UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
April 16, 2004 (April 15, 2004)
___________________
TORCH OFFSHORE, INC.
(Exact Name of Registrant as Specified in its Charter)
000-32855
(Commission File Number)
Delaware 74-2982117
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
401 Whitney Avenue, Suite 400
Gretna, Louisiana 70056-2596
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(504) 367-7030
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99.1 Torch Offshore, Inc. Press Release, dated
April 15, 2004.
ITEM 12. RESULT OF OPERATIONS AND FINANCIAL CONDITION.
On April 15, 2004, Torch Offshore, Inc. (the "Company")
issued a press release announcing operating results for
the quarter ended December 31, 2003. In addition, the
Company announced the commencement of contract negotiations
with Mariner Energy for the first pipelay project for the
Midnight Express which is expected to take place in the
fourth quarter of 2004 following the vessel conversion
completion. A copy of this press release is furnished
as Exhibit 99.1 to this report and incorporated by
reference herein.
The Company has presented its EBITDA, as adjusted, for the
three- and twelve-month period ended December 31, 2003 in
the press release, which is a "non-GAAP" financial measure
under Regulation G. The components of EBITDA, as adjusted,
are computed by using amounts, which are determined in
accordance with GAAP. As part of our press release informat-
ion, we have provided a reconciliation of EBITDA, as
adjusted, to net income/loss, which is its nearest compar-
able GAAP financial measure. However, because EBITDA, as ad-
justed is not based on any standardized methodology pre-
scribed by GAAP, it is not necessarily comparable to similar
measures presented by other companies. The Company included
EBITDA, as adjusted, in the press release because it
believes that it uses this measure as an internal benchmark
against certain performance objectives and to provide
investors and creditors additional information in assessing
the Company's business in comparison to industry and other
market competitive standards.
SIGNATURE
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 hereunto duly
authorized.
TORCH OFFSHORE, INC.
By: /s/ ROBERT E. FULTON
Date: April 16, 2004 ------------------------
Robert E. Fulton
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
99.1 Torch Offshore, Inc. Press Release, dated
April 15, 2004.
EXHIBIT 99.1
NEWS RELEASE
For immediate release to:
Analysts, Financial Community, Media
Contact: Bob Fulton (1) 504-367-7030
Bradley Lowe (1) 504-367-7030
Torch Offshore Announces 2003 Fourth Quarter and Annual
Results and Commencement of Contract Negotiations for the First
Project for the Midnight Express
New Orleans, Louisiana USA, April 15, 2004
Torch Offshore, Inc. (NASDAQ: TORC) (the "Company")
announced today its fourth quarter and twelve month 2003
financial results, as summarized below.
FOURTH QUARTER RESULTS
Revenues for the quarter ended December 31, 2003 were $19.4
million, a decrease of 20.9 percent compared to revenues of
$24.5 million for the fourth quarter of 2002. Gross profit
(revenues less cost of sales) for the fourth quarter of 2003
was $0.2 million or 1.2 percent of revenues compared to
gross profit for the fourth quarter of 2002 which was $5.9
million, or 24.0 percent of revenues. The fourth quarter
2003 net loss was $6.8 million, or $0.54 per diluted share,
compared to net income in the fourth quarter of 2002 which
was $0.5 million, or $0.04 per diluted share. Fourth quarter
2003 net results were adversely impacted by a $1.6 million
(non-cash) ($1.0 million after tax effect, or $0.08 per
diluted share) SFAS No. 144 asset impairment charge related
to the Midnight Carrier, $2.6 million ($1.7 million after
tax effect, or $0.13 per diluted share) of charges relating
to claims and settlements for work completed in prior
periods and a $1.3 million ($0.11 per diluted share)
deferred tax asset valuation allowance.
ANNUAL RESULTS
For the year ended December 31, 2003, revenues decreased 3.6
percent to $65.6 million generating a gross profit of $6.4
million or 9.7 percent of revenues, compared to 2002
revenues of $68.0 million that produced a gross profit of
$14.6 million, or 21.5 percent of revenues. Included in cost
of sales in 2003 was $2.1 million ($1.3 million after tax
effect, or $0.11 per diluted share) of costs related to the
termination of the Midnight Hunter charter. The net loss for
the twelve months ended December 31, 2003 totaled $9.2
million, or $0.73 per diluted share, compared to net income
in the twelve months ended December 31, 2002 which was $0.4
million, or $0.03 per diluted share. Net results for the
year ended December 31, 2003 were adversely impacted by a
$1.6 million (non-cash) ($1.0 million after tax effect, or
$0.08 per diluted share) SFAS No. 144 asset impairment
charge related to the Midnight Carrier, $3.0 million ($1.9
million after tax effect, or $0.15 per diluted share) of
charges relating to claims and settlements for work
completed in prior periods, a $0.5 million ($0.3 million
after tax effect, or $0.03 per diluted share) charge related
to costs to establish and commence bidding operations in
Mexico and a $1.3 million ($0.11 per diluted share) deferred
tax asset valuation allowance.
Our independent auditors, Ernst & Young LLP, concluded, as
required by generally accepted auditing standards, that
their auditors' report on the Company's 2003 financial
statements, included in our annual report on Form 10-K,
should include an explanatory paragraph regarding our
ability to continue as a going concern, and accordingly,
they included such a paragraph in their report. Therefore,
the Company's management has developed a financial plan,
that is fully described in the Company's Form 10-K filed
with the SEC. Among other measures, our plan includes
pursuing means of raising additional capital. Raising
additional capital during 2004 and 2005 is a requirement for
the Company to continue to conduct operations, meet its
obligations and support the operations of the Midnight
Express. Because certain transactions included in our
business plan are not yet complete, there are inherent
uncertainties associated with such transactions.
Lyle G. Stockstill, Torch Offshore, Inc. Chairman and Chief
Executive Officer, commented, "Overall in 2003, market
conditions remained relatively weak as drilling activity in
the Gulf of Mexico continued at depressed levels. These
levels of capital expenditures by the oil and natural gas
companies drove market prices to lower levels, and as a
result, adversely impacted our gross profit margins and
utilization levels. Because of these market conditions, an
adverse arbitration ruling related to the Midnight Hunter
termination, and other events with a direct impact on our
earnings, we experienced a significant loss in 2003."
Stockstill added, "We have disclosed our financial plan for
2004 in our annual report and are confident that it will
provide sufficient financial resources. The Midnight Express
was a large undertaking for a company of our size and this
has put a burden on our current financial resources.
However, we believe the payoff in this investment is on the
short-term horizon as we expect the vessel to enter our
active fleet in the second half of 2004."
RECENT DEVELOPMENTS
The Company is beginning contract negotiations with Mariner
Energy for the first pipelay project for the Midnight
Express which is expected to take place in the fourth
quarter of 2004 following the vessel conversion completion.
Although the specifics of the project have yet to be
finalized, the work will take place in the Gulf of Mexico in
water depths ranging up to 4,000 feet and will entail
several of the challenging intricacies of deepwater pipelay,
including pipe-in-pipe and a midline termination skid
installation, the type of work the Midnight Express was
designed and targeted to complete. We will provide further
details at a later time once they are finalized.
Stockstill added, "As with the Midnight Wrangler and
Midnight Hunter, the Midnight Express has found a welcome
market upon its introduction to our active fleet. We are
quite excited about the opportunity to utilize the Midnight
Express on this project for Mariner Energy and we thank them
for the opportunity. The Midnight Express is a dynamic
vessel that has the ability to revitalize our Company - and
this work for Mariner Energy is only the first step for this
vessel and our future in the deep waters of the world."
CONFERENCE CALL
A conference call will be held at 10:00 a.m. (Central Time)
on Thursday, April 15, 2004. To participate by telephone,
United States callers can dial (800) 599-9795 and
international callers can dial (617) 786-2905 ten to fifteen
minutes prior to the starting time. The conference ID for
all callers is 49963439. The conference call will also be
webcast live on the Internet through the Investor Relations
page on the Company's web site, www.torchinc.com.
The call will be available for replay beginning at 1:00 p.m.
(Central Time) on Thursday, April 15, 2004 and ending at
midnight (Central Time) on Wednesday, April 21, 2004. For
callers in the United States, the toll-free number for the
replay is (888) 286-8010. For international callers, the
number is (617) 801-6888. The conference ID for all callers
for the replay is 51638353. All individuals listening to the
conference call or the replay are reminded that all
conference call material is copyrighted by Torch Offshore,
Inc. and cannot be recorded or rebroadcast without Torch
Offshore, Inc.'s express written consent.
Established in 1978, Torch Offshore, Inc. is involved in
offshore pipeline installation and subsea construction for
the oil and natural gas industry. Torch Offshore, Inc. is
expanding beyond its established shallow water niche market
in order to serve the industry's worldwide growing needs in
the deep waters.
Any statements made in this news release, other than those
of historical fact, about an action, event or development,
which the Company hopes, expects, believes or anticipates
may or will occur in the future, are forward-looking
statements under the Private Securities Litigation Act of
1995. The forward-looking statements in this news release
include statements about the capabilities of the Company's
vessels and the sufficiency of the Company's resources. Such
statements are subject to various assumptions, risks and
uncertainties, which are specifically described in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 filed with the Securities and
Exchange Commission, as well as other factors that may not
be within the Company's control, including, specifically,
oil and natural gas commodity prices, weather conditions and
offshore construction activity levels. Although the Company
believes its expectations are based on reasonable
assumptions, it gives no assurance that the Company's
assumptions and projections will prove to be correct. Actual
results may differ materially from those projected.
PR 04-008
# # #
TORCH OFFSHORE, INC.
Statements of Operations
(in thousands, except per share data)
Three Months Year
Ended Ended
December 31, December 31,
----------------- ------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues $19,390 $24,522 $65,557 $67,990
Cost of revenues:
Cost of sales 19,154 18,646 59,170(B) 53,341
Depreciation and
amortization 3,736(C) 1,907 9,368(C) 7,540
General and
administrative
expenses 2,219 1,270 6,536 4,767
Other operating
expense 3,518(D) 1,966(A) 3,518(D) 1,966(A)
------- ------- ------ -------
Total cost of
revenues 28,627 23,789 78,592 67,614
------- ------- ------ -------
Operating income
(loss) (9,237) 733 (13,035) 376
------- ------- ------ -------
Other income
(expense):
Interest expense - 93 - -
Interest income - 12 1 232
Gain on early
retirement of debt 885 - 885 -
------- ------- ------ ------
Total other
income 885 105 886 232
------- ------- ------ ------
Income (loss) before
income taxes (8,352) 838 (12,149) 608
Income tax benefit
(expense) 1,594(E) (294) 2,923(E) (213)
------- ------- ------ ------
Net income (loss)
attributable to
stockholders $(6,758) $ 544 $(9,226) $ 395
======= ======= ====== ======
Net income (loss) per
common share:
Basic $(0.54) $ 0.04 $ (0.73) $ 0.03
(C),(D),(E) (A) (B),(C),(D),(E) (A)
=========== ======= ============= ====
Diluted $(0.54) $ 0.04 $ (0.73) $ 0.03
(C),(D),(E) (A) (B),(C),(D),(E) (A)
=========== ======= ============= ====
Weighted average
common stock
outstanding:
Basic 12,639 12,635 12,637 12,692
====== ====== ====== ======
Diluted 12,639 12,636 12,637 12,695
====== ====== ====== ======
Other data:
EBITDA, As Adjusted
(F),(G) $(4,616) $3,692 $(2,782) $8,968
======= ====== ====== ======
(A) Includes a noncash specific charge of $0.9 million
($0.04 per diluted share for the fourth quarter of 2002
and $0.04 per diluted share for the year ended December
31, 2002, net of related income tax effects) resulting
from the write off of certain costs due to the
termination of the Midnight Hunter charter agreement
and a noncash specific charge of $0.2 million ($0.01
per diluted share for the fourth quarter of 2002 and
$0.01 per diluted share for the year ended December 31,
2002, net of related income tax effects) resulting from
the write off of certain financing costs related to the
Midnight Express.
(B) Includes $2.1 million ($0.11 per diluted share for
the year ended December 31, 2003, net of related income
tax effect) of costs related to the termination of the
Midnight Hunter charter.
(C) Includes a noncash specific charge of $1.6 million
($0.08 per diluted share for the fourth quarter of 2003
and $0.08 per diluted share for the year ended December
31, 2003, net of related income tax effects) resulting
from an asset impairment charge on the Midnight Carrier.
(D) Includes $2.6 million ($0.13 per diluted share for
the fourth quarter of 2003, net of related income tax
effects) in the fourth quarter of 2003 and $3.0 million
($0.15 per diluted share for the year ended December 31,
2003, net of related income tax effects) in the 2003 year
of charges relating to claims and settlements for work
completed in prior periods.
(E) Includes a deferred tax asset valuation allowance of
$1.3 million ($0.11 per diluted share for the fourth
quarter of 2003 and $0.11 per diluted share for the
year ended December 31, 2003).
(F) The Company calculates EBITDA, as adjusted, as earnings
before net interest, income taxes, depreciation and
amortization and certain other vessel charges. Please see
Condensed Balance Sheet and Other Information included
in this news release for a reconciliation of EBITDA, as
adjusted, to net income/loss. EBITDA, as adjusted, is
presented here to provide additional information about our
operations. EBITDA, as adjusted, is not a calculation
based on generally accepted accounting principles (GAAP)
and should not be considered as an alternative to net
income/loss, as an indicator of our operating performance
or as an alternative to cash flow as a better measure of
liquidity. In addition, our EBITDA, as adjusted,
calculation may not be comparable to similarly titled
measures of other companies.
TORCH OFFSHORE, INC.
Condensed Balance Sheet
and Other Information
(in thousands, except per share data)
December 31, December 31,
2003 2002
----------- ------------
Assets
Current assets $ 24,081 $ 31,373
Property, net 143,266 67,561
Other assets 2,559 2,970
-------- --------
Total assets $169,906 $101,904
======== ========
Liabilities and
Stockholders' Equity
Accounts payable - trade $ 15,148 $ 7,677
Accrued expenses and
other 7,707 7,393
Midnight Express Finance
Facility 45,639 -
Current portion of long-
term debt 3,396 14
Receivable line of
credit 7,227 4,271
-------- --------
Total current
liabilities 79,117 19,355
Deferred income taxes - 2,636
Long-term debt, less
current portion 20,057 46
Stockholders' equity 70,732 79,867
-------- --------
Total liabilities
and stockholders' equity $169,906 $101,904
======== ========
Three Monts Year
Ended Ended
December 31, December 31,
------------ ------------
2003 2002 2003 2002
---- ---- ---- ----
EBITDA, As Adjusted,
Reconciliation (G):
Net income (loss) $(6,758) $ 544 $(9,226) $ 395
Income tax expense
(benefit) (1,594) 294 (2,923) 213
Interest (income)
expense - (105) (1) (232)
Depreciation and
amortization 3,736 1,907 9,368 7,540
Vessel charges - 1,052 - 1,052
------- ----- ------ ------
EBITDA, As Adjusted $(4,616) $3,692 $(2,782) $8,968
======= ===== ====== ======
(B) We have disclosed EBITDA, as adjusted, a non-GAAP measure
determined as described in item (F) above, because we use
this measure as an internal benchmark against certain
performance objectives and to provide investors and
creditors additional information in assessing our business
in comparison to industry and other market competitive
standards.