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Hercules Offshore Announces Fourth Quarter and Full Year 2012 Results



    Hercules Offshore Announces Fourth Quarter and Full Year 2012 Results

PR Newswire

HOUSTON, Feb. 12, 2013

HOUSTON, Feb. 12, 2013 /PRNewswire/ -- Hercules Offshore, Inc. (Nasdaq: HERO)
today reported income from continuing operations of $4.3 million, or $0.03 per
diluted share, on revenue of $202.6 million for the fourth quarter 2012,
compared with a loss from continuing operations of $21.5 million, or $0.16 per
diluted share, on revenue of $162.8 million for the fourth quarter 2011.

For the twelve month period ended December 31, 2012, the Company reported a
loss from continuing operations of $127.0 million, or $0.83 per diluted share,
on revenue of $709.8 million, versus a loss from continuing operations of
$66.5 million, or $0.51 per diluted share, on revenue of $655.4 million for
the twelve month period ended December 31, 2011.  As outlined in the
Reconciliation of GAAP to Non-GAAP Financial Measures, the twelve month period
ended December 31, 2012 results include impairment charges on property and
equipment, certain gains and debt refinancing and retirement costs. On a net
after tax basis, these adjustments approximated a charge of $59.0 million, or
$0.39 per diluted share.

John T. Rynd, Chief Executive Officer and President of Hercules Offshore
stated, "Market fundamentals in the U.S. Gulf of Mexico strengthened
throughout 2012, to levels that, in many respects, are the best they have been
in the long history of drilling in the region. This momentum continues through
to today.  As we begin 2013, the visibility in our core domestic business is
unsurpassed, with customer discussions already focusing on 2014 demand.  Given
the limited availability of rigs and strong interest from customers, we have
embarked on our first rig reactivation. Additional reactivations, as well as
further growth in backlog and dayrates, are contingent on commodity prices,
rig availability, and customer demand. We will remain disciplined in our
capital allocation decisions, however, we are optimistic regarding our growth
prospects based on current market dynamics in the U.S. Gulf of Mexico.

"Our international operations are in the early stages of a transformation,
where we seek to expand our global footprint and high-grade our asset mix in
key offshore markets.  The rebound in our domestic operations, along with our
success in strengthening the balance sheet, will allow for opportunistic
investments in this area. 

"While there are a number of positive catalysts for our Company to capitalize
on, we also have challenges, including our ability to minimize shipyard time
and control costs.  After the extreme market conditions that we have
successfully navigated through over the past several years, I am confident
that our organization is well-equipped to meet these future challenges."

Offshore

Revenue generated from Domestic Offshore for the fourth quarter 2012 increased
by 21.9% to $91.1 million from $74.8 million in the fourth quarter 2011, as a
result of improving dayrates partially offset by a reduction in utilization. 
Average revenue per rig per day rose by 28.5% to $67,681 in the fourth quarter
2012 from $52,686 in the comparable 2011 period.  Utilization decreased to
81.3% in the fourth quarter 2012 from 85.7% in the fourth quarter 2011, due to
shipyard downtime on the Hercules 205, Hercules 253, Hercules 263 and Hercules
350 related to capital upgrade and regulatory survey requirements.  Operating
expenses of $60.9 million in the fourth quarter 2012 includes approximately
$7.4 million of net gains from asset sales, compared to operating expenses of
$45.7 million in the fourth quarter of 2011, which includes $15.0 million of
gains from asset sales.  Excluding these gains, the overall increase in
segment operating expense was driven by higher labor, repair and maintenance,
and workers' compensation expense. Domestic Offshore generated operating
income of $10.0 million in the fourth quarter 2012 compared to operating
income of $9.0 million in the fourth quarter 2011.

International Offshore revenue of $49.8 million in the fourth quarter 2012,
which includes a $10.0 million payment from Angola Drilling Company ("ADC")
related to a prior contract on the Hercules 185, compares to $40.9 million in
the fourth quarter 2011.  Average revenue per rig per day for the fourth
quarter 2012 increased to $137,671 from $85,778 in the fourth quarter 2011,
primarily on higher dayrates for the Hercules 260, the absence of the Hercules
258 and Platform Rig 3, which were previously contracted at below fleet
average rates, and the impact of the ADC payment.  Operating days declined to
362 days in the fourth quarter 2012 compared to 477 days in the respective
2011 period, mainly as a result of the sale of Platform Rig 3 and contract
expiration on the Hercules 258, partially offset by increased utilization on
the Hercules 208, Hercules 261 and Hercules 262.  Operating expenses decreased
to $27.1 million in the fourth quarter 2012 from $34.6 million in the fourth
quarter 2011, from lower costs on the Hercules 208 and Hercules 260, the
stacking of the Hercules 258 and Hercules 185, and the sale of Platform Rig
3.  International Offshore recorded operating income of $9.8 million in the
fourth quarter 2012 compared to an operating loss of $6.0 million in the prior
year period.

Inland

Inland generated revenue of $8.1 million in the fourth quarter 2012 compared
to revenue of $6.9 million in the fourth quarter 2011, as a result of
improvements in dayrates and utilization.  Fourth quarter 2012 average revenue
per rig per day of $32,826 and utilization of 89.5%, compared favorably to
$30,524 and 82.2% in the respective 2011 period.  Operating expenses for the
fourth quarter 2012 were $5.2 million versus operating expenses of $6.3
million in the fourth quarter 2011.  Gains on asset sales reduced fourth
quarter 2012 operating expenses by $1.4 million, compared to gains of $0.6
million in fourth quarter 2011.  Inland recorded an operating loss of $0.6
million in the fourth quarter 2012 compared to an operating loss of $3.1
million in the comparable prior year period. 

Liftboats

Domestic Liftboats revenue increased by 60.0% to $19.8 million in the fourth
quarter 2012 from $12.4 million in the fourth quarter 2011, due to strong
improvements in pricing and utilization.  Average revenue per liftboat per day
increased by 21.7% to $9,327 in the fourth quarter 2012 from $7,662 in the
fourth quarter 2011.  Operating days increased to 2,122 in the fourth quarter
2012 compared to 1,614 in the comparable 2011 period.  Operating expenses in
the fourth quarter 2012 were $10.5 million, essentially flat with operating
expenses in the fourth quarter 2011.  Domestic Liftboats recorded operating
income of $4.7 million in the fourth quarter 2012 compared to an operating
loss of $2.5 million in the fourth quarter 2011.

International Liftboats revenues increased by 21.5% to $33.8 million in the
fourth quarter 2012 from $27.8 million in the prior year period.  Average
revenue per liftboat per day increased to $22,961 in the fourth quarter 2012
from $21,595 in the respective 2011 period, while utilization increased to
74.8% from 60.9% in the same periods, respectively.  Operating expenses
increased to $16.4 million in the fourth quarter 2012 from $15.0 million in
the fourth quarter 2011, primarily due to higher labor costs.  International
Liftboats recorded operating income of $11.6 million in the fourth quarter
2012 compared to operating income of $4.8 million in the prior year period.

Non-GAAP

Certain non-GAAP performance measures and corresponding reconciliations to
GAAP financial measures for the Company have been provided for meaningful
comparisons between current results and prior operating periods. Generally, a
non-GAAP financial measure is a numerical measure of a company's performance,
financial position, or cash flows that excludes or includes amounts that are
not normally excluded or included in the most directly comparable measure
calculated and presented in accordance with generally accepted accounting
principles. In order to fully assess the financial operating results,
management believes that the adjusted loss from continuing operations figures
included in this release are appropriate measures of the continuing and normal
operations of the Company. However, these measures should be considered in
addition to, and not as a substitute for, or superior to, income (loss) from
continuing operations, operating income (loss), cash flows from operations, or
other measures of financial performance prepared in accordance with GAAP. The
non-GAAP measures included in this press release have been reconciled to the
nearest GAAP measure in the table that follows the financial statements.
Please see the attached Reconciliation of GAAP to Non-GAAP Financial Measures
for a complete description of the adjustments made to Operating Loss, Loss
From Continuing Operations and Diluted Loss per Share from Continuing
Operations.

Conference Call Information

Hercules Offshore will conduct a conference call at 10:00 a.m. CST (11:00 a.m.
EST) on February 12, 2013, to discuss its fourth quarter and full year 2012
financial results. To participate in the call, dial 866-510-0707 (domestic) or
617-597-5376 (international) and reference access code 76244795 approximately
10 minutes prior to the start of the call. The conference call will also be
broadcast live via the Internet at http://www.herculesoffshore.com.

A replay of the conference call will be available by telephone on February 12,
2013, beginning at 12:00 p.m. CST (1:00 p.m. EST), through February 19, 2013.
The phone number for the conference call replay is 888-286-8010 (domestic) or
617-801-6888 (international) with access code 91770267. Additionally, the
recorded conference call will be accessible through our website at
http://www.herculesoffshore.com for 7 days after the conference call.

Additional Information

Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 37
jackup rigs, 13 barge rigs and 63 liftboats. The Company offers a range of
services to oil and gas producers to meet their needs during drilling, well
service, platform inspection, maintenance, and decommissioning operations in
several key shallow water provinces around the world. Hercules Offshore
currently holds 32.1% of share capital in Discovery Offshore S.A., a pure
play, ultra-high specification jackup rig company.  For more information,
please visit our website at http://www.herculesoffshore.com.

The news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements are subject to a number of risks,
uncertainties and assumptions, including the factors described in Hercules
Offshore's most recent periodic reports and other documents filed with the
Securities and Exchange Commission, which are available free of charge at the
SEC's website at http://www.sec.gov or the Company's website at
http://www.herculesoffshore.com. Hercules Offshore cautions you that
forward-looking statements are not guarantees of future performance and that
actual results or developments may differ materially from those projected or
implied in these statements.

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                              December 31,     December 31,
                                              2012             2011
                                              (Unaudited)
ASSETS
  Current Assets:
     Cash and Cash Equivalents                $      259,193   $      134,351
     Restricted Cash                          2,027            9,633
     Accounts Receivable, Net                 167,936          153,688
     Prepaids                                 16,135           16,352
     Current Deferred Tax Asset               21,125           15,543
     Other                                    12,191           20,435
                                              478,607          350,002
  Property and Equipment, Net                 1,462,755        1,591,791
  Equity Investment                           38,191           34,735
  Other Assets, Net                           37,077           30,176
                                              $   2,016,630    $   2,006,704
LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities:
     Short-term Debt and Current Portion of   $        67,054  $        22,130
     Long-term Debt
     Accounts Payable                         58,615           49,370
     Accrued Liabilities                      82,781           70,421
     Interest Payable                         17,367           9,899
     Insurance Notes Payable                  9,123            5,218
     Other Current Liabilities                26,483           18,366
                                              261,423          175,404
  Long-term Debt, Net of Current Portion      798,013          818,146
  Deferred Income Taxes                       56,821           83,503
  Other Liabilities                           17,611           21,098
  Commitments and Contingencies
  Stockholders' Equity                        882,762          908,553
                                              $   2,016,630    $   2,006,704

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                         Three Months Ended          Twelve Months Ended
                         December 31,                December 31,
                         2012          2011          2012           2011
                         (Unaudited)   (Unaudited)   (Unaudited)
Revenue                  $  202,634    $  162,788    $  709,792     $  655,358
Costs and Expenses:
    Operating Expenses   120,150       112,251       438,084        444,332
    Asset Impairment     -             -             108,216        -
    Depreciation and     40,248        43,872        166,426        172,571
    Amortization
    General and          20,718        16,801        60,643         57,204
    Administrative
                         181,116       172,924       773,369        674,107
Operating Income (Loss)  21,518        (10,136)      (63,577)       (18,749)
Other Income (Expense):
    Interest Expense     (19,341)      (20,143)      (79,172)       (79,178)
    Loss on
    Extinguishment of    -             -             (9,156)        -
    Debt
    Other, Net           1,132         (671)         1,896          (3,934)
Income (Loss) Before     3,309         (30,950)      (150,009)      (101,861)
Income Taxes
Income Tax Benefit       958           9,420         23,005         35,341
Income (Loss) from       4,267         (21,530)      (127,004)      (66,520)
Continuing Operations
Income (Loss) from
Discontinued Operations, -             43            -              (9,608)
Net of Taxes
Net Income (Loss)        $     4,267   $  (21,487)   $ (127,004)    $
                                                                     (76,128)
Basic Income (Loss) Per
Share:
    Income (Loss) from                                              $    
    Continuing           $       0.03  $     (0.16)  $      (0.83)   (0.51)
    Operations
    Income (Loss) from
    Discontinued         -             -             -              (0.07)
    Operations
    Net Income (Loss)    $       0.03  $     (0.16)  $      (0.83)  $    
                                                                    (0.58)
Diluted Income (Loss)
Per Share:
    Income (Loss) from                                              $    
    Continuing           $       0.03  $     (0.16)  $      (0.83)  (0.51)
    Operations
    Income (Loss) from
    Discontinued         -             -             -              (0.07)
    Operations
    Net Income (Loss)    $       0.03  $     (0.16)  $      (0.83)  $    
                                                                    (0.58)
Weighted Average Shares
Outstanding:
    Basic                158,594       137,894       153,722        130,474
    Diluted              160,459       137,894       153,722        130,474

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                       Twelve Months Ended December 31,
                                       2012                 2011
                                        (Unaudited) 
Cash Flows from Operating Activities:
 Net Loss                              $         (127,004)  $         (76,128)
 Adjustments to Reconcile Net Loss to
 Net Cash Provided by
 Operating Activities:
 Depreciation and Amortization         166,426              174,227
 Stock-Based Compensation Expense      6,243                5,283
 Deferred Income Taxes                 (33,236)             (59,187)
 Benefit for Doubtful Accounts         (8,847)              (13,623)
 Receivable
 Amortization of Deferred Financing    3,174                3,871
 Fees
 Amortization of Original Issue        4,122                4,433
 Discount
 Gain on Insurance Settlement          (30,668)             -
 Gain on Disposal of Assets, Net       (33,396)             (10,079)
 Non-Cash Portion of Loss on           2,738                -
 Extinguishment of Debt
 Asset Impairment                      108,216              -
 Other                                 (1,776)              3,245
 Net Change in Operating Assets and    12,371               19,983
 Liabilities
 Net Cash Provided by Operating        68,363               52,025
 Activities
Cash Flows from Investing Activities:
 Acquisition of Assets                 (40,000)             (25,000)
 Additions of Property and Equipment   (127,180)            (39,483)
 Deferred Drydocking Expenditures      (11,425)             (15,739)
 Cash Paid for Equity Investment       (4,288)              (34,155)
 Insurance Proceeds Received           54,139               -
 Proceeds from Sale of Assets, Net     72,897               80,362
 Decrease in Restricted Cash           3,588                1,495
 Net Cash Used in Investing            (52,269)             (32,520)
 Activities
Cash Flows from Financing Activities:
 Long-term Debt Borrowings             500,000              -
 Long-term Debt Repayments             (452,909)            (22,247)
 Redemption of 3.375% Convertible      (27,606)             -
 Senior Notes
 Common Stock Issuance                 96,696               -
 Payment of Debt Issuance Costs        (7,717)              (2,109)
 Other                                 284                  2,536
 Net Cash Provided by (Used in)        108,748              (21,820)
 Financing Activities
Net Increase (Decrease) in Cash and    124,842              (2,315)
Cash Equivalents
Cash and Cash Equivalents at           134,351              136,666
Beginning of Period
Cash and Cash Equivalents at End of    $          259,193   $        134,351
Period

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
                            Three Months Ended        Twelve Months Ended
                            December 31,              December 31,
                            2012         2011         2012         2011
Domestic Offshore:
 Number of rigs (as of end  29           38           29           38
 of period)
 Revenue                    $            $            $            $        
                             91,099       74,762      355,762      217,450
 Operating expenses         60,928       45,742       238,674      186,132
 Asset impairment           -            -            25,502       -
 Depreciation and           17,972       18,226       72,938       68,146
 amortization expense
 General and                2,194        1,776        8,130        9,275
 administrative expenses
 Operating income (loss)    $            $            $            $        
                             10,005         9,018     10,518       (46,103)
International Offshore:
 Number of rigs (as of end  8            9            8            9
 of period)
 Revenue                    $            $            $            $        
                             49,837       40,916      135,047      237,047
 Operating expenses         27,083       34,636       66,144       134,439
 Asset impairment           -            -            82,714       -
 Depreciation and           10,490       12,809       45,577       52,278
 amortization expense
 General and                2,499        (544)        (183)        (7,512)
 administrative expenses
 Operating income (loss)    $            $            $            $          
                               9,765      (5,985)     (59,205)     57,842
Inland:
 Number of barges (as of    14           17           14           17
 end of period)
 Revenue                    $            $            $            $          
                               8,108        6,929     28,015       28,180
 Operating expenses         5,212        6,280        26,175       22,973
 Depreciation and           3,208        3,251        12,842       14,589
 amortization expense
 General and                245          519          652          1,388
 administrative expenses
 Operating loss             $            $            $            $        
                                (557)     (3,121)     (11,654)     (10,770)
Domestic Liftboats:
 Number of liftboats (as    39           40           39           40
 of end of period)
 Revenue                    $            $            $            $          
                             19,791       12,366      63,832       56,575
 Operating expenses         10,489       10,544       40,050       42,381
 Depreciation and           3,842        3,692        15,524       15,329
 amortization expense
 General and                717          611          2,680        2,190
 administrative expenses
 Operating income (loss)    $            $            $            $          
                               4,743      (2,481)       5,578      (3,325)
International Liftboats:
 Number of liftboats (as    24           24           24           24
 of end of period)
 Revenue                    $            $            $            $        
                             33,799       27,815      127,136      116,106
 Operating expenses         16,438       15,049       67,041       58,407
 Depreciation and           4,024        5,245        16,896       19,624
 amortization expense
 General and                1,733        2,696        4,588        7,166
 administrative expenses
 Operating income           $            $            $            $          
                             11,604         4,825     38,611       30,909
Total Company:
 Revenue                    $            $            $            $        
                             202,634      162,788     709,792      655,358
 Operating expenses         120,150      112,251      438,084      444,332
 Asset impairment           -            -            108,216      -
 Depreciation and           40,248       43,872       166,426      172,571
 amortization expense
 General and                20,718       16,801       60,643       57,204
 administrative expenses
 Operating income (loss)    21,518       (10,136)     (63,577)     (18,749)
      Interest expense      (19,341)     (20,143)     (79,172)     (79,178)
      Loss on               -            -            (9,156)      -
 extinguishment of debt
      Other, net            1,132        (671)        1,896        (3,934)
 Income (loss) before       3,309        (30,950)     (150,009)    (101,861)
 income taxes
      Income tax benefit    958          9,420        23,005       35,341
 Income (loss) from         4,267        (21,530)     (127,004)    (66,520)
 continuing operations
 Income (loss) from
 discontinued operations,   -            43           -            (9,608)
 net of taxes
 Net income (loss)          $            $            $            $        
                               4,267      (21,487)    (127,004)    (76,128)

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
              Three Months Ended December 31, 2012
                                                                            Average
                                                               Average      Operating
              Operating Days  Available Days  Utilization (1)  Revenue per
                                                               Day (2)      Expense per
                                                                            Day (3)
Domestic      1,346           1,656           81.3%            $            $    
Offshore                                                       67,681        36,792
International 362             460             78.7%            137,671      58,876
Offshore
Inland        247             276             89.5%            32,826       18,884
Domestic      2,122           2,944           72.1%            9,327        3,563
Liftboats
International 1,472           1,968           74.8%            22,961       8,353
Liftboats
              Three Months Ended December 31, 2011
                                                                            Average
                                                               Average      Operating
              Operating Days  Available Days  Utilization (1)  Revenue per
                                                               Day (2)      Expense per
                                                                            Day (3)
Domestic      1,419           1,656           85.7%            $            $    
Offshore                                                       52,686        27,622
International 477             644             74.1%            85,778       53,783
Offshore
Inland        227             276             82.2%            30,524       22,754
Domestic      1,614           3,128           51.6%            7,662        3,371
Liftboats
International 1,288           2,116           60.9%            21,595       7,112
Liftboats
              Twelve Months Ended December 31, 2012
                                                                            Average
                                                               Average      Operating
              Operating Days  Available Days  Utilization (1)  Revenue per
                                                               Day (2)       Expense
                                                                            per
                                                                            Day (3)
Domestic      5,760           6,588           87.4%            $            $    
Offshore                                                       61,764        36,229
International 1,331           2,336           57.0%            101,463      28,315
Offshore
Inland        880             1,098           80.1%            31,835       23,839
Domestic      7,315           11,941          61.3%            8,726        3,354
Liftboats
International 5,367           7,562           71.0%            23,688       8,866
Liftboats
              Twelve Months Ended December 31, 2011
                                                                            Average
                                                               Average      Operating
              Operating Days  Available Days  Utilization (1)  Revenue per
                                                               Day (2)      Expense per
                                                                            Day (3)
Domestic      4,494           5,755           78.1%            $            $    
Offshore                                                       48,387        32,343
International 2,131           2,828           75.4%            111,237      47,539
Offshore
Inland        966             1,095           88.2%            29,172       20,980
Domestic      7,290           12,983          56.2%            7,761        3,264
Liftboats
International 5,310           8,395           63.3%            21,866       6,957
Liftboats

    Utilization is defined as the total number of days our rigs or liftboats,
    as applicable, were under contract, known as operating days, in the period
    as a percentage of the total number of available days in the period.  Days
(1) during which our rigs and liftboats were undergoing major refurbishments,
    upgrades or construction, and days during which our rigs and liftboats are
    cold stacked, are not counted as available days. Days during which our
    liftboats are in the shipyard undergoing drydocking or inspection are
    considered available days for the purposes of calculating utilization. 
    Average revenue per rig or liftboat per day is defined as revenue earned
(2) by our rigs or liftboats, as applicable, in the period divided by the
    total number of operating days for our rigs or liftboats, as applicable,
    in the period.
    Average operating expense per rig or liftboat per day is defined as
    operating expenses, excluding depreciation and amortization, incurred by
    our rigs or liftboats, as applicable, in the period divided by the total
    number of available days in the period.  We use available days to
    calculate average operating expense per rig or liftboat per day rather
(3) than operating days, which are used to calculate average revenue per rig
    or liftboat per day, because we incur operating expenses on our rigs and
    liftboats even when they are not under contract and earning a dayrate. In
    addition, the operating expenses we incur on our rigs and liftboats per
    day when they are not under contract are typically lower than the per day
    expenses we incur when they are under contract.

 

Hercules Offshore, Inc. and Subsidiaries
 Reconciliation of GAAP to Non-GAAP Financial Measures
 (Unaudited)
 (In thousands, except per share data)
We report our financial results in accordance with generally accepted
accounting principles (GAAP). However, management believes that certain
non-GAAP performance measures and ratios may provide users of this financial
information additional meaningful comparisons between current results and
results in prior operating periods. Non-GAAP financial measures we may present
from time to time are operating income, income from continuing operations or
diluted earnings per share excluding certain charges or amounts. These
adjusted income amounts are not a measure of financial performance under GAAP.
Accordingly, they should not be considered as a substitute for operating
income, income from continuing operations, net income, earnings per share or
other income data prepared in accordance with GAAP.  See the table below for
supplemental financial data and corresponding reconciliations to GAAP
financial measures for the twelve months ended December 31, 2012. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the Company's reported results prepared in accordance with GAAP. The
non-GAAP measures included in this press release have been reconciled to the
nearest GAAP measure in the following table:

                                                    Twelve Months Ended
                                                    December 31,
                                                    2012
    Operating Loss:
      GAAP Operating Loss                           $          (63,577)
      Adjustment                                    62,598                (a)
      Non-GAAP Operating Loss                       $               (979)
    Other Expense:
      GAAP Other Expense                            $          (86,432)
      Adjustment                                    9,156                 (b)
      Non-GAAP Other Expense                        $          (77,276)
   Benefit for Income Taxes:
      GAAP Benefit for Income Taxes                 $           23,005
      Tax Impact of Adjustment                      (12,796)
      Non-GAAP Benefit for Income Taxes             $           10,209
    Loss from Continuing Operations:
      GAAP Loss from Continuing Operations          $       (127,004)
      Total Adjustment, Net of Tax                  58,958
      Non-GAAP Loss from Continuing Operations      $         (68,046)
    Diluted Loss per Share from Continuing
Operations:
      GAAP Diluted Loss per Share from Continuing   $             (0.83)
Operations
      Adjustment per Share                          0.39
      Non-GAAP Diluted Loss per Share from          $             (0.44)
Continuing Operations   

         This amount represents a non-cash charge of $47.5 million related to
         the impairment of the Hercules 185 and related unamortized deferred
         costs; a non-cash charge of $35.2 million related to the impairment
(a)      of the Hercules 258; a non-cash charge of $25.5 million related to
         the impairment of the Hercules 252; an $18.4 million gain on the sale
         of Platform Rig 3 and a $27.3 million gain on the Hercules 185
         insurance settlement. On an after-tax basis, these adjustments
         approximated $53.0 million.
         This amount represents (i) a charge of $6.4 million related to our
         debt refinancing in April 2012; (ii) a non-cash charge of $1.4
         million related to the write-off of unamortized issuance costs in
(b)      connection with the April 2012 termination of our prior term loan and
         (iii) a $1.3 million loss on the retirement of a portion of our
         3.375% convertible senior notes. On an after-tax basis, these
         adjustments approximated $6.0 million.

SOURCE Hercules Offshore, Inc.

Website: http://www.herculesoffshore.com
Contact: Son P. Vann, CFA, Vice President Investor Relations and Planning,
Hercules Offshore, Inc., +1-713-350-8508
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