FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 1-10945
OCEANEERING INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2628227
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16001 Park Ten Place, Suite 600
Houston, Texas 77084
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 578-8868
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 28, 1995
Common Stock, $.25 Par Value 23,087,122 shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, March 31,
1995 1995
(unaudited) (audited)
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 15,262 $ 12,865
Accounts receivable (net of allowance
for doubtful accounts of $1,227 at
June 30 and $1,238 at March 31) 71,959 58,360
Prepaid expenses and other 4,463 4,613
Total Current Assets 91,684 75,838
Property and Equipment, at cost:
Marine services equipment 182,791 175,528
Mobile offshore production equipment 24,514 24,694
Buildings, improvements and other 29,133 28,648
236,438 228,870
Less: Accumulated Depreciation 138,020 134,515
Net Property and Equipment 98,418 94,355
Goodwill (net of amortization
of $1,787 and $1,546) 12,809 13,051
Investments and Other Assets 4,494 4,508
TOTAL ASSETS $207,405 $187,752
LIABILITIES and SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 18,825 $ 15,110
Accrued liabilities 30,475 29,870
Income taxes payable 8,907 7,634
Current portion of long-term debt 152 118
Total Current Liabilities 58,359 52,732
Long-Term Debt, net of current portion 21,000 9,472
Other Long-Term Liabilities 10,458 10,408
Shareholders' Equity 117,588 115,140
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $207,405 $187,752
See Notes to Consolidated Financial Statements.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For the Three Months Ended
June 30,
1995 1994
(in thousands, except per
share amounts)
Revenues $ 71,541 $ 63,370
Cost of services 58,232 49,276
Selling, general and administrative 8,309 8,366
expenses
Income from operations 5,000 5,728
Interest income 138 176
Interest expense (397) (212)
Other income (expense), net 63 (97)
Income before income taxes 4,804 5,595
Provision for income taxes (2,017) (1,929)
Net income $ 2,787 $ 3,666
Earnings per common share equivalent $0.12 $0.15
Weighted average number of common
share equivalents outstanding 23,158 24,183
See Notes to Consolidated Financial Statements.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three
Months Ended
June 30,
1995 1994
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,787 $ 3,666
Adjustments to reconcile net income to net cash
provided by/(used in) operating activities:
Depreciation and amortization 4,803 3,905
Currency translation adjustments and other 211 295
Decrease (increase) in accounts receivable (13,599)(13,273)
Decrease (increase) in prepaid expenses
and other current assets 153 (882)
Increase (decrease) in current liabilities 5,662 5,679
Increase (decrease) in other long-term
liabilities 50 (2,615)
Total adjustments to net income (2,720) (6,891)
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 67 (3,225)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment and other
assets (9,757) (8,896)
Decrease (increase) in investments -- 24
NET CASH USED IN INVESTING ACTIVITIES (9,757) (8,872)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings, net of
payments 11,528 (41)
Proceeds from issuance of common stock 142 85
Treasury stock reissued 417 --
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 12,087 44
NET INCREASE (DECREASE) IN CASH 2,397 (12,053)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 12,865 26,486
CASH AND CASH EQUIVALENTS - END OF PERIOD $15,262 $14,433
See Notes to Consolidated Financial Statements.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation and Significant Accounting Policies
These Consolidated Financial Statements are unaudited and have been
prepared pursuant to instructions for the Quarterly Report on Form
10-Q required to be filed with the Securities and Exchange
Commission and do not include all information and footnotes
normally included in financial statements prepared in accordance
with generally accepted accounting principles. Management has
reflected all adjustments which it believes are necessary to
present fairly the Company's financial position at June 30, 1995
and its results of operations and cash flows for the three month
periods presented. All such adjustments are of a normal recurring
nature. The financial statements should be read in conjunction
with the consolidated financial statements and notes thereto
included in the Registrant's Annual Report on Form 10-K for its
fiscal year ended March 31, 1995. The results for interim periods
are not necessarily indicative of annual results.
2. Cash and Cash Equivalents
Cash and cash equivalents includes demand deposits and highly
liquid interest-bearing investment grade securities. Approximately
$1,400,000 and $1,500,000 of the Company's cash as of June 30, and
March 31, 1995, respectively, was restricted and is posted as
security in interest bearing accounts related to litigation
involving the Company's United Kingdom subsidiary. The Company
believes it has adequate defenses to the claims and that the
outcome will not have a material adverse effect on the financial
position of the Company.
3. Shareholders' Equity
Shareholders' Equity consisted of the following:
June 30, March 31,
1995 1995
(unaudited) (audited)
(in thousands, except
share data)
Shareholders' Equity:
Common Stock, par value $0.25;
90,000,000 shares authorized;
24,017,046 and 24,017,046 issued $ 6,004 $ 6,004
Additional paid-in capital 80,978 80,800
Treasury stock, 929,924 and 977,363
shares at cost (8,179) (8,596)
Retained earnings 46,986 44,199
Cumulative translation adjustments (8,201) (7,267)
Total Shareholders' Equity $117,588 $115,140
4. Income Taxes
Cash taxes paid were $801,000 and $637,000 for the three months
ended June 30, 1995 and 1994, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Financial Condition
At June 30, 1995, the Company's working capital was approximately
$33.3 million, which included $13.9 million of unrestricted cash and
cash equivalents. The Company expects to be able to meet its ongoing
annual cash requirements from existing cash on hand and from operating
cash flows, although if significant investment opportunities arise,
the Company may use external finance.
In April 1995, the Company signed a new credit agreement with a group
of banks in the amount of $75 million ("Credit Agreement"); borrowings
under the Credit Agreement were approximately $21 million at June 30,
1995, none of which is required to be repaid prior to fiscal 1999.
The Company also has an uncommitted credit agreement with a bank in
the amount of $20 million for use for letters of credit and short-term
borrowings ("Uncommitted Line"). As of June 30, 1995, the Company had
utilized $8 million under the Uncommitted Line.
Capital expenditures were $9.8 million during the first three months
of fiscal 1996, as compared to $8.9 million during the corresponding
period of the prior fiscal year. Fiscal 1996 expenditures consisted
primarily of costs to complete the upgrade of two offshore support
vessels and upgrades to the Company's fleet of remotely operated
vehicles ("ROVs"). Expenditures in fiscal 1995 consisted primarily of
acquisition costs of an offshore support vessel. There were no
material commitments for capital expenditures at June 30, 1995.
Results of Operations
Consolidated revenue and margin information is as follows:
Three Months Ended
June 30,
1995 1994
(in thousands)
Revenues $ 71,541 $ 63,370
Gross margin 13,309 14,094
Gross margin % 19% 22%
Operating margin % 7% 9%
The quarters ending June 30 and September 30 have generally been the
Company's peak in both revenues and net income for its Oilfield Marine
business. Revenues and net income in the Offshore Field Development
and Advanced Technologies businesses are generally not seasonal.
Oilfield Marine Services
Revenue and gross margin information is as follows:
Three Months Ended
June 30,
1995 1994
(in thousands)
Revenues $ 31,581 $ 30,719
Gross margin 5,558 5,703
Gross margin % 18% 19%
Revenues and gross margins from oilfield customers for the first
quarter of fiscal 1996 were at approximately the same level as the
corresponding period of the prior year. Utilization and prices for
the Company's remotely operated vehicle fleet rose during the quarter
but demand for diving and topside inspection services decreased
resulting in a slightly lower gross margin for this segment compared
to fiscal 1995.
Offshore Field Development
Revenue and gross margin information is as follows:
Three Months Ended
June 30,
1995 1994
(in thousands)
Revenues $ 23,621 $ 14,721
Gross margin 4,807 3,311
Gross margin % 20% 22%
Revenues for the three month period ended June 30, 1995 increased over
the corresponding period of the prior year primarily as a result of a
contract to convert a jackup rig into a Mobile Offshore Production
Systems unit. The conversion was completed subsequent to the end of
the first quarter of fiscal 1996. The Company's Floating Production,
Storage and Offloading ("FPSO") system continued to work offshore
Angola under a contract expiring in January 1996. Revenues from the
FPSO for the three month periods ended June 30, 1995 and 1994 were
$3,473,000 and $4,277,000, respectively; gross margins for the three
month periods ended June 30, 1995 and 1994 were $1,717,000 and
$2,261,000, respectively.
Advanced Technologies
Revenue and gross margin information is as follows:
Three Months Ended
June 30,
1995 1994
(in thousands)
Revenues $ 16,339 $ 17,930
Gross margin 2,944 5,080
Gross margin % 18% 28%
Revenues and margins for the first quarter of fiscal 1996 decreased
over the corresponding period of the prior year as a result of lower
utilization of the Company's deep ocean search equipment, lower
profitability in space-related product sales and costs associated with
entry into the environmental services business.
Other
The provisions for income taxes were related to U.S. income taxes
which were provided at estimated annual effective rates using
assumptions as to earnings and other factors which would affect the
tax calculation for the remainder of the fiscal year, and to the
operations of foreign branches and subsidiaries which were subject to
local income and withholding taxes. The Company's effective tax rate
increased during the first quarter of fiscal 1996 compared to the
first quarter of fiscal 1995 as a result of an increase in the amount
of business subject to taxing jurisdictions with higher effective tax
rates, primarily the United States.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) The Company did not file any reports on Form 8-K during the
quarter for which this report is filed.
SIGNATURES
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.
OCEANEERING INTERNATIONAL, INC.
(Registrant)
Date: August 8, 1995 By: //s// JOHN R. HUFF
John R. Huff, President and
Chief Executive Officer
Date: August 8, 1995 By: //s// MARVIN J. MIGURA
Marvin J. Migura, Senior Vice President
and Chief Financial Officer
Date: August 8, 1995 By: //s// RICHARD V. CHIDLOW
Richard V. Chidlow, Controller
and Chief Accounting Officer