Cal Dive International, Inc.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contract with Customers (Topic 606). The objective of this ASU is to establish the principles to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue from contracts with customers. The core principle is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and must be adopted using either a full retrospective method or a modified retrospective method. We are currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements.

We may not redeem the Convertible Notes prior to the maturity date. Prior to April 15, 2017, holders may convert their Convertible Notes only under the following circumstances: (i) the closing sale price of our common stock equals or exceeds $2.69 for 20 days during a 30 consecutive trading day period; (ii) the trading price per $1,000 principal amount of the Convertible Notes is less than 98% of the product of the closing sale price of our common stock and the conversion price for the Convertible Notes for each of five consecutive trading days; or (iii) upon the occurrence of specified corporate events.  On and after April 15, 2017 until the maturity date, holders may convert all or a portion of their Convertible Notes at any time with settlement of all Convertible Notes converted during the period occurring on July 15, 2017. Upon conversion of a Convertible Note, we will pay or deliver, at our election, cash, shares of our common stock or a combination thereof, based on an initial conversion rate of 445.6328 shares of our common stock per $1,000 principal amount of Convertible Notes (which is equivalent to an initial conversion price of approximately $2.24 per share of our common stock).

Upon the occurrence of certain fundamental changes, holders of the Convertible Notes will have the right to require us to purchase all or a portion of their Convertible Notes for cash at a price equal to 100% of the principal amount of such Convertible Notes, plus any accrued and unpaid interest. Upon the occurrence of certain significant corporate transactions, holders who convert their Convertible Notes in connection with a change of control may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, the Convertible Notes contain certain events of default as set forth in the indenture, including cross default provisions in the event of an acceleration of our other debt. As of September 30, 2014, none of the conditions allowing holders of the Convertible Notes to convert, or requiring us to repurchase the Convertible Notes, had been met.  However, on September 8, 2014, we were notified by the NYSE that we no longer satisfied the minimum share price standard for continued listing of our common stock, and that we had six months to regain compliance with this continued listing standard to avoid delisting.  On October 29, 2014, we received a further notice from the NYSE that it had determined to commence proceedings to delist our common stock in view of its abnormally low trading price, and trading in our common stock on the NYSE was suspended immediately.  The delisting of our common stock will constitute a fundamental change under the indenture for the Convertible Notes.

We have now completed the first two projects for Pemex.  We completed the first project in the second quarter 2014.  We were scheduled to complete the second project in the third quarter 2014; however this project was extended by delays and additional work requested by Pemex and was completed in early November 2014.  The remaining two projects continue to be temporarily suspended by Pemex as it waits for the platforms to be installed by other contractors. Once the two platforms are installed, we will complete the remaining scopes of work on both projects, which consists of tie in work and topside hook up and commissioning work on one project, and a short pipeline scope of work plus tie in and topside hook up and commissioning work on the second project. Because the delays associated with the remaining two projects have been caused by Pemex, under the terms of the contracts the risk of further weather delays offshore will be borne by Pemex for the remaining scopes of work. We were expecting to recommence work on one of these two projects late in the third quarter 2014; however the platform installation was further delayed by the other contractor. Based on Pemex's current project schedule, we expect to recommence work on these two projects late in the fourth quarter 2014 and complete these two projects by the second quarter 2015.  We estimate that we are approximately 80% complete on the remaining two Mexico projects on a combined basis, and expect that the remaining two projects will be completed profitably at margins we originally anticipated.  As we complete these projects, we will invoice Pemex and expect to collect payment for our work over the next several quarters.

On September 8, 2014, we were notified by the NYSE that we no longer satisfied the minimum share price standard for continued listing of our common stock, and that we had six months to regain compliance with this continued listing standard to avoid delisting. On October 29, 2014, we received a further notice from the NYSE that it had determined to commence proceedings to delist our common stock in view of its abnormally low trading price, and trading in our common stock on the NYSE was suspended immediately. The delisting of our common stock will constitute a fundamental change under the indenture for the Convertible Notes.  Our stock now trades on the OTC under the symbol "CDVI."  Upon the occurrence of certain fundamental changes, holders of the Convertible Notes have the right to require us to purchase all or a portion of the Convertible Notes for cash at a price equal to 100% of the principal amount of such Convertible Notes plus any accrued and unpaid interest.  See "Liquidity and Capital Resources – Convertible Notes."

Moreover, on September 8, 2014, we received notice from the NYSE that we no longer satisfied the minimum share price standard for continued listing of our common stock, and that we had six months to regain compliance with this continued listing standard to avoid delisting. On October 29, 2014, we received a further notice from the NYSE that it had determined to commence proceedings to delist our common stock in view of its abnormally low trading price, and trading in our common stock on the NYSE was suspended immediately. The delisting of our common stock will constitute a fundamental change under the indenture for the Convertible Notes.  Our stock now trades on the OTC under the symbol "CDVI."