EX-99.1 2 deepdown_8k-ex9901.htm PRESS RELEASE deepdown_8k-ex9901.htm
Exhibit 99.1
 

NEWS RELEASE
May 14, 2009
OTC BB:  DPDW

DEEP DOWN ANNOUNCES FIRST QUARTER RESULTS


HOUSTON, TX – May 14, 2009 – Deep Down, Inc. (OTCBB: DPDW) announced today unaudited results for the first quarter ended March 31, 2009.

Revenues for the first quarter of 2009 were $7,102,589, compared to $6,279,465 for the first quarter of 2008, for a 13.1% increase. The increase in revenues included $2.6 million from the acquisition of Flotation Technologies.  Net loss for the first quarter ended March 31, 2009, was $729,775 as compared to a net loss of $89,477 for the same period of 2008.  The first quarter loss included a net loss from Flotation Technologies of approximately $300,000.

Ron Smith, President and Chief Executive Officer stated “Historically, the first quarter is our weakest operating quarter; however, our operations as a whole have been naturally affected by the economic slowdown and falling oil and gas prices. We are fortunate to be in the deepwater sector of the industry, which is currently the strongest sector.  We have recently announced several new contracts that are commencing this year, and are beginning work on our large riser buoyancy contract for delivery in the first quarter of 2010. We continue to expect growth in our operations for the balance of the year.”

“The Company’s financial condition continues to be strong,” commented Eugene L. Butler, Chief Financial Officer. “With all of the Company’s recent acquisitions and the significant growth we have experienced, we are now implementing a new Enterprise, Resource, and Planning (ERP) system to strengthen and improve our internal controls, consolidate our accounting systems, and streamline our service, manufacturing, and operating processes.”
 
About Deep Down, Inc.
 
Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down’s proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and ROV tooling, as well as marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. Deep Down provides these services through its four subsidiaries. More information about Deep Down is available at www.deepdowncorp.com, by contacting the company at (281) 517-5000, or ir@deepdowninc.com.


 
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One of our most important responsibilities is to communicate with shareholders in an open and direct manner.  Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends."  We cannot promise future returns.  Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events.  Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.

For Further Information

Steven Haag, Investor Relations
ir@deepdowninc.com
(281) 517-5000 (O)













 
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CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
             
   
March 31, 2009
    
December 31, 2008
  
ASSETS
  
 
    
 
  
Cash and cash equivalents
   $ 6,260,939     $ 2,495,464  
Restricted cash
     135,855       135,855  
Accounts receivable, net
     6,422,509       10,772,097  
Prepaid expenses and other current assets
     663,342       633,868  
Inventory
     993,545       1,224,170  
Costs and estimated earnings in excess of billings on uncompleted contracts
     165,454       707,737  
Work in progress
     78,007       137,940  
Deferred tax asset
     1,683,806       216,900  
Total current assets
     16,403,457       16,324,031  
Property and equipment, net
     14,806,223       13,799,196  
Other assets, net (see Related Party Note 10)
     928,453       457,836  
Intangibles, net
     17,763,529       18,090,680  
Goodwill
     15,024,300       15,024,300  
Total assets
   $ 64,925,962     $ 63,696,043  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Accounts payable and accrued liabilities
   $ 3,522,510     $ 4,318,394  
Billings in excess of costs and estimated earnings on uncompleted contracts
     2,128,356       2,315,043  
Current portion of long-term debt
     471,015       382,912  
Total current liabilities
     6,121,881       7,016,349  
Long-term debt
     3,358,435       1,718,475  
Deferred tax liabilities
     2,310,728       1,125,945  
Total liabilities
     11,791,044       9,860,769  
                 
Stockholders' equity:
                
Common stock, $0.001 par value, 490,000,000 shares authorized, 179,700,630
                
  and 177,350,630 shares issued and outstanding, respectively
     179,701       177,351  
Additional paid-in capital
     60,355,193       60,328,124  
Accumulated deficit
     (7,399,976 )     (6,670,201 )
Total stockholders' equity
     53,134,918       53,835,274  
Total liabilities and stockholders' equity
   $ 64,925,962     $ 63,696,043  
                 
                 


 
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DEEP DOWN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
             
   
For the Three Months Ended
  
   
March 31,
  
   
2009
    
2008
  
Revenues
   $ 7,102,589     $ 6,279,465  
Cost of sales
     4,798,788       3,931,555  
Gross profit
     2,303,801       2,347,910  
Operating expenses:
                
Selling, general & administrative
     2,843,776       1,879,409  
Depreciation and amortization
     406,097       125,803  
Total operating expenses
     3,249,873       2,005,212  
Operating income (loss)
     (946,072 )     342,698  
Other income (expense):
                
Interest income
     2,228       39,164  
Interest expense
     (48,344 )     (769,030 )
Other (expense) income
     (2,910 )     28,355  
Total other expense
     (49,026 )     (701,511 )
Loss before income taxes
     (995,098 )     (358,813 )
Benefit from income taxes
     265,323       269,366  
Net loss
   $ (729,775 )   $ (89,447 )
                 
Loss per share:
                
Basic
   $ -     $ -  
Weighted-average common shares outstanding
     176,150,630       87,185,242  
                 
Diluted
   $ -     $ -  
Weighted-average common shares outstanding
     176,150,630       87,185,242  


 
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CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited)
  
             
   
Three Months Ended
  
   
March 31,
  
   
2009
    
2008
  
Cash flows from operating activities:
            
             
Net loss
   $ (729,775 )   $ (89,447 )
Adjustments to reconcile net income to net cash used in
                
operating activities:
                
Non-cash amortization of debt discount
     -       231,760  
Non-cash amortization of deferred financing costs
     -       56,915  
Share-based compensation
     29,419       105,162  
Bad debt expense
     60,000       3,949  
Depreciation and amortization
     751,276       298,150  
Loss on disposal of equipment
     (3,038 )     58,115  
Deferred taxes payable
     (282,123 )     -  
Changes in assets and liabilities:
                
Accounts receivable
     4,289,588       (282,869 )
Prepaid expenses and other current assets
     (30,091 )     (107,239 )
Inventory
     230,625       -  
Costs and estimated earnings in excess of billings on uncompleted contracts
     542,283       -  
Work in progress
     59,933       (161,279 )
Accounts payable and accrued liabilities
     (795,884 )     (603,631 )
Billings in excess of costs and estimated earnings on uncompleted contracts
     (186,687 )     (53,030 )
Net cash provided by (used in) operating activities
   $ 3,935,526     $ (543,444 )
Cash flows used in investing activities:
                
Cash paid for acquisition of Mako
     -       (2,979,192 )
Purchases of equipment
     (1,428,114 )     (156,958 )
Deposits, related party
     (470,000 )     -  
Restricted cash
     -       (187,500 )
       Net cash used in investing activities
   $ (1,898,114 )   $ (3,323,650 )
Cash flows from financing activities:
                
Proceeds from sales-type lease
     -       103,500  
Borrowings on long-term debt
     1,840,000       5,600,000  
Payments of long-term debt
     (111,937 )     (926,808 )
       Net cash provided by financing activities
   $ 1,728,063     $ 4,776,692  
Change in cash and equivalents
     3,765,475       909,598  
Cash and cash equivalents, beginning of period
     2,495,464       2,206,220  
Cash and cash equivalents, end of period
   $ 6,260,939     $ 3,115,818  
                 
                 

 
 
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