Hercules Offshore Announces Third Quarter 2007 Earnings (3)

    
                       HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In thousands)
                                    (Unaudited)
    
                                              Nine Months Ended September 30,
                                                   2007              2006
    
    Cash Flows from Operating Activities:
      Net Income                                  $105,228           $83,524
      Adjustments to Reconcile Net Income to Net
       Cash Provided by Operating Activities:
        Depreciation and Amortization               63,520            22,582
        Stock-based Compensation Expense             6,157             2,277
        Deferred Income Taxes                       25,986            27,652
        Amortization of Deferred Financing Fees      1,046               506
        Excess Tax Benefit from Stock-based
         Arrangements                               (1,612)              -
        Loss on Early Retirement of Debt             2,182               -
        Gain on Disposal of Assets                  (1,641)          (30,779)
        (Increase) Decrease in Operating Assets -
            Accounts Receivable                     15,169           (28,392)
            Insurance Claims Receivable             (9,026)           (7,913)
            Tax Sharing Agreement Payment         (118,247)              -
            Prepaid Expenses and Other               2,869           (23,673)
        Increase (Decrease) in Operating
         Liabilities -
            Accounts Payable                       (11,253)           16,420
            Insurance Note Payable                 (12,052)            9,629
            Other Current Liabilities                5,492            12,335
            Other Liabilities                          834               526
        Net Cash Provided by Operating Activities   74,652            84,694
    
    Cash Flows from Investing Activities:
      Acquisition of Business, Net of
       Cash Acquired                              (733,763)              -
      Investment in Marketable Securities         (128,525)              -
      Proceeds from Sale of Marketable Securities  108,675               -
      Additions of Property and Equipment          (97,521)         (143,282)
      Deferred Drydocking Expenditures             (14,680)           (8,967)
      Insurance Proceeds Received                    3,850            50,090
      Proceeds from Sale of Assets, Net              2,211             5,989
      (Increase) Decrease in Restricted Cash           229              (250)
            Net Cash Used in Investing      
             Activities                           (859,524)          (96,420)
    
    Cash Flows from Financing Activities:
      Long-term Debt Borrowings                    900,000               -
      Payment of Debt                              (93,715)           (1,050)
      Proceeds from Issuance of Common Stock           -              54,198
      Proceeds from Exercise of Stock Options        2,054               340
      Excess Tax Benefit from Stock-based
       Arrangements                                  1,612               -
      Payment of Debt Issuance Costs               (17,753)             (639)
      Distributions to Members                         -              (3,732)
      Other                                            (46)              -
            Net Cash Provided by
             Financing Activities                  792,152            49,117
    
    Net Increase in Cash and Cash Equivalents        7,280            37,391
    Cash and Cash Equivalents at        
     Beginning of Period                            72,772            47,575
    Cash and Cash Equivalents at End of Period     $80,052           $84,966

    
                   HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                    SELECTED FINANCIAL AND OPERATING DATA
                (Dollars in thousands, except per day amounts)
                                 (Unaudited)

                            Three Months Ended        Nine Months Ended
                               September 30,             September 30,
                            2007         2006         2007         2006
    
    Domestic Offshore:
      Number of rigs (as of  
       end of period)           27            6           27            6
      Revenues             $99,588      $46,415     $170,744     $111,703
      Operating expenses,  
       excluding
       depreciation and
       amortization         47,292       14,280       74,754       37,606  
      Depreciation and  
       amortization  
       expense              13,962        2,538       19,214        6,279
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization      1,663        1,846        5,216        5,219  
      Operating income     $36,671      $27,751      $71,560      $62,599  
    
    International Offshore:
      Number of rigs (as of  
       end of period)           10            3           10            3  
      Revenues             $50,498       $7,883      $91,014      $12,159  
      Operating expenses,  
       excluding
       depreciation and
       amortization         22,888        4,047       37,606        5,650  
      Depreciation and  
       amortization  
       expense               5,800          935        8,531        1,186  
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization        122          442        1,667          949  
      Operating income     $21,688       $2,459      $43,210       $4,374  
    
    Inland:
      Number of barges
       (as of end of
           period)              27          -             27          -
      Revenues             $53,638         $-        $53,638         $-    
      Operating expenses,  
       excluding
       depreciation and
       amortization         26,546          -         26,546          -    
      Depreciation and  
       amortization  
       expense               6,950          -          6,950          -    
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization        533          -            533          -    
      Operating income     $19,609         $-        $19,609         $-    
    
    Domestic Liftboats:
      Number of liftboats  
       (as of end of
           period)              47           47           47           47  
      Revenues             $35,677      $40,082     $105,575      $95,842  
      Operating expenses,  
       excluding
       depreciation  
       and amortization     16,321       13,339       45,600       33,389  
      Depreciation and  
       amortization  
       expense               6,354        5,171       18,616       14,059  
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization        545          618        1,622        1,780  
      Operating income     $12,457      $20,954      $39,737      $46,614  

    
                   HERCULES OFFSHORE, INC. AND SUBSIDIARIES
             SELECTED FINANCIAL AND OPERATING DATA - (Continued)
                (Dollars in thousands, except per day amounts)
                                 (Unaudited)

                            Three Months Ended         Nine Months Ended
                               September 30,             September 30,
                            2007          2006         2007         2006

    International Liftboats:
      Number of liftboats  
       (as of end of
        period)                 18            4           18            4  
      Revenues             $18,090       $2,832      $46,028       $9,938  
      Operating expenses,  
       excluding
       depreciation  
       and amortization      8,581        1,531       23,045        4,748  
      Depreciation and  
       amortization  
       expense               1,843          426        5,485          979  
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization      1,011          721        2,843        2,075  
      Operating income      $6,655         $154      $14,655       $2,136  
    
    Other:
      Revenues             $36,874         $-        $36,874         $-
      Operating expenses,  
       excluding
       depreciation  
       and amortization     22,274          -         22,274          -
      Depreciation and  
       amortization  
       expense               4,400          -          4,400          -
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization        577          -            577          -
      Operating income      $9,623         $-         $9,623         $-
    
    Total Company:
      Revenues            $294,365      $97,212     $503,873     $229,642  
      Operating expenses,  
       excluding
       depreciation  
       and amortization    143,902       33,197      229,825       81,393  
      Depreciation and  
       amortization  
       expense              39,581        9,097       63,520       22,582  
      General and  
       administrative
       expenses, excluding
       depreciation  
       and amortization     18,018        7,209       36,516       20,396  
      Operating income      92,864       47,709      174,012      105,271  
        Interest expense   (15,761)      (2,575)     (19,230)      (6,824)
        Gain on disposal  
         of asset              -          1,110          -         30,690  
        Loss on early  
         retirement  
         of debt            (1,312)         -         (2,182)         -
        Other income         2,507          874        5,028        2,697  
      Income before  
       income taxes         78,298       47,118      157,628      131,834  
        Income tax  
         provision         (29,927)     (17,439)     (52,400)     (48,310)
      Net income           $48,371      $29,679     $105,228      $83,524

(CONTINUA)