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 December 31, 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 February 5, 1997 was 45,249,742.
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 9
Part II
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 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 December 31, 1996 and for the three-
month and nine-month periods ended December 31, 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 the 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
February 4, 1997
New Orleans, Louisiana
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
Contract Revenues $ 56,776 $32,431 $179,539 $109,588
Cost of Contract Revenues 41,496 23,205 130,122 76,099
Gross Profit 15,280 9,226 49,417 33,489
Selling, General and
Administrative
Expenses 4,033 2,812 10,597 8,613
Operating Income 11,247 6,414 38,820 24,876
Other Income (Expense):
Interest Expense (121) (41) (574) (128)
Other 395 298 601 1,492
274 257 27 1,364
Income Before Income Taxes 11,521 6,671 38,847 26,240
Provision for Income Taxes 3,449 2,396 11,615 9,637
Net Income $ 8,072 $4,275 $ 27,232 $16,603
Weighted Average Common
Shares Outstanding 39,634,000 38,676,000 39,516,000 38,418,000
Net Income Per Share $ 0.20 $ 0.11 $ 0.69 $ 0.43
See Notes to Consolidated Financial Statements.
Global Industries, Ltd.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
December 31 March 31,
1996 1996
ASSETS
Current Assets:
Cash $ 6,295 $ 5,430
Escrowed funds, bond proceeds 18,106 16,189
Receivables 55,461 39,610
Advances to unconsolidated affiliate 10,551 --
Prepaid expenses and other 3,438 3,825
Total current assets 93,851 65,054
Escrowed Funds, Bond Proceeds 2,625 4,768
Property and Equipment, net 196,425 126,295
Other Assets:
Deferred charges, net 6,446 5,453
Advances to unconsolidated affiliate 12,680 --
Investment in unconsolidated
affiliate 3,401 --
Other 10,907 956
Total other assets 33,434 6,409
Total $326,335 202,526
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 2,266 1,048
Accounts payable 31,545 19,364
Accrued liabilities 12,824 4,020
Accrued profit-sharing 3,011 3,465
Insurance payable 3,034 2,893
Total current liabilities 52,680 30,790
Long-Term Debt 90,127 21,144
Deferred Income Taxes 19,398 14,898
Commitments and Contingencies
Shareholders' Equity:
Preferred stock -- --
Common stock, issued and outstanding,
38,166,003 and 37,872,078 shares,
respectively 382 379
Additional paid-in capital 60,006 58,806
Retained earnings 103,742 76,509
Total shareholders' equity 164,130 135,694
Total $326,335 $202,526
See Notes to Consolidated Financial Statements.
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
December 31,
1996 1995
Cash Flows From Operating Activities:
Net income $ 27,232 $ 16,603
Adjustments to reconcile net income to
net cash provided
by (used in) operating activities:
Depreciation and amortization 12,602 7,203
Deferred income taxes 4,500 1,700
Other 12 277
Changes in operating assets and
liabilities
(net of acquisitions):
Receivables (11,499) (24,922)
Prepaid expenses and other 985 (3,697)
Accounts payable and accrued
liabilities 12,119 12,827
Net cash provided by (used in)
operating activities 45,951 9,991
Cash Flows From Investing Activities:
Additions to property and equipment (72,919) (46,788)
Escrowed funds, bond proceeds 226 551
Acquisition of business, net of cash
acquired (5,990) --
Acquisition of equity interest in
unconsolidated affiliate (201) --
Advances to unconsolidated affiliate (23,231) --
Additions to deferred charges (3,464) (587)
Other (7,850) (60)
Net cash (used in) investing
activities (113,429) (46,884)
Cash Flows From Financing Activities:
Proceeds from exercise of employee
stock options 1,028 184
Proceeds from issuance of long-term
debt 68,828 --
Repayment of long-term debt (1,513) (212)
Net cash provided by financing
activities 68,343 (28)
Cash:
Increase (Decrease) 865 (36,921)
Beginning of period 5,430 49,404
End of period $ 6,295 $ 12,483
Supplemental Cash Flow Information:
Interest paid, net of amount
capitalized $ 721 $ 174
Income taxes paid 3,093 3,647
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. The results of operations of Norman
Offshore Pipelines, Inc. since its acquisition on July 1, 1996,
are included in the accompanying financial statements. 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
periods ended December 31, 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.
The accompanying consolidated financial statements have been
adjusted to reflect two-for-one stock splits effected in January
and August of 1996.
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.
During the fiscal quarter ended December 31, 1996 the Company
completed construction of a 200-foot semi-submersible Swath
(Small Waterplane Area Twin Hull) dive support vessel. At
December 31, 1996, accumulated construction costs of the vessel,
now named the Pioneer, approximated $29.7 million. In December
1995 the company constructing the Pioneer filed suit against the
Company in the U.S. District Court, Western District of
Louisiana, Lafayette Division seeking $8.2 million in additional
costs believed by it to be owed because of change orders during
construction and $5 million for disruption, acceleration, and
delay damages. Under an agreement reached with Aker Gulf Marine,
Global took possession of the Pioneer on August, 1996 and moved
it to Global's facility in Amelia, Louisiana where construction
and equipping of the vessel was completed. Sea trials were
successfully completed in November, 1996 and the vessel is
currently deployed in the Gulf of Mexico. Under the terms of the
agreement, Global has been given clear title to the Pioneer in
exchange for a cash payment of $3.2 million and the posting of a
$4.5 million bond in favor of Aker Gulf Marine. Such amounts and
the release of the vessel are without prejudice to each company's
rights to pursue claims against the other in the pending
litigation or otherwise. The Company does not believe that the
constructor's claims are valid, intends to vigorously defend
against them, intends to recover all amounts which it is legally
entitled to recover and does not believe that the ultimate
resolution of the claims will have a material adverse impact on
the Company's financial statements.
The Company estimates that the cost to complete capital
expenditure projects in progress at December 31, 1996
approximates $70.0 million.
Recent Developments - On December 23, 1996, Global completed an
acquisition which included a 49% ownership interest in CCC
Fabricaciones y Construcciones, S.A. de C.V. ("CCC"), a leading
provider of offshore construction services in Mexico, as well as
the DB-21, a 400 foot combination pipelay derrick barge, a
crawler crane, a saturation diving system and approximately 21
acres of land located adjacent to Global's facility in New
Iberia, Louisiana. Global also acquired an option to purchase
for $12.0 million the DB-l5, a 400 foot combination pipelay
derrick barge currently chartered to CCC. The remaining 51%
interest in CCC has been retained by a group of affiliated
privately-held Mexican companies that have participated in CCC
since its formation. The total purchase price for the CCC
acquisition (including the exercise price of the option to
purchase the DB-15) was $38.0 million. In addition, Global (i)
has loaned $23.0 million to CCC to repay $15.0 million of
existing indebtedness and for working capital needs and (ii) has
provided performance guarantees supporting approximately $50.0
million of CCC's existing indebtedness primarily relating to
existing construction projects in progress. Although the Company
holds a 49% interest in CCC, the control mechanisms contained in
the contractual arrangements between Global and the other owners
of CCC require the Company's consent for all material decisions
and establish a relationship that is essentially a 50/50 joint
venture. Funding for the transaction was provided by working
capital and borrowings. The Company's investment in CCC will be
accounted for under the equity method.
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 December 31, 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.
On December 23, 1996, Global completed an acquisition which
included a 49% ownership interest in CCC Fabricaciones y
Construcciones, S.A. de C.V. ("CCC"), a leading provider of
offshore construction services in Mexico, as well as the DB-21, a
400 foot combination pipelay derrick barge, a crawler crane, a
saturation diving system and approximately 21 acres of land
located adjacent to Global's facility in New Iberia, Louisiana.
Global also acquired an option to purchase for $12.0 million the
DB-l5, a 400 foot combination pipelay derrick barge currently
chartered to CCC. The remaining 51% interest in CCC has been
retained by a group of affiliated privately-held Mexican
companies that have participated in CCC since its formation. The
total purchase price for the CCC acquisition (including the
exercise price of the option to purchase the DB-15) was $38.0
million. In addition, Global (i) has loaned $23.0 million to CCC
to repay $15.0 million of existing indebtedness and for working
capital needs and (ii) has provided performance guarantees
supporting approximately $50.0 million of CCC's existing
indebtedness primarily relating to existing construction projects
in progress. Although the Company holds a 49% interest in CCC,
the control mechanisms contained in the contractual arrangements
between Global and the other owners of CCC require the Company's
consent for all material decisions and establish a relationship
that is essentially a 50/50 joint venture. Funding for the
transaction was provided by working capital and borrowings. The
Company's investment in CCC will be accounted for under the
equity method. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources."
Although the Company has been expanding its international
operations, 77% of the Company's contract revenues in fiscal 1996
were derived from work performed in the 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 generally is earned during the second
(July through September) and third (October through December)
quarters of its fiscal year. Because of seasonality, full year
results are not likely to be a direct multiple of any particular
quarter or combination of quarters. The following table
documents the seasonal nature of the Company's operations by
presenting the weighted average percentage of annual contract
revenues, gross profit and net income contributed during each
fiscal quarter for the past three fiscal years.
Quarter Ended
June 30, September 30, December 31, March 31,
Contract Revenues 22% 34% 26% 18%
Gross Profit 20 41 28 11
Net Income 18 44 28 10
The Company expanded its operations offshore West Africa during
the first half of fiscal 1996. Strong demand for the Company's
offshore construction services in this market during the fourth
quarter of fiscal 1996 resulted in the fourth quarter of fiscal
1996 making a significantly greater contribution to fiscal 1996's
contract revenues, gross profit and net income than historically,
which had a significant impact on the three year weighted
averages shown above.
Results of Operations
The following table sets forth, for the periods indicated,
statement of operations data expressed as a percentage of
contract revenues.
Quarter Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
Contract revenues 100.0% 100.0% 100.0% 100.0%
Cost of contract
revenues (73.1) (71.6) (72.5) (69.4)
Gross profit 26.9 28.4 27.5 30.6
Selling, general and
administrative
expenses (7.1) (8.7) (5.9) (7.9)
Interest expense (0.3) (0.1) (0.2) (0.1)
Other income
(expense), net 0.8 1.0 0.3 1.4
Income before income
taxes 20.3 20.6 21.7 24.0
Provision for income
taxes (6.1) (7.4) (6.5) (8.8)
Net income 14.2% 13.2% 15.2% 15.2%
Third Quarter of Fiscal 1997 Compared to Third Quarter of Fiscal
1996
Contract Revenues. Contract revenues for the third quarter of
fiscal 1997 of $56.8 million were 75% higher than the $32.4
million reported for the same period a year earlier. The
increase in revenues for the quarter largely resulted from
revenues generated by international operations, improved
utilization and dayrates on dive support vessels and liftboats,
and the July 1, 1996 acquisition of Norman Offshore Pipelines,
Inc. ("Norman Offshore"). Barge days employed improved to 486,
compared to the 337 days employed in the same period last year.
This increase was largely due to the increased number of barge
days of the Coastal Division resulting from the Norman Offshore
Acquisition. Liftboat and dive support vessel days employed of
1,351 were higher than the 1,204 days worked during the same
period last year. Diver days employed totaled 4,410 for the
quarter, up from 3,372 a year earlier.
Depreciation and Amortization. Depreciation and amortization,
including amortization of drydocking costs, for the third quarter
of fiscal 1997 was $4.3 million compared with $1.9 million for
the same period in fiscal 1996. The increase was principally
attributable to higher depreciation on the Cheyenne (which is
depreciated on a units-of-production basis), depreciation on
additions to the Company's vessel fleet and higher dry-dock
amortization amounts.
Gross Profit. For the third quarter of fiscal 1997, the Company
had gross profit (the excess of contract revenues over the cost
of contract revenues, which includes depreciation and
amortization charges) of $15.3 million compared with $9.2 million
for the same quarter of fiscal 1996. Gross profit as a percent
of revenues for the current quarter was 27%, below the gross
profit percentage earned during the same quarter of fiscal 1996
of 28%. The decline in the gross profit margin for the most
current quarter was primarily due to the lower pipeline
installation revenues and the fact that a significant portion of
international revenues were from fabrication and procurement
which provide lower margins. Gross profit for the current period
was further reduced by the effect of a $0.8 million accrual for
retirement and incentive compensation expense, as compared to a
$0.4 million provision in the same period last year.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the third quarter of fiscal 1997
totaled $4.0 million compared with $2.8 million for the same
period a year earlier. This increase was principally due to
higher administrative expenses associated with international
operations, and a provision for retirement and incentive
compensation plan expense of $1.1 million recorded for the
quarter compared with $0.6 million for the same period in the
prior fiscal year. Of the provisions, $0.3 million in the
current quarter and $0.2 million of the prior period were
included in the selling, general, and administrative expenses and
$0.8 million and $0.4 million, respectively, were included in
cost of contract revenues.
Other Income (Expense). Interest expense, net of $0.8 million of
capitalized interest cost, was $0.1 million in the third quarter
of fiscal 1997 compared to less than $0.1 million in the same
period a year earlier. Other income in the current quarter was
$0.4 million compared to $0.3 million reported in the same period
a year earlier.
Net Income. Net income for the third quarter of fiscal 1997 was
$8.1 million, up 88% from $4.3 million in the same period a year
earlier, while net income per share of $0.20 for the current
quarter increased 82% from $0.11 for the same period a year
earlier because the average shares outstanding increased 2.5%.
The Company's effective income tax rate for the current period
was 30%, compared to 37% for the same period a year earlier,
reflecting the benefit of a lower effective tax rate for the
Company's international operations.
First Nine Months of Fiscal 1997 Compared to First Nine Months of
Fiscal 1996
Contract Revenues. Contract revenues for the first nine months
of fiscal 1997 of $179.5 million were 64% higher than the $109.6
million reported for the same period a year earlier. The
increase in revenues for the nine months largely resulted from
revenues generated by a full nine months of international
operations, strong domestic derrick activity, in part due to the
availability of the Hercules acquired in late November 1995,
improved utilization and dayrates on dive support vessels and
liftboats, and the July 1, 1996 Norman Offshore Acquisition,
partially offset by lower revenues contributed by the Company's
Gulf of Mexico pipelay barge fleet. Barge days employed improved
to 1,393, compared to the 951 days employed in the same period
last year. This increase was largely due to the increased number
of barge days of the Coastal Division resulting from the Norman
Offshore Acquisition on July 1, 1996. Liftboat and dive support
vessel days employed of 4,023 were significantly higher than the
3,280 days worked during the same period last year. Diver days
employed totaled 12,900 for the nine months of fiscal 1996, up
from 8,791 a year earlier.
Depreciation and Amortization. Depreciation and amortization,
including amortization of drydocking costs, for the first nine
months of fiscal 1997 was $12.4 million compared with $7.2
million for the same period in fiscal 1996. The increase was
principally attributable to higher depreciation on the Cheyenne
and the Hercules (both of which are depreciated on a units-of-
production basis) and higher dry-dock amortization amounts.
Gross Profit. For the first nine months of fiscal 1997, the
Company had gross profit (the excess of contract revenues over
the cost of contract revenues, which includes depreciation and
amortization charges) of $49.4 million compared with $33.5
million for the first nine months of fiscal 1996. Gross profit
as a percent of revenues for the current nine-month period was
28%, below the gross profit percentage earned during the first
nine months of fiscal 1996 of 31%. The decline in the gross
profit margin for the most current nine months was primarily due
to the lower pipeline installation revenues, lower margins on the
Coastal Division's revenues as compared to margins on revenues
from the Company's larger and deeper water barges, and the fact
that a significant portion of international revenues were from
fabrication and procurement which provide lower margins. Gross
profit for the current period was further reduced by the effect
of a $2.1 million accrual for retirement and incentive
compensation expense, as compared to a $1.1 million provision in
the same period last year.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the first nine months of fiscal
1997 totaled $10.6 million compared with $8.6 million for the
same period a year earlier. This increase was principally due to
higher administrative costs associated with international
operations and a provision for retirement and incentive
compensation plan expense of $3.0 million recorded for the
current nine-months period compared with $1.6 million for the
same period in the prior fiscal year. Of the provisions, $0.9
million in the current nine-month period and $0.5 million of the
prior period were included in the selling, general, and
administrative expenses and $2.1 million and $1.1 million,
respectively, were included in cost of contract revenues.
Other Income(Expense). Interest expense, net of $1.8 million of
capitalized interest cost, was $0.4 million in the current nine-
month period compared to $0.1 million in the same period a year
earlier. Other income in the current nine-month period of $0.5
million was lower than the $1.5 million reported a year earlier
largely because the Company had less funds available for
investment.
Net Income. Net income for the first nine months of fiscal 1997
was $27.2 million, up 64% from $16.6 million in the same period a
year earlier, while net income per share of $0.69 for the first
nine months of fiscal 1997 increased 60% from $0.43 for the same
period a year earlier because the average shares outstanding
increased 2.9%. The Company's effective income tax rate for the
current period was 30%, compared to 37% for the same period a
year earlier, reflecting the benefit of a lower effective tax
rate for the Company's international operations.
Liquidity and Capital Resources
The Company's operations generated cash flow of $46.0 million
during the first nine months of fiscal 1997. Cash from
operations, together with $68.3 million provided by financing
activities, funded investing activities of $113.4 million.
Investing activities consisted principally of capital
expenditures, the Norman Offshore, CCC and Divcon acquisitions,
dry-docking costs, and the placement of MARAD-guaranteed Title XI
bond proceeds in escrow. Funds provided by financing activities
principally represent borrowings under the Company's revolving
credit facility with a commercial bank (the "Credit Facility")
and proceeds from the sale of Title XI bonds. Working capital
increased $5.4 million during the first nine months of fiscal
1997 from $34.3 million at March 31, 1996, to $39.7 at December
31, 1996.
Capital expenditures during the first nine months of fiscal 1997
included the costs of construction of two liftboats, a launch
barge and a cargo barge, construction of the Pioneer and
initiation of the upgrade of the Hercules. In August 1996, the
Company reached an agreement with Aker Gulf Marine, and took
possession of the Pioneer. The vessel was relocated to the
Company's facility in Amelia, Louisiana where the construction
and equipping of the vessel was completed. The Pioneer
successfully completed sea trials and began operations November
1996. Under the terms of the agreement, the Company has received
clear title to the Pioneer in exchange for a $3.2 million cash
payment and the posting of a $4.5 million bond in favor of Aker
Gulf Marine. Such amounts and the release of the vessel are
without prejudice to each company's rights to pursue claims
against the other in pending litigation or otherwise. In
September 1994, the Company sold $20.9 million of Title XI bonds
in connection with financing the cost of construction and
outfitting the Pioneer.
The Company estimates that the cost to complete capital
expenditure projects in progress at December 31, 1996 will be
approximately $70.0 million with $47.0 million to be incurred
during the balance of fiscal 1997 and the remainder during fiscal
1998. The addition of conventional pipelay capability and
dynamic positioning to the Hercules is now scheduled for
completion during the summer of 1997 at a cost of completion of
approximately $30.0 million, which is in addition to the
approximately $25.0 million previously spent.
Long-term debt outstanding at December 31, 1996, included $42.0
million of Title XI bonds. Included in this amount are $20.3
million of bonds which the Company issued on August 7, 1996 to
finance the construction of two liftboats, a launch barge and a
cargo barge. The Company's outstanding Title XI bonds mature in
2003, 2005, 2020, and 2022. The bonds carry interest rates of
9.15%, 8.75% 8.30% and 7.25% per annum, respectively, and require
aggregate semi-annual payments of $0.5 million, plus interest,
until January 1998 when aggregate semi-annual payments will be
$0.9 million. The agreements pursuant to which the Title XI
bonds were issued contain certain covenants, including the
maintenance of minimum working capital and net worth
requirements, which, if not met, result in additional covenants
that restrict the operations of the Company and its ability to
pay cash dividends. The Company is currently in compliance with
these covenants.
In July 1996, the Company completed the Norman Offshore
Acquisition. In addition, the Company completed the CCC and
Divcon Acquisitions in December 1996. The purchase price for
each of these three transactions was primarily funded by cash
generated form operations and borrowings under the Company's
Credit Facility.
The Company's Credit Facility provides for a $75.0 million
revolving line of credit with a commercial bank. The Credit
Facility allows for a maximum draw at any one time of $50.0
million for general corporate purposes and $40.0 million for
construction or renovation of vessels, provided that the
aggregate outstanding principal amount may never exceed $75.0
million. At December 31, 1996, $45.0 million was outstanding
under the Credit Facility (all of which has been drawn down
during fiscal 1997) and the Company was in compliance with the
covenants contained therein. The Credit Facility is available
until January 1, 1998, at which time the amount then outstanding
becomes due and payable. Interest accrues at LIBOR plus 1.25%
(6.78% at December 31, 1996) and is payable monthly. Continuing
access to the Credit Facility is conditioned upon the Company's
remaining in compliance with certain covenants, including the
maintenance of certain financial ratios.
On February 4, 1997, the Company completed an equity offering of
7.0 million shares of common stock with the net proceeds to the
Company of approximately $139.6 million. The Company used part of
the proceeds to repay the outstanding balance under its Credit
Facility.
Funds available under the Company's Credit Facility and Title XI
bonds, combined with available cash, cash generated from
operations, and the net proceeds from the common stock offering
are expected to be sufficient to fund the Company's operations,
scheduled debt retirement and planned capital expenditures 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 States 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.
On December 14, 1995, Aker Gulf Marine filed suit against Global
in the U.S. District Court for the Western District of Louisiana
seeking $8.2 million in additional costs believed by it to be
owed because of change orders during construction of the Pioneer,
and $5.0 million for disruption, acceleration, and delay damages.
Global does not believe that Aker Gulf Marine's claims are valid
and intends to vigorously defend against them, intends to recover
all amounts which it is legally entitled to recover and does not
believe that the ultimate resolution of the claims will have a
material adverse impact on Global's financial statements. Under
an agreement reached with Aker Gulf Marine, Global took
possession of the Pioneer on August, 1996 and moved it to
Global's facility in Amelia, Louisiana where construction and
equipping of the vessel was completed. Sea trials were
successfully completed in November, 1996 and the vessel is
currently deployed in the Gulf of Mexico. Under the terms of the
agreement, Global has been given clear title to the Pioneer in
exchange for a cash payment of $3.2 million and the posting of a
$4.5 million bond in favor of Aker Gulf Marine. Such amounts and
the release of the vessel are without prejudice to each Company's
rights to pursue claims against the other in the pending
litigation or otherwise.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
15.1 Letter re: unaudited interim financial information, page
15.
(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: MICHAEL J. POLLOCK
Vice President, Chief
Financial Officer
(Principal Financial and Accounting Officer)
February 14, 1997
EXHIBIT 15.1
February 12, 1997
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 December 31, 1996 and
1995, as indicated in our report dated February 4, 1997; 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
December 31, 1996, is incorporated by reference in Registration
Statement Nos. 33-58048 and 33-89778 on Form S-8 and Registration
Statement No. 333-18773 on Form S-3.
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