What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-27 · 486 added, 373 removed, 811 unchanged (51% of the section changed)

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Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of FASB ASU 2016-02, Leases .

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of FASB ASU 2016-02 Leases .

Basis for Opinion

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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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As discussed in Note 2 to the consolidated financial statements, the Company evaluates property and equipment for impairment at least quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable, or triggering events.

The Company performs this evaluation considering the future economic benefits of the assets (or asset groups), historical and estimated future profitability measures, and other factors that may be present, such as extended periods of idle time or the inability to contract the Company’s equipment at economical rates.

The carrying value of property and equipment as of December 31, 2019 was $1,872,637 thousand.

The Company performs this evaluation considering the future economic benefits of the asset or asset groups, historical and estimated future profitability measures, and other factors that may be present, such as extended periods of idle time or the inability to contract the Company’s equipment at economical rates.

The carrying value of property and equipment as of December 31, 2020 was $1,783 million.

We identified the evaluation of property and equipment impairment triggering events as a critical audit matter.

The evaluation of a triggering event for those assets not under a long-term contract required significant judgment, as expected spending trends by customers in the industry may lead to periods of low utilization and low day rates, and could result in the recognition of impairment charges for assets or asset groups.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s processes to identify and assess triggering events that indicate that the carrying value of an asset or asset group may not be recoverable, including controls related to the consideration of forecasted to actual results and market conditions in determination of a triggering event.

We evaluated the Company’s identification of potential triggering events, including future expected revenues from executed contracts.

Sustained decreases in commodity prices and uncertainty regarding spending trends by customers in the industry may lead to periods of low utilization and low day rates for those assets or asset groups not under a long-term contract, and the evaluation of the impact of these factors required a higher degree of subjective auditor judgment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the evaluation of property and equipment for impairment.

This included controls related to the Company’s process to identify and evaluate triggering events that indicate that the carrying value of an asset or asset group may not be recoverable, including the consideration of forecasted to actual results and market conditions in determination of a triggering event.

We evaluated the Company’s identification of triggering events, including consideration of future expected revenues from executed contracts.

We compared data used by the Company against analyst and industry reports.

We evaluated the Company’s data and assumptions when we identified information that was contrary to that used by the Company.

We compared the Company’s historical forecasts to actual results by asset group to assess the Company’s ability to accurately forecast.

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Restricted cash — 54,130

Accounts receivable:

Trade, net of allowance for uncollectible accounts of $0

Unbilled and other

Accounts receivable, net of allowance for credit losses of $ 3,469 and $ 0 , respectively

132,233 125,457

Other current assets 102,092 50,450

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Other assets, net 40,013 84,508

Total assets $ 2,498,278 $ 2,596,731

LIABILITIES AND SHAREHOLDERS’ EQUITY

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Accrued liabilities 87,035 62,389

Income tax payable

Current maturities of long-term debt 90,651 99,731

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Common stock, no par, 240,000 shares authorized, 150,341 and 148,888 shares issued, respectively

1,327,592 1,318,961

Retained earnings 464,524 445,370

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Year Ended December 31,

2020 2019 2018

Net revenues $ 733,555 $ 751,909 $ 739,818

Cost of sales 653,646 614,071 618,134

Gain (loss) on disposition of assets, net

Gross profit 79,909 137,838 121,684

Gain on disposition of assets, net 889 — 146

Goodwill impairment ( 6,689 ) — —

Selling, general and administrative expenses ( 61,084 ) ( 69,841 ) ( 70,287 )

Income (loss) from operations

Income from operations 13,025 67,997 51,543

Equity in earnings (losses) of investment 216 1,439 ( 3,918 )

Net interest expense ( 28,531 ) ( 8,333 ) ( 13,751 )

Loss on extinguishment of long-term debt

Gain (loss) on extinguishment of long-term debt 9,239 ( 18 ) ( 1,183 )

Other income (expense), net 4,724 1,165 ( 6,324 )

Royalty income and other 2,710 3,306 4,631

Income (loss) before income taxes

Income before income taxes 1,383 65,556 30,998

Income tax provision (benefit) ( 18,701 ) 7,859 2,400

Net income 20,084 57,697 28,598

Net loss attributable to redeemable noncontrolling interests ( 2,090 ) ( 222 ) —

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Earnings per share of common stock:

Basic $ 0.13 $ 0.39 $ 0.19

Diluted $ 0.13 $ 0.38 $ 0.19

Weighted average common shares outstanding:

Basic 148,993 147,536 146,702

Diluted 149,897 149,577 146,830

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

2020 2019 2018

Net income $ 20,084 $ 57,697 $ 28,598

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on hedges arising during the period

Reclassifications to net income

Net unrealized loss on hedges arising during the period ( 95 ) ( 680 ) ( 847 )

Reclassifications into earnings 452 5,470 7,201

Income taxes on hedges ( 72 ) ( 966 ) ( 1,338 )

Net change in hedges, net of tax 285 3,824 5,016

Unrealized gain (loss) on note receivable arising during the period

Unrealized loss on note receivable arising during the period — — ( 629 )

Income taxes on note receivable — — 132

Unrealized gain (loss) on note receivable, net of tax

Unrealized loss on note receivable, net of tax — — ( 497 )

Foreign currency translation gain (loss) 12,835 5,400 ( 7,166 )

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Less comprehensive loss attributable to redeemable noncontrolling interests:

Net loss ( 2,090 ) ( 222 ) —

Foreign currency translation gain 90 138 —

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(in thousands)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Redeemable Noncontrolling Interests

Equity Redeemable

Noncontrolling

Shares Amount

Balance, December 31, 2017 147,740 $ 1,284,274 $ 352,906 $ ( 69,787 ) $ 1,567,393 $ —

Net income — — 28,598 — 28,598 —

Reclassification of stranded tax effect to retained earnings — — 1,530 ( 1,530 ) — —

Foreign currency translation adjustments — — — ( 7,166 ) ( 7,166 ) —

Unrealized gain on hedges, net of tax — — — 5,016 5,016 —

Unrealized gain on note receivable, net of tax

Unrealized loss on note receivable, net of tax — — — ( 497 ) ( 497 ) —

Equity component of debt discount on convertible senior notes — 15,411 — — 15,411 —

Issuance of common stock, net of transaction costs

Activity in company stock plans, net and other 463 ( 746 ) — — ( 746 ) —

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Balance, December 31, 2018 148,203 $ 1,308,709 $ 383,034 $ ( 73,964 ) $ 1,617,779 $ —

Reclassification of stranded tax effect to retained earnings

Net income — — 57,919 — 57,919 ( 222 )

Reclassification of deferred gain from sale leaseback transaction to retained earnings — — 4,560 — 4,560 —

Foreign currency translation adjustments — — — 5,400 5,400 138

Unrealized gain on hedges, net of tax — — — 3,824 3,824 —

Unrealized loss on note receivable, net of tax

Equity component of debt discount on convertible senior notes

Issuance of redeemable noncontrolling interests — — — — — 3,396

Accretion of redeemable noncontrolling interests — — ( 143 ) — ( 143 ) 143

Activity in company stock plans, net and other 685 ( 1,032 ) — — ( 1,032 ) —

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Balance, December 31, 2019 148,888 $ 1,318,961 $ 445,370 $ ( 64,740 ) $ 1,699,591 $ 3,455

Net income (loss)

Reclassification of deferred gain from sale leaseback transaction to retained earnings

Net income — — 22,174 — 22,174 ( 2,090 )

Credit losses recognized in retained earnings upon adoption of ASU No.

2016-13 — — ( 620 ) — ( 620 ) —

Foreign currency translation adjustments — — — 12,835 12,835 90

Unrealized gain on hedges, net of tax — — — 285 285 —

Issuance of redeemable noncontrolling interests

Accretion of redeemable noncontrolling interests — — ( 2,400 ) — ( 2,400 ) 2,400

Equity component of convertible senior notes — 33,336 — — 33,336 —

Re-acquisition of equity component of convertible senior notes — ( 18,006 ) — — ( 18,006 ) —

Capped call transactions — ( 10,625 ) — — ( 10,625 ) —

Activity in company stock plans, net and other 1,453 ( 4,345 ) — — ( 4,345 ) —

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Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 20,084 $ 57,697 $ 28,598

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 133,709 112,720 110,522

Goodwill impairment 6,689 — —

Amortization of debt discounts 6,964 6,261 5,735

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Equity in (earnings) losses of investment ( 216 ) ( 1,439 ) 3,918

(Gain) loss on disposition of assets, net

Loss on extinguishment of long-term debt

Gain on disposition of assets, net ( 889 ) — ( 146 )

(Gain) loss on extinguishment of long-term debt ( 9,239 ) 18 1,183

Unrealized gain on derivative contracts, net ( 601 ) ( 3,383 ) ( 2,324 )

Unrealized foreign currency (gain) loss ( 2,665 ) ( 628 ) 1,466

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net ( 8,419 ) ( 3,050 ) 20,920

Income tax receivable, net of income tax payable ( 22,124 ) ( 4,456 ) 964

Other current assets ( 28,664 ) 25,383 ( 9,904 )

Income tax payable, net of income tax receivable

Accounts payable and accrued liabilities 10,830 ( 31,265 ) ( 1,818 )

Other, net ( 14,521 ) ( 6,743 ) 26,543

Net cash provided by operating activities 98,800 169,669 196,744

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Proceeds from sale of assets 963 2,550 25

Other — — 1,044

Net cash used in investing activities ( 19,281 ) ( 142,385 ) ( 136,014 )

Cash flows from financing activities:

Issuance of convertible senior notes

Redemption of convertible senior notes

Proceeds from term loans

Proceeds from convertible senior notes 200,000 — 125,000

Repayment of convertible senior notes ( 183,150 ) — ( 60,365 )

Proceeds from term loan — 35,000 —

Repayment of term loans ( 3,500 ) ( 35,442 ) ( 63,807 )

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Repayment of MARAD Debt ( 7,200 ) ( 6,858 ) ( 6,532 )

Capped call transactions ( 10,625 ) — —

Debt issuance costs ( 7,747 ) ( 1,586 ) ( 3,867 )

Net proceeds from issuance of common stock

Payments related to tax withholding for share-based compensation ( 5,264 ) ( 1,680 ) ( 1,407 )

Proceeds from issuance of ESPP shares 622 462 506

Net cash provided by (used in) financing activities

Net cash used in financing activities ( 52,578 ) ( 45,818 ) ( 46,186 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,818 1,636 ( 1,677 )

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Our Operations

We provide services and methodologies that we believe are critical to maximizing production economics.

Our life of field services are segregated into three reportable business segments:

Our services are segregated into three reportable business segments:

Well Intervention, Robotics and Production Facilities (Note 15).

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.

Our Well Intervention segment includes our vessels and/or equipment used to access offshore wells for the purpose of performing well enhancement or decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.

Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and two chartered monohull vessels, the Siem Helix 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.

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, and two robotics support vessels under long-term charter:

the Grand Canyon II and the Grand Canyon III .

We also utilize spot vessels as needed, including the Ross Candies , which is under a flexible charter agreement.

The Grand Canyon charter terminated in November 2019.

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 5), and our ownership of oil and gas properties acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019 (Note 8).

Our well intervention equipment includes intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module (“ROAM”), some of which we provide on a stand-alone basis.

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 globally.

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.

All of our current Production Facilities activities are located in the Gulf of Mexico.

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.

The acquisition is expected to strengthen our supply of subsea intervention systems.

The holders of the remaining 30 % noncontrolling interest have the right to put their shares to us in June 2024.

These redeemable noncontrolling interests have been recognized as temporary equity at their estimated fair value of $ 3.4 million at the acquisition date.

We recognized $ 2.4 million of identifiable intangible assets and $ 6.9 million of goodwill, which are reflected in “Other assets” in the accompanying consolidated balance sheet (Note 3).

Goodwill is related to the synergies expected from the acquisition.

STL is included in our Well Intervention segment and its revenue and earnings are immaterial to our consolidated results.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

Our consolidated financial statements include the accounts of majority owned subsidiaries.

Our consolidated financial statements include the accounts of our majority-owned subsidiaries.

The equity method is used to account for investments in affiliates in which we do not have majority ownership but have the ability to exert significant influence.

We account for our ownership interest in Independence Hub under the equity method of accounting.

All material intercompany accounts and transactions have been eliminated.

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We classify cash as restricted when there are legal or contractual restrictions for its withdrawal.

As of December 31, 2019 , we had restricted cash of $54.1 million , which serves as collateral for one letter of credit and is expected to be restricted for less than one year.

Accounts Receivable and Allowance for Uncollectible Accounts

Accounts receivable are stated at the historical carrying amount, net of write-offs and allowance for uncollectible accounts.

We establish an allowance for uncollectible accounts based on historical experience as well as any specific collection issues that we have identified.

We had no restricted cash as of December 31, 2020.

As of December 31, 2019, we had restricted cash of $ 54.1 million, which served as collateral for a letter of credit and was restricted for less than one year.

In January 2021, we reclassified $ 73.4 million to restricted cash, which serves as collateral for a letter of credit for a temporary importation permit for work offshore Nigeria that is expected to be less than one year.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recognized when our right to consideration becomes unconditional.

Accounts receivable are stated at the historical carrying amount, net of write-offs and allowance for credit losses.

We estimate current expected credit losses on our accounts receivable at each reporting date.

We estimate current expected credit losses based on our credit loss history, adjusted for current factors including global economic and business conditions, offshore energy industry and market conditions, customer mix, contract payment terms and past due accounts receivable.

Uncollectible receivables are written off when a settlement is reached for an amount that is less than the outstanding historical balance or when we have determined that the balance will not be collected (Note 19).

Property and Equipment

Property and equipment is recorded at historical cost.

Property and equipment is depreciated on a straight-line basis over the estimated useful life of an asset.

Property and equipment is recorded at historical cost, net of accumulated depreciation.

Property and equipment is depreciated on a straight-line basis over its estimated useful life.

The cost of improvements is capitalized whereas the cost of repairs and maintenance is expensed as incurred.

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The amount of the impairment recorded is calculated as the difference between the carrying amount of the asset or asset group and its estimated fair value.

Individual assets are grouped for impairment purposes at the lowest level where there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

The expected future cash flows used for impairment reviews and related fair value calculations are based on assessments of operating revenues and costs, project margins and capital project decisions, considering all available information at the date of review.

Individual assets are evaluated for impairment at the lowest level where there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

The expected future cash flows used for impairment reviews and related fair value calculations are based on assessments of operating revenues and costs, project margins and capital project spending, considering all available information at the date of review.

Capitalized Interest

Interest from external borrowings is capitalized on major projects until the assets are ready for their intended use.

Capitalized interest is added to the cost of the underlying asset and is amortized over the useful life of the asset in the same manner as the underlying asset.

Capitalized interest is excluded from our interest expense (Note 8).

Interest from external borrowings is capitalized on major projects under development until the assets are ready for their intended use.

Capitalized interest is added to the cost of the underlying asset and is amortized over the useful life of the asset.

Capitalized interest is excluded from our interest expense (Note 8) and is included as an investing cash outflow in the consolidated statements of cash flows.

Equity Investment

With respect to our investment accounted for using the equity method of accounting, losses in excess of the carrying amount of our equity investment are recognized when (i) we guaranteed the obligations of the investee, (ii) we are otherwise committed to provide further financial support for the investee, or (iii) it is anticipated that the investee’s return to profitability is imminent.

If we provided a commitment to fund losses, we would continue to record losses resulting in a negative equity method investment, which is presented as a liability in the consolidated balance sheets.

Losses in excess of the carrying amount of our equity investment are presented as a liability in the consolidated balance sheets.

Leases with a term greater than one year are recognized in the consolidated balance sheet as right-of-use (“ROU”) assets and lease liabilities.

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We perform an impairment analysis of goodwill at least annually as of November 1 or more frequently whenever events or circumstances occur indicating that goodwill might be impaired.

Our goodwill balance as of November 1, 2019 was attributable to the STL acquisition in May 2019 (Note 1).

We performed a qualitative assessment.

Based on our assessment of relevant events and circumstances, we have determined that there was no impairment of goodwill.

We had no goodwill in the accompanying consolidated balance sheet at December 31, 2018 .

Our goodwill balance attributable to the acquisition of a controlling interest in Subsea Technologies Group Limited (“STL”) was fully impaired during 2020, and we had no goodwill in the accompanying consolidated balance sheet at December 31, 2020 (Note 7).

Deferred Recertification and Dry Dock Costs

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Recertification costs for a vessel are typically incurred while the vessel is in dry dock.

We defer and amortize recertification costs, including vessel dry dock costs, over the length of time for which we expect to receive benefits from the recertification, which generally ranges from 30 to 60 months if the appropriate permitting is obtained.

We defer and amortize recertification costs, including vessel dry dock costs, over the period that the certification applies, which generally ranges from 30 to 60 months if the appropriate permitting is obtained.

A recertification process, including vessel dry dock, typically lasts between one to three months , a period during which a vessel or a piece of equipment is idle and generally not available to earn revenue.

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We generate revenue in our Well Intervention segment by supplying vessels, personnel and equipment to provide well intervention services, which involve providing marine access, serving as a deployment mechanism to the subsea well, connecting to and maintaining a secure connection to the subsea well and maintaining well control through the duration of the intervention services.

We also perform down-hole intervention work and provide certain engineering services.

We generate revenue in our Robotics segment by operating ROVs, trenchers and a ROVDrill to provide subsea construction, inspection, repair and maintenance services to oil and gas companies as well as subsea trenching and burial of pipelines and cables as well as seabed clearing for the oil and gas and the renewable energy industries.

We may also perform down-hole intervention work and provide certain engineering services.

We also provide integrated robotic services by supplying vessels that deploy ROVs and trenchers.

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We record revenues net of taxes collected from customers and remitted to governmental authorities.

Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract.

Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration.

We generally account for our services under contracts with customers as a single performance obligation satisfied over time.

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If a current estimate of total contract costs to be incurred exceeds the estimate of total revenues to be earned, we recognize the projected loss in full when it is identified.

A modification to a lump sum contract is generally accounted for as part of the existing contract and recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

We implemented a new accounting policy with respect to revenue from contracts with customers upon the adoption of Accounting Standards Update (“ASU”) No.

2014-09 on January 1, 2018.

See Note 12 for additional disclosures.

A modification to a lump sum contract is generally accounted for as part of the existing contract and recognized as an adjustment to revenue on a cumulative catch-up basis.

Income from Oil and Gas Production

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At December 31, 2020, we believe that we have appropriately accounted for any unrecognized tax benefits.

To the extent we prevail in matters for which a liability for an unrecognized tax benefit is established or are required to pay amounts in excess of the liability, our effective tax rate in a given financial statement period may be affected.

To the extent we prevail in matters for which a liability for an unrecognized tax benefit has been recognized or are required to pay amounts in excess of the liability, our effective tax rate in a given financial statement period may be affected.

Share-Based Compensation

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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.

Compensation cost for performance share unit (“PSU”) awards 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.

PSUs that are accounted for as liability awards are measured at their estimated fair value at the balance sheet date, and subsequent changes in fair value of the awards are recognized in earnings.

Compensation cost for our performance share unit (“PSU”) awards, which have a service condition and a market condition and are accounted for as equity awards, is measured based on the grant date estimated fair value and recognized over the vesting period on a straight-line basis.

PSUs that are accounted for as liability awards are measured at their estimated fair value at each balance sheet date, and subsequent changes in fair value of the awards are recognized in earnings for the portion of the award for which the requisite service period has elapsed.

Cumulative compensation cost for vested liability PSU awards equals the actual payout value upon vesting.

Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure plug and abandonment (“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.

The estimated 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.

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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 consolidated balance sheets at fair value.

Interest rate and foreign currency derivative instruments are reflected in the consolidated balance sheets at fair value.

The capped call transactions (the “2026 Capped Calls”) we entered into in connection with the issuance of Convertible Senior Notes Due 2026 are recorded in shareholders’ equity and are not accounted for as derivatives (Note 8).

We engage solely in cash flow hedges.

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These changes are subsequently reclassified into earnings when the hedged transactions affect earnings.

Changes in the fair value of a derivative instrument that does not qualify for hedge accounting are recorded in earnings in the period in which the change occurs.

Changes in the fair value of interest rate and foreign currency derivative instruments that do not qualify for hedge accounting are recorded in earnings.

We formally document all relationships between hedging instruments and the related hedged items, as well as our risk management objectives, strategies for undertaking various hedge transactions and our methods for assessing and testing correlation and hedge ineffectiveness.

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If hedge accounting is discontinued because it is probable the hedged transaction will not occur, gains or losses on the hedging instruments are reclassified from accumulated OCI into earnings immediately.

If the forecasted transaction continues to be probable of occurring, any unrealized gains or losses in accumulated OCI, a component of shareholders’ equity, are reclassified into earnings over the remaining period of the original forecasted transaction.

Interest Rate Risk

From time to time, we enter into interest rate swaps to stabilize cash flows related to our long-term variable interest rate debt.

Changes in the fair value of interest rate swaps are reported in accumulated OCI.

These changes are subsequently reclassified into earnings when the anticipated interest is recognized as interest expense.

Foreign Currency Exchange Rate Risk

Because we operate in various regions around the world, we conduct a portion of our business in currencies other than the U.S.

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.

Changes in the fair value of foreign currency exchange contracts are reported in accumulated OCI.

These changes are subsequently reclassified into earnings when the forecasted payments are made.

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 income (expense), net” in the consolidated statements of operations.

Earnings Per Share

The presentation of basic earnings per share (“EPS”) on the face of the accompanying consolidated statements of operations is computed by dividing net income or loss by the weighted average shares of our common stock outstanding.

Basic earnings per share (“EPS”) is computed by dividing net income or loss attributable to common shareholders by the weighted average shares of our common stock outstanding.

The calculation of diluted EPS is similar to that for basic EPS, except that the denominator includes dilutive common stock equivalents and the numerator excludes the effects of dilutive common stock equivalents, if any.

We have shares of restricted stock issued and outstanding that are currently unvested.

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.

We are required to compute basic and diluted 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.

Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.

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, we are required to compute basic and diluted EPS under the two-class method in periods in which we have earnings.

Under the two-class method, the undistributed earnings available to common shareholders 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.

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.

Major Customers and Concentration of Credit Risk

The market for our products and services is primarily the offshore oil and gas and renewable industries.

Major Customers and Concentration of Risk

We offer our products and services primarily in the offshore oil and gas and renewable markets.

Oil and gas companies spend capital on exploration, drilling and production operations, the amount of which is generally dependent on the prevailing view of future oil and gas prices and volatility, which are subject to many external factors.

Our customers consist primarily of major and independent oil and gas producers and suppliers, pipeline transmission companies, renewable energy companies and offshore engineering and construction firms.

We perform ongoing credit evaluations of our customers and provide allowances for probable credit losses.

We perform ongoing credit evaluations of our customers and provide allowances for credit losses.

The percentages of consolidated revenue from major customers (those representing 10% or more of our consolidated revenues) are as follows:

2019 — Petrobras ( 29 % ), BP ( 15 % ) and Shell ( 13 % );

2020 — Petrobras ( 28 %) and BP ( 17 %);

and 2017 — BP ( 19 % ), Petrobras ( 13 % ) and Talos ( 10 % ).

Most of the concentration of revenues appears in our Well Intervention business.

2019 — Petrobras ( 29 %), BP ( 15 %) and Shell ( 13 %);

and 2018 — Petrobras ( 28 %) and BP ( 15 %).

Most of the concentration of revenues are in our Well Intervention segment.

Fair Value Measurements

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New accounting standards adopted

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases (Topic 842)” (“ASC 842”), which was updated by subsequent amendments.

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ASC 842 also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors.

We adopted ASC 842 in the first quarter of 2019 using the modified retrospective method.

We adopted ASC 842 as of January 1, 2019 using the modified retrospective method.

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.

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Aside from these changes, ASC 842 has not had, and is not expected to have, a material impact on our net earnings or cash flows.

New accounting standards issued but not yet effective

See Note 6 for additional information regarding our leases.

In June 2016, the FASB issued ASU No.

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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.

The guidance will be effective for us as of January 1, 2020.

We do not expect this ASU to have a material impact on our consolidated financial statements upon adoption.

Upon adoption of ASU No.

2016-13 on January 1, 2020, we recognized $ 0.6 million (net of deferred taxes of $ 0.2 million) related to the provision for current expected credit losses on our accounts receivable through a cumulative effect offset to retained earnings.

The credit loss standard also resulted in the recognition of an additional $ 0.7 million in credit loss reserves on our accounts receivable for the year ended December 31, 2020.

See Note 19 for additional information regarding allowance for credit losses on our accounts receivable.

New accounting standards issued but not yet effective

In August 2020, the FASB issued ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, this ASU removes from GAAP the requirement to separate certain convertible instruments, such as our Convertible Senior Notes Due 2022, Convertible Senior Notes Due 2023 and Convertible Senior Notes Due 2026 (Note 8), into liability and equity components.

Consequently, those convertible instruments will be accounted for in their entirety as liabilities measured at their amortized cost.

We have elected to early adopt ASU No.

2020-06 on a modified retrospective basis as of January 1, 2021.

The adoption of this ASU will increase our long-term debt and decrease common stock by approximately $ 44.1 million and $ 41.5 million, respectively, as we reclassify the conversion features associated with our various outstanding convertible senior notes from equity to long-term debt.

The adoption of this ASU will also increase our retained earnings and decrease deferred tax liabilities by approximately $ 6.7 million and $ 9.3 million, respectively.

The embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Subsequent to its adoption, the ASU is also expected to reduce our interest expense as there will no longer be debt discounts associated with our outstanding convertible senior notes.

Additionally, the ASU no longer permits the treasury stock method for convertible instruments and instead requires the application of the if-converted method to calculate the impact of our convertible senior notes on diluted EPS.

We do not expect any other recent accounting standards to have a material impact on our financial position, results of operations or cash flows.

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Contract assets (Note 12) $ 2,446 $ 740

Prepaids 15,904 12,635

Deferred costs (Note 12) 23,522 28,340

Income tax receivable (Note 9) 20,787 1,261

Other receivable (Note 16) 29,782 —

Other 9,651 7,474

Total other current assets $ 102,092 $ 50,450

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Charter deposit (1)

12,544 12,544

Other receivable (Note 16) — 27,264

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Intangible assets with finite lives, net (Note 2) 3,809 3,847

Other 1,335 3,100

Total other assets, net $ 40,013 $ 84,508

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Accrued payroll and related benefits $ 24,768 $ 31,417

Accrued interest 7,098 3,942

Investee losses in excess of investment (Note 5) 1,499 4,069

Deferred revenue (Note 12) 8,140 11,568

Derivative liability (Note 21)

AROs (Note 16) 30,913 —

Other 14,617 11,393

Total accrued liabilities $ 87,035 $ 62,389

Other non-current liabilities consist of the following (in thousands):

Investee losses in excess of investment (Note 5)

Deferred gain on sale of property (1)

Deferred revenue (Note 12) $ 1,869 $ 8,286

Asset retirement obligations (Note 16)

Derivative liability (Note 21)

AROs (Note 16) — 28,258

Other 2,009 2,100

Total other non-current liabilities $ 3,878 $ 38,644

Relates to the sale and lease-back in January 2016 of certain office and warehouse property located in Aberdeen, Scotland.

The deferred gain had been amortized over a 15 -year minimum lease term prior to our adoption of ASC 842 on January 1, 2019.

See Note 2 for the effect of ASC 842 on this deferred gain.

Note 4 — Property and Equipment

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Estimated Useful Life 2020 2019

15 to 30 years

ROVs, trenchers and ROVDrill

Machinery, equipment and leasehold improvements

5 to 15 years

Vessels 15 to 30 years $ 2,349,752 $ 2,323,314

ROVs, trenchers and ROVDrill 10 years 263,968 270,004

Machinery, equipment and leasehold improvements 5 to 15 years 335,187 328,956

Total property and equipment $ 2,948,907 $ 2,922,274

Note 5 — Equity Method Investments

We have a 20 % ownership interest in Independence Hub that we account for using the equity method of accounting.

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.

We recognized a liability of $ 4.1 million and $ 11.2 million at December 31, 2019 and 2018 , respectively, for our share of Independence Hub’s estimated obligations, net of remaining working capital.

We have a 20 % ownership interest in Independence Hub, LLC (“Independence Hub”) that we account for using the equity method of accounting.

Independence Hub owns the “Independence Hub” platform, which is nearing the completion of its decommissioning.

The remaining liability balances for our share of Independence Hub’s estimated obligations, net of remaining working capital, were $ 1.5 million and $ 4.1 million at December 31, 2020 and 2019, respectively.

Note 6 — Leases

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As of December 31, 2020, the minimum sublease income to be received in the future totaled $ 2.1 million.

The following table details the components of our lease cost in 2019 (in thousands):

December 31, 2019

The following table details the components of our lease cost in 2020 and 2019 (in thousands):

Year Ended December 31,

Operating lease cost $ 64,742 $ 70,860

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Net lease cost $ 116,001 $ 103,633

For the year ended December 31, 2018, total rental expense was approximately $ 147.8 million and total sublease rental income was $ 1.4 million.

Maturities of our operating lease liabilities as of December 31, 2020 are as follows (in thousands):

Facilities and Equipment

Vessels Facilities and Equipment Total

Less than one year $ 54,621 $ 6,028 $ 60,649

One to two years 52,106 5,435 57,541

Two to three years 34,580 4,649 39,229

Three to four years 2,470 4,374 6,844

Four to five years — 2,340 2,340

Over five years — 4,054 4,054

Total lease payments $ 143,777 $ 26,880 $ 170,657

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Total operating lease liabilities $ 130,425 $ 22,183 $ 152,608

The following table presents the weighted average remaining lease term and discount rate in 2019:

December 31, 2019

Weighted average remaining lease term

Maturities of our operating lease liabilities as of December 31, 2019 are as follows (in thousands):

Vessels Facilities and Equipment Total

Less than one year $ 60,210 $ 6,610 $ 66,820

One to two years 54,564 5,888 60,452

Two to three years 52,106 5,257 57,363

Three to four years 34,580 4,622 39,202

Four to five years 2,470 4,349 6,819

Over five years — 6,251 6,251

Total lease payments $ 203,930 $ 32,977 $ 236,907

imputed interest ( 24,846 ) ( 6,449 ) ( 31,295 )

Total operating lease liabilities $ 179,084 $ 26,528 $ 205,612

Current operating lease liabilities $ 48,716 $ 5,069 $ 53,785

Non-current operating lease liabilities 130,368 21,459 151,827

Total operating lease liabilities $ 179,084 $ 26,528 $ 205,612

The following table presents the weighted average remaining lease term and discount rate:

Weighted average remaining lease term 3.1 years 4.0 years

Weighted average discount rate 7.53 % 7.54 %

The following table presents other information related to our operating leases in 2019 (in thousands):

December 31, 2019

The following table presents other information related to our operating leases (in thousands):

Year Ended December 31,

Cash paid for operating lease liabilities $ 66,026 $ 71,698

ROU assets obtained in exchange for new operating lease obligations 516 1,168

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):

Facilities and Equipment

Total lease payments

For the years ended December 31, 2018 and 2017 , total rental expense was approximately $ 147.8 million and $ 114.5 million , respectively.

For the years ended December 31, 2018 and 2017 , total sublease rental income was $ 1.4 million and $ 1.3 million , respectively.

Note 7 — Goodwill

Note 7 — Business Combinations and Goodwill

In May 2019, we acquired a 70 % controlling interest in STL, a subsea engineering firm based in Aberdeen, Scotland, for $ 5.1 million.

The holders of the remaining 30 % noncontrolling interest currently have the right to put their shares to us in June 2024.

These redeemable noncontrolling interests have been recognized as temporary equity.

STL is included in our Well Intervention segment (Note 15) and its revenue and earnings are immaterial to our consolidated results.

As a result of the decline in oil prices as well as energy and energy services valuations during the first quarter 2020 due to the ongoing COVID-19 pandemic and the OPEC+ price war, we impaired all of our goodwill, which consisted entirely of our goodwill in STL.

The changes in the carrying amount of goodwill are as follows (in thousands):

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Balance at December 31, 2019 7,157

Relates to goodwill arising from the STL acquisition in May 2019 (Note 1).

Other adjustments (2)

Impairment loss (3)

Balance at December 31, 2020 $ —

(1) Relates to goodwill arising from the acquisition of a controlling interest in STL in May 2019.

(2) Relates to foreign currency adjustments.

(3) Relates to the impairment of the entire STL goodwill balance in March 2020.

Note 8 — Long-Term Debt

Long-term debt consists of the following (in thousands):

Term Loan (previously scheduled to mature June 2020)

Term Loan (matures December 2021) $ 29,750 $ 33,250

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2023 Notes (mature September 2023) 30,000 125,000

2026 Notes (mature February 2026) 200,000 —

MARAD Debt (matures February 2027) 56,410 63,610

Nordea Q5000 Loan (matures April 2020)

Nordea Q5000 Loan (matures January 2021) (1)

53,572 89,286

Unamortized debt discounts ( 45,692 ) ( 22,540 )

Unamortized debt issuance costs ( 9,477 ) ( 7,753 )

Total debt 349,563 405,853

Less current maturities ( 90,651 ) ( 99,731 )

Long-term debt $ 258,912 $ 306,122

(1) We repaid the Nordea Q5000 Loan in January 2021.

Credit Agreement

On June 30, 2017, we entered into an Amended and Restated Credit Agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America, N.A.

We have a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America, N.A.

(“Bank of America”).

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.

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 Credit Agreement is comprised of a Term Loan with a remaining balance of $ 29.8 million as of December 31, 2020 and a Revolving Credit Facility with a maximum availability of $ 175 million that 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.

As of December 31, 2020, the Term Loan is classified as current in the accompanying consolidated balance sheet.

As of December 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 $ 160.2 million, net of $ 2.8 million of letters of credit issued under that facility.

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We also pay a fixed commitment fee of 0.50 % per annum on the unused portion of the Revolving Credit Facility.

The Term Loan principal is required to be repaid in quarterly installments of 2.5 % of the aggregate principal amount of the Term Loan, with a balloon payment at maturity.

Installment amounts are subject to adjustment for any prepayments on the Term Loan.

The Term Loan principal is required to be repaid in quarterly installments of 2.5 % of its aggregate principal amount, with a balloon payment at maturity.

Installments are subject to adjustment for any prepayments.

We may prepay indebtedness outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid.

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.

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.

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.

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, that we consider customary for this type of transaction.

The covenants include certain restrictions on our and certain of our subsidiaries’ ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, pay dividends and make capital expenditures.

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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”).

The debt and EBITDA of the Unrestricted Subsidiaries with the exception of Helix Q5000 Holdings, S.à r.l.

(“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.

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.

In addition, these obligations are secured by pledges of up to 66 % of the shares of certain foreign subsidiaries.

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.

In March 2018, we prepaid $ 61 million of the then-existing term loan with a portion of the net proceeds from the 2023 Notes and recognized a $ 0.9 million loss to write off the related remaining unamortized debt issuance costs.

In June 2017, we recognized a $ 0.4 million loss to write off the remaining unamortized debt issuance costs related to certain lenders exiting from the then-existing term loan.

These losses are presented as “Loss on extinguishment of long-term debt” in the accompanying consolidated statements of operations.

In connection with decreases in lenders’ commitments under our then-existing revolving credit facility, in June 2017, we recorded a $ 1.6 million interest charge to accelerate the amortization of a pro-rata portion of debt issuance costs related to the lenders whose commitments were reduced.

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 (Note 16).

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.

(“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 to Helix.

In June 2019, in connection with an amendment of the Credit Agreement we wrote off the remaining unamortized debt issuance costs associated with a lender exiting the Credit Agreement.

In March 2018, we prepaid $ 61 million of the then-existing term loan with a portion of the net proceeds from the 2023 Notes and wrote off $ 0.9 million of unamortized debt issuance costs.

These write-offs are presented as “Loss on extinguishment of long-term debt” in the accompanying consolidated statements of operations.

Convertible Senior Notes Due 2022 (“2022 Notes”)

On November 1, 2016, we completed a public offering and sale of the 2022 Notes in the aggregate principal amount of $ 125 million .

The 2022 Notes bear interest at a rate of 4.25 % per annum and are payable semi-annually in arrears on November 1 and May 1 of each year, beginning on May 1, 2017.

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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.

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.

The 2022 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

On August 14, 2020, we repurchased $ 90 million in aggregate principal amount of the 2022 Notes for $ 89.1 million.

We applied $ 81.7 million of the repurchase price to the acquisition of the debt component of the 2022 Notes and recognized an extinguishment gain of $ 3.3 million.

The remaining unamortized debt discount of the 2022 Notes was $ 1.3 million and $ 8.0 million at December 31, 2020 and 2019, respectively.

We applied the remaining $ 7.4 million of the repurchase price to the re-acquisition of the equity component.

The remaining equity component of the 2022 Notes was $ 9.5 million ($ 5.3 million net of tax) and $ 16.9 million ($ 11.0 million net of tax) at December 31, 2020 and 2019, respectively.

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.

For the years ended December 31, 2020, 2019 and 2018, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 6.2 million, $ 8.4 million and $ 8.1 million, respectively.

The remaining unamortized debt discount of the 2022 Notes was $ 8.0 million and $ 11.0 million at December 31, 2019 and 2018 , respectively.

With the adoption of ASU No.

2020-06 beginning January 1, 2021, the 2022 Notes will no longer be reported at a discount.

See Note 2 for the effect of ASU No.

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 .

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.

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We have the right and the intention to settle the principal amount of any such future conversions in cash.

Although not currently convertible, the value of the shares into which the 2023 Notes are convertible exceeded the principal amount of the 2023 Notes by $ 2.1 million as of December 31, 2019 .

Prior to March 15, 2021, the 2023 Notes are not redeemable.

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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.

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.

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.

For the years ended December 31, 2019 and 2018 , interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 8.4 million and $ 6.4 million , respectively.

The 2023 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

On August 14, 2020, we repurchased $ 95 million in aggregate principal amount of the 2023 Notes for $ 94.1 million.

We applied $ 78.2 million of the repurchase price to the re-acquisition of the debt component of the 2023 Notes and recognized an extinguishment gain of $ 5.9 million.

The remaining unamortized debt discount of the 2023 Notes was $ 2.7 million and $ 14.5 million at December 31, 2020 and 2019, respectively.

We applied the remaining $ 15.9 million of the repurchase price to the re-acquisition of the equity component.

The remaining equity component of the 2023 Notes was $ 4.2 million ($ 3.6 million net of tax) and $ 20.1 million ($ 15.9 million net of tax) at December 31, 2020 and 2019, respectively.

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.

For the years ended December 31, 2020, 2019 and 2018, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 6.1 million, $ 8.4 million and $ 6.4 million, respectively.

With the adoption of ASU No.

2020-06 beginning January 1, 2021, the 2023 Notes will no longer be reported at a discount.

See Note 2 for the effect of ASU No.

Convertible Senior Notes Due 2026 (“2026 Notes”)

On August 14, 2020, we issued $ 200 million in aggregate principal amount of the 2026 Notes.

The net proceeds from the issuance of the 2026 Notes were approximately $ 192.5 million, after deducting the underwriting discounts and commissions and estimated offering expenses.

As discussed further in Note 10, we used approximately $ 10.5 million of the net proceeds to enter into the 2026 Capped Calls.

We used the remainder of the net proceeds, together with cash on hand, to repurchase $ 90 million in aggregate principal amount of the 2022 Notes and $ 95 million in aggregate principal amount of the 2023 Notes (see “Convertible Senior Notes Due 2022” and “Convertible Senior Notes Due 2023” above) in privately negotiated transactions.

The 2026 Notes bear interest at a rate of 6.75 % per annum and are payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2021.

The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased.

During certain periods and subject to certain conditions, the 2026 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $ 6.97 per share of common stock), subject to adjustment in certain circumstances.

In order to reduce the potential dilution of the 2026 Notes to shareholders’ equity, we entered into the 2026 Capped Calls, which effectively increase the conversion price of the 2026 Notes to approximately $ 8.42 per share.

However, the 2026 Capped Calls are separate transactions from the 2026 Notes and do not change the holders’ rights under the 2026 Notes, and holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls (Note 10).

We have the right and the intention to settle the principal amount of any such future conversions in cash.

Prior to August 15, 2023, the 2026 Notes are not redeemable.

On or after August 15, 2023, if certain conditions are met, we may redeem all or any portion of the 2026 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 2026 Notes).

Holders of the 2026 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2026 Notes).

The indenture governing the 2026 Notes contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee under the indenture or the holders of not less than 25 % in aggregate principal amount then outstanding under the 2026 Notes may declare the entire principal amount of all the notes, and the interest accrued on such notes, if any, to be immediately due and payable.

In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2026 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.

The 2026 Notes are separated between the equity component of $ 43.8 million ($ 34.6 million net of tax) recognized in shareholders’ equity and the debt component which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

The effective interest rate for the 2026 Notes is 12.4 % after considering the effect of the accretion of the related debt discount over the term of the 2026 Notes.

For the year ended December 31, 2020, interest expense (including amortization of the debt discount) related to the 2026 Notes was $ 7.2 million.

The remaining unamortized debt discount of the 2026 Notes was $ 41.7 million at December 31, 2020.

With the adoption of ASU No.

2020-06 beginning January 1, 2021, the 2026 Notes will no longer be reported at a discount.

See Note 2 for the effect of ASU No.

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 .

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The Nordea Q5000 Loan was funded in the amount of $ 250 million in April 2015 at the time the Q5000 vessel was delivered to us.

Helix Vessel Finance S.à r.l., an indirect wholly owned Luxembourg subsidiary of Helix, guaranteed the Nordea Q5000 Loan.

Helix Vessel Finance S.à r.l., Q5000 Holdings's parent, which is a wholly owned Luxembourg subsidiary of Helix, has 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.

The Nordea Q5000 Loan bears interest at a LIBOR rate plus a margin of 2.5 % .

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.

The remaining principal balance and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current in the accompanying consolidated balance sheet as of December 31, 2019 .

Q5000 Holdings 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.

We use interest rate swap contracts to fix the one-month LIBOR rate on a portion of our borrowings under the Nordea Q5000 Loan (Note 21).

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.

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.

The covenants include restrictions on Q5000 Holdings’s ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, and pay dividends.

In addition, the Nordea Credit Agreement obligates Q5000 Holdings to meet certain minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance.

We amended the Nordea Credit Agreement on March 11, 2020.

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.

The amendment increased the margin to 2.75 %, maintained the existing quarterly amortization requirements, and extended the final maturity to January 31, 2021 with a balloon payment on that date of $ 53.6 million.

The remaining principal balance and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current in the accompanying consolidated balance sheets.

We repaid the remaining balance of the Nordea Q5000 Loan at its maturity on January 29, 2021.

We previously issued additional convertible senior notes in March 2012, which were originally scheduled to mature on March 15, 2032 (the “2032 Notes”).

In 2018, we fully redeemed the remaining $ 60.1 million in aggregate principal amount of the 2032 Notes and recognized a corresponding $ 0.2 million loss.

The loss is presented as “Loss on extinguishment of long-term debt” in the accompanying consolidated statements of operations.

As discussed above, 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.

The loss is presented as “Loss on extinguishment of long-term debt” in the accompanying consolidated statement of operations.

In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the 2026 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.

As of December 31, 2020, we were in compliance with these covenants.

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Over five years — — — 200,000 14,645 — 214,645

Gross debt 29,750 35,000 30,000 200,000 56,410 53,572 404,732

Unamortized debt discounts (1)

— ( 1,325 ) ( 2,651 ) ( 41,716 ) — — ( 45,692 )

Unamortized debt issuance costs (2)

( 191 ) ( 198 ) ( 427 ) ( 5,572 ) ( 3,049 ) ( 40 ) ( 9,477 )

Total debt 29,559 33,477 26,922 152,712 53,361 53,532 349,563

Less current maturities ( 29,559 ) — — — ( 7,560 ) ( 53,532 ) ( 90,651 )

Long-term debt $ — $ 33,477 $ 26,922 $ 152,712 $ 45,801 $ — $ 258,912

Term Loan pursuant to the Credit Agreement matures in December 2021.

The 2022 Notes and the 2023 Notes will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022 and September 2023, respectively.

(1) The 2022 Notes, the 2023 Notes and the 2026 Notes will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022, September 2023 and February 2026, respectively.

See Note 2 for future accounting changes related to these discounts.

(2) Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.

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Year Ended December 31,

2020 2019 2018

Interest expense $ 30,538 $ 31,186 $ 32,617

Capitalized interest (1)

( 1,182 ) ( 20,246 ) ( 15,629 )

Interest income ( 825 ) ( 2,607 ) ( 3,237 )

Net interest expense $ 28,531 $ 8,333 $ 13,751

(1) The significant reduction in capitalized interest in 2020 was attributable to the conclusion of our planned major capital commitments following the completion of the Q7000 .

Note 9 — Income Taxes

On December 22, 2017, the 2017 Tax Act was enacted.

The 2017 Tax Act is comprehensive tax reform legislation that contains significant changes to corporate taxation, including a permanent reduction of the corporate income tax rate from 35 % to 21 % , a mandatory one-time tax on un-repatriated accumulated earnings of foreign subsidiaries, a partial limitation on the deductibility of business interest expense, and a shift from U.S.

taxation on worldwide income of multinational corporations to a partial territorial system (along with rules that create a new U.S.

minimum tax on earnings of foreign subsidiaries).

Due to the changes to U.S.

tax laws as a result of the 2017 Tax Act, we recorded a $ 51.6 million net income tax benefit during the fourth quarter of 2017.

This amount was comprised of the following:

Reduction of the U.S.

Corporate Income Tax Rate

We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to reverse.

Accordingly, our deferred tax assets and liabilities were re-measured to reflect the reduction in the U.S.

corporate income tax rate from 35 % to 21 % , resulting in a $ 59.7 million deferred income tax benefit recorded during the fourth quarter of 2017 and a corresponding decrease in net deferred tax liabilities as of December 31, 2017.

Transition Tax on Foreign Earnings

The one-time transition tax was based on our total post-1986 foreign earnings and profits (“E&P”) deemed repatriated to the U.S.

to the extent the E&P has not already been subject to U.S.

We recorded a deferred income tax expense of $ 8.1 million during the fourth quarter of 2017 related to the one-time transition tax on certain foreign earnings.

This resulted in a corresponding decrease in deferred tax assets of $ 8.1 million due to the utilization of U.S.

net operating losses against the deemed mandatory repatriation income inclusion.

We and our subsidiaries file a consolidated U.S.

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Year Ended December 31,

2020 2019 2018

Current $ ( 14,818 ) $ 4,374 $ 4,830

Deferred ( 3,883 ) 3,485 ( 2,430 )

$ ( 18,701 ) $ 7,859 $ 2,400

Domestic $ ( 15,074 ) $ 3,715 $ ( 3,161 )

Foreign ( 3,627 ) 4,144 5,561

$ ( 18,701 ) $ 7,859 $ 2,400

Components of income (loss) before income taxes are as follows (in thousands):

Year Ended December 31,

2020 2019 2018

Domestic $ ( 3,406 ) $ 2,219 $ ( 28,838 )

Foreign 4,789 63,337 59,836

$ 1,383 $ 65,556 $ 30,998

Coronavirus Aid, Relief, and Economic Security Act (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.

income tax regulations.

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.

As a result of these changes, we recognized a $ 7.6 million net tax benefit in the year ended December 31, 2020, consisting of an $ 18.9 million current tax benefit, which is reflected in our income tax receivable at December 31, 2020, and a $ 11.3 million deferred tax expense.

This $ 7.6 million net tax benefit resulted from our deferred tax assets related to our net operating losses in the U.S.

being utilized at the previous higher income tax rate applicable to the carryback periods.

During the year ended December 31, 2020, we migrated two of our foreign subsidiaries into our U.S.

consolidated tax group.

Subsequent to the migration, these subsidiaries are disregarded and no longer subject to certain branch profits taxes.

Consequently, we recognized net deferred tax benefits of $ 8.3 million due to the reduction in the overall tax rate associated with these subsidiaries.

Income taxes are provided based on the U.S.

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.

statutory rate and our effective rate are as follows:

The primary differences between the income tax provision (benefit) at the U.S.

statutory rate and our actual income tax provision (benefit) are as follows:

Year Ended December 31,

Statutory rate

Foreign provision

Change in U.S.

2020 2019 2018

Taxes at U.S.

statutory rate $ 290 21.0 % $ 13,767 21.0 % $ 6,510 21.0 %

Mandatory U.S.

repatriation (1)

Change in tax position (2)

Effective rate

As a result of the U.S.

tax law changes, we recorded a net deferred tax benefit of $ 51.6 million during the fourth quarter of 2017 (see above).

As a result of a change in tax position related to our foreign taxes, we recorded a tax charge of $ 6.3 million in June 2017.

Foreign tax provision ( 3,426 ) ( 247.7 ) ( 6,557 ) ( 10.0 ) ( 4,941 ) ( 15.9 )

CARES Act ( 7,596 ) ( 549.2 ) — — — —

Subsidiary restructuring ( 8,333 ) ( 602.5 ) — — — —

Other 364 26.2 649 1.0 831 2.6

Income tax provision (benefit) $ ( 18,701 ) ( 1,352.2 ) % $ 7,859 12.0 % $ 2,400 7.7 %

Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes.

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Deferred tax liabilities:

Debt discounts on 2022 Notes and 2023 Notes

Prepaid and other

Depreciation $ 153,226 $ 166,239

Debt discounts on 2022 Notes, 2023 Notes and 2026 Notes 9,298 4,643

Total deferred tax liabilities $ 162,524 $ 170,882

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At December 31, 2020, our U.S.

net operating losses available for carryforward totaled $ 228.3 million .

net operating loss carryforwards prior to 2018 in the amount of $ 112.3 million will begin to expire in 2035 if unused.

Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

net operating losses available for carryforward totaled $ 197.4 million, of which $ 85.1 million occurred after the passage of the 2017 Tax Act and are not subject to expiration.

net operating loss carryforwards generated prior to 2018 in the amount of $ 112.3 million will begin to expire in 2035 if unused.

Realization of net operating losses is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

Although realization is not assured, management believes it is more likely than not that all of these tax attributes will be utilized.

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of approximately $ 62.2 million.

Due to the enactment of the 2017 Tax Act, repatriations of foreign earnings will generally be free of U.S.

federal tax but may result in other withholding taxes or state taxes.

Due to the enactment of the U.S.

Tax Cuts and Jobs Act (the “2017 Tax Act”), repatriations of foreign earnings will generally be free of U.S.

federal tax but may be subject to changes in future tax legislation that may result in taxation.

Indefinite reinvestment is determined by management’s intentions concerning our future operations.

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as we consider them permanently reinvested.

Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings.

Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes associated with these undistributed earnings.

We recorded an uncertain tax position of $ 0.7 million in 2020 related to a research and development credit taken on our 2019 U.S.

Federal Income Tax Return and certain expenses not reversed for tax purposes.

We account for tax-related interest in interest expense and tax penalties in selling, general and administrative expenses.

The statute of limitations on our sole remaining uncertain tax position expired in 2019.

We did not record any interest related to these positions in 2020 as the amount was immaterial.

The statute of limitations on $ 0.3 million of uncertain tax positions expired in 2019.

Therefore, as of December 31, 2019, there were no unrecognized tax benefits related to uncertain tax positions.

As of December 31, 2018 and 2017 , we had unrecognized tax benefits of $ 0.3 million related to uncertain tax positions, which if recognized would have affected the annual effective tax rate in those years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2019 , 2018 and 2017 is as follows (in thousands):

Balance at January 1,

Additions for tax positions of prior years

Reductions for tax positions of prior years

Balance at December 31,

We file tax returns in the U.S.

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jurisdiction tax returns by taxing authorities would not have a material impact on our financial position.

The tax periods from 2016 through 2019 remain open to review and examination by the Internal Revenue Service.

The tax periods from 2013, 2014, and 2018 through 2020 remain open to review and examination by the Internal Revenue Service.

jurisdictions, the open tax periods include 2013 through 2020.

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Our amended and restated Articles of Incorporation provide for authorized Common Stock of 240,000,000 shares with no stated par value per share and 5,000,000 shares of preferred stock, $ 0.01 par value per share, issuable in one or more series.

On January 10, 2017, we completed an underwritten public offering (the “Offering”) of 26,450,000 shares of our common stock at a public offering price of $ 8.65 per share.

The net proceeds from the Offering approximated $ 220 million , after deducting underwriting discounts and commissions and offering expenses.

We used the net proceeds from the Offering for general corporate purposes, including debt repayment, capital expenditures, working capital and investments in our subsidiaries.

In connection with the 2026 Notes offering (Note 8), we entered into the 2026 Capped Calls with three separate option counterparties.

The 2026 Capped Calls are separate transactions from the 2026 Notes and do not change the holders' rights under the 2026 Notes.

Holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls.

The 2026 Capped Calls are for an aggregate of 28,675,900 shares of our common stock, which corresponds to the shares into which the 2026 Notes are initially convertible.

The capped call shares are subject to certain anti-dilution adjustments.

Each capped call option has an initial strike price of approximately $ 6.97 per share, which corresponds to the initial conversion price of the 2026 Notes, and an initial cap price of approximately $ 8.42 per share.

The strike and cap prices are subject to certain adjustments.

The 2026 Capped Calls are intended to offset some or all of the potential dilution to Helix common shares caused by any conversion of the 2026 Notes up to the cap price.

The 2026 Capped Calls can be settled in either net shares or cash at our option in components commencing December 15, 2025 and ending February 12, 2026, which could be extended under certain circumstances.

The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting Helix, including a merger, tender offer, nationalization, insolvency or delisting.

In addition, certain events may result in a termination of the 2026 Capped Calls, including changes in law, insolvency filings and hedging disruptions.

The 2026 Capped Calls are recorded at their aggregate cost of $ 10.6 million as a reduction to common stock in the shareholders’ equity section of our consolidated balance sheet.

The components of accumulated OCI are as follows (in thousands):

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Accumulated OCI $ ( 51,620 ) $ ( 64,740 )

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 21).

Balances at December 31, 2019 and 2018 were net of deferred income taxes totaling $ 0.1 million and $ 1.0 million , respectively.

(1) Relates to foreign currency hedges for the Grand Canyon III charter as well as interest rate hedge contracts for the Nordea Q5000 Loan (Note 21).

Note 11 — Stock Buyback Program

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The following table provides information about disaggregated revenue by contract duration (in thousands):

Well Intervention

Production Facilities

Intercompany Eliminations (1)

Well Intervention Robotics Production Facilities Intercompany Eliminations (1)

Total Revenue

Year ended December 31, 2020

Short-term $ 206,812 $ 117,439 $ — $ — $ 324,251

Long-term 332,437 60,579 58,303 ( 42,015 ) 409,304

Total $ 539,249 $ 178,018 $ 58,303 $ ( 42,015 ) $ 733,555

Year ended December 31, 2019

Short-term $ 214,926 $ 94,501 $ — $ — $ 309,427

Long-term 378,374 77,171 61,210 ( 74,273 ) 442,482

Total $ 593,300 $ 171,672 $ 61,210 $ ( 74,273 ) $ 751,909

Year ended December 31, 2018

Short-term $ 199,294 $ 89,072 $ — $ — $ 288,366

Long-term 361,274 69,917 64,400 ( 44,139 ) 451,452

Total $ 560,568 $ 158,989 $ 64,400 $ ( 44,139 ) $ 739,818

(1) Intercompany revenues among our business segments are under agreements that are considered long-term.

Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract.

Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration.

Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional.

Accounts receivable that have been billed to customers are recorded as trade accounts receivable while accounts receivable that have not been billed to customers are recorded as unbilled accounts receivable.

Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance.

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Contract assets as of December 31, 2020 and 2019 were $ 2.4 million and $ 0.7 million, respectively.

We had no impairment losses on our accounts receivable for the years ended December 31, 2019 and 2018 .

We had no credit losses on our contract assets for the years ended December 31, 2020, 2019 and 2018.

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.

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Contract liabilities as of December 31, 2020 and 2019 totaled $ 10.0 million and $ 19.9 million, respectively.

Revenue recognized for the years ended December 31, 2019 and 2018 included $ 10.1 million and $ 11.6 million , respectively, that were included in the contract liability balance as the beginning of each period.

Revenue recognized for the years ended December 31, 2020, 2019 and 2018 included $ 11.6 million, $ 10.1 million and $ 11.6 million, respectively, that were included in the contract liability balance as 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.

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For the year ended December 31, 2019, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were $ 2.1 million, which resulted from the recognition of previously constrained variable consideration for contractual adjustments related to withholding taxes in Brazil.

For the year ended December 31, 2018 , revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were immaterial.

For the years ended December 31, 2020 and 2018, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were immaterial.

Contract Fulfillment Costs

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Our deferred contract costs as of December 31, 2020 and 2019 totaled $ 24.4 million and $ 42.9 million, respectively.

For the years ended December 31, 2019 and 2018 , we recorded $ 31.5 million and $ 33.1 million , respectively, related to amortization of deferred contract costs existing at the beginning of each period.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 35.8 million, $ 31.5 million and $ 33.1 million, respectively, related to amortization of deferred contract costs.

There were no associated impairment losses for any period presented.

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Year Ended December 31,

2020 2019 2018

Income Shares Income Shares Income Shares

Net income attributable to common shareholders $ 22,174 $ 57,919 $ 28,598

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Net income available to common shareholders, diluted $ 19,635 149,897 $ 57,295 149,577 $ 28,326 146,830

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):

The following weighted average potentially dilutive shares related to the 2022 Notes, the 2023 Notes, the 2026 Notes and the 2032 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):

Year Ended December 31,

2020 2019 2018

2022 Notes 6,537 8,997 8,997

The 2032 Notes were fully redeemed in May 2018.

2023 Notes 9,391 13,202 10,344

2026 Notes 10,891 — —

2032 Notes (1)

(1) The 2032 Notes were fully redeemed in 2018.

Note 14 — Employee Benefit Plans

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We sponsor a defined contribution 401(k) retirement plan.

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.

We made employer contributions of $ 1.0 million to the 401(k) plan in 2019 .

Our discretionary contributions are in the form of cash and consist of a 50 % match of each participant’s contribution up to 5 % of the participant’s salary.

For the years ended December 31, 2020 and 2019, we made discretionary employer contributions of $ 1.6 million and $ 1.0 million, respectively, to the 401(k) plan.

Employee Stock Purchase Plan

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The Compensation Committee also determines the type of award to be made to each participant and, as set forth in the related award agreement, the terms, conditions and limitations applicable to each award.

The Compensation Committee may grant stock options, restricted stock, restricted stock units, PSUs and cash awards.

The Compensation Committee may grant stock options, restricted stock, restricted stock units (“RSUs”), PSUs and cash awards.

Awards that have been granted to employees under the 2005 Incentive Plan have a vesting period of three years (or 33 % per year) with the exception of PSUs, which vest 100 % on the third anniversary date of the grant.

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The following grants of share-based awards were made in 2020 under the 2005 Incentive Plan:

Date of Grant

Per Share/Unit

Vesting Period

Date of Grant Shares/

Units Grant Date

Per Share/Unit Vesting Period

January 2, 2020 (1)

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19,407 $ 3.47 100% on January 1, 2022

August 1, 2019 (4)

100% on August 1, 2020

October 1, 2020 (3)

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(3) 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.

Reflects a grant of restricted stock made to a new independent member of our Board upon her joining our Board.

(4) Reflects annual equity grants to each independent member of our Board.

In January 2020, we granted our executive officers and select management employees 369,938 shares of restricted stock and 369,938 PSUs under the 2005 Incentive Plan.

The market value of the restricted shares was $ 9.63 per share or $ 3.6 million .

The grant date fair value of the PSUs was $ 13.15 per unit.

Also in January 2020, we granted $ 4.7 million of fixed value cash awards to other select management employees under the 2005 Incentive Plan.

In January 2021, we granted our executive officers 452,381 RSUs and 452,381 PSUs under the 2005 Incentive Plan.

The grant date fair value of the RSUs was $ 4.20 per unit or $ 1.9 million.

The grant date fair value of the PSUs was $ 5.33 per unit or $ 2.4 million.

Also in January 2021, we granted $ 3.4 million of fixed value cash awards to select management employees under the 2005 Incentive Plan.

Restricted Stock Awards

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Year Ended December 31,

2020 2019 2018

Shares Grant Date

Fair Value (1)

Shares Grant Date

Fair Value (1)

Shares Grant Date

Fair Value (1)

Awards outstanding at beginning of year 1,173,045 $ 6.81 1,320,989 $ 7.40 1,579,218 $ 7.63

Granted 667,752 7.06 846,835 6.02 614,286 7.46

( 631,498 ) 7.52 ( 993,361 ) 6.92 ( 823,310 ) 7.88

Forfeited ( 32,348 ) 5.41 ( 1,418 ) 8.82 ( 49,205 ) 7.62

Awards outstanding at end of year 1,176,951 $ 6.61 1,173,045 $ 6.81 1,320,989 $ 7.40

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We grant PSUs to our executive officers and from time to time select management employees.

The payout at vesting of PSUs is based on the performance of our common stock over a three -year period compared to the performance of other companies in a peer group selected by the Compensation Committee of our Board, with the maximum amount of the award being 200 % of the original awarded PSUs and the minimum amount being zero .

PSUs granted prior to 2017 were settled in cash and accounted for as liability awards.

PSUs granted beginning in 2017 are to be settled solely in shares of our common stock and therefore are accounted for as equity awards.

PSUs granted in 2020, 2019 and 2018 are to be settled solely in shares of our common stock and therefore are accounted for as equity awards.

The payout at vesting of these PSUs is based on the performance of our common stock over a three-year period compared to the performance of other companies in a peer group selected by the Compensation Committee of our Board, with the maximum amount of the award being 200 % of the original awarded PSUs and the minimum amount being zero .

The following table summarizes information about our equity PSU awards:

Year Ended December 31,

2020 2019 2018

Units Grant Date

Fair Value (1)

Units Grant Date

Fair Value (1)

Units Grant Date

Fair Value (1)

Equity PSU awards outstanding at beginning of year 1,565,044 $ 10.17 1,006,360 $ 11.76 613,665 $ 12.64

Granted 369,938 13.15 688,540 7.60 449,271 10.44

Vested ( 589,335 ) 12.64 — — — —

Forfeited ( 48,521 ) 7.60 ( 129,856 ) 8.91 ( 56,576 ) 10.83

Equity PSU awards outstanding at end of year 1,297,126 $ 9.99 1,565,044 $ 10.17 1,006,360 $ 11.76

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In January 2021, 368,038 equity PSU awards granted in 2018 vested at 200 %, representing 736,075 shares of our common stock with a total market value of $ 3.1 million.

For the years ended December 31, 2018 and 2017 , $ 0.9 million and $ 4.6 million , respectively, were recognized as share-based compensation related to liability PSU awards.

At December 31, 2018 , the liability balance for unvested liability PSU awards related to the 2016 grant was $ 11.1 million , which were cash settled when they vested in January 2019.

During 2018 and 2017 , we cash settled $ 0.9 million and $ 0.6 million , respectively, related to the liability PSU awards granted in 2015 and 2014.

In 2019 and 2018 , we granted $ 4.6 million and $ 5.2 million , respectively, of fixed value cash awards to select management employees under the 2005 Incentive Plan.

In January 2020, 589,335 equity PSU awards granted in 2017 vested at 200 %, representing 1,178,670 shares of our common stock with a total market value of $ 11.4 million.

For the year ended December 31, 2018, $ 0.9 million were recognized as share-based compensation related to liability PSU awards.

During 2019 and 2018, we cash settled liabilities of $ 11.1 million and $ 0.9 million, respectively, related to PSU awards granted in 2016 and 2015, respectively.

In 2020, 2019 and 2018, we granted $ 4.7 million, $ 4.6 million and $ 5.2 million, respectively, of fixed value cash awards to select management employees under the 2005 Incentive Plan.

The value of these cash awards is recognized on a straight-line basis over a vesting period of three years .

For the years ended December 31, 2019 and 2018 , $ 3.2 million and $ 1.7 million , respectively, was recognized as compensation cost, which reflected the liability balance as of December 31, 2019 and 2018 for the cash payout made in January 2020 and 2019, respectively.

For the years ended December 31, 2020, 2019 and 2018, we recognized compensation costs of $ 4.4 million and $ 3.2 million and $ 1.7 million, respectively, which reflected the cash payouts made in January 2021, 2020 and 2019, respectively.

Note 15 — Business Segment Information

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Our U.S., U.K.

and Brazil Well Intervention operating segments are aggregated into the Well Intervention business segment for financial reporting purposes.

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.

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.

Our Robotics segment includes ROVs, trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, two robotics support vessels under long-term charter:

the Grand Canyon II and the Grand Canyon III , and spot vessels, including the Ross Candies , which is under a flexible charter agreement.

We returned the Grand Canyon to its owner during the fourth quarter of 2019.

Our Production Facilities segment includes the HP I , the HFRS, our ownership interest in Independence Hub (Note 5) and our ownership of oil and gas properties (Note 1).

and Brazil well intervention operating segments are aggregated into the Well Intervention segment for financial reporting purposes.

Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and the Siem Helix 1 and Siem Helix 2 chartered vessels.

Our well intervention equipment includes IRSs, SILs and the ROAM, some of which we provide on a stand-alone basis.

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 globally.

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.

Our Production Facilities segment includes the HP I , the HFRS and our ownership of oil and gas properties (Note 16).

All material intercompany transactions between the segments have been eliminated.

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Year Ended December 31,

2020 2019 2018

Net revenues —

Well Intervention $ 539,249 $ 593,300 $ 560,568

Robotics 178,018 171,672 158,989

Production Facilities 58,303 61,210 64,400

Intercompany eliminations ( 42,015 ) ( 74,273 ) ( 44,139 )

Total $ 733,555 $ 751,909 $ 739,818

Income (loss) from operations —

Well Intervention $ 26,855 $ 89,564 $ 87,643

Robotics 13,755 7,261 ( 14,054 )

Production Facilities 15,975 17,160 27,263

Segment operating income 56,585 113,985 100,852

Goodwill impairment (1)

( 6,689 ) — —

Corporate, eliminations and other ( 36,871 ) ( 45,988 ) ( 49,309 )

Total 13,025 67,997 51,543

Net interest expense ( 28,531 ) ( 8,333 ) ( 13,751 )

Other non-operating income (expense), net 16,889 5,892 ( 6,794 )

Income (loss) before income taxes

Income before income taxes $ 1,383 $ 65,556 $ 30,998

Capital expenditures —

Well Intervention $ 19,523 $ 139,212 $ 136,164

Robotics 257 417 151

Production Facilities — 123 325

Corporate and other 464 1,102 443

Total $ 20,244 $ 140,854 $ 137,083

Depreciation and amortization —

Well Intervention $ 101,756 $ 80,153 $ 76,943

Robotics 15,952 16,459 19,175

Production Facilities 15,652 15,658 14,070

Corporate and eliminations 349 450 334

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments at rates consistent with those charged to third parties.

Total $ 133,709 $ 112,720 $ 110,522

(1) Relates to the impairment of the entire STL goodwill balance (Note 7).

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments.

Intercompany segment revenues are as follows (in thousands):

Year Ended December 31,

2020 2019 2018

Well Intervention (1)

Amount in the year ended December 31, 2019 included $ 27.5 million associated with P&A work on two of the Droshky wells for our Production Facilities segment (Note 16).

Marathon Oil has agreed to remit payment to us as the P&A work is completed.

$ 15,039 $ 43,484 $ 14,218

Robotics 26,976 30,789 29,921

Total $ 42,015 $ 74,273 $ 44,139

(1) Amount in the year ended December 31, 2019 included $ 27.5 million associated with the P&A work on our oil and gas properties in our Production Facilities segment (Note 16).

Revenues by individually significant geographic location are as follows (in thousands):

Year Ended December 31,

Our operational assets work throughout the year in various regions around the world such as the Gulf of Mexico, Brazil, the North Sea, Asia Pacific and West Africa.

2020 2019 2018

$ 304,563 $ 297,162 $ 271,260

133,005 193,903 194,434

Brazil 208,565 216,796 208,054

Other 87,422 44,048 66,070

Total $ 733,555 $ 751,909 $ 739,818

Our operational assets work in various regions around the world such as the Gulf of Mexico, Brazil, the North Sea, Asia Pacific and West Africa.

The following table provides our property and equipment, net of accumulated depreciation, by individually significant geographic location (in thousands):

$ 750,986 $ 808,683

764,070 782,246

Brazil 267,896 281,698

Singapore 12 10

Total $ 1,782,964 $ 1,872,637

(1) Includes certain assets that are based in the U.K.

but may operate in the North Sea and West Africa regions, including the Q7000 that was delivered to us in November 2019.

Amount in 2018 primarily included the Q7000 vessel previously under completion at the shipyard in Singapore.

but may operate in the North Sea, West Africa and other regions, including the Q7000 .

Segment assets are comprised of all assets attributable to each reportable segment.

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Well Intervention $ 2,134,081 $ 2,180,180

Robotics 132,550 151,478

Production Facilities 129,773 142,624

Corporate and other 101,874 122,449

Total $ 2,498,278 $ 2,596,731

Note 16 — Asset Retirement Obligations

The following table describes the changes in our AROs (both current and long-term) (in thousands):

The following table describes the changes in our AROs (both current and long-term) for the years ended December 31, 2020 and 2019 (in thousands):

AROs at January 1, $ 28,258 $ —

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AROs at December 31, $ 30,913 $ 28,258

In connection with the acquisition in January 2019 of certain assets associated with the Droshky Prospect (Notes 1 and 8), 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.

We initially recognized $ 53.3 million of ARO liability, $ 50.8 million of receivables and $ 2.5 million of acquired property for this transaction.

Our AROs relate to our Droshky oil and gas properties that we acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.

In connection with assuming the P&A of those assets, we are entitled to receive agreed-upon amounts from Marathon Oil as the P&A work is completed.

Note 17 — Commitments and Contingencies and Other Matters

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 Petrobras to perform well intervention work offshore Brazil.

We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels, which are currently used in connection with our contracts with Petrobras to perform well intervention work offshore Brazil.

The initial term of the charter agreements with Siem is for seven years , with options to extend.

We have long-term charter agreements for the Grand Canyon II and Grand Canyon III vessels for use in our robotics operations.

The charter agreements expire in April 2021 for the Grand Canyon II and in May 2023 for the Grand Canyon III .

The Grand Canyon charter terminated in November 2019.

In September 2013, we executed a contract for the construction of the Q7000 , a newbuild semi-submersible well intervention vessel built to U.K.

North Sea standards.

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 % was paid upon the delivery of the vessel in November 2019.

At December 31, 2019 , our total investment in the Q7000 was $ 536.4 million , including $ 346.0 million of installment payments to the shipyard.

With the delivery of the Q7000 , all significant capital commitments have been completed.

The vessel commenced operations in Nigeria in January 2020.

The Siem Helix 1 charter expires June 2023 and the Siem Helix 2 charter expires February 2024.

We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels for use in our robotics operations.

The expiration date of the Grand Canyon II charter was extended in February 2021 from April 2021 until December 2021, with an option to renew.

The Grand Canyon III charter expires May 2023.

We took delivery of the Q7000 in November 2019, and the vessel commenced operations in January 2020.

With the delivery of the Q7000 , all of our planned major capital commitments have been completed.

Contingencies and Claims

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Year Ended December 31,

2020 2019 2018

Interest paid, net of interest capitalized $ 15,943 $ 1,909 $ 7,369

Income taxes paid 7,434 8,856 5,705

Our non-cash investing activities include the acquisition of property and equipment for which payment has not been made.

Our capital additions include the acquisition of property and equipment for which payment has not been made.

As of December 31, 2020 and 2019, these non-cash capital additions totaled $ 1.6 million and $ 10.2 million, respectively.

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The following table sets forth the activity in our valuation accounts for each of the three years in the period ended December 31, 2020 (in thousands):

Uncollectible

Losses Deferred

Balance at December 31, 2017 $ 2,752 $ 12,337

Additions (1) (3)

Deductions (1)

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Balance at December 31, 2018 — 17,940

Deductions (2)

Adjustments (2)

Balance at December 31, 2019 — 18,631

Additions (3)

Adjustments (2) (4)

Balance at December 31, 2020 $ 3,469 $ 19,722

The increase in allowance for uncollectible accounts primarily reflects charges associated with the provision for uncertain collection of a portion of our existing trade receivables related to our Robotics segment.

The decrease in allowance for uncollectible accounts reflects the write-offs of trade receivables that are either settled or deemed uncollectible.

The addition of a deferred tax asset valuation allowance reflects management’s view that we will not be able to fully realize our foreign tax credits available from 2015 within the carryforward period.

The increase in valuation allowance primarily reflects additional net operating losses in our Robotics segment in the U.K.

for which insufficient future taxable income exists to offset the losses.

(1) The decrease in allowance for credit losses reflects the write-offs of accounts receivable that are either settled or deemed uncollectible

(2) The increase in valuation allowance primarily reflects additional net operating losses in our Robotics segment in the U.K.

for which insufficient future taxable income exists to offset the losses.

See Note 2 for a detailed discussion regarding our accounting policy on accounts receivable and allowance for uncollectible accounts and Note 9 for a detailed discussion of the valuation allowance related to our deferred tax assets.

(3) The additions in allowance for credit losses reflect credit loss reserves during 2020.

(4) The adjustment in allowance for credit losses reflects provision for current expected credit losses upon the adoption of ASU No.

2016-13 on January 1, 2020.

See Note 2 for a detailed discussion regarding our accounting policy on accounts receivable and allowance for credit losses as well as the adoption of ASU No.

See Note 9 for a detailed discussion of the valuation allowance related to our deferred tax assets.

Note 20 — Fair Value Measurements

Assets and liabilities measured at fair value are based on one or more of three valuation approaches as follows:

Market Approach.

(a) Market Approach.

Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Cost Approach.

(b) Cost Approach.

Amount that would be required to replace the service capacity of an asset (replacement cost).

Income Approach.

Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).

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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.

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.

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.

The following tables provide additional information relating to those financial instruments measured at fair value on a recurring basis (in thousands):

Fair Value at December 31, 2019

Interest rate swaps

Foreign exchange contracts — hedging instruments

Foreign exchange contracts — non-hedging instruments

Total net liability

Fair Value at December 31, 2018

Interest rate swaps

Foreign exchange contracts — hedging instruments

Foreign exchange contracts — non-hedging instruments

As of December 31, 2020, there were no financial instruments measured at fair value on a recurring basis.

The following table provides additional information relating to those financial instruments measured at fair value on a recurring basis as of December 31, 2019 (in thousands):

Fair Value at December 31, 2019 Valuation

Level 1 Level 2 Level 3 Total

Interest rate swaps $ — $ 44 $ — $ 44 (c)

Foreign exchange contracts — hedging instruments — 401 — 401 (c)

Foreign exchange contracts — non-hedging instruments — 601 — 601 (c)

Total net liability $ — $ 958 $ — $ 958

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Value (2) (3)

Term Loan (previously scheduled to mature June 2020)

Term Loan (matures December 2021) $ 29,750 $ 28,969 $ 33,250 $ 32,959

Nordea Q5000 Loan (matures April 2020)

Nordea Q5000 Loan (matures January 2021) (4)

53,572 53,598 89,286 89,398

MARAD Debt (matures February 2027) 56,410 62,318 63,610 68,643

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2023 Notes (mature September 2023) 30,000 28,650 125,000 162,188

2026 Notes (mature February 2026) 200,000 211,383 — —

Total debt $ 404,732 $ 418,431 $ 436,146 $ 487,413

(1) Principal amount includes current maturities and excludes the related unamortized debt discount and debt issuance costs.

See Note 8 for additional disclosures on our long-term debt.

The estimated fair value of the 2022 Notes and the 2023 Notes was determined using Level 1 fair value inputs under the market approach.

(2) The estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach.

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.

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.

(3) The principal amount and estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes are for the entire instrument inclusive of the conversion feature reported in shareholders’ equity.

(4) The maturity date of the Nordea Q5000 Loan was extended from April 2020 to January 2021 as a result of an amendment to the Nordea Credit Agreement in March 2020.

We repaid the Nordea Q5000 Loan in January 2021.

Note 21 — Derivative Instruments and Hedging Activities

In June 2015, we entered into interest rate swap contracts to fix the interest rate on $ 187.5 million of the Nordea Q5000 Loan (Note 8).

These swap contracts, which are settled monthly, began in June 2015 and extend through April 2020.

Our interest rate swap contracts qualify for cash flow hedge accounting treatment.

Changes in the fair value of interest rate swaps are reported in accumulated OCI (net of tax).

These changes are subsequently reclassified into earnings when the anticipated interest is recognized as interest expense.

These swap contracts expired in April 2020.

Our interest rate swap contracts qualified for cash flow hedge accounting treatment.

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 the Norwegian kroner through July 2019 and February 2020, respectively.

Unrealized losses associated with our foreign currency exchange contracts that qualify for hedge accounting treatment are included in accumulated OCI (net of tax).

These changes are subsequently reclassified into earnings when the forecasted vessel charter payments are made and recorded as cost of sales.

Changes in unrealized losses associated with the foreign currency exchange contracts that are not designated as cash flow hedges are reflected in “Other income (expense), net” in the accompanying consolidated statements of operations.

The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands):

Balance Sheet

A portion of our foreign currency exchange contracts qualified for hedge accounting treatment.

We had no derivative instruments that were designated as hedging instruments as of December 31, 2020.

The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments as of December 31, 2019 (in thousands):

Balance Sheet

Location Fair

Asset Derivative Instruments:

Interest rate swaps

Other current assets

Interest rate swaps

Other assets, net

Interest rate swaps Other current assets $ 44

Liability Derivative Instruments:

Foreign exchange contracts

Accrued liabilities

Foreign exchange contracts

Other non-current 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):

Balance Sheet

Foreign exchange contracts Accrued liabilities $ 401

We had no derivative instruments that were not designated as hedging instruments as of December 31, 2020.

The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments as of December 31, 2019 (in thousands):

Balance Sheet

Location Fair

Liability Derivative Instruments:

Foreign exchange contracts

Accrued liabilities

Foreign exchange contracts

Other non-current liabilities

Foreign exchange contracts Accrued liabilities $ 601

The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our consolidated statements of operations (in thousands):

We estimate that as of December 31, 2019 , $ 0.3 million of net losses in accumulated OCI associated with our derivative instruments is expected to be reclassified into earnings within the next 12 months.

Unrealized Gain (Loss) Recognized in OCI

Year Ended December 31,

2020 2019 2018

Foreign exchange contracts $ ( 54 ) $ ( 315 ) $ ( 1,453 )

Interest rate swaps ( 41 ) ( 365 ) 606

$ ( 95 ) $ ( 680 ) $ ( 847 )

Location of Gain (Loss)

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Accumulated OCI

into Earnings

Gain (Loss) Reclassified from

into Earnings Gain (Loss) Reclassified from

Accumulated OCI into Earnings

Year Ended December 31,

Foreign exchange contracts

Cost of sales

Interest rate swaps

Net interest expense

2020 2019 2018

Foreign exchange contracts Cost of sales $ ( 455 ) $ ( 6,125 ) $ ( 7,709 )

Interest rate swaps Net interest expense 3 655 508

$ ( 452 ) $ ( 5,470 ) $ ( 7,201 )

The following table presents the impact that derivative instruments not designated as hedging instruments had on our consolidated statements of operations (in thousands):

Location of Gain (Loss)

Recognized in Earnings

Gain (Loss) Recognized in Earnings

Location of Loss

Recognized in Earnings Loss Recognized in Earnings

Year Ended December 31,

Foreign exchange contracts

Other income (expense), net

2020 2019 2018

Foreign exchange contracts Other income (expense), net $ ( 81 ) $ ( 378 ) $ ( 901 )

$ ( 81 ) $ ( 378 ) $ ( 901 )

Note 22 — Quarterly Financial Information (Unaudited)

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Quarter Ended

September 30,

Net income attributable to common shareholders

Basic earnings per common share

Diluted earnings per common share

March 31, June 30, September 30, December 31,

Net revenues $ 181,021 $ 199,147 $ 193,490 $ 159,897

Gross profit 2,010 29,576 34,628 13,695

Net income (loss) ( 13,928 ) 5,450 24,445 4,117

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Diluted earnings (loss) per common share $ ( 0.09 ) $ 0.04 $ 0.16 $ 0.03

Net revenues $ 166,823 $ 201,728 $ 212,609 $ 170,749

Gross profit 16,254 39,934 55,074 26,576

Net income 1,318 16,823 31,622 7,934

Net income attributable to common shareholders 1,318 16,854 31,695 8,052

Basic earnings per common share $ 0.01 $ 0.11 $ 0.21 $ 0.05

Diluted earnings per common share $ 0.01 $ 0.11 $ 0.21 $ 0.05

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data