e10vq
UNITED STATES 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, 2008
GULFMARK OFFSHORE, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-22853
(Commission file number)
76-0526032
(I.R.S. Employer Identification No.)
|
|
|
10111 Richmond Avenue, Suite 340, Houston, Texas
(Address of principal executive offices)
|
|
77042
(Zip Code) |
(713) 963-9522
(Registrants telephone number, including area code)
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 þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ |
Accelerated filer o |
Non-accelerated filer o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
YES o NO þ
Number of shares of Common Stock, $0.01 Par Value, outstanding as of July 31, 2008:
25,320,935.
(Exhibit Index Located on Page 24)
GulfMark Offshore, Inc.
Index
2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2008 |
|
2007 |
|
|
(In thousands) |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
214,668 |
|
|
$ |
40,119 |
|
Trade accounts receivable, net allowance for doubtful accounts of
$225 in 2008
and $149 in 2007 |
|
|
83,936 |
|
|
|
87,243 |
|
Other accounts receivable |
|
|
6,357 |
|
|
|
3,399 |
|
Prepaid expenses and other current assets |
|
|
6,376 |
|
|
|
3,273 |
|
|
|
|
Total current assets |
|
|
311,337 |
|
|
|
134,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels and equipment at cost, net of accumulated depreciation of $225,762 in
2008 and $218,342 in 2007 |
|
|
693,241 |
|
|
|
641,333 |
|
Construction in progress |
|
|
116,244 |
|
|
|
112,667 |
|
Goodwill |
|
|
36,572 |
|
|
|
34,264 |
|
Fair value hedge |
|
|
11,688 |
|
|
|
6,740 |
|
Deferred costs and other assets |
|
|
6,019 |
|
|
|
4,974 |
|
|
|
|
Total assets |
|
$ |
1,175,101 |
|
|
$ |
934,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
17,132 |
|
|
$ |
21,409 |
|
Income taxes payable |
|
|
4,209 |
|
|
|
2,516 |
|
Accrued personnel costs |
|
|
17,780 |
|
|
|
17,872 |
|
Accrued interest expense |
|
|
5,863 |
|
|
|
5,793 |
|
Accrued professional fees |
|
|
1,512 |
|
|
|
982 |
|
Other accrued liabilities |
|
|
3,423 |
|
|
|
1,906 |
|
|
|
|
Total current liabilities |
|
|
49,919 |
|
|
|
50,478 |
|
|
|
|
Long-term debt |
|
|
300,518 |
|
|
|
159,558 |
|
Long-term income taxes: |
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
879 |
|
|
|
2,731 |
|
Income tax liabilities FIN 48 |
|
|
10,813 |
|
|
|
9,060 |
|
Other income taxes payable |
|
|
22,542 |
|
|
|
23,602 |
|
Fair value hedge |
|
|
11,688 |
|
|
|
6,740 |
|
Other liabilities |
|
|
5,685 |
|
|
|
5,752 |
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, no par value; 2,000 authorized; no shares issued |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value; 30,000 shares authorized; 23,201 and
22,680 shares issued and outstanding, respectively |
|
|
229 |
|
|
|
227 |
|
Additional paid-in capital |
|
|
215,672 |
|
|
|
211,004 |
|
Retained earnings |
|
|
415,891 |
|
|
|
336,846 |
|
Accumulated other comprehensive income |
|
|
143,580 |
|
|
|
128,308 |
|
Treasury stock, at cost |
|
|
(7,096 |
) |
|
|
(4,200 |
) |
Deferred compensation expense |
|
|
4,781 |
|
|
|
3,906 |
|
|
|
|
Total stockholders equity |
|
|
773,057 |
|
|
|
676,091 |
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
1,175,101 |
|
|
$ |
934,012 |
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
(In thousands, except
shares and per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
81,893 |
|
|
$ |
74,341 |
|
|
$ |
165,241 |
|
|
$ |
139,854 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating expenses |
|
|
29,912 |
|
|
|
24,688 |
|
|
|
57,610 |
|
|
|
49,602 |
|
Drydock expense |
|
|
2,630 |
|
|
|
1,012 |
|
|
|
6,322 |
|
|
|
5,471 |
|
General and administrative expenses |
|
|
9,421 |
|
|
|
8,584 |
|
|
|
18,198 |
|
|
|
15,217 |
|
Depreciation and amortization expense |
|
|
9,515 |
|
|
|
7,425 |
|
|
|
18,263 |
|
|
|
14,532 |
|
Gain on sale of assets |
|
|
(16,407 |
) |
|
|
(1,249 |
) |
|
|
(16,410 |
) |
|
|
(6,262 |
) |
|
|
|
Total costs and expenses |
|
|
35,071 |
|
|
|
40,460 |
|
|
|
83,983 |
|
|
|
78,560 |
|
|
|
|
Operating income |
|
$ |
46,822 |
|
|
$ |
33,881 |
|
|
$ |
81,258 |
|
|
$ |
61,294 |
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(935 |
) |
|
|
(2,038 |
) |
|
|
(2,117 |
) |
|
|
(4,650 |
) |
Interest income |
|
|
296 |
|
|
|
845 |
|
|
|
592 |
|
|
|
1,871 |
|
Foreign currency gain (loss) and other |
|
|
195 |
|
|
|
190 |
|
|
|
45 |
|
|
|
88 |
|
|
|
|
Total other expense, net |
|
|
(444 |
) |
|
|
(1,003 |
) |
|
|
(1,480 |
) |
|
|
(2,691 |
) |
|
|
|
Income before income taxes |
|
|
46,378 |
|
|
|
32,878 |
|
|
|
79,778 |
|
|
|
58,603 |
|
Income tax provision |
|
|
403 |
|
|
|
(2,157 |
) |
|
|
(733 |
) |
|
|
(3,529 |
) |
|
|
|
Net income |
|
$ |
46,781 |
|
|
$ |
30,721 |
|
|
$ |
79,045 |
|
|
$ |
55,074 |
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.06 |
|
|
$ |
1.37 |
|
|
$ |
3.50 |
|
|
$ |
2.46 |
|
|
|
|
Diluted |
|
$ |
2.00 |
|
|
$ |
1.32 |
|
|
$ |
3.40 |
|
|
$ |
2.39 |
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,661 |
|
|
|
22,443 |
|
|
|
22,602 |
|
|
|
22,368 |
|
|
|
|
Diluted |
|
|
23,334 |
|
|
|
23,187 |
|
|
|
23,240 |
|
|
|
23,071 |
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
For the Six Months Ended June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Deferred |
|
Total |
|
|
|
|
|
|
Stock at $0.01 |
|
Paid-In |
|
Retained |
|
Comprehensive |
|
|
|
|
|
|
|
|
|
Compensation |
|
Stockholders |
|
|
|
|
|
|
Par Value |
|
Capital |
|
Earnings |
|
Income |
|
Treasury Stock |
|
Expense |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
Balance at December 31, 2007 |
|
$ |
227 |
|
|
$ |
211,004 |
|
|
$ |
336,846 |
|
|
$ |
128,308 |
|
|
|
(164 |
) |
|
$ |
(4,200 |
) |
|
$ |
3,906 |
|
|
$ |
676,091 |
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
79,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,045 |
|
|
|
|
|
Issuance of common stock |
|
|
1 |
|
|
|
4,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,506 |
|
|
|
|
|
Exercise of stock options |
|
|
1 |
|
|
|
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164 |
|
|
|
|
|
Shares reacquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31 |
) |
|
|
(2,021 |
) |
|
|
|
|
|
|
(2,021 |
) |
|
|
|
|
Deferred compensation plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16 |
) |
|
|
(875 |
) |
|
|
875 |
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,272 |
|
|
|
|
|
|
|
|
Balance at June 30, 2008 |
|
$ |
229 |
|
|
$ |
215,672 |
|
|
$ |
415,891 |
|
|
$ |
143,580 |
|
|
|
(211 |
) |
|
$ |
(7,096 |
) |
|
$ |
4,781 |
|
|
$ |
773,057 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2008 |
|
2007 |
|
|
(In thousands) |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
79,045 |
|
|
$ |
55,074 |
|
Adjustments to reconcile net income to net cash provided by operations: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
18,263 |
|
|
|
14,532 |
|
Gain on sale of assets |
|
|
(16,410 |
) |
|
|
(6,262 |
) |
Amortization of stock based compensation |
|
|
2,687 |
|
|
|
1,827 |
|
Amortization of deferred financing costs on debt |
|
|
352 |
|
|
|
351 |
|
Adjustment for doubtful accounts receivable, net of write-offs |
|
|
74 |
|
|
|
(361 |
) |
Deferred income tax expense (benefit) |
|
|
232 |
|
|
|
1,664 |
|
Foreign currency transaction loss |
|
|
234 |
|
|
|
548 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,673 |
|
|
|
(10,285 |
) |
Prepaids and other |
|
|
(2,961 |
) |
|
|
(1,978 |
) |
Accounts payable |
|
|
(4,746 |
) |
|
|
2,683 |
|
Accrued liabilities and other |
|
|
(1,797 |
) |
|
|
(1,351 |
) |
|
|
|
Net cash provided by operating activities |
|
|
76,646 |
|
|
|
56,442 |
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of vessels and equipment |
|
|
(62,920 |
) |
|
|
(80,722 |
) |
Proceeds from disposition of vessels and equipment |
|
|
21,048 |
|
|
|
8,150 |
|
|
|
|
Net cash used in investing activities |
|
|
(41,872 |
) |
|
|
(72,572 |
) |
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from debt, net of debt financing costs |
|
|
152,143 |
|
|
|
254 |
|
Repayments of debt |
|
|
(12,000 |
) |
|
|
(1,094 |
) |
Proceeds from exercise of stock options |
|
|
163 |
|
|
|
761 |
|
Proceeds from issuance of common stock |
|
|
259 |
|
|
|
220 |
|
|
|
|
Net cash provided by financing activities |
|
|
140,565 |
|
|
|
141 |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(790 |
) |
|
|
2,732 |
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
174,549 |
|
|
|
(13,257 |
) |
Cash and cash equivalents at beginning of the period |
|
$ |
40,119 |
|
|
$ |
82,759 |
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
214,668 |
|
|
$ |
69,502 |
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Interest paid, net of interest capitalized |
|
$ |
1,542 |
|
|
$ |
3,997 |
|
|
|
|
Income taxes paid |
|
$ |
2,540 |
|
|
$ |
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL INFORMATION
The condensed consolidated financial statements of GulfMark Offshore, Inc. and its
subsidiaries included herein have been prepared by us without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, or SEC. Unless otherwise indicated,
references to we, us, our and the Company refer to GulfMark Offshore, Inc. and its
subsidiaries. Certain information relating to our organization and footnote disclosures normally
included in financial statements prepared in accordance with U.S. generally accepted accounting
principles, or U.S. GAAP, has been condensed or omitted in this Form 10-Q pursuant to such rules
and regulations. However, we believe that the disclosures herein are adequate to make the
information presented not misleading. The consolidated balance sheet as of December 31, 2007, has
been derived from the audited financial statements at that date but does not include all of the
information and footnotes required by U.S. GAAP for the presentation of complete financial
statements. It is recommended that these financial statements be read in conjunction with our
consolidated financial statements and notes thereto included in our Form 10-K for the year ended
December 31, 2007.
In the opinion of management, all adjustments, which include reclassifications and normal
recurring adjustments necessary to present fairly the financial statements for the periods
indicated have been made. All significant intercompany accounts have been eliminated. Certain
reclassifications of previously reported information may be made to conform with current year
presentation.
We provide marine support and transportation services primarily to companies involved in the
offshore exploration and production of oil and natural gas. Our fleet of vessels provides various
services that support the ongoing operation and construction of offshore oil and natural gas
facilities and drilling rigs, including the transportation of materials, supplies and personnel,
and the positioning of drilling structures. The majority of our operations are in the North Sea,
with the balance offshore Southeast Asia and the Americas. Periodically, we will contract vessels
into other regions to meet customers requirements.
Basic Earnings Per Share, or EPS, is computed by dividing net income by the weighted average
number of shares of common stock outstanding during the period. Diluted EPS is computed using the
treasury stock method for common stock equivalents. The details of our EPS calculation are as
follows (in thousands except per share amounts):
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
June 30, 2008 |
|
June 30, 2007 |
|
|
|
|
|
|
|
|
|
|
Per Share |
|
|
|
|
|
|
|
|
|
Per Share |
|
|
Income |
|
Shares |
|
Amount |
|
Income |
|
Shares |
|
Amount |
|
|
|
Earnings per share, basic |
|
$ |
46,781 |
|
|
|
22,661 |
|
|
$ |
2.06 |
|
|
$ |
30,721 |
|
|
|
22,443 |
|
|
$ |
1.37 |
|
Dilutive effect of common
stock options and unvested
restricted stock |
|
|
|
|
|
|
673 |
|
|
|
|
|
|
|
|
|
|
|
744 |
|
|
|
|
|
|
|
|
Earnings per share, diluted |
|
$ |
46,781 |
|
|
|
23,334 |
|
|
$ |
2.00 |
|
|
$ |
30,721 |
|
|
|
23,187 |
|
|
$ |
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
June 30, 2008 |
|
June 30, 2007 |
|
|
|
|
|
|
|
|
|
|
Per Share |
|
|
|
|
|
|
|
|
|
Per Share |
|
|
Income |
|
Shares |
|
Amount |
|
Income |
|
Shares |
|
Amount |
|
|
|
Earnings per share, basic |
|
$ |
79,045 |
|
|
|
22,602 |
|
|
$ |
3.50 |
|
|
$ |
55,074 |
|
|
|
22,368 |
|
|
$ |
2.46 |
|
Dilutive effect of common stock
options and unvested restricted
stock |
|
|
|
|
|
|
638 |
|
|
|
|
|
|
|
|
|
|
|
703 |
|
|
|
|
|
|
|
|
Earnings per share, diluted |
|
$ |
79,045 |
|
|
|
23,240 |
|
|
$ |
3.40 |
|
|
$ |
55,074 |
|
|
|
23,071 |
|
|
$ |
2.39 |
|
|
|
|
(2) OTHER COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, for the three and six month
periods ended June 30, 2008 and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
(In thousands) |
Net income |
|
$ |
46,781 |
|
|
$ |
30,721 |
|
|
$ |
79,045 |
|
|
$ |
55,074 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
4,890 |
|
|
|
15,283 |
|
|
|
15,272 |
|
|
|
20,949 |
|
|
|
|
Other comprehensive income |
|
$ |
51,671 |
|
|
$ |
46,004 |
|
|
$ |
94,317 |
|
|
$ |
76,023 |
|
|
|
|
Our accumulated other comprehensive income relates to our cumulative foreign currency
translation adjustment.
(3) FLEET EXPANSION AND RENEWAL PROGRAM
During the period 2000-2006, we added 15 new vessels to the fleet as part of our long-range
growth strategynine in the North Sea, three in the Americas and three offshore Southeast Asia.
In continuation of our growth strategy, we committed in 2005 to build six new 10,600 BHP AHTS
vessels for a total cost of approximately $140 million. The vessels are of a new design we
developed in conjunction with the builder, which incorporate Dynamic Positioning 2 (DP-2)
certification and Fire Fighting Class 1 (FiFi-1). They have a large carrying capacity of
approximately 2,700 tons. Keppel Singmarine Pte, Ltd. is building these vessels primarily to meet
the growing demand of our customer base offshore Southeast Asia. Four of these vessels have been
delivered to date beginning with the Sea Cheyenne in October 2007, the Sea Apache in January 2008,
the Sea Kiowa in March 2008, and the Sea Choctaw in July 2008. The final two vessels in this group
are scheduled for delivery in the fourth quarter of 2008. As a complement to these six new
vessels, during 2006, we took delivery of two newly constructed vessels, the Sea Guardian and the
Sea Sovereign. These vessels are currently under contract in Southeast Asia. Also during 2006, we
exercised a right of first refusal granted under the Sea Sovereign purchase contract for an
additional vessel, the Sea Supporter, which was delivered in
8
October 2007 and went to work on a term contract in Southeast Asia.
We also agreed to participate in a joint venture with Aker Yards ASA for the construction of
two large PSVs, one of which, the Highland Prestige, was delivered early in the second quarter of
2007 and immediately went to work in the North Sea region on a term contract. The second vessel,
the North Promise, was delivered at the end of the third quarter 2007 and is also working on a term
contract in the North Sea region. At the end of 2005, we purchased 100% of the Highland Prestige
from the joint venture, and during the second quarter of 2007 we purchased 100% of the North
Promise. Additionally, during the first quarter of 2007, we committed to build two new PSVs,
similar to the design of the North Promise and Highland Prestige but with a double-layer hull and
various environmental enhancements. Aker Yards ASA will build these vessels at a combined cost of
approximately $91 million, with estimated delivery dates in late 2009 and the first half of 2010.
In the third quarter of 2007, we entered into agreements with two shipyards to construct five
additional vessels. Bender Shipbuilding & Repair Co., Inc., a Mobile, Alabama based company was
contracted to build three PSVs and Gdansk Shiprepair Yard Remontowa SA, a Polish company, was
contracted to build two AHTS vessels. The estimated total cost of the five new build vessels is
$130 million. The first of these vessels is scheduled to be delivered in the fourth quarter of
2009 and the last of the five is scheduled to be delivered in the third quarter of 2010.
When applicable, we will enter into forward currency contracts to minimize our foreign
currency exchange risk related to the construction of new vessels. To this end on September 30,
2005, we entered into a forward contract related to the construction of the Highland Prestige.
This forward contract was designated as a fair value hedge and was highly effective as the terms of
the contract were the same as the purchase commitment. During the term of the hedge, the
consolidated balance sheet reflected the change in fair value of the foreign currency contract and
the offsetting purchase commitment. The contract expired on March 14, 2007 and upon settlement,
the positive foreign currency change of $0.9 million resulting from the change in the fair value of
the hedge was reflected as a reduction to the overall construction cost of the vessel.
Additionally during August 2007, we entered into a series of forward currency contracts
relative to future milestone payments for the construction of the six Keppel vessels and the two
Aker Yards vessels. As of June 30, 2008, the positive foreign currency change on the remaining
forward contracts was $11.7 million. The forward contracts are designated as fair value hedges and
deemed highly effective with the foreign currency change reflected in the overall construction cost
of the vessels.
Historically, our strategy has been to sell older vessels in our fleet when the appropriate
opportunity arises. Consistent with this strategy, in January 2007, we sold the North Prince, one
of our oldest North Sea based vessels. The proceeds from this sale were $5.7 million, and we
recognized a gain on the sale of $5.0 million. During the course of 2007, we also completed the
sale of three small 1981-built AHTSs based in Southeast Asia for proceeds totaling $10.1 million,
recognizing a gain of $7.2 million. In the second quarter of 2008, we completed the sale of two
pre-1985 built AHTS vessels, the Sea Diligent and the North Crusader, generating sales proceeds of
$21.0 million and a gain of $16.4 million, which is recognized in the current quarter.
Additionally, early in the third quarter of 2008, we sold the Sem Valiant, an older Southeast Asia
based AHTS, for $2.6 million, generating a gain of approximately $0.9 million which will be
recognized in our third quarter 2008 results. We believe the timing of these sales fit well with
our Southeast Asia new build delivery schedule.
Interest is capitalized in connection with the construction of vessels. During the three month
period ended June 30, 2008 and 2007, $2.6 million and $1.4 million, respectively, were capitalized.
During the six month period ended June 30, 2008 and 2007, $4.9 million and $2.3 million,
respectively
9
was capitalized.
(4) INCOME TAXES
We consider earnings of certain foreign subsidiaries to be permanently reinvested, and as
such, we have not provided for any U.S. federal or state income taxes on these earnings. Our
overall tax provision is affected by the mix of our operations within various taxing jurisdictions;
accordingly, there is limited correlation between income before income taxes and the income tax
provision or benefit. Our North Sea operations based in the U.K. and Norway have a special tax
incentive for qualified shipping operations known as a tonnage tax. These tonnage tax regimes
provide for a tax based on the net tonnage weight of a qualified vessel, resulting in significantly
lower taxes than those that would apply if we were not a qualified shipping company in those
jurisdictions. Further, as part of our 2007 Southeast Asia region realignment we began the movement
of certain of our vessels into our Singapore subsidiary, which in late 2007 had been granted
Approved International Shipping (AIS) status by the Singapore Maritime & Port Authority. This AIS
status provides for a ten year tax exemption, with additional extensions available, for vessel
profits in the Singapore subsidiary. During the three months ended June 30, 2008, our income was
derived principally from lower tax jurisdictions.
During the fourth quarter of 2007, the Norwegian taxing authority enacted tonnage tax
legislation as part of their 2008 budgetary process where they repealed the previous tonnage tax
system which had been in effect from 1996 to 2006, and created a new tonnage tax system from
January 2007 forward which is similar to other EU tonnage tax systems. Companies that participated
in the repealed Norwegian tonnage tax system are now required to pay the tax on accumulated untaxed
shipping profits as of December 31, 2006. Two-thirds of the liability is payable in equal
installments over ten years beginning in 2008, while the remaining one-third of the tax liability
can be met through qualified environmental expenditures on Norwegian flagged vessels. As of
December 31, 2007, we recorded current income tax expense of $25.3 million related to this repealed
tonnage tax liability. During the quarter ended June 30, 2008 the Norwegian tax authorities
provided additional guidance regarding the calculation of the accumulated untaxed shipping profits
as of December 31, 2006 resulting in the previously recorded liability being reduced by $1.0
million, which was recorded as a discrete, or one time, tax benefit in our tax provision. This
revision, along with the first of the ten annual installment payments having been paid in the
quarter ended June 30, 2008, resulted in our balance sheet including a $1.7 million current income
tax payable for one-tenth of the remaining liability and a $22.5 million other long term liability.
Of this long term payable, $13.9 million of this remaining liability is payable over eight years
and $8.6 million represents the one-third environmental portion of the total liability that we
expect to fully utilize before the recently extended deadline of December 31, 2021.
On January 1, 2008, a revenue based Flat Tax, or IETU, became effective for our operations in
Mexico. The IETU replaced the Assets Tax, which was repealed as of December 31, 2007, and the IETU
will, generally, function as an alternative minimum corporate tax payable to the extent that the
new revenue based tax exceeds the current income tax liability. With the change to the IETU, we
have determined that it is more likely than not we will not realize any economic benefit from the
future utilization of our Mexican tax loss carryforwards, and, accordingly, at December 31, 2007 we
established a net valuation allowance related to such carryforwards.
Effective January 1, 2007, we adopted FASB Interpretation Number 48, Accounting for
Uncertainty in Income Taxes, or FIN 48. We recognize income tax related penalties and interest in
our provision for income taxes and, to the extent applicable, in the corresponding balance sheet
presentations for accrued income tax assets and liabilities, including any amounts for uncertain
tax positions.
10
(5) COMMITMENTS AND CONTINGENCIES
We have contingent liabilities and future claims for which we have made estimates of the
amount of the eventual cost to liquidate these liabilities or claims. These liabilities and claims
may involve threatened or actual litigation where damages have not been specifically quantified but
we have made an assessment of our exposure and recorded a provision in our accounts for the
expected loss. Other claims or liabilities, including those related to taxes in foreign
jurisdictions, may be estimated based on our experience in these matters and, where appropriate,
the advice of outside counsel or other outside experts. Upon the ultimate resolution of the
uncertainties surrounding our estimates of contingent liabilities and future claims, our future
reported financial results would be impacted by the difference between our estimates and the actual
amounts paid to settle the liabilities. In addition to estimates related to litigation and tax
liabilities, other examples of liabilities requiring estimates of future exposure include
contingencies arising out of acquisitions and divestitures. Our contingent liabilities are based on
the most recent information available to us regarding the nature of the exposure. Such exposures
change from period to period based upon updated relevant facts and circumstances, which can cause
the estimate to change. In the recent past, our estimates for contingent liabilities have been
sufficient to cover the actual amount of our exposure.
(6) NEW ACCOUNTING PRONOUNCEMENTS
In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The
Hierarchy of Generally Accepted Accounting Principles, or SFAS No. 162. SFAS No. 162 identifies
the sources of accounting principles and the framework for selecting the principles to be used in
the preparation of financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States. SFAS No. 162 is
effective 60 days following the SECs approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles. We are currently reviewing SFAS No. 162 and do not expect that this
Statement will result in a change in current practice.
In April 2008, the FASB issued FASB Staff Position (FSP) No. FAS 142-3, Determination of
the Useful Life of Intangible Assets, or FSP No. FAS 142-3. FSP No. FAS 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142 Goodwill and Other
Intangible Assets, or FASB No. 142. The intent of this FSP is to improve the consistency between
the useful life of a recognized intangible asset under FASB No. 142 and the period of expected cash
flows used to measure the fair value of the asset under FASB Statement No. 141 Business
Combinations and other U.S. generally accepted accounting principles. FSP No. FAS 142-3 is
effective for financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is prohibited. The implementation of
this standard will not have an impact on our consolidated financial position or results of
operations.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement), or FSP No. APB 14-1. FSP No. APB 14-1 clarifies that convertible debt instruments
that may be settled in cash upon conversion (including partial cash settlement) are not addressed
by paragraph 12 of APB Opinion No. 14 Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants. Additionally, the FSP specifies that issuers of such instruments should
separately account for the liability and equity components in a manner that will reflect the
entitys nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.
FSP No. APB 14-1 is effective for financial statements issued for fiscal years beginning after
December 15,
11
2008, and interim periods within those fiscal years. The implementation of this standard will
not have an impact on our consolidated financial position or results of operations.
In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities, or FSP No.
EITF 03-6-1. FSP No. EITF 03-6-1 addresses whether instruments granted in share-based payment
transactions are participating securities prior to vesting and, therefore, need to be included in
the earnings allocation in computing earnings per share, or EPS, under the two-class method
described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share, or FASB No. 128.
The guidance in this FSP applies to the calculation of EPS under FASB No. 128 for share-based
payment awards with rights to dividends or dividend equivalents. FSP No. EITF 03-6-1 is effective
for financial statements issued for fiscal years beginning after December 15, 2008, and interim
periods within those years. All prior-period EPS data presented should be adjusted retrospectively
to conform with the provisions of this FSP. Early application is not permitted. The
implementation of this standard will not have an impact on our consolidated financial position or
results of operations.
(7) OPERATING SEGMENT INFORMATION
We operate three segments: the North Sea, Southeast Asia and the Americas, each of which is
considered a reportable segment under SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information. Our management evaluates segment performance primarily based on
operating income. Cash and debt are managed centrally. Because the regions do not manage those
items, the gains and losses on foreign currency remeasurements associated with these items are
excluded from operating income. Our management considers segment operating income to be a good
indicator of each segments operating performance from its continuing operations, as it represents
the results of the ownership interest in operations without regard to financing methods or capital
structures. Each operating segments operating income (loss) is summarized in the following table
and detailed discussions below:
12
Operating Income (Loss) by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast |
|
|
|
|
|
|
|
|
North Sea |
|
Asia |
|
Americas |
|
Other |
|
Total |
|
|
(In thousands) |
Quarter Ended June 30, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
53,452 |
|
|
$ |
20,175 |
|
|
$ |
8,266 |
|
|
$ |
|
|
|
$ |
81,893 |
|
Direct operating expenses |
|
|
22,519 |
|
|
|
2,992 |
|
|
|
4,401 |
|
|
|
|
|
|
|
29,912 |
|
Drydock expense |
|
|
2,593 |
|
|
|
(515 |
) |
|
|
552 |
|
|
|
|
|
|
|
2,630 |
|
General and administrative expenses |
|
|
3,335 |
|
|
|
506 |
|
|
|
681 |
|
|
|
4,899 |
|
|
|
9,421 |
|
Depreciation and amortization expense |
|
|
6,422 |
|
|
|
1,830 |
|
|
|
1,090 |
|
|
|
173 |
|
|
|
9,515 |
|
Gain on sale of assets |
|
|
(13,034 |
) |
|
|
(3,373 |
) |
|
|
|
|
|
|
|
|
|
|
(16,407 |
) |
|
|
|
Operating income (loss) |
|
$ |
31,617 |
|
|
$ |
18,735 |
|
|
$ |
1,542 |
|
|
$ |
(5,072 |
) |
|
$ |
46,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
59,997 |
|
|
$ |
8,459 |
|
|
$ |
5,885 |
|
|
$ |
|
|
|
$ |
74,341 |
|
Direct operating expenses |
|
|
19,409 |
|
|
|
2,011 |
|
|
|
3,268 |
|
|
|
|
|
|
|
24,688 |
|
Drydock expense |
|
|
122 |
|
|
|
896 |
|
|
|
(6 |
) |
|
|
|
|
|
|
1,012 |
|
General and administrative expenses |
|
|
3,380 |
|
|
|
337 |
|
|
|
369 |
|
|
|
4,498 |
|
|
|
8,584 |
|
Depreciation and amortization expense |
|
|
6,173 |
|
|
|
543 |
|
|
|
678 |
|
|
|
31 |
|
|
|
7,425 |
|
Gain on sale of assets |
|
|
|
|
|
|
(1,249 |
) |
|
|
|
|
|
|
|
|
|
|
(1,249 |
) |
|
|
|
Operating income (loss) |
|
$ |
30,913 |
|
|
$ |
5,921 |
|
|
$ |
1,576 |
|
|
$ |
(4,529 |
) |
|
$ |
33,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast |
|
|
|
|
|
|
|
|
North Sea |
|
Asia |
|
Americas |
|
Other |
|
Total |
|
|
(In thousands) |
Six Months Ended June 30, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
113,960 |
|
|
$ |
36,403 |
|
|
$ |
14,878 |
|
|
$ |
|
|
|
$ |
165,241 |
|
Direct operating expenses |
|
|
44,681 |
|
|
|
5,369 |
|
|
|
7,560 |
|
|
|
|
|
|
|
57,610 |
|
Drydock expense |
|
|
5,122 |
|
|
|
445 |
|
|
|
755 |
|
|
|
|
|
|
|
6,322 |
|
General and administrative expenses |
|
|
6,159 |
|
|
|
912 |
|
|
|
1,132 |
|
|
|
9,995 |
|
|
|
18,198 |
|
Depreciation and amortization expense |
|
|
12,921 |
|
|
|
3,186 |
|
|
|
1,860 |
|
|
|
296 |
|
|
|
18,263 |
|
Gain on sale of assets |
|
|
(13,037 |
) |
|
|
(3,373 |
) |
|
|
|
|
|
|
|
|
|
|
(16,410 |
) |
|
|
|
Operating income (loss) |
|
$ |
58,114 |
|
|
$ |
29,864 |
|
|
$ |
3,571 |
|
|
$ |
(10,291 |
) |
|
$ |
81,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
111,665 |
|
|
$ |
17,163 |
|
|
$ |
11,026 |
|
|
$ |
|
|
|
$ |
139,854 |
|
Direct operating expenses |
|
|
39,268 |
|
|
|
3,688 |
|
|
|
6,646 |
|
|
|
|
|
|
|
49,602 |
|
Drydock expense |
|
|
4,256 |
|
|
|
1,142 |
|
|
|
73 |
|
|
|
|
|
|
|
5,471 |
|
General and administrative expenses |
|
|
5,940 |
|
|
|
252 |
|
|
|
704 |
|
|
|
8,321 |
|
|
|
15,217 |
|
Depreciation and amortization expense |
|
|
11,906 |
|
|
|
1,058 |
|
|
|
1,507 |
|
|
|
61 |
|
|
|
14,532 |
|
Gain on sale of assets |
|
|
(5,013 |
) |
|
|
(1,249 |
) |
|
|
|
|
|
|
|
|
|
|
(6,262 |
) |
|
|
|
Operating income (loss) |
|
$ |
55,308 |
|
|
$ |
12,272 |
|
|
$ |
2,096 |
|
|
$ |
(8,382 |
) |
|
$ |
61,294 |
|
|
|
|
(9) SUBSEQUENT EVENT
On July 1, 2008, under the terms of a Membership Interest and Stock Purchase Agreement, we
acquired 100% of the membership interests of Rigdon Marine Holdings, L.L.C. (Rigdon Holdings) and
all the shares of common stock of Rigdon Marine Corporation (Rigdon Marine, together with Rigdon
Holdings, Rigdon) not owned by Rigdon Holdings for consideration of $271 million (plus or minus
certain post-closing adjustments), consisting of $150 million in cash and approximately 2.1
million shares of GulfMark Offshore, Inc. common stock valued at $121 million at closing, plus the
assumption of $269 million in debt. We financed the cash portion of the consideration with cash on
hand and borrowing of $140.9 million under our current $175 million revolver, which borrowing took
place during the second quarter of 2008. Rigdon operates a fleet of 22 technologically advanced
13
offshore supply vessels primarily in the domestic Gulf of Mexico, with six additional vessels under
construction to be delivered by the third quarter of 2009.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We provide marine support and transportation services to companies involved in the offshore
exploration and production of oil and natural gas. Our vessels transport drilling materials,
supplies and personnel to offshore facilities, as well as move and position drilling structures.
The current vessel count excludes the July 1, 2008 Rigdon acquisition. The majority of our
operations are based in the North Sea with 36 vessels operating in the area. We also have 14
vessels offshore Southeast Asia, five vessels offshore Brazil, six vessels in the Gulf of Mexico,
two in the Mediterranean Sea, two offshore India, and three offshore Africa. Our fleet has grown
in both size and capability from an original 11 vessels acquired in 1990 to our present level of 68
vessels, through strategic acquisitions and new construction of technologically advanced vessels,
partially offset by dispositions of certain older, less profitable vessels. Our fleet includes 47
owned vessels, and 21 managed vessels.
Our results of operations are directly impacted by the level of activity in worldwide offshore
oil and natural gas exploration, development and production. This activity is in turn influenced
by trends in oil and natural gas prices. Oil and natural gas prices are affected by a host of
geopolitical and economic forces, including the fundamental principles of supply and demand. Over
the last few years commodity prices have been at record highs, resulting in oil and natural gas
companies increasing exploration and development activities, after reduced levels of activities
from 2002 through early 2004.
The operations of our fleet may be subject to seasonal factors. Operations in the North Sea
are often at their highest levels during the summer months, from April to August, and at their
lowest levels during the winter, from November to February. Operations in our other areas,
although involving some seasonal factors, tend to remain more consistent throughout the year. We
have historically, to the extent possible, accomplished the majority of our regulatory drydocks
during these seasonal decreases in demand in order to minimize downtime during our traditionally
peak demand periods. When a vessel is drydocked, we incur not only the drydocking cost but also
the loss of revenue from the vessel during the drydock period. The demands of the market, the
expiration of existing contracts, the start of new contracts and the availability allowed by our
customers have and will continue to influence the timing of drydocks throughout the year. During
the second quarter of 2008, we completed 156 drydock days, compared to 50 drydock days completed in
the same quarter last year.
We provide management services to other vessel owners for a fee. We do not include charter
revenues and vessel expenses of these vessels in our operating results but rather include
management fees in operating revenues. These vessels have been excluded for purposes of
calculating fleet rates per day worked and utilization in the applicable periods.
Our operating costs are primarily a function of fleet configuration and utilization levels.
The most significant direct operating costs are wages paid to vessel crews, maintenance and
repairs, and marine insurance. Generally, fluctuations in vessel utilization have little effect on
direct operating costs in the short term, and as a result direct operating costs as a percentage of
revenues may vary substantially due to changes in day rates and utilization.
In addition to direct operating costs, we incur fixed charges related to the depreciation of
our fleet and costs for routine drydock inspections, which are maintenance and repairs designed to
ensure compliance with applicable regulations and maintaining certifications for our vessels with
various international classification societies.
14
Critical Accounting Policies
In the period covered by this report, there have been no changes to the critical accounting
policies used in our reporting of results of operations and financial position. For a discussion
of our critical accounting policies, see Managements Discussion and Analysis of Financial
Condition and Results of Operations in our Form 10-K for the year ended December 31, 2007.
Results of Operations
The table below sets forth, by region, the average day rates and utilization for our vessels
and the average number of vessels owned or chartered during the periods indicated. These vessels
generate substantially all of our revenues and operating profit. We use the information that
follows to evaluate the performance of our business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
|
Revenue by Region (000s) (a): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Sea Based Fleet (b) |
|
$ |
53,452 |
|
|
$ |
59,997 |
|
|
$ |
113,960 |
|
|
$ |
111,665 |
|
Southeast Asia Based Fleet |
|
|
20,175 |
|
|
|
8,459 |
|
|
|
36,403 |
|
|
|
17,163 |
|
Americas Based Fleet |
|
|
8,266 |
|
|
|
5,885 |
|
|
|
14,878 |
|
|
|
11,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rates Per Day Worked (a) (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Sea Based Fleet (c) |
|
$ |
21,766 |
|
|
$ |
23,788 |
|
|
$ |
23,384 |
|
|
$ |
22,554 |
|
Southeast Asia Based Fleet |
|
|
17,992 |
|
|
|
8,373 |
|
|
|
16,179 |
|
|
|
8,616 |
|
Americas Based Fleet |
|
|
15,854 |
|
|
|
11,364 |
|
|
|
14,507 |
|
|
|
11,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall Utilization (a): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Sea Based Fleet |
|
|
95.3 |
% |
|
|
92.6 |
% |
|
|
93.8 |
% |
|
|
91.3 |
% |
Southeast Asia Based Fleet |
|
|
86.6 |
% |
|
|
90.6 |
% |
|
|
91.3 |
% |
|
|
91.8 |
% |
Americas Based Fleet |
|
|
85.5 |
% |
|
|
97.2 |
% |
|
|
86.7 |
% |
|
|
94.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Owned/Chartered Vessels (a) (d): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Sea Based Fleet |
|
|
27.0 |
|
|
|
29.3 |
|
|
|
27.7 |
|
|
|
29.2 |
|
Southeast Asia Based Fleet |
|
|
14.8 |
|
|
|
12.5 |
|
|
|
13.9 |
|
|
|
12.3 |
|
Americas Based Fleet |
|
|
7.0 |
|
|
|
6.0 |
|
|
|
6.7 |
|
|
|
6.0 |
|
|
|
|
Total |
|
|
48.8 |
|
|
|
47.8 |
|
|
|
48.3 |
|
|
|
47.5 |
|
|
|
|
(a) |
|
Includes all owned or bareboat chartered vessels. |
(b) |
|
Rate per day worked is defined as total charter revenues divided by number of days worked.
Utilization rate is defined as the total days worked divided by total days of availability in
the period. |
(c) |
|
Revenues for vessels in the North Sea based fleet are primarily earned in Pound Sterling
(GBP), Norwegian Kroner (NOK) and Euros, and have been converted to U.S. Dollars (US$) at the
average exchange rate for the period. The average equivalent exchange rate per one US$ for
the periods indicated is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
|
|
|
1 US$ = |
|
|
|
GBP |
|
|
0.507 |
|
|
|
0.503 |
|
|
|
0.506 |
|
|
|
0.507 |
|
NOK |
|
|
5.069 |
|
|
|
6.01 |
|
|
|
5.19 |
|
|
|
6.116 |
|
Euro |
|
|
0.639 |
|
|
|
0.742 |
|
|
|
0.653 |
|
|
|
0.752 |
|
(d) |
|
Average number of vessels is calculated based on the aggregate number of vessel days
available during each period |
15
|
|
divided by the number of calendar days in such period. Includes
owned and bareboat vessels only, and is adjusted for vessel additions and dispositions
occurring during each periods. |
Comparison of the Three Months Ended June 30, 2008 with the Three Months Ended June 30, 2007
For the quarter ended June 30, 2008, our net income was $46.8 million, or $2.00 per diluted
share, on quarterly revenue of $81.9 million. This compares to a net income during the same period
in 2007 of $30.7 million, or $1.32 per diluted share on revenues of $74.3 million.
During this quarter, we continued to experience strong revenue levels. Our revenue increased
$7.6 million compared to the same quarter a year ago, primarily as a result of higher day rates in
both Southeast Asia and Americas region coupled with the addition of four new vessels in the
Southeast Asia region partially offset by the sale of three of the older vessels. The overall mix
in capacity and day rates partially contributed $4.8 million to the revenue increase, while the
continued strengthening of the Norwegian Kroner (NOK) against the U.S. Dollar contributed $2.7
million to the overall revenue improvement. There was also an increase in utilization, amounting
to an increase of $0.1 million.
Operating income increased 38.2%, or $12.9 million, from $33.9 million reported in second
quarter of 2007 to $46.8 million during this years second quarter. In addition to the increase in
revenue, we recognized a gain of $16.4 million related to the sale of the Sea Diligent and North
Crusader during the quarter. Offsetting these improvements was an increase in direct operating
expenses of $5.2 million, largely due to higher levels of repair and maintenance, an increase in
the NOK against the U.S. Dollar and the addition of the new vessels. Depreciation and amortization
expense increased by $2.1 million over the prior year quarter as a result of the addition of the
new vessels, while general and administrative expenses increased by $0.8 million, principally
related to increased incentive compensation expense and administrative costs.
North Sea
Revenue in our North Sea region decreased by $6.5 million, a decrease of 11%, from $60.0
million in the second quarter of 2007 to $53.5 million in the second quarter of the current year.
From the prior quarter, day rates decreased by 8.5% due to the transfer of some vessels from spot
contracts to long term contracts and the softening of the spot market which reduced revenue by $7.5
million. Offsetting the decrease in day rates was a positive exchange rate effect, as the NOK
strengthened against the U.S. Dollar, which partially offset the decrease in day rates by $2.0
million. Capacity decreased revenue by $1.6 million, largely due to the mobilization of the
Highland Drummer, Highland Piper and the North Crusader out of the region. The decrease in
capacity was partially offset by the addition of the North Promise in the later part of 2007.
Operating income for the region increased by $0.7 million to $31.6 million. In addition to the
decrease in revenue, direct operating and drydock cost increased by $3.1 million and $2.5 million
respectively from the quarter ending June 30, 2007. Offsetting these items was the recognized gain
of $13.0 million related to the sale of the North Crusader in the second quarter of 2008.
Depreciation and amortization expense increased by $0.2 million resulting from the addition of the
North Promise.
Southeast Asia
Our Southeast Asia region showed a significant improvement in revenue during the second
quarter of this year, more than doubling over the second quarter of 2007. Revenues increased from
$8.5 million to $20.2 million. Day rates increased from $8,373 to $17,992, while capacity
increased by $10.9 million. The increase in capacity was due to the full quarter effect of the
2007 addition of the Highland Drummer and the mobilization of the North Crusader into the region in
the first quarter of 2008. In addition as part of the new build program, four new vessels came
online beginning in the
16
third quarter of 2007 through the current quarter. These vessels are the
Sea Cheyenne, Sea Apache, Sea Kiowa and Sea Supporter. These increases in capacity were offset by the sale of the Sem
Courageous in the first quarter of 2008, the Sea Diligent in the current quarter and the Sea
Explorer and Sea Endeavor in the third quarter of 2007. Operating income for the region increased
from $5.9 million to $18.7 million, an increase of $12.8 million quarter to quarter. In addition
to the increase in revenue, drydock expense decreased by $1.4 million. These improvements were
partially offset by an increase in direct operating expenses of $1.0 million, and an increase in
depreciation and amortization expense of $1.3 million resulting from the increase in capacity. Also
recognized, during the second quarter of this year, was a gain of $3.3 million on the sale of the
Sea Diligent.
Americas
Our Americas region revenue increased by $2.4 million, from $5.9 million in the second quarter
of 2007 to $8.3 million in the second quarter of this year. This increase was primarily caused by
the mobilization of the Highland Piper into the region during the second quarter of 2008, which
increased capacity by $2.5 million and the result of the positive movement in exchange rates
between the Brazilian Reis (BRL) and the U.S. Dollar. Offsetting these increases was a decrease in
utilization from 97.2% to 85.5% which decreased revenue by $0.7 million. Operating income remained
basically unchanged from the same quarter in 2007, even though revenue increased, as direct
operating cost also increased by $1.1 million due to higher crew salaries and travel. Drydock
expenses increased by $0.6 million and depreciation and amortization expense also increased by $0.4
million as a result of the amortization of the mobilization of the vessel into the region. General
and administrative expense increased by $0.3 million due to increased salaries and start up cost
related to the newly created U.S. operation.
Other
Other expenses in the second quarter of 2008 decreased by $0.6 million compared to the prior
year second quarter. This decrease was mainly caused by decreased interest expense, $1.1 million,
due to the repayment of all outstanding balances on our revolving credit facility during 2007,
coupled with increased capitalized interest being recorded in the second quarter of this year
related to the vessels under construction. Interest income decreased by $0.5 million resulting
from lower interest earned on lower cash balances throughout the quarter.
Our income tax provision for the second quarter resulted in a credit to income tax expense of
$0.4 million, compared to the $2.2 million charge, for the second quarter of 2007. The decrease in
the 2008 period reflected a $1.0 million one-time benefit related to the 2007 changes to Norwegian
tonnage tax laws plus increased profits in lower tax jurisdictions.
Comparison of the Six Months Ended June 30, 2008 with the Six Months Ended June 30, 2007
For the six months ended June 30, 2008, we had net income of $79.0 million, or $3.40 per
diluted share, on revenues of $165.2 million. During the same period in 2007, net income was $55.1
million, or $2.39 per diluted share, on revenues of $139.9 million.
Our year to date revenue increased 18.2% or $25.4 million year over year. The overall mix in
capacity and day rates increased revenue by $18.6 million, largely due to the additions of the
North Promise and Sea Supporter in late 2007, as well as the Sea Cheyenne, Sea Apache and Sea Kiowa
throughout 2008. This was offset in part by the sale of the Sem Courageous, Sea Explorer and Sea
Endeavor in the later part of 2007 and the Sea Diligent and North Crusader in the second quarter of
2008. Also contributing to the revenue increase was the continued strength of primarily the NOK
against the US$ which contributed $5.9 million to the overall increase. Utilization increased from
17
91.8% last year to 92.1% this year, for an increase of $0.9 million.
Operating income increased by $20.0 million, from $61.3 million in 2007 to $81.3 million this
year. While the increase in revenue was the main factor responsible for this increase, during 2008
we also recognized a gain of $16.4 million on the sale of two vessels. Partially offsetting these
contributions was an increase in direct operating expenses of $8.0 million, due mainly to the
addition of the new vessels, as well as the increase in the GBP and NOK exchange rate against the
U.S. Dollar. Depreciation and amortization expense increased by $3.7 million also due to the
addition of the new vessels. General and administrative expenses increased $3.0 million, resulting
increased salaries, professional fees and administrative costs.
North Sea
North Sea revenue increased 2.1%, or $2.3 million, from last year. The positive fluctuation
in the exchange rates between the Pound Sterling (GBP) and NOK and the U.S. Dollar contributed $4.3
million to the increase in revenue while utilization rates increased from 91.3% to 93.8% thus
resulting in an increase of $1.1 million. Capacity increased by $1.6 million, due to the full year
effect of the Highland Prestige and North Promise partially offset by the mobilization of the
Highland Drummer and Highland Piper out of the region. Partially offsetting was a decrease in day
rates of $4.7 million resulting from lower spot market rates for both anchor handlers and large
platform supply vessels during the first half of 2008. Operating income increased by $2.8 million,
the majority of which is related to the gain of $13.0 million related to the sale of the North
Crusader. Partially offsetting this was the increase in drydock expense of $0.9 million and an
increase of direct operating costs of $5.4 million due mainly to the addition of the new vessels
coupled with higher crew salaries and travel cost. Depreciation and amortization expense increased
by $1.0 million, due to the addition of new vessels. General and administrative expenses also
increased by $0.2 million due primarily to increased salaries.
Southeast Asia
Revenue for our Southeast Asia based fleet increased by $19.2 million, from $17.2 million in
the first six months of 2007 to $36.4 million in the same 2008 period. The increase was primarily
attributable to an increase in the fleet size in the region. The increase resulted from the
addition of the Sea Apache, Sea Cheyenne, and Sea Kiowa in 2008, the Sea Supporter in the later
part of 2007, and we mobilized two vessels into the region in late 2007 and the first quarter of
2008. Partially offsetting the additions was the sale of the Sem Courageous and Sea Explorer in
2007 and the sale of the Sea Diligent in June 2008. In addition, day rates increased from $8,616
in 2007 to $16,179 in 2008, which contributed $0.9 million to the increase in revenue, resulting
mainly from the addition of technologically advanced vessels into the region which command higher
day rates. Operating income increased from $12.3 million in 2007 to $29.9 million this year.
While the increase in revenue is the main factor attributing to this increase, the region also
experienced a decrease in drydock expense of $0.7 million. Additionally, the sale of the Sea
Diligent during the year contributed a gain of $3.3 million to the increase in operating income.
Direct operating expense increased by $1.7 million resulting primarily from the net additions of
the vessels into the region. Depreciation and amortization expense increased by $2.1 million also
as a result of the additions of vessels to the region.
Americas
Our Americas region revenue increased $3.9 million, from $11.0 million in 2007 to $14.9
million in 2008. The increase was the result of the combination of higher day rates and the
positive fluctuation in exchange rates between BRL and the U.S. Dollar which contributed $1.7
million to the increase in revenue. The increase in capacity also contributed $2.6 million to the
increase in revenue primarily resulting from the mobilization of the Highland Piper into the region
in the first quarter of
18
2008. Utilization decreased from 94.2% last year to 86.7% this year,
reducing revenue by $0.4 million. Operating income increased by $1.5 million, which was directly related to the increase in
revenue, partially offset by increases in direct operating expenses of $0.9 million, drydock
expenses of $0.7 million and depreciation expenses of $0.4 million. General and administrative
expense increased by $0.4 million due to increased salaries, and start up cost related to the newly
created U.S. operation.
Other
In the six months ended June 30, 2008, other expenses totaled $1.5 million a decrease of $1.2
million from 2007. The decrease was attributed to a $2.5 million decrease in interest expense, and
a $1.3 million decrease in interest income.
Our income tax provision for the first half of 2008 was $0.7 million, a 0.92% effective tax
rate, compared to a provision of $3.5 million for the same 2007 period, or 6.0% effective tax rate.
The decrease in our effective tax rate is mainly a reflection of our higher pretax earnings in low
tax jurisdictions coupled with a one-time $1.0 million Norwegian tax benefit related to the 2007
changes to Norways tonnage tax laws.
Liquidity, Capital Resources and Financial Condition
Our ongoing liquidity requirements are generally associated with our need to service debt,
fund working capital, acquire or improve equipment and make other investments. Since inception, we
have been active in the acquisition of additional vessels through both the resale market and new
construction. Bank financing, equity capital and internally generated funds have historically
provided funding for these activities.
As of June 30, 2008, we had total debt of $300.5 million, consisting of approximately $159.6
million of our 7.75% senior notes, and $140.9 million draw on our current $175 million revolver for
the July 1, 2008 acquisition of Rigdon.
Net working capital as of June 30, 2008 was $261.4 million, including $214.7 million in cash,
as a result of borrowings of approximately $140.9 million under the companys revolving credit
agreement required to partially fund the cash purchase price of the Rigdon Marine Companies
acquisition on July 1, 2008. Net cash provided by operating activities increased by $20.2 million
to $76.6 million for the six months ended June 30, 2008. This increase was mainly due to improved
financial performance in the first half of 2008, partially offset by working capital changes. Net
cash used in investing activities was $41.9 million and $72.6 million for the six months ended June
30, 2008 and 2007, respectively. The decrease of $30.7 million reflects decreased payments on new
build vessels, coupled with the higher proceeds from the disposition of two vessels.
Most of our income tax liabilities are for deferred taxes. The tonnage tax regimes in both
Norway and the U.K. reduce the cash required for taxes, and accelerated tax depreciation has
further mitigated current taxes outside the North Sea region.
In the first half of 2008, we made approximately $54.0 million in payments related to the
vessels under construction. Drydocking expenditures for the first six months of 2008 were $6.3
million.
We believe that our current level of cash on hand and cash flows from operations will be
adequate to repay our debts due and will provide sufficient resources to finance our operating
requirements. However, our ability to fund working capital, capital expenditures and debt service
in excess of cash on hand will be dependent upon the success of our operations. To the extent that
19
existing sources are insufficient to meet those cash requirements, we would seek other debt or
equity financing; however, we can give no assurances that such debt or equity financing would be available
on acceptable terms.
In addition, we have sold a Southeast Asia based vessel in July of 2008 that would result in
cash proceeds of approximately $2.6 million.
Currency Fluctuations and Inflation
In areas where currency risks are potentially high, we normally accept only a small percentage
of charter hire in local currency. The remainder is paid in U.S. Dollars.
Substantially all of our operations are international; therefore we are exposed to currency
fluctuations and exchange rate risks. Charters for vessels in the North Sea fleet are primarily
denominated in GBP with a portion denominated in NOK and Euros. Substantially all of our operating
costs are denominated in the same currency as charter hire in order to reduce the risk of currency
fluctuations. For the periods indicated, the average equivalent exchange rate per one U.S. Dollar
(US$) were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
|
|
1 US$ = |
GBP |
|
|
0.507 |
|
|
|
0.503 |
|
|
|
0.506 |
|
|
|
0.507 |
|
NOK |
|
|
5.069 |
|
|
|
6.01 |
|
|
|
5.19 |
|
|
|
6.116 |
|
Euro |
|
|
0.639 |
|
|
|
0.742 |
|
|
|
0.653 |
|
|
|
0.752 |
|
Our North Sea based fleet generated $114 million in revenues and $58.1 million in operating
income for the six months ended June 30, 2008.
Reflected in the accompanying balance sheet as of June 30, 2008, is $143.6 million in
accumulated other comprehensive income, which fluctuates, based on differences in foreign currency
exchange rates as of each balance sheet date compared to the exchange rates when we invested
capital in these markets. Changes in other comprehensive income are non-cash items that are
primarily attributable to investments in vessels and dollar based capitalization between our parent
company and our foreign subsidiaries.
After evaluating the U.S. Dollar debt, we have determined that it is in our best interest not
to use any financial instruments to hedge the exposure of our revenue and costs of operations to
currency fluctuations under present conditions. Our decision is based on a number of factors,
including among others:
|
|
|
the cost of using hedging instruments in relation to the risks of currency
fluctuations, |
|
|
|
|
the propensity for adjustments in currency denominated vessel day rates over time
to compensate for changes in the purchasing power of the currency as measured in
U.S. Dollars, |
|
|
|
|
the level of U.S. Dollar denominated borrowings available to us, and |
|
|
|
|
the conditions in our U.S. Dollar generating regional markets. |
One or more of these factors may change and we, in response, may choose to use financial
instruments to hedge risks of currency fluctuations. However, in 2007, we entered into forward
currency contracts to specifically hedge the foreign currency exposure related to firm contractual
commitments in the form of future vessel payments. These hedging relationships were formally
20
documented at inception and the contracts have been and continue to be highly effective. As a result,
by design, there is an exact offset between the gain or loss exposure in the related underlying
contractual commitment. The balance sheet reflects the change in the fair value of the foreign
currency contracts and purchase commitments of $11.7 million, an increase of $5.0 million from
year-end 2007.
To date, general inflationary trends have not had a material effect on our operating revenues
or expenses.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and other statements that are not
historical facts concerning, among other things, market conditions, the demand for marine and
transportation support services and future capital expenditures. These statements are subject to
certain risks, uncertainties and assumptions, including, without limitation:
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operational risk, |
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catastrophic or adverse sea or weather conditions, |
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dependence on the oil and gas industry, |
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prevailing oil and natural gas prices, |
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expectations about future prices, |
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delay or cost over runs on construction projects, |
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ongoing capital expenditure requirements, |
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uncertainties surrounding environmental and government regulation, |
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risk relating to leverage, |
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risks of foreign operations, |
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risk of war, sabotage or terrorism, |
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assumptions concerning competition, |
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risks of currency fluctuations, and |
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other matters. |
These statements are based on certain assumptions and analyses made by us in light of our
experience and perception of historical trends, current conditions, expected future developments
and other factors we believe are appropriate under the circumstances. Such statements are subject
to risks and uncertainties, including the risk factors discussed above and those discussed in our
Form 10-K for the year ended December 31, 2007, filed with the SEC, general economic and business
conditions, the business opportunities that may be presented to and pursued by us, changes in law
or regulations and other factors, many of which are beyond our control.
We cannot assure you that we have accurately identified and properly weighed all of the
factors which affect market conditions and demand for our vessels, that the information upon which
we have relied is accurate or complete, that our analysis of the market and demand for our vessels
is correct, or that the strategy based on that analysis will be successful.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Sensitivity
Our financial instruments that are potentially sensitive to changes in interest rates include
our 7.75% Senior Notes. As of July 3, 2008, the fair value of these notes, based on quoted market
prices, was approximately $159.6 million compared to a carrying amount of also $159.6 million.
21
Exchange Rate Sensitivity
We operate in a number of international areas and are involved in transactions denominated in
currencies other than U.S. Dollars, which exposes us to foreign currency exchange risk. At various
times we may utilize forward exchange contracts, local currency borrowings and the payment
structure of customer contracts to selectively hedge exposure to exchange rate fluctuations in
connection with monetary assets, liabilities and cash flows denominated in certain foreign
currency. We do not hold or issue forward exchange contracts or other derivative financial
instruments for speculative purposes.
Other information required under Item 3 has been incorporated into Managements Discussion and
Analysis of Financial Condition and Results of Operations, and is incorporated herein.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Based on their evaluation of our disclosure controls and procedures as of the end of the
period covered by this report, our Chief Executive Officer and Chief Financial Officer have
concluded that the disclosure controls and procedures are effective for the period covered by the
report ensuring that the information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms.
(b) Evaluation of internal controls and procedures.
As of December 31, 2007, our management determined that our internal controls over financial
reporting were effective. Our assessment of the effectiveness of our internal controls over
financial reporting as of December 31, 2007, has been audited by UHY LLP, an independent public
accounting firm, as stated in our Form 10-K for the year ended December 31, 2007 filed with the
SEC.
There were no changes in our internal controls over financial reporting that occurred during
the period covered by this report that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
22
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS OF A VOTE OF SECURITY HOLDERS
At our annual meeting of Stockholders held on May 18, 2008, our stockholders approved the
election of all nominated directors as follows:
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Name of Nominee |
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For |
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Withheld |
Peter I. Bijur |
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19,672,876 |
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1,160,229 |
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David J. Butters |
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18,837,850 |
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1,995,255 |
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Marshall A. Crowe |
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20,542,391 |
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290,714 |
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Louis S. Gimbel, 3rd |
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20,524,958 |
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308,147 |
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Sheldon S. Gordon |
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20,562,764 |
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270,341 |
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Robert B. Millard |
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20,562,764 |
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270,341 |
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Robert T. OConnell |
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20,004,842 |
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828,263 |
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Rex C. Ross |
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20,523,148 |
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309,957 |
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Bruce A. Streeter |
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20,500,553 |
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332,552 |
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At our annual meeting of Stockholders held on May 18, 2008, our stockholders approved the
selection of UHY LLP as the Companys independent auditors for the fiscal year ending December 31,
2008, as follows:
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For |
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Against |
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Abstained |
20,819,184 |
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7,177 |
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6,742 |
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ITEM 5. OTHER INFORMATION
On July 1, 2008, subsequent to the period covered by this report, we acquired 100% of the
membership interests in Rigdon Marine Holdings, L.L.C. (Rigdon Holdings) and all the shares of
common stock of Rigdon Marine Corporation not owned by Rigdon Holdings for consideration of $271
million (plus or minus certain post-closing adjustments), consisting of $150 million in cash and
approximately 2.1 million shares of GulfMark Offshore, Inc. common stock valued at $121 million at
closing, plus the assumption of $269 million in debt. We financed the cash portion of the
consideration with both cash on hand and by borrowing $140.9 million under our current $175 million
revolver, which borrowing took place during the second quarter of 2008.
23
ITEM 6. EXHIBITS
Exhibits
See Exhibit Index for the list of Exhibits filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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GulfMark Offshore, Inc.
(Registrant)
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By: |
/s/ Edward A. Guthrie
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Edward A. Guthrie |
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Executive Vice President and
Chief Financial Officer |
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Date: July 31, 2008
24
EXHIBIT INDEX
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Exhibit No. |
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Document Description |
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3.1
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Certificate of Incorporation, dated
December 4, 1996
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Incorporated by reference to Exhibit 3.1 to our quarterly report on Form
10-Q for the quarter ended September 30, 2002 |
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3.2
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Certificate of Amendment of Certificate of
Incorporation, dated March 6, 1997
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Incorporated by reference to Exhibit 3.2 to our quarterly report on Form
10-Q for the quarter ended September 30, 2002 |
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3.3
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Certificate of Amendment of Certificate of
Incorporation, dated May 24, 2002
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Incorporated by reference to Exhibit 3.3 to our quarterly report on Form
10-Q for the quarter ended September 30, 2002 |
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3.4
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Bylaws, dated December 6, 1996
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Incorporated by reference to Exhibit 3.3 to our Registration Statement on
Form S-4, Registration No. 333-24141 filed on March 28, 1997 |
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3.5
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Amendment No. 1 to Bylaws
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Incorporated by reference to Exhibit 3.1 to our Form 8-K/A filed on
September 17, 2007 |
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4.1
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See Exhibit Nos. 3.1, 3.2 and 3.3 for
provisions of the Certificate of
Incorporation and Exhibit 3.4 for
provisions of the Bylaws defining the
rights of the holders of Common Stock
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Incorporated by reference to Exhibits 3.1, 3.2 and 3.3 to our quarterly
report on Form 10-Q for the quarter ended September 30, 2002 and Exhibit
3.3 to our Registration Statement on Form S-4, Registration No. 333-24141
filed on March 28, 1997 |
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4.2
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Specimen Certificate for GulfMark
Offshore, Inc. Common Stock, $0.01 par
value
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Incorporated by reference to Exhibit 4.2 to our Registration Statement on
Form S-1, Registration No. 333-31139 filed on July 11, 1997 |
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4.3
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Indenture, dated July 21, 2004, among
GulfMark Offshore, Inc., as Issuer, and
U.S. Bank National Association, as
Trustee, including a form of the Companys
7.75% Senior Notes due 2014
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Incorporated by reference to Exhibit 4.4 to our quarterly report on Form
10-Q for the quarter ended September 30, 2004 |
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4.4
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Registration Rights Agreement, dated July
21, 2004, among GulfMark Offshore, Inc.
and the initial purchasers
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Incorporated by reference to Exhibit 4.5 to our quarterly report on Form
10-Q for the quarter ended September 30, 2004 |
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4.5
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Registration Rights Agreement
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Incorporated by reference to Exhibit 4.5 in Form 8-K, filed on July 7, 2008 |
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10.1
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GulfMark Offshore, Inc. 2005 Non-Employee
Director Share Incentive Plan
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Incorporated by reference to Exhibit A of our Proxy Statement on Form DEF
14A, filed on April 21, 2005 |
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10.2
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Amendment No. 1 to the GulfMark Offshore,
Inc. 2005 Non-Employee Director Share
Incentive Plan
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Incorporated by reference to Exhibit 4.8.2 to our Registration Statement
on Form S-8, Registration No. 333-143258 filed on May 25, 2007 |
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10.3
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Form of Non-Employee Director Restricted
Stock Agreement for an award of restricted
stock under the GulfMark Offshore, Inc.
2005 Non-Employee Director Share Incentive
Plan
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Incorporated by reference to our current report on Form 8-K, filed on May
18, 2006 |
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10.4
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Amendment No. 2 to the GulfMark Offshore,
Inc. 1997 Incentive Equity Plan
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Incorporated by reference to Exhibit 4.8.3 to our Post-Effective Amendment
No. 1 to our Registration Statement on Form S-8, Registration No.
333-57294 filed on May 25, 2007 |
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10.5
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Amendment No. 3 to the GulfMark Offshore,
Inc. 1997 Incentive Equity Plan
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Incorporated by reference to Exhibit 4.8.4 to our Post-Effective Amendment
No. 1 to our Registration Statement on Form S-8, Registration No.
333-57294 filed on May 25, 2007 |
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10.6
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Membership Interest and Stock Purchase
Agreement among GulfMark Offshore, Inc.,
Rigdon Marine Corporation, Rigdon Marine
Holdings, L.L.C., all the members
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Filed herewith |
25
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Exhibit No. |
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Document Description |
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of Rigdon Marine Holdings, L.L.C.,
Sherwood Investment, L.L.C., John J.
Tennant III Irrevocable Trust, Brian M.
Bowman Irrevocable Trust, and Bourbon
Offshore, dated May 28, 2008 |
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10.7
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Assignment and Assumption Agreement
between GulfMark Offshore, Inc. and
GulfMark Management, Inc., dated June 30,
2008
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Filed herewith |
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10.8
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Non-Competition and Non-Solicitation
Agreement between GulfMark Offshore, Inc.
and Larry T. Rigdon, dated July 1, 2008
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Filed herewith |
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10.9
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Operating Agreement and By-laws of Jackson
Offshore, LLC, by and between Rigdon
Marine Corporation, Lee Jackson, and
Bourbon Offshore Holdings SAS, dated
August 16, 2006
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Filed herewith |
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10.10
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Delphin Marine Logistics Limited Joint
Venture Agreement, by and between Rigdon
Marine Corporation, Mariners Haven Limited
and Delphin Marine Logistics Limited,
dated February 29, 2008
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Filed herewith |
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10.11
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Senior Secured Credit Facility Agreement
among Rigdon Marine Corporation and DVB
Bank NV, as Underwriter, Arranger, Agent,
Security Trustee, Swap Bank and Book
Manager, and the lenders that are parties
thereto, dated December 28, 2005
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Filed herewith |
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10.12
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Amendment No. 1 to Senior Secured Credit
Facility Agreement among Rigdon Marine
Corporation, DVB Bank NV, as Underwriter,
Arranger, Agent, Security Trustee, Swap
Bank and Book Manager, and the lenders
that are parties thereto, dated February
28, 2006
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Filed herewith |
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10.13
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Amendment No. 2 to Senior Secured Credit
Facility Agreement among Rigdon Marine
Corporation, DVB Bank NV, as Underwriter,
Arranger, Agent, Security Trustee, Swap
Bank and Book Manager, DVB Bank AG, as
Swap Bank, and the lenders that are
parties thereto, dated May 9, 2007
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Filed herewith |
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10.14
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Amendment No. 3 to Senior Secured Credit
Facility Agreement among Rigdon Marine
Corporation, DVB Bank NV, as Underwriter,
Arranger, Book Manager, Facility Agent and
Security Trustee, DVB Bank AG, as Swap
Bank, and the lenders that are parties
thereto, dated July 1, 2008
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Filed herewith |
26
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Exhibit No. |
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Document Description |
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10.15
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Guaranty given by GulfMark Offshore, Inc.
in favor of DVB Bank NV pursuant to Senior
Secured Credit Facility Agreement, dated
July 1, 2008
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Filed herewith |
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10.16
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First Preferred Fleet Mortgage by Rigdon
Marine Corporation in favor of DVB Bank NV
dated as of December 28, 2005
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Filed herewith |
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10.17
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Amendment No. 1 to First Preferred Fleet
Mortgage dated July 1, 2008
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Filed herewith |
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10.18
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Subordination Agreement between DVB Bank
NV, as Agent for Senior Lenders, DVB Bank
NV, as Agent for the Junior Lenders, and
Rigdon Marine Corporation, as Borrower,
dated July 1, 2008
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Filed herewith |
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10.19
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Assignment, Assumption, Amendment and
Restatement of Loan Agreement Providing
for a US$85,000,000 Subordinated Secured
Credit Facility between Bourbon Capital
U.S.A., Inc., as Assignor, Rigdon Marine
Corporation, as Borrower, DVB Bank NV, as
Facility Agent and Security Trustee, and
the lenders that are parties thereto,
dated July 1, 2008
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Filed herewith |
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10.20
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Guaranty given by GulfMark Offshore, Inc.
in favor of DVB Bank NV, pursuant to
Assignment, Assumption, Amendment and
Restatement of Loan Agreement, dated July
1, 2008
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Filed herewith |
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10.21
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Second Preferred Fleet Mortgage by Rigdon
Marine Corporation in favor of Bourbon
Capital U.S.A., Inc. dated December 28,
2005, as supplemented by Supplement Nos.
1, 2, 3, 4, 5, 6 and 7, dated August 20,
2007, October 22, 2007, November 30, 2007,
December 18, 2007, February 26, 2008,
February 29, 2008 and June 27, 2008,
respectively
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Filed herewith |
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10.22
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Assignment of Second Preferred Fleet
Mortgage between Bourbon Capital U.S.A.,
Inc., as Assignor, and DVB Bank NV, as
Assignee, dated July 1, 2008
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Filed herewith |
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10.23
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Amendment to Second Preferred Fleet
Mortgage by Rigdon Marine Corporation in
favor of DVB Bank NV, as Security Trustee
dated July 1, 2008
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Filed herewith |
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10.24
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US $25,000,000 Secured Reducing Revolving Loan
and Letter of Credit Facility Agreement between
GulfMark Offshore, Inc. and DnB NOR Bank ASA
dated June 1, 2006 as amended and Restated by a
First Supplemental Agreement dated June 5, 2008
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Filed herewith |
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10.25
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First Supplemental Agreement to Loan Agreement
dated June 1, 2006 between GulfMark Offshore,
Inc. and DnB NOR Bank ASA dated June 5, 2008
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Filed herewith |
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10.26
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US $60,000,000 Secured Reducing Revolving Loan
Facility Agreement between Gulf Marine Far East
PTE. LTD. dated June 5, 2008
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Filed herewith |
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31.1
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Section 302 certification for B.A. Streeter
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Filed herewith |
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31.2
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Section 302 certification for E.A. Guthrie
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Filed herewith |
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32.1
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Section 906 certification furnished for
B.A. Streeter
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Filed herewith |
27
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Exhibit No. |
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Document Description |
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32.2
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Section 906 certification furnished for
E.A. Guthrie
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Filed herewith |
28