What changed in this filing

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Item 1. Financial Statements

2021-10-22 compared with 2021-07-28 · 207 added, 140 removed, 595 unchanged (37% of the section changed)

4 unchanged sentences

(in thousands)

September 30,

Current assets:

23 unchanged sentences

Total liabilities

Commitments and contingencies

Redeemable noncontrolling interests

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

4 unchanged sentences

Net interest expense

Gain (loss) on extinguishment of long-term debt

Other income (expense), net

1 unchanged sentence

Income (loss) before income taxes

Income tax benefit

Income tax provision (benefit)

Net income (loss)

Net income (loss) attributable to redeemable noncontrolling interests

Net loss attributable to redeemable noncontrolling interests

Net income (loss) attributable to common shareholders

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss), net of tax:

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

Net unrealized loss on hedges arising during the period

Reclassifications into earnings

5 unchanged sentences

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

Net income (loss)

Foreign currency translation gain (loss)

9 unchanged sentences

Noncontrolling

Balance, March 31, 2021

Net income (loss)

Balance, June 30, 2021

Foreign currency translation adjustments

Accretion of redeemable noncontrolling interests

Acquisition of redeemable noncontrolling interests

Activity in company stock plans, net and other

Share-based compensation

Balance, June 30, 2021

Balance, September 30, 2021

Comprehensive

1 unchanged sentence

Noncontrolling

Balance, March 31, 2020

Balance, June 30, 2020

Net income (loss)

Foreign currency translation adjustments

Unrealized gain on hedges, net of tax

Accretion of redeemable noncontrolling interests

Equity component of convertible senior notes

Re-acquisition of equity component of convertible senior notes

Capped call transactions

Activity in company stock plans, net and other

Share-based compensation

Balance, June 30, 2020

Balance, September 30, 2020

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

13 unchanged sentences

Share-based compensation

Balance, June 30, 2021

Balance, September 30, 2021

Comprehensive

2 unchanged sentences

Balance, December 31, 2019

Net income (loss)

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

2 unchanged sentences

Accretion of redeemable noncontrolling interests

Equity component of convertible senior notes

Re-acquisition of equity component of convertible senior notes

Capped call transactions

Activity in company stock plans, net and other

Share-based compensation

Balance, June 30, 2020

Balance, September 30, 2020

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

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

5 unchanged sentences

(Gain) loss on disposition of assets, net

(Gain) loss on extinguishment of long-term debt

Unrealized gain on derivative contracts, net

Unrealized foreign currency (gain) loss

Unrealized foreign currency loss

Changes in operating assets and liabilities:

Accounts receivable, net

Income tax receivable

Other current assets

Income tax payable, net of income tax receivable

Accounts payable and accrued liabilities

5 unchanged sentences

Cash flows from financing activities:

Proceeds from convertible senior notes

Repayment of convertible senior notes

Repayment of Term Loan

1 unchanged sentence

Repayment of MARAD Debt

Capped call transactions

Debt issuance costs

25 unchanged sentences

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, statements of shareholders’ equity and statements of cash flows, as applicable.

The operating results for the three- and six-month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The operating results for the three- and nine-month periods ended September 30, 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.

2 unchanged sentences

New accounting standards

In August 2020, the FASB issued ASU No.

In August 2020, the Financial Accounting Standards Board 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.

3 unchanged sentences

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 increased our long-term debt and decreased the reported value of 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.

10 unchanged sentences

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

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 segment provides services enabling our customers to safely access offshore wells for the purpose of performing production 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 .

1 unchanged sentence

Our well intervention segment also includes our ownership interest in Subsea Technologies Group Limited (“STL”).

Prior to June 2021 we held a 70 % controlling interest in STL, and in June 2021 we acquired the remaining 30 % interest for approximately $ 2.3 million.

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.

Beginning in May 2019 we held a 70 % controlling interest in STL, and in June 2021 we acquired the remaining 30 % interest.

Our Robotics segment provides offshore construction, 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.

4 unchanged sentences

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

September 30,

Contract assets (Note 7)

4 unchanged sentences

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

September 30,

Deferred recertification and dry dock costs, net

5 unchanged sentences

Accrued liabilities consist of the following (in thousands):

September 30,

Accrued payroll and related benefits

Accrued interest

Income tax payable

Deferred revenue (Note 7)

2 unchanged sentences

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

September 30,

Deferred revenue (Note 7)

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost

3 unchanged sentences

Net lease cost

Maturities of our operating lease liabilities as of June 30, 2021 are as follows (in thousands):

Maturities of our operating lease liabilities as of September 30, 2021 are as follows (in thousands):

Facilities and

26 unchanged sentences

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

September 30,

Weighted average remaining lease term

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

September 30,

Cash paid for operating lease liabilities

ROU assets obtained in exchange for new operating lease obligations

Right-of-use assets obtained in exchange for new operating lease obligations

Note 5 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of June 30, 2021 are as follows (in thousands):

Scheduled maturities of our long-term debt outstanding as of September 30, 2021 are as follows (in thousands):

Less than one year

11 unchanged sentences

Credit Agreement

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

(“Bank of America”).

The Credit Agreement is comprised of a Term Loan with a remaining balance of $ 28.0 million as of June 30, 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 June 30, 2021, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 172.3 million, net of $ 2.7 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.

The Term Loan 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 of 2.25 %.

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 3.35 % as of June 30, 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 %.

Borrowings under the Revolving Credit Facility 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 ranging from 2.50 % to 3.50 %.

A letter of credit fee is payable by us equal to the applicable margin for LIBOR rate loans multiplied by the daily amount available to be drawn under the applicable letter of credit.

Margins on borrowings under the Revolving Credit Facility will vary in relation to the Consolidated Total Leverage Ratio (as defined below) as provided for in the Credit Agreement.

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

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

Installments are subject to adjustment for any prepayments.

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

We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount available under the Revolving Credit Facility.

Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I – Title XI, Inc.) and of Helix Robotics Solutions Limited and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I – Title XI, Inc.) and of Helix Robotics Solutions Limited.

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

The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, that we consider customary for this type of transaction.

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

In addition, the Credit Agreement obligates us to meet minimum ratio requirements of EBITDA to interest charges (Consolidated Interest Coverage Ratio), funded debt to EBITDA (Consolidated Total Leverage Ratio) and secured funded debt to EBITDA (Consolidated Secured Leverage Ratio).

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., 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.

On September 30, 2021, we entered into an asset-based credit agreement (the “ABL Facility”) with Bank of America, N.A.

(“Bank of America”), Wells Fargo Bank, N.A.

and Zions Bancorporation.

The ABL Facility provides for an $ 80 million asset-based revolving credit facility, which matures on September 30, 2026 , with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 50 million.

The ABL Facility also permits us to request an increase of the facility by up to $ 70 million, subject to certain conditions.

Commitments under the ABL Facility are comprised of separate U.S.

revolving credit facility commitments of $ 45 million and $ 35 million, respectively.

The ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S.

customer accounts receivable and cash, and provides for a $ 10 million sub-limit for the issuance of letters of credit.

As of September 30, 2021, we had no borrowings under the ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 69.6 million, net of $ 2.2 million of letters of credit issued under that facility.

We and certain of our U.S.

subsidiaries are the initial borrowers under the ABL Facility, whose obligations under the ABL Facility are guaranteed by those borrowers and certain other U.S.

subsidiaries, excluding Cal Dive I – Title XI, Inc.

(“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries.

Other subsidiaries may be added as guarantors of the facility in the future.

The ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S.

borrowers and guarantors, and by substantially all of the assets of the U.K.

borrowers and guarantors.

borrowings under the ABL Facility initially bear interest at the LIBOR rate plus a margin of 1.50 % to 2.00 % or at a base rate plus a margin of 0.50 % to 1.00 %.

borrowings under the ABL Facility denominated in U.S.

dollars initially bear interest at the LIBOR rate and U.K.

borrowings denominated in the British pound initially bear interest at the SONIA daily rate, each plus a margin of 1.50 % to 2.00 %.

We also pay a commitment fee of 0.375 % to 0.50 % per annum on the unused portion of the facility.

Beginning on the earlier of June 30, 2023, cessation of LIBOR or an earlier opt-in election, LIBOR will be replaced by either SOFR or term SOFR plus a margin of 0.114 % to 0.428 % or an alternate benchmark rate.

The ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions.

The ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding.

The ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10 % of the borrowing base or $ 8 million.

The ABL Facility also requires us to maintain a pro forma minimum excess availability of $ 16 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

Convertible Senior Notes Due 2022 (“2022 Notes”)

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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.

The unamortized debt discount and debt issuance costs were being accreted to interest expense through the

maturity date of the 2022 Notes.

The unamortized debt discount and debt issuance costs were being 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.

1 unchanged sentence

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 June 30, 2021, unamortized debt issuance costs related to the 2022 Notes were $ 0.2 million.

As of September 30, 2021, unamortized debt issuance costs related to the 2022 Notes were $ 0.1 million.

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

2 unchanged sentences

2020-06 decreased to 4.8 %.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2022 Notes was $ 0.4 million and $ 0.8 million, respectively, with coupon interest expense of $ 0.4 million and $ 0.7 million, respectively, and the amortization of issuance costs of $ 0.1 million for the six-month period ended June 30, 2021.

For the three- and six-month periods ended June 30, 2020, total interest expense related to the 2022 Notes was $ 2.3 million and $ 4.5 million, respectively, with coupon interest expense of $ 1.3 million and $ 2.6 million, respectively, and the amortization of debt discount and issuance costs of $ 1.0 million and $ 1.9 million, respectively.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2022 Notes was $ 0.4 million and $ 1.3 million, respectively, with coupon interest expense of $ 0.4 million and $ 1.1 million, respectively, and the amortization of issuance costs of $ 0.2 million for the nine-month period ended September 30, 2021.

For the three- and nine-month periods ended September 30, 2020, total interest expense related to the 2022 Notes was $ 1.4 million and $ 6.0 million, respectively, with coupon interest expense of $ 0.8 million and $ 3.5 million, respectively, and the amortization of debt discount and issuance costs of $ 0.6 million and $ 2.5 million, respectively.

Convertible Senior Notes Due 2023 (“2023 Notes”)

17 unchanged sentences

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 June 30, 2021, unamortized debt issuance costs related to the 2023 Notes were $ 0.4 million.

As of September 30, 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.

2 unchanged sentences

2020-06 decreased to 4.8 %.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2023 Notes was $ 0.3 million and $ 0.7 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.6 million, respectively, and the amortization of issuance costs of $ 0.1 million for the six-month period ended June 30, 2021.

For the three- and six-month periods ended June 30, 2020, total interest expense related to the 2023 Notes was $ 2.3 million and $ 4.6 million, respectively, with coupon interest expense of $ 1.3 million and $ 2.6 million, respectively, and the amortization of debt discount and issuance costs of $ 1.0 million and $ 2.0 million, respectively.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2023 Notes was $ 0.3 million and $ 1.0 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.9 million, respectively, and the amortization of issuance costs of $ 0.1 million for the nine-month period ended September 30, 2021.

For the three- and nine-month periods ended September 30, 2020, total interest expense related to the 2023 Notes was $ 1.4 million and $ 6.0 million, respectively, with coupon interest expense of $ 0.8 million and $ 3.4 million, respectively, and the amortization of debt discount and issuance costs of $ 0.6 million and $ 2.6 million, respectively.

Convertible Senior Notes Due 2026 (“2026 Notes”)

17 unchanged sentences

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 June 30, 2021, unamortized debt issuance costs related to the 2026 Notes were $ 6.5 million.

As of September 30, 2021, unamortized debt issuance costs related to the 2026 Notes were $ 6.2 million.

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

2 unchanged sentences

2020-06 decreased to 7.6 %.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2026 Notes was $ 3.7 million and $ 7.3 million, respectively, with coupon interest expense of $ 3.4 million and $ 6.7 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.6 million, respectively.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2026 Notes was $ 3.7 million and $ 11.0 million, respectively, with coupon interest expense of $ 3.4 million and $ 10.1 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.9 million, respectively.

For the three- and nine-month periods ended September 30, 2020, total interest expense related to the 2026 Notes was $ 2.5 million with coupon interest expense of $ 1.7 million and the amortization of debt discount and issuance costs of $ 0.8 million.

2026 Capped Calls

11 unchanged sentences

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 .

The MARAD Debt is collateralized by the Q4000 and is guaranteed 50 % by us.

In 2005, Helix’s subsidiary CDI – Title XI issued its U.S.

Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”).

The MARAD Debt is guaranteed by the U.S.

government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration (“MARAD”).

The obligation of CDI Title XI to reimburse MARAD in the event CDI Title XI fails to repay the MARAD Debt is collateralized by the Q4000 and is guaranteed 50 % by us.

In addition, we have agreed to bareboat charter the Q4000 from CDI Title XI for so long as the MARAD Debt remains outstanding.

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

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 agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt are typical for U.S.

government-guaranteed ship financing transactions, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

We previously had a 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, 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 June 30, 2021, we were in compliance with these covenants.

As of December 31, 2020, the remaining principal amount of the Nordea Q5000 Loan was $ 53.6 million, which we repaid in January 2021.

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

The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $ 175 million and had a maturity date of December 31, 2021.

Concurrent with our entering into the ABL Facility, the Credit Agreement was terminated.

The $ 28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility.

We had no borrowings under the Revolving Credit Facility.

In accordance with the ABL Facility, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including a springing fixed charge coverage ratio and minimum liquidity with respect to the ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt.

As of September 30, 2021, we were in compliance with these covenants.

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest expense

6 unchanged sentences

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

For the three- and six-month periods ended June 30, 2021, we applied the annual effective tax rate method in determining our overall income tax provision or benefit.

Under this method, the estimated annual worldwide effective tax rate, adjusted for discrete tax items, is applied to the pre-tax income or loss for each interim reporting period.

During the three- and six-month periods ended June 30, 2020, we utilized the discrete method to calculate income tax provision or benefit on a stand-alone basis for the interim reporting period based on management’s judgment that the discrete method was more appropriate than the annual effective tax rate method given the high degree of uncertainty in forecasting the impact of the COVID-19 pandemic on future market conditions and the overall oil and gas sector.

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.

1 unchanged sentence

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, in the six-month period ended June 30, 2020 we recognized an estimated $ 5.2 million net tax benefit ($ 15.8 million current tax benefit and $ 10.6 million deferred tax expense).

As a result of these changes, in the nine-month period ended September 30, 2020 we recognized an estimated $ 7.6 million net tax benefit ($ 18.9 million current tax benefit and $ 11.3 million deferred tax expense).

This net tax benefit was generated as our deferred tax assets related to U.S.

net operating losses were realized at higher prior year income tax rates.

During the six-month period ended June 30, 2020, we migrated two of our foreign subsidiaries into our U.S.

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

consolidated tax group.

1 unchanged sentence

branch profits tax and a net deferred tax benefit of $ 8.3 million was recognized.

The effective tax rates for the three-month periods ended June 30, 2021 and 2020 were 12.6 % and ( 5.2 )%, respectively.

The effective tax rates for the three-month periods ended September 30, 2021 and 2020 were 5.3 % and 17.6 %, respectively.

The variance was primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as the impact of the CARES Act in 2020.

The effective tax rates for the six-month periods ended June 30, 2021 and 2020 were 10.0 % and 71.6 %, respectively.

The variance was primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as the impact of the CARES Act and the foreign subsidiary restructuring in 2020.

The effective tax rates for the nine-month periods ended September 30, 2021 and 2020 were 7.5 % and 9,777.0 %, respectively.

The effective tax rate for the nine-month period ended September 30, 2021 was lower than the U.S.

statutory rate primarily driven by losses in jurisdictions with low tax rates as well as non-U.S.

withholding and deemed profits taxes paid.

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

statutory rate primarily due to the recognition of benefits from our foreign subsidiary restructuring and the CARES Act, as discussed above, in relation to nominal pre-tax losses.

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

statutory rate and our actual income tax benefit are as follows (dollars in thousands):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Taxes at U.S.

2 unchanged sentences

Subsidiary restructuring

Income tax benefit (2)

(1) Includes interim period allocations of $ 1.6 million and $ 2.8 million, respectively, for the three- and six-month periods ended June 30, 2021.

(2) The negative effective tax rate for the three-month period ended June 30, 2020 was driven by tax benefits of foreign losses in relation to nominal pre-tax income.

Income tax provision (benefit)

(1) Includes interim period allocations of $( 1.7 ) million and $ 1.1 million, respectively, for the three- and nine-month periods ended September 30, 2021 and $ 2.3 million for both the three- and nine-month periods ended September 30, 2020.

Note 7 — Revenue from Contracts with Customers

7 unchanged sentences

Eliminations (1)

Three months ended June 30, 2021

Three months ended June 30, 2020

Six months ended June 30, 2021

Six months ended June 30, 2020

Three months ended September 30, 2021

Three months ended September 30, 2020

Nine months ended September 30, 2021

Nine months ended September 30, 2020

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

1 unchanged sentence

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

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

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

1 unchanged sentence

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

Contract assets were $ 0.6 million at June 30, 2021 and $ 2.4 million at December 31, 2020.

We had no credit losses on our contract assets for the three- and six-month periods ended June 30, 2021 and 2020.

Contract assets were $ 0.4 million at September 30, 2021 and $ 2.4 million at December 31, 2020.

We had no credit losses on our contract assets for the three- and nine-month periods ended September 30, 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 $ 10.3 million at June 30, 2021 and $ 10.0 million at December 31, 2020.

Revenue recognized for the three- and six-month periods ended June 30, 2021 included $ 4.2 million and $ 5.4 million, respectively, that were included in the contract liability balance at the beginning of each period.

Revenue recognized for the three- and six-month periods ended June 30, 2020 included $ 3.5 million and $ 6.4 million, respectively, that were included in the contract liability balance at the beginning of each period.

Contract liabilities totaled $ 10.2 million at September 30, 2021 and $ 10.0 million at December 31, 2020.

Revenue recognized for the three- and nine-month periods ended September 30, 2021 included $ 4.0 million and $ 6.7 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, 2020 included $ 3.4 million and $ 8.8 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 June 30, 2021, $ 291.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 152.8 million in 2021 , $ 92.0 million in 2022 and $ 46.6 million in 2023 and thereafter.

As of September 30, 2021, $ 230.5 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 68.6 million in 2021 , $ 102.6 million in 2022 and $ 59.3 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 June 30, 2021.

For the three- and six-month periods ended June 30, 2021 and 2020, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For the three- and nine-month periods ended September 30, 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 $ 14.8 million at June 30, 2021 and $ 24.4 million at December 31, 2020.

For the three- and six-month periods ended June 30, 2021, we recorded $ 9.5 million and $ 19.9 million, respectively, related to amortization of these deferred contract costs.

For the three- and six-month periods ended June 30, 2020, we recorded $ 8.8 million and $ 18.0 million, respectively, related to amortization of these deferred contract costs.

Our deferred contract costs totaled $ 9.3 million at September 30, 2021 and $ 24.4 million at December 31, 2020.

For the three- and nine-month periods ended September 30, 2021, we recorded $ 11.7 million and $ 31.6 million, respectively, related to amortization of these deferred contract costs.

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 these deferred contract costs.

There were no associated impairment losses for any period presented.

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Three Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Net income (loss) attributable to common shareholders

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Share-based awards other than participating securities

Undistributed earnings reallocated to participating securities

Net income (loss) available to common shareholders, diluted

Six Months Ended

June 30, 2021

June 30, 2020

Net loss attributable to common shareholders

Nine Months Ended

September 30, 2021

September 30, 2020

Net income (loss) attributable to common shareholders

Undistributed earnings allocated to participating securities

Accretion of redeemable noncontrolling interests

Net loss available to common shareholders, basic

Net income (loss) available to common shareholders, basic

Effect of dilutive securities:

Share-based awards other than participating securities

Net loss available to common shareholders, diluted

We had net losses for the three- and six-month periods ended June 30, 2021 and the six-month period ended June 30, 2020.

Undistributed earnings reallocated to participating securities

Net income (loss) available to common shareholders, diluted

We had net losses for the three- and nine-month periods ended September 30, 2021.

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

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Diluted shares (as reported)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Note 9 — Employee Benefit Plans

Long-Term Incentive Plan

As of June 30, 2021, there were 5.9 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 six-month period ended June 30, 2021, the following grants of share-based awards were made under the 2005 Incentive Plan:

As of September 30, 2021, there were 5.9 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, 2021, the following grants of share-based awards were made under the 2005 Incentive Plan:

Date of Grant

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100 % on January 1, 2023

July 1, 2021 (3)

100 % on January 1, 2023

July 23, 2021 (4)

100 % on July 23, 2022

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

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(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.

(4) Reflects a grant of restricted stock made to a new independent member of our Board upon his joining our Board.

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.

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No restricted stock awards have been granted to our executive officers or other employees in 2021.

For the three- and six-month periods ended June 30, 2021, $ 0.9 million and $ 1.7 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and six-month periods ended June 30, 2020, $ 1.0 million and $ 2.1 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and nine-month periods ended September 30, 2021, $ 0.8 million and $ 2.5 million, respectively, were recognized as share-based compensation related to restricted stock.

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.

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.

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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- and six-month periods ended June 30, 2021, $ 1.0 million and $ 2.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and six-month periods ended June 30, 2020, $ 0.9 million and $ 2.0 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

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 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.

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

For the three- and six-month periods ended June 30, 2021, $ 0.2 million and $ 0.4 million, respectively, were recognized as compensation cost.

Compensation cost recognized for the three-month period ended September 30, 2021 was minimal.

For the nine-month period ended September 30, 2021, $ 0.4 million was recognized as compensation cost.

In 2021 and 2020, we granted fixed-value cash awards of $ 3.5 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 six-month periods ended June 30, 2021, $ 1.0 million and $ 2.0 million, respectively, were recognized as compensation cost.

For the three- and six-month periods ended June 30, 2020, $ 1.1 million and $ 2.3 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.0 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2020, $ 1.1 million and $ 3.4 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

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

As of June 30, 2021, 1.6 million shares were available for issuance under the ESPP.

As of September 30, 2021, 1.6 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 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 segment provides services enabling our customers to safely access offshore wells for the purpose of performing production 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, 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 segment provides offshore construction, 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.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net revenues —

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Well Intervention

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

September 30,

Well Intervention

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Accretion expense

AROs at June 30,

AROs at September 30,

Note 12 — Commitments and Contingencies and Other Matters

We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels, which are currently used in connection with our contracts with Petróleo Brasileiro S.A.

We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels, which historically have been used in connection with our contracts with Petróleo Brasileiro S.A.

(“Petrobras”) to perform well intervention work offshore Brazil.

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We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels.

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 expiration date of the Grand Canyon II charter was extended to December 2022, with an option to renew.

The Grand Canyon III charter expires May 2023.

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In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.

We are currently involved in several lawsuits filed by current and former offshore employees seeking overtime compensation.

These suits are brought as collective actions and are in various stages of litigation.

In one such lawsuit, during the third quarter 2021 the United States Court of Appeals for the Fifth Circuit issued a ruling adverse to us that may also have implications for some of the other cases in which we are involved, as well as the way offshore personnel are compensated throughout our industry.

We intend to further appeal this matter and to continue vigorously defending these lawsuits.

Notwithstanding that we believe we retain valid defenses, at this time we have established a liability for probable losses in certain of these matters.

The final outcome of these matters remains uncertain and the ultimate liability to us could be more or less than the liability established.

Note 13 — Statement of Cash Flow Information

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

Six Months Ended

Nine Months Ended

September 30,

Interest paid, net of interest capitalized

Income taxes paid (1)

(1) Exclusive of income tax refunds.

During the nine-month period ended September 30, 2021, we received $ 18.9 million in refunds related to the CARES Act.

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

These non-cash capital additions totaled $ 0.4 million at June 30, 2021 and $ 1.6 million at December 31, 2020.

These non-cash capital additions totaled $ 0.3 million at September 30, 2021 and $ 1.6 million at December 31, 2020.

Note 14 — Allowance for Credit Losses

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Adjustments (3)

Balance at June 30,

Balance at September 30,

(1) Additions (reductions) in allowance for credit losses reflect credit loss reserves (releases) during the respective periods, including a $ 1.7 million credit loss reserve in 2020 related to a receivable in our Robotics segment.

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

June 30, 2021

September 30, 2021

December 31, 2020

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Value (2) (3)

Term Loan (matures December 2021)

Term Loan (repaid September 2021) (4)

Nordea Q5000 Loan (matured January 2021) (5)

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(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 Term Loan was fully repaid in September 2021 concurrent with our entering into the ABL Facility (Note 5).

(5) 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