Horizon Offshore Inc
I General Information:
A. Company Name
Horizon Offshore Inc
B Company's Industry
Horizon Offshore, Inc. is a leading provider of marine construction services
to the offshore oil and gas Industry.
C. Choice of this company
Just a friend of mine had recommended this company.
D. Company trade Location
Company trades at NASDAQ NM.
E. The ticker symbol of the company.
Ticker symbol is HOFF.
F. Auditing firm
Arthur Andersen LLP, Houston, Texas.
G.Information about the website
1. The following information are provided in the website such as The Horizon news, about the company and its operations, the press releases, Investor relations which consists of the share holder information and the transfer agents address, corporate overview and the SEC filings (8K,10K and 10Q).
2. Website Address:
3. Website Print out:
Horizon Offshore, Inc. provides marine construction services to the offshore oil and gas industry around the world.
The Company's fleet is used to perform a wide range of marine construction activities, including installation and burial of marine pipelines with conventional 'S' pipelay and "reel" pipelay methods, derrick barge operations for installation of new and abandonment of old oil and gas producing facilities.
Horizon's mission is to pursue operational excellence while maintaining the highest regard for the management of health, safety and environment (HSE) and quality. In all aspects of our work, we provide high quality, industry recognized marine construction services throughout the world.
Recent Horizon News
- Horizon Offshore to Present at Raymond James & Associates 24th Annual Institutional Investors Conference
- Horizon Offshore Names Additional Board Member
- Horizon Offshore Names New Director
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Copyright ÃÂ© 1996-2002
Horizon Offshore, Inc. All rights reserved.
A. Article about the company and its industry.
1. "Horizon offshore wins Gulf Of Mexico Pipeline contract from Williams." (10/17/2002), www.oilworks.com/new/i102102.html
Horizon Offshore Inc is a leading provider of marine construction services to the offshore oil and gas industry. Operations are concentrated in the shallow deep water ranges of U.S Gulf of Mexico, central and South America, with strategic expansion into other international areas. Horizon offshore of Houston, Texas has been awarded a contract by Williams's oil gathering to install 50 miles of oil pipeline in the united states of gulf of Mexico for the mountaineer shallow water pipeline system, which is the part of the devils tower project being constructed by Williams.
Horizon offshore decided to utilize one of their largest vessels Lone Star horizon and Pecos horizon for pipelining. This will be installed in water depths ranging from 8 to 270 feet. the work started in the fourth quarter of 2002 and scheduled to complete during the first quarter of 2003.
Gulf of Mexico demonstrates the company's ability to capitalize and benefit from growing deep water field development, by performing related shallow water work. Horizon's stellar track record frequently makes them marine construction contractor of choice by its customers for longer, high profile project of this type.
2. "Horizon offshore announces International certifications" press release
Horizon offshore also called HOFF announced its achievement of two internationally recognized certifications. Norwegian classification society Det Norske Veritas (DNV) certified horizon with occupational health and safety assessment series management system standard OHSAS 18001.This certification is designed to minimize the risk of accidents and near-miss incidents that employees and other parties may encounter while participating in work-related activities.
The second certification was received by DNV to international quality management system standard ISO9001:2000 for its activities in Houston and Southeast Asia marine constructionm.Compliance with this certification is expected to enhance customer satisfaction by demonstrating horizon's ability to consistently provide products meeting customer and applicable regulatory requirements.
The company is mainly involved in performing wide range of marine construction activities, including installation of marine pipelines to transport oil and gas and other sub sea production systems.
The industry conditions and volatility, prices of oil and gas, the company's ability to obtain and the timing of new projects reflect the actual results. Obviously horizon has grown up to level where it reached the depths of the marine construction.
Horizon offshore, Inc is a leading provider of marine construction services to the offshore oil and gas industry and was established in the year 1989 with around 545 employees, including 399 operating personnel and 146 corporate, admisnistrative and management personnel. Operations are concentrated in the shallow to deepwater ranges of the US Gulf of Mexico, Central and South America with strategic expansion in to other international areas.Horizon.The company's fleet consists of thirteen vessels, twelve of which are operational. The company established a joint venture with Cal Dive International, Inc to participate in the ultra deep water market. The primary services the Company provides include installing pipelines to transport oil and natural gas, providing pipelines, hook-up and commissioning services and installing production platforms and other structures and then salvaging them at the end of their life cycles.
During 2001, the Company laid 126 miles of pipe of various diameters in various depths. In 2001, the Company performed a total of 72 pipeline construction contracts, and installed or removed 30 offshore platforms. The Company continued its international expansion efforts with the purchase of the Sea Horizon in July 2001, a combination 360-foot derrick pipe lay barge. After completing upgrades and modifications, the Sea Horizon became the Company's largest combination barge capable of performing turnkey projects in remote locations with a single mobilization. The Sea Horizon was mobilized in February 2002 to perform a pipeline and platform installation project in Indonesian waters. This project, involving over 10.6 kilometers of pipe at water depths of 175 feet, and a 450-ton, four-pile platform installation, marks the Company's entry into Southeast Asia. The Sea Horizon is scheduled to upgrade its lift capacity to 1,200 tons in the latter part of 2002. The Company intends to continue operating the vessel in Indonesia and Malaysia, as well as other areas in Southeast Asia, such as Thailand and Vietnam. The Company's pipe lay vessels employ conventional S-lay technology, which is appropriate for operating on the United States continental shelf and in many international areas. For larger pipe burying projects, or where deeper trenching is required, the Company uses the Canyon Horizon, the dedicated pipe bury barge.
For the nine months ended 9/30/02, revenues fell 2% to $195.4 million. Net income before extraordinary item decreased 56% to $4.8 million. Results reflect higher contract revenues from the projects in Mexico, offset by a $2 million loss due to a fire. The major competitors for this company are Atlas Pipeline Partners (APL) and Atwood Oceanic, Inc. (ATW)
The marine construction industry is highly competitive .Competition is influenced by factors such as price, availability and capability of equipment, personnel, reputation and experience of management. They currently compete with Global industries, Ltd., Torch Offshore, Inc and a few other smaller contracters, and the competitors for the installation and removal of production platforms are offshore specialty Fabricators, Inc.
C.Plotting Stock prices:
IV: Balance sheet and Income statement analysis:
A. Balance sheet:
1. There are two types of stocks reported on the balance sheet they are the Common stock with a par value of 35000,000 and preferred stock of 5000,000.
2. The number of shares that are authorized are 24244598, the number issued is 19,869098 and the number of outstanding for each year is
3. The Accounting equation is A=L +E
393584=207894 + 185690
Beginning balance: Assets = Liabilities + Equity
239425=135390 + 239425
Ending Balance: Assets = Liabilities + Equity
393584= 207894 + 393584
4. The inventory has increased from last year to this year
5. The company's largest asset is the company's property and the equipments (6 vessels)
B.Income Statement Analysis:
1. The change in the cost of goods sold is 237,175 and he Gross Margin from Last year to this year is
2. The net income from last year 2000 is $6374, and 10,693 in the year 2001,Hence the net change in the net income is 4319
3. The largest operating expense is the selling general and Administration expense which is 13,771
4. The company has one revenue account.
1. The amount of dividends the company paid last year is 95,838 in 2001, and 16,581 in the year 2000.This change is due to the change in the net income from last year to this year.
2. The 3 items of information that I learned from reading the footnotes are the Accounts Recievable, Notes payable and the Dividends.
V. Ratio Analysis:
Return on Assets: This is a profitability ratio that measures how efficiently the company uses assets to produce profits.
The Return on Assets can be calculated by: Net Income before taxes / Total Assets.
$16,078 / 393584 = .041 or 4.1%
The company has a low return on assets.
Total Asset Turnover: A profitability ratio that indicates the amount of revenues produced for a given level of assets used.
Total Asset turnover = Sales / Total Assets
$272208 / 393584 = .69 0r 6.9%
This indicates that horizon produced 6.9% as many dollars in sales as it has invested in assets.
Profit Margin after Income taxes: A profitability ratio that measures the earnings produced from a given level of revenues by comparing net income after income taxes with the revenue figure.
Profit margin after Income tax = Net Income after taxes / sales
$10,693 / 272208 = .039 or 3.9%
Return on Equity: A profitability ratio that measures the after-tax net income generated from a given level of investment by a company's owners.
Return on equity: Net Income after taxes / Equity
$10,693 / 185690 = .057 or 5.7%
Current Ratio: A liquidity ratio that measures a company's ability to meet short term obligations by comparing current assets to current liabilities
Current ratio: Current assets / current liabilities
$161745 / 83690 = 1.93 to 1.
This indicates that Horizon had $1.93 of current assets for every $1.00 of current liabilities at the end of 2002
Quick Ratio: A liquidity ratio that is similar to the current ratio, but a more stringent test of liquidity, because only current assets considered to be highly liquid are included in the calculation.
Quick ratio = Cash + Receivables + Marketable Securities / current liabilities.
$7864 + 52431 + 0 / 83690 = .72 to 1
Net sales to working capital ratio: A ratio used to measure the level of sales generated from a given level of working capital
Net sales = Sales / Current assets - Current liabilities
$272208 / 161745 - 83690 = 3.487 to 1
This figure suggests that in 2002 the horizon generated $ 3.48 in sales for every $ 1 of working capital it had at the end of 2001
Inventory turnover: A liquidity ratio that indicates how long a company holds its inventory
Inventory turnover = cost of sales / inventory
$237175 / 1705 = 13.9 times
365/13.9 = 26.25 days
Debt ratio: A solvency that indicates what proportion of a company's assets is financed by debt
Debt ratio = Total liabilities / Total assets = 207894 / 393584 = .53 0r 53%
Total liabilities to Net worth = A solvency ratio indicating the relationship between creditors claims to a company's assets and the owners claim to those assets
Total liabilities to net worth = total liabilities / net worth
83690 / 185690 = .451
The horizon has $ .451 of debt for every $1 of equity.