1999 FIRST QUARTER REPORT

May 4, 1999

 

To Our Shareholders:

The difference between night and day is an apt characterization of market conditions in the Gulf of Mexico in the first quarter of 1999 versus 1998. A year ago, customers concerned about equipment availability accelerated projects into the first quarter and were willing to pay premium rates, particularly for dynamically positioned vessels. This year our customer base has been frozen by low commodity prices and merger activity. During April, however, the doom and gloom environment changed 180° as oil prices moved above $18 a barrel and natural gas traded at $2.25/mcf. These rapidly changing conditions have triggered a high level of interest in the Cal Dive story. During April, Merrill Lynch and Howard Weil initiated research coverage and CDI appeared at the Howard Weil Energy Conference. Morgan Stanley issued an extensive research report on the offshore construction industry, "Play Deep", and listed CDI as one of their three top energy picks (along with Baker Hughes and Halliburton). Morgan Stanley also sponsored a West Coast road show which highlighted their estimates that Deepwater exploration and development spending would increase from $11 billion in 1998 to $19 billion by the year 2001. As a $500 million market cap company, Cal Dive does not need to capture a whole lot of that incremental $8 billion a year to grow significantly.

Financial Highlights

While a long way from the record first quarter of 1998, $2.1 million of earnings generated in the trough of 1999 still represents the second best Q1 in Cal Dive history.

First Quarter

     1999  

     1998  

    Decrease

Revenues

$26,006,000

$33,157,000

22%

Net Income

2,087,000

5,243,000

60%

Diluted Earnings Per Share

0.14

0.35

60%

Operational Highlights

 

Field

Customer

Description

Depth (fsw)

Diana

Exxon

Coring in advance of July construction project

4,856

Troika

BP/Amoco

Tighten flange connection on rigid jumper

1,800

Penn State

Amerada Hess

Lay 20,500 foot wellhead control umbilical

1,641

Baldpate

Amerada Hess

Tie Penn State production into compliant tower

1,641

Pompano

BP/Amoco

Change out two control pods

1,500

Zinc

Exxon

Change out control pod

1,500

Respectfully submitted,

Owen E. Kratz
Chairman
Chief Executive Officer

Martin R. Ferron
President
Chief Operating Officer

S. James Nelson, Jr.
Executive Vice President
Chief Financial Officer

 

CAL DIVE INTERNATIONAL, INC.

Comparative Consolidated Statements of Operations

Three Months Ended March 31,

(000's omitted, except per share data)

1999

1998

Net Revenues

$26,006

$33,157

Cost of Sales

20,749

22,594

Gross Profit

5,257

10,563

Selling and Administrative

2,573

2,840

Equity in Earnings of Aquatica, Inc.

100

133

Interest (Income), net & Other

(448)

(209)

Income Before Income Taxes

3,232

8,065

Income Tax Provision

1,145

2,822

Net Income

$2,087

$5,243

Other Financial Data:

EBITDA (1)

$5,544

$9,839

Weighted Avg. Shares Outstanding:

Basic

14,617

14,535

Diluted

14,995

14,999

Earnings Per Common Share:

Basic

$0.14

$0.36

Diluted

$0.14

$0.35

(1)

The Company calculates EBITDA as earnings before net interest expense, taxes, depreciation and amortization. EBITDA is a

supplemental financial measurement used by the Company and investors in the marine construction industry in the evaluation

of its business.

Comparative Consolidated Balance Sheets

ASSETS

LIABILITIES & SHAREHOLDERS' EQUITY

(000'S omitted)

March 31, 1999

Dec. 31, 1998

March 31, 1999

Dec. 31, 1998

Current Assets:

Current Liabilities:

Cash and cash equivalents

$39,584

$32,843

Accounts payable

$18,285

$15,949

Accounts receivable

26,437

31,053

Accrued liabilities

6,805

10,020

Other current assets

12,932

9,190

Income tax payable

1,971

1,201

Total Current Assets

78,953

73,086

Total Current Liabilities

27,061

27,170

Net Property & Equipment

88,869

79,159

Long-Term Debt

0

0

Restricted Cash Deposits

2,475

2,408

Deferred Income Taxes

13,539

13,539

Investment in Aquatica, Inc.

7,756

7,656

Decommissioning Liabilities

24,637

9,883

Other Assets

3,430

1,926

Shareholders' Equity

116,246

113,643

Total Assets

$181,483

$164,235

Total Liabilities & Equity

$181,483

$164,235

This report and press release include certain statements that may be deemed "forward looking statements" under applicable law.  Forward looking statements are not statements of historical fact and such statements are not guarantees of future performance or events and involve risks and assumptions that could cause actual results to vary materially from those predicted, including among other things, unexpected delays and operational issues associated with turnkey projects, the price of crude oil and natural gas, weather conditions in offshore markets, change in site conditions, and capital expenditures by customers. The Company strongly encourages readers to note that some or all of the assumptions upon which such forward looking statements are based are beyond the Company's ability to control  or estimate precisely and may in some cases be subject to rapid and material change.