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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, 2008
 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
    
    72-1212563(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)8000 Global DriveCarlyss, Louisiana
    
    70665(Address of principal executive offices)
    
    (Zip Code)
 (337) 583-5000
 None
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o
  o þ




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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
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II   OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 1B. Unresolved Staff Comments
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Purchases of Equity Securities
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    29Signature
    
    
    30Letter Regarding Unaudited Interim Financial InformationCertification of B.K. Chin, CEO, Pursuant to Section 302Certification of Jeffrey B. Levos, CFO, Pursuant to Section 302Certification of B.K. Chin, CEO, Pursuant to Section 906Certification of Jeffrey B. Levos, CFO, Pursuant to Section 906
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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 Report of Independent Registered Public Accounting Firm
     Share-Based Payment,
  
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands)
 June 30
    
    
    December 312008
    
    
    2007(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    488,363
    
    
    $
    723,450Restricted cash
    
    
    1,133
    
    
    
    1,121Marketable securities
    
    
    5,200
    
    
    
    99,935Accounts receivable  net of allowance of
$6,267 for 2008 and $1,278 for 2007
    
    
    258,666
    
    
    
    167,469Unbilled work on uncompleted contracts
    
    
    130,874
    
    
    
    106,716Contract costs incurred not yet recognized
    
    
    3,667
    
    
    
    10,821Deferred income taxes
    
    
    18,702
    
    
    
    3,827Assets held for sale
    
    
    775
    
    
    
    1,002Prepaid expenses and other
    
    
    41,062
    
    
    
    27,875Total current assets
    
    
    948,442
    
    
    
    1,142,216Property and Equipment, net
    
    
    513,904
    
    
    
    349,549Other AssetsMarketable securities
    
    
    41,968
    
    
    
    Accounts receivable  long-term
    
    
    19,475
    
    
    
    9,315Deferred charges, net
    
    
    78,401
    
    
    
    43,045Goodwill
    
    
    37,388
    
    
    
    37,388Other
    
    
    8,836
    
    
    
    8,285Total other assets
    
    
    186,068
    
    
    
    98,033Total
    
    $
    1,648,414
    
    
    $
    1,589,798LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    3,960
    
    
    $
    3,960Accounts payable
    
    
    225,059
    
    
    
    169,034Employee-related liabilities
    
    
    28,092
    
    
    
    28,366Income taxes payable
    
    
    32,730
    
    
    
    39,683Accrued interest payable
    
    
    5,670
    
    
    
    5,827Advance billings on uncompleted contracts
    
    
    15,096
    
    
    
    36,691Other accrued liabilities
    
    
    16,657
    
    
    
    15,638Total current liabilities
    
    
    327,264
    
    
    
    299,199Long-Term Debt
    
    
    388,360
    
    
    
    390,340Deferred Income Taxes
    
    
    35,989
    
    
    
    35,617Other Liabilities
    
    
    12,762
    
    
    
    11,050Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock, $0.01 par value, authorized 150,000 shares and issued
119,258 and 118,001 shares, respectively
    
    
    1,193
    
    
    
    1,180Additional paid-in capital
    
    
    437,630
    
    
    
    418,366Retained earnings
    
    
    528,556
    
    
    
    515,206Treasury stock at cost, 3,021 in 2008 and 2,904 in 2007
    
    
    (79,451
    )
    
    
    (77,257
    )Accumulated other comprehensive loss
    
    
    (3,889
    )
    
    
    (3,903
    )Total shareholders equity
    
    
    884,039
    
    
    
    853,592Total
    
    $
    1,648,414
    
    
    $
    1,589,798
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    300,543
    
    
    $
    248,940
    
    
    $
    602,008
    
    
    $
    525,949Cost of operations
    
    
    292,707
    
    
    
    174,807
    
    
    
    539,842
    
    
    
    358,342Gross profit
    
    
    7,836
    
    
    
    74,133
    
    
    
    62,166
    
    
    
    167,607Loss (gain) on asset disposals
    
    
    151
    
    
    
    12
    
    
    
    (2,012
    )
    
    
    (1,308
    )Selling, general and administrative expenses
    
    
    24,961
    
    
    
    19,884
    
    
    
    48,000
    
    
    
    38,028Operating income (loss)
    
    
    (17,276
    )
    
    
    54,237
    
    
    
    16,178
    
    
    
    130,887Interest income
    
    
    3,470
    
    
    
    5,766
    
    
    
    10,233
    
    
    
    10,810Interest expense
    
    
    (1,708
    )
    
    
    (2,032
    )
    
    
    (5,826
    )
    
    
    (4,773
    )Other income (expense), net
    
    
    (2,489
    )
    
    
    765
    
    
    
    (1,632
    )
    
    
    606Income (loss) before taxes
    
    
    (18,003
    )
    
    
    58,736
    
    
    
    18,953
    
    
    
    137,530Income taxes (benefits)
    
    
    (4,523
    )
    
    
    17,607
    
    
    
    5,603
    
    
    
    41,945Net income (loss)
    
    $
    (13,480
    )
    
    $
    41,129
    
    
    $
    13,350
    
    
    $
    95,585Earnings (Loss) Per Common ShareBasic
    
    $
    (0.12
    )
    
    $
    0.35
    
    
    $
    0.12
    
    
    $
    0.82Diluted
    
    $
    (0.12
    )
    
    $
    0.35
    
    
    $
    0.12
    
    
    $
    0.81Weighted Average Common Shares OutstandingBasic
    
    
    114,260
    
    
    
    117,305
    
    
    
    113,954
    
    
    
    116,946Diluted
    
    
    114,260
    
    
    
    119,168
    
    
    
    115,716
    
    
    
    118,675
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GLOBAL INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)
(Unaudited)
 Six Months EndedJune 302008
    
    
    2007Cash Flows From Operating ActivitiesNet income
    
    $
    13,350
    
    
    $
    95,585Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and non-stock-based amortization
    
    
    22,203
    
    
    
    23,592Stock-based compensation expense
    
    
    6,648
    
    
    
    9,167Provision for doubtful accounts
    
    
    5,494
    
    
    
    415Gain on sale or disposal of property and equipment
    
    
    (2,012
    )
    
    
    (1,308
    )Derivative (gain) loss
    
    
    422
    
    
    
    (325
    )Deferred income taxes
    
    
    (14,813
    )
    
    
    (2,224
    )Excess tax benefits from stock-based compensation
    
    
    (4,019
    )
    
    
    (2,541
    )Changes in operating assets and liabilitiesReceivables, unbilled work, and contract costs
    
    
    (127,317
    )
    
    
    70,452Prepaid expenses and other
    
    
    (12,504
    )
    
    
    752Accounts payable, employee-related liabilities and other accrued liabilities
    
    
    30,240
    
    
    
    2,480Deferred dry dock costs incurred
    
    
    (42,070
    )
    
    
    (9,362
    )Net cash provided by (used in) operating activities
    
    
    (124,378
    )
    
    
    186,683Cash Flows From Investing ActivitiesProceeds from sale of assets
    
    
    6,250
    
    
    
    3,651Additions to property and equipment
    
    
    (177,422
    )
    
    
    (15,541
    )Sale of marketable securities
    
    
    101,404
    
    
    
    93,820Purchase of marketable securities
    
    
    (49,296
    )
    
    
    (169,657
    )Additions to restricted cash
    
    
    (11
    )
    
    
    (26
    )Net cash (used in) investing activities
    
    
    (119,075
    )
    
    
    (87,753
    )Cash Flows From Financing ActivitiesRepayment of long-term debt
    
    
    (1,980
    )
    
    
    (1,980
    )Proceeds from sale of common stock, net
    
    
    8,609
    
    
    
    13,696Repurchase of common stock
    
    
    (2,194
    )
    
    
    (168
    )Additions to deferred charges
    
    
    (88
    )
    
    
    (4
    )Excess tax benefits from stock-based compensation
    
    
    4,019
    
    
    
    2,541Net cash provided by financing activities
    
    
    8,366
    
    
    
    14,085Cash and cash equivalentsIncrease (decrease)
    
    
    (235,087
    )
    
    
    113,015Beginning of period
    
    
    723,450
    
    
    
    352,178End of period
    
    $
    488,363
    
    
    $
    465,193Supplemental DisclosuresInterest Paid
    
    $
    6,229
    
    
    $
    2,971Income Taxes Paid
    
    $
    28,117
    
    
    $
    49,028
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Notes to Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    GeneralBasis of PresentationThe accompanying unaudited Condensed Consolidated Financial Statements include the accounts
of Global Industries, Ltd. and its subsidiaries (Company, we, us, or our).In the opinion of management of the Company, all adjustments (such adjustments consisting
only of a normal and recurring nature) necessary for a fair presentation of the operating
results for the interim periods presented have been included in the unaudited Condensed
Consolidated Financial Statements. Operating results for the period ended June 30, 2008,
are not necessarily indicative of the results that may be expected for the year ending
December 31, 2008. These financial statements should be read in conjunction with our audited
Consolidated Financial Statements and related notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2007.ReclassificationsDuring the second quarter of 2008, we began separately disclosing interest income on the accompanying condensed
consolidated statement of operations. This reclassification had no impact on non-operating
income for these periods.Recent Accounting PronouncementsSFAS 157.In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements(SFAS
157), which defines fair value, establishes a framework for measuring fair value and
enhances disclosures about instruments carried at fair value, but does not change existing
guidance as to whether or not an instrument is carried at fair value. In February 2008, the
FASB issued FASB Staff Positions (FSP) SFAS 157-2, Effective Date for FASB Statement 157.
This FSP permits the delayed application of SFAS 157 for all non-recurring fair value
measurements of non-financial assets and non-financial liabilities until fiscal years
beginning after November 15, 2008. The Company adopted SFAS 157, as amended, on a
prospective basis beginning January 1, 2008, for its financial assets and liabilities and
will adopt this statement for its non-financial assets and liabilities, which consists of
goodwill and assets held for sale, on January 1, 2009. See further discussion about the
implementation of SFAS 157 in Note 5.SFAS 161.In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities(SFAS 161). SFAS 161 requires specific disclosures
regarding the location and amounts of derivative instruments in the Companys financial
statements, how derivative instruments and related hedged items are accounted for, and how
derivative instruments and related hedged items affect the Companys financial position,
financial performance, and cash flows. SFAS 161 is effective for financial statements
issued, and for fiscal years and interim periods, beginning after November 15, 2008. We will
adopt the new disclosure requirements of SFAS 161 in the first quarter 2009.FSP FAS 142-3. In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful
Life of Intangible Assets(FSP FAS 142-3). FSP FAS 142-3 requires companies estimating the
useful life of a recognized intangible asset to consider their historical experience in
renewing or extending similar arrangements or, in the absence of historical experience, to
consider assumptions that market participants would use about renewal or extension as
adjusted for the entity-specific factors in SFAS No. 142, Goodwill and Other Intangible
Assets. FSP FAS 142-3 will be effective for the Company beginning January 1, 2009.
Management is currently assessing the effect of this pronouncement on the Companys
consolidated financial statements.FSP APB 14-1. In May 2008, the FASB issued FSP APB No. 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),
(FSP APB 14-1). The FSP will require cash settled convertible debt to be separated into
debt and equity components at issuance and a value to be assigned to each. The value
assigned to the debt component will be the estimated fair value of similar bonds without the
conversion feature. The difference between the bond cash proceeds and this estimated fair
value will be recorded as a debt discount and amortized to interest expense over the life of
the bond. Although FSP APB 14-1 will have no impact on the Companys actual past or future
cash flows, it will require the Company to record a material increase
in non-cash interest expense as the debt
discount is amortized. FSP APB 14-1 will become effective for the Company beginning
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January 1, 2009 and applied retrospectively to all periods presented. The Company is
continuing to evaluate the impact of adopting FSP APB 14-1 on the consolidated financial
statements.FSP EITF 03-6-1.In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (FSP
EITF 03-6-1). This FSP addresses whether instruments granted in share-based payment
transactions are participating securities prior to vesting and, therefore, need to be
included in computing earnings per share under the two-class method described in SFAS No.
128, Earnings Per Share. This FSP shall be applied retrospectively for financial statements
issued for fiscal years beginning after December 15, 2008. The Company is currently
evaluating the impact, if any, of adopting FSP EITF 03-6-1. End of Note 1.2.
    
    Restricted CashRestricted cash represents cash deposits for the purpose of providing a banking institution
cash collateral for ongoing short-term foreign exchange contracts. There is no contractual
obligation or agreement to have the cash restricted for a period longer than one to five
days; therefore, restricted cash is classified as a current asset on the accompanying
condensed consolidated balance sheets.3.
    
    Marketable SecuritiesAs of June 30, 2008, the Company held $48.1 million at par value in auction rate securities
which are variable rate bonds tied to short-term interest rates with maturities up to 31
years. Auction rate securities have interest rate resets through a Dutch auction at
predetermined short intervals. Interest rates generally reset every 7-35 days. The coupon
interest rate for these securities ranged from 2.9% to 4.3%, on a tax exempt basis, for the
quarter ended June 30, 2008.The Companys investments in auction rate securities were issued by municipalities and state
education agencies. The auction rates securities issued by state education agencies
represent pools of student loans for which repayment is substantially guaranteed by the U.S.
government under the Federal Family Education Loan Program (FFELP). All of the Companys
investments in auctions rate securities have at least a double A rating. As of June 30,
2008, the par value of auction rate securities issued by state education agencies was $30.0
million and the par value of auction rate securities issued by municipalities was $18.1
million.In July 2008, $5.2 million auction rate securities issued by municipalities were redeemed at
par value. These securities are classified as current assets on the accompanying condensed
consolidated balance sheet as of June 30, 2008.Recent auctions for the Companys auction rate securities have failed. An auction failure,
which is not a default in the underlying debt instrument, occurs when there are more sellers
than buyers at a scheduled interest rate auction date. This results in a lack of liquidity
for these securities, even though debt service continued to occur. When auctions fail, the
interest rate is adjusted according to the provisions of the related security agreement,
which generally results in an interest rate higher than the interest rate the issuer pays in
connection with successful auctions. During the six months ended June 30, 2008, the Company
continued to earn and receive scheduled interest on these securities.Based on a lack of current market liquidity and the Companys ability and intent to continue
holding its auction rate securities until they can be sold or redeemed at par value or
mature, the Company classifies these securities as non-current.The Companys investments in auction rate securities are classified as available for sale
and are carried at fair value with any unrealized gains and losses recorded in other
comprehensive income. The Company concluded the fair value of the auction rate securities
classified as non-current at June 30, 2008 was $42.0 million, a decline of $0.9 million from
par value. The decline in fair value has been assessed by the Company as temporary and has
been recorded as an unrealized loss in accumulated other comprehensive income, net of tax of
$0.2 million. The Company will continue to monitor the market for auction rate securities
and consider its impact, if any, on fair value of the remaining investment through
disposition.
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4.
    
    DerivativesThe Company uses forward contracts to manage its exposure in foreign currency rates. The
Companys outstanding forward foreign currency contracts are used to hedge cash flows for
forecasted purchase commitments denominated in Euros and Norwegian Kroners. Changes in fair
value of the Euro forward contracts are recorded in earnings because the hedging
relationship was deemed to be ineffective. The Norwegian Kroner forward contracts are
accounted for as cash flow hedges with unrealized gains and losses recorded in other
comprehensive income. As of June 30, 2008 and December 31, 2007, there was $5.7 million and
$5.1 million of unrealized gains, net of tax, in accumulated other comprehensive income. As
of June 30, 2008, approximately $3.2 million of the unrealized gains are expected to be
realized in earnings during the next twelve months.5.
    
    Fair Value of Financial InstrumentsUnder SFAS 157, fair value is defined as the price that would be received to sell an asset
or paid to transfer a liability (i.e. exit price) in an orderly transaction between market
participants at the measurement date. SFAS 157 establishes a hierarchy for inputs used in
measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available.
The hierarchy for inputs is categorized into three levels based on the reliability of inputs
as follows:
     Fair Value Measurements at June 30, 2008  (In thousands)
 Description
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Cash equivalents
    
    $
    424,492
    
    
    $
    424,492
    
    
    $
    
    
    
    $
    Marketable securities
    
    
    47,168
    
    
    
    
    
    
    
    5,200
    
    
    
    41,968Derivative contracts
    
    
    9,036
    
    
    
    
    
    
    
    9,036
    
    
    
    Total
    
    $
    480,696
    
    
    $
    424,492
    
    
    $
    14,236
    
    
    $
    41,968
  Changes in Level 3 financial instruments
 Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30
    
    
    June 30(In thousands)Beginning Balance
    
    $
    34,805
    
    
    $
    48,800Purchases, issuances, and settlements
    
    
    
    
    
    
    (13,050
    )Unrealized gain (loss)
    
    
    38
    
    
    
    (907
    )Transfers in and/or out of Level 3
    
    
    7,125
    
    
    
    7,125Balance at June 30, 2008
    
    $
    41,968
    
    
    $
    41,968
 6.
    
    ReceivablesReceivables 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. The
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balance of accounts receivable  long-term at June 30, 2008 and December 31, 2007 represents
amounts related to retainage which were not expected to be collected within the next twelve
months. The balance of unbilled work on uncompleted contracts includes (a) amounts
receivable from customers for work that has not yet been billed pursuant to contractually
specified milestone billing requirements and (b) revenue accruals.
 The claims and unapproved change orders included in our receivables amounted to $37.9
million at June 30, 2008 and $46.0 million at December 31, 2007.
 Costs and Estimated Earnings on Uncompleted Contracts
 June 30
    
    
    December 312008
    
    
    2007(In thousands)Costs incurred on uncompleted contracts
    
    $
    712,785
    
    
    $
    838,856Estimated earnings
    
    
    127,149
    
    
    
    322,089Costs and estimated earnings on uncompleted contracts
    
    
    839,934
    
    
    
    1,160,945Less: Billings to date
    
    
    (733,675
    )
    
    
    (1,091,255
    )106,259
    
    
    
    69,690Plus: Accrued revenue
    
    
    21,390
    
    
    
    8,371Less: Advance billings on uncompleted contracts
    
    
    (11,871
    )
    
    
    (8,036
    )$
    115,778
    
    
    $
    70,025Included in accompanying balance sheets under the
following captions:Unbilled work on uncompleted contracts
    
    $
    130,874
    
    
    $
    106,716Advance billings on uncompleted contracts
    
    
    (15,096
    )
    
    
    (36,691
    )$
    115,778
    
    
    $
    70,025
 7.
    
    Property and EquipmentThe components of property and equipment, at cost, and the related accumulated depreciation
are as follows:
 June 30
    
    
    December 312008
    
    
    2007(In thousands)Land
    
    $
    6,322
    
    
    $
    6,322Facilities and equipment
    
    
    159,169
    
    
    
    155,676Marine vessels
    
    
    529,816
    
    
    
    428,021Construction in progress
    
    
    141,998
    
    
    
    68,757Total property and equipment
    
    
    837,305
    
    
    
    658,776Less: Accumulated depreciation
    
    
    (323,401
    )
    
    
    (309,227
    )Property and equipment, net
    
    $
    513,904
    
    
    $
    349,549
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8.
    
    Deferred Dry Docking Costs
 The Company utilizes the deferral method to capitalize vessel dry docking costs and to
amortize the costs to the next dry docking. Such capitalized costs include regulatory
required steel replacement, direct costs for vessel mobilization and demobilization, rental
of dry docking facilities and services, third party inspection fees, and inspection of
machinery, safety and navigation equipment. Crew costs may also be capitalized when
employees perform all or a part of the required dry docking. Any
repair and maintenance costs incurred during the dry docking period
are expensed as incurred.
 9.
    
    Long-Term Debt
 The components of long-term debt are as follows:
 June 30
    
    
    December 312008
    
    
    2007(In thousands)Senior Convertible Debentures due 2027, 2.75%
    
    $
    325,000
    
    
    $
    325,000Title XI Bonds due 2025, 7.71%
    
    
    67,320
    
    
    
    69,300Revolving Credit Facility
    
    
    
    
    
    
    Total long-term debt
    
    
    392,320
    
    
    
    394,300Less: Current maturities
    
    
    (3,960
    )
    
    
    (3,960
    )Long-term debt less current maturities
    
    $
    388,360
    
    
    $
    390,340
  10.
    
    Commitments and ContingenciesCommitmentsConstruction and Purchases in ProgressThe estimated cost to complete capital expenditure
projects in progress at June 30, 2008 was approximately $460.2 million, which primarily
represents expenditures for construction of new generation derrick/pipelay vessels, the
Global 1200 and Global 1201. This amount includes an aggregate commitment of 158.8 million
Singapore Dollars (or $116.6 million US Dollars as of June 30, 2008) and 25.7 million
Euros (or $40.6 million US Dollars as of June 30, 2008).Off Balance Sheet Arrangements In the normal course of our business activities, and
pursuant to agreements to perform construction services, we provide guarantees, bonds, and
letters of credit to customers, vendors, and other parties. At June 30, 2008, the aggregate
amount of these outstanding guarantees and bonds was $91.2 million, which are scheduled to
expire between July 2008 and July 2009, and the aggregate amount of outstanding letters of
credit was $123.8 million, which are due to expire between July 2008 and October 2009.ContingenciesDuring the fourth quarter of 2007, we received a payroll tax assessment for the years 2005
through 2007 from the Nigerian tax authorities in the amount of $23.2 million. The
assessment alleges that certain expatriate employees, working on projects in Nigeria, were
subject to personal income taxes, which were not paid to the government. We filed a formal
objection to the assessment on November 12, 2007. We do not believe these employees are
subject to the personal income tax assessed; however, we believe this matter will ultimately
have to be resolved by litigation. We do not expect the ultimate resolution to have a
material adverse effect on the Company.On February 21, 2007, we received a $29.7 million tax assessment from Algeria for income
tax, business tax and value added tax for the years 2005 and 2004. We are indemnified by
our client for the value added tax portion, which is approximately $10.4 million, of the
assessment. We accrued income taxes for the Algerian tax liability in conjunction with the
project in 2005 and 2004. We have engaged an outside tax counsel to assist us in resolving
the tax assessment. During the fourth quarter of 2007, we reached a final resolution with
the Algerian tax authority for the income and the business tax portions of the assessment
for approximately $2.5 million, including penalties. This amount was paid during the first
quarter of 2008.
 11




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In June 2007, the Company announced that it was conducting an internal investigation of its
West Africa operations, focusing on the legality, under the U.S. Foreign Corrupt Practices
Act (FCPA) and local laws, of one of its subsidiarys reimbursement of certain expenses
incurred by a customs agent in connection with shipments of materials and the temporary
importation of vessels into West African waters. The Audit Committee has engaged Andrews and
Kurth LLP to lead the investigation. Andrews and Kurth LLP is an international firm with
significant experience in investigating and advising on FCPA matters. The investigation is
ongoing.At this stage of the internal investigation, the Company is unable to predict what
conclusions, if any, the Securities and Exchange Commission (SEC) will reach, whether the
Department of Justice will open a separate investigation to investigate this matter, or what
potential remedies these agencies may seek. If the SEC or Department of Justice determines
that violations of the FCPA have occurred, they could seek civil and criminal sanctions,
including monetary penalties, against us and/or certain of our employees, as well as changes
to our business practices and compliance programs, any of which could have a material
adverse effect on our business and financial condition. In addition, such actions, whether
actual or alleged, could damage our reputation and ability to do business. Further
detecting, investigating, and resolving these matters is expensive and consumes significant
time and attention of our senior management.We continue to use alternative procedures adopted after the commencement of the
investigation to obtain Nigerian temporary import permits. These procedures are designed to
ensure FCPA compliance. Although we are still working and pursuing additional work in West
Africa, we have declined or terminated available projects and delayed the start of certain
projects in Nigeria in order to ensure FCPA compliance and appropriate security for our
personnel and assets. The possibility exists that we may have to curtail or cease our
operations in Nigeria if appropriate long-term solutions cannot be identified and
implemented. We have worldwide customer relationships and a mobile fleet, and we are
prepared to redeploy vessels to other areas as necessary to ensure the vessels are utilized
to the fullest extent possible.Notwithstanding that the internal investigation is ongoing, we have concluded that certain
changes to our compliance program would provide us with greater assurance that we are in
compliance with the FCPA and its record-keeping requirements. We have a long-time published
policy requiring compliance with the FCPA and broadly prohibiting any improper payments by
us to foreign or domestic officials as well as training programs for our employees. Since
the commencement of the internal investigation, we have adopted, and may adopt additional,
measures intended to enhance our compliance procedures and ability to audit and confirm our
compliance. Additional measures also may be required once the investigation concludes.The Company has concluded that it is premature for it to determine whether it needs to make
any financial reserve for any potential liabilities that may result from these activities
given the status of the internal investigation.We are a party to legal proceedings and potential claims arising in the ordinary course of
business. We do not believe that these matters arising in the ordinary course of business
will have a material impact on our financial statements in future periods.11.
    
    Comprehensive Income (Loss)Other Comprehensive Income (Loss) The differences between net income (loss) and
comprehensive income (loss) for each of the comparable periods is presented in the table
below.
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Net Income (Loss)
    
    $
    (13,480
    )
    
    $
    41,129
    
    
    $
    13,350
    
    
    $
    95,585Unrealized gain (loss) on derivatives
    
    
    (726
    )
    
    
    2,220
    
    
    
    1,036
    
    
    
    3,477Unrealized gain (loss) on auction rate securities
    
    
    38
    
    
    
    
    
    
    
    (907
    )
    
    
    Deferred tax benefit (expense)
    
    
    243
    
    
    
    (778
    )
    
    
    (115
    )
    
    
    (1,218
    )Comprehensive Income (Loss)
    
    $
    (13,925
    )
    
    $
    42,571
    
    
    $
    13,364
    
    
    $
    97,844
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Accumulated Other Comprehensive Income (Loss)A roll-forward of the amounts included in
accumulated other comprehensive income (loss), net of taxes, is shown below.
 Forward
    
    
    
    
    
    
    AccumulatedAccumulated
    
    
    Foreign
    
    
    
    
    
    
    OtherTranslation
    
    
    Currency
    
    
    Auction Rate
    
    
    ComprehensiveAdjustment
    
    
    Contracts
    
    
    Securities
    
    
    Income/(Loss)(In thousands)Balance at December 31, 2007
    
    $
    (8,978
    )
    
    $
    5,075
    
    
    $
    
    
    
    $
    (3,903
    )Change in value
    
    
    
    
    
    
    673
    
    
    
    (659
    )
    
    
    14Balance at June 30, 2008
    
    $
    (8,978
    )
    
    $
    5,748
    
    
    $
    (659
    )
    
    $
    (3,889
    )
 The amount of accumulated translation adjustment included in accumulated other comprehensive
income (loss) relates to prior translations of subsidiaries whose functional currency was
not the U.S. dollar. The amount of gain on forward foreign currency contracts included in
accumulated other comprehensive income (loss) hedges the Companys exposure to changes in
Norwegian Kroners for commitments of long-term vessel charters.12.
    
    Stock-Based CompensationPursuant to Statement of Financial Accounting Standards No. 123(R), Share-Based Payment,
(SFAS 123(R)) 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.The table below sets forth the total amount of stock-based compensation expense for the
three and six months ended June 30, 2008 and 2007.
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Stock-based compensation expense
Stock options
    
    $
    782
    
    
    $
    1,102
    
    
    $
    1,558
    
    
    $
    2,417Restricted stock
    
    
    2,232
    
    
    
    2,482
    
    
    
    4,020
    
    
    
    5,160Performance shares and units
    
    
    690
    
    
    
    471
    
    
    
    1,070
    
    
    
    1,590Total stock-based compensation expense
    
    $
    3,704
    
    
    $
    4,055
    
    
    $
    6,648
    
    
    $
    9,167
 13.
    
    Other Income (Expense), netComponents of other income (expense), net are as follows:
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Foreign exchange rate gain (loss)
    
    $
    (2,231
    )
    
    $
    (578
    )
    
    $
    (2,236
    )
    
    $
    (874
    )Derivative contract gain (loss)
    
    
    (135
    )
    
    
    322
    
    
    
    588
    
    
    
    558Reversal of allowance for doubtful accounts
    
    
    
    
    
    
    660
    
    
    
    
    
    
    
    787Other income (expense), net
    
    
    (123
    )
    
    
    361
    
    
    
    16
    
    
    
    135Total
    
    $
    (2,489
    )
    
    $
    765
    
    
    $
    (1,632
    )
    
    $
    606
 14.
    
    Income TaxesThe Companys effective tax rate for the three and six months ended June 30, 2008 was 25.1%
and 29.6%, respectively, compared to 30.0% and 30.5% for the three and six months ended June
30, 2007. The difference in the effective tax rate between the three months ended June 30,
2008 and 2007 reflects a change in the mix of taxable earnings by jurisdiction.
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In the second quarter of 2008, a tax liability totaling $1.5 million in taxes and $0.3
million in penalties for late filing related to uncertain tax positions taken in prior years
was settled. The liability related to filing requirements in West Africa. Taxes and
penalties associated with years 1997 through 2006 were paid with a corresponding reduction
in the reserve for uncertain tax positions for the amount of $1.5 million.15.
    
    Earnings Per ShareBasic earnings per share (EPS) is computed by dividing net income during the period by the
weighted average number of common shares outstanding during each period. Diluted EPS is
computed by dividing net income (loss) during the period by the weighted average number of
shares that would have been outstanding assuming the issuance of dilutive potential common
shares as if outstanding during the reporting period, net of shares assumed to be
repurchased using the treasury stock method.The following table presents the reconciliation between basic shares and diluted shares.
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share data)Net income (loss)
    
    $
    (13,480
    )
    
    $
    41,129
    
    
    $
    13,350
    
    
    $
    95,585Common shares dilutionWeighted-average shares outstanding  basic
    
    
    114,260
    
    
    
    117,305
    
    
    
    113,954
    
    
    
    116,946Effect of dilutive securities
Stock options
    
    
    
    
    
    
    1,437
    
    
    
    894
    
    
    
    1,303Performance shares and units
    
    
    
    
    
    
    426
    
    
    
    156
    
    
    
    426Restricted stock
    
    
    
    
    
    
    
    
    
    
    712
    
    
    
    Weighted-average shares outstanding  diluted
    
    
    114,260
    
    
    

    119,168
    
    
    
    115,716
    
    
    
    118,675Earnings (loss) per shareBasic
    
    $
    (0.12
    )
    
    $
    0.35
    
    
    $
    0.12
    
    
    $
    0.82Diluted
    
    $
    (0.12
    )
    
    $
    0.35
    
    
    $
    0.12
    
    
    $
    0.81
 Approximately 3.3 million potential shares of common stock were excluded from the diluted
EPS for the three months ended June 30, 2008 because they were anti-dilutive. Approximately
0.5 million and 0.1 million potential shares of common stock were excluded from the diluted
EPS for the six months ended June 30, 2008 and 2007, respectively, because they were
anti-dilutive. There were no anti-dilutive shares excluded from the diluted earnings per
share computation for the quarter ended June 30, 2007.16.
    
    Segment InformationDuring 2007, we reorganized the underlying operations and economics of our operating
segments. As a result, the reportable segments were realigned to better reflect our
internal management reporting structure and to facilitate our growth strategy and renewed
focus on diving and underwater services. Also, effective with the reorganization, we
renamed our diving services to subsea services to more accurately depict our expanding
business beyond diving services to include diverless intervention, SURF (subsea equipment,
umbilical, riser and flow-line), and IRM (inspection, repairs and maintenance) services. The
six reportable segments prior to 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. In the second quarter of
2008, we renamed our Gulf of Mexico segments to North America segments to better reflect our
strategic direction to expand our marketing efforts into Canada, Newfoundland, and other
regions in North America. The six revised reportable segments subsequent to the
reorganization and renaming of the Gulf of Mexico segments include: North America OCD,
North America 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 three and six months ended June 30, 2007 and consists
of the following:
 
    
    a geographical shift of India operations from the Middle East to Asia Pacific;
    
    transfer of a portion of subsea services from the Middle East to West Africa; and
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##### Table of Contents




    
    corporate interest income and expense no longer being allocated to the reportable
segments.
 The above organizational changes did not have an impact on consolidated net income or cash
flows. The following table presents information about the profit (loss) for each of our
revised reportable segments and includes an allocation of all corporate expense to the
reportable segments, with the exception of interest expense.
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Total segment revenuesNorth America OCD
    
    $
    22,632
    
    
    $
    31,176
    
    
    $
    29,572
    
    
    $
    48,038North America Subsea
    
    
    35,681
    
    
    
    42,699
    
    
    
    59,700
    
    
    
    72,104Latin America
    
    
    55,578
    
    
    
    33,017
    
    
    
    125,750
    
    
    
    134,865West Africa
    
    
    77,123
    
    
    
    57,976
    
    
    
    117,740
    
    
    
    109,250Middle East
    
    
    66,938
    
    
    
    34,014
    
    
    
    152,447
    
    
    
    43,425Asia Pacific/India
    
    
    49,886
    
    
    
    67,741
    
    
    
    131,894
    
    
    
    147,957Subtotal
    
    
    307,838
    
    
    
    266,623
    
    
    
    617,103
    
    
    
    555,639Intersegment eliminationsNorth America OCD
    
    
    
    
    
    
    (5,587
    )
    
    
    
    
    
    
    (7,726
    )North America Subsea
    
    
    (6,990
    )
    
    
    (3,512
    )
    
    
    (13,028
    )
    
    
    (5,286
    )Middle East
    
    
    (305
    )
    
    
    (8,471
    )
    
    
    (2,067
    )
    
    
    (16,565
    )Asia Pacific/India
    
    
    
    
    
    
    (113
    )
    
    
    
    
    
    
    (113
    )Subtotal
    
    
    (7,295
    )
    
    
    (17,683
    )
    
    
    (15,095
    )
    
    
    (29,690
    )Consolidated revenues
    
    $
    300,543
    
    
    $
    248,940
    
    
    $
    602,008
    
    
    $
    525,949Income (loss) before taxesNorth America OCD
    
    $
    650
    
    
    $
    6,435
    
    
    $
    (7,280
    )
    
    $
    5,226North America Subsea
    
    
    6,045
    
    
    
    15,812
    
    
    
    4,471
    
    
    
    26,421Latin America
    
    
    (14,588
    )
    
    
    11,511
    
    
    
    3,236
    
    
    
    64,819West Africa
    
    
    (7,291
    )
    
    
    (8,290
    )
    
    
    (13,494
    )
    
    
    (7,781
    )Middle East
    
    
    (11,531
    )
    
    
    11,019
    
    
    
    6,438
    
    
    
    12,538Asia Pacific/India
    
    
    9,167
    
    
    
    19,744
    
    
    
    21,806
    
    
    
    31,337Corporate
    
    
    (455
    )
    
    
    2,505
    
    
    
    3,776
    
    
    
    4,970Consolidated income (loss) before taxes
    
    $
    (18,003
    )
    
    $
    58,736
    
    
    $
    18,953
    
    
    $
    137,530
 17.
    
    Subsequent EventOn August 4, 2008, the Companys Board of Directors
approved a program which authorizes $100.0 million for the
repurchase of outstanding shares of the Companys common stock
over the next twelve month period ending August 4, 2009.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking StatementsFrom time to time, our management or persons acting on our behalf make forward-looking statements
to inform existing and potential security holders about the Company. These statements may include
projections and estimates concerning the timing and success of specific projects and our future
backlog, revenues, income, and capital spending. Forward-looking statements are generally
accompanied by words such as estimate, project, believe, expect, anticipate, plan,
goal, or other words that convey the uncertainty of future events or outcomes.In addition, various statements in this Quarterly Report on Form 10-Q for the three and six months
ended June 30, 2008 (Quarterly Report), including those that express a belief, expectation, or
intention, as well as those that are not statements of historical fact, are forward-looking
statements. We are including the following discussion to inform our existing and potential
security holders generally of some of the risks and uncertainties that can affect our Company and
to take advantage of the safe harbor protection for forward-looking statements that applicable
federal securities law affords.Our forward-looking statements speak only as of the date of this report. We disclaim any
obligation to update these statements unless required by securities laws, and we caution you not to
rely on them unduly. We have based these forward-looking statements on our current expectations
and assumptions about future events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to significant business, economic,
competitive, regulatory, and other risks, contingencies and uncertainties, most of which are
difficult to predict and many of which are beyond our control. These risks, contingencies, and
uncertainties relate to, among other matters, the following:
 
    
    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;
    
    changes in vessel construction costs and delays in completion of vessels
    
    the level of offshore drilling activity; and
    
    foreign exchange and currency fluctuations.
 We believe the items we have outlined above are important factors that could cause our actual
results to differ materially from the estimates in our financial statements and those expressed in
forward-looking statements made in this report or elsewhere. These factors are not necessarily all
the important factors that could affect us. Unpredictable or unknown factors we have not discussed
in this report could also have material adverse effects on actual results of matters that are the
subject of our forward-looking statements. We do not intend to update our description of important
factors each time a potential important factor arises, except as required by applicable securities
laws and regulations. We advise existing and potential security holders to be aware that important
factors not referred to above could affect the accuracy of our forward-looking statements. For
more detailed information regarding risks, see the discussion of risk factors in Item 1A of our
Annual Report on Form 10-K for 2007.The following discussion presents managements discussion and analysis of our financial condition
and results of operations.Results of OperationsGeneralWe are a leading offshore construction company offering a comprehensive and integrated range of
marine construction and support services in the North America, Latin America, West Africa, the
Middle East (including the Mediterranean), and Asia Pacific/India regions. These services include
pipeline construction, platform installation and removal, project management,
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##### Table of Contents



construction support, diving services, diverless intervention, SURF, IRM, and decommissioning/plug
and abandonment services.Our results of operations, in terms of revenues, gross profit, and gross profit as a percentage of
revenues (margins), are principally driven by three factors:  (1) our level of offshore
construction and subsea activity (activity), (2) pricing, which can be affected by contract mix
(pricing), and (3) operating efficiency on any particular construction project (productivity).Our business consists of two principal activities:
 
    
    Offshore Construction Services, which include pipeline construction and platform
installation and removal services; and
    
    Subsea Services, which include diving, diverless intervention, SURF, IRM, salvage, and
site clearance services.
 Offshore Construction ServicesThe level of our offshore construction activity in any given period has a significant impact on our
results of operations. Our results of operations depend heavily upon our ability to obtain, in a
very competitive environment, a sufficient quantity of offshore construction contracts with
sufficient gross profit margins to recover the fixed costs associated with our offshore
construction business. The offshore construction business is capital and personnel intensive, and
as a practical matter, many of our costs, including the wages of skilled workers, are effectively
fixed in the short run regardless of whether or not our vessels are being utilized in productive
service. In general, as activity increases, a greater proportion of these fixed costs are
recovered through operating revenues; consequently, gross profit and margins increase. Conversely,
as activity decreases, our revenues decline, but our costs do not decline proportionally, thereby
constricting our gross profit and margins. Our activity level can be affected by changes in demand
due to economic or other conditions in the oil and gas exploration industry, seasonal conditions in
certain geographical areas, and our ability to win the bidding for available jobs.Most of our offshore construction revenues are earned through international contracts which are
generally larger, more complex, and of longer duration than our typical domestic contracts. Most
of these international contracts require a significant amount of working capital, are generally bid
on a lump-sum basis, and are secured by a letter of credit or performance bond. Operating cash
flows may be negatively impacted during periods of escalating activity due to the substantial
amounts of cash required to initiate these projects and the normal delays between our cash
expenditures and cash receipts from the customer. Additionally, lump-sum contracts for offshore
construction services are inherently risky and are subject to many unforeseen circumstances and
events that may affect productivity and thus, profitability. When productivity decreases with no
offsetting decrease in costs or increases in revenues, our contract margins erode compared to our
bid margins. In general, we traditionally bear a larger share of project related risks during
periods of weak demand for our services and a smaller share of risks during periods of high demand
for our services. Consequently, our revenues and margins from offshore construction services are
subject to a high degree of variability, even as compared to other businesses in the offshore
energy industry.Subsea ServicesMost of our subsea revenues are the result of short-term work, involve numerous smaller contracts,
and are usually based on a day-rate charge. Financial risks associated with these types of
contracts are normally limited due to their short-term and non-lump sum nature. However, some
subsea contracts, especially those that utilize dive support vessels (DSVs), may involve
longer-term commitments that extend from the exploration, design, and installation phases of a
field throughout its useful life by providing IRM services. The financial risks which are
associated with these commitments remain low in comparison with our offshore construction
activities due to the day-rate structure of the contracts. Revenues and margins from our subsea
activities tend to be more consistent than from our offshore construction activities.
 17




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##### Table of Contents



Quarter Ended June 30, 2008 Compared to Quarter Ended June 30, 2007
 2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    300,543
    
    
    
    100.0
    %
    
    $
    248,940
    
    
    
    100.0
    %
    
    
    20.7
    %Cost of operations
    
    
    292,707
    
    
    
    97.4
    
    
    
    174,807
    
    
    
    70.2
    
    
    
    (67.4
    )Gross profit
    
    
    7,836
    
    
    
    2.6
    
    
    
    74,133
    
    
    
    29.8
    
    
    
    (89.4
    )Loss on asset disposals
    
    
    151
    
    
    
    0.1
    
    
    
    12
    
    
    
    
    
    
    
    n/mSelling, general and administrative expenses
    
    
    24,961
    
    
    
    8.3
    
    
    
    19,884
    
    
    
    8.0
    
    
    
    (25.5
    )Operating income (loss)
    
    
    (17,276
    )
    
    
    (5.8
    )
    
    
    54,237
    
    
    
    21.8
    
    
    
    (131.9
    )Interest income
    
    
    3,470
    
    
    
    1.2
    
    
    
    5,766
    
    
    
    2.3
    
    
    
    (39.8
    )Interest expense
    
    
    (1,708
    )
    
    
    (0.6
    )
    
    
    (2,032
    )
    
    
    (0.8
    )
    
    
    15.9Other income (expense), net
    
    
    (2,489
    )
    
    
    (0.8
    )
    
    
    765
    
    
    
    0.3
    
    
    
    (425.4
    )Income (loss) before taxes
    
    
    (18,003
    )
    
    
    (6.0
    )
    
    
    58,736
    
    
    
    23.6
    
    
    
    (130.7
    )Income taxes (benefits)
    
    
    (4,523
    )
    
    
    (1.5
    )
    
    
    17,607
    
    
    
    7.1
    
    
    
    125.7Net income (loss)
    
    $
    (13,480
    )
    
    
    (4.5
    %)
    
    $
    41,129
    
    
    
    16.5
    %
    
    
    (132.8
    %)
 Overview
 Revenues
  Gross Profit
 Selling, General and Administrative Expenses 
 Interest Income 
 Interest Expense 
 Other income (expense), net 
 Income Taxes 
 Segment Information 
 18




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North America Offshore Construction Division
 Cherokee Pioneer
 North America Subsea
 REM Commander,
 Latin America
  West Africa
  Middle East
  Asia Pacific/India
  19




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Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    602,008
    
    
    
    100.0
    %
    
    $
    525,949
    
    
    
    100.0
    %
    
    
    14.5
    %Cost of operations
    
    
    539,842
    
    
    
    89.7
    
    
    
    358,342
    
    
    
    68.1
    
    
    
    (50.6
    )Gross profit
    
    
    62,166
    
    
    
    10.3
    
    
    
    167,607
    
    
    
    31.9
    
    
    
    (62.9
    )Gain on asset disposals
    
    
    (2,012
    )
    
    
    (0.3
    )
    
    
    (1,308
    )
    
    
    (0.2
    )
    
    
    53.8Selling, general and administrative expenses
    
    
    48,000
    
    
    
    8.0
    
    
    
    38,028
    
    
    
    7.2
    
    
    
    (26.2
    )Operating income (loss)
    
    
    16,178
    
    
    
    2.6
    
    
    
    130,887
    
    
    
    24.9
    
    
    
    (87.6
    )Interest income
    
    
    10,233
    
    
    
    1.7
    
    
    
    10,810
    
    
    
    2.1
    
    
    
    (5.3
    )Interest expense
    
    
    (5,826
    )
    
    
    (1.0
    )
    
    
    (4,773
    )
    
    
    (0.9
    )
    
    
    (22.1
    )Other income (expense), net
    
    
    (1,632
    )
    
    
    (0.3
    )
    
    
    606
    
    
    
    0.1
    
    
    
    (369.3
    )Income before taxes
    
    
    18,953
    
    
    
    3.1
    
    
    
    137,530
    
    
    
    26.2
    
    
    
    (86.2
    )Income taxes
    
    
    5,603
    
    
    
    0.9
    
    
    
    41,945
    
    
    
    8.0
    
    
    
    86.6Net income
    
    $
    13,350
    
    
    
    2.2
    %
    
    $
    95,585
    
    
    
    18.2
    %
    
    
    (86.0
    %)
 Overview
 Revenues.
 Gross Profit.
 Selling, General and Administrative Expenses.
 Interest Expense.
 Other income (expense), net.
 Income Taxes.
 Results of Operations  Segment Information
  North America Offshore Construction Division
  20




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Cherokee
 North America Subsea
 REM Commander
 Latin America
  West Africa
  Middle East
  Asia Pacific/India
  21




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Utilization of Major Construction Vessels
  Industry and Business Outlook
    Liquidity and Capital Resources
 Cash Flows
   Global Orion
 22




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##### Table of Contents



Contractual Obligations
  (In millions)Less than 1 year
    
    $
    183.11 to 3 years
    
    
    206.8Total
    
    $
    389.9
 Liquidity Risk
  Liquidity Outlook
     23




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24




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
   
   25




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Item 4. Controls and Procedures.
   26




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
     
 Item 1A. Risk Factors.
  
 Item 1B. Unresolved Staff Comments.
  27




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Purchases of Equity Securities.
  Total Number
    
    Maximumof Shares
    
    Number ofPurchased as
    
    Shares thatPart of Publicly
    
    May Yet BeTotal Number
    
    Average
    
    Announced
    
    Purchasedof Shares
    
    Price Paid
    
    Plans or
    
    Under the PlansPeriod
    
    Purchased(1)
    
    per Share
    
    Programs
    
    or ProgramsApril 1, 2008 - April 30, 2008
    
    
    6,520
    
    
    $
    16.72
    
    
    
    
    
    
    
    May 1, 2008  May 31, 2008
    
    
    22,336
    
    
    
    18.49
    
    
    
    
    
    
    
    June 1, 2008  June 30, 2008
    
    
    482
    
    
    
    16.46
    
    
    
    
    
    
    
    Total
    
    
    29,338
    
    
    $
    18.06
    
    
    
    
    
    
    
    
 
 (1)
    
    On July 17, 2007, the Board of Directors authorized the
Company to withhold shares of restricted stock to satisfy payments
for withholding taxes.  
 Item 4. Submission of Matters to a Vote of Security Holders.
  Number of Votes CastBrokerName of Director
    
    For
    
    Withhold
    
    Non-VoteB. K. Chin
    
    
    101,753,791
    
    
    
    1,467,045
    
    
    
    0John A. Clerico
    
    
    102,743,389
    
    
    
    477,447
    
    
    
    0Lawrence Dickerson
    
    
    102,736,987
    
    
    
    483,849
    
    
    
    0Edward P. Djerejian
    
    
    101,772,112
    
    
    
    1,448,724
    
    
    
    0Larry E. Farmer
    
    
    102,739,003
    
    
    
    481,833
    
    
    
    0Edgar G. Hotard
    
    
    102,749,514
    
    
    
    471,322
    
    
    
    0Richard A. Pattarozzi
    
    
    91,254,039
    
    
    
    11,966,797
    
    
    
    0James L. Payne
    
    
    102,336,521
    
    
    
    884,315
    
    
    
    0Michael J. Pollock
    
    
    101,766,663
    
    
    
    1,454,173
    
    
    
    0Cindy B. Taylor
    
    
    100,922,831
    
    
    
    2,298,005
    
    
    
    0
  Votes for
    
    
    101,430,567Votes against
    
    
    1,757,948Votes abstain
    
    
    32,321Broker non-vote
    
    
    0Total
    
    
    103,220,836
 28




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Item 6. Exhibits.
 *  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, Jeffrey B. Levos*  32.1 -
    
    Section 906 Certification of CEO, B. K. Chin*  32.2 -
    
    Section 906 Certification of CFO, Jeffrey B. Levos
 
 *
    
    Included with this filing 29




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Signature
  GLOBAL INDUSTRIES, LTD.By:
    
    /s/ Jeffrey B. LevosJeffrey B. LevosSenior Vice President andChief Financial Officer(Principal Financial Officer)
 By:
    
    /s/ Trudy P. McConnaughhayTrudy P. McConnaughhayCorporate Controller(Principal Accounting Officer)
  30