The following items were
the subject of a Form
12b-25 and are included
herein: Items 6, 7, 7A,
and 8
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, 1999
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 0-23383
OMNI ENERGY SERVICES CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-1395273
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4500 N.E. EVANGELINE THRUWAY
CARENCRO, LOUISIANA 70520
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (318) 896-6664
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
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. _________
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at March 28, 2000 was approximately $ 12,084,363.
The number of shares of the Registrant's common stock, $0.01 par value
per share, outstanding at March 28, 2000 was 15,979,505.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for its 2000 annual
meeting of shareholders have been incorporated by reference into Part III
of this Form 10-K.
OMNI ENERGY SERVICES CORP.
ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
PAGE
PART II 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 20
Item 8. Financial Statements and Supplementary Data 21
PART III 40
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 40
SIGNATURES S-1
EXHIBIT INDEX E-1
Item 6. Selected Financial Data
The selected financial data as of and for the years ended December 31,
1995 and as of and for the 201-day period ended July 19, 1996 are derived
from the audited financial statements of OGC. The selected financial data
as of December 31, 1996, 1997, 1998, 1999 and for the 165-day period ended
December 31, 1996 and the years ended December 31, 1997, 1998 and 1999 are
derived from the audited financial statements of the Company. The following
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
financial statements and notes thereto included elsewhere in this Annual
Report.
PREDECESSOR SUCCESSOR
------------------ -----------------------------------------------------------
201-day 165-day
period period
ended ended Year ended Year ended Year ended
July 19, December 31, December 31, December 31, December 31,
1995 1996 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
(In thousands, except share and per share data)
Income Statement Data:
Operating revenue $ 12,690 $ 10,017 $ 10,942 $ 45,098 $ 62,085 $ 24,137
Operating expense(1) 8,704 6,814 8,114 33,592 48,464 27,039
-------- --------- -------- -------- -------- --------
Gross profit 3,986 3,203 2,828 11,506 13,621 (2,902)
General and administrative expenses 1,791 789 1,050 4,469 11,459 10,790
Asset impairment and other charges --- --- --- --- 3,379 (336)
-------- --------- -------- -------- -------- --------
Operating income (loss) 2,195 2,414 1,778 7,037 (1,217) (13,356)
Interest expense(1) 148 151 437 1,866 1,683 2,989
Other expense (income), net 7 (6) (20) (37) (281) 150
-------- --------- -------- -------- -------- --------
Income (loss) before income taxes 2,040 2,269 1,361 5,208 (2,619) (16,495)
Income tax expense (benefit) --- --- --- 327 (826) (1,274)
-------- --------- -------- -------- -------- --------
Income (loss) before minority interest 2,040 2,269 1,361 4,881 (1,793) (15,221)
Loss of minority interest --- --- --- --- (18) (362)
-------- --------- -------- -------- -------- --------
Income (loss) from continuing operations 2,040 2,269 1,361 4,881 (1,775) (14,859)
Income (loss) from discontinued operations --- --- --- 1,054 (25) (1,067)
Loss from disposition of discontinued
operations --- --- --- --- --- (11,012)
-------- --------- -------- -------- -------- --------
Income (loss) before extraordinary item 2,040 2,269 1,361 5,935 (1,800) (26,938)
Extraordinary expense from early
extinguishment of debt, net of tax --- --- --- 84 --- ---
-------- --------- -------- -------- -------- --------
Net income (loss) $ 2,040 $ 2,269 $ 1,361 $ 5,851 $ (1,800) $(26,938)
-------- --------- -------- -------- -------- --------
Basic earnings (loss) per common share:
Continuing operations $ 1,020 $1,134.50 $ 0.13 $ 0.38 $ (0.11) $ (0.93)
Discontinued operations --- --- --- 0.09 0.00 (0.76)
Extraordinary item --- --- --- (0.01) --- ---
-------- --------- -------- -------- -------- --------
Net income (loss) $ 1,020 $1,134.50 $ 0.13 $ 0.47 $ (0.11) $ (1.69)
Diluted earnings (loss) per common share:
Continuing operations $ 1,020 $1,134.50 $ 0.13 $ 0.38 $ (0.11) $ (0.93)
Discontinued operations --- --- --- 0.09 0.00 (0.76)
-------- --------- -------- -------- -------- --------
Extraordinary item --- --- --- (0.01) --- ---
Net income (loss) $ 1,020 $1,134.50 $ 0.13 $ 0.46 $ (0.11) $ (1.69)
Unaudited Pro Forma Data:
Income before income taxes and
extraordinary item, reported above $ 2,040 $ 2,269 $ 1,361 $ 5,208
Pro forma interest expense(2) --- --- --- 345
Pro forma provision for income taxes(3) 816 908 475 1,945
-------- --------- -------- --------
Pro forma net income $ 1,224 $ 1,361 $ 886 $ 2,918
-------- --------- -------- --------
Pro forma net income per common share $ 0.25
========
Number of shares used in per share
calculation (5):
Basic 2 2 10,708 11,733 15,850 15,970
Diluted 2 2 10,708 11,810 15,850 15,970
AS OF DECEMBER 31,
1995 1996(4) 1997 1998 1999
-------- -------- -------- -------- --------
(In thousands)
Balance Sheet Data:
Total assets $ 5,429 $ 20,386 $ 73,579 $ 83,814 $ 48,114
Long-term debt, less current maturities 341 10,574 13,745 13,895 8,371
- ------------------------
(1) The step-up to fair value of the assets acquired in the OGC
Acquisition resulted in increased depreciation reported by the Company,
which is included in operating expenses. In order to finance the OGC
Acquisition, the Company incurred additional indebtedness, which
resulted in additional interest expense.
(2) Reflects an increase in interest expense as a result of the incurrence
of indebtedness to finance the repurchase of outstanding preferred
units of OMNI Geophysical and the distribution to the members of OMNI
Geophysical, as if such event had occurred on January 1, 1997.
(3) Each of OGC, OMNI Geophysical and American Aviation was an S
corporation or a limited liability company exempt from income tax at
the entity level, and thus the historical financial statements prior to
December 4, 1997 show no provision for income taxes. Effective
December 4, 1997, the Company became subject to income taxes at the
corporate level. This pro forma adjustment reflects a provision for
income taxes on the Company's net income at a combined federal and
state tax rate of 40%.
(4) Includes the stepped-up fair value of the assets and liabilities
purchased in the OGC Acquisition.
(5) The weighted average number of shares of common stock for the
Successor periods in the table above, excluding the years ended
December 31, 1998 and 1999, give effect to the Share Exchange
discussed in Item 1.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's Discussion and Analysis of Financial Condition and
Results of Operations contains certain "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933 (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"), which reflect management's best judgment based on factors currently
known. Actual results could differ materially from those anticipated in
these "forward looking statements" as a result of a number of factors,
including but not limited to those discussed under the heading "Cautionary
Statements." "Forward looking statements" provided by the Company pursuant
to the safe harbor established by the federal securities laws should be
evaluated in the context of these factors.
This discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and notes thereto.
GENERAL
DEMAND. The Company receives its revenues from customers in the
energy industry. Demand for the Company's services is principally impacted
by conditions affecting geophysical companies engaged in the acquisition of
3-D seismic data. The level of activity among geophysical companies is
primarily influenced by the level of capital expenditures by oil and gas
companies for seismic data acquisition activities. A number of factors
affect the decision of oil and gas companies to pursue the acquisition of
seismic data, including (i) prevailing and expected oil and gas demand and
prices; (ii) the cost of exploring for, producing and developing oil and
gas reserves; (iii) the discovery rate of new oil and gas reserves; (iv)
the availability and cost of permits and consents from landowners to
conduct seismic activity; (v) local and international political and
economic conditions; (vi) governmental regulations; and (vii) the
availability and cost of capital. The ability to finance the acquisition
of seismic data in the absence of oil and gas companies' interest in
obtaining the information is also a factor as some geophysical companies
will acquire seismic data on a speculative basis.
Within the last decade, improvements in drilling and production
techniques and the acceptance of 3-D imaging as an exploration tool
resulted in significantly increased seismic activity throughout the
Transition Zone. Due to this increased demand, the Company grew rapidly
during 1997 and in early 1998, completing six acquisitions in 1997 and
three acquisitions in 1998. In addition, the Company expanded its
facilities and equipment through early 1998 to meet current market demand.
Many of the acquisitions and new facilities and equipment acquired were
made through debt financing that had final maturities in 1999 and 2000.
Substantially all of the Company's assets have been pledged to secure
existing debt. The additional capacity and related increase in work force
led to significant increases in operating expenses and selling, general and
administrative expenses through the second quarter of 1998. Beginning in
mid-1998, seismic activity in the areas in which the Company operates
decreased substantially, resulting in corresponding reductions in demand
for the Company's services which adversely affected results of operations.
For the years ended December 31, 1998 and 1999, the Company's operating
revenues and loss from continuing operations were $62 million and $24
million, and $1.8 million and $14.9 million, respectively.
The Company curtailed its expansion strategy in the last half of 1998
in response to industry conditions and the short-term outlook. In
addition, in the third quarter of 1998, the Company's senior management and
Board of Directors approved a plan to reduce future operating costs and
improve operating efficiencies (see Note 8). During 1999, management
continued its efforts to adjust its operations to current market conditions
by downsizing its operations through closure of certain operating locations
and adopting a plan to discontinue its aviation division (see Note 2).
During 1999, the Company requested and received from its primary secured
creditors reductions in principal payments and extension of maturities,
initially until March 31, 2000 and subsequently until May 15, 2000. In
addition, as of December 31, 1999, the Company was not in compliance with
certain financial covenants of the Company's long-term debt agreements.
The Company obtained waivers as of December 31, 1999 and through May 15,
2000. Management is continuing to explore opportunities for restructuring
its indebtedness and alternative financing and capital opportunities. See
Liquidity and Capital Resources.
SEASONALITY AND WEATHER RISKS. The Company's operations are subject
to seasonal variations in weather conditions and daylight hours. Since the
Company's activities take place outdoors, on average, fewer hours are
worked per day and fewer holes are generally drilled or surveyed per day in
winter months than in summer months, due to an increase in rainy, foggy,
and cold conditions and a decrease in daylight hours.
DISCONTINUED OPERATIONS. The Company maintains a fleet of at least 20
aircraft, aviation and turbine engine inventories and miscellaneous flight
and other equipment used in providing aviation services to its customers.
During 1999, the Company adopted a plan to discontinue the aviation
division. Subsequent to December 31, 1999, the Company entered into a
letter of intent to sell the aviation division and utilized the proposed
purchase price to record the net assets of the aviation division at their
net realizable value. In addition, management accrued estimated operating
losses through the estimated disposal date, which is included in the loss
on disposition. The parties subsequently agreed to terminate the letter of
intent. The Company is actively pursuing the sale of the assets to other
interested companies. The Company does not expect that the ultimate gain
or loss on disposition will be materially different from the loss provided
for in 1999.
RESULTS OF OPERATIONS
The following discussion provides information related to the results
of operations of the Company.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1999
----------------- -----------------
Operating revenue $ 62,085 $ 24,137
Operating expense 48,464 27,039
-------- --------
Gross profit (loss) 13,621 (2,902)
General and administrative expenses 11,459 10,790
Asset impairment and other charges 3,379 (336)
-------- --------
Operating loss (1,217) (13,356)
Interest expense 1,683 2,989
Other income 281 (150)
-------- --------
Loss before income taxes (2,619) (16,495)
Income tax expense (benefit) (826) (1,274)
-------- --------
Loss before minority interest (1,793) (15,221)
Loss of minority interest (18) (362)
-------- --------
Loss from continuing operations (1,775) (14,859)
Income (loss) from discontinued operations (25) (1,067)
Loss on disposition of discontinued operations - (11,012)
-------- --------
Net Loss $ (1,800) $(26,938)
======== ========
Operating revenues decreased 61%, or $38.0 million, from $62.1 million
to $24.1 million for the years ended December 31, 1998 and 1999,
respectively. The decrease was due primarily to a depressed seismic market
throughout 1999. As a result of the decline in the seismic activity and
adverse pricing during the last year, drilling and survey revenues
decreased $29.2 million and $7.6 million, respectively, to $19.5 million
and $4.5 million, respectively for the year ended December 31, 1999. The
revenues of the Company's South American joint venture increased 92% from
$1.2 million for the year ended December 31, 1998 to $2.3 million for the
year ended December 31, 1999.
Operating expenses decreased 44%, or $21.5 million, from $48.5 million
in 1998 to $27.0 million in 1999. Declines in payroll costs and contract
services accounted for 53% of this decrease as operating payroll expense
decreased from $21.8 million to $14.3 million and contract services
decreased from $4.3 million to $0.5 million for the years ended December
31, 1998 and 1999, respectively. The significant decrease in seismic
activity has resulted in a corresponding decrease in the amount of
personnel employed by the Company, as the average number of field employees
has declined to 228 in 1999 compared to 388 in 1998. Also, as a result of
the lower activity levels in 1999 as compared to 1998, explosives and fuel,
repairs and maintenance and field supply expenses decreased $9.9 million
from $14.8 million for the year ended December 31, 1998 to $4.9 million for
the year ended December 31, 1999. Rental and lease expense decreased $0.6
million to $1.4 million for the year ended December 31, 1999 from $2.0
million for the year ended December 31, 1998 primarily due to decreases in
vehicle leases resulted from the decrease in activity.
Gross profit (loss) decreased $16.5 million, or 121%, from $13.6
million to $(2.9 million) for the years ended December 31, 1998 and 1999,
respectively. Gross profit (loss) margins fell from 22% to (12)% for the
years ended December 31, 1998 and 1999, respectively. The variance is
attributable to substantially lower domestic revenues from the Company's
Drilling and Survey segments, as well as a loss of $2.2 million from the
Company's South American operations.
General and administrative expenses were $11.5 million for 1998
compared to $10.8 million for 1999, a 6% decrease. Payroll, payroll taxes
and insurance expenses decreased $1.0 million from $5.7 million for the
year ended December 31, 1998 to $4.7 million for the year ended December
31, 1999. These decreases are due to the reduction in the workforce
implemented by the Company due to the declines in the market environment.
The Company experienced a 20% decrease in advertising, promotions,
professional services and travel and entertainment expenses due to
decreased activity levels from $1.5 million to $1.2 million in the years
ended December 31, 1998 and 1999, respectively. Supplies, utilities and
communications expense decreased $0.3 million from $1.0 million to $0.7
million for the years ended December 31, 1998 and 1999, respectively.
However, bad debt expense increased $1.4 million to $2.4 million in
December 31, 1999. Of this increase, $2.4 million is related to a customer
that is currently in bankruptcy proceedings. Due to additional cutbacks
implemented by the Company in December 1999 and during the first quarter of
2000, the Company estimates it will achieve an additional savings in
general and administrative expenses of approximately $2.5 million from 1999
levels before consideration of bad debt provisions.
During 1999, based on the sale of the steel marsh buggies held for
sale (see Note 6), the remaining buggies were revalued by $0.3 million.
The Company expects to dispose of the remaining buggies during 2000.
Interest expense increased $1.3 million from $1.7 million to $3.0
million for the years ended December 31, 1998 and 1999. The increase was
primarily due to higher average levels of debt outstanding during 1999.
Due to the losses in the years ended December 31, 1998 and 1999, the
Company recorded an income tax benefit of $0.8 million and $1.3 million,
respectively.
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
Operating revenue $ 45,098 $ 62,085
Operating expense 33,592 48,464
-------- --------
Gross profit 11,506 13,621
General and administrative expenses 4,469 11,459
Asset impairments and other charges --- 3,379
-------- --------
Operating income 7,037 (1,217)
Interest expense 1,866 1,683
Other income 37 281
-------- --------
Income (loss) before income taxes 5,208 (2,619)
Income tax expense (benefit) 327 (826)
-------- --------
Income (loss) before minority interest 4,881 (1,793)
Minority interest --- (18)
-------- --------
Income (loss) from continuing operations 4,881 (1,775)
Income (loss) from discontinued operations 1,054 (25)
-------- --------
Income (loss) before extraordinary item 5,935 (1,800)
Extraordinary expense from early extinguishment of
debt, net of tax 84 ---
-------- --------
Net income (loss) $ 5,851 $ (1,800)
======== ========
Operating revenues increased 38%, or $17.0 million, from $45.1 million
to $62.1 million for the years ended December 31, 1997 and 1998,
respectively. This increase was due primarily to increased activity during
the first six months of 1998. Operating revenues from the Company's
drilling and survey divisions increased by $10.1 million and $8.0 million,
respectively, as compared to the year ended December 31, 1997. Total
revenues for the year ended 1998 were $48.7 million and $12.1 million for
the drilling and survey divisions, respectively. The Company's South
American joint venture, completed effective July 1, 1998, produced revenues
of $1.2 million.
Operating expenses increased 44% to $48.5 million in 1998 from $33.6
million in 1997. Operating payroll increased 45%, or $6.8 million, to
$21.8 million for the year ended December 31, 1998, due to a 42% increase
in the average number of employees, from 410 in the year ended December 31,
1997 to 581 in the year ended December 31, 1998. Contract services
increased $3.0 million, from $1.3 million to $4.3 million for the years
ended December 31, 1997 and 1998, respectively, primarily due to increased
demand for surveyors beyond the survey division's staff capabilities.
Explosives expense increased $0.6 million to $4.3 million for the year
ended December 31, 1998 due to the increase in drilling jobs during the
year. Insurance expense was $1.3 million for the year ended December 31,
1998, compared to an expense of $0.2 million for the year ended December
31, 1997, due primarily to increases in the number of personnel and
vehicles. Repairs and maintenance expense increased 47% to $6.9 million
for the year ended December 31, 1998, and, depreciation expense increased
80% to $3.6 million for the year ended December 31, 1998. These increases
of $2.2 million and $1.6 million for repairs and maintenance and
depreciation, respectively, are a result of increases in the number and
utilization of drilling and support equipment. Rentals and lease expense
increased $0.8 million to $2.0 million for the year ended December 31, 1998
from $1.2 million for the year ended December 31, 1997 primarily due to
increases in vehicle leases resulting from increased activity.
Gross profit increased $2.1 million, or 18%, from $11.5 million to
$13.6 million for the years ended December 31, 1997 and 1998, respectively.
Gross margins fell from 25% in 1997 to 22% in 1998, as a result of the
rapid growth during the year related to increases in personnel and
equipment and the completion of nine acquisitions and a joint venture,
beginning in 1997.
General and administrative expenses increased $7.0 million from $4.5
million in the December 31, 1997 year to $11.5 million for the year ended
December 31, 1998. Increases in payroll, payroll taxes and insurance
expenses accounted for 46% of this growth as these expenses increased to
$5.7 million for the year ended December 31, 1998 from $2.5 million for the
year ended December 31, 1997. This increase is primarily due to increases
in executive management and other personnel to meet the demands imposed by
the rapid growth of the Company in recent periods. Also, as a result of
heightened activity levels and of being a new public company, the Company
recognized an increase of $0.9 million in advertising, promotions,
professional services and travel and entertainment expenses from $0.6
million in December 31, 1997 to $1.5 million in December 31, 1998.
Supplies, utilities and communications expenses increased $0.5 million from
$0.5 million to $1.0 million for the years ended December 31, 1997 and
1998, respectively, for the same reasons. Bad debt expense increased $0.8
million to $1.0 million in December 31, 1998. Of this increase, $0.6
million is related to the evaluation and subsequent recognition of bad debt
expense for certain accounts receivable in the third quarter of 1998. As a
result of the acquisitions completed during 1997 and 1998, amortization
expense increased $0.3 million, from $0.1 million to $0.4 million, for the
years ended December 31, 1997 and 1998, respectively. Taxes and license
expense was $0.2 million in 1998, due to franchise taxes. Because of the
status of OMNI Geophysical as an L.L.C., there was no related expense for
1997.
In response to recent market conditions and the resultant decline in
certain asset utilization of the Company's equipment, during 1998 the
Company evaluated certain of its assets for realizability. The asset
impairment and other charges relate to a $1.8 million provision for fixed
assets, primarily nine drilling units which became impaired due to reduced
demand and environmental factors which have restricted their future use; a
$1.3 million write-off of seismic data held for sale which became impaired
due to recent price declines; and a $0.6 million additional provision for
uncollectible accounts receivable. In addition, in response to anticipated
future market conditions, the Company's senior management and Board of
Directors approved a plan to reduce future operating costs and improve
operating efficiencies. The plan involved several factors including the
restructuring of senior management and the closing and relocation of
certain of its operational facilities. Accordingly, the Company recorded an
accrual of severance and lease exit costs of $0.3 million. Future related
severance costs were charged against this reserve as incurred. The $0.6
million provision for uncollectible accounts receivable is reported in
general and administrative expenses and the remaining charges are reported
as asset impairment and other charges in the accompanying Consolidated
Statements of Income.
Interest expense decreased 11%, or $0.2 million from $1.9 million for
the year ended December 31, 1997 to $1.7 million for the year ended
December 31, 1998. This decrease was due to lower average interest rates
on similar weighted average debt outstanding.
Income tax expense was $0.3 million in 1997, compared to an income tax
benefit of $0.8 million in 1998.
LIQUIDITY AND CAPITAL RESOURCES
During 1998 and continuing into 1999, world-wide oil and gas prices and
related activity have hit new lows, on an inflation adjusted basis, for the
past several decades, impacting the Company and its competitors. Despite
the recent resurgence of the oil and gas prices, the seismic market is
still in a depressed state due to the recent fluctuations in the prices of
oil and gas and the excess capacity of available seismic data in the
market. This volatile market has impacted the ability of the Company, its
customers, and others in the industry to change their forecasts and budgets
in response to the significant fluctuations and future uncertainties of
commodity pricing. These fluctuations can rapidly impact the Company's
cash flows as supply and demand factors impact the number and size of
seismic projects available.
In response, the Company has restructured its senior management
compensation plans, reduced its workforce, sold its operation located in
Thibodaux, Louisiana and adopted a plan to dispose of its aviation
division. The Company has also moved the equipment from its Canadian and
Victoria, Texas locations, as well as a portion of the equipment from its
South American operations, to its main facility in Carencro, Louisiana and
has reduced operating levels to a minimum in South America pending
improvements in market conditions.
Despite these changes, the Company has suffered recurring losses from
operations and has a net working capital deficiency, including significant
current debt maturities, that raises substantial doubt about its ability to
continue as a going concern. The terms of the Company's credit facilities
with Hibernia National Bank (the "Hibernian Facility") and the CIT Group
("CIT") contain, among other provisions, requirements for maintaining
defined levels of EBITDA, working capital and tangible net worth and cash
flow coverage. Each agreement, including the Company's subordinated notes,
contain cross-default provisions for these covenants. At December 31,
1999, the Company was in violation of certain of its covenants under these
agreements. The Company has received waivers from Hibernia and CIT via
amendments/waivers which waived financial covenant violations as of
December 31, 1999 and through May 2000 and extend maturities through May
2000. The Company does not have sufficient resources available to make the
required payments in May 2000 should the creditors require the Company to
repay the amounts due upon their maturity.
The Company is attempting to refinance its current creditor agreements
through a combination of new agreements with its current creditors or other
parties, which appropriately matches principal amortization with the cash
flow capabilities of the assets pledged. In addition to attempting to
refinance the outstanding amounts due, the Company is evaluating other
capital raising alternatives, including additional debt, the sale of
operating assets or divisions, and other alternatives. In this regard, on
April 7, 2000, the Company reached an agreement in principle on a term
sheet which outlines the following transaction. The Company would acquire
the common stock of another seismic related company in return for the
issuance of shares of common stock of the Company and the issuance of a
new junior convertible preferred stock. Contemporaneously therewith, the
Company would receive a substantial amount of cash from new investors
through the issuance of additional shares of its senior convertible
preferred stock. The Company's $7.5 million of outstanding subordinated
debt would be converted to shares of the newly issued junior convertible
preferred stock. The final terms, including the number of common and
preferred shares to be issued, the terms of the preferred stock including
conversion futures, and the amount of cash to be received, are subject
to the completion of negotiations between the parties to the term sheet
and the new investors. In addition, final completion of this transaction
will be subject to Board of Directors and shareholder approval. The
Company expects to restructure all or substantially all of its remaining
existing indebtedness in connection with this transaction. Management
believes the Company will be able to successfully complete these
negotiations or obtain appropriate financing for its operations. However,
there can be no assurances that the Company can complete their negotiations
or obtain appropriate financing for its operations.
At December 31, 1999, the Company had approximately $0.1 million in
cash compared to approximately $3.3 million at December 31, 1998. The
Company had working capital of approximately $(9.8) million at December 31,
1999, compared to approximately $22.2 million at December 31, 1998. The
decrease in working capital is due to lower cash levels and the
classification of a significant portion of the Company's long-term debt to
current debt due to maturity dates in May 2000 for certain agreements,
partially offset by decreases in accounts payable.
Cash provided by (used in) operating activities was $(8.2) million and
$6.1 million in the years ended December 31, 1999 and 1998, respectively.
The Company's net loss was the single largest contributing factor in 1999.
The Company's primary credit facility is with Hibernia. The Hibernia
Facility provides the Company with a $6.1 million term loan, a $6.0
million revolving line of credit to finance working capital requirements
and a $2.9 million note used to finance capital expenditures and
acquisitions. The loans under the Hibernia Facility bear interest at prime
plus 3% and have a final maturity of May 15, 2000. As of December 31,
1999, the Company had approximately $12.0 million outstanding under the
Hibernia Facility, including $1.9 million attributable to revolver
indebtedness which is classified with the net amounts of the discontinued
operations.
At December 31, 1999, the Company also has approximately $4.4 million
in other loans outstanding, including approximately $3.0 million in
outstanding debt pursuant to agreements with CIT,consisting of two asset-
based financing loans (the "CIT Loans"). Of the principal outstanding
under the CIT loans, approximately $2.4 million bears interest at LIBOR
plus 3.75% and matures in July 2001 with the remaining amount of $0.6
million that bears interest at LIBOR plus 3.0% and matures in September
2000. In accordance with amendments to these agreements signed in
September 1999 and April 2000, principal payments aggregating approximately
$0.8 due were either postponed and/or reduced until May 2000.
In the year ended December 31, 1999, the Company privately placed $7.5
million in subordinated debentures with an affiliate of the Company. The
proceeds were used for debt repayment and to fund operations. $5.0 million
of the notes had an interest rate of 12% and mature on March 1, 2004. The
additional $2.5 million of notes have an interest rate of 12.5% until
December 31, 1999, at which time the rate increased by 0.5% per month not
to exceed 20%. This portion of the notes matures on March 1, 2005, with
interest payable March 1 of each year. In connection with these
debentures, the Company issued warrants to purchase up to 1,937,500 shares
of the Company's common stock at an exercise price of $5.00, $3.00 and
$2.00 per share for 1,600,000 shares, 300,000 shares and 37,500 shares,
respectively. The warrants in relation to the 1,600,000 shares vest
equally over four years commencing in 1999 until 2002, unless the
debentures are paid in full, in which case, those warrants that have not
become exercisable will become void. All of the warrants that become
exercisable will expire on March 1, 2004. As for the warrants in relation
to the remaining 337,500 shares, these vest immediately and expire on March
1, 2005. The fair value of all warrants is included as paid-in-capital and
the effective interest rate over the term of the debt, including coupon
interest plus the amortized value of the warrants, is approximately 19%.
In December, 1999 and February 2000, the Company received from an
affiliate of the Company $1,000,000 and $500,000, respectively, related to
a preferred stock subscription agreement. The terms of the preferred stock
to be issued will contain an 8% cumulative dividend rate, be convertible
into common stock with an initial conversion rate of $2.50, be redeemable
at the option of the Company at par plus unpaid dividends, contain
liquidation preferences and contain voting rights only with respect to
matters that would reduce the ranking of the stock compared to other
classes of stock. The funds were used for debt service and to fund
operations.
Historically, the Company's capital requirements have primarily
related to the purchase or fabrication of new seismic drilling equipment
and related support equipment and business acquisitions. The Company made
capital expenditures of approximately $1.0 million to purchase or construct
new assets during the year ended December 31, 1999, including $0.5 million
for drilling and support equipment used in conjunction with the South
American project and $0.5 million for the Company's new information
systems.
YEAR 2000 UPDATE
By the end of 1999, the Company completed its remediation and testing
of critical information technology and non-information technology systems.
As a result of those efforts, the Company experienced no significant
disruptions in those systems and it is believed those systems successfully
responded to the year 2000 date change. The Company expended appropriately
in connection with remediating its systems. Management is not aware of any
material problems resulting from year 2000 issues, either with product or
service offerings, internal systems or the products and services of third
parties. The Company will continue to monitor its critical computer
applications and those of its suppliers and vendors throughout the year
2000 to ensure that any latent year 2000 matters that may arise are
addressed promptly.
CAUTIONARY STATEMENTS
This Annual Report contains "forward-looking statements." Such
statements include, without limitation, statements regarding the Company's
expectations regarding revenue levels, profitability and costs, the
expected results of the Company's business strategy, and other plans and
objectives of management of the Company for future operations and
activities.
Important factors that could cause actual results to differ materially
from the Company's expectations include, without limitation, the Company's
dependence on activity in the oil and gas industry, risks associated with
the Company's rapid growth, dependence on a relatively small number of
significant customers, seasonality and weather risks, the hazardous
conditions and difficult terrain in which the Company operates, risks
associated with the Company's international expansion, and risks arising
from year 2000 information technology issues. Many of these factors are
beyond the control of the Company.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards that every derivative instrument be
recorded in the balance sheet as either an asset or a liability measured at
its fair value. In June 1999, the FASB delayed SFAS 133's effective date
by one year to fiscal years beginning after June 15, 2000 with earlier
application permitted. The Company will adopt SFAS 133 effective January
1, 2001; however, adoption is not expected to have a material impact on its
financial position.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company is exposed to interest rate risk due to changes in
interest rates, primarily in the United States. The Company's policy is to
manage interest rates through the use of a combination of fixed and
floating rate debt. The Company currently does not use any derivative
financial instruments to manage its exposure to interest rate risk. The
table below provides information, without regard to certain instruments
being in default (see Note 5, 6 and 7), about the Company's future
maturities of principal for outstanding debt instruments and fair value at
December 31, 1999. All instruments described are non-traded instruments.
Dollars in thousands 2000 2001 2002 2003 2004
-------- -------- -------- -------- --------
Long-term debt
Fixed Rate 236 44 --- --- ---
Average interest rate 7.5% 7.5%
Variable Rate 10,418 992 150 --- ---
Average interest rate 10.8% 10.8% 9.5%
Short-term debt
Fixed Rate 1,104 --- --- --- ---
Average interest rate 7.4% --- --- --- ---
Variable Rate --- --- --- --- ---
Average interest rate --- --- --- --- ---
FOREIGN CURRENCY RISKS
The Company's transactions are in U.S. dollars. Previously, the
Company did have one subsidiary which conducted its operations in Canadian
dollars. However, its operations were closed in July 1999. Currently, the
South American joint venture transacts all of its activity in U.S. dollars.
However, operations in South America have been curtailed pending future
developments in that market.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements PAGE
Report of Independent Public Accountants................................21
Consolidated Balance Sheets as of December 31, 1998 and 1999............22
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1998 and 1999...................................24
Consolidated Statements of Changes in Equity for the
Years Ended December 31, 1997, 1998 and 1999.......................25
Consolidated Statements of Cash Flow for the
Years Ended December 31, 1997, 1998 and 1999.......................26
Notes to Financial Statements...........................................27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of OMNI Energy Services Corp.:
We have audited the accompanying consolidated balance sheets of OMNI Energy
Services Corp. and subsidiaries (a Louisiana corporation, the "Company") as
of December 31, 1998 and 1999, and the related consolidated statements of
income, cash flows and changes in equity for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of OMNI Energy Services
Corp. and subsidiaries as of December 31, 1998 and 1999 and the results of
its operations and cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations and has a net working capital deficiency, including significant
current debt maturities, that raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might
result should the Company be unable to continue as a going concern.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
April 7, 2000
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
ASSETS
1998 1999
---------- ----------
(Thousands of Dollars)
CURRENT ASSETS:
Cash and cash equivalents $ 3,333 $ 104
Accounts receivable, net 7,406 3,011
Deferred tax asset 851 ---
Parts and supplies inventory 4,400 2,438
Prepaid expenses and other 3,067 2,601
Net assets of discontinued operations 19,625 1,160
---------- ----------
Total current assets 38,682 9,314
---------- ----------
PROPERTY AND EQUIPMENT:
Land 1,209 1,209
Building and improvements 5,326 5,047
Drilling, field and support equipment 28,110 27,776
Shop equipment 1,140 698
Office equipment 1,404 1,748
Vehicles 3,605 2,404
Construction in progress 444 ---
---------- ----------
41,238 38,882
Less: accumulated depreciation 5,630 8,277
---------- ----------
Total property and equipment, net 35,608 30,605
OTHER ASSETS:
Goodwill, net 8,810 7,853
Other 714 342
---------- ----------
Total other assets 9,524 8,195
---------- ----------
Total assets $ 83,814 $ 48,114
---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
LIABILITIES AND EQUITY
1998 1999
---------- ----------
(Thousands of Dollars)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 9,752 $ 11,758
Accounts payable 5,656 3,326
Accrued expenses 933 2,076
Due to affiliates and shareholders 100 ---
Line of credit --- 1,949
---------- ----------
Total current liabilities 16,441 19,109
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 13,895 1,186
Line of credit 4,315 ---
Subordinated debt --- 7,185
Due to affiliate and shareholders 900 ---
Deferred taxes 2,092 ---
---------- ----------
Total long-term liabilities 21,202 8,371
---------- ----------
TOTAL LIABILITIES 37,643 27,480
MINORITY INTEREST 600 238
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common Stock, $.01 par value, 45,000,000 shares
authorized; 15,958,627 and 15,979,505 issued and
outstanding at December 31, 1998 and 1999,
respectively 160 160
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; none issued and outstanding --- ---
Preferred Stock Subscribed --- 1,000
Additional paid-in capital 46,885 47,597
Accumulated other comprehensive income (64) (13)
Accumulated deficit (1,410) (28,348)
---------- ----------
Total equity 45,571 20,396
---------- ----------
Total liabilities and equity $ 83,814 $ 48,114
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
1997 1998 1999
------------ ------------ -----------
(Dollars in thousands, except per share data)
Operating revenue $ 45,098 $ 62,085 $ 24,137
Operating expense 33,592 48,464 27,039
------------ ------------ -----------
Gross profit 11,506 13,621 (2,902)
General and administrative expense 4,469 11,459 10,790
Asset impairment and other charges --- 3,379 (336)
------------ ------------ -----------
Operating income (loss) 7,037 (1,217) (13,356)
Interest expense 1,866 1,683 2,989
Other income (expense) 37 281 (150)
------------ ------------ -----------
(1,829) (1,402) (3,139)
------------ ------------ -----------
Income (loss) before taxes 5,208 (2,619) (16,495)
Income tax expense (benefit) 327 (826) (1,274)
------------ ------------ -----------
Income (loss) before minority interest 4,881 (1,793) (15,221)
Loss of minority interest --- (18) (362)
------------ ------------ -----------
Income (loss) from continuing operations 4,881 (1,775) (14,859)
Income (loss) from discontinued operations 1,054 (25) (1,067)
Loss on disposition of discontinued operations --- --- (11,012)
------------ ------------ -----------
Income (loss) before extraordinary item 5,935 (1,800) (26,938)
Extraordinary expense from early
extinguishment of debt, net of tax 84 --- ---
------------ ------------ -----------
Net income (loss) $ 5,851 $ (1,800) $ (26,938)
============ ============ ===========
Preferred dividend requirements $ (391) $ --- $ ---
------------ ------------ -----------
Income (loss) applicable to common shares $ 5,460 $ (1,800) $ (26,938)
============ ============ ===========
Basic earnings (loss) per common share:
Continuing operations 0.38 $ (0.11) $ (0.93)
Discontinued operations 0.09 0.00 (0.76)
Extraordinary item (0.01) --- ---
------------ ----------- -----------
Net income (loss) $ 0.47 $ (0.11) $ (1.69)
============ =========== -----------
Diluted earnings (loss) per common share:
Continuing operations 0.38 (0.11) (0.93)
Discontinued operations 0.09 0.00 (0.76)
Extraordinary item (0.01) --- ---
------------ ----------- -----------
Net income (loss) $ 0.46 $ (0.11) $ (1.69)
============ =========== ===========
UNAUDITED PRO FORMA DATA:
Income before taxes reported above $ 5,208
Pro forma interest expense (345)
-----------
Pro forma provision for income taxes related to
operations as a non-taxable corporate entity (2,400)
-----------
Pro forma income from continuing operations $ 2,463
`
Pro forma income from continuing operations per $ .21
common share ===========
Pro forma weighted average common shares 11,810,016
-----------
The accompanying notes are an integral part of these consolidated financial
statements.
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
(DOLLARS IN THOUSANDS)
Preferred Stock Accumulated
Subscribed Common Stock Preferred Units Common Units Additional Other
--------------- ------------ --------------- ------------ Paid-In Comprehensive Retained
Amount Shares Amount Units Amount Units Amount Capital Income Earnings Total
------ ------ ------ ----- ------ ----- ------ ------- ------------- ---------- -----
BALANCE, December
31, 1996 $--- $--- $--- $4,000 $4,000 $101,263 $1 $--- $--- $1,342 $5,343
Add-sale of common
units --- --- --- --- --- 2,000 --- 78 --- --- 78
-sale of preferred
units --- --- --- 1,000 1,000 --- --- --- --- --- 1,000
-issuance of common
units --- --- --- --- --- 10,213 --- 6,415 --- --- 6,415
Deduct-contributions
of undistributed
retained earnings
from OMNI due to
change in tax
status --- --- --- --- --- --- --- 302 --- (302) ---
-distributions to
common unit holders --- --- --- --- --- --- --- --- --- (5,930) (5,930)
-payment of preferred
dividends --- --- --- --- --- --- --- --- --- ( 571) (571)
-retirement of preferred
units --- --- --- (5,000) (5,000) --- --- --- --- --- (5,000)
Share exchange --- 12,000,000 120 --- --- (113,476) (1) (119) --- --- ---
Add-public offering of
Shares --- 3,450,000 34 --- --- --- --- 34,241 --- --- 34,275
-issuance of common
shares for
acquisitions --- 276,282 3 --- --- --- --- 3,037 --- --- 3,040
-deferred compensation
expense --- --- --- --- --- --- --- 84 --- --- 84
-net income --- --- --- --- --- --- --- --- --- 5,851 5,851
----- ----- ---- ----- ----- ------ ---- ------ ------ ------- -------
BALANCE, December
31, 1997 --- 15,726,282 157 --- --- --- --- 44,038 --- 390 44,585
Add-issuance of
common shares for
acquisitions and
joint venture --- 213,532 3 --- --- --- --- 2,672 --- --- 2,675
deferred compensation
expense --- --- --- --- --- --- --- 144 --- --- 144
-stock options
exercised --- 18,813 --- --- --- --- --- 42 --- --- 42
Deduct-initial public
offering costs --- --- --- --- --- --- --- (11) --- --- (11)
Comprehensive income:
-net loss --- --- --- --- --- --- --- --- --- (1,800) (1,800)
-foreign currency
translation
adjustments --- --- --- --- --- --- --- (64) --- (64)
----- - --- ----- ------ ------ ---- - -- ------ -----
Total comprehensive
income --- - --- --- --- --- --- - --- --- (1,864)
----- - --- ----- ------ ------ ---- - ------- ------ ------
BALANCE, December
31, 1998 --- 15,958,627 160 --- --- --- --- 46,885 64 (1,410) 45,571
Add-deferred
Compensation
expense --- --- --- --- --- --- --- 92 --- --- 92
-stock option
exercise --- 21 --- --- --- --- --- 47 --- --- 47
-detachable
warrants --- --- --- --- --- --- --- 573 --- --- 573
-preferred stock 1,000 --- --- --- --- --- --- --- --- --- 1,000
Comprehensive income:
- net loss --- --- --- --- --- --- --- --- --- (26,938) (26,938)
- foreign currency
translation
adjustments --- --- --- --- --- --- --- --- 51 --- 51
----- ---------- ---- ----- ------ ------- ---- -------- ------ -------- ------
Total comprehensive
income --- --- --- --- --- --- --- --- -- (26,938) (26,887)
BALANCE, December
31, 1999 $1,000 15,958,648 $160 --- --- --- --- $47,597 $ (13) $(28,348) $20,396
====== ========== ==== ==== ====== ======= ==== ======== ====== ======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
1997 1998 1999
---------- --------- -----------
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,851 $(1,800) $(26,938)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities-
Loss on disposal of discontinued operations --- --- 11,012
Depreciation 2,259 4,472 4,265
Amortization 252 739 892
Loss on fixed asset dispositions 39 105 278
Deferred compensation 84 144 92
Provision for bad debts 151 995 2,338
Minority interest --- (18) (362)
Interest expense on detachable warrants --- --- 258
Property, plant and equipment impairment charges --- 1,473 ---
Deferred taxes 179 (833) (6,343)
Changes in operating assets and liabilities-
Decrease (increase) in assets-
Receivables - Trade (4,340) 4,475 656
Receivables - Other (622) 734 1,683
Inventory (1,710) (2,060) 193
Prepaid expenses (849) 1,195 1,179
Other (661) (532) 2,874
Increase (decrease) in liabilities-
Accounts payable and accrued expenses 4,341 (2,471) (171)
Unearned revenue --- (638) ---
Due to affiliates and stockholders/members (29) 100 (100)
---------- --------- -----------
Net cash provided by (used in) operating
activities 4,945 6,080 (8,194)
---------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash received (3,193) (4,996) ---
Proceeds from disposal of fixed assets 579 3,933 9,333
Purchase of fixed assets (16,398) (15,644) (651)
---------- --------- -----------
Net cash provided by (used in) investing
activities (19,012) (16,707) 8,682
---------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 27,283 10,577 1,424
Principal payments on long-term debt (26,268) (9,643) (12,768)
Net borrowings/(payments) on line of credit (2,116) 4,314 (880)
Subordinated debt --- --- 7,500
Proceeds from preferred stock subscription --- --- 1,000
Capital contributions 1,078 --- ---
Distributions to stockholders/members (6,501) --- ---
Retirement of preferred units (5,000) --- ---
Net proceeds from public offering
34,275 --- ---
---------- --------- -----------
Net cash provided by (used in) financing
activities 22,751 5,248 (3,724)
---------- --------- -----------
Effect of exchange rate changes in cash --- (11) 7
NET INCREASE (DECREASE) IN CASH FROM OPERATIONS 8,684 (5,390) (3,229)
CASH, at beginning of period 39 8,723 3,333
---------- --------- -----------
CASH, at end of period $ 8,723 $ 3,333 $ 104
========== ========= ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
CASH PAID FOR INTEREST $ 1,771 $ 1,681 $ 2,989
========== ========= ===========
CASH PAID FOR TAXES $ $ 2,395 $ --
========== ========= ===========
The accompanying notes are an integral part of these consolidated
financial statements.
OMNI ENERGY SERVICES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND PRINCIPLES OF CONSOLIDATION
OMNI Energy Services Corp., a Louisiana corporation, (the "Company"), was
formed on September 11, 1997. On December 4, 1997 the Company issued
12,000,000 shares of its common stock in exchange for all of the
outstanding common units of OMNI Geophysical, L.L.C. ("OMNI"), and options
to purchase 118,018 shares of the Company's common stock were issued in
exchange for options to acquire common units of OMNI (the "Share
Exchange"). In December 1997, after completion of the Share Exchange, the
Company publicly offered for sale 3,450,000 shares of common stock.
OMNI was formed in 1996 as a Louisiana limited liability company. OMNI
acquired substantially all of the assets and liabilities of OMNI
Geophysical Corporation ("Predecessor") on July 19, 1996. The acquisition
was accounted for as a purchase with the assets acquired and liabilities
assumed recorded at their estimated fair values. The purchase price of
approximately $13,300,000 was financed through the sale of preferred units
for $4,000,000, the proceeds from a $7,000,000 asset-based loan and a
$2,300,000 subordinated note issued to Predecessor. The allocation of the
purchase price to the estimated fair values of assets acquired and
liabilities assumed resulted in goodwill of approximately $219,000 which is
being amortized over a 25-year period on a straight-line basis.
In connection with OMNI's acquisition, OMNI issued 4,000 10%, cumulative
participating preferred units and 1,000 15%, cumulative participating
preferred units. OMNI paid dividends of approximately $180,000 on its 10%
cumulative participating preferred units in early 1997. On September 30,
1997, OMNI redeemed the outstanding preferred units at a redemption price
of $1,000 per unit and paid the holders of the preferred units cumulative
unpaid dividends totaling approximately $391,000.
All material intercompany accounts and transactions have been eliminated in
these financial statements. Certain prior year amounts have been
reclassified to conform with current year financial statement presentation.
NATURE OF BUSINESS AND CURRENT OPERATING ENVIRONMENT
The Company is an oilfield service company specializing in providing an
integrated range of on-shore seismic drilling and survey services to
geophysical companies operating in logistically difficult and
environmentally sensitive terrain in the continental United States. The
Company's primary market is the marsh, swamp, shallow water and contiguous
dry land areas along the U.S. Gulf Coast (the "Transition Zone"), primarily
Louisiana and Texas, where the Company is the leading provider of seismic
drilling services.
The Company receives its revenues from customers in the energy industry.
During 1998 and continuing into 1999, world-wide oil and gas prices and
related activity have hit new lows, on an inflation adjusted basis, for the
past several decades, impacting the Company and its competitors. Despite
the recent resurgence of the oil and gas prices, the seismic market is
still in a depressed state due to the recent fluctuations in the prices of
oil and gas and the excess capacity of available seismic data in the
market. This volatile market has impacted the ability of the Company, its
customers and others in the industry to change their forecasts and budgets
in response to the significant fluctuation, and future uncertainty of
commodity pricing. These fluctuations can rapidly impact the Company's
cash flows as supply and demand factors impact the number and size of
seismic projects available.
The Company grew rapidly during 1997 and in early 1998, completing six
acquisitions in 1997 and three acquisitions in 1998. In addition, the
Company expanded its facilities and equipment to meet current market demand
through early 1998. Many of the acquisitions and new facilities and
equipment acquired were made through debt financing that had final
maturities in 1999 and 2000. Substantially all of the Company's assets
have been pledged to secure existing debt. The Company curtailed its
expansion strategy in the last half of 1998 in response to the industry
conditions and short-term outlook.
In addition, in the third quarter of 1998, the Company's senior management
and Board of Directors approved a plan to reduce future operating costs and
improve operating efficiencies (see Note 8). During 1999, management
continued its efforts to adjust its operations to current market conditions
by downsizing its operations through closure of certain operating locations
and adopting a plan to dispose of its aviation division (see Note 2).
Despite these changes, the Company has suffered recurring losses from
operations and has a net working capital deficiency, including significant
current debt maturities, that raises substantial doubt about its ability to
continue as a going concern. The terms of the Company's primary secured
credit (see Note 5) agreements contain, among other provisions,
requirements for maintaining defined levels of EBITDA, working capital
and tangible net worth and cash flow coverage. Each agreement, including
the Company's subordinated notes see Note 7), contains cross-default
provisions for these covenants. At December 31, 1999, the Company was in
violation of certain of its covenants under these agreements. The Company
has received waivers from the creditors via amendments/waivers which waived
financial covenant violations as of December 31, 1999 and through May 2000.
Due to current and anticipated market conditions in the near term, the
Company believes it will be in violation of these covenants after May 2000.
In addition, approximately $13 million will be due in May 2000. The
Company does not have sufficient resources available to make the required
payments in May 2000 should the creditors require the Company to repay the
amounts due.
The Company is attempting to refinance its current creditor agreements
through a combination of new agreements with its current creditors or other
parties, which appropriately matches principal amortization with the cash
flow capabilities of the assets pledged. In addition to attempting to
refinance the outstanding amounts due, the Company is evaluating other
capital raising alternatives, including additional debt, the sale of
operating assets or divisions, and other alternatives. In this regard, on
April 7, 2000, the Company signed a term sheet which outlines the following
transaction. The Company would acquire the common stock of another seismic
related company in return for the issuance of shares of common stock of the
Company and the issuance of a new junior convertible preferred stock.
Contemporaneously therewith, the Company would receive a substantial amount
of cash from new investors through the issuance of additional shares of its
senior convertible preferred stock. The Company's $7.5 million of
outstanding subordinated debt would be converted to shares of the newly
issued junior convertible preferred stock. The final terms, including the
number of common and preferred shares to be issued, the terms of the
preferred stock including conversion futures, and the amount of cash to be
received, are subject to the completion of negotiations between the parties
to the term sheet and the new investors. In addition, final completion of
this transaction will be subject to Board of Directors and shareholder
approval. The Company expects to restructure all or substantially all of
its remaining existing indebtedness in connection with this transaction.
Management believes the Company will be able to successfully complete these
negotiations or obtain appropriate financing for its operations. However,
there can be no assurances that the Company can complete their negotiations
or obtain appropriate financing for its operations.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities
that might result should the Company be unable to continue as a going
concern.
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
the disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. The more significant estimates include asset
impairment reserves, useful lives for depreciation and amortization,
receivables reserve requirements, loss on disposal of discontinued
operations and the realizability of deferred tax assets. Actual results
could differ from those estimates.
RECENT PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards that every derivative instrument be
recorded in the balance sheet as either an asset or a liability measured at
its fair value. In June 1999, the FASB delayed SFAS 133's effective date
by one year to fiscal years beginning after June 15, 2000 with earlier
application permitted. The Company will adopt SFAS 133 effective January
1, 2001; however, adoption is not expected to have a material impact on its
financial position.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates its long-lived assets for financial impairment when
events or changes in circumstances indicate that the carrying amount of
such assets may not be fully recoverable. The Company evaluates the
recoverability of long-lived assets not held for sale by measuring the
carrying amount of the assets against the estimated undiscounted future
cash flows associated with them. At the time such evaluations indicate
that the future undiscounted cash flows of certain long-lived assets are
not sufficient to cover the carrying value of such assets, the assets are
adjusted to their estimated fair values.
REVENUE RECOGNITION
The Company recognizes revenues as services are rendered. Revenue from the
Company's drilling operations is recognized on a per hole basis. Once the
Company has drilled and loaded a source point, revenue from the drilling of
such source point is recognized. Similarly, revenue is recognized from the
Company's seismic survey operations either on a day rate or per mile basis.
Under the per mile basis, revenue is recognized when the source or
receiving point is marked by one of the Company's survey crews. Generally,
the Company invoices its customers twice a month.
CASH AND CASH EQUIVALENTS
The Company considers investments with an original maturity of 90 days or
less to be cash equivalents. Due to its short-term nature the fair value
of cash and cash equivalents approximates its book value.
ACCOUNTS RECEIVABLE
Trade and other receivables are stated at net realizable value. The Company
grants short-term credit to its customers, primarily geophysical companies.
INVENTORIES
Inventories consist of parts and supplies used for drilling. All
inventories are valued at lower of average cost or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
The Company provides for depreciation by charges to operations in amounts
estimated to allocate the cost of the assets over their estimated useful
lives and salvage values as follows:
ASSET CLASSIFICATION USEFUL LIFE SALVAGE VALUE
-------------------- ----------- -------------
Buildings and improvements 25 years ---
Drilling, field and support
equipment 5-10 years 10%
Shop equipment 10 years ---
Office equipment 5 years ---
Vehicles 4-5 years ---
Additions to property and equipment and major replacements are capitalized.
Gains and losses on dispositions, maintenance, repairs and minor
replacements are reflected in current operations. Drilling equipment which
is fabricated is comprised of direct and indirect costs incurred during
fabrication. Costs include materials and labor consumed during
fabrication. Interest is also capitalized during the fabrication period.
At December 31, 1999 and 1998, the Company had $610,221 and $274,500 in
assets held for sale, primarily steel marsh buggies that were revalued in
connection with the asset impairment charge recorded in the third quarter
of 1998 (See Note 8). One of the steel marsh buggies was sold during 1999
at a value higher than what was previously recorded and therefore, the
remaining eight steel marsh buggies were revalued by $335,721 to the
balance at December 31, 1999. The Company expects to dispose of the
remaining assets held for sale during 2000.
On March 31, 1998, the Company sold the assets of its fixed wing division
for approximately $2.9 million. This transaction had no significant impact
on the Company's operating results.
GOODWILL
Goodwill represents the excess of the purchase price of acquisitions over
the fair value of the net assets acquired. Such excess costs are being
amortized on a straight-line basis over a twenty-five year period. As of
December 31, 1998 and 1999, accumulated goodwill amortization totaled
approximately $587,470 and $1,193,759 respectively. The Company
periodically assesses the recoverability of the unamortized balance based
on expected future profitability and undiscounted future cash flows of the
acquisitions and their contribution to the overall operation of the
Company.
INCOME TAXES
Prior to December 4, 1997, OMNI was treated as a partnership for income tax
purposes and income taxes were the responsibility of the individual
members. Accordingly, no provision for income taxes had been made in the
accompanying financial statements.
As previously discussed, on December 4, 1997 the members of OMNI exchanged
all of their common units in OMNI for 12,000,000 shares of common stock of
the Company. The Share Exchange was accounted for as a reorganization
whereby the assets and liabilities transferred were accounted for at their
historical cost in a manner similar to that in a pooling-of-interest. As a
result, the Company provided for income taxes in the fourth quarter of 1997
and in the years ended December 31, 1998 and 1999.
FOREIGN CURRENCY TRANSLATION
The Company's Canadian subsidiary maintained its accounting records in its
local currency (Canadian Dollar) before its operations were closed in July
1999. The currency was converted to United States Dollars with the effect
of the foreign currency translation reflected as a component of
shareholders' equity in accordance with SFAS No. 52, "Foreign Currency
Translation." Currently, all other international activity is transacted in
United States Dollars. Foreign currency transaction gains or losses are
credited or charged to income, and such amounts are insignificant for the
periods presented.
UNAUDITED PRO FORMA DATA
Additional interest expense is recorded as a pro forma adjustment to
reflect the incurrence of indebtedness to finance the repurchase of
outstanding preferred units and the distribution of undistributed earnings
of OMNI as if such events had occurred on January 1, 1997.
The pro forma provision for income taxes for OMNI is the result of the
application of a combined federal and state income tax rate (40%) to income
before income taxes and extraordinary item.
2. DISCONTINUED OPERATIONS
In November 1999, the Company adopted a plan to dispose of its aviation
division. The Company maintains a fleet of at least 20 aircraft, aviation
and turbine engine inventories and miscellaneous flight and other equipment
used in providing aviation services to its customers. As a result of the
Company's adoption of the plan, the consolidated financial statements of
the Company and the related Notes to Consolidated Financial Statements have
been adjusted and restated to reflect the results of operations and net
assets of the aviation division as a discontinued operation in accordance
with generally accepted accounting principles. Assets and liabilities of
the aviation division at December 31, 1999 primarily consist of trade
accounts receivable, inventory, accounts payable, accruals, debt and
deferred taxes. Revenues of the aviation division totaled $8.5 million,
$12.2 million and $4.5 million for the years ended December 31, 1999, 1998
and 1997, respectively. The loss on disposition of discontinued operations
includes the write-down of the net assets, including $6.8 million related
to goodwill, to estimated net realizable value and the estimated operating
losses through the expected disposal date.
3. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
The allowance for uncollectible accounts consists of the following:
Balance at Additions Write-off of
Beginning of Charged to Uncollectible Balance at End
DESCRIPTION Period Expense Amounts of Period
----------- ------------ ------------- -------------- ----------------
December 31, 1999
Allowance for uncollectible accounts $ 751,849 $ 2,407,422 $ (11,611) $ 3,147,660
December 31, 1998
Allowance for uncollectible accounts $ 295,000 $ 767,676 (310,827) 751,849
December 31, 1997
Allowance for uncollectible accounts $ 125,000 $ 170,000 --- 295,000
4. EARNINGS PER SHARE
Basic EPS excludes dilution and is determined by dividing income available
to common stockholders by the weighted average number of shares of common
stock outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if options and other contracts to issue shares of
common stock were exercised or converted into common stock. The Company
had 1,467,184 and 1,415,061 options outstanding in the years ended December
31, 1998 and 1999, respectively, that were excluded from the calculation of
diluted EPS as antidilutive considering the net loss. There were no
options outstanding in the year ended December 31, 1997 excluded from the
calculation of diluted EPS as antidilutive. In addition, warrants to
purchase up to 1,937,500 shares of common stock were also excluded for the
year ended December 31, 1999. Dilutive common equivalent shares for the
year ended December 31, 1997 were all attributable to stock options. There
were no options outstanding in the year ended December 31, 1997 excluded
from the calculation of diluted EPS as antidilutive.
Pro forma basic earnings per common share was computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. The following table sets forth the computation of basic
and diluted weighted average shares for the years ended December 31, 1997,
1998 and 1999.
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1998 1999
------------ ------------ ------------
Shares:
Weighted average number of common shares
outstanding 11,733 15,850 15,970
Options 77 -- --
------------ ------------ ------------
Weighted average number of common shares
outstanding, plus assumed conversion 11,810 15,850 15,970
------------ ------------ ------------
5. LONG-TERM DEBT
Long-term debt consists of the following (dollars in thousands) December 31,
----------------------
1998 1999
Notes payable to a finance company, variable interest -------- --------
rate with $2,393 at LIBOR plus 3.75%. Remaining portion
at LIBOR plus 3.0%; interest rates ranging from 9.48% to
10.01% at December 31, 1999 with maturity dates ranging
from July 2001 to September 2002, secured by various
property and equipment $ 4,333 $ 2,993
Note payable to a bank with interest payable at prime
plus 3.0% (11.5% at December 31, 1999) maturing May 2000 6,682 5,765
Acquisition loan to a bank with interest payable at
prime plus 3.0% (11.5% at December 31, 1999) maturing May
2000 7,938 2,801
Note payable to a bank with interest payable quarterly at
LIBOR plus 2.0% with maturity at April 28, 1999 2,639 ---
Note payable to an insurance company; monthly payments of
$85 through September 2000 867 768
Notes payable, interest rates ranging from 6.7% to 7.5%,
with maturity dates ranging from January 2000 to March
2001 828 532
Various notes payable 360 85
---------- ----------
Total 23,647 12,944
Less: Current maturities 9,752 11,758
---------- ----------
Long-term debt less current maturities $ 13,895 $ 1,186
========== ==========
Annual maturities of long-term debt during each of the following years
ended December 31, are as follows (in thousands):
2000 $ 11,758
2001 1,036
2002 150
------------
$ 12,944
============
The estimated fair value of long-term debt, based on borrowing rates
currently available to the Company for notes with similar terms and average
maturities, approximated the carrying value as of December 31, 1998 and
1999.
For the years ended December 31, 1998 and 1999, interest in the amount of
approximately $173,000 and $13,000, respectively, was capitalized to
property, plant and equipment.
In connection with the Company's initial public offering, during 1997
approximately $23.8 million in debt was retired, resulting in an
extraordinary loss of $84,000, net of tax effects of approximately $42,000.
In January 1998, the Company restructured its credit arrangements with its
primary bank lender. Under the restructured facility (the "Credit
Facility"), the Company refinanced an $11.0 million loan, obtained a $10.0
million revolving line of credit to finance working capital requirements,
and obtained a $9.0 million line of credit to finance capital expenditures
and acquisitions. During 1999, the fifth and sixth amendments to the
Credit Facility were adopted altering the credit agreement with the primary
bank lender. The Credit Facility currently provides the Company with a
$6.1 million term loan, a $6.0 million revolving line of credit to finance
working capital requirements (discussed in Note 6 below) and a $2.9 million
note used to finance capital expenditures and acquisitions.
The terms of the bank and finance company agreements contain, among other
provisions, requirements for maintaining defined levels of working capital,
tangible net worth, debt service coverage and funded debt to EBITDA. As of
December 31, 1999, the Company was in violation of certain of its covenants
under these agreements. Each agreement, including the Company's
subordinated notes (see Note 7), contains cross-default provisions for
these covenants. At December 31, 1999, the Company was in violation of
certain of its covenants under these agreements. The Company has received
waivers from the creditors via amendments/waivers which waived financial
covenant violations as of December 31, 1999 and through May 2000. Due to
current and anticipated market conditions in the near term, the Company
believes it will be in violation of these covenants after May 2000. In
addition, approximately $13.0 milion will be due in May 2000. The Company
does not have sufficient resources available to make the required payments
in May 2000 should the creditors require the Company to repay the amounts
due. Management is continuing to pursue restructuring the Company's
indebtedness and alternative financing and capital alternatives (see Note
1).
6. LINE OF CREDIT
The Company has outstanding a revolving line of credit agreement with a
bank. Availability under the agreement is the lower of: (i) $6.0 million
or, (ii) the sum of 80% of eligible accounts receivable, 50% of eligible
inventory and advances to finance the purchase of certain parts and
supplies. The line bears interest at prime plus 3% (11.5% at December 31,
1999), and matures on March 31, 2000. The weighted-average interest rate
on the line was 7.1% and 9.5% for the years ended December 31, 1998 and
1999, respectively. The line was collateralized by accounts receivable and
certain equipment of the Company. As of December 31, 1999 the Company had
$3.4 million outstanding under the line. Approximately $1.5 million of
this amount will be repaid with proceeds from the sale of the aviation
division (see Note 2) and accordingly has been included with the net assets
of discontinued operations. This line of credit matures in May 2000.
7. SUBORDINATED DEBT
In the year ended December 31, 1999, the Company privately placed $7.5
million in subordinated debentures with an affiliate of the Company. The
proceeds were used for cash reserves and general corporate purposes. Notes
with a principal of $5.0 million bear interest at 12% per annum and mature
on March 1, 2004. An additional $2.5 million of notes bear interest at
12.5% per annum until December 31, 1999, at which time the rate will
increase by 0.5% per month not to exceed 20% per annum. This portion of
the notes matures on March 1, 2005, with interest payable March 1 of each
year. In connection with these debentures, the Company issued warrants to
purchase up to 1,937,500 shares of the Company's common stock at an
exercise price of $5.00, $3.00 and $2.00 per share for 1,600,000 shares,
300,000 shares and 37,500 shares, respectively. The warrants in relation
to the 1,600,000 shares vest equally over four years commencing in 1999
until 2002, unless the debentures are paid in full, in which case, those
warrants that have not become exercisable will become void. All of these
warrants that become exercisable will expire on March 1, 2004. The
warrants for the remaining 337,500 shares vest immediately and expire on
March 1, 2005. The fair value of all warrants is included as paid-in-
capital and the effective interest rate over the term of the debt,
including the coupon and the amortization of the fair value of the
warrants, is approximately 19%. The amount of the three notes included in
subordinated debt in the accompanying balance sheet at December 31, 1999
was $7.2 million.
8. ASSET IMPAIRMENT AND OTHER NON-RECURRING CHARGES
During 1998, in response to market conditions and the resultant decline in
certain asset utilization of the Company's equipment, the Company evaluated
certain of its assets for realizability. The related asset impairment
charges relate to a $1.8 million provision for fixed assets, primarily nine
drilling units and 15 trucks, which became impaired due primarily to
reduced demand and environmental impact factors which have restricted their
future use, a $1.3 million write-off of seismic data held for sale which
became impaired due to recent price declines, and a $0.6 million additional
provision for uncollectible accounts receivable. Currently, the Company has
sold all of the trucks and one of the drilling units, which were considered
to be impaired. The estimated fair value of the remaining eight drilling
units is approximately $0.6 million and is included in other current
assets.
The $0.6 million provision for uncollectible accounts receivable is
reported in general and administrative expenses and the remaining charges
are reported as asset impairment and other charges in the accompanying
Consolidated Statements of Income.
In addition, the Company's senior management and Board of Directors
approved a plan to reduce future operating costs and improve operating
efficiencies. The plan involved several factors including the
reorganization of senior management and the closing and relocation of
certain of its operational facilities. Accordingly, the Company recorded an
accrual of severance and lease exit costs of $0.3 million during the year
ended December 31, 1998. As of December 31, 1999, the Company has paid
all of these costs.
9. RELATED PARTY TRANSACTIONS
During the year ended December 31, 1998, the Company was to purchase two
operating facilities from a major shareholder for $0.9 million. However,
the transactions never transpired and the major shareholder continues to
maintain ownership of these facilities. The Company did lease one of these
facilities from the major shareholder during the year ended December 31,
1999 at a total lease expense of $0.1 million. The Company is under a
lease contract for a portion of 2000 for the facility as well (See Note
11).
10. CUSTOMER CONCENTRATION
Substantially all of the Company's revenues are derived from companies in
the energy industry. During the year ended December 31, 1997, two
customers accounted for approximately 40% (25% and 15%, respectively) of
the Company's total revenues. Included in accounts receivable as of
December 31, 1997, are amounts owed from these customers totaling
approximately 28% (16% and 12%, respectively) of total accounts receivable.
During the year ended December 31, 1998, three customers accounted for 66%
(33%, 18% and 15%, respectively) of the Company's total revenues. Included
in accounts receivable as of December 31, 1998, are amounts owed from these
customers totaling approximately 56% (36%, 14% and 6%, respectively) of
total accounts receivable.
During the year ended December 31, 1999, three customers accounted for 71%
(40%, 19% and 12%, respectively) of the Company's total revenues. Included
in accounts receivable as of December 31, 1999, are amounts owed from these
customers totaling approximately 69% (11%, 51% and 1%, respectively) of
total accounts receivable.
11. COMMITMENTS AND CONTINGENCIES
In connection with the acquisition of the assets of Predecessor discussed
in Note 1, the Company also entered into a five-year lease agreement with
Predecessor to lease Predecessor's main office facility. The monthly lease
payment under the agreement was $25,000 through September 2000.
During 1999, the Company entered into a sale leaseback transaction with its
aviation fleet. The Company received $8 million upon sale of the aircraft
and entered into an operating lease for a period of 10 years. Monthly
rental payments under the lease are $80,000. See Note 2 for further
discussion regarding this equipment.
Total rental expense was $1,519,27, $2,458,316 and $1,712,927 for the years
ended December 31, 1997, 1998 and 1999, respectively. The Company leases
certain offices, warehouse facilities, drilling equipment and vehicles
under noncancelable operating lease agreements which expire at various
times. The noncancelable operating leases that were in effect as of
December 31, 1999 require the Company to make the following future minimum
lease payments:
For the Year Ended December 31:
2000 $ 1,335,615
2001 665,774
2002 391,036
2003 391,036
2004 325,863
Total minimum lease payments $ 3,109,324
The Company carries workers compensation insurance coverage with a
deductible amount of $250,000 per incident for claims incurred in 1997. In
1998, the Company changed insurance carriers and had no deductible.
Management of the Company is not aware of any significant workers
compensation claims or any significant claims incurred but not reported as
of December 31, 1999.
The Company has entered into employment agreements with its key executive
officers which include base salaries and terms of employment.
12. PREFERRED STOCK SUBSCRIPTION
In December, 1999 and February 2000, the Company received from an affiliate
of the Company $1,000,000 and $500,000, respectively, related to a
preferred stock subscription agreement. The terms of the preferred stock
to be issued will contain an 8% cumulative dividend rate, be convertible
into common stock with an initial conversion rate of $2.50, be redeemable
at the option of the Company at par plus unpaid dividends, contain
liquidation preferences and contain voting rights only with respect to
matters that would reduce the ranking of the stock compared to other
classes of stock. The funds were used for debt service and to fund
operations
13. STOCK OPTIONS
In April and June 1997, OMNI issued options to purchase 516 and 600 common
units, respectively, equivalent to 54,567 and 63,451 shares, respectively
of Common Stock calculated on the pro forma share basis described in Note
1. The exercise price for these options is $2.28 per share (on the pro
forma share basis described in Note 1) and expire if unexercised after ten
years. In the years ended December 31, 1998 and 1999, 18,189 and 12,338 of
these options were canceled. Total compensation expense relating to these
options is approximately $365,000, which is being recognized pro rata over
the three-year vesting period of the options. The deferred compensation to
be recognized by the Company is based on the estimated fair value of the
Company's common units on the date of the issuance. Compensation expense
related to the options totaled $144,000 and $92,000 for the years ended
December 31, 1998 and 1999, respectively.
In September 1997, the Company adopted and its sole shareholder approved
the Stock Incentive Plan (the "Incentive Plan") to provide long-term
incentives to its key employees, officers, directors who are employees of
the Company, and consultants and advisors to the Company and non-employee
directors ("Eligible Persons"). Under the incentive plan, the Company may
grant incentive stock options, non-qualified stock options, restricted
stock, other stock-based awards, or any combination thereof to Eligible
Persons. Options generally vest over a four-year period and expire if
unused after ten years. The exercise price of any stock option granted may
not be less than the fair market value of the Common Stock on the date of
grant. A total of 1,500,000 shares of common stock were authorized under
the Incentive Plan in 1997. Of the 1,500,000 authorized, 312,404 remain
available for issuance under the plan at December 31, 1999.
In January 1999, the Company approved the Stock Option Plan (the "Option
Plan") to provide for the grant of options to purchase shares of common
stock of the Company to non-officer employees of the Company and its
subsidiaries in lieu of year-end cash bonuses. The Option Plan is intended
to increase shareholder value and advance the interests of the Company by
providing an incentive to employees and by increasing employee awareness of
the Company in the marketplace. Under the Option Plan, the Company may
grant options to any employee of the Company with the exception of the
officers of the Company. The options become exercisable immediately with
respect to one-half of the shares, and the remaining one-half shall be
exercisable one year following the date of the grant. The exercise price
of any stock option granted may not be less than the fair market value of
the Common Stock on the effective date of the grant. A total of 150,000
shares of common stock were authorized under the Option Plan in 1999 and
later amended to be 300,000 shares of common stock. Of the 300,000
authorized, 77,401 remain available for issuance under the plan at December
31, 1999.
The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees". Accordingly,
the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation,"
do not affect the Company's reported results of operations. Pro forma
disclosures as if the Company had adopted the provisions of SFAS No. 123
are presented below.
Had compensation cost been determined based on the fair value at the grant
date consistent with the provisions of SFAS No. 123, the Company's net
income and earnings per common share would have approximated the pro forma
amounts below:
For the years ended
------------------------------------------------------------------------------------
December 31, 1999 December 31, 1998 December 31, 1997
----------------- ----------------- -----------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
----------- --------- ----------- --------- ----------- ---------
(Dollars in thousands except per share amounts)
Net income (loss) $ (26,863) $ (28,194) $ (1,800) $ (3,312) $ 5,851 $ 5,510
Basic earnings (loss) per
share $ (1.68) $ (1.77) $ (0.11) $ (0.21) $ 0.47 $ 0.44
Diluted earnings (loss) per
share $ (1.68) $ (1.77) $ (0.11) $ (0.21) $ 0.46 $ 0.43
A summary of the Company's stock options as of December 31, 1997, 1998 and
1999, and changes during the years then ended are presented below:
Weighted Incentive
Average Plan Other
Exercise Price Options Options
-------------- --------- -------
Balance at January 1, 1997 $ --- --- ---
Granted 10.10 1,056,000 122,563
Balance at December 31, 1997 10.10 1,056,000 122,563
Granted 10.89 310,500 --
Exercised 2.28 --- 18,813
Forfeited 8.13 37,000 18,189
--------------- ------------ ------------
Balance at December 31, 1998
10.48 1,329,500 85,561
Granted 3.23 546,788 ---
Exercised 2.28 --- 20,878
Forfeited 7.43 455,949 17,838
--------------- ------------ ------------
Balance at December 31, 1999 8.27 1,420,339 46,845
=============== ============ ============
As of December 31, 1999, there were 909,586 options exercisable with a
weighted average exercise price of $10.21.
The weighted average fair value at date of grant for options granted during
1997 was $4.26 per option. The fair value of options granted is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) dividend yield of 0.00%; (b) expected
volatility of 40%; (c) risk-free interest rate of 6.07%; and (d) expected
life from 3 to 6.5 years.
The weighted average fair value at date of grant for options granted during
1998 was $8.58 per option. The fair value of options granted is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) dividend yield of 0.00%; (b) expected
volatility of 89%; (c) risk-free interest rate of 5.44%; and (d) expected
life of 6.5 years.
The weighted average fair value at date of grant for options granted during
1999 was $1.94 per option. The fair value of options granted is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) dividend yield of 0.00%; (b) expected
volatility ranging from 75% to 82%; (c) average risk-free interest rate of
5.70%; and (d) expected life of 6.5 years.
The following table summarizes information about stock options outstanding as
of December 31, 1999:
Options Outstanding Options Exercisable
------------------------------------------------- ---------------------------------------
Exercise Prices Number Wgtd. Avg. Wgtd.Avg. Number Wgtd. Avg.
Outstanding Remaining Contr. Exercise Exercisable Exercise Price
life Price
----------- ---------------- ------------------ ----------------- ------------------
$ 1.50 - $ 3.00 309,200 6.4 $ 2.072 33,487 $ 2.280
$ 3.813 - $ 5.00 211,859 4.3 $ 4.596 87,224 $ 5.000
$ 10.25 - $ 10.375 64,000 7.4 $ 10.254 17,500 $ 10.264
$ 10.50 - $ 11.81 853,500 4.5 $ 11.018 752,500 $ 11.005
$14.375 13,625 8.0 $ 14.375 3,875 $ 14.375
$17.375 15,000 8.4 $ 17.375 15,000 $ 17.375
----------- ---------------- ------------------ ----------------- ------------------
1,467,184 5.0 $ 8.268 909,586 $ 10.213
----------- ---------------- ------------------ ----------------- ------------------
14. INCOME TAXES
The components of deferred tax assets and liabilities as of December 31, 1998
and 1999 are as follows (dollars in thousands):
1998 1999
--------- ---------
Deferred Tax Assets:
Allowance for doubtful accounts $ 398 $ 1,275
Foreign taxes 57 147
Goodwill 1,477 1,339
Net operating loss carryforward (expires 2019) 1,319 7,696
Accrued liabilities 396 1,641
--------- ---------
Total deferred tax assets 3,647 12,098
Deferred Tax Liabilities:
Property and equipment (4,888) (6,289)
--------- ---------
Total deferred tax liabilities (4,888) (6,289)
Less: Valuation Allowance --- (5,809)
--------- ---------
Net Deferred Tax Asset/(Liability) $ (1,241) ---
========= =========
The income tax expense (benefit) for the year ended December 31, 1997, 1998
and 1999 consisted of the following (dollars in thousands):
1997 1998 1999
-------- --------- ----------
Current expense (benefit) $ 338 $ (934) $ (1,869)
Deferred expense (benefit) (8) 228 595
Adjustment to deferred taxes due to change in
tax status 73 --- ---
-------- --------- ----------
Tax expense (benefit) before extraordinary item 403 (706) (1,274)
Allocated to extraordinary item (42) --- ---
-------- --------- ----------
Total $ 361 $ (706) $ (1,274)
The reconciliation of Federal statutory and effective income tax rates for
the years ended December 31, 1997, 1998 and 1999 is shown below:
1997 1998 1999
---- ---- ----
Statutory federal rate 34% (34)% (34)%
Income not subject
to corporate tax (27%) --- ---
State taxes --- (3)% (3)%
Goodwill --- 10% 2%
Valuation allowance --- --- 26%
Other (1%) 5% 1%
---- ---- ----
Total 6% (22%) (8%)
---- ---- ----
As of December 31, 1999, for tax purposes, the Company had net operating
loss carryforwards (NOLs) of approximately $20.5 million. The NOLs will
expire in 2018 and 2019. The Company accounts for income taxes under the
provision of SFAS No. 109 (FAS 109) which requires recognition of future
tax benefits (NOLs and other temporary differences), subject to a valuation
allowance based on the likelihood of a concept of "more-likely-than-not" of
realizing such benefits. In determining whether it is "more-likely-than-
not" that the Company will realize such benefits, FAS 109 requires that all
negative and positive evidence be considered (with more weight given to
evidence that is "objective and verifiable") in making the determination.
FAS 109 indicated that "forming a conclusion that a valuation allowance is
not needed is difficult when there is negative evidence such as cumulative
losses in recent years"; therefore the Company determined that it was
required by the provision of FAS 109 to establish a valuation allowance of
$5.8 million for all of the recorded net deferred tax assets. This
determination was based primarily on historical losses without considering
the impact of any potential upturn in the Company's business due to
improvements in the seismic market, refinancing of current indebtedness or
new capital infusion, or other changes to the Company's operations.
Accordingly, future favorable adjustments to the valuation allowance may be
required if and when circumstances change.
15. SEGMENT INFORMATION
The Company has adopted SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information," which requires that companies disclose
segment data based on how management makes decisions about allocating
resources to segments and measuring their performance. Currently, the
Company operates principally in two segments, which operate in North
America: Drilling and Survey. Because the aviation division is reported
as a discontinued operation, it is no longer included as a reportable
segment.
Survey revenue is recorded after the customer has determined the placement
of source and receiving points, and after survey crews are sent into the
field to plot each source and receiving point prior to drilling. Drilling
revenue is derived primarily from drilling and loading of the source points
for seismic analysis. In 1998, the Company expanded internationally into
South America where it currently provides drilling and survey services as
well as line-cutting services.
The following shows industry segment information for the years ended
December 31, 1997, 1998 and 1999:
Year Year Year
Ended Ended Ended
December December December
31, 31, 31,
1997 1998 1999
---- ---- ----
(Thousands of Dollars)
OPERATING REVENUES:
Drilling $ 41,033 $ 48,815 $ 17,309
Survey 4,065 12,076 4,480
Other (1) --- 1,194 2,348
------------- ------------- ------------
Total $ 45,098 $ 62,085 $ 24,137
============= ============= ============
___________________
(1) Consists of line-cutting services in South America.
GROSS PROFIT:
Drilling $ 9,323 $ 10,856 $ (425)
Survey 2,183 2,705 (301)
Other --- 60 (2,176)
------------- ------------- ------------
Total 11,506 13,621 (2,902)
General and administrative expenses 4,469 11,459 10,790
Asset impairment and other charges --- 3,379 (336)
Other expense, net 1,829 1,402 3,139
------------- ------------- ------------
Income (loss) before taxes $ 5,208 $ (2,619) $ (16,495)
============= ============= ============
IDENTIFIABLE ASSETS 1997 1998 1999
---- ---- ----
Drilling $ 35,000 $ 34,704 $ 33,257
Survey 3,849 6,459 6,231
Other 16,640 21,589 14,437
------------- ----------- -------------
Total $ 55,489 $ 62,752 $ 53,925
============= =========== =============
CAPITAL EXPENDITURES:
Drilling $ 8,105 $ 9,138 $ 488
Survey 729 881 35
Other 4,619 981 459
------------- ----------- -------------
Total $ 13,453 $ 11,000 $ 982
============= =========== =============
As of December 31, 1999, approximately $2.4 million of the Company's
assets are located in South America. All remaining assets are
located in North America.
16. ACQUISITIONS
On March 25, 1997, OMNI acquired the assets and assumed certain liabilities
of Delta Surveys, Inc., a surveying business, for $180,000 in cash and a
$120,000, 8.5%, three year promissory note. This acquisition was accounted
for using the purchase method of accounting. The excess of cost over the
estimated fair value of the net assets resulted in goodwill of
approximately $172,000.
Effective July 1, 1997, OMNI acquired substantially all of the assets and
liabilities of American Aviation Incorporated ("American Aviation"), a
company that operated aircraft for various seismic drilling support
services. In consideration for the acquisition of substantially all the
assets of American Aviation, OMNI issued to American Aviation 10,213 common
units of OMNI (equivalent to 1,080,017 shares of Common Stock), valued at
approximately $6.4 million and a $1.0 million promissory note bearing
interest at 8.5%, paid $500,000 cash and assumed approximately $6.7 million
in debt. The excess cost over the estimated fair value of the net assets
resulted in goodwill of approximately $7.6 million.
Effective July 1, 1997, OMNI acquired Leonard J. Chauvin, Jr., Inc.
("Chauvin"), a surveying company, for $788,000 cash and up to an additional
$100,000 based on the future earnings of Chauvin through August 31, 1999.
The excess cost over the estimated fair value of the net assets acquired
resulted in goodwill of approximately $701,000. In December 1998, the
assets were sold for $60,000 in cash and a $90,000 note receivable.
Effective September 1, 1997, OMNI acquired substantially all the assets
O.T.H. Exploration Services, Inc., a seismic rock drilling company,
headquartered in the Rocky Mountain region. The aggregate purchase price
was $600,000 cash, which approximated the fair value of the net assets
acquired.
Effective October 1, 1997, the Company acquired American Helicopter
Drilling Inc. ("American Helicopter") for $1,050,000 in cash and 227,272
shares of common stock valued at approximately $2,500,000 at the initial
offering price. The excess cost over the estimated fair value of the net
assets acquired resulted in goodwill of approximately $1,963,000. American
Helicopter was engaged in seismic drilling services in the Rocky Mountain
area and in the fabrication, export and servicing of heli-portable and
other seismic drilling units.
Effective October 1, 1997, the Company acquired Fournier & Associates
("Fournier") for $211,000 in cash and 49,010 shares of common stock valued
at approximately $539,000 at the initial offering price. The excess cost
over the estimated fair value of the net assets acquired resulted in
goodwill of approximately $622,000. Fournier was a seismic survey company
operating four crews in the Transition Zone and adjacent areas.
Effective April 1, 1998, the Company acquired Eagle Surveys International,
Inc., a seismic survey support company, headquartered in Houston, Texas.
The aggregate purchase price was $1.8 million consisting of $1.1 million in
cash and 53,039 shares of common stock. The excess cost over the estimated
fair value of the net assets resulted in goodwill of approximately $1.5
million.
Effective April 20, 1998, the Company acquired the assets of Coastal
Turbines, Inc., a helicopter support company, based in Lafayette,
Louisiana. The aggregate purchase price was approximately $1.2 million
consisting of $1.1 million in cash and 4,546 shares of common stock.
Effective May 1, 1998, the Company acquired Hamilton Drill Tech, Inc., a
specialty seismic drilling support company, headquartered in Canada. The
purchase price was approximately $0.9 million in cash. The excess cost over
the estimated fair value of the net assets resulted in goodwill of
approximately $95,000.
Effective July 1, 1998, OMNI International Energy Services, Ltd. (a wholly-
owned subsidiary) entered into a joint venture with Edwin Waldman Attie of
Bolivia. The newly formed joint venture company, OMNI International Energy
Services - South America, Ltd. provides integrated services in selected
South American countries. The aggregate investment was approximately $6.5
million, consisting of approximately $2.6 million in cash, $2.0 million in
equipment and 155,947 shares of common stock. The excess cost over the
estimated fair value of the net assets resulted in goodwill of
approximately $2.9 million. In consolidation, the Company owns an 85%
interest in the joint venture.
The operating results of each of the acquired companies have been included
in consolidated statements of income from the effective dates of
acquisition.
17. SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarter Ended
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
1999 (1)
---- --
Operating revenues $ 7,450 $ 7,055 $ 5,658 $ 3,974
Gross profit (loss) 878 (1,901) (594) (1,285)
Income (loss) from continuing operations (1,142) (3,687) (2,366) (7,664)
Income (loss)from discontinued operations (83) (636) (23) (11,337)
--------- ------- --------- --------
Net income (loss) $ (1,225) $(4,323) $ (2,389) $(19,001)
========= ======= ========= ========
Net income (loss) per common share:
Income (loss) from continuing operations $ (0.07) (0.23) (0.15) (0.48)
Income (loss) from discontinued
operations (0.01) (0.04) (0.00) (0.71)
Net income (loss) $ (0.08) (0.27) (0.15) (1.19)
========= ======= ========= ========
Diluted earnings per common share $ (0.08) (0.27) (0.15) (1.19)
========= ======= ========= ========
Quarter Ended
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
1998
----
Operating revenues $ 16,186 $21,447 $ 16,605 $ 7,847
Gross profit (loss) 4,544 7,583 1,878 (384)
Income (loss) from continuing operations 1,480 2,665 (3,379) (2,541)
Income (loss) from discontinued operations 365 846 119 (1,355)
--------- ------- ------------ -----------
Net income (loss) $ 1,845 3,511 (3,260) (3,896)
========= ======= ============ ===========
Net income (loss) per common share:
Income (loss) from continuing operations $ 0.09 $ 0.17 $ (0.21) $ (0.16)
Income (loss) from discontinued operations 0.02 0.05 0.01 (0.09)
--------- ------- ------------ -----------
Net income (loss) $ 0.12 $ 0.22 $ (0.20) $ (0.25)
========= ======= ============ ===========
Diluted earnings per common share $ 0.12 $ 0.22 $ (0.20) $ (0.25)
========= ======= ============ ===========
________________________
(1) The fourth quarter of 1999 includes a provision for valuation
allowance of $5.8 million. (See Note 14)
ITEM. 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) The following financial statements, schedules and exhibits are
filed as part of this Report:
(1) Financial Statements. Reference is made to Item 8 hereof.
(2) Financial Statement Schedules: None.
(3) Exhibits. See Index to Exhibits on page E-1. The Company will
furnish to any eligible shareholder, upon written request of such
shareholder, a copy of any exhibit listed upon the payment of a reasonable
fee equal to the Company's expenses in furnishing such exhibit.
(b) Reports on form 8-K: None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
OMNI ENERGY SERVICES CORP.
(Registrant)
By: /S/ PETER H. NIElSEN
-------------------------------
Peter H. Nielsen
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: April 14, 2000
S-1
OMNI ENERGY SERVICES CORP.
EXHIBIT INDEX
EXHIBIT
NUMBER
2.1 Exchange Agreement between the members of OMNI
Geophysical, L.L.C. and OMNI Energy Services Corp. (the
"Company")(1)
2.2 Exchange Agreement by and among American Aviation
Incorporated, American Aviation L.L.C. and OMNI
Geophysical, L.L.C., dated as of July 1, 1997.(2)
3.1 Amended and Restated Articles of Incorporation of
the Company(2)
3.2 Bylaws of the Company, as amended.(1)
4.1 See Exhibits 3.1 and 3.2 for provisions of the
Company's Articles of Incorporation and By-laws
defining the rights of holders of Common Stock.
4.2 Specimen Common Stock Certificate.(2)
10.1 Form of Indemnity Agreement by and between the
Company and each of its directors and executive
officers.(2)
10.2 The Company's Stock Incentive Plan.(2)
10.3 Form of Stock Option Agreements under the
Company's Stock Incentive Plan.(2)
10.4 Amended and Restated Employment and Non-
Competition Agreement between OMNI Geophysical, L.L.C.
and David Jeansonne.(2)
10.5 Amended and Restated Employment and Non-
Competition Agreement between OMNI Geophysical, L.L.C.
and Allen R. Woodard.(2)
10.6 Employment and Non-Competition Agreement between
Robert F. Nash and the Company effective July 1,
1998.(3)
10.7 Employment and Non-Competition Agreement between
John H. Untereker and the Company effective July 21,
1998(4), as amended by Amendment No.1 dated March 1, 1999.
10.8 Confidentiality and Non-Competition Agreement
between OMNI Geophysical, L.L.C. and American Aviation,
L.L.C. and American Aviation Incorporated, David
Jeansonne, and Richard Patrick Morris. (2)
10.9 Option Agreement between the Company and Roger E.
Thomas dated as of September 25, 1997. (2)
10.10 Option Agreement between the Company and Allen R.
Woodard dated as of September 25, 1997. (2)
10.11 Intangible Asset Purchase Agreement by and
among American Aviation Incorporated, American Aviation
L.L.C. and OMNI Geophysical, L.L.C., dated as of July
1, 1997. (2)
10.12 Joint Venture Agreement among the Company, OMNI
International Energy Services, Ltd. and Edwin Waldman
Attie effective July 1, 1998. (3)
10.13 Amended and Restated Loan Agreement, dated as of
January 20, 1998, by and among the company, American
Aviation L.L.C., OMNI Marine & Supply, Inc. and
Hibernia National Bank. (1)
10.14 First Amendment to Amended and Restated Loan
Agreement, by and among the Company, certain of its
subsidiaries and Hibernia National Bank. (5)
10.15 Second Amendment to Amended and Restated Loan
Agreement, by and among the Company, certain of its
subsidiaries and Hibernia National Bank. (4)
10.16 Third Amendment to Amended and Restated Loan
Agreement, by and among the Company, certain of its
subsidiaries and Hibernia National Bank. (3)
10.17 Fourth Amendment to Amended and Restated Loan Agreement, by
and among the Company, certain of its subsidiaries and
Hibernia National Bank. (6)
10.18 Fifth Amendment to Amended and Restated Loan Agreement, by
and among the Company, certain of its subsidiaries and
Hibernia National Bank. (7)
10.19 Sixth Amendment to Amended and Restated Loan Agreement, by
and among the Company, certain of its subsidiaries and
Hibernia National Bank. (7)
10.20 Seventh Amendment to Amended and Restated Loan Agreement, by
and among the Company, certain of its subsidiaries and
Hibernia National Bank.
21.1 Subsidiaries of the Company. (7)
27.1 Financial Data Schedule
________________________
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997
(2) Incorporated by reference to the Company's Registration Statement on Form
S-1 (Registration Statement No. 333-36561).
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1998.
(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998.
(6) Incorporated by reference to the Company's Current Report on Form 8-K filed
April 29, 1999.
(7) Previously filed.