Hercules (HERO) Offshore Announces Fourth Quarter and Full Year 2009 Results
Mar. 2, 2010 (PR Newswire) —
HOUSTON, March 2 /PRNewswire-FirstCall/ — Hercules Offshore, Inc. (Nasdaq: HERO) today reported a loss from continuing operations of $26.9 million, or $0.23 per diluted share, on revenues of $176.4 million for the fourth quarter ended December 31, 2009, versus a loss from continuing operations of $1.1 billion, or $12.90 per diluted share, on revenues of $313.5 million for the quarter ended December 31, 2008.
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When adjusting for certain items outlined in the attached Reconciliation of GAAP to Non-GAAP Financial Measures, the Company reported a loss from continuing operations of $25.8 million, or $0.23 per diluted share for the fourth quarter 2009, compared with income from continuing operations of $36.2 million, or $0.41 per diluted share for the fourth quarter 2008, also adjusted for certain items. The fourth quarter 2009 loss of $0.23 per diluted share has not been adjusted for the accounts receivable reserve and related items associated with the Hercules 185 which adversely impacted the results on a pre-tax basis by a net of $31.6 million. The accounts receivable reserve associated with Hercules 185 was reduced from the previously announced amount by $3.0 million due to a payment received.
The Company reported a loss from continuing operations of $90.1 million, or $0.93 per diluted share, on revenues of $742.9 million for the twelve month period ended December 31, 2009, versus a loss from continuing operations of $1.1 billion, or $12.25 per diluted share, on revenues of $1.1 billion for the twelve month period ended December 31, 2008.
The Company reported a loss from continuing operations for the twelve months ended December 31, 2009, of $75.2 million, or $0.77 per diluted share, as adjusted for certain items, compared to income from continuing operations of $92.9 million, or $1.04 per diluted share for the twelve months ended December 31, 2008, also adjusted for certain items.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “Our fourth quarter 2009 results were adversely impacted by the accounts receivable reserve in International Offshore as well as relatively weak business conditions in our Domestic Offshore and Inland segments. However, solid results from our cost reduction measures partially offset these challenges. Overall, 2009 was one of the most difficult years our industry has ever seen and I am extremely proud of the proactive response by our management team and employees to enhance revenue opportunities, eliminate costs, reduce capital spending and strengthen our capital structure.”
Mr. Rynd continued, “While the slope of the recovery is still uncertain, we believe that the recovery is underway, as evidenced by the recent increase in our Domestic Offshore activity levels and our increasing backlog which is providing better visibility than we have had in over a year. The recent strengthening and stabilization in commodity prices, reduced oilfield service costs, the improvement in the capital markets and feedback we have received from our customers are all pointing toward increasing exploration and production spending both in the U.S. and internationally, which serve to reinforce our belief that the industry has entered the initial stages of recovery.”
Offshore
Domestic Offshore revenues in the fourth quarter 2009 decreased to $25.8 million from $109.7 million in the fourth quarter 2008 due to declines in both operating days and dayrates which were primarily caused by weak demand. Fourth quarter 2009 average revenue per rig per day decreased to $37,799 compared to $72,008 in the fourth quarter 2008, while operating days declined to 682 from 1,524, in the same periods, respectively. The decline in revenue was partially offset by a 28% reduction in operating costs to $43.8 million in the fourth quarter 2009 from $61.0 million in the fourth quarter 2008 as a result of the Company’s stacking plan. Domestic Offshore recorded an operating loss of $34.5 million for the fourth quarter 2009 compared with operating income of $29.9 million, before the impairment of property and equipment and goodwill, for the fourth quarter 2008.
International Offshore generated revenues of $98.5 million in the fourth quarter 2009, a slight increase from $93.2 million in the fourth quarter 2008. Average revenue per rig per day increased to $131,571 from $127,981 in the same periods, respectively, despite a decline in market dayrates as the Company benefitted from a change in the mix of rigs working. Operating days increased modestly to 749 in the fourth quarter 2009 from 728 in the fourth quarter 2008, as a result of the fourth quarter 2008 and first quarter 2009 commencement of operations on our two jackup rigs operating in Saudi Arabia, largely offset by fewer operating days on the Hercules 156 and Hercules 170, which were warm stacked earlier in 2009, and the Hercules 206, which has mobilized to the U.S. Gulf of Mexico in November 2009 from Mexico. Fourth quarter 2009 operating income was $11.2 million, including the net charge of $31.6 million related to the Hercules 185 compared to operating income of $43.3 million in the comparable quarter, excluding the impairment of goodwill. The Company continues to pursue all commercial and legal avenues for the collection of the receivable related to the Hercules 185. Although the amount owed by the customer remains undisputed and the Company recently received a $3.0 million payment from the customer, the collection of the receivable remains uncertain.
Inland
During the fourth quarter 2009, Inland revenues declined to $4.3 million from $37.5 million in the fourth quarter 2008 due to extremely weak demand, which also led to a decline in average revenue per rig per day to $18,346 from $39,454 in the same periods, respectively. Operating days declined to 237 in the fourth quarter 2009 from 951 in the fourth quarter 2008. However, utilization of marketed rigs increased to 85.9% in the fourth quarter 2009 from 68.9% in the comparable period of 2008 because of significantly reduced available days resulting from our stacking plan, which also led to a 72.3% reduction in operating expenses to $8.0 million in the fourth quarter 2009 from $29.0 million in the fourth quarter 2008. Inland recorded an operating loss of $11.9 million in the fourth quarter 2009 versus a fourth quarter 2008 operating loss of $8.5 million excluding the effect of impairment charges.
Liftboats
Domestic Liftboats generated revenues of $14.8 million during the fourth quarter 2009 compared to revenues of $31.2 million in the fourth quarter 2008. Utilization decreased to 62.5% in the fourth quarter 2009, following a mild hurricane season from 81.4% in the same period of 2008, which was bolstered by repair work stemming from Hurricanes Gustav and Ike. As a result of the reduced demand and a fleet mix shift following the mobilization of four of our larger class liftboats to West Africa, average revenue per liftboat per day declined to $6,780 in the fourth quarter 2009 from $9,918 in the fourth quarter 2008. The reduced fleet size and decline in utilization led to a reduction in operating income to approximately $353,000 in fourth quarter 2009 from $12.3 million in the fourth quarter 2008.
During the fourth quarter 2009, International Liftboats generated revenues of $26.8 million compared to $27.0 million in the fourth quarter 2008. Average revenue per liftboat per day increased slightly to $21,972 from $20,177 in the fourth quarters of 2009 and 2008, respectively. Partially offsetting the higher average revenue per liftboat per day was a decrease in utilization to 63.3% in the fourth quarter 2009 from 78.3% in the fourth quarter 2008, due to weak demand, particularly for the smaller vessels, and an extensive drydocking schedule. Our average operating expense per liftboat per day increased to $8,582 in the fourth quarter 2009 from $6,643 in the fourth quarter 2008 largely driven by expenses related to the mobilization of the four aforementioned liftboats as well as the mix shift in the type of liftboats. As a result, operating income decreased to $4.6 million in the fourth quarter 2009 from $10.9 million in the fourth quarter 2008.
Liquidity and Capitalization
At December 31, 2009, the Company had unrestricted cash and equivalents totaling $140.8 million and unused capacity of $165.0 million under its revolving credit facility. As of December 31, 2009, the Company’s balance sheet reflects total debt of $861.7 million. Cash flow provided by operations was $17.9 million and capital expenditures plus deferred drydocking expenditures were $6.7 million during the three months ended December 31, 2009.
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 (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, 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 Income (Loss), Net Income (Loss) From Continuing Operations and Diluted Earnings (Loss) per Share from Continuing Operations.
Conference Call Information
Hercules Offshore will conduct a conference call at 10:00 a.m. CST (11:00 a.m. EST) on Tuesday, March 2, 2010, to discuss its fourth quarter and year end 2009 financial results. To participate in the call, dial 800-901-5231 (domestic) or 617-786-2961 (international) and reference access code 99167334 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 Tuesday, March 2, 2010, beginning at 1:00 p.m. CST (2:00 p.m. EST), through Tuesday, March 9, 2010. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international) with reference code 93181822. 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. All statements, other than statements of historical fact, included in this news release that address outlook, activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. 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. Risks and uncertainties that may affect our actual results include, among other things, oil and natural gas prices and industry expectations about future prices; demand for our rigs and vessels; future utilization rates and dayrates; our ability to enter into and the terms of future contracts and the collection of accounts receivable; sufficiency and availability of financing and compliance with our debt covenants; the impact of governmental laws and regulations; increases in operating expenses; uncertainties relating to the level of activity in offshore oil and natural gas exploration, development and production; labor relations and work stoppages; operating hazards such as severe weather and seas, fires, blowouts, war, terrorism, and inadequate insurance coverage; compliance with or breach of environmental laws; the business impact of newly constructed rigs; the effect of litigation and contingencies; and the inability to carry out our business strategies.
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $140,828 $106,455
Restricted Cash 3,658 -
Accounts Receivable, Net 133,662 293,089
Prepaids 13,706 23,033
Current Deferred Tax Asset 22,885 17,379
Assets Held for Sale - 39,623
Other 6,675 19,946
----- ------
321,414 499,525
Property and Equipment, Net 1,923,603 2,049,030
Other Assets, Net 32,459 42,340
------ ------
$2,277,476 $2,590,895
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term Debt and Current Portion
of Long-term Debt $4,952 $11,455
Insurance Notes Payable 5,484 11,126
Accounts Payable 51,868 99,823
Accrued Liabilities 67,773 83,424
Interest Payable 6,624 506
Taxes Payable 5,671 32,440
Other Current Liabilities 34,229 35,966
------ ------
176,601 274,740
Long-term Debt, Net of Current Portion 856,755 1,015,764
Other Liabilities 19,809 35,529
Deferred Income Taxes 245,799 339,547
Commitments and Contingencies
Stockholders' Equity 978,512 925,315
------- -------
$2,277,476 $2,590,895
========== ==========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -------------------------
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
Revenues $176,407 $313,469 $742,851 $1,111,807
Costs and Expenses:
Operating Expenses 125,437 161,573 514,136 631,711
Impairment of
Goodwill - 950,287 - 950,287
Impairment of
Property and
Equipment - 376,668 26,882 376,668
Depreciation and
Amortization 49,682 51,744 201,421 192,894
General and
Administrative 44,002 23,383 92,558 81,160
------ ------ ------ ------
219,121 1,563,655 834,997 2,232,720
------- --------- ------- ---------
Operating Loss (42,714) (1,250,186) (92,146) (1,120,913)
Other Income (Expense):
Interest Expense (23,505) (15,793) (77,986) (63,778)
Expense of Credit
Agreement Fees - - (15,073) -
Gain (Loss) on Early
Retirement of Debt,
Net (1,590) 26,345 12,157 26,345
Other, Net 1,207 497 3,967 3,315
----- --- ----- -----
Loss Before
Income Taxes (66,602) (1,239,137) (169,081) (1,155,031)
Income Tax Benefit 39,721 104,149 78,932 73,161
------ ------- ------ ------
Loss from Continuing
Operations (26,881) (1,134,988) (90,149) (1,081,870)
Income (Loss) from
Discontinued
Operation, Net of
Taxes 380 (754) (1,585) (1,520)
--- ---- ------ ------
Net Loss $(26,501) $(1,135,742) $(91,734) $(1,083,390)
======== =========== ======== ===========
Basic Loss Per Share:
Loss from Continuing
Operations $(0.23) $(12.90) $(0.93) $(12.25)
Income (Loss)
from Discontinued
Operation - (0.01) (0.01) (0.01)
--- ----- ----- -----
Net Loss $(0.23) $(12.91) $(0.94) $(12.26)
====== ======= ====== =======
Diluted Loss Per Share:
Loss from Continuing
Operations $(0.23) $(12.90) $(0.93) $(12.25)
Income (Loss)
from Discontinued
Operation - (0.01) (0.01) (0.01)
--- ----- ----- -----
Net Loss $(0.23) $(12.91) $(0.94) $(12.26)
====== ======= ====== =======
Weighted Average
Shares Outstanding:
Basic 114,564 87,970 97,114 88,351
Diluted 114,564 87,970 97,114 88,351
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months Ended
December 31,
-------------------
2009 2008
---- ----
(Unaudited)
Cash Flows from Operating Activities:
Net Loss (91,734) $(1,083,390)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 201,421 192,918
Stock-Based Compensation Expense 8,257 12,535
Deferred Income Taxes (89,295) (118,685)
Provision for Doubtful Accounts
Receivable 32,912 6,167
Amortization of Deferred Financing Fees 3,594 4,036
Amortization of Original Issue Discount 4,120 4,292
Non-Cash Loss on Derivatives 1,429 -
Gain on Insurance Settlement (8,700) -
Gain on Disposal of Assets (970) (3,029)
Expense of Credit Agreement Fees 15,073 -
Gain on Early Retirement of Debt, Net (12,157) (26,345)
Impairment of Goodwill - 950,287
Impairment of Property and Equipment 26,882 376,668
Excess Tax Benefit from Stock-Based
Arrangements (4,571) (5,860)
Net Change in Operating Assets and
Liabilities 52,658 (39,646)
------ -------
Net Cash Provided by Operating
Activities 138,919 269,948
Cash Flows from Investing Activities:
Acquisition of Assets - (320,839)
Additions of Property and Equipment (76,141) (264,245)
Deferred Drydocking Expenditures (15,646) (17,269)
Proceeds from Sale of Marketable Securities - 39,300
Insurance Proceeds Received 9,168 30,221
Proceeds from Sale of Assets, Net 25,767 17,045
Increase in Restricted Cash (3,658) -
------ ---
Net Cash Used in Investing
Activities (60,510) (515,787)
Cash Flows from Financing Activities:
Short-term Debt Borrowings (Repayments),
Net (2,455) 2,455
Long-term Debt Borrowings 292,149 350,000
Long-term Debt Repayments (403,648) (121,427)
Redemption of 3.375% Convertible Senior
Notes (6,099) (44,848)
Common Stock Issuance (Repurchase) 89,600 (49,228)
Proceeds from Exercise of Stock Options - 5,127
Excess Tax Benefit from Stock-Based
Arrangements 4,571 5,860
Payment of Debt Issuance Costs (18,143) (8,097)
Other (11) -
--- ---
Net Cash Provided by (Used in)
Financing Activities (44,036) 139,842
Net Increase (Decrease) in Cash and
Cash Equivalents 34,373 (105,997)
Cash and Cash Equivalents at Beginning
of Period 106,455 212,452
------- -------
Cash and Cash Equivalents at End of
Period $140,828 $106,455
======== ========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
---- ---- ---- ----
Domestic Offshore:
Number of rigs (as of end
of period) (a) 24 27 24 27
Revenues $25,779 $109,740 $140,889 $382,358
Operating expenses 43,838 60,988 175,473 227,884
Impairment of goodwill - 507,194 - 507,194
Impairment of property and
equipment - 174,613 - 174,613
Depreciation and
amortization expense 15,525 17,765 60,775 66,850
General and administrative
expenses 901 1,057 6,496 4,673
--- ----- ----- -----
Operating loss $(34,485) $(651,877) $(101,855) $(598,856)
======== ========= ========= =========
International Offshore:
Number of rigs (as of end
of period) (b) 10 12 10 12
Revenues $98,547 $93,170 $393,797 $327,983
Operating expenses 41,940 37,281 169,418 147,899
Impairment of goodwill - 150,886 - 150,886
Impairment of property and
equipment - - 26,882 -
Depreciation and
amortization expense 15,106 11,471 63,808 37,865
General and administrative
expenses 30,312 1,166 35,694 2,980
------ ----- ------ -----
Operating income (loss) $11,189 $(107,634) $97,995 $(11,647)
======= ========= ======= ========
Inland:
Number of barges (as of
end of period) (a) 17 27 17 27
Revenues $4,348 $37,521 $19,794 $162,487
Operating expenses 8,030 28,987 44,593 125,656
Impairment of goodwill - 205,474 - 205,474
Impairment of property and
equipment - 202,055 - 202,055
Depreciation and
amortization expense 8,023 11,577 32,465 43,107
General and administrative
expenses 243 5,497 1,831 8,347
--- ----- ----- -----
Operating loss $(11,948) $(416,069) $(59,095) $(422,152)
======== ========= ======== =========
Domestic Liftboats:
Number of liftboats
(as of end of period) (C) 41 45 41 45
Revenues $14,822 $31,191 $75,584 $94,755
Operating expenses 9,461 13,346 48,738 54,474
Depreciation and
amortization expense 4,423 4,848 20,267 21,317
General and administrative
expenses 585 669 2,039 2,386
--- --- ----- -----
Operating income $353 $12,328 $4,540 $16,578
==== ======= ====== =======
(a) In January 2009, we retired four Domestic Offshore rigs and ten
Inland barges. In November 2009, we transferred Hercules 206 to
Domestic Offshore to be cold-stacked.
(b) In August 2009, we sold Hercules 110 which was cold-stacked in
Trinidad. In November 2009, we transferred Hercules 206 to Domestic
Offshore to be cold-stacked.
(c) The number of liftboats as of December 31, 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 Twelve Months Ended
December 31, December 31,
------------------ --------------------
2009 2008 2009 2008
---- ---- ---- ----
International Liftboats:
Number of liftboats
(as of end of
period) (C) 24 20 24 20
Revenues $26,828 $26,977 $88,537 $85,896
Operating expenses 16,563 11,346 48,240 39,122
Depreciation and
amortization expense 4,208 2,417 12,880 9,912
General and
administrative
expenses 1,442 2,296 4,990 5,990
----- ----- ----- -----
Operating income $4,615 $10,918 $22,427 $30,872
====== ======= ======= =======
Delta Towing:
Revenues $6,083 $14,870 $24,250 $58,328
Operating expenses 5,605 9,625 27,674 36,676
Impairment of goodwill - 86,733 - 86,733
Depreciation and
amortization expense 1,599 2,869 7,917 10,926
General and
administrative
expenses 312 2,128 1,336 4,058
--- ----- ----- -----
Operating loss $(1,433) $(86,485) $(12,677) $(80,065)
======= ======== ======== ========
Total Company:
Revenues $176,407 $313,469 $742,851 $1,111,807
Operating expenses 125,437 161,573 514,136 631,711
Impairment of
goodwill - 950,287 - 950,287
Impairment of
property and
equipment - 376,668 26,882 376,668
Depreciation and
amortization expense 49,682 51,744 201,421 192,894
General and
administrative
expenses 44,002 23,383 92,558 81,160
------ ------ ------ ------
Operating loss (42,714) (1,250,186) (92,146) (1,120,913)
Interest expense (23,505) (15,793) (77,986) (63,778)
Expense of Credit
Agreement Fees - - (15,073) -
Gain (Loss) on early
retirement of debt,
net (1,590) 26,345 12,157 26,345
Other, net 1,207 497 3,967 3,315
----- --- ----- -----
Loss before income
taxes (66,602) (1,239,137) (169,081) (1,155,031)
Income tax benefit 39,721 104,149 78,932 73,161
------ ------- ------ ------
Loss from continuing
operations (26,881) (1,134,988) (90,149) (1,081,870)
Income (loss) from
discontinued
operation,
net of taxes 380 (754) (1,585) (1,520)
--- ---- ------ ------
Net Loss $(26,501) $(1,135,742) $(91,734) $(1,083,390)
======== =========== ======== ===========
(c) The number of liftboats as of December 31, 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 December 31, 2009
------------------------------------
Average
Average Operating
Operating Available Revenue per Expense per
Days Days Utilization(1) Day(2) Day (3)
---- ---- ------------- ------ -------
Domestic
Offshore 682 1,012 67.4% $37,799 $43,318
International
Offshore 749 951 78.8% 131,571 44,101
Inland 237 276 85.9% 18,346 29,094
Domestic
Liftboats 2,186 3,496 62.5% 6,780 2,706
International
Liftboats 1,221 1,930 63.3% 21,972 8,582
Three Months Ended December 31, 2008
------------------------------------
Average
Average Operating
Operating Available Revenue per Expense per
Days Days Utilization(1) Day(2) Day (3)
---- ---- ------------- ------ -------
Domestic
Offshore 1,524 2,024 75.3% $72,008 $30,132
International
Offshore 728 791 92.0% 127,981 47,131
Inland 951 1,380 68.9% 39,454 21,005
Domestic
Liftboats 3,145 3,864 81.4% 9,918 3,454
International
Liftboats 1,337 1,708 78.3% 20,177 6,643
Twelve Months Ended December 31, 2009
-------------------------------------
Average
Average Operating
Operating Available Revenue per Expense per
Days Days Utilization(1) Day(2) Day (3)
---- ---- ------------- ------ -------
Domestic
Offshore 2,676 4,544 58.9% $52,649 $38,616
International
Offshore 3,100 3,714 83.5% 127,031 45,616
Inland 651 1,578 41.3% 30,406 28,259
Domestic
Liftboats 9,535 14,804 64.4% 7,927 3,292
International
Liftboats 4,293 7,209 59.6% 20,624 6,692
Twelve Months Ended December 31, 2008
-------------------------------------
Average
Average Operating
Operating Available Revenue per Expense per
Days Days Utilization(1) Day(2) Day (3)
---- ---- ------------- ------ -------
Domestic
Offshore 5,907 8,166 72.3% $64,730 $27,906
International
Offshore 2,753 3,005 91.6% 119,137 49,218
Inland 4,048 5,885 68.8% 40,140 21,352
Domestic
Liftboats 10,343 15,785 65.5% 9,161 3,451
International
Liftboats 5,028 6,501 77.3% 17,084 6,018
(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 $3.9 million and $16.3 million related to
amortization of deferred mobilization revenue and contract specific
capital expenditures reimbursed by the customer for the three and
twelve months ended December 31, 2009, respectively and $2.3 million
and $11.6 million for the three and twelve months ended December 31,
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 twelve months ended
December 31, 2009, respectively and $0.3 million for both the three
and twelve months ended December 31, 2008.
(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 $3.6 million and $6.3 million
related to amortization of deferred mobilization expenses, including
a $2.6 million charge to impair the deferred mobilization costs
related to one international contract, for the three and twelve
months ended December 31, 2009, respectively and $1.0 million and
$5.6 million for the three and twelve months ended December 31, 2008,
respectively. Included in International Liftboats operating expense
is a total of $0.2 million related to amortization of deferred
mobilization expenses for both the three and twelve months ended
December 31, 2009. There was no such operating expense for the
three and twelve months ended December 31, 2008.
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 and twelve months ended December 31, 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 Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
---- ---- ---- ----
Operating Income (Loss):
GAAP Operating
Loss $(42,714) $(1,250,186) $(92,146) $(1,120,913)
Adjustment -(a) 1,328,914(b) 26,882(c) 1,334,423(d)
--- --------- ------ ---------
Non-GAAP Operating
Income (Loss) $(42,714) $78,728 $(65,264) $213,510
======== ======= ======== ========
Other Income (Expense):
GAAP Other Income
(Expense) $(23,888) $11,049 $(76,935) $(34,118)
Adjustment 1,590(a) (26,345)(b) 2,916(c) (26,345)(d)
----- ------- ----- -------
Non-GAAP Other
Expense $(22,298) $(15,296) $(74,019) $(60,463)
======== ======== ======== ========
Benefit (Provision) for
Income Taxes:
GAAP Benefit for
Income Taxes $39,721 $104,149 $78,932 $73,161
Tax Impact of
Adjustment (557)(a) (131,403)(b) (14,799)(c) (133,331)(d)
---- -------- ------- --------
Non-GAAP Benefit
(Provision) for
Income Taxes $39,164 $(27,254) $64,133 $(60,170)
======= ======== ======= ========
Income (Loss) from
Continuing Operations:
GAAP Loss from
Continuing
Operations $(26,881) $(1,134,988) $(90,149) $(1,081,870)
Total Adjustment,
Net of Tax 1,033(a) 1,171,166(b) 14,999(c) 1,174,747(d)
----- --------- ------ ---------
Non-GAAP Income
(Loss) from
Continuing
Operations $(25,848) $36,178 $(75,150) $92,877
======== ======= ======== =======
Diluted Earnings (Loss) per
Share from Continuing
Operations:
GAAP Diluted Loss
per Share from
Continuing
Operations $(0.23) $(12.90) $(0.93) $(12.25)
Adjustment
per Share -(a) 13.31(b) 0.16(c) 13.29(d)
--- ----- ---- -----
Non-GAAP Diluted
Earnings (Loss)
per Share from
Continuing
Operations $(0.23) $0.41 $(0.77) $1.04
====== ===== ====== =====
(a) This amount represents a non-cash charge of $1.6 million related to
the write-off of unamortized issuance cost in connection with the
early retirement of a portion of our term loan facility. On an after-
tax basis, this adjustment approximated $1.0 million, or zero cents
per diluted share.
(b) These amounts represent a non-cash charge of $1.3 billion to reflect
the impairment of goodwill and property and equipment, $2.0 million
of separation and benefit related costs associated with the Company's
executive management changes, a $28.4 million gain on the repurchase
of $88.2 million aggregate principal amount of the Company's 3.375%
Convertible Senior Notes as well as the related write-off of
unamortized issuance costs of $2.1 million. On an after-tax basis,
these adjustments approximated $1.2 billion, or $13.31 per diluted
share.
(c) 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; (v) a $4.3 million charge
related to certain fees paid to third-parties associated with the
amendment of our Credit Agreement and (vi) a non-cash charge of $1.6
million related to the write-off of unamortized issuance cost in
connection with the early retirement of a portion of our term loan
facility. On an after-tax basis, these adjustments approximated $15.0
million, or 16 cents per diluted share.
(d) These amounts represent a non-cash charge of $1.3 billion to reflect
the impairment of goodwill and property and equipment, $7.5 million of
separation and benefit related costs associated with the Company's
executive management changes, a $28.4 million gain on the repurchase
of $88.2 million aggregate principal amount of the Company's 3.375%
Convertible Senior Notes as well as the related write-off of
unamortized issuance costs of $2.1 million. On an after-tax basis,
these adjustments approximated $1.2 billion, or $13.29 per diluted
share.
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