Hercules Offshore Announces Third Quarter 2010 Results
HOUSTON, Oct. 27 /PRNewswire-FirstCall/ — Hercules Offshore, Inc. (Nasdaq: HERO) today reported a loss from continuing operations of $15.1 million, or $0.13 per diluted share, on revenues of $168.5 million for the third quarter 2010, compared with a loss from continuing operations of $37.2 million, or $0.38 per diluted share, on revenues of $159.3 million for the third quarter 2009, excluding the effects of non-recurring items.
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During the third quarter of 2009, when including the effect of non-recurring items, the Company reported a loss from continuing operations of $47.0 million, or $0.48 per diluted share. These non-recurring items include a $15.1 million charge related to the write-off of previously deferred unamortized debt issuance costs and the payment of certain third-party fees in connection with the amendment of our Credit Agreement. On an after-tax basis, these adjustments approximated $9.8 million, or $0.10 per diluted share.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore, stated, “In spite of the continuing uncertainty surrounding the permit approval process, we credit our customers and marketing group for finding opportunities to keep our Domestic Offshore segment relatively busy during what has been a very challenging regulatory environment for the shallow water drilling industry in the third quarter. While the pace of permit and exploration plan approval remains slow, the pick up in permit issuances for new wells in recent weeks gives us measured confidence that the Bureau of Ocean Energy Management, Regulation, and Enforcement (“BOEMRE”) and the industry are gaining common ground on compliance with the new regulations.”
“Our Domestic Liftboats benefited from spill remediation related work throughout the third quarter. Going forward, the recently issued Notice to Lessees – G05 is expected to provide a solid base of plug and abandonment and decommissioning work for our domestic liftboats over a multi-year cycle.”
Offshore
During the third quarter 2010, Domestic Offshore generated revenues of $25.1 million compared to $19.0 million in the same period of 2009, primarily as a result of an increase in industry activity year over year from the extremely low levels of demand experienced following the financial crisis. Utilization increased in the third quarter 2010 to 62.9% from 41.9% in third quarter 2009. Average revenue per rig per day decreased to $39,338 in the third quarter 2010 from $44,715 in the comparable 2009 period. Operating costs increased by $2.2 million to $38.7 million in the third quarter 2010, in part due to one time repairs and maintenance expense associated with our compliance with recent regulatory changes. Domestic Offshore recorded an operating loss of $32.1 million for the third quarter 2010 compared to an operating loss of $35.3 million in the third quarter 2009.
Revenues generated from International Offshore for the third quarter 2010 were $74.4 million, a $15.6 million decrease over the comparable 2009 period, due to a decline in operating days to 538 from 768 in the same periods, respectively. The decrease in operating days stems from the mobilization of the Hercules 205 and Hercules 206 from Mexico at the conclusion of their contracts to the U.S. Gulf of Mexico, as well as idle time on the Hercules 185 in Angola. Lower activity was partially offset by an increase in average revenue per rig per day, which increased to $138,344 in the third quarter 2010 from $117,241 in the third quarter 2009. Average operating expense per rig per day decreased to $37,518 from $43,945 in the respective third quarter periods of 2010 and 2009. International Offshore operating income remained relatively flat at approximately $27.0 million year over year.
Inland
Inland revenues of $5.7 million in the third quarter 2010 were more than double third quarter 2009 revenue of $2.4 million, bolstered by an increase in operating days to 269 from 116 in the same periods, respectively. Average revenue per rig per day remained relatively flat at $21,357 in the third quarter 2010 versus $21,009 in the third quarter 2009, while utilization increased to 97.5% from 42.0% over the same periods. Operating expenses in the third quarter 2010 increased slightly to $8.3 million compared with third quarter 2009 operating expenses of $7.4 million, largely due to an accrual of approximately $3.0 million related to a multi-year state sales and use tax audit. This segment recorded an operating loss of $8.6 million in the third quarter 2010 versus $13.5 million in the respective 2009 period.
Liftboats
Domestic Liftboats generated revenues of $24.6 million in the third quarter 2010 compared to $19.3 million in the third quarter 2009, as a result of a 30% increase in operating days to 3,203 from 2,466 in the same periods, respectively. Average revenue per liftboat per day declined modestly to $7,684 in the third quarter 2010 from $7,813 in the third quarter 2009. Utilization for the third quarter was 91.6%, a marked improvement from 68.6% in the third quarter 2009, reflecting incremental demand related to the Macondo well incident and spill remediation efforts. Domestic Liftboats recorded operating income of $9.4 million in the third quarter 2010 compared to $1.0 million in the third quarter 2009.
International Liftboats revenues increased 24% to $27.8 million in the third quarter 2010 versus $22.3 million in the third quarter 2009. Average revenue per liftboat per day was $23,176 in the third quarter 2010, a $3,750 increase from third quarter 2009 levels, while utilization declined to 56.6% from 62.4% in the same periods, respectively. Operating costs decreased slightly in the third quarter 2010 to $13.0 million from $14.5 million in the third quarter 2009. Operating income increased to $9.4 million in the third quarter 2010 from $2.6 million in the third quarter 2009.
Liquidity and Capitalization
At September 30, 2010, the Company had unrestricted cash and cash equivalents totaling $134.6 million and unused capacity of approximately $164 million under its revolving credit facility. As of September 30, 2010, the Company’s balance sheet reflects total debt of $859.5 million.
Non-GAAP
Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the Company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the adjusted loss from continuing operations figures included in this release are appropriate measures of the continuing and normal operations of the Company. However, these measures should be considered in addition to, and not as a substitute for, or superior to, income (loss) from continuing operations, operating income (loss), cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table that follows the financial statements. Please see the attached Reconciliation of GAAP to Non-GAAP Financial Measures for a complete description of the adjustments made to Operating Loss, Loss From Continuing Operations and Diluted Loss per Share from Continuing Operations.
Conference Call Information
Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on Wednesday, October 27, 2010, to discuss its third quarter 2010 financial results. To participate in the call, dial 866-730-5770 (domestic) or 857-350-1594 (international) and reference access code 92223378 approximately 10 minutes prior to the start of the call. The conference call will also be broadcast live via the Internet at http://www.herculesoffshore.com.
A replay of the conference call will be available by telephone on October 27, 2010, beginning at 1:00 p.m. CDT (2:00 p.m. EDT), through November 3, 2010. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international). The access code is 59015707. Additionally, the recorded conference call will be accessible through our Web site at http://www.herculesoffshore.com for 28 days after the conference call.
Additional Information
Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 30 jackup rigs, 17 barge rigs, 65 liftboats, three submersible rigs, one platform rig and a fleet of marine support vessels. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world.
For more information, please visit our Web site at http://www.herculesoffshore.com.
The news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to a number of risks, uncertainties and assumptions, including the factors described in Hercules Offshore’s most recent periodic reports and other documents filed with the Securities and Exchange Commission, which are available free of charge at the SEC’s Web site at http://www.sec.gov or the Company’s Web site at http://www.herculesoffshore.com. Hercules Offshore cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
September December
30, 31,
2010 2009
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $134,644 $140,828
Restricted Cash 13,124 3,658
Accounts Receivable, Net 144,423 133,662
Prepaids 24,157 13,706
Current Deferred Tax Asset 11,246 22,885
Other 20,349 6,675
------ -----
347,943 321,414
Property and Equipment, Net 1,799,884 1,923,603
Other Assets, Net 29,489 32,459
------ ------
$2,177,316 $2,277,476
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term Debt and Current Portion of
Long-term Debt $4,924 $4,952
Insurance Notes Payable 16,386 5,484
Accounts Payable 49,057 51,868
Accrued Liabilities 61,999 67,773
Interest Payable 23,625 6,624
Taxes Payable - 5,671
Other Current Liabilities 25,160 34,229
------ ------
181,151 176,601
Long-term Debt, Net of Current Portion 854,590 856,755
Other Liabilities 6,548 19,809
Deferred Income Taxes 198,941 245,799
Commitments and Contingencies
Stockholders' Equity 936,086 978,512
------- -------
$2,177,316 $2,277,476
========== ==========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
-------------
2010 2009
---- ----
Revenues $168,484 $159,262
Costs and Expenses:
Operating Expenses 109,230 123,358
Impairment of Property and
Equipment - -
Depreciation and Amortization 46,154 51,802
General and Administrative 14,512 16,814
169,896 191,974
------- -------
Operating Loss (1,412) (32,712)
Other Income (Expense):
Interest Expense (21,384) (24,131)
Expense of Credit Agreement
Fees - (15,073)
Gain on Early Retirement of
Debt, Net - -
Other, Net (19) 70
--- ---
Loss Before Income Taxes (22,815) (71,846)
Income Tax Benefit 7,754 24,876
----- ------
Loss from Continuing Operations (15,061) (46,970)
Loss from Discontinued
Operation, Net of Taxes - (1,290)
--- ------
Net Loss $(15,061) $(48,260)
======== ========
Basic Loss Per Share:
Loss from Continuing Operations $(0.13) $(0.48)
Loss from Discontinued
Operation - (0.02)
Net Loss $(0.13) $(0.50)
====== ======
Diluted Loss Per Share:
Loss from Continuing Operations $(0.13) $(0.48)
Loss from Discontinued
Operation - (0.02)
Net Loss $(0.13) $(0.50)
====== ======
Weighted Average Shares
Outstanding:
Basic 114,774 97,159
Diluted 114,774 97,159
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
Revenues $485,228 $566,444
Costs and Expenses:
Operating Expenses 326,187 388,699
Impairment of Property and
Equipment - 26,882
Depreciation and Amortization 144,758 151,739
General and Administrative 41,613 48,556
512,558 615,876
------- -------
Operating Loss (27,330) (49,432)
Other Income (Expense):
Interest Expense (64,382) (54,481)
Expense of Credit Agreement
Fees - (15,073)
Gain on Early Retirement of
Debt, Net - 13,747
Other, Net 3,150 2,760
----- -----
Loss Before Income Taxes (88,562) (102,479)
Income Tax Benefit 38,561 39,211
------ ------
Loss from Continuing Operations (50,001) (63,268)
Loss from Discontinued
Operation, Net of Taxes - (1,965)
--- ------
Net Loss $(50,001) $(65,233)
======== ========
Basic Loss Per Share:
Loss from Continuing Operations $(0.44) $(0.69)
Loss from Discontinued
Operation - (0.02)
Net Loss $(0.44) $(0.71)
====== ======
Diluted Loss Per Share:
Loss from Continuing Operations $(0.44) $(0.69)
Loss from Discontinued
Operation - (0.02)
Net Loss $(0.44) $(0.71)
====== ======
Weighted Average Shares
Outstanding:
Basic 114,742 91,298
Diluted 114,742 91,298
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-----------------
2010 2009
---- ----
Cash Flows from Operating Activities:
Net Loss $(50,001) $(65,233)
Adjustments to Reconcile Net Loss to Net
Cash Provided by
Operating Activities:
Depreciation and Amortization 144,758 151,739
Stock-Based Compensation Expense 2,799 6,208
Deferred Income Taxes (38,639) (64,535)
Provision for Doubtful Accounts Receivable 80 4,468
Amortization of Deferred Financing Fees 2,493 2,851
Amortization of Original Issue Discount 3,041 3,196
Non-Cash Loss on Derivatives 1,987 5,554
Gain on Insurance Settlement - (8,700)
Gain on Disposal of Assets (10,180) (58)
Gain on Early Retirement of Debt, Net - (13,747)
Impairment of Property and Equipment - 26,882
Excess Tax Benefits from Stock-Based
Arrangements (381) (5,500)
Expense of Credit Agreement Fees - 15,073
Net Change in Operating Assets and
Liabilities (36,277) 61,750
------- ------
Net Cash Provided by Operating Activities 19,680 119,948
Cash Flows from Investing Activities:
Additions of Property and Equipment (16,353) (71,395)
Deferred Drydocking Expenditures (10,972) (13,719)
Insurance Proceeds Received - 9,168
Proceeds from Sale of Assets, Net 15,764 23,305
Increase in Restricted Cash (9,466) (3,657)
------ ------
Net Cash Used in Investing Activities (21,027) (56,298)
Cash Flows from Financing Activities:
Short-term Debt Repayments - (2,455)
Long-term Debt Repayments (5,233) (20,555)
Redemption of 3.375% Convertible Senior
Notes - (6,099)
Common Stock Issuance - 83,344
Excess Tax Benefits from Stock-Based
Arrangements 381 5,500
Payment of Debt Issuance Costs - (9,931)
Other 15 (11)
--- ---
Net Cash Provided by (Used in) Financing
Activities (4,837) 49,793
Net Increase (Decrease) in Cash and Cash
Equivalents (6,184) 113,443
Cash and Cash Equivalents at Beginning of
Period 140,828 106,455
Cash and Cash Equivalents at End of Period $134,644 $219,898
======== ========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended
September 30,
-------------
2010 2009
---- ----
Domestic Offshore:
Number of rigs (as of end
of period) 25 23
Revenues $25,058 $18,959
Operating expenses 38,701 36,476
Depreciation and
amortization expense 17,277 15,118
General and administrative
expenses 1,146 2,615
Operating loss $(32,066) $(35,250)
======== ========
International Offshore:
Number of rigs (as of end
of period) 9 11
Revenues $74,429 $90,041
Operating expenses 31,065 44,209
Impairment of property and
equipment - -
Depreciation and
amortization expense 14,404 16,769
General and administrative
expenses 2,067 2,317
Operating income $26,893 $26,746
======= =======
Inland:
Number of barges (as of end
of period) 17 17
Revenues $5,745 $2,437
Operating expenses 8,279 7,442
Depreciation and
amortization expense 4,991 8,166
General and administrative
expenses 1,103 360
Operating loss $(8,628) $(13,531)
======= ========
Domestic Liftboats:
Number of liftboats (as of
end of period) 41 41
Revenues $24,612 $19,268
Operating expenses 11,314 12,725
Depreciation and
amortization expense 3,314 5,048
General and administrative
expenses 560 539
Operating income $9,424 $956
====== ====
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
Domestic Offshore:
Number of rigs (as of end
of period) 25 23
Revenues $88,163 $115,110
Operating expenses 115,082 131,635
Depreciation and
amortization expense 50,986 45,250
General and administrative
expenses 4,807 5,595
Operating loss $(82,712) $(67,370)
======== ========
International Offshore:
Number of rigs (as of end
of period) 9 11
Revenues $221,364 $295,250
Operating expenses 98,394 127,478
Impairment of property and
equipment - 26,882
Depreciation and
amortization expense 43,808 48,702
General and administrative
expenses 5,546 5,382
Operating income $73,616 $86,806
======= =======
Inland:
Number of barges (as of end
of period) 17 17
Revenues $15,676 $15,446
Operating expenses 20,359 36,563
Depreciation and
amortization expense 18,736 24,442
General and administrative
expenses (1,756) 1,588
Operating loss $(21,663) $(47,147)
======== ========
Domestic Liftboats:
Number of liftboats (as of
end of period) 41 41
Revenues $53,950 $60,762
Operating expenses 31,481 39,277
Depreciation and
amortization expense 11,182 15,844
General and administrative
expenses 1,436 1,454
Operating income $9,851 $4,187
====== ======
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended
September 30,
-------------
2010 2009
---- ----
International Liftboats:
Number of liftboats (as
of end of period) 24 24
Revenues $27,765 $22,320
Operating expenses 12,951 14,457
Depreciation and
amortization expense 4,199 4,010
General and
administrative expenses 1,184 1,279
Operating income $9,431 $2,574
====== ======
Delta Towing:
Revenues $10,875 $6,237
Operating expenses 6,920 8,049
Depreciation and
amortization expense 1,172 1,892
General and
administrative expenses 354 218
Operating income (loss) $2,429 $(3,922)
====== =======
Total Company:
Revenues $168,484 $159,262
Operating expenses 109,230 123,358
Impairment of property
and equipment - -
Depreciation and
amortization 46,154 51,802
General and
administrative 14,512 16,814
------ ------
Operating loss (1,412) (32,712)
Interest expense (21,384) (24,131)
Expense of Credit
Agreement Fees - (15,073)
Gain on early retirement
of debt, net - -
Other, net (19) 70
--- ---
Loss before income taxes (22,815) (71,846)
Income tax benefit 7,754 24,876
----- ------
Loss from continuing
operations (15,061) (46,970)
Loss from discontinued
operation, net of taxes - (1,290)
Net loss $(15,061) $(48,260)
======== ========
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
International Liftboats:
Number of liftboats (as
of end of period) 24 24
Revenues $80,914 $61,709
Operating expenses 42,310 31,677
Depreciation and
amortization expense 13,258 8,672
General and
administrative expenses 4,119 3,548
Operating income $21,227 $17,812
======= =======
Delta Towing:
Revenues $25,161 $18,167
Operating expenses 18,561 22,069
Depreciation and
amortization expense 4,376 6,318
General and
administrative expenses 1,018 1,024
Operating income (loss) $1,206 $(11,244)
====== ========
Total Company:
Revenues $485,228 $566,444
Operating expenses 326,187 388,699
Impairment of property
and equipment - 26,882
Depreciation and
amortization 144,758 151,739
General and
administrative 41,613 48,556
------ ------
Operating loss (27,330) (49,432)
Interest expense (64,382) (54,481)
Expense of Credit
Agreement Fees - (15,073)
Gain on early retirement
of debt, net - 13,747
Other, net 3,150 2,760
----- -----
Loss before income taxes (88,562) (102,479)
Income tax benefit 38,561 39,211
------ ------
Loss from continuing
operations (50,001) (63,268)
Loss from discontinued
operation, net of taxes - (1,965)
Net loss $(50,001) $(65,233)
======== ========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended September 30, 2010
-------------------------------------
Operating Available Utilization
Days Days (1)
---------- ---------- ------------
Domestic Offshore 637 1,012 62.9%
International
Offshore 538 828 65.0%
Inland 269 276 97.5%
Domestic
Liftboats 3,203 3,496 91.6%
International
Liftboats 1,198 2,116 56.6%
Three Months Ended September 30, 2009
-------------------------------------
Operating Available Utilization
Days Days (1)
---------- ---------- ------------
Domestic Offshore 424 1,012 41.9%
International
Offshore 768 1,006 76.3%
Inland 116 276 42.0%
Domestic
Liftboats 2,466 3,596 68.6%
International
Liftboats 1,149 1,840 62.4%
Nine Months Ended September 30, 2010
------------------------------------
Operating Available Utilization
Days Days (1)
---------- ---------- ------------
Domestic Offshore 2,426 3,074 78.9%
International
Offshore 1,598 2,516 63.5%
Inland 759 819 92.7%
Domestic
Liftboats 7,433 10,374 71.7%
International
Liftboats 3,596 6,430 55.9%
Nine Months Ended September 30, 2009
------------------------------------
Operating Available Utilization
Days Days (1)
---------- ---------- ------------
Domestic Offshore 1,994 3,532 56.5%
International
Offshore 2,351 2,763 85.1%
Inland 414 1,302 31.8%
Domestic
Liftboats 7,349 11,308 65.0%
International
Liftboats 3,072 5,279 58.2%
Three Months Ended September 30, 2010
-------------------------------------
Average Average
Revenue Operating
per Day Expense per
(2) Day (3)
-------- ------------
Domestic
Offshore $39,338 $38,242
International
Offshore 138,344 37,518
Inland 21,357 29,996
Domestic
Liftboats 7,684 3,236
International
Liftboats 23,176 6,121
Three Months Ended September 30, 2009
-------------------------------------
Average Average
Revenue Operating
per Day Expense per
(2) Day (3)
-------- ------------
Domestic
Offshore $44,715 $36,043
International
Offshore 117,241 43,945
Inland 21,009 26,964
Domestic
Liftboats 7,813 3,539
International
Liftboats 19,426 7,857
Nine Months Ended September 30, 2010
------------------------------------
Average Average
Revenue Operating
per Day Expense per
(2) Day (3)
-------- ------------
Domestic
Offshore $36,341 $37,437
International
Offshore 138,526 39,107
Inland 20,653 24,858
Domestic
Liftboats 7,258 3,035
International
Liftboats 22,501 6,580
Nine Months Ended September 30, 2009
------------------------------------
Average Average
Revenue Operating
per Day Expense per
(2) Day (3)
-------- ------------
Domestic
Offshore $57,728 $37,269
International
Offshore 125,585 46,138
Inland 37,309 28,082
Domestic
Liftboats 8,268 3,473
International
Liftboats 20,088 6,001
(1) Utilization is defined as the total number of days our rigs or
liftboats, as applicable, were under contract, known as operating
days, in the period as a percentage of the total number of available
days in the period. Days during which our rigs and liftboats were
undergoing major refurbishments, upgrades or construction, and days
during which our rigs and liftboats are cold-stacked, are not
counted as available days. Days during which our liftboats are in
the shipyard undergoing drydocking or inspection are considered
available days for the purposes of calculating utilization.
(2) Average revenue per rig or liftboat per day is defined as revenue
earned by our rigs or liftboats, as applicable, in the period
divided by the total number of operating days for our rigs or
liftboats, as applicable, in the period. Included in International
Offshore revenue is a total of $3.7 million and $11.0 million
related to amortization of deferred mobilization revenue for the
three and nine months ended September 30, 2010, respectively and
$4.3 million and $12.3 million for the three and nine months ended
September 30, 2009, respectively. Included in International
Liftboats revenue is a total of $0.6 million related to amortization
of deferred mobilization revenue for the nine months ended September
30, 2010 and $0.1 million and $0.2 million for the three and nine
months ended September 30, 2009, respectively. There was no such
revenue in the three months ended September 30, 2010 for
International Liftboats.
(3) Average operating expense per rig or liftboat per day is defined as
operating expenses, excluding depreciation and amortization,
incurred by our rigs or liftboats, as applicable, in the period
divided by the total number of available days in the period. We use
available days to calculate average operating expense per rig or
liftboat per day rather than operating days, which are used to
calculate average revenue per rig or liftboat per day, because we
incur operating expenses on our rigs and liftboats even when they
are not under contract and earning a dayrate. In addition, the
operating expenses we incur on our rigs and liftboats per day when
they are not under contract are typically lower than the per day
expenses we incur when they are under contract. Included in
International Offshore operating expense is a total of $0.2 million
and $0.6 million related to amortization of deferred mobilization
expenses for the three and nine months ended September 30, 2010,
respectively and $1.3 million and $2.7 million for the three and
nine months ended September 30, 2009, respectively. Included in
International Liftboats operating expense is a total of $1.2 million
related to amortization of deferred mobilization expenses for the
nine months ended September 30, 2010. There was no such operating
expense for the three months ended September 30, 2010, nor the three
and nine months ended September 30, 2009 for International
Liftboats.
Hercules Offshore, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
We report our financial results in accordance with generally accepted
accounting principles (GAAP). However, management believes that
certain non-GAAP performance measures and ratios may provide users
of this financial information additional meaningful comparisons
between current results and results in prior operating periods. Non-
GAAP financial measures we may present from time to time are
operating income, income from continuing operations or diluted
earnings per share excluding certain charges or amounts. These
adjusted income amounts are not a measure of financial performance
under GAAP. Accordingly, they should not be considered as a
substitute for operating income, income from continuing operations,
net income, earnings per share or other income data prepared in
accordance with GAAP. See the table below for supplemental
financial data and corresponding reconciliations to GAAP financial
measures for the three and nine months ended September 30, 2009.
Non-GAAP financial measures should be viewed in addition to, and
not as an alternative for, the Company's reported results prepared
in accordance with GAAP. The non-GAAP measures included in this
press release have been reconciled to the nearest GAAP measure in
the following table:
Three Months
Ended Nine Months Ended
September 30, September 30,
2009 2009
-------------- --------------
Operating Loss:
GAAP Operating Loss $(32,712) $(49,432)
Adjustment - (a) 26,882 (b)
--- ------
Non-GAAP Operating
Loss $(32,712) $(22,550)
======== ========
Other Expense:
GAAP Other Expense $(39,134) $(53,047)
Adjustment 15,073 (a) 1,326 (b)
------ -----
Non-GAAP Other
Expense $(24,061) $(51,721)
======== ========
Benefit for Income
Taxes:
GAAP Benefit for
Income Taxes $24,876 $39,211
Tax Impact of
Adjustment (5,276) (a) (14,242) (b)
Non-GAAP Benefit for
Income Taxes $19,600 $24,969
======= =======
Loss from Continuing
Operations:
GAAP Loss from
Continuing
Operations $(46,970) $(63,268)
Total Adjustment, Net
of Tax 9,797 (a) 13,966 (b)
----- ------
Non-GAAP Loss from
Continuing
Operations $(37,173) $(49,302)
======== ========
Diluted Loss per
Share from
Continuing
Operations:
GAAP Diluted Loss per
Share from
Continuing
Operations $(0.48) $(0.69)
Adjustment per Share 0.10 (a) 0.15 (b)
---- ----
Non-GAAP Diluted
Loss per Share from
Continuing
Operations $(0.38) $(0.54)
(a) These amounts represent (i) a $10.8 million charge due to the
write-off of previously deferred unamortized debt issuance costs in
connection with the amendment of our Credit Agreement and (ii) a
$4.3 million charge related to certain fees paid to third-parties
associated with the amendment of our Credit Agreement. On an after-
tax basis, these adjustments approximated $9.8 million, or ten cents
per diluted share, for the three months ended September 30, 2009.
(b) These amounts represent (i) a non-cash charge of $26.9 million
to reflect the impairment of the Hercules 110; (ii) a $10.7 million
gain on the repurchase of $20.0 million aggregate principal amount
of our 3.375% Convertible Senior Notes offset by the write-off of
unamortized issuance cost of $0.4 million; (iii) a $4.4 million gain
on the retirement of $45.8 million aggregate principal amount of our
3.375% Convertible Senior Notes in exchange for 7,755,440 of our
common shares offset by the write-off of unamortized issuance cost
of $1.0 million; (iv) a $10.8 million charge due to the write-off
of previously deferred unamortized debt issuance costs in connection
with the amendment of our Credit Agreement and (v) a $4.3 million
charge related to certain fees paid to third-parties associated
with the amendment of our Credit Agreement. On an after-tax basis,
these adjustments approximated $14.0 million, or 15 cents per
diluted share, for the nine months ended September 30, 2009.
SOURCE Hercules Offshore, Inc.