NOTE 16: SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

NOTE 16: SEGMENT INFORMATION

For the six months ended June 30, 2010, our operating segments, Deep Down Delaware, Mako and Flotation were aggregated into a single reporting segment (“Services”). Effective December 31, 2010 we contributed all of Flotation’s operating assets and liabilities (except for one intercompany corporate overhead payable), along with other contributions we made, to CFT, in return for a 20 percent common unit ownership interest in CFT.  As a result of this transaction, for the six months ended June 30, 2011, our Services reporting segment excludes those contributed operations of Flotation.  Additionally, effective January 1, 2011, CFT is considered a separate reporting segment.

While the operating segments within our Services reporting segment have different product lines, they are very similar. They are all service-based operations revolving around our personnel’s expertise in the deepwater and ultra-deepwater industry, and any equipment is produced to a customer specified design and engineered using Deep Down personnel expertise, with installation and project management as part of our service revenue to the customer. Additionally, the operating segments have similar customers and distribution methods, and their economic characteristics are similar with regard to their gross margin percentages.  Our operations are located in the United States, though we occasionally make sales to international customers.

Summary financial data by segment is as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Revenues    Services	$	7,094		$	9,552		$	13,378		$	15,826
Gross profit    Services	$	1,857		$	3,555		$	3,044		$	5,123
Income (loss) before income taxes
Services	$	211		$	(312	)	$	(1,199	)	$	(2,668	)
Corporate, net (1)		(40	)		(158	)		(261	)		(291	)
CFT		(202	)		-			(316	)		-
	$	(31	)	$	(470	)	$	(1,776	)	$	(2,959	)

(1) The Corporate segment includes expenses associated with the Company’s corporate office, all of the Company’s acquisition-related costs, professional fees, specifically audit and legal fees, and all share-based compensation, net of allocations to the operating segments.