-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A1BQUr8RBh0APvHJh2cFRgLVl4X/ZVxXYdEjFZmvId4jcJnP0sqeTmtdutlHvnDO La5RfNrjN1/MmX5Q13CJkA== 0000906520-97-000002.txt : 19970520 0000906520-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000906520-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN OILFIELD DIVERS INC CENTRAL INDEX KEY: 0000906520 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 720918249 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22032 FILM NUMBER: 97608542 BUSINESS ADDRESS: STREET 1: 900 TOWN & COUNTRY LANE SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77024 BUSINESS PHONE: 7134613400 MAIL ADDRESS: STREET 1: 900 TOWN & COUNTRY LANE SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77024 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________ FORM 10-Q (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 1997 ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ ________________________ Commission File Number: 0-22032 ________________________ AMERICAN OILFIELD DIVERS, INC. (Exact Name of Registrant as Specified in its Charter) Louisiana 72-0918249 (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 130 East Kaliste Saloom Road 70508 Lafayette, Louisiana (Zip Code) (Address of Principal Executive Offices) 318/234-4590 (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(b) or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At May 15, 1997 there were 10,531,440 shares of common stock, no par value, outstanding. AMERICAN OILFIELD DIVERS, INC. INDEX Part I. Financial Information Page Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1997 and December 31, 1996........................ 1 Consolidated Statements of Income - Three Months Ended March 31, 1997 and March 31, 1996............................................ 2 Consolidated Statements of Changes in Stockholders' Equity - Three Months Ended March 31, 1997 and March 31, 1996............................................ 3 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and March 31, 1996............................................ 4 Notes to Consolidated Financial Statements.................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 8 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K..................... 12 Signatures.................................................... 13 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. American Oilfield Divers, Inc. Consolidated Balance Sheets --------------------------- (in thousands)
March 31, 1997 December 31, 1996 -------------- ----------------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 19,397 $ 1,322 Accounts receivable, net of allowance for doubtful accounts of $480 and $500 18,832 20,095 Unbilled revenue 9,466 5,929 Other receivables 2,225 2,171 Inventories 4,592 4,651 Prepaid expenses 3,233 1,566 ____________ ___________ Total current assets 57,745 35,734 Property, plant and equipment, net of accumulated depreciation of $24,286 and $22,428 43,505 43,041 Trademarks and patents, net of accumulated amortization 8,977 9,307 Other assets, net of accumulated amortization 5,040 4,825 ____________ ___________ $115,267 $92,907 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,214 $ 9,609 Income taxes payable 1,818 1,756 Other liabilities 10,352 9,139 Short-term borrowings --- 1,306 Current portion of long-term debt 1,648 1,702 ___________ ___________ Total current liabilities 18,032 23,512 Deferred tax liability 2,653 2,601 Borrowings under a line of credit agreement --- 12,450 Long-term debt, less current portion 8,071 8,459 Other liabilities 40 40 ___________ ___________ Total liabilities 28,796 47,062 Stockholders' equity: Common stock, no par value 1,807 1,373 Other stockholders' equity 84,664 44,472 ___________ ___________ Total stockholders' equity 86,471 45,845 ___________ ___________ $115,267 $92,907 ============ =========== The accompanying notes are an integral part of these consolidated financial statements.
American Oilfield Divers, Inc. Consolidated Statements of Income ---------------------------------- (in thousands, except per share data) Three Months Ended March 31, __________________ (unaudited) 1997 1996 ---- ---- Diving and related revenues $28,576 $19,228 ------- -------- Costs and expenses: Diving and related expenses 19,822 12,621 Selling, general and administrative expenses 5,835 4,720 Depreciation and amortization 2,318 1,862 -------- -------- Total costs and expenses 27,975 19,203 -------- -------- Operating income 601 25 Other income (expense), net (205) 149 -------- -------- Income before income taxes 396 174 Income tax provision 170 70 -------- -------- Net income $ 226 $ 104 ======== ======== Net income per share $ .03 $ .02 ======== ======== Weighted average common shares outstanding 8,890 6,709 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. American Oilfield Divers, Inc. Consolidated Statements of Changes in Stockholders' Equity ----------------------------------------------------------- (in thousands, except share data)
Foreign (Accumulated Additional Currency Deficit) Common Stock Paid-in Translation Retained (unaudited) Shares Amount Capital Adjustment Earnings Total ------ ------ --------- ------------ ---------- ------- Balance at December 31, 1995 6,709,497 $1,360 $40,837 $(132) $ (2,510) $39,555 Adjustment to valuation of common stock issued in connection with an acquisition (52) (52) Exercise of stock options 24,000 2 135 137 Net effects of translation of foreign currency (8) (8) Net income 104 104 ____________ _________ ________ _________ __________ _________ Balance at March 31, 1996 6,733,497 $1,362 $40,920 $(140) $ (2,406) $39,736 ============ ========= ======== ========= =========== ========= Balance at December 31, 1996 6,879,867 $1,373 $42,059 $ (98) $ 2,511 $45,845 Issuance of common stock in a secondary stock offering 3,128,315 379 34,871 35,250 Issuance of common stock from underwriter's exercise of overallotment option 425,000 52 4,818 4,870 Exercise of stock options 35,399 3 323 326 Net effects of translation of foreign currency (46) (46) Net income 226 226 ----------- ---------- -------- -------- ----------- ----------- Balance at March 31, 1997 10,468,581 $1,807 $82,071 $(144) $ 2,737 $86,471 =========== ========== ======== ======== =========== =========== The accompanying notes are an integral part of these consolidated financial statements.
American Oilfield Divers, Inc. Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, ------------------- 1997 1996 ---- ---- (unaudited) Net cash flows from operating activities: Net income 226 104 Non-cash items included in net income: Depreciation and amortization 2,318 1,862 Net (gain) loss on disposition of assets --- (398) Other (8,248) 3,783 ________ ________ Net cash provided by (used by) operating activities (5,704) 5,351 Cash flows from investing activities: Capital expenditures (2,346) (2,286) Proceeds from sale of assets --- 5,462 Proceeds from insurance claim --- 535 Other (331) 989 _________ _________ Net cash provided by (used by) investing activities (2,677) 4,700 Cash flows from financing activities: Proceeds from issuance of common stock 40,446 136 Repayments of term debt (1,372) (500) Net payments under line-of-credit agreement (12,618) (7,875) ___________ __________ Net cash provided by (used by) financing activities 26,456 (8,239) ___________ __________ Net increase in cash 18,075 1,812 Cash and cash equivalents at beginning of period 1,322 788 __________ __________ Cash and cash equivalents at end of period $19,397 $ 2,600 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. American Oilfield Divers, Inc. Notes to Consolidated Financial Statements ------------------------------------------ Note 1 - Organization and Significant Accounting Principles --------------------------------------------------- The consolidated financial statements include the accounts of American Oilfield Divers, Inc. and its wholly-owned and majority-owned subsidiaries (the "Company"). The Company provides undersea construction, installation, and repair and maintenance services to the offshore oil and gas industry, primarily in the United States Gulf of Mexico, the U.S. West Coast and select international areas, and to inland industrial and governmental customers. In addition, the Company manufactures and markets subsea pipeline connectors and a patented marginal well production system to the domestic and international oilfield industry. All material intercompany transactions and balances have been eliminated in consolidation. In June 1996, the Board of Directors of the Company changed the Company's fiscal year end from October 31 to December 31 so as to report its quarterly and annual results of operations on a comparable basis with other companies in the oil and gas industry. As a result of this change in fiscal year end, this quarterly report on Form 10-Q includes results of operations as of and for the three months ended March 31, 1997 and 1996. In February 1997, the Company completed a secondary stock offering of 3,553,315 shares of common stock which provided the Company with net proceeds of approximately $40 million. The Company used approximately $16 million to repay borrowings outstanding under its line of credit and intends to use the remaining proceeds for general corporate purposes, including working capital requirements and to fund any future capital expenditures and strategic asset acquisitions. A description of the organization and operations of the Company, the significant accounting policies followed, and the financial condition and results of operations as of December 31, 1996, are contained in the audited consolidated financial statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1996. These unaudited first quarter financial statements should be read in conjunction with the audited 1996 financial statements. The unaudited financial statements at March 31, 1997 and for the three months ended March 31, 1997 and 1996 and the notes thereto have been prepared in accordance with generally accepted accounting principles for interim financial information and Rule 10-01 for Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of the results of operations have been included. Operating results for interim periods are not necessarily indicative of the results that can be expected for full fiscal years. The offshore oilfield services industry in the Gulf of Mexico is highly seasonal as a result of weather conditions and the timing of capital expenditures by the oil and gas industry. Utilization of the company's dive crews and diving support vessels ("DSV") and therefore the related scope and extent of the company's offshore diving operations are limited by winter weather conditions generally prevailing in the Gulf of Mexico and in certain of the Company's inland markets from December to April. Although adverse weather conditions occurring from time to time from May through November may also adversely affect vessel utilization and diving operations, historically, a disproportionate amount of the Company's diving services have been performed during the period from May through November. The Company expects a higher concentration of its total revenues and net income to be earned during the third (July through September) and fourth (October through December) quarters of its fiscal year compared to the first (January through March) and second (April through June) quarters. Effective January 1, 1996, the Company implemented Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," (SFAS 121). This pronouncement requires a review for impairment whenever circumstances indicate that the carrying amount of long-lived assets, certain identifiable intangibles and goodwill may not be recoverable through future cash flows. In accordance with SFAS 121, the Company recognized a pre-tax charge of $500,000 ($290,000 after tax, or $.04 per share), effective January 1, 1996. The charge is included in depreciation and amortization in the consolidated statement of income for the three months ended March 31, 1996. Effective March 1,1996, the Company sold its pipelay/bury barge, the "American Enterprise," for proceeds of $5,400,000. The gain on the sale is included in other income in the consolidated statement of income for the three month period ended March 31, 1996. Note 2 - Inventories - --------------------- The major classes of inventories consist of the following (in thousands): March 31, December 31, 1997 1996 ---- ---- (Unaudited) Fuel 133 152 Supplies 641 659 Work-in-process 1,730 2491 Finished goods 2,088 1,349 ----- ----- $4,592 $4,651 ===== ===== Note 3 - Earnings per Share - ------------------------------ Earnings per share is calculated by dividing net income by the weighted average number of common shares,including redeemable common shares, outstanding during each period. Outstanding stock options are common stock equivalents but are excluded from earnings per common share as the effect would not be materially dilutive. In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share". This Statement replaces APB No. 15 "Earnings per Share", establishes standards for computing and presenting earnings per share ("EPS") and is effective for the year ended December 31, 1997. This statement is not expected to have a material effect on the Company's reported EPS amount. Note 4 - Commitments and Contingencies - ---------------------------------------- Legal Matters A large oil and gas company has instituted litigation against subsidiaries of the Company in Edinburgh, Scotland seeking damages of approximately U.S. $3,000,000, plus interest and costs, on the basis of allegations that a product supplied by the subsidiaries exhibited design faults upon installation in a North Sea pipeline. Prior to installation the product was hydrostatically tested onshore and during the test it did not leak or otherwise malfunction. After installation but before oil or gas flowed through the pipeline under pressure the product was removed and replaced by the customer against the recommendations of the Company's subsidiaries. The product did not leak and no environmental damage is alleged. The Company believes that the product was fully suitable for service and intends to defend the claim vigorously, although no assurance can be given as to the ultimate outcome of the litigation. The Company and certain of its subsidiaries are also parties to various routine legal proceedings primarily involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act as a result of alleged negligence or alleged "unseaworthiness" of the Company's vessels. While the outcome of these lawsuits cannot be predicted with certainty, the Company believes that its insurance coverage with respect to such claims is adequate and that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on its business or financial condition or results of operations. Insurance Although the Company's operations involve a higher degree of risk than found in some other service industries, management is of the opinion that it maintains insurance at levels generally at or above industry standards to insure itself against the normal risks of operations. Note 5 - Subsequent Events - -------------------------- On April 27, 1997, the Company's jackup derrick barge, the American Intrepid, sank in the Gulf of Mexico. The Company believes its level of insurance is adequate and, at this time, believes the loss of the vessel will not have a material adverse effect on its financial condition or results of operations. During April 1997, the Company reached an agreement in principle with the owners to acquire for cash substantially all of the assets of Contract Diving Services, Pty. Ltd., and its affiliates, a subsea services provider based in Perth, Western Australia. The transaction is expected to close during the second quarter of 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following tables set forth, for the periods indicated, additional information on the operating results of the Company in its geographic and product markets: Three Months Ended March 31, 1997 Inland and Gulf International West Coast Subsea (Unaudited) Services(1) Services(2) Services(3) Products(4) Total ---------- ------------- ------------ ------------ ------ Diving and related revenues $13,461 $ 2,841 $ 7,789 $ 4,485 $ 28,576 Diving and related expenses $ 9,942 $ 1,607 $ 5,837 $ 2,436 $ 19,822 Gross profit $ 3,519 $ 1,234 $ 1,952 $ 2,049 $ 8,754 Gross profit percentage 26.1% 43.4% 25.1% 45.7% 30.6% Three Months Ended March 31, 1996 --------------------------------- Inland and Gulf International West Coast Subsea (Unaudited) Services(1) Services(2) Services(3) Products(4) Total ---------- ------------- ------------ ------------ ------ Diving and related revenues $10,804 $2,300 $4,965 $1,159 $19,228 Diving and related expenses $ 7,688 $1,022 $3,345 $ 566 $12,621 Gross profit $ 3,116 $1,278 $1,620 $ 593 $ 6,607 Gross profit percentage 28.8% 55.6% 32.6% 51.2% 34.4% __________________ (1) Includes diving and related services, pipelay/bury and derrick barge services provided by American Marine Construction, Inc. and environmental remediation and oil spill response services provided by American Pollution Control, Inc., all of which were performed in the Gulf of Mexico. The pipelay/bury barge was sold effective March 1, 1996. (2) Includes all diving and related services performed outside of the United States and its coastal waters except for Latin America, which is included in Inland and West Coast Services. (3) Includes diving and related services off the U.S. West Coast provided by American Pacific Marine, Inc. and diving and related services provided by American Inland Divers, Inc. (4) Includes manufacturing and marketing of Big Inch pipeline connectors and Tarpon marginal well production systems. The three months ended March 31, 1997 also includes manufacturing and marketing of Tarpon Concrete Storage Systems and Hard Suits Inc. products. The following discussion of the Company's financial condition, results of operations, and liquidity and capital resources should be read in conjunction with the Company's consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Results of Operations In the first quarter ended March 31, 1997, the Company experienced strong demand for its subsea services and related products in spite of the fact that this period is not traditionally associated with uniformly high activity, particularly in the Gulf of Mexico. Revenue increased from $19.2 million in the first quarter of 1996 to $28.6 million in the current quarter due to (i) increased utilization of the Company's dive crews and vessels in the Gulf Services sector; (ii) increased sales of Big Inch pipeline connectors and tie-ins; (iii) sales of concrete storage barges manufactured by newly-acquired Tarpon Concrete Storage Systems; and (iv) increased demand for the Company's diving and marine construction services in the U.S. Inland market. However, the overall gross profit margin of 30.6% for the three months ended March 31, 1997 was lower than the same period in 1996 due to (i) seasonally flat, year-over-year rates for the Company's personnel and vessels, despite increasing costs in these areas; (ii) low utilization of the jackup derrick barge American Intrepid; and (iii) operating losses incurred at Hard Suits Inc. Losses incurred at Hard Suits, however, were at a lower rate than the losses incurred during the fourth quarter of 1996 when AOD acquired Hard Suits. Management continues to implement measures to minimize these losses going forward. The oil and gas industry in the Gulf of Mexico has continued to strengthen, resulting in an increase in both the demand and the day rates charged for the Company's divers and DSVs. The improved industry trends have also contributed to increased demand for the Company's subsea pipeline connector products in the Gulf of Mexico. The Company anticipates that this trend will continue as long as supply and demand fundamentals for oil and gas and demand for infrastructure- related projects remain strong in the Gulf of Mexico. The Company's results of operations will generally vary from reporting period to reporting period depending in large part on the location and type of work being performed, the mix of the marine services being performed, the season of the year and the job conditions encountered. Also, weather conditions in the Gulf of Mexico and in certain of the Company's inland markets, particularly the winter weather conditions that are generally present from December through April, substantially reduce the work that could otherwise be performed by the Company's dive crews and limit the utilization of the Company's support vessels in the Gulf of Mexico. The Company expects winter weather patterns and other adverse weather conditions to continue to have an adverse effect on the Company's diving operations, both in the Gulf of Mexico and elsewhere. On April 27, 1997, the Company's jackup derrick barge, the American Intrepid, sank in the Gulf of Mexico. The Company believes its level of insurance is adequate and, at this time, believes the loss of the vessel will not have a material adverse effect on its financial condition or results of operations. During April 1997, the Company reached an agreement in principle with the owners to acquire for cash substantially all of the assets of Contract Diving Services, Pty. Ltd., and its affiliates, a subsea services provider based in Perth, Western Australia. The transaction is expected to close during the second quarter or 1997. Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996 Total revenues. The Company's consolidated revenues increased $9.4 million or 49%, from $19.2 million in the three months ended March 31, 1996 to $28.6 million in the current quarter. Of the $9.4 million increase, (i) approximately $4.0 million was attributable to increased diving and vessel activity in the Gulf of Mexico; (ii) approximately $2.8 million was attributable to increased diving activity in the Inland and West Coast Services markets; (iii) approximately $3.3 million was due to revenue from the Company's manufactured products; and (iv) approximately $540,000 was attributable to increased activity of the International Services Group. These revenue increases were offset by a revenue decrease of approximately $1.1 million attributable to the American Enterprise, the Company's pipelay/bury barge that was sold on March 1, 1996. Diving and related expenses. The Company's consolidated diving and related expenses increased $7.2 million or 57%, from $12.6 million in the three months ended March 31, 1996 to $19.8 million in the current quarter. Of the $7.2 million increase, (i) approximately $3.2 million was attributable to increased diving and vessel activity in the Gulf of Mexico; (ii) approximately $2.5 million was attributable to increased diving activity in the Inland and West Coast Services markets; (iii) approximately $1.8 million was due to expenses related to the Company's manufactured products; and (vi) approximately $585,000 was attributable to increased activity of the International Services Group. These expense increases were offset by an expense decrease of approximately $1.0 million attributable to the American Enterprise, the Company's pipelay/bury barge that was sold on March 1, 1996. Selling, general and administrative expenses. Selling, general and administrative expenses increased 24%, or $1.1 million to $5.8 million during the first quarter of 1997 compared to $4.7 million for the first three months of 1996. The increase was primarily attributable to supporting higher diving and vessel activity in the Gulf of Mexico; increased activity of the Inland and West Coast Services group; and manufacturing operations of the Company's new Tarpon Concrete Storage Systems and Hard Suits divisions. The remaining increase was attributable to supporting the increased activity of the Company's other operating groups. This increase was offset by an overall decrease in selling, general and administrative expenses of the Company's other groups as a result of ongoing focused cost-cutting efforts. Although there was an overall increase in the level of selling, general and administrative expenses during the first quarter of fiscal 1997, selling, general and administrative expenses, as a percentage of revenues, decreased to 20% compared to 25% for the first quarter in fiscal 1996. As previously indicated, the increase in diving and related expenses was greater than that for diving and related revenue due to seasonally lower rates for the Company's personnel and vessels, low utilization of the Company's jack up derrick barge and operating losses of Hard Suits Inc. Depreciation and amortization. Depreciation and amortization increased $456,000, or 24%, to $2.3 million in the first quarter of fiscal 1997 compared to $1.9 million in the first three months of 1996. The increase was attributable to the addition of Hard Suits Inc., and other additions and improvements to the Company's operational and administrative assets primarily in the Gulf Services group, offset by a $105,000 reduction in depreciation expense of the American Enterprise which was sold in March 1996. Depreciation and amortization expense for the three months ended March 31, 1996 includes a pre-tax charge of $500,000, $290,000 after tax, attributable to the implementation of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of". Operating income. During the three months ended March 31, 1997, operating income was $601,000 compared to an operating income of $25,000 for the comparable period in 1996. The positive change in operating income was due primarily to overall increase in revenue offset by a reduction in the Company's gross profit margin from 34.4% to 30.6% and increases in both selling, general and administrative expense and depreciation and amortization expense. Other income/expense. During the current quarter, other expense (net) of $205,000 was comprised of net interest expense of $311,000, offset by other income of $106,000. This compares to other income (net) of $149,000 in the first three months of 1996, which was comprised of net interest expense of $283,000 offset by a net gain on the disposal of assets, including the sale of the American Enterprise, of $399,000 and other income of $33,000. Net income. As a result of the conditions discussed above, the Company recorded net income of $226,000, or $.03 per share, in the three months ended March 31, 1997 compared to net income of $104,000, or $.02 per share, in the three months ended March 31, 1996. Liquidity and Capital Resources The Company's primary liquidity needs are, generally, to fund working capital requirements and to make capital expenditures for acquisitions of, and improvements to, its facilities and to its DSVs and diving and related equipment. The Company also incurs expenses for mobilization and project execution on an ongoing basis throughout the course of its contracts, while collections from customers typically do not occur until approximately ninety days after invoicing. The Company has traditionally supported these working capital requirements by using a combination of internally generated funds and short-term and long-term debt. The Company has a $15 million revolving line of credit with a bank at the prime rate. No amounts are outstanding at March 31, 1997. At March 31, 1997 the Company has a long-term note payable with a bank in the amount of $9,250,000 at a fixed interest rate of 7.9%. The terms of the note require monthly principal payments of $125,000, plus interest, with a balloon payment of $3.1 million due on May 31, 2001. This debt is secured by eleven DSVs and certain diving equipment. Also at March 31, 1997, the Company has various government assistance notes which are non-interest bearing, unsecured and are payable in various installments through July 1999. In February 1997, the Company completed a secondary stock offering of 3,553,315 shares of common stock which provided the Company with net proceeds of approximately $40 million. The Company used approximately $16 million to repay borrowings outstanding under its line of credit and intends to use the remaining proceeds for general corporate purposes, including working capital requirements and to fund any future capital expenditures and strategic asset acquisitions. The Company believes that cash flows from operations and borrowings available under its bank credit facility will provide sufficient funds for the next twelve to eighteen months to meet its working capital and capital expenditure requirements and to fund any further expansion into new geographic markets or development of new product lines. Net cash used by operations was $5.7 million for the three months ended March 31, 1997 compared to $5.4 million provided by operations in the comparable prior year period. Changes in cash flows from operating activities are primarily due to timing differences in cash received from customers and cash paid to employees and suppliers. In the most recent three month period, net cash used by investing activities was approximately $2.7 million which consisted of $2.3 million expended for the acquisition of and improvements to operating assets to be used in the Company's operations. In the prior three month period, net cash provided by investing activities was approximately $4.7 million which consisted of $5.5 million received from the sale of the American Enterprise and other operating assets, and the receipt of $535,000 related to an insurance claim, offset by $2.3 million expended for the acquisition of and improvements to operating assets to be used in the Company's operations. Cash flows provided by financing activities of $26.5 million in the three months ended March 31, 1997 were primarily attributable to proceeds of $40.4 million from the sale of stock in a secondary offering and through the exercise of stock options offset by payments of short-term and long-term debt totalling $14.0 million. In the first three months of 1996, cash used by financing activities of approximately $8.2 million was primarily attributable to net payments of short-term and long-term debt totalling $8.4 million, offset by proceeds from issuance of common stock totalling $136,000. PART II. OTHER INFORMATION Item 1.Legal Proceedings. A large oil and gas company has instituted litigation against subsidiaries of the Company in Edinburgh, Scotland seeking damages of approximately U.S. $3,000,000, plus interest and costs, on the basis of allegations that a product supplied by the subsidiaries exhibited design faults upon installation in a North Sea pipeline. Prior to installation the product was hydrostatically tested onshore and during the test it did not leak or otherwise malfunction. After installation but before oil or gas flowed through the pipeline under pressure the product was removed and replaced by the customer against the recommendations of the Company's subsidiaries. The product did not leak and no environmental damage is alleged. The Company believes that the product was fully suitable for service and intends to defend the claim vigorously, although no assurance can be given as to the ultimate outcome of the litigation. The Company and certain of its subsidiaries are also parties to various routine legal proceedings primarily involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act as a result of alleged negligence or alleged "unseaworthiness" of the Company's vessels. While the outcome of these lawsuits cannot be predicted with certainty, the Company believes that its insurance coverage with respect to such claims is adequate and that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on its business or financial condition or results of operations. Item 6.Exhibits and Reports on Form 8-K. (a) 27.1 Financial Data Schedule. The Company filed a Current Report on Form 8-K, dated February 25, 1997, with respect to its earnings release for the three months and year ended December 31, 1996. 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. AMERICAN OILFIELD DIVERS,INC. Date: May 15, 1997 /s/ Cathy M. Green _____________________________________ Cathy M. Green Vice President - Finance, Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROMCONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 19,397 0 19,312 480 4,592 57,745 67,791 24,286 115,267 18,032 0 0 0 1,807 84,664 115,267 28,576 28,576 19,822 27,975 205 7 311 396 170 226 0 0 0 226 .03 0
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