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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported) February 15, 2001
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CAL DIVE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 95-3409686
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
400 N. SAM HOUSTON PARKWAY E., SUITE 400, HOUSTON, TEXAS 77060
(Address of Principal Executive Offices) (Zip Code)
(281) 618-0400
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 - 2000 Fourth Quarter Report to Shareholders of Cal Dive
International, Inc.
Item 9. Regulation FD Disclosure
In accordance with General Instruction B.2. of Form 8-K, the
information incorporated by reference herein should not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
except as shall be expressly set forth by specific reference in such a filing.
The 2000 Fourth Quarter Report to Shareholders which discusses Cal
Dive's fourth quarter financial results and its forecast for its first quarter
ending March 31, 2001 and for the year ending December 31, 2001 is filed as
Exhibit 99.1 and is incorporated herein by reference.
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CAL DIVE INTERNATIONAL, INC.
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.
Date: February 15, 2001
CAL DIVE INTERNATIONAL, INC.
By: /s/ S. JAMES NELSON
-------------------------
S. James Nelson
Vice Chairman
By: /s/ A. WADE PURSELL
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A. Wade Pursell
Senior Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1 2000 Fourth Quarter Report to Shareholders of
Cal Dive International, Inc.
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Exhibit 99.1
2000 FOURTH QUARTER REPORT
February 15, 2001
TO OUR SHAREHOLDERS:
Your Company delivered record earnings in a quarter when offshore construction
activity was curtailed by a soft market and weather, including nine separate
winter fronts that rolled through the Gulf of Mexico during December. Those
same fronts also drove year-end natural gas prices to $10.00/mcf and
accentuated the countercyclical strategy of our gas production company, Energy
Resource Technology (ERT). Although service company margins have remained under
severe pressure since the oil price collapse of 1998, the ERT "safety net" has
provided CDI strong earnings and cash flow that have carried us through this
challenging period. Pricing leverage has begun to shift from the producers to
service companies, leading us to expect a period of rapidly escalating rates
that will make the next couple of years good ones for offshore construction
companies. Wall Street has rewarded Cal Dive shareholders for this performance
and outlook by increasing the market valuation of CDIS 61% in 2000, following a
60% increase in 1999. The fourth quarter also saw a significant increase in the
public float of CDIS following the two-for-one stock split effected in
November.
FINANCIAL HIGHLIGHTS
We are extremely proud that 2000 earnings come within $800,000 of the all-time
record set in 1998, despite one of the worst years ever experienced by the
offshore construction industry.
FOURTH QUARTER TWELVE MONTHS _
--------------------------------------- ----------------------------------------
2000 1999 INCREASE 2000 1999 INCREASE
------------ ----------- -------- ------------ ------------ --------
REVENUES $51,297,000 $42,374,000 21% $181,014,000 $160,954,000 12%
NET INCOME 8,766,000 3,154,000 178% 23,326,000 16,899,000 38%
DILUTED EARNINGS PER SHARE 0.27 0.10 170% 0.72 0.55 31%
* REVENUES: The 21% improvement over the same quarter a year-ago is
particularly impressive, as last year we had two significant Deepwater
projects (Diana and Cooper) underway. Strong commodity prices enabled ERT
to generate the same 40% of consolidated revenues that the division has
averaged this year.
* GROSS PROFIT: Contracting profitability was more than double the third
quarter, increasing overall margins to 38% from 20% a year ago. ERT
margins continued to run in the 50 to 60% range given existing levels of
oil and natural gas prices.
* SG&A: $6.5 million was 13% of revenues in contrast to 10% in Q4 last year
as strong performance for the quarter triggered incentive compensation.
Last year, no bonuses were paid except to ERT employees.
* CASH POSITION: EBITDA of $65 million set a new CDI record at 36% of
revenues, up from the 28% average of the past three years. Collection of
income tax refunds in January pushed cash balances above $50 million as
of the date of this report.
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OPERATIONAL HIGHLIGHTS
* CDI FLEET: Our decision to move two key assets (the Uncle John and Witch
Queen) to Mexican waters during Q4 was a good one. Sea states were more
stable in the Bay of Campeche and the day-rate jobs enabled our fleet of
DP vessels to register the highest margins of the year. The Sea Sorceress
finished a pipeline remediation job for Coastline/Enron before going into
drydock in Mobile, Alabama, for the DP conversion. With both the Uncle
John and the Witch Queen outside the Gulf and despite very poor weather
conditions, the Cal Diver I showed its versatility on new construction
work by successfully completing the pipeline tie-ins which enabled first
flow of production from Shell Hickory.
* WELL OPERATIONS: Our new Q4000 and the Uncle John target a specific
niche: well intervention and completion. During the past year we have
organized a 15-person well operations group under the leadership of Andy
Scott. Earl Broussard (from Cooper-Cameron) and Colin Johnston (Baker
Hughes, Inteq) have joined Ian Collie as managers working with Alliance
partners Schlumberger and FMC. This group recently completed a "world
first" on a well intervention project for Conoco. The Uncle John served
as a dynamically positioned work platform for this project in what would
usually be classed as "jack-up water," i.e. 200 feet of water. The well
abandonment, utilizing the Schlumberger Sen Tree III System as an open
water riser system, marked the first time this type of intervention has
been completed anywhere.
* BARGE OPERATIONS: Our weather-susceptible Cal Dive Barge I had limited
activity during Q4, a period characterized by soft salvage and shallow
water construction markets. Revenues for the fourth quarter and for the
year were less than half of those generated in the comparable periods of
1999, which included our largest salvage job ever and considerable
Horizon Alliance barge activity. On a brighter note, 71 platforms that
had been scheduled for removal in 2000 have been deferred into the
current year. We expect that this decommissioning work will occur at a
time when OCS construction activity will also ramp up, causing a
significant increase in 2001 salvage rates.
* ERT: The December weather and looming natural gas shortages resulted in
an average realized price of $5.75/mcf, more than double the $2.25
realized in Q4 last year. Oil averaged $31.30 and represented 26% of Q4
production in contrast to $21 per barrel and 34% in the same period of
last year. Production of 3.7 BCFe compares to the 4.2 BCFe average of the
prior two quarters with the decrease due to a field taken out of service
while a well was being drilled, and because of the decline curve of
mature properties. The exploitation work at Vermilion 201 confirmed
behind pipe oil reserves which were brought on line at the end of
December and added roughly 2 BCF of reserves from a new location.
* AQUATICA: Revenues of our shallow water operation were up 25% over Q4
last year as these services support upstream drill rig activity. The
dramatic increase in rates for utility and supply boats are also
impacting what customers pay for the diving services we provide off
similar vessels. After a long and distinguished career in the diving
industry and having helped us integrate Aquatica into Cal Dive, Sonny
Freeman has announced his retirement to spend more time with his family.
We wish him all the best for the future. Steve Brazda replaces Sonny as
President of Aquatica.
* FORECAST: The attached appendix contains our preliminary thoughts
regarding the year 2001 in general and the first quarter specifically.
The ranges of these forecasts fall pretty much in line with First Call
estimates; i.e. diluted earnings per share of 18 to 22 cents in Q1 and 90
cents to $1.00 for the full year.
Respectfully submitted,
/s/ OWEN E. KRATZ /s/ MARTIN R. FERRON /s/ JAMES NELSON, JR.
Owen E. Kratz Martin R. Ferron S. James Nelson, Jr.
Chairman President Vice Chairman
Chief Executive Officer Chief Operating Officer
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APPENDIX
DISCLOSURE OF FIRST QUARTER AND 2001 ESTIMATES
This narrative sets forth current estimates of operating and financial data for
the first quarter and year ending December 31, 2001. All of the assumptions
upon which these estimates are based constitute FORWARD LOOKING STATEMENTS
within the meaning of Section 27 A of the Securities Act of 1933, Section 21 E
of the Securities Exchange Act of 1934 and the Private Securities Litigation
Reform Act of 1995. Although we believe that these forward looking statements
are based on reasonable assumptions, a number of factors could affect the
future results of the Company or the offshore oilfield industry generally, and
could cause actual results to differ materially from those estimated. Those
factors are set forth in more detail in our filings with the Securities and
Exchange Commission to which the reader is referred.
FIRST QUARTER0
o VESSEL AVAILABILITY: The Cal Diver I will undergo a regulatory
inspection during the quarter. The Merlin is cold-stacked in Morgan
City and the Sea Sorceress is in Mobile, Alabama, undergoing DP
conversion.
o WEATHER CONDITIONS: Winter weather conditions in the Gulf of Mexico
typically restrict vessel utilization in this quarter, particularly
for salvage operations.
o CONTRACTING REVENUES: Expected to be 70% to 80% of Q1 levels last year
when a major project (The Cooper Deepwater field abandonment)
accounted for 22% of the quarter's revenues.
o NATURAL GAS PRICES: An average between $6.00 and $6.75 per mcf. Prices
in the remaining two months of the quarter will fluctuate
significantly depending upon weather temperatures and ending storage
levels.
o OIL PRICES: An average realized price of $27 to $29 per barrel. Oil
will represent from 25 to 27% of ERT production volumes.
o GAS & OIL PRODUCTION: 3.4 to 3.7 BCFe, a level generally consistent
with Q4 2000.
o MARGINS: Assumed commodity prices should enable consolidated margins
similar to that of the fourth quarter of 2000. We expect an
improvement in OCS contracting gross profit as rates have increased
for these services and several of last year's construction projects
were delayed by November and December weather.
o TAX RATE: 35%, consistent with prior quarters.
o SHARES OUTSTANDING: 33 million fully diluted shares.
o EPS: Diluted earnings per share are projected in a range of 18 to 22
cents.
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YEAR 2001
o CONSOLIDATED REVENUES: Range from $200 million to $215 million. The
addition of the Q4000 and Sea Sorceress, together with a significant
improvement in the operations of those vessels that work the OCS, are
expected to increase contracting revenues by $30 million to $40
million over 2000 levels.
o VESSEL UTILIZATION: An increase of approximately 20% with two new
assets coming into service (the Q4000 and Sea Sorceress) and stronger
demand for the CDI DSV's that work the OCS.
o NATURAL GAS PRICES: We are assuming that realized prices will average
between $4.50 and $5.00 per mcf for the full year, in contrast to
$4.03 in 2000.
o OIL PRICES: An average realized price of $25.00 per barrel, down from
the $28.60 realized in 2000.
o GAS AND OIL PRODUCTION: Assumed property acquisitions are expected to
enable ERT to offset the steep decline of the mature properties in our
portfolio and maintain production at a level basically consistent with
the prior year.
o MARGINS: 28% to 30%, a level consistent with 2000 and with our average
during the years 1996 through 1998.
o OVERHEAD: Our corporate goal is to keep selling and administrative
expenses at or below 10% of revenues.
o EBITDA: Expect that we will maintain last year's 36% margin, which
will help fund up to $150 million of capital spending in 2001.
o TAX RATE: A level of 35% is expected but could be adjusted depending
upon Research and Development expenditures associated with the Q4000
for tax reporting purposes.
o DEBT: May draw a total of only $80 million on MARAD ($40 million in
2001) versus the $138 million committed to fund completion of the
Q4000. Our cash model forecasts only $80 million of debt outstanding
at year-end 2001, or a debt-to-total-capitalization ratio of 19%.
o SHARES OUTSTANDING: 33 million fully diluted shares.
o EPS: Diluted earnings per share are projected in a range of $0.90 to
$1.00.
