Interest payments on the term loans
for the first three months of 2001 were: Tranche A, $1.4 million, Tranche B,
$0.6 million and Tranche C, $2.1 million. At March 31, 2001, $6.0 million was
outstanding under the revolving credit facility. This balance was completely
paid down as of April 9, 2001. In addition to the revolver balance, there are
$1.7 million in outstanding letters of credit as of April 30, 2001.
Borrowings under the credit agreement are collateralized 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.
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 the
aggregate principal amount of $1.2 million have been paid in quarterly amounts
between June 30, 2000 and March 31, 2001. 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.
Recent Developments
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. Additionally, the
names of certain of the Company's subsidiaries were changed from "Hvide" to
"Seabulk." 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.
Item 3. Quantitative and Qualitative Disclosures of Market Risk
Information about the Company's exposure to market risk was disclosed
in its 2000 Annual Report on Form 10-K, which was filed with the Securities and
Exchange Commission on March 30, 2001. There have been no material quantitative
or qualitative changes in market risk exposures since the date of that filing.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information concerning certain legal proceedings see Note 9 of the
financial statements.
Item 6. Exhibits and Reports on Form 8-K
None.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEABULK INTERNATIONAL, INC.
/s/ J. STEPHEN NOUSS
J. Stephen Nouss
Senior Vice President and Chief Financial Officer
Date: May 11, 2001