##### 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 June 30, 2008
 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
  Large accelerated filer þ
    
    Accelerated filer o
    
    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 July 25, 200887,949,582




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##### 



HERCULES OFFSHORE, INC.
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements:Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three and six months ended June 30, 2008 and June 30,
2007
    
    
    4Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and June 30, 2007
    
    
    5Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2008
and June 30, 2007
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    36Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 4. Submission of Matters to a Vote of Security Holders
    
    
    41Item 6. Exhibits
    
    
    43Signatures
    
    
    44Amended and Restated 2004 Long-Term Incentive PlanCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO & CFO Pursuant to Section 906
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    98,026
    
    
    $
    212,452Marketable Securities
    
    
    
    
    
    
    39,300Accounts Receivable, Net
    
    
    262,501
    
    
    
    221,663Insurance Claims Receivable
    
    
    4,209
    
    
    
    43,342Supplies
    
    
    2,489
    
    
    
    2,494Prepaids
    
    
    53,278
    
    
    
    31,417Current Deferred Tax Asset
    
    
    17,551
    
    
    
    17,551Other
    
    
    28,460
    
    
    
    23,565466,514
    
    
    
    591,784Property and Equipment, Net
    
    
    2,424,203
    
    
    
    2,060,224Goodwill
    
    
    952,740
    
    
    
    940,241Other Assets, Net
    
    
    47,139
    
    
    
    50,290$
    3,890,596
    
    
    $
    3,642,539LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term Debt and Current Portion of Long-term Debt
    
    $
    20,400
    
    
    $
    21,653Insurance Note Payable
    
    
    32,148
    
    
    
    16,931Accounts Payable
    
    
    104,203
    
    
    
    105,527Accrued Liabilities
    
    
    80,805
    
    
    
    80,138Taxes Payable
    
    
    7,137
    
    
    
    23,006Other Current Liabilities
    
    
    25,979
    
    
    
    16,845270,672
    
    
    
    264,100Long-term Debt, Net of Current Portion
    
    
    1,137,762
    
    
    
    890,013Other Liabilities
    
    
    34,494
    
    
    
    19,518Deferred Income Taxes
    
    
    447,776
    
    
    
    457,475Commitments and ContingenciesStockholders Equity:Common Stock, $0.01 Par Value; 200,000 Shares Authorized; 89,410 and
88,876 Shares
Issued, Respectively; 87,938 and 88,857 Shares Outstanding, Respectively
    
    
    894
    
    
    
    889Capital in Excess of Par Value
    
    
    1,750,378
    
    
    
    1,731,882Treasury Stock, at Cost, 1,472 Shares and 19 Shares, Respectively
    
    
    (49,879
    )
    
    
    (582
    )Accumulated Other Comprehensive Loss
    
    
    (9,791
    )
    
    
    (8,117
    )Retained Earnings
    
    
    308,290
    
    
    
    287,3611,999,892
    
    
    
    2,011,433$
    3,890,596
    
    
    $
    3,642,539
  3




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    270,830
    
    
    $
    99,044
    
    
    $
    484,216
    
    
    $
    209,508Costs and Expenses:Operating Expenses
    
    
    158,870
    
    
    
    44,396
    
    
    
    291,679
    
    
    
    85,923Depreciation and Amortization
    
    
    47,280
    
    
    
    12,209
    
    
    
    90,906
    
    
    
    23,939General and Administrative
    
    
    23,966
    
    
    
    9,335
    
    
    
    40,330
    
    
    
    18,498230,116
    
    
    
    65,940
    
    
    
    422,915
    
    
    
    128,360Operating Income
    
    
    40,714
    
    
    
    33,104
    
    
    
    61,301
    
    
    
    81,148Other Income (Expense):Interest Expense
    
    
    (14,579
    )
    
    
    (1,379
    )
    
    
    (30,539
    )
    
    
    (3,469
    )Loss on Early Retirement of Debt
    
    
    
    
    
    
    (870
    )
    
    
    
    
    
    
    (870
    )Other, Net
    
    
    67
    
    
    
    1,246
    
    
    
    2,274
    
    
    
    2,521Income Before Income Taxes
    
    
    26,202
    
    
    
    32,101
    
    
    
    33,036
    
    
    
    79,330Income Tax Provision
    
    
    (9,759
    )
    
    
    (8,635
    )
    
    
    (12,107
    )
    
    
    (22,473
    )Net Income
    
    $
    16,443
    
    
    $
    23,466
    
    
    $
    20,929
    
    
    $
    56,857Earnings Per Share:Basic
    
    $
    0.19
    
    
    $
    0.73
    
    
    $
    0.24
    
    
    $
    1.77Diluted
    
    $
    0.18
    
    
    $
    0.72
    
    
    $
    0.23
    
    
    $
    1.74Weighted Average Shares Outstanding:Basic
    
    
    88,625
    
    
    
    32,099
    
    
    
    88,742
    
    
    
    32,037Diluted
    
    
    89,461
    
    
    
    32,813
    
    
    
    89,516
    
    
    
    32,642
  4




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended June 30,2008
    
    
    2007Cash Flows from Operating Activities:Net Income
    
    $
    20,929
    
    
    $
    56,857Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:Depreciation and Amortization
    
    
    90,906
    
    
    
    23,939Stock-based Compensation Expense
    
    
    7,932
    
    
    
    2,881Deferred Income Taxes
    
    
    6,243
    
    
    
    5,031Amortization of Deferred Financing Fees
    
    
    1,712
    
    
    
    293Gain on Disposal of Assets
    
    
    (1,911
    )
    
    
    (296
    )Excess Tax Benefit from Stock-based Arrangements
    
    
    (5,447
    )
    
    
    (1,731
    )Loss on Early Retirement of Debt
    
    
    
    
    
    
    870(Increase) Decrease in Operating Assets -Accounts Receivable
    
    
    (41,755
    )
    
    
    14,146Insurance Claims Receivable
    
    
    (142
    )
    
    
    (5,853
    )Prepaid Expenses and Other
    
    
    14,069
    
    
    
    2,482Increase (Decrease) in Operating Liabilities -Accounts Payable
    
    
    (885
    )
    
    
    1,703Insurance Note Payable
    
    
    (21,077
    )
    
    
    (6,058
    )Other Current Liabilities
    
    
    (4,846
    )
    
    
    (7,898
    )Other Liabilities
    
    
    3,126
    
    
    
    (284
    )Net Cash Provided by Operating Activities
    
    
    68,854
    
    
    
    86,082Cash Flows from Investing Activities:Acquisition of Assets
    
    
    (320,839
    )
    
    
    Additions of Property and Equipment
    
    
    (130,528
    )
    
    
    (38,133
    )Deferred Drydocking Expenditures
    
    
    (9,151
    )
    
    
    (9,864
    )Investment in Marketable Securities
    
    
    
    
    
    
    (61,500
    )Proceeds from Sale of Marketable Securities
    
    
    39,300
    
    
    
    37,600Insurance Proceeds Received
    
    
    25,332
    
    
    
    Proceeds from Sale of Assets, Net
    
    
    12,649
    
    
    
    610Net Cash Used in Investing Activities
    
    
    (383,237
    )
    
    
    (71,287
    )Cash Flows from Financing Activities:Short-term Debt Borrowings (Repayments), Net
    
    
    1,086
    
    
    
    Long-term Debt Borrowings
    
    
    350,000
    
    
    
    Long-term Debt Repayments
    
    
    (104,470
    )
    
    
    (37,700
    )Share Repurchases
    
    
    (49,228
    )
    
    
    Proceeds from Exercise of Stock Options
    
    
    5,127
    
    
    
    1,510Excess Tax Benefit from Stock-based Arrangements
    
    
    5,447
    
    
    
    1,731Payment of Debt Issuance Costs
    
    
    (8,005
    )
    
    
    (441
    )Other
    
    
    
    
    
    
    (46
    )Net Cash Provided by (Used in) Financing Activities
    
    
    199,957
    
    
    
    (34,946
    )Net Decrease in Cash and Cash Equivalents
    
    
    (114,426
    )
    
    
    (20,151
    )Cash and Cash Equivalents at Beginning of Period
    
    
    212,452
    
    
    
    72,772Cash and Cash Equivalents at End of Period
    
    $
    98,026
    
    
    $
    52,621Cash Paid for Interest
    
    $
    13,538
    
    
    $
    4,295Cash Paid for Taxes
    
    
    32,994
    
    
    
    27,375
  5




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net Income
    
    $
    16,443
    
    
    $
    23,466
    
    
    $
    20,929
    
    
    $
    56,857Other Comprehensive Income (Loss), Net of Tax:Changes related to Hedge Transactions
    
    
    5,352
    
    
    
    (267
    )
    
    
    (1,674
    )
    
    
    (427
    )Comprehensive Income
    
    $
    21,795
    
    
    $
    23,199
    
    
    $
    19,255
    
    
    $
    56,430
  6




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
 1. General
 Hercules 350 Hercules 261 Hercules 262
   Revenue Recognition
  Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Mobilization revenue deferred
    
    $
    4,450
    
    
    $
    
    
    
    $
    8,277
    
    
    $
    Mobilization expense deferred
    
    
    
    
    
    
    
    
    
    
    3,398
    
    
    
    Mobilization revenue recognized
    
    
    4,206
    
    
    
    710
    
    
    
    6,176
    
    
    
    2,465Mobilization expense recognized
    
    
    2,142
    
    
    
    411
    
    
    
    2,956
    
    
    
    1,582
 7




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
   Other Assets
   Other Intangible Assets
   Remainder of 2008
    
    $
    3,5852009
    
    
    4,6582010
    
    
    1,6912011
    
    
    7272012
    
    
    
 Cash and Cash Equivalents and Marketable Securities
   8




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 2. Earnings Per Share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net income
    
    $
    16,443
    
    
    $
    23,466
    
    
    $
    20,929
    
    
    $
    56,857Denominator:Weighted average basic shares
    
    
    88,625
    
    
    
    32,099
    
    
    
    88,742
    
    
    
    32,037Add effect of stock equivalents
    
    
    836
    
    
    
    714
    
    
    
    774
    
    
    
    605Weighted average diluted shares
    
    
    89,461
    
    
    
    32,813
    
    
    
    89,516
    
    
    
    32,642Basic earnings per share
    
    $
    0.19
    
    
    $
    0.73
    
    
    $
    0.24
    
    
    $
    1.77Diluted earnings per share
    
    $
    0.18
    
    
    $
    0.72
    
    
    $
    0.23
    
    
    $
    1.74
  3. Asset Acquisition and Business Combination
 Hercules 350 Hercules 261 Hercules 262
   4. Dispositions
 Hercules 256
  9




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 5. Debt
  June 30, 2008
    
    
    December 31, 2007Term Loan Facility, due July 2013
    
    $
    893,250
    
    
    $
    895,5003.375% Convertible Senior Notes due June 2038
    
    
    250,000
    
    
    
    9.5% Senior Notes, due December 2008
    
    
    10,314
    
    
    
    10,4327.375% Senior Notes, due April 2018
    
    
    3,512
    
    
    
    3,5136.95% Senior Notes, due April 2008
    
    
    
    
    
    
    2,221Foreign Line of Credit
    
    
    1,086
    
    
    
    Total Debt
    
    
    1,158,162
    
    
    
    911,666Less Short-term Debt and Current Portion of Long-term Debt
    
    
    20,400
    
    
    
    21,653Total Long-term Debt, Net of Current Portion
    
    $
    1,137,762
    
    
    $
    890,013
 Senior secured credit agreement
      Senior notes and other debt
    10




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  6. Derivative Instruments and Hedging
    July 1, 2008-September 30, 2008
    
    $
    100,000October 1, 2008-December 30, 2008
    
    
    325,000December 31, 2008-March 31, 2009
    
    
    325,000April 1, 2009-June 30, 2009
    
    
    250,000July 1, 2009-September 30, 2009
    
    
    175,000October 1, 2009-December 30, 2009
    
    
    75,000
  July 1, 2008-September 30, 2008
    
    $
    200,000October 1, 2008-December 31, 2008
    
    
    100,000January 1, 2009-March 31, 2009
    
    
    50,000
 Accounting for Derivative Instruments and Hedging
Activities Accounting for Certain Derivative Instruments and Certain
Hedging Activities (an amendment of FASB Statement No. 133) Amendment of
Statement 133 on Derivative Instruments and Hedging Activities
  June 30,
    
    December 31,2008
    
    2007Fair value included in Other Assets, Net
    
    $
    1,186
    
    
    $
    322Fair value included in Other Liabilities
    
    
    16,250
    
    
    
    12,809Cumulative
unrealized loss, net of tax of $5,272 and $4,371, respectively included in
Accumulated Other Comprehensive Loss
    
    
    (9,791
    )
    
    
    (8,117
    )
 11




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 Recognized Gain (Loss) in
    
    Recognized Gain (Loss) inConsolidated Statements of
    
    Consolidated Statements ofOperations for the Three Months
    
    Operations for the Six MonthsEnded June 30,
    
    Ended June 30,2008
    
    2007
    
    2008
    
    2007Realized Gains (Losses) included in Interest Expense
    
    $
    (3,717
    )
    
    $
    109
    
    
    $
    (4,267
    )
    
    $
    316
  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)
  Quoted Prices inTotal
    
    Active Markets forFair Value
    
    Identical Asset or
    
    Significant Other
    
    SignificantMeasurement
    
    Liability
    
    Observable Inputs
    
    Unobservable Inputs
    
    ValuationJune 30, 2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TechniqueDerivative Assets
    
    $
    1,186
    
    
    $
    
    
    
    $
    1,186
    
    
    $
    
    
    
    
    ADerivative Liabilities
    
    
    16,250
    
    
    
    
    
    
    
    16,250
    
    
    
    
    
    
    
    A
 7. Stock-based Compensation
    12




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
    8. Supplemental Cash Flow Information
  Six Months Ended June 30,2008
    
    2007Decrease in fair value of derivative instruments
    
    $
    1,674
    
    
    $
    427
 9. Income Tax
      13




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  10. Segments
  Domestic Offshore 
 International Offshore
 Inland 
 Domestic Liftboats
 International Liftboats
 Other 
  14




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HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
  Three Months Ended June 30, 2008
    
    
    Six Months Ended June 30, 2008Depreciation
    
    
    
    
    
    
    
    
    
    
    DepreciationIncome (Loss)
    
    
    &
    
    
    
    
    
    
    Income (Loss)
    
    
    &Revenue
    
    
    from Operations
    
    
    Amortization
    
    
    Revenue
    
    
    from Operations
    
    
    AmortizationDomestic Offshore
    
    $
    97,438
    
    
    $
    23,577
    
    
    $
    16,204
    
    
    $
    159,885
    
    
    $
    21,687
    
    
    $
    31,539International Offshore
    
    
    74,187
    
    
    
    27,424
    
    
    
    9,310
    
    
    
    139,530
    
    
    
    61,774
    
    
    
    16,896Inland
    
    
    40,262
    
    
    
    (2,914
    )
    
    
    10,520
    
    
    
    80,530
    
    
    
    (4,854
    )
    
    
    20,180Domestic Liftboats
    
    
    22,269
    
    
    
    2,973
    
    
    
    5,382
    
    
    
    38,213
    
    
    
    (1,578
    )
    
    
    11,334International Liftboats
    
    
    20,305
    
    
    
    6,752
    
    
    
    2,368
    
    
    
    38,596
    
    
    
    14,900
    
    
    
    4,352Other
    
    
    16,369
    
    
    
    2,315
    
    
    
    2,712
    
    
    
    27,462
    
    
    
    1,046
    
    
    
    5,287270,830
    
    
    
    60,127
    
    
    
    46,496
    
    
    
    484,216
    
    
    
    92,975
    
    
    
    89,588Corporate
    
    
    
    
    
    
    (19,413
    )
    
    
    784
    
    
    
    
    
    
    
    (31,674
    )
    
    
    1,318Total Company
    
    $
    270,830
    
    
    $
    40,714
    
    
    $
    47,280
    
    
    $
    484,216
    
    
    $
    61,301
    
    
    $
    90,906
 Three Months Ended June 30, 2007
    
    
    Six Months Ended June 30,2007Depreciation
    
    
    
    
    
    
    
    
    
    
    DepreciationIncome from
    
    
    &
    
    
    
    
    
    
    Income from
    
    
    &Revenue
    
    
    Operations
    
    
    Amortization
    
    
    Revenue
    
    
    Operations
    
    
    AmortizationDomestic Offshore
    
    $
    28,325
    
    
    $
    10,124
    
    
    $
    2,691
    
    
    $
    71,156
    
    
    $
    34,889
    
    
    $
    5,252International Offshore
    
    
    19,640
    
    
    
    9,927
    
    
    
    1,363
    
    
    
    40,516
    
    
    
    21,522
    
    
    
    2,731Inland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Domestic Liftboats
    
    
    37,195
    
    
    
    14,825
    
    
    
    6,192
    
    
    
    69,898
    
    
    
    27,280
    
    
    
    12,262International Liftboats
    
    
    13,884
    
    
    
    3,541
    
    
    
    1,938
    
    
    
    27,938
    
    
    
    8,000
    
    
    
    3,642Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,044
    
    
    
    38,417
    
    
    
    12,184
    
    
    
    209,508
    
    
    
    91,691
    
    
    
    23,887Corporate
    
    
    
    
    
    
    (5,313
    )
    
    
    25
    
    
    
    
    
    
    
    (10,543
    )
    
    
    52Total Company
    
    $
    99,044
    
    
    $
    33,104
    
    
    $
    12,209
    
    
    $
    209,508
    
    
    $
    81,148
    
    
    $
    23,939
 Total AssetsJune 30, 2008
    
    
    December 31, 2007Domestic Offshore
    
    $
    1,663,762
    
    
    $
    1,504,548International Offshore
    
    
    963,842
    
    
    
    681,742Inland
    
    
    660,835
    
    
    
    646,120Domestic Liftboats
    
    
    151,172
    
    
    
    186,568International Liftboats
    
    
    145,326
    
    
    
    149,813Other
    
    
    140,193
    
    
    
    229,979Corporate
    
    
    165,466
    
    
    
    243,769Total Company
    
    $
    3,890,596
    
    
    $
    3,642,539
 15




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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
 Accounting for Contingencies
   Robert E. Aaron et al. vs. Phillips 66 Company et al. Circuit Court, Second Judicial District,
Jones County, Mississippi.
   Insurance
   16




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
    Surety Bonds and Unsecured Letters of Credit
   Insurance Claims
 Hercules 205
 12. Accounting Pronouncements
 Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)
 Disclosures about Derivative Instruments and Hedging
Activities
 17




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##### Table of Contents



HERCULES OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
UNAUDITED
 , Business Combinations Business Combinations Accounting for Costs
Associated with Exit or Disposal Activities Accounting for
Contingencies.
 Fair Value Measurements Effective
Date of FASB Statement No. 157
 , The Fair Value Option for Financial Assets and Financial Liabilities
 18




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  OVERVIEW
     Domestic Offshore
 International Offshore
 Inland
 Domestic Liftboats
 International Liftboats
 Other
   19




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##### Table of Contents



RESULTS OF OPERATIONS
  20




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands)Domestic Offshore:Number of rigs (as of end of period)
    
    
    27
    
    
    
    6
    
    
    
    27
    
    
    
    6Revenues
    
    $
    97,438
    
    
    $
    28,325
    
    
    $
    159,885
    
    
    $
    71,156Operating expenses
    
    
    56,275
    
    
    
    13,899
    
    
    
    104,047
    
    
    
    27,462Depreciation and amortization expense
    
    
    16,204
    
    
    
    2,691
    
    
    
    31,539
    
    
    
    5,252General and administrative expenses
    
    
    1,382
    
    
    
    1,611
    
    
    
    2,612
    
    
    
    3,553Operating income
    
    $
    23,577
    
    
    $
    10,124
    
    
    $
    21,687
    
    
    $
    34,889International Offshore:Number of rigs (as of end of period)
    
    
    12
    
    
    
    3
    
    
    
    12
    
    
    
    3Revenues
    
    $
    74,187
    
    
    $
    19,640
    
    
    $
    139,530
    
    
    $
    40,516Operating expenses
    
    
    37,308
    
    
    
    7,335
    
    
    
    60,100
    
    
    
    14,718Depreciation and amortization expense
    
    
    9,310
    
    
    
    1,363
    
    
    
    16,896
    
    
    
    2,731General and administrative expenses
    
    
    145
    
    
    
    1,015
    
    
    
    760
    
    
    
    1,545Operating income
    
    $
    27,424
    
    
    $
    9,927
    
    
    $
    61,774
    
    
    $
    21,522Inland:Number of barges (as of end of period)
    
    
    27
    
    
    
    
    
    
    
    27
    
    
    
    Revenues
    
    $
    40,262
    
    
    $
    
    
    
    $
    80,530
    
    
    $
    Operating expenses
    
    
    31,306
    
    
    
    
    
    
    
    63,232
    
    
    
    Depreciation and amortization expense
    
    
    10,520
    
    
    
    
    
    
    
    20,180
    
    
    
    General and administrative expenses
    
    
    1,350
    
    
    
    
    
    
    
    1,972
    
    
    
    Operating loss
    
    $
    (2,914
    )
    
    $
    
    
    
    $
    (4,854
    )
    
    $
    Domestic Liftboats:Number of liftboats (as of end of period)
    
    
    45
    
    
    
    47
    
    
    
    45
    
    
    
    47Revenues
    
    $
    22,269
    
    
    $
    37,195
    
    
    $
    38,213
    
    
    $
    69,898Operating expenses
    
    
    13,446
    
    
    
    15,639
    
    
    
    27,340
    
    
    
    29,279Depreciation and amortization expense
    
    
    5,382
    
    
    
    6,192
    
    
    
    11,334
    
    
    
    12,262General and administrative expenses
    
    
    468
    
    
    
    539
    
    
    
    1,117
    
    
    
    1,077Operating income (loss)
    
    $
    2,973
    
    
    $
    14,825
    
    
    $
    (1,578
    )
    
    $
    27,280International Liftboats:Number of liftboats (as of end of period)
    
    
    20
    
    
    
    18
    
    
    
    20
    
    
    
    18Revenues
    
    $
    20,305
    
    
    $
    13,884
    
    
    $
    38,596
    
    
    $
    27,938Operating expenses
    
    
    9,896
    
    
    
    7,523
    
    
    
    17,116
    
    
    
    14,464Depreciation and amortization expense
    
    
    2,368
    
    
    
    1,938
    
    
    
    4,352
    
    
    
    3,642General and administrative expenses
    
    
    1,289
    
    
    
    882
    
    
    
    2,228
    
    
    
    1,832Operating income
    
    $
    6,752
    
    
    $
    3,541
    
    
    $
    14,900
    
    
    $
    8,000
 21




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Other:Revenues
    
    $
    16,369
    
    
    $
    
    
    
    $
    27,462
    
    
    $
    Operating expenses
    
    
    10,639
    
    
    
    
    
    
    
    19,844
    
    
    
    Depreciation and amortization expense
    
    
    2,712
    
    
    
    
    
    
    
    5,287
    
    
    
    General and administrative expenses
    
    
    703
    
    
    
    
    
    
    
    1,285
    
    
    
    Operating income
    
    $
    2,315
    
    
    $
    
    
    
    $
    1,046
    
    
    $
    Total Company:Revenues
    
    $
    270,830
    
    
    $
    99,044
    
    
    $
    484,216
    
    
    $
    209,508Operating expenses
    
    
    158,870
    
    
    
    44,396
    
    
    
    291,679
    
    
    
    85,923Depreciation and amortization expense
    
    
    47,280
    
    
    
    12,209
    
    
    
    90,906
    
    
    
    23,939General and administrative expenses
    
    
    23,966
    
    
    
    9,335
    
    
    
    40,330
    
    
    
    18,498Operating income
    
    
    40,714
    
    
    
    33,104
    
    
    
    61,301
    
    
    
    81,148Interest expense
    
    
    (14,579
    )
    
    
    (1,379
    )
    
    
    (30,539
    )
    
    
    (3,469
    )Loss on early retirement of debt
    
    
    
    
    
    
    (870
    )
    
    
    
    
    
    
    (870
    )Other, net
    
    
    67
    
    
    
    1,246
    
    
    
    2,274
    
    
    
    2,521Income before income taxes
    
    
    26,202
    
    
    
    32,101
    
    
    
    33,036
    
    
    
    79,330Income tax provision
    
    
    (9,759
    )
    
    
    (8,635
    )
    
    
    (12,107
    )
    
    
    (22,473
    )Net income
    
    $
    16,443
    
    
    $
    23,466
    
    
    $
    20,929
    
    
    $
    56,857
  Three Months Ended June 30, 2008AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    Expense perDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    Day (3)Domestic Offshore
    
    
    1,612
    
    
    
    2,024
    
    
    
    79.6
    %
    
    $
    60,445
    
    
    $
    27,804International Offshore
    
    
    642
    
    
    
    732
    
    
    
    87.7
    %
    
    
    115,556
    
    
    
    50,967Inland
    
    
    1,017
    
    
    
    1,486
    
    
    
    68.4
    %
    
    
    39,589
    
    
    
    21,067Domestic Liftboats
    
    
    2,466
    
    
    
    3,871
    
    
    
    63.7
    %
    
    
    9,030
    
    
    
    3,474International Liftboats
    
    
    1,331
    
    
    
    1,590
    
    
    
    83.7
    %
    
    
    15,255
    
    
    
    6,224
 Three Months Ended June 30, 2007AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    ExpenseDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    per Day (3)Domestic Offshore
    
    
    375
    
    
    
    546
    
    
    
    68.7
    %
    
    $
    75,531
    
    
    $
    25,455International Offshore
    
    
    179
    
    
    
    182
    
    
    
    98.4
    %
    
    
    109,719
    
    
    
    40,305Inland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Domestic Liftboats
    
    
    2,980
    
    
    
    4,186
    
    
    
    71.2
    %
    
    
    12,482
    
    
    
    3,736International Liftboats
    
    
    1,252
    
    
    
    1,547
    
    
    
    80.9
    %
    
    
    11,090
    
    
    
    4,862
 22




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##### Table of Contents



Six Months Ended June 30, 2008AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    ExpenseDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    per Day (3)Domestic Offshore
    
    
    2,710
    
    
    
    4,026
    
    
    
    67.3
    %
    
    $
    58,998
    
    
    $
    25,844International Offshore
    
    
    1,296
    
    
    
    1,441
    
    
    
    89.9
    %
    
    
    107,662
    
    
    
    41,707Inland
    
    
    1,955
    
    
    
    3,033
    
    
    
    64.5
    %
    
    
    41,192
    
    
    
    20,848Domestic Liftboats
    
    
    4,066
    
    
    
    8,057
    
    
    
    50.5
    %
    
    
    9,398
    
    
    
    3,393International Liftboats
    
    
    2,548
    
    
    
    3,137
    
    
    
    81.2
    %
    
    
    15,148
    
    
    
    5,456
 Six Months Ended June 30, 2007AverageAverage
    
    OperatingOperating
    
    Available
    
    
    
    
    
    Revenue
    
    ExpenseDays
    
    Days
    
    Utilization (1)
    
    per Day (2)
    
    per Day (3)Domestic Offshore
    
    
    849
    
    
    
    1,086
    
    
    
    78.2
    %
    
    $
    83,812
    
    
    $
    25,287International Offshore
    
    
    359
    
    
    
    362
    
    
    
    99.2
    %
    
    
    112,857
    
    
    
    40,659Inland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Domestic Liftboats
    
    
    5,647
    
    
    
    8,285
    
    
    
    68.2
    %
    
    
    12,378
    
    
    
    3,534International Liftboats
    
    
    2,414
    
    
    
    3,021
    
    
    
    79.9
    %
    
    
    11,573
    
    
    
    4,788
 
 (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 Domestic Offshore revenue
is a total of $0.1 million related to amortization of contract specific capital
expenditures reimbursed by the customer for the three and six months ended June 30, 2007.
There was no such revenue in the three and six months ended June 30, 2008.
Included in International Offshore revenue is a total of $4.2 million and $6.2 million
related to amortization of deferred mobilization revenue and contract specific capital
expenditures reimbursed by the customer for the three and six months ended June 30, 2008,
respectively, and $0.7 million and $2.5 million for the three and six months ended June 30,
2007, respectively.(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 $2.1 million and $3.0 million related to amortization of
deferred mobilization expenses for the three and six months ended June 30, 2008,
respectively, and $0.4 million and $1.6 million for the three and six months ended June 30,
2007, respectively.
 For the Three Months Ended June 30, 2008 and 2007
 Revenues
 Consolidated.
 Domestic Offshore .
 23




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##### Table of Contents



International Offshore .
 Inland.
 Domestic Liftboats.
 International Liftboats.
 Other.
 Operating Expenses
 Consolidated .
 Domestic Offshore .
 International Offshore.
 24




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##### Table of Contents



Inland.
 Domestic Liftboats.
 International Liftboats.
 Other.
 Depreciation and Amortization
  General and Administrative Expenses
  Interest Expense
  Other Income
  Income Tax Provision
  25




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##### Table of Contents



For the Six Months Ended June 30, 2008 and 2007
 Revenues
 Consolidated.
 Domestic Offshore .
 International Offshore .
 Inland.
 Domestic Liftboats.
 International Liftboats.
 Other.
 26




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##### Table of Contents



Operating Expenses
 Consolidated .
 Domestic Offshore .
 International Offshore.
 Inland.
 Domestic Liftboats.
 International Liftboats.
 Other.
 Depreciation and Amortization
  General and Administrative Expenses
  Interest Expense
  Other Income
  27




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##### Table of Contents



Income Tax Provision
  CRITICAL ACCOUNTING POLICIES
   OUTLOOK
 Offshore
       28




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##### Table of Contents



Inland
    Liftboats
    Labor Markets
  29




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Sources and Uses of Cash
  Net Cash Provided by Operating Activities
    
    $
    68.9Net Cash Used in Investing ActivitiesAcquisition of Assets
    
    
    (320.8
    )Additions of Property and Equipment
    
    
    (130.5
    )Deferred Drydocking Expenditures
    
    
    (9.2
    )Sale of Marketable Securities
    
    
    39.3Insurance Proceeds Received
    
    
    25.3Proceeds from Sale of Assets, Net
    
    
    12.7Total
    
    
    (383.2
    )Net Cash Provided by (Used in) Financing ActivitiesShort-term Debt Borrowings (Repayments), Net
    
    
    1.1Long-term Debt Borrowings
    
    
    350.0Long-term Debt Repayments
    
    
    (104.5
    )Share Repurchases
    
    
    (49.2
    )Proceeds from Exercise of Stock Options
    
    
    5.1Excess Tax Benefit from Stock-Based Arrangements
    
    
    5.4Payment of Debt Issuance Costs
    
    
    (8.0
    )Total
    
    
    199.9Net Decrease in Cash and Cash Equivalents
    
    $
    (114.4
    )
  Sources of Liquidity and Financing Arrangements
   30




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##### Table of Contents



Cash Requirements and Contractual Obligations
 Asset Acquisition
  Debt
       31




---



##### Table of Contents



Capital Expenditures
 Hercules 208 Hercules 261 Hercules 262
     Contractual Obligations
   32




---



##### Table of Contents



Off-Balance Sheet Arrangements
 Guarantees
  Letters of Credit and Surety Bonds
  Accounting Pronouncements
  33




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
  
    
    our ability to enter into new contracts for our rigs and liftboats and future
utilization rates for the units;
    
    the correlation between demand for our rigs and our liftboats and our earnings and
customers expectations of energy prices;
    
    future capital expenditures and refurbishment, repair and upgrade costs;
    
    expected completion times for our refurbishment and upgrade projects;
    
    sufficiency of funds for required capital expenditures, working capital and debt
service;
    
    our plans regarding increased international operations;
    
    expected useful lives of our rigs and liftboats;
    
    liabilities under laws and regulations protecting the environment;
    
    expected outcomes of litigation, claims and disputes and their expected effects on our
financial condition and results of operations;
    
    expectations regarding improvements in offshore drilling activity and dayrates,
continuation of current market conditions, demand for our rigs and liftboats, operating
revenues, operating and maintenance expense, insurance expense and deductibles, interest
expense, debt levels and other matters with regard to outlook.
  
    
    oil and natural gas prices and industry expectations about future prices;
    
    demand for offshore jackup 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 and other oil and natural gas producing regions, or further acts of terrorism
in the United States, or elsewhere;
    
    the impact of governmental laws and regulations;
    
    the adequacy of sources of 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;
    
    labor relations and work stoppages, particularly in the West African labor environments;
 34




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##### Table of Contents




    
    operating hazards such as severe weather and seas, fires, cratering, blowouts, war,
terrorism and cancellation or unavailability of insurance 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
     Interest Rate Swaps and Derivatives
 Liquidity and Capital Resources
 35




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##### Table of Contents



July 1, 2008-September 30, 2008
    
    $
    200,000October 1, 2008-December 31, 2008
    
    
    100,000January 1, 2009-March 31, 2009
    
    
    50,000
  July 1, 2008-September 30, 2008
    
    $
    100,000October 1, 2008-December 30, 2008
    
    
    325,000December 31, 2008-March 31, 2009
    
    
    325,000April 1, 2009-June 30, 2009
    
    
    250,000July 1, 2009-September 30, 2009
    
    
    175,000October 1, 2009-December 30, 2009
    
    
    75,000
 
 ITEM 4. CONTROLS AND PROCEDURES
    
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  36




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##### Table of Contents



ITEM 1A. RISK FACTORS
  The offshore service industry is highly cyclical, and certain of our contracts, primarily in the
U.S. Gulf of Mexico, are short-term contracts. The volatility of the industry, coupled with our
short-term contracts, could result in sharp declines in our profitability.
  A significant portion of our business is conducted in the shallow-water U.S. Gulf of Mexico. The
mature nature of this region could result in less drilling activity in the area, thereby reducing
demand for our services.
  Acquisitions are an important component of our business strategy. Our acquisition strategy may be
unsuccessful if we are unable to identify and complete future acquisitions, fail to successfully
integrate acquired assets or businesses we acquire, are unable to obtain financing for acquisitions
on acceptable terms or incorrectly predict operating results.
   
    
    the risk of incorrect assumptions regarding the future results of acquired operations or
assets or expected cost reductions or other synergies expected to be realized as a result
of acquiring operations or assets;
    
    the risk of failing to integrate the operations or management of any acquired operations
or assets successfully and timely; and
    
    the risk of diversion of managements attention from existing operations or other
priorities.
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Our international operations are subject to additional political, economic, and other uncertainties
not generally associated with domestic operations.
  
    
    political, social and economic instability, war and acts of terrorism;
    
    potential seizure, expropriation or nationalization of assets;
    
    damage to our equipment or violence directed at our employees, including kidnappings;
    
    piracy;
    
    increased operating costs;
    
    complications associated with repairing and replacing equipment in remote locations;
    
    repudiation, modification or renegotiation of contracts;
    
    limitations on insurance coverage, such as war risk coverage in certain areas;
    
    import-export quotas;
    
    confiscatory taxation;
    
    work stoppages or strikes, particularly in the Nigerian and Mexican labor environment;
    
    unexpected changes in regulatory requirements;
    
    wage and price controls;
    
    imposition of trade barriers;
    
    imposition or changes in enforcement of local content laws;
    
    restrictions on currency or capital repatriations;
    
    currency fluctuations and devaluations; and
    
    other forms of government regulation and economic conditions that are beyond our
control.
     Upgrade, refurbishment and repair projects are subject to risks, including delays and cost
overruns, which could have an adverse impact on our available cash resources and results of
operations.
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Hercules 208 Hercules 261 Hercules 262
  
    
    unexpectedly long delivery times for, or shortages of, key equipment, parts and
materials;
    
    shortages of skilled labor and other shipyard personnel necessary to perform the work;
    
    unforeseen increases in the cost of equipment, labor and raw materials, particularly
steel;
    
    unforeseen design and engineering problems;
    
    unanticipated actual or purported change orders;
    
    work stoppages;
    
    latent damages or deterioration to hull, equipment and machinery in excess of
engineering estimates and assumptions;
    
    failure or delay of third-party service providers and labor disputes;
    
    disputes with shipyards and suppliers;
    
    delays and unexpected costs of incorporating parts and materials needed for the
completion of projects;
    
    failure or delay in obtaining acceptance of the rig from our customer;
    
    financial or other difficulties at shipyards;
    
    adverse weather conditions; and
    
    inability to obtain required permits or approvals.
  TODCOs tax sharing agreement with Transocean may require continuing substantial payments.
   Our debt could adversely affect our ability to operate our business and make it difficult to meet
our debt service obligations.
  
    
    we may not be able to obtain necessary financing in the future for working capital,
capital expenditures, acquisitions, debt service requirements or other purposes;
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
    
    we may be exposed to risks inherent in interest rate fluctuations because our
borrowings generally are at variable rates of interest, which would result in higher
interest expense to the extent we have not hedged such risk in the event of increases in
interest rates; and
    
    we could be more vulnerable in the event of a downturn in our business that would
leave us less able to take advantage of significant business opportunities and to react
to changes in our business and in market or industry conditions.
  We are a holding company, and we are dependent upon cash flow from subsidiaries to meet our
obligations.
   We limit foreign ownership of our company, which may restrict investment in our common stock and
could reduce the price of our common stock.
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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Numberof Shares
    
    
    Average PricePeriod
    
    Purchased (1)
    
    
    Share Paid perApril 1  30, 2008
    
    
    662
    
    
    $
    27.57May 1  31, 2008
    
    
    265
    
    
    
    35.75June 1  30, 2008
    
    
    
    
    
    
    Total
    
    
    927
    
    
    
    29.91
 
 (1)
    
    Represents the surrender of shares of 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.  Total Number of
    
    
    Maximum Number ofTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares That May Yet Beof Shares
    
    
    Average Price
    
    
    Part of a Publicly
    
    
    Purchased UnderPeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Announced Plan (2)
    
    
    Plan (2)April 1  30, 2008
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/AMay 1  31, 2008
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune 1  30, 2008
    
    
    1,450,000
    
    
    
    33.95
    
    
    
    1,450,000
    
    
    
    Total
    
    
    1,450,000
    
    
    
    33.95
    
    
    
    1,450,000
    
    
    
    
 
 (2)
    
    As announced on May 28, 2008, concurrently with the offering of the 3.375% Convertible
Senior Notes, we repurchased shares of our outstanding common stock in privately negotiated
transactions as approved by our Board of Directors who authorized the repurchase of up to
$50 million of our common stock. We do not intend to make further purchases pursuant to
this board authorization. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Name
    
    For
    
    WithheldJohn T. Reynolds
    
    
    76,168,768
    
    
    
    250,598F. Gardner Parker
    
    
    71,596,824
    
    
    
    4,822,542
   For
    
    
    60,165,885Against
    
    
    1,042,346Abstain
    
    
    156,946Broker Non-Vote
    
    
    15,054,193
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##### Table of Contents



For
    
    
    75,728,421Against
    
    
    140,187Abstain
    
    
    550,646Broker Non-Vote
    
    
    116
 42




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##### Table of Contents



For
    
    
    51,746,876Against
    
    
    24,274,674Abstain
    
    
    397,696Broker Non-Vote
    
    
    124
 
 ITEM 6. EXHIBITS
 4.1
    
    Indenture, dates as of June 3, 2008, by and between the Company and the Trustee (incorporated
by reference to Exhibit 4.1 to Hercules Current Report on Form 8-K dated June 3, 2008 (File
No.-0-51582)).4.2
    
    Form of Note (included in Exhibit 4.1).10.1
    
    Purchase Agreement, dated May 28, 2008, by and between the Company and Goldman, Sachs & Co.,
Banc of America Securities LLC and UBS Securities LLC, as representatives of the Initial
Purchasers (incorporated by reference to Exhibit 10.1 to Hercules Current Report on Form 8-K
dated June 3, 2008 (File No.-0-51582)).10.2
    
    Separation Agreement dated as of June 20, 2008, between Hercules Offshore, Inc. and Randall
D. Stilley (incorporated by reference to Exhibit 10.1 to Hercules Current Report on Form 8-K
dated June 23, 2008 (File No.-0-51582)).10.3
    
    Executive Employment Agreement dated as of June 20, 2008, between Hercules Offshore, Inc. and
John T. Rynd (incorporated by reference to Exhibit 10.2 to Hercules Current Report on Form
8-K dated June 23, 2008 (File No.-0-51582)).10.4*
    
    First Amendment to
Hercules Offshore Inc. Amended and Restated 2004 Long-Term Incentive Plan.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 43




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##### Table of Contents



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. RyndPresident and Chief Executive Officer(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)
  44




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##### Table of Contents



Exhibit Index
 4.1
    
    Indenture, dates as of June 3, 2008, by and between the Company and the Trustee (incorporated
by reference to Exhibit 4.1 to Hercules Current Report on Form 8-K dated June 3, 2008 (File
No.-0-51582)).4.2
    
    Form of Note (included in Exhibit 4.1).10.1
    
    Purchase Agreement, dated May 28, 2008, by and between the Company and Goldman, Sachs & Co.,
Banc of America Securities LLC and UBS Securities LLC, as representatives of the Initial
Purchasers (incorporated by reference to Exhibit 10.1 to Hercules Current Report on Form 8-K
dated June 3, 2008 (File No.-0-51582)).10.2
    
    Separation Agreement dated as of June 20, 2008, between Hercules Offshore, Inc. and Randall
D. Stilley (incorporated by reference to Exhibit 10.1 to Hercules Current Report on Form 8-K
dated June 23, 2008 (File No.-0-51582)).10.3
    
    Executive Employment Agreement dated as of June 20, 2008, between Hercules Offshore, Inc. and
John T. Rynd (incorporated by reference to Exhibit 10.2 to Hercules Current Report on Form
8-K dated June 23, 2008 (File No.-0-51582)).10.4*
    
    First Amendment to
Hercules Offshore Inc. Amended and Restated 2004 Long-Term Incentive Plan.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