QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | Emerging growth company |
PART I. | FINANCIAL INFORMATION | PAGE | |
Item 1. | Financial Statements: | ||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | OTHER INFORMATION | ||
Item 1. | |||
Item 2. | |||
Item 6. | |||
June 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable: | |||||||
Trade, net of allowance for uncollectible accounts of $0 | |||||||
Unbilled and other | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property and equipment | |||||||
Less accumulated depreciation | ( | ) | ( | ) | |||
Property and equipment, net | |||||||
Operating lease right-of-use assets | |||||||
Other assets, net | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued liabilities | |||||||
Income tax payable | |||||||
Current maturities of long-term debt | |||||||
Current operating lease liabilities | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Operating lease liabilities | |||||||
Deferred tax liabilities | |||||||
Other non-current liabilities | |||||||
Total liabilities | |||||||
Redeemable noncontrolling interests | |||||||
Shareholders’ equity: | |||||||
Common stock, no par, 240,000 shares authorized, 148,759 and 148,203 shares issued, respectively | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenues | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Gross profit | |||||||||||||||
Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income from operations | |||||||||||||||
Equity in losses of investment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on extinguishment of long-term debt | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Royalty income and other | |||||||||||||||
Income before income taxes | |||||||||||||||
Income tax provision | |||||||||||||||
Net income | |||||||||||||||
Net loss attributable to redeemable noncontrolling interests | ( | ) | ( | ) | |||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Earnings per share of common stock: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Net unrealized gain (loss) on hedges arising during the period | ( | ) | ( | ) | ( | ) | |||||||||
Reclassifications to net income | |||||||||||||||
Income taxes on hedges | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net change in hedges, net of tax | |||||||||||||||
Unrealized loss on note receivable arising during the period | ( | ) | |||||||||||||
Income taxes on note receivable | |||||||||||||||
Unrealized loss on note receivable, net of tax | ( | ) | |||||||||||||
Foreign currency translation loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||
Comprehensive income | |||||||||||||||
Comprehensive loss attributable to redeemable noncontrolling interests | ( | ) | ( | ) | |||||||||||
Comprehensive income attributable to common shareholders | $ | $ | $ | $ |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) | — | — | — | ( | ) | |||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | ) | ( | ) | — | ||||||||||||||
Unrealized gain on hedges, net of tax | — | — | — | — | ||||||||||||||||||
Issuance of redeemable noncontrolling interests | — | — | — | — | — | |||||||||||||||||
Accretion of redeemable noncontrolling interests | — | — | ( | ) | — | ( | ) | |||||||||||||||
Activity in company stock plans, net and other | ( | ) | ( | ) | — | — | ( | ) | — | |||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | ( | ) | $ | $ |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, March 31, 2018 | $ | $ | $ | ( | ) | $ | $ | — | ||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | ) | ( | ) | — | ||||||||||||||
Unrealized gain on hedges, net of tax | — | — | — | — | ||||||||||||||||||
Equity component of debt discount on convertible senior notes | — | ( | ) | — | — | ( | ) | — | ||||||||||||||
Activity in company stock plans, net and other | — | — | — | |||||||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | ( | ) | $ | $ | — |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) | — | — | — | ( | ) | |||||||||||||||||
Reclassification of deferred gain from sale and leaseback transaction to retained earnings | — | — | — | — | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | ) | ( | ) | — | ||||||||||||||
Unrealized gain on hedges, net of tax | — | — | — | — | ||||||||||||||||||
Issuance of redeemable noncontrolling interests | — | — | — | — | — | |||||||||||||||||
Accretion of redeemable noncontrolling interests | — | — | ( | ) | — | ( | ) | |||||||||||||||
Activity in company stock plans, net and other | ( | ) | — | — | ( | ) | — | |||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | ( | ) | $ | $ |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | ( | ) | $ | $ | — | ||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Reclassification of stranded tax effect to retained earnings | — | — | ( | ) | — | |||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | ) | ( | ) | — | ||||||||||||||
Unrealized gain on hedges, net of tax | — | — | — | — | ||||||||||||||||||
Unrealized loss on note receivable, net of tax | — | — | — | ( | ) | ( | ) | — | ||||||||||||||
Equity component of debt discount on convertible senior notes | — | — | — | — | ||||||||||||||||||
Activity in company stock plans, net and other | ( | ) | — | — | ( | ) | — | |||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | ( | ) | $ | $ | — |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Amortization of debt discounts | |||||||
Amortization of debt issuance costs | |||||||
Share-based compensation | |||||||
Deferred income taxes | ( | ) | |||||
Equity in losses of investment | |||||||
Loss on extinguishment of long-term debt | |||||||
Unrealized gain on derivative contracts, net | ( | ) | ( | ) | |||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable, net | ( | ) | ( | ) | |||
Other current assets | ( | ) | ( | ) | |||
Income tax payable | ( | ) | ( | ) | |||
Accounts payable and accrued liabilities | |||||||
Other, net | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
STL acquisition, net | ( | ) | |||||
Proceeds from sale of assets | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Issuance of Convertible Senior Notes due 2023 | |||||||
Repurchase of Convertible Senior Notes due 2032 | ( | ) | |||||
Proceeds from term loan | |||||||
Repayment of term loan | ( | ) | ( | ) | |||
Repayment of Nordea Q5000 Loan | ( | ) | ( | ) | |||
Repayment of MARAD Debt | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | ( | ) | |||
Payments related to tax withholding for share-based compensation | ( | ) | ( | ) | |||
Proceeds from issuance of ESPP shares | |||||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | |||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents: | |||||||
Balance, beginning of year | |||||||
Balance, end of period | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Contract assets (Note 9) | $ | $ | |||||
Prepaids | |||||||
Deferred costs (Note 9) | |||||||
Other receivable (Note 13) | |||||||
Other | |||||||
Total other current assets | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Prepaids | $ | $ | |||||
Deferred recertification and dry dock costs, net | |||||||
Deferred costs (Note 9) | |||||||
Charter deposit (1) | |||||||
Other receivable (Note 13) | |||||||
Goodwill (Note 2) | |||||||
Intangible assets with finite lives, net (Note 2) | |||||||
Other | |||||||
Total other assets, net | $ | $ |
(1) | This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term. |
June 30, 2019 | December 31, 2018 | ||||||
Accrued payroll and related benefits | $ | $ | |||||
Investee losses in excess of investment (Note 4) | |||||||
Deferred revenue (Note 9) | |||||||
Asset retirement obligations (Note 13) | |||||||
Derivative liability (Note 17) | |||||||
Other | |||||||
Total accrued liabilities | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Investee losses in excess of investment (Note 4) | $ | $ | |||||
Deferred gain on sale of property (1) | |||||||
Deferred revenue (Note 9) | |||||||
Asset retirement obligations (Note 13) | |||||||
Derivative liability (Note 17) | |||||||
Other | |||||||
Total other non-current liabilities | $ | $ |
(1) | Relates to the sale and lease-back in January 2016 of our office and warehouse property located in Aberdeen, Scotland. The deferred gain had been amortized over a |
Three Months Ended | Six Months Ended | ||||||
June 30, 2019 | June 30, 2019 | ||||||
Operating lease cost | $ | $ | |||||
Variable lease cost | |||||||
Short-term lease cost | |||||||
Sublease income | ( | ) | ( | ) | |||
Net lease cost | $ | $ |
Vessels | Facilities and Equipment | Total | |||||||||
Remainder of 2019 | $ | $ | $ | ||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Thereafter | |||||||||||
Total lease payments | $ | $ | $ | ||||||||
Less: imputed interest | ( | ) | ( | ) | ( | ) | |||||
Total operating lease liabilities | $ | $ | $ | ||||||||
Current operating lease liabilities | $ | $ | $ | ||||||||
Non-current operating lease liabilities | |||||||||||
Total operating lease liabilities | $ | 204,873 | $ | 28,307 | $ | 233,180 |
June 30, 2019 | ||
Weighted average remaining lease term | ||
Weighted average discount rate | % |
Six Months Ended | |||
June 30, 2019 | |||
Cash paid for operating lease liabilities | $ | ||
ROU assets obtained in exchange for new operating lease obligations |
Vessels | Facilities and Equipment | Total | |||||||||
2019 | $ | $ | $ | ||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Thereafter | |||||||||||
Total lease payments | $ | $ | $ |
Term Loan (1) | 2022 Notes | 2023 Notes | MARAD Debt | Nordea Q5000 Loan | Total | ||||||||||||||||||
Less than one year | $ | $ | $ | $ | $ | $ | |||||||||||||||||
One to two years | |||||||||||||||||||||||
Two to three years | |||||||||||||||||||||||
Three to four years | |||||||||||||||||||||||
Four to five years | |||||||||||||||||||||||
Over five years | |||||||||||||||||||||||
Gross debt | |||||||||||||||||||||||
Unamortized debt discounts (2) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Unamortized debt issuance costs (3) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Total debt | |||||||||||||||||||||||
Less: current maturities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Long-term debt | $ | $ | $ | $ | $ | $ |
(1) | Term Loan pursuant to the Credit Agreement (as defined below) matures in December 2021. |
(2) | Our Convertible Senior Notes due 2022 (the “2022 Notes”) will increase to their face amount through accretion of the debt discount through May 2022. Our Convertible Senior Notes due 2023 (the “2023 Notes”) will increase to their face amount through accretion of the debt discount to interest expense through September 2023. |
(3) | Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest expense | $ | $ | $ | $ | |||||||||||
Interest income | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Capitalized interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net interest expense | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
U.S. statutory rate | % | % | % | % | |||||||
Foreign provision | ( | ) | ( | ) | ( | ) | ( | ) | |||
Other | |||||||||||
Effective rate | % | % | % | % |
June 30, 2019 | December 31, 2018 | ||||||
Cumulative foreign currency translation adjustment | $ | ( | ) | $ | ( | ) | |
Net unrealized loss on hedges, net of tax (1) | ( | ) | ( | ) | |||
Accumulated OCI | $ | ( | ) | $ | ( | ) |
(1) | Relates to foreign currency hedges for the Grand Canyon II and Grand Canyon III charters as well as interest rate swap contracts for the Nordea Q5000 Loan (Note 17) and is net of deferred income taxes totaling $ |
Well Intervention | Robotics | Production Facilities | Intercompany Eliminations (1) | Total Revenue | ||||||||||||||||
Three months ended June 30, 2019 | ||||||||||||||||||||
Short-term | $ | $ | $ | $ | $ | |||||||||||||||
Long-term (2) | ( | ) | ||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three months ended June 30, 2018 | ||||||||||||||||||||
Short-term | $ | $ | $ | $ | $ | |||||||||||||||
Long-term (2) | ( | ) | ||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Six months ended June 30, 2019 | ||||||||||||||||||||
Short-term | $ | $ | $ | $ | $ | |||||||||||||||
Long-term (2) | ( | ) | ||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Six months ended June 30, 2018 | ||||||||||||||||||||
Short-term | $ | $ | $ | $ | $ | |||||||||||||||
Long-term (2) | ( | ) | ||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ |
(1) | Intercompany revenues among our business segments are under agreements that are considered long-term. |
(2) | Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration. |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||
Income | Shares | Income | Shares | ||||||||||
Basic: | |||||||||||||
Net income attributable to common shareholders | $ | $ | |||||||||||
Less: Undistributed earnings allocated to participating securities | ( | ) | ( | ) | |||||||||
Accretion of redeemable noncontrolling interests | ( | ) | |||||||||||
Net income available to common shareholders, basic | $ | $ | |||||||||||
Diluted: | |||||||||||||
Net income available to common shareholders, basic | $ | $ | |||||||||||
Effect of dilutive securities: | |||||||||||||
Share-based awards other than participating securities | |||||||||||||
Net income available to common shareholders, diluted | $ | $ |
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||
Income | Shares | Income | Shares | ||||||||||
Basic: | |||||||||||||
Net income attributable to common shareholders | $ | $ | |||||||||||
Less: Undistributed earnings allocated to participating securities | ( | ) | ( | ) | |||||||||
Accretion of redeemable noncontrolling interests | ( | ) | |||||||||||
Net income available to common shareholders, basic | $ | $ | |||||||||||
Diluted: | |||||||||||||
Net income available to common shareholders, basic | $ | $ | |||||||||||
Effect of dilutive securities: | |||||||||||||
Share-based awards other than participating securities | |||||||||||||
Net income available to common shareholders, diluted | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
2022 Notes | |||||||||||
2023 Notes | |||||||||||
2032 Notes (1) |
(1) | The 2032 Notes were fully redeemed in May 2018. |
Date of Grant | Shares/ Units | Grant Date Fair Value Per Share/Unit | Vesting Period | ||||||||||
January 2, 2019 (1) | $ | 33% per year over three years | |||||||||||
January 2, 2019 (2) | 100% on January 2, 2022 | ||||||||||||
January 2, 2019 (3) | 100% on January 1, 2021 | ||||||||||||
April 1, 2019 (3) | 100% on January 1, 2021 |
(1) | Reflects grants of restricted stock to our executive officers and select management employees. |
(2) | Reflects grants of performance share units (“PSUs”) to our executive officers and select management employees. The PSUs provide for an award based on the performance of our common stock over a three-year period with the maximum amount of the award being |
(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. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenues — | |||||||||||||||
Well Intervention | $ | $ | $ | $ | |||||||||||
Robotics | |||||||||||||||
Production Facilities | |||||||||||||||
Intercompany eliminations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total | $ | $ | $ | $ | |||||||||||
Income (loss) from operations — | |||||||||||||||
Well Intervention | $ | $ | $ | $ | |||||||||||
Robotics | ( | ) | ( | ) | ( | ) | |||||||||
Production Facilities | |||||||||||||||
Segment operating income | |||||||||||||||
Corporate, eliminations and other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Well Intervention (1) | $ | $ | $ | $ | |||||||||||
Robotics | |||||||||||||||
Total | $ | $ | $ | $ |
(1) | Amounts in 2019 include $ |
June 30, 2019 | December 31, 2018 | ||||||
Well Intervention | $ | $ | |||||
Robotics | |||||||
Production Facilities | |||||||
Corporate and other | |||||||
Total | $ | $ |
AROs at January 1, 2019 | $ | ||
Liability incurred during the period (1) | |||
Liability settled during the period | ( | ) | |
Accretion expense | |||
AROs at June 30, 2019 | $ |
(1) | In connection with the acquisition on January 18, 2019 of certain assets related to the Droshky Prospect (Note 2), we assumed the AROs for the required P&A of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the P&A work is completed. We initially recognized $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Interest paid, net of interest capitalized | $ | $ | |||||
Income taxes paid |
• | Level 1 — Observable inputs such as quoted prices in active markets; |
• | Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3 — Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. |
(a) | Market Approach — Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. |
(b) | Cost Approach — Amount that would be required to replace the service capacity of an asset (replacement cost). |
(c) | Income Approach — Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models). |
Fair Value at June 30, 2019 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Valuation Approach | |||||||||||||
Assets: | |||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | (c) | ||||||||||||
Liabilities: | |||||||||||||||||
Foreign exchange contracts — hedging instruments | (c) | ||||||||||||||||
Foreign exchange contracts — non-hedging instruments | (c) | ||||||||||||||||
Total net liability | $ | $ | $ | $ |
Fair Value at December 31, 2018 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Valuation Approach | |||||||||||||
Assets: | |||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | (c) | ||||||||||||
Liabilities: | |||||||||||||||||
Foreign exchange contracts — hedging instruments | (c) | ||||||||||||||||
Foreign exchange contracts — non-hedging instruments | (c) | ||||||||||||||||
Total net liability | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||||
Principal Amount (1) | Fair Value (2) (3) | Principal Amount (1) | Fair Value (2) (3) | ||||||||||||
Term Loan (previously scheduled to mature June 2020) | $ | $ | $ | $ | |||||||||||
Term Loan (matures December 2021) | |||||||||||||||
Nordea Q5000 Loan (matures April 2020) | |||||||||||||||
MARAD Debt (matures February 2027) | |||||||||||||||
2022 Notes (mature May 2022) | |||||||||||||||
2023 Notes (mature September 2023) | |||||||||||||||
Total debt | $ | $ | $ | $ |
(1) | Principal amount includes current maturities and excludes the related unamortized debt discount and debt issuance costs. See Note 6 for additional disclosures on our long-term debt. |
(2) | The estimated fair value of the 2022 Notes and the 2023 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 fair value of the 2022 Notes and the 2023 Notes are for the entire instrument inclusive of the conversion feature reported in shareholders’ equity. |
June 30, 2019 | December 31, 2018 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Asset Derivative Instruments: | |||||||||||
Interest rate swaps | Other current assets | $ | Other current assets | $ | |||||||
Interest rate swaps | Other assets, net | Other assets, net | |||||||||
$ | $ | ||||||||||
Liability Derivative Instruments: | |||||||||||
Foreign exchange contracts | Accrued liabilities | $ | Accrued liabilities | $ | |||||||
Foreign exchange contracts | Other non-current liabilities | Other non-current liabilities | |||||||||
$ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Liability Derivative Instruments: | |||||||||||
Foreign exchange contracts | Accrued liabilities | $ | Accrued liabilities | $ | |||||||
Foreign exchange contracts | Other non-current liabilities | Other non-current liabilities | |||||||||
$ | $ |
Unrealized Gain (Loss) Recognized in OCI | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Foreign exchange contracts | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Interest rate swaps | ( | ) | ( | ) | ||||||||||||
$ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings | Gain (Loss) Reclassified from Accumulated OCI into Earnings | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Foreign exchange contracts | Cost of sales | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Interest rate swaps | Net interest expense | ||||||||||||||||
$ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Location of Gain (Loss) Recognized in Earnings | Gain (Loss) Recognized in Earnings | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Foreign exchange contracts | Other expense, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
$ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
• | statements regarding our business strategy and any other business plans, forecasts or objectives, any or all of which are subject to change; |
• | statements regarding projections of revenues, gross margins, expenses, earnings or losses, working capital, debt and liquidity, or other financial items; |
• | statements regarding our backlog and commercial contracts and rates thereunder; |
• | statements regarding our ability to enter into and/or perform commercial contracts, including the scope, timing and outcome of those contracts; |
• | statements regarding the acquisition, construction, completion, upgrades to or maintenance of vessels, systems or equipment and any anticipated costs or downtime related thereto, including the construction, completion and mobilization of the Q7000; |
• | statements regarding any financing transactions or arrangements, or our ability to enter into such transactions or arrangements; |
• | statements regarding potential legislative, governmental, regulatory, administrative or other public body actions, requirements, permits or decisions; |
• | statements regarding our trade receivables and their collectability; |
• | statements regarding potential developments, industry trends, performance or industry ranking; |
• | statements regarding general economic or political conditions, whether international, national or in the regional or local markets in which we do business; |
• | statements regarding our ability to retain our senior management and other key employees; |
• | statements regarding the underlying assumptions related to any projection or forward-looking statement; and |
• | any other statements that relate to non-historical or future information. |
• | the impact of domestic and global economic conditions and the future impact of such conditions on the oil and gas industry and the demand for our services; |
• | the impact of oil and gas price fluctuations and the cyclical nature of the oil and gas industry; |
• | the impact of any potential cancellation, deferral or modification of our work or contracts by our customers; |
• | the ability to effectively bid and perform our contracts, including the impact of equipment problems or failure; |
• | the impact of the imposition by our customers of rate reductions, fines and penalties with respect to our operating assets; |
• | unexpected future capital expenditures, including the amount and nature thereof; |
• | the effectiveness and timing of completion of our vessel and/or system upgrades and major maintenance items; |
• | unexpected delays in the delivery, chartering or customer acceptance, and terms of acceptance, of our assets; |
• | the effects of our indebtedness and our ability to reduce capital commitments; |
• | the results of our continuing efforts to control costs and improve performance; |
• | the success of our risk management activities; |
• | the effects of competition; |
• | the availability of capital (including any financing) to fund our business strategy and/or operations; |
• | the impact of current and future laws and governmental regulations, including tax and accounting developments, such as the 2017 Tax Act; |
• | the impact of the U.K. to potentially exit the European Union, known as Brexit, on our business, operations and financial condition, which is unknown at this time; |
• | the effect of adverse weather conditions and/or other risks associated with marine operations; |
• | the impact of foreign currency exchange controls and exchange rate fluctuations; |
• | the effectiveness of our current and future hedging activities; |
• | the potential impact of a loss of one or more key employees; and |
• | the impact of general, market, industry or business conditions. |
• | worldwide economic activity and general economic and business conditions, including available access to global capital and capital markets; |
• | the global supply and demand for oil and natural gas; |
• | political and economic uncertainty and geopolitical unrest, including regional conflicts and economic and political conditions in the Middle East and other oil-producing regions; |
• | actions taken by the Organization of Petroleum Exporting Countries; |
• | the availability and discovery rate of new oil and natural gas reserves in offshore areas; |
• | the exploration and production of onshore shale oil and natural gas; |
• | the cost of offshore exploration for and production and transportation of oil and natural gas; |
• | the level of excess production capacity; |
• | the ability of oil and gas companies to generate funds or otherwise obtain external capital for capital projects and production operations; |
• | the sale and expiration dates of offshore leases in the United States and overseas; |
• | technological advances affecting energy exploration, production, transportation and consumption; |
• | potential acceleration of the development of alternative fuels; |
• | shifts in end-customer preferences toward fuel efficiency and the use of natural gas; |
• | weather conditions and natural disasters; |
• | environmental and other governmental regulations; and |
• | domestic and international tax laws, regulations and policies. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 16,823 | $ | 17,784 | $ | 18,141 | $ | 15,224 | |||||||
Adjustments: | |||||||||||||||
Income tax provision | 2,876 | 298 | 3,200 | 385 | |||||||||||
Net interest expense | 2,205 | 3,599 | 4,303 | 7,495 | |||||||||||
Loss on extinguishment of long-term debt | 18 | 76 | 18 | 1,181 | |||||||||||
Other expense, net | 1,311 | 3,441 | 145 | 2,516 | |||||||||||
Depreciation and amortization | 28,003 | 27,877 | 56,512 | 55,659 | |||||||||||
EBITDA | 51,236 | 53,075 | 82,319 | 82,460 | |||||||||||
Adjustments: | |||||||||||||||
Realized losses from foreign exchange contracts not designated as hedging instruments | (912 | ) | (806 | ) | (1,781 | ) | (1,496 | ) | |||||||
Other than temporary loss on note receivable | — | — | — | (1,129 | ) | ||||||||||
Adjusted EBITDA | $ | 50,324 | $ | 52,269 | $ | 80,538 | $ | 79,835 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | $ | 32,561 | $ | 87,666 | |||
Less: Capital expenditures, net of proceeds from sale of assets | (24,933 | ) | (41,969 | ) | |||
Free cash flow | $ | 7,628 | $ | 45,697 |
Three Months Ended June 30, | Increase/ (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
Net revenues — | ||||||||||||||
Well Intervention | $ | 159,074 | $ | 161,759 | $ | (2,685 | ) | (2 | )% | |||||
Robotics | 45,446 | 39,060 | 6,386 | 16 | % | |||||||||
Production Facilities | 15,621 | 16,343 | (722 | ) | (4 | )% | ||||||||
Intercompany eliminations | (18,413 | ) | (12,537 | ) | (5,876 | ) | ||||||||
$ | 201,728 | $ | 204,625 | $ | (2,897 | ) | (1 | )% | ||||||
Gross profit (loss) — | ||||||||||||||
Well Intervention | $ | 30,237 | $ | 38,033 | $ | (7,796 | ) | (20 | )% | |||||
Robotics | 5,137 | (1,485 | ) | 6,622 | (3) | |||||||||
Production Facilities | 4,900 | 6,994 | (2,094 | ) | (30 | )% | ||||||||
Corporate, eliminations and other | (340 | ) | (645 | ) | 305 | |||||||||
$ | 39,934 | $ | 42,897 | $ | (2,963 | ) | (7 | )% | ||||||
Gross margin — | ||||||||||||||
Well Intervention | 19% | 24% | ||||||||||||
Robotics | 11% | (4)% | ||||||||||||
Production Facilities | 31% | 43% | ||||||||||||
Total company | 20% | 21% | ||||||||||||
Number of vessels or robotics assets (1) / Utilization (2) | ||||||||||||||
Well Intervention vessels | 6/94% | 6/88% | ||||||||||||
Robotics assets | 51/41% | 55/38% | ||||||||||||
Chartered robotics vessels | 4/92% | 5/70% |
(1) | Represents the number of vessels or robotics assets as of the end of the period, including vessels under both short-term and long-term charters, and excluding acquired vessels prior to their in-service dates and vessels disposed of and/or taken out of service. |
(2) | Represents the average utilization rate, which is calculated by dividing the total number of days the vessels or robotics assets generated revenues by the total number of available calendar days in the applicable period. The average utilization rates of chartered robotics vessels during the three-month periods ended June 30, 2019 and 2018 include 24 and 54 spot vessel days, respectively, at near full utilization. |
(3) | Percent calculation not meaningful. |
Three Months Ended June 30, | Increase/ (Decrease) | ||||||||||
2019 | 2018 | ||||||||||
Well Intervention | $ | 9,812 | $ | 4,215 | $ | 5,597 | |||||
Robotics | 8,601 | 8,322 | 279 | ||||||||
$ | 18,413 | $ | 12,537 | $ | 5,876 |
Six Months Ended June 30, | Increase/ (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
Net revenues — | ||||||||||||||
Well Intervention | $ | 281,305 | $ | 291,328 | $ | (10,023 | ) | (3 | )% | |||||
Robotics | 84,487 | 66,229 | 18,258 | 28 | % | |||||||||
Production Facilities | 30,874 | 32,664 | (1,790 | ) | (5 | )% | ||||||||
Intercompany eliminations | (28,115 | ) | (21,334 | ) | (6,781 | ) | ||||||||
$ | 368,551 | $ | 368,887 | $ | (336 | ) | — | % | ||||||
Gross profit (loss) — | ||||||||||||||
Well Intervention | $ | 43,747 | $ | 55,721 | $ | (11,974 | ) | (21 | )% | |||||
Robotics | 3,548 | (13,383 | ) | 16,931 | 127 | % | ||||||||
Production Facilities | 9,671 | 14,451 | (4,780 | ) | (33 | )% | ||||||||
Corporate, eliminations and other | (778 | ) | (909 | ) | 131 | |||||||||
$ | 56,188 | $ | 55,880 | $ | 308 | 1 | % | |||||||
Gross margin — | ||||||||||||||
Well Intervention | 16% | 19% | ||||||||||||
Robotics | 4% | (20)% | ||||||||||||
Production Facilities | 31% | 44% | ||||||||||||
Total company | 15% | 15% | ||||||||||||
Number of vessels or robotics assets (1) / Utilization (2) | ||||||||||||||
Well Intervention vessels | 6/84% | 6/80% | ||||||||||||
Robotics assets | 51/40% | 55/34% | ||||||||||||
Chartered robotics vessels | 4/90% | 5/63% |
(1) | Represents the number of vessels or robotics assets as of the end of the period, including vessels under both short-term and long-term charters, and excluding acquired vessels prior to their in-service dates and vessels disposed of and/or taken out of service. |
(2) | Represents the average utilization rate, which is calculated by dividing the total number of days the vessels or robotics assets generated revenues by the total number of available calendar days in the applicable period. The average utilization rates of chartered robotics vessels during the six-month periods ended June 30, 2019 and 2018 include 108 and 96 spot vessel days, respectively, at near full utilization. |
Six Months Ended June 30, | Increase/ (Decrease) | ||||||||||
2019 | 2018 | ||||||||||
Well Intervention | $ | 13,037 | $ | 6,167 | $ | 6,870 | |||||
Robotics | 15,078 | 15,167 | (89 | ) | |||||||
$ | 28,115 | $ | 21,334 | $ | 6,781 |
June 30, 2019 | December 31, 2018 | ||||||
Net working capital | $ | 157,308 | $ | 259,440 | |||
Long-term debt (1) | 307,455 | 393,063 | |||||
Liquidity (2) | 432,489 | 426,813 |
(1) | Long-term debt does not include the current maturities portion of our long-term debt as that amount is included in net working capital. Long-term debt is also net of unamortized debt discount and debt issuance costs. See Note 6 for information relating to our long-term debt. |
(2) | Liquidity, as defined by us, is equal to cash and cash equivalents plus available capacity under the Revolving Credit Facility, which capacity is reduced by letters of credit drawn against that facility. Our liquidity at June 30, 2019 included cash and cash equivalents of $261.1 million and $171.3 million of available borrowing capacity under the Revolving Credit Facility (Note 6). Our liquidity at December 31, 2018 included cash and cash equivalents of $279.5 million and $147.4 million of available borrowing capacity under our then-existing revolving credit facility. |
June 30, 2019 | December 31, 2018 | ||||||
Term Loan (previously scheduled to mature June 2020) | $ | — | $ | 33,321 | |||
Term Loan (matures December 2021) | 34,523 | — | |||||
Nordea Q5000 Loan (matures April 2020) | 106,506 | 123,980 | |||||
MARAD Debt (matures February 2027) | 63,300 | 66,443 | |||||
2022 Notes (mature May 2022) (1) | 113,950 | 112,192 | |||||
2023 Notes (mature September 2023) (2) | 106,209 | 104,379 | |||||
Total debt | $ | 424,488 | $ | 440,315 |
(1) | The 2022 Notes will increase to their face amount through accretion of the debt discount through May 1, 2022. |
(2) | The 2023 Notes will increase to their face amount through accretion of the debt discount through September 15, 2023. |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash provided by (used in): | |||||||
Operating activities | $ | 32,561 | $ | 87,666 | |||
Investing activities | (29,014 | ) | (41,969 | ) | |||
Financing activities | (22,469 | ) | (22,963 | ) |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Capital expenditures: | |||||||
Well Intervention | $ | (26,621 | ) | $ | (41,756 | ) | |
Robotics | (139 | ) | (64 | ) | |||
Production Facilities | (109 | ) | (104 | ) | |||
Other | (589 | ) | (45 | ) | |||
STL acquisition, net | (4,081 | ) | — | ||||
Proceeds from sale of assets | 2,525 | — | |||||
Net cash used in investing activities | $ | (29,014 | ) | $ | (41,969 | ) |
Total (1) | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | |||||||||||||||
Term Loan | $ | 35,000 | $ | 3,500 | $ | 31,500 | $ | — | $ | — | |||||||||
Nordea Q5000 Loan | 107,143 | 107,143 | — | — | — | ||||||||||||||
MARAD Debt | 67,081 | 7,027 | 15,124 | 16,672 | 28,258 | ||||||||||||||
2022 Notes (2) | 125,000 | — | 125,000 | — | — | ||||||||||||||
2023 Notes (3) | 125,000 | — | — | 125,000 | — | ||||||||||||||
Interest related to debt (4) | 60,955 | 20,079 | 29,257 | 9,707 | 1,912 | ||||||||||||||
Property and equipment (5) | 86,074 | 85,768 | 306 | — | — | ||||||||||||||
Operating leases (6) | 452,755 | 118,039 | 198,346 | 128,283 | 8,087 | ||||||||||||||
Total cash obligations | $ | 1,059,008 | $ | 341,556 | $ | 399,533 | $ | 279,662 | $ | 38,257 |
(1) | Excludes unsecured letters of credit outstanding at June 30, 2019 totaling $3.7 million. These letters of credit may be issued to support various obligations, such as contractual obligations, contract bidding and insurance activities. |
(2) | Notes mature in May 2022. The 2022 Notes can be converted prior to their stated maturity if the closing price of our common stock for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds $18.06 per share, which is 130% of the conversion price. At June 30, 2019, the conversion trigger was not met. See Note 6 for additional information. |
(3) | Notes mature in September 2023. The 2023 Notes can be converted prior to their stated maturity if the closing price of our common stock for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds $12.31 per share, which is 130% of the conversion price. At June 30, 2019, the conversion trigger was not met. See Note 6 for additional information. |
(4) | Interest payment obligations were calculated using stated coupon rates for fixed rate debt and interest rates applicable at June 30, 2019 for variable rate debt. |
(5) | Primarily reflects costs associated with the Q7000, which is currently under completion (Note 14). |
(6) | Operating leases include vessel charters and facility and equipment leases. At June 30, 2019, our commitment related to long-term vessel charters totaled approximately $410.8 million, of which $173.9 million is related to the non-lease (services) components that are not included in operating lease liabilities on our balance sheet. |
Period | (a) Total number of shares purchased (1) | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced program | (d) Maximum number of shares that may yet be purchased under the program (2) | |||||||||
April 1 to April 30, 2019 | — | $ | — | — | 4,668,594 | ||||||||
May 1 to May 31, 2019 | 64,262 | 7.82 | — | 4,668,594 | |||||||||
June 1 to June 30, 2019 | — | — | — | 4,668,594 | |||||||||
64,262 | $ | 7.82 | — |
(1) | Includes shares forfeited in satisfaction of tax obligations upon vesting of restricted shares. |
(2) | Under the terms of our stock repurchase program, the issuance of shares to members of our Board and to certain employees, including shares issued under the ESPP to participating employees (Note 11), increases the number of shares available for repurchase. For additional information regarding our stock repurchase program, see Note 9 to our 2018 Form 10-K. |
Exhibit Number | Description | Filed or Furnished Herewith or Incorporated by Reference from the Following Documents (Registration or File Number) | ||
3.1 | ||||
3.2 | ||||
4.1 | ||||
10.1 | ||||
10.2 | ||||
10.3 | ||||
10.4 | ||||
31.1 | ||||
31.2 | ||||
32.1 | ||||
101.INS | XBRL Instance Document. | The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||
101.SCH | XBRL Schema Document. | Filed herewith | ||
101.CAL | XBRL Calculation Linkbase Document. | Filed herewith | ||
101.PRE | XBRL Presentation Linkbase Document. | Filed herewith | ||
101.DEF | XBRL Definition Linkbase Document. | Filed herewith | ||
101.LAB | XBRL Label Linkbase Document. | Filed herewith |
HELIX ENERGY SOLUTIONS GROUP, INC. (Registrant) | ||||
Date: | July 26, 2019 | By: | /s/ Owen Kratz | |
Owen Kratz President and Chief Executive Officer (Principal Executive Officer) | ||||
Date: | July 26, 2019 | By: | /s/ Erik Staffeldt | |
Erik Staffeldt Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
HELIX ENERGY SOLUTIONS GROUP, INC. | JOHNSON | ||||
By: | /s/ Owen Kratz | /s/ Alisa Johnson | |||
Name: | Owen Kratz | Alisa Johnson | |||
Title: | President and Chief Executive Officer |
1. | Purpose. The purpose of this Agreement is to set forth the terms and conditions of Executive’s employment with the Company. This Agreement represents both Parties’ intentions with respect to the terms and conditions of Executive’s employment with the Company. |
2. | Definitions. For the purposes of this Agreement, the following words shall have the following meanings: |
(a) | “Affiliate” means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another Person. The term “control” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. With respect to any amount under this Agreement that is deferred compensation subject to Code Section 409A, for the purposes of Code Section 409A only, Affiliate shall mean all Persons with whom the Company would be considered a single employer under Code Section 414(b) or 414(c) and for the purposes of a Separation from Service (as defined in Section 2(o)) and determining the controlled group but using fifty percent (50%) instead of eighty percent (80%) pursuant to Treasury Regulation § 1.409A-1(h)(3). |
(b) | “AICP” or “Annual Incentive Compensation Plan” means any Company annual incentive compensation cash bonus plan in which Executive participates, as in effect from time to time. |
(c) | “Annual Cash Compensation” means, with respect to a Change in Control, the sum of (i) the amount of Executive’s Base Annual Salary for the year in which the Change in Control occurs and (ii) the target AICP bonus which could be payable to Executive |
(d) | “Base Annual Salary” means Executive’s base annual salary as described in Section 5(a) hereof. |
(e) | “Board” means the board of directors of the Company. |
(f) | “Cause” means in connection with a termination of Executive’s employment by the Company: (i) embezzlement or theft by Executive of any property of the Company or its Affiliates; (ii) any breach by Executive of any material provision of this Agreement; (iii) any act by Executive constituting a felony or otherwise involving theft, fraud, gross dishonesty, or moral turpitude; (iv) negligence or willful misconduct on the part of Executive in the performance of his duties as an employee, officer, or director of the Company or its Affiliates; (v) Executive’s breach of his fiduciary obligations to the Company or its Affiliates; (vi) Executive’s material violation or breach of the policies or procedures of the Company and its Affiliates (including but not limited to blackout periods for trading Common Stock); or (vii) any chemical dependence of Executive which adversely affects the performance of his duties and responsibilities to the Company or its Affiliates. |
(g) | “Change in Control” means a “Change in Control Event” within the meaning of Treasury Regulation § 1.409A-3(i)(5) and described in paragraphs (i), (ii) or (iii) below or any combination thereof as permitted in the Treasury Regulations with respect to the Company: |
(i) | A change in ownership that occurs when one person or a group (as determined for the purposes of Code Section 409A) acquires stock that, combined with stock previously owned, controls more than fifty percent (50%) of the value or voting power of the stock of the Company (incremental increases in ownership by a person or group that already owns fifty percent (50%) of the Company prior to such increase do not result in a change in ownership); |
(ii) | A change in effective control that occurs on the date that, during any 12-month period, either (x) any person or group acquires stock possessing forty-five percent (45%) or more of the voting power of the Company, or (y) the majority of the Board (or, if applicable, the board of directors of the Company’s ultimate parent) is replaced by persons whose appointment or election is not endorsed by a majority of the Board (or, if applicable, the board of directors of such ultimate parent) prior to the date of the appointment or election; or |
(iii) | A change in ownership of a substantial portion of the assets that occurs on the date that a person or a group acquires, during any 12-month period, assets of the Company having a total gross fair market value equal to eighty-five percent (85%) or more of the total gross fair market value of all of the Company’s assets; provided, however, that there is no change in control event under this paragraph (iii) when there is a transfer to: (w) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; (x) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company immediately after the asset transfer; (y) a person, or more than one person acting as a group, that owns immediately after the asset transfer, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company; or (z) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in item (y) within the meaning of Code Section 409A. For the purposes of this paragraph (iii), “gross fair market value” shall have the meaning as provided in Code Section 409A. |
(h) | “Code” means the Internal Revenue Code of 1986, as amended. |
(i) | “Common Stock” means common stock, no par value, of the Company, or any successor security issued in lieu thereof. |
(j) | “Compensation Committee” means the compensation committee of the Board. |
(k) | “Confidential Information” means information (i) disclosed to or known by Executive as a consequence of or through his employment with the Company; (ii) not generally known outside the Company; and (iii) which relates to any aspect of the Company, its Affiliates or their business, research, or development. “Confidential Information” includes, but is not limited to, the Company’s and its Affiliate’s trade secrets, proprietary information, business plans, marketing plans, financial information, compensation and benefit information, cost and pricing information, customer contacts, suppliers, vendors, and information provided to the Company or its Affiliates by a third party under restrictions against disclosure or use by the Company, its Affiliates or others. |
(l) | “Conflict of Interest” means any activity which might adversely affect the Company or its Affiliates, including ownership of a material interest in any supplier, contractor, distributor, subcontractor, customer, or other entity with which the Company or its Affiliates does business. |
(m) | “Copyright Works” means materials for which copyright protection may be obtained including, but not limited to: literary works (including all written material), computer programs, artistic and graphic works (including designs, graphs, drawings, blueprints, and other works), recordings, models, photographs, slides, motion pictures, and audio‑visual works, regardless of the form or manner in which documented or recorded. |
(n) | “Company” means Helix Energy Solutions Group, Inc., a Minnesota corporation. |
(o) | “Date of Termination” means the date of termination of Executive’s employment by the Company and that is a “Separation from Service” within the meaning of Code Section 409A, which means a termination of Executive’s employment with the Company (and its controlled group within the meaning of Treasury Regulation § 1.409A-1(h)(3)) in accordance with the Company’s policies and procedures; provided, however, that the Company and Executive reasonably anticipate that no further services will be performed after the termination date or that the level of bona fide services Executive will perform after such date (whether as an employee or an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period or the full period of service to the Company if Executive has been providing services to the Company for less than 36 months. As used in this Agreement, references to termination of the Executive’s employment shall mean Executive’s “Separation from Service” within the meaning of Code Section 409A. |
(p) | “Disability” or “Disabled” means any physical or mental incapacity, disease or affliction, as determined by a legally qualified medical practitioner selected by the Company which prevents Executive to a substantial degree from performing his obligations after reasonable accommodation from the Company. |
(q) | “Effective Date” means May 1, 2019. |
(r) | “Equity-Based Awards” means stock options, restricted stock, restricted stock units, performance vesting stock, performance stock units, and any other award granted by the Company, which derives its value based upon the Common Stock, regardless whether such award is ultimately intended to be settled in stock or cash. |
(s) | “Good Reason” means, in connection with a termination of employment by Executive, the occurrence of any of the following without Executive’s written consent (except in connection with the termination of employment of Executive by the Company for Cause or Disability): |
(i) | a material diminution in Executive’s Base Annual Salary; |
(ii) | a material diminution in Executive’s authority, duties, or responsibilities; |
(iii) | a material change in geographic location at which Executive must perform the services; or |
(iv) | any other action or inaction that constitutes a material breach by the Company of the terms of this Agreement. |
(t) | “Inventions” means inventions (whether patentable or not), discoveries, improvements, designs, and ideas (whether or not shown or described in writing or reduced to practice) including, and in addition to any such Confidential Information or Copyright Works. |
(u) | “LTIP” or “Long Term Incentive Plan” means the Company’s 2005 Long-Term Incentive Plan (as amended and restated effective January 1, 2017) or other long-term incentive plan of the Company pursuant to which Executive receives Equity Based Awards, as in effect from time to time. |
(v) | “Person” means, for the purposes of the term Affiliate in Section 2(a) hereof, and as used in Section 7(e) hereof, any individual, partnership, corporation, limited liability company, group, trust or other legal entity. |
(w) | “Retirement” means a termination of Executive’s employment under circumstances as shall constitute retirement from the Company based on age and/or years of employment, as determined by the Board, in its sole discretion, in accordance with written policies adopted by the Board from time to time; in absence of the adoption of such policy, Executive’s resignation on or after attainment of age 65 shall be deemed to be “Retirement” for purposes of this Agreement. |
3. | Duration. This Agreement shall become effective on the Effective Date and shall terminate on the second (2nd) anniversary of the Effective Date, unless earlier terminated as hereinafter provided, provided that commencing on the second anniversary date of the Effective Date and each second anniversary date thereafter, the term of this Agreement shall automatically be extended for two additional years unless, no later than ninety (90) days prior to the applicable anniversary date, the Company or Executive shall give written notice to the other that it or he, respectively, does not wish to extend the term of this Agreement, in which case this Agreement shall terminate on the applicable anniversary date. |
4. | Duties and Responsibilities. Commencing on the Effective Date, Executive shall diligently render his services to the Company as Senior Vice President, General Counsel and Corporate Secretary in a manner customary for such officers or equivalent positions and in accordance with the Company’s directives, and shall use his best efforts and good faith in fulfilling such responsibilities and in accomplishing such directives. Executive agrees to devote his full-time efforts, abilities, and attention to the business of the Company, and shall not engage in any activities which will interfere with such efforts. Executive shall well and faithfully serve the Company during the continuance of his employment hereunder and shall use his best efforts to promote the interests of the Company. Executive’s principal place of employment will be at the Company’s corporate headquarters in Houston, Texas. Executive hereby acknowledges that he is a fiduciary with respect to the Company and its Affiliates and shall act in accordance and otherwise comply with his fiduciary obligation to the Company and its Affiliates. |
5. | Compensation and Benefits. In return for the services to be provided by Executive pursuant to this Agreement, the Company agrees to pay Executive as follows: |
(a) | Base Annual Salary. Executive shall receive a Base Annual Salary annually of $300,000 payable every two weeks, subject to deduction of statutorily required amounts, including but not limited to, withholding for federal, state and local income taxes, and amounts payable by employees of the Company for employee benefits. The annual salary to be paid by the Company to Executive shall be reviewed at least annually and may from time to time be increased (but may not be decreased) as approved by the Company (any such increased amount shall then be referred to as “Base Annual Salary” for the purposes of this Agreement). |
(b) | Annual Incentive Compensation Plan. Executive shall be eligible to receive an Annual Incentive Compensation Plan bonus, with the components, target and maximum amounts based on a percentage of Executive’s Base Annual Salary, each as determined by the Board or Compensation Committee, in its sole discretion, subject to the terms of the AICP. Subject to the foregoing, a portion of the annual AICP bonus may be based upon the Company’s financial performance and a portion of the AICP may be based upon achievement of Executive’s individual performance objectives, all as may be determined by the Board or Compensation Committee, in its sole discretion. For 2019, Executive’s target bonus shall be prorated such that prior to Executive’s being elected as Senior Vice President, General Counsel and Corporate Secretary, Executive’s target bonus shall be 75% of his then base annual salary, and with respect from the period of time during 2019 that Executive has served as the Company’s Senior Vice President, General Counsel and Corporate Secretary, Executive’s target bonus shall be 100% of his Base Annual Salary set forth in Section 5(a) above. AICP bonuses for each calendar year shall be payable in the following calendar year as determined by the Board or Compensation Committee; provided, however, that payment, if any, shall be made no later than March 15th of such following year. |
(c) | Long Term Incentive Plan. As a senior management executive of the Company, Executive shall participate annually in the Long Term Incentive Plan as determined by and on such terms approved by the Company, the Board or the Compensation Committee, in its sole discretion. The LTIP may include stock options, restricted stock, restricted stock units and/or other types of compensation. |
(d) | Benefits. Executive shall be entitled to participate in the Company’s various employee benefit plans as the same may be constituted from time to time, including without limitation, the Company’s 401(k) plan, in the same manner as other senior management executives of the Company, subject to the terms and conditions of the plans, as same may be amended or terminated pursuant to their terms from time to time as determined by the Company in its sole discretion. |
(e) | Expenses. Executive shall be reimbursed by the Company for all reasonable business expenses incurred by Executive in performance of his duties hereunder upon the submission of appropriate vouchers, bills or receipts for such expenses in accordance with the Company’s policy, and upon Executive’s reasonable documentation of such expenses, the expenses shall be paid in a cash lump sum payment as soon as reasonably practicable, but in no event later than March 15th of the calendar year following the calendar year in which the expenses are incurred. |
(f) | Vacation. Executive will be provided four (4) weeks’ paid vacation in each calendar year, to be accrued at a prorata monthly rate, and additional paid holidays and similar rights and privileges as are enjoyed generally by Company’s senior management executives. Vacation shall be subject to the Company’s policy and vacation days must be taken in accordance with the Company’s policy for senior management executives, as may be amended from time to time. |
6. | Termination. |
(a) | Death, Disability or Retirement. The Company may terminate Executive’s employment if he is Disabled for six (6) consecutive months or for a total of six (6) months during any 12-month period. Executive’s employment will be automatically terminated upon his death or Retirement. |
(b) | Termination for Cause. The Company may terminate Executive’s employment immediately for Cause by written notice to Executive. |
(c) | Termination Without Cause. The Company may terminate Executive’s employment without Cause and for any reason upon written notice to Executive. |
(d) | Termination by Executive Without Good Reason. Executive may terminate his employment upon 30 days’ written notice to the Company. In the event Executive terminates his employment in this manner, he shall remain in the Company’s employ subject to all terms and conditions of this Agreement for the entire 30-day period unless instructed otherwise by the Company in writing. |
(e) | Termination by Executive for Good Reason. Executive may terminate his employment for “Good Reason” by giving the Company advance written notice of such intent and the grounds thereof within a period not to exceed 30 days after the existence of the event constituting Good Reason. After Executive gives such notice, the Company shall have 30 days to correct the Good Reason event, and if the Company does not correct the Good Reason event within the prescribed time, Executive must terminate his employment within 61 days of the date of the event constituting Good Reason in order to be entitled to any benefits under Section 7(d) of this Agreement. In addition, once an event constitutes Good Reason, if the Company does not correct the event and if Executive does not give notice (as described above) and terminate his employment within 61 days of the event, such specific instance of the event shall no longer constitute Good Reason under this Agreement. |
(f) | Resignation of All Positions. Executive agrees that after any termination of his employment, he will tender his resignation from any position he may hold as an officer or director of the Company or any Affiliate or otherwise associated companies. |
7. | Severance and Change in Control Payments and Benefits. Executive shall be entitled to the following compensation under the following circumstances: |
(a) | Death, Disability or Retirement. In the event Executive’s employment is terminated as a result of his death, Disability or Retirement, Executive’s rights under any Equity-Based Awards or other compensation rights or awards shall be determined in accordance with the controlling plan documents and award agreements and his unpaid Base Annual Salary shall be paid through the Date of Termination in accordance with the Company’s normal payroll practices. Any unpaid AICP bonus for a calendar year preceding the calendar year of Executive’s Date of Termination shall be paid when the AICP bonus for other participants is paid but in no event later than March 15th of the calendar year following the end of the calendar year of the applicable AICP bonus. Executive’s award under any AICP to which he would otherwise be entitled in the calendar year of his Date of Termination shall be prorated for the period of his participation in the AICP during the relevant calendar year, and payable at the same time other participants in the AICP receive payment but in no event later than March 15th of the calendar year following the calendar year of the Date of Termination. Executive shall be reimbursed for all expenses incurred and in accordance with Section 5(f); Executive shall be paid all accrued unused vacation in accordance with the Company’s vacation policy, as amended from time to time, and Executive shall be entitled to all benefits under Section 5(d) subject to the terms and conditions of the applicable plan documents and arrangements, as amended from time to time. |
(b) | Termination for Cause or Resignation of Executive Without Good Reason. If Executive is terminated by the Company for Cause or if Executive resigns or otherwise terminates without Good Reason, no AICP bonus for the calendar year of his Date of Termination will be paid, all other benefits and rights, including Equity-Based Awards shall be determined under the then governing plans and award agreements, and his unpaid Base Annual Salary shall be paid through to the Date of Termination in accordance with the Company’s normal payroll practices. Any unpaid AICP bonus for a calendar year preceding the calendar year of Executive’s Date of Termination shall be paid in accordance with the terms of the applicable AICP and when the AICP bonus for other participants is paid but in no event later than March 15th of the calendar year following the end of the calendar year of the applicable AICP bonus. Executive shall be reimbursed for all expenses incurred and in accordance with Section 5(e); Executive shall be paid all accrued unused vacation in accordance with the Company’s vacation policy, as amended from time to time, and Executive shall be entitled to all benefits under Section 5(d) subject to the terms and conditions of the applicable plan documents and arrangements, as amended from time to time. |
(c) | Termination Without Cause. In the event Executive’s employment with the Company is terminated by the Company without Cause, the Company shall pay Executive an amount equal to his Base Annual Salary for the year in which the termination occurs in a lump sum cash payment as soon as administratively feasible following the Date of Termination but no later than 70 days after the Date of Termination (subject to Section 7(h)). There shall be an automatic acceleration of the vesting of any Equity-Based Awards granted to Executive by the Company that were scheduled to vest by their terms within 12 months following the Date of Termination, and to the extent the provisions of this Section 7(c) change the terms of such Equity-Based Awards held by Executive now or in the future, this Section 7(c) shall be deemed an amendment to the agreement between Company and Executive setting forth the terms of such awards and shall form part of such agreement. Except as provided in the previous sentence, Executive’s rights under any Equity-Based Awards or other compensation rights or awards shall be determined according to the controlling plan documents and award agreements, and the benefits provided in this Section 7(c) regarding Executive’s Equity-Based Awards shall be in addition to, and not in limitation of, the value or benefit of any Equity-Based Awards, the exercisability, vesting or payment of which is accelerated or otherwise enhanced pursuant to the terms of the LTIP or agreement heretofore or hereafter adopted between Executive and the Company regarding Equity-Based Awards granted to Executive. Executive’s unpaid Base Annual Salary shall be paid through his Date of Termination in accordance with the Company’s normal payroll practices. Any unpaid AICP bonus for a year preceding the calendar year of Executive’s Date of Termination shall be paid when the AICP bonus for other participants is paid but in no event later than March 15th of the calendar year following the end of the calendar year of the applicable AICP bonus. In addition, the Company shall pay Executive his award under any AICP for the calendar year of his Date of Termination (a) calculated on the basis of the Company and Executive having fully met all performance criteria (financial, personal or otherwise) for a target bonus (which will not include any multiplier that may be applicable to result in a maximum bonus), (b) paid on the basis of a deemed 12-month calendar year participation in the plan, and (c) payable at the same time other participants in the plan receive payment but no later than March 15th of the calendar year following the end of the calendar year of the Date of Termination. Executive shall be reimbursed for all expenses incurred and in accordance with Section 5(e); Executive shall be paid all accrued unused vacation in accordance with the Company’s vacation policy, as amended from time to time, and Executive shall be entitled to all benefits under Section 5(d) subject to the terms and conditions of the applicable plan documents and arrangements, as amended from time to time. |
(d) | Termination by Executive for Good Reason. In the event that Executive terminates his employment with the Company for Good Reason, the Company shall pay Executive an amount equal to his Base Annual Salary for the year in which termination occurs in a lump sum cash payment as soon as administratively feasible following the Date of Termination but no later than 70 days after the Date of Termination (subject to Section 7(h)). There shall be an automatic acceleration of the vesting of any Equity-Based Awards granted to Executive by the Company that were scheduled to vest by their terms within 12 months following the Date of Termination, and to the extent the provisions of this Section 7(d) change the terms |
(e) | Change in Control. Notwithstanding the foregoing subsections (a) - (d) of this Section 7 and in lieu thereof, if within the period beginning with the date of a Change in Control and continuing through the second anniversary thereof, the Company terminates Executive’s employment without Cause or Executive terminates his employment for Good Reason, then: |
(i) | The Company shall pay Executive as soon as administratively feasible after the date of the Change in Control but no later than 70 days following the date of the Change in Control a lump sum cash amount equal to two (2) times Executive’s Annual Cash Compensation; |
(ii) | Executive’s rights under any Equity-Based Awards or other compensation rights, benefits or awards shall be as provided in the governing plan and/or award agreements (subject to paragraph (iv) below); |
(iii) | Any unpaid AICP bonus for a calendar year preceding the calendar year of the Change in Control shall be paid when the AICP bonus for other participants is paid but in no event later than March 15th of the calendar year following the end of the calendar year of the applicable AICP bonus; |
(iv) | Notwithstanding the provision of any agreement to the contrary, the Company shall cause all of Executive’s existing unvested Equity-Based Awards to be accelerated and vested immediately as of the date of the Change in Control and payment or issuance of shares of Common Stock shall be made pursuant to the applicable plans and/or award agreements (for the avoidance of doubt, the benefits provided for in this Section 7(e)(iv) regarding Executive’s Equity-Based Awards shall be in addition to, and not in limitation of, the value or benefit of any Equity-Based Awards, the exercisability, vesting or payment of which is accelerated or otherwise enhanced pursuant to the terms of the LTIP or other agreement heretofore or hereafter adopted between Executive and the Company regarding Equity-Based Awards granted to Executive). |
(v) | Executive shall be promptly reimbursed all reasonable business expenses incurred by him upon reasonable documentation and in accordance with Company policy prior to the date of the Change in Control to be paid no later than March 15th following the end of the calendar year in which the expenses were incurred; |
(vi) | Company shall pay a lump sum amount equal to the cost of continuation of group health coverage under COBRA for a period of 18 months based upon the rates of such COBRA coverage for the coverage as in effect for Executive (and his dependents, if applicable) on the date of the Change in Control to be paid in a cash lump sum payment at the same time payment under Section 7(e)(i)is made; |
(vii) | If any payments are payable under this Section 7(e), in no event will any amounts be paid or payable under Section 7(a)-(d). |
(f) | Release of All Claims. In order to receive any payments (other than any unpaid Base Annual Salary and accrued vacation through to his Date of Termination, if applicable) pursuant to Section 7(c) or (d), Executive shall first be required to execute and return a release in a form and substance satisfactory to the Company which releases the Company and its Affiliates, and their officers, employees, and directors and any employee benefit plan (and any other Company related person as specified in the release) (the “Company Group”) of any claims which Executive may have as against the Company Group and such release must be effective and not revoked within the time prescribed in the release and the release must be returned and effective within the time period specified by the Company in the release but in no event later than 60 days after Executive’s Date of Termination if payments are made pursuant to Section 7(c) or (d). |
(g) | No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment or other benefit required to be paid to Executive pursuant to this Agreement, whether by seeking other employment or otherwise, nor shall the amount of any such payment or other benefit be reduced on account of any compensation earned by Executive as a result of employment. The Company’s obligation to make the payments provided for in this Agreement (including, but not limited to, the payments under Section 7(c), (d) or (e)), and otherwise perform its obligations hereunder shall not be affected by any counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others, exclusive of payroll withholdings required by law. |
(h) | Specified Employees. Notwithstanding any other provision herein, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of his Date of Termination, then any amounts under this Agreement which are payable upon his “Separation from Service” (within the meaning of Code Section 409A) and subject to the provisions of Code Section 409A and not otherwise excluded under Code Section 409A, shall not be paid until the first (1st) business day that is at least six (6) months after the date after Executive’s Date of Termination (the “Waiting Period”). Any payments that would have been made to Executive during the Waiting Period but for this Section 7(h) shall instead be made to Executive in the form of a lump sum payment on the date that payments commence pursuant to the preceding sentence with interest (calculated at the short-term applicable federal rate compounded semi-annually) on the amount not paid during the Waiting Period from the Date of Termination through the date of payment. |
8. | Inventions, Confidential Information, Patents, and Copyright Works. |
(a) | Notification of Company. Upon conception, all Inventions, Confidential Information, and Copyright Works shall become the property of the Company (or the United States Government where required by law) whether or not patent or copyright registration applications are filed for such subject matter. Executive will communicate to the Company promptly and fully all Inventions, or suggestions (whether or not patentable), all Confidential Information or Copyright Works made, designed, created, or conceived by Executive (whether made, designed, created, or conceived solely by Executive or jointly with others) during the period of his employment with the Company: (a) which relate to the actual or anticipated business, research, activities, or development of the Company at the time of the conception; or (b) which result from or are suggested by any work which Executive has done or may do for or on behalf of the Company; or (c) which are developed, tested, improved, or investigated either in part or entirely on time for which Executive was paid by the Company, or using any resources of the Company. |
(b) | Transfer of Rights. Executive agrees, during his employment with the Company, to assign and transfer to and does hereby assign and transfer to the Company Executive’s entire right, title, and interest in all Inventions, Confidential Information, Copyright Works and patents prepared, made or conceived by or in behalf of Executive (solely or jointly with others): (a) which relate in any way to the actual or anticipated business of the Company, or (b) which relate in any way to the actual or anticipated research or development of the Company, or (c) which are suggested by or result, directly or indirectly, from any task assigned to Executive or in which Executive otherwise engages in behalf of the Company. Executive also agrees to do all things necessary to transfer to the Company Executive’s entire right, title, and interest in and to all such Inventions, Confidential Information, Copyright Works or patents as the Company may request, on such forms as the Company may provide, at any time during or after Executive’s employment. Executive will promptly and fully assist the Company during and subsequent to his employment in every lawful way to obtain, protect, and enforce the Company’s patent, copyrights, trade secret or other proprietary rights for Inventions, Confidential Information, Copyright Works or patents in any and all countries. |
(c) | Notice of Rights Under State Statutes. No provision in this Agreement is intended to require assignment of any of Executive’s rights in an Invention for which no equipment, supplies, facilities, Confidential Information, Copyright Works, Inventions, patents or information of the Company was used, and which was (1) developed entirely on Executive’s own time; (2) does not relate directly or indirectly to the business of the Company or to the actual or demonstrably anticipated research or development of the Company; and (3) does not result from any work performed by Executive for the Company or assigned to Executive by the Company. |
(d) | Rights in Copyrights. Unless otherwise agreed in writing by the Company, all Copyright Works prepared wholly or partially by Executive (alone or jointly with others) within the scope of his employment with the Company, shall be deemed a “work made for hire” under the copyright laws and shall be owned by the Company. Executive understands that any assignment or release of such works can only be made by the Company. Executive will do everything reasonably necessary to enable the Company or its nominee to protect its rights in such works. Executive agrees to execute all documents and to do all things necessary to vest in the Company Executive’s right and title to copyrights in such works. Executive shall not assist or work with any third party that is not an employee of the Company to create or prepare any Copyright Works without the prior written consent of the Company. |
(e) | Assistance in Preparation of Applications. During and after employment Executive will promptly and fully assist, if requested by the Company, in the preparation and filing of patents and Copyright Works registrations in any and all countries selected by the Company and will assign to the Company Executive’s entire right, title, and interest in and to such patents and Copyright Works registrations, as well as all Inventions or Copyright Works to which such patents and Copyright Works registrations pertain, to enable any such properties to be prosecuted under the direction of the Company and to ensure that any patent or Copyright Works registration obtained will validly issue to the Company. |
(f) | Execute Documents. During and after employment Executive will promptly sign any and all lawful papers, take all lawful oaths, and do all lawful acts, including testifying, at the request of the Company, in connection with the procurement, grant, enforcement, maintenance, exploitation, or defense against assertion of any patent, trademark, copyright, trade secret or related rights, including applications for protection or registration thereof. Such lawful papers include, but are not limited to, any and all powers, assignments, affidavits, declarations and other papers deemed by the Company to be necessary or advisable. |
(g) | Keep Records. Executive will keep and regularly maintain adequate and current written records of all Inventions, Confidential Information, and Copyright Works he participates in creating, conceiving, developing, and manufacturing. Such records shall be kept and maintained in the form of notes, sketches, drawings, reports, or other documents relating thereto, bearing at least the date of preparation and the signatures or name of each employee contributing to the subject matter reflected in the record. Such records shall be and shall remain the exclusive property of the Company and shall be available to the Company at all times. |
(h) | Return of Documents, Equipment, Etc. All writings, records, and other documents and things comprising, containing, describing, discussing, explaining, or evidencing any Inventions, Confidential Information, or Copyright Works and all equipment, components, parts, tools, and the like in Executive’s custody or possession that have been obtained or prepared in the course of Executive’s employment with the Company shall be the exclusive property of the Company, shall not be copied and/or removed from the premises of the Company, except in pursuit of the business of the Company, and shall be delivered to the Company, without Executive retaining any copies, upon notification of the termination of Executive’s employment or at any other time requested by the Company. The Company shall have the right to retain, access, and inspect all property of Executive of any kind in the office, work area, and on the premises of the Company upon termination of Executive’s employment and at any time during employment by the Company, to ensure compliance with the terms of this Agreement. |
(i) | Other Contracts. Executive represents and warrants that he is not a party to any existing contract relating to the granting or assignment to others of any interest in Inventions, Confidential Information, Copyright Works or patents hereafter made by Executive except insofar as copies of such contracts, if any, are attached to this Agreement. |
(j) | Assignment After Termination. Executive recognizes that ideas, Inventions, Confidential Information, Copyright Works, Copyright Works registrations or patents relating to his activities while working for the Company that are conceived or made by Executive, alone or with others, within one (1) year after termination of his employment may have been conceived in significant part while Executive was employed by the Company. Accordingly, Executive agrees that such ideas, Inventions, Confidential Information, Copyright Works, Copyright Works registrations or patents shall be presumed to have been conceived and made during his employment with the Company and are to be assigned to the Company in accordance with this Section 8. |
(k) | Prior Conceptions. At the end of this Section 8(k), Executive has set forth, if any, what he represents and warrants to be a complete list of all Inventions, if any, patented or unpatented, or Copyright Works, including a brief description thereof (without revealing any confidential or proprietary information of any other Party) which Executive participated in the conception, creation, development, or making of prior to his employment with the Company and for which Executive claims full or partial ownership or other interest, or which are in the physical possession of a former employer and which are therefore excluded from the scope of this Agreement. |
9. | Non‑Competition, Non‑Solicitation, and Confidentiality. The Company and Executive acknowledge and agree that while Executive is employed pursuant to this Agreement, the Company will give Executive access to Confidential Information of the Company and its Affiliates to which Executive did not have access prior to signing this Agreement and which Executive may need and use during such employment, the receipt of which is hereby acknowledged by Executive; Executive will be provided under this Agreement (i) specialized training on how to perform his duties and (ii) contact with the Company’s and its Affiliates’ customers and potential customers. In consideration of all of the foregoing, the Company and Executive agree as follows: |
(a) | Non-Competition During Employment. Executive agrees that for the duration of this Agreement, he will not compete with the Company by engaging in the conception, design, development, production, marketing, or servicing in the offshore energy services industry (for purposes of this Section 9, the “Services”), and that he will not work for, in any capacity, assist, or become affiliated with as an owner, partner, employee, contractor, joint venture or otherwise, either directly or indirectly, any individual or business which performs the Services. |
(b) | Non-Competition After Employment. Executive agrees that for a period of one (1) year after termination of his employment with the Company for any reason he will not compete with the Company by engaging in the Services, and that he will not work for, in any capacity, assist, or become affiliated with as an owner, partner, employee, contractor, joint venture or otherwise, either directly or indirectly, any individual or business that performs the Services; provided, however, that Executive may accept employment with a business that performs the Services if Executive is employed by a division, affiliate, or subsidiary that does not perform the Services and Executive understands and agrees that he cannot perform any services for the division, subsidiary, or affiliate which does compete with the Company in the provision of the Services. |
(c) | Conflicts of Interest. Executive agrees that for the duration of this Agreement, he will not engage, either directly or indirectly, in any Conflict of Interest, and that Executive will promptly inform a corporate officer of the Company as to each offer received by Executive to engage in any such activity. Executive further agrees to disclose to the Company any other facts of which Executive becomes aware which might involve or give rise to a Conflict of Interest or potential Conflict of Interest. |
(d) | Non-Solicitation of Customers. Executive further agrees that, for the duration of this Agreement, and for a period of one (1) year after the termination of his employment with the Company for any reason, he will not solicit or accept any business for the provision of the Services from any customer or client or prospective customer or client with whom Executive dealt, had contact with or during the time Executive was employed by the Company. |
(e) | Non-Solicitation of Employees. Executive agrees that for the duration of this Agreement, and for a period of one (1) year after the termination of his employment with the Company for any reason, he will not either directly or indirectly, on his own behalf or on behalf of others, solicit, attempt to hire, or hire any person employed by the Company to work for Executive or for any other entity, firm, corporation, or individual; provided, however, that nothing in this Section 9(e) shall prohibit a future employer of Executive from soliciting, attempting to hire, or hiring any person employed by the Company so long as Executive is not directly or indirectly involved in the process including, but not limited to providing or suggesting (directly or indirectly) names of such employees to anyone for purposes of possible employment and/or directing such employees to contact anyone for purposes of possible employment. |
(f) | Confidential Information. Executive further agrees that he will not, except as the Company may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon, publish, or otherwise disclose to any third party any Confidential Information or proprietary information of the Company, or authorize anyone else to do these things at any time either during or subsequent to his employment with the Company. This Section 9(f) shall continue in full force and effect after termination of Executive’s employment and after the termination of this Agreement for any reason. Executive’s obligations under this Section 9(f) of this Agreement with respect to any specific Confidential Information and proprietary information shall cease when that specific portion of Confidential Information and proprietary information becomes publicly known, in its entirety and without combining portions of such information obtained separately. It is understood that such Confidential Information and proprietary information of the Company include matters that Executive conceives or develops, as well as matters Executive learns from other employees of the Company. |
(g) | Confidential Information of Prior Employer. Executive will not disclose or use during the period of his employment with the Company any proprietary or confidential information or copyright works, which Executive may have acquired because of employment with an employer other than the Company. |
(h) | Time Period Tolled. The time periods referenced in this Section 9 during which Executive is restrained from competing against the Company shall not include any period of time during which Executive is in breach of this Agreement. Said time periods referenced in this Section 9 will be tolled, such that the Company will receive the full benefit of the time period in the event Executive breaches this Agreement. |
(i) | Breach. Executive agrees that any breach of Sections 9(a), (b), (c), (d), (e) or (f) above cannot be remedied solely by money damages, and that in addition to any other remedies the Company may have, the Company is entitled to obtain injunctive relief against Executive. Nothing herein, however, shall be construed as limiting the Company’s right to pursue any other available remedy at law or in equity, including recovery of damages and termination of this Agreement. |
(j) | Independent Covenants. All covenants contained in this Section 9 shall be construed as agreements independent of any other provision of this Agreement, and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of such covenants. |
10. | Return of Company Property. Executive agrees to execute and deliver such documents and take all other actions as the Company may request from time to time in order to effect the transfer and delivery to the Company of any of the Company’s or its Affiliates’ assets in the possession or subject to the control of Executive including, without limitation, the Company’s or its Affiliates’ computers, printers, books, records, files, databases, software, Confidential Information, and other documents in whatever form or medium and wherever located, and the Company’s or its Affiliates’ credit cards, travel authority cards, parking and identification badges. |
11. | Right to Enter Agreement. Executive represents and covenants to the Company that he has full power and authority to enter into this Agreement and that the execution of this Agreement will not breach or constitute a default of any other agreement or contract to which he is a Party or by which he is bound. |
12. | Assignment. This Agreement may be assigned by the Company, but cannot be assigned by Executive. An assignment of this Agreement by the Company shall not relieve the Company of any liability or obligation under this Agreement except any such assignment in connection with or as a result of a Change in Control (including, but not limited to, by operation of law). |
13. | Binding Agreement. The Parties acknowledge that this Agreement shall be binding upon and inure to the benefit of (a) Executive’s heirs, successors, personal representatives, and legal representatives and (b) any successor of the Company. Any such successor of the Company shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “successor” shall include any person, firm, corporation, or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. |
14. | Notices. All notices pursuant to this Agreement shall be in writing and sent certified mail, return receipt requested, by hand delivery or by overnight delivery service addressed as follows: |
If to Executive: | Ken Neikirk | |
13006 Perthshire Road | ||
Houston, TX 77079 | ||
If to the Company: | Helix Energy Solutions Group, Inc. | |
Attn: President and Chief Executive Officer | ||
3505 West Sam Houston Parkway North, Suite 400 | ||
Houston, TX 77043 | ||
With a copy to: | Helix Energy Solutions Group, Inc. | |
Attn: Chief Financial Officer 3505 West Sam Houston | ||
Parkway North, Suite 400 | ||
Houston, TX 77043 |
15. | Waiver. No waiver by either Party to this Agreement of any right to enforce any term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such right in the future or of any other right or remedy available under this Agreement. |
16. | Severability. If any provision of this Agreement is determined to be void, invalid, unenforceable, or against public policy, such provisions shall be deemed severable from the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full force and effect. Furthermore, any breach by the Company of any provision of this Agreement shall not excuse Executive’s compliance with the requirements of Sections 8 or 9, to the extent they are otherwise enforceable. |
17. | Arbitration. Except with respect to injunctive relief which may be sought by the Company or Executive from a court in Harris County, Texas, to which the Parties hereby submit to personal jurisdiction, the Parties agree to resolve any and all claims or controversies past, present, or future arising out of or relating to this Agreement, Executive’s employment and/or termination of employment with the Company, including but not limited to claims for wrongful termination of employment, and claims under the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family Medical Leave Act, the Sarbanes-Oxley Act, the Equal Pay Act, the Fair Labor Standards Act, Chapter 21 of the Texas Labor Code, formerly known as the Texas Commission on Human Rights Act, the retaliatory discharge provisions of the Texas Worker’s Compensation Act, the Texas Pay Day Act, and any similar state law or local ordinance to binding arbitration under the Federal Arbitration Act, before one neutral arbitrator in the City of Houston, State of Texas, under the American Arbitration Association (“AAA”) National Rules for the Resolution of Employment Disputes. If the Parties cannot agree on one arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the arbitrator will be selected using alternate strikes with Executive striking first. The Parties further agree that (i) except as expressly awarded in arbitration and subject to Section 25 below, each party shall be responsible for its own expenses, including but not limited to attorneys’ fees in connection with the cost of the arbitration except that the fees of the arbitrators shall be shared equally by Executive and the Company, (ii) collective actions are not permissible unless agreed upon by the parties in writing, (iii) administrative proceedings under the National Labor Relations Act and Title VII of the Civil Rights Act are |
18. | Entire Agreement. The terms and provisions contained herein shall constitute the entire agreement between the Parties with respect to Executive’s employment with the Company during the time period covered by this Agreement. This Agreement replaces and supersedes any and all existing agreements entered into between Executive and the Company relating generally to the same subject matter. |
19. | Modification of Agreement. This Agreement may not be changed or modified or released or discharged or abandoned or otherwise terminated, in whole or in part, except by an instrument in writing signed by Executive and an officer or other authorized executive of the Company. |
20. | Understand Agreement. Executive represents and warrants that he has read and understood each and every provision of this Agreement, acknowledges that he has obtained or has had the opportunity to obtain independent legal advice from attorneys of his choice, and confirms that Executive has freely and voluntarily entered into this Agreement. |
21. | Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas without giving any effect to the conflict of laws provisions thereof. |
22. | Code Section 409A. The Parties agree that the Company may amend and/or operate this Agreement to be exempt from or to comply with Code Section 409A including, but not limited to, using the definitions or other terms required by Code Section 409A and including without limitation any notices, rulings, interpretations or regulations issued under Code Section 409A after the date hereof to avoid the application of penalty taxes under Code Section 409A. The Company and Executive shall cooperate in good faith for the adoption of such amendments and/or the operation of the Agreement to avoid the application of penalty taxes under Code Section 409A. The Parties agree that Executive shall have no right to specify the calendar year during which any payment hereunder shall be made. |
23. | No Guarantee of Tax Consequences. None of the Company nor any of its Affiliates or their officers, directors or employees guarantees or shall be responsible or liable for the federal, state, local, domestic and foreign, tax consequences to Executive respecting any payments or benefits provided to Executive under this Agreement, including but not limited to, any excise taxes that may be imposed under Code Section 409A. Executive acknowledges that the Company has advised him to consult his own counsel and/or tax advisor respecting all of the terms of this Agreement, including but not limited to, Sections 7, 8 and 9. |
24. | Withholding Taxes. The Company may withhold from all salary, bonuses, or other benefits or payments under this Agreement all federal, state, local, domestic and foreign, taxes as shall be required pursuant to any law or governmental ruling or regulation as reasonably determined by the Company. |
25. | Legal Fees on Change in Control. If a Date of Termination occurs after a Change in Control occurs, the Company agrees, upon reasonable documentation, to reimburse to the full extent permitted by law, all legal fees and expenses to a maximum of $50,000.00 which Executive, Executive’s legal representatives or Executive’s family may reasonably incur arising out of or in connection with any arbitration or litigation, if applicable, concerning the validity or enforceability of any provision of the Agreement, or any action by Executive, Executive’s legal representatives, or Executive’s family to enforce his or their rights under this Agreement, regardless of the outcome of such arbitration or litigation. The expenses that may be reimbursed under this Section 25 shall in no way modify Executive’s duty to arbitrate any such claims or the arbitration provisions under Section 17. Notwithstanding the foregoing, to the extent that Code Section 409A is applicable to the expenses under this subsection, and to the extent that no exception under Code Section 409A is applicable, the following shall apply: (a) all expenses that are includable in income to be paid under this subsection shall only be paid if such expenses are incurred prior to the last day of the second (2nd) calendar year following the calendar year in which the Date of Termination occurs; (b) all expenses must be paid by the end of the third (3rd) calendar year following the calendar year in which the Date of Termination occurs; (c) Executive (or his legal representative or family) must provide the Company with reasonable documentation of such expenses; (d) payments for such expenses will be made within 15 business days after reasonable documentation of the expenses incurred has been provided to the Company (and such documentation must be provided within 45 days after the expenses are incurred) but in no event later than the end of Executive’s taxable year following the year in which the expenses were incurred; and (e) the payments under this subsection cannot be substituted for another benefit. |
26. | Disputed Payments and Refusals to Pay. If following the Date of Termination, the Company fails to make a payment due under Section 7(e) or Section 25 of this Agreement in whole or in part as of the payment date specified in this Agreement, either intentionally or unintentionally, other than with the express or implied consent of Executive, the Company shall owe Executive interest on the delayed payment, compounded quarterly, if Executive (i) accepts the portion (if any) of the payment that the Company is willing to make (unless such acceptance will result in a relinquishment of the claim to all or part of the remaining amount) and (ii) makes prompt and reasonable good faith efforts to collect the remaining portion of the payment (determined utilizing the standards set forth in Treasury Regulation § 1.409A-3(g)). Any such interest payments shall become due and payable effective as of the applicable payment date(s) specified in (i) Section 7(e) with respect to the delinquent payment(s) due under Section 7(e) and (ii) Section 25 with respect to the delinquent payment(s) due under Section 25. Such interest payable under this Section 26 shall be calculated at a rate equal to an amount equal to two percentage points in excess of the prime commercial lending rate announced from time to time by JPMorgan Chase Bank or its successor during the period of such nonpayment, compounded quarterly. The Company shall pay such interest payable under this Section 26 no later than the deadline specified in Treasury Regulation § 1.409A-3(g). |
27. | Counterparts. Any number of counterparts of this Agreement may be executed and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one instrument. This Agreement may be executed by portable document format (PDF) or facsimile signature which signature shall be binding upon the Parties. |
EXECUTIVE | THE COMPANY | ||||
HELIX ENERGY SOLUTIONS GROUP, INC. | |||||
/s/ Ken Neikirk | By: | /s/ Owen Kratz | |||
Name: | Ken Neikirk | Owen Kratz | |||
President and Chief Executive Officer | |||||
Date: | 5-1-19 | Date: | May 1, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Helix Energy Solutions Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Owen Kratz | |||
Owen Kratz | |||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Helix Energy Solutions Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Erik Staffeldt | |||
Erik Staffeldt | |||
Executive Vice President and | |||
Chief Financial Officer |
/s/ Owen Kratz | |||
Owen Kratz | |||
President and Chief Executive Officer |
/s/ Erik Staffeldt | |||
Erik Staffeldt | |||
Executive Vice President and | |||
Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Current assets: | ||
Allowance for uncollectible accounts | $ 0 | $ 0 |
Shareholders’ equity: | ||
Common stock, shares authorized | 240,000,000 | 240,000,000 |
Common stock, shares issued | 148,759,000 | 148,203,000 |
Condensed Consolidated Statements Of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Net revenues | $ 201,728 | $ 204,625 | $ 368,551 | $ 368,887 |
Cost of sales | 161,794 | 161,728 | 312,363 | 313,007 |
Gross profit | 39,934 | 42,897 | 56,188 | 55,880 |
Selling, general and administrative expenses | (16,862) | (18,125) | (32,847) | (32,224) |
Income from operations | 23,072 | 24,772 | 23,341 | 23,656 |
Equity in losses of investment | (29) | (135) | (69) | (271) |
Net interest expense | (2,205) | (3,599) | (4,303) | (7,495) |
Loss on extinguishment of long-term debt | (18) | (76) | (18) | (1,181) |
Other expense, net | (1,311) | (3,441) | (145) | (2,516) |
Royalty income and other | 190 | 561 | 2,535 | 3,416 |
Income before income taxes | 19,699 | 18,082 | 21,341 | 15,609 |
Income tax provision | 2,876 | 298 | 3,200 | 385 |
Net income | 16,823 | 17,784 | 18,141 | 15,224 |
Net loss attributable to redeemable noncontrolling interests | (31) | 0 | (31) | 0 |
Net income attributable to common shareholders | $ 16,854 | $ 17,784 | $ 18,172 | $ 15,224 |
Earnings per share of common stock (in dollars per share) | ||||
Basic | $ 0.11 | $ 0.12 | $ 0.12 | $ 0.10 |
Diluted | $ 0.11 | $ 0.12 | $ 0.12 | $ 0.10 |
Weighted average common shares outstanding (in shares) | ||||
Basic | 147,521 | 146,683 | 147,471 | 146,668 |
Diluted | 148,101 | 146,724 | 147,931 | 146,668 |
Redeemable Noncontrolling Interests (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Increase (Decrease) in Redeemable Noncontrolling Interests [Roll Forward] | ||
Balance, beginning of period | $ 0 | $ 0 |
Net loss attributable to redeemable noncontrolling interests | (31) | (31) |
Issuance of redeemable noncontrolling interests | 3,396 | 3,396 |
Accretion of redeemable noncontrolling interests | 18 | 18 |
Balance, end of period | $ 3,383 | $ 3,383 |
Basis Of Presentation And New Accounting Standards |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation And New Accounting Standards | Note 1 — Basis of Presentation and New Accounting Standards The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix” or the “Company”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements have been prepared pursuant to instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S. dollars and are consistent in all material respects with those applied in our 2018 Annual Report on Form 10-K (“2018 Form 10-K”) with the exception of the impact of adopting the new lease accounting standard in 2019 (see below). The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures. Actual results may differ from our estimates. We have made all adjustments (which were normal recurring adjustments) that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, and statements of cash flows, as applicable. The operating results for the three- and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Our balance sheet as of December 31, 2018 included herein has been derived from the audited balance sheet as of December 31, 2018 included in our 2018 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto included in our 2018 Form 10-K. Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format. New accounting standards adopted 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 right-of-use 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 in the first quarter of 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 right-of-use (“ROU”) assets of $253.4 million (net of existing prepaid/deferred rent balances) as of January 1, 2019. 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 is not expected to have a material impact on our net earnings or cash flows. New accounting standards issued but not yet effective In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments. This ASU replaces the current incurred loss model for measurement of credit losses on financial assets (including trade receivables) with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods. We are currently evaluating the impact this guidance will have on our consolidated financial statements. We do not expect any other recent accounting standards to have a material impact on our financial position, results of operations or cash flows.
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Company Overview |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company Overview | Note 2 — Company Overview We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations. We provide services and methodologies that we believe are critical to maximizing production economics. Our services cover the lifecycle of an offshore oil or gas field. We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. Our “life of field” services are segregated into three reportable business segments: Well Intervention, Robotics and Production Facilities (Note 12). Our Well Intervention segment includes our vessels and/or equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa. Our well intervention vessels include the Q4000, the Q5000, the Seawell, the Well Enhancer, and two chartered monohull vessels, the Siem Helix 1 and the Siem Helix 2. We also have a semi-submersible well intervention vessel under completion, the Q7000. Our well intervention equipment includes intervention riser systems (“IRSs”) and subsea intervention lubricators (“SILs”), some of which we provide on a stand-alone basis. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, and three ROV support vessels under long-term charter: the Grand Canyon, the Grand Canyon II and the Grand Canyon III. We also utilize spot vessels as needed. Our Production Facilities segment includes the Helix Producer I (the “HP I”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), our ownership interest in Independence Hub, LLC (“Independence Hub”) (Note 4), and several wells and related infrastructure associated with the Droshky Prospect that we acquired from Marathon Oil Corporation (“Marathon Oil”) on January 18, 2019. All of our current production facilities activities are located in the Gulf of Mexico. On May 29, 2019, we acquired a 70% controlling interest in Subsea Technologies Group Limited (“STL”), a subsea engineering firm based in Aberdeen, Scotland, for $5.1 million, including $4.1 million in cash and $1.0 million that we advanced to STL in December 2018. The acquisition is expected to strengthen our supply of subsea intervention systems. The remaining 30% noncontrolling interest holders have the right to put their shares to us in June 2024. These redeemable noncontrolling interests have been recognized as temporary equity at their estimated fair value of $3.4 million at the acquisition date. We recognized $2.4 million of identifiable intangible assets and $6.8 million of goodwill, which are reflected in “Other assets” in the accompanying condensed consolidated balance sheet (Note 3). Goodwill is related to the synergies expected from the acquisition. The ultimate fair values of acquired assets, liabilities and noncontrolling interests are provisional and pending final assessment of the valuations. STL is included in our Well Intervention segment (Note 12) and its revenue and earnings are immaterial to our consolidated results.
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Details Of Certain Accounts |
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Details Of Certain Accounts | Note 3 — Details of Certain Accounts Other current assets consist of the following (in thousands):
Other assets, net consist of the following (in thousands):
Accrued liabilities consist of the following (in thousands):
Other non-current liabilities consist of the following (in thousands):
(1) Relates to the sale and lease-back in January 2016 of our office and warehouse property located in Aberdeen, Scotland. The deferred gain had been amortized over a 15-year minimum lease term prior to our adoption of ASC 842 on January 1, 2019. See Note 1 for the effect of ASC 842 on this deferred gain.
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Equity Investments |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investments | Note 4 — Equity Investments We have a 20% ownership interest in Independence Hub that we account for using the equity method of accounting. Independence Hub owns the “Independence Hub” platform located in Mississippi Canyon Block 920 in the Gulf of Mexico in a water depth of 8,000 feet. We are committed to providing our pro-rata portion of financial support for Independence Hub to pay its obligations as they become due. The platform decommissioning process is currently underway and is expected to be substantially completed within the next 12 months. We recognized a liability of $10.0 million at June 30, 2019 and $11.2 million at December 31, 2018 for our share of Independence Hub’s estimated obligations, net of remaining working capital. This liability is reflected in “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 5 — Leases We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. We also sublease some of our facilities under non-cancelable sublease agreements. Leases with a term greater than one year are recognized on our balance sheet as ROU assets and lease liabilities. We have elected not to recognize on our balance sheet leases with an initial term of one year or less. Lease liabilities and their corresponding ROU assets are recorded at the commencement date based on the present value of lease payments over the expected lease term. We use our incremental borrowing rate, which would be the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment, to calculate the present value of lease payments. ROU assets are adjusted for any initial direct costs paid or incentives received. We separate our long-term vessel charters between their lease components and non-lease services. We estimate the lease component using the residual estimate approach by estimating the non-lease services, which are primarily crew, repair and maintenance, and regulatory certification costs. For all other leases, we have not separated the lease components and non-lease services. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. We recognize operating lease cost on a straight-line basis over the lease term for both (i) leases that are recognized on the balance sheet and (ii) short-term leases. We recognize lease cost related to variable lease payments that are not recognized on the balance sheet in the period in which the obligation is incurred. The following table details the components of our lease cost (in thousands):
Maturities of our operating lease liabilities as of June 30, 2019 are as follows (in thousands):
The following table presents the weighted average remaining lease term and discount rate:
The following table presents other information related to our operating leases (in thousands):
As previously disclosed in our 2018 Form 10-K and under the previous lease accounting standard, future minimum lease payments for our operating leases as of December 31, 2018 were as follows (in thousands):
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 6 — Long-Term Debt Scheduled maturities of our long-term debt outstanding as of June 30, 2019 are as follows (in thousands):
Below is a summary of certain components of our indebtedness: Credit Agreement On June 30, 2017, we entered into an Amended and Restated Credit Agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America, N.A. (“Bank of America”). On June 28, 2019, we amended our existing term loan (the “Term Loan”) and revolving credit facility (the “Revolving Credit Facility”) under the Credit Agreement. The Credit Agreement is comprised of a $35 million Term Loan and a Revolving Credit Facility of $175 million. 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 up to $100 million with respect to an increase in the Revolving Credit Facility. As of June 30, 2019, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $171.3 million, net of $3.7 million of letters of credit issued under that facility. Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof. The Term Loan bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin of 2.25%. The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25%. The interest rate on the Term Loan was 5.65% as of June 30, 2019. 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 times 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 the aggregate principal amount of the Term Loan, with a balloon payment at maturity. Installment amounts are subject to adjustment for any prepayments on the Term Loan. 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 of the Revolving Credit Facility. Borrowings under the Credit Agreement mature on December 31, 2021. The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, which we consider customary for this type of transaction. 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 debt and EBITDA of the Unrestricted Subsidiaries are not included in the calculations of our financial covenants, except that at our election we may include the debt and EBITDA of either Helix Q5000 Holdings, S.à r.l. (“Q5000 Holdings”) or Helix Q7000 Holdings, S.à r.l. (“Q7000 Holdings”), each a wholly owned subsidiary incorporated in Luxembourg. We are currently including the debt and EBITDA of Q5000 Holdings in the calculations of our financial covenants. Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Canyon Offshore Limited, and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Canyon Offshore Limited. In addition, these obligations are secured by pledges of up to 66% of the shares of certain foreign subsidiaries. In March 2018, we prepaid $61 million of the then-existing term loan with a portion of the net proceeds from the 2023 Notes. We recognized a $0.9 million loss to write off the related unamortized debt issuance costs. In June 2019, in connection with the amendment of the Credit Agreement we wrote off the remaining unamortized debt issuance costs associated with a lender exiting the Credit Agreement. These losses are presented as “Loss on extinguishment of long-term debt” in the accompanying condensed consolidated statements of operations. In January 2019, contemporaneously with our purchase from Marathon Oil of several wells and related infrastructure associated with the Droshky Prospect located in offshore Gulf of Mexico Green Canyon Block 244, we amended the Credit Agreement to permit the issuance of certain security to third parties for required plug and abandonment (“P&A”) obligations and to make certain capital expenditures in connection with acquired assets (Notes 2 and 13). Convertible Senior Notes Due 2022 On November 1, 2016, we completed a public offering and sale of the 2022 Notes in the aggregate principal amount of $125 million. The 2022 Notes bear interest at a rate of 4.25% per annum and are payable semi-annually in arrears on November 1 and May 1 of each year, beginning on May 1, 2017. 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. Prior to November 1, 2019, the 2022 Notes are not redeemable. On or after 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 are accounted for by separating the net proceeds between long-term debt and shareholders’ equity. In connection with the issuance of the 2022 Notes, we recorded a debt discount of $16.9 million ($11.0 million net of tax) as a result of separating the equity component. The effective interest rate for the 2022 Notes is 7.3% after considering the effect of the accretion of the related debt discount that represented the equity component of the 2022 Notes at their inception. For the three- and six-month periods ended June 30, 2019, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $2.1 million and $4.2 million, respectively. For the three- and six-month periods ended June 30, 2018, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $2.0 million and $4.0 million, respectively. The remaining unamortized debt discount of the 2022 Notes was $9.5 million at June 30, 2019 and $11.0 million at December 31, 2018. Convertible Senior Notes Due 2023 On March 20, 2018, we completed a public offering and sale of the 2023 Notes in the aggregate principal amount of $125 million. The net proceeds from the issuance of the 2023 Notes were approximately $121.0 million after deducting the underwriters’ discounts and commissions and estimated offering expenses. We used the net proceeds from the issuance of the 2023 Notes to fund the required repurchase by us of $59.3 million in principal of Convertible Senior Notes due 2032 (the “2032 Notes”) described below and to prepay $61.0 million of the then-existing term loan. 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 are accounted for by separating the net proceeds between long-term debt and shareholders’ equity. In connection with the issuance of the 2023 Notes, we recorded a debt discount of $20.1 million ($15.9 million net of tax) as a result of separating the equity component. The effective interest rate for the 2023 Notes is 7.8% after considering the effect of the accretion of the related debt discount that represented the equity component of the 2023 Notes at their inception. For the three- and six-month periods ended June 30, 2019, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $2.1 million and $4.2 million, respectively. For the three- and six-month periods ended June 30, 2018, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $1.9 million and $2.2 million, respectively. The remaining unamortized debt discount of the 2023 Notes was $16.2 million at June 30, 2019 and $17.8 million at December 31, 2018. MARAD Debt This U.S. 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. 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. The parent company of Q5000 Holdings, Helix Vessel Finance S.à r.l., also a wholly owned Luxembourg subsidiary, guaranteed the Nordea Q5000 Loan. The loan is secured by the Q5000 and its charter earnings as well as by a pledge of the shares of Q5000 Holdings. This indebtedness is non-recourse to Helix. The Nordea Q5000 Loan bears interest at a LIBOR rate plus a margin of 2.5%. The Nordea Q5000 Loan matures on April 30, 2020 and is repayable in scheduled quarterly principal installments of $8.9 million with a balloon payment of $80.4 million at maturity. The remaining principal balance was classified as current as of June 30, 2019. Q5000 Holdings may elect to prepay indebtedness outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid. Quarterly principal installments are subject to adjustment for any prepayments on this debt. In June 2015, we entered into interest rate swap contracts to fix the one-month LIBOR rate on a portion of our borrowings under the Nordea Q5000 Loan (Note 17). The total notional amount of the swaps (initially $187.5 million) decreases in proportion to the reduction in the principal amount outstanding under the Nordea Q5000 Loan. The fixed LIBOR rates are approximately 150 basis points. The Nordea Credit Agreement and related loan documents include terms and conditions, including covenants and prepayment requirements, that we consider customary for this type of transaction. The covenants include restrictions on Q5000 Holdings’s ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, and pay dividends. In addition, the Nordea Credit Agreement obligates Q5000 Holdings to meet certain minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance. Convertible Senior Notes Due 2032 In March 2012, we issued $200 million of 3.25% Convertible Senior Notes, which were originally scheduled to mature on March 15, 2032. In March 2018, we made a tender offer for the repurchase of the 2032 Notes outstanding on the first repurchase date as required by the indenture governing the 2032 Notes, and as a result we repurchased $59.3 million in aggregate principal amount of the 2032 Notes on March 20, 2018. The total repurchase price was $59.5 million, including $0.2 million in fees. We recognized a $0.2 million loss in connection with the repurchase of the 2032 Notes. The loss is presented as “Loss on extinguishment of long-term debt” in the accompanying condensed consolidated statement of operations. On May 4, 2018, we redeemed the remaining $0.8 million in aggregate principal amount of the 2032 Notes. Other In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the MARAD Debt agreements and the Nordea Credit Agreement, we are required to comply with certain covenants, including with respect to the Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio and a consolidated secured leverage ratio, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements. As of June 30, 2019, we were in compliance with these covenants. The following table details the components of our net interest expense (in thousands):
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Income Taxes |
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Income Taxes | Note 7 — Income Taxes 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. The effective tax rates for the three- and six-month periods ended June 30, 2019 were 14.6% and 15.0%, respectively. The effective tax rates for the three- and six-month periods ended June 30, 2018 were 1.6% and 2.5%, respectively. The increase was primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions. Income taxes are provided based on the U.S. statutory rate and the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes. The primary differences between the U.S. statutory rate and our effective rate are as follows:
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Shareholders' Equity |
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Shareholders' Equity | Note 8 — Shareholders’ Equity The components of accumulated other comprehensive income (loss) (“accumulated OCI”) are as follows (in thousands):
(1) Relates to foreign currency hedges for the Grand Canyon II and Grand Canyon III charters as well as interest rate swap contracts for the Nordea Q5000 Loan (Note 17) and is net of deferred income taxes totaling $0.4 million at June 30, 2019 and $1.0 million at December 31, 2018.
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Revenue From Contracts With Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue From Contracts With Customers | Note 9 — Revenue from Contracts with Customers Disaggregation of Revenue Our revenues are derived primarily from short-term and long-term service contracts with customers. Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts). We record revenues net of taxes collected from customers and remitted to governmental authorities. The following table provides information about disaggregated revenue by contract duration (in thousands):
Contract Balances Accounts receivable are recognized when our right to consideration becomes unconditional. Accounts receivable that have been billed to customers are recorded as trade accounts receivable while accounts receivable that have not been billed to customers are recorded as unbilled accounts receivable. Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance. Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract assets are reflected in “Other current assets” on the accompanying condensed consolidated balance sheets (Note 3). Contract assets were $0.3 million at June 30, 2019 and $5.8 million at December 31, 2018. Impairment losses recognized on our accounts receivable and contract assets were immaterial for the three- and six-month periods ended June 30, 2019 and 2018. Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer. Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) the amount billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” on the accompanying condensed consolidated balance sheets (Note 3). Contract liabilities totaled $22.6 million at June 30, 2019 and $25.9 million at December 31, 2018. Revenue recognized for the three- and six-month periods ended June 30, 2019 included $2.6 million and $5.2 million, respectively, that were included in the contract liability balance at the beginning of each period. Revenue recognized for the three- and six-month periods ended June 30, 2018 included $8.7 million and $10.0 million, respectively, that were included in the contract liability balance at the beginning of each period. We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Performance Obligations As of June 30, 2019, $1.0 billion related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $281.3 million in 2019, $401.7 million in 2020 and $278.6 million in 2021 and thereafter. These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees. These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at June 30, 2019. For the three- and six-month periods ended June 30, 2019 and 2018, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial. Contract Fulfillment Costs Contract fulfillment costs consist of costs incurred in fulfilling a contract with a customer. Our contract fulfillment costs primarily relate to costs incurred for mobilization of personnel and equipment at the beginning of a contract and costs incurred for demobilization at the end of a contract. Mobilization costs are deferred and amortized ratably over the contract term (including anticipated contract extensions) based on the pattern of the provision of services to which the contract fulfillment costs relate. Demobilization costs are recognized when incurred at the end of the contract. Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” on the accompanying condensed consolidated balance sheets (Note 3). Our deferred contract costs totaled $53.5 million at June 30, 2019 and $65.9 million at December 31, 2018. For the three- and six-month periods ended June 30, 2019, we recorded $8.2 million and $15.9 million, respectively, related to amortization of deferred contract costs existing at the beginning of each period. For the three- and six-month periods ended June 30, 2018, we recorded $8.2 million and $17.1 million, respectively, related to amortization of deferred contract costs existing at the beginning of each period. There were no associated impairment losses for all periods presented. For additional information regarding revenue recognition, see Notes 2 and 10 to our 2018 Form 10-K.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 10 — Earnings Per Share We have shares of restricted stock issued and outstanding that are currently unvested. Shares of restricted stock are considered participating securities because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock. We are required to compute earnings per share (“EPS”) under the two-class method in periods in which we have earnings. Under the two-class method, the undistributed earnings for each period are allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed. Because both the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses. The presentation of basic EPS on the face of the accompanying condensed consolidated statements of operations is computed by dividing net income or loss by the weighted average shares of our common stock outstanding. 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. The computations of the numerator (income) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands):
The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2032 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):
(1) The 2032 Notes were fully redeemed in May 2018.
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Employee Benefit Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Note 11 — Employee Benefit Plans Long-Term Incentive Plan We currently have one active long-term incentive plan: the 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”). On May 15, 2019, our shareholders approved an amendment to and restatement of the 2005 Incentive Plan to: (i) authorize 7.0 million additional shares for issuance pursuant to our equity incentive compensation strategy, (ii) establish a maximum award limit applicable to independent members of our Board of Directors (our “Board”) under the 2005 Incentive Plan, (iii) require, subject to certain exceptions, that all awards under the 2005 Incentive Plan have a minimum vesting or restriction period of one year and (iv) remove certain requirements with respect to performance-based compensation under Section 162(m) of the Internal Revenue Code that were repealed by the U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”). As of June 30, 2019, there were 8.5 million shares of our common stock available for issuance under the 2005 Incentive Plan. During the six-month period ended June 30, 2019, the following grants of share-based awards were made under the 2005 Incentive Plan:
Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis. Forfeitures are recognized as they occur. For the three- and six-month periods ended June 30, 2019, $2.4 million and $3.7 million respectively, were recognized as share-based compensation related to restricted stock. For the three- and six-month periods ended June 30, 2018, $1.5 million and $3.0 million, respectively, were recognized as share-based compensation related to restricted stock. The estimated fair value of PSUs is determined using a Monte Carlo simulation model. PSUs granted prior to 2017 could be settled in either cash or shares of our common stock and were accounted for as liability awards. Beginning in 2017, PSUs granted are to be settled solely in shares of our common stock and therefore are accounted for as equity awards. Compensation cost for PSUs that are accounted for as equity awards is measured based on the estimated grant date fair value and recognized over the vesting period on a straight-line basis as an increase to equity. For the three- and six-month periods ended June 30, 2019, $1.4 million and $2.7 million, respectively, were recognized as share-based compensation related to PSUs. For the three- and six-month periods ended June 30, 2018, $4.2 million and $5.2 million, respectively, were recognized as share-based compensation related to PSUs. The liability balance for previously unvested PSUs granted in January 2016 was $11.1 million at December 31, 2018, which we settled in cash when those PSUs vested in January 2019. Additionally in 2019 and 2018, we granted fixed-value cash awards of $4.6 million and $5.2 million, respectively, to select management employees under the 2005 Incentive Plan. The value of fixed value cash awards is recognized on a straight-line basis over a vesting period of three years. For the three- and six-month periods ended June 30, 2019, $0.8 million and $1.6 million, respectively, were recognized as compensation cost. For the three- and six-month periods ended June 30, 2018, $0.4 million and $0.8 million, respectively, were recognized as compensation cost. Employee Stock Purchase Plan We have an employee stock purchase plan (the “ESPP”). On May 15, 2019, our shareholders approved an amendment to and restatement of the ESPP to: (i) increase the shares authorized for issuance by 1.5 million shares and (ii) delegate to an administrator the authority to establish from time to time the maximum shares purchasable during a purchase period. As of June 30, 2019, 2.0 million shares were available for issuance under the ESPP. The ESPP currently has a purchase limit of 130 shares per employee per purchase period. For more information regarding our employee benefit plans, including the 2005 Incentive Plan and the ESPP, see Note 12 to our 2018 Form 10-K.
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Business Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | Note 12 — Business Segment Information We have three reportable business segments: Well Intervention, Robotics and Production Facilities. Our U.S., U.K. and Brazil well intervention operating segments are aggregated into the Well Intervention business segment for financial reporting purposes. Our Well Intervention segment includes our vessels and/or equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa. Our well intervention vessels include the Q4000, the Q5000, the Seawell, the Well Enhancer, and the chartered Siem Helix 1 and Siem Helix 2 vessels. Our well intervention equipment includes IRSs and SILs, some of which we provide on a stand-alone basis, and also includes STL beginning in the second quarter of 2019 (Note 2). Our Robotics segment includes ROVs, trenchers and a ROVDrill, which are designed to complement offshore construction and well intervention services, and three ROV support vessels under long-term charter: the Grand Canyon, the Grand Canyon II and the Grand Canyon III. Our Production Facilities segment includes the HP I, the HFRS, our ownership interest in Independence Hub (Note 4) and our ownership of certain oil and gas properties that we acquired from Marathon Oil in January 2019 (Note 13). All material intercompany transactions between the segments have been eliminated. We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands):
Intercompany segment amounts are derived primarily from equipment and services provided to other business segments at rates consistent with those charged to third parties. Intercompany segment revenues are as follows (in thousands):
Segment assets are comprised of all assets attributable to each reportable segment. Corporate and other includes all assets not directly identifiable with our business segments, most notably the majority of our cash and cash equivalents. The following table reflects total assets by reportable segment (in thousands):
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Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||
Asset Retirement Obligations | Note 13 — Asset Retirement Obligations Our asset retirement obligations (“AROs”) consist of estimated costs for subsea infrastructure P&A activities. The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate. After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense. An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations. The following table describes the changes in our AROs (both current and long-term) (in thousands):
(1) In connection with the acquisition on January 18, 2019 of certain assets related to the Droshky Prospect (Note 2), we assumed the AROs for the required P&A of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the P&A work is completed. We initially recognized $53.3 million of ARO liability, $50.8 million of receivables and $2.5 million of acquired property for this transaction.
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Commitments And Contingencies And Other Matters |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies And Other Matters | Note 14 — Commitments and Contingencies and Other Matters Commitments We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels used in connection with our contracts with Petróleo Brasileiro S.A. (“Petrobras”) to perform well intervention work offshore Brazil. The initial term of the charter agreements with Siem is for seven years from the respective vessel delivery dates with options to extend. We have long-term charter agreements for the Grand Canyon, Grand Canyon II and Grand Canyon III vessels for use in our robotics operations. The charter agreements expire in October 2019 for the Grand Canyon, in April 2021 for the Grand Canyon II and in May 2023 for the Grand Canyon III. In September 2013, we entered into a contract for the construction of a newbuild semi-submersible well intervention vessel, the Q7000, to be built to North Sea standards. Pursuant to the contract and subsequent amendments, 20% of the contract price was paid upon the signing of the contract, 20% was paid in each of 2016, 2017 and 2018, and the remaining 20% is due upon the delivery of the vessel, which at our option can be deferred until December 31, 2019. We are also contractually committed to reimburse the shipyard for its costs in connection with the deferment of the Q7000’s delivery beyond 2017. At June 30, 2019, our total investment in the Q7000 was $427.4 million, including $276.8 million of installment payments to the shipyard. Currently, equipment is being installed for the completion of the vessel. Contingencies and Claims We believe that there are currently no contingencies that would have a material adverse effect on our financial position, results of operations and cash flows. Litigation We are involved in various legal proceedings, some involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act. In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.
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Statement Of Cash Flow Information |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement Of Cash Flow Information | Note 15 — Statement of Cash Flow Information We define cash and cash equivalents as cash and all highly liquid financial instruments with original maturities of three months or less. The following table provides supplemental cash flow information (in thousands):
Our non-cash investing activities include the acquisition of property and equipment for which payment has not been made. These non-cash capital additions totaled $10.2 million at June 30, 2019 and $9.9 million at December 31, 2018.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 16 — Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value accounting rules establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Assets and liabilities measured at fair value are based on one or more of three valuation approaches as follows:
Our financial instruments include cash and cash equivalents, receivables, accounts payable, long-term debt and derivative instruments. 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 17) 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. These modeling techniques require us to make estimations of future prices, price correlation, volatility and liquidity based on market data. Our actual results may differ from our estimates, and these differences could be positive or negative. The following tables provide additional information relating to those financial instruments measured at fair value on a recurring basis (in thousands):
The principal amount and estimated fair value of our long-term debt are as follows (in thousands):
(3) The principal amount and fair value of the 2022 Notes and the 2023 Notes are for the entire instrument inclusive of the conversion feature reported in shareholders’ equity.
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Derivative Instruments And Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments And Hedging Activities | Note 17 — Derivative Instruments and Hedging Activities Our business is exposed to market risks associated with interest rates and foreign currency exchange rates. Our risk management activities involve the use of derivative financial instruments to hedge the impact of market risk exposure related to variable interest rates and foreign currency exchange rates. To reduce the impact of these risks on earnings and increase the predictability of our cash flows, from time to time we enter into certain derivative contracts, including interest rate swaps and foreign currency exchange contracts. All derivative instruments are reflected in the accompanying condensed consolidated balance sheets at fair value. We engage solely in cash flow hedges. Cash flow hedges are entered into to hedge the variability of cash flows related to a forecasted transaction or to be received or paid related to a recognized asset or liability. Changes in the fair value of derivative instruments that are designated as cash flow hedges are reported in OCI. These changes are subsequently reclassified into earnings when the hedged transactions affect earnings. Changes in the fair value of a derivative instrument that does not qualify for hedge accounting are recorded in earnings in the period in which the change occurs. For additional information regarding our accounting for derivative instruments and hedging activities, see Notes 2 and 18 to our 2018 Form 10-K. Interest Rate Risk From time to time, we enter into interest rate swaps to stabilize cash flows related to our long-term variable interest rate debt. In June 2015 we entered into interest rate swap contracts to fix the interest rate on $187.5 million of the Nordea Q5000 Loan (Note 6). These swap contracts, which are settled monthly, began in June 2015 and extend through April 2020. Our interest rate swap contracts qualify for cash flow hedge accounting treatment. Changes in the fair value of interest rate swaps are reported in accumulated OCI (net of tax). These changes are subsequently reclassified into earnings when the anticipated interest is recognized as interest expense. Foreign Currency Exchange Rate Risk Because we operate in various regions around the world, we conduct a portion of our business in currencies other than the U.S. dollar. We enter into foreign currency exchange contracts from time to time to stabilize expected cash outflows related to our vessel charters that are denominated in foreign currencies. In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the Grand Canyon II and Grand Canyon III charter payments denominated in Norwegian kroner through July 2019 and February 2020, respectively. Unrealized losses associated with our foreign currency exchange contracts that qualify for hedge accounting treatment are included in accumulated OCI (net of tax). Changes in unrealized losses associated with the foreign currency exchange contracts that are not designated as cash flow hedges are reflected in “Other expense, net” in the accompanying condensed consolidated statements of operations. Quantitative Disclosures Relating to Derivative Instruments The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands):
The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments (in thousands):
The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our condensed consolidated statements of operations (in thousands). We estimate that as of June 30, 2019, $1.4 million of net losses in accumulated OCI associated with our derivative instruments is expected to be reclassified into earnings within the next 12 months.
The following table presents the impact that derivative instruments not designated as hedging instruments had on our condensed consolidated statements of operations (in thousands):
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Basis Of Presentation And New Accounting Standards (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation | The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix” or the “Company”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements have been prepared pursuant to instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S. dollars and are consistent in all material respects with those applied in our 2018 Annual Report on Form 10-K (“2018 Form 10-K”) with the exception of the impact of adopting the new lease accounting standard in 2019 (see below). The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures. Actual results may differ from our estimates. We have made all adjustments (which were normal recurring adjustments) that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, and statements of cash flows, as applicable. The operating results for the three- and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Our balance sheet as of December 31, 2018 included herein has been derived from the audited balance sheet as of December 31, 2018 included in our 2018 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto included in our 2018 Form 10-K.
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Reclassifications | Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.
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New Accounting Standards | New accounting standards adopted 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 right-of-use 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 in the first quarter of 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 right-of-use (“ROU”) assets of $253.4 million (net of existing prepaid/deferred rent balances) as of January 1, 2019. 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 is not expected to have a material impact on our net earnings or cash flows. New accounting standards issued but not yet effective In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments. This ASU replaces the current incurred loss model for measurement of credit losses on financial assets (including trade receivables) with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods. We are currently evaluating the impact this guidance will have on our consolidated financial statements. We do not expect any other recent accounting standards to have a material impact on our financial position, results of operations or cash flows.
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Details Of Certain Accounts (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other current assets | Other current assets consist of the following (in thousands):
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Schedule of other assets, net | Other assets, net consist of the following (in thousands):
(1) This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term.
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Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands):
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Schedule of other non-current liabilities | Other non-current liabilities consist of the following (in thousands):
(1) Relates to the sale and lease-back in January 2016 of our office and warehouse property located in Aberdeen, Scotland. The deferred gain had been amortized over a 15-year minimum lease term prior to our adoption of ASC 842 on January 1, 2019. See Note 1 for the effect of ASC 842 on this deferred gain.
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of lease cost | The following table details the components of our lease cost (in thousands):
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Schedule of maturities of operating lease liabilities | Maturities of our operating lease liabilities as of June 30, 2019 are as follows (in thousands):
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Schedule of weighted average remaining lease term and discount rate | The following table presents the weighted average remaining lease term and discount rate:
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Schedule of other information related to operating leases | The following table presents other information related to our operating leases (in thousands):
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Schedule of future minimum operating lease payments | As previously disclosed in our 2018 Form 10-K and under the previous lease accounting standard, future minimum lease payments for our operating leases as of December 31, 2018 were as follows (in thousands):
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Long-Term Debt (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maturities of long-term debt outstanding | Scheduled maturities of our long-term debt outstanding as of June 30, 2019 are as follows (in thousands):
(3) Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.
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Schedule of components of net interest expense | The following table details the components of our net interest expense (in thousands):
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of differences between U.S. statutory rate and effective rate | The primary differences between the U.S. statutory rate and our effective rate are as follows:
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Shareholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of accumulated OCI | The components of accumulated other comprehensive income (loss) (“accumulated OCI”) are as follows (in thousands):
(1) Relates to foreign currency hedges for the Grand Canyon II and Grand Canyon III charters as well as interest rate swap contracts for the Nordea Q5000 Loan (Note 17) and is net of deferred income taxes totaling $0.4 million at June 30, 2019 and $1.0 million at December 31, 2018.
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Revenue From Contracts With Customers (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue | The following table provides information about disaggregated revenue by contract duration (in thousands):
(2) Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration.
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computations of basic and diluted EPS | The computations of the numerator (income) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands):
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Schedule of shares excluded from diluted EPS calculation | The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2032 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):
(1) The 2032 Notes were fully redeemed in May 2018.
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Employee Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of grants of share-based awards | During the six-month period ended June 30, 2019, the following grants of share-based awards were made under the 2005 Incentive Plan:
(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.
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Business Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial data by reportable segment | Certain financial data by reportable segment are summarized as follows (in thousands):
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Schedule of intercompany segment revenues | Intercompany segment revenues are as follows (in thousands):
(1) Amounts in 2019 include $5.3 million associated with P&A work that commenced on one of the Droshky wells for our Production Facilities segment (Notes 2 and 13). Upon completion of the P&A work Marathon Oil is contractually obligated to remit payment to us, which is reflected in “Other receivable” in the accompanying condensed consolidated balance sheet (Note 3).
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Schedule of total assets by reportable segment | The following table reflects total assets by reportable segment (in thousands):
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Asset Retirement Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of asset retirement obligations | The following table describes the changes in our AROs (both current and long-term) (in thousands):
(1) In connection with the acquisition on January 18, 2019 of certain assets related to the Droshky Prospect (Note 2), we assumed the AROs for the required P&A of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the P&A work is completed. We initially recognized $53.3 million of ARO liability, $50.8 million of receivables and $2.5 million of acquired property for this transaction.
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Statement Of Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental cash flow information | The following table provides supplemental cash flow information (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial instruments measured at fair value on a recurring basis | The following tables provide additional information relating to those financial instruments measured at fair value on a recurring basis (in thousands):
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Schedule of principal amount and estimated fair value of long-term debt | The principal amount and estimated fair value of our long-term debt are as follows (in thousands):
(3) The principal amount and fair value of the 2022 Notes and the 2023 Notes are for the entire instrument inclusive of the conversion feature reported in shareholders’ equity.
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Derivative Instruments And Hedging Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of balance sheet location and fair value of derivative instruments designated as hedging instruments | The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands):
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Schedule of balance sheet location and fair value of derivative instruments not designated as hedging instruments | The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments (in thousands):
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Schedule of unrealized gain (loss) recognized in OCI | The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our condensed consolidated statements of operations (in thousands). We estimate that as of June 30, 2019, $1.4 million of net losses in accumulated OCI associated with our derivative instruments is expected to be reclassified into earnings within the next 12 months.
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Schedule of gain (loss) reclassified from Accumulated OCI into earnings |
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Schedule of impact of derivative instruments not designated as hedging instruments on condensed consolidated statements of operations | The following table presents the impact that derivative instruments not designated as hedging instruments had on our condensed consolidated statements of operations (in thousands):
|
Basis Of Presentation And New Accounting Standards - New Accounting Standards (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease liabilities | $ 233,180 | ||
Operating lease right-of-use assets | $ 227,213 | $ 0 | |
Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease liabilities | $ 259,000 | ||
Operating lease right-of-use assets | 253,400 | ||
Retained Earnings | Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred gain on sale and leaseback transaction | 4,600 | ||
Tax effect of deferred gain on sale and leaseback transaction | $ 900 |
Company Overview (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
segment
vessel
| |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 3 |
Well Intervention | |
Segment Reporting Information [Line Items] | |
Number of long-term chartered vessels | 2 |
Robotics | |
Segment Reporting Information [Line Items] | |
Number of long-term chartered vessels | 3 |
Company Overview - STL Acquisition (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 29, 2019 |
Dec. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Business Acquisition [Line Items] | ||||
Cash paid for business acquisition | $ 4,081 | $ 0 | ||
STL | ||||
Business Acquisition [Line Items] | ||||
Controlling interest acquired, ownership percentage | 70.00% | |||
Total Consideration for business acquisition | $ 5,100 | |||
Cash paid for business acquisition | $ 4,100 | |||
Other payment for business acquisition | $ 1,000 | |||
Redeemable noncontrolling interests, ownership percentage | 30.00% | |||
Redeemable noncontrolling interests recognized | $ 3,400 | |||
Intangible assets recognized | 2,400 | |||
Goodwill recognized | $ 6,800 |
Details Of Certain Accounts - Other Current Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Contract assets (Note 9) | $ 273 | $ 5,829 |
Prepaids | 15,222 | 10,306 |
Deferred costs (Note 9) | 26,644 | 27,368 |
Other receivable (Note 13) | 26,000 | 0 |
Other | 9,625 | 8,091 |
Total other current assets | $ 77,764 | $ 51,594 |
Details Of Certain Accounts - Other Assets, Net (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaids | $ 945 | $ 5,896 |
Deferred recertification and dry dock costs, net | 19,108 | 8,525 |
Deferred costs (Note 9) | 26,832 | 38,574 |
Charter deposit | 12,544 | 12,544 |
Other receivable (Note 13) | 25,996 | 0 |
Goodwill (Note 2) | 6,763 | 0 |
Intangible assets with finite lives, net (Note 2) | 3,828 | 1,402 |
Other | 2,692 | 3,116 |
Total other assets, net | $ 98,708 | $ 70,057 |
Details Of Certain Accounts - Accrued Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued payroll and related benefits | $ 22,796 | $ 43,079 |
Investee losses in excess of investment (Note 4) | 10,000 | 5,125 |
Deferred revenue (Note 9) | 11,240 | 10,103 |
Asset retirement obligations (Note 13) | 22,173 | 0 |
Derivative liability (Note 17) | 4,251 | 9,311 |
Other | 14,151 | 17,976 |
Total accrued liabilities | $ 84,611 | $ 85,594 |
Details Of Certain Accounts - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Investee losses in excess of investment (Note 4) | $ 0 | $ 6,035 |
Deferred gain on sale of property | 0 | 5,052 |
Deferred revenue (Note 9) | 11,396 | 15,767 |
Asset retirement obligations (Note 13) | 26,912 | 0 |
Derivative liability (Note 17) | 0 | 884 |
Other | 2,976 | 11,800 |
Total other non-current liabilities | $ 41,284 | $ 39,538 |
Term of lease agreement | 15 years |
Equity Investments - Narrative (Details) - Independence Hub, LLC $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
ft
|
Dec. 31, 2018
USD ($)
|
|
Schedule of Equity Method Investments [Line Items] | ||
Percentage of ownership interest | 20.00% | |
Water depth | ft | 8,000 | |
Investee losses in excess of investment | $ | $ 10.0 | $ 11.2 |
Leases - Components Of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Lease, Cost [Abstract] | ||
Operating lease cost | $ 18,056 | $ 36,189 |
Variable lease cost | 3,222 | 6,297 |
Short-term lease cost | 4,804 | 8,962 |
Sublease income | (373) | (726) |
Net lease cost | $ 25,709 | $ 50,722 |
Leases - Weighted Average Remaining Lease Term And Discount Rate (Details) |
Jun. 30, 2019 |
---|---|
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 4 years 4 months 24 days |
Weighted average discount rate (as a percent) | 7.54% |
Leases - Other Information Related To Operating Leases (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Leases [Abstract] | |
Cash paid for operating lease liabilities | $ 35,784 |
ROU assets obtained in exchange for new operating lease obligations | $ 671 |
Leases - Future Minimum Operating Lease Payments (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 122,501 |
2020 | 102,140 |
2021 | 94,401 |
2022 | 95,435 |
2023 | 55,799 |
Thereafter | 10,448 |
Total lease payments | 480,724 |
Vessels | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | 116,620 |
2020 | 96,800 |
2021 | 89,216 |
2022 | 90,371 |
2023 | 51,266 |
Thereafter | 0 |
Total lease payments | 444,273 |
Facilities and Equipment | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | 5,881 |
2020 | 5,340 |
2021 | 5,185 |
2022 | 5,064 |
2023 | 4,533 |
Thereafter | 10,448 |
Total lease payments | $ 36,451 |
Long-Term Debt - MARAD Debt (Details) - MARAD Debt Maturing February 2027 |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Debt Instrument [Line Items] | |
Guarantor obligations (as a percent) | 50.00% |
Frequency of periodic payment | semi-annual |
Maturity date | February 2027 |
Interest rate (as a percent) | 4.93% |
Long-Term Debt - Nordea Credit Agreement (Details) - Nordea Q5000 Loan Maturing April 2020 - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Apr. 30, 2015 |
Sep. 30, 2014 |
Jun. 30, 2015 |
|
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 250.0 | ||
Funded amount | $ 250.0 | ||
Maturity date | Apr. 30, 2020 | ||
Frequency of periodic payment | quarterly | ||
Scheduled principal installments | $ 8.9 | ||
Balloon payment | $ 80.4 | ||
Interest Rate Swaps | |||
Debt Instrument [Line Items] | |||
Notional amount | $ 187.5 | ||
Fixed LIBOR rate on interest rate swaps (as a percent) | 1.50% | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 2.50% |
Long-Term Debt - Convertible Senior Notes Due 2032 (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 20, 2018 |
Mar. 31, 2012 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
May 04, 2018 |
|
Debt Instrument [Line Items] | |||||||
Principal amount | $ 459,224 | $ 459,224 | |||||
Repurchase of convertible debt | 0 | $ 60,362 | |||||
Loss on extinguishment of long-term debt | $ (18) | $ (76) | $ (18) | $ (1,181) | |||
Convertible Senior Notes Maturing March 2032 (Redeemed May 2018) | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 200,000 | ||||||
Interest rate (as a percent) | 3.25% | ||||||
Maturity date | Mar. 15, 2032 | ||||||
Repurchased principal amount | $ 59,300 | $ 800 | |||||
Repurchase of convertible debt | 59,500 | ||||||
Payments for fees | 200 | ||||||
Loss on extinguishment of long-term debt | $ (200) |
Long-Term Debt - Components Of Net Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Disclosure [Abstract] | ||||
Interest expense | $ 8,045 | $ 8,041 | $ 15,941 | $ 16,340 |
Interest income | (675) | (679) | (1,433) | (1,269) |
Capitalized interest | (5,165) | (3,763) | (10,205) | (7,576) |
Net interest expense | $ 2,205 | $ 3,599 | $ 4,303 | $ 7,495 |
Income Taxes - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 14.60% | 1.60% | 15.00% | 2.50% |
Income Taxes - Effective Income Tax Rate Reconciliation (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
U.S. statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
Foreign provision | (8.40%) | (19.60%) | (9.00%) | (20.20%) |
Other | 2.00% | 0.20% | 3.00% | 1.70% |
Effective rate | 14.60% | 1.60% | 15.00% | 2.50% |
Shareholders' Equity - Components Of Accumulated OCI (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Cumulative foreign currency translation adjustment | $ (70,118) | $ (69,855) |
Net unrealized loss on hedges, net of tax | (1,397) | (4,109) |
Accumulated OCI | (71,515) | (73,964) |
Deferred tax assets | $ 400 | $ 1,000 |
Earnings Per Share - Potentially Dilutive Shares Excluded From Diluted EPS Calculation (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Convertible Senior Notes Maturing May 2022 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 8,997 | 8,997 | 8,997 | 8,997 |
Convertible Senior Notes Maturing September 2023 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 13,202 | 13,202 | 13,202 | 7,440 |
Convertible Senior Notes Maturing March 2032 (Redeemed May 2018) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 0 | 12 | 0 | 1,057 |
Business Segment Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
segment
vessel
| |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 3 |
Robotics | |
Segment Reporting Information [Line Items] | |
Number of long-term chartered vessels | vessel | 3 |
Business Segment Information - Total Assets By Reportable Segment (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 2,620,222 | $ 2,347,730 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | 143,839 | 162,645 |
Well Intervention | Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,111,752 | 1,916,638 |
Robotics | Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 187,401 | 147,602 |
Production Facilities | Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 177,230 | $ 120,845 |
Asset Retirement Obligations - Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jan. 18, 2019 |
|
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Balance at beginning of period | $ 0 | |
Liability incurred during the period | 53,294 | |
Liability settled during the period | (5,327) | |
Accretion expense | 1,118 | |
Balance at end of period | 49,085 | |
Business Acquisition [Line Items] | ||
ARO liability | 0 | |
Droshky Prospect | ||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Liability settled during the period | $ (5,300) | |
Business Acquisition [Line Items] | ||
ARO liability | $ 53,300 | |
Other receivables | 50,800 | |
Acquired property | $ 2,500 |
Commitments And Contingencies And Other Matters - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Commitments And Contingencies [Line Items] | ||
Total investment | $ 2,805,043 | $ 2,785,778 |
Siem Helix 1 and Siem Helix 2 | ||
Commitments And Contingencies [Line Items] | ||
Term of charter agreement | 7 years | |
Q7000 | ||
Commitments And Contingencies [Line Items] | ||
Total investment | $ 427,400 | |
Q7000 | Contract Signing | ||
Commitments And Contingencies [Line Items] | ||
Percentage of contract price | 20.00% | |
Q7000 | Due 2016 | ||
Commitments And Contingencies [Line Items] | ||
Percentage of contract price | 20.00% | |
Q7000 | Due 2017 | ||
Commitments And Contingencies [Line Items] | ||
Percentage of contract price | 20.00% | |
Q7000 | Due 2018 | ||
Commitments And Contingencies [Line Items] | ||
Percentage of contract price | 20.00% | |
Q7000 | Vessel Delivery | ||
Commitments And Contingencies [Line Items] | ||
Percentage of contract price | 20.00% | |
Q7000 | Shipyard | ||
Commitments And Contingencies [Line Items] | ||
Total investment | $ 276,800 |
Statement Of Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Supplemental Cash Flow Information [Abstract] | ||
Interest paid, net of interest capitalized | $ 1,478 | $ 3,783 |
Income taxes paid | $ 5,478 | $ 3,651 |
Statement Of Cash Flow Information - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Supplemental Cash Flow Information [Abstract] | ||
Non-cash capital additions | $ 10.2 | $ 9.9 |
Derivative Instruments And Hedging Activities - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2015 |
|
Derivative [Line Items] | ||
Loss in Accumulated OCI to be re-classified within twelve months | $ 1.4 | |
Interest Rate Swaps | Nordea Q5000 Loan Maturing April 2020 | ||
Derivative [Line Items] | ||
Notional amount | $ 187.5 |
Derivative Instruments And Hedging Activities - Derivative Instruments Designated As Hedging Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Asset derivative instruments designated as hedging instruments | $ 253 | $ 1,064 |
Liability derivative instruments designated as hedging instruments | 2,006 | 6,211 |
Other Current Assets | Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivative instruments designated as hedging instruments | 253 | 863 |
Other Assets, Net | Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivative instruments designated as hedging instruments | 0 | 201 |
Accrued Liabilities | Foreign Exchange Contracts | ||
Derivatives, Fair Value [Line Items] | ||
Liability derivative instruments designated as hedging instruments | 2,006 | 5,857 |
Other Non-Current Liabilities | Foreign Exchange Contracts | ||
Derivatives, Fair Value [Line Items] | ||
Liability derivative instruments designated as hedging instruments | $ 0 | $ 354 |
Derivative Instruments And Hedging Activities - Derivative Instruments Not Designated As Hedging Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Liability derivative instruments not designated as hedging instruments | $ 2,245 | $ 3,984 |
Accrued Liabilities | Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Liability derivative instruments not designated as hedging instruments | 2,245 | 3,454 |
Other Non-Current Liabilities | Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Liability derivative instruments not designated as hedging instruments | $ 0 | $ 530 |
Derivative Instruments And Hedging Activities - Unrealized Gain (Loss) Recognized In OCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized Gain (Loss) Recognized in OCI | $ (278) | $ (1,226) | $ (427) | $ 927 |
Foreign Exchange Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized Gain (Loss) Recognized in OCI | (24) | (1,459) | (58) | 129 |
Interest Rate Swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized Gain (Loss) Recognized in OCI | $ (254) | $ 233 | $ (369) | $ 798 |
Derivative Instruments And Hedging Activities - Gain (Loss) Reclassified From Accumulated OCI Into Earnings (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Reclassified from Accumulated OCI into Earnings | $ (1,975) | $ (1,807) | $ (3,821) | $ (3,434) |
Foreign Exchange Contracts | Cost of Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Reclassified from Accumulated OCI into Earnings | (2,185) | (1,925) | (4,263) | (3,581) |
Interest Rate Swaps | Net Interest Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Reclassified from Accumulated OCI into Earnings | $ 210 | $ 118 | $ 442 | $ 147 |
Derivative Instruments And Hedging Activities - Impact Of Derivative Instruments Not Designated As Hedging Instruments On Condensed Consolidated Statements Of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in Earnings | $ (2) | $ (787) | $ (42) | $ 57 |
Foreign Exchange Contracts | Other Expense, Net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in Earnings | $ (2) | $ (787) | $ (42) | $ 57 |
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