UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ		Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2008

o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition period from                      to                     

Global Industries, Ltd.

(Exact Name of Registrant as Specified in Its Charter)

Louisiana (State or Other Jurisdiction of Incorporation or Organization)		72-1212563 (I.R.S. Employer Identification Number)

8000 Global Drive Carlyss, Louisiana (Address of Principal Executive Offices)		70665 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock ($0.01 par value)		The NASDAQ Global Select Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES þ     NO o

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES o     NO þ

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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):

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

YES o     NO þ

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2008 was $1,935,385,644 based on the last reported sales price of the Common Stock on June 30, 2008 on the NASDAQ Global Select Market.

The number of shares of the registrant’s Common Stock outstanding as of February 24, 2009, was 113,634,217.

 

 

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 20, 2009 are incorporated by reference into Part III hereof.

GLOBAL INDUSTRIES, LTD.
TABLE OF CONTENTS
FORM 10-K

PART I
Item 1.		Business			5
Item 1A.		Risk Factors			11
Item 1B.		Unresolved Staff Comments			17
Item 2.		Properties			18
Item 3.		Legal Proceedings			21
Item 4.		Submission of Matters to a Vote of Security Holders			23
Item (Unnumbered).		Executive Officers of the Registrant			23
PART II
Item 5.		Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities			25
Item 6.		Selected Financial Data			26
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			44
Item 8.		Financial Statements and Supplementary Data
		Report of Independent Registered Public Accounting Firm			48
		Consolidated Balance Sheets — December 31, 2008 and 2007			49
		Consolidated Statements of Operations — Years Ended December 31, 2008, 2007, and 2006			50
		Consolidated Statements of Shareholders’ Equity — Years Ended December 31, 2008, 2007, and 2006			51
		Consolidated Statements of Cash Flows — Years Ended December 31, 2008, 2007, and 2006			52
		Notes to Consolidated Financial Statements			53
Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			84
Item 9A.		Controls and Procedures			84
		Management’s Report on Internal Control over Financial Reporting			84
PART III
Item 10.		Directors, Executive Officers, and Corporate Governance of the Registrant			86
Item 11.		Executive Compensation			86
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			86
Item 13.		Certain Relationships and Related Transactions and Director Independence			86
Item 14.		Principal Accountant Fees and Services			86
PART IV
Item 15.		Exhibits and Financial Statement Schedules			87
		Signatures			92
EX-3.2
EX-10.19
EX-10.49
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

FORWARD-LOOKING STATEMENTS

We are including the following discussion to generally inform our existing and potential security holders of some risks and uncertainties that can affect our Company 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 to inform existing and potential security holders about our Company. These statements may include projections and estimates concerning the timing and success of specific projects and our future backlog, revenues, income, and capital spending. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “believe,” “expect,” “anticipate,” “plan,” “goal,” or other words that convey uncertainty of future events or outcomes.

In addition, various statements in this Annual Report, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. In this Annual Report, forward-looking statements appear in Item 1 - “Business” of Part I, in Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in the “Notes to Consolidated Financial Statements” in Item 8 of Part II, and elsewhere. These forward-looking statements speak only as of the date of this Annual 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 industry conditions;
	•		environmental matters;
	•		changes in laws and regulations;
	•		the effects of resolving claims and variation orders;
	•		availability of capital resources;
	•		delays or cancellation of projects included in backlog;
	•		fluctuations in the prices of or demand for oil and gas;
	•		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 important factors that could affect us. Unpredictable or unknown 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 security holders that they should be aware that important factors not referred to above could affect the accuracy of our forward-looking statements.

PART I

ITEM 1. BUSINESS

We provide worldwide construction and subsea services including pipeline construction, platform installation and removal, project management, construction support, diving services, diverless intervention, and marine support services to the offshore oil and gas industry primarily in selected international areas and the United States Gulf of Mexico. Unless the context indicates otherwise, all references to “we,” “us,” “our,” or “the Company” refer to Global Industries, Ltd. and its consolidated subsidiaries.

Segments of Business

Our worldwide business is divided into six reportable segments: North America Offshore Construction Division, North America Subsea, Latin America, West Africa, Middle East, and Asia Pacific/India. For additional segment information, please refer to the narrative and tabular descriptions of our segments and operating results under “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in Item 7 of Part II of this Annual Report and under Note 17“Industry, Segment and Geographic Information” in Item 8 of Part II of this Annual Report.

DESCRIPTION OF OPERATIONS

We began as a provider of diving services to the offshore oil and gas industry over thirty years ago and have used selective acquisitions, new construction, and upgrades to expand our operations and assets. On December 31, 2008, our fleet included eleven derrick lay barges (DLBs), one derrick barge (DB) , five multi service vessels (MSVs), four dive support vessels (DSVs), two offshore supply vessels (OSVs) and two cargo barges. Our major construction vessels, which include ten barges and two ships, have various combinations of pipelay, pipe bury, derrick, dive support and deepwater lowering capabilities. In 2008, we expanded our fleet with the addition of two MSVs, one chartered and one purchased. We also are building two pipelay/derrick vessels designated “Global 1200” and “Global 1201” with expected completion in 2010 and 2011, respectively.

We are a leading offshore construction company offering a comprehensive and integrated range of marine construction and support services in the North America, Latin America, West Africa, the Middle East (including the Mediterranean), and Asia Pacific/India regions. These services include pipeline construction, platform installation and removal, project management, construction support, diving services, diverless intervention, and marine support services.

We are equipped to provide services from shallow water to water depths of up to 10,000 feet. As exploration companies have made considerable commitments and expenditures for production in water depths over 1,000 feet, we have invested in vessels, equipment, technology, and skills to increase our abilities to provide services in this growing deepwater market.

Our business consists of two principal activities:

	•		Offshore Construction Services, which include pipeline construction and platform installation and removal services; and
	•		Subsea Services, which include diving and diverless intervention, and marine support services.

For financial information regarding our operating segments and the geographic areas in which we operate, please read Note 17 of the “Notes to Consolidated Financial Statements” in Item 8 of Part II of this Annual Report.

Offshore Construction Services

Our offshore construction services include pipelay, derrick, project management, and related services. We are capable of installing steel pipe by either the conventional or the reel method of pipelaying using

either manual or automatic welding processes. With the conventional method, 40-foot to 60-foot segments of up to 60-inch diameter pipe are welded together, x-ray tested and corrosion coated on the deck of the pipelay vessel. Each segment of pipe is connected to the prior segment of pipe and then submerged in the water as the vessel is moved forward by its anchor winches or, in some instances, onboard thrusters. This process is repeated until the desired length of pipe has been laid. In good weather conditions and shallow water, our vessels can install approximately 400 feet per hour of small diameter pipe using the conventional pipelay method. As pipe diameter increases, water depth increases, or weather conditions become less favorable, our rate of pipeline installation declines. The conventional method of pipeline construction is still the preferred method for laying pipelines in certain situations, especially in shallow water where pipeline burying is required and can be performed simultaneously with the laying of pipe. We have the ability to install pipelines using the conventional method in the U.S. Gulf of Mexico, Latin America, West Africa, the Middle East, and Asia Pacific/India. Several of our vessels employ dynamic positioning technology, which uses onboard thrusters in conjunction with global positioning system technology to enable a vessel to remain on station or move with precision without the use of anchors.

We are also capable of installing pipelines using the reel method of pipeline construction. Under the reel method, welding and testing are performed onshore, and then the pipe is spooled in one continuous length onto a large reel on a specially designed major construction vessel. Once the vessel is in the proper position offshore, the pipe is unreeled onto the ocean floor as the vessel moves forward. This method of pipeline construction is generally used for pipelines with diameters of 12.0 inches or less and is especially well suited for deep water where pipeline burying is not required and for seasons with inclement weather since offshore installation can be performed quickly between periods of rough weather. The pipeline construction services which we perform by the reel method are primarily performed in the U.S. Gulf of Mexico.

In the Gulf of Mexico, the United States Department of Interior Minerals Management Service (MMS) requires the burial of all offshore oil and gas pipelines greater than 8.75 inches in diameter and located in water depths of 200 feet or less. We believe we have the equipment and expertise necessary to assist our customers with compliance with these MMS regulations. Regulations also require that these pipelines be periodically inspected, repaired, and if necessary, reburied. Inspection requires extensive diving or remotely operated vehicle (ROV) services, and rebury requires either hand-jetting by divers or the use of one of our major construction vessels and a jet sled (a large machine, typically towed behind a major construction vessel, which uses powerful streams of water to bury a pipeline as the vessel moves forward).

All of our major construction vessels are equipped with cranes designed to lift and place equipment into position for installation. Nine of these vessels are capable of lifts of 500 tons or more, making them suitable for very heavy lifts such as offshore platform installations. In addition, the vessels can be used to disassemble and remove platforms and prepare them for salvage or refurbishment. MMS regulations require platforms to be removed within twelve months after production ceases and require the site be restored to meet stringent standards. According to the MMS, in January 2009 there were approximately 3,750 platforms on active leases in U.S. waters of the Gulf of Mexico. We expect demand for Gulf of Mexico abandonment services to increase as more platforms are required to be removed due to these MMS regulations.

Subsea Services

Demand for subsea services covers the full life cycle of an offshore oil and gas property, including:

	•		supporting exploration;
	•		supporting platform and pipeline installation;
	•		performing periodic inspections of pipelines and platforms;
	•		performing repairs and maintenance to pipelines and platforms;
	•		installing SURF (subsea, umbilicals, risers and flow lines);
	•		providing ROV services; and
	•		performing salvage and site clearance services.

To support our subsea operations, we operate a fleet of four DSVs and five MSV’s. Four of these vessels have deepwater lowering capability to 2,000 meters. In early 2008, we took delivery of two state-of-the-art work class ROVs.

For the Gulf of Mexico, the MMS requires that all offshore structures have extensive and detailed inspections for corrosion, metal thickness, and structural damage every five years. As the age of the offshore infrastructure increases, we anticipate that demand for inspections, repairs, and wet welding technology will increase over the next three to five years.

For subsea projects involving long-duration and deepwater dives, we use saturation diving systems that maintain an environment for the divers at the subsea water pressure at which they are working until the job is completed. Saturation diving allows divers to make repeated dives without decompressing, thereby reducing the time necessary to complete the job and reducing the diver’s exposure to the risks associated with frequent decompression. At December 31, 2008, we had eleven saturation diving systems available for use. Two of our largest saturation diving systems are capable of maintaining an environment simulating subsea water pressures to 1,500 feet. Our pipelay and derrick operations create captive demand for our saturation diving services. This ability to offer our divers saturation diving work helps us to attract and retain qualified and experienced divers.

We have been at the forefront in the development of wet underwater welding techniques. Underwater welds are made by two methods: dry hyperbaric welding and wet welding. In dry hyperbaric welding, a customized, watertight enclosure is engineered and fabricated to fit the specific requirements of the structural joint or pipeline requiring repairs. The enclosure is lowered into the water, attached to the structure, and then the water is evacuated, allowing divers to enter the chamber and perform dry welding repairs. Wet welding is accomplished while divers are in the water, using specialized welding rods. Wet welding is less costly because it eliminates the need to construct an expensive, customized, single-use enclosure. We believe that we have been a leader in improving wet welding techniques and that we have satisfied the technical specifications for customers’ wet welded repairs in water depths to 325 feet.

We also operate other offshore support vessels (OSVs) internationally to support our offshore construction services and offer time charters to the offshore service industry.

Business Strategy

In 2009, we plan to concentrate on strengthening our core business by focusing on the following:

	•		business acquisition and backlog accumulation;
	•		retention and hiring of key personnel;
	•		cost management; and
	•		successful project execution.

Raw Materials

Our offshore construction activities require raw materials, such as carbon and alloy steels in various forms, welding gases, paint, fuels and lubricants, which are available from many sources. We do not depend on a single supplier or source for any of these materials. Although shortages of some of these materials and fuels have existed from time to time, no material shortage currently exists. However, steel prices are volatile, and shortages may occur from time to time.

Customers and Contracts

Our customers are primarily oil and gas producers and pipeline companies. During the year ended December 31, 2008, we provided offshore marine construction services to approximately sixty customers. Five customers accounted for at least 10% each of consolidated revenues in at least one of the years 2008, 2007, and 2006. Petroleos Mexicanos (PEMEX) accounted for 10%, 23% and 40% of consolidated revenues in respective years 2008, 2007 and 2006. Saudi Aramco accounted for 14% of our 2008 consolidated revenues and Petroleo Brasileiro, S.A. (Petrobras) accounted for 15% of our 2008

consolidated revenues. The loss of one of these customers could have a material adverse effect on our Company.

The level of construction services required by any particular customer depends on the size of that customer’s capital expenditure budget devoted to construction projects in a particular year. Consequently, customers that account for a significant portion of revenues in one fiscal year may represent an immaterial portion of revenues in subsequent fiscal years. Our traditional contracts are typically of short duration, being completed in one to five months. Engineering, Procurement, Installation and Commissioning contracts (EPIC), turnkey contracts, and certain international contracts may be performed over time periods exceeding one year.

Contracts for work in North America are typically awarded on a competitive bid basis with customers usually requesting bids on projects one to three months prior to commencement. However, for projects in water depths greater than 1,000 feet, turnkey projects, and projects in international areas, the elapsed time from bid request to commencement of work may exceed one year. Our marketing staff contacts offshore operators known to have projects scheduled to ensure that we have an opportunity to bid for the projects. Most contracts are awarded on a fixed-price basis, but we also perform work on a cost-plus, unit rate or day-rate basis, or on a combination of such bases. We attempt to qualify our contracts so we can recover the costs of certain unexpected difficulties and the costs of weather-related delays.

Competition

In each region of the world in which we operate, the offshore marine construction industry is highly competitive. Price competition and contract terms are the primary factors in determining which qualified contractor is awarded a job. However, the ability to deploy modern equipment and techniques, to attract and retain skilled personnel, and to demonstrate a good safety record have also been important competitive factors.

Major international competitors include Acergy S.A., Allseas Marine Contractors, S.A., Clough Limited, Dynamic Industries, Inc., J. Ray McDermott, S.A., Leighton International, Saipem S.p.a., Subsea 7, and Technip, S.A. Some of these international competitors also bid and compete for projects in North America. In addition, internationally, there are numerous other regionalized competitors with whom we compete directly. Domestic competition for deepwater projects in North America includes Allseas Marine Contractors, S.A., Helix Energy Solutions Group, Inc., and J. Ray McDermott S.A. Our competitors for shallow and intermediate water domestic projects include Cal Dive International and many smaller companies including Bisso Marine Company, Chet Morrison Contractors, Inc., and Offshore Specialties Fabricators, Inc. Many shallow and intermediate water companies compete primarily based on price.

Backlog

Our backlog of construction contracts includes signed contracts, letters of intent that are not materially qualified or contingent, and change orders to the extent of the lower of cost incurred or probable recovery. As of December 31, 2008, our backlog amounted to approximately $519.6 million ($489.8 million for international operations and $29.8 million for North America), compared to our backlog at December 31, 2007 of $713.6 million ($697.5 million for international operations and $16.1 million for North America). Our backlog as of December 31, 2008 is scheduled to be performed during 2009. Due to the prevalence of day-rate and short-term contractual arrangements in North America, our backlog does not provide a good indication of the level of demand for our services in this region. We do not consider the backlog amounts in any region to be a reliable indicator of future earnings.

Factors Affecting Demand

Our level of offshore construction activity primarily depends upon the capital expenditures of oil and gas companies and foreign governments for construction services associated with offshore oil and gas exploration, development, and production projects. Numerous factors influence these expenditures, including the following:

	•		oil and gas prices, along with expectations about future prices;
	•		the cost of exploring for, producing, and delivering oil and gas;
	•		the terms and conditions of offshore leases;
	•		the discovery rates of new oil and gas reserves in offshore areas;
	•		the ability of businesses in the oil and gas industry to raise capital; and
	•		local and international political and economic conditions.

Please read Item 1A, “Risk Factors,” for further information on factors affecting demand.

Patents

We own or are the licensee of a number of patents in the United States and in other countries related to pipelaying. For example, we own United States Patent Number 6,328,502. This patent involves a novel barge system for laying deep water subsea pipelines either by means of reeled pipe or conventional pipelaying procedures and covers several features incorporated into the Hercules. We hold patent protection for this invention in a number of foreign countries and have a patent pending in Venezuela.

Employees

Our work force varies based on our workload at any particular time. During 2008, the number of our employees, not including subcontractors, ranged from 3,009 to 3,863. As of December 31, 2008, we had 3,863 employees. None of our employees are covered by a collective bargaining agreement, other than a group of offshore employees in Mexico. We believe that our relationship with our employees is satisfactory.

Seasonality

Each of the geographical areas in which we operate has seasonal patterns that affect our operating patterns. Our operating patterns are primarily related to the offshore weather conditions where our projects are performed. In general, our offshore operations are disrupted when seasonal winds or currents, which may vary by country or location within our operating segments, make the seas too rough for our vessels to work safely and efficiently. Our operating patterns are also affected by the timing of capital expenditures by oil and gas companies. Some of these companies are national oil and gas companies, which may be affected by local political factors and cycles.

Financial Information about Geographic Areas

For financial information about our geographic areas of operation, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations”, which presents revenue and long-lived assets attributable to each of our geographic areas for the years ended December 31, 2008, 2007 and 2006. For a discussion of risks attendant to our foreign operations, see the discussion in Item 1A, “Risk Factors” under the heading “Our international operations expose us to additional risks inherent in doing business abroad.”

Government Regulation and Environmental Matters

Many aspects of the offshore marine construction industry are subject to extensive governmental regulation. In the United States, we are subject to the jurisdiction of the United States Coast Guard, the National Transportation Safety Board and the Customs Service, as well as private industry organizations such as the American Bureau of Shipping. The Coast Guard and the National Transportation Safety Board set safety standards and are authorized to investigate vessel accidents and recommend improved safety standards, and the Customs Service is authorized to inspect vessels at will.

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, and certificates with respect to our operations. The kind of permits, licenses, and certificates required in our operations depends upon a number of factors. We believe that we have obtained or can obtain all permits, licenses, and certificates necessary to conduct our business.

We depend on the demand for our services from the oil and gas industry and, therefore, laws and regulations, as well as changing taxes and policies relating to the oil and gas industry affect our business. In particular, the exploration and development of oil and gas properties located on the Outer Continental Shelf of the United States is regulated primarily by the MMS.

Our operations also are affected by numerous federal, state, and local laws and regulations relating to protection of the environment including, in the United States, the Outer Continental Shelf Lands Act, the Federal Water Pollution Control Act of 1972, and the Oil Pollution Act of 1990. The technical requirements of these laws and regulations are becoming increasingly complex and stringent, and compliance may become increasingly difficult and expensive. However, we believe that compliance with current environmental laws and regulations is not likely to have a material adverse effect on our business or financial statements. Certain environmental laws provide for “strict liability” for remediation of spills and releases of hazardous substances and some provide liability for damages to natural resources or threats to public health and safety. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties, and criminal prosecution. Our compliance with these laws and regulations has entailed certain changes in our operating procedures and approximately $0.3 million in expenditures during 2008. It is possible that changes in the environmental laws and enforcement policies thereunder or claims for damages to persons, property, natural resources, or the environment could result in substantial costs and liabilities to us. Our insurance policies provide liability coverage for sudden and accidental occurrences of pollution and/or clean up and containment of the foregoing in amounts that we believe are adequate.

Certain ancillary activities related to the offshore construction industry, especially the transportation of personnel and equipment between port and the field of work offshore, constitute “coastwise trade” within the meaning of federal maritime regulations. We are also subject to regulation by the United States Maritime Administration (MarAd), the Coast Guard, and the Customs Services. Under these regulations, only vessels owned by United States citizens that are built and registered under the laws of the United States may engage in “coastwise trade.” Certain provisions of our Articles of Incorporation are intended to aid in compliance with the foregoing requirements regarding ownership by persons other than United States citizens.

In 2008, we complied with the International Ship and Port Facility Security Code (ISPS) as mandated by the Homeland Security Act of 2002. Under the ISPS, we performed worldwide security assessments, plans, risk analyses, and other requirements on our vessels and port facilities and completed the process of installing automated identification systems on our vessels.

SEC REPORTING

We electronically file certain documents with, or furnish such documents to, the Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, along with any related amendments and supplements thereto. From time to time, we may also file registration and related statements pertaining to equity or debt offerings. You may read and copy any materials we file with the SEC from the SEC’s Public Reference Room located at 100F Street, NE, Washington, DC 20549. You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website, www.sec.gov, which contains reports, proxy, information statements, and other information regarding issuers that file or furnish documents electronically with the SEC.

We provide free electronic access to our annual, quarterly, and current reports (and all amendments to these reports) on our internet website, www.globalind.com. These reports are available on our website as soon as reasonably practicable after we electronically file or furnish such materials with or to the SEC. Information on our website does not constitute part of this Annual Report. You may also contact our Investor Relations Department at 281-529-7979 for copies of these reports free of charge.

ITEM 1A. RISK FACTORS

An investment in our common stock involves certain risks. If any of these risks were to occur, our business, results of operations, cash flows, and financial condition could be materially adversely affected. In that case, the trading price of our common stock could decline, and you could lose part or all of your investment. Among the key risk factors that may have a direct impact on our business, results of operations, cash flows, and financial condition are the following.

Our business is substantially dependent on the level of capital expenditures in the oil and gas industry, and lower capital expenditures will adversely affect our results of operations.

The demand for our services depends on the condition of the oil and gas industry and, in particular, on the capital expenditures of companies engaged in the offshore exploration, development, and production of oil and natural gas. Capital expenditures by these companies are primarily influenced by four factors:

	•		the oil and gas industry’s ability to economically justify placing discoveries of oil and gas reserves in production;
	•		the oil and gas industry’s need to maintain, repair, and replace existing pipelines and structures to extend the life of production;
	•		the oil and gas industry’s need to clear structures from the lease once the oil and gas reserves have been depleted; and
	•		weather events, such as major tropical storms or hurricanes.

Historically, prices of oil and natural gas and offshore exploration, development, and production have fluctuated substantially. A sustained period of substantially reduced capital expenditures by oil and gas companies will result in decreased demand for our services, low margins, and possibly net losses.

Economic conditions could negatively impact our business.

Recent economic data indicate that the rate of economic activity in the United States and worldwide has declined significantly from the activity rates experienced in recent years. Continued prolonged periods of little or no economic growth will further decrease demand for oil and natural gas, which could result in lower prices for crude oil and natural gas and therefore, lower demand and potentially lower pricing for our services. If economic conditions deteriorate for prolonged periods, our results of operations and cash flows would be adversely affected. Crude oil and natural gas prices have declined significantly from their historic highs in July 2008, and such price declines can be expected to reduce drilling activity and demand for our services from the levels experienced during 2008. In addition, most of our customers are involved in the energy industry, and if a significant number of them experience a prolonged business decline or disruption as a result of economic slowdown or lower crude oil and natural gas prices, we may incur increased exposure to credit risk and bad debts.

Recent events in the global credit markets have significantly impacted the availability of credit and financing costs for many of our customers. Many of our customers finance their offshore exploration and development programs through third-party lenders. The reduced availability and increased costs of borrowing could cause our customers to reduce their capital expenditures for offshore exploration and development, thereby reducing demand and potentially resulting in lower pricing for our services. Also, the current credit and economic environment could significantly impact the financial condition of some customers over a period of time, leading to business disruptions and restricting their ability to pay us for services performed, which could negatively impact our results of operations and cash flows.

Our international operations expose us to additional risks inherent in doing business abroad.

A majority of our revenue is derived from operations outside the United States. The scope and extent of our operations outside of the U.S. Gulf of Mexico means we are exposed to the risks inherent in doing business abroad. These risks include the following:

	•		currency exchange rate fluctuations, devaluations, and restrictions on currency repatriation;
	•		unfavorable taxes, tax increases, and retroactive tax claims;
	•		the disruption of operations from labor and political disturbances;
	•		insurrection, war, or acts of terrorism that may disrupt markets;
	•		expropriation or seizure of our property;
	•		nullification, modification, or renegotiation of existing contracts;
	•		regional economic downturns;
	•		import/export quotas and other forms of public and governmental regulation; and
	•		inability to obtain or retain licenses required for operations.

We cannot predict the nature of foreign governmental regulations applicable to our operations that may be enacted in the future. In many cases, our direct or indirect customer will be a foreign government, which can increase our exposure to these risks. U.S. government-imposed export restrictions or trade sanctions under the Export Administration Act of 2001, the Trading with the Enemy Act of 1917 or similar legislation or regulation also may impede our ability to expand our operations and bid for and accept work in specific countries that we might otherwise have the equipment and technical ability to compete. These factors could have a material adverse effect on our financial condition, results of operation, and cash flows.

We are exposed to the substantial hazards and risks inherent in marine construction, and our insurance coverage is limited.

Our business involves a high degree of operational risks. Hazards and risks that are inherent in marine operations include capsizing, grounding, colliding, and sustaining damage from severe weather conditions. In addition, our construction work can disrupt existing pipeline, platforms, and other offshore structures. Any of these incidents could cause damage to or destruction of vessels, property or equipment, personal injury or loss of life, suspension of production operations, or environmental damage. The failure of offshore pipelines or structural components during or after our installation could also result in similar injuries or damages. Any of these events could result in interruption of our business or significant liability.

We cannot always obtain insurance for our operating risks, and it is not practical to insure against all risks in all geographic areas. Builders risk insurance is becoming increasingly expensive and coverage limits have been decreasing. Uninsured liabilities resulting from our operations may adversely affect our business and results of operations.

We depend on significant customers.

Some of our segments derive a significant amount of their revenues from a small number of customers. The inability of these segments to continue to perform services for a number of their large existing customers, if not offset by contracts with new or other existing customers, could have a material adverse effect on our business and operations.

If we are unable to attract and retain skilled workers our business will be adversely affected.

Our operations depend substantially upon our ability to retain and attract project managers, project engineers, and skilled construction workers such as divers, welders, pipefitters, and equipment operators. Our ability to expand our operations is impacted by our ability to increase our labor force. The demand for skilled workers in our industry is currently high, and the supply is limited. As a result of the cyclical nature of the oil and gas industry as well as the physically demanding nature of the work, skilled workers may choose to pursue employment in other fields. A significant increase in the wages paid or benefits offered by competing employers could result in a reduction in our skilled labor force, increases in our employee costs, or both. If either of these events occur, our operations and results could be materially adversely affected.

New construction projects are subject to risks, including delays and cost overruns, which could have a material negative impact on our available cash resources and results of operations.

We are expanding our fleet with the construction of two new generation derrick/pipelay vessels, designated as the Global 1200 and Global 1201. These projects are subject to risks of delay or cost overruns inherent in any large construction project resulting from numerous factors, including the following:

	•		shortages of equipment, materials or skilled labor;
	•		unscheduled delays in the delivery of ordered materials and equipment;
	•		unanticipated cost increases;
	•		weather interferences;
	•		difficulties in obtaining necessary permits or in meeting permit conditions;
	•		design and engineering problems; and
	•		shipyard delays and performance issues.

Failure to complete new construction on time, or the inability to complete new construction in accordance with its design specifications, may, in some circumstances, result in loss of revenues, penalties, or delay, renegotiation or cancellation of a contract. In the event of termination of one of these contracts, we may not be able to secure a replacement contract on as favorable terms. Additionally, capital expenditures for construction projects could materially exceed our planned capital expenditures.

The implementation of our business strategy will expose our Company to additional operational risk.

An element of our business strategy is to broaden our business segments with emphasis on deepwater/SURF and integrated projects. As we begin to implement this prong of our strategy, our Company will be exposed to additional operational risks inherent in these longer-term deepwater and integrated projects, such as harsh weather conditions, low productivity and project execution issues. The costs associated with the realization of these risks could have a material adverse effect on our financial condition, results of operations, and cash flows.

Our business is capital intensive, and our ability to finance our business depends on generating sufficient cash flow from our operations.

We require substantial capital to fund our working capital, capital expenditures, and other cash needs. Our ability to generate cash depends on demand for construction services by the oil and gas industry as a result of the levels of capital expenditures by oil and gas companies and on competitive, general economic, financial, and many other factors that are beyond our control. Our ability to finance our business is also dependant upon our ability to execute projects successfully. We cannot provide assurance that we will always be able to generate sufficient operating cash flow to provide us with the working capital required to support our operations, and we may experience periodic cash demands that exceed our operating cash flow. Our failure to generate sufficient operating cash flow to provide adequate working capital would have a material adverse effect on our business, results of operations, and financial condition.

We have incurred losses in this and past years and may incur additional losses in the future which could adversely affect our operations.

We incurred operating losses this year and we may have operating losses in the future if we cannot obtain sufficient work and complete projects within our cost estimates. Operating losses could have significant adverse effects on our future operations including limiting our ability to adjust to changing market conditions, reducing our ability to withstand competitive pressures and impairing our ability to obtain financing to provide for future working capital needs and capital expenditures.

We may be unable to obtain critical project materials or services on a timely basis.

Our operations depend on our ability to procure on a timely basis project materials, such as pipe, or project services, such as tugboats for barges, to complete projects in an efficient manner. Our inability to timely procure these resources could have a material adverse effect on our business.

We may not complete fixed-price or unit-rate contracts within our original estimates of costs, which will adversely affect our results.

Because of the nature of the offshore construction industry, most of our projects are performed on a fixed-price or unit-rate basis. The profits we realize on one of our contracts will often vary from the estimated amounts because of changes in offshore job conditions, in labor and equipment productivity, and in third party costs. In addition, we sometimes bear the risk of delays caused by bad weather conditions. We may continue to suffer lower profits or losses on some projects because of cost overruns resulting from these or other causes. Such reduced profit or losses could have a material adverse impact on our results of operations.

Our industry is highly competitive.

Contracts for our services are generally awarded on a competitive bid basis, and price is a primary factor in determining who is awarded the project. Customers also consider availability and capability of equipment, reputation, experience, and the safety record of the contender in awarding jobs. During industry down cycles in particular, we may have to accept lower rates for our services and vessels or increased contractual liabilities which could result in lower profits or losses. As we have increased our operations in deeper waters and internationally, we have encountered additional competitors, many of whom have greater experience and greater resources than we do in these markets.

Additionally, our competitiveness in international markets may be adversely affected by regulations requiring, among other things, the awarding of contracts to local contractors, the employment of local citizens and/or the purchase of supplies from local vendors that favor or require local ownership.

We operate in countries where corrupt behavior exists that could impair our ability to do business in the future or result in significant fines or penalties.

We and our affiliates operate in countries where governmental corruption has been known to exist. While we and our subsidiaries are committed to conducting business in a legal and ethical manner, there is a risk of violating either the U.S. Foreign Corrupt Practices Act (“FCPA”) or laws or legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign officials for the purpose of obtaining or keeping business. Some of the past internal control deficiencies identified by our management relate to our operations in West Africa and other foreign jurisdictions. These deficiencies make it more likely that a violation could have occurred. Violation of these laws could result in monetary penalties against us or our subsidiaries and could damage our reputation and, therefore, our ability to do business. For information concerning a current investigation related to FCPA matters in West Africa, see Item 3 — Legal Proceedings.

Our internal controls may not be sufficient to achieve all stated goals and objectives; existing deficiencies may not be adequately remediated.

Our internal controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. The design of any system of internal controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Section 404 of the Sarbanes-Oxley Act requires that management document and test the internal controls over financial reporting and to assert annually in our Annual Report on Form 10-K whether the internal controls over financial

reporting at year end are effective. We have not identified any material weaknesses in our internal controls as defined by the Public Company Accounting Oversight Board. During the course of documenting and testing our internal controls to ensure compliance with Section 404, we identified certain internal control issues and significant deficiencies which management believes should be improved and corrected. In addition to creating risks that information required to be reported in our SEC filings may not be timely recorded, processed and reported, these deficiencies increase the likelihood of misstatements in our financial statements or violations of law. Management has a remediation plan for these issues and is working to complete their remediation. There can be no assurance, however, that all of the identified issues and significant deficiencies will be resolved. Any failure to remediate the deficiencies noted in connection with our audits or to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure also could adversely affect the results of the periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our “internal control over financial reporting” under Section 404 of the Sarbanes-Oxley Act in the future. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could result in a lower trading price of our stock.

We have substantial funds held at domestic and foreign financial institutions that exceed the insurance coverage offered by the FDIC and foreign governments, the loss of which would have a severe negative effect on our operations and liquidity.

Although the FDIC insures deposits in banks and thrift institutions up to $250,000 per eligible account, the amount that we have deposited at certain banks substantially exceeds the FDIC limit. If any of the financial institutions where we have deposited funds were to fail, we may lose some or all of our deposited funds that exceed the FDIC’s $250,000 insurance coverage limit. Such a loss would have a severe negative effect on our operations and liquidity.

Our investments in auction rate securities may be adversely impacted by continued liquidity risk.

We have invested a portion of our cash in auction rate securities. Our investments in auction rate securities may be adversely impacted by relatively illiquid markets. Our ability to sell these securities may be impaired due to the increase in failed auctions in 2008. Although we have entered into a settlement agreement with UBS Financial Services, Inc. (“UBS”) to settle $30.0 million in par value of auction rate securities, the sale of these securities will be subject to the economic ability of UBS to meet their obligation under the terms of the settlement. Therefore, we may not be able to liquidate these securities in the immediate future or may be forced to sell them for less than what we might have otherwise have been able, or both. For further discussion, see Note 2 to the Notes to the Consolidated Financial Statements.

We may experience difficulties resolving claims and variation orders, which may adversely impact our cash flows.

In the ordinary course of our business, we must negotiate with our clients to resolve claims and change orders. A “claim” is an amount in excess of the agreed contract price (or amount not included in the original contract price) that we seek to collect from our clients or others for client-caused delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. A “change order” is a change to the scope of a project contract, which may be initiated by either us or our client. When a variation to the project scope or specifications is required, it is customary that we continue to execute the project to completion although we may not have precise agreement with our client on the financial responsibilities of all parties. If we are unable to resolve claims and change orders with our client satisfactorily, our profit and cash flow from the project could be adversely affected.

There might be delays or cancellation of projects included in our backlog.

As of December 31, 2008, our backlog of construction contracts amounted to approximately $519.6 million. The dollar amount of our backlog does not necessarily indicate future revenues or earnings related to the performance of that work. Although the backlog represents only business that we consider to be firm, cancellations, delays, or scope adjustments have occurred in the past and are likely to occur in the future. Due to factors outside our control, such as changes in project scope and schedule, we cannot predict with certainty when or if projects included in our backlog will be performed.

We may experience equipment or mechanical failures, which could increase costs, reduce revenues and result in penalties for failure to meet project completion requirements.

The successful execution of contracts requires a high degree of reliability of our vessels, barges and equipment. The average age of our fleet as of December 31, 2008 was 27 years. Breakdowns not only add to the costs of executing a project, but they can also delay the completion of subsequent contracts, which are scheduled to utilize the same assets. We operate a scheduled maintenance program in order to keep all assets in good working order, but despite this breakdowns can and do occur.

Our operations could suffer with the loss of one of our senior officers or other key personnel.

Our success depends heavily on continued services of our senior management and key employees. Our officers and key personnel have extensive experience in our industry, so if we were to lose a number of our key employees or executive officers, our operations could suffer from the loss of the knowledge base attributable to these key personnel.

Our revenues are subject to a significant number of tax regimes, and changes in the tax legislation or the rules implementing tax legislation or the regulator enforcing those rules or legislation in any one of these countries could negatively and adversely affect our results of operations.

We operate in many countries and are therefore subject to the jurisdiction of numerous tax authorities, as well as cross-border treaties between governments. Our operations in these countries are taxed on different bases, including net income, net income deemed earned, and revenue based withholding. We determine our tax provision based on our interpretation of enacted local tax laws and existing practices, and use assumptions regarding the tax deductibility of items and recognition of revenue. Changes in these assumptions could impact the amount of income taxes that we provide for any given year and could adversely affect our result of operations.

Our debt instruments contain covenants that limit our operating and financial flexibility.

Under the terms of our credit facility, we must comply with certain financial covenants. As of September 30, 2008, we did not meet the minimum fixed charge coverage ratio covenant. The financial institutions participating in the credit facility waived compliance with the covenant condition. However, if future defaults occur, we may not be able to obtain a compliance waiver. Our ability to meet the financial ratios and tests under our credit facility is affected, in part, by events beyond our control, and we may not be able to satisfy those ratios and tests. For a more detailed discussion of our credit facility, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included elsewhere in this Annual Report.

Critical accounting policies significantly affect our reported financial results and conditions.

Although our financial statements are prepared in accordance with U.S. generally accepted accounting principles, the preparation of our financial statements requires us to make estimates and judgments, such as the estimates used for the cost to complete projects under the percentage-of-completion method of project accounting. These estimates and judgments have a significant effect on the amounts reported in our financial statements. Certain critical accounting policies affect our more significant judgments and estimates, and these policies are described in “Management’s Discussion and Analysis of Financial

Condition and Results of Operations — Critical Accounting Policies and Estimates,” included elsewhere in this Annual Report. Actual amounts and results may differ materially from our estimates.

Compliance with environmental and other governmental regulations could be costly and could negatively impact our operations.

Our vessels and operations are subject to and affected by various types of governmental regulation including many international, federal, state, and local environmental protection laws and regulations. These laws and regulations are becoming increasingly complex and stringent, and compliance may become increasingly difficult and expensive. We may be subject to significant fines and penalties for non-compliance, and some environmental laws impose joint and several “strict liability” for cleaning up spills and releases of oil and hazardous substances, regardless of whether we were negligent or at fault. These laws and regulations may expose us to liability for the conduct of or conditions caused by others or for our acts that complied with all applicable laws at the time we performed the acts.

Adoption of laws or regulations that have the effect of curtailing exploration and production of oil and natural gas in our areas of operation could adversely affect our operations by reducing demand for our services. In addition, new laws or regulations, or changes to existing laws or regulations may increase our costs or otherwise adversely affect our operations.

We limit foreign ownership of our Company, which could reduce the price of our common stock.

Our Articles of Incorporation, as amended and restated, limit the percentage of outstanding common stock and other classes of voting securities that non-United States citizens can own. Applying the statutory requirements applicable today, our Articles of Incorporation provide that no more than 25% of our outstanding common stock may be owned by non-United States citizens. These restrictions may at times preclude United States citizens from transferring their common stock to non-United States citizens. These restrictions may also limit the available market for resale of shares of common stock and for the issuance of shares by us and could adversely affect the price of our common stock.

Provisions in our corporate documents and Louisiana law could delay or prevent a change in control of our Company, even if that change would be beneficial to our shareholders.

The existence of some provisions in our corporate documents could delay or prevent a change in control of our Company, even if that change would be beneficial to our shareholders. Our Articles of Incorporation and By-Laws contain provisions that may make acquiring control of our Company difficult, including provisions relating to the nomination and removal of our directors, provisions regulating the ability of our shareholders to bring matters for action at annual meetings of our shareholders, and the authorization given to our Board of Directors to issue and set the terms of preferred stock. Louisiana law also effectively limits the ability of a potential acquirer to obtain a written consent of our shareholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We operate a fleet of twelve major construction vessels, two cargo launch barges, four DSVs, five MSV’s, and two OSVs. Our major construction vessels include ten barges, and two ships. All of our major construction vessels are designed to perform more than one type of construction project which reduces the risk that these combination vessels will experience extended periods of idleness. A listing of our significant major construction vessels along with a brief description of the capabilities of each is presented elsewhere in this Form 10-K. Our significant vessels and equipment are described below. In addition, we are expanding our fleet with construction of two new generation derrick/pipelay vessels, designated as the “Global 1200” and “Global 1201” with expected delivery dates in 2010 and 2011, respectively.

The Hercules is a 444-foot dynamically positioned pipelay/heavy-lift barge with a 2,000-ton crane capable of performing revolving lifts up to approximately 1,600 tons and is capable of both conventional and reeled pipelay. Using its portable reel, the Hercules is capable of spooling up to eighty-four miles of 6.625-inch diameter pipe, twenty-two miles of 12.75-inch diameter pipe, or ten miles of 18-inch pipe. This reel is capable of being removed and installed on the Hercules as job demands change. At December 31, 2008, the Hercules was assigned to our West Africa segment, but did transfer to our North America OCD segment in January 2009 to operate in the U.S Gulf of Mexico.

The Titan 2 is a 456-foot self-propelled twin-hulled DP derrick ship capable of lifting 880 tons. We lease the Titan 2 from a third party under a long-term charter agreement which expires in 2018. The Titan 2’s current base of operations is Mexico’s Bay of Campeche.

The Chickasaw is a 275-foot dynamically positioned pipelay barge with a pipelay reel that has a capacity ranging from forty-five miles of 4.5-inch diameter pipe, nineteen miles of 6.625-inch diameter pipe or four miles of 12.75-inch diameter pipe in one continuous length. The Chickasaw is currently stationed in the U.S. Gulf of Mexico.

The Pioneer is a dynamically positioned SWATH vessel that provides support services in water depths to 8,000 feet. The Pioneer’s hull design reduces weather sensitivity, allowing the vessel to continue operating in up to 12-foot seas and remain on site in up to 20-foot seas. The vessel is equipped to install, maintain, and service subsea completions, support saturation diving, and is equipped for abandonment operations, pipeline installation support, and other services beyond the capabilities of conventional DSVs. The Pioneer is currently stationed in the U. S. Gulf of Mexico.

The REM Commander and the REM Fortress are 305-foot dynamically positioned dive support vessels which were delivered to the Company during 2006 under long-term charter agreements. These newly built vessels have extensive capabilities, including dynamic positioning, 100-ton crane capacity (140-ton for the REM Fortress) with deepwater lowering capability to 2,000 meters and specialized design features which facilitate diving, ROV inspection, and other offshore construction services. The REM Commander, which is currently assigned to our Latin America segment and operating in Brazil, was delivered in June 2006 under a long-term charter with a five-year fixed term and five one-year options. The REM Fortress, which is currently assigned to our Middle East / Mediterranean segment, was delivered in October 2006 under a long-term charter agreement with a three-year fixed term and four one-year options.

The Olympic Challenger is a DP-2 class 347-foot dynamically positioned self-propelled MSV and inspection, repair and maintenance (IRM) vessel. It is equipped with a 250-ton heave compensated crane with deepwater lowering capability to 3,000 meters. We leased the Challenger in August, 2008 from a third party under a charter agreement with a fixed term of five years with one two year option and three one year options. Constructed in 2008 and equipped with a Schilling ROV system, the vessel is designed for diving support as well as performance of field development and SURF work. The Olympic Challenger is currently stationed in the U. S. Gulf of Mexico.

The Global Orion is a DP-2 class 299-foot dynamically positioned self propelled MSV. It was constructed in 2002 and includes a 150-ton crane with deepwater lowering capability to 1,500 meters

and a saturation diving system. The vessel is designed for diving support as well as performance of field development and SURF work. The Global Orion is currently stationed in the U. S. Gulf of Mexico.

We own four of the vessels in the operating fleet described above. The Titan 2, Olympic Challenger, REM Commander, and REM Fortress are leased vessels. Ten of the vessels that we own are subject to ship mortgages. In compliance with governmental regulations, our insurance policies, and certain of our financing arrangements, we are required to maintain our vessels in accordance with standards of seaworthiness and safety set by government regulations or classification organizations. We maintain our fleet to the standards for seaworthiness, safety, and health set by the International Maritime Organization or the U.S. Coast Guard, and our vessels are inspected by the American Bureau of Shipping, Bureau Veritas, or Det Norske Veritas.

We also own and operate other ancillary offshore construction equipment including portable pipe reels, jetting sleds, and hydraulic and steam pile driving hammers. Our portable pipe reels are relatively small vertical reels which can be used for small diameter pipe on conventional barges or for simultaneously laying two pipelines using the Chickasaw. Our jetting sleds are capable of burying pipelines of up to thirty-six inches in diameter. Pile hammers are used by construction barges to drive the pilings which secure offshore platforms to the bottom of the sea. We also operate thirteen saturation diving systems. Our saturation systems range in capacity from four to twelve divers. Two of the saturation systems are capable of supporting dives as deep as 1,500 feet. Each saturation system consists of a diving bell, for transporting the divers to the sea floor, and pressurized living quarters. The systems have surface controls for measuring and mixing the specialized gases that the divers breathe and connecting hatches for entering the diving bell and providing meals and supplies to the divers.

In addition to the fleet of vessels which we operate as described above, we charter other vessels, such as tugboats, cargo barges, utility boats, and dive support vessels, and lease other equipment, such as saturation diving systems and ROVs.

We own 603 acres near Carlyss, Louisiana and have constructed a deepwater support facility and pipe base. This location serves as the corporate headquarters and the headquarters of our Gulf of Mexico Offshore Construction operations. The facility is capable of accommodating our deepwater draft vessels.

The following table summarizes our significant facilities as of December 31, 2008:

				Approximate
				Square Feet		Owned/Leased
Location		Principal Use		or Acreage		(Lease Expiration)
Carlyss, LA		Shore base/Corporate Headquarters		603 acres		Owned
Port of Iberia, LA		Research and Development Center		3,765 sq. ft.		Leased (Mar. 2010)
Houston, TX		Office		71,071 sq. ft.		Leased (Jul. 2013)
Cd. Del Carmen, Mexico		Office/Workshop		41,042 sq. ft.		Owned
Tema, Ghana		Office/Shore base		56,966 sq. ft.		Leased (July 2011)
Lagos, Nigeria		Office		11,690 sq. ft.		Leased (Dec. 2012)
Sharjah, United Arab Emirates		Office		13,946 sq. ft.		Leased (April 2011)
Mumbai, India		Project Management Office		7,365 sq. ft.		Leased (Dec. 2011)
Batam Island, Indonesia		Shore base		45 acres		Leased (Mar. 2028)
Singapore		Office		10,854 sq. ft.		Leased (Aug. 2013)
Al Khobar, Saudi Arabia		Office		5,434 sq. ft.		Leased (Aug. 2009)
Rio de Janeiro, Brazil		Office		6,480 sq. ft.		Leased (Jun. 2010)

Global Industries, Ltd.
Listing of Major Construction Vessels

										Derrick				Pipelay
														Maximum				Maximum
										Maximum				Pipe				Water				Year				Living
						Length				Lift				Diameter				Depth				Acquired				Quarter
Vessel Name		Vessel Type		Capability		(Feet)				(Tons)				(Inches)				(Feet)				/Leased				Capacity
Titan 2(1)		Ship		Derrick			456				880				—				—				2001				326
Hercules		Barge		Pipelay/reel/derrick			444				2,000				60.00				10,000				1995				191
Seminole (2)		Ship		Pipelay/derrick ship			424				800				48.00				1,500				1997				220
Comanche		Barge		Pipelay/derrick			400				1,000				48.00				1,500				1996				223
Shawnee		Barge		Pipelay/derrick			400				860				48.00				1,500				1996				272
Iroquois		Barge		Pipelay			400				250				60.00				1,000				1997				259
DLB 264		Barge		Pipelay/derrick			397				1,000				60.00				1,000				1998				220
DLB 332		Barge		Pipelay/derrick			352				750				60.00				1,000				1998				208
Cheyenne		Barge		Pipelay/bury/derrick			350				800				36.00				1,500				1992				190
Cherokee		Barge		Pipelay/derrick			350				925				36.00				1,500				1990				183
Chickasaw		Barge		Pipelay/reel			275				160				12.75				6,000				1990				70
Sea Constructor		Barge		Pipelay/bury			250				200				24.00				400				1987				104

ITEM 3. LEGAL PROCEEDINGS

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 the Company.

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 the Company.

We have one unresolved issue related to an Algerian tax assessment received by the Company 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, the Company announced that it was conducting an internal investigation of its West Africa operations, focusing on the legality, under the U.S. Foreign Corrupt Practices Act (“FCPA”) and local laws, of one of its 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 the Company’s Board of Directors has engaged outside counsel to lead the investigation.

At this stage of the internal investigation, the Company is unable to predict what conclusions, if any, the Securities and Exchange Commission (“SEC”) will reach, whether the 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.

We continue to use alternative procedures adopted after the commencement of the investigation to obtain Nigerian temporary import permits. These procedures are designed to ensure FCPA compliance. Although we are still working and pursuing additional work in West Africa, we have declined or terminated available projects and delayed the start of certain projects in Nigeria in order to ensure FCPA compliance and appropriate security for our personnel and assets. The possibility exists that we may have to curtail or cease our operations in Nigeria if appropriate long-term solutions cannot be identified and implemented. We have prepared a plan for this potential outcome. We have worldwide customer relationships and a mobile fleet, and we are prepared to redeploy vessels to other areas as necessary to ensure the vessels are utilized to the fullest extent possible.

Notwithstanding the ongoing 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.

The Company has concluded that it is premature for it to make any financial reserve for any potential liabilities that may result from these activities given the status of the internal investigation.

Our operations are subject to the inherent risks of offshore marine activity including accidents resulting in the loss of life or property, environmental mishaps, mechanical failures, and collisions. We insure against certain of these risks. We believe our insurance should protect us against, among other things, the accidental total or constructive total loss of our vessels. We also carry workers’ compensation, maritime employer’s liability, general liability, and other insurance customary in our business. All insurance is carried at levels of coverage and deductibles that we consider financially prudent. Recently, our industry has experienced a tightening in the builders’ risk market and the property market subject to named windstorms, which has increased deductibles and reduced coverage.

Our services are provided in hazardous environments where accidents involving catastrophic damage or loss of life could result, and litigation arising from such an event may result in us being named a defendant in lawsuits asserting large claims. Although there can be no assurance that the amount of insurance carried by our Company is sufficient to protect us fully in all events, management believes that our insurance protection is adequate for our business operations. A successful liability claim for which we are underinsured or uninsured could have a material adverse effect on the Company.

We are 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. We believe that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on our business or financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM (Unnumbered). EXECUTIVE OFFICERS OF THE REGISTRANT

(Provided pursuant to General Instruction G to Form 10-K)

All executive officers named below, in accordance with the By-laws, are elected annually and hold office until a successor has been duly elected and qualified. Our executive officers as of February 24, 2008, were as follows:

Name		Age				Position
John A. Clerico			67			Chairman of the Board and Chief Executive Officer
Peter S. Atkinson			61			President
Jeffrey B. Levos			48			Senior Vice President and Chief Financial Officer
Russell J. Robicheaux			60			Chief Administrative Officer and General Counsel
James J. Doré			54			Senior Vice President, North America and Worldwide Diving and Subsea Services
Byron W. Baker			52			Senior Vice President, Worldwide Fleet Operations
John M. Katok			52			Senior Vice President, Worldwide Business Development
Eduardo Borja			51			Senior Vice President, Global Marketing and Strategy
Ashit Jain			38			Vice President, Asia Pacific/India and Middle East

Mr. Clerico has been a member of the Company’s Board since February 2006, was appointed Chief Executive Officer in October 2008 and is the Chairman of Chartmark Investments, Inc., a company he founded in 2001. Mr. Clerico previously served as Executive Vice President and Chief Financial Officer of Praxair, Inc. From 1999-2000, Mr. Clerico was a member of the Office of the Chairman at Praxair and also had leadership responsibility for the company’s operations in Europe and South America. Prior to that, Mr. Clerico was an executive with Union Carbide Company where he served as Treasurer and Chief Financial Officer.

Mr. Atkinson joined our Company in September 1998 as Vice President and Chief Financial Officer. In June 2000, he was named President. In December 2005, he reassumed the additional title of Chief Financial Officer. In May 2008, he relinquished title of Chief Financial Officer while retaining title of President. Prior to joining our Company he had been Director — Financial Planning with J. Ray McDermott, S.A., having previously served in various capacities at McDermott International, Inc. and J. Ray McDermott, S.A. for twenty-three years. At McDermott, he served at the corporate level as well as in the North Sea, Middle East, West Africa, and Central and South America. He is currently serving on the Board of Directors executive committee of the National Ocean Industry Association.

Mr. Levos joined our Company in May 2008 as Senior Vice President and Chief Financial Officer. Mr. Levos joined the Company after eight years at Cooper Industries, Ltd. where he served in several financial roles, most recently as Vice President, Finance & Chief Accounting Officer. Mr. Levos also held financial executive roles with The Coastal Corporation and the accounting firm of Deloitte & Touche. He is a graduate of Westminster College and has completed the Harvard Advanced Management Program and is a Certified Public Accountant in the State of Texas.

Mr. Robicheaux joined our Company in August 1999 as Vice President and General Counsel. In August 2001, he was named Senior Vice President, General Counsel. In April 2006, Mr. Robicheaux was named Chief Administrative Officer and General Counsel. Prior to joining our Company, Mr.

Robicheaux had been Assistant General Counsel with J. Ray McDermott, S.A. since 1995. In addition, he served in various engineering and legal capacities at McDermott International, Inc. for the preceding twenty-five years, including design and field engineering, project engineering, estimating and project management.

Mr. James Doré has over twenty-five years of service with our Company. He has held a number of management positions with responsibility for marketing, contracts and estimating, and diving operations. Mr. Doré was named Vice President, Marketing in March 1993, Vice President, Special Services in November 1994 and Vice President, Diving and Special Services in February 1996. In August 2001, he was named Senior Vice President, Diving and Special Services. In November 2002, Mr. Doré was named President of Global Divers and Marine Contractors. In June 2005, Mr. Doré was appointed Senior Vice President, Asia Pacific/India. In October 2006, Mr. Doré was named Senior Vice President, Eastern Hemisphere. In July 2007, he was named Senior Vice President, Worldwide Diving and Subsea Services and Middle East and Mediterranean Region. In November, 2008 Mr. Doré relinquished his role over the Middle East and Mediterranean Region and assumed responsibility for the North America Region. Mr. Doré previously served as President of the Association of Diving Contractors, an industry trade association. Mr. Doré is the brother of William J. Doré, the Company’s founder and a member of our Board of Directors.

Mr. Baker joined our Company in May 1997 as Operations Manager in our Latin America segment and served in various capacities with our Company through August 2001. In August 2001, Mr. Baker was named Sr. Vice President of Equipment, Operations and Regulatory and in 2003 was named Sr. Vice President, the Americas. In June 2007, he was named Senior Vice President, North America Region and Worldwide Fleet. Prior to joining our Company, Mr. Baker served in various management capacities for J. Ray McDermott, Inc., Offshore Pipelines, Inc. and Brown & Root, Inc. Mr. Baker has more than thirty years of experience in the offshore construction industry including service in the United States, Latin America, the North Sea, West Africa, Asia Pacific/India, and the Middle East.

Mr. Katok joined our Company in May 2008 as Vice President, Middle East. In January 2009, Mr. Katok was named Senior Vice President, Worldwide Business Development with responsibility to enhance customer relationships through client sponsorship and developing processes to increase project backlog and ensure improved project planning and execution. Prior to joining our Company, Mr. Katok served as Commercial Vice President with Technip, Inc. for six years. Previously, Mr. Katok spent more than twenty-five years with Kellogg, Brown & Root in a variety of commercial, project management, and operational roles. He is an engineering graduate of West Virginia University where he holds a B.S. in Civil Engineering.

Mr. Borja rejoined our Company in January 2009 as Senior Vice President, Global Marketing and Strategy with responsibility for market analysis and development of growth strategies to expand the Company’s services into deepwater and subsea markets. Mr. Borja first joined the Company in September 2001, serving in leadership positions in both operations and business development for the Latin America segment. He was named Vice President, Latin America in May 2002 and served in that role until mid-2008. His operational and business development experience includes domestic and international assignments, including positions with ICA-Fluor Daniel. Mr. Borja holds a Master’s Degree in Construction Management from Universidad Iberoamericana and a Bachelors Degree in Civil Engineering from Universidad Nacional Autonoma de Mexico.

Mr. Ashit Jain joined our Company in 1997 and has held top management positions in operations, engineering, project management, estimating and project controls. He was appointed Vice President, Asia Pacific & India in 2006 and is based in the Asia Pacific region. Mr. Jain has over fourteen years experience in the marine construction industry. After graduating from the University of Delhi in 1992, his early assignments covered complex offshore projects in the Middle East and Asia.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES

Our common stock is traded on the NASDAQ Global Select Market under the symbol “GLBL.” The following table sets forth, for the periods indicated, the high and low closing sale prices per share of our common stock as reported by the NASDAQ Global Select Market.

		Common Stock Price
		Low				High
Year ended 2007:
First quarter		$	12.47			$	18.29
Second quarter			19.00				26.82
Third quarter			20.46				28.88
Fourth quarter			21.42				27.74
Year ended 2008:
First quarter		$	15.62			$	22.92
Second quarter			15.86				19.73
Third quarter			6.57				17.50
Fourth quarter			2.10				6.70

As of February 24, 2009, there were approximately 783 holders of record of our common stock and we believe approximately 23,412 beneficial holders of our common stock.

We have never paid cash dividends on our common stock, and we do not intend to pay cash dividends in the foreseeable future. We currently intend to retain earnings, if any, for the future operation and growth of our business. Our credit facility and other financing arrangements restrict the payment of cash dividends.

During the fourth quarter of 2008 Mr. William Doré, an “affiliated purchaser” (as defined in Rule 10b-18 of the Securities Exchange Act of 1934, as amended) and a director of our Company, purchased 1.0 million shares at a total cost of $2.6 million, or $2.64 per share. No options were exercised in the fourth quarter of 2008. The Company purchased no equity securities during the fourth quarter of 2008.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data presented below for each of the past five fiscal periods should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.

		Year Ended December 31,
		2008				2007				2006				2005				2004
		(in thousands, except per share and ratio data)
Revenues		$	1,070,988			$	992,513			$	1,234,849			$	688,615			$	463,331
Cost of operations			1,084,581				719,768				887,003				571,768				398,875
Gross profit (loss)			(13,593	)			272,745				347,846				116,847				64,456
Loss on asset impairments			2,551				141				8,931				—				7,173
Provision for Vinci (GTM) litigation			—				—				(13,699	)			—				—
Net gain on asset disposal			(1,695	)			(4,220	)			(6,395	)			(5,303	)			(18,246	)
Selling, general and administrative expenses			95,364				81,275				71,109				50,916				37,923
Operating income (loss)			(109,813	)			195,549				287,900				71,234				37,606
Interest income			14,477				27,966				8,169				3,304				976
Interest expense			(13,624	)			(13,439	)			(10,787	)			(10,192	)			(14,797	)
Other income (expense), net			(641	)			3,826				705				1,668				(2,623	)
Income (loss) from continuing operations before income taxes			(109,601	)			213,902				285,987				66,014				21,162
Income taxes			7,760				53,942				86,242				31,256				14,640
Income (loss) from continuing operations, net of income taxes			(117,361	)			159,960				199,745				34,758				6,522
Income from discontinued operations, net of income taxes(1)			—				—				—				—				15,910
Net income (loss)		$	(117,361	)		$	159,960			$	199,745			$	34,758			$	22,432
Net income (loss) per diluted share
Continuing operations		$	(1.03	)		$	1.36			$	1.70			$	0.30			$	0.06
Discontinued operations			0.00				0.00				0.00				0.00				0.14
Net income (loss)		$	(1.03	)		$	1.36			$	1.70			$	0.30			$	0.20
Ratio of earnings to fixed charges (2)			n/a	(3)			7.3x				12.0x				5.6x				2.2x
Total assets (4)		$	1,485,594			$	1,589,798			$	1,070,997			$	844,662			$	743,240
Working capital (4)		$	380,894			$	843,017			$	460,126			$	232,050			$	186,647
Long-term debt (4)		$	390,340			$	394,300			$	73,260			$	77,220			$	81,180

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 the related “Notes to Consolidated Financial Statements” included in Item 8 of Part II of this Annual Report.

Results of Operations

2008 Overview

During 2008, the Company continued its expansion into new geographical areas and faced challenges with respect to the Camarupim project in Brazil and the Berri and Qatif project in Saudi Arabia. Operational and productivity issues on both projects as well as cost over-runs on Berri and Qatif resulted in both projects reporting losses during 2008. The Company is expecting to finalize these two projects in 2009. Also in the third and fourth quarters of 2008, the impact of the worldwide credit crisis had a negative impact on demand for the Company’s services and its operating results continued to decline, predominately in its North America segments.

General

In July 2007, we reorganized the underlying operations and economics of our operating segments. As a result, the reportable segments were realigned to better reflect the current reporting structure of our internal management and to facilitate our growth strategy and renewed focus on diving and underwater services. Also effective with this reorganization, we renamed our diving services to subsea services to more accurately depict our expanding business beyond diving services to include diverless intervention, SURF, and IRM services. In the second quarter of 2008, we renamed our Gulf of Mexico segments to North America segments to better reflect our strategic direction to expand our marketing efforts into Canada, Newfoundland, and other regions in North America. The six reportable segments prior to reorganization included: Gulf of Mexico Offshore Construction Division (OCD), Gulf of Mexico Diving, Latin America, West Africa, Middle East (including the Mediterranean and India), and Asia Pacific. The six revised reportable segments subsequent to the reorganization include: North America OCD, North America Subsea, Latin America, West Africa, Middle East (including the Mediterranean), and Asia Pacific/India. Mexico remains in our Latin America segment. This reorganization is reflected as a retrospective change to the financial information and the narrative description in “Management’s Discussion and Analysis of Results of Operations and Financial Condition” presented for the years ended December 31, 2008, 2007 and 2006, and consists of the following:

	•		a geographical shift of India operations from the Middle East to the Asia Pacific;
	•		transfer of a portion of subsea services from the Middle East to West Africa; and
	•		corporate interest income and expense no longer being allocated to the reportable segments.

The above organizational changes did not have an impact on equity, consolidated net income or consolidated cash flows.

Our results of operations are affected by the overall level of activity of the offshore construction industry within each worldwide region in which we operate. This overall level of offshore construction activity is principally determined by four factors: (1) the oil and gas industry’s ability to economically justify placing discoveries of oil and gas reserves in production; (2) the oil and gas industry’s need to maintain, repair, and replace existing pipelines and structures to extend the life of production; (3) the oil and gas industry’s need to clear structures from the lease once the oil and gas reserves have been depleted; and (4) weather events such as major hurricanes. Our results of operations ultimately reflect our ability to secure jobs through competitive bidding and manage those jobs to successful completion. The competition and inherent operating risks vary between the worldwide regions in which we operate, and these challenges affect individual segment profitability.

Our results of operations are measured 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 and subsea 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. 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; and, 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/or our ability to win the bidding for available jobs. 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.

Most of our offshore construction revenues are obtained 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 cash expenditures by the Company 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. 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 are required to bear a larger share of project related risks during periods of weak demand for our services and a smaller share of risk 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.

Claims and change orders are a significant aspect of any construction business and are particularly significant in the offshore construction industry. A claim is an amount in excess of the contract price which a construction contractor seeks to collect from customers or others due to delays, errors in specifications or design, unapproved change orders, or other causes of unanticipated costs caused by the customer or others. A change order is a request to alter the scope of work of a previously agreed upon construction contract. Change orders may include changes in specifications or design, method or manner of performance, facilities, equipment, site, or the period for completion of the work. Change orders are common in our business due to the nature of offshore construction contracts and sometimes add to the degree of project execution difficulty. A change order usually increases the scope of work but may also decrease the scope and, consequently, the amount of contract revenue and costs which are recognized. Either the customer or the Company may initiate a change order. At the time of initiation, a change order may be approved or unapproved by either party, priced or unpriced, or defined or undefined regarding detailed scope. Even when the scope of work is defined, the associated increase or decrease in contract revenue may be governed by contract terms or may be negotiated later, sometimes after the work is performed.

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 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 associated with these commitments are 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 those from our offshore construction activities.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

		2008								2007
						% of								% of				% Change
		Thousands				Revenue				Thousands				Revenue				(Unfavorable)
Revenues		$	1,070,988				100.0	%		$	992,513				100.0	%			7.9	%
Cost of operations			1,084,581				101.3				719,768				72.5				(50.7	)
Gross profit (loss)			(13,593	)			1.3				272,745				27.5				(105.0	)
Loss on asset impairments			2,551				—				141				—				n/m
Net gain on asset disposal			(1,695	)			—				(4,220	)			0.4				(59.8	)
Selling, general and administrative expenses			95,364				8.9				81,275				8.2				(17.3	)
Operating income (loss)			(109,813	)			10.2				195,549				19.7				(156.2	)
Interest income			14,477				1.4				27,966				2.8				(48.2	)
Interest expense			(13,624	)			1.3				(13,439	)			1.4				(1.4	)
Other income (expense), net			(641	)			—				3,826				0.4				(116.8	)
Income (loss) before income taxes			(109,601	)			10.3				213,902				21.5				(151.2	)
Income taxes			7,760				0.7				53,942				5.4				85.6
Net income (loss)		$	(117,361	)			11.0	%		$	159,960				16.1	%			(173.4	)%

Revenues — Revenues increased by $78.5 million, or 7.9%, between 2008 and 2007 to $1.1 billion for 2008 primarily due to higher activity in the Middle East, Asia Pacific/India, and Latin America. Increased construction activity in the Middle East from the Berri and Qatif project and kickoff of the Camarupim project in Latin America were somewhat offset by lower demand for our services in North America and lower activity in West Africa. For a detailed discussion of revenues and income (loss) before taxes for each geographical area, please see “Segment Information” below.

Depreciation and Amortization in Cost of Operations. The amount of depreciation and amortization expense, including the amortization of dry-docking costs, included in our cost of operations for 2008 was $51.9 million, compared to $46.9 million included in 2007. This increase in depreciation and amortization expense was primarily caused by increased dry-dock amortization related to two major construction vessels and an increase in the amount of depreciation expense related to our major construction vessels with the addition of the Global Orion to the vessel fleet. Depreciation associated with our office expansion in the Middle East and Latin America also contributed to the increase in depreciation. Amortization of stock compensation decreased between the periods by $1.4 million. We expect amortization of our dry-dock costs to be material to our operations in 2009.

Gross Profit — Gross profit decreased by $286.3 million, or 105%, between 2008 and 2007 to a $13.6 million gross loss for 2008 compared to $272.7 million gross profit for 2007. The decrease primarily reflects the adverse effects of the losses incurred on the Berri and Qatif project in Saudi Arabia and the Camarupim project in Brazil. Cost overruns on the Berri and Qatif project and productivity and equipment delays on both projects resulted in substantial project deterioration during 2008. Results for 2008 include an estimate for losses through the projects’ anticipated completion dates in 2009.

Loss on Asset Impairments. Loss on asset impairments increased $2.5 million in 2008, compared to 2007. During 2008, primarily due to high repair costs in excess of future benefit of certain vessels, we decided not to repair them and recorded an aggregate impairment loss of $2.6 million on the retirement of two DSVs. In 2007, we recorded an impairment loss of $0.1 million.

Gain on Asset Disposal. Net gains on the disposal of assets decreased $2.5 million from 2007 to 2008. Net gains on asset disposals totaled $1.7 million for 2008 primarily from the sale of a DSV. Net gains on asset disposals totaled $4.2 million during 2007, which primarily arose from sale of three DSVs, that were partially offset by losses on the disposal of ancillary dive support systems.

Selling, General and Administrative Expenses — Selling, general and administrative expenses increased by $14.1 million, or 17.3%, to $95.4 million for 2008, compared to $81.3 million during 2007. Increased labor costs in all areas except Asia Pacific/India were responsible for the majority of this increase, as well as increased professional fees, rent expense, and computer expense, all related to the Company’s continued business expansion. Partially offsetting these increases was a reduction in amortization of stock compensation resulting from the recapture of stock expense related to performance shares and the net favorable impact related to the recapture of previously recognized stock expense resulting from the accelerated vesting of certain shares upon the resignation of the Company’s CEO in October, 2008.

Interest Income — Interest income decreased by $13.5 million to $14.5 million during 2008, compared to $28.0 million for 2007. Lower interest rates and decreased cash balances in 2008 contributed to lower return on cash balances and short-term investments compared to 2007.

Interest Expense — Interest expense increased slightly to $13.6 million for 2008 compared to $13.4 million for 2007. Increased interest resulting from the issuance of $325.0 million of convertible debentures in July 2007 was partially offset by a reversal of $2.5 million previously accrued interest expense related to the 2008 settlement of a previous uncertain tax position.

Other income (expense), net — Other income (expense), net decreased by $4.5 million from 2007 primarily resulting from losses on foreign currency exchange rate differences incurred in 2008 and the nonrecurrence of a $1.4 million recognized gain in 2007 related to the settlement of a claim for interrupted operations as a result of a 2006 oil spill in the Gulf of Mexico by a refinery adjacent to our property in Louisiana.

Income Taxes — The Company’s effective tax rate was (7.1)% and 25.2%, respectively, for the twelve months ended December, 2008 and 2007. The tax rate in 2008 was adversely impacted by losses that could not be tax benefited and also taxes paid in tax jurisdictions with a deemed profit tax regime where tax is calculated as a percentage of revenue rather than being based upon net income. This resulted in an income tax expense being recognized despite the loss reported before taxes for the twelve months ended December 31, 2008.

Segment Information - The following sections discuss the results of operations for each of our reportable segments during the twelve month periods ended December 31, 2008 and 2007.

Utilization of Major Construction Vessels

Worldwide utilization for our major construction vessels was 49%, 45%, and 61% for the fiscal years ended December 31, 2008, 2007, and 2006, respectively. Utilization of our major construction vessels is calculated by dividing the total number of days major construction vessels are assigned to project-related work by the total number of calendar days for the period. Dive support vessels, cargo/launch barges, ancillary supply vessels and short-term chartered project-specific construction vessels are excluded from the utilization calculation. The Company frequently uses chartered anchor handling tugs, dive support vessels and, from time to time, construction vessels in the Company’s operations. Also, most of the Company’s international contracts (which are generally larger, more complex and of longer duration) are generally bid on a lump-sum or unit-rate (vs. day-rate) basis wherein the Company assumes the risk of performance and changes in utilization rarely impact revenues but can have an inverse relationship to changes in profitability. For these reasons, the Company considers utilization rates to have a relatively low direct correlation to changes in revenue and gross profit.

North America Offshore Construction Division

Revenues were $81.1 million in 2008 compared to $106.5 million in 2007. A decrease of $25.4 million, or 24%, between 2008 and 2007 was primarily due to: (1) lower activity related to market conditions driven by decreased demand for services; (2) $11.2 million related to the extended dry docking of the Cherokee; and (3) non-compensated vessel standby costs during Hurricanes Gustav and Ike. Loss before taxes was $17.7 million for 2008 compared to income before taxes of $12.6 million for 2007. This decrease of $30.3 million was primarily attributable to lower revenues and lower margins on projects attributable to the continuing softening of market conditions in the Gulf of Mexico, lower profitability on derrick work impacted by operational issues, and non-recovered vessel costs resulting from lower vessel utilization for 2008.

North America Subsea

Revenues were comparable between 2008 and 2007. Revenues generated in 2008 were $146.1 million compared to $150.4 million for 2007. However, project profitability declined between the two years with increased competition affecting pricing, coupled with higher operating costs incurred in 2008. Income before taxes was $7.4 million for 2008 compared to $59.8 million for 2007. This decrease of $52.4 million, or 88%, was attributable to lower margins resulting from increased competition affecting pricing as well as productivity issues affecting some of our projects. Idle and startup costs associated with the addition of the Global Orion and Olympic Challenger to the vessel fleet also negatively impacted the margins during 2008. In 2007, higher project margins were generated from the REM Commander which was subsequently transferred to the Latin American region in April 2008. In addition, we recorded a $1.0 million impairment on a DSV during 2008.

Latin America

Revenues were $267.0 million for 2008 compared to $227.0 million for 2007. An increase of $40.0 million, or 17.6%, in 2008 compared to 2007 was primarily due to additional revenue from expansion into Brazil, partially offset by lower activity in Mexico. Despite the increase in revenues, we reported a loss before taxes of $17.9 million during 2008 compared to income before taxes of $97.6 million in 2007. The decrease of $115.5 million was primarily due to the favorable finalization of project claims and change orders in 2007 and the recording of a loss position on the Camarupim project in Brazil in 2008. For 2008, the Camarupim project was estimated to complete at a significant loss due to lower than expected productivity and vessel standby delays from mechanical and weather downtime. Results for 2008 therefore include an estimate for losses on the Camarupim project through the project’s estimated completion in 2009. This compares to high profit margins obtained from the favorable resolutions of change orders and claims on projects in Mexico in 2007.

West Africa

Revenues were $152.9 million for 2008 compared to $184.7 million for 2007. This decrease of $31.8 million, or 17%, in 2008 compared to 2007 was primarily due to decreased activity in the region. In 2008, we performed two major construction projects in West Africa compared to three major construction projects in 2007. Loss before taxes was $42.0 million for 2008 compared to a loss before taxes of $15.0 million in 2007. In 2008, additional costs were incurred related to idle vessel costs from low utilization and project productivity issues related to a project in Nigeria. Also, we recorded a $1.6 million impairment on a DSV in 2008. Exchange losses of $3.7 million primarily related to naira cash balances also negatively impacted the loss before taxes; however, this loss was partially offset by a reversal of previously accrued interest expense related to a 2008 favorable settlement of an uncertain tax position. See also Note 9 of the Notes to Consolidated Financial Statements for a discussion of challenges related to conducting operations in Nigeria.

Middle East

Revenues were $237.5 million for 2008 compared to $186.3 million during 2007. This increase of $51.2 million, or 27%, for 2008 compared to 2007 was attributable to increased activity in the region.

During 2008, two major projects were in progress compared to a lower level of construction activity during much of 2007. However, loss before taxes of $81.6 million was reported during 2008 compared to income before taxes of $29.6 million for 2007 due primarily to the significant deterioration in the Berri and Qatif project in Saudi Arabia during 2008. The loss on the Berri and Qatif project is primarily due to exceptional losses in productivity and cost overruns. Results for 2008 therefore include an estimate for losses on the Berri and Qatif project through the estimated completion date in the 2009 third quarter.

Asia Pacific/India

Revenues were $223.5 million for 2008 compared to $181.2 million for 2007. This increase of $42.3 million, or 23%, for 2008 compared to 2007 was primarily attributable to higher activity during 2008. Income before taxes was $40.9 million for 2008 compared to $11.5 million for 2007. This increase in profitability of $29.4 million was primarily due to higher revenues, increased project margins, good project execution, and cost recoveries attributable to higher vessel utilization during 2008.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

		2007								2006
						% of								% of				% Change
		Thousands				Revenue				Thousands				Revenue				(Unfavorable)
Revenues		$	992,513				100.0	%		$	1,234,849				100.0	%			(19.6	)%
Cost of operations			719,768				72.5				887,003				71.8				18.9
Gross profit (loss)			272,745				27.5				347,846				28.2				(21.6	)
Loss on asset impairments			141				—				8,931				0.7				98.4
Reduction in litigation provision			—				—				(13,699	)			1.1				(100.0	)
Net gain on asset disposal			(4,220	)			0.4				(6,395	)			0.5				(34.0	)
Selling, general and administrative expenses			81,275				8.2				71,109				5.8				(14.3	)
Operating income			195,549				19.7				287,900				23.3				(32.1	)
Interest income			27,966				2.8				8,169				.7				242.3
Interest expense			(13,439	)			1.4				(10,787	)			0.9				(24.6	)
Other income (expense), net			3,826				0.4				705				—				n/m
Income before income taxes			213,902				21.5				285,987				23.2				(25.2	)
Income taxes			53,942				5.4				86,242				7.0				37.5
Net income		$	159,960				16.1	%		$	199,745				16.2	%			(19.9	)%

Revenues. Revenues decreased by 19.6% to $992.5 million between 2007 and 2006, primarily due to a decline in construction activity from the high levels experienced in Latin America and Gulf of Mexico during 2006. Two significant construction projects that were fully active in Latin America in 2006 were completed during the first half of 2007. Furthermore, the exceptionally high level of demand for hurricane related repair work in the Gulf of Mexico moderated during 2007. Worldwide utilization of our major construction vessels decreased to 45% in 2007, compared to 61% in 2006. The effects of lower construction activity in Latin America and the Gulf of Mexico experienced in 2007 were reduced by the positive impact of increased construction activity in the Middle East. For a detailed discussion of revenues and income before taxes for each geographical area, please see “Segment Information” below.

Depreciation and Amortization in Cost of Operations. The amount of depreciation and amortization expense, including the amortization of dry-docking costs, included in our cost of operations for 2007 was $46.9 million, compared to the $51.4 million included in 2006. This decrease in depreciation and amortization expense was primarily caused by a reduction in the amount of major construction vessel depreciation, resulting from lower utilization. The amount of amortization related to stock-based compensation and dry-docking increased between the periods.

Gross Profit. Gross profit decreased by $75.1 million to $272.7 million in 2007, compared to 2006, primarily due to lower revenues, as described above, and lower margins from our West Africa segment, which were caused by incremental vessel costs that were predominately unrecovered project costs. As a percentage of revenues, our overall gross profit margin decreased from 28.2% in 2006 to 27.5% in 2007. This decline in gross profit margin was primarily the result of lower utilization of our major construction vessels and lower profitability on projects in West Africa.

Loss on Asset Impairments. Loss on asset impairments decreased $8.8 million in 2007, compared to 2006. Several vessels were impaired and permanently retired in 2006. During 2006, primarily due to escalating repair and maintenance costs, and lack of available work for certain equipment, we recorded an aggregate impairment loss of $8.9 million, which resulted from the retirement of two DLBs, six DSVs, and other ancillary construction equipment. In 2007, we recorded an impairment loss of $0.1 million.

Reduction in Litigation Provision. In 2006, a $13.7 million reduction in a loss provision was recorded related to a settlement between us and Vinci, (formerly named Groupe GTM) for litigation involving termination of a share purchase agreement to purchase shares of ETPM S.A. There was no such reduction during 2007.

Gain on Asset Disposal. Net gains on the disposal of assets decreased $2.2 million from 2006 to 2007. Net gains on asset disposals totaled $4.2 million for 2007, which primarily consisted of the sale of three DSVs, that were partially offset by losses on the disposal of ancillary dive support systems. In 2006, gains on asset sales included $3.0 million for the sale of a cargo barge, and $2.6 million for the sale of three crew vessels, and two DSVs.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased by $10.2 million to $81.3 million in 2007, compared to 2006, primarily due to higher legal and professional fees, and administrative expenses. Incremental legal fees of approximately $4.4 million were incurred during 2007 resulting from our internal investigation of our operations in West Africa focusing on our compliance with the FCPA. Additional administrative expenses were incurred during 2007 for establishing new offices in various geographical areas and supporting the projects in those respective areas.

Interest Expense. Interest expense increased by $2.7 million to $13.4 million (net of $0.3 million in capitalized interest) in 2007, compared to 2006, primarily due to incremental interest expense on additional debt incurred. During the third quarter of 2007, we issued $325.0 million of 2.75% Senior Convertible Debentures.

Interest Income. Interest income increased by $19.8 million to $28.0 million in 2007, compared to 2006, primarily due to higher balances of cash, cash equivalents and marketable securities.

Other income (expense), net. Other income increased by $3.1 million to $3.8 million in 2007, compared to 2006, primarily as a result of a gain of approximately $1.4 million resulting from the settlement of a claim for interrupted operations resulting from a 2006 oil spill in the Gulf of Mexico by a refinery adjacent to our property in Louisiana. Gains from derivative instruments in 2007 were $1.2 million higher than 2006 gains.

Income Taxes. Our effective tax rate for 2007 was 25% compared to 30% for 2006. This decline was primarily due to the mix of earnings from high to low taxable jurisdictions.

Segment Information - The following sections discuss the results of operations for each of our reportable segments during the twelve month periods ended December 31, 2007 and 2006. We determined it was preferable to reclassify 2006 segment information associated with the presentation of inter-segment revenues between the North America OCD and North America Subsea to correspond with the 2007 presentation. The reclassifications had no impact on the consolidated statements of shareholders’ equity, operations, or cash flows.

North America Offshore Construction Division

Revenues decreased 44% to $106.5 million in 2007, compared to 2006, primarily due to a lower level of activity in the region and pricing pressures. There was an exceptionally high level of demand for the offshore construction services in the Gulf of Mexico during 2006 due to the damaging effects caused by hurricanes. Activity in 2006 was comprised of numerous projects that were related to hurricane repair work on offshore oil and gas platforms, compared to fewer, but larger projects in 2007. A high level of competition for offshore construction services was experienced in this area during 2007 that caused us to experience additional pricing pressures, compared to 2006. Income before taxes decreased by $35.9 million to $12.6 million in 2007, compared to 2006, which was attributable to the same factors that caused lower revenues. In addition, a $3.0 million gain on the sale of a cargo barge and a $1.4 million loss on the impairment of one major construction vessel and certain other unrelated ancillary construction equipment was recorded during 2006.

North America Subsea

Revenues remained relatively the same between 2007 and 2006. Revenues generated in 2007 were $150.4 million, compared to $152.2 million in 2006. A majority of the revenues generated during 2007 was comprised of salvage work. Project profitability improved between comparable years, partly due to good project execution and high utilization of the REM Commander and Pioneer for services that included plug and abandonment, pipeline repair and ROV support. The projects performed in 2006 were primarily for inspection, repair and maintenance services. Income before taxes was relatively the same between comparable years or $59.8 million in 2007 compared to $59.4 million in 2006. In addition we recorded a $2.6 million gain on the sale of three crew vessels and two DSVs in 2006, and a $2.0 million impairment loss on one DSV in 2006.

Latin America

Revenues decreased 55% to $227.0 million in 2007, compared to 2006, primarily due to a lower level of activity in 2007. Construction activity diminished during 2007, compared to 2006, during the completion stage of three large multi-year projects that were fully active in 2006. Although revenues declined, gross profit margins increased from 32% in 2006 to 51% in 2007. Higher gross profit margins were achieved in 2007 primarily as a result of favorable resolutions of change orders that were recognized towards the completion of these large multi-year projects. Income before taxes declined 26% from $132.0 million in 2006 to $97.6 million in 2007. In 2007, the improved gross profit margins plus a lower allocation of corporate selling, general and administrative expenses (based on lower activity) reduced a substantial portion of the negative impact from lower revenues. In addition, a $1.4 million loss was recorded in 2006 for the impairment of three DSVs.

West Africa

Revenues and demand for our services in this area remained relatively the same between 2007 and 2006. Revenues generated in 2007 were $184.7 million, compared to $191.4 million in 2006. Gross profit margins declined during 2007 compared to 2006 from 18% to 2%. This deterioration was a result of lost project profitability and additional project costs that occurred when projects were abruptly suspended mid-year when we experienced security and logistical issues in Nigeria. Consequently, our fleet was demobilized from the area. We also encountered additional project standby costs in 2007 as a result of delays in obtaining vessel permits for the area. Incremental vessel costs including mobilization and demobilization costs, standby costs and idle vessel costs totaled approximately $30.0 million in 2007. Income before taxes decreased from $25.6 million in 2006 to a net loss of $15.0 million in 2007, which was primarily due to high vessel costs and increased allocations of corporate selling, general and administrative expenses.

Middle East

Revenues increased by $183.6 million to $186.3 million in 2007, compared to 2006, primarily due to a high level of construction activity in the region due to an increase in demand. We experienced high vessel utilization on three large construction projects of which two are multi-year projects. Two major

construction vessels and a DSV, the Rem Fortress, were transferred from other regions of the world to the Middle East to support demand in the area. In 2006, activity consisted primarily of subsea services and a low level of construction activity. Gross profit margins improved from 2006 to 2007 reflecting an increase in vessel utilization and productivity. Net income before taxes improved by $33.7 million to $29.6 million in 2007, compared to a net loss of $4.1 million in 2006, reflecting higher revenues and productivity. Results in 2007 were positively impacted by a $2.3 million gain on the sale of a DSV. Results in 2006 were negatively impacted by a $4.1 million impairment loss on one DLB and two DSVs, partly offset by a $2.7 million gain on the sale of two DSVs.

Asia Pacific/India

Revenues declined by 23% to $181.2 million in 2007, compared to 2006, primarily due to a decline in activity. We experienced lower vessel utilization in this region during 2007, compared to 2006. Three major construction vessels from Asia Pacific/India region were assigned to the Middle East region during 2007. In 2007, activity primarily consisted of work performed on two large construction projects, compared to the work performed on a large multi-year project in 2006 supplemented by intersegment diving services. Gross profit margins remained relatively consistent from 2006 to 2007. The effects of lower activity in 2007 were partially offset by lower vessel costs due, in part, to mobilizing vessels to the Middle East and West Africa. Income before taxes decreased from $13.4 million in 2006, to $11.5 million in 2007, primarily due to lower construction activity in 2007 compared to 2006. A portion of the decrease in net income before taxes was offset by a $1.3 million gain on the sale of a DSV in 2007.

Industry and Business Outlook

Recent declines in energy prices and a significant downturn in the worldwide economy is impacting the offshore construction industry and the Company is beginning to see reluctance on the part of its customers to move forward with previously planned projects. In those areas of the world where bidding activity remains high, the Company is experiencing pricing pressures from its potential customers. While some opportunities remain, neither the duration or severity of the worldwide recession nor the impact that it will have on our operations can be predicted with certainty. We do expect weakening demand for our services throughout 2009.

During 2009, our focus will be on successful execution of our projects, building additional backlog, cost cutting initiatives, and cash conservation. Many of these measures are in the process of being implemented.

As of December 31, 2008, our backlog totaled approximately $519.6 million ($489.9 million for international regions and $29.7 million for the Gulf of Mexico). This backlog is scheduled to be performed in 2009. Of the total backlog at December 31, 2008, $112.5 million is related to the Camarupim project in Latin America and the Berri and Qatif in the Middle East on which we have recorded anticipated contract losses in 2008. Therefore, we do not expect this portion of our backlog to produce any margins. The amount of our backlog in North America is not a reliable indicator of the level of demand for our services due to the prevalence of short-term contractual arrangements in this region.

Liquidity and Capital Resources

Overview

Cash on hand and proceeds from the sale of marketable securities provided the major sources of funds in 2008. Our cash on hand and the sales proceeds of marketable securities sufficiently funded additions to restricted cash, stock repurchases and the continued growth of the business, including capital expenditures for expanding and modernizing our fleet of vessels.

The primary uses of cash during 2008 have been for funding operating activities, repurchases of common stock and capital spending. Additions to restricted cash also decreased our cash available for operating and investing activities. We had firm capital commitments on projects, which were in progress at December 31, 2008, of approximately $351.0 million with expenditures extending into 2011, of which $198.9 million is expected to be incurred during 2009, primarily for the construction of two new generation derrick/pipelay vessels (the Global 1200 and Global 1201). Total 2009 capital expenditures on committed and discretionary projects are expected to be approximately $200 — $220 million. The actual capital expenditures for 2009 may differ from our expectations due to changes in existing capital project schedules and/or projected capital projects.

Cash Flows

Operating Activities — Our cash and cash equivalents decreased by $435.8 million to $287.7 million at December 31, 2008, compared to December 31, 2007. Net cash used by our operating activities was $119.2 million for the year ended December 31, 2008, compared to net cash generated by our operating activities of $267.7 million during 2007. The use of funds in 2008 was primarily attributable to the net loss from continuing operations, a net use of $17.2 million of cash to fund working capital and an increase in dry docking activities to $47.2 million. The effects of the positive cash flow of $267.7 million from operating activities in 2007 was primarily attributable to net income and a reduction in major working capital components partly offset by increased dry docking activities.

Investing Activities — Investing activities used $297.3 million of cash in 2008, compared to $156.0 million in 2007. The net cash used in 2008 was primarily due to purchases of property and equipment, totaling $267.9 million, resulting primarily from the expansion and upgrade to the fleet. During 2008, the Company incurred expenditures for the construction of two new generation derrick/pipelay vessels (the Global 1200 and Global 1201) and purchased a deepwater subsea construction vessel, the Global Orion. In addition, $93.4 million of cash was transferred to restricted cash as a result of the November 7, 2008 amendment to the Revolving Credit Facility (please refer to Note 8 of the Notes to Consolidated Financial Statements for additional information on this amendment). These uses of cash were partially offset by net sales of marketable securities totaling $57.6 million. The increase in cash used by investing activities in 2007 was primarily attributable to investing $99.9 million in marketable securities and purchases of property and equipment totaling $61.8 million.

Financing Activities — Financing activities used $19.3 million of net cash in 2008 compared to providing $259.6 million in 2007. The net cash used in 2008 is primarily due to the repurchase of the Company’s common stock under a repurchase program announced in August 2008. Approximately 3.1 million shares of company stock were repurchased in 2008 at a cost of approximately $25.6 million, leaving approximately $74.4 million remaining under the program. As a result of the November 7, 2008 amendment to the Revolving Credit Facility, the Company is prohibited from making additional share repurchases. The cash provided in 2007 primarily reflected the gross proceeds of $325.0 million received from the issuance of 2.75% Senior Convertible Debentures issued in July 2007. Approximately $75.0 million of these proceeds were simultaneously used to purchase 2.8 million shares of our common stock.

Long-Term Debt

Our long-term debt outstanding includes $325.0 million of 2.75% Senior Convertible Debentures which carry an interest rate of 2.75% per annum with semi-annual interest payments. These debentures are

convertible into cash, and if applicable, into shares of the Company’s common stock. The Company may redeem all or a part of the debentures any time on or after August 1, 2014, for cash at a price equal to 100% of the principal amount of the debentures being redeemed plus accrued and unpaid interest. The holders of the debentures may require the Company to repurchase all or a part of their debentures for cash on August 1, 2017 and August 1, 2022 at a price equal to 100% of the principal amount of the debentures being redeemed plus accrued or unpaid interest, or upon the occurrence of certain types of fundamental changes. Our 2.75% Senior Convertible Debentures contain a default provision which permits the trustee or holders of the convertible debentures to accelerate such indebtedness in the event of our failure to pay principal when due or a default that results in the acceleration of any indebtedness of the Company in excess of $50 million.

We also maintain $65.3 million of Title XI bonds outstanding which carry an interest rate of 7.71% per annum with semi-annual principal payments of approximately $2.0 million payable each February and August until maturity in 2025. Our Title XI bonds contain a cross default provision which provides that a default of our Revolving Credit Facility is a default under our Title XI bonds which may result in our bonds becoming due and payable under certain circumstances.

Our Revolving Credit Facility provides a borrowing capacity of up to $150.0 million . As of December 31, 2008, the Company had no borrowings against the facility and $88.9 million of letters of credit outstanding thereunder. As a result of operating performance, the Company 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 our Company to cash-collateralize letters of credit and bank guarantees. While the interim cash collateralization is in effect, no borrowings, letters of credit, or bank guarantees unsecured by cash are available to the Company under the Revolving Credit Facility. For additional discussion see below under Liquidity Risk and Note 8 of the Notes to the Consolidated Financial Statements.

Our Revolving Credit Facility has a customary cross default provision triggered by a default of any other indebtedness of the Company, the aggregate principal amount of which is in excess of $5 million.

The Company expects to be in compliance with the covenants under the existing debt agreements in 2009 based on our current financial projections.

Other Indebtedness and Obligations

We also have a $16.0 million short-term credit facility at one of our foreign locations, which is secured by a letter of credit issued under our primary credit facility. At December 31, 2008, we had $0.5 million in cash overdrafts reflected in accounts payable, $9.9 million of letters of credit outstanding, and $5.6 million of credit availability under this particular credit facility.

Charters — We have a long-term charter for the Titan 2, a 456-foot self-propelled twin-hulled derrick ship. The vessel charter payments are approximately $6.3 million annually. The charter term is 177 months expiring in May 2018. This charter can be canceled by us at anytime, subject to a termination penalty of the transfer to the vessel owner of title to our dynamic positioning (“DP”) system used on the vessel. The DP system was at December 31,  2008 purchased and installed on the Titan 2, at our cost, during the first quarter of 2002 for a total cost of $8.9 million, with a book value at December 31, 2008 of $3.0 million.

We have three long-term charters for MSVs, two of which were delivered in 2006 and one which was delivered in 2008. The first MSV charter, the Rem Commander, includes a fixed-term five year lease with five annual options, and requires monthly payments denominated in Norwegian kroners at an annual rate of approximately 63.1 million kroners (or $8.9 million as of December 31, 2008). The second MSV charter, the Rem Fortress, includes a fixed-term three year lease with four annual options, and requires monthly payments denominated in Norwegian kroners at an annual rate of approximately 78.4 million kroners (or $11.1 million as of December 31, 2008). As of December 31, 2008, we had entered into forward foreign currency contracts that have enabled us to fulfill our remaining non-cancellable Norwegian kroner obligations under these charters at an average rate of 6.29 kroners per U.S. dollar. The third MSV charter, the Olympic Challenger, includes a five year, fixed term lease with one two-year option and three one-year options at an annual rate of approximately $16.8 million.

Future Lease Obligations — The following table sets forth, as of December 31, 2008, our minimum rental commitments under operating leases with an initial non-cancellable term of one year or more (in thousands).

2009		$	43,014
2010			30,765
2011			25,140
2012			19,383
2013			11,720
Thereafter			14
Total		$	130,036

Summary of Contractual Obligations as of December 31, 2008

		Payments due by period
						Less												More
						than 1				1-3				3-5				than 5
Contractual Obligations		Total				year				years				years				years
		(in thousands)
Long-Term Debt Principal Only		$	390,340			$	3,960			$	7,920			$	7,920			$	370,540
Long-Term Debt Interest Only(1)			89,287				13,899				26,882				25,661				22,845
Operating Lease Obligations — Cancelable			66,192				5,668				12,908				9,364				38,698
Operating Lease Obligations — Non-Cancelable			130,036				43,014				55,905				31,103				14
Purchase Obligations(2)			311,108				164,293				146,815				—				—
Total		$	986,963			$	230,834			$	250,430			$	74,048			$	432,097

The contractual obligations reported above exclude our liability of $10.0 million recognized under FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” related to our provision for uncertain tax positions. We have excluded such amounts as we are unable to make a reasonably reliable estimate of the period of cash settlement with the respective taxing authorities.

Off Balance Sheet Arrangements

In the normal course of business with customers, vendors, and others, we have entered into off-balance sheet arrangements. We provide guarantees and performance, bid, and payment bonds pursuant to agreements, or in connection with bidding, to obtain such agreements to perform construction services. The aggregate amount of these guarantees and bonds at December 31, 2008 was $65.2 million in surety bonds and $93.4 million in bank guarantees and/or letters of credit. The surety bonds are due to expire between January 2009 and October 2009 and the bank guarantees/letters of credit are due to expire between January 2009 and January 2010.

Liquidity Risk

As a result of our operating performance, the Company did not meet the existing minimum fixed charge coverage ratio covenant in the Third Amended and Restated Credit Agreement (the “Revolving Credit Facility”) as of September 30, 2008. On November 7, 2008, the financial institutions participating in the Revolving Credit Facility waived compliance with the covenant condition. In consideration of this waiver, the Company and the participating financial institutions have amended the Revolving Credit Facility to:

	•		temporarily cash-collateralize letters of credit and bank guarantees;
	•		temporarily waive compliance with certain financial covenants;
	•		temporarily prohibit share repurchases; and
	•		temporarily maintain unencumbered liquidity of $100 million.

On February 25, 2009, the Revolving Credit Facility was further amended to remove the requirement to maintain unencumbered liquidity of $100 million. The effective date of this amendment is December 31, 2008.

The length of the interim cash-collateralization period will depend on the Company’s future financial performance. For the remaining duration of the Revolving Credit Facility after the cash-collateralization period, this facility has been further amended to:

	•		allow for a new starting point in measuring financial performance; and
	•		permit borrowings and/or the issuance of letters of credit and bank guarantees based on a rate premium over prime rate ranging from 1.50% to 3.00% or London Interbank Offered Rate (“LIBOR”) ranging from 2.00% to 3.50% based upon certain financial ratios.

While the interim cash-collateralization requirement is in effect, no borrowings, letters of credit or bank guarantees unsecured by cash are available to the Company under the Revolving Credit Facility. All cash collateral is classified in the Consolidated Balance Sheet as Restricted Cash. As of December 31, 2008, the Company had no borrowing against the facility and $88.9 million in letters of credit outstanding thereunder. The Company also has a $16.0 million short-term credit facility at one of its foreign locations. At December 31, 2008, the available borrowing under this facility was $5.6 million.

As of December 31, 2008, approximately $42.4 million of our marketable securities were held in auction rate securities. These securities are intended to provide liquidity through an auction process that resets the applicable interest rate at predetermined intervals, allowing investors to either roll over their holdings or sell them at par value. As a result of liquidity issues in the global credit markets, our outstanding auction rate securities, as of December 31, 2008, have failed to settle at auction. Consequently, these investments are not currently liquid and the Company will not be able to access these funds until a future auction of these investments is successful or a buyer is found outside the auction process. On November 13, 2008, we agreed to accept auction rate security rights (“the Settlement”) from UBS related to $30.0 million in par value of auction rate securities issued by state education agencies. The Settlement permits us to sell or put our auction rate securities 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.

Liquidity Outlook

During the next twelve months, the Company expects that balances of cash, cash equivalents, and marketable securities, supplemented by cash generated from operations will be sufficient to fund operations (including increases in working capital required to fund any increases in activity levels), scheduled debt retirement, and currently planned capital expenditures. Based on expected operating cash flows and other sources of cash, the Company does not believe the reduction in liquidity from the amendment to the Revolving Credit Facility or the illiquidity of its investments in auction rate securities will have a material impact on the Company’s overall ability to meet liquidity needs during the next twelve months. However, given the current state of credit markets and the limitations imposed by recent amendments to the Company’s Revolving Credit Facility, if such operating cash flows or other sources of cash are less than currently expected or delayed or if unexpected needs for cash arise the Company may not have sufficient liquidity to meet all of its needs and may be forced to postpone capital expenditures or take other actions. The Company’s liquidity position could affect its ability to bid on and accept projects, particularly where the project requires a letter of credit since the Company’s

current ability to obtain letters of credit is limited by its available cash. This could have a material adverse effect on the Company’s future results.

The Company’s Board of Directors approved a stock repurchase program on August 4, 2008, which authorizes $100.0 million for the repurchase of outstanding shares of the Company’s common stock over the twelve month period ending August 4, 2009. Approximately 3.1 million shares of Company stock were purchased in 2008 at a cost of approximately $25.6 million, leaving approximately $74.4 million remaining under the program. As a result of the November 7, 2008 amendment to the Revolving Credit Facility, the Company is currently prohibited from additional share repurchases. Capital expenditures for 2009 are expected to be between $200.0 million and $220.0 million. This range includes expenditures for the Global 1200, Global 1201, and various vessel upgrades. In addition, the Company will continue to evaluate the divesture of assets that are no longer critical to operations to reduce operating costs and preserve a solid financial position.

The long-term liquidity of the Company will ultimately be determined by our ability to earn operating profits which are sufficient to cover our fixed costs, including scheduled principal and interest payments on debt, and to provide a reasonable return on shareholders’ investment. The Company’s ability to earn operating profits in the long run will be determined by, among other things, the sustained viability of the oil and gas energy industry, commodity price expectations for crude oil and natural gas, the competitive environment of the markets in which the Company operates, and ability to win bids and manage awarded projects to successful completion.

Recent Accounting Pronouncements

SFAS 141. In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) will not have a material impact on our consolidated results of operations and financial condition.

SFAS 157. In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and enhances disclosures about instruments carried at fair value, but does not change existing guidance as to whether or not an instrument is carried at fair value. In February 2008, the FASB issued FASB Staff Positions (“FSP”) SFAS 157-2, “Effective Date for FASB Statement 157.” This FSP permits the delayed application of SFAS 157 for all non-recurring fair value measurements of non-financial assets and non-financial liabilities until fiscal years beginning after November 15, 2008. In October 2008, the FASB issued FSP FAS 157-3,“Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS 157-3”). This FSP clarifies the application of SFAS 157 when the market for a financial asset is not active. FSP FAS 157-3 was effective upon issuance and used to evaluate the fair value of auction rate securities as of September 30, 2008. The Company adopted SFAS 157, as amended, on a prospective basis beginning January 1, 2008, for its financial assets and liabilities and will adopt this statement for its non-financial assets and liabilities, which consists of goodwill and assets held for sale, on January 1, 2009. We do not believe the adoption of SFAS No. 157 for our nonfinancial assets and liabilities will have a material impact on our consolidated results of operations and financial condition. See further discussion about the implementation of SFAS 157 in Note 3 of the Notes to the Consolidated Financial Statements.

SFAS 159. In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits all entities to choose to measure many eligible financial instruments and certain other items at fair value that are not currently required to be measured at fair value. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement was

effective for us at the beginning of our fiscal year 2008. In the fourth quarter of 2008, we elected to use fair value to measure the Settlement from UBS . For more information, see Note 2 of the Notes to the Consolidated Financial Statements..

SFAS 160. In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” (“SFAS 160”). SFAS 160 re-characterizes minority interests in consolidated subsidiaries as non-controlling interests and requires the classification of minority interests as a component of equity. Under SFAS 160, a change in control will be measured at fair value, with any gain or loss recognized in earnings. The effective date for SFAS 160 is for fiscal periods beginning on or after December 15, 2008. Early adoption and retroactive application of SFAS 160 to years preceding the effective date are not permitted. The adoption of SFAS 160 will not have a material effect on our consolidated financial statements.

SFAS 161. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 requires specific disclosures regarding the location and amounts of derivative instruments in the Company’s financial statements, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued, and for fiscal years and interim periods, beginning after November 15, 2008. We will adopt the new disclosure requirements of SFAS 161 in the first quarter 2009.

FSP FAS 142-3. In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3 requires companies estimating the useful life of a recognized intangible asset to consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, to consider assumptions that market participants would use about renewal or extension as adjusted for the entity-specific factors in SFAS No. 142, “Goodwill and Other Intangible Assets”. FSP FAS 142-3 will be effective for the Company beginning January 1, 2009. The adoption of FSP FAS 142-3 will not have a material impact on the Company’s consolidated financial statements.

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)”, (“FSP APB 14-1”) which will change the accounting for our 2.75% Senior Convertible Debentures due 2027. The FSP will require 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 will be the estimated fair value of similar bonds without the conversion feature. The difference between the bond cash proceeds and this estimated fair value will be recorded as a debt discount and amortized to interest expense over the life of the bond. Although FSP APB 14-1 will have no impact on the Company’s actual past or future cash flows, it will require the Company to record a material increase in non-cash interest expense as the debt discount is amortized. FSP APB 14-1 will become effective for the Company beginning January 1, 2009 and will be applied retrospectively to all periods presented. The Company calculates that the implementation of this FSP will increase previously reported 2008 and 2007 non-cash interest expense by $7.8 million and $3.1 million, respectively and 2009 non-cash interest expense by $8.4 million. This increase does not contemplate the impact of capitalized interest. In addition, the implementation of this FSP will increase additional paid-in capital by $68.2 million with a decrease in long-term debt of $104.9 million and increase to deferred taxes of $36.7 million at July 27, 2007, the date of issuance of the convertible debentures.

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”, (“FSP EITF 03-6-1”). This FSP 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 described in SFAS No. 128, “Earnings Per Share". This FSP shall be applied retrospectively for financial statements issued for fiscal years beginning after December 15, 2008. The Company is currently evaluating the impact, if any, of FSP EITF 03-6-1.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make judgments and estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

Revenues from construction contracts, which are generally recognized using the percentage-of-completion method, are measured by relating the actual cost of work performed to date to the current estimated total cost of the project (the cost-to-cost option of the percentage-of-completion method). The use of this method is based on our experience to be able to make reasonably dependable estimates of the cost to complete our projects. Total estimated costs are affected by operating efficiency, change in expected cost of materials and labor, adverse market conditions, and other factors that could affect the timing of revenue recognition and/or the overall profitability of a project. Significant changes in cost estimates could possibly result in a contract loss. Anticipated losses on contracts are recorded in full in the period in which they become evident.

In addition, we include claims and unapproved change orders, to the extent of costs incurred, in contract revenues when (1) the contract or other evidence provides a legal basis for the claim, (2) additional costs are not the result of deficiencies in our performance, (3) costs are identifiable, and (4) evidence supporting the claim is objective and verifiable. We actively negotiate our claims and change orders with our customers and the outcome of the negotiations has an impact on profitability of the project. We continually monitor and assess the collectability of our contract revenues and receivables, and make the appropriate allowances when necessary.

Receivables

Our receivables include billed and unbilled receivables, and often include claims and changes orders. We recognize claims and unapproved change orders to the extent of costs incurred, and when we believe collection is probably and reasonably estimated. We continually monitor and evaluate our receivables for collectability. When we become aware of an uncollectible receivable, a specific reserve for bad debt expense is estimated and recorded, which reduces the receivable balance. We believe our allowance for doubtful accounts is adequate to cover anticipated losses.

Property and Equipment

Long-lived assets held and used (primarily marine vessels and related equipment) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of long-lived assets by determining whether the carrying values of an asset group can be recovered through projected net cash flows, undiscounted and without interest charges, based on expected operating results over the remaining life of the asset group. The cash flow estimates are based on historical data adjusted for management estimates of future market performance that rely on existing market data, industry-wide trends, and expected vessel day-rates, utilization, and margins. Management’s estimates may vary considerably from actual outcomes due to future adverse market conditions, poor operating results, or other factors that could result in our inability to recover the current carrying value of the long-lived asset, thereby possibly requiring an impairment charge in the future.

We depreciate major construction vessels using the units-of-production method based on the estimated operating days of each vessel. Our depreciation expense calculated under the units-of-production method may be less than, equal to or greater than depreciation expense calculated under the straight-line method in any period. The annual depreciation based on estimated operating days of each vessel will be at least 20% of annual straight-line depreciation and 40% of cumulative straight-line depreciation.

Impairment of Goodwill

During 2008, the Company sustained a significant decrease in market capitalization below the carrying value of its net book value. Combined with the recent decrease in oil and gas prices and consequently, demand for the Company’s services, a triggering event resulted under SFAS No. 142, Goodwill and Other Intangible Assets. Therefore, the Company tested the recoverability of its goodwill at December 31, 2008 and concluded that no impairment was warranted. Recoverability is determined by comparing the estimated fair value of the reporting unit to which the goodwill applies to the carrying value, including goodwill, of that reporting unit. Changes in assumptions required to estimate the present value of the excess earnings could materially impact the fair value estimate.

Income Taxes

Deferred tax assets in excess of related valuation reserves require considerable judgments and estimates regarding estimated future taxable income and ongoing prudent and feasible tax planning strategies. These estimates and judgments include some degree of uncertainty and changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets. Historically, changes to valuation allowances have been caused by major changes in the business cycle in certain countries and changes in local country law. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions.

We operate in many countries under various legal forms. As a result, we are subject to the jurisdiction of numerous domestic and foreign tax authorities, as well as to tax agreements and treaties among these governments. Our operations in these different jurisdictions are taxed on various bases: actual income before taxes, deemed profits (which are generally determined using a percentage of revenues rather than profits) and withholding taxes based on revenue. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events, such as the amount, timing, and character of deductions, permissible revenue recognition methods under the tax law, and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restriction or our level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of income taxes that we provide during any given year. A 1% change in our effective tax rate would impact our net loss by $1.1 million.

Our tax filings for various periods are subjected to audit by tax authorities in most jurisdictions where we conduct business. These audits may result in assessments of additional taxes that are resolved with the authorities or potentially through the courts. We believe that these assessments may occasionally be based on arbitrary and even erroneous interpretations of local tax law. We have received tax assessments from various taxing authorities and are currently at varying stages of appeals and/or litigation regarding these matters. We have provided for the amounts we believe will ultimately result from these proceedings. We believe we have substantial defenses to the questions being raised and will pursue all legal remedies should an unfavorable outcome result. However, resolution of these matters involves uncertainties, and there are no assurances that the outcomes will be favorable.

In certain situations, we provide for taxes where assessments have not been received. In those situations, we consider it more likely than not the taxes ultimately payable will not exceed those amounts reflected in filed tax returns. Accordingly, taxes are provided in those situations under the guidance in the Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48). Future events, such as changes in the facts or tax law, judicial decisions regarding existing law or a favorable audit outcome, may later indicate the assertion of additional taxes is no longer more likely than not to occur. In such circumstances, it is possible that taxes previously provided would be released.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Due to the international nature of our business operations and the interest rate fluctuation, we are exposed to certain risks associated with changes in foreign currency exchange rates and interest rates.

Foreign Currency Risk

Most of our business operations are conducted in foreign countries that use different currencies. As such, we use natural hedging techniques to manage the foreign exchange risks associated with our foreign operations by contracting, to the extent possible, international construction jobs to be payable in U.S. dollars. We also, to the extent possible, maintain cash balances at foreign locations in U.S. dollar accounts. We believe that a significant change in currency rates in the regions in which we operate could have a significant effect on our results of operations.

From time to time, we also make significant contractual commitments which are denominated in foreign currencies. At December 31, 2008, we had significant contractual commitments which were denominated in Norwegian kroners, Singapore dollars, and Euros. We entered into forward foreign currency contracts, for non-trading purposes, to mitigate our currency risk with respect to our contractual obligations denominated in Norwegian kroners, as further described.

Our Norwegian kroner commitments at December 31, 2008, which result from two long-term vessel charters, will require the use of 223.1 million kroners (or $31.6 million as of December 31, 2008) over the next three years. As of December 31, 2008, we had hedged all of our non-cancellable Norwegian kroner commitments related to these vessel charters at an average rate of 6.29 kroners per dollar. Consequently, a gain or loss from this forward foreign currency contract would be offset by the gain or loss on the underlying commitment and, therefore would not have an impact on our future earnings or cash flows.

At December 31, 2008, we had approximately Nigerian naira 2.0 billion (US $14.3 million) in a demand deposit. We are currently in the process of converting these excess moneys back to US dollars, which requires us to follow a formal repatriation process as directed by the Central Bank of Nigeria. During 2008, we recognized $3.7 million of exchange losses related primarily to naira cash deposits. Based on the recent lack of liquidity and exchange rate volatility in this currency, we believe there is further downside risk to this currency.

The estimated cost to complete capital expenditure projects in progress at December 31, 2008 will require an aggregate commitment of 146.9 million Singapore dollars (or $101.8 million as of December 31, 2008). A 1% increase in the value of the Singapore dollar at December 31, 2008 will increase the dollar value of these commitments by approximately $1.0 million.

As of December 31, 2008, the Company was committed to purchase certain equipment which will require the use of Euros 22.7 million (or $32.0 million as of December 31, 2008) over the next three years. A 1% increase in the value of the euro will increase the dollar value of these commitments by approximately $0.3 million.

Interest Rate Risk

We are exposed to changes in interest rates with respect to our investments in cash equivalents and marketable securities. Our investments consist primarily of commercial paper, bank certificates of deposit, money market funds, treasury securities, and tax-exempt auction rate debt securities. These investments are subject to changes in short-term interest rates. We invest in high grade investments with a credit rating of AA-/Aa3 or better, with a main objective of preserving capital. A 1% increase or decrease in the average interest rate of our cash equivalents and marketable securities would have an approximate $4.2 million impact on our pre-tax annualized interest income.

We are also exposed to interest rate risk on any borrowings against our Revolving Credit Facility with variable interest rate provisions. At December 31, 2008, there were no outstanding borrowings under the Revolving Credit Facility.

Our Senior Convertible Debentures mature in 2027 and carry a fixed interest rate of 2.75%, and our United States Government Guaranteed Ship Financing Bonds mature in 2025 and carry a fixed interest rate of 7.71%. Changes in interest rates do not have an impact on the interest expense for this indebtedness.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the internal control over financial reporting of Global Industries, Ltd. and subsidiaries (the “Company”) as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2008 of the Company and our report dated February 27, 2009 expressed an unqualified opinion on those financial statements and financial statement schedule.

DELOITTE & TOUCHE LLP
Houston, Texas
February 27, 2009

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Global Industries, Ltd. and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index under Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Global Industries, Ltd. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

DELOITTE & TOUCHE LLP
Houston, Texas
February 27, 2009

GLOBAL INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands)

		December 31,
		2008				2007
ASSETS
Current Assets
Cash and cash equivalents		$	287,669			$	723,450
Restricted cash			94,516				1,121
Marketable securities			—				99,935
Accounts receivable — net of allowance of $12,070 for 2008 and $1,278 for 2007			180,018				167,469
Unbilled work on uncompleted contracts			86,011				106,716
Contract costs incurred not yet recognized			11,982				10,821
Deferred income taxes			7,223				3,827
Assets held for sale			2,181				1,002
Prepaid expenses and other			44,585				27,875
Total current assets			714,185				1,142,216
Property and Equipment, net			593,522				349,549
Other Assets
Marketable securities — long-term			42,375				—
Accounts receivable — long-term			22,246				9,315
Deferred charges, net			72,370				43,045
Goodwill			37,388				37,388
Other			3,508				8,285
Total other assets			177,887				98,033
Total		$	1,485,594			$	1,589,798
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long term debt		$	3,960			$	3,960
Accounts payable			207,239				169,034
Employee-related liabilities			26,113				28,366
Income taxes payable			38,649				39,683
Accrued interest payable			5,613				5,827
Advance billings on uncompleted contracts			4,609				36,691
Accrued anticipated contract losses			35,055				—
Other accrued liabilities			12,053				15,638
Total current liabilities			333,291				299,199
Long-Term Debt			386,380				390,340
Deferred Income Taxes			28,941				35,617
Other Liabilities			13,266				11,050
Commitments and Contingencies			—				—
Shareholders’ Equity
Common stock, $0.01 par value, 150,000 authorized, and 119,650 and 118,001 shares issued at December 31, 2008 and 2007, respectively			1,197				1,180
Additional paid-in capital			441,105				418,366
Retained earnings			397,845				515,206
Treasury stock at cost, 6,130 in 2008 and 2,904 in 2007			(105,038	)			(77,257	)
Accumulated other comprehensive loss			(11,393	)			(3,903	)
Total shareholders’ equity			723,716				853,592
Total		$	1,485,594			$	1,589,798

See notes to consolidated financial statements.

GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

		Year Ended December 31,
		2008				2007				2006
Revenues		$	1,070,988			$	992,513			$	1,234,849
Cost of operations			1,084,581				719,768				887,003
Gross profit (loss)			(13,593	)			272,745				347,846
Loss on asset impairments			2,551				141				8,931
Reduction in litigation provision			—				—				(13,699	)
Net gain on asset disposal			(1,695	)			(4,220	)			(6,395	)
Selling, general, and administrative expenses			95,364				81,275				71,109
Operating income (loss)			(109,813	)			195,549				287,900
Interest income			14,477				27,966				8,169
Interest expense			(13,624	)			(13,439	)			(10,787	)
Other income (expense), net			(641	)			3,826				705
Income (loss) from operations before income taxes			(109,601	)			213,902				285,987
Income taxes			7,760				53,942				86,242
Net income (loss)		$	(117,361	)		$	159,960			$	199,745
Earnings (loss) per common share:
Basic		$	(1.03	)		$	1.38			$	1.73
Diluted		$	(1.03	)		$	1.36			$	1.70
Weighted Average Shares Outstanding:
Basic			113,647				116,137				115,632
Diluted			113,647				117,819				117,307

See notes to consolidated financial statements.

GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share data)

																		Accumulated
										Additional								Other
		Common Stock								Paid-In				Treasury				Comprehensive				Retained
		Shares				Amount				Capital				Stock				Loss				Earnings				Total
Balance at Jan. 1, 2006			114,343,661			$	1,144			$	350,550			$	—			$	(8,978	)		$	154,089			$	496,805
Net income			—				—				—				—				—				199,745				199,745
Amortization of unearned stock compensation			—				—				9,721				—				—				—				9,721
Restricted stock issues, net			760,277				7				5,446				—				—				—				5,453
Exercise of stock options			1,053,042				10				9,210				—				—				—				9,220
Tax effect of exercise of stock options			—				—				3,690				—				—				—				3,690
Common stock issued			95,431				1				680				—				—				—				681
Treasury stock purchased			—				—				—				(644	)			—				—				(644	)
Comprehensive income, net of tax:
Gain on derivatives			—				—				—				—				894				—				894
Balance at Dec. 31, 2006			116,252,411			$	1,162			$	379,297			$	(644	)		$	(8,084	)		$	353,834			$	725,565
Net income			—				—				—				—				—				159,960				159,960
Cumulative effect of adopting FIN 48			—				—				—				—				—				1,412				1,412
Amortization of unearned stock compensation			—				—				14,059				—				—				—				14,059
Restricted stock issues, net			203,816				2				2,564				—				—				—				2,566
Exercise of stock options			1,544,559				16				17,669				—				—				—				17,685
Tax effect of exercise of stock options			—				—				4,777				—				—				—				4,777
Common stock issued			—				—				—				—				—				—				—
Treasury stock purchased			—				—				—				(76,613	)			—				—				(76,613	)
Comprehensive income, net of tax:
Gain on derivatives			—				—				—				—				4,181				—				4,181
Balance at Dec. 31, 2007			118,000,786			$	1,180			$	418,366			$	(77,257	)		$	(3,903	)		$	515,206			$	853,592
Net income (loss)			—				—				—				—				—				(117,361	)			(117,361	)
Amortization of unearned stock compensation			—				—				8,375				—				—				—				8,375
Restricted stock issues, net			681,446				7				2,648				—				—				—				2,655
Exercise of stock options			967,628				10				8,595				—				—				—				8,605
Tax effect of exercise of stock options			—				—				3,121				—				—				—				3,121
Common stock issued			—				—				—				—				—				—				—
Treasury stock purchased			—				—				—				(27,781	)			—				—				(27,781	)
Comprehensive income, net of tax:
Loss on derivatives			—				—				—				—				(7,490	)			—				(7,490	)
Balance at Dec. 31, 2008			119,649,860			$	1,197			$	441,105			$	(105,038	)		$	(11,393	)		$	397,845			$	723,716