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 September 30, 1998
Commission File Number: 2-56600
Global Industries, Ltd.
(Exact name of registrant as specified in its charter)
Louisiana 72-1212563
(State or other jurisdiction of incorporation or organization)(I.R.S.
Employer Identification No.)
107 Global Circle
P.O. Box 61936, Lafayette, LA 70596-1936
(Address of principal executive offices) (Zip Code)
(318) 989-0000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since
last report)
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. x Yes o No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of the Registrant's Common Stock
outstanding as of October 31, 1998 was 91,161,379.
<PAGE>
Global Industries, Ltd.
Index - Form 10-Q
Part I
Item 1. Financial Statements - Unaudited
Independent Accountants' Report 3
Consolidated Statements of Operations 4
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature 19
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
Global Industries, Ltd.
We have reviewed the condensed consolidated financial statements
of Global Industries, Ltd. and subsidiaries, as listed in the
accompanying index, as of September 30, 1998 and for the three-
month and six-month periods ended September 30, 1998 and 1997.
These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such condensed consolidated
financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Global
Industries, Ltd. and subsidiaries as of March 31, 1998, and the
related consolidated statements of operations, shareholders'
equity, and cash flows for the year then ended (not presented
herein); and in our report dated June 12, 1998, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of March 31, 1998 is
fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
October 29, 1998
New Orleans, Louisiana
<PAGE>
<TABLE>
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $120,575 $108,772 $212,733 $171,948
Cost of Revenues 89,674 70,915 151,245 113,252
-------- -------- -------- --------
Gross Profit 30,901 37,857 61,488 58,696
Equity in Net Earnings
(Loss) of Unconsolidated (1,329) (471) (2,891) (2,127)
Affiliate
Selling, General and
Administrative Expenses 7,968 6,448 13,443 10,695
------- ------- -------- -------
Operating Income 21,604 30,938 45,154 45,874
------- ------- -------- -------
Other Income (Expense):
Interest Expense (2,822) (350) (3,973) (480)
Other 136 597 551 2,112
------- ------- -------- -------
(2,686) 247 (3,422) 1,632
------- ------- -------- -------
Income Before Income Taxes 18,918 31,185 41,732 47,506
Provision for Income Taxes 6,621 11,850 14,606 18,052
Net Income $ 12,297 $ 19,335 $ 27,126 $ 29,454
======== ======== ======== ========
Weighted Average Common
Shares
Outstanding:
Basic 91,155,000 91,021,000 91,662,000 90,872,000
Diluted 93,532,000 93,905,000 93,911,000 93,389,000
Net Income Per Share:
Basic $ 0.13 $ 0.21 $ 0.30 $ 0.32
Diluted $ 0.13 $ 0.21 $ 0.29 $ 0.32
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
Global Industries, Ltd.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<CAPTION>
September 30, March 31,
1998 1998
------------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 19,362 $ 18,693
Escrowed funds 1,004 6,907
Receivables 117,497 97,156
Advances to and receivables from
unconsolidated affiliate 21,391 22,852
Prepaid expenses and other 7,414 7,002
-------- --------
Total current assets 166,668 152,610
-------- --------
Escrowed Funds 14,474 22,478
-------- --------
Property and Equipment, net 523,495 432,224
-------- --------
Other Assets:
Deferred charges, net 17,846 12,139
Investment in unconsolidated affiliate -- 1,878
Other 4,146 4,038
-------- --------
Total other assets 21,992 18,055
-------- --------
Total $726,629 $625,367
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 2,416 $ 2,168
Accounts payable 55,759 55,016
Accrued liabilities 20,046 11,418
Accrued profit-sharing 1,391 4,126
Insurance payable 752 2,410
-------- --------
Total current liabilities 80,364 75,138
Long-Term Debt 218,397 144,825
-------- --------
Deferred Income Taxes 42,869 36,471
Commitments and Contingencies -------- --------
Shareholders' Equity:
Preferred stock -- --
Common stock, issued 92,030,574 and
91,597,114 shares, respectively 920 915
Additional paid-in capital 211,446 208,911
Treasury stock at cost (874,500 shares
at September 30, 1998) (11,229) --
Translation adjustments (10,549) (8,178)
Retained earnings 194,411 167,285
Total shareholders' equity 384,999 368,933
Total $726,629 $625,367
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Global Industries, Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
September 30,
1998 1997
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 27,126 $ 29,454
Adjustments to reconcile net income to
net cash provided
by (used in) operating activities:
Depreciation and amortization 22,609 13,219
Deferred income taxes 6,411 4,000
Equity in net (earnings) loss of
unconsolidated affiliate 2,891 2,127
Other 215 4
Changes in operating assets and
liabilities (net of acquisitions):
Receivables (20,507) (37,776)
Receivables from unconsolidated
affiliate (6,387) --
Prepaid expenses and other (472) (3,534)
Accounts payable and accrued
liabilities 5,098 18,222
------- -------
Net cash provided by (used in)
operating activities 36,984 25,716
Cash Flows From Investing Activities:
Additions to property and equipment
(net of acquisitions) (112,398) (63,148)
Escrowed funds 13,907 19,119
Acquisition of business, net of cash
acquired -- (103,805)
Additions to deferred charges (9,547) (3,918)
Net repayment of advances to
unconsolidated affiliate 6,835 15,943
Other 85 142
-------- --------
Net cash (used in) investing
activities (101,118) (135,667)
Cash Flows From Financing Activities:
Proceeds from sale of common stock 2,516 1,001
Purchase of treasury stock (11,229) --
Net proceeds (repayment) of long-term debt 73,820 56,033
-------- --------
Net cash provided by (used in)
financing activities 65,107 57,034
Effect of Exchange Rate Changes on Cash (304) (450)
-------- --------
Cash:
Increase (Decrease) 669 (53,367)
Beginning of period 18,693 63,981
-------- --------
End of period $ 19,362 $ 10,614
======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Global Industries, Ltd.
Notes To Consolidated Financial Statements (Unaudited)
1. Basis of Presentation - The accompanying unaudited
consolidated financial statements include the accounts of Global
Industries, Ltd. and its wholly owned subsidiaries (the
"Company"). The Company also has a 49% ownership interest in CCC
Fabricaciones y Construcciones, S.A. de C.V. ("CCC"), which is
accounted for by the equity method. Effective December 31, 1998,
the Company will change its fiscal year-end to December 31 of
each year.
In the opinion of management of the Company, all adjustments
(such adjustments consisting only of a normal recurring nature)
necessary for a fair presentation of the operating results for
the interim periods presented have been included in the unaudited
consolidated financial statements. Operating results for the
period ended September 30, 1998, are not necessarily indicative
of the results that may be expected for the fiscal year ending
March 31, 1999. These financial statements should be read in
conjunction with the Company's audited consolidated financial
statements and related notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1998.
The financial statements required by Rule 10-01 of Regulation S-X
have been reviewed by independent public accountants as stated in
their report included herein.
2. Recent Accounting Pronouncements - The Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"), effective April 1, 1998.
SFAS 130 establishes standards for reporting and display of
comprehensive income and its major components. Comprehensive
income includes net income and other comprehensive income which,
in the case of the Company, currently includes only foreign
currency translation adjustments.
Following is a summary of the Company's comprehensive income for
the three months and six months ended September 30, 1998 and 1997
(in thousands):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $12,297 $19,335 $27,126 $29,454
Other Comprehensive Income
(Loss), net of income tax:
Foreign currency
translation adjustments 67 (3,531) (2,371) (3,531)
------- ------- ------- -------
Comprehensive Income $12,364 $15,804 $24,755 $25,923
======= ======= ======= =======
</TABLE>
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"), which is effective for the Company
beginning April 1, 1998. SFAS 131 redefines how operating
segments are determined and requires disclosure of certain
financial and descriptive information about a Company's operating
segments. Management believes that implementation of SFAS 131
will not have a material impact on the presentation of the
Company's financial statements but may require additional
disclosure.
<PAGE>
In February 1998, the FASB issued Statement of Financial
Accounting Standards No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits" ("SFAS 132"). SFAS
132 revises the standards for disclosure of pension and other
postretirement benefit plans by standardizing the disclosure
requirements, requiring additional information on changes in the
benefit obligations and fair values of plan assets, and
eliminating certain disclosure requirements no longer considered
to be useful. These new disclosure requirements are designed to
improve the understandability of benefit disclosures for
financial analysis. The Company is required to adopt this
standard for fiscal 1999. Management believes that the
implementation of SFAS 132 will not have a material impact on the
Company's financial statements and disclosures.
3. Change in Accounting Estimate - Effective April 1, 1998, the
Company changed its estimate of the useful lives of certain
marine barges which are depreciated on the units-of-production
method. The Company increased total estimated operating days for
such barges to better reflect the estimated periods during which
the assets will remain in service. For the second quarter of
fiscal 1999, the change had the effect of reducing depreciation
expense by $0.7 million and increasing net income by $0.5 million
(less than $0.01 per both basic and diluted share). The change
had the effect of reducing depreciation expense by $1.7 million
and increasing net income by $1.1 million ($0.01 per both basic
and diluted share) for the six months ended September 30, 1998.
4. Financing Arrangements - During September 1998, the Company
amended the terms of its existing credit agreement with a
syndicate of commercial banks to increase the available line of
credit from $200 million to $250 million. At September 30, 1998,
the amount available under the credit agreement approximated
$41.9 million.
5. Basic and Diluted Net Income Per Share - The difference in the
number of weighted average shares outstanding for basic and
diluted net income per share is attributable to the incremental
shares related to outstanding options to purchase common stock.
6. Commitments and Contingencies - The Company is a party to legal
proceedings and potential claims arising in the ordinary course
of business. Management does not believe these matters will
materially effect the Company's consolidated financial
statements.
During August 1998, the Board of Directors authorized the
expenditure of up to $30.0 million to purchase shares of the
Company's outstanding common stock. Subject to market
conditions, the purchases may be effected from time to time
through solicited or unsolicited transactions in the market or in
privately negotiated transactions. No limit was placed on the
duration of the purchase program. Subject to applicable
securities laws, purchase decisions will be made by management
based upon market conditions and other factors. As of September
30, 1998, the Company had purchased 874,500 shares since the
authorization at a total cost of $11.2 million. In October 1998,
the Company purchased an additional 55,000 shares at a total cost
of $0.4 million.
The Company has guaranteed certain indebtedness of CCC
approximating $23.9 million at September 30, 1998. The Company
has also given performance and currency guarantees totaling $30.8
million at September 30, 1998, to banks for CCC debt related to
project financings. Under the terms of the performance and
currency guarantees, the banks may enforce the guarantees (i) if
the customer does not pay CCC because neither CCC nor the
guarantors performed the contracts that define the projects or
(ii) if, after converting contract payments from Mexican Pesos to
United States Dollars, funds from the project are insufficient to
pay the sums due. In April 1998, the Company gave a contingent
guarantee to a financial institution whereby the guarantee
becomes effective if certain vessel contracts of CCC are canceled
or not renewed. The contingent guaranty amount at September 30,
1998 was $16.0 million.
<PAGE>
In the normal course of its business activities, the Company
provides letters of credit and bonds to secure the performance
and/or payment of obligations, including the payment of worker's
compensation obligations. Additionally, the Company has issued a
letter of credit as collateral for $28.0 million of Port
Improvement Revenue Bonds. At September 30, 1998, outstanding
letters of credit and bonds approximated $31.2 million.
The Company estimates that the cost to complete capital
expenditure projects in progress at September 30, 1998,
approximates $28 million.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
The following discussion presents management's discussion and
analysis of the Company's financial condition and results of
operations. Certain of the statements included below, including
those regarding future financial performance or results or that
are not historical facts, are or contain "forward-looking"
information as that term is defined in the Securities Act of
1933, as amended. The words "expect," "believe," "anticipate,"
"project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions
readers that any such statements are not guarantees of future
performance or events and such statements involve risks,
uncertainties and assumptions, including but not limited to
industry conditions, general economic conditions, competition,
ability of the Company to successfully manage its growth,
operating risks, risks of international operations, risks of
vessel construction and other factors discussed below and in the
Company's Annual Report on Form 10-K for the year ended March 31,
1998. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect,
actual results and outcomes may differ materially from those
indicated in the forward-looking statements.
The following discussion should be read in conjunction with the
Company's unaudited consolidated financial statements for the
periods ended September 30, 1998 and 1997, included elsewhere in
this report and the Company's audited consolidated financial
statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1998.
During the second quarter of fiscal 1998, the Company completed
the acquisition of certain business operations and assets of Sub
Sea International, Inc. and certain of its subsidiaries (the "Sub
Sea Acquisition"). The $103.8 million acquisition costs
(including $1.8 million of directly related acquisition costs)
came from available cash and borrowings under the Company's
existing credit line. The major assets acquired in the
transaction included three construction barges, four liftboats
and one dive support vessel based in the United States, four
support vessels based in the Middle East, and support vessels and
ROVs based in the Far East and Asia Pacific.
In the first quarter of fiscal 1999, the Company again added to
its fleet with the acquisition of the pipelay/derrick barges DLB
332 (Teknik Perdana) and DLB 264 (Teknik Padu) from TL Marine
Sdn. Bhd. These two vessels are currently in Asia Pacific. The
purchase price was $47.3 million (of which $4.8 million was paid
in the fourth quarter of fiscal 1998) and was funded from the
Company's bank line of credit. The DLB 332 is 352 feet by 100
feet, has an 800 ton lift capacity, and can be outfitted to lay
up to 60-inch diameter pipe. The DLB 264 is 400 feet by 100
feet, has an 1,100 ton lift capacity, and is capable of laying up
to 60-inch diameter pipe. Both vessels have completed
commitments under short-term bare boat charter agreements with
Hydro Marine Services, Inc., an affiliate of J. Ray McDermott
S.A., and are currently available for use in the Company's
construction services work.
<PAGE>
In July 1998, the Company's barge Hercules completed its
conversion to a dynamically-positioned pipelay/heavy-lift barge
and returned to service to begin its first conventional pipelay
project. The second phase of the upgrade of the Hercules,
installation of a reel on the barge to enable it to install
offshore pipelines using the reel method, is expected to occur in
the fourth quarter of fiscal 1999.
The offshore marine construction industry is seasonal because of
weather and climatical conditions and because of the timing of
capital expenditures by oil and gas companies. In the United
States Gulf of Mexico ("U.S. Gulf"), where the Company derived
77% of its revenues in fiscal 1998 and 54% of its revenues in the
first six months of fiscal 1999, the Company has historically
performed a substantial portion of its services during the period
of June through November. As a result, the Company may earn a
disproportionate portion of the Company's revenues, gross profit,
and net income during the second (July through September) and
third (October through December) quarters of its fiscal year.
Because of seasonality, full year results are not likely to be a
direct multiple of any particular quarter or combination of
quarters. The following table documents the seasonal nature of
the Company's operations by presenting the percentage of
revenues, gross profit, and net income contributed by each fiscal
quarter for the past three fiscal years.
<TABLE>
<CAPTION>
Quarter Ended
June 30, Sept. 30, Dec. 31, March 31,
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Revenues, three year average 19% 30% 28% 23%
Gross profit, three year average 19 35 25 21
Net income, three year average 19 37 24 20
</TABLE>
In recent years, the Company has expanded and acquired operations
in West Africa, Asia Pacific, Mexico, and the Middle East.
Certain of these geographic areas have seasonal effects different
from the U.S. Gulf. As a larger percentage of the Company's
operations are in these areas, the different seasonal effects may
affect the three year averages shown above.
As discussed in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1998, demand for the Company's
construction services depends on the condition of the oil and gas
industry, and particularly the capital expenditures of oil and
gas companies with operations in the U.S. Gulf and in other
regions served by the Company. As a result, the Company is
concerned about the continuing weakness in oil prices as a
prolonged decline in offshore drilling and exploration activity
could adversely affect the Company's future revenues and
profitability. In the quarter ended September 30, 1998, the
Company did experience a drop in demand for its services in the
U.S. Gulf because of cutbacks in the capital expenditures of oil
and gas companies and increased competition which had an adverse
effect on the Company's results of operations. Should this trend
of lower demand and increased competition in the U.S. Gulf
continue, the Company expects the results of operations for the
current fiscal year to be materially lower than in the prior
fiscal year.
<PAGE>
Results of Operations
The following table sets forth the Company's statements of
operations expressed as a percentage of revenues for the periods
indicated.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues (74.4) (65.2) (71.1) (65.9)
------ ------ ------ -------
Gross profit 25.6 34.8 28.9 34.1
Equity in net
earnings (loss) of
unconsolidated affiliate (1.1) (0.4) (1.4) (1.2)
Selling, general and
administrative expenses (6.6) (5.9) (6.3) (6.2)
------ ----- ------ -------
Operating Income 17.9 28.5 21.2 26.7
Interest expense (2.3) (0.3) (1.9) (0.3)
Other income (expense),net 0.1 0.5 0.3 1.2
------ ----- ------ -------
Income before income taxes 15.7 28.7 19.6 27.6
Provision for income taxes (5.5) (10.9) (6.9) (10.5)
------ ------ ------ -------
Net income 10.2% 17.8% 12.7% 17.1%
====== ====== ====== =======
</TABLE>
The Company's results of operations for the first half of fiscal
1998 and 1999 reflect the level of offshore construction activity
in the U.S. Gulf, West Africa, and Asia Pacific and the amount of
resources supplied to the Company's unconsolidated affiliate, CCC
Fabricaciones y Construciones, S.A. de C.V. ("CCC") in Mexico.
The results for the first half of fiscal 1999 also include the
results of additional business acquired in July 1997 from Sub Sea
International, Inc. in the U. S. Gulf, Asia Pacific, and the
Middle East.
Second Quarter Fiscal 1999 Compared to Second Quarter Fiscal 1998
Revenues. Revenues for the second quarter of fiscal 1999 of
$120.6 million were 11% higher than the $108.8 million recorded
in the second quarter of fiscal 1998. The increase in revenues
for the quarter resulted from greater revenue contributions from
the Company's international operations in West Africa, Mexico,
Asia Pacific, and the Middle East, partially offset by lower
revenues in the U. S. Gulf.
U. S. Gulf of Mexico -- Revenues in the U. S. Gulf declined 10%
to $73.0 million in the second quarter of fiscal 1999 from $81.0
million in the same period of fiscal 1998. Barge days worked in
the U. S. Gulf were 372 in the second quarter of fiscal 1999
compared to 642 in the same quarter last year. Liftboat, DSV,
and OSV days worked in the U. S. Gulf declined to 1,474 in the
second quarter of fiscal 1999 from 2,070 in last year's second
quarter. Diver days in the U. S. Gulf declined to 4,352 during
the second quarter of fiscal 1999 from 6,039 during the same
period last year. In addition to decreased demand for the
Company's offshore construction services, four named tropical
systems in the Gulf of Mexico during September further reduced
operating activities during the quarter. The reduced operating
activities caused a decline in revenues. Lower pricing and
increased competition further contributed to the decline in
revenue.
<PAGE>
West Africa -- Revenues in West Africa increased to $15.3 million
during the second quarter of fiscal 1999 from $10.1 million in
last fiscal year's second quarter. During the quarter, the
Company began procurement of job materials and subcontracted
fabrication for projects set to begin in the third quarter of
fiscal 1999. Barge days worked in West Africa were 30 for the
second quarter of fiscal 1999 compared to 73 in last year's
second quarter. The Company also recorded 206 diver days in West
Africa during the second quarter of fiscal 1999 compared to 746
during the same period last year.
Mexico -- Revenues in Mexico increased significantly to $9.5
million during the second quarter of fiscal 1999 when compared to
$3.8 million in last fiscal year's second quarter. The Company
derived substantially all of its revenue in Mexico from barge
charters, diving services, and other services provided to its
unconsolidated affiliate, CCC. During the second quarter of
fiscal 1999, the Company had five barges working offshore Mexico.
Barge days worked offshore Mexico were 215 for the second quarter
of fiscal 1999 compared to 176 in last year's second quarter.
Diver days worked offshore Mexico during the second quarter of
fiscal 1999 were 1,529 compared to 991 in last year's second
quarter.
Asia Pacific -- Revenues in Asia Pacific improved to $16.5
million during the fiscal 1999 second quarter from $10.7 million
in last fiscal year's second quarter. The barge Seminole began
work in Asia Pacific in September. Additionally, the Company
benefited in the second quarter of fiscal 1999 from charter
revenue on the barges DLB 332 and DLB 264, which the Company
purchased in April 1998. The Company recorded 156 barge days in
Asia Pacific during the second quarter of fiscal 1999 compared
with none in last fiscal year's second quarter. Also, the
Company had increased revenues during the second quarter of
fiscal 1999 from its ROV services when compared with last fiscal
year's second quarter. The increase in revenues during the
second quarter of fiscal 1999 from barge and ROV activities was
partially offset by lower revenues from DSV, OSV, and diving
activities when compared with last fiscal year's second quarter.
DSV and OSV days declined to 361 in the second quarter of fiscal
1999 compared with 425 in last fiscal year's second quarter.
Diver days worked during the second quarter of fiscal 1999
declined to 1,302 from 2,824 during the second quarter of fiscal
1998.
Middle East -- Revenues in the Middle East were $6.3 million
during the second quarter of fiscal 1999 as compared with $3.2
million during the second quarter of fiscal 1998. Middle East
barge days, OSV days, and diver days during the second quarter of
fiscal 1999 were 24, 152, and 4,206, respectively. Barge days,
OSV days, and diver days during the second quarter of fiscal 1998
were 33, 143, and 1,231, respectively.
Depreciation and Amortization. Effective April 1, 1998, the
Company changed its estimate of the useful lives of certain
marine barges that it depreciates using a units-of-production
method. The Company increased total estimated operating days to
better reflect the estimated periods during which the assets will
remain in service. The change reduced depreciation expense by
$0.7 million in the second quarter of fiscal 1999. Higher
depreciation expense for the second quarter of fiscal 1999
compared to the second quarter of fiscal 1998 is partially
attributable to the depreciation expense on the upgraded
Hercules, the Seminole, and the addition of two barges, the DLB
332, and the DLB 264, which the Company depreciates using a
units-of-production method. The increase is also a result of
higher dry-dock cost amortization on vessels that incurred
dry-dock costs since the second quarter of fiscal 1998. Lower
depreciation on certain other barges depreciated using a
units-of-production method, and that had lower days employed in
the second quarter of fiscal 1999 than in the same quarter of
fiscal 1998, partially offset the depreciation increase.
Gross Profit. Gross profit for the second quarter of fiscal 1999
of $30.9 million was 18% lower than the $37.9 million gross
profit for the same quarter a year earlier. The lower gross
profit was primarily attributable to the decreased operating
activity and margins in the U. S. Gulf and decreased barge
activity in West Africa. Higher gross profit from operations in
Mexico, Asia Pacific, and the Middle East partially offset the
decrease. Gross profit as a percentage of revenue was 25.6% for
the second quarter of fiscal 1999 as compared to 34.8% for the
same quarter a year earlier.
<PAGE>
Selling, General, and Administrative Expenses. Selling, general,
and administrative expenses for the second quarter of fiscal 1999
were $8.0 million, 25% higher than the $6.4 million expense for
the same quarter a year earlier. The increase is attributable to
the expansion of the Company's business.
Interest Expense and Other Income (Expense). Interest expense,
net of $0.2 million of capitalized interest cost, was $2.8
million in the second quarter of fiscal 1999 compared to $0.4
million in the same quarter a year earlier. The increase is
attributable to higher debt levels in the second quarter of
fiscal 1999 than in the second quarter of fiscal 1998. Other
income in the second quarter fiscal 1999 of $0.1 million was $0.5
million lower than the other income reported a year earlier
largely because the Company had lower cash balances available for
investment.
Net Income. Included in net income for the second quarter of
fiscal 1999 is a $1.3 million loss associated with the Company's
49% ownership interest in CCC. The second quarter of fiscal 1998
loss associated with the CCC ownership was $0.5 million. The
Company's effective income tax rate declined from 38.0% in the
second quarter of fiscal 1998 to 35.0% in the second quarter of
fiscal 1999, reflecting changes in taxable income in differing
taxable jurisdictions.
First Six Months of Fiscal 1999 Compared to First Six Months of
Fiscal 1998
Revenues. Revenues for the first six months of fiscal 1999 of
$212.7 million were 24% higher than the $171.9 million recorded
in the first six months of fiscal 1998. The increase in revenues
for the six-month period resulted from greater revenue
contributions from the Company's international operations in West
Africa, Mexico, Asia Pacific, and the Middle East, partially
offset by lower revenues in the U. S. Gulf.
United States Gulf of Mexico -- Revenues in the U. S. Gulf
declined 17% to $115.3 million in the first six months of fiscal
1999 from $138.8 million in the same period of fiscal 1998.
Barge days worked in the U.S. Gulf were 619 in the first six
months of fiscal 1999 compared to 1,023 in the same six-month
period last year. Liftboat, DSV, and OSV days worked in the U.
S. Gulf declined to 2,954 in the first six months of fiscal 1999
from 3,633 in last year's first six months. Diver days in the U.
S. Gulf declined to 7,921 during the first six months of fiscal
1999 from 10,644 during the same period last year. Decreased
demand, increased competition, weather events, and dry-dockings
contributed to the declines in activity and revenues.
West Africa -- Revenues in West Africa increased to $35.6 million
during the first six months of fiscal 1999 from $10.8 million in
last fiscal year's first six months. Barge days worked in West
Africa were 117 for the first six months of fiscal 1999 compared
to 81 in last year's first six months. The Company also recorded
1,178 diver days in West Africa during the first six months of
fiscal 1999 compared to 939 during the same period last year.
Mexico -- Revenues in Mexico also increased to $20.9 million
during the first six months of fiscal 1999 from $4.8 million in
last fiscal year's first six months. The Company derived
substantially all of its revenue in Mexico from barge charters,
diving services, and other services provided to its
unconsolidated affiliate, CCC. During the first six months of
fiscal 1999, the Company had five barges working offshore Mexico
with as many as four working concurrently. Barge days worked
offshore Mexico were 446 for the first six months of fiscal 1999
compared to 231 in last year's first six months. Diver days
worked offshore Mexico during the first six months of fiscal 1999
were 3,022 compared to 1,063 in last year's first six months.
Asia Pacific -- Revenues in Asia Pacific improved to $23.8
million during the first six months of fiscal 1999 from $14.3
million in last fiscal year's first six months. The Company
benefited in the first six months of fiscal 1999 from the July
1997 Sub Sea Acquisition. The Company also received revenue on
the DLB 332 and DLB 264, which the Company acquired in April
1998. Also, the barge Seminole began work in Asia Pacific in
September. The Company recorded 324 barge days in Asia Pacific
during the first six months of fiscal 1999 compared with none in
last fiscal year's first six months. The Company recorded 910
DSV and OSV days in the first six months of fiscal 1999 compared
to 425 in last fiscal year's first six months. Diver days worked
during the first six months of fiscal 1999 declined to 3,190 from
6,735 worked during the first six months of fiscal 1998.
<PAGE>
Middle East -- Revenues in the Middle East were $17.1 million
during the first six months of fiscal 1999 compared to $3.2
million during the first six months of fiscal 1998. The Company
entered the Middle East market through the Sub Sea Acquisition in
July 1997. Middle East barge days, OSV days, and diver days
during the first six months of fiscal 1999 were 85, 443, and
9,401, respectively. Barge days, OSV days, and diver days during
the first six months of fiscal 1998 were 33, 143, and 1,231,
respectively.
Depreciation and Amortization. Effective April 1, 1998, the
Company changed its estimate of the useful lives of certain
marine barges that it depreciates using a units-of-production
method. The Company increased total estimated operating days to
better reflect the estimated period during which the assets will
remain in service. The change had the effect of reducing
depreciation expense by $1.7 million in the first six months of
fiscal 1999. Higher depreciation expense for the first six
months of fiscal 1999 compared to the first six months of fiscal
1998 is partially attributable to (i) depreciation expense on the
upgraded Hercules, the Seminole, and the addition of two barges
the DLB 332, and the DLB 264, which the Company depreciates using
a units-of-production method, (ii) higher dry-dock cost
amortization on vessels that incurred dry-dock costs since the
second quarter of fiscal 1998, and (iii) other increases in
property and equipment through purchases and acquisitions. Lower
depreciation on barges depreciated using a units-of-production
method, and which had lower days employed in the first six months
of fiscal 1999 than in the same six-month period of fiscal 1998,
partially offset the depreciation increase.
Gross Profit. Gross profit for the first six months of fiscal
1999 of $61.5 million was 5% higher than the $58.7 million gross
profit for the same six-month period a year earlier. The gross
profit increase was primarily attributable to the increased
revenue contributions of the international operations, and was
partially offset by lower gross profit from the operations in the
U. S. Gulf. Gross profit as a percentage of revenues was 28.9%
for the first six months of fiscal 1999 as compared to 34.1% for
the same six-month period a year earlier. For the first six
months of fiscal 1999, gross profit as a percentage of revenue
for operations in the U. S. Gulf was lower when compared to the
first six months of fiscal 1998. Gross profit as a percentage of
revenue in the Company's international operations improved in the
first six months of fiscal 1999.
Selling, General, and Administrative Expenses. Selling, general,
and administrative expenses for the first six months of fiscal
1999 were $13.4 million, 25% higher than the $10.7 million
expense for the same six-month period a year earlier. The
increase is primarily attributable to the expansion of the
Company's business.
Interest Expense and Other Income (Expense). Interest expense,
net of $1.8 million of capitalized interest cost, was $4.0
million in the first six months of fiscal 1999 compared to $0.5
million in the same six-month period a year earlier. The
increase is attributable to higher debt levels in the first six
months of fiscal 1999 than in the first six months of fiscal
1998. Other income in the first six months fiscal 1999 of $0.6
million was $1.5 lower than the other income reported a year
earlier largely because the Company had lower cash balances
available for investment.
Net Income. Included in net income for the first six months of
fiscal 1999 is a $2.9 million loss associated with the Company's
49% ownership interest in CCC. The first six months of fiscal
1998 loss associated with the CCC ownership was $2.1 million.
The Company's effective income tax rate declined from 38.0% in
the first six months of fiscal 1998 to 35.0% in the first six
months of fiscal 1999, reflecting changes in taxable income in
differing taxable jurisdictions.
<PAGE>
Liquidity and Capital Resources
The Company's operations generated cash flow of $37.0 million
during the first six months of fiscal 1999. Cash from
operations, together with available cash and funds provided by
financing activities, funded net investing activities of $101.1
million. Net investing activities consisted principally of
capital expenditures, dry-docking costs, and net reimbursements
of escrowed funds and advances to CCC. Working capital increased
$8.8 million during the first six months of fiscal 1999 from
$77.5 million at March 31, 1998, to $86.3 million at September
30, 1998.
Capital expenditures during the first six months of fiscal 1999
aggregated $112.4 million. These expenditures included a $42.5
million final payment to acquire the DLB 332 and DLB 264, $28.8
million for continued conversion and upgrade of the Hercules,
$8.5 million for continued construction of the Carlyss,
Louisiana, deepwater support facility and pipebase, and $7.1
million for the construction of a shorebase facility in Batam,
Indonesia. The Company estimates that the cost to complete
capital expenditure projects in progress at September 30, 1998,
approximates $28 million.
Long-term debt outstanding at September 30, 1998, (including
current maturities), consists primarily of $39.1 million of Title
XI bonds, a $28.0 million obligation to service Lake Charles
Harbor and Terminal District bonds, and $153.0 million drawn
against the Company's revolving line of credit.
The Company's outstanding Title XI bonds mature in 2003, 2005,
2020 and 2022, carry interest rates of 9.15%, 8.75%, 8.30%, and
7.25% per annum, respectively, and require aggregate semi-annual
payments of $0.9 million, plus interest. The agreements pursuant
to which the Title XI bonds were issued contain certain
covenants, including the maintenance of minimum working capital
and net worth requirements, which, if not met, result in
additional covenants that restrict the operations of the Company
and its ability to pay cash dividends. The Company is currently
in compliance with these covenants.
The Company maintains a revolving line of credit under a loan
agreement ("Restated Credit Agreement") with a syndicate of
commercial banks. Effective September 16, 1998, an amendment to
the Restated Credit Agreement increased the line of credit from
$200.0 million to $250.0 million. The revolving credit facility
reduces to $150.0 million on July 1, 2000, and to $100.0 million
on July 1, 2001. Borrowings under the facility bear interest at
fluctuating rates, are payable on June 30, 2002, and have
subsidiary guarantees and stock pledges as security. The amount
of available credit decreases by (i) borrowings outstanding
($153.0 million at September 30, 1998), (ii) outstanding letters
of credit issued under the Restated Credit Agreement ($31.2
million at September 30, 1998) and (iii) amounts outstanding
under a separate credit agreement between the banks and CCC,
limited to a maximum of $35.0 million ($23.9 million at September
30, 1998). For continuing access to the revolving line of credit,
the Company must remain in compliance with the covenants of the
Restated Credit Agreement, including covenants relating to the
maintenance of certain financial ratios. The Company is
currently in compliance with these covenants. At October 31,
1998, $49.6 million was available under the Restated Credit
Agreement.
The Company has guaranteed certain indebtedness and commitments
of CCC approximating $23.9 million at September 30, 1998. The
Company has also given performance and currency guarantees
totaling $30.8 million at September 30, 1998, to banks for CCC
debt related to project financings. Under the terms of the
performance and currency guarantees, the banks may enforce the
guarantees (i) if the customer does not pay CCC because neither
CCC nor the guarantors performed the contracts that define the
projects or (ii) if, after converting contract payments from
Mexican Pesos to United States Dollars, funds from the project
are insufficient to pay the sums due. In April 1998, the Company
gave a contingent guarantee to a financial institution whereby
the guarantee becomes effective if certain vessel contracts of
CCC are canceled or not renewed. The contingent guaranty amount
at September 30, 1998 was $16.0 million.
<PAGE>
Although Global had reached agreement in principal with its
partner to restructure its joint venture in Mexico, CCC, by
selling or spinning-off to its partner CCC's onshore construction
and fabrication business and assets, implementation of this
agreement on terms acceptable to Global has been more difficult
than expected. The Company is currently evaluating its
participation in CCC and alternative ways to restructure CCC but
can give no assurance concerning the form or the timing of any
transaction.
During August 1998, the Board of Directors authorized the
expenditure of up to $30.0 million to purchase shares of the
Company's outstanding common stock. Subject to market
conditions, the Company may effect purchases from time to time.
The Board of Directors placed no limit on the duration of the
program. As of September 30, 1998, the Company had purchased
874,500 shares since the authorization at a total cost of $11.2
million. In October 1998, the Company purchased an additional
55,000 shares at a total cost of $0.4 million.
The Company expects funds available under the Company's Restated
Credit Agreement, combined with available cash, cash generated
from operations, and other potential debt arrangements to provide
sufficient funds for the Company's operations, scheduled debt
retirement, planned capital expenditures, and working capital
needs for the foreseeable future.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"), which is effective for the Company
beginning April 1, 1998. SFAS 131 redefines how operating
segments are determined and requires disclosure of certain
financial and descriptive information about a Company's operating
segments. Management believes that implementation of SFAS 131
will not have a material impact on the presentation of the
Company's financial statements but may require additional
disclosure.
In February 1998, the FASB issued Statement of Financial
Accounting Standards No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits" ("SFAS 132"). SFAS
132 revises the standards for disclosure of pension and other
postretirement benefit plans by standardizing the disclosure
requirements, requiring additional information on changes in the
benefit obligations and fair values of plan assets, and
eliminating certain disclosure requirements no longer considered
to be useful. These new disclosure requirements are designed to
improve the understandability of benefit disclosures for
financial analysis. The Company is required to adopt this
standard for fiscal 1999. Management believes that the
implementation of SFAS 132 will not have a material impact on the
Company's financial statements and disclosures.
Year 2000
The Company makes use of computers in its gathering,
manipulating, calculating, and reporting of accounting,
financial, administrative, and management information. It also
relies on computers to undertake certain operational procedures
and to more efficiently produce documents and financial
instruments. Additionally, the Company uses computers as a
communication tool for its employees to communicate among
themselves and with other persons outside the organization.
Finally, certain of the Company's equipment makes use of embedded
computer technology. The complete failure of these or certain of
the Company's suppliers' computer systems could have a
significant negative impact on the business operations of the
Company.
<PAGE>
The Company has prepared a Year 2000 project plan to identify and
assess its risks associated with Year 2000 issues. Under the
plan, the Company has begun assessing its major information and
computing systems and is updating or replacing, in the normal
course of business, any applications that are not Year 2000
compliant. The scope of this work includes an assessment of
systems using embedded technology, including its fleet of
offshore vessels. The Company has contracted firms specializing
in the assessment and remediation of embedded technology. The
Company plans to complete identification of mission critical
systems that require modification or replacement by mid-1999.
The Company has also contacted its key vendors and customers to
assess their progress with their own Year 2000 issues and to
anticipate potential risks associated with its key vendors and
customers. The Company does not currently foresee any material
affects to its business, operations, or financial condition
resulting from any suppliers' and customers' deficiency.
Despite efforts to address all material Year 2000 issues in
advance, the Company could potentially experience disruptions to
some aspects of its activities or operations. Thus, the Company
intends to develop business contingency plans for mitigating the
effect of potential disruptions.
Total amounts spent to date on Year 2000 efforts are less than
$100,000. Additional efforts to carry out the plan are also
expected to cost less than $100,000. The Company cannot make a
reliable estimate of the cost to fix non-Year 2000 compliant
systems at this time. However, considering assessments to date,
the Company believes that its estimated costs related to the year
2000 issue will not be material to the Company's business,
operations, or financial condition.
In the normal course of business, the Company is in the initial
phase of replacing its accounting and procurement systems and has
established a target date of mid-1999 for its installations at
all locations. While the Company's growth is driving the
Company's efforts to replace its accounting and procurement
systems, the Company does expect the implementation of the new
accounting and procurement system to mitigate any potential Year
2000 issues related to the existing systems. The Company expects
the corporate-wide accounting and procurement system replacement
to cost approximately $3 million.
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 believes that the outcome of all
such proceedings, even if determined adversely, would not have a
material adverse effect on its consolidated financial statements.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Shareholders of the Company was held
on August 5, 1998. At such meeting, each of the following
persons listed below, all of whom were incumbent directors, were
elected to the Board of Directors of the Company for a term
ending at the Company's 1999 Annual Meeting of Shareholders. The
number of votes cast with respect to the election of each such
person is set forth opposite such person's name.
<TABLE>
<CAPTION>
Name of Director Number of Votes Cast
Broker
For Withhold Non-Vote Abstain
<S> <C> <C> <C> <C>
William J. Dore 78,975,033 166,955 0 0
Michael J. McCann 78,955,141 186,847 0 0
James C. Day 78,975,429 166,559 0 0
Edward P.Djerejian 78,975,429 166,559 0 0
Myron J. Moreau 78,975,408 166,580 0 0
Michael J. Pollock 78,955,162 186,826 0 0
</TABLE>
At the 1998 Annual Meeting of Shareholders, the Company's
shareholders voted for approval of the Company's 1998 Equity
Incentive Plan. The plan permits the granting of both stock
option awards and restricted stock awards to officer and non-
officer employees. The number of votes cast with respect to the
amendment is set forth below:
<TABLE>
<CAPTION>
Number of Votes Cast
Broker
For Against Abstain Withhold Non-Vote
<S> <C> <C> <C> <C> <C>
Approval of the
1998 Equity
Incentive Plan 70,470,488 8,556,071 115,426 0 0
</TABLE>
Item 5. Other Information.
On October 28, 1998, the Company's Board of Directors determined
to change the Company's fiscal year-end to December 31 of each
year effective December 31, 1998. The Company's Form 10-K for
the fiscal period ended December 31, 1998, will cover the
transition period.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
No. 10.1- Fourth Amendment to Restated Credit
Agreement dated September 16,1998 by and among the Registrant,
certain of its subsidiaries, Bank One, Louisiana, National
Association, and other lenders named therein.
No. 15.1- Letter re: unaudited interim financial information.
No. 27.1- Financial Data Schedules.
(b) Reports on Form 8-K - None
<PAGE>
Signature
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.
GLOBAL INDUSTRIES, LTD.
By: /s/ PETER S. ATKINSON
________________________________________
Peter S. Atkinson
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
November 10, 1998
<PAGE>
EXHIBIT 15.1
November 9, 1998
Global Industries, Ltd.
107 Global Circle
Lafayette, Louisiana 70503
We have made a review, in accordance with standards established
by the American Institute of Certified Public Accountants, of the
unaudited interim financial information of Global Industries,
Ltd. and subsidiaries for the periods ended September 30, 1998
and 1997, as indicated in our report dated October 29, 1998;
because we did not perform an audit, we expressed no opinion on
that information.
We are aware that our report referred to above, which is included
in your Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, is incorporated by reference in Registration
Statement Nos. 33-58048 and 33-89778 on Form S-8.
We also are aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act of 1933, is not considered a
part of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
FOURTH AMENDMENT TO RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO RESTATED CREDIT AGREEMENT
(hereinafter referred to as the Agreement) dated as of the
16th day of September, 1998 by and among GLOBAL INDUSTRIES,
LTD., a Louisiana corporation (the Borrower), GLOBAL PIPELINES
PLUS, INC., a Louisiana corporation (Plus), GLOBAL DIVERS AND
CONTRACTORS, INC., a Louisiana corporation (Divers), GLOBAL
MOVIBLE OFFSHORE, INC., a Louisiana corporation (Movible),
PIPELINES, INCORPORATED, a Louisiana corporation (Pipelines),
GLOBAL INDUSTRIES OFFSHORE, INC., a Delaware corporation
(Industries Offshore) and GLOBAL INTERNATIONAL VESSELS, LTD., a
Cayman Islands corporation (International Vessels) (Plus,
Divers, Movible, Pipelines, Industries Offshore and International
Vessels are collectively called the Guarantors), BANK ONE,
LOUISIANA, NATIONAL ASSOCIATION, a national banking association
(Bank One), ABN AMRO BANK N.V., HOUSTON AGENCY (ABN), CREDIT
LYONNAIS NEW YORK BRANCH (CL), THE FUJI BANK, LIMITED, HOUSTON
AGENCY (Fuji), HIBERNIA NATIONAL BANK (Hibernia), PARIBAS
(Paribas), WHITNEY NATIONAL BANK (Whitney) and WELLS FARGO
BANK NATIONAL ASSOCIATION (Wells Fargo) (Bank One, ABN, CL,
Fuji, Hibernia, Paribas, Whitney and Wells Fargo are hereinafter
referred to collectively as Banks, and individually as Bank)
and Bank One, as Agent (in such capacity, the Agent).
WHEREAS, Borrower, the Guarantors and the Bank One entered
into a Restated Credit Agreement dated as of April 17, 1997 (the
Credit Agreement) under the terms of which Bank One agreed to
provide Borrower with a revolving loan facility in amounts of up
to $85,000,000.00; and
WHEREAS, Bank One subsequently assigned interest in the
Credit Agreement and the revolving commitment described therein
to ABN AMRO Bank N.V., Houston Agency, Credit Lyonnais, New York
Branch, The Fuji Bank, Limited, Houston Agency and Hibernia
National Bank (with Bank One, the AOriginal Bank Group@); and
WHEREAS, Borrower, the Guarantors and the Original Bank
Group entered into a First Amendment to Restated Credit Agreement
dated as of June 23, 1997 (the First Amendment); and
WHEREAS, Borrower, the Guarantors and the Original Bank
Group entered into a Second Amendment to Restated Credit
Agreement dated as of November 18, 1997 (the Second Amendment);
and
WHEREAS, as of April 8, 1998, Paribas and Whitney acquired
interests in the Credit Agreement and the Revolving Commitment
described therein (Paribas and Whitney, together with the
Original Bank Group are hereinafter called the Existing Bank
Group); and
WHEREAS, Borrower, the Guarantors, and the Existing Bank
Group entered into a Third Amendment to Restated Credit
Agreement dated as of April 9, 1998; and
WHEREAS, as of the date hereof, Wells Fargo is acquiring an
interest in the Credit Agreement and the Revolving Commitment;
and
WHEREAS, the Agent, the Banks, the Borrower and the
Guarantors have agreed to further amend the Credit Agreement to
increase the amount of the Revolving Commitment and made certain
additional changes thereto.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained the parties agree to amend the Credit
Agreement in the following respects:
1. Section 1 of the Credit Agreement is hereby amended in the
following respects:
(1) By deleting the definition of Revolving Commitment and
inserting the following new definition in lieu thereof:
Revolving Commitment shall mean (A)
for all Banks, (i)$250,000,000 from the
Fourth Amendment Effective Date through the
dates of consummation of a private placement
of debt by Borrower in an amount of up to
$150,000,000, which private placement shall
have been approved by all Banks;
(ii) $200,000,000 from the date of
consummation of such private placement
through June 30, 2000; (iii) $150,000,000
from July 1, 2000 through June 30, 2001; and
$100,000,000 from July 1, 2001 through
June 30, 2002; and (B) as to any Bank, its
obligation to make Advances hereunder on the
Revolving Loan and purchase its Pro Rata Part
of participations in Letters of Credit issued
hereunder by the Agent in amounts not
exceeding an amount equal to its Revolving
Commitment Percentage times the Revolving
Commitment in existence at the time of
determination.
(2) By deleting the definition of Revolving Commitment
Percentage and inserting the following new definition in lieu
thereof:
Revolving Commitment Percentage shall
mean for each Bank the percentage derived by
dividing its Revolving Commitment at the time
of determination by the Revolving Commitments
of all Banks at the time of determination.
At the Effective Date, the Revolving
Commitment Percentage of each Bank is as
follows:
Bank One 17%
ABN 16%
Hibernia 16%
CL 15%
Fuji 12%
Whitney 12%
Paribas 6%
Wells Fargo 6%
2. Section 3 of the Credit Agreement is hereby amended in the
following respects:
(1) Subsection 3(a) is hereby amended by deleting the reference
therein to $200,000,000 and asserting in lieu thereof
$250,000,000.
(2) Subsection 3(b) is hereby amended by deleting the first
sentence thereof in its entirety and substituting the following
sentence in lieu thereof:
From and after the date of the Fourth
Amendment to Restated Credit Agreement, there
shall be outstanding eight notes: (i) one
Revolving Note in the aggregate face amount
of $42,500,000 payable to the order of Bank
One, (ii) one Revolving Note in the aggregate
face amount of $40,000,000 payable to ABN,
(iii) one Revolving Note in the aggregate
face amount of $37,500,000 payable to the
order of CL, (iv) one Revolving Note in the
aggregate face amount of $30,000,000 payable
to the order of Fuji, and (v) one Revolving
Note in the aggregate face amount of
$40,000,000 payable to the order of Hibernia,
(vi) one Revolving Note in the aggregate face
amount of $15,000,000 payable to the order of
Paribas, (vii) one Revolving Note in the
aggregate face amount of $30,000,000 payable
to the order of Whitney and (viii) one
Revolving Note in the aggregate amount of
$15,000,000 payable to the order of Wells
Fargo.
3. Section 12(d) of the Credit Agreement is hereby amended by
deleting the reference therein to 50% and substituting 55% in
lieu thereof.
4. Exhibit C to the Credit Agreement is hereby deleted and
replaced by the new Exhibit C in the form attached hereto.
5. This Fourth Amendment shall be effective as of the date
first above written, but only upon satisfaction of the conditions
precedent set forth in paragraph 7 hereof (the Fourth Amendment
Effective Date).
6. The obligation of the Banks hereunder shall be subject to
the following conditions precedent:
(1) Borrowers Execution and Delivery. Borrower shall have
executed and delivered to the Agent for the benefit of the Banks,
this Agreement, the new Notes and other required documents, all
in form and substance satisfactory to Agent;
(2) Guarantors Execution and Delivery. The Guarantors shall
have executed and delivered to the Agent for the benefit of the
Banks, new Guaranties in the form of Exhibit C hereto and other
required documents, all in form and substance satisfactory to
Agent;
(3) Legal Opinion. The Agent shall have received from
Borrowers and Guarantors legal counsel a favorable legal
opinion in form and substance reasonably satisfactory to Agent
and its counsel;
(4) Corporate Resolutions. The Agent shall have received
appropriate certified corporate resolutions of Borrower and each
Guarantor;
(5) Good Standing. The Agent shall have received evidence of
existence and good standing for Borrower and each Guarantor;
(6) Amendments to Articles of Incorporation and Bylaws. The
Agent shall have received copies of all amendments to the
Articles of Incorporation of Borrower and each Guarantor made
since the Effective Date of the Credit Agreement, certified by
the Secretary of State of the State or Country of its
incorporation, and a copy of any amendments to the Bylaws of
Borrower and each Guarantor, made since the Effective Date of the
Credit Agreement, certified by Borrower and each Guarantor as
being true, correct and complete;
(7) Payment of Fees. The Agent shall have received payment in
full of all fees due on the date of execution of this Agreement;
(8) Representation and Warranties. The representations and
warranties of Borrower and each Consolidated Subsidiary under
this Agreement are true and correct in all material respects as
of such date, as if then made (except to the extent that such
representations and warranties related solely to an earlier date
or the Majority Banks shall have consented to the contrary);
(9) No Event of Default. No Event of Default shall have
occurred and be continuing nor shall any event have occurred or
failed to occur which, with the passage of time or service of
notice, or both, would constitute an Event of Default;
(10) Other Documents. Agent shall have received such other
instruments and documents incidental and appropriate to the
transaction provided for herein as Bank or its counsel may
reasonably request, and all such documents shall be in form and
substance reasonably satisfactory to the Agent; and
(11) Legal Matters Satisfactory. All legal matters incident to
the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to special counsel for Agent retained at
the expense of Borrower.
7. Except to the extent its provisions are specifically
amended, modified or superseded by this Agreement, the
representations, warranties and affirmative and negative
covenants of the Borrower contained in the Credit Agreement are
incorporated herein by reference for all purposes as if copied
herein in full. The Borrower hereby restates and reaffirms each
and every term and provision of the Credit Agreement, as amended,
including, without limitation, all representations, warranties
and affirmative and negative covenants. Except to the extent its
provisions are specifically amended, modified or superseded by
this Agreement, the Credit Agreement, as amended, and all terms
and provisions thereof shall remain in full force and effect, and
the same in all respects are confirmed and approved by the
Borrower and the Banks.
8. Unless otherwise defined herein, all defined terms used
herein shall have the same meaning ascribed to such terms in the
Credit Agreement.
9. This Agreement may be executed in any number of identical
separate counterparts, each of which for all purposes to be
deemed an original, but all of which shall constitute,
collectively, one Agreement.
10. The Guarantors are executing this Agreement only to indicate
their consent to the execution hereof by the Borrower.
11. WRITTEN CREDIT AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED
BY THE FIRST AMENDMENT, THE SECOND AMENDMENT, THE THIRD AMENDMENT
AND THIS FOURTH AMENDMENT, REPRESENTS THE FINAL AGREEMENT BETWEEN
AND AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN AND
AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties have caused this Fourth
Amendment to Restated Credit Agreement to be duly executed as of
the date first above written.
BORROWER:
GLOBAL INDUSTRIES, LTD.
a Louisiana corporation
By:
Name: Michael J. McCann
Title: Vice President
GUARANTORS:
GLOBAL PIPELINES PLUS, INC.;
GLOBAL DIVERS AND CONTRACTORS,INC.;
GLOBAL MOVIBLE OFFSHORE, INC.;
PIPELINES, INCORPORATED;
GLOBAL INDUSTRIES OFFSHORE, INC.; AND
GLOBAL INTERNATIONAL VESSELS, LTD.
By:
Name: Michael J. McCann
Title: Vice President
BANKS:
BANK ONE, LOUISIANA, NATIONAL
ASSOCIATION, a national banking association
By:
Rose M. Miller, Vice President
ABN AMRO BANK N.V., HOUSTON AGENCY
By:
H. Gene Shiels, Vice President
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name: Phillippe Soustra
Title: Senior Vice President
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By:
Name: Raymond Ventura
Title: Vice President & Manager
HIBERNIA NATIONAL BANK
By:
Bruce Ross, Vice President
PARIBAS
By:
Name: Marian Livingston
Title: Vice President
By:
Name: Michael H. Fiuzat
Title: Vice President
WHITNEY NATIONAL BANK
By:
Name: Harry C. Stahel
Title: Senior Vice President
WELLS FARGO BANK NATIONAL
ASSOCIATION
By:
Name: Joseph P. Maxwell
Title:Assistant Vice President
AGENT:
BANK ONE, LOUISIANA, NATIONAL
ASSOCIATION, a national banking association
By:
Rose M. Miller, Vice President
EXHIBIT C
CONTINUING GUARANTY
CONTINUING GUARANTY (this Agreement) made and entered into
as of September 16, 1998 by Global Pipelines Plus, Inc.,
Global Divers and Contractors, Inc., Global Movible Offshore,
Inc., Pipelines, Incorporated, Global Industries Offshore, Inc.
and Global International Vessels, Ltd. (hereinafter, whether one
or more, individually and collectively referred to as
Guarantor), in favor of Bank One, Louisiana, National
Association of Lafayette, Louisiana, as Agent for itself and each
of the financial institutions which are or have become a party to
that certain Restated Credit Agreement dated as of April 17,
1997, as amended, by and among Borrower (as hereinafter defined),
the Agent and the financial institutions party thereto (the
Credit Agreement) (hereinafter referred to as Lenders),
guarantying the Indebtedness (as defined) of GLOBAL INDUSTRIES,
LTD., a Louisiana corporation (hereinafter referred to as
Borrower).
WITNESSETH:
FOR VALUE RECEIVED, and in consideration of and for credit
and financial accommodations extended, to be extended, or
continued to or for the account of the above named Borrower, the
undersigned Guarantor, whether one or more, hereby jointly,
severally and solidarity, agrees as follows:
Section 1. Continuing Guaranty of Borrower's Indebtedness.
Guarantor hereby absolutely and unconditionally agrees to, and by
these presents does hereby, guarantee the prompt and punctual
payment, performance and satisfaction of any and all loans,
extensions of credit and/or other obligations that Borrower may
now and/or in the future owe to and/or incur in favor of Lenders
under or pursuant to that certain Restated Credit Agreement dated
as of April 17, 1997, as amended, by and among Borrower,
Guarantors and Lenders, and as the same may be amended and/or
restated from time to time and in effect (the Credit
Agreement), including the indebtedness of Borrower evidenced by
certain Promissory Notes of even date herewith in the maximum
aggregate principal amount of $250,000,000.00, made by Borrower
pursuant to the Credit Agreement, as said Promissory Notes may be
renewed from time to time and in effect, and whether such
indebtedness and/or obligations are absolute or contingent,
liquidated or unliquidated, due or to become due, secured or
unsecured, and whether now existing or hereafter arising, of any
nature or kind whatsoever, up to a maximum principal amount
outstanding at any one or more times not to exceed TWO HUNDRED
FIFTY MILLION AND NO/100 DOLLARS (U.S. $250,000.000.00), together
with interest, costs and attorneys' fees thereon (with all of
Borrower's indebtedness and/or obligations being hereinafter
individually and collectively referred to under this Agreement as
Borrower's Indebtedness or the Indebtedness).
Notwithstanding any other provision herein to the contrary,
the maximum principal amount of Borrower's Indebtedness in favor
of Lenders guaranteed by Guarantor under this Agreement is
limited to TWO HUNDRED FIFTY MILLION AND NO/100 DOLLARS (U.S.
$250,000,000.00) (interest, costs, and attorney's fees under
Borrower's Indebtedness are additionally guaranteed hereunder.)
Section 2. Limitation on Liability. The liability of any
Guarantor hereunder with respect to the Indebtedness shall be
limited to the maximum amount of liability that can be incurred
without rendering this Continuing Guaranty, as it relates to any
Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater
amount.
Section 3. Joint, Several and Solidarity Liability.
Guarantor further agrees that its obligations and liabilities for
the prompt and punctual payment, performance and satisfaction of
all of Borrower's Indebtedness shall be on a joint and several
and solidary basis along with Borrower to the same degree and
extent as if Guarantor had been and/or will be a co-borrower,
co-principal obligor and/or co-maker of all of Borrower's
Indebtedness. In the event that there is more than one guarantor
under this Agreement, or in the event that there are other
guarantors, endorsers or sureties of all or any portion of
Borrower's Indebtedness, Guarantor's obligations and liabilities
hereunder shall be on a joint and several and solidary basis
along with such other guarantor or guarantors, endorsers and/or
sureties.
Section 4. Duration; Cancellation of Agreement. This
Agreement and Guarantor's obligations and liabilities hereunder
shall remain in full force and effect until such time as each and
every Indebtedness of Borrower shall be paid, performed and/or
satisfied in full, in principal, interest, costs and attorneys'
fees, or until such time as this Agreement may be cancelled or
otherwise terminated by Lenders under a written cancellation
instrument in favor of Guarantor (subject to the automatic
reinstatement provision hereinbelow). Unless otherwise indicated
under such a written cancellation instrument, Lenders' agreement
to terminate or otherwise cancel this Agreement shall only effect
and shall be expressly limited to Guarantor's continuing
obligations and liabilities to guarantee the prompt and punctual
payment, performance and satisfaction of Borrower's Indebtedness
incurred, originated and/or extended or committed to by Lenders
after the date of such a written cancellation instrument; with
Guarantor remaining fully obligated and liable under this
Agreement for the prompt and punctual payment, performance and
satisfaction of any and all of Borrower's then outstanding
Indebtedness together with continuing assessment of interest
thereon) that was incurred, originated, extended or committed to
prior to the date of such a written cancellation instrument.
Nothing under this Agreement or under any other agreement or
understanding by and between Guarantor and Lenders, shall in any
way obligate, or be construed to obligate, Lenders to agree to
the subsequent termination or cancellation of Guarantor's
obligations and liabilities hereunder, it being fully understood
and agreed by Guarantor that Lenders may, within its sole and
uncontrolled discretion and judgment, refuse to release Guarantor
from any of its obligations and liabilities under this Agreement
for any reason whatsoever as long as any of Borrower's
Indebtedness remains unpaid and outstanding.
Section 5. Default of Borrower. Should Borrower default
under any of its Indebtedness in favor of Lenders as provided in
the Credit Agreement, Guarantor unconditionally and absolutely
agrees to pay the full then unpaid amount of all of Borrower's
Indebtedness guaranteed hereunder, in principal interest, costs
and reasonable attorneys' fees. Such payment or payments shall
be made immediately following demand by Lenders at Agent's
offices at 200 West Congress Street, Lafayette, Louisiana 70501.
Guarantor hereby waives notice of acceptance of this Agreement
and of any Indebtedness to which it applies or may apply.
Guarantor further waives presentation and demand for payment of
Borrower's Indebtedness, notice of dishonor and of nonpayment,
notice of intention to accelerate, notice of acceleration,
protest and notice of protest, collection or institution of any
suit or other action by Lenders in collection thereof, including
any notice of default in payment thereof or other notice to, or
demand for payment thereof on any party. Guarantor additionally
waives any and all rights and pleas of division and discussion as
provided under Louisiana State law, as well as, to the degree
applicable, any similar rights as may be provided under the laws
of any other state.
Section 6. Guarantor's Subordination of Rights to Lenders.
In the event that Guarantor should for any reason (i) make any
payment for and on behalf of Borrower under any of Borrower's
Indebtedness, and/or (ii) make any payments to Lenders in total
or partial satisfaction of Guarantor's obligations and
liabilities hereunder, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect or to be
reimbursed by Borrower (or by any guarantor, endorser or surety
of Borrower's Indebtedness), whether Guarantor's rights of
collection or reimbursement arise by way of subrogation to the
rights of Lenders or otherwise, shall in all respects be
subordinate, inferior and junior to Lenders' rights to collect
and enforce payment, performance and satisfaction of Borrower's
then remaining Indebtedness, until such time as all of Borrower's
Indebtedness is fully paid and satisfied. Upon the occurrence
and continuance of an Event of Default (as defined in the Credit
Agreement) any and all amounts owed by Borrower to Guarantor
shall in all respects be subordinate, inferior and junior to
Lenders' rights to collect and enforce payment, performance and
satisfaction of Borrower's then remaining Indebtedness, until
such time as all of Borrower's Indebtedness is fully paid and
satisfied. Guarantor further agrees to refrain from attempting
to collect and/or enforce any of Guarantor's aforesaid rights
against Borrower (or any other guarantor, surety or endorser of
Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining
Indebtedness in favor of Lenders is fully paid and satisfied, in
principal, interest, costs and attorneys' fees.
Section 7. Additional Covenants. Guarantor further agrees
that Lenders may, at its sole option, at any time, and from time
to time, without the consent of or notice to Guarantor, or any
one of them, or to any other party, and without incurring any
responsibility to Guarantor or to any other party, and without
impairing or releasing the obligations of Guarantor under this
Agreement:
(A) Discharge or release any party (including, but not
limited to, Borrower or any guarantor under this Agreement) who
is or may be liable to Lenders for any of Borrower's
Indebtedness;
(B) Sell, exchange, release, surrender, realize upon
or otherwise deal with, in any manner and in any order, any
collateral directly or indirectly securing repayment of any of
Borrower's Indebtedness;
(C) Change the manner, place or terms of payment, or
change or extend the time of payment of or renew, as often and
for such periods as Lenders may determine, or after, any of
Borrower's Indebtedness;
(D) Settle or compromise any of Borrower's
Indebtedness;
(E) Subordinate and/or agree to subordinate the
payment of all or any of Borrower's Indebtedness or Lenders'
security rights in and/or to any collateral directly or
indirectly securing any such indebtedness, to the payment and/or
security rights of any other present and/or future creditors of
Borrower;
(F) Apply any sums paid to any of Borrower's
Indebtedness, with such payments being applied in such priority
or with such preferences as Lenders may determine in its sole
discretion, regardless of what Indebtedness of Borrower remains
unpaid;
(G) Take or accept any other security for any or all
of Borrower's Indebtedness; and/or
(H) Enter into, deliver, modify, amend or waive
compliance with, any Instrument or arrangement evidencing,
securing or otherwise affecting, all or any part of Borrower's
Indebtedness.
In addition, no course of dealing between Lenders and
Borrower (or any other guarantor, surety or endorser of
Borrower's Indebtedness), nor any failure or delay on the part of
Lenders to exercise any of Lenders' rights and remedies, or any
other agreement or agreements by and between Lenders and Borrower
(or any other guarantor, surety or endorser) shall have the
affect of impairing or releasing Guarantor's obligations and
liabilities to Lenders or of waiving any of Lenders' rights and
remedies. Any partial exercise of any rights and remedies
granted to Lenders shall furthermore not constitute a waiver of
any of Lenders' other rights and remedies, it being Guarantor's
intent and agreement that Lenders' rights and remedies shall be
cumulative in nature. Guarantor further agrees that, should
Borrower default under any of its Indebtedness, any waiver or
forbearance on the part of Lenders to pursue the rights and
remedies available to Lenders shall be binding upon Lenders only
to the extent that Lenders specifically agree to such waiver or
forbearance in writing. A waiver or forbearance on the part of
Lenders as to one event of default shall not constitute a waiver
of forbearance as to any other default.
Section 8. No Release of Guarantor. Guarantor's obligations
and liabilities under this Agreement shall not be released,
impaired, reduced or otherwise affected by, and shall continue in
full force and effect, notwithstanding the occurrence of any
event, including without limitation any one of the following
events:
(A) Death, insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability, dissolution or
lack of authority (whether corporate, partnership or trust) of
Borrower (or any person acting on Borrower's behalf), or any
other guarantor, surety or endorser of any of Borrower's
Indebtedness;
(B) Partial payment or payments of any amount due
and/or outstanding under any of Borrower's Indebtedness;
(C) Any payment of Borrower or any other party to
Lenders is held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or for any
reason, Lenders is required to refund such payment or pay such
amount to Borrower or to any other person;
(D) Any dissolution of Borrower or any sale, lease or
transfer of all or any part of Borrower's assets; and/or
(E) Any failure of Lenders to notify Guarantor of the
acceptance of this Agreement or of the making loans or other
extensions of credit in reliance on this Agreement or of the
failure of Borrower to make any payment due by Borrower to
Lenders.
(F) Apply any sums paid to any of Borrower's
Indebtedness, with such payments being applied in such priority
or with such preferences as Lenders may determine in its own
discretion, regardless of what Indebtedness of Borrower remains
unpaid;
(G) Take or accept any other security for any or all
of Borrower's Indebtedness; and/or
(H) Enter into, deliver, modify, amend or waive
compliance with, any Instrument or arrangement evidencing,
securing or otherwise affecting, all or any part of Borrower's
Indebtedness.
This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or
shall automatically and retroactively be reinstated if a release
or discharge has occurred, as the case may be, if at any time any
payment or part thereof to Lenders with respect to any of
Borrower's Indebtedness is rescinded or must otherwise be
restored by Lenders pursuant to any insolvency, bankruptcy,
reorganization, receivership, or any other debt relief granted to
Borrower or to any other party. In the event that Lenders must
rescind or restore any payment received by Lenders in
satisfaction of Borrower's Indebtedness, any prior release or
discharge from the terms of this Agreement given to Guarantor
shall be without effect, and this Agreement and Guarantor's
obligations and liabilities hereunder shall automatically be
renewed or reinstated and shall remain in full force and effect
to the same degree and extent as if such a release or discharge
was never granted. It is the intention of Lenders and Guarantor
that Guarantor's obligations and liabilities hereunder shall not
be discharged except by Guarantor's full and complete performance
of such obligations and liabilities and then only to the extent
of such performance.
Section 9. Enforcement of Guarantor's Obligations and
Liabilities. Guarantor agrees that, should Lenders deem it
necessary to file an appropriate collection action to enforce
Guarantor's obligations and liabilities under this Agreement,
Lenders may commence such a civil action against Guarantor
without the necessity of first (i) attempting to collect
Borrower's Indebtedness from Borrower or from any other
guarantor, surety or endorser, whether through filing of suit or
otherwise, (ii) attempting to exercise against any collateral
directly or indirectly securing repayment of any of Borrower's
Indebtedness, whether through the filing of an appropriate
foreclosure action or otherwise, or (iii) including Borrower or
any other guarantor, surety or endorser of any of Borrower's
Indebtedness as an additional party defendant in such a
collection action against Guarantor. If there is more than one
guarantor under this Agreement, each guarantor additionally
agrees that Lenders may file an appropriate collection and/or
enforcement action against any one or more of them, without
impairing the rights of Lenders against any other guarantor under
this Agreement. In the event that Lenders should ever deem it
necessary to refer this Agreement to an attorney-at-law for the
purpose of enforcing Guarantor obligations and liabilities
hereunder, or of protecting or preserving Lenders' rights
hereunder, Guarantor (and each of them, on a joint, several and
solidary basis) agrees to reimburse Lenders for the reasonable
fees of such an attorney. Guarantor additionally agrees that
Lenders shall not be liable for failure to use diligence in the
collection of any of Borrower's Indebtedness or any collateral
security therefor, or in creating or preserving the liability of
any person liable on any such Indebtedness, or in creating,
perfecting or preserving any security for any such Indebtedness.
Section 10. Additional Documents. Upon the reasonable
request of Lenders, Guarantor will, at any time, and from time to
time, duly execute and deliver to Lenders any and all such
further instruments and documents, and supply such additional
information as may be necessary or advisable in the opinion of
Lenders, to obtain the full benefits of this Agreement.
Section 11. Transfer of Indebtedness. This agreement is for
the benefit of Lenders and for such other person or persons as
may from time to time become or be the holders of any of
Borrower's Indebtedness hereby guaranteed and this Agreement
shall be transferable and negotiable, with the same force and
effect and to the same extent as Borrower's Indebtedness may be
transferable, it being understood that, upon the transfer or
assignment by Lenders of any of Borrower's Indebtedness hereby
guaranteed, the legal holder of such Indebtedness shall have all
the rights granted to Lenders under this Agreement.
Guarantor hereby recognizes and agrees that Lenders may,
from time to time, one or more times, transfer all or any portion
of Borrower's Indebtedness to one or more third parties. Such
transfers may include, but are not limited to, sales of a
participation or syndication interest in such Indebtedness in
favor of one or more third parties. Guarantor specifically
agrees and consents to all such transfers and assignments and
Guarantor further waives any subsequent notice of and right to
consent to any such transfers and assignments as may be provided
under applicable Louisiana law. Guarantor additionally agrees
that the purchaser of a participation or syndication interest in
Borrower's Indebtedness will be considered as the absolute owner
of an interest in, or a percentage interest of, such Indebtedness
and that such a purchaser shall have all of the rights granted to
the purchaser under any participation agreement governing the
sale of such a participation or syndication interest. Guarantor
further waives any right of offset that Guarantor may have
against Lenders and/or any purchaser of such a participation or
syndication interest in Borrower's Indebtedness and Guarantor
unconditionally agrees that either Lenders or such a purchaser
may enforce Guarantor's obligations and liabilities under this
Agreement, irrespective of the failure or insolvency of Lenders
or any such purchaser. Guarantor further agrees that, upon any
transfer of all or any portion of Borrower's Indebtedness,
Lenders may transfer and deliver any and all collateral securing
repayment of such Indebtedness including, but not limited to, any
collateral provided by Guarantor) to the transferee of such
Indebtedness and such collateral (again, including but not
limited to Guarantor's collateral) shall secure any and all of
Borrower's Indebtedness in favor of such transferee. Guarantor
additionally agrees that, after any such transfer or assignment
has taken place, Lenders shall be fully discharged from any and
all liability and responsibility to Borrower (and Guarantor) with
respect to such collateral, and the transferee thereafter shall
be vested with all the powers and rights with respect to such
collateral.
Section 12. Right of Offset. As collateral security for the
repayment of Guarantor's obligations and liabilities under this
Agreement, Guarantor hereby grants Lenders, as well as their
successors and assigns, the right to apply, upon the occurrence
of an Event of Default under the Credit Agreement and the
expiration of any applicable grace period allowed to cure the
Event of Default, any and all funds that Guarantor may then have
on deposit with or in the possession or control of any Lender and
its successors or assigns (with the exception of funds deposited
in IRA, pension or other tax-deferred deposit accounts), towards
repayment of any of Borrower's Indebtedness subject to this
Agreement.
Section 13. Construction. The provisions of this Agreement
shall be in addition to and cumulative of, and not in
substitution, novation or discharge of, any and all prior or
contemporaneous guaranty or other agreements by Guarantor (or any
one or more of them), in favor of Lenders or assigned to Lenders
by others, all of which shall be construed as complementing each
other. Nothing herein contained shall prevent Lenders from
enforcing any and all such guaranties or agreements in accordance
with their respective terms.
Section 14. Amendment. No amendment, modification, consent or
waiver of any provision of this Agreement, and no consent to any
departure by Guarantor therefrom, shall be effective unless the
same shall be in writing signed by a duly authorized officer of
Lenders, and then shall be effective only to the specific
instance and for the specific purpose for which given.
Section 15. Successors and Assigns Bound. Guarantor's
obligations and liabilities under this Agreement shall be binding
upon Guarantor's successors, heirs, legatees, devisees,
administrator executors and assigns. The rights and remedies
granted to Lenders under this Agreement shall also inure to the
benefit of Lenders' successors and assigns, as well as to any and
all subsequent holder or holders of any of Borrower's
Indebtedness subject to this Agreement.
Section 16. Caption Heading. Caption headings of the of this
Agreement are for convenience purposes only and are not to be
used to interpret or to define their provisions. In this
Agreement, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
Section 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF LOUISIANA.
Section 18. Severability. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or
future laws effective during the term hereof; such provision
shall be fully severable, this Agreement shall be construed and
enforceable as if the illegal, invalid or unenforceable provision
had never comprised a part of it, and the remaining provisions of
this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement, a provision as
similar in terms to such illegal, invalid or unenforceable
provision as may be possible and legal, valid and enforceable.
IN WITNESS WHEREOF, Guarantor has executed this Agreement in
favor of Lenders on the day, month, and year first written above.
GUARANTORS:
GLOBAL PIPELINES PLUS, INC.;
GLOBAL DIVERS AND CONTRACTORS, INC.;
GLOBAL MOVIBLE OFFSHORE, INC.;
PIPELINES, INCORPORATED;
GLOBAL INDUSTRIES OFFSHORE, INC.; and
GLOBAL INTERNATIONAL VESSELS, LTD.
By:
Name:
Title:
ACCEPTED:
BANK ONE, LOUISIANA,
NATIONAL ASSOCIATION
as Agent for itself
and the Lenders
By: DATE: _________, 1998
Rose M. Miller, Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Global
Industries, Ltd.'s financial statements for the six-months ended September 30,
1998 and is qualified in its entirety by reference to such 10Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 19,362
<SECURITIES> 0
<RECEIVABLES> 117,497
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 166,668
<PP&E> 523,495
<DEPRECIATION> 0
<TOTAL-ASSETS> 726,629
<CURRENT-LIABILITIES> 80,364
<BONDS> 218,397
0
0
<COMMON> 920
<OTHER-SE> 384,079
<TOTAL-LIABILITY-AND-EQUITY> 726,629
<SALES> 0
<TOTAL-REVENUES> 212,733
<CGS> 0
<TOTAL-COSTS> 151,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,973
<INCOME-PRETAX> 41,732
<INCOME-TAX> 14,606
<INCOME-CONTINUING> 27,126
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,126
<EPS-PRIMARY> .30
<EPS-DILUTED> .29
</TABLE>
