UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2007           or         

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

For the transition period from           to         

Commission file number 1-12289

SEACOR Holdings Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

 

13-3542736

(State or Other Jurisdiction of

 

(IRS Employer

Incorporation or Organization)

 

Identification No.)

2200 Eller Drive, P.O. Box 13038,

 

 

Fort Lauderdale, Florida

 

33316

(Address of Principal Executive Offices)

 

(Zip Code)

 

954-523-2200

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

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

Large Accelerated Filer  x

Accelerated Filer  o

Non-Accelerated Filer  o

 

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

The total number of shares of common stock, par value $.01 per share, outstanding as of August 1, 2007 was 23,560,090. The Registrant has no other class of common stock outstanding.

 




SEACOR HOLDINGS INC.

Table of Contents

Part I.

 

Financial Information

 

3

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2007
and December 31, 2006

 

3

 

 

 

 

 

Condensed Consolidated Statements of Income for each of the
Three Months and Six Months Ended June 30, 2007 and 2006

 

4

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2007 and 2006

 

5

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

 

6

 

 

 

Item 2.

 

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

 

15

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

28

 

 

 

Item 4.

 

Controls and Procedures

 

28

 

Part II.

 

Other Information

 

29

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

 

 

 

Item 4.

 

Submission of Matters to a Vote of Security Holders

 

29

 

 

 

Item 6.

 

Exhibits

 

29

 

 

2




PART I—FINANCIAL INFORMATION

ITEM 1.                FINANCIAL STATEMENTS

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

 

 

June 30,
2007

 

December 31,
2006

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

503,288

 

$

506,966

 

Restricted cash

 

54,680

 

41,951

 

Available-for-sale securities

 

19,184

 

28,547

 

Receivables:

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $4,849 and $4,848 in 2007 and 2006, respectively

 

263,211

 

264,090

 

Other

 

28,948

 

48,866

 

Inventories

 

28,471

 

22,670

 

Deferred income taxes

 

13,256

 

13,256

 

Prepaid expenses and other

 

13,754

 

12,023

 

Total current assets

 

924,792

 

938,369

 

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

 

136,331

 

76,218

 

Property and Equipment

 

2,345,711

 

2,213,245

 

Less accumulated depreciation

 

(490,070

)

(443,035

)

Net property and equipment

 

1,855,641

 

1,770,210

 

Construction Reserve Funds & Title XI Reserve Funds

 

344,465

 

348,261

 

Goodwill

 

49,040

 

41,950

 

Intangible Assets

 

32,830

 

38,631

 

Other Assets, net of allowance for doubtful accounts of $1,734 and $2,055 in 2007 and 2006, respectively

 

28,699

 

39,343

 

 

 

$

3,371,798

 

$

3,252,982

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

9,429

 

$

9,218

 

Current portion of capital lease obligations

 

2,978

 

2,490

 

Accounts payable and accrued expenses

 

86,118

 

88,868

 

Other current liabilities

 

254,778

 

194,933

 

Total current liabilities

 

353,303

 

295,509

 

Long-Term Debt

 

934,489

 

940,891

 

Capital Lease Obligations

 

9,269

 

20,112

 

Deferred Income Taxes

 

373,931

 

358,734

 

Deferred Gains and Other Liabilities

 

96,470

 

73,764

 

Minority Interest in Subsidiaries

 

7,193

 

6,894

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued or outstanding

 

 

 

Common stock, $.01 par value, 60,000,000 shares authorized; 32,110,490 and 31,745,583 shares issued in 2007 and 2006, respectively

 

321

 

317

 

Additional paid-in capital

 

899,016

 

871,914

 

Retained earnings

 

1,059,794

 

956,376

 

Less 8,215,505 and 7,226,784 shares held in treasury in 2007 and 2006, respectively, at cost

 

(366,365

)

(274,490

)

Accumulated other comprehensive income:

 

 

 

 

 

Cumulative translation adjustments

 

1,428

 

1,009

 

Unrealized gain on available-for-sale securities

 

2,949

 

1,952

 

Total stockholders’ equity

 

1,597,143

 

1,557,078

 

 

 

$

3,371,798

 

$

3,252,982

 

 

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

3




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

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

Operating Revenues

 

$

325,454

 

$

330,986

 

$

636,217

 

$

636,901

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

198,818

 

187,149

 

387,476

 

356,793

 

Administrative and general

 

33,937

 

32,865

 

68,337

 

64,358

 

Depreciation and amortization

 

38,055

 

42,318

 

76,930

 

85,578

 

 

 

270,810

 

262,332

 

532,743

 

506,729

 

Gains on Asset Dispositions and Impairments, Net

 

42,540

 

24,089

 

54,697

 

44,966

 

Operating Income

 

97,184

 

92,743

 

158,171

 

175,138

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

Interest income

 

11,456

 

9,086

 

23,680

 

16,222

 

Interest expense

 

(12,108

)

(12,847

)

(25,376

)

(26,915

)

Derivative transaction gains (losses), net

 

(254

)

3,084

 

(124

)

272

 

Foreign currency transaction gains (losses), net

 

460

 

1,217

 

(130

)

1,376

 

Marketable security transaction losses, net

 

(9,430

)

(3,341

)

(14,118

)

(6,926

)

Other, net

 

639

 

595

 

596

 

623

 

 

 

(9,237

)

(2,206

)

(15,472

)

(15,348

)

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

 

87,947

 

90,537

 

142,699

 

159,790

 

Income Tax Expense

 

30,206

 

33,703

 

49,048

 

59,134

 

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

 

57,741

 

56,834

 

93,651

 

100,656

 

Minority Interest in Income of Subsidiaries

 

(304

)

(104

)

(482

)

(187

)

Equity in Earnings of 50% or Less Owned Companies

 

7,829

 

6,031

 

10,249

 

12,400

 

Net Income

 

$

65,266

 

$

62,761

 

$

103,418

 

$

112,869

 

Basic Earnings Per Common Share

 

$

2.73

 

$

2.52

 

$

4.29

 

$

4.55

 

Diluted Earnings Per Common Share

 

$

2.41

 

$

2.24

 

$

3.80

 

$

4.04

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

23,885,550

 

24,868,508

 

24,118,540

 

24,827,685

 

Diluted

 

27,581,958

 

28,568,267

 

27,832,382

 

28,541,772

 

 

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

4




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

 

 

Six Months Ended
June 30,

 

 

 

2007

 

2006

 

Net Cash Provided by Operating Activities

 

$

  165,383

 

$

  135,744

 

Cash Flows from Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(235,516

)

(149,461

)

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

 

196,763

 

138,739

 

Purchases of securities

 

(40,153

)

(23,543

)

Proceeds from sale of securities

 

52,676

 

40,499

 

Investments in and advances to 50% or less owned companies

 

(26,646

)

(5,937

)

Return of investments and advances from 50% or less owned companies

 

5,333

 

 

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

 

 

15,600

 

Principal payments on notes receivable from 50% or less owned companies

 

107

 

 

Principal payments on (investments in) third party notes receivable, net

 

783

 

 

Net (increase) decrease in restricted cash

 

(12,729

)

9,657

 

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

 

3,796

 

(62,952

)

Net decrease in escrow deposits on like kind exchanges

 

7,672

 

 

Cash settlements on derivative transactions, net

 

2,434

 

4,721

 

Repayments of (investments in) sales type leases, net

 

5,508

 

(5,316

)

Business acquisitions, net of cash acquired

 

(25,364

)

(34

)

Net cash used in investing activities

 

(65,336

)

(38,027

)

Cash Flows from Financing Activities:

 

 

 

 

 

Payments on long-term debt and capital lease obligations

 

(15,578

)

(22,497

)

Common stock acquired for treasury

 

(92,096

)

(25,763

)

Proceeds and tax benefits from share award plans

 

3,520

 

6,245

 

Dividends paid to minority interest holders, net

 

(184

)

(279

)

Net cash used in financing activities

 

(104,338

)

(42,294

)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

613

 

677

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

(3,678

)

56,100

 

Cash and Cash Equivalents, Beginning of Period

 

506,966

 

484,422

 

Cash and Cash Equivalents, End of Period

 

$

  503,288

 

$

  540,522

 

 

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

5




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

1.                 Basis of Presentation

The condensed consolidated financial information for each of the three and six months ended June 30, 2007 and 2006 has been prepared by the Company and has not been audited by its independent registered public accounting firm. The condensed consolidated financial statements include the accounts of SEACOR Holdings Inc. and its consolidated subsidiaries. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to present fairly the Company’s financial position as of June 30, 2007, its results of operations for each of the three and six months ended June 30, 2007 and 2006 and its cash flows for the six months ended June 30, 2007 and 2006. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

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

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

2.                 Business Acquisitions

Waxler Acquisition.   On March 13, 2007, the Company acquired all of the assets and certain liabilities of Waxler Transportation Company, Inc. and Waxler Towing Company, Incorporated (collectively referred to as “Waxler”), as well as certain assets from Waxler affiliates. The acquisition price was $32.5 million, including 202,972 shares of SEACOR common stock, par value $0.01 per share (“Common Stock”) valued at $19.1 million based upon the closing price of Common Stock on March 13, 2007 of $94.15 per share, plus additional cash consideration of $13.4 million. Acquired assets included 14 tank barges and eight towboats. In addition, the Company assumed leases on two other tank barges. The Company has performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their estimated fair value, with the excess of purchase price over fair value recorded as goodwill in the amount of $3.7 million. Further changes to the preliminary fair value analysis may be made as the valuation of assets and liabilities are finalized and additional information becomes available, primarily related to the fair value of acquired equipment, identifiable intangible assets and income tax obligations.

Vensea Acquisition.   On January 31, 2007, the Company acquired its partner’s 50% interest in VENSEA Marine, SRL (“Vensea”), an owner of one offshore marine vessel in Latin America, for $0.7 million under the terms of a buyout option included in the joint venture’s operating agreement. Subsequent to the transaction, the Company owns all of the issued and outstanding shares of Vensea.

6




EraMed Acquisition.   Effective January 5, 2007, a wholly owned subsidiary of the Company, EraMed LLC (“EraMed”), acquired the air medical business of Keystone Helicopter Corporation for $11.5 million. The final purchase price is subject to working capital adjustments as defined in the asset purchase agreement. At the time of acquisition, EraMed operated 33 light and medium twin engine helicopters, including four owned, ten leased-in and 19 managed, in support of hospital based air medical programs in the northeastern United States. The Company has performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their estimated fair values, resulting in no goodwill being recorded. Further changes to the preliminary fair value analysis may be made as the valuation of assets and liabilities are finalized and additional information becomes available, primarily related to the fair value of acquired equipment and identifiable intangible assets.

RMA Acquisition.   On October 1, 2006, the Company acquired all of the issued and outstanding shares of Response Management Associates, Inc. (“RMA”) for $12.5 million. The Company’s purchase price includes cash consideration of $8.0 million, a note payable of $3.5 million and accrued working capital payments of $1.0 million. The selling stockholder of RMA has the opportunity to receive additional consideration of up to $8.5 million based upon certain performance standards over the period from date of acquisition through September 30, 2012. During the six months ended June 30, 2007, the Company completed its fair value analysis for the acquisition which resulted in goodwill in the amount of $3.4 million.

Purchase Price Allocation.   The following table summarizes the allocation of the purchase prices for the above acquisitions during the six months ended June 30, 2007 (in thousands):

Trade and other receivables

 

$

9,484

 

Other current assets

 

1,305

 

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

 

(915

)

Property and Equipment

 

40,239

 

Goodwill

 

7,090

 

Intangible Assets

 

(3,419

)

Other Assets

 

4,697

 

Accounts payable and other current liabilities

 

(9,822

)

Deferred Income Taxes

 

(4,185

)

Purchase price(1)

 

$

44,474

 


(1)                Purchase price is net of $1.1 million cash acquired, includes acquisition costs totaling $0.9 million and includes issued Common Stock valued at $19.1 million.

3.                 Equipment Acquisitions, Dispositions and Depreciation Policy

Capital expenditures were $235.5 million during the six months ended June 30, 2007. Excluding the acquisition of equipment identified in Note 2 above, equipment deliveries during the period included six offshore services vessels, 35 dry cargo hopper barges, 15 deck barges, eleven helicopters and three harbor tugs.

During the six months ended June 30, 2007, the Company sold 22 offshore support vessels, 105 dry cargo hopper barges, three tank barges, four helicopters, construction contracts and other equipment for an aggregate consideration of $196.8 million and recognized net gains of $54.7 million.

7




Equipment, stated at cost, is depreciated using the straight line method over the estimated useful life of the asset, less estimated salvage value. With respect to each class of asset, the estimated useful life is typically based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets which have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date. In addition, the Company has retrofitted one and is in the process of retrofitting a second of its tankers with double-hulls to extend their useful lives beyond their original Oil Pollution Act 1990 (“OPA 90”) mandated retirement dates. As of June 30, 2007, the estimated useful lives (in years) of each of the Company’s major categories of new equipment are as follows:

Offshore Marine Vessels

 

20

 

Tankers(1)

 

25

 

Inland River Towboats and Barges

 

20 - 25

 

Helicopters

 

12

 

Harbor and Offshore Tugs

 

40

 


(1)                Subject to OPA 90 requirements.

4.                 Construction Reserve Funds

The Company has established, pursuant to Section 511 of the Merchant Marine Act, 1936, as amended, joint depository construction reserve funds with the Maritime Administration. In accordance with this statute, the Company is permitted to deposit proceeds from the sale of certain vessels into the joint depository construction reserve fund accounts for the purpose of acquiring U.S. flag vessels and qualifying for the temporary deferral of taxable gains realized from the sale of vessels. Withdrawals from the construction reserve fund accounts are only permitted with the consent of the Maritime Administration and the funds on deposit must be committed for expenditure within three years or be released for the Company’s general use.

As of June 30, 2007, construction reserve funds of $327.3 million are classified as non-current assets in the accompanying condensed consolidated balance sheets as the Company has the intent and ability to use the funds to acquire equipment. During the six months ended June 30, 2007, construction reserve fund account transactions included withdrawals of $35.3 million, deposits of $21.5 million and earned interest of $9.4 million.

5.                 Commitments and Contingencies

The Company’s unfunded capital commitments as of June 30, 2007 consisted primarily of marine service vessels, harbor tugs, helicopters, barges and capital improvements to certain of its existing marine transportation fleet and totaled $516.4 million, of which $178.8 million is payable during the remainder of 2007 and the balance payable through 2010. Of these commitments, approximately $152.4 million may be terminated without further liability other than the payment of liquidated damages of $2.5 million in the aggregate. Subsequent to June 30, 2007, the Company committed to purchase additional property and equipment for $102.5 million and reduced other unfunded capital commitments by $12.3 million through the sale of certain purchase contracts.

The Company has guaranteed the payment of amounts owed by one of its joint ventures under a vessel charter agreement that expires in 2011. In addition, the Company has guaranteed amounts owed by certain of its joint ventures under a banking facility and a performance guarantee. As of June 30, 2007, the total amount guaranteed by the Company was $7.2 million.

8




In the normal course of its business, the Company becomes involved in various litigation matters including, among other things, claims by third parties for alleged property damages, personal injuries and other matters. While the Company believes it has meritorious defenses against these claims, management has used estimates in determining the Company’s potential exposure and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs will have a material effect on the Company’s consolidated financial position or results of 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 U. S. Gulf of Mexico. The Company believes that this subpoena is part of a broader industry inquiry and that other providers have also received such subpoena. SEACOR intends to provide all information requested in response to this investigation.

Under United States law, “United States persons” are prohibited from business activities and contracts in certain countries, including Sudan and Iran. Relating to the prohibitions, Seabulk International, Inc. (“Seabulk”), a subsidiary of the Company acquired in July 2005, 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 consolidated financial position or results of operations.

Marine Transportation Services has had one of its tankers retrofitted to a double-hull configuration and has another tanker currently undergoing such a retrofit to enable each of them to continue to transport crude oil and petroleum products beyond their OPA 90 mandated retirement dates in 2011. Both vessels operate in the U.S. coastwise, or Jones Act, trade, which is restricted to vessels built or rebuilt in the United States. The retrofit work has been and is being completed in a foreign shipyard. In May 2005, the Company received a determination from the National Vessel Documentation Center (“NVDC”) of the U.S. Coast Guard, which administers the U.S. build requirements of the Jones Act. The determination, which the Company relied upon to commence the retrofit in a foreign shipyard, concluded the retrofits would not constitute a foreign rebuilding and therefore would not jeopardize the tankers’ eligibility to operate in the U.S. coastwise trade. On April 25, 2007, Crowley Maritime Corp., another operator of tank vessels in the U.S. coastwise trade, filed an appeal asking the Commandant of the Coast Guard to reverse the NVDC’s May 2005 determination, which would render these two tankers ineligible to operate in the U.S. coastwise trade. Subsequently, on July 9, 2007, a U.S. shipbuilders trade association, Crowley Maritime Corp. and another operator of tankers in the U.S. coastwise trade commenced a civil action in the U.S. District Court for the Eastern District of Virginia, Shipbuilders Council of America, Inc., et al. v. U.S. Department of Homeland Security, et al., No. 1:07cv665 (E.D. Va.), in which they seek to have the court set aside the NVDC’s determination and direct the Coast Guard to revoke the coastwise license of the tanker whose retrofit has been completed. We believe the NVDC’s determination was correct and in accord with the Coast Guard’s long-standing regulations and interpretations. We have filed an unopposed motion to intervene in the action in which we intend to assist the Coast Guard in defending the NVDC’s determination.

9




Certain subsidiaries of the Company are participating employers in an industry-wide, multi-employer, defined benefit pension fund, the Merchant Navy Officers Pension Fund (“MNOPF”), based in the United Kingdom. Under the direction of a court order, any deficit is to be remedied through future funding contributions from all participating employers. Deficits allocable to the Company relate to officers employed between 1978 and 2002 by SEACOR’s Stirling group of companies (which had been acquired by SEACOR in 2001) and its predecessors.  An actuarial valuation of the MNOPF in 2003 determined there was a funding deficit totaling $412.0 million of which $4.4 million, representing the Company’s share of this deficit, was invoiced and recognized in 2005. Subsequent to this invoice, the pension fund trustees determined that $49.0 million of the $412.0 million 2003 valuation deficit was deemed uncollectible due to the non-existence or liquidation of certain participating employers. In March 2007, the Company received an invoice for its allocated portion of the 2003 uncollectible deficit in the amount of $0.6 million and correspondingly recognized this expense. In March 2006, the MNOPF underwent another actuarial valuation and determined that further contributions totaling $296.0 million may be required to ensure the fund would no longer be in a deficit position. The pension fund trustees are expected to complete the 2006 actuarial process in September 2007 by finalizing the allocation of the deficit to all participating employers. Depending on the results of the 2006 and future actuarial valuations, it is possible that the MNOPF will issue additional invoices requiring the Company to recognize payroll related operating expenses in the period invoices are received.

6.                 Long-Term Debt

As of June 30, 2007, the Company had no outstanding borrowings under its revolving credit facility and the remaining availability under this facility was $298.6 million, net of issued letters of credit of $1.4 million. In addition, the Company had other outstanding letters of credit totaling $43.3 million with various expiration dates through 2010. On July 3, 2007, the unsecured revolving credit facility was amended to increase availability thereunder by $150.0 million, bringing the maximum available borrowing to $450.0 million.

7.                 Stock and Debt Repurchases

During the six months ended June 30, 2007, the Company acquired 993,080 shares of Common Stock for treasury for an aggregate purchase price of $92.1 million. As of June 30, 2007, repurchase authority of $48.1 million granted by SEACOR’s Board of Directors remained available for acquisition of additional shares of Common Stock, SEACOR’s 7.2% Senior Notes due 2009, its 5.875% Senior Notes due 2012, its 2.875% Convertible Debentures due 2024 and the 9.5% senior notes of Seabulk due 2013. Securities are acquired from time to time through open market purchases, privately negotiated transactions or otherwise, depending on market conditions.

Subsequent to June 30, 2007, the Company acquired 346,600 shares of Common Stock for treasury for an aggregate purchase price of $30.7 million.  On July 31, 2007, SEACOR’s Board of Directors increased the repurchase authority to $100.0 million, of which $99.8 million remained available as of August 3, 2007.

10




8.                 Earnings Per Common Share

In accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share, basic earnings per common share are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities. In determining dilutive securities for this purpose the Company assumes, through the application of the treasury stock and if-converted methods, all restricted stock grants have vested, all common shares have been issued pursuant to the exercise of all outstanding stock options and all common shares have been issued pursuant to the conversion of all outstanding convertible notes. Diluted earnings per common share for the three and six months ended June 30, 2007 excluded 235,020 of certain share awards as the effect of their inclusion in the computation would have been antidilutive. Diluted earnings per common share for the three and six months ended June 30, 2006 excluded 56,875 and 89,875, respectively, of certain share awards as the effect of their inclusion in the computation would have been antidilutive. Computations of basic and diluted earnings per common share are as follows (in thousands, except per share data):

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

 

Net
Income

 

Average O/S
Shares

 

Per
Share

 

Net
Income

 

Average O/S
Shares

 

Per
Share

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

65,266

 

 

23,886

 

 

$

2.73

 

$

103,418

 

 

24,119

 

 

$

4.29

 

Effect of Dilutive Securities, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options and Restricted Stock

 

 

 

278

 

 

 

 

 

 

295

 

 

 

 

Convertible Securities

 

1,212

 

 

3,418

 

 

 

 

2,425

 

 

3,418

 

 

 

 

Diluted Earnings Per Common Share

 

$

66,478

 

 

27,582

 

 

$

2.41

 

$

105,843

 

 

27,832

 

 

$

3.80

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

62,761

 

 

24,869

 

 

$

2.52

 

$

112,869

 

 

24,828

 

 

$

4.55

 

Effect of Dilutive Securities, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options and Restricted Stock

 

 

 

281

 

 

 

 

 

 

296

 

 

 

 

Convertible Securities

 

1,212

 

 

3,418

 

 

 

 

2,425

 

 

3,418

 

 

 

 

Diluted Earnings Per Common Share

 

$

63,973

 

 

28,568

 

 

$

2.24

 

$

115,294

 

 

28,542

 

 

$

4.04

 

 

9.                 Comprehensive Income

For the three months ended June 30, 2007 and 2006, total comprehensive income was $67.1 million and $63.0 million, respectively. For the six months ended June 30, 2007 and 2006, total comprehensive income was $104.8 million and $112.3 million, respectively. Other comprehensive income consisted of gains and losses from foreign currency translation adjustments and unrealized holding gains and losses on available-for-sale securities.

11




10.          Share Based Compensation

The following transactions have occurred in connection with the Company’s share based compensation plans during the six months ended June 30, 2007:

Director stock awards granted

 

2,500

 

Employee Stock Purchase Plan shares issued

 

12,949

 

Restricted stock awards granted

 

125,655

 

Restricted stock awards cancelled

 

8,590

 

Restricted Stock Unit (“RSU”) Activities:

 

 

 

RSU’s outstanding at December 31, 2006

 

5,102

 

Granted

 

1,600

 

Converted to shares

 

(1,207

)

RSU’s outstanding at June 30, 2007

 

5,495

 

Stock Option Activities:

 

 

 

Options outstanding at December 31, 2006

 

877,025

 

Granted

 

118,200

 

Exercised

 

(32,573

)

Cancelled

 

(6,500

)

Options outstanding at June 30, 2007

 

956,152

 

Shares available for future grant at June 30, 2007(1)

 

1,218,418

 


(1)                The 2007 Share Incentive Plan was approved by the Company’s shareholders on May 17, 2007 with 1,000,000 shares being made available for stock awards. Upon approval of the new plan, no further grants will be made under any of the prior plans, but awards made prior to adoption (including the Company’s commitments as of June 30, 2007 to grant 82,200 stock options to certain officers and key employees in installments during 2007) remain unaffected.

11.          New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes (“FIN 48”), to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted FIN 48 on January 1, 2007 and the adoption had no material effect on its consolidated financial position or results of operations. The Company accounts for interest and penalties relating to uncertain tax positions in its income tax provision. The Internal Revenue Service is currently examining the Company’s U.S. federal income tax returns filed for the years ended December 31, 2005 and 2004.

On September 15, 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and therefore should be determined based on the assumptions that market participants would use in pricing an asset or liability. SFAS No. 157 sets out a fair value hierarchy and requires companies to disclose fair value measurements within that hierarchy. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined the impact, if any, the adoption of SFAS No. 157 will have on its consolidated financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Liabilities—Including an amendment of FASB Statement No. 155 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities, and certain nonfinancial instruments that are similar to financial instruments, at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined the impact, if any, the adoption of SFAS No. 159 will have on its consolidated financial position or results of operations.

12




12.          Segment Information

Operating business segments have been defined as a component of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s basis of measurement of segment profit or loss has not changed from those previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. The following tables summarize the operating results and assets of the Company’s reportable segments. Certain reclassifications of prior period information have been made to conform to the current period’s segment presentation.

 

 

Offshore

 

Marine

 

Inland

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

Marine

 

Transportation

 

River

 

Aviation

 

Environmental

 

 

 

and

 

 

 

 

 

Services

 

Services

 

Services

 

Services

 

Services

 

Other

 

Eliminations

 

Total

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

For the Three Months Ended June 30, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

171,230

 

 

25,924

 

 

 

28,020

 

 

 

55,861

 

 

 

31,718

 

 

12,701

 

 

 

 

325,454

 

Intersegment

 

212

 

 

 

 

 

 

 

 

 

 

 

450

 

 

41

 

 

(703

)

 

 

 

 

171,442

 

 

25,924

 

 

 

28,020

 

 

 

55,861

 

 

 

32,168

 

 

12,742

 

 

(703

)

 

325,454

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

88,596

 

 

22,865

 

 

 

13,056

 

 

 

41,212

 

 

 

23,605

 

 

10,177

 

 

(693

)

 

198,818

 

Administrative and general

 

11,893

 

 

1,236

 

 

 

2,101

 

 

 

4,439

 

 

 

4,323

 

 

2,206

 

 

7,739

 

 

33,937

 

Depreciation and amortization

 

14,515

 

 

9,790

 

 

 

4,332

 

 

 

6,601

 

 

 

1,100

 

 

1,264

 

 

453

 

 

38,055

 

 

 

115,004

 

 

33,891

 

 

 

19,489

 

 

 

52,252

 

 

 

29,028

 

 

13,647

 

 

7,499

 

 

270,810

 

Gains (Losses) on Asset Dispositions

 

38,546

 

 

 

 

 

2,622

 

 

 

1,505

 

 

 

(133

)

 

 

 

 

 

42,540

 

Operating Income (Loss)

 

94,984

 

 

(7,967

)

 

 

11,153

 

 

 

5,114

 

 

 

3,007

 

 

(905

)

 

(8,202

)

 

97,184

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gains (losses), net

 

(365

)

 

13

 

 

 

 

 

 

(1

)

 

 

80

 

 

(1

)

 

734

 

 

460

 

Other, net

 

19

 

 

 

 

 

138

 

 

 

474

 

 

 

(1

)

 

118

 

 

(109

)

 

639

 

Equity in Earnings (Losses) of 50% or Less Owned Companies

 

5,529

 

 

 

 

 

2,311

 

 

 

17

 

 

 

126

 

 

(154

)

 

 

 

7,829

 

Segment Profit (Loss)

 

100,167

 

 

(7,954

)

 

 

13,602

 

 

 

5,604

 

 

 

3,212

 

 

(942

)

 

 

 

 

 

 

Other Income (Expense) not included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,336

)

Less Equity Earnings included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,829

)

Income Before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87,947

 

For the Six Months Ended June 30, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

342,158

 

 

56,480

 

 

 

54,742

 

 

 

101,294

 

 

 

57,282

 

 

24,261

 

 

 

 

636,217

 

Intersegment

 

212

 

 

 

 

 

 

 

 

 

 

 

1,378

 

 

163

 

 

(1,753

)

 

 

 

 

342,370

 

 

56,480

 

 

 

54,742

 

 

 

101,294

 

 

 

58,660

 

 

24,424

 

 

(1,753

)

 

636,217

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

181,595

 

 

43,714

 

 

 

25,361

 

 

 

77,437

 

 

 

44,358

 

 

16,754

 

 

(1,743

)

 

387,476

 

Administrative and general

 

24,916

 

 

2,422

 

 

 

2,978

 

 

 

8,960

 

 

 

9,624

 

 

4,391

 

 

15,046

 

 

68,337

 

Depreciation and amortization

 

31,039

 

 

19,948

 

 

 

7,831

 

 

 

12,680

 

 

 

2,009

 

 

2,528

 

 

895

 

 

76,930

 

 

 

237,550

 

 

66,084

 

 

 

36,170

 

 

 

99,077

 

 

 

55,991

 

 

23,673

 

 

14,198

 

 

532,743

 

Gains (Losses) on Asset Dispositions

 

46,840

 

 

 

 

 

6,244

 

 

 

1,732

 

 

 

(149

)

 

30

 

 

 

 

54,697

 

Operating Income (Loss)

 

151,660

 

 

(9,604

)

 

 

24,816

 

 

 

3,949

 

 

 

2,520

 

 

781

 

 

(15,951

)

 

158,171

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gains (losses), net

 

(1,072

)

 

9

 

 

 

 

 

 

(1

)

 

 

78

 

 

(1

)

 

857

 

 

(130

)

Other, net

 

1

 

 

 

 

 

136

 

 

 

474

 

 

 

(1

)

 

118

 

 

(132

)

 

596

 

Equity in Earnings (Losses) of 50% or Less Owned Companies

 

6,881

 

 

 

 

 

3,280

 

 

 

33

 

 

 

147

 

 

(92

)

 

 

 

10,249

 

Segment Profit (Loss)

 

157,470

 

 

(9,595

)

 

 

28,232

 

 

 

4,455

 

 

 

2,744

 

 

806

 

 

 

 

 

 

 

Other Income (Expense) not included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,938

)

Less Equity Earnings included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,249

)

Income Before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142,699

 

Assets as of June 30, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

28,560

 

 

 

 

 

82,276

 

 

 

11,438

 

 

 

1,245

 

 

12,812

 

 

 

 

136,331

 

Goodwill

 

21,421

 

 

177

 

 

 

5,164

 

 

 

352

 

 

 

17,809

 

 

4,117

 

 

 

 

49,040

 

Other Segment Assets

 

964,333

 

 

453,632

 

 

 

269,032

 

 

 

379,180

 

 

 

72,791

 

 

86,296

 

 

961,163

 

 

3,186,427

 

 

 

1,014,314

 

 

453,809

 

 

 

356,472

 

 

 

390,970

 

 

 

91,845

 

 

103,225

 

 

961,163

 

 

3,371,798

 

 

13




 

 

 

Offshore

 

Marine

 

Inland

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

Marine

 

Transportation

 

River

 

Aviation

 

Environmental

 

 

 

and

 

 

 

 

 

Services

 

Services

 

Services

 

Services

 

Services

 

Other

 

Eliminations

 

Total

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

$’000

 

For the Three Months Ended June 30, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

 

168,281

 

 

 

37,446

 

 

 

36,339

 

 

 

39,595

 

 

 

36,946

 

 

12,379

 

 

 

 

330,986

 

Intersegment

 

 

4

 

 

 

 

 

 

 

 

 

308

 

 

 

 

 

(223

)

 

(89

)

 

 

 

 

 

 

168,285

 

 

 

37,446

 

 

 

36,339

 

 

 

39,903

 

 

 

36,946

 

 

12,156

 

 

(89

)

 

330,986

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

86,695

 

 

 

18,064

 

 

 

18,649

 

 

 

29,137

 

 

 

26,345

 

 

8,336

 

 

(77

)

 

187,149

 

Administrative and general

 

 

11,470

 

 

 

1,049

 

 

 

829

 

 

 

4,158

 

 

 

5,156

 

 

1,853

 

 

8,350

 

 

32,865

 

Depreciation and amortization

 

 

21,793

 

 

 

10,162

 

 

 

3,267

 

 

 

4,591

 

 

 

741

 

 

1,275

 

 

489

 

 

42,318

 

 

 

 

119,958

 

 

 

29,275

 

 

 

22,745

 

 

 

37,886

 

 

 

32,242

 

 

11,464

 

 

8,762

 

 

262,332

 

Gains (Losses) on Asset Dispositions

 

 

22,489

 

 

 

 

 

 

 

 

 

1,818

 

 

 

(215

)

 

 

 

(3

)

 

24,089

 

Operating Income (Loss)

 

 

70,816

 

 

 

8,171

 

 

 

13,594

 

 

 

3,835

 

 

 

4,489

 

 

692

 

 

(8,854

)

 

92,743

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gains (losses), net

 

 

196

 

 

 

(8

)

 

 

 

 

 

(56

)

 

 

(60

)

 

 

 

1,145

 

 

1,217

 

Other, net

 

 

49

 

 

 

 

 

 

2

 

 

 

545

 

 

 

 

 

 

 

(1

)

 

595

 

Equity in Earnings (Losses) of 50% or Less Owned Companies

 

 

5,857

 

 

 

 

 

 

 

 

 

(8

)

 

 

259

 

 

(77

)

 

 

 

6,031

 

Segment Profit

 

 

76,918

 

 

 

8,163

 

 

 

13,596

 

 

 

4,316

 

 

 

4,688

 

 

615

 

 

 

 

 

 

 

Other Income (Expense) not included in Segment Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,018

)

Less Equity Earnings included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,031

)

Income Before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90,537

 

For the Six Months Ended June 30, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

 

328,126

 

 

 

75,170

 

 

 

70,827

 

 

 

73,049

 

 

 

64,869

 

 

24,860

 

 

 

 

636,901

 

Intersegment

 

 

11

 

 

 

 

 

 

 

 

 

308

 

 

 

 

 

180

 

 

(499

)

 

 

 

 

 

328,137

 

 

 

75,170

 

 

 

70,827

 

 

 

73,357

 

 

 

64,869

 

 

25,040

 

 

(499

)

 

636,901

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

166,201

 

 

 

39,535

 

 

 

34,044

 

 

 

55,482

 

 

 

46,853

 

 

15,177

 

 

(499

)

 

356,793

 

Administrative and general

 

 

23,158

 

 

 

2,013

 

 

 

1,645

 

 

 

7,652

 

 

 

9,561

 

 

3,457

 

 

16,872

 

 

64,358

 

Depreciation and amortization

 

 

44,920

 

 

 

20,347

 

 

 

6,741

 

 

 

8,845

 

 

 

1,474

 

 

2,534

 

 

717

 

 

85,578

 

 

 

 

234,279

 

 

 

61,895

 

 

 

42,430

 

 

 

71,979

 

 

 

57,888

 

 

21,168

 

 

17,090

 

 

506,729

 

Gains (Losses) on Asset Dispositions

 

 

43,041

 

 

 

 

 

 

 

 

 

2,143

 

 

 

(215

)

 

 

 

(3

)

 

44,966

 

Operating Income (Loss)

 

 

136,899

 

 

 

13,275

 

 

 

28,397

 

 

 

3,521

 

 

 

6,766

 

 

3,872

 

 

(17,592

)

 

175,138

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gains (losses), net

 

 

228

 

 

 

(9

)

 

 

 

 

 

(56

)

 

 

(64

)

 

 

 

1,277

 

 

1,376

 

Other, net

 

 

54

 

 

 

 

 

 

2

 

 

 

545

 

 

 

 

 

 

 

22

 

 

623

 

Equity in Earnings (Losses) of 50% or Less Owned Companies

 

 

11,872

 

 

 

 

 

 

 

 

 

(5

)

 

 

363

 

 

170

 

 

 

 

12,400

 

Segment Profit

 

 

149,053

 

 

 

13,266

 

 

 

28,399

 

 

 

4,005

 

 

 

7,065

 

 

4,042

 

 

 

 

 

 

 

Other Income (Expense) not included in Segment Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,347

)

Less Equity Earnings included in Segment Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,400

)

Income Before Taxes, Minority Interest and Equity Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

159,790

 

 

14




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

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the cyclical nature of the oil and gas industry, activity in foreign countries and changes in foreign political, military and economic conditions, the dependence of Offshore Marine Services, Marine Transportation Services and Aviation Services on several customers, industry fleet capacity, consolidation of our customer base, the ongoing need to replace aging vessels, restrictions imposed by the Shipping Acts and Aviation Acts on the amount of foreign ownership of the Company’s Common Stock, increased competition if the Jones Act is repealed, safety record requirements related to Offshore Marine Services and Aviation Services, changes in foreign and domestic oil and gas exploration and production activity, operational risks of Offshore Marine Services, Marine Transportation Services, Harbor and Offshore Towing Services and Aviation Services, effects of adverse weather conditions and seasonality on Aviation Services, decreased demand for Marine Transportation Services and Harbor and Offshore Towing Services due to construction of additional refined petroleum product, natural gas or crude oil pipelines or due to decreased demand for refined petroleum products, crude oil or chemical products or a change in existing methods of delivery, future phase-out of our single-hull tankers, dependence of spill response revenue on the number and size of spills and upon continuing government regulation in this area and our ability to comply with such regulation and other governmental regulation, changes in NRC’s OSRO classification, liability in connection with providing spill response services, effects of adverse weather and river conditions and seasonality on Inland River Services, the level of grain export volume, the effect of fuel prices on barge towing costs, variability in freight rates for inland river barges, the effect of international economic and political factors in Inland River Service’s operations, adequacy of insurance coverage, compliance with government regulation, including environmental laws and regulations, currency exchange fluctuations, the attraction and retention of qualified personnel by the Company and various other matters, many of which are beyond the Company’s control and other factors. In addition, these statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties. The words “estimate,” “project,” “intend,” “believe,” “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Form 10-Q should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned under “Risks, Uncertainties and Other Factors That May Affect Future Results” in Item 1A of our Form 10-K and “Forward-Looking Statements” in Item 7 of our Form 10-K and SEACOR’s periodic reporting on Form 8-K (if any), which we incorporate by reference.

Results of Operations

The Company’s operations are divided into five main business segments – Offshore Marine Services, Marine Transportation Services, Inland River Services, Aviation Services and Environmental Services. The Company also has activities that are referred to and described under Other, which primarily includes Harbor and Offshore Towing Services, energy trading activities, various other investments in joint ventures and asset leasing activities.

15




The sections below provide an analysis of the Company’s operations by business segment for the three months (“Current Year Quarter”) and six months (“Current Six Months”) ended June 30, 2007 as compared to the three months (“Prior Year Quarter”) and six months (“Prior Six Months”) ended June 30, 2006. See “Item 1. Financial Statements - Note 12, Segment Information” included in Part I for consolidating segment tables for each period presented.