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




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Global Industries, Ltd.
Index  Form 10-Q
  
 Part I  Financial InformationItem 1.
    
    Financial Statements  UnauditedReport of Independent Registered Public Accounting Firm
    
    
    3Condensed Consolidated 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
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    27Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    28Item 1A.
    
    Risk Factors
    
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 6.
    
    Exhibits
    
    
    31Signature
    
    
    32IndentureRegistration Rights AgreementPurchase AgreementAmendment No.2 to Third Amended Credit AgreementLetter re Unaudited Interim Financial InformationCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
       Share-Based Payment,
  
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 (Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    465,193
    
    
    $
    352,178Restricted cash
    
    
    1,099
    
    
    
    1,073Marketable securities
    
    
    75,837
    
    
    
    Accounts
receivable  net of allowance of $25,439 for 2007
and $17,203 for 2006
    
    
    181,265
    
    
    
    197,258Unbilled work on uncompleted contracts
    
    
    58,187
    
    
    
    90,980Contract costs incurred not yet recognized
    
    
    1,753
    
    
    
    22,721Deferred income taxes
    
    
    3,196
    
    
    
    2,781Prepaid expenses and other
    
    
    17,523
    
    
    
    16,147Total current assets
    
    
    804,053
    
    
    
    683,138Property and Equipment, net
    
    
    312,417
    
    
    
    316,876Other AssetsAccounts receivable  longterm
    
    
    6,616
    
    
    
    7,731Deferred charges, net
    
    
    23,502
    
    
    
    19,862Deferred income taxes
    
    
    3,703
    
    
    
    2,711Goodwill, net
    
    
    37,388
    
    
    
    37,388Other
    
    
    4,967
    
    
    
    3,291Total other assets
    
    
    76,176
    
    
    
    70,983Total
    
    $
    1,192,646
    
    
    $
    1,070,997LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    3,960
    
    
    $
    3,960Accounts payable
    
    
    108,732
    
    
    
    127,009Employee-related liabilities
    
    
    28,286
    
    
    
    25,643Income taxes payable
    
    
    27,306
    
    
    
    38,092Accrued interest payable
    
    
    2,030
    
    
    
    2,134Advance billings on uncompleted contracts
    
    
    24,853
    
    
    
    4,557Other accrued liabilities
    
    
    19,057
    
    
    
    21,617Total current liabilities
    
    
    214,224
    
    
    
    223,012Long-Term Debt
    
    
    67,320
    
    
    
    69,300Deferred Income Taxes
    
    
    51,507
    
    
    
    51,714Other Liabilities
    
    
    9,538
    
    
    
    1,406Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock issued, $0.01 par value, 150,000 authorized, and 117,734 and
116,252 shares issued and outstanding at 2007 and 2006, respectively
    
    
    1,177
    
    
    
    1,162Additional paid-in capital
    
    
    404,687
    
    
    
    379,297Retained earnings
    
    
    450,830
    
    
    
    353,834Treasury stock at cost, 32 in 2007 and 25 in 2006
    
    
    (812
    )
    
    
    (644
    )Accumulated other comprehensive loss
    
    
    (5,825
    )
    
    
    (8,084
    )Total shareholders equity
    
    
    850,057
    
    
    
    725,565Total
    
    $
    1,192,646
    
    
    $
    1,070,997
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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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    248,940
    
    
    $
    367,631
    
    
    $
    525,949
    
    
    $
    613,898Cost of operations
    
    
    174,807
    
    
    
    266,494
    
    
    
    358,342
    
    
    
    464,631Gross profit
    
    
    74,133
    
    
    
    101,137
    
    
    
    167,607
    
    
    
    149,267Loss on asset impairments
    
    
    
    
    
    
    4,485
    
    
    
    
    
    
    
    4,485Reduction in litigation provision
    
    
    
    
    
    
    (13,699
    )
    
    
    
    
    
    
    (13,699
    )Net loss (gain) on asset disposal
    
    
    12
    
    
    
    (216
    )
    
    
    (1,308
    )
    
    
    (507
    )Selling, general and administrative expenses
    
    
    19,884
    
    
    
    14,710
    
    
    
    38,028
    
    
    
    30,996Operating income
    
    
    54,237
    
    
    
    95,857
    
    
    
    130,887
    
    
    
    127,992Other expense:Interest expense
    
    
    2,032
    
    
    
    2,460
    
    
    
    4,773
    
    
    
    4,496Other (income), net
    
    
    (6,531
    )
    
    
    (1,060
    )
    
    
    (11,416
    )
    
    
    (1,093
    )Income before taxes
    
    
    58,736
    
    
    
    94,457
    
    
    
    137,530
    
    
    
    124,589Income taxes
    
    
    17,607
    
    
    
    32,074
    
    
    
    41,945
    
    
    
    43,442Net income
    
    $
    41,129
    
    
    $
    62,383
    
    
    $
    95,585
    
    
    $
    81,147Earnings Per Common ShareBasic
    
    $
    0.35
    
    
    $
    0.54
    
    
    $
    0.82
    
    
    $
    0.70Diluted
    
    $
    0.35
    
    
    $
    0.53
    
    
    $
    0.81
    
    
    $
    0.69Weighted AverageCommon Shares OutstandingBasic
    
    
    117,305
    
    
    
    115,650
    
    
    
    116,946
    
    
    
    115,181Diluted
    
    
    119,168
    
    
    
    117,478
    
    
    
    118,675
    
    
    
    116,915
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GLOBAL INDUSTRIES, LTD.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)  (Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash Flows From Operating ActivitiesNet Income
    
    $
    95,585
    
    
    $
    81,147Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    23,592
    
    
    
    26,946Stock-based compensation expense
    
    
    9,167
    
    
    
    4,708Provision for doubtful accounts
    
    
    415
    
    
    
    7,601Gain on sale or disposal of property and equipment
    
    
    (1,308
    )
    
    
    (507
    )Derivative gain
    
    
    (325
    )
    
    
    Loss on asset impairments
    
    
    
    
    
    
    4,485Reduction in litigation provision
    
    
    
    
    
    
    (13,699
    )Deferred income taxes
    
    
    (2,224
    )
    
    
    17,250Excess tax benefits from stock-based compensation
    
    
    (2,541
    )
    
    
    Changes in operating assets and liabilitiesReceivables, unbilled work, and contract costs
    
    
    70,452
    
    
    
    (134,767
    )Prepaid expenses and other
    
    
    752
    
    
    
    1,046Accounts payable, employee-related liabilities and other
accrued liabilities
    
    
    2,480
    
    
    
    65,802Deferred dry-dock costs incurred
    
    
    (9,362
    )
    
    
    (11,967
    )Net cash provided by operating activities
    
    
    186,683
    
    
    
    48,045Cash Flows From Investing ActivitiesProceeds from sale of assets
    
    
    3,651
    
    
    
    509Additions to property and equipment
    
    
    (15,541
    )
    
    
    (28,373
    )Purchase of short-term investments
    
    
    (75,837
    )
    
    
    Additions to restricted cash
    
    
    (26
    )
    
    
    (8,685
    )Net cash (used in) investing activities
    
    
    (87,753
    )
    
    
    (36,549
    )Cash Flows From Financing ActivitiesProceeds from sale of common stock, net
    
    
    13,696
    
    
    
    7,161Additions to deferred charges
    
    
    (4
    )
    
    
    (517
    )Repayment of long-term debt
    
    
    (1,980
    )
    
    
    (1,980
    )Repurchase of common stock
    
    
    (168
    )
    
    
    Excess tax benefits from stock-based compensation
    
    
    2,541
    
    
    
    Net cash provided by financing activities
    
    
    14,085
    
    
    
    4,664Cash and cash equivalentsIncrease
    
    
    113,015
    
    
    
    16,160Beginning of period
    
    
    352,178
    
    
    
    127,138End of period
    
    $
    465,193
    
    
    $
    143,298Supplemental DisclosuresInterest Paid
    
    $
    2,971
    
    
    $
    9,487Income Taxes Paid
    
    $
    49,028
    
    
    $
    8,072
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Global Industries, Ltd.
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    Basis of Presentation The accompanying unaudited Condensed Consolidated Financial
Statements include the accounts of Global Industries, Ltd. and its subsidiaries (the
Company, we, us, or our).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 periods ended June 30, 2007
are not necessarily indicative of the results that may be expected for the year ending
December 31, 2007. 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, 2006.2.
    
    Accounting Change  Recognizing Uncertain Income Tax Positions In July 2006, the Financial
Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109(FIN 48). This interpretation
prescribes a recognition threshold and measurement attribute for tax positions taken, or
expected to be taken, on a tax return. The Company adopted the provisions of FIN 48 on
January 1, 2007, which requires a cumulative effect of accounting change to the opening
balance of retained earnings upon adoption. Accordingly, the Company recognized a $1.4
million cumulative adjustment for such tax positions as an increase to the opening balance of
retained earnings on January 1, 2007, as reflected in the accompanying financial position for
the period ended June 30, 2007. Please see Note 9 for additional information regarding the
adoption of FIN 48.3.
    
    Marketable Securities The Company has invested in auction rate securities which are debt
and preferred stock instruments having longer-dated legal maturities (in most cases, many
years), but with interest rates that are generally reset every 28-49 days under an auction
system. Because the Company regularly liquidates its investments in these securities for
reasons including, among others, changes in the availability of and the yield on alternative
investments, the Company has classified these securities as available-for-sale. The coupon
interest rate for these securities ranged from 3.6% to 4.0%, on a tax exempt basis, for the
quarter ended June 30, 2007. Short-term marketable securities are carried at cost, which
approximates fair value. Management determines the appropriate classification of its
investments in debt and equity securities at the time of purchase and re-evaluates such
determination at each balance sheet date. Investments classified as available-for-sale are
carried at an estimated fair value with any unrealized gain or loss recorded in accumulated
other comprehensive income. There was no unrealized gain or loss associated with the auction
rate securities that were outstanding at June 30, 2007.4.
    
    Receivables Receivables are presented in the following balance sheet accounts: (1) accounts
receivable, (2) accounts receivable  long-term, (3) unbilled work on uncompleted contracts,
and (4) contract costs incurred not yet recognized. Accounts receivableat June 30, 2007
included $13.3 million which was not immediately collectible due to contractually specified
retainage requirements. This amount is expected to be collected within the next twelve
months. Accounts receivableat December 31, 2006 included $4.4 million which was related to
retainage.The balance of accounts receivable  long-termat June 30, 2007 and December 31, 2006
represents amounts related to retainage which were not expected to be collected within the
next twelve months.The balance of unbilled work on uncompleted contractsincludes (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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Costs and Estimated Earnings on Uncompleted Contracts
 June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Costs incurred on uncompleted contracts
    
    $
    819,788
    
    
    $
    663,381Estimated earnings
    
    
    280,972
    
    
    
    197,693Costs and estimated earnings on uncompleted contracts
    
    
    1,100,760
    
    
    
    861,074Less: Billings to date
    
    
    (1,082,193
    )
    
    
    (796,353
    )18,567
    
    
    
    64,721Plus: Accrued revenue
    
    
    14,767
    
    
    
    21,702$
    33,334
    
    
    $
    86,423Included in accompanying balance sheets under the
following captions:Unbilled work on uncompleted contracts
    
    $
    58,187
    
    
    $
    90,980Advance billings on uncompleted contracts
    
    
    (24,853
    )
    
    
    (4,557
    )$
    33,334
    
    
    $
    86,423
 5.
    
    Property and Equipment Property and equipment are stated at cost less accumulated
depreciation. Expenditures for property and equipment and items that substantially increase
the useful lives of existing assets are capitalized at cost and depreciated. Routine
expenditures for repairs and maintenance are expensed as incurred. Except for major
construction vessels that are depreciated on the units-of-production (UOP) method over
estimated vessel operating days, depreciation is provided utilizing the straight-line method
over the estimated useful lives of the assets. The UOP method is based on vessel utilization
days and more closely correlates depreciation expense to vessel revenue. In addition, the UOP
method provides for a minimum depreciation floor in periods with nominal vessel use. In
general, less depreciation expense would be recorded in periods of high utilization and
revenues, and more depreciation expense would be recorded in periods of low vessel utilization
and revenues if we applied only a straight-line depreciation method. Property and equipment
at June 30, 2007 and December 31, 2006 is presented net of $301.3 million and $286.0 million
of accumulated depreciation, respectively.6.
    
    Commitments and ContingenciesContingencies Pursuant to a tax audit of a Nigerian subsidiary of the Company for the
years of 1998 through 2003, tax authorities in Nigeria have issued a payroll tax assessment
against the Company in the amount of $24.4 million. The assessment alleges that certain
persons were working on projects in Nigeria and were subject to payroll taxes which were not
paid. However, due to the specific persons listed in the assessment and the periods of time
which they are alleged to have worked in Nigeria, we believe that this claim is
substantially without merit. We recorded a reserve of $0.1 million for this assessment in
the second quarter of 2006. This reserve reflects managements best estimate for our
Nigerian payroll tax liability associated with this assessment. In October 2006, we
received a formal demand for payment from the Nigerian tax authorities and believe that this
matter will ultimately be resolved by litigation.On February 21, 2007, we received a $29.7 million tax assessment from Algeria for income
tax, business tax and value added tax for 2005 and 2004. We are indemnified by our clients
for the value added tax portion, or 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 believe the ultimate amount due will not be
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Commitments
  7.
    
    Derivative Financial Instruments Due to the international nature of our business operations
and the variable interest rate provisions of our revolving credit facility, we are exposed to
certain risks associated with changes in foreign currency exchange rates and interest rates.
From time to time, we enter into derivative agreements (hedging instruments) to hedge our
exposure to specific foreign currency or interest rate risks (hedged items). We do not use
derivative financial instruments for trading purposes.We did not enter into any new derivative positions during the three and six months ended
June 30, 2007. As discussed in Note 13 of the Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the year ended December 31, 2006, we record
in earnings the changes in fair market value and cash settlements with respect to our Euro
forward exchange agreements as they were previously determined to be ineffective hedges, and
we account for our Norwegian Kroner forward exchange agreements as cash flow hedges, as
defined by Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities.
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8.
    
    Restructuring Costs- On May 9, 2007, a decision was made to relocate the Asia Pacific
regional headquarters from Bangkok to Singapore to better align the Companys strategies with
its target markets. The expected completion date for this relocation is December 31, 2007.
The estimated total cost to be incurred related to this plan is approximately $2.0 million, of
which $ 1.3 million will be costs for severance and benefits, and other costs related to
closing the Bangkok headquarters, as well as capital improvements of approximately $0.7
million for the new Singapore headquarters. At June 30, 2007, $0.4 million was accrued for
severance expense and is reflected in the cost of operations.9.
    
    Income Taxes As a result of implementing FIN 48 on January 1, 2007, the Company recognized
a $1.4 million reduction of taxes due to foreign tax benefits which was accounted for as an
increase to the January 1, 2007 balance of retained earnings. Also on January 1, 2007, the
Company had:
 
    
    unrecognized tax benefits of $11.7 million, all of which would impact the
Companys effective tax rate, if recognized;
    
    $5.7 million of accrued income tax for uncertain tax positions; and
    
    $4.6 million of interest expense and penalties related to income taxes. The
Company recognized interest accrued for income taxes, as interest expense and
penalties are reflected in Other income, net.
    10




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10.
    
    Other Comprehensive Income Comprehensive income included 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 Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Net Income
    
    $
    41,129
    
    
    $
    62,383
    
    
    $
    95,585
    
    
    $
    81,147Unrealized net gain
on derivative
instruments
    
    
    2,220
    
    
    
    2,419
    
    
    
    3,477
    
    
    
    2,865Less: deferred taxes
    
    
    (778
    )
    
    
    (841
    )
    
    
    (1,218
    )
    
    
    (997
    )Comprehensive Income
    
    $
    42,571
    
    
    $
    63,961
    
    
    $
    97,844
    
    
    $
    83,015
 A roll-forward of the amounts included in accumulated other comprehensive income (loss), net
of taxes, is shown below.
 AccumulatedAccumulated
    
    
    Foreign
    
    
    OtherTranslation
    
    
    Exchange
    
    
    ComprehensiveAdjustment
    
    
    Agreements
    
    
    Income (Loss)(In thousands)Balance at December 31, 2006
    
    $
    (8,978
    )
    
    $
    894
    
    
    $
    (8,084
    )Change in value
    
    
    
    
    
    
    2,327
    
    
    
    2,327Reclassifications to earnings
    
    
    
    
    
    
    (68
    )
    
    
    (68
    )Balance at June 30, 2007
    
    $
    (8,978
    )
    
    $
    3,153
    
    
    $
    (5,825
    )
 The amount of accumulated translation adjustment included in accumulated other comprehensive
income (loss) relates to subsidiaries whose functional currency was not the U.S. dollar in
certain prior years. The amount of gain on forward exchange agreements included in
accumulated other comprehensive income (loss) is associated with forward exchange agreements
which hedge the Companys foreign currency commitments under long-term vessel charters and
under contracts for the purchase of equipment. This gain (or potential loss) will be
reclassified to results of operations as the associated hedged items are settled and will
offset any variability in foreign exchange rates which occurs subsequent to the initiation
of the hedges.
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11.
    
    Earnings Per Share The following table presents the reconciliation between basic shares and
diluted shares (in thousands, except per share data).
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Net Income
    
    $
    41,129
    
    
    $
    62,383
    
    
    $
    95,585
    
    
    $
    81,147Common shares dilutionBasic shares
    
    
    117,305
    
    
    
    115,650
    
    
    
    116,946
    
    
    
    115,181Effect of dilutive securities
    
    
    1,863
    
    
    
    1,828
    
    
    
    1,729
    
    
    
    1,734Diluted shares
    
    
    119,168
    
    
    
    117,478
    
    
    
    118,675
    
    
    
    116,915Earning per shareBasic
    
    $
    0.35
    
    
    $
    0.54
    
    
    $
    0.82
    
    
    $
    0.70Diluted
    
    $
    0.35
    
    
    $
    0.53
    
    
    $
    0.81
    
    
    $
    0.69
 The amounts shown for the effect of dilutive securities represent incremental shares
associated with dilutive stock options and performance units which were issued pursuant to
the Companys stock-based compensation plans. Anti-dilutive shares represent options where
the strike price was in excess of the average market price of our common stock for the
period reported and are excluded from the computation of diluted earnings per share. There
were no anti-dilutive shares excluded from the dilutive earnings per share computation for
the quarter ended June 30, 2007. Excluded anti-dilutive shares totaled 0.3 million for the
quarter ended June 30, 2006, and 0.1 million and 0.4 million for the six months ended June
30, 2007 and 2006, respectively.12.
    
    Stock-Based Compensation Pursuant to SFAS 123R, Share-Based Payment, companies must
recognize the cost of employee services received in exchange for awards of equity instruments
based on the grant-date fair value of those awards.The table below sets forth the total amount of stock-based compensation expense for the
three and six months ended June 30, 2007 and 2006.
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Stock-Based Compensation ExpenseStock Options
    
    $
    1,102
    
    
    $
    871
    
    
    $
    2,417
    
    
    $
    1,723Time-Based Restricted Stock
    
    
    2,482
    
    
    
    1,081
    
    
    
    5,160
    
    
    
    1,656Performance Shares and Units
    
    
    471
    
    
    
    76
    
    
    
    1,590
    
    
    
    1,329Total Stock-Based
Compensation
    
    $
    4,055
    
    
    $
    2,028
    
    
    $
    9,167
    
    
    $
    4,708
 12




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##### Table of Contents



13.
    
    Segment Information The following table presents information about the profit (or loss) for
the three and six months ended June 30, 2007 and 2006 of each of the Companys six reportable
segments: 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 information contains certain allocations of corporate expenses that we deem reasonable and
appropriate for the evaluation of results of operations.The Company determined it was preferable to reclassify 2006 segment information
associated with the presentation of inter-segment revenues between the Gulf of Mexico OCD
and Gulf of Mexico Diving to correspond with the 2007 presentation. The
reclassifications had no impact on equity, net income or cash flows.
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Total segment revenuesGulf of Mexico OCD
    
    $
    31,177
    
    
    $
    43,758
    
    
    $
    48,039
    
    
    $
    96,888Gulf of Mexico Diving
    
    
    42,700
    
    
    
    35,262
    
    
    
    72,098
    
    
    
    70,511Latin America
    
    
    33,017
    
    
    
    143,974
    
    
    
    134,865
    
    
    
    206,468West Africa
    
    
    57,975
    
    
    
    56,288
    
    
    
    109,260
    
    
    
    89,369Middle East
    
    
    94,033
    
    
    
    60,190
    
    
    
    168,889
    
    
    
    132,461Asia Pacific
    
    
    13,548
    
    
    
    44,969
    
    
    
    23,152
    
    
    
    50,317Subtotal
    
    
    272,450
    
    
    
    384,441
    
    
    
    556,303
    
    
    
    646,014Intersegment eliminationsGulf of Mexico OCD
    
    
    (5,589
    )
    
    
    (4,061
    )
    
    
    (7,726
    )
    
    
    (7,024
    )Gulf of Mexico Diving
    
    
    (3,511
    )
    
    
    (4,444
    )
    
    
    (5,279
    )
    
    
    (16,152
    )Latin America
    
    
    
    
    
    
    (583
    )
    
    
    
    
    
    
    (1,218
    )Middle East
    
    
    (10,279
    )
    
    
    (4,623
    )
    
    
    (12,743
    )
    
    
    (4,623
    )Asia Pacific
    
    
    (4,131
    )
    
    
    (3,099
    )
    
    
    (4,606
    )
    
    
    (3,099
    )Subtotal
    
    
    (23,510
    )
    
    
    (16,810
    )
    
    
    (30,354
    )
    
    
    (32,116
    )Consolidated revenues
    
    
    248,940
    
    
    
    367,631
    
    
    
    525,949
    
    
    
    613,898Income (loss) before taxesGulf of Mexico OCD
    
    
    7,402
    
    
    
    12,369
    
    
    
    6,648
    
    
    
    21,718Gulf of Mexico Diving
    
    
    16,333
    
    
    
    9,864
    
    
    
    27,136
    
    
    
    20,076Latin America
    
    
    9,172
    
    
    
    28,544
    
    
    
    62,734
    
    
    
    27,432West Africa
    
    
    (10,535
    )
    
    
    13,622
    
    
    
    (10,744
    )
    
    
    17,705Middle East
    
    
    34,383
    
    
    
    9,268
    
    
    
    43,762
    
    
    
    21,189Asia Pacific
    
    
    1,889
    
    
    
    7,006
    
    
    
    7,902
    
    
    
    3,157Corporate (litigation provision)
    
    
    
    
    
    
    13,699
    
    
    
    
    
    
    
    13,699Over (under) allocated
corporate expenses
    
    
    92
    
    
    
    85
    
    
    
    92
    
    
    
    (387
    )Consolidated income before taxes
    
    $
    58,736
    
    
    $
    94,457
    
    
    $
    137,530
    
    
    $
    124,589
 13




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##### Table of Contents



14.
    
    Subsequent Event Effective July 27, 2007, the Company issued $325.0 million of 2.75 percent
Senior Convertible Debentures due 2027. The debentures will be convertible into cash, and if
applicable, into shares of the Companys common stock, or under certain circumstances and at
the Companys election, solely into the Companys common stock based on a conversion rate of
28.1821 shares per $1,000 principal amount of debentures. In addition, the Company granted a
thirty day option to the initial purchasers of the convertible debentures to purchase up to an
additional $50.0 million aggregate principal amount of debentures. Pursuant to this indenture,
the Company used $75.0 million of proceeds from the issuance of the debentures to repurchase
2.8 million shares of the Companys common stock. The net proceeds received from the issuance
of the debentures after the repurchase of Company common stock were $243.5 million.
Concurrent with this transaction, the Company amended certain negative covenants in its
existing $130.0 million revolving line of credit to allow for the issuance of these
convertible debentures and to allow the Company to use $75.0 million of net proceeds from the
debentures to repurchase shares of its common stock.In July 2007, the Company announced the construction of a new generation dynamically
positioned combination derrick/pipelay vessel for its worldwide offshore fleet at an
estimated cost of $240.0 million. This vessel, currently designated the Global 1200, is
designed to work in deep and shallow water, and is expected to be operational in 2010.
 14




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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;
    
    foreign exchange and currency fluctuations; and
    
    acquisitions or divestitures
  15




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Results of Operations
 General
    
    
    Offshore Construction Services, which includes pipeline construction and platform
installation and removal services; and
    
    Diving Services, which includes diving and marine support services.
 Offshore Construction Services
   Diving Services
  16




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##### Table of Contents



Quarter Ended June 30, 2007 Compared to Quarter Ended June 30, 2006
 2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    248,940
    
    
    
    100.0
    %
    
    $
    367,631
    
    
    
    100.0
    %
    
    
    (32
    )%Cost of operations
    
    
    174,807
    
    
    
    70.2
    
    
    
    266,494
    
    
    
    72.5
    
    
    
    34Gross profit
    
    
    74,133
    
    
    
    29.8
    
    
    
    101,137
    
    
    
    27.5
    
    
    
    (27
    )Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    4,485
    
    
    
    1.2
    
    
    
    Reduction in litigation
    
    
    
    
    
    
    
    
    
    
    (13,699
    )
    
    
    (3.7
    )
    
    
    Net (gain) on asset disposal
    
    
    12
    
    
    
    (0.0
    )
    
    
    (216
    )
    
    
    (0.1
    )
    
    
    (106
    )Selling, general and administrative expenses
    
    
    19,884
    
    
    
    8.0
    
    
    
    14,710
    
    
    
    4.0
    
    
    
    (35
    )Operating income
    
    
    54,237
    
    
    
    21.8
    
    
    
    95,857
    
    
    
    26.1
    
    
    
    (43
    )Other expense:Interest expense
    
    
    2,032
    
    
    
    0.8
    
    
    
    2,460
    
    
    
    0.7
    
    
    
    17Other (income), net
    
    
    (6,531
    )
    
    
    (2.6
    )
    
    
    (1,060
    )
    
    
    (0.3
    )
    
    
    516Income before taxes
    
    
    58,736
    
    
    
    23.6
    
    
    
    94,457
    
    
    
    25.7
    
    
    
    (38
    )Income taxes
    
    
    17,607
    
    
    
    7.1
    
    
    
    32,074
    
    
    
    8.7
    
    
    
    45Net income
    
    $
    41,129
    
    
    
    16.5
    %
    
    $
    62,383
    
    
    
    17.0
    %
    
    
    (34
    )%
 Revenues. REM Commander
 Gross Profit. REM Commander
 Loss on Asset Impairments. Navajo, Pipeliner 5
 Reduction in Litigation Provision.
 Selling, General and Administrative Expenses.
 17




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##### Table of Contents



Interest Expense.
 Other Expense/Income.
 Income Taxes
 Results of Operations  Segment Information.
  Gulf of Mexico Offshore Construction Division
 Sea Constructor
 Gulf of Mexico Diving
 REM Commander REM Commander
 Latin America
  18




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West Africa
  Middle East
 Navajo
 Asia Pacific
 Hercules
 19




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Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    % Change(Thousands)
    
    
    Revenue
    
    
    (Thousands)
    
    
    Revenue
    
    
    (Unfavorable)Revenues
    
    $
    525,949
    
    
    
    100.0
    %
    
    $
    613,898
    
    
    
    100.0
    %
    
    
    (14
    %)Cost of operations
    
    
    358,342
    
    
    
    68.1
    
    
    
    464,631
    
    
    
    75.7
    
    
    
    23Gross profit
    
    
    167,607
    
    
    
    31.9
    
    
    
    149,267
    
    
    
    24.3
    
    
    
    12Loss on asset impairments
    
    
    
    
    
    
    
    
    
    
    4,485
    
    
    
    0.7
    
    
    
    Reduction in litigation
    
    
    
    
    
    
    
    
    
    
    (13,699
    )
    
    
    (2.2
    )
    
    
    Net (gain) on asset disposal
    
    
    (1,308
    )
    
    
    (0.2
    )
    
    
    (507
    )
    
    
    (0.1
    )
    
    
    158Selling, general and administrative expenses
    
    
    38,028
    
    
    
    7.2
    
    
    
    30,996
    
    
    
    5.0
    
    
    
    (23
    )Operating income
    
    
    130,887
    
    
    
    24.9
    
    
    
    127,992
    
    
    
    20.9
    
    
    
    2Other expense:Interest expense
    
    
    4,773
    
    
    
    0.9
    
    
    
    4,496
    
    
    
    0.7
    
    
    
    (6
    )Other (income), net
    
    
    (11,416
    )
    
    
    (2.2
    )
    
    
    (1,093
    )
    
    
    (0.1
    )
    
    
    944Income before taxes
    
    
    137,530
    
    
    
    26.2
    
    
    
    124,589
    
    
    
    20.3
    
    
    
    10Income taxes
    
    
    41,945
    
    
    
    8.0
    
    
    
    43,442
    
    
    
    7.1
    
    
    
    3Net income
    
    $
    95,585
    
    
    
    18.2
    %
    
    $
    81,147
    
    
    
    13.2
    %
    
    
    18
    %
 Revenues. REM Commander
 Gross Profit.
 Loss on Asset Impairments. Navajo, Pipeliner 5
 Reduction in Litigation Provision.
 Net Gain on Asset Disposal.
 Selling, General and Administrative Expenses.
 20




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##### Table of Contents



Other Expense/Income.
 Income Taxes.
 Results of Operations  Segment Information
  Gulf of Mexico Offshore Construction Division
 Pioneer, Sea Constructor Pipeliner 5
 Gulf of Mexico Diving
 REM Commander ,
 Latin America
  21




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##### Table of Contents



West Africa
  Middle East
 Navajo
 Asia Pacific
  22




---



##### Table of Contents



Industry and Business Outlook
     Liquidity and Capital Resources
 Overview
  Cash Flow
   23




---



##### Table of Contents



Long-Term Debt
   Other Indebtedness and Obligations
  Liquidity Outlook
    Critical Accounting Policies and Estimates
  24




---



##### Table of Contents



25




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##### Table of Contents



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




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##### Table of Contents



Item 4. Controls and Procedures.
   27




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##### Table of Contents



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




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Item 1A. Risk Factors.
  29




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  Number of Votes CastBrokerName of Director
    
    For
    
    Withhold
    
    Non-VoteB. K. Chin
    
    
    94,802,650
    
    
    
    6,934,682
    
    
    
    0John A. Clerico
    
    
    94,817,216
    
    
    
    6,920,116
    
    
    
    0Lawrence Dickerson
    
    
    94,819,054
    
    
    
    6,918,278
    
    
    
    0Edward P. Djerejian
    
    
    90,214,833
    
    
    
    11,522,499
    
    
    
    0Larry E. Farmer
    
    
    94,815,024
    
    
    
    6,922,308
    
    
    
    0Edgar G. Hotard
    
    
    92,207,730
    
    
    
    9,529,602
    
    
    
    0Richard A. Pattarozzi
    
    
    94,766,162
    
    
    
    6,971,170
    
    
    
    0James L. Payne
    
    
    94,814,624
    
    
    
    6,922,708
    
    
    
    0Michael J. Pollock
    
    
    93,850,255
    
    
    
    7,887,077
    
    
    
    0Cindy B. Taylor
    
    
    94,494,924
    
    
    
    7,242,408
    
    
    
    0
  Votes for
    
    
    100,601,836Votes against
    
    
    1,043,469Votes abstain
    
    
    92,024Broker non-vote
    
    
    0Total
    
    
    101,737,329
 30




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##### Table of Contents



Item 6. Exhibits.
 *
    
    4.1 -
    
    Indenture of Global Industries, Ltd. and Wells Fargo
Bank, National Association, as Trustee, dated July 27,
2007.*
    
    4.2 -
    
    Registration Rights Agreement, by and between Global
Industries, Ltd., as Issuer, and Lehman Brothers Inc.,
as Representative of the Several Initial Purchasers,
dated as of July 27, 2007.*
    
    10.1 -
    
    Purchase Agreement, between Global Industries, Ltd. and
Lehman Brothers Inc., Calyon Securities (USA) Inc.,
Fortis Securities LLC and Natexis Bleichroeder Inc.,
dated July 23, 2007.*
    
    10.2 -
    
    Amendment No. 2 to Third Amended and Restated Credit
Agreement, dated July 27, 2007, by and among Global
Industries, Ltd., Global Offshore Mexico, S. de R.L. de
C.V., and Global Industries International L.L.C. in its
capacity as general partner of Global Industries
International, L.P., the Lenders party to the Credit
Agreement, and Calyon New York Branch, as administrative
agent for the Lenders.*
    
    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 31




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##### Table of Contents



Signature
  GLOBAL INDUSTRIES, LTD.By:
    
    /s/ PETER S. ATKINSONPeter S. Atkinson
President and Chief Financial Officer
(Principal Financial and Accounting Officer)
  32




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##### Table of Contents



Exhibits.*
    
    4.1 -
    
    Indenture of Global Industries, Ltd. and Wells Fargo
Bank, National Association, as Trustee, dated July 27,
2007.*
    
    4.2 -
    
    Registration Rights Agreement, by and between Global
Industries, Ltd., as Issuer, and Lehman Brothers Inc.,
as Representative of the Several Initial Purchasers,
dated as of July 27, 2007.*
    
    10.1 -
    
    Purchase Agreement, between Global Industries, Ltd. and
Lehman Brothers Inc., Calyon Securities (USA) Inc.,
Fortis Securities LLC and Natexis Bleichroeder Inc.,
dated July 23, 2007.*
    
    10.2 -
    
    Amendment No. 2 to Third Amended and Restated Credit
Agreement, dated July 27, 2007, by and among Global
Industries, Ltd., Global Offshore Mexico, S. de R.L. de
C.V., and Global Industries International L.L.C. in its
capacity as general partner of Global Industries
International, L.P., the Lenders party to the Credit
Agreement, and Calyon New York Branch, as administrative
agent for the Lenders.*
    
    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