UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x                              Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2006           or

o                                 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

 

(IRS Employer

Incorporation or Organization)

 

Identification No.)

 

 

 

2200 Eller Drive, P.O. Box 13038,

 

 

Fort Lauderdale, Florida

 

33316

(Address of Principal Executive Offices)

 

(Zip Code)

 

954-524-4200

(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 x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x

 

Accelerated Filer o

 

Non-Accelerated Filer o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

The total number of shares of common stock, par value $.01 per share, outstanding as of August 2, 2006 was 24,814,816. The Registrant has no other class of common stock outstanding.

 




SEACOR HOLDINGS INC.

Table of Contents

Part I.

 

Financial Information

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

1

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005  

 

1

 

 

 

 

 

Condensed Consolidated Statements of Income for each of the Three Months and Six Months Ended June 30, 2006 and 2005

 

2

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005

 

3

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

 

4

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations      

 

14

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

Item 4.

 

Controls and Procedures

 

26

 

Part II.

 

Other Information

 

 

 

 

 

Item 1A

 

Risk Factors

 

27

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

27

 

 

 

Item 4.

 

Submission of Matters to a Vote of Security Holders

 

27

 

 

 

Item 6.

 

Exhibits

 

28

 

 




PART I—FINANCIAL INFORMATION

ITEM 1.                FINANCIAL STATEMENTS

SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)

 

 

June 30,
2006

 

December 31,
2005

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

540,522

 

 

$

484,422

 

 

Restricted cash

 

31,530

 

 

41,187

 

 

Available-for-sale securities

 

22,039

 

 

12,595

 

 

Receivables:

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $10,572 and $13,696 at June 30, 2006 and December 31, 2005, respectively

 

248,179

 

 

242,159

 

 

Other

 

29,821

 

 

18,672

 

 

Deferred income taxes

 

5,195

 

 

5,196

 

 

Held for sale assets

 

510

 

 

6,810

 

 

Inventories

 

25,949

 

 

21,996

 

 

Prepaid expenses and other

 

11,500

 

 

6,054

 

 

Total current assets

 

915,245

 

 

839,091

 

 

Investments, at Equity, and Receivables from 50% or Less Owned Companies

 

44,418

 

 

36,954

 

 

Property and Equipment

 

2,133,693

 

 

2,108,724

 

 

Less accumulated depreciation

 

(395,882

)

 

(349,331

)

 

Net property and equipment

 

1,737,811

 

 

1,759,393

 

 

Construction Reserve Funds & Title XI Reserve Funds

 

209,269

 

 

146,317

 

 

Goodwill

 

44,286

 

 

40,351

 

 

Intangible Assets

 

29,503

 

 

40,182

 

 

Other Assets

 

34,431

 

 

22,853

 

 

 

 

$

3,014,963

 

 

$

2,885,141

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

6,567

 

 

$

7,539

 

 

Current portion of capital lease obligations

 

2,403

 

 

2,966

 

 

Accounts payable and accrued expenses

 

92,534

 

 

72,719

 

 

Other current liabilities

 

186,293

 

 

164,682

 

 

Total current liabilities

 

287,797

 

 

247,906

 

 

Long-Term Debt

 

935,293

 

 

950,403

 

 

Capital Lease Obligations

 

20,274

 

 

27,232

 

 

Deferred Income Taxes

 

255,423

 

 

242,316

 

 

Deferred Gains and Other Liabilities

 

51,528

 

 

49,543

 

 

Minority Interest in Subsidiaries

 

6,346

 

 

6,436

 

 

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; 31,650,515 and 31,341,739 shares issued at June 30, 2006 and December 31, 2005, respectively

 

317

 

 

313

 

 

Additional paid-in capital

 

864,789

 

 

861,722

 

 

Retained earnings

 

834,851

 

 

721,982

 

 

Less 6,849,110 and 6,522,890 shares held in treasury at June 30, 2006 and December 31, 2005, respectively, at cost

 

(242,917

)

 

(220,814

)

 

Unamortized restricted stock

 

 

 

(3,708

)

 

Accumulated other comprehensive income:

 

 

 

 

 

 

 

Cumulative translation adjustments

 

45

 

 

(353

)

 

Unrealized gain on available-for-sale securities

 

1,217

 

 

2,163

 

 

Total stockholders’ equity

 

1,458,302

 

 

1,361,305

 

 

 

 

$

3,014,963

 

 

$

2,885,141

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

and should be read in conjunction herewith.

1




SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

Operating Revenues

 

$

330,986

 

$

177,831

 

$

636,901

 

$

343,016

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

187,149

 

117,179

 

356,793

 

232,780

 

Administrative and general

 

32,865

 

19,329

 

64,358

 

37,824

 

Depreciation and amortization

 

42,318

 

18,492

 

85,578

 

36,774

 

 

 

262,332

 

155,000

 

506,729

 

307,378

 

Gains on Asset Dispositions

 

24,089

 

1,812

 

44,966

 

15,328

 

Operating Income

 

92,743

 

24,643

 

175,138

 

50,966

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

Interest income

 

9,086

 

4,484

 

16,222

 

8,163

 

Interest expense

 

(12,847

)

(7,550

)

(26,915

)

(15,141

)

Derivative transactions gains (losses), net

 

3,084

 

(178

)

272

 

(1,768

)

Foreign currency transactions gains, net

 

1,217

 

4,401

 

1,376

 

3,852

 

Marketable security transactions gains (losses), net

 

(3,341

)

8,502

 

(6,926

)

14,736

 

Other, net

 

595

 

440

 

623

 

640

 

 

 

(2,206

)

10,099

 

(15,348

)

10,482

 

Income from Continuing Operations Before Income Tax Expense, Minority Interest in Income of Subsidiaries and Equity In Earnings of 50% or Less Owned Companies

 

90,537

 

34,742

 

159,790

 

61,448

 

Income Tax Expense

 

33,703

 

12,448

 

59,134

 

22,188

 

Income from Continuing Operations Before Minority Interest in Income of Subsidiaries and Equity in Earnings of 50% or Less Owned Companies

 

56,834

 

22,294

 

100,656

 

39,260

 

Minority Interest in Income of Subsidiaries

 

(104

)

(154

)

(187

)

(120

)

Equity in Earnings of 50% or Less Owned Companies

 

6,031

 

2,594

 

12,400

 

4,211

 

Income from Continuing Operations

 

62,761

 

24,734

 

112,869

 

43,351

 

Income from Discontinued Operations, Net of Tax

 

 

390

 

 

364

 

Net Income

 

$

62,761

 

$

25,124

 

$

112,869

 

$

43,715

 

Basic Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

2.52

 

$

1.35

 

$

4.55

 

$

2.37

 

Income from Discontinued Operations

 

 

0.02

 

 

0.02

 

Net Income

 

$

2.52

 

$

1.37

 

$

4.55

 

$

2.39

 

Diluted Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

2.24

 

$

1.18

 

$

4.04

 

$

2.09

 

Income from Discontinued Operations

 

 

0.02

 

 

0.02

 

Net Income

 

$

2.24

 

$

1.20

 

$

4.04

 

$

2.11

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

24,868,508

 

18,349,393

 

24,827,685

 

18,299,325

 

Diluted

 

28,568,267

 

21,923,636

 

28,541,772

 

21,915,888

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

and should be read in conjunction herewith.

2




SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2006

 

2005

 

Net Cash Provided by Operating Activities

 

$

135,744

 

$

52,032

 

Cash Flows from Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(149,461

)

(144,960

)

Proceeds from disposition of property, equipment and held for sale assets

 

138,739

 

112,287

 

Purchases of securities

 

(23,543

)

(81,753

)

Proceeds from sale of securities

 

40,499

 

178,130

 

Investments in and advances to 50% or less owned companies

 

(5,937

)

(252

)

Proceeds on sale of investments in 50% or less owned companies

 

15,600

 

 

Net decrease in restricted cash

 

9,657

 

 

Net (increase) decrease in construction reserve funds and title XI reserve funds

 

(62,952

)

45,866

 

Cash settlements on derivative transactions, net

 

4,721

 

(110

)

Investments in sales-type leases

 

(5,316

)

 

Other

 

(34

)

4,855

 

Net cash (used in) provided by investing activities

 

(38,027

)

114,063

 

Cash Flows from Financing Activities:

 

 

 

 

 

Payments on long-term debt and capital lease obligations

 

(22,497

)

(13,207

)

Proceeds from borrowings under a revolving credit facility

 

 

15,000

 

Dividends paid to minority interest holders

 

(279

)

(183

)

Cash received from minority interest holders

 

 

341

 

Common stock acquired for treasury

 

(25,763

)

(5,561

)

Proceeds and tax benefits from share award plans

 

6,245

 

2,625

 

Net cash used in financing activities

 

(42,294

)

(985

)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

677

 

(2,310

)

Net Increase in Cash and Cash Equivalents

 

56,100

 

162,800

 

Cash and Cash Equivalents, Beginning of Period

 

484,422

 

214,389

 

Cash and Cash Equivalents, End of Period

 

$

540,522

 

$

377,189

 

 

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

3




SEACOR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.      Basis of Presentation

The condensed consolidated financial information for each of the three and six months ended June 30, 2006 and 2005 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, which effective July 1, 2005 include Seabulk International, Inc. (“Seabulk”—see Note 2). In the opinion of management, all adjustments (consisting of normal recurring adjustments and those described in Note 2) have been made to present fairly the Company’s financial position as of June 30, 2006, its results of operations for each of the three and six months ended June 30, 2006 and 2005 and its cash flows for the six months ended June 30, 2006. 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 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 fiscal year ended December 31, 2005.

Unless the context otherwise indicates, any references in this Quarterly Report on Form 10-Q to the “Company” refer to SEACOR Holdings Inc. and its consolidated subsidiaries and any references in this Quarterly Report on Form 10-Q to “SEACOR” refer to SEACOR Holdings Inc.

Certain reclassifications of prior period information have been made to conform to the presentation of the current period.

2.      Seabulk Merger and Disposition of Held for Sale Seabulk Assets

On July 1, 2005, SEACOR completed its acquisition of Seabulk through a merger with a wholly-owned subsidiary of SEACOR (the “Seabulk Merger”). The Seabulk Merger was accounted for as a purchase, with SEACOR as the acquiror in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. Accordingly, SEACOR  performed a fair value analysis whereby the purchase price was allocated to the assets and liabilities of Seabulk, including certain identifiable intangible assets, based on their fair values as of July 1, 2005, with the excess of purchase price over fair value recorded as goodwill in the amount of $16.3 million. The fair value analysis of assets and liabilities acquired in the Seabulk Merger was finalized as of June 30, 2006.

4




Changes to the allocation of purchase price during the six months ended June 30, 2006 are summarized in the following table (in thousands):

Trade receivables

 

$

830

 

Held for sale assets

 

(705

)

Net property and equipment

 

(7,818

)

Goodwill

 

4,166

 

Intangible Assets

 

(8,808

)

Other Assets

 

9,671

 

Other current liabilities

 

1,272

 

Deferred Taxes

 

1,392

 

Adjustments to Purchase Price

 

$

 

 

As part of the fair value analysis, the Company designated certain Seabulk vessels as held for sale in the aggregate amount of $123.0 million, net of drydock commitments, including two foreign-flag double-hulled product tankers, one tug and 13 offshore supply vessels. During the six months ended December 31, 2005, Seabulk sold the two foreign-flag double-hull product tankers, one tug and seven offshore supply vessels for aggregate consideration of $116.5 million. During the six months ended June 30, 2006, Seabulk sold four offshore supply vessels for aggregate consideration of $6.0 million. No gain or loss on the sale of the vessels was recorded as the fair value of the vessels was equal to the net sales price. As of June 30, 2006, two offshore supply vessels with combined value of $0.5 million were classified as held for sale.

Pro forma Information—The following pro forma information has been prepared as if the acquisition of Seabulk had occurred on January 1, 2005 (in thousands, except per share data):

 

 

For the Three Months
Ended June 30,

 

For the Six Months
Ended June 30,

 

 

 

2006

 

2005 Pro forma

 

2006

 

2005 Pro forma

 

Operating Revenues

 

$

330,986

 

 

$

274,518

 

 

$

636,901

 

 

$

535,284

 

 

Operating Income

 

92,743

 

 

29,232

 

 

175,138

 

 

64,979

 

 

Net Income

 

62,761

 

 

26,168

 

 

112,869

 

 

41,815

 

 

Basic Earnings Per Common Share

 

$

2.52

 

 

$

1.06

 

 

$

4.55

 

 

$

1.70

 

 

Diluted Earnings Per Common Share

 

2.24

 

 

0.92

 

 

4.04

 

 

1.47

 

 

 

This pro forma information has been prepared for informational purposes only and is not necessarily indicative of what would have occurred if the acquisition had taken place on that date, nor does it purport to be indicative of the future operating results of the Company.

3.      Equipment Acquisitions, Dispositions and Depreciation Policy

Capital expenditures were $149.5 million in the six months ended June 30, 2006. Equipment deliveries during the period included two offshore services vessels, 38 new dry cargo covered hopper barges, three new chemical tank barges and five new helicopters.

During the six months ended June 30, 2006, in addition to the disposition of the four Seabulk vessels that had been held for sale, the Company sold 32 offshore support vessels, two helicopters, other equipment and undelivered equipment for aggregate consideration of $132.7 million and recognized a gain of $45.0 million.

Equipment, stated at cost, is depreciated over the estimated useful lives of the assets using the straight-line method. For offshore support vessels and related equipment estimated useful lives are generally 20 years from date of build, for tankers 25 years from date of build or the required retirement

5




date as determined by the Oil Pollution Act of 1990, for inland river dry cargo and chemical tank barges 20 years from date of build, for helicopters and related equipment twelve years from date of build, for harbor and offshore tugs 40 years from date of build, and for all other equipment two to 20 years.

4.      Disposition of Joint Venture Interest and Vessel

In 1994, the Company and Grupo TMM, S.A., a Mexican corporation (“TMM”) organized a joint venture, Maritima Mexicana, S.A. de C.V. (“Marmex”) to serve the Mexican offshore market. Effective March 3, 2006, the Company sold its 40% interest in Marmex to TMM for $20.0 million recognizing an after tax gain thereon of $4.5 million and was released from its guarantees in the amount of $8.0 million with respect to vessels bareboat chartered to the joint venture. In addition, TMM purchased five offshore vessels from the Company for aggregate consideration of approximately $37.3 million (see Note 3).

During the three months ended June 30, 2006, one of the Company’s offshore marine joint ventures sold a vessel for $27.8 million. The Company’s share of the gain included in Equity in Earnings of 50% or Less Owned Companies was $4.2 million.

5.      Construction Reserve Funds

Construction reserve fund accounts were established by the Company pursuant to Section 511 of the Merchant Marine Act, 1936, as amended. In accordance with this statute, the Company is permitted to deposit proceeds from the sale of certain vessels into the joint depository construction reserve fund accounts for the purpose of acquiring U.S. flag vessels and qualifying for the temporary deferral of taxable gains realized from the sale of vessels. Withdrawals from the construction reserve fund accounts are only permitted with the consent of the Maritime Administration.

As of June 30, 2006, construction reserve funds of $192.9 million are classified as non-current assets in the accompanying condensed consolidated balance sheets as the Company has the intent and ability to use the funds to acquire equipment. During the six months ended June 30, 2006, construction reserve fund account transactions included withdrawals of $10.2 million, deposits of $76.6 million and earned interest of $3.7 million.

6.      Commitments and Contingencies

The Company’s unfunded capital commitments as of June 30, 2006, consisted primarily of marine service vessels, helicopters and barges and totaled $631.7 million, of which $429.7 million is payable in 2006 and 2007, with the remaining balance payable through 2009. Of these commitments, approximately $187.8 million may be terminated without further liability other than the payment of liquidated damages of $4.9 million in the aggregate. Subsequent to the end of the quarter the Company committed to purchase additional equipment for $37.5 million.

The Company has guaranteed the payment of amounts owed by certain of its joint ventures under vessel charter agreements that expire through 2009. In addition, the Company has guaranteed amounts owed by certain of its joint ventures under a banking facility and a performance guarantee. As of June 30, 2006, the total amount guaranteed by the Company was $4.1 million.

In the normal course of its business, the Company becomes involved in various litigation matters including, among other things, claims by third parties for alleged property damages, personal injuries and other matters. While the Company believes it has meritorious defenses against these claims, management has used estimates in determining the Company’s potential exposure 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 will have a material effect on the Company’s financial position or results of its operations.

6




In June 2005, a subsidiary of SEACOR received a document subpoena from the Antitrust Division of the U.S. Department of Justice. This subpoena relates to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the Gulf of Mexico. The Company believes that this subpoena is part of a broader industry inquiry and that the other providers also have received such subpoena. SEACOR intends to provide all information requested in response to this investigation.

Under United States law, “United States persons” are prohibited from business activities and contracts in certain countries, including Sudan and Iran. Relating to the prohibitions, Seabulk filed three reports with and submitted documents to the Office of Foreign Asset Control (“OFAC”) of the U.S. Department of Treasury in December 1999 and January and May 2002. One of the reports was also filed with the Bureau of Export Administration of the U.S. Department of Commerce. The reports and documents related to certain limited charters with third parties involving three Seabulk vessels which called in Sudan for several months in 1999 and January 2000 and charters with third parties involving several of Seabulk’s vessels which called in Iran in 1998. In March 2003, Seabulk received notification from OFAC that the case has been referred to its Civil Penalties Division. Should OFAC determine that these activities constituted violations of the laws or regulations, civil penalties, including fines, could be assessed against Seabulk and/or certain individuals who knowingly participated in such activity. The Company cannot predict the extent of such penalties; however, management does not believe the outcome of these matters will have a material impact on its financial position or results of operations.

Certain subsidiaries of the Company were previously participating employers in an industry-wide, multi-employer, defined benefit pension fund based in the United Kingdom: the Merchant Navy Officers Pension Fund (“MNOPF”). Under the direction of a court order, any deficit is to be remedied through future funding contributions from all participating employers. The most recent actuarial review of the MNOPF determined there was a funding deficit of $412.0 million of which $4.4 million, representing the Company’s share of this deficit, was invoiced and recognized in 2005. Deficits allocable to the Company relate to officers employed between 1978 and 2002 by SEACOR’s Stirling group of companies (which had been acquired by SEACOR in 2001) and its predecessors. In March 2006, the MNOPF was scheduled to undergo an actuarial valuation to determine if additional contributions would be required; however, the Company has not received notification of any new actuarial valuation results. Depending on the results of future actuarial valuations, it is possible that the MNOPF will issue additional invoices requiring the Company to recognize payroll related operating expenses in the period invoices are received.

7.      Long-Term Debt

As of June 30, 2006, the Company had no outstanding borrowings under the SEACOR revolving credit facility which terminates in February 2007. Remaining availability under the SEACOR revolving credit facility was $160.8 million, net of issued letters of credit of $39.2 million. During the three months ended March 31, 2006, the Company terminated Seabulk’s credit facility.

During the six months ended June 30, 2006, the Company made principal payments on long-term debt and capital lease obligations of $22.5 million. Payments included $10.5 million on debt assumed in a December 2005 acquisition and $4.7 million on the termination of a capital lease assumed in the Seabulk Merger.

8.      Stock and Debt Repurchases

During the six months ended June 30, 2006, the Company acquired 336,500 shares of SEACOR common stock, par value $0.01 per share (“Common Stock”), for treasury in the amount of $25.8 million. As of June 30, 2006, repurchase authority of $24.2 million granted by the Company’s Board of Directors remained available for acquisition of additional shares of Common Stock, SEACOR’s 7.2% Senior Notes

7




Due 2009, its 57¤8% Senior Notes due 2012, its 2.875% Convertible Debentures Due 2024 and the 9.5% senior notes of Seabulk due 2013. Securities are acquired from time to time through open market purchases, privately negotiated transactions or otherwise, depending on market conditions.

Subsequent to June 30, 2006, the Company’s Board of Directors increased the above referenced repurchase authority to $75.0 million.

9.      Earnings Per Common Share

Basic earnings per common share were computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share were computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities. In determining dilutive securities for this purpose the Company assumes, through the application of the treasury stock and if-converted methods, all restricted stock grants have vested, all common shares have been issued pursuant to the exercise of all outstanding stock options and all common shares have been issued pursuant to the conversion of all outstanding convertible notes. Diluted earnings per common share for the three and six months ended June 30, 2006 excluded 56,875 and 89,875, respectively, options and share awards as the effect of their inclusion in the computation would have been antidilutive. Diluted earnings per common share for the three and six months ended June 30, 2005 excluded 110,560 options and share awards as the effect of their inclusion in the computation would have been antidilutive.

Computations of basic and diluted earnings per share for the periods presented are as follows (in thousands, except per share data):

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

 

Net
Income

 

Average O/S
Shares

 

Per
Share

 

Net
Income

 

Average O/S
Shares

 

Per
Share

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

62,761

 

 

24,869

 

 

$

2.52

 

$

112,869

 

 

24,828

 

 

$

4.55

 

Effect of Dilutive Securities, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options and Restricted Stock

 

 

 

281

 

 

 

 

 

 

296

 

 

 

 

Convertible Securities

 

1,212

 

 

3,418

 

 

 

 

2,425

 

 

3,418

 

 

 

 

Diluted Earnings Per Common
Share

 

$

63,973

 

 

28,568

 

 

$

2.24

 

$

115,294

 

 

28,542

 

 

$

4.04

 

2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

25,124

 

 

18,349

 

 

$

1.37

 

$

43,715

 

 

18,299

 

 

$

2.39

 

Effect of Dilutive Securities, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options and Restricted Stock

 

 

 

157

 

 

 

 

 

 

199

 

 

 

 

Convertible Securities

 

1,198

 

 

3,418

 

 

 

 

2,408

 

 

3,418

 

 

 

 

Diluted Earnings Per Common
Share

 

$

26,322

 

 

21,924

 

 

$

1.20

 

$

46,123

 

 

21,916

 

 

$

2.11

 

 

10.   Comprehensive Income

For the three months ended June 30, 2006 and 2005, total comprehensive income was $63.0 million and $18.0 million, respectively. For the six months ended June 30, 2006 and 2005, total comprehensive income was $112.3 million and $35.6 million, respectively. Other comprehensive income consisted of gains and losses from foreign currency translation adjustments and unrealized holding gains and losses on available-for-sale securities.

8




11.   Share-Based Compensation

On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments (“SFAS No. 123(R)”), which is a revision of Statement of Financial Accounting Standards No. 123, Share-Based Payments. SFAS No. 123(R) supersedes Accounting Principal Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB No. 25”) and amends Statement of Financial Accounting Standards No. 95, Statement of Cash Flows. SFAS No. 123(R) requires all share based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. SFAS No. 123(R) eliminates the alternative of using the intrinsic method of accounting provided for in APB No. 25, which generally resulted in no compensation expense recorded in the financial statements related to the grant of stock options to employees if certain conditions were met.

The fair value concepts were not changed significantly in SFAS No. 123(R); however, companies must choose among alternative valuation models and amortization assumptions upon adoption of the new standard. After assessing alternative valuation models and amortization assumptions, the Company has continued using both the Black-Scholes valuation model and straight-line amortization of compensation expense over the requisite service period of the grants. The Company will reconsider use of this model if additional information becomes available in the future that indicates another model would be more appropriate, or if grants issued in future periods have characteristics that cannot be reasonably estimated using this model. The Company has previously estimated forfeitures in its expense calculation for pro forma footnote disclosure and no change in that methodology was made upon adoption of SFAS No. 123(R).

The Company’s share-based compensation plans as described in Note 13 of the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 have not been modified during the six months ended June 30, 2006. Effective January 1, 2006, the Company adopted SFAS No. 123(R) using the modified prospective method which requires the Company to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Accordingly, prior period amounts presented herein have not been restated to reflect the adoption of SFAS No. 123(R). In accordance with SFAS No. 123(R), the Company will present the excess tax benefits from the exercise of stock options as a financing cash flow in our statements of cash flows. The impact of adopting SFAS No. 123(R) lowered net income for the three and six months ended June 30, 2006, $0.5 million and $0.9 million, respectively. The impact of adopting SFAS No. 123(R) lowered basic earnings per common share for the three and six months ended June 30, 2006, $0.02 and $0.04, respectively, and lowered diluted earnings per common share for the three and six months ended June 30, 2006, $0.02 and $0.03, respectively.

During the three and six months ended June 30, 2006, the Company recognized $2.0 million and $3.3 million, respectively, of compensation expense related to stock options, employee stock purchase plan purchases, restricted stock grants (including restricted stock units) and director stock grants. As of June 30, 2006, the Company had approximately $16.2 million in total unrecognized compensation costs of which $3.4 million and $4.2 million is expected to be recognized in 2006 and 2007, respectively, with the remaining balance recognized through 2011.

9




The previously disclosed pro forma effects of recognizing the estimated fair value of stock-based compensation are presented below (in thousands, except per share data):

 

 

Three Months

 

Six Months

 

 

 

Ended

 

Ended

 

 

 

June 30, 2005

 

June 30, 2005

 

Net Income, As Reported

 

 

$

25,124

 

 

 

$

43,715

 

 

Add: Stock Based Compensation Using Intrinsic Value Method, net of tax

 

 

495

 

 

 

914

 

 

Less: Stock Based Compensation Using Fair Value Method, net of tax

 

 

(642

)

 

 

(1,207

)

 

Net Income, Pro Forma

 

 

$

24,977

 

 

 

$

43,422

 

 

Basic Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

As Reported

 

 

$

1.37

 

 

 

$

2.39

 

 

Pro Forma

 

 

1.36

 

 

 

2.37

 

 

Diluted Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

As Reported

 

 

$

1.20

 

 

 

$

2.11

 

 

Pro Forma

 

 

1.19

 

 

 

2.09

 

 

 

The weighted average value of grants under the Company’s share-based compensation plans were $51.55 and $38.73 for the six months ended June 30, 2006 and 2005, respectively. The fair value of each option granted during the six months ended June 30, 2006 and 2005 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: (a) no dividend yield, (b) weighted average expected volatility of 25.7% and 27.6%, respectively, (c) weighted average discount rates of 4.93% and 3.93%, respectively, and (d) expected lives of five years.

The following transactions have occurred in connection with the Company’s share-based compensation plans during the six months ended June 30, 2006:

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Exercise / Grant

 

 

 

Shares

 

Price

 

Stock Option Activities:

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2005

 

 

919,653

 

 

 

$

37.23

 

 

Granted

 

 

110,875

 

 

 

$

79.04

 

 

Exercised

 

 

(142,126

)

 

 

$

17.44

 

 

Cancelled

 

 

(1,025

)

 

 

$

57.86

 

 

Outstanding at June 30, 2006

 

 

887,377

 

 

 

$

45.60

 

 

Options exercisable at June 30, 2006

 

 

571,469

 

 

 

$

37.68

 

 

Director stock awards granted

 

 

2,500

 

 

 

$

78.75

 

 

Restricted stock awards granted (including 275 restricted stock units)

 

 

117,420

 

 

 

$

74.58

 

 

Restricted stock awards cancelled

 

 

360

 

 

 

$

69.88

 

 

Employee Stock Purchase Plan shares issued

 

 

10,640

 

 

 

$

60.18

 

 

Shares available for future grant at June 30, 2006

 

 

724,649

 

 

 

 

 

 

 

During the six months ended June 30, 2006, the Company also issued 47,005 shares of Common Stock in exchange for restricted stock units previously issued by Seabulk and assumed as part of the Seabulk Merger.

10




The aggregate intrinsic value of options exercised during the six months ended June 30, 2006 was $8.2 million. As of June 30, 2006, the aggregate intrinsic value of all options outstanding, all exercisable options and all restricted stock awards outstanding was $32.4 million, $25.4 million and $14.7 million, respectively.

The following table summarizes certain information about the options outstanding at June 30, 2006 grouped into five exercise price ranges:

 

 

Exercise Price Range

 

 

 

Under
$15.01

 

$15.01
to
$30.00

 

$30.01
to
$45.00

 

$45.01
to
$60.00

 

over
$60.00

 

Options outstanding at June 30, 2006

 

40,623

 

97,534

 

414,910

 

116,760

 

217,550

 

Weighted-average exercise price

 

$

12.41

 

$

26.25

 

$

37.49

 

$

51.64

 

$

72.68

 

Weighted-average remaining contractual life (years)

 

3.18

 

3.29

 

5.92

 

6.63

 

9.44

 

Options exercisable at June 30, 2006

 

40,623

 

89,907

 

317,162

 

80,817

 

42,960

 

Weighted average exercise price of exercisable options

 

$

12.41

 

$

26.59

 

$

37.22

 

$

50.51

 

$

63.97

 

 

12.   New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts reported after adoption will be accounted for as a cumulative effect adjustment recorded to the beginning balance of retained earnings. FIN 48 is effective for fiscal years beginning after December 15, 2006 and will be adopted by SEACOR on January 1, 2007. The Company is reviewing the new standard and has not determined the impact, if any, the adoption of FIN 48 will have on its consolidated financial position or results of operations.

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 a component 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. The Company’s basis of measurement of segment profit or loss has not changed from those previously described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Certain reclassifications of prior period information have been made to conform to the current period’s reportable segment presentation.

11




The following tables summarize information about the operating results for the Company’s reportable segments (in thousands):

 

 

Offshore

 

Marine

 

Inland

 

 

 

 

 

 

 

 

 

 

 

Marine

 

Transportation

 

River

 

Aviation

 

Environmental

 

 

 

 

 

 

 

Services

 

Services

 

Services

 

Services

 

Services

 

Other

 

Total

 

For the Three Months Ended June 30, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

 

$

168,281

 

 

 

$

37,446

 

 

$

36,339

 

$

39,595

 

 

$

36,946

 

 

$

12,379

 

$

330,986

 

Intersegment

 

 

4

 

 

 

 

 

 

308

 

 

 

 

(223

)

89

 

Operating revenues

 

 

168,285

 

 

 

37,446

 

 

36,339

 

39,903

 

 

36,946

 

 

12,156

 

331,075

 

Operating expenses

 

 

(86,695

)

 

 

(18,064

)

 

(18,649

)

(29,137

)

 

(26,345

)

 

(8,336

)

(187,226

)

Administrative and general

 

 

(11,470

)

 

 

(1,049

)

 

(829

)

(4,158

)

 

(5,156

)

 

(1,853

)

(24,515

)

Depreciation and amortization

 

 

(21,793

)

 

 

(10,162

)

 

(3,267

)

(4,591

)

 

(741

)

 

(1,275

)

(41,829

)

Gains (losses) on asset dispositions

 

 

22,489

 

 

 

 

 

 

1,818

 

 

(215

)

 

 

24,092

 

Other income (expense), primarily foreign currency

 

 

245

 

 

 

(8

)

 

2

 

489

 

 

(60

)

 

 

668

 

Equity in earnings (losses) of 50% or less owned companies

 

 

5,857

 

 

 

 

 

 

(8

)

 

259

 

 

(77

)

6,031

 

Reportable Segment Profit

 

 

$

76,918

 

 

 

$

8,163

 

 

$

13,596

 

$

4,316

 

 

$

4,688

 

 

$

615

 

108,296

 

Corporate expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,860

)

Other income (expense) not included
above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,874

)

Equity in earnings (losses) of 50% or less owned companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,031

)

Segment Eliminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Income before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

90,537

 

For the Three Months Ended June 30, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

 

$

84,028

 

 

 

$

 

 

$

27,333

 

$

30,835

 

 

$

35,635

 

 

$

 

$

177,831

 

Intersegment

 

 

15

 

 

 

 

 

 

114

 

 

 

 

 

129

 

Operating revenues

 

 

84,043

 

 

 

 

 

27,333

 

30,949

 

 

35,635

 

 

 

177,960

 

Operating expenses

 

 

(50,735

)

 

 

 

 

(16,880

)

(22,346

)

 

(27,347

)

 

 

(117,308

)

Administrative and general

 

 

(8,241

)

 

 

 

 

(570

)

(1,858

)

 

(4,177

)

 

(5

)

(14,851

)

Depreciation and amortization

 

 

(10,950

)

 

 

 

 

(2,791

)

(3,940

)

 

(778

)

 

 

(18,459

)

Gains on asset dispositions

 

 

1,770

 

 

 

 

 

 

 

 

42

 

 

 

1,812

 

Other income, primarily foreign currency

 

 

4,370

 

 

 

 

 

92

 

120

 

 

34

 

 

 

4,616

 

Equity in earnings of 50% or less owned companies

 

 

1,764

 

 

 

 

 

 

 

 

369

 

 

461

 

2,594

 

Reportable Segment Profit

 

 

$

22,021

 

 

 

$

 

 

$

7,184

 

$

2,925

 

 

$

3,778

 

 

$

456

 

36,364

 

Corporate expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,516

)

Other income (expense) not included
above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,488

 

Equity in earnings of 50% or less owned companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,594

)

Segment Eliminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

34,742

 

 

12




 

 

 

Offshore

 

Marine

 

Inland

 

 

 

 

 

 

 

 

 

 

 

Marine

 

Transportation

 

River

 

Aviation

 

Environmental

 

 

 

 

 

 

 

Services

 

Services

 

Services

 

Services

 

Services

 

Other

 

Total

 

For the Six Months Ended June 30, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

$

328,126

 

 

$

75,170

 

 

$

70,827

 

$

73,049

 

 

$

64,869

 

 

$

24,860

 

$

636,901

 

Intersegment

 

11

 

 

 

 

 

308

 

 

 

 

180

 

499

 

Operating revenues

 

328,137

 

 

75,170

 

 

70,827

 

73,357

 

 

64,869

 

 

25,040

 

637,400

 

Operating expenses

 

(166,201

)

 

(39,535

)

 

(34,044

)

(55,482

)

 

(46,853

)

 

(15,177

)

(357,292

)

Administrative and general

 

(23,158

)

 

(2,013

)

 

(1,645

)

(7,652

)

 

(9,561

)

 

(3,457

)

(47,486

)

Depreciation and amortization

 

(44,920

)

 

(20.347

)

 

(6,741

)

(8,845

)

 

(1,474

)

 

(2,534

)

(84,861

)

Gains (losses) on asset dispositions

 

43,041

 

 

 

 

 

2,143

 

 

(215

)

 

 

44,969

 

Other income (expense), primarily foreign currency

 

282

 

 

(9

)

 

2

 

489

 

 

(64

)

 

 

700

 

Equity in earnings of 50% or less owned companies

 

11,872

 

 

 

 

 

(5

)

 

363

 

 

170

 

12,400

 

Reportable Segment Profit

 

$

149,053

 

 

$

13,266

 

 

$

28,399

 

$

4,005

 

 

$

7,065

 

 

$

4,042

 

205,830

 

Corporate expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,604

)

Other income (expense) not included
above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,048

)

Equity in earnings of 50% or less owned companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,400

)

Segment Eliminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

Income before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

159,790

 

For the Six Months Ended June 30, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

$

164,352

 

 

$

 

 

$

52,863

 

$

54,273

 

 

$

71,528

 

 

$

 

$

343,016

 

Intersegment

 

41

 

 

 

 

 

551

 

 

 

 

 

592

 

Operating revenues

 

164,393

 

 

 

 

52,863

 

54,824

 

 

71,528

 

 

 

343,608

 

Operating expenses

 

(103,585

)

 

 

 

(31,652

)

(44,133

)

 

(54,002

)

 

 

(233,372

)

Administrative and general

 

(15,742

)

 

 

 

(1,078

)

(4,439

)

 

(7,988

)

 

(5

)

(29,252

)

Depreciation and amortization

 

(21,620

)

 

 

 

(5,388

)

(8,006

)

 

(1,638

)

 

 

(36,652

)

Gains on asset dispositions

 

14,693

 

 

 

 

11

 

585

 

 

39

 

 

 

15,328

 

Other income, primarily foreign currency

 

3,830

 

 

 

 

27

 

192

 

 

41

 

 

50

 

4,140

 

Equity in earnings of 50% or less owned companies

 

2,860

 

 

 

 

 

 

 

660

 

 

691

 

4,211

 

Reportable Segment Profit (Loss)

 

$

44,829

 

 

$

 

 

$

14,783

 

$

(977

)

 

$

8,640

 

 

$

736

 

68,011

 

Corporate expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,704

)

Other income (expense) not included
above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,352

 

Equity in earnings of 50% or less owned companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,211

)

Segment Eliminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

61,448

 

 

13




ITEM 2.                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the cyclical nature of the oil and gas industry, international operations, changes in foreign political, military and economic conditions, the dependence of Offshore Marine Services, Marine Transportation Services and Aviation Services on several customers, industry fleet capacity, consolidation of our customer base, the ongoing need to replace aging vessels, restrictions imposed by the Shipping Acts and Aviation Acts on the amount of foreign ownership of the Company’s Common Stock, increased competition if the Jones Act is repealed, safety record requirements related to Offshore Marine Services and Aviation Services, changes in foreign and domestic oil and gas exploration and production activity, vessel and helicopter-related risks of Offshore Marine Services, Marine Transportation Services, Harbor and Offshore Towing Services and Aviation Services, effects of adverse weather conditions and seasonality on Aviation Services, decreased demand for our tanker and towing services due to construction of additional refined petroleum product, natural gas or crude oil pipelines or due to decreased demand for refined petroleum products, crude oil or chemical products or a change in existing methods of delivery, future phase-out of our single-hull tankers, dependence of spill response revenue on the number and size of spills and upon continuing government regulation in this area and our ability to comply with such regulation and other governmental regulation, changes in NRC’s OSRO classification, liability in connection with providing spill response services, effects of adverse weather and river conditions and seasonality on inland river operations, the level of grain export volume, the effect of fuel prices on barge towing costs, variability in freight rates for inland river barges, the effect of international economic and political factors in inland river operations, adequacy of insurance coverage, compliance with government regulation, including environmental laws and regulations, currency exchange fluctuations, the attraction and retention of qualified personnel by the Company, our integration of the internal controls and procedures of Seabulk International, Inc. to continue our compliance with the Sarbanes-Oxley Act of 2002 and various other matters, many of which are beyond the Company’s control and other factors. In addition, these statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties. The words “estimate,” “project,” “intend,” “believe,” “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Form 10-Q should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned under “Risks, Uncertainties and Other Factors That May Affect Future Results” in Item 1A of our Form 10-K and SEACOR’s periodic reporting on Form 8-K (if any), which we incorporate by reference.

14




Consolidated Results of Operations

The table below provides an analysis of the Company’s consolidated statements of operations for the three months (“Current Year Quarter”) and six months (“Current Six Months”) ended June 30, 2006 as compared to the three months (“Prior Year Quarter”) and six months (“Prior Six Months”) ended June 30, 2005. Additional discussions of results of operations by business segment are presented below (in thousands):

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

Percent Change

 

 

 

2006

 

2005

 

2006

 

2005

 

3 Mos

 

6 Mos

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 

‘06/ ‘05

 

‘06/ ‘05

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Offshore Marine Services

 

$

168,285

 

 

51

%

 

$

84,043

 

 

47

%

 

$

328,137

 

 

52

%

 

$

164,393

 

 

48

%

 

 

100

%

 

 

100

%

 

Marine Transportation
Services

 

37,446

 

 

11

%

 

 

 

 

 

75,170

 

 

12

%

 

 

 

 

 

 

N/A

 

 

 

N/A

 

 

Inland River Services

 

36,339

 

 

11

%

 

27,333

 

 

16

%

 

70,827

 

 

11

%

 

52,863

 

 

15

%

 

 

33

%

 

 

34

%

 

Aviation Services

 

39,903

 

 

12

%

 

30,949

 

 

17

%

 

73,357

 

 

12

%

 

54,824

 

 

16

%

 

 

29

%

 

 

35

%

 

Environmental Services

 

36,946

 

 

11

%

 

35,635

 

 

20

%

 

64,869

 

 

10

%

 

71,528

 

 

21

%

 

 

4

%

 

 

(9

)%

 

Other and Eliminations

 

12,067

 

 

4

%

 

(129

)

 

0

%

 

24,541

 

 

3

%

 

(592

)

 

0

%

 

 

9454

%

 

 

425

%

 

 

 

$

330,986

 

 

100

%

 

$

177,831

 

 

100

%

 

$

636,901

 

 

100

%

 

$

343,016

 

 

100

%

 

 

86

%

 

 

86

%

 

Operating Income

 

$

92,743

 

 

28

%

 

$

24,643

 

 

14

%

 

$

175,138

 

 

27

%

 

$

50,966

 

 

15

%

 

 

276

%

 

 

244

%

 

Other, net

 

(2,206

)

 

(1

)%

 

10,099

 

 

6

%

 

(15,348

)

 

(2

)%

 

10,482

 

 

3

%

 

 

(122

)%

 

 

(246

)%

 

Income before income taxes, minority interest & equity earnings

 

90,537

 

 

27

 

 

34,742

 

 

20

%

 

159,790

 

 

25

%

 

61,448

 

 

18

%

 

 

161

%

 

 

160

%

 

Income tax expense

 

33,703

 

 

(10

)%

 

12,448

 

 

(7

)%

 

59,134

 

 

(9

)%

 

22,188

 

 

(6

)%

 

 

171

%

 

 

167

%

 

Income before minority interest & equity earnings

 

56,834

 

 

17

%

 

22,294

 

 

13

%

 

100,656

 

 

16

%

 

39,260

 

 

12

%

 

 

155

%

 

 

156

%

 

Minority interest