##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 0-51582
 
 HERCULES OFFSHORE, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware
    
    56-2542838(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 9 Greenway Plaza, Suite 2200Houston, Texas
    
    77046(Address of principal executive offices)
    
    (Zip Code)
 (713) 350-5100
(Registrants telephone number, including area code)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Common Stock, par value $0.01 per share
    
    Outstanding as of April 26, 2010114,756,787




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##### 



HERCULES OFFSHORE, INC.
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
    
    
    4Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    5Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2010 and 2009
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 4. Controls and Procedures
    
    
    39PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    40Item 1A. Risk Factors
    
    
    40Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 6. Exhibits
    
    
    40Signatures
    
    
    41EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 HERCULES OFFSHORE, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    130,797
    
    
    $
    140,828Restricted Cash
    
    
    7,028
    
    
    
    3,658Accounts Receivable, Net of Allowance for Doubtful Accounts of $33,676
and $38,522 as of March 31, 2010 and December 31, 2009, Respectively
    
    
    136,196
    
    
    
    133,662Prepaids
    
    
    5,958
    
    
    
    13,706Current Deferred Tax Asset
    
    
    21,766
    
    
    
    22,885Other
    
    
    15,080
    
    
    
    6,675316,825
    
    
    
    321,414Property and Equipment, Net
    
    
    1,881,958
    
    
    
    1,923,603Other Assets, Net
    
    
    30,796
    
    
    
    32,459$
    2,229,579
    
    
    $
    2,277,476LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term Debt and Current Portion of Long-term Debt
    
    $
    4,931
    
    
    $
    4,952Insurance
Notes Payable
    
    
    760
    
    
    
    5,484Accounts Payable
    
    
    47,791
    
    
    
    51,868Accrued Liabilities
    
    
    58,921
    
    
    
    67,773Interest Payable
    
    
    23,179
    
    
    
    6,624Taxes Payable
    
    
    
    
    
    
    5,671Other Current Liabilities
    
    
    35,164
    
    
    
    34,229170,746
    
    
    
    176,601Long-term Debt, Net of Current Portion
    
    
    855,728
    
    
    
    856,755Other Liabilities
    
    
    15,053
    
    
    
    19,809Deferred Income Taxes
    
    
    223,934
    
    
    
    245,799Commitments and ContingenciesStockholders Equity:Common Stock, $0.01 Par Value; 200,000 Shares Authorized; 116,294 and 116,154 SharesIssued, Respectively; 114,751 and 114,650 Shares Outstanding, Respectively
    
    
    1,163
    
    
    
    1,162Capital in Excess of Par Value
    
    
    1,920,675
    
    
    
    1,921,037Treasury Stock, at Cost, 1,543 Shares and 1,504 Shares, Respectively
    
    
    (50,307
    )
    
    
    (50,151
    )Accumulated Other Comprehensive Loss
    
    
    (3,694
    )
    
    
    (5,773
    )Retained Deficit
    
    
    (903,719
    )
    
    
    (887,763
    )964,118
    
    
    
    978,512$
    2,229,579
    
    
    $
    2,277,476
  3




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Revenues
    
    $
    150,849
    
    
    $
    223,491Costs and Expenses:Operating Expenses
    
    
    108,636
    
    
    
    149,244Depreciation and Amortization
    
    
    50,254
    
    
    
    48,846General and Administrative
    
    
    12,303
    
    
    
    16,292171,193
    
    
    
    214,382Operating Income (Loss)
    
    
    (20,344
    )
    
    
    9,109Other Income (Expense):Interest Expense
    
    
    (21,739
    )
    
    
    (15,789
    )Other, Net
    
    
    (14
    )
    
    
    (656
    )Loss Before Income Taxes
    
    
    (42,097
    )
    
    
    (7,336
    )Income Tax Benefit
    
    
    26,141
    
    
    
    2,825Loss from Continuing Operations
    
    
    (15,956
    )
    
    
    (4,511
    )Loss from Discontinued Operation, Net of Taxes
    
    
    
    
    
    
    (433
    )Net Loss
    
    $
    (15,956
    )
    
    $
    (4,944
    )Basic Loss Per Share:Loss from Continuing Operations
    
    $
    (0.14
    )
    
    $
    (0.05
    )Loss from Discontinued Operation
    
    
    
    
    
    
    (0.01
    )Net Loss
    
    $
    (0.14
    )
    
    $
    (0.06
    )Diluted Loss Per Share:Loss from Continuing Operations
    
    $
    (0.14
    )
    
    $
    (0.05
    )Loss from Discontinued Operation
    
    
    
    
    
    
    (0.01
    )Net Loss
    
    $
    (0.14
    )
    
    $
    (0.06
    )Weighted Average Shares Outstanding:Basic
    
    
    114,696
    
    
    
    88,002Diluted
    
    
    114,696
    
    
    
    88,002
  4




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash Flows from Operating Activities:Net Loss
    
    $
    (15,956
    )
    
    $
    (4,944
    )Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:Depreciation and Amortization
    
    
    50,254
    
    
    
    48,846Stock-Based Compensation Expense
    
    
    156
    
    
    
    1,965Deferred Income Taxes
    
    
    (22,657
    )
    
    
    (7,529
    )Provision (Benefit) for Doubtful Accounts Receivable
    
    
    (1,472
    )
    
    
    507Amortization of Deferred Financing Fees
    
    
    873
    
    
    
    1,058Amortization of Original Issue Discount
    
    
    1,002
    
    
    
    1,315Non-Cash Loss on Derivatives
    
    
    3,561
    
    
    
    Gain on Insurance Settlement
    
    
    
    
    
    
    (8,700
    )(Gain) Loss on Disposal of Assets
    
    
    (3,013
    )
    
    
    216Excess Tax Benefits from Stock-Based Arrangements
    
    
    (374
    )
    
    
    (3,202
    )(Increase) Decrease in Operating Assets Accounts Receivable
    
    
    (1,062
    )
    
    
    51,925Insurance Claims Receivable
    
    
    (3
    )
    
    
    (468
    )Prepaid Expenses and Other
    
    
    10,400
    
    
    
    8,958Increase (Decrease) in Operating Liabilities Accounts Payable
    
    
    (4,077
    )
    
    
    (19,226
    )Insurance
Notes Payable
    
    
    (4,724
    )
    
    
    (11,126
    )Other Current Liabilities
    
    
    (7,733
    )
    
    
    14,906Other Liabilities
    
    
    (4,843
    )
    
    
    2,953Net Cash Provided by Operating Activities
    
    
    332
    
    
    
    77,454Cash Flows from Investing Activities:Additions of Property and Equipment
    
    
    (4,546
    )
    
    
    (32,568
    )Deferred Drydocking Expenditures
    
    
    (4,396
    )
    
    
    (4,009
    )Insurance Proceeds Received
    
    
    
    
    
    
    8,709Proceeds from Sale of Assets, Net
    
    
    3,616
    
    
    
    1,960Increase in Restricted Cash
    
    
    (3,370
    )
    
    
    Net Cash Used in Investing Activities
    
    
    (8,696
    )
    
    
    (25,908
    )Cash Flows from Financing Activities:Short-term Debt Repayments
    
    
    
    
    
    
    (2,455
    )Long-term Debt Repayments
    
    
    (2,050
    )
    
    
    Excess Tax Benefits from Stock-Based Arrangements
    
    
    374
    
    
    
    3,202Other
    
    
    9
    
    
    
    (11
    )Net Cash Provided by (Used in) Financing Activities
    
    
    (1,667
    )
    
    
    736Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (10,031
    )
    
    
    52,282Cash and Cash Equivalents at Beginning of Period
    
    
    140,828
    
    
    
    106,455Cash and Cash Equivalents at End of Period
    
    $
    130,797
    
    
    $
    158,737
  5




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Net Loss
    
    $
    (15,956
    )
    
    $
    (4,944
    )Other Comprehensive Income (Loss), Net of Taxes:Changes Related to Hedge Transactions
    
    
    2,079
    
    
    
    (406
    )Comprehensive Loss
    
    $
    (13,877
    )
    
    $
    (5,350
    )
  6




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 UNAUDITED
 1. General
      Reclassifications
  7




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 Revenue Recognition
  Three Months Ended March 31,2010
    
    2009Mobilization revenue deferred
    
    $
    600
    
    
    $
    12,000Mobilization expense deferred
    
    
    
    
    
    
    132Mobilization revenue recognized
    
    
    3,777
    
    
    
    3,916Mobilization expense recognized
    
    
    916
    
    
    
    693
   As of
    
    As ofBalance Sheet
    
    March 31,
    
    December 31,Classification
    
    2010
    
    2009Assets:Deferred Mobilization and Contract
Preparation Expense  Current Portion
    
    Other
    
    $
    1,579
    
    
    $
    1,092Deferred Mobilization and Contract
Preparation Expense  Non-Current Portion
    
    Other Assets, Net
    
    
    163
    
    
    
    1,651Liabilities:Deferred Mobilization Revenue-Current Portion
    
    Other Current Liabilities
    
    
    19,859
    
    
    
    19,406Deferred Mobilization Revenue-Non-Current
Portion
    
    Other Liabilities
    
    
    7,848
    
    
    
    12,628
 Accounts Receivable and Allowance for Doubtful Accounts
  Other Assets
   8




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  Other Intangible Assets
   Cash and Cash Equivalents
  Restricted Cash
  2. Earnings Per Share
  3. Dispositions
 Hercules
191 Hercules 255 Hercules 191 Hercules 255
 4. Debt
  March 31,
    
    
    December 31,2010
    
    
    2009Term Loan Facility, due July 2013
    
    $
    480,802
    
    
    $
    482,85210.5% Senior Secured Notes, due October 2017
    
    
    292,432
    
    
    
    292,2723.375% Convertible Senior Notes, due June 2038
    
    
    83,914
    
    
    
    83,0717.375% Senior Notes, due April 2018
    
    
    3,511
    
    
    
    3,512Total Debt
    
    
    860,659
    
    
    
    861,707Less Short-term Debt and Current Portion of
Long-term Debt
    
    
    4,931
    
    
    
    4,952Total Long-term Debt, Net of Current Portion
    
    $
    855,728
    
    
    $
    856,755
 9




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 Senior
secured credit facility
  
    
    The total leverage ratio for any test period is calculated as the ratio of consolidated
indebtedness on the test date to consolidated EBITDA for the trailing twelve months, all as
defined in the Credit Agreement.
 MaximumTest Date
    
    Total Leverage RatioSeptember 30, 2010
    
    
    8.00 to 1.00December 31, 2010
    
    
    7.50 to 1.00March 31, 2011
    
    
    7.00 to 1.00June 30, 2011
    
    
    6.75 to 1.00September 30, 2011
    
    
    6.00 to 1.00December 31, 2011
    
    
    5.50 to 1.00March 31, 2012
    
    
    5.25 to 1.00June 30, 2012
    
    
    5.00 to 1.00September 30, 2012
    
    
    4.75 to 1.00December 31, 2012
    
    
    4.50 to 1.00March 31, 2013
    
    
    4.25 to 1.00June 30, 2013
    
    
    4.00 to 1.00
 
    
    At March 31, 2010, the Companys total leverage
ratio was 6.60.
 
    
    Maintain a minimum level of liquidity, measured as the amount of unrestricted cash and
cash equivalents on hand and availability under the revolving credit facility, of (i)
$100.0 million for the period between October 1, 2009 through December 31, 2010, (ii) $75.0
million during calendar year 2011 and (iii) $50.0 million thereafter. As of March 31, 2010,
as calculated pursuant to the Credit Agreement, the Companys total liquidity was $295.6
million.
    
    Maintain a minimum fixed charge coverage ratio as follows:
 Fixed ChargePeriod
    
    
    Coverage RatioJuly 1, 2009
    
    
    
    
    
    December 31, 2011
    
    
    1.00 to 1.00January 1, 2012
    
    
    
    
    
    March 31, 2012
    
    
    1.05 to 1.00April 1, 2012
    
    
    
    
    
    June 30, 2012
    
    
    1.10 to 1.00July 1, 2012 and thereafter
    
    
    
    
    
    
    
    
    
    
    1.15 to 1.00
 
    
    The consolidated fixed charge coverage ratio for any test period is defined as the
sum of consolidated EBITDA for the test period plus an amount that may be added for the
purpose of calculating the ratio for such test period, not to exceed $130.0 million in
total during the term of the credit facility, to consolidated fixed charges for the
test period, all as defined in the Credit Agreement. As of
March 31, 2010, the Companys fixed
charge coverage ratio was 1.0.
 
    
    Mandatory prepayments of debt outstanding under the Credit Agreement with 100% of excess
cash flow as defined in the Credit Agreement for the fiscal year ending December 31, 2009
and 50% of excess cash flow thereafter and with proceeds from:
 
    
    unsecured debt issuances, with the exception of refinancing;
    
    secured debt issuances;
    
    casualty events not used to repair damaged property;
    
    sales of assets in excess of $25 million annually; and
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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 
    
    unless the Company has achieved a specified leverage ratio, 50% of proceeds from
equity issuances, excluding those for permitted acquisitions or to meet the minimum
liquidity requirements.
     10.5% senior secured notes due 2017
     
    
    incur additional indebtedness or issue certain preferred stock;
    
    pay dividends or make other distributions;
    
    make other restricted payments or investments;
    
    sell assets;
    
    create liens;
 11




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 
    
    enter into agreements that restrict dividends and other payments by restricted
subsidiaries;
    
    engage in transactions with its affiliates; and
    
    consolidate, merge or transfer all or substantially all of its assets.
    Year
    
    Optional Redemption Price2013
    
    
    105.2500
    %2014
    
    
    102.6250
    %2015
    
    
    101.3125
    %2016 and thereafter
    
    
    100.0000
    %
  3.375% convertible senior notes due 2038
     12




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 Other debt
  Fair value estimate
  March 31, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    Value(in millions)Term Loan Facility, due July 2013
    
    $
    480.8
    
    
    $
    467.0
    
    
    $
    482.9
    
    
    $
    468.410.5% Senior Secured Notes, due October 2017
    
    
    292.4
    
    
    
    298.1
    
    
    
    292.3
    
    
    
    315.83.375% Convertible Senior Notes, due June 2038
    
    
    83.9
    
    
    
    76.6
    
    
    
    83.1
    
    
    
    76.87.375% Senior Notes, due April 2018
    
    
    3.5
    
    
    
    2.9
    
    
    
    3.5
    
    
    
    3.0
 5. Derivative Instruments and Hedging
      13




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
   March 31, 2010
    
    
    December 31, 2009Balance Sheet
    
    Fair
    
    
    Balance Sheet
    
    
    FairClassification
    
    Value
    
    
    Classification
    
    
    ValueDerivatives(a):Interest rate contracts:Other
    
    $
    
    
    
    Other
    
    $
    Total Asset Derivatives
    
    $
    
    
    
    Total Asset Derivatives
    
    $
    Other Current Liabilities
    
    $
    10,674
    
    
    Other Current Liabilities
    
    $
    10,312Other Liabilities
    
    
    
    
    
    Other Liabilities
    
    
    Total Liability Derivatives
    
    $
    10,674
    
    
    Total Liability Derivatives
    
    $
    10,312
 
 (a)
    
    These interest rate contracts were designated as cash flow hedges through July 27, 2009.  I.
    
    II.
    
    III.
    
    IV.
    
    V.Three Months
    
    
    
    
    
    Three Months
    
    
    
    
    
    Three MonthsEnded
    
    
    
    
    
    Ended
    
    
    
    
    
    EndedMarch 31,
    
    
    
    
    
    March 31,
    
    
    
    
    
    March 31,Derivatives(a)
    
    2010
    
    2009
    


    


    
    2010
    
    2009
    
    
    
    2010
    
    2009Interest rate
contracts
    
    $
    
    
    
    $
    (3,275
    )
    
    Interest Expense
    
    $
    (3,198
    )
    
    $
    (4,414
    )
    
    Interest Expense
    
    $
    (363
    )
    
    $
    
 
 (a)
    
    These interest rate contracts were designated as cash flow hedges through July 27, 2009.I.
    
    Amount of Gain (Loss), Net of Taxes Recognized in Other Comprehensive Income (Loss) on
Derivative (Effective Portion)II.
    
    Classification of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss)
into Income (Loss) (Effective Portion)III.
    
    Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into
Income (Loss) (Effective Portion)IV.
    
    Classification of Gain (Loss) Recognized in Income (Loss) on DerivativeV.
    
    Amount of Gain (Loss) Recognized in Income (Loss) on Derivative  Cumulative unrealized loss, net of tax of $3,108, as of December 31, 2009
    
    $
    (5,773
    )Reclassification of losses into net income, net of tax of $1,119
    
    
    2,079Cumulative unrealized loss, net of tax of $1,989, as of March 31, 2010
    
    $
    (3,694
    )
 14




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 6. Fair Value Measurements
 Fair Value Measurements and Disclosures
 Fair Value Measurements and Disclosures
 Level 1
    
    
    
    Inputs are quoted prices in active markets for identical assets or liabilities.Level 2
    
    
    
    Inputs are quoted prices for similar assets or liabilities in an active
market, quoted prices for identical or similar assets or liabilities in
markets that are not active, inputs other than quoted prices that are
observable and market-corroborated inputs which are derived principally from
or corroborated by observable market data.Level 3
    
    
    
    Inputs are derived from valuation techniques in which one or more significant
inputs or value drivers are unobservable.
  (A)
    
    Market approach  Uses prices and other relevant information generated by market
transactions involving identical or comparable assets or liabilities(B)
    
    Income approach  Uses valuation techniques to convert future amounts to a single
present amount based on current market expectations about those future amounts,
including present value techniques, option-pricing models and excess earnings method(C)
    
    Cost approach  Based on the amount that currently would be required to replace
the service capacity of an asset (replacement cost)
 Improving Disclosures about Fair Value
Measurements
   Quoted Prices inTotal
    
    Active Markets forFair Value
    
    Identical Asset or
    
    Significant Other
    
    SignificantMeasurement
    
    Liability
    
    Observable Inputs
    
    Unobservable Inputs
    
    ValuationMarch 31, 2010
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TechniqueInterest Rate
Contracts
    
    $
    10,674
    
    
    $
    
    
    
    $
    10,674
    
    
    $
    
    
    
    
    A
 15




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  Quoted Prices inTotal
    
    Active Markets forFair Value
    
    Identical Asset or
    
    Significant Other
    
    SignificantMeasurement
    
    Liability
    
    Observable Inputs
    
    Unobservable Inputs
    
    ValuationDecember 31, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TechniqueInterest Rate Contracts
    
    $
    10,312
    
    
    $
    
    
    
    $
    10,312
    
    
    $
    
    
    
    
    A
 7. Stock-based Compensation
    8. Supplemental Cash Flow Information
  Three Months Ended March 31,2010
    
    2009(In thousands)Cash paid during the period for:Interest, net of capitalized interest
    
    $
    60
    
    
    $
    (64
    )Income taxes
    
    
    11,321
    
    
    
    4,577
  9. Income Tax
  16




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
      17




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 10. Segments
   Domestic Offshore
 International Offshore
 Inland
 Domestic Liftboats
 International Liftboats
 Delta Towing
  18




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  Three Months Ended March 31, 2010Income (Loss)
    
    
    Depreciationfrom
    
    
    &Revenue
    
    
    Operations
    
    
    AmortizationDomestic Offshore
    
    $
    28,962
    
    
    $
    (30,126
    )
    
    $
    16,539International Offshore
    
    
    73,442
    
    
    
    22,486
    
    
    
    14,931Inland
    
    
    4,751
    
    
    
    (5,307
    )
    
    
    7,506Domestic Liftboats
    
    
    11,443
    
    
    
    (2,566
    )
    
    
    4,200International Liftboats
    
    
    25,962
    
    
    
    5,303
    
    
    
    4,691Delta Towing
    
    
    6,289
    
    
    
    (941
    )
    
    
    1,590150,849
    
    
    
    (11,151
    )
    
    
    49,457Corporate
    
    
    
    
    
    
    (9,193
    )
    
    
    797Total Company
    
    $
    150,849
    
    
    $
    (20,344
    )
    
    $
    50,254
 Three Months Ended March 31, 2009Income (Loss)
    
    
    Depreciationfrom
    
    
    &Revenue
    
    
    Operations
    
    
    AmortizationDomestic Offshore
    
    $
    59,181
    
    
    $
    (11,940
    )
    
    $
    15,040International Offshore
    
    
    103,452
    
    
    
    42,885
    
    
    
    15,184Inland
    
    
    12,913
    
    
    
    (16,244
    )
    
    
    7,993Domestic Liftboats
    
    
    22,610
    
    
    
    3,019
    
    
    
    5,049International Liftboats
    
    
    18,642
    
    
    
    6,860
    
    
    
    2,384Delta Towing
    
    
    6,693
    
    
    
    (4,257
    )
    
    
    2,284223,491
    
    
    
    20,323
    
    
    
    47,934Corporate
    
    
    
    
    
    
    (11,214
    )
    
    
    912Total Company
    
    $
    223,491
    
    
    $
    9,109
    
    
    $
    48,846
 Total AssetsMarch 31,
    
    
    December 31,2010
    
    
    2009Domestic Offshore
    
    $
    876,859
    
    
    $
    870,723International Offshore
    
    
    806,931
    
    
    
    860,252Inland
    
    
    156,309
    
    
    
    160,354Domestic Liftboats
    
    
    85,246
    
    
    
    88,942International Liftboats
    
    
    164,874
    
    
    
    164,221Delta Towing
    
    
    60,505
    
    
    
    62,563Corporate
    
    
    78,855
    
    
    
    70,421Total Company
    
    $
    2,229,579
    
    
    $
    2,277,476
 19




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 11. Commitments and Contingencies
 Legal Proceedings
 Contingencies  Loss Contingencies
   Robert E. Aaron et al. vs. Phillips 66 Company et al. Circuit Court, Second Judicial District,
Jones County, Mississippi.
   20




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 Insurance
     Surety Bonds, Bank Guarantees and Unsecured Letters of Credit
   12. Accounting Pronouncements
  13. Subsequent Events
 Hercules 191
 21




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  Hercules 191 Hercules 255 Hercules 191 Hercules 255
  Domestic Offshore
 International Offshore
 Inland
 Domestic Liftboats
 International Liftboats
 Delta Towing
  22




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23




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##### Table of Contents



RESULTS OF OPERATIONS
  Three Months EndedMarch 31,2010
    
    
    2009(Dollars in thousands)Domestic Offshore:Number of rigs (as of end of period)
    
    
    25
    
    
    
    23Revenues
    
    $
    28,962
    
    
    $
    59,181Operating expenses
    
    
    39,152
    
    
    
    54,413Depreciation and amortization expense
    
    
    16,539
    
    
    
    15,040General and administrative expenses
    
    
    3,397
    
    
    
    1,668Operating loss
    
    $
    (30,126
    )
    
    $
    (11,940
    )International Offshore:Number of rigs (as of end of period)
    
    
    9
    
    
    
    12Revenues
    
    $
    73,442
    
    
    $
    103,452Operating expenses
    
    
    34,719
    
    
    
    44,141Depreciation and amortization expense
    
    
    14,931
    
    
    
    15,184General and administrative expenses
    
    
    1,306
    
    
    
    1,242Operating income
    
    $
    22,486
    
    
    $
    42,885Inland:Number of barges (as of end of period)
    
    
    17
    
    
    
    17Revenues
    
    $
    4,751
    
    
    $
    12,913Operating expenses
    
    
    5,717
    
    
    
    20,264Depreciation and amortization expense
    
    
    7,506
    
    
    
    7,993General and administrative expenses
    
    
    (3,165
    )
    
    
    900Operating loss
    
    $
    (5,307
    )
    
    $
    (16,244
    )Domestic Liftboats:Number of liftboats (as of end of period)
    
    
    41
    
    
    
    45Revenues
    
    $
    11,443
    
    
    $
    22,610Operating expenses
    
    
    9,314
    
    
    
    14,134Depreciation and amortization expense
    
    
    4,200
    
    
    
    5,049General and administrative expenses
    
    
    495
    
    
    
    408Operating income (loss)
    
    $
    (2,566
    )
    
    $
    3,019International Liftboats:Number of liftboats (as of end of period)
    
    
    24
    
    
    
    20Revenues
    
    $
    25,962
    
    
    $
    18,642Operating expenses
    
    
    14,462
    
    
    
    8,107Depreciation and amortization expense
    
    
    4,691
    
    
    
    2,384General and administrative expenses
    
    
    1,506
    
    
    
    1,291Operating income
    
    $
    5,303
    
    
    $
    6,860
 24




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##### Table of Contents



Three Months EndedMarch 31,2010
    
    
    2009(Dollars in thousands)Delta Towing:Revenues
    
    $
    6,289
    
    
    $
    6,693Operating expenses
    
    
    5,272
    
    
    
    8,185Depreciation and amortization expense
    
    
    1,590
    
    
    
    2,284General and administrative expenses
    
    
    368
    
    
    
    481Operating loss
    
    $
    (941
    )
    
    $
    (4,257
    )Total Company:Revenues
    
    $
    150,849
    
    
    $
    223,491Operating expenses
    
    
    108,636
    
    
    
    149,244Depreciation and amortization expense
    
    
    50,254
    
    
    
    48,846General and administrative expenses
    
    
    12,303
    
    
    
    16,292Operating income (loss)
    
    
    (20,344
    )
    
    
    9,109Interest expense
    
    
    (21,739
    )
    
    
    (15,789
    )Other, net
    
    
    (14
    )
    
    
    (656
    )Loss before income taxes
    
    
    (42,097
    )
    
    
    (7,336
    )Income tax benefit
    
    
    26,141
    
    
    
    2,825Loss from continuing operations
    
    
    (15,956
    )
    
    
    (4,511
    )Loss from discontinued operation, net of taxes
    
    
    
    
    
    
    (433
    )Net loss
    
    $
    (15,956
    )
    
    $
    (4,944
    )
  Three Months Ended March 31, 2010AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    ExpenseDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    per Day (3)Domestic Offshore
    
    
    823
    
    
    
    990
    
    
    
    83.1
    %
    
    $
    35,191
    
    
    $
    39,547International Offshore
    
    
    527
    
    
    
    869
    
    
    
    60.6
    %
    
    
    139,359
    
    
    
    39,953Inland
    
    
    240
    
    
    
    270
    
    
    
    88.9
    %
    
    
    19,796
    
    
    
    21,174Domestic Liftboats
    
    
    1,727
    
    
    
    3,420
    
    
    
    50.5
    %
    
    
    6,626
    
    
    
    2,723International Liftboats
    
    
    1,174
    
    
    
    2,160
    
    
    
    54.4
    %
    
    
    22,114
    
    
    
    6,695
 Three Months Ended March 31, 2009AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    ExpenseDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    per Day (3)Domestic Offshore
    
    
    864
    
    
    
    1,384
    
    
    
    62.4
    %
    
    $
    68,497
    
    
    $
    39,316International Offshore
    
    
    795
    
    
    
    847
    
    
    
    93.9
    %
    
    
    130,128
    
    
    
    52,115Inland
    
    
    298
    
    
    
    723
    
    
    
    41.2
    %
    
    
    43,332
    
    
    
    28,028Domestic Liftboats
    
    
    2,439
    
    
    
    3,870
    
    
    
    63.0
    %
    
    
    9,270
    
    
    
    3,652International Liftboats
    
    
    918
    
    
    
    1,710
    
    
    
    53.7
    %
    
    
    20,307
    
    
    
    4,741
 
 (1)
    
    Utilization is defined as the total number of days our rigs or liftboats, as
applicable, were under contract, known as operating days, in the period as a percentage of
the total number of available days in the period. Days during which our rigs and liftboats
were undergoing major refurbishments, upgrades or construction, and days during which our
rigs and liftboats are cold-stacked, are not counted as available days. Days during which
our liftboats are in the shipyard undergoing drydocking or inspection are considered
available days for the purposes of calculating utilization.(2)
    
    Average revenue per rig or liftboat per day is defined as revenue earned by our rigs or
liftboats, as applicable, in the period divided by the total number of operating days for
our rigs or liftboats, as applicable, in the period. Included in International Offshore
revenue is a total of $3.6 million and $3.8 million related to amortization of deferred
mobilization revenue for the three months ended March 31, 2010 and 2009, respectively.
Included in International Liftboats revenue is a total of $0.1 million related to
amortization of deferred mobilization revenue for both the three months ended March 31,
2010 and 2009. 25




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##### Table of Contents



(3)
    
    Average operating expense per rig or liftboat per day is defined as operating expenses,
excluding depreciation and amortization, incurred by our rigs or liftboats, as applicable,
in the period divided by the total number of available days in the period. We use available
days to calculate average operating expense per rig or liftboat per day rather than
operating days, which are used to calculate average revenue per rig or liftboat per day,
because we incur operating expenses on our rigs and liftboats even when they are not under
contract and earning a dayrate. In addition, the operating expenses we incur on our rigs
and liftboats per day when they are not under contract are typically
lower than the per day
expenses we incur when they are under contract. Included in International Offshore
operating expense is a total of $0.2 million and $0.7 million related to amortization of
deferred mobilization expenses for the three months ended March 31, 2010 and 2009,
respectively. Included in International Liftboats operating expense is a total of $0.7
million related to amortization of deferred mobilization expenses for the three months
ended March 31, 2010. There was no such operating expense for the three months ended March
31, 2009. For the Three Months Ended March 31, 2010 and 2009
 Revenues
 Consolidated.
 Domestic Offshore .
 International Offshore . Hercules 156 Hercules
170 Hercules 205 Hercules 206 Platform Hercules 262
 Inland.
 Domestic Liftboats.
 International Liftboats.
 Delta Towing.
 26




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##### Table of Contents



Operating Expenses
 Consolidated .
 Domestic Offshore .
 International Offshore. Hercules 156 Hercules 170 Hercules 206
 Inland.
 Domestic Liftboats.
 International Liftboats. Whale Shark
 Delta Towing.
 Depreciation and Amortization
 Hercules 262 Hercules 185 Whale Shark Hercules 110
 General and Administrative Expenses
  27




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##### Table of Contents



Interest Expense
  Income Tax Benefit
  Non-GAAP Financial Measures
 General Rules Regarding Disclosure of Non-GAAP Financial Measures
  For the Three Months Ended March 31,2010
    
    
    2009Loss from Continuing Operations
    
    $
    (15,956
    )
    
    $
    (4,511
    )Interest expense
    
    
    21,739
    
    
    
    15,789Income tax benefit
    
    
    (26,141
    )
    
    
    (2,825
    )Depreciation and amortization
    
    
    50,254
    
    
    
    48,846EBITDA
    
    
    29,896
    
    
    
    57,299
 CRITICAL ACCOUNTING POLICIES
  28




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OUTLOOK
 Offshore
       29




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Inland
   Liftboats
   30




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Sources and Uses of Cash
  Net Cash Provided by Operating Activities
    
    $
    0.3Net Cash Provided by (Used in) Investing Activities:Additions of Property and Equipment
    
    
    (4.5
    )Deferred Drydocking Expenditures
    
    
    (4.4
    )Proceeds from Sale of Assets, Net
    
    
    3.6Increase in Restricted Cash
    
    
    (3.4
    )Total
    
    
    (8.7
    )Net Cash
Provided by (Used in) Financing Activities:Long-term Debt Repayments
    
    
    (2.0
    )Excess Tax
Benefits from Stock-Based Arrangements
    
    
    0.4Total
    
    
    (1.6
    )Net Decrease in Cash and Cash Equivalents
    
    $
    (10.0
    )
 Sources of Liquidity and Financing Arrangements
   31




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##### Table of Contents



Cash Requirements and Contractual Obligations
 Debt
     
    
    Eliminate the requirement that we comply with the total leverage ratio financial
covenant for the nine month period commencing October 1, 2009 and ending on June 30, 2010.
    
    Amend the maximum total leverage ratio that we must comply with to the following
schedule. The total leverage ratio for any test period is calculated as the ratio of
consolidated indebtedness on the test date to consolidated EBITDA for the trailing twelve
months, all as defined in the Credit Agreement.
 MaximumTest Date
    
    Total Leverage RatioSeptember 30, 2010
    
    
    8.00 to 1.00December 31, 2010
    
    
    7.50 to 1.00March 31, 2011
    
    
    7.00 to 1.00June 30, 2011
    
    
    6.75 to 1.00September 30, 2011
    
    
    6.00 to 1.00December 31, 2011
    
    
    5.50 to 1.00March 31, 2012
    
    
    5.25 to 1.00June 30, 2012
    
    
    5.00 to 1.00September 30, 2012
    
    
    4.75 to 1.00December 31, 2012
    
    
    4.50 to 1.00March 31, 2013
    
    
    4.25 to 1.00June 30, 2013
    
    
    4.00 to 1.00
 
    
    At March 31, 2010, our total leverage ratio was 6.60.
 
    
    Require us to maintain a minimum level of liquidity, measured as the amount of
unrestricted cash and cash equivalents we have on hand and availability under the revolving
credit facility, of (i) $100.0 million for the period between October 1, 2009 through
December 31, 2010, (ii) $75.0 million during calendar year 2011 and (iii) $50.0 million
thereafter. As of March 31, 2010, as calculated pursuant to our Credit Agreement, our total
liquidity was $295.6 million.
 32




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##### Table of Contents




    
    Revise the consolidated fixed charge coverage ratio definition and reduce the minimum fixed
charge coverage ratio that we must maintain to the following schedule:
 Fixed ChargePeriod
    
    
    
    Coverage RatioJuly 1, 2009
    
    
    
    
    
    December 31, 2011
    
    
    1.00 to 1.00January 1, 2012
    
    
    
    
    
    March 31, 2012
    
    
    1.05 to 1.00April 1, 2012
    
    
    
    
    
    June 30, 2012
    
    
    1.10 to 1.00July 1, 2012 and thereafter
    
    
    
    
    
    
    
    
    1.15 to 1.00
 
    
    The consolidated fixed charge coverage ratio for any test period is defined as
the sum of consolidated EBITDA for the test period plus an amount that may be added for
the purpose of calculating the ratio for such test period, not to exceed $130.0 million
in total during the term of the credit facility, to consolidated fixed charges for the
test period, all as defined in the Credit Agreement. As of March 31, 2010, our fixed
charge coverage ratio was 1.0.
 
    
    Require mandatory prepayments of debt outstanding under the Credit Agreement with 100%
of excess cash flow as defined in the Credit Agreement for the fiscal year ending December
31, 2009 and 50% of excess cash flow thereafter and with proceeds from:
 
    
    unsecured debt issuances, with the exception of refinancing;
    
    secured debt issuances;
    
    casualty events not used to repair damaged property;
    
    sales of assets in excess of $25 million annually; and
    
    unless we have achieved a specified leverage ratio, 50% of proceeds from equity
issuances, excluding those for permitted acquisitions or to meet the minimum
liquidity requirements.
    33




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##### Table of Contents



The indenture governing the notes contains covenants that, among other things, limit our
ability and the ability of our restricted subsidiaries to:
 
    
    incur additional indebtedness or issue certain preferred stock;
    
    pay dividends or make other distributions;
    
    make other restricted payments or investments;
    
    sell assets;
    
    create liens;
    
    enter into agreements that restrict dividends and other payments by restricted
subsidiaries;
    
    engage in transactions with our affiliates; and
    
    consolidate, merge or transfer all or substantially all of our assets.
 The indenture governing the notes also contains a provision under which an event of default by
us or by any restricted subsidiary on any other indebtedness exceeding $25.0 million would be
considered an event of default under the indenture if such default is: a) caused by failure to pay
the principal at final maturity, or b) results in the acceleration of such indebtedness prior to
maturity.
 Prior to October 15, 2012, we may redeem the notes with the net cash proceeds of certain
equity offerings, at a redemption price equal to 110.50% of the aggregate principal amount plus
accrued and unpaid interest; provided, that (i) after giving effect to any such redemption, at
least 65% of the notes originally issued would remain outstanding immediately after such redemption
and (ii) we make such redemption not more than 90 days after the consummation of such equity
offering. In addition, prior to October 15, 2013, we may redeem all or part of the notes at a
price equal to 100% of the aggregate principal amount of notes to be redeemed, plus the applicable
premium, as defined in the indenture, and accrued and unpaid interest.
 On or after October 15, 2013, we may redeem the notes, in whole or part, at the redemption
prices set forth below, together with accrued and unpaid interest to the redemption date.
 Year
    
    Optional Redemption Price2013
    
    
    105.2500
    %2014
    
    
    102.6250
    %2015
    
    
    101.3125
    %2016 and thereafter
    
    
    100.0000
    %
 34




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##### Table of Contents



If we experience a change of control, as defined, we must offer to repurchase the notes at an
offer price in cash equal to 101% of their principal amount, plus accrued and unpaid interest.
Furthermore, following certain asset sales, we may be required to use the proceeds to offer to
repurchase the notes at an offer price in cash equal to 100% of their principal amount, plus
accrued and unpaid interest.
     March 31, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    Value(in millions)Term Loan Facility, due July 2013
    
    $
    480.8
    
    
    $
    467.0
    
    
    $
    482.9
    
    
    $
    468.410.5% Senior Secured Notes, due October 2017
    
    
    292.4
    
    
    
    298.1
    
    
    
    292.3
    
    
    
    315.83.375% Convertible Senior Notes, due June 2038
    
    
    83.9
    
    
    
    76.6
    
    
    
    83.1
    
    
    
    76.87.375% Senior Notes, due April 2018
    
    
    3.5
    
    
    
    2.9
    
    
    
    3.5
    
    
    
    3.0
    35




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##### Table of Contents



Common Stock Offering
  Capital Expenditures
      Off-Balance Sheet Arrangements
 Guarantees
  Bank Guarantees, Letters of Credit, and Surety Bonds
  36




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##### Table of Contents



Contractual Obligations
   Accounting Pronouncements
  FORWARD-LOOKING STATEMENTS
  
    
    our levels of indebtedness, covenant compliance and access to capital under current
market conditions;
    
    our ability to enter into new contracts for our rigs and liftboats and future
utilization rates and dayrates for the units;
    
    our ability to renew or extend our long-term international contracts, or enter into new
contracts, when such contracts expire;
    
    demand for our rigs and our liftboats and our earnings;
    
    activity levels of our customers and their expectations of future energy prices;
    
    sufficiency and availability of funds for required capital expenditures, working capital
and debt service;
    
    levels of reserves for accounts receivable;
    
    success of our cost cutting measures and plans to dispose of certain assets;
    
    expected completion times for our refurbishment and upgrade projects;
    
    our plans to increase international operations;
    
    expected useful lives of our rigs and liftboats;
    
    future capital expenditures and refurbishment, reactivation, transportation, repair and
upgrade costs;
    
    our ability to effectively reactivate rigs that we have recently stacked;
    
    liabilities and restrictions under coastwise laws of the United States and regulations
protecting the environment;
    
    expected outcomes of litigation, claims and disputes and their expected effects on our
financial condition and results of operations; and
    
    expectations regarding offshore drilling activity and dayrates, market conditions,
demand for our rigs and liftboats, operating revenues, operating and maintenance expense,
insurance coverage, insurance expense and deductibles, interest expense, debt levels and
other matters with regard to outlook.
  37




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##### Table of Contents



:
 
    
    oil and natural gas prices and industry expectations about future prices;
    
    levels of oil and gas exploration and production spending;
    
    demand and supply for offshore drilling rigs and liftboats;
    
    our ability to enter into and the terms of future contracts;
    
    the worldwide military and political environment, uncertainty or instability resulting
from an escalation or additional outbreak of armed hostilities or other crises in the
Middle East, West Africa and other oil and natural gas producing regions or acts of
terrorism or piracy;
    
    the impact of governmental laws and regulations;
    
    the adequacy and costs of sources of credit and liquidity;
    
    uncertainties relating to the level of activity in offshore oil and natural gas
exploration, development and production;
    
    competition and market conditions in the contract drilling and liftboat industries;
    
    the availability of skilled personnel in view of recent reductions in our personnel;
    
    labor relations and work stoppages, particularly in the West African and Mexican labor
environments;
    
    operating hazards such as hurricanes, severe weather and seas, fires, cratering,
blowouts, war, terrorism and cancellation or unavailability of insurance coverage, or
insufficient coverage;
    
    the effect of litigation and contingencies; and
    
    our inability to achieve our plans or carry out our strategy.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Exposure
   38




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March 31, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    Value(in millions)Term Loan Facility, due July 2013
    
    $
    480.8
    
    
    $
    467.0
    
    
    $
    482.9
    
    
    $
    468.410.5% Senior Secured Notes, due October 2017
    
    
    292.4
    
    
    
    298.1
    
    
    
    292.3
    
    
    
    315.83.375%
Convertible Senior Notes, due June 2038
    
    
    83.9
    
    
    
    76.6
    
    
    
    83.1
    
    
    
    76.87.375% Senior Notes, due April 2018
    
    
    3.5
    
    
    
    2.9
    
    
    
    3.5
    
    
    
    3.0
 Interest Rate Swaps and Derivatives
 Liquidity
and Capital Resources
    
 ITEM 4. CONTROLS AND PROCEDURES
  39




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  Our operations in the Gulf of Mexico could be adversely impacted by the recent drilling rig
accident and resulting oil spill.
    
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number ofShares Purchased
    
    Maximum Numberas Part of a
    
    of Shares ThatTotal Number
    
    
    
    
    
    Publicly
    
    May Yet Beof Shares
    
    Average Price
    
    Announced Plan
    
    Purchased UnderPeriod
    
    Purchased (1)
    
    Paid per Share
    
    (2)
    
    Plan (2)January 1-31, 2010
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/AFebruary 1-28, 2010
    
    
    37,969
    
    
    
    4.06
    
    
    
    N/A
    
    
    
    N/AMarch 1-31, 2010
    
    
    464
    
    
    
    4.27
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    38,433
    
    
    
    4.06
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    Represents the surrender of shares of our common stock to satisfy tax withholding
obligations in connection with the vesting of restricted stock issued to employees under
our stockholder-approved long-term incentive plan.(2)
    
    We did not have at any time during the quarter, and currently do not have, a share
repurchase program in place. 
 ITEM 6. EXHIBITS
 31.1*
    
    Certification of Chief Executive Officer of Hercules pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Financial Officer of Hercules pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of the Chief Executive Officer and the Chief Financial Officer of Hercules
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 40




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SIGNATURES
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 HERCULES OFFSHORE, INC.By:
    /s/ John T. RyndJohn T. RyndChief Executive Officer and President
(Principal Executive Officer)By:
    /s/ Lisa W. RodriguezLisa W. RodriguezSenior Vice President and Chief Financial Officer
(Principal Financial Officer)By:
    /s/ Troy L. CarsonTroy L. CarsonVice President and Corporate Controller
(Principal Accounting Officer)  41