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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
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, 2000
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 SMIT Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware 13-3542736
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
11200 Richmond Avenue, Suite 400, Houston, Texas 77082
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 782-5990
Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, New York Stock Exchange
par value $.01 per share
Securities registered pursuant to Section 12 (g) of the Act:
None
(Title of Class)
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 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.
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of March 23, 2001 was approximately $790,703,821. The total
number of shares of Common Stock issued and outstanding as of March 23, 2001 was
19,225,104.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive proxy statement to be filed with 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 SMIT INC.
FORM 10-K
TABLE OF CONTENTS
PART I
Page
Item 1. Business........................................................ 1
Offshore Marine Services........................................ 2
Environmental Services.......................................... 9
Investment in Drilling Services Business........................ 10
Other Investments............................................... 11
Employees....................................................... 12
Glossary of Selected Offshore Marine Industry Terms............. 13
Item 2. Properties...................................................... 14
Item 3. Legal Proceedings............................................... 14
Item 4. Submission of Matters to a Vote of Security Holders............. 14
Item 4A. Executive Officers of the Registrant............................ 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters...................................................... 16
Item 6. Selected Financial Data......................................... 17
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 18
Offshore Marine Services........................................ 18
Environmental Services.......................................... 20
Investment in Drilling Services Business........................ 21
Other Investments............................................... 21
Results of Operations........................................... 23
Liquidity and Capital Resources................................. 30
Item 7A. Quantitative and Qualitative Disclosures About Market Risk...... 39
Item 8. Financial Statements and Supplementary Data..................... 40
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 40
PART III
Item 10. Directors and Executive Officers of the Registrant.............. 41
Item 11. Executive Compensation.......................................... 41
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 41
Item 13. Certain Relationships and Related Transactions.................. 41
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on
Form 8-K..................................................... 42
FORWARD-LOOKING STATEMENTS
Certain statements discussed in Item 1 (Business), 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 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 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: general economic and business conditions, the
cyclical nature of our business, adequacy of insurance coverage, currency
exchange fluctuations, changes in foreign political, military and economic
conditions, the ongoing need to replace aging vessels, dependence of spill
response revenue on 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, industry fleet capacity, changes in foreign and
domestic oil and gas exploration and production activity, competition,
regulatory initiatives, customer preferences, marine-related risks, and various
other matters, many of which are beyond the Company's control and other factors
as are described at the end of Item 7 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) of this Form 10-K.
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.
PART I
ITEM 1. BUSINESS
General
The Company is a major provider of offshore marine services to the oil and gas
exploration and production industry, is one of the leading providers of oil
spill response services to owners of tank vessels and oil storage, processing,
and handling facilities, and owns a minority equity interest in a company that
owns and operates mobile offshore jackup drilling rigs.
The Company's offshore marine service business operates a diversified fleet of
offshore support vessels principally through wholly owned, majority owned, and
50% or less owned subsidiaries, many of which have been organized to facilitate
vessel acquisitions and various financing transactions in connection therewith
and to satisfy foreign and domestic vessel certification requirements. The
Company's vessels are primarily dedicated to servicing offshore oil and gas
exploration and production facilities mainly in the U.S. Gulf of Mexico,
offshore West Africa, the North Sea, the Far East, Latin America, and the
Mediterranean. The Company's offshore marine fleet, including owned,
chartered-in, joint ventured, pooled, and managed vessels, delivers cargo and
personnel to offshore installations, handles anchors for drilling rigs and other
marine equipment, supports offshore construction and maintenance work, and
provides standby safety support and oil spill response services. The Company may
also from time to time furnish vessels for special projects such as well
stimulation, seismic data gathering, salvage, freight hauling, and line
handling. In connection with its offshore marine services, the Company offers
logistics services, which include shorebase, marine transport, and other supply
chain management services in support of offshore exploration and production
operations.
The Company's environmental service business provides contractual oil spill
response and other professional services to those who store, transport, produce,
or handle petroleum and certain non-petroleum oils as required by the Oil
Pollution Act of 1990, as amended ("OPA 90"), and various state regulations. The
Company's environmental services, provided primarily through its wholly owned
subsidiaries, National Response Corporation ("NRC"), International Response
Corporation ("IRC"), and ERST/O'Brien's Inc. ("ERST"), include training,
consulting and supervision for emergency preparedness, response and crisis
management associated with oil or hazardous material spills, fires, and natural
disasters, and the maintenance of specialized equipment for immediate deployment
in response to spills and other events. NRC has acted as the principal oil spill
response contractor on several of the largest oil spills that have occurred in
the United States since the enactment of OPA 90.
The Company consolidated the reporting of financial information of drill rig
operator Chiles Offshore LLC, due to the Company's majority ownership, from its
inception in 1997 until its initial public offering of common stock (the "Chiles
IPO"). On September 22, 2000, Chiles Offshore LLC converted into a corporation,
was renamed Chiles Offshore Inc. ("Chiles Offshore"), and completed the Chiles
IPO. As a consequence of the Chiles IPO, the Company's ownership interest in
Chiles Offshore was reduced from 55.4% to 27.3%. Because its ownership interest
has declined below 50%, the Company no longer consolidates Chiles Offshore and
its consolidated subsidiaries' ("Chiles") financial condition, results of
operations and cash flows and, as of September 22, 2000, began accounting for
its interest in
1
Chiles using the equity method. Chiles Offshore, through its consolidated
subsidiaries, currently owns and operates two ultra-premium jackup drilling
rigs, has contracted for the construction of two additional rigs, and operates
another rig under a bareboat charter pending Chiles Offshore's acquisition of a
corporation owning such rig.
Unless the context indicates otherwise, any reference in this Annual Report on
Form 10-K to the "Company" refers to SEACOR SMIT Inc., incorporated in 1989 in
Delaware, and its consolidated subsidiaries, "SEACOR" refers to SEACOR SMIT
Inc., and "Common Stock" refers to the common stock, par value $.01 per share,
of SEACOR. SEACOR's principal executive offices are located at 11200 Richmond
Avenue, Suite 400, Houston, Texas 77082, where its telephone number is (713)
782-5990. Certain industry terms used in the description of the Company's
offshore marine business are defined or described under "Glossary of Selected
Offshore Marine Industry Terms" appearing at the end of this Item 1.
Offshore Marine Services
Geographic Markets Served
The operations of the Company's offshore marine service business are
concentrated in five geographic regions of the world. The table below sets
forth, at the dates indicated, the various types of vessels owned, bareboat
chartered-in, managed, joint ventured, and pooled by the Company in those five
regions. For a description of vessel types, see "Glossary of Selected Offshore
Marine Industry Terms" at the end of Item 1. For information concerning
revenues, operating profits, and long-lived assets for the Company's domestic
and international offshore marine business and its environmental and drilling
service segments, refer to "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Results of Operations" and "Item
8. Exhibits, Financial Statements, Schedules and Reports on Form 8-K - Note 14
of the Notes to Consolidated Financial Statements."
At December 31,
------------------------
Vessel Types by Geographic Market 1998 1999 2000
- ---------------------------------------------- ---- ---- ----
Domestic, principally the U.S. Gulf of Mexico:
Crew ......................................... 67 64 66
Utility ...................................... 74 74 66
Supply and Towing Supply ..................... 26 30 25
Anchor Handling Towing Supply ................ 7 11 7
Geophysical, Freight, and Other .............. 3 2 2
- --------------------------------------------------------------------------------
Total Domestic Fleet ............................. 177 181 166
- --------------------------------------------------------------------------------
North Sea:
Supply and Towing Supply ..................... 5 5 4
Standby Safety ............................... 23 19 37
---- ---- ----
28 24 41
---- ---- ----
Latin America:
Crew ......................................... 4 5 6
Utility ...................................... 2 5 5
Supply and Towing Supply ..................... 20 16 18
Anchor Handling Towing Supply ................ 8 6 6
---- ---- ----
34 32 35
---- ---- ----
West Africa:
Crew ......................................... 10 9 8
Utility and Line Handling .................... 6 2 2
Supply and Towing Supply ..................... 15 13 13
Anchor Handling Towing Supply ................ 8 6 6
---- ---- ----
39 30 29
---- ---- ----
Far East:
Crew ......................................... -- 2 9
Supply and Towing Supply ..................... 5 5 5
Anchor Handling Towing Supply ................ 9 6 6
---- ---- ----
14 13 20
---- ---- ----
Other Foreign:
Crew ......................................... 1 1 1
Supply and Towing Supply ..................... 10 11 10
Anchor Handling Towing Supply ................ 2 1 2
Geophysical, Freight, and Other .............. 2 1 1
---- ---- ----
15 14 14
- --------------------------------------------------------------------------------
Total Foreign Fleet .............................. 130 113 139
- --------------------------------------------------------------------------------
Total Fleet ...................................... 307 294 305
================================================================================
Domestic. The Company is a major provider of offshore marine services to the oil
and gas exploration and production industry that operates primarily in the U.S.
Gulf of Mexico. At December 31, 2000, the Company owned and/or operated 166
vessels domestically, principally in the U.S. Gulf of Mexico. In support of
exploration activities, the Company utilizes its supply and towing supply,
anchor handling towing supply, and crew vessels; whereas, in production support
2
activities, the Company employs its utility and crew vessels. The Company also
operates or bareboat charters-out specially equipped vessels that provide well
stimulation, seismic data gathering, oil spill response, and freight services.
At December 31, 2000, there were approximately 360 supply and towing supply, 220
crew, 166 utility, and 38 anchor handling towing supply vessels operating in the
U.S. Gulf of Mexico, substantially all of which were operated by 43 companies in
this region.
Following year-end, the Company completed three separate transactions that
increased its fleet size in this region by 32 vessels, including a vessel
presently under construction, and committed to the construction of 2 additional
vessels. In January 2001, the Company acquired all of the issued share capital
of Plaisance Marine, Inc. ("Plaisance Marine"), which owns 2 mini-supply
vessels, and acquired 4 additional mini-supply vessels from companies affiliated
with Plaisance (collectively the "Plaisance Fleet"). Aggregate consideration
paid for the Plaisance Fleet and certain related spares and other assets was
$20.1 million, including $16.2 million in cash, the assumption of $0.7 million
of debt, and the issuance of 71,577 shares of Common Stock valued at $3.2
million as of November 22, 2000. Plaisance Marine and affiliated companies
(collectively "Plaisance") are headquartered in Louisiana, and the Plaisance
Fleet operates in the U.S. Gulf of Mexico. In February 2001, 2 U.S. based towing
supply vessels were acquired from Rincon Marine, Inc., a U.S. based operator
("Rincon"). Aggregate consideration paid Rincon was $19.7 million, including
$6.1 million in cash and the assumption of $13.6 million of debt. Also in
February 2001, the Company completed the acquisition of all of the issued share
capital of Gilbert Cheramie Boats, Inc. and related corporations (collectively
"Cheramie"), all headquartered in Louisiana. The transaction involved cash
consideration of $62.7 million paid for all of the shares of voting and
non-voting stock of the companies. Cheramie owns 11 mini-supply, 11 utility, and
1 newly delivered supply vessel that operate in the U.S. Gulf of Mexico and an
additional supply vessel under construction with delivery scheduled for April
2001.
North Sea. At December 31, 2000, the Company's fleet included 41 vessels
operating in the North Sea. The Company's principal North Sea activity is
providing standby safety vessel services to platform and rig operators in the
region. The Company's standby safety fleet includes 5 managed, 5 pooled, and 2
joint ventured vessels. See "Joint Ventures and Pooling Arrangements" for
discussion of pooled and joint ventured vessel activities and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Offshore Marine Services" for discussion of managed vessel
activity. At December 31, 2000, there were approximately 125 vessels certified
for North Sea standby safety operations.
Demand in the North Sea market for standby safety vessel services developed in
1991 after the United Kingdom promulgated increased safety 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. The Company believes that it was one of the first
companies to convert vessels for use in standby safety service.
On April 19, 2000, the Company significantly expanded its North Sea standby
safety fleet through the acquisition of all of the issued share capital of
Putford Enterprises Ltd. and associated companies (collectively "Boston
Putford"). Assets acquired in the Boston Putford transaction included standby
safety vessels, certain joint venture interests, and fixed assets, for an
aggregate purchase price valued at approximately (pound)23.0 million ($39.3
million based on exchange rates in effect and the closing price of SEACOR's
Common Stock on April 19, 2000). The Boston Putford fleet, including vessels
held in joint ventures, but excluding vessels managed for third parties,
consisted of 18 vessels operating primarily in the southern UK sector of the
North Sea. The purchase consideration consisted of (pound)14.2 million in cash
($22.5 million based on exchange rates in effect on April 19, 2000), 125,423
shares of Common Stock (after adjustment for the Company's stock split on June
15, 2000), a (pound)5.0 million, five-year, fixed coupon note, and a (pound)2.5
million, five-year, fixed coupon note that is subject to offset if Boston
Putford does not meet certain earnings targets. The notes combined had an
estimated value of (pound)6.2 million ($9.8 million based on exchange rates in
effect on April 19, 2000).
On March 6, 2001, SEACOR and Stirling Shipping Company Ltd. ("Stirling
Shipping"), a private UK company based in Glasgow, Scotland, signed a letter of
intent for SEACOR to acquire all of the issued share capital of Stirling
Shipping and certain subsidiaries. Purchase consideration will be based on the
adjusted assets less liabilities of Stirling Shipping at closing, which is
estimated to total (pound)58.0 million ($85.1 million based on exchange rates in
effect on March 6, 2001). The purchase price will be payable approximately 50%
in cash, 20% in shares of Common Stock, and 30% in the form of promissory notes.
Stirling Shipping's long term debt is projected to be (pound)38.3 million at
closing ($56.2 million based on exchange rates in effect on March 6, 2001). The
final price is subject to certain closing adjustments. Through its acquisition
of Stirling Shipping, SEACOR will acquire 12 vessels all currently operating in
the North Sea and contracts for the construction of 2 new vessels. Of the 12
vessels, 9 are supply vessels and 3 are anchor handling towing supply vessels.
The new construction contracts are for two 15,000 bhp anchor handling towing
supply vessels at a total cost of approximately (pound)31.6 million ($46.4
million based on exchange rates in effect on March 6, 2001). The vessels will be
built in the UK and are scheduled for delivery during the first half of 2002.
The Company intends to retain Stirling Shipping's
3
management and vessel crews. Completion of the transaction is subject to certain
due diligence items, execution of definitive documentation, approval of Stirling
Shipping's shareholders and the Boards of Directors of Stirling Shipping and
SEACOR. The parties anticipate that the transaction will be completed by the
end of April 2001.
Latin America. The Company provides offshore marine services in Latin America
for both exploration and production activities. At December 31, 2000, the
Company owned and/or operated 35 vessels in this region, including 23 based in
Mexican ports, and 12 based in ports in Chile, Brazil, Venezuela, Trinidad, St.
Croix, and Argentina. Joint venture corporations in which the Company holds an
equity interest owned 20 of its Latin American vessels and bareboat or time
chartered-in an additional 12 vessels, 7 from the Company and 5 from outside
sources. See "Joint Ventures and Pooling Arrangements." Two additional Latin
American vessels owned by the Company were bareboat chartered-out to a Brazilian
customer and 1 vessel was operated by the Company's environmental service
segment in support of oil spill response activities in St. Croix.
Operating conditions in Mexico are, in many respects, similar to those in the
U.S. Gulf of Mexico; however, demand for vessels in Mexico has been affected
historically to a significant degree by Mexican government policies,
particularly those relating to Petroleos Mexicanos ("PEMEX"), the Mexican
national oil company. At December 31, 2000, there were approximately 160 vessels
in Mexico, including tugs and barges.
Offshore drilling and production activities in Venezuela, Chile, and Argentina
were either steady or declining during 2000. Demand for natural gas and large
LNG projects spurred exploration and production activities in Trinidad. Brazil,
a premier deepwater market, was opened to foreign investments in 2000.
Approximately 15 international oil companies were awarded concessions to explore
offshore Brazil and most spent the year applying for permits and preparing to
commence operations in the coming year. Petrobras, the Brazilian state-owned oil
company, still represents 99% of the demand for vessels.
West Africa. At December 31, 2000, the Company owned and/or operated 29 vessels
offshore West Africa. Competition is more concentrated in this market than in
the U.S. Gulf of Mexico. The Company is presently one of five principal offshore
marine operators serving the West African coast that own and operate
approximately 220 vessels in this region. The need for vessels in this market is
primarily dependent upon multi-year offshore oil and gas exploration and
development projects and production support.
Far East. At December 31, 2000, the Company's fleet in the Far East, including
20 vessels, was primarily based in ports in Singapore and Indonesia. Joint
venture corporations, in which the Company holds an equity interest, owned 9 of
those vessels and bareboat chartered-in an additional vessel. The joint venture
fleet included 8 crew, 1 anchor handling towing supply, and 1 towing supply
vessel. See "Joint Ventures and Pooling Arrangements." At December 31, 2000,
there were approximately 250 vessels operated by approximately 17 companies
supporting exploration, production, construction, and special project activities
in approximately 16 countries in the Far East.
Other Foreign. At December 31, 2000, 14 of the Company's vessels operated from
bases located in France, Tunisia, Greece, Egypt, Abu Dhabi, Pakistan, and
Turkmenistan (collectively referred to as "Other Foreign" regions). Joint
venture corporations in which the Company holds an equity interest owned 11 of
these vessels, and 3 vessels owned by the Company were bareboat chartered-out.
See "Joint Ventures and Pooling Arrangements."
Fleet
General. The offshore marine service industry supplies vessels to owners and
operators of offshore drilling rigs and production platforms. The Company
believes its fleet of offshore support vessels is well suited for serving this
industry. As of December 31, 2000, the average age of the Company's owned
offshore marine fleet was approximately 15.2 years. Excluding the Company's
standby safety vessels, the average age of the Company's fleet was approximately
13.9 years. The following table sets forth, at the dates indicated, a count of
the Company's fleet by type of vessel. For a description of vessel types, see
"Glossary of Selected Offshore Marine Industry Terms" at the end of Item 1.
At December 31,
----------------------
Type of Vessels Comprising Fleet 1998 1999 2000
- -------------------------------------------------- --- --- ---
Crew ............................................. 82 81 90
Utility and Line Handling ........................ 83 81 73
Supply and Towing Supply ......................... 81 80 75
Anchor Handling Towing Supply .................... 34 30 27
Standby Safety ................................... 23 19 37
Geophysical, Freight, and Other .................. 4 3 3
--- --- ---
Total Fleet .................................... 307 294 305(1)
=== === ===
- --------------------
(1) Includes 227 vessels owned directly by the Company. Twenty-one and 5
vessels are chartered-in and managed, respectively, by the Company, and the
Company operates 5 vessels under pooling arrangements. Joint venture
corporations in which the Company holds an equity interest own 41 vessels.
Five and 1 vessel, respectively, are chartered-in by the TMM Joint Venture
and Pelican Joint Venture, as hereinafter defined.
4
Acquisitions. The Company actively monitors opportunities to buy and sell
vessels that will maximize the overall utility and flexibility of its fleet.
Fleet size has grown significantly, from 83 vessels at December 31, 1994 to 305
vessels at December 31, 2000. This expansion was achieved principally through
the purchase of vessels from competitors, new construction of vessels, and
equity holdings in joint ventures that own vessels. The Company's most
significant vessel acquisition transactions in the past six years are set forth
in the following table.
In the Year
---------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
----------------- -------------------------- ----------------- ----- ----- ----------
New New New Boston
Type of Vessels Acquired Graham(1) CNN(2) McCall(3) CNN(2) SMIT(4) Build Galaxie(5) Build Build Putford(6)
- ----------------------------------- --------- ------ --------- ------ ------- ----- ---------- ----- ----- ----------
Crew .............................. 37 - 36 -- 3 5 4 4 --
Utility and Line Handling ......... 83 - 5 -- -- 17 -- 2 --
Supply and Towing Supply .......... 7 3 -- 1 24 1 2 3 1 --
Anchor Handling Towing Supply...... -- 2 -- 5 24 1 -- 3 3 --
Standby Safety .................... -- - -- - -- -- -- -- 18
Geophysical, Freight, and ......... -- - -- - 1 -- -- -- --
--------- ------ --------- ------ ------- ----- ---------- ----- ----- ----------
Total .......................... 127 5 41 6 49 5 24 10 10 18
========= ====== ========= ====== ======= ===== ========== ===== ===== ==========
- --------------------
(1) Vessels acquired from John E. Graham & Sons, a corporation that was
headquartered in Alabama.
(2) Vessels acquired from Compagnie Nationale de Navigation, a French company.
(3) The acquisition of McCall Enterprises, Inc. and its affiliated companies,
corporations headquartered in Louisiana.
(4) Vessels and equity interests in joint ventures that owned vessels acquired
in a transaction (the "SMIT Transaction") with SMIT Internationale N.V.
("SMIT"). Includes 10 anchor handling towing supply, 10 supply and towing
supply, and 1 project vessel that were owned by SMIT joint ventures.
(5) Vessels acquired in a transaction with Galaxie Marine Services, Inc. and
affiliated companies, corporations headquartered in Louisiana ("Galaxie").
(6) Vessels acquired in the acquisition of Boston Putford. Two Boston Putford
standby safety vessels participate in joint ventures.
At December 31, 2000, the Company was committed to the construction of 7 crew
vessels and 1 towing supply vessel that are expected to enter service during the
next two years. Following year-end, the Company committed to the construction of
2 mini-supply vessels that are expected to enter service during 2001.
Dispositions. Since 1994, the Company has also sold many vessels, particularly
those that were less marketable serving the Company's ordinary operations. The
table below sets forth, in the years indicated, the number of vessels sold by
type of service. At December 31, 2000, 19 of these vessels, including 13 supply
and towing supply, 5 crew, and 1 anchor handling towing supply, were bareboat
chartered-in by the Company pursuant to sale-leaseback transactions. The leases
expire at various dates from 2001 through 2005 and contain purchase and renewal
options. The Company has recently removed 3 standby safety vessels from
operation and is actively marketing them for sale.
In the Year
-----------------------------------------------------------
Type of Vessels Sold 1995 1996 1997 1998 1999 2000
- ------------------------------------- ---- ---- ---- ---- ---- ----
Crew................................. 1 -- 2 5 11 1
Utility and Line Handling............ 6 16 7 7 2 8
Supply and Towing Supply............. 4 -- 21 14 -- 9
Anchor Handling Towing Supply........ 1 -- 5 8 1 1
Standby Safety....................... -- -- -- -- -- 2
Geophysical, Freight, and Other...... -- -- 2 -- -- --
---- ---- ---- ---- ---- ----
12 16 37 34 14 21
==== ==== ==== ==== ==== ====
Joint Ventures and Pooling Arrangements
The Company has formed or acquired interests in offshore marine joint ventures
and entered into pooling arrangements with various third parties to enter new
markets, enhance its marketing capabilities, and facilitate operations in
certain foreign markets. These arrangements allow the Company to expand its
fleet while diversifying the risks and reducing the capital outlays associated
with independent fleet expansion. The joint venture and pooling arrangements in
which the Company participates are described below:
VEESEA Joint Venture. In 1991, the Company expanded its operations into the
standby safety market of the North Sea and, until April 2000, all of its standby
safety vessels operating in that region were owned or chartered-in by a
subsidiary of the Company, VEESEA Holdings, Inc. ("VEESEA Holdings") and its
subsidiaries (collectively, "VEESEA"). Management of the VEESEA fleet was the
responsibility of Vector Offshore Limited, a UK company ("Vector"), which owned
a 9% equity interest in VEESEA Holdings (the "VEESEA Joint Venture"). Following
the Company's acquisition of Boston Putford and its purchase of the majority of
Vector's equity interest in VEESEA in April 2000, management of the VEESEA Joint
Venture and SEAVEC Pool, as hereinafter defined, was consolidated with the
operations of Boston Putford.
SEAVEC Pool. In January 1995, the Company entered into a pooling arrangement
with Toisa Ltd., a UK offshore marine transportation and services company
("Toisa"). Under this pooling arrangement (the "SEAVEC Pool"), the Company and
Toisa jointly market certain of their standby safety vessels in the North Sea
market, with operating
5
revenues pooled and allocated to the respective companies pursuant to a formula
based on the class of vessels each company contributes to the pool. At December
31, 2000, the SEAVEC Pool was comprised of 13 vessels of which Toisa owned 5.
Avian Fleet Pool. Following Vector's bareboat charter-in of seven standby safety
vessels in November 1996, VEESEA Holdings, Toisa, and the vessels' owners
entered into a pooling arrangement pursuant to which they shared the net
operating profits, after certain adjustments for maintenance and management
expenses, of the vessels (previously known as the "Saint Fleet Pool"). Vector
assumed management control of these vessels in December 1996 and marketed the
vessels in coordination with the SEAVEC Pool. Three Saint Fleet Pool vessels
were returned to their owners in 1998, and the remaining four vessels continued
in a pooling arrangement between the owners and VEESEA Holdings until terminated
in 2000 (the "Avian Fleet Pool").
TMM Joint Venture. During 1994, the Company and Transportacion Maritima Mexicana
S.A. de C.V., a Mexican corporation ("TMM"), organized a joint venture to serve
the Mexican offshore market (the "TMM Joint Venture"). The TMM Joint Venture is
comprised of two corporations, Maritima Mexicana, S.A. and SEAMEX International
Ltd., in each of which corporations the Company owns a 40% equity interest. The
TMM Joint Venture enabled the Company to expand into a market contiguous to the
U.S. Gulf of Mexico and provides greater marketing flexibility for the Company's
fleet in the region. At December 31, 2000, the TMM Joint Venture owned 12
vessels and chartered-in an additional 11 vessels, including 6 from the Company
and 5 from outside sources.
SMIT Joint Ventures. Pursuant to a transaction with SMIT Internationale N.V.
("SMIT") that was consummated in January 1997 (the "SMIT Transaction"), the
Company acquired, among other things, certain joint venture interests owned by
SMIT and structured a joint venture with SMIT (collectively, the "SMIT Joint
Ventures") that increased the Company's presence in international markets. In
1999, the Board of Directors of a SMIT Joint Venture adopted a plan of
liquidation, which provided for the complete liquidation of the joint venture
corporation. At December 31, 2000, the Smit Joint Ventures owned 15 vessels,
including 3 remaining to be sold under the plan of liquidation, and bareboat
chartered-in an additional vessel. The SMIT Joint Ventures' vessels operate in
the Far East, Latin America, the Middle East, and the Mediterranean.
Vision Joint Venture. During 1997, the Company and a wholly owned subsidiary of
TMM structured a limited liability company, SEACOR VISION LLC (the "Vision Joint
Venture"), for purposes of owning and operating an anchor handling towing supply
vessel that was constructed in that same year. During October 2000, the Company
acquired all of the TMM subsidiary's membership interest in the Vision Joint
Venture for $4.2 million, and as a result, the Company now owns 100% of SEACOR
VISION LLC.
Logistics Joint Venture. During 1996, the Company structured a joint venture
corporation, Energy Logistics, Inc., with Baker/M.O. Services, Inc. Since its
inception, Energy Logistics, Inc.'s mission has been to provide shorebase,
marine transport, and other supply chain management services in support of
offshore exploration and production operations primarily in the U.S. Gulf of
Mexico. In December 1999, the Company acquired additional common shares of
Energy Logistics, Inc., increasing its ownership interest from 50% to 67%. Also,
in December 1999, Energy Logistics, Inc. acquired Liberty Services, Inc. and its
affiliated companies (collectively referred to as "Liberty"), corporations
headquartered in Louisiana that have provided base services, equipment rental,
and personnel in support of the offshore energy industry for over 15 years. At
December 31, 2000, Energy Logistics, Inc. and Liberty (collectively referred to
as "ELI") operated shorebase support facilities in 4 Louisiana cities and
employed 8 of the Company's crew and utility vessels in its operations.
Pelican Joint Venture. In December 2000, the Company entered into a joint
venture owned 50% by each of the Company and Penguin Boat International Limited,
a Singapore corporation, ("Penguin"). The joint venture, Pelican Offshore
Services Pte Ltd, also a Singapore corporation ("Pelican"), owns six and
charters-in one newly built Fast Support Intervention Vessels (also known as
multipurpose crew vessels). The Company paid SGD5.8 million, or $3.3 million,
for its equity interest in the Pelican joint venture and advanced SGD5.2
million, or $3.0 million, to the Pelican joint venture for its purchase of a
crew vessel, which it presently charters-in, and to fulfill certain working
capital funding obligations pursuant to the joint venture agreement. The Pelican
fleet of Fast Support Intervention Vessels is currently employed in the Far East
region and will also be marketed in Asia and the Middle East jointly by Pelican
and the Company. Penguin built six of the seven Pelican vessels in the last
three years. Pelican currently has offices in Jakarta, Indonesia, and Singapore.
Other Joint Ventures. The Company participates in five additional joint ventures
that provide vessel services to the oil and gas industry (the "Other Joint
Ventures"). At December 31, 2000, the Other Joint Ventures owned eight vessels
that are operated internationally, including a vessel bareboat chartered-out to
one of the Smit Joint Ventures. The Other Joint Ventures also chartered-in one
vessel from the Company, which operated internationally. An additional joint
venture assists with management of the Company's vessels operating offshore
Nigeria.
6
Risks of Foreign Operations
For the years ended December 31, 1998, 1999, 2000, approximately 39%, 36%, and
30%, respectively, of the Company's operating revenues were derived from its
foreign operations. The Company's foreign offshore marine operations are subject
to various risks inherent in conducting business in foreign nations. These risks
include, among others, political instability, potential vessel seizure,
nationalization of assets, fluctuating currency values, hard currency shortages,
controls of 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.
Industry Conditions
Exploration and drilling activities, which affect the demand for vessels, are
influenced by a number of factors, including the current and anticipated prices
of oil and natural gas, the expenditures by oil and gas companies for
exploration and development, and the availability of drilling rigs. In addition,
demand for drilling services remains dependent on a variety of political and
economic factors beyond the Company's control, including 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, and the policies of various governments
regarding exploration and development of their oil and natural gas reserves. See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" for discussion of current market conditions.
Customers
The Company offers offshore marine services to over 275 customers including
major integrated oil companies and large independent oil and gas exploration and
production companies. The Company has enjoyed long standing relationships with
several of its customers and has established alliances with some of them. The
percentage of revenues attributable to any individual customer varies from time
to time, depending on the level of oil and gas exploration undertaken by a
particular customer, the suitability of the Company's vessels for the customer's
projects, and other factors, many of which are beyond the Company's control. For
the fiscal year ended December 31, 2000, approximately 10% of the Company's
offshore marine segment's operating revenues were earned from services provided
to Chevron Corporation.
Charter Terms
Customers for vessels generally award charters based on suitability and
availability of equipment, price and reputation for quality service, and
duration of employment. Charter terms may vary from several days to several
years.
Competition
The offshore marine service industry is highly competitive. In addition to
price, service, and reputation, the principal competitive factors for fleets
include the existence of national flag preference, operating conditions and
intended use (all of which determine the suitability of vessel types),
complexity of maintaining logistical support, and the cost of transferring
equipment from one market to another.
Although there are many suppliers of offshore marine services, management
believes that only Tidewater Inc. operates in all geographic markets and has a
substantial percentage of the domestic and foreign offshore marine market in
relation to that of the Company and its other competitors.
Government Regulation
Domestic Regulation. The Company's operations are subject to significant
federal, state, and local regulations, as well as international conventions. The
Company's domestically registered vessels are subject to the jurisdiction of the
United States Coast Guard (the "Coast Guard"), the National Transportation
Safety Board, the U.S. Customs Service, and the U.S. Maritime Administration, as
well as subject to 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. Moreover, to ensure compliance with
applicable safety regulations, the Coast Guard is authorized to inspect vessels
at will.
The Company is also subject to the Shipping Act, 1916, as amended (the "Shipping
Act"), and the Merchant Marine Act of 1920, as amended (the "1920 Act," and
together with the Shipping Act, the "Acts"), which govern, among other things,
the ownership and operation of vessels used to carry cargo between U.S. ports.
The Acts require that vessels engaged in the
7
U.S. coastwise trade be owned by U.S. citizens and built in the United States.
For a corporation engaged in the U.S. coastwise trade to be deemed a citizen of
the U.S.: (a) the corporation must be organized under the laws of the United
States or of a state, territory, or possession thereof, (b) 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, (c) 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 (d) at
least 75% of the interest in such corporation must be owned by U.S. "citizens"
(as defined in the Acts). Should the Company fail to comply with the U.S.
citizenship requirements of the 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 Acts, the Company's Restated Certificate of
Incorporation: (i) contains provisions limiting the aggregate percentage
ownership by non-U.S. citizens of any class of the Company'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 25.0%), and
authorizes the Board of Directors, under certain circumstances, to increase the
foregoing percentage to 24.0%, (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, the
Company's Amended and Restated 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 Chief Executive Officer and the President, all of whom
must be U.S. citizens.
Foreign Regulation. The Company, through its subsidiaries, joint ventures, and
pooling arrangements, operates vessels registered in the following foreign
jurisdictions: St. Vincent and the Grenadines, Vanuatu, the Cayman Islands,
France, Chile, Egypt, the Netherlands, Bahamas, Greece, Panama, Liberia, the
Philippines, Argentina, Trinidad, Tunisia, and Mexico. The Company's vessels
registered in these jurisdictions are subject to the laws of the applicable
jurisdiction as to ownership, registration, manning, and safety of vessels. In
addition, the vessels are subject to the requirements of a number of
international conventions to which the jurisdiction of registration of the
vessels is a party. 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 these foreign jurisdictions are
in compliance with all applicable material regulations and have all licenses
necessary to conduct their business. In addition, vessels operated as standby
safety vessels in the North Sea are subject to the requirements of the
Department of Transport of the UK pursuant to the UK Safety Act.
Environmental Regulation. The Company's vessels routinely transport diesel fuel
to offshore rigs and platforms and carry diesel fuel for their own use,
transport certain bulk chemical materials used in drilling activities, transport
rig-generated wastes to shore for delivery to waste disposal contractors, and
transport liquid mud which contains oil and oil by-products. These operations
are subject to a variety of federal and analogous state statutes concerning
matters of environmental protection. Statutes and regulations that govern the
discharge of oil and other pollutants onto navigable waters include OPA 90 and
the Clean Water Act of 1972, as amended (the "Clean Water Act"). The Clean Water
Act imposes substantial potential liability for the costs of remediating
releases of petroleum and other substances in reportable quantities. State laws
analogous to the Clean Water Act also specifically address the accidental
release of petroleum in reportable quantities.
OPA 90, which amended the Clean Water Act, increased the limits on liability for
oil discharges at sea, although such limits do not apply in certain listed
circumstances. In addition, some states have enacted legislation providing for
unlimited liability under state law for oil spills occurring within their
boundaries. Other environmental statutes and regulations governing the Company's
offshore marine operations include, among other things, the Resource
Conservation and Recovery Act, as amended ("RCRA"), which regulates the
generation, transportation, storage, and disposal of on-shore hazardous and
non-hazardous wastes; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), which imposes strict and joint and
several liability for the costs of remediating historical environmental
contamination; and the Outer Continental Shelf Lands Act, as amended ("OCSLA"),
which regulates oil and gas exploration and production activities on the Outer
Continental Shelf.
OCSLA provides the federal government with broad discretion in regulating the
leasing of offshore resources for the production of oil and gas. Because the
Company's offshore marine operations rely on offshore oil and gas exploration
and production, the government's exercise of OCSLA authority 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.
In addition to these federal and state laws, state and local laws and
regulations and certain international treaties to which the U.S. is a signatory,
such as MARPOL 73/78, subject the Company to various requirements governing
waste disposal and water and air pollution.
8
Environmental Services
Market
The Company's environmental service business is operated primarily through NRC,
IRC, and ERST and provides contractual oil spill response and other related
training and consulting services. The market for these services has grown
substantially since 1990 when the United States Congress passed OPA 90 after the
Exxon Valdez spill in Alaska. OPA 90 requires that all tank vessels operating
within the Exclusive Economic Zone of the United States and all facilities and
pipelines handling oil that could have a spill impacting the navigable waters of
the United States, 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.
Equipment and Services
Oil Spill Response Services. The Company owns and maintains specialized
equipment that is positioned in designated areas to comply with regulations
promulgated by the Coast Guard and also has personnel trained to respond to oil
spills as required by customers and regulations. The Company provides these
services on the East, Gulf, and West Coasts of the United States as well as in
the Caribbean. From 1996 and until November 30, 2000, oil spill response
services were provided on the West Coast of the United States through a joint
venture operation, Clean Pacific Alliance ("CPA"), between NRC and Crowley
Marine Services, Inc. ("Crowley Marine"). On November 30, 2000, NRC purchased
Crowley Marine's 50% interest in CPA and began a termination process. As of that
date, all of CPA's duty of performance under existing contracts was assigned and
transferred to NRC. CPA will be dissolved upon completion of the termination
process.
When an oil spill occurs, the Company mobilizes specialized oil spill response
equipment, using either its own personnel or personnel under contract, to
provide emergency response services for both land and marine oil spills. The
Company has established a network of approximately 120 independent oil spill
response contractors that may assist it with the provisioning of equipment and
personnel. NRC has acted as the principal contractor on several of the largest
oil spills that have occurred in the United States after the enactment of OPA
90.
Training, Drill, and Other Professional Services. The Company has developed
customized training programs for industrial companies that educate personnel on
the risks associated with the prevention of and response to oil spills, handling
of hazardous materials, fire fighting, and other crisis-related events. The
Company also plans for and participates in customer oil spill response drill
programs, vessel response plans, and response exercises. The Company's drill
services and training programs are offered both on a stand-alone basis and as
part of its base retainer services.
International. The Company operates its environmental service business
internationally through IRC. Client services of IRC include oil spill response,
training, exercise support, and special projects in assessing risk of spills,
response preparedness, strategies, and resource requirements. International
response services are currently provided in the Southeast Asia, Indian Ocean,
Caribbean, and Latin America regions. Joint ventures have been formed with local
partners in Thailand, Brazil, and Venezuela to provide spill response and other
services to multinational oil companies, governments, and industry. Oil spill
response and related consulting service revenues derived from foreign operations
have not been material.
Customers and Contract Arrangements
The Company offers its retainer services and oil spill response services
primarily to the domestic and international shipping community and to owners of
facilities such as refineries, pipelines, exploration and production platforms,
and tank terminals. In addition to its retainer customers, the Company also
provides oil spill response services to others, including, under certain
circumstances, the Coast Guard. The Company presently has approximately 700
customers. The Company's retainer arrangements with these customers include both
short-term contracts (one year or less) and long-term agreements, in some cases
as long as ten years from inception. For the fiscal year ended December 31,
2000, approximately 18% and 17% of the Company's environmental retainer revenue
was received from Citgo Petroleum Corporation and Coastal Refining and
Marketing, Inc., respectively.
The Company also generates revenue from the supervision of activities in
response to oil spill emergencies. The level of spill activity can dramatically
impact the Company's environmental service revenue. A single large spill can
contribute significantly to overall revenues and to operating income. However,
the Company is unable to predict revenues from oil spills.
Competition
The principal competitive factors in the environmental service business are
price, service, reputation, experience, and
9
operating capabilities. Management believes that the lack of uniform regulatory
development and enforcement on a federal and state level has created a lower
barrier to entry in several market segments, which has increased the number of
competitors. The Company's oil spill response business faces competition
primarily from the Marine Spill Response Corporation, a non-profit corporation
funded by the major integrated oil companies, other industry cooperatives, and
also from smaller contractors who target specific market niches. The Company's
environmental consulting business faces competition from a number of relatively
small privately-held spill management companies.
Government Regulation
NRC is "classified" by the Coast Guard as an Oil Spill Removal Organization
("OSRO"). The OSRO classification process is strictly voluntary and plan holders
who utilize classified OSROs are exempt from the requirement to list their
response resources in their plans. The classification process represents
standard guidelines by which the Coast Guard and plan holders can evaluate an
OSRO's potential to respond to and recover oil spills of various types and sizes
in different operating environments and geographic locations. NRC holds OSRO
classification under the current Coast Guard guidelines for every port in the
continental United States, Hawaii, and the Caribbean.
In addition to the Coast Guard, the Environmental Protection Agency ("EPA"), the
Office of Pipeline Safety, the Minerals Management Service division of the
Department of Interior, and 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, the Company's environmental service
business enjoys immunity from imposition of liability under federal law and some
state laws for any spills arising from its response efforts, except for deaths,
personal injuries, or if the Company's environmental service business is found
to be grossly negligent or to have engaged in willful misconduct. The Company's
environmental service business maintains insurance coverage against such claims
arising from its response operations. It considers the limits of liability
adequate, although there can be no assurance that such coverage will be
sufficient to cover future claims that may arise.
Investment in Drilling Services Business
Chiles Offshore LLC, the predecessor to Chiles Offshore, was formed in August
1997 for the purpose of constructing, owning and operating ultra-premium jackup
drilling rigs. In September 2000, in conjunction with the Chiles IPO, Chiles
Offshore was converted into a corporation and renamed Chiles Offshore Inc. The
Company currently owns 27.5% of Chiles Offshore's outstanding common stock,
increased from 27.3% immediately upon the Chiles IPO, after a subsequent
reduction in the number of shares of Chiles Offshore's outstanding common stock.
In 1997, Chiles Offshore LLC started construction of two ultra-premium jackup
drilling rigs at AMFELS, Inc. ("AMFELS"), a shipyard located in Brownsville,
Texas. The first rig, the Chiles Columbus, was delivered in May 1999, and the
second rig, the Chiles Magellan, was delivered in October 1999 (each a "Rig" and
together, the "Rigs"). In addition, since April 2000, Chiles Offshore has been
operating a third such rig, the Tonala, under a bareboat charter with
Perforadora Central S.A. de C.V. ("Perforadora Central"), a Mexican company. As
a result, Chiles Offshore currently operates three of the seven existing
ultra-premium jackup drilling rigs in the world, all of which presently operate
in the U.S. Gulf of Mexico. In July 2000, Chiles Offshore entered into an
agreement with Perforadora Central to acquire, through a series of transactions,
all of the shares of capital stock of a newly formed entity that will own the
Tonala in exchange for Chiles Offshore's common stock and its assumption of long
term debt, the principal amount of which was approximately $64.6 million as of
December 31, 2000. Chiles Offshore expects the closing of the acquisition to
take place during the second quarter of 2001.
In April 2000, Chiles Offshore entered into an agreement with Keppel FELS
Limited to construct an ultra-premium jackup rig of the KFELS Mod V "B" design,
the Chiles Discovery. Chiles Offshore expects the Chiles Discovery to be
delivered in Singapore and placed in operation during the second quarter of 2002
at a construction cost of $110.0 million, exclusive of interest and other
capitalized costs. In April 2000, Chiles Offshore also entered into an agreement
for the construction, at its option, of up to three additional rigs of the same
design.
In September 2000, Chiles Offshore completed the Chiles IPO, and received
approximately $157.0 million of net proceeds. As a result of the Chiles IPO, the
Company's ownership in Chiles Offshore declined from 55.4% to 27.3%. Chiles
Offshore used approximately $99.0 million of the Chiles IPO proceeds to
repurchase and retire approximately $95.0 million principal amount of its senior
notes plus accrued interest, constituting substantially all of its outstanding
senior notes, and repaid approximately $7.0 million of the amounts outstanding
under its prior bank credit facility with accrued interest. SEACOR owned
approximately $26.7 million aggregate principal amount of such notes and held an
economic interest in substantially all of the remaining notes (approximately
$68.1 million principal amount), and recognized a pretax gain of approximately
$6.6 million as a result of this transaction. Chiles Offshore also used the
Chiles IPO proceeds to fund a portion of the costs required to further expand
its rig fleet and for other general corporate purposes. Chiles Offshore files
reports with the Securities and Exchange Commission (the "Commission")
10
and its shares are traded on the American Stock Exchange, commonly referred to
as "AMEX," under the trading symbol "COD."
Demand for offshore drilling services is cyclical in nature and depends
substantially on the condition of the oil and gas industry and its willingness
to spend capital on exploration for, and production of, oil and natural gas. The
level of these capital expenditures is highly sensitive to existing oil and gas
prices as well as price expectations among oil and gas operators. Increasing
commodity prices generally result in increased oil and gas exploration and
production, which translates into greater demand for offshore drilling services.
Conversely, falling commodity prices generally result in reduced demand for
those services. In recent years, an increasing amount of exploration and
production expenditures has been concentrated in deeper water requiring
semisubmersible drilling rigs or drill ships. The trend is expected to continue
and could result in a decline in demand for jack-up rigs. In addition, the
allocation of exploration and production expenditures to on-shore prospects
could affect demand for such rigs.
The financial results of the offshore drilling industry depend on the
utilization levels and dayrates for rigs, which in turn are determined by the
supply of available drilling rigs relative to demand. Periods of high demand,
high utilization levels and high dayrates have been followed by periods of low
demand, low utilization levels and low dayrates. In the early 1980s, in the
aftermath of the second oil price shock, general expectations were that oil
prices would rise substantially. This was the basis for the dramatic new
building activity that resulted in construction of 279 offshore mobile rigs
between 1980 and 1983. Oversupply of rigs then caused worldwide offshore rig
utilization to decline rapidly and substantially depressed the offshore contract
drilling market until the beginning of the 1990s. By the mid-1990s, the world's
offshore drilling rig fleet had declined in size to the point at which low
supply and high demand yielded higher utilization, and consequently higher
dayrates.
Chiles' operations are subject to a variety of federal, state, and local
environmental and safety laws and regulations which, among other things, limit
discharge of certain materials into the environment and can require removal and
cleanup operations. For example, Chiles could become liable for damages and
costs incurred in connection with oil spills. Environmental protection has
become increasingly stringent in recent years, and certain laws impose "strict
liability" rendering a company liable for environmental damage without regard to
fault. Such environmental laws and regulations may expose Chiles to liability
for the conduct of or conditions caused by others, or for its acts that were in
compliance with all applicable laws at the time such acts were performed. In
addition, these laws and regulations can restrict access to certain areas,
reducing potential sales of Chiles' services in the United States. The primary
federal environmental laws to which Chiles is subject to include the (i) Clean
Water Act; (ii) OPA 90; (iii) OCSLA, (iv) Clean Air Act, (v) RCRA, and (vi)
CERCLA.
Other Investments
In 1998, the Company acquired an interest in the predecessor of Globe Wireless,
LLC ("Globe Wireless") and now owns approximately 38% of the voting units issued
by Globe Wireless. Globe Wireless is a provider of advanced marine
telecommunication services using satellite and high frequency radio
technologies. It owns and operates a worldwide network of high frequency radio
stations to offer email, data transfer, and telex services to ships at a much
lower cost than competing satellite services. The Company believes that Globe
Wireless offers the only such service combining radio, satellite, and internet
communications to the maritime community. See "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations - Comparison of
Fiscal Year 2000 to Fiscal Year 1999 - Other - Equity in Net Earnings (Losses)
of 50% or Less Owned Companies."
In the fourth quarter of 2000, the Company acquired 23 newly constructed inland
river hopper barges ("barges") for aggregate consideration of $6.0 million and
acquired SCF Corporation ("SCF"), a company that owns and operates barges and
that was substantially owned and controlled by certain SEACOR directors.
Forty-three barges and a 50% interest in a partnership that owns 11 additional
barges acquired in the SCF transaction were valued at $7.5 million. The SCF
acquisition resulted in the Company's issuance of 121,064 shares of Common Stock
net of 254,381 shares owned by SCF, which have been returned to treasury, and
the payment to SCF's shareholders of $3.3 million in cash, representing SCF's
working capital. SEACOR's directors, including all directors who were
disinterested with respect to the transaction, unanimously approved the SCF
acquisition.
At December 31, 2000, the Company owned 66 barges and a 50% interest in a
partnership that owned 11 barges and managed 204 barges for third parties.
Subsequent to year-end, the Company committed to the construction of an
additional 60 barges at an aggregate cost of approximately $14.9 million. These
newly constructed barges are expected to enter service in 2001 and the Company
expects a certain number of these barges to be purchased by third parties and
managed by the Company.
In addition, the Company, from time to time, makes investments in other related
businesses. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Comparison of Fiscal
11
Year 2000 to Fiscal Year 1999 - Other - Equity in Net Earnings (Losses) of 50%
or Less Owned Companies and Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources - Capital
Expenditures."
Employees
As of December 31, 2000, the Company directly or indirectly employed
approximately 3,100 persons. Of the individuals directly employed by the
Company, approximately 1,475 work aboard offshore support vessels and 500 work
ashore. The Company's administrative, base support, and managerial personnel
include 372 offshore marine, 110 environmental, 5 barge and 13 corporate
employees.
The Company also indirectly employs personnel for its various operations. West
Africa Offshore, Ltd., a Nigerian corporation of which the Company owns 40%,
assists with the management of the Company's vessels operating offshore Nigeria
and, at December 31, 2000, employed approximately 160 shipboard and 70
administrative, shore support, and managerial personnel. At December 31, 2000,
approximately 80 shipboard personnel were provided to the Company for its North
Sea offshore support vessel operations pursuant to an agreement with SMIT. At
December 31, 2000, Celtic Pacific Ship Management Overseas, Ltd. and Guernsey
Ship Management Ltd., vessel manning agencies, provided approximately 815
shipboard personnel for the Company's North Sea standby safety vessel
operations.
12
Glossary of Selected Offshore Marine Industry Terms
Anchor Handling Towing Supply Vessels. Anchor handling towing supply vessels are
equipped with winches capable of towing drilling rigs and lifting and
positioning their anchors and other marine equipment. They range in size and
capacity and are usually characterized in terms of horsepower and towing
capacity. For U.S. Gulf of Mexico service, anchor handling towing supply vessels
typically require 6,000 horsepower or more to position and service
semi-submersible rigs drilling in deep water areas.
Bareboat Charter. This is a lease arrangement under which the lessee (charterer)
is responsible for all crewing, insurance, and other operating expenses, as well
as the payment of bareboat charter hire to the vessel owner.
Crew Boats. Crew boats transport personnel and cargo to and from production
platforms and rigs. Older crew boats, early 1980's built, are generally 100 feet
to 110 feet in length and are generally designed for speed to transport
personnel and small amounts of cargo. Newer crew boat designs, also known as
Fast Support Intervention Vessels, are generally larger, 130 feet to 180 feet in
length, and have greater cargo carrying capacities. They are used primarily to
transport cargo on a time sensitive basis.
Freight Vessels. Freight vessels have a substantial amount of clear deck space
for cargo and adequate stability to handle tiers of containers or
overdimensional cargo. Speed and fuel consumption are also important factors in
this vessel category.
Line Handling Vessels. Line handling vessels are outfitted with special
equipment to assist tankers while they are loading at single buoy moorings. They
have a high degree of maneuverability, are well fendered and include pollution
dispersal capability.
Mini-Supply Vessels. Mini-supply vessels serve drilling and production
facilities and support offshore construction and maintenance work. They range in
size between 125 feet to 155 feet in length and many are able to carry liquid
mud, methanol, fuel and water. Mini-supply vessels have bow thrusters for added
maneuverability and are well suited for deepwater production support.
Mini-supply vessels do not have below deck bulk tanks for the carriage of dry
mud or cement.
Oil Spill Response Vessels. Oil spill response vessels are specially equipped to
respond to oil spill emergencies and are certified as such by the U.S. Coast
Guard.
Overall Utilization. For any vessel with respect to any period, the ratio of
aggregate number of days worked by such vessel to total calendar days available
during such period.
Project and Geophysical Vessels. These vessels generally have special features
to meet the requirements of specific jobs. The special features include large
deck spaces, high electrical generating capacities, slow controlled speed and
unique thrusters, extra berthing facilities, and long range capabilities. These
vessels are primarily used for well stimulation and for the deployment of
seismic data gathering equipment.
Rate Per Day Worked. For any vessel with respect to any period, the ratio of
total charter revenue of such vessel to the aggregate number of days worked by
such vessel for such period.
Standby Safety Vessels. Standby safety vessels operate in the UK sector of the
North Sea. They typically remain on station to provide a safety backup to
offshore rigs and production facilities, carry special equipment to rescue
personnel, are equipped to provide first aid and shelter and, in some cases,
also function as supply vessels.
Supply Vessels. Supply vessels serve drilling and production facilities and
support offshore construction and maintenance work. They are differentiated from
other vessels by cargo flexibility and capacity. The size of a vessel typically
determines deck capacity, although vessels constructed after 1979 with exhaust
stacks forward have better configurations for cargo stowage and handling. In
addition to deck cargo, such as pipe or drummed materials on pallets, supply
vessels transport liquid mud, potable and drill water, diesel fuel and dry bulk
cement. Generally, customers prefer vessels with large liquid mud and bulk
cement capacity and large areas of clear deck space. For certain jobs, other
characteristics such as maneuverability, fuel efficiency, or firefighting
capability may also be important.
Time Charter. This is a lease arrangement under which the entity providing the
vessel is responsible for all crewing, insurance, and other operating expenses
and the charterer only pays a time charter hire fee to the providing entity.
Towing Supply Vessels. These vessels perform the same functions as supply
vessels but are equipped with more powerful engines (3,000 to 5,000 horsepower)
and deck mounted winches, giving them the added capability to perform general
towing duties, buoy setting and limited anchor handling work. Towing supply
vessels are primarily used in international operations, which require the
additional versatility that these vessels offer relative to supply vessels.
Utility Vessels. These vessels provide service to offshore production facilities
and also support offshore maintenance and construction work. Their capabilities
include the transportation of fuel, water, deck cargo, and personnel. They range
in length from 96 feet to 125 feet and can, depending on the vessel design, have
enhanced features such as firefighting and pollution response capabilities.
13
ITEM 2. PROPERTIES
SEACOR's executive offices are located in Houston, Texas and New York, New York,
and its offshore marine and drilling service segments' headquarters are located
in Houston, Texas. Headquarters for the Company's environmental service segment
are located in New York, New York.
The Company also maintains additional facilities in support of its offshore
marine, logistics, environmental service, and inland barge operations.
Domestically, the offshore marine service segment's largest base is located in
Morgan City, Louisiana and includes administrative offices, warehouse
facilities, and a waterfront site for vessel dockage. Other domestic offshore
marine service segment facilities are located primarily in Louisiana cities that
both serve as ports-of-call for many customers and represent strategically
dispersed operating bases along the U.S. Gulf of Mexico. In its foreign
operations, the Company's offshore marine service segment maintains offices in
Rotterdam, the Netherlands, Paris, France, Lowestoft, London, and Montrose,
United Kingdom, and Singapore in support of its widely dispersed foreign fleet.
The Company's logistics operation has sites in Morgan City, Cameron, Venice, and
Belle Chasse, Louisiana that serve as operating bases or provide administrative
offices and warehouse facilities. The Company's environmental service segment
maintains offices in 14 cities, primarily located in the United States. The
Company's inland barge operation's headquarters are in St. Louis, Missouri. The
Company believes that its facilities, including waterfront locations used for
vessel dockage and the undertaking of certain vessel repair work, provide an
adequate base of operations for the foreseeable future. Information regarding
the Company's fleet is included in Item 1 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal and other proceedings which are
incidental to the conduct of its business. The Company believes that none of
these proceedings, if adversely determined, would have a material adverse effect
on its financial condition 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 2000.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Officers of the Company serve at the pleasure of the Board of Directors. The
name, age, and offices held by each of the executive officers of the Company at
December 31, 2000 were as follows:
Name Age Position
- ---------------------- --- ------------------------------------------
Charles Fabrikant 56 Chairman of the Board of Directors,
President, and Chief Executive Officer
Randall Blank 50 Executive Vice President, Chief Financial
Officer and Secretary
Milton Rose 56 Vice President
Rodney Lenthall 55 Vice President
Lenny Dantin 48 Vice President and Controller
Dick Fagerstal 40 Vice President and Treasurer
Alice Gran 51 Vice President and General Counsel
Andrew Strachan 53 Vice President
Charles Fabrikant has been Chairman of the Board and Chief Executive Officer of
SEACOR, and has served as a director of certain of SEACOR's subsidiaries, since
December 1989. He has been President of SEACOR since October 1992. For more than
five years preceding its acquisition by SEACOR in December 2000, Mr. Fabrikant
served as Chairman of the Board and Chief Executive Officer of SCF. For more
than the past five years, Mr. Fabrikant has been the President of Fabrikant
International Corporation ("FIC"), a privately owned corporation engaged in
marine operations and investments that may be deemed an affiliate of the
Company. Mr. Fabrikant is a director of Chiles Offshore and Globe Wireless. Mr.
Fabrikant is a licensed attorney admitted to practice in the State of New York
and in the District of Columbia.
Randall Blank has been Executive Vice President and Chief Financial Officer of
SEACOR since December 1989 and has been the Secretary since October 1992. From
December 1989 to October 1992, Mr. Blank was Treasurer of SEACOR. In addition,
Mr. Blank has been a director of certain of SEACOR's subsidiaries since January
1990. Mr. Blank is a director of Chiles Offshore and Globe Wireless.
Mr. Rose has been a Vice President of SEACOR and President and Chief Operating
Officer of its Americas Division since January 1993. Mr. Rose also serves as a
director of various SEACOR joint ventures. From 1985 to January 1993,
14
Mr. Rose was Vice President-Marine Division for Bay Houston Towing Company, a
provider of ship docking and contract towing services.
Rodney Lenthall has been a Vice President of SEACOR and President of its
International Division since November 2000. In addition, Mr. Lenthall has been a
director of certain SEACOR subsidiaries since May 1998 and of Globe Wireless
since 1999. Mr. Lenthall was a director of Ocean Group PLC, a major UK transport
company, from 1979 until April 1998 and served as a consultant to the Company
from May 1998 until November 2000. He is also a supervisory board director of
Viktor Lenac Shipyard, Croatia and a Director of Shipowners' P&I Club
(Luxembourg).
Lenny Dantin has been Vice President and Controller of SEACOR since March 1991.
From October 1992 to May 2000, Mr. Dantin was Treasurer of SEACOR. In addition,
Mr. Dantin has been an officer and director of certain of SEACOR's subsidiaries
since January 1990. Since 1994, Mr. Dantin has been a director of the two
companies comprising the TMM Joint Venture.
Dick Fagerstal has been Vice President of Finance since August 1997 and has
served as its Treasurer since May 2000. Mr. Fagerstal has also served as a
director of certain of SEACOR's subsidiaries since August 1997. Mr. Fagerstal
has been the Senior Vice President and Chief Financial Officer of Chiles
Offshore since August 1997 and has served as its Secretary since February 1998.
Mr. Fagerstal also served as a director of Chiles Offshore since August 1997.
From February 1986 to August 1997, Mr. Fagerstal served as a bank officer for
the New York office of Den norske Bank ASA.
Alice Gran has been Vice President and General Counsel of SEACOR since July
1998. From 1978 until joining SEACOR, Ms. Gran was a partner in the Washington,
D.C. law firm of Fort & Schlefer, L.L.P. Ms. Gran is a licensed attorney
admitted to practice in the District of Columbia.
Andrew Strachan has been a Vice President of SEACOR since April 1997 and a
director and officer of certain SEACOR subsidiaries since December 1996. From
prior to 1996 and until joining SEACOR, Mr. Strachan held various positions with
SMIT that included Group Director for SMIT's offshore shipping business.
15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market for the Company's Common Stock
SEACOR's Common Stock trades on the New York Stock Exchange (the "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, which have been
restated to give effect for the three-for-two stock split effected June 15,
2000.
HIGH LOW
---- ---
Fiscal Year Ending December 31, 1999:
First Quarter ...................................... 36.3333 25.6667
Second Quarter ..................................... 38.4167 32.3333
Third Quarter ...................................... 37.0417 31.6667
Fourth Quarter ..................................... 35.7917 29.7917
Fiscal Year Ending December 31, 2000:
First Quarter ...................................... 41.7500 29.0417
Second Quarter ..................................... 44.7083 36.2500
Third Quarter ...................................... 46.7500 38.0000
Fourth Quarter ..................................... 54.5000 38.8750
Fiscal Year Ending December 31, 2001:
First Quarter (through March 23, 2001) ............. 54.5000 45.0000
The closing sale price of SEACOR's Common Stock, as reported on the NYSE
Composite Tape on March 23, 2001, was $45.13 per share. As of March 23, 2001,
there were 141 holders of record of the 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 such
dividends in the foreseeable future. Instead, SEACOR intends to retain earnings
for working capital and to finance the expansion of its business. Pursuant to
the terms of the Company's $100.0 million reducing revolving credit facility
with Den norske Bank ASA (the "DnB Credit Facility"), SEACOR may declare and pay
dividends if it is in full compliance with the covenants contained in the DnB
Credit Facility and no Events of Default, as defined in the DnB Credit Facility,
have occurred and are continuing or will occur after giving effect to any
declaration or distribution to shareholders. In addition to any contractual
restrictions, as a holding company, SEACOR's ability to pay any cash dividends
is dependent on the earnings and cash flows of its operating subsidiaries and
their ability to make funds available to SEACOR. At December 31, 2000, the
Company had $80.9 million available for future borrowings under the DnB Credit
Facility. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."
The payment of future cash dividends, if any, would be made only from assets
legally available therefor, and would also depend on the Company's financial
condition, results of operations, current and anticipated capital requirements,
plans for expansion, restrictions under then existing indebtedness, and other
factors deemed relevant by the Company's Board of Directors in its sole
discretion.
Recent Sales of Unregistered Securities
On December 20, 2000, SCF was merged with and into SEACOR. In connection
therewith, SEACOR issued 375,445 shares of Common Stock to the former
shareholders of SCF. No underwriters were involved and there were no
underwriting discounts or commissions. The securities were issued in reliance
upon the exemption from registration provided under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), based upon the fact
that the common stock was issued by the issuer in a transaction not involving a
public offer.
On April 19, 2000, SEACOR issued 125,423 shares of Common Stock to the former
stockholders of Boston Putford in connection with the acquisition of Boston
Putford by SEACOR. The consideration for such issuance consisted of all the
issued and outstanding capital stock of Boston Putford. No underwriters were
involved and there were no underwriting discounts or commissions. The securities
were issued in reliance upon the exemption from registration provided under
Section 4(2) of the Securities Act based upon the fact that the common stock was
issued by the issuer in a transaction not involving a public offer.
16
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. Consolidated Financial
Statements" included in Parts II and IV, respectively, of this Annual Report on
Form 10-K.
Year Ended December 31,
-------------------------------------------------------------------------
1996 1997 1998 1999 2000
--------- ----------- ----------- ----------- -----------
Income Statement Data:
Operating Revenues ................................ $ 224,444 $ 346,948 $ 385,791 $ 289,425 $ 339,941
Costs and Expenses:
Operating expenses ............................. 124,668 167,493 187,722 166,786 201,452
Administrative and general ..................... 22,304 28,299 36,102 34,744 39,548
Depreciation and amortization .................. 24,967 36,538 36,449 41,282 51,189
--------- ----------- ----------- ----------- -----------
Operating Income .................................. 52,505 114,618 125,518 46,613 47,752
Net interest income (expense) ..................... (2,155) (1,412) 2,548 (1,835) (10,027)
Gain from equipment sales or retirements, net ..... 2,264 61,928 38,338 1,677 7,628
Other income (expense)(1) ......................... (646) 569 6,492 (2,939) 16,305
--------- ----------- ----------- ----------- -----------
Income before income taxes, minority interest,
Equity in net earnings of 50% or less owned
Companies, and extraordinary item .............. 51,968 175,703 172,896 43,516 61,658
Income tax expense ................................ 18,535 61,384 60,293 15,249 20,580
--------- ----------- ----------- ----------- -----------
Income before minority interest, equity in
Net earnings of 50% or less owned
Companies, and extraordinary item .............. 33,433 114,319 112,603 28,267 41,078
Minority interest in (income) loss of subsidiaries 244 (301) (1,612) 1,148 (3,393)
Equity in net earnings of 50% or less owned
companies ...................................... 1,283 5,575 13,627 330 (3,565)
--------- ----------- ----------- ----------- -----------
Income before extraordinary item .................. 34,960 119,593 124,618 29,745 34,120
Extraordinary item - gain (loss) on
extinguishment of Debt, net of tax .............. (807) (439) 1,309 1,191 --
--------- ----------- ----------- ----------- -----------
Net income ........................................ $ 34,153 $ 119,154 $ 125,927 $ 30,936 $ 34,120
========= =========== =========== =========== ===========
Net income per common share(2) :
Basic earnings per common share .............. $ 1.98 $ 5.74 $ 6.39 $ 1.73 $ 2.02
Diluted earnings per common share ............ 1.83 4.98 5.50 1.69 1.92
Statement of Cash Flows Data:
Cash provided by operating activities .......... $ 58,737 $ 105,548 $ 122,141 $ 47,872 $ 65,251
Cash provided by (used in) investing activities (100,120) (215,087) (149,202) 39,779 (31,012)
Cash provided by (used in) financing
activities ................................... 161,482 135,468 27,308 (82,686) 14,222
Other Financial Data:
EBITDA(3) ...................................... $ 79,730 $ 157,341 $ 174,293 $ 91,977 $ 90,537
Balance Sheet Data (at period end):
Cash and cash equivalents(4) ................... $ 149,053 $ 175,381 $ 175,267 $ 178,509 $ 224,219
Total assets ................................... 636,455 1,019,801 1,257,975 1,196,991 1,132,730
Total long-term debt, including current portion 220,452 360,639 474,921 468,493 377,955
Stockholders' equity ........................... 351,071 474,014 542,782 508,130 552,552
- --------------------
(1) In 1998, 1999, and 2000, other income primarily included gains and losses
from the sale of marketable securities, derivative transactions, and the
sale of investments in 50% or less owned companies. In 2000, other income
additionally included a gain upon the sale of shares of Chiles Offshore.
(2) Computations of basic and diluted net income per common share give effect
for SEACOR's June 15, 2000 three-for-two stock split.
(3) As used herein, "EBITDA" is operating income plus depreciation and
amortization, amortization of deferred mobilization costs, which is
included in marine operating expenses, minority interest in (income) loss
of subsidiaries and equity in net earnings of 50% or less owned companies,
before applicable income taxes. EBITDA should not be considered by an
investor as an alternative to net income, as an indicator of the Company's
operating performance, or as an alternative to cash flows as a better
measure of liquidity.
(4) Cash and cash equivalents excluded restricted cash in 1997, 1998, 1999, and
2000 of $46,983, $69,234, $21,985, and $40,759, respectively, and
marketable securities in 1996, 1997, 1998, 1999, and 2000 of $311,
$160,440, $194,703, $73,005, and $82,181, respectively.
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Offshore Marine Services
The Company provides marine transportation, logistics, and related services
largely dedicated to supporting offshore oil and gas exploration and production.
Marine transportation services are provided through the operation, domestically
and internationally, of offshore support vessels. The Company's vessels deliver
cargo and personnel to offshore installations, tow and handle the anchors of
drilling rigs and other marine equipment, support offshore construction and
maintenance work, and provide standby safety support. The Company's vessels also
are used for special projects, such as well stimulation, seismic data gathering,
freight hauling, line handling, salvage, and oil spill emergencies. Logistics
services include shorebase, marine transport, and other supply chain management
services in support of offshore exploration and production operations.
Operating revenues are affected primarily by the number of vessels owned and
bareboat and time chartered-in as well as rates per day worked and utilization
of the Company's fleet.
Rates per day worked and utilization of the Company's fleet are a function of
demand for and availability of marine vessels, which is closely aligned with the
level of exploration and development of offshore areas. The level of exploration
and development of offshore areas is affected by both short-term and long-term
trends in oil and gas prices which, in turn, are related to the demand for
petroleum products and the current availability of oil and gas resources. The
table below sets forth rates per day worked and utilization data for the
Company's fleet during the periods indicated.
Year Ended December 31,
------------------------------
1998 1999 2000
-------- -------- --------
Rates per Day Worked ($):(1)(2)
Supply and Towing Supply ................... 6,572 5,432 5,163
Anchor Handling Towing Supply .............. 12,283 11,869 11,410
Crew ....................................... 2,701 2,493 2,645
Standby Safety ............................. 6,620 6,045 5,328
Utility and Line Handling .................. 1,904 1,691 1,645
Geophysical, Freight, and Other ............ 6,120 5,576 5,341
Overall Fleet ........................... 4,254 3,929 3,865
Overall Utilization (%):(1)
Supply and Towing Supply ................... 89.4 69.9 74.7
Anchor Handling Towing Supply .............. 85.8 73.5 70.7
Crew ....................................... 93.2 83.0 94.3
Standby Safety ............................. 99.5 74.1 79.1
Utility and Line Handling .................. 91.6 65.9 57.1
Geophysical, Freight, and Other ............ 99.2 55.7 60.4
Overall Fleet ........................... 91.5 73.1 75.7
- --------------------
(1) Rates per day worked is the ratio of total charter revenue to the total
number of vessel days worked. Rates per day worked and overall utilization
figures exclude owned vessels that are bareboat chartered-out, vessels
owned by corporations that participate in pooling arrangements with the
Company, joint venture vessels, and managed vessels and include vessels
bareboat and time chartered-in by the Company.
(2) Revenues for certain of the Company's vessels, primarily its standby safety
vessels, are earned in foreign currencies, primarily British Pounds
Sterling, and have been converted to U.S. dollars at the weighted average
exchange rate for the periods indicated.
Opportunities to buy and sell vessels are actively monitored by the Company to
maximize overall fleet utility and flexibility. Since 1994, fleet size has grown
significantly from 83 offshore support vessels at December 31, 1994 to 305
offshore support vessels at December 31, 2000. This expansion has been achieved
principally through the purchase of offshore support vessels from its
competitors, newly constructed vessels, and equity holdings in joint ventures
that own offshore support vessels. The Company has also sold many vessels from
its fleet, particularly those that were less marketable serving the Company's
ordinary operations. Since 1997, proceeds from the sale of certain vessels have
been deposited into restricted cash accounts for purposes of acquiring newly
constructed U.S.-flag vessels and qualifying for the Company's temporary
deferral of taxable gains realized from the sale of those vessels.
From time to time, the Company bareboat or time charters-in vessels. A bareboat
charter is a vessel lease under which the lessee ("charterer") is responsible
for all crewing, insurance, and other operating expenses, as well as the payment
of bareboat charter hire to the providing entity. A time charter is a lease
under which the entity providing the vessel is responsible for all crewing,
insurance, and other operating expenses and the charterer only pays a time
charter hire fee to the providing entity. Operating revenues for vessels owned
and bareboat or time chartered-in are earned at similar rates. However,
operating expenses associated with vessels bareboat and time chartered-in
include charter hire expenses that, in turn, are included in vessel expenses,
but exclude depreciation expense.
18
7
At various times, the Company provides management services to other vessel
owners. Charter revenues and vessel expenses of those managed vessels are not
generally included in the Company's operating results, but the Company does
recognize a management fee in operating revenue.
The Company also bareboat charters-out vessels. Operating revenues for these
vessels are generally lower than for vessels owned and operated or bareboat
chartered-in by the Company, because vessel expenses, normally recovered through
charter revenue, are the burden of the charterer. Operating expenses include
depreciation expense if vessels owned by the Company are chartered-out. At
December 31, 2000, there were 17 vessels bareboat chartered-out, including 7 and
2 vessels operated by the Company's joint ventures and environmental service
segment, respectively.
The table below sets forth the Company's fleet structure at the dates indicated.
At December 31,
----------------------
Fleet Structure 1998 1999 2000
- ----------------------------------------------------- ---- ---- ----
Owned ............................................... 225 222 227
Bareboat and Time Chartered-in ...................... 27 28 21
Managed ............................................. 4 1 5
Joint Ventures and Pools(1):
TMM Joint Venture ............................... 17 14 17
SMIT Joint Venture .............................. 18 15 15
Pelican Joint Venture ........................... -- -- 7
Other Joint Ventures ............................ 4 6 8
SEAVEC Pool ..................................... 5 4 5
Avian Fleet Pool (formally, Saint Fleet Pool)... 7 4 --
---- ---- ----
Overall Fleet .................................. 307 294 305
==== ==== ====
- --------------------
(1) See "Item 1. Business - Joint Ventures and Pooling Arrangements."
Vessel operating expenses are primarily a function of fleet size and utilization
levels. The most significant vessel operating expense items are wages paid to
marine personnel, maintenance and repairs, and marine insurance. In addition to
variable vessel operating expenses, the offshore marine business segment incurs
fixed charges related to the depreciation of property and equipment.
Depreciation is a significant operating expense, and the amount related to
vessels is the most significant component.
A portion of the Company's revenues and expenses, primarily related to the
Company's North Sea operations, are received or paid in foreign currencies. For
financial statement reporting purposes, these amounts are translated into U.S.
dollars at the weighted average exchange rates during the relevant period.
Overall, the percentage of the Company's offshore marine operating revenues
derived from foreign operations, whether in U.S. dollars or foreign currencies,
approximated 37% in the twelve month period ended December 31, 2000.
Regulatory drydockings, which are a substantial component of marine maintenance
and repair costs, are expensed when incurred. Under applicable maritime
regulations, vessels must be drydocked twice in a five-year period for
inspection and routine maintenance and repair. The Company follows an asset
management strategy pursuant to which it defers required drydocking of selected
marine vessels and voluntarily removes these marine vessels from operation
during periods of weak market conditions and low rates per day worked. Should
the Company undertake a large number of drydockings in a particular fiscal
quarter or fiscal year or put through survey a disproportionate number of older
vessels, which typically have higher drydocking costs, comparative results may
be affected. For the years ended December 31, 1998, 1999, and 2000, drydocking
costs totaled $10.8 million, $5.5 million, and $7.3 million, respectively.
During those same periods, the Company completed the drydocking of 95, 81, and
80 marine vessels, respectively.
As of December 31, 2000, the average age of vessels owned by the Company was
approximately 15.2 years. Excluding the Company's standby safety vessels, the
average age of the Company's fleet was approximately 13.9 years. The Company
believes that after offshore support vessels have been in service for
approximately 25 years (20 years for crewboats and 30 years for certain standby
safety vessels), the level of expenditures (which typically increase with vessel
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
acquiring new or used vessels, or that the Company's financial resources will be
sufficient to enable it to make capital expenditures for such purposes.
Operating results are also affected by the Company's participation in various
joint ventures. The Company has formed or acquired interests in offshore marine
joint ventures and entered into pooling arrangements with various third parties
to enter new markets, enhance its marketing capabilities, and facilitate
operations in certain foreign markets. These arrangements allow the Company to
expand its fleet while diversifying the risks and reducing the capital outlays
associated with independent fleet expansion. The Company also participates in a
logistics joint venture whose mission has been to provide shorebase, marine
transport, and other supply chain management services in support of offshore
exploration and production operations principally in the U.S. Gulf of Mexico.
See "Item 1. Business - Joint Ventures and Pooling Arrangements."
19
The Company actively monitors opportunities to buy and sell offshore support
vessels that will maximize the overall utility and flexibility of its fleet. In
2000, the Company acquired (i) 18 standby safety vessels in the Boston Putford
transaction, including vessels participating in joint ventures, (ii) a 50%
equity interest in a company that owned 6 and bareboat chartered-in 1 crew
vessel, (iii) 6 towing supply vessels, and (iv) 2 crew and 1 anchor handling
towing supply vessels that were newly constructed. Following year-end, the
Company continued fleet expansion with the acquisition of the 6 Plaisance, 2
Rincon, and 24 Cheramie vessels, including 1 under construction. The cost of the
Plaisance Marine and Cheramie acquisitions will be allocated under the purchase
method of accounting based upon the fair value of the assets acquired and
liabilities assumed, plus amounts of transaction cost and the related deferred
tax effect of the acquisition. Should the purchase transaction with Stirling
Shipping be concluded, 14 additional vessels will be added to the Company's
fleet. In 2000, the Company sold 21 vessels, including 3 that were the subject
of leaseback arrangements, and cancelled the bareboat charter-in of 7 vessels.
Following year-end, the Company sold 4 additional vessels.
The worldwide offshore rig count in 2000 increased sharply over 1999 following
the recovery from the oil price collapse of 1998 and as drilling programs
escalated to take advantage of much higher natural gas prices. The number of
offshore rigs in operation grew significantly in North America, West Africa, the
North Sea, and the Far East. There were approximately 516 offshore rigs in
operation worldwide at year-end, representing a 19% increase over the count at
the prior year-end. The number of offshore rigs drilling in U.S. Gulf of Mexico
deepwater, where water depths exceed 1,000 feet, were at a record high in 2000,
according to the Mineral Management Service of the Department of Interior.
With higher commodity prices for oil and gas, many U.S. Gulf of Mexico
exploration and production companies have announced increased budgets for
exploration and production projects and are expected to increase their capital
expenditure programs for 2001. Although day rates for offshore rigs in the North
Sea have recently improved, utilization has been steady at approximately 85%.
Rig utilization offshore West Africa has risen steadily throughout 2000, and
utilization commitments for 2001 appear strong. Deepwater drilling activities
offshore West Africa have also been on the rise. Rig utilization in the Far East
improved during 2000 and further expansion of offshore activity is expected in
the coming year.
In 2000, utilization of the Company's domestic offshore support fleet averaged
77.3%, or 4% higher than in the prior year. Demand improved for supply and
towing supply and crew vessels but declined for anchor handling towing supply
and utility vessels. In 2000, the average rate per day worked for the Company's
domestic fleet was $3,314, or 2% higher than in the prior year. Rates per day
worked improved between years for all vessel types except utility and project.
In 2000, utilization of the Company's foreign offshore support fleet averaged
71.2%, or 2% higher than in the prior year. Demand improved for standby safety
and crew vessels but declined for supply and towing supply and anchor handling
towing supply vessels. In 2000, the average rate per day worked for the
Company's foreign fleet was $5,468, or 10% lower than in the prior year. Rates
per day worked declined between years for all vessel types with the exception of
crew. Rates per day worked for anchor handling towing supply and supply and
towing supply vessels have recently improved.
Environmental Services
The Company's environmental service business provides contractual oil spill
response and other related training and consulting services. The Company's
clients include tank vessel owner/operators, refiners and terminal operators,
exploration and production facility operators, and pipeline operators. The
Company charges a retainer fee to its customers for ensuring by contract the
availability (at predetermined rates) of its response services and equipment.
Retainer services include employing a staff to supervise response to an oil
spill emergency and maintaining specialized equipment, including marine
equipment, in a ready state for emergency and spill response as contemplated by
response plans filed by the Company's customers in accordance with OPA 90 and
various state regulations. The Company maintains relationships with numerous
environmental sub-contractors to assist with response operations and equipment
maintenance and provide trained personnel for deploying equipment in a spill
response.
Pursuant to retainer agreements entered into with the Company, certain vessel
owners pay in advance to the Company an annual retainer fee based upon the
number and size of vessels in each such owner's fleet and in some circumstances
pay the Company additional fees based upon the level of each vessel owner's
voyage activity in the U.S. The Company recognizes the greater of revenue earned
by voyage activity or the portion of the retainer earned in each accounting
period. Certain vessel and facility owners pay a fixed fee or a fee based on
volume of petroleum product transported for the Company's retainer services and
such fee is recognized ratably throughout the year. The Company's retainer
agreements with vessel owners generally range from one to three years while
retainer arrangements with facility owners are as long as ten years.
Spill response revenue is dependent on the magnitude of any one spill response
and the number of spill responses
20
within a given fiscal period. Consequently, spill response revenue can vary
greatly between comparable periods and the revenue from any one period is not
indicative of a trend or of anticipated results in future periods. Costs of oil
spill response activities relate primarily to (i) payments to sub-contractors
for labor, equipment and materials, (ii) direct charges to the Company for
equipment and materials, (iii) participation interests of others in gross
profits from oil spill response, and (iv) training and exercises related to
spill response preparedness.
The Company charges consulting fees to customers for customized training
programs, its planning of and participation in customer oil spill response drill
programs and response exercises, and other special projects.
The principal components of the Company's operating costs are salaries and
related benefits for operating personnel, payments to sub-contractors, equipment
maintenance, and depreciation. These expenses are primarily a function of
regulatory requirements and the level of retainer business.
In 1996, NRC expanded its coverage area to include the West Coast of the United
States through CPA. On November 30, 2000, NRC purchased Crowley Marine's 50%
interest in CPA and began a termination process. As of that date, all of CPA's
duty of performance under existing contracts was assigned and transferred to
NRC. CPA will be dissolved upon completion of the termination process.
Investment in Drilling Services Business
The Company consolidated the reporting of financial information of drill rig
operator Chiles Offshore, due to the Company's majority ownership, from its
inception in 1997 until the Chiles IPO. On September 22, 2000, Chiles Offshore
completed the Chiles IPO. As a consequence, the Company's ownership interest in
Chiles Offshore was reduced from 55.4% to 27.3%. Because its ownership interest
has declined below 50%, the Company no longer consolidates Chiles' financial
condition, results of operations, and cash flows and, as of September 22, 2000,
began accounting for its interest in Chiles using the equity method.
Chiles operated as a development stage company from its inception and until July
1999, devoting substantially all its efforts constructing the Rigs, raising
capital, and securing contracts for the Rigs. In 1997, Chiles commenced
construction of two ultra-premium jackup drilling rigs, the Chiles Columbus and
the Chiles Magellan, which were delivered to Chiles in May 1999 and October
1999, respectively. Since its delivery and final commissioning in April 2000,
Chiles bareboat chartered-in and operated the Tonala.
The number of rigs Chiles operates is a function of rigs delivered to service
through its capital expenditure program and rigs placed in operation under
charter. Chiles typically operates its rigs on well-to-well contracts that last
approximately 30 to 90 days. Presently, Chiles contracts and operates it rigs in
the U.S. Gulf of Mexico. Chiles has two rigs under construction, one that is
expected to be completed during the second quarter of 2002, and one that is
expected to be completed during the third quarter of 2002.
Chiles derives its revenue primarily from drilling contracts to drill wells for
oil and gas operators. These drilling contracts typically provide for base
dayrates, which may be subject to adjustments based on performance incentives.
Fees and expenses for transporting Chiles' rigs between sites are included in
revenues and expenses. For the twelve months ended December 31, 2000,
utilization was 100% for Chiles' rigs and the effective average dayrate was
$56,230. During the available operating days in 1999, Chiles' rigs earned an
effective average dayrate of $33,598 and achieved 99.8% utilization. In
calculating the effective average dayrates, Chiles divides revenues earned by
its rigs during the period by the total number of days in the period. In
addition, Chiles' effective average dayrates include any bonuses, which may be
triggered by achieving performance and safety targets in some of Chiles'
contracts and mobilization revenue.
Rig operating expenses primarily consist of crew, insurance, and repair and
maintenance costs.
General and administrative expenses primarily consist of management,
administration, marketing, finance and legal expenses.
Other Investments
In 1998, the Company acquired an interest in the predecessor of Globe Wireless
and now owns approximately 38% of its voting units. Globe Wireless is a provider
of advanced marine telecommunication services using satellite and high frequency
radio technologies. It owns and operates a worldwide network of high frequency
radio stations to offer email, data transfer, and telex services to ships at a
much lower cost than competing satellite services. The Company believes that
Globe Wireless offers the only such service combining radio, satellite, and
internet communications to the maritime community.
In the fourth quarter of 2000, the Company acquired 23 newly constructed barges
and SCF. The cost of the SCF
21
acquisition was allocated under the purchase method of accounting based upon the
fair value of the assets acquired and liabilities assumed, plus amounts of
transaction costs and the related deferred tax effect of the acquisition.
Goodwill of approximately $1.2 million was recorded in connection with this
acquisition and is being amortized to expense over 12 years. At December 31,
2000, the Company owned 66 barges and a 50% interest in a partnership that owned
11 barges and managed 204 barges for third parties.
In addition, the Company, from time to time, makes investments in other related
businesses.
22
Results of Operations
The following table sets forth operating revenue and operating profit for the
Company's various business segments for the periods indicated, in thousands of
dollars. The table includes the complete operating results of Chiles, the
Company's drilling service business segment, until completion of the Chiles IPO
on September 22, 2000. As a consequence of the Chiles IPO, the Company's
ownership interest in Chiles Offshore declined below a majority, and the Company
began accounting for its investment in Chiles Offshore under the equity method.
The Company evaluates the performance of each operating segment based upon the
operating profit of the segment including gains or losses from equipment sales
and retirements and the sale of interest in 50% or less owned companies and
equity in the net earnings of 50% or less owned companies, but excluding
minority interest in income or losses of subsidiaries, net interest, gains or
losses from derivative transactions and the sale of marketable securities, gain
upon sale of shares of Chiles, corporate expenses, and income taxes. Operating
profit is defined as Operating Income as reported in "Item 8. Financial
Statements and Supplementary Data - Consolidated Statements of Income" included
in Part IV of this Annual Report on Form 10-K excluding corporate expenses and
net of certain other income and expense items. The disaggregation of financial
results has been prepared using a management approach. Segment assets exclude
those considered by the Company to be of a corporate nature. Corporate assets
include SEACOR and its wholly owned subsidiaries' unrestricted cash, marketable
securities, certain other assets, and property and equipment related to
corporate activities. Information disclosed in the table presented below may
differ from separate financial statements reported by subsidiaries of the
Company due to certain elimination entries required in consolidation.
Corporate
Marine Environmental Drilling and Other Total
2000 --------- ------------- --------- ---------- -----------
Operating Revenues -
External Customers .................... $ 276,473 $ 24,996 $ 37,380 $ 1,092(a) $ 339,941
Intersegment .......................... 458 -- -- (458) --
--------- -------- --------- --------- -----------
Total ................................ $ 276,931 $ 24,996 $ 37,380 $ 634 $ 339,941
========= ======== ========= ========= ===========
Operating Profit ........................ $ 33,830 $ 3,655 $ 14,615 $ 200 $ 52,300
Gains from Equipment Sales or
Retirements, net ..................... 7,616 13 -- -- 7,629
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies ................. (396) 619 458 (5,667) (4,986)
Minority Interest in Income of
Subsidiaries ......................... -- -- -- (3,393) (3,393)
Net Interest Expense .................... -- -- -- (10,027) (10,027)
Derivative Income, net .................. -- -- -- 6,292 6,292
Gains from Sale of Marketable Securities,
net .................................. -- -- -- 7,562 7,562
Gain upon Sale of Shares of Chiles ...... -- -- -- 4,023 4,023
Corporate Expenses ...................... -- -- -- (6,121) (6,121)
Income Taxes ............................ -- -- -- (19,159) (19,159)
--------- -------- --------- --------- -----------
Income (Loss) before Extraordinary
Item................................. $ 41,050 $ 4,287 $ 15,073 $ (26,290) $ 34,120
========= ======== ========= ========= ===========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies ..... $ 43,078 $ 432 $ 68,122 $ 26,062 $ 137,694
Other Segment Assets .................... 635,208 29,516 -- 20,267 684,991
--------- -------- --------- --------- -----------
Subtotal Segment Assets ................. 678,286 29,948 68,122 46,329 822,685
Corporate ............................... -- -- -- 310,045 310,045
--------- -------- --------- --------- -----------
Total Assets.......................... $ 678,286 $ 29,948 $ 68,122 $ 356,374 $ 1,132,730
========= ======== ========= ========= ===========
Depreciation and Amortization ........... $ 41,936 $ 4,005 $ 5,144 $ 104 $ 51,189
=================================================================================================================
1999
Operating Revenues -
External Customers .................... $ 258,177 $ 22,659 $ 7,651 $ 938 (b) $ 289,425
Intersegment .......................... 528 161 -- (689) --
--------- -------- --------- --------- -----------
Total ................................ $ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
========= ======== ========= ========= ===========
Operating Profit (Loss) ................. $ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or
Retirements, net ........................ 1,661 16 -- -- 1,677
Loss from Sale of Interest in a 50% or
Less Owned Company ...................... (72) -- -- -- (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies .................. 4,906 814 -- (3,107) 2,613
Minority Interest in Loss of Subsidiaries -- -- -- 1,148 1,148
Net Interest Expense .................... -- -- -- (1,835) (1,835)
Derivative Losses, net .................. -- -- -- (1,323) (1,323)
Losses from Sale of Marketable
Securities, net.......................... -- -- -- (279) (279)
Corporate Expenses ...................... -- -- -- (5,169) (5,169)
Income Taxes ............................ -- -- -- (17,533) (17,533)
--------- -------- --------- --------- -----------
Income (Loss) before Extraordinary
Item................................. $ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
========= ======== ========= ========= ===========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies ..... $ 41,989 $ 1,288 $ -- $ 33,999 $ 77,276
Other Segment Assets .................... 621,197 27,650 199,294 -- 848,141
--------- -------- --------- --------- -----------
Subtotal Segment Assets .............. 663,186 28,938 199,294 33,999 925,417
Corporate ............................... -- -- -- 271,574 271,574
--------- -------- --------- --------- -----------
Total Assets ......................... $ 663,186 $ 28,938 $ 199,294 $ 305,573 $ 1,196,991
========= ======== ========= ========= ===========
Depreciation and Amortization ........... $ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=================================================================================================================
23
Corporate
Marine Environmental Drilling and Other Total
1998 --------- ------------- --------- ---------- -----------
Operating Revenues --
External Customers .................... $ 359,611 $ 26,180 $ -- $ -- $ 385,791
Intersegment .......................... -- -- -- -- --
--------- -------- --------- --------- -----------
Total ................................ $ 359,611 $ 26,180 $ -- $ -- $ 385,791
========= ======== ========= ========= ===========
Operating Profit (Loss) ................. $ 127,403 $ 4,479 $ (823) $ -- $ 131,059
Gains from Equipment Sales or
Retirements, net ..................... 38,227 111 -- -- 38,338
Gain from Sale of Interest in a 50% or
Less Owned Company ................... 1,197 -- -- -- 1,197
Equity in Net Earnings of 50% or Less
Owned Companies ...................... 13,657 554 -- -- 14,211
Minority Interest in Income of
Subsidiaries ......................... -- -- -- (1,612) (1,612)
Net Interest Income ..................... -- -- -- 2,548 2,548
Derivative Income, net .................. -- -- -- 3,273 3,273
Gains from Sale of Marketable Securities,
net .................................. -- -- -- 1,827 1,827
Corporate Expenses ...................... -- -- -- (5,344) (5,344)
Income Taxes ............................ -- -- -- (60,879) (60,879)
--------- -------- --------- --------- -----------
Income (Loss) before Extraordinary
Item .............................. $ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
========= ======== ========= ========= ===========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies ...... $ 54,954 $ 524 $ -- $ -- $ 55,478
Other Segment Assets .................... 770,614 29,103 177,832 -- 977,549
--------- -------- --------- --------- -----------
Subtotal Segment Assets ............... 825,568 29,627 177,832 -- 1,033,027
Corporate ............................... -- -- -- 224,948 224,948
--------- -------- --------- --------- -----------
Total Assets ........................ $ 825,568 $ 29,627 177,832 $ 224,948 $ 1,257,975
========= ======== ========= ========= ===========
Depreciation and Amortization ........... $ 32,534 $ 3,846 56 $ 13 $ 36,449
=================================================================================================================
(a) Revenues attributable to the Company's inland barge business that commenced
operation in the third quarter of 2000.
(b) Revenues attributable to the Company's telecommunications business that was
acquired in April 1999 and sold in July 1999.
Revenues and operating profits attributed to geographic areas were based upon
the country of domicile for offshore marine and drilling service segment
customers and the country in which the Company provided oil spill protection or
other related training and consulting services for environmental service segment
customers. The Company considers long-lived assets to be property and equipment
that has been distributed to geographical areas based upon the assets' physical
location during the applicable period. Certain of the Company's offshore marine
service segment's long-lived vessel assets relocate between its geographical
areas of operation. The costs of long-lived vessel assets that are relocated
have been allocated between geographical areas of operation based upon length of
service in the applicable region. The following table is presented in thousands
of dollars for the years ended December 31.
24
United United Other
States Nigeria Kingdom Foreign Total
------------ ----------- ----------- ----------- -----------
2000:
Revenue:
Offshore Marine.......... $ 175,011 $ 15,544 $ 39,565 $ 46,811 $ 276,931
Environmental............ 23,816 -- -- 1,180 24,996
Drilling................. 37,380 -- -- -- 37,380
Other.................... 634 -- -- -- 634
------------ ----------- ----------- ----------- -----------
$ 236,841 $ 15,544 $ 39,565 $ 47,991 $ 339,941
============ =========== =========== =========== ===========
Operating Profit:
Offshore Marine.......... $ 36,507 $ (4,626) $ (3,917) $ 5,866 $ 33,830
Environmental............ 3,293 -- -- 362 3,655
Drilling................. 14,615 -- -- -- 14,615
Other.................... 200 -- -- -- 200
------------ ----------- ----------- ----------- -----------
$ 54,615 $ (4,626) $ (3,917) $ 6,228 $ 52,300
============ =========== =========== =========== ===========
Long-Lived Assets:
Offshore Marine.......... 277,294 40,119 47,898 136,396 501,707
Environmental............ 10,764 -- -- 248 11,012
Drilling................. - -- -- -- --
Other.................... 14,359 -- -- -- 14,359
------------ ----------- ----------- ----------- -----------
$ 302,417 $ 40,119 $ 47,898 $ 136,644 $ 527,078
==================================================================================================
1999:
Revenue:
Offshore Marine.......... $ 156,663 $ 19,324 $ 24,610 $ 58,108 $ 258,705
Environmental............ 22,110 -- 33 677 22,820
Drilling................. 7,651 -- -- -- 7,651
Other.................... 249 -- -- -- 249
------------ ----------- ----------- ----------- -----------
$ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
============ =========== =========== =========== ===========
Operating Profit:
Offshore Marine.......... 40,291 (5,237) (755) 11,859 46,158
Environmental............ 4,604 -- 30 167 4,801
Drilling................. (585) -- -- -- (585)
Other.................... 144 -- -- -- 144
------------ ----------- ----------- ----------- -----------
$ 44,454 $ (5,237) $ (725) $ 12,026 $ 50,518
============ =========== =========== =========== ===========
Long-Lived Assets:
Offshore Marine.......... 346,573 40,486 33,083 91,328 511,470
Environmental............ 11,836 -- -- 194 12,030
Drilling................. 191,697 -- -- -- 191,697
Other.................... -- -- -- -- --
------------ ----------- ----------- ----------- -----------
$ 550,106 $ 40,486 $ 33,083 $ 91,522 $ 715,197
==================================================================================================
United United Other
States Nigeria Kingdom Foreign Total
------------ ----------- ----------- ----------- -----------
1998:
Revenue:
Offshore Marine.......... $ 209,434 $ 30,593 $ 28,465 $ 91,119 $ 359,611
Environmental............ 25,217 62 59 842 26,180
Drilling................. -- -- -- -- --
------------ ----------- ----------- ----------- -----------
$ 234,651 $ 30,655 $ 28,524 $ 91,961 $ 385,791
============ =========== =========== =========== ===========
Operating Profit:
Offshore Marine.......... 82,100 6,516 5,097 33,690 127,403
Environmental............ 4,477 42 34 (74) 4,479
Drilling................. (823) -- -- -- (823)
------------ ----------- ----------- ----------- -----------
$ 85,754 $ 6,558 $ 5,131 $ 33,616 $ 131,059
============ =========== =========== =========== ===========
Long-Lived Assets:
Offshore Marine.......... 393,566 47,257 31,416 139,124 611,363
Environmental............ 13,085 -- -- 119 13,204
Drilling................. 294 -- -- -- 294
------------ ----------- ----------- ----------- -----------
$ 406,945 $ 47,257 $ 31,416 $ 139,243 $ 624,861
==================================================================================================
Comparison of Fiscal Year 2000 to Fiscal Year 1999
Offshore Marine Services
Operating Revenues. The Company's offshore marine service segment's operating
revenues increased $18.2 million, or 7%, in the twelve month period ended
December 31, 2000 compared to the twelve month period ended December 31, 1999.
Operating revenues rose due primarily to the acquisition of the Boston Putford
standby safety vessel fleet, the consolidation of ELI's financial results with
those of the Company, and the entry into service of vessels both constructed for
and chartered-in by the Company. These increases were offset by a decline in
operating revenues between comparable periods due primarily to lower utilization
and rates per day worked, the sale of vessels, and an increase in the number of
vessels bareboat chartered-out.
The construction, acquisition, and bareboat charter-in of 17 standby safety (the
Boston Putford fleet), 6 supply and
25
towing supply, 6 crew, 4 anchor handling towing supply, and 2 utility vessels
resulted in a $33.9 million increase in operating revenues. During December
1999, the Company acquired a majority ownership interest in ELI, a provider of
logistics services that include shorebase, marine transport, and other supply
chain management services in support of offshore exploration and production
operations. From December 1999, the financial condition, results of operations,
and cash flows of ELI are reflected in the Company's consolidated financial
statements. Prior to that date, the Company reported its interest in ELI as an
investment in a 50% or less owned company that was accounted for under the
equity method. Operating revenues rose by $11.9 million between years due to the
consolidation of ELI with the Company.
Lower utilization resulted in an approximate $4.4 million decline in operating
revenues. Demand declined for the Company's U.S. anchor handling towing supply
and utility, North Sea standby safety, and West African and Other Foreign supply
and towing supply vessels. Additionally, three U.S. anchor handling towing
supply vessels were removed from service for emergency repairs. These declines
were offset by the improvement in utilization of the Company's U.S. crew and
supply and towing supply, West African anchor handling towing supply and crew,
and Other Foreign anchor handling towing supply fleets.
Lower rates per day worked resulted in an approximate $9.2 million decline in
operating revenues. Rates per day worked declined in the Company's U.S. and West
African anchor handling towing supply and its North Sea standby safety and
supply and towing supply fleets. Revenues additionally declined due to lower
rates per day worked in the Company's U.S. utility, West African supply and
towing supply, and Other Foreign anchor handling towing supply and supply and
towing supply fleets. These declines were offset by an improvement in rates per
day worked earned by the Company's U.S. crew and supply and towing supply
fleets.
The sale and charter-in expiration of 12 utility, 11 supply and towing supply, 7
anchor handling towing supply, 7 crew, 2 standby safety and 1 project vessel
resulted in a $11.6 million decline in operating revenues. Operating revenues
also declined $3.1 million as certain vessels previously operated by the Company
have been bareboat chartered-out.
The Company's fleet's average rate per day worked rose $612, or 17%, from the
first to the fourth quarter of 2000. Rates per day worked improved significantly
for the Company's domestic and foreign fleet of supply and towing supply and
crew vessels. The Company's fleet's utilization rose by 13% to 78.8% from the
first to the fourth quarter of 2000. Demand for foreign and domestic vessels
improved over 31% and 7%, respectively. Utilization improved due primarily to a
rise in demand for foreign and domestic supply and towing supply and domestic
anchor handling towing supply vessels and the acquisition of the Boston Putford
North Sea standby safety fleet that is highly utilized.
Operating Profit. The Company's offshore marine segment's operating profit
declined $12.3 million, or 27%, in the twelve month period ended December 31,
2000 compared to the twelve month period ended December 31, 1999 due primarily
to those factors adversely affecting operating revenues as outlined above.
Operating profits also declined due to higher operating expenses that resulted
from (i) emergency repairs performed on 3 large anchor handling towing supply
vessels, (ii) drydocking 4 laid-up vessels for return to active service, (iii)
an increase in personal injury claim costs, (iv) rising per average employee
health care costs, (v) enhanced training programs primarily in support of
seamen's need to meet the certification requirements pursuant to the
International Convention on Standards of Training, Certification, and
Watchkeeping for Seafarers, and (vi) a greater number of main engine overhauls.
At December 31, 2000, the Company had 33 vessels out of service, including 26
that require drydocking prior to re-entering operations. The removal of vessels
from service resulted primarily from weak demand and low rates per day worked
for the Company's U.S. Gulf of Mexico utility fleet. In September 2000, the
Company increased wages paid to seamen working domestically in response to
competition for qualified personnel.
Gains from Equipment Sales or Retirements, Net. Net gains from equipment sales
increased $6.0 million, or 359%, in the twelve month period ended December 31,
2000 compared to the twelve month period ended December 31, 1999. Nine supply
and towing supply, 8 utility, 2 standby safety, 1 crew, and 1 anchor handling
towing supply vessel were sold in 2000, whereas, 11 crew, 1 anchor handling
towing supply, and 2 utility vessels were sold in 1999. Gains rose between years
due to an increase in more valuable vessel sales and a decline in deferred sale
profits pursuant to sale-leaseback transactions. In accordance with generally
accepted accounting principles, gains realized in sale-leaseback transactions
are deferred in certain circumstances and amortized to income as reductions in
rental expense over the applicable lease terms.
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity losses
were $0.4 million in the twelve month period ended December 31, 2000, whereas,
equity earnings were $4.9 million in the comparable period of the prior year.
Joint venture operating results declined between years due primarily to reduced
profits of the TMM Joint Venture and the SMIT Joint Ventures. Reduced profits in
the TMM Joint Venture resulted primarily from an increase in reserves for
doubtful accounts receivable and estimated income tax expenses recorded in prior
26
periods and lower rates per day worked earned by the venture's fleet. A vessel
sale and the termination of one chartered-in vessel by the SMIT Joint Ventures
also resulted in reduced profits.
Environmental Services
Operating Revenues. The environmental business segment's operating revenues
increased $2.2 million, or 10%, in the twelve month period ended December 31,
2000 compared to the twelve month period ended December 31, 1999 due primarily
to an increase in the number and severity of oil spills managed by the Company
that was partially offset by a decline in retainer revenues.
Operating Profit. The environmental business segment's operating profit
decreased $1.1 million, or 24%, in the twelve month period ended December 31,
2000 compared to the twelve month period ended December 31, 1999. Operating
expenses rose between years due to the addition of a marine operating base in
St. Croix and higher drydocking expenses. The expansion of operations in the
Caribbean was pursuant to a 10-year contract with a major customer. Operating
results also fell due to a decline in revenue from retainer services.
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity earnings
decreased $0.2 million, or 24%, in the twelve month period ended December 31,
2000 compared to the twelve month period ended December 31, 1999 due primarily
to a decrease in the severity of oil spills managed by CPA. On November 30,
2000, NRC purchased Crowley Marine's 50% interest in CPA and began a termination
process. As of that date, all of CPA's duty of performance under existing
contracts was assigned and transferred to NRC. CPA will be dissolved upon
completion of the termination process.
Drilling Services
Operating Revenues. The drilling business segment's operating revenues increased
$29.7 million, or 389%, in the period from January 1, 2000 through September 21,
2000, the last date of operation prior to the Company's deconsolidation of
Chiles, compared to the twelve month period ended December 31, 1999. The Chiles
Columbus was placed in service during June 1999 and the Chiles Magellan was
placed in service during November 1999. Prior to such time, and since its
inception, Chiles had not engaged in operations other than managing construction
of the Rigs and related matters. Revenues also increased due to the commencement
of operations in April 2000 of the Tonala and improvement in rates per day
worked.
Operating Profit. In the period from January 1, 2000 through September 21, 2000,
the last date of operation prior to the Company's deconsolidation of Chiles, the
drilling business segment's operating profits were $14.6 million, whereas, in
the twelve month period ended December 31, 1999, the drilling business segment
incurred operating losses of $0.6 million. The improvement in operating results
between years was due primarily to the factors affecting operating revenues as
outlined above.
As a consequence of the Chiles IPO, the Company's ownership interest in Chiles
Offshore was reduced from 55.4% to 27.3% and consequently, because its ownership
interest declined below 50%, the Company no longer consolidates Chiles'
financial condition, results of operations, and cash flows. As of September 22,
2000, the Company began accounting for its interest in Chiles Offshore using the
equity method.
Other
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity losses in
the twelve month period ended December 31, 2000 and December 31, 1999 resulted
from the Company's recognition of its share of the operating losses of Globe
Wireless. Due to an ability to significantly influence the operating activities
of Globe Wireless, the Company began recording its proportionate share of the
operating results of Globe Wireless during the second quarter of 1999. Prior to
this time, the Company carried its investment in Globe Wireless at cost. Current
and prior year results included $0.5 million and $0.2 million, respectively, of
equity earnings from a bulk carrier joint venture. In 2000, the bulk carrier
joint venture recognized a gain from the sale of a construction contract for a
Handymax Dry-Bulk ship in which the Company's equity interest totaled $0.5
million.
Minority Interest in Income (Loss) of Subsidiaries. The Company reported
minority interest in $3.4 million of income in 2000 and $1.1 million of losses
in 1999 that primarily related to the business activities of Chiles. Chiles was
not profitable until 2000 following the commencement of rig operations in June
1999.
Net Interest Expense. Net interest expense rose $8.2 million in the twelve month
period ended December 31, 2000 compared to the twelve month period ended
December 31, 1999. Interest expense rose due primarily to a decline in interest
capitalized after substantial completion of the Company's offshore marine vessel
and Chiles' rig construction programs in 1999 and indebtedness incurred with
respect to the purchase of two vessels. This increase was partially offset by
lower interest expense resulting primarily from reduced indebtedness following
the deconsolidation of
27
Chiles and the entry into swap agreements. Interest income declined also due to
the Chiles deconsolidation and as a result of the exchange of certain notes
receivable for equity holdings in Globe Wireless. During the twelve months of
2000 and 1999, the Company capitalized interest of $0.6 million and $9.8
million, respectively, with respect to the construction of the Rigs and offshore
marine vessels.
Derivative Income (Loss), Net. In the twelve month period ended December 31,
2000, the Company recognized net derivative income of $6.3 million, whereas, in
the twelve month period ended December 31, 1999, the Company recognized net
derivative losses of $1.3 million. In September 2000, Chiles Offshore purchased
and redeemed substantially all of its then outstanding Chiles 10.0% Senior Notes
Due 2008 (the "Chiles 10.0% Notes") with proceeds from the Chiles IPO, which
resulted in the termination of certain swap agreements entered into by the
Company with respect to those Notes, and as a further result, the Company
recognized derivative income of $6.6 million. Net derivative losses were also
incurred in 2000 and 1999 from commodity price hedging arrangements in which the
settlement prices quoted on the New York Mercantile Exchange ("NYMEX") exceeded
the contract prices for various natural gas and crude oil positions. See "Item
7A. Quantitative and Qualitative Disclosures About Market Risk" for additional
discussion.
Gains (Losses) from Sale of Marketable Securities, Net. In the twelve month
period ended December 31, 2000, the Company realized net gains from the sale of
marketable securities of $7.6 million, whereas, in the twelve month period ended
December 31, 1999, the Company recognized net losses from the sale of marketable
securities of $0.3 million. Net gains in 2000 resulted primarily from the sale
of equity securities during periods when the market values were greater than
those at the dates of purchase. These gains were partially offset by losses
realized from the sale of interest bearing securities during periods when
interest rates exceeded those in effect at the dates of purchase. Net losses in
1999 resulted primarily from the sale of interest bearing securities during
periods when interest rates exceeded those in effect at the dates of purchase.
Corporate Expenses. In the twelve month period ended December 31, 2000 compared
to the twelve month period ended December 31, 1999, corporate expenses increased
$1.0 million due primarily to an increase in wage and related benefit costs.
Comparison of Fiscal Year 1999 to Fiscal Year 1998
Offshore Marine Services
Operating Revenue. The Company's offshore marine service segment's operating
revenues decreased $100.9 million, or 28%, in the twelve month period ended
December 31, 1999 compared to the twelve month period ended December 31, 1998
due primarily to lower utilization and rates per day worked and the sale of
vessels. The adverse effect of reduced drilling and production support
activities due to declines in oil and gas prices was partially offset by an
increase in operating revenues resulting from the entry into service of vessels
both constructed for and chartered-in by the Company.
Operating revenues declined approximately $71.2 million in the twelve month
period ended December 31, 1999 compared to the twelve month period ended
December 31, 1998 due to lower vessel utilization. Demand for all classes of the
Company's U.S. Gulf of Mexico fleet was adversely affected and declines in
demand for its supply and towing supply and utility vessels were particularly
significant. The Company's domestic fleet utilization ranged from 68.9% to 79.0%
throughout 1999 and averaged 75.4% in December, whereas, in 1998, utilization
ranged from 82.8% to 97.2%. Utilization of the Company's offshore West Africa
supply and towing supply and anchor handling towing supply, North Sea standby
safety, and Far East and Other Foreign regions anchor handling towing supply and
supply and towing supply vessels also declined. Utilization of the Company's
vessels operating offshore West Africa was 84.9% in 1998 compared to 60.9% in
1999. North Sea standby safety vessel utilization was 99.5% in 1998 compared to
74.1% in 1999, and in the Far East and Other Foreign regions, utilization
declined from 85.6% in 1998 to 76.0% in 1999.
Operating revenues declined approximately $32.8 million in the twelve month
period ended December 31, 1999 compared to the twelve month period ended
December 31, 1998 due to declines in rates per day worked of the Company's
worldwide fleet. Approximately 60% of the decrease resulted from lower rates per
day worked of the Company's domestic fleet of supply and towing supply, crew,
and utility vessels. Rates per day worked of the Company's domestic supply and
towing supply vessels declined sharply, averaging $7,000 during the first
quarter of 1998 compared to $4,275 in the fourth quarter of 1999. Rates per day
worked also declined for the Company's offshore West Africa anchor handling
towing supply and supply and towing supply, Far East and Other Foreign anchor
handling towing supply, and North Sea standby safety and supply and towing
supply vessels.
Vessels removed from the Company's operations due to their sale or the
cancellation of certain charter-in agreements resulted in an approximate $27.6
million decline in operating revenues between years. The entry into
28
operation of vessels constructed for the Company or chartered-in increased
operating revenues by approximately $36.5 million between years. Revenues also
declined between years as certain vessels previously operated by the Company
have been bareboat chartered-out.
Operating Profit. The Company's offshore marine business segment's operating
profit declined $81.2 million, or 64%, in the twelve month period ended December
31, 1999 compared to the twelve month period ended December 31, 1998 due
primarily to those factors adversely affecting operating revenues outlined
above. Operating profits were also adversely affected between comparable years
due to an increase in foreign currency translation losses resulting from the
revaluation of Dutch Guilder cash deposits during periods of a strengthening
U.S. dollar. At December 31, 1999, weak demand and low rates per day worked
resulted in the Company removing 46 vessels from service, including 27 that
require drydocking prior to re-entering operation. The vessels removed from
service were primarily from the utility fleet that operated in the U.S. Gulf of
Mexico. Performance based compensation expense for administrative personnel
declined between comparable years in response to declining profits. Operating
costs also declined between years, as bad debt expenses recognized in 1998 did
not recur in 1999 and the Company recovered certain receivables written-off in
prior periods.
Gains from Equipment Sales or Retirements, Net. Net gains from equipment sales
and retirements decreased $36.6 million in the twelve month period ended
December 31, 1999 compared to the twelve month period ended December 31, 1998
due to fewer and less valuable vessel sales. In the twelve month period ended
December 31, 1999, the Company sold 14 vessels, whereas, during the fiscal year
1998, the Company sold 34 vessels. During 1999, the Company sold 11 crew, 2
utility, and 1 anchor handling towing supply vessel. In 1998, 8 towing supply, 8
anchor handling towing supply, 7 utility, 6 supply, and 5 crew vessels were
sold. Of the vessels sold in 1999 and 1998, 5 and 11, respectively, were
subsequently bareboat chartered-in pursuant to sale-leaseback transactions, and
certain of the gains realized from those sales were deferred and are being
credited to income as reductions in rental expense over the life of the
respective bareboat charters.
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity earnings
declined $8.8 million in the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998 due primarily to:
(i) reduced drilling and production activities that resulted from declines in
oil and gas prices, (ii) lower gains from less valuable vessel sales, (iii)
reduced fleet size in the SMIT Joint Ventures resulting from vessel sales, and
(iv) increased trade accounts receivable bad debt reserves with respect to
customers of the TMM Joint Venture.
In 1999, the Board of Directors of one of the SMIT Joint Ventures adopted a plan
of liquidation due to such venture's limited opportunities for future
investments and growth and the Company received a $10.0 million liquidating
dividend. The SMIT joint venture to be liquidated was structured in 1996
pursuant to the SMIT Transaction and commenced operations with nine owned
vessels. This joint venture shall continue operations until such time as its
remaining fleet (three vessels at December 31, 1999) can be sold or otherwise
liquidated. With respect to the Company's equity interest in the earnings of the
SMIT joint venture to be liquidated, the Company has recorded $3.0 million of
income tax expense in 1999. In prior periods, no income tax expense was recorded
in connection with this foreign joint venture's operations in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
Environmental Services
Operating Revenue. The environmental service segment's operating revenues
decreased $3.4 million, or 13%, in the twelve month period ended December 31,
1999 compared to the twelve month period ended December 31, 1998. The decrease
was due primarily to a decline in the number and severity of oil spills managed
by the Company and reduced retainer revenues that resulted from the loss of a
large customer.
Operating Profit. The environmental service segment's operating profit increased
$0.3 million, or 7%, in the twelve month period ended December 31, 1999 compared
to the twelve month period ended December 31, 1998. Declines in operating
revenues were offset by the Company's reduction in operating and general and
administrative expenses.
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity earnings
increased $0.3 million in the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998 due primarily to an
increase in the oil spill response activities of CPA.
Drilling Services
The Chiles Columbus was placed in service during June 1999 and the Chiles
Magellan was placed in service during November 1999. Prior to such time, and
since inception, Chiles has not engaged in operations other than managing
29
construction of the Rigs and related matters. With the delivery and
commissioning of the two Rigs, Chiles generated operating revenues of $7.7
million. Chiles has incurred operating losses since its inception in 1997.
Other
Equity in Net Earnings (Losses) of 50% or Less Owned Companies. Equity losses in
the twelve month period ended December 31, 1999 resulted primarily from the
Company's recognition of its share of the operating losses of Globe Wireless.
Due to an ability to significantly influence the operating activities of Globe
Wireless, the Company began recording its proportionate share of the operating
results of Globe Wireless during the second quarter of 1999. Prior to this time,
the Company carried its investment in Globe Wireless at cost.
Net Interest Income (Expense). In the twelve month period ended December 31,
1999, the Company incurred net interest expense, whereas, in comparable periods
of 1998, the Company realized net interest income. Between comparable periods,
funds invested in interest bearing securities declined due primarily to the
Company's use of cash for the purchase of property and equipment, Common Stock,
and the retirement of certain indebtedness. The decrease in interest income was
partially offset by a decline in interest costs that resulted primarily from the
Company's debt repurchase program and entry into swap agreements. See "Liquidity
and Capital Resources - Stock and Debt Repurchase Program and Item 7A.
Quantitative and Qualitative Disclosures About Market Risk."
Derivative Income (Loss), Net. In the twelve month period ended December 31,
1999, the Company recognized a net loss of $1.3 million from commodity price
hedging arrangements, whereas, in the twelve month period ended December 31,
1998, the Company recognized a net gain of $3.3 million. In 1999, the net loss
was due primarily to the settlement prices quoted on the New York Mercantile
Exchange ("NYMEX") exceeding the contract prices for various natural gas and
crude oil positions; whereas, during 1998, the net gain was due primarily to the
contract prices exceeding the settlement prices quoted on the NYMEX for various
natural gas positions. See "Item 7A. Quantitative and Qualitative Disclosures
About Market Risk" for additional discussion of the Company's commodity price
hedging arrangements.
Gains (Losses) from Sale of Marketable Securities, Net. In the twelve month
period ended December 31, 1999, losses resulted primarily from the sale of
interest bearing securities during periods when interest rates exceeded those in
effect at date of purchase. These losses were substantially offset by gains
realized from the sale of other marketable securities. In the twelve months
ended December 31, 1998, gains resulted primarily from the sale of interest
bearing securities during periods when interest rates were lower than those in
effect at date of purchase.
Corporate Expenses. In the twelve month period ended December 31, 1999 compared
to the twelve month period ended December 31, 1998, corporate expenses declined
$0.2 million due primarily to a reduction in performance based compensation
expense in response to declining profits.
Liquidity and Capital Resources
General
The Company's ongoing liquidity requirements arise primarily from its need to
service debt, fund working capital, acquire, construct, or improve equipment and
make other investments. Management believes that cash flow from operations will
provide sufficient working capital to fund the Company's operating needs. The
Company may, from time to time, issue shares of Common Stock, preferred stock,
debt, or a combination thereof, or sell vessels to finance the acquisition of
equipment and businesses or make improvements to existing equipment.
The Company's cash flow levels and operating revenues will be determined
primarily by the size of the Company's offshore marine fleet, rates per day
worked and overall utilization of the Company's offshore marine vessels and
retainer, spill response, and consulting activities of the Company's
environmental service business. The volatility of oil and gas prices, the level
of offshore production and exploration activity, and other factors beyond the
Company's control will directly affect the Company's marine service business.
Cash and Marketable Securities
At December 31, 2000, the Company's cash and investments in marketable
securities totaled $347.2 million, including $224.2 million of unrestricted cash
and cash equivalents, $82.2 million of investments in marketable securities, and
$40.8 million of restricted cash. The Company's cash and investments in
marketable securities increased $73.7 million in the twelve month period ended
December 31, 2000 compared to the twelve month period ended December 31, 1999.
See "Cash Generation and Deployment" below.
Restricted cash at December 31, 2000 is intended for use in defraying costs to
construct offshore support vessels for the Company. At December 31, 2000, the
Company had funded $10.9 million in offshore marine vessel
30
construction costs from unrestricted cash balances, and subject to the Maritime
Administration's approval, the Company expects such amounts to be reimbursed
from construction reserve fund restricted cash accounts.
In the years 1997 through 2000, the Company deposited proceeds from the sale of
certain offshore support vessels into escrow and construction reserve fund bank
accounts for purposes of acquiring newly constructed U.S.-flag vessels and
qualifying for the Company's temporary deferral of taxable gains realized from
the sale of the vessels. Escrow accounts were established pursuant to certain
exchange and escrow agreements and restrict the use of funds deposited therein
for a period of six months. Should replacement offshore marine vessels not be
delivered prior to expiration of the applicable six month escrow period, funds
then remaining in the escrow accounts will be released to the Company for
general use. The Company has also established, pursuant to Section 511 of the
Merchant Marine Act, 1936, as amended, joint depository construction reserve
fund accounts with the Maritime Administration. From date of deposit,
withdrawals from these accounts are subject to prior written approval of the
Maritime Administration. Funds must be committed for expenditure within three
years or be released for the Company's general use. Gains from vessel sales
previously deferred would become immediately taxable upon release to the
Company, for general use, of sale proceeds that were deposited into joint
depository construction reserve fund accounts.
In 1998, net proceeds from the sale of the Chiles 10.0% Notes were deposited
into escrow accounts in accordance with certain escrow agreements between Chiles
and U.S. Bank Trust National Association, as Escrow Agent. The use of these
funds was limited to (i) partially funding the construction of the Rigs, (ii)
paying interest on the Chiles 10.0% Notes through the first two semi-annual
interest payment dates, and (iii) providing working capital. At December 31,
1999, the net proceeds from the sale of the Chiles 10.0% Notes had been expended
in accordance with the terms of the escrow agreements.
Investments in marketable securities at December 31, 2000 were primarily
comprised of debt securities issued by the U.S. Government and also included
equity securities, corporate debt securities, debt securities of states of the
United States, and debt securities of the government of the United Kingdom. Of
the Company's investments in debt securities, approximately 78% have contractual
maturities of five years or less.
Cash Generation and Deployment
Cash flow provided from operating activities during the twelve month period
ended December 31, 2000 totaled $65.3 million and increased $17.4 million, or
36%, from the prior year due primarily to the commencement of rig operations by
Chiles and the improvement in cash flow from changes in working capital. This
increase was partially offset by a decline in the Company's marine service
segment's operating profit.
In the twelve month period ended December 31, 2000, the Company generated $195.5
million from investing and financing activities. Available-for-sale securities
were sold for $90.3 million. Twenty-one offshore support vessels were sold for
$56.8 million. Proceeds, including cash collateral, of $19.5 million were
received upon the termination of certain SEACOR swap agreements in connection
with Chiles Offshore's purchase and redemption of substantially all of the
Chiles 10.0% Notes. Chiles Offshore completed an offering of membership
interests and the Company realized $17.7 million, net of offering costs.
Dividends received from 50% or less owned companies totaled $9.0 million,
including $5.0 million distributed by a SMIT Joint Venture that has adopted a
plan of liquidation. Additional cash was generated primarily from the repayment
of notes due from 50% or less owned companies.
In the twelve month period ended December 31, 2000, the Company used $212.3
million in its investing and financing activities. Capital expenditures for
property and equipment, primarily related to rig and barge construction and the
acquisition and construction of offshore marine vessels, totaled $73.8 million.
Marketable securities were acquired for $60.7 million. Restricted cash balances
rose by $18.8 million as deposits into vessel joint depository construction
reserve fund accounts exceeded withdrawals into such accounts generated from the
sale of equipment. Chiles Offshore repaid $15.0 million of outstanding
indebtedness borrowed under its bank facility. The Company paid $15.0 million
primarily to acquire Boston Putford (net of cash acquired) and the majority of
Vector's equity interest in the VEESEA Joint Venture. The deconsolidation of
Chiles resulted in an $11.7 million reduction in cash balances. Investments in
and advances to 50% or less owned companies totaled $7.1 million and related
primarily to organizing the Pelican Joint Venture. SEACOR Securities
(hereinafter defined) were repurchased pursuant to the Stock and Debt Repurchase
Program for $4.8 million. Additional cash was used primarily for the scheduled
repayments of outstanding indebtedness and the settlement of certain derivative
transactions.
Capital Expenditures
Property and equipment capital expenditures totaled $226.8 million, $140.5
million, and $73.8 million in 1998, 1999, and 2000, respectively. Property
additions in each of those years included the Company's acquisition,
construction, and improvement of offshore support vessels. Capital expenditures
in 1998 and 1999 included cost to construct Rigs and
31
2000 also included cost to construct barges. The offshore marine service
segment's construction program that began in 1996 reflects the Company's
commitment to serve the offshore oil and gas industry with equipment it believes
is well suited for deep water drilling and production activities.
At December 31, 2000, the Company was committed to the construction of 8
offshore support vessels at an approximate aggregate cost of $43.1 million of
which $6.3 million had been expended. Following year-end, the Company completed
three separate transactions that increased its fleet size by 32 vessels,
including a vessel presently under construction with delivery scheduled for
April 2001. The aggregate consideration paid in these three transactions was
$102.5 million, including $85.0 million in cash, the assumption of $14.3 million
of debt, and the issuance of Common Stock valued at $3.2 million at the time of
the purchase agreement. See "Item 1. Business - Offshore Marine Services" for
additional discussion. Following year-end, the Company also committed to the
construction of 2 additional offshore support vessels and 60 barges for an
aggregate cost of $21.4 million. The offshore support vessels are expected to
enter service over the next two years and the barges are expected to enter
service in 2001. The Company expects a certain number of the barges to be
purchased by third parties and managed by the Company. On March 6, 2001, SEACOR
and Stirling Shipping signed a letter of intent for SEACOR to acquire all of the
issued share capital of Stirling Shipping and certain subsidiaries. Through its
acquisition of Stirling Shipping, SEACOR will acquire 12 vessels and contracts
for the construction of 2 new vessels that are scheduled for delivery during the
first half of 2002. Purchase consideration is estimated to total (pound)58.0
million ($85.1 million based on exchange rates in effect at March 6, 2001) and
will be payable approximately 50% in cash, 20% in shares of Common Stock, 30% in
the form of promissory notes. Stirling Shipping's long term debt is projected to
be (pound)38.3 million at closing ($56.2 million based on exchange rates in
effect on March 6, 2001). Through its acquisition of Stirling Shipping, SEACOR
will acquire 12 vessels all currently operating in the North Sea and contracts
for the construction of 2 new vessels. Of the 12 vessels, 9 are supply vessels
and 3 are anchor handling towing supply vessels. The new construction contracts
are for two 15,000 bhp anchor handling towing supply vessels at a total cost of
approximately (pound)31.6 million ($46.4 million based on exchange rates in
effect on March 6, 2001). The vessels will be built in the UK and are scheduled
for delivery during the first half of 2002.
In 1999, joint venture corporations in which the Company owns a 50% equity
interest committed to the construction of two Handymax Dry-Bulk ships. During
the third quarter of 2000, one of the two construction contracts was sold. A
commitment remains to complete the construction of the remaining ship for an
approximate cost of $19.5 million, 75% of which is expected to be financed from
external sources. The ship presently under construction is expected to enter
service in 2001. In 2001, the Company and its dry-bulk business partners sold
and bareboat chartered back a 1990 built Handymax Dry-bulk ship, the only
dry-bulk vessel operated since commencement of this business venture in 1998.
The Company may make selective acquisitions of offshore support vessels or
barges, fleets of offshore support vessels or barges, oil spill response
equipment, or expand the scope and nature of its environmental and logistics
services, or invest in businesses related to its existing operations. The
Company also may upgrade or enhance its offshore support vessels or construct
offshore support vessels to remain competitive in the marketplace. Management
anticipates that such expenditures would be funded through a combination of
existing cash balances, cash flow provided by operations, sale of existing
equipment and, potentially, through the issuance of additional indebtedness,
shares of Common Stock, or the Company's preferred stock.
Credit Facilities
Under the terms of the DnB Credit Facility that was established in November
1998, the Company may borrow up to $100.0 million aggregate principal amount (as
such amount may be adjusted, the "Maximum Committed Amount") under unsecured
reducing revolving credit loans maturing on November 17, 2004. The Maximum
Committed Amount will automatically decrease semi-annually by 4.54% beginning
November 17, 1999, with the balance payable at maturity. Outstanding borrowings
will bear interest at annual rates ranging from 45 to 110 basis points (the
"Margin") above LIBOR. The Margin is determined quarterly and varies based upon
the percentage the Company's funded debt bears to EBITDA, as defined, and/or the
credit rating maintained by Moody's and Standard & Poor's, if any. The DnB
Credit Facility requires the Company, on a consolidated basis, to maintain a
minimum ratio of vessels' values to Maximum Committed Amount, a minimum cash and
cash equivalent level, a specified interest coverage ratio, specified debt to
capitalization ratios, and a minimum net worth. The DnB Credit Facility limits
the amount of secured indebtedness that the Company and its subsidiaries may
incur, provides for a negative pledge with respect to certain activities of the
Company's vessel owning/operating subsidiaries, and restricts the payment of
dividends. At December 31, 2000, there were outstanding letters of credit issued
by Den norske Bank ASA ("DnB") on behalf of the Company totaling $5.5 million
and the amount available for future borrowings under the DnB Credit Facility
totaled $80.9 million.
Pursuant to a February 1998 letter agreement between the Company and SMIT, the
Company agreed to prepay
32
certain contingent obligations for additional purchase consideration that would
otherwise have been payable to SMIT in 1999 pursuant to a certain Asset Purchase
Agreement dated December 19, 1996, by and among the Company and SMIT. The
prepayment included cash of $20.9 million and the issuance, effective January 1,
1999, of five-year subordinated promissory notes in the aggregate principal
amount of $23.2 million, which notes will bear interest at 5.467% per annum
payable quarterly in arrears. The amounts prepaid to SMIT have increased the
carrying values of vessels and certain joint venture interests that were
acquired in the SMIT Transaction.
At December 31, 2000, the Company had outstanding $147.5 million aggregate
principal amount of its 7.2% Senior Notes Due September 15, 2009 (the "7.2%
Notes"). Interest on the 7.2% Notes is payable semi-annually on March 15 and
September 15 of each year commencing March 15, 1998. The 7.2% Notes may be
redeemed at any time at the option of the Company, in whole or from time to time
in part, at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of redemption plus a Make-Whole
Premium, if any, relating to the then prevailing Treasury Yield and the
remaining life of the 7.2% Notes. The 7.2% Notes were issued under an indenture
that contains covenants including, among others, limitations on liens and sale
and leasebacks of certain Principal Properties, as defined in the 1997
Indenture, and certain restrictions on the Company consolidating with or merging
into any other Person.
At December 31, 2000, the Company had outstanding $181.6 million aggregate
principal amount of its 5 3/8% Convertible Subordinated Notes Due November 15,
2006 (the "5 3/8% Notes") that were issued pursuant to a private placement and
the SMIT Transaction in 1996. The 5 3/8% Notes are convertible, in whole or
part, at the option of the holder at any time prior to the close of business on
the business day next preceding November 15, 2006, unless previously redeemed
into shares of Common Stock at a conversion price of $44.00 per share
(equivalent to a conversion rate of 22.7272 shares of Common Stock per $1,000
principal amount of the 5 3/8% Notes), subject to adjustment in certain
circumstances. The 5 3/8% Notes are redeemable at the Company's option at any
time on or after November 24, 1999 at the redemption prices specified therein,
together with accrued and unpaid interest to the repurchase date. The 5 3/8%
Notes are general unsecured obligations of the Company, subordinated in right of
payment to all senior indebtedness of the Company and effectively subordinated
in right of payment to all indebtedness and other obligations and liabilities
and any preferred stock of the Company's subsidiaries. Also, pursuant to the
SMIT Transaction, the Company entered into certain lease purchase agreements
which obligate the Company to purchase two vessels from SMIT with cash and $6.75
million principal amount of the 5 3/8% Notes in 2001.
Following December 31, 2000, the Company called for redemption $50.0 million of
the $181.6 million in aggregate principal amount outstanding of the 5 3/8%
Notes. Together with certain privately negotiated transactions, the call
resulted in the redemption of $85.2 million of the 5 3/8% Notes in exchange for
1,965,145 shares of Common Stock and $0.1 million of the 5 3/8% Notes for
approximately $0.1 million. On March 8, 2001, the Company announced that it has
called for redemption on April 9, 2001, $50.0 million of the 5 3/8% Notes. The
redemption price would be $1,029.90 per $1,000 principal amount of notes plus
accrued interest from November 15, 2000 to the redemption date. Holders of notes
being called would be able to convert any or all of their notes into 22.7272
shares of Common Stock per $1,000 principal amount of notes until the close of
business on April 6, 2001. SEACOR has entered into a standby agreement with
Credit Suisse First Boston ("Credit Suisse") under which Credit Suisse has
agreed, subject to certain conditions, to purchase from the Company the shares
of Common Stock that otherwise would have been delivered upon conversion of up
to $50.0 million aggregate principal amount of the notes that are subject to the
call but are not converted. The Company would use those proceeds to redeem notes
that are called for redemption but not converted.
Capital Structure
At December 31, 2000, the Company's capital structure was comprised of $380.5
million in long-term debt (including current portion) and $552.6 million in
stockholders' equity. Long-term debt declined $88.0 million from the prior
fiscal year-end due primarily to the deconsolidation of Chiles, Chiles
Offshore's repayment of $15.0 million borrowed under its bank facility, and the
Company's regularly scheduled repayment of outstanding indebtedness. This
decline in long-term debt was partially offset by the issuance of fixed coupon
notes in connection with the acquisition of Boston Putford. Stockholders' equity
rose due primarily to an increase in retained earnings of $34.1 million from net
income. Stockholders' equity also rose $10.0 million due to the issuance of
Common Stock from treasury in connection with the acquisitions of SCF and Boston
Putford, $1.7 million due to other comprehensive income that resulted primarily
from unrealized gains on available-for-sale securities, and $1.3 million due to
the amortization of restricted stock. These increases were partially offset by a
$4.8 million decline resulting from the Company's repurchase of Common Stock.
On May 23, 2000, SEACOR's Board of Directors authorized a three-for-two stock
split effected in the form of a stock dividend distributed on June 15, 2000.
Shareholders of record as of June 2, 2000 received one additional share of
Common Stock for every two shares they owned on that date; 7,137,801 shares were
distributed.
33
Stock and Debt Repurchase Program
In March 2000, SEACOR's Board of Directors increased its previously announced
securities repurchase authority by $15.0 million. The securities covered by this
repurchase program (the "Stock and Debt Repurchase Program") include Common
Stock, the 5 3/8% Notes, the 7.2% Notes, and the Chiles 10.0% Notes
(collectively, the "SEACOR Securities"). Repurchases of SEACOR Securities will
be effected from time to time through open market purchases, privately
negotiated transactions, or otherwise, depending on market conditions. In the
twelve month period ended December 31, 2000, the Company acquired 154,400 shares
of Common Stock (after adjustment for the stock split) and $0.01 million
principal amount of the Chiles 10.0% Notes for an aggregate cost of $4.8
million. At December 31, 2000, the Company had approximately $36.9 million of
available authority for the repurchase of additional SEACOR Securities. Due to
the decline in the Company's ownership interest of Chiles Offshore, resulting
from the Chiles IPO, the Chiles 10.0% Notes will no longer be considered SEACOR
Securities and is no longer subject to the announced repurchase authority.
Stock Purchase and Option Plans
On May 23, 2000, the stockholders of SEACOR approved the 2000 Employee Stock
Purchase Plan (the "Stock Purchase Plan") that permits SEACOR to offer Common
Stock for purchase by eligible employees at a price equal to 85% of the lesser
of (i) the fair market value of the Common Stock on the first day of the
offering period or (ii) the fair market value of the Common Stock on the last
day of the offering period. Common Stock will be available for purchase under
the Stock Purchase Plan for six month offering periods. Three hundred thousand
shares of Common Stock are reserved for issuance under the Stock Purchase Plan
during the ten years following its adoption.
Eligible employees may accumulate savings through payroll deductions over an
offering period in order to purchase Common Stock at the end of such period.
Purchases of Common Stock under the Stock Purchase Plan may only be made with
accumulated savings from payroll deductions, and an employee cannot complete
such purchases using other resources. All employees who have been continuously
employed by SEACOR's participating subsidiaries for at least six months and who
regularly work more than 20 hours a week and more than five months a year are
eligible to participate in the Stock Purchase Plan.
The Stock Purchase Plan is intended to comply with Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), but is not intended to be subject
to Section 401(a) of the Code or the Employee Retirement Income Security Act of
1974. The Board of Directors of SEACOR may amend or terminate the Stock Purchase
Plan at any time; however, no increase in the number of shares of Common Stock
reserved for issuance under the Stock Purchase Plan may be made without
stockholder approval.
On May 23, 2000, the stockholders of SEACOR approved the 2000 Stock Option Plan
for Non-Employee Directors (the "Non-Employee Director Plan"). Under the
Non-Employee Director Plan, each member of the Board of Directors who is not an
employee of SEACOR or any subsidiary will be granted an option to purchase 3,000
shares of Common Stock on the date of each annual meeting of the stockholders of
SEACOR through and including the 2004 Annual Meeting of Stockholders. The
exercise price of the options granted under the Non-Employee Director Plan will
be equal to 100% of the fair market value per share of Common Stock on the date
the options are granted. One hundred fifty thousand shares of Common Stock have
been reserved for issuance under the Non-Employee Director Plan.
Options granted under the Non-Employee Director Plan will be exercisable at any
time following the earlier of the first anniversary of, or the first annual
meeting of SEACOR's stockholders after, the date of grant, for a period of up to
ten years from date of grant. Subject to the accelerated vesting of options upon
a non-employee Director's death or disability, if a non-employee Director's
service as a director of SEACOR is terminated, his or her options will terminate
with respect to the shares of Common Stock as to which such options are not then
exercisable. A non-employee Director's options that are vested but not exercised
may, subject to certain exceptions, be exercised within three months after the
date of termination of service as a director in the case of termination by
reason of voluntary retirement, failure of SEACOR to nominate such director for
re-election or failure of such director to be re-elected by stockholders after
nomination by SEACOR, or within one year in the case of termination of service
as a director by reason of death or disability.
Goodwill
The cost in excess of net assets of purchased businesses, goodwill, is being
amortized on a straight-line basis over 10 to 20 years. As of December 31, 2000,
unamortized goodwill, resulting from the acquisitions of NRC, ERST, Galaxie, and
SCF, totaled $17.5 million and represents 1.5% of the Company's total assets.
Various factors are considered in assigning the amortization period for
goodwill, that include, among others, the effect of obsolescence, demand,
competition, and other economic factors that may reduce a useful life.
Management periodically evaluates
34
the amortization periods for goodwill to determine if later events or
circumstances warrant revised estimates of useful lives. It is also management's
policy to review goodwill for impairment whenever events or changes in
circumstances indicate that the carrying value of goodwill may not be
recoverable. As of and subsequent to December 31, 2000, there have been no
events or changes in circumstances surrounding the purchased businesses to
indicate that the carrying value of the allocated goodwill may not be
recoverable.
Effects of Inflation
The Company's significant international operations expose it to the effects of
inflation and currency fluctuations. To minimize the financial impact of these
items the Company may, from time to time, enter into forward foreign exchange
contracts with major domestic or international financial institutions aimed at
reducing the risk that the U.S. denominated value of anticipated transactions in
foreign currencies will be reduced (or the cost of any such obligations
increased) as a result of fluctuations in foreign currencies valued against the
dollar. Although the Company does not consider inflation a significant business
risk in the current and foreseeable future, in the event that inflation becomes
a significant factor in the world economy, inflationary pressures may result in
increased operating and financing costs.
Recent Accounting Pronouncements
In January 2001, the Company adopted the Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities", as amended. The
Statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in the
derivative's fair market value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. The adoption of SFAS 133 did not materially affect the
financial statements of the Company.
The Company uses derivative financial instruments to hedge against its exposure
to changes in foreign currencies and prices of natural gas and crude oil. To
protect certain of the U.S. dollar value of Pound Sterling denominated net
assets of the Company from the effects of volatility in foreign exchange rates
that might occur prior to their conversion to U.S. dollars, the Company has
entered into forward exchange contracts. The forward exchange contracts enable
the Company to sell Pounds Sterling for U.S. dollars in the future at fixed
exchange rates to offset the consequences of changes in foreign exchange on the
amount of the U.S. dollar cash flows to be derived from net assets. At December
31, 2000, there were no material unrealized gains or losses on the outstanding
contracts.
During 2000, the Company also entered into Norwegian Kroner forward exchange
contracts. These contracts enable the company to buy Norwegian Kroners for U.S.
dollars in the future at fixed exchange rates that could offset possible
consequences of changes in foreign exchange rates should the Company decide to
conduct business in Norway. At December 31, 2000, the unrealized gains on the
outstanding contracts totaled $0.6 million.
The Company has also entered into and settled various positions in natural gas
and crude oil via swaps, options, and futures contracts. The general purpose of
these hedge transactions is to provide value to the Company should the price of
natural gas and crude oil decline, which, if sustained, would lead to a decline
in the Company's offshore assets market values and cash flows. At December 31,
2000, the Company's positions in commodity contracts were not material.
Forward Looking Statements
Certain statements discussed under the captions "Business," "Legal Proceedings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Quantitative and Qualitative Disclosures About Market Risk" and
elsewhere in this Form 10-K 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 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:
35
The Company's industry is subject to cyclicality, and a significant or prolonged
decline in oil and gas prices would likely reduce the level of exploration and
development of offshore areas, which would result in a lower demand for our
offshore marine services and drilling rigs.
The Company's industry is highly cyclical. Activity in the offshore oil and gas
exploration and production industry has a significant impact on the Company's
offshore vessel operations and the operations of Chiles. Factors that affect the
level of exploration and development of offshore areas include both short-term
and long-term trends in oil and gas prices. In recent years, oil and gas prices
have been extremely volatile and, as a result, the level of offshore exploration
and drilling activity also has been extremely volatile. Reductions in oil and
gas prices generally result in decreased drilling and production and
corresponding decreases in demand for the Company's offshore vessel services and
Chiles' drilling rigs. Decreased demand for these services and drilling rigs
would reduce the Company's revenue and profitability.
The Company relies on several customers for a significant share of our revenues.
The loss of any of these customers could adversely affect our business and
operating results.
Customers are primarily the major oil companies, large independent oil and gas
exploration and production companies, members of the shipping community and
owners of refineries, pipelines, and tank terminals. The portion of the
Company's revenues attributable to any single customer changes over time,
depending on the level of relevant activity by the customer, the Company's
ability to meet the customer's needs, and other factors, many of which are
beyond the Company's control. During 2000, the Company received approximately
10% of its offshore marine service segment operating revenues from Chevron
Corporation. During 2000, the Company's oil spill response service segment
received approximately 17% of its environmental retainer revenue from Coastal
Refining and Marketing, Inc. and 18% from Citgo Petroleum Corporation, its two
largest customers.
The Company may incur significant costs, liabilities and penalties in complying
with government regulations.
Government regulation, such as international conventions, federal, state and
local laws and regulations in jurisdictions where the Company's vessels operate
or are registered, have a significant impact on our offshore marine and
environmental response businesses. These regulations relate to worker health and
safety, the manning, construction and operation of vessels, oil spills and other
aspects of environmental protection.
Risks of incurring substantial compliance costs and liabilities and penalties
for non-compliance, particularly with respect to environmental laws and
regulations, are inherent in the Company's business. If this happens, it could
have a substantial negative impact on the Company's profitability and financial
position. The Company cannot predict whether it will incur such costs or
penalties in the future.
The Company faces intense competition that could adversely affect its ability to
increase its market share and its revenues.
The Company's businesses operate in highly competitive industries. High levels
of competition could reduce its revenues, increase its expenses and reduce its
profitability.
In addition to price, service and reputation, important competitive factors for
offshore supply fleets include: customers' national flag preference, operating
conditions and intended use (all of which determine the suitability of available
vessels), complexity of logistical support needs and presence of equipment in
the appropriate geographical locations.
The important competitive factors in the environmental services business are
price, service, reputation, experience and operating capabilities. In addition,
the Company believes that the absence of uniform environmental regulation and
enforcement on international, federal, state and local levels has lowered
barriers to entry in several market segments and increased the number of
competitors. The Company's oil spill response business faces competition from
the Marine Spill Response Corporation (a non-profit corporation funded by the
major integrated oil companies), other industry cooperatives, and smaller
contractors who target specific market niches.
In the contract drilling business, customers generally award contracts on a
competitive bid basis and contractors can move rigs from areas of low
utilization and day rates to areas of greater activity and higher day rates. The
Company believes that, as a result, competition for drilling contracts will
continue to be intense for the foreseeable future. Decreases in drilling
activity in a major market could depress day rates and could reduce utilization
of the Chiles Rigs. Substantially all of Chiles' competitors in the business of
providing jackup drilling services have substantially larger fleets and are more
established as drilling contractors.
36
An increase in supply of offshore marine vessels would likely have a negative
effect on the charter rates earned by the Company's offshore support vessels,
which would reduce the Company's earnings.
Expansion of the worldwide offshore marine fleet would increase competition in
the markets where the Company operates. Increased refurbishment of disused or
"mothballed" vessels, conversion of vessels from uses other than oil support and
related activities, or construction of new vessels could all add vessel capacity
to current worldwide levels. A significant increase in vessel capacity would
lower charter rates and result in a corresponding reduction in our revenues and
profitability.
Marine-related risks could lead to the disruption of the Company's offshore
marine services and to its incurrence of liability.
The operation of offshore support vessels is subject to various risks, including
catastrophic marine disaster, adverse weather and sea conditions, capsizing,
grounding, mechanical failure, collision, oil and hazardous substance spills and
navigation errors. These risks could endanger the safety of the Company's
personnel, vessels, cargo, equipment under tow and other property, as well as
the environment. If any of these events were to occur, the Company could be held
liable for resulting damages. In addition, the affected vessels could be removed
from service and would not be available to generate revenue.
Drilling-related risks could lead to the disruption of Chiles' drilling services
and to its incurrence of liability.
The operation of offshore jackup drilling rigs by Chiles is subject to various
risks, including blowouts, craterings, fires, collisions, groundings of drilling
equipment and adverse weather and sea conditions. These hazards could damage the
environment, cause personal injury or loss of life and damage or destroy the
property and equipment involved. In addition, the Chiles rigs face many of the
marine-related risks associated with the Company's offshore support vessels. If
any of these events were to occur, Chiles could incur substantial liability for
oil spills, reservoir damage, and other accidents. In addition, the affected
Chiles rigs could be removed from service and would not be available to generate
revenue.
Insurance coverage may not protect the Company from all of the liabilities that
could arise from the risks inherent in its businesses.
The Company maintains insurance coverage against the risks related to its
offshore marine and environmental response services. There can be no assurance,
however, that its 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, the Company
could be exposed to substantial liability.
The Company's significant international operations are subject to currency
exchange risks.
To minimize the financial impact of currency fluctuations and risks arising from
fluctuations in currency exchange rates, the Company attempts to contract the
majority of its services in U.S. dollars. However, in some of its foreign
businesses, the Company collects revenues and pays expenses in local currency.
Because the Company conducts substantially all of its operations in U.S.
dollars, if the value of foreign currencies decline against the U.S. dollar, the
Company's operating revenues in these foreign countries would effectively be
reduced. The Company engages in certain currency hedging arrangements designed
to minimize the effect of fluctuation in Pounds Sterling, the currency in the
United Kingdom, where most of its currency exchange risk arises. There can be no
assurance, however, that the Company will not incur losses in the future as a
result of currency exchange rate fluctuations.
Much of the Company's offshore marine operations are conducted in foreign
countries. Unstable political, military and economic conditions in those
countries could adversely affect the Company's business and operating results.
During 2000, approximately 37% of the Company's offshore marine revenues were
derived from foreign operations. These operations are subject to risks, among
other things, of political instability, potential vessel seizure,
nationalization of assets, currency restrictions, import-export quotas, and
other forms of public and governmental regulation, all of which are beyond the
Company's control. Economic sanctions or an oil embargo in Nigeria, for example,
could have a significant negative impact on activity in the oil and gas industry
in offshore West Africa, a region in which the Company operates vessels. In
addition, the Company's offshore support vessel operations in Mexico are
significantly affected by Mexican government policy. The Company cannot predict
whether any such conditions or events might develop in the future.
As our vessels become older, we may not be able to maintain or replace our
vessels.
As of December 31, 2000, the average age of vessels the Company owned, excluding
its standby safety vessels, was approximately 13.9 years. The Company believes
that after an offshore supply vessel has been in service for
37
approximately 25 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 can
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.
Spill response revenue is dependent upon the magnitude and number of spill
responses.
The Company's environmental service business' spill response revenue can vary
greatly between comparable fiscal periods based on the number and magnitude of
spill responses in any given period. As a result, the Company's revenue and
profitability attributable to this business may vary greatly from period to
period.
A relaxation of oil spill regulation or enforcement could reduce demand for the
Company's environmental services.
The Company's environmental service business is dependent upon the enforcement
of regulations promulgated under OPA 90 and, to a lesser extent, upon state
regulations. Less stringent oil spill regulations or less aggressive enforcement
of these regulations would decrease demand for the Company's environmental
service segment's services. The Company cannot assure you 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 the Company's
oil spill response services could be reduced, which could have a negative impact
on its profitability.
NRC relies on being classified as an "Oil Spill Removal Organization." A change
in, or revocation of, this classification would result in a loss of business.
NRC is classified as an OSRO. OSRO classification is a voluntary process
conducted by the United States Coast Guard. The Coast Guard classifies OSROs
based on their overall ability to respond to various types and sizes of oil
spills in different operating environments, such as rivers/canals, inland waters
and oceans. Coast Guard classified OSROs have a competitive advantage over
non-classified service providers. 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 Coast Guard. A loss of NRC's classification or
changes in the requirements could eliminate or diminish NRC's ability to provide
customers with this exemption. If this happens, the Company could lose
customers, in which case its revenues and profitability could be reduced.
The Company's environmental service business may incur liability in connection
with providing spill response services.
Although the Company's environmental service business is generally exempt from
liability under the federal Clean Water Act for its own actions and omissions in
providing spill response services, this exemption would not apply if it found to
have been grossly negligent or to have engaged in willful misconduct, or if it
fails to provide these services consistent with applicable regulations and
directives under the Clean Water Act. In addition, the exemption under the
federal Clean Water Act would not protect the Company's environmental service
business 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 the Company's environmental service business provides service have adopted
similar exemptions, several states have not. If a court or other applicable
authority determines that the Company's environmental service business does not
benefit from federal or state exemptions from liability in providing spill
response services, the Company's environmental service business could be liable
together with the local contractor and the responsible party for any resulting
damages, including damages caused by others.
If the Company does not restrict the amount of foreign ownership of its Common
Stock, the Company could be prohibited from operating its vessels in parts of
the U.S., which would adversely affect its business and operating results.
The Company is subject to the Shipping Act, 1916 and the Merchant Marine Act of
1920. These Acts govern, among other things, the ownership and operation of
vessels 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
United States. For a corporation engaged in the U.S. coastwise trade to be
deemed a citizen of the U.S.: (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 chief executive officer and the chairman of the board of directors must be a
U.S. citizen (and no officer who is not a U.S. citizen may act in such person's
absence), (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 Acts).
The Company would be prohibited from operating its vessels in the U.S. coastwise
trade during any period in which
38
the Company did not comply with these regulations. To facilitate compliance, the
Company's certificate of incorporation: (i) limits ownership by foreigners of
any class of its capital stock (including its Common Stock) to 22.5%, so that
foreign ownership will not exceed the 25.0% permitted. Under certain
circumstances the Company's board of directors may increase this percentage to
24.0%, (ii) requires a stock certification system with two types of certificates
to aid tracking of ownership, and (iii) permits the Company's board of directors
to make such determinations to ascertain ownership and implement such
limitations as reasonably may be necessary.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports located
in the United Kingdom where its functional currency is Pounds Sterling. The
financial statements of the Company's United Kingdom operations are measured
using the Pound Sterling and changes in the strength of that currency relative
to the U.S. dollar and the corresponding adjustment to the net assets of those
operations caused by exchange rate fluctuations result in the recognition of
currency translation adjustments that are reported in Accumulated Other
Comprehensive Income in Stockholders' Equity. The total net assets of Pound
Sterling functional investees as of December 31, 2000 was (pound)7.6 million. A
10% weakening in the Pound Sterling to the U.S. dollar exchange rate would
result in a change of $1.1 million to Other Comprehensive Income related to
these investments. To protect certain of the U.S. dollar value of Pound Sterling
denominated net assets of the Company from the effects of volatility in foreign
exchange rates that might occur prior to their conversion to U.S. dollars, the
Company has entered into forward exchange contracts. The forward exchange
contracts enable the Company to sell Pounds Sterling for U.S. dollars in the
future at fixed exchange rates to offset the consequences of changes in foreign
exchange on the amount of U.S. dollar cash flows to be derived from the net
assets. The Company considers these forward exchange contracts as economic
hedges of a net investment as the translation adjustments resulting from the
forward exchange contracts move in the opposite direction from the translation
adjustments resulting from the restatement of its United Kingdom subsidiaries'
net assets. At December 31, 2000, the notional and fair values of those forward
exchange contracts, which expire at various dates through August 2001, were
approximately $2.8 million and $0.1 million, respectively. The weighted average
exchange rate of the Company's forward exchange contracts at December 31, 2000
was approximately .65 Pounds Sterling per U.S. dollar. Assets of investees with
functional currencies other than the Pound Sterling are not significant to the
Company.
During 2000, the Company also entered into Norwegian Kroner forward exchange
contracts. These contracts enable the Company to buy Norwegian Kroners for U.S.
dollars in the future at fixed exchange rates which could offset possible
consequences of changes in foreign exchange rates should the Company decide to
conduct business in Norway. At December 31, 2000, the notional and fair values
of those forward exchange contracts, which expire in January 2001, were
approximately NOK93.4 million, or $10.0 million, and NOK5.6 million, or $0.6
million, respectively. The weighted average exchange rate of the Company's
forward exchange contracts at December 31, 2000 was approximately NOK9.34 per
U.S. dollar. The Company also collects certain revenues and pays certain
expenses in other foreign currencies. With respect to these foreign currency
risks, the Company has not entered into hedging contracts and its operating
results are positively or negatively affected as these foreign currencies
strengthen or weaken against the U.S. dollar.
The Company has entered into and settled various positions in natural gas and
crude oil via swaps, options, and futures contracts pursuant to which, on each
applicable settlement date, the Company receives or pays an amount, if any, by
which a contract price for a swap, an option, or a futures contract exceeds the
settlement price quoted on the New York Mercantile Exchange ("NYMEX") or
receives or pays the amount, if any, by which the settlement price quoted on the
NYMEX exceeds the contract price. The general purpose of these hedge
transactions is to provide value to the Company should the price of natural gas
and crude oil decline which over time, if sustained, would lead to a decline in
the Company's offshore assets' market values and cash flows. For accounting
purposes, the Company records the change in market value of its commodity
contracts at the end of each month and recognizes a related gain or loss. At
December 31, 2000, the Company's positions in commodity contracts were not
material.
In order to reduce its cost of capital, the Company entered into swap agreements
during 1999 with a major financial institution with respect to notional amounts
equal to a portion of the outstanding principal amount of the Chiles 10.0%
Notes. Pursuant to each such agreement, such financial institution agreed to pay
to the Company an amount equal to interest paid by Chiles on the notional amount
of Chiles 10.0% Notes subject to such agreement, and the Company agreed to pay
to such financial institution an amount equal to interest at the rate of
approximately 6.9% per annum on the agreed upon price of such notional amount of
Chiles 10% Notes as set forth in the applicable swap agreement. Upon termination
of each swap agreement, the financial institution agreed to pay to the
Company the amount, if any, by which the fair market value of the notional
amount of Chiles 10% Notes subject to the swap agreement on such date exceeded
the agreed upon price of such notional amount as set forth in such swap
agreement, and the Company agreed to pay to such financial institution the
amount, if any, by which the
39
agreed upon price of such notional amount exceeded the fair market value of such
notional amount on such date. In September 2000, Chiles Offshore purchased and
redeemed substantially all of its then outstanding Chiles 10% Notes with
proceeds from the Chiles IPO which resulted in the termination of these swap
agreements and the Company recognized derivative income of $6.6 million.
The Company is exposed to market risks associated with movements in interest
rates relating to its debt security investments. A 1% increase in interest rates
would decrease the Company's annual comprehensive income approximately $2.5
million, assuming its investments in debt securities at December 31, 2000 remain
unchanged and an immediate increase in rates. The Company manages its risk
associated with these investments through maintaining a ladder of maturities,
primarily of less than five years. In addition to debt securities, the Company
had $10.5 million invested in equity securities as of December 31, 2000. A 10%
decline in the value of these securities would reduce Other Comprehensive Income
by $1.1 million. The Company monitors these investments on a regular basis and
disposes of investments when it judges the risk profile to be too high or when
it feels the investments have reached an attractive valuation.
The Company's debt is primarily in fixed interest rate instruments. While the
fair value of these debt instruments will vary with changes in interest rates,
the Company has fixed most of its cash flow requirements and operations are not
significantly impacted by interest rate fluctuations. For a significant portion
of the Company's fixed debt instruments, the 5 3/8% Notes, the fair value is
driven by the conversion feature rather than interest rates. Subsequent to
year-end, the Company called or arranged to call $100.0 million of the 5 3/8%
Notes. Of the $181.6 million in aggregate principal amount of the 5 3/8% Notes
outstanding at December 31, 2000, $135.2 million has been or will be redeemed in
connection with these calls and certain privately negotiated transactions. The
Company's only significant variable rate debt instrument is its DnB Credit
Facility, under which the Company has no amounts outstanding at December 31,
2000. While available for liquidity requirements, the Company has not
historically utilized significant portions of the facility for any extended
periods of time and thus has not been significantly impacted by fluctuations in
interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes are included in Part IV
of this Form 10-K on pages 50 through 79.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
40
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As permitted by General Instruction G. to this Form 10-K, other than information
with respect to the Company's executive officers which is set forth in Item 4A
of Part I of this Form 10-K, the information required to be disclosed pursuant
to this Item 10 is incorporated in its entirety herein by reference to the
Company's definitive proxy statement to be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's last fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 11 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14A within 120 days after the
end of the Company's last fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 12 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14A within 120 days after the
end of the Company's last fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 13 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14A within 120 days after the
end of the Company's last fiscal year.
41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement Schedules.
See Index to Consolidated Financial Statements and Financial Statement
Schedule on page 50 of this Form 10-K.
3. Exhibits:
Exhibit
Number Description
2.1 * Asset Purchase Agreement, dated as of December 19, 1996, by and
among SEACOR Holdings, Inc. and certain of its subsidiaries, and
Smit Internationale N.V. and certain of its subsidiaries
(incorporated herein by reference to Exhibit 2.0 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with
the Commission on December 24, 1996).
2.2 * Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Triangle Marine, Inc., F.C.
Felterman, Ernest Felterman, D. Lee Felterman and Daniel C.
Felterman (incorporated herein by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-3 (No. 333-20921) filed
with the Commission on January 31, 1997).
2.3 * Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman,
Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein, by reference to Exhibit 2.2 to the Company's
Registration Statement on Form S-3 (No. 333-20921) filed with the
Commission on January 31, 1997).
2.4 * Definitive Purchase Agreement, dated September 5, 1995, by and among
Graham Marine Inc., Edgar L. Graham, J. Clark Graham, and Glenn A.
Graham (incorporated herein by reference to Exhibit 2.0 to the
Company's Current Report on Form 8-K dated September 15, 1995).
2.5 * Global Agreement, dated as of November 14, 1995, by and among
Compagnie Nationale de Navigation and Feronia International
Shipping, SA and SEACOR Holdings, Inc. and the subsidiaries listed
in said agreement (incorporated herein by reference to Exhibit 2.2
of the Company's Registration Statement on Form S-3 (No. 33-97868)
filed with the Commission on November 17, 1995).
2.6 * Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and McCall
Enterprises, Inc. (incorporated herein by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
2.7 * Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR Support Services, Inc. and McCall
Support Vessels, Inc. (incorporated herein by reference to Exhibit
2.2 to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
2.8 * Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall Crews, Inc.
(incorporated herein by reference to Exhibit 2.3 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
42
2.9 * Exchange Agreement relating to McCall Crewboats, L.L.C., dated as of
May 31, 1996, by and among SEACOR Holdings, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.4 to the Company's Current Report on Form 8-K
dated May 31, 1996 and filed with the Commission on June 7, 1996).
2.10 * Share Exchange Agreement and Plan of Reorganization relating to
Cameron Boat Rentals, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.5 to the Company's Current Report on Form 8-K
dated May 31, 1996 and filed with the Commission on June 7, 1996).
2.11 * Share Exchange Agreement and Plan of Reorganization relating to
Philip A. McCall, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.6 to the Company's Current Report on Form 8-K
dated May 31, 1996 and filed with the Commission on June 7, 1996).
2.12 * Share Exchange Agreement and Plan of Reorganization relating to
Cameron Crews, Inc., dated as of May 31, 1996, by and among SEACOR
Holdings, Inc., McCall Enterprises, Inc. and the persons listed on
the signature pages thereto (incorporated herein by reference to
Exhibit 2.7 to the Company's Current Report on Form 8-K dated May
31, 1996 and filed with the Commission on June 7, 1996).
2.13 * Stock Purchase Agreement dated as of January 30, 2001 by and between
SEACOR SMIT Inc. and Brian Cheramie (incorporated herein by
reference to Exhibit 10.1 of the Company's Current Report on Form
8-K filed with the Commission on March 5, 2001).
2.14 * Letter Agreement dated as of February 23, 2001, amending the Stock
Purchase Agreement dated as of January 30, 2001 by and between
SEACOR SMIT Inc. and Brian Cheramie (incorporated herein by
reference to Exhibit 10.2 of the Company's Current Report on Form
8-K filed with the Commission on March 5, 2001).
2.15 * Stock Purchase Agreement dated as of January 30, 2001 by and among
SEACOR SMIT Inc., the persons listed on Exhibit A thereto and Brian
Cheramie, as representative of such persons (incorporated herein by
reference to Exhibit 10.3 of the Company's Current Report on Form
8-K filed with the Commission on March 5, 2001).
2.16 * Letter Agreement dated as of February 23, 2001, amending the Stock
Purchase Agreement dated as of January 30, 2001 by and among SEACOR
SMIT Inc., the persons listed on Exhibit A thereto and Brian
Cheramie, as representative of such persons (incorporated herein by
reference to Exhibit 10.4 of the Company's Current Report on Form
8-K filed with the Commission on March 5, 2001).
2.17 * Share Purchase Agreement, dated as of April 19, 2000, among SEACOR
SMIT Inc. and the other parties thereto (incorporated herein by
reference to Exhibit 2.1 of the Company's Registration Statement on
Form S-3 (No. 333-37492) filed with the Commission on May 19, 2000).
2.18 * Agreement and Plan of Merger, dated as of December 19, 2000, by and
between SEACOR SMIT Inc. and SCF Corporation (incorporated by
reference to Exhibit 2.1 of the Company's Registration Statement on
Form S-3 (No. 333-56842) filed with the Commission on March 9,
2001).
2.19 * Share Purchase Agreement, dated as of January 9, 2001, among SEACOR
SMIT Inc. and the other parties thereto (incorporated by reference
to Exhibit 2.2 of the Company's Registration Statement on Form S-3
(No. 333-56842) filed with the Commission on March 9, 2001).
3.1 * Restated Certificate of Incorporation of SEACOR SMIT Inc.
(incorporated herein by reference to Exhibit 3.1(a) to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1997 and filed with the Commission on August 14, 1997).
3.2 * Certificate of Amendment to the Restated Certificate of
Incorporation of SEACOR SMIT Inc. (incorporated herein by reference
to Exhibit 3.1(b) to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997 and filed with the Commission
on August 14, 1997).
43
3.3 * Amended and Restated By-laws of SEACOR Holdings, Inc. (incorporated
herein by reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-8 (No. 333-12637) of SEACOR Holdings, Inc. filed
with the Commission on September 25, 1996).
4.1 * Indenture, dated as of November 1, 1996, between First Trust
National Association, as trustee, and SEACOR Holdings, Inc.
(including therein forms of 5-3/8% Convertible Subordinated Notes
due November 15, 2006 of SEACOR Holdings, Inc.) (incorporated herein
by reference to Exhibit 4.0 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996 and filed
with the Commission on November 14, 1996).
4.2 * Indenture, dated as of September 22, 1997, between SEACOR SMIT Inc.
and First Trust National Association, as trustee (including therein
form of Exchange Note 7.20% Senior Notes Due 2009)(incorporated
herein by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-4 (No. 333-38841) filed with the Commission on
October 27, 1997).
4.3 * Investment and Registration Rights Agreement, dated as of March 14,
1995, by and among SEACOR Holdings, Inc., Miller Family Holdings,
Inc., Charles Fabrikant, Mark Miller, Donald Toenshoff, Alvin Wood,
Granville Conway and Michael Gellert (incorporated herein by
reference to Exhibit 4.0 of the Company's Current Report on Form 8-K
dated March 14, 1995, as amended).
4.4 * Investment and Registration Rights Agreement, dated as of May 31,
1996, among SEACOR Holdings, Inc. and the persons listed on the
signature pages thereto (incorporated herein by reference to Exhibit
10.8 to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
4.5 * Registration Rights Agreement, dated November 5, 1996, between
SEACOR Holdings, Inc. and Credit Suisse First Boston Corporation,
Salomon Brothers Inc. and Wasserstein Perella Securities, Inc.
(incorporated herein by reference to Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1996 and filed with the Commission on November 14, 1996).
4.6 * Investment and Registration Rights Agreement, dated as of December
19, 1996, by and between SEACOR Holdings, Inc. and Smit
International Overseas B.V. (incorporated herein by reference to
Exhibit 4.0 to the Company's Current Report on Form 8-K dated
December 19, 1996 and filed with the Commission on December 24,
1996).
4.7 * Investment and Registration Rights Agreement, dated as of January 3,
1997, among SEACOR Holdings, Inc., Acadian Offshore Services, Inc.,
Galaxie Marine Service, Inc., Moonmaid Marine, Inc. and Triangle
Marine, Inc. (incorporated herein by reference to Exhibit 4.6 to the
Company's Registration Statement on Form S-3 (No. 333-20921) filed
with the Commission on January 31, 1997).
4.8 * Investment and Registration Rights Agreement, dated October 27,
1995, by and between SEACOR Holdings, Inc. and Coastal Refining and
Marketing, Inc. (incorporated herein by reference to Exhibit 4.2 of
the Company's Registration Statement on Form S-3 (No. 33-97868)
filed with the Commission on November 17, 1995).
4.9 * Investment and Registration Rights Agreement, dated November 14,
1995, by and between SEACOR Holdings, Inc. and Compagnie Nationale
de Navigation (incorporated herein by reference to Exhibit 4.3 of
the Company's Registration Statement on Form S-3 (No. 33-97868)
filed with the Commission on November 17, 1995).
4.10 * Registration Agreement, dated as of September 22, 1997, between the
Company and the Initial Purchasers (as defined therein)(incorporated
herein by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-4 (No. 333-38841) filed with the Commission on
October 27, 1997).
4.11 * Restated Stockholders' Agreement dated December 16, 1992
(incorporated herein by reference to Exhibit 10.12 to the Annual
Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal year
ended December 31, 1992).
44
4.12 * Investment and Registration Rights Agreement, dated as of April 19,
2000, among SEACOR SMIT Inc. and the other parties thereto
(incorporated herein by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-3 (No. 333-37492) filed with the
Commission on May 19, 2000).
4.13 * Investment and Registration Rights Agreement, dated as of December
19, 2000, among SEACOR SMIT Inc. and the other parties thereto
(incorporated by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-3 (No. 333-56842) filed with the
Commission on March 9, 2001).
4.14 * Investment and Registration Rights Agreement, dated as of January 9,
2001, among SEACOR SMIT Inc. and the other parties thereto
(incorporated by reference to Exhibit 4.2 of the Company's
Registration Statement on Form S-3 (No. 333-56842) filed with the
Commission on March 9, 2001).
10.1 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of McCall Enterprises, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.2 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of McCall Support Vessels, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.3 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of N.F. McCall Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.4 * Indemnification Agreement, dated as of May 31, 1996, among all of
the members of McCall Crewboats, L.L.C., Norman McCall, as
representative of such members, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.4 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.5 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of Cameron Boat Rentals, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.5 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.6 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of Philip A. McCall, Inc. and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.6 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.7 * Indemnification Agreement, dated as of May 31, 1996, among all of
the stockholders of Cameron Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.7 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.8 * The Master Agreement, dated as of June 6, 1996, by and among
Compagnie Nationale de Navigation, SEACOR Holdings, Inc. and SEACOR
Worldwide Inc. (incorporated herein by reference to Exhibit 10.9 to
the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996).
10.9 * Management and Administrative Services Agreement, dated January 1,
1990, between SCF Corporation and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.32 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with the
Commission on November 10, 1992).
10.10 * Amendment No. 1 to the Management and Services Agreement, dated as
of January 1, 1993, between SCF Corporation and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.34 to the
Annual Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal
year ended December 31, 1992).
45
10.11 * Lease Agreement, dated September 1, 1989, between The Morgan City
Fund and NICOR Marine Inc. (SEACOR Marine Inc., as successor lessee)
(incorporated herein by reference to Exhibit 10.33 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with the
Commission on November 10, 1992).
10.12 *,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with the
Commission on November 10, 1992).
10.13 *,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated herein
by reference to SEACOR Holdings, Inc.'s Proxy Statement dated March
18, 1996 relating to the Annual Meeting of Stockholders held on
April 18, 1996).
10.14 *,** SEACOR SMIT Inc. 2000 Stock Option Plan for Non-Employee Directors
(incorporated herein by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2000 and
filed with the Commission on August 14, 2000).
10.15 *,** Benefit Agreement, dated May 1, 1989, between NICOR Marine Inc. and
Lenny P. Dantin (assumed by SEACOR Holdings, Inc.) (incorporated
herein by reference to Exhibit 10.51 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission on
November 10, 1992).
10.16 *,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by reference to
Exhibit 10.61 to the Annual Report on Form 10-K of SEACOR Holdings,
Inc. for the fiscal year ended December 31, 1992).
10.17 * Management and Services Agreement, dated January 1, 1985, between
NICOR Marine (Nigeria) Inc. and West Africa Offshore Limited
(assumed by SEACOR Holdings, Inc.) (incorporated herein by reference
to Exhibit 10.55 to the Company's Registration Statement on Form S-1
(No. 33-53244) filed with the Commission on November 10, 1992).
10.18 * Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with
the Commission on December 24, 1996).
10.19 * Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with
the Commission on December 24, 1996).
10.20 * Joint Venture Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit-Lloyd (Antillen) N.V. (incorporated herein
by reference to Exhibit 10.0 to the Company's Current Report on Form
8-K dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.21 * Form of Management Agreement (incorporated herein by reference to
Exhibit 10.4 to the Company's Current Report on Form 8-K dated
December 19, 1996 and filed with the Commission on December 24,
1996).
10.22 * Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated herein by
reference to Exhibit 10.3 to the Company's Current Report on Form
8-K dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.23 * Salvage and Maritime Contracting Agreement, dated December 19, 1996,
between SEACOR Holdings, Inc. and Smit Internationale N.V.
(incorporated herein by reference to Exhibit 10.5 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with
the Commission on December 24, 1996).
46
10.24 * License Agreement, dated December 19, 1996, between SEACOR Holdings,
Inc., certain subsidiaries of SEACOR Holdings, Inc. and Smit
Internationale N.V. (incorporated herein by reference to Exhibit
10.6 to the Company's Current Report on Form 8-K dated December 19,
1996 and filed with the Commission on December 24, 1996).
10.25 * Letter Agreement, dated February 26, 1998, between SEACOR SMIT Inc.
and certain of its subsidiaries and SMIT Internationale N.V. and
certain of its subsidiaries (incorporated herein by reference to
Exhibit 99.1 of the Company's Current Report on Form 8-K filed with
the Commission of March 11, 1998).
10.26 * Purchase Agreement, dated as of September 15, 1997, between the
Company and Salomon Brothers Inc., individually and as
representative of the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-4 (No. 333-38841) filed
with the Commission on October 27, 1997).
10.27 * Revolving Credit Facility Agreement dated as of June 30, 1997 among
SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the other banks
and financial institutions named therein (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1997 and filed with the
Commission on August 14, 1997).
10.28 * Agreement, dated October 27, 1995, by and among SEACOR Holdings,
Inc., NRC Holdings, Inc., Coastal Refining and Marketing, Inc., and
Phibro Energy USA, Inc. (incorporated herein by reference to Exhibit
10.1 of the Company's Registration Statement on Form S-3 (No.
33-97868) filed with the Commission on November 15, 1995).
10.29 *,** Employment Agreement, dated March 14, 1995, by and between National
Response Corporation and Mark Miller (incorporated herein by
reference to Exhibit 10.3 of the Company's Registration Statement on
Form S-3 (No. 33-97868) filed with the Commission on November 15,
1995).
10.30 *,** Employment Agreement, dated March 14, 1995, by and between National
Response Corporation and James Miller (incorporated herein by
reference to Exhibit 10.4 of the Company's Registration Statement on
Form S-3 (No. 33-97868) filed with the Commission on November 15,
1995).
10.31 *,** Letter agreement, dated February 26, 1997, between SEACOR SMIT Inc.
and certain of its' subsidiaries and SMIT Internationale, N.V. and
certain of its subsidiaries (incorporated herein by reference to
Exhibit 99.1 of the Current Report on Form 8-K filed with the
Commission on March 11, 1998).
10.32 * Agreement for a U.S. $100,000,000 Revolving Credit Facility to be
made available to SEACOR SMIT Inc. by the financial institutions
identified on Schedule A and Den Norske Bank ASA, as agent, dated
November 17, 1998.
10.33 * Amendment No. 1 To Credit Agreement made as of February 4, 1999 by
and between SEACOR SMIT Inc., the financial institutions listed in
Schedule A to that certain Credit Agreement dated November 17, 1998
and Den norske Bank ASA.
10.34 * Amendment No. 2 To Credit Agreement made as of October 1, 1999 by
and between SEACOR SMIT Inc., certain financial institutions and Den
norske Bank ASA., which further amends that certain Revolving Credit
Agreement dated November 17, 1998 and Amendment No. 1 thereto dated
February 4, 1999.
10.35 *,** Form of Type A Restricted Stock Grant Agreement (incorporated herein
by reference to Exhibit 10.35 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 and filed with the
Commission on March 30, 2000).
10.36 *,** Form of Type B Restricted Stock Grant Agreement (incorporated herein
by reference to Exhibit 10.36 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 and filed with the
Commission on March 30, 2000).
10.37 *,** Form of Option Agreement for Officers and Key Employees Pursuant to
the SEACOR SMIT Inc. 1996
47
Share Incentive Plan (incorporated herein by reference to Exhibit
10.37 of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 and filed with the Commission on March
30, 2000).
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
- ------------------
* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required to be
filed as an exhibit pursuant to Item14 (c) of the rules governing the
preparation of this report.
(b) Reports on Form 8-K:
None.
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SEACOR SMIT INC.
(Registrant)
By: /s/ Charles Fabrikant
----------------------------
Charles Fabrikant,
Chairman of the Board,
President, and Chief Executive Officer
Date: March 30, 2001
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Charles Fabrikant Chairman of the Board, March 30, 2001
- --------------------------------- President and Chief Executive
Charles Fabrikant Officer (Principal Executive Officer)
/s/ Randall Blank Executive Vice President, Chief March 30, 2001
- --------------------------------- Financial Officer and Secretary
Randall Blank (Principal Financial Officer)
/s/ Lenny P. Dantin Vice President and Controller March 30, 2001
- --------------------------------- (Principal Accounting Officer)
Lenny P. Dantin
/s/ Granville E. Conway Director March 30, 2001
- ---------------------------------
Granville E. Conway
/s/ Michael E. Gellert Director March 30, 2001
- ---------------------------------
Michael E. Gellert
/s/ Antoon Kienhuis Director March 30, 2001
- ---------------------------------
Antoon Kienhuis
/s/ Stephen Stamas Director March 30, 2001
- ---------------------------------
Stephen Stamas
/s/ Richard M. Fairbanks III Director March 30, 2001
- ---------------------------------
Richard M. Fairbanks III
/s/ Pierre de Demandolx Director March 30, 2001
- ---------------------------------
Pierre de Demandolx
/s/ Andrew R. Morse Director March 30, 2001
- ---------------------------------
Andrew R. Morse
/s/ John Hadjipateras Director March 30, 2001
- ---------------------------------
John Hadjipateras
49
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Page
----
Financial Statements:
Report of Independent Public Accountants............................ 51
Consolidated Balance Sheets - December 31, 2000 and 1999............ 52
Consolidated Statements of Income for the years ended
December 31, 2000, 1999, and 1998................................ 53
Consolidated Statements of Changes in Equity for the years ended
December 31, 2000, 1999, and 1998................................ 54
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998................................ 55
Notes to Consolidated Financial Statements.......................... 56
Financial Schedule:
Report of Independent Public Accountants on Financial
Statement Schedule............................................... 78
Valuation and Qualifying Accounts for the
Years ended December 31, 2000, 1999, and 1998.................... 79
All Financial Schedules, except those set forth above, have been omitted since
the information required is included in the financial statements or notes or
have been omitted as not applicable or required.
50
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SEACOR SMIT Inc.:
We have audited the accompanying consolidated balance sheets of SEACOR SMIT Inc.
(a Delaware corporation) and subsidiaries as of December 31, 2000 and 1999 and
the related consolidated statements of income, changes in equity and cash flows
for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SEACOR SMIT Inc. and
subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.
Arthur Andersen LLP
New Orleans, Louisiana
February 14, 2001
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(in thousands, except share data)
ASSETS 2000 1999
----------- -----------
Current Assets:
Cash and cash equivalents ................................................ $ 224,219 $ 178,509
Marketable securities (available-for-sale) ............................... 4,997 18,196
Trade and other receivables, net of allowance for
doubtful accounts of $1,310 and $1,567, respectively ................... 87,687 69,501
Prepaid expenses and other ............................................... 5,103 15,810
----------- -----------
Total current assets ................................................. 322,006 282,016
----------- -----------
Investments, at Equity, and Receivables from 50% or Less Owned Companies .... 137,694 77,276
Available-for-Sale Securities ............................................... 77,184 54,809
Property and Equipment:
Vessels and equipment .................................................... 642,048 603,854
Rigs ..................................................................... -- 193,820
Construction in progress ................................................. 13,752 21,761
Other .................................................................... 56,711 39,577
----------- -----------
712,511 859,012
Less-accumulated depreciation ............................................ (185,433) (143,815)
----------- -----------
527,078 715,197
----------- -----------
Restricted Cash ............................................................. 40,759 21,985
Other Assets ................................................................ 28,009 45,708
----------- -----------
$ 1,132,730 $ 1,196,991
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt ........................................ $ 2,553 $ 2,832
Accounts payable and accrued expenses .................................... 25,746 29,757
Accrued wages ............................................................ 6,940 4,870
Accrued interest ......................................................... 4,664 4,056
Accrued vessel construction and purchase costs ........................... 11,477 1,337
Other current liabilities ................................................ 15,003 6,140
----------- -----------
Total current liabilities ............................................ 66,383 48,992
----------- -----------
Long-Term Debt .............................................................. 377,955 465,661
Deferred Income Taxes ....................................................... 119,545 101,704
Deferred Gains and Other Liabilities ........................................ 14,371 35,783
Minority Interest in Subsidiaries ........................................... 1,924 36,721
Stockholders' Equity:
Common stock, $ 01 par value, 40,000,000 shares authorized; 21,426,969 and
21,353,259 shares issued in 2000 and 1999, respectively ................ 214 214
Additional paid-in capital ............................................... 278,567 274,979
Retained earnings ........................................................ 402,142 368,022
Less 4,310,505 and 4,401,426 shares held in treasury in 2000 and 1999,
respectively, at cost................................................... (125,968) (131,183)
Unamortized restricted stock ............................................. (1,301) (1,110)
Accumulated other comprehensive loss ..................................... (1,102) (2,792)
----------- -----------
Total stockholders' equity ........................................... 552,552 508,130
----------- -----------
$ 1,132,730 $ 1,196,991
=========== ===========
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
52
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(in thousands, except share data)
2000 1999 1998
------------ ------------ ------------
Operating Revenue:
Marine ................................................................. $ 276,931 $ 258,705 $ 359,611
Other .................................................................. 63,010 30,720 26,180
------------ ------------ ------------
339,941 289,425 385,791
------------ ------------ ------------
Costs and Expenses:
Operating expenses -
Marine ............................................................... 174,482 154,947 177,236
Other ................................................................ 26,970 11,839 10,486
Administrative and general ............................................. 39,548 34,744 36,102
Depreciation and amortization .......................................... 51,189 41,282 36,449
------------ ------------ ------------
292,189 242,812 260,273
------------ ------------ ------------
Operating Income .......................................................... 47,752 46,613 125,518
------------ ------------ ------------
Other Income (Expense):
Interest income ........................................................ 17,423 20,495 25,346
Interest expense ....................................................... (27,450) (22,330) (22,798)
Gain from equipment sales or retirements, net .......................... 7,628 1,677 38,338
Gain upon sale of shares of Chiles Offshore Inc ........................ 4,023 -- --
Derivative income (loss) ............................................... 6,292 (1,323) 3,273
Other, net ............................................................. 5,990 (1,616) 3,219
------------ ------------ ------------
13,906 (3,097) 47,378
------------ ------------ ------------
Income Before Income Taxes, Minority Interest, Equity in Earnings
(Losses) of 50% or Less Owned Companies, and Extraordinary Item ........... 61,658 43,516 172,896
------------ ------------ ------------
Income Tax Expense:
Current ................................................................ 4,952 358 33,635
Deferred ............................................................... 15,628 14,891 26,658
------------ ------------ ------------
20,580 15,249 60,293
------------ ------------ ------------
Income Before Minority Interest, Equity in Earnings (Losses) of
50% or less Owned Companies, and Extraordinary Item .................... 41,078 28,267 112,603
Minority Interest in Net (Income) Loss of Subsidiaries .................... (3,393) 1,148 (1,612)
Equity in Earnings (Losses) of 50% or Less Owned Companies, net of tax..... (3,565) 330 13,627
------------ ------------ ------------
Income Before Extraordinary Item .......................................... 34,120 29,745 124,618
Extraordinary Item - Gain on Extinguishment of Debt, net of tax ........... -- 1,191 1,309
------------ ------------ ------------
Net Income ................................................................ $ 34,120 $ 30,936 $ 125,927
============ ============ ============
Basic Earnings Per Common Share:
Income before extraordinary item ....................................... $ 2.02 $ 1.66 $ 6.32
Extraordinary item ..................................................... -- 0.07 0.07
------------ ------------ ------------
Net income ............................................................. $ 2.02 $ 1.73 $ 6.39
============ ============ ============
Diluted Earnings Per Common Share:
Income before extraordinary item ....................................... $ 1.92 $ 1.64 $ 5.45
Extraordinary item ..................................................... -- 0.05 0.05
------------ ------------ ------------
Net income ............................................................. $ 1.92 $ 1.69 $ 5.50
============ ============ ============
Weighted Average Common Shares:
Basic .................................................................. 16,887,176 17,867,480 19,702,667
Diluted ................................................................ 21,234,528 22,252,445 24,135,834
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
53
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(in thousands)
Accumulated
Additional Unamortized Other
Common Paid-in Retained Treasury Restricted Comprehensive Comprehensive
Stock Capital Earnings Stock Stock Income Income
- ------------------------------------------------- ------ ---------- -------- -------- --------- ------------ ------------
2000
- ------------------------------------------------
Balance, December 31, 1999 ...................... $ 214 $ 274,979 $ 368,022 $ (131,183) $ (1,110) $ (2,792) $ --
Add/(Deduct) -
-Net income for fiscal year 2000 ........... -- -- 34,120 -- -- -- 34,120
-Issuance of common stock:
ERST/O'Brien's Inc acquisition ......... -- 920 -- -- -- -- --
Putford Enterprises Ltd acquisition ..... -- -- -- 4,086 -- -- --
SCF Corporation acquisition ............. -- -- -- 5,920 -- -- --
Exercise of stock options ............... -- 763 -- -- -- -- --
Issuance of restricted stock ............ -- 1,529 -- -- (1,543) -- --
-Amortization of restricted stock .......... -- -- -- -- 1,337 -- --
-Cancellation of restricted stock .......... -- -- -- (15) 15 -- --
-Net currency translation adjustments ...... -- -- -- -- -- (1,721) (1,721)
-Change in unrealized gains (losses) on
available-for-sale securities ........... -- -- -- -- -- 3,411 3,411
-Change in value of investment in Chiles
Offshore LLC ............................ -- 380 -- -- -- -- --
-Cash in lieu of fractional shares in stock
split ................................... -- (4) -- -- -- -- --
-Purchase of treasury shares ............... -- -- -- (4,776) -- -- --
----- --------- --------- ---------- -------- -------- ---------
Balance, December 31, 2000 ...................... $ 214 $ 278,567 $ 402,142 $ (125,968) $ (1,301) $ (1,102) $ 35,810
===============================================================================================================================
1999
- ------------------------------------------------
Balance, December 31, 1998 ...................... $ 212 $ 271,941 $ 337,086 $ (65,656) $ (972) $ 171 $ --
Add/(Deduct) -
-Net income for fiscal year 1999 ........... -- -- 30,936 -- -- -- 30,936
-Issuance of common stock:
ERST/O'Brien's Inc acquisition ......... -- 1,482 -- -- -- -- --
Issuance of restricted stock ............ 2 1,593 -- -- (1,653) -- --
-Amortization of restricted stock .......... -- -- -- -- 1,508 -- --
-Cancellation of restricted stock .......... -- -- -- (7) 7 -- --
-Net currency translation adjustments ...... -- -- -- -- -- (526) (526)
-Change in unrealized gains (losses) on
available-for-sale securities ........... -- -- -- -- -- (2,437) (2,437)
-Debt offering costs ....................... -- (37) -- -- -- -- --
-Purchase of treasury shares ............... -- -- -- (65,520) -- -- --
----- --------- --------- ---------- -------- -------- ---------
Balance, December 31, 1999 ...................... $ 214 $ 274,979 $ 368,022 $ (131,183) $ (1,110) $ (2,792) $ 27,973
===============================================================================================================================
1998
- ------------------------------------------------
Balance, December 31, 1997 ...................... $ 211 $ 268,657 $ 211,159 $ (5,365) $ (986) $ 338 $ --
Add/(Deduct) -
-Net income for fiscal year 1998 ........... -- -- 125,927 -- -- -- 125,927
-Issuance of common stock:
ERST/O'Brien's Inc acquisition ......... -- 442 -- -- -- -- --
Exercise of stock options ............... 1 1,473 -- -- -- -- --
Issuance of restricted stock ............ -- 1,369 -- -- (1,319) -- --
-Amortization of restricted stock .......... -- -- -- -- 1,333 -- --
-Net currency translation adjustments ...... -- -- -- -- -- (121) (121)
-Change in unrealized gains (losses) on
available-for-sale securities ........... -- -- -- -- -- (46) (46)
-Purchase of treasury shares ............... -- -- -- (60,291) -- -- --
----- --------- --------- ---------- -------- -------- ---------
Balance, December 31, 1998 ...................... $ 212 $ 271,941 $ 337,086 $ (65,656) $ (972) $ 171 $ 125,760
===============================================================================================================================
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
54
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(in thousands)
2000 1999 1998
--------- --------- ---------
Cash Flows from Operating Activities:
Net income ......................................................................... $ 34,120 $ 30,936 $ 125,927
Depreciation and amortization ...................................................... 51,189 41,282 36,449
Restricted stock amortization ...................................................... 1,337 1,508 1,333
Debt discount/(premium) amortization, net .......................................... (49) 129 1,275
Bad debt expense ................................................................... (235) (328) 455
Deferred income taxes .............................................................. 15,628 14,891 26,658
Equity in net earnings of 50% or less owned companies .............................. 3,565 (330) (13,627)
Extraordinary (gain) loss, extinguishment of debt .................................. -- (1,191) (1,309)
(Gain) loss from sale of investment in 50% or less owned companies ................. -- 72 (1,197)
Derivative (income) loss ........................................................... (6,292) 1,323 (3,273)
(Gain) loss from sale of available-for-sale securities, net ........................ (7,562) 279 (1,827)
Gain upon sale of shares of Chiles Offshore Inc .................................... (4,023) -- --
Gain from equipment sales or retirements, net ...................................... (7,628) (1,677) (38,338)
Amortization of deferred gains on sale and leaseback transactions .................. (18,601) (24,278) (19,797)
Minority interest in income (loss) of subsidiaries ................................. 3,393 (1,148) 1,612
Other, net ......................................................................... 1,709 3,382 2,770
Changes in operating assets and liabilities -
(Increase) decrease in receivables ............................................... (15,468) 15,139 231
(Increase) decrease in prepaid expenses and other assets ......................... 5,985 (5,692) (5,230)
Increase (decrease) in accounts payable, accrued and other liabilities ........... 8,183 (26,425) 10,029
--------- --------- ---------
Net cash provided by operations ................................................ 65,251 47,872 122,141
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment ................................................ (73,750) (140,470) (226,779)
Proceeds from the sale of marine vessels and equipment ............................. 56,772 20,889 143,965
Investments in and advances to 50% or less owned companies ......................... (7,056) (21,798) (6,973)
Principal payments on notes due from 50% or less owned companies ................... 1,514 8,610 2,611
Proceeds from sale of investment in 50% or less owned companies .................... -- 263 2,310
Net (increase) decrease in restricted cash account ................................. (18,774) 47,249 (22,251)
Proceeds from sale of available-for-sale securities ................................ 90,309 134,352 143,241
Proceeds from maturity of held-to-maturity securities .............................. -- -- 33,020
Purchases of available-for-sale securities ......................................... (60,650) (15,745) (209,018)
Purchases of convertible preferred stock of and loans to Globe Wireless, LLC ....... -- -- (11,500)
Cash settlements of derivative transactions ........................................ (1,454) 3,694 (431)
Dividends received from 50% or less owned companies ................................ 9,029 11,450 2,334
Acquisitions, net of cash acquired ................................................. (14,892) (6,239) --
Cash of Chiles Offshore LLC, a deconsolidated subsidiary ........................... (11,691) -- --
Other, net ......................................................................... (369) (2,476) 269
--------- --------- ---------
Net cash provided by (used in) investing activities ............................ (31,012) 39,779 (149,202)
--------- --------- ---------
Cash Flows from Financing Activities:
Payments of long-term debt and stockholder loans ................................... (17,240) (47,830) (14,741)
Proceeds from issuance of long-term debt ........................................... 482 38,115 --
Payments on capital lease obligations .............................................. (1,675) (1,587) (1,454)
Net proceeds from the sale of Chiles Offshore LLC 10.0% Senior Notes ............... -- -- 105,762
Collateral deposits pursuant to swap agreements .................................... -- (10,166) --
Proceeds from membership interest offering of Chiles Offshore LLC .................. -- 4,338 --
Distribution of membership interest to minority shareholders of Chiles ............. 17,651 -- (2,725)
Offshore LLC
Termination of swap agreements ..................................................... 19,504 -- --
Common stock acquired for treasury ................................................. (4,776) (65,520) (60,291)
Other, net ......................................................................... 276 (36) 757
--------- --------- ---------
Net cash provided by (used in) financing activities ............................ 14,222 (82,686) 27,308
--------- --------- ---------
Effects of Exchange Rate Changes on Cash and Cash Equivalents ......................... (2,751) (1,723) (361)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents .................................. 45,710 3,242 (114)
Cash and Cash Equivalents, beginning of period ........................................ 178,509 175,267 175,381
--------- --------- ---------
Cash and Cash Equivalents, end of period .............................................. $ 224,219 $ 178,509 $ 175,267
========= ========= =========
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
55
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES:
Nature of Operations. SEACOR SMIT Inc. ("SEACOR") and its subsidiaries (the
"Company") furnish offshore support services to the offshore oil and gas
exploration and production industry and provide contractual oil spill response
and professional services to those who store, transport, produce, or handle
petroleum and certain non-petroleum oils. The Company's offshore support vessels
operate principally in the United States, West Africa, the North Sea, the Far
East, Latin America, and the Mediterranean. Logistics services include
shorebase, marine transport, and other supply chain management services in
support of offshore exploration and production operations primarily in the U.S.
Gulf of Mexico. Logistics services are provided by Energy Logistics, Inc.
("ELI"), a subsidiary of the Company. In December 1999, ELI became a majority
owned subsidiary and its financial condition, results of operations, and cash
flows are now consolidated with those of the Company. Since inception in 1996
and until December 1999, the Company reported its interest in ELI as an
investment in a 50% or less owned company that was accounted for under the
equity method. The Company also consolidated the business activities of drill
rig operator Chiles Offshore LLC from its inception in 1997 and until its
initial public offering of common stock (the "Chiles IPO") due to its majority
ownership. On September 22, 2000, Chiles Offshore LLC converted into a
corporation, was renamed Chiles Offshore Inc. ("Chiles Offshore"), and completed
the Chiles IPO. As a consequence of the Chiles IPO, the Company's ownership
interest in Chiles Offshore was reduced from 55.4% to 27.3%. Because its
ownership interest has declined below 50%, the Company no longer consolidates
Chiles Offshore and its consolidated subsidiaries ("Chiles") financial
condition, results of operations, and cash flows and, as of September 22, 2000,
began accounting for its interest in Chiles Offshore using the equity method.
Since its inception and until July 1999, Chiles Offshore operated as a
development stage company, devoting substantially all its efforts to
constructing two ultra-premium jackup rigs (the "Rigs"), raising capital, and
securing contracts for the Rigs.
Basis of Consolidation. The consolidated financial statements include the
accounts of SEACOR and all majority owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. The equity method
of accounting is used by the Company when it has a 20% to 50% ownership interest
in other entities and the ability to exercise significant influence over their
operating and financial policies. Accordingly, the Company's share of the net
earnings of these entities is included in consolidated net income. Investments
in other companies are carried at cost.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents. Cash equivalents refer to securities with maturities
of three months or less when purchased.
Accounts Receivable. Customers of offshore marine support and rig services are
primarily major and large independent oil and gas exploration and production
companies; whereas, customers of oil spill and emergency response services
include tank vessel owner/operators, refiners, terminals, exploration and
production facilities and pipeline operators. The Company's customers are
granted credit on a short-term basis and related credit risks are considered
minimal.
Property and Equipment. Property and equipment are recorded at historical cost
and depreciated over the estimated useful lives of the related assets.
Depreciation is computed on the straight-line method for financial reporting
purposes. Maintenance and repair costs, including routine drydock inspections on
vessels in accordance with maritime regulations, are charged to operating
expense as incurred. Expenditures that extend the useful life or improve the
marketing and commercial characteristics of vessels and major renewals or
improvements to other properties are capitalized. Vessels and related equipment
are depreciated over 20-30 years, the Rigs are depreciated over 25 years, the
barges are depreciated over 20 years, and all other property and equipment are
depreciated and amortized over two to ten years.
Certain interest costs incurred during the construction of offshore support
vessels and the Rigs have been capitalized as part of the assets' carrying
values and are being amortized to expense over such assets estimated useful
lives. Interest
56
capitalized in 2000, 1999, and 1998 totaled $639,000,
$9,836,000, and $8,455,000, respectively.
Other Assets. Other assets include the following, in thousands:
2000 1999
-------- --------
Goodwill ............................................... $ 23,121 $ 20,118
Deferred financing costs ............................... 6,567 9,824
Net sale-type leases, see Note 13 ...................... 1,953 2,311
Notes receivable ....................................... 1,543 1,523
Collateral deposits pursuant to swap agreements,
see Note 2 ........................................... -- 10,166
Common stock investments, carried at cost .............. 1,900 1,000
Receivable due from a financial institution
pursuant to swap agreements, see Note 2 ................ -- 6,772
Other .................................................. 471 493
-------- --------
35,555 52,207
Less accumulated amortization .......................... (7,546) (6,499)
-------- --------
Total other assets ..................................... $ 28,009 $ 45,708
======== ========
Other assets are being amortized to expense primarily on a straight-line basis
over their estimated period of benefit, ranging from two to twenty years.
Amortization expense for intangible assets totaled $2,296,000 in 2000,
$2,703,000 in 1999, and $2,190,000 in 1998.
Income Taxes. Deferred income tax assets and liabilities have been provided in
recognition of the income tax effect attributable to the difference between
assets and liabilities reported in the tax return and financial statements.
Deferred tax assets or liabilities are provided using the enacted tax rates
expected to apply to taxable income in the periods in which the deferred tax
assets and liabilities are expected to be settled or realized.
Deferred Gain. The Company has entered into vessel sale and leaseback
transactions and other vessel sale transactions with joint venture corporations
in which the Company has a 50% or less ownership interest. Certain gains
realized from these transactions were not immediately recognized as income but
were deferred in the Consolidated Balance Sheets. For the sale and leaseback
transactions, gains were deferred to the extent of the present value of minimum
lease payments and are being amortized to income as reductions in rental expense
over the applicable lease terms. For vessel sale transactions with joint venture
corporations, gains were deferred to the extent of the Company's ownership
interest and are being amortized to income over the applicable vessels'
depreciable lives.
Foreign Currency Translation. The assets, liabilities, and results of operations
of certain SEACOR subsidiaries are measured using the currency of the primary
foreign economic environment within which they operate, their functional
currency. For the purpose of consolidating these subsidiaries with SEACOR, the
assets and liabilities of these foreign operations are translated to U.S.
dollars at currency exchange rates as of the balance sheet date and for revenue
and expenses at the weighted average currency exchange rates during the
applicable reporting periods. Translation adjustments resulting from the process
of translating these subsidiaries' financial statements are charged to
Accumulated Other Comprehensive Income in Stockholders' Equity.
Certain SEACOR subsidiaries also enter into transactions denominated in
currencies other than their functional currency. Changes in currency exchange
rates between the functional currency and the currency in which a transaction is
denominated is included in the determination of net income in the period in
which the currency exchange rates change. Net pre-tax foreign currency exchange
losses were $1,573,000 and $1,288,000 in 2000 and 1999, respectively, and were
not material in 1998. Gains and losses on foreign currency transactions that are
designated as, and effective as, economic hedges of a net investment in a
foreign entity (such as debt denominated in a foreign currency or forward
exchange contracts) are charged to Accumulated Other Comprehensive Income in
Stockholders' Equity. Gains or losses on foreign currency transactions that do
not hedge an exposure are included in determining net income in accordance with
the requirements for other foreign currency transactions as described above.
Revenue Recognition. The Company's offshore marine and drilling service segments
earn revenue primarily from the time charter of vessels and drilling contracts
for rigs to customers based upon daily rates of hire. A time charter is a lease
arrangement under which the Company provides a vessel or rig to a customer and
is responsible for all crewing, insurance, and other operating expenses. Vessel
or rig charters may range from several days to several years. Drilling contracts
may be for single or multiple wells or for term periods.
Environmental customers are charged retainer fees for ensuring by contract the
availability (at predetermined rates) of the Company's response services and
equipment. Retainer services include employing a staff to supervise response to
an oil spill or other emergency and maintaining specialized equipment. Certain
vessel owners pay in advance a minimum annual retainer fee based upon the number
and size of vessels in each such owner's fleet and in some circumstances pay the
Company additional fees based upon the level of each vessel owner's voyage
activity in the U.S. The Company recognizes the greater of revenue earned by
voyage activity or the portion of the retainer earned in each
57
accounting period. Certain other vessel owners pay a fixed fee for the Company's
retainer service and such fee is recognized ratably throughout the period.
Facility owners generally pay a quarterly fee based on a formula that defines
and measures petroleum products transported to or processed at the facility.
Some facility owners pay an annual fixed fee and such fee is recognized ratably
throughout the year. Retainer agreements with vessel owners generally range from
one to three years while retainer arrangements with facility owners are as long
as ten years. Spill response revenue is dependent on the magnitude of any one
spill response and the number of spill responses within a given fiscal year.
Consequently, spill response revenue can vary greatly between comparable
periods. Consulting fees are also earned by the Company's environmental service
business from preparation of customized training programs, planning of and
participation in customer oil spill response drill programs and response
exercises, and other special projects.
Other, net. In 2000, 1999, and 1998, other income and expense primarily included
gains and losses from the sale of marketable securities and the exchange of
foreign currencies.
Common Stock Split. On May 23, 2000, SEACOR's Board of Directors authorized a
three-for-two stock split effected in the form of a stock dividend distributed
on June 15, 2000. Shareholders of record as of June 2, 2000 received one
additional share of SEACOR's common stock, par value $.01 per share ("Common
Stock") for every two shares they owned on that date. As a result of this stock
split, 7,137,801 shares were distributed. Shareholders' Equity has been restated
to give retroactive recognition to the stock split for all periods presented by
reclassifying from additional paid-in capital to common stock the par value of
the additional shares arising from the split. Additionally, except as otherwise
indicated, share and per share amounts and stock option and convertible
securities have been similarly restated.
Earnings Per Share. Basic earnings per common share were computed based on the
weighted-average number of common shares issued and outstanding for the relevant
periods. Diluted earnings per common share were computed based on the
weighted-average number of common shares issued and outstanding plus all
potentially dilutive common shares that would have been outstanding in the
relevant periods assuming the vesting of restricted stock grants and the
issuance of common shares for stock options and convertible subordinated notes
through the application of the treasury stock and if-converted methods,
respectively. All computations give effect for the three-for-two stock split
effected June 15, 2000. Certain options and share awards, 74,140, 46,601, and
79,067 in 2000, 1999, and 1998, respectively, were excluded from the computation
of diluted earnings per share as the effect would have been antidilutive.
Per
Income Shares Share
------------ ---------- ------
FOR THE YEAR ENDED 2000-
Basic Earnings Per Share:
Income Before Extraordinary Item .............. $ 34,120,000 16,887,176 $ 2.02
======
Effect of Dilutive Securities:
Options and Restricted Stock .................. -- 220,082
Convertible Securities ........................ 6,605,000 4,127,270
------------ ----------
Diluted Earnings Per Share:
Income Available to Common Stockholders
Plus Assumed Conversions .................... $ 40,725,000 21,234,528 $ 1.92
============ ========== ======
FOR THE YEAR ENDED 1999-
Basic Earnings Per Share:
Income Before Extraordinary Item .............. $ 29,745,000 17,867,480 $ 1.66
======
Effect of Dilutive Securities:
Options and Restricted Stock .................. -- 185,447
Convertible Securities ........................ 6,714,000 4,199,518
------------ ----------
Diluted Earnings Per Share:
Income Available to Common Stockholders
Plus Assumed Conversions .................... $ 36,459,000 22,252,445 $ 1.64
============ ========== ======
FOR THE YEAR ENDED 1998-
Basic Earnings Per Share:
Income Before Extraordinary Item .............. $124,618,000 19,702,667 $ 6.32
======
Effect of Dilutive Securities:
Options and Restricted Stock .................. -- 188,851
Convertible Securities ........................ 6,761,000 4,244,316
------------ ----------
Diluted Earnings Per Share:
Income Available to Common Stockholders
Plus Assumed Conversions .................... $131,379,000 24,135,834 $ 5.45
============ ========== ======
58
Comprehensive Income. In 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income,"
which establishes standards for reporting and displaying comprehensive income
and its components in a full set of general purpose financial statements.
Comprehensive income is defined as the total of net income and all other changes
in equity of an enterprise that result from transactions and other economic
events of a reporting period other than transactions with owners. The Company
has chosen to disclose Comprehensive Income in the Consolidated Statements of
Changes in Equity. For purposes of SFAS 130, the Company's other comprehensive
income or loss was comprised of net currency translation adjustments and
unrealized holding gains and losses on available-for-sale securities. Income
taxes allocated to each component of other comprehensive income during the years
indicated are as follows, in thousands of dollars:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------- ------- -------
2000
Foreign currency translation adjustments .................... $ (2,648) $ 927 $(1,721)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period .. 12,809 (4,483) 8,326
Less - reclassification adjustment for (gains) losses
included in net income ................................. (7,562) 2,647 (4,915)
-------- ------- -------
Other comprehensive income .................................. $ 2,599 $ (909) $ 1,690
======== ======= =======
1999
Foreign currency translation adjustments .................... $ (809) $ 283 $ (526)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period .. (4,030) 1,412 (2,618)
Less - reclassification adjustment for (gains) losses
included in net income ................................. 279 (98) 181
-------- ------- -------
Other comprehensive income .................................. $ (4,560) $ 1,597 $(2,963)
======== ======= =======
1998
Foreign currency translation adjustments .................... $ (186) $ 65 $ (121)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period .. 1,757 (615) 1,142
Less - reclassification adjustment for (gains) losses
included in net income ................................. (1,827) 639 (1,188)
-------- ------- -------
Other comprehensive income .................................. $ (256) $ 89 $ (167)
======== ======= =======
Accumulated other comprehensive income balances during the years indicated are
as follows, in thousands of dollars:
Foreign Unrealized Accumulated
Currency Gains (Losses) Other Comprehensive
Items on Securities Income
--------- -------------- -------------------
2000
Beginning balance........... $ (293) $ (2,499) $ (2,792)
Current period change....... (1,721) 3,411 1,690
--------- ----------- -------------
Ending Balance.............. $ (2,014) $ 912 $ (1,102)
========= =========== =============
1999
Beginning balance........... $ 233 $ (62) $ 171
Current period change....... (526) (2,437) (2,963)
--------- ----------- -------------
Ending Balance.............. $ (293) $ (2,499) $ (2,792)
========= =========== =============
1998
Beginning balance........... $ 354 $ (16) $ 338
Current period change....... (121) (46) (167)
--------- ----------- -------------
Ending Balance.............. $ 233 $ (62) $ 171
========= =========== =============
Reliance on Foreign Operations. For the years ended December 31, 2000, 1999, and
1998, approximately 30%, 36%, and 39%, respectively, of the Company's operating
revenues were derived from its foreign operations. The Company's foreign
operations, primarily contained in its offshore marine service segment, are
subject to various risks inherent in conducting business in foreign nations.
These risks include, among others, political instability, potential vessel
seizure, nationalization of assets, currency restrictions and exchange rate
fluctuations, import-export quotas, and other forms of public and governmental
regulations, all of which are beyond the control of the Company. Although
historically the Company's operations have not been affected materially by such
conditions or events, it is not possible to predict whether any such 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. Oil spill response and related
training and consulting service revenues derived from foreign markets have not
been material, and the Rigs operate in the U.S. Gulf of Mexico.
Recent Accounting Pronouncements. On January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities", as amended. The Statement
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair market value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related
59
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. The adoption of SFAS 133 did not materially
affect the financial statements of the Company.
Reclassifications. Certain reclassifications of prior year information have been
made to conform with the current year presentation.
2. FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments have been
determined using available market information and appropriate valuation
methodologies. Considerable judgment was required in developing certain of the
estimates of fair value, and accordingly, the estimates presented herein, in
thousands of dollars, are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
2000 1999
------------------------- ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------ ----------- -----------
ASSETS:
Cash and temporary cash investments.....................$ 224,219 $ 224,219 $ 178,509 $ 178,509
Marketable securities................................... 82,181 82,181 73,005 73,005
Collateral deposits, notes, and other receivables....... 6,781 6,781 22,169 22,151
Restricted cash......................................... 40,759 40,759 21,985 21,985
Stock investments, carried at cost...................... 1,900 1,900 1,000 1,000
Commodity swaps, options, and futures and forward
contracts............................................. 709 709 59 59
LIABILITIES:
Long-term debt, including current portion............... 363,278 403,060 449,238 424,886
Indebtedness to a minority shareholder of a subsidiary.. -- -- 607 630
Commodity swaps, options, and futures and forward
contracts............................................. 21 21 1,285 1,285
The carrying value of cash and temporary cash investments, restricted cash,
collateral deposits, and other receivables approximate fair value. It was not
practicable to estimate the fair value of the Company's stock investments in
2000 and 1999 because of the lack of quoted market prices and the inability to
estimate fair value without incurring excessive costs. The fair values of the
Company's notes receivable, long-term debt, indebtedness to a minority
stockholder, marketable securities, commodity swaps, options, and futures, and
forward contracts were estimated based upon quoted market prices or by
discounting the underlying cash flows using market information as to interest
rates for receivables and indebtedness of similar terms and maturity.
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports located
in the United Kingdom, where its functional currency is Pound Sterling. The
financial statements of the Company's United Kingdom operations are measured
using the Pound Sterling and changes in the strength of that currency relative
to the U.S. dollar and the corresponding adjustment to the net assets of those
operations caused by exchange rate fluctuations result in the recognition of
currency translation adjustments that are reported in Accumulated Other
Comprehensive Income in Stockholders' Equity. To protect the U.S. dollar value
of certain Pound Sterling denominated net assets of the Company from the effects
of volatility in foreign exchange rates that might occur prior to their
conversion to U.S. dollars, the Company has entered into forward exchange
contracts. The forward exchange contracts enable the Company to sell Pounds
Sterling in the future at fixed exchange rates to offset the consequences of
changes in foreign exchange on the amount of U.S. dollar cash flows to be
derived from the net assets. The Company considers these forward exchange
contracts as economic hedges of its net investment in the United Kingdom and
resulting gains or losses from those transactions are charged to Accumulated
Other Comprehensive Income in Stockholders' Equity. At December 31, 2000, the
total notional and fair values of these forward exchange contracts, all of which
expire at various dates through August 2001, was $2,758,000 and $71,000,
respectively.
During 2000, the Company also entered into Norwegian Kroner forward exchange
contracts. These contracts enable the Company to buy Norwegian Kroners in the
future at fixed exchange rates which could offset possible consequences of
changes in foreign exchange should the Company decide to conduct business in
Norway. The Company considers these contracts as intellectual hedges and
therefore, the resulting gains or losses from these transactions are charged to
Derivative Income (Loss) in the Consolidated Statements of Income. For the
twelve month period ending December 31, 2000, the Company recognized net gains
of $639,000 from its Norwegian Kroner forward exchange contracts. At December
31, 2000, the notional and fair values of the Norwegian Kroner forward exchange
contracts were NOK93,377,500, or $10,000,000, and NOK5,605,500, or $639,000,
respectively, and the contracts expire in January 2001.
The Company has entered into and settled various positions in natural gas and
crude oil via swaps, options, and
60
futures contracts pursuant to which, on each applicable settlement date, the
Company receives or pays an amount, if any, by which a contract price for a
swap, an option, or a futures contract exceeds the settlement price quoted on
the New York Mercantile Exchange ("NYMEX") or receives or pays the amount, if
any, by which the settlement price quoted on the NYMEX exceeds the contract
price. The general purpose of these hedge transactions is to provide value to
the Company should the price of natural gas and crude oil decline which over
time, if sustained, would lead to a decline in the Company's offshore assets'
market values and cash flows. For accounting purposes, the Company records the
change in the market value of its commodity contracts at the end of each month
and recognizes a related gain or loss. For the twelve month periods ending
December 31, 2000, 1999, and 1998, the Company has recognized net losses of
$980,000, net losses of $1,323,000, and net gains of $3,273,000, respectively,
from commodity hedging activities that were reported as Derivative Income (Loss)
in the Consolidated Statements of Income. At December 31, 2000, the Company's
positions in commodity contracts were not material.
In order to reduce its cost of capital, the Company entered into swap agreements
during 1999 with a major financial institution with respect to notional amounts
equal to a portion of the $110,000,000 aggregate principal amount of the Chiles
10.0% Senior Notes Due 2008 (the "Chiles 10.0% Notes"). Pursuant to each such
agreement, such financial institution agreed to pay to the Company an amount
equal to interest paid by Chiles Offshore on the notional amount of Chiles 10.0%
Notes subject to such agreement, and the Company agreed to pay to such financial
institution an amount equal to interest currently at the rate of approximately
6.9% per annum on the agreed upon price of such notional amount of Chiles 10.0%
Notes as set forth in the applicable swap agreement.
Upon termination of each swap agreement, the financial institution agreed to pay
to the Company the amount, if any, by which the fair market value of the
notional amount of Chiles 10.0% Notes subject to the swap agreement on such date
exceeded the agreed upon price of such notional amount as set forth in such swap
agreement, and the Company agreed to pay to such financial institution the
amount, if any, by which the agreed upon price of such notional amount exceeded
the fair market value of such notional amount on such date. In September 2000,
Chiles Offshore purchased and redeemed substantially all of its then outstanding
Chiles 10.0% Notes with proceeds from the Chiles IPO that resulted in the
termination of these swap agreements and the Company recognized derivative
income of $6,634,000.
3. MARKETABLE SECURITIES:
The Company's marketable securities are categorized as available-for-sale, as
defined by the Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Available-for-sale
securities are measured at fair values with unrealized holding gains and losses
charged to Accumulated Other Comprehensive Income in Stockholders' Equity. The
amortized cost and fair value of marketable securities at December 31, 2000 and
1999 were as follows, in thousands of dollars:
Gross Unrealized Holding
-------------------------
Amortized
Type of Securities Cost Gains Losses Fair Value
- -------------------------------------- -------------- ---------- ----------- ---------------
2000
Available-for-Sale:
U.S. Government and Agencies.... $ 56,530 $ 422 $ (442) $ 56,510
U.S. States and Political
Subdivisions.................. 4,050 141 -- 4,191
Corporate Debt Securities....... 5,794 -- (80) 5,714
UK Government Securities........ 3,865 -- (8) 3,857
Equity Securities............... 10,540 1,716 (347) 11,909
-------------- -------- --------- -------------
$ 80,779 $ 2,279 $ (877) $ 82,181
============== ======== ========= =============
1999
Available-for-Sale:
U.S. Government and Agencies.... $ 56,312 $ -- $ (3,282) $ 53,030
U.S. States and Political
Subdivisions.................. 1,045 -- (81) 964
Corporate Debt Securities....... 1,770 -- (80) 1,690
UK Government Securities........ 4,439 -- (110) 4,329
Equity Securities............... 13,428 637 (1,073) 12,992
-------------- -------- --------- -------------
$ 76,994 $ 637 $ (4,626) $ 73,005
============== ======== ========= =============
The contractual maturities of debt marketable securities at December 31, 2000
were as follows, in thousands of dollars:
Amortized Fair
Type and Maturity Cost Value
- ---------------------------------------------------- ---------- -----------
Available-for-Sale:
Mature in One Year or Less....................... $ 5,069 $ 4,997
Mature After One Year Through Five Years......... 49,406 49,535
Mature After Five Years Through Ten Years........ 8,490 8,572
Mature After Ten Years........................... 7,274 7,168
-------- ---------
$ 70,239 $ 70,272
======== =========
61
During 2000, 1999, and 1998, the sale of available-for-sale securities resulted
in gross realized gains of $8,558,000, $721,000, and $2,084,000, respectively,
and gross realized losses of $996,000, $1,000,000, and $257,000, respectively.
The specific identification method was used to determine the cost of
available-for-sale securities in computing realized gains and losses.
4. VESSEL ACQUISITIONS AND DISPOSITIONS:
Putford Transaction. On April 19, 2000, the Company acquired all of the issued
share capital of Putford Enterprises Ltd. and associated companies
(collectively, "Boston Putford"). Assets indirectly acquired in the acquisition
included Boston Putford's standby safety vessels ("SBSV"), certain joint venture
interests, and fixed assets for an aggregate purchase price valued at
approximately (pound)23,00,000 ($39,300,000 based on exchange rates in effect
and SEACOR's closing stock price on April 19, 2000). Boston Putford's SBSV
fleet, including vessels held in joint ventures, but excluding vessels managed
for third parties, consisted of 18 vessels operating primarily in the southern
UK sector of the North Sea. The purchase consideration consisted of
(pound)14,200,000 in cash ($22,500,000 based on exchange rates in effect on
April 19, 2000), 125,423 shares of Common Stock (after adjustment for the
Company's stock split in June 2000), a (pound)5,000,000, five-year, 4.0% fixed
coupon note, and a (pound)2,500,000, five-year, 4.0% fixed coupon note that is
subject to offset if Boston Putford does not meet certain earnings targets. The
notes combined had an estimated value of (pound)6,200,000 ($9,800,000 based on
exchange rates in effect on April 19, 2000). The cost of the acquisition was
allocated under the purchase method of accounting based upon the fair value of
the assets acquired and liabilities assumed, plus amounts of transaction costs
and the related deferred tax effect of the acquisition. Results of operations of
Boston Putford are included in the consolidated financial statements of the
Company beginning on the date of the acquisition. The following unaudited pro
forma information has been prepared as if the acquisition of Boston Putford had
occurred at the beginning of each of the periods presented, in thousands of
dollars except per share data. This pro forma information has been prepared for
comparative purposes only and is not necessarily indicative of what would have
occurred had the acquisition taken place on the dates indicated, nor does it
purport to be indicative of the future operating results of the Company.
For the Year Ended
---------------------------
12/31/00 12/31/99
------------- -------------
Revenue................................ $ 353,893 $ 343,761
Income Before Extraordinary Item....... 35,851 34,477
Net Income............................. 35,851 35,668
Basic Earnings Per Share............... 2.12 1.98
SCF Transaction. On December 20, 2000, the Company acquired SCF Corporation
("SCF"), a company that owns and operates inland river barges and that was
substantially owned and controlled by certain SEACOR directors. Forty-three
barges and a 50% interest in a partnership that owns 11 additional barges
acquired in the SCF transaction were valued at $7,500,000. The SCF acquisition
resulted in the Company's issuance of 121,064 shares of Common Stock net of
254,381 shares owned by SCF, which have been returned to treasury, and the
payment to SCF's shareholders of $3,304,000 in cash, representing SCF's working
capital. The cost of the SCF acquisition was allocated under the purchase method
of accounting based upon the fair value of the assets acquired and liabilities
assumed, plus amounts of transaction costs and the related deferred tax effect
of the acquisition. Goodwill of approximately $1,200,000 was recorded in
connection with this acquisition and is being amortized to expense over 12
years. The pro forma effect of the acquisition of SCF on the Company's results
of operations was not material.
Acquisitions Following Year-end. In January 2001, the Company acquired all of
the issued share capital of Plaisance Marine, Inc. ("Plaisance Marine") that
owns two mini-supply vessels and acquired four additional mini-supply vessels
from companies affiliated with Plaisance (collectively the "Plaisance Fleet'").
Aggregate consideration paid for the Plaisance Fleet and certain related spares
and other assets was approximately $20,100,000, including approximately
$16,200,000 paid in cash, the assumption of approximately $700,000 of debt, and
the issuance of 71,577 shares of Common Stock valued at approximately $3,200,000
as of November 22, 2000. Plaisance Marine and affiliated companies are
headquartered in Louisiana, and the Plaisance Fleet operates in the U.S. Gulf of
Mexico. In February 2001, the Company acquired two U.S. based towing supply
vessels from Rincon Marine, Inc., a U.S. based operator ("Rincon"). Aggregate
consideration paid Rincon was approximately $19,700,000, including approximately
$6,100,000 in cash and the assumption of approximately $13,600,000 of debt.
Vessel Construction. Since January 1, 1998, the Company completed the
construction of 10 crew, 7 anchor handling towing supply, 4 supply, and 2
utility vessels at an approximate aggregate cost of $229,367,000 and 23 barges
for an approximate aggregate cost of $6,000,000.
62
Vessel Dispositions. The table below sets forth, during the fiscal years
indicated, the number of offshore support vessels sold by type of service. At
December 31, 2000, 16 of those vessels, including 10 supply and towing supply, 5
crew, and 1 anchor handling towing supply, were bareboat chartered-in by the
Company.
Type of Vessel 2000 1999 1998
- ------------------------------------- ----------- ------------ -----------
Utility.............................. 8 2 7
Supply............................... 6 -- 6
Anchor Handling Towing Supply........ 1 1 8
Crew................................. 1 11 5
Towing Supply........................ 3 -- 8
Standby Safety....................... 2 -- --
-------- -------- --------
21 14 34
======== ======== ========
5. INVESTMENT IN CHILES OFFSHORE INC.
On September 22, 2000, Chiles Offshore converted from a limited liability
company to a corporation and completed the Chiles IPO of 8,970,000 shares of its
common stock at $19.00 per share and immediately following the Chiles IPO,
Chiles Offshore had 17,687,241 shares of common stock outstanding. Proceeds from
the Chiles IPO, net of offering costs, approximated $156,900,000. Chiles
Offshore used $99,000,000 of the offering proceeds to repurchase and retire
outstanding indebtedness consisting of approximately $95,000,000 principal
amount of the 10.0% Chiles Notes plus accrued interest. Chiles Offshore also
used approximately $7,000,000 to repay outstanding indebtedness under its bank
facility. As a result of termination of the limited liability company status,
Chiles recorded a net deferred tax liability through a charge to earnings of
approximately $27,400,000 attributable primarily to the difference in financial
reporting and tax reporting methods of accounting for depreciation.
As a consequence of the Chiles IPO, the Company's ownership interest in Chiles
Offshore was reduced from 55.4% to 27.3% and the Company owns 4,831,401 shares
of common stock of Chiles Offshore as of the date of the Chiles IPO. With less
than 50% ownership interest, the Company no longer consolidates Chiles'
financial condition, results of operations, and cash flows and, as of September
22, 2000, began accounting for its interest in Chiles Offshore using the equity
method. The Company recognized a gain upon the sale of common stock of Chiles
Offshore of $2,615,000, net of deferred taxes, representing the difference
between the Company's underlying interest in the net book value of Chiles
Offshore immediately following the Chiles IPO and its pre-IPO carrying value. As
a result of Chiles Offshore's redemption of the Chiles 10.0% Notes, certain swap
agreements with respect to the Chiles 10.0% Notes, to which the Company was a
party, were terminated and the Company recognized derivative income of
$6,634,000.
During December 2000, Chiles Offshore repurchased 109,000 shares of its common
stock at an average cost of $16.01 per share and therefore, the number of shares
of common stock outstanding was reduced to 17,578,241. As a result of this
reduction in the outstanding shares of Chiles Offshore's common stock, the
Company's ownership interest in Chiles Offshore increased from 27.3% to 27.5%.
The following table is summarized financial information, in thousands of
dollars, for Chiles for the periods indicated.
12/31/00 12/31/99
----------- ------------
Current Assets..................................................... $ 62,662 $ 7,937
Noncurrent Assets.................................................. 237,393 195,309
Current Liabilities................................................ 23,348 11,668
Noncurrent Liabilities............................................. 28,858 117,000
For the Years Ended
--------------------------
1/1/00-9/21/00 9/22/00-12/31/00 12/31/99 12/31/98
-------------- ---------------- ---------- ----------
Operating Revenue.................... $ 37,380 $ 18,626 $ 8,596 $ --
Operating Income (Loss).............. 14,550 6,212 (585) (823)
Income (Loss) Before Extraordinary
Item............................... 6,888 (22,791) (3,475) 173
Net Income (Loss).................... 6,888 (24,611) (3,963) 173
63
6. INVESTMENTS, AT EQUITY, AND RECEIVABLES FROM 50% OR LESS OWNED COMPANIES:
Investments, carried at equity, and advances to 50% or less owned companies at
December 31, 2000 and 1999 were as follows, in thousands of dollars:
Ownership
50% or Less Owned Companies Percentage 2000 1999
- ------------------------------------- ------------- ----------- -----------
Chiles Offshore Inc. (see Note 5).... 27.5% $ 68,122 $ --
Globe Wireless, LLC.................. 38.0% 25,478 31,646
SEAMEX International, Ltd............ 40.0% 13,918 14,025
Pelican Offshore Services Pte Ltd.... 50.0% 6,114 --
Ocean Marine Services (Egypt) Ltd.... 33.3% 5,158 6,252
Ultragas Smit Lloyd Ltda............. 49.0% 3,285 3,524
Maritima Mexicana, S.A............... 40.0% 2,682 3,828
Patagonia Offshore Services S.A...... 50.0% 2,135 2,595
SEACOR-Smit (Aquitaine) Ltd.......... 50.0% 1,252 5,641
Other................................ 25.7%-50.0% 9,550 9,765
--------- ---------
$ 137,694 $ 77,276
========= =========
Globe Wireless. During April 1998, the Company entered into a financing
arrangement with Globe, Inc., the predecessor of Globe Wireless, providing for
potential financing from the Company aggregating $20,000,000, comprised of
$10,000,000 of Globe, Inc.'s Series C Convertible Preferred Stock ("Series C
Stock") and $10,000,000 of senior secured promissory notes ("Promissory Notes").
Upon signing of the financing agreements, the Company acquired 3,288,156 shares
of Series C Stock for $7,000,000, exchanged a note evidencing a $3,000,000 loan
in 1997 for Promissory Notes, and received a warrant for the purchase of
additional Series C Stock at an exercise price of $2.13 per share (the "Series C
Warrant"). In October 1998, the Company purchased an additional 1,750,000 shares
of Series C Stock for $3,000,000, renegotiated certain covenants of the April
1998 financing agreement, and in connection therewith, the exercise price of the
Series C Warrant was reduced to $1.71 per share. In April 1999, the Series C
Warrant was exchanged for a warrant to purchase Class C Preferred Units of Globe
Wireless ("Class C Units") at an exercise price of $1.71 per unit (the "SEACOR
Warrants"), and all of Globe, Inc.'s Series C Stock, including that held by the
Company, was exchanged for an equivalent number of Class C Units. Through
December 16, 1999, the Company advanced Globe Wireless an additional
$13,721,000.
In May 1999, SEACOR, through its wholly owned subsidiary, SEACOR Malted Inc.,
and its wholly owned subsidiary Malted Ltd., acquired all of the issued and
outstanding stock of Marinet Systems Ltd. ("Marinet"), a United Kingdom based
provider of communications services and equipment to the maritime industry.
Effective July 1, 1999, Globe Wireless acquired all of the issued and
outstanding stock of SEACOR Malted Inc. and its wholly owned subsidiaries for a
$5,279,000 note payable to the Company (the "Marinet Loan").
In December 1999, Globe Wireless commenced a private placement offering (the
"Private Placement") to raise a minimum of $34,000,000 (the "Minimum Offering")
and a maximum of $44,000,000 (the "Maximum Offering") in additional capital for
general corporate purposes, including capital expenditures and working capital,
through the sale of 18,565,401 Class D Preferred Units ("Class D Units") at
$2.37 per unit. In February 2000, the Maximum Offering was increased to
$57,000,000. The Minimum Offering was consummated as of December 16, 1999, and
in connection therewith, Globe Wireless issued 15,470,047 Class D Units in
exchange for gross cash proceeds of $24,664,000 and the conversion into Class D
Units of certain advances by the Company to Globe Wireless and the Marinet Loan,
aggregating $12,000,000. In connection with the consummation of the Minimum
Offering, the Company exercised the SEACOR Warrant and purchased 7,556,667 Class
C Units at the exercise price of $1.71 per unit from Globe Wireless in exchange
for the cancellation of $10,000,000 of Promissory Notes and the payment of
$2,954,000 in cash. In February 2000, Globe Wireless completed the Maximum
Offering through the sale of 8,580,586 additional Class D Units in exchange for
gross cash proceeds of $20,336,000. At present, through its ownership of Class D
Units and Class C Units, the Company controls approximately 38% of the voting
units issued by Globe Wireless.
Prior to 1999, the Company carried its investment in Globe Wireless at cost. Due
to an ability to significantly influence the operating activities of Globe
Wireless, the Company began recording its proportionate share of the net losses
of Globe Wireless during the second quarter of 1999.
TMM Joint Ventures. During 1994, the Company and Transportacion Maritima
Mexicana S.A. de C.V., a Mexican corporation ("TMM"), structured a joint venture
to serve the Mexican offshore market (the "TMM Joint Venture") that is comprised
of two corporations, Maritima Mexicana, S.A. and SEAMEX International Ltd.
("SEAMEX"), a Liberian corporation. Since 1994, the Company has sold six of its
vessels to the TMM Joint Venture. The Company realized gains from the vessel
sales that have been deferred to the extent of the Company's ownership interest
in the TMM Joint Venture and are being amortized to income over the vessels'
depreciable lives. At December 31, 2000, the TMM Joint Venture operated 12
offshore support vessels owned by the joint venture and 11 bareboat and time
chartered-in offshore support vessels, 6 of which were provided by the Company.
64
Pelican Offshore Services Pte Ltd. During 2000, the Company entered into a joint
venture owned 50% by each of the Company and Penguin Boat International Limited,
a Singapore corporation, ("Penguin"). The joint venture, Pelican Offshore
Services Pte Ltd, also a Singapore corporation ("Pelican"), owns six and
charters-in one newly built Fast Support Intervention Vessels (also known as
multipurpose crew vessels). At December 31, 2000, the seven vessels were
operating in the Far East.
Smit Joint Ventures. In 1996, SMIT Internationale N.V. ("SMIT") and the Company
structured a joint venture, SEACOR-Smit (Aquitaine) Ltd., a Bahamian corporation
("Aquitaine"), and the Company purchased the joint venture interests of SMIT in
Smit Swire Shilbaya Egypt Ltd., an Egyptian corporation ("SSS"), Ultragas Smit
Lloyd Ltda., a Chilean corporation ("Ultragas-Smit"), and Smit Lloyd Matsas
(Hellas) Shipping Company S.A. ("Matsas"), a Greek corporation. During 1998, the
assets of SSS were transferred to Ocean Marine Services (Egypt) Ltd. ("OMS"),
also an Egyptian corporation. At December 31, 2000, OMS owned six vessels that
were operating offshore Egypt; Ultragas-Smit owned four vessels that were
operating offshore Chile; and Aquitaine owned three vessels that were operating
in the Far East and the Mediterranean and Matsas owned two vessels that were
operating in the Mediterranean.
In 1999, the Board of Directors of Aquitaine adopted a plan of liquidation due
to such venture's limited opportunities for future investments and growth.
During 2000 and 1999, the Company received liquidating dividends of $5,000,000
and $10,000,000, respectively. Aquitaine shall continue operations until such
time as its remaining fleet can be sold or otherwise liquidated. As a
consequence of the liquidation plan, the Company recorded
With respect to the Company's equity interest in the net earnings of Aquitaine,
the Company has recorded $214,000 and $3,000,000 of income tax expense in 2000
and 1999, respectively. Prior to 1999, no income tax expense was recorded in
connection with this foreign joint venture's operations in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
Patagonia. During 1997, the Company and a subsidiary of Sociedad Naviera
Ultragas Ltda., the Company's joint venture partner in Ultragas-Smit, formed
Patagonia Offshore Services S.A., a Panamanian corporation ("Patagonia"), to
operate vessels in support of the Argentine and adjacent offshore markets.
Patagonia owns one vessel that was acquired from the Company in 1997. The
Company realized a gain from the vessel sale that has been deferred to the
extent of its ownership interest in Patagonia and is being amortized to income
over the vessel's depreciable life.
Other. The Company participates in other joint ventures that operate offshore
support vessels, environmental service businesses, and a Handymax Dry-Bulk
vessel built in 1990.
At December 31, 2000, the amount of consolidated retained earnings that
represents undistributed earnings of 50% or less owned companies accounted for
by the equity method was $7,418,000. Deferred taxes have not been recorded with
respect to $9,787,000 of those earnings.
7. RESTRICTED CASH:
At December 31, 2000, restricted cash, totaling $40,759,000, is intended for use
in defraying costs to construct offshore support vessels for the Company. At
December 31, 2000, the Company has funded $10,855,000 of offshore support
vessels construction costs from unrestricted cash balances, and subject to the
Maritime Administration's approval, the Company expects such amounts to be
reimbursed from construction reserve fund restricted cash accounts, as discussed
below.
Proceeds from the sale of certain offshore support vessels in 1997, 1998, 1999,
and 2000 have been deposited into escrow and construction reserve fund bank
accounts for purposes of acquiring newly constructed U.S.-flag vessels and
qualifying for the Company's temporary deferral of taxable gains realized from
the sale of the vessels. Escrow accounts were established pursuant to certain
exchange and escrow agreements and restrict the use of funds deposited therein
for a period of six months. Should replacement offshore support vessels not be
delivered prior to expiration of the applicable six-month escrow period, funds
then remaining in the escrow accounts will be released to the Company for
general use. In 1998, the Company also established, pursuant to Section 511 of
the Merchant Marine Act, 1936, as amended, joint depository construction reserve
fund accounts with the Maritime Administration. From date of deposit,
withdrawals from these accounts are subject to prior written approval of the
Maritime Administration. Funds must be committed for expenditure within three
years or be released for the Company's general use. Gains from vessel sales
previously deferred would become immediately taxable upon release to the
Company, for general use, of sale proceeds that were deposited into joint
depository construction reserve fund accounts.
65
8. INCOME TAXES:
Income before income taxes, minority interest, equity in net earnings of 50% or
less owned companies, and extraordinary item derived from the United States and
foreign operations for the years ended December 31, are as follows, in thousands
of dollars:
2000 1999 1998
------------- ------------- -------------
United States................................. $ 56,743 $ 36,382 $ 118,721
Foreign....................................... 4,915 7,134 54,175
----------- ----------- -----------
$ 61,658 $ 43,516 $ 172,896
=========== =========== ===========
The Company files a consolidated U.S. federal tax return. Income tax expense
(benefit) consisted of the following components for the years ended December 31,
in thousands of dollars:
2000 1999 1998
------------- ------------- -------------
Current:
State...................................... $ 741 $ 666 $ 1,367
Federal.................................... (600) (2,176) 26,607
Foreign.................................... 4,811 1,868 5,661
Deferred:
Federal.................................... 14,351 14,891 26,658
Foreign.................................... 1,277 - -
----------- ----------- -----------
$ 20,580 $ 15,249 $ 60,293
=========== =========== ===========
The following table reconciles the difference between the statutory federal
income tax rate for the Company to the effective income tax rate:
2000 1999 1998
------------- ------------- --------------
Statutory Rate................................ 35.0 % 35.0% 35.0 %
Foreign and State Taxes....................... 1.2 % 1.8% 1.3 %
Other......................................... (2.8)% (1.8% (1.4)%
---------- --------- ----------
33.4 % 35.0% 34.9 %
========== ========= ==========
The components of the net deferred income tax liability were as follows, for the
years ended December 31, in thousands of dollars:
2000 1999
------------ -------------
Deferred tax assets:
Net Operating Loss Carryforwards....... $ 10,809 $ --
Foreign Tax Credit Carryforwards....... 6,968 2,486
Subpart F Loss......................... 3,644 2,499
Nondeductible Accruals................. 598 827
Other.................................. 1,324 1,800
------------ -------------
Total deferred tax assets........... 23,343 7,612
------------ -------------
Deferred tax liabilities:
Property and equipment................. 117,853 106,099
Investment in Subsidiaries............. 24,466 3,060
Other.................................. 491 --
------------ -------------
Total deferred tax liabilities...... 142,810 109,159
------------ -------------
Net deferred tax liabilities..... $ 119,467 $ 101,547
============ =============
The Company has not recognized a deferred tax liability of $7,545,000 for
undistributed earnings of certain non-U.S. subsidiaries and joint venture
corporations because it considers those earnings to be indefinitely reinvested
abroad. As of December 31, 2000, the undistributed earnings of these
subsidiaries and joint venture corporations were $21,556,000. As of December 31,
2000, the Company has net operating loss carryforwards for income tax purposes
totaling approximately $30,883,000, including $28,960,000 that expires in 2014
and $1,923,000 that expires in 2015. As of December 31, 2000, the Company also
has foreign tax credit Carryforwards for income tax purposes approximating
$6,968,000 that expire from 2003 through 2005. The Company believes that it will
be able to utilize the net operating loss and foreign tax credit carryforwards
through future earnings or tax strategies of the Company and therefore no
valuation allowance on the related deferred tax assets was recorded.
66
9. LONG-TERM DEBT:
Long-term debt balances, maturities, and interest rates are as follows as of
December 31, in thousands of dollars:
2000 1999
-------------- --------------
5 3/8% Convertible Subordinated Notes due 2006, interest payable
semi-annually............................................................. $ 181,600 $ 181,600
7.2% Senior Notes due 2009, interest payable semi-annually................ 147,500 147,500
10.0% Senior Notes of Chiles due 2008, interest payable semi-annually -- 68,265
5.467% Subordinated Promissory Notes due SMIT in 2004, interest payable
quarterly .............................................................. 23,200 23,200
Chiles Bank Facility, principal payments beginning 2003 and due through
2006, bearing interest at LIBOR plus 1 3/8% (approximately 7.3%
at December 31, 1999)................................................... -- 22,000
Capital Lease Obligations, see Note 13.................................... 17,580 19,255
Promissory Notes due the ex-shareholders of Putford Enterprises Ltd.,
bearing interest at 4%, principal and interest due April 2005 .......... 11,198 --
Promissory Notes due various financial institutions, primarily secured
by property and equipment, interest rates ranging from 7.15% to 10.0%,
principal repayments at various dates through 2004...................... 1,103 1,515
Promissory Note due a vessel charterer, payable in equal monthly
installments from February 1998 through June 2002, bearing
interest at 10.0%, secured by Mortgage on a vessel..................... -- 737
Promissory Note due a financial institution, payable in quarterly
installments through May 2003, bearing interest at LIBOR plus 2.5%,
secured by a First Preferred Ship Mortgage covering eleven barges....... 202 --
Promissory Note due a stockholder, payable in equal annual installments
from January 1998 through January 2001, bearing interest at 7.5%........ 278 536
----------- -----------
382,661 464,608
Less - Portion due within one year....................................... (2,553) (2,832)
- Debt premium or (discount), net................................... (2,153) 3,885
----------- -----------
$ 377,955 $ 465,661
=========== ===========
Annual maturities of long-term debt for the five years following December 31,
2000 are as follows, in thousands of dollars.
2001 2002 2003 2004 2005
----------- ---------- ----------- ----------- -----------
Amount............................... $ 2,553 $ 9,364 $ 152 $ 23,283 $ 11,233
=========== ========== =========== =========== ===========
Convertible Notes. On November 5, 1996, the Company completed the private
placement of $172,500,000 aggregate principal amount of its 5 3/8% Convertible
Subordinated Notes due November 15, 2006 (the "Convertible Notes"). The
Convertible Notes and the SMIT Convertible Notes defined below (collectively the
"5 3/8% Notes") were issued under an Indenture dated as of November 1, 1996,
(the "1996 Indenture"), between the Company and First Trust National
Association, as trustee. The 5 3/8% Notes are convertible, in whole or part, at
the option of the holder at any time prior to the close of business on the
business day next preceding November 15, 2006, unless previously redeemed into
shares of SEACOR's common stock at a conversion price of $66.00 per share
(equivalent to a conversion rate of 15.1515 shares of SEACOR's common stock per
$1,000 principal amount of the 5 3/8% Notes), subject to adjustment in certain
circumstances. The 5 3/8% Notes are redeemable at the Company's option at any
time on or after November 24, 1999 at the redemption prices specified therein,
together with accrued and unpaid interest to the date of repurchase. The Company
incurred $4,311,000 in costs associated with the sale of the Convertible Notes
including $3,881,000 of underwriter's discount. The debt issue costs are
reported in other assets and are being amortized to expense over the life of the
related debt using the effective interest rate method. The 5 3/8% Notes are
general unsecured obligations of the Company, subordinated in right of payment
to all "Senior Indebtedness" (as defined in the 1996 Indenture) of the Company
and effectively subordinated in right of payment to all indebtedness and other
obligations and liabilities and any preferred stock of the Company's
subsidiaries. The 5 3/8% Notes will mature on November 15, 2006 and bear
interest at a rate of 5 3/8% per annum from November 5, 1996, in the case of the
Convertible Notes, and December 19, 1996, in the case of the SMIT Convertible
Notes, or in each case, from the most recent interest payment date on which
interest has been paid or provided for, payable on May 15 and November 15 of
each year, commencing on May 15, 1997 to the holders thereof on May 1 and
November 1, respectively, preceding such interest payment date.
On December 19, 1996, the Company acquired substantially all of the offshore
marine vessel assets, vessel spare parts, and certain related joint venture
interests owned by SMIT and its subsidiaries (the "SMIT Transaction"). Pursuant
to the SMIT Transaction, the Company issued $15,250,000 principal amount of its
SMIT Convertible Notes. The SMIT Convertible Notes were issued under the 1996
Indenture discussed above. Also, pursuant to the SMIT Transaction, the Company
entered into lease purchase agreements for two vessels. See Note 13.
During 1997 and 1999, the Company purchased $1,000,000 and $5,150,000,
respectively, principal amount of its Convertible Notes in the open market. The
write-off of certain deferred financing costs associated with the Convertible
Notes acquired and the difference between the amount paid to acquire the
Convertible Notes and their carrying value
67
resulted in the Company recognizing an extraordinary loss of $114,000 or $.01
per basic share in 1997. In 1999, the extraordinary loss with respect to the
retirement of Convertible Notes was not material.
DnB Credit Facility. On November 17, 1998, the Company entered into an agreement
for a $100,000,000 unsecured reducing revolving credit facility with Den norske
Bank ASA (the "DnB Credit Facility"), as agent for itself and other lenders
named therein that replaced the prior revolving credit facility with Den norske
Bank ASA ("DnB"). Until termination of the DnB Credit Facility, a commitment fee
is payable on a quarterly basis, at rates ranging from 17.5 to 40 basis points
per annum on the average unfunded portion of the DnB Credit Facility. The
commitment fee rate varies based upon the percentage the Company's funded debt
bears to earnings before interest, taxes, depreciation, and amortization
("EBITDA"), as defined, and/or the credit rating maintained by Moody's and
Standard & Poor's, if any.
Under the terms of the DnB Credit Facility, the Company may borrow up to
$100,000,000 aggregate principal amount (the "Maximum Committed Amount") of
unsecured reducing revolving credit loans maturing on November 17, 2004. The
Maximum Committed Amount will automatically decrease semi-annually by 4.54%
beginning November 17, 1999, with the balance payable at maturity. Outstanding
borrowings will bear interest at annual rates ranging from 45 to 110 basis
points (the "Margin") above LIBOR. The Margin is determined quarterly and varies
based upon the percentage the Company's funded debt bears to EBITDA, as defined,
and/or the credit rating maintained by Moody's and Standard & Poor's, if any.
The DnB Credit Facility requires the Company, on a consolidated basis, to
maintain a minimum ratio of vessels' values to Maximum Committed Amount, as
defined, a minimum cash and cash equivalent level, a specified interest coverage
ratio, specified debt to capitalization ratios and a minimum net worth. The DnB
Credit Facility limits the amount of secured indebtedness which the Company and
its subsidiaries may incur, provides for a negative pledge with respect to
certain activities of the Company's vessel owning/operating subsidiaries, and
restricts the payment of dividends. At December 31, 2000, there were outstanding
letters of credit issued by DnB on behalf of the Company totaling $5,459,000 and
the amount available for future borrowings under the DnB Credit Facility totaled
$80,906,000.
7.2% Notes. On September 15, 1997, the Company completed the sale of
$150,000,000 aggregate principal amount of its 7.2% Senior Notes due 2009 (the
"7.2% Notes") which will mature on September 15, 2009. The offering was made to
qualified institutional buyers and a limited number of institutional accredited
investors and in offshore transactions exempt from registration under U.S.
federal securities laws. Interest on the 7.2% Notes is payable semi-annually on
March 15 and September 15 of each year commencing March 15, 1998. The 7.2% Notes
may be redeemed at any time at the option of the Company, in whole or from time
to time in part, at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of redemption plus a Make-Whole
Premium, if any, relating to the then prevailing Treasury Yield and the
remaining life of the 7.2% Notes. On December 8, 1997, the Company completed an
exchange offer through which it exchanged all of the 7.2% Notes for a series of
7.2% Senior Notes (the "7.2% Exchange Notes") which are identical in all
material respects to the 7.2% Notes, except that the 7.2% Exchange Notes are
registered under the Securities Act of 1933, as amended. The 7.2% Notes and the
7.2% Exchange Notes were issued under an indenture (the "1997 Indenture")
between the Company and First Trust National Association, as trustee. The 1997
Indenture contains covenants including, among others, limitations on liens and
sale and leasebacks of certain Principal Properties, as defined in the 1997
Indenture, and certain restrictions on the Company consolidating with or merging
into any other Person, as defined in the 1997 Indenture. The Company incurred
$1,412,500 in costs associated with the sale of the 7.2% Notes including
$1,012,500 of underwriters discount. Debt issue costs are reported in Other
Assets of the Consolidated Balance Sheet and are being amortized to expense over
the life of the related indebtedness using the effective interest rate method.
During 1999, the Company purchased $2,500,000 principal amount of its 7.2% Notes
in the open market.
SMIT Notes. Pursuant to a February 1998 letter agreement between the Company and
SMIT, the Company agreed to prepay certain contingent obligations for additional
purchase consideration that would otherwise have been payable to SMIT in 1999
pursuant to the SMIT Transaction. The prepayment included cash of $20,880,000
and the issuance, effective January 1, 1999, of five-year subordinated
promissory notes in the aggregate principal amount of $23,200,000, which notes
bear interest at 5.467% per annum payable quarterly in arrears. The amounts
prepaid to SMIT have increased the carrying values of vessels and certain joint
venture interests that were acquired in the SMIT Transaction.
Chiles 10.0% Notes. On April 29, 1998, Chiles Offshore completed the sale of the
Chiles 10.0% Notes. Interest on the Chiles 10.0% Notes was payable semi-annually
on May 1 and November 1 of each year commencing November 1, 1998. During 1998
and 1999, SEACOR and a wholly owned subsidiary of SEACOR purchased $17,130,000
and $43,235,000, respectively, principal amount of the Chiles 10.0% Notes in the
open market. The write-off of certain deferred financing costs associated with
the Chiles 10.0% Notes acquired and the difference between the amount
68
paid to acquire the Chiles 10.0% Notes and their carrying value resulted in the
recognition of an extraordinary gain of $1,309,000 and $1,211,000 in 1998 and
1999, respectively. During 1999, SEACOR and its wholly owned subsidiary that
owned Chiles 10.0% Notes sold $18,630,000 principal amount of such notes to a
financial institution, subject to swap agreements. See Note 2 for discussion. In
November 1999, Chiles Offshore completed an offering of membership interests and
rights to purchase membership interests (the "Offering") which provided all
current members with a pro rata right to purchase such securities in an
aggregate amount of $15,000,000. The proceeds from this Offering were used by
Chiles Offshore to repurchase, at par, $15,000,000 aggregate principal amount of
the Chiles 10.0% Notes from SEACOR. Net proceeds from the Chiles IPO
approximated $156,900,000. Chiles Offshore used $99,000,000 of the Chiles IPO
offering proceeds to repurchase and retire outstanding indebtedness, consisting
of approximately $95,000,000 principal amount of the Chiles 10.0% Notes plus
accrued interest. Chiles Offshore also used approximately $7,000,000 of the
Chiles IPO proceeds to repay outstanding indebtedness due under its bank
facility.
Chiles Bank Facility. Also on April 29, 1998, Chiles Offshore entered into a
bank credit agreement that provided for a $25,000,000 revolving credit facility
(the "Chiles Bank Facility") maturing December 31, 2004. The Chiles Bank
Facility was arranged by Nederlandse Scheepshypotheek Bank N.V. and MeesPierson
Capital Corporation. In December 1999, the Chiles Bank Facility was amended and
available borrowings rose from $25,000,000 to $40,000,000 (the "Amended Chiles
Bank Facility"). The Amended Chiles Bank Facility provided for a floating
interest rate of LIBOR plus 1 3/8% per annum (approximately 7.3% at December 31,
1999) on amounts outstanding under the Amended Chiles Bank Facility and provided
for repayment of such amounts in eight quarterly installments of $1,875,000
beginning March 31, 2003, followed by eight quarterly installments of
$3,125,000, with the remaining balance payable on December 31, 2006. As a
condition precedent to the increase in the Amended Chiles Bank Facility, Chiles
Offshore was required to reduce the outstanding principal amount of the Chiles
10.0% Notes by $15,000,000 to $95,000,000. In December 2000, Chiles Offshore
replaced this bank credit agreement with a $120,000,000 credit facility that was
facilitated by Fortis Capital Corporation, Nedship Bank N.V., and DnB.
Effective September 22, 2000, the Company no longer consolidates Chiles'
financial condition, results of operations, and cash flows. See Note 5 for
discussion.
10. COMMON STOCK:
During 1999, SEACOR's Board of Directors increased its securities repurchase
authority by $105,000,000. The securities covered by the repurchase program
include the Company's Common Stock, its 5 3/8% Notes, and its 7.2% Notes
(collectively, the "SEACOR Securities"). Prior to the deconsolidation of Chiles
(see Note 5 for discussion), the Chiles 10.0% Notes were also covered by the
repurchase program. A total of 1,462,000 shares of Common Stock, at an aggregate
cost of $65,520,000, were repurchased for treasury during 1999.
During 2000, SEACOR's Board of Directors increased its securities repurchase
authority by $15,000,000. A total of 154,400 shares of Common Stock, at an
aggregate cost of $4,776,000, were repurchased for treasury during 2000. As of
December 31, 2000, the Company had approximately $36,884,000 available for the
repurchase of SEACOR Securities. The repurchase of any SEACOR Securities will be
effected from time to time through open market purchases, privately negotiated
transactions, or otherwise, depending on market conditions.
11. BENEFIT PLANS:
Seacor Savings Plan. SEACOR, through a wholly owned subsidiary, introduced a
defined contribution plan (the "SEACOR Plan"), effective July 1, 1994.
Furthermore, in connection with a merger and acquisition, the Company assumed
the obligations of certain other defined contribution plans. Effective January
1, 1998, the Company merged the defined contribution plans previously assumed
into the SEACOR Plan. Requirements for eligibility in the SEACOR Plan include
(i) one year of full time employment, (ii) attainment of 21 years of age, and
(iii) residency in the United States. Participants may contribute up to 15% of
their pre-tax annual compensation, and contributions are funded monthly.
Participants are fully vested in the Company's contribution upon (i) attaining
the age of 65, (ii) death, (iii) becoming disabled, or (iv) completing five
years of employment service. Contribution forfeitures for non-vested terminated
employees are used to reduce future contributions of the Company or pay
administrative expenses. The Company's contribution is limited to 50% of the
employee's first 6% of wages invested in the SEACOR Plan and is subject to
annual review by the Board of Directors. The Company's contributions to the plan
were $977,000, $948,000, and $845,000 for the years ended December 31, 2000,
1999, and 1998, respectively.
Stock Plans. On November 22, 1992, and April 18, 1996, SEACOR's stockholders
adopted the 1992 Non-Qualified Stock Option Plan (the "Stock Option Plan") and
the 1996 Share Incentive Plan (the "Share Incentive Plan"), respectively
(collectively, the "Plans"). The Plans provide for the grant of options to
purchase shares of SEACOR's common stock, and the Share Incentive Plan
additionally provides for the grant of stock appreciation
69
rights, restricted stock awards, performance awards, and stock units to key
officers and employees of the Company. The exercise price per share of options
granted cannot be less than 75% and 90% of the fair market value of SEACOR's
common stock at the date of grant under the Stock Option Plan and Share
Incentive Plan, respectively. Options granted under the Plans expire no later
than the tenth anniversary of the date of grant. The Plans are administered by
the Stock Option and Executive Compensation Committee of the Board of Directors
(the "Compensation Committee"). Seven hundred fifty thousand shares of SEACOR's
common stock have been reserved for issuance under each of the Stock Option Plan
and the Share Incentive Plan.
On May 23, 2000, the stockholders of SEACOR approved the 2000 Employee Stock
Purchase Plan (the "Stock Purchase Plan") that permits SEACOR to offer Common
Stock for purchase by eligible employees at a price equal to 85% of the lesser
of (i) the fair market value of Common Stock on the first day of the offering
period or (ii) the fair market value of Common Stock on the last day of the
offering period. Common Stock will be available for purchase under the Stock
Purchase for six-month offering periods. Three hundred thousand shares of Common
Stock are reserved for issuance under the Stock Purchase Plan during the ten
years following its adoption. Eligible employees may accumulate savings through
payroll deductions over an offering period in order to purchase Common Stock at
the end of such period. Purchases of Common Stock under the Stock Purchase Plan
may only be made with accumulated savings from payroll deductions, and an
employee cannot complete such purchases using other resources. All employees who
have been continuously employed by SEACOR's participating subsidiaries for at
least six months and who regularly work more than 20 hours a week and more than
five months a year are eligible to participate in the Stock Purchase Plan. The
Stock Purchase Plan is intended to comply with Section 423 of the Internal
Revenue Code of 1986, as amended (the "code") but is not intended to be subject
to Section 401(a) of the Code or the Employee Retirement Income Security Act of
1974. The Board of Directors of SEACOR may amend or terminate the Stock Purchase
Plan at any time; however, no increase in the number of shares of Common Stock
reserved for issuance under the Stock Purchase Plan may be made without
stockholder approval.
On May 23, 2000, the stockholders of SEACOR also approved the 2000 Stock Options
Plan for Non-Employee Directors (the "Non-Employee Director Plan"). Under the
Non-Employee Director Plan, each member of the Board of Directors who is not an
employee of SEACOR or any subsidiary will be granted an option to purchase 3,000
shares of Common Stock on the date of each annual meeting of the stockholders of
SEACOR through and including the 2004 Annual Meeting of Stockholders. The
exercise price of the options granted under the Non-Employee Director Plan will
be equal to 100% of the fair market value per share of Common stock on the date
the options are granted. One hundred fifty thousand shares of Common stock have
been reserved under the Non-Employee Director Plan. Options granted under the
Non-Employee Director Plan will be exercisable at any time following the earlier
of the first anniversary of, or the first annual meeting of SEACOR's
stockholders after, the date of grant, for a period of up to ten years from date
of grant. Subject to the accelerated vesting of options upon a non-employee
Director's death or disability, if a non-employee Director's service as a
director of SEACOR is terminated, his or her options will terminate with respect
to the shares of Common Stock as to which such options are not then exercisable.
A non-employee Director's options that are vested but not exercised may, subject
to certain exceptions, be exercised within three months after the date of
termination of service as a director in the case of termination by reason of
voluntary retirement, failure of SEACOR to nominate such director for
re-election or failure of such director to be re-elected by stockholders after
nomination by SEACOR, or within one year in the case of termination of service
as a director by reason of death or disability.
Stock Options. In October 1995, Statement of Financial Accounting Standards No.
123 ("SFAS 123"), "Accounting for Stock Based Compensation," was issued
effective in 1996 for the Company. Under SFAS 123, companies could either adopt
a "fair valued based method" of accounting for an employee stock option, as
defined, or continue to use accounting methods as prescribed by APB Opinion No.
25. The Company has elected to continue accounting for its plan under APB
Opinion No 25. Had compensation costs for the plan been determined consistent
with SFAS 123, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts for the years ended December 31,
2000, 1999, and 1998, in thousands of dollars, except per share data.
2000 1999 1998
-------------------------- --------------------------- --------------------------
As Reported Pro forma As Reported Pro forma As Reported Pro forma
------------ ------------ ------------- ------------- ------------- ------------
Net Income.................. $ 34,120 $ 32,211 $ 30,936 $ 30,439 $ 125,927 $ 125,746
Earnings per common share:
Basic.................... $ 2.02 $ 1.91 $ 1.73 $ 1.71 $ 6.39 $ 6.38
Diluted.................. 1.92 1.83 1.69 1.67 5.50 5.49
The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future events, and additional awards in the future are anticipated.
70
Share Award Transactions. The following transactions have occurred in the Plans
during the periods ended December 31:
2000 1999 1998
------------------------- ------------------------- ------------------------
Wt'ed Avg. Wt'ed Avg. Wt'ed Avg.
Number of Exercise/ Number of Exercise/ Number of Exercise/
Shares Grant Price Shares Grant Price Shares Grant Price
----------- ------------ ----------- ------------ ---------- ------------
Stock Option Activities --
Outstanding, at beginning of year 545,871 $ 16.31 443,721 $ 13.09 487,668 $ 11.36
Granted......................... 172,616 $ 32.81 104,775 $ 29.97 30,978 $ 34.49
Exercised....................... (36,750) $ 10.32 -- $ -- (73,125) $ 10.36
Canceled........................ (525) $ 32.10 (2,625) $ 17.71 (1,800) $ 22.97
--------- --------- ---------
Outstanding, at end of year........ 681,212 $ 20.80 545,871 $ 16.31 443,721 $ 13.09
========= ========= =========
Options exercisable at year end ... 452,511 $ 14.30 421,403 $ 12.05 413,043 $ 11.51
========= ========= =========
Weighted average fair value of
Options granted................. $ 34.70 $ 18.57 $ 22.39
========= ========= =========
Restricted stock awards granted....... 44,018 $ 35.04 55,500 $ 29.79 37,935 $ 34.77
========= ========= =========
Shares available for future grant .... 348,711 563,945 721,370
========= ========= =========
The fair value of each option granted during the periods presented is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) no dividend yield, (b) weighted average expected
volatility of 38.09%, 44.07%, and 44.06% in the years 2000, 1999, and 1998,
respectively, (c) discount rates of 6.21%, 5.01%, and 5.21% in the years 2000,
1999 and 1998, respectively, and (d) expected lives of five years.
On date of issue, the market value of restricted shares issued to certain
officers and key employees of the Company is recorded in Stockholders' Equity as
Unamortized Restricted Stock and then amortized to expense over one and three
year vesting periods. During 2000, 1999, and 1998, compensation cost recognized
in connection with restricted stock awards totaled $1,337,000, $1,508,000, and
$1,333,000, respectively. At December 31, 2000, there were 74,372 shares of
unvested restricted stock outstanding at a weighted average price of $46.00. Of
the unvested shares outstanding, 44,975, 20,708, and 8,689 shares will vest in
2001, 2002, and 2003, respectively. On February 14, 2001, the Compensation
Committee granted 53,030 restricted shares to certain officers and key employees
of the Company with aggregate market value of $2,728,000 on that date.
The following table summarizes certain information about the options outstanding
at December 31, 2000 grouped into three exercise price ranges:
Exercise Price Range
---------------------------------------------------
$6.43 - $16.63 $20.50 - $29.67 $30.71 - $43.00
---------------- ----------------- ----------------
Options outstanding at December 31, 2000............. 391,836 75,525 213,851
Weighted-average exercise price...................... $ 11.76 $ 28.92 $ 34.50
Weighted-average remaining contractual life (years).. 3.59 7.33 8.61
Options exercisable at December 31, 2000............. 391,836 30,375 30,300
Weighted average exercise price of exercisable
options............................................ $ 11.76 $ 27.95 $ 33.43
12. RELATED PARTY TRANSACTIONS:
National Response Corporation, a wholly owned subsidiary of the Company ("NRC"),
contracts with James Miller Marine Services ("JMMS"), an environmental
contractor based in Staten Island, New York, for spill response services. In
fiscal 2000, 1999, and 1998, NRC paid approximately $203,000, $362,000, and
$398,000, respectively, to JMMS for these services. The brother of a NRC
director is Vice President of JMMS.
Miller Environmental Group ("MEG"), an environmental contractor based in
Calverton, New York, maintains and stores spill response equipment owned by NRC
and provides labor, equipment and materials to assist in spill response
activities, and provides other services to NRC. In fiscal 2000, 1999, and 1998,
NRC paid approximately $82,000, $293,000, and $171,000, respectively, to MEG for
these services. The father of a NRC director is Vice President, Secretary and
Treasurer of MEG.
Globe Wireless provides the Company's offshore marine service segment a
"ship-to-shore" communication network and has provisioned and installed certain
computer hardware, software, and electronic equipment aboard its offshore marine
vessels. In fiscal 2000, 1999, and 1998, approximately $1,237,000, $1,421,000,
and $743,000, respectively, was paid to Globe Wireless for services and
merchandise provided the Company.
A fee is paid to a minority stockholder for managing the Company's North Sea
standby safety vessels. The U.S. dollar equivalent of such fees paid in Pounds
Sterling approximated $596,000, $1,058,000, and $1,087,000 in the years ended
December 31, 2000, 1999, and 1998, respectively.
On December 20, 2000, the Company acquired through a merger SCF, a company that
owned and operated inland river barges and that was substantially owned and
controlled by certain SEACOR officers and directors, including
71
Messrs. Fabrikant, Blank, Conway, Morse, and an entity this is an affiliate of
Mr. Gellert. See Note 4 for additional discussion of this transaction.
13. COMMITMENTS AND CONTINGENCIES:
As of December 31, 2000, the Company has commitments to build eight offshore
support vessels at an approximate aggregate cost of $43,064,000 of which
$6,340,000 has been expended. These vessels are expected to enter service during
the next two years. A joint venture corporation, in which the Company owns a 50%
equity interest, is committed to the construction of one Handymax Dry-Bulk ship
that is expected to enter service in 2001. The cost to construct and place this
ship into service will approximate $19,500,000, of which 75% is expected to be
financed from external sources. Following December 31, 2000, the Company
committed to build two additional offshore support vessels at an approximate
aggregate cost of $6,500,000 and an additional 60 barges at an approximate
aggregate cost of $14,900,000. The Company expects a certain number of the
barges to be purchased by third parties and managed by the Company. The offshore
support vessels are expected to be delivered during the fourth quarter of 2001
and the barges are expected to be delivered at various dates through June 2001.
In the normal course of its business, the Company becomes involved in various
litigation matters including, among other things, claims by third parties for
alleged property damages, personal injuries, and other matters. While the
Company believes it has meritorious defenses against these claims, management
has used estimates in determining the Company's potential exposure and has
recorded reserves in its financial statements related thereto where appropriate.
It is possible that a change in the Company's estimates of that exposure could
occur, but the Company does not expect such changes in estimated costs will have
a material effect on the Company's financial position or results of operations.
During 1998 and 1995, the Company entered into sale-type leases for two crew and
one anchor handling towing supply vessels, respectively. The anchor handling
towing supply vessel was sold in 1998 to a third party and bareboat chartered to
SEAMEX. The remaining leases expire in 2001 and contain options that permit the
lessee to purchase the vessels at various dates during the term of the leases.
The amortization of unearned income in the years ended December 31, 2000, 1999,
and 1998, totaled $492,000, $548,000, and $403,000, respectively. The net
investment in sale-type leases at December 31, 2000 was comprised of minimum
lease payment receivables totaling $791,000, estimated residual values of
$1,933,000, and unearned income of $413,000. As of December 31, 2000, $385,000
and $1,926,000 of the net investment in the sale-type leases were reported in
the Consolidated Balance Sheets as current and noncurrent other assets,
respectively.
In December 1996, pursuant to the SMIT Transaction, the Company leased two
vessels under capital leases with gross costs of $21,239,000 that are being
depreciated over an estimated useful life of 23 years. At December 31, 2000 and
1999, accumulated depreciation related to these vessels totaled $3,727,000 and
$2,754,000, respectively. At December 31, 2000, $1,767,000 and $15,813,000 in
obligations under these capital leases are reported as current and long-term
debt, respectively. Minimum lease payments of $18,482,000 are due in 2001. The
amount to be paid in 2001 will include cash and the issuance of $6,750,000 in
SMIT Convertible Notes. Future minimum lease payments include interest of
$902,000.
During 2000, 1999, and 1998, the Company completed transactions for the sale and
leaseback of 3, 5, and 11 vessels, respectively, and the leases have been
classified as operating leases in accordance with SFAS No. 13 "Accounting for
Leases." The leases contain purchase and lease renewal options at fair market
value or rights of first refusal with respect to the sale or lease of the
vessels and range in duration from two to five years. Gains realized from those
sales, totaling $1,394,000, $6,566,000 and $38,442,000 in 2000, 1999, and 1998,
respectively, have been deferred and are being credited to income as reductions
in rental expense over the lease terms. Rental expense in 2000, 1999 and 1998
totaled $3,267,000, $3,525,000, and $2,142,000, respectively. Future minimum
lease payments are $11,197,000 in 2001, $7,429,000 in 2002, $6,300,000 in 2003,
$5,279,000 in 2004, and $4,560,000 in 2005.
14. MAJOR CUSTOMERS AND SEGMENT DATA:
The Company adopted Statement of Financial Accounting Standards No. 131 ("SFAS
131"), "Disclosures about Segments of an Enterprise and Related Information,"
during the fourth quarter of 1998. SFAS 131 established standards for the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also established standards for related disclosures about
products and services, geographic areas, and major customers. SFAS 131 defined
operating segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has aggregated its business activities into
72
three operating segments: marine, environmental, and drilling. These operating
segments represent strategic business units that offer different services.
The marine service segment charters support vessels to owners and operators of
offshore drilling rigs and production platforms both domestically and
internationally. Two of the large groups of offshore support vessels operated by
the Company are crew boats, which transport personnel and small loads of cargo
when expedited deliveries are required, and utility boats, which support
offshore production activities by delivering general cargo and facilitating
infield transportation of personnel and materials. Two other significant classes
of vessels operated by the Company are towing supply and anchor handling towing
supply vessels. These vessels have powerful engines and deck mounted winches and
are capable of towing and positioning offshore drilling rigs as well as
providing supply vessel services. The Company's standby safety vessels, which
operate in the North Sea, provide a means of evacuation and rescue for platform
and rig personnel in the event of an emergency at an offshore installation. The
Company also operates supply vessels, which transport drill pipe, drilling
fluids, and construction materials, and special service vessels, which include
well stimulation, seismic data gathering, line handling, freight, oil spill
response, and salvage vessels. In connection with its offshore marine services,
the Company offers logistics services, which include shorebase, marine
transport, and other supply chain management services in support of offshore
exploration and production operations.
The environmental service segment provides contractual oil spill response and
other related training and consulting services. The Company's clients include
tank vessel owner/operators, refiners and terminal operators, exploration and
production facility operators, and pipeline operators. The Company charges a
retainer fee to its customers for ensuring by contract the availability (at
predetermined rates) of its response services and equipment. Retainer services
include employing a staff to supervise response to an oil spill emergency and
maintaining specialized equipment, including marine equipment, in a ready state
for emergency and spill response as contemplated by response plans filed by the
Company's customers in accordance with Oil Pollution Act of 1990 and various
state regulations. The Company maintains relationships with numerous
environmental sub-contractors to assist with response operations, equipment
maintenance, and provide trained personnel for deploying equipment in a spill
response. When oil spills occur, the Company mobilizes specialized oil spill
response equipment, using either its own personnel or personnel under contract,
to provide emergency response services for both land and marine oil spills.
The Company's drilling service segment conducted its business affairs through
Chiles Offshore LLC ("Chiles Offshore"), an entity in which the Company owned a
majority ownership interest until its conversion into a corporation (with Chiles
Offshore renamed "Chiles Offshore Inc.") and completion of the Chiles IPO on
September 22, 2000. Chiles Offshore's business purpose is to own and operate
offshore drilling rigs. Since inception in 1997 and until July 1999, Chiles
Offshore operated as a development stage company, devoting substantially all its
efforts constructing two ultra-premium jackup rigs, raising capital, and
securing contracts for the Rigs. The first Rig, the Chiles Columbus, entered
service in June 1999 and the second Rig, the Chiles Magellan, entered service in
November 1999. In April 2000, Chiles commenced operation of a bareboat
chartered-in ultra-premium jackup rig, the Tonala. Effective September 22, 2000,
the Company no longer consolidates the operating results of Chiles.
The Company evaluates the performance of each operating segment based upon the
operating profit of the segment and including gains or losses from the sale of
equipment and interest in 50% or less owned companies and equity in the net
income of 50% or less owned companies but excluding minority interest in income
or loss of subsidiaries, interest income and expense, net gains or losses from
the sale of marketable securities, derivative transactions, and the sale of
shares of Chiles, corporate expenses, and income taxes. Operating profit is
defined as Operating Income as reported in the Consolidated Statements of Income
excluding corporate expenses and net of certain other income and expense items.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies except that the
disaggregation of financial results has been prepared using a management
approach. Segment assets exclude those considered by the Company to be of a
corporate nature. Corporate assets include SEACOR and its wholly owned
subsidiaries' unrestricted cash, marketable securities, certain other assets,
and property and equipment related to corporate operations. Information
disclosed in the tables presented below may differ from separate financial
statements presented by subsidiaries of the Company due to certain elimination
entries required in consolidation.
Revenues attributed to geographic areas were based upon the country of domicile
for marine service segment customers and the country in which the Company
provided oil spill protection or other related training and consulting services
for environmental service segment customers. Revenues from services rendered to
divisions or subsidiaries of one customer totaled $26,777,000 in 2000,
$26,139,000 in 1999, and $40,717,000 in 1998 (8% of revenues in 2000, 9% of
revenues in 1999, and 11% of revenues in 1998). Information about profit and
loss and assets by business segment is as follows for the years ended December
31, in thousands of dollars:
73
Other and
2000 Marine Environmental Drilling Corporate Total
----------- ----------- ----------- ------------ -----------
Operating Revenues -
External Customers.......................... $ 276,473 $ 24,996 $ 37,380 $ 1,092(a)$ 339,941
Intersegment................................ 458 -- -- (458) --
--------- --------- --------- --------- ---------
Total...................................... $ 276,931 $ 24,996 $ 37,380 $ 634 $ 339,941
========= ========= ========= ========= ==========
Operating Profit (Loss)....................... $ 33,830 $ 3,655 $ 14,615 $ 200 $ 52,300
Gains from Equipment Sales or Retirements, net 7,616 13 -- -- 7,629
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................ (396) 619 458 (5,667) (4,986
Minority Interest in Loss of Subsidiaries..... -- -- -- (3,393) (3,393)
Interest Income............................... -- -- -- 17,423 17,423
Interest Expense.............................. -- -- -- (27,450) (27,450)
Derivative Income, net........................ -- -- -- 6,292 6,292
Gains from Sale of Marketable Securities, net -- -- -- 7,562 7,562
Gain upon Sale of Shares of Chiles............ -- -- -- 4,023 4,023
Corporate Expenses............................ -- -- -- (6,121) (6,121)
Income Taxes.................................. -- -- -- (19,159) (19,159)
--------- --------- --------- --------- ---------
Income (Loss) before Extraordinary Item. $ 41,050 $ 4,287 $ 15,073 $ (26,290) $ 34,120
========= ========= ========= ========= ==========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies............ $ 43,078 $ 432 $ 68,122 $ 26,062 $ 137,694
Other Segment Assets.......................... 635,208 29,516 -- 20,267 684,991
--------- --------- --------- --------- ---------
Subtotal Segment Assets..................... 678,286 29,948 68,122 46,329 822,685
Corporate..................................... -- -- -- 310,045 310,045
--------- --------- --------- --------- ---------
Total Assets.............................. $ 678,286 $ 29,948 $ 68,122 $ 356,374 $1,132,730
========= ========= ========= ========= ==========
Depreciation and Amortization................. $ 41,936 $ 4,005 $ 5,144 $ 104 $ 51,189
=================================================================================================================
1999
Operating Revenues -
External Customers.......................... $ 258,177 $ 22,659 $ 7,651 $ 938(b)$ 289,425
Intersegment................................ 528 161 -- (689) --
--------- --------- --------- --------- ---------
Total...................................... $ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
========= ========= ========= ========= ==========
Operating Profit (Loss)....................... $ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or Retirements, net 1,661 16 -- -- 1,677
Loss from Sale of Interest in a 50% or Less
Owned Company............................... (72) -- -- -- (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................ 4,906 814 -- (3,107) 2,613
Minority Interest in Loss of Subsidiaries..... -- -- -- 1,148 1,148
Interest Income............................... -- -- -- 20,495 20,495
Interest Expense.............................. -- -- -- (22,330) (22,330)
Derivative Losses, net........................ -- -- -- (1,323) (1,323)
Losses from Sale of Marketable Securities, net -- -- -- (279) (279)
Corporate Expenses............................ -- -- -- (5,169) (5,169)
Income Taxes.................................. -- -- -- (17,533) (17,533)
--------- --------- --------- --------- ---------
Income (Loss) before Extraordinary Item... $ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
========= ========= ========= ========= ==========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies............ $ 41,989 $ 1,288 $ -- $ 33,999 $ 77,276
Other Segment Assets.......................... 621,197 27,650 199,294 -- 848,141
--------- --------- --------- --------- ---------
Subtotal Segment Assets..................... 663,186 28,938 199,294 33,999 925,417
Corporate..................................... -- -- -- 271,574 271,574
--------- --------- --------- --------- ---------
Total Assets.............................. $ 663,186 $ 28,938 $ 199,294 $ 305,573 $1,196,991
========= ========= ========= ========= ==========
Depreciation and Amortization................. $ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=================================================================================================================
1998
Operating Revenues -
External Customers.......................... $ 359,611 $ 26,180 $ -- $ -- $ 385,791
Intersegment................................ -- -- -- -- --
--------- --------- --------- --------- ---------
Total...................................... $ 359,611 $ 26,180 $ -- $ -- $ 385,791
========= ========= ========= ========= ==========
Operating Profit (Loss)....................... $ 127,403 $ 4,479 $ (823) $ -- $ 131,059
Gains from Equipment Sales or Retirements, net 38,227 111 -- -- 38,338
Gain from Sale of Interest in a 50% or Less
Owned Company............................... 1,197 -- -- -- 1,197
Equity in Net Earnings of 50% or Less Owned
Companies................................... 13,657 554 -- -- 14,211
Minority Interest in Income of Subsidiaries... -- -- -- (1,612) (1,612)
Interest Income............................... -- -- -- 25,346 25,346
Interest Expense.............................. -- -- -- (22,798) (22,798)
Derivative Income, net........................ -- -- -- 3,273 3,273
Gains from Sale of Marketable Securities, net -- -- -- 1,827 1,827
Corporate Expenses............................ -- -- -- (5,344) (5,344)
Income Taxes.................................. -- -- -- (60,879) (60,879)
--------- --------- --------- --------- ---------
Income (Loss) before Extraordinary Item... $ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
========= ========= ========= ========= ==========
Investments, at Equity, and Receivables
from 50% or Less Owned Companies............ $ 54,954 $ 524 $ -- $ -- $ 55,478
Other Segment Assets.......................... 770,614 29,103 177,832 -- 977,549
--------- --------- --------- --------- ---------
Subtotal Segment Assets..................... 825,568 29,627 177,832 -- 1,033,027
Corporate..................................... -- -- -- 224,948 224,948
--------- --------- --------- --------- ---------
Total Assets.............................. $ 825,568 $ 29,627 $ 177,832 $ 224,948 $1,257,975
========= ========= ========= ========= ==========
Depreciation and Amortization................. $ 32,534 $ 3,846 $ 56 $ 13 $ 36,449
=================================================================================================================
(a) Revenues attributable to the Company's inland barge business that commenced
operation in the third quarter of 2000.
(b) Revenues attributable to the Company's telecommunications business that was
acquired in April 1999 and sold in July 1999.
74
Revenues and operating profits attributed to geographic areas were based upon
the country of domicile for offshore marine and drilling service segment
customers and the country in which the Company provided oil spill protection or
other related training and consulting services for environmental service segment
customers. The Company considers long-lived assets to be property and equipment
that has been distributed to geographical areas based upon the assets' physical
location during the applicable period. Certain of the Company's offshore marine
service segment's long-lived vessel assets relocate between its geographical
areas of operation. The costs of long-lived vessel assets that are relocated
have been allocated between geographical areas of operation based upon length of
service in the applicable region. The following table is presented in thousands
of dollars for the years ending December 31.
United United Other
States Nigeria Kingdom Foreign Total
---------- ---------- ---------- ---------- ----------
2000:
Revenue:
Offshore Marine.......... $ 175,011 $ 15,544 $ 39,565 $ 46,811 $ 276,931
Environmental............ 23,816 -- -- 1,180 24,996
Drilling................. 37,380 -- -- -- 37,380
Other.................... 634 -- -- -- 634
---------- ---------- ---------- ---------- ----------
$ 236,841 $ 15,544 $ 39,565 $ 47,991 $ 339,941
========== ========== ========== ========== ==========
Operating Profit:
Offshore Marine.......... $ 36,507 $ (4,626) $ (3,917) $ 5,866 $ 33,830
Environmental............ 3,293 -- -- 362 3,655
Drilling................. 14,615 -- -- -- 14,615
Other.................... 200 -- -- -- 200
---------- ---------- ---------- ---------- ----------
$ 54,615 $ (4,626) $ (3,917) $ 6,228 $ 52,300
========== ========== ========== ========== ==========
Long-Lived Assets:
Offshore Marine.......... 277,294 40,119 47,898 136,396 501,707
Environmental............ 10,764 -- -- 248 11,012
Drilling................. -- -- -- -- --
Other.................... 14,359 -- -- -- 14,359
---------- ---------- ---------- ---------- ----------
$ 302,417 $ 40,119 $ 47,898 $ 136,644 $ 527,078
=========================================================================================================
1999:
Revenue:
Offshore Marine.......... $ 156,663 $ 19,324 $ 24,610 $ 58,108 $ 258,705
Environmental............ 22,110 -- 33 677 22,820
Drilling................. 7,651 -- -- -- 7,651
Other.................... 249 -- -- -- 249
---------- ---------- ---------- ---------- ----------
$ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
========== ========== ========== ========== ==========
Operating Profit:
Offshore Marine.......... 40,291 (5,237) (755) 11,859 46,158
Environmental............ 4,604 -- 30 167 4,801
Drilling................. (585) -- -- -- (585)
Other.................... 144 -- -- -- 144
---------- ---------- ---------- ---------- ----------
$ 44,454 $ (5,237) $ (725) $ 12,026 $ 50,518
========== ========== ========== ========== ==========
Long-Lived Assets:
Offshore Marine.......... 346,573 40,486 33,083 91,328 511,470
Environmental............ 11,836 -- -- 194 12,030
Drilling................. 191,697 -- -- -- 191,697
Other.................... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
$ 550,106 $ 40,486 $ 33,083 $ 91,522 $ 715,197
=========================================================================================================
1998:
Revenue:
Offshore Marine.......... $ 209,434 $ 30,593 $ 28,465 $ 91,119 $ 359,611
Environmental............ 25,217 62 59 842 26,180
Drilling................. -- -- -- -- --
---------- ---------- ---------- ---------- ----------
$ 234,651 $ 30,655 $ 28,524 $ 91,961 $ 385,791
========== ========== ========== ========== ==========
Operating Profit:
Offshore Marine.......... 82,100 6,516 5,097 33,690 127,403
Environmental............ 4,477 42 34 (74) 4,479
Drilling................. (823) -- -- -- (823)
---------- ---------- ---------- ---------- ----------
$ 85,754 $ 6,558 $ 5,131 $ 33,616 $ 131,059
========== ========== ========== ========== ==========
Long-Lived Assets:
Offshore Marine.......... 393,566 47,257 31,416 139,124 611,363
Environmental............ 13,085 -- -- 119 13,204
Drilling................. 294 -- -- -- 294
---------- ---------- ---------- ---------- ----------
$ 406,945 $ 47,257 $ 31,416 $ 139,243 $ 624,861
=========================================================================================================
75
15. EVENTS SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED): On February 20,
2001, the Company called for redemption $50,000,000 of the $181,600,000 in
aggregate principal amount outstanding of the 5 3/8% Notes. The redemption price
would be $1,029.90 per $1,000 principal amount of notes plus accrued interest
from November 15, 2000 to the redemption date. Holders of notes being called
were able to convert any or all of their notes into 22.7272 shares of Common
Stock per $1,000 principal amount of notes. Together with certain privately
negotiated transactions, the call resulted in the redemption of $85,161,000 in
principal amount of the 5 3/8% Notes in exchange for 1,965,145 shares of Common
Stock and $112,000 in principal amount of the 5 3/8% Notes for approximately
$117,000.
On February 23, 2001, the Company completed the acquisition of all of the issued
share capital of Gilbert Cheramie Boats, Inc. and related companies
("Cheramie"). The transaction involved purchase consideration of approximately
$62,700,000 paid in cash for all shares of voting and non-voting stock of the
Cheramie. Cheramie is headquartered in Golden Meadow, Louisiana, and their fleet
is dedicated to serving the oil and gas industry in the Gulf of Mexico. Cheramie
owns 11 mini-supply, 11 utility, and 1 newly delivered offshore supply vessel.
In addition, another offshore supply vessel is under construction and is
scheduled for delivery in April 2001.
On March 6, 2001, the Company and Stirling Shipping Company Ltd. ("Stirling
Shipping"), a private UK company based in Glasgow, Scotland, announced that they
had signed a letter of intent for the Company to acquire all of the issued share
capital of Stirling Shipping and certain subsidiaries. The purchase
consideration will be based on the adjusted assets less liabilities of Stirling
Shipping at closing, which is estimated to total approximately (pound)58,000,000
($85,100,000 based on exchange rates in effect on March 6, 2001). The purchase
price will be payable approximately 50% in cash, 20% in shares of Common Stock,
and 30% in the form of promissory notes. Stirling's long term debt is projected
to be approximately (pound)38,300,000 ($56,200,000 based on exchange rates in
effect on March 6, 2001) at closing. The final price is subject to certain
closing adjustments. Through its acquisition of Stirling Shipping, the Company
will acquire twelve vessels all currently working in the North Sea with an
average age of 11.7 years and contracts for the construction of two new vessels.
Of the twelve vessels, nine are supply vessels and three are anchor handling
towing supply vessels ("AHTS"). The new construction contracts are for two
15,000 bhp AHTS vessels at a total cost of approximately (pound)31,600,000
($46,400,000 based on exchange rates in effect on March 6, 2001). The vessels
will be built in the UK and are scheduled for delivery during the first half of
2002. The Company intends to retain Stirling Shipping's management and vessel
crews. Completion of the transaction is subject to certain due diligence items,
execution of definitive documentation, approval of Stirling Shipping's
shareholders and the Boards of Directors of Stirling Shipping and SEACOR.
The parties anticipate that the transaction will be completed by the end of
April 2001.
On March 8, 2001, the Company announced that it has called for redemption on
April 9, 2001, $50,000,000 in principal amount of the 5 3/8% Notes. The
redemption price will be $1,029.90 per $1,000 principal amount of notes plus
accrued interest from November 15, 2000 to the redemption date. Holders of notes
being called would be able to convert any or all of their notes into 22.7272
shares of Common Stock per $1,000 principal amount of notes until the close of
business on April 6, 2001. SEACOR has entered into a standby agreement with
Credit Suisse First Boston ("Credit Suisse") under which Credit Suisse has
agreed, subject to certain conditions, to purchase from the Company the shares
of Common Stock that otherwise would have been delivered upon conversion of up
to $50,000,000 aggregate principal amount of the notes that are subject to the
call but are not converted. The Company would use those proceeds to redeem notes
that are called for redemption but not converted.
16. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS:
2000 1999 1998
--------- ---------- ----------
(in thousands of dollars)
Cash income taxes paid.....................................................$ 5,539 $ 5,048 $ 47,345
Cash interest paid......................................................... 28,942 35,875 22,514
Schedule of Non-Cash Investing and Financing Activities:
Property exchanged for investment in and notes receivable from 50% or
less owned company.................................................... -- -- --
Sale of a subsidiary to Globe Wireless for a note receivable............ -- 5,279 --
Conversion of loans into convertible preferred units of Globe Wireless.. -- 22,000 --
Investment in 50% or less owned companies with long-term debt,
including debt discount.............................................. -- -- 738
Acquisition of ERST/O'Brien's Inc. with Common Stock.................... 920 1,482 442
Acquisition of Boston Putford with - Common Stock....................... 4,086 -- --
- notes, including debt discount..... 9,818 -- --
Acquisition of SCF with - Common Stock....................... 5,920 -- --
- assumption of debt................. 552 -- --
Purchase of vessels with - deferred payment obligation........ 7,754 -- --
- notes, including debt discount..... -- -- 22,462
76
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Selected financial information for interim periods are presented below in
thousands of dollars, except share data. Earnings per share are computed
independently for each of the quarters presented; therefore, the sum of the
quarterly earnings per share do not necessarily equal the total for the year.
Quarter Ended
----------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31,
------------- ------------ ------------ ------------
2000:
Revenue...................................... $ 88,301 $ 93,552 $ 85,144 $ 72,944
Gross profit(1).............................. 24,952 22,857 20,981 18,510
Income before extraordinary item............. 11,109 11,491 5,040 6,480
Basic earnings per common share -
Income before extraordinary item.......... 0.66 0.68 0.30 0.39
Extraordinary item........................ -- -- -- --
---------- ---------- ---------- ----------
Net Income................................ $ 0.66 $ 0.68 $ 0.30 $ 0.39
========== ========== ========== ==========
Diluted earnings common per share -
Income before extraordinary item.......... $ 0.60 $ 0.62 $ 0.29 $ 0.39
Extraordinary item........................ -- -- -- --
---------- ---------- ---------- ----------
Net Income................................ $ 0.60 $ 0.62 $ 0.29 $ 0.39
========== ========== ========== ==========
1999:
Revenue...................................... $ 71,335 $ 71,894 $ 68,475 $ 77,721
Gross profit(1).............................. 18,129 19,031 17,496 26,701
Income before extraordinary item............. 6,140 4,109 6,217 13,279
Basic earnings per common share -
Income before extraordinary item.......... 0.37 0.23 0.34 0.72
Extraordinary item........................ -- 0.05 -- 0.01
---------- ---------- ---------- ----------
Net Income................................ $ 0.37 $ 0.28 $ 0.34 $ 0.73
========== ========== ========== ==========
Diluted earnings common per share -
Income before extraordinary item.......... $ 0.37 $ 0.23 $ 0.34 $ 0.65
Extraordinary item........................ -- 0.05 -- 0.01
---------- ---------- ---------- ----------
Net Income................................ $ 0.37 $ 0.28 $ 0.34 $ 0.66
========== ========== ========== ==========
(1) Gross profit is defined as Operating Income as reported in the Consolidated
Statements of Income less general and administrative expenses.
77
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To SEACOR SMIT Inc.:
We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of SEACOR SMIT Inc. and its
subsidiaries and have issued our report thereon dated February 14, 2001. Our
audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule on page 79 is the responsibility of
the Company's management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Arthur Andersen LLP
New Orleans, Louisiana
February 14, 2001
78
SEACOR SMIT INC. and SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2000, 1999, and 1998
(in thousands)
Balance Charges to Balance
Beginning Cost and (a) End
Description of Year Expenses Deductions of Year
- ----------------------------------------- ----------- ------------ ----------- -----------
Year Ended December 31, 2000
Allowance for doubtful accounts
(deducted from accounts receivable) $ 1,567 $ (235) $ 22 $ 1,310
========= ========= ========= =========
Year Ended December 31, 1999
Allowance for doubtful accounts
(deducted from accounts receivable) $ 1,956 $ (328) $ 61 $ 1,567
========= ========= ========= =========
Year Ended December 31, 1998
Allowance for doubtful accounts
(deducted from accounts receivable) $ 1,626 $ 455 $ 125 $ 1,956
========= ========= ========= =========
(a) Accounts receivable amounts deemed uncollectible and removed from accounts
receivable and allowance for doubtful accounts.
79
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR END DECEMBER 31, 2000
Exhibit
Number Description
- ------- --------------
2.1* Asset Purchase Agreement, dated as of December 19, 1996, by and among
SEACOR Holdings, Inc. and certain of its subsidiaries, and Smit
Internationale N.V. and certain of its subsidiaries (incorporated
herein by reference to Exhibit 2.0 to the Company's Current Report on
Form 8-K dated December 19, 1996 and filed with the Commission on
December 24, 1996).
2.2* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Triangle Marine, Inc., F.C.
Felterman, Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-3 (No. 333-20921) filed with the
Commission on January 31, 1997).
2.3* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman, Ernest
Felterman, D. Lee Felterman and Daniel C. Felterman (incorporated
herein, by reference to Exhibit 2.2 to the Company's Registration
Statement on Form S-3 (No. 333-20921) filed with the Commission on
January 31, 1997).
2.4* Definitive Purchase Agreement, dated September 5, 1995, by and among
Graham Marine Inc., Edgar L. Graham, J. Clark Graham, and Glenn A.
Graham (incorporated herein by reference to Exhibit 2.0 to the
Company's Current Report on Form 8-K dated September 15, 1995).
2.5* Global Agreement, dated as of November 14, 1995, by and among Compagnie
Nationale de Navigation and Feronia International Shipping, SA and
SEACOR Holdings, Inc. and the subsidiaries listed in said agreement
(incorporated herein by reference to Exhibit 2.2 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 17, 1995).
2.6* Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and McCall Enterprises,
Inc. (incorporated herein by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.7* Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR Support Services, Inc. and McCall Support
Vessels, Inc. (incorporated herein by reference to Exhibit 2.2 to the
Company's Current Report on Form 8-K dated May 31, 1996 and filed with
the Commission on June 7, 1996).
2.8* Agreement and Plan of Merger, dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall Crews, Inc.
(incorporated herein by reference to Exhibit 2.3 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.9* Exchange Agreement relating to McCall Crewboats, L.L.C., dated as of
May 31, 1996, by and among SEACOR Holdings, Inc. and the persons listed
on the signature pages thereto (incorporated herein by reference to
Exhibit 2.4 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with the Commission on June 7, 1996).
2.10* Share Exchange Agreement and Plan of Reorganization relating to Cameron
Boat Rentals, Inc., dated as of May 31, 1996, by and among SEACOR
Holdings, Inc., McCall Enterprises, Inc. and the persons listed on the
signature pages thereto (incorporated herein by reference to Exhibit
2.5 to the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
80
2.11* Share Exchange Agreement and Plan of Reorganization relating to Philip
A. McCall, Inc., dated as of May 31, 1996, by and among SEACOR
Holdings, Inc., McCall Enterprises, Inc. and the persons listed on the
signature pages thereto (incorporated herein by reference to Exhibit
2.6 to the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
2.12* Share Exchange Agreement and Plan of Reorganization relating to Cameron
Crews, Inc., dated as of May 31, 1996, by and among SEACOR Holdings,
Inc., McCall Enterprises, Inc. and the persons listed on the signature
pages thereto (incorporated herein by reference to Exhibit 2.7 to the
Company's Current Report on Form 8-K dated May 31, 1996 and filed with
the Commission on June 7, 1996).
2.13* Stock Purchase Agreement dated as of January 30, 2001 by and between
SEACOR SMIT Inc. and Brian Cheramie (incorporated herein by reference
to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with
the Commission on March 5, 2001).
2.14* Letter Agreement dated as of February 23, 2001, amending the Stock
Purchase Agreement dated as of January 30, 2001 by and between SEACOR
SMIT Inc. and Brian Cheramie (incorporated herein by reference to
Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the
Commission on March 5, 2001).
2.15* Stock Purchase Agreement dated as of January 30, 2001 by and among
SEACOR SMIT Inc., the persons listed on Exhibit A thereto and Brian
Cheramie, as representative of such persons (incorporated herein by
reference to Exhibit 10.3 of the Company's Current Report on Form 8-K
filed with the Commission on March 5, 2001).
2.16* Letter Agreement dated as of February 23, 2001, amending the Stock
Purchase Agreement dated as of January 30, 2001 by and among SEACOR
SMIT Inc., the persons listed on Exhibit A thereto and Brian Cheramie,
as representative of such persons (incorporated herein by reference to
Exhibit 10.4 of the Company's Current Report on Form 8-K filed with the
Commission on March 5, 2001).
2.17* Share Purchase Agreement, dated as of April 19, 2000, among SEACOR SMIT
Inc. and the other parties thereto (incorporated herein by reference to
Exhibit 2.1 of the Company's Registration Statement on Form S-3 (No.
333-37492) filed with the Commission on May 19, 2000).
2.18* Agreement and Plan of Merger, dated as of December 19, 2000, by and
between SEACOR SMIT Inc. and SCF Corporation (incorporated by reference
to Exhibit 2.1 of the Company's Registration Statement on Form S-3 (No.
333-56842) filed with the Commission on March 9, 2001).
2.19* Share Purchase Agreement, dated as of January 9, 2001, among SEACOR
SMIT Inc. and the other parties thereto (incorporated by reference to
Exhibit 2.2 of the Company's Registration Statement on Form S-3 (No.
333-56842) filed with the Commission on March 9, 2001).
3.1* Restated Certificate of Incorporation of SEACOR SMIT Inc. (incorporated
herein by reference to Exhibit 3.1(a) to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1997 and filed with
the Commission on August 14, 1997).
3.2* Certificate of Amendment to the Restated Certificate of Incorporation
of SEACOR SMIT Inc. (incorporated herein by reference to Exhibit 3.1(b)
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14, 1997).
3.3* Amended and Restated By-laws of SEACOR Holdings, Inc. (incorporated
herein by reference to Exhibit 4.2 to the Company's Registration
Statement on Form S-8 (No. 333-12637) of SEACOR Holdings, Inc. filed
with the Commission on September 25, 1996).
4.1* Indenture, dated as of November 1, 1996, between First Trust National
Association, as trustee, and SEACOR Holdings, Inc. (including therein
forms of 5-3/8% Convertible Subordinated Notes due November 15, 2006 of
SEACOR Holdings, Inc.) (incorporated herein by reference to Exhibit 4.0
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 and filed with the Commission on November 14,
1996).
81
4.2* Indenture, dated as of September 22, 1997, between SEACOR SMIT Inc. and
First Trust National Association, as trustee (including therein form of
Exchange Note 7.20% Senior Notes Due 2009)(incorporated herein by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-4 (No. 333-38841) filed with the Commission on October 27,
1997).
4.3* Investment and Registration Rights Agreement, dated as of March 14,
1995, by and among SEACOR Holdings, Inc., Miller Family Holdings, Inc.,
Charles Fabrikant, Mark Miller, Donald Toenshoff, Alvin Wood, Granville
Conway and Michael Gellert (incorporated herein by reference to Exhibit
4.0 of the Company's Current Report on Form 8-K dated March 14, 1995,
as amended).
4.4* Investment and Registration Rights Agreement, dated as of May 31, 1996,
among SEACOR Holdings, Inc. and the persons listed on the signature
pages thereto (incorporated herein by reference to Exhibit 10.8 to the
Company's Current Report on Form 8-K dated May 31, 1996 and filed with
the Commission on June 7, 1996).
4.5* Registration Rights Agreement, dated November 5, 1996, between SEACOR
Holdings, Inc. and Credit Suisse First Boston Corporation, Salomon
Brothers Inc. and Wasserstein Perella Securities, Inc. (incorporated
herein by reference to Exhibit 4.1 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996 and filed
with the Commission on November 14, 1996).
4.6* Investment and Registration Rights Agreement, dated as of December 19,
1996, by and between SEACOR Holdings, Inc. and Smit International
Overseas B.V. (incorporated herein by reference to Exhibit 4.0 to the
Company's Current Report on Form 8-K dated December 19, 1996 and filed
with the Commission on December 24, 1996).
4.7* Investment and Registration Rights Agreement, dated as of January 3,
1997, among SEACOR Holdings, Inc., Acadian Offshore Services, Inc.,
Galaxie Marine Service, Inc., Moonmaid Marine, Inc. and Triangle
Marine, Inc. (incorporated herein by reference to Exhibit 4.6 to the
Company's Registration Statement on Form S-3 (No. 333-20921) filed with
the Commission on January 31, 1997).
4.8* Investment and Registration Rights Agreement, dated October 27, 1995,
by and between SEACOR Holdings, Inc. and Coastal Refining and
Marketing, Inc. (incorporated herein by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-3 (No. 33-97868) filed with
the Commission on November 17, 1995).
4.9* Investment and Registration Rights Agreement, dated November 14, 1995,
by and between SEACOR Holdings, Inc. and Compagnie Nationale de
Navigation (incorporated herein by reference to Exhibit 4.3 of the
Company's Registration Statement on Form S-3 (No. 33-97868) filed with
the Commission on November 17, 1995).
4.10* Registration Agreement, dated as of September 22, 1997, between the
Company and the Initial Purchasers (as defined therein)(incorporated
herein by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-4 (No. 333-38841) filed with the Commission on
October 27, 1997).
4.11* Restated Stockholders' Agreement dated December 16, 1992 (incorporated
herein by reference to Exhibit 10.12 to the Annual Report on Form 10-K
of SEACOR Holdings, Inc. for the fiscal year ended December 31, 1992).
4.12* Investment and Registration Rights Agreement, dated as of April 19,
2000, among SEACOR SMIT Inc. and the other parties thereto
(incorporated herein by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-3 (No. 333-37492) filed with the
Commission on May 19, 2000).
4.13* Investment and Registration Rights Agreement, dated as of December 19,
2000, among SEACOR SMIT Inc. and the other parties thereto
(incorporated by reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-3 (No. 333-56842) filed with the Commission on
March 9, 2001).
4.14* Investment and Registration Rights Agreement, dated as of January 9,
2001, among SEACOR SMIT Inc. and the other parties thereto
(incorporated by reference to Exhibit 4.2 of the Company's Registration
82
Statement on Form S-3 (No. 333-56842) filed with the Commission on
March 9, 2001).
10.1* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of McCall Enterprises, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.2* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of McCall Support Vessels, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.3* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of N.F. McCall Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.4* Indemnification Agreement, dated as of May 31, 1996, among all of the
members of McCall Crewboats, L.L.C., Norman McCall, as representative
of such members, and SEACOR Holdings, Inc. (incorporated herein by
reference to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated May 31, 1996 and filed with the Commission on June 7, 1996).
10.5* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of Cameron Boat Rentals, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.5 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.6* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of Philip A. McCall, Inc. and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.6 to the Company's
Current Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
10.7* Indemnification Agreement, dated as of May 31, 1996, among all of the
stockholders of Cameron Crews, Inc., Norman McCall, as representative
of such stockholders, and SEACOR Holdings, Inc. (incorporated herein
by reference to Exhibit 10.7 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7, 1996).
10.8* The Master Agreement, dated as of June 6, 1996, by and among Compagnie
Nationale de Navigation, SEACOR Holdings, Inc. and SEACOR Worldwide
Inc. (incorporated herein by reference to Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996).
10.9* Management and Administrative Services Agreement, dated January 1,
1990, between SCF Corporation and SEACOR Holdings, Inc. (incorporated
herein by reference to Exhibit 10.32 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission on
November 10, 1992).
10.10* Amendment No. 1 to the Management and Services Agreement, dated as of
January 1, 1993, between SCF Corporation and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.34 to the Annual
Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal year ended
December 31, 1992).
10.11* Lease Agreement, dated September 1, 1989, between The Morgan City Fund
and NICOR Marine Inc. (SEACOR Marine Inc., as successor lessee)
(incorporated herein by reference to Exhibit 10.33 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with the
Commission on November 10, 1992).
10.12*,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with the
Commission on November 10, 1992).
83
10.13*,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated herein
by reference to SEACOR Holdings, Inc.'s Proxy Statement dated March
18, 1996 relating to the Annual Meeting of Stockholders held on April
18, 1996).
10.14*,** SEACOR SMIT Inc. 2000 Stock Option Plan for Non-Employee Directors
(incorporated herein by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2000 and
filed with the Commission on August 14, 2000).
10.15*,** Benefit Agreement, dated May 1, 1989, between NICOR Marine Inc. and
Lenny P. Dantin (assumed by SEACOR Holdings, Inc.) (incorporated
herein by reference to Exhibit 10.51 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission on
November 10, 1992).
10.16*,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by reference to
Exhibit 10.61 to the Annual Report on Form 10-K of SEACOR Holdings,
Inc. for the fiscal year ended December 31, 1992).
10.17* Management and Services Agreement, dated January 1, 1985, between
NICOR Marine (Nigeria) Inc. and West Africa Offshore Limited (assumed
by SEACOR Holdings, Inc.) (incorporated herein by reference to Exhibit
10.55 to the Company's Registration Statement on Form S-1 (No.
33-53244) filed with the Commission on November 10, 1992).
10.18* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.19* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.20* Joint Venture Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit-Lloyd (Antillen) N.V. (incorporated herein by
reference to Exhibit 10.0 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on December 24,
1996).
10.21* Form of Management Agreement (incorporated herein by reference to
Exhibit 10.4 to the Company's Current Report on Form 8-K dated
December 19, 1996 and filed with the Commission on December 24, 1996).
10.22* Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated herein by
reference to Exhibit 10.3 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on December 24,
1996).
10.23* Salvage and Maritime Contracting Agreement, dated December 19, 1996,
between SEACOR Holdings, Inc. and Smit Internationale N.V.
(incorporated herein by reference to Exhibit 10.5 to the Company's
Current Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.24* License Agreement, dated December 19, 1996, between SEACOR Holdings,
Inc., certain subsidiaries of SEACOR Holdings, Inc. and Smit
Internationale N.V. (incorporated herein by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K dated December 19, 1996
and filed with the Commission on December 24, 1996).
10.25* Letter Agreement, dated February 26, 1998, between SEACOR SMIT Inc.
and certain of its subsidiaries and SMIT Internationale N.V. and
certain of its subsidiaries (incorporated herein by reference to
Exhibit 99.1 of the Company's Current Report on Form 8-K filed with
the Commission of March 11, 1998).
84
10.26 * Purchase Agreement, dated as of September 15, 1997, between the
Company and Salomon Brothers Inc., individually and as representative
of the Initial Purchasers (as defined therein)(incorporated herein by
reference to Exhibit 4.2 to the Company's Registration Statement on
Form S-4 (No. 333-38841) filed with the Commission on October 27,
1997).
10.27 * Revolving Credit Facility Agreement dated as of June 30, 1997 among
SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the other banks
and financial institutions named therein (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1997 and filed with the
Commission on August 14, 1997).
10.28* Agreement, dated October 27, 1995, by and among SEACOR Holdings, Inc.,
NRC Holdings, Inc., Coastal Refining and Marketing, Inc., and Phibro
Energy USA, Inc. (incorporated herein by reference to Exhibit 10.1 of
the Company's Registration Statement on Form S-3 (No. 33-97868) filed
with the Commission on November 15, 1995).
10.29*,** Employment Agreement, dated March 14, 1995, by and between National
Response Corporation and Mark Miller (incorporated herein by reference
to Exhibit 10.3 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 15, 1995).
10.30*,** Employment Agreement, dated March 14, 1995, by and between National
Response Corporation and James Miller (incorporated herein by
reference to Exhibit 10.4 of the Company's Registration Statement on
Form S-3 (No. 33-97868) filed with the Commission on November 15,
1995).
10.31*,** Letter agreement, dated February 26, 1997, between SEACOR SMIT Inc.
and certain of its' subsidiaries and SMIT Internationale, N.V. and
certain of its subsidiaries (incorporated herein by reference to
Exhibit 99.1 of the Current Report on Form 8-K filed with the
Commission on March 11, 1998).
10.32* Agreement for a U.S. $100,000,000 Revolving Credit Facility to be made
available to SEACOR SMIT Inc. by the financial institutions identified
on Schedule A and Den Norske Bank ASA, as agent, dated November 17,
1998.
10.33* Amendment No. 1 To Credit Agreement made as of February 4, 1999 by and
between SEACOR SMIT Inc., the financial institutions listed in
Schedule A to that certain Credit Agreement dated November 17, 1998
and Den norske Bank ASA.
10.34* Amendment No. 2 To Credit Agreement made as of October 1, 1999 by and
between SEACOR SMIT Inc., certain financial institutions and Den
norske Bank ASA., which further amends that certain Revolving Credit
Agreement dated November 17, 1998 and Amendment No. 1 thereto dated
February 4, 1999.
10.35*,** Form of Type A Restricted Stock Grant Agreement (incorporated herein
by reference to Exhibit 10.35 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 and filed with the
Commission on March 30, 2000).
10.36*,** Form of Type B Restricted Stock Grant Agreement (incorporated herein
by reference to Exhibit 10.36 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 and filed with the
Commission on March 30, 2000).
10.37*,** Form of Option Agreement for Officers and Key Employees Pursuant to
the SEACOR SMIT Inc. 1996 Share Incentive Plan (incorporated herein by
reference to Exhibit 10.37 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 and filed with the
Commission on March 30, 2000).
21.1 List of Registrant's Subsidiaries.
85
23.1 Consent of Arthur Andersen LLP.
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* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required to be
filed as an exhibit pursuant to Item14 (c) of the rules governing the
preparation of this report.
86