Note 19 — Condensed Consolidated Guarantor and Non-Guarantor Financial Information

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

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)


		As of December 31, 2012
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	381,599	$	4,436	$	51,065	$	-	$	437,100
Accounts receivable, net		39,203		37,378		75,652		-		152,233
Unbilled revenue		13,959		875		19,006		-		33,840
Income taxes receivable		24,611		-		306		(10,716)		14,201
Other current assets		54,588		16,418		11,696		31		82,733
Current assets of discontinued operations		-		84,000		-		-		84,000
Total current assets		513,960		143,107		157,725		(10,685)		804,107
Intercompany		(154,756)		352,210		(125,889)		(71,565)		-
Property and equipment, net		208,190		351,746		930,556		(4,617)		1,485,875
Other assets:
Equity investments in unconsolidated affiliates		-		-		167,599		-		167,599
Equity investments in affiliates		1,762,359		53,461		-		(1,815,820)		-
Goodwill		-		45,107		17,828		-		62,935
Other assets, net		47,355		130		34,848		(32,496)		49,837
Due from subsidiaries/parent		294,461		485,096		-		(779,557)		-
Non-current assets of discontinued operations		-		816,227		-		-		816,227
Total assets	$	2,671,569	$	2,247,084	$	1,182,667	$	(2,714,740)	$	3,386,580

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	45,784	$	17,229	$	29,385	$	-	$	92,398
Accrued liabilities		117,902		26,019		17,593		-		161,514
Income taxes payable		-		26,618		-		(26,618)		-
Current maturities of long-term debt		11,487		-		5,120		-		16,607
Current liabilities of discontinued operations		-		182,527		-		-		182,527
Total current liabilities		175,173		252,393		52,098		(26,618)		453,046
Long-term debt		902,453		-		100,168		-		1,002,621
Deferred tax liabilities		168,688		86,925		109,171		(5,547)		359,237
Other long-term liabilities		1,453		3,086		486		-		5,025
Due to parent		-		-		323,049		(323,049)		-
Non-current liabilities of discontinued operations		-		147,237		-		-		147,237
Total liabilities		1,247,767		489,641		584,972		(355,214)		1,967,166
Convertible preferred stock		-		-		-		-		-
Total equity		1,423,802		1,757,443		597,695		(2,359,526)		1,419,414
Total liabilities and shareholders' equity	$	2,671,569	$	2,247,084	$	1,182,667	$	(2,714,740)	$	3,386,580

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)


		As of December 31, 2011
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	495,484	$	2,432	$	48,547	$	-	$	546,463
Accounts receivable, net		79,290		26,885		41,724		-		147,899
Unbilled revenue		10,530		155		26,690		-		37,375
Income taxes receivable		80,388		-		-		(80,388)		-
Other current assets		68,627		20,624		10,159		(5,826)		93,584
Current assets of discontinued operations		-		118,921		-		-		118,921
Total current assets		734,319		169,017		127,120		(86,214)		944,242
Intercompany		(147,187)		315,821		(102,826)		(65,808)		-
Property and equipment, net		230,946		550,668		682,899		(4,844)		1,459,669
Other assets:
Equity investments in unconsolidated affiliates		-		-		175,656		-		175,656
Equity investments in affiliates		1,952,392		37,239		-		(1,989,631)		-
Goodwill		-		45,107		17,108		-		62,215
Other assets, net		53,425		2,712		16,809		(37,780)		35,166
Due from subsidiaries/parent		64,655		430,496		-		(495,151)		-
Non-current assets of discontinued operations		-		905,399		-		-		905,399
Total assets	$	2,888,550	$	2,456,459	$	916,766	$	(2,679,428)	$	3,582,347

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	39,280	$	9,626	$	25,013	$	-	$	73,919
Accrued liabilities		115,921		3,841		26,350		-		146,112
Income taxes payable		-		97,692		217		(96,616)		1,293
Current maturities of long-term debt		3,000		-		10,377		(5,500)		7,877
Current liabilities of discontinued operations		-		166,975		-		-		166,975
Total current liabilities		158,201		278,134		61,957		(102,116)		396,176
Long-term debt		1,042,155		-		105,289		-		1,147,444
Deferred tax liabilities		231,255		88,625		103,552		(5,822)		417,610
Other long-term liabilities		4,150		4,647		571		-		9,368
Due to parent		-		-		98,285		(98,285)		-
Non-current liabilities of discontinued operations		-		161,208		-		-		161,208
Total liabilities		1,435,761		532,614		369,654		(206,223)		2,131,806
Convertible preferred stock		1,000		-		-		-		1,000
Total equity		1,451,789		1,923,845		547,112		(2,473,205)		1,449,541
Total liabilities and shareholders' equity	$	2,888,550	$	2,456,459	$	916,766	$	(2,679,428)	$	3,582,347

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in thousands)


		Year Ended December 31, 2012
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated

Net revenues	$	90,552	$	404,628	$	464,331	$	(113,402)	$	846,109
Cost of sales		111,531		444,956		351,283		(111,576)		796,194
Gross profit (loss)		(20,979)		(40,328)		113,048		(1,826)		49,915
Loss on sale of assets, net		-		(13,475)		(1)		-		(13,476)
Non-hedge loss on commodity derivative contracts		-		(10,507)		-		-		(10,507)
Selling, general and administrative expenses		(53,539)		(22,782)		(20,018)		1,924		(94,415)
Income (loss) from operations		(74,518)		(87,092)		93,029		98		(68,483)
Equity in earnings of investments		(12,264)		16,222		8,434		(3,958)		8,434
Net interest expense and other		(59,759)		392		(6,517)		(28)		(65,912)
Income (loss) before income taxes		(146,541)		(70,478)		94,946		(3,888)		(125,961)
Income tax provision (benefit)		(96,328)		24,186		12,951		33		(59,158)
Income (loss) from continuing operations		(50,213)		(94,664)		81,995		(3,921)		(66,803)
Income (loss) from discontinued operations, net of tax		(1,621)		25,305		-		-		23,684
Net income (loss) applicable to Helix		(51,834)		(69,359)		81,995		(3,921)		(43,119)
Net income applicable to noncontrolling interests		-		-		-		(3,178)		(3,178)
Preferred stock dividends		(37)		-		-		-		(37)
Net income (loss) applicable to Helix common shareholders	$	(51,871)	$	(69,359)	$	81,995	$	(7,099)	$	(46,334)

Total comprehensive income (loss) applicable to Helix common shareholders	$	(51,952)	$	(82,219)	$	89,260	$	(7,073)	$	(51,984)


		Year Ended December 31, 2011
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated

Net revenues	$	84,748	$	362,648	$	367,114	$	(112,510)	$	702,000
Cost of sales		72,902		281,267		309,429		(111,281)		552,317
Gross profit		11,846		81,381		57,685		(1,229)		149,683
Loss on sale of assets, net		(6)		-		-		-		(6)
Selling, general and administrative expenses		(74,205)		(25,963)		12,101		1,430		(86,637)
Income (loss) from operations		(62,365)		55,418		69,786		201		63,040
Equity in earnings of investments		262,990		7,340		22,215		(270,330)		22,215
Other than temporary loss on equity investments		-		-		(10,563)		-		(10,563)
Net interest expense and other		(157,546)		(6,787)		67,181		23,510		(73,642)
Income (loss) before income taxes		43,079		55,971		148,619		(246,619)		1,050
Income tax provision (benefit)		(63,242)		18,181		8,186		69		(36,806)
Income (loss) from continuing operations		106,321		37,790		140,433		(246,688)		37,856
Income from discontinued operations, net of tax		-		95,221		-		-		95,221
Net income (loss) applicable to Helix		106,321		133,011		140,433		(246,688)		133,077
Net income applicable to noncontrolling interests		-		-		-		(3,098)		(3,098)
Preferred stock dividends		(40)		-		-		-		(40)
Net income (loss) applicable to Helix common shareholders	$	106,281	$	133,011	$	140,433	$	(249,786)	$	129,939

Total comprehensive income (loss) applicable to Helix common shareholders	$	107,575	$	161,760	$	140,214	$	(250,569)	$	158,980

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in thousands)


		Year Ended December 31, 2010
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated

Net revenues	$	183,147	$	376,134	$	334,726	$	(119,538)	$	774,469
Cost of sales		124,722		287,709		302,051		(104,830)		609,652
Gross profit		58,425		88,425		32,675		(14,708)		164,817
Goodwill impairment		-		-		(16,743)		-		(16,743)
Gain on sale of assets, net		3,159		-		5,959		-		9,118
Selling, general and administrative expenses		(67,165)		(18,268)		(22,482)		1,802		(106,113)
Loss from operations		(5,581)		70,157		(591)		(12,906)		51,079
Equity in earnings of investments		(60,443)		8,473		19,469		51,970		19,469
Other than temporary loss on equity investments		(2,240)		-		-		-		(2,240)
Net interest expense and other		(59,522)		(1,991)		(5,125)		-		(66,638)
Income (loss) before income taxes		(127,786)		76,639		13,753		39,064		1,670
Income tax provision (benefit)		(9,175)		23,465		9,405		(4,529)		19,166
Income (loss) from continuing operations		(118,611)		53,174		4,348		43,593		(17,496)
Loss from discontinued operations, net of tax		-		(106,657)		-		-		(106,657)
Net income (loss) applicable to Helix		(118,611)		(53,483)		4,348		43,593		(124,153)
Net income applicable to noncontrolling interests		-		-		-		(2,835)		(2,835)
Preferred stock dividends		(114)		-		-		-		(114)
Net income (loss) applicable to Helix common shareholders	$	(118,725)	$	(53,483)	$	4,348	$	40,758	$	(127,102)

Total comprehensive income (loss) applicable to Helix common shareholders	$	(119,051)	$	(59,969)	$	(5,653)	$	40,754	$	(143,919)

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


		Year Ended December 31, 2012
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated
Cash flows from operating activities:
Net income (loss), including noncontrolling interests	$	(51,834)	$	(69,359)	$	81,995	$	(3,921)	$	(43,119)
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates		12,264		(16,222)		-		3,958		-
Other adjustments		106,022		126,672		6,349		(19,856)		219,187
Cash provided by (used in) operating activities		66,452		41,091		88,344		(19,819)		176,068
Cash provided by discontinued operations		1,621		274,809		-		-		276,430
Net cash provided by (used in) operating activities		68,073		315,900		88,344		(19,819)		452,498

Cash flows from investing activities:
Capital expenditures		(2,422)		(38,197)		(282,420)		-		(323,039)
Distributions from equity investments, net		-		-		7,797		-		7,797
Proceeds from sale of assets		-		19,530		-		-		19,530
Cash used in investing activities		(2,422)		(18,667)		(274,623)		-		(295,712)
Cash used in discontinued operations		-		(120,057)		-		-		(120,057)
Net cash used in investing activities		(2,422)		(138,724)		(274,623)		-		(415,769)

Cash flows from financing activities:
Borrowings of debt		400,000		-		-		-		400,000
Repayments of debt		(520,357)		-		(4,877)		-		(525,234)
Deferred financing costs		(7,580)		-		-		-		(7,580)
Distributions to noncontrolling interests		-		-		(5,287)		-		(5,287)
Repurchases of common stock		(7,197)		-		-		-		(7,197)
Excess tax from stock-based compensation		(1,186)		-		-		-		(1,186)
Exercise of stock options, net and other		1,252		-		-		-		1,252
Intercompany financing		(44,468)		(175,172)		199,821		19,819		-
Net cash provided by (used in) financing activities		(179,536)		(175,172)		189,657		19,819		(145,232)

Effect of exchange rate changes on cash and cash equivalents		-		-		(860)		-		(860)
Net increase (decrease) in cash and cash equivalents		(113,885)		2,004		2,518		-		(109,363)
Cash and cash equivalents:
Balance, beginning of year		495,484		2,434		48,547		-		546,465
Balance, end of year		381,599		4,438		51,065		-		437,102
Less cash from discontinued operations, end of year		-		2		-		-		2
Cash from continuing operations, end of year	$	381,599	$	4,436	$	51,065	$	-	$	437,100

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


		Year Ended December 31, 2011
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated
Cash flows from operating activities:
Net income (loss), including noncontrolling interests	$	106,321	$	133,011	$	140,433	$	(246,688)	$	133,077
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates		(262,990)		(7,340)		-		270,330		-
Other adjustments		39,860		(30,770)		40,293		198		49,581
Cash provided by (used in) operating activities		(116,809)		94,901		180,726		23,840		182,658
Cash provided by discontinued operations		-		384,498		-		-		384,498
Net cash provided by (used in) operating activities		(116,809)		479,399		180,726		23,840		567,156

Cash flows from investing activities:
Capital expenditures		(32,417)		(55,124)		(12,613)		-		(100,154)
Distributions from equity investments, net		-		-		1,266		-		1,266
Proceeds from sale of Cal Dive common stock		3,588		-		-		-		3,588
Cash used in investing activities		(28,829)		(55,124)		(11,347)		-		(95,300)
Cash used in discontinued operations		-		(87,017)		-		-		(87,017)
Net cash used in investing activities		(28,829)		(142,141)		(11,347)		-		(182,317)

Cash flows from financing activities:
Borrowings of debt		109,400		-		-		-		109,400
Repayments of debt		(317,485)		-		(4,645)		-		(322,130)
Deferred financing costs		(9,311)		-		-		-		(9,311)
Repurchases of common stock		(7,604)		-		-		-		(7,604)
Excess tax from stock-based compensation		(1,013)		-		-		-		(1,013)
Exercise of stock options, net and other		1,978		-		(1,215)		-		763
Intercompany financing		488,723		(338,118)		(126,765)		(23,840)		-
Net cash provided by (used in) financing activities		264,688		(338,118)		(132,625)		(23,840)		(229,895)

Effect of exchange rate changes on cash and cash equivalents		-		-		436		-		436
Net increase (decrease) in cash and cash equivalents		119,050		(860)		37,190		-		155,380
Cash and cash equivalents:
Balance, beginning of year		376,434		3,294		11,357		-		391,085
Balance, end of year		495,484		2,434		48,547		-		546,465
Less cash from discontinued operations, end of year		-		2		-		-		2
Cash from continuing operations, end of year	$	495,484	$	2,432	$	48,547	$	-	$	546,463

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


		Year Ended December 31, 2010
						Non-		Consolidating
		Helix		Guarantors		Guarantors		Entries		Consolidated
Cash flows from operating activities:
Net income (loss), including noncontrolling interests	$	(118,611)	$	(53,483)	$	4,348	$	43,593	$	(124,153)
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates		60,443		(8,473)		-		(51,970)		-
Other adjustments		94,376		45,567		76,865		(21,283)		195,525
Cash provided by (used in) operating activities		36,208		(16,389)		81,213		(29,660)		71,372
Cash provided by discontinued operations		-		260,082		-		-		260,082
Net cash provided by (used in) operating activities		36,208		243,693		81,213		(29,660)		331,454

Cash flows from investing activities:
Capital expenditures		(56,650)		(37,155)		(28,413)		-		(122,218)
Distributions from equity investments, net		-		-		2,286		-		2,286
Proceeds from insurance reimbursement		7,020		-		-		-		7,020
Proceeds from sale of assets		6,042		-		-		-		6,042
Cash used in investing activities		(43,588)		(37,155)		(26,127)		-		(106,870)
Cash used in discontinued operations		-		(74,686)		-		-		(74,686)
Net cash used in investing activities		(43,588)		(111,841)		(26,127)		-		(181,556)

Cash flows from financing activities:
Repayments of debt		(4,326)		-		(4,424)		-		(8,750)
Deferred financing costs		(2,947)		-		-		-		(2,947)
Repurchases of common stock		(11,680)		-		-		-		(11,680)
Excess tax from stock-based compensation		(3,945)		-		-		-		(3,945)
Exercise of stock options, net and other		560		-		(2,517)		-		(1,957)
Intercompany financing		147,410		(131,080)		(45,990)		29,660		-
Net cash provided by (used in) financing activities		125,072		(131,080)		(52,931)		29,660		(29,279)

Effect of exchange rate changes on cash and cash equivalents		-		-		(207)		-		(207)
Net increase in cash and cash equivalents		117,692		772		1,948		-		120,412
Cash and cash equivalents:
Balance, beginning of year		258,742		2,522		9,409		-		270,673
Balance, end of year		376,434		3,294		11,357		-		391,085
Less cash from discontinued operations, end of year		-		1		-		-		1
Cash from continuing operations, end of year	$	376,434	$	3,293	$	11,357	$	-	$	391,084