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 June 30, 1996
Commission File Number: 2-56600
Global Industries, Ltd.
(Exact name of registrant as specified in its charter)
Louisiana 72-1212563
(State or other jurisdiction of incorporation or organization)(I.R.S.
Employer Identification No.)
107 Global Circle
P.O. Box 31936, Lafayette, LA 70593-1936
(Address of principal executive offices) (Zip Code)
(318) 989-0000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since
last report)
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. X Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of the Registrant's Common Stock
outstanding as of August 14, 1996 was 19,055,428.
Global Industries, Ltd.
Index - Form 10-Q
Part I
Item 1. Financial Statements - Unaudited
Independent Accountants' Report 3
Consolidated Statements of Operations 4
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
Global Industries, Ltd.
We have reviewed the condensed consolidated financial statements
of Global Industries, Ltd. and subsidiaries, as listed in the
accompanying index, as of June 30, 1996 and for the three-month
periods ended June 30, 1996 and 1995. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such condensed consolidated
financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Global
Industries, Ltd. and subsidiaries as of March 31, 1996, and the
related consolidated statements of operations, shareholders'
equity, and cash flows for year then ended (not presented
herein); and in our report dated May 31, 1996, we expressed an
unqualified opinion on those consolidated financial statements
and included an explanatory paragraph relating to the Company's
adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" effective April 1, 1993. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of March 31, 1996 is fairly stated,
in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
DELOITTE & TOUCHE LLP
August 2, 1996
New Orleans, Louisiana
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Quarter Ended June 30,
1996 1995
Contract Revenues $ 50,332 $ 31,795
Cost of Contract Revenues 37,979 23,073
Gross Profit 12,353 8,722
Selling, General and Administrative 2,970 2,795
Expenses
Operating Income 9,383 5,927
Other Income (Expense):
Interest Expense (71) (44)
Other 137 673
66 629
Income Before Income Taxes 9,449 6,556
Provision for Income Taxes 2,806 2,426
Net Income $ 6,643 $ 4,130
Weighted Average Common Shares
Outstanding 19,718,000 19,136,000
Net Income Per Share $ 0.34 $ 0.22
See Notes to Consolidated Financial Statements.
Global Industries, Ltd.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 30, March 31,
1996 1996
ASSETS
Current Assets:
Cash $ 12,117 $ 5,430
Escrowed funds, Pioneer 18,289 16,189
Receivables 43,355 39,610
Prepaid expenses and other 3,368 3,825
Total current assets 77,129 65,054
Escrowed Funds, Pioneer 2,756 4,768
Property and Equipment, net 134,325 126,295
Other Assets:
Deferred charges, net 6,380 5,453
Other 968 956
Total other assets 7,348 6,409
Total $ 221,558 $ 202,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 1,048 $ 1,048
Accounts payable 24,097 19,364
Accrued liabilities 5,731 4,020
Accrued profit-sharing 3,865 3,465
Insurance payable 3,256 2,893
Total current liabilities 37,997 30,790
Long-Term Debt 25,038 21,144
Deferred Income Taxes 15,898 14,898
Commitments and Contingencies
Shareholders' Equity:
Preferred stock -- --
Common stock, issued and outstanding,
19,045,218,
18,936,039 shares, respectively 190 189
Additional paid-in capital 59,093 58,806
Retained earnings 83,342 76,699
Total shareholders' equity 142,625 135,694
Total $ 221,558 $ 202,526
See Notes to Consolidated Financial Statements.
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Quarter Ended June 30,
1996 1995
Cash Flows From Operating Activities:
Net income $6,643 $4,130
Adjustments to reconcile net income to
net cash provided
by (used in) operating activities:
Depreciation and amortization 3,549 2,542
Deferred income taxes 1,000 700
Changes in operating assets and
liabilities:
Receivables (3,745) (15,320)
Prepaid expenses and other 457 (3,116)
Accounts payable and accrued 7,207 13,935
liabilities
Net cash provided by (used in) 15,111 2,871
operating activities
Cash Flows From Investing Activities:
Additions to property and equipment (10,810) (10,990)
Additions to deferred charges (1,642) (143)
Other (95) 614
Net cash (used in) investing (12,547) (10,519)
activities
Cash Flows From Financing Activities:
Proceeds from exercise of employee 229 93
stock options
Net proceeds (repayment) of long-term 3,894 (106)
debt
Net cash provided by (used in) 4,123 (13)
financing activities
Cash and Short-Term Investments:
Increase (Decrease) 6,687 (7,661)
Beginning of period 5,430 49,404
End of period $12,117 $41,743
Supplemental Cash Flow Information:
Interest paid, net of amount $ 86 $ 88
capitalized
Income taxes paid 446 --
See Notes to Consolidated Financial Statements.
Global Industries, Ltd.
Notes To Consolidated Financial Statements (Unaudited)
1. Basis of Presentation - The accompanying unaudited consolidated
financial statements include the accounts of the Company and its
wholly owned subsidiaries.
In the opinion of management of the Company, all adjustments
(such adjustments consisting only of a normal recurring nature)
necessary for a fair presentation of the operating results for
the interim periods presented have been included in the unaudited
consolidated financial statements. Operating results for the
quarter ended June 30, 1996, are not necessarily indicative of
the results that may be expected for the year ending March 31,
1997. These financial statements should be read in conjunction
with Management's Discussion and Analysis of Financial Condition
and Results of Operations included in this Form 10-Q, and the
Company's audited consolidated financial statements and related
notes thereto included in the Company's Annual Report on Form 10-
K for the fiscal year ended March 31, 1996.
On June 20, 1996, the Board of Directors, subject to shareholder
approval of an increase in the authorized number of shares of
common stock, declared a two-for-one common stock split expected
to be distributed in the form of a stock dividend by August 28,
1996 to shareholders of record on August 16, 1996. On August 7,
1996, the shareholders approved an amendment to the Company's
Articles of Incorporation to increase the authorized number of
shares of both common and preferred stock from 25,000,000 shares
to 150,000,000 shares and 5,000,000 shares to 30,000,000 shares,
respectively.
Supplementary net income per share for the three months ended
June 30, 1996 and 1995, adjusted to give retroactive effect to
the two-for-one common stock split, amounted to $0.17 and $0.11,
respectively, based on weighted average common shares outstanding
of 39,436,000 and 38,272,000.
The financial statements required by Rule 10-01 of Regulation S-X
have been reviewed by independent public accountants as stated in
their report included herein.
2. Commitments and Contingencies - The Company is a party in legal
proceedings and potential claims arising in the ordinary course
of business. Management does not believe these matters will
materially effect the Company's consolidated financial
statements.
The Company has under construction a 200-foot semi-submersible
Swath (Small Waterplane Area Twin Hull) dive support vessel named
the Pioneer estimated to cost approximately $24.0 million. The
escrowed funds, Pioneer, at June 30, 1996, of $21.0 million,
represent proceeds from the sale of ship bonds in September 1994,
and will become available to the Company upon completion of the
Pioneer. The Pioneer is expected to be available for service in
September 1996.
As previously reported Aker Gulf Marine filed suit against the
Company in the U.S. District Court, Western District of
Louisiana, Lafayette Division in December of 1995 seeking $8.2
million in additional costs believed by it to be owed because of
change orders during construction and $5.0 million for
disruption, acceleration and delay damages. In August 1996 the
Company reached an agreement with Aker Gulf Marine, and took
possession of the Pioneer which is now located at the Company's
facility in Amelia, Louisiana where construction and equipping of
the vessel will be completed. Under the terms of the agreement
the Company has been given clear title to the Pioneer in
exchange for $3.2 million and the posting of a $4.5 million bond
in favor of Aker Gulf Marine. Such amounts and release of the
vessel are without prejudice to each company's rights to pursue
claims against the other in pending litigation or otherwise. The
Company does not believe that Aker Gulf Marine's claims are valid
and is vigorously defending against them and does not believe
that ultimate resolution of the claims will have a material
adverse impact on the Company's financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion should be read in conjunction with the
Company's unaudited consolidated financial statements for the
periods ended June 30, 1996 and 1995 and Management's Discussion
and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996.
Although the Company has been expanding its international
operations, 77% of the Company's contract revenues in fiscal 1996
and 73% in the first quarter of fiscal 1997 were derived from
work in the U.S. Gulf of Mexico. The offshore marine construction
industry in the Gulf of Mexico is highly seasonal as a result of
weather conditions and the timing of capital expenditures by oil
and gas companies. Historically, a substantial portion of the
Company's services has been performed during the period from June
through November. As a result, a disproportionate portion of the
Company's contract revenues, gross profit and net income is
generally earned during the second (July through September) and
third (October through December) quarters of its fiscal year. The
following table documents the seasonal nature of the Company's
operations by presenting the weighted average percentage of
contract revenues, gross profit and net income contributed by
each fiscal quarter for the past three fiscal years.
Quarter Ended
June 30, Sept. 30, Dec. 31, March 31,
Contract revenues, three year average 22 % 34 % 26 % 18 %
Gross profit, three year average 20 41 28 11
Net income, three year average 18 44 28 10
The Company expanded its operations offshore West Africa during
the first half of fiscal 1996. Strong demand in this market
during the fourth quarter of fiscal 1996 resulted in the fourth
quarter of fiscal 1996 making a significantly greater
contribution to the year's contract revenues, gross profit and
net income than historically, which has a significant impact on
the three year averages shown above.
Results of Operations
The following table sets forth for the periods indicated the
Company's statements of operations expressed as a percentage of
contract revenues.
Quarter Ended
June 30,
1996 1995
Contract revenues 100.0 % 100.0 %
Cost of contract revenues (75.5) (72.6)
Gross profit 24.5 27.4
Selling, general and administrative expenses (5.9) (8.8)
Interest expense (0.1) (0.0)
Other income (expense), net 0.3 2.0
Income before income taxes 18.8 20.6
Provision for income taxes (5.6) (7.6)
Net income 13.2 % 13.0%
First Quarter Fiscal 1997 Compared to First Quarter Fiscal 1996
Contract Revenues. Contract revenues for the first quarter of
fiscal 1997 of $50.3 million were $18.5 million or 58% higher
than the $31.8 million recorded in the first quarter of fiscal
1996. The improved revenue performance reflects the benefits of
international operations and stronger demand for Gulf of Mexico
derrick and diving services in the current quarter as compared to
the fiscal 1996 period. International operations commenced during
the second quarter of fiscal 1996 and did not contribute to
contract revenues during the first quarter of fiscal 1996. These
increases were partially offset by a decline in the Company's
Gulf of Mexico pipeline services during the current quarter as
compared to the same period in fiscal 1996. Barge days employed
were 332 in the first quarter of fiscal 1997 compared with 268
days in the 1996 period. Liftboat and DSV days of 1,320 in the
most recent period were higher than the 961 days during the year
earlier period. Diver days totaled 3,545 in the first quarter
of fiscal 1997 compared with 2,372 a year earlier.
Depreciation and Amortization. Depreciation and amortization
expenses, including amortization of drydocking costs, were $3.5
million in the first quarter of fiscal 1997 compared to $2.5
million a year earlier. The increase was principally
attributable to increased utilization of the upgraded Chickasaw
and the Hercules, both of which are depreciated on a units-of-
production basis.
Gross Profit. Gross profit for the first quarter of fiscal 1997
of $12.4 million was 42% higher than the $8.7 million gross
profit for the same quarter a year earlier. The gross profit
increase was primarily attributable to the increases in
international and derrick services, partially offset by lower
than normal gross profit from pipeline installation services.
Gross profit as a percent of contract revenues declined for the
current period to 24.5% as compared to 27.4% for the same quarter
a year earlier, primarily due to the lower pipeline installation
revenues and resulting lower gross profit margins in that area.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the first quarter of fiscal 1997
were $3.0 million, 6% higher than the $2.8 million expense for
the same quarter a year earlier. A provision for retirement and
incentive compensation plan expense of $0.4 million was recorded
in the first quarter 1997, compared to $1.0 million for the same
period a year earlier. Of the current period provision, $0.2
million was included in selling, general and administrative
expense in the 1997 quarter, compared to $0.3 million for the
same period a year earlier. The increase in Selling, General and
Administrative expense largely reflects the cost of staff added
in order to manage the Company's expansion.
Other Income (Expense). Interest expense, net of $0.2 million
of capitalized interest cost, was less than $0.1 million in the
current quarter compared to less than $ 0.1 million in the same
quarter a year earlier. Other income (expense) in the current
quarter of $0.1 million was lower than the $0.7 million reported
a year earlier largely because the Company had lower balances
available for investment.
Net Income. Net income for the first quarter of fiscal 1997
totaled $6.6 million, an increase of 61% from $4.1 million in the
same quarter a year earlier. The Company's effective income tax
rate declined from 37.0% in the first quarter of fiscal 1996 to
29.7% in the current quarter, reflecting the benefit of a lower
effective tax rate for the Company's international operations.
Liquidity and Capital Resources
While the Company generated positive net cash from operations
during the past three fiscal years, first quarter operations have
typically consumed cash due to the seasonality of the Company's
business. During the first quarter of fiscal 1997, however,
operations contributed $15.1 million of cash, which together with
$4.1 million provided by financing activities, funded investing
activities (principally capital expenditures) of $12.5 million.
The funds provided by financing activities represent draws
against the Company's revolving line of credit. Working capital
increased $4.9 million during the quarter as increases in cash,
accounts receivable, and escrowed funds of $6.7 million, $3.7
million, and $2.1 million respectively, offset the increases in
accounts payable, accrued liabilities, and insurance payable of
$4.7 million, $2.1 million, and $0.4 million, respectively, and
the $0.5 million decrease in other prepaid expenses.
Capital expenditures during the first quarter included the costs
of construction of two liftboats of $2.9 million and construction
of the Pioneer of $2.1 million. In August 1996 the Company
reached an agreement with Aker Gulf Marine, and took possession
of the Pioneer which is now located at the Company's facility in
Amelia, Louisiana where construction and equipping of the vessel
will be completed. Sea trials are expected to occur in September
in time to have the vessel ready for operation for the coming
winter season in the Gulf of Mexico. Under the terms of the
agreement, the Company has been given clear title to the Pioneer
in exchange for $3.2 million and the posting of a $4.5 million
bond in favor of Aker Gulf Marine. Such amounts and release of
the vessel are without prejudice to each company's rights to
pursue claims against the other in pending litigation or
otherwise. See "Item 1. Legal Proceedings" included in Part II
of this Form 10-Q for additional information. The fully equipped
cost for the Pioneer is estimated at $24.0 million. In September
1994 the Company sold $20.9 million of MARAD guaranteed ship
bonds in connection with financing the cost of constructing and
outfitting the Pioneer. These funds are currently held in escrow
by MARAD and will be available to the Company upon completion of
the vessel.
In July 1996, the Company completed its previously announced
acquisition of Norman Offshore Pipelines, Inc. The purchase
price was funded from available cash and from draws against the
Company's revolving line of credit. Long-term debt outstanding
at June 30, 1996, includes $22.1 million of Ship Bonds issued
under the authority of MARAD. The Ship Bonds mature in 2003,
2005 and 2020, carry interest rates of 9.15%, 8.75% and 8.30% per
annum, respectively, and require aggregate semi-annual payments
of $0.5 million, plus interest. The agreements pursuant to which
the Ship Bonds were issued contain certain covenants, including
the maintenance of minimum working capital and net worth
requirements, which, if not met, result in additional convenants
that restrict the operations of the Company and its ability to
pay cash dividends. The Company is currently in compliance with
these covenants.
The Company maintains a $50.0 million revolving line of credit
("Loan Agreement") with a commercial bank. The Loan Agreement
allows for a maximum draw at any one time of $25.0 million for
general corporate purposes and $40.0 million for construction or
renovation of vessels, provided that the aggregate outstanding
principal amount shall never exceed $50.0 million. The revolving
credit facility of the Loan Agreement is available until January
1, 1998, at which time the amount then outstanding becomes due
and payable. Interest accrues at LIBOR plus 1.8% (7.2375% at
June 30, 1996) and is payable monthly. Continuing access to the
revolving line of credit is conditioned upon the Company
remaining in compliance with the covenants of the Loan Agreement,
including the maintenance of certain financial ratios. At June
30, 1996, $4.0 million was outstanding under the Loan Agreement
and the Company was in compliance with the covenants contained
therein.
On April 10, 1996, the Company received authorization to issue
United States Guaranteed Ship Financing Bonds in connection with
the construction of two liftboats, a launch barge, and a cargo
barge. The Ship Bonds, issued August 7, 1996, totaled $20.3
million, mature in 2021 and carry an interest rate of 7.25% per
annum.
Funds available under the Company's credit facility and MARAD
financings, combined with available cash, and cash generated from
operations, are expected to provide sufficient funds for the
Company's operations, scheduled debt retirement, planned capital
expenditures, and working capital needs for the foreseeable
future.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various routine legal proceedings
primarily involving claims for personal injury under the General
Maritime Laws of the United Sates and Jones Act as a result of
alleged negligence. The Company believes that the outcome of all
such proceedings, even if determined adversely, would not have a
material adverse effect on its consolidated financial statements.
As previously reported Aker Gulf Marine filed suit against the
Company in the U.S. District Court, Western District of
Louisiana, Lafayette Division in December 1995 seeking $8.2
million in additional costs believed by it to be owed because of
change orders during construction and $5.0 million for
disruption, acceleration and delay damages. In August 1996 the
Company reached an agreement with Aker Gulf Marine, and took
possession of the Pioneer which is now located at the Company's
facility in Amelia, Louisiana where construction and equipping of
the vessel will be completed. Under the terms of the agreement
the Company has been given clear title to the Pioneer in
exchange for $3.2 million and the posting of a $4.5 million bond
in favor of Aker Gulf Marine. Such amounts and release of the
vessel are without prejudice to each company's rights to pursue
claims against the other in pending litigation or otherwise. The
Company does not believe that Aker Gulf Marine's claims are valid
and is vigorously defending against them and does not believe
that ultimate resolution of the claims will have a material
adverse impact on the Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
The 1996 Annual Meeting of Shareholders of the Company was held
on August 7, 1996. At such meeting, each of the following
persons listed below, all of whom were incumbent directors, were
elected to the Board of Directors of the Company for a term
ending at the Company's 1997 Annual Meeting of Shareholders. The
number of votes cast with respect to the election of each such
person is set forth opposite such person's name.
Name of Director Number of Votes Cast
Broker
For Withhold Non-Vote Abstain
William J.Dore 14,106,229 133,424 0 0
Michael J.Pollock 14,106,427 133,226 0 0
James C. Day 14,217,965 21,688 0 0
Edward P.Djerejian 14,217,945 21,708 0 0
Myron J.Moreau 14,219,227 20,426 0 0
At the 1996 Annual Meeting of Shareholders, the Company's
shareholders voted for (1) an amendment to the Company's 1992
Stock Option Plan, which increased the number of shares
authorized for issuance thereunder from 1.8 million to 2.4
million shares of Common Stock of the Company and (2) an
amendment to the Company's Amended and Restated Articles of
Incorporation which increases the number of authorized shares of
Preferred Stock to 30.0 million and the number of authorized
shares of Common Stock to 150.0 million. The number of votes
cast with respect to each proposal is set forth below:
Number of Votes Cast
Broker
For Against Abstain Withhold Non-Vote
Amendment to 10,168,845 2,845,618 13,221 0 0
Option Plan
Amendment to 12,486,102 1,708,827 42,724 0 0
Amend and
Restate
Articles
of
Incorporation
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
No.15, Letter re: unaudited interim financial information.
No.27, Financial Data Schedules.
(b) Reports on Form 8-K - None.
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, thereunto duly authorized.
GLOBAL INDUSTRIES, LTD.
By: /s/ MICHAEL J. POLLOCK
___________________________________
Michael J. Pollock
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
August 14, 1996
EXHIBIT 15
August 13, 1996
Global Industries, Ltd.
107 Global Circle
Lafayette, Louisiana 70503
We have made a review, in accordance with standards established
by the American Institute of Certified Public Accountants, of the
unaudited interim financial information of Global Industries,
Ltd. and subsidiaries for the periods ended June 30, 1996 and
1995, as indicated in our report dated August 2, 1996; because we
did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included
in your Quarterly Report on Form 10-Q for the quarter ended June
30, 1996, is incorporated by reference in Registration Statement
Nos. 33-58048 and 33-89778 on Form S-8.
We also are aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act of 1933, is not considered a
part of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana