-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PuI1fGy95qrqR2WbjxgAinGwrOfXHjozyske66bAqfjFjhQY0XAbPp9JiirKRSM5 7HiivEIuMcZ2+n4D9wLOzg== 0000890566-98-001421.txt : 19980814 0000890566-98-001421.hdr.sgml : 19980814 ACCESSION NUMBER: 0000890566-98-001421 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAL DIVE INTERNATIONAL INC CENTRAL INDEX KEY: 0000866829 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 953409686 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22739 FILM NUMBER: 98684875 BUSINESS ADDRESS: STREET 1: 400 N SAM HOUSTON PKWYE STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060 BUSINESS PHONE: 7136901818 MAIL ADDRESS: STREET 1: 400 N SAM HOUSTON PKWY E STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060 10-Q 1 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 June 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 of Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 400 N. Sam Houston Parkway E. Suite 400 Houston, Texas 77060 (Address of Principal Executive Offices) (281) 618-0400 (Registrants telephone number, Including area code) Indicate by check mark 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 August 13, 1998 there were 14,555,831 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 - June 30, 1998 and December 31, 1997.........................1 Consolidated Statements of Operations - Three Months Ended June 30, 1998 and June 30, 1997..........................................2 Six Months Ended June 30, 1998 and June 30, 1997..........................................3 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1998 and June 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........................11 Signatures......................................................12 Part I. Financial Statements Item 1. Financial Statements Cal Dive International, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) June 30, Dec. 31, 1998 1997 ----------- ---------- ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents ...................... $ 18,152 $ 13,025 Accounts receivable -- Trade, net of revenue allowance on gross amounts billed of $2,159 and $1,822 .................... 22,804 23,856 Unbilled .................................. 8,969 8,134 Other current assets ........................... 10,030 4,947 --------- --------- Total current assets ................... 59,955 49,962 --------- --------- PROPERTY AND EQUIPMENT ............................... 102,879 89,499 Less - Accumulated depreciation ................ (24,157) (20,021) --------- --------- 78,722 69,478 --------- --------- OTHER ASSETS: Cash deposits restricted for salvage operations ................................ 5,906 5,670 Investment in Aquatica, Inc. ................... 5,645 0 Other assets, net .............................. 1,499 490 --------- --------- $ 151,727 $ 125,600 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ............................... $ 21,042 $ 12,919 Accrued liabilities ............................ 6,974 7,514 Income taxes payable ........................... 2,643 602 --------- --------- Total current liabilities ................. 30,659 21,035 LONG-TERM DEBT ....................................... 0 0 DEFERRED INCOME TAXES ................................ 9,945 8,745 DECOMMISSIONING LIABILITIES .......................... 10,375 6,451 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock, no par, 60,000 shares authorized, 21,365 and 21,345 shares issued and outstanding ........................... 53,014 52,832 Retained earnings .............................. 51,485 40,288 Treasury stock, 6,821 shares, at cost .......... (3,751) (3,751) --------- --------- Total shareholders' equity ................ 100,748 89,369 --------- --------- $ 151,727 $ 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 June 30, -------------------- 1998 1997 -------- ------- (unaudited) NET REVENUES: Subsea and salvage ............................... $ 35,228 $25,258 Natural gas and oil production ................... 3,298 3,370 -------- ------- 38,526 28,628 COST OF SALES: Subsea and salvage ............................... 23,999 17,322 Natural gas and oil production ................... 2,393 2,024 -------- ------- Gross profit ................................ 12,134 9,282 -------- ------- SELLING AND ADMINISTRATIVE EXPENSES: Selling expenses ................................. 328 349 Administrative expenses .......................... 3,370 1,613 -------- ------- Total selling and administrative expenses ... 3,698 1,962 -------- ------- INCOME FROM OPERATIONS ................................. 8,436 7,320 OTHER INCOME AND EXPENSE: Equity in earnings of Aquatica, Inc. ............. 500 0 Net interest (income) expense and other .......... (224) 317 -------- ------- INCOME BEFORE INCOME TAXES ............................. 9,160 7,003 Provision for income taxes ....................... 3,206 2,399 -------- ------- NET INCOME ............................................. $ 5,954 $ 4,604 ======== ======= EARNINGS PER COMMON SHARE: Basic ............................................ $ 0.41 $ 0.40 Diluted .......................................... $ 0.40 $ 0.39 ======== ======= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic ............................................ 14,545 11,570 Diluted .......................................... 14,997 11,862 ======== ======= 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) Six Months Ended June 30, -------------------- 1998 1997 -------- ------- (unaudited) NET REVENUES: Subsea and salvage ............................... $ 64,570 $38,846 Natural gas and oil production ................... 7,113 8,226 -------- ------- 71,683 47,072 COST OF SALES: Subsea and salvage ............................... 44,393 28,103 Natural gas and oil production ................... 4,592 4,265 -------- ------- Gross profit ................................ 22,698 14,704 -------- ------- SELLING AND ADMINISTRATIVE EXPENSES: Selling expenses ................................. 644 710 Administrative expenses .......................... 5,893 3,468 -------- ------- Total selling and administrative expenses ... 6,537 4,178 -------- ------- INCOME FROM OPERATIONS ................................. 16,161 10,526 OTHER INCOME AND EXPENSE: Equity in earnings of Aquatica, Inc. ............. 633 0 Net interest (income) expense and other .......... (434) 649 -------- ------- INCOME BEFORE INCOME TAXES ............................. 17,228 9,877 Provision for income taxes ....................... 6,031 3,388 -------- ------- NET INCOME ............................................. $ 11,197 $ 6,489 ======== ======= EARNINGS PER COMMON SHARE: Basic ............................................ $ 0.77 $ 0.57 Diluted .......................................... $ 0.75 $ 0.56 ======== ======= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic ............................................ 14,540 11,336 Diluted .......................................... 14,992 11,631 ======== ======= 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)
Six Months Ended June 30, --------------------- 1998 1997 --------- --------- (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................ $ 11,197 $ 6,489 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization ........................ 4,168 3,522 Deferred income taxes ................................ 1,200 1,108 Equity in earnings of Aquatica, Inc. ................. (633) 0 Gain on sale of property ............................. 0 (464) Changes in operating assets and liabilities: Accounts receivable, net ............................. 217 211 Other current assets ................................. (5,083) (1,778) Accounts payable and accrued liabilities ............. 7,583 (674) Income taxes payable/receivable ...................... 2,041 1,710 Other non-current, net ............................... (1,085) 125 -------- -------- Net cash provided by operating activities ......... 19,605 10,249 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ...................................... (9,274) (10,159) Investment in Aquatica, Inc. .............................. (5,013) 0 Purchase of deposits restricted for salvage operations .... (236) (177) Proceeds from sale of property ............................ 0 1,084 -------- -------- Net cash used in investing activities ............. (14,523) (9,252) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of treasury stock, net of transaction costs .......... 0 4,423 Borrowings under term loan facility ....................... 0 6,700 Exercise of stock options ................................. 45 0 Repayments of long-term debt .............................. 0 (11,700) -------- -------- Net cash provided by (used in) financing activities 45 (577) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS ....................... 5,127 420 CASH AND CASH EQUIVALENTS: Balance, beginning of period .............................. 13,025 204 -------- -------- Balance, end of period .................................... $ 18,152 $ 624 ======== ========
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 June 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, including by way of illustration and not of limitation, statements relating to liquidity, margins, the Company's business strategy, plans for future operations, and the industry conditions. 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 JUNE 30, 1998 AND 1997 REVENUES. During the three months ended June 30, 1998, the Company's revenues increased 35% to $38.5 million compared to $28.6 million for the three months ended June 30, 1997. The Subsea and Salvage segment contributed all of the increase with the sales of the Natural Gas and Oil Production segment remaining relatively flat. 70% of the increase was due to exceptional offshore performance by CDI's DP fleet, particularly the UNCLE JOHN and WITCH QUEEN, which both doubled their respective revenues in the second quarter of 1998 compared to the second quarter of 1997. The remainder of the increase was due to the addition of the Dynamically Positioned ("DP") MERLIN and the charter of the CSO CONSTRUCTOR filling in for the BALMORAL SEA which was out of service for scheduled maintenance and inspection. Natural gas and oil production revenue for the three months ended June 30, 1998 was $3.3 million as compared to $3.4 million for the three months ended June 30, 1997. Production declined slightly during the second quarter of 1998 as compared to the second quarter 1997. However this decrease was offset by higher gas prices which averaged $2.24/Mcf during the three months ended June 30, 1998 as compared to $2.01/Mcf for the three months ended June 30, 1997. GROSS PROFIT. Gross profit increased $2.9 million, or 31%, from $9.3 million for the three months ended June 30, 1997, to $12.1 million for the three months ended June 30, 1998. The increase was due mainly to exceptional offshore performance and strong rates for the DP fleet (particularly the UNCLE JOHN and WITCH QUEEN) which offset the favorable impact of a large, complex construction project in shallow water completed in the second quarter of 1997. Subsea and Salvage margins remained strong at 32% during the three months ended June 30, 1998 compared to the three months ended June 30, 1997. Natural gas and oil production gross profit was $900,000 for the three months ended June 30, 1998, as compared to $1.3 million during the same period in the prior year. Several key wells required workover operations and the second quarter of 1997 included a gain of $500,000 from the sale of two properties. - 7 - SELLING & ADMINISTRATIVE EXPENSES. Selling and administrative expenses increased $1.7 million, to $3.7 million for the three months ended June 30, 1998, as compared to $2.0 million during the same period in the prior year. Included in the $3.7 million is a $1 million provision principally 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 half 1998 bottom line results, a provision was recorded in the second 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. OTHER INCOME AND EXPENSE. The Company recorded $500,000 in the second quarter of 1998 reflecting its share of the second quarter earnings of Aquatica, Inc., the investment made in February of this year. The Company recorded net interest income and other of $224,000 for the three months ended June 30, 1998 in contrast to $317,000 of net interest expense and other for the three months ended June 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 of $3.2 million for the three months ended June 30, 1998, increased over the comparable prior year period due to increased profitability. NET INCOME. Net income of $6.0 million for the three months ended June 30, 1998 was $1.4 million, or 29%, more than the comparable period in 1997 as a result of factors described above. COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 AND 1997 REVENUES. Consolidated revenues of $71.7 million for the first half of 1998 was 52% more than the $47.1 million earned during the first half of 1997 with the Subsea and Salvage segment contributing all of the increase. The majority of the increase was due to increased demand for services provided by CDI's DP vessels, particularly the UNCLE JOHN and WITCH QUEEN which together contributed 60% of the increase. The charter of the MARIANOS during the first quarter of 1998 contributed $3.9 million as the vessel filled in while the WITCH QUEEN was in drydock for scheduled maintenance and likewise the CONSTRUCTOR contributed $3.9 million while the BALMORAL SEA was out of service in the second quarter of 1998. Natural gas and oil production was $7.1 million for the first half of 1998 as compared to $8.2 million for the first half of 1997. Most of the decrease was due to a decline in average gas prices from $2.48/Mcf for the first half of 1997 to $2.18/Mcf during the six months ended June 30, 1998 as production was constant at 2.7 Bcf. GROSS PROFIT. Gross profit increased by $8.0 million, or 54%, from $14.7 million in the first half of 1997 to $22.7 million in the first half of 1998 with the UNCLE JOHN and WITCH QUEEN making up the majority of the increase. The remaining increase was due to improved demand for the two saturation diving vessels and to the impact of a change in the method of accounting for regulatory related drydock inspection and certification expenditures (see Note 4 of Consolidated Financial Statements). Subsea and Salvage margins increased from 28% in the first half of 1997 to 31% during the first half of 1998 due mainly to the impact of the accounting change. - 8 - Natural gas and oil production gross profit was $2.5 million for the six months ended June 30, 1998 as compared to $4.0 million for the comparable prior year period. The decrease was due to the aforementioned $500,000 gain recorded on the sale of two properties during the second quarter of 1997 and to the decline in average gas prices during the first half of 1998 as compared to the first half of 1997. SELLING & ADMINISTRATIVE EXPENSES. Selling and administrative expenses increased $2.4 million to $6.5 million in the six months ended June 30, 1998 as compared to the first half of 1997. The $6.5 million includes a $1 million provision principally for 1998 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. Even with the increase in administrative costs such expenses represented 9% of revenues, a level identical to the first half of 1997. OTHER INCOME AND EXPENSE. The Company recorded $633,000 in the first half of 1998 reflecting its share of earnings of Aquatica, Inc. Net interest income and other of $434,000 for the six months ended June 30, 1998 compares to $649,000 of net interest expense and other for the six months ended June 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 $6.0 million for the first half of 1998 as compared to $3.4 million for the comparable prior year period. The increase was due to the Company's increased profitability. NET INCOME. Net income increased 73% to $11.2 million in the six months ended June 30, 1998 as compared to $6.5 million in the first half 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 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 June 30, 1998, the Company had $29.3 million of working capital (including $18.2 million of cash on hand) and no debt outstanding after funding ERT's purchase of offshore properties and the equity investment in Aquatica. 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 $19.6 million in the six months ended June 30, 1998, as compared to $10.2 million provided in the six months ended June 30, 1997. This increase is primarily the result of increased profitability of the Company. Accounts Payable increased $8.1 million at June 30, 1998 as compared to December 31, 1997 due mainly to the increase in activity during the second quarter of 1998 as compared to the fourth quarter 1997 and significant accruals as of June 30, 1998 for the Tera Nova project in the third quarter 1998 (including upgrade and preparation costs of the SEA SORCERESS). Other current - 9 - assets increased $5.1 million at June 30, 1998 as compared to December 31, 1997 due mainly to the aforementioned Tera Nova deferred project costs and the impact of the Company's change in method of accounting for regulatory related drydock inspection and certification expenditures. INVESTING ACTIVITIES. The Company incurred $9.3 million of capital expenditures during the first half of 1998 compared to $10.2 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. Nearly half of the $10.2 million incurred during the first half of 1997 related to the acquisition of two ROV's from Coflexip with a majority of the remaining balance representing 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 activity in 1998 represents the exercise of stock options. During the six months ended June 30, 1997, the Company repaid $5.0 million, net of its borrowings under its Revolving Credit Agreement with Fleet Capital Corporation. Subsequent to June 30, 1997, the Company paid off the remaining $20.0 million outstanding on July 7, 1997, with proceeds from the initial public offering. 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. 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 is presently implementing, a new project management accounting system which is Year 2000 compliant. This system, which fully integrates all of its modules, will provide 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. This implementation will be completed during 1998. 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 vessel computer DP systems are dependent on government satellites and the government has not yet confirmed that they have solved Year 2000 data problems. - 10 - 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. - 11 - 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: August 13, 1998 By: /s/ S.JAMES NELSON S. James Nelson, Executive Vice President and Chief Financial Officer Date: August 13, 1998 By: /s/ A. WADE PURSELL A. Wade Pursell, Vice President-Finance and Chief Accounting Officer - 12 - EX-27 2
5 1,000 6-MOS DEC-31-1998 JUN-30-1998 18,152 0 31,773 2,159 0 59,955 102,879 24,157 151,727 30,659 0 0 0 53,014 47,734 151,727 71,683 71,683 48,985 55,522 (633) 0 (434) 17,228 6,031 11,197 0 0 0 11,197 .77 .75
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