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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 March 31, 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(Do not check if a smaller reporting company)
  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
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    23PART II -
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    24Item 1A.
    
    Risk Factors
    
    
    24Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of
Equity Securities
    
    
    25Item 6.
    
    Exhibits
    
    
    26Signature
    
    
    27Letter Regarding Unaudited Interim Financial InformationCertification of CEO, B.K. Chin, Pursuant to Section 302Certification of CFO, Peter S. Atkinson, Pursuant to Section 302Certification of CEO, B.K. Chin, Pursuant to Section 906Certification of CFO, Peter S. Atkinson, 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)
 March 31
    
    
    December 312008
    
    
    2007(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    674,408
    
    
    $
    723,450Restricted cash
    
    
    1,129
    
    
    
    1,121Marketable securities
    
    
    28,977
    
    
    
    99,935Accounts receivable  net of allowance of
$1,324 for 2008 and $1,278 for 2007
    
    
    206,643
    
    
    
    167,469Unbilled work on uncompleted contracts
    
    
    123,496
    
    
    
    106,716Contract costs incurred not yet recognized
    
    
    15,226
    
    
    
    10,821Deferred income taxes
    
    
    10,897
    
    
    
    3,827Assets held for sale
    
    
    379
    
    
    
    1,002Prepaid expenses and other
    
    
    35,123
    
    
    
    27,875Total current assets
    
    
    1,096,278
    
    
    
    1,142,216Property and Equipment, net
    
    
    356,743
    
    
    
    349,549Other AssetsMarketable securities
    
    
    34,805
    
    
    
    Accounts receivable  long-term
    
    
    13,834
    
    
    
    9,315Deferred charges, net
    
    
    56,481
    
    
    
    43,045Goodwill, net
    
    
    37,388
    
    
    
    37,388Other
    
    
    9,758
    
    
    
    8,285Total other assets
    
    
    152,266
    
    
    
    98,033Total
    
    $
    1,605,287
    
    
    $
    1,589,798LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    3,960
    
    
    $
    3,960Accounts payable
    
    
    173,397
    
    
    
    169,034Employee-related liabilities
    
    
    26,764
    
    
    
    28,366Income taxes payable
    
    
    38,311
    
    
    
    39,683Accrued interest payable
    
    
    2,138
    
    
    
    5,827Advance billings on uncompleted contracts
    
    
    21,486
    
    
    
    36,691Other accrued liabilities
    
    
    14,835
    
    
    
    15,638Total current liabilities
    
    
    280,891
    
    
    
    299,199Long-Term Debt
    
    
    388,360
    
    
    
    390,340Deferred Income Taxes
    
    
    39,128
    
    
    
    35,617Other Liabilities
    
    
    11,976
    
    
    
    11,050Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock, $0.01 par value, authorized 150,000 shares and issued
118,248 and 118,001 shares, respectively
    
    
    1,182
    
    
    
    1,180Additional paid-in capital
    
    
    424,081
    
    
    
    418,366Retained earnings
    
    
    542,035
    
    
    
    515,206Treasury stock at cost, 2,994 in 2008 and 2,904 in 2007
    
    
    (78,922
    )
    
    
    (77,257
    )Accumulated other comprehensive loss
    
    
    (3,444
    )
    
    
    (3,903
    )Total shareholders equity
    
    
    884,932
    
    
    
    853,592Total
    
    $
    1,605,287
    
    
    $
    1,589,798
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)
 Three Months EndedMarch 312008
    
    
    2007Revenues
    
    $
    301,465
    
    
    $
    277,009Cost of operations
    
    
    247,135
    
    
    
    183,535Gross profit
    
    
    54,330
    
    
    
    93,474Net gain on asset disposal
    
    
    (2,163
    )
    
    
    (1,320
    )Selling, general and administrative expenses
    
    
    23,039
    
    
    
    18,144Operating income
    
    
    33,454
    
    
    
    76,650Other (income) expense:Interest expense
    
    
    4,118
    
    
    
    2,741Other income, net
    
    
    (7,620
    )
    
    
    (4,885
    )Income before taxes
    
    
    36,956
    
    
    
    78,794Income taxes
    
    
    10,126
    
    
    
    24,338Net income
    
    $
    26,830
    
    
    $
    54,456Earnings Per Common ShareBasic
    
    $
    0.23
    
    
    $
    0.47Diluted
    
    $
    0.23
    
    
    $
    0.46Weighted Average Common Shares OutstandingBasic
    
    
    115,267
    
    
    
    116,583Diluted
    
    
    116,742
    
    
    
    117,982
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
 Three Months EndedMarch 312008
    
    
    2007Cash Flows From Operating ActivitiesNet Income
    
    $
    26,830
    
    
    $
    54,456Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and non-stock-based amortization
    
    
    11,128
    
    
    
    11,792Stock-based compensation expense
    
    
    2,944
    
    
    
    5,007Provision for doubtful accounts
    
    
    356
    
    
    
    1,997Gain on sale or disposal of property and equipment
    
    
    (2,163
    )
    
    
    (1,320
    )Derivative gain
    
    
    (172
    )
    
    
    Deferred income taxes
    
    
    (4,588
    )
    
    
    414Excess tax benefits from stock-based compensation
    
    
    (2,106
    )
    
    
    (740
    )Changes in operating assets and liabilitiesReceivables, unbilled work, and contract costs
    
    
    (66,858
    )
    
    
    (1,041
    )Prepaid expenses and other
    
    
    (6,116
    )
    
    
    (1,815
    )Accounts payable, employee-related liabilities and other
accrued liabilities
    
    
    (11,853
    )
    
    
    16,297Deferred drydock costs incurred
    
    
    (16,589
    )
    
    
    (6,354
    )Net cash provided by (used in) operating activities
    
    
    (69,187
    )
    
    
    78,693Cash Flows From Investing ActivitiesProceeds from sale of assets
    
    
    4,409
    
    
    
    3,652Additions to property and equipment
    
    
    (18,577
    )
    
    
    (8,737
    )Sale of marketable securities
    
    
    84,504
    
    
    
    Purchase of marketable securities
    
    
    (49,296
    )
    
    
    Additions to restricted cash
    
    
    (7
    )
    
    
    (13
    )Net cash provided by (used in) investing activities
    
    
    21,033
    
    
    
    (5,098
    )Cash Flows From Financing ActivitiesRepayment of long-term debt
    
    
    (1,980
    )
    
    
    (1,980
    )Proceeds from sale of common stock, net
    
    
    666
    
    
    
    1,858Repurchase of common stock
    
    
    (1,665
    )
    
    
    Additions to deferred charges
    
    
    (15
    )
    
    
    Excess tax benefits from stock-based compensation
    
    
    2,106
    
    
    
    740Net cash provided by (used in) financing activities
    
    
    (888
    )
    
    
    618Cash and cash equivalentsIncrease (decrease)
    
    
    (49,042
    )
    
    
    74,213Beginning of period
    
    
    723,450
    
    
    
    352,178End of period
    
    $
    674,408
    
    
    $
    426,391Supplemental DisclosuresInterest Paid
    
    $
    7,305
    
    
    $
    2,895Income Taxes Paid
    
    $
    15,054
    
    
    $
    27,080
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Notes to Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    GeneralBasis of Presentation The 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 March 31, 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.Recent Accounting Pronouncements SFAS 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 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 4.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 after November 15, 2008. Early application is
permitted. Because SFAS 161 impacts the Companys disclosure and not its accounting
treatment for derivative instruments and related hedged items, the Companys adoption of
SFAS 161 will not impact the consolidated financial statements.2.
    
    Marketable SecuritiesThe Company holds investments in auction rate securities which are variable debt bonds tied
to short-term interest rates with maturities up to 32 years. Auction rate securities have
interest rate resets through a Dutch auction at predetermined short intervals. Interest
rates generally reset every 7-49 days under an auction system. The coupon interest rate for
these securities ranged from 4.01% to 8.55%, on a tax exempt basis, for the quarter ended
March 31, 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 a triple A rating, except for one security
which has a double A rating. As of March 31, 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 $34.6 million.In April 2008, $16.5 million auction rate securities issued by municipalities were redeemed
at par value. The Company expects another $12.3 million of these securities will be
redeemed in May 2008 at par value. These
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securities and $0.2 million of related accrued interest are classified as current assets on
the accompanying condensed consolidated balance sheet as of March 31, 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. When auctions fails, 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.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 reevaluated the classification these securities and as a result
reclassified $35.8 million in par value at March 31, 2008 from current to 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 was $34.9 million, a decline of $0.9 million from par value at
March 31, 2008. 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.3.
    
    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 March 31, 2008 and December 31, 2007, there was $6.2 million
and $5.1 million of net unrealized gains in accumulated other comprehensive income,
respectively. Included in this total is approximately $3.2 million of net unrealized gains
which are expected to be realized in earnings during the twelve months following March 31,
2008.4.
    
    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:
    In determining fair value, the Company uses various valuation approaches. A market approach
is used to derive the fair value of the Companys investments in cash equivalents and
auction rates securities issued by municipalities.
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An income approach is used to derive the fair value of the Companys investments in auction
rate securities issued by state education agencies and the Companys assets and liabilities
resulting from outstanding forward foreign currency contracts. Discounted cash flow models
are used to present value the future cash flows under the terms of the contracts using
current market information as of the balance sheet date. Prevailing foreign currency spot
and forward rates are used to value the forward foreign currency contracts. A discount
rate, comprised of a weighted average of the Companys short-term benchmark interest rates,
the medium and long-term treasury note interest rates, and risk premiums for credit and
liquidity, is used to value the auction rate securities.Assets measured at fair value on a recurring basis are categorized in the table below based
upon the lowest level of significant input to the valuations.
 Fair Value Measurements at March 31, 2008  (In thousands)
 Description
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Cash equivalents
    
    $
    615,881
    
    
    $
    615,881
    
    
    $
    
    
    
    $
    Marketable securities
    
    
    63,782
    
    
    
    
    
    
    
    28,977
    
    
    
    34,805Derivative contracts
    
    
    10,353
    
    
    
    
    
    
    
    10,353
    
    
    
    Total
    
    $
    690,016
    
    
    $
    615,881
    
    
    $
    39,330
    
    
    $
    34,805
 Financial instruments classified as Level 3 in the fair value hierarchy represent auction
rate securities, classified as non-current marketable securities on the condensed
consolidated balance sheet as of March 31, 2008, in which management has used at least one
significant unobservable input in the valuation model. The following unrealized loss was
derived from the valuation model and was recorded in other comprehensive income. The
following table presents a reconciliation of activity for such securities on a net basis:
 (In thousands)Balance at December 31, 2007
    
    $
    48,800Purchases, issuances, and settlements
    
    
    (13,050
    )Realized gain (loss)
    
    
    Unrealized gain (loss)
    
    
    (945
    )Balance at March 31, 2008
    
    $
    34,805
 5.
    
    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. As of December 31, 2007, accounts receivable
included $2.4 million related to contractually specified retainage requirements with
collections due within a twelve month period. There was no such retainage as of March 31,
2008. The balance of accounts receivable  long-term at March 31, 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.
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The claims and unapproved change orders included in our receivables amounted to $34.1
million at March 31, 2008 and $46.0 million at December 31, 2007.
 Costs and Estimated Earnings on Uncompleted Contracts
 March 31
    
    
    December 312008
    
    
    2007(In thousands)Costs incurred on uncompleted contracts
    
    $
    890,633
    
    
    $
    838,856Estimated earnings
    
    
    364,526
    
    
    
    322,089Costs and estimated earnings on uncompleted contracts
    
    
    1,255,159
    
    
    
    1,160,945Less: Billings to date
    
    
    (1,159,026
    )
    
    
    (1,091,255
    )96,133
    
    
    
    69,690Plus: Accrued revenue(1)
    
    
    16,529
    
    
    
    8,371Less: Advance billings on uncompleted contracts
    
    
    (10,652
    )
    
    
    (8,036
    )$
    102,010
    
    
    $
    70,025Included in accompanying balance sheets under the following captions:Unbilled work on uncompleted contracts
    
    $
    123,496
    
    
    $
    106,716Advance billings on uncompleted contracts
    
    
    (21,486
    )
    
    
    (36,691
    )$
    102,010
    
    
    $
    70,025
 
 (1)
    
    Represents unbilled amounts receivable related to work performed on projects for which the
percentage-of-completion method is not applicable. 6.
    
    Property and EquipmentThe components of property and equipment, at cost, and the related accumulated depreciation
are as follows:
 March 31
    
    
    December 312008
    
    
    2007(In thousands)Land
    
    $
    6,322
    
    
    $
    6,322Facilities and equipment
    
    
    158,967
    
    
    
    155,676Marine vessels
    
    
    428,435
    
    
    
    428,021Construction in progress
    
    
    80,255
    
    
    
    68,757Total property and equipment
    
    
    673,979
    
    
    
    658,776Less: Accumulated depreciation
    
    
    (317,236
    )
    
    
    (309,227
    )Property and
equipment, net
    
    $
    356,743
    
    
    $
    349,549
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7.
    
    Long-Term DebtThe components of long-term debt are as follows:
 March 31
    
    
    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
 At March 31, 2008, the available borrowing under our Revolving Credit Facility was $33.8
million. The Company also has a $16.0 million short-term credit facility at one of its
foreign locations. At March 31, 2008, the available borrowing under this facility was $0.9
million.8.
    
    Commitments and ContingenciesCommitmentsConstruction and Purchases in ProgressThe estimated cost to complete capital expenditure
projects in progress at March 31, 2008 was approximately $270.9 million, which primarily
represents expenditures for construction of the Global 1200, our new generation
derrick/pipelay vessel, and various vessel upgrades. This amount includes an aggregate
commitment of 64.3 million Singapore Dollars (or $46.6 million as of March 31, 2008) and
10.7 million (or $16.9 million as of March 31, 2008).Off Balance Sheet Arrangements In the normal course of our business activities, and
pursuant to agreements or upon obtaining such agreements to perform construction services,
we provide guarantees, bonds, and letters of credit to customers, vendors, and other
parties. At March 31, 2008, the aggregate amount of these outstanding guarantees and bonds
was $62.5 million, which are scheduled to expire between April 2008 and May 2009, and the
aggregate amount of outstanding letters of credit was $116.2 million, which are due to
expire between April 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. Based on our outside tax counsels discussions with the Algerian tax
authorities, we expect the value added tax assessment will be waived.
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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 Company further announced that the
Audit Committee of the Companys Board of Directors had engaged the law firm of Mayer Brown
LLP, an international law firm with significant experience in investigating and advising on
FCPA matters, to lead the investigation. Recently, the primary attorneys handling the
investigation have left Mayer Brown LLP and are practicing with Andrews and Kurth LLP. The
Audit Committee has now engaged Andrews and Kurth LLP to complete 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 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.
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9.
    
    Comprehensive IncomeOther Comprehensive Income Comprehensive income includes changes in the fair value of
certain derivative financial instruments which qualify for hedge accounting treatment. The
differences between net income and comprehensive income for each of the comparable periods
presented are as follows.
 Three Months EndedMarch 312008
    
    
    2007(In thousands)Net Income
    
    $
    26,830
    
    
    $
    54,456Unrealized net gain on derivatives
    
    
    1,762
    
    
    
    1,257Unrealized loss on auction rate securities
    
    
    (945
    )
    
    
    Deferred tax benefit
    
    
    (358
    )
    
    
    (440
    )Comprehensive Income
    
    $
    27,289
    
    
    $
    55,273
 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
    
    
    
    
    
    
    1,145
    
    
    
    (686
    )
    
    
    459Balance at March 31, 2008
    
    $
    (8,978
    )
    
    $
    6,220
    
    
    $
    (686
    )
    
    $
    (3,444
    )
 The amount of accumulated translation adjustment included in accumulated other comprehensive
income (loss) relates to subsidiaries whose functional currency, in prior years, 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.10.
    
    Earnings Per ShareThe following table presents the reconciliation between basic shares and diluted shares.
 Three Months EndedMarch 312008
    
    2007(In thousands, except per share data)Net Income
    
    $
    26,830
    
    
    $
    54,456Common shares dilutionWeighted-average shares outstanding  basic
    
    
    115,267
    
    
    
    116,583Effect of dilutive securitiesStock options
    
    
    948
    
    
    
    973Performance shares and units
    
    
    527
    
    
    
    426Weighted-average shares outstanding  diluted
    
    
    116,742
    
    
    
    117,982Earnings per share
Basic
    
    $
    0.23
    
    
    $
    0.47Diluted
    
    $
    0.23
    
    
    $
    0.46
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Anti-dilutive shares represent options where the strike price was in excess of the average
market price of the Companys common stock for the period reported and are excluded from the
computation of diluted earnings per share. Excluded anti-dilutive shares totaled 0.3
million and 0.5 million for the quarters ended March 31, 2008 and 2007, respectively.11.
    
    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
months ended March 31, 2008 and 2007.
 Three Months EndedMarch 312008
    
    
    2007(In thousands)Stock-Based Compensation ExpenseStock Options
    
    $
    776
    
    
    $
    1,316Time-Based Restricted Stock
    
    
    1,788
    
    
    
    2,572Performance Shares and Units
    
    
    380
    
    
    
    1,119Total Stock-Based Compensation Expense
    
    $
    2,944
    
    
    $
    5,007
 12.
    
    Income TaxesThe Companys effective tax rate for the first quarter of 2008 was 27% as compared to 31%
for the first quarter of 2007. The decrease in our effective tax rate was due to improved
earnings in foreign jurisdictions with low statutory tax rates.13.
    
    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. The six revised reportable
segments subsequent to the reorganization include: Gulf of Mexico OCD, Gulf of Mexico
Subsea, Latin America, West Africa, Middle East (including the Mediterranean) and Asia
Pacific/India. This reorganization is reflected as a retrospective change to the financial
information presented in the three months ended March 31, 2007 and consists of the
following:
 
    
    transfer of inter-segment revenues from the Gulf of Mexico OCD to the Gulf of Mexico
Subsea;
    
    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
    
    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.
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Three Months EndedMarch 312008
    
    
    2007(In thousands)Total segment revenuesGulf of Mexico OCD
    
    $
    6,940
    
    
    $
    16,862Gulf of Mexico Subsea
    
    
    24,019
    
    
    
    29,405Latin America
    
    
    70,172
    
    
    
    101,848West Africa
    
    
    40,617
    
    
    
    51,274Middle East
    
    
    85,509
    
    
    
    9,411Asia Pacific/India
    
    
    82,008
    
    
    
    80,216Subtotal
    
    $
    309,265
    
    
    $
    289,016Intersegment eliminationsGulf of Mexico OCD
    
    $
    
    
    
    $
    (2,139
    )Gulf of Mexico Subsea
    
    
    (6,038
    )
    
    
    (1,774
    )Middle East
    
    
    (1,762
    )
    
    
    (8,094
    )Subtotal
    
    $
    (7,800
    )
    
    $
    (12,007
    )Consolidated revenues
    
    $
    301,465
    
    
    $
    277,009Income (loss) before taxesGulf of Mexico OCD
    
    $
    (7,930
    )
    
    $
    (1,209
    )Gulf of Mexico Subsea
    
    
    (1,574
    )
    
    
    10,609Latin America
    
    
    17,824
    
    
    
    53,308West Africa
    
    
    (6,203
    )
    
    
    509Middle East
    
    
    17,969
    
    
    
    1,519Asia Pacific/India
    
    
    12,639
    
    
    
    11,593Corporate
    
    
    4,231
    
    
    
    2,465Consolidated income before taxes
    
    $
    36,956
    
    
    $
    78,794
 14.
    
    Subsequent EventOn May 7, 2008, the Company announced it signed a Memorandum of Agreement to acquire a
dynamically positioned deepwater construction and diving vessel that
can be outfitted with a
saturation diving system and remotely operated vehicle (ROV). This vessel, will be
designated as the Global Orion, and will be available for service in May 2008.
 15




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




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Results of Operations
 General
    
    
    Offshore Construction Services, which include pipeline construction and platform
installation and removal services; and
    
    Subsea Services, which include diving, diver-less intervention, SURF, IRM, salvage,
and site clearance services.
 Offshore Construction Services
   Subsea Services
  17




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Quarter Ended March 31, 2008 Compared to Quarter Ended March 31, 2007
 Three months ended March 312008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    301,465
    
    
    
    100.0
    %
    
    $
    277,009
    
    
    
    100.0
    %
    
    
    8.8
    %Cost of operations
    
    
    247,135
    
    
    
    82.0
    
    
    
    183,535
    
    
    
    66.3
    
    
    
    (34.7
    )Gross profit
    
    
    54,330
    
    
    
    18.0
    
    
    
    93,474
    
    
    
    33.7
    
    
    
    (41.9
    )Net (gain) on asset disposal
    
    
    (2,163
    )
    
    
    (0.7
    )
    
    
    (1,320
    )
    
    
    (0.5
    )
    
    
    63.9Selling, general and
administrative expenses
    
    
    23,039
    
    
    
    7.6
    
    
    
    18,144
    
    
    
    6.5
    
    
    
    (27.0
    )Operating income
    
    
    33,454
    
    
    
    11.1
    
    
    
    76,650
    
    
    
    27.7
    
    
    
    (56.4
    )Other expense:Interest expense
    
    
    4,118
    
    
    
    1.4
    
    
    
    2,741
    
    
    
    1.0
    
    
    
    (50.2
    )Other (income), net
    
    
    (7,620
    )
    
    
    (2.6
    )
    
    
    (4,885
    )
    
    
    (1.8
    )
    
    
    56.0Income before taxes
    
    
    36,956
    
    
    
    12.3
    
    
    
    78,794
    
    
    
    28.5
    
    
    
    (53.1
    )Income taxes
    
    
    10,126
    
    
    
    3.4
    
    
    
    24,338
    
    
    
    8.8
    
    
    
    58.4Net income
    
    $
    26,830
    
    
    
    8.9
    %
    
    $
    54,456
    
    
    
    19.7
    %
    
    
    (50.7
    %)
 Revenues
 Gross Profit
 Selling, General and Administrative Expenses 
 Other (Income), net 
 Income Taxes 
 18




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Segment Information 
 Gulf of Mexico Offshore Construction Division
 Cherokee Pioneer
 Gulf of Mexico Subsea
 Pioneer REM Commander
 Latin America
  West Africa
  Middle East
  19




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##### Table of Contents



Asia Pacific/India
 Comanche
 Industry and Business Outlook
    Liquidity and Capital Resources
 Cash Flow
     20




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Liquidity Risk
   Liquidity Outlook
     21




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
  Interest Rate Risk
  22




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Item 4. Controls and Procedures.
   23




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
     
 Item 1A. Risk Factors.
  24




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Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity
Securities.
  Total Number of
    
    
    MaximumShares
    
    
    Number of SharesPurchased as
    
    
    that May Yet BeTotal Number
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Purchased Underof Shares
    
    
    Paid per
    
    
    Announced Plans
    
    
    the Plans orPeriod
    
    Purchased(1)
    
    
    Share
    
    
    or Programs
    
    
    ProgramsJanuary 1, 2008 - January 31, 2008
    
    
    89
    
    
    $
    21.84
    
    
    
    
    
    
    
    February 1, 2008  February 29, 2008
    
    
    862
    
    
    
    22.04
    
    
    
    
    
    
    
    March 1, 2008  March 31, 2008
    
    
    89,084
    
    
    
    18.44
    
    
    
    
    
    
    
    Total
    
    
    90,035
    
    
    $
    18.48
    
    
    
    
    
    
    
    
 
 (1)
    
    On July 17, 2007, the Board of Directors authorized the Company to withhold shares of
restricted stock to satisfy payments for withholding taxes. 25




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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, Peter S. Atkinson*
    
    32.1 -
    
    Section 906 Certification of CEO, B. K. Chin*
    
    32.2 -
    
    Section 906 Certification of CFO, Peter S. Atkinson
 
 *
    
    Included with this filing 26




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Signature
  GLOBAL INDUSTRIES, LTD.By:

/s/ Peter S. AtkinsonPeter S. AtkinsonPresident and Chief Financial Officer
(Principal Financial and Accounting Officer)  27