What changed in this filing

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Item 1. Financial Statements

2021-04-28 compared with 2020-10-22 · 287 added, 563 removed, 383 unchanged (69% of the section changed)

4 unchanged sentences

(in thousands)

September 30,

2020 December 31,

Current assets:

2 unchanged sentences

Accounts receivable, net of allowance for credit losses of $ 1,665 and $ 3,469 , respectively

157,834 125,457

Other current assets

2 unchanged sentences

Less accumulated depreciation

( 1,197,712 )

( 1,165,943 )

Property and equipment, net

1 unchanged sentence

Other assets, net

Total assets $ 2,505,474 $ 2,596,731

LIABILITIES AND SHAREHOLDERS' EQUITY

13 unchanged sentences

Common stock, no par, 240,000 shares authorized, 150,715 and 150,341 shares issued, respectively

1,325,520 1,318,961

Retained earnings

1 unchanged sentence

Total shareholders’ equity

1,705,486 1,699,591

Total liabilities, redeemable noncontrolling interests and shareholders’ equity

$ 2,505,474 $ 2,596,731

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

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net revenues $ 193,490 $ 212,609 $ 573,658 $ 581,160

Cost of sales

Gross profit 34,628 55,074 66,214 111,262

Gain on disposition of assets, net 440 — 913 —

Goodwill impairment

Selling, general and administrative expenses

Income from operations 19,015 38,998 12,182 62,339

Equity in losses of investment ( 11 ) ( 13 ) ( 33 ) ( 82 )

Loss from operations

Net interest expense

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

Other income (expense), net

Royalty income and other

Income (loss) before income taxes 29,677 35,161 ( 165 ) 56,502

Loss before income taxes

Income tax provision (benefit)

Net income 24,445 31,622 15,967 49,763

Net loss attributable to redeemable noncontrolling interests

Net income attributable to common shareholders $ 24,499 $ 31,695 $ 18,011 $ 49,867

Earnings per share of common stock:

Basic $ 0.16 $ 0.21 $ 0.10 $ 0.33

Diluted $ 0.16 $ 0.21 $ 0.10 $ 0.33

Net loss attributable to common shareholders

Loss per share of common stock:

Weighted average common shares outstanding:

Basic 149,032 147,575 148,956 147,506

Diluted 149,951 148,354 149,824 148,086

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net income $ 24,445 $ 31,622 $ 15,967 $ 49,763

Other comprehensive income, net of tax:

Other comprehensive income (loss), net of tax:

Net unrealized loss on hedges arising during the period

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Other comprehensive income (loss), net of tax

Comprehensive income 43,871 27,937 195 48,527

Less comprehensive income (loss) attributable to redeemable noncontrolling interests:

Net loss ( 54 ) ( 73 ) ( 2,044 ) ( 104 )

Comprehensive income (loss)

Less comprehensive loss attributable to redeemable noncontrolling interests:

Foreign currency translation gain (loss)

Comprehensive gain (loss) attributable to redeemable noncontrolling interests 79 ( 151 ) ( 2,159 ) ( 182 )

Comprehensive income attributable to common shareholders $ 43,792 $ 28,088 $ 2,354 $ 48,709

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

HELIX ENERGY SOLUTIONS GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Equity Redeemable

Noncontrolling

Shares Amount

Balance, June 30, 2020 150,040 $ 1,318,531 $ 436,107 $ ( 99,938 ) $ 1,654,700 $ 3,372

Net income (loss) — — 24,499 — 24,499 ( 54 )

Foreign currency translation adjustments — — — 19,426 19,426 133

Accretion of redeemable noncontrolling interests — — ( 128 ) — ( 128 ) 128

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 96 193 — — 193 —

Share-based compensation — 2,091 — — 2,091 —

Balance, September 30, 2020 150,136 $ 1,325,520 $ 460,478 $ ( 80,512 ) $ 1,705,486 $ 3,579

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Equity Redeemable

Noncontrolling

Shares Amount

Balance, June 30, 2019 148,759 $ 1,314,163 $ 405,748 $ ( 71,515 ) $ 1,648,396 $ 3,383

Net income (loss) — — 31,695 — 31,695 ( 73 )

Foreign currency translation adjustments — — — ( 4,301 ) ( 4,301 ) ( 78 )

Unrealized gain on hedges, net of tax — — — 616 616 —

Accretion of redeemable noncontrolling interests — — ( 25 ) — ( 25 ) 25

Activity in company stock plans, net and other 43 214 — — 214 —

Share-based compensation — 2,428 — — 2,428 —

Balance, September 30, 2019 148,802 $ 1,316,805 $ 437,418 $ ( 75,200 ) $ 1,679,023 $ 3,257

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to common shareholders

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

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(in thousands)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Equity Redeemable

Noncontrolling

Shares Amount

Balance, December 31, 2020

Net income (loss) — — 18,011 — 18,011 ( 2,044 )

Expected credit losses recognized in retained earnings upon adoption of ASU 2016-13 — — ( 620 ) — ( 620 ) —

Cumulative-effect adjustments upon adoption of ASU No.

Foreign currency translation adjustments

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

Accretion of redeemable noncontrolling interests

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

Share-based compensation

Balance, September 30, 2020 150,136 $ 1,325,520 $ 460,478 $ ( 80,512 ) $ 1,705,486 $ 3,579

Common Stock Retained

Earnings Accumulated

Balance, March 31, 2021

Comprehensive

Shareholders’

Equity Redeemable

Noncontrolling

Shares Amount

Balance, December 31, 2019

Net income (loss) — — 49,867 — 49,867 ( 104 )

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

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

Foreign currency translation adjustments

Unrealized gain on hedges, net of tax

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

Accretion of redeemable noncontrolling interests

1 unchanged sentence

Share-based compensation

Balance, September 30, 2019 148,802 $ 1,316,805 $ 437,418 $ ( 75,200 ) $ 1,679,023 $ 3,257

Balance, March 31, 2020

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

3 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income $ 15,967 $ 49,763

Adjustments to reconcile net income to net cash used in operating activities:

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

Depreciation and amortization

4 unchanged sentences

Deferred income taxes

Equity in losses of investment 33 82

Gain on disposition of assets, net ( 913 ) —

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

Unrealized gain on derivative contracts, net

Unrealized foreign currency loss 2,891 636

Unrealized foreign currency (gain) loss

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable and accrued liabilities

Other, net ( 15,929 ) ( 9,683 )

Net cash provided by operating activities 58,628 89,877

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures

STL acquisition, net — ( 4,081 )

Proceeds from sale of assets 938 2,550

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from convertible senior notes 200,000 —

Repayment of convertible senior notes ( 183,150 ) —

Proceeds from term loan — 35,000

Repayment of term loans ( 2,625 ) ( 34,567 )

Repayment of Term Loan

Repayment of Nordea Q5000 Loan

Repayment of MARAD Debt

Capped call transactions ( 10,625 ) —

Debt issuance costs

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash ( 3,227 ) 6,881

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash:

13 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S.

dollars and are consistent in all material respects with those applied in our 2019 Annual Report on Form 10-K (our “2019 Form 10-K”) with the exception of the impact of adopting the new credit loss accounting standard in 2020 (see below).

dollars and are consistent in all material respects with those applied in our 2020 Annual Report on Form 10-K (our “2020 Form 10-K”) with the exception of the impact of early adopting Accounting Standards Update (“ASU”) No.

2020-06 on a modified retrospective basis beginning January 1, 2021 (see below).

The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures.

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We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income and statements of cash flows, as applicable.

The operating results for the three- and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

The operating results for the three-month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Our balance sheet as of December 31, 2020 included herein has been derived from the audited balance sheet as of December 31, 2020 included in our 2020 Form 10-K.

These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto included in our 2019 Form 10-K.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our 2020 Form 10-K.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.

Beginning in the first quarter 2020, the COVID-19 pandemic led to worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations in efforts to control the spread of COVID-19 such as shelter-in-place orders, quarantines, executive orders and similar restrictions.

As a result, the global economy has been marked by significant slowdown and uncertainty, which has resulted in a decline in oil prices in response to demand concerns and global storage considerations.

Lower oil prices have resulted in a significantly weaker outlook for oil and gas producers, many of which have cut their capital and operating budgets for 2020 and beyond.

Our financial statements for the three- and nine-month periods ended September 30, 2020 reflect the impact of these events and current market conditions, which include reduced utilization on our vessels due to customers deferring work, increased operating costs related to the current environment, our recognition of goodwill impairment losses (Note 6) and tax benefits resulting from the U.S.

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (Note 8).

The continued spread of, or failure to contain, COVID-19 or continued oil price volatility could result in further adverse impact on our results of operations, cash flows and financial position, including further asset impairments.

New accounting standards adopted

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

2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments.

This ASU replaces the current incurred loss model for measurement of credit losses on financial assets (including trade receivables) with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts.

The guidance became effective for us as of January 1, 2020 and resulted in the recognition of $ 0.6 million (net of deferred taxes of $ 0.2 million) of allowances for expected credit losses related to our accounts receivable through a cumulative effect offset to retained earnings.

The new credit loss standard is expected to accelerate recognition of credit losses on our accounts receivable.

See Note 17 for additional information regarding allowance for credit losses on our accounts receivable.

New accounting standards issued but not yet effective

New accounting standards

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 liability and equity separation model for convertible instruments with conversion features that are not required to be bifurcated as a derivative under ASC Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital.

Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

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

The adoption of this ASU is expected to increase the net book value of our long-term debt and reduce shareholders’ equity as we reclassify the conversion features associated with our various outstanding convertible senior notes (Note 7).

Subsequent to its adoption, the ASU is also expected to reduce our interest expense.

Additionally, the ASU no longer permits the treasury stock method and instead requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”).

The guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis.

We are currently evaluating when to adopt the ASU and the impact it will have on our consolidated financial statements.

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

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 5), into liability and equity components.

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

We elected to early adopt ASU No.

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

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

The adoption of this ASU also increased our retained earnings and decreased deferred tax liabilities by $ 6.7 million and $ 9.3 million, respectively.

Subsequent to its adoption, the ASU is also expected to reduce our interest expense as there will no longer be debt discounts to amortize 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 earnings per share (“EPS”).

We do not expect any other recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

Note 2 — Company Overview

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations.

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

Our services cover the lifecycle of an offshore oil or gas field.

Our services also include subsea cable burial and seabed clearing services for the offshore renewable energy sector.

Traditionally, our services have covered the lifecycle of an offshore oil or gas field.

In recent years, we have seen an increasing demand for our services from the offshore renewable energy market.

We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions.

Our North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months.

Our services are segregated into three reportable business segments:

Well Intervention, Robotics and Production Facilities (Note 10).

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 provides services enabling our customers to safely access offshore wells for the purpose of performing well enhancement or decommissioning operations.

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

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

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.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), our ownership interest in Independence Hub, LLC (“Independence Hub”) (Note 4), and our ownership of oil and gas properties.

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 provides offshore construction, cable trenching, seabed clearance, inspection, repair and maintenance services to both the oil and gas and the renewable energy markets globally.

Our Robotics services also complement well intervention services.

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, and 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.

1 unchanged sentence

Other current assets consist of the following (in thousands):

September 30,

2020 December 31,

Contract assets (Note 7)

Prepaids 17,949 12,635

Deferred costs (Note 7)

Income tax receivable

Other receivable (1)

Other 6,755 7,474

Other receivable (Note 11)

Total other current assets

(1) Agreed-upon amounts to be paid to us by Marathon Oil Corporation (“Marathon Oil”) as the required plug and abandonment (“P&A”) work associated with our Droshky oil and gas properties is completed (Note 14).

Other assets, net consist of the following (in thousands):

September 30,

2020 December 31,

Prepaids $ 527 $ 777

Deferred recertification and dry dock costs, net

1 unchanged sentence

Charter deposit (1)

12,544 12,544

Other receivable (2)

Goodwill (Note 6) — 7,157

Intangible assets with finite lives, net

Other 2,026 2,323

Total other assets, net

(1) This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term.

(2) Agreed-upon amounts to be paid to us by Marathon Oil as the required P&A work associated with our Droshky oil and gas properties is completed (Note 14).

Accrued liabilities consist of the following (in thousands):

September 30,

2020 December 31,

Accrued payroll and related benefits

Investee losses in excess of investment (Note 4) 1,940 4,069

Accrued interest

Deferred revenue (Note 7)

Asset retirement obligations (Note 11)

Derivative liability (Note 19) — 1,002

Other 16,328 14,333

Total accrued liabilities

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

September 30,

2020 December 31,

Deferred revenue (Note 7)

Asset retirement obligations (Note 14) — 28,258

Other 1,982 2,100

Total other non-current liabilities

Note 4 — 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 nearing completion of its decommissioning.

The remaining liability balances for our share of Independence Hub’s estimated obligations, net of remaining working capital, were $ 1.9 million at September 30, 2020 and $ 4.1 million at December 31, 2019.

Note 4 — Leases

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Operating lease cost

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Net lease cost

Maturities of our operating lease liabilities as of September 30, 2020 are as follows (in thousands):

Vessels Facilities and Equipment Total

Remainder of 2020 $ 15,018 $ 1,532 $ 16,550

2021 54,421 5,646 60,067

2022 52,106 5,135 57,241

2023 34,580 4,598 39,178

2024 2,470 4,328 6,798

Thereafter — 6,125 6,125

Maturities of our operating lease liabilities as of March 31, 2021 are as follows (in thousands):

Facilities and

Less than one year

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Total lease payments

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

Vessels Facilities and Equipment Total

2020 $ 60,210 $ 6,610 $ 66,820

2021 54,564 5,888 60,452

2022 52,106 5,257 57,363

2023 34,580 4,622 39,202

2024 2,470 4,349 6,819

Thereafter — 6,251 6,251

Facilities and

Less than one year

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Total lease payments

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

September 30,

2020 December 31,

Weighted average remaining lease term 3.3 years 4.0 years

Weighted average remaining lease term

Weighted average discount rate

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

Nine Months Ended

September 30,

Three Months Ended

Cash paid for operating lease liabilities

ROU assets obtained in exchange for new operating lease obligations

Note 6 — Business Combinations and Goodwill

In May 2019, we acquired a 70 % controlling interest in Subsea Technologies Group Limited (“STL”), a subsea engineering firm based in Aberdeen, Scotland, for $ 5.1 million.

The holders of the remaining 30 % noncontrolling interest 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 13) 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 price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”) during the first quarter 2020, we identified that it was more likely than not that the fair value of goodwill associated with our STL acquisition was less than its carrying amount.

Based on the result of our goodwill impairment test as of March 31, 2020, we recorded a charge to write off the carrying amount of the goodwill.

The fair value of the reporting unit used to determine the impairment was estimated using a discounted cash flow approach.

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

Well Intervention

Balance at December 31, 2019 $ 7,157

Impairment loss ( 6,689 )

Other adjustments (1)

Balance at September 30, 2020 $ —

(1) Relates to foreign currency adjustments.

Note 5 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of September 30, 2020 are as follows (in thousands):

Scheduled maturities of our long-term debt outstanding as of March 31, 2021 are as follows (in thousands):

Less than one year

4 unchanged sentences

Over five years

Gross debt 30,625 35,000 30,000 200,000 56,410 62,500 414,535

Unamortized debt discounts (2)

— ( 1,560 ) ( 2,869 ) ( 43,133 ) — — ( 47,562 )

Unamortized debt issuance costs (1)

( 239 ) ( 235 ) ( 462 ) ( 5,761 ) ( 3,171 ) ( 159 ) ( 10,027 )

Total debt 30,386 33,205 26,669 151,106 53,239 62,341 356,946

current maturities ( 3,500 ) — — — ( 7,560 ) ( 62,341 ) ( 73,401 )

Less current maturities

Long-term debt

(1) Term Loan pursuant to the Credit Agreement (as defined below) matures in December 2021.

(2) Convertible Senior Notes due 2022, 2023 and 2026 will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022, September 2023 and February 2026, respectively.

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

See Note 1 for accounting changes as a result of the adoption of ASU No.

Below is a summary of certain components of our indebtedness:

2 unchanged sentences

(“Bank of America”).

The Credit Agreement is comprised of a Term Loan with a remaining balance of $ 30.6 million as of September 30, 2020 and a Revolving Credit Facility with a maximum availability of $ 175 million that matures on December 31, 2021.

The Credit Agreement is comprised of a Term Loan with a remaining balance of $ 28.9 million as of March 31, 2021 and a Revolving Credit Facility with a maximum availability of $ 175 million.

The Credit Agreement expires and the Term Loan 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 September 30, 2020, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 144.7 million, net of $ 3.4 million of letters of credit issued under that facility.

As of March 31, 2021, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 172.2 million, net of $ 2.8 million of letters of credit issued under that facility.

Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof.

1 unchanged sentence

The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25 %.

The interest rate on the Term Loan was 3.40 % as of September 30, 2020.

The interest rate on the Term Loan was 3.36 % as of March 31, 2021.

Borrowings under the Revolving Credit Facility bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin ranging from 1.50 % to 2.50 %.

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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 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.

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., 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.

Convertible Senior Notes Due 2022 (“2022 Notes”)

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.

The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased.

During certain periods and subject to certain conditions, the 2022 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $ 13.89 per share of common stock), subject to adjustment in certain circumstances.

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

The 2022 Notes bear interest at a coupon interest rate of 4.25 % per annum payable semi-annually in arrears on November 1 and May 1 of each year until maturity.

The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased by us.

The 2022 Notes are convertible by their holders at any time beginning February 1, 2022 at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount, which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $ 13.89 per share of common stock.

Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to February 1, 2022, holders of the 2022 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2022 Notes was equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition).

Holders of the 2022 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 30.5887 shares of our common stock per $1,000 principal amount.

Prior to November 1, 2019, the 2022 Notes were not redeemable.

Beginning November 1, 2019, if certain conditions are met, we may redeem all or any portion of the 2022 Notes at a redemption price payable in cash equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” (as defined in the indenture governing the 2022 Notes).

Holders of the 2022 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2022 Notes).

The indenture governing the 2022 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 2022 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 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 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 a gain of $ 3.3 million.

The remaining unamortized debt discount of the 2022 Notes was $ 1.6 million at September 30, 2020 and $ 8.0 million at December 31, 2019.

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) at September 30, 2020 and $ 16.9 million ($ 11.0 million net of tax) at December 31, 2019.

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 three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 1.3 million and $ 5.6 million, respectively.

For the three- and nine-month periods ended September 30, 2019, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $ 2.1 million and $ 6.2 million, respectively.

On or after November 1, 2019, we may redeem all or any portion of the 2022 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Any redemption would be payable in cash equal to 100 % of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments.

Holders of the 2022 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2022 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2022 Notes).

The indenture governing the 2022 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable.

In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a subsidiary, the principal amount of the 2022 Notes together with any accrued interest will become immediately due and payable.

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

Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2022 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2022 Notes totaled $ 1.5 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2022 Notes (Note 1).

As of March 31, 2021, unamortized debt issuance costs related to the 2022 Notes were $ 0.2 million.

The effective interest rate for the 2022 Notes prior to the adoption of ASU No.

2020-06 was 7.3 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 4.8 %.

For the three-month period ended March 31, 2021, total interest expense related to the 2022 Notes was $ 0.4 million primarily from coupon interest expense .

For the three-month period ended March 31, 2020, total interest expense related to the 2022 Notes was $ 2.3 million, with coupon interest expense of $ 1.4 million and the amortization of debt discount and issuance costs of $ 0.9 million.

Convertible Senior Notes Due 2023 (“2023 Notes”)

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.

The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased.

During certain periods and subject to certain conditions, the 2023 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $ 9.47 per share of common stock), subject to adjustment in certain circumstances.

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

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

On or after March 15, 2021, if certain conditions are met, we may redeem all or any portion of the 2023 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 2023 Notes).

Holders of the 2023 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2023 Notes).

The indenture governing the 2023 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 2023 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 2023 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.

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 a gain of $ 5.9 million.

The remaining unamortized debt discount of the 2023 Notes was $ 2.9 million at September 30, 2020 and $ 14.5 million at December 31, 2019.

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) at September 30, 2020 and $ 20.1 million ($ 15.9 million net of tax) at December 31, 2019.

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 three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 1.3 million and $ 5.6 million, respectively.

For the three- and nine-month periods ended September 30, 2019, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $ 2.1 million and $ 6.3 million, respectively.

The 2023 Notes bear interest at a coupon interest rate of 4.125 % per annum payable semi-annually in arrears on March 15 and September 15 of each year until maturity.

The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased by us.

The 2023 Notes are convertible by their holders at any time beginning March 15, 2023 at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount, which currently represents 3,168,399 potentially convertible shares at an initial conversion price of approximately $ 9.47 per share of common stock.

Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to March 15, 2023, holders of the 2023 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2023 Notes was equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition).

Holders of the 2023 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount.

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

On or after March 15, 2021, we may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Any redemption would be payable in cash equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments.

Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2023 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2023 Notes).

The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable.

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

Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2023 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2023 Notes totaled $ 3.1 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2023 Notes (Note 1).

As of March 31, 2021, unamortized debt issuance costs related to the 2023 Notes were $ 0.4 million.

The effective interest rate for the 2023 Notes prior to the adoption of ASU No.

2020-06 was 7.8 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 4.8 %.

For the three-month period ended March 31, 2021, total interest expense related to the 2023 Notes was $ 0.4 million, with coupon interest expense of $ 0.3 million and the amortization of issuance costs of $ 0.1 million.

For the three-month period ended March 31, 2020, total interest expense related to the 2023 Notes was $ 2.3 million, with coupon interest expense of $ 1.3 million and the amortization of debt discount and issuance costs of $ 1.0 million.

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 9, we used approximately $ 10.5 million of the net proceeds to enter into privately negotiated capped call transactions in connection with the issuance of the 2026 Notes.

We used approximately $ 183.2 million, consisting of 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.

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

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

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

The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which currently represents 28,675,900 potentially convertible shares at an initial conversion price of approximately $ 6.97 per share of common stock.

Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to November 17, 2025, holders of the 2026 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2026 Notes was equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition).

Holders of the 2026 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 64.5207 shares of our common stock per $1,000 principal amount.

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 each of the three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2026 Notes was $ 2.4 million.

The remaining unamortized debt discount of the 2026 Notes was $ 43.1 million at September 30, 2020.

On or after August 15, 2023, we may redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (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, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable.

The 2026 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2026 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2026 Notes totaled $ 47.3 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2026 Notes (Note 1).

As of March 31, 2021, unamortized debt issuance costs related to the 2026 Notes were $ 6.8 million.

The effective interest rate for the 2026 Notes prior to the adoption of ASU No.

2020-06 was 12.4 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 7.6 %.

For the three-month period ended March 31, 2021, total interest expense related to the 2026 Notes was $ 3.7 million, with coupon interest expense of $ 3.4 million and the amortization of debt issuance costs of $ 0.3 million.

In connection with the 2026 Notes offering, we entered into capped call transactions (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.

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 MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93 %.

Nordea Credit Agreement

In September 2014, Q5000 Holdings entered into a credit agreement (the “Nordea Credit Agreement”) with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) in an amount of up to $ 250 million.

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

Helix Vessel Finance S.à r.l., Q5000 Holdings's parent, which is a direct wholly owned Luxembourg subsidiary of Helix, guaranteed the Nordea Q5000 Loan.

The loan is secured by the Q5000 and its charter earnings as well as by a pledge of the shares of Q5000 Holdings.

This indebtedness is non-recourse to Helix.

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 increases the margin to 2.75 %, maintains the existing quarterly amortization requirements, and extends the final maturity to January 31, 2021 with a balloon payment on that date of $ 53.6 million.

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

We may elect to prepay indebtedness outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid.

Quarterly principal installments are subject to adjustment for any prepayments on this debt.

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.

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 September 30, 2020, we were in compliance with these covenants.

We previously had a credit agreement (the “Nordea Credit Agreement”) with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000 .

The loan was secured by the Q5000 and its charter earnings.

As of December 31, 2020, the remaining principal amount of the Nordea Q5000 Loan was $ 53.6 million, reflecting the balloon payment on the final maturity of January 31, 2021.

We repaid this balance in January 2021.

In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt agreements, 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 March 31, 2021, we were in compliance with these covenants.

The following table details the components of our net interest expense (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Interest expense

Interest income ( 409 ) ( 652 ) ( 991 ) ( 2,085 )

Capitalized interest

Interest income

Net interest expense

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therefore, our assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions.

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.

For the three-month period ended March 31, 2021, our estimated annual effective tax rate, adjusted for discrete tax items, is applied to our pre-tax loss as we have determined that the use of the annual effective tax rate method is appropriate.

We used the discrete effective tax rate method for recording income taxes for the three-month period ended March 31, 2020.

The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate.

The discrete method treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis.

For the three-month period ended March 31, 2020, we believed using the discrete method was more appropriate than the annual effective tax rate method because of the high degree of uncertainty in estimating annual pretax earnings created at the time by uncertainty in future market conditions caused by the ongoing COVID-19 pandemic as well as uncertainty in the oil and gas market.

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 nine-month period ended September 30, 2020, consisting of a $ 18.9 million current tax benefit and a $ 11.3 million deferred tax expense.

As a result of these changes, in the three-month period ended March 31, 2020 we recognized an estimated $ 5.8 million net tax benefit, consisting of a $ 15.9 million current tax benefit and a $ 10.1 million deferred tax expense.

This $ 5.8 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 nine-month period ended September 30, 2020, we migrated two of our foreign subsidiaries into our U.S.

During the three-month period ended March 31, 2020, we migrated two of our foreign subsidiaries into our U.S.

consolidated tax group.

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

Our estimated annual effective tax rate, adjusted for discrete tax items, is applied to our near break-even pre-tax loss for the nine-month period ended September 30, 2020 as we have determined that a return to the annualized effective tax rate method is appropriate.

Income taxes are provided based on the U.S.

statutory rate and the local statutory rate for each foreign jurisdiction adjusted for items that are required for federal and foreign income tax reporting purposes.

The effective tax rates for the three-month periods ended September 30, 2020 and 2019 were 17.6 % and 10.1 %, respectively.

Income taxes are provided at the U.S.

statutory rate and at the local statutory rate for each foreign jurisdiction and adjusted for items that are permanent differences for Federal and foreign income tax reporting purposes, but not for book purposes.

The effective tax rates for the three-month periods ended March 31, 2021 and 2020 were ( 4.0 )% and 60.2 %, respectively.

The variance was primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as our carrying back certain net operating losses to prior periods with higher income tax rates.

The effective tax rate for the nine-month period ended September 30, 2020 was significantly higher than the U.S.

The effective tax rate for the three-month period ended March 31, 2021 was significantly lower than the U.S.

statutory rate primarily due to non-creditable foreign taxes and offset in part by a significant portion of our current period earnings being generated in certain jurisdictions with a lower tax rate.

The combination of these offsetting factors resulted in an overall tax provision and a negative tax rate for the quarter.

The effective tax rate for the three-month period ended March 31, 2020 was significantly higher than the U.S.

statutory rate primarily due to our recognition of discrete benefits during the period related to the restructuring of certain foreign subsidiaries and our carrying back certain net operating losses to prior periods with higher income tax rates under tax law changes associated with the CARES Act whereas we had only nominal pre-tax losses.

The effective tax rate for the nine-month period ended September 30, 2019 was lower than the U.S.

statutory rate primarily due to a significant portion of our earnings being generated in certain jurisdictions with lower tax rates.

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Taxes at U.S.

1 unchanged sentence

Foreign tax provision

CARES Act ( 2,362 ) ( 8.0 ) — — ( 7,596 ) 4,603.6 — —

Subsidiary restructuring

Other 274 0.9 ( 271 ) ( 0.8 ) ( 140 ) 85.1 361 0.6

Income tax provision (benefit) (1)

Note 9 — Shareholders’ Equity

The components of accumulated other comprehensive loss (“accumulated OCI”) are as follows (in thousands):

September 30,

2020 December 31,

Cumulative foreign currency translation adjustment $ ( 80,512 ) $ ( 64,455 )

Net unrealized loss on hedges, net of tax (1)

Accumulated OCI $ ( 80,512 ) $ ( 64,740 )

(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 19).

In connection with the 2026 Notes offering (Note 7), we entered into capped call transactions with three separate option counterparties (the “2026 Capped Calls”).

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, subject to certain anti-dilution adjustments.

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.

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 condensed consolidated balance sheet.

(1) The negative effective tax rate for the three-month period ended March 31, 2021 is due to the tax benefits associated with our nominal pretax loss being smaller than our non-creditable foreign taxes.

Note 7 — Revenue from Contracts with Customers

Disaggregation of Revenue

Our revenues are derived from short-term and long-term service contracts with customers.

Our revenues are primarily derived from short-term and long-term service contracts with customers.

Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts).

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

Well Intervention Robotics Production Facilities Intercompany Eliminations (1)

Total Revenue

Three months ended September 30, 2020

Short-term $ 46,907 $ 28,782 $ — $ — $ 75,689

Long-term 93,896 21,020 14,167 ( 11,282 ) 117,801

Total $ 140,803 $ 49,802 $ 14,167 $ ( 11,282 ) $ 193,490

Three months ended September 30, 2019

Short-term $ 53,018 $ 26,809 $ — $ — $ 79,827

Long-term 117,188 25,100 13,777 ( 23,283 ) 132,782

Total $ 170,206 $ 51,909 $ 13,777 $ ( 23,283 ) $ 212,609

Nine months ended September 30, 2020

Short-term $ 184,599 $ 87,307 $ — $ — $ 271,906

Long-term 242,697 48,589 43,301 ( 32,835 ) 301,752

Total $ 427,296 $ 135,896 $ 43,301 $ ( 32,835 ) $ 573,658

Nine months ended September 30, 2019

Short-term $ 145,611 $ 80,440 $ — $ — $ 226,051

Long-term 305,900 55,956 44,651 ( 51,398 ) 355,109

Total $ 451,511 $ 136,396 $ 44,651 $ ( 51,398 ) $ 581,160

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

Eliminations (1)

Three months ended March 31, 2021

Three months ended March 31, 2020

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

Contract Balances

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Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 3).

Contract assets were $ 1.9 million at September 30, 2020 and $ 0.7 million at December 31, 2019.

We had no impairment losses on our contract assets for the three- and nine-month periods ended September 30, 2020 and 2019.

Contract assets were $ 0.4 million at March 31, 2021 and $ 2.4 million at December 31, 2020.

We had no credit losses on our contract assets for the three-month periods ended March 31, 2021 and 2020.

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 are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 3).

Contract liabilities totaled $ 12.8 million at September 30, 2020 and $ 19.9 million at December 31, 2019.

Revenue recognized for the three- and nine-month periods ended September 30, 2020 included $ 3.4 million and $ 8.8 million, respectively, that were included in the contract liability balance at the beginning of each period.

Revenue recognized for the three- and nine-month periods ended September 30, 2019 included $ 4.0 million and $ 7.4 million, respectively, that were included in the contract liability balance at the beginning of each period.

Contract liabilities totaled $ 10.9 million at March 31, 2021 and $ 10.0 million at December 31, 2020.

Revenue recognized for the three-month periods ended March 31, 2021 and 2020 included $ 2.5 million and $ 3.4 million, respectively, that were included in the contract liability balance at the beginning of each period.

We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.

Performance Obligations

As of September 30, 2020, $ 480.6 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 129.6 million in 2020, $ 247.0 million in 2021 and $ 104.0 million in 2022 and thereafter.

As of March 31, 2021, $ 358.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 238.7 million in 2021 , $ 84.4 million in 2022 and $ 35.3 million in 2023 and thereafter.

These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees.

These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at September 30, 2020.

For the three- and nine-month periods ended September 30, 2020 and 2019, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For the three-month periods ended March 31, 2021 and 2020, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

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Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 3).

Our deferred contract costs totaled $ 26.1 million at September 30, 2020 and $ 42.9 million at December 31, 2019.

For the three- and nine-month periods ended September 30, 2020, we recorded $ 9.2 million and $ 27.2 million, respectively, related to amortization of deferred contract costs existing at the beginning of each period.

For the three- and nine-month periods ended September 30, 2019, we recorded $ 7.7 million and $ 23.6 million, respectively, related to amortization of deferred contract costs existing at the beginning of each period.

Our deferred contract costs totaled $ 19.6 million at March 31, 2021 and $ 24.4 million at December 31, 2020.

For the three-month periods ended March 31, 2021 and 2020, we recorded $ 10.4 million and $ 9.2 million, respectively, related to amortization of these deferred contract costs.

There were no associated impairment losses for any period presented.

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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, net income or loss attributable to common shareholders for each period is 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.

The presentation of basic EPS on the face of the accompanying condensed consolidated statements of operations is computed by dividing net income or loss by the weighted average shares of our common stock outstanding.

Basic EPS is computed by dividing net income or loss available 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.

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Three Months Ended

September 30, 2020 Three Months Ended

September 30, 2019

Income Shares Income Shares

Net income attributable to common shareholders $ 24,499 $ 31,695

Undistributed earnings allocated to participating securities ( 180 ) ( 261 )

Accretion of redeemable noncontrolling interests ( 128 ) ( 25 )

Net income available to common shareholders, basic $ 24,191 149,032 $ 31,409 147,575

Effect of dilutive securities:

Share-based awards other than participating securities — 919 — 779

Undistributed earnings reallocated to participating securities 2 — 1 —

Net income available to common shareholders, diluted $ 24,193 149,951 $ 31,410 148,354

Nine Months Ended

September 30, 2020 Nine Months Ended

September 30, 2019

Income Shares Income Shares

Net income attributable to common shareholders $ 18,011 $ 49,867

Undistributed earnings allocated to participating securities ( 117 ) ( 435 )

Three Months Ended

March 31, 2021

March 31, 2020

Basic and Diluted:

Net loss attributable to common shareholders

Accretion of redeemable noncontrolling interests

Net income available to common shareholders, basic $ 15,611 148,956 $ 49,389 147,506

Effect of dilutive securities:

Share-based awards other than participating securities — 868 — 580

Undistributed earnings reallocated to participating securities 1 — 2 —

Net income available to common shareholders, diluted $ 15,612 149,824 $ 49,391 148,086

Net loss available to common shareholders

We had net losses for the three-month periods ended March 31, 2021 and 2020.

Accordingly, our diluted EPS calculation for these periods excluded any assumed exercise or conversion of common stock equivalents.

These common stock equivalents were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable periods.

Shares that otherwise would have been included in the diluted per share calculations assuming we had earnings are as follows (in thousands):

Three Months Ended

Diluted shares (as reported)

Share-based awards

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

2022 Notes 5,688 8,997 7,886 8,997

2023 Notes 8,076 13,202 11,481 13,202

2026 Notes 14,650 — 4,919 —

Note 9 — Employee Benefit Plans

Long-Term Incentive Plan

As of September 30, 2020, there were 7.0 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the nine-month period ended September 30, 2020, the following grants of share-based awards were made under the 2005 Incentive Plan:

Date of Grant Shares/

Units Grant Date

Per Share/Unit Vesting Period

As of March 31, 2021, there were 6.0 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the three-month period ended March 31, 2021, the following grants of share-based awards were made under the 2005 Incentive Plan:

Date of Grant

Per Share/Unit

Vesting Period

January 1, 2021 (1)

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100 % on January 1, 2023

April 1, 2020 (3)

43,351 1.64 100% on January 1, 2022

July 1, 2020 (3)

19,407 3.47 100% on January 1, 2022

(1) Reflects grants of restricted stock to our executive officers and select management employees.

(2) Reflects grants of performance share units (“PSUs”) to our executive officers and select management employees.

The PSUs provide for an award based on the performance of our common stock over a three-year period with the maximum amount of the award being 200 % of the original PSU awards and the minimum amount being zero .

(3) Reflects grants of restricted stock to certain independent members of our Board of Directors who have elected to take their quarterly fees in stock in lieu of cash.

(1) Reflects grants of restricted stock units (“RSUs”) to our executive officers.

(2) Reflects grants of performance share units (“PSUs”) to our executive officers.

These PSUs consist of two components:

(i) 50 % based on the performance of our common stock and (ii) 50 % based on cumulative total Free Cash Flow (“FCF”).

The grant date fair value represents the average grant date fair value of the two components.

(3) Reflects grants of restricted stock to certain independent members of our Board of Directors (our “Board”) who have elected to take their quarterly fees in stock in lieu of cash.

Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis.

Forfeitures are recognized as they occur.

For the three- and nine-month periods ended September 30, 2020, $ 1.1 million and $ 3.2 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and nine-month periods ended September 30, 2019, $ 1.2 million and $ 4.9 million, respectively, were recognized as share-based compensation related to restricted stock.

The estimated fair value of PSUs is determined using a Monte Carlo simulation model.

Our existing PSUs are to be settled solely in shares of our common stock and are accounted for as equity awards.

Compensation cost for PSUs is measured based on the estimated grant date fair value and recognized over the vesting period on a straight-line basis as an increase to shareholders’ equity.

For the three- and nine-month periods ended September 30, 2020, $ 1.0 million and $ 3.0 million, respectively, were recognized as share-based compensation related to PSUs.

For the three- and nine-month periods ended September 30, 2019, $ 1.2 million and $ 3.9 million, respectively, were recognized as share-based compensation related to PSUs.

In January 2020, based on the performance of our common stock over a three-year period, 589,335 equity PSU awards granted in 2017 vested at 200 % and resulted in the delivery of 1,178,670 shares of our common stock with a total market value of $ 11.4 million.

No restricted stock awards were granted in 2021.

All outstanding unvested restricted stock awards were granted in 2020 and 2019.

For the three-month periods ended March 31, 2021 and 2020, $ 0.8 million and $ 1.1 million, respectively, were recognized as share-based compensation related to restricted stock.

Our existing PSUs that were granted prior to 2021 are to be settled solely in shares of our common stock and are accounted for as equity awards.

Those PSUs contain a service condition and a market condition.

PSUs granted in 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee of our Board and are initially accounted for as equity awards.

The PSUs granted in 2021 consist of two components:

(i) 50 % based on the performance of our common stock against peer group companies, which contains a service condition and a market condition, and (ii) 50 % based on cumulative total FCF, which contains a service condition and a performance condition.

FCF is calculated as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets.

Our PSUs cliff vest at the end of a three-year period with the maximum amount of the award being 200 % of the original PSU awards and the minimum amount being zero .

Compensation cost for PSUs that 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.

The grant date estimated fair value is determined using a Monte Carlo simulation model.

Compensation cost for PSUs that have a service condition and a performance condition and are accounted for as equity awards is initially measured based on the grant date fair value.

Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition.

For the three-month periods ended March 31, 2021 and 2020, $ 1.0 million and $ 1.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

In January 2021, based on the performance of our common stock price as compared to our performance peer group over a three-year period, 368,038 equity PSUs granted in 2018 vested at 200 %, representing 736,075 shares of our common stock with a total market value of $ 3.1 million.

RSUs granted in 2021 have been accounted for as liability awards.

Liability RSUs are measured at their estimated fair value at each balance sheet date, and subsequent changes in the 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 RSUs equals the actual payout value upon vesting.

For the three-month period ended March 31, 2021, $ 0.2 million was recognized as compensation cost.

In 2021 and 2020, we granted fixed-value cash awards of $ 3.4 million and $ 4.7 million, respectively, 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 three- and nine-month periods ended September 30, 2020, $ 1.1 million and $ 3.4 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2019, $ 0.8 million and $ 2.4 million, respectively, were recognized as compensation cost.

For the three-month periods ended March 31, 2021 and 2020, $ 1.0 million and $ 1.2 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

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

Our discretionary contributions 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 suspended our discretionary contributions for an indefinite period beginning January 2021.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”).

As of September 30, 2020, 1.8 million shares were available for issuance under the ESPP.

As of March 31, 2021, 1.7 million shares were available for issuance under the ESPP.

The ESPP currently has a purchase limit of 260 shares per employee per purchase period.

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

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 provides services enabling our customers to safely 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 the Siem Helix 1 and Siem Helix 2 chartered 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 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.

Our Production Facilities segment includes the HP I , the HFRS, our ownership interest in Independence Hub (Note 4) and our ownership of oil and gas properties (Note 14).

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

Our Robotics segment provides offshore construction, cable trenching, seabed clearance, inspection, repair and maintenance services to both the oil and gas and the renewable energy markets globally.

Our Robotics services also complement well intervention services.

Our Robotics segment includes ROVs, trenchers and a ROVDrill, and 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 11).

All material intercompany transactions between the segments have been eliminated.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net revenues —

Well Intervention

Robotics 49,802 51,909 135,896 136,396

Production Facilities

Intercompany eliminations

Total $ 193,490 $ 212,609 $ 573,658 $ 581,160

Income (loss) from operations —

Well Intervention

Robotics 6,983 8,876 11,940 7,921

Production Facilities

Segment operating income 29,961 49,615 47,992 93,830

Segment operating income (loss)

Goodwill impairment (1)

— — ( 6,689 ) —

Corporate, eliminations and other

Total $ 19,015 $ 38,998 $ 12,182 $ 62,339

(1) Relates to goodwill associated with our STL acquisition (Note 6).

(1) 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 COVID-19 pandemic and the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”), we impaired all of our goodwill, which consisted entirely of goodwill attributable to the acquisition of a controlling interest in Subsea Technologies Group Limited (“STL”).

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Well Intervention

$ 4,120 $ 15,318 $ 11,334 $ 28,355

Robotics 7,162 7,965 21,501 23,043

Total $ 11,282 $ 23,283 $ 32,835 $ 51,398

(1) The three- and nine-month periods ended September 30, 2019 included $ 10.6 million and $ 15.9 million, respectively, associated with P&A work on our Droshky oil and gas properties in our Production Facilities segment (Note 14).

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

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The following table reflects total assets by reportable segment (in thousands):

September 30,

2020 December 31,

Well Intervention

Robotics 142,538 151,478

Production Facilities

Corporate and other

Total $ 2,505,474 $ 2,596,731

Note 11 — Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure P&A activities associated with our oil and gas properties.

In connection with the acquisition of our Droshky oil and gas properties which we acquired from Marathon Oil in January 2019, 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.

The estimated P&A costs are discounted to present value using a credit-adjusted risk-free discount rate.

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.

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.

An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

The following table describes the changes in our AROs (in thousands):

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 obligations related to those assets, we are entitled to receive agreed-upon amounts from Marathon Oil as the P&A work is completed.

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

AROs at January 1,

Other revisions in estimated cash flows —

Accretion expense

AROs at September 30, 2020 $ 30,279

AROs at March 31,

Note 12 — Commitments and Contingencies and Other Matters

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

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

The Grand Canyon II charter expires April 2021 and 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 significant capital commitments have been completed.

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.

Contingencies and Claims

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The following table provides supplemental cash flow information (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Interest paid, net of interest capitalized

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

These non-cash capital additions totaled $ 1.2 million at September 30, 2020 and $ 10.2 million at December 31, 2019.

These non-cash capital additions totaled $ 0.6 million at March 31, 2021 and $ 1.6 million at December 31, 2020.

Note 14 — 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, oil and gas industry and market conditions, customer mix, contract payment terms and past due accounts receivable.

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.

The following table sets forth the activity in our allowance for credit losses (in thousands):

Allowance for Credit Losses

Balance at December 31, 2019 $ —

Initial adoption of ASU 2016-13 (Note 1) 785

Provision for current expected credit losses (1)

Balance at September 30, 2020 $ 3,172

(1) This amount consists of a $ 1.7 million credit loss reserve related to a receivable in our Robotics segment and general current expected credit loss adjustments.

Balance at January 1,

Additions (1)

Write-offs (2)

Adjustments (3)

Balance at March 31,

(1) The additions in allowance for credit losses reflect credit loss reserves during the respective periods.

(2) The write-offs of allowance for credit losses reflect certain receivables related to our Robotics segment that were previously reserved and subsequently deemed to be uncollectible.

(3) 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.

Note 15 — Fair Value Measurements

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The fair value accounting rules establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Observable inputs such as quoted prices in active markets;

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

• Level 3 — Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Observable inputs such as quoted prices in active markets;

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

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

(a) Market Approach — Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

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

(c) 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).

Our financial instruments include cash and cash equivalents, receivables, accounts payable, long-term debt and derivative instruments.

(a) Market Approach.

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

(b) Cost Approach.

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

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).

Our financial instruments include cash and cash equivalents, receivables, accounts payable and long-term debt.

The carrying amount of cash and cash equivalents, trade and other current receivables as well as accounts payable approximates fair value due to the short-term nature of these instruments.

The fair value of our derivative instruments (Note 19) reflects our best estimate and is based upon exchange or over-the-counter quotations whenever they are available.

Quoted valuations may not be available due to location differences or terms that extend beyond the period for which quotations are available.

Where quotes are not available, we utilize other valuation techniques or models to estimate market values.

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.

These modeling techniques require us to make estimations of future prices, price correlation, volatility and liquidity based on market data.

As of September 30, 2020, there were no financial instruments measured at fair value on a recurring basis.

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

Level 1 Level 2 Level 3 Total Valuation

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

The principal amount and estimated fair value of our long-term debt are as follows (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021

December 31, 2020

Value (2) (3)

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Term Loan (matures December 2021)

Nordea Q5000 Loan (matures January 2021) (4)

62,500 62,656 89,286 89,398

Nordea Q5000 Loan (matured January 2021) (4)

MARAD Debt (matures February 2027)

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2026 Notes (mature February 2026)

Total debt $ 414,535 $ 376,259 $ 436,146 $ 487,413

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

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

See Note 5 for additional disclosures on our long-term debt.

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The fair value of the Term Loan, the Nordea Q5000 Loan and the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.

(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 (Note 7).

Note 19 — Derivative Instruments and Hedging Activities

Our business is exposed to market risks associated with interest rates and foreign currency exchange rates.

Our risk management activities involve the use of derivative financial instruments to mitigate the impact of market risk exposure related to variable interest rates and foreign currency exchange rates.

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.

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

The 2026 Capped Calls are recorded in shareholders’ equity and are not accounted for as derivatives.

We engage solely in cash flow hedges.

Cash flow hedges are entered into to hedge the variability of cash flows related to a forecasted transaction or to be received or paid related to a recognized asset or liability.

Changes in the fair value of derivative instruments that are designated as cash flow hedges are reported in OCI.

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.

For additional information regarding our accounting for derivative instruments and hedging activities, see Notes 2 and 21 to our 2019 Form 10-K.

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.

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

These swap contracts expired in April 2020.

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

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

These changes were subsequently reclassified into earnings when the anticipated interest was 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.

In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the Grand Canyon II and Grand Canyon III charter payments denominated in Norwegian kroner through July 2019 and February 2020, respectively.

Changes in the fair value of foreign currency exchange contracts that qualify for hedge accounting treatment were reported in accumulated OCI (net of tax).

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

Changes in the fair value of foreign currency exchange contracts that did not qualify as cash flow hedges were recognized immediately in earnings within “Other expense, net” in the accompanying condensed consolidated statements of operations.

Quantitative Disclosures Relating to Derivative Instruments

We had no derivative instruments that were designated as hedging instruments as of September 30, 2020.

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

December 31, 2019

Balance Sheet

Location Fair

Asset Derivative Instruments:

Interest rate swaps Other current assets $ 44

Liability Derivative Instruments:

Foreign exchange contracts Accrued liabilities $ 401

We had no derivative instruments that were not designated as hedging instruments as of September 30, 2020.

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

December 31, 2019

Balance Sheet

Location Fair

Liability Derivative Instruments:

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 condensed consolidated statements of operations (in thousands):

Unrealized Gain (Loss) Recognized in OCI

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Foreign exchange contracts $ — $ ( 280 ) $ ( 54 ) $ ( 338 )

Interest rate swaps — 6 ( 41 ) ( 363 )

$ — $ ( 274 ) $ ( 95 ) $ ( 701 )

Location of Gain (Loss)

Reclassified from

Accumulated OCI into Earnings Gain (Loss) Reclassified from

Accumulated OCI into Earnings

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Foreign exchange contracts Cost of sales $ — $ ( 1,197 ) $ ( 455 ) $ ( 5,460 )

Interest rate swaps Net interest expense — 151 3 593

$ — $ ( 1,046 ) $ ( 452 ) $ ( 4,867 )

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

Location of Loss

Recognized in Earnings Loss Recognized in Earnings

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Foreign exchange contracts Other expense, net $ — $ ( 371 ) $ ( 81 ) $ ( 413 )

$ — $ ( 371 ) $ ( 81 ) $ ( 413 )

(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, which had been accounted for in shareholders’ equity through December 31, 2020.

(4) The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 5) .

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-Q

Item 1. Financial Statements