Hercules Offshore Announces Third Quarter 2009 Results
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HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- Hercules Offshore, Inc. (Nasdaq: HERO) today reported 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, compared with income from continuing operations of $31.9 million, or $0.36 per diluted share on revenues of $315.7 million for the third quarter 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050601/DAW092LOGO)
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 for the third quarter 2009. The third quarter 2009 results 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 Rynd, Chief Executive Officer and President of Hercules Offshore stated, "Our third quarter operating results reflect the full brunt of one of the most severe declines in U.S. exploration and production capital spending in memory as domestic offshore and inland industry-wide activity levels reached new lows. Our results were also hindered by downtime on two of our international offshore rigs."
"However, a number of factors including the gradual improvement in the capital markets, strong oil prices and a constructive forward curve for natural gas, have led to a sharp uptick in domestic drilling bidding activity and recent contract awards. Our Domestic Offshore average days of backlog per rig have recently increased to 88 from just 19 on August 20. While it is still too early to know what 2010 will hold as we have yet to see our customers' spending plans, and the environment could remain weak for some time, we believe the worst of the cyclical downturn may be behind us."
Mr. Rynd continued, "Furthermore, I am extremely pleased with our continued progress in strengthening our capital structure. Since September 30, 2008, we have retired approximately $280 million in total indebtedness. Additionally, our recent issuance of $300 million in senior secured notes due 2017 has further improved our debt maturity profile."
Offshore
During the third quarter 2009, revenues from Domestic Offshore were $19.0 million compared to $112.7 million in the third quarter 2008 as a result of a sharp decline in industry activity. Operating days for the third quarter 2009 declined by 75% to 424 days from 1,673 days in the third quarter 2008 while average revenue per day per rig decreased to $44,715 from $67,384 for the comparable periods, respectively. Operating costs were reduced by $26.4 million in response to the weak activity levels. The segment generated an operating loss of $35.3 million in the third quarter 2009 versus income of $31.3 million in the third quarter 2008.
International Offshore generated revenues of $90.0 million in the third quarter 2009 compared with revenues of $95.3 million for the same period of 2008. Average revenue per rig per day decreased to $117,241 in the quarter ended September 30, 2009, from $130,704 in the comparable quarter of 2008 primarily as a result of lower dayrates on two of our rigs working in Mexico, fewer operating days on the Hercules 260 and no operating days on the Hercules 156, both of which had above average dayrates in the third quarter 2008. Utilization for the third quarter 2009 declined to 76.3% from 94.3% in the third quarter 2008. The Hercules 156 which was not on contract during the third quarter 2009, coupled with the Hercules 170 which completed its contract early in the quarter, as well as downtime on the Hercules 208 and Hercules 260, adversely impacted utilization. Operating income declined to $26.7 million in the third quarter 2009 compared to $34.2 million in the prior year period.
Inland
Inland generated revenues of $2.4 million in the third quarter 2009 versus $44.4 million in the third quarter 2008. Demand was weak industry-wide and resulted in a significant decline in operating days to 116 versus 1,142 in the previous year. Average revenue per day per rig declined to $21,009 from $38,911 for the respective periods. Operating costs were reduced by 78% over the comparable period, or by approximately $26.0 million. The Inland segment recorded an operating loss of $13.5 million in the third quarter 2009 compared with an operating loss of $1.2 million in the third quarter 2008.
Liftboats
Domestic Liftboats recorded revenues of $19.3 million in the third quarter 2009, a reduction of approximately $6.1 million from the third quarter 2008. Average revenue per day per liftboat decreased to $7,813 in the third quarter 2009 versus $8,094 in the third quarter 2008 while utilization decreased to 68.6% from 81.1% in the same periods, respectively. Third quarter 2008 utilization benefitted from demand related to hurricanes Gustav and Ike. Operating income declined to $1.0 million in the third quarter 2009 compared with $5.8 million in the same quarter of 2008. Four domestic liftboats were transferred to the International Liftboats segment during the quarter as they prepared for their mobilization to West Africa, which is currently underway.
International Liftboats generated third quarter 2009 revenues of $22.3 million, a slight increase from $20.3 million in the third quarter 2008 due largely to the addition of the Whale Shark, which commenced operations in the Middle East during the third quarter 2009. Average revenue per day per liftboat for the third quarter was $19,426 versus $17,780 in the third quarter 2008, stemming mainly from the addition of our Middle East operations. Operating income for the period was $2.6 million, a decrease from $5.1 million in the third quarter 2008, resulting from contract preparation expenses in our Middle East operations and preparation costs related to the fourth quarter 2009 transfer of four vessels to West Africa.
Balance Sheet and Cash Flow
At September 30, 2009, the Company had cash and cash equivalents totaling $219.9 million and unused capacity of $165.0 million under its revolving credit facility. As of September 30, 2009, the Company's balance sheet reflects total debt of $951.7 million. Cash flow provided by operations was $32.7 million and capital expenditures and deferred drydocking expenditures were $13.4 million during the three months ended September 30, 2009.
During September, the Company completed the issuance of 17.5 million shares of common stock for net proceeds of $82.3 million. During October 2009, the Company received additional net proceeds of $6.3 million related to the issuance of 1.3 million shares of common stock from the partial exercise of the underwriter's overallotment option. The Company also completed a private placement of $300.0 million of 10.5% Senior Secured Notes due 2017 in October 2009. Net proceeds from the Senior Notes offering of $284.4 million, coupled with an additional $97.4 million in cash were used to repay indebtedness outstanding under the company's term loan. These payments have reduced the balance on the term loan facility to $484.1 million, resulting in a decline of 2.5% in the interest rate margin on the term loan.
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 income 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, 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.
Conference Call Information
Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on Wednesday, October 28, 2009, to discuss its third quarter 2009 financial results. To participate in the call, dial 866-788-0547 (domestic) or 857-350-1685 (international) and reference access code 58884642 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 Wednesday, October 28, 2009, beginning at 1:00 p.m. CDT (2:00 p.m. EDT), through Wednesday, November 4, 2009. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international) with reference code 15875122. 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, and has operations in nine different countries on three continents. 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 shallow waters.
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 30, December 31,
2009 2008
---- ----
(Unaudited) (As Adjusted)
ASSETS
Current Assets:
Cash and Cash Equivalents $219,898 $106,455
Restricted Cash 3,657 -
Accounts Receivable, Net 192,967 293,089
Prepaids 26,234 23,033
Current Deferred Tax Asset 18,766 17,379
Assets Held for Sale - 39,623
Other 17,405 19,946
------ ------
478,927 499,525
Property and Equipment, Net 1,975,534 2,049,030
Other Assets, Net 42,658 42,340
------ ------
$2,497,119 $2,590,895
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term Debt and Current
Portion of Long-term Debt $9,000 $11,455
Insurance Note Payable 14,838 11,126
Accounts Payable 68,472 99,823
Accrued Liabilities 78,968 83,424
Interest Payable 13,923 506
Taxes Payable 32,616 32,440
Other Current Liabilities 37,410 35,966
------ ------
255,227 274,740
Long-term Debt, Net of Current
Portion 942,727 1,015,764
Other Liabilities 27,435 35,529
Deferred Income Taxes 278,080 339,547
Commitments and Contingencies
Stockholders' Equity 993,650 925,315
------- -------
$2,497,119 $2,590,895
========== ==========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----
(As Adjusted) (As Adjusted)
Revenues $159,262 $315,738 $566,444 $798,338
Costs and Expenses:
Operating Expenses 123,358 180,978 388,699 470,138
Impairment of
Property and
Equipment - - 26,882 -
Depreciation and
Amortization 51,802 50,256 151,739 141,150
General and
Administrative 16,814 17,447 48,556 57,777
------ ------ ------ ------
191,974 248,681 615,876 669,065
------- ------- ------- -------
Operating Income
(Loss) (32,712) 67,057 (49,432) 129,273
Other Income
(Expense):
Interest Expense (24,131) (16,807) (54,481) (47,985)
Expense of Credit
Agreement Fees (15,073) - (15,073) -
Gain on Early
Retirement of
Debt, Net - - 13,747 -
Other, Net 70 543 2,760 2,818
--- --- ----- -----
Income (Loss) Before
Income Taxes (71,846) 50,793 (102,479) 84,106
Income Tax Benefit
(Provision) 24,876 (18,938) 39,211 (30,988)
------ ------- ------ -------
Income (Loss) from
Continuing
Operations (46,970) 31,855 (63,268) 53,118
Loss from
Discontinued
Operation, Net of
Taxes (1,290) (168) (1,965) (766)
------ ---- ------ ----
Net Income (Loss) $(48,260) $31,687 $(65,233) $52,352
======== ======= ======== =======
Basic Earnings (Loss)
Per Share:
Income (Loss) from
Continuing
Operations $(0.48) $0.36 $(0.69) $0.60
Loss from
Discontinued
Operation (0.02) - (0.02) (0.01)
----- --- ----- -----
Net Income (Loss) $(0.50) $0.36 $(0.71) $0.59
====== ===== ====== =====
Diluted Earnings
(Loss) Per Share:
Income (Loss) from
Continuing
Operations $(0.48) $0.36 $(0.69) $0.60
Loss from
Discontinued
Operation (0.02) - (0.02) (0.01)
----- --- ----- -----
Net Income (Loss) $(0.50) $0.36 $(0.71) $0.59
====== ===== ====== =====
Weighted Average
Shares Outstanding:
Basic 97,159 87,950 91,298 88,478
Diluted 97,159 88,508 91,298 89,180
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------------
2009 2008
---- ----
(As Adjusted)
Cash Flows from
Operating Activities:
Net Income (Loss) (65,233) $52,352
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 151,739 141,168
Stock-Based Compensation Expense 6,208 10,382
Deferred Income Taxes (64,535) 11,239
Provision for Doubtful Accounts
Receivable 4,468 364
Amortization of Deferred
Financing Fees 2,851 2,882
Amortization of Original Issue
Discount 3,196 2,598
Non-Cash Loss on Derivatives 5,554 -
Gain on Insurance Settlement (8,700) -
Gain on Disposal of Assets (58) (3,649)
Expense of Credit Agreement Fees 15,073 -
Gain on Early Retirement of
Debt, Net (13,747) -
Impairment of Property and Equipment 26,882 -
Excess Tax Benefit from Stock-Based
Arrangements (4,458) (5,469)
Net Change in Operating Assets and
Liabilities 61,750 (79,275)
------ -------
Net Cash Provided by Operating
Activities 120,990 132,592
Cash Flows from
Investing Activities:
Acquisition of Assets - (320,839)
Additions of Property and Equipment (71,395) (184,843)
Deferred Drydocking Expenditures (13,719) (13,547)
Proceeds from Sale of Marketable
Securities - 39,300
Insurance Proceeds Received 9,168 29,229
Proceeds from Sale of Assets, Net 23,305 14,584
Increase in Restricted Cash (3,657) -
------ ---
Net Cash Used in Investing
Activities (56,298) (436,116)
Cash Flows from Financing Activities:
Short-term Debt Borrowings
(Repayments), Net (2,455) 686
Long-term Debt Borrowings - 350,000
Long-term Debt Repayments (20,555) (106,720)
Redemption of 3.375% Convertible
Senior Notes (6,099) -
Common Stock Issuance (Repurchase) 83,344 (49,228)
Proceeds from Exercise of Stock
Options - 5,127
Excess Tax Benefit from Stock-Based
Arrangements 4,458 5,469
Payment of Debt Issuance Costs (9,931) (8,085)
Other (11) -
--- ---
Net Cash Provided by Financing
Activities 48,751 197,249
Net Increase
(Decrease) in Cash and Cash Equivalents 113,443 (106,275)
Cash and Cash Equivalents at Beginning
of Period 106,455 212,452
------- -------
Cash and Cash Equivalents at End of Period $219,898 $106,177
======== ========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
(As Adjusted) (As Adjusted)
Domestic Offshore:
Number of rigs (as
of end of
period)(a) 23 27 23 27
Revenues $18,959 $112,733 $115,110 $272,618
Operating expenses 36,476 62,849 131,635 166,896
Depreciation and
amortization
expense 15,118 17,546 45,250 49,085
General and
administrative
expenses 2,615 1,004 5,595 3,616
----- ----- ----- -----
Operating income
(loss) $(35,250) $31,334 $(67,370) $53,021
======== ======= ======== =======
International Offshore:
Number of rigs (as
of end of
period) (b) 11 12 11 12
Revenues $90,041 $95,283 $295,250 $234,813
Operating expenses 44,209 50,518 127,478 110,618
Impairment of
property and
equipment - - 26,882 -
Depreciation and
amortization
expense 16,769 9,498 48,702 26,394
General and
administrative
expenses 2,317 1,054 5,382 1,814
----- ----- ----- -----
Operating income $26,746 $34,213 $86,806 $95,987
======= ======= ======= =======
Inland:
Number of barges
(as of end of
period) (a) 17 27 17 27
Revenues $2,437 $44,436 $15,446 $124,966
Operating expenses 7,442 33,437 36,563 96,669
Depreciation and
amortization
expense 8,166 11,350 24,442 31,530
General and
administrative
expenses 360 878 1,588 2,850
--- --- ----- -----
Operating loss $(13,531) $(1,229) $(47,147) $(6,083)
======== ======= ======== =======
Domestic Liftboats:
Number of liftboats
(as of end of
period) (c) 41 45 41 45
Revenues $19,268 $25,351 $60,762 $63,564
Operating expenses 12,725 13,788 39,277 41,128
Depreciation and
amortization
expense 5,048 5,135 15,844 16,469
General and
administrative
expenses 539 600 1,454 1,717
--- --- ----- -----
Operating income $956 $5,828 $4,187 $4,250
==== ====== ====== ======
(a) In January 2009, we retired four Domestic Offshore rigs and ten Inland
barges.
(b) In August 2009, we sold Hercules 110 which was cold-stacked in
Trinidad.
(c) The number of liftboats as of September 30, 2009 reflects the transfer
of four liftboats from our Domestic Liftboats segment to our
International Liftboats segment. The financial results of these four
vessels are reflected in International Liftboats from the date of
transfer which occurred during the three months ended September 30,
2009.
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----
(As Adjusted) (As Adjusted)
International Liftboats:
Number of liftboats
(as of end of
period) (c) 24 20 24 20
Revenues $22,320 $20,323 $61,709 $58,919
Operating expenses 14,457 10,660 31,677 27,776
Depreciation and
amortization
expense 4,010 3,143 8,672 7,495
General and
administrative
expenses 1,279 1,466 3,548 3,694
----- ----- ----- -----
Operating income $2,574 $5,054 $17,812 $19,954
====== ====== ======= =======
Delta Towing:
Revenues $6,237 $17,612 $18,167 $43,458
Operating expenses 8,049 9,726 22,069 27,051
Depreciation and
amortization
expense 1,892 2,782 6,318 8,057
General and
administrative
expenses 218 645 1,024 1,930
--- --- ----- -----
Operating income
(loss) $(3,922) $4,459 $(11,244) $6,420
======= ====== ======== ======
Total Company:
Revenues $159,262 $315,738 $566,444 $798,338
Operating expenses 123,358 180,978 388,699 470,138
Impairment of
property and
equipment - - 26,882 -
Depreciation and
amortization
expense 51,802 50,256 151,739 141,150
General and
administrative
expenses 16,814 17,447 48,556 57,777
------ ------ ------ ------
Operating income
(loss) (32,712) 67,057 (49,432) 129,273
Interest
expense (24,131) (16,807) (54,481) (47,985)
Expense of
Credit
Agreement Fees (15,073) - (15,073) -
Gain on early
retirement of
debt, net - - 13,747 -
Other, net 70 543 2,760 2,818
--- --- ----- -----
Income (loss) before
income taxes (71,846) 50,793 (102,479) 84,106
Income tax
benefit
(provision) 24,876 (18,938) 39,211 (30,988)
------ ------- ------ -------
Income (loss) from
continuing
operations (46,970) 31,855 (63,268) 53,118
Loss from
discontinued
operation, net of
taxes (1,290) (168) (1,965) (766)
------ ---- ------ ----
Net income (loss) $(48,260) $31,687 $(65,233) $52,352
======== ======= ======== =======
(c) The number of liftboats as of September 30, 2009 reflects the
transfer of four liftboats from our Domestic Liftboats segment to our
International Liftboats segment. The financial results of these four
vessels are reflected in International Liftboats from the date of
transfer which occurred during the three months ended September 30,
2009.
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended September 30, 2009
----------------------------------------------------------
Average Average
Revenue Operating
Operating Available Utilization per Day Expense per
Days Days (1) (2) Day (3)
-------- --------- --------- -------- ----------
Domestic
Offshore 424 1,012 41.9% $44,715 $36,043
International
Offshore 768 1,006 76.3% 117,241 43,945
Inland 116 276 42.0% 21,009 26,964
Domestic
Liftboats 2,466 3,596 68.6% 7,813 3,539
International
Liftboats 1,149 1,840 62.4% 19,426 7,857
Three Months Ended September 30, 2008
----------------------------------------------------------
Average Average
Revenue Operating
Operating Available Utilization per Day Expense per
Days Days (1) (2) Day (3)
-------- --------- --------- -------- ----------
Domestic
Offshore 1,673 2,116 79.1% $67,384 $29,702
International
Offshore 729 773 94.3% 130,704 65,353
Inland 1,142 1,472 77.6% 38,911 22,715
Domestic
Liftboats 3,132 3,864 81.1% 8,094 3,568
International
Liftboats 1,143 1,656 69.0% 17,780 6,437
Nine Months Ended September 30, 2009
----------------------------------------------------------
Average Average
Revenue Operating
Operating Available Utilization per Day Expense per
Days Days (1) (2) Day (3)
-------- --------- --------- -------- ----------
Domestic
Offshore 1,994 3,532 56.5% $57,728 $37,269
International
Offshore 2,351 2,763 85.1% 125,585 46,138
Inland 414 1,302 31.8% 37,309 28,082
Domestic
Liftboats 7,349 11,308 65.0% 8,268 3,473
International
Liftboats 3,072 5,279 58.2% 20,088 6,001
Nine Months Ended September 30, 2008
----------------------------------------------------------
Average Average
Revenue Operating
Operating Available Utilization per Day Expense per
Days Days (1) (2) Day (3)
-------- --------- --------- -------- ----------
Domestic
Offshore 4,383 6,142 71.4% $62,199 $27,173
International
Offshore 2,025 2,214 91.5% 115,957 49,963
Inland 3,097 4,505 68.7% 40,351 21,458
Domestic
Liftboats 7,198 11,921 60.4% 8,831 3,450
International
Liftboats 3,691 4,793 77.0% 15,963 5,795
(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 $4.3 million and $12.3 million related to
amortization of deferred mobilization revenue and contract specific
capital expenditures reimbursed by the customer for the three and
nine months ended September 30, 2009, respectively and $3.1 million
and $9.3 million for the three and nine months ended September 30,
2008, respectively. Included in International Liftboats revenue is a
total of $0.1 million and $0.2 million related to amortization of
deferred mobilization revenue for the three and nine months ended
September 30, 2009, respectively. There was no such revenue in the
three months nor the nine months ended September 30, 2008 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 $1.3 million and $2.7 million related
to amortization of deferred mobilization expenses for the three and
nine months ended September 30, 2009, respectively and $1.6 million
and $4.6 million for the three and nine months ended September 30,
2008, respectively.
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. One such non-GAAP
financial measure we may present from time to time is operating income,
income from continuing operations or diluted earnings per share excluding
certain charges or amounts. This adjusted income amount is not a measure
of financial performance under GAAP. Accordingly, it 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 months ended September 30, 2009 and the nine months ended September
30, 2009 and 2008. 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 2008
---- ---- ----
Operating Income
(Loss):
GAAP Operating
Income (Loss) $(32,712) $(49,432) $129,273
Adjustment - (a) 26,882 (b) 5,509 (c)
--- ------ -----
Non-GAAP Operating
Income (Loss) $(32,712) $(22,550) $134,782
======== ======== ========
Other Income
(Expense):
GAAP Other Income
(Expense) $(39,134) $(53,047) $(45,167)
Adjustment 15,073 (a) 1,326 (b) - (c)
------ ----- ---
Non-GAAP Other
Expense $(24,061) $(51,721) $(45,167)
======== ======== ========
Benefit (Provision)
for Income Taxes:
GAAP Benefit
(Provision) for
Income Taxes $24,876 $39,211 $(30,988)
Tax Impact of
Adjustment (5,276) (a) (14,242) (b) (1,928) (c)
------ ------- ------
Non-GAAP Benefit
(Provision) for
Income Taxes $19,600 $24,969 $(32,916)
======= ======= ========
Income (Loss) from
Continuing
Operations:
GAAP Income (Loss)
from Continuing
Operations $(46,970) $(63,268) $53,118
Total Adjustment,
Net of Tax 9,797 (a) 13,966 (b) 3,581 (c)
----- ------ -----
Non-GAAP Income
(Loss) from
Continuing
Operations $(37,173) $(49,302) $56,699
======== ======== =======
Diluted Earnings
(Loss) per Share
from Continuing
Operations:
GAAP Diluted
Earnings (Loss)
per Share from
Continuing
Operations $(0.48) $(0.69) $0.60
Adjustment per
Share 0.10 (a) 0.15 (b) 0.04 (c)
---- ---- ----
Non-GAAP Diluted
Earnings (Loss)
per Share from
Continuing
Operations $(0.38) $(0.54) $0.64
====== ====== =====
(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.
(c) These amounts represent $5.5 million of separation and benefit related
costs associated with the Company's executive management changes. On an
after-tax basis, these adjustments approximated $3.6 million, or four
cents per diluted share, for the nine months ended September 30, 2008.
SOURCE Hercules Offshore, Inc.
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