<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 MARCH 31, 1999
OR
[ ] 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 0-22303
GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-1147390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
583 THOMPSON ROAD,
HOUMA, LOUISIANA 70363
(Address of principal executive offices) (Zip Code)
(504) 872-2100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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 [_]
The number of shares of the Registrant's common stock, no par value per
share, outstanding at May 10, 1999 was 11,638,400.
<PAGE>
GULF ISLAND FABRICATION, INC.
I N D E X
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1999
(unaudited) and December 31, 1998 3
Consolidated Statements of Income for the
Three Months Ended March 31, 1999 and 1998
(unaudited) 4
Consolidated Statement of Changes in
Shareholders' Equity for the Three Months
Ended March 31, 1999 (unaudited) 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998
(unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-11
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX E-1
2
<PAGE>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1999 1998
----------- ------------
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash $12,358 $ 2,808
Contracts receivable, net 21,347 34,682
Retainage 3,329 5,837
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,723 2,061
Prepaid expenses 797 878
Inventory 1,143 1,137
Recoverable income taxes - 531
------- -------
Total current assets 40,697 47,934
Property, plant and equipment, net 45,775 45,418
Excess of cost over fair value of net assets acquired
less accumulated amortization of $ 347,375 and $ 278,825 at
March 31, 1999 and December 31, 1998, respectively 3,771 3,839
Other assets 438 549
------- -------
Total assets $90,681 $97,740
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,180 $ 7,151
Billings in excess of costs and estimated
earnings on uncompleted contracts 6,477 9,476
Accrued employee costs 2,898 4,085
Accrued expenses 2,591 1,983
Income taxes payable 187 -
------- -------
Total current liabilities 16,333 22,695
Deferred income taxes 2,693 2,315
Notes payable - 3,000
------- -------
Total liabilities 19,026 28,010
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, no par value, 20,000,000 shares
authorized, 11,638,400 shares issued and outstanding
at March 31, 1999 and December 31, 1998 4,162 4,162
Additional paid-in capital 35,124 35,124
Retained earnings 32,369 30,444
------- -------
Total shareholders' equity 71,655 69,730
------- -------
$90,681 $97,740
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1999 1998
------ ------
(in thousands, except per share data)
<S> <C> <C>
Revenue $30,329 $46,914
Cost of revenue 26,103 38,603
------- -------
Gross profit 4,226 8,311
General and administrative expenses 1,282 1,614
------- -------
Operating income 2,944 6,697
Other expense (income):
Interest expense 21 42
Interest income (101) (67)
Other - net (49) -
------- -------
(129) (25)
------- -------
Income before income taxes 3,073 6,722
Income taxes 1,148 2,489
------- -------
Net income $ 1,925 $ 4,233
======= =======
Per share data:
Basic earnings per share $0.17 $0.36
======= =======
Diluted earnings per share $0.17 $0.36
======= =======
Weighted-average shares 11,638 11,612
Effect of dilutive securities: employee stock options 18 105
------- -------
Adjusted weighted-average shares 11,656 11,717
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
------------ --------- ----------- ---------- -------------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 11,638,400 $4,162 $35,124 $30,444 $69,730
Net income - - - 1,925 1,925
---------- ------ ------- ------- -------
Balance at March 31, 1999 11,638,400 $4,162 $35,124 $32,369 $71,655
========== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1999 1998
------ ------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,925 $ 4,233
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,133 920
Amortization 68 73
Deferred income taxes 378 (46)
Changes in operating assets and liabilities:
Contracts receivable 13,335 (5,352)
Retainage 2,508 (1,422)
Costs and estimated earnings in excess of billings
on uncompleted contracts 338 (1,348)
Prepaid expenses and other assets 118 107
Inventory (43) (34)
Accounts payable and accrued expenses (3,550) 822
Income taxes payable 718 2,502
Billings in excess of costs and estimated earnings
on uncompleted contracts (2,999) 3,276
------- -------
Net cash provided by operating activities 13,929 3,731
Cash flows from investing activities:
Capital expenditures, net (1,490) (3,002)
Payment for purchase of Southport, net of cash acquired - (5,922)
Other 111 -
------- -------
Net cash used in investing activities (1,379) (8,924)
Cash flows from financing activities:
Borrowings against notes payable - 5,000
Principal payments on notes payable (3,000) (4,900)
Proceeds from exercise of stock options - 175
------- -------
Net cash provided by (used in) financing activities (3,000) 275
------- -------
Net increase (decrease) in cash 9,550 (4,918)
Cash at beginning of period 2,808 6,879
------- -------
Cash at end of period $12,358 $ 1,961
======= =======
Supplemental cash flow information:
Interest paid $ 31 $ 18
======= =======
Income taxes paid $ 25 $ -
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
GULF ISLAND FABRICATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1999 AND 1998
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES
Gulf Island Fabrication, Inc. ("Gulf Island"), together with its wholly
owned subsidiaies (collectively "the Company"), is a leading fabricator of
offshore drilling and production platforms and other specialized structures used
in the development and production of offshore oil and gas reserves. The Company,
located in Houma, Louisiana, also offers offshore interconnect pipe hook-up,
inshore marine construction, manufacture and repair of pressure vessels, steel
warehousing and sales, and the fabrication of offshore living quarters. Gulf
Island's principal markets are concentrated in the offshore regions of the Gulf
of Mexico. The consolidated financial statements include the accounts of Gulf
Island and its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
The information presented at March 31, 1999 and for the three months ended
March 31, 1999 and 1998, is unaudited. In the opinion of the Company's
management, the accompanying unaudited financial statements contain all
adjustments (consisting of normal recurring adjustments) that the Company
considers necessary for the fair presentation of the Company's financial
position at March 31, 1999 and the results of its operations for the three
months ended March 31, 1999 and 1998, and its cash flows for the three months
ended March 31, 1999 and 1998. The results of operations for the three months
ended March 31, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
In the opinion of management, the financial statements included herein have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1998.
NOTE 2 -- CONTINGENCIES
The Company is one of four defendants in a lawsuit in which the plaintiff
claims that the Company improperly installed certain attachments to a jacket
that it had fabricated for the plaintiff. The plaintiff, which has recovered
most of its out-of-pocket losses from its insurer, seeks to recover the
remainder of its claimed out-of-pocket losses (approximately $1 million) and
approximately $65 million from the four defendants for economic losses that it
alleges resulted from the delay in oil and gas production that was caused by
these events. The trial court has issued rulings, the effect of which is to
limit the damage recoverable from all four defendants to a maximum of $15
million.
7
<PAGE>
GULF ISLAND FABRICATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)
The trial court has issued this and other rulings that have been favorable to
the defendants, all of which are subject to appeal by the plaintiff at the
conclusion of the trial. Management is vigorously defending this case and, after
consultation with legal counsel, does not expect that the ultimate resolution of
this matter will have a material adverse effect on the financial position or
results of operations of the Company.
The Company is subject to other claims arising primarily in the normal
conduct of its business. While the outcome of such claims cannot be determined,
management does not expect that resolution of these matters will have a material
adverse effect on the financial position or results of operations of the
Company, although no assurances can be given to the ultimate outcome of the
claims.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's revenue for the three-month period ended March 31, 1999 was
$30.3 million, a decrease of 35.4% compared to $46.9 million in revenue for the
three-month period ended March 31, 1998. Revenue decreased as a result of a
lower volume of direct labor hours applied to contracts during the current
period. The continued slowdown in the oil and gas industry has made fewer
fabrication projects available; consequently, in the three-month period ended
March 31, 1999, the Company had fewer contracts in its backlog and thus fewer
hours worked compared to the same period in 1998.
The fewer number of projects available has also caused the competitiveness
in the bidding process to substantially reduce margins on contracts that have
been awarded. For the three-month period ended March 31, 1999, gross profit was
$4.2 million (13.9% of revenue), compared to $8.3 million (17.7% of revenue) of
gross profit for the three-month period ended March 31, 1998.
The Company's general and administrative expenses were $1.3 million for the
three-month period ended March 31, 1999, compared to $1.6 million for the three-
month period ended March 31, 1998. The decrease of $332,000 was primarily the
result of the Company more efficiently managing its costs associated with public
company reporting requirements and a general decrease in costs related to
reduced production levels.
The Company had net interest income of $80,000 for the three month period
ended March 31, 1999 compared to $25,000 for the three month period ended March
31, 1998. The current reduction in production levels is making more cash
generated from jobs in progress available for investing.
Although there have been recent increases in the price of oil and natural
gas, these increases are not being reflected in the number and dollar value of
projects in the market. Accordingly, the Company is continuously monitoring its
costs as production levels decline to take appropriate actions.
LIQUIDITY AND CAPITAL RESOURCES
Historically the Company has funded its business activities through funds
generated from operations and borrowings under its bank credit facility. Net
cash provided by operations increased to $13.9 million for the three months
ended March 31, 1999 while working capital remained relatively stable at $24.4
million. Net cash used in investing activities for the three months ended March
31, 1999 was $1.4 million. The Company acquired one new Manitowoc crane and
incurred approximately $130,000 in costs for improvements to its Southport
facility located in Harvey, Louisiana. These capital expenditures were for
equipment designed to increase the capacity of its facility and the productivity
of its labor force.
9
<PAGE>
Net cash used in financing activities was $3.0 million for the three-month
period ended March 31, 1999. This amount was a payment to eliminate the
outstanding balance on the Company's bank credit facility.
The Company's bank credit facility currently provides for a revolving line
of credit (the "Revolver") of up to $20.0 million, which bears interest equal
to, at the Company's option, the prime lending rate established by Citibank,
N.A. or LIBOR plus 1 1/2%. The Revolver matures December 31, 2000 and is
secured by a mortgage on the Company's real estate, equipment and fixtures. At
March 31, 1999, the Company had no outstanding borrowings under the credit
facility.
Capital expenditures for the remaining nine months of 1999 are estimated to
be approximately $3.6 million, including improvements to the facilities and
various other fabrication equipment. Management believes that its available
funds, cash generated by operating activities and funds available under the
Revolver will be sufficient to fund these capital expenditures and its working
capital needs. The Company may, however, expand its operations through future
acquisitions that may require additional equity or debt financing.
YEAR 2000 ISSUES
The Problem. Year 2000 issues result from the past practice in the
computer industry of using two digits rather than four digits when coding the
year portion of a date. This practice can create breakdowns or erroneous
results when computers and processors embedded in other equipment perform
operations involving dates later than December 31, 1999.
The Company's State of Readiness. The Company has assessed the Year 2000
compliance of its information technology systems and has purchased software and
hardware that it believes will be adequate to upgrade all of these systems to
Year 2000 compliance. The Company has also surveyed its significant non-
information technology equipment for Year 2000 issues. Although the Company uses
several such items of equipment that are significant to its operations (such as
automated welding and cutting equipment), none of the automated functions of
this equipment are date sensitive and the Company believes that none of the
equipment will require replacement or modification for Year 2000 compliance.
The Company does not have any significant suppliers or customers whose
information technology systems directly interface with that of the Company;
nevertheless, as part of its assessment of its state of readiness, the Company
has surveyed a representative number of its suppliers and customers for Year
2000 compliance. To date, the Company has received replies from approximately
73% of the suppliers that it has contacted, all of which (with insignificant
exceptions) have indicated that they have taken appropriate steps to achieve
Year 2000 compliance or have plans to do so. The Company has received replies
from approximately 75% of its customers contacted, all of which have indicated
that they have taken steps to achieve Year 2000 compliance or have plans to do
so.
Costs. Because the Company's information technology systems have been
regularly upgraded and replaced as part of the Company's ongoing efforts to
maintain high-grade technology and because the Company is not heavily dependent
on non-information technology equipment that is date sensitive, the Company's
Year 2000 compliance costs are expected to be relatively low. The Company has
incurred $77,000 to purchase software and hardware to upgrade its information
technology systems and management does not believe that significant
10
<PAGE>
additional costs will be required for Year 2000 compliance. There can be no
guarantee, however, that actual costs will not exceed that amount.
Risks. Although the Company believes that it has taken reasonable steps to
assess its internal systems and prepare them for Year 2000 issues, if those
steps prove inadequate the Company's ability to estimate and bid on new jobs and
its financial and other daily business procedures could be interrupted or
delayed, any of which could have a material adverse effect on the Company's
operations. Because the replies to the Company's survey of its suppliers and
customers is not complete, the Company is not in a position to evaluate the risk
of their non-compliance. It is possible that the operations of the Company
could be adversely affected to a material extent by the non-compliance of
significant suppliers or customers.
Contingency Plan. While the Company intends to continue to monitor Year
2000 issues, it does not currently have a contingency plan for dealing with the
possibility that its current systems may prove inadequate, nor does the Company
currently intend to develop such a plan.
FORWARD-LOOKING STATEMENTS
Statements under "Year 2000 Issues" as to the Company's beliefs and
expectations, statements in the last paragraph under "Results of Operations" and
other statements in this report and the exhibits hereto that are not statements
of historical fact are forward-looking statements. These statements involve
risks and uncertainties that include, among others, the timing and extent of
changes in the prices of crude oil and natural gas, the timing of new projects
and the Company's ability to obtain them, competitive factors in the heavy
marine fabrication industry, the accuracy of the Company's assessment of its
exposure to Year 2000 issues and the adequacy of the steps it has taken to
address those issues. Changes in these factors could result in changes in the
Company's performance and could cause the actual results to differ materially
from those expressed in the forward-looking statements.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) An annual meeting of the registrant's stockholders was held on April
29, 1999.
(c) The following matters were voted upon with the results as indicate
below:
(1) Election of the following nominees for directors.
John P. ("Jack") Laborde
Number of Votes Cast For -- 10,273,993
Number of Votes Cast Against or Withheld -- 31,530
Number of Abstentions -- None
Number of Broker Non-Votes -- None
Gregory J. Cotter
Number of Votes Cast For -- 10,274,293
Number of Votes Cast Against or Withheld -- 31,230
Number of Abstentions -- None
Number of Broker Non-Votes -- None
(2) Ratification of appointment of Ernst & Young LLP as independent
auditors.
Number of Votes Cast For -- 10,279,149
Number of Votes Cast Against or Withheld -- 18,674
Number of Abstentions -- 7,700
Number of Broker Non-Votes -- None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27.1 Financial Data Schedule.
99.1 Press release issued by the Company on February 4, 1999
announcing the resignation of a director.
99.2 Press release issued by the Company on April 28, 1999
announcing the signing of a letter of intent to reconstruct the
Petronius south deck module owned by Texaco, Inc. (operator) and
Marathon Oil Company.
99.3 Press release issued by the Company on April 29, 1999
announcing its 1999 first quarter earnings and related matters.
(b) The Company filed no reports on Form 8-K during the quarter for which
this report is filed.
12
<PAGE>
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.
GULF ISLAND FABRICATION, INC.
By: /s/ Joseph P. Gallagher, III
------------------------------
Joseph P. Gallagher, III
Vice President -- Finance,
Chief Financial Officer
and Treasurer
(Principal Financial Officer
and Duly Authorized Officer)
DATE: MAY 11, 1999
13
<PAGE>
GULF ISLAND FABRICATION, INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
27.1 Financial Data Schedule
99.1 Press release issued by the Company on February 4,1999 announcing the
resignation of a director.
99.2 Press release issued by the Company on April 28, 1999 announcing the
signing of a letter of intent to reconstruct the Petronius south deck
module owned by Texaco, Inc. (operator) and Marathon Oil Company.
99.3 Press release issued by the Company on April 29, 1999 announcing its
1999 first quarter earnings and related matters.
E-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from consolidated
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 12,358
<SECURITIES> 0
<RECEIVABLES> 24,676
<ALLOWANCES> 0
<INVENTORY> 797
<CURRENT-ASSETS> 40,697
<PP&E> 68,341
<DEPRECIATION> 22,566
<TOTAL-ASSETS> 90,681
<CURRENT-LIABILITIES> 16,333
<BONDS> 0
0
0
<COMMON> 4,162
<OTHER-SE> 67,493
<TOTAL-LIABILITY-AND-EQUITY> 90,681
<SALES> 30,329
<TOTAL-REVENUES> 30,329
<CGS> 26,103
<TOTAL-COSTS> 27,385
<OTHER-EXPENSES> (150)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 3,073
<INCOME-TAX> 1,148
<INCOME-CONTINUING> 1,925
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,925
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
<PAGE>
NEWS RELEASE EXHIBIT 99.1
For further information contact:
Kerry J. Chauvin Joseph P. Gallagher, III
Chief Executive Officer Chief Financial Officer
(504) 872-2100 (504) 872-2100
FOR IMMEDIATE RELEASE
FEBRUARY 4, 1999
GULF ISLAND FABRICATION, INC.
ANNOUNCES RESIGNATION OF DIRECTOR
HOUMA, LA - GULF ISLAND FABRICATION, INC. (NASDAQ: GIFI) announced today
that Stephen G. Benton, Jr., a director of the Company since February, 1998, has
resigned.
<PAGE>
NEWS RELEASE EXHIBIT 99.2
For further information contact:
Kerry J. Chauvin Joseph P. Gallagher, III
Chief Executive Officer Chief Financial Officer
(504) 872-2100 (504) 872-2100
FOR IMMEDIATE RELEASE
APRIL 28, 1999
GULF ISLAND FABRICATION, INC.
SIGNS LETTER OF INTENT TO RECONSTRUCT
PETRONIUS SOUTH DECK MODULE
HOUMA, LA - GULF ISLAND FABRICATION, INC. (NASDAQ: GIFI) Gulf Island
Fabrication, Inc. announced that it has signed a letter of intent and began
construction early this year on the south deck module of the Petronius deepwater
project owned by Texaco, Inc. (operator) and Marathon Oil Company.
Details of a contract are being finalized, according to Kerry J. Chauvin,
President and Chief Executive Officer of Gulf Island Fabrication, Inc.
Financial terms are not being disclosed.
"We are pleased to be involved with re-building this important aspect of a
major deepwater project," said Chauvin. "Gulf Island Fabrication built the
original north and south decks of the Petronius compliant tower and the re-
building of the south deck will be a replica of the original."
Chauvin added that the re-building project is important to sustaining the
Houma area's industrial growth. Gulf Island Fabrication has more than 180
workers assigned to the south deck module reconstruction. The new module is
expected to be completed in the second quarter of 2000.
Gulf Island Fabrication, Inc., based in Houma, Louisiana, is a leading
fabricator of offshore drilling and production platforms and other specialized
structures used in the development and production of offshore oil and gas
reserves. The Company also offers offshore interconnect pipe hook-up, inshore
marine construction, manufacture and repair of pressure vessels, steel
warehousing and sales, and the fabrication of offshore living quarters.
<PAGE>
NEWS RELEASE EXHIBIT 99.3
For further information contact:
Kerry J. Chauvin Joseph "Duke" Gallagher
Chief Executive Officer Chief Financial Officer
(504) 872-2100 (504) 872-2100
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 29, 1999
GULF ISLAND FABRICATION, INC.
REPORTS FIRST QUARTER EARNINGS
Houma, LA -- Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today
reported net income of $1.9 million ($.17 diluted EPS) on revenue of $30.3
million for its first quarter ended March 31, 1999, compared to net income of
$4.2 million ($.36 diluted EPS) on revenue of $46.9 million for the first
quarter ended March 31, 1998.
At March 31, 1999, the company had a revenue backlog of $57.6 million and a
labor backlog of approximately 900 thousand man-hours remaining to work.
Mr. Kerry J. Chauvin, Gulf Island's President and C.E.O. stated, "The
slowdown in the oil and gas industry has brought our revenues and margins down
to levels about where they were in the first quarter of 1997. We continue to
take the necessary steps to maintain our strong balance sheet. With the
previous investment in labor saving equipment and under-roof fabrication area,
the company is poised to maintain its competitive position and capitalize on the
expected future increase in demand for our products and services, especially in
the deep water regions."
Gulf Island Fabrication, Inc., based in Houma, Louisiana, is a leading
fabricator of offshore drilling and production platforms and other specialized
structures used in the development and production of offshore oil and gas
reserves. The Company also offers offshore interconnect pipe hook-up, inshore
marine construction, manufacture and repair of pressure vessels, steel
warehousing and sales, and the fabrication of offshore living quarters.
<PAGE>
EXHIBIT 99.3
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months
Ended March 31,
----------------------
1999 1998
------- -------
Revenue $30,329 $46,914
Cost of revenue 26,103 38,603
------- -------
Gross profit 4,226 8,311
General and administrative expenses 1,282 1,614
------- -------
Operating income 2,944 6,697
Other expense (income):
Interest expense 21 42
Interest income (101) (67)
Other - net (49) -
------- -------
(129) (25)
------- -------
Income before income taxes 3,073 6,722
Income taxes 1,148 2,489
------- -------
Net income $ 1,925 $ 4,233
======= =======
Per share data:
Basic earnings per share $0.17 $0.36
======= =======
Diluted earnings per share(1) $0.17 $0.36
======= =======
Weighted-average shares 11,638 11,612
======= =======
Adjusted weighted-average shares(1) 11,656 11,717
======= =======
Depreciation and amortization
included in expense above $ 1,201 $ 993
======= =======
(1) The calculation of diluted earnings per share assumes that all stock
options are exercised and that the assumed proceeds are used to purchase
shares at the average market price for the period.
