EX-99.1 2 deepdown_8k-ex9901.htm EARNINGS RELEASE deepdown_8k-ex9901.htm
EXHIBIT 99.1
PRESS RELEASE


 
NEWS RELEASE
 
November 17, 2009   OTC BB:  DPDW
 
Deep Down Announces Third Quarter Results
 
HOUSTON, TX – November 17, 2009 – Deep Down, Inc. (OTCBB: DPDW) announced today unaudited results for the third quarter ended September 30, 2009.

Revenues for the third quarter of 2009 were $8.4 million, compared to $11.7 million for the third quarter of 2008, for a 28% decrease. The reduction in revenue over the same prior year period was a result of customers delaying future projects or slowing down many of their offshore and deepwater projects. Net loss for the third quarter ended September 30, 2009, was $2.1 million as compared to net income of $1.6 million for the same period of 2008.

Gross profit decreased approximately $3.5 million to approximately $2.2 million for the three months ended September 30, 2009, a decrease of approximately 62% compared to the three months ended September 30, 2008. For the three months ended September 30, 2009, gross margins were negatively impacted by our large floatation order and by two other floatation orders, all which have incurred more costs than originally estimated.  As such, gross margins decreased to 26 percent of revenue for the third quarter of 2009.

“Revenues in the third quarter improved by $2.2 million over the second quarter revenues while the loss before income taxes was lower by over $500,000 compared to the second quarter, and we expect operations to continue to improve during the fourth quarter,” commented Eugene L. Butler, Chief Financial Officer.  “The cost containment program, which was commenced in the second quarter is continuing and beginning to have a positive effect on general and administrative expenses.”

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 tooling, 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 subsidiaries. More information about Deep Down is available at www.deepdowncorp.com, by contacting the company at (281) 517-5000, or ir@deepdowninc.com.
 
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

Investor Relations
ir@deepdowninc.com
(281) 517-5000 (O)
 
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DEEP DOWN, INC.
  
CONSOLIDATED BALANCE SHEETS
  
(Unaudited)
  
             
(In thousands)
  
September 30, 2009
    
December 31, 2008
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 3,896     $ 2,495  
Restricted cash
     -       136  
Accounts receivable, net
     4,206       10,772  
Inventory
     1,052       1,362  
Costs and estimated earnings in excess of billings on uncompleted contracts
     748       708  
Deferred tax asset
     2,892       217  
Prepaid expenses and other current assets
     921       634  
Total current assets
     13,715       16,324  
Property and equipment, net
     20,088       13,799  
Intangibles, net
     17,109       18,091  
Goodwill
     14,966       15,024  
Other assets, net
     1,126       458  
Total assets
   $ 67,004     $ 63,696  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 4,030     $ 4,319  
Lease Receivable
     -       -  
Billings in excess of costs and estimated earnings on uncompleted contracts
     3,252       2,315  
Current portion of long-term debt
     6,029       383  
Total current liabilities
     13,311       7,017  
Long-term debt, net
     904       1,718  
Deferred tax liabilities
     2,892       1,126  
Total liabilities
     17,107       9,861  
                 
Commitments and contingencies (Note 10)
                
                 
Stockholders' equity:
                
Common stock, $0.001 par value, 490,000 shares authorized, 180,451
                
  and 177,351 shares issued and outstanding, respectively
     180       177  
Additional paid-in capital
     60,968       60,328  
Accumulated deficit
     (11,251 )     (6,670 )
Total stockholders' equity
     49,897       53,835  
Total liabilities and stockholders' equity
   $ 67,004     $ 63,696  
 
See accompanying notes to unaudited consolidated financial statements.
 
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Deep Down, Inc.
Consolidated Statements of Operations
(Unaudited)
 
             
   
Nine Months Ended
  
   
September 30,
        
(In thousands except per share amounts)
  
2009
    
2008
  
             
Revenues
   $ 21,729     $ 25,852  
Cost of sales
     15,413       15,462  
Gross profit
     6,316       10,390  
Operating expenses:
                
Selling, general & administrative
     10,302       9,414  
Depreciation and amortization
     1,242       883  
Total operating expenses
     11,544       10,297  
Operating income (loss)
     (5,228 )     93  
Other income (expense):
                
Interest income
     9       103  
Interest expense
     (236 )     (3,484 )
Loss on debt extinguishment
     -       (446 )
Other income
     15       6  
Total other income (expense)
     (212 )     (3,821 )
Income (loss) before income taxes
     (5,440 )     (3,728 )
Income tax (expense) benefit
     859       351  
Net income (loss)
   $ (4,581 )   $ (3,377 )
Income (loss) per share:
                
Basic
   $ (0.03 )   $ (0.03 )
Weighted-average number of common shares outstanding
     176,276       131,744  
Diluted
   $ (0.03 )   $ (0.03 )
Weighted-average number of common shares outstanding
     176,276       131,744  
 
See accompanying notes to unaudited consolidated financial statements.
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DEEP DOWN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Nine Months Ended
  
   
September 30,
  
(In thousands)
  
2009
    
2008
  
Cash flows from operating activities:
            
Net loss
   $ (4,581 )   $ (3,377 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                
Interest income
     -       (55 )
Non-cash amortization of debt discount
     -       1,817  
Non-cash amortization of deferred financing costs
     -       763  
Share-based compensation
     643       424  
Bad debt expense
     126       1,053  
Depreciation and amortization
     2,389       1,642  
(Gain) loss on disposal of equipment
     (21 )     161  
Deferred taxes payable
     (909 )     -  
Changes in assets and liabilities:
     -       -  
Accounts receivable
     6,440       942  
Inventory
     310       (821 )
Costs and estimated earnings in excess of billings on uncompleted contracts
     (40 )     (41 )
Prepaid expenses and other current assets
     (287 )     (453 )
Other assets
     (112 )     -  
Accounts payable and accrued liabilities
     (289 )     (1,059 )
Billings in excess of costs and estimated earnings on uncompleted contracts
     937       179  
Net cash provided by operating activities
     4,606       1,175  
Cash flows from investing activities:
                
Cash paid for acquisition of Flotation, net of cash acquired of $235
     -       (22,162 )
Proceeds from final settlement of acquisition of Flotation
     58       -  
Cash paid for acquisition of Mako, net of expenses
     -       (4,237 )
Purchases of property and equipment
     (5,536 )     (2,564 )
Proceeds from sale of property and equipment
     53       -  
Cash paid for capitalized software
     (383 )     -  
Purchase of investment
     (150 )     -  
Note receivable, net of repayments
     (23 )     -  
Restricted cash
     136       375  
       Net cash used in investing activities
     (5,845 )     (28,588 )
Cash flows from financing activities:
                
Proceeds from sale of common stock, net of expenses
     -       37,060  
Proceeds from sales-type lease
     -       587  
Borrowings on long-term debt
     3,000       5,604  
Repayments on long-term debt
     (360 )     (12,889 )
       Net cash provided by financing activities
     2,640       30,362  
Change in cash and equivalents
     1,401       2,949  
Cash and cash equivalents, beginning of period
     2,495       2,206  
Cash and cash equivalents, end of period
   $ 3,896     $ 5,155  
 
See accompanying notes to unaudited consolidated financial statements.
 
 
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