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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 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
 þ o
  þ o o
 o þ




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##### 



Global Industries, Ltd.
Index  Form 10-Q
 Part I  Financial InformationItem 1.
    
    Financial Statements  UnauditedReport of Independent Registered Public Accounting Firm
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Balance Sheets
    
    
    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
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    36Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    37Item 1A.
    
    Risk Factors
    
    
    38Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    39Item 6.
    
    Exhibits
    
    
    39Signature
    
    
    40Settlement AgreementLetter re Unaudited Interim Financial InformationSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
        
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Quarter Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Results of OperationsRevenues
    
    $
    367,631
    
    
    $
    209,359
    
    
    $
    613,898
    
    
    $
    346,615Cost of operations
    
    
    266,494
    
    
    
    171,825
    
    
    
    464,631
    
    
    
    284,784Gross profit
    
    
    101,137
    
    
    
    37,534
    
    
    
    149,267
    
    
    
    61,831Loss on asset impairments
    
    
    4,485
    
    
    
    
    
    
    
    4,485
    
    
    
    Reduction in litigation provision
    
    
    (13,699
    )
    
    
    
    
    
    
    (13,699
    )
    
    
    Net (gain) on asset disposal
    
    
    (216
    )
    
    
    (2,503
    )
    
    
    (507
    )
    
    
    (2,615
    )Selling, general and administrative expenses
    
    
    14,710
    
    
    
    14,393
    
    
    
    30,996
    
    
    
    24,675Operating income
    
    
    95,857
    
    
    
    25,644
    
    
    
    127,992
    
    
    
    39,771Other expense:Interest expense
    
    
    2,460
    
    
    
    2,480
    
    
    
    4,496
    
    
    
    4,864Other (income)
    
    
    (1,060
    )
    
    
    (817
    )
    
    
    (1,093
    )
    
    
    (1,546
    )Income before taxes
    
    
    94,457
    
    
    
    23,981
    
    
    
    124,589
    
    
    
    36,453Income taxes
    
    
    32,074
    
    
    
    11,628
    
    
    
    43,442
    
    
    
    16,604Net income
    
    $
    62,383
    
    
    $
    12,353
    
    
    $
    81,147
    
    
    $
    19,849Earnings Per Common ShareBasic
    
    $
    0.54
    
    
    $
    0.11
    
    
    $
    0.70
    
    
    $
    0.18Diluted
    
    $
    0.53
    
    
    $
    0.11
    
    
    $
    0.69
    
    
    $
    0.17Weighted Average Common Shares OutstandingBasic
    
    
    115,650
    
    
    
    112,512
    
    
    
    115,181
    
    
    
    112,557Diluted
    
    
    117,478
    
    
    
    115,346
    
    
    
    116,915
    
    
    
    114,911
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent AssetsCash
    
    $
    143,298
    
    
    $
    127,138Restricted cash
    
    
    10,162
    
    
    
    1,477Accounts receivable  net of allowance of $8,793 for 2006
and $7,757 for 2005
    
    
    238,291
    
    
    
    181,433Unbilled work on uncompleted contracts
    
    
    127,131
    
    
    
    76,291Contract costs incurred not yet recognized
    
    
    53,544
    
    
    
    34,076Deferred income taxes
    
    
    
    
    
    
    14,158Prepaid expenses and other
    
    
    31,495
    
    
    
    34,448Total current assets
    
    
    603,921
    
    
    
    469,021Property and Equipment, net
    
    
    333,551
    
    
    
    330,402Other AssetsDeferred charges, net
    
    
    25,400
    
    
    
    19,125Goodwill, net
    
    
    37,388
    
    
    
    37,388Other
    
    
    3,285
    
    
    
    1,378Total other assets
    
    
    66,073
    
    
    
    57,891Total
    
    $
    1,003,545
    
    
    $
    857,314LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    3,960
    
    
    $
    3,960Accounts payable
    
    
    168,002
    
    
    
    119,000Employee-related liabilities
    
    
    18,011
    
    
    
    16,170Income taxes payable
    
    
    48,512
    
    
    
    25,726Accrued interest
    
    
    2,143
    
    
    
    2,249Advance billings on uncompleted contracts
    
    
    10,343
    
    
    
    21,308Litigation liability provision
    
    
    22,050
    
    
    
    34,911Other accrued liabilities
    
    
    13,258
    
    
    
    13,647Total current liabilities
    
    
    286,279
    
    
    
    236,971Long-Term Debt
    
    
    71,280
    
    
    
    73,260Deferred Income Taxes
    
    
    52,583
    
    
    
    49,491Other Liabilities
    
    
    735
    
    
    
    787Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock issued, 115,993 and 114,344 shares,
respectively
    
    
    1,160
    
    
    
    1,144Additional paid-in capital
    
    
    363,382
    
    
    
    350,550Accumulated other comprehensive loss
    
    
    (7,110
    )
    
    
    (8,978
    )Retained earnings
    
    
    235,236
    
    
    
    154,089Total shareholders equity
    
    
    592,668
    
    
    
    496,805Total
    
    $
    1,003,545
    
    
    $
    857,314
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months EndedJune 30,2006
    
    
    2005Cash Flows From Operating ActivitiesNet income
    
    $
    81,147
    
    
    $
    19,849Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    26,946
    
    
    
    24,720Stock-based compensation expense
    
    
    4,708
    
    
    
    1,332Provision for doubtful accounts
    
    
    7,601
    
    
    
    1,056Gain on sale or disposal of property and equipment
    
    
    (507
    )
    
    
    (615
    )Loss on asset impairments
    
    
    4,485
    
    
    
    Reduction in litigation provision
    
    
    (13,699
    )
    
    
    Deferred income taxes
    
    
    17,250
    
    
    
    12,310Latin America tax penalties and fees
    
    
    
    
    
    
    2,500Changes in operating assets and liabilitiesReceivables, unbilled work, and contract costs
    
    
    (134,767
    )
    
    
    (125,622
    )Prepaid expenses and other
    
    
    1,046
    
    
    
    (6,186
    )Accounts payable, employee-related liabilities and other
accrued liabilities
    
    
    65,802
    
    
    
    46,255Deferred dry-dock costs incurred
    
    
    (11,967
    )
    
    
    (7,276
    )Net cash provided by (used in) operating activities
    
    
    48,045
    
    
    
    (31,677
    )Cash Flows From Investing ActivitiesProceeds from sale of assets
    
    
    509
    
    
    
    1,329Additions to property and equipment
    
    
    (28,373
    )
    
    
    (11,012
    )Additions to restricted cash
    
    
    (8,685
    )
    
    
    (1,000
    )Net cash (used in) investing activities
    
    
    (36,549
    )
    
    
    (10,683
    )Cash Flows From Financing ActivitiesProceeds from sale of common stock, net
    
    
    7,161
    
    
    
    2,345Additions to deferred charges
    
    
    (517
    )
    
    
    (674
    )Repayment of long-term debt
    
    
    (1,980
    )
    
    
    (1,980
    )Net cash provided by (used in) financing activities
    
    
    4,664
    
    
    
    (309
    )CashIncrease (decrease)
    
    
    16,160
    
    
    
    (42,669
    )Beginning of period
    
    
    127,138
    
    
    
    143,161End of period
    
    $
    143,298
    
    
    $
    100,492
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Global Industries, Ltd.
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.
    
    Recent Accounting Pronouncements In July 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109(FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entitys
financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. It
prescribes a recognition threshold and measurement attribute for financial statement
disclosure of tax positions taken or expected to be taken on a tax return. This
interpretation is effective for fiscal years beginning after December 15, 2006. Consistent
with the requirements of FIN 48, we will adopt this new standard on January 1, 2007. We are
currently evaluating the provisions of FIN 48 and have not yet determined the impact, if any,
on our consolidated financial statements.3.
    
    Contracts in Progress and Revenue Recognition Revenues from construction contracts, which
are generally recognized on the percentage-of-completion method, are measured by relating the
actual cost of work performed to date to the current estimated total cost of the respective
contract (the cost-to-cost method). Contract costs include all direct material and labor
costs and those indirect costs related to contract performance, such as indirect vessel costs
(including depreciation and amortization), labor, supplies, and repairs. Certain costs may be
excluded from the cost-to-cost method of measuring progress, such as significant costs for
materials and major third-party subcontractors, if it appears that such exclusion would result
in a more meaningful measurement of actual contract progress and resulting periodic allocation
of income. Provisions for estimated losses, if any, on uncompleted contracts are made in the
period in which such losses are determined. Selling, general and administrative costs are
charged to expense as incurred. We also provide services on a day-rate basis to many of our
customers. Revenues for day-rate services are recognized as the services are rendered and
when collectability is reasonably assured.4.
    
    Receivables Our receivables are presented in the following balance sheet accounts: (1)
accounts receivable, (2) unbilled work on uncompleted contracts, and (3) contract costs
incurred not yet recognized. Accounts receivable are stated at net realizable value, and the
allowances for uncollectible accounts were $8.8 million and $7.8 million at June 30, 2006 and
December 31, 2005, respectively. The balance of accounts receivable primarily consists of
work which has been billed to customers. The balance of unbilled work on uncompleted
contracts includes (a) amounts that have not yet been billed to customers pursuant to
contractually specified milestone billing requirements, (b) unbilled retainage, and (c)
revenue accruals.
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Costs and Estimated Earnings on Uncompleted Contracts
 June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Costs incurred on uncompleted contracts
    
    $
    444,364
    
    
    $
    567,266Estimated (losses) earnings
    
    
    88,009
    
    
    
    62,038Costs and estimated earnings on uncompleted contracts
    
    
    532,373
    
    
    
    629,304Less: Billings to date
    
    
    473,546
    
    
    
    608,27258,827
    
    
    
    21,032Plus: Accrued revenue
    
    
    57,961
    
    
    
    33,951$
    116,788
    
    
    $
    54,983Included in accompanying balance sheets under the
following captions:Unbilled work on uncompleted contracts
    
    $
    127,131
    
    
    $
    76,291Advance billings on uncompleted contracts
    
    
    (10,343
    )
    
    
    (21,308
    )$
    116,788
    
    
    $
    54,983
 5.
    
    Restricted Cash At June 30, 2006, the balance of restricted cash was comprised of
restricted cash deposits related to forward currency agreements, foreign customs guarantees,
and foreign currency exchange arrangements. We expect that restrictions with respect to $9.1
million of the June 30, 2006 restricted cash balance related to forward currency agreements
and foreign customs guarantees will be cleared during the third quarter of 2006. Restrictions
with respect to the remaining balance will remain until the associated foreign currency
arrangement expires.6.
    
    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
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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. If we applied only a straight-line depreciation
method, less depreciation expense would be recorded in periods of high vessel utilization and
revenues, and more depreciation expense would be recorded in periods of low vessel utilization
and revenues.
 7.
    
    Goodwill Goodwill represents the excess cost over the fair value of net assets acquired
and is tested on an annual basis or when circumstances indicate that impairment may exist.
The carrying amount of goodwill as of June 30, 2006 and December 31, 2005 was approximately
$37.4 million and is primarily attributable to our Latin America segment.8.
    
    Loss on Asset Impairments Due to a deterioration in forecasted cash flows and/or expected
useful life with respect to certain of our marine assets in the second quarter of 2006, we
tested those assets for impairment during the quarter. Our analysis included (1) cost
estimates for refurbishment, upgrades, and regulatory compliance, (2) cash flow projections
for potential future work, and (3) an evaluation of the potential for vessel sales to others.
Each asset was analyzed and valued using third party assessments and probability weighted
undiscounted cash flow analysis, taking into account any costs related to the disposal of the
asset. As a result of this analysis, we recorded a pre-tax non-cash impairment charge of $4.5
million related to certain of our marine assets. The segment, assets, and amounts associated
with the loss are listed below.
 Segment
    
    Description of Asset
    
    
    Amount(In thousands)Gulf of Mexico OCD
    
    Pipeliner 5
    
    $
    757Gulf of Mexico OCD
    
    GP 35
    
    
    2Latin America
    
    1 DSV
    
    
    450Middle East
    
    Navajo
    
    
    3,276Total
    
    
    
    
    
    $
    4,485
 9.
    
    Income Taxes Our effective tax rate was 35% and 46% for the six months ended June 30, 2006
and 2005, respectively. Our effective tax rate for 2006 was negatively impacted by a $1.7
million increase in income tax reserves. Our effective tax rate for 2005 was substantially
higher than our 35% U.S. Federal statutory rate primarily due to taxes in certain foreign
jurisdictions that were levied on a deemed profits (i.e., percentage of revenue) basis, net
operating losses in certain foreign jurisdictions where we did not record a tax benefit, and
permanent book to tax differences.10.
    
    Financing Arrangements On June 30, 2006, we entered into the Third Amended and Restated
Credit Agreement (the Credit Agreement). As compared to the credit facility which it
replaced, the Credit Agreement increased our overall borrowing capacity, reduced the interest
rate premiums (spreads) to be paid on our borrowings, reduced fee rates for letters of
credit, increased the number of subsidiaries allowed to borrow under the facility, extended
the term of the facility, and reduced the scope of certain covenants applicable under the
agreement. The Credit Agreement, which is a $130 million revolving credit facility with
optional provisions for expansion to $150 million, replaces the previous $85 million credit
facility that would have matured in March 2008. The Credit Agreement matures on June 30,
2011.
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11.
    
    Commitments and Contingencies We are a party to legal proceedings and potential claims
arising in the ordinary course of business. Management does not believe these matters will
materially affect our consolidated financial statements in future periods.
 
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Type of Tax
    
    Amount(In millions)Income taxes
    
    $
    3.1Value added taxes
    
    
    0.8Penalties, interest, and inflationary charges
    
    
    1.7Total
    
    $
    5.6
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12.
    
    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
interest rates. From time to time, we enter into derivative agreements (hedging instruments)
to hedge our exposure to specific foreign currency or interest rate risks (hedged items). We
do not use derivative financial instruments for trading purposes. As of June 30, 2006, we had
entered into forward exchange contracts to hedge commitments denominated in Norwegian kroners
and euros. The Company accounts for these instruments as cash flow hedges, as defined by
Statement of Financial Accounting Standards No. 133, (SFAS 133), Accounting for Derivative
Instruments and Hedging Activities.Under SFAS 133, all derivatives which are designated as
hedges and meet certain requirements are granted special hedge accounting treatment.
Generally, under this accounting treatment, all periodic changes in the fair value of the
derivative financial instruments which are designated as hedges and that are considered to be
effective, as defined by SFAS 133, are recorded in accumulated other comprehensive income
until the associated hedged item is settled. The Company is exposed to the risk that, at some
future point in time, its derivative financial instruments which are designated as hedges may
no longer be considered effective as defined by SFAS 133, or may no longer qualify for hedge
accounting treatment for some other reason. In such case, the amount of accumulated other
comprehensive income associated with the disqualified derivative financial instrument as well
as future periodic changes in value will be included in the Companys results of operations.
Ineffectiveness, as defined by SFAS 133, results when the change in the total fair value of a
derivative financial instrument which is designated as a hedge does not equal the change in
fair value of the associated hedged item. All changes in fair value which are associated with
ineffectiveness will be included in the results of operations of the Company during the period
of the change. During the six months ended June 30, 2006 and 2005, the Company did not
recognize any gains or losses in its results of operations due to ineffectiveness. As of June
30, 2006, the Company had $1.9 million in unrealized gains, net of tax, in accumulated other
comprehensive income related to forward exchange hedges. Included in this total is
approximately $0.4 million in net unrealized gains which are expected to be realized in
earnings during the twelve months following June 30, 2006.
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13.
    
    Other Comprehensive Income Comprehensive income included changes in the fair value of
certain derivative financial instruments which qualify for hedge accounting treatment.
Comprehensive income totaled $64.0 million and $12.4 million for the quarters ended June 30,
2006 and 2005, respectively, and $83.0 million and $19.8 million for the six months ended June
30, 2006 and 2005, respectively. The differences between net income and comprehensive income
for each of the comparable periods presented are as follows.
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Net Income
    
    $
    62,383
    
    
    $
    12,353
    
    
    $
    81,147
    
    
    $
    19,849Unrealized net gain on derivative instruments
    
    
    2,419
    
    
    
    
    
    
    
    2,865
    
    
    
    Less: deferred taxes
    
    
    (841
    )
    
    
    
    
    
    
    (997
    )
    
    
    Comprehensive Income
    
    $
    63,961
    
    
    $
    12,353
    
    
    $
    83,015
    
    
    $
    19,849
  AccumulatedAccumulated
    
    
    Foreign
    
    
    OtherTranslation
    
    
    Exchange
    
    
    ComprehensiveAdjustment
    
    
    Agreements
    
    
    Income (Loss)Balance at December 31, 2005
    
    $
    (8,978
    )
    
    $
    
    
    
    $
    (8,978
    )Change in value
    
    
    
    
    
    
    1,868
    
    
    
    1,868Reclassifications to earnings
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2006
    
    $
    (8,978
    )
    
    $
    1,868
    
    
    $
    (7,110
    )
  14.
    
    Segment Information During the first quarter of 2006, our operations management and
internal financial reporting were reorganized into five business units: Gulf of Mexico, Latin
America, West Africa, Middle East (including India), and Asia Pacific. Each of these business
units includes both offshore construction activities and diving activities for a particular
region of the world. Management has determined that the Gulf of Mexico business unit includes
two reportable segments under SFAS 131, Disclosures About Segments of an Enterprise and
Related Information,and has presented six segments in this note to the financial statements:
Gulf of Mexico Offshore Construction Division (OCD), Gulf of Mexico Diving, Latin America,
West Africa, Middle East, and Asia Pacific. The amounts shown for the comparable period in
2005 have been restated to correspond to the new presentation of segments. The
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following tables present information about the profit or loss of each of the Companys six
reportable segments for the quarters and six months ended June 30, 2006 and 2005. The
information contains certain allocations of corporate expenses that we deem reasonable and
appropriate for the evaluation of results of operations.
 Quarter Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Total segment revenuesGulf of Mexico OCD
    
    
    52,440
    
    
    
    22,672
    
    
    
    112,432
    
    
    
    45,990Gulf of Mexico Diving
    
    
    27,674
    
    
    
    10,178
    
    
    
    57,135
    
    
    
    23,698Latin America
    
    
    143,974
    
    
    
    96,705
    
    
    
    206,468
    
    
    
    162,461West Africa
    
    
    56,288
    
    
    
    5,802
    
    
    
    89,369
    
    
    
    9,320Middle East
    
    
    60,190
    
    
    
    28,886
    
    
    
    132,461
    
    
    
    53,768Asia Pacific
    
    
    44,969
    
    
    
    48,549
    
    
    
    50,317
    
    
    
    58,919Subtotal
    
    
    385,535
    
    
    
    212,792
    
    
    
    648,182
    
    
    
    354,156Intersegment eliminationsGulf of Mexico Diving
    
    
    (9,599
    )
    
    
    (2,792
    )
    
    
    (25,344
    )
    
    
    (6,900
    )Latin America
    
    
    (583
    )
    
    
    
    
    
    
    (1,218
    )
    
    
    Middle East
    
    
    (4,623
    )
    
    
    (414
    )
    
    
    (4,623
    )
    
    
    (414
    )Asia Pacific
    
    
    (3,099
    )
    
    
    (227
    )
    
    
    (3,099
    )
    
    
    (227
    )Subtotal
    
    
    (17,904
    )
    
    
    (3,433
    )
    
    
    (34,284
    )
    
    
    (7,541
    )Consolidated
revenues
    
    
    367,631
    
    
    
    209,359
    
    
    
    613,898
    
    
    
    346,615Income (loss) before taxesGulf of Mexico OCD
    
    
    14,634
    
    
    
    6,755
    
    
    
    26,265
    
    
    
    16,676Gulf of Mexico Diving
    
    
    7,599
    
    
    
    3,561
    
    
    
    15,529
    
    
    
    8,391Latin America
    
    
    28,544
    
    
    
    (826
    )
    
    
    27,432
    
    
    
    1,650West Africa
    
    
    13,622
    
    
    
    (3,459
    )
    
    
    17,705
    
    
    
    (7,575
    )Middle East
    
    
    9,268
    
    
    
    11,145
    
    
    
    21,189
    
    
    
    17,654Asia Pacific
    
    
    7,006
    
    
    
    6,497
    
    
    
    3,157
    
    
    
    (1,088
    )Corporate (litigation
provision)
    
    
    13,699
    
    
    
    
    
    
    
    13,699
    
    
    
    Over (under) allocated
corporate expenses
    
    
    85
    
    
    
    308
    
    
    
    (387
    )
    
    
    745Consolidated income
before taxes
    
    
    94,457
    
    
    
    23,981
    
    
    
    124,589
    
    
    
    36,453
 15.
    
    Stock-Based Compensation During the six month periods ended June 30, 2006 and 2005, we had
three stock-based compensation plans that provide for the granting of restricted stock, stock
options, performance-based shares, performance-based units, or any combination thereof to
directors, officers, and employees.
  14




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Share-Based Payment
 15




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##### Table of Contents



2005 Pro Forma Information
 Quarter
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005(In thousands except per share amounts)Net income (loss) as reported
    
    $
    12,353
    
    
    $
    19,849Add: Recognized stock compensation expense, net of taxes
    
    
    408
    
    
    
    866Less: SFAS 123R pro forma stock compensation expense, net of taxes
    
    
    (738
    )
    
    
    (1,520
    )Pro-forma net income (loss)
    
    $
    12,023
    
    
    $
    19,195As reported :Basic
    
    $
    0.11
    
    
    $
    0.18Diluted
    
    
    0.11
    
    
    
    0.17Pro forma:Basic
    
    $
    0.11
    
    
    $
    0.17Diluted
    
    
    0.11
    
    
    
    0.17
  Award Type
    

Method Used to Determine Actual and Pro Forma 2005 Compensation CostStock Options:
    
    Estimated using the Black-Scholes Option Valuation
method. (Pro forma)Time-based
Restricted Stock:
    
    Measured using fair value on the grant date. (Actual)Performance Shares:
    
    Initially measured using fair value and expected
achievement levels on the date of grant.
Compensation cost is then periodically adjusted to
reflect changes in market prices and achievement
through the settlement date. (Actual)
  2005Expected life in years
    
    6 yearsInterest rate
    
    
    4.54
    %Volatility
    
    
    46.59
    %Forfeiture rate
    
    ActualExpected dividends
    
    
    -0-
 16




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##### Table of Contents



Award Type
    
    Method Used to Determine 2006 Compensation CostStock Options:
    
    Estimated using the Black-Scholes Option
Valuation method in accordance with SFAS 123R.Time-based Restricted
Stock:
    
    Measured using fair value on the grant date.
Forfeitures were assumed
to be 12%.Performance Shares/Units:
    
    Performance shares/units are segregated between
those shares which are earned based upon a
market condition and those which are earned
based upon other criteria. Performance
shares/units which are dependent upon a market
condition are measured using the fair value at
the date of grant and a 100% expected
achievement level. The fair value of the
market based awards is based upon a Monte Carlo
Simulation. Performance shares/units which
have no market-based earnings criteria are
initially measured using fair value at date of
award and expected achievement levels on date
of grant. Compensation cost is then
periodically adjusted to reflect changes in
expected achievement through the settlement
date.
  2006Expected life in years
    
    6 yearsInterest rate
    
    
    5.15
    %Volatility
    
    
    58.70
    %Forfeiture rate
    
    
    25.0
    %Expected dividends
    
    
    -0-
  17




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##### Table of Contents



STOCK OPTIONS
 Outstanding OptionsYear to Date Period Ending June 30, 2006Weighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Average
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueShares
    
    
    Price
    
    
    Life (Years)
    
    
    (in thousands)Outstanding at
December 31, 2005
    
    
    4,459,050
    
    
    $
    10.14Granted
    
    
    923,300
    
    
    
    12.69Forfeited or expired
    
    
    (121,370
    )
    
    
    11.72Exercised
    
    
    (811,423
    )
    
    
    9.04Outstanding at June 30, 2006
    
    
    4,449,557
    
    
    $
    10.82
    
    
    
    5.3
    
    
    $
    26,146Exercisable at June 30, 2006
    
    
    3,088,837
    
    
    $
    10.87
    
    
    
    4.0
    
    
    $
    18,014
   Non-Vested OptionsJune 30, 2006WeightedAverageGrant DateShares
    
    
    Fair ValueOutstanding at December 31, 2005
    
    
    782,990
    
    
    $
    7.88Vested
    
    
    (265,800
    )
    
    
    9.52Forfeited or expired
    
    
    (79,770
    )
    
    
    9.66Granted
    
    
    923,300
    
    
    
    12.69Outstanding at June 30, 2006
    
    
    1,360,720
    
    
    $
    10.72
  18




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##### Table of Contents



TIME-BASED RESTRICTED STOCK
 Outstanding SharesYear to Date Period Ending June 30, 2006Weighted
    
    
    RemainingAverage
    
    
    Average
    
    
    AggregateGrant date
    
    
    Contractual
    
    
    ValueShares
    
    
    Fair Value
    
    
    Life (Years)
    
    
    (in thousands)Outstanding at December 31, 2005
    
    
    846,174
    
    
    $
    6.75Granted
    
    
    780,981
    
    
    
    14.86Forfeited or expired
    
    
    (57,868
    )
    
    
    9.48Vested and Released to participants
    
    
    (70,201
    )
    
    
    5.56Outstanding at June 30, 2006
    
    
    1,499,086
    
    
    $
    10.92
    
    
    
    2.01
    
    
    $
    16,374
   PERFORMANCE SHARES
 Outstanding SharesYear to Date Period Ending June 30, 2006WeightedAverage
    
    
    AggregateGrant date
    
    
    ValueShares
    
    
    Fair Value
    
    
    (in thousands)Outstanding at December 31, 2005
    
    
    796,250
    
    
    $
    5.40Granted
    
    
    36,750
    
    
    
    9.67Forfeited or expired
    
    
    (70,000
    )
    
    
    5.64Outstanding at June 30, 2006
    
    
    763,000
    
    
    $
    5.59
    
    
    $
    4,261
   19




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##### Table of Contents



PERFORMANCE-BASED UNITS
 Outstanding UnitsYear to Date Period Ending June 30, 2006WeightedAverage
    
    
    AggregateGrant date
    
    
    ValueUnits
    
    
    Fair Value
    
    
    (in thousands)Outstanding at
December 31, 2005
    
    
    
    
    
    $
    Granted
    
    
    197,750
    
    
    
    14.88Forfeited or expired
    
    
    (8,575
    )
    
    
    14.71Outstanding at June 30, 2006
    
    
    189,175
    
    
    $
    14.88
    
    
    $
    2,816
    Non-Employee Director Compensation Plan
 20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    fluctuations in the prices or demand for oil and gas;
    
    the level of offshore drilling activity;
    
    operating hazards;
    
    industry conditions;
    
    foreign exchange and currency fluctuations;
    
    changes in laws and regulations;
    
    acquisition or divestitures;
    
    environmental matters; and
    
    the availability of capital resources.
  21




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##### Table of Contents



Results of Operations
 General
 Disclosures About Segments of an Enterprise and Related Information,
    Offshore Construction
  22




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##### Table of Contents



Diving
  Overview
  23




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##### Table of Contents



Quarter Ended June 30, 2006 Compared to Quarter Ended June 30, 2005
 2006
    
    
    2005
    
    
    % Change(Thousands)
    % of Revenue
    
    
    (Thousands)
    % of Revenue
    
    
    (Unfavorable)Revenues
    
    $
    367,631
    
    
    
    100.0
    %
    
    $
    209,359
    
    
    
    100.0
    %
    
    
    76
    %Cost of operations
    
    
    266,494
    
    
    
    72.5
    
    
    
    171,825
    
    
    
    82.1
    
    
    
    (55
    )Gross profit
    
    
    101,137
    
    
    
    27.5
    
    
    
    37,534
    
    
    
    17.9
    
    
    
    169Loss on asset impairments
    
    
    4,485
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    Reduction in litigation provision
    
    
    (13,699
    )
    
    
    (3.7
    )
    
    
    
    
    
    
    
    
    
    
    Net (gain) on asset disposal
    
    
    (216
    )
    
    
    (0.1
    )
    
    
    (2,503
    )
    
    
    (1.2
    )
    
    
    (91
    )Selling, general and administrative expenses
    
    
    14,710
    
    
    
    4.0
    
    
    
    14,393
    
    
    
    6.9
    
    
    
    (2
    )Operating income
    
    
    95,857
    
    
    
    26.1
    
    
    
    25,644
    
    
    
    12.2
    
    
    
    274Other expense:Interest expense
    
    
    2,460
    
    
    
    0.7
    
    
    
    2,480
    
    
    
    1.2
    
    
    
    1Other (income)
    
    
    (1,060
    )
    
    
    (0.3
    )
    
    
    (817
    )
    
    
    (0.5
    )
    
    
    30Income before taxes
    
    
    94,457
    
    
    
    25.7
    
    
    
    23,981
    
    
    
    11.5
    
    
    
    294Income taxes
    
    
    32,074
    
    
    
    8.7
    
    
    
    11,628
    
    
    
    5.6
    
    
    
    (176
    )Net income
    
    $
    62,383
    
    
    
    17.0
    %
    
    $
    12,353
    
    
    
    5.9
    %
    
    
    405
    %
 Revenues.
 Depreciation and Amortization.
 Gross Profit .
 Loss on Asset Impairments. Navajo,
Pipeliner 5,
 24




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Net Gains on Asset Disposal
 Selling, General and Administrative Expenses.
 Interest Expense .
 Other Expense/Income.
 Net Income.
 Segment Information.
  Gulf of Mexico Offshore Construction Division
  25




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Gulf of Mexico Diving
  Latin America
  West Africa
  26




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##### Table of Contents



Middle East
 Navajo
 Asia Pacific
  27




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Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005
 2006
    
    
    2005
    
    
    % Change(Thousands)
    % of Revenue
    
    
    (Thousands)
    % of Revenue
    
    
    (Unfavorable)Revenues
    
    $
    613,898
    
    
    
    100.0
    %
    
    $
    346,615
    
    
    
    100.0
    %
    
    
    77
    %Cost of operations
    
    
    464,631
    
    
    
    75.7
    
    
    
    284,784
    
    
    
    82.2
    
    
    
    (63
    )Gross profit
    
    
    149,267
    
    
    
    24.3
    
    
    
    61,831
    
    
    
    17.8
    
    
    
    141Loss on asset impairments
    
    
    4,485
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    Reduction in litigation provision
    
    
    (13,699
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    
    
    
    
    Net (gain) on asset disposal
    
    
    (507
    )
    
    
    (0.1
    )
    
    
    (2,615
    )
    
    
    (0.8
    )
    
    
    (81
    )Selling, general and administrative expenses
    
    
    30,996
    
    
    
    5.0
    
    
    
    24,675
    
    
    
    7.1
    
    
    
    (26
    )Operating income
    
    
    127,992
    
    
    
    20.9
    
    
    
    39,771
    
    
    
    11.5
    
    
    
    222Other expense:Interest expense
    
    
    4,496
    
    
    
    0.7
    
    
    
    4,864
    
    
    
    1.4
    
    
    
    8Other (income)
    
    
    (1,093
    )
    
    
    (0.1
    )
    
    
    (1,546
    )
    
    
    (0.4
    )
    
    
    (29
    )Income before taxes
    
    
    124,589
    
    
    
    20.3
    
    
    
    36,453
    
    
    
    10.5
    
    
    
    242Income taxes
    
    
    43,442
    
    
    
    7.1
    
    
    
    16,604
    
    
    
    4.8
    
    
    
    (162
    )Net income
    
    $
    81,147
    
    
    
    13.2
    %
    
    $
    19,849
    
    
    
    5.7
    %
    
    
    309
    %
 Revenues.
 Depreciation and Amortization.
 Gross Profit .
 Loss on Asset Impairments . Navajo Pipeliner 5
 28




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##### Table of Contents



Net Gains on Asset Disposal.
 Selling, General and Administrative Expenses.
 Interest Expense .
 Other Expense/Income.
 Net Income.
 Segment Information.
  Gulf of Mexico Offshore Construction Division
 G/P 37 Pipeliner 5
 29




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Gulf of Mexico Diving
  Latin America
  West Africa
  30




---



##### Table of Contents



Middle East
 Navajo
 Asia Pacific
  Liquidity and Capital Resources
 Overview
   31




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##### Table of Contents



Cash Flow
    Long-Term Debt
    32




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##### Table of Contents



Other Indebtedness and Obligations
  Titan 2 Titan 2
   Industry and Business Outlook
   33




---



##### Table of Contents



Liquidity Outlook
   Critical Accounting Policies and Estimates
  34




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
        35




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##### Table of Contents



Item 4. Controls and Procedures.
   36




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 
  Type of Tax
    
    Amount(In millions)Income taxes
    
    $
    3.1Value added taxes
    
    
    0.8Penalties, interest, and inflationary charges
    
    
    1.7Total
    
    $
    5.6
 37




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##### Table of Contents



Item 1A. Risk Factors.
  38




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  Number of Votes CastBrokerName of Director
    
    For
    
    Withhold
    
    Non-VoteWilliam J. Doré
    
    
    105,269,719
    
    
    
    1,226,747
    
    
    
    0John A. Clerico
    
    
    106,032,437
    
    
    
    464,029
    
    
    
    0Edward P. Djerejian
    
    
    102,166,125
    
    
    
    4,330,341
    
    
    
    0Larry E. Farmer
    
    
    106,125,863
    
    
    
    370,603
    
    
    
    0Edgar G. Hotard
    
    
    105,260,135
    
    
    
    1,236,331
    
    
    
    0Richard A. Pattarozzi
    
    
    104,229,093
    
    
    
    2,267,373
    
    
    
    0James L. Payne
    
    
    106,170,581
    
    
    
    325,885
    
    
    
    0Michael J. Pollock
    
    
    101,959,122
    
    
    
    4,537,344
    
    
    
    0Luis Téllez
    
    
    66,892,397
    
    
    
    39,604,069
    
    
    
    0
  Votes for
    
    
    103,921,245Votes against
    
    
    2,030,664Votes abstain
    
    
    544,557Broker non-vote
    
    
    0Total
    
    
    106,496,466
 
 Item 6. Exhibits.
 *
10.1 
    
    Settlement Agreement between Global Industries, Ltd. and
Groupe GTM (now Vinci) dated June 30, 2006.* 15.1 
    
    Letter regarding unaudited interim financial information.* 31.1 
    
    Section 302 Certification of CEO, William J. Doré* 31.2 
    
    Section 302 Certification of CFO, Peter S. Atkinson* 32.1 
    
    Section 906 Certification of CEO, William J. Doré* 32.2 
    
    Section 906 Certification of CFO, Peter S. Atkinson
 
 *
    
    Included with this filing 39




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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)  40




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##### Table of Contents



EXHIBIT INDEX
 * 10.1 
    
    Settlement Agreement between Global Industries, Ltd. and
Groupe GTM (now Vinci) dated June 30, 2006.* 15.1 
    
    Letter regarding unaudited interim financial information.* 31.1 
    
    Section 302 Certification of CEO, William J. Doré* 31.2 
    
    Section 302 Certification of CFO, Peter S. Atkinson* 32.1 
    
    Section 906 Certification of CEO, William J. Doré* 32.2 
    
    Section 906 Certification of CFO, Peter S. Atkinson
 
 *
    
    Included with this filing