United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x                              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

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)

 

(I.R.S. Employer Identification No.)

2200 Eller Drive, P.O. Box 13038,
Fort Lauderdale, Florida

 

33316

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (954)-523-2200

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, par value $.01 per share

 

New York Stock Exchange

 

Securities registered pursuant to Section 12 (g) of the Act:

 

None

 

 

 

 

(Title of Class)

 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes  x No

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 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. x Yes  o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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. (Check one):  x  Large Accelerated Filer  o Accelerated Filer  o Non-Accelerated Filer

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

The aggregate market value of the voting stock of the registrant held by non-affiliates as of June 30, 2006 was approximately $1,941,802,000 based on the closing price on the New York Stock Exchange on such date. The total number of shares of Common Stock issued and outstanding as of February 22, 2007 was 24,531,005.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission (the “Commission”) pursuant to Regulation 14A within 120 days after the end of the Registrant’s last fiscal year is incorporated by reference into Part III of this Annual Report on Form 10-K.

 




SEACOR HOLDINGS INC.
FORM 10-K
TABLE OF CONTENTS

PART I

 

Item 1.

Business

1

 

General

1

 

Segment and Geographic Information

2

 

Offshore Marine Services

2

 

Marine Transportation Services

8

 

Inland River Services

10

 

Aviation Services

13

 

Environmental Services

16

 

Other

18

 

Government Regulation

18

 

Industry Hazards and Insurance

23

 

Employees

23

Item 1A.

Risk Factors

23

Item 1B.

Unresolved Staff Comments

29

Item 2.

Properties

29

Item 3.

Legal Proceedings

29

Item 4.

Submission of Matters to a Vote of Security Holders

29

 

Executive Officers of the Registrant

30

 

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 

31

 

Market for the Company’s Common Stock

31

 

Performance Graph

32

 

Issuer Repurchases of Equity Securities and Debt

33

Item 6.

Selected Financial Data

34

Item 7.

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

35

 

Overview

35

 

Consolidated and Business Segment Results of Operations

37

 

Liquidity and Capital Resources

48

 

Effects of Inflation

52

 

Contingencies

52

 

Related Party Transactions

53

 

Critical Accounting Policies and Estimates

54

 

New Accounting Pronouncement

56

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

57

Item 8.

Financial Statements and Supplementary Data

59

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

59

Item 9A.

Controls and Procedures

59

Item 9B.

Other Information

59

 

PART III

 

Item 10.

Directors and Executive Officers of the Registrant

60

Item 11.

Executive Compensation

60

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   

60

Item 13.

Certain Relationships and Related Transactions

60

Item 14.

Principal Accountant Fees and Services

60

 

PART IV

 

Item 15.

Exhibits and Financial Statement Schedules

61

 




FORWARD-LOOKING STATEMENTS

Certain statements discussed in Item 1 (Business), Item 1A (Risk Factors), Item 3 (Legal Proceedings), Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 7A (Quantitative and Qualitative Disclosures About Market Risk) and elsewhere in this Form 10-K as well as in other materials and oral statements that we release from time to time to the public constitute “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 significant 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 are discussed in Item 1A. Risk 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 “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” 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. You are advised, however, to consult any further disclosures we make on related subjects in our 10-Q and 8-K reports to the Securities and Exchange Commission.

PART I

ITEM 1. BUSINESS

General

Unless the context indicates otherwise, the terms “we,” “our,” “ours,” “us” and the “Company” refer to SEACOR Holdings Inc. and its consolidated subsidiaries. “SEACOR” refers to SEACOR Holdings Inc., incorporated in 1989 in Delaware. “Common Stock” refers to the common stock, par value $.01 per share, of SEACOR.

The Company is in the business of owning, operating, investing in and marketing equipment, primarily in the offshore oil and gas and marine transportation industries. We operate a diversified fleet of offshore support vessels and helicopters servicing oil and gas exploration, development and production facilities worldwide and we also operate a fleet of U.S. flag product tankers which transport petroleum, chemicals and crude products primarily in the U.S. domestic or “coastwise” trade. In addition, we operate a fleet of inland river barges transporting grain and other bulk commodities on the U.S. inland waterways. Our environmental services segment provides oil spill response, manages environmental remediation projects and offers related consulting services worldwide to those who store, transport, produce or handle petroleum products and environmentally hazardous materials.

SEACOR’s principal executive offices are located at 2200 Eller Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316, and our telephone number is (954) 523-2200. Our Internet address is www.seacorholdings.com.

The Company’s Corporate Governance policies, including the Board of Directors’ Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee charters are made available, free of charge, on our website or in print for shareholders.

All of the Company’s periodic report filings with the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are made available,

1




free of charge, through our website, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports. These reports and amendments are available through the Company’s website as soon as reasonably practicable after the Company electronically files such reports or amendments with the SEC. They are also available to be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information as to the operation of the SEC’s Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information.

Segment and Geographic Information

The Company’s operations are divided into five business segments: “Offshore Marine Services,” “Marine Transportation Services,” “Inland River Services,” “Aviation Services,” and “Environmental Services.”  Our additional activities are described under “Other,” which primarily includes “Harbor and Offshore Towing Services,” various other investments in joint ventures and asset leasing activities. Marine Transportation Services and Harbor and Offshore Towing Services were acquired as a result of our acquisition of Seabulk International, Inc. (“Seabulk”) on July 1, 2005 through a merger with a wholly-owned subsidiary of SEACOR (the “Seabulk Merger”). Financial data for segment and geographic areas is reported in Part IV “Note 16. Major Customers and Segment Data” of this Annual Report on Form 10-K.

Offshore Marine Services

Business

Offshore Marine Services operates a diversified fleet of support vessels primarily servicing offshore oil and gas exploration, development and production facilities worldwide. Vessels in this service are employed to deliver cargo and personnel to offshore installations, handle anchors for drilling rigs and other marine equipment, support offshore construction and maintenance work, provide standby safety support and oil spill response services. From time to time, Offshore Marine Services supports projects such as well stimulation, seismic data gathering and offshore accommodation. Offshore Marine Services also offers logistics services in support of offshore oil and gas exploration, development and production operations including shorebased, marine transport and other supply chain management services. This segment contributed 52%, 50% and 58% of consolidated revenues in 2006, 2005 and 2004, respectively.

2




Equipment and Services

The following tables identify the types of vessels that comprise the Offshore Marine Services’ fleet as of December 31 in the indicated years. “Owned vessels” are those majority owned by the Company. “Joint ventured vessels” are those owned by entities in which the Company does not have a controlling interest. “Leased-in vessels” are generally those which have been sold to an institutional lessor and then leased back. “Pooled vessels” are owned by entities not affiliated with Offshore Marine Services with the revenues or results of operations of these vessels being shared with the revenues and results of operations of certain vessels owned by Offshore Marine Services based upon an agreed formula. “Managed vessels” are owned by entities not affiliated with the Company but are operated by Offshore Marine Services for a fee. See Glossary of Vessel Types below for an explanation of the services they perform.

 

 

Owned(a)

 

Joint
Ventured

 

Leased-in

 

Pooled or
Managed

 

Total

 

2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

18

 

 

 

2

 

 

 

2

 

 

 

 

 

 

22

 

 

Crew

 

 

59

 

 

 

2

 

 

 

23

 

 

 

 

 

 

84

 

 

Mini-supply

 

 

17

 

 

 

1

 

 

 

5

 

 

 

1

 

 

 

24

 

 

Standby safety

 

 

21

 

 

 

1

 

 

 

 

 

 

5

 

 

 

27

 

 

Supply

 

 

12

 

 

 

 

 

 

12

 

 

 

 

 

 

24

 

 

Towing supply

 

 

27

 

 

 

9

 

 

 

3

 

 

 

 

 

 

39

 

 

Other

 

 

12

 

 

 

2

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

166

 

 

 

17

 

 

 

45

 

 

 

6

 

 

 

234

 

 

2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

24

 

 

 

3

 

 

 

2

 

 

 

 

 

 

29

 

 

Crew

 

 

75

 

 

 

3

 

 

 

23

 

 

 

 

 

 

101

 

 

Mini-supply

 

 

22

 

 

 

1

 

 

 

7

 

 

 

1

 

 

 

31

 

 

Standby safety

 

 

21

 

 

 

1

 

 

 

 

 

 

5

 

 

 

27

 

 

Supply

 

 

32

 

 

 

4

 

 

 

8

 

 

 

 

 

 

44

 

 

Towing supply

 

 

31

 

 

 

19

 

 

 

3

 

 

 

 

 

 

53

 

 

Other

 

 

14

 

 

 

2

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

219

 

 

 

33

 

 

 

43

 

 

 

6

 

 

 

301

 

 

2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

14

 

 

 

3

 

 

 

1

 

 

 

 

 

 

18

 

 

Crew

 

 

60

 

 

 

3

 

 

 

19

 

 

 

 

 

 

82

 

 

Mini-supply

 

 

25

 

 

 

1

 

 

 

4

 

 

 

 

 

 

30

 

 

Standby safety

 

 

21

 

 

 

1

 

 

 

 

 

 

5

 

 

 

27

 

 

Supply

 

 

12

 

 

 

4

 

 

 

3

 

 

 

1

 

 

 

20

 

 

Towing supply

 

 

11

 

 

 

20

 

 

 

2

 

 

 

 

 

 

33

 

 

Other

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

144

 

 

 

33

 

 

 

29

 

 

 

6

 

 

 

212

 

 


(a)              Excludes 3 owned vessels removed from service in 2005.

The following table indicates the average age in years of our fleet as of December 31:

 

2006

 

2005

 

2004

 

Including standby safety vessels

 

16.4

 

16.9

 

12.3

 

Excluding standby safety vessels

 

14.3

 

15.5

 

9.6

 

 

3




Glossary of Vessel Types

Anchor handling towing supply (“AHTS”) vessels are used primarily for towing, positioning and mooring drilling rigs and other marine equipment by lifting and setting anchors on the sea bottom. AHTS vessels are also used to transport supplies and equipment from shore bases to offshore drillings rigs, platforms and other installations. The defining characteristics of AHTS vessels are horsepower (“bhp”) and size of winch in terms of “line pull” and wire storage capacity. Our fleet of AHTS vessels has varying capabilities and supports offshore mooring activities in water depths ranging from 300 to 8,000 feet. Most modern AHTS vessels are equipped with dynamic positioning (“DP”) systems that enable them to maintain a fixed position in close proximity to a rig without the use of tie-up lines.

Crew boats move personnel to and from offshore installations. Historically, crew boats transported people and were also used to deliver “light” cargo such as personal effects, small machinery and small quantities of fuel and water. These boats also served as field stand-by vessels, moving personnel between platforms and providing an emergency stand-by service under certain circumstances. Crew boats built prior to 1990 are generally 100 to 130 feet in length and are capable of 20 knots in light condition and calm seas. Vessels built since 1998, also referred to as Fast Support Vessels (“FSVs”), range from 130 to 200 feet in length and develop speeds of between 25 and 35 knots. Modern FSVs have enhanced cargo carrying capacities, including the capacity to support some phases of drilling operations. Vessels supporting deep water drilling are usually equipped with DP capabilities.

Mini-supply vessels are generally less than 165 feet in length and typically carry deck cargo, liquid mud, methanol, diesel fuel and water. These vessels are well suited for production support, construction projects, maintenance work and certain drilling support activities.

Standby safety vessels typically remain on location proximate to offshore rigs and production facilities to respond to emergencies. These vessels carry special equipment to rescue personnel and are equipped to provide first aid and shelter. In some cases, these vessels perform a dual role, functioning also as supply vessels.

Supply vessels and towing supply vessels are generally more than 165 feet in length and are used to deliver cargo to rigs and platforms where drilling and work-over activity is underway or to support construction work by delivering pipe to vessels performing underwater installations. Supply vessels are distinguished from other vessels by the total carrying capacity (expressed as deadweight: “dwt”), available area of clear deck space, below-deck capacity for storage of mud and cement used in the drilling process and tank storage for water and fuel oil. Speed is not generally a factor but the ability to hold station in open water and moderately rough seas is a key factor in differentiating supply vessels. To improve station keeping ability, certain supply vessels have DP capabilities. Towing supply vessels perform similar cargo delivery functions to those handled by supply vessels. They are, however, equipped with more powerful engines (4-8,000 bhp) and winches, giving them the added capability to perform general towing functions, buoy setting and limited anchor handling work.

Other includes geophysical, accommodation, anchor handling tugs, line handling and other vessels. These vessels generally have specialized features adapting them to specific applications. Special project activities include well stimulation, seismic data gathering, freight hauling services and accommodation services.

4




Markets

The demand for vessels is affected by the level of offshore exploration and drilling activities, which in turn is influenced by a number of factors including:

·       expectations as to future oil and gas commodity prices

·       customer assessments of offshore drilling prospects compared to land-based opportunities

·       customer assessments of cost, geological opportunity and political stability in host countries

·       worldwide demand for oil and natural gas

·       the ability of The Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing

·       the level of production of non-OPEC countries

·       the relative exchange rates for the U.S. dollar

·       various government policies regarding exploration and development of their oil and gas reserves

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of current market conditions.

We operate vessels in six principal geographic regions. From time to time, vessels are relocated between these regions to meet customer demand for equipment. The table below sets forth vessel types by geographic market as of December 31. We sometimes participate in joint venture arrangements in certain geographical locations in order to enhance our marketing capabilities and facilitate operations in certain foreign markets. This allows for expansion of both our fleet and operations while diversifying risks and reducing capital outlays associated with such expansion.

5




 

2006

 

2005

 

2004

 

United States:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

11

 

 

 

9

 

 

 

4

 

 

Crew

 

 

61

 

 

 

70

 

 

 

58

 

 

Mini-supply

 

 

22

 

 

 

28

 

 

 

26

 

 

Supply

 

 

9

 

 

 

23

 

 

 

8

 

 

Towing supply

 

 

4

 

 

 

5

 

 

 

4

 

 

 

 

 

107

 

 

 

135

 

 

 

100

 

 

Africa, primarily West Africa:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

7

 

 

 

6

 

 

 

3

 

 

Crew

 

 

12

 

 

 

13

 

 

 

13

 

 

Mini-supply

 

 

 

 

 

 

 

 

1

 

 

Supply

 

 

8

 

 

 

10

 

 

 

2

 

 

Towing Supply

 

 

18

 

 

 

20

 

 

 

8

 

 

Other

 

 

3

 

 

 

4

 

 

 

 

 

 

 

 

48

 

 

 

53

 

 

 

27

 

 

United Kingdom, primarily North Sea:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

 

 

 

1

 

 

 

1

 

 

Standby safety

 

 

27

 

 

 

27

 

 

 

27

 

 

Supply

 

 

 

 

 

 

 

 

4

 

 

 

 

 

27

 

 

 

28

 

 

 

32

 

 

Asia:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

3

 

 

 

8

 

 

 

3

 

 

Crew

 

 

5

 

 

 

3

 

 

 

2

 

 

Mini-supply

 

 

1

 

 

 

1

 

 

 

 

 

Supply

 

 

1

 

 

 

1

 

 

 

 

 

Towing Supply

 

 

4

 

 

 

3

 

 

 

1

 

 

Other

 

 

1

 

 

 

2

 

 

 

1

 

 

 

 

 

15

 

 

 

18

 

 

 

7

 

 

Middle East:

 

 

 

 

 

 

 

 

 

 

 

 

 

Crew

 

 

3

 

 

 

6

 

 

 

 

 

Supply

 

 

4

 

 

 

3

 

 

 

 

 

Towing supply

 

 

10

 

 

 

11

 

 

 

7

 

 

Other

 

 

9

 

 

 

10

 

 

 

1

 

 

 

 

 

26

 

 

 

30

 

 

 

8

 

 

Mexico, Central and South America:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

1

 

 

 

5

 

 

 

6

 

 

Crew

 

 

3

 

 

 

9

 

 

 

8

 

 

Mini-supply

 

 

1

 

 

 

2

 

 

 

3

 

 

Supply

 

 

2

 

 

 

7

 

 

 

6

 

 

Towing supply

 

 

3

 

 

 

11

 

 

 

11

 

 

Other

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

11

 

 

 

35

 

 

 

34

 

 

Other Foreign:

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor handling towing supply

 

 

 

 

 

 

 

 

1

 

 

Crew

 

 

 

 

 

 

 

 

1

 

 

Towing supply

 

 

 

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

2

 

 

 

4

 

 

Total Foreign Fleet

 

 

127

 

 

 

166

 

 

 

112

 

 

Total Fleet

 

 

234

 

 

 

301

 

 

 

212

 

 

 

6




United States.   At December 31, 2006, 107 vessels were operating in the U.S., including 67 owned, 38 leased-in, one joint ventured and one pooled. Offshore Marine Services’ expertise in this market is deepwater anchor handling with our fleet of AHTS vessels and exploration and production support with our fleet of crew and mini-supply vessels. This is a highly volatile market because the activities we support tend to be of short-term duration and influenced by the near term price of natural gas. In addition, a large number of offshore marine service companies are active in this market and they compete largely on price alone.

Africa, primarily West Africa.   At December 31, 2006, 48 vessels were operating in West Africa, including 43 owned and five bareboat chartered-in. Our largest market in this area is Nigeria, which is dominated by the major oil companies and is characterized by large scale, multi-year projects. Angola is an increasingly significant market for our business. At the end of the year, we had eleven vessels operating within Angolan waters. The remainder of the Company’s vessels in this region operate from ports in the Republic of the Congo, Cameroon, Gabon, Equatorial Guinea and South Africa.

United Kingdom, primarily North Sea.   At December 31, 2006, 27 vessels were operating in the North Sea, including 21 owned, one joint ventured and five managed-in. The North Sea fleet provides standby safety and supply services. Demand in the North Sea market for standby services developed in 1991 after the United Kingdom promulgated legislation requiring offshore operations to maintain higher specification standby safety vessels. The legislation requires a vessel to “stand by” to provide a means of evacuation and rescue for platform and rig personnel in the event of an emergency at an offshore installation.

Asia.   At December 31, 2006, 15 vessels were operating in Asia, including eleven owned, two leased-in and two joint ventured. Offshore Marine Services’ vessels operating in this area generally support exploration programs and therefore follow drilling rigs to their locations in the region. To date, our largest markets in this area have been Vietnam and Indonesia. We compete against a large number of local and international companies in this region.

Middle East.   At December 31, 2006, 26 vessels were operating in the Middle East region, including 18 owned and eight joint ventured. Offshore Marine Services’ vessels operating in this area generally support activities in countries along the Arabian Gulf and Arabian Sea, including the United Arab Emirates, Qatar, Pakistan and India. We compete against a large number of local and international companies in this region.

Mexico, Central and South America.   At December 31, 2006, 11 vessels were operating in Mexico, Central and South America, including six owned and five joint ventured. Offshore Marine Services’ primary markets in this region are Mexico and Brazil. In both areas, Offshore Marine Services operates through local companies registered to do business in the country and benefits from certain national flag preferences.

Customers and Contractual Arrangements

Offshore Marine Services’ principal customers are major integrated oil companies, large independent oil and gas exploration and production companies and emerging independent companies. Consolidation of oil and gas companies through mergers and acquisitions over the past several years has had a limiting effect on Offshore Marine Services’ customer base. In 2006 there was no single customer responsible for 10% or more of consolidated operating revenues. The ten largest customers of Offshore Marine Services accounted for approximately 46% of Offshore Marine Services’ operating revenues. The loss of one or a few of our customers could have a material adverse effect on Offshore Marine Services’ results of operations.

7




The Offshore Marine Services segment earns and recognizes revenues primarily from the time charter and bareboat charter of vessels to customers based upon daily rates of hire. A time charter is a lease arrangement under which the Company provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under bareboat charter agreements, the Company provides the vessel to the customer and the customer assumes responsibility for all operating expenses and assumes all risk of operation. Vessel charters may range from several days to several years. Revenues from time charters and bareboat charters are recorded and recognized as service is provided.

Competitive Conditions

Each of the markets in which Offshore Marine Services operates is highly competitive. The most important competitive factors are pricing and the availability of equipment to fit customer requirements at the time the equipment is needed. Other important factors include service and reputation, flag preference, local marine operating conditions, the ability to provide and maintain logistical support given the complexity of a project and the cost of moving equipment from one geographical location to another.

Offshore Marine Services has numerous competitors in each of its geographical regions ranging from international companies that operate vessels in many of the same regions to smaller local companies that typically concentrate their activities in one specific region.

Risks of Foreign Operations

For the years ended December 31, 2006, 2005 and 2004 approximately 46%, 50%, and 56%, respectively, of Offshore Marine Services’ operating revenues were derived from foreign operations. Foreign operations are subject to inherent risks. These risks include, among others, political instability, asset seizures, nationalization of assets, terrorist attacks, piracy, kidnapping, fluctuating currency values, hard currency shortages, controls on currency exchange, the repatriation of income or capital, import-export quotas and other forms of public and governmental regulation, all of which are beyond the control of the Company. It is not possible to predict whether any of these conditions or events might develop in the future. The occurrence of any one or more of such conditions or events could have a material adverse effect on the Company’s financial condition and results of operations.

Marine Transportation Services

Business

As of December 31, 2006, Marine Transportation Services operated a fleet of ten U.S. flag tankers, including nine owned and one leased-in, providing marine transportation services for petroleum products and chemicals moving in the U.S. domestic or “coastwise” trade. Additionally, Marine Transportation Services managed one vessel on behalf of a third party. This segment contributed 11% and 7% of consolidated revenues in 2006 and 2005, respectively.

Equipment and Services

The Oil Pollution Act of 1990 (“OPA 90”) prohibits vessels without double-hulls from transporting crude oil and petroleum products in U.S. coastwise transportation after certain dates based on the age and size of the vessel. In addition, single-hulled vessels will be prohibited from transporting petroleum products in most international markets under a phase-out schedule established by the International Maritime Organization (“IMO”).

8




The table below sets forth our Marine Transportation Services fleet as of December 31, 2006.

Name of Vessel

 

 

 

Capacity
in barrels

 

Tonnage
in “dwt”
(1)

 

OPA 90
Retirement date

 

Type

 

Seabulk Trader (2)

 

 

360,000

 

 

 

49,900

 

 

 

see note

 

 

Double-bottom

 

Seabulk Challenge (2)

 

 

360,000

 

 

 

49,900

 

 

 

see note

 

 

Double-bottom

 

HMI Brenton Reef

 

 

341,000

 

 

 

45,000

 

 

 

None

 

 

Double-hull

 

Seabulk Energy

 

 

341,000

 

 

 

45,000

 

 

 

None

 

 

Double-hull

 

Seabulk Arctic

 

 

340,000

 

 

 

46,000

 

 

 

None

 

 

Double-hull

 

Seabulk Mariner

 

 

340,000

 

 

 

46,000

 

 

 

None

 

 

Double-hull

 

Seabulk Pride

 

 

340,000

 

 

 

46,000

 

 

 

None

 

 

Double-hull

 

Seabulk Power

 

 

260,000

 

 

 

36,600

 

 

 

2008

 

 

Single-hull

 

Seabulk Magnachem(3)

 

 

297,000

 

 

 

39,300

 

 

 

2007

 

 

Double-bottom

 

Seabulk America

 

 

297,000

 

 

 

46,300

 

 

 

2015

 

 

Double-bottom

 

 


(1)                 Dead weight tons or “dwt”.

(2)                   During 2006 Marine Transportation Services committed to retrofit the Seabulk Trader and the Seabulk Challenge with double-hulls, thereby enabling these vessels to continue to transport crude oil and petroleum products beyond their presently mandated OPA 90 retirement dates in 2011. Work on the Seabulk Trader is expected to be completed during March 2007. Work on the Seabulk Challenge is expected to begin during March 2007 and be completed by the end of June 2007.

(3)                 In 2006 Marine Transportation Services exercised an option to purchase the Seabulk Magnachem at the expiration of the current lease term in February 2007.

Markets

Petroleum Product Transportation.   In the domestic energy trade, oceangoing vessels transport fuel and other petroleum products primarily from refineries and storage facilities along the coast of the U.S. Gulf of Mexico to utilities, waterfront industrial facilities and distribution facilities along the U.S. Gulf of Mexico, the Atlantic and Pacific coasts, as well as transport crude and product between Alaska and the West Coast and Hawaii. The number of U.S. flag oceangoing vessels eligible to participate in the U.S. domestic trade and capable of transporting fuel or petroleum products has steadily decreased since 1980 as vessels have reached the end of their useful lives or are being retired due to OPA 90 requirements. In addition, the cost of new vessel construction in the United States (a requirement to operate in the U.S. domestic coastwise trade) has substantially increased.

Chemical Transportation.   In the U.S. domestic coastwise chemical transportation trade, vessels carry chemicals, primarily from chemical manufacturing plants and storage facilities along the coast of the U.S. Gulf of Mexico to industrial users in and around U.S. Atlantic and Pacific coast ports. The chemicals transported consist primarily of caustic soda, paraxylene, alkylates, toluene and lubricating oils. Some of the chemicals must be carried in vessels with specially coated or stainless steel cargo tanks and many of them are sensitive to contamination and require special cargo-handling equipment.

Customers and Contractual Arrangements

The primary purchasers of petroleum product transportation services are multi-national oil and gas companies, oil trading companies and large industrial consumers of fuel with waterfront facilities. The primary purchasers of chemical transportation services are chemical and oil companies. Both services are generally contracted for on the basis of short-term or long-term time charters, voyage charters, contracts of affreightment or other transportation agreements tailored to the shipper’s requirements. In 2006, no single customer responsible for 10% or more of consolidated operating revenues. The ten largest customers of Marine Transportation Services accounted for approximately 94% of Marine Transportation Services’

9




operating revenues. The loss of one or a few of our customers could have a material adverse effect on Marine Transportation Services’ results of operations.

As with other vessels we operate, tankers operated by Marine Transportation Services under time charter are operated for a daily rate of hire whereby the customer pays for fuel and we are responsible for the actual operation of the vessel and all other vessel operating expenses. Contracts of affreightment are contracts for cargos that are committed on a multi-voyage basis over a period of weeks or months, with minimum and maximum cargo tonnages specified over the period at a fixed or escalating rate per ton. Revenues for voyage charters and contracts of affreightment are recognized based on the percentage of voyage completion computed on the basis of the number of voyage days worked at the relevant reporting date divided by the total number of days expected to complete the entire voyage.

Competitive Conditions

The markets in which our fleet operate are highly competitive. Our primary direct competitors are other operators of U.S. flag ocean-going tank vessels and chemical carriers. The most important competitive factors are pricing and availability to fit customer requirements as well as the requirement in certain areas to operate double-hull or double-bottom vessels.

Inland River Services

Business

Inland River Services provides dry and liquid bulk cargo transportation on the U.S. inland waterways, primarily the Mississippi River, Illinois River, Tennessee River, Ohio River and their tributaries and the U.S. Gulf Intracoastal waterways.

We control one of the industry’s newest fleets of dry cargo and tank barges transporting agricultural and industrial products on the inland waterways. We also own towboats used for moving barges, a fleeting operation and deck barges for specialized projects. Inland River Services contributed 11%, 13% and 14% of consolidated operating revenues in 2006, 2005 and 2004, respectively.

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Equipment and Services

The following table sets forth the number of dry cargo barges, chemical tank barges, deck barges and towboats owned and/or operated by Inland River Services.

 

 

Owned

 

Joint
Ventured

 

Chartered-in

 

Pooled or
Managed

 

Total

 

2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dry Cargo Barges-Open

 

 

290

 

 

 

8

 

 

 

5

 

 

 

10

 

 

313

 

Dry Cargo Barges-Covered

 

 

512

 

 

 

56

 

 

 

4

 

 

 

155

 

 

727

 

Chemical Tank Barges

 

 

42

 

 

 

19

 

 

 

 

 

 

 

 

61

 

Deck Barges

 

 

7

 

 

 

 

 

 

 

 

 

 

 

7

 

Towboats

 

 

7

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

858

 

 

 

83

 

 

 

9

 

 

 

165

 

 

1,115

 

2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dry Cargo Barges-Open

 

 

285

 

 

 

 

 

 

 

 

 

11

 

 

296

 

Dry Cargo Barges-Covered

 

 

470

 

 

 

 

 

 

182

 

 

 

191

 

 

843

 

Chemical Tank Barges

 

 

44

 

 

 

 

 

 

 

 

 

 

 

44

 

Deck Barges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Towboats

 

 

7

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

806

 

 

 

 

 

 

182

 

 

 

202

 

 

1,190

 

2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dry Cargo Barges-Open

 

 

240

 

 

 

 

 

 

 

 

 

13

 

 

253

 

Dry Cargo Barges-Covered

 

 

440

 

 

 

 

 

 

182

 

 

 

197

 

 

819

 

Chemical Tank Barges

 

 

20

 

 

 

 

 

 

 

 

 

 

 

20

 

Deck Barges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Towboats

 

 

6

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

706

 

 

 

 

 

 

182

 

 

 

210

 

 

1,098

 

 

The Inland River Services dry cargo fleet consists of open and covered hopper barges. Open hopper barges are used to transport commodities that are not sensitive to water such as coal, aggregate and scrap. Covered hopper barges are more versatile because they can also carry water sensitive products, such as grain, ores, alloys, cements and fertilizer. Each dry cargo barge in our fleet is capable of transporting approximately 1,500 to 2,000 tons (1,350 to 1,800 metric tons) of cargo. The carrying capacity of a barge at any particular time is determined by water depth in the river channels and hull size of the barge. Adverse river conditions such as high water resulting from excessive rainfall, or low water caused by drought, can also impact operations by limiting the speed at which tows travel the U.S. inland waterways, the number of barges included in tows and the quantity of cargo that is loaded in the barges.

Inland barges are unmanned and are moved on the U.S. inland waterways by vessels known in the trade as “towboats.”  The combination of a towboat and barges is commonly referred to as a “tow.”  We generally charge a price per ton for point to point transportation of dry bulk commodities. Customers are permitted a specified number of days to load and discharge the cargo, and thereafter pay a per diem rate for extra time. From time to time, a small number of our dry cargo barges will be used for storage for a period prior to delivery. Inland River Services contracts with third parties to provide towing services to move its dry cargo barges on a spot basis with rates charged being market driven. Towing prices fluctuate with demand, rising with higher volumes and higher fuel costs.

Typical dry cargo voyage activity requires shifting a clean, empty barge from a fleeting location to a loading facility. The barge is then moved from the loading location and assembled into a tow before proceeding to its next destination. After unloading it is shifted to a fleeting area for cleaning and repair, if

11




needed, before being moved again into a load position. Generally we try to match-up northbound and southbound movements of cargo to minimize repositioning costs. Typically, grain cargos move southbound and non-grain cargos move northbound.

The Inland River Services fleet of chemical and product tank barges transports liquid bulk cargos such as lube oils, solvents and glycols. The operation and chartering arrangements for these barges are similar to those of the dry cargo barges described above.

Inland River Services also owns a “fleeting operation” which is a staging area for grouping barges in preparation for movements up and down the river and a holding area for barges waiting to load and unload cargo. Our fleeting operation is managed by a third party.

During the fourth quarter of 2006, we entered into a 50-50 joint venture with a financial investor to own a fleet of inland marine transportation assets with a view toward generating cash returns which may be enhanced by entering strategic positions in marketable securities and commodity futures.

During the fourth quarter of 2006, we purchased a 50% interest in a joint venture that operates a grain and liquid fertilizer storage and handling facility in McLeansboro, Illinois.

Markets

The market for our services, prices achieved and utilization are driven by supply and demand economics. The relationship between supply and demand reflects many factors, including:

·                    the level of domestic and international production of the basic agricultural products to be transported (in particular the yields from grain harvests)

·                    the level of domestic and international consumption of agricultural products and the effect of these levels on the volumes of products that are physically moved into the export markets

·                    domestic and worldwide demand for iron ore, steel, steel by-products, coal, petroleum and other bulk commodities

·                    strength or weakness of the U.S. Dollar

·                    the cost of ocean freight and the cost of fuel

Within the U.S. other local factors also have an effect on pricing, including:

·                    the supply of barges available to move the products

·                    the ability to position the barges to maximize efficiencies and utility in moving cargos both northbound and southbound

·                    the cost of alternative forms of transportation (primarily rail)

·                    general operating logistics on the river network including size and operating status of locks and dams

·                    the effect of river levels on the loading capacities of the barges in terms of draft restrictions

Most of Inland River Services business is booked in the short-term and spot markets, and therefore, its earnings are subject to fluctuations in market rates. We occasionally seek to enter into long-term contracts to provide a level of stable cash flows and moderate the effect of market fluctuations.

Seasonality

During harsh winters the upper Mississippi River usually closes to barge traffic from mid-December to mid-March. Ice often hinders the navigation of barge traffic on the mid-Mississippi River, the

12




Illinois River and the upper Ohio River during the same period. The volume of grain transported from the Midwest to the Gulf of Mexico, which is primarily for export, is greatest during the harvest season from mid-August through late November. The harvest season is particularly significant because pricing tends to peak during these months in response to higher demand for equipment.

Customers and Contractual Arrangements

The principal customers for Inland River Services are major agricultural and industrial companies. In 2006 there was no single customer responsible for 10% or more of consolidated operating revenues. The ten largest customers of Inland River Services accounted for approximately 60% of Inland River Services’ revenues in 2006. The loss of one or a few of our customers would not have a material adverse effect on Inland River Services’ results of operations.

Most of the barges in the fleet are employed under contracts of affreightment that can vary in duration, ranging from one voyage to several years. For longer term contracts base rates may be adjusted in response to changes in fuel prices and operating expenses. Some longer term contracts provide for the transport of a minimum number of tons of cargo or specific transportation requirements for a particular customer. Some barges are bareboat chartered-out to third parties for a fixed payment of hire per day for the duration of the charter. These contracts tend to be longer, ranging in term from one to five years.

Competitive Conditions

Generally, we believe the primary barriers to effective competitive entry into the U.S. inland waterways markets are the complexity of operations, the consolidation of the inland river towing industry and the difficulty in assembling a large enough fleet and an experienced staff to operate efficiently in the execution of voyages and to re-position barges effectively to optimize their use. The primary competitive factors among established operators are price and availability of barges. In addition to reliability, barge operators must have equipment of a suitable type and condition for a specific cargo.

We believe that there are four major domestic companies that operate over 2,000 barges each, with one of those operating over 3,000 barges. There are also four mid-sized barge companies that operate more than 500 but less than 1,000 barges. While our main competitors are other barge lines, railroads also compete for traffic that might otherwise move on the U.S. inland waterways.

Aviation Services

Business

Aviation Services’ helicopter fleet principally provides transportation services to the offshore oil and gas exploration, development and production industry that operates in the U.S. Gulf of Mexico and Alaska. Aviation Services also provides flightseeing tours in Alaska and leases helicopters to third parties. It also owns a fixed base operation (“FBO”) at Ted Stevens Anchorage International Airport. The FBO sells fuel and provides services to corporate aircraft and a regional airline. Aviation Services contributed 12%, 14% and 6% of consolidated operating revenues in 2006, 2005 and 2004, respectively.

Equipment and Services

At December 31, 2006, Aviation Services owned 109 helicopters and leased 14 others under operating leases. Of these, 108 were located in the United States and 15 were located in foreign jurisdictions. Aviation Services operates a Federal Aviation Administration (“FAA”) approved maintenance repair station in Lake Charles, Louisiana and is a factory approved service facility for Bell Helicopter, American Eurocopter and Turbomeca.

13




The composition of Aviation Services’ fleet as of December 31 was as follows:

 

 

Owned(a)

 

Leased-in

 

Managed

 

Total

 

2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Light Helicopters

 

 

67

 

 

 

14

 

 

 

 

 

 

81

 

 

Medium Helicopters

 

 

39

 

 

 

 

 

 

 

 

 

39

 

 

Heavy Helicopters

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

109

 

 

 

14

 

 

 

 

 

 

123

 

 

2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Light Helicopters

 

 

55

 

 

 

14

 

 

 

 

 

 

69

 

 

Medium Helicopters

 

 

36

 

 

 

 

 

 

 

 

 

36

 

 

Heavy Helicopters

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

94

 

 

 

14

 

 

 

 

 

 

108

 

 

2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Light Helicopters

 

 

72

 

 

 

17

 

 

 

1

 

 

 

90

 

 

Medium Helicopters

 

 

32

 

 

 

 

 

 

 

 

 

32

 

 

Heavy Helicopters

 

 

5

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

109

 

 

 

17

 

 

 

1

 

 

 

127

 

 

 


(a)                  Excludes 3, 16 and 3 helicopters removed from service as of December 31, 2006, 2005 and 2004, respectively

Light Helicopters are single or twin engine helicopters with a passenger capacity of between four and seven. Medium Helicopters are twin engine helicopters with a passenger capacity of up to 13. Heavy Helicopters are twin engine helicopters with a passenger capacity of up to 19.

On January 5, 2007, a wholly owned subsidiary of the Company, EraMed LLC (“EraMed”), acquired the air medical business of Keystone Helicopter Corporation. EraMed operates 33 light and medium twin engine aircraft, including four owned, ten leased-in and 19 managed, in support of hospital based air medical programs in the northeastern United States.

Markets

At this time, Aviation Services’ principal market for its transportation services is in the U.S. Gulf of Mexico supporting the offshore oil and gas exploration, development and production industry. The customers and locations are similar to those serviced by Offshore Marine Services and the market opportunities there are subject to the same cycles and pressures as described in “Item 1. Business—Offshore Marine Services—Markets.”  In addition, Aviation Services leases aircraft in the U.S. and internationally, conducts flightseeing operations in Alaska and provides services to the utility and offshore markets in Alaska.

Flightseeing services are operated out of Juneau and from areas near Denali National Park. Other helicopter services to the oil and mining industries in Alaska are provided on a contract or charter basis from bases in Valdez, Anchorage, the Kenai area and Deadhorse. These services are somewhat seasonal in nature, peaking during the months of May through September when weather conditions are more conducive to operations.

Seasonality

A significant portion of Aviation Services’ operating revenues and profits related to oil and gas industry activity is dependent on actual flight hours. The fall and winter months have fewer hours of daylight and consequently flight hours are generally lower at these times. In addition, prolonged periods of adverse weather and the effect of fewer hours of daylight can adversely impact our operating results. In

14




general, the winter months of December through February in the U.S. Gulf of Mexico and October through April in Alaska have more days of adverse weather conditions than the other months of the year. In the U.S. Gulf of Mexico, June through November is tropical storm season. During tropical storms, we are unable to operate in the area of the storm although flight activity may increase immediately prior to and after storms due to the evacuation and return of offshore workers. Our flightseeing operation is also seasonal; activity generally occurs from late May until early September.

Customers and Contractual Arrangements

Aviation Services charters its helicopters to utility and oil and gas customers primarily through master service agreements, term contracts and day-to-day charter arrangements. Master service agreements require incremental payments above a fixed fee based upon flight hours flown, have fixed terms ranging from one month to five years and generally are cancelable upon 30 days notice. Term contracts and day-to-day charter arrangements are generally non-cancelable without cause and call for a combination of a monthly or daily fixed rental fee plus a charge based on hours flown. Day-to-day charter arrangements are generally based on either an hourly or daily rate. Our rate structure, as it applies to our utility and oil and gas contracts, contains terms that limit our exposure to increases in fuel costs over a pre-agreed level. Fuel costs in excess of these levels are passed through to our customers. With respect to flightseeing aircraft, we allocate block space to cruise lines and sell seats directly to customers. The Company’s principal customers in the U.S. Gulf of Mexico are oil companies of varying sizes and production management companies. In Alaska, the Company’s principal customers are oil companies and cruise line passengers.

There are other markets for our helicopter transportation services that include oil and gas industry support activities abroad, agricultural support and general aviation activities. Our activity in these markets is limited. We have 15 helicopters operating abroad under leases to third parties.

In 2006 no one customer was responsible for 10% or more of consolidated operating revenues. The ten largest customers of Aviation Services accounted for approximately 59% of Aviation Services’ operating revenues. The loss of one or a few of our customers could have a material adverse effect on Aviation Services’ results of operations.

Competitive Conditions

The helicopter transportation business is highly competitive. There are two major competitors in the U.S.,  PHI, Inc. and Bristow Group Inc., as well as several other smaller companies. In addition, several customers in the U.S. Gulf of Mexico operate their own helicopter fleets. We are one of the largest helicopter companies operating in the U.S. Gulf of Mexico and the largest operator in Alaska. In most instances, an operator must have an acceptable safety record, demonstrated reliability and suitable equipment to participate in bidding for work. Among bidders meeting these criteria, customers typically make their final choice based on price and aircraft preference.

15




Environmental Services

Business

Environmental Services primarily provides emergency preparedness and response services to oil, chemical, industrial and marine transportation clients in the U.S. and abroad. In the United States, these services are generally rendered to those clients who store, transport, produce or handle petroleum and certain non-petroleum oils that are subject to the provisions of OPA 90 and various other federal, state and municipal regulations. Internationally, these services may be required by legislation and regulation of the countries where our clients operate, international maritime conventions and environmental covenants placed on clients by their lending institutions. We conduct our business primarily through the Company’s wholly owned subsidiaries, National Response Corporation (“NRC”), The O’Brien’s Group, Inc. and SEACOR Environmental Services International Limited. Environmental Services contributed 11%, 14% and 23% of consolidated revenues in 2006, 2005 and 2004, respectively.

Products and Services

Emergency Response Services.   Environmental Services employs trained personnel and maintains specialized equipment positioned in the U.S. and in certain locations outside the U.S. to respond to oil spills, other emergencies and projects required by our customers. A fleet of specialized vessels and barges outfitted with oil spill equipment is positioned on the East, Gulf and West Coasts of the U.S. as well as in the Caribbean and Hawaii. Oil spill and other response equipment are also stationed in certain international locations in Africa, the Caspian Region, the Far East, the Middle East and South America. This division of Environmental Services has also established a network of approximately 175 independent oil spill response contractors that may assist it by providing equipment and personnel. Operating revenues earned from emergency response services approximated 35%, 46% and 49% of Environmental Services’ total operating revenues for the years ended December 31, 2006, 2005, and 2004, respectively.

Retainer Services.   We offer retainer contracts to the maritime community, such as operators of tank and non-tank vessels and chemical carriers and to owners of facilities, such as refineries, pipelines, exploration and production platforms, power plants and storage tank and transportation terminals. Retainer services include access to professional response management and specialized equipment necessary to respond to an oil or chemical spill emergency.

Consulting Services.   Our personnel assist clients in the development and updating of their prevention, emergency response and security plans. These personnel also develop and conduct customized training programs for clients to educate their employees on the prevention of and response to emergencies, such as oil spills, handling of hazardous materials releases, fire fighting, security and terrorist incidents, natural disasters, public health emergencies and other crisis-related events and associated risks. In addition, our professionals plan, conduct, evaluate and participate in all types of customer and government led emergency response drills and exercises. We also assist customers in the selection, purchase, shipment and commissioning of environmental equipment and products and training of personnel to operate this equipment. Consultants with specialized qualifications also conduct and assist with vessel inspections, security assessments of vessels and facilities and serve as expert witnesses on behalf of clients in litigation matters. We offer these services throughout the U.S. and internationally, both on a stand-alone basis and as part of retainer services, to our oil, chemical, industrial, marine transportation and government customers.

Industrial and Remediation Services.   We also provide industrial and remediation services to oil, chemical, industrial and government clients on the U.S. West Coast and internationally. These services include hazardous waste management, industrial and marine cleaning, salvage support, petroleum storage tank removal, pipeline repair and site remediation services. Some of these projects are required or

16




governed by federal, state or local regulations. Also, many of these projects are the result of competitive bidding conducted by our customers.

Markets

The market for contractual oil spill preparedness, response and other related training and consulting services in the U.S. resulted from the enactment of OPA 90 following the Exxon Valdez oil spill in Alaska. OPA 90 (and subsequent regulations promulgated by the Department of Transportation (“DOT”), Environmental Protection Agency (“EPA”), the Minerals Management Service division of the U.S. Department of Interior (“MMS”) and the United States Coast Guard (“USCG”)) requires that all tank vessels operating within the 200-mile Exclusive Economic Zone of the United States and all facilities and pipelines handling oil that could have a spill affecting the navigable waters of the U.S. develop a plan to respond to a “worst case” oil spill and ensure by contract or other approved means the ability to respond to such a spill.

We also provide vessel security assessments, security plans, security training and exercises and other related services. We market these services to clients who are required to comply with the Maritime Transportation Security Act of 2002 which was enacted following the September 11, 2001 terrorist attacks. We also market Homeland Security services to federal, state, county and local agencies to assist them in their efforts to improve emergency preparedness and response capabilities.

In the international market for oil spill response services, Environmental Services seeks to develop opportunities with governments, other agencies and international oil and gas exploration and production companies to establish and operate the necessary response capability. Where possible, Environmental Services builds on its emergency response presence to provide additional environmental, training and industrial services.

Customers and Contractual Arrangements

Environmental Services offers its services primarily to the domestic and international shipping community, major oil companies, independent exploration and production companies, pipeline and transportation companies, power generating operators, industrial companies and airports. Services are provided pursuant to contracts generally ranging from one month to ten years. In addition to our retainer customers, we provide training, exercise and response services for oil spills, chemical releases, terrorist acts and natural disasters to others, including, under certain circumstances, local, state and federal agencies such as the USCG. In 2006 there was no single customer responsible for 10% or more of consolidated operating revenues. The ten largest customers of Environmental Services accounted for approximately 48% of Environmental Services’ operating revenues. The loss of a single large client or a group of mid-size customers could have a material adverse effect on Environmental Services’ results of operations. However, Environmental Services has more than 2,300 customers, and management does not believe that it is dependent on a single customer or small group of customers.

Competitive Conditions

The principal competitive factors in the environmental service business are price, customer service, reputation, experience and operating capabilities. In the U.S., NRC faces competition primarily from the Marine Spill Response Corporation, a non-profit corporation funded by the major integrated oil companies, other non-profit industry cooperatives and also from those commercial contractors who target specific market niches in response, consulting and remediation. Internationally, competition for both oil spill response and emergency preparedness and management comes from a few private companies and regional oil industry cooperatives.

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Risks of Foreign Operations

Environmental Services operates worldwide. Services include oil spill and hazardous material response, environmental and engineering project management, training and consultancy to multinational oil companies, governments and industry. For the years ended December 31, 2006, 2005 and 2004 approximately 22%, 11%, and 8%, respectively, of Environmental Services’ operating revenues were derived from its foreign operations.

Foreign operations are subject to various inherent risks. These risks include, among others, political instability, nationalization of assets, terrorist attacks, the repatriation of income or capital, import-export quotas and other forms of public and governmental regulation, all of which are beyond the control of the Company. It is not possible to predict whether any of these conditions or events might develop in the future.

Other

Harbor and Offshore Towing Services.   At December 31, 2006, Harbor and Offshore Towing Services operated a total of 26 tugs, of which 15 were conventional tugs, four were Azimuth Stern Drive tugs, three were Forward Azimuth Drive tugs and four were Ship Docking Modules (“SDM”). SDMs™ are innovative vessels designed and patented by Seabulk which are maneuverable, efficient and flexible and require fewer crew members than conventional harbor tugs. In 2006 there was no single customer responsible for 10% or more of consolidated operating revenues. The ten largest customers of Harbor and Offshore Towing Services accounted for approximately 33% of Harbor and Offshore Towing Services’ operating revenues.

At December 31, 2006, twelve tugs were operating in Florida; four in Port Everglades, six in Tampa and two in Port Canaveral. Five tugs were operating in Port Arthur, Texas, three were in Mobile, Alabama and three were in Lake Charles, Louisiana. Two tugs were engaged in offshore towing operations in Mexico and one tug was bareboat chartered-out.

Joint Ventures, Leasing and Other Activities.   The Company is party to a 50-50 joint venture that operated a 52,000 dwt handy-max bulk carrier built and delivered in 2001 and sold to a third party in September 2006. The Company has a 38% interest in a business that operates a worldwide network of high frequency radio stations. In addition, the Company has a minority equity investment in a company that designs and manufactures water treatment systems for sale or lease. The Company records the results of these investments using the equity method of accounting.

The Company also engages in asset leasing activities.

Government Regulation

Regulatory Matters

Our operations are subject to significant U.S. federal, state and local regulations, as well as international conventions and the laws of foreign jurisdictions where we operate our equipment or where the equipment is registered. Our domestically registered vessels are subject to the jurisdiction of the USCG, the National Transportation Safety Board (“NTSB”), the U.S. Customs Service and the U.S. Maritime Administration, as well as to the rules of private industry organizations such as the American Bureau of Shipping. These agencies and organizations establish safety standards and are authorized to investigate vessels and accidents and to recommend improved maritime safety standards. Aviation Services is subject to regulations pursuant to the Federal Aviation Act of 1958, as amended (“Federal Aviation Act”), and other statutes pursuant to Federal Aviation Regulations Part 135 Air Taxi Certificate granted by the FAA. The FAA regulates flight operations and, in this respect, has jurisdiction over Aviation Services personnel, aircraft, ground facilities and certain technical aspects of its operations. In addition to

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the FAA, the NTSB is authorized to investigate aircraft accidents and to recommend improved safety standards.  We are also subject to the Communications Act of 1934, as amended because of the use of radio facilities in Aviation Services operations.

Offshore Marine Services, Marine Transportation Services and Inland River Services are also subject to the Shipping Act, 1916, as amended (“1916 Act”), and the Merchant Marine Act of 1920, as amended (“1920 Act,” or “Jones Act” and, together with the 1916 Act, “Shipping Acts”), which govern, among other things, the ownership and operation of vessels used to carry cargo between U.S. ports known as “U.S. coastwise trade.” The Shipping Acts require that vessels engaged in the U.S. coastwise trade be owned by U.S. citizens and built in the U.S. For a corporation engaged in the U.S. coastwise trade to be deemed a U.S. citizen: (i) the corporation must be organized under the laws of the U.S. or of a state, territory or possession thereof, (ii) each of the president or other chief executive officer and the chairman of the board of directors of such corporation must be a U.S. citizen, (iii) no more than a minority of the number of directors of such corporation necessary to constitute a quorum for the transaction of business can be non-U.S. citizens and (iv) at least 75% of the interest in such corporation must be owned by U.S. “citizens” (as defined in the Shipping Acts). Should the Company fail to comply with the U.S. citizenship requirements of the Shipping Acts, it would be prohibited from operating its vessels in the U.S. coastwise trade during the period of such non-compliance.

To facilitate compliance with the Shipping Acts, SEACOR’s Restated Certificate of Incorporation: (i) limits the aggregate percentage ownership by non-U.S. citizens of any class of the SEACOR’s capital stock (including the Common Stock) to 22.5% of the outstanding shares of each such class to ensure that such foreign ownership will not exceed the maximum percentage permitted by applicable maritime law (presently 25%) but authorizes SEACOR’s Board of Directors, under certain circumstances, to increase the foregoing percentage to 24%, (ii) requires institution of a dual stock certification system to help determine such ownership and (iii) permits the Board of Directors to make such determinations as reasonably may be necessary to ascertain such ownership and implement such limitations. In addition, SEACOR’s by-laws provide that the number of foreign directors shall not exceed a minority of the number necessary to constitute a quorum for the transaction of business and restrict any officer who is not a U.S. citizen from acting in the absence or disability of the Chairman of the Board of Directors and the Chief Executive Officer and the President, all of whom must be U.S. citizens.

Aviation Services’ helicopters operating in the United States are similarly subject to registration and citizenship requirements under the Federal Aviation Act. That Act requires that before an aircraft may be legally operated in the United States, it must be owned by “citizens of the United States,” which, in the case of a corporation, means a corporation (i) organized under the laws of the U.S. or of a state, territory or possession thereof, (ii) of which at least 75% of its voting interests are owned or controlled by persons who are U.S. “citizens” (as defined in the Federal Aviation Act and regulations promulgated thereunder), and (iii) of which the president and at least two-thirds of the board of directors and managing officers are U.S. citizens.

All of Marine Transportation Services’ and Inland River Services’ vessels and the majority of Offshore Marine Services’ vessels are registered in the United States. Offshore Marine Services also operates vessels registered in a number of foreign jurisdictions. Vessels registered in these jurisdictions are subject to the laws of the applicable jurisdiction as to ownership, registration, manning and safety. In addition, the vessels are subject to the requirements of a number of international conventions that are applicable to vessels depending on their jurisdiction of registration. Among the more significant of these conventions are: (i) the 1978 Protocol Relating to the International Convention for the Prevention of Pollution from Ships, (ii) the International Convention on the Safety of Life at Sea, 1974 and 1978 Protocols, and (iii) the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978. The Company believes that its vessels registered in foreign jurisdictions are in compliance with all applicable material regulations and have all licenses necessary to conduct their business. In addition,

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vessels operated as standby safety vessels in the North Sea are subject to the requirements of the Department of Transport of the United Kingdom pursuant to the United Kingdom Safety Act.

All of our chemical and petroleum product tankers, harbor and offshore towing vessels, certain of our offshore marine vessels and all of our inland river tank barges that are operated by a third party are subject to periodic inspection and survey by, and drydocking and maintenance requirements of, the USCG and/or the American Bureau of Shipping and other marine classification societies. Moreover, to insure compliance with applicable safety regulations, the USCG is authorized to inspect vessels at will.

NRC, one of our Environmental Services companies, is classified by the USCG as an Oil Spill Removal Organization (“OSRO”) for every port in the continental U.S., Hawaii and the Caribbean. The OSRO classification process is strictly voluntary. Vessel owners and other customers subject to OPA 90 who utilize classified OSROs are exempt from the requirement to list their response resources in their plans. The classification process permits the USCG and these customers to evaluate the ability of an OSRO to respond to and recover oil spills of various types and sizes in different operating environments and geographic locations.

In addition to the USCG, the EPA, the Office of Pipeline Safety, the MMS and certain individual states regulate vessels, facilities and pipelines in accordance with the requirements of OPA 90 or under analogous state law. There is currently little uniformity among the regulations issued by these agencies.

When responding to third-party oil spills, Environmental Services enjoys immunity from liability under federal law and some state laws for any spills arising from its response efforts, except in the event of deaths or personal injuries as a result of its gross negligence or willful misconduct.

Environmental Compliance

As more fully described below, all of our businesses are, to some degree, subject to federal, state, local and international laws and regulations relating to environmental protection and occupational safety and health, including laws that govern the discharge of oil and pollutants into navigable waters. Violations of these laws may result in civil and criminal penalties, fines, injunctions or other sanctions.

We believe that our operations currently are in compliance with all material environmental laws and regulations. We do not expect that we will be required to make capital expenditures in the near future that are material to our financial position or operations to comply with environmental laws and regulations; however, because such laws and regulations are frequently changing and may impose increasingly strict requirements, we cannot predict the ultimate cost of complying with these laws and regulations. The recent trend in environmental legislation and regulation is generally toward stricter standards, and it is our view that this trend is likely to continue.

OPA 90 establishes a regulatory and liability regime for the protection of the environment from oil spills. OPA 90 applies to owners and operators of facilities operating near navigable waters and owners and operators of vessels operating in U.S. waters, which include the navigable waters of the United States and the 200-mile Exclusive Economic Zone of the United States. Although it appears to apply in general to all vessels, for purposes of its liability limits and financial-responsibility and response-planning requirements, OPA 90 differentiates between tank vessels (which include our chemical and petroleum product vessels) and “other vessels” (which include our tugs, offshore marine vessels and dry cargo barges).

Under OPA 90, owners and operators of regulated facilities and owners and operators or certain charterers of vessels are “responsible parties” and are jointly, severally and strictly liable for removal costs and damages arising from facility and vessel oil spills unless the spill results solely from the act or omission of certain third parties under specified circumstances, an act of God or an act of war. Damages are defined broadly to include (i) injury to natural resources and the costs of remediation thereof; (ii) injury to, or

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economic losses resulting from the destruction of, real and personal property; (iii) net loss by the U.S. government, a state or political subdivision thereof of taxes, royalties, rents, fees and profits; (iv) lost profits or impairment of earning capacity due to property or natural resources damage; (v) net costs of providing increased or additional public services necessitated by a spill response, such as protection from fire, safety or other hazards; and (vi) loss of subsistence use of available natural resources.

The statutory liability of responsible parties for tank vessels is limited to the greater of $1,200 per gross ton or $10 million ($2 million for a vessel of 3,000 gross tons or less) per vessel; for any “other vessel,” such liability is limited to the greater of $600 per gross ton or $500,000 per vessel. These liability limits do not apply (a) if an incident is caused by the responsible party’s violation of federal safety, construction or operating regulations or by the responsible party’s gross negligence or willful misconduct, (b) if the responsible party fails to report the incident or to provide reasonable cooperation and assistance in connection with oil removal activities as required by a responsible official or (c) if the responsible party fails to comply with certain governmental orders.

Under OPA 90, with certain limited exceptions, all newly-built oil tankers carrying crude oil and petroleum products in U.S. waters must have double-hulls. Existing single-hull, double-side or double-bottom tank vessels, unless retrofitted with double-hulls, must be phased out of service at some point through 2015, depending upon the vessel’s size, age and place of discharge.

OPA 90 expanded pre-existing financial responsibility requirements and requires tank vessel owners and operators to establish and maintain with the USCG evidence of insurance or qualification as a self-insurer or other evidence of financial responsibility sufficient to meet their potential liabilities under OPA 90. We have satisfied USCG regulations by providing evidence of financial responsibility demonstrated by commercial insurance and self-insurance. The regulations also implement the financial responsibility requirements of the Comprehensive Environmental Response, Compensation and Liability Act, described below, which imposes liability for discharges of hazardous substances such as chemicals, in an amount equal to $300 per gross ton, thus increasing the overall financial responsibility in the case of tank vessels from $1,200 to $1,500 per gross ton.

OPA 90 also amended the Clean Water Act (“CWA”), also described below, to require the owner or operator of certain facilities or of a tank vessel to prepare facility or vessel response plans and to contract with oil spill removal organizations to remove, to the maximum extent practicable, a worst-case discharge. The Company has complied with these requirements. We expect our pollution liability insurance to cover any cost of spill removal subject to overall coverage limitations of $1.0 billion; however, a failure or refusal of the insurance carrier to provide coverage in the event of a catastrophic spill could result in material liability in excess of available insurance coverage, resulting in a material adverse effect on our business, results of operations or financial position.

OPA 90 allows states to impose their own liability regimes with respect to oil pollution incidents occurring within their boundaries and many states have enacted legislation providing for unlimited liability for oil spills. Some states have issued regulations addressing financial responsibility and vessel and facility response planning requirements. We do not anticipate that state legislation or regulations will have any material impact on our operations.

In addition to OPA 90, the following are examples of environmental laws that relate to our business and operations:

The federal CWA and comparable state and local laws impose restrictions on the discharge of pollutants into the navigable waters of the United States. These laws also provide for civil and criminal penalties, as well as injunctive relief, for violations. A related statute, the Coastal Zone Management Act, authorizes state development and implementation of programs to manage non-point source pollution to restore and protect coastal waters.

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The federal Resource Conservation and Recovery Act (“RCRA”) and comparable state and local laws regulate the generation, transportation, treatment, storage and disposal of hazardous and certain non-hazardous wastes. These laws also provide for civil and criminal penalties, as well as injunctive relief, for violations. Our operations may generate or, in some cases, result in the transportation of these regulated wastes.

The federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and comparable state laws establish strict and, under certain circumstances, joint and several liabilities for specified parties in connection with liability for the investigation and remediation of releases of hazardous materials into the environment and damages to natural resources.

The federal Clean Air Act (“CAA”) and comparable state and local laws impose restrictions on the emission of air pollutants into the atmosphere. These laws also provide for civil and criminal penalties, as well as injunctive relief, for violations. Our chemical and petroleum product carrier vessels are subject to vapor control and recovery requirements when loading, unloading, ballasting, cleaning, and conducting other operations in certain ports and are equipped with vapor control systems that satisfy these requirements in all material respects.

We manage exposure to losses from the above-described laws through our efforts to use only well-maintained, well-managed and equipped facilities and vessels and our development of safety and environmental programs, including a maritime compliance program and our insurance program. We believe we will be able to accommodate reasonably foreseeable environmental regulatory changes. There can be no assurance, however, that any future regulations or requirements or that any discharge or emission of pollutants by us will not have a material adverse effect.

Security

Heightened awareness of security needs brought about by the events of September 11, 2001 has caused the USCG, the IMO and the states and local ports to adopt heightened security procedures relating to ports and vessels. The Company has updated its procedures in light of the new requirements.

In 2002, Congress passed the Maritime Transportation Security Act (“MTSA”), which together with the IMO’s recent security proposals (collectively known as the International Ship and Port Facility Security Code or “ISPS”), requires specific security plans for our vessels and rigorous crew identification requirements. The following vessels are subject to the requirements of the ISPS:

·       U.S. flag vessels operating in the Jones Act trade that are at least 100 gross registered tons

·       U.S. flag vessels operating on an international voyage

·       Foreign flag vessels that are at least 500 gross tons under the International Tonnage Convention

The Company has implemented vessel security plans and procedures for each of its U.S. flag vessels pursuant to rules implementing the MTSA which have been issued by the USCG. The Company anticipates that the costs of security for our business will continue to increase. The Company’s U.S. flag vessels, subject to the requirements of the ISPS, all foreign flag vessels and U.S. flag vessels, operating on an international voyage, were in compliance with the ISPS requirements effective July 1, 2004.

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Industry Hazards and Insurance

Vessel operations involve inherent risks associated with carrying large volumes of cargo and rendering services in a marine environment. In addition, helicopter operations are potentially hazardous and may result in incidents or accidents. Hazards include adverse weather conditions, collisions, fire and mechanical failures, which may result in injury to personnel, damage to equipment, loss of operating revenues, contamination of cargo, pollution and other environmental damages and increased costs. The Company maintains marine and aviation hull, liability and war risk, general liability, workers compensation and other insurance customary in the industries in which we operate. We also conduct training and safety programs to promote a safe working environment and minimize hazards.

Employees

As of December 31, 2006, the Company employed 4,994 individuals directly and indirectly through crewing or manning agreements. Substantially all indirect employees support Offshore Marine Services vessel operations.

At December 31, 2006, Offshore Marine Services employed 764 seafarers in the North Sea of whom 270 were members of a union under the terms of an ongoing agreement. In the United States, a total of approximately 557 employees are unionized in Marine Transportation Services and Harbor and Offshore Towing Services. The union agreements expire at varying times through August 22, 2009. Certain individuals in Environmental Services are also represented by unions. The unionization of domestic seamen and/or aviation employees could arise in the future.

Management considers relations with its employees to be satisfactory.

ITEM 1A.        RISK FACTORS

Risks, Uncertainties and Other Factors That May Affect Future Results

Demand for many of our services substantially depends on the level of activity in the offshore oil and natural gas exploration, development and production industry.   The level of offshore oil and natural gas exploration, development and production activity has historically been volatile and that volatility is likely to continue. The level of activity is subject to large fluctuations in response to relatively minor changes in a variety of factors that are beyond our control, including:

·       prevailing oil and natural gas prices and expectations about future prices and price volatility

·       the cost of exploring for, producing and delivering oil and natural gas offshore

·       worldwide demand for energy and other petroleum products as well as chemical products

·       availability and rate of discovery of new oil and natural gas reserves in offshore areas

·       local and international political and economic conditions and policies including cabotage and local content laws

·       technological advances affecting energy production and consumption

·       weather conditions

·       environmental regulation

·       the ability of oil and natural gas companies to generate or otherwise obtain funds for capital

A prolonged material downturn in oil and natural gas prices is likely to cause a substantial decline in expenditures for exploration, development and production activity. Lower levels of expenditure and activity would result in a decline in the demand and lower rates for our offshore energy support services and tanker services. Moreover, approximately 54% of our Offshore Marine Services and 73% of our Aviation Services are currently conducted in the U.S. Gulf of Mexico and are therefore dependent on levels of activity in that region, which may differ from levels of activity in other regions of the world.

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We conduct international operations, which involve additional risks.   We operate vessels and lease helicopters worldwide. Activity outside the U.S. involves additional risks, including the possibility of:

·       restrictive actions by foreign governments, including asset seizure

·       foreign taxation and changes in foreign tax laws

·       limitations on the repatriation of earnings

·       changes in currency exchange rates

·       local cabotage and local ownership laws and requirements

·       nationalization and expropriation

·       loss of contract rights

·       political instability, war and civil disturbances or other risks that may limit or disrupt markets

Our ability to compete in the international offshore energy support market may be adversely affected by foreign government regulations that favor or require the awarding of contracts to local competitors, or that require foreign persons to employ citizens of, or purchase supplies from, a particular jurisdiction. Further, our foreign subsidiaries may face governmentally imposed restrictions on their ability to transfer funds to their parent company.

Unstable political, military and economic conditions in foreign countries where a significant proportion of Offshore Marine Services’ operations are conducted could adversely impact our business.   During 2006, approximately 46% of our Offshore Marine Services’ operating revenues resulted from Offshore Marine Services’ foreign operations. These operations are subject to risks, including potential vessel seizure, terrorist attacks, piracy, kidnapping, nationalization of assets, currency restrictions, import or export quotas and other forms of public and government regulation, all of which are beyond our control. Economic sanctions or an oil embargo, for example could have significant impact on activity in the oil and gas industry and correspondingly on us should Offshore Marine Services operate vessels in a country subject to any sanctions or embargo, or in the surrounding region to the extent any sanctions or embargo disrupt our operations in the region.

Offshore Marine Services, Marine Transportation Services and Aviation Services rely on several customers for a significant share of their revenues, the loss of which could adversely affect Offshore Marine Services’, Marine Transportation Services’ and Aviation Services’ businesses and operating results.   Offshore Marine Services’, Marine Transportation Services’ and Aviation Services’ customers are primarily major oil companies and large independent oil and gas exploration and production companies. The portion of Offshore Marine Services’, Marine Transportation Services’ or Aviation Services’ revenues attributable to any single customer may change over time, depending on the level of relevant activity by such customer, our ability to meet the customer’s needs and other factors, many of which are beyond our control.

Consolidation of our customer base could adversely affect demand for our equipment and reduce our revenues.   Oil and natural gas companies, energy companies and drilling contractors have undergone substantial consolidation in the last few years. Additional consolidation is likely. Consolidation results in fewer companies to charter or contract for our equipment. Also, merger activity among both major and independent oil and natural gas companies affects exploration, development and production activity as the consolidated companies integrate operations to increase efficiency and reduce costs. Less promising exploration and development projects of a combined company may be dropped or delayed. Such activity may result in an exploration and development budget for a combined company that is lower than the total budget of both companies before consolidation, adversely affecting demand for our Offshore Marine Services’ vessels, Marine Transportation Services’ tankers and Aviation Services’ helicopters, thereby reducing our revenues.

We may be unable to maintain or replace our vessels as they age.   As of December 31, 2006, the average age of our Offshore Marine Services vessels, excluding its standby safety vessels, was approximately 14.3

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years. The Company believes that after an offshore support vessel has been in service for approximately 20 years, the expense (which typically increases with age) necessary to satisfy required marine certification standards may not be economically justifiable. There can be no assurance that the Company will be able to maintain its fleet by extending the economic life of existing vessels, or that its financial resources will be sufficient to enable it to make expenditures necessary for these purposes or to acquire or build replacement vessels.

An increase in the supply of offshore support vessels or tankers would likely have an adverse impact on the charter rates earned by our offshore support vessels and tankers.   Expansion of the worldwide offshore support vessel fleet would increase competition in the markets where Offshore Marine Services operates. The refurbishment of disused or “mothballed” vessels, conversion of vessels from uses other than oil and gas exploration and production support and related activities or construction of new vessels could all add vessel capacity to current worldwide levels. A significant increase in vessel capacity could lower charter rates and result in lower operating revenues. Similarly, should our competitors in the domestic petroleum and chemical product tankers industry construct a significant number of new tankers or large capacity integrated or articulated tug and barges, demand for our tanker assets could be adversely affected.

If we do not restrict the amount of foreign ownership of our Common Stock, we could be prohibited from operating our offshore support vessels, inland river vessels and barges and tankers in parts of the U.S. and could be prohibited from operating our helicopters, which would adversely impact our business and operating results.   We are subject to the Shipping Acts, which govern, among other things, the ownership and operation of offshore support vessels, tankers and barges used to carry cargo between U.S. ports. The Acts require that vessels engaged in the “U.S. coastwise trade” be owned by U.S. citizens and built in the U.S. We are also subject to regulations pursuant to the Federal Aviation Act and other statutes (“Aviation Acts”). Generally, our aircraft operating in the U.S. must be registered in the U.S. In order to register such aircraft under the Aviation Acts, we must be owned or controlled by U.S. citizens. Although our Certificate of Incorporation and by-laws contain provisions intended to assure compliance with these provisions of the Shipping Acts, and also comply with the Aviation Acts, we would be prohibited from operating our vessels in the U.S. coastwise trade and our helicopters in the U.S. during any period in which we did not comply with these regulations.

Marine Transportation Services could lose Jones Act protection, which would result in additional competition.   A substantial portion of Marine Transportation Services’ operations is conducted in the U.S. coastwise trade. Under the Jones Act, this trade is restricted to vessels built in the United States, owned and manned by U.S. citizens and registered under U.S. law. There have been attempts to repeal or amend the Jones Act, and these attempts are expected to continue in the future. Repeal of the Jones Act could result in additional competition from vessels built in lower-cost foreign shipyards and owned and manned by foreign nationals with promotional foreign tax incentives and with lower wages and benefits than U.S. citizens, which could have a material adverse effect on our business, results of operations and financial condition.

Failure to maintain an acceptable safety record may have an adverse impact on our ability to retain customers.   Our customers consider safety and reliability a primary concern in selecting a service provider. We must maintain a record of safety and reliability that is acceptable to our customers. Should this not be achieved, the ability to retain current customers and attract new customers may be adversely affected.

The Outer Continental Shelf Lands Act, as amended, provides the federal government with broad discretion in regulating the leasing of offshore resources for the production of oil and gas.   Because offshore marine operations rely on offshore oil and gas exploration and production, the government’s exercise of authority under the provisions of the Outer Continental Shelf Lands Act, to restrict the availability of offshore oil and gas leases could have a material adverse effect on the Company’s financial condition and results of operations.

Operational risks could disrupt Offshore Marine Services, Marine Transportation Services, Harbor and Offshore Towing Services and Aviation Services and expose us to liability.   The operation of offshore support

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vessels, tankers, tugs, and helicopters is subject to various risks, including catastrophic disaster, adverse weather, mechanical failure and collision. Additional risks to vessels include sea conditions, capsizing, grounding, oil and hazardous substance spills and navigation errors. These risks could endanger the safety of our personnel, equipment, cargo and other property, as well as the environment. If any of these events were to occur, we could be held liable for resulting damages. In addition, the affected vessels or helicopters could be removed from service and would not be available to generate revenues.

Aviation Services may be subject to adverse weather conditions and seasonality.   A significant portion of the Company’s revenues from Aviation Services is dependent on actual flight hours. Prolonged periods of adverse weather, storms and the effect of fewer hours of daylight adversely impact Aviation Services. Winter months generally have more days of adverse weather conditions than the other months of the year with poor visibility, high winds, heavy precipitation and fewer daylight hours all adversely affecting the operations of helicopters. June through November is tropical storm season in the U.S. Gulf of Mexico; during tropical storms, helicopters are unable to operate in the area of the storm. In addition, many of Aviation Services’ facilities are located along the U.S. Gulf of Mexico coast and tropical storms may cause damage to its property.

Revenue from our tanker segment and towing activities could be adversely affected by a decline in demand for domestic refined petroleum products, crude oil or chemical products, or a change in existing methods of delivery.   A reduction in domestic consumption of refined petroleum products, crude oil or chemical products may adversely affect revenue from our tanker segment and towing activities. Weather conditions also affect demand for our tanker services and towing services. For example, a mild winter may reduce demand for heating oil in our areas of operation. Moreover, alternative methods of delivery of refined petroleum, natural gas or crude oil may be developed and therefore reduce demand for our services. Finally, a reduction in domestic refining capacity would reduce demand for our services.

Construction of additional refined petroleum product, natural gas or crude oil pipelines could have a material adverse effect on our tanker and towing revenues.   Long-haul transportation of refined petroleum products, crude oil and natural gas is generally less costly by pipeline than by tanker. Existing pipeline systems are either insufficient to meet demand in, or do not reach all of, the markets served by our tankers. New pipeline segments are being planned and approved for the Florida market. The construction and operation of these pipelines could have an adverse effect on our tanker and towing businesses.

We may have to phase-out some of our single-hull tankers from petroleum product transportation service in U.S. waters.   OPA 90 establishes a phase-out schedule, depending upon vessel size and age, for non-double-hull vessels carrying crude oil and petroleum products in U.S. coastwise transportation. The phase-out dates for our non-double-hull tankers are as follows: Seabulk Magnachem—2007, Seabulk Power—2008 and Seabulk America—2015. As a result of this requirement, unless these vessels are modified with double-hulls, which will require substantial capital expenditures, they will be prohibited from transporting crude oil and petroleum products in U.S. coastwise transportation after their phase-out dates. They would also be prohibited from transporting petroleum products in most foreign and international markets under a phase-out schedule established by the IMO were we to attempt to enter those markets.

We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business.   Increasingly stringent federal, state, local and international laws and regulations governing worker safety and health and the manning, construction and operation of vessels significantly affect our operations. Many aspects of the marine industry are subject to extensive governmental regulation by the USCG, Occupational Safety and Health Administration (“OSHA”), the NTSB and the U.S. Customs Service and to regulation by port states and class society organizations such as the American Bureau of Shipping, as well as to international regulations from international treaties such as the Safety of Life at Sea convention administered by port states and class societies. The USCG, the OSHA and the NTSB set safety standards and are authorized to investigate

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vessel accidents and recommend improved safety standards. The U.S. Customs Service is authorized to inspect vessels at will.

Our business and operations are also subject to federal, state, local and international laws and regulations that control the discharge of oil and hazardous materials into the environment or otherwise relate to environmental protection and occupational safety and health. Compliance with such laws and regulations may require installation of costly equipment or operational changes, and the phase-out of certain product tankers. Failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Some environmental laws impose strict and, under certain circumstances, joint and several liability for remediation of spills and releases of oil and hazardous materials and damage to natural resources, which could subject us to liability without regard to whether we were negligent or at fault. These laws and regulations may expose us to liability for the conduct of or conditions caused by others, including charterers. Moreover, these laws and regulations could change in ways that substantially increase our costs. We cannot be certain that existing laws, regulations or standards, as currently interpreted or reinterpreted in the future, or future laws and regulations will not have a material adverse effect on our business, results of operations and financial condition. For more information, see Item 1. “Governmental Regulation—Environmental Compliance.”

Spill response revenue is subject to significant volatility.   Environmental Services’ response revenues are event driven and can vary greatly from quarter to quarter and year to year based on the number and magnitude of responses. As a result, Environmental Services’ profitability may also vary greatly from year to year.

A relaxation of oil spill regulation or enforcement could reduce demand for Environmental Services’ services.   Environmental Services is dependent upon the enforcement of regulations promulgated under OPA 90, international conventions and, to a lesser extent, upon local regulations. Less stringent oil spill regulations or less aggressive enforcement of these regulations would decrease demand for Environmental Services’ services. There can be no assurance that oil spill regulation will not be relaxed or enforcement of existing or future regulation will not become less stringent. If this happens, the demand for Environmental Services’ oil spill response services could be adversely impacted.

A change in, or revocation of, NRC’s classification as an Oil Spill Removal Organization would result in a loss of business.   NRC is classified by the USCG as an OSRO. The USCG classifies OSROs based on their overall ability to respond to various types and sizes of oil spills. USCG classified OSROs have a competitive advantage over non-classified service providers because customers of a classified OSRO are exempt from regulations that would otherwise require them to list their oil spill response resources in filings with the USCG. A loss of NRC’s classification or changes in the requirements for classification could eliminate or diminish NRC’s ability to provide customers with this exemption. If this happens, Environmental Services could lose customers.

Environmental Services could incur liability in connection with providing spill response services.   Although Environmental Services is generally exempt from liability under the CWA for its own actions and omissions in providing spill response services, this exemption might not apply if it were found to have been grossly negligent or to have engaged in willful misconduct, or if it were to have failed to provide these services consistent with applicable regulations and directives under the CWA. In addition, the exemption under the federal CWA would not protect Environmental Services against liability for personal injury or wrongful death, or against prosecution under other federal or state laws. While most of the U.S. states in which Environmental Services provides service have adopted similar exemptions, several states have not. If a court or other applicable authority were to determine that Environmental Services does not benefit from federal or state exemptions from liability in providing spill response services, Environmental Services could be liable together with the local contractor and the responsible party for any resulting damages, including damages caused by others.

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Inland River Services could experience variation in freight rates.   Freight transportation rates may fluctuate as the volume of cargo and availability of barges changes. Volume of freight transported on the inland waterways may vary as a result of various factors, such as global economic conditions and business cycles, domestic and international agricultural production and demand and foreign currency exchange rates. Barge participation in the industry can also vary year to year and is dependent on the number of barges built and retired from service. Extended periods of high barge availability and low cargo demand could adversely impact Inland River Services.

Inland River Services’ results of operations could be adversely affected by the decline in U.S. grain exports.   Inland River Services’ business is significantly affected by the volume of grain exports handled through U.S. Gulf of Mexico ports. Grain exports can vary due to a number of factors including the crop harvest yield levels in the U.S. and abroad, and the demand for grain in the U.S. The shortage of available grain overseas can increase demand for U.S. grain. Conversely, an abundance of grain overseas can decrease demand for U.S. grain. A decline in exports could result in excess barge capacity, which would likely lower freight rates earned by Inland River Services.

Inland River Services’ results of operations could be adversely affected by international economic and political factors.   The actions of foreign governments could affect the import and export of the dry-bulk commodities typically transported by Inland River Services. Foreign trade agreements and each country’s adherence to the terms of such agreements can raise or lower demand for U.S. imports and exports of the dry-bulk commodities Inland River Services transports. National and international boycotts and embargoes of other countries’ or U.S. imports or exports together with the raising or lowering of tariff rates will affect the demand for transportation of the cargos Inland River Services transports. These actions or developments could have an adverse impact on Inland River Services.

Inland River Services’ results of operations are affected by seasonal activity.   Inland River Services’ business is seasonal, and its quarterly revenues and profits have historically been lower during the first and second quarters of the year and higher during the third and fourth quarters during the grain harvest.

Inland River Services’ results of operations are affected by adverse weather and river conditions.   Weather patterns can affect river levels and cause ice conditions during winter months, which can hamper barge navigation. Locks on river systems may be closed for maintenance or other causes, which may delay barge movements. These conditions could adversely impact Inland River Services.

Inland River Services’ results of operations could be materially and adversely affected by fuel price fluctuations.   For the most part, Inland River Services purchases towboat and fleeting services from third party vendors. It is indirectly exposed to increases in fuel prices, as vendors will adjust the price of the services when fuel prices escalate. If this happens, Inland River Services results of operation may be adversely affected.

Our insurance coverage may be inadequate to protect the Company from the liabilities that could arise in our businesses.   We maintain insurance coverage against the risks related to our businesses. There can be no assurance, however, that existing insurance coverage can be renewed at commercially reasonable rates or that available coverage will be adequate to cover future claims. If a loss occurs that is partially or completely uninsured, we could be exposed to substantial liability.

Our global operations are subject to currency exchange risks.   In some of our foreign businesses, we collect revenues and pay expenses in local currency. If the value of foreign currencies (in particular the value of the British Pound Sterling) decline against the U.S. dollar and we do not or are not able to minimize the effects of such fluctuations through currency hedging arrangements, our operating results may be adversely affected. There can be no assurance that we will not incur losses in the future as a result of currency exchange rate fluctuations.

Our inability to attract and retain qualified personnel could have an adverse effect on us.   Attracting and retaining skilled personnel across all of our business segments is an important factor in our future success.

28




The market for the personnel we employ is very competitive and we cannot be certain that we will be successful in attracting and retaining qualified personnel in the future.

ITEM 1B.       UNRESOLVED STAFF COMMENTS

None

ITEM 2.                PROPERTIES

Offshore support vessels, tankers, barges and helicopters are the principal physical properties owned by the Company and are more fully described in “Offshore Marine Services,” “Marine Transportation Services,” “Inland River Services” and “Aviation Services” in “Item 1. Business.”

ITEM 3.                LEGAL PROCEEDINGS

In the ordinary 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 such exposure could occur, but the Company does not expect such changes in estimated costs will have a material effect on the Company’s consolidated financial position or results of its operations.

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 other providers have also received such a 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 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.

ITEM 4.                SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2006.

29




EXECUTIVE OFFICERS OF THE REGISTRANT

Officers of SEACOR serve at the pleasure of the Board of Directors. The name, age and offices held by each of the executive officers of SEACOR at December 31, 2006 were as follows:

Name

 

 

 

Age

 

Position

Charles Fabrikant

 

62

 

President, Chief Executive Officer and Chairman of the Board, and has been a director of SEACOR and several of its subsidiaries since 1989. Mr. Fabrikant is also a Director of Diamond Offshore Drilling, Inc., a contract oil and gas driller. He is also President of Fabrikant International Corporation, a privately owned corporation engaged in marine investments. Fabrikant International Corporation may be deemed an affiliate of SEACOR.

Randall Blank

 

56

 

Senior Vice President of SEACOR since September 2005 and President and Chief Executive Officer of Environmental Services since October 1997. From December 1989 to September 2005, Mr. Blank was Executive Vice President and Chief Financial Officer of SEACOR and from October 1992 to September 2005 he was Secretary of SEACOR. In addition, Mr. Blank has been an officer and director of certain SEACOR subsidiaries since 1989.

James Cowderoy

 

47

 

Senior Vice President of SEACOR since August 2006. Previously, he served as a Board Member of SEACOR from August 2001 to August 2006 and was the Chairman and Managing Director of Harrisons (Clyde) Ltd., a Glasgow-based ship owning company, since May 2002. Mr. Cowderoy served as Managing Director of Stirling Shipping Company Limited until its acquisition by SEACOR in May 2001, and subsequently as Managing Director of SEACOR International Ltd. until May 2002. Mr. Cowderoy is also a director of North England P&I Association Ltd., Vice-Chairman of Marine Shipping Mutual Insurance Company Ltd., and remains Chairman of Harrisons (Clyde) Ltd.

Dick Fagerstal

 

46

 

Senior Vice President, Corporate Development and Treasurer of SEACOR since February 2003 and has served as Treasurer since May 2000. From August 1997 to February 2003, Mr. Fagerstal served as Vice President of Finance. Mr. Fagerstal has also served as a director of certain SEACOR’s subsidiaries since August 1997.

John Gellert

 

36

 

Senior Vice President since June 2004. Mr. Gellert’s primary responsibility since 2002 has been the running of the domestic and international divisions of Offshore Marine Services. Mr. Gellert has been an employee of SEACOR since 1992.

Alice Gran

 

57

 

Senior Vice President and General Counsel of SEACOR since July 1998 also Secretary of SEACOR since September 2005. Ms. Gran is a director and officer of certain SEACOR subsidiaries and is responsible for managing legal, insurance and certain risk management functions. Ms. Gran joined SEACOR in July 1998. Ms. Gran is a licensed attorney admitted to practice law in the District of Columbia.

Richard Ryan

 

52

 

Senior Vice President of SEACOR since November 2005 and from September 2005 to November 2005 was Vice President. Mr. Ryan has been Chief Financial Officer since September 2005. Mr. Ryan joined SEACOR in 1996. From December 1996 until June 2002 he was International Controller and from July 2002 until becoming Chief Financial Officer served as Managing Director of SEACOR Marine (International) Ltd.

Matthew Cenac

 

41

 

Vice President and Chief Accounting Officer of SEACOR since September 2005. From June 2003 to August 2005 Mr. Cenac was Corporate Controller of SEACOR. In addition, Mr. Cenac is an officer and director of certain SEACOR’s subsidiaries.

Andrew Strachan

 

59

 

Vice President of SEACOR since April 1997 and a director and officer of certain SEACOR subsidiaries since December 1996.

 

30




PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for the Company’s Common Stock

SEACOR’s Common Stock trades on the New York Stock Exchange (“NYSE”) under the trading symbol “CKH.” Set forth in the table below for the periods presented are the high and low sale prices for SEACOR’s Common Stock.

 

 

HIGH

 

LOW

 

Fiscal Year Ending December 31, 2007:

 

 

 

 

 

First Quarter (through February 22, 2007)

 

$

103.31

 

$

88.04

 

Fiscal Year Ending December 31, 2006:

 

 

 

 

 

First Quarter

 

$

79.20

 

$

67.60

 

Second Quarter

 

$

92.85

 

$

73.99

 

Third Quarter

 

$

89.15

 

$

76.53

 

Fourth Quarter

 

$

102.34

 

$

78.40

 

Fiscal Year Ending December 31, 2005:

 

 

 

 

 

First Quarter

 

$

67.09

 

$

52.62

 

Second Quarter

 

$

65.95

 

$

53.92

 

Third Quarter

 

$

73.12

 

$

61.93

 

Fourth Quarter

 

$

74.15

 

$

64.04

 

 

As of February 22, 2007, there were 259 holders of record of Common Stock.

SEACOR has not paid any cash dividends in respect of its Common Stock since its inception in December 1989 and has no present intention to pay any dividends in the foreseeable future. Instead, we intend to retain earnings for working capital and to finance the expansion of our business. Any payment of future dividends will be at the discretion of SEACOR’s Board of Directors and will depend upon, among other factors, the Company’s earnings, financial condition, current and anticipated capital requirements, plans for expansion, level of indebtedness and contractual restrictions, including the provisions of the Company’s revolving credit facility or other then-existing indebtedness. The payment of future cash dividends, if any, would be made only from assets legally available.

31




Performance Graph

Set forth in the graph below is a comparison of the cumulative total return that a hypothetical investor would have earned assuming the investment of $100 over the five-year period commencing on December 31, 2001 in (i) the Common Stock of the Company, (ii) the Standard & Poor’s 500 Stock Index (“S&P 500”) and (iii) the Simmons Offshore Transportation Index, an index of oil service companies published by Simmons and Company, Inc. (the “Simmons Peer Index”).

GRAPHIC

 

 

December  31

 

 

 

2001

 

2002

 

2003

 

2004

 

2005

 

2006

 

Company

 

 

100

 

 

 

96

 

 

 

91

 

 

 

115

 

 

 

147

 

 

 

214

 

 

S&P 500

 

 

100

 

 

 

77

 

 

 

97

 

 

 

106

 

 

 

109

 

 

 

124

 

 

Simmons Peer Index

 

 

100

 

 

 

101

 

 

 

103

 

 

 

141

 

 

 

188

 

 

 

265

 

 

 

32




Issuer Repurchases of Equity Securities and Debt

In 2006, 2005 and 2004, the Company acquired 727,180, 304,676, and 370,490 shares of Common Stock for treasury, respectively, at an aggregate cost of $58.1 million, $20.5 million, and $14.9 million, respectively. As of December 31, 2006, $75.0 million of repurchase authority granted by SEACOR’s Board of Directors remains available for the acquisition of additional shares of Common Stock, SEACOR’s 7.2% Notes due 2009, 5.875% Senior Notes Due 2012, 2.875% Convertible Senior Debentures due 2024 and the 9.5% Seabulk Senior Notes due 2013. Securities are acquired from time to time through open market purchases, privately negotiated transactions or otherwise, depending on market conditions.

 

 

 

 

 

 

Total Number of

 

 

 

 

 

 

 

 

 

Shares Purchased as

 

Maximum Value of

 

 

 

 

 

 

 

Part of Publicly

 

Shares that may Yet

 

 

 

Total Number Of

 

Average Price

 

Announced Plans or

 

be Purchased under 

 

Period

 

 

 

Shares Purchased

 

Paid Per Share

 

Programs

 

the Plans or Programs(1)(2)

 

10/01/06-10/31/06

 

 

 

 

 

N/A

 

 

 

 

 

 

$

42,621,353

 

 

11/01/06-11/30/06

 

 

 

 

 

N/A

 

 

 

 

 

 

$

75,000,000

 

 

12/01/06-12/31/06

 

 

 

 

 

N/A

 

 

 

 

 

 

$

75,000,000

 

 


(1)                Beginning in February 1997 and increased at various times through November 2006, the Board of Directors authorized the repurchase of $457.4 million of Common Stock, debt or combination thereof. Through December 31, 2006, the Company has repurchased $304.2 million and $78.2 million of Common Stock and debt, respectively.

(2)                On November 15, 2006, the Company’s Board of Directors increased the repurchase authority to $75.0 million.

33




ITEM 6. SELECTED FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL INFORMATION

The following table sets forth, for the periods and at the dates indicated, selected historical and consolidated financial data for the Company, in thousands of dollars, except per share data. Such financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” included in Parts II and IV, respectively, of this Annual Report on Form 10-K.

 

 

Year Ended December 31,

 

 

 

2006

 

2005

 

2004

 

2003

 

2002

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

Offshore Marine Services

 

$

682,577

 

$

480,058

 

$

286,721

 

$

316,116

 

$

367,969

 

Marine Transportation Services(1)

 

145,195

 

72,348

 

 

 

 

Inland River Services

 

147,466

 

123,231

 

66,568

 

27,859

 

12,607

 

Aviation Services(2)

 

156,014

 

137,555

 

27,180

 

20,604

 

 

Environmental Services

 

144,516

 

136,577

 

115,014

 

44,045

 

22,087

 

Elimination and Other(3)

 

47,677

 

22,235

 

(3,623

)

(2,415

)

495

 

 

 

$

1,323,445

 

$

972,004

 

$

491,860

 

$

406,209

 

$

403,158

 

Operating Income

 

$

360,748

 

$

177,452

 

$

28,672

 

$

23,251

 

$

52,392

 

Other Income (Expenses):

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

$

(15,686

)

$

(28,951

)

$

(14,063

)

$

(11,782

)

$

(8,231

)

Other income(4)

 

645

 

45,897

 

9,677

 

9,980

 

21,981

 

 

 

$

(15,041

)

$

16,946

 

$

(4,386

)

$

(1,802

)

$

13,750

 

Income from Continuing Operations

 

$

234,394

 

$

170,345

 

$

19,889

 

$

11,954

 

$

46,587

 

Income from Continuing Operations
Per Share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

9.52

 

$

7.89

 

$

1.09

 

$

0.63

 

$

2.33

 

Diluted

 

8.44

 

6.93

 

1.08

 

0.63

 

2.28

 

Statement of Cash Flows Data:

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

366,107

 

$

237,645

 

$

34,521

 

$

56,565

 

$

68,684

 

Cash provided by (used in) investing activities

 

(281,495

)

167,243

 

(318,117

)

(13,310

)

4,278

 

Cash provided by (used in) financing activities

 

(64,230

)

(131,936

)

231,725

 

(127,525

)

87,205

 

Balance Sheet Data (at period end):

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, restricted cash, marketable securities and Title XI and construction reserve funds

 

$

925,725

 

$

684,521

 

$

495,387

 

$

438,131

 

$

525,931

 

Total assets

 

3,252,982

 

2,885,141

 

1,766,009

 

1,402,611

 

1,487,107

 

Long-term debt and capital lease obligations

 

961,003

 

977,635

 

582,367

 

332,179

 

402,118

 

Stockholders’ equity

 

1,557,078

 

1,361,305

 

793,757

 

770,446

 

804,951

 

Capital Expenditures

 

$

381,710

 

$

250,459

 

$

200,052

 

$

161,842

 

$

139,706

 

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

Offshore Marine Services:

 

 

 

 

 

 

 

 

 

 

 

Fleet Count, at period ends(5)

 

234

 

301

 

212

 

235

 

301

 

Overall Fleet Utilization(6)

 

86

%

87

%

85

%

77

%

79

%

Overall Rates Per Day (7)(8)

 

$

9,109

 

$

6,757

 

$

5,839

 

$

4,874

 

$

5,120

 

Tanker Count, at period end(5)

 

10

 

10

 

 

 

 

Dry Cargo Barge Count, at period end(5)

 

1,040

 

1,139

 

1,072

 

784

 

535

 

Chemical Tank Barge Count, at
period end
(5)

 

61

 

44

 

20

 

 

 

Inland Deck Barge Count, at period end(5)

 

7

 

 

 

 

 

Inland Towboat Count , at period end(5)

 

7

 

7

 

6

 

3

 

 

Helicopter Count, at period end(5)

 

123

 

108

 

127

 

41

 

36

 


(1)                 Marine Transportation Services commenced operations in July 2005 with the Company’s acquisition of Seabulk.

34




(2)                 Aviation Services commenced operations in December 2002 with the Company’s acquisition of Tex-Air Helicopters, Inc. In December 2004, the Company acquired Era Aviation, Inc. significantly increasing the number of helicopters and the size of the segment’s business.

(3)                 Elimination and Other includes the operations of Harbor & Offshore Towing Services, which commenced operations in July 2005 with the Company’s acquisition of Seabulk.

(4)                 Other income principally includes gains and losses fr