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, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12289
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SEACOR SMIT INC.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 13-3542736
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
11200 Richmond Avenue, Suite 400, Houston, Texas 77082
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (281) 899-4800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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Common Stock, par value $.01 per share New York Stock Exchange
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Securities registered pursuant to Section 12 (g) of the Act:
None
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(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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X Yes
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The aggregate market value of the voting stock of the registrant held by
non-affiliates as of March 20, 2002 was approximately $922,836,000. The total
number of shares of Common Stock issued and outstanding as of March 20, 2002 was
20,172,704.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission (the "Commission") pursuant to Regulation 14A within 120
days after the end of the Registrant's last fiscal year is incorporated by
reference into Part III of this Annual Report on Form 10-K.
SEACOR SMIT INC.
FORM 10-K
TABLE OF CONTENTS
PART I
Page
Item 1. Business.......................................................................... 1
Offshore Marine Services.......................................................... 1
Environmental Services............................................................ 9
Other Investments................................................................. 11
Segment and Geographic Information................................................ 11
Employees......................................................................... 11
Item 2. Properties........................................................................ 12
Item 3. Legal Proceedings................................................................. 12
Item 4. Submission of Matters to a Vote of Security Holders............................... 12
Item 4A. Executive Officers of the Registrant.............................................. 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............. 13
Item 6. Selected Financial Data........................................................... 15
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 16
Offshore Marine Service Segment................................................... 16
Environmental Service Segment..................................................... 18
Other Investments................................................................. 18
Results of Operations............................................................. 19
Liquidity and Capital Resources................................................... 25
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................ 35
Item 8. Financial Statements and Supplementary Data....................................... 37
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.......................................................... 37
PART III
Item 10. Directors and Executive Officers of the Registrant................................ 37
Item 11. Executive Compensation............................................................ 37
Item 12. Security Ownership of Certain Beneficial Owners and Management.................... 37
Item 13. Certain Relationships and Related Transactions.................................... 37
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.................... 37
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 the number and
size of spills and upon continuing government regulation in this area
and our ability to comply with such regulation and other governmental
regulation, 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. The words "estimate," "project," "intend," "believe," "plan"
and similar expressions are intended to identify forward-looking
statements. Forward-looking statements speak only as of the date of the
document in which they are made. We disclaim any obligation or
undertaking to provide any updates or revisions to any forward-looking
statement to reflect any change in our expectations or any change in
events, conditions or circumstances on which the forward-looking
statement is based.
PART I
ITEM 1. BUSINESS
GENERAL
Unless the context indicates otherwise, any reference 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.
The Company is a major provider of offshore marine services to the oil
and gas exploration and production industry and is one of the leading
providers of oil spill response services to owners of tank vessels and
oil storage, processing and handling facilities. The Company also
operates an inland river hopper barge business and holds a 23.8% equity
interest in Chiles Offshore Inc. ("Chiles Offshore"), a company that
owns and operates three ultra-premium jackup drilling rigs.
SEACOR's principal executive offices are located at 11200 Richmond
Avenue, Suite 400, Houston, Texas 77082, where its telephone number is
(281) 899-4800.
OFFSHORE MARINE SERVICES
GENERAL
The Company's offshore marine service business is primarily dedicated to
operating a diversified fleet of offshore support vessels that service
offshore oil and gas exploration and production facilities mainly in the
U.S. Gulf of Mexico, the North Sea, Latin America, West Africa and Asia.
Our vessels deliver cargo and personnel to offshore installations,
handle anchors for drilling rigs and other marine equipment, support
offshore construction and maintenance work and provide standby safety
support and oil spill response services. From time-to-time, vessels
service special projects, such as well stimulation, seismic data
gathering, salvage and freight hauling. In addition to vessel services,
the Company's offshore marine service business offers logistics
services, which include shorebase, marine transport and other supply
chain management services also in support of offshore oil and gas
exploration and production operations.
1
FLEET
GENERAL. As of December 31, 2001, the average age of the Company's owned
fleet was approximately 14.8 years. Excluding standby safety vessels,
the average age of the fleet was approximately 13.7 years. The Company
believes that after 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.
The Company's fleet is primarily comprised of the following types of
vessels:
ANCHOR HANDLING TOWING SUPPLY. Anchor handling towing supply vessels
range in size and capacity and are equipped with winches capable of
towing drilling rigs and lifting and positioning their anchors. At
present, the horsepower and pounds of winch line pull capacity for these
vessels range from approximately 6,000 horsepower to 15,000 horsepower
and 600,000 lbs. to 1,000,000 lbs., respectively. These vessels also
have varying capacity to transport deck cargo and liquid mud, potable
and drill water, diesel fuel and dry bulk cement in compartments below
deck. A number of anchor handling towing supply vessels are equipped
with dynamic positioning ("DP") systems that enable them to maintain a
fixed position in close proximity to a rig without the use of tie-up
lines.
CREW BOATS. Crew boats transport personnel as well as cargo to and from
production platforms and rigs. Vessels built prior to 1990 are generally
100 feet to 110 feet in length. Newer vessel designs, also known as Fast
Support Intervention Vessels, are generally 130 feet to 190 feet in
length and have enhanced cargo carrying capacities. Crew boats are
equipped with high-speed capabilities and are used primarily to
transport cargo on a time sensitive basis.
GEOPHYSICAL, FREIGHT AND OTHER. Vessels employed in geophysical and
other project work generally have special features to meet the
requirements of specific projects, including large deck space, high
electrical generating capacity, high maneuverability and unique
thrusters, extra berthing facilities and long-range cruising
capabilities. These vessels are used for projects such as well
stimulation and the deployment of seismic data gathering equipment.
Freight vessels have a substantial amount of clear deck space for cargo
and adequate stability to handle tiers of containers or over-dimensional
cargo.
MINI-SUPPLY. Mini-supply vessels range in size from 125 feet through 155
feet in length and serve drilling and production facilities and support
offshore construction and maintenance work. They typically carry deck
cargo, liquid mud, methanol and fuel and water but are not equipped with
below deck bulk tanks for the carriage of dry mud or cement. Mini-supply
vessels have bow thrusters for added maneuverability and are well suited
for deepwater production support.
STANDBY SAFETY. 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, function as supply vessels.
SUPPLY. Supply vessels serve drilling and production facilities and
support offshore construction and maintenance work. They are
differentiated from other vessels by cargo carrying flexibility and
capacity, which is typically determined by the size of a vessel. In
addition to deck cargo, supply vessels transport liquid mud, potable and
drill water, diesel fuel and dry bulk cement below deck. Generally,
customers prefer vessels with large liquid mud and bulk cement capacity
and large areas of clear deck space. For certain projects,
characteristics such as maneuverability, fuel efficiency or firefighting
capability may also be important. The Company's supply vessels range in
length from 166 feet to 250 feet and certain of those vessels have DP
capabilities.
TOWING SUPPLY. Towing supply vessels perform the same functions as
supply vessels but are equipped with more powerful engines (3,000 to
6,000 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. Utility vessels service offshore production facilities and also
support offshore maintenance and construction work. They are capable of
transporting fuel, water, deck cargo and personnel and certain of the
fleet have enhanced firefighting and pollution response features.
Utility vessels range in length from 96 feet to 125 feet.
2
The following table sets forth, at the dates indicated, the Company's
fleet count by type of vessel.
At December 31,
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Type of Vessels Comprising Fleet 1999 2000 2001
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Anchor Handling Towing Supply................................. 30 27 31
Crew.......................................................... 81 90 91
Geophysical, Freight and Other................................ 3 3 3
Mini-Supply................................................... 8 8 26
Standby Safety................................................ 19 37 30
Supply and Towing Supply...................................... 79 74 79
Utility....................................................... 74 66 65
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Total Fleet................................................. 294 305 325(1)
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(1) Includes 237 vessels owned directly by the Company and an additional
vessel owned by a subsidiary in which the Company owns a majority equity
interest. Twenty-five and 12 vessels are chartered-in and managed,
respectively. Joint venture corporations in which the Company owns less
than a majority equity interest own 46 and charter-in 4 vessels from
third parties.
ACQUISITIONS AND DISPOSITIONS. The Company actively monitors opportunities to
buy and sell vessels to maximize the overall utility and flexibility of its
fleet. The fleet has grown significantly, from 83 vessels at January 1, 1995 to
325 vessels at December 31, 2001, principally through the purchase of vessels
from competitors, newly constructed vessels and equity holdings in joint
ventures that own vessels. The most significant vessel acquisition transactions
beginning in 1995 are set forth in the following table.
Anchor Supply
Handling Geophysical, and
Towing Freight Mini- Standby Towing
Year and Transaction Supply Crew and Other Supply Safety Supply Utility Total
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1995:
Graham(1)............... - 37 - 5 - 7 78 127
CNN(2).................. 2 - - - - 3 - 5
1996:
McCall(3).............. - 36 - - - - 5 41
CNN(2).................. 5 - - - - 1 - 6
SMIT(4)................. 24 - 1 - - 24 - 49
1997:
New Construction........ 1 3 - - - 1 - 5
Galaxie(5).............. - 5 - 1 - 1 17 24
1998:
New Construction........ 3 4 - - - 3 - 10
1999:
New Construction........ 3 4 - 2 - 1 - 10
2000:
Boston Putford(6)....... - - - - 18 - - 18
New Construction........ 1 2 - - - - - 3
2001:
Plaisance Marine(7)..... - - - 6 - - - 6
Cheramie(8)............. - - - 11 - 2 11 24
Stirling(9)............. 5 - - - - 9 - 14
New Construction........ - 4 - 2 - 1 - 7
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44 95 1 27 18 53 111 349
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Transaction with:
(1) John E. Graham & Sons and certain affiliated companies, headquartered in
Alabama.
(2) Compagnie Nationale de Navigation, a French company.
(3) McCall Enterprises, Inc. and its affiliated companies, headquartered in
Louisiana.
(4) SMIT Internationale N.V., a Netherlands company, that included the
purchase by the Company of a 50% interest in 9 vessels sold by SMIT and
SMIT's equity interest in joint ventures that owned and operated 12
vessels.
(5) Galaxie Marine Services, Inc. and affiliated companies, headquartered in
Louisiana.
(6) Putford Enterprises Ltd. and associated companies, headquartered in
England.
(7) Plaisance Marine, Inc. and affiliated companies, headquartered in
Louisiana.
(8) Gilbert Cheramie Boats, Inc. and affiliated companies, headquartered in
Louisiana.
(9) Stirling Shipping Holdings Limited, headquartered in Scotland, including
2 new construction vessels delivered in 2002.
3
The table below sets forth, in the years indicated, the number of
vessels sold by type of service. At December 31, 2001, 24 of these
vessels, including 12 crew, 8 supply and towing supply, 2 anchor
handling towing supply and 2 mini-supply, were bareboat chartered-in by
the Company pursuant to sale-leaseback transactions. The leases expire
at various dates from 2002 through 2008 and contain purchase and renewal
options. The Company has removed one standby safety vessel from
operations and is actively marketing it for sale. Of the vessels sold in
2001, 3 utility and 1 mini-supply vessel were sold to the Company's
environmental service business.
Type of Vessels Sold 1995 1996 1997 1998 1999 2000 2001
- ----------------------------------- ------------ ----------- ----------- ----------- ----------- ----------- -----------
Anchor Handling Towing Supply...... 1 - 5 8 1 1 1
Crew............................... 1 - 2 5 11 1 13
Geophysical, Freight and Other..... - - 2 - - - -
Mini-Supply........................ - - - - - - 4
Standby Safety..................... - - - - - 2 6
Supply and Towing Supply........... 4 - 21 14 - 9 5
Utility............................ 6 16 7 7 2 8 10
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12 16 37 34 14 21 39
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MARKETS
Vessels operate in five principal geographic regions of the world. The
table below sets forth, at the dates indicated, the various types of
vessels that are owned, bareboat chartered-in, managed, joint ventured
and pooled in those five regions.
At December 31,
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Vessel Types by Geographic Market 1999 2000 2001
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Domestic, principally in the U.S. Gulf of Mexico:
Anchor Handling Towing Supply................. 11 7 4
Crew.......................................... 64 66 60
Geophysical, Freight and Other................ 2 2 2
Mini-Supply................................... 6 6 23
Supply and Towing Supply...................... 29 24 20
Utility....................................... 69 61 62
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Total Domestic Fleet.............................. 181 166 171
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North Sea:
Anchor Handling Towing Supply................. - - 2
Standby Safety................................ 19 37 30
Supply and Towing Supply...................... 5 4 15
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24 41 47
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Latin America:
Anchor Handling Towing Supply................. 6 6 9
Crew.......................................... 5 6 10
Mini-Supply................................... 2 2 3
Supply and Towing Supply...................... 16 18 20
Utility....................................... 3 3 3
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32 35 45
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West Africa:
Anchor Handling Towing Supply................. 6 6 9
Crew.......................................... 9 8 11
Supply and Towing Supply...................... 13 13 11
Utility....................................... 2 2 -
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30 29 31
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Asia:
Anchor Handling Towing Supply................. 6 6 6
Crew.......................................... 2 9 9
Supply and Towing Supply...................... 5 5 6
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13 20 21
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Other Foreign:
Anchor Handling Towing Supply................. 1 2 1
Crew.......................................... 1 1 1
Geophysical, Freight and Other................ 1 1 1
Supply and Towing Supply...................... 11 10 7
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14 14 10
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Total Foreign Fleet............................... 113 139 154
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Total Fleet....................................... 294 305 325
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4
DOMESTIC. The Company is a major provider of vessel services to the U.S.
oil and gas exploration and production industry that operates primarily
in the U.S. Gulf of Mexico. At December 31, 2001, the U.S. fleet
included 171 vessels. Its supply and towing supply, anchor handling
towing supply and certain crew vessels support exploration activities
and utility and certain crew vessels support production activities. The
Company's vessels may also be employed in geophysical, freight and other
special purpose operations. At December 31, 2001, there were
approximately 350 supply and towing supply, 220 crew, 160 utility and 30
anchor handling towing supply vessels operating in the U.S. Gulf of
Mexico through 40 companies.
In 2001, the Company increased the size of its U.S. Gulf of Mexico fleet
through business combinations and the purchase and construction of
vessels. In January 2001, the Company acquired all of the issued and
outstanding shares of Plaisance Marine, Inc. ("Plaisance"), which owned
2 vessels and purchased 4 additional vessels from companies affiliated
with Plaisance (collectively the "Plaisance Fleet'"). Aggregate
consideration paid for the Plaisance Fleet was $20.1 million, including
$16.2 million paid in cash, the assumption of $0.7 million of debt, and
the issuance of 71,577 shares of Common Stock from treasury, valued at
$3.2 million on the closing date. In February 2001, the Company acquired
all of the issued and outstanding shares of Gilbert Cheramie Boats, Inc.
and related companies (collectively, "Cheramie"), which owned 24
vessels, for $72.0 million and 2 vessels from Rincon Marine, Inc.
("Rincon") for $19.7 million, including $6.1 million in cash and the
assumption of $13.6 million in debt. The Company commissioned the
construction of six U.S. flag vessels in 2001 at a cost of approximately
$25.0 million.
NORTH SEA. The principal activities of the Company's North Sea fleet,
comprised of 47 vessels at December 31, 2001, are the provisioning of
standby safety, supply and anchor handling towing supply vessel services
to platform and rig operators in the region, which encompasses offshore
Norway, Denmark, the Netherlands, Germany, Great Britain and Ireland.
Two supply and 10 standby safety vessels were managed by the Company for
third party owners and 2 additional standby safety vessels participate
in joint ventures, one in which the Company owns a majority equity
interest. See "Joint Ventures and Pooling Arrangements" for discussion
of joint venture 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, 2001, there were approximately 121 vessels certified for North Sea
standby safety operations and 112 supply and 89 anchor handling towing
supply vessels working in the North Sea.
Demand in the North Sea market for standby safety vessel services
developed in 1991 after the United Kingdom promulgated legislation
requiring offshore operations to maintain higher specification standby
safety vessels. The legislation requires a vessel to "stand by" to
provide a means of evacuation and rescue for platform and rig personnel
in the event of an emergency at an offshore installation. The Company
believes that it was one of the first companies to convert vessels for
use in standby safety service.
In May 2001, the Company acquired all of the issued and outstanding
shares of Stirling Shipping Holdings Limited ("Stirling Shipping"),
which owned 12 vessels and construction contracts for 2 additional
vessels. Aggregate consideration was (pound)54.3 million ($77.1 million
based on exchange rates in effect and the price of Common Stock on the
closing date), consisting of (pound)29.9 million, or $43.0 million, in
cash, (pound)14.7 million, or $21.2 million, in one-year loan notes, and
285,852 shares of Common Stock issued from treasury, valued at $12.9
million. Stirling Shipping's long term debt at closing was approximately
(pound)43.0 million, or $61.9 million. Stirling Shipping's 2 new
construction vessels were delivered to the Company in the first quarter
of 2002.
LATIN AMERICA. The Company provides vessel services in Latin America for
both exploration and production activities. At December 31, 2001, the
Company owned, either directly or through joint ventures, and/or
operated 45 vessels in this region, including 27 based in Mexican ports
and 18 based in ports of Trinidad, Brazil, Chile, Argentina and
Venezuela. Joint venture corporations in which the Company owns an
equity interest owned 26 of its Latin American vessels and bareboat or
time chartered-in an additional 11 vessels, 7 from the Company and 4
from outside sources. See "Joint Ventures and Pooling Arrangements" for
discussion of joint venture vessel activities. The Company bareboat
chartered-out 4 additional vessels to a Brazilian customer.
Operating conditions in Mexico are 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. PEMEX has an aggressive budget for 2002,
which, if implemented, will increase vessel demand offshore Mexico. At
December 31, 2001, there were approximately 280 vessels operating in
Mexico, including tugs and barges.
5
In Trinidad, expansion of a LNG facility continues to drive demand for
natural gas, and in late 2001, the largest oil discovery in decades was
made off the country's East Coast. Brazil, a premier deepwater market,
saw modest increases in drilling activity during 2001 by multinational
oil companies and Petrobras, the state owned oil company. Approximately
15 international oil companies presently have concessions to explore
offshore Brazil. Offshore drilling and production activities in
Venezuela, Chile and Argentina have been steady. Petroleos de Venezuela,
S.A., the state owned oil company in Venezuela, has plans to increase
offshore drilling along its border with Trinidad, where multinational
oil companies operating off the Southern Coast of Trinidad have
discovered significant gas reserves.
WEST AFRICA. At December 31, 2001, the Company owned and/or operated 30
vessels and, through a joint venture, bareboat chartered-out a vessel to
a customer in West Africa. Competition is very concentrated in this
market with only 6 principal vessel operators managing approximately 240
vessels. See "Joint Ventures and Pooling Arrangements" for discussion of
joint venture vessel activities. The need for vessels in this market is
primarily dependent upon multi-year offshore oil and gas exploration and
development projects and production support.
ASIA. At December 31, 2001, the Company's fleet in Asia was comprised of
21 vessels, including 1 vessel constructed during the year at a cost of
$11.5 million. Joint venture corporations in which the Company owns an
equity interest owned 10 of the vessels in this fleet. See "Joint
Ventures and Pooling Arrangements" for discussion of joint venture
vessel activities. At December 31, 2001, there were in excess of 250
vessels operated by approximately 17 companies supporting exploration,
production, construction and special project activities in Asia.
OTHER FOREIGN. At December 31, 2001, 10 of the Company's other foreign
vessels operated from bases located in France, Greece, Egypt and
Turkmenistan. Joint venture corporations in which the Company owns an
equity interest owned 8 of these vessels and 2 vessels owned by the
Company were bareboat chartered-out. See "Joint Ventures and Pooling
Arrangements" for discussion of joint venture vessel activities.
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
have allowed the Company to expand its fleet or marine related
operations while diversifying the risks and reducing the capital outlays
associated with independent expansion.
TMM JOINT VENTURE. In 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")
that is comprised of two corporations, Maritima Mexicana, S.A., a
Mexican corporation, and SEAMEX International Ltd., a Liberian
corporation, in each of which the Company owns a 40% equity interest.
The TMM Joint Venture has 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, 2001,
the TMM Joint Venture owned 17 vessels and chartered-in an additional 10
vessels, including 6 from the Company and 4 from outside sources.
LOGISTICS JOINT VENTURE. The Company holds a 67% equity interest in
Energy Logistics, Inc., a joint venture corporation that provides
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 that was incorporated in 1996. Energy
Logistics, Inc. owns Liberty Services, Inc. ("Liberty"), which has
provided base services, equipment rental and personnel in support of the
offshore energy industry for over 15 years. At December 31, 2001, Energy
Logistics, Inc. and Liberty (collectively referred to as "ELI") operated
shorebase support facilities in Louisiana and employed eight 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 eight newly built Fast Support Intervention Vessels.
The Pelican fleet is currently employed in Asia and will also be
marketed in the Middle East jointly by Pelican and the Company. Penguin
built seven of the eight Pelican vessels. Pelican currently has offices
in Jakarta, Indonesia and Singapore.
ULTRAGAS JOINT VENTURE. In 1996, the Company acquired an equity interest
in Ultragas Smit Lloyd Ltda ("Ultragas") and certain other entities
affiliated with Ultragas that own and operate vessels serving the oil
and gas industry in Latin America. In 1997, the Company and a subsidiary
of Sociedad Naviera Ultragas Ltda, the Company's joint venture partner
in Ultragas and its affiliated companies, formed an additional
corporation for the purpose of owning and operating additional vessels.
As of December 31, 2001, the Ultragas joint venture owned five vessels
that were operating in Chile, Argentina and Brazil. The Company's
ownership interests in entities comprising the Ultragas joint venture
range from 25.7% to 50%.
6
OTHER JOINT VENTURES. At December 31, 2001, the Company participated in
7 additional joint ventures that provide vessel services to the oil and
gas industry. Participation in many of the vessel joint ventures
resulted from a transaction with SMIT Internationale N.V. ("SMIT") that
was consummated in December 1996 (the "SMIT Transaction"), in which the
Company acquired, among other things, equity interests in joint ventures
that were owned by SMIT and structured a joint venture with SMIT that
increased its international market presence. At December 31, 2001, these
other joint ventures owned 16 vessels, including 2 remaining to be sold
under one of the other joint venture's plan of liquidation, and operated
in Trinidad, Asia, the Middle East, the Mediterranean, West Africa,
Venezuela and the North Sea.
Since 1995, the Company had been a party to a pooling arrangement with a
UK corporation pursuant to which the Company and its pooling partner
jointly marketed certain of their standby safety vessels to North Sea
customers. Under this arrangement, operating revenues were pooled and
allocated to the respective companies pursuant to a formula based on the
class of vessels each company contributed to the pool. In 2001, the
Company and its partner terminated this pooling arrangement.
An additional joint venture assists with management of the Company's
vessels operating off the coast of Nigeria.
CUSTOMERS AND CONTRACT ARRANGEMENTS
The Company offers offshore marine services to over 200 customers,
including major integrated oil companies and large independent oil and
gas exploration and production companies and has enjoyed long standing
relationships with many of them. The percentage of revenue 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, 2001, approximately 11% of the Company's
offshore marine segment's operating revenues were earned from services
provided to ExxonMobil Corporation.
The majority of the vessels in the Company's fleet are time chartered to
customers pursuant to which the customer rents a vessel and the Company
provides all necessary support for its safe and efficient operation.
Vessel operating expenses are typically the responsibility of the
Company except that generally fuel and lubricants are provided by the
customer. In return for providing time charter services, the Company is
paid a daily rate of hire. The Company also charters-out vessels from
its fleet to customers under bareboat charter agreements. Pursuant to
these agreements, the Company provides only the vessel to the customer,
and the customer assumes responsibility to provide for all of the
vessel's operating expenses and generally assumes all risk of operation.
The daily rate of hire that the Company charges under a bareboat charter
agreement is lower than that under a time charter agreement.
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.
RISKS OF FOREIGN OPERATIONS
For the years ended December 31, 1999, 2000 and 2001 approximately 36%,
30% and 42%, respectively, of the Company's offshore marine 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.
7
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 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 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 United States or of a state, territory or
possession thereof, (ii) each of the president or other chief executive
officer and the chairman of the board of directors of such corporation
must be a U.S. citizen, (iii) no more than a minority of the number of
directors of such corporation necessary to constitute a quorum for the
transaction of business can be non-U.S. citizens and (iv) at least 75%
of the interest in such corporation must be owned by U.S. "citizens" (as
defined in the 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) limits 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
and Mexico. The 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; certain bulk chemical materials used in drilling
activities; rig-generated wastes to shore for delivery to waste disposal
contractors; and liquid mud which contains oil and oil by-products.
These operations are subject to a variety of federal and analogous state
8
statutes concerning matters of environmental protection. Statutes and
regulations that govern the discharge of oil and other pollutants onto
navigable waters include the Oil Pollution Act of 1990, as amended ("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, 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.
ENVIRONMENTAL SERVICES
GENERAL
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 OPA 90 and various state regulations. The Company's
environmental services are provided primarily through its wholly owned
subsidiaries, National Response Corporation ("NRC"), International
Response Corporation ("IRC") and ERST/O'Brien's Inc. ("ERST"). These
services include training, consulting and supervision for emergency
preparedness, response and crisis management associated with oil or
hazardous material spills, fires and natural disasters and maintaining
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 market for contractual oil spill response and other related training
and consulting services grew substantially since 1990, when the United
States Congress passed OPA 90 after the Exxon Valdez oil 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 affecting 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. Today, almost 12 years since OPA 90's
enactment, the market for these services has stabilized and has become
very competitive for the numerous companies that now provide related
services.
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 has personnel trained to
respond to oil spills as required by customers and regulations. Included
in the equipment are 10 oil spill response vessels and 6 oil spill
response barges. The Company provides these services on the East, Gulf
and West Coasts of the United States as well as in the Caribbean and
Hawaii.
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 130 independent oil spill response contractors that may
assist it with the provisioning of equipment and personnel.
9
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 drills and other response
exercises and drafts vessel response plans. 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 primarily 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 industries. 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 on
one-time bases, including, under certain circumstances, the Coast Guard.
The Company presently has approximately 750 retainer customers. The
Company's 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,
2001, approximately 21% and 14% of the Company's environmental retainer
revenue was received from Citgo Petroleum Corporation and El Paso
Corporation, respectively.
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.
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 revenue
from oil spills. Further, based on recent statistics, it appears as
though OPA 90 has had the intended beneficial effect of reducing the
number and magnitude of oil spills.
COMPETITION
The principal competitive factors in the environmental service business
are price, service, reputation, experience and 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 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.
10
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 damages 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.
OTHER INVESTMENTS
INLAND RIVER BUSINESS
The Company's inland river business was established in the third quarter
of 2000 upon its acquisition of newly constructed inland river hopper
barges ("barges") and was further expanded upon acquiring SCF
Corporation ("SCF"), a company that owned and operated barges, in
December 2000. SCF has a history of operating barges, dating back to
1983. The Company's barges service the agriculture and industrial
sectors within the United States that are strategically aligned along
the Mississippi River and its tributaries. At December 31, 2001, the
Company controlled 338 barges, including 101 directly owned, 11 owned by
a 50% owned partnership and 226 managed for third parties.
INVESTMENT IN CHILES OFFSHORE
Chiles Offshore was formed in 1997 for the purpose of constructing,
owning and operating ultra-premium jackup drilling rigs. Chiles Offshore
presently operates three of the nine existing ultra-premium jackup
drilling rigs in the world. Two of the rigs are currently operating in
the U.S. Gulf of Mexico and the third rig is working offshore Trinidad.
Chiles Offshore has owned two of its three rigs since 1999 and acquired
the third rig in 2001 for an aggregate purchase price of $111.0 million.
In 2000, Chiles Offshore entered into an agreement with Keppel FELS
Limited ("Keppel") to construct two ultra-premium jackup drilling rigs
of the KFELS Mod V "B" design at an aggregate construction cost
estimated not to exceed $222.0 million, exclusive of interest and other
capitalized costs. One rig was delivered to Chiles Offshore in February
2002 and, after commissioning, is expected to enter service under a
long-term contract. The second rig is expected to enter service during
the third quarter of 2002. Chiles Offshore also has an option agreement
with Keppel to build up to two additional rigs of the design presently
under construction. If Chiles Offshore does not exercise an option to
construct one of the two additional rigs by April 6, 2002, both
construction options will expire.
Chiles Offshore files reports with the Commission and its shares are
traded on the American Stock Exchange under the trading symbol "COD."
OTHER ACTIVITIES
In 1998, the Company acquired an interest in the predecessor of Globe
Wireless, L.L.C. ("Globe Wireless") and now owns, through its ownership
of senior convertible preferred units, approximately 38% of the voting
units issued by Globe Wireless. Globe Wireless operates a worldwide
network of high frequency radio stations. The network of stations is a
wireless data network initially targeted at the maritime industry that
supports Internet messaging, telex and facsimile communications. Globe
Wireless also provides Telex-Over-Radio and Satellite messaging services
to the maritime industry.
In addition, the Company, from time-to-time, makes investments in other
related businesses.
SEGMENT AND GEOGRAPHIC INFORMATION
Financial data for segment and geographic areas is reported in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations - Results of Operations" and "Item 8. Consolidated
Financial Statements - Note 13. Major Customers and Segment Data"
included in Parts II and IV, respectively, of this Annual Report on Form
10-K.
EMPLOYEES
As of December 31, 2001, the Company directly or indirectly employed
approximately 3,400 individuals. Of those directly employed,
approximately 1,425 work aboard vessels and 515 work ashore. The
shorebase staff, including administrative, shore support and managerial
personnel, approximated 390 in the offshore marine business segment, 100
in the environmental business segment, 8 in the barge business segment
and 17 corporate employees.
11
All indirect employees support vessel operations. In Nigeria, a joint
venture company assists with vessel management and, at December 31,
2001, employed approximately 200 shipboard and 70 administrative, shore
support and managerial personnel. Also at December 31, 2001, the
Company's North Sea operations were provided 70 shipboard personnel
pursuant to an agreement with SMIT and an additional 1,120 seamen
through various manning agencies.
ITEM 2. PROPERTIES
SEACOR's executive offices are located in Houston, Texas and New York,
New York. Headquarters for the Company's two principal business
segments, offshore marine and environmental, are located in Houston,
Texas and Great River, New York, respectively.
The Company maintains additional facilities in support of its offshore
marine, environmental service and barge operations. Domestically, the
offshore marine service segment's largest base of operation is located
in Morgan City, Louisiana and adjacent communities that include
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 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 offshore marine service segment maintains offices in the
United Kingdom, Singapore, France and the Netherlands in support of its
widely dispersed foreign fleet. The environmental service segment
maintains offices in 14 cities, primarily located in the United States.
Headquarters for the inland barge segment is 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 2001.
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, 2001 were as follows:
Name Age Position
- -------------------------------- ------------------ -----------------------------------------------------------------
Charles Fabrikant 57 Chairman of the Board of Directors,
President and Chief Executive Officer
Randall Blank 51 Executive Vice President, Chief Financial
Officer and Secretary
Milton Rose 57 Vice President
Rodney Lenthall 56 Vice President
Lenny Dantin 49 Vice President and Chief Accounting Officer
Dick Fagerstal 41 Vice President and Treasurer
Alice Gran 52 Vice President and General Counsel
Andrew Strachan 54 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 Chairman of the Board of Chiles Offshore and a
director of Globe Wireless. Mr. Fabrikant is a licensed attorney
admitted to practice in the State of New York and in the District of
Columbia.
12
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.
Milton 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, 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 Chief Accounting Officer 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 has 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.
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, 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
F Fiscal Year Ending December 31, 2001:
First Quarter........................................... 54.5000 44.5000
Second Quarter.......................................... 49.2800 43.0000
Third Quarter........................................... 48.1500 34.5100
Fourth Quarter.......................................... 47.5000 34.2500
Fiscal Year Ending December 31, 2002:
First Quarter (through March 20, 2002).................. 49.7000 40.1000
13
As of March 20, 2002, there were 152 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 dividends in the foreseeable future. Instead, SEACOR intends to
retain earnings for working capital and to finance the expansion of its
business. Any payment of future dividends will be at the discretion of
SEACOR's Board of Directors and will depend upon, among other factors,
the Company's earnings, financial condition, capital requirements, level
of indebtedness and contractual restrictions, including the provisions
of the Company's revolving credit facility.
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.
14
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,
--------------------------------------------------------------------------
1997 1998 1999 2000 2001
------------ ------------ ------------ ------------ ------------
INCOME STATEMENT DATA:
Operating Revenues...................................$ 346,948 $ 385,791 $ 289,425 $ 339,941 $ 434,790
Costs and Expenses:
Operating expenses................................. 167,493 187,722 166,786 201,452 234,551
Administrative and general......................... 28,299 36,102 34,744 39,548 49,980
Depreciation and amortization...................... 36,538 36,449 41,282 51,189 58,324
------------ ------------ ------------ ------------ ------------
Operating Income...................................... 114,618 125,518 46,613 47,752 91,935
Net interest income (expense)......................... (1,412) 2,548 (1,835) (10,027) (8,452)
Gain from equipment sales or retirements, net......... 61,928 38,338 1,677 7,628 9,030
Other income (expense)(1)............................. 569 6,492 (2,939) 16,305 11,208
------------ ------------ ------------ ------------ ------------
Income before income taxes, minority interest,
Equity in net earnings of 50% or less owned
Companies and extraordinary item................... 175,703 172,896 43,516 61,658 103,721
Income tax expense.................................... 61,384 60,293 15,249 20,580 36,058
------------ ------------ ------------ ------------ ------------
Income before minority interest, equity in
Net earnings of 50% or less owned
Companies and extraordinary item................... 114,319 112,603 28,267 41,078 67,663
Minority interest in (income) loss of subsidiaries.... (301) (1,612) 1,148 (3,393) (372)
Equity in net earnings of 50% or less owned 5,575 13,627 330 (3,565) 4,306
companies.............................................
------------ ------------ ------------ ------------ ------------
Income before extraordinary item...................... 119,593 124,618 29,745 34,120 71,597
Extraordinary item - gain (loss) on extinguishment
of (439) 1,309 1,191 - (896)
Debt, net of tax...................................
------------ ------------ ------------ ------------ ------------
Net income...........................................$ 119,154 $ 125,927 $ 30,936 $ 34,120 $ 70,701
============ ============ ============ ============ ============
Income before Extraordinary Item(2) :
Basic earnings per common share................$ 5.76 $ 6.32 $ 1.66 $ 2.02 $ 3.68
Diluted earnings per common share............... 5.00 5.45 1.64 1.92 3.47
STATEMENT OF CASH FLOWS DATA:
Cash provided by operating activities.............$ 105,548 $ 122,141 $ 47,872 $ 65,251 $ 111,420
Cash provided by (used in) investing activities.... (215,087) (149,202) 39,779 (31,012) (76,638)
Cash provided by (used in) financing activities.... 135,468 27,308 (82,686) 14,222 (77,455)
OTHER FINANCIAL DATA:
EBITDA(3).........................................$ 157,341 $ 174,293 $ 91,977 $ 90,537 $ 156,034
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents(4)......................$ 175,381 $ 175,267 $ 178,509 $ 224,219 $ 180,394
Total assets....................................... 1,019,801 1,257,975 1,196,991 1,132,730 1,298,138
Long-term debt..................................... 358,714 472,799 465,661 377,955 256,675
Stockholders' equity............................... 474,014 542,782 508,130 552,552 743,698
- ----------
(1) In 1999, 2000 and 2001, 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 income before extraordinary item 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,
2000 and 2001 of $46,983, $69,234, $21,985, $40,759 and $55,290,
respectively, and marketable securities in 1997, 1998, 1999, 2000 and
2001 of $160,440, $194,703, $73,005, $82,181 and $22,371, respectively.
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Through its subsidiaries and joint venture arrangements, the Company
furnishes offshore support services to the oil and gas exploration and
production industry and provides 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 U.S. Gulf of Mexico, the North Sea,
Latin America, West Africa and Asia and its oil spill and professional
services are primarily provided in the U.S.
The Company's business is primarily comprised of two segments, offshore
marine services and environmental services. Upon completion of the
September 22, 2000 initial public offering of the common stock of Chiles
Offshore, the Company's drilling service business segment, the Company's
ownership interest in Chiles Offshore declined below 50% and the Company
began accounting for its interest in Chiles Offshore under the equity
method. As a result, the Company no longer accounts for its investment
in Chiles Offshore as a segment.
OFFSHORE MARINE SERVICE SEGMENT
The Company's offshore marine service segment provides marine
transportation, logistics and related services primarily dedicated to
supporting oil and gas exploration and production.
The offshore marine service segment's operating revenues are primarily
affected 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. Overall utilization for any vessel with respect to any
period is the ratio of aggregate number of days worked by such vessel to
total calendar days available during such period. The rate per day
worked for any vessel with respect to any period is the ratio of total
time charter revenue of such vessel to the aggregate number of days
worked by such vessel for such period.
The Company has expanded its fleet from 83 vessels at January 1, 1995 to
325 vessels at December 31, 2001. During the year ended December 31,
2001, the Company acquired or chartered-in 63 vessels and disposed or
terminated the charter-in of 47 vessels. Ten vessels were sold and
leased-back in 2001. Since 1997, the Company has deposited proceeds from
the sale of certain vessels 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.
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,
----------------------------------------------
Fleet 1999 2000 2001
- ---------------------------------------------------------- ------------- -------------- --------------
Rates per Day Worked ($):(1)(2)
Anchor Handling Towing Supply......................... 11,869 11,410 13,548
Crew.................................................. 2,493 2,645 3,313
Geophysical, Freight and Other........................ 5,576 5,341 5,406
Mini-Supply........................................... 2,094 2,041 3,071
Standby Safety........................................ 6,045 5,328 5,448
Supply and Towing Supply.............................. 5,526 5,251 7,771
Utility............................................... 1,669 1,609 1,895
Overall Fleet..................................... 3,929 3,865 5,040
16
Year Ended December 31,
----------------------------------------------
Fleet 1999 2000 2001
- ---------------------------------------------------------- ------------- -------------- --------------
Overall Utilization (%):(1)
Anchor Handling Towing Supply......................... 73.5 70.7 84.6
Crew.................................................. 83.0 94.3 93.4
Geophysical, Freight and Other........................ 55.7 60.4 51.8
Mini-Supply........................................... 81.5 92.9 91.7
Standby Safety........................................ 74.1 79.0 87.3
Supply and Towing Supply.............................. 69.3 74.1 88.8
Utility............................................... 65.2 55.0 56.1
Overall Fleet..................................... 73.1 75.7 81.1
--------------
(1) 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 North Sea fleet, are earned in foreign
currencies, primarily Pounds Sterling, and have been
converted to U.S. dollars at the weighted average
exchange rate for the periods indicated.
The Company earns operating revenues primarily from the time or bareboat
charter-out of vessels, which are owned or bareboat or time
chartered-in. At December 31, 2001, the Company had 14 vessels bareboat
chartered-out, including 5 vessels operated by the Company's joint
ventures. 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 operating results, but the
Company does recognize a management fee in operating revenues.
The table below sets forth the Company's fleet structure at the dates
indicated.
At December 31,
--------------------------------------------
Fleet Structure 1999 2000 2001
- ------------------------------------------------------------- -------------- ------------- -------------
Domestic:
Owned...................................................... 160 148 148
Bareboat and Time Chartered-in............................. 21 18 23
Managed.................................................... - - -
Joint Ventures and Pools(1)................................ - - -
-------------- ------------- -------------
181 166 171
-------------- ------------- -------------
Foreign:
Owned..................................................... 62 79 90
Bareboat and Time Chartered-in............................ 7 3 2
Managed................................................... 1 5 12
Joint Ventures and Pools(1)............................... 43 52 50
-------------- ------------- -------------
113 139 154
-------------- ------------- -------------
Total Fleet............................................. 294 305 325
============== ============= =============
--------------------
(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 and charter-in hire. Depreciation
is a significant operating expense and the amount related to vessels is
the most significant component. Most vessels chartered-in by the Company
resulted from sale and lease-back transactions.
Drydocking repairs, which are a substantial component of a vessel's
maintenance costs, are expensed when incurred. Under applicable maritime
regulations, vessels must be drydocked twice in a five-year period for
inspection by regulatory authorities. The Company follows an asset
management strategy pursuant to which it defers required drydocking of
selected vessels and voluntarily removes these 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 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,
1999, 2000 and 2001, drydocking costs totaled $5.5 million, $7.3 million
and $10.1 million, respectively. During those same periods, the Company
completed the drydocking of 81, 80 and 99 marine vessels, respectively.
A portion of the Company's revenues and expenses, primarily related to
its 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.
17
The worldwide offshore rig count in 2001 decreased from the previous
year due primarily to declining oil and natural gas prices. There were
approximately 418 offshore mobile rigs in operation worldwide at
year-end 2001, representing a 5% decrease from the count at the prior
year-end. U.S. Gulf of Mexico drilling rig utilization fell from
approximately 175 offshore mobile rigs at the end of 2000 to
approximately 120 offshore mobile rigs at the end of 2001; whereas,
utilization of drilling rigs operating internationally actually improved
from 265 offshore mobile rigs working at the end of 2000 to 298 offshore
mobile rigs in service at the end of 2001.
In response to high oil and gas commodity prices, drilling in the U.S.
Gulf of Mexico was very active in the first half of 2001 but began to
decline mid-year from the slowdown in the economy, a cool summer, fuel
switching and then the tragedy of September 11. The unusually warm
winter of 2001-2002 also contributed to the decrease in demand for
offshore drilling and consequently the demand for the Company's vessels
in the U.S. Gulf of Mexico. Throughout these same periods, international
drilling activity remained steady, as did the utilization of the
Company's foreign fleet.
Recently, natural gas and oil prices have begun to increase. As a
result, demand for the Company's vessels may increase in response to
more offshore drilling activity in the U.S. Gulf of Mexico.
International activity has remained stable.
ENVIRONMENTAL SERVICE SEGMENT
The Company's 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.
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 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.
OTHER INVESTMENTS
INLAND RIVER OPERATIONS
The Company's inland river business earns operating revenues primarily
from voyage affreightments under which customers are charged for a
committed space to transport cargo for a specific time from a point of
origin to a destination at an established rate per ton. Revenues are
also earned while cargo is stored aboard barges and when barges are
chartered-out to third parties. Barge operating expenses are typically
differentiated between those directly related to voyages and all other
barge operating costs. Voyage expenses primarily include towing,
switching, fleeting and cleaning costs; whereas, non-voyage related
operating expenses include such costs as repairs, insurance and
depreciation.
18
The Company's directly owned barges and certain of those managed for
third parties participate in two pooling arrangements. Pursuant to these
pooling arrangements, operating revenues and voyage expenses are pooled
and the net results are allocated to respective participating barge
owners based upon the number of days any one participating owner's
barges bear to the total number of days of all barges participating in
the pool.
The Company has contracts or commitments to build 174 barges in 2002.
INVESTMENT IN CHILES OFFSHORE
The Company consolidated the reporting of financial information of drill
rig operator Chiles Offshore, due to its majority ownership, from its
inception in 1997 until its initial public offering of common stock (the
"Chiles IPO"). On September 22, 2000, Chiles Offshore 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%, at which
point the Company ceased consolidating Chiles Offshore's financial
condition, results of operations and cash flows and began accounting for
its interest in Chiles Offshore using the equity method. At December 31,
2001, Company's ownership percentage in Chiles Offshore was 23.8%. The
decline in the Company's ownership percentage since the Chiles IPO was
primarily the consequence of Chiles Offshore's issuance of additional
shares upon its acquisition of all the share capital of an entity that
owned an ultra-premium jackup drilling rig.
Chiles Offshore derives its revenues primarily from contracts to drill
wells for oil and gas operators. In the U.S. Gulf of Mexico, these
drilling contracts are typically for terms of 30 to 90 days and provide
for base dayrates, which may be subject to adjustments based on
performance incentives. In international operations, Chiles Offshore has
entered into multi-year drilling contracts.
For the twelve months ended December 31, 2001, Chiles Offshore's rig
utilization was 100% and the average dayrate was $71,609. In calculating
average dayrates, Chiles Offshore divides the revenue earned by its rigs
during the period by the total number of rig operating days in the
period. In addition, Chiles Offshore's average dayrates include any
bonuses that may be triggered by achieving performance and safety
targets in its drilling contracts.
Both dayrates and utilization are a function of demand for, and
availability of, drilling rigs, which are affected by short- and
long-term trends in oil and gas prices, which are, in turn, related to
the demand for petroleum products, the current availability of oil and
gas resources and the general level of worldwide economic activity.
Rig operating expense consists primarily of crew costs, insurance,
inspections, repair and maintenance and other related costs. General and
administrative expenses consist primarily of corporate and safety
management, administration, marketing, financial and legal expenses.
OTHER ACTIVITIES
The Company, from time-to-time, makes investments in other related
businesses.
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 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 interests 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, interest income and expense, gains
or losses from derivative transactions and the sale of marketable
securities, gain upon sale of shares of Chiles Offshore, 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 which the Company considers to be of a corporate nature,
including 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.
19
Other and
1999 Marine Environmental Drilling Corporate Total
------------- ------------- ------------- -------------- -------------
Operating Revenues -
External Customers................................ $ 258,177 $ 22,659 $ 7,651 $ 938(a)$ 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 Net Loss of Subsidiaries....... - - - 1,148 1,148
Interest Income..................................... - - - 20,495 20,495
Interest Expense.................................... - - - (22,330) (22,330)
Derivative Loss, 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
=================================================================================================================================
2000
Operating Revenues -
External Customers................................ $ 276,473 $ 24,996 $ 37,380 $ 1,092(b)$ 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 Net Income 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 Offshore......... - - - 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
=================================================================================================================================
2001
Operating Revenues -
External Customers................................ $ 398,345 $ 26,847 $ - $ 9,598(b)$ 434,790
Intersegment...................................... 778 - - (778) -
------------- ------------- ------------- -------------- -------------
Total............................................ $ 399,123 $ 26,847 $ - $ 8,820 $ 434,790
============= ============= ============= ============== =============
Operating Profit.................................... $ 98,004 $ 2,037 $ - $ 2,216 $ 102,257
Gains (Losses) from Equipment Sales or Retirements,
net................................................. 9,180 6 - (156) 9,030
Gain from Sale of Interest in 50% or Less Owned
Companies........................................... 201 - - - 201
Equity in Net Earnings (Losses) of 50% or Less
Owned Companies................................... 5,181 40 5,810 (4,739) 6,292
Minority Interest in Net income of Subsidiaries..... - - - (372) (372)
Interest Income..................................... - - - 13,546 13,546
Interest Expense.................................... - - - (21,998) (21,998)
Derivative Income, net.............................. - - - 4,127 4,127
Gains from Sale of Marketable Securities, net....... - - - 5,689 5,689
Corporate Expenses.................................. - - - (9,131) (9,131)
Income Taxes........................................ - - - (38,044) (38,044)
------------- ------------- ------------- -------------- -------------
Income (Loss) before Extraordinary Item......... $ 112,566 $ 2,083 $ 5,810 $ (48,862) $ 71,597
============= ============= ============= ============== =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................... $ 49,618 $ 303 $ 77,607 $ 26,299 $ 153,827
Other Segment Assets................................ 875,148 28,412 - 32,310 935,870
------------- ------------- ------------- -------------- -------------
Subtotal Segment Assets........................... 924,766 28,715 77,607 58,609 1,089,697
Corporate........................................... - - - 208,441 208,441
------------- ------------- ------------- -------------- -------------
Total Assets.................................... $ 924,766 $ 28,715 $ 77,607 $ 267,050 $ 1,298,138
============= ============= ============= ============== =============
Depreciation and Amortization....................... $ 52,926 $ 4,288 $ - $ 1,110 $ 58,324
=================================================================================================================================
(a) Revenues attributable to the Company's telecommunications business
that was acquired in April 1999 and sold in July 1999.
(b) Revenues attributable to the Company's inland river business that
commenced operation in the third quarter of 2000.
20
Revenues 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 and 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.
1999 2000 2001
------------ ------------- ------------
Revenues:
United States of America................... $ 186,673 $ 236,841 $ 267,195
United Kingdom............................. 24,643 39,565 74,477
Nigeria.................................... 19,324 15,544 29,425
Other...................................... 58,785 47,991 63,693
------------ ------------- ------------
$ 289,425 $ 339,941 $ 434,790
============ ============= ============
Long-Lived Assets:
United States of America................... $ 550,106 $ 302,417 $ 335,648
United Kingdom............................. 33,083 47,898 186,686
Nigeria.................................... 40,486 40,119 39,973
Other...................................... 91,522 136,644 172,450
------------ ------------- ------------
$ 715,197 $ 527,078 $ 734,757
============ ============= ============
COMPARISON OF FISCAL YEAR 2001 TO FISCAL YEAR 2000
OFFSHORE MARINE SERVICE SEGMENT
OPERATING REVENUES. The Company's offshore marine service segment's
operating revenues increased $122.2 million, or 44%, in the twelve month
period ended December 31, 2001 compared to the twelve month period ended
December 31, 2000. This increase was due primarily to a growing fleet
and higher rates per day worked and utilization.
Operating revenues generated by newly acquired, constructed and
chartered-in vessels exceeded the loss of revenues associated with
vessel dispositions through sales and charter-in terminations. Fleet
growth over the past two years contributed approximately $80.0 million
toward higher operating revenues in 2001 versus 2000. Vessel
dispositions and charter-in terminations over the past two years
resulted in a decline in operating revenues between years of
approximately $19.0 million.
Rising rates per day worked and utilization resulted in higher operating
revenues between years of $45.0 million and $15.0 million, respectively.
Rates per day worked rose for all vessel classes in all operating
regions, excluding domestic geophysical, freight and other vessels.
Rates per day worked particularly improved for the Company's worldwide
fleet of supply and towing supply vessels, U.S. crew and utility vessels
and foreign anchor handling towing supply vessels. Higher utilization of
domestic and foreign anchor handling towing supply and supply and towing
supply vessels was partially offset by a decline in the use of North Sea
standby safety and U.S. utility and crew vessels.
OPERATING PROFIT. The Company's offshore marine business segment's
operating profit increased $64.2 million, or 190%, in the twelve month
period ended December 31, 2001 compared to the twelve month period ended
December 31, 2000 due primarily to those factors affecting operating
revenues outlined above. These increases were partially offset by higher
operating expenses that resulted primarily from an increase in (i)
charter-in costs following the sale and leaseback of several vessels,
(ii) crew wages paid to seamen working domestically in response to
competition for qualified personnel, (iii) the number of vessels
undergoing drydocking, (iv) vessel related insurance claims costs and
(v) costs to repair crew vessel engines, which have grown in number and
horsepower with the construction of larger vessels over the past several
years. General and administrative expenses also rose between years due
primarily to higher compensation costs with the addition of staff and an
increase in reserves for doubtful accounts receivable associated with
the Company's foreign operations.
GAINS (LOSSES) FROM EQUIPMENT SALES OR RETIREMENTS, NET. Net gains from
equipment sales or retirements increased $1.6 million in the twelve
month period ended December 31, 2001 compared to the twelve month period
ended December 31, 2000. Apart from sale and leaseback transactions in
both years, eleven additional vessels were sold in 2001 versus the prior
year.
21
EQUITY IN NET EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Equity
earnings increased $5.6 million in the twelve month period ended
December 31, 2001 compared to the twelve month period ended December 31,
2000. Profits rose due to improved performance by the TMM Joint Venture,
the sale of a vessel by a joint venture that was structured between the
Company and SMIT and the commencement of the Pelican Joint Venture.
ENVIRONMENTAL SERVICE SEGMENT
OPERATING REVENUES. The environmental service segment's operating
revenues increased $1.9 million, or 7%, in the twelve month period ended
December 31, 2001 compared to the twelve month period ended December 31,
2000. This increase resulted primarily from the addition of a retainer
client in late 2000 that was formerly a customer of the environmental
service segment's dissolved U.S. West Coast joint venture and higher
international equipment sales. These revenue improvements were partially
offset by a decrease in the severity of managed oil spills.
OPERATING PROFIT. The environmental segment's operating profit decreased
$1.6 million, or 44%, in the twelve month period ended December 31, 2001
compared to the twelve month period ended December 31, 2000. Costs rose
with the establishment of operations on the U.S. West Coast upon the
dissolution of a joint venture in that region, higher legal and
international marketing expenses and increased wages associated with the
provisioning of spill management services.
EQUITY IN NET EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Equity
earnings decreased $0.6 million in the twelve month period ended
December 31, 2001 compared to the twelve month period ended December 31,
2000. A decline in profits resulting from the dissolution of a U.S. West
Coast joint venture was partially offset by higher income earned by two
foreign joint ventures.
DRILLING SEGMENT
As a consequence of the Chiles IPO on September 22, 2000, the Company's
ownership interest in Chiles Offshore declined below 50% and the Company
no longer consolidates Chiles Offshore's 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 AND CORPORATE
EQUITY IN NET EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Equity
losses decreased $0.9 million in the twelve month period ended December
31, 2001 compared to the twelve month period ended December 31, 2000.
Losses declined due to a decline in the operating losses of Globe
Wireless and a gain realized from the sale of a Handymax Dry-Bulk ship
by a bulk carrier joint venture. These improvements were offset by the
Company's recognition of a charge for investment impairment and its
proportionate share of the net losses of Strategic Software Limited, an
entity in which the Company holds an equity interest and whose principal
activity is to develop and sell software to the ship brokerage and
shipping industry.
MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES. Minority interest in
net income of subsidiaries declined $3.0 million in the twelve month
period ended December 31, 2001 compared to the twelve month period ended
December 31, 2000 due primarily to the deconsolidation of once
majority-owned Chiles Offshore.
INTEREST INCOME AND INTEREST EXPENSE. Net interest expense decreased
$1.6 million in the twelve month period ended December 31, 2001 compared
to the twelve month period ended December 31, 2000. Interest expense
declined due primarily to the deconsolidation of Chiles Offshore and
SEACOR's redemption in 2001 of $135.3 million principal amount of its 5
3/8% Convertible Subordinated Notes Due 2006 (the "5 3/8% Notes"). See
"Liquidity and Capital Resources - Credit Facilities - 5 3/8% Notes" for
additional discussion. Interest income also declined primarily with the
use of previously invested cash balances to acquire vessels and barges
and to liquidate debt.
DERIVATIVE INCOME (LOSSES), NET. Net gains from derivative transactions
decreased $2.2 million in the twelve month period ended December 31,
2001 compared to the twelve month period ended December 31, 2000. Gains
realized in 2000 upon termination of the Company's swap agreements in
respect of Chiles Offshore's 10.0% Senior Notes Due 2008 (the "Chiles
10.0% Notes") that were substantially purchased and redeemed with
proceeds from the Chiles IPO did not recur (the "Chiles Swap
Transaction"). Net gains from commodity price hedging arrangements on
various natural gas and crude oil positions, U.S. treasury note and U.S.
treasury bond option and futures contracts and foreign currency forward
exchange contracts in 2001 partially offset the decline. See "Item 7A.
Quantitative and Qualitative Disclosures About Market Risk" for
additional discussion.
22
GAINS FROM SALE OF MARKETABLE SECURITIES, NET. Net gains from the sale
of marketable securities decreased $1.9 million in the twelve month
period ended December 31, 2001 compared to the twelve month period ended
December 31, 2000. In both years, the Company realized net gains
primarily from the sale of equity securities.
CORPORATE EXPENSES. In the twelve month period ended December 31, 2001
compared to the twelve month period December 31, 2000, corporate
expenses increased $3.0 million. 2001 included underwriting fees and
legal and professional expenses relating to unused availability under a
standby purchase agreement with Credit Suisse First Boston ("CSFB") in
connection with the redemption of certain of the Company's 5 3/8% Notes
and higher costs resulting from an increase in the number of filings
with the Commission. See "Liquidity and Capital Resources - Credit
Facilities - 5 3/8% Notes" for additional discussion. Corporate expenses
also increased between comparable periods due to an increase in wage and
related benefit costs.
COMPARISON OF FISCAL YEAR 2000 TO FISCAL YEAR 1999
OFFSHORE MARINE SERVICE SEGMENT
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 between years due primarily
to the acquisition, construction and charter-in of vessels and the
consolidation of ELI's financial results with those of the Company. A
decline in operating revenues resulting from vessel sales and charter-in
expirations, an increase in the number of vessels bareboat chartered-out
and lower rates per day worked and utilization partially offset this
increase.
The acquisition, construction and charter-in of vessels resulted in a
$33.9 million increase in operating revenues. This increase was offset
by a $14.7 million decline in operating revenues due to vessel sales and
charter-in expirations and an increase in the number of vessels bareboat
chartered-out.
As a result of ELI becoming a majority owned subsidiary in December
1999, the Company began consolidating ELI's financial condition, results
of operations and cash flows with its own and operating revenues rose
between years by $11.9 million. 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.
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.
OPERATING PROFIT. 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. The decline
was also partially attributable to higher operating expenses resulting
from (i) emergency repairs performed on three large anchor handling
towing supply vessels, (ii) drydocking four 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.
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 due primarily 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.
23
EQUITY IN NET EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Equity
earnings decreased $5.3 million, in the twelve month period ended
December 31, 2000 compared to the twelve month period ended December 31,
1999 due primarily to a decline in the operating results of the TMM
Joint Venture and certain other ventures in which the Company acquired
an equity interest from SMIT (the "SMIT Joint Ventures"). Reduced
profits in the TMM Joint Venture were due primarily to an increase in
reserves for doubtful accounts receivable and estimated income tax
expenses recorded in prior periods and lower rates per day worked earned
by the venture's fleet. Reduced profits in the SMIT Joint Ventures were
due primarily to fewer operating vessels, resulting from vessel sales
and the charter-in expiration of a vessel.
ENVIRONMENTAL SERVICE SEGMENT
OPERATING REVENUES. 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, which
was partially offset by a decline in retainer revenues.
OPERATING PROFIT. 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 due primarily to higher operating
expenses resulting from the addition of a marine operating base in St.
Croix and higher drydocking expenses and the decline in retainer
revenues.
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 the environmental service segment's U.S. West Coast
joint venture.
DRILLING SEGMENT
OPERATING REVENUES. 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
Offshore, compared to the twelve month period ended December 31, 1999
due to the commencement of operation of two newly constructed rigs, the
charter-in of one rig and an improvement in rates per day worked.
OPERATING PROFIT. Operating profits increased $15.2 million in the
period from January 1, 2000 through September 21, 2000 due primarily to
the factors affecting operating revenue as outlined above.
As a consequence of the Chiles IPO on September 22, 2000, the Company's
ownership interest in Chiles Offshore declined below 50% and the Company
no longer consolidates Chiles Offshore's 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 AND CORPORATE
EQUITY IN NET EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Equity
losses increased $2.6 million, in the twelve month period ended December
31, 2000 compared to the twelve month period ended December 31, 1999.
Losses in both years resulted primarily from the Company's recognition
of its equity interest in the operating losses of Globe Wireless. 2000's
losses were partially offset by the Company's equity interest in a gain
realized by a bulk carrier joint venture upon its sale of a construction
contract for a Handymax Dry-Bulk ship.
MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES. Minority interest in
net income of subsidiaries increased $4.5 million in the twelve month
period ended December 31, 2000 compared to the twelve month period ended
December 31, 1999 due primarily to increased profits of majority-owned
subsidiary Chiles Offshore.
INTEREST INCOME AND INTEREST EXPENSE. Net interest expense increased
$8.2 million in the twelve month period ended December 31, 2000 compared
to the twelve month period ended December 31, 1999. Interest expense
increased due primarily to a decline in interest capitalized after
substantial completion of the Company's offshore marine vessel and
Chiles Offshore's 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 Chiles Offshore
and the entry into swap agreements. Interest income declined also due to
the Chiles Offshore 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 rigs for Chiles Offshore and vessels.
24
DERIVATIVE INCOME (LOSS), NET. Net derivative income increased $7.6
million in the twelve month period ended December 31, 2000 compared to
the twelve month period ended December 31, 1999 due primarily to the
Chiles Swap Transaction.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. Net gains from
sales of marketable securities increased $7.8 million in the twelve
month period ended December 31, 2000 compared to the twelve month period
ended December 31, 1999 due primarily to 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.
GAIN UPON SALE OF SHARES OF CHILES OFFSHORE. In 2000, the Company
recognized a gain upon the sale of common stock of Chiles Offshore
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.
CORPORATE EXPENSES. Corporate expenses increased $1.0 million 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 wage and
related benefit costs.
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 for the foreseeable future. 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.
A decline in U.S. Gulf of Mexico drilling activity during the second
half of 2001 has lowered demand and rates per day worked for most
classes of vessels in the Company's U.S. fleet. As a result, operating
revenues have declined, and at present, the Company has 36 U.S. vessels
out of service, including 27 from its utility fleet. Oil and natural gas
prices have recently improved, and should these prices remain stable or
rise further over the next several months, drilling activities in the
U.S. Gulf of Mexico should also increase. These improvements should in
turn lead to higher utilization and rates per day worked for the
Company's domestic fleet. The Company cannot predict whether, or to what
extent, market conditions will improve, remain stable or even
deteriorate. As a result, should present demand and rates per day worked
for the Company's U.S. vessels remain unchanged or further decline,
results of operations and cash flows will be adversely affected.
CASH AND MARKETABLE SECURITIES
At December 31, 2001, the Company's cash and investments in marketable
securities totaled $258.1 million, including $180.4 million of
unrestricted cash and cash equivalents, $22.4 million of investments in
marketable securities and $55.3 million of restricted cash. The
Company's cash and investments in marketable securities decreased $89.1
million in the twelve month period ended December 31, 2001 compared to
the twelve month period ended December 31, 2000. See "Cash Generation
and Deployment" below.
Restricted cash at December 31, 2001 is comprised of joint depository
construction reserve fund accounts with the Maritime Administration that
were established pursuant to Section 511 of the Merchant Marine Act,
1936, as amended. In accordance with this statute, the Company has been
permitted to deposit proceeds from the sale of certain vessels into the
joint depository construction reserve fund accounts for purposes of
acquiring newly constructed U.S.-flag vessels and qualifying for
temporary deferral of taxable gains realized from the sale of the
vessels. From date of deposit, withdrawals from the joint depository
construction reserve fund accounts are subject to prior written approval
of the Maritime Administration, and the funds on deposit must be
committed for expenditure within three years or be released for the
Company's general use. Any such gains from vessel sales previously
deferred would become immediately taxable upon release to the Company of
sale proceeds that were deposited into joint depository construction
reserve fund accounts.
25
Investments in marketable securities at December 31, 2001 were primarily
debt securities issued by U.S. states and their political subdivisions,
the government of the United Kingdom, the U.S. Government and its
agencies and corporations. Of the investments in debt securities,
approximately 78%, or $15.2 million, have contractual maturities of 10
years or longer.
CASH GENERATION AND DEPLOYMENT
Cash flow provided from operating activities during the twelve month
period ended December 31, 2001 totaled $111.4 million and increased
$46.2 million, or 71%, from the prior year due primarily to fleet growth
and higher rates per day worked and utilization. This increase was
partially offset by unfavorable changes in working capital.
In the twelve month period ended December 31, 2001, the Company
generated $309.7 million from investing and financing activities.
Available-for-sale securities were sold for $145.9 million. The Company
borrowed $65.0 million under its revolving credit facility in connection
with the acquisition of Stirling Shipping and the repayment of Stirling
Shipping's outstanding indebtedness. Cash proceeds from the sale of
vessels totaled $60.7 million. Pursuant to a standby purchase agreement
between CSFB and SEACOR, CSFB purchased 216,170 shares of Common Stock
for $10.0 million. See "Credit Facilities and Notes -- 5 3/8% Notes" for
discussion. Additional cash was generated primarily from the receipt of
dividends and principal payments on notes from 50% or less owned
companies, the sale of the Company's investment in two 50% or less owned
offshore marine service segment companies and the settlement of certain
derivative transactions.
In the twelve month period ended December 31, 2001, the Company used
$463.8 million in its investing and financing activities. Capital
expenditures for property and equipment, primarily related to the
acquisition and construction of vessels and barges, totaled $107.4
million. To acquire corporations that own vessels, the Company paid
$98.2 million, net of cash acquired. Marketable securities were acquired
for $74.8 million. The Company repaid $124.9 million of certain
outstanding indebtedness, primarily including $71.0 million on the books
of Stirling Shipping, $35.0 million borrowed under the its revolving
credit facility and $17.6 million with respect to two vessels purchased
under capital lease arrangements. The Company paid $38.0 million for the
redemption of $36.1 million principal amount of the 5 3/8% Notes.
Restricted cash balances rose by $14.5 million as deposits into joint
depository construction reserve fund accounts exceeded reimbursements to
the Company. Investments in and advances to 50% or less owned companies,
primarily for the purchase of vessels, totaled $5.8 million. Additional
cash was used primarily for the purchase of Common Stock for treasury.
CAPITAL EXPENDITURES
Property and equipment capital expenditures totaled $140.5 million,
$73.8 million and $107.4 million in 1999, 2000 and 2001, respectively.
Property additions in each of those years included the acquisition,
construction and improvement of vessels. Capital expenditures in 1999
included costs to construct rigs for Chiles Offshore and 2000 and 2001
included costs to construct barges.
At December 31, 2001, the Company was committed to the construction of 9
vessels at an approximate aggregate cost of $85.6 million, of which
$40.6 million had been expended. Following year end, the Company
committed to the construction of 2 additional vessels and 174 barges at
an approximate aggregate cost of $60.3 million. The vessels are expected
to enter service during the next two years, and the barges are expected
to enter service during 2002. The Company expects a certain number of
the barges to be purchased by third parties and managed by the Company.
The Company may make selective acquisitions of vessels or barges, fleets
of 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 vessels or construct 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 or
shares of Common Stock.
CREDIT FACILITIES AND NOTES
REVOLVING CREDIT FACILITY. On February 5, 2002, the Company completed
the syndication of a $200.0 million, five year, non-reducing, unsecured
revolving credit facility that replaced a $100.0 million unsecured
reducing revolving credit facility, of which $25.7 million was available
for future borrowing upon termination. Advances under the new revolving
credit facility are available for general corporate purposes. Interest
on advances will be charged at a rate per annum of LIBOR plus an
applicable margin of 65 to 150 basis points based upon the Company's
credit rating as determined by Standard & Poor's and Moody's.
Adjustments to the applicable margin are the only consequence of a
26
change in the Company's credit rating. The Company is not required to
maintain a credit rating under the terms of the facility agreement, and
if the Company does not maintain a credit rating, the applicable margin
would be determined by financial ratios. The new revolving credit
facility contains various restrictive covenants covering interest
coverage, secured debt to total capitalization, funded debt to total
capitalization ratios, the maintenance of a minimum level of
consolidated net worth, as well as other customary covenants,
representations and warranties, funding conditions and events of
default. The new revolving credit facility contains no repayment
triggers. A letter of credit, in the amount of (pound)15.3 million, or
$21.8 million as of March 20, 2002, has been issued pursuant to the
terms of the new revolving credit facility, representing a guarantee on
notes issued by the Company in connection with the acquisition of
Stirling Shipping. Amounts available for future borrowings under the new
revolving credit facility totaled approximately $148.2 million at March
20, 2002.
7.2% NOTES. At December 31, 2001, 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. 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 contain covenants including, among others,
limitations on liens and sale and leasebacks of certain properties and
restrictions on the Company consolidating with or merging into any other
Person.
In order to reduce its cost of capital, the Company entered into swap
agreements during the fourth quarter of 2001 with a major financial
institution with respect to notional amounts equal to a portion of its
7.2% Notes. Pursuant to each such agreement, such financial institution
agreed to pay to the Company an amount equal to interest paid on the
notional amount of the 7.2% 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 3.3% per annum on the
agreed upon price of such notional amount of the 7.2% Notes as set forth
in the applicable swap agreement. At December 31, 2001, $30.0 million
notional principal amount of the 7.2% Notes were covered by such swap
agreements.
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 the 7.2% 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. The swap agreements
terminate during the fourth quarter of 2002 unless extended by mutual
consent.
5 3/8% NOTES. In 1996, the Company issued $187.8 million aggregate
principal amount of its 5 3/8% Notes, which 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 date of repurchase.
In 2001, the Company called for the redemption of $100.0 million of the
$181.6 million aggregate principal amount outstanding of the 5 3/8%
Notes. The redemption price was $1,029.90 per $1,000 principal amount of
notes plus accrued interest to the applicable redemption date. Holders
of 5 3/8% 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. The call, together with certain privately negotiated
transactions, resulted in the conversion of $99.2 million principal
amount of the 5 3/8% Notes into 2,285,878 shares of Common Stock and
redemption of $36.1 million principal amount of the 5 3/8% Notes for
approximately $38.0 million, including accrued interest, and at December
31, 2001, $46.3 million aggregate principal amount of the 5 3/8% Notes
remained outstanding.
Pursuant to an amended and restated standby purchase agreement between
CSFB and SEACOR, CSFB was obligated, subject to several conditions, to
purchase from SEACOR, at a purchase price of $46.26 per share, the
number of shares of Common Stock necessary to provide SEACOR with the
proceeds to pay the aggregate total redemption price of up to $100.0
million of the 5 3/8% Notes that SEACOR redeemed. During 2001, CSFB
purchased 216,170 shares of Common Stock to provide SEACOR with proceeds
to redeem $10.0 million principal amount of its 5 3/8% Notes that were
called for redemption but not converted.
27
SEACOR also entered into an equity forward transaction with Credit
Suisse First Boston International ("CSFBi"), an affiliate of CSFB, with
respect to the shares of Common Stock that CSFB did purchase from SEACOR
under the standby purchase agreement. At December 31, 2001, the $10.0
million paid by CSFB for the purchase of 216,170 shares of Common Stock
was reported in the consolidated balance sheet as common stock sold with
an equity forward transaction. During the first quarter of 2002, SEACOR
paid CSFBi a nominal amount to settle the equity forward transaction and
the $10.0 million previously reported as common stock sold with an
equity forward transaction was permanently reclassified in the
consolidated balance sheet to the common stock and additional paid-in
capital accounts.
OTHER NOTES. Outstanding promissory notes issued upon the purchase of
vessels aggregated $67.6 million at December 31, 2001 of which $33.5
million, $23.2 million and $10.9 million are scheduled for repayment in
2002, 2004 and 2005, respectively. Other promissory notes, totaling $0.8
million, are repayable at various dates through 2010.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Below is an aggregation of the Company's contractual obligations and
commercial commitments as of December 31, 2001, in thousands of dollars.
Payments Due By Period
-------------------------------------------------------------------
Less than After
Contractual Obligations Total 1 Year 1-3 Years 4-5 Years 5 Years
- ------------------------------------ ---------- ---------- ----------- ---------- ----------
Long-term Debt..................... $ 292,223 $ 33,724 $ 34,456 $ 46,358 $ 177,685
Operating Leases................... 59,283 16,525 33,379 4,807 4,572
Construction Commitments(1)........ 45,035 43,259 1,776 - -
---------- ---------- ----------- ---------- ----------
Total Contractual Cash $ 396,541 $ 93,508 $ 69,611 $ 51,165 $ 182,257
Obligations........................ ========== ========== =========== ========== ==========
Amount of Commitment Expiration Per Period
-------------------------------------------------------------------
Total Less than Over 5
Other Commercial Commitments Committed 1 Year 1-3 Years 4-5 Years Years
- ------------------------------------ ---------- ---------- ----------- ---------- ----------
TMM Joint Venture Guarantee(2)..... $ 2,212 $ 2,212 $ - $ - $ -
Pelican Joint Venture Guarantee(3). 1,500 - - 1,500 -
Letter of Credit (4)............... 22,213 22,213 - - -
---------- ---------- ----------- ---------- ----------
Total Commercial Commitments.... $ 25,925 $ 24,425 $ - $ 1,500 $ -
========== ========== =========== ========== ==========
- --------------------
(1) Following year end, the Company contracted for the construction of 105
barges and 2 vessels and committed to build 69 additional barges. The
barges and vessels are expected to be delivered to the Company in 2002
and 2003, respectively. Aggregate construction cost for this equipment
approximates $60.3 million, including $51.1 million and $9.2 million
expected to be paid in 2002 and 2003, respectively. A certain number of
the new construction barges are expected to be purchased by third
parties and managed by the Company.
(2) Guarantee for non-payment of obligations owing under a charter
arrangement by the Company's TMM Joint Venture that is expected to
terminate during 2002.
(3) Guarantee of amounts owed by the Pelican Joint Venture under its banking
facilities.
(4) Letter of credit issued pursuant to the terms of the Company's revolving
credit facility, representing a guarantee on notes issued by the Company
in connection with the acquisition of Stirling Shipping.
GLOBE WIRELESS
Since inception in the early 1990's, Globe Wireless has focused on
expanding its network of high frequency radio stations and customers
base. To support its continued growth, Globe Wireless completed a
private placement offering in 2000 that raised approximately $57
million. Although Globe Wireless has experienced negative cash flow, the
management of Globe Wireless presently believes the company will closely
approximate cash break-even by mid-2003. There can be no assurances that
Globe Wireless's future operations will succeed. Should Globe Wireless
be unable to meet its funding requirements, SEACOR would be required to
commit additional funding or record an impairment charge with respect to
its investment. At December 31, 2001, the carrying value of the
Company's investment in Globe Wireless was $20.7 million.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results
of Operations discusses the consolidated financial statements of the
Company, which have been prepared in accordance with accounting
principles generally accepted in the U.S. In many cases, the accounting
treatment of a particular transaction is specifically dictated by
generally accepted accounting principles; whereas, in other
circumstances, the Company is required to make estimates, judgements and
assumptions that we believe are reasonable based upon information
available. The Company bases its estimates and judgements on historical
experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgements about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions and conditions. We believe
that of our significant accounting policies, as discussed in our
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footnotes to the consolidated financial statements, the following may
involve a higher degree of judgement and complexity.
REVENUE RECOGNITION. Operating revenues are earned primarily from the
offshore marine service segment's time and bareboat charter-out of
vessels and the environmental service segment's charge for retainer
fees. Revenue is recognized when persuasive evidence of an arrangement
exists, the service has been delivered, fees are fixed and determinable,
collectibility is probable and when other significant obligations have
been fulfilled.
PURCHASE ACCOUNTING AND GOODWILL. Purchase accounting requires extensive
use of estimates and judgement to allocate the cost of an acquired
enterprise to the assets acquired and liabilities assumed. The cost of
each acquired operation is allocated to the assets acquired and
liabilities assumed based on their estimated fair values. These
estimates are revised during an allocation period as necessary when, and
if, information becomes available to further define and quantify the
value of the assets acquired and liabilities assumed. The allocation
period does not exceed beyond one year from the date of the acquisition.
To the extent additional information to refine the original allocation
becomes available during the allocation period, the allocation of the
purchase price is adjusted. Should information become available after
the allocation period, those items are included in operating results.
The cost of an enterprise acquired in a business combination includes
the direct cost of the acquisition. The operating results of entities
acquired are included in the Company's consolidated statements of income
from the completion date of the applicable transaction.
In recording various business combinations, the Company has assigned the
excess of the cost of its acquired enterprises over the sum of the
amounts assigned to the identifiable assets acquired less liabilities
assumed to goodwill, the balance of which totaled $36.6 million at
December 31, 2001. In 2001 and prior years, the Company amortized
goodwill to expense over the expected benefit period, ranging from 10 to
22 years. Effective January 1, 2002, the Company adopted Financial
Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other
Intangible Assets." Among other changes to prior practices, the new
standard requires that goodwill be tested for impairment annually or
when events or circumstances occur between annual tests indicating that
goodwill for a reporting unit might be impaired based on a fair value
concept. SFAS 142 requires that impairment testing of the opening
goodwill balances be performed within six months from the start of the
fiscal year in which the standard is adopted and that any impairment be
written off and reported as a cumulative effect of a change in
accounting principle. We have completed an initial review and do not
currently expect to record an impairment charge. However, there can be
no assurance that at the time the review is completed a material
impairment charge will not be recorded. The Company ceased amortization
of its remaining goodwill balance effective January 1, 2002.
INVESTMENTS. The Company holds less than majority investments in
strategically aligned companies that included a $77.6 million investment
at December 31, 2001 in Chiles Offshore, which is traded publicly. The
Company employs the equity method of accounting for investments in
common stock when such investments in voting stock gives it the ability
to exercise significant influence over operating and financial policies
of a company even though it holds 50% or less of the voting stock.
Significant influence is generally deemed to exist if the Company owns
between 20% and 50% of an entity's voting stock, although the ability to
exercise influence may be indicated in several ways even when such
investments are below 20%. The Company also holds less significant
investments, carried at cost, in private companies over which it does
not have the ability to exercise significant influence nor does it own
greater than 20% of the entity's voting stock. The Company may record
investment impairment charges when it believes an investment has
experienced a decline in value that is other than temporary. Future
adverse changes in market conditions or poor operating results of
underlying investments could result in losses or an inability to recover
the carrying value of the investments that may not be reflected in an
investment's current carrying value, thereby possibly requiring an
impairment charge in the future.
FAIR VALUE OF DERIVATIVE INSTRUMENTS. Derivative instruments are
recorded at fair value and except for those transactions that are
effective hedges for accounting purposes in accordance with Financial
Accounting Standard No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," gains and losses are included in
the determination of our net income. The derivative contracts recorded
in the Company's consolidated balance sheets are stated at their fair
values, which the Company acquired from third parties that regularly
conduct business in the derivative contracts, which we have negotiated.
Future adverse changes in the market price for the underlying notional
amounts of our derivative contracts may result in losses in our
statement of income or other comprehensive income, if hedge accounting
criteria are met.
CARRYING VALUE OF VESSELS. The Company depreciates its vessels over 20
to 25 years from date of original construction, except for standby
safety vessels where it has chosen a useful life of 30 years. In
assigning depreciable lives to its vessels, the Company has considered
the effects of both physical deterioration largely caused by wear and
tear due to operating use and other economic factors that could impact
commercial viability. Furthermore, salvage value, an amount typically
29
expected to be recovered through sale upon vessel retirement,
approximates 10% of cost. To date, the Company's experience confirms
that these policies are reasonable, although, there may be events or
changes in circumstances in the future that indicate the recoverability
of the carrying amount of a vessel might not be possible. Examples of
events or changes in circumstances that could indicate that the
recoverability of a vessel's carrying amount should be assessed might
include (i) a significant decrease in the market value of a vessel, (ii)
a significant adverse change in the business climate that could affect
the value of a vessel and (iii) current period operating or cash flow
losses combined with a history of operating or cash flow losses or a
projection or forecast that demonstrates continuing losses associated
with a vessel. If events or changes in circumstances as set forth above
indicate that a vessel's carrying amount may not be recoverable, the
Company would then be required to estimate the undiscounted future cash
flows expected to result from the use of the vessel and its eventual
disposition. If the sum of the expected future cash flows is less than
the carrying amount of the vessel, the Company would be required to
recognize an impairment loss.
INCOME TAXES. At December 31, 2001, the Company had not provided for
U.S. income taxes with respect to $30.5 million of undistributed
earnings of certain non-U.S. subsidiaries and 50% or less owned
companies as it is the Company's intention to indefinitely invest these
earnings abroad. Should a remittance of these earnings be expected in
the foreseeable future, the Company would then be required to provision
for the related U.S. income tax consequences.
STOCK AND DEBT REPURCHASE PROGRAM
SEACOR's Board of Directors previously approved a securities repurchase
plan, which allows the Company to acquire Common Stock, 5 3/8% Notes and
its 7.2% Notes (collectively, the "SEACOR Securities") and, prior to the
deconsolidation of Chiles Offshore in 2000, certain of the Chiles 10.0%
Notes. In 2001, a total of 5,950 shares of Common Stock were acquired
for treasury at an aggregate cost of approximately $0.2 million. In
2000, 154,400 shares of Common Stock were acquired for treasury at an
aggregate cost of approximately $4.8 million. As of December 31, 2001,
the Company had approximately $36.7 million available for the repurchase
of additional SEACOR Securities that may be conducted from time-to-time
through open market purchases, privately negotiated transactions or
otherwise, depending on market conditions.
STOCK INCENTIVE AND PURCHASE PLANS
STOCK INCENTIVE 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 Common Stock, and
the Share Incentive Plan additionally provides for the grant of stock
appreciation 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 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. Seven
hundred fifty thousand shares of Common Stock have been reserved for
issuance under each of the Stock Option Plan and the Share Incentive
Plan. In 2000 and 2001, the Company granted 216,634 and 198,380 shares
and/or options to purchase shares of Common Stock, respectively. At
December 31, 2001, there were 152,350 shares available for future grant
under the Plans.
EMPLOYEE STOCK PURCHASE 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 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. 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.
In 2001, 15,923 shares of Common Stock were issued from treasury
pursuant to the Stock Purchase Plan. No shares of Common Stock were
issued in 2000.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. 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
30
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. In 2000 and 2001, options were granted for the purchase of
21,000 and 24,000 shares of Common Stock, respectively.
EFFECTS OF INFLATION
The Company's global 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 foreign currency
forward 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
Effective January 1, 2001, the Company adopted 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 market value. SFAS 133
requires that changes in the derivative's fair market value be
recognized 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 cumulative effect of adopting SFAS 133 was not
material.
The Company uses derivative financial instruments to hedge against its
exposure to changes in foreign currencies, prices of natural gas and
crude oil and interest rates. 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, 2001, there were no outstanding forward exchange
contracts for which hedge accounting criteria were met.
In 2000 and 2001, the Company also entered into forward exchange
contracts that are considered speculative with respect to Norwegian
Kroners, Pounds Sterling and Euros. The Norwegian Kroner contracts
enabled the Company to buy Norwegian Kroners in the future at fixed
exchange rates which could have offset possible consequences of changes
in foreign exchange had it decided to conduct business in Norway. The
Pound Sterling and Euro contracts enable the Company to buy Pounds
Sterling and Euros in the future at fixed exchange rates, which could
offset possible consequences of changes in foreign exchange of its
business conducted in the United Kingdom and Europe. For the twelve
month periods ending December 31, 2000 and 2001, the Company recognized
net gains of $0.6 million and net losses of $0.2 million, respectively,
from these forward exchange contracts. At December 31, 2001, there were
no outstanding Norwegian Kroner contracts and the fair market values of
its speculative Pound Sterling and Euro contracts totaled $0.5 million
and was reported in the consolidated balance sheet as trade and other
receivables.
31
Natural gas and crude oil swaps, options and futures contracts are
employed by the Company to provide it value 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. U.S.
treasury notes and U.S. treasury bonds options and futures contracts,
which began in 2001, provide value to the Company should the price of
U.S. treasury notes and bonds decline leading to generally higher
interest rates which, if sustained over time, might lead to a higher
interest cost for the Company. For the twelve month periods ending
December 31, 1999, 2000 and 2001, the Company has recognized net losses
of $1.3 million, net losses of $1.0 million and net gains of $4.6
million, respectively, from commodity hedging activities, and the fair
market value of the Company's positions in commodity contracts at
December 31, 2001 totaled $1.5 million and was reported in the
consolidated balance sheet as trade and other receivables. For the
twelve month period ending December 31, 2001, the Company has recognized
net gains of $0.2 million from U.S. treasury note and U.S. treasury bond
future contracts, and the Company's unrealized loss with respect to its
positions in U.S. treasury obligations totaled $0.3 million and was
reported in the consolidated balance sheet as other current liabilities.
Effective January 1, 2002, the Company adopted SFAS 141, "Business
Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."
Among other changes to prior practices, the new standards require (i)
the use of the purchase method of accounting for all business
combinations, (ii) that goodwill not be amortized in any circumstance
and (iii) that goodwill be tested for impairment annually or when events
or circumstances occur between annual tests indicating that goodwill for
a reporting unit might be impaired based on a fair value concept. SFAS
142 requires that impairment testing of the opening goodwill balances be
performed within six months from the start of the fiscal year in which
the standard is adopted and that any impairment be written off and
reported as a cumulative effect of a change in accounting principle. We
have completed an initial review and do not currently expect to record
an impairment charge. However, there can be no assurance that at the
time the review is completed a material impairment charge will not be
recorded. The Company ceased amortization of its remaining goodwill
balance effective January 1, 2002. Goodwill amortization was $1.2
million in 1999, $1.4 million in 2000 and $3.2 million in 2001.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS 143, "Accounting for Asset Retirement Obligations", which requires
recording the fair value of a liability for an asset retirement
obligation in the period incurred. The standard is effective for fiscal
years beginning after June 15, 2002, with earlier application permitted.
Upon adoption of the standard, the Company will be required to use a
cumulative effect approach to recognize transition amounts for any
existing retirement obligation liabilities, asset retirement costs and
accumulated depreciation. The nature of the Company's business and
long-lived assets is such that adoption of this new standard should have
no significant impact on the Company's financial statements.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." This new statement also supercedes certain
aspects of Accounting Principle Board Opinion No. 30 ("APB 30"),
"Reporting the Results of Operations-Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," with regard to reporting the effects
of a disposal of a segment of a business and will require expected
future operating losses from discontinued operations to be reported in
discontinued operations in the period incurred rather than as of the
measurement date as presently required by APB 30. Additionally, certain
dispositions may now qualify for discontinued operations treatment. The
provisions of this statement are required to be applied for fiscal years
beginning after December 15, 2001 and interim periods within those
fiscal years. The Company expects this statement will not have a
material impact on its financial statements.
CAUTIONARY STATEMENTS
In addition to the other information contained in this Annual Report,
the following factors should be considered carefully.
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 REDUCE DEMAND
FOR THE COMPANY'S OFFSHORE MARINE SERVICES.
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 marine operations. The level of exploration and
development of offshore areas is affected by 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 vessels and logistics services. Decreased demand for these
services would reduce the Company's revenue and profitability.
32
THE COMPANY RELIES ON SEVERAL CUSTOMERS FOR A SIGNIFICANT SHARE OF OUR
REVENUES, THE LOSS OF WHICH COULD ADVERSELY AFFECT THE COMPANY'S
BUSINESS AND OPERATING RESULTS.
The Company's 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 2001, the Company derived approximately 11% of its offshore
marine service segment operating revenue from ExxonMobil Corporation.
During 2001, the Company's environmental service segment derived
approximately 21% of its environmental retainer revenue from Citgo
Petroleum Corporation and 14% from El Paso 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. The
occurrence of any of the foregoing 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 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 fleets of vessels
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 primary competitive factors in the environmental service 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
environmental service 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.
AN INCREASE IN SUPPLY OF OFFSHORE SUPPORT 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 support vessel 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 revenues and
profitability.
MARINE-RELATED RISKS COULD DISRUPT THE COMPANY'S OFFSHORE MARINE
SERVICES AND EXPOSE THE COMPANY TO 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.
33
THE COMPANY'S INSURANCE COVERAGE MAY BE INADEQUATE TO PROTECT THE
COMPANY FROM THE LIABILITIES THAT COULD ARISE 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 GLOBAL 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 revenue 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.
BECAUSE A SIGNIFICANT PROPORTION 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 2001, approximately 42% 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.
THE COMPANY MAY BE UNABLE TO MAINTAIN OR REPLACE ITS VESSELS AS THEY
AGE.
As of December 31, 2001, the average age of vessels the Company owned,
excluding its standby safety vessels, was approximately 13.7 years. The
Company believes that after an offshore support vessel has been in
service for 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 will be able to maintain its fleet by extending the
economic life of existing vessels, or that its financial resources will
be sufficient to enable it to make expenditures necessary for these
purposes or to acquire or build replacement vessels.
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 SERVICE.
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. There can be
no assurance that oil spill regulation will not be relaxed or
enforcement of existing or future regulation will not become less
stringent. If this happens, the demand for the Company's oil spill
response services could be reduced, which could have a negative impact
on its profitability.
A CHANGE IN, OR REVOCATION OF, NRC'S CLASSIFICATION AS AN "OIL SPILL
REMOVAL ORGANIZATION" WOULD RESULT IN A LOSS OF BUSINESS.
NRC is classified as an OSRO. OSRO classification is a voluntary process
conducted by the 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
34
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 would decline.
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 was 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 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
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. 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, 2001 was approximately (pound)68.0 million. A 1% weakening in the
exchange rate of the Pound Sterling against the U.S. dollar would result
in an after-tax charge of $0.6 million to other comprehensive income
related to these investments. To protect 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 because the translation adjustments resulting from the
forward exchange contracts move in the opposite direction from the
35
translation adjustments resulting from the restatement of its United
Kingdom subsidiaries' net assets. At December 31, 2001, there were no
outstanding forward exchange contracts for which hedge accounting
criteria were met.
The Company has also entered into forward exchange contracts that are
considered speculative during 2000 and 2001 with respect to Norwegian
Kroners, Pounds Sterling, and Euros. The Norwegian Kroner contracts
enabled the Company to buy Norwegian Kroners in the future at fixed
exchange rates which could have offset possible consequences of changes
in foreign currency exchange rates had it decided to conduct business in
Norway. The Pound Sterling and Euro contracts enable the Company to buy
Pounds Sterling and Euros in the future at fixed exchange rates, which
could offset possible consequences of changes in foreign exchange of its
business conducted in the United Kingdom and Europe. At December 31,
2001, there were no outstanding Norwegian Kroner contracts and the fair
market values of its speculative Pound Sterling and Euro contracts
totaled $0.5 million and was reported in the consolidated balance sheet
as trade and other receivables.
Natural gas and crude oil swaps, options, and futures contracts are
employed by the Company to provide it value 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. U.S.
treasury notes and U.S. treasury bonds options and futures contracts
provide value to the Company should the price of U.S. treasury notes and
bonds decline leading to generally higher interest rates which, if
sustained over time, might lead to a higher interest cost for the
Company. At December 31, 2001, the fair market value of the Company's
positions in commodity contracts totaled $1.5 million and was reported
in the consolidated balance sheet as trade and other receivables. Also
at December 31, 2001, the Company's unrealized loss with respect to its
positions in U.S. treasury obligations totaled $0.3 million and was
reported in the consolidated balance sheet as other current liabilities.
In November 2001, SEACOR advanced its wholly owned subsidiary, Stirling
Shipping, a Pound Sterling functional currency investee, $63.6 million,
or (pound)45.0 million, to assist Stirling Shipping with the repayment
of indebtedness due a UK bank. SEACOR considers its advance to Stirling
Shipping an intercompany loan with payment expected in the foreseeable
future. Until repaid, accounting standards require that changes in the
exchange rate from the transaction date until the settlement date with
respect to this intercompany loan be included in the determination of
net income. A 1% weakening in the exchange rate of the Pound Sterling
against the U.S. dollar would result in the Company's recognition of
$0.6 million foreign currency transaction loss with respect to this
advance.
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 affected by interest rate
fluctuations. For a 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. As of December 31, 2001, $46.3 million aggregate
principal amount of the 5 3/8% Notes was outstanding. The Company's only
significant variable rate debt instrument is its revolving credit
facility, under which the Company had only $30.0 million outstanding at
December 31, 2001. 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.
In order to reduce its cost of capital, the Company entered into swap
agreements during the fourth quarter of 2001 with a major financial
institution with respect to notional amounts equal to a portion of its
7.2% Notes. Pursuant to each such agreement, such financial institution
agreed to pay to the Company an amount equal to interest paid on the
notional amount of the 7.2% 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 3.3% per annum on the
agreed upon price of such notional amount of the 7.2% Notes as set forth
in the applicable swap agreement. At December 31, 2001, $30.0 million
notional principal amount of the 7.2% Notes were covered by such swap
agreements.
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 the 7.2% 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. The agreed upon price of
such notional amount as set forth in such swap agreement totaled $30.3
million. At December 31, 2001, there was an unrealized loss, totaling
$0.5 million, which resulted from the agreed upon price exceeding the
fair value of the notional amounts set forth in the swap agreements. The
swap agreements terminate during the fourth quarter of 2002 unless
extended by mutual consent.
36
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 43 through 73.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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.
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 43 of this Form
10-K.
3. Exhibits:
Exhibit
Number Description
------ -----------
1.1 * Form of Standby Purchase Agreement between SEACOR SMIT Inc.
and Credit Suisse First Boston Corporation (incorporated herein
by reference to Exhibit 1.1 to the Company's Registration
Statement on Form S-3 (No. 333-53874), filed with the Commission
on January 18, 2001).
37
1.2 * Form of ISDA Master Agreement between SEACOR SMIT Inc. and
Credit Suisse First Boston Corporation, with attached Schedule
and Confirmation (incorporated herein by reference to Exhibit
1.2 to the Company's Registration Statement on Form S-3 (No.
333-53874), filed with the Commission on January 18, 2001).
2.1 * 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).
2.2 * Stock Exchange 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).
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
38
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 Statement on Form S-3 (No. 333-56842)
filed with the Commission on March 9, 2001).
4.15 * SEACOR SMIT Inc. 2000 Employee Stock Purchase Plan, as amended
February 14, 2001 (incorporated herein by reference to Exhibit
4.4 to the Company's Registration Statement on Form S-8 (No.
333-56714), filed with the Commission on March 8, 2001).
4.16 * Instrument, dated May 4, 2001, setting forth terms of (pound)
14,668,942 in aggregate principal amount of Fixed Rate Abatable
Loan Notes (including form of Loan Note Certificate as a
Schedule thereto) (incorporated herein by reference to the
Company's Registration Statement on Form 8-K dated May 17,
2001).
4.17 * Form of Indenture, dated as of January 10, 2001, among SEACOR
SMIT Inc. and U.S. Bank Trust National Association as trustee
(incorporated herein by reference to Exhibit 4.2 to Amendment
No.1 to the Company's Registration Statement on Form S-3/A (No.
333-53326) filed with the Commission on January 18, 2001).
4.18 * Form of Indenture, dated as of January 10, 2001, among SEACOR
SMIT Inc. and U.S. Bank Trust National Association as trustee
(incorporated herein by reference to Exhibit 4.3 to Amendment
No. 1 to the Company's Registration Statement on Form S-3/A (No.
333-53326) filed with the Commission on January 18, 2001).
10.1 * 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).
10.2 *+ 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).
39
10.3 *+ 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).
10.4 *+ 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).
10.5 *+ 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).
10.6 *+ 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).
10.7 * 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).
10.8 * 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).
10.9 * 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).
10.10 * 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).
10.11 * 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).
10.12*+ 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, 2000
and filed with the Commission on March 30, 2000).
10.13*+ 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, 2000
and filed with the Commission on March 30, 2000).
10.14*+ 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, 2000 and filed with the Commission on March 30,
2000).
10.15 * 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, dated February 23, 2001 and filed with the Commission
on March 5, 2001).
10.16 * Letter Agreement dated as of February 23, 2001, amending the
Stock Purchase 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, dated February 23, 2001 and filed with the Commission
on March 5, 2001).
40
10.17 * 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, dated February 23, 2001
and filed with the Commission on March 5, 2001).
10.18 * 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, dated February 23, 2001
and filed with the Commission on March 5, 2001).
10.19 * Stock Purchase Agreement, dated as of May 4, 2001, by and
between SEACOR SMIT Inc. and the Stirling Vendors (incorporated
herein by reference to the Company's Registration Statement on
Form 8-K dated May 17, 2001).
10.20 * Tax Deed, dated as of May 4, 2001, by and between SEACOR SMIT
Inc. and the Stirling Vendors (incorporated herein by reference
to the Company's Registration Statement on Form 8-K dated May
17, 2001).
10.21 Revolving Credit Facility Agreement, dated as of February 5,
2002 by and among SEACOR SMIT Inc., the banks and financial
institutions named therein, Fleet National Bank, Den norske Bank
ASA, Nordea and The Governor and Company of the Bank of Scotland
as agents.
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
99.1 Letter from SEACOR SMIT Inc. to the Securities Exchange
Commission regarding representations by 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.
41
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 29, 2002
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 29, 2002
------------------------------- President and Chief Executive
Charles Fabrikant Officer (Principal Executive Officer)
/s/ Randall Blank Executive Vice President, Chief March 29, 2002
------------------------------- Financial Officer and Secretary
Randall Blank (Principal Financial Officer)
/s/ Lenny P. Dantin Vice President March 29, 2002
------------------------------- and Chief Accounting Officer
Lenny P. Dantin (Principal Accounting Officer)
/s/ Michael E. Gellert Director March 29, 2002
-------------------------------
Michael E. Gellert
/s/ Stephen Stamas Director March 29, 2002
-------------------------------
Stephen Stamas
/s/ Richard M. Fairbanks III Director March 29, 2002
-------------------------------
Richard M. Fairbanks III
/s/ Pierre de Demandolx Director March 29, 2002
-------------------------------
Pierre de Demandolx
/s/ Andrew R. Morse Director March 29, 2002
-------------------------------
Andrew R. Morse
/s/ John Hadjipateras Director March 29, 2002
-------------------------------
John Hadjipateras
/s/ Oivind Lorentzen Director March 29, 2002
-------------------------------
Oivind Lorentzen
/s/ James Cowderoy Director March 29, 2002
-------------------------------
James Cowderoy
42
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Financial Statements:
Page
----
Report of Independent Public Accountants............................ 44
Consolidated Balance Sheets - December 31, 2001 and 2000............ 45
Consolidated Statements of Income for the years ended
December 31, 2001, 2000 and 1999................................. 46
Consolidated Statements of Changes in Equity for the years ended
December 31, 2001, 2000 and 1999................................ 47
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999................................. 48
Notes to Consolidated Financial Statements.......................... 49
Financial Schedule:
Report of Independent Public Accountants on Financial
Statement Schedule............................................... 72
Valuation and Qualifying Accounts for the
Years ended December 31, 2001, 2000 and 1999..................... 73
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.
43
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, 2001 and 2000 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, 2001. 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, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.
As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2001 the Company adopted SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities."
/s/ Arthur Andersen LLP
New Orleans, Louisiana
February 21, 2002
44
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS 2001 2000
--------------- ---------------
Current Assets:
Cash and cash equivalents............................................................$ 180,394 $ 224,219
Marketable securities (available-for-sale)........................................... - 4,997
Trade and other receivables, net of allowance for doubtful
accounts allowance of $1,635 and $1,310, respectively............................. 104,436 87,687
Prepaid expenses and other........................................................... 6,631 5,103
--------------- ---------------
Total current assets............................................................ 291,461 322,006
--------------- ---------------
Investments, at Equity, and Receivables from 50% or Less Owned Companies................ 153,827 137,694
Available-for-Sale Securities........................................................... 22,371 77,184
Property and Equipment:
Vessels and equipment................................................................ 871,688 642,048
Construction in progress............................................................. 51,292 13,752
Other................................................................................ 48,641 56,711
--------------- ---------------
971,621 712,511
Less-accumulated depreciation........................................................ (236,864) (185,433)
--------------- ---------------
734,757 527,078
--------------- ---------------
Restricted Cash......................................................................... 55,290 40,759
Other Assets............................................................................ 40,432 28,009
--------------- ---------------
$ 1,298,138 $ 1,132,730
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt....................................................$ 33,724 $ 2,553
Accounts payable and accrued expenses................................................ 29,070 25,746
Accrued wages........................................................................ 8,471 6,940
Accrued interest..................................................................... 5,384 4,664
Accrued vessel construction and purchase costs....................................... 5,752 11,477
Accrued liability-short sale of securities........................................... 7,485 -
Accrued acquisition costs............................................................ 10,162 -
Other current liabilities............................................................ 13,661 15,003
--------------- ---------------
Total current liabilities....................................................... 113,709 66,383
--------------- ---------------
Long -Term Debt ........................................................................ 256,675 377,955
Deferred Income Taxes................................................................... 148,430 119,545
Deferred Gains and Other Liabilities.................................................... 24,070 14,371
Minority Interest in Subsidiaries....................................................... 1,556 1,924
Common Stock Sold with Equity Forward Transaction....................................... 10,000 -
Stockholders' Equity:
Common stock, $.01 par value, 40,000,000 shares authorized; 24,027,003
and 21,426,969 shares issued in 2001 and 2000, respectively....................... 238 214
Additional paid-in capital........................................................... 384,857 278,567
Retained earnings.................................................................... 472,843 402,142
Less 3,943,333 and 4,310,505 shares held in treasury in 2001 and
2000, respectively, at cost....................................................... (109,638) (125,968)
Unamortized restricted stock......................................................... (1,985) (1,301)
Accumulated other comprehensive income (loss) -
Cumulative translation adjustments................................................ (2,474) (2,014)
Unrealized gain (loss) on available-for-sale
securities........................................................................ (143) 912
--------------- ---------------
Total stockholders' equity...................................................... 743,698 552,552
--------------- ---------------
$ 1,298,138 $ 1,132,730
=============== ===============
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
45
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS, EXCEPT SHARE DATA)
2001 2000 1999
--------------- --------------- ---------------
Operating Revenues....................................................... $ 434,790 $ 339,941 $ 289,425
--------------- --------------- ---------------
Costs and Expenses:
Operating expenses.................................................... 234,551 201,452 166,786
Administrative and general............................................ 49,980 39,548 34,744
Depreciation and amortization......................................... 58,324 51,189 41,282
--------------- --------------- ---------------
342,855 292,189 242,812
--------------- --------------- ---------------
Operating Income......................................................... 91,935 47,752 46,613
--------------- --------------- ---------------
Other Income (Expense):
Interest income....................................................... 13,546 17,423 20,495
Interest expense...................................................... (21,998) (27,450) (22,330)
Gain from equipment sales or retirements, net......................... 9,030 7,628 1,677
Gain upon sale of shares of Chiles Offshore Inc....................... - 4,023 -
Derivative income (loss), net......................................... 4,127 6,292 (1,323)
Other, net............................................................ 7,081 5,990 (1,616)
--------------- --------------- ---------------
11,786 13,906 (3,097)
--------------- --------------- ---------------
Income Before Income Taxes, Minority Interest, Equity in Earnings
(Losses) of 50% or Less Owned Companies and Extraordinary Item........ 103,721 61,658 43,516
--------------- --------------- ---------------
Income Tax Expense:
Current............................................................... 14,838 4,952 358
Deferred.............................................................. 21,220 15,628 14,891
--------------- --------------- ---------------
36,058 20,580 15,249
--------------- --------------- ---------------
Income Before Minority Interest, Equity in Earnings (Losses) of 50% or
Less Owned Companies and Extraordinary Item........................... 67,663 41,078 28,267
Minority Interest in Net (Income) Loss of Subsidiaries................... (372) (3,393) 1,148
Equity in Earnings (Losses) of 50% or Less Owned Companies............... 4,306 (3,565) 330
--------------- --------------- ---------------
Income Before Extraordinary Item......................................... 71,597 34,120 29,745
Extraordinary Item - Gain (Loss) on Debt Extinguishment.................. (896) - 1,191
--------------- --------------- ---------------
Net Income............................................................... $ 70,701 $ 34,120 $ 30,936
=============== =============== ===============
Basic Earnings Per Common Share:
Income before extraordinary item...................................... $ 3.68 $ 2.02 $ 1.66
Extraordinary item.................................................... (0.05) - 0.07
--------------- --------------- ---------------
Net income............................................................ $ 3.63 $ 2.02 $ 1.73
=============== =============== ===============
Diluted Earnings Per Common Share:
Income before extraordinary item...................................... $ 3.47 $ 1.92 $ 1.64
Extraordinary item.................................................... (0.04) - 0.05
--------------- --------------- ---------------
Net income............................................................ $ 3.43 $ 1.92 $ 1.69
=============== =============== ===============
Weighted Average Common Shares:
Basic 19,490,115 16,887,176 17,867,480
Diluted............................................................... 21,335,182 21,234,528 22,252,445
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
46
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS)
Additional Unamortized
Common Paid-in Retained Treasury Restricted
Stock Capital Earnings Stock Stock
- -------------------------------------------------- --------- -------------- ------------ ----------- ------------
2001
- --------------------------------------------------
Balance, December 31, 2000.......................$ 214 $ 278,567 $ 402,142 $ (125,968) $ (1,301)
Add/(Deduct) -
-Net income for fiscal year 2001.............. - - 70,701 - -
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 27,877
shares................................... - 1,284 - - -
Plaisance Marine Inc. acquisition.......... - - - 3,163 -
Stirling Shipping Holdings Limited......... - - - 12,777 -
Employee Stock Purchase Plan............... - - - 624
Exercise of stock options.................. - 272 - - -
Issuance of restricted stock............... 1 3,644 - - (2,976)
-Amortization of restricted stock............. - - - - 2,272
-Cancellation of restricted stock, 459 shares. - - - (20) 20
-Net currency translation adjustments......... - - - - -
-Change in unrealized gains (losses) on
available-for-sale securities.............. - - - - -
-Conversion of 5 3/8% Convertible Subordinated
Notes due 2006............................. 23 98,824 - - -
-Change in share of book value of investment
in Chiles Offshore Inc..................... - 2,395 - - -
-Change in value of shares issued in equity
forward transaction........................ - (164) - - -
-Change in fair value of derivatives.......... - - - - -
-Purchase of TMM's minority interest in
SEACOR Vision LLC.......................... - 35 - - -
-Purchase of treasury shares.................. - - - (214) -
--------- -------------- ------------ ----------- ------------
Balance, December 31, 2001.......................$ 238 $ 384,857 $ 472,843 $ (109,638) $ (1,985)
=================================================================================================================
2000
- --------------------------------------------------
Balance, December 31, 1999.......................$ 214 $ 274,979 $ 368,022 $ (131,183) $ (1,110)
Add/(Deduct) -
-Net income for fiscal year 2000.............. - - 34,120 - -
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 15,254
shares................................... - 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, 623 shares. - - - (15) 15
-Net currency translation adjustments......... - - - - -
-Change in unrealized gains (losses) on
available-for-sale securities.............. - - - - -
-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)
=================================================================================================================
1999
- --------------------------------------------------
Balance, December 31, 1998.......................$ 212 $ 271,941 $ 337,086 $ (65,656) $ (972)
Add/(Deduct) -
-Net income for fiscal year 1999.............. - - 30,936 - -
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 32,001
shares................................... - 1,482 - - -
Issuance of restricted stock............... 2 1,593 - - (1,653)
-Amortization of restricted stock............. - - - - 1,508
-Cancellation of restricted stock, 150 shares. - - - (7) 7
-Net currency translation adjustments......... - - - - -
-Change in unrealized gains (losses) on
available-for-sale securities.............. - - - - -
-Debt offering costs.......................... - (37) - - -
-Purchase of treasury shares.................. - - - (65,520) -
--------- -------------- ------------ ----------- ------------
Balance, December 31, 1999.......................$ 214 $ 274,979 $ 368,022 $ (131,183) $ (1,110)
=================================================================================================================
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
47
** TABLE CONTINUED **
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS)
(CONTINUED)
Accumulated
Other
Comprehensive Comprehensive
Income Income
- -------------------------------------------------- ---------------- ---------------
2001
- -------------------------------------------------
Balance, December 31, 2000.......................$ (1,102) $ -
Add/(Deduct) -
-Net income for fiscal year 2001.............. - 70,701
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 27,877
shares................................... - -
Plaisance Marine Inc. acquisition.......... - -
Stirling Shipping Holdings Limited......... - -
Employee Stock Purchase Plan...............
Exercise of stock options.................. - -
Issuance of restricted stock............... - -
-Amortization of restricted stock............. - -
-Cancellation of restricted stock, 459 shares. - -
-Net currency translation adjustments......... (545) (545)
-Change in unrealized gains (losses) on
available-for-sale securities.............. (1,055) (1,055)
-Conversion of 5 3/8% Convertible Subordinated
Notes due 2006............................. - -
-Change in share of book value of investment
in Chiles Offshore Inc..................... - -
-Change in value of shares issued in equity
forward transaction........................ - -
-Change in fair value of derivatives.......... 85 85
-Purchase of TMM's minority interest in
SEACOR Vision LLC.......................... - -
-Purchase of treasury shares.................. - -
---------------- ---------------
Balance, December 31, 2001.......................$ (2,617) $ 69,186
===================================================================================
2000
- -------------------------------------------------
Balance, December 31, 1999.......................$ (2,792) $ -
Add/(Deduct) -
-Net income for fiscal year 2000.............. - 34,120
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 15,254
shares................................... - -
Putford Enterprises Ltd. acquisition....... - -
SCF Corporation acquisition................ - -
Exercise of stock options.................. - -
Issuance of restricted stock............... - -
-Amortization of restricted stock............. - -
-Cancellation of restricted stock, 623 shares. - -
-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............................... - -
-Cash in lieu of fractional shares in stock
split...................................... - -
-Purchase of treasury shares.................. - -
---------------- ---------------
Balance, December 31, 2000.......................$ (1,102) $ 35,810
===================================================================================
1999
- -------------------------------------------------
Balance, December 31, 1998.......................$ 171 $ -
Add/(Deduct) -
-Net income for fiscal year 1999.............. - 30,936
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition, 32,001
shares................................... - -
Issuance of restricted stock............... - -
-Amortization of restricted stock............. - -
-Cancellation of restricted stock, 150 shares. - -
-Net currency translation adjustments......... (526) (526)
-Change in unrealized gains (losses) on
available-for-sale securities.............. (2,437) (2,437)
-Debt offering costs.......................... - -
-Purchase of treasury shares.................. - -
---------------- ---------------
Balance, December 31, 1999.......................$ (2,792) $ 27,973
===================================================================================
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
47-A
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS)
2001 2000 1999
------------- -------------- -------------
Cash Flows from Operating Activities:
Net income.....................................................................$ 70,701 $ 34,120 $ 30,936
Depreciation and amortization.................................................. 58,324 51,189 41,282
Restricted stock amortization.............................................. 2,272 1,337 1,508
Debt discount/(premium) amortization, net.................................. 474 (49) 129
Bad debt expense........................................................... 947 (235) (328)
Deferred income taxes...................................................... 21,220 15,628 14,891
Equity in net (earnings) losses of 50% or less owned companies............. (4,306) 3,565 (330)
Extraordinary (gain) loss, extinguishment of debt.......................... 896 - (1,191)
(Gain) loss from sale of investment in 50% or less owned companies......... (201) - 72
Derivative (income) loss................................................... (4,127) (6,292) 1,323
(Gain) loss from sale of available-for-sale securities, net................ (5,689) (7,562) 279
Gain upon sale of shares of Chiles Offshore Inc............................ - (4,023) -
Gain from equipment sales or retirements, net.............................. (9,030) (7,628) (1,677)
Amortization of deferred gains on sale and leaseback transactions.......... (5,482) (18,601) (24,278)
Minority interest in income (loss) of subsidiaries......................... 372 3,393 (1,148)
Other, net................................................................. 504 1,709 3,382
Changes in operating assets and liabilities -
(Increase) decrease in receivables....................................... (3,360) (15,468) 15,139
(Increase) decrease in prepaid expenses and other assets................. (4,175) 5,985 (5,692)
Increase (decrease) in accounts payable, accrued and other liabilities... (7,920) 8,183 (26,425)
------------- -------------- -------------
Net cash provided by operations........................................ 111,420 65,251 47,872
------------- -------------- -------------
Cash Flows from Investing Activities:
Purchases of property and equipment........................................ (107,445) (73,750) (140,470)
Proceeds from the sale of marine vessels and equipment..................... 60,666 56,772 20,889
Investments in and advances to 50% or less owned companies................. (5,763) (7,056) (21,798)
Principal payments on notes due from 50% or less owned companies........... 6,040 1,514 8,610
Proceeds from sale of investment in 50% or less owned companies............ 3,076 - 263
Net (increase) decrease in restricted cash account......................... (14,531) (18,774) 47,249
Proceeds from sale of available-for-sale securities........................ 145,920 90,309 134,352
Purchases of available-for-sale securities................................. (74,771) (60,650) (15,745)
Cash settlements of derivative transactions................................ 1,594 (1,454) 3,694
Dividends received from 50% or less owned companies........................ 6,705 9,029 11,450
Acquisitions, net of cash acquired......................................... (98,174) (13,110) (6,239)
Cash of Chiles Offshore LLC, a deconsolidated subsidiary................... - (11,691) -
Other, net................................................................. 45 (2,151) (2,476)
------------- -------------- -------------
Net cash provided by (used in) investing activities.................... (76,638) (31,012) 39,779
------------- -------------- -------------
Cash Flows from Financing Activities:
Payments of long-term debt and stockholder loans........................... (145,356) (17,240) (47,830)
Proceeds from issuance of long-term debt .................................. 75,563 482 38,115
Payments on capital lease obligations...................................... (17,580) (1,675) (1,587)
Proceeds from issuance of Common Stock..................................... 10,000 - -
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
Offshore LLC............................................................. - 17,651 -
Termination of swap agreements............................................. - 19,504 -
Common stock acquired for treasury......................................... (214) (4,776) (65,520)
Other, net................................................................. 132 276 (36)
------------- -------------- -------------
Net cash provided by (used in) financing activities.................... (77,455) 14,222 (82,686)
------------- -------------- -------------
Effects of Exchange Rate Changes on Cash and Cash Equivalents.................. (1,152) (2,751) (1,723)
------------- -------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents........................... (43,825) 45,710 3,242
Cash and Cash Equivalents, beginning of period................................. 224,219 178,509 175,267
------------- -------------- -------------
Cash and Cash Equivalents, end of period.......................................$ 180,394 $ 224,219 $ 178,509
============= ============== =============
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
48
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") is a major provider of offshore support vessel services
to the oil and gas exploration and production industry and is one of the
leading providers of oil spill response services to owners of tank
vessels and oil storage, processing and handling facilities. The Company
also operates hopper barges in its inland river business and holds a
23.8% equity interest in Chiles Offshore Inc. ("Chiles Offshore"), a
company that owns and operates ultra-premium jackup drilling rigs.
BASIS OF CONSOLIDATION. The consolidated financial statements include
the accounts of SEACOR and all majority owned subsidiaries. All
significant intercompany accounts and transactions are eliminated in
consolidation.
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 EQUIVALENTS. Cash equivalents refer to securities with maturities
of three months or less when purchased.
ACCOUNTS RECEIVABLE. Customers of offshore support vessel services are
primarily major and large independent oil and gas exploration and
production companies. Oil spill and emergency response services are
provided to tank vessel owner/operators, refiners, terminals,
exploration and production facilities and pipeline operators. Barge
customers are primarily major agricultural and industrial companies
based within the United States. All customers are granted credit on a
short-term basis and related credit risks are considered minimal.
PROPERTY AND EQUIPMENT. Property and equipment, stated at cost, are
depreciated over the estimated useful lives of the assets using the
straight-line method for financial reporting purposes. Offshore support
vessels ("vessels") and related equipment are depreciated over 20 to 30
years, inland river hopper barges ("barges") are depreciated over 20
years and all other property and equipment are depreciated and amortized
over two to ten years.
Vessel and barge maintenance and repair and routine drydock inspection
costs 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. Certain interest costs incurred during the
construction of equipment was capitalized as part of the assets'
carrying values and are being amortized to expense over such assets
estimated useful lives. Interest capitalized in 2001, 2000 and 1999
totaled $760,000, $639,000 and $9,836,000, respectively.
OTHER ASSETS. Other assets include the following:
(in thousands) 2001 2000
- -------------------------------------------------- ----------- ------------
Goodwill...........................................$ 36,629 $ 23,121
Deferred financing costs........................... 4,970 6,567
Net sale-type leases, see Note 12.................. 3,774 1,953
Notes receivable................................... 4,797 1,543
Common stock investments, carried at cost.......... 1,150 1,900
Other.............................................. 659 471
----------- ------------
51,979 35,555
Less accumulated amortization...................... (11,547) (7,546)
----------- ------------
Total other assets.................................$ 40,432 $ 28,009
=========== ============
Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, has been amortized through December 31, 2001 on
a straight-line basis over the expected benefit period that ranged from
10 to 22 years. Deferred financing costs, incurred in connection with
the issuance of debt, is amortized over the life of the related debt,
ranging from 5 to 12 years, using the effective interest rate method.
Goodwill and deferred financing cost amortization expenses totaled
$3,740,000 in 2001, $2,296,000 in 2000 and $2,703,000 in 1999. Effective
January 1, 2002, the Company ceased amortization of goodwill. (See
"Recent Accounting Pronouncements" for discussion.)
49
Common stock investments, carried at cost, are investments in private
companies over which the Company does not have the ability to exercise
significant influence nor does it own greater than 20% of the investees
voting stock. These investments are carried at cost and are adjusted
only for other-than-temporary declines in fair value, distributions of
earnings and additional investments.
BUSINESS COMBINATIONS. As discussed in Note 4, business combinations
completed by the Company have been accounted for under the purchase
method of accounting. The cost of each acquired operation is allocated
to the assets acquired and liabilities assumed based on their estimated
fair values. These estimates are revised during an allocation period as
necessary when, and if, information becomes available to further define
and quantify the value of the assets acquired and liabilities assumed.
The allocation period does not exceed beyond one year from the date of
the acquisition. To the extent additional information to refine the
original allocation becomes available during the allocation period, the
allocation of the purchase price is adjusted. Should information become
available after the allocation period, those items are included in
operating results. The cost of an enterprise acquired in a business
combination includes the direct cost of the acquisition. The operating
results of entities acquired are included in the Consolidated Statements
of Income from the completion date of the applicable transaction.
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 taxes are not provided on the
undistributed earnings of certain non-U.S. subsidiaries and joint
venture corporations because the Company considers those earnings to be
indefinitely reinvested abroad.
DEFERRED GAINS. The Company has entered into vessel sale and leaseback
transactions and has sold vessels to joint venture corporations in which
it holds an equity ownership interest. Certain of the gains realized
from these transactions were not immediately recognized in income and
have been reported in the Consolidated Balance Sheets as "Deferred Gains
and Other Liabilities." In 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. In joint venture sale transactions, gains
were deferred to the extent of the Company's ownership interest, with
amortization to income over the applicable vessels' depreciable lives,
and upon receipt of debt securities and an inadequate down payment, with
amortization to income on the installment method.
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. Upon consolidating these
subsidiaries with SEACOR, their assets and liabilities 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 reported in the Consolidated Balance Sheets as
"Accumulated other comprehensive income (loss)."
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. The
Company's earnings in 2001 included net foreign currency exchange gains
of $1,247,000; whereas 2000 and 1999 included net foreign currency
exchange losses of $1,573,000 and $1,288,000, respectively. 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 reported in the Consolidated Balance Sheet as
"Accumulated other comprehensive income (loss)." 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.
From time-to-time, SEACOR may advance funds to wholly owned subsidiaries
whose functional currency differs from the U.S. dollar. If settlement of
such advances are not planned or anticipated to be paid in the
foreseeable future, exchange rate gains and losses relating to the
transactions are deferred and included in the Consolidated Balance
Sheets as "Accumulated other comprehensive income (loss)." Conversely,
if settlement of the advances are expected in the foreseeable future,
changes in the exchange rate from the transaction date until the
settlement date with respect to such advances are included in the
Consolidated Statements of Income as "Other, net."
50
REVENUE RECOGNITION. The Company's offshore marine business segment
earns revenues primarily from the time and bareboat charter-out of
vessels to customers based upon daily rates of hire. A time charter is a
lease arrangement under which the Company provides a vessel to a
customer and is responsible for all crewing, insurance and other
operating expenses. In a bareboat charter, the Company provides only the
vessel to the customer, and the customer assumes responsibility to
provide for all of the vessel's operating expenses and generally assumes
all risk of operation. Vessel charters may range from several days to
several years.
Customers of the Company's environmental business segment are charged
retainer fees for ensuring by contract the availability (at
predetermined rates) of oil spill response services and equipment that
are generally recognized ratably throughout the year. Retainer services
include employing a staff to supervise response to an oil spill and
maintaining specialized equipment. 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 from preparation of customized
training programs, planning of and participation in customer oil spill
response drill programs and response exercises and other special
projects.
The Company's inland river business earns revenues primarily from voyage
affreightments under which customers are charged for a committed space
to transport cargo for a specific time from a point of origin to a
destination at an established rate per ton. The inland river operation
also earns revenues while cargo is stored aboard a barge and when a
barge is chartered-out by a third party.
OTHER, NET. In 2001, 2000 and 1999, other income and expense primarily
included gains and losses from the sale of marketable securities and the
exchange of foreign currencies.
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. All computations give
effect for the three-for-two stock split effected June 15, 2000. Certain
options and share awards, 127,580, 74,140 and 46,601 in 2001, 2000 and
1999, respectively, were excluded from the computation of diluted
earnings per share as the effect would have been antidilutive.
Per
(in thousands, except shares and per share data) Income Shares Share
- --------------------------------------------------------------- -------------------------------- ---------
FOR THE YEAR ENDED 2001-
BASIC EARNINGS PER SHARE:
Income before extraordinary item........................ $ 71,597 19,490,115 $ 3.68
=========
EFFECT OF DILUTIVE SECURITIES:
Options and restricted stock............................ - 253,260
Convertible securities.................................. 2,596 1,591,807
Common stock sold with equity forward contract,
see Note 8............................................ (164) -
--------------------------------
DILUTED EARNINGS PER SHARE:
Income available to common stockholders
plus assumed conversions............................. $ 74,029 21,335,182 $ 3.47
================================ =========
FOR THE YEAR ENDED 2000-
BASIC EARNINGS PER SHARE:
Income before extraordinary item........................ $ 34,120 16,887,176 $ 2.02
=========
EFFECT OF DILUTIVE SECURITIES:
Options and restricted stock............................ - 220,082
Convertible securities.................................. 6,605 4,127,270
--------------------------------
DILUTED EARNINGS PER SHARE:
Income available to common stockholders
plus assumed conversions............................. $ 40,725 21,234,528 $ 1.92
================================ =========
FOR THE YEAR ENDED 1999-
BASIC EARNINGS PER SHARE:
Income before extraordinary item........................ $ 29,745 17,867,480 $ 1.66
=========
EFFECT OF DILUTIVE SECURITIES:
Options and restricted stock............................ - 185,447
Convertible securities.................................. 6,714 4,199,518
--------------------------------
DILUTED EARNINGS PER SHARE:
Income available to common stockholders
plus assumed conversions.............................. $ 36,459 22,252,445 $ 1.64
================================ =========
51
RECENT ACCOUNTING PRONOUNCEMENTS. Effective January 1, 2002, the Company
adopted Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."
Among other changes to prior practices, the new standards require (i)
the use of the purchase method of accounting for all business
combinations, (ii) that goodwill not be amortized in any circumstance
and (iii) that goodwill be tested for impairment annually or when events
or circumstances occur between annual tests indicating that goodwill for
a reporting unit might be impaired based on a fair value concept. SFAS
142 requires that impairment testing of the opening goodwill balances be
performed within six months from the start of the fiscal year in which
the standard is adopted and that any impairment be written off and
reported as a cumulative effect of a change in accounting principle. We
have completed an initial review and do not currently expect to record
an impairment charge. However, there can be no assurance that at the
time the review is completed a material impairment charge will not be
recorded. The Company has ceased amortization of its remaining goodwill
balance effective January 1, 2002.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS 143, "Accounting for Asset Retirement Obligations", which requires
recording the fair value of a liability for an asset retirement
obligation in the period incurred. The standard is effective for fiscal
years beginning after June 15, 2002, with earlier application permitted.
Upon adoption of the standard, the Company will be required to use a
cumulative effect approach to recognize transition amounts for any
existing retirement obligation liabilities, asset retirement costs and
accumulated depreciation. The nature of the Company's business and
long-lived assets is such that adoption of this new standard should have
no significant impact on the Company's financial statements.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". This new statement also supercedes certain
aspects of Accounting Principle Board Opinion No. 30 ("APB 30"),
"Reporting the Results of Operations-Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," with regard to reporting the effects
of a disposal of a segment of a business and will require expected
future operating losses from discontinued operations to be reported in
discontinued operations in the period incurred rather than as of the
measurement date as presently required by APB 30. Additionally, certain
dispositions may now qualify for discontinued operations treatment. The
provisions of this statement are required to be applied for fiscal years
beginning after December 15, 2001 and interim periods within those
fiscal years. The Company expects this statement will not have a
material impact on its financial statements.
COMPREHENSIVE INCOME. 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. 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:
Before-Tax Tax (Expense) Net-of-Tax
(in thousands) Amount or Benefit Amount
- ---------------------------------------------------------------------- ---------------- --------------- ----------------
2001
Foreign currency translation adjustments..............................$ (708) $ 248 $ (460)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period........... 4,066 (1,423) 2,643
Less - reclassification adjustment for (gains) losses included in
net income............................................................ (5,689) 1,991 (3,698)
---------------- --------------- ----------------
Other comprehensive income (loss).....................................$ (2,331) $ 816 $ (1,515)
================ =============== ================
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 (loss).....................................$ 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 (loss).....................................$ (4,560) $ 1,597 $ (2,963)
================ =============== ================
RECLASSIFICATIONS. Certain reclassifications of prior year information
have been made to conform with the current year presentation.
52
2. FINANCIAL INSTRUMENTS:
The estimated fair values 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 are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
2001 2000
----------------------------- -----------------------------
Carrying Estimated Carrying Estimated
(in thousands) Amount Fair Value Amount Fair Value
- ------------------------------------------------------------- -------------- ------------- ------------- -------------
ASSETS:
Cash and temporary cash investments...................... $ 180,394 $ 180,394 $ 224,219 $ 224,219
Marketable securities.................................... 22,371 22,371 82,181 82,181
Collateral deposits, notes and other receivables......... 30,787 30,717 6,781 6,781
Restricted cash.......................................... 55,290 55,290 40,759 40,759
Stock investments, carried at cost....................... 1,150 1,150 1,900 1,900
Derivative instruments................................... 1,909 1,909 709 709
LIABILITIES:
Long-term debt, including current portion................ 290,399 295,844 362,928 402,710
Other current liabilities................................ 164 164 - -
Derivative instruments................................... 848 848 21 21
The carrying value of cash and temporary cash investments, restricted
cash, collateral deposits and other receivables approximate fair value.
The fair values of the Company's notes receivable, long-term debt,
marketable securities and derivative instruments 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 maturities.
Effective January 1, 2001, the Company adopted 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 market value. SFAS 133
requires that changes in the derivative's fair market value be
recognized 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 cumulative effect of adopting SFAS 133 was not
material.
The Company has foreign currency exchange risks primarily related to its
offshore support vessel operations that are conducted from ports located
in the United Kingdom, where its functional currency is Pounds Sterling.
To protect the U.S. dollar value of certain Pounds Sterling denominated
net assets of the Company from the effects of volatility in foreign
currency exchange rates that might occur prior to their conversion to
U.S. dollars, the Company has entered into forward exchange contracts.
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. During the twelve months
ended December 31, 2001, the Company settled several Pounds Sterling
forward exchange contracts, which resulted in a realized gain of
$131,000. At December 31, 2001, the Company had no outstanding Pounds
Sterling forward exchange contracts for which hedge accounting criteria
were met.
The Company has also entered into additional forward exchange contracts
that are considered speculative during 2000 and 2001 with respect to
Norwegian Kroners, Pounds Sterling and Euros. The Norwegian Kroner
contracts enabled the Company to buy Norwegian Kroners in the future at
fixed exchange rates which could have offset possible consequences of
changes in foreign exchange had the Company decided to conduct business
in Norway. The Pound Sterling and Euro contracts enable the Company to
buy Pounds Sterling and Euros in the future at fixed exchange rates
which could offset possible consequences of changes in foreign exchange
of the Company's business conducted in the United Kingdom and Europe.
Resulting gains or losses from these transactions are reported in the
Consolidated Statements of Income as "Derivative income (loss)" as they
do not meet the criteria for hedge accounting. For the twelve month
periods ending December 31, 2001 and 2000, the Company recognized net
losses of $153,000 and net gains of $639,000, respectively, from these
forward exchange contracts. At December 31, 2001, the Company had no
outstanding Norwegian Kroner contracts and the fair market value of its
speculative Pound Sterling and Euro contracts totaled $451,000 and was
reported in the Consolidated Balance Sheets as "Trade and other
receivables."
53
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 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, 2001,
2000 and 1999, the Company has recognized net gains of $4,584,000, net
losses of $980,000 and net losses of $1,323,000, respectively, from
commodity hedging activities that were reported in the Consolidated
Statements of Income as "Derivative income (loss)." At December 31,
2001, the fair market value of the Company's positions in commodity
contracts totaled $1,458,000 and was reported in the Consolidated
Balance Sheets as "Trade and other receivables."
The Company, furthermore, beginning in the fourth quarter of 2001,
entered into and settled various positions in U.S. treasury notes and
U.S. treasury bonds via 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 an option or a futures
contract exceeds the settlement price quoted on the Chicago Board of
Trade ("CBOT") or receives or pays the amount, if any, by which the
settlement price quoted on the CBOT exceeds the contract price. The
general purpose of these hedge transactions is to provide value to the
Company should the price of U.S. treasury notes and bonds decline
leading to generally higher interest rates which, if sustained over
time, might lead to a higher interest cost for the Company. For
accounting purposes, the Company records the change in the market value
of its U.S. treasury positions at the end of each month and recognizes a
related gain or loss. For the twelve month period ending December 31,
2001, the Company has recognized net gains of $196,000 from U.S.
treasury note and U.S. treasury bond option and future contracts that
were reported in the Consolidated Statements of Income as "Derivative
income." At December 31, 2001, the Company's unrealized loss with
respect to its positions in U.S. treasury obligations totaled $349,000
and was reported in the Consolidated Balance Sheets as "Other current
liabilities."
In order to reduce its cost of capital, the Company entered into swap
agreements during the fourth quarter of 2001 with a major financial
institution with respect to notional amounts equal to a portion of the
$147,500,000 aggregate principal amount of the 7.2% Senior Notes Due
2009 (the "7.2 % Notes"). Pursuant to each such agreement, such
financial institution agreed to pay to the Company an amount equal to
interest paid on the notional amount of the 7.2% 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 3.3%
per annum on the agreed upon price of such notional amount of the 7.2%
Notes as set forth in the applicable swap agreement. At December 31,
2001, $30,000,000 notional principal amount of the 7.2% Notes were
covered by such swap agreements.
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 the 7.2% 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. At December 31, 2001, the
unrealized loss, totaling $499,000, which resulted from the agreed upon
price exceeding the fair value of the notional amounts set forth in the
swap agreements has been recorded in the Consolidated Statements of
Income as a "Derivative loss" as it did not meet hedge accounting
criteria and will be subject to periodic revaluation based upon the fair
market value of such swaps. The swap agreements terminate during the
fourth quarter of 2002 unless extended by mutual consent.
To reduce cost of capital during years when the Company owned a majority
equity interest in Chiles Offshore, see Note 5, it entered into swap
agreements in 1999 with a major financial institution with respect to
notional amounts equal to a portion of Chiles Offshore's $110,000,000
aggregate principal amount 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 at 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.
54
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 its initial public
offering that resulted in the termination of these swap agreements and
the Company recognized derivative income of $6,634,000.
3. MARKETABLE SECURITIES:
Equity securities that have readily determinable fair values and
investments in debt securities are classified by the Company as
investments in available-for-sale securities. These investments are
reported at their fair values with unrealized holding gains and losses
included in the Consolidated Balance Sheets as "Accumulated other
comprehensive income (loss)." Available-for-sale securities are included
in the Consolidated Balance Sheets as "Marketable Securities" if the
Company intends to liquidate the investment within one year from the
balance sheet date and are included as "Available-for-Sale Securities"
if the Company has the intent and ability to hold such investments for
over one year from the balance sheet date. The amortized cost and fair
value of marketable securities at December 31, 2001 and 2000 were as
follows, in thousands of dollars:
Gross Unrealized Holding
Amortized --------------------------- Fair
Type of Securities Cost Gains Losses Value
- ------------------------------------------ ----------- ----------- ----------- -----------
2001:
U.S. government and agencies........ $ 2,471 $ - $ (309) $ 2,162
U.S. states and political 11,560 - (596) 10,964
subdivisions.............................
Corporate debt securities........... 1,725 32 (84) 1,673
UK government securities............ 3,759 3 - 3,762
Equity securities................... 3,076 735 (1) 3,810
----------- ----------- ----------- -----------
$ 22,591 $ 770 $ (990) $ 22,371
=========== =========== =========== ===========
2000:
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
=========== =========== =========== ===========
The contractual maturities of debt marketable securities at December 31,
2001 were as follows, in thousands of dollars:
Amortized Fair
Maturities Cost Value
- ----------------------------------------------- ------------- -------------
Mature in one year or less.....................$ - $ -
Mature after one year through five years....... 4,320 4,299
Mature after five years through ten years...... - -
Mature after ten years......................... 15,195 14,262
----------------- -------------
$ 19,515 $ 18,561
================= =============
During 2001, 2000 and 1999, the sale of available-for-sale securities
resulted in gross realized gains of $9,587,000, $8,558,000 and $721,000,
respectively, and gross realized losses of $3,898,000, $996,000 and
$1,000,000, respectively. The specific identification method was used to
determine the cost of available-for-sale securities in computing
realized gains and losses. During 2001, the Company transacted various
short sales of equity securities and at December 31, 2001 had recorded a
liability in the Consolidated Balance Sheet as "Accrued liability-short
sale of securities" equal to the fair market value of these equity
securities. Gross unrealized gains and losses, totaling $247,000 and
$623,000, respectively, resulting from these short sales were recorded
in the Consolidated Statements of Income as "Other, net."
4. VESSEL ACQUISITIONS AND DISPOSITIONS:
STIRLING TRANSACTION. On May 4, 2001, the Company completed the
acquisition of all of the issued and outstanding shares of Stirling
Shipping Holdings Limited ("Stirling Shipping"). Aggregate consideration
was (pound)54,300,000 ($77,100,000 based on exchange rates in effect and
the price of SEACOR's common stock, par value $.01 per share ("Common
Stock") on the closing date), consisting of (pound)29,900,000, or
$43,000,000, in cash, (pound)14,700,000, or $21,200,000, in one-year
loan notes, and 285,852 shares of Common Stock issued from treasury,
valued at $12,900,000. Stirling Shipping's long term debt at closing was
approximately (pound)43,000,000, or $61,900,000. To fund a portion of
the Stirling Shipping acquisition, the Company borrowed $25,000,000
55
under its revolving credit facility, and in the third quarter, repaid
this loan. Through its acquisition of Stirling Shipping, the Company
acquired 12 vessels primarily working in the North Sea, including 9
supply and 3 anchor handling towing supply vessels, and contracts for
the construction of 2 anchor handling towing supply vessels. The new
construction vessels, which have now been delivered to the Company, were
built in the UK. In November 2001, the Company repaid all of the
outstanding indebtedness, totaling (pound)48,316,000 or approximately
$68,250,000, that was included in the Stirling Shipping acquisition.
Existing cash balances and borrowings available under the Company's
revolving credit facility, totaling $30,000,000 at December 31, 2001,
were used to liquidate this obligation.
CHERAMIE TRANSACTION. In February 2001, the Company completed the
acquisition of all of the issued and outstanding shares of Gilbert
Cheramie Boats, Inc. and related companies (collectively, "Cheramie").
Purchase consideration was $62,800,000 in cash. Through its acquisition
of Cheramie, the Company acquired 11 mini-supply, 11 utility and 2
offshore supply vessels operating in the U.S. Gulf of Mexico. Pursuant
to the terms of the purchase agreement, the Company had an option of
making an Internal Revenue Code Section 338(h)(10) election and, in
January 2002, it exercised that option. The election entitled the
Company to full income tax basis in the assets of the Cheramie companies
and the realization of an income tax benefit of the depreciation. In
order to induce the prior shareholders of Cheramie to agree to the
election, the Company has agreed to make them "whole" for the amount of
the increase in their total income tax liability, including the amount
of income tax payable by them on the additional purchase price payment.
In January 2002, as a result of making this election, the Company paid
the prior shareholders of Cheramie an additional $10,200,000 in order to
reimburse them for all of their expected additional income tax
obligations, which payment was recorded in the Consolidated Balance
Sheet as "Accrued acquisition costs." The original purchase
consideration included $975,000 that was deposited into an escrow
account for other incremental tax liabilities that may be incurred by
the selling shareholders of Cheramie with respect to the purchase
transaction. The January 2002 payment was intended to reimburse the
selling shareholders for all of their incremental tax liabilities, and
therefore, the Company has recorded an adjustment to the purchase price
for the funds presently held in escrow. Goodwill, as adjusted, of
approximately $11,280,000 was recorded in connection with this
acquisition.
RINCON TRANSACTION. 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
$19,700,000, including $6,100,000 in cash and the assumption of
$13,600,000 of debt due Caterpillar Financial Services Corporation
("Caterpillar"). In February 2002, the Company repaid all of the
outstanding indebtedness due Caterpillar from working capital.
PLAISANCE TRANSACTION. In January 2001, the Company acquired all of the
issued and outstanding shares of Plaisance Marine, Inc. ("Plaisance")
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
$20,100,000, including $16,200,000 paid in cash, the assumption of
$700,000 of debt and the issuance of 71,577 shares of Common Stock from
treasury, valued at $3,200,000 on the closing date. The Plaisance Fleet
operates in the U.S. Gulf of Mexico.
SCF TRANSACTION. On December 20, 2000, the Company acquired SCF
Corporation ("SCF"), a company that owned and operated 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. Goodwill of
approximately $1,200,000 was recorded in connection with this
acquisition.
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 (pound)23,000,000 ($39,300,000 based
on exchange rates in effect and SEACOR's stock price on the closing
date). 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 the closing date),
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
($9,800,000 based on exchange rates in effect on the closing date).
56
PURCHASE PRICE ALLOCATION. The following table summarizes the allocation
of the purchase price in the Stirling Shipping, Cheramie and Plaisance
acquisitions in 2001 and SCF and Putford acquisitions in 2000:
For the Year Ended
-------------------------------
(in thousands) 12/31/01 12/31/00
- ---------------------------------------------------------- --------------- ---------------
Trade and other receivables ............................$ 11,092 $ 13,841
Prepaid expenses and other.............................. 714 1,458
Investments, at equity.................................. - 954
Marketable securities................................... - 177
Property and equipment.................................. 197,394 35,044
Goodwill................................................ 11,813 1,179
Accounts payable and accrued liabilities................ (17,854) (14,937)
Debt.................................................... (83,657) (10,370)
Deferred income taxes................................... (5,386) (3,203)
Minority interest....................................... - (1,027)
Treasury stock.......................................... (15,942) (10,006)
--------------- ---------------
Purchase price(a).......................................$ 98,174 13,110
=============== ===============
-------------------
(a) The purchase price is net of cash acquired, totaling $7,958,000 and
$12,908,000 in 2001 and 2000, respectively, and includes acquisition
costs, totaling $1,435,000 and $267,000 in 2001 and 2000, respectively.
UNAUDITED PRO FORMA INFORMATION. The following unaudited pro forma
information has been prepared as if the acquisition of Stirling
Shipping, Cheramie, Plaisance, SCF and Boston Putford had occurred at
the beginning of each of the periods presented. This pro forma
information has been prepared for comparative purposes only and is not
necessarily indicative of what would have occurred had the acquisition
taken place on the dates indicated, nor does it purport to be indicative
of the future operating results of the Company.
For the Year Ended (unaudited)
--------------------------------
(in thousands, except per share data) 12/31/01 12/31/00
- ------------------------------------------- ---------------- ---------------
Revenue....................................$ 453,522 $ 410,240
Income before extraordinary item........... 73,779 41,523
Net income............................ 72,883 41,523
Basic earnings per share................... 3.67 2.37
VESSEL CONSTRUCTION. Since January 1, 1999, the Company completed the
construction of 10 crew, 4 anchor handling towing supply, 4 mini-supply,
1 supply and 1 towing supply vessel at an approximate aggregate cost of
$158,338,000 and 75 barges for an approximate aggregate cost of
$18,868,000.
VESSEL DISPOSITIONS. The table below sets forth, during the fiscal years
indicated, the number of vessels sold by type of service. At December
31, 2001, 24 of vessels, including 12 crew, 6 supply, 2 towing supply, 2
mini-supply and 2 anchor handling towing supply, were bareboat
chartered-in by the Company pursuant to sale-leaseback transactions.
Type of Vessel 2001 2000 1999
- -------------------------------------- ------------ ------------ -----------
Anchor handling towing supply........ 1 1 1
Crew................................. 13 1 11
Mini-supply.......................... 3 - -
Standby safety....................... 6 2 -
Supply............................... - 6 -
Towing supply........................ 5 3 -
Utility.............................. 7 8 2
------------ ------------ -----------
35 21 14
============ ============ ===========
5. INVESTMENTS, AT EQUITY, AND RECEIVABLES FROM 50% OR LESS OWNED
COMPANIES:
The equity method of accounting for investments in common stock is
employed by the Company when such investments in voting stock gives it
the ability to exercise significant influence over operating and
financial policies of an investee even though the Company holds 50% or
less of the voting stock. Significant influence is generally deemed to
exist if the Company owns between 20% and 50% of the voting stock of an
investee, although the ability to exercise influence may be indicated in
several ways even when such investments are below 20%. The Company
reports its investment in and advances to equity investees in the
Consolidated Balance Sheets as "Investment, at Equity, and Receivables
from 50% or Less Owned Companies." The Company reports its share of
earnings or losses of equity investees in the Consolidated Statements of
Income as "Equity in Earnings (Losses) of 50% or Less Owned Companies."
57
Investments, carried at equity, and advances to 50% or less owned
companies at December 31, 2001 and 2000 were as follows, in thousands of
dollars:
Ownership
50% or Less Owned Companies Percentage 2001 2000
- ------------------------------------------- --------------- ------------- -------------
Chiles Offshore............................ 23.8% $ 77,607 $ 68,122
TMM Joint Venture.......................... 40.0% 26,305 16,600
Globe Wireless, L.L.C...................... 38.0% 20,727 25,478
Pelican Offshore Services Pte Ltd.......... 50.0% 8,436 6,114
Ultragas Joint Venture..................... 25.7%-50.0% 5,637 6,137
Other...................................... 33.3%-50.0% 15,115 15,243
------------- -------------
$ 153,827 $ 137,694
============= =============
CHILES OFFSHORE. Chiles Offshore LLC, the predecessor to Chiles
Offshore, was formed in 1997 for the purpose of constructing, owning and
operating ultra-premium jackup drilling rigs. Two newly constructed rigs
were delivered in 1999, both of which are currently employed under
drilling contracts in the U.S. Gulf of Mexico. In July 2001, Chiles
Offshore completed the acquisition of all of the shares of capital stock
of an entity that owned an ultra-premium jackup rig (the "Rig
Acquisition"). This rig is presently operating in Trinidad under a
long-term contract for a major integrated oil and gas operator.
In 2000, Chiles Offshore entered into an agreement with Keppel FELS
Limited ("Keppel") to construct two ultra-premium jackup drilling rigs
of the KFELS Mod V "B" design at an aggregate construction cost
estimated not to exceed $222,000,000, exclusive of interest and other
capitalized costs. One rig was delivered to Chiles Offshore in February
2002 and, after commissioning, is expected to enter service under a
long-term contract. The second rig is expected to enter service during
the third quarter of 2002. Chiles Offshore also has an option agreement
with Keppel to build up to two additional rigs of the design presently
under construction. If Chiles Offshore does not exercise an option to
construct one of the two additional rigs by April 6, 2002, both
construction options will expire.
The Company consolidated the business activities of Chiles Offshore from
its inception and until its initial public offering of common stock (the
"Chiles IPO") on September 22, 2000 due to its majority ownership. 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' 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 Chiles Offshore's sale of
common stock in the Chiles IPO of $4,023,000 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. At December 31, 2001, the Company held a 23.8% equity
interest in Chiles Offshore and owns 4,831,401 shares of its common
stock. The decline in the Company's percentage of ownership interest in
Chiles Offshore since its September 2000 IPO was primarily the
consequence of Chiles Offshore's issuance of additional shares pursuant
to the Rig Acquisition.
The following table is unaudited summarized financial information for
Chiles Offshore for the periods indicated:
(in thousands) 12/31/01 12/31/00
- -------------------------------------------- ------------- --------------
Current assets.............................. $ 36,292 $ 62,662
Noncurrent assets........................... 456,272 237,393
Current liabilities......................... 34,211 23,348
Noncurrent liabilities...................... 132,869 28,858
For the For the
Year 01/1/00 09/22/00 Year
Ended to to Ended
(in thousands) 12/31/01 09/21/00 12/31/00 12/31/99
- --------------------------------------- ------------ ----------- ------------- ------------
Operating revenues....................$ 74,184 $ 37,380 $ 18,626 $ 8,596
Operating income (loss)............ 29,688 14,550 6,212 (585)
Income (loss) before extraordinary item 22,546 6,888 (22,791) (3,475)
Net income (loss)...................... 22,546 6,888 (24,611) (3,963)
The Company received approximately $240,000, $130,000 and $117,000
during 2001, 2000 and 1999, respectively, for management and legal
services provided Chiles Offshore. Chiles Offshore also paid the Company
approximately $65,000 for services provided by one of its offshore
marine vessels in 2001.
58
TMM JOINT VENTURE. In 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 that is comprised of two
corporations, Maritima Mexicana, S.A., a Mexican corporation, and SEAMEX
International Ltd., a Liberian corporation. Since 1994, the Company has
sold 10 of its vessels to the joint venture at a gain, of which a
significant portion has been deferred in the Consolidated Balance Sheets
for future income recognition. At December 31, 2001, the joint venture
operated 17 vessels that it owned and bareboat and time chartered-in 10
vessels, 6 of which were provided by the Company. The Company guarantees
up to 40% of obligations for nonpayment that may arise from the bareboat
charter-in of a vessel by the venture. At December 31, 2001, the
Company's guarantee was limited to approximately $2,200,000 and
terminates upon completion of the charter, expected to be during 2002.
In connection with the sale of three vessels from the Company to the
joint venture in 2001, promissory notes were issued the Company as
partial payment. The outstanding and unpaid principal amount of such
promissory notes totaled $13,788,000 as of December 31, 2001;
$12,288,000 payable by April 2002 and the remaining balance payable in
equal quarterly installments through November 2003. The promissory notes
bear interest ranging from approximately 10% to 11% and are secured by
first priority maritime mortgages. Revenues earned by the Company from
the charter of vessels and management services provided to the TMM joint
venture in 2001, 2000 and 1999 totaled $4,890,000, $5,760,000 and
$8,659,000, respectively.
GLOBE WIRELESS L.L.C. Globe Wireless L.L.C. ("Globe Wireless") and its
subsidiaries operate a worldwide network of high frequency radio
stations. The network of stations is a wireless data network initially
targeted at the maritime industry that supports Internet messaging,
telex and facsimile communications. Globe Wireless also provides
Telex-Over-Radio and Satellite messaging services to the maritime
industry. At present, through its ownership of senior convertible
preferred 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.
Since inception in the early 1990's, Globe Wireless has focused on
expanding its network of high frequency radio stations and customers
base. To support its continued growth, Globe Wireless completed a
private placement offering in 2000 that raised approximately
$57,000,000. Although Globe Wireless has experienced negative cash flow,
the management of Globe Wireless presently believes the company will
closely approximate cash break-even by mid-2003. There can be no
assurances that Globe Wireless' future operations will succeed. Should
Globe Wireless be unable to meet its funding requirements, SEACOR would
be required to commit additional funding or record an impairment charge
with respect to its investment.
Globe Wireless provides the Company's offshore marine business segment a
"ship-to-shore" communication network and has provisioned and installed
certain computer hardware, software and electronic equipment aboard its
vessels. In fiscal 2001, 2000 and 1999, approximately $2,126,000,
$1,237,000 and $1,421,000, respectively, was paid to Globe Wireless for
services and merchandise provided the Company.
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 8 newly built Fast Support Intervention Vessels (also
known as multipurpose crew vessels) that operate in Asia. At December
31, 2001, the Company had outstanding loans to Pelican totaling
approximately $2,900,000. The Company also presently guarantees up to
$1,500,000 of amounts owed by the Pelican joint venture under its
banking facilities that is expected to mature in 2006.
ULTRAGAS JOINT VENTURE. In 1996, the Company acquired an equity interest
in Ultragas Smit Lloyd Ltda ("Ultragas") and certain other entities
affiliated with Ultragas that own and operate vessels. In 1997, the
Company and a subsidiary of Sociedad Naviera Ultragas Ltda, the
Company's joint venture partner in Ultragas and its affiliated companies
formed an additional corporation for the purpose of owning and operating
additional vessels. As of December 31, 2001, this joint venture owned
five vessels that were operating in Chile, Argentina and Brazil. One
venture vessel was acquired from the Company for a promissory note whose
outstanding principal balance totaled $1,198,000 at December 31, 2001.
This note was repaid in 2002.
59
OTHER. The Company's other joint ventures are primarily vessel owning
corporations servicing the offshore oil and gas exploration and
production industries but also include environmental service businesses,
an entity whose principal activity is to develop and sell software to
the ship brokerage and shipping industry and a corporation that owns a
Handymax Dry-Bulk ship. During 2001, the Company sold its interest in
two offshore marine service joint ventures for approximately $3,076,000
and recorded a nominal gain. At December 31, 2001, 16 vessels were owned
by offshore marine joint venture corporations and operated in Trinidad,
Asia, the Middle East, the Mediterranean, West Africa, Venezuela and the
North Sea. At December 31, 2001, the Company had outstanding loans,
totaling $5,293,000, to its other joint ventures.
In 1999, the Board of Directors of one of the other offshore marine
joint ventures adopted a plan of liquidation due to its limited
opportunities for future investments and growth. Operations are expected
to continue until such time as the venture's remaining two vessels can
be sold. Prior to 1999, the Company had not accrued for the U.S. income
tax consequences related to its interest in this venture's undistributed
earnings as they were expected to be permanently invested abroad. With
the liquidation plan adoption, it became apparent that the Company's
share of prior undistributed earnings of the venture would be paid.
Therefore, in 1999, the Company reported a $3,000,000 cumulative income
tax adjustment related to its share of those undistributed earnings in
the Consolidated Statement of Income in "Equity in Earnings (Losses) of
50% or Less Owned Companies." In 2001, 2000 and 1999, the Company
received liquidating dividends of $2,000,000, $5,000,000 and
$10,000,000, respectively.
At December 31, 2001, the amount of consolidated retained earnings that
represents undistributed earnings of 50% or less owned companies
accounted for by the equity method was $29,760,000. Deferred taxes have
not been recorded with respect to $15,898,000 of those earnings.
COMBINED CONDENSED FINANCIALS, EXCLUDING CHILES OFFSHORE. The unaudited
combined condensed financial position and results of operations of the
Company's equity basis affiliates, excluding Chiles Offshore, are
summarized below:
(in thousands) 2001 2000
- ---------------------------------- -------------- --------------
Current assets....................$ 67,171 $ 110,259
Noncurrent assets................. 134,535 152,520
Current liabilities............... 42,327 44,389
Noncurrent liabilities............ 38,808 24,635
(in thousands) 2001 2000 1999
- ------------------------------------------------- ------------- -------------- --------------
Operating revenues...............................$ 103,990 $ 86,905 $ 81,479
Operating income................................. 2,697 (5,467) 1
Income (loss) before extraordinary item.......... 3,265 1,672 (3,675)
Net income....................................... 3,265 1,672 (3,675)
6. RESTRICTED CASH:
Over the past several years, the Company has established, pursuant to
Section 511 of the Merchant Marine Act, 1936, as amended, joint
depository construction reserve fund accounts with the Maritime
Administration. In accordance with this statute, the Company has been
permitted to deposit proceeds from the sale of certain vessels into the
joint depository construction reserve fund 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. From date of deposit, withdrawals from the joint depository
construction reserve fund accounts are subject to prior written approval
of the Maritime Administration, and the funds on deposit must be
committed for expenditure within three years or be released for the
Company's general use. Such gains from vessel sales previously deferred
would become immediately taxable upon release to the Company of sale
proceeds that were deposited into joint depository construction reserve
fund accounts.
60
7. 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) 2001 2000 1999
- ----------------------------------- ------------ ----------- -----------
United States.......................$ 64,474 $ 56,743 $ 36,382
Foreign............................. 39,247 4,915 7,134
------------ ----------- -----------
$ 103,721 $ 61,658 $ 43,516
============ =========== ===========
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) 2001 2000 1999
- ---------------------------- ------------ ----------- -----------
Current:
State.....................$ 790 $ 741 $ 666
Federal................... 8,331 (600) (2,176)
Foreign................... 5,717 4,811 1,868
Deferred:
Federal................... 21,123 14,351 14,891
Foreign................... 97 1,277 -
------------ ----------- -----------
$ 36,058 $ 20,580 $ 15,249
============ =========== ===========
The following table reconciles the difference between the statutory
federal income tax rate for the Company to the effective income tax
rate:
2001 2000 1999
----------------- ------------------ ------------------
Statutory rate................ 35.0% 35.0% 35.0%
Foreign and state taxes....... 1.0% 1.2% 1.8%
Other......................... (1.2)% (2.8)% (1.8)%
----------------- ------------------ ------------------
34.8% 33.4% 35.0%
================= ================== ==================
The components of the net deferred income tax liability were as follows,
for the years ended December 31:
(in thousands) 2001 2000
- ------------------------------------------------------ ------------ -----------
Deferred tax assets:
Net operating loss carryforwards............... $ 13,889 $ 10,809
Foreign tax credit carryforwards............... 7,370 6,968
Subpart F loss................................. 3,500 3,644
Nondeductible accruals......................... 645 598
Other.......................................... 1,391 1,324
------------ -----------
Total deferred tax assets................ 26,795 23,343
------------ -----------
Deferred tax liabilities:
Property and equipment......................... 149,919 117,853
Investment in subsidiaries..................... 24,141 24,466
Other.......................................... 1,058 491
------------ -----------
Total deferred tax liabilities........... 175,118 142,810
------------ -----------
Net deferred tax liabilities....... $ 148,323 $ 119,467
============ ===========
The Company has not recognized a deferred tax liability of $10,684,000
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, 2001, the
undistributed earnings of these subsidiaries and joint venture
corporations were $30,525,000. As of December 31, 2001, the Company has
net operating loss carryforwards for income tax purposes totaling
approximately $39,683,000 including $28,960,000 that expires in 2014 and
$10,723,000 that expires in 2015. As of December 31, 2001, the Company
also has foreign tax credit carryforwards for income tax purposes
approximating $7,370,000 that expire from 2004 through 2006. The Company
believes that it will be able to utilize the net operating loss and
foreign tax credit carryforwards through future earnings or tax
strategies of the Company and therefore no valuation allowance on the
related deferred tax assets was recorded.
61
8. LONG-TERM DEBT:
Long-term debt balances, maturities and interest rates are as follows as
of December 31, in thousands of dollars:
2001 2000
---------------- ----------------
7.2% Senior Notes due 2009, interest payable semi-annually...........................$ 147,500 $ 147,500
5 3/8% Convertible Subordinated Notes due 2006, interest payable semi-annually....... 46,320 181,600
Revolving Credit Facility maturing in November 2004, bearing interest at 2.71% as of
December 31, 2001 payable quarterly, see Note 4.................................. 30,000 -
5.467% Subordinated Promissory Notes due SMIT in 2004, interest payable quarterly ... 23,200 23,200
Promissory Notes, due prior shareholders of Stirling Shipping, bearing interest
at 4.0%, principal and interest due May 2002, see Note 4......................... 21,358 -
Promissory Notes, due Caterpillar, interest rates ranging from approximately
7.5% to 8.0%, repaid February 2002, see Note 4 .................................. 12,132 -
Promissory Notes due the prior shareholders of Putford Enterprises Ltd., bearing
Interest at 4%, principal and interest due April 2005, see Note 4
various dates through 2004....................................................... 10,920 11,198
Promissory Notes due various financial institutions, primarily secured by property
and equipment, interest rates ranging from approximately 6.75% to 8.9%,
principal repayments at various dates through 2010............................... 672 1,103
Promissory Note due a bank, payable in equal quarterly installments through 2003,
Bearing interest at LIBOR plus 2.5%.............................................. 121 202
Promissory Note due a stockholder, payable in equal annual installments from
January 1998 through January 2001, bearing interest at 7.5%...................... - 278
Capital Lease Obligations, see Note 12............................................... - 17,580
---------------- ----------------
292,223 382,661
Less - Portion due within one year................................................. (33,724) (2,553)
- Debt premium or (discount), net............................................. (1,758) (2,153)
---------------- ----------------
$ 256,741 $ 377,955
================ ================
Maturities of long-term debt following December 31, 2001 are as follows:
(in thousands) 2002 2003 2004 2005 2006 Thereafter
- -------------------- ---------- ---------- ---------- ---------- ---------- ----------
Amount.............. $ 33,724 $ 205 $ 23,297 $ 10,954 $ 46,358 $ 177,685
========== ========== ========== ========== ========== ==========
7.2% NOTES. On September 15, 1997, the Company completed the sale of
$150,000,000 aggregate principal amount of its 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
the Consolidated Balance Sheets as "Other Assets." During 1999, the
Company purchased $2,500,000 principal amount of its 7.2% Notes in the
open market.
5 3/8% 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 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 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. Debt issue costs are reported in the Consolidated Balance
Sheet as "Other Assets." The 5 3/8% Notes are general unsecured
62
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
vessel assets, vessel spare parts and certain related joint venture
interests owned by SMIT Internationale N.V. ("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.
In prior years, the Company purchased $6,150,000 principal amount of its
5 3/8% Notes in the open market. In 2001, the Company called for the
redemption of $100,000,000 of the $181,600,000 aggregate principal
amount outstanding of the 5 3/8% Notes. The redemption price was
$1,029.90 per $1,000 principal amount of notes plus accrued interest to
the applicable redemption date. Holders of 5 3/8% 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. The call, together
with certain privately negotiated transactions, resulted in the
conversion of $99,166,000 principal amount of the 5 3/8% Notes into
2,285,878 shares of Common Stock and redemption of $36,114,000 principal
amount of the 5 3/8% Notes for approximately $37,970,000, including
accrued interest. The Company recognized an extraordinary after-tax
charge of $896,000, or $0.04 per diluted share, net of income taxes
totaling $482,000, upon writing-off deferred financing costs related to
the 5 3/8% Notes redemption.
Pursuant to an amended and restated standby purchase agreement between
Credit Suisse First Boston ("CSFB") and SEACOR, CSFB was obligated,
subject to several conditions, to purchase from SEACOR, at a purchase
price of $46.26 per share, the number of shares of Common Stock
necessary to provide SEACOR with the proceeds to pay the aggregate total
redemption price of up to $100,000,000 face amount of the 5 3/8% Notes
that SEACOR redeemed. During 2001, CSFB purchased 216,170 shares of
Common Stock to provide SEACOR with proceeds to redeem $10,000,000
principal amount of its 5 3/8% Notes that were called but not converted.
Related underwriting and legal and professional fees expensed in 2001
totaled $586,000.
SEACOR entered into an equity forward transaction with Credit Suisse
First Boston International ("CSFBi"), an affiliate of CSFB, with respect
to the shares of Common Stock that CSFB did purchase from SEACOR under
the standby purchase agreement. At December 31, 2001, the $10,000,000
paid by CSFB for the purchase of 216,170 shares of Common Stock was
reported in the Consolidated Balance Sheets as "Common Stock Sold with
Equity Forward Transaction." During the first quarter of 2002, SEACOR
paid CSFBi a nominal amount to settle the equity forward transaction and
the $10,000,000 previously reported as common stock sold with equity
forward transaction was permanently reclassified to the Company's common
stock and additional paid-in capital accounts.
REVOLVING CREDIT FACILITY. On February 5, 2002, the Company completed
the syndication of a $200,000,000, five year, non-reducing, unsecured
revolving credit facility that replaced a $100,000,000 unsecured
reducing revolving credit facility of which $25,683,000 was available
for future borrowing upon termination. Advances under the new revolving
credit facility are available for general corporate purposes. Interest
on advances will be charged at a rate per annum of LIBOR plus an
applicable margin of 65 to 150 basis points based upon the Company's
credit rating as determined by Standard and Poor's and Moody's,
equivalent to 2.75% on February 5, 2002. Adjustments to the applicable
margin are the only consequence of a change in the Company's credit
rating. The Company is not required to maintain a credit rating under
the terms of the facility agreement, and if the Company does not
maintain a credit rating, the applicable margin would be determined by
financial ratios. The new revolving credit facility contains various
restrictive covenants covering interest coverage, secured debt to total
capitalization, funded debt to total capitalization ratios, the
maintenance of a minimum level of consolidated net worth, as well as
other customary covenants, representations and warranties, funding
conditions and events of default. The new revolving credit facility
contains no repayment triggers. A letter of credit, in the amount of
(pound)15,256,000, or $21,794,000 as of March 20, 2002, has been issued
pursuant to the terms of the revolving credit facility, representing a
guarantee on notes issued by the Company in connection with the
acquisition of Stirling Shipping. Amounts available for future
borrowings under the new revolving credit facility totaled approximately
$148,206,000 at March 20, 2002.
63
5.467% 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.
9. 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. As a result of this stock split, 7,137,801 shares were
distributed. Stockholders' 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.
The Company's Board of Directors have previously approved a securities
repurchase plan, which allows the Company to acquire Common Stock, 5
3/8% Notes and its 7.2% Notes (collectively, the "SEACOR Securities")
and, prior to the deconsolidation of Chiles Offshore in 2000, certain of
the Chiles 10.0% Notes. In 2001, a total of 5,950 shares of Common Stock
were acquired for treasury at an aggregate cost of $214,000. In 2000,
154,400 shares of Common Stock were acquired for treasury at an
aggregate cost of $4,776,000. As of December 31, 2001, the Company had
approximately $36,670,000 available for the repurchase of additional
SEACOR Securities that may be conducted from time-to-time through open
market purchases, privately negotiated transactions or otherwise,
depending on market conditions.
10. BENEFIT PLANS:
SEACOR SAVINGS PLAN. The Company provides a defined contribution plan to
its employees. 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 $1,088,000, $977,000 and $948,000 for the years ended
December 31, 2001, 2000 and 1999, 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 Common Stock, and
the Share Incentive Plan additionally provides for the grant of stock
appreciation 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 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 Common
Stock have been reserved for issuance under each of the Stock Option
Plan and the Share Incentive Plan. During 2001 and 2000, 198,380 and
216,634 shares and/or options to purchase shares of Common Stock,
respectively, were granted pursuant to the Plans. As of December 31,
2001, there were 152,350 shares available for future grant under the
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 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 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. 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. During 2001, 15,923 shares of Common Stock were
issued from treasury pursuant to the Stock Purchase Plan.
64
On May 23, 2000, the stockholders of SEACOR also 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 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. In 2001 and 2000, options were granted for the
purchase of 24,000 and 21,000, respectively, shares of Common Stock.
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, 2001, 2000 and 1999.
2001 2000 1999
------------------------------- ------------------------------- -------------------------------
(in thousands, except share data) As Reported Pro forma As Reported Pro forma As Reported Pro forma
- ---------------------------------- --------------- --------------- --------------- -------------- --------------- ---------------
Net income........................$ 70,701 $ 68,746 $ 34,120 $ 32,211 $ 30,936 $ 30,439
Earnings per common share:
Basic..........................$ 3.63 $ 3.53 $ 2.02 $ 1.91 $ 1.73 $ 1.71
Diluted........................ 3.43 3.34 1.92 1.83 1.69 1.67
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.
SHARE AWARD TRANSACTIONS. The following transactions have occurred in
the Plans during the periods ended December 31:
2001 2000 1999
----------------------------- ---------------------------- ----------------------------
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.. 681,212 $ 20.80 545,871 $ 16.31 443,721 $ 13.09
Granted......................... 139,800 $ 44.73 172,616 $ 32.81 104,775 $ 29.97
Exercised....................... (11,760) $ 11.20 (36,750)$ 10.32 - $ -
Canceled........................ (1,500) $ 40.00 (525)$ 32.10 (2,625)$ 17.71
------------- ------------ ------------
Outstanding, at end of year........ 807,752 $ 25.05 681,212 $ 20.80 545,871 $ 16.31
============= ============ ============
Options exercisable at year end.... 549,113 $ 18.35 452,511 $ 14.30 421,403 $ 12.05
============= ============ ============
Weighted average fair value of
Options granted.................$ 26.21 $ 34.70 $ 18.57
============= ============ ============
Restricted stock awards granted........ 58,580 $ 50.80 44,018 $ 35.04 55,500 $ 29.79
============= ============ ============
Shares available for future grant...... 152,350 348,771 563,945
============= ============ ============
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 37.37%, 38.09% and 44.07% in the
years 2001, 2000 and 1999, respectively, (c) discount rates of 5.31%,
6.21% and 5.01% in the years 2001, 2000 and 1999, 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 2001, 2000
and 1999, compensation cost recognized in connection with restricted
stock awards totaled $2,272,000, $1,337,000 and $1,508,000,
respectively. At December 31, 2001, there were 87,672 shares of unvested
65
restricted stock outstanding at a weighted average price of $48.93. Of
the unvested shares outstanding, 53,768, 21,222 and 12,682 shares will
vest in 2002, 2003 and 2004, respectively.
The following table summarizes certain information about the options
outstanding at December 31, 2001 grouped into three exercise price
ranges:
Exercise Price Range
------------------------------------------------------------
$6.43 - $16.63 $20.50 - $29.67 $30.71 - $52.25
------------------- ------------------- -------------------
Options outstanding at December 31, 2001....................... 380,826 74,778 352,148
Weighted-average exercise price................................$ 11.81 $ 28.94 $ 38.54
Weighted-average remaining contractual life (years)............ 2.55 6.33 8.17
Options exercisable at December 31, 2001....................... 380,826 53,203 115,084
Weighted average exercise price of exercisable options.........$ 11.81 $ 28.64 $ 35.23
11. RELATED PARTY TRANSACTIONS:
On December 20, 2000, the Company acquired SCF, a company that owned and
operated barges and that was substantially owned and controlled by
certain SEACOR officers and directors, including Messrs. Fabrikant,
Blank, Conway and Morse and an entity that is an affiliate of Mr.
Gellert. See Note 4 for additional discussion of this transaction.
The terms and conditions of the SCF acquisition were determined based on
negotiations between representatives of SCF, members of SEACOR's Boardd
of Directors (none of whom had a financial interest in SCF or were
employed by the Company) and an independent financial advisor retained
to review this transaction, which financial advisor rendered an opinion
to the Board of Directors that the terms thereof were fair to the
stockholders of SEACOR from a financial point of view.
12. COMMITMENTS AND CONTINGENCIES:
At December 31, 2001, the Company was committed to the construction of 9
vessels at an approximate aggregate cost of $85,600,000, of which
$40,600,000 had been expended. Following year end, the Company committed
to the construction of 2 additional vessels and 174 barges at an
approximate aggregate cost of $60,300,000. The vessels are expected to
enter service during the next two years, and the barges are expected to
enter service during 2002. The Company expects a certain number of the
barges to be purchased by third parties and managed by the Company.
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.
The Company leases 25 vessels, resulting primarily from sale-leaseback
transactions and certain facilities and equipment. These leasing
agreements have been classified as operating leases for financial
reporting purposes and related rental fees are charged to expense over
the lease term as they become payable. Vessel leases generally 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 1 to 7 years. Certain of the gains realized from
various sale-leaseback transactions, totaling $11,447,000, $1,394,000
and $6,566,000 in 2001, 2000 and 1999, respectively, have been deferred
in the Consolidated Balance Sheets and are being credited to income as
reductions in rental expense over the lease terms. The total rental
expense for the Company's operating leases in 2001, 2000 and 1999
totaled $12,945,000, $5,107,000 and $4,994,000, respectively. Future
minimum payments under operating leases that have a remaining term in
excess of one year at December 31, 2001 are as follows in thousands:
Minimum
In the Years Ending December 31, Payment
- ----------------------------------------------------- -----------------
2002................................................ $ 16,525
2003................................................ 13,180
2004................................................ 10,458
2005................................................ 9,741
2006................................................ 4,807
Years subsequent to 2006............................ 4,572
The Company has entered into sale-type lease transactions for four
vessels that expire in 2004 and contain options that permit the lessee
to purchase the vessels at various dates during the lease terms. The
minimum lease payments and unguaranteed residual values accruing to the
Company under these leases have been recorded as a gross investment in
66
the leases. The difference between the gross investment and the sum of
the present values of the two components of the gross investment has
been recorded as unearned income to be amortized over the lease term
using the interest method. The amortization of unearned income in the
years ended December 31, 2001, 2000 and 1999, totaled $595,000, $492,000
and $548,000, respectively. The net investment in sale-type leases at
December 31, 2001 was comprised of minimum lease payment receivables
totaling $5,125,000, estimated residual values of $1,200,000 and
unearned income of $1,416,000. Minimum lease payments, totaling
$1,833,000, $1,833,000 and $1,459,000, are due in 2002, 2003 and 2004,
respectively. As of December 31, 2001, $1,135,000 and $3,774,000 of the
net investment in the sale-type leases were reported in the Consolidated
Balance Sheets as "Prepaid expenses and other" and "Other Assets",
respectively.
In 1996, the Company entered into leases for two vessels, which were
classified as capital leases for accounting purposes until their
purchase in December 2001. Both the acquired values and gross amounts
recorded under capital leases, approximating $24,000,000, have been
included in the Consolidated Balance Sheet as "Vessels and equipment."
At December 31, 2000, $1,767,000 and $15,813,000 in obligations under
these capital leases were reported as current and long-term debt,
respectively. The acquisition of these vessels resulted in the Company's
payment of $15,341,000 to the prior lessor.
13. MAJOR CUSTOMERS AND SEGMENT DATA:
SFAS 131 requires companies to provide certain information about their
operating segments. SFAS 131 also established standards for related
disclosures about products and services, geographic areas and major
customers. Operating segments are defined 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's business is primarily comprised of two segments, offshore
marine services and environmental services. Upon completion of the
September 22, 2000 initial public offering of the common stock of Chiles
Offshore, the Company's drilling service business segment, the Company's
ownership interest in Chiles Offshore declined below 50% and the Company
began accounting for its interest in Chiles Offshore under the equity
method. As a result, the Company no longer accounts for its investment
in Chiles Offshore as a segment.
The marine service segment charters vessels principally to owners and
operators of offshore drilling rigs and production platforms both
domestically and internationally. Crew vessels transport personnel and
small loads of cargo when expedited deliveries are required. Supply and
towing supply vessels transport drill pipe, drilling fluids and
construction materials and those with deck mounted winches have added
capability to perform general towing duties, buoy setting and limited
anchor handling work. Anchor handling towing supply 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. Utility vessels support offshore production activities by
delivering general cargo and facilitating infield transportation of
personnel and materials. Mini-supply vessels serve both drilling and
production facilities and typically transport deck cargo, liquid mud,
methanol and fuel and water. 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.
Special service vessels may support well stimulation, seismic data
gathering, line handling, freight hauling and oil spill response.
Logistic services, including shorebase, marine transport and other
supply chain management services, are also provided by the Company in
support of offshore oil and gas exploration and production operations
through a majority owned subsidiary.
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 and various
state regulations. Services include training, consulting and supervision
for emergency preparedness, response and crisis management associated
with oil or hazardous material spills, fires and natural disasters and
maintaining specialized equipment for immediate deployment in response
to spills and other events. 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
clients include tank vessel owner/operators, refiners and terminal
operators, exploration and production facility operators and pipeline
operators.
The Company's inland river business was established in the third quarter
of 2000 upon its acquisition of newly constructed barges and was further
expanded upon acquiring SCF Corporation ("SCF"), a company that owned
and operated barges, in December 2000. The Company's barges service the
67
agriculture and industrial sectors within the United States that are
strategically aligned along the Mississippi River and its tributaries.
Revenues and other information with respect to this business segment
have been included in "Other and Corporate" and not reported separately
in the accompanying tables as it has never met any of the quantitative
thresholds for determining reportable segments as outlined in SFAS 131.
68
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 from services rendered to divisions or subsidiaries of one
customer totaled $42,240,000 in 2001, $26,777,000 in 2000 and
$26,139,000 in 1999 (10% of revenue in 2001, 8% of revenues in 2000 and
9% of revenues in 1999). Information about profit and loss and assets by
business segment is as follows for the years ended December 31, in
thousands of dollars:
Other and
2001 Marine Environmental Drilling Corporate Total
------------- ------------- ------------- -------------- -------------
Operating Revenues -
External Customers................................ $ 398,345 $ 26,847 $ - $ 9,598(a)$ 434,790
Intersegment...................................... 778 - - (778) -
------------- ------------- ------------- -------------- -------------
Total............................................ $ 399,123 $ 26,847 $ - $ 8,820 $ 434,790
============= ============= ============= ============== =============
Operating Profit.................................... $ 98,004 $ 2,037 $ - $ 2,216 $ 102,257
Gains (Losses) from Equipment Sales or Retirements, 9,180 6 - (156) 9,030
net.................................................
Gain from Sale of Interest in 50% or Less Owned 201 - - - 201
Companies...........................................
Equity in Net Earnings (Losses) of 50% or Less
Owned Companies................................... 5,181 40 5,810 (4,739) 6,292
Minority Interest in Net income of Subsidiaries..... - - - (372) (372)
Interest Income..................................... - - - 13,546 13,546
Interest Expense.................................... - - - (21,998) (21,998)
Derivative Income, net.............................. - - - 4,127 4,127
Gains from Sale of Marketable Securities, net....... - - - 5,689 5,689
Corporate Expenses.................................. - - - (9,131) (9,131)
Income Taxes........................................ - - - (38,044) (38,044)
------------- ------------- ------------- -------------- -------------
Income (Loss) before Extraordinary Item......... $ 112,566 $ 2,083 $ 5,810 $ (48,862) $ 71,597
============= ============= ============= ============== =============
============= ============== =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................... $ 49,618 $ 303 $ 77,607 $ 26,299 $ 153,827
Other Segment Assets................................ 875,148 28,412 - 32,310 935,870
------------- ------------- ------------- -------------- -------------
Subtotal Segment Assets........................... 924,766 28,715 77,607 58,609 1,089,697
Corporate........................................... - - - 208,441 208,441
------------- ------------- ------------- -------------- -------------
Total Assets.................................... $ 924,766 $ 28,715 $ 77,607 $ 267,050 $ 1,298,138
============= ============= ============= ============== =============
Depreciation and Amortization....................... $ 52,926 $ 4,288 $ - $ 1,110 $ 58,324
=================================================================================================================================
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 Net Income 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
=================================================================================================================================
69
Other and
1999 Marine Environmental Drilling Corporate Total
------------- ------------- ------------- -------------- -------------
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 (72) - - - (72)
Company.............................................
Equity in Net Earnings (Losses) of 50% or Less
Owned Companies................................... 4,906 814 - (3,107) 2,613
-
Minority Interest in Net 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
=================================================================================================================================
(a) Revenues attributable to the Company's inland river 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 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 for the years
ending December 31.
(in thousands) 2001 2000 1999
- ------------------------------------------------ ------------ ------------- ------------
Revenues:
United States of America................... $ 267,195 $ 236,841 $ 186,673
United Kingdom............................. 74,477 39,565 24,643
Nigeria.................................... 29,425 15,544 19,324
Other...................................... 63,693 47,991 58,785
------------ ------------- ------------
$ 434,790 $ 339,941 $ 289,425
============ ============= ============
Long-Lived Assets:
United States of America................... $ 335,648 $ 302,417 $ 550,106
United Kingdom............................. 186,686 47,898 33,083
Nigeria.................................... 39,973 40,119 40,486
Other...................................... 172,450 136,644 91,522
------------ ------------- ------------
$ 734,757 $ 527,078 $ 715,197
============ ============= ============
For the years ended December 31, 2001, 2000 and 1999, approximately 39%,
30% and 36%, 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 barge operations are limited to the U.S.
14. EVENTS SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED):
On February 28, 2002, the Compensation Committee granted 59,210
restricted shares to certain officers and key employees of the Company
with an aggregate market value of $2,576,000 on that date.
In March 2002, two vessels were sold for $20,000,000 pursuant to
sale-leaseback transactions. Sale gains are expected to be deferred for
future income recognition.
70
15. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS:
(in thousands) 2001 2000 1999
- ---------------------------------------------------------------------------------------- -------- --------- ---------
Cash income taxes paid.................................................................. $ 14,244 $ 5,539 $ 5,048
Cash interest paid...................................................................... 21,262 28,942 35,875
Schedule of Non-Cash Investing and Financing Activities:
Property exchanged for investment in and notes receivable from 50% or less owned
company........................................................................... 17,688 - -
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
Conversion of 5 3/8% Notes into Common Stock........................................ 98,824 - -
Acquisition of ERST/O'Brien's Inc. with - Common Stock............................. 1,284 920 1,482
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 -
Acquisition of Plaisance with - Common Stock............................. 3,163 - -
- assumption of debt....................... 700 - -
Acquisition of Rincon vessels with - assumption of debt....................... 13,600 - -
Acquisition of Stirling Shipping with - Common Stock............................. 12,777 - -
- assumption of debt....................... 61,900 - -
- notes, including debt discount........... 21,200 - -
Purchase of vessels with - deferred payment obligation.............. - 7,754 -
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Selected financial information for interim periods are presented below.
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
--------------------------------------------------------------
(in thousands, except share data) Dec. 31, Sept. 30, June 30, March 31,
- ----------------------------------------------------- ----------- ----------- ----------- -----------
2001:
Revenue.............................................. $ 109,804 $ 119,358 $ 112,428 $ 93,200
Operating Income..................................... 22,212 30,195 26,333 13,195
Income before extraordinary item..................... 18,679 22,506 18,278 12,134
Basic earnings per common share -
Income before extraordinary item................. 0.93 1.13 0.92 0.67
Extraordinary item............................... - - (0.04) -
----------- ----------- ----------- -----------
Net Income....................................... $ 0.93 $ 1.13 $ 0.88 $ 0.67
=========== =========== =========== ===========
Diluted earnings common per share -
Income before extraordinary item................. $ 0.93 $ 0.97 $ 0.88 $ 0.62
Extraordinary item............................... - - (0.04) -
----------- ----------- ----------- -----------
Net Income....................................... $ 0.93 $ 0.97 $ 0.84 $ 0.62
=========== =========== =========== ===========
2000:
Revenue.............................................. $ 88,301 $ 93,552 $ 85,144 $ 72,944
Operating Income..................................... 14,649 12,626 11,402 9,075
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
=========== =========== =========== ===========
71
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 21, 2002. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The
schedule on page 73 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.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
February 21, 2002
72
SEACOR SMIT INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS)
Balance Charges to Balance
Beginning Cost and (a) End
Description of Year Expenses Deductions of Year
- ------------------------------------------------ ------------- -------------- ------------- --------------
Year Ended December 31, 2001
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 1,310 $ 947 $ 622 $ 1,635
============= ============== ============= ==============
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
============= ============== ============= ==============
(a) Accounts receivable amounts deemed uncollectible and removed from
accounts receivable and allowance for doubtful accounts.
73
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR END DECEMBER 31, 2001
Exhibit
Number Description
------ -----------
1.1 * Form of Standby Purchase Agreement between SEACOR SMIT Inc.
and Credit Suisse First Boston Corporation (incorporated herein
by reference to Exhibit 1.1 to the Company's Registration
Statement on Form S-3 (No. 333-53874), filed with the Commission
on January 18, 2001).
1.2 * Form of ISDA Master Agreement between SEACOR SMIT Inc. and
Credit Suisse First Boston Corporation, with attached Schedule
and Confirmation (incorporated herein by reference to Exhibit
1.2 to the Company's Registration Statement on Form S-3 (No.
333-53874), filed with the Commission on January 18, 2001).
2.1 * 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).
2.2 * Stock Exchange 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).
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).
74
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 Statement on Form S-3 (No. 333-56842)
filed with the Commission on March 9, 2001).
75
4.15 * SEACOR SMIT Inc. 2000 Employee Stock Purchase Plan, as amended
February 14, 2001 (incorporated herein by reference to Exhibit
4.4 to the Company's Registration Statement on Form S-8 (No.
333-56714), filed with the Commission on March 8, 2001).
4.16 * Instrument, dated May 4, 2001, setting forth terms of (pound)
14,668,942 in aggregate principal amount of Fixed Rate Abatable
Loan Notes (including form of Loan Note Certificate as a
Schedule thereto) (incorporated herein by reference to the
Company's Registration Statement on Form 8-K dated May 17,
2001).
4.17 * Form of Indenture, dated as of January 10, 2001, among SEACOR
SMIT Inc. and U.S. Bank Trust National Association as trustee
(incorporated herein by reference to Exhibit 4.2 to Amendment
No.1 to the Company's Registration Statement on Form S-3/A (No.
333-53326) filed with the Commission on January 18, 2001).
4.18 * Form of Indenture, dated as of January 10, 2001, among SEACOR
SMIT Inc. and U.S. Bank Trust National Association as trustee
(incorporated herein by reference to Exhibit 4.3 to Amendment
No. 1 to the Company's Registration Statement on Form S-3/A (No.
333-53326) filed with the Commission on January 18, 2001).
10.1 * 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).
10.2 *+ 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).
10.3 *+ 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).
10.4 *+ 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).
10.5 *+ 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).
76
10.6 *+ 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).
10.7 * 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).
10.8 * 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).
10.9 * 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).
10.10 * 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).
10.11 * 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).
10.12*+ 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, 2000
and filed with the Commission on March 30, 2000).
10.13*+ 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, 2000
and filed with the Commission on March 30, 2000).
10.14*+ 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, 2000 and filed with the Commission on March 30,
2000).
10.15 * 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, dated February 23, 2001 and filed with the Commission
on March 5, 2001).
77
10.16 * Letter Agreement dated as of February 23, 2001, amending the
Stock Purchase 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, dated February 23, 2001 and filed with the Commission
on March 5, 2001).
10.17 * 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, dated February 23, 2001
and filed with the Commission on March 5, 2001).
10.18 * 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, dated February 23, 2001
and filed with the Commission on March 5, 2001).
10.19 * Stock Purchase Agreement, dated as of May 4, 2001, by and
between SEACOR SMIT Inc. and the Stirling Vendors (incorporated
herein by reference to the Company's Registration Statement on
Form 8-K dated May 17, 2001).
10.20 * Tax Deed, dated as of May 4, 2001, by and between SEACOR SMIT
Inc. and the Stirling Vendors (incorporated herein by reference
to the Company's Registration Statement on Form 8-K dated May
17, 2001).
10.21 Revolving Credit Facility Agreement, dated as of February 5,
2002 by and among SEACOR SMIT Inc., the banks and financial
institutions named therein, Fleet National Bank, Den norske Bank
ASA, Nordea and The Governor and Company of the Bank of Scotland
as agents.
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
99.1 Letter from SEACOR SMIT Inc. to the Securities Exchange
Commission regarding representations by 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.
78