SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 31, 1997
GLOBAL INDUSTRIES, LTD.
(Exact name of registrant as specified in its charter)
LOUISIANA 2-56600 72-1212563
(State of Incorporation)(Commission File Number)(I.R.S. Employer
Identification Number)
107 GLOBAL CIRCLE
LAFAYETTE, LOUISIANA
(Address of principal executive offices)
70503
(Zip Code)
Registrant's telephone number, including area code: (318) 989-0000
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
This Form 8K/A includes financial statements related
to the Registrant's July 31, 1997 acquisition of
certain business operations and assets of SubSea
International, Inc. and its subsidiaries.
(a) Financial Statements of Business Acquired.
Balance sheets of the Business Acquired of SubSea
International, Inc. by Global Industries, Ltd. as of
October 31, 1996 (Audited) and July 31, 1997 (Unaudited),
and the related statements of operations and cash flows
for the year ended October 31, 1996 (Audited) and the
nine months ended July 31, 1997 and 1996 (Unaudited),
including the notes thereto and the related report of
Deloitte & Touche LLP are set forth in Attachment A hereto
and incorporated herein by reference.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Combined Balance Sheet
of Global Industries, Ltd. as of June 30, 1997, including
the notes thereto are set forth in Attachment B
hereto and incorporated herein by reference.
Unaudited Pro Forma Condensed Combined Statements
of Operations of Global Industries, Ltd. for the year
ended March 31, 1997 and the three months ended June
30, 1997, including the notes thereto are set forth in
Attachment C hereto and incorporated herein by reference.
(c) Exhibits.
23.1 Consent of Deloitte & Touche LLP.
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
Dated: October 14, 1997
GLOBAL INDUSTRIES, LTD.
By: /S/ MICHAEL J. POLLOCK
Michael J. Pollock
Vice President, Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Global Industries, Ltd.
We have audited the accompanying balance sheet of the Business
Acquired of SubSea International, Inc. by Global Industries, Ltd.
(the "Acquired Business") as of October 31, 1996, and the related
statements of operations and cash flows for the year then ended.
These financial statements are the responsibility of the management
of SubSea International, Inc. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the balance sheet of the Acquired Business, as of
October 31, 1996, and the results of operations and cash flows of
the Acquired Business for the year then ended in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
September 8, 1997
BUSINESS OF SUBSEA INTERNATIONAL, INC.
ACQUIRED BY GLOBAL INDUSTRIES, LTD.
BALANCE SHEETS (In Thousands)
October July 31,
ASSETS 31, 1997
1996 (Unaudited)
CURRENT ASSETS:
Receivables, net $ 32,045 $ 18,494
Prepaid expenses and other 7,621 5,372
--------- ---------
Total current assets 39,666 23,866
PROPERTY AND EQUIPMENT, net (Note 3) 93,445 90,169
--------- --------
TOTAL $133,111 $114,035
========= ========
LIABILITIES AND OWNER'S INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 17,794 $ 7,856
Accrued liabilities 9,841 3,121
-------- --------
Total current liabilities 27,635 10,977
CONTINGENCIES (Note 5) - -
OWNER'S INVESTMENT - Advances from parent
company and
affiliates, net (Note 4) 105,476 103,058
-------- -------
TOTAL $133,111 $114,035
======== ========
See notes to financial statements.
BUSINESS OF SUBSEA INTERNATIONAL, INC.
ACQUIRED BY GLOBAL INDUSTRIES, LTD.
STATEMENTS OF OPERATIONS (In Thousands)
Year Ended Nine Months Ended
October 31, July 31,
1996 1996 1997
(Unaudited)
REVENUES $104,855 $81,738 $69,127
COST OF REVENUES 98,541 75,716 60,408
-------- ------- -------
GROSS PROFIT 6,314 6,022 8,719
SELLING, GENERAL AND
ADMINISTRATIVE 8,673 6,184 6,596
EXPENSES -------- ------ ------
OPERATING INCOME (LOSS) (2,359) (162) 2,123
OTHER INCOME (EXPENSE) 32 84 (3,190)
-------- ------ -------
INCOME (LOSS) BEFORE INCOME TAXES (2,327) (78) (1,067)
INCOME TAX (PROVISION) BENEFIT 814 27 373
--------- ------ -------
NET INCOME (LOSS) $ (1,513) $ (51) $ (694)
========== ========== =========
See notes to financial statements.
BUSINESS OF SUBSEA INTERNATIONAL, INC.
ACQUIRED BY GLOBAL INDUSTRIES, LTD.
STATEMENTS OF CASH FLOWS (In Thousands)
Year Ended Nine Months Ended
October 31, July 31,
1996 1996 1997
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,513) $ (51) $ (694)
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization 5,461 4,008 4,099
Changes in operating assets and
liabilities:
Receivables 5,168 1,202 13,551
Prepaid expenses and other (4,789) (5,135) 2,249
Accounts payable and accrued 1,798 7 (16,658)
liabilities --------- -------- --------
Net cash provided by (used in) 6,125 31 2,547
operating activities --------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property and equipment (11,990) (7,141) (823)
--------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES -
Advances from (to) parent company and 5,865 7,110 (1,724)
affiliates, net --------- -------- -------
INCREASE IN CASH $ - $ - $ -
========= ======== =======
See notes to financial statements.
BUSINESS OF SUBSEA INTERNATIONAL, INC.
ACQUIRED BY GLOBAL INDUSTRIES, LTD.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Effective July 31, 1997, Global Industries, Ltd. ("Global")
acquired certain business operations and assets of SubSea
International, Inc. ("SSI") and certain of its subsidiaries
(hereinafter referred to as the "Acquired Business"). SSI, a
subsidiary of Dresser Industries, Inc. ("Dresser"), among other
things, engaged in the business of providing underwater
construction, pipelay, pipebury, diving and related services in
the Gulf of Mexico (including United States and Mexican waters),
Middle East, Southeast Asia, Australia, New Zealand and
Singapore. The major assets acquired included three construction
barges, four liftboats and one dive support vessel based in the
United States, four support vessels based in the Middle East, and
support vessels and ROVs based in the Far East and Asia Pacific.
The accompanying financial statements have been prepared from the
historical books and records of SSI and present (1) the assets
and liabilities of the Acquired Business as of October 31, 1996
and July 31, 1997 and (2) the results of operations of the
Acquired Business relating to such assets and liabilities for the
year ended October 31, 1996 and the nine months ended July 31,
1997 and 1996.
The statements of operations may not necessarily be indicative of
the results of operations that would have been realized had the
Acquired Business been operated as a stand-alone entity.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Revenues from construction contracts were
recognized on the percentage-of-completion method, measured by
relating the actual cost of work performed to date to the current
estimated total cost of the respective contract. Contract cost
included all direct material and labor costs and those indirect
costs related to contractual performance, such as indirect labor,
supplies and repairs. Provisions for estimated losses, if any,
on uncompleted contracts were made in the period in which such
losses were determined. Selling, general and administrative
costs were charged to expense as incurred.
Property and Equipment - Property and equipment were stated at
cost. Expenditures for property and equipment and items which
substantially increase the useful lives of existing assets were
capitalized at cost and depreciated. Routine expenditures for
repairs and maintenance were expensed as incurred. Depreciation
was provided for in amounts sufficient to allocate the cost of
depreciable assets to operations over their estimated service
lives on the straight-line method. Leasehold improvements were
amortized on the straight-line method over the lives of the
respective leases or their estimated service lives, whichever was
shorter. The periods used in determining depreciation and
amortization follow:
Machinery and equipment 3 - 20 years
Buildings 30 years
Income Taxes - The operations of SSI were included in the
consolidated U.S. federal income tax return of Dresser. Dresser
assumed a federal tax rate approximating 35% of taxable income or
loss in allocating income tax expense or benefit in the
accompanying financial statements. The allocation did not
distinguish between current and deferred income taxes. State and
foreign income taxes were not material.
Concentration of Credit Risk - The Acquired Business' customers
are primarily major oil companies, independent oil and gas
producers, and transportation companies operating in the Gulf of
Mexico and international areas. The Acquired Business performs
ongoing credit evaluation of its customers and requires posting
of collateral when deemed appropriate. The Acquired Business
provides allowances for possible credit losses when necessary.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Foreign Currency Translation - The functional currency for
certain non-U.S. entities is the applicable local currency. The
translation of the applicable local currencies into U.S. dollars
was performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date and for revenue and
expense accounts using weighted average exchange rates during the
period.
Interim Financial Statements - In the opinion of management, all
adjustments (such adjustments consisting only of a normal
recurring nature) necessary for a fair presentation of the
operating results for the nine months ended July 31, 1997 and
1996 have been included in the unaudited consolidated financial
statements.
3. PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows (in thousands):
October 31,
1996
Machinery and equipment $107,385
Buildings 2,743
Land and land improvements 1,217
--------
111,345
Less accumulated depreciation and 17,900
amortization --------
Property and equipment, net $ 93,445
========
4. RELATED PARTY TRANSACTIONS
As a subsidiary of Dresser, SSI maintained an intercompany
account with Dresser and certain affiliated companies for
recording the parent company's investment, intercompany charges
and intercompany transfers of cash, among other transactions.
The accompanying financial statements include no interest costs
associated with the Acquired Business' net borrowings for such
intercompany indebtedness.
In normal course of business activities, Dresser guaranteed
certain commitments and obligations of SSI relating principally
to performance obligations under contracts.
5. CONTINGENCIES
The Acquired Business was involved in legal proceedings and
potential claims arising in the ordinary course of business.
Management of SSI does not believe that the ultimate resolution
of these matters will materially effect the accompanying
financial statements.
6. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Acquired Business operated primarily in the offshore oil and
gas construction industry. Geographic information relating to
the Acquired Business' operations for the year ended October 31,
1996 follows (in thousands):
Revenues:
Domestic $60,963
Asia Pacific 33,028
Middle East 10,864
--------
$104,855
========
Operating income (loss):
Domestic $(3,805)
Asia Pacific 2,173
Middle East (727)
--------
$(2,359)
========
Identifiable assets:
Domestic $65,378
Asia Pacific 55,637
Middle East 12,096
--------
$133,111
========
GLOBAL INDUSTRIES, LTD.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
INTRODUCTION
The following unaudited pro forma condensed combined financial
statements give effect to the July 31, 1997 acquisition (the
"Acquisition") of certain business operations and assets of SubSea
International, Inc. and certain of its subsidiaries ("SSI").
The unaudited pro forma condensed combined financial statements
should be read in conjunction with the accompanying notes and the
historical financial statements of Global Industries, Ltd.
("Global") and SSI and notes thereto. This pro forma information is
presented for illustrative purposes only and is not necessarily
indicative of the results which actually would have been obtained if
the Acquisition had been effected on the pro forma dates specified,
nor is it necessarily indicative of future results.
The unaudited pro forma condensed combined financial statements are
based upon the purchase method of accounting for the Acquisition.
The Unaudited Pro Forma Condensed Combined Statements of Operations
for the year ended March 31, 1997 and the three months ended June
30, 1997 assumes that the Acquisition was effected on April 1, 1996.
The Unaudited Pro Forma Condensed Combined Balance Sheet as of June
30, 1997 assumes that the Acquisition was effected on that date.
Global's fiscal year end is March 31, while SSI's is October 31.
The Unaudited Pro Forma Condensed Combined Statements of Operations
for the year ended March 31, 1997 and the three months ended June
30, 1997 include SSI's unaudited financial information for the
twelve months ended January 31, 1997 and the three months ended
April 30, 1997, respectively. During the period from May 1, 1997
through June 30, 1997, unaudited revenues of SSI amounted to
approximately $14.0 million. The Unaudited Pro Forma Condensed
Combined Balance Sheet as of June 30, 1997 includes SSI's unaudited
financial information as of April 30, 1997.
PURCHASE PRICE
The purchase price of the Acquisition of $102 million was paid in
cash and was funded from available cash of $25 million and the
remainder from borrowings under Global's existing credit line. The
major assets acquired in the transaction include three construction
barges, four liftboats and one dive support vessel based in the
United States, four support vessels based in the Middle East, and
support vessels and ROVs based in the Far East and Asia Pacific.
GLOBAL INDUSTRIES, LTD.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
(In thousands)
(UNAUDITED)
Global
Industries Pro Pro
Ltd. SSI Forma Forma
ASSETS Historical Historical Adjustments Combined
CURRENT ASSETS:
Cash $ 51,156 $(25,000)(a) $ 26,156
Receivables 57,800 $ 24,564 82,364
Other 27,191 5,928 33,119
--------- -------- --------- --------
Total current asets 136,147 30,492 (25,000) 141,639
Property and 287,719 89,768 6,186 (d) 383,673
equipment, net
Other assets 16,306 - 16,306
--------- -------- -------- -------
TOTAL $440,172 $120,260 $(18,814) $541,618
========= ======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 29,838 $ 10,475 $ 3,000 (b) $ 43,313
Other 23,049 10,971 34,020
--------- -------- -------- --------
Total current 52,887 21,446 3,000 77,333
liabilities
Long-term debt 40,900 - 77,000 (a) 117,900
Deferred income taxes 23,598 - 23,598
Shareholders' equity 322,787 - 322,787
Owner's investment - 98,814 (98,814)(c) -
-------- -------- -------- --------
TOTAL $440,172 $120,260 $(18,814) $541,618
======== ======== ======== ========
See notes to pro forma condensed combined balance sheet.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET:
(a)Adjustment to record the payment of cash and incurrence of debt
to fund the Acquisition.
(b)Adjustment to record the accrual for estimated transaction costs.
(c)Adjustment to eliminate the owner's investment account of SSI.
(d)Adjustment to record the available step-up in the basis of fixed
assets of SSI to estimated fair value at acquisition date
(step-up limited by purchase price).
GLOBAL INDUSTRIES, LTD.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1997
(In thousands, except share and per share data)
(UNAUDITED)
Global
Industries, Pro Pro
Ltd. SSI Forma Forma
Historical Historical Adjustments Combined
Revenues $229,142 $108,648 $337,790
Cost of revenues 165,889 102,126 $ 600 (c) 268,615
-------- -------- ----------- -------
Gross profit 63,253 6,522 (600) 69,175
Selling, general and
administrative
expenses 15,080 9,249 24,329
-------- -------- ----------- ------
Operating income 48,173 (2,727) (600) 44,846
(loss)
(5,400) (a)
Other income (expense) 302 (222) (1,250) (b) (6,570)
-------- -------- ---------- ------
Income (loss) before 48,475 (2,949) (7,250) 38,276
income taxes
Income tax (provision) (14,543) 1,032 2,500 (d) (11,011)
benefit -------- -------- ---------- --------
Net income (loss) $ 33,932 $ (1,917) $(4,750) $ 27,265
========= ========== ======== ========
Net income per share $0.84 N/A N/A $0.67
========= ========== ======== ========
Weighted average 40,450,842 N/A N/A 40,450,842
common shares ========== ========== ======== ==========
See notes to pro forma condensed combined statements of operations.
GLOBAL INDUSTRIES, LTD.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997
(In thousands, except share and per share data)
(UNAUDITED)
Global
Industries, Pro Pro
Ltd. SSI Forma Forma
Historical Historical Adjustments Combined
Revenues $ 63,176 $ 26,517 $ 89,693
Cost of revenues 42,337 24,926 $ 150 (c) 67,413
-------- -------- ------ --------
Gross profit 20,839 1,591 (150) 22,280
Equity in net
(earnings) loss of
unconsolidated 1,656 - 1,656
affiliate
Selling, general and
administrative
expenses 4,247 2,211 6,458
------- ------ ------ -------
Operating income (loss) 14,936 (620) (150) 14,166
(1,350) (a)
Other income (expense) 1,385 390 (310) (b) 115
------- ------ ------- -------
Income (loss) before 16,321 (230) (1,810) 14,281
income taxes
Income tax (provision) (6,202) 80 635 (d) (5,487)
benefit ------- ------ -------- -------
Net income (loss) $10,119 $ (150) $(1,175) $ 8,794
======= ========= ======== =========
Net income per share $0.22 N/A N/A $0.19
======= ========= ======== =========
Weighted average
common shares 46,567,000 N/A N/A 46,567,000
========== ========= ======== ==========
See notes to pro forma condensed combined statements of operations.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF
OPERATIONS:
(a)To adjust interest expense to reflect the $77 million of debt
incurred to fund a portion of the purchase price of the
Acquisition. In accordance with the debt agreement the interest
rate is assumed to be 7.0%.
(b)To adjust interest income to reflect the assumed beginning-of-the-
year usage of $25 million of cash in the Acquisition. Interest
yield on cash investments is assumed to be 5%.
(c)To adjust for additional depreciation on the new basis of
property and equipment acquired in the Acquisition.
(d)To adjust income taxes for tax effects related to the
Acquisition.
(e)The pro forma combined information does not include the operating
and general and administrative cost savings anticipated as a
result of the consolidation of operations.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 33-58048 & 33-89778 of Global Industries, Ltd. on
Form S-8 of our report dated September 8, 1997, appearing in this
Current Report on Form 8-K/A of Global Industries, Ltd. dated October
14, 1997.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
October 13, 1997