Company Quick10K Filing
Quick10K
Hornbeck Offshore Services
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$1.45 38 $55
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-03-14 Officers, Exhibits
8-K 2019-02-13 Earnings, Exhibits
8-K 2019-02-07 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-02-05 Regulation FD, Exhibits
8-K 2019-01-22 Regulation FD, Exhibits
8-K 2019-01-10 Regulation FD
8-K 2018-12-31 Regulation FD, Other Events, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-10-02 Other Events
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-06-21 Shareholder Vote
8-K 2018-05-18 Other Events
8-K 2018-05-02 Earnings, Exhibits
8-K 2018-03-29 Other Events, Exhibits
8-K 2018-02-04 Earnings, Officers, Exhibits
ORCL Oracle 185,410
PBFX PBF Logistics 1,280
TCPC Blackrock Tcp Capital 861
IIPR Innovative Industrial Properties 781
CALX Calix 376
OXSQ Oxford Square Capital 305
BCOW 1895 Bancorp of Wisconsin 47
RELV Reliv 8
AGUSA AG Acquisition Group 0
GLTR ETFS Precious Metals Basket Trust 0
HOS 2019-03-31
Part 1-Financial Information
Item 1-Financial Statements
Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3-Quantitative and Qualitative Disclosures About Market Risk
Item 4-Controls and Procedures
Part Ii-Other Information
Item 1-Legal Proceedings
Item 1A-Risk Factors
Item 2-Unregistered Sales of Equity Securities and Use of Proceeds
Item 3-Defaults Upon Senior Securities
Item 4-Mine Safety Disclosures
Item 5-Other Information
Item 6-Exhibits
EX-10.40 ex1040q110-q03312019.htm
EX-31.1 ex311q110-q03312019.htm
EX-31.2 ex312q110-q03312019.htm
EX-32.1 ex321q110-q03312019.htm
EX-32.2 ex322q110-q03312019.htm

Hornbeck Offshore Services Earnings 2019-03-31

HOS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 q10-q03312019.htm 10-Q Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-32108
 
  Hornbeck Offshore Services, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
72-1375844
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
103 NORTHPARK BOULEVARD, SUITE 300
COVINGTON, LA 70433
(Address of Principal Executive Offices) (Zip Code)
(985) 727-2000
(Registrant’s Telephone Number, Including Area Code)
 
     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.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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  
 
Accelerated filer  
 
 
 
Non-accelerated filer  (Do not check if a smaller reporting company)
 
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).    Yes      No  
Class
 
Trading Symbol
 
Name of exchange on which registered
 
Outstanding at April 30, 2019
Common Stock, $0.01 par value
 
HOS
 
New York Stock Exchange
 
37,874,611
 



HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019
TABLE OF CONTENTS
 
 


i


PART 1—FINANCIAL INFORMATION
Item 1—Financial Statements
HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
March 31,
2019
 
December 31,
2018
 
(Unaudited)
ASSETS
 
Current assets:
 
 
 
Cash and cash equivalents
$
174,554

 
$
224,936

Accounts receivable, net of allowance for doubtful accounts of $919 and $1,123, respectively
59,283

 
54,924

Other current assets
21,249

 
19,768

Total current assets
255,086

 
299,628

Property, plant and equipment, net
2,410,116

 
2,434,829

Deferred charges, net
29,173

 
22,525

Right of use assets
24,285

 

Other assets
4,687

 
7,655

Total assets
$
2,723,347

 
$
2,764,637

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
31,117

 
$
26,826

Accrued interest
13,218

 
15,910

Accrued payroll and benefits
10,976

 
12,445

Current portion of long-term debt, net of original issue discount of $443 and $2,725 and deferred financing costs of $149 and $611, respectively
25,174

 
96,311

Lease liabilities
3,104

 

Other accrued liabilities
8,808

 
9,750

Total current liabilities
92,397

 
161,242

Long-term debt, including deferred net gain of $36,608 and $15,845, and net of original issue discount of $3,762 and $3,013 and deferred financing costs of $6,835 and $6,149, respectively
1,171,559

 
1,123,625

Deferred tax liabilities, net
160,449

 
169,122

Lease liabilities
24,483

 

Other liabilities
2,710

 
2,722

Total liabilities
1,451,598

 
1,456,711

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; 37,875 and 37,701 shares issued and outstanding, respectively
379

 
377

Additional paid-in-capital
761,988

 
761,834

Retained earnings
510,983

 
549,475

Accumulated other comprehensive loss
(1,601
)
 
(3,760
)
Total stockholders’ equity
1,271,749

 
1,307,926

Total liabilities and stockholders’ equity
$
2,723,347

 
$
2,764,637



The accompanying notes are an integral part of these consolidated statements.

1


HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(Unaudited)
Revenues:
 
 
 
Vessel revenues
$
45,252

 
$
33,134

Non-vessel revenues
8,784

 
8,453

 
54,036

 
41,587

Costs and expenses:
 
 
 
Operating expenses
40,394

 
35,969

Depreciation
24,771

 
24,648

Amortization
3,611

 
1,992

General and administrative expenses
11,967

 
12,875

 
80,743


75,484

Gain on sale of assets
26

 
43

Operating loss
(26,681
)
 
(33,854
)
Other income (expense):
 
 
 
Loss on early extinguishment of debt, net
(71
)
 

Interest income
1,114

 
644

Interest expense
(19,726
)
 
(13,945
)
Other income (expense), net
(87
)
 
9

 
(18,770
)
 
(13,292
)
Loss before income taxes
(45,451
)
 
(47,146
)
Income tax benefit
(8,831
)
 
(8,491
)
Net loss
$
(36,620
)
 
$
(38,655
)
Loss per share:
 
 
 
Basic loss per common share
$
(0.97
)
 
$
(1.04
)
Diluted loss per common share
$
(0.97
)
 
$
(1.04
)
Weighted average basic shares outstanding
37,788

 
37,339

Weighted average diluted shares outstanding
37,788

 
37,339



The accompanying notes are an integral part of these consolidated statements.

2


HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(Unaudited)
Net loss
$
(36,620
)
 
$
(38,655
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation income (loss)
287

 
(300
)
Total comprehensive loss
$
(36,333
)
 
$
(38,955
)


The accompanying notes are an integral part of these consolidated statements.

3


HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

(In thousands)
 
Three Months Ended March 31, 2019
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (loss)
 
Total
Stockholders
Equity
 
Shares
 
Amount
 
Balance at January 1, 2019
37,700

 
$
377

 
$
761,834

 
$
549,475

 
$
(3,760
)
 
$
1,307,926

Shares issued under employee benefit programs
175

 
2

 
(124
)
 

 

 
(122
)
Adoption of ASU 2018-02

 

 

 
(1,872
)
 
1,872

 

Stock-based compensation expense

 

 
278

 

 

 
278

Net loss

 

 

 
(36,620
)
 

 
(36,620
)
Foreign currency translation income

 

 

 

 
287

 
287

Balance at March 31, 2019
37,875

 
$
379

 
$
761,988

 
$
510,983

 
$
(1,601
)
 
$
1,271,749




 
Three Months Ended March 31, 2018
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (loss)
 
Total
Stockholders
Equity
 
Shares
 
Amount
 
Balance at January 1, 2018
37,144

 
$
371

 
$
760,278

 
$
668,598

 
$
8,677

 
$
1,437,924

Shares issued under employee benefit programs
348

 
4

 
(536
)
 

 

 
(532
)
Stock-based compensation expense

 

 
610

 

 

 
610

Net loss

 

 

 
(38,655
)
 

 
(38,655
)
Foreign currency translation loss

 

 

 

 
(300
)
 
(300
)
Balance at March 31, 2018
37,492

 
$
375

 
$
760,352

 
$
629,943

 
$
8,377

 
$
1,399,047





The accompanying notes are an integral part of these consolidated statements.

4


HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(36,620
)
 
$
(38,655
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation
24,771

 
24,648

Amortization
3,611

 
1,992

Stock-based compensation expense
975

 
2,868

Loss on early extinguishment of debt, net
71

 

Provision for bad debts
204

 
223

Deferred tax benefit
(8,749
)
 
(8,556
)
Amortization of deferred financing costs
481

 
1,139

Gain on sale of assets
(26
)
 
(43
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(4,690
)
 
(3,802
)
Other current and long-term assets
(1,501
)
 
2,282

Deferred drydocking charges
(9,300
)
 
(1,970
)
Accounts payable
4,476

 
8,919

Accrued liabilities and other liabilities
2,845

 
2,164

Accrued interest
(2,691
)
 
(83
)
Net cash used in operating activities
(26,143
)
 
(8,874
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Costs incurred for OSV newbuild program
(3
)
 
(2,690
)
Net proceeds from sale of assets
26

 
43

Vessel capital expenditures
(522
)
 
(3,906
)
Non-vessel capital expenditures
(71
)
 
(7
)
Net cash used in investing activities
(570
)
 
(6,560
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from first-lien term loans
29,159

 

Repurchase of convertible notes
(47,310
)
 

Payment of deferred financing costs
(5,524
)
 

Shares withheld for payment of employee withholding taxes

 
(536
)
Net cash used in financing activities
(23,675
)
 
(536
)
Effects of exchange rate changes on cash
6

 
(43
)
Net decrease in cash and cash equivalents
(50,382
)
 
(16,013
)
Cash and cash equivalents at beginning of period
224,936

 
186,849

Cash and cash equivalents at end of period
$
174,554

 
$
170,836

SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
 
 
 
Cash paid for interest
$
19,507

 
$
15,131

Cash paid for (refunds of) income taxes
$
(1,338
)
 
$
449

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
 
 
 
Exchange of convertible notes for first-lien term loans
$
20,951

 
$

Exchange of senior notes for second-lien term loans
$
142,629

 
$



The accompanying notes are an integral part of these consolidated statements.

5

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





1. Basis of Presentation
The accompanying unaudited consolidated financial statements do not include certain information and footnote disclosures required by United States generally accepted accounting principles, or GAAP. The interim financial statements and notes are presented as permitted by instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements have been included and consist only of normal recurring items. The unaudited quarterly financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K of Hornbeck Offshore Services, Inc. (together with its subsidiaries, the “Company”) for the year ended December 31, 2018. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
The consolidated balance sheet at December 31, 2018 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.
2. Going Concern
Since the second half of 2014, the offshore oil service sector has experienced difficult operating conditions due to the declining price of oil. This low oil price environment has caused many of the Company's customers to reduce their budgets for the worldwide exploration or production of oil. This reduced spending has negatively impacted the Company's financial results. As discussed in Note 8, the Company's 2020 senior notes and 2021 senior notes mature in April 2020 and March 2021, respectively. The maturity of the Company’s 2020 senior notes now falls within the twelve month period from the issuance of these financial statements for which the Company is required to evaluate as part of its assessment of its ability to continue as a going concern. Management of the Company continues to believe it has adequate liquidity to fund its operations up until the maturity of the 2020 senior notes. However, absent the combination of a significant recovery of market conditions such that cash flow from operations were to increase materially from currently projected levels, coupled with the refinancing and/or further management of its funded debt obligations, the Company does not currently expect to have sufficient liquidity to repay the full amount of the 2020 senior notes and the 2021 senior notes as they mature in 2020 and 2021, respectively. Management continues to implement its on-going plan to address its maturities as they become due, including the refinancing of its 2020 senior notes and, based on continuing discussions with existing and potential lenders, management is optimistic that it will be able to successfully implement this plan. However, management recognizes that its plan depends on the actions of these third parties, including reaching an agreement with existing senior note holders and/or obtaining new sources of liquidity, and, therefore, the Company is unable at this time to conclude that such plan is reasonably certain of being achieved. Accordingly, given the uncertainty with respect to the Company’s ability to pay its 2020 senior notes in full as they become due, the Company acknowledges that substantial doubt exists regarding its ability to continue as a going concern. There can be no assurance that cash flows from operations will increase materially or that the Company will succeed in reaching agreements with its senior note holders or accessing new capital to pay the 2020 senior notes in full as they become due within the next twelve months.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the twelve month period following the date of these consolidated financial statements. As such, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.


3. Recent Accounting Pronouncements
Standard
 
Description
 
Required Date of Adoption
 
Effect on the financial statements and other significant matters
Standards that have been adopted
 
 
ASU No. 2016-02, "Leases" (Topic 842)

 
This standard requires lessees to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. ASU 2016-02 requires a modified retrospective application. Early adoption is permitted.

 
January 1, 2019

 
The Company adopted this ASU effective January 1, 2019. See further discussion below and in footnote 12.
 
 
 
 
 
 
 
ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income"

 
This standard allows companies to reclassify items in accumulated other comprehensive income to retained earnings for stranded tax effects resulting from The Tax Cuts and Jobs Act.

 
January 1, 2019

 
The Company adopted ASU No. 2018-02 on January 1, 2019. This adoption had no material impact on its consolidated financial statements.

 
 
 
 
 
 
 
ASU No. 2018-09, "Codification Improvements"

 
This standard provides clarification, corrects errors in and makes minor improvements to various ASC topics. Many of the amendments in this update have transition guidance with effective dates for annual periods beginning after December 15, 2018, and some amendments do not require transition guidance and are effective upon issuance of this update.

 
January 1, 2019

 
The Company adopted ASU No. 2019-09 on January 1, 2019. This adoption had no material impact on its consolidated financial statements.

 
 
 
 
 
 
 
ASU No. 2018-11, "Leases" (Topic 842): Targeted Improvements

 
This standard provides for the election of transition methods between the modified retrospective method and the optional transition relief method. The modified retrospective method is applied to all prior reporting periods presented with a cumulative-effect adjustment recorded in the earliest comparative period while the optional transition relief method is applied beginning in the period of adoption with a cumulative-effect adjustment recorded in such period. Also, this standard allows lessors to elect to not separate non-lease components from the associated lease components if certain criteria are met.

 
January 1, 2019

 
The Company adopted ASU No. 2018-11 on January 1, 2019. See further discussion below.



Standards that have not been adopted
 
 
ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments"
 
This standard requires measurement and recognition of expected credit losses for financial assets held. ASU No. 2016-13 requires modified retrospective application. Early adoption is permitted.
 
January 1, 2020
 
The Company believes that the implementation of this new guidance will not have a material impact on its consolidated financial statements.
 
 
 
 
 
 
 

ASC 842, Leases 

Lessee Accounting

In February 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-02, Leases, which requires lessees to recognize a right-of-use, or ROU, asset and a lease obligation for all leases. This ASU became effective for the Company for its annual reporting period beginning January 1, 2019, including interim periods within that reporting period. The Company adopted the standard using a modified retrospective approach with the effective date of the standard as the date of initial application.

The Company elected the package of practical expedients permitted under the transition guidance within the standard, which eliminates the reassessment of past leases, classification and initial direct costs. For leases with a term of twelve months or less, the Company has made a policy election in which the ROU asset and lease liability will not be recognized on its balance sheet.
 
As a result of the Company's adoption of this new standard, it recorded ROU assets of $24.7 million and lease liabilities of $27.7 million. The adoption of the standard did not have an impact on the Company's equity and will not have a material impact on the Company's results of operations and cash flows.

Lessor Accounting

Under ASU 2018-11 a lessor may elect to combine lease and non-lease components provided that the non-lease component(s) otherwise would be accounted for under the new revenue guidance in ASC 606 and both of the following conditions are met:
The timing and pattern of transfer for the lease component are the same as those for the non-lease components associated with that lease component.
The lease component, if accounted for separately, would be classified as an operating lease.
When the above conditions are met, the entity will need to assess predominance. If the non-lease components are predominant, the entity accounts for the combined component under ASC 606; otherwise, the entity accounts for the combined component under ASC 842.
After review of its revenue streams, the Company has concluded that the non-lease component of its revenue is predominant, and that both of the criteria above are met. Therefore, the Company has adopted the new transition options and will combine lease and non-lease revenues. The Company will recognize revenue based on the non-lease component under ASC 606, as it has concluded that the non-lease component is the predominant component. The adoption of ASU 2018-11 on January 1, 2019 did not change the timing or amounts of revenues recognized by the Company.



6

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




4. Revenues from Contracts with Customers

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective method. The adoption of this standard did not have a material impact on the Company's financial position or results of operations. Accordingly, the Company did not make an adjustment to the opening balance of retained earnings in order to account for the implementation of the new requirements of this standard, and it did not restate prior period information for the effects of the new standard.
    
The services that are provided by the Company represent a single performance obligation under our contracts that are satisfied at a point in time or over time. Revenues are earned primarily by (1) chartering the Company's vessels, including the operation of such vessels, (2) providing vessel management services to third party vessel owners, and (3) providing shore-based port facility services, including rental of land. The services generating these revenue streams are provided to customers based upon contracts that include fixed or determinable prices and do not generally include right of return or other significant post-delivery obligations. The Company's vessel revenues, vessel management revenues and port facility revenues are recognized either at a point in time or over the passage of time when the customer has received or is receiving the benefit from the applicable service. Revenues are recognized when the performance obligations are satisfied in accordance with contractual terms and in an amount that reflects the consideration that the Company expects to be entitled to in exchange for the services rendered or rentals provided. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Invoices are typically billed to our customers on a monthly basis and payment terms on customer invoices typically range 30 to 60 days.
A performance obligation under contracts with the Company's customers to render services is the unit of account under Topic 606. The Company accounts for services rendered separately if they are distinct and the service is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered provided on its own or with other resources that are readily available to the customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
As of March 31, 2019, the Company has certain remaining performance obligations representing contracted vessel revenues for which work has not been performed and such contracts have an original expected duration of more than one year. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations for such contracts was $5.6 million, all of which is expected to be recognized in 2019. The Company has elected to apply the optional exemption for the disclosure of the remaining performance obligations for any of its revenue streams that are expected to have a duration of one year or less and, therefore, such amounts have not been disclosed.


7

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Disaggregation of Revenues

For the three months ended March 31, 2019 and 2018, the Company recognized revenues as follows (in thousands):
 
Three months ended March 31,
 
2019
 
2018
Vessel revenues
$
45,252

 
$
33,134

Vessel management revenues
8,475

 
7,759

Shore-based facility revenues
309

 
694

 
$
54,036

 
$
41,587

5. Loss per share
Basic loss per common share was calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share was calculated by dividing net loss by the weighted average number of common shares outstanding during the year plus the effect of dilutive stock options and restricted stock unit awards. When reporting a net loss, the Company uses weighted average basic shares outstanding to calculate diluted earnings per share. Weighted average number of common shares outstanding was calculated by using the sum of the shares determined on a daily basis divided by the number of days in the period.
The table below reconciles the Company’s loss per share (in thousands, except for per share data): 
 
Three Months Ended 
 March 31,
 
2019
 
2018
Net loss
$
(36,620
)
 
$
(38,655
)
Weighted average number of shares of common stock outstanding
37,788

 
37,339

Add: Net effect of dilutive stock options and unvested restricted stock (1)(2)(3)

 

Weighted average number of dilutive shares of common stock outstanding
37,788

 
37,339

Loss per common share:
 
 
 
Basic loss per common share
$
(0.97
)
 
$
(1.04
)
Diluted loss per common share
$
(0.97
)
 
$
(1.04
)
 
(1)
Due to a net loss, the Company excluded from the calculation of loss per share the effect of equity awards representing the rights to acquire 404 shares of common stock for the three months ended March 31, 2019 and 750 shares of common stock for the three months ended March 31, 2018, respectively.
(2)
For the three months ended March 31, 2019 and 2018, the 2019 convertible senior notes were not dilutive, as the average price of the Company’s stock was less than the effective conversion price of such notes. It is the Company's stated intention to redeem the principal amount of its 2019 convertible senior notes in cash and the Company has used the treasury method for determining potential dilution in the diluted earnings per share computation.
(3)
Dilutive unvested restricted stock units are expected to fluctuate from quarter to quarter depending on the Company’s performance compared to a predetermined set of performance criteria. See Note 9 to these financial statements for further information regarding certain of the Company’s restricted stock grants.
6. Property, Plant and Equipment

Asset Impairment Assessment
In accordance with ASC 360, the Company periodically reviews long-lived asset valuations when events or changes in circumstances indicate that an asset’s carrying value may not be recoverable. If indicators of impairment exist, the Company assesses the recoverability of its long-lived assets by comparing the projected future undiscounted cash flows associated with the related long-lived asset group over their remaining

8

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




estimated useful lives. If the sum of the estimated undiscounted cash flows are less than the carrying amounts of the asset group, the assets are written down to their estimated fair values based on the expected discounted future cash flows or appraised values attributable to the assets. The future cash flows are subjective and are based on the Company’s current assumptions regarding future dayrates, utilization, operating expense, G&A expense and recertification costs that could differ from actual results.
During the second quarter of 2016, the Company determined that it observed indicators of impairment related to its vessels. This resulted from the rapid deterioration of its second quarter 2016 operating results, as well as the uncertainty regarding future market conditions and the related impact on the Company's projected operating results. For the purpose of calculating the undiscounted cash flows, the Company grouped its vessels into two groups, OSVs and MPSVs, and used a probability-weighted undiscounted cash flow projection to test for recoverability. After reviewing the results of this calculation, the Company determined that each of its asset groups had sufficient projected undiscounted cash flows to recover the remaining book value of the Company's long-lived assets within such groups. While the Company has not observed any new impairment indicators since 2016, the Company has reviewed and updated, as necessary, the assumptions used in determining its undiscounted cash flow projections for each asset group to reflect current market conditions. After reviewing the results of these updated projections, the Company determined that each of its asset groups continue to have sufficient projected undiscounted cash flows to recover the remaining book value of the Company's long-lived assets within such group.
7. Acquisition of Vessels
On May 18, 2018, the Company completed the acquisition of four high-spec Jones Act-qualified OSVs and related equipment from Aries Marine Corporation and certain of its affiliates for $40.9 million in cash, inclusive of $4.0 million related to a non-compete intangible asset that is being amortized over the life of such asset, or two years. Also included in this transaction was the cost of fuel and lube inventory and transactions fees. The acquired vessels are all U.S.-flagged and are comprised of two 300 class OSVs and two 280 class OSVs. The Company determined that substantially all of the fair value of the assets acquired are concentrated in a group of similar identifiable assets and, therefore, has accounted for such transaction as an asset acquisition under ASU 2017-01.
8. Long-Term Debt
As of the dates indicated, the Company had the following outstanding long-term debt (in thousands):
 
March 31,
2019
 
December 31,
2018
5.875% senior notes due 2020, net of deferred financing costs of $937 and $1,162
$
223,376

 
$
365,780

5.000% senior notes due 2021, net of deferred financing costs of $1,930 and $2,173
448,070

 
447,827

1.500% convertible senior notes due 2019, net of original issue discount of $443 and $2,725 and deferred financing costs of $149 and $611
25,174

 
96,311

First-lien term loans due 2023, including deferred gain of $15,628 and $15,845, and net of original issue discount of $3,762 and $3,013, and deferred financing costs of $3,968 and $2,814
357,898

 
310,018

Second-lien term loans due 2025, including deferred gain of $20,980
142,215

 

 
1,196,733

 
1,219,936

Less current maturities
(25,174
)
 
(96,311
)
 
$
1,171,559

 
$
1,123,625


9

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




The table below summarizes the Company's cash interest payments (in thousands):
 
Cash Interest Payments
 
Payment Dates
5.875% senior notes due 2020
$
6,589

 
April 1 and October 1
5.000% senior notes due 2021
11,250

 
March 1 and September 1
1.500% convertible senior notes due 2019
193

 
Final payment on September 1, 2019
First-lien term loans due 2023
2,800

 
Variable (1)
Second-lien term loans due 2025
2,879

 
January 31, April 30, July 31, and October 31
 
(1)
The interest rate on the first-lien term loans is variable based on the Company's election. The amount reflected in this table is the monthly amount payable based on the 30-day LIBOR interest rate that was elected and in effect on March 31, 2019. Please see further discussion of the variable interest rate below.
First-Lien Term Loans
On June 15, 2017, the Company entered into the First Lien Term Loan Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the First Lien Term Loan Agreement), by and among the Company, as Parent Borrower, Hornbeck Offshore Services, LLC, or HOS, as Co-Borrower, certain holders of the Company’s then outstanding notes, or the First-Lien Initial Lenders, and Wilmington Trust, National Association, as Administrative Agent and Collateral Agent for the lenders that initially provided for $300 million of first-lien delayed-draw term loans, or the first-lien term loans. On March 1, 2019, the Company entered into Incremental First Lien Term Loan Joinder Agreements with such parties, including certain existing as well as additional lenders, to borrow an additional $50.0 million of first-lien term loans, or the incremental first-lien term loans, under the First Lien Term Loan Agreement, including approximately $30.1 million in cash of new financing. On March 1, 2019, the Company exchanged approximately $21.0 million in face value of its 2019 convertible senior notes in a privately negotiated debt-for-debt exchange for the remaining approximately $19.9 million of incremental first-lien term loans. In accordance with applicable accounting guidance, this debt-for-debt exchange was accounted for as a debt modification. As a result, the Company recorded a loss on early extinguishment of debt of $1.3 million ($1.1 million or $0.03 per diluted share after-tax) due to deal costs associated with the exchange. The incremental first-lien term loans have the same terms applicable to the first-lien term loans originally issued under the existing First Lien Term Loan Agreement.
The Company can use the amounts under the first-lien term loans for working capital and general corporate purposes, including acquisitions and/or the refinancing of existing debt, subject to, among other things, compliance with certain covenants requiring the Company to maintain access to liquidity (cash and credit availability) of $25.0 million at all times. The minimum liquidity level required for prepayment of the Company’s existing indebtedness and/or certain other restricted payments is $65.0 million.
The first-lien term loans are collateralized by 48 domestic high-spec OSVs and MPSVs and seven foreign high-spec OSVs, including a security interest in two pending MPSV newbuilds, and associated personalty, as well as by certain deposit and securities accounts. Borrowings accrue interest, at the Company’s option, at either an adjusted London Interbank Offered Rate (subject to a 1.00% floor) plus an applicable margin or the greatest of (a) the prime rate announced by The Wall Street Journal, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%, and (c) the London Interbank Offered Rate plus, 1%, plus, an applicable a margin.
Second-Lien Term Loans
During the three months ended March 31, 2019, the Company completed two private offers and exchanged an aggregate of $142.6 million in face value of its 2020 senior notes for $121.2 million of second-lien term loans due 2025, or second-lien term loans, of the Company and the Co-Borrower. In accordance with

10

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




applicable accounting guidance, this debt-for-debt exchange was accounted for as a debt modification. As a result, the Company recorded a loss on early extinguishment of debt of $2.4 million ($1.9 million or $0.05 per diluted share after-tax) due to deal costs associated with the exchange. As contemplated by and provided for under the agreement governing the first-lien term loans, the second-lien term loans were made pursuant to a Second Lien Term Loan Agreement entered into by the Company, the Co-Borrower, the lenders party thereto and the Administrative Agent and Collateral Agent. The second-lien term loans have a maturity date of February 7, 2025 and bear interest at a fixed rate per annum of 9.50%. The second-lien term loans are guaranteed by certain of the Company’s present domestic subsidiaries and will be guaranteed by certain of the Company's future domestic subsidiaries and are secured on a second-lien basis, subject to certain permitted liens, by a second-priority interest in the same collateral securing the Company’s first-lien term loans.
Convertible Note Repurchases
During the three months ended March 31, 2019, the Company completed a series of private transactions for the repurchase of $52.9 million in face value of its outstanding 2019 convertible senior notes for an aggregate total of $47.6 million of cash. The Company recorded a gain on early extinguishment of debt of $3.6 million ($2.9 million or $0.08 per diluted share after-tax), which was comprised of a $5.6 million gain on the repurchase, offset in part by the write-off of $2.0 million of original issue discount, deal costs and unamortized financing costs related to the notes repurchased.
The agreements governing the first-lien term loans and the second-lien term loans and the indentures governing the Company's 2020 senior notes and 2021 senior notes impose certain restrictions on the Company. Such restrictions affect, and in many cases limit or prohibit, among other things, the Company's ability to incur additional indebtedness, make capital expenditures, redeem equity, create liens, sell assets and make dividend or other restricted payments.
The Company estimates the fair value of its 2020 senior notes, 2021 senior notes, 2019 convertible senior notes, the first-lien term loans, and the second-lien term loans by primarily using quoted market prices. Given the observability of the inputs to these estimates, the Company has assigned a Level 2 of the three-level valuation hierarchy. As of the dates indicated below, the Company had the following face values, carrying values and fair values (in thousands):
 
March 31, 2019
 
December 31, 2018
 
Face Value
 
Carrying Value
 
Fair Value
 
Face Value
 
Carrying Value
 
Fair Value
5.875% senior notes due 2020
$
224,313

 
$
223,376

 
$
141,878

 
$
366,942

 
$
365,780

 
$
191,727

5.000% senior notes due 2021
450,000

 
448,070

 
251,438

 
450,000

 
447,827

 
220,500

1.500% convertible senior notes due 2019
25,766

 
25,174

 
22,803

 
99,647

 
96,311

 
88,125

First-lien term loans due 2023 (1)
350,000

 
357,898

 
350,455

 
300,000

 
310,018

 
295,875

Second-lien term loans due 2025 (2)
121,235

 
142,215

 
96,685

 

 

 

 
$
1,171,314

 
$
1,196,733

 
$
863,259

 
$
1,216,589

 
$
1,219,936

 
$
796,227

 
(1)
The carrying value of the first-lien term loans due 2023 includes a deferred gain of $15,628 less original issue discount and deferred financing costs of $7,730.
(2)
The carrying value of the second-lien term loans due 2025 includes a deferred gain of $20,980.
Capitalized Interest
During the first quarter of 2018, the Company notified the shipyard that it was terminating the construction contracts for two vessels in the Company's fifth OSV newbuild program. The Company did not capitalize any of its interest costs during the three months ended March 31, 2019. Upon recommencement of construction of such vessels, the Company intends to resume capitalization of interest costs related thereto. During the three

11

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




months ended March 31, 2018, the Company capitalized approximately $2.3 million of interest costs related to the construction of vessels.
9. Incentive Compensation
Stock-Based Incentive Compensation Plan
The Company’s stock-based incentive compensation plan covers a maximum of 4.95 million shares of common stock that allows the Company to grant restricted stock awards, restricted stock unit awards, or collectively restricted stock, stock options, stock appreciation rights and fully-vested common stock to employees and directors. As of March 31, 2019, the Company has granted awards covering 4.61 million shares of common stock under such plan.
Restricted Stock
During the three months ended March 31, 2019, the Company granted 2.4 million time-based phantom restricted stock units. The compensation expense related to time-based phantom restricted stock units are amortized over a vesting period of up to three years and is determined based on the market price of the Company’s stock on the date of grant applied to the total shares that are expected to fully vest. All phantom restricted stock units are re-measured quarterly and classified as a liability, due to the currently intended settlement of these awards in cash. In addition to the phantom restricted stock units granted in 2019, the Company granted performance-based and time-based restricted stock units and phantom restricted stock units in prior years. During the three months ended March 31, 2019, the Company issued 173,997 shares of common stock due to vestings of restricted stock units.
Stock Appreciation Rights
During the three months ended March 31, 2019, the Company granted 1.6 million stock appreciation rights, or SARs. The SARs vest and become exercisable in three equal annual installments on each of the 1st, 2nd and 3rd anniversaries of the grant date and have a ten-year life. The SARs represent the right to receive, upon exercise, a number of shares of Company common stock, cash, or a combination thereof, at the election of the Company, equal to the product of the aggregate number of shares of Company common stock with respect to which the SAR is exercised and the excess of the fair market value of a share of Company common stock as of the date of exercise over the grant price of $1.38.
In accordance with ASC 718, the fair value of each SAR granted is estimated on the date granted using the Black-Scholes option-pricing model. As of the grant date, the Company does not have shares available to settle these SARs in shares and, therefore, they are accounted for as liability awards and are re-measured quarterly and classified as a liability. As of March 31, 2019, the fair value for SARs granted during the three months ended March 31, 2019 was $0.97 per share granted.
The following weighted average assumptions were used to value SARs:
 
Three Months Ended March 31,
 
 
2018
 
Expected volatility
96.4
%
Expected life
6.0
years
Risk-free interest rate
2.4
%
Expected dividend yield
%
The risk-free interest rate used to value SARs is based on the U.S. Treasury yield curve in effect at the time of grant with maturity dates that coincide with the expected life of the SARs. Since this is the first time the Company has issued SARS, it used the simplified method under GAAP to determine the expected life. The

12

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Company's assumption for volatility is based on its historical volatility calculated on the grant date of an award for a period of time that coincides with the expected life of the options.
The impact of stock-based compensation expense charges on the Company’s operating results are reflected in the table below (in thousands, except for per share data):
 
Three Months Ended 
 March 31,
 
2019
 
2018
Loss before income taxes
$
975

 
$
2,868

Net loss
$
786

 
$
2,351

Earnings per common share:
 
 
 
Basic earnings per common share
$
0.02

 
$
0.06

Diluted earnings per common share
$
0.02

 
$
0.06

10. Commitments and Contingencies
Vessel Construction
During the first quarter of 2018, the Company notified the shipyard that was constructing the remaining two vessels in the Company's fifth OSV newbuild program that it was terminating the construction contracts for such vessels. The Company has worked with the performance bond surety and will select and contract with a shipyard that can finish construction and deliver such vessels. On October 2, 2018, the original shipyard filed suit against the Company in the 22nd Judicial District Court for the Parish of St. Tammany in the State of Louisiana. The Company has responded to the suit and has alleged counter-claims. The Company intends to vigorously defend the shipyard’s claims and considers them to be without merit. The surety has authorized the Company to select a completion yard and, subject to the terms of the applicable performance bonds and subject to a reservation of rights, the surety will fund the cost to complete the vessels in excess of their contract price of up to the full amount of the performance bond.
The cost of this nearly completed 24-vessel newbuild program, before construction period interest, is expected to be approximately $1,335.0 million, of which $22.7 million and $38.2 million are currently expected to be incurred in the remainder of 2019 and fiscal 2020, respectively. As of the date of termination, these two remaining vessels, both of which are 400 class MPSVs, were projected to be delivered in the second and third quarters of 2019, respectively. Due to the uncertainty of the timing and location of future construction activities, these vessels are now projected to be delivered in the second and third quarters of 2020, respectively. However, the timing of the remaining construction draws remains subject to change commensurate with any potential further delays in the delivery dates of such vessels. From the inception of this program through March 31, 2019, the Company had incurred $1,274.1 million, or 95.4%, of total expected project costs.
Contingencies
In the normal course of its business, the Company becomes involved in various claims and legal proceedings in which monetary damages are sought. It is management's opinion that the Company's liability, if any, under such claims or proceedings would not materially affect the Company's financial position or results of operations. The Company insures against losses relating to its vessels, pollution and third party liabilities, including claims by employees under Section 33 of the Merchant Marine Act of 1920, or the Jones Act. Third party liabilities and pollution claims that relate to vessel operations are covered by the Company’s entry in a mutual protection and indemnity association, or P&I Club, as well as by marine liability policies in excess of the P&I Club’s coverage. The Company provides reserves for any individual claim deductibles for which the Company remains responsible by using an estimation process that considers Company-specific and industry data, as well as management’s experience, assumptions and consultation with outside counsel. As additional information becomes available, the Company will assess the potential liability related to its pending claims and

13

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




revise its estimates. Although historically revisions to such estimates have not been material, changes in estimates of the potential liability could materially impact the Company’s results of operations, financial position or cash flows.
11. Income Taxes
The effective tax benefit rate for the three months ended March 31, 2019 and 2018 was 19.4% and 18.0%, respectively. The Company's effective tax rate differs from the federal statutory rate due to the establishment of valuation allowances in 2019 and 2018 for state net operating loss and foreign tax credit carryforwards based upon management's conclusion that it is more likely than not such losses and credits will not be realized by their expiration dates. The Company's income tax benefit for the three months ended March 31, 2019 was higher than the benefit rate from the three months ended March 31, 2018 due to higher tax expense related to valuation allowances and long-term incentive compensation in the prior year quarter.
During the three months ended March 31, 2019, the Company adopted ASU 2018-02 and has elected to reclassify the stranded income tax effects of the Tax Cuts and Jobs Act from accumulated comprehensive income to retained earnings. As a result, a reduction in retained earnings and an increase in accumulated other comprehensive income of $1.9 million was recorded in the quarter ended March 31, 2019.
12. Leases
The Company determines if an agreement is a lease or contains a lease at inception. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. ROU assets and the corresponding lease liabilities are recorded at the commencement date based on the present value of lease payments over the expected lease term. The Company uses its incremental borrowing rate, which would be the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment, to calculate the present value of lease payments.
The Company is obligated under certain operating leases for shore-based facilities, office space and temporary housing. Such leases will often include options to extend the lease and the Company will include option periods that, on commencement date, it is reasonably likely that it will exercise the option. Some leases may require variable lease payments such as real estate taxes and maintenance expenses. These costs are expensed in the period in which they are incurred. None of the Company's leases contain any residual value guarantees. The Company recorded $1.1 million of expense related to leases in general and administrative and operating expenses during the three months ended March 31, 2019. The expense recorded for short-term leases was immaterial.
During the three months ended March 31, 2019, the Company recorded operating cash outflows from operating leases of $0.8 million.

14

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Annual maturities of operating lease liabilities under non-cancelable leases with terms in excess of one year, as of March 31, 2019, are as follows (in thousands):
 
Three Months Ended March 31, 2019
Remainder of 2019
$
2,294

2020
3,114

2021
3,017

2022
3,065

2023
3,122

Thereafter
43,873

Total lease payments
58,485

Less: imputed interest
30,898

Total operating lease liabilities
$
27,587

 
 
Weighted-average remaining lease term
17.8

Weighted-average discount rate
9.0
%

13. Condensed Consolidating Financial Statements of Guarantors
The following tables present the condensed consolidating balance sheets as of March 31, 2019 and December 31, 2018, the condensed consolidating statements of operations, the condensed consolidating statements of comprehensive income (loss) and condensed consolidating statements of cash flows for the three months ended March 31, 2019 and 2018, respectively, for the domestic subsidiaries of the Company that serve as guarantors of the Company's first-lien term loans, second-lien term loans, 2019 convertible senior notes, 2020 senior notes, 2021 senior notes and the financial results for the Company's subsidiaries that do not serve as guarantors. The guarantor subsidiaries of the first-lien term loans, second-lien term loans, 2019 convertible senior notes, 2020 senior notes, 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. Certain prior period amounts have been reclassified to conform to the current period presentation.

15

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Balance Sheet
(In thousands, except per share data)
 
As of March 31, 2019
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
9

 
$
166,404

 
$
8,141

 
$

 
$
174,554

Accounts receivable, net of allowance for doubtful accounts of $919

 
40,039

 
19,272

 
(28
)
 
59,283

Other current assets
65

 
18,584

 
2,600

 

 
21,249

Total current assets
74

 
225,027

 
30,013

 
(28
)
 
255,086

Property, plant and equipment, net

 
2,069,820

 
340,296

 

 
2,410,116

Deferred charges, net

 
25,404

 
3,769

 

 
29,173

Intercompany receivable
1,894,953

 
1,042,857

 
511,453

 
(3,449,263
)
 

Investment in subsidiaries
660,838

 

 

 
(660,838
)
 

Right of use assets

 
23,932

 
353

 

 
24,285

Other assets

 
4,147

 
540

 

 
4,687

Total assets
$
2,555,865

 
$
3,391,187

 
$
886,424

 
$
(4,110,129
)
 
$
2,723,347

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
180

 
$
28,628

 
$
2,309

 
$

 
$
31,117

Accrued interest
13,218

 

 

 

 
13,218

Accrued payroll and benefits

 
9,465

 
1,511

 

 
10,976

Current portion of long-term debt, net of original issue discount of $443 and deferred financing costs of $149
25,174

 

 

 

 
25,174

Lease liabilities

 
2,860

 
244

 

 
3,104

Other liabilities

 
5,431

 
3,405

 
(28
)
 
8,808

Total current liabilities
38,572

 
46,384

 
7,469

 
(28
)
 
92,397

Long-term debt, including deferred net gain of $36,608, and net of original issue discount of $3,762 and deferred financing costs of $6,835
1,171,559

 

 

 

 
1,171,559

Deferred tax liabilities, net

 
159,006

 
1,443

 

 
160,449

Intercompany payables
73,985

 
2,443,193

 
932,085

 
(3,449,263
)
 

Lease liabilities

 
24,374

 
109

 

 
24,483

Other liabilities

 
2,710

 

 

 
2,710

Total liabilities
1,284,116

 
2,675,667

 
941,106

 
(3,449,291
)
 
1,451,598

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; 37,875 shares issued and outstanding
379

 

 

 

 
379

Additional paid-in capital
761,988

 
37,979

 
8,602

 
(46,581
)
 
761,988

Retained earnings
510,983

 
677,541

 
(63,284
)
 
(614,257
)
 
510,983

Accumulated other comprehensive loss
(1,601
)
 

 

 

 
(1,601
)
Total stockholders’ equity
1,271,749

 
715,520

 
(54,682
)
 
(660,838
)
 
1,271,749

Total liabilities and stockholders’ equity
$
2,555,865

 
$
3,391,187

 
$
886,424

 
$
(4,110,129
)
 
$
2,723,347

 
 
 
 
 
 
 
 
 
 

16

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Balance Sheet
(In thousands, except per share data)
 
As of December 31, 2018
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1

 
$
219,217

 
$
5,718

 
$

 
$
224,936

Accounts receivable, net of allowance for doubtful accounts of $1,123

 
42,136

 
12,788

 

 
54,924

Other current assets
30

 
18,740

 
998

 

 
19,768

Total current assets
31

 
280,093

 
19,504

 

 
299,628

Property, plant and equipment, net

 
2,193,797

 
241,032

 

 
2,434,829

Deferred charges, net

 
19,721

 
2,804

 

 
22,525

Intercompany receivable
1,920,557

 
914,060

 
483,128

 
(3,317,745
)
 

Investment in subsidiaries
699,325

 

 

 
(699,325
)
 

Other assets

 
7,118

 
537

 

 
7,655

Total assets
$
2,619,913

 
$
3,414,789

 
$
747,005

 
$
(4,017,070
)
 
$
2,764,637

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
25,345

 
$
1,481

 
$

 
$
26,826

Accrued interest
15,910

 

 

 

 
15,910

Accrued payroll and benefits

 
11,520

 
925

 

 
12,445

Deferred revenue

 

 

 

 

Current portion of long-term debt, net of original issue discount of $2,725 and deferred financing costs of $611
96,311

 

 

 

 
96,311

Other accrued liabilities

 
7,491

 
2,259

 

 
9,750

Total current liabilities
112,221

 
44,356

 
4,665

 

 
161,242

Long-term debt, including deferred net gain of $15,845, and net of original issue discount of $3,013 and deferred financing costs of $6,149
1,123,625

 

 

 

 
1,123,625

Deferred tax liabilities, net

 
167,756

 
1,366

 

 
169,122

Intercompany payables
76,141

 
2,452,258

 
789,342

 
(3,317,741
)
 

Other liabilities

 
2,720

 
2

 

 
2,722

Total liabilities
1,311,987

 
2,667,090

 
795,375

 
(3,317,741
)
 
1,456,711

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; 37,701 shares issued and outstanding
377

 

 

 

 
377

Additional paid-in capital
761,834

 
37,978

 
8,602

 
(46,580
)
 
761,834

Retained earnings
549,475

 
709,721

 
(56,972
)
 
(652,749
)
 
549,475

Accumulated other comprehensive loss
(3,760
)
 

 

 

 
(3,760
)
Total stockholders’ equity
1,307,926

 
747,699

 
(48,370
)
 
(699,329
)
 
1,307,926

Total liabilities and stockholders’ equity
$
2,619,913

 
$
3,414,789

 
$
747,005

 
$
(4,017,070
)
 
$
2,764,637

 
 
 
 
 
 
 
 
 
 

17

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Statement of Operations
(In thousands)
 
Three Months Ended March 31, 2019
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
Revenues
$

 
$
46,256

 
$
8,289

 
$
(509
)
 
$
54,036

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating expenses

 
31,546

 
9,333

 
(485
)
 
40,394

Depreciation

 
21,055

 
3,716

 

 
24,771

Amortization

 
2,726

 
885

 

 
3,611

General and administrative expenses
40

 
11,078

 
873

 
(24
)
 
11,967

 
40

 
66,405

 
14,807

 
(509
)
 
80,743

Gain on sale of assets

 
26

 

 

 
26

Operating loss
(40
)
 
(20,123
)
 
(6,518
)
 

 
(26,681
)
Other income (expense):
 
 
 
 
 
 
 
 
 
Loss on early extinguishment of debt, net
(71
)
 

 

 

 
(71
)
Interest income

 
1,037

 
77

 

 
1,114

Interest expense
(19,726
)
 

 

 

 
(19,726
)
Equity in earnings (losses) of consolidated subsidiaries
(16,783
)
 

 

 
16,783

 

Other income (expense), net

 
362

 
(449
)
 

 
(87
)
 
(36,580
)
 
1,399

 
(372
)
 
16,783

 
(18,770
)
Loss before income taxes
(36,620
)
 
(18,724
)
 
(6,890
)
 
16,783

 
(45,451
)
Income tax benefit

 
(8,723
)
 
(108
)
 

 
(8,831
)
Net loss
$
(36,620
)
 
$
(10,001
)
 
$
(6,782
)
 
$
16,783

 
$
(36,620
)


Condensed Consolidating Statement of Comprehensive Income (Loss)
(In thousands)
 
Three Months Ended March 31, 2019
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
Net income (loss)
$
(36,620
)
 
$
(10,001
)
 
$
(6,782
)
 
$
16,783

 
$
(36,620
)
Other comprehensive income:
 
 
 
 
 
 
 
 
 
Foreign currency translation gain
287

 

 

 

 
287

Total comprehensive income (loss)
$
(36,333
)
 
$
(10,001
)
 
$
(6,782
)
 
$
16,783

 
$
(36,333
)









18

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Statement of Operations
(In thousands)
 
Three Months Ended March 31, 2018
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
Revenues
$

 
$
40,315

 
$
1,329

 
$
(57
)
 
$
41,587

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating expenses

 
33,985

 
2,038

 
(54
)
 
35,969

Depreciation

 
23,306

 
1,342

 

 
24,648

Amortization

 
1,799

 
193

 

 
1,992

General and administrative expenses
56

 
12,369

 
453

 
(3
)
 
12,875

 
56

 
71,459

 
4,026

 
(57
)
 
75,484

Gain on sale of assets

 
43

 

 

 
43

Operating loss
(56
)
 
(31,101
)
 
(2,697
)
 

 
(33,854
)
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income

 
569

 
75

 

 
644

Interest expense
(13,945
)
 

 

 

 
(13,945
)
Equity in earnings (losses) of consolidated subsidiaries
(24,654
)
 

 

 
24,654

 

Other income (expense), net

 
2,016

 
(2,007
)
 

 
9

 
(38,599
)
 
2,585

 
(1,932
)
 
24,654

 
(13,292
)
Income (loss) before income taxes
(38,655
)
 
(28,516
)
 
(4,629
)
 
24,654

 
(47,146
)
Income tax benefit

 
(8,299
)
 
(192
)
 

 
(8,491
)
Net income (loss)
$
(38,655
)
 
$
(20,217
)
 
$
(4,437
)
 
$
24,654

 
$
(38,655
)

Condensed Consolidating Statement of Comprehensive Income (Loss)
(In thousands)
 
Three Months Ended March 31, 2018
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
Net income (loss)
$
(38,655
)
 
$
(20,217
)
 
$
(4,437
)
 
$
24,654

 
$
(38,655
)
Other comprehensive income:
 
 
 
 
 
 
 
 
 
Foreign currency translation loss
(300
)
 

 

 

 
(300
)
Total comprehensive income (loss)
$
(38,955
)
 
$
(20,217
)
 
$
(4,437
)
 
$
24,654

 
$
(38,955
)








19

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Statement of Cash Flows
(In thousands)

 
Three Months Ended March 31, 2019
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating
 
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
23,683

 
$
(52,865
)
 
$
3,039

 
$

 
$
(26,143
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 

Costs incurred for acquisition of offshore supply vessels

 

 

 

 

Costs incurred for OSV newbuild program

 
(3
)
 

 

 
(3
)
Net proceeds from sale of assets

 
26

 

 

 
26

Vessel capital expenditures

 
114

 
(636
)
 

 
(522
)
Non-vessel capital expenditures

 
(85
)
 
14

 

 
(71
)
Net cash provided by (used in) investing activities

 
52

 
(622
)
 

 
(570
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Proceeds from first-lien term loans
29,159

 

 

 

 
29,159

Repurchase of convertible notes
(47,310
)
 

 

 

 
(47,310
)
Deferred financing costs
(5,524
)
 

 

 

 
(5,524
)
Net cash used in financing activities
(23,675
)
 

 

 

 
(23,675
)
Effects of exchange rate changes on cash

 

 
6

 

 
6

Net increase (decrease) in cash and cash equivalents
8

 
(52,813
)
 
2,423

 

 
(50,382
)
Cash and cash equivalents at beginning of period
1

 
219,217

 
5,718

 

 
224,936

Cash and cash equivalents at end of period
$
9

 
$
166,404

 
$
8,141

 
$

 
$
174,554

SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
 
 
 
 
 
 
 
 
 
Cash paid for interest
$
19,507

 
$

 
$

 
$

 
$
19,507

Cash paid for (refunds of) income taxes
$

 
$
(1,476
)
 
$
138

 
$

 
$
(1,338
)
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Exchange of convertible notes for first-lien term loans
$
20,951

 
$

 
$

 
$

 
$
20,951

Exchange of senior notes for second-lien term loans
$
142,629

 
$

 
$

 
$

 
$
142,629



20

HORNBECK OFFSHORE SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidating Statement of Cash Flows
(In thousands)


 
Three Months Ended March 31, 2018