Bruce Streeter, President and COO of the Company, said, "We had anticipated that the first quarter of 2004 would not be much different than the first quarter of 2003, and operating income was actually a little better this year than last. In the first quarter of 2003, we had one of our vessels working the entire quarter on the Prestige incident off the coast of Spain at an attractive dayrate, while this year the vessel was idle. In addition, we have mobilized several ships to different areas and absorbed the costs while better positioning the vessels for the coming periods. As in past years we have adjusted dry dock schedules to better position vessels to the market, completing the drydocking of four vessels and starting a fifth during the quarter. Modifications were completed on the Highland Warrior to prepare the vessel for the long term contract in Brazil later in the year.
"We have recently had a number of extensions of contracts in Southeast Asia and seen several seasonal contracts for some of our North Sea equipment as well as a long haul towage contracts for two of the new anchor handlers. The spot market conditions in the North Sea have been difficult and despite a number of positive signs there was no discernable improvement in the first quarter. Our focus continues to be on expanding our presence in various markets including Southeast Asia and Brazil, where we believe we have a competitive advantage in obtaining term work at acceptable day rates.''
Revenues of $31.6 million for the first quarter of 2004 were $3.3 million above the same quarter one year ago and $2.6 million lower than the fourth quarter of 2003. The primary reason for the $3.3 million increase from 2003 was revenue from the four newbuild vessels delivered in 2003 and the North Crusader contract in Brazil, partially offset by the return of a bareboat chartered vessel in Brazil. The variance of $2.6 million from the fourth quarter of 2003 was due primarily to lower average dayrates and utilization in the North Sea and the sale of the St. Rognvald ferry vessel, partially offset by the effects of stronger currencies in the U.K. and Norway.
Operating income of $0.8 million for the first quarter of 2004 was $0.4 million better than the first quarter in 2003 but $3.7 million lower than the fourth quarter of 2003. The increase over the first quarter of 2003 was due primarily to the full quarter impact from the new vessel deliveries in 2003 while the decrease from the fourth quarter of 2003 was attributable to the impact of lower utilization and dayrates in the North Sea. Direct operating costs increased to $18.6 million, which was $2.7 million higher than the same quarter of 2003 and $0.2 million less than the fourth quarter of 2003. The variance from one year ago is due principally to the increased number of vessels, $2.1 million, and the effects of stronger currencies in the U.K. and Norway, $1.0 million. The decrease in the first quarter of 2004 from the last quarter of 2003 was due principally to the sale of the St. Rognvald partially offset by the full quarter's cost from operation of the new anchor handler delivered in December of 2003. Depreciation and amortization expense increased to $8.2 million in the quarter reflecting the newbuild deliveries and the impact of stronger currencies in the U.K. and Norway.
At March 31, 2004, the Company had working capital of $21.0 million, including $12.8 million in cash. During the first quarter of 2004, the Company's $100 million credit facility remained the same as at December 31, 2003, at 48.3 million Pounds or $89.0 million, an exchange rate of 1.8437.
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