Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements are based on Gulf Island Fabrication, Inc.’s historical consolidated financial statements and Gulf Marine Fabricators (“GMF”) historical financial statements, each included herein, and adjusted to give effect to the January 31, 2006 acquisition of GMF. The unaudited pro forma combined statement of income for the twelve months ended December 31, 2005 give effect to the acquisition of GMF as if it had occurred on January 1, 2005. The unaudited pro forma combined balance sheet as of December 31, 2005 gives effect to the acquisition of GMF as if it had occurred on December 31, 2005.

The unaudited pro forma condensed consolidated financial information does not purport to present the actual results of operations or financial position of the Company had the transactions and events assumed therein in fact occurred on the date indicated, nor is it necessarily indicative of the results of operations that may be achieved in the future. The unaudited pro forma condensed consolidated financial information is based on certain assumptions and adjustments described in the notes thereto and should be read in conjunction therewith. The unaudited pro forma condensed consolidated financial information should also be read in conjunction with the audited consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

GULF ISLAND FABRICATION, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

December 31, 2005

 

     Historical             
     Gulf Island
Fabrication, Inc.		     Gulf Marine
Fabricators		    Pro Forma
Adjustments (1)		     Pro Forma  
     (In thousands)  

ASSETS

       

Current assets:

          

Cash

    $ 5,689     $ 665    $ 154     $ 6,517  

Short-term investments

      30,212       —        (30,212 )     —    

Contracts receivable, net

      30,790       3,414      2,772       36,967  

Retainage

      666       —        —         666  

Costs and estimated earnings in excess
of billings on uncompleted contracts

      27,219       1,445      (1,445 )     27,219  

Prepaid expenses

      2,352       1,123      (1,123 )     2,352  

Receivable from affiliates

      —         11,374      (11,374 )     —    

Inventory

      5,515       612      91       6,218  

Recoverable income taxes

      969       —        —         969  
                               

Total current assets

      103,412       18,633      (41,137 )     80,908  

Property, plant and equipment, net

      59,744       27,678      49,391       136,813  

Intangible assets, net

      —         —        4,000       4,000  

Investment in subsidiary

      —         —        —         —    

Other assets

      650       —        —         650  
                               

Total Assets

    $ 163,806     $ 46,311    $ 12,254     $ 222,371  
                               

LIABILITIES AND STOCKHOLDERS’ EQUITY

          

Current liabilities:

          

Bank overdrafts

    $ —       $ 4,797    $ (4,797 )   $ —    

Accounts payable

      7,236       664      (664 )     7,236  

Accounts payable—affiliates

      —         1,941      (1,941 )     —    

Billings in excess of costs and estimated
earnings on uncompleted contracts

      4,214       1,042      5,391       10,647  

Accrued employee costs

      3,318       —        132       3,450  

Accrued expenses

      1,503       2,269      (2,269 )     1,503  

Other liabilities

      —         19,090      (19,090 )     —    
                               

Total current liabilities

      16,271       29,803      (23,238 )     22,836  

Deferred income taxes

      9,270       —        —         9,270  

Notes payable, term-loan

      —         —        12,000       12,000  
                               

Total liabilities

      25,541       29,803      (11,238 )     44,106  
                               

Stockholders’ equity:

          

Common stock, no par value

      5,047       —        4,000       9,047  

Additional paid-in capital

      45,161       —        36,000       81,161  

Retained earnings

      88,886       —        —         88,886  

Partners’ equity

      —         16,508      (16,508 )     —    

Deferred Compensation—restricted stock

      (829 )     —        —         (829 )
                               

Total stockholders’ equity

      138,265       16,508      23,492       178,265  
                               

Total liabilities and stockholders’ equity

    $ 163,806     $ 46,311    $ 12,254     $ 222,371  
                               

GULF ISLAND FABRICATION, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

December 31, 2005

 

      Historical              
     Gulf Island
Fabrication, Inc.		     Gulf Marine
Fabricators		     Pro Forma
Adjustments		     Pro Forma  
           (In thousands)        

Revenue

    $ 188,545     $ 41,558     $ —       $ 230,103  

Cost of Revenue

      164,548       47,450       2,609 (2)     214,607  
                                

Gross Profit (Loss)

      23,997       (5,892 )     (2,609 )     15,496  

General and administrative expenses

      5,681       5,006       —         10,687  
                                

Operating income (loss)

      18,316       (10,898 )     (2,609 )     4,809  

Other income (expense):

         

Interest expense

      (55 )     (415 )     (728 )(3)     (1,198 )

Interest income

      1,395       12       —         1,407  

Other

      (460 )     833       —         373  
                                
     880       430       (728 )     582  
                                

Income (loss) before income taxes

      19,196       (10,468 )     (3,337 )     5,391  

Income taxes (benefit)

      6,209       —         (4,459 )(4)     1,750  
                                

Net Income (loss)

      12,987       (10,468 )     1,122       3,641  
                                

Earnings per share data:

         

Basic earnings per share

    $ 1.06         $ 0.26  
                    

Diluted earnings per share

    $ 1.05         $ 0.26  
                    

Outstanding Shares:

         

Weighted average shares of GIFI

      12,242         —         12,242  

Shares issued for GMF acquisition

      1,586 (5)       1,586 (5)     1,586 (5)
                          

Pro forma weighted average shares

      13,828         1,586       13,828  

Effect of dilutive securities

      134         —         134  
                          

Pro forma adjusted weighted average shares

      13,962         1,586       13,962  
                          

GULF ISLAND FABRICATION, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

 

1. To record the purchase of certain assets of Gulf Marine Fabricators (GMF) as if the acquisition occurred on December 31, 2005. The purchase price, the purchase price allocation (which is not completely finalized) and financing of the transaction are summarized as follows:

 

Purchase price paid:

   

Proceeds from debt

    $ 12,000  

Cash

      28,009  

Acquisition cost

      1,384  

Cash to receive from seller for assumed liabilities

      (6,186 )

Issuance of common stock (5)

      40,000  
        
   $ 75,207  
        

 

Allocated to:

   

Property, plant and equipment

    $ 77,069  

Intangibles (amortization ranging 18 to 24 mos.)

      4,000  

Inventory

      703  

Current liabilities

      (6,565 )
        
   $ 75,207  
        

 

2. To record additional depreciation expense related to the step-up in property plant, and equipment and amortization related to intangibles for 2005.

 

3. To record interest expense on the acquisition debt of $12 million at the Company’s borrowing rate of 6.07% for 2005.

 

4. To record the income tax benefit of losses from GMF for 2005 at the Company’s effective tax rate of 32.3%.

 

5. The number of shares issued was calculated by dividing $40 million by the average closing sales price of Gulf Island Common Stock over the twenty trading days immediately prior to the date the Asset Purchase Agreement was executed, such average to be weighted by the trading volume of the Gulf Island Common Stock on each such trading day.