4 unchanged sentences
(in thousands)
−Removed: September 30,
Current assets:
Cash and cash equivalents
−Removed: Accounts receivable:
−Removed: Trade, net of allowance for uncollectible accounts of $0
−Removed: Unbilled and other
+Added: Restricted cash
+Added: Accounts receivable, net of allowance for credit losses of $1,371 and $0, respectively
Other current assets
9 unchanged sentences
Accrued liabilities
−Removed: Income tax payable
Current maturities of long-term debt
19 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Cost of sales
−Removed: Gain on disposition of assets, net
+Added: Goodwill impairment
Selling, general and administrative expenses
−Removed: Income from operations
+Added: Income (loss) from operations
Equity in losses of investment
Net interest expense
−Removed: Loss on extinguishment of long-term debt
−Removed: Other expense, net
+Added: Other income (expense), net
Royalty income and other
−Removed: Income before income taxes
−Removed: Income tax provision
+Added: Income (loss) before income taxes
+Added: Income tax provision (benefit)
+Added: Net income (loss)
Net loss attributable to redeemable noncontrolling interests
−Removed: Net income attributable to common shareholders
−Removed: Earnings per share of common stock:
+Added: Net income (loss) attributable to common shareholders
+Added: Earnings (loss) per share of common stock:
Weighted average common shares outstanding:
2 unchanged sentences
AND SUBSIDIARIES
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Added: CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Other comprehensive loss, net of tax:
−Removed: Net unrealized gain (loss) on hedges arising during the period
−Removed: Reclassifications to net income
+Added: Net income (loss)
+Added: Other comprehensive income (loss), net of tax:
+Added: Net unrealized loss on hedges arising during the period
+Added: Reclassifications to net (income) loss
Income taxes on hedges
Net change in hedges, net of tax
−Removed: Unrealized loss on note receivable arising during the period
−Removed: Income taxes on note receivable
−Removed: Unrealized loss on note receivable, net of tax
−Removed: Foreign currency translation loss
−Removed: Other comprehensive loss, net of tax
−Removed: Comprehensive income
+Added: Foreign currency translation gain (loss)
+Added: Other comprehensive income (loss), net of tax
+Added: Comprehensive income (loss)
Less comprehensive loss attributable to redeemable noncontrolling interests:
1 unchanged sentence
Comprehensive loss attributable to redeemable noncontrolling interests
−Removed: Comprehensive income attributable to common shareholders
−Removed: The accompanying notes are an integral part of these condensed consolidated financial statements.
−Removed: HELIX ENERGY SOLUTIONS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
−Removed: (in thousands)
−Removed: Comprehensive
−Removed: Shareholders’
−Removed: Redeemable Noncontrolling Interests
−Removed: Balance, June 30, 2019
−Removed: Net income (loss)
−Removed: Foreign currency translation adjustments
−Removed: Unrealized gain on hedges, net of tax
−Removed: Accretion of redeemable noncontrolling interests
−Removed: Activity in company stock plans, net and other
−Removed: Share-based compensation
−Removed: Balance, September 30, 2019
−Removed: Comprehensive
−Removed: Shareholders’
−Removed: Redeemable Noncontrolling Interests
−Removed: Balance, June 30, 2018
−Removed: Foreign currency translation adjustments
−Removed: Unrealized gain on hedges, net of tax
−Removed: Equity component of debt discount on convertible senior notes
−Removed: Activity in company stock plans, net and other
−Removed: Share-based compensation
−Removed: Balance, September 30, 2018
+Added: Comprehensive income (loss) attributable to common shareholders
The accompanying notes are an integral part of these condensed consolidated financial statements.
5 unchanged sentences
Shareholders’
−Removed: Redeemable Noncontrolling Interests
+Added: Noncontrolling
Balance, December 31, 2019
−Removed: Net income (loss)
−Removed: Reclassification of deferred gain from sale and leaseback transaction to retained earnings
+Added: Expected credit losses recognized in retained earnings upon adoption of ASU 2016-13
Foreign currency translation adjustments
Unrealized gain on hedges, net of tax
−Removed: Issuance of redeemable noncontrolling interests
Accretion of redeemable noncontrolling interests
1 unchanged sentence
Share-based compensation
−Removed: Balance, September 30, 2019
+Added: Balance, March 31, 2020
Comprehensive
Shareholders’
−Removed: Redeemable Noncontrolling Interests
+Added: Noncontrolling
Balance, December 31, 2018
−Removed: Reclassification of stranded tax effect to retained earnings
+Added: Reclassification of deferred gain from sale and leaseback transaction to retained earnings
Foreign currency translation adjustments
Unrealized gain on hedges, net of tax
−Removed: Unrealized loss on note receivable, net of tax
−Removed: Equity component of debt discount on convertible senior notes
Activity in company stock plans, net and other
Share-based compensation
−Removed: Balance, September 30, 2018
+Added: Balance, March 31, 2019
The accompanying notes are an integral part of these condensed consolidated financial statements.
3 unchanged sentences
(in thousands)
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
Cash flows from operating activities:
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Net income (loss)
+Added: Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization
+Added: Goodwill impairment
Amortization of debt discounts
3 unchanged sentences
Equity in losses of investment
−Removed: Gain on disposition of assets, net
−Removed: Loss on extinguishment of long-term debt
Unrealized gain on derivative contracts, net
−Removed: Changes in operating assets and liabilities, net of acquisitions:
+Added: Unrealized foreign currency (gain) loss
+Added: Changes in operating assets and liabilities:
Accounts receivable, net
+Added: Income tax receivable
Other current assets
−Removed: Income tax payable, net of income tax receivable
Accounts payable and accrued liabilities
−Removed: Net cash provided by operating activities
+Added: Net cash used in operating activities
Cash flows from investing activities:
Capital expenditures
−Removed: STL acquisition, net
Proceeds from sale of assets
1 unchanged sentence
Cash flows from financing activities:
−Removed: Issuance of Convertible Senior Notes due 2023
−Removed: Repurchase of Convertible Senior Notes due 2032
−Removed: Proceeds from term loan
−Removed: Repayment of term loan
+Added: Repayment of term loans
Repayment of Nordea Q5000 Loan
4 unchanged sentences
Net cash used in financing activities
−Removed: Effect of exchange rate changes on cash and cash equivalents
−Removed: Net increase in cash and cash equivalents
−Removed: Cash and cash equivalents:
+Added: Effect of exchange rate changes on cash and cash equivalents and restricted cash
+Added: Net decrease in cash and cash equivalents and restricted cash
+Added: Cash and cash equivalents and restricted cash:
Balance, beginning of year
12 unchanged sentences
The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S.
−Removed: dollars and are consistent in all material respects with those applied in our 2018 Annual Report on Form 10-K (“ 2018 Form 10-K”) with the exception of the impact of adopting the new lease accounting standard in 2019 (see below).
+Added: dollars and are consistent in all material respects with those applied in our 2019 Annual Report on Form 10-K (our “ 2019 Form 10-K”) with the exception of the impact of adopting the new credit loss accounting standard in 2020 (see below).
The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures.
1 unchanged sentence
We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income and statements of cash flows, as applicable.
−Removed: The operating results for the three- and nine- month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 .
+Added: The operating results for the three- month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 .
Our balance sheet as of December 31, 2019 included herein has been derived from the audited balance sheet as of December 31, 2019 included in our 2019 Form 10-K.
1 unchanged sentence
Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.
+Added: In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic.
+Added: The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations in efforts to control the spread of COVID-19 such as shelter-in-place orders, quarantines, executive orders and similar restrictions.
+Added: As a result, the global economy has been marked by significant slowdown and uncertainty, which has led to a precipitous decline in oil prices in response to demand concerns, further exacerbated by the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”) during the first quarter 2020 and global storage considerations.
+Added: The decline in oil prices has resulted in a significantly weaker outlook for oil and gas producers, who have begun to cut their capital and operating budgets.
+Added: Our financial statements for the three- month period ended March 31, 2020 reflect the impact of these events and current market conditions, which include namely the recognition of goodwill impairment losses (Note 6) and tax benefits resulting from the U.S.
+Added: Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (Note 8).
+Added: The continued spread of COVID-19 or deterioration in oil prices could result in further adverse impact on our results of operations, cash flows and financial position, including further asset impairments.
New accounting standards adopted
−Removed: In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.
−Removed: 2016-02, “Leases (Topic 842)” (“ASC 842”), which was updated by subsequent amendments.
−Removed: ASC 842 requires a lessee to recognize a lease right-of-use asset and related lease liability for most leases, including those classified as operating leases.
−Removed: ASC 842 also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors.
−Removed: We adopted ASC 842 in the first quarter of 2019 using the modified retrospective method.
−Removed: We also elected the package of practical expedients permitted under the transition guidance that, among other things, allows companies to carry forward their historical lease classification.
−Removed: Our adoption of ASC 842 resulted in the recognition of operating lease liabilities of $ 259.0 million and corresponding right-of-use (“ROU”) assets of $ 253.4 million (net of existing prepaid/deferred rent balances) as of January 1, 2019.
−Removed: In addition, we reclassified the remaining deferred gain of $ 4.6 million (net of deferred taxes of $ 0.9 million ) on a 2016 sale and leaseback transaction to retained earnings.
−Removed: Subsequent to adoption, leases in foreign currencies will generate foreign currency gains and losses, and we will no longer amortize the deferred gain from the aforementioned sale and leaseback transaction.
−Removed: Aside from these changes, ASC 842 is not expected to have a material impact on our net earnings or cash flows.
−Removed: New accounting standards issued but not yet effective
−Removed: In June 2016, the FASB issued ASU No.
+Added: In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.
2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments.
This ASU replaces the current incurred loss model for measurement of credit losses on financial assets (including trade receivables) with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts.
−Removed: The guidance will be effective for us as of January 1, 2020.
−Removed: We are currently evaluating the impact this guidance will have on our consolidated financial statements.
−Removed: We do not expect any other recent accounting standards to have a material impact on our financial position, results of operations or cash flows.
+Added: The guidance became effective for us as of January 1, 2020 and resulted in the recognition of $ 0.6 million (net of deferred taxes of $ 0.2 million ) of allowances for expected credit losses related to our accounts receivable through a cumulative effect offset to retained earnings.
+Added: The new credit loss standard is expected to accelerate recognition of credit losses on our accounts receivable.
+Added: See Note 17 for additional information regarding allowance for credit losses on our accounts receivable.
+Added: New accounting standards issued but not yet effective
+Added: We do not expect any other new accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.
Note 2 — Company Overview
6 unchanged sentences
Our Well Intervention segment includes our vessels and/or equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.
−Removed: Our well intervention vessels include the Q4000 , the Q5000 , the Seawell , the Well Enhancer , and two chartered monohull vessels, the Siem H elix 1 and the Siem Helix 2 .
−Removed: We also have a semi-submersible well intervention vessel under completion, the Q7000 .
+Added: Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and two chartered monohull vessels, the Siem H elix 1 and the Siem Helix 2 .
Our well intervention equipment includes intervention riser systems (“IRSs”) and subsea intervention lubricators (“SILs”), some of which we provide on a stand-alone basis.
−Removed: Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, and three robotics support vessels under long-term charter:
−Removed: the Grand Canyon , the Grand Canyon II and the Grand Canyon III .
−Removed: We also utilize spot vessels as needed, including the Ross Candies , which is under a flexible charter agreement.
−Removed: Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), our ownership interest in Independence Hub, LLC (“Independence Hub”) (Note 4), and several wells and related infrastructure associated with the Droshky Prospect that we acquired from Marathon Oil Corporation (“Marathon Oil”) on January 18, 2019.
+Added: Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, which are designed to complement well intervention services and offshore construction to both the oil and gas and the renewable energy markets.
+Added: Our Robotics segment also includes two robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III , as well as spot vessels as needed, including the Ross Candies , which is under a flexible charter agreement.
+Added: Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), our ownership interest in Independence Hub, LLC (“Independence Hub”) (Note 4), and our ownership of oil and gas properties acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.
All of our current production facilities activities are located in the Gulf of Mexico.
−Removed: On May 29, 2019, we acquired a 70 % controlling interest in Subsea Technologies Group Limited (“STL”), a subsea engineering firm based in Aberdeen, Scotland, for $ 5.1 million , including $ 4.1 million in cash and $ 1.0 million that we loaned to STL in December 2018.
−Removed: The acquisition is expected to strengthen our supply of subsea intervention systems.
+Added: On May 29, 2019, we acquired a 70 % controlling interest in Subsea Technologies Group Limited (“STL”), a subsea engineering firm based in Aberdeen, Scotland, for $ 5.1 million .
The holders of the remaining 30 % noncontrolling interest have the right to put their shares to us in June 2024.
−Removed: These redeemable noncontrolling interests have been recognized as temporary equity at their estimated fair value of $ 3.4 million at the acquisition date.
−Removed: We recognized $ 2.4 million of identifiable intangible assets and $ 6.9 million of goodwill, which are reflected in “Other assets” in the accompanying condensed consolidated balance sheet (Note 3).
−Removed: Goodwill is related to the synergies expected from the acquisition.
−Removed: The ultimate fair values of acquired assets, liabilities and noncontrolling interests are provisional and pending final assessment of the valuations.
+Added: These redeemable noncontrolling interests were recognized as temporary equity at their estimated fair value of $ 3.4 million at the acquisition date.
+Added: In March 2020, we recorded an impairment loss to write off the goodwill associated with the STL acquisition (Note 6).
STL is included in our Well Intervention segment (Note 13) and its revenue and earnings are immaterial to our consolidated results.
1 unchanged sentence
Other current assets consist of the following (in thousands):
−Removed: September 30,
Contract assets (Note 10)
Deferred costs (Note 10)
−Removed: Other receivable (Note 13)
+Added: Income tax receivable
Total other current assets
Other assets, net consist of the following (in thousands):
−Removed: September 30,
Deferred recertification and dry dock costs, net
1 unchanged sentence
Charter deposit (1)
−Removed: Other receivable (Note 13)
+Added: Other receivable (2)
Goodwill (Note 6)
−Removed: Intangible assets with finite lives, net (Note 2)
+Added: Intangible assets with finite lives, net
Total other assets, net
This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term.
+Added: Agreed-upon amounts to be paid by Marathon Oil as the required plug and abandonment (“P&A”) work on the remaining Droshky wells is completed (Notes 7 and 14).
Accrued liabilities consist of the following (in thousands):
−Removed: September 30,
Accrued payroll and related benefits
1 unchanged sentence
Deferred revenue (Note 10)
−Removed: Asset retirement obligations (Note 13)
Derivative liability (Note 19)
1 unchanged sentence
Other non-current liabilities consist of the following (in thousands):
−Removed: September 30,
−Removed: Investee losses in excess of investment (Note 4)
−Removed: Deferred gain on sale of property (1)
Deferred revenue (Note 10)
Asset retirement obligations (Note 14)
−Removed: Derivative liability (Note 17)
Total other non-current liabilities
−Removed: Relates to the sale and lease-back in January 2016 of our office and warehouse property located in Aberdeen, Scotland.
−Removed: The deferred gain had been amortized over a 15 -year minimum lease term prior to our adoption of ASC 842 on January 1, 2019.
−Removed: See Note 1 for the effect of ASC 842 on this deferred gain.
Note 4 — Equity Method Investments
We have a 20 % ownership interest in Independence Hub that we account for using the equity method of accounting.
−Removed: Independence Hub owns the “Independence Hub” platform located in Mississippi Canyon Block 920 in the Gulf of Mexico in a water depth of 8,000 feet.
−Removed: We are committed to providing our pro-rata portion of financial support for Independence Hub to pay its obligations as they become due.
−Removed: The platform decommissioning process is currently underway and is expected to be substantially completed within the next 12 months.
−Removed: We had a liability of $ 7.6 million at September 30, 2019 and $ 11.2 million at December 31, 2018 for our share of Independence Hub’s estimated obligations, net of remaining working capital.
−Removed: This liability is reflected in “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets.
+Added: Independence Hub owns the “Independence Hub” platform, which is in the process of being decommissioned and is expected to be substantially completed within the next 12 months.
+Added: We recognized a liability of $ 2.7 million at March 31, 2020 and $ 4.1 million at December 31, 2019 for our share of Independence Hub’s estimated obligations, net of remaining working capital.
Note 5 — Leases
1 unchanged sentence
We also sublease some of our facilities under non-cancelable sublease agreements.
−Removed: Leases with a term greater than one year are recognized on our balance sheet as ROU assets and lease liabilities.
−Removed: We have elected to not recognize on our balance sheet leases with an initial term of one year or less.
−Removed: Lease liabilities and their corresponding ROU assets are recorded at the commencement date based on the present value of lease payments over the expected lease term.
−Removed: We use our incremental borrowing rate, which would be the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment, to calculate the present value of lease payments.
−Removed: ROU assets are adjusted for any initial direct costs paid or incentives received.
−Removed: We separate our long-term vessel charters between their lease components and non-lease services.
−Removed: We estimate the lease component using the residual estimate approach by estimating the non-lease services, which are primarily crew, repair and maintenance, and regulatory certification costs.
−Removed: For all other leases, we have not separated the lease components and non-lease services.
−Removed: The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option.
−Removed: We recognize operating lease cost on a straight-line basis over the lease term for both (i) leases that are recognized on the balance sheet and (ii) short-term leases.
−Removed: We recognize lease cost related to variable lease payments that are not recognized on the balance sheet in the period in which the obligation is incurred.
The following table details the components of our lease cost (in thousands):
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30, 2019
−Removed: September 30, 2019
Operating lease cost
3 unchanged sentences
Net lease cost
−Removed: Maturities of our operating lease liabilities as of September 30, 2019 are as follows (in thousands):
+Added: Maturities of our operating lease liabilities as of March 31, 2020 are as follows (in thousands):
Facilities and Equipment
6 unchanged sentences
Total operating lease liabilities
+Added: Maturities of our operating lease liabilities as of December 31, 2019 are as follows (in thousands):
+Added: Facilities and Equipment
+Added: Total lease payments
+Added: imputed interest
+Added: Total operating lease liabilities
+Added: Current operating lease liabilities
+Added: Non-current operating lease liabilities
+Added: Total operating lease liabilities
The following table presents the weighted average remaining lease term and discount rate:
−Removed: September 30, 2019
+Added: March 31, 2020
+Added: December 31, 2019
Weighted average remaining lease term
1 unchanged sentence
The following table presents other information related to our operating leases (in thousands):
−Removed: Nine Months Ended
−Removed: September 30, 2019
+Added: Three Months Ended
Cash paid for operating lease liabilities
ROU assets obtained in exchange for new operating lease obligations
−Removed: As previously disclosed in our 2018 Form 10-K and under the previous lease accounting standard, future minimum lease payments for our operating leases as of December 31, 2018 were as follows (in thousands):
−Removed: Facilities and Equipment
−Removed: Total lease payments
+Added: Note 6 — Goodwill
+Added: The changes in the carrying amount of goodwill are as follows (in thousands):
+Added: Well Intervention
+Added: Balance at December 31, 2019
+Added: Impairment loss (1)
+Added: Other adjustments (2)
+Added: Balance at March 31, 2020
+Added: As a result of the decline in oil prices as well as energy and energy services valuations during the three- month period ended March 31, 2020 due to the ongoing COVID-19 pandemic and the OPEC+ price war, we identified that it was more likely than not that the fair value of goodwill associated with our STL acquisition (Note 2) was less than its carrying amount.
+Added: Based on the result of our goodwill impairment test as of March 31, 2020 , we recorded a charge to write off the carrying amount of the goodwill.
+Added: The fair value of the reporting unit used to determine the impairment was estimated using a discounted cash flow approach.
+Added: Relates to foreign currency adjustments.
Note 7 — Long-Term Debt
−Removed: Scheduled maturities of our long-term debt outstanding as of September 30, 2019 are as follows (in thousands):
+Added: Scheduled maturities of our long-term debt outstanding as of March 31, 2020 are as follows (in thousands):
Less than one year
9 unchanged sentences
Term Loan pursuant to the Credit Agreement (as defined below) matures in December 2021.
−Removed: Our Convertible Senior Notes due 2022 and 2023 will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022 and September 2023, respectively.
+Added: Convertible Senior Notes due 2022 and 2023 will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022 and September 2023, respectively.
Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.
4 unchanged sentences
On June 28, 2019, we amended our existing term loan (the “Term Loan”) and revolving credit facility (the “Revolving Credit Facility”) under the Credit Agreement.
−Removed: The Credit Agreement is comprised of a $ 35 million Term Loan and a Revolving Credit Facility of $ 175 million .
+Added: The Credit Agreement is comprised of a $ 35 million Term Loan and a Revolving Credit Facility of $ 175 million and matures on December 31, 2021.
The Revolving Credit Facility permits us to obtain letters of credit up to a sublimit of $ 25 million .
Pursuant to the Credit Agreement, subject to existing lender participation and/or the participation of new lenders, and subject to standard conditions precedent, we may request aggregate commitments of up to $ 100 million with respect to an increase in the Revolving Credit Facility.
−Removed: As of September 30, 2019 , we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 172.6 million , net of $ 2.4 million of letters of credit issued under that facility.
+Added: As of March 31, 2020 , we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 172.6 million , net of $ 2.4 million of letters of credit issued under that facility.
Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof.
1 unchanged sentence
The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25 % .
−Removed: The interest rate on the Term Loan was 5.29 % as of September 30, 2019 .
+Added: The interest rate on the Term Loan was 4.24 % as of March 31, 2020 .
Borrowings under the Revolving Credit Facility bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin ranging from 1.50 % to 2.50 % .
6 unchanged sentences
We may prepay indebtedness outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid.
−Removed: We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount of the Revolving Credit Facility.
−Removed: Borrowings under the Credit Agreement mature on December 31, 2021.
+Added: We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount available under the Revolving Credit Facility.
+Added: Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited.
+Added: In addition, these obligations are secured by pledges of up to 66 % of the shares of certain foreign subsidiaries (restricted subsidiaries).
The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, which we consider customary for this type of transaction.
2 unchanged sentences
We may designate one or more of our new foreign subsidiaries as subsidiaries not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”).
−Removed: The debt and EBITDA of the Unrestricted Subsidiaries with the exception of Helix Q5000 Holdings, S.à r.l.
−Removed: (“Q5000 Holdings”), a wholly owned subsidiary incorporated in Luxembourg, are not included in the calculations of our financial covenants.
−Removed: Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited (formerly known as Canyon Offshore Limited) and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited.
−Removed: In addition, these obligations are secured by pledges of up to 66 % of the shares of certain foreign subsidiaries.
−Removed: In March 2018, we prepaid $ 61 million of the then-existing term loan with a portion of the net proceeds from the 2023 Notes.
−Removed: We recognized a $ 0.9 million loss to write off the related unamortized debt issuance costs.
−Removed: In June 2019, in connection with the amendment of the Credit Agreement we wrote off the remaining unamortized debt issuance costs associated with a lender exiting the Credit Agreement.
−Removed: These losses are presented as “Loss on extinguishment of long-term debt” in the accompanying condensed consolidated statements of operations.
−Removed: In January 2019, contemporaneously with our purchase from Marathon Oil of several wells and related infrastructure associated with the Droshky Prospect located in offshore Gulf of Mexico Green Canyon Block 244, we amended the Credit Agreement to permit the issuance of certain security to third parties for required plug and abandonment (“P&A”) obligations and to make certain capital expenditures in connection with acquired assets (Notes 2 and 13).
+Added: The Unrestricted Subsidiaries are not pledged as collateral under the Credit Agreement, and the debt and EBITDA of the Unrestricted Subsidiaries with the exception of Helix Q5000 Holdings, S.à r.l.
+Added: (“Q5000 Holdings”), a wholly owned Luxembourg subsidiary of Helix Vessel Finance S.à r.l., are not included in the calculations of our financial covenants except to the extent of any cash actually distributed by such subsidiary of Helix.
+Added: In January 2019, contemporaneously with our acquisition from Marathon Oil of several wells and related infrastructure associated with the Droshky Prospect located in offshore Gulf of Mexico Green Canyon Block 244, we amended the Credit Agreement to permit the issuance of certain security to third parties for required P&A obligations and to make certain capital expenditures in connection with acquired assets (Notes 2 and 14).
Convertible Senior Notes Due 2022 (“2022 Notes”)
4 unchanged sentences
We have the right and the intention to settle the principal amount of any such future conversions in cash.
−Removed: Prior to November 1, 2019, the 2022 Notes are not redeemable.
−Removed: On or after November 1, 2019, if certain conditions are met, we may redeem all or any portion of the 2022 Notes at a redemption price payable in cash equal to 100 % of the principal amount to be redeemed, plus accrued and unpaid interest, and a “make-whole premium” (as defined in the indenture governing the 2022 Notes).
+Added: Prior to November 1, 2019, the 2022 Notes were not redeemable.
+Added: Beginning November 1, 2019, if certain conditions are met, we may redeem all or any portion of the 2022 Notes at a redemption price payable in cash equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” (as defined in the indenture governing the 2022 Notes).
Holders of the 2022 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2022 Notes).
1 unchanged sentence
In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2022 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.
−Removed: The 2022 Notes are accounted for by separating the net proceeds between long-term debt and shareholders’ equity.
+Added: The 2022 Notes were initially accounted for by separating the net proceeds between long-term debt and shareholders’ equity.
In connection with the issuance of the 2022 Notes, we recorded a debt discount of $ 16.9 million ( $ 11.0 million net of tax) as a result of separating the equity component.
−Removed: The effective interest rate for the 2022 Notes is 7.3 % after considering the effect of the accretion of the related debt discount that represented the equity component of the 2022 Notes at their inception.
−Removed: For the three- and nine- month periods ended September 30, 2019 , interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 2.1 million and $ 6.2 million , respectively.
−Removed: For the three- and nine- month periods ended September 30, 2018 , interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 2.0 million and $ 6.1 million , respectively.
−Removed: The remaining unamortized debt discount of the 2022 Notes was $ 8.8 million at September 30, 2019 and $ 11.0 million at December 31, 2018 .
+Added: The effective interest rate for the 2022 Notes is 7.3 % after considering the effect of the accretion of the related debt discount over the term of the 2022 Notes.
+Added: Interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 2.1 million for each of the three- month periods ended March 31, 2020 and 2019 .
+Added: The remaining unamortized debt discount of the 2022 Notes was $ 7.2 million at March 31, 2020 and $ 8.0 million at December 31, 2019 .
Convertible Senior Notes Due 2023 (“2023 Notes”)
On March 20, 2018, we completed a public offering and sale of the 2023 Notes in the aggregate principal amount of $ 125 million .
−Removed: The net proceeds from the issuance of the 2023 Notes were approximately $ 121.0 million after deducting the underwriters’ discounts and commissions and estimated offering expenses.
−Removed: We used the net proceeds from the issuance of the 2023 Notes to fund the required repurchase by us of $ 59.3 million in principal of Convertible Senior Notes due 2032 (the “2032 Notes”) described below and to prepay $ 61.0 million of the then-existing term loan.
The 2023 Notes bear interest at a rate of 4.125 % per annum and are payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2018.
7 unchanged sentences
In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2023 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.
−Removed: The 2023 Notes are accounted for by separating the net proceeds between long-term debt and shareholders’ equity.
+Added: The 2023 Notes were initially accounted for by separating the net proceeds between long-term debt and shareholders’ equity.
In connection with the issuance of the 2023 Notes, we recorded a debt discount of $ 20.1 million ( $ 15.9 million net of tax) as a result of separating the equity component.
−Removed: The effective interest rate for the 2023 Notes is 7.8 % after considering the effect of the accretion of the related debt discount that represented the equity component of the 2023 Notes at their inception.
−Removed: For the three- and nine- month periods ended September 30, 2019 , interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 2.1 million and $ 6.3 million , respectively.
−Removed: For the three- and nine- month periods ended September 30, 2018 , interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 2.1 million and $ 4.3 million , respectively.
−Removed: The remaining unamortized debt discount of the 2023 Notes was $ 15.4 million at September 30, 2019 and $ 17.8 million at December 31, 2018 .
+Added: The effective interest rate for the 2023 Notes is 7.8 % after considering the effect of the accretion of the related debt discount over the term of the 2023 Notes.
+Added: Interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 2.1 million for each of the three- month periods ended March 31, 2020 and 2019 .
+Added: The remaining unamortized debt discount of the 2023 Notes was $ 13.7 million at March 31, 2020 and $ 14.5 million at December 31, 2019 .
government-guaranteed financing (the “MARAD Debt”), pursuant to Title XI of the Merchant Marine Act of 1936 administered by the Maritime Administration, was used to finance the construction of the Q4000 .
4 unchanged sentences
The Nordea Q5000 Loan was funded in the amount of $ 250 million in April 2015 at the time the Q5000 was delivered to us.
−Removed: The parent company of Q5000 Holdings, Helix Vessel Finance S.à r.l., also a wholly owned Luxembourg subsidiary, guaranteed the Nordea Q5000 Loan.
+Added: Helix Vessel Finance S.à r.l., a direct wholly owned Luxembourg subsidiary of Helix, guaranteed the Nordea Q5000 Loan.
The loan is secured by the Q5000 and its charter earnings as well as by a pledge of the shares of Q5000 Holdings.
This indebtedness is non-recourse to Helix.
−Removed: The Nordea Q5000 Loan bears interest at a LIBOR rate plus a margin of 2.5 % .
−Removed: The Nordea Q5000 Loan matures on April 30, 2020 and is repayable in scheduled quarterly principal installments of $ 8.9 million with a balloon payment of $ 80.4 million at maturity.
−Removed: The remaining principal balance and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current.
−Removed: Q5000 Holdings may elect to prepay indebtedness outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid.
+Added: We amended the Nordea Q5000 Loan on March 11, 2020.
+Added: Prior to the amendment, the Nordea Q5000 Loan incurred interest at a LIBOR rate plus a margin of 2.5 % and was repayable in scheduled quarterly principal installments of $ 8.9 million with a balloon payment of $ 80.4 million on April 30, 2020.
+Added: The amendment increases the margin to 2.75 % , maintains the existing quarterly amortization requirements, and extends the final maturity to January 31, 2021 with a balloon payment on that date of $ 53.6 million .
+Added: The remaining principal balance and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current in the accompanying condensed consolidated balance sheets.
+Added: We may elect to prepay indebtedness outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid.
Quarterly principal installments are subject to adjustment for any prepayments on this debt.
−Removed: In June 2015, we entered into interest rate swap contracts to fix the one-month LIBOR rate on a portion of our borrowings under the Nordea Q5000 Loan (Note 17).
−Removed: The total notional amount of the swaps (initially $ 187.5 million ) decreases in proportion to the reduction in the principal amount outstanding under the Nordea Q5000 Loan.
−Removed: The fixed LIBOR rates are approximately 150 basis points.
The Nordea Credit Agreement and related loan documents include terms and conditions, including covenants and prepayment requirements, that we consider customary for this type of transaction.
1 unchanged sentence
In addition, the Nordea Credit Agreement obligates Q5000 Holdings to meet certain minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance.
−Removed: Convertible Senior Notes Due 2032
−Removed: In March 2012, we issued $ 200 million of 3.25 % Convertible Senior Notes, which were originally scheduled to mature on March 15, 2032.
−Removed: In March 2018, we made a tender offer for the repurchase of the 2032 Notes outstanding on the first repurchase date as required by the indenture governing the 2032 Notes, and as a result we repurchased $ 59.3 million in aggregate principal amount of the 2032 Notes on March 20, 2018.
−Removed: The total repurchase price was $ 59.5 million , including $ 0.2 million in fees.
−Removed: We recognized a $ 0.2 million loss in connection with the repurchase of the 2032 Notes.
−Removed: The loss is presented as “Loss on extinguishment of long-term debt” in the accompanying condensed consolidated statement of operations.
−Removed: On May 4, 2018, we redeemed the remaining $ 0.8 million in aggregate principal amount of the 2032 Notes.
In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the MARAD Debt agreements and the Nordea Credit Agreement, we are required to comply with certain covenants, including with respect to the Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio and a consolidated secured leverage ratio, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements.
−Removed: As of September 30, 2019 , we were in compliance with these covenants.
+Added: As of March 31, 2020 , we were in compliance with these covenants.
The following table details the components of our net interest expense (in thousands):
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Interest expense
6 unchanged sentences
therefore, our assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions.
−Removed: The effective tax rates for the three- and nine- month periods ended September 30, 2019 were 10.1 % and 11.9 % , respectively.
−Removed: The effective tax rates for the three- and nine- month periods ended September 30, 2018 were 3.0 % and 2.8 % , respectively.
−Removed: The increases were primarily attributable to improvements in profitability in the U.S.
−Removed: year over year.
+Added: The CARES Act, which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S.
+Added: income tax regulations.
+Added: The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year.
+Added: As a result of these changes, we recognized an estimated $ 5.8 million net tax benefit in the three- month period ended March 31, 2020 , consisting of a $ 15.9 million current tax benefit and a $ 10.1 million deferred tax expense.
+Added: This $ 5.8 million net tax benefit resulted from our deferred tax assets related to our net operating losses in the U.S.
+Added: being utilized at the previous higher income tax rate applicable to the carryback periods.
+Added: We adopted the discrete effective tax rate method for recording income taxes for the three- month period ended March 31, 2020 .
+Added: The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate.
+Added: The discrete method treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis.
+Added: We believe that the use of the discrete method is more appropriate than the annual effective tax rate method because of the current high degree of uncertainty in estimating annual pretax earnings created by uncertainty in future market conditions caused by the ongoing COVID-19 pandemic as well as uncertainty in the oil and gas market.
+Added: We will re-evaluate our use of this method each quarter until such time as a return to the annualized effective tax rate method is deemed appropriate.
+Added: The effective tax rates for the three- month periods ended March 31, 2020 and 2019 were 60.2 % benefit and 19.7 % expense, respectively.
+Added: The variance in the effective tax rate was primarily attributable to our carrying back certain net operating losses to prior periods with higher income tax rates as well as the result of the consolidation of certain U.S.
+Added: branch operations with the Helix U.S.
+Added: consolidated tax group.
Income taxes are provided based on the U.S.
−Removed: statutory rate and the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes.
+Added: statutory rate and at the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes.
The primary differences between the U.S.
1 unchanged sentence
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
statutory rate
Foreign provision
+Added: Subsidiary restructuring
Effective rate
1 unchanged sentence
The components of accumulated other comprehensive loss (“accumulated OCI”) are as follows (in thousands):
−Removed: September 30,
Cumulative foreign currency translation adjustment
1 unchanged sentence
Accumulated OCI
−Removed: Relates to foreign currency hedges for the Grand Canyon II and Grand Canyon III charters as well as interest rate swap contracts for the Nordea Q5000 Loan (Note 17) and is net of deferred income taxes totaling $ 0.2 million at September 30, 2019 and $ 1.0 million at December 31, 2018 .
+Added: Relates to foreign currency hedges for the Grand Canyon III charter as well as interest rate hedge contracts for the Nordea Q5000 Loan (Note 19).
Note 10 — Revenue from Contracts with Customers
Disaggregation of Revenue
−Removed: Our revenues are derived primarily from short-term and long-term service contracts with customers.
+Added: Our revenues are derived from short-term and long-term service contracts with customers.
Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts).
5 unchanged sentences
Total Revenue
−Removed: Three months ended September 30, 2019
−Removed: Long-term (2)
−Removed: Three months ended September 30, 2018
−Removed: Long-term (2)
−Removed: Nine months ended September 30, 2019
+Added: Three months ended March 31, 2020
Long-term (2)
−Removed: Nine months ended September 30, 2018
+Added: Three months ended March 31, 2019
Long-term (2)
7 unchanged sentences
Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized.
−Removed: Contract assets are reflected in “Other current assets” on the accompanying condensed consolidated balance sheets (Note 3).
−Removed: Contract assets were $ 0.6 million at September 30, 2019 and $ 5.8 million at December 31, 2018 .
−Removed: We incurred no impairment losses on our accounts receivable and contract assets for the three- and nine- month periods ended September 30, 2019 and 2018 .
+Added: Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 3).
+Added: Contract assets were $ 5.9 million at March 31, 2020 and $ 0.7 million at December 31, 2019 .
+Added: We had no impairment losses on our contract assets for the three- month periods ended March 31, 2020 and 2019 .
Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer.
Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) amounts billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized.
−Removed: Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” on the accompanying condensed consolidated balance sheets (Note 3).
−Removed: Contract liabilities totaled $ 20.0 million at September 30, 2019 and $ 25.9 million at December 31, 2018 .
−Removed: Revenue recognized for the three- and nine- month periods ended September 30, 2019 included $ 4.0 million and $ 7.4 million , respectively, that were included in the contract liability balance at the beginning of each period.
−Removed: Revenue recognized for the three- and nine- month periods ended September 30, 2018 included $ 7.4 million and $ 10.8 million , respectively, that were included in the contract liability balance at the beginning of each period.
+Added: Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 3).
+Added: Contract liabilities totaled $ 17.2 million at March 31, 2020 and $ 19.9 million at December 31, 2019 .
+Added: Revenue recognized for the three- month periods ended March 31, 2020 and 2019 included $ 3.4 million and $ 2.5 million , respectively, that were included in the contract liability balance at the beginning of each period.
We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.
Performance Obligations
−Removed: As of September 30, 2019 , $ 833.8 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 114.5 million in 2019, $ 443.2 million in 2020 and $ 276.1 million in 2021 and thereafter.
+Added: As of March 31, 2020 , $ 677.7 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 392.2 million in 2020, $ 219.5 million in 2021 and $ 66.0 million in 2022 and thereafter.
These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees.
−Removed: These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at September 30, 2019 .
−Removed: For the three- and nine- month periods ended September 30, 2019 and 2018 , revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.
+Added: These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at March 31, 2020 .
+Added: For the three- month periods ended March 31, 2020 and 2019 , revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.
Contract Fulfillment Costs
3 unchanged sentences
Demobilization costs are recognized when incurred at the end of the contract.
−Removed: Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” on the accompanying condensed consolidated balance sheets (Note 3).
−Removed: Our deferred contract costs totaled $ 47.1 million at September 30, 2019 and $ 65.9 million at December 31, 2018 .
−Removed: For the three- and nine- month periods ended September 30, 2019 , we recorded $ 7.7 million and $ 23.6 million , respectively, related to amortization of deferred contract costs existing at the beginning of each period.
−Removed: For the three- and nine- month periods ended September 30, 2018 , we recorded $ 8.5 million and $ 25.6 million , respectively, related to amortization of deferred contract costs existing at the beginning of each period.
+Added: Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 3).
+Added: Our deferred contract costs totaled $ 37.1 million at March 31, 2020 and $ 42.9 million at December 31, 2019 .
+Added: For the three- month periods ended March 31, 2020 and 2019 , we recorded $ 9.2 million and $ 7.7 million , respectively, related to amortization of deferred contract costs existing at the beginning of each period.
There were no associated impairment losses for any period presented.
3 unchanged sentences
Shares of restricted stock are considered participating securities because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock.
−Removed: We are required to compute earnings per share (“EPS”) under the two-class method in periods in which we have earnings.
+Added: We are required to compute basic and diluted earnings per share (“EPS”) under the two-class method in periods in which we have earnings.
Under the two-class method, the undistributed earnings for each period are allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed.
−Removed: Because both the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.
+Added: Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.
For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses.
3 unchanged sentences
Three Months Ended
−Removed: September 30, 2019
+Added: March 31, 2020
Three Months Ended
−Removed: September 30, 2018
−Removed: Net income attributable to common shareholders
−Removed: Undistributed earnings allocated to participating securities
−Removed: Accretion of redeemable noncontrolling interests
−Removed: Net income available to common shareholders, basic
−Removed: Net income available to common shareholders, basic
−Removed: Effect of dilutive securities:
−Removed: Share-based awards other than participating securities
−Removed: Undistributed earnings reallocated to participating securities
−Removed: Net income available to common shareholders, diluted
−Removed: Nine Months Ended
−Removed: September 30, 2019
−Removed: Nine Months Ended
−Removed: September 30, 2018
−Removed: Net income attributable to common shareholders
+Added: March 31, 2019
+Added: Net income (loss) attributable to common shareholders
Undistributed earnings allocated to participating securities
Accretion of redeemable noncontrolling interests
−Removed: Net income available to common shareholders, basic
−Removed: Net income available to common shareholders, basic
+Added: Net income (loss) available to common shareholders, basic
+Added: Net income (loss) available to common shareholders, basic
Effect of dilutive securities:
Share-based awards other than participating securities
−Removed: Undistributed earnings reallocated to participating securities
−Removed: Net income available to common shareholders, diluted
−Removed: The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2032 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):
+Added: Net income (loss) available to common shareholders, diluted
+Added: We had a net loss for the three- month period ended March 31, 2020 .
+Added: Accordingly, our diluted EPS calculation for this period excluded any assumed exercise or conversion of common stock equivalents.
+Added: These common stock equivalents were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable periods.
+Added: Shares that otherwise would have been included in the diluted per share calculations assuming we had earnings are as follows (in thousands):
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: 2032 Notes (1)
−Removed: The 2032 Notes were fully redeemed in May 2018.
+Added: March 31, 2020
+Added: Diluted shares (as reported)
+Added: Share-based awards
+Added: In addition, the following potentially dilutive shares related to the 2022 Notes and the 2023 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):
+Added: Three Months Ended
Note 12 — Employee Benefit Plans
2 unchanged sentences
the 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).
−Removed: On May 15, 2019, our shareholders approved an amendment to and restatement of the 2005 Incentive Plan to:
−Removed: (i) authorize 7.0 million additional shares for issuance pursuant to our equity incentive compensation strategy, (ii) establish a maximum award limit applicable to independent members of our Board of Directors (our “Board”) under the 2005 Incentive Plan, (iii) require, subject to certain exceptions, that all awards under the 2005 Incentive Plan have a minimum vesting or restriction period of one year and (iv) remove certain requirements with respect to performance-based compensation under Section 162(m) of the Internal Revenue Code that were repealed by the U.S.
−Removed: Tax Cuts and Jobs Act (the “2017 Tax Act”).
−Removed: As of September 30, 2019 , there were 8.5 million shares of our common stock available for issuance under the 2005 Incentive Plan.
−Removed: During the nine -month period ended September 30, 2019 , the following grants of share-based awards were made under the 2005 Incentive Plan:
+Added: As of March 31, 2020 , there were 7.0 million shares of our common stock available for issuance under the 2005 Incentive Plan.
+Added: During the three -month period ended March 31, 2020 , the following grants of share-based awards were made under the 2005 Incentive Plan:
Date of Grant
7 unchanged sentences
100% on January 1, 2022
−Removed: April 1, 2019 (3)
−Removed: 100% on January 1, 2021
−Removed: July 1, 2019 (3)
−Removed: 100% on January 1, 2021
−Removed: August 1, 2019 (4)
−Removed: 100% on August 1, 2020
Reflects grants of restricted stock to our executive officers and select management employees.
1 unchanged sentence
The PSUs provide for an award based on the performance of our common stock over a three -year period with the maximum amount of the award being 200 % of the original PSU awards and the minimum amount being zero .
−Removed: Reflects grants of restricted stock to certain independent members of our Board who have elected to take their quarterly fees in stock in lieu of cash.
−Removed: Reflects a grant of restricted stock made to a new independent member of our Board upon her joining our Board.
+Added: Reflects grants of restricted stock to certain independent members of our Board of Directors who have elected to take their quarterly fees in stock in lieu of cash.
Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis.
Forfeitures are recognized as they occur.
−Removed: For the three- and nine- month periods ended September 30, 2019 , $ 1.2 million and $ 4.9 million respectively, were recognized as share-based compensation related to restricted stock.
−Removed: For the three- and nine- month periods ended September 30, 2018 , $ 1.5 million and $ 4.5 million , respectively, were recognized as share-based compensation related to restricted stock.
+Added: For the three- month periods ended March 31, 2020 and 2019 , $ 1.1 million and $ 1.3 million , respectively, were recognized as share-based compensation related to restricted stock.
The estimated fair value of PSUs is determined using a Monte Carlo simulation model.
−Removed: PSUs granted prior to 2017 could be settled in either cash or shares of our common stock and were accounted for as liability awards.
−Removed: Beginning in 2017, PSUs granted are to be settled solely in shares of our common stock and therefore are accounted for as equity awards.
+Added: PSUs granted prior to 2017 were settled in cash and accounted for as liability awards.
+Added: PSUs granted beginning in 2017 are to be settled solely in shares of our common stock and therefore are accounted for as equity awards.
Compensation cost for PSUs that are accounted for as equity awards is measured based on the estimated grant date fair value and recognized over the vesting period on a straight-line basis as an increase to equity.
−Removed: For the three- and nine- month periods ended September 30, 2019 , $ 1.2 million and $ 3.9 million , respectively, were recognized as share-based compensation related to PSUs.
−Removed: For the three- and nine- month periods ended September 30, 2018 , $ 6.3 million and $ 11.5 million , respectively, were recognized as share-based compensation related to PSUs.
−Removed: The liability balance for previously unvested PSUs granted in January 2016 was $ 11.1 million at December 31, 2018 , which we settled in cash when those PSUs vested in January 2019.
−Removed: Additionally in 2019 and 2018, we granted fixed-value cash awards of $ 4.6 million and $ 5.2 million , respectively, to select management employees under the 2005 Incentive Plan.
−Removed: The value of fixed value cash awards is recognized on a straight-line basis over a vesting period of three years .
−Removed: For the three- and nine- month periods ended September 30, 2019 , $ 0.8 million and $ 2.4 million , respectively, were recognized as compensation cost.
−Removed: For the three- and nine- month periods ended September 30, 2018 , $ 0.5 million and $ 1.3 million , respectively, were recognized as compensation cost.
+Added: For the three- month periods ended March 31, 2020 and 2019 , $ 1.1 million and $ 1.3 million , respectively, were recognized as share-based compensation related to PSUs.
+Added: In January 2020, based on the performance of our common stock over a three -year period, 589,335 equity PSU awards granted in 2017 vested at 200 % and resulted in the delivery of 1,178,670 shares of our common stock with a total market value of $ 11.4 million .
+Added: In 2020 and 2019, we granted fixed-value cash awards of $ 4.7 million and $ 4.6 million , respectively, to select management employees under the 2005 Incentive Plan.
+Added: The value of these cash awards is recognized on a straight-line basis over a vesting period of three years .
+Added: For the three- month periods ended March 31, 2020 and 2019 , $ 1.2 million and $ 0.8 million , respectively, were recognized as compensation cost.
+Added: Defined Contribution Plan
+Added: We sponsor a defined contribution 401(k) retirement plan.
+Added: Our discretionary contributions, which were reactivated in April 2019, are in the form of cash and currently consist of a 50 % match of each participant’s contribution up to 5 % of the participant’s salary.
Employee Stock Purchase Plan
We have an employee stock purchase plan (the “ESPP”).
−Removed: On May 15, 2019, our shareholders approved an amendment to and restatement of the ESPP to:
−Removed: (i) increase the shares authorized for issuance by 1.5 million shares and (ii) delegate to an internal administrator the authority to establish the maximum shares purchasable during a purchase period.
−Removed: As of September 30, 2019 , 2.0 million shares were available for issuance under the ESPP.
+Added: As of March 31, 2020 , 1.9 million shares were available for issuance under the ESPP.
The ESPP currently has a purchase limit of 260 shares per employee per purchase period.
5 unchanged sentences
and Brazil well intervention operating segments are aggregated into the Well Intervention business segment for financial reporting purposes.
−Removed: Our Well Intervention segment includes our vessels and/or equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.
−Removed: Our well intervention vessels include the Q4000 , the Q5000 , the Seawell , the Well Enhancer , and the chartered Siem Helix 1 and Siem Helix 2 vessels.
+Added: Our Well Intervention reportable segment includes our vessels and/or equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.
+Added: Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and the chartered Siem Helix 1 and Siem Helix 2 vessels.
Our well intervention equipment includes IRSs and SILs, some of which we provide on a stand-alone basis.
−Removed: Our Robotics segment includes ROVs, trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, three robotics support vessels under long-term charter:
−Removed: the Grand Canyon , the Grand Canyon II and the Grand Canyon III , and spot vessels, including the Ross Candies, which is under a flexible charter agreement.
−Removed: Our Production Facilities segment includes the HP I , the HFRS, our ownership interest in Independence Hub (Note 4) and our ownership of certain oil and gas properties that we acquired from Marathon Oil in January 2019 (Note 13).
+Added: Our Robotics segment includes ROVs, trenchers and a ROVDrill, which are designed to complement well intervention services and offshore construction to both the oil and gas and the renewable energy markets.
+Added: Our Robotics segment also includes two robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III , as well as spot vessels, including the Ross Candies, which is under a flexible charter agreement.
+Added: Our Production Facilities segment includes the HP I , the HFRS, our ownership interest in Independence Hub (Note 4) and our ownership of oil and gas properties (Note 2).
All material intercompany transactions between the segments have been eliminated.
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Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Net revenues —
5 unchanged sentences
Production Facilities
−Removed: Segment operating income
+Added: Segment operating income (loss)
+Added: Goodwill impairment (1)
Corporate, eliminations and other
+Added: Relates to goodwill associated with our STL acquisition (Note 6).
Intercompany segment amounts are derived primarily from equipment and services provided to other business segments at rates consistent with those charged to third parties.
1 unchanged sentence
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Well Intervention
−Removed: Amounts in the three- and nine- month periods ended September 30, 2019 included $ 10.6 million and $ 15.9 million , respectively, associated with P&A work on the Droshky wells for our Production Facilities segment (Notes 2 and 13).
−Removed: Upon completion of the P&A work Marathon Oil is contractually obligated to remit payment to us.
Segment assets are comprised of all assets attributable to each reportable segment.
1 unchanged sentence
The following table reflects total assets by reportable segment (in thousands):
−Removed: September 30,
Well Intervention
2 unchanged sentences
Note 14 — Asset Retirement Obligations
−Removed: Our asset retirement obligations (“AROs”) consist of estimated costs for subsea infrastructure P&A activities.
−Removed: The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate.
+Added: Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure P&A activities associated with our oil and gas properties, which costs are discounted to present value using a credit-adjusted risk-free discount rate.
After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense.
2 unchanged sentences
AROs at January 1, 2020
−Removed: Liability incurred during the period (1)
−Removed: Liability settled during the period
Accretion expense
−Removed: AROs at September 30, 2019
−Removed: In connection with the acquisition on January 18, 2019 of certain assets related to the Droshky Prospect (Note 2), we assumed the AROs for the required P&A of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the P&A work is completed.
−Removed: We initially recognized $ 53.3 million of ARO liability, $ 50.8 million of receivables and $ 2.5 million of acquired property for this transaction.
+Added: AROs at March 31, 2020
Note 15 — Commitments and Contingencies and Other Matters
+Added: Commitments Related to Our Fleet
We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels used in connection with our contracts with Petróleo Brasileiro S.A.
(“Petrobras”) to perform well intervention work offshore Brazil.
−Removed: The initial term of the charter agreements with Siem is for seven years from the respective vessel delivery dates with options to extend.
−Removed: We have long-term charter agreements for the Grand Canyon , Grand Canyon II and Grand Canyon III vessels for use in our robotics operations.
−Removed: The charter agreements expire in October 2019 for the Grand Canyon , in April 2021 for the Grand Canyon II and in May 2023 for the Grand Canyon III .
−Removed: In September 2013, we entered into a contract for the construction of a newbuild semi-submersible well intervention vessel, the Q7000 , to be built to North Sea standards.
−Removed: Pursuant to the contract and subsequent amendments, 20 % of the contract price was paid upon the signing of the contract, 20 % was paid in each of 2016, 2017 and 2018, and the remaining 20 % is due upon the delivery of the vessel.
−Removed: We have informed the shipyard of our intent to take delivery of the vessel in November 2019.
−Removed: At September 30, 2019 , our total investment in the Q7000 was $ 446.4 million , including $ 276.8 million of installment payments to the shipyard.
−Removed: The vessel is currently in the final preparation phase for work expected to commence in early 2020.
+Added: The initial term of the charter agreements with Siem is for seven years with options to extend.
+Added: We have long-term charter agreements for the Grand Canyon II and Grand Canyon III vessels for use in our robotics operations.
+Added: The charter agreements expire in April 2021 for the Grand Canyon II and in May 2023 for the Grand Canyon III .
+Added: We took delivery of the Q7000 in November 2019 and the vessel commenced operations in Nigeria in January 2020.
+Added: With the delivery of the Q7000 , all significant capital commitments have been completed.
Contingencies and Claims
4 unchanged sentences
We define cash and cash equivalents as cash and all highly liquid financial instruments with original maturities of three months or less.
+Added: We classify cash as restricted when there are legal or contractual restrictions for its withdrawal.
+Added: As of March 31, 2020 , we had restricted cash of $ 52.4 million , which serves as collateral for one project-related letter of credit and is expected to be restricted for less than one year.
The following table provides supplemental cash flow information (in thousands):
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
Interest paid, net of interest capitalized
1 unchanged sentence
Our non-cash investing activities include the acquisition of property and equipment for which payment has not been made.
−Removed: These non-cash capital additions totaled $ 14.0 million at September 30, 2019 and $ 9.9 million at December 31, 2018 .
+Added: These non-cash capital additions totaled $ 5.2 million at March 31, 2020 and $ 10.2 million at December 31, 2019 .
+Added: Note 17 — Allowance for Credit Losses
+Added: We estimate current expected credit losses on our accounts receivable at each reporting date.
+Added: We estimate current expected credit losses based on our credit loss history, adjusted for current factors including global economic and business conditions, oil and gas industry and market conditions, customer mix, contract payment terms and past due accounts receivable.
+Added: The following table sets forth the activity in our allowance for credit losses (in thousands):
+Added: Allowance for Credit Losses
+Added: Balance at December 31, 2019
+Added: Initial adoption of ASU 2016-13 (Note 1)
+Added: Provision for current expected credit losses
+Added: Balance at March 31, 2020
Note 18 — Fair Value Measurements
13 unchanged sentences
Where quotes are not available, we utilize other valuation techniques or models to estimate market values.
+Added: The fair value of our interest rate swaps is calculated as the discounted cash flows of the difference between the rate fixed by the hedging instrument and the LIBOR forward curve over the remaining term of the hedging instrument.
+Added: The fair value of our foreign currency exchange contracts is calculated as the discounted cash flows of the difference between the fixed payment specified by the hedging instrument and the expected cash inflow of the forecasted transaction using a foreign currency forward curve.
These modeling techniques require us to make estimations of future prices, price correlation, volatility and liquidity based on market data.
−Removed: Our actual results may differ from our estimates, and these differences could be positive or negative.
The following tables provide additional information relating to those financial instruments measured at fair value on a recurring basis (in thousands):
−Removed: Fair Value at September 30, 2019
+Added: Fair Value at March 31, 2020
Interest rate swaps
−Removed: Foreign exchange contracts — hedging instruments
−Removed: Foreign exchange contracts — non-hedging instruments
−Removed: Total net liability
+Added: Total liability
Fair Value at December 31, 2019
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The principal amount and estimated fair value of our long-term debt are as follows (in thousands):
−Removed: September 30, 2019
+Added: March 31, 2020
December 31, 2019
1 unchanged sentence
Value (2) (3)
−Removed: Term Loan (previously scheduled to mature June 2020)
Term Loan (matures December 2021)
−Removed: Nordea Q5000 Loan (matures April 2020)
+Added: Nordea Q5000 Loan (matures January 2021) (4)
MARAD Debt (matures February 2027)
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The estimated fair value of the 2022 Notes and the 2023 Notes was determined using Level 1 fair value inputs under the market approach.
−Removed: The fair value of the term loans, the Nordea Q5000 Loan and the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.
+Added: The fair value of the Term Loan, the Nordea Q5000 Loan and the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.
The principal amount and estimated fair value of the 2022 Notes and the 2023 Notes are for the entire instrument inclusive of the conversion feature reported in shareholders’ equity.
+Added: The maturity date of the Nordea Q5000 was extended from April 2020 to January 2021 as a result of an amendment to the Nordea Credit Agreement in March 2020 (Note 7).
Note 19 — Derivative Instruments and Hedging Activities
1 unchanged sentence
Our risk management activities involve the use of derivative financial instruments to mitigate the impact of market risk exposure related to variable interest rates and foreign currency exchange rates.
−Removed: To reduce the impact of these risks on earnings and increase the predictability of our cash flows, from time to time we enter into certain derivative contracts, including interest rate swaps and foreign currency exchange contracts.
+Added: To reduce the impact of these risks on earnings and increase the predictability of our cash flows, from time to time we enter into derivative contracts, including interest rate swaps and foreign currency exchange contracts.
All derivative instruments are reflected in the accompanying condensed consolidated balance sheets at fair value.
14 unchanged sentences
Because we operate in various regions around the world, we conduct a portion of our business in currencies other than the U.S.
−Removed: We enter into foreign currency exchange contracts from time to time to stabilize expected cash outflows related to our vessel charters that are denominated in foreign currencies.
+Added: We enter into foreign currency exchange contracts from time to time to stabilize expected cash outflows related to forecasted transactions that are denominated in foreign currencies.
In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the Grand Canyon II and Grand Canyon III charter payments denominated in Norwegian kroner through July 2019 and February 2020, respectively.
−Removed: Unrealized losses associated with our foreign currency exchange contracts that qualify for hedge accounting treatment are included in accumulated OCI (net of tax).
−Removed: Changes in unrealized losses associated with the foreign currency exchange contracts that are not designated as cash flow hedges are reflected in “Other expense, net” in the accompanying condensed consolidated statements of operations.
+Added: Changes in the fair value of foreign currency exchange contracts that qualify for hedge accounting treatment are reported in accumulated OCI (net of tax).
+Added: These changes are subsequently reclassified into earnings when the forecasted payments are made.
+Added: Changes in the fair value of foreign currency exchange contracts that do not qualify as cash flow hedges are recognized immediately in earnings within “Other expense, net” in the accompanying condensed consolidated statements of operations.
Quantitative Disclosures Relating to Derivative Instruments
The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands):
−Removed: September 30, 2019
+Added: March 31, 2020
December 31, 2019
5 unchanged sentences
Other current assets
−Removed: Interest rate swaps
−Removed: Other assets, net
−Removed: Other assets, net
Liability Derivative Instruments:
−Removed: Foreign exchange contracts
+Added: Interest rate swaps
Accrued liabilities
1 unchanged sentence
Foreign exchange contracts
−Removed: Other non-current liabilities
−Removed: Other non-current liabilities
+Added: Accrued liabilities
+Added: Accrued liabilities
The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments (in thousands):
−Removed: September 30, 2019
+Added: March 31, 2020
December 31, 2019
5 unchanged sentences
Accrued liabilities
−Removed: Foreign exchange contracts
−Removed: Other non-current liabilities
−Removed: Other non-current liabilities
The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our condensed consolidated statements of operations (in thousands):
−Removed: We estimate that as of September 30, 2019 , $ 0.8 million of net losses in accumulated OCI associated with our derivative instruments is expected to be reclassified into earnings within the next 12 months.
−Removed: Unrealized Gain (Loss) Recognized in OCI
+Added: Unrealized Loss
+Added: Recognized in OCI
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Foreign exchange contracts
5 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Foreign exchange contracts
7 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Foreign exchange contracts
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.