Condensed Consolidated Guarantor And Non-Guarantor Financial Information

9 Months Ended

Sep. 30, 2011

Condensed Consolidated Guarantor And Non-Guarantor Financial Information

Condensed Consolidated Guarantor And Non-Guarantor Financial Information

Note 17 – Condensed Consolidated Guarantor and Non-Guarantor Financial Information

The payment of our obligations under the Senior Unsecured Notes is guaranteed by all of our restricted domestic subsidiaries ("Subsidiary Guarantors") except for Cal Dive I-Title XI, Inc.  Each of these Subsidiary Guarantors is included in our consolidated financial statements and has fully and unconditionally guaranteed the Senior Unsecured Notes on a joint and several basis.  As a result of these guaranty arrangements, we are required to present the following condensed consolidating financial information.  The accompanying guarantor financial information is presented on the equity method of accounting for all periods presented.  Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries' cumulative results of operations, capital contributions and distributions and other changes in equity.  Elimination entries related primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions.

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

(Unaudited)

	As of September 30, 2011
		Helix			Guarantors		Non-Guarantors			Consolidating  Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	335,063		$	1,060	$	39,232		$	—		$	375,355
Accounts receivable, net		76,595			92,881		51,686			—			221,162
Unbilled revenue		13,235			18		15,621			—			28,874
Income taxes receivable		39,013			—		2,691			(41,704	)		—
Other current assets		60,957			49,739		13,832			(1,292	)		123,236
Total current assets		524,863			143,698		123,062			(42,996	)		748,627
Intercompany		(16,546	)		276,281		(210,909	)		(48,826	)		—
Property and equipment, net		219,450			1,552,025		707,165			(4,887	)		2,473,753
Other assets:
Equity investments in unconsolidated affiliates		—			—		186,423			—			186,423
Equity investments in affiliates		1,989,756			35,708		—			(2,025,464	)		—
Goodwill, net		—			45,107		17,237			—			62,344
Other assets, net		46,672			45,977		17,625			(29,412	)		80,862
Due from subsidiaries/parent		82,918			331,591		—			(414,509	)		—
	$	2,847,113		$	2,430,387	$	840,603		$	(2,566,094	)	$	3,552,009
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	42,650		$	74,003	$	28,459		$	—		$	145,112
Accrued liabilities		50,000			81,412		28,264			—			159,676
Income taxes payable		—			62,870		—			(59,014	)		3,856
Current maturities of long-term debt		3,000			—		4,877			—			7,877
Total current liabilities		95,650			218,285		61,600			(59,014	)		316,521
Long-term debt		1,058,626			—		105,288			—			1,163,914
Deferred income taxes		227,047			120,838		99,249			(5,614	)		441,520
Asset retirement obligations		—			169,429		—			—			169,429
Other long-term liabilities		1,351			2,899		594			—			4,844
Due to parent		—			—		108,403			(108,403	)		—
Total liabilities		1,382,674			511,451		375,134			(173,031	)		2,096,228
Convertible preferred stock		1,000			—		—			—			1,000
Total equity		1,463,439			1,918,936		465,469			(2,393,063	)		1,454,781
	$	2,847,113		$	2,430,387	$	840,603		$	(2,566,094	)	$	3,552,009

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	As of December 31, 2010
		Helix		Guarantors		Non-Guarantors			Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	376,434	$	3,294	$	11,357		$	—		$	391,085
Accounts receivable, net		61,846		91,659		23,788			—			177,293
Unbilled revenue		11,990		—		37,421			—			49,411
Income taxes receivable		19,334		—		7,195			(20,430	)		6,099
Other current assets		63,306		49,557		12,889			(8,786	)		116,966
Total current assets		532,910		144,510		92,650			(29,216	)		740,854
Intercompany		1,906		263,920		(171,513	)		(94,313	)		—
Property and equipment, net		217,153		1,605,906		709,082			(5,061	)		2,527,080
Equity investments in unconsolidated affiliates		—		—		187,031			—			187,031
Equity investments in affiliates		1,998,289		29,899		—			(2,028,188	)		—
Goodwill, net		—		45,107		17,387			—			62,494
Other assets, net		43,971		38,324		21,900			(29,634	)		74,561
Due from subsidiaries/parent		95,398		105,434		—			(200,832	)		—
	$	2,889,627	$	2,233,100	$	856,537		$	(2,387,244	)	$	3,592,020
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	60,308	$	56,107	$	42,966		$	—		$	159,381
Accrued liabilities		58,074		107,874		32,289			—			198,237
Income taxes payable		—		36,678		—			(36,678	)		—
Current maturities of long-term debt		4,326		—		14,301			(8,448	)		10,179
Total current liabilities		122,708		200,659		89,556			(45,126	)		367,797
Long-term debt		1,237,587		—		110,166			—			1,347,753
Deferred income taxes		185,453		135,101		98,968			(5,883	)		413,639
Asset retirement obligations		—		170,410		—			—			170,410
Other long-term liabilities		1,421		3,691		665			—			5,777
Due to parent		—		—		120,884			(120,884	)		—
Total liabilities		1,547,169		509,861		420,239			(171,893	)		2,305,376
Convertible preferred stock		1,000		—		—			—			1,000
Total equity		1,341,458		1,723,239		436,298			(2,215,351	)		1,285,644
	$	2,889,627	$	2,233,100	$	856,537		$	(2,387,244	)	$	3,592,020

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)

	Three Months Ended September 30, 2011
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Net revenues	$	19,986		$	266,447		$	109,780		$	(23,717	)	$	372,496
Cost of sales		15,698			182,259			75,643			(23,399	)		250,201
Gross profit (loss)		4,288			84,188			34,137			(318	)		122,295
Gain on oil & gas derivative contracts		—			—			—			—			—
Gain (loss) on sale or acquisition of assets		—			—			—			—			—
Selling, general and administrative expenses		(6,752	)		(9,551	)		(6,105	)		326			(22,082	)
Income (loss) from operations		(2,464	)		74,637			28,032			8			100,213
Equity in earnings of investments		60,831			7,277			4,906			(68,108	)		4,906
Net interest expense and other		(17,612	)		(8,016	)		(9,200	)		—			(34,828	)
Income (loss) before income taxes		40,755			73,898			23,738			(68,100	)		70,291
Provision (benefit) for income taxes		(5,266	)		24,419			4,309			3			23,465
Net income (loss), including noncontrolling interests		46,021			49,479			19,429			(68,103	)		46,826
Less net income applicable to noncontrolling interests		—			—			—			(800	)		(800	)
Preferred stock dividends		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders	$	46,011		$	49,479		$	19,429		$	(68,903	)	$	46,016

	Three Months Ended September 30, 2010
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Net revenues	$	82,764		$	212,105		$	111,581		$	(13,781	)	$	392,669
Cost of sales		42,397			184,369			92,765			(13,414	)		306,117
Gross profit (loss)		40,367			27,736			18,816			(367	)		86,552
Gain on oil & gas derivative contracts		—			161			—			—			161
Gain (loss) on sale or acquisition of assets		—			—			13			—			13
Selling, general and administrative expenses		(15,465	)		(7,370	)		(4,212	)		419			(26,628	)
Income (loss) from operations		24,902			20,527			14,617			52			60,098
Equity in earnings of investments		27,871			7,567			6,221			(35,438	)		6,221
Net interest expense and other		(19,452	)		(3,996	)		2,041			—			(21,407	)
Income (loss) before income taxes		33,321			24,098			22,879			(35,386	)		44,912
Provision (benefit) for income taxes		7,185			4,530			6,234			16			17,965
Net income (loss), including noncontrolling interests		26,136			19,568			16,645			(35,402	)		26,947
Less net income applicable to noncontrolling interests		—			—			—			(776	)		(776	)
Preferred stock dividends		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders	$	26,126		$	19,568		$	16,645		$	(36,178	)	$	26,161

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)

	Nine Months Ended September 30, 2011
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Net revenues	$	56,113		$	756,344		$	260,582		$	(70,617	)	$	1,002,422
Cost of sales		47,414			521,387			203,651			(69,599	)		702,853
Gross profit (loss)		8,699			234,957			56,931			(1,018	)		299,569
Gain on oil & gas derivative contracts		—			—			—			—			—
Gain (loss) on sale or acquisition of assets		(6	)		—			—			—			(6	)
Selling, general and administrative expenses		(27,512	)		(29,502	)		(14,917	)		1,110			(70,821	)
Income (loss) from operations		(18,819	)		205,455			42,014			92			228,742
Equity in earnings of investments		167,867			5,809			16,443			(173,676	)		16,443
Net interest expense and other		(53,139	)		(18,615	)		(8,675	)		—			(80,429	)
Income (loss) before income taxes		95,909			192,649			49,782			(173,584	)		164,756
Provision (benefit) for income taxes		(17,229	)		66,479			(95	)		31			49,186
Net income (loss), including noncontrolling interests		113,138			126,170			49,877			(173,615	)		115,570
Less net income applicable to noncontrolling interests		—			—			—			(2,354	)		(2,354	)
Preferred stock dividends		(30	)		—			—			—			(30	)
Net income (loss) applicable to Helix common shareholders	$	113,108		$	126,170		$	49,877		$	(175,969	)	$	113,186

	Nine Months Ended September 30, 2010
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Net revenues	$	137,456		$	568,075		$	256,639		$	(68,669	)	$	893,501
Cost of sales		73,889			641,568			215,067			(54,613	)		875,911
Gross profit (loss)		63,567			(73,493	)		41,572			(14,056	)		17,590
Gain on oil & gas derivative contracts		—			2,643			—			—			2,643
Gain (loss) on sale or acquisition of assets		—			287			5,959			—			6,246
Selling, general and administrative expenses		(52,923	)		(25,285	)		(14,788	)		1,321			(91,675	)
Income (loss) from operations		10,644			(95,848	)		32,743			(12,735	)		(65,196	)
Equity in earnings of investments		(36,865	)		10,672			12,932			26,193			12,932
Net interest expense and other		(42,160	)		(16,564	)		(6,102	)		—			(64,826	)
Income (loss) before income taxes		(68,381	)		(101,740	)		39,573			13,458			(117,090	)
Provision (benefit) for income taxes		517			(40,606	)		2,584			(4,457	)		(41,962	)
Net income (loss), including noncontrolling interests		(68,898	)		(61,134	)		36,989			17,915			(75,128	)
Less net income applicable to noncontrolling interests		—			—			—			(2,049	)		(2,049	)
Preferred stock dividends		(104	)		—			—			—			(104	)
Net income (loss) applicable to Helix common shareholders	$	(69,002	)	$	(61,134	)	$	36,989		$	15,866		$	(77,281	)

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine Months Ended September 30, 2011
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Cash flow from operating activities:
Net income (loss), including noncontrolling interests	$	113,138		$	126,170		$	49,877		$	(173,615	)	$	115,570
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates		(167,867	)		(5,809	)		—			173,676			—
Other adjustments		19,125			218,602			2,578			(4,744	)		235,561
Net cash provided by (used in) operating
activities		(35,604	)		338,963			52,455			(4,683	)		351,131
Cash flows from investing activities:
Capital expenditures		(18,240	)		(129,535	)		(20,074	)		—			(167,849	)
Investments in equity investments		—			—			(2,699	)		—			(2,699	)
Distributions from equity investments, net		—			—			3,437			—			3,437
Proceeds from sale of Cal Dive common stock		3,588			—			—			—			3,588
Decrease (increase) in restricted cash		—			703			—			—			703
Net cash used in investing activities		(14,652	)		(128,832	)		(19,336	)		—			(162,820	)
Cash flows from financing activities:
Repayments of debt		(111,941	)		—			(5,860	)		—			(117,801	)
Extinguishment of Senior Unsecured Notes		(77,394	)		—			—			—			(77,394	)
Deferred financing costs		(9,224	)		—			—			—			(9,224	)
Repurchase of common stock and preferred dividends paid		(1,102	)		—			—			—			(1,102	)
Excess tax benefit from stock-based  compensation		(805	)		—			—			—			(805	)
Exercise of stock options, net		2,018			—			—			—			2,018
Intercompany financing		207,333			(212,365	)		349			4,683			—
Net cash provided by (used in) financing activities		8,885			(212,365	)		(5,511	)		4,683			(204,308	)
Effect of exchange rate changes on cash and cash equivalents		—			—			267			—			267
Net increase (decrease) in cash and cash equivalents		(41,371	)		(2,234	)		27,875			—			(15,730	)
Cash and cash equivalents:
Balance, beginning of year		376,434			3,294			11,357			—			391,085
Balance, end of period	$	335,063		$	1,060		$	39,232		$	—		$	375,355

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended September 30, 2010
	Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Cash flow from operating activities:
Net income (loss), including noncontrolling interests	$	(68,898	)	$	(61,134	)	$	36,989		$	17,915		$	(75,128	)
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates		36,866			(10,673	)		—			(26,193	)		—
Other adjustments		70,963			229,567			33,675			(17,311	)		316,894
Net cash provided by (used in) operating
activities		38,931			157,760			70,664			(25,589	)		241,766
Cash flows from investing activities:
Capital expenditures		(54,880	)		(104,423	)		(19,715	)		—			(179,018	)
Investments in equity investments		—			—			(7,768	)		—			(7,768	)
Distributions from equity investments, net		—			—			9,876			—			9,876
Insurance recovery		7,020			9,086			—			—			16,106
Proceeds from sale of property		—			852			—			—			852
Decrease (increase) in restricted cash		—			(133	)		—			—			(133	)
Net cash used in investing activities		(47,860	)		(94,618	)		(17,607	)		—			(160,085	)
Cash flows from financing activities:
Repayments of debt		(3,245	)		—			(6,708	)		—			(9,953	)
Deferred financing costs		(2,864	)		—			—			—			(2,864	)
Repurchases of common stock		(11,763	)		—			—						(11,763	)
Excess tax benefit from stock-based  compensation		(2,376	)		—			—			—			(2,376	)
Exercise of stock options, net		335			—			—			—			335
Intercompany financing		73,887			(61,811	)		(37,665	)		25,589			—
Net cash provided by (used in) financing activities		53,974			(61,811	)		(44,373	)		25,589			(26,621	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(253	)		—			(253	)
Net increase (decrease) in cash and cash equivalents		45,045			1,331			8,431			—			54,807
Cash and cash equivalents:
Balance, beginning of year		258,742			2,522			9,409			—			270,673
Balance, end of period	$	303,787		$	3,853		$	17,840		$	—		$	325,480