Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 ________________________________________
FORM 10-Q
________________________________________ 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013              or             
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-12289
SEACOR Holdings Inc.
(Exact Name of Registrant as Specified in Its Charter)
________________________________________ 
Delaware
 
13-3542736
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
2200 Eller Drive, P.O. Box 13038,
 
 
Fort Lauderdale, Florida
 
33316
(Address of Principal Executive Offices)
 
(Zip Code)
954-523-2200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
________________________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
(Do not check if a smaller
reporting company)
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý
The total number of shares of common stock, par value $.01 per share, outstanding as of April 25, 2013 was 20,109,172. The Registrant has no other class of common stock outstanding.


Table of Contents

SEACOR HOLDINGS INC.
Table of Contents
 
Part I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
Part II.
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.


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PART I—FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS
SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
 
March 31,
2013
 
December 31,
2012
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
312,977

 
$
248,204

Restricted cash
27,129

 
28,285

Marketable securities
22,568

 
21,668

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts of $1,209 and $1,201 in 2013 and 2012, respectively
172,889

 
224,944

Other
41,139

 
45,334

Inventories
31,966

 
25,787

Deferred income taxes
3,530

 
3,530

Prepaid expenses and other
8,834

 
12,719

Discontinued operations
384

 
108,153

Total current assets
621,416

 
718,624

Property and Equipment:
 
 
 
Historical cost
2,186,892

 
2,238,383

Accumulated depreciation
(785,765
)
 
(763,803
)
 
1,401,127

 
1,474,580

Construction in progress
113,381

 
110,296

Net property and equipment
1,514,508

 
1,584,876

Investments, at Equity, and Advances to 50% or Less Owned Companies
299,778

 
272,535

Construction Reserve Funds & Title XI Reserve Funds
194,477

 
195,629

Goodwill
17,978

 
17,978

Intangible Assets, Net
15,754

 
15,305

Other Assets
51,576

 
55,123

Discontinued Operations

 
840,724

 
$
2,715,487

 
$
3,700,794

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current portion of long-term debt
$
15,435

 
$
21,920

Current portion of capital lease obligations
2,711

 
2,900

Accounts payable and accrued expenses
69,008

 
107,892

Other current liabilities
109,300

 
93,093

Discontinued operations
300

 
39,836

Total current liabilities
196,754

 
265,641

Long-Term Debt
655,384

 
655,309

Capital Lease Obligations
36

 
59

Deferred Income Taxes
422,719

 
426,027

Deferred Gains and Other Liabilities
116,572

 
120,342

Discontinued Operations
2,599

 
490,741

Total liabilities
1,394,064

 
1,958,119

Equity:
 
 
 
SEACOR Holdings Inc. stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued nor outstanding

 

Common stock, $.01 par value, 60,000,000 shares authorized; 36,957,667 and 36,740,324 shares issued in 2013 and 2012, respectively
369

 
367

Additional paid-in capital
1,340,875

 
1,330,324

Retained earnings
1,047,426

 
1,473,509

Shares held in treasury of 16,851,393 and 16,852,391 in 2013 and 2012, respectively, at cost
(1,089,064
)
 
(1,088,560
)
Accumulated other comprehensive loss, net of tax
(4,321
)
 
(1,986
)
 
1,295,285

 
1,713,654

Noncontrolling interests in subsidiaries
26,138

 
29,021

Total equity
1,321,423

 
1,742,675

 
$
2,715,487

 
$
3,700,794


The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

1

Table of Contents

SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except share data, unaudited)
 
Three Months Ended March 31,
 
2013
 
2012
Operating Revenues
$
267,064

 
$
297,849

Costs and Expenses:
 
 
 
Operating
200,913

 
208,419

Administrative and general
35,645

 
34,991

Depreciation and amortization
33,548

 
29,702

 
270,106

 
273,112

Gains on Asset Dispositions and Impairments, Net
2,015

 
3,777

Operating Income (Loss)
(1,027
)
 
28,514

Other Income (Expense):
 
 
 
Interest income
3,167

 
2,643

Interest expense
(12,840
)
 
(9,987
)
Debt extinguishment losses, net

 
(160
)
Marketable security gains, net
3,995

 
3,358

Derivative losses, net
(2,107
)
 
(2,958
)
Foreign currency gains (losses), net
(4,011
)
 
1,661

Other, net
3

 
(84
)
 
(11,793
)
 
(5,527
)
Income (Loss) from Continuing Operations Before Income Tax Expense (Benefit) and
   Equity in Earnings (Losses) of 50% or Less Owned Companies
(12,820
)
 
22,987

Income Tax Expense (Benefit)
(2,653
)
 
9,460

Income (Loss) from Continuing Operations Before Equity in Earnings (Losses) of 50% or
   Less Owned Companies
(10,167
)
 
13,527

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
(869
)
 
7,661

Income (Loss) from Continuing Operations
(11,036
)
 
21,188

Income (Loss) from Discontinued Operations, Net of Tax
(211
)
 
15,185

Net Income (Loss)
(11,247
)
 
36,373

Net Loss attributable to Noncontrolling Interests in Subsidiaries
(373
)
 
(115
)
Net Income (Loss) attributable to SEACOR Holdings Inc.
$
(10,874
)
 
$
36,488

 
 
 
 
Net Income (Loss) attributable to SEACOR Holdings Inc.:
 
 
Continuing operations
$
(10,763
)
 
$
21,303

Discontinued operations
(111
)
 
15,185

 
$
(10,874
)
 
$
36,488

 
 
 
 
Basic Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
Continuing operations
$
(0.55
)
 
$
1.04

Discontinued operations

 
0.74

 
$
(0.55
)
 
$
1.78

 
 
 
 
Diluted Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
Continuing operations
$
(0.55
)
 
$
1.02

Discontinued operations

 
0.73

 
$
(0.55
)
 
$
1.75

 
 
 
 
Weighted Average Common Shares Outstanding:
 
 
 
Basic
19,738,930

 
20,519,660

Diluted
19,738,930

 
20,893,210


The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

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SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 
 
Three Months Ended March 31,
 
 
2013
 
2012
Net Income (Loss)
 
$
(11,247
)
 
$
36,373

Other Comprehensive Income (Loss):
 
 
 
 
Foreign currency translation gains (losses)
 
(4,198
)
 
3,200

Reclassification of foreign currency translation losses to foreign currency gains (losses), net
 

 
758

Derivative gains (losses) on cash flow hedges
 
49

 
(476
)
Reclassification of derivative losses on cash flow hedges to interest expense
 

 
636

Reclassification of derivative losses on cash flow hedges to equity in earnings (losses) of 50% or less owned companies
 
167

 
74

Other
 

 
42

 
 
(3,982
)
 
4,234

Income tax (expense) benefit
 
1,227

 
(1,394
)
 
 
(2,755
)
 
2,840

Comprehensive Income (Loss)
 
(14,002
)
 
39,213

Comprehensive Income (Loss) attributable to Noncontrolling Interests in Subsidiaries
 
(848
)
 
136

Comprehensive Income (Loss) attributable to SEACOR Holdings Inc.
 
$
(13,154
)
 
$
39,077


















The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

3

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SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands, unaudited)
 
 
SEACOR Holdings Inc. Stockholders’ Equity
 
Non-
Controlling
Interests In
Subsidiaries
 
Total
Equity
 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Shares
Held In
Treasury
 
Accumulated
Other
Comprehensive
Loss
 
December 31, 2012
 
$
367

 
$
1,330,324

 
$
1,473,509

 
$
(1,088,560
)
 
$
(1,986
)
 
$
29,021

 
$
1,742,675

Issuance of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Stock Purchase Plan
 

 

 

 
975

 

 

 
975

Exercise of stock options
 
1

 
3,719

 

 

 

 

 
3,720

Director stock awards
 

 
83

 

 

 

 

 
83

Restricted stock and restricted stock units
 
1

 
(34
)
 

 

 

 

 
(33
)
Distribution of Era Group stock to shareholders
 

 

 
(415,209
)
 

 
(55
)
 
(107
)
 
(415,371
)
Share award settlements for Era Group employees and directors
 

 
(631
)
 

 

 

 

 
(631
)
Amortization of share awards
 

 
5,935

 

 

 

 

 
5,935

Cancellation of restricted stock
 

 
1,479

 

 
(1,479
)
 

 

 

Issuance of noncontrolling interests
 

 

 

 

 

 
40

 
40

Distributions to noncontrolling interests
 

 

 

 

 

 
(1,968
)
 
(1,968
)
Net loss
 

 

 
(10,874
)
 

 

 
(373
)
 
(11,247
)
Other comprehensive loss
 

 

 

 

 
(2,280
)
 
(475
)
 
(2,755
)
Three months ended March 31, 2013
 
$
369

 
$
1,340,875

 
$
1,047,426

 
$
(1,089,064
)
 
$
(4,321
)
 
$
26,138

 
$
1,321,423
































The accompanying notes are an integral part of these consolidated financial statements
and should be read in conjunction herewith.

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SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2013
 
2012
Net Cash Provided by Operating Activities of Continuing Operations
$
56,794

 
$
67,075

Cash Flows from Investing Activities of Continuing Operations:
 
 
 
Purchases of property and equipment
(33,855
)
 
(65,332
)
Proceeds from disposition of property and equipment
61,369

 
2,883

Investments in and advances to 50% or less owned companies
(22,355
)
 
(13,546
)
Return of investments and advances from 50% or less owned companies
510

 
2,003

Net advances on revolving credit line to 50% or less owned companies

 
(300
)
Principal payments on third party notes receivable, net
3,079

 
3,367

Net decrease (increase) in restricted cash
1,156

 
(4,677
)
Net decrease in construction reserve funds and Title XI reserve funds
1,152

 
48

Repayments on leases, net
835

 
955

Business acquisitions, net of cash acquired

 
(148,139
)
Net cash provided by (used in) investing activities of continuing operations
11,891

 
(222,738
)
Cash Flows from Financing Activities of Continuing Operations:
 
 
 
Payments on long-term debt and capital lease obligations
(2,665
)
 
(60,320
)
Net repayments under inventory financing arrangements
(5,519
)
 
(17,312
)
Proceeds from issuance of long-term debt

 
69

Share award settlements for Era Group employees and directors
(357
)
 

Proceeds and tax benefits from share award plans
4,658

 
5,261

Distributions paid to noncontrolling interests, net of issuances
(1,928
)
 
(333
)
Net cash used in financing activities of continuing operations
(5,811
)
 
(72,635
)
Effects of Exchange Rate Changes on Cash and Cash Equivalents
(2,538
)
 
1,354

Net Increase (Decrease) in Cash and Cash Equivalents from Continuing Operations
60,336

 
(226,944
)
Cash Flows from Discontinued Operations:
 
 
 
Operating Activities
24,298

 
20,356

Investing Activities
(5,987
)
 
37,882

Financing Activities
(14,017
)
 
37,303

Effects of Exchange Rate Changes on Cash and Cash Equivalents
143

 
858

Net Increase in Cash and Cash Equivalents from Discontinued Operations
4,437

 
96,399

Net Increase (Decrease) in Cash and Cash Equivalents
64,773

 
(130,545
)
Cash and Cash Equivalents, Beginning of Period
248,204

 
381,482

Cash and Cash Equivalents, End of Period
$
312,977

 
$
250,937







The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

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Table of Contents

SEACOR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
BASIS OF PRESENTATION AND ACCOUNTING POLICY
The condensed consolidated financial information for the three months ended March 31, 2013 and 2012 has been prepared by the Company and has not been audited by its independent registered public accounting firm. The condensed consolidated financial statements include the accounts of SEACOR Holdings Inc. and its consolidated subsidiaries. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of March 31, 2013, its results of operations for the three months ended March 31, 2013 and 2012, its comprehensive income (loss) for the three months ended March 31, 2013 and 2012, its changes in equity for the three months ended March 31, 2013, and its cash flows for the three months ended March 31, 2013 and 2012. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to SEACOR Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “SEACOR” refers to SEACOR Holdings Inc.
Discontinued Operations. On January 31, 2013, the Company completed the spin-off ("Spin-off") of Era Group Inc. (“Era Group”), the company that operated SEACOR's Aviation Services business segment, by means of a dividend to SEACOR's shareholders of all the issued and outstanding common stock of Era Group. Era Group filed a Registration Statement on Form 10 with the Securities and Exchange Commission, describing the Spin-off, that was declared effective on January 14, 2013. Era Group is now an independent company whose common stock is listed on the New York Stock Exchange under the symbol "ERA." Discontinued operations includes the historical financial position, results of operations and cash flows of Era Group as well as the operations previously reported as discontinued in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (see Note 14).
Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet these criteria is deferred until the criteria are met. Deferred revenues, included in other current liabilities, for the three months ended March 31 were as follows (in thousands): 
 
2013
 
2012
Balance at beginning of period
$
6,592

 
$
9,845

Revenues deferred during the period

 
1,132

Revenues recognized during the period

 
(4,623
)
Balance at end of period
$
6,592

 
$
6,354

As of March 31, 2013, deferred revenues included $6.6 million relating to the time charter of several offshore support vessels scheduled to be paid through the conveyance of an overriding royalty interest (the "Conveyance") in developmental oil and gas producing properties operated by a customer in the U.S. Gulf of Mexico. Payments under the Conveyance, and the timing of such payments, are contingent upon production and energy sale prices. On August 17, 2012, the customer filed a voluntary petition for Chapter 11 bankruptcy. The Company is vigorously defending its interest in connection with the bankruptcy filing, however; payments received under the Conveyance subsequent to August 17, 2012 are subject to bankruptcy court approval. The Company will continue to recognize revenues as cash is received and approved by the bankruptcy court or earlier should future collection become reasonably assured. All costs and expenses related to these charters were recognized as incurred.

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Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income (loss) were as follows:
 
 
SEACOR Holdings Inc. Stockholders Equity
 
Noncontrolling
Interests
 
 
 
 
Foreign
Currency
Translation
Adjustments
 
Derivative
Losses on
Cash Flow
Hedges, net
 
Other
 
Total
 
Foreign
Currency
Translation
Adjustments
 
Other
 
Other
Comprehensive
Income (Loss)
December 31, 2012
 
$
(1,238
)
 
$
(732
)
 
$
(16
)
 
$
(1,986
)
 
$
321

 
$
(10
)
 
 
Distribution of Era Group stock to shareholders
 
(55
)
 

 

 
(55
)
 

 

 
 
Other comprehensive income (loss)
 
(3,723
)
 
216

 

 
(3,507
)
 
(475
)
 

 
$
(3,982
)
Income tax (expense) benefit
 
1,303

 
(76
)
 

 
1,227

 

 

 
1,227

Three months ended March 31, 2013
 
$
(3,713
)
 
$
(592
)
 
$
(16
)
 
$
(4,321
)
 
$
(154
)
 
$
(10
)
 
$
(2,755
)
Reclassifications. Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. These reclassifications had no effect on net income as previously reported.
2.
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
The Company’s financial assets and liabilities as of March 31, 2013 that are measured at fair value on a recurring basis were as follows (in thousands):
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
Marketable securities(1)
$
22,568

 
$

 
$

Derivative instruments (included in other receivables)
465

 
6,052

 

Construction reserve funds and Title XI reserve funds
194,477

 

 

LIABILITIES
 
 
 
 
 
Short sale of marketable securities (included in other current liabilities)
9,610

 

 

Derivative instruments (included in other current liabilities)
770

 
5,478

 

 ______________________
(1)
Marketable security gains (losses), net include unrealized gains of $4.0 million and $2.0 million for the three months ended March 31, 2013 and 2012, respectively, related to marketable security positions held by the Company as of March 31, 2013.

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The estimated fair values of the Company’s other financial assets and liabilities as of March 31, 2013 were as follows (in thousands): 
 
 
 
Estimated Fair Value
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash
$
340,106

 
$
340,106

 
$

 
$

Investments, at cost, in 50% or less owned companies (included in other
  assets)
9,315

 
see below
 
 
 
 
Notes receivable from other business ventures (included in other
  receivables and other assets)
22,990

 
see below
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion
670,819

 

 
783,655

 

The carrying value of cash, cash equivalents and restricted cash approximates fair value. The fair value of the Company’s long-term debt was estimated based upon quoted market prices or by using discounted cash flow analyses based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. It was not practicable to estimate the fair value of the Company’s notes receivable from other business ventures as the overall returns are uncertain due to certain provisions for additional payments contingent upon future events. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
The Company’s non-financial assets and liabilities that were measured at fair value during the three months ended March 31 were as follows (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
2013
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Long-lived assets under construction(1)
 
$
17,494

 
$

 
$

______________________
(1)
During the three months ended March 31, 2013, the Company recognized impairment charges of $3.0 million related to two of Shipping Services harbor tugs, which are currently under construction and anticipated to be sold and leased back upon completion (see Note 5).
3.
DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
Derivative instruments are classified as either assets or liabilities based on their individual fair values. Derivative assets and liabilities are included in other receivables and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. The fair values of the Company’s derivative instruments as of March 31, 2013 were as follows (in thousands): 
 
Derivative
Asset
 
Derivative
Liability
 
 
 
 
Options on equities and equity indices
$
234

 
$
182

Forward currency exchange, option and future contracts
209

 
886

Interest rate swap agreements

 
4,561

Commodity swap, option and future contracts:
 
 
 
Exchange traded
465

 
589

Non-exchange traded
5,609

 
30

 
$
6,517

 
$
6,248

Cash Flow Hedges. As of March 31, 2013, the Company had no interest rate swap agreements designated as cash flow hedges. As of March 31, 2013, one of the Company’s Offshore Marine Services 50% or less owned companies had an interest rate swap agreement maturing in 2015 that has been designated as a cash flow hedge. This instrument calls for the joint venture to pay a fixed interest rate of 1.48% on the amortized notional value of $17.8 million and receive a variable interest rate based on LIBOR on the amortized notional value. As of March 31, 2013, one of the Company’s Inland River Services 50% or less owned companies had four interest rate swap agreements with maturities ranging from 2013 through 2015 that have been designated as

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cash flow hedges. These instruments call for the joint venture to pay fixed rates of interest ranging from 1.53% to 4.16% on the aggregate amortized notional value of $42.2 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. Additionally, as of March 31, 2013, one of the Company’s Shipping Services 50% or less owned companies had an interest rate swap agreement maturing in 2017 that has been designated as a cash flow hedge. The instrument calls for the joint venture to pay a fixed interest rate of 2.79% on the amortized notional value of $38.9 million and received a variable interest rate based on LIBOR on the amortized notional value. By entering into these interest rate swap agreements, the Company's joint ventures have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate.
The Company recognized gains (losses) on derivative instruments designated as cash flow hedges for the three months ended March 31 as follows (in thousands): 
 
2013
 
2012
Interest rate swap agreements, effective portion in other comprehensive income (loss)
$
49

 
$
(476
)
Interest rate swap agreements, ineffective portion in derivative losses, net

 
(28
)
 
$
49

 
$
(504
)
Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments in derivative losses, net for the three months ended March 31 as follows (in thousands):
 
2013
 
2012
Options on equities and equity indices
$
(2,284
)
 
$
(1,212
)
Forward currency exchange, option and future contracts
(598
)
 
583

Interest rate swap agreements
89

 
(209
)
Commodity swap, option and future contracts:
 
 
 
Exchange traded
(744
)
 
(993
)
Non-exchange traded
1,430

 
(1,099
)
U.S. Treasury notes, rate-locks and bond future and option contracts

 

 
$
(2,107
)
 
$
(2,930
)
The Company, from time to time, holds positions in publicly traded equity options that convey the right or obligation to engage in a future transaction on the underlying equity security or index. The Company’s investment in equity options primarily includes positions in energy, marine, transportation and other related businesses. These contracts are typically entered into to mitigate the risk of changes in the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose of.
The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of March 31, 2013, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $13.6 million. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months.
The Company has entered into various interest rate swap agreements with maturities ranging from 2013 through 2018 that call for the Company to pay fixed interest rates ranging from 2.25% to 3.00% on an aggregate amortized notional value of $198.8 million (including an amortized notional value of €11.9 million or $15.3 million) and receive a variable interest rate based on LIBOR on these notional values. In addition, two of the Company’s Offshore Marine Services 50% or less owned companies have entered into interest rate swap agreements maturing in 2014 and 2018 that call for the joint venture to pay fixed interest rates of 3.05% and 1.30%, on the amortized notional values of $24.0 million and $108.0 million, respectively, and receive a variable interest rate based on LIBOR on the amortized notional values. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company or its joint venture.
The Company enters and settles positions in various exchange and non-exchange traded commodity swap, option and future contracts. The Company's ethanol and industrial alcohol manufacturing facility enters into exchange traded positions (primarily corn) to protect its raw material and finished goods inventory balance from market changes. In the Company’s agricultural trading business, fixed price future purchase and sale contracts for sugar are included in the Company’s non-exchange traded derivative positions. The Company enters into exchange traded positions to protect these purchase and sale contracts as well as its inventory balances from market changes. As of March 31, 2013, the net market exposure to corn and sugar under these contracts was not material. The Company also enters into exchange traded positions (primarily natural gas, heating oil, crude oil, gasoline, corn and sugar) to provide value to the Company should there be a sustained decline in the price of commodities that could lead to a

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reduction in the market values and cash flows of the Company’s Offshore Marine Services, Inland River Services and Shipping Services businesses. As of March 31, 2013, these positions were not material.
4.
BUSINESS ACQUISITIONS
Pantagro Acquisition. On June 25, 2012, the Company acquired a 95% controlling interest in Pantagro-Pantanal Produtos Agropecuarious Ltda. ("Pantagro") for $0.4 million ($0.2 million in cash and $0.2 million in a note payable). Pantagro is an Argentine agricultural trading company focusing primarily on salt. The Company performed a fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The fair value analysis was finalized in March 2013.
Superior Lift Boats Acquisition. On March 30, 2012, the Company acquired 18 lift boats, real property and working capital from Superior Energy Inc. (“Superior”) for $142.5 million. The Company performed a fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The fair value analysis was finalized in March 2013.
Purchase Price Allocation. The following table summarizes the allocation of the purchase price for the Company’s business acquisitions during the three months ended March 31, 2013 (in thousands):
Property and Equipment
$
(1,599
)
Intangible Assets
1,599

Purchase price
$

5.
EQUIPMENT ACQUISITIONS, DISPOSITIONS AND DEPRECIATION AND IMPAIRMENT POLICIES
During the three months ended March 31, 2013, capital expenditures were $33.9 million. Equipment deliveries during the period included two offshore support vessels, including one wind farm utility vessel, and one liquid tank barge.
During the three months ended March 31, 2013, the Company sold two offshore support vessels and other property and equipment for net proceeds of $68.4 million ($61.3 million in cash and $7.1 million in seller financing) and gains of $4.3 million, all of which were recognized currently. In addition, the Company recognized previously deferred gains of $0.7 million. The two offshore support vessels were sold to certain of the Company's Offshore Marine Services' joint ventures for $60.5 million (see Note 6).
The Company has sold certain equipment to 50% or less owned companies, entered into vessel sale-leaseback transactions with finance companies, and provided seller financing on sales of its equipment to third parties and its 50% or less owned companies. A portion of the gains realized from these transactions were deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets. Deferred gain activity related to these transactions for the three months ended March 31 was as follows (in thousands):
 
2013
 
2012
Balance at beginning of period
$
111,514

 
$
117,192

Deferred gains arising from asset sales

 

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(2,801
)
 
(4,925
)
Amortization of deferred gains included in gains on asset dispositions and impairments, net
(716
)
 
(801
)
Balance at end of period
$
107,997

 
$
111,466

Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

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As of March 31, 2013, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
Offshore support vessels (excluding wind farm utility)
20
Wind farm utility vessels
10
Inland river dry cargo and deck barges
20
Inland river liquid tank barges
25
Inland river towboats
25
U.S.-flag product tankers
25
RORO(1) vessels
20
Harbor tugs
25
Ocean liquid tank barges
25
Terminal and manufacturing facilities
20
______________________ 
(1)
Roll on/Roll off ("RORO").
The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to fair value. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the three months ended March 31, 2013, the Company recognized impairment charges of $3.0 million related to two of Shipping Services harbor tugs, which are currently under construction and anticipated to be sold and leased back upon completion.
6.
INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES
Sea-Cat Crewzer II. On January 23, 2013 the Company and another offshore support vessel operator formed Sea-Cat Crewzer II LLC (“Sea-Cat Crewzer II”), a 50-50 joint venture to own and operate two high speed offshore catamaran crew boats. Upon formation, the Company and its partner each contributed capital of $11.5 million in cash. Sea-Cat Crewzer II then immediately purchased one high speed offshore catamaran crew boat from the Company for $24.1 million ($23.0 million in cash and $1.1 million in seller financing).
MexMar. During the three months ended March 31, 2013, the Company made an additional cash investment of $5.9 million in Mantenimiento Express Maritimo, S.A.P.I. de C.V. ("MexMar"), an Offshore Marine Services Mexican joint venture. During the three months ended March 31, 2013, MexMar purchased one offshore support vessel from the Company for $36.4 million ($30.4 million in cash and $6.0 million in seller financing). As of March 31, 2013, $6.1 million was outstanding on the seller financing, inclusive of unpaid accrued interest, all of which was repaid in April 2013.
SCFCo Holdings. SCFCo Holdings LLC (“SCFCo”) was established to operate towboats and dry cargo barges on the Parana-Paraguay Rivers and a terminal facility at Port Ibicuy, Argentina. During the three months ended March 31, 2013, the Company contributed additional capital of $1.4 million to fund SCFCo’s operations and provided net temporary working capital advances of $0.5 million. As of March 31, 2013, the total outstanding balance of working capital advances by the Company was $2.8 million.
Bunge-SCF Grain. Bunge-SCF Grain LLC (“Bunge-SCF Grain”) was established to construct and operate a terminal grain elevator in Fairmont City, Illinois. During the three months ended March 31, 2013, the Company and its partner each made a working capital advance of $2.5 million to Bunge-SCF Grain and received $0.5 million of repayments on working capital advances. As of March 31, 2013, the total outstanding balance of working capital advances was $7.0 million.
Other. During the three months ended March 31, 2013, the Company made a $0.5 million capital contribution to one of its industrial aviation businesses in Asia.
Guarantees. The Company has guaranteed the payment of amounts owed by one of its joint ventures under a vessel charter and has guaranteed amounts owed under banking facilities by certain of its joint ventures. As of March 31, 2013, the total amount guaranteed by the Company under these arrangements was $26.6 million. In addition, as of March 31, 2013, the Company had uncalled capital commitments to two of its joint ventures for a total of $2.4 million.
7.
COMMITMENTS AND CONTINGENCIES
As of March 31, 2013, the Company’s unfunded capital commitments were $151.8 million and included: fourteen offshore support vessels for $106.1 million; seven inland river liquid tank barges for $15.0 million; five inland river towboats for $12.7 million; four harbor tugs for $7.4 million and other equipment and improvements for $8.0 million. In addition, the Company

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notified a lessor of its intent to purchase two harbor tugs currently operating under capital leases for $2.6 million. Of these commitments, $97.8 million is payable during the remainder of 2013 with the balance payable through 2015. Subsequent to March 31, 2013, the Company committed to purchase additional equipment for $49.7 million.
On July 14, 2010, a group of individuals and entities purporting to represent a class commenced a civil action in the U.S. District Court for the Eastern District of Louisiana, Terry G. Robin, et al. v. Seacor Marine, L.L.C., et al., No. 2:10-cv-01986 (E.D. La.) (the “Robin Case”), in which they asserted that support vessels, including vessels owned by the Company, responding to the explosion and resulting fire that occurred aboard the semi-submersible drilling rig, the Deepwater Horizon, were negligent in their efforts to save lives and put out the fire and contributed to the sinking of the Deepwater Horizon and subsequent oil spill. The action was part of the overall multi-district litigation, In re Oil Spill by the Oil Rig “Deepwater Horizon”, MDL No. 2179 (“MDL”). The complaint sought compensatory, punitive, exemplary, and other damages. In response to this lawsuit, the Company filed petitions seeking exoneration from, or limitation of liability in relation to, any actions that may have been taken by vessels owned by the Company to extinguish the fire. On June 8, 2011, the Company moved to dismiss these claims (with the exception of one claim filed by a Company employee) on various legal grounds. On October 12, 2011, the Court granted the Company's motion to dismiss in its entirety, dismissing with prejudice all claims that had been filed against the Company in the limitation actions (with the exception of one claim filed by a Company employee that was not subject to the motion to dismiss). The Court entered final judgments in favor of the Company in the Robin Case and each of the limitation actions on November 21, 2011. On December 12, 2011, the claimants appealed each of those judgments to the Unites States Court of Appeals for the Fifth Circuit. The claimants' opening brief was submitted on May 7, 2012, and the claimants filed a reply brief on June 1, 2012. Oral argument was not requested by the Fifth Circuit. On December 13, 2012, the Fifth Circuit affirmed the judgment of the district court. The claimants have not petitioned the United States Supreme Court for a writ of certiorari and their deadline to do so has expired.
With respect to the one claim filed by a Company employee, that individual also commenced a separate action in the MDL entitled DuWayne Mason v. Seacor Marine, LLC, No. 2:11-CV-00826 (E.D. La.), in which he alleges sustaining personal injuries not only in connection with responding to the explosion and fire, but also in the months thereafter in connection with the clean-up of oil and dispersants while a member of the crew of the M/V Seacor Vanguard. Although the case is subject to the MDL Court's stay of individual proceedings, on July 16, 2012 the employee sought to sever his case from the MDL. On March 5, 2013, the Court denied the motion, and on April 2, 2013, the employee filed a motion asking the Court to reconsider. The Company's response is due on April 30, 2013. The Company is unable to estimate the potential exposure, if any, resulting from this matter and intends to vigorously defend the action should it ever proceed. The Company does not expect this matter will have a material effect on the Company's consolidated financial position or its results of operations. In addition, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend the Company in connection with this matter.
On July 20, 2010, two individuals purporting to represent a class commenced a civil action in the Civil District Court for the Parish of Orleans in the State of Louisiana, John Wunstell, Jr. and Kelly Blanchard v. BP, et al., No. 2010-7437 (Division K) (the “Wunstell Action”), in which they assert, among other theories, that Mr. Wunstell suffered injuries as a result of his exposure to certain noxious fumes and chemicals in connection with the provision of remediation, containment and response services by O'Brien's Response Management Inc. ("ORM"), a subsidiary of the Company prior to the ORM Transaction (as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 2012). The action now is part of the overall MDL. The complaint also seeks to establish a “class-wide court-supervised medical monitoring program” for all individuals “participating in BP's Deepwater Horizon Vessels of Opportunity Program and/or Horizon Response Program” who allegedly experienced injuries similar to those of Mr. Wunstell. The Company believes this lawsuit has no merit and will continue to vigorously defend the action. Pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend ORM in connection with the Wunstell Action and claims asserted in the MDL.
On December 15, 2010, ORM and National Response Corporation ("NRC"), subsidiaries of the Company prior to the ORM Transaction and SES Business Transaction (as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 2012), respectively, were named as defendants in one of the several consolidated “master complaints” that have been filed in the overall MDL. The master complaint naming ORM and NRC asserts various claims on behalf of a putative class against multiple defendants concerning the clean-up activities generally, and the use of dispersants specifically. By court order, the Wunstell Action has been stayed as a result of the filing of the referenced master complaint. The Company believes that the claims asserted against ORM and NRC in the master complaint have no merit and on February 28, 2011, ORM and NRC moved to dismiss all claims against them in the master complaint on legal grounds. On September 30, 2011, the Court granted in part and denied in part the motion to dismiss that ORM and NRC had filed (an amended decision was issued on October 4, 2011 that corrected several grammatical errors and non-substantive oversights in the original order). Although the Court refused to dismiss the referenced master complaint in its entirety at that time, the Court did recognize the validity of the “derivative immunity” and “implied preemption” arguments that ORM and NRC advanced and directed ORM and NRC to (i) conduct limited discovery to develop evidence to support those arguments and (ii) then re-assert the arguments. The Court did, however, dismiss all state-law claims and certain other claims that had been asserted in the referenced master complaint, and dismissed the claims of all plaintiffs that have failed to allege a legally-sufficient injury. A schedule for limited discovery and motion practice was established by the Court and, in accordance with that schedule, ORM and NRC filed for summary judgment re-asserting their derivative immunity and

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implied preemption arguments on May 18, 2012. Those motions were argued on July 13, 2012 and are still pending decision. In addition to the indemnity provided to ORM, pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend ORM and NRC in connection with these claims in the MDL.
Subsequent to the filing of the referenced master complaint, eight additional individual civil actions have been filed in the U.S. District Court for the Eastern District of Louisiana concerning the clean-up activities generally, which name the Company, ORM and/or NRC as defendants or third-party defendants and are part of the overall MDL. On April 8, 2011, ORM was named as a defendant in Johnson Bros. Corporation of Louisiana v. BP, PLC, et al., No. 2:11-cv-00781 (E.D. La.), which is a suit by an individual business seeking damages allegedly caused by a delay on a construction project alleged to have resulted from the clean-up operations. On April 15, 2011, ORM and NRC were named as defendants in James and Krista Pearson v. BP Exploration & Production, Inc. ("BP Exploration"), et al., No. 2:11-cv-00863 (E.D. La.), which is a suit by a husband and wife, who allegedly participated in the clean-up effort and are seeking damages for personal injury, property damage to their boat, and amounts allegedly due under contract. On April 15, 2011, ORM and NRC were named as defendants in Thomas Edward Black v. BP Exploration, et al., No. 2:11-cv-00867 (E.D. La.), which is a suit by an individual who is seeking damages for lost income because he allegedly could not find work in the fishing industry after the oil spill. On April 20, 2011, a complaint was filed in Darnell Alexander, et al. v. BP, PLC, et al., No. 2:11-cv-00951 (E.D. La.) on behalf of 117 individual plaintiffs that seek to adopt the allegations made in the referenced master complaint against ORM and NRC (and the other defendants). On October 3, 2012, ORM and NRC were served with a Rule 14(c) Third-Party Complaint by Jambon Supplier II, L.L.C. and Jambon Marine Holdings L.L.C. in their Limitation of Liability action, In the Matter of Jambon Supplier II, L.L.C., et al., No. 2:12-CV-00426 (E.D. La.). This Third-Party Complaint alleges that if claimant David Dinwiddie, who served as a clean-up crewmember aboard the M/V JAMBON SUPPLIER II vessel during the clean-up efforts, was injured as a result of his exposure to dispersants and chemicals during the course and scope of his employment, then said injuries were caused by the third-party defendants. On November 25, 2012, ORM was named as a defendant in Victoria Sanchez v. American Pollution Control Corp. et al., No. 2:12-CV-00164 (E.D. La.), a maritime suit filed by an individual who allegedly participated in the clean-up effort and sustained personal injuries during the course of such employment. On December 17, 2012, the Court unsealed a False Claims Act lawsuit naming ORM as a defendant, Dillon v. BP, PLC et al., No. 2:12-CV-00987 (E.D. La.)., which is a suit by an individual seeking damages and penalties arising from alleged false reports and claims made to the federal government with respect to the amount of oil burned and dispersed during the clean-up. The federal government has declined to intervene in this suit. Finally, on April 8, 2013, the Company, ORM, and NRC were named as defendants in William and Dianna Fitzgerald v. BP Exploration et al., No. 2:13-CV-00650 (E.D. La.), which is a suit by a husband and wife whose son allegedly participated in the clean-up effort and became ill as a result of his exposure to oil and dispersants. By court order, all eight of these additional individual cases have been stayed until further notice. The Company is unable to estimate the potential exposure, if any, resulting from these matters but believes they are without merit and does not expect they will have a material effect on the Company's consolidated financial position or its results of operations.
On February 18, 2011, Triton Asset Leasing GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., and Transocean Deepwater Inc. (collectively “Transocean”) named ORM and NRC as third-party defendants in a Rule 14(c) Third-Party Complaint in Transocean's own Limitation of Liability Act action, which is part of the overall MDL, tendering to ORM and NRC the claims in the referenced master complaint that have already been asserted against ORM and NRC. Transocean, Cameron International Corporation, Halliburton Energy Services, Inc., and M-I L.L.C. also filed cross-claims against ORM and NRC for contribution and tort indemnity should they be found liable for any damages in Transocean's Limitation of Liability Act action and ORM and NRC have asserted counterclaims against those same parties for identical relief. Weatherford U.S., L.P. and Weatherford International, Inc. (collectively "Weatherford") had also filed cross-claims against ORM and NRC, but recently moved to voluntarily dismiss these cross-claims without prejudice. The Court granted Weatherford's motion on February 8, 2013. As provided above, the Company is unable to estimate the potential exposure, if any, resulting from these actions but believes they are without merit and does not expect these matters will have a material effect on the Company's consolidated financial position or its results of operations.
On November 16, 2012, 668 individuals who served as beach clean-up workers in Escambia County, Florida during the Deepwater Horizon oil spill response commenced a civil action in the Circuit Court for the First Judicial Circuit of Florida, in and for Escambia County, Abney et al. v. Plant Performance Services, LLC et al., No. 2012-CA-002947, in which they allege, among other things, that ORM and other defendants engaged in the contamination of Florida waters and beaches in violation of Florida Statutes Chapter 376 and injured the plaintiffs by exposing them to dispersants during the course and scope of their employment. The case was removed to the U.S. District Court for the Northern District of Florida on January 13, 2013, Abney et al. v. Plant Performance Services, LLC et la., No. 3:13-CV-00024 (N.D. Fla.), and on January 16, 2013, the United States Judicial Panel on Multidistrict Litigation (“JPML”) issued a Conditional Transfer Order (“CTO”) transferring the case to the MDL, subject to any timely-filed notice of objection from the plaintiffs. Upon receipt of a notice of objection from the plaintiffs, a briefing schedule was set by the JPML, and so a stay of proceedings and suspension of deadlines was sought and obtained by the Court in the U.S. District Court for the Northern District of Florida. Following briefing before the JPML, the case was transferred to the U.S. District Court for the Eastern District of Louisiana and consolidated with the MDL on April 2, 2013. The Company is unable to estimate

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the potential exposure, if any, resulting from this matter but believes it is without merit and does not expect this matter to have a material effect on the Company's consolidated financial position or its results of operations.
Separately, on March 2, 2012, the Court announced that BP Exploration and BP America Production Company ("BP America") (collectively "BP") and the plaintiffs had reached an agreement on the terms of two proposed class action settlements that will resolve, among other things, plaintiffs' economic loss claims and clean-up related claims against BP. The parties filed their proposed settlement agreements on April 18, 2012 along with motions seeking preliminary approval of the settlements. The Court held a hearing on April 25, 2012 to consider those motions and preliminarily approved both settlements on May 2, 2012. A final fairness hearing took place on November 8, 2012. The Court granted final approval to the Economic and Property Damages Class Action Settlement on December 21, 2012, and granted final approval to the Medical Benefits Class Action Settlement on January 11, 2013. Notices of Appeal to the Fifth Circuit with respect to both class action settlements have been filed by various objectors. Although neither the Company, ORM, or NRC are parties to the settlement agreements, the Company, ORM, and NRC are listed as released parties on the releases accompanying both settlement agreements. As the releases for both settlements have been deemed valid and enforceable by the district court, if the Fifth Circuit affirms these decisions, class members who did not file timely requests for exclusion will be barred from pursuing economic loss, property damage, personal injury, medical monitoring, and/or other released claims against the Company, ORM, and NRC. At this time, the Company expects these settlements to reduce ORM's potential exposure, if any, from some of the pending actions described above, but is currently still evaluating the settlements' impacts on these cases.
On January 29, 2013, HEPACO, LLC ("HEPACO"), served a demand for arbitration upon ORM, in which HEPACO claims that ORM owes HEPACO an additional fee of $20,291,178.92 under the parties' Management Services Agreement (“MSA”), dated June 1, 2010.  According to HEPACO, the MSA requires ORM to pay HEPACO an additional fee of 30% of total charges paid under the MSA ("Surcharge") to compensate HEPACO for U.S. Longshoremen's and Harbor Workers' insurance or Jones Act insurance and related risks attendant to the work when contract requires labor to be performed over, adjoining and/or in water. ORM denies liability for the Surcharge, intends to vigorously defend against the claim, and has sought indemnity for any resulting judgment and related attorneys fees from BP America and BP Exploration. ORM has advised BP that, pursuant to the Bridge Agreement HOU-WL4-3066 between BP and ORM, effective as of June 1, 2010, under which ORM managed and oversaw, for BP, subcontractors, such as HEPACO, in connection with on-shore services related to the BP Deepwater Horizon oil spill, BP ultimately is responsible for the payment of the Surcharge should HEPACO be determined to be entitled to recover it under the MSA.
In the course of the Company's business, it may agree to indemnify a party.  If the indemnified party makes a successful claim for indemnification, the Company would be required to reimburse that party in accordance with the terms of the indemnification agreement.  Indemnification agreements generally are subject to threshold amounts, specified claim periods and other restrictions and limitations.
In connection with the SES Business Transaction and the ORM Transaction, the Company remains contingently liable for certain obligations, including potential liabilities relating to work performed in connection with the Deepwater Horizon oil spill response. In the case of the SES Business Transaction, such potential liabilities may not exceed the purchase consideration received by the Company for the SES Business Transaction and in the case of the ORM Transaction are subject to a negotiated cap. The Company currently is indemnified under contractual agreements with BP.
ORM is defending against four collective action lawsuits, each asserting failure to pay overtime with respect to individuals who provided service on the Deepwater Horizon spill response (the “DPH FLSA Actions”) under the Fair Labor Standards Act (“FLSA”). These cases - Dennis Prejean v. O'Brien's Response Management Inc. (E.D. La., Case No.: 2:12-cv-01045) (the “Prejean Action”); Baylor Singleton et. al. v. O'Brien's Response Management Inc. et. al. (E.D. La., Case No.: 2:12-cv-01716) (the “Singleton Action”); Himmerite et al. v. O'Brien's Response Management Inc. et al. (E.D. La., Case No.: 2:12-cv-01533) (the “Himmerite Action”); and Chann Chavis v. O'Brien's Response Management Inc. et al. (S.D. Tx., Case No.: 4:12-cv-02045) (the “Chavis Action”) - were each brought on behalf of certain individuals who worked on the Deepwater Horizon oil spill response and who were classified as independent contractors. The Prejean, Himmerite and Singleton Actions were each filed in the United States District Court for the Eastern District of Louisiana and then subsequently consolidated with the overall MDL. The Himmerite and Singleton Actions have since been automatically stayed pending further scheduling by the Court, pursuant to the procedures in the MDL. In the Prejean Action, ORM has answered the complaint, a scheduling order has been issued, and plaintiffs have, among other things, filed a Motion for Conditional Certification, which has been stayed pending further scheduling by the Court in accordance with the procedures of the MDL. The limitations periods for potential plaintiffs to opt-in to the Prejean, Himmerite and Singleton actions have all been tolled pending further action by the Court. The Chavis Action was filed on July 7, 2012 in the United States District Court for the Southern District of Texas. On December 20, 2012, the parties in the Chavis Action entered into a full and final settlement agreement with respect to all of the Plaintiff's individual and class claims, and the Court issued an order approving this settlement on March 11, 2013. The Company is unable to estimate the potential exposure, if any, resulting from any of these DPH FLSA Actions, but believes they are without merit and will continue to vigorously defend against them.

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In the normal course of its business, the Company becomes involved in various other litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company's potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company's estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company's consolidated financial position or its results of operations.
8.
MULTI-EMPLOYER PENSION PLANS
There has been no material change in the multi-employer pension plans in which the Company participates, except that the Company received notification from the American Maritime Officers Pension Plan (the "AMOPP”) that, based on an actuarial valuation performed as of September 30, 2012, if the Company chooses to withdraw from the AMOPP, its withdrawal liability will be $45.6 million. That liability may change in future years based on various factors, primarily employee census. As of March 31, 2013, the Company has no intention to withdraw from the AMOPP and no deficit amounts have been invoiced. Depending upon the results of the future actuarial valuations and the ten-year rehabilitation plan, it is possible that the AMOPP will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received or contribution levels are increased.
9.
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
As of March 31, 2013, the remaining availability under the SEACOR revolving credit facility was $359.0 million, net of issued letters of credit of $1.0 million. In addition, as of March 31, 2013, the Company had other outstanding letters of credit totaling $29.1 million with various expiration dates through 2016.
During the three months ended March 31, 2013, the Company made scheduled payments on other long-term debt and capital lease obligations of $2.7 million and made net repayments of $5.5 million on inventory financing arrangements.
SEACOR’s Board of Directors has previously authorized the Company to purchase any or all of its 7.375% Senior Notes due 2019, which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the three months ended March 31, 2013, the Company did not repurchase any of its 7.375% Senior Notes due 2019.
10.
STOCK REPURCHASES
SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire Common Stock, which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the three months ended March 31, 2013, the Company did not acquire any shares of Common Stock for treasury. As of March 31, 2013, the remaining authority under the repurchase plan was $100.0 million.
11.
EARNINGS PER COMMON SHARE OF SEACOR
Basic earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the treasury stock and if-converted methods. Dilutive securities for this purpose assumes restricted stock grants have vested, common shares have been issued pursuant to the exercise of outstanding stock options and common shares have been issued pursuant to the conversion of all outstanding convertible notes.

15

Table of Contents

Computations of basic and diluted earnings per common share of SEACOR for the three months ended March 31, were as follows (in thousands, except share data):
 
Net Income (Loss) Attributable to SEACOR
 
Average O/S Shares
 
Per Share
2013
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
(10,874
)
 
19,738,930

 
$
(0.55
)
Effect of Dilutive Share Awards:
 
 
 
 
 
Options and Restricted Stock(1)

 

 
 
Convertible Securities(2)

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
(10,874
)
 
19,738,930

 
$
(0.55
)
2012
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
36,488

 
20,519,660

 
$
1.78

Effect of Dilutive Share Awards:
 
 
 
 
 
Options and Restricted Stock(1)

 
373,550

 
 
Diluted Weighted Average Common Shares Outstanding
$
36,488

 
20,893,210

 
$
1.75

______________________ 
(1)
For the three months ended March 31, 2013 and 2012, diluted earnings per common share of SEACOR excluded 1,474,897 and 501,274 of certain share awards, respectively, as the effect of their inclusion in the computation would be anti-dilutive.
(2)
Excludes interest expense of $4.6 million, net of tax, and 4,200,525 shares related to the Company's 2.5% Convertible Senior Notes as the their inclusion would be anti-dilutive.
12.
SHARE BASED COMPENSATION
Transactions in connection with the Company’s share based compensation plans during the three months ended March 31, 2013 were as follows:
Director stock awards granted
1,000

Employee Stock Purchase Plan (“ESPP”) shares issued
17,998

Restricted stock awards granted
147,800

Restricted stock awards canceled
17,000

Shares released from Deferred Compensation Plan

Stock Option Activities:
 
Outstanding as of December 31, 2012
1,281,821

Granted
368,612

Exercised
(68,543
)
Forfeited

Expired
(1,576
)
Outstanding as of March 31, 2013
1,580,314

Shares available for future grants and ESPP purchases as of March 31, 2013
1,001,595

______________________ 
(1)
During the three months ended March 31, 2013, the Company granted 318,012 stock options to existing option holders under make-whole provisions upon the Spin-off of Era Group.
13.
SEGMENT INFORMATION
Accounting standards require public business enterprises to report information about each of their operating business segments that exceed certain quantitative thresholds or meet certain other reporting requirements. Operating business segments have been defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Certain reclassifications of prior period information have been made to conform to the current period's reportable segment presentation as a result of the Company's presentation of discontinued operations (see Note 1 and 14). The Company’s basis of measurement of segment profit or loss is as previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
 

16

Table of Contents

The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments.
 
Offshore
Marine
Services
$’000
 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
Ethanol and
Industrial
Alcohol(1)(2)
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended
March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
123,992

 
49,423

 
46,476

 
32,849

 
14,324

 

 
267,064

Intersegment
24

 
654

 

 

 

 
(678
)
 

 
124,016

 
50,077

 
46,476

 
32,849

 
14,324

 
(678
)
 
267,064

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
90,031

 
36,389

 
26,614

 
34,045

 
14,488

 
(654
)
 
200,913

Administrative and general
14,827

 
4,024

 
5,177

 
661

 
1,656

 
9,300

 
35,645

Depreciation and amortization
16,287

 
7,084

 
7,797

 
1,489

 
99

 
792

 
33,548

 
121,145

 
47,497

 
39,588

 
36,195

 
16,243

 
9,438

 
270,106

Gains (Losses) on Asset Dispositions
  and Impairments, Net
2,339

 
697

 
(3,069
)
 

 
1,907

 
141

 
2,015

Operating Income (Loss)
5,210

 
3,277

 
3,819

 
(3,346
)
 
(12
)
 
(9,975
)
 
(1,027
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative gains (losses), net
150

 

 

 
39

 
842

 
(3,138
)
 
(2,107
)
Foreign currency gains (losses), net
(3,264
)
 
(137
)
 
(7
)
 

 
(167
)
 
(436
)
 
(4,011
)
Other, net

 

 
14

 

 
54

 
(65
)
 
3

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
1,313

 
(2,387
)
 
(1,505
)
 

 
1,710

 

 
(869
)
Segment Profit (Loss)
3,409

 
753

 
2,321

 
(3,307
)
 
2,427

 
 
 
 
Other Income (Expense) not included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
(5,678
)
Plus Equity Earnings (Losses) included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
869

Loss Before Taxes, Equity Losses and Discontinued Operations
 
 
 
 
 
 
 
(12,820
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
19,920

 
5,727

 
6,814

 

 
357

 
1,037

 
33,855

 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment:
 
 
 
 
 
 
 
 
 
 
 
 


Historical cost
1,110,480

 
493,140

 
506,279

 
43,788

 
4,032

 
29,173

 
2,186,892

Accumulated depreciation
(428,766
)
 
(133,827
)
 
(206,603
)
 
(7,146
)
 
(467
)
 
(8,956
)
 
(785,765
)
 
681,714

 
359,313

 
299,676

 
36,642

 
3,565

 
20,217

 
1,401,127

Construction in progress
61,447

 
15,335

 
33,444

 

 
2,063

 
1,092

 
113,381

 
743,161

 
374,648

 
333,120

 
36,642

 
5,628

 
21,309

 
1,514,508

Investments, at Equity, and Advances to 50% or Less Owned Companies
85,311

 
55,105

 
65,941

 

 
93,421

 

 
299,778

Inventories
6,497

 
2,297

 
1,284

 
19,868

 
2,020

 

 
31,966

Goodwill
13,367

 
2,759

 
1,852

 

 

 

 
17,978

Intangible Assets
5,105

 
8,824

 
1,272

 
72

 
481

 

 
15,754

Other current and long-term assets, excluding cash and near cash assets(3)
136,661

 
37,787

 
18,316

 
5,947

 
47,877

 
31,380

 
277,968

Segment Assets
990,102

 
481,420

 
421,785

 
62,529

 
149,427

 
 
 
 
Cash and near cash assets(3)
 
 
 
 
 
 
 
 
 
 
 
 
557,151

Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
384

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
2,715,487

______________________
(1)
Operating revenues includes $32.1 million of tangible product sales and operating expenses includes $34.4 million of costs of goods sold.
(2)
Inventories includes raw materials of $3.0 million and work in process of $2.4 million.
(3)
Cash and near cash assets includes cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds.

17

Table of Contents

 
 
Offshore
Marine
Services
$’000
 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
Ethanol and
Industrial
Alcohol(1)(2)
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended
March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
120,951

 
53,490

 
45,733

 
39,619

 
38,056

 

 
297,849

Intersegment
135

 

 

 

 
52

 
(187
)
 

 
121,086

 
53,490

 
45,733

 
39,619

 
38,108

 
(187
)
 
297,849

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
75,340

 
35,183

 
27,572

 
37,405

 
33,077

 
(158
)
 
208,419

Administrative and general
11,856

 
3,982

 
4,867

 
425

 
4,798

 
9,063

 
34,991

Depreciation and amortization
12,882

 
7,007

 
7,617

 
1,052

 
689

 
455

 
29,702

 
100,078

 
46,172

 
40,056

 
38,882

 
38,564

 
9,360

 
273,112

Gains on Asset Dispositions, Net
1,845

 
1,927

 

 

 
5

 

 
3,777

Operating Income (Loss)
22,853

 
9,245

 
5,677

 
737

 
(451
)
 
(9,547
)
 
28,514

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative losses, net

 

 

 
(485
)
 
(1,417
)
 
(1,056
)
 
(2,958
)
Foreign currency gains (losses), net
1,123

 
(22
)
 
13

 

 
99

 
448

 
1,661

Other, net

 

 
30

 

 

 
(114
)
 
(84
)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
1,829

 
250

 
(217
)
 
6,154

 
(355
)
 

 
7,661

Segment Profit (Loss)
25,805

 
9,473

 
5,503

 
6,406

 
(2,124
)
 
 
 
 
Other Income (Expense) not included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
(4,146
)
Less Equity Earnings (Losses) included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
(7,661
)
Income Before Taxes, Equity Earnings and Discontinued Operations
 
 
 
 
 
 
 
22,987

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
42,778

 
4,884

 
10,543

 

 
6,106

 
1,021

 
65,332

 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment:
 
 
 
 
 
 
 
 
 
 
 
 


Historical cost
1,120,414

 
474,013

 
525,497

 
43,693

 
22,316

 
26,226

 
2,212,159

Accumulated depreciation
(386,583
)
 
(109,715
)
 
(183,461
)
 
(1,038
)
 
(3,271
)
 
(10,047
)
 
(694,115
)
 
733,831

 
364,298

 
342,036

 
42,655

 
19,045

 
16,179

 
1,518,044

Construction in progress
92,322

 
11,670

 
27,419

 

 
2,676

 
4,591

 
138,678

 
826,153

 
375,968

 
369,455

 
42,655

 
21,721

 
20,770

 
1,656,722

Investments, at Equity, and Advances to 50% or Less Owned Companies
68,645

 
50,758

 
11,989

 

 
48,539

 

 
179,931

Inventories
6,261

 
2,681

 
1,476

 
15,178

 
6,369

 

 
31,965

Goodwill
13,367

 
4,345

 
1,852

 

 
37,138

 

 
56,702

Intangible Assets
5,500

 
8,755

 
1,811

 
157

 
5,909

 

 
22,132

Other current and long-term assets, excluding cash and near cash assets(3)
140,019

 
61,675

 
15,564

 
6,726

 
104,243

 
17,238

 
345,465

Segment Assets
1,059,945

 
504,182

 
402,147

 
64,716

 
223,919

 
 
 
 
Cash and near cash assets(3)
 
 
 
 
 
 
 
 
 
 
 
605,407

Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
1,008,629

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
3,906,953

 ______________________
(1)
Operating revenues includes $38.9 million of tangible product sales and operating expenses includes $38.0 million of costs of goods sold.
(2)
Inventories includes raw materials of $2.8 million and work in process of $2.4 million.
(3)
Cash and near cash assets includes cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds.

18

Table of Contents

14.
DISCONTINUED OPERATIONS
Summarized selected operating results of the Company's discontinued operations for the three months ended March 31 were as follows (in thousands):
 
 
2013
 
2012
SES Business
 
 
 
 
Operating Revenues
 
$

 
$
22,387

Costs and Expenses:
 
 
 
 
Operating
 

 
18,234

Administrative and general
 

 
4,020

Depreciation and amortization
 

 
1,428

 
 

 
23,682

Losses on Asset Dispositions
 

 
(71
)
Operating Loss
 

 
(1,366
)
Other Income (Expense), Net (including gain on sale of business)
 
(1,537
)
 
24,966

Income Tax Expense (Benefit)
 
(538
)
 
4,502

Equity in Earnings of 50% or Less Owned Companies
 

 
302

Net Income (Loss)
 
$
(999
)
 
$
19,400

 
 
 
 
 
SEI
 
 
 
 
Operating Revenues
 
$

 
$
162,930

Costs and Expenses:
 
 
 
 
Operating
 

 
159,963

Administrative and general
 

 
1,510

Depreciation and amortization
 

 
(5
)
 
 

 
161,468

Operating Income
 


1,462

Other Income (Expense), Net (including gain on sale of business)
 
(143
)
 
(1,131
)
Income Tax Expense (Benefit)
 
(50
)
 
239

Net Income (Loss)
 
$
(93
)
 
$
92

 
 
 
 
 
Era Group
 
 
 
 
Operating Revenues
 
$
22,892

 
$
61,052

Costs and Expenses: