 March
19, 2007 Hercules Offshore Acquisition of TODCO Filed by Hercules Offshore, Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 Subject Company: Hercules Offshore, Inc. Commission File No.: 0-51582 |
 1 Forward-looking Statements This presentation will contain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
statements, which include any statement that does not relate strictly to historical facts, use terms such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “position,” “predict,” “project,” or “strategy” or the negative connotation or other variations of such terms or other similar terminology. In particular, statements, express or
implied, regarding future results of operations or ability to generate
revenues, income or cash flow or to make acquisitions are forward-looking statements. These forward-looking statements are based on
management’s current plans, expectations, estimates, assumptions and
beliefs concerning future events impacting Hercules Offshore, Inc.
(“Hercules”) and therefore involve a number of risks and uncertainties, many of which are beyond management’s control. These risks and uncertainties are further
described in Hercules’ annual report on Form 10-K and its most
recent periodic reports and other documents filed with the Securities and Exchange Commission which are available free of charge at the SEC’s
website at www.sec.gov or the company’s website at www.herculesoffshore.com. The
forward-looking statements involve risks and uncertainties that affect Hercules’ operations and financial performance. All forward-looking statements attributable to Hercules’ representatives are expressly qualified in their entirety by this cautionary statement.
|
       2 A Winning Combination A Gulf of Mexico leader. . . with global reach A Leader in Liftboats A Leader in Barge Drilling A New Leader in Jackup Drilling |
 3 Management Representatives Representatives Randall Stilley Chief Executive Officer and President John Rynd Senior Vice President Lisa Rodriguez Senior Vice President and Chief Financial Officer David Crowley Senior Vice President of Operations (TODCO) Stephen Butz Vice President and Treasurer |
 4 Transaction Highlights Consideration to TODCO shareholders Average per share – 0.979 Hercules shares – $16.00 per share in cash Cash or stock election feature (subject to proration) Acquisition funded with existing cash on hand and a senior secured term loan facility Closing expected mid-2007 – Subject to: – HSR approval – Hercules and TODCO shareholder votes Post-transaction Board of Directors to include seven Hercules and three TODCO nominees |
 5 Creates Shareholder Value in Near and Long-term Accretive to earnings and cash flow per share Opportunity to enhance future returns with lower cost of capital Potential for multiple expansion due to size and growth prospects Pro forma 2006 revenue and EBITDA of $1.3 billion and $551 million, respectively Revenue (1) ($mm) EBITDA (1) ($mm) (1) PF Hero represents Hercules plus TODCO financials per 2006 10K filings, no accounting
adjustments have been made. $344 $1,256 0.0 500.0 1,000.0 1,500.0 HERO PF HERO $190 $551 0.0 250.0 500.0 750.0 HERO PF HERO |
 6 Acquisition-related debt allows Hercules to optimize its capital structure
Enhanced credit quality due to increased scale and scope Term loan provides flexibility for rapid de-leveraging with significant expected free cash flow Successful track record of de-leveraging following acquisitions Pro Forma Capital Structure as of 12/31/06 Total Debt/Total Capitalization Total Debt as a Multiple of LTM EBITDA 2.0x 2.0x 1.8x 1.7x 1.0x 0.8x 0.6x 0.5x 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x PF HERO RIG PDE SPN RDC DO NE GSF 50% 37% 35% 33% 29% 23% 18% 12% 0.0% 20.0% 40.0% 60.0% SPN PF HERO PDE RIG DO RDC NE GSF |
 7 Summary of Strategic Rationale Enhances position in Gulf of Mexico and increases operational flexibility Provides asset and geographic diversity Expands international footprint for future growth Creates larger, more diverse jackup fleet Timely combination in a fragmented jackup market Combines leaders in barge drilling and liftboats Potential to realize meaningful synergies – Economies of scale – Procurement of materials, insurance, employee benefits – Operational synergies and redundant public company expenses |
 8 Provides Asset Diversity 2006 Revenue Segmentation Analysis Pre-Transaction $344 MM Post-Transaction $1,256 MM GOM Contract Drilling 47% International Liftboats 6% Domestic Liftboats 39% International Contract Drilling 9% Domestic Liftboats 11% International Contract Drilling 17% Inland Barge Drilling 19% International Liftboats 2% GOM Contract Drilling 46% Delta Towing 6% |
 9 2006 Geographic Revenue Analysis Provides Geographic Diversity Pre-Transaction $344 MM Post-Transaction $1,256 MM We expect international contribution to represent a greater portion of our revenues in the future US GOM 86% West Africa 6% India / Middle East 9% India 1% West Africa 2% Latin America 14% Inland US 25% US GOM 56% Middle East 1% |
 10 A Global Footprint with Significant Expansion Potential Mexico Jackup Rigs 2 Platform Rig 1 West Africa Jackup Rig 1 Liftboats 17 Middle East Jackup Rig 1 Malaysia (1) Jackup Rig 1 U.S. Gulf Coast Inland Barges 27 Land Rigs (TX) 2 Trinidad Jackup Rig 1 Land Rig 1 (1) Pro forma for TODCO’s announced THE 208 relocation. (2) Includes Hercules Rig 26, marketing internationally. Brazil Jackup Rig 1 Venezuela Land Rigs 6 U.S. Gulf of Mexico Jackup Rigs 25 Submersible 3 Liftboats 47 India Jackup Rig 1 Global Summary Liftboats 64 Jackup Rigs 33 Inland Barges 27 Land Rigs 9 Submersible 3 Platform Rigs 1 (2) |
 11 Fourth Largest Global Jackup Fleet Current Global Jackup Landscape Current Gulf of Mexico Jackup Landscape (1) Source: ODS-Petrodata (1) Excludes rigs that have announced mobilization out of the GOM, including Hercules Rig
26 43 42 40 33 27 25 24 20 16 13 11 10 9 0 5 10 15 20 25 30 35 40 45 ESV GSF NE PF HERO PDE RIG THE RDC NBR DO COSL Nat'lHERO Drilling 24 18 14 12 9 7 6 4 3 3 0 5 10 15 20 25 PF HERO THE ESV PDE NBR RDC HERO DO Blake GSF |
 12 A Leading Player in US Gulf Coast Inland Barges Source: Company estimates based on public information. 27 13 4 2 2 1 0 5 10 15 20 25 30 HERO PKD Axxis Tetra Coastal NBR |
 13 A Leading Provider of Liftboat Services Current Gulf of Mexico Liftboat Landscape Current West Africa Liftboat Landscape Source: Company estimates based on public information. (1) Denotes cold-stacked or abandoned vessels. 47 27 15 6 6 4 3 3 2 1 0 10 20 30 40 50 HERO SPN Aries Montco OL Laredo AMC OMC Seahorse CS Liftboats 17 3 2 1 1 0 5 10 15 20 HERO Zumax (1) Zukus (1) NV De Brandt Shoreline |
 14 August 2005 Acquired the Whale Shark liftboat from CS Liftboats June 2005 Acquired Rig 16 from Transocean and 17 liftboats from Superior Energy October 2004 Acquired 22 liftboats from Global Industries August 2004 Acquired five jackup rigs from Parker Drilling Successful integration of 12 asset acquisitions since formation – Integrated several large fleets, operations and employees Opportunistic acquisition strategy Focus on return on capital employed Successful Acquisition Track Record February 2006 Acquired Rig 26 from Aries Offshore Partners Ltd. November 2005 Acquired seven liftboats from Danos & Curole September 2005 Acquired Rig 31 from Hydrocarbon Capital II LLC June 2006 Acquired six liftboats from Laborde Marine Lifts November 2006 Acquired eight liftboats and assumed rights to operate five additional liftboats from Halliburton January 2005 Acquired Rig 25 from Parker Drilling and Rig 30 from Porterhouse Offshore, L.P. |
 15 Stated Key Objectives – Past, Present, and Future Grow the Company – Merger expedites growth initiative – Utilize critical mass and financial strength to enhance future growth Quickly integrate and deploy newly acquired assets – Identify and implement operational best practices – Past successes of effectively integrating acquisitions Maintain Financial Discipline – Pro forma debt level of 2.0x LTM EBITDA is within industry range – Use significant free cash to de-lever Diversify asset base and geographic footprint – Leverage combined operational and management depth to continue and accelerate international expansion |
 Business Outlook
|
 17 0 50 100 150 200 250 300 $- $25 $50 $75 $100 $125 0 50 100 150 200 250 300 350 400 450 500 $- $25 $50 $75 $100 $125 $150 $175 $200 Source: ODS-Petrodata. West Africa dayrates are used to approximate average market rates for worldwide jackup
rigs. Solid Backlog of Work Globally Business visibility has increased substantially over the past six years, but has
weakened considerably in the US Gulf of Mexico over the last several months
Current Worldwide Jackup Backlog Current GOM Jackup Backlog Jan 1999 187 Days Feb 2007 459 Days West Africa 300’ IC 200’ MC Jackups in GOM Jan 2004 32 Days Feb 2007 134 Days |
 18 Inland Barge Update Largest operator in US Gulf Coast – 72 total barges of which 23 are workover only – Of 49 drilling barges, TODCO owns 27, Parker owns 14 (84% of supply) TODCO holds excess supply with 17 operating and 10 cold stacked Latest Contracted Dayrates Rigs Avg High - Conventional <2000hp 1 $30,800 $30,800 – Conventional 2000hp 2 32,500 35,300 – Conventional 3000hp 3 45,800 60,500 – Posted 2000hp 3 56,900 65,300 – Posted 3000hp 8 46,400 62,100 17 $45,600 $57,400 (1) TODCO fleet as of February 28, 2007 (1) Marketed |
 19 Liftboat Update Weather causing seasonal decline in utilization in the GOM – Liftboats cannot mobilize in seas greater than 5 ft. – As much as 15% of the fleet was waiting on weather at various times during January and February, but utilization improving in March Return to more typical seasonality – During 2006 demand was extremely robust given the hurricane repair work and operators were willing to pay for liftboats while waiting out the weather GOM Dayrate outlook stable – Dayrates likely to remain flat into the first part of 2007 West Africa remains strong – Increased spot market prices by 30% during December – May mobilize additional vessels into West Africa |
 20 Conclusions Enhances position in Gulf of Mexico and increases operational flexibility Provides asset and geographic diversity Expands international footprint for future growth Timely combination in a fragmented jackup market Combines leaders in barge drilling and liftboats Accretive to earnings and cash flow per share Use significant free cash flow to de-lever |
 Appendix A Introduction to Hercules Offshore Inc. |
 22 Hercules Offshore Overview Unique business mix within the oil services industry Tremendous growth since inception in late 2004 Experienced management team Proven track record of maximizing return on capital Note: See Explanatory Information slide. Division Adjusted EBITDA does not
include corporate G&A and other income/expense. Quarterly Revenue Quarterly Adjusted EBITDA ($ in millions) ($ in millions) $9.2 $10.8 $13.9 $24.0 $29.1 $33.7 $42.9 $47.3 $24.9 $26.3 $28.2 $24.0 $27.0 $42.6 $54.3 $67.4 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 Liftboats Drilling $4.2 $4.6 $5.8 $11.7 $16.8 $20.7 $26.7 $24.5 $12.5 $12.6 $13.8 $11.3 $14.1 $26.8 $33.7 $44.0 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 Liftboats Drilling |
 23 The Global Leader in Liftboats 64 vessels worldwide – Hercules operates the largest liftboat fleet in the GOM with 47 vessels – Largest liftboat fleet in West Africa with 17 vessels Acquired Halliburton’s Nigerian-based West African liftboat fleet – 13 liftboats, 120 employees – Multi-year alliance with Halliburton – Retained personnel – Improved day-rates – Leveraging shore-base for expansion outside Nigeria Targeting emerging opportunities in Middle East Utilization tends to be more stable and dayrates tend to be more predictable than that of jackups, given their use throughout the life of a well
|
 24 Hercules’ Liftboat Fleet Starfish Class 140’ Liftboat Swordfish Class 200’ Liftboat (1) Within the liftboat industry, the terms leg-length and liftboat class are used
interchangeably. Note: Utilization is defined as the total number of operating days in the period as a percentage of the total number of calendar days in the period our liftboats were actively marketed. Dayrates include reimbursements from
customers under relevant contracts. 67% Leg - Length / YTD Liftboat Class (1) Number of Feb-06 Feb-07 Y-o-Y 2007 (Feet) Vessels Dayrate Dayrate % Change Utilization Gulf of Mexico 260' 1 $28,231 $34,652 23% 100% 230' 3 $21,191 28,569 35% 23% 190-215' 6 15,779 22,051 40% 81% 170' 2 NA NA NA 3% 140-150' 6 8,628 10,539 22% 87% 120-130' 14 7,111 8,435 19% 63% 105' 15 5,481 6,992 28% 60% Domestic Total 47 $9,334 $12,292 32% 63% West Africa All Vessels 17 $10,004 $11,733 17% 78% |
 25 Hercules Contract Drilling Segment Overview Hercules owns a fleet of nine jackup rigs – Six operating in the U.S. GOM – One operating in Qatar – One operating in India – One currently in a shipyard being upgraded to a 250’IC for international
operations (available early Q3’07) Specialized design features of three of Hercules’ jackup rigs contribute to high utilization of the Company’s fleet |
 26 Hercules Drilling Fleet Status Upgrading to 250’IC FY 2006 FY 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Current Customer Rig 11 $61,914 $64,871 $65,976 Bois d’Arc Rig 15 $52,692 $78,540 $95,487 Energy XXI Rig 20 $73,499 $84,886 $100,781 Chevron Rig 21 $79,925 $82,443 Chevron Rig 22 $67,826 $83,899 $82,497 Helis Rig 30 $69,162 $67,933 $71,443 Rig 16 Rig 26 Cairn Rig 31 Average Dayrate $69,534 $76,129 $81,283 Note: 2006 dayrates are based on actual results. Subsequent quarters represent
estimates based on current backlog. Contracted Available Shipyard $66,029 $96,354 $115,008 $83,853 $85,226 $83,784 Through May 2008 @ $69-70,000 $84-86,000 $79-81,000 $79-81,000 $69-70,000 $85-87,000 $117,383 $140,000 $139K-141K $69,860 $64-66,000 $69,461 $89,386 Energy XXI Occidental International US Gulf of Mexico $84-86,000 $74-76,000 TBD |
 Appendix B Combined Fleet Details |
 28 Combined Jackup Fleet Under Contract West Africa ILC 150 THE 185 Under Contract Trinidad MC 100 THE 110 Reactivating Mobilizing to SE Asia MC 200 THE 208 Under Contract Middle East ILC 170 Rig 16 Under Contract Mexico MC 200 THE 206 Shipyard Mexico MC 200 THE 205 Under Contract India MS 250 Rig 31 Under Contract Brazil ILC 150 THE 156 Under Contract US GOM MS 250 THE 251 Cold Stacked US GOM MS 250 THE 256 Cold Stacked US GOM MS 250 THE 255 Cold Stacked US GOM MS 250 THE 254 Under Contract US GOM MS 250 THE 253 Under Contract US GOM MS 250 THE 252 Under Contract US GOM MS 250 THE 250 Under Contract US GOM MS 250 Rig 30 Under Contract US GOM MC 200 THE 207 Under Contract US GOM MC 200 THE 204 Under Contract US GOM MC 200 THE 203 Under Contract US GOM MC 200 THE 202 Shipyard US GOM MC 200 THE 201 Under Contract US GOM MC 200 THE 200 Under Contract US GOM MC 200 Rig 11 Under Contract US GOM MC 173 Rig 22 Idle US GOM MC 150 THE 153 Under Contract US GOM MC 150 THE 152 Under Contract US GOM MC 120 Rig 21 Under Contract US GOM MC 100 Rig 20 Shipyard US GOM ILC 250 Rig 26 Cold Stacked US GOM ILC 160 THE 191 Cold Stacked US GOM ILC 150 THE 155 Under Contract US GOM ILC 150 THE 150 Under Contract US GOM ILS 85 Rig 15 Status as of 2/28/07 Region of Operation Vessel Class Asset Name |
 29 Inland Barge Fleet Under Contract 30,000 Posted 3,000 HP Rig 64 Cold Stacked 30,000 Posted 3,000 HP Rig 61 Under Contract 30,000 Posted 3,000 HP Rig 55 Under Contract 30,000 Posted 3,000 HP Rig 49 Under Contract 30,000 Posted 3,000 HP Rig 48 Cold Stacked 30,000 Posted 3,000 HP Rig 47 Under Contract 30,000 Posted 3,000 HP Rig 46 Under Contract 30,000 Posted 3,000 HP Rig 41 Under Contract 30,000 Posted 3,000 HP Rig 27 Under Contract 30,000 Posted 3,000 HP Rig 17 Under Contract 25,000 Posted 3,000 HP Rig 57 Under Contract 25,000 Posted 2,000 HP Rig 52 Cold Stacked 25,000 Posted 2,000 HP Rig 10 Under Contract 25,000 Posted 2,000 HP Rig 09 Cold Stacked 25,000 Posted 2,000 HP Rig 07 Cold Stacked 30,000 Conventional 2,000 HP Rig 32 Cold Stacked 30,000 Conventional 3,000 HP Rig 31 Cold Stacked 30,000 Conventional 3,000 HP Rig 30 Under Contract 30,000 Conventional 3,000 HP Rig 29 Under Contract 30,000 Conventional 3,000 HP Rig 28 Under Contract 30,000 Conventional 3,000 HP Rig 11 Under Contract 25,000 Conventional 3,000 HP Rig 15 Under Contract 20,000 Conventional 2,000 HP Rig 01 Cold Stacked 14,000 Conventional 2,000 HP Rig 23 Cold Stacked 15,000 Conventional 1,000 HP Rig 21 Cold Stacked 14,000 Conventional 1,000 HP Rig 20 Under Contract 14,000 Conventional 1,000 HP Rig 19 Status as of 2/28/07 Drilling Depth Platform Type Vessel Class Asset Name |
 30 Liftboat Fleet West Africa 400,000 215 Blue Shark US GOM 300,000 140 Rainbow Runner West Africa 590,000 170 Oilfish US GOM 300,000 140 Blue Runner West Africa 200,000 150 Black Marlin US GOM 150,000 140 Starfish West Africa 200,000 150 F.J. Leleux US GOM 150,000 130 Triggerfish West Africa 200,000 145 Rudderfish US GOM 150,000 130 Albacore West Africa 175,000 145 Pilotfish US GOM 150,000 130 Stingray West Africa 150,000 130 Scamp US GOM 150,000 130 Sandshark West Africa 100,000 120 Zoal Albrecht US GOM 142,000 130 Mahi Mahi West Africa 100,000 120 Tigerfish US GOM 137,500 130 Sailfish West Africa 100,000 120 Solefish US GOM 130,000 130 Moray West Africa 100,000 120 James Choat US GOM 110,000 130 Skipfish West Africa 100,000 120 Durwood Speed US GOM 100,000 130 Pompano West Africa 100,000 120 Charlie Cobb US GOM 150,000 125 Rockfish West Africa 100,000 105 Tapertail US GOM 150,000 120 Grouper West Africa 100,000 105 Gemfish US GOM 150,000 120 Gar West Africa 90,000 105 Bonefish US GOM 110,000 120 Tilapia West Africa 72,000 105 Croaker US GOM 110,000 120 Sea Robin US GOM 729,000 260 Whale Shark US GOM 130,000 105 Pike US GOM 1,000,000 230 Tigershark US GOM 110,000 105 Jackfish US GOM 500,000 229 Man-O-War US GOM 110,000 105 Tarpon US GOM 500,000 229 Kingfish US GOM 110,000 105 Marlin US GOM 500,000 215 Wahoo US GOM 110,000 105 Herring US GOM 500,000 205 Amberjack US GOM 110,000 105 Dolphin US GOM 1,000,000 200 Bullshark US GOM 110,000 105 Cobia US GOM 798,000 200 Cutlassfish US GOM 110,000 105 Carp US GOM 798,000 200 Creole Fish US GOM 110,000 105 Barracuda US GOM 700,000 190 Swordfish US GOM 100,000 105 Palometa US GOM 654,000 175 Mako US GOM 100,000 105 Sea Trout US GOM 575,850 175 Leatherjack US GOM 100,000 105 Seabream US GOM 200,000 150 Seabass US GOM 100,000 105 Wolffish US GOM 200,000 150 Manta Ray US GOM 100,000 105 Remora US GOM 150,000 145 Hammerhead US GOM 100,000 105 Corina Operating Region Maximum Deck Load (pounds) Leg Length (feet) Asset Name Operating Region Maximum Deck Load (pounds) Leg Length (ft.) Asset Name |
 31 Other Rigs Idle USA -- Texas 8,000 900 HP Land Rig #27 Reactivating USA -- Texas 6,500 750 HP Land Rig #26 Under Contract Venezuela 35,000 3,000 HP Land Cliffs #55 Under Contract Venezuela 30,000 3,000 HP Land Cliffs #54 Under Contract Venezuela 25,000 2,000 HP Land Cliffs #43 Under Contract Venezuela 25,000 2,000 HP Land Cliffs #42 Under Contract Venezuela 25,000 2,000 HP Land Cliffs #40 Warm Stacked Venezuela 18,000 2,000 HP Land Cliffs #37 Under Contract Trinidad 18,000 2,000 HP Land Cliffs #36 Under Contract Mexico 25,000 -- Platform Platform 3 Under Contract US GOM 30,000 -- Submersible THE 78 Under Contract US GOM 30,000 -- Submersible THE 77 Under Contract US GOM 25,000 -- Submersible THE 75 Status Region of Operation Drilling Depth Details Rig Type Asset Name |
 32 Explanatory Information Adjusted EBITDA is calculated as net income before interest expense, taxes, depreciation
and amortization, gain on disposal of assets and loss on early retirement of
debt. Adjusted EBITDA is included in this presentation because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and
other interested parties in the evaluation of companies in our industry, some
of which present EBITDA and Adjusted EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax
rates by using Adjusted EBITDA. In addition, we utilize Adjusted EBITDA in
evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is
commonly used by us and our investors to measure our ability to service
indebtedness. Adjusted EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA
and Adjusted EBITDA differently and, therefore, Adjusted EBITDA as presented
for us may not be comparable to EBITDA and Adjusted EBITDA reported by other companies. Adjusted EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and amortization, gain on disposal of assets and loss on early retirement of debt. The following tables reconcile Adjusted EBITDA with net income. Note: Reconciliations for Drilling and Liftboats do not include corporate adjustments. EBITDA Reconciliation ($ in millions) Drilling Liftboats 1Q 05 2Q 05 Q3 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 05 2Q 05 Q3 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 Net Income $9.5 $7.6 $10.5 $0.5 $25.6 $15.6 $19.1 $27.2 $2.5 $1.5 $2.5 ($1.6) $7.5 $9.3 $12.6 $12.7 Plus: Interest Expense 1.8 1.8 1.9 1.5 1.3 1.4 1.7 2.3 0.5 0.6 0.9 0.8 0.7 0.8 0.9 1.4 Plus: Income Tax Expense – – – 6.9 15.1 7.5 10.5 10.0 – – – 8.9 4.4 5.5 7.6 4.7 Plus: Depreciation and Amortization 1.3 1.3 1.4 1.5 1.7 2.3 3.5 4.0 1.2 1.5 2.3 3.2 4.3 5.2 5.6 5.7 Plus: Loss on Early Retirement of Debt – 1.8 – 0.8 – – – – – 0.9 – 0.5 – – – – Less: Gain on Disposal of Assets – – – – 29.6 – 1.1 – – – – – – – – – Adjusted EBITDA $12.5 $12.6 $13.8 $11.3 $14.1 $26.8 $33.7 $44.0 $4.2 $4.6 $5.8 $11.7 $16.8 $20.7 $26.7 $24.5 Company EBITDA Reconciliation ($ in millions) Company 1Q 05 2Q 05 Q3 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 Net Income $11.4 $8.2 $10.1 ($2.2) $30.9 $22.9 $29.7 $35.5 Plus: Interest Expense 2.3 2.5 2.7 2.3 2.1 2.2 2.6 2.5 Plus: Income Tax Expense – – – 15.4 18.6 12.3 17.4 16.1 Plus: Loss on Early Retirement of Debt – 2.8 – 1.3 – – – – Less: Gain on Disposal of Assets – – – – 29.6 – 1.1 – Adjusted EBIT $13.7 $13.5 $12.8 $16.8 $22.0 $37.4 $48.6 $54.1 Plus: Depreciation and Amortization 2.5 2.9 3.8 4.7 5.9 7.6 9.1 9.7 Adjusted EDITDA $16.2 $16.3 $16.6 $21.5 $27.9 $45.0 $57.7 $63.9 |
 33 Risk Factors Risks with respect to the combination of Hercules Offshore and TODCO, as well as other
recent and future acquisitions, include the risk that we will not be able to
close the transaction, as well as difficulties in the integration of the
operations and personnel of the acquired company, diversion of management's attention away from other business concerns, and the assumption of any
undisclosed or other liabilities of the acquired company. We expect to
incur substantial transaction and merger related costs associated with
completing the merger with TODCO, obtaining regulatory approvals, combining
the operations of the two companies and achieving desired synergies. Additional unanticipated costs may be incurred in the integration of the businesses of Hercules
Offshore and TODCO. Expected benefits of the merger may not be achieved in
the near term, or at all. Hercules Offshore will have a significant
amount of additional debt as a result of the merger. This debt will require us to use cash flow to repay indebtedness, may have a material
adverse effect on our financial health, and may
limit our future operations and ability to borrow additional funds. |
 34 Important Information to be Filed In connection with the proposed transaction, Hercules Offshore will file a Form S-4,
TODCO will file a definitive proxy statement and both companies will file
other relevant documents concerning the proposed merger transaction with the
SEC. INVESTORS ARE URGED TO READ THE FORM S-4 AND THE PROXY
STATEMENT WHEN THEY BECOME AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE
MERGER. Investors may obtain a free copy of the Form S-4 and the
proxy statement (when available) and the other documents free of charge at the website maintained by the SEC at www.sec.gov <http://www.sec.gov/>. Hercules Offshore and TODCO and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
stockholders of Hercules Offshore and TODCO in connection with the
merger. Information about the directors and executive officers of Hercules Offshore and their ownership of Hercules common stock is set forth in the proxy
statement for Hercules Offshore's 2006 Annual Meeting of Stockholders filed with the SEC on March 24, 2006. Information about the directors and executive officers of TODCO and their ownership of
TODCO common stock is set forth in the proxy statement for
TODCO's 2006 annual meeting, which was filed with the SEC on March 22, 2006. Investors may obtain additional information regarding the interests of such participants by reading the Form S-4 and proxy statement for the merger when
they become available. |
 |