Document and Entity Information (USD $)	12 Months Ended
Document and Entity Information (USD $)	Dec. 31, 2010	Feb. 28, 2011	Jun. 30, 2010
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2010
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
Trading Symbol	HOS
Entity Registrant Name	HORNBECK OFFSHORE SERVICES INC /LA
Entity Central Index Key	0001131227
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,831,253
Entity Public Float			$ 369,542,965

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Current assets:
Cash and cash equivalents	$ 126,966	$ 51,019
Accounts receivable, net of allowance for doubtful accounts of $734 and $860, respectively	71,777	61,724
Other current assets	17,598	13,999
Total current assets	216,341	126,742
Property, plant and equipment, net	1,606,121	1,602,663
Deferred charges, net	41,058	41,195
Other assets	14,905	15,748
Total assets	1,878,425	1,786,348
Current liabilities:
Accounts payable	25,100	16,279
Accrued interest	9,024	9,787
Accrued payroll and benefits	13,413	6,878
Deferred revenue	2,197	1,876
Current taxes payable		1,615
Other accrued liabilities	4,451	4,571
Total current liabilities	54,185	41,006
Long-term debt, net of original issue discount of $41,767 and $53,326, respectively	758,233	746,674
Deferred tax liabilities, net	222,413	198,934
Other liabilities	1,717	2,671
Total liabilities	1,036,548	989,285
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; 26,584 and 26,160 shares issued and outstanding, respectively	266	262
Additional paid-in capital	415,673	407,334
Retained earnings	425,634	389,218
Accumulated other comprehensive income	304	249
Total stockholders' equity	841,877	797,063
Total liabilities and stockholders' equity	$ 1,878,425	$ 1,786,348

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Accounts receivable, allowance for doubtful accounts	$ 734	$ 860
Long-term debt, original issue discount	$ 41,767	$ 53,326
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000	100,000
Common stock, shares issued	26,584	26,160
Common stock, shares outstanding	26,584	26,160

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Revenues	$ 420,804	$ 385,948	$ 432,084
Costs and expenses:
Operating expenses	196,771	161,188	164,532
Depreciation	58,509	69,461	33,498
Amortization	18,546	23,908	18,504
General and administrative expenses	36,774	30,844	37,155
Costs and Expenses, Total	310,600	285,401	253,689
Gain on sale of assets	2,025	1,147	8,402
Operating income	112,229	101,694	186,797
Other income (expense):
Interest income	528	482	1,525
Interest expense	(55,183)	(21,024)	(8,331)
Other income (expense), net	344	(597)	190
Nonoperating Income (Expense), Total	(54,311)	(21,139)	(6,616)
Income before income taxes	57,918	80,555	180,181
Income tax expense	21,502	30,155	64,379
Net income	$ 36,416	$ 50,400	$ 115,802
Basic earnings per common share	$ 1.38	$ 1.94	$ 4.48
Diluted earnings per common share	$ 1.34	$ 1.87	$ 4.29
Weighted average basic shares outstanding	26,396	26,040	25,840
Weighted average diluted shares outstanding	27,176	26,975	27,020

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income
Beginning Balance at Dec. 31, 2007	$ 606,147	$ 257	$ 382,660	$ 223,016	$ 214
Beginning Balance (in shares) at Dec. 31, 2007		25,760
Shares issued under employee benefit programs (in shares)		160
Shares issued under employee benefit programs	2,142	2	2,140
Stock-based compensation expense	12,183		12,183
Tax (expense) benefits from equity awards	610		610
Comprehensive income:
Net income	115,802			115,802
Foreign currency translation	16				16
Total comprehensive income	115,818
Ending Balance at Dec. 31, 2008	736,900	259	397,593	338,818	230
Ending Balance (in shares) at Dec. 31, 2008		25,920
Shares issued under employee benefit programs (in shares)		240
Shares issued under employee benefit programs	1,511	3	1,508
Stock-based compensation expense	9,788		9,788
Tax (expense) benefits from equity awards	(1,555)		(1,555)
Comprehensive income:
Net income	50,400			50,400
Foreign currency translation	19				19
Total comprehensive income	50,419
Ending Balance at Dec. 31, 2009	797,063	262	407,334	389,218	249
Ending Balance (in shares) at Dec. 31, 2009		26,160
Shares issued under employee benefit programs (in shares)		424
Shares issued under employee benefit programs	(2)	4	(6)
Stock-based compensation expense	9,064		9,064
Tax (expense) benefits from equity awards	(719)		(719)
Comprehensive income:
Net income	36,416			36,416
Foreign currency translation	55				55
Total comprehensive income	36,471
Ending Balance at Dec. 31, 2010	$ 841,877	$ 266	$ 415,673	$ 425,634	$ 304
Ending Balance (in shares) at Dec. 31, 2010		26,584

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 36,416	$ 50,400	$ 115,802
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	58,509	69,461	33,498
Amortization	18,546	23,908	18,504
Stock-based compensation expense	8,710	8,704	10,815
Provision for bad debts	(126)	(1,275)	1,087
Deferred tax expense	20,559	27,507	44,517
Amortization of deferred financing costs	15,199	12,869	11,573
Gain on sale of assets	(2,025)	(1,147)	(8,402)
Equity in (income) loss from investment	6	555	(188)
Changes in operating assets and liabilities:
Accounts receivable	(9,930)	26,500	(11,517)
Other receivables and current assets	6,737	12,141	(12,593)
Deferred drydocking charges	(22,510)	(19,234)	(19,773)
Accounts payable	7,124	(4,869)	(12)
Accrued liabilities and other liabilities	(5,440)	(29,953)	23,499
Accrued interest	(763)	7,677	22
Net cash provided by operating activities	131,012	183,244	206,832
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs incurred for MPSV program	(8,533)	(114,507)	(257,802)
Costs incurred for OSV newbuild program #4	(27,377)	(142,842)	(191,965)
Costs incurred for TTB newbuild program #2			(9,261)
Acquisition of shore-base port facility			(11,541)
Net proceeds from sale of assets	4,656	10,596	17,812
Vessel capital expenditures	(24,169)	(12,774)	(22,386)
Non-vessel capital expenditures	(1,564)	(3,523)	(12,150)
Net cash used in investing activities	(56,987)	(263,050)	(487,293)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under revolving credit facility		75,000	125,000
Repayment of borrowings under revolving credit facility		(200,000)
Net proceeds from issuance of senior notes		242,808
Deferred financing costs	(89)	(9,514)	(32)
Net cash proceeds from other shares issued	1,955	2,296	2,141
Net cash provided by financing activities	1,866	110,590	127,109
Effects of exchange rate changes on cash	56	19	16
Net increase (decrease) in cash and cash equivalents	75,947	30,803	(153,336)
Cash and cash equivalents at beginning of period	51,019	20,216	173,552
Cash and cash equivalents at end of period	126,966	51,019	20,216
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	44,178	24,201	24,981
Cash paid for income taxes	$ 2,809	$ 15,520	$ 6,119

Organization

12 Months Ended

Dec. 31, 2010

Organization

1. Organization

Nature of Operations

Hornbeck Offshore Services, Inc., or the Company, was incorporated in the state of Delaware in 1997. The Company, through its subsidiaries, operates offshore supply vessels, or OSVs, multi-purpose support vessels, or MPSVs, and a shore-base facility to provide logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the U.S. Gulf of Mexico, or GoM, and select international markets. The Company, through its subsidiaries, also operates ocean-going tugs and tank barges that provide transportation of petroleum products, primarily in the northeastern United States, GoM and Puerto Rico. All significant intercompany accounts and transactions have been eliminated.

- Definition

Description containing the entire organization, consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References+ Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2010

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Revenue Recognition

The Company charters its OSVs, MPSVs and certain of its tank barges to clients under time charters based on a daily rate of hire and recognizes revenue as earned on a daily basis during the contract period of the specific vessel.

The Company also contracts certain of its tank barges to clients under contracts of affreightment, or COAs, under which revenue is recognized based on the number of days incurred for the voyage as a percentage of total estimated days applied to total estimated revenues. Voyage related costs are expensed as incurred. Substantially all voyages under these contracts are less than 10 days in length.

Deferred revenue represents payments received from customers or billings submitted to customers in advance of vessels commencing time charters.

Cash and Cash Equivalents

Cash and cash equivalents consist of all highly liquid investments in money market funds, deposits and investments available for current use with an initial maturity of three months or less.

Accounts Receivable

Accounts receivable consists of trade receivables net of reserves, amounts to be rebilled to customers and interest receivables.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Depreciation and amortization of equipment and leasehold improvements are computed using the straight-line method based on the estimated useful lives of the related assets. Major modifications and improvements, which extend the useful life of the vessel, are capitalized and amortized over the remaining useful life of the vessel. Gains and losses from retirements or other dispositions are recognized as incurred. Salvage values for marine equipment are estimated to range between 5% and 25% of the originally recorded cost, depending on the vessel type.

The estimated useful lives by classification are as follows:


Tugs			14-25 years
Tank barges			3-25 years
Offshore supply vessels			5-25 years
Multi-purpose support vessels			25 years
Non-vessel related property, plant and equipment			3-28 years

All of the Company’s single-hulled tank barges have estimated useful lives based on their classification under the Oil Pollution Act of 1990. The Company’s double-hulled tank barges have an estimated useful life of 25 years. Assets having shorter useful lives primarily relate to acquired vessels. See “Impairment of Long-Lived Assets” below for more information.

Deferred Charges

The Company’s vessels are required by regulation to be recertified after certain periods of time. The Company defers the drydocking expenditures incurred due to regulatory marine inspections and amortizes the costs on a straight-line basis over the period to be benefited from such improvements (generally 30 months). Financing charges are amortized over the term of the related debt.

Deferred charges also include prepaid lease expenses related to the Company’s shore-base port facility. Such prepaid lease expenses are being amortized on a straight-line basis over the effective remaining term of the lease.

Mobilization Costs

The Company incurs mobilization costs to transit its vessels to and from certain regions and/or for long-term contracts. These costs, which are typically expensed as incurred, include, but are not limited to, fuel, crew wages, vessel modification and pre-positioning expenses, materials and supplies and importation taxes. The Company incurred mobilization costs of $9.7 million during 2010 associated with placing eight vessels on multi-year charters in Brazil

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The provision for income taxes includes provisions for federal, state and foreign income taxes. Interest and penalties relating to uncertain tax positions are recorded as general and administrative expenses.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Concentration of Credit Risk

Customers are primarily major and independent, domestic and international, oil and oil service companies. The Company’s customers are granted credit on a short-term basis and related credit risks are considered minimal. The Company usually does not require collateral. The Company provides an estimate for uncollectible accounts based primarily on management’s judgment using historical losses, current economic conditions and individual evaluations of each customer to make adjustments to the allowance for doubtful accounts.

The following table represents the allowance for doubtful accounts (in thousands):


	December 31,
	2010			2009			2008
Balance, beginning of year	$	860		$	2,135		$	1,048
Changes to provision		(126	)		(1,275	)		1,087

Balance, end of year	$	734		$	860		$	2,135

Impairment of Long-Lived Assets

When events or circumstances indicate that the carrying amount of long-lived assets to be held and used or intangible assets might not be recoverable, the expected future undiscounted cash flows from the assets are estimated and compared with the carrying amount of the assets. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recorded. The impairment loss is measured by comparing the fair value of the assets with their carrying amounts. Fair value is determined based on discounted cash flow or appraised values, as appropriate. See Note 14 for further information

Earnings Per Share

12 Months Ended

Dec. 31, 2010

Earnings Per Share

3. Earnings Per Share

Basic earnings per common share was calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share was calculated by dividing net income by the weighted average number of common shares outstanding during the year plus the effect of dilutive stock options. 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 earnings per share (in thousands, except for per share data):


	Year Ended December 31,
	2010		2009		2008
Net income	$	36,416	$	50,400	$	115,802

Weighted average number of shares of common stock outstanding		26,396		26,040		25,840
Add: Net effect of dilutive stock options(1)(2)		780		935		1,180

Adjusted weighted average number of shares of common stock outstanding(3)		27,176		26,975		27,020

Earnings per common share:
Basic	$	1.38	$	1.94	$	4.48

Diluted	$	1.34	$	1.87	$	4.29

(1)

As of December 31, 2010, 2009, and 2008, stock options representing rights to acquire 400, 414, and 3, shares, respectively, of common stock were excluded from the calculation of diluted earnings per share because the effect was antidilutive. Stock options are anti-dilutive when the exercise price of the options is greater than the average market price of the common stock for the period or when the results from operations are a net loss.

(2)	For the year ended December 31, 2010, 2009, and 2008, the 1.625% convertible senior notes were not dilutive, as the average price of the Company’s stock was less than the effective conversion price of the Notes. See Note 6 for further information.

(3)	Dilutive restricted stock is expected to fluctuate from quarter to quarter depending the Company’s performance compared to a predetermined set of performance criteria. See Note 8 for further information regarding certain of the Company’s restricted stock awards.

Defined Contribution Plan

12 Months Ended

Dec. 31, 2010

Defined Contribution Plan

4. Defined Contribution Plan

The Company offers a 401(k) plan to all full-time employees. Employees must be at least eighteen years of age and have completed three months of service to be eligible for participation. Participants may elect to defer up to 60% of their compensation, subject to certain statutorily established limits. The Company may elect to make annual matching and profit sharing contributions to the 401(k) plan. During the years ended December 31, 2010, 2009 and 2008, the Company made contributions to the 401(k) plan of approximately $2.9 million, $2.9 million, and $2.3 million, respectively.

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2010

Property, Plant and Equipment

5. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):


	December 31,
	2010			2009
Tugs	$	75,602		$	76,913
Tank barges		162,077			163,664
Offshore supply vessels and multi-purpose support vessels		1,501,573			1,222,381
Non-vessel related property, plant and equipment		89,026			73,069
Less: Accumulated depreciation		(229,642	)		(183,022	)

		1,598,636			1,353,005

Construction in progress		7,485			249,658

	$	1,606,121		$	1,602,663

During 2010, the Company completed its fourth OSV newbuild program and its MPSV program. The Company’s fourth OSV newbuild program consisted of vessel construction contracts with three domestic shipyards to build six 240 ED class OSVs, nine 250 EDF class OSVs and one 290 class OSV. These vessels were delivered on various dates since 2008. The aggregate cost, prior to the allocation of construction period interest, of the fourth OSV newbuild program was approximately $431.6 million. The Company’s MPSV program consisted of the conversion of two coastwise sulfur tankers into U.S.-flagged, proprietary 370 class DP-2 new generation MPSVs at domestic shipyards, and the newbuild construction of two 430 class DP-3 new generation MPSVs at foreign shipyards. These vessels were delivered on various dates since 2008. The aggregate cost of the MPSV program, prior to the allocation of construction period interest, was approximately $491.1 million.

Long-Term Debt

12 Months Ended

Dec. 31, 2010

Long-Term Debt

6. Long-Term Debt

Senior Notes

On November 23, 2004, the Company issued in a private placement $225.0 million in aggregate principal amount of 6.125% senior unsecured notes, or senior notes, governed by an indenture, or the 2004 indenture. The effective interest rate on the 2004 senior notes is 6.38%. On October 4, 2005, the Company issued in a private placement an additional $75.0 million in aggregate principal amount of 6.125% senior unsecured notes, or additional notes, governed by the 2004 indenture. The additional notes were priced at 99.25% of principal amount to yield 6.41%. The senior notes and additional notes, collectively, the 2014 senior notes, mature on December 1, 2014 and require semi-annual interest payments at a fixed interest rate of 6.125% per year on June 1 and December 1 of each year until maturity. No principal payments are due until maturity. Pursuant to registered exchange offers, the senior notes issued in November 2004 and October 2005 that were initially sold pursuant to private placements were exchanged by the holders for 6.125% senior notes with substantially the same terms, except that the issuance of the senior notes issued in the exchange offers was registered under the Securities Act of 1933, as amended, or the Securities Act. Both series of senior notes were issued under and are entitled to the benefits of the same 2004 indenture.

On August 17, 2009, the Company issued in a private placement $250.0 million of 8.000% senior notes, or 2017 senior notes. The net proceeds to the Company from the offering were approximately $237.3 million, net of original issue discount and estimated transaction costs. The Company used $200.0 million of proceeds to repay debt under its revolving credit facility, which may be reborrowed. The remaining proceeds were available for general corporate purposes, which include partial funding of the construction of OSVs and MPSVs under existing newbuild programs. The 2017 senior notes mature on September 1, 2017 and require semi-annual interest payments at an annual rate of 8.000%, or $10.0 million semi-annually, on March 1 and September 1 of each year until maturity, which began on March 1, 2010. The effective interest rate on the 2017 senior notes is 8.63% and no principal payments are due until maturity. Pursuant to a registered exchange offer, the senior notes issued in August 2009 that were initially sold pursuant to private placements were exchanged by the holders for 8.000% senior notes with substantially the same terms, except that the issuance of the senior notes issued in the exchange offer was registered under the Securities Act of 1933, as amended, or the Securities Act. The original 8.000% senior notes and the similar notes exchanged therefor were issued under and are entitled to the benefits of the same 2009 indenture.

The 2014 senior notes and 2017 senior notes are senior unsecured obligations and rank equally in right of payment with other existing and future senior indebtedness and senior in right of payment to any subordinated indebtedness that may be incurred by the Company in the future. These senior notes are guaranteed by certain of the Company’s subsidiaries. The guarantees are full and unconditional, joint and several, and all of the Company’s non-guarantor subsidiaries are minor as defined in the Securities and Exchange Commission, or Commission, regulations. Hornbeck Offshore Services, Inc., as the parent company issuer of these senior notes, has no independent assets or operations other than its ownership interest in its subsidiaries and affiliates. There are no significant restrictions on the Company’s ability or the ability of any guarantor to obtain funds from its subsidiaries by such means as a dividend or loan, except for certain restrictions contained in the Company’s revolving credit facility restricting the payment of dividends by the Company’s two principal subsidiaries. The Company may, at its option, redeem all or part of the 2014 senior notes or 2017 senior notes from time to time at specified redemption prices and subject to certain conditions required by the indenture. The Company is permitted under the terms of the indenture to incur additional indebtedness in the future, provided that certain financial conditions set forth in the indenture are satisfied by the Company.

Convertible Senior Notes

On November 13, 2006, the Company issued in a private placement $250.0 million of convertible senior notes due 2026, or the convertible notes, to qualified institutional buyers pursuant to Rule 144A under the Securities Act. During the first quarter of 2007, the Company registered the resale of the convertible notes by the holders thereof. The convertible notes bear interest at an annual rate of 1.625%, declining to 1.375% beginning on November 15, 2013, payable semi-annually on May 15 and November 15 of each year, with the first interest payment made on May 15, 2007. The effective interest rate on such notes is 6.36%. The convertible notes are convertible into shares of the Company’s common stock based on the applicable conversion rate only under the following circumstances:

•

during any calendar quarter (and only during such calendar quarter), if the closing price of the Company’s shares of common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 135% of the conversion price per share, which is $1,000 divided by the then applicable conversion rate;

•

prior to November 15, 2013, during the five business day period after a 10 consecutive trading day period in which the trading price per $1,000 principal amount of senior subordinated convertible notes for each day of that period was less than 95% of the product of the closing price for the Company’s shares of common stock for each day of that period and the number of shares of common stock issuable upon conversion of $1,000 principal amount of the convertible notes;

•

if the convertible notes have been called for redemption, or

•

upon the occurrence of specified corporate transactions, as defined by the convertible note agreement.

The initial conversion rate of 20.6260 shares per $1,000 principal amount of notes, which corresponds to a conversion price of approximately $48.48 per share, is based on the last reported sale price of the Company’s common shares on The New York Stock Exchange of $35.26 on November 7, 2006. As of December 31, 2010, the Company’s closing share price was $20.88.

The convertible senior notes are guaranteed by certain of the Company’s subsidiaries. The guarantees are full and unconditional, joint and several, and all of the Company’s non-guarantor subsidiaries are minor as defined in Commission regulations. Hornbeck Offshore Services, Inc., as the parent company issuer of the convertible senior notes, has no independent assets or operations other than its ownership interest in its subsidiaries and affiliates. There are no significant restrictions on the Company’s ability or the ability of any guarantor to obtain funds from its subsidiaries by such means as a dividend or loan, except for certain restrictions contained in the Company’s revolving credit facility restricting the payment of dividends by the Company’s two principal subsidiaries. The convertible notes are general unsecured, senior obligations of the Company, ranking equally in right of payment with all of its existing and future senior indebtedness, including its outstanding 6.125% senior notes due 2014, 8.000% new senior notes due 2017, and indebtedness under its revolving credit facility.

If, upon the occurrence of certain events, the holders of the convertible notes exercise the conversion provisions of the convertible notes, the Company may need to remit the principal balance of the convertible notes to them in cash as discussed below. In such case, the Company would classify the entire amount of the outstanding convertible notes as a current liability in the respective quarter. This evaluation of the classification of amounts outstanding associated with the convertible notes will occur every calendar quarter. Upon conversion, a holder will receive, in lieu of common stock, an amount of cash equal to the lesser of (i) the principal amount of the convertible note, or (ii) the conversion value, determined in the manner set forth in the indenture governing the convertible notes, of a number of shares equal to the conversion rate. If the conversion value exceeds the principal amount of the convertible note on the conversion date, the Company will also deliver, at the Company’s election, cash or common stock or a combination of cash and common stock with respect to the conversion value upon conversion. If conversion occurs in connection with a change of control, the Company may be required to deliver additional shares of its common stock by increasing the conversion rate with respect to such convertible notes.

In connection with the sale of the convertible notes, the Company is a party to convertible note hedge transactions with respect to its common stock with Jefferies & Company, Inc., JP Morgan Chase and AIG-FP Structured Finance (Cayman) Limited, or the counterparties. Each of the convertible note hedge transactions involves the purchase of call options with exercise prices equal to the conversion price of the convertible notes, and are intended to mitigate dilution to the Company’s stockholders upon the potential future conversion of the convertible notes. Under the convertible note hedge transactions, the counterparties are required to deliver to the Company the number of shares of the Company’s common stock that the Company is obligated to deliver to the holders of the convertible notes with respect to the conversion. The convertible note hedge transactions cover approximately the same number of shares of the Company’s common stock underlying the convertible notes, subject to customary anti-dilution adjustments, at a strike price of approximately $48.48 per share of common stock. The convertible note hedge transactions expire at the close of trading on November 15, 2013, which is the date that the convertible notes are first putable by the convertible noteholders, although the counterparties will have ongoing obligations with respect to convertible notes properly converted on or prior to that date of which the counterparty has been timely notified. In addition, on November 15, 2016 and November 15, 2021, holders of the 1.625% convertible senior notes may require the Company to purchase their notes for cash.

The Company also entered into separate warrant transactions, whereby the Company sold to the counterparties warrants to acquire approximately the same number of shares of its common stock underlying the convertible notes, subject to customary anti-dilution adjustments, at a strike price of $62.59 per share of common stock, which represented a 77.5% premium over the closing price of the Company’s shares of common stock on November 7, 2006. If the counterparties exercise the warrants, the Company will have the option to settle in cash or shares of its common stock equal to the difference between the then market price and strike price. The convertible note hedge and warrant transactions are separate and legally distinct instruments that bind the Company and the counterparties and have no binding effect on the holders of the convertible notes.

For income tax reporting purposes, the Company has elected to integrate the convertible notes and the convertible note hedge transactions. Integration of the convertible note hedge with the convertible notes creates an in-substance original issue debt discount for income tax reporting purposes and, therefore, the cost of the convertible note hedge is accounted for as interest expense over the term of the convertible notes for income tax reporting purposes. The associated income tax deductions will be recognized in the period that the deduction is taken for income tax reporting purposes. The Company has also treated the proceeds from the sale of warrants as a non-taxable increase in additional paid-in capital in stockholders’ equity.

Revolving Credit Facility

On September 27, 2006, the Company closed on a five-year senior secured $100.0 million revolving credit facility with an accordion feature that allowed for the expansion of the facility up to an aggregate of $250.0 million. On February 20, 2008, the Company exercised its accordion feature in full and increased the then-undrawn borrowing base of its revolving credit facility from $100.0 million to $250.0 million. In accordance with the terms of the expanded facility, the Company pledged an additional 16 new generation OSVs as collateral commensurate with the higher borrowing base. On November 4, 2009, the Company amended and extended its revolving credit facility, which maintains its $250.0 million borrowing base but now includes an accordion feature that allows for the expansion of the facility up to an aggregate of $350.0 million. The amended facility, among other changes, also extended the maturity from September 2011 to March 2013. With the amended facility, the Company has the option of borrowing at a variable rate of interest equal to either (i) LIBOR, plus an applicable margin, or (ii) the greatest of the Prime Rate, the Federal Funds Effective Rate plus 1/2 of 1% and the one-month LIBOR plus 1%, plus in each case an applicable margin. The applicable margin for each base rate is determined by a pricing grid, which is based on the Company’s leverage ratio, as defined in the credit agreement governing the amended revolving credit facility. Unused commitment fees are payable quarterly at the annual rate of 50.0 basis points of the unused portion of the borrowing base of the amended facility. The Company also exchanged certain vessels pledged as collateral under the amended revolving credit facility such that the total number of vessels pledged as collateral is 19 new generation OSVs. None of the Company’s Downstream vessels are pledged under the amended and extended facility. As of December 31, 2010, there were no amounts drawn under the Company’s $250 million revolving credit facility and $0.9 million posted in letters of credit. As of December 31, 2010, the Company was in compliance with all financial covenants contained in its amended revolving credit facility.

On March 14, 2011, the Company further amended the credit agreement governing its revolving credit facility to favorably adjust certain financial ratios and provide for additional new maintenance covenants. The key changes to the Company’s revolving credit facility, effective commencing with the fiscal quarter ended December 31, 2010, were as follows:

•

The maximum leverage ratio, as defined in the previous credit agreement, was eliminated as a maintenance covenant and is now only used to determine the pricing grid.

•

A maximum secured debt leverage ratio of 2.00 to 1.00, as defined in the March 2011 amendment, was added as a new maintenance covenant.

•

The minimum interest coverage ratio was reduced from 3.00 to 1.00 to 2.00 to 1.00.

•

A maximum total debt to capitalization ratio of 55.0%, as defined in the March 2011 amendment, was added as a new maintenance covenant.

Other than these key changes, all other definitions and substantive terms in the Company’s credit agreement governing its revolving credit facility were unchanged with the March 2011 amendment and remain in effect through the remaining life of the facility, which expires on March 31, 2013.

The credit agreement governing the amended revolving credit facility and the indentures governing the Company’s 2014 senior notes and 2017 senior notes impose certain operating and financial 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 6.125% senior notes due 2014, its 8.000% senior notes due 2017 and its 1.625% convertible senior notes due 2026 by using quoted market prices. The fair value of the Company’s revolving credit facility, when there are outstanding balances, approximates its carrying value. The face value, carrying value and fair value of the Company’s total debt was $800.0 million, $758.2 million and $783.9 million, respectively, as of December 31, 2010.

Interest expense excludes capitalized interest related to the construction or conversion of vessels in the approximate amount of $3.7 million, $23.8 million, and $28.3 million, for the years ended December 31, 2010, 2009, and 2008, respectively.

As of the dates indicated, the Company had the following outstanding long-term debt (in thousands):


	December 31,
	2010		2009
6.125% senior notes due 2014, net of original issue discount of $279 and $341	$	299,721	$	299,659
8.000% senior notes due 2017, net of original issue discount of $6,305 and $6,980		243,695		243,020
1.625% convertible senior notes due 2026, net of original issue discount of $35,183 and $46,005(1)		214,817		203,995
Revolving credit facility		—		—

		758,233		746,674
Less current maturities		—		—

	$	758,233	$	746,674

(1)	The notes initially bear interest at a fixed rate of 1.625% per year, declining to 1.375% beginning on November 15, 2013.

Annual maturities of debt, excluding the potential effects of conditions discussed in Convertible Senior Notes, during each year ending December 31, are as follows (in thousands):


2011	$	—
2012		—
2013		—
2014		299,721
2015		—
Thereafter		458,512

	$	758,233

Stockholders' Equity

12 Months Ended

Dec. 31, 2010

Stockholders' Equity

7. Stockholders’ Equity

Preferred Stock

The Company’s certificate of incorporation authorizes 5.0 million shares of preferred stock. The Board of Directors has the authority to issue preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the Company‘s stockholders.

Stockholder Rights Plan

The Company’s Board of Directors previously implemented a stockholder rights plan, as amended, establishing one right for each outstanding share of common stock. The rights become exercisable, and transferable apart from the Company’s common stock, 10 business days following a public announcement that a person or group has acquired beneficial ownership of, or has commenced a tender or exchange offer for, 10% or more of the Company’s common stock.

- Definition

Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References+ Details

Stock-Based Compensation

12 Months Ended

Dec. 31, 2010

Stock-Based Compensation

8. Stock-Based Compensation

Incentive Compensation Plan

During the Company’s Annual Meeting of Stockholders in June 2010, the Company’s stockholders approved an increase in the number of shares available to issue under its stock-based incentive compensation plan by 700,000. The Company’s stock-based incentive compensation plan now covers a maximum of 4.2 million shares of common stock that allows the Company to grant restricted stock awards, restricted stock unit awards, or collectively restricted stock, stock options and stock appreciation rights to employees and directors. The issuance of shares of common stock under the incentive compensation plan has been registered on Form S-8 with the Securities and Exchange Commission.

The table below reflects selected financial captions and the related impact stock-based compensation expense charges have on the Company’s operating results (in thousands, except per share data):


	Year Ended December 31,
	2010		2009		2008
Income before taxes	$	8,710	$	8,704	$	10,815

Net income	$	5,479	$	5,449	$	6,954

Earnings per common share:
Basic	$	0.21	$	0.21	$	0.27

Diluted	$	0.20	$	0.20	$	0.26

For the years ended December 31, 2010, 2009, and 2008, approximately $0.4 million, $1.1 million, and $1.4 million of stock-based compensation expense, respectively, was capitalized as part of the Company’s newbuild construction programs and general corporate projects. The accounting rule also requires the benefits of tax deductions in excess of recognized compensation expense to be reported as financing cash flows, rather than as operating cash flows. The Company recorded financing cash flows for such excess tax deductions of approximately $0.4 million, $0.2 million, and $0.5 million for the years ended December 31, 2010, 2009, and 2008, respectively. Net cash proceeds from the exercise of stock options were $0.6 million, $1.0 million, and $1.2 million for the years ended December 31, 2010, 2009, and 2008, respectively, and the income tax benefit from such exercises was $2.7 million, $1.3 million, and $1.0 million for the respective periods. As of December 31, 2010, the Company has approximately 1.0 million shares available for future grants of stock options, restricted stock, stock appreciation rights or other awards to employees and directors under the incentive compensation plan.

Stock Options

The Company is authorized to grant stock options under its incentive compensation plan in which the purchase price of the stock subject to each option is established as the closing price on the New York Stock Exchange of the Company’s common stock on the date of grant and accordingly is not less than the fair market value of the stock on the date of grant. All options granted during the year ended December 31, 2006 expire ten years after the date of grant, have an exercise price equal to or greater than the actual or estimated market price of the Company’s stock on the date of grant and vest over a one to four-year period. No stock options were granted during the years ended December 31, 2010 and 2009.

The following table represents the Company’s stock option activity for the year ended December 31, 2010 (in thousands, except per share data and years):


	Number of Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2010		866		$	18.41		4.1	$	6,035
Exercised		(97	)		6.62		n/a		1,410
Forfeited		(4	)		27.00		n/a		n/a

Options outstanding at December 31, 2010		765		$	19.85		3.5	$	3,502

Exercisable options outstanding at December 31, 2010		765		$	19.85		3.5	$	3,502

The Company did not record any stock-based compensation expense during the year ended December 31, 2010, and as of December 31, 2010, had no unamortized stock-based compensation expense associated with stock options. In addition, no stock options vested during the year ended December 31, 2010.

Restricted Stock

The Company’s incentive compensation plan allows the Company to issue restricted stock units, with either performance-based or time-based vesting provisions. The Company has issued two types of performance-based restricted stock unit awards whose vesting is determined by achieving either external or internal performance criteria. For the first type of performance-based restricted stock unit award, the number of shares that will ultimately be received by the award recipients at the end of the performance period is dependent upon the Company’s performance relative to a peer group, as defined by the restricted stock unit agreements governing such awards. Performance has historically been measured by a number of factors, including the change in the Company’s stock price measured against the peer group during the measurement period, generally three years, return on invested capital, return on equity, OSV operating profit margin and growth in earnings (net income) before interest, income taxes, depreciation and amortization or EBITDA. The actual number of shares that could be received by the award recipients can range from 0% to 200% of the Company’s base share awards depending on the Company’s performance ranking relative to the peer group. This type of performance-based restricted stock unit was granted in 2008. The second type of performance-based restricted stock unit award, calculates the shares to be received based on the Company’s achievement of certain performance criteria over a three-year period as defined by the restricted stock unit agreement governing such awards. The actual number of shares that could be received by these award recipients can range from 0% to 100% of the Company’s base share awards depending on the number of performance goals attained by the Company. Compensation expense related to restricted stock unit awards is recognized over the period the restrictions lapse, from one to three years. The fair value of the Company’s performance-based restricted stock unit awards, which is determined using a Monte Carlo simulation, is applied to the base shares and is amortized over the vesting period based on either their relative performance compared to peers or internal performance goals attained. The compensation expense related to time-based restricted stock unit awards, which is amortized over a one-to-four year vesting period, 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. As of December 31, 2010, the Company had unamortized stock-based compensation expense of $7.8 million, which will be recognized over the next 1.8 years. In addition, the Company has recorded approximately $8.7 million of compensation expense during the year ended December 31, 2010 associated with restricted stock unit awards.

The following table summarizes the restricted stock awards activity during the year ended December 31, 2010 (in thousands, except per share data):


	Number of Shares			Weighted Avg. Fair Value Per Share(1)
Restricted stock awards:
Restricted stock awards as of January 1, 2010		1,057		$	31.66
Granted during the period		418			20.19
Cancellations during the period(2)		(120	)		21.40
Vested		(334	)		26.82

Outstanding, as of December 31, 2010		1,021		$	26.86

(1)	The weighted average fair value per share is determined by the stock price on the date of grant for time-based shares and is determined using a Monte Carlo simulation for performance-based shares, of which the fair value is applied to both the base and bonus share awards.

(2)	Includes the full amount of both base and bonus share awards cancelled during the period, which represents up to 200% of the aggregate total of the base share awards.

Employee Stock Purchase Plan

On May 3, 2005, the Company established the Hornbeck Offshore Services, Inc. 2005 Employee Stock Purchase Plan, or ESPP, which was adopted by the Company’s Board of Directors and approved by the Company’s stockholders. Under the ESPP, the Company is authorized to issue up to 700,000 shares of common stock to eligible employees of the Company and its designated subsidiaries. Employees have the opportunity to purchase shares of the Company’s common stock at periodic intervals through accumulated payroll deductions that will be applied at semi-annual intervals to purchase shares of common stock at a discount from the market price as defined by the ESPP. The ESPP is designed to satisfy the requirements of Section 423 of the Internal Revenue Code of 1986, as amended, and thereby allows participating employees to defer recognition of taxes when purchasing the shares of common stock at a 15% discount under the ESPP. The Company has an effective Registration Statement on Form S-8 with the Commission registering the issuance of shares of common stock under the ESPP. As of December 31, 2010, there were approximately 425,884 shares available for future issuance to employees under the ESPP.

The fair value of the employees’ stock purchase rights granted under the ESPP was estimated using the Black-Scholes model with the following assumptions for years ended December 31, 2010 and 2009:


	2010			2009
Dividend yield		0	%		0	%
Expected volatility		51.3	%		73.2	%
Risk-free interest rate		0.2	%		0.3	%
Expected term (months)		6.0			6.0
Weighted-average grant-date fair value per share	$	5.66		$	7.03

Income Taxes

12 Months Ended

Dec. 31, 2010

Income Taxes

9. Income Taxes

The net long-term deferred tax liabilities in the accompanying consolidated balance sheets include the following components (in thousands):


	December 31,
	2010			2009			2008
Deferred tax liabilities:
Fixed assets	$	343,023		$	249,698		$	190,983
Deferred charges and other liabilities		11,982			12,313			8,623

Total deferred tax liabilities		355,005			262,011			199,606
Deferred tax assets:
Net operating loss carryforwards		(98,914	)		(29,603	)		(134	)
Allowance for doubtful accounts		(266	)		(311	)		(777	)
Stock-based compensation expense		(5,766	)		(6,554	)		(6,994	)
Alternative minimum tax credit carryforward		(20,863	)		(20,863	)		(21,183	)
Foreign tax credit carryforward		(4,558	)		(3,462	)		—
Other		(4,440	)		(2,284	)		(665	)

Total deferred tax assets		(134,807	)		(63,077	)		(29,753	)
Valuation allowance		—			—			134

Total deferred tax liabilities, net	$	220,198		$	198,934		$	169,987

Current deferred tax assets, net	$	2,215		$	—		$	—
Long-term deferred tax liabilities, net		222,413			198,934			169,987

Total deferred tax liabilities, net	$	220,198		$	198,934		$	169,987

The components of the income tax expense follow (in thousands):


	December 31,
	2010		2009			2008
Current tax expense (benefit):
U.S.	$	—	$	(448	)	$	15,446
Foreign		943		3,096			4,416

Total current tax expense		943		2,648			19,862
Deferred tax expense:
U.S.		20,559		27,507			44,517

Total tax expense	$	21,502	$	30,155		$	64,379

Income before income taxes, based on jurisdiction earned, was as follows (in thousands):


	December 31,
	2010		2009		2008
U.S.	$	56,800	$	58,016	$	141,982
Foreign		1,118		22,539		38,199

Total income before income taxes	$	57,918	$	80,555	$	180,181

At December 31, 2010, the Company had federal tax net operating loss carryforwards of approximately $272.0 million which will expire in 2029 and 2030 and foreign tax credit carryforwards of approximately $4.6 million, which will expire in 2019 and 2020. The Company has state tax net operating loss carryforwards of approximately $78.4 million which will expire in 2019 through 2025 and can only be utilized if the Company generates taxable income in particular tax jurisdictions.

The following table reconciles the difference between the Company’s income tax provision calculated at the federal statutory rate and the actual income tax provision (in thousands):


	Year Ended December 31,
	2010		2009		2008
Statutory rate	$	20,271	$	28,194	$	63,063
State taxes, net		753		1,047		2,355
Non-deductible expense		80		71		34
Foreign taxes and other		398		843		(1,073	)

	$	21,502	$	30,155	$	64,379

Commitments and Contingencies

12 Months Ended

Dec. 31, 2010

Commitments and Contingencies

10. Commitments and Contingencies

Operating Leases

The Company is obligated under certain operating leases for marine vessels, office space, shore-base facilities and vehicles. The Covington facility lease, which commenced on September 1, 2003, provides for an initial term of five years with two five-year renewal options. In September 2008, the Company exercised its first five-year renewal option. A shore-base facility lease in Port Fourchon commenced on December 20, 2005 and provides for an initial term of seven years with four additional five-year periods upon the terms and conditions contained in the lease agreement. On January 30, 2008, the Company purchased a leasehold interest in a parcel of improved real estate as an adjacent addition to HOS Port, its existing shore-base facility located in Port Fourchon, Louisiana. At December 31, 2010, the new facility lease had approximately four years remaining on its initial term, with four additional five-year renewal periods.

Future minimum payments under noncancelable leases for years subsequent to 2010 follow (in thousands):


Year Ended December 31,
2011	$	2,394
2012		2,215
2013		1,836
2014		847
2015		824
Thereafter		24,933

Total	$	33,049

In addition, the Company leases marine vessels used in its operations under long-term and month-to-month operating lease agreements. Total rent expense related to such leases was approximately $0.2 million, and $5.4 million, during the years ended December 31, 2009, and 2008, respectively. We did not have any rent expense related to such vessels during the year ended December 31, 2010.

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 its 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. In February 2009, the terms of entry with the P&I Club for both of the Company’s segments contained an annual aggregate deductible (AAD) for which the Company remains responsible. In February 2010, the terms of entry for our Downstream segment contained an AAD. The P&I Club is responsible for covered amounts that exceed the AAD, after payment by the Company of an additional individual claim deductible. The Company provides reserves for those portions of the AAD and 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 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.

Related Party Transactions

12 Months Ended

Dec. 31, 2010

Related Party Transactions

12. Related Party Transactions

During 2010, 2009, and 2008, the Company received aggregate payments of approximately $4.3 million, $9.9 million, and $0.6 million, respectively, for charter of its OSVs and rental of its shore-base port facility from a customer whose Chairman of the Board serves on the Company’s Board of Directors. From October 2007 until his retirement on May 7, 2009, such customer’s Chairman also served as its President and Chief Executive Officer. This Board member stepped down as Chairman of such customer and ceased to serve as a director effective May 7, 2010.

- Definition

This element may be used for the entire related party transactions disclosure as a single block of text. Disclosure may include: the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References+ Details

Major Customers

12 Months Ended

Dec. 31, 2010

Major Customers

13. Major Customers

In the years ended December 31, 2010, 2009, and 2008, revenues from the following customers exceeded 10% of total revenues:


	Year Ended December 31,
	2010			2009			2008
Customer A(1)		21	%		—			—
Customer B(2)		13	%		11	%		—
Customer C(1)		—			18	%		—

(1)	Upstream and Downstream segment.

(2)	Upstream segment.

Asset and Goodwill Impairment Assessment

12 Months Ended

Dec. 31, 2010

Asset and Goodwill Impairment Assessment

14. Asset and Goodwill Impairment Assessment

In the second quarter of 2009, triggering events occurred which resulted in the Company performing impairment tests on its Downstream segment assets as well as the conventional OSVs in its Upstream Segment. This resulted in the Company recording a non-cash asset impairment charge of $25.8 million, included in depreciation expense, related to ten single-hulled tank barges and six ocean-going tugs, and a $0.9 million non-cash charge, included in amortization expense, for the write-off of remaining goodwill associated with the Company’s Downstream segment. Based on the analysis performed, no impairment existed for any of the Company’s conventional OSVs. The specific triggering events were the Downstream segment operating loss for the quarter ended June 30, 2009, the lack of any material new contracts for the Downstream segment since March 31, 2009, and the lack of any expected change in performance in that segment in the near term. As of June 30, 2009, the Company had stacked all of its conventional OSVs, which it considered to be a triggering event for those specific assets.

The impairment assessment compared the net book values of the Company’s Downstream marine assets, as well as Downstream segment goodwill that was booked upon the Company’s formation in June 1997, to their respective fair values. The analysis performed during the second quarter of 2009 included considering recent vessel sales, quoted market prices and past third-party appraisals.

Based on recent comparable vessel sales in the second half of 2009 and third party appraisals obtained during the fourth quarter of 2009 in connection with the Company’s amended and extended revolving credit facility in November 2009, no further impairment for the Company’s vessels was deemed necessary as of December 31, 2010 and 2009. No new triggering events have occurred since June 30, 2009. The Company considered whether the curtailed level of drilling activity in the GoM represented an indicator of impairment for any of its asset groups and concluded it did not. Some factors that the Company considered were the anticipated temporary nature of the reduced drilling activity, projected operating results for assets groups, the significant remaining operating useful life, mobility and flexibility of the Company’s vessels. The Company did not record any impairment losses related to its long-lived assets during 2008 or 2010.

Segment Information

12 Months Ended

Dec. 31, 2010

Segment Information

15. Segment Information

The Company provides marine transportation and logistics services through two business segments. The Company primarily operates new generation OSVs and MPSVs in the U.S. Gulf of Mexico, or GoM, other U.S. coastlines, Latin America and the Middle East and operates a shore-base facility in Port Fourchon, Louisiana through its Upstream segment. The OSVs, MPSVs and the shore-base facility principally support complex exploration and production projects by transporting cargo to offshore drilling rigs and production facilities and provide support for oilfield and non-oilfield specialty services, including military applications. The Downstream segment primarily operates ocean-going tugs and tank barges in the northeastern United States, the GoM, Great Lakes and Puerto Rico. The ocean-going tugs and tank barges provide coastwise transportation of refined and bunker grade petroleum products as well as non-traditional downstream services, such as support of deepwater well testing and other specialty applications for the Company’s upstream customers.

The following table shows reportable segment information for the years ended December 31, 2010, 2009, and 2008, reconciled to consolidated totals and prepared on the same basis as the Company’s consolidated financial statements (in thousands).


	Year Ended December 31,
	2010		2009			2008
Revenues:
Upstream
Domestic	$	298,400	$	274,782		$	262,199
Foreign(1)		76,127		51,875			72,161

		374,527		326,657			334,360

Downstream
Domestic		42,854		58,050			88,235
Foreign(1)		3,423		1,241			9,489

		46,277		59,291			97,724

Total	$	420,804	$	385,948		$	432,084

Operating Expenses:
Upstream	$	166,349	$	121,488		$	111,256
Downstream		30,422		39,700			53,276

Total	$	196,771	$	161,188		$	164,532

Depreciation and Amortization:
Upstream	$	64,685	$	50,740		$	32,958
Downstream		12,370		42,629			19,044

Total	$	77,055	$	93,369		$	52,002

General and Administrative Expenses:
Upstream	$	33,956	$	25,641		$	26,255
Downstream		2,818		5,203			10,900

Total	$	36,774	$	30,844		$	37,155

Gain on Sale of Assets:
Upstream	$	986	$	111		$	8,402
Downstream		1,039		1,036			—

Total	$	2,025	$	1,147		$	8,402

Operating Income:
Upstream	$	110,523	$	128,899		$	172,293
Downstream		1,706		(27,205	)		14,504

Total	$	112,229	$	101,694		$	186,797

Capital Expenditures:
Upstream	$	58,282	$	272,147		$	491,253
Downstream		1,840		391			11,627
Non-vessel		1,521		1,108			2,225

Total	$	61,643	$	273,646		$	505,105

Identifiable Assets:
Upstream	$	1,647,561	$	1,552,974		$	1,319,392
Downstream		205,782		204,850			254,574
Corporate		25,082		28,524			21,777

Total	$	1,878,425	$	1,786,348		$	1,595,743

Long-Lived Assets:
Upstream
Domestic	$	1,203,136	$	1,295,100		$	1,042,540
Foreign(1)		211,488		108,335			126,709

		1,414,624		1,403,435			1,169,249

Downstream
Domestic		166,673		191,627			223,669
Foreign(1)(2)		18,297		—			4,431

		184,970		191,627			228,100
Corporate		6,527		7,601			7,991

Total	$	1,606,121	$	1,602,663		$	1,405,340

(1)

The Company’s vessels conduct operations in international areas. Vessels will routinely move to and from international and domestic operating areas. As these assets are highly mobile, the long-lived assets reflected above represent the assets that were present in international areas as of December 31, 2010, 2009, and 2008, respectively.

(2)	Included are amounts applicable to the Puerto Rico Downstream operations, even though Puerto Rico is considered a possession of the United States and the Jones Act applies to vessels operating in Puerto Rican waters.

Supplemental Selected Quarterly Financial Data (Unaudited) (in thousands, except per share data)

12 Months Ended

Dec. 31, 2010

Supplemental Selected Quarterly Financial Data (Unaudited) (in thousands, except per share data)

17. Supplemental Selected Quarterly Financial Data (Unaudited) (in thousands, except per share data):

The following table contains selected unaudited quarterly financial data from the consolidated statements of operations for each quarter of fiscal years 2010 and 2009. The operating results for any quarter are not necessarily indicative of results for any future period.


	Quarter Ended
	Mar 31		Jun 30 ⁽¹⁾		Sep 30		Dec 31
Fiscal Year 2010⁽²⁾⁽³⁾
Revenues	$	86,245	$	111,885	$	125,351	$	97,321
Operating income		15,673		34,517		43,315		18,722
Net income		2,552		13,043		18,203		2,614
Earnings per common share:
Basic	$	0.10	$	0.49	$	0.69	$	0.10
Diluted		0.09		0.48		0.67		0.10
Fiscal Year 2009⁽²⁾
Revenues	$	109,647	$	97,909	$	90,086	$	88,307
Operating income		45,411		5,038		27,072		24,174
Net income		27,101		199		13,774		9,327
Earnings per common share:
Basic	$	1.04	$	0.01	$	0.53	$	0.36
Diluted		1.01		0.01		0.51		0.34

(1)	Results for the quarter ended June 30, 2009 reflect the asset and goodwill impairment charges of $25.8 million and $0.9 million, respectively, discussed further in Note 14 to the consolidated financial statements.

(2)	The sum of the four quarters may not equal annual results due to rounding

(3)	Results for the quarters ended June 30, September 30, and December 31, 2010 included approximately $22.1 million, $57.1 million and $23.0 million of revenues, respectively, related to oil spill response efforts in the GoM that were completed by December 31, 2010.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

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