##### Table of Contents



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: 001-33206
 
 CAL DIVE INTERNATIONAL, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    61-1500501(I.R.S. Employer
Identification No.)400 North Sam Houston Parkway, E., Suite 1000
Houston, Texas(Address of Principal Executive Offices)
    
    77060(Zip Code)
 (281) 618-0400  Registrants telephone number, including area code:
 þ o
  o o þ
 o þ




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##### 



CAL DIVE INTERNATIONAL, INC.
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December
31, 2006 (audited)
    
    
    1Condensed Consolidated and Combined Statements of Operations (unaudited) for the
three and six months ended June 30, 2007 and 2006
    
    
    2Condensed Consolidated and Combined Statements of Cash Flows (unaudited) for the
six months ended June 30, 2007 and 2006
    
    
    3Notes to Condensed Consolidated and Combined Financial Statements (unaudited)
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16PART II  OTHER INFORMATION
    
    
    17Item 1A. Risk Factors
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 6. Exhibits
    
    
    17SIGNATURES
    
    
    19EXHIBIT INDEX
    
    
    20Certification of the Chief Executive OfficerCertification of the Chief Financial OfficerSection 1350 Certification by Chief Executive Officer and Chief Financial Officer
  i




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Cal Dive International, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets
 (in thousands, except per share par value)
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,667
    
    
    $
    22,655Accounts receivable -Trade, net of allowance for doubtful accounts of $0 and $169, respectively
    
    
    101,777
    
    
    
    93,748Unbilled revenue
    
    
    22,948
    
    
    
    33,869Net receivable from Helix
    
    
    869
    
    
    
    1,626Deferred income taxes
    
    
    2,626
    
    
    
    1,869Assets held for sale
    
    
    
    
    
    
    698Notes receivable
    
    
    1,814
    
    
    
    3,008Other current assets
    
    
    19,689
    
    
    
    11,274Total current assets
    
    
    153,390
    
    
    
    168,747Property and equipment
    
    
    308,433
    
    
    
    293,929Less  Accumulated depreciation
    
    
    (82,398
    )
    
    
    (71,682
    )226,035
    
    
    
    222,247Other assets:Equity investment
    
    
    
    
    
    
    10,871Goodwill
    
    
    26,802
    
    
    
    26,666Other assets, net
    
    
    39,381
    
    
    
    23,622Total assets
    
    $
    445,608
    
    
    $
    452,153LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    49,497
    
    
    $
    39,810Accrued liabilities
    
    
    15,821
    
    
    
    19,004Total current liabilities
    
    
    65,318
    
    
    
    58,814Long-term debt
    
    
    140,000
    
    
    
    201,000Long-term payable to Helix
    
    
    8,392
    
    
    
    11,028Deferred income taxes
    
    
    29,137
    
    
    
    20,824Other long term liabilities
    
    
    1,769
    
    
    
    2,726Total liabilities
    
    
    244,616
    
    
    
    294,392Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, 240,000 shares authorized, $0.01 par value, issued and outstanding:
84,327 and 84,298 shares, respectively
    
    
    843
    
    
    
    843Capital in excess of par value of common stock
    
    
    156,501
    
    
    
    154,898Retained earnings
    
    
    43,648
    
    
    
    2,020Total stockholders equity
    
    
    200,992
    
    
    
    157,761Total liabilities and stockholders equity
    
    $
    445,608
    
    
    $
    452,153




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Cal Dive International, Inc. and Subsidiaries
 
 Condensed Consolidated and Combined Statements of Operations (unaudited)
 (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenues
    
    $
    135,258
    
    
    $
    124,764
    
    
    $
    284,484
    
    
    $
    244,554Cost of sales
    
    
    89,693
    
    
    
    63,821
    
    
    
    180,967
    
    
    
    133,405Gross profit
    
    
    45,565
    
    
    
    60,943
    
    
    
    103,517
    
    
    
    111,149Gain on sale of assets
    
    
    1,687
    
    
    
    16
    
    
    
    1,694
    
    
    
    283Selling and administrative expenses
    
    
    11,110
    
    
    
    9,360
    
    
    
    20,766
    
    
    
    15,515Income from operations
    
    
    36,142
    
    
    
    51,599
    
    
    
    84,445
    
    
    
    95,917Equity in earnings (losses) of
investment, inclusive of impairment
charge
    
    
    (11,793
    )
    
    
    (183
    )
    
    
    (10,841
    )
    
    
    2,650Net interest income (expense)
    
    
    (2,419
    )
    
    
    (13
    )
    
    
    (4,958
    )
    
    
    316Income before income taxes
    
    
    21,930
    
    
    
    51,403
    
    
    
    68,646
    
    
    
    98,883Provision for income taxes
    
    
    10,365
    
    
    
    17,983
    
    
    
    27,018
    
    
    
    34,689Net income
    
    $
    11,565
    
    
    $
    33,420
    
    
    $
    41,628
    
    
    $
    64,194Earnings per common share:Basic
    
    $
    0.14
    
    
    $
    0.54
    
    
    $
    0.50
    
    
    $
    1.04Diluted
    
    $
    0.14
    
    
    $
    0.54
    
    
    $
    0.50
    
    
    $
    1.04Weighted average common shares outstanding:Basic
    
    
    83,680
    
    
    
    61,507
    
    
    
    83,680
    
    
    
    61,507Diluted
    
    
    83,801
    
    
    
    61,507
    
    
    
    83,746
    
    
    
    61,507
  2




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Cal Dive International, Inc. and Subsidiaries
 
 Condensed Consolidated and Combined Statements of Cash Flows (unaudited)
 (in thousands)
 Six Months Ended June 30,2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    41,628
    
    
    $
    64,194Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    18,074
    
    
    
    10,727Stock compensation expense
    
    
    1,603
    
    
    
    1,122Equity in (earnings) losses of investment,
inclusive of impairment charge
    
    
    10,841
    
    
    
    (2,650
    )Deferred income taxes
    
    
    7,556
    
    
    
    2,175Gain on sale of assets
    
    
    (1,694
    )
    
    
    (283
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    4,518
    
    
    
    (32,472
    )Assets held for sale
    
    
    698
    
    
    
    Other current assets
    
    
    (9,506
    )
    
    
    1,211Accounts payable and accrued liabilities
    
    
    1,872
    
    
    
    10,450Other noncurrent, net
    
    
    (21,823
    )
    
    
    (7,452
    )Net cash provided by operating activities
    
    
    53,767
    
    
    
    47,022Cash Flows From Investing Activities:Capital expenditures
    
    
    (12,272
    )
    
    
    (7,387
    )Acquisition of businesses
    
    
    
    
    
    
    (78,174
    )Proceeds from sales of property
    
    
    517
    
    
    
    16,782Net cash used in investing activities
    
    
    (11,755
    )
    
    
    (68,779
    )Cash Flows From Financing Activities:Repayments on credit facility
    
    
    (61,000
    )
    
    
    Cash transfers from Helix for investing activities
    
    
    
    
    
    
    79,800Cash transfers to Helix from operating activities
    
    
    
    
    
    
    (58,039
    )Net cash provided by (used in) financing activities
    
    
    (61,000
    )
    
    
    21,761Net increase (decrease) in cash and cash equivalents
    
    
    (18,988
    )
    
    
    4Cash and cash equivalents:Balance, beginning of period
    
    
    22,655
    
    
    
    Balance, end of period
    
    $
    3,667
    
    
    $
    4Supplemental Cash Flow Information:Interest paid
    
    $
    5,685
    
    
    $
    Income taxes paid
    
    $
    26,205
    
    
    $
    
  3




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Cal Dive International, Inc. and Subsidiaries
 
 Notes to Condensed Consolidated and Combined Financial Statements (unaudited)
 1. Preparation of Interim Financial Statements
       4




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2. Related Party Transactions
         5




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3. Details of Certain Accounts (in thousands)
  June 30,
    
    
    December 31,2007
    
    
    2006Other receivables
    
    $
    3,764
    
    
    $
    3,134Insurance claims to be reimbursed
    
    
    3,902
    
    
    
    1,870Other prepaids
    
    
    3,304
    
    
    
    1,679Income taxes receivable
    
    
    5,849
    
    
    
    Supplies and spare parts inventory
    
    
    2,790
    
    
    
    2,295Other
    
    
    80
    
    
    
    2,296$
    19,689
    
    
    $
    11,274
  June 30,
    
    
    December 31,2007
    
    
    2006Deferred drydock expenses, net
    
    $
    31,141
    
    
    $
    20,069Equipment deposits
    
    
    4,375
    
    
    
    Intangible assets with definite lives, net
    
    
    2,928
    
    
    
    3,159Deferred financing costs
    
    
    397
    
    
    
    378Other
    
    
    540
    
    
    
    16$
    39,381
    
    
    $
    23,622
  June 30,
    
    
    December 31,2007
    
    
    2006Accrued payroll and related benefits
    
    $
    6,025
    
    
    $
    7,500Accrued insurance
    
    
    4,698
    
    
    
    3,367Insurance claims to be reimbursed
    
    
    3,902
    
    
    
    1,870Accrued income taxes payable
    
    
    
    
    
    
    1,201Other
    
    
    1,196
    
    
    
    5,066$
    15,821
    
    
    $
    19,004
 4. Equity Investment
  6




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5. Long-term Debt
   6. Commitments and Contingencies
 Lease Commitments
  Insurance
  Litigation and Claims
  7. Stock-Based Compensation Plans
 Helix Plans
   7




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Cal Dive Plans
       8




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8. Income Taxes
    9. Business Segment Information
  10. Recently Issued Accounting Principles
  The Fair Value Option for Financial
Assets and Financial Liabilities
 11. Acquisition of Horizon Offshore, Inc.
  9




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12. Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    June 30, 2007Income
    
    
    Shares
    
    
    Income
    
    
    SharesEarnings applicable per common share  Basic
    
    $
    11,565
    
    
    
    83,680
    
    
    $
    41,628
    
    
    
    83,680Restricted shares
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    66Earnings applicable per common share  Diluted
    
    $
    11,565
    
    
    
    83,801
    
    
    $
    41,628
    
    
    
    83,746
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
  Overview
 Recent Developments
  10




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Our Relationship with Helix
   Critical Accounting Estimates and Policies
  Recently Issued Accounting Principles
   11




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Results of Operations
 Comparison of Three Months Ended June 30, 2007 and 2006
 Revenues.
 Gross profit.
 Selling and administrative expenses.
 Net interest expense.
 Equity in earnings (loss) of investment, inclusive of impairment.
 Income taxes.
 Net income.
 Comparison of Six Months Ended June 30, 2007 and 2006
 Revenues.
 12




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Gross profit.
 Selling and administrative expenses.
 Equity in earnings (loss) of investment, net of impairment.
 Net interest income (expense).
 Income taxes.
 Net income.
 Vessel Utilization
  Three Months Ended June 30,
    
    Six Months Ended June 30,2007
    
    2006
    
    2007
    
    2006Number of
    
    Utilization
    
    Number of
    
    Utilization
    
    Number of
    
    Utilization
    
    Number of
    
    UtilizationVessels (1)
    
    (2)
    
    Vessels (1)
    
    (2)
    
    Vessels (1)
    
    (2)
    
    Vessels (1)
    
    (2)Saturation diving
    
    
    8
    
    
    
    88
    %
    
    
    7
    
    
    
    97
    %
    
    
    8
    
    
    
    91
    %
    
    
    7
    
    
    
    95
    %Surface and mixed gas diving
    
    
    15
    
    
    
    70
    %
    
    
    15
    
    
    
    98
    %
    
    
    15
    
    
    
    67
    %
    
    
    15
    
    
    
    98
    %Shallow water pipelay
    
    
    2
    
    
    
    98
    %
    
    
    2
    
    
    
    100
    %
    
    
    2
    
    
    
    97
    %
    
    
    2
    
    
    
    100
    %Entire fleet
    
    
    25
    
    
    
    77
    %
    
    
    24
    
    
    
    98
    %
    
    
    25
    
    
    
    76
    %
    
    
    24
    
    
    
    97
    %
 
 (1)
    
    As of the end of the period and excluding acquired vessels prior to their in-service dates, vessels taken out of service prior to their disposition and vessels jointly owned with a third party. 13




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(2)
    
    Effective vessel utilization is calculated by dividing the total number of days the vessels generated revenues by the total number of days the vessels were available for
operation in each quarter and does not reflect acquired vessels prior to their in-service
dates, vessels in drydocking, vessels taken out of service for upgrades or prior to their
disposition and vessels jointly owned with a third party. Liquidity and Capital Resources
    Cash Flows
 Operating activities.
 Investing Activities.
 DLB801 Kestrel
 Financing activities.
 14




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Capital Expenditures
  Revolving Credit Facility
     Contractual and Other Obligations
   Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in thousands)Payable to Helix
    
    $
    8,831
    
    
    $
    3,995
    
    
    $
    2,643
    
    
    $
    1,622
    
    
    $
    571Noncancelable operating leases and charters
    
    
    17,873
    
    
    
    8,124
    
    
    
    2,672
    
    
    
    1,870
    
    
    
    5,207Long-term debt
    
    
    140,000
    
    
    
    
    
    
    
    
    
    
    
    140,000
    
    
    
    Acquisition of Horizon (1)
    
    
    302,500
    
    
    
    302,500
    
    
    
    
    
    
    
    
    
    
    
    Total cash obligations
    
    $
    469,204
    
    
    $
    314,619
    
    
    $
    5,315
    
    
    $
    143,492
    
    
    $
    5,778
 15




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(1)
    
    Related to the cash portion of CDIs pending Horizon acquisition. The Company has
obtained a commitment for long-term financing to fund the cash portion of the acquisition. See
Notes to Condensed Consolidated and Combined Financial Statements (Unaudited)  Note 11 included
herein for detailed discussion of this transaction. Off-Balance Sheet Arrangements
 ,
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk Management
  
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  16




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PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
   WITHHOLDFOR
    
    AUTHORITYOwen E. Kratz
    
    
    73,022,182
    
    
    
    9,418,590David E. Preng
    
    
    81,456,590
    
    
    
    984,182
   FOR
    
    
    73,939,134AGAINST
    
    
    4,270,872ABSTAIN
    
    
    35,300
 
 Item 6. Exhibits
  ExhibitNumber
    
    Exhibit Title2.1
    
    Agreement and Plan of Merger, dated as of June 11, 2007 by and among Cal Dive International,
Inc., Cal Dive Acquisition, LLC and Horizon Offshore, Inc. (1)3.1
    
    Amended and Restated Certificate of Incorporation of Cal Dive International, Inc. (2)3.2
    
    Amended and Restated Bylaws of Cal Dive International, Inc. (2)4.1
    
    Specimen Common Stock certificate of Cal Dive International, Inc. (3)10.1
    
    Amended and Restated 2006 Long Term Incentive Plan (4) (5)10.2
    
    Form of Indemnity Agreement by and between Cal Dive International, Inc. and each of its
directors and named executive officers (4) (5)31.1
    
    Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Quinn J.
Hébert, Chief Executive Officer31.2
    
    Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by G. Kregg
Lunsford, Chief Financial Officer32.1
    
    Section 1350 Certification by Chief Executive Officer and Chief Financial Officer
 
 (1)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed June 12, 2007. 17




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(2)
    
    Incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006.(3)
    
    Incorporated by reference from the Companys Registration Statement on Form S-1 (Registration No. 333-134609) initially filed with the Commission on May 31, 2006, as amended.(4)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed May 11, 2007.(5)
    
    Compensatory plan or arrangement. Items 1, 2, 3 and 5 are not applicable and have been omitted.
 18




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SIGNATURES
  CAL DIVE INTERNATIONAL, INC.By:
    /s/ Quinn J. HébertQuinn J. HébertPresident and Chief Executive OfficerBy:
    /s/ G. Kregg LunsfordG. Kregg LunsfordExecutive Vice President,

Chief Financial Officer and Treasurer 19




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EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Title2.1
    
    Agreement and Plan of Merger, dated as of June 11, 2007 by and among Cal Dive International,
Inc., Cal Dive Acquisition, LLC and Horizon Offshore, Inc. (1)3.1
    
    Amended and Restated Certificate of Incorporation of Cal Dive International, Inc. (2)3.2
    
    Amended and Restated Bylaws of Cal Dive International, Inc. (2)4.1
    
    Specimen Common Stock certificate of Cal Dive International, Inc. (3)10.1
    
    Amended and Restated 2006 Long Term Incentive Plan (4) (5)10.2
    
    Form of Indemnity Agreement by and between Cal Dive International, Inc. and each of its
directors and named executive officers (4) (5)31.1
    
    Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Quinn J.
Hébert, Chief Executive Officer31.2
    
    Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by G. Kregg
Lunsford, Chief Financial Officer32.1
    
    Section 1350 Certification by Chief Executive Officer and Chief Financial Officer
 
 (1)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed June 12, 2007.(2)
    
    Incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006.(3)
    
    Incorporated by reference from the Companys Registration Statement on Form S-1 (Registration No. 333-134609) initially filed with the Commission on May 31, 2006, as amended.(4)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed May 11, 2007.(5)
    
    Compensatory plan or arrangement. 20