UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
For the quarterly period ended
or
For the transition period from__________ to__________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of October 18, 2021,
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, | December 31, | |||||
| 2021 |
| 2020 | |||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
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Accounts receivable, net of allowance for credit losses of $ |
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Other current assets |
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Total current assets |
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Property and equipment |
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Less accumulated depreciation |
| ( |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other assets, net |
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Total assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued liabilities |
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Current maturities of long-term debt |
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Current operating lease liabilities |
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Total current liabilities |
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Long-term debt |
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Operating lease liabilities |
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Deferred tax liabilities |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies | ||||||
Redeemable noncontrolling interests |
| — |
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Shareholders’ equity: |
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Common stock, |
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Retained earnings |
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Accumulated other comprehensive loss |
| ( |
| ( | ||
Total shareholders’ equity |
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Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||
Net revenues | $ | | $ | | $ | | $ | | |||||
Cost of sales |
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Gross profit |
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Gain (loss) on disposition of assets, net |
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| ( |
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Goodwill impairment |
| — |
| — |
| — |
| ( | |||||
Selling, general and administrative expenses |
| ( |
| ( |
| ( |
| ( | |||||
Income (loss) from operations |
| ( |
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| ( |
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Net interest expense |
| ( |
| ( |
| ( |
| ( | |||||
Gain (loss) on extinguishment of long-term debt |
| ( |
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| ( |
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Other income (expense), net |
| ( |
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| ( |
| ( | |||||
Royalty income and other |
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Income (loss) before income taxes |
| ( |
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| ( |
| ( | |||||
Income tax provision (benefit) |
| ( |
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| ( |
| ( | |||||
Net income (loss) |
| ( |
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| ( |
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Net loss attributable to redeemable noncontrolling interests |
| — |
| ( |
| ( |
| ( | |||||
Net income (loss) attributable to common shareholders | $ | ( | $ | | $ | ( | $ | | |||||
Earnings (loss) per share of common stock: |
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Basic | $ | ( | $ | | $ | ( | $ | | |||||
Diluted | $ | ( | $ | | $ | ( | $ | | |||||
Weighted average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2021 |
| 2020 | 2021 |
| 2020 | |||||||
Net income (loss) | $ | ( | $ | | $ | ( |
| $ | | ||||
Other comprehensive income (loss), net of tax: |
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Net unrealized loss on hedges arising during the period |
| — |
| — |
| — |
| ( | |||||
Reclassifications into earnings |
| — |
| — |
| — |
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Income taxes on hedges |
| — |
| — |
| — |
| ( | |||||
Net change in hedges, net of tax |
| — |
| — |
| — |
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Foreign currency translation gain (loss) |
| ( |
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| ( |
| ( | |||||
Other comprehensive income (loss), net of tax |
| ( |
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| ( |
| ( | |||||
Comprehensive income (loss) |
| ( |
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| ( |
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Less comprehensive income (loss) attributable to redeemable noncontrolling interests: |
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Net loss |
| — |
| ( |
| ( |
| ( | |||||
Foreign currency translation gain (loss) |
| — |
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| ( | |||||
Comprehensive income (loss) attributable to redeemable noncontrolling interests |
| — |
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| ( |
| ( | |||||
Comprehensive income (loss) attributable to common shareholders | $ | ( | $ | | $ | ( |
| $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)
Accumulated |
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Other | Total | Redeemable | |||||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | Noncontrolling | |||||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity |
| Interests | ||||||
Balance, June 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
| $ | — | ||||
Net loss |
| — |
| — |
| ( |
| — |
| ( |
| — | |||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
| ( |
| — | |||||
Activity in company stock plans, net and other |
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| — |
| — |
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| — | |||||
Share-based compensation |
| — |
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| — |
| — |
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| — | |||||
Balance, September 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
| $ | — |
Accumulated |
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Other | Total | Redeemable | |||||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | Noncontrolling | |||||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity |
| Interests | ||||||
Balance, June 30, 2020 |
| | $ | | $ | | $ | ( | $ | |
| $ | | ||||
Net income (loss) |
| — |
| — |
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| — |
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| ( | |||||
Foreign currency translation adjustments |
| — |
| — |
| — |
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Accretion of redeemable noncontrolling interests |
| — |
| — |
| ( |
| — |
| ( |
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Equity component of convertible senior notes | — | | — | — | | — | |||||||||||
Re-acquisition of equity component of convertible senior notes | — | ( | — | — | ( | — | |||||||||||
Capped call transactions | — | ( | — | — | ( | — | |||||||||||
Activity in company stock plans, net and other |
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| — |
| — |
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| — | |||||
Share-based compensation |
| — |
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| — |
| — |
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| — | |||||
Balance, September 30, 2020 |
| | $ | | $ | | $ | ( | $ | |
| $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)
Accumulated |
| ||||||||||||||||
Other | Total | Redeemable | |||||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | Noncontrolling | |||||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity |
| Interests | ||||||
Balance, December 31, 2020 |
| | $ | | $ | | $ | ( | $ | |
| $ | | ||||
Net loss |
| — |
| — |
| ( |
| — |
| ( |
| ( | |||||
Cumulative-effect adjustments upon adoption of ASU No. 2020-06 |
| — |
| ( |
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| — |
| ( |
| — | |||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
| ( |
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Accretion of redeemable noncontrolling interests |
| — |
| — |
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| — |
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| ( | |||||
Acquisition of redeemable noncontrolling interests |
| — |
| — |
| — |
| — |
| — |
| ( | |||||
Activity in company stock plans, net and other |
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| ( |
| — |
| — |
| ( |
| — | |||||
Share-based compensation |
| — |
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| — |
| — |
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| — | |||||
Balance, September 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
| $ | — |
Accumulated |
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Other | Total | Redeemable | |||||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | Noncontrolling | |||||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity |
| Interests | ||||||
Balance, December 31, 2019 |
| | $ | | $ | | $ | ( | $ | |
| $ | | ||||
Net income (loss) |
| — |
| — |
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| — |
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| ( | |||||
Credit losses recognized in retained earnings upon adoption of ASU No. 2016-13 |
| — |
| — |
| ( |
| — |
| ( |
| — | |||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
| ( |
| ( | |||||
Unrealized gain on hedges, net of tax |
| — |
| — |
| — |
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| — | |||||
Accretion of redeemable noncontrolling interests |
| — |
| — |
| ( |
| — |
| ( |
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Equity component of convertible senior notes | — | | — | — | | — | |||||||||||
Re-acquisition of equity component of convertible senior notes | — | ( | — | — | ( | — | |||||||||||
Capped call transactions | — | ( | — | — | ( | — | |||||||||||
Activity in company stock plans, net and other |
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| ( |
| — |
| — |
| ( |
| — | |||||
Share-based compensation |
| — |
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| — |
| — |
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| — | |||||
Balance, September 30, 2020 |
| | $ | | $ | | $ | ( | $ | |
| $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended | ||||||
September 30, | ||||||
| 2021 |
| 2020 | |||
Cash flows from operating activities: |
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Net income (loss) | $ | ( | $ | | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Goodwill impairment |
| — |
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Amortization of debt discounts |
| — |
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Amortization of debt issuance costs |
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Share-based compensation |
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Deferred income taxes |
| ( |
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(Gain) loss on disposition of assets, net |
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(Gain) loss on extinguishment of long-term debt |
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| ( | ||
Unrealized gain on derivative contracts, net |
| — |
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Unrealized foreign currency loss |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
| ( |
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Other current assets | | ( | ||||
Income tax payable, net of income tax receivable |
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Accounts payable and accrued liabilities |
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Other, net |
| ( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
| ( |
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Proceeds from sale of assets | | | ||||
Net cash used in investing activities |
| ( |
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Cash flows from financing activities: |
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Proceeds from convertible senior notes |
| — |
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Repayment of convertible senior notes |
| — |
| ( | ||
Repayment of Term Loan |
| ( |
| ( | ||
Repayment of Nordea Q5000 Loan |
| ( |
| ( | ||
Repayment of MARAD Debt |
| ( |
| ( | ||
Capped call transactions |
| — |
| ( | ||
Debt issuance costs |
| ( |
| ( | ||
Acquisition of redeemable noncontrolling interests | ( | — | ||||
Payments related to tax withholding for share-based compensation |
| ( |
| ( | ||
Proceeds from issuance of ESPP shares |
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Net cash used in financing activities |
| ( |
| ( | ||
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
| ( |
| ( | ||
Net increase (decrease) in cash and cash equivalents and restricted cash |
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| ( | ||
Cash and cash equivalents and restricted cash: |
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Balance, beginning of year |
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Balance, end of period | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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”). 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 2020 Annual Report on Form 10-K (our “2020 Form 10-K”) with the exception of the impact of early adopting Accounting Standards Update (“ASU”) No. 2020-06 on a modified retrospective basis beginning January 1, 2021 (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, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statements of shareholders’ equity and statements of cash flows, as applicable. The operating results for the three- and nine-month periods ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Our balance sheet as of December 31, 2020 included herein has been derived from the audited balance sheet as of December 31, 2020 included in our 2020 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our 2020 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
In August 2020, the Financial Accounting Standards Board issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, this ASU removes from GAAP the requirement to separate certain convertible instruments, such as our Convertible Senior Notes Due 2022, Convertible Senior Notes Due 2023 and Convertible Senior Notes Due 2026 (Note 5), into liability and equity components. Consequently, those convertible instruments will be accounted for in their entirety as liabilities measured at their amortized cost. We elected to early adopt ASU No. 2020-06 on a modified retrospective basis beginning January 1, 2021. The adoption of this ASU increased our long-term debt and decreased the reported value of our common stock by $
We do not expect any other recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.
9
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. Traditionally, our services have covered the lifecycle of an offshore oil or gas field. In recent years, we have seen an increasing demand for our services from the offshore renewable energy market. We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. Our North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into
Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and
Our Robotics segment provides offshore construction, trenching, seabed clearance, inspection, repair and maintenance services to both the oil and gas and the renewable energy markets globally. Our Robotics services also complement well intervention services. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers, a ROVDrill and
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”) and our ownership of oil and gas properties. All of our current Production Facilities activities are located in the Gulf of Mexico.
Note 3 — Details of Certain Accounts
Other current assets consist of the following (in thousands):
September 30, | December 31, | |||||
| 2021 |
| 2020 | |||
Contract assets (Note 7) | $ | |
| $ | | |
Prepaids |
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Deferred costs (Note 7) |
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Income tax receivable |
| — |
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Other receivable (Note 11) |
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Other |
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Total other current assets | $ | |
| $ | |
Other assets, net consist of the following (in thousands):
September 30, | December 31, | |||||
| 2021 |
| 2020 | |||
Deferred recertification and dry dock costs, net | $ | |
| $ | | |
Deferred costs (Note 7) |
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Charter deposit (1) |
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Intangible assets with finite lives, net |
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Other |
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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. |
10
Accrued liabilities consist of the following (in thousands):
September 30, | December 31, | |||||
| 2021 |
| 2020 | |||
Accrued payroll and related benefits | $ | |
| $ | | |
Accrued interest | | | ||||
Income tax payable |
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| — | ||
Deferred revenue (Note 7) |
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Asset retirement obligations (Note 11) |
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Other |
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Total accrued liabilities | $ | |
| $ | |
Other non-current liabilities consist of the following (in thousands):
September 30, | December 31, | |||||
| 2021 |
| 2020 | |||
Deferred revenue (Note 7) | $ | |
| $ | | |
Other |
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Total other non-current liabilities | $ | |
| $ | |
Note 4 — 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.
The following table details the components of our lease cost (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
Operating lease cost | $ | | $ | | $ | |
| $ | | |||
Variable lease cost |
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Short-term lease cost |
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