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, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period to
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COMMISSION FILE NUMBER 0-23383
OMNI ENERGY SERVICES CORP.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-1395273
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4500 N.E. EVANGELINE THRUWAY
CARENCRO, LOUISIANA 70520
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (337) 896-6664
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 [ ]
As of May 9, 2002 there were 27,305,474 shares of the Registrant's
common stock, $0.01 par value per share, outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 AND DECEMBER 31, 2001
(Thousands of dollars)
ASSETS March 31, December 31,
2002 2001
--------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 178 $ 1,233
Accounts receivable, net 5,453 5,250
Parts and supplies inventory 2,946 2,723
Prepaid expenses 1,712 857
Assets held for sale 621 630
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Total current assets 10,910 10,693
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PROPERTY AND EQUIPMENT:
Land 359 359
Buildings and improvements 4,505 4,505
Drilling, field and support equipment 26,450 24,834
Aviation equipment 4,526 5,109
Shop equipment 425 392
Office equipment 1,501 1,500
Vehicles 2,389 2,526
Construction in progress 138 50
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40,293 39,275
Less: accumulated depreciation 14,133 13,707
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Total property and equipment 26,160 25,568
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OTHER ASSETS:
Goodwill 2,006 2,006
Other 158 181
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Total other assets 2,164 2,187
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Total assets $39,234 $38,448
======= =======
The accompanying notes are an integral part of these financial statements.
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OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 AND DECEMBER 31, 2001
(Thousands of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
2002 2001
-------- --------
(unaudited)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,292 $ 2,750
Accounts payable 3,515 2,598
Accrued expenses 1,851 2,843
Due to affiliates 1,395 175
-------- --------
Total current liabilities 10,053 8,366
======== ========
LONG-TERM LIABILITIES:
Line of credit 2,074 2,012
Long-term debt, less current maturities 8,263 9,289
-------- --------
Total long-term liabilities 10,337 11,301
-------- --------
Total liabilities 20,390 19,667
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MINORITY INTEREST 221 221
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STOCKHOLDERS' EQUITY:
Preferred Stock, Series A, 7,500 shares issued and
outstanding; Series B, 4,600 shares 11,858 11,616
issued and outstanding
Common Stock, $.01 par value, 45,000,000
shares authorized; 27,295,474 issued and outstanding
273 273
Treasury Stock, 1,085,400 shares acquired at cost (706) (706)
Additional paid-in capital 56,643 56,643
Accumulated deficit (49,360) (49,183)
Cumulative translation adjustment (85) (83)
-------- --------
Total equity 18,623 18,560
-------- --------
Total liabilities and stockholders' equity $ 39,234 $ 38,448
======== ========
The accompanying notes are an integral part of these financial statements.
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OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended March 31,
2002 2001
-------- --------
(Unaudited)
Operating revenue $ 4,614 $ 4,212
Operating expenses 3,805 4,797
-------- --------
Gross profit (loss) 809 (585)
General and administrative expenses 508 855
Asset impairment and other charges -- 180
-------- --------
Operating income (loss) 301 (1,620)
Interest expense 219 647
Other income (expense) (17) 7,521
-------- --------
236 6,874
-------- --------
Income before taxes 65 5,254
Income taxes -- --
-------- --------
Net income 65 5,254
Accretion of preferred stock (242) --
-------- --------
Net earnings (loss) applicable to common and
common equivalent shares $ (177) $ 5,254
======== ========
Basic earnings (loss) per common share: ($ 0.01) $ 0.20
Diluted earnings (loss) per common share: ($ 0.01) $ 0.14
Weighted average shares outstanding:
Basic 26,212 26,936
Diluted 26,212 36,889
The accompanying notes are an integral part of these financial statements.
-4-
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(THOUSANDS OF DOLLARS)
Three months ended March 31,
----------------------------
2002 2001
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 65 $ 5,254
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation 879 809
Amortization 12 33
Loss on fixed asset disposition 18 2
Provision for bad debts -- 59
Asset impairment and other charges -- 180
Changes in operating assets and liabilities-
Decrease (increase) in assets-
Receivables-
Trade 1,153 (453)
Other (1,356) (7,857)
Inventory (69) 486
Prepaid expenses 471 471
Other 18 (260)
Increase (decrease) in liabilities-
Accounts payable and accrued expenses (75) (234)
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Net cash provided by (used in) operating activities 1,116 (1,510)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition paid with cash (2,076) --
Proceeds from disposal of fixed assets 700 21
Purchase of fixed assets (87) (25)
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Net cash used in investing activities (1,463) (4)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt -- 130
Proceeds from subordinated debt -- 500
Proceeds from issuance of common stock -- 27
Principal payments on long-term debt (1,990) (716)
Due to affiliates 1,220 --
Net borrowings on line of credit 62 1,627
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Net cash provided by (used in) financing activities (708) 1,568
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NET INCREASE (DECREASE) IN CASH (1,055) 54
CASH, at beginning of period 1,233 317
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CASH, at end of period $ 178 $ 371
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest $ 219 $ 400
======= =======
Equipment acquired under capital lease $ 179 $ --
======= =======
Premiums financed with insurance carrier $ 1,280 $ --
======= =======
The accompanying notes are an integral part of these financial statements.
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OMNI ENERGY SERVICES CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements have been prepared without audit as permitted by the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to such rules and
regulations. However, the management of OMNI Energy Services Corp. believes that
this information is fairly presented. These unaudited condensed consolidated
financial statements and notes thereto should be read in conjunction with the
financial statements contained in our Annual Report on Form 10-K for the year
ended December 31, 2001 and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary to fairly present the financial results for the
interim periods presented.
NOTE 2. EARNINGS PER SHARE
Basic Earnings Per Share (EPS) excludes dilution and is determined by dividing
income available to common stockholders by the weighted average number of shares
of common stock outstanding during the periods presented. Diluted EPS reflects
the potential dilution that could occur if options and other contracts to issue
shares of common stock were exercised or converted into common stock.
We had 1,471,333 options outstanding and warrants to purchase 1,050,214 shares
of common stock as of March 31, 2002 that were excluded from the calculation of
diluted EPS because they were antidilutive. Likewise, we had 197,129 options
outstanding and warrants to purchase 1,937,500 shares of common stock as of
March 31, 2001 that were excluded from the calculation of diluted EPS because
they were antidilutive.
NOTE 3. LONG-TERM DEBT
Our primary credit facility is with Hibernia National Bank (the "Hibernia
Facility"). The Hibernia Facility, which was amended November 2, 2001, currently
provides us with a $2.0 million equipment loan, a $2.0 million real estate loan
and a $5.0 million revolving line of credit to finance working capital
requirements. The loans bear interest at prime plus 1.5% and have a final
maturity of August 31, 2004. As of March 31, 2002, we had approximately $5.7
million outstanding under the Hibernia Facility.
At March 31, 2002, we had approximately $2.1 million in outstanding debt
pursuant to agreements with The CIT Group (CIT), consisting of an asset-based
financing loan (the "CIT Loan"). The principal outstanding under the CIT Loan
bears interest at LIBOR plus 5.0%. The maturity date of the note has been
extended to August 2004. This loan is collateralized by various seismic drilling
units and support equipment.
At March 31, 2002 we had a note payable to a finance company with interest at
8%, to finance our aviation fleet. The loan amortizes over ten years, maturing
January 1, 2007 and is secured by our aviation fleet. The outstanding balance at
March 31, 2002 is approximately $4.2 million.
During the years ended December 31, 1999, 2000 and 2001, we privately placed
with an affiliate subordinated debentures totaling $7.5 million, $3.4 million
and $1.5 million, respectively. The debentures matured five years from their
date of issue and accrued interest at various rates ranging from a fixed rate of
12% per annum to a variable rate of interest starting at 12% per annum and
escalating to 20% per annum. In October 2000, we agreed to convert $4.6 million
of the subordinated debentures into our Series A Preferred Stock. In May 2001,
we agreed to pay the affiliate
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$3.0 million cash plus issue to the affiliate $4.6 million of our Series B
Preferred Stock in full satisfaction of all of the remaining outstanding
subordinated debentures including accrued interest of $1.8 million. This
transaction resulted in the affiliate agreeing to forgive $1.0 million of
indebtedness which has been reflected as a capital contribution from the
affiliate rather than as income in the accompanying financial statements. (See
Note 4 regarding the accounting for preferred stock.)
In connection with the original issuance of the subordinated debentures, we
issued to the affiliate detachable warrants to purchase 5,738,500 shares of our
common stock, of which 2,901,000 have been cancelled as of December 31, 2001.
The remaining 2,837,500 warrants outstanding are all exercisable with exercise
prices ranging from $0.75 to $2.00 per share.
The following table summarizes the exercise prices of warrants to the affiliate
as of March 31, 2002:
Exercise Price Warrants
-------------- --------
$2.00 37,500
$1.50 516,667
$0.75 2,283,333
---------
2,837,500
=========
NOTE 4. PREFERRED STOCK
At March 31, 2002 we had a total of 7,500 shares of Series A Preferred Stock,
and 4,600 shares of Series B Preferred Stock issued and outstanding, at a total
liquidation value of $12.1 million.
The Series A Preferred Stock has an 8% cumulative dividend rate, is convertible
into our common stock with a conversion rate of $0.75, is redeemable at our
option at $1,000 per share plus accrued dividends, contains a liquidation
preference of $1,000 per share, has voting rights on all matters submitted to a
vote of our shareholders, has separate voting rights with respect to matters
that would affect the rights of the holders of the Preferred Stock, and has
aggregate voting rights of the affiliate limited to 49% of our total outstanding
common and preferred shares with voting rights. In respect to the Series A
Preferred Stock, the affiliate has agreed to waive its conversion rights until
our EBITDA (as defined) reaches a mutually agreed upon level. The preferred
shareholders have also agreed that dividends would not accrue on the outstanding
stock from April 2001 through June 2002. Dividends are being accreted at 8%
during the free dividend period. As of April 2001 there were approximately $0.3
million of dividends in arrears relating to these outstanding shares of Series A
Preferred Stock.
In May 2001, we committed to issue 4,600 shares of Series B Preferred Stock to
an affiliate of ours in satisfaction of all outstanding principal and interest
owed under the subordinated debt agreements (See Note 3). These shares were
issued in March 2002. The Series B Preferred Stock has an 8% cumulative dividend
rate, is convertible into our common stock with an initial conversion rate of
$1.25, is redeemable at our option at $1,000 per share plus accrued dividends,
contains a liquidation preference of $1,000 per share and has no voting rights
until such time as it becomes convertible. The Series B Preferred Stock does not
have conversion rights until our EBITDA (as defined) reaches a mutually agreed
upon level, and until all shares of Series A Preferred Stock become convertible.
We have also agreed that dividends would not accrue on the outstanding stock
from May 2001 through June 2002. Dividends are being accreted at 8% during the
free dividend period. As of May 2001 there were no dividends in arrears relating
to the outstanding shares of Series B Preferred Stock.
NOTE 5. SEGMENT INFORMATION
The following shows industry segment information for our four operating
segments, Drilling, Aviation, Survey, and Permitting for the three months ended
March 31, 2002 and 2001 (in thousands):
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Three months ended March 31,
----------------------------
2002 2001
-------- --------
Operating revenues:
Drilling $ 3,535 $ 3,294
Aviation 929 551
Survey -- 277
Permitting 150 90
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Total $ 4,614 $ 4,212
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Gross profit (loss):
Drilling $ 238 $ (170)
Aviation 733 (311)
Survey (39) (68)
Permitting 12 9
Other (135) (45)
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Total $ 809 $ (585)
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General and administrative expenses 508 855
Asset impairment charges -- 180
Other (income) expense 236 (6,874)
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Income before taxes $ 65 $ 5,254
======== ========
Identifiable Assets:
Drilling $ 23,178 $ 22,369
Aviation 6,312 1,082
Survey 1,368 1,688
Other 8,376 16,031
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Total $ 39,234 $ 41,170
======== ========
Capital Expenditures:
Drilling (1) $ -- $ 25
Aviation -- --
Survey -- --
Other 1 --
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Total $ 1 $ 25
======== ========
(1) Net of assets acquired from AirJac (See Note 9) totaling $2.1 million.
NOTE 6. RECENT PRONOUNCEMENTS
In July 2001, Statement of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets"
were issued. SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. Under SFAS No. 142,
goodwill and intangible assets with indefinite lives are no longer amortized but
are reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have indefinite
lives will continue to be amortized over their useful lives (but with no maximum
life). The amortization provisions of SFAS No. 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, we adopted SFAS No. 142
effective January 1, 2002 and accordingly, no amortization of goodwill was
recorded in the quarter ended March 31,2002. Goodwill amortization expense for
the quarter ended March 31, 2001 was approximately $33,000. The adoption of SFAS
No. 142 did not have a significant effect on our results of operations and
financial condition.
In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" was issued. These new rules on asset impairment supersede
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," and was effective for our fiscal year
beginning January 1, 2002. Under SFAS No. 144 an impairment loss shall be
recognized if an evaluation of the carrying amount of an
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asset against the undiscounted future cash flows associated with it is not
sufficient to cover the carrying value of such assets. An impairment loss shall
also be recognized on assets held for sale if the carrying amount of a
long-lived asset or asset group is not recognizable and exceeds the fair value.
The adoption of SFAS No. 144 did not have any impact on our financial statements
upon adoption.
NOTE 7. CONCENTRATION OF CREDIT RISK
We extend credit to customers and other parties in the normal course of
business. We regularly review outstanding receivables, and provide for estimated
losses through an allowance for doubtful accounts. In evaluating the level of
established reserves, we make judgments regarding the parties' ability to make
required payments, economic events and other factors. As the financial condition
of these parties change, circumstances develop or additional information becomes
available, adjustments to the allowance for doubtful account may be required.
Due to the nature of our industry, we have a concentration of credit risks. As a
result, adjustments to the allowance for doubtful accounts may be significant.
NOTE 8. ASSETS HELD FOR SALE
At March 31, 2002, we had $0.6 million in assets held for sale which includes 8
steel marsh buggies as well as the remaining assets of our South American
operation, for which we have specific agreements to sell. We expect to dispose
of the remaining assets held for sale during 2002. The carrying values, which we
believe approximate fair market value of our assets held for sale at March 31,
2002, is as follows (in thousands):
Asset Type March 31, 2002
------------------------ --------------
Steel marsh buggies $108
South American facility and other 513
----
Total assets held for sale $621
====
NOTE 9. ACQUISITION
Effective January 18, 2002 we acquired the assets of AirJac Drilling (AirJac), a
division of Veritas DGC Land, Inc., a seismic drilling support company
headquartered in New Iberia, Louisiana. The aggregate acquisition cost was $2.3
million, including $2.0 million cash, acquisition costs and assumption of a
capital lease. In this acquisition we acquired inventory, vehicles, shop
equipment and drilling, field and support equipment. We received advances from
affiliates totaling approximately $1.2 million in connection with the financing
of this transaction; approximately $0.7 million of which is secured by treasury
stock and approximately $0.5 million of which is secured by accounts receivable
from a customer. The results of AirJac's operations have been included in our
consolidated financial statements since the acquisition date. The following
summarized unaudited income statement data reflects our results of operations as
if the AirJac transaction had taken place on January 1, 2001 (in thousands):
Unaudited Pro forma Results
Quarter ended Quarter ended
March 31, 2002 March 31, 2001
-------------- --------------
Revenue 4,614 7,458
Net operating income (loss) 301 (1,473)
Net income 65 5,355
Basic earnings per share $0.00 $ 0.20
Diluted earnings per share $0.00 $ 0.14
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The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition. The allocation of
the purchase price is subject to refinement as acquired asset and liability
values are being finalized (amounts in thousands):
Current assets $ 154
Property, plant, and equipment 2,101
Capital lease obligation assumed (179)
-------
Net assets acquired $ 2,076
=======
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations contains certain "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act"), which reflect
management's best judgment based on factors currently known. Actual results
could differ materially from those anticipated in these "forward looking
statements" as a result of a number of factors, including but not limited to
those discussed under the heading "Forward-Looking Statements." "Forward looking
statements" provided by us pursuant to the safe harbor established by the
federal securities laws should be evaluated in the context of these factors.
This discussion should be read in conjunction with the financial
statements and the accompanying notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in our Annual Report
on Form 10-K for the year ended December 31, 2001.
GENERAL
Demand. We receive our revenues from customers in the energy industry.
Demand for our services is principally impacted by conditions affecting
geophysical companies engaged in the acquisition of 3-D seismic data. The level
of activity among geophysical companies is primarily influenced by the level of
capital expenditures by oil and gas companies for seismic data acquisition
activities. A number of factors affect the decision of oil and gas companies to
pursue the acquisition of seismic data, including (i) prevailing and expected
oil and gas demand and prices; (ii) the cost of exploring for, producing and
developing oil and gas reserves; (iii) the discovery rate of new oil and gas
reserves; (iv) the availability and cost of permits and consents from landowners
to conduct seismic activity; (v) local and international political and economic
conditions; (vi) governmental regulations; and (vii) the availability and cost
of capital. The ability to finance the acquisition of seismic data in the
absence of oil and gas companies' interest in obtaining the information is also
a factor, as some geophysical companies will acquire seismic data on a
speculative basis.
During 1999, with the reduction in the price of oil and gas, we began
to experience a decrease in demand for our services. In 2001, the market
experienced a rebound. Based upon bid activity and existing backlog, we expect
revenues to continue to improve in 2002.
Seasonality and Weather Risks. Our operations are subject to seasonal
variations in weather conditions and available daylight hours. Since our
activities take place outdoors, on average, fewer hours are worked per day and
fewer holes are generally drilled or surveyed per day in winter months than in
summer months, due to an increase in rain, fog, and cold conditions and a
decrease in daylight hours.
RESULTS OF OPERATIONS (IN THOUSANDS) THREE MONTHS ENDED MARCH 31,
2002 2001
------- -------
Operating revenue $ 4,614 $ 4,212
Operating expense 3,805 4,797
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Gross profit 809 (585)
General and administrative expenses 508 855
Asset impairment and other charges -- 180
------- -------
Operating loss 301 (1,620)
Interest expense 219 647
Other income (expense) (17) 7,521
------- -------
Income before income taxes 65 5,254
Income taxes -- --
------- -------
Net income 65 5,254
Accretion of preferred stock (242) --
------- -------
Net earnings (loss) applicable to common and
common equivalent shares $ (177) $ 5,254
======= =======
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Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
Operating revenues increased 10% or $0.4 million, from $4.2 million for
the three months ended March 31, 2001 to $4.6 million for the three months ended
March 31, 2002. Drilling revenues increased $0.2 million, to $3.5 million for
the three months ended March 31, 2002 from $3.3 million for the three months
ended March 31, 2001. Likewise, aviation revenues increased $0.3 million to $0.9
million for the three months ended March 31, 2002 from $0.6 million for the
three months ended March 31,2001; however, survey revenues decreased from $0.3
million to $0.0 million for the three months ended March 31, 2001 compared to
the same period in 2002.
Operating expenses decreased 21%, or $1.0 million, from $4.8 million
for the three months ended March 31, 2001 to $3.8 million for the three months
ended March 31, 2002. Declines in payroll costs accounted for 40% of this
decrease as operating payroll expense decreased from $2.2 million to $1.8
million for the three months ended March 31, 2001 and 2002, respectively. The
number of field personnel we employed declined to 146 for the three months ended
March 31, 2002 compared to 161 for the three months ended March 31, 2001 and we
have restructured the field payroll structure to more properly follow
production. Repairs and maintenance expenses decreased $0.8 million from the
first quarter of 2001 to the same period of 2002. This decrease is due primarily
to the termination of our aviation lease and subsequent capitalization of major
aviation repairs, which are being expensed to repairs and maintenance as used.
These decreases were partially offset by an increase in contract services from
$0.1 million for the three months ended March 31, 2001 to $0.3 million for the
three months ended March 31, 2002. We employ the use of contractors exclusively
for our permitting division and occasionally for our drilling division, when
necessary.
Gross profit margins were 18% and (14)% for the three months ended
March 31, 2002 and 2001, respectively. The variance is attributable to an
increase in revenue coupled with more stringent cost control measures.
General and administrative expenses decreased $0.4 million from $0.9
million for the three months ended March 31, 2001 to $0.5 million for the three
months ended March 31, 2002, a 44% decrease. Insurance expenses, investor
relations expenses, taxes and licenses expenses, and professional services
decreased $0.1 million each from the period ended March 31, 2001 to the same
period in 2002.
Asset impairment charges were $0.2 million in the three months ended
March 31, 2001 and related to the tractor drills that were being held for sale
and were subsequently sold in 2001.
Interest expense decreased $0.4 million from $0.6 million for the three
month period ended March 31, 2001 to $0.2 million for the three month period
ended March 31, 2002, due to lower interest rates and lower average debt during
the periods. Other income (expense) decreased $7.5 million due to the receipt of
proceeds in 2001 from a key-man life insurance policy on our former CEO who was
killed in a private aircraft accident in 2001.
Due to our recent history of operating losses, we recorded a valuation
allowance during the periods against our net operating loss carry-forwards,
which has resulted in our not reporting any income tax expense or benefit during
the periods ended March 31, 2001 and 2002. We anticipate that this accounting
will continue until such time that we can sustain enough operating profit to
utilize all or part of our net operating loss carry-forwards.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2002, we had approximately $0.2 million in cash compared
to approximately $1.2 million at December 31, 2001. We had working capital of
approximately $0.9 million at March 31, 2002, compared to approximately $2.3
million at December 31, 2001. The decrease in working capital from December 31,
2001 to March 31, 2002 is due primarily to the acquisition of AirJac Drilling
for which we paid $2.0 million cash (See Note 9).
Cash provided by (used in) operating activities was $1.1 million and
($1.5 million) in the periods ended March 31, 2002 and 2001, respectively. The
increase is due primarily to the subsequent receipt of a key-man life insurance
receivable recorded at March 31, 2001.
Our primary credit facility is with Hibernia National Bank (the
"Hibernia Facility"). The Hibernia Facility, which was amended November 2, 2001,
currently provides us with a $2.0 million equipment loan, a $2.0 million real
estate loan and a $5.0 million revolving line of credit to finance working
capital requirements. The loans bear interest at prime plus 1.5% and have a
final maturity of August 31, 2004. As of March 31, 2002, we had approximately
$5.7 million outstanding
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under the Hibernia Facility. Availability under the Line is the lower of: (i)
$5.0 million or (ii) the sum of 80% of eligible accounts receivable, plus 25% of
eligible aviation inventory of parts and supplies. The Line is collateralized by
our accounts receivable and inventory. As of March 31, 2002 we had $2.1 million
outstanding under the Line (included in the $5.7 million total outstanding under
the facility). Additional borrowing capacity under the Line was $0.2 million as
of March 31, 2002. We expect the cash flow provided by our operating activities
will be adequate to finance our working capital needs for 2002.
At March 31, 2002, we also had approximately $8.0 million in other
loans outstanding, including approximately $2.1 million in outstanding debt
pursuant to agreements with a financing company. This loan is an asset-based
financing loan bearing interest at LIBOR plus 5.0%. As previously mentioned, we
have renegotiated an extended maturity to August 31, 2004 from August 31, 2002.
Also included in the $8.0 million in other loans is approximately $4.2 million
in outstanding debt to a financing company pursuant to our acquisition of our
aviation fleet previously operated under an operating lease. This loan is
secured by the aviation fleet, amortizes over ten years, accrues interest at 8%
per annum and matures January 1, 2007.
Effective January 18, 2002 we acquired the assets of AirJac Drilling, a
division of Veritas DGC Land, Inc., a seismic drilling support company
headquartered in New Iberia, Louisiana. The aggregate acquisition cost was $2.3
million, including $2.0 million cash, acquisition costs and assumption of a
capital lease. In this acquisition we acquired inventory, vehicles, shop
equipment and drilling, field and support equipment. We received advances from
affiliates totaling approximately $1.2 million in connection with the financing
of this transaction; approximately $0.7 million is secured by treasury stock and
approximately $0.5 million is secured by accounts receivable from a customer.
The results of AirJac's operations have been included in our consolidated
financial statements since acquisition date.
Historically, our capital requirements have primarily related to the
purchase or fabrication of new seismic drilling equipment and related support
equipment and business acquisitions. Other than the acquisition discussed in
Note 9, we have no material commitments outstanding for expenditures nor do we
anticipate significant capital expenditures in 2002.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report contains certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements other than statements of historical fact included
in this report regarding our financial position and liquidity, our strategic
alternatives, future capital needs, business strategies and other plans and
objectives of our management for future operations and activities, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by our management in light of our experience and our
perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate under the
circumstances. Such forward-looking statements are subject to uncertainties that
could cause our actual results to differ materially from such statements. Such
uncertainties include but are not limited to: the volatility of the oil and gas
industry, including the level of offshore exploration, production and
development activity; changes in competitive factors affecting our operations;
operating hazards, including the significant possibility of accidents resulting
in personal injury, property damage or environment damage; the effect on our
performance of regulatory programs and environmental matters; seasonality of the
offshore industry in the Gulf of Mexico; and our dependence on certain
customers. These and other uncertainties related to our business are described
in detail in our other public filings. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. You are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof. We undertake no obligation to update any of our
forward-looking statements for any reason.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in our market risks since the year ended
December 31, 2001. For more information, please read the consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K for the
year ended December 31, 2001.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on our behalf by the
undersigned thereunto duly authorized.
OMNI ENERGY SERVICES CORP.
Dated: May 15, 2002 /s/ James C. Eckert
---------------------------------------
James C. Eckert
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 15, 2002 /s/ Burton T. Zaunbrecher
---------------------------------------
Burton T. Zaunbrecher
Executive Vice President,
Chief Operating Officer and Treasurer
Dated: May 15, 2002 /s/ G. Darcy Klug
---------------------------------------
G. Darcy Klug
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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