SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File Number: 33-42039
SEABULK TRANSMARINE PARTNERSHIP, LTD.
State of Incorporation: Florida I.R.S. Employer I.D. 59-2580172
2200 Eller Drive
P.O. Box 13038
Ft. Lauderdale, Florida 33316
(954) 524-4200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (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 ninety days.
Yes No X
SEABULK TRANSMARINE PARTNERSHIP, LTD.
Quarter ended June 30, 1998
Index
Page
Part I. Financial Information
Item 1. Financial Statements.................................................1
Condensed Balance Sheets at
December 31, 1997 and June 30, 1998 (Unaudited).......................... 2
Condensed Statements of Operations for the
three and six months ended June 30, 1997 and 1998 (Unaudited)............ 3
Condensed Statements of Cash Flows for the
six months ended June 30, 1997 and 1998 (Unaudited)...................... 4
Notes to Condensed Financial Statements.................................. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................8
Part II. Other Information
Item 6. Reports on Form 8-K............................................... 10
Signature.................................................................. 10
10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Seabulk Transmarine Partnership, Ltd.
Balance Sheets
(in thousands)
December 31, June 30,
1997 1998
------------- -----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents............................................. $ 16 $ 21
Insurance claims and other receivables................................ 14 --
Inventory, spare parts and supplies................................... 1,320 1,320
Prepaid expenses and deferred costs................................... 312 280
---------------- ---------------
Total current assets............................................... 1,662 1,621
Vessels and improvements................................................... 43,806 43,806
Less accumulated depreciation.............................................. (9,810) (10,525)
---------------- ---------------
33,996 33,281
Deferred costs, net........................................................ 426 281
---------------- ---------------
$ 36,084 $ 35,183
================ ===============
Liabilities and partners' equity Current liabilities:
Accrued liabilities .................................................. $ 741 $ 786
---------------- ---------------
Total current liabilities.................................................. 741 786
Due to affiliates, net .................................................... 31,777 30,652
Other long term obligations ............................................... 109 124
Commitments and contingencies
Partners' equity .......................................................... 3,457 3,621
---------------- --------------
$ 36,084 $ 35,182
================ ===============
See accompanying notes.
Seabulk Transmarine Partnership, Ltd.
Statement of Operations
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1998 1997 1998
------------ ------------ ------------ -----------
Revenues.............................................. $ 2,615 $ 2,791 $ 5,307 $ 5,215
Operating expenses:
Crew payroll and benefits......................... 735 717 1,396 1,396
Repairs and maintenance........................... 165 216 335 358
Insurance......................................... 120 86 278 195
Consumables....................................... 53 91 125 154
Other............................................. 117 143 175 244
----------- ---------- ----------- -----------
Total operating expenses........................ 1,190 1,253 2,309 2,347
Selling, general and administrative expenses:
Salaries and benefits ............................ 34 51 76 104
Professional fees................................. 775 331 1,283 574
Allocated overhead ............................... 134 137 268 275
Other ............................................ 10 10 19 23
----------- ---------- ----------- -----------
Total overhead expenses ........................ 953 529 1,646 976
Depreciation ......................................... 354 358 707 715
----------- ---------- ----------- -----------
Income from operations................................ 118 651 645 1,177
Interest expense...................................... 407 569 892 1,012
Other expense......................................... 29 -- 34 --
----------- ---------- ----------- -----------
Net income (loss) .................................... $ (318) $ 82 $ (281) $ 165
=========== ========== =========== ===========
See accompanying notes.
Seabulk Transmarine Partnership, Ltd.
Statements of Cash Flows
(in thousands)
Six Months Ended
June 30,
1997 1998
----------- ---------
(Unaudited)
Operating activities
Net income (loss)................................................................. $ (281) $ 165
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................................................ 707 715
Amortization of drydocking costs ............................................ 159 195
Amortization of debt issuance costs ......................................... 21 --
Changes in operating assets and liabilities:
Accounts receivable ......................................................... (24) 14
Other assets ................................................................ (48) (17)
Due to affiliates ........................................................... 720 (1,125)
Accrued and other liabilities................................................ 240 59
----------- ----------
Net cash provided by operating activities ........................................ 1,494 6
Investing activity
Purchase of property ............................................................. (50) (1)
Financing activity
Principal payments on allocated term loan borrowings ............................. (1,446) --
------- ----------
Change in cash and cash equivalents .............................................. (2) 5
Cash and cash equivalents at beginning of year ................................... 17 16
----------- ----------
Cash and cash equivalents at end of year ......................................... $ 15 $ 21
========= =========
See accompanying notes.
SEABULK TRANSMARINE PARTNERSHIP, LTD.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
1. Organization and Description of Business
Organization. Seabulk Transmarine Partnership, Ltd. ("STPL" or the
"Partnership"), a Florida limited partnership, was formed on August 30, 1985
pursuant to a partnership agreement (the "Agreement"), to own and operate a
chemical transportation carrier, the Seabulk America. The general partner of the
Partnership is Seabulk Tankers, Ltd. ("STL"), a Florida limited partnership
(which owns a 33% interest in the Partnership), and the limited partners (and
their respective interests in the Partnership) are STL (0.33%), Seabulk America
Partnership, Ltd. ("SAPL"), a Florida limited partnership (41.67%), and Stolt
Tankers (U.S.A) Inc. (25%). STL and SAPL are 100%- and 82%-owned subsidiaries,
respectively, of Hvide Marine Incorporated ("HMI").
Description of Business. The Seabulk America is used to transport
chemicals, primarily from chemical manufacturing plants and storage facilities
along the U.S. Gulf of Mexico coast to industrial users in and around Atlantic
and Pacific coast ports. The Partnership time charters the Seabulk America to
Ocean Specialty Tankers Corp. ("OSTC"), which is 100% owned by HMI.
2. Partnership Agreement
The general partner is responsible for the management of the
Partnership. Pursuant to the Agreement, the general partner and the limited
partners (collectively referred to as the "Partners") are required to make
capital contributions at such times and in such amounts as the general partner
requests by notice. No additional capital contributions have been required for
1996, 1997 or the six months ended June 30, 1998. The Partners are not entitled
to withdraw any part of the capital account or to receive any distribution from
the Partnership except as specifically provided in the Agreement. All net income
or net losses of the Partnership are allocated to the capital accounts in
proportion to the partnership interests. The Partnership terminates on August
30, 2010, unless sooner terminated, liquidated or dissolved by law or pursuant
to the Agreement or unless extended by amendment to the Agreement.
3. Transactions with Affiliates
Balances due (to) from affiliates consist of the following (in
thousands):
December 31, June 30,
----------------- ----------------
1997 1998
Due to HMI $ (33,212) $ (32,243)
Due from STL 338 338
Due from OSTC 1,062 1,218
Other, net 35 35
----------------- ---------------
Total due to affiliates $ (31,777) $ (30,652)
================ =============
The amount payable to HMI reflects various transactions between the
Partnership and HMI. There are no terms of settlement associated with the
account balance. The balance is primarily the result of the Partnership's
participation in HMI's central cash management program, in which substantially
all the Partnership's cash receipts are remitted to HMI and substantially all
cash disbursements are funded by HMI. Other transactions include miscellaneous
other administrative expenses incurred by HMI on behalf of the Partnership.
HMI provides various administrative services to the Partnership, including legal
assistance and technical expertise on ship management and maintenance. It is
HMI's policy to charge these expenses and all other central operating costs on
the basis of direct usage when identifiable, with the remainder allocated
pursuant to the terms of the Agreement. Amounts charged by HMI include a monthly
management fee, as set forth in the Agreement, which is adjusted annually based
on changes in the Consumer Price Index. HMI also charges interest based on the
amount due to HMI. In the opinion of the Partnership's management, this method
of allocation is reasonable.
An analysis of transactions in the Due to HMI account for the six
months ended June 30, 1998 follows (in thousands):
Balance at beginning of year $(33,212)
Net cash remitted to (received from) HMI 5,215
Allocated management fees (276)
Allocated guarantee fee (12)
Allocated interest expense (1,013)
Operating expenses (2,347)
Professional fees (573)
Miscellaneous administrative expenses (25)
-----
Balance at end of year $(32,243)
=========
Average balance during the year $(32,728)
At June 30, 1998, the Partnership had a stand-by letter of credit in
the amount of $5,600,000 available for the benefit of the Partnership provided
by HMI (the "Letter of Credit"). The Letter of Credit was terminated in December
1998 (see Note 7). Included in the accompanying statements of operations are
guarantee fees primarily related to the Letter of Credit.
4. Guarantees of Indebtedness of Others
In February 1998, HMI completed an offering of $300.0 million of 8.375%
senior notes (the "Senior Notes"). Interest on the Senior Notes is payable
semi-annually in arrears on February 15 and August 15. The Senior Notes mature
on February 15, 2008 and are redeemable, in whole or in part, at the option of
HMI on or after February 15, 2003. The Senior Notes are guaranteed by the
Partnership and certain other HMI subsidiaries; however, the Partnership's
guarantee is limited to HMI's approximately 67% economic ownership interest in
the Partnership.
HMI's credit facility with a group of banks (the "Credit Facility")
provides for revolving credit loans aggregating up to $175 million, subject to
certain conditions. The Credit Facility also provides for a term loan in the
amount of $150 million. The Credit Facility provides that borrowings thereunder
will be secured by HMI-owned vessels, including the Seabulk America, having an
appraised value of at least $600.0 million and by substantially all other assets
of HMI and its subsidiaries. The revolving and term loan portions mature on
February 12, 2003 and March 31, 2005 respectively. At June 30, 1998, HMI's
outstanding indebtedness under the revolving credit portion of the Credit
Facility was approximately $92 million, and approximately $145 million was
outstanding under the term loan portion of the Credit Facility. The Partnership
and certain other subsidiaries of HMI also jointly and severally guarantee the
repayment of HMI's indebtedness under the Credit Facility; however, the
Partnership's guarantee is limited to HMI's 67% ownership interest in the
Seabulk America.
5. Commitments and Contingencies
See Note 7.
6. Income Taxes
The Partnership has received a ruling from the Internal Revenue Service
that it will be classified as a partnership for federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of the Partners.
7. Subsequent Event
In 1990, the Partnership withheld approximately $2,400,000 from a
shipyard relating to delays and other problems encountered in the construction
of the Partnership's vessel. In 1993, the shipyard filed a claim to recover
approximately $6,100,000 for additional construction costs allegedly due the
shipyard. The proceeding was settled in the fourth quarter of 1998. Under the
terms of the settlement, all claims were dismissed with prejudice in
consideration of the payment to the shipyard of $4,750,000 in installments from
December 1998 to May 1999. As part of the settlement, a $5,600,000 bond
previously provided by HMI was released and a related letter of credit provided
as collateral to the bond was terminated.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") should be read in conjunction with
the condensed financial statements and the related notes thereto included
elsewhere in this Report.
The MD&A contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical fact, included in the MD&A are forward-looking
statements. Although the Partnership believes that the expectations and beliefs
reflected in such forward-looking statements are reasonable, it can give no
assurance that they will prove correct.
Results of Operations
Three months ended June 30, 1998 compared with the
three months ended June 30, 1997
Revenue. Revenue increased 6.7% to $2.8 million for the three months
ended June 30, 1998 from $2.6 million for the three months ended June 30, 1997
due to an increased charter rate in the Partnership's time charter on the
Seabulk America.
Operating Expenses. Operating expenses increased 5.3% to $1.3 million
for the three months ended June 30, 1998 as compared to $1.2 million for the
three months ended June 30, 1997. As a percentage of revenue, operating expenses
decreased to 44.9% for the three months ended June 30, 1998 from 45.5% in the
1997 period due to the increased charter rate of the Seabulk America.
Overhead Expenses. Overhead expenses decreased 44.5% to $0.5 million
for the three months ended June 30, 1998 from $1.0 million for the three months
ended June 30, 1997, primarily due to a decrease in fees related to litigation.
As a percentage of revenues, overhead expenses decreased to 19.0% for the three
months ended June 30, 1998 from 36.4% for the three months ended June 30, 1997
due to this reduction in fees and the increase in revenue.
Depreciation Expense. Depreciation expense remained relatively flat for
the three months ended June 30, 1998 as compared with the 1997 period due to
minimal amounts of new capital expenditures.
Income from Operations. Income from operations increased 451.7% to $0.7
million for the three months ended June 30, 1998 from $0.1 million the three
months ended June 30, 1997 as a result of the factors noted above.
Net Interest Expense. Net interest expense increased 39.8% to $0.6
million for the three months ended June 30, 1998 from $0.4 million for the 1997
period, primarily as a result of an increase in the interest rate charged on the
intercompany balance with HMI.
Net Income. The Partnership had net income of $82,000 for the three
months ended June 30, 1998 as compared to a net loss of $318,000 for the 1997
period, primarily as a result of the factors noted above.
Six months ended June 30, 1998 compared with the six months ended June
30, 1997.
Revenue. Revenue decreased 1.7% to $5.2 million for the six months
ended June 30, 1998 from $5.3 million for the six months ended June 30, 1997 due
to a decreased charter rate in the Partnership's time charter on the Seabulk
America in the 1998 first quarter compared to the 1997 first quarter.
Operating Expenses. Operating expenses remained relatively flat for the
six months ended June 30, 1998 as compared with six months ended June 30, 1997.
As a percentage of revenue, operating expenses increased to 45.0% for the six
months ended June 30, 1998 from 43.5% in the 1997 period due to the decreased
charter rate of the Seabulk America discussed above.
Overhead Expenses. Overhead expenses decreased 40.7% to $1.0 million
for the six months ended June 30, 1998 from $1.6 million for the six months
ended June 30, 1997, primarily due to a decrease in fees related to litigation.
As a percentage of revenues, overhead expenses decreased to 18.7% for the six
months ended June 30, 1998 from 31.0% for the six months ended June 30, 1997 due
to this reduction in fees.
Depreciation Expense. Depreciation expense remained relatively flat for
the six months ended June 30, 1998 as compared with the 1997 period due to
minimal amounts of new capital expenditures.
Income from Operations. Income from operations increased 82.5% to $1.2
million for the six months ended June 30, 1998 from $0.6 million the six months
ended June 30, 1997 as a result of the factors noted above.
Interest Expense. Interest expense increased 13.5% to $1.0 million for
the six months ended June 30, 1998 from $0.9 million for the 1997 period,
primarily as a result of an increase in the interest rate charged on the
intercompany balance with the HMI.
Net Income. The Partnership had net income of $165,000 for the six
months ended June 30, 1998 as compared to a net loss of $281,000 for the 1997
period, primarily as a result of the factors noted above.
PART II. OTHER INFORMATION
Item 6. Reports on Form 8-K
b. Reports on Form 8-K.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities and on
the dates indicated.
SEABULK TRANSMARINE PARTNERSHIP, LTD.
By: SEABULK TANKERS, Ltd.
its General Partner
By: HVIDE MARINE TRANSPORT, INCORPORATED
its General Partner
By:
John H. Blankley, Executive Vice President,
Chief Financial Officer and Director
Date: