Horizon Offshore Reports Third Quarter Results


HOUSTON, Oct. 31, 2007 (PRIME NEWSWIRE) -- Horizon Offshore, Inc. (Nasdaq:HOFF) today reported quarterly results for the third quarter of 2007.



                         Summary of Results
                              (Unaudited)
         (In thousands, except per share data and percentages)

                                Three Months Ended  Nine Months Ended
                                   September 30,       September 30,
                                   2007     2006      2007      2006
                                --------------------------------------
 Contract revenues              $147,778  $143,733  $351,844  $430,618
 Gross profit                     36,542    39,130    50,650   116,807
 Margin                             24.7%     27.2%     14.4%     27.1%
 Operating income                 28,627    30,812    26,639    87,008
 Net income                       18,874    20,866    14,908    53,207
 Diluted earnings per
  share                             0.58      0.64      0.46      1.72
 Adjusted EBITDA                  36,374    40,520    48,135    99,843

The Company's revenues and gross profit for the third quarter of 2007 reflect strong results in its domestic geographic segment due primarily to the work on a significant project in the Northeastern U.S. for the installation, burial and testing of several pipelines along with the associated tie-ins to service the Northeast Gateway Deepwater Port offshore Massachusetts. The pipeline installation and burial portions of the project were completed utilizing the Atlantic Horizon and the Lonestar Horizon during the third quarter of 2007. The Texas Horizon, a dive support vessel, mobilized during August 2007 to complete the final stages of the construction portion of the project. This project began in May 2007 and is expected to be completed in November 2007. Also, contributing to strong domestic revenues and gross profit for the third quarter of 2007 is the Company's work in the U.S. Gulf of Mexico related to recovery and removal of damaged pipe as well as several platform installations.

In its Southeast Asia/Mediterranean geographic segment, the Company's combination barge, the Sea Horizon, was 100% utilized on a charter during the third quarter of 2007, which is expected to last through November 2007. The full utilization of this barge produced strong operating results in Southeast Asia.

Most of the Company's revenues and gross profit in Latin America were derived from a project that it performed and completed during the third quarter of 2007 as a subcontractor offshore Veracruz, Mexico in the Marsopa field. The contractor's customer for this project was Petroleos Mexicanos ("Pemex"). The gross profit recognized on this project, however, was offset by losses on the Company's two projects for Pemex offshore Mexico. The Company continued to incur delays in completing these two projects due to adverse weather conditions and poor diving subcontractor productivity and as a result, recognized additional losses of approximately $(15.1) million during the quarter ending September 30, 2007. The Company completed one of the two projects during October 2007 and is near completion on the second.

In West Africa, the Company incurred additional costs for the completion of the shore approaches of the lateral lines of the West Africa Gas Pipeline project and recognized additional losses of $(1.9) million for the third quarter. The Company has completed the pipeline installation portion of this project and the repair of the main trunk line that was damaged during the first quarter of 2007. The Company is currently completing the remaining work on the last part of the project.

David Sharp, President and Chief Executive Officer of Horizon Offshore, Inc. said, "We are very pleased with this quarter's results. Successful execution of a number of domestic projects as well as a project in Mexico enabled us to overcome subcontractor disappointments in Mexico on our Pemex projects and in West Africa. Our employees remain committed to superior project execution to serve the needs of our clients."

The Company will not be conducting a conference call with investors for the third quarter results due to its pending merger with Cal Dive International, Inc.

About Horizon Offshore, Inc.

Horizon and its subsidiaries provide marine construction services for the offshore oil and gas and energy industries. The Company's fleet is used to perform a wide range of marine construction activities, including installation and repair of marine pipelines to transport oil and gas and other sub sea production systems, and the installation and abandonment of production platforms.

The Horizon Offshore logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=760

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which represent the Company's expectations and beliefs concerning future events that involve risks and uncertainties which could cause actual results to differ materially from those currently anticipated. All statements other than statements of historical facts included in this release are forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include the factors described from time to time in the Company's filings with the Securities and Exchange Commission. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks, and uncertainties.

Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Consequently, the forward-looking statements often identified with words like "should," "expects," "believes," "anticipates," "may," "could," etc., contained herein should not be regarded as representations by Horizon or any other person that the projected outcomes can or will be achieved.

Comparative Tables Follow:



                          Horizon Offshore, Inc.
                          Income Statement Data
                               (Unaudited)
                  (In thousands, except per share data)


                                Three Months Ended   Nine Months Ended
                                   September 30,       September 30,
                                 2007       2006     2007       2006
                                --------------------------------------
 Income Statement Data:

 Contract revenues              $147,778  $143,733  $351,844  $430,618
 Cost of contract
  revenues                       111,236   104,603   301,194   313,811
                                --------  --------  --------  --------
     Gross profit                  36,542   39,130    50,650   116,807
 Selling, general and
  administrative
  expenses                          7,915    8,318    24,011    25,641
 Gain on insurance
  settlement                          --       --        --    (14,300)
 Reserve for claims and
   receivables                        --       --        --     18,458
                                 --------  --------  --------  --------
      Operating income             28,627   30,812    26,639    87,008
                                
 Other:
      Interest expense            (2,816)   (3,146)   (8,521)  (10,771)
      Interest income                886       894     2,654     1,686
      Loss on debt
       extinguishment                --        --        --     (2,402)
      Other income
       (expense), net                (50)      395       (35)      358
                                --------  --------  --------  --------

 Income before income
  taxes                           26,647    28,955    20,737    75,879
 Income tax provision              7,773     8,089     5,829    22,672
                                --------  --------  --------  --------

 Net income                     $ 18,874  $ 20,866  $ 14,908  $ 53,207
                                ========  ========  ========  ========

 Earnings per share:
 Net income per share
  - basic                       $   0.59  $   0.66  $   0.47  $   1.75
                                ========  ========  ========  ========
 Net income per share
  - diluted                     $   0.58  $   0.64  $   0.46  $   1.72
                                ========  ========  ========  ========

 Weighted average shares
  used in computing
  earnings per share:
    Basic                         32,169    31,814    32,004    30,334
    Diluted                       32,388    32,370    32,132    30,882

 Other Non-GAAP Financial Data:
 Adjusted EBITDA(1)             $ 36,374  $ 40,520  $ 48,135  $ 99,843

 Adjusted EBITDA
  calculation is as
  follows:
 Net income                     $ 18,874  $ 20,866  $ 14,908  $ 53,207
 Income tax provision              7,773     8,089     5,829    22,672
 Net interest expense              1,930     2,252     5,867     9,085
 Depreciation and
  amortization                     6,941     7,067    18,570    20,101
 Stock-based
  compensation                       856     2,246     2,961     6,676
 Loss on debt
  extinguishment                     --        --        --      2,402
 Gain on insurance
  settlement                         --        --        --    (14,300)
                                --------  --------  --------  --------
  Adjusted EBITDA               $ 36,374  $ 40,520  $ 48,135  $ 99,843

 1)  Horizon calculates Adjusted EBITDA (adjusted earnings before
     interest, taxes, depreciation and amortization) as net income
     excluding income taxes, net interest expense, depreciation and
     amortization, and adjusted for stock-based compensation, loss on
     debt extinguishment and gain on insurance settlement. Adjusted
     EBITDA is not calculated in accordance with Generally Accepted
     Accounting Principles (GAAP), but is a non-GAAP measure that is
     derived from items in Horizon's GAAP financials and is used as a
     measure of operational performance. Management references this
     non-GAAP financial measure frequently in its decision-making
     because it provides supplemental information that facilitates
     internal comparisons to historical operating performance of prior
     periods and external comparisons to competitors' historical
     operating performance. Horizon also has aligned the disclosure of
     Adjusted EBITDA with the financial covenants in its material
     credit agreements with various lenders, which include ratios
     requiring a determination of EBITDA, as defined. Adjusted EBITDA
     is a material component of the financial covenants in Horizon's
     credit agreements and non-compliance with the covenants could
     result in the acceleration of indebtedness. Horizon believes
     Adjusted EBITDA is a commonly applied measurement of financial
     performance by investors. Horizon believes Adjusted EBITDA is
     useful to investors because it gives a measure of operational
     performance without taking into account items that Horizon does
     not believe relate directly to operations or that are subject to
     variations that are not caused by operational performance. This
     non-GAAP measure is not intended to be a substitute for GAAP
     measures, and investors are advised to review this non-GAAP
     measure in conjunction with GAAP information provided by Horizon.
     Adjusted EBITDA should not be construed as a substitute for
     income from operations, net income or cash flows from operating
     activities (all determined in accordance with GAAP) for the
     purpose of analyzing Horizon's operating performance, financial
     position and cash flows. Horizon's computation of Adjusted EBITDA
     may not be comparable to similar titled measures of other
     companies. A reconciliation of this non-GAAP measure to Horizon's
     net income is included.

                        Horizon Offshore, Inc.
                          Balance Sheet Data
                              (Unaudited)
                            (In thousands)

                                          September 30   December 31,
                                              2007          2006
                                              ----          ----
 Cash and cash equivalents and
  short-term investments                    $100,379        $96,890
 Working  capital                            203,314        204,523
 Total assets                                549,038        523,019
 Total debt                                  103,635        114,212
 Total stockholders' equity                  312,710        297,335

            

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