For the first quarter of 2004, gross profit was $(0.1) million, on revenues of $42.5 million, compared with gross profit of $2.5 million, or 3.8 percent, on revenues of $67.1 million for the first quarter of 2003. Pre-tax net loss was $(9.9) million, with income tax expense of $0.8 million for the first quarter of 2004, compared with pre-tax net loss of $(4.5) million and an income tax benefit of $(1.5) million for the same quarter last year.
For the three months ended March 31, 2004, the Company's domestic and Latin American operations generated losses as there was not a sufficient level of contract activity and associated revenues to support its operating cost structure in those geographic areas. This was primarily the result of continuing low levels of vessel utilization due to competitive market conditions in the U.S. Gulf of Mexico and the decreased work in Latin America until the recently awarded contract for Pemex. Also, productivity on execution of certain projects during the first quarter of 2004 was less than initially estimated when the projects were bid.
The Company's inability to collect significant outstanding receivables and claims from Pemex, Iroquois and Williams has continued to impact its liquidity and cause Horizon to closely manage cash during 2004. However, the Company was able to meet its immediate cash needs from the financing secured with the issuance of the $65.4 million Subordinated Notes in March 2004.
In March 2004, Horizon was awarded significant contracts offshore Mexico for Pemex and offshore Israel for the Israel Electric Corporation. Work commenced under the Pemex contract in March 2004, and mobilization is scheduled to begin in June 2004 for the pipeline installation phase of the project. Pursuant to the Israel Electric Corporation contract, the Company is required to obtain a $9.1 million letter of credit to secure a portion of its obligations under the contract. In order to secure this letter of credit, Horizon is currently finalizing terms and documents with Elliott Associates and other holders of the Subordinated Notes to loan the Company at least $10 million and up to $20 million. This loan transaction has not closed and is subject to conditions of closing and obtaining the required consents of the Company's lenders. Completion of this transaction and performance of the Israel Electric Corporation project are vital to the Company's operating activities.
The Company filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 with the Securities and Exchange Commission on May 17, 2004. Reference should be made to the Form 10-Q for a more complete description of the Company's results of operations for the quarter ended March 31, 2004 and the Company's liquidity and capital resources.
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