As filed with the Securities and Exchange Commission on December 13, 2006

Registration No. 333-134609

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Amendment No. 7

to

 

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

CAL DIVE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

400 N. Sam Houston Parkway E., Suite 1000

Houston, Texas 77060

(281) 618-0400

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

 

 

 

G. Kregg Lunsford

400 N. Sam Houston Parkway E., Suite 1000

Houston, Texas 77060

(281) 618-0400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies to:

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this registration statement becomes effective.

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.  o

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED DECEMBER 13, 2006

 

Prospectus

22,173,000 Shares

 

Cal Dive International, Inc.

Common Stock

 

 

 

 

Cal Dive International, Inc. is offering 22,173,000 shares of common stock. We intend to distribute all of the net proceeds from this offering to our parent company, Helix Energy Solutions Group, Inc., as a dividend. See “Use of Proceeds.” This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $14.00 and $16.00 per share.

 

 

 

 

Our common stock has been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol “DVR.”

 

 

 

 

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 10.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

Our parent company, Helix Energy Solutions Group, Inc., has granted the underwriters the right to purchase up to 3,325,950 additional shares of common stock to cover any over-allotments. The underwriters can exercise this right at any time within 30 days after the offering. Any proceeds resulting from the sale of shares by Helix, after deducting underwriting discounts, will be paid to Helix and we will receive no proceeds from the sale of shares by Helix. The underwriters expect to deliver the shares of common stock to investors on or about          , 2006.

 

 

 

 

 

          , 2006

 

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate as of the date on the front of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Information contained in our web site does not constitute part of this prospectus.

 

 

TABLE OF CONTENTS

 

 

SUMMARY

	•	Leader in the Gulf of Mexico OCS diving services market.  We believe the size of our fleet and workforce makes us the market leader for diving services on the Gulf of Mexico OCS. We believe our size advantages allow us to provide the highest-quality diving services on the Gulf of Mexico OCS and result in our leading share of diving services contracts in this market. Furthermore, we expect to achieve similar leadership in new offshore markets due to our superior operating capabilities, international experience, existing relationships with globally focused customers and proven acquisition expertise.
	•	High-quality asset base.  The diversity of our vessels and diving systems, along with the modern features of our saturation diving fleet, positions us among the most technically advanced marine contractors and enables us to provide a wide range of offshore services. We possess complementary

		diving, pipelay and pipe burial capabilities that are often required for more complex subsea projects. As a result, we can effectively execute this higher-margin business while enhancing the utilization of our diving support vessels.

	•	Highly skilled workforce.  The quality of our workforce has been, and will continue to be, a vital contributor to our success. We believe that our high vessel utilization, commitment to effective training and safety, customer relationships and proven operating history help us to attract and retain skilled employees.
	•	Excellent, long-standing customer relationships.  During our more than 30 years operating in the Gulf of Mexico, we have built a reputation as a premier diving services contractor in the region and have developed a large and stable customer base, which includes virtually all of the top 20 energy producers in the Gulf of Mexico.
	•	Successful acquisition track record.  We have a proven track record of identifying and executing acquisitions that complement our fleet and workforce and enhance our service capabilities.
	•	Proven management team with extensive experience in the marine contracting business.  Our senior management team, which has an average of 22 years of industry experience, includes recognized leaders in diving services and offshore construction. We believe the knowledge and experience of our management team provides us a valuable competitive advantage.

	•	Strengthen leadership position on the Gulf of Mexico OCS.  We will seek to expand our leadership position in the Gulf of Mexico OCS diving services market by enhancing the capabilities of our existing assets, making acquisitions of complementary assets or businesses and continuing to provide a high level of customer service. As evidence of our continued success in this market, we recently entered into a new diving services contract with a major oil company, the largest such contract in our history based on potential revenues of approximately $80 million.
	•	Expand into high-growth international markets through acquisitions.  We are continually evaluating potential acquisition targets in high-growth international markets. Our goal is to replicate our Gulf of Mexico OCS leadership in the most attractive international offshore regions by leveraging our operating capabilities, international experience, customer relationships and acquisition expertise.
	•	Continue to attract, develop and retain highly skilled personnel.  Our market leadership and future growth plans are predicated on our ability to employ the most highly skilled divers, supervisors and support staff in the industry. We structure our compensation and benefit plans to be competitive with our peers and invest significant resources in developing the technical, operational and safety skills of our workforce.
	•	Maintain a disciplined cost structure.  We seek to contain the costs of our operations and identify new opportunities to reduce costs. We believe that our cost discipline strategy will enhance our profitability in strong market environments and better position us to withstand market downturns.
	•	Optimize our mix of dayrate and qualified turnkey work.  We seek to optimize the allocation of our resources between dayrate and qualified turnkey work in order to diversify our sources of revenue and enhance overall profitability. We believe that this strategy allows us to respond effectively to the increasing demand from larger customers for integrated solutions while ensuring that a segment of our fleet is positioned to capitalize on attractive opportunities in the spot market.
	•	Improve financial flexibility.  We intend to improve our financial flexibility in the near term by utilizing our strong operating cash flows to reduce the debt incurred by us in connection with this offering. We seek to achieve a more conservative capital structure over the long term so that we may continue to actively pursue value-enhancing growth initiatives and mitigate some of the financial risk associated with a market downturn.

Common stock offered by us		22,173,000 shares
Common stock to be outstanding immediately after completion of this offering		83,679,691 shares
Common stock to be held by Helix immediately after completion of this offering		61,506,691 shares
Percentage of our common stock to be held by Helix immediately after completion of this offering		73.5%
Proposed NYSE symbol		DVR
Use of proceeds		We estimate that the net proceeds from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $307.0 million, assuming an initial public offering price of $15.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. A $1.00 increase (decrease) in the assumed public offering price of $15.00 per share would increase (decrease) the net proceeds to us from this offering and the dividend to Helix by $20.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated expenses and underwriting discounts and commissions payable by us.
		We intend to distribute all of the net proceeds from this offering to Helix as a dividend. If the underwriters exercise their over-allotment option, Helix will sell 3,325,950 additional shares of our common stock to the underwriters to cover any over-allotments. Any proceeds resulting from the sale of shares by Helix, after deducting underwriting discounts, will be paid to Helix and we will receive no proceeds from the sale of shares by Helix. See “Use of Proceeds.”
Dividend policy		Other than the dividends that we declared prior to the effectiveness of this offering and that we intend to pay Helix in connection with this offering, we do not anticipate paying any dividends on our common stock in the foreseeable future.
Risk factors		For a discussion of the risks related to our business, our relationship with Helix, our common stock and this offering, see “Risk Factors” beginning on page 10.

	•	reflects a 61,506.691 to 1 stock split to be effected immediately prior to this offering;
	•	assumes no exercise of the underwriters’ over-allotment option; and
	•	excludes 1,320,309 restricted shares we anticipate granting to certain executive officers and employees in connection with this offering.

	•	the results of operations of the assets acquired from Torch prior to their acquisition in August 2005 because this transaction did not qualify as a “business combination” under FASB Statement No. 141, Business Combinations;

	•	the results of operations of the assets acquired from Fraser Diving prior to their acquisition because such results are immaterial; and
	•	the results of OTSL prior to our equity investment in July 2005 because such results are immaterial.

	•	the third-party indebtedness of $78 million, bearing interest at 6.37% and incurred on December 8, 2006 by a subsidiary of Helix that is being transferred to us in connection with this offering and the proceeds of which were distributed to Helix on December 8, 2006 as a dividend, was outstanding as of September 30, 2006; and

	•	an additional $122 million draw under the same third-party indebtedness, bearing interest at 6.37% and incurred by the same subsidiary following the closing of this offering and the proceeds of which will be distributed to Helix as a dividend, was outstanding as of September 30, 2006.

																										Pro Forma
														Pro Forma												Nine Months
														Year Ended				Nine Months Ended								Ended
		Year Ended December 31,												December 31,				September 30,								September 30,
		2003				2004				2005				2005(1)				2005				2006				2006(1)
														(unaudited)				(unaudited)				(unaudited)				(unaudited)
		(in thousands, except per share and marine contracting activity data)
Results of Operations Data:
Net revenues		$	135,488			$	125,786			$	224,299			$	464,543			$	127,237			$	372,918			$	378,930
Cost of sales			108,479				101,583				152,586				386,794				88,370				204,031				207,322
Gross profit			27,009				24,203				71,713			$	77,749				38,867				168,887			$	171,608
Gain on sale of assets			—				—				270								—				322
Selling and administrative expenses			10,337				12,318				16,730								8,483				25,210
Income from operations			16,672				11,885				55,253								30,384				143,999
Equity in earnings (losses) of investment			—				—				2,817								672				(587	)
Net interest income			—				—				45								22				364
Income before income taxes			16,672				11,885				58,115								31,078				143,776
Provision for income taxes			5,870				4,211				20,385								10,980				50,531
Net income		$	10,802			$	7,674			$	37,730							$	20,098			$	93,245
Net income per common share (unaudited):
Basic and diluted(2)		$	0.18			$	0.12			$	0.61							$	0.33			$	1.52
Pro forma basic and diluted(3)										$	0.39											$	0.96
Other Financial Data:
EBITDA (unaudited)(4)		$	31,881			$	27,395			$	73,378							$	41,670			$	160,459
Depreciation and amortization			15,209				15,510				15,308								10,614				17,047
Capital expenditures			2,784				2,912				36,407								31,678				21,055
Acquisition of businesses			—				—				42,917								—				100,660
Cash Flow Data(5):
Cash flows provided by (used in):
Operating activities		$	26,370			$	28,610			$	32,228							$	15,788			$	107,832
Investing activities			(2,584	)			(2,912	)			(79,547	)							(31,104	)			(106,036	)
Financing activities			(23,786	)			(25,698	)			47,319								15,316				252
Marine Contracting Activity Data (unaudited):
Number of vessels(6)			13				13				22								13				25
Utilization(7)			68	%			63	%			79	%							72	%			95	%

		December 31,												September 30, 2006
		2003				2004				2005				Historical				Pro Forma
		(unaudited)												(unaudited)				(unaudited)
		(in thousands)
Balance Sheet Data:
Total current assets		$	43,270			$	46,565			$	110,484			$	125,936			$	123,888
Net property and equipment			91,533				76,329				113,604				221,530				221,530
Total assets			156,280				144,817				277,884				405,357				403,309
Total current liabilities			21,165				27,438				73,869				101,865				101,865
Long-term debt			—				—				—				—				200,000
Total liabilities			45,748				52,309				100,101				132,256				331,033
Total owner’s equity			110,532				92,508				177,783				273,101				72,276

(1)		Since a statement of revenue and direct operating expenses for the assets acquired from Acergy is presented elsewhere in this prospectus instead of a full statement of operations, the pro forma information for the year ended December 31, 2005 and the nine months ended September 30, 2006 set forth above is limited to a presentation of net revenues, cost of sales and gross profit.
(2)		Basic and diluted net income per share are based upon 61,506,691 shares outstanding to be held by Helix. These shares reflect a 61,506.691 to 1 stock split to be effected immediately prior to this offering.

(3)		Unaudited pro forma basic and diluted net income per share have been calculated using the sum of the 61,506,691 shares that will be owned by Helix at the completion of this offering, the 22,173,000 shares to be issued in this offering with the net proceeds to be distributed to Helix as a dividend and the 13,333,333 shares that we would have been required to issue to fund a $78 million dividend distributed to Helix on December 8, 2006, and a $122 million dividend to be distributed to Helix following the closing of this offering for which a total of $200 million of debt will be assumed by us.

(4)		In addition to net income, we evaluate our financial performance based on other factors, one primary measure of which is earnings before net interest expense, taxes, depreciation and amortization, which we refer to as EBITDA. We use EBITDA as a measure of the operational strengths and performance of our business and not as a measure of liquidity. However, a limitation of the use of EBITDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Accordingly, EBITDA should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among companies; thus, EBITDA as presented below may not be comparable to similarly titled measures of other companies.

	•	it is widely used by investors in our industry to measure a company’s operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and
	•	it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation and amortization of our vessels) from our operating results.

	•	as a measure of operating performance because it assists us in comparing our performance on a consistent basis as it removes the impact of our capital structure and asset base from our operating results;
	•	in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management;
	•	as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations;
	•	to assess compliance with financial ratios and covenants that will be included in our revolving credit facility; and
	•	in communications with lenders, rating agencies and others, concerning our financial performance.

														Nine Months Ended
		Year Ended December 31,												September 30,
		2003				2004				2005				2005				2006
														(unaudited)				(unaudited)
		(in thousands)
EBITDA (unaudited)		$	31,881			$	27,395			$	73,378			$	41,670			$	160,459
Less: Depreciation and amortization			15,209				15,510				15,308				10,614				17,047
Plus: Net interest income			—				—				45				22				364
Less: Provision for income taxes			5,870				4,211				20,385				10,980				50,531
Net income		$	10,802			$	7,674			$	37,730			$	20,098			$	93,245

(5)		Cash flows from financing activities have been reflected as (a) cash transfers from us to Helix equal to substantially all cash provided by operating activities and (b) cash transfers from Helix to us equal to the amount of cash used in investing activities. Substantially all excess cash has been transferred to our owner. These cash transfers have been reflected as changes in total owner’s equity.
(6)		As of the end of the period and excluding acquired vessels prior to their in-service dates, vessels taken out of service prior to their disposition and vessels jointly owned by a third party.
(7)		Average vessel utilization is calculated by dividing the total number of days the vessels generated revenues by the total number of days the vessels were available for operation in each period and does not reflect acquired vessels prior to their in-service dates, vessels in drydocking, vessels taken out of service prior to their disposition and vessels jointly owned by a third party.

 

An investment in our common stock involves various risks. You should carefully consider the following risks and all of the other information contained in this prospectus before investing in our common stock. The risks described below are those which we believe are the material risks that we face. These risks could materially adversely affect our business, financial condition or results of operations. In such an event, the trading price of our common stock could decline and you could lose part or all of your investment.

 

Risks Related to Our Business

 

Our business largely depends on offshore exploration, development and production activity in the oil and natural gas industry, which is currently at a historically high level and could decline in the future.

 

Our business is substantially dependent upon the condition of the oil and natural gas industry and, in particular, the willingness of oil and natural gas companies to make capital expenditures for offshore exploration, development and production operations. The level of capital expenditures generally depends on the prevailing views of future oil and natural gas prices, which are influenced by numerous factors, including but not limited to:

 

 

Oil and natural gas prices are currently at historically high levels and recent capital spending levels may not remain the same or increase. A sustained period of low offshore drilling and production activity or the return of lower commodity prices would likely have a material adverse effect on our business, financial condition or results of operations.

 

Market conditions in the marine contracting industry are highly cyclical and subject to rapid change. Due to the short-term nature of most of our contracts, adverse changes in market conditions can have an immediate impact on our results of operations.

 

Historically, the marine contracting industry has been highly cyclical, with periods of high demand and high dayrates often followed by periods of low demand and low dayrates. Periods of low demand intensify the competition in the industry and can result in vessels and diving systems being idle. We may be required to idle vessels or diving systems or reduce contract rates in response to market conditions in the future. On the Gulf of Mexico OCS, contracts are generally short-term, and oil and natural gas companies tend to respond quickly to changes in commodity prices. Due to the short-term nature of most of our contracts, changes in market conditions can have an immediate impact on our results of operations. In addition, customers generally have

the right to terminate our contracts with little or no notice, and without penalty. As a result of the cyclicality of our industry, we expect our results of operations to be volatile.

 

Our business is concentrated on the Gulf of Mexico OCS, and the mature nature of this region could result in less exploration, development and production activities in the area, thereby reducing demand for our services.

 

The Gulf of Mexico OCS is a mature oil and natural gas production region that has experienced substantial exploration, development and production activity for many years. Because a large number of oil and natural gas prospects in this region have already been drilled, additional prospects of sufficient size and quality could be more difficult to identify. Moreover, oil and natural gas companies may be unable to obtain financing necessary to drill prospects in this region. The decrease in the size of oil and natural gas prospects, the decrease in production or the failure to obtain such financing may result in reduced exploration, development and production activity in the Gulf of Mexico and reduced demand for our services.

 

Intense competition in our industry may reduce our profitability and weaken our financial condition.

 

The businesses in which we operate are highly competitive. Our contracts traditionally have been awarded on a competitive bid basis, and while customers may consider, among other things, the reputation, safety record and experience of the contractor, price competition is often the primary factor in determining which qualified contractor is awarded a job. This competition has become more intense in recent years as mergers among oil and natural gas companies have reduced the number of available customers. Contract pricing is in part dependent on the supply of competing vessels. Generally, excess offshore service capacity puts downward pressure on contract rates. If other companies construct new vessels or relocate existing vessels to our markets, competition may further increase, driving down the rates we may charge our customers. We believe that the competition for contracts will continue to be intense in the foreseeable future. The impairment of our ability to compete successfully may reduce our profitability and weaken our financial condition.

 

If we fail to manage our growth effectively, our results of operations could be harmed.

 

We have a history of growing through acquisitions of companies and assets. We must plan and manage our acquisitions effectively to achieve revenue growth and maintain profitability in our evolving market. If we fail to manage current and future acquisitions effectively, our results of operations could be adversely affected. Our growth has placed, and is expected to continue to place, significant demands on our personnel, management and other resources. We must continue to improve our operational, financial, management and legal/compliance information systems to keep pace with the growth of our business.

 

Any future acquisitions could present a number of risks, including but not limited to:

 

 

If we are unsuccessful in completing acquisitions of other businesses or assets, our business, financial condition or results of operations could be adversely affected. In addition, if we are unsuccessful in integrating our acquisitions in a timely and cost-effective manner, our business, financial condition or results of operations could be adversely affected.

Our operations outside of the United States are subject to additional political, economic, and other uncertainties that could adversely affect our business, financial condition or results of operations, and our exposure to such risks will increase as we expand our international operations.

 

An element of our business strategy is to expand into international oil and natural gas producing areas such as Southeast Asia, the Middle East and Trinidad. Our operations outside of the United States are subject to risks inherent in foreign operations, including but not limited to:

 

 

In addition, laws and policies of the United States affecting foreign trade and taxation may also adversely affect our international operations.

 

As our international operations expand, the exposure to these risks will increase. Our business, financial condition or results of operations could be susceptible to adverse events beyond our control that may occur in the particular country or region in which we are active.

 

We are the subject of an agreed final judgment that prevents us from making acquisitions of certain vessels without the consent of the U.S. Department of Justice, which could adversely affect our ability to make strategic acquisitions and increase our revenues and profitability.

 

As part of the Acergy and Torch acquisitions in 2005, Helix entered into an agreed final judgment with the U.S. Department of Justice, or DOJ, to remedy certain anti-competitive effects of the acquisitions alleged by the DOJ. The final judgment requires Helix, until January 2009, to notify the DOJ of any proposed direct or indirect acquisition of a saturation diving chamber that has been operated in the Gulf of Mexico at any time since October 1, 2002 or any interest in a company that owns or operates such a chamber. We are also subject to and will continue to be bound by the consent decree. Since we are not able to make any acquisition of this type without obtaining the consent of the DOJ, our ability to satisfy our customers’ demands for services that require us to use saturation diving chambers and to generate revenues from these services may be limited.

 

The loss of the services of one or more of our key employees, or our failure to attract and retain other highly qualified personnel in the future, could disrupt our operations and adversely affect our financial results.

 

Our industry has lost a significant number of experienced subsea professionals over the years due to, among other reasons, the cyclicality of our business. Our continued success depends on the active participation of our key employees. The loss of one or more of our key people could adversely affect our operations. We believe that our success and continued growth are also dependent upon our ability to attract and retain skilled personnel. Unionization or a significant increase in the wages paid by other employers could result in a reduction in our workforce, increases in the wage rates we pay, or both. If either of these events occurs for any

significant period of time, our revenues and profitability could be diminished and our growth potential could be impaired.

 

The operation of marine vessels is risky, and we may incur losses or other liabilities that are not covered by insurance and could have a material adverse effect on our financial condition and results of operations.

 

Marine contracting involves a high degree of operational risk. Hazards, such as vessels sinking, grounding, colliding and sustaining damage from severe weather conditions, are inherent in marine operations. These hazards can cause personal injury or loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. Damage arising from such occurrences may result in lawsuits asserting large claims. We maintain such insurance protection as we deem prudent, including Jones Act employee coverage, which is the maritime equivalent of workers’ compensation, and hull insurance on our vessels. Such insurance may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. A successful claim for which we are not fully insured could have a material adverse effect on our business, financial condition or results of operations. Moreover, our ability to maintain adequate insurance in the future at rates that we consider reasonable may be limited. As a result of market conditions, premiums and deductibles for certain of our insurance policies have increased substantially and could escalate further. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. For example, insurance carriers are now requiring broad exclusions for losses due to war risk and terrorist acts and limitations for wind storm damage. The current insurance on our vessels, in some cases, is in amounts approximating book value, which is less than replacement value. In the event of property loss due to a catastrophic marine disaster, mechanical failure or collision, insurance may not cover a substantial loss of revenues, increased costs and other liabilities, and could have a material adverse effect on our operating performance if we were to lose any of our large vessels.

 

After this offering, we will have substantial debt obligations that could restrict our operations and impair our financial condition.

 

We intend to distribute all of the net proceeds from this offering to Helix as a dividend. See “Use of Proceeds.” In addition, after this offering, we will be party to a $250 million five-year revolving credit facility. On December 8, 2006, the subsidiary of ours that acts as borrower under the facility borrowed $79 million under the facility, of which $78 million was distributed to Helix as a dividend. Following the closing of this offering, that subsidiary is expected to borrow another $122 million under the facility, all of which is to be distributed to Helix as a dividend. Therefore, we will not have the availability of the proceeds from this offering or the draw downs from our credit facility for our continuing operations or debt service. We expect to use the remaining availability under the facility for working capital and other general corporate purposes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Revolving Credit Facility.”

 

This substantial indebtedness could have adverse consequences on us, including:

 

 

If our cash flow and capital resources are insufficient to service our debt obligations, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, seek additional equity or debt capital or restructure or refinance our debt. However, these measures might be unsuccessful or inadequate in permitting us to meet our scheduled debt service obligations. We may be unable to restructure or refinance our obligations or obtain additional equity financing or sell assets on satisfactory terms or at all. As a result, an

inability to meet our debt obligations could cause us to default on those obligations. A default under any debt instrument could, in turn, result in defaults under other debt instruments. Any such defaults could materially impair our financial condition and liquidity.

 

Our contracting business declines in winter, and bad weather in the Gulf of Mexico can adversely affect our revenues.

 

Marine operations conducted in the Gulf of Mexico are typically seasonal and depend, in part, on weather conditions. Historically, we have experienced our lowest vessel utilization rates during the first quarter, and to a lesser extent during the fourth quarter, when weather conditions are least favorable for offshore exploration, development and construction activities. As is common in the industry, we typically bear the risk of delays caused by some, but not all, adverse weather conditions. Accordingly, our results in any one quarter are not necessarily indicative of annual results or continuing trends.

 

Our original estimates of the costs associated with our qualified turnkey projects may be incorrect and result in reduced profitability or losses on those projects.

 

Many of our projects are performed on a qualified turnkey basis where a defined work scope is delivered for a fixed price and extra work, which is subject to customer approval, is billed separately. The revenue, cost and gross profit realized on a turnkey contract can vary from the estimated amount because of changes in offshore job conditions, variations in labor and equipment productivity from the original estimates, and the performance of others, such as alliance partners. These variations and risks inherent in the marine construction business may result in our experiencing reduced profitability or losses on projects.

 

We are subject to extensive federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations.

 

Our subsea construction, intervention, inspection, maintenance and decommissioning operations are subject to extensive laws and regulations. In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. Due to adverse operating market conditions or unfavorable financing conditions, there may be occasions when certain recertification efforts may be postponed, rendering certain vessel operations temporarily out of commission, until more favorable market or cost of capital conditions arise. For example, the DP DSV Witch Queen, which generated $13.0 million of revenues in 2003, was taken out of service for substantially all of 2004 due to market conditions and a pending, costly regulatory drydock. In addition, our costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to our operations that may, for instance, require us to obtain additional permits, approvals and certificates for proposed projects. Any actual or alleged violation of permit requirements or failure to obtain any required permit could result in restrictions or prohibitions on our operations or criminal sanctions. Alternatively, we may have to incur substantial expenditures to obtain, maintain or renew authorizations to conduct existing projects. If a project is unable to function as planned due to changing requirements or local opposition, we may suffer expensive delays, extended periods of non-operation or significant loss of value in a project. All such costs may have a negative effect on our business, financial condition or results of operations. Failure to comply with such laws and regulations, as interpreted and enforced, could have a material adverse effect on our business, financial condition or results of operations. See “Business — Government Regulation.”

 

We may incur substantial costs and liabilities with respect to environmental, health and safety laws and regulations.

 

We may incur substantial costs and liabilities as a result of environmental, health and safety requirements relating to, among other things, our subsea construction and intervention, inspection, maintenance and decommissioning operations. These costs and liabilities could arise under a wide range of environmental, health and safety laws, including regulations and enforcement policies, which have tended to become increasingly strict over time. Failure to comply with these laws and regulations may result in assessment of

administrative, civil, and criminal penalties, imposition of cleanup and site restoration costs and liens, and the issuance of orders enjoining or limiting our current or future operations. Compliance with these laws and regulations also increases the cost of our operations and may prevent or delay the commencement or continuance of a given operation. In addition, claims for damages, including damages for natural resources, to persons or property may result from environmental and other impacts of our operations.

 

Strict, joint and several liability to remediate contamination may be imposed under certain environmental laws, which could cause us to become liable for, among other things, the conduct of others or for consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken. New or modified environmental, health or safety laws, regulations or enforcement policies could be more stringent and impose unforeseen liabilities or significantly increase compliance costs. Therefore, the costs to comply with environmental, health or safety laws or regulations or the liabilities incurred in connection with them could significantly and adversely affect our business, financial condition or results of operations. See “Business — Environmental Regulation.”

 

Risks Related to Our Relationship with Helix

 

We have no operating history as an independent company and our historical and pro forma combined financial information is not necessarily representative of the results we would have achieved as an independent publicly traded company and may not be a reliable indicator of our future results.

 

The historical and pro forma combined financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows we would have achieved as an independent publicly traded company during the periods presented or those results we will achieve in the future. This is primarily a result of the following factors:

 

 

Helix owns a controlling interest in our company. The interests of Helix may conflict with those of our other stockholders, and other stockholders’ voting power may be limited.

 

After this offering, Helix will own approximately 73.5% of the outstanding shares of our common stock. For so long as Helix continues to own shares of our common stock representing more than 50% of the total voting power of our stock, it will have the ability to direct the election of all members of our board of

directors and to exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations involving us, or acquisition or disposition of assets, the incurrence of indebtedness by us, the issuance of any additional common stock or other equity securities by us, the repurchase or redemption of common stock or preferred stock by us and the payment of dividends by us. Similarly, Helix will have the power to determine or significantly influence the outcome of matters submitted to a vote or our stockholders, including the power to prevent an acquisition or any other change in control of us. Because Helix’s interests as our controlling stockholder may differ from your interests, actions taken by Helix with respect to us may not be favorable to you.

 

Prior to the completion of this offering, we also will enter into a Master Agreement, a Corporate Services Agreement and a number of other agreements with Helix setting forth various matters governing our relationship with Helix while it remains a significant stockholder in us. For a description of these agreements, see “Arrangements Between Helix and Us.” These agreements will govern our relationship with Helix after this offering and will allow Helix to retain control over, among other things, the provision of corporate services to us and our ability to make certain acquisitions or to merge or consolidate or to sell all or substantially all our assets. The rights of Helix under these agreements may allow Helix to delay or prevent an acquisition of us that our other stockholders may consider favorable. We will not be able to terminate these agreements or amend them in a manner we deem more favorable so long as Helix continues to own shares of our common stock representing more than 50% of the total voting power of our common stock. See “Description of Capital Stock” and “Arrangements Between Helix and Us.”

 

Conflicts of interest may arise between Helix and us that could be resolved in a manner unfavorable to us.

 

Questions relating to conflicts of interest may arise between Helix and us in a number of areas relating to our past and ongoing relationships. After this offering, two of our directors will continue to serve as directors and executive officers of Helix and one of our prospective directors will continue to serve as a director of Helix. For as long as Helix continues to own shares of our common stock representing more than 50% of the total voting power of our common stock, it will have the ability to direct the election of all the members of our board of directors and to exercise a controlling influence over our business and affairs.

 

Areas in which conflicts of interest between Helix and us could arise include, but are not limited to, the following:

 

 

If Helix engages in the same type of business we conduct or takes advantage of business opportunities that might be attractive to us, our ability to operate successfully and expand our business may be hampered.

 

Our amended and restated certificate of incorporation provides that, subject to any contractual provision to the contrary, Helix will have no obligation to refrain from:

 

 

In addition, the corporate opportunity policy set forth in our amended and restated certificate of incorporation addresses potential conflicts of interest between our company, on the one hand, and Helix and its officers and directors who are officers or directors of our company, on the other hand. The policy provides that if Helix acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both Helix and us, we will have renounced our interest in the corporate opportunity. It also provides that if one of our directors or officers who is also a director or officer of Helix learns of a potential transaction or matter that may be a corporate opportunity for both Helix and us, we will have renounced our interest in the corporate opportunity, unless that opportunity is expressly offered to that person in writing solely in his or her capacity as our director or officer.

 

If one of our officers or directors, who also serves as a director or officer of Helix, learns of a potential transaction or matter that may be a corporate opportunity for both Helix and us, our amended and restated certificate of incorporation provides that the director or officer will have no duty to communicate or present that corporate opportunity to us and will not be liable to us or our stockholders for breach of fiduciary duty by reason of Helix’s actions with respect to that corporate opportunity.

 

This policy could result in Helix having rights to corporate opportunities in which both we and Helix have an interest. We are unaware of any intention by Helix to take advantage of business opportunities that might be attractive to us.

 

By becoming a stockholder in our company, you will be deemed to have notice of and have consented to these provisions of our amended and restated certificate of incorporation. See “Description of Capital Stock — Corporate Opportunity.”

 

Future sales or distributions of our shares by Helix could depress the market price for shares of our common stock.

 

After this offering, Helix may sell all or part of the shares of our common stock that it owns or distribute those shares to its stockholders, including pursuant to demand registration rights described herein. Sales or distributions by Helix of substantial amounts of our common stock in the public market or to its stockholders could adversely affect prevailing market prices for our common stock. Helix is not subject to any contractual obligation that would prohibit it from selling, spinning off, splitting off or otherwise disposing of any shares of our common stock, except that Helix has agreed not to sell, spin off, split off or otherwise dispose of any of our shares of common stock for a period of 180 days after the date of this prospectus without the prior written consent of Banc of America Securities LLC and J.P. Morgan Securities Inc., subject to certain limitations and limited exceptions. Consequently, Helix may not maintain its ownership of our common stock after the 180-day period following this offering.

We may be unable to replace the corporate services Helix provides us in a timely manner or on comparable terms.

 

We will enter into a Corporate Services Agreement with Helix prior to the completion of this offering. Pursuant to the Corporate Services Agreement, Helix and its affiliates will agree to provide us with corporate services after this offering, including treasury and other financial services, employment benefit services and insurance, information systems and network services. The Corporate Services Agreement will require Helix and us to utilize these services in the conduct of its business until such time as Helix owns less than 50% of the total voting power of our common stock.

 

We are negotiating these arrangements with Helix in the context of a parent-subsidiary relationship. Although Helix will be contractually obligated to provide us with services during the term of the Corporate Services Agreement, we may not be able to obtain services of similar scope and quality after the expiration of that agreement. In addition, our costs of procuring those services from third parties may increase. See “Arrangements Between Helix and Us — Relationship with Helix.”

 

We will not have control over certain tax decisions and could be liable for income taxes owed by Helix.

 

Prior to the closing of this offering, we and certain of our subsidiaries will be included in Helix’s consolidated group for U.S. federal income tax purposes. In addition, we or one or more of our subsidiaries may be included in the combined, consolidated or unitary tax returns of Helix or one or more of its subsidiaries for foreign, state and local income tax purposes. Under the Tax Matters Agreement, Helix will have the right to prepare and file income tax returns that include us or our subsidiaries if Helix has any responsibility for the taxes shown on such income tax returns. The Tax Matters Agreement provides that Helix will have sole authority to respond to and conduct all tax proceedings (including tax audits) relating to such income tax returns. This arrangement may result in conflicts of interest between Helix and us. For example, under the Tax Matters Agreement, Helix will be able to choose to contest, compromise or settle any adjustment or deficiency proposed by the relevant taxing authority in a manner that may be beneficial to Helix and detrimental to us.

 

Moreover, notwithstanding the Tax Matters Agreement, U.S. federal tax law provides that each member of a consolidated group is liable for the group’s entire tax obligation. Thus, to the extent Helix or other members of the consolidated group fail to make any U.S. federal income tax payments required by law for tax periods for which we or our subsidiaries are included in Helix’s consolidated group, we could be liable for the shortfall. Similar principles may apply for foreign, state and local income tax purposes where we file combined, consolidated or unitary returns with Helix or its subsidiaries for foreign, state and local income tax purposes.

 

We could be responsible for taxes resulting from the transfer of assets to us by Helix.

 

To effect the separation, Helix will, and will cause its affiliates to, transfer to us the assets related to our business not currently owned by us, as described in this prospectus. Under the Tax Matters Agreement, Helix is generally responsible for any taxes resulting from such transfer. However, under the Tax Matters Agreement, we have agreed to be responsible for any additional taxes that may result from actions we take following the closing of this offering.

 

Risks Related to Our Common Stock and This Offering

 

There is no existing market for our common stock, and a trading market that will provide you with adequate liquidity may not develop.

 

Prior to this offering, there has been no public market for our common stock. We intend to apply to list our common stock on the NYSE. An active trading market may not develop for our common stock, which may make it more difficult for you to sell your shares. Negotiations between us and the representatives of the underwriters will determine the initial public offering price and may not be indicative of the market price of

our common stock that will prevail in the trading market. You may not be able to sell your shares at or above the initial public offering price.

 

The market price for our shares of common stock may be highly volatile and could be subject to wide fluctuations.

 

The market price of our common stock may also be influenced by many factors, some of which are beyond our control, including:

 

 

In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of these companies. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our stock price.

 

In the past, some companies that have had volatile market prices for their securities have been subject to securities class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial legal costs and a diversion of our management’s attention and resources. This could have a material adverse effect on our business, financial condition or results of operations.

 

Our stock ownership by Helix, provisions in our agreements with Helix and our corporate governance documents and Delaware law may delay or prevent an acquisition of us that our other stockholders may consider favorable, which could decrease the value of your shares of common stock.

 

After this offering, for as long as Helix continues to own shares of our common stock representing more than 50% of the total voting power of our common stock, it will have the ability to control decisions regarding an acquisition of us by a third party. In addition, our amended and restated certificate of incorporation, bylaws and Delaware law contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions include restrictions on the ability of our stockholders to remove directors, supermajority voting requirements for stockholders to amend our organizational documents,

restrictions on a classified board of directors and limitations on action by our stockholders by written consent. Some of these provisions, such as the limitation on stockholder action by written consent, only become effective once Helix no longer controls us. In addition, our board of directors has the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Delaware law also imposes certain restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding voting stock. These restrictions under Delaware law do not apply to Helix until it beneficially owns less than 15% of our common stock and subsequently increases its shareholdings to once again beneficially own at least 15% of our common stock. Although we believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics and thereby provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders. See “Description of Capital Stock.”

 

We currently do not intend to pay dividends on our common stock.

 

Other than the dividends that we declared prior to the effectiveness of this offering and that we intend to pay to Helix in connection with this offering, we do not expect to pay dividends on our common stock in the foreseeable future. We are a holding company with no independent operations and no significant assets other than the stock of our subsidiaries. We therefore are dependent upon the receipt of dividends or other distributions from our subsidiaries to pay dividends. Accordingly, if you purchase shares in this offering, the price of our common stock must appreciate in order to realize a gain on your investment. This appreciation may not occur.

 

You will suffer an immediate and substantial dilution in the net tangible book value of the common stock you purchase.

 

We estimate that the initial public offering price of our common stock will be $15.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. This amount is substantially higher than the pro forma as adjusted net tangible book value that our outstanding common stock will have immediately after this offering. Accordingly, purchasers of common stock in this offering will experience immediate and substantial dilution of approximately $14.48 per share in net tangible book value of the common stock. See “Dilution.”

 

You may experience dilution of your ownership interests due to the future issuance of additional shares of our common stock.

 

We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of our present shareholders and purchasers of common stock offered hereby. Following the closing of this offering, we will be authorized to issue 240 million shares of common stock and 5 million shares of preferred stock with preferences and rights as determined by our board of directors. Pursuant to our long-term incentive plan, we will also reserve 7 million shares of our common stock for future issuance as restricted stock, stock options or other equity-based grants to employees and directors. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with the hiring of personnel, future acquisitions, future private placements of our securities for capital raising purposes or for other business purposes. At the close of this offering, the potential issuance of additional shares of common stock may create downward pressure on the trading price of our common stock.

 

All statements other than statements of historical facts included in this prospectus, including but not limited to, statements regarding our future financial position, business strategy, budgets, projected costs, savings and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations (“cautionary statements”) are disclosed under “Risk Factors” and elsewhere in this prospectus, including but not limited to, in conjunction with the forward-looking statements included in this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements included in this prospectus.

 

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this prospectus and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

 

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $307.0 million, assuming an initial public offering price of $15.00 per share of common stock, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. We estimate that a $1.00 increase (decrease) in the assumed public offering price of $15.00 per share would increase (decrease) the net proceeds to us from this offering and the dividend to Helix by $20.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated expenses and underwriting discounts and commissions payable by us.

 

We intend to distribute all of the net proceeds from this offering to Helix as a dividend. If the underwriters exercise their over-allotment option, Helix will sell 3,325,950 additional shares of our common stock to the underwriters to cover any over-allotments. Any proceeds resulting from the sale of shares by Helix, after deducting underwriting discounts, will be paid to Helix and we will receive no proceeds from the sale of shares by Helix.

 

Other than the dividends that we declared prior to the effectiveness of this offering and that we intend to pay to Helix in connection with this offering, we do not anticipate paying any dividends on the shares of our common stock in the foreseeable future. If cash dividends were to be paid on our common stock, holders of common stock would share equally, on a per share basis, in any such cash dividend.

 

The following table sets forth our combined cash and cash equivalents and our combined capitalization as of September 30, 2006, adjusted to give effect to:

 

 

An increase or decrease in the assumed public offering price would have no effect on our cash and cash equivalents, additional paid-in capital, total owner’s equity or total capitalization because any such increase or decrease will be reflected solely in the proceeds to be paid to Helix as a dividend. This table should be read in conjunction with our selected combined financial data and the combined financial statements and notes thereto included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

 

 

 

Our net tangible book value at September 30, 2006 was approximately $243.2 million, or $3.95 per share of our common stock. Net tangible book value per share represents our total tangible assets reduced by our total liabilities and divided by the number of shares of common stock outstanding. Adjusted net tangible book value gives effect to the $200 million of third-party indebtedness incurred by us in connection with this offering. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Revolving Credit Facility.” As of September 30, 2006, we had an adjusted net tangible book value of $43.2 million, or $0.70 per share of common stock. Dilution in adjusted net tangible book value per share represents the difference between the amount per share that you pay in this offering and the pro forma adjusted net tangible book value per share immediately after this offering.

 

After giving effect to the receipt of the estimated net proceeds from the sale by us of 22,173,000 shares, assuming an initial public offering price of $15.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and the application of the estimated net proceeds therefrom as described under “Use of Proceeds,” our pro forma adjusted net tangible book value at September 30, 2006, would have been $43.2 million, or $0.52 per share of common stock. The offering represents an immediate $0.18 decrease in adjusted net tangible book value per share to existing stockholders and an immediate $14.48 decrease in pro forma adjusted net tangible book value per share to you. The following table illustrates the dilution:

 

 

 

An increase or decrease in the assumed initial public offering price would have no effect on our net tangible book value per share after this offering or the dilution per share to new investors in this offering because any such increase or decrease will be reflected solely in the proceeds to be paid to Helix as a dividend.

 

The following table sets forth, as of September 30, 2006, the differences between the amounts paid or to be paid by the groups set forth in the table with respect to the aggregate number of shares of our common stock acquired or to be acquired by each group:

 

 

If the underwriters’ over-allotment option is exercised in full, the number of shares of common stock held by existing stockholders will be reduced to 58,180,741, or 69.5% of the aggregate number of shares of common stock outstanding after this offering, and the number of shares of common stock held by new investors will be increased to 25,498,950, or 30.5% of the aggregate number of common stock outstanding after this offering.

 

The following table sets forth unaudited pro forma combined financial data of Cal Dive International, Inc.

 

We have prepared our combined financial statements as if Cal Dive International, Inc. had been in existence as a separate company throughout all relevant periods. The pro forma combined statement of operations data for the year ended December 31, 2005 presented below was derived from our audited combined financial statements and the accompanying notes thereto included elsewhere in this prospectus.

 

The pro forma combined statement of operations data for the nine months ended September 30, 2006 and the pro forma combined balance sheet data as of September 30, 2006 presented below were derived from our unaudited condensed combined financial statements and the accompanying notes thereto included elsewhere in this prospectus. The operating results for the nine months ended September 30, 2006 include all adjustments (consisting only of normal recurring adjustments) that we believe are necessary for a fair statement of the results for such interim period.

 

Our unaudited pro forma results of operations data is presented for the year ended December 31, 2005 as if the acquisition of the Acergy business was completed on January 1, 2005.

 

Our unaudited pro forma combined financial data as of and for the year ended December 31, 2005 do not include:

 

 

Our unaudited pro forma combined results of operations data for the nine months ended September 30, 2006 are presented as if the acquisition of the Acergy business was completed on January 1, 2005.

 

Our unaudited pro forma combined results of operations data for the nine months ended September 30, 2006 do not include the results of operations of the assets acquired from Fraser Diving prior to their acquisition because such results are immaterial.

 

Our unaudited pro forma combined balance sheet as of September 30, 2006 is presented assuming:

 

 

 

The unaudited pro forma information set forth below is based upon available information and assumptions that we believe are reasonable. The historical financial and other data have been prepared on a combined basis from Helix’s consolidated financial statements using the historical results of operations and bases of assets and liabilities of Helix’s shallow water marine contracting business and give effect to allocations of expenses from Helix to us and from us to Helix. The costs to operate our business as a standalone public entity may exceed the historical allocations of expenses related to areas that include but are not limited to litigation and other legal matters, compliance with the Sarbanes-Oxley Act and other corporate compliance matters, insurance and claims management and the related cost of insurance, as well as general overall purchasing power. These possible increased costs are not included in the pro forma information as their impact on our results of operations cannot be reasonably estimated. The unaudited pro forma information is

for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had this offering occurred on the dates indicated. The unaudited pro forma information also should not be considered representative of our future financial condition or results of operations.

 

You should read the information contained in this table in conjunction with “Selected Historical Combined Financial Data,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical audited and unaudited combined financial statements and the accompanying notes thereto of us and our combined subsidiaries included elsewhere in this prospectus.

 

Unaudited Pro Forma Combined Statement of Operations(1)
(in thousands, except per share data)

 

 

 

Unaudited Pro Forma Combined Balance Sheet
(in thousands)

 

 

 

 

 

The historical financial and other data have been prepared on a combined basis from Helix’s consolidated financial statements using the historical results of operations and bases of the assets and liabilities of the shallow water marine contracting business of Helix and give effect to allocations of expenses from Helix. Our historical financial data will not necessarily be indicative of our future performance nor will such data necessarily reflect what our financial position and results of operations would have been had we operated as an independent publicly traded company during the periods shown.

 

We have prepared our combined financial statements as if Cal Dive International, Inc. had been in existence as a separate company throughout all relevant periods. The combined results of operations data and cash flow data for the years ended December 31, 2003, 2004 and 2005 and the combined balance sheet data as of December 31, 2004 and 2005 presented below were derived from our audited combined financial statements and the related notes thereto included elsewhere in this prospectus. The combined results of operations data and cash flow data for the years ended December 31, 2001 and 2002 and for the nine months ended September 30, 2005 and 2006 and the combined balance sheet data as of September 30, 2006 presented below were derived from our unaudited combined financial statements and accompanying notes thereto included elsewhere in this prospectus. The combined balance sheet data as of December 31, 2001, 2002 and 2003 presented below were derived from our unaudited combined financial statements. The operating results for the nine months ended September 30, 2005 and 2006 include all adjustments (consisting only of normal recurring adjustments) that we believe are necessary for a fair statement of the results for such interim periods.

 

The operating results of the acquired vessels from the Torch asset purchase are included in these historical combined statements of operations since the acquisition date of August 31, 2005. The operating results of the assets acquired from Acergy during 2005 are included in the accompanying historical combined statements of operations since the acquisition date of November 1, 2005. Our combined statements of operations do not include the operating results of the DLB801 or the Kestrel prior to their acquisitions in January and March 2006, respectively. The operating results of the assets acquired from Fraser Diving are included in the accompanying historical combined statements of operations since the acquisition date of July 31, 2006.

 

Results for the nine months ended September 30, 2006 are not necessarily indicative of the results expected for the fiscal year ended December 31, 2006 or any future period.

 

You should read the information contained in this table in conjunction with “Unaudited Pro Forma Combined Financial Data,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical audited combined financial statements and the accompanying notes thereto of us included elsewhere in this prospectus.

 

The following table presents a non-GAAP financial measure, EBITDA, which we use to evaluate the financial performance of our business. EBITDA is not calculated or presented in accordance with GAAP. In footnote 2 below, we explain EBITDA and reconcile it to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP.