What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-02-25 · 372 added, 522 removed, 775 unchanged (54% of the section changed)

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We have audited the accompanying consolidated balance sheets of Helix Energy Solutions Group, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

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

Basis for Opinion

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated February 25, 2021 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Accounts receivable, net of allowance for credit losses of $ 1,477 and $ 3,469 , respectively

132,233 125,457

Other current assets

2 unchanged sentences

Less accumulated depreciation

( 1,280,509 )

( 1,165,943 )

Property and equipment, net

1 unchanged sentence

Other assets, net

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

LIABILITIES AND SHAREHOLDERS' EQUITY

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Total liabilities

Commitments and contingencies

Redeemable noncontrolling interests

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Common stock, no par, 240,000 shares authorized, 151,124 and 150,341 shares issued, respectively

1,327,592 1,318,961

Retained earnings

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Year Ended December 31,

2020 2019 2018

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

Cost of sales

Gross profit 79,909 137,838 121,684

Gain on disposition of assets, net 889 — 146

Gain (loss) on disposition of assets, net

Goodwill impairment

Selling, general and administrative expenses

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

Income (loss) from operations

Equity in earnings (losses) of investment

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Royalty income and other

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

Income (loss) before income taxes

Income tax provision (benefit)

Net income 20,084 57,697 28,598

Net income (loss)

Net loss attributable to redeemable noncontrolling interests

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

Earnings per share of common stock:

Basic $ 0.13 $ 0.39 $ 0.19

Diluted $ 0.13 $ 0.38 $ 0.19

Net income (loss) attributable to common shareholders

Earnings (loss) per share of common stock:

Weighted average common shares outstanding:

Basic 148,993 147,536 146,702

Diluted 149,897 149,577 146,830

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

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Year Ended December 31,

2020 2019 2018

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

Net income (loss)

Other comprehensive income (loss), net of tax:

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Net change in hedges, net of tax

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

Income taxes on note receivable — — 132

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

Foreign currency translation gain (loss)

Other comprehensive income (loss), net of tax

Comprehensive income 33,204 66,921 25,951

Comprehensive income (loss)

Less comprehensive loss attributable to redeemable noncontrolling interests:

Net loss ( 2,090 ) ( 222 ) —

Foreign currency translation gain

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income attributable to common shareholders $ 35,204 $ 67,005 $ 25,951

Comprehensive income (loss) attributable to common shareholders

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

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(in thousands)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Equity Redeemable

Noncontrolling

Shares Amount

Balance, December 31, 2018

Net income — — 28,598 — 28,598 —

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

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

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

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

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

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

Share-based compensation — 9,770 — — 9,770 —

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

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

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

Net income (loss)

Deferred gain from sale leaseback transaction in retained earnings upon adoption of ASU No.

Foreign currency translation adjustments

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Balance, December 31, 2019

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

Net income (loss)

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

2016-13 — — ( 620 ) — ( 620 ) —

Foreign currency translation adjustments

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Balance, December 31, 2020

Cumulative-effect adjustments upon adoption of ASU No.

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, December 31, 2021

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

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Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

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

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

Net income (loss)

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

Depreciation and amortization

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Equity in (earnings) losses of investment

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

(Gain) loss on disposition of assets, net

(Gain) loss on extinguishment of long-term debt

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Unrealized foreign currency (gain) loss

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities:

Accounts receivable, net

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Accounts payable and accrued liabilities

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

Net cash provided by operating activities

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Proceeds from sale of assets

Other — — 1,044

Net cash used in investing activities

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Proceeds from Term Loan

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

Repayment of Term Loan

Repayment of Nordea Q5000 Loan

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Debt issuance costs

Acquisition of redeemable noncontrolling interests

Payments related to tax withholding for share-based compensation

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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.

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 Operations

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

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

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby avoiding drilling new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and gas.

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

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

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, which are designed to complement well intervention services and offshore construction to both the oil and gas and the renewable energy markets globally.

Our Robotics segment also includes two robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III , as well as spot vessels as needed.

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”), and our ownership of oil and gas properties.

Our well intervention equipment includes intervention systems, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance, inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy.

Additionally, our Robotics services are used in and complement our well intervention services.

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under long-term charter as well as spot vessels as needed.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), the Helix Fast Response System (the “HFRS”), and our ownership of oil and gas properties.

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

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

Our restricted cash as of December 31, 2021 consisted of $ 71.1 million pledged as collateral for a letter of credit for a temporary importation permit for work offshore Nigeria and $ 2.5 million pledged toward our asset-based credit agreement (the “ABL Facility”).

These cash pledges increase the availability under the ABL Facility.

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

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

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

Accounts Receivable and Allowance for Credit Losses

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

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

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

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

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

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

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

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

Capitalized Interest

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

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

Our goodwill balance attributable to the acquisition of a controlling interest in Subsea Technologies Group Limited (“STL”) was fully impaired during 2020 (Note 7).

Deferred Recertification and Dry Dock Costs

Our vessels and certain well intervention equipment are required by regulation to be periodically recertified.

Our vessels and certain well intervention assets are required by regulation to be periodically recertified.

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

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

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

Major replacements and improvements that extend the economic useful life or functional operating capability of a vessel or a piece of equipment are capitalized and depreciated over the asset’s remaining economic useful life.

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

Major replacements and improvements that extend the economic useful life or functional operating capability of a vessel or other asset are capitalized and depreciated over the asset’s remaining economic useful life.

We expense routine repairs and maintenance costs as they are incurred.

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

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

We generate revenue in our Robotics segment by operating ROVs and trenchers to provide subsea construction and IRM services to oil and gas companies as well as subsea trenching and burial of pipelines and cables as well as seabed clearing for the oil and gas and the renewable energy markets.

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

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Income from Royalty Interests

Income from royalty interests is recognized according to our share of monthly oil and gas production volumes and is reflected in “Royalty income and other” in the consolidated statements of operations.

Income from royalty interests is recognized according to our share of monthly oil and gas production volumes and is included in “Royalty income and other” in the consolidated statements of operations.

Deferred income taxes are based on the differences between financial reporting and tax bases of assets and liabilities.

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We consider the undistributed earnings of our non-U.S.

subsidiaries without operations in the U.S.

to be permanently reinvested.

subsidiaries to be permanently reinvested.

We provide for uncertain tax positions and related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by local taxing authorities.

At December 31, 2021, we believe that we have appropriately accounted for any unrecognized tax benefits.

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

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

Share-Based Compensation

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

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

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

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

Compensation cost for performance share unit (“PSU”) awards 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 determined using a Monte Carlo simulation model and subsequently recognized over the vesting period on a straight-line basis.

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.

Compensation cost for restricted stock unit (“RSU”) awards, which are accounted for as liability awards, is 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.

Asset Retirement Obligations

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

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

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

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

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

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

We engage solely in cash flow hedges.

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

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

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

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

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Earnings Per Share

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

Basic earnings per share (“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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Because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock, we are required to compute basic and diluted EPS under the two-class method in periods in which we have earnings.

Under the two-class method, the undistributed earnings available to common shareholders for each period are allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed.

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.

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

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

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

2021 — Petrobras ( 23 %) and Shell ( 17 %);

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

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

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

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

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

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

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

ASC 842 requires a lessee to recognize a lease ROU asset and related lease liability for most leases, including those classified as operating leases.

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

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

We also elected the package of practical expedients permitted under the transition guidance that, among other things, allows companies to carry forward their historical lease classification.

Our adoption of ASC 842 resulted in the recognition of operating lease liabilities of $ 259.0 million and corresponding ROU assets of $ 253.4 million (net of existing prepaid/deferred rent balances) as of January 1, 2019.

2016-02, “Leases (Topic 842)” (“ASC 842”).

Our adoption of ASC 842 as of January 1, 2019 resulted in the recognition of operating lease liabilities of $ 259.0 million and corresponding ROU assets of $ 253.4 million (net of existing prepaid/deferred rent balances).

In addition, we reclassified the remaining deferred gain of $ 4.6 million (net of deferred taxes of $ 0.9 million) on a 2016 sale and leaseback transaction to retained earnings.

Subsequent to adoption, leases in foreign currencies will generate foreign currency gains and losses, and we will no longer amortize the deferred gain from the aforementioned sale and leaseback transaction.

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

See Note 6 for additional information regarding our leases.

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

New accounting standards issued but not yet effective

In August 2020, the FASB issued ASU No.

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

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

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

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

We have elected to early adopt ASU No.

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

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

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

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

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

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

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

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 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.

As a result of our adoption of ASU No.

2020-06, interest expense associated with our outstanding convertible senior notes decreased by $ 7.6 million in 2021 as there were no longer any debt discounts to amortize.

New accounting standards issued but not yet effective

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 3 — Details of Certain Accounts

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Contract assets (Note 12)

Prepaids 15,904 12,635

Deferred costs (Note 12)

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Other receivable (Note 16)

Other 9,651 7,474

Total other current assets

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Charter deposit (1)

12,544 12,544

Other receivable (Note 16) — 27,264

Goodwill (Note 7) — 7,157

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

Other 1,335 3,100

Intangible assets with finite lives, net

Total other assets, net

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Deferred revenue (Note 12)

AROs (Note 16) 30,913 —

Other 14,617 11,393

Asset retirement obligations (Note 16)

Total accrued liabilities

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Deferred revenue (Note 12)

AROs (Note 16) — 28,258

Other 2,009 2,100

Total other non-current liabilities

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Estimated Useful Life

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

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

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

15 to 30 years

ROVs and trenchers

Machinery, equipment and leasehold improvements

5 to 15 years

Total property and equipment

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As of December 31, 2021, the minimum sublease income to be received in the future totaled $ 1.5 million.

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

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

Year Ended December 31,

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Net lease cost

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

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

Vessels Facilities and Equipment Total

Facilities and

Less than one year

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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

Facilities and

Less than one year

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

Weighted average remaining lease term 3.1 years 4.0 years

Weighted average remaining lease term

Weighted average discount rate

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Cash paid for operating lease liabilities

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

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

Note 7 — Business Combinations and Goodwill

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

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

These redeemable noncontrolling interests have been recognized as temporary equity.

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

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

Oil prices as well as energy and energy services valuations experienced significant decline 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+”).

As a result, we impaired all of our goodwill, which consisted entirely of goodwill attributable to the acquisition in May 2019 of a 70 % controlling interest in STL, a subsea engineering firm based in Aberdeen, Scotland.

In June 2021, we acquired the remaining 30 % noncontrolling interest in STL.

These redeemable noncontrolling interests had been recognized as temporary equity.

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

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

1 unchanged sentence

Balance at December 31, 2019

Additions (1)

Other adjustments (2)

Balance at December 31, 2019 7,157

Other adjustments (2)

Impairment loss

Foreign currency adjustments

Balance at December 31, 2020

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

(2) Relates to foreign currency adjustments.

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

Note 8 — Long-Term Debt

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

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

Term Loan (repaid September 2021) (1)

Nordea Q5000 Loan (matured January 2021) (2)

2022 Notes (mature May 2022)

2 unchanged sentences

MARAD Debt (matures February 2027)

Nordea Q5000 Loan (matures January 2021) (1)

53,572 89,286

Unamortized debt discounts (3)

Unamortized debt issuance costs

Total debt 349,563 405,853

Less current maturities

Long-term debt

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

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

(2) The Nordea Q5000 Loan was fully repaid upon maturity in January 2021.

(3) As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there are no longer any debt discounts associated with the 2022 Notes, the 2023 Notes and the 2026 Notes (Note 2) .

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 $ 29.8 million as of December 31, 2020 and a Revolving Credit Facility with a maximum availability of $ 175 million that matures on December 31, 2021.

The Revolving Credit Facility permits us to obtain letters of credit up to a sublimit of $ 25 million.

Pursuant to the Credit Agreement, subject to existing lender participation and/or the participation of new lenders, and subject to standard conditions precedent, we may request aggregate commitments of up to $ 100 million with respect to an increase in the Revolving Credit Facility.

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

As of December 31, 2020, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $ 160.2 million, net of $ 2.8 million of letters of credit issued under that facility.

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 3.40 % as of December 31, 2020.

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

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.

(“Q5000 Holdings”), a wholly owned Luxembourg subsidiary of Helix Vessel Finance S.à r.l., are not included in the calculations of our financial covenants except to the extent of any cash actually distributed by such subsidiary to Helix.

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

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

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

Convertible Senior Notes Due 2022 (“2022 Notes”)

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.

On September 30, 2021, we entered into 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 December 31, 2021, we had no borrowings under the ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 51.1 million, net of $ 1.9 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.

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, 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 were able to convert their notes if the closing price of our common stock exceeded 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 significant subsidiary, the principal amount of the 2022 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.

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

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

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

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

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

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

The effective interest rate for the 2022 Notes is 7.3 % after considering the effect of the accretion of the related debt discount over the term of the 2022 Notes.

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

With the adoption of ASU No.

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

See Note 2 for the effect of ASU No.

Convertible Senior Notes Due 2023 (“2023 Notes”)

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 an extinguishment gain of $ 5.9 million.

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

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

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

The effective interest rate for the 2023 Notes is 7.8 % after considering the effect of the accretion of the related debt discount over the term of the 2023 Notes.

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

With the adoption of ASU No.

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

See Note 2 for the effect of ASU No.

Convertible Senior Notes Due 2026 (“2026 Notes”)

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

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

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

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

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

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

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

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

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

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

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.

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.

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 2).

As of December 31, 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.

2020-06 was 7.3 %.

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

2020-06 decreased to 4.8 %.

For the year ended December 31, 2021, total interest expense related to the 2022 Notes was $ 1.7 million, with coupon interest expense of $ 1.5 million and the amortization of issuance costs of $ 0.2 million.

For the years ended December 31, 2020 and 2019, total interest expense related to the 2022 Notes was $ 6.6 million and $ 8.9 million, respectively, with coupon interest expense of $ 3.9 million and $ 5.3 million, respectively, and the amortization of debt discount and issuance costs of $ 2.7 million and $ 3.6 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.

The unamortized debt discount and debt issuance costs were being 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 2).

As of December 31, 2021, unamortized debt issuance costs related to the 2023 Notes were $ 0.3 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 year ended December 31, 2021, total interest expense related to the 2023 Notes was $ 1.4 million, with coupon interest expense of $ 1.2 million and the amortization of issuance costs of $ 0.2 million.

For the years ended December 31, 2020 and 2019, total interest expense related to the 2023 Notes was $ 6.6 million and $ 8.9 million, respectively, with coupon interest expense of $ 3.7 million and $ 5.2 million, respectively, and the amortization of debt discount and issuance costs of $ 2.9 million and $ 3.7 million, respectively.

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 on 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.

In order to reduce the potential dilution of the 2026 Notes to shareholders’ equity, we entered into the 2026 Capped Calls in August 2020 concurrent with the 2026 Notes offering (Note 10).

The 2026 Capped Calls effectively increase the conversion price of the 2026 Notes to approximately $ 8.42 per share.

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

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

With the adoption of ASU No.

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

See Note 2 for the effect of ASU No.

government guaranteed financing (the “MARAD Debt”), pursuant to Title XI of the Merchant Marine Act of 1936 administered by the Maritime Administration, was used to finance the construction of the Q4000 .

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

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.

The unamortized debt discount and debt issuance costs were being 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 2).

As of December 31, 2021, unamortized debt issuance costs related to the 2026 Notes were $ 5.9 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 year ended December 31, 2021, total interest expense related to the 2026 Notes was $ 14.7 million, with coupon interest expense of $ 13.5 million and the amortization of debt issuance costs of $ 1.2 million.

For the year ended December 31, 2020, total interest expense related to the 2026 Notes was $ 7.5 million, with coupon interest expense of $ 5.1 million and the amortization of debt discount and issuance costs of $ 2.4 million.

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 %.

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 vessel was delivered to us.

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

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

This indebtedness is non-recourse to Helix.

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

Prior to the amendment, the Nordea Q5000 Loan incurred interest at a LIBOR rate plus a margin of 2.5 % and was repayable in scheduled quarterly principal installments of $ 8.9 million with a balloon payment of $ 80.4 million on April 30, 2020.

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

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

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

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

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

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

In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the 2026 Notes, the MARAD Debt agreements and the Nordea Credit Agreement, we are required to comply with certain covenants, including with respect to the Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio and a consolidated secured leverage ratio, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements.

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, 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 December 31, 2021, we were in compliance with these covenants.

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Over five years

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

Unamortized debt discounts (1)

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

Unamortized debt issuance costs (1)

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

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

Less current maturities

Long-term debt

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

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

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

See Note 2 for accounting changes as a result of the adoption of ASU No.

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

Year Ended December 31,

2020 2019 2018

Interest expense

Capitalized interest (1)

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

Interest income

Net interest expense

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

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

Note 9 — Income Taxes

We and our subsidiaries file a consolidated U.S.

federal income tax return.

We believe that our recorded deferred tax assets and liabilities are reasonable.

However, tax laws and regulations are subject to interpretation, and the outcomes of tax disputes are inherently uncertain;

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

We are a U.S.-based multinational corporation subject to taxation in multiple jurisdictions.

We believe that our deferred tax assets and liabilities for all jurisdictions are reasonable and fairly presented.

Tax laws in each jurisdiction, as well as their interactions, are complex and their interpretation requires significant judgment.

Components of income tax provision (benefit) reflected in the consolidated statements of operations consist of the following (in thousands):

Year Ended December 31,

2020 2019 2018

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

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

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

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

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

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

Current tax provision (benefit):

Total current

Deferred tax provision (benefit):

Total deferred

Total income tax provision (benefit)

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

Year Ended December 31,

2020 2019 2018

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

Foreign 4,789 63,337 59,836

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

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S.

income tax regulations.

The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year.

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

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

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

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

consolidated tax group.

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

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

Income taxes are provided based on the U.S.

statutory rate and at the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes.

Income (loss) before income taxes

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

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

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

Year Ended December 31,

2020 2019 2018

Taxes at U.S.

statutory rate

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

CARES Act ( 7,596 ) ( 549.2 ) — — — —

Foreign tax provision (benefit)

Subsidiary restructuring

Other 364 26.2 649 1.0 831 2.6

Valuation allowance release (net of U.S.

Income tax provision (benefit)

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.

Under the CARES Act, we recognized a $ 7.6 million net tax benefit for the year ended December 31, 2020, consisting of an $ 18.9 million current tax benefit (refund claim) and an $ 11.3 million deferred tax expense (reduction in U.S.

net operating loss).

The refund was received in full during 2021.

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

consolidated tax group.

As a result, these subsidiaries are not subject to future U.S.

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

During the year ended December 31, 2021, we released a non-U.S.

valuation allowance of $ 6.4 million ($ 5.0 million net of U.S.

federal tax benefit) for deferred tax assets as it is more likely than not that they will be fully utilized.

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

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Deferred tax liabilities:

Depreciation $ 153,226 $ 166,239

Debt discounts on 2022 Notes, 2023 Notes and 2026 Notes

Prepaid and other

Total deferred tax liabilities

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At December 31, 2021, our U.S.

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

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

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

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

The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carryforward period are reduced.

At December 31, 2020, we had a $ 2.9 million valuation allowance recorded against our U.S.

deferred tax assets for foreign tax credits.

Management believes it is more likely than not that we will not be able to utilize the foreign tax credits prior to their expiration.

At December 31, 2020, we had a $ 16.8 million valuation allowance related to certain non-U.S.

deferred tax assets, primarily net operating losses from our Robotics segment in the U.K., as management believes it is more likely than not that we will not be able to utilize the tax benefits.

Additional valuation allowances may be made in the future if in management’s opinion it is more likely than not that future tax benefits will not be utilized.

net operating losses available for carryforward totaled $ 180.0 million, of which $ 112.3 million will begin to expire between 2035 and 2037, with the remaining $ 67.7 million not subject to expiration.

Management believes it is more likely than not that these tax losses will be utilized prior to their expiration.

At December 31, 2021, we had $ 5.3 million in gross U.S.

tax credits, which included $ 3.0 million of foreign tax credits subject to a full valuation allowance.

At December 31, 2021, our non-U.S.

net operating losses totaled $ 71.0 million, and do not expire under local tax law.

At December 31, 2021, we had accumulated undistributed earnings generated by our non-U.S.

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

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

We intend to indefinitely reinvest these earnings, as well as future earnings from our non-U.S.

subsidiaries without operations in the U.S., to fund our international operations.

Management intends to indefinitely reinvest these earnings to fund our international operations.

In addition, we expect future U.S.

cash generation will be sufficient to meet future U.S.

We have not provided deferred income taxes on the accumulated earnings and profits from our non-U.S.

subsidiaries without operations in the U.S.

as we consider them permanently reinvested.

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

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

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

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

As of December 31, 2021, we had unrecognized tax benefits of $ 0.1 million related to uncertain tax positions, which, if recognized, would affect the annual effective tax rate.

Due to the expiration of the statute of limitations as well as effective settlements in 2021 we released the full $ 0.6 million reserve related to uncertain tax positions recorded in 2020.

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

We did not record any interest related to these positions in 2021 as the amount was immaterial.

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

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

We file tax returns in the U.S.

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

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

The tax periods from 2018 through 2021 are open to review and examination by the U.S.

Internal Revenue Service.

jurisdictions, the open tax periods include 2014 through 2021.

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

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

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

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

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

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

Cumulative foreign currency translation adjustment $ ( 51,620 ) $ ( 64,455 )

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

Accumulated OCI $ ( 51,620 ) $ ( 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 21).

Note 11 — Stock Buyback Program

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

Well Intervention Robotics Production Facilities Intercompany Eliminations (1)

Total Revenue

Year ended December 31, 2021

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

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

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

Year ended December 31, 2020

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

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

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

Year ended December 31, 2019

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

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

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

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

Contract Balances

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Performance Obligations

As of December 31, 2020, $ 406.7 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 301.2 million in 2021, $ 72.9 million in 2022 and $ 32.6 million in 2023 and thereafter.

As of December 31, 2021, $ 348.2 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 245.9 million, $ 102.1 million and $ 0.2 million in 2022 , 2023 and 2024 , respectively.

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 December 31, 2021.

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

For the years ended December 31, 2021 and 2020, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were immaterial.

Contract Fulfillment Costs

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Year Ended December 31,

2020 2019 2018

Income Shares Income Shares Income Shares

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

Net income (loss) attributable to common shareholders

Undistributed earnings allocated to participating securities

Accretion of redeemable noncontrolling interests

Net income available to common shareholders, basic $ 19,634 148,993 $ 57,289 147,536 $ 28,325 146,702

Net income (loss) available to common shareholders, basic

Effect of dilutive securities:

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Undistributed earnings reallocated to participating securities

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

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

Net income (loss) available to common shareholders, diluted

We had a net loss for the year ended December 31, 2021.

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):

Year Ended December 31,

2020 2019 2018

2022 Notes 6,537 8,997 8,997

2023 Notes 9,391 13,202 10,344

2026 Notes 10,891 — —

2032 Notes (1)

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

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):

Year Ended December 31,

Note 14 — Employee Benefit Plans

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

Our discretionary contributions were suspended for 2021 and re-activated beginning January 2022.

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

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As of December 31, 2021, 1.6 million shares were available for issuance under the ESPP.

Eligible employees who participate in the ESPP may purchase shares of our common stock through payroll deductions on an after-tax basis over a four-month period beginning on January 1, May 1, and September 1 of each year during the term of the ESPP, subject to certain restrictions and limitations established by the Compensation Committee of our Board and Section 423 of the Internal Revenue Code.

The per share price of common stock purchased under the ESPP is equal to 85 % of the lesser of its fair market value on (i) the first trading day of the purchase period or (ii) the last trading day of the purchase period.

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We currently have one active long-term incentive plan, the 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

The 2005 Incentive Plan is administered by the Compensation Committee of our Board.

The 2005 Incentive Plan is administered by the Compensation Committee.

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

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

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

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

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The following grants of share-based awards were made in 2021 under the 2005 Incentive Plan:

Date of Grant Shares/

Units Grant Date

Per Share/Unit Vesting Period

Date of Grant

Per Share/Unit

Vesting Period

January 1, 2021 (1)

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January 4, 2021 (2)

Restricted stock

100 % on January 1, 2023

April 1, 2021 (2)

Restricted stock

100 % on January 1, 2023

July 1, 2021 (2)

Restricted stock

100 % on January 1, 2023

July 23, 2021 (2)

Restricted stock

100 % on July 23, 2022

October 1, 2021 (2)

Restricted stock

100 % on January 1, 2023

December 8, 2021 (2)

Restricted stock

100 % on December 8, 2022

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

(2) Reflects grants of PSUs to our executive officers and select management employees.

These awards when vested can only be settled in shares of our common stock.

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

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

(1) Reflects grants to our executive officers.

(2) Reflects grants to certain independent members of our Board.

In January 2022, we granted our executive officers 1,065,705 RSUs and 1,065,705 PSUs under the 2005 Incentive Plan.

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The grant date fair value of the PSUs was $ 4.25 per unit or $ 4.5 million.

PSUs and RSUs issued in 2022 are payable in either cash or stock at the discretion of the Compensation Committee.

Also in January 2022, we granted $ 5.0 million of fixed value cash awards to select management employees under the 2005 Incentive Plan.

Restricted Stock Awards

We grant restricted stock to members of our Board, executive officers and select management employees.

We grant restricted stock to members of our Board and from time to time our executive officers and select management employees.

The following table summarizes information about our restricted stock:

Year Ended December 31,

2020 2019 2018

Shares Grant Date

Fair Value (1)

Shares Grant Date

Fair Value (1)

Shares Grant Date

Fair Value (1)

Awards outstanding at beginning of year

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

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

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

Awards outstanding at end of year

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The weighted average vesting period related to unvested restricted stock at December 31, 2021 was approximately 0.7 years.

Performance Share Unit Awards

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

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

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

Our 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 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 Free Cash Flow, which contains a service condition and a performance condition.

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

The maximum payout at vesting of our PSUs is 200 % of the original PSU awards and the minimum payout is zero .

The following table summarizes information about our equity PSU awards:

Year Ended December 31,

2020 2019 2018

Units Grant Date

Fair Value (1)

Units Grant Date

Fair Value (1)

Units Grant Date

Fair Value (1)

Equity PSU awards outstanding at beginning of year

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

Vested ( 589,335 ) 12.64 — — — —

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

Equity PSU awards outstanding at end of year

(1) Represents the weighted average grant date fair value, which is determined using a Monte Carlo simulation model.

For the years ended December 31, 2020, 2019 and 2018, $ 4.0 million, $ 5.1 million and $ 3.8 million, respectively, were recognized as share-based compensation related to equity PSU awards.

(1) Represents the weighted average grant date fair value.

For the years ended December 31, 2021, 2020 and 2019, $ 4.1 million, $ 4.0 million and $ 5.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

Future compensation cost associated with unvested equity PSU awards at December 31, 2021 totaled approximately $ 3.9 million.

The weighted average vesting period related to unvested equity PSU awards at December 31, 2020 was approximately 1.0 year.

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

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

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

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

The weighted average vesting period related to unvested equity PSUs at December 31, 2021 was approximately 0.9 year.

In January 2022, 559,150 equity PSUs granted in 2019 vested at 157 %, representing 876,469 shares of our common stock with a total market value of $ 3.2 million.

In January 2021, 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.

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

RSUs granted in 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and have been accounted for as liability awards.

Compensation cost recognized for the year ended December 31, 2021 was $ 0.5 million, which reflects the value of RSUs that were granted in 2021 and paid out in January 2022.

In 2021, 2020 and 2019, we granted $ 3.5 million, $ 4.7 million and $ 4.6 million, respectively, of fixed value cash awards to select management employees under the 2005 Incentive Plan.

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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 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 includes ROVs, trenchers and a ROVDrill, which are designed to complement well intervention services and offshore construction to both the oil and gas and the renewable energy markets globally.

Our Robotics segment also includes two robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III , as well as spot vessels as needed.

Our well intervention equipment includes intervention systems, some of which we provide on a stand-alone basis.

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

Additionally, our Robotics services are used in and complement our well intervention services.

Our Robotics segment includes ROVs, trenchers and robotics support vessels under long-term charter as well as spot vessels as needed.

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

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Year Ended December 31,

2020 2019 2018

Net revenues —

Well Intervention

Robotics 178,018 171,672 158,989

Production Facilities

Intercompany eliminations

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

Income (loss) from operations —

Well Intervention

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

Production Facilities

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

Segment operating income (loss)

Goodwill impairment (1)

( 6,689 ) — —

Corporate, eliminations and other

Total 13,025 67,997 51,543

Net interest expense

Other non-operating income (expense), net

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

Income (loss) before income taxes

Capital expenditures —

Well Intervention

Robotics 257 417 151

Production Facilities

Corporate and other 464 1,102 443

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

Corporate, eliminations and other

Depreciation and amortization —

Well Intervention

Robotics 15,952 16,459 19,175

Production Facilities

Corporate and eliminations

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

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

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Year Ended December 31,

2020 2019 2018

Well Intervention (1)

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

Robotics 26,976 30,789 29,921

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

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

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

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

Year Ended December 31,

2020 2019 2018

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

133,005 193,903 194,434

Brazil 208,565 216,796 208,054

Other 87,422 44,048 66,070

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

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

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

$ 750,986 $ 808,683

764,070 782,246

Brazil 267,896 281,698

Singapore 12 10

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

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

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

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

(1) Includes the Q7000 and certain other assets that are based in the U.K.

but are currently operating in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

(2) Includes the equipment on the Siem Helix 1 chartered vessel and certain other assets that are based in Brazil but are currently operating in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

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

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Well Intervention

Robotics 132,550 151,478

Production Facilities

Corporate and other

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

Note 16 — Asset Retirement Obligations

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

AROs at January 1,

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Liability settled during the period

Revisions in estimated cash flows — 822

Revisions in estimates

Accretion expense

AROs at December 31,

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

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

Note 17 — Commitments and Contingencies and Other Matters

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

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 Petrobras to perform well intervention work offshore Brazil.

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

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

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

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

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 to December 2022, with an option to renew.

The Grand Canyon III charter expires May 2023.

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

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

Contingencies and Claims

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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 have further appealed this matter and continue to vigorously defend 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 18 — Statement of Cash Flow Information

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Interest paid, net of interest capitalized

Income taxes paid (1)

(1) Exclusive of income tax refunds.

During the year ended December 31, 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.

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The following table sets forth the activity in our valuation accounts for each of the three years in the period ended December 31, 2021 (in thousands):

Losses Deferred

Allowance for

Deferred Tax Asset

Credit Losses

Valuation Allowance

Balance at December 31, 2018

Deductions (1)

Adjustments (2)

Balance at December 31, 2019

Additions (1)

Adjustments (2)

Balance at December 31, 2020

Additions (3)

Reductions (1)

Write-offs (3)

Adjustments (4)

Balance at December 31, 2021

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

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

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

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

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

(2) 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.

(3) 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.

(4) The decrease in valuation allowance primarily relates to the valuation allowance release for certain of our U.K.

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

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

(a) Market Approach.

Market Approach.

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

(b) Cost Approach.

Cost Approach.

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

Income Approach.

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

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

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

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

Fair Value at December 31, 2019 Valuation

Level 1 Level 2 Level 3 Total

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

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

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

Total net liability $ — $ 958 $ — $ 958

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

Principal Amount (1)

December 31, 2021

December 31, 2020

Value (2) (3)

Principal Amount (1)

Value (2) (3)

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

Nordea Q5000 Loan (matures January 2021) (4)

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

Term Loan (repaid September 2021) (4)

Nordea Q5000 Loan (matured January 2021) (5)

MARAD Debt (matures February 2027)

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2026 Notes (mature February 2026)

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

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

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

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

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

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

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

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

We repaid the Nordea Q5000 Loan in January 2021.

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, 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 8).

(5) The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 8).

Note 21 — Derivative Instruments and Hedging Activities

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

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

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

Balance Sheet

Location Fair

Asset Derivative Instruments:

Interest rate swaps Other current assets $ 44

Liability Derivative Instruments:

Foreign exchange contracts Accrued liabilities $ 401

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

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

Balance Sheet

Location Fair

Liability Derivative Instruments:

Foreign exchange contracts Accrued liabilities $ 601

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

Unrealized Gain (Loss) Recognized in OCI

We had no derivative instruments as of December 31, 2021 and 2020.

Unrealized Loss Recognized in OCI

Year Ended December 31,

2020 2019 2018

Foreign exchange contracts

Interest rate swaps

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

Location of Gain (Loss)

Gain (Loss) Reclassified from

Reclassified from

Accumulated OCI

into Earnings Gain (Loss) Reclassified from

Accumulated OCI into Earnings

Accumulated OCI into

Year Ended December 31,

2020 2019 2018

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

Interest rate swaps Net interest expense 3 655 508

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

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

Foreign exchange contracts

Cost of sales

Interest rate swaps

Net interest expense

The following table presents the impact that derivative instruments not designated as hedging instruments had on our consolidated statements of operations for the years ended December 31, 2020 and 2019 (in thousands):

Loss Recognized in Earnings

Location of Loss

Recognized in Earnings Loss Recognized in Earnings

Year Ended December 31,

2020 2019 2018

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

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

Note 22 — Quarterly Financial Information (Unaudited)

In addition to being affected by the timing of oil and gas company expenditures, offshore marine construction activities may fluctuate as a result of weather conditions.

Historically, a substantial portion of our services has been performed during the summer and fall months.

As a result, a disproportionate portion of our revenues and net income is earned during such periods.

The following is a summary of consolidated quarterly financial information (in thousands, except per share amounts):

Quarter Ended

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

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

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

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

Net income (loss) attributable to common shareholders ( 11,938 ) 5,450 24,499 4,163

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

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

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

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

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

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

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

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

Recognized in Earnings

Foreign exchange contracts

Other income (expense), net

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data