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) May 3, 2004
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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)
Item 7. Financial Statements and Exhibits.
Number Description
------ ----------------------------------------------------------
99.1 Press Release of Cal Dive International, Inc. dated
May 3, 2004 reporting Cal Dive's financial results for the
first quarter of 2004.
99.2 2004 First Quarter Report to Shareholders.
Item 12. Results of Operations and Financial Condition.
Incorporated by reference are the press release and 2004 First Quarter Report to
Shareholders issued by the Registrant on May 3, 2004 regarding earnings for the
first quarter of 2004, attached as Exhibits 99.1 and 99.2, respectively. This
information is not deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934 and is not incorporated by reference into any
Securities Act registration statements.
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: May 3, 2004
CAL DIVE INTERNATIONAL, INC.
By: /S/
-----------------------------------
S. James Nelson
Vice Chairman
By: /S/
-----------------------------------
A. Wade Pursell
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------------------------------------
99.1 Press Release dated May 3, 2004
99.2 2004 First Quarter Report to Shareholders
EXHIBIT 99.1
[CDI LOGO] PRESSRELEASE
www.caldive.c Cal Dive International, Inc. - 400 N. Sam Houston Parkway
E., Suite 400 - Houston, TX 77060-3500 - 281-618-0400 - fax: 281-618-0505
FOR IMMEDIATE RELEASE 04-010
CONTACT: JIM NELSON
DATE: MAY 3, 2004 TITLE: VICE CHAIRMAN
CAL DIVE REPORTS FIRST QUARTER EARNINGS OF 36 CENTS
HOUSTON, TX - Cal Dive International, Inc. (Nasdaq: CDIS) reported record first
quarter net income of $13.6 million, or $0.36 per diluted share, an increase of
125% over year ago net income of $6.0 million or $0.16 per diluted share.
Approximately 3 cents of current quarter earnings per share are attributable to
a portion of the Q4000 construction costs qualifying for the Research &
Development tax credit. First quarter revenues of $120.7 million increased 36%
over the year ago quarter due to improved levels of oil and gas production and
DP vessel utilization.
Owen Kratz, Chairman and Chief Executive Officer of Cal Dive, stated, "Record
oil and gas production of 10 BCFe reflects three aspects of our strategy to grow
the scope of our oil and gas business: well exploitation to enhance production
from mature properties, successful PUD developments, and initial production from
CDI's interest in the deepwater Gunnison field. We are aggressively pursuing a
fourth element of this strategy: exporting the ERT model to other basins of the
world.
"Our Marine Contracting people did a great job securing 87% utilization for the
four large DP vessels added to the fleet in 2002 (the Q4000, Seawell, Intrepid
and Eclipse). This utilization enabled our contracting business to generate
positive returns in a quarter when weather typically limits activity in our two
major markets."
Mr. Kratz continued, "The record earnings in the first quarter were achieved
without any contribution from our new business segment, the ownership of
production facilities. Mechanical completion of the Marco Polo TLP was
established March 13. This event triggers the monthly fixed demand charge in the
second quarter, with tariff-related income expected around the end of June. A
binding Memorandum of Understanding has been signed to process production from
the nearby K2 field and we are actively involved in negotiations to tie back
production from other fields in the vicinity."
Cal Dive International, Inc., headquartered in Houston, Texas, is an energy
service company specializing in well operations and subsea construction. CDI
operates a fleet of technically advanced marine construction vessels and
robotics worldwide and conducts salvage operations in the Gulf of Mexico. Energy
Resource Technology, Inc., a wholly
owned subsidiary, acquires and operates mature and non-core offshore oil and gas
properties.
This press release and accompanying shareholder report contain forward-looking
statements that involve risks, uncertainties and assumptions that could cause
our results to differ materially from those expressed or implied by such
forward-looking statements. All statements, other than statements of historical
fact, are statements that could be deemed forward-looking statements, including,
without limitation, any projections of revenue, gross margin, expenses, earnings
or losses from operations, or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statement concerning developments, performance or industry rankings relating to
services; any statements regarding future economic conditions or performance;
any statements of expectation or belief; and any statements of assumptions
underlying any of the foregoing. The risks, uncertainties and assumptions
referred to above include the performance of contracts by suppliers, customers
and partners; employee management issues; as described from time to time in our
reports filed with the Securities and Exchange Commission, including the
company's Annual Report on Form 10-K for the year ending December 31, 2003. We
assume no obligation and do not intend to update these forward-looking
statements.
CAL DIVE INTERNATIONAL, INC.
COMPARATIVE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Mar. 31,
-----------------------------
(000's omitted, except per share data) 2004 2003
- ------------------------------------------------------------ ------------ ------------
(unaudited)
Net Revenues:
Marine Contracting $ 65,519 $ 54,229
Oil and Gas Production 55,195 34,671
------------ ------------
Total Revenues 120,714 88,900
Cost of Sales:
Marine Contracting 61,547 54,243
Oil and Gas Production 27,426 15,461
------------ ------------
Gross Profit 31,741 19,196
Selling and Administrative 11,158 8,953
------------ ------------
Income from Operations 20,583 10,243
Interest Expense (Income), net & Other 1,555 1,101
------------ ------------
Income Before Income Taxes 19,028 9,142
Income Tax Provision 5,019 3,291
------------ ------------
Income Before Change in Accounting Principle 14,009 5,851
Cumulative Effect of Change in Accounting Principle, net 0 530
------------ ------------
Net Income 14,009 6,381
Preferred Stock Dividends and Accretion 364 343
------------ ------------
Net Income Applicable to Common Shareholders $ 13,645 $ 6,038
============ ============
Other Financial Data:
Income from Operations $ 20,583 $ 10,243
Depreciation and Amortization:
Marine Contracting 8,900 7,825
Oil and Gas Production 17,500 8,203
------------ ------------
EBITDA (1) $ 46,983 $ 26,271
============ ============
Weighted Avg. Shares Outstanding:
Basic 37,946 37,553
Diluted 39,150 37,601
============ ============
Earnings Per Share:
Basic $ 0.36 $ 0.16
Diluted $ 0.36 $ 0.16
============ ============
(1) The Company calculates EBITDA as earnings before net interest expense,
taxes, depreciation and amortization. EBITDA is a supplemental non-GAAP
financial measurement used by CDI and investors in the marine construction
industry in the evaluation of its business due to the measurement being
similar to performance of operations.
COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(000'S omitted) Mar. 31, 2004 Dec. 31, 2003
- ---------------------------------------- ------------- -------------
(unaudited)
Current Assets:
Cash and equivalents $ 7,252 $ 8,811
Accounts receivable 101,077 96,607
Other current assets 28,066 25,232
------------- -------------
Total Current Assets 136,395 130,650
Net Property & Equipment:
Marine Contracting 422,971 420,834
Oil and Gas 188,273 197,969
Production Facilities - Deepwater Gateway 40,653 34,517
Goodwill 82,433 81,877
Other assets, net 18,223 16,995
------------- -------------
Total Assets $ 888,948 $ 882,842
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Mar. 31, 2004 Dec. 31, 2003
--------------- ---------------
(unaudited)
Current Liabilities:
Accounts payable $ 39,787 $ 50,897
Accrued liabilities 49,390 36,850
Current mat of L-T debt 31,732(2) 16,199
--------------- ---------------
Total Current Liabilities 120,909 103,946
Long-term debt 172,614 206,632
Deferred income taxes 95,063 89,274
Decommissioning liabilities 75,141 75,269
Other long term liabilities 1,330 2,042
Convertible preferred stock 24,652 24,538
Shareholders' equity 399,239 381,141
--------------- ---------------
Total Liabilities & Equity $ 888,948 $ 882,842
=============== ===============
(2) Reflects $15.9 million relating to the Company's revolving credit facility
(which expires February 2005). A new revolving credit facility is
currently being negotiated and should be in place later this year.
EXHIBIT 99.2
2004 FIRST QUARTER REPORT
May 3, 2004
TO OUR SHAREHOLDERS:
Your company set an all-time earnings record for the first quarter as we
achieved an important milestone: 10 BCFe of oil and gas production. While
initial Gunnison production added 1.5 BCFe, most of the improvement resulted
from the success of last year's well exploitation program. Stronger than
anticipated utilization of our DP vessels, particularly the two dedicated to
Well Ops, also led a sequential and year-over-year improvement in Marine
Contracting. Another CDI milestone was achieved in Q1 as three of our DP vessels
were deployed in the high profile commissioning of the Marco Polo tension-leg
platform (TLP). Two caveats regarding these Q1 trends: First, while Gunnison
production will ramp up during the year, the steep decline curve of our mature
properties will make it a challenge to match last year's Shelf production.
Second, we continue to have little visibility regarding the 2004 contracting
markets, particularly for utilization in the second quarter shoulder months of
April and May, which are typically the lowest of the year.
FINANCIAL HIGHLIGHTS
Net income at 11% of revenues compares favorably with the results of early-cycle
service companies as well as mid to small E&P companies.
FIRST QUARTER
-------------------------------------------------
2004 2003 INCREASE
------------- ------------- -------------
REVENUES $ 120,714,000 $ 88,900,000 36%
NET INCOME 13,645,000 6,038,000 126%
DILUTED EARNINGS PER COMMON SHARE 0.36 0.16 125%
* REVENUES: Roughly two-thirds of the $31.8 million increase reflects
significantly higher oil and gas production and, to a lesser extent,
commodity prices, with the balance due to improved utilization of the two
Well Ops vessels.
* MARGINS: 26%, the highest of any quarter since 2001, was four points
better than the year ago period due to the profit contribution of Marine
Contracting (which only broke even in Q1 of 2003).
* SG&A: $11.2 million increased $2.2 million from the same period a year ago
due to the ERT incentive compensation program and to a new Marine
Contracting compensation system. Even with this increase, overhead was 9%
of first quarter revenues, an improvement from the 10% of a year ago.
* TAX RATE: An Internal Revenue Service review of the years 2001 and 2002
was completed in Q1 with no taxes assessed. The audit also confirmed that
a portion of the Q4000 construction costs qualified for the Research &
Development tax credit, a permanent difference which resulted in a 26% tax
rate during the quarter and an estimated 33% rate for 2004.
* DEBT: Total debt of $204 million at the end of March compares to $223
million at year-end. Current maturities at March 31, 2004, included $16
million borrowed on the Revolving Credit Agreement which was paid off at
the end of April.
OPERATIONAL HIGHLIGHTS
MARINE CONTRACTING
* UTILIZATION:
Well Ops Deep Construction Robotics Shelf Construction
---------------- ----------------- ---------------- ------------------
2004 2003 2004 2003 2004 2003 2004 2003
----- ----- ----- ----- ----- ----- ----- -----
First Quarter 82% 51% 71% 74% 49% 53% 32% 51%
===== ===== ===== ===== ===== ===== ===== =====
* WELL OPERATIONS: The SEAWELL worked 66 days versus only 27 days a year ago
and would have achieved full utilization had a project not been delayed
waiting on third party materials. Our people were successful in
accelerating three well intervention projects into the quarter as work for
Statoil will limit her availability during the North Sea summer season.
The Q4000 did achieve near full utilization completing two well
remediation projects for ENI (King Kong and Yosemite) and installing
jumpers at Nakika in 5,200 feet of water. The vessel then transited
offshore Holland for a heavy lift NAM project that was time sensitive. The
Q4000 lifting capacity exceeds that of monohull vessels and is much more
cost-effective than heavy lift barges.
* DEEPWATER CONSTRUCTION: Utilization was comparable with the prior year
even though the Witch Queen was coldstacked for the entire first quarter
of 2004. The INTREPID had a busy quarter (almost full utilization)
installing flowline and umbilicals at Triton and Nakika and setting steel
catenary risers at Marco Polo. Full utilization for the UNCLE JOHN
produced minimal returns as we took weather in a number of cases and had
the vessel working on Shelf saturation diving projects. Outside of the
Gulf, the ECLIPSE is experiencing strong demand in the Asia Pacific
region. The MYSTIC VIKING spent January and a portion of February offshore
Trinidad and the month of March in the Atlantic providing salvage survey
and assistance for a Canyon project.
* ROBOTICS: While ROV system utilization declined slightly, revenues were
46% higher than the year ago due to projects which required ROV support
vessels. In addition to the Mystic Viking project (see above), the MERLIN
had 60 days of utilization, up substantially from only 18 a year ago. The
NORTHERN CANYON deployed the T-750 Super Trencher at Glider and Tahoe, two
projects we hope will prove that burial is a flow assurance option in the
deepwater GOM.
* SHELF CONSTRUCTION: Given the rough weather in the Gulf we typically
schedule regulatory inspections during Q1. The CAL DIVER I, BARGE I and
two of our small utility vessels were out of service for varying portions
of the quarter for this reason. Year ago utilization was higher than
normal as a number of vessels were engaged in MMS mandated inspections of
platforms in the path of Hurricane Lili. The shallow water market in the
Gulf remains flat and soft. Our OCS alliance with Horizon Offshore was
terminated as that company has moved much of its equipment to other basins
of the world.
OIL & GAS PRODUCTION
* PRODUCTION & PRICES:
Shelf (BCFe) Gunnison (BCFe) Average Price: Oil Average Price: Gas
----------------- ----------------- ------------------ ------------------
2004 2003 2004 2003 2004 2003 2004 2003
------ ------ ------ ------ ------ ------ ------ ------
First Quarter 8.51 6.80 1.51 -- $30.66 $28.67 $ 5.58 $ 5.22
====== ====== ====== ====== ====== ====== ====== ======
* SHELF: Commodity prices remained strong with our net realized price per
BCFe up 7% from the prior year. Roughly half of the 26% production
improvement was a result of our second PUD success at High Island 544, a
100% owned field brought online late last year. The balance of the
production increase is a function of last year's well exploitation
program, specifically drilling and remedial well work at Vermilion 200,
High Island 557, and at South Marsh Island 130. 35% of Q1 oil production
was hedged at an average price of approximately $26.50 per bbl. The use of
costless collars for natural gas hedges resulted in our realizing the full
average market price during the quarter.
* GUNNISON: Natural gas production from the three subsea wells was curtailed
in March as the first oil well was brought online. None of Gunnison first
quarter production was hedged. Total ERT DD&A of $17.5 million was 32% of
Q1 oil and gas production revenues due in part to the relatively high
(36%) amortization rate at Gunnison. In addition, the new Gunnison natural
gas wells combined with those of the Shelf well work program resulted in
natural gas being 67% of ERT production in Q1, up from 58% in the year ago
period.
/s/ Owen E. Kratz /s/ Martin R. Ferron /s/ S. James Nelson, Jr. /s/ A. Wade Pursell
Owen E. Kratz Martin R. Ferron S. James Nelson, Jr. A. Wade Pursell
Chief Executive Officer Chief Operating Officer Vice Chairman Chief Financial Officer
