UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-21086

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.)
8000 Global Drive Carlyss, Louisiana		70665
(Address of principal executive offices)		(Zip Code)

(337) 583-5000
(Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year, if changes 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.

YES þ          NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o          NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o          NO þ

The number of shares of the registrant’s common stock outstanding as of November 3, 2009, was 113,876,792.

 

 

Global Industries, Ltd.
Table of Contents

		Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Report of Independent Registered Public Accounting Firm			3
Condensed Consolidated Balance Sheets (Unaudited)			4
Condensed Consolidated Statements of Operations (Unaudited)			5
Condensed Consolidated Statements of Cash Flows (Unaudited)			6
Notes to Condensed Consolidated Financial Statements (Unaudited)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			33
Item 4. Controls and Procedures			34
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 6. Exhibits			36
Signature			37
EX-15.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Global Industries, Ltd.

We have reviewed the accompanying condensed consolidated balance sheet of Global Industries, Ltd. and subsidiaries (the “Company”) as of September 30, 2009, and the related condensed consolidated statements of operations for the three-month and nine-month periods ended September 30, 2009 and 2008, and cash flows for the nine-month periods ended September 30, 2009 and 2008. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), 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 reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Global Industries, Ltd. and subsidiaries as of December 31, 2008, 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 February 27, 2009 (October 5, 2009 as to the effects of the retrospective adjustments discussed in Notes 2 and 18), we expressed an unqualified opinion and included an explanatory paragraph relating to the adoption of new accounting guidance on convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), on determining whether instruments granted in share-based payment transactions are participating securities, and to a change in segment reporting on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2008 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

November 5, 2009
Houston, Texas

GLOBAL INDUSTRIES, LTD.

		September 30				December 31
		2009				2008
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	380,616			$	287,669
Restricted cash			1,139				94,516
Marketable securities			31,150				—
Accounts receivable – net of allowance of $1,070 for 2009 and $12,070 for 2008			147,842				180,018
Unbilled work on uncompleted contracts			116,994				86,011
Contract costs incurred not yet recognized			2,619				11,982
Deferred income taxes			2,937				7,223
Assets held for sale			8,820				2,181
Prepaid expenses and other			57,398				44,585
Total current assets			749,515				714,185
Property and Equipment, net			680,288				599,078
Other Assets
Marketable securities — long-term			11,103				42,375
Accounts receivable — long-term			24,237				22,246
Deferred charges, net			54,948				70,573
Goodwill			37,388				37,388
Other			8,821				3,508
Total other assets			136,497				176,090
Total		$	1,566,300			$	1,489,353
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long term debt		$	3,960			$	3,960
Accounts payable			222,938				207,239
Employee-related liabilities			24,839				26,113
Income taxes payable			53,372				38,649
Accrued interest payable			2,229				5,613
Advance billings on uncompleted contracts			394				4,609
Accrued anticipated contract losses			100				35,055
Other accrued liabilities			8,364				12,053
Total current liabilities			316,196				333,291
Long-Term Debt			292,225				289,966
Deferred Income Taxes			69,604				64,020
Other Liabilities			13,318				13,266
Commitments and Contingencies			—				—
Shareholders’ Equity
Common stock, $0.01 par value, 150,000 shares authorized, and 120,020 and 119,650 shares issued at September 30, 2009 and December 31, 2008, respectively			1,200				1,197
Additional paid-in capital			513,309				509,345
Retained earnings			473,681				394,699
Treasury stock at cost, 6,130 shares			(105,038	)			(105,038	)
Accumulated other comprehensive loss			(8,195	)			(11,393	)
Total shareholders’ equity			874,957				788,810
Total		$	1,566,300			$	1,489,353

See Notes to Condensed Consolidated Financial Statements.

GLOBAL INDUSTRIES, LTD.

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
						As adjusted								As adjusted
						(Note 10)								(Note 10)
Revenues		$	203,718			$	218,551			$	768,010			$	820,559
Cost of operations			163,855				307,409				617,609				847,251
Gross profit (loss)			39,863				(88,858	)			150,401				(26,692	)
Loss (gain) on asset disposals and impairments			274				1,640				(8,249	)			(372	)
Selling, general and administrative expenses			19,075				25,439				55,635				73,439
Operating income (loss)			20,514				(115,937	)			103,015				(99,759	)
Interest income			402				2,476				1,594				12,709
Interest expense			(2,756	)			(4,642	)			(9,978	)			(12,578	)
Other income (expense), net			9				(234	)			6,579				(1,866	)
Income (loss) before taxes			18,169				(118,337	)			101,210				(101,494	)
Income tax expense (benefits)			4,151				(15,229	)			22,228				(10,364	)
Net income (loss)		$	14,018			$	(103,108	)		$	78,982			$	(91,130	)
Earnings (Loss) Per Common Share
Basic		$	0.12			$	(0.90	)		$	0.69			$	(0.80	)
Diluted		$	0.12			$	(0.90	)		$	0.69			$	(0.80	)
Weighted Average Common Shares Outstanding
Basic			112,693				114,493				112,550				114,135
Diluted			113,278				114,493				113,118				114,135

See Notes to Condensed Consolidated Financial Statements.

GLOBAL INDUSTRIES, LTD.

		Nine Months Ended
		September 30
		2009				2008
						As adjusted
						(Note 10)
Cash Flows From Operating Activities
Net income (loss)		$	78,982			$	(91,130	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and non-stock-based amortization			47,427				40,545
Stock-based compensation expense			5,207				10,179
Provision for doubtful accounts			3,161				5,368
Gain on sale or disposal of property and equipment			(9,207	)			(1,929	)
Derivative (gain) loss			(838	)			613
Loss on asset impairments			958				1,557
Deferred income taxes			7,006				(34,753	)
Excess tax benefits from stock-based compensation			(57	)			(4,019	)
Changes in operating assets and liabilities
Accounts receivable, unbilled work, and contract costs			5,403				(27,795	)
Prepaid expenses and other			(15,938	)			(23,389	)
Accounts payable, employee-related liabilities, and other accrued liabilities			(59,310	)			50,306
Deferred dry-docking costs incurred			(6,465	)			(47,419	)
Net cash provided by (used in) operating activities			56,329				(121,866	)
Cash Flows From Investing Activities
Proceeds from the sale of assets			26,915				6,476
Additions to property and equipment			(79,018	)			(240,113	)
Purchase of marketable securities			—				(49,296	)
Sale of marketable securities			—				106,804
Decrease in (additions to) restricted cash			93,377				(16	)
Net cash provided by (used in) investing activities			41,274				(176,145	)
Cash Flows From Financing Activities
Repayment of long-term debt			(3,960	)			(3,960	)
Proceeds from sale of common stock, net			126				8,607
Repurchase of common stock			(283	)			(27,770	)
Additions to deferred charges			(596	)			(87	)
Excess tax benefits from stock-based compensation			57				4,019
Net cash provided by (used in) financing activities			(4,656	)			(19,191	)
Cash and cash equivalents
Increase (decrease)			92,947				(317,202	)
Beginning of period			287,669				723,450
End of period		$	380,616			$	406,248
Supplemental Disclosures
Interest paid, net of amounts capitalized		$	11,128			$	10,203
Income taxes paid		$	10,271			$	37,865
Property and equipment additions included in accounts payable		$	71,154			$	19,070

See Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1.

General

		Basis of Presentation
		The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Global Industries, Ltd. and its subsidiaries (“Company,” “we,” “us,” or “our”).
		In the opinion of our management, all adjustments (such adjustments consisting of a normal and recurring nature) necessary for a fair presentation of the operating results for the interim periods presented have been included in the unaudited Condensed Consolidated Financial Statements. Operating results for the period ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. These financial statements should be read in conjunction with our audited Consolidated Financial Statements and related notes thereto included in our Current Report on Form 8-K dated October 6, 2009.
		We have evaluated all subsequent events through November 5, 2009, the date the financial statements were issued.
		All “$” represent U.S. Dollars.
		Recent Accounting Pronouncements
		SFAS 168. In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 168”) (ASC Topic 105). SFAS 168 establishes the FASB Accounting Standards CodificationTM (the “Codification” or “ASC”) as the single source of authoritative, nongovernmental generally accepted accounting principles (“GAAP”), other than guidance issued by the SEC. ASC does not change GAAP; it introduces a new structure for organizing GAAP and limits the hierarchy to two levels-authoritative and nonauthoritative. ASC is effective for interim or annual financial periods ending after September 15, 2009. We adopted ASC beginning on July 1, 2009 and the principal impact on our financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification. In order to ease the transition to the Codification, we are providing the Codification cross reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
		SFAS 165. In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC 855). This guidance establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance is effective for interim or annual financial periods ending after June 15, 2009. We adopted this guidance beginning April 1, 2009. The adoption of this guidance did not have a material impact on our financial statements. See Note 1 for disclosures required by this guidance.
		In April 2009, the FASB issued three FASB Staff Positions (“FSP”) intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. These FSPs are effective for interim and annual reporting periods ending after June 15, 2009. We adopted these standards on a prospective basis beginning April 1, 2009. The adoption of these standards did not have a material impact on our consolidated results of operations and financial condition.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly” (ASC 820-10-65-4), provides guidance for determining fair values when there is no active market or where the price inputs being used represent distressed sales.

FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (ASC 320-10-65-1), provides additional guidance to provide greater clarity about the credit and noncredit component of an other than temporary impairment event and to improve presentation and disclosure of other than temporary impairments in the financial statements.

FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (ASC 825-10-65-1), requires disclosures about the fair value of financial instruments in interim as well as annual financial statements.

		SFAS 161. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (ASC 815-10-50). This guidance requires specific disclosures regarding the location and amounts of derivative instruments in our financial statements, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect our financial position, financial performance, and cash flows. This guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We adopted this guidance beginning January 1, 2009. See Note 4 for disclosures required by this guidance.
		FSP APB 14-1. In May 2008, the FASB issued FSP APB No. 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (ASC 470-20), which changed the accounting for our 2.75% Senior Convertible Debentures (“Debentures”) due 2027. This guidance requires cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component is the estimated fair value of similar bonds without the conversion feature. The difference between the bond cash proceeds and this estimated fair value is recorded as a debt discount and amortized to interest expense over the life of the bond. Although this guidance has no impact on our actual past or future cash flows, it requires us to record a material increase in non-cash interest expense as the debt discount is amortized. This guidance became effective for us beginning January 1, 2009 and is applied retrospectively to all periods presented. See Note 10 for disclosures required by this guidance.
		FSP EITF 03-6-1. In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (ASC 260-10-65-2). This guidance addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in computing earnings per share under the two-class method. We adopted this guidance retrospectively beginning January 1, 2009. See Note 16 for disclosure of the financial statement impact from implementation of this guidance.
		ASU No. 2009-05. In August 2009, FASB issued ASU No. 2009-05 which amends Fair Value Measurements and Disclosures – Overall (ASC Topic 820-10) to provide guidance on the fair value measurement of liabilities. This update requires clarification for circumstances in which a quoted price in an active market for the identical liability is not available. A reporting entity is required to measure fair value using one or more of the following techniques: 1) a valuation technique that uses either the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as an asset; or 2) another valuation technique that is consistent with the principles in ASC Topic 820 such as the income and market approach to valuation. The amendment in this update also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. This update further clarifies that if the fair value of a liability is determined by reference to a quoted price in an active market for an identical liability, that price would be considered a Level 1 measurement in the fair value hierarchy. Similarly, if the identical liability has a quoted price when traded as an asset in an active market, it is also a Level 1 fair value measurement if no adjustments to the quoted price of the asset are required. This update is effective for our fourth quarter 2009 and we are currently evaluating the impact of adopting this update on our consolidated financial statements.
		SFAS 167. In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities” (ASC Topic 810-10). This updated guidance requires an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. It also requires an ongoing reassessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. This update is effective for our fiscal year beginning January 1, 2010 and we are currently evaluating the impact of adopting this update on our consolidated financial statements.

2.

Restricted Cash

As a result of operating performance, the interim cash collateralization period related to the November 2008 waiver and amendment of our Revolving Credit Facility ended effective June 30, 2009 and previously restricted cash representing cash collateral for outstanding letters of credit and bank guarantees was released from restriction. See Note 10 for a discussion of this development. At September 30, 2009, restricted cash was comprised of cash deposits related to foreign currency exchange arrangements. Restrictions with respect to these deposits will remain in effect until we terminate the associated foreign currency exchange arrangement.

3.

Marketable Securities

		As of September 30, 2009, we held $42.4 million at par value in auction rate securities which are variable rate bonds tied to short-term interest rates with maturities up to 30 years. Auction rate securities have interest rate resets through a Dutch auction at predetermined short intervals. Interest rates generally reset every 7-49 days. The coupon interest rate for these securities ranged from 0.4% to 0.9%, on a tax exempt basis for the three months ended September 30, 2009.
		Our investments in auction rate securities were issued by municipalities and state education agencies. The auction rate securities issued by state education agencies represent pools of student loans for which repayment is substantially guaranteed by the U.S. government under the Federal Family Education Loan Program. All of our investments in auction rate securities have at least a double A rating. As of September 30, 2009, the par value of auction rate securities issued by state education agencies was $30.0 million and the par value of auction rate securities issued by municipalities was $12.4 million.
		Auctions for our auction rate securities continue to fail in 2009. An auction failure, which is not a default in the underlying debt instrument, occurs when there are more sellers than buyers at a scheduled interest rate auction date. This results in a lack of liquidity for these securities, even though debt service continued to occur. During the nine months ended September 30, 2009, we continued to earn and receive scheduled interest on these securities.
		Auction Rate Securities under Settlement Agreement - In November 2008, we accepted an auction rate security rights agreement (the “Settlement”) with UBS Financial Services, Inc. (“UBS”) that permits us to sell or put all of our auction rate securities issued by state education agencies and one auction rate security issued by a municipality back to UBS at par value at any time during the period from June 30, 2010 through July 2, 2012. We expect to put these auction rate securities back to UBS on June 30, 2010, the earliest date allowable under the Settlement, if not sold prior to that date; therefore, these securities are classified as current as of September 30, 2009. We reclassified these auction rate securities to trading securities. Consequently, we will be required to assess the fair value of the Settlement and these auction rate securities and record changes in earnings each period until the Settlement is exercised and the securities are redeemed. As of September 30, 2009, the fair value of auction rate securities covered under the Settlement was $28.0 million, a decline of $2.8 million from par value, but an improvement in the $3.1 million impairment recognized at December 31, 2008. We recognized the $2.8 million decline in par value as an other-than-temporary impairment in Other income (expense), net on the Condensed Consolidated Statement of Operations. However, as we will be permitted to put these securities back to UBS at par, we recognized an offsetting $2.8 million gain on the fair value assessment of the Settlement in Other income (expense), net. Although the Settlement represents the right to sell the securities back to UBS at par, we will be required to periodically assess the economic ability of UBS to meet that obligation in assessing the fair value of the Settlement.
		Auction Rate Securities issued by Municipalities — Of our total $12.4 million investment in auction rate securities issued by municipalities, $11.6 million are not covered under the Settlement, remain classified as available for sale and are carried at fair value with any unrealized gains and losses recorded in Other Comprehensive Income. We concluded the fair value of these auction rate securities issued by municipalities at September 30, 2009 was $11.5 million, a decline of $0.1 million from par value. The decline in fair value has been assessed as temporary and has been recorded as an unrealized loss in Accumulated Other Comprehensive Income (Loss), net of tax of $0.04 million. We will continue to monitor the market for auction rate securities and consider its impact, if any, on fair value of the remaining investment through disposition. Subsequent to September 30, 2009, we sold $0.4 million of these securities and therefore classified this portion of the securities as current at September 30, 2009.

4.

Derivatives

		We use forward contracts to manage our exposure in foreign currency exchange rates. Our outstanding forward foreign currency contracts at September 30, 2009 are used to hedge cash flows for long-term charter payments on two multi-service vessels denominated in Norwegian Kroners and certain purchase commitments related to the construction of the Global 1200 in Singapore that are denominated in Singapore Dollars.
		The Norwegian Kroner forward contracts have maturities extending until June 2011 and are accounted for as cash flow hedges with the effective portion of unrealized gains and losses recorded in Accumulated Other Comprehensive Income (Loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of September 30, 2009, there was $0.9 million in unrealized gains, net of taxes, in Accumulated Other Comprehensive Income (Loss) of which $0.6 million is expected to be realized in earnings during the twelve months following September 30, 2009. As of September 30, 2009, these contracts are included in Prepaid expenses and other and Other assets on the Condensed Consolidated Balance Sheets, valued at $0.9 million and $0.4 million, respectively. For the three months and nine months ended September 30, 2009, we recorded $0.1 million in realized gains and $0.6 million in realized losses, respectively related to these contracts which are included in Other income (expense), net on the Consolidated Statement of Operations. For the three months and nine months ended September 30, 2008, we recorded $1.2 million and $3.6 million, respectively in realized gains related to these contracts which are included in Other income (expense), net on the Consolidated Statement of Operations. As of December 31, 2008, there was $2.4 million of unrealized losses, net of tax, in Accumulated Other Comprehensive Income (Loss). As of December 31, 2008, these contracts were included in Other accrued liabilities and Other liabilities, long-term on the Condensed Consolidated Balance Sheets, valued at $2.0 million and $1.7 million respectively.
		During the second quarter of 2009, we entered into two forward contracts to purchase 18.9 million Singapore Dollars to hedge certain purchase commitments in the first quarter of 2010 related to the construction of the Global 1200 in Singapore. We have not elected hedge treatment for these contracts. Consequently, changes in the fair value of these instruments are recorded in Other income (expense), net on the Consolidated Statement of Operations. For the three months and nine months ended September 30, 2009, we recorded $0.4 million and $0.8 million, respectively in gains related to these two contracts. As of September 30, 2009, the fair value of these contracts was $0.8 million and is included in Prepaid expenses and other on the Condensed Consolidated Balance Sheets.

5.

Fair Value of Financial Instruments

In accordance with accounting guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy for inputs is categorized into three levels based on the reliability of inputs as follows:

		Level 1		—		Observable inputs such as quoted prices in active markets.
		Level 2		—		Inputs (other than quoted prices in active markets) that are either directly or indirectly observable.
		Level 3		—		Unobservable inputs which require management’s best estimate of what market participants would use in pricing the asset or liability.

Assets measured at fair value on a recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations.

Fair Value Measurements at September 30, 2009
(In thousands)

Description		Total				Level 1				Level 2				Level 3
Cash equivalents		$	183,798			$	183,798			$	—			$	—
Marketable securities			42,253				—				—				42,253
Derivative contracts			2,163				—				2,163				—
Total		$	228,214			$	183,798			$	2,163				42,253

		Financial instruments classified as Level 3 in the fair value hierarchy represent auction rate securities and the related put option in which management has used at least one significant unobservable input in the valuation model.
		Due to the lack of observable market quotes on our auction rate securities portfolio, we utilize a valuation model that relies on Level 3 inputs including market, tax status, credit quality, duration, recent market observations and overall capital market liquidity. The valuation of our auction rate securities is subject to uncertainties that are difficult to predict. Factors that may impact our valuation include changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk and ongoing strength and quality of market credit and liquidity.
		The following table presents a reconciliation of activity for such securities:

Changes in Level 3 Financial Instruments
(In thousands)

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
Balance at beginning of period		$	41,035			$	41,968			$	42,375			$	48,800
Purchases, issuances, and settlements			—				(200	)			—				(13,250	)
Total gains or losses:
Included in other comprehensive income			1,218				—				(122	)			(907	)
Transfers in to Level 3			—				—				—				12,125
Transfers out of Level 3			—				—				—				(5,000	)
Balance at end of period		$	42,253			$	41,768			$	42,253			$	41,768

6.

Receivables

Receivables are presented in the following balance sheet accounts: (1) accounts receivable, (2) accounts receivable – long term, (3) unbilled work on uncompleted contracts, and (4) contract costs incurred not yet recognized. Accounts receivable are stated at net realizable value, and the allowances for uncollectible accounts were $1.1 million and $12.1 million at September 30, 2009 and December 31, 2008, respectively. Accounts receivable at September 30, 2009 and December 31, 2008 included $11.1 million and $0.1 million, respectively, of retainage, which represents the short-term portion of amounts not immediately collectible due to contractually specified requirements. Accounts receivable – long term at September 30, 2009 and December 31, 2008 represented amounts related to retainage which were not expected to be collected within the next twelve months.

Receivables also include claims and unapproved change orders of $54.0 million at September 30, 2009 and $28.6 million at December 31, 2008. These claims and change orders are amounts due for extra work or changes in the scope of work on certain projects.

Costs and Estimated Earnings on Uncompleted Contracts

		September 30				December 31
		2009				2008
		(In thousands)
Costs incurred and recognized on uncompleted contracts		$	1,093,706			$	738,496
Estimated earnings			40,444				(19,411	)
Costs and estimated earnings on uncompleted contracts			1,134,150				719,085
Less: Billings to date			(1,025,328	)			(653,373	)
			108,822				65,712
Plus: Accrued revenue(1)			7,778				15,770
Less: Advance billing on uncompleted contracts			—				(80	)
		$	116,600			$	81,402
Included in accompanying balance sheets under the following captions:
Unbilled work on uncompleted contracts		$	116,994			$	86,011
Advance billings on uncompleted contracts			(394	)			(4,609	)
		$	116,600			$	81,402

7.

Asset Disposal and Impairments and Assets Held for Sale

Due to escalating costs for dry-docking services, escalating repair and maintenance costs for aging vessels, increasing difficulty in obtaining certain replacement parts, and declining marketability of certain vessels, we decided to forego dry-docking or refurbishment of certain vessels and to sell or permanently retire them from service. Consequently, we recognized gains and losses on the disposition of certain vessels, and non-cash impairment charges on the retirement of other vessels. Each asset was analyzed using an undiscounted cash flow analysis and valued at the lower of carrying value or net realizable value.

Net Gains and (Losses) on Asset Disposal consisted of the following:

				Three Months Ended								Nine Months Ended
				September 30								September 30
Segment		Description of Asset		2009				2008				2009				2008
				(In thousands)
North America Subsea		One Dive Support Vessel (“DSV”) in 2009 and Other		$	(64	)		$	(83	)		$	5,003			$	(179	)
Latin America		Other			(2	)			—				(13	)			(176	)
West Africa		Two cargo barges and one DSV			(145	)			—				643				—
Asia Pacific		One Derrick Lay Barge (“DLB”) and Other			(58	)			12				3,370				4
Middle East		One DSV in 2008 and Other in 2009 and 2008			(5	)			(12	)			230				2,280
Corporate		Other			—				—				(26	)			—
				$	(274	)		$	(83	)		$	9,207			$	1,929

Losses on Asset Impairments consisted of the following:

				Three Months Ended								Nine Months Ended
				September 30								September 30
Segment		Description of Asset		2009				2008				2009				2008
								(In thousands)
North America Subsea		One DSV and Three Dive Systems		$	—			$	—			$	768			$	—
Latin America		One DSV			—				—				190				—
West Africa		One DSV			—				1,557				—				1,557
				$	—			$	1,557			$	958			$	1,557

In accordance with accounting guidance, long-lived assets held for sale are carried at the lower of the asset’s carrying value or net realizable value and depreciation ceases.

Assets Held for Sale consisted of the following:

				September 30						December 31
Segment		Description of Asset		2009				Description of Asset		2008
				(In thousands)						(In thousands)
North America Subsea		None		$	—			One DSV and Dive System		$	749
West Africa		One DLB and One DSV			6,673			One DSV			1,000
Asia Pacific		Other			2,147			None			—
Middle East		None			—			One DLB			432
				$	8,820					$	2,181

8.

Property and Equipment

The components of property and equipment, at cost, and the related accumulated depreciation are as follows:

		September 30				December 31
		2009				2008
		(In thousands)
Land		$	6,322			$	6,322
Facilities and equipment			189,132				179,650
Marine vessels			482,452				535,042
Construction in progress			317,748				208,827
Total property and equipment			995,654				929,841
Less: Accumulated depreciation			(315,366	)			(330,763	)
Property and equipment, net		$	680,288			$	599,078

Expenditures for property and equipment and items that substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred. We capitalized $3.9 million and $2.2 million of interest costs for the three months ended September 30, 2009 and 2008, respectively. We capitalized $10.5 million and $4.9 million of interest costs for the nine months ended September 30, 2009 and 2008, respectively. Except for major construction vessels that are depreciated on the units-of-production (“UOP”) method over estimated vessel operating days, depreciation is provided utilizing the straight-line method over the estimated useful lives of the assets. The UOP method is based on vessel utilization days and more closely correlates depreciation expense to vessel revenue. In addition, the UOP method provides for a minimum depreciation floor in periods with nominal vessel use. In general, if we applied only a straight-line depreciation method instead of the UOP method, less depreciation expense would be recorded in periods of high utilization and revenues, and more depreciation expense would be recorded in periods of low vessel utilization and revenues.

9.

Deferred Dry-Docking Costs

We utilize the deferral method to capitalize vessel dry-docking costs and to amortize the costs to the next dry-docking. Such capitalized costs include regulatory required steel replacement, direct costs for vessel mobilization and demobilization and rental of dry-docking facilities and services. Crew costs may also be capitalized when employees perform all or a part of the required dry-docking. Any repair and maintenance costs incurred during the dry-docking period are expensed.

The below table presents dry docking costs incurred and amortization for all periods presented:

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)								(In thousands)
Net book value at beginning of period		$	50,538			$	66,940			$	61,552			$	30,735
Additions for the period			1,209				5,349				6,465				47,419
Reclassifications to assets held for sale			—				—				(4,914	)			—
Amortization expense for the period			(5,251	)			(4,780	)			(16,607	)			(10,645	)
Net book value at end of period		$	46,496			$	67,509			$	46,496			$	67,509

10.

Long-Term Debt

The components of long-term debt are as follows:

		September 30				December 31
		2009				2008
		(In thousands)
Senior convertible debentures due 2027, 2.75%		$	234,805			$	228,586
Title XI bonds due 2025, 7.71%			61,380				65,340
Revolving credit facility			—				—
Total long-term debt			296,185				293,926
Less: Current maturities			3,960				3,960
Long-term debt less current maturities		$	292,225			$	289,966

The fair value of our Senior Convertible Debentures based on quoted market prices was approximately $211.3 million and $113.6 million at September 30, 2009 and December 31, 2008, respectively. The fair value of our Title XI bonds based on quoted market prices was $76.5 million and $88.1 million at September 30, 2009 and December 31, 2008, respectively.

Senior Convertible Debentures

On January 1, 2009, we retrospectively implemented new accounting guidance which changed the accounting treatment of our Senior Convertible Debentures. This guidance requires cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component is the estimated fair value of similar bonds without the conversion feature. The difference between the bond cash proceeds and this estimated fair value is recorded as a debt discount and amortized to interest expense over the ten year period ending August 1, 2017. This is the earliest date that holders of the Debentures may require us to repurchase all or part of their Debentures for cash. The adoption of this guidance resulted in an increase in net loss of $0.3 million for the three months ended September 30, 2008 with no impact on earnings per share and an increase in net loss of $1.7 million, or $0.02 per diluted share for the nine months ended September 30, 2008. The net income for the three and nine month periods ended September 30, 2009 was not materially impacted by the implementation of this guidance.

The Debentures are convertible into cash, and if applicable, into shares of our common stock, or under certain circumstances and at our election, solely into our common stock, based on a conversion rate of 28.1821 shares per $1,000 principal amount of Debentures, which represents an initial conversion price of $35.48 per share. As of September 30, 2009, the Debentures’ if-converted value does not exceed the Debentures’ principal of $325 million.

The adjusted components of our Debentures are as follows:

		September 30				December 31
		2009				2008
		(In thousands)
Principal amount of debt component		$	325,000			$	325,000
Less: Unamortized debt discount			90,195				96,414
Carrying amount of debt component		$	234,805			$	228,586
Debt discount on issuance		$	107,261			$	107,261
Less: Issuance costs			2,249				2,249
Deferred income tax			36,772				36,772
Carrying amount of equity component		$	68,240			$	68,240

Although the implementation of the new guidance has no impact on our actual past or future cash flows, it requires us to record a material increase in non-cash interest expense as the debt discount is amortized. The table below presents adjusted Debentures interest expense:

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)								(In thousands)
Contractual interest coupon, 2.75%		$	2,235			$	2,235			$	6,703			$	6,703
Amortization of debt discount			2,116				1,966				6,219				5,777
Total Debentures interest expense		$	4,351			$	4,201			$	12,922			$	12,480
Effective interest rate			7.5	%			7.5	%			7.5	%			7.5	%

Revolving Credit Facility

Our Revolving Credit Facility provides a borrowing capacity of up to $150.0 million. As of September 30, 2009, we had no borrowings against the facility and $67.8 million of letters of credit outstanding thereunder. Due to the sale of one of the vessels mortgaged under the Revolving Credit Facility, the effective borrowing capacity under this facility at September 30, 2009 is $139.9 million. As a result of operating performance, we did not meet the minimum fixed charge coverage ratio under the facility at September 30, 2008. On November 7, 2008, we amended our Revolving Credit Facility to temporarily require us to cash-collateralize letters of credit and bank guarantees. During the interim cash collateralization period, no borrowings, letters of credit, or bank guarantees unsecured by cash were available to us under the Revolving Credit Facility. As a result of our operating performance, the interim cash collateralization period ended, effective June 30, 2009, as requirements to release this restricted cash collateral were satisfied. We also have a $16.0 million short-term credit facility at one of our foreign locations. At September 30, 2009, we had $4.9 million of letters of credit outstanding, and $11.1 million of credit availability under this particular credit facility.

11.

Commitments and Contingencies

Commitments

Construction and Purchases in Progress — The estimated cost to complete capital expenditure projects in progress at September 30, 2009 was approximately $333.1 million, which primarily represents expenditures for construction of the Global 1200 and Global 1201, our new generation derrick/pipelay vessels. This amount includes aggregate commitments of 59.4 million Singapore Dollars (or $41.9 million as of September 30, 2009) and € 11.5 million (or

$16.8 million as of September 30, 2009). During the second quarter of 2009, we entered into two forward contracts to purchase 18.9 million Singapore Dollars to hedge certain of these purchase commitments.

Off Balance Sheet Arrangements — In the normal course of our business activities, and pursuant to agreements or upon obtaining such agreements to perform construction services, we provide guarantees, bonds, and letters of credit to customers, vendors, and other parties. At September 30, 2009, the aggregate amount of these outstanding bonds was $53.3 million, which are scheduled to expire between October 2009 and September 2010, and the aggregate amount of outstanding letters of credit was $69.3 million, which are due to expire between October 2009 and July 2011.

Contingencies

During the fourth quarter of 2007, we received a payroll tax assessment for the years 2005 through 2007 from the Nigerian Revenue Department in the amount of $23.2 million. The assessment alleges that certain expatriate employees, working on projects in Nigeria, were subject to personal income taxes, which were not paid to the government. We filed a formal objection to the assessment on November 12, 2007. We do not believe these employees are subject to the personal income tax assessed; however, based on past practices of the Nigerian Revenue Department, we believe this matter will ultimately have to be resolved by litigation. We do not expect the ultimate resolution to have a material adverse effect on our future operating results.

During 2008, we received an additional assessment from the Nigerian Revenue Department in the amount of $40.4 million for tax withholding related to third party service providers. The assessment alleges that taxes were not withheld from third party service providers for the years 2002 through 2006 and remitted to the Nigerian government. We have filed an objection to the assessment. We do not expect the ultimate resolution to have a material adverse effect on our future operating results.

During the third quarter of 2009, we received a tax assessment from the Mexican Revenue Department in the amount of $5.9 million related to the 2003 tax year. The assessment alleges that chartered vessels should be treated as equipment leases and subject to tax at a rate of 10%. We have engaged outside counsel to assist us in appealing the assessment. We do not expect the ultimate resolution to have a material adverse effect on our future operating results; however, if the Mexican Revenue Department prevails in its assessment, we could be exposed to similar liabilities for the tax years beginning in 2004 through the current year.

We have an unresolved issue related to an Algerian tax assessment that we received on February 21, 2007. The remaining amount in dispute is approximately $10.4 million of alleged value added tax for the years 2004 and 2005. We are contractually indemnified by our client for the full amount of the assessment that remains in dispute. We continue to engage outside tax counsel to assist us in resolving the tax assessment.

In June 2007, we announced that we were conducting an internal investigation of our West Africa operations, focusing on the legality, under the U.S. Foreign Corrupt Practices Act (“FCPA”) and local laws, of one of our subsidiary’s reimbursement of certain expenses incurred by a customs agent in connection with shipments of materials and the temporary importation of vessels into West African waters. The Audit Committee of our Board of Directors has engaged outside legal counsel to lead the investigation.

At this stage of the internal investigation, we are unable to predict what conclusions, if any, the Securities and Exchange Commission (“SEC”) will reach, whether the U.S. Department of Justice will open a separate investigation to investigate this matter, or what potential remedies these agencies may seek. If the SEC or Department of Justice determines that violations of the FCPA have occurred, they could seek civil and criminal sanctions, including monetary penalties, against us and certain of our employees, as well as changes to our business practices and compliance programs, any of which could have a material adverse effect on our business and financial condition. In addition, such actions, whether actual or alleged, could damage our reputation and ability to do business. Further detecting, investigating, and resolving these matters is expensive and consumes significant time and attention of our senior management.

As of the date of this Quarterly Report on Form 10-Q (“Quarterly Report”) we have no active projects in West Africa and have curtailed our operations in the region. We will continue to seek prospects in the area and could return in the future.

Notwithstanding the internal investigation, we have concluded that certain changes to our compliance program would provide us with greater assurance that we are in compliance with the FCPA and its record-keeping requirements. We have a long-time published policy requiring compliance with the FCPA and broadly prohibiting any improper payments by us to foreign or domestic officials, as well as training programs for our employees. Since the commencement of the internal investigation, we have adopted, and may adopt additional, measures intended to enhance our compliance procedures and ability to audit and confirm our compliance. Additional measures also may be required once the investigation concludes.

We have concluded that it is premature for us to make any financial reserve for any potential liabilities that may result from these activities.

In addition to the previously mentioned legal matters, we are a party to legal proceedings and potential claims arising in the ordinary course of business. We do not believe that these matters arising in the ordinary course of business will have a material impact on our financial statements in future periods.

12.

Comprehensive Income (Loss)

Other Comprehensive Income (Loss) — The differences between net income and comprehensive income for each of the comparable periods presented are as follows.

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)
Net income (loss)		$	14,018			$	(103,108	)		$	78,982			$	(91,130	)
Unrealized gain (loss) on derivatives			2,077				(7,005	)			5,041				(5,969	)
Unrealized gain (loss) on auction rate securities			1,218				—				(122	)			(907	)
Deferred tax benefit (expense)			(1,154	)			2,452				(1,722	)			2,337
Comprehensive income (loss)		$	16,159			$	(107,661	)		$	82,179			$	(95,669	)

Accumulated Other Comprehensive Income (Loss) — A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, is shown below.

						Forward								Accumulated
		Accumulated				Foreign								Other
		Translation				Currency				Auction Rate				Comprehensive
		Adjustment				Contracts				Securities				Income (Loss)
		(In thousands)
Balance at December 31, 2008		$	(8,978	)		$	(2,415	)		$	—			$	(11,393	)
Change in value			—				2,651				(79	)			2,572
Reclassification to earnings			—				626				—				626
Balance at September 30, 2009		$	(8,978	)		$	862			$	(79	)		$	(8,195	)

The amount of accumulated translation adjustment included in accumulated other comprehensive income (loss) relates to prior translations of subsidiaries whose functional currency was not the U.S. Dollar. The amount of gain (loss) on forward foreign currency contracts included in accumulated other comprehensive income (loss) hedges our exposure to changes in Norwegian Kroners for commitments of long-term vessel charters. The amount of loss on auction rate securities relates to a temporary decline in the fair value of certain investments that lack current market liquidity. See also Note 3 for further discussion on auction rate securities.

13.

Stock-Based Compensation

In accordance with accounting guidance, companies must recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards.

The table below sets forth the total amount of stock-based compensation expense for the three and nine months ended September 30, 2009 and 2008.

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)
Stock-based compensation expense
Stock options		$	156			$	784			$	613			$	2,342
Time-based restricted stock			1,319				2,020				3,912				6,040
Performance shares and units			286				727				682				1,797
Total stock-based compensation expense		$	1,761			$	3,531			$	5,207			$	10,179

14.

Other Income (Expense), net

Components of other income (expense), net are as follows:

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)
Foreign exchange rate gain (loss)		$	(2,488	)		$	(222	)		$	1,864			$	(2,457	)
Derivative contract gain (loss)			354				(186	)			838				403
Insurance settlement(s)			1,750				—				2,728				—
Other			393				174				1,149				188
Total		$	9			$	(234	)		$	6,579			$	(1,866	)

15.

Income Taxes

Our effective tax rates for the three and nine months ended September 30, 2009 were 22.8% and 22.0%, respectively, and 12.9% and 10.2% for the three and nine months ended September 30, 2008, respectively. The first nine months of 2009 had earnings in foreign jurisdictions with deemed profit tax regimes where tax is calculated as a percentage of revenue and losses utilized that were not previously tax benefited, resulting in a lower effective rate when compared to the corporate tax rate in the United States of 35%. The first nine months of 2008 included losses that could not be tax effected and low margins in tax jurisdictions with deemed profit regimes, resulting in a lower tax benefit when compared to the 35% U.S. corporate tax rate.

16. Earnings Per Share

		Basic earnings per share (“EPS”) is computed by dividing earnings (loss) attributed to common shareholders during the period by the weighted average number of shares of common stock outstanding during each period. Diluted EPS is computed by dividing net income (loss) attributed to common shareholders during the period by the weighted average number of shares of common stock that would have been outstanding assuming the issuance of dilutive potential common stock as if outstanding during the reporting period, net of shares assumed to be repurchased using the treasury stock method. The dilutive effect of stock options and performance units is based on the treasury stock method. The dilutive effect of non-vested restricted stock awards is based on the more dilutive of the treasury stock method or the two-class method assuming a reallocation of undistributed earnings to common shareholders after considering the dilutive effect of potential common shares other than the non-vested shares of restricted stock.
		We retrospectively implemented new accounting guidance on January 1, 2009 which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to participate in computing earnings per share under the two-class method. Our non-vested restricted stock awards contain nonforfeitable rights to dividends and consequently are included in the computation of earnings per share under the two-class method. For the three months ended September 30, 2008, 1.1 million non-vested restricted shares were considered participating securities resulting in no impact in either basic or diluted earnings per share.

		For the nine months ended September 30, 2008, 1.3 million non-vested restricted shares were considered participating securities resulting in no impact in either basic or diluted earnings per share. For the three months ended September 30, 2009, 1.2 million non-vested restricted shares participated in the net income reported for that period resulting in no impact in either basic or diluted earnings per share. For the nine months ended September 30, 2009, 1.3 million non-vested restricted shares participated in net income reported for that period resulting in a reduction in basic earnings per share of $0.01 and no impact in diluted earnings per share.
		The following table presents information necessary to calculate earnings (loss) per share of common stock for the three and nine months ended September 30, 2009 and 2008.

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands, except per share data)
Basic EPS:
Net income (loss)		$	14,018			$	(103,108	)		$	78,982			$	(91,130	)
Less earnings attributed to shareholders of non-vested restricted stock			(144	)			—				(871	)			—
Earnings (loss) attributed to common shareholders		$	13,874			$	(103,108	)		$	78,111			$	(91,130	)
Weighted-average number of common shares outstanding — basic			112,693				114,493				112,550				114,135
Basic earnings (loss) per common share		$	0.12			$	(0.90	)		$	0.69			$	(0.80	)
Diluted EPS:
Earnings (loss) attributable to common shareholders-basic		$	13,874			$	(103,108	)		$	78,111			$	(91,130	)
Adjustment to earnings (loss) attributable to common shareholders for redistribution to shareholders of non-vested restricted stock			—				—				5				—
Adjusted earnings (loss) attributable to common shareholders-diluted		$	13,874			$	(103,108	)		$	78,116			$	(91,130	)
Weighted-average number of common shares outstanding — basic			112,693				114,493				112,550				114,135
Dilutive effect of potential common shares:
Stock options			41				—				24				—
Performance units			544				—				544				—
Weighted-average number of common shares outstanding — diluted			113,278				114,493				113,118				114,135
Diluted net income (loss) per common share		$	0.12			$	(0.90	)		$	0.69			$	(0.80	)

		Anti-dilutive shares primarily represent options where the strike price was in excess of the average market price of our common stock for the period reported and are excluded from the computation of diluted earnings per share. Excluded anti-dilutive shares totaled 1.7 million and 2.5 million for the three months ended September 30, 2009 and 2008, respectively. Excluded anti-dilutive shares totaled 1.8 million and 2.5 million for the nine months ended September 30, 2009 and 2008, respectively.
		The net settlement premium obligation on the Senior Convertible Debentures, issued in July 2007, was not included in the dilutive earnings per share calculation for the three or nine months ended September 30, 2009 and 2008 because the conversion price of the debentures was in excess of our common stock price.

17.

Segment Information

		The following table presents information about the profit (or loss) for the three and nine months ended September 30, 2009 and 2008 of each of our six reportable segments: North America Offshore Construction Division (“OCD”), North America Subsea, Latin America, West Africa, Middle East (including the Mediterranean), and Asia Pacific/India.
		As of the date of this Quarterly Report, we have no active projects in West Africa and have curtailed our operations in the region. We continue, however, to evaluate viable and profitable projects in the area.
		Also, during the first quarter of 2009, we discontinued allocation of corporate stewardship costs to our reportable segments. This change has been reflected as a retrospective change to the financial information for the three and nine months ended September 30, 2008 presented below. This change did not affect our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows.

		Three Months Ended								Nine Months Ended
		September 30								September 30
		2009				2008				2009				2008
		(In thousands)
Total segment revenues
North America OCD		$	60,011			$	28,868			$	108,961			$	58,440
North America Subsea			46,343				43,422				112,093				103,122
Latin America			35,749				59,509				185,534				185,259
West Africa			(529	)			22,924				101,039				140,664
Middle East			28,668				35,638				82,167				188,085
Asia Pacific/India			47,433				40,423				206,880				172,317
Subtotal			217,675				230,784				796,674				847,887
Intersegment eliminations
North America Subsea			(13,957	)			(10,159	)			(25,394	)			(23,187	)
Latin America			—				(2,074	)			—				(2,074	)
Middle East			—				—				(3,270	)			(2,067	)
Subtotal			(13,957	)			(12,233	)			(28,664	)			(27,328	)
Consolidated revenues		$	203,718			$	218,551			$	768,010			$	820,559
Income (loss) before taxes
North America OCD		$	12,903			$	(5,961	)		$	4,924			$	(11,873	)
North America Subsea			10,267				522				25,972				6,906
Latin America			(10,642	)			(19,648	)			11,825				(12,132	)
West Africa			(2,709	)			(10,103	)			30,150				(19,387	)
Middle East			6,337				(83,273	)			15,913				(73,768	)
Asia Pacific/India			9,333				10,805				34,351				35,317
Corporate			(7,320	)			(10,679	)			(21,925	)			(26,557	)
Consolidated income (loss) before taxes		$	18,169			$	(118,337	)		$	101,210			$	(101,494	)

The following table presents information about the assets of each of our reportable segments as of September 30, 2009 and December 31, 2008.

		September 30				December 31
		2009				2008
		(In thousands)
Segment assets at period end
North America OCD		$	166,951			$	39,184
North America Subsea			175,729				191,866
Latin America			247,924				254,007
West Africa			78,619				214,748
Middle East			89,163				117,997
Asia Pacific/India			218,080				173,613
Corporate			589,834				497,938
Consolidated segment assets at period end		$	1,566,300			$	1,489,353

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

We are including the following discussion to inform our existing and potential shareholders generally of some of the risks and uncertainties that can affect us and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords.

From time to time, our management or persons acting on our behalf make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, to inform existing and potential shareholders about us. These statements may include projections and estimates concerning the timing and success of specific projects and our future backlog, revenues, income and capital expenditures. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. In addition, sometimes we will specifically describe a statement as being a forward-looking statement and refer to this cautionary statement.

In addition, various statements in this Quarterly Report on Form 10-Q, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. Those forward-looking statements appear in Part I, Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the notes to our consolidated financial statements in Part I, Item 1 of this report and elsewhere in this report. These forward-looking statements speak only as of the date of this report; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:

	•		the level of capital expenditures in the oil and gas industry;
	•		risks inherent in doing business abroad;
	•		operating hazards related to working offshore;
	•		dependence on significant customers;
	•		ability to attract and retain skilled workers;
	•		general economic and business conditions and industry trends;
	•		environmental matters;
	•		changes in laws and regulations;
	•		the effects of resolving claims and variation orders;
	•		adverse outcomes from legal and regulatory proceedings;
	•		availability of capital resources;
	•		delays or cancellation of projects included in backlog;
	•		fluctuations in the prices of or demand for oil and gas;
	•		our ability to comply with covenants in our credit agreements and other debt instruments and availability, terms and deployment of capital
	•		the level of offshore drilling activity; and
	•		foreign exchange, currency, and interest rate fluctuations.

We believe the items we have outlined above are important factors that could cause estimates in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this report or elsewhere by us or on our behalf. We have discussed many of these factors in more detail elsewhere in this report. These factors are not necessarily all the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our shareholders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements. For more detailed information regarding risks, see the discussion of risk factors in Item 1A of our Annual Report on Form 10-K for 2008.

The following discussion presents management’s discussion and analysis of our financial condition and results of operations and should be read in conjunction with the consolidated financial statements and related notes for the period ended September 30, 2009.

Results of Operations

General

We are a leading offshore construction company offering a comprehensive and integrated range of marine construction and support services in North America, Latin America, West Africa, the Middle East (including the Mediterranean), and Asia Pacific/India regions. As of the date of this Quarterly Report, we have no active projects in West Africa and have curtailed our operations in the region. We will continue, however, to evaluate viable and profitable projects in the area.

Our business consists of two principal activities:

	•		Offshore Construction Services, which include pipeline construction, platform installation and removal, project management and construction support services; and
	•		Subsea Services, which include diving, diver-less intervention, SURF (subsea equipment, umbilical, riser, and flow line), IRM (inspection, repairs, and maintenance), and decommissioning/plug and abandonment services.

Our results of operations, in terms of revenues, gross profit, and gross profit as a percentage of revenues (“margins”), are principally driven by three factors: (1) our level of offshore construction activity (“activity”), (2) pricing, which can be affected by contract mix (“pricing”), and (3) operating efficiency on any particular construction project (“productivity”).

Offshore Construction Services

The level of our offshore construction activity in any given period has a significant impact on our results of operations. Our results of operations depend heavily upon our ability to obtain, in a very competitive environment, a sufficient quantity of offshore construction contracts with sufficient gross profit margins to recover the fixed costs associated with our offshore construction business. The offshore construction business is capital and personnel intensive, and as a practical matter, many of our costs, including the wages of skilled workers, are effectively fixed in the short run regardless of whether or not our vessels are being utilized in productive service. In general, as activity increases, a greater proportion of these fixed costs are recovered through operating revenues; consequently, gross profit and margins increase. Conversely, as activity decreases, our revenues decline, but our costs do not decline proportionally, thereby constricting our gross profit and margins. Our activity level can be affected by changes in demand due to economic or other conditions in the oil and gas exploration industry, seasonal conditions in certain geographical areas, and our ability to win the bidding for available jobs.

Most of our offshore construction revenues are earned through international contracts which are generally larger, more complex, and of longer duration than our typical domestic contracts. Most of these international contracts require a significant amount of working capital, are generally bid on a lump-sum basis, and are secured by a letter of credit or performance bond. Operating cash flows may be negatively impacted during periods of escalating activity due to the substantial amounts of cash required to initiate these projects and the normal delays between our cash expenditures and cash receipts from the customer. Additionally, lump-sum contracts for offshore construction services are inherently risky and are subject to many unforeseen circumstances and events that may affect productivity and thus, profitability. When productivity decreases with no offsetting decrease in costs or increases in revenues, our contract margins erode compared to our bid margins. In general, we traditionally bear a larger share of project related risks during periods of weak demand for our services and a smaller share of risks during periods of high demand for our services. Consequently, our revenues and margins from offshore construction services are subject to a high degree of variability, even as compared to other businesses in the offshore energy industry.

Subsea Services

Most of our subsea revenues are the result of short-term work, involve numerous smaller contracts, and are usually based on a day-rate charge. Financial risks associated with these types of contracts are normally limited due to their short-term and non-lump sum nature. However, some subsea contracts, especially those that utilize dive support vessels (“DSVs”), may involve longer-term commitments that extend from the exploration, design, and installation phases of a field throughout its useful life by providing IRM services. The financial risks which are associated with these commitments remain low in comparison with our offshore construction activities due to the day-rate structure of the contracts. Revenues and margins from our subsea activities tend to be more consistent than from our offshore construction activities.

Quarter Ended September 30, 2009 Compared to Quarter Ended September 30, 2008

		Three months ended September 30
		2009								2008
						% of								% of				% Change
		(Thousands)				Revenue				(Thousands)				Revenue				(Unfavorable)
Revenues		$	203,718				100.0	%		$	218,551				100.0	%			(6.8	%)
Cost of operations			163,855				80.4				307,409				140.7				46.7
Gross profit			39,863				19.6				(88,858	)			40.7				144.9
(Gain) loss on asset disposals and impairments			274				0.1				1,640				0.7				83.3
Selling, general and administrative expenses			19,075				9.4				25,439				11.6				25.0
Operating income (loss)			20,514				10.1				(115,937	)			53.0				117.7
Interest income			402				0.2				2,476				1.1				(83.8	)
Interest expense			(2,756	)			1.4				(4,642	)			2.2				40.6
Other income (expense), net			9				—				(234	)			0.1				103.8
Income (loss) before income taxes			18,169				8.9				(118,337	)			54.2				115.4
Income tax expense (benefits)			4,151				2.0				(15,229	)			7.0				(127.3	)
Net income (loss)		$	14,018				6.9	%		$	(103,108	)			47.2	%			113.6	%

Revenues — Revenues decreased by 6.8% to $203.7 million for the third quarter of 2009, compared to the third quarter of 2008. This decrease was primarily due to lower activity in the Middle East, West Africa, and Latin America partially offset by higher activity in North America OCD, North America Subsea, and Asia Pacific/India. For a detailed discussion of revenues and income before taxes for each geographical area, see “Segment Information” below.

Gross Profit — Gross profit increased to $39.9 million in the third quarter of 2009, compared to a gross loss of $88.9 million in the third quarter of 2008, primarily due to higher project margins. Gross profits in North America OCD, North America Subsea, Latin America and Middle East were higher for the third quarter of 2009 in comparison to the third quarter of 2008 primarily due to improved project productivity. During the 2008 third quarter, two projects in Saudi Arabia and Brazil experienced significant productivity and logistical issues while projects during the 2009 third quarter were not comparably impacted by these factors. Asia Pacific/India segment gross profit reduction was primarily attributable to decreased pricing and increased costs associated with the DLB264 and the Subtec 1 which were in the Middle East segment in the third quarter of 2008.

(Gain) loss on Asset Disposals and Impairments — (Gain) loss on asset disposals and impairments decreased to a loss of $0.3 million in the third quarter of 2009, compared to a loss of $1.6 million in the third quarter of 2008, primarily due to the $1.6 million impairment of the Sea Puma in the third quarter of 2008.

Selling, General and Administrative Expenses — Selling, general and administrative expenses decreased by $6.3 million, or 25%, to $19.1 million for the third quarter of 2009, compared to the third quarter of 2008. Decreased labor costs of $1.2 million in all business segments except North America OCD and Asia Pacific/India as well as decreases in travel costs, amortization of equity compensation, and professional fees were the primary drivers of the decrease. The decreases are attributable to our cost reduction efforts.

Interest Income — Interest income decreased by $2.1 million to $0.4 million in the third quarter of 2009, compared to $2.5 million in the third quarter of 2008. Significantly lower interest rates in 2009 contributed to a lower return on cash balances and short-term investments compared to 2008.

Interest Expense — Interest expense decreased by $1.8 million to $2.8 million in the third quarter of 2009, compared to $4.6 million in the third quarter of 2008. Higher capitalized interest primarily driven by expenditures for ongoing construction of the Global 1200 and Global 1201 was responsible for the majority of the decrease between comparable periods. Capitalized interest during the third quarter of 2009 was $3.9 million compared to $2.2 million for the third quarter of 2008.

Other Income (Expense), net — Other income (expense), net increased by $0.2 million from a $0.2 million expense in the third quarter of 2008 to $0.01 million of income in the third quarter of 2009. The increase is primarily attributable to receipt of a $1.8 million insurance claim in our West Africa segment substantially offset by losses on foreign currency exchange transactions during the 2009 third quarter.

Income Taxes — Our effective tax rate for the third quarter of 2009 was 22.8%, compared to 12.9% for the third quarter of 2008. The third quarter of 2008 included losses that could not be tax effected and lower margins in tax jurisdictions with a deemed profit regime where tax is calculated as a percentage of revenue resulting in a lower tax benefit than if these conditions had not occurred. Comparatively, the third quarter of 2009 was profitable and benefited from higher earnings in foreign jurisdictions with deemed profit tax regimes and utilization of losses not previously tax benefited.

Segment Information — The following sections discuss the results of operations for each of our reportable segments during the quarters ended September 30, 2009 and 2008.

North America Offshore Construction Division

Revenues were $60.0 million for the third quarter of 2009 compared to $28.9 million for the third quarter of 2008. This increase in revenues is primarily due to increased utilization of the Cherokee, Hercules and the Sea Constructor, partially offset by the reduction in utilization of the Titan II, which was chartered from our Latin America segment in the 2008 third quarter, and the GP37. The third quarter of 2008 was adversely affected by the extended dry dock of the Cherokee and non-compensated vessel stand-by costs during Hurricanes Gustav and Ike and decreases in productivity on certain projects. Income before taxes was $12.9 million during the third quarter of 2009 compared to a loss of $6.0 million during the third quarter of 2008. This increase in income was primarily due to increased vessel utilization and higher profit margins on projects.