Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation and Accounting Policy (Policy)

v3.2.0.727
Basis of Presentation and Accounting Policy (Policy)
6 Months Ended
Jun. 30, 2015
Accounting Policies [Abstract]  
Basis Of Consolidation
The condensed consolidated financial information for the three and six months ended June 30, 2015 and 2014 has been prepared by the Company and has not been audited by its independent registered public accounting firm. The condensed consolidated financial statements include the accounts of SEACOR Holdings Inc. and its consolidated subsidiaries. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of June 30, 2015, its results of operations for the three and six months ended June 30, 2015 and 2014, its comprehensive income (loss) for the three and six months ended June 30, 2015 and 2014, its changes in equity for the six months ended June 30, 2015, and its cash flows for the six months ended June 30, 2015 and 2014. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the "Company" refers to SEACOR Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to "SEACOR" refers to SEACOR Holdings Inc. Capitalized terms used and not specifically defined herein have the same meaning given those terms in the Company's Annual report on Form 10-K for the year ended December 31, 2014.
Revenue Recognition
Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet these criteria is deferred until the criteria are met.
As of June 30, 2015, deferred revenues of $6.8 million, included in other current liabilities, related to the time charter of several offshore support vessels scheduled to be paid through the conveyance of an overriding royalty interest (the "Conveyance") in developmental oil and gas producing properties operated by a customer in the U.S. Gulf of Mexico. Payments under the Conveyance, and the timing of such payments, were contingent upon production and energy sale prices. On August 17, 2012, the customer filed a voluntary petition for chapter 11 bankruptcy, which was converted to chapter 7 in June 2014. The Company is vigorously defending its interest in connection with the bankruptcy filing; however, payments received under the Conveyance subsequent to August 17, 2012 and during the 90 days prior to the filing are subject to bankruptcy court approval. The Company will recognize revenues when legally permissible as provided under the bankruptcy court rules. All costs and expenses related to these charters were recognized as incurred.
Property, Plant and Equipment Disclosure [Text Block]
Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.
As of June 30, 2015, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
Offshore support vessels (excluding wind farm utility)
20
Wind farm utility vessels
10
Inland river dry-cargo barges
20
Inland river liquid tank barges
25
Inland river towboats
25
Product tankers - U.S.-flag
25
Short-sea Container/RORO(1) vessels
20
Harbor and offshore tugs
25
Ocean liquid tank barges
25
Terminal and manufacturing facilities
20
______________________
(1)
Roll on/Roll off ("RORO").
Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.
Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. During the six months ended June 30, 2015, capitalized interest totaled $9.6 million.
EQUIPMENT ACQUISITIONS, DISPOSITIONS AND IMPAIRMENTS
During the six months ended June 30, 2015, capital expenditures were $132.1 million. Equipment deliveries during the six months ended June 30, 2015 included one fast support vessel, one supply vessel, one wind farm utility vessel and two inland river towboats.
During the six months ended June 30, 2015, the Company sold two offshore support vessels, one 10,000 barrel inland river tank barge, twelve inland river deck barges and other property and equipment for net proceeds of $24.7 million, ($22.7 million in cash and $2.0 million in seller financing) and gains of $3.6 million, of which $1.6 million were recognized currently and $2.0 million were deferred. In addition, the Company recognized previously deferred gains of $4.6 million.
During the six months ended June 30, 2015, the Company recognized impairment charges of $6.6 million related to the suspended construction of two offshore support vessels.
Schedule of Estimated Useful Life of Newly Acquired Equipment [Table Text Block]
As of June 30, 2015, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
Offshore support vessels (excluding wind farm utility)
20
Wind farm utility vessels
10
Inland river dry-cargo barges
20
Inland river liquid tank barges
25
Inland river towboats
25
Product tankers - U.S.-flag
25
Short-sea Container/RORO(1) vessels
20
Harbor and offshore tugs
25
Ocean liquid tank barges
25
Terminal and manufacturing facilities
20
______________________
(1)
Roll on/Roll off ("RORO").
Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.
Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. During the six months ended June 30, 2015, capitalized interest totaled $9.6 million.
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]
Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to fair value. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the six months ended June 30, 2015 and 2014, the Company recognized impairment charges of $6.6 million and $3.9 million, respectively, related to long-lived assets held for use.
Income Tax Disclosure [Text Block]
Income Taxes. During the three and six months ended June 30, 2015, the Company's effective tax rates of negative 1.6% and 27.3%, respectively, were primarily due to tax benefits not recognized on losses attributable to noncontrolling interests (see Note 9).
Deferred Gains [Policy Text Block]
Deferred Gains. The Company has sold certain equipment to its 50% or less owned companies, entered into vessel sale-leaseback transactions with finance companies, and provided seller financing on sales of its equipment to third parties and its 50% or less owned companies. A portion of the gains realized from these transactions were deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets. Deferred gain activity related to these transactions for the six months ended June 30 was as follows (in thousands):
 
2015
 
2014
Balance at beginning of period
$
159,911

 
$
124,763

Adjustments to deferred gains arising from asset sales
2,035

 
40,445

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(11,273
)
 
(7,155
)
Amortization of deferred gains included in gains (losses) on asset dispositions and impairments, net
(4,597
)
 
(2,656
)
Balance at end of period
$
146,076

 
$
155,397

Schedule Of Deferred Gain Activity [Table Text Block]
Deferred gain activity related to these transactions for the six months ended June 30 was as follows (in thousands):
 
2015
 
2014
Balance at beginning of period
$
159,911

 
$
124,763

Adjustments to deferred gains arising from asset sales
2,035

 
40,445

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(11,273
)
 
(7,155
)
Amortization of deferred gains included in gains (losses) on asset dispositions and impairments, net
(4,597
)
 
(2,656
)
Balance at end of period
$
146,076

 
$
155,397

Comprehensive Income (Loss) Note
Accumulated Other Comprehensive Loss. The components of accumulated other comprehensive loss were as follows:
 
SEACOR Holdings Inc. Stockholders' Equity
 
Noncontrolling
Interests
 
 
 
Foreign
Currency
Translation
Adjustments
 
Derivative
Losses on
Cash Flow
Hedges, net
 
Other
 
Total
 
Foreign
Currency
Translation
Adjustments
 
Other
 
Other
Comprehensive
Income
December 31, 2014
$
(3,494
)
 
$
(16
)
 
$
5

 
$
(3,505
)
 
$
(86
)
 
$
3

 
 
Other comprehensive income
486

 
26

 

 
512

 
69

 

 
$
581

Income tax expense
(170
)
 
(9
)
 

 
(179
)
 

 

 
(179
)
Six months ended
June 30, 2015
$
(3,178
)
 
$
1

 
$
5

 
$
(3,172
)
 
$
(17
)
 
$
3

 
$
402

Earnings Per Common Share of SEACOR
Earnings (Loss) Per Share. Basic earnings (loss) per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings (loss) per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the treasury stock and if-converted methods. Dilutive securities for this purpose assumes restricted stock grants have vested, common shares have been issued pursuant to the exercise of outstanding stock options and common shares have been issued pursuant to the conversion of all outstanding convertible notes.
Computations of basic and diluted earnings (loss) per common share of SEACOR were as follows (in thousands, except share data):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
Net Income attributable to SEACOR
 
Average O/S Shares
 
Per Share
 
Net Income (Loss) Attributable to SEACOR
 
Average O/S Shares
 
Per Share
2015
 
 
 
 
 
 
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
687

 
17,780,759

 
$
0.04

 
$
(18,882
)
 
17,779,250

 
$
(1.06
)
Effect of Dilutive Share Awards:
 
 
 
 
 
 
 
 
 
 
 
Options and Restricted Stock(1)

 
301,705

 
 
 

 

 
 
Convertible Notes(2)(3)

 

 
 
 

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
687

 
18,082,464

 
$
0.04

 
$
(18,882
)
 
17,779,250

 
$
(1.06
)
2014
 
 
 
 
 
 
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
21,067

 
19,989,402

 
$
1.05

 
$
32,576

 
20,049,056

 
$
1.62

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

 
394,567

 
 
 

 
416,288

 
 
Convertible Notes(2)
3,148

 
4,200,525

 
 
 
6,287

 
4,200,525

 
 
Diluted Weighted Average Common Shares Outstanding
$
24,215

 
24,584,494

 
$
0.98

 
$
38,863

 
24,665,869

 
$
1.58

______________________
(1)
For the three months ended June 30, 2015 and 2014, diluted earnings per common share of SEACOR excluded 685,645 and 365,398, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive. For the six months ended June 30, 2015 and 2014, diluted earnings per common share of SEACOR excluded 2,017,788 and 288,510, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive.
(2)
For the three and six months ended June 30, 2015 and 2014, diluted earnings per common share of SEACOR excluded 1,825,326 common shares issuable pursuant to the Company's 3.0% Convertible Senior Notes as the effect of their inclusion in the computation would be anti-dilutive.
(3)
For the three and six months ended June 30, 2015, diluted earnings per common share of SEACOR excluded 4,200,525 common shares issuable pursuant to the Company's 2.5% Convertible Senior Notes as the effect of their inclusion in the computation would be anti-dilutive.
New Accounting Pronouncements
New Accounting Pronouncements. On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States. The core principal of the new standard is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. The Company has not yet selected the method of adoption or determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.
On February 18, 2015, the FASB issued an accounting standard update that amends the guidance for evaluating whether to consolidate certain legal entities. Specifically, the accounting standard update modifies the method for determining whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, it eliminates the presumption that a general partner should consolidate a limited partnership and impacts the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The accounting standard update is effective for annual and interim periods beginning after December 15, 2015 and early adoption permitted. The Company has not yet determined what impact, if any, the adoption of the accounting standard update will have on its consolidated financial position, results of operations or cash flows.
On April 7, 2015, the FASB issued final guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. The recognition and measurement guidance for debt issuance costs have not changed. The new standard requires retrospective application and represents a change in accounting principle. The final guidance is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. As of June 30, 2015, the Company had $12.6 million of debt issuance costs included in other assets in the accompanying condensed consolidated balance sheets.