Condensed Consolidating Financial Statements of Guarantors

The following tables present the condensed consolidating historical financial statements as of December 31, 2017 2016, and 2015, and for each of the two years ended December 31, 2017, for the domestic subsidiaries of the Company that serve as guarantors of the Company's 2019 convertible senior notes, 2020 senior notes and 2021 senior notes and the financial results for the Company's subsidiaries that do not serve as guarantors. The guarantor subsidiaries of the 2019 convertible senior notes, 2020 senior notes and 2021 senior notes are 100% owned by the Company and the guarantees are full and unconditional and joint and several. The non-guarantor subsidiaries of such notes include all of the Company's foreign subsidiaries.

Condensed Consolidating Balance Sheet

(In thousands, except per share data)



	Year Ended December 31, 2017
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	4	$	178,746	$	8,099		$	—		$	186,849
Accounts receivable, net of allowance for doubtful accounts of $6,054	—		40,407		4,295			—			44,702
Other current assets	29		16,051		810			—			16,890
Total current assets	33		235,204		13,204			—			248,441
Property, plant and equipment, net	—		2,379,097		121,916			—			2,501,013
Deferred charges, net	—		11,408		1,404			—			12,812
Intercompany receivable	1,778,711		648,920		39,445			(2,467,076		)	—
Investment in subsidiaries	790,734		8,602		—			(799,336		)	—
Other assets	—		5,984		628			—			6,612
Total assets	$	2,569,478	$	3,289,215	$	176,597		$	(3,266,412	)	$	2,768,878
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	15,643	$	553		$	—		$	16,196
Accrued interest	14,734		—		—			—			14,734
Accrued payroll and benefits	—		8,458		1,017			—			9,475
Other accrued liabilities	—		8,129		328			—			8,457
Total current liabilities	14,734		32,230		1,898			—			48,862
Long-term debt, including deferred gain of $18,911, and net of original issue discount of $7,862 and deferred financing costs of $10,134	1,080,826		—		—			—			1,080,826
Deferred tax liabilities, net	—		192,793		4,672			—			197,465
Intercompany payables	140,019		2,240,832		190,177			(2,571,028		)	—
Other liabilities	—		3,802		(1		)	—			3,801
Total liabilities	1,235,579		2,469,657		196,746			(2,571,028		)	1,330,954
Stockholders’ equity:
Preferred stock: $0.01 par value; 5,000 shares authorized; no shares issued and outstanding	—		—		—			—			—
Common stock: $0.01 par value; 100,000 shares authorized; 37,144 shares issued and outstanding	371		—		—			—			371
Additional paid-in capital	758,690		37,975		8,602			(44,989		)	760,278
Retained earnings	574,838		781,583		(37,428		)	(650,395		)	668,598
Accumulated other comprehensive income	—		—		8,677			—			8,677
Total stockholders’ equity	1,333,899		819,558		(20,149		)	(695,384		)	1,437,924
Total liabilities and stockholders’ equity	$	2,569,478	$	3,289,215	$	176,597		$	(3,266,412	)	$	2,768,878

Condensed Consolidating Balance Sheet

(In thousands, except per share data)



	Year Ended December 31, 2016
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	9	$	212,196	$	4,822		$	—		$	217,027
Accounts receivable, net of allowance for doubtful accounts of $2,120	—		30,846		5,704			—			36,550
Other current assets	15		16,176		787			—			16,978
Total current assets	24		259,218		11,313			—			270,555
Property, plant and equipment, net	—		2,449,473		128,915			—			2,578,388
Deferred charges, net	2,581		15,724		772			—			19,077
Intercompany receivable	1,779,872		680,663		107,038			(2,567,573		)	—
Investment in subsidiaries	768,718		8,602		(4,283		)	(773,037		)	—
Other assets	1,744		6,239		2,272			—			10,255
Total assets	$	2,552,939	$	3,419,919	$	246,027		$	(3,340,610	)	$	2,878,275
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	11,325	$	449		$	—		$	11,774
Accrued interest	14,763		—		—			—			14,763
Accrued payroll and benefits	—		8,104		492			—			8,596
Other accrued liabilities	—		8,463		1,547			—			10,010
Total current liabilities	14,763		27,892		2,488			—			45,143
Long-term debt, net of original issue discount of $31,093 and deferred financing costs of $10,197	1,083,710		—		—			—			1,083,710
Deferred tax liabilities, net	—		337,503		5,517			—			343,020
Intercompany payables	61,715		2,264,900		245,276			(2,571,891		)	—
Other liabilities	—		3,416		(10		)	—			3,406
Total liabilities	1,160,188		2,633,711		253,271			(2,571,891		)	1,475,279
Stockholders’ equity:
Preferred stock: $0.01 par value; 5,000 shares authorized; no shares issued and outstanding	—		—		—			—			—
Common stock: $0.01 par value; 100,000 shares authorized; 36,467 shares issued and outstanding	365		—		—			—			365
Additional paid-in capital	754,394		37,978		4,319			(42,297		)	754,394
Retained earnings	637,992		748,080		(21,658		)	(726,422		)	637,992
Accumulated other comprehensive income (loss)	—		150		10,095			—			10,245
Total stockholders’ equity	1,392,751		786,208		(7,244		)	(768,719		)	1,402,996
Total liabilities and stockholders’ equity	$	2,552,939	$	3,419,919	$	246,027		$	(3,340,610	)	$	2,878,275

Condensed Consolidating Statement of Operations

(In thousands)



	Year Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating			Consolidated
Revenues	$	—		$	180,083		$	11,694		$	(365	)	$	191,412
Costs and expenses:
Operating expenses	—			108,517			12,385			(365		)	120,537
Depreciation	—			93,460			5,273			—			98,733
Amortization	—			11,968			1,200			—			13,168
General and administrative expenses	182			45,078			2,348			(11		)	47,597
	182			259,023			21,206			(376		)	280,035
Gain on sale of assets	—			(133		)	12			—			(121		)
Operating income (loss)	(182		)	(79,073		)	(9,500		)	11			(88,744		)
Other income (expense):
Gain on early extinguishment of debt	15,478			—			—			—			15,478
Interest income	—			1,320			883			—			2,203
Interest expense	(51,364		)	—			—			—			(51,364		)
Equity in earnings (losses) of consolidated subsidiaries	63,489			—			—			(63,489		)	—
Other income (expense), net	—			1,157			(1,542		)	(11		)	(396		)
	27,603			2,477			(659		)	(63,500		)	(34,079		)
Income (loss) before income taxes	27,421			(76,596		)	(10,159		)	(63,489		)	(122,823		)
Income tax expense (benefit)	—			(150,735		)	491			—			(150,244		)
Net income (loss)	$	27,421		$	74,139		$	(10,650	)	$	(63,489	)	$	27,421

Condensed Consolidating Statements of Comprehensive Income (Loss)

(In thousands)



	Year Ended December 31, 2017
	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating			Consolidated
Net income (loss)	$	27,421	$	74,139		$	(10,650	)	$	(63,489	)	$	27,421
Other comprehensive income:
Foreign currency translation gain (loss)	—		(149		)	(1,419		)	—			(1,568		)
Total comprehensive income (loss)	$	27,421	$	73,990		$	(12,069	)	$	(63,489	)	$	25,853

Condensed Consolidating Statement of Operations

(In thousands)



	Year Ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating		Consolidated
Revenues	$	—		$	213,563		$	8,707		$	2,029	$	224,299
Costs and expenses:
Operating expenses	—			114,783			14,904			1,971		131,658
Depreciation	—			88,443			4,628			—		93,071
Amortization	—			19,024			1,461			—		20,485
General and administrative expenses	184			39,479			3,637			58		43,358
	184			261,729			24,630			2,029		288,572
Gain on sale of assets	—			53			1			—		54
Operating loss	(184		)	(48,113		)	(15,922		)	—		(64,219		)
Other income (expense):
Interest income	—			984			506			—		1,490
Interest expense	(48,673		)	—			(2		)	—		(48,675		)
Equity in earnings (losses) of consolidated subsidiaries	(14,989		)	—			—			14,989		—
Other income (expense), net	—			(2,272		)	4,324			—		2,052
	(63,662		)	(1,288		)	4,828			14,989		(45,133		)
Income (loss) before income taxes	(63,846		)	(49,401		)	(11,094		)	14,989		(109,352		)
Income tax benefit	—			(44,721		)	(785		)	—		(45,506		)
Net income (loss)	$	(63,846	)	$	(4,680	)	$	(10,309	)	$	14,989	$	(63,846	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

(In thousands)



	Year Ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating		Consolidated
Net income (loss)	$	(63,846	)	$	(4,680	)	$	(10,309	)	$	14,989	$	(63,846	)
Other comprehensive income:
Foreign currency translation gain	—			31			14,290			—		14,321
Total comprehensive income (loss)	$	(63,846	)	$	(4,649	)	$	3,981		$	14,989	$	(49,525	)

Condensed Consolidating Statement of Operations

(In thousands)



	Year ended December 31, 2015
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating			Consolidated
Revenues	$	—		$	426,419		$	50,952		$	(1,301	)	$	476,070
Costs and expenses:
Operating expenses	—			178,748			41,514			(1,002		)	219,260
Depreciation	—			81,522			1,044			—			82,566
Amortization	—			25,782			681			—			26,463
General and administrative expenses	189			44,398			3,861			(151		)	48,297
	189			330,450			47,100			(1,153		)	376,586
Gain (loss) on sale of assets	—			44,060			—			—			44,060
Operating income (loss)	(189		)	140,029			3,852			(148		)	143,544
Other income (expense):
Interest income	—			1,125			400			—			1,525
Interest expense	(39,460		)	—			(36		)	—			(39,496		)
Equity in earnings (losses) of consolidated subsidiaries	106,798			—			—			(106,798		)	—
Other income (expense), net	—			(4,053		)	5,238			(180		)	1,005
	67,338			(2,928		)	5,602			(106,978		)	(36,966		)
Income (loss) before income taxes	67,149			137,101			9,454			(107,126		)	106,578
Income tax expense	—			35,194			4,563			—			39,757
Net income (loss)	$	67,149		$	101,907		$	4,891		$	(107,126	)	$	66,821

Condensed Consolidating Statements of Comprehensive Income

(In thousands)



	Year Ended December 31, 2015
	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating			Consolidated
Net income (loss)	$	67,149	$	101,907		$	4,891		$	(107,126	)	$	66,821
Other comprehensive income:
Foreign currency translation loss	—		(81		)	(3,093		)	—			(3,174		)
Total comprehensive income (loss)	$	67,149	$	101,826		$	1,798		$	(107,126	)	$	63,647

Condensed Consolidating Statements of Cash Flows

(In thousands)



	Year Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	(6,231	)	$	(12,152	)	$	3,725		$	—	$	(14,658	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs incurred for OSV newbuild program #5	—			(18,496		)	392			—		(18,104		)
Net proceeds from sale of assets	—			33			10			—		43
Vessel capital expenditures	—			(1,173		)	(514		)	—		(1,687		)
Non-vessel capital expenditures	—			(1,512		)	(40		)	—		(1,552		)
Net cash used in investing activities	—			(21,148		)	(152		)	—		(21,300		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from first-lien credit facility	66,640			—			—			—		66,640
Repurchase of senior notes	(5,057		)	—			—					(5,057		)
Repurchase of convertible notes	(49,631		)	—			—			—		(49,631		)
Deferred financing costs	(5,636		)	—			—			—		(5,636		)
Shares withheld for payment of employee withholding taxes	(575		)	—			—			—		(575		)
Net cash proceeds from other shares issued	485			—			—			—		485
Net cash provided by financing activities	6,226			—			—			—		6,226
Effects of exchange rate changes on cash	—			(150		)	(296		)	—		(446		)
Net increase (decrease) in cash and cash equivalents	(5		)	(33,450		)	3,277			—		(30,178		)
Cash and cash equivalents at beginning of period	9			212,196			4,822			—		217,027
Cash and cash equivalents at end of period	$	4		$	178,746		$	8,099		$	—	$	186,849
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	$	52,194		$	—		$	—		$	—	$	52,194
Cash paid for (refunds of) income taxes	$	—		$	(9,793	)	$	751		$	—	$	(9,042	)
SUPPLEMENTAL DISCLOUSURES OF NON-CASH FINANCING ACTIVITIES:
Exchange of convertible notes for first-lien term loan	$	127,096		$	—		$	—		$	—	$	127,096

Condensed Consolidating Statements of Cash Flows

(In thousands)



	Year Ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	251		$	55,677		$	(2,428	)	$	—	$	53,500
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs incurred for OSV newbuild program #5	—			(76,615		)	338			—		(76,277		)
Net proceeds from sale of assets	—			523			1			—		524
Vessel capital expenditures	—			(19,604		)	(1,085		)	—		(20,689		)
Non-vessel capital expenditures	—			(467		)	(102		)	—		(569		)
Net cash used in investing activities	—			(96,163		)	(848		)	—		(97,011		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs	(1,102		)	—			—			—		(1,102		)
Shares withheld for payment of employee withholding taxes	(450		)	—			—			—		(450		)
Net cash proceeds from other shares issued	1,300			—			—			—		1,300
Net cash used in financing activities	(252		)	—			—			—		(252		)
Effects of exchange rate changes on cash	—			31			958			—		989
Net increase (decrease) in cash and cash equivalents	(1		)	(40,455		)	(2,318		)	—		(42,774		)
Cash and cash equivalents at beginning of period	10			252,651			7,140			—		259,801
Cash and cash equivalents at end of period	$	9		$	212,196		$	4,822		$	—	$	217,027
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	$	50,152		$	—		$	—		$	—	$	50,152
Cash paid for income taxes	$	—		$	1,292		$	2,440		$	—	$	3,732

Condensed Consolidating Statements of Cash Flows

(In thousands)



	Year Ended December 31, 2015
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	223		$	109,987		$	106,885		$	—	$	217,095
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs incurred for OSV newbuild program #5	—			(120,767		)	(69,303		)	—		(190,070		)
Net proceeds from sale of assets	—			152,000			—			—		152,000
Vessel capital expenditures	—			(55,724		)	(31,068		)	—		(86,792		)
Non-vessel capital expenditures	—			(16,211		)	(276		)	—		(16,487		)
Net cash used in investing activities	—			(40,702		)	(100,647		)	—		(141,349		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from first-lien credit facility	—			—			—			—		—
Repurchase of senior notes	—			—			—			—		—
Repurchase of convertible notes	—			—						—		—
Deferred financing costs	(2,089		)	—			—			—		(2,089		)
Shares withheld for payment of employee withholding taxes	(1,252		)	—			—			—		(1,252		)
Net cash proceeds from other shares issued	3,112			—			—			—		3,112
Net cash used in financing activities	(229		)	—			—			—		(229		)
Effects of exchange rate changes on cash	—			(81		)	(758		)	—		(839		)
Net increase (decrease) in cash and cash equivalents	(6		)	69,204			5,480			—		74,678
Cash and cash equivalents at beginning of period	16			183,447			1,660			—		185,123
Cash and cash equivalents at end of period	$	10		$	252,651		$	7,140		$	—	$	259,801
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	$	50,492		$	—		$	—		$	—	$	50,492
Cash paid for income taxes	$	—		$	582		$	4,226		$	—	$	4,808