Published: 2023-02-24 00:00:00 ET

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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Principles of Consolidation. The consolidated financial statements include the accounts of Oceaneering International, Inc. (“Oceaneering,” “we,” “us” or “our”) and our more than 50% owned and controlled subsidiaries. We also consolidate entities that are determined to be variable interest entities if we determine that we are the primary beneficiary; otherwise, we account for those entities using the equity method of accounting. We use the equity method to account for our investments in unconsolidated affiliated companies of which we own an equity interest of between 20% and 50% and as to which we have significant influence, but not control, over operations. We use the cost method for all other long-term investments. Investments in entities that we do not consolidate are reflected on our balance sheet in other non-current assets. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires that our management make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Reclassifications. Certain amounts from prior periods have been reclassified to conform with the current year presentation.

Cash and Cash Equivalents. Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or less from the date of investment.

Allowance for Credit Losses—Financial Assets Measured at Amortized Costs. We identify allowances for credit losses based on future expected losses when accounts receivable, contract assets or held-to-maturity loan receivables are created rather than when losses are probable.

We use the loss-rate method in developing the allowance for credit losses, which involves identifying pools of assets with similar risk characteristics, reviewing historical losses within the last three years and consideration of reasonable supportable forecasts of economic indicators. Changes in estimates, developing trends and other new information could have material effects on future evaluations.

We monitor the credit quality of our accounts receivable and other financing receivable amounts by frequent customer interaction, following economic and industry trends and reviewing specific customer data. Our other receivable amounts include contract assets and held-to-maturity loans receivable, which we consider to have a low risk of loss.

We consider macroeconomic conditions when assessing our credit risk exposure including any impacts from the COVID-19 pandemic and new variants thereof, the Russia-Ukraine conflict and volatility in the oil and natural gas markets and the effects thereof on our customers and various counterparties. We have determined the impacts to our credit loss expense are de minimis for the years ended December 31, 2022, 2021 and 2020.

On January 1, 2020, we adopted Accounting Standard Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as amended (“ASC 326”) using the modified retrospective method. As a result of the adoption of ASC 326, we recorded a cumulative-effect adjustment of $2.3 million as of January 1, 2020, which decreased retained earnings and increased the allowance for credit losses. As of December 31, 2022, our allowance for credit losses was $2.0 million for accounts receivable and $0.3 million for other receivables. As of December 31, 2021, our allowance for credit losses was $0.9 million for accounts receivable and $0.3 million for other receivables.

Financial assets are written off when deemed uncollectible and there is no reasonable expectation of recovering the contractual cash flows. During the years ended December 31, 2022, 2021 and 2020, we recognized credit losses of $0.4 million, $53 million and $11 million, respectively, of which approximately 100%, 100% and 50%, respectively, had been previously reserved. The 2021 credit losses included a reserve of $49 million in receivables and contract assets partially offset by the reclassification of $20 million of contract assets into salable inventory related to termination of a number of entertainment ride systems contracts with the China Evergrande Group and its affiliated

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companies (collectively, “Evergrande”) in our Manufactured Products segment. See Note 10—”Commitments and Contingencies” for discussion regarding Evergrande.

We have elected to apply the practical expedient available under ASC 326 to exclude the accrued interest receivable balance that is included in our held-to-maturity loans receivable. The amounts excluded as of December 31, 2022 and 2021 were $0.8 million and $1.2 million, respectively.

Accounts receivable are considered to be past-due after the end of the contractual terms agreed to with the customer. There were no material past-due amounts that we consider uncollectible for our financial assets as of December 31, 2022. We generally do not require collateral from our customers.

Inventory. Inventory is valued at the lower of cost or net realizable value. We determine cost using the weighted-average method. We periodically review the value of items in inventory and record write-downs or write-offs of inventory based on our assessment of market conditions. Write-downs and write-offs are charged to cost of services and products. We did not record any write-downs or write-offs of inventory in the years ended December 31, 2022 and 2021, as compared to $7.0 million of write-downs and write-offs in the year ended December 31, 2020.

Property and Equipment, Long-Lived Intangible Assets and Right-of-Use Operating Lease Assets. We provide for depreciation of property and equipment on the straight-line method over estimated useful lives of eight years for Remotely Operated Vehicles (“ROVs”), three to 25 years for marine services equipment (such as vessels and diving equipment) and three to 25 years for buildings, improvements and other equipment.

We charge the costs of repair and maintenance of property and equipment to operations as incurred, and we capitalize the costs of improvements that extend asset lives or functionality. Upon the disposition of property and equipment, the related cost and accumulated depreciation accounts are relieved and any resulting gain or loss is recognized in income.

We capitalize interest on assets where the construction period is anticipated to be more than three months. We did not capitalize interest in 2022, 2021 or 2020. We do not allocate general administrative costs to capital projects.

Long-lived intangible assets, primarily acquired in connection with business combinations, include trade names, intellectual property and customer relationships.

Our management periodically, and upon the occurrence of a triggering event, reviews the realizability of our property and equipment, long-lived intangible assets and right-of-use operating lease assets to determine whether any events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such as the nature of the assets, the future economic benefits of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset. We did not identify indicators of impairment for property and equipment, long-lived intangible assets or right-of-use operating lease assets for the years ended December 31, 2022 and 2021. For information regarding write-downs and write-offs of property and equipment, long-lived intangible assets and right-of-use operating lease assets in the year ended December 31, 2020, see Note 5—“Impairments” and Note 11—“Operations by Business Segment and Geographic Area.”

For assets held for sale or disposal, the fair value of the asset is measured using fair market value less estimated costs to sell. Assets are classified as held-for-sale when we have a plan for disposal of certain assets and those assets meet the held for sale criteria.

For additional information regarding right-of-use operating lease assets, see “Leases” below.

Goodwill. Our goodwill is evaluated for impairment annually and whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

In our annual evaluation of goodwill, we perform a qualitative or quantitative impairment test. Under the qualitative approach, if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we are required to perform the quantitative analysis to determine the fair value for the reporting unit. We then compare the fair value of the reporting unit with its carrying amount and recognize an impairment loss for the amount by which the carrying amount exceeds the fair value of the reporting unit. The loss recognized should not

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exceed the total amount of goodwill allocated to the reporting unit. We also consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. We did not identify any indicators of impairment for goodwill for the years ended December 31, 2022 and 2021. For information regarding impairments of goodwill in the year ended December 31, 2020, see Note 5—“Impairments” and Note 11—“Operations by Business Segment and Geographic Area.”

Revenue Recognition. All of our revenue is realized through contracts with customers. We recognize our revenue according to the contract type. On a daily basis, we recognize service revenue over time for contracts that provide for specific time, material and equipment charges, which we bill periodically, ranging from weekly to monthly. We use the input method to faithfully depict revenue recognition, because each day of service provided represents value to the customer. The performance obligations in these contracts are satisfied, and revenue is recognized, as the work is performed. When appropriate, we apply the practical expedient to recognize revenue for the amount invoiced when the invoice corresponds directly to the value of our performance to date.

We account for significant fixed-price contracts, mainly relating to our Manufactured Products segment, and to a lesser extent in our Offshore Projects Group (“OPG”) and Aerospace and Defense Technologies (“ADTech”) segments, by recognizing revenue over time using the cost-to-cost input method. In 2022, 2021 and 2020, we accounted for 15%, 16% and 24%, respectively, of our revenue using the cost-to-cost input method to measure progress toward satisfying the related performance obligations on our contracts. The remainder of our revenue is recognized at the point in time when control transfers to the customer, thus satisfying the performance obligation.

We have elected to recognize the cost for freight and shipping as an expense when incurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by us from customers, are excluded from revenue.

We apply judgment in the determination and allocation of transaction price to performance obligations, and the subsequent recognition of revenue, based on the facts and circumstances of each contract. We routinely review estimates related to our contracts and, when required, reflect revisions to profitability in earnings immediately. If an element of variable consideration has the potential for a significant future reversal of revenue, we will constrain that variable consideration to a level intended to remove the potential future reversal. If a current estimate of total contract cost indicates an ultimate loss on a contract, we recognize the projected loss in full when we determine it. During the year ended December 31, 2022, we recognized a projected loss of $5.2 million for contracts in our Manufactured Products segment. During the year ended December 31, 2021, we recognized a projected loss of $3.6 million for a contract in our Subsea Robotics segment. We did not have any material adjustments to earnings as a result of revisions to contract estimates during the year ended December 31, 2020. There could be significant adjustments to overall contract costs in the future, due to changes in facts and circumstances.

In general, our payment terms consist of those services billed regularly as provided and those products delivered at a point in time, which are invoiced after the performance obligation is satisfied. Our product and service contracts with milestone payments due at agreed progress points during the contract are invoiced when those milestones are reached, which may differ from the timing of revenue recognition. Our payment terms generally do not provide financing of contracts to customers, nor do we receive financing from customers as a result of these terms.

See Note 3—“Revenue” for more information on our revenue from contracts with customers.

Leases. We determine whether a contract is or contains a lease at inception, whether as a lessee or a lessor. We take into consideration the elements of an identified asset, right to control and the receipt of economic benefit in making those determinations.

As a lessor, we lease certain types of equipment along with the provision of services and utilize the expedient allowing us to combine the lease and non-lease components into a combined component that is accounted for (1) under “Leases” (“ASC 842”), when the lease component is predominant, and (2) under the accounting standard “Revenue from Contracts with Customers” (“ASC 606”), when the service component is predominant. In general, when we have a service component, it is typically the predominant element and leads to accounting under ASC 606.

As a lessor, we lease certain types of equipment, often providing services at the same time. These leases can be priced on a dayrate or lump-sum basis for periods ranging from a few days to multi-year contracts. These leases are negotiated on commercial terms at market rates and many carry standard options to extend or terminate at our customer's discretion. These leases generally do not contain options to purchase, material restrictions or covenants that impact our accounting for leases.

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As a lessee, we lease land, buildings, vessels and equipment for the operation of our business and to support some of our service line revenue streams. These generally carry lease terms that range from days for operational and support equipment to 15 years for land and buildings. These leases are negotiated on commercial terms at market rates and many carry standard options to extend or terminate at our discretion. When the exercise of those options is reasonably certain, we include them in the lease assessment. Our leases do not contain material restrictions or covenants that impact our accounting for them, nor do we provide residual value guarantees.

As a lessee, we utilize the practical expedients to not recognize leases with an initial lease term of 12 months or less on the balance sheet and to combine lease and non-lease components together and account for the combined component as a lease for all asset classes, except real estate.

Right-of-use operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement or modification date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, based on the information available at commencement or modification date in determining the present value of future payments. In determining the incremental borrowing rate, we considered our external credit ratings, bond yields for us and our identified peers, the risk-free rate in geographic regions where we operate, and the impact associated with providing collateral over a similar term as the lease for an amount equal to the future lease payments. Our right-of-use operating lease assets also include any lease prepayments made and exclude lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

See Note 4—“Leases” for more information on our operating leases and Note 5—“Impairments” for more information on determination of impairment indicators for our long-lived intangible assets.

Stock-Based Compensation. We recognize all share-based payments to directors, officers and employees over their vesting periods in the income statement based on their estimated fair values. For more information on our employee benefit plans, see Note 12—“Employee Benefit Plans.”

Income Taxes. We provide income taxes at appropriate tax rates in accordance with our interpretation of the respective tax laws and regulations after review and consultation with our internal tax department, tax advisors and, in some cases, legal counsel in various jurisdictions. We provide for deferred income taxes for differences between carrying amounts of assets and liabilities for financial and tax reporting purposes and provide a valuation allowance against deferred tax assets when it is more likely than not that the asset will not be realized.

We recognize an expense or benefit for an uncertain tax position if it is more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the uncertain tax position is then measured and recognized at the largest amount that we believe is greater than 50% likely of being realized upon ultimate settlement. We account for any applicable interest and penalties on these uncertain tax positions as a component of our provision for income taxes on our financial statements.

We have elected to account for U.S. federal income tax on global intangible low‑taxed income (“GILTI”) as a current period expense when incurred.

For more information on income taxes, see Note 7—“Income Taxes.”

Foreign Currency Translation. The functional currency for most of our foreign subsidiaries is the applicable local currency. Results of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated into U.S. dollars using the exchange rates in effect as of the balance sheet date, and the resulting translation adjustments are recognized, net of tax, in accumulated other comprehensive income (loss) as a component of shareholders' equity. All foreign currency transaction gains and losses are recognized currently in the Consolidated Statements of Operations. We recorded less than $(0.1) million, $(8.4) million and $(14) million of foreign currency transaction gains (losses) in the years ended December 31, 2022, 2021 and 2020, respectively. Those amounts are included as a component of other income (expense), net in our Consolidated Statement of Operations.

Earnings (Loss) per Share. For each year presented, the only difference between our annual calculated weighted average basic and diluted number of shares outstanding is the effect of outstanding restricted stock units.

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Revenue by Category

The following table presents revenue disaggregated by business segment, geographical region, and timing of transfer of goods or services.

												Year Ended December 31,
(in thousands)												2022						2021						2020
Business Segment:
			Energy
						Subsea Robotics						$	621,921					$	538,515					$	493,332
						Manufactured Products						382,361						344,251						477,419
						Offshore Projects Group						489,317						378,121						289,127
						Integrity Management & Digital Solutions						229,884						241,393						226,938
			Total Energy									1,723,483						1,502,280						1,486,816
			Aerospace and Defense Technologies									342,601						366,995						341,073
						Total						$	2,066,084					$	1,869,275					$	1,827,889

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The following table provides information about contract assets and contract liabilities from contracts with customers.

									Year Ended December 31,
(in thousands)									2022						2021
Total contract assets, beginning of period									$	164,847					$	221,997
Revenue accrued									1,984,385						1,825,487
Write-off of Evergrande contract assets									—						(38,032)
Amounts billed									(1,964,385)						(1,844,605)
Total contract assets, end of period									$	184,847					$	164,847
Total contract liabilities, beginning of period									$	88,175					$	50,046
Deferrals of milestone payments									104,649						81,942
Recognition of revenue for goods and services									(79,874)						(43,813)
Total contract liabilities, end of period									$	112,950					$	88,175

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Supplemental information about our operating leases follows:

												December 31,
(in thousands)												2022						2021
Assets:
			Right-of-use operating lease assets									$	139,611					$	146,097
Liabilities:
			Current									$	19,580					$	18,781
			Noncurrent									151,842						158,503
Lease liabilities												$	171,422					$	177,284

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												December 31,
												2022						2021
Lease Term and Discount Rate:
			Weighted-average remaining lease term (years)									9						10
			Weighted-average discount rate									5.8		%				5.9		%

No impairments of right-of-use operating leases were recorded in the years ended December 31, 2022 and 2021. During the first quarter of 2020, we determined there were impairment indicators present for reporting units in our Subsea Products and Advanced Technologies segments and, as a result, we recorded a pre-tax right-of-use operating lease impairments of $17 million. See Note 5—“Impairments” for more information on determination of impairment indicators for our right-of-use assets.

Operating lease cost reflects the lease expense resulting from amortization over the respective lease terms of our operating leases with initial lease terms greater than 12 months. Our short-term lease cost consists of expense for our operating leases with initial lease terms of 12 months or less that are not recorded on our balance sheet. The components of lease cost are as follows:

												Year ended December 31,
(in thousands)												2022						2021
Lease Cost:
Operating lease cost			Operating lease cost									$	34,467					$	34,406
Short-term lease cost			Short-term lease cost									101,048						78,835
Total Lease Cost												$	135,515					$	113,241

As of December 31, 2022, future maturities of lease liabilities for our operating leases with an initial lease term of more than 12 months were as follows:

Maturities of Lease Liabilities
(in thousands)
For the year ended December 31,
2023						$	28,967
2024						24,949
2025						24,239
2026						25,058
2027						23,773
Thereafter						96,755
Total lease payments						223,741
Less: Interest						(52,319)
Present Value of Lease Liabilities						$	171,422

Goodwill

We did not identify any triggering events and, accordingly, no impairments of goodwill were recorded in the years ended December 31, 2022 and 2021. In our 2020 annual goodwill evaluation, we performed qualitative assessments for our two reporting units, Subsea Robotics and ADTech, with remaining goodwill balances. We concluded that it was more likely than not that the fair value of each of these reporting units was more than the carrying value of the reporting unit.

After reallocation of our goodwill to our new segments in the third quarter of 2020, we determined that impairment indicators were present and performed quantitative analyses for our Subsea Robotics and Manufactured Products reporting units. Based on these quantitative analyses, the fair value was determined to be less than the carrying

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value for our Manufactured Products unit, but not for our Subsea Robotics reporting unit. As a result, for our Manufactured Products unit, we recorded a pre-tax goodwill impairment loss of $41 million in the three-month period ended September 30, 2020.

During the first quarter of 2020, due to the protracted energy downturn compounded by demand destruction resulting from the adverse impacts of the COVID-19 pandemic and insufficient control of crude oil supply levels during the quarter, as well as our customers' continued focus on cost discipline, we determined that impairment indicators were present and we were required to perform a quantitative analysis for our Subsea Products–Service, Technology and Rentals (“ST&R”), Subsea Products–Manufactured Products, Subsea Projects, Asset Integrity and Advanced Technologies–Commercial reporting units. Based on these quantitative analyses, the fair value was determined to be less than the carrying value for each of those reporting units, with the exception of Subsea Products–Manufactured Products. As a result, for our Subsea Products–ST&R, Subsea Projects, Asset Integrity and Advanced Technologies–Commercial reporting units, we recorded pre-tax goodwill impairment losses of $51 million, $130 million, $111 million and $11 million, respectively. For our ROVs and Advanced Technologies–Government reporting units, qualitative assessments were performed; and we concluded that it was more likely than not the fair value of each of those reporting units was more than the carrying value of the reporting unit and, therefore, no impairments were recorded for those reporting units.

Our estimates of fair values for our reporting units determined in the first and third quarters of 2020 required us to use significant unobservable inputs, classified as Level 3 fair value measurements, including assumptions related to future performance, risk-adjusted discount rates, future commodity prices and demand for our services and estimates of expected realizable values. For our cash flow projections in each of those periods, we utilized a weighted-average cost of capital ranging from 11% to 15% and a terminal value based on the Gordon Growth Model, assuming an expected long-term growth rate of 2%.

Our third quarter 2020 change in our operating segments resulted in one reporting unit for each of our new segments. The following table reflects goodwill impairments as recorded in the three-month period ended March 31, 2020, and allocated, based on historical cost, to our new reporting segments:

									Three Months Ended March 31, 2020
(in thousands)									As originally recorded						As recast to reflect segment changes
Segment/Reporting Unit									Goodwill Impairment						Subsea Robotics						Manufactured Products						OPG						IMDS						Total
Subsea Products/ST&R									$	51,302					$	17,457					$	—					$	33,845					$	—					$	51,302
Subsea Projects/Subsea Projects									129,562						84,661						—						32,440						12,461						129,562
Asset Integrity/Asset Integrity									110,753						—						—						—						110,753						110,753
Advanced Technologies/Commercial									11,388						—						11,388						—						—						11,388
			Total goodwill impairment						$	303,005					$	102,118					$	11,388					$	66,285					$	123,214					$	303,005

Aside from the goodwill impairments discussed above, the changes in our reporting units' goodwill balances during the periods presented are from currency exchange rate changes.

For further information regarding goodwill by business segment, see Note 11–“Operations by Business Segment and Geographic Area.”

Property and Equipment and Intangible Assets

We did not identify any triggering events and, accordingly, no impairments of long-lived assets were recorded in the years ended December 31, 2022 and 2021.

After reallocation of our long-lived assets to our new segments in the third quarter of 2020, we determined that impairment indicators were present and performed a quantitative assessment for our Manufactured Products asset groups. Based on that assessment, we concluded that it was more likely than not that the fair value of the asset groups within Manufactured Products was more than the carrying value of each asset group and, therefore, no impairment was required. We did not identify any triggering events for our asset groups other than those included in Manufactured Products during the third quarter of 2020.

During the first quarter of 2020, due to the protracted energy downturn compounded by demand destruction resulting from the adverse impacts of the COVID-19 pandemic and insufficient control of crude oil supply levels

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during the quarter, as well as our customers' continued focus on cost discipline, we determined that impairment indicators were present within certain of our asset groups. To measure fair value for these asset groups, we used the following approaches:

•Subsea Distribution Solutions U.K. - We utilized the cost approach and considered economic obsolescence under the income approach to determine fair value of the property and equipment.

•Subsea Distribution Solutions Brazil and Angola - We utilized a combination of market and cost approaches to measure fair values.

•Shallow Water vessels - We utilized the cost approach and considered historical, current and anticipated dayrates and utilization to measure market value.

•Renewables and Special Projects - We utilized a combination of market and cost approaches to measure fair values.

•Oceaneering Entertainment Systems and Oceaneering AGV Systems - We utilized a combination of market and cost approaches to measure fair value.

Our estimates of fair value for these asset groups required us to use significant unobservable inputs, classified as Level 3 fair value measurements, including assumptions related to future performance, risk-adjusted discount rates, future commodity prices and demand for our services and estimates of expected realizable value. In the first quarter of 2020, our cash flow projections utilized a weighted-average cost of capital ranging from 12% to 15% and a terminal value based on the Gordon Growth Model, assuming an expected long-term growth rate of 2%.

Our third quarter 2020 change in operating segments did not result in any changes in our asset groups. Our reporting units with long-lived asset impairments in the three-month period ended March 31, 2020, were realigned into our new reporting segments as follows:

									Three Months Ended March 31, 2020
(in thousands)									As originally recorded						As recast to reflect segment changes
Segment/Reporting Unit									Long-lived Asset Impairments						Manufactured Products						OPG						IMDS						Total
Subsea Products
			Subsea Distribution Solutions U.K.						$	6,543					$	6,543					$	—					$	—					$	6,543
			Subsea Distribution Solutions Brazil						9,834						9,834																		9,834
			Subsea Distribution Solutions Angola						38,482						38,482																		38,482
Subsea Projects
			Shallow Water vessels						3,894												3,894												3,894
			Renewables and Special Projects Group						3,628												3,628												3,628
			Global Data Solutions						167																		167						167
Advanced Technologies
			Oceaneering Entertainment Systems						5,065						5,065																		5,065
			Oceaneering AGV Systems						1,150						1,150																		1,150
			Total long-lived asset impairments						$	68,763					$	61,074					$	7,522					$	167					$	68,763

In 2020, we also recorded $24 million for write-downs and write-offs of certain equipment and intangible assets associated with equipment obsolescence.

For further information regarding write-downs and write-offs of property and equipment and long-lived intangible assets by business segment, see Note 11–“Operations by Business Segment and Geographic Area.”

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The following is information regarding selected balance sheet accounts:

 

									December 31,
(in thousands)									2022						2021
Inventory, net:
			Remotely operated vehicle parts and components						$	81,701					$	72,572
			Other inventory, primarily raw materials						102,674						81,110
			Total						$	184,375					$	153,682
Other current assets:
			Prepaid expenses						$	56,170					$	61,984
			Angolan bonds						6,369						6,416
			Total						$	62,539					$	68,400
Other noncurrent assets:
			Cash surrender value of life insurance policies						$	33,012					$	41,922
			Investment in unconsolidated affiliates						30,049						30,502
			Income tax receivable						20,170						—
			Intangible assets, net						11,517						12,641
			Other						27,476						19,190
			Total						$	122,224					$	104,255
Accrued liabilities:
			Payroll and related costs						$	122,380					$	134,538
			Accrued job costs						57,310						49,032
			Income taxes payable						44,966						35,826
			Current operating lease liability						19,580						18,781
			Accrued interest						10,180						9,937
			Other						53,030						42,545
			Total						$	307,446					$	290,659
Other long-term liabilities:
			Supplemental Executive Retirement Plan						$	29,635					$	35,195
			Uncertain tax positions						10,869						14,830
			Long-Term Incentive Plan						14,479						11,996
			Deferred income taxes						2,228						1,375
			Other						27,439						26,708
			Total						$	84,650					$	90,104

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The components of income (loss) before income taxes are as follows: 

						Year Ended December 31,
(in thousands)						2022						2021						2020
Domestic						$	(50,396)					$	(125,010)					$	(306,354)
Foreign						129,448						119,301						(192,543)
Income (loss) before income taxes						$	79,052					$	(5,709)					$	(498,897)

The components of the income tax provision (benefit) applicable for domestic and foreign taxes and cash taxes paid are as follows: 

						Year Ended December 31,
(in thousands)						2022						2021						2020
Current income tax expense (benefit):
Domestic						$	3,241					$	974					$	(32,743)
Foreign						49,041						44,422						34,755
Total current income tax expense (benefit)						52,282						45,396						2,012
Deferred income tax expense (benefit):
Domestic						633						(328)						(9,192)
Foreign						196						(1,470)						5,034
Total deferred income tax expense (benefit)						829						(1,798)						(4,158)
Total income tax expense (benefit)						$	53,111					$	43,598					$	(2,146)
Cash taxes paid, net						$	44,959					$	29,204					$	26,264

The reconciliation between the actual income tax provision and income tax computed using the U.S. statutory federal income tax rate is summarized as follows:

						Year Ended December 31,
(in thousands)						2022						2021						2020
Income tax provision (benefit) at the U.S. statutory rate						$	16,645					$	(1,199)					$	(104,769)
Base erosion and anti-abuse tax						2,369						—						—
CARES Act						—						—						(4,681)
Permanent differences for goodwill impairments						—						—						50,435
Valuation allowances						11,078						33,068						46,650
Foreign tax rate differential						14,505						8,619						6,088
Foreign income inclusion						12,304						3,141						(2,079)
Stock compensation						137						542						1,032
Excess compensation						1,083						1,301						2,268
Uncertain tax positions						(704)						158						(5,939)
General business credits						(1,952)						(2,452)						(2,558)
Other items, net						(2,354)						420						11,407
Total provision (benefit) for income taxes						$	53,111					$	43,598					$	(2,146)

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Significant components of net deferred tax assets and liabilities were as follows: 

						December 31,
(in thousands)						2022						2021
Deferred tax assets:
Deferred compensation						$	19,344					$	17,169
Deferred income						3,478						7,604
Accrued expenses						23,434						23,555
Net operating loss and other carryforwards						540,443						551,724
Long-term operating lease liabilities						32,846						34,728
Goodwill and intangibles						34,362						19,623
Interest						35,638						31,898
Other						24,651						27,667
Gross deferred tax assets						714,196						713,968
Valuation allowances						(684,786)						(679,242)
Total deferred tax assets						$	29,410					$	34,726
Deferred tax liabilities:
Property and equipment						$	5,611					$	7,185
Basis difference in equity investments						879						1,948
Right-of-use operating lease assets						25,148						26,968
Total deferred tax liabilities						$	31,638					$	36,101
Net deferred income tax liability						$	2,228					$	1,375

Our net deferred tax liability is reflected within our balance sheet as follows: 

						December 31,
(in thousands)						2022						2021
Deferred tax liabilities included in other long-term liabilities						$	2,228					$	1,375
Net deferred income tax liability						$	2,228					$	1,375

As of December 31, 2022, we had approximately $496 million of deferred tax assets related to net operating and other loss carryforwards that were generated in various worldwide jurisdictions. The carryforwards include $185 million that do not expire and $311 million that will expire from 2023 through 2042. We have recorded a total valuation allowance of $685 million on net operating loss and tax credit carryforwards, as well as other deferred tax assets, as we believe that it is more likely than not that these deferred tax assets will not be realized. We recorded an additional valuation allowance of $6.0 million and $87 million in 2022 and 2021, respectively.

On March 27, 2020, the U.S. Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law in the United States. In accordance with the rules and procedures under the CARES Act, we filed certain refund claim to carry back a portion of our U.S. net operating loss. Prior to enactment of the CARES Act, such net operating losses could only be carried forward. As a result, we expected to receive combined refunds of approximately $33 million, of which we have previously received $10 million as of December 31, 2022. During the third quarter of 2022, we reached an agreement in principle to settle our 2014 U.S. tax return audit, which reduces the outstanding refunds by approximately $3.0 million. The remaining refunds of approximately $20 million are classified as other noncurrent assets in the consolidated balance sheet as of December 31, 2022. While the exact timing for the receipt of these refunds remains uncertain, we do not anticipate receiving any portion of these refunds in 2023. In 2020, we also realized a non-cash tax benefit of $8.4 million due to the carryback provision of the CARES Act recognized as a reduction in long-term liabilities.

We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur material tax consequences upon the distribution of such earnings. As of December 31, 2022, we did not provide for deferred taxes on earnings of our foreign subsidiaries that are indefinitely reinvested. If we were to make a distribution from the unremitted earnings of these subsidiaries, we could be subject to taxes in various jurisdictions. However, it is not practical to estimate the amount of tax that could ultimately be due if such earnings were remitted. If our expectations were to change regarding future tax consequences, we may be required to record additional deferred taxes that could have a material effect on our consolidated financial statements.

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We recognize the expense or benefit for an uncertain tax position if it is more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the uncertain tax position is then measured and recognized at the largest amount that we believe is greater than 50% likely of being realized upon ultimate settlement. We account for any applicable interest and penalties on these positions as a component of our provision for income taxes in our consolidated financial statements.

A reconciliation of the beginning and ending amount of gross uncertain tax positions, excluding penalties and interest, is as follows: 

						Year Ended December 31,
(in thousands)						2022						2021						2020
Balance at beginning of year						$	17,367					$	20,086					$	16,911
Additions based on tax positions related to the current year						269						1,934						2,229
Reductions for expiration of statutes of limitations						(520)						(784)						(628)
Additions based on tax positions related to prior years						1,103						2,011						1,830
Reductions based on tax positions related to prior years						(2,171)						(2,818)						(68)
Settlements						(202)						(3,062)						(188)
Balance at end of year						$	15,846					$	17,367					$	20,086

We increased (decreased) income tax expense by $(1.0) million, $(1.1) million and $(1.2) million in 2022, 2021 and 2020, respectively, for penalties and interest on uncertain tax positions, which brought our total liabilities for penalties and interest on uncertain tax positions to $2.5 million and $3.4 million in other long-term liabilities on our balance sheets as of December 31, 2022 and 2021, respectively. All additions or reductions to those liabilities would affect our effective income tax rate in the periods of change.

We believe approximately $8.0 million to $9.0 million of gross uncertain tax positions will be resolved within the next 12 months. A portion of our uncertain tax position liability is reflected as a reduction in our gross deferred tax asset before valuation allowance and as a reduction in our long-term income tax receivable which is included in other noncurrent assets on our consolidated balance sheet. The remaining balance is reflected in other long-term liabilities on our consolidated balance sheet. The balance of gross uncertain tax position liability included in other long-term liabilities on our consolidated balance sheet was $8.0 million and $11 million as of December 31, 2022 and December 31, 2021, respectively. The balance of gross uncertain tax position liability netted against our gross deferred tax asset before valuation allowance was $5.0 million and $6.0 million as of December 31, 2022 and December 31, 2021, respectively. The balance of gross uncertain tax position liability netted against our gross long-term income tax receivable included in other noncurrent assets was $2.0 million as of December 31, 2022. There was no balance of gross uncertain tax position liability netted against our gross long-term income tax receivable included in other noncurrent assets as of December 31, 2021. 

Our tax returns are subject to audit by taxing authorities in multiple jurisdictions. These audits often take years to complete and settle. The following table lists the earliest tax years open to examination by tax authorities where we have significant operations: 

Jurisdiction						Periods
United States						2014
United Kingdom						2019
Norway						2017
Angola						2015
Brazil						2017
Australia						2018

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Long-term debt consisted of the following: 

									December 31,
			(in thousands)						2022						2021
4.650% Senior Notes due 2024									$	400,000					$	400,000
6.000% Senior Notes due 2028									300,000						300,000
Interest rate swap settlements									4,371						6,572
Unamortized debt issuance costs									(3,398)						(4,505)
Long-term Debt									$	700,973					$	702,067

In November 2014, we completed the public offering of $500 million aggregate principal amount of 4.650% Senior Notes due 2024 (the “2024 Senior Notes”). We pay interest on the 2024 Senior Notes on May 15 and November 15 of each year. The 2024 Senior Notes are scheduled to mature on November 15, 2024.

In February 2018, we completed the public offering of $300 million aggregate principal amount of 6.000% Senior Notes due 2028 (the “2028 Senior Notes”). We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year. The 2028 Senior Notes are scheduled to mature on February 1, 2028. We used the net proceeds from the 2028 Senior Notes to repay our term loan indebtedness described further below.

We may redeem some or all of the 2024 Senior Notes and 2028 Senior Notes (collectively, the “Senior Notes”) at specified redemption prices. In the year ended December 31, 2021, we repurchased $100 million in aggregate principal amount of the 2024 Senior Notes in open-market transactions. The aggregate purchase price in the year ended December 31, 2021 included accrued and unpaid interest to the repurchase date of $0.7 million, and we recorded loss on extinguishment of debt of $1.1 million (including premiums and fees associated with the repurchases).

In October 2014, we entered into a credit agreement (as amended, the “Prior Credit Agreement”) with a group of banks. The Prior Credit Agreement initially provided for a $500 million five-year revolving credit facility (the “Prior Revolving Credit Facility”). The Prior Credit Agreement also provided for a $300 million term loan, which we repaid in full in February 2018, using net proceeds from the issuance of our 2028 Senior Notes referred to above, and cash on hand. In February 2018, we entered into Agreement and Amendment No. 4 to the Prior Credit Agreement to, among other things, extend the maturity of the Prior Revolving Credit Facility to January 25, 2023.

On April 8, 2022, we entered into a new senior secured revolving credit agreement with a group of banks (the “Revolving Credit Agreement”) that will mature in April 2026. In connection with entering into the Revolving Credit Agreement, we terminated our Prior Revolving Credit Facility. No borrowings were outstanding under the Prior

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Revolving Credit Facility. We repaid all accrued fees and expenses in connection with the termination of the Prior Revolving Credit Facility and all commitments thereunder were terminated. No early termination penalties were incurred in connection with the termination of the Prior Revolving Credit Facility.

The Revolving Credit Agreement includes a $215 million revolving credit facility (the “Revolving Credit Facility”) with a $100 million sublimit for the issuance of letters of credit. Our obligations under the Revolving Credit Agreement are guaranteed by certain of our wholly owned subsidiaries and are secured by first priority liens on certain of our assets and those of the guarantors, including, among other things, intellectual property, inventory, accounts receivable, equipment and equity interests in subsidiaries. As of December 31, 2022, we had no borrowings outstanding under the Revolving Credit Facility and no letters of credit outstanding under the Revolving Credit Agreement.

We may borrow under the Revolving Credit Facility at either (1) a base rate, determined as the greatest of (A) the prime rate of Wells Fargo Bank, National Association, (B) the federal funds effective rate plus 1⁄2 of 1% and (C) Adjusted Term SOFR (as defined in the Revolving Credit Agreement for a one-month tenor plus 1%, in each case plus the applicable margin, which varies from 1.25% to 2.25% depending on our Consolidated Net Leverage Ratio (as defined in the Revolving Credit Agreement), or (2) Adjusted Term SOFR plus the applicable margin, which varies from 2.25% to 3.25% depending on our Consolidated Net Leverage Ratio. We will also pay a facility fee based on the amount of the underlying commitment that is being utilized, which fee varies from 0.300% to 0.375%, with the higher rate owed when we use the Revolving Credit Facility less.

The Revolving Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted Consolidated Net Leverage Ratio is initially 4.00 to 1.00 and decreases to 3.25 to 1.00 during the term of the Revolving Credit Facility. The minimum Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Agreement) is 3.00 to 1.00 throughout the term of the Revolving Credit Facility. In addition, the Revolving Credit Agreement contains various covenants that we believe are customary for agreements of this nature, including, but not limited to, restrictions on our ability and the ability of each of our subsidiaries to incur debt, grant liens, make certain investments, make distributions, merge or consolidate, sell assets and enter into certain restrictive agreements. As of December 31, 2022, we were in compliance with all the covenants set forth in the Revolving Credit Agreement.

We had two interest rate swaps in place relating to a total of $200 million of the 2024 Senior Notes for the period to November 2024. The agreements swapped the fixed interest rate of 4.65% on $100 million of the 2024 Senior Notes to the floating rate of one-month LIBOR plus 2.426% and on another $100 million to one-month LIBOR plus 2.823%. In March 2020, we settled both interest rate swaps with the counterparty for cash proceeds of $13 million. The settlement resulted in a $13 million increase to our long-term debt balance that will be amortized to interest expense prospectively through the maturity date for the 2024 Senior Notes using the effective interest method. In the year ended December 31, 2022, we amortized $2.2 million to interest expense. In the year ended December 31, 2021, we amortized $4.3 million to interest expense, including $1.8 million, for the pro-rata write-off of interest rate swap settlement gains associated with the 2024 Senior Notes repurchases discussed above.

We incurred $6.9 million and $4.2 million of issuance costs related to the 2024 Senior Notes and the 2028 Senior Notes, respectively, and $4.0 million of new loan costs related to the Revolving Credit Agreement. These costs, net of accumulated amortization, are included as a reduction of long-term debt in our Consolidated Balance Sheets, as they pertain to the Senior Notes, and in other noncurrent assets, as they pertain to the Revolving Credit Agreement. We are amortizing these costs to interest expense through the respective maturity dates for the Senior Notes and the Revolving Credit Agreement using the straight-line method, which approximates the effective interest rate method. As a result, we amortized $2.1 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively.

We made cash interest payments of $38 million, $39 million and $44 million in 2022, 2021 and 2020, respectively.

Lease Commitments

As of December 31, 2022, we occupied several facilities under noncancellable operating leases expiring at various dates through 2035. See Note 4—“Leases” for more information on our operating leases.

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Insurance

The workers' compensation, maritime employer's liability and comprehensive general liability insurance policies that we purchase each include a deductible layer, for which we would be responsible, that we consider financially prudent. Insurance above the deductible layers can be by occurrence or in the aggregate. We determine the level of accruals for claims exposure by reviewing our historical experience and current year claim activity. We do not record accruals on a present-value basis. We review larger claims with insurance adjusters and establish specific reserves for known liabilities. We establish an additional reserve for incidents incurred but not reported to us for each year using our estimates and based on prior experience. We believe we have established adequate accruals for expected liabilities arising from those obligations. However, it is possible that future earnings could be affected by changes in our estimates relating to these matters.

Litigation

In the ordinary course of business, we are, from time to time, involved in litigation or subject to disputes, governmental investigations or claims related to our business activities, including, among other things:

•performance- or warranty-related matters under our customer and supplier contracts and other business arrangements; and

•workers’ compensation claims, Jones Act claims, occupational hazard claims, premises liability claims and other claims.

Although we cannot predict the ultimate outcome of these matters, we believe that our ultimate liability, if any, that may result from these other actions and claims will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, because of the inherent uncertainty of litigation and other dispute resolution proceedings and, in some cases, the availability and amount of potentially available insurance, we can provide no assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material effect on our consolidated financial condition, results of operations or cash flows for the fiscal period in which that resolution occurs.

Letters of Credit

We had $52 million and $46 million in letters of credit outstanding as of December 31, 2022 and 2021, respectively, which related to self-insurance requirements and various bid and performance bonds, which are usually for the duration of the applicable contract.

Financial Instruments and Risk Concentration

In the normal course of business, we manage risks associated with foreign exchange rates and interest rates through a variety of strategies, including the use of hedging transactions. As a matter of policy, we do not use derivative instruments unless we have an underlying exposure. Other financial instruments that potentially subject us to concentrations of credit risk are principally cash and cash equivalents and accounts receivable.

The carrying values of cash and cash equivalents approximate their fair values due to the short-term maturity of the underlying instruments. Accounts receivable are generated from a broad group of customers, primarily from the energy industry and the U.S. government, which are major sources of our revenue. Due to their short-term nature, carrying values of our accounts receivable and accounts payable approximate fair market values.

We estimated the aggregate fair market value of the Senior Notes to be $661 million as of December 31, 2022 based on quoted prices. Since the market for the Senior Notes is not an active market, the fair value of the Senior Notes is classified within Level 2 in the fair value hierarchy under U.S. GAAP (inputs other than quoted prices in active markets for similar assets and liabilities that are observable or can be corroborated by observable market data for substantially the full terms for the assets or liabilities).

Foreign currency gains (losses) in the year ended December 31, 2022 were less than $(0.1) million. Foreign currency gains (losses) of $(8.4) million in the year ended December 31, 2021 were primarily related to gains (losses) for the Angolan kwanza of $(4.5) million due to declining exchange rates for the Angolan kwanza relative to the U.S. dollar. Foreign currency gain (losses) of $(14) million in the year ended December 31, 2020 were primarily related to gains (losses) for the Angolan kwanza of $(2.8) million and the Brazilian real of $(7.3) million due to declining exchange rates for the Angolan kwanza and the Brazilian real relative to the U.S. dollar. Foreign currency transaction losses related to the Angolan kwanza in the years ended December 31, 2021 and 2020 were primarily

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due to the remeasurement of our Angolan kwanza cash balances to U.S. dollars. Foreign currency losses related to the Brazilian real in the year ended December 31, 2020 were primarily due to the remeasurement of our U.S. dollar denominated liability balances to the Brazilian real. We recorded foreign currency transaction gains (losses) related to the Angolan kwanza and Brazilian real as a component of other income (expense), net in our Consolidated Statements of Operations in those respective periods.

Any conversion of cash balances from kwanza to U.S. dollars is controlled by the central bank in Angola. As of December 31, 2022 and 2021, we had the equivalent of approximately $5.6 million and $1.0 million of kwanza cash balances, respectively, in Angola reflected on our Consolidated Balance Sheets.

To mitigate our currency exposure risk in Angola, we have used kwanza to purchase equivalent Angolan central bank (Banco Nacional de Angola) bonds. The bonds are denominated as U.S. dollar equivalents, so that, upon payment of semi-annual interest and principal upon maturity, payment is made in kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate. As of December 31, 2022 and 2021, we had $6.2 million, respectively, of U.S. dollar equivalent Angolan bonds. These bonds mature in 2023 and are classified as available-for-sale securities; accordingly, they are recorded at fair market value in other current assets on our Consolidated Balance Sheets. We did not sell any of our remaining Angolan bonds in the year ended December 31, 2022; however, during the year ended December 31, 2021, we sold a portion of these bonds for $4.5 million, reducing the balance as of December 31, 2021 to $6.2 million, and recognized a gain of $0.5 million as a component of other income (expense), net in our Consolidated Statement of Operations.

We estimated the fair market value of the Angolan bonds to be $6.4 million as of December 31, 2022 and 2021, respectively, using quoted market prices. Since the market for the Angolan bonds is not an active market, the fair value of the Angolan bonds is classified within Level 2 in the fair value hierarchy under U.S. GAAP. As of December 31, 2022 and 2021, we had $0.1 million and $0.2 million, respectively, in unrealized gains, net of tax, related to these bonds as a component of accumulated other comprehensive loss in our Consolidated Balance Sheets.

We made the decision during the fourth quarter of 2021 to terminate a number of entertainment ride systems contracts with Evergrande and recorded a net loss in our Manufactured Products segment. The specific elements of the net loss included a reserve of $49 million in receivables and contract assets partially offset by the reclassification of $20 million of contract assets into salable inventory. As of December 31, 2021, we had no outstanding accounts receivable or contract assets for those projects.

Business Segment Information

We are a global technology company delivering engineered services and products and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries.

Our Energy business leverages our asset base and capabilities for providing services and products for offshore energy operations, inclusive of the offshore renewables energy market. Our Energy segments are:

• Subsea Robotics—Our Subsea Robotics segment provides the following:

◦ ROVs for drill support and vessel-based services, including subsea hardware installation, construction, pipeline inspection, survey and facilities inspection, maintenance and repair;

◦ ROV tooling; and

◦ survey services, including hydrographic survey and positioning services and autonomous underwater vehicles for geoscience.

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• Manufactured Products—Our Manufactured Products segment provides the following:

◦ distribution and connection systems including production control umbilicals and field development hardware and pipeline connection and repair systems to the energy industry; and

◦autonomous mobile robotic technology and entertainment systems to a variety of industries.

• Offshore Projects Group—Our OPG segment provides the following:

◦ subsea installation and intervention, including riserless light well intervention services, inspection, maintenance and repair (“IMR”) services, principally in the U.S. Gulf of Mexico and offshore Angola, utilizing owned and charter vessels;

◦ installation and workover control systems and ROV workover control systems;

◦ diving services;

◦ decommissioning services;

◦ project management and engineering; and

◦ drill pipe riser services and systems and wellhead load relief solutions.

• Integrity Management & Digital Solutions—Our IMDS segment provides the following:

◦ asset integrity management services;

◦ software and analytical solutions for the bulk cargo maritime industry; and

◦ software, digital and connectivity solutions for the energy industry.

Our Aerospace and Defense Technologies segment provides services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. Government agencies and their prime contractors.

Unallocated Expenses are those not associated with a specific business segment. These consist of expenses related to our incentive and deferred compensation plans, including restricted stock and bonuses, as well as other general expenses, including corporate administrative expenses.

There are no differences in the basis of segmentation or in the basis of measurement of segment profit or loss from those used in our consolidated financial statements for the year ended December 31, 2021.

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The table that follows presents revenue, income (loss) from operations and depreciation and amortization expense including goodwill impairment, by business segment: 

						Year Ended December 31,
(in thousands)						2022						2021						2020
Revenue
Energy
Subsea Robotics						$	621,921					$	538,515					$	493,332
Manufactured Products						382,361						344,251						477,419
OPG						489,317						378,121						289,127
IMDS						229,884						241,393						226,938
Total Energy						1,723,483						1,502,280						1,486,816
ADTech						342,601						366,995						341,073
Total						$	2,066,084					$	1,869,275					$	1,827,889
Income (Loss) from Operations
Energy
Subsea Robotics						$	118,248					$	76,874					$	(65,817)
Manufactured Products						11,692						(15,876)						(88,253)
OPG						49,256						31,197						(105,680)
IMDS						14,901						18,572						(121,675)
Total Energy						194,097						110,767						(381,425)
ADTech						44,168						60,992						56,023
Unallocated Expenses						(127,402)						(131,960)						(120,677)
Total						$	110,863					$	39,799					$	(446,079)
Depreciation and Amortization Expense, including Goodwill Impairment
Energy
Subsea Robotics						$	67,684					$	87,900					$	212,621
Manufactured Products						11,946						12,788						66,772
OPG						28,560						28,173						115,288
IMDS						4,599						4,420						127,221
Total Energy						112,789						133,281						521,902
ADTech						2,853						4,783						2,666
Unallocated Expenses						5,327						1,659						4,327
Total						$	120,969					$	139,723					$	528,895

We determine income (loss) from operations for each business segment before interest income or expense, other income (expense) and provision for income taxes. We do not consider an allocation of these items to be practical.

Revenue

During 2022 and 2021, revenue from one customer, the U.S. Government, accounted for 11% and 12%, respectively, of our total consolidated annual revenue, and no other customer accounted for more than 10% of our total consolidated revenue. No individual customer accounted for more than 10% of our consolidated revenue during 2020.

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Income (Loss) from Operations

Year ended December 31, 2021—During the year ended December 31, 2021, we recorded charges and other discrete impacts attributable to each of our reporting segments as follows:

												For the Year Ended December 31, 2021
(in thousands)												Subsea Robotics						Manufactured Products									OPG						IMDS						ADTech						Unallocated Expenses						Total
Impacts for the effects of:
			Provision for Evergrande losses, net									$	—					$	29,549								$	—					$	—					$	—					$	—					$	29,549
			Loss on sale of asset									—						—									—						—						—						1,415						1,415
			Other									395						537									149						217						10						—						1,308
						Total charges						$	395					$	30,086								$	149					$	217					$	10					$	1,415					$	32,272

Year ended December 31, 2020—During the year ended December 31, 2020, we recorded charges and other discrete impacts attributable to each of our reporting segments as follows:

												For the Year Ended December 31, 2020
(in thousands)												Subsea Robotics						Manufactured Products									OPG						IMDS						ADTech						Unallocated Expenses						Total
Impacts for the effects of:
			Long-lived assets impairments									$	—					$	61,074								$	8,826					$	545					$	—					$	—					$	70,445
			Long-lived assets write-offs									7,328						—									16,644						170						—						—						24,142
			Inventory write-downs									7,038						—									—						—						—						—						7,038
			Goodwill impairment									102,118						52,263									66,285						123,214						—						—						343,880
			Other									5,055						2,266									8,590						4,272						572						455						21,210
						Total charges						$	121,539					$	115,603								$	100,345					$	128,201					$	572					$	455					$	466,715

There were no adjustments of a similar nature during the year ended December 31, 2022.

Depreciation and Amortization Expense, including Goodwill Impairment

Depreciation expense on property and equipment, reflected in the Depreciation and Amortization Expense, including Goodwill Impairment table above, was $113 million, $136 million and $170 million in 2022, 2021 and 2020, respectively.

Amortization expense on long-lived intangible assets, reflected in the Depreciation and Amortization Expense, including Goodwill Impairment table above, was $7.5 million, $3.8 million and $15 million in 2022, 2021 and 2020, respectively.

Goodwill impairment expense, reflected in the Depreciation and Amortization Expense, including Goodwill Impairment table above, was $344 million in 2020. See “Income (Loss) from Operations” above for amounts attributable to each segment.

We recorded the write-downs and write-offs of certain equipment and intangible assets, reflected in our depreciation expense, of $14 million in 2020. We also recorded the write-offs of certain intangible assets, reflected in our amortization expense, of $10 million in 2020. See “Income (Loss) from Operations” above for amounts attributable to each segment.

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Assets, Property and Equipment, Net and Goodwill

The following table presents Assets, Property and Equipment, net and Goodwill by business segment: 

						December 31,
(in thousands)						2022						2021
Assets
Energy
Subsea Robotics						$	467,608					$	447,130
Manufactured Products						339,087						342,978
OPG						345,264						333,248
IMDS						91,154						83,796
Total Energy						1,243,113						1,207,152
ADTech						115,450						107,999
Corporate and Other						673,120						647,708
Total						$	2,031,683					$	1,962,859
Property and Equipment, Net
Energy
Subsea Robotics						$	175,239					$	190,992
Manufactured Products						74,282						85,190
OPG						159,439						186,187
IMDS						9,807						10,934
Total Energy						418,767						473,303
ADTech						6,186						7,632
Corporate and Other						13,496						8,661
Total						$	438,449					$	489,596
Goodwill
Energy
Subsea Robotics						$	23,885					$	24,454
Total Energy						23,885						24,454
ADTech						10,454						10,454
Total						$	34,339					$	34,908

All assets specifically identified with a particular business segment have been segregated. Cash and cash equivalents, certain other current assets, certain investments and certain other assets have not been allocated to particular business segments and are included in Corporate and Other.

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Capital Expenditures

The following table presents Capital Expenditures, including business acquisitions, by business segment: 

						Year Ended December 31,
(in thousands)						2022						2021						2020
Capital Expenditures
Energy
Subsea Robotics						$	55,649					$	27,591					$	14,624
Manufactured Products						4,129						2,510						1,220
OPG						4,456						7,980						33,647
IMDS						4,058						3,305						3,488
Total Energy						68,292						41,386						52,979
ADTech						1,956						2,525						1,462
Corporate and Other						10,795						6,288						6,246
Total						$	81,043					$	50,199					$	60,687

Geographic Operating Areas

On January 1, 2019 we adopted the lease standard, Topic 842, which requires lessees to recognize right-of-use assets. For 2022 and 2021, $140 million and $146 million of right-of-use operating lease assets are included in the following table which summarizes Property and Equipment, Net and Right-of-Use Operating Lease Assets by geographic area:

						December 31,
(in thousands)						2022						2021
Property and Equipment, Net and Right-of-Use Operating Lease Assets
Foreign:
Norway						$	59,933					$	69,880
United Kingdom						59,762						65,665
Brazil						59,045						59,318
Africa						36,583						49,874
Asia and Australia						29,221						29,371
Other						18,192						18,456
Total Foreign						262,736						292,564
United States						315,324						343,129
Total						$	578,060					$	635,693

Revenue is based on location where services are performed and products are manufactured. See Note 3—”Revenue” for disclosure of revenue by geographic area .

Retirement Investment Plans

We have several employee retirement investment plans that, taken together, cover most of our full-time employees. The Oceaneering Retirement Investment Plan is a 401(k) plan in which U.S. employees may participate by deferring a portion of their gross monthly salary and directing us to contribute the deferred amount to the plan. We match a portion of the employees' deferred compensation. Our contributions to the 401(k) plan were $20 million, $13 million and $14 million for the plan years ended December 31, 2022, 2021 and 2020, respectively.

We also make matching contributions to foreign employee savings plans similar in nature to a 401(k) plan. In 2022, 2021 and 2020, these contributions, principally related to plans associated with the United Kingdom and Norwegian subsidiaries, were $11 million, $11 million and $11 million, respectively.

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The Oceaneering International, Inc. Supplemental Executive Retirement Plan covers selected key management employees and executives, as approved by the Compensation Committee of our Board of Directors (the “Compensation Committee”). Under this plan, we accrue an amount determined as a percentage of the participant's gross monthly salary and the amounts accrued are treated as if they are invested in one or more investment vehicles pursuant to this plan. Expenses related to this plan during 2022, 2021 and 2020 were $2.6 million, $1.8 million and $1.9 million, respectively.

Incentive Plans

Under our Second Amended and Restated 2010 Incentive Plan and our 2020 Incentive Plan (together the “Incentive Plans”), shares of our common stock are made available for awards to employees and nonemployee members of our Board of Directors.

The Incentive Plans are administered primarily by the Compensation Committee; however, the full Board of Directors makes determinations regarding awards to nonemployee directors under the Incentive Plans. The Compensation Committee or our Board of Directors, as applicable, determines the type(s) of award(s) to be made to each participant and sets forth in the related award agreement the terms, conditions and limitations applicable to each award. Stock options, stock appreciation rights and stock and cash awards may be made under the Incentive Plans. There are no options outstanding under either Incentive Plan. We have not granted any stock options since 2005 and the Compensation Committee has expressed its intention to refrain from using stock options as a component of employee compensation for our executive officers and other employees for the foreseeable future. Additionally, the Board of Directors has expressed its intention to refrain from using stock options as a component of nonemployee director compensation for the foreseeable future.

In 2022, 2021 and 2020, the Compensation Committee granted awards of performance units to certain of our key executives and employees. The performance units awarded are scheduled to vest in full on the third anniversary of the applicable award dates, or pro rata over three years if the participant meets certain age and years of service requirements. The Compensation Committee and the Board of Directors approved specific financial goals and measures (as defined), for each of the three-year periods ending December 31, 2024, 2023 and 2022 to be used as the basis for the final value of the performance units. The final value of the performance unit granted may range from $0 to $200 in each of 2022, 2021 and 2020. Upon vesting and determination of value, the value of the performance units will be payable in cash. Compensation expense related to the performance units was $13 million, $9.4 million and $7.6 million in 2022, 2021 and 2020, respectively. As of December 31, 2022, there were 273,597 performance units outstanding.

During 2022, 2021 and 2020, the Compensation Committee granted restricted units of our common stock to certain of our key executives and employees. During 2022, 2021 and 2020, our Board of Directors granted restricted common stock to our nonemployee directors. Over 83%, 85% and 80% of the grants made to our employees in 2022, 2021 and 2020, respectively, vest in full on the third anniversary of the award date, conditional upon continued employment. The remainder of the grants made to employees vest pro rata over three years, as these participants meet certain age and years-of-service requirements. For the grants of restricted stock units to each of the participant employees, the participant will be issued one share of our common stock for each of the participant's vested restricted stock units at the earlier of three years or, if the participant vested earlier after meeting the age and service requirements, following termination of employment or service. The grants of restricted stock to our nonemployee directors were scheduled to vest in full on the first anniversary of the award date, conditional upon continued service as a director, except for the 2021 grant to one director who retired from our board of directors as of the date of our annual meeting in May 2021, which vested on that date.

The Compensation Committee has a policy that Oceaneering will not provide U.S. federal income tax gross-up payments to any of its directors or executive officers in connection with future awards of restricted stock or stock units.

The additional tax charge realized from tax deductions less than the financial statement expense of our restricted stock grants was $0.1 million, $0.5 million and $1.0 million in 2022, 2021 and 2020, respectively. The 2022, 2021 and 2020 charges were recognized in our Consolidated Statements of Operations.

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The following is a summary of our restricted stock and restricted stock unit activity for 2022, 2021 and 2020: 

			Number						Weighted Average Fair Value						Aggregate Intrinsic Value
Balance as of December 31, 2019			1,741,335						18.72
Granted			1,007,383						10.23
Issued			(489,035)						23.82						$	5,821,000
Forfeited			(304,337)						14.89
Balance as of December 31, 2020			1,955,346						13.67
Granted			1,333,689						11.80
Issued			(601,830)						16.42						$	7,613,000
Forfeited			(239,946)						12.35
Balance as of December 31, 2021			2,447,259						12.10
Granted			898,264						14.14
Issued			(674,968)						14.53						$	9,529,000
Forfeited			(134,748)						12.19
Balance as of December 31, 2022			2,535,807						12.18

The restricted stock units granted in 2022, 2021 and 2020 carry no voting rights and no dividend rights. Each grantee of shares of restricted common stock is deemed to be the record owner of those shares during the restriction period, with the right to vote and receive any dividends on those shares.

Grants of restricted stock units are valued at their estimated fair values as of their respective grant dates. The grants in 2022, 2021 and 2020 were subject only to vesting conditioned on continued employment or service as a nonemployee director; therefore, these grants were valued at the grant date fair market value using the closing price of our stock on the New York Stock Exchange.

Compensation expense under the restricted stock plans was $9.6 million, $9.6 million and $7.5 million for 2022, 2021 and 2020, respectively. As of December 31, 2022, we had $10.5 million of future expense to be recognized related to our restricted stock unit plans over a weighted average remaining life of 1.6 years.

Post-Employment Benefit

Pursuant to a service agreement we entered into with a former Chairman of the Board of Directors, we are obligated to provide for medical coverage on an after-tax basis to him, his spouse and two adult children for their lives. Our total accrued liabilities, current and long-term, under this post-employment benefit were $1.8 million as of both December 31, 2022 and 2021.