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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
Commission File Number 33-42039
SEABULK TRANSMARINE
PARTNERSHIP, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-2580172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2200 Eller Drive, P.O. Box 13038
Ft. Lauderdale, Florida 33316
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 523-2200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). YES [ ] NO [X]
DOCUMENTS INCORPORATED BY REFERENCE
None.
The Registrant meets the conditions set forth in General Instructions
(I) (1) (a) and (b) of Form 10-K (as modified by prior no action relief to
unrelated parties) and is therefore filing this form using the reduced
disclosure format specified therein.
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SEABULK TRANSMARINE PARTNERSHIP, LTD.
2003 FORM 10-K
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
PART I
1 Business........................................................................................... 2
2 Properties......................................................................................... 3
3 Legal Proceedings.................................................................................. 3
4 Submission of Matters to a Vote of Security Holders................................................ 3
PART II
5 Market for Registrant's Common Equity and Related Stockholder Matters.............................. 4
6 Selected Financial Data............................................................................ 4
7 Management's Discussion and Analysis of the Results of Operations.................................. 4
7A Quantitative and Qualitative Disclosures About Market Risk......................................... 5
8 Financial Statements and Supplementary Data........................................................ 5
9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure............... 5
9A Controls and Procedures............................................................................ 6
PART III
10 Directors and Executive Officers of the Registrant................................................. 7
11 Executive Compensation ............................................................................ 7
12 Security Ownership of Certain Beneficial Owners and Management..................................... 7
13 Certain Relationships and Related Transactions..................................................... 7
14 Principal Accounting Fees and Services ............................................................ 7
PART IV
15 Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................................... 8
FINANCIAL SUPPLEMENT
Financial Statements and Schedules.................................................................... F-1
1
PART I
ITEM 1. BUSINESS
GENERAL
Seabulk Transmarine Partnership, Ltd. (STPL or the Partnership), a
Florida limited partnership, was formed on August 30, 1985, pursuant to a
partnership agreement (the Agreement), to own and operate a chemical
transportation carrier, the SEABULK AMERICA. The general partner of the
Partnership is Seabulk Tankers, Ltd. (STL), a Florida limited partnership
(holding a 33% interest in the Partnership), and the limited partners are STL
(holding a 0.33% interest in the Partnership), Seabulk America Partnership Ltd.
(SAPL), a Florida limited partnership (holding a 41.67% interest in the
Partnership), and Stolt Tankers (U.S.A.) Inc. (holding a 25% interest in the
Partnership).
In the U.S. domestic chemical transportation trade, vessels carry
chemicals, primarily from chemical manufacturing plants and storage tank
facilities along the coast of the U.S. Gulf of Mexico to industrial users in and
around Atlantic and Pacific coast ports. The chemicals transported consist
primarily of caustic soda, alcohol, chlorinated solvents, paraxylene, alkylates,
toluene, methyl tertiary butyl ether (MTBE), phosphoric acid, and lubricating
oils. Certain of the chemicals transported must be carried in vessels with
specially coated or stainless steel cargo tanks; further, many of these
chemicals are very sensitive to contamination and require special cargo-handling
equipment.
The SEABULK AMERICA has full double bottoms (as distinct from
double-hulls). Double bottoms provide increased protection over single-hull
vessels in the event of a spill. Delivered in 1990, the SEABULK AMERICA is the
only vessel in the U.S. domestic trade capable of carrying large cargoes of
acid, as a vessel strengthened to carry relatively heavy cargoes such as
phosphoric and other acids. The SEABULK AMERICA'S stainless steel tanks were
constructed without internal structure, which greatly reduces cargo residue from
transportation and results in less cargo degradation. Stainless steel tanks,
unlike epoxy-coated tanks, also do not require periodic sandblasting and
recoating. The SEABULK AMERICA was one of the first U.S.-Flag carriers to be
equipped with state-of-the-art-integrated navigation, cargo control monitoring,
and automated engine room equipment.
The SEABULK AMERICA has 24 cargo segregations which are configured,
strengthened, and coated to handle various sized parcels of a wide variety of
industrial chemical and petroleum products, giving it the ability to handle a
broader range of chemicals than many chemical-capable product carriers. Many of
the chemicals transported by the Partnership are hazardous substances. Under
current arrangements, voyages are conducted from the Houston and Corpus Christi,
Texas, and Lake Charles, Louisiana areas to such ports as New York,
Philadelphia, Baltimore, Wilmington, North Carolina, Charleston, South Carolina,
Los Angeles and San Francisco.
2
Pursuant to the Oil Pollution Act of 1990, the Seabulk America, which
was built with full double bottoms, but not double sides, cannot be used to
transport petroleum and petroleum products in U.S. commerce after 2015. It is
possible that it could continue to carry certain chemicals in U.S. commerce
after 2015, or that it could be redocumented in another country and be used to
transport chemicals in the non-U.S. trades after 2015. The Partnership has no
present plans to take any of these actions, and no assurance can be given as to
the feasibility or economic liability of doing so.
EMPLOYEES
As of March 1, 2004, the Partnership had approximately 36 employees,
which are comprised of the officers and crew of the SEABULK AMERICA. The crew of
the Seabulk America is subject to two collective bargaining agreements that
expire on December 31, 2006 and December 31, 2007. Management considers
relations with employees to be satisfactory.
ITEM 2. PROPERTIES
The Partnership's operations are conducted at the Parent's principal
offices located in Fort Lauderdale, Florida, where the parent leases
approximately 36,000 square feet of office and shop space under a lease that
expires in 2009.
ITEM 3. LEGAL PROCEEDINGS
From time to time the Partnership may also be a party to litigation
arising in the ordinary course of its business, most of which is covered by
insurance, subject to substantial deductibles.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted pursuant to General Instruction I to Form 10-K (the
"Instruction").
3
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Partnership's equity securities are not publicly traded. The
Partnership files reports under the Securities Exchange Act of 1934 (the
"Exchange Act") due to its status as a non-wholly owned subsidiary guarantor of
the Parent's 9.50% Senior Notes due 2013.
The Partnership is presently 75%-owned by indirect subsidiaries of the
Parent and 25% owned by Stolt Tankers (U.S.A.), Inc., an unaffiliated third
party ("Stolt"). Seabulk Tankers, Ltd., an indirect wholly owned subsidiary of
the Parent, owns a 33% general partnership interest and a .33% limited
partnership interest in the Partnership; Seabulk America Partnership, Ltd., an
81.59%-owned indirect subsidiary of the Parent, owns a 41.67% limited
partnership interest in the Partnership. The Partnership's partnership agreement
allows for distributions to be made to the partners at any time based on the
partners' percentage ownership of the partnership assets without priority or
preference. No distributions have been made to the partners since the
Partnership's formation. In addition, the Partnership is restricted from making
distributions in certain circumstances by covenants contained in the Parent's
credit facility and senior notes documentation.
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to the Instruction.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Partnership's
historical financial statements and the related notes thereto included elsewhere
in this report.
FORWARD-LOOKING INFORMATION
Certain statements in the following analysis contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act of 1933. All statements other than statements of
historical fact included in this discussion are forward-looking statements.
Although the Partnership believes the expectations and beliefs reflected in such
forward-looking statements are reasonable, it can give no assurance that they
will prove to have been correct.
GENERAL
The Partnership is only a small part of the Parent's overall marine
support and transportation services business and operations. For the year ended
December 31, 2003, the assets and revenues of the Partnership respectively
represented 4.79% and 4.32% of the consolidated assets and revenues of the
Parent.
4
2003 COMPARED WITH 2002
REVENUE. Revenue increased 10.6% to $13.7 million for the year ended
December 31, 2003 from $12.4 million for the year ended December 31, 2002. The
increase is primarily due to more off-hire days in the 2002 period as a result
of a scheduled drydocking in 2002.
OPERATING EXPENSES. Operating expenses increased 10.7% to $8.6 million
for the year ended December 31, 2003 from $7.8 million for the same period in
2002. The increase is primarily due to an increase in fuel and port charges as a
result of more off-hire days in the 2002 period. Fuel and port charges generally
are not incurred during a drydocking. As a percentage of revenue, operating
expenses remained substantially the same at 63.1% for the year ended December
31, 2003 from 63.0% for the 2002 period.
OVERHEAD EXPENSES. Overhead expenses remained substantially the same at
$0.9 million for the year ended December 31, 2003 and 2002. As a percentage of
revenue, overhead expenses decreased to 6.5% for the year ended December 31,
2003 compared to 7.1% for the same period in 2002 as a result of the higher
revenue in the 2003 period as discussed above.
DEPRECIATION, AMORTIZATION AND DRYDOCKING. Depreciation, amortization
and drydocking increased 29.2% to $3.0 million for the year ended December 31,
2003 from $2.3 million for the year ended December 31, 2002. The increase is due
to higher drydock amortization in the 2003 period as the cost of the drydock in
the third quarter of 2002 was substantially higher than the cost of the previous
drydocking. Drydocking costs are deferred and amortized over 30 months.
INTEREST EXPENSE CHARGED BY AFFILIATE. Interest expense charged by
affiliate decreased 20.9% to $1.6 million for the year ended December 31, 2003
from $2.0 million for the same period in 2002. The decrease is primarily due to
a reduction in the interest rate charged by SBI as a result of the SBI
recapitalization in September 2002.
COMMITMENTS
Under applicable regulations, the Partnership's vessel is required to
be drydocked twice in each five-year period for inspection and routine
maintenance and repairs. The next drydock is scheduled for June 2005 with an
estimated cost of between $4 and $6 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Jones Act restricts the U.S. coastwise trade to vessels owned,
operated and crewed substantially by U.S. citizens. The Jones Act continues to
be in effect and supported by Congress and the Administration. However, it is
possible that SBI's and STPL's advantage as a U.S. citizen operator of Jones Act
vessels could be somewhat eroded over time as there continue to be periodic
efforts and attempts by foreign interests to circumvent certain aspects of the
Jones Act.
ITEM 8. FINANCIAL STATEMENTS
The Partnership's Financial Statements are listed in Item 15 (a),
included at the end of this report on Form 10-K beginning on page F-1, and
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
5
ITEM 9A. CONTROLS AND PROCEDURES.
As part of the group of entities that are subsidiaries of SBI, the
Partnership relies on the disclosure controls and procedures of the parent. SBI
maintains systems of disclosure controls and procedures (as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934) designed to ensure that SBI
and its subsidiaries are able to record, process, summarize and report, within
the applicable time periods, the information required in the annual and
quarterly reports filed by SBI, the Partnership and SAPL under the Securities
Exchange Act of 1934. Management has evaluated the effectiveness of these
disclosure controls and procedures as of the end of the period covered by this
report. Based upon that evaluation, the principal executive officer and
principal financial officer concluded that these disclosure controls and
procedures are effective to accomplish their purpose. No changes were made
during the period covered by this report to the Partnership's internal control
over financial reporting (as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934) that have materially affected the Partnership's internal
control over financial reporting or are reasonably likely to materially affect
the Partnership's internal control over financial reporting.
Attached as Exhibits 31.1 and 31.2 hereto are certifications by the
principal executive officer and chief financial officer, which are required by
Section 302 of the Sarbanes-Oxley Act of 2002. The information set forth in this
Item 4 should be read in conjunction with these Section 302 certifications.
6
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted pursuant to the Instruction.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to the Instruction.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Omitted pursuant to the Instruction.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted pursuant to the Instruction.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Partnership's accountant fees and services are included as part
of the consolidated amount shown in Item 14 of the Parents Form 10-K
for 2003.
7
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENTS AND SCHEDULES. See Index to consolidated
financial statements and Schedules which appears on page F-1 herein.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the last
quarter of the fiscal year covered by this report on Form 10-K.
(c) LISTS OF EXHIBITS. The following is a list of exhibits furnished.
Copies of exhibits will be furnished upon request of any stockholder
at a charge of $0.25 per page plus postage. The Partnership hereby
files as part of this Form 10-K the exhibits required by Item 15(c)
listed below. Exhibits which are incorporated herein by reference can
be inspected and copied at the public reference facilities maintained
by the Commission, 450 Fifth Street N.W., Room 1024, Washington, D.C.
29549 and at the Commission's regional office at CitiCorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies of
such material can also be obtained from the Public Reference Section
of the Commission, 450 Fifth Street N.W., Washington, D.C. 29549, at
prescribed rates.
8
EXHIBIT
NUMBER EXHIBITS
- --------- --------
3.1(a) Supplemental Affidavit and Amended and Restated Certificate of
Limited Partnership of Seabulk Transmarine Partnership, Ltd.
[incorporated by reference to Form 10-K filed April 1999
(Registration No. 333-42039-01)].
3.1(b) Certificate of Amendment to Certificate of Limited Partnership For:
Seabulk Transmarine Partnership, Ltd. (Certificate filed September
17, 1985) dated January 1, 1991. [incorporated by reference to Form
10-K filed April 1999 (Registration No. 333-42039-01)].
3.1(c) Certificate of Amendment to Certificate of Limited Partnership For:
Seabulk Transmarine Partnership, Ltd. (Certificate filed September
17, 1985) dated January 1, 1991. [incorporated by reference to Form
10-K filed April 1999 (Registration No. 333-42039-01)].
3.2(a) Limited Partnership Agreement of Seabulk Transmarine Partnership,
Ltd. dated August 30, 1985. [incorporated by reference to Form 10-K
filed April 1999 (Registration No. 333-42039-01)].
3.2(b) Amendment to Limited Partnership Agreement of Seabulk Transmarine
Partnership, Ltd., dated December 24, 1986. [incorporated by
reference to Form 10-K filed April 1999 (Registration No.
333-42039-01)].
3.2(c) Amendment to Limited Partnership Agreement of Seabulk Transmarine
Partnership, Ltd., dated May 31, 1989. [incorporated by reference
to Form 10-K filed April 1999 (Registration No. 333-42039-01)].
4.1 Indenture, dated as of August 5, 2003, among Seabulk International,
Inc., the Guarantors named therein and Wachovia Bank, National
Association, as Trustee [incorporated by reference to Form S-4
filed October, 2003 (Registration No. 333-110138)].
4.2 Supplemental Indenture, dated as of October 3, 2003, among Seabulk
International, Inc., the Guarantors named therein, and Wachovia
National Bank, National association, as Trustee [incorporated by
reference to Form S-4 filed October, 2003 (Registration No.
333-110138)].
4.3* Second Supplemental Indenture and Amendment -- Subsidiary
Guarantee, dated as of March 22, 2004, among Seabulk
International, Inc., the Guarantors named therein, and Wachovia
National Bank, National Association, as Trustee.
10.1 Tanker Time Charter Party, dated December 15, 1989, between Seabulk
Transmarine Partnership, Ltd. and Ocean Specialty Tankers
Corporation, with respect to Seabulk America. [incorporated by
reference to Form S-4 filed April 1994 (Registration No.
333-78166)].
23.1* Consent of Ernst & Young LLP
9
31.1* Certification of Principal Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.
31.2* Certification of Principal Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.
32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C.
ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 and rule 13a-14(b) of the Securities Exchange Act of
1934 (furnished herewith).
32.2* Certification of Principal Financial Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and rule 13a-14(b) of the Securities
Exchange Act of 1934 (furnished herewith).
- ---------------
* Furnished herewith
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SEABULK TRANSMARINE PARTNERSHIP, LTD.
By: SEABULK TANKERS, LTD.
its General Partner
By: SEABULK TRANSPORT, INCORPORATED
its General Partner
By: /s/ GERHARD E. KURZ
---------------------------------------
Gerhard E. Kurz
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the report has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GERHARD E. KURZ Chairman, President and March 30, 2004
- ----------------------- Chief Executive Officer
Gerhard E. Kurz (Principal Executive Officer)
/s/ VINCENT J. DESOSTOA Senior Vice President and March 30, 2004
- ----------------------- Chief Financial Officer
Vincent J. deSostoa (Principal Financial Officer)
11
SEABULK TRANSMARINE PARTNERSHIP, LTD.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Report of Independent Certified Public Accountants........................................................F-2
Financial Statements:
Balance Sheets as of December 31, 2003 and 2002..........................................................F-3
Statements of Operations for the years ended December 31, 2003, 2002, and 2001............................F-4
Statements of Partners' Capital for the years ended December 31, 2003, 2002, and 2001.....................F-5
Statements of Cash Flows for the years ended December 31, 2003, 2002, and 2001............................F-6
Notes to Financial Statements.............................................................................F-7
All schedules have been omitted because the information is not applicable or is
not material or because the information required is included in the consolidated
financial statements or the notes thereto.
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Seabulk Transmarine Partnership, Ltd.
We have audited the balance sheets of Seabulk Transmarine Partnership,
Ltd. (a Florida limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital and cash flows for each of
the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the Partnership's management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Seabulk Transmarine
Partnership, Ltd. at December 31, 2003 and 2002, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
Fort Lauderdale, Florida
February 27, 2004
F-2
SEABULK TRANSMARINE PARTNERSHIP, LTD.
BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash ............................................................ $ 1,030 $ 13
Trade accounts receivable, net of allowance for doubtful accounts
of $29 and $71 in 2003 and 2002, respectively ................. 822 723
Insurance claims and other receivables .......................... 16 2
Marine operating supplies ....................................... 482 586
Prepaid expenses and other ...................................... 18 28
-------- --------
Total current assets ......................................... 2,368 1,352
Vessel and equipment ............................................... 50,162 50,150
Less accumulated depreciation ...................................... (20,268) (18,098)
-------- --------
Vessel and equipment, net .......................................... 29,894 32,052
Deferred drydocking costs .......................................... 1,022 1,840
-------- --------
Total assets ................................................. $ 33,284 $ 35,244
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accrued liabilities and other ................................... $ 415 $ 518
-------- --------
Total current liabilities .................................... 415 518
Due to affiliates .................................................. 30,069 31,478
Commitments and contingencies
Partners' capital:
General partner ................................................. $ 1,752 $ 1,900
Limited partners ................................................ 1,048 1,348
-------- --------
Total partners' capital ...................................... 2,800 3,248
-------- --------
Total liabilities and partners' capital ...................... $ 33,284 $ 35,244
======== ========
SEE NOTES TO FINANCIAL STATEMENTS.
F-3
SEABULK TRANSMARINE PARTNERSHIP, LTD.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
---------------------------------------------
2003 2002 2001
-------- -------- --------
Revenue ..................................... $ 13,662 $ 12,352 $ 9,826
Operating expenses:
Crew payroll and benefits ................ 3,084 3,319 3,119
Repairs and maintenance .................. 985 1,035 733
Insurance ................................ 482 271 300
Fuel and consumables ..................... 1,833 1,498 362
Port charges and other ................... 2,232 1,660 160
-------- -------- --------
Total operating expenses .............. 8,616 7,783 4,674
Overhead expenses:
Salaries and benefits .................... 247 252 306
Overhead allocated from affiliate ........ 550 550 550
Professional fees allocated from affiliate 2 24 25
Other .................................... 91 56 34
-------- -------- --------
Total overhead expenses ............... 890 882 915
Depreciation, amortization and drydocking ... 2,988 2,313 2,292
-------- -------- --------
Income from operations ...................... 1,168 1,374 1,945
Interest expense charged by affiliate ....... (1,616) (2,043) (2,004)
-------- -------- --------
Net loss .............................. $ (448) $ (669) $ (59)
======== ======== ========
Allocation of Net loss:
General Partner .......................... $ (148) $ (221) $ (19)
Limited partners ......................... (300) (448) (40)
-------- -------- --------
Net loss .............................. $ (448) $ (669) $ (59)
======== ======== ========
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
SEABULK TRANSMARINE PARTNERSHIP, LTD.
STATEMENTS OF PARTNERS' CAPITAL
(IN THOUSANDS)
GENERAL LIMITED TOTAL PARTNERS'
PARTNER PARTNERS CAPITAL
------- -------- ---------------
Balance, December 31, 2000 $ 2,140 $ 1,836 $ 3,976
Net loss ............... (19) (40) (59)
------- ------- -------
Balance, December 31, 2001 2,121 1,796 3,917
Net loss ............... (221) (448) (669)
------- ------- -------
Balance, December 31, 2002 1,900 1,348 3,248
Net loss ............... (148) (300) (448)
------- ------- -------
Balance, December 31, 2003 $ 1,752 $ 1,048 $ 2,800
======= ======= =======
SEE NOTES TO FINANCIAL STATEMENTS
F-5
SEABULK TRANSMARINE PARTNERSHIP, LTD.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
------------------------------------------------
2003 2002 2001
------- ------- -------
OPERATING ACTIVITIES
Net loss ................................................ $ (448) $ (669) $ (59)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation of vessel and equipment ............... 2,170 1,738 1,736
Amortization of drydocking costs ................... 818 575 556
Other non-cash items ............................... -- 49 --
Changes in operating assets and liabilities:
Accounts receivable .............................. (99) 129 (453)
Insurance claims and other receivables ........... (15) (9) 40
Marine operating supplies ........................ 104 (129) 23
Other current and long-term assets ............... 10 (10) (3)
Accrued liabilities and other .................... (103) 216 60
------- ------- -------
Net cash provided by operating activities ............... 2,437 1,890 1,900
INVESTING ACTIVITIES
Purchases of equipment .................................. (11) (249) --
Expenditures for Drydocking ............................. -- (1,999) --
------- ------- -------
Net cash used in investing activities ................... (11) (2,248) --
FINANCING ACTIVITY
Due (to) from affiliates ................................ (1,409) 357 (1,900)
------- ------- -------
Net cash provided by (used in) financing activity ....... (1,409) 357 (1,900)
Change in cash .......................................... 1,017 (1) --
Cash at beginning of period ............................. 13 14 14
------- ------- -------
Cash at end of period ................................... $ 1,030 $ 13 $ 14
======= ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
F-6
SEABULK TRANSMARINE PARTNERSHIP, LTD.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
1. ORGANIZATION AND BASIS OF PRESENTATION
Seabulk Transmarine Partnership, Ltd. (STPL or the Partnership), a
Florida limited partnership, was formed on August 30, 1985, pursuant to a
partnership agreement (the Agreement), to own and operate a chemical
transportation carrier, the SEABULK AMERICA. The general partner of the
Partnership is Seabulk Tankers, Ltd. (STL), a Florida limited partnership
(holding a 33% interest in the Partnership), and the limited partners are STL
(holding a 0.33% interest in the Partnership), Seabulk America Partnership Ltd.
(SAPL), a Florida limited partnership (holding a 41.67% interest in the
Partnership), and Stolt Tankers (U.S.A.) Inc. (holding a 25% interest in the
Partnership).
The following table sets forth each limited partners' share of the
total limited partners capital:
December 31,
----------------------------
2003 2002
-------- -------
STL $ 18 $ 19
SAPL 2,449 2,636
Stolt Tankers (U.S.A), Inc. (1,419) (1,307)
-------- -------
Total $ 1,048 $ 1,348
======== =======
2. PARTNERSHIP AGREEMENT
The general partner is responsible for the management of the
Partnership. Pursuant to the Agreement, the general partner and the limited
partners (collectively referred to as the Partners) are required to make capital
contributions at such times and in such amounts as the general partner requests
by notice. No additional capital contributions were required for the year ended
December 31, 2003 or 2002. The Partners are not entitled to withdraw any part of
their capital accounts or to receive any distribution from the Partnership
except as specifically provided in the Agreement. All net income or net losses
of the Partnership are to be allocated to the Partners' capital accounts in
proportion to their partnership interests. The Partnership terminates on August
30, 2010, unless sooner terminated, liquidated or dissolved by law or pursuant
to the Agreement or unless extended by amendment to the Agreement.
3. SUMMARY OF ACCOUNTING POLICIES
REVENUES. Revenue earned on voyage contracts is recognized based upon
the percentage of voyage completion. Demurrage revenue is recognized when
earned.
MARINE OPERATING SUPPLIES. Marine operating supplies consist of vessel
spare parts and supplies that are recorded at cost and charged to operating
expenses as consumed.
INSURANCE CLAIMS RECEIVABLE. Insurance claims receivable represent costs
incurred in connection with insurable incidents for which the Partnership
expects to be reimbursed by the insurance carrier(s), subject to applicable
deductibles. Deductible amounts related to covered incidents are expensed in the
period of occurrence of the incident. The credit risk associated with insurance
claims receivable is considered low due to the credit quality and funded status
of the insurance clubs in which the Partnership participates.
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DEFERRED DRYDOCKING COSTS. Periodically, the Partnership's vessel is
drydocked for major repairs and maintenance to pass inspections to maintain its
operating classification, as mandated by maritime regulations. Costs incurred to
drydock the vessel are deferred and amortized using the straight-line method
over the period to the next drydocking, generally 30 to 36 months. Drydocking
costs are comprised of painting the vessel hull and sides, recoating cargo and
fuel tanks, and performing other maintenance activities to bring the vessel into
compliance with classification standards and which can typically only be
performed while the vessel is drydocked.
VESSEL AND EQUIPMENT. Vessel and equipment are stated at cost, less
accumulated depreciation. Significant renewals and improvements that extend the
useful lives of the assets are capitalized. Maintenance and repairs that do not
improve or extend the lives of the assets are expensed and incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets ranging from 5 to 29 years, as determined by the Oil
Pollution Act of 1990 and other factors. Pursuant to OPA 90, the SEABULK AMERICA
cannot be used to transport petroleum or petroleum products in U.S. commerce
after 2015. In June 2003, the Partnership reduced the remaining useful life of
the vessel by five years to 2015. The Partnership has determined that the vessel
will likely not be working in foreign waters after its OPA 90 life in the United
States. This change in estimate increased depreciation by approximately $415,000
for the year ended December 31, 2003.
4. TRANSACTIONS WITH AFFILIATES
The amount payable to affiliates represents an advance between the
Partnership and SBI as a result of various transactions. The Partnership pays
against the advance balance when it has generated a positive cash flow from
operations. The advance is primarily the result of the Partnership's
participation in SBI's central cash management program, wherein substantially
all the Partnership's cash receipts are remitted to SBI and substantially all
cash disbursements are funded by SBI. Other transactions include miscellaneous
administrative expenses incurred by SBI on behalf of the Partnership.
SBI provides various administrative services to the Partnership,
including legal assistance and technical expertise on ship management and
maintenance. It is SBI's policy to charge these expenses and all other central
operating costs, first on the basis of direct usage when identifiable, with the
remainder allocated pursuant to the terms of the Agreement. Amounts charged by
SBI include interest on the outstanding amounts due to SBI and a monthly
management fee (overhead allocated from SBI), as set forth in the Agreement,
which can be adjusted annually based on changes in the Consumer Price Index.
During the year ended December 31, 2003, SBI charged interest at the weighted
average rate of 5.20% based on the amount due to SBI. SBI also allocates 10% of
its tanker administrative overhead cost to the Partnership. In the opinion of
management, these allocation methodologies are reasonable.
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Transactions in the Due to Affiliates account for the year ended December 31,
2003, 2002 and 2001 are as follows:
2003 2002 2001
-------- -------- --------
(IN THOUSANDS)
Balance at beginning of period ........ $(31,478) $(31,121) $(33,021)
Net cash remitted to SBI ........... 12,531 10,351 9,493
Overhead allocated from SBI ........ (550) (550) (550)
Interest expense charged by SBI .... (1,616) (2,043) (2,004)
Operating expenses ................. (8,616) (7,783) (4,674)
Professional fees allocated from SBI (2) (24) (25)
Other items ........................ (338) (308) (340)
-------- -------- --------
Balance at end of period .............. $(30,069) $(31,478) $(31,121)
======== ======== ========
5. COMMITMENTS AND CONTINGENCIES
UNIONS AND COLLECTIVE BARGAINING AGREEMENTS. Substantially all of the
crew of the SEABULK AMERICA is subject to collective bargaining agreements.
Management considers relations with the crewmembers to be satisfactory; however,
if these relations were to deteriorate, it could have an adverse effect on the
Partnership's operating results. The collective bargaining agreement with the
officers (licensed crew) union, which represents approximately 50% of the total
crew, expires on December 31, 2006. The collective bargaining agreement for the
non-union crew (unlicensed crew), which represents approximately 50% of the
total crew, will expire on December 31, 2007.
LITIGATION. The Partnership is sometimes named as a defendant in
litigation, usually relating to claims for bodily injuries or property damage.
The Partnership, through SBI, maintains insurance coverage against such claims
to the extent deemed prudent by management and applicable deductible amounts are
accrued at the time of the incident. In the opinion of management, the
Partnership is not currently a party to any legal proceeding, the adverse
outcome of which, individually or in the aggregate, could reasonably be expected
to have a material adverse effect on its financial position, results of
operations, or cash flows.
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6. CONCENTRATION OF CREDIT RISK
SIGNIFICANT CUSTOMER. Substantially all of the Partnership's accounts
receivable are due from entities that operate in the oilfield or chemical
industries. The Partnership performs ongoing credit evaluations of its trade
customers and generally does not require collateral. For the year ended December
31, 2003, seven customers accounted for 79% of the Partnership's revenue. As of
December 31, 2003, accounts receivables from these customers amounted to 88% of
total accounts receivable. The Partnership provides for an allowance for
doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. Actual losses have
historically been within management's expectations and estimates. Recoveries on
accounts receivable are recorded against bad debt expense.
7. SENIOR NOTES OFFERING
On August 5, 2003, SBI completed the offering of $150 million of Senior
Notes ("Notes") due 2013 through a private placement eligible for resale under
Rule 144A and Regulation S. The net proceeds of the offering were used to repay
a portion of the Parent's indebtedness under its existing $180 million credit
facility. Interest on the Notes will be payable semi-annually in arrears,
commencing on February 15, 2004. The interest rate on the Notes sold to private
investors is 9.50%. The Notes are senior unsecured obligations guaranteed by
certain of the Parent's U.S. subsidiaries, including the Partnership. The Notes
are subject to certain covenants, including, among other things, limiting the
Parent's and certain U.S. subsidiaries' (including the Partnership's) ability to
incur additional indebtedness or issue preferred stock, pay dividends to
stockholders, and make investments or sell assets. On October 31, 2003, SBI and
certain U.S. subsidiaries (including the Partnership) filed a registration
statement with the SEC to register substantially identical senior notes to be
exchanged for the Notes pursuant to a registration rights agreement, so that the
notes may be eligible for trading in the public markets. On November 13, 2003,
the registration statement was declared effective and SBI commenced the exchange
offer. The exchange offer expired on December 16, 2003.
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