UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended September 30, 1998
( ) 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: 0-22739
--------------------------------
Cal Dive International, Inc.
(Exact Name of Registrant as Specified in its Charter)
Minnesota 95-3409686
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
400 N. Sam Houston Parkway E.
Suite 400
Houston, Texas 77060
(Address of Principal Executive Offices)
(281) 618-0400
(Registrant's telephone number,
Including area code)
---------------------
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13(b) or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
At November 13, 1998 there were 14,558,831 shares of common stock, no par
value outstanding.
CAL DIVE INTERNATIONAL, INC.
INDEX
Part I. Financial Information
Page
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997....................1
Consolidated Statements of Operations -
Three Months Ended September 30, 1998 and
September 30, 1997.......................................2
Nine Months Ended September 30, 1998 and
September 30, 1997.......................................3
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1998 and
September 30, 1997.........................................4
Notes to Consolidated Financial Statements.......................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................12
Signatures......................................................13
PART I. FINANCIAL STATEMENTS
Item 1. Financial Statements
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPT. 30, DEC. 31,
1998 1997
----------- ----------
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 19,764 $ 13,025
Accounts receivable --
Trade, net of revenue allowance
on gross amounts billed of
$2,374 and $1,822 .................... 30,840 23,856
Unbilled revenue .......................... 4,787 8,134
Other current assets ........................... 9,901 4,947
--------- ---------
Total current assets ................... 65,292 49,962
--------- ---------
PROPERTY AND EQUIPMENT ............................... 105,775 89,499
Less - Accumulated depreciation ................ (26,362) (20,021)
--------- ---------
79,413 69,478
--------- ---------
OTHER ASSETS:
Cash deposits restricted for salvage operations 5,633 5,670
Investment in Aquatica, Inc. ................... 6,356 0
Other assets, net .............................. 1,219 490
--------- ---------
$ 157,913 $ 125,600
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................... $ 14,387 $ 12,919
Accrued liabilities ............................ 9,336 7,514
Income taxes payable ........................... 5,634 602
--------- ---------
Total current liabilities ................. 29,357 21,035
LONG-TERM DEBT ....................................... 0 0
DEFERRED INCOME TAXES ................................ 9,945 8,745
DECOMMISSIONING LIABILITIES .......................... 10,459 6,451
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par, 60,000 shares
authorized, 21,365 and 21,345 shares issued
and outstanding ........................... 52,840 52,832
Retained earnings .............................. 59,063 40,288
Treasury stock, 6,820 shares, at cost .......... (3,751) (3,751)
--------- ---------
Total shareholders' equity ................ 108,152 89,369
--------- ---------
$ 157,913 $ 125,600
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
-1-
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SEPT. 30,
----------------------------
1998 1997
-------- ---------
(unaudited)
NET REVENUES:
Subsea and salvage ......................... $ 40,782 $ 25,480
Natural gas and oil production ............. 2,131 3,379
-------- --------
42,913 28,859
COST OF SALES:
Subsea and salvage ......................... 25,758 18,639
Natural gas and oil production ............. 2,039 1,801
-------- --------
Gross profit .......................... 15,116 8,419
-------- --------
SELLING AND ADMINISTRATIVE EXPENSES:
Selling expenses ........................... 293 319
Administrative expenses .................... 4,121 2,189
-------- --------
Total selling and administrative
expenses ........................... 4,414 2,508
-------- --------
INCOME FROM OPERATIONS ........................... 10,702 5,911
OTHER INCOME AND EXPENSE:
Equity in earnings of Aquatica, Inc. ....... 700 0
Net interest (income) expense and other .... (253) (229)
-------- --------
INCOME BEFORE INCOME TAXES ....................... 11,655 6,140
Provision for income taxes ................. 4,078 2,157
-------- --------
NET INCOME ....................................... $ 7,577 $ 3,983
======== ========
EARNINGS PER COMMON SHARE:
Basic ...................................... $ 0.52 $ 0.28
Diluted .................................... $ 0.51 $ 0.27
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic ...................................... 14,553 14,322
Diluted .................................... 14,985 14,795
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
-2-
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPT. 30,
---------------------------
1998 1997
------------ -----------
(unaudited)
NET REVENUES:
Subsea and salvage .......................... $ 105,351 $ 64,326
Natural gas and oil production .............. 9,245 11,605
--------- ---------
114,596 75,931
COST OF SALES:
Subsea and salvage .......................... 70,150 46,741
Natural gas and oil production .............. 6,632 6,066
--------- ---------
Gross profit ........................... 37,814 23,124
--------- ---------
SELLING AND ADMINISTRATIVE EXPENSES:
Selling expenses ............................ 937 1,028
Administrative expenses ..................... 10,014 5,657
--------- ---------
Total selling and administrative
expenses ............................. 10,951 6,685
--------- ---------
INCOME FROM OPERATIONS ............................ 26,863 16,439
OTHER INCOME AND EXPENSE:
Equity in earnings of Aquatica, Inc. ........ 1,333 0
Net interest (income) expense and other ..... (687) 419
--------- ---------
INCOME BEFORE INCOME TAXES ........................ 28,883 16,020
Provision for income taxes .................. 10,109 5,547
--------- ---------
NET INCOME ........................................ $ 18,774 $ 10,473
========= =========
EARNINGS PER COMMON SHARE:
Basic ....................................... $ 1.29 $ 0.84
Diluted ..................................... $ 1.25 $ 0.82
========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic ....................................... 14,544 12,402
Diluted ..................................... 14,977 12,797
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED SEPT. 30,
---------------------------
1998 1997
------------- ------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 18,774 $ 10,473
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation and amortization ................... 6,389 5,424
Deferred income taxes ........................... 1,200 3,108
Equity in earnings of Aquatica, Inc. ............ (1,333) 0
Gain on sale of property ........................ 0 (464)
Changes in operating assets and liabilities:
Accounts receivable, net ........................ (3,637) (3,282)
Other current assets ............................ (4,954) (3,131)
Accounts payable and accrued liabilities ........ 3,290 (480)
Income taxes payable/receivable ................. 5,033 367
Other non-current, net .......................... (876) 489
-------- --------
Net cash provided by operating activities .... 23,886 12,504
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................. (12,232) (19,410)
Investment in Aquatica, Inc. ......................... (5,023) 0
Purchase of deposits restricted for salvage operations 0 (213)
Proceeds from sale of property ....................... 0 1,084
-------- --------
Net cash used in investing activities ........ (17,255) (18,539)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock, net of transaction costs ....... 0 39,456
Sale of treasury stock, net of transaction costs ..... 0 4,359
Borrowings under term loan facility .................. 0 6,700
Exercise of stock options ............................ 108 0
Repayments of long-term debt ......................... 0 (31,700)
-------- --------
Net cash provided by financing activities .... 108 18,815
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS .................. 6,739 12,780
CASH AND CASH EQUIVALENTS:
Balance, beginning of period ......................... 13,025 204
-------- --------
Balance, end of period ............................... $ 19,764 $ 12,984
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
-4-
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements include the accounts of Cal Dive
International, Inc. (Cal Dive, CDI or the Company) and its wholly owned
subsidiaries, Energy Resource Technology, Inc. (ERT) and Cal Dive Offshore, Ltd.
All significant intercompany accounts and transactions have been eliminated.
These financial statements are unaudited and have been prepared pursuant to
instructions for the Quarterly Report on Form 10-Q required to be filed with the
Securities and Exchange Commission and do not include all information and
footnotes normally included in financial statements prepared in accordance with
generally accepted accounting principles.
Management has reflected all adjustments (which were normal recurring
adjustments) which it believes are necessary for a fair presentation of the
consolidated balance sheets, results of operations, and cash flows, as
applicable. Operating results for the periods ended September 30, 1998, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. These financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K.
NOTE 2 - INVESTMENT IN AQUATICA, INC.
In February 1998, CDI purchased a significant minority equity interest in
Aquatica, Inc. for $5 million, in addition to a commitment to lend additional
funds of up to $5 million to allow Aquatica to purchase vessels and fund other
growth opportunities. Aquatica, Inc., headquartered in Lafayette, Louisiana, is
a surface diving company founded in October 1997 with the acquisition of
Acadiana Divers, a 15 year old surface diving company. Dependent upon various
preconditions, as defined, the shareholders of Aquatica, Inc. have the right to
convert their shares into Cal Dive shares at a ratio based on a formula which,
among other things, values their interest in Aquatica, Inc. and must be
accretive to Cal Dive shareholders. CDI accounts for this investment on the
equity basis of accounting for financial reporting purposes.
NOTE 3 - ACQUISITION OF OFFSHORE BLOCKS
In January 1998, ERT acquired interests in six blocks involving two separate
fields (a 55% interest in East Cameron 231 and a 10% interest in East Cameron
353) from Sonat Exploration Company ("Sonat"). The properties were purchased in
exchange for cash of $1 million, as well as assumption of Sonat's pro rata share
of the related decommissioning liability.
NOTE 4 - CHANGE IN ACCOUNTING POLICY
Effective January 1, 1998, the Company changed its method of accounting for
regulatory (U.S. Coast Guard, American Bureau of Shipping and Det Norske
Veritas) related drydock inspection and certification expenditures. This change
was made due to the significant changes in the composition of the Company's
fleet which has been expanded to include more sophisticated dynamically
positioned vessels that are capable of working in the deepwater Gulf of Mexico,
a key to Cal Dive's operating strategy. The change also coincides with the first
time these vessels were due for drydock inspection and certification since being
acquired by CDI. The Company previously expensed inspection and certification
costs as incurred; however, effective January 1, 1998, such expenditures will be
capitalized and amortized over the 30-month period between regulatory mandated
drydock inspections and certification. This predominant industry practice
provides better matching of expenses with the period benefited (i.e.,
certification to operate the vessel for a 30-month period between required
drydock inspections and to meet bonding and insurance coverage requirements).
This change had an $800,000 positive impact on net income, or $0.05 per share,
in the Company's first quarter 1998 consolidated financial statements. The
cumulative effect of this change in accounting principle is immaterial to the
Company's consolidated financial statements taken as a whole.
NOTE 5 - SECONDARY STOCK OFFERING
In May 1998, the Company completed a secondary offering of 2,867,070 shares of
common stock at $33.50 per share on behalf of certain selling shareholders. The
Company received no proceeds from the offering. However, shareholder liquidity
was enhanced as public ownership increased to approximately 50% of the shares
outstanding and accordingly, the average daily trading volume of CDI has
increased proportionately since the secondary offering.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
FORWARD LOOKING STATEMENTS AND ASSUMPTIONS
This Quarterly Report on Form 10-Q may contain or incorporate by reference
certain forward-looking statements. Forward looking statements and assumptions
in this report that are not statements of historical fact involve risks and
assumptions that could cause actual results to vary materially from those
predicted, including among other things, unexpected delays and operational
issues associated with turnkey projects, the price of crude oil and natural gas,
weather conditions in offshore markets, changes in site conditions and capital
expenditures by customers. The Company strongly encourages readers to note that
some or all of the assumptions, upon which such forward-looking statements are
based, are beyond the Company's ability to control or estimate precisely, and
may in some cases be subject to rapid and material changes. Accordingly,
evaluation of future prospects of the Company must be made with caution when
relying on forward-looking information.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
REVENUES. During the three months ended September 30, 1998, the Company's
revenues increased 49% to $42.9 million compared to $28.9 million for the three
months ended September 30, 1997. The Subsea and Salvage segment contributed all
of the increase with the revenues of the Natural Gas and Oil Production segment
declining $1.3 million. All of the Subsea and Salvage increase was generated by
the Company's fleet of dynamically positioned, deepwater vessels. New assets
(SEA SORCERESS and MERLIN) accounted for $5 million of the $14 million increase
with the balance due to strong customer demand for the UNCLE JOHN, WITCH QUEEN
and BALMORAL SEA. This record level of revenues was achieved even though
Hurricane Georges and two tropical storms reduced vessel utilization to only 50%
in September.
Natural gas and oil production revenue for the three months ended
September 30, 1998 was $2.1 million as compared to $3.4 million for the three
months ended September 30, 1997. Production declined 42% during the third
quarter of 1998 as compared to the third quarter 1997 as several key ERT wells
remained offline as workover operations were delayed first by a lack of
available equipment and then by weather. Also contributing to the decline in
revenue was a decrease in natural gas prices which averaged $1.99/Mcf during the
three months ended September 30, 1998 as compared to $2.29/Mcf for the three
months ended September 30, 1997.
GROSS PROFIT. Gross profit increased $6.7 million, or 80%, from $8.4
million for the three months ended September 30, 1997, to $15.1 million for the
three months ended September 30, 1998. The increase was due mainly to
exceptional offshore performance and strong rates for the DP fleet (particularly
the UNCLE JOHN, WITCH QUEEN and BALMORAL SEA which combined for an $8.2 million
increase) which offset the negative impact of the Natural Gas and Oil Production
segment. Operations of the Company's most weather susceptible vessel, the Cal
Dive Barge I, were curtailed in the quarter while incurring fixed third party
costs for chartered tugs and material
- 7 -
barges. In addition, weather and concerns about lack of progress in the dredging
of "glory holes" caused the Terra Nova Alliance to suspend operations, resulting
in break-even results for the Sea Sorceress.
Natural gas and oil production gross profit was $92,000 for the three
months ended September 30, 1998, as compared to $1.6 million during the same
period in the prior year. The decrease was due to the aforementioned declines in
production and average gas prices.
SELLING & ADMINISTRATIVE EXPENSES. Selling and administrative expenses
increased $1.9 million, to $4.4 million for the three months ended September 30,
1998, as compared to $2.5 million during the same period in the prior year.
Included in the $4.4 million is $1.1 million of incremental provision for 1998
Incentive Compensation. In prior years, roughly 65% of CDI's business came in
the second half of the year and thus incentive targets were not achieved (and
bonuses were not recorded) until late in the third and into the fourth quarter.
However, based on the first three quarters 1998 bottom line results, an
additional provision was recorded in the third quarter 1998 for incentive
compensation. The remainder of the increase is due to the addition of new
personnel to support the Company's deepwater strategy and growth in its base
business and the cost of a supply chain management consulting study.
OTHER INCOME AND EXPENSE. The Company recorded $700,000 in the third
quarter of 1998 reflecting its share of the earnings of Aquatica, Inc., an
investment made in February of this year. The Company recorded net interest
income and other of $253,000 for the three months ended September 30, 1998, in
line with the $229,000 recorded for the three months ended September 30, 1997 as
the Company was debt free in both periods.
INCOME TAXES. Income taxes of $4.1 million for the three months ended
September 30, 1998, increased over the comparable prior year period due to
increased profitability as the effective tax rate remained 35% in both periods.
NET INCOME. Net income of $7.6 million for the three months ended
September 30, 1998 was $3.6 million, or 90%, more than the comparable period in
1997 as a result of factors described above.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
REVENUES. Consolidated revenues of $114.6 million for the first nine
months of 1998 were 51% more than the $75.9 million earned during the first
three quarters of 1997 with the Subsea and Salvage segment contributing all of
the increase while natural gas and oil production revenues declined $2.4
million. The majority of the increase was due to increased demand for services
provided by CDI's DP vessels, particularly the UNCLE JOHN, WITCH QUEEN and
BALMORAL SEA which together contributed 61% of the increase. In addition, new
vessels (SEA SORCERESS and MERLIN) contributed $8 million of the increase. The
charter of two Coflexip Stena Offshore vessels, the MARIANOS during the first
quarter and the CONSTRUCTOR in the second, added almost $8 million to 1998
revenues.
Natural gas and oil production was $9.2 million for the first nine months
of 1998 as
- 8 -
compared to $11.6 million for the comparable period of 1997. The decrease was
due to a decline in production from 4.1 BCF during the nine months ended
September 30, 1997 to 3.5 BCF during the same period this year and also a
decline in average gas prices from $2.44/Mcf for the first three quarters of
1997 to $2.15/Mcf during the nine months ended September 30, 1998. The decline
in production is a result of five wells going off line in the second quarter and
remedial work delayed throughout the third quarter by a lack of equipment and
then by weather.
GROSS PROFIT. Gross profit increased by $14.7 million, or 64%, from $23.1
million in the first three quarters of 1997 to $37.8 million in the first nine
months of 1998 with the UNCLE JOHN, WITCH QUEEN AND BALMORAL SEA making up the
majority of the increase. The remaining increase was due to improved demand for
the two saturation diving vessels and the vessels which work in the shallow Gulf
of Mexico (from the shore to 300 feet of water). Subsea and Salvage margins
increased from 27% in the first three quarters of 1997 to 33% during the same
period of 1998 due mainly to outstanding offshore performance and demand for the
DP vessels.
Natural gas and oil production gross profit was $2.6 million for the nine
months ended September 30, 1998 as compared to $5.5 million for the comparable
prior year period. The decrease was due to the aforementioned declines in
average natural gas prices and production during the first three quarters of
1998 as compared to the same period of 1997.
SELLING & ADMINISTRATIVE EXPENSES. Selling and administrative expenses
increased $4.3 million to $11.0 million in the nine months ended September 30,
1998 as compared to the first three quarters of 1997. The $11.0 million includes
a $2.5 million provision principally for 1998 Incentive Compensation compared to
$400,000 provided in such period of 1997. The remainder of the increase is due
to the addition of new personnel to support the Company's deepwater strategy,
growth in its base business and to the cost of a supply chain consulting
project. Administrative costs were 9.5% of revenues in the first nine months of
1998, a level virtually identical to that in the same period of 1997.
OTHER INCOME AND EXPENSE. The Company recorded $1.3 million in the first
three quarters of 1998 reflecting its share of earnings of Aquatica, Inc. Net
interest income and other of $687,000 for the nine months ended September 30,
1998 compares to $419,000 of net interest expense and other for the nine months
ended September 30, 1997. This improvement was due to the repayment of all
outstanding debt with proceeds from its initial public offering of common stock
in July 1997.
INCOME TAXES. Income taxes were $10.1 million for the first half of 1998
as compared to $5.5 million for the comparable prior year period. The increase
was due to the Company's increased profitability as the effective tax rate
remained 35% in both periods.
NET INCOME. Net income increased 79% to $18.8 million in the nine months
ended September 30, 1998 as compared to $10.5 million in the first three
quarters of 1997 as a result of factors described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operating activities by internally
generated cash flow. An initial public offering of common stock was completed on
July 7, 1997, with the sale of
- 9 -
2,875,000 shares generating net proceeds to the Company of approximately $39.5
million, net of underwriting discounts and issuance costs. The proceeds were
used to fund capital expenditures during 1997, and to repay all outstanding
long-term indebtedness. As of September 30, 1998, the Company had $35.9 million
of working capital (including $19.8 million of cash on hand) and no debt
outstanding after funding $12.2 million of capital expenditures, which includes
ERT's purchase of six blocks offshore and the equity investment in Aquatica.
CDI's cash on hand has risen to $30 million as of October 31, 1998.
Additionally, CDI has approximately $40.0 million available under a Revolving
Credit Agreement. The Company has had, and anticipates having additional
discussions with third parties regarding possible asset acquisitions (including
natural gas and oil properties and vessels). However, the Company can give no
assurance that any such transaction can be completed.
OPERATING ACTIVITIES. Net cash provided by operating activities was $23.9
million in the nine months ended September 30, 1998, as compared to $12.5
million provided in the nine months ended September 30, 1997. This increase is
primarily the result of increased profitability of the Company. Other current
assets increased $5.0 million at September 30, 1998 as compared to December 31,
1997 due mainly to the purchases of inventory in connection with the new Full
Field Development program.
INVESTING ACTIVITIES. The Company incurred $12.2 million of capital
expenditures during the first three quarters of 1998 compared to $19.4 million
during the comparable prior year period. In January 1998, ERT acquired interests
in six blocks involving two separate fields from Sonat Exploration Company for
$1.0 million and assumption of Sonat's pro rata share of the related
decommissioning liability. The remaining balance includes costs associated with
placing the MERLIN in service and additions to the SEA SORCERESS in preparation
for the Tera Nova project as well as the cost of new steel and equipment added
to the WITCH QUEEN, BALMORAL SEA and CAL DIVER V during 1998 drydock
inspections. The Company spent $19.4 million in the first nine months of 1997.
The SEA SORCERESS was acquired during the third quarter of 1997. Nearly half of
the remaining capital expenditures related to the acquisition of two ROV's from
Coflexip and costs associated with installation of a derrick on the UNCLE JOHN.
In February 1998, the Company purchased a significant minority equity
investment in Aquatica, Inc. (a surface diving company) for $5.0 million, in
addition to a commitment to lend additional funds of $5.0 million to allow
Aquatica to purchase vessels and fund other growth opportunities. During the
second quarter of 1997, the Company sold two offshore natural gas and oil
properties for approximately $1.0 million.
FINANCING ACTIVITIES. The only financing activity in 1998 represents the
exercise of stock options. During the first nine months of 1997, the Company
repaid the $25 million of borrowing under its Revolving Credit Agreement with
Fleet Capital Corporation. During the second quarter of 1997 Coflexip acquired
3.7 million shares of the Company's stock, consisting of 3.2 million shares sold
by management and First Reserve Funds and 528,541 shares sold by the Company.
CAPITAL COMMITMENTS. The Company does not have any material commitments
for capital expenditures for the next year. However, as discussed previously, in
connection with its business strategy, management expects the Company to acquire
or build additional vessels, as well as buy additional natural gas and oil
properties.
- 10 -
IMPACT OF YEAR 2000 ISSUE
The Company has assessed what computer software will require modification
or replacement so that its computer systems will properly utilize dates beyond
December 31, 1999. The Company has purchased, and has implemented, a new project
management accounting system which is Year 2000 compliant. This system, which
fully integrates all of its modules, provides project managers and accounting
personnel with up-to-date information enabling them to better control jobs in
addition to providing benefits in inventory control and planned vessel
maintenance. Accordingly, the Company believes that with this conversion, the
Year 2000 issue will be resolved in a timely manner and presently does not
believe that the cost to become Year 2000 compliant will have a material adverse
effect on the Company's consolidated financial statements. In this regard, it
should be noted that CDI's vessels are dependent on government satellites and
the government has not yet confirmed that they have solved Year 2000 data
problems.
- 11 -
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various routine legal proceedings primarily
involving claims for personal injury under the General Maritime Laws of
the United States and Jones Act as a result of alleged negligence. The
Company carries insurance for these types of risks and believes that the
outcome of all such proceedings would not have a material adverse effect
on its consolidated financial position, results of operations or net cash
flows.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held on May 12, 1998.
(b) The only matter submitted to a vote of security holders was for (i)
the election of two Class I Directors and (ii) the approval of the
1998 Employee Stock Purchase Plan. The following are the voting
results on each of the matters.
(i) ELECTION OF DIRECTORS VOTES FOR VOTES WITHHELD
--------------------- ----------- ----------------
Owen Kratz 13,715,345 4,311
Thomas M. Ehret 13,715,345 4,311
The other continuing directors of the Company are:
William E. Macaulay
Gordon F. Ahalt
Jean-Bernard Fay
S. James Nelson
David H. Kennedy
Kenneth Hulls
(ii) APPROVAL OF 1998 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------------------
VOTES FOR VOTES AGAINST VOTES ABSTAINED
------------ ----------------- -----------------
13,707,175 0 1,990
Item 5. Other Information
On May 21, 1998, the Company completed a secondary public offering of
common stock with the sale of 2,867,070 shares on behalf of certain
selling shareholders. No proceeds from the sale were received by the
Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being submitted
as an exhibit only in the electronic format of this Quarterly Report
on Form 10-Q being submitted to the Securities and Exchange
Commission.)
(b) Reports on Form 8-K - None.
- 12 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAL DIVE INTERNATIONAL, INC.
Date: November 13, 1998 By: /s/ S. JAMES NELSON
S. James Nelson, Executive Vice
President and Chief Financial Officer
Date: November 13, 1998 By: /s/ A. WADE PURSELL
A. Wade Pursell, Vice President-Finance
and Chief Accounting Officer
-13-
5
1,000
9-MOS
DEC-31-1998
SEP-30-1998
19,764
0
35,627
2,374
0
65,292
105,775
26,362
157,913
29,357
0
0
0
52,840
55,312
157,913
114,596
114,596
76,782
87,733
(1,333)
0
(687)
28,883
10,109
18,774
0
0
0
18,774
1.29
1.25
