##### Table of Contents



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 September 30, 2007
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 0-21086
 Global Industries, Ltd.
  Louisiana
(State or other jurisdiction of 
incorporation or organization)
    
    72-1212563
(I.R.S. Employer Identification No.)8000 Global Drive 
Carlyss, Louisiana
(Address of principal executive offices)
    
    70665
(Zip Code)
 (337) 583-5000
 None
  x o
  x o o
  o x




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##### 



PART I -
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Report of Independent Registered Public Accounting Firm
    
    
    3Condensed Consolidated Balance Sheets
    
    
    4Condensed Consolidated Statements of Operations
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    27PART II -
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    28Item 1A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 6.
    
    Exhibits
    
    
    30Signature
    
    
    31Letter Regarding Unaudited Interim Financial InformationSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 Report of Independent Registered Public Accounting Firm
     Share-Based Payment,
  
 3




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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands)
 September 30
    
    
    December 312007
    
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    674,625
    
    
    $
    352,178Restricted cash
    
    
    1,111
    
    
    
    1,073Marketable securities
    
    
    100,805
    
    
    
    Accounts receivable  net of allowance of $3,620 for 2007
and $17,203 for 2006
    
    
    192,849
    
    
    
    197,258Unbilled work on uncompleted contracts
    
    
    60,965
    
    
    
    90,980Contract costs incurred not yet recognized
    
    
    8,589
    
    
    
    22,721Deferred income taxes
    
    
    2,795
    
    
    
    2,781Prepaid expenses and other
    
    
    16,713
    
    
    
    16,147Total current assets
    
    
    1,058,452
    
    
    
    683,138Property and Equipment, net
    
    
    343,460
    
    
    
    316,876Other AssetsAccounts
receivable  long-term
    
    
    6,669
    
    
    
    7,731Deferred charges, net
    
    
    36,172
    
    
    
    19,862Deferred income taxes
    
    
    223
    
    
    
    2,711Goodwill, net
    
    
    37,388
    
    
    
    37,388Other
    
    
    8,423
    
    
    
    3,291Total other assets
    
    
    88,875
    
    
    
    70,983Total
    
    $
    1,490,787
    
    
    $
    1,070,997LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    3,960
    
    
    $
    3,960Accounts payable
    
    
    117,054
    
    
    
    127,009Employee-related liabilities
    
    
    28,421
    
    
    
    25,643Income taxes payable
    
    
    27,734
    
    
    
    38,092Accrued interest payable
    
    
    2,257
    
    
    
    2,134Advance billings on uncompleted contracts
    
    
    30,650
    
    
    
    4,557Other accrued liabilities
    
    
    20,334
    
    
    
    21,617Total current liabilities
    
    
    230,410
    
    
    
    223,012Long-Term Debt
    
    
    390,340
    
    
    
    69,300Deferred Income Taxes
    
    
    43,820
    
    
    
    51,714Other Liabilities
    
    
    10,401
    
    
    
    1,406Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock, $0.01 par value, authorized 150,000 shares
and issued 117,854 and 116,252 shares in 2007 and 2006,
respectively
    
    
    1,178
    
    
    
    1,162Additional paid-in capital
    
    
    411,793
    
    
    
    379,297Retained earnings
    
    
    482,305
    
    
    
    353,834Treasury stock at cost, 2,888 in 2007 and 25 in 2006
    
    
    (76,858
    )
    
    
    (644
    )Accumulated other comprehensive loss
    
    
    (2,602
    )
    
    
    (8,084
    )Total shareholders equity
    
    
    815,816
    
    
    
    725,565Total
    
    $
    1,490,787
    
    
    $
    1,070,997
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    203,536
    
    
    $
    316,865
    
    
    $
    729,485
    
    
    $
    930,763Cost of operations
    
    
    146,714
    
    
    
    212,027
    
    
    
    505,056
    
    
    
    676,658Gross profit
    
    
    56,822
    
    
    
    104,838
    
    
    
    224,429
    
    
    
    254,105Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,485Reduction in litigation provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,699
    )Net loss (gain) on asset disposal
    
    
    (9
    )
    
    
    (2,618
    )
    
    
    (1,317
    )
    
    
    (3,125
    )Selling, general and administrative expenses
    
    
    20,749
    
    
    
    17,570
    
    
    
    58,777
    
    
    
    48,566Operating income
    
    
    36,082
    
    
    
    89,886
    
    
    
    166,969
    
    
    
    217,878Other expense (income)Interest expense
    
    
    3,718
    
    
    
    3,372
    
    
    
    8,491
    
    
    
    7,868Other (income), net
    
    
    (10,777
    )
    
    
    (2,920
    )
    
    
    (22,193
    )
    
    
    (4,013
    )Income before taxes
    
    
    43,141
    
    
    
    89,434
    
    
    
    180,671
    
    
    
    214,023Income taxes
    
    
    11,666
    
    
    
    25,765
    
    
    
    53,611
    
    
    
    69,207Net income
    
    $
    31,475
    
    
    $
    63,669
    
    
    $
    127,060
    
    
    $
    144,816Earnings Per Common ShareBasic
    
    $
    0.27
    
    
    $
    0.55
    
    
    $
    1.09
    
    
    $
    1.25Diluted
    
    $
    0.27
    
    
    $
    0.54
    
    
    $
    1.08
    
    
    $
    1.24Weighted Average Common Shares OutstandingBasic
    
    
    115,715
    
    
    
    115,988
    
    
    
    116,503
    
    
    
    115,418Diluted
    
    
    117,292
    
    
    
    117,673
    
    
    
    118,108
    
    
    
    117,167
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)
 Nine Months EndedSeptember 302007
    
    
    2006Cash Flows From Operating ActivitiesNet Income
    
    $
    127,060
    
    
    $
    144,816Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    32,100
    
    
    
    38,802Stock-based compensation expense
    
    
    13,081
    
    
    
    9,724Provision for doubtful accounts
    
    
    (2,668
    )
    
    
    22,359Gain on sale or disposal of property and equipment
    
    
    (1,317
    )
    
    
    (3,125
    )Derivative gain
    
    
    (612
    )
    
    
    Loss on asset impairments
    
    
    
    
    
    
    4,485Reduction in litigation provision
    
    
    
    
    
    
    (13,699
    )Deferred income taxes
    
    
    (6,253
    )
    
    
    17,875Latin America tax penalties, fees, and adjustments
    
    
    
    
    
    
    1,684Excess tax benefits from stock-based compensation.
    
    
    (3,499
    )
    
    
    (1,417
    )Other
    
    
    
    
    
    
    (66
    )Changes in operating assets and liabilities
Receivables, unbilled work, and contract costs
    
    
    52,286
    
    
    
    (125,052
    )Prepaid expenses and other
    
    
    3,337
    
    
    
    12,555Accounts payable, employee-related liabilities
and other accrued liabilities
    
    
    15,720
    
    
    
    13,972Deferred dry-dock costs incurred
    
    
    (18,371
    )
    
    
    (12,239
    )Litigation settlement payment
    
    
    
    
    
    
    (22,050
    )Net cash provided by operating activities.
    
    
    210,864
    
    
    
    88,624Cash Flows From Investing ActivitiesProceeds from sale of assets
    
    
    3,665
    
    
    
    3,587Additions to property and equipment
    
    
    (48,568
    )
    
    
    (35,757
    )Purchase of short-term investments
    
    
    (100,805
    )
    
    
    Decrease in (additions to) restricted cash
    
    
    (38
    )
    
    
    441Net cash (used in) investing activities
    
    
    (145,746
    )
    
    
    (31,729
    )Cash Flows From Financing ActivitiesAdditions to deferred charges
    
    
    (6,928
    )
    
    
    (683
    )Proceeds from long-term debt
    
    
    325,000
    
    
    
    Repayment of long-term debt
    
    
    (3,960
    )
    
    
    (3,960
    )Proceeds from sale of common stock, net
    
    
    15,932
    
    
    
    8,112Repurchase of common stock
    
    
    (76,214
    )
    
    
    (432
    )Excess tax benefits from stock-based compensation
    
    
    3,499
    
    
    
    1,417Net cash provided by financing activities.
    
    
    257,329
    
    
    
    4,454Cash and cash equivalentsIncrease
    
    
    322,447
    
    
    
    61,349Beginning of period
    
    
    352,178
    
    
    
    127,138End of period
    
    $
    674,625
    
    
    $
    188,487Supplemental DisclosuresInterest Paid
    
    $
    5,676
    
    
    $
    12,396Income Taxes Paid
    
    $
    61,149
    
    
    $
    42,433
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Notes to Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    Basis of Presentation The accompanying unaudited Condensed Consolidated Financial
Statements include the accounts of Global Industries, Ltd. and its subsidiaries (the
Company, we, us, or our).
  2.
    
    Accounting Change  Recognizing Uncertain Income Tax PositionsIn July 2006, the
Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109(FIN 48). This
interpretation prescribes a recognition threshold and measurement attribute for tax positions
taken, or expected to be taken, on a tax return. The Company adopted the provisions of FIN 48
on January 1, 2007, which requires a cumulative effect of accounting change to the opening
balance of retained earnings upon adoption. Accordingly, the Company recognized a $1.4
million cumulative adjustment for such tax positions as an increase to the opening balance of
retained earnings on January 1, 2007, as reflected in the accompanying financial position for
the period ended September 30, 2007. Please see Note 12 for additional information regarding
the adoption of FIN 48.
 3.
    
    Marketable Securities The Company has invested in auction rate securities which are debt
and preferred stock instruments having longer-dated legal maturities (in most cases, many
years), but with interest rates that are generally reset every 28-49 days under an auction
system. Because the Company regularly liquidates its investments in these securities for
reasons including, among others, changes in the availability of and the yield on alternative
investments, the Company has classified these securities as available-for-sale. The coupon
interest rate for these securities ranged from 3.90% to 4.75%, on a tax exempt basis, for the
quarter ended September 30, 2007. Short-term marketable securities are carried at cost, which
approximates fair value. Management determines the appropriate classification of its
investments in debt and equity securities at the time of purchase and re-evaluates such
determination at each balance sheet date. Investments classified as available-for-sale are
carried at an estimated fair value with any unrealized gain or loss recorded in accumulated
other comprehensive income. There was no unrealized gain or loss associated with the auction
rate securities that were outstanding at September 30, 2007.
 4.
    
    Receivables Receivables are presented in the following balance sheet accounts: (1)
accounts receivable, (2) accounts receivable  long-term, (3) unbilled work on uncompleted
contracts, and (4) contract costs incurred not yet recognized. Accounts receivableat
September 30, 2007 included $0.1 million which was not immediately collectible due to
contractually specified retainage requirements. This amount is expected to be collected
within the next twelve months. Accounts receivableat December 31, 2006 included $4.4 million
which was related to retainage.
 accounts receivable  long-term
 unbilled work on uncompleted contracts
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Costs and Estimated Earnings on Uncompleted Contracts
 September 30
    
    
    December 312007
    
    
    2006(In thousands)Costs incurred on uncompleted contracts
    
    $
    773,140
    
    
    $
    663,381Estimated earnings
    
    
    294,149
    
    
    
    197,693Costs and estimated earnings on uncompleted contracts
    
    
    1,067,289
    
    
    
    861,074Less: Billings to date
    
    
    (1,050,434
    )
    
    
    (796,353
    )16,855
    
    
    
    64,721Plus: Accrued revenue
    
    
    16,112
    
    
    
    21,702Less: Advance billings on uncompleted contracts
    
    
    (2,652
    )
    
    
    $
    30,315
    
    
    $
    86,423Included in accompanying balance sheets under the
following captions:Unbilled work on uncompleted contracts
    
    $
    60,965
    
    
    $
    90,980Advance billings on uncompleted contracts
    
    
    (30,650
    )
    
    
    (4,557
    )$
    30,315
    
    
    $
    86,423
 5.
    
    Property and Equipment Property and equipment are stated at cost less accumulated
depreciation. Expenditures for property and equipment and items that substantially increase
the useful lives of existing assets are capitalized at cost and depreciated. Routine
expenditures for repairs and maintenance are expensed as incurred. Except for major
construction vessels that are depreciated on the units-of-production (UOP) method over
estimated vessel operating days, depreciation is provided utilizing the straight-line method
over the estimated useful lives of the assets. The UOP method is based on vessel utilization
days and more closely correlates depreciation expense to vessel revenue. In addition, the UOP
method provides for a minimum depreciation floor in periods with nominal vessel use. In
general, if we applied only a straight-line depreciation method, less depreciation expense
would be recorded in periods of high utilization and revenues, and more depreciation expense
would be recorded in periods of low vessel utilization and revenues. Property and equipment
at September 30, 2007 and December 31, 2006 is presented net of $306.5 million and $286.0
million of accumulated depreciation, respectively.
 6.
    
    Long-Term Debt The components of long-term debt are as follows:
 September 30
    
    
    December 312007
    
    
    2006(In thousands)United States Government Guaranteed Ship
Financing Bond (Title XI bonds) carry 7.71% interest
rate and mature in February 2025
    
    $
    69,300
    
    
    $
    73,260Revolving Credit Facility with a syndicate of
commercial banks, interest payable at variable rates
    
    
    
    
    
    
    Senior Convertible Debentures carry 2.75% interest
    
    
    325,000
    
    
    
    rate and mature August 2027Total long-term debt
    
    
    394,300
    
    
    
    73,260Less: current maturities
    
    
    3,960
    
    
    
    3,960Long-term debt less current maturities
    
    $
    390,340
    
    
    $
    69,300
  8




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7.
    
    Commitments and Contingencies
 Contingencies
  9




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Commitments
  8.
    
    Derivative Financial Instruments Due to the international nature of our business
operations and the variable interest rate provisions of our Revolving Credit Facility, we are
exposed to certain risks associated with changes in foreign currency exchange rates and, if
applicable, interest rate fluctuation on outstanding borrowings. From time to time, we enter
into derivative agreements (hedging instruments) to hedge our exposure to specific foreign
currency (hedged items). We do not use derivative financial instruments for trading purposes.
 Accounting
for Derivative Instruments and Hedging Activities.
  10




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9.
    
    Comprehensive Income
 Other Comprehensive Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Net Income
    
    $
    31,475
    
    
    $
    63,669
    
    
    $
    127,060
    
    
    $
    144,816Unrealized net gain
(loss) on
derivative
instruments
    
    
    4,958
    
    
    
    (4,849
    )
    
    
    8,435
    
    
    
    (1,984
    )Less: deferred taxes
    
    
    (1,735
    )
    
    
    1,638
    
    
    
    (2,953
    )
    
    
    641Comprehensive Income
    
    $
    34,698
    
    
    $
    60,458
    
    
    $
    132,542
    
    
    $
    143,473
 Accumulated Other Comprehensive Income (Loss) -
 AccumulatedAccumulated
    
    
    Foreign
    
    
    OtherTranslation
    
    
    Exchange
    
    
    ComprehensiveAdjustment
    
    
    Agreements
    
    
    Income/(Loss)(In thousands)Balance at December 31, 2006
    
    $
    (8,978
    )
    
    $
    894
    
    
    $
    (8,084
    )Change in value
    
    
    
    
    
    
    5,550
    
    
    
    5,550Reclassifications to earnings
    
    
    
    
    
    
    (68
    )
    
    
    (68
    )Balance at September 30, 2007
    
    $
    (8,978
    )
    
    $
    6,376
    
    
    $
    (2,602
    )
  11




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10.
    
    Earnings Per Share The following table presents the reconciliation between basic shares
and diluted shares.
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share data)Net Income
    
    $
    31,475
    
    
    $
    63,669
    
    
    $
    127,060
    
    
    $
    144,816Common shares dilutionWeighted-average shares outstanding  basic
    
    
    115,715
    
    
    
    115,988
    
    
    
    116,503
    
    
    
    115,418Effect of dilutive securitiesStock options
    
    
    1,166
    
    
    
    1,261
    
    
    
    1,194
    
    
    
    1,325Performance shares and units
    
    
    411
    
    
    
    424
    
    
    
    411
    
    
    
    424Weighted-average shares outstanding  diluted
    
    
    117,292
    
    
    
    117,673
    
    
    
    118,108
    
    
    
    117,167Earnings per shareBasic
    
    $
    0.27
    
    
    $
    0.55
    
    
    $
    1.09
    
    
    $
    1.25Diluted
    
    $
    0.27
    
    
    $
    0.54
    
    
    $
    1.08
    
    
    $
    1.24
   11.
    
    Restructuring Costs On May 9, 2007, a decision was made to relocate the Asia Pacific
regional headquarters from Bangkok to Singapore to better align the Companys strategies with
its target markets. The expected completion date for this relocation is December 31, 2007.
The total estimated cost to be incurred for this plan is approximately $1.9 million. The
estimate includes $1.2 million of SG&A expenses for closing the Bangkok headquarters, of which
$0.5 million is attributable to severance and benefits, as well as various expenses for
setting up the Singapore headquarters. The total estimated cost also includes $0.7 million
for capital improvements for the Singapore headquarters. The total cost incurred at September
30, 2007, was $1.1 million, of which $0.5 million was recorded in cost of operations and $0.6
million was spent on capital improvements.
 12.
    
    Income Taxes As a result of implementing FIN 48 on January 1, 2007, the Company recognized
a $1.4 million reduction of taxes due to foreign tax benefits which was accounted for as an
increase to the January 1, 2007 balance of retained earnings. Also on January 1, 2007, the
Company had:
 
    
    unrecognized tax benefits of $11.7 million, all of which would impact the
Companys effective tax rate, if recognized;
    
    $5.7 million of accrued income tax for uncertain tax positions; and
    
    $4.6 million of interest expense and penalties related to income taxes. The
Company recognized interest accrued for income taxes, as interest expense and
penalties are reflected in Other income, net.
 12




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13.
    
    Stock-Based Compensation Pursuant to SFAS 123R, Share-Based Payment, companies must
recognize the cost of employee services received in exchange for awards of equity instruments
based on the grant-date fair value of those awards.
  Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Stock-Based Compensation Expense
Stock Options
    
    $
    1,015
    
    
    $
    2,039
    
    
    $
    3,432
    
    
    $
    4,215Time-Based Restricted Stock
    
    
    2,037
    
    
    
    1,636
    
    
    
    7,205
    
    
    
    3,190Performance Shares and Units.
    
    
    854
    
    
    
    1,042
    
    
    
    2,444
    
    
    
    2,319Total Stock-Based
Compensation Expense
    
    $
    3,906
    
    
    $
    4,717
    
    
    $
    13,081
    
    
    $
    9,724
 13




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14.
    
    Segment Information Effective July 1, 2007, the Companys chief operating decision maker
reorganized the underlying operations and economics of the operating segments. As a result,
the reportable segments were aligned to better reflect the Companys internal management
reporting structure and to facilitate the Companys growth strategy and renewed focus on
diving and underwater services. Also effective with this reorganization, the Company renamed
its Diving Services to Subsea Services to more accurately depict the Companys expanding
business beyond diving services to include diver-less intervention, SURF (subsea equipment,
umbilical, riser and flow-line), and IRM (inspection, repairs and maintenance) services. The
six reportable segments prior to this reorganization included: Gulf of Mexico Offshore
Construction Division (OCD), Gulf of Mexico Diving, Latin America, West Africa, Middle East
(including the Mediterranean and India), and Asia Pacific. The six revised reportable
segments subsequent to the reorganization include: Gulf of Mexico OCD, Gulf of Mexico Subsea,
Latin America, West Africa, Middle East (including the Mediterranean) and Asia Pacific/India.
This reorganization is reflected as a retrospective change to the financial information
presented in the nine month period ended September 30, 2007 and in the three and nine month
period ended September 30, 2006 and consist of the following:
 
    
    a geographical shift of India operations from the Middle East to the Asia
Pacific;
    
    transfer of a portion of subsea services from the Middle East to West Africa; and
    
    corporate interest income and expense no longer being
allocated to the reportable segments.
  14




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Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Total segment revenuesGulf of Mexico OCD
    
    $
    32,037
    
    
    $
    51,868
    
    
    $
    80,075
    
    
    $
    148,756Gulf of Mexico Subsea
    
    
    45,620
    
    
    
    46,416
    
    
    
    117,724
    
    
    
    116,927Latin America
    
    
    39,404
    
    
    
    163,009
    
    
    
    174,269
    
    
    
    369,477West Africa
    
    
    44,626
    
    
    
    46,348
    
    
    
    153,876
    
    
    
    135,691Middle East
    
    
    41,530
    
    
    
    630
    
    
    
    84,955
    
    
    
    1,516Asia Pacific/India
    
    
    8,977
    
    
    
    19,374
    
    
    
    156,934
    
    
    
    193,569Subtotal
    
    
    212,194
    
    
    
    327,645
    
    
    
    767,833
    
    
    
    965,936Intersegment eliminationsGulf of Mexico OCD
    
    
    
    
    
    
    (2,311
    )
    
    
    (7,726
    )
    
    
    (9,335
    )Gulf of Mexico Subsea
    
    
    (8,225
    )
    
    
    (8,469
    )
    
    
    (13,511
    )
    
    
    (24,620
    )Latin America
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,218
    )Middle East
    
    
    (401
    )
    
    
    
    
    
    
    (16,966
    )
    
    
    Asia Pacific/India
    
    
    (32
    )
    
    
    
    
    
    
    (145
    )
    
    
    Subtotal
    
    
    (8,658
    )
    
    
    (10,780
    )
    
    
    (38,348
    )
    
    
    (35,173
    )Consolidated revenues
    
    
    203,536
    
    
    
    316,865
    
    
    
    729,485
    
    
    
    930,763Income (loss) before taxesGulf of Mexico OCD
    
    
    4,888
    
    
    
    15,490
    
    
    
    10,115
    
    
    
    37,631Gulf of Mexico Subsea
    
    
    21,974
    
    
    
    25,978
    
    
    
    48,395
    
    
    
    46,088Latin America
    
    
    10,282
    
    
    
    49,762
    
    
    
    75,101
    
    
    
    77,734West Africa
    
    
    2,924
    
    
    
    5,620
    
    
    
    (4,857
    )
    
    
    25,126Middle East
    
    
    2,489
    
    
    
    (486
    )
    
    
    15,027
    
    
    
    (3,961
    )Asia Pacific/India
    
    
    (6,145
    )
    
    
    (8,378
    )
    
    
    25,192
    
    
    
    19,232Corporate (litigation provision)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,699Corporate net interest income (expense)
    
    
    6,729
    
    
    
    1,448
    
    
    
    11,698
    
    
    
    (1,526
    )Consolidated income before taxes
    
    $
    43,141
    
    
    $
    89,434
    
    
    $
    180,671
    
    
    $
    214,023
 15




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking Statements
    
    
    the level of capital expenditures in the oil and gas industry;
    
    risks inherent in doing business abroad;
    
    operating hazards related to working offshore;
    
    dependence on significant customers;
    
    ability to attract and retain skilled workers;
    
    general industry conditions;
    
    environmental matters;
    
    changes in laws and regulations;
    
    the effects of resolving claims and variation orders;
    
    availability of capital resources;
    
    delays or cancellation of projects included in backlog;
    
    fluctuations in the prices or demand for oil and gas;
    
    the level of offshore drilling activity;
    
    foreign exchange and currency fluctuations; and
    
    acquisitions or divestitures.
   16




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##### Table of Contents



Results of Operations  General
    
    
    Offshore Construction Services, which include pipeline construction and platform
installation and removal services; and
    
    Subsea Services, which include diving, diver-less intervention and marine support
services.
 Offshore Construction Services
  17




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Subsea Services
 18




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##### Table of Contents



Quarter Ended September 30, 2007 Compared to Quarter Ended September 30, 2006
 2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    203,536
    
    
    
    100.0
    %
    
    $
    316,865
    
    
    
    100.0
    %
    
    
    (35.8
    )%Cost of operations
    
    
    146,714
    
    
    
    72.1
    
    
    
    212,027
    
    
    
    66.9
    
    
    
    30.8Gross profit
    
    
    56,822
    
    
    
    27.9
    
    
    
    104,838
    
    
    
    33.1
    
    
    
    (45.8
    )Net (gain) on asset disposal
    
    
    (9
    )
    
    
    
    
    
    
    (2,618
    )
    
    
    (0.8
    )
    
    
    (99.7
    )Selling, general and
administrative expenses
    
    
    20,749
    
    
    
    10.2
    
    
    
    17,570
    
    
    
    5.5
    
    
    
    (18.1
    )Operating income
    
    
    36,082
    
    
    
    17.7
    
    
    
    89,886
    
    
    
    28.4
    
    
    
    (59.9
    )Other expense:Interest expense
    
    
    3,718
    
    
    
    1.8
    
    
    
    3,372
    
    
    
    1.1
    
    
    
    (10.3
    )Other (income), net
    
    
    (10,777
    )
    
    
    (5.3
    )
    
    
    (2,920
    )
    
    
    (0.9
    )
    
    
    269.1Income before taxes
    
    
    43,141
    
    
    
    21.2
    
    
    
    89,434
    
    
    
    28.2
    
    
    
    (51.8
    )Income taxes
    
    
    11,666
    
    
    
    5.7
    
    
    
    25,765
    
    
    
    8.1
    
    
    
    54.7Net income
    
    $
    31,475
    
    
    
    15.5
    %
    
    $
    63,669
    
    
    
    20.1
    %
    
    
    (50.6
    )%
 Revenues
 Gross Profit
 Net (Gain) on Asset Disposal
 Selling, General and Administrative Expenses
 Other (Income), net
 Income Taxes
 Segment Information
 19




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##### Table of Contents



Gulf of Mexico Offshore Construction Division
 Gulf of Mexico Subsea
 Latin America
 West Africa
 Middle East
 Asia Pacific/India
 20




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Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006
 2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    729,485
    
    
    
    100.0
    %
    
    $
    930,763
    
    
    
    100.0
    %
    
    
    (21.6
    )%Cost of operations
    
    
    505,056
    
    
    
    69.2
    
    
    
    676,658
    
    
    
    72.7
    
    
    
    25.4Gross profit
    
    
    224,429
    
    
    
    30.8
    
    
    
    254,105
    
    
    
    27.3
    
    
    
    (11.7
    )Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    4,485
    
    
    
    0.5
    
    
    
    100.0Reduction in litigation
    
    
    
    
    
    
    
    
    
    
    (13,699
    )
    
    
    (1.5
    )
    
    
    (100.0
    )Net (gain) on asset disposal
    
    
    (1,317
    )
    
    
    (0.2
    )
    
    
    (3,125
    )
    
    
    (0.3
    )
    
    
    (57.9
    )Selling, general and administrative
Expenses
    
    
    58,777
    
    
    
    8.1
    
    
    
    48,566
    
    
    
    5.2
    
    
    
    (21.0
    )Operating income
    
    
    166,969
    
    
    
    22.9
    
    
    
    217,878
    
    
    
    23.4
    
    
    
    (23.4
    )Other expense:Interest expense
    
    
    8,491
    
    
    
    1.2
    
    
    
    7,868
    
    
    
    0.8
    
    
    
    (7.9
    )Other (income), net
    
    
    (22,193
    )
    
    
    (3.0
    )
    
    
    (4,013
    )
    
    
    (0.4
    )
    
    
    453.0Income before taxes
    
    
    180,671
    
    
    
    24.7
    
    
    
    214,023
    
    
    
    23.0
    
    
    
    (15.6
    )Income taxes
    
    
    53,611
    
    
    
    7.3
    
    
    
    69,207
    
    
    
    7.4
    
    
    
    22.5Net income
    
    $
    127,060
    
    
    
    17.4
    %
    
    $
    144,816
    
    
    
    15.6
    %
    
    
    (12.3
    )%
 Revenues
 Gross Profit
 Loss on Asset Impairments Navajo, Pipeliner 5
 Reduction in Litigation Provision -
 Net (Gain) on Asset Disposal
 Selling, General and Administrative Expenses
 Other (Income) net
 21




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##### Table of Contents



Income Taxes -
 Segment Information
 Gulf of Mexico Offshore Construction Division  Pipeliner 5
 Gulf of Mexico Subsea
 Latin America
 West Africa
 Middle East  Navajo
 22




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##### Table of Contents



Asia Pacific/India
 23




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##### Table of Contents



Industry and Business Outlook
    Liquidity and Capital Resources
 Overview
 Cash Flow
   Long-Term Debt
  24




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##### Table of Contents



Other Indebtedness and Obligations
 Liquidity Outlook
   Critical Accounting Policies and Estimates
 25




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     26




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##### Table of Contents



Item 4. Controls and Procedures.
   27




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
       28




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##### Table of Contents



Item 1A.  Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
   29




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##### Table of Contents



Item 6.
    
    Exhibits.
 4.1 -
    
    Indenture dated as of July 27, 2007, between the Company
and Wells Fargo Bank, National Association. .
(incorporated herein by reference to Exhibit 4.1 to our
Quarterly Report on Form 10-Q filed on August 8, 2007)4.2 -
    
    Registration Rights Agreement dated as of July 27, 2007
between the Company and Lehman Brothers Inc., Calyon
Securities (USA) Inc., Natexis Bleichroeder Inc. and
Fortis Securities LLC. . (incorporated herein by
reference to Exhibit 4.2 to our Quarterly Report on Form
10-Q filed on August 8, 2007)10.1 -
    
    Purchase Agreement dated as of July 23, 2007 between
Lehman Brothers Inc., Calyon Securities (USA) Inc.,
Natexis Bleichroeder Inc. and Fortis Securities LLC .
(incorporated herein by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q filed on August 8, 2007)10.2 -
    
    Amendment No. 2 to the Third Amended and Restated Credit
Agreement, dated June 30, as amended by Amendment No. 1
thereto dated as of October 6, 2006, by and among the
Company, Global Offshore Mexico, S. de R.L. de C.V., and
Global Industries International L.L.C. in its capacity
as general partner of Global Industries International,
L.P., the lenders party to the Credit Agreement, and
Calyon New York Branch, as administrative agent for the
lenders. (incorporated herein by reference to Exhibit
10.2 to our Quarterly Report on Form 10-Q filed on
August 8, 2007)* 15.1 -
    
    Letter regarding unaudited interim financial information.* 31.1 -
    
    Section 302 Certification of CEO, B. K. Chin* 31.2 -
    
    Section 302 Certification of CFO, Peter S. Atkinson* 32.1 -
    
    Section 906 Certification of CEO, B. K. Chin* 32.2 -
    
    Section 906 Certification of CFO, Peter S. Atkinson
 
 *
    
    Included with this filing 30




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##### Table of Contents



Signature
  GLOBAL INDUSTRIES, LTD.By:
    /s/ Peter S. AtkinsonPeter S. AtkinsonPresident and Chief Financial Officer
(Principal Financial and Accounting Officer)  31




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description4.1 -
    
    Indenture dated as of July 27, 2007, between the Company
and Wells Fargo Bank, National Association. .
(incorporated herein by reference to Exhibit 4.1 to our
Quarterly Report on Form 10-Q filed on August 8, 2007)4.2 -
    
    Registration Rights Agreement dated as of July 27, 2007
between the Company and Lehman Brothers Inc., Calyon
Securities (USA) Inc., Natexis Bleichroeder Inc. and
Fortis Securities LLC. . (incorporated herein by
reference to Exhibit 4.2 to our Quarterly Report on Form
10-Q filed on August 8, 2007)10.1 -
    
    Purchase Agreement dated as of July 23, 2007 between
Lehman Brothers Inc., Calyon Securities (USA) Inc.,
Natexis Bleichroeder Inc. and Fortis Securities LLC .
(incorporated herein by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q filed on August 8, 2007)10.2 -
    
    Amendment No. 2 to the Third Amended and Restated Credit
Agreement, dated June 30, as amended by Amendment No. 1
thereto dated as of October 6, 2006, by and among the
Company, Global Offshore Mexico, S. de R.L. de C.V., and
Global Industries International L.L.C. in its capacity
as general partner of Global Industries International,
L.P., the lenders party to the Credit Agreement, and
Calyon New York Branch, as administrative agent for the
lenders. (incorporated herein by reference to Exhibit
10.2 to our Quarterly Report on Form 10-Q filed on
August 8, 2007)* 15.1 -
    
    Letter regarding unaudited interim financial information.* 31.1 -
    
    Section 302 Certification of CEO, B. K. Chin* 31.2 -
    
    Section 302 Certification of CFO, Peter S. Atkinson* 32.1 -
    
    Section 906 Certification of CEO, B. K. Chin* 32.2 -
    
    Section 906 Certification of CFO, Peter S. Atkinson
 
 *
    
    Included with this filing 32