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Hercules Offshore Inc. Reports Operating Results (10-Q)

July 27, 2012 | About:
10qk

10qk

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Hercules Offshore Inc. (HERO) filed Quarterly Report for the period ended 2012-06-30.

Hercules Offshore, Inc. has a market cap of $591.2 million; its shares were traded at around $3.54 with and P/S ratio of 0.9.

Highlight of Business Operations:

Our income tax effective rate of 20.1% during the Current Quarter, compared to an effective rate of 44.1% for the Comparable Quarter, decreased primarily due to mix of earnings (losses) from different jurisdictions as well as discrete items recorded in the current quarter. In some cases our income tax is based on gross revenues or deemed profits under local tax laws rather than income before taxes. In addition, our assets move between taxing jurisdictions and operating structures with differing tax rates. As a result, variations in our effective tax rate from period to period may have limited correlation with pre-tax income or loss.

Domestic Offshore. The rigs acquired from Seahawk contributed to $49.0 million of the increase in revenue from our Domestic Offshore segment. Excluding the revenue from the rigs acquired from Seahawk, revenue increased approximately $24.0 million due to increased operating days for the legacy Hercules rigs to 1,908 days during the Current Period from 1,481 days during the Comparable Period. In addition, an increase in average dayrates for the legacy Hercules rigs, $55,628 in the Current Period compared to $44,011 in the Comparable Period, contributed to an approximate $17 million increase in revenue.

Domestic Offshore. The increase in operating expenses for our Domestic Offshore segment was due primarily to approximately $26 million related to the rigs acquired from Seahawk. Excluding the operating expenses related to the rigs acquired from Seahawk, operating expenses increased approximately $2 million driven by an increase in labor costs of $7.2 million, fewer gains on asset sales of $2.8 million in the Current Period as compared to the Comparable Period, as well as current period accrued sales and use tax expense of $2.3 million related to several multi-year sales and use tax audits. These increases were partially offset by a decrease in costs associated with workers compensation, equipment rentals, and insurance premiums of $5.2 million, $3.1 million and $2.1 million, respectively.

The decrease in general and administrative expenses is primarily related to a $3.4 million reduction in bad debt expense in the Current Period as compared to the Comparable Period primarily due to the Companys recovery of $10 million in the Current Period, of which $8.8 million was recognized as a benefit to bad debt expense and $1.2 million was recognized as revenue, compared to $5 million in the Comparable Period from one international customer. Additionally, the Comparable Period included $2.9 million of transaction costs in its Domestic Offshore segment associated with the Seahawk transaction.

Our income tax effective rate of 19.6% during the Current Period, compared to an effective rate of 39.1% for the Comparable Period, decreased primarily due to mix of earnings (losses) from different jurisdictions as well as discrete items recorded in the current period. In some cases our income tax is based on gross revenues or deemed profits under local tax laws rather than income before taxes. In addition, our assets move between taxing jurisdictions and operating structures with differing tax rates. As a result, variations in our effective tax rate from period to period may have limited correlation with pre-tax income or loss.

Read the The complete Report

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