SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002 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 (IRS Employer
incorporation or organization) Identification No.)
11200 Richmond, Suite 400, Houston, Texas 77082
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(Address of principal executive offices) (Zip Code)
(281) 899-4800
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The total number of shares of common stock, par value $.01 per share,
outstanding as of August 7, 2002 was 20,175,426. The Registrant has no other
class of common stock outstanding.
SEACOR SMIT INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 2002 and December 31, 2001..........................................1
Condensed Consolidated Statements of Operations for each of the
Three and Six Months Ended June 30, 2002 and 2001............................2
Condensed Consolidated Statements of Cash Flows
for each of the Six Months Ended June 30, 2002 and 2001......................3
Notes to Condensed Consolidated Financial Statements..............................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.....................................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................19
Part II. Other Information
Item 5. Other Information.....................................................................21
Item 6. Exhibits and Reports on Form 8-K......................................................21
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
June 30, December 31,
2002 2001
------------------- -------------------
ASSETS
Current Assets:
Cash and cash equivalents................................................... $ 173,840 $ 180,394
Trade and other receivables, net of allowance for
doubtful accounts of $1,578 and $1,635, respectively..................... 101,523 104,436
Prepaid expenses and other.................................................. 7,307 6,631
------------------- -------------------
Total current assets..................................................... 282,670 291,461
------------------- -------------------
Investments, at Equity, and Receivables from 50% or Less Owned Companies....... 154,868 153,827
Available-for-Sale Securities.................................................. 23,261 22,371
Property and Equipment......................................................... 986,175 971,621
Less - Accumulated depreciation............................................. (254,609) (236,864)
------------------- -------------------
Net property and equipment............................................... 731,566 734,757
------------------- -------------------
Construction Reserve Funds..................................................... 63,220 55,290
Goodwill....................................................................... 28,341 28,232
Other Assets................................................................... 9,529 12,200
------------------- -------------------
$ 1,293,455 $ 1,298,138
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................................... $ 255 $ 33,724
Accounts payable and accrued expenses....................................... 24,003 29,070
Other current liabilities................................................... 45,648 50,915
------------------- -------------------
Total current liabilities................................................ 69,906 113,709
------------------- -------------------
Long-term Debt................................................................. 257,383 256,675
Deferred Income Taxes.......................................................... 155,108 148,430
Deferred Gains and Other Liabilities........................................... 25,374 24,070
Minority Interest in Subsidiaries.............................................. 1,557 1,556
Common Stock Sold with Equity Forward Transaction.............................. - 10,000
Stockholders' Equity:
Common stock, $.01 par value, 24,110,957 and 24,027,003 shares issued at
June 30, 2002 and December 31, 2001, respectively........................ 241 238
Additional paid-in capital.................................................. 397,751 384,857
Retained earnings........................................................... 496,497 472,843
Less 3,935,509 and 3,943,333 shares held in treasury at June 30, 2002
and December 31, 2001, respectively, at cost............................. (109,368) (109,638)
Less unamortized restricted stock compensation.............................. (3,370) (1,985)
Accumulated other comprehensive income (loss) -
Cumulative translation adjustments...................................... 2,283 (2,474)
Unrealized gain (loss) on available-for-sale securities................. 93 (143)
------------------- -------------------
Total stockholders' equity............................................... 784,127 743,698
------------------- -------------------
$ 1,293,455 $ 1,298,138
=================== ===================
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
1
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
Three Months Ended June Six Months Ended
30, June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------- ------------- ------------- -------------
Operating Revenues....................................................$ 97,670 $ 112,428 $ 201,313 $ 205,628
------------- ------------- ------------- -------------
Costs and Expenses:
Operating expenses................................................. 61,133 59,267 118,289 115,691
Administrative and general......................................... 12,803 12,241 25,163 23,654
Depreciation and amortization...................................... 13,996 14,587 27,872 26,755
------------- ------------- ------------- -------------
87,932 86,095 171,324 166,100
------------- ------------- ------------- -------------
Operating Income...................................................... 9,738 26,333 29,989 39,528
------------- ------------- ------------- -------------
Other Income (Expense):
Interest on debt................................................... (3,796) (5,356) (7,797) (10,995)
Interest income.................................................... 2,102 3,413 3,969 7,887
Gain from equipment sales and retirements, net..................... 938 1,917 3,237 3,847
Derivative income (loss), net...................................... 1,404 62 632 (35)
Foreign currency transaction gain (loss), net...................... 6,411 (150) 3,251 (658)
Other, net......................................................... 487 1,273 (678) 2,499
------------- ------------- ------------- -------------
7,546 1,159 2,614 2,545
------------- ------------- ------------- -------------
Income Before Income Taxes, Minority Interest, Equity in Earnings
of 50% or Less Owned Companies and Extraordinary Item.............. 17,284 27,492 32,603 42,073
Income Tax Expense.................................................... 6,156 9,630 11,399 14,745
------------- ------------- ------------- -------------
Income Before Minority Interest, Equity in Earnings of 50% or
Less Owned Companies and Extraordinary Item........................ 11,128 17,862 21,204 27,328
Minority Interest in Income of Subsidiaries........................... (95) (86) (188) (164)
Equity in Earnings of 50% or Less Owned Companies..................... 1,215 502 2,638 3,248
------------- ------------- ------------- -------------
Income Before Extraordinary Item...................................... 12,248 18,278 23,654 30,412
Extraordinary Item - Loss on Debt Extinguishment, net of tax.......... - (896) - (896)
------------- ------------- ------------- -------------
Net Income............................................................$ 12,248 $ 17,382 $ 23,654 $ 29,516
============= ============= ============= =============
Basic Earnings Per Common Share:
Income before extraordinary item...................................$ 0.61 $ 0.92 $ 1.18 $ 1.60
Extraordinary item.................................................. - (0.04) - (0.05)
------------- ------------- ------------- -------------
Net income.......................................................$ 0.61 $ 0.88 $ 1.18 $ 1.55
============= ============= ============= =============
Diluted Earnings Per Common Share:
Income before extraordinary item...................................$ 0.59 $ 0.88 $ 1.15 $ 1.50
Extraordinary item.................................................. - (0.04) - (0.04)
------------- ------------- ------------- -------------
Net income.......................................................$ 0.59 $ 0.84 $ 1.15 $ 1.46
============= ============= ============= =============
Weighted Average Common Shares:
Basic.............................................................. 20,078,231 19,832,918 20,058,824 18,979,203
Diluted............................................................ 21,393,472 21,225,122 21,373,534 21,385,449
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
2
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
Six Months Ended June 30,
2002 2001
-------------------- -------------------
Net Cash Provided by Operating Activities.................................... $ 37,920 $ 32,088
-------------------- -------------------
Cash Flows from Investing Activities:
Purchase of property and equipment........................................ (60,008) (61,113)
Proceeds from sale of marine vessels and equipment........................ 53,757 9,851
Purchase of available-for-sale securities................................. (11,565) (44,461)
Proceeds from sale of available-for-sale securities....................... 10,970 88,137
Proceeds from sale of investment in 50% or less owned companies........... - 1,932
Investments in and advances to 50% or less owned companies................ (1,470) (5,124)
Principal payments on notes due from 50% or less owned companies.......... 5,618 1,594
Dividends received from 50% or less owned companies....................... 1,290 1,087
Net increase in construction reserve funds................................ (7,930) (5,823)
Cash settlements from derivative transactions............................. (851) (60)
Acquisitions, net of cash acquired........................................ (109) (99,218)
Other, net................................................................ 707 64
-------------------- -------------------
Net cash used in investing activities.................................. (9,591) (113,134)
-------------------- -------------------
Cash Flows from Financing Activities:
Payments of long-term debt................................................ (33,696) (38,212)
Payments of capital lease obligations..................................... - (872)
Payments of stockholders' loans........................................... - (278)
Proceeds from issuance of long-term debt.................................. 96 27,221
Proceeds from issuance of common stock.................................... - 10,000
Proceeds from exercise of stock options................................... 349 118
Proceeds from Employee Stock Purchase Plan................................ 363 -
Other..................................................................... - (1)
-------------------- -------------------
Net cash provided used in financing activities......................... (32,888) (2,024)
-------------------- -------------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents................. (1,995) (712)
-------------------- -------------------
Net Decrease in Cash and Cash Equivalents.................................... (6,554) (83,782)
Cash and Cash Equivalents, Beginning of Period............................... 180,394 224,219
-------------------- -------------------
Cash and Cash Equivalents, End of Period..................................... $ 173,840 $ 140,437
==================== ===================
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith
3
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION --
The condensed consolidated financial information for the three and six-month
periods ended June 30, 2002 and 2001 has been prepared by the Company and was
not audited by its independent public accountants. In the opinion of management,
all adjustments have been made to present fairly the financial position, results
of operations and cash flows of the Company at June 30, 2002 and for all
reported periods. Results of operations for the interim periods presented are
not necessarily indicative of the operating results for the full year or any
future periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the financial statements and
related notes thereto included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
Unless the context otherwise indicates, any references in this Quarterly Report
on Form 10-Q to the "Company" refer to SEACOR SMIT Inc. and its consolidated
subsidiaries, and any references in this Quarterly Report on Form 10-Q to
"SEACOR" refer to SEACOR SMIT Inc.
Certain reclassifications of prior year information have been made to conform
with the current year presentation.
2. 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 the impairment test as of January 1,
2002 and have determined there is no goodwill impairment. The Company ceased
amortization of its remaining goodwill balance effective January 1, 2002. For
the three and six-month periods ended June 30, 2001, goodwill amortization
totaled $922,000 and $1,438,000, respectively, and adjusted for goodwill
amortization, net income before extraordinary item in these same periods would
have been $18,877,000, or $0.91 per fully diluted share, and $31,347,000, or
$1.55 per fully diluted share, respectively.
Effective January 1, 2002, the Company adopted 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 adoption
of this statement did not have a material impact on the Company's financial
statements.
In July 2001, the Financial Accounting Standards Board 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.
4
In May 2002, the FASB also issued SFAS No. 145 - "Recission of FASB Statements
Nos. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections"
which is effective for fiscal years beginning after May 15, 2002. This
statement, among other matters, provides guidance with respect to the accounting
for gains or losses on capital leases which were modified to become operating
leases. The statement also eliminates the requirement that gains or losses on
the early extinguishment of debt be classified as extraordinary items and
provides guidance when gains or losses on the early retirement of debt should or
should not be reflected as an extraordinary item. The Company does not expect
this statement to have a material impact on its financials statements when it
becomes effective.
3. COMPREHENSIVE INCOME --
For the three-month periods ended June 30, 2002 and 2001, total comprehensive
income was $17,397,000 and $14,928,000, respectively. For the six-month periods
ended June 30, 2002 and 2001, total comprehensive income was $28,647,000 and
$26,102,000, respectively. Other comprehensive income in 2002 consisted
primarily of gains from foreign currency translation adjustments and unrealized
holding gains on available-for-sale securities and other comprehensive losses in
2001 consisted primarily of losses from foreign currency translation adjustments
and unrealized holding losses on available-for-sale securities.
4. EARNINGS PER SHARE --
Basic earnings per share were computed based on the weighted average number of
common shares issued and outstanding during the relevant periods. Diluted
earnings per 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. The computation of diluted earnings per share excludes
certain options and share awards, totaling 53,600 and 51,600, respectively, for
the three and six-month periods ended June 30, 2002 and 83,480 and 30,000,
respectively, for the three and six-month periods ended June 30, 2001 as the
effect would have been antidilutive.
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------------------- ---------------------------------------
Per Per
Income Shares Share Income Shares Share
------------- --------------- -------- -------------- --------------- --------
2002
- ----
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item.......... $ 12,248,000 20,078,231 $ 0.61$ 23,654,000 20,058,824 $ 1.18
======== ========
EFFECT OF DILUTIVE SECURITIES, NET OF TAX:
Options and Restricted Stock.............. - 262,522 - 261,987
Convertible Securities.................... 433,000 1,052,719 865,000 1,052,723
------------- --------------- -------------- ---------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions............... $ 12,681,000 21,393,472 $ 0.59$ 24,519,000 21,373,534 $ 1.15
============= =============== ======== ============== =============== ========
2001
- ----
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item.......... $ 18,278,000 19,832,918 $ 0.92$ 30,412,000 18,979,203 $ 1.60
======== ========
EFFECT OF DILUTIVE SECURITIES, NET OF TAX:
Options and Restricted Stock.............. - 252,200 - 266,424
Convertible Securities.................... 470,000 1,140,004 1,733,000 2,139,822
------------- --------------- -------------- ---------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions............... $ 18,748,000 21,225,122 $ 0.88$ 32,145,000 21,385,449 $ 1.50
============= =============== ======== ============== =============== ========
5. COMMON STOCK SOLD WITH EQUITY FORWARD TRANSACTION --
Pursuant to an amended and restated standby purchase agreement between Credit
Suisse First Boston Corporation ("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 its 5 3/8% Convertible Subordinated Notes due November 15, 2006
(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.
5
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 a 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 Condensed Consolidated
Balance Sheets as "Common Stock Sold with Equity Forward Transaction." During
the first quarter of 2002, SEACOR paid CSFBI $164,000 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.
6. DISPOSITIONS --
In the six-month period ended June 30, 2002, the Company sold 13 offshore marine
vessels and other equipment that resulted in the recognition of a net pre-tax
gain totaling $4,499,000. This gain was offset by a charge of $1,262,000
resulting from the write-down of the carrying value of certain offshore marine
equipment associated with a previously cancelled construction contract. Three of
the vessels sold during 2002 were chartered-in by the Company pursuant to
sale-leaseback transactions. The Company continues to deposit proceeds from the
sale of certain vessels into joint depository construction reserve fund bank
accounts with the Maritime Administration for purposes of acquiring newly
constructed U.S.-flag vessels and qualifying for the Company's temporary
deferral of taxable gains realized from the sales. Joint depository construction
reserve fund bank accounts are reported in the Condensed Consolidated Balance
Sheets as "Construction Reserve Funds."
7. FOREIGN CURRENCY --
Certain SEACOR subsidiaries enter into transactions denominated in currencies
other than their functional currency and 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. SEACOR has also advanced funds to
wholly owned subsidiaries whose functional currencies differ from the U.S.
dollar and, as settlement of the advances are expected in the foreseeable
future, changes in the currency exchange rates from the transaction date until
the settlement date with respect to such advances are also included in the
determination of net income in the period in which the currency exchange rates
change.
In the three and six-month periods ended June 30, 2002, the Company recognized
net gains from foreign currency transactions of $6,411,000 and $3,251,000,
respectively. In the three and six-month periods ended June 30, 2001, the
Company recognized net losses from foreign currency transactions of $150,000 and
$658,000, respectively. In both years, these gains and losses are reported in
the Condensed Consolidated Statements of Operations as "Foreign currency
transaction gain (loss), net." Gains in 2002 resulted primarily from the
revaluation of obligations due SEACOR by certain wholly owned U.K. subsidiaries,
whose functional currency is Pounds Sterling, during periods when the Pound
Sterling currency strengthened against the U.S. dollar.
8. LONG-TERM DEBT --
During the second quarter of 2002, the Company repaid (pound)14,669,000, or
$21,368,000, in one year loan notes, plus accrued interest. The notes were
issued in connection with the acquisition of Stirling Shipping Holdings Limited
in 2001.
On July 31, 2002, SEACOR redeemed $10,000,000 of the $46,319,000 aggregate
principal amount outstanding of its 5 3/8% Notes. The redemption price was
$1,023.90 per $1,000 principal amount of the notes.
6
9. SEGMENT INFORMATION --
The Company's Offshore Marine Services business is primarily dedicated to
operating a diversified fleet of offshore support vessels serving 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.
The Company's other activities include its environmental service and inland
river barge businesses and all non-Offshore Marine Service segment equity in
earnings of 50% or less owned companies. Prior to 2002, the Company presented
its environmental service business as a separate reportable business segment.
Effective January 1, 2002, the environmental service business is no longer
reported as a separate segment as it does not meet the criteria for reporting
segregation pursuant to accounting standards.
The Company evaluates business performance based upon operating profit (defined
as Operating Income as reported in the Consolidated Statements of Operations,
excluding corporate-related expenses) plus any gains and losses from the sale of
equipment and interest in 50% or less owned companies, equity in the earnings
and losses of 50% or less owned companies and foreign currency transaction gains
and losses. Accounting policies for measuring segment profits have not changed
from those previously described in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
Offshore
Marine Other Total
----------- ----------- -----------
FOR THE THREE MONTHS ENDED JUNE 30, 2002:
Revenues from external customers.........................$ 90,681 $ 6,989 $ 97,670
Intersegment revenues..................................... 67 - 67
----------- ----------- -----------
Segment operating revenues............................... 90,748 6,989 97,737
----------- -----------
Elimination of intersegment revenues..................... (67)
-----------
Consolidated operating revenues........................ $ 97,670
===========
Operating profit.......................................... 11,545 512 12,057
Gains from equipment sales or retirements, net............ 938 - 938
Foreign currency transaction gains, net................... 6,411 - 6,411
Equity in earnings (losses) of 50% or less owned
companies.................................................... 2,247 (1,396) 851
----------- ----------- -----------
Segment profit........................................... 21,141 (884) 20,257
----------- -----------
Interest income.......................................... 2,102
Interest expense......................................... (3,796)
Derivative income, net................................... 1,404
Gains from sale of marketable securities, net............ 487
Corporate expenses....................................... (2,319)
Equity in earnings of 50% or less owned companies........ (851)
-----------
Consolidated earnings before income taxes.............. $ 17,284
===========
FOR THE THREE MONTHS ENDED JUNE 30, 2001:
Revenues from external customers.........................$ 102,870 $ 9,558 $ 112,428
Intersegment revenues..................................... 294 - 294
----------- ----------- -----------
Segment operating revenues............................... 103,164 9,558 112,722
----------- -----------
Elimination of intersegment revenues..................... (294)
-----------
Consolidated operating revenues........................ $ 112,428
===========
Operating profit.......................................... 27,299 1,354 28,653
Gains (losses) from equipment sales or retirements, net... 2,074 (157) 1,917
Foreign currency transaction losses, net.................. (150) - (150)
Equity in earnings (losses) of 50% or less owned
companies.................................................... 975 (309) 666
----------- ----------- -----------
Segment profit.......................................... 30,198 888 31,086
----------- -----------
Interest income......................................... 3,413
Interest expense........................................ (5,356)
Derivative income, net.................................. 62
Gains from sale of marketable securities, net........... 1,272
Corporate expenses...................................... (2,319)
Equity in earnings of 50% or less owned companies ...... (666)
-----------
Consolidated earnings before income taxes............. $ 27,492
===========
7
Offshore
Marine Other Total
----------- ----------- -----------
FOR THE SIX MONTHS ENDED JUNE 30, 2002:
Revenues from external customers.........................$ 186,255 $ 15,058 $ 201,313
Intersegment revenues..................................... 134 - 134
----------- ----------- -----------
Segment operating revenues............................... 186,389 15,058 201,447
----------- -----------
Elimination of intersegment revenues..................... (134)
-----------
Consolidated operating revenues........................ $ 201,313
===========
Operating profit.......................................... 33,408 1,337 34,745
Gains from equipment sales or retirements, net............ 3,236 1 3,237
Foreign currency transaction gains (losses), net.......... 3,262 (11) 3,251
Equity in earnings (losses) of 50% or less owned
companies.................................................... 3,535 (1,143) 2,392
----------- ----------- -----------
Segment profit........................................... 43,441 184 43,625
----------- -----------
Interest income.......................................... 3,969
Interest expense......................................... (7,797)
Derivative income, net................................... 632
Losses from sale of marketable securities, net........... (678)
Corporate expenses....................................... (4,756)
Equity in earnings of 50% or less owned companies........ (2,392)
-----------
Consolidated earnings before income taxes.............. $ 32,603
===========
FOR THE SIX MONTHS ENDED JUNE 30, 2001:
Revenues from external customers.........................$ 187,343 $ 18,285 $ 205,628
Intersegment revenues..................................... 440 - 440
----------- ----------- -----------
Segment operating revenues............................... 187,783 18,285 206,068
----------- -----------
Elimination of intersegment revenues..................... (440)
-----------
Consolidated operating revenues........................ $ 205,628
===========
Operating profit.......................................... 41,954 2,276 44,230
Gains (losses) from equipment sales or retirements, net... 4,002 (155) 3,847
Foreign currency transaction gains (losses), net.......... (659) 1 (658)
Equity in earnings of 50% or less owned companies......... 3,218 473 3,691
Gain from Sale of Interest in a 50% or Less Owned
Company................................................. 100 - 100
----------- ----------- -----------
Segment profit........................................... 48,615 2,595 51,210
----------- -----------
Interest income.......................................... 7,887
Interest expense......................................... (10,995)
Derivative losses, net................................... (35)
Gains from sale of marketable securities, net............ 2,399
Corporate expenses....................................... (4,702)
Equity in earnings of 50% or less owned companies........ (3,691)
-----------
Consolidated earnings before income taxes.............. $ 42,073
===========
10. COMMITMENTS AND CONTINGENCIES --
As of June 30, 2002, the Company was committed to the construction of 10
offshore support vessels for an approximate aggregate cost of $83,400,000 of
which $17,510,000 has been expended. These vessels are expected to enter service
within the next two years. At June 30, 2002, the Company was also committed to
the construction of 112 inland river hopper barges ("barges") at an approximate
aggregate cost of $28,000,000. The Company expects a certain number of the
barges to be purchased by third parties and managed by the Company. The barges
are expected to be delivered during 2002.
11. CHILES MERGER --
On August 7, 2002, the stockholders of Chiles Offshore Inc. ("Chiles"), the
Company's drilling rig affiliate, approved a merger with ENSCO International
Incorporated ("ENSCO") and the merger was completed. Pursuant to the terms of
the merger agreement, Chiles' stockholders will receive $5.25 and 0.6575 shares
of ENSCO's common stock for each share of Chiles' common stock they owned at the
time of the merger. The Company will receive $25,364,855 and 3,176,646 shares of
ENSCO's common stock, valued at $73,444,000 as of August 7, 2002. This will
result in the Company's recognition of an after-tax gain of approximately
$12,500,000, or $0.58 per fully diluted share. The Company will account for its
shares of ENSCO common stock as available-for-sale securities and will record
changes in the market value each period as an adjustment to other comprehensive
income.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements discussed in Item 2 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) and Item 3 (Quantitative and
Qualitative Disclosures About Market Risk) and elsewhere in this Form 10-Q
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 as are described at the end of Item 7 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) of the Company's Form
10-K for the fiscal year ended December 31, 2001. 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.
OVERVIEW
Through its subsidiaries and joint venture arrangements, the Company furnishes
offshore support services to the oil and gas exploration and production
industry, contractual oil spill response and professional services to those who
store, transport, produce or handle petroleum and certain non-petroleum oils and
inland river dry cargo transportation services. 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 related professional
services and inland river barge services are primarily provided in the U.S.
OFFSHORE MARINE SERVICES
The Company's offshore marine service business provides marine transportation,
logistics and related services primarily dedicated to supporting offshore oil
and gas exploration and production.
The offshore marine service business' 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.
Rates per day worked and utilization of the Company's fleet are a function of
demand for and availability of marine vessels, which are 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.
9
The table below sets forth rates per day worked and utilization data for the
Company during the periods indicated.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------- -------------- ------------- --------------
RATES PER DAY WORKED ($): (1) (2)
Supply and Towing Supply........................... 7,964 7,742 7,975 7,370
Anchor Handling Towing Supply...................... 12,103 13,667 12,624 13,235
Crew............................................... 3,224 3,323 3,259 3,221
Standby Safety..................................... 5,726 5,351 5,568 5,273
Utility and Line Handling.......................... 1,744 1,925 1,748 1,841
Mini-Supply........................................ 2,749 3,178 2,743 3,012
Geophysical, Freight and Other(3).................. - 5,446 - 5,427
Overall Fleet.............................. 5,046 4,987 5,142 4,780
OVERALL UTILIZATION (%): (1)
Supply and Towing Supply........................... 89.0 90.4 88.9 88.2
Anchor Handling Towing Supply...................... 79.1 83.3 83.1 81.5
Crew............................................... 81.8 95.3 83.6 96.2
Standby Safety..................................... 84.8 86.9 86.3 86.3
Utility and Line Handling.......................... 62.3 60.3 60.9 55.2
Mini-Supply........................................ 85.9 94.5 85.7 93.8
Geophysical, Freight and Other(3).................. - 50.0 - 57.0
Overall Fleet.............................. 79.1 83.2 79.9 81.4
- ------------------
(1) Rates per day worked is the ratio of total charter revenue to the total
number of vessel days worked. Rates per day worked and overall utilization
figures exclude owned vessels that are bareboat chartered-out, vessels
owned by corporations that participate in pooling arrangements with the
Company, joint venture vessels, and managed/operated vessels and include
vessels bareboat and time chartered-in by the Company.
(2) Revenues for certain of the Company's vessels 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.
(3) In 2002, the Company directly owned two of the vessels in this class,
neither of which operated in these periods.
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
June 30, 2002, the Company had 15 vessels bareboat chartered-out, including 6
vessels operated by the Company's joint ventures. From time to time, 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 offshore marine fleet structure at the
dates indicated:
At June 30,
--------------------------------
Fleet Structure 2002 2001
- ----------------------------------------------------- --------------- ----------------
Domestic:
Owned........................................... 129 174
Bareboat and Time Chartered-In.................. 26 18
Foreign:
Owned........................................... 90 84
Bareboat and Time Chartered-In.................. 3 -
Managed......................................... 7 7
Joint Ventures and Pools........................ 51 49
--------------- ----------------
Total Fleet................................ 306 332
=============== ================
At the beginning of 2002, 15 U.S. utility vessels were permanently removed from
service and 13 of these vessels are still held for sale at June 30, 2002. These
vessels range in length from 96 feet to 120 feet, are at least 20 years old and
have not operated for over one year. All held for sale vessels have been
excluded from utilization statistics and fleet counts since exiting service. The
carrying value of held for sale vessels, totaling $1.1 million, is expected to
be recovered upon disposition.
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.
10
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 quarter or six-month period or put
through survey a disproportionate number of older vessels, which typically have
higher drydocking costs, comparative results may be affected. For the six-month
periods ended June 30, 2002 and 2001, drydocking costs totaled $7.7 million and
$6.6 million, respectively. During those same periods, the Company completed the
drydocking of 41 and 58 marine vessels, respectively. At June 30, 2002, the
Company had removed 25 U.S. based vessels from service requiring drydocking
prior to re-entering operations.
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. Overall,
approximately 52% of the Company's offshore marine operating revenues was
derived from foreign operations (in U.S. dollars or foreign currencies) in the
six-month period ended June 30, 2002.
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. 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.
Operating results are also affected by the Company's participation in various
joint ventures. The Company has formed or acquired interests in offshore marine
joint ventures with various third parties to enter new markets, enhance its
marketing capabilities and facilitate operations in certain foreign markets.
These arrangements allow the Company to expand its fleet while diversifying the
risks and reducing the capital outlays associated with independent fleet
expansion. The Company also participates in a majority owned logistics joint
venture whose mission has been to provide shorebase, marine transport and other
supply chain management services in support of offshore exploration and
production operations principally in the U.S. Gulf of Mexico.
Exploration and drilling activities, which affect the demand for vessels, are
influenced by a number of factors, including the current and anticipated future
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.
OTHER BUSINESSES AND INVESTMENTS
ENVIRONMENTAL SERVICES
The Company's environmental services 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 charges a retainer fee to its customers for ensuring by contract the
availability (at predetermined rates) of its response services and equipment.
Spill response revenue is dependent on the magnitude of any one spill response
and the number of spill responses within a given fiscal period. The Company also
charges consulting fees to customers for developing customized training
programs, planning of and participation in customer oil spill response drill
programs and response exercises as well as other special projects.
11
Operating costs for environmental services primarily include 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.
INLAND RIVER BUSINESS
The Company's inland river business was established in 2000. The Company's
inland river hopper barges service the agriculture and industrial sectors within
the United States that are located along the Mississippi River and its
tributaries. Operating revenues are primarily earned from voyage affreightments
under which customers are charged an established rate per ton to transport cargo
at a specific time from a point of origin to a destination. Revenues are also
earned while cargo is stored aboard barges, when barges are chartered-out to
third parties and by managing barges owned by others. Expenses primarily include
towing, switching, fleeting and cleaning costs and non-voyage related operating
expenses including such costs as repairs, insurance and depreciation.
Barges owned by the Company 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.
At June 30, 2002, the Company controlled 408 barges, including 163 directly
owned, 11 owned by a 50% owned partnership and 234 managed for third parties.
The Company has contracts or commitments to build 112 additional barges in the
second half of 2002.
INVESTMENT IN DRILLING SERVICES BUSINESS
As of June 30, 2002, the Company owned a 23.8% equity interest in Chiles
Offshore Inc. ("Chiles"), a company that owns and operates four ultra-premium
jackup drilling rigs. Chiles was formed in 1997 for the purpose of constructing,
owning and operating ultra-premium jackup drilling rigs.
Chiles earns its revenues primarily from drilling wells for oil and gas
operators pursuant to drilling contracts. In the three and six-month periods
ended June 30, 2002 and 2001, the Chiles rigs were utilized 100% of the time and
their rate per day worked was $76,106 and $73,226 and $71,895 and $70,419,
respectively. Rig operating expenses primarily include crew, insurance and
repair and maintenance costs. Administrative expenses primarily include
management, administration, marketing, finance and legal expenses.
On August 7, 2002, the stockholders of Chiles approved a merger with ENSCO
International Incorporated ("ENSCO") and the merger was completed. Pursuant to
the terms of the merger agreement, Chiles' stockholders will receive $5.25 and
0.6575 shares of ENSCO's common stock for each share of Chiles' common stock
they owned at the time of the merger. The Company will receive $25.4 million and
3,176,646 shares of ENSCO's common stock, valued at $73.4 million as of August
7, 2002. This will result in the Company's recognition of an after-tax gain of
approximately $12.5 million, or $0.58 per fully diluted share.
OTHER INVESTMENTS
In 1998, the Company acquired an interest in the predecessor of Globe Wireless,
L.L.C. ("Globe Wireless") and now owns approximately 38% of its voting units.
Globe Wireless is a provider of advanced marine telecommunication services using
satellite and high frequency radio technologies. It owns and operates a
worldwide network of high frequency radio stations that offer email, data
transfer and telex services to ships at a much lower cost than competing
satellite services. The Company believes that Globe Wireless offers the only
such service combining radio, satellite and Internet communications to the
maritime community.
In addition, the Company, from time to time, makes investments in other related
businesses.
12
RESULTS OF OPERATIONS
In the following table, the Company segregates the operating revenues and
profits of its offshore marine service business and combines similar results for
its environmental and inland river businesses in an "Other" reporting category
as they do not meet accounting standards for separate disclosure. The "Other"
reporting category additionally includes all non-offshore marine service
business equity in earnings of 50% or less owned companies. Prior to 2002, the
Company presented its environmental service business as a separate reportable
business segment. Effective January 1, 2002, the environmental service business
is no longer reported as a separate segment as it does not meet the criteria for
reporting segregation pursuant to accounting standards.
The Company evaluates business performance based upon operating profit (defined
as Operating Income as reported in the Consolidated Statements of Operations,
excluding corporate-related expenses) plus any gains and losses from the sale of
equipment and interest in 50% or less owned companies, equity in the earnings
and losses of 50% or less owned companies and foreign currency transaction gains
and losses. Accounting policies for measuring segment profits have not changed
from those previously described in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
Offshore Total
Marine Other
---------------- ---------------- ----------------
FOR THE THREE MONTHS ENDED JUNE 30, 2002:
Revenue from External Customers............................. $ 90,681 $ 6,989 $ 97,670
Intersegment Revenues........................................ 67 - 67
---------------- ---------------- ----------------
Segment Operating Revenues............................... 90,748 6,989 97,737
---------------- ----------------
Elimination of Intersegment Revenues..................... (67)
----------------
Consolidated Operating Revenues ...................... $ 97,670
================
Operating Profit............................................ 11,545 512 12,057
Gains from Equipment Sales or Retirements, net.............. 938 - 938
Foreign Currency Transaction Gains, net..................... 6,411 - 6,411
Equity in Earnings (Losses) of 50% or Less Owned Companies.. 2,247 (1,396) 851
---------------- ---------------- ----------------
Segment Profit........................................... 21,141 (884) 20,257
---------------- ----------------
Interest Income.......................................... 2,102
Interest Expense......................................... (3,796)
Derivative Income, net................................... 1,404
Gains from Sale of Marketable Securities, net............ 487
Corporate Expenses....................................... (2,319)
Equity in Earnings of 50% or Less Owned Companies........ (851)
----------------
Consolidated Earnings Before Income Taxes............. $ 17,284
================
FOR THE THREE MONTHS ENDED JUNE 30, 2001:
Revenue from External Customers............................. $ 102,870 $ 9,558 $ 112,428
Intersegment Revenues........................................ 294 - 294
---------------- ---------------- ----------------
Segment Operating Revenues............................... 103,164 9,558 112,722
---------------- ----------------
Elimination of Intersegment Revenues..................... (294)
----------------
Consolidated Operating Revenues ...................... $ 112,428
================
Operating Profit............................................ 27,299 1,354 28,653
Gains (Losses) from Equipment Sales or Retirements, net..... 2,074 (157) 1,917
Foreign Currency Transaction Losses, net.................... (150) - (150)
Equity in Earnings (Losses) of 50% or Less Owned Companies.. 975 (309) 666
---------------- ---------------- ----------------
Segment Profit........................................... 30,198 888 31,086
---------------- ----------------
Interest Income.......................................... 3,413
Interest Expense......................................... (5,356)
Derivative Income, net................................... 62
Gains from Sale of Marketable Securities, net............ 1,272
Corporate Expenses....................................... (2,319)
Equity in Earnings of 50% or Less Owned Companies........ (666)
----------------
Consolidated Earnings Before Income Taxes............. $ 27,492
================
13
Offshore Total
Marine Other
---------------- ---------------- ----------------
FOR THE SIX MONTHS ENDED JUNE 30, 2002:
Revenue from External Customers............................. $ 186,255 $ 15,058 $ 201,313
Intersegment Revenues........................................ 134 - 134
---------------- ---------------- ----------------
Segment Operating Revenues............................... 186,389 15,058 201,447
---------------- ----------------
Elimination of Intersegment Revenues..................... (134)
----------------
Consolidated Operating Revenues ...................... $ 201,313
================
Operating Profit............................................ 33,408 1,337 34,745
Gains from Equipment Sales or Retirements, net.............. 3,236 1 3,237
Foreign Currency Transaction Gains (Losses), net............ 3,262 (11) 3,251
Equity in Earnings (Losses) of 50% or Less Owned Companies.. 3,535 (1,143) 2,392
---------------- ---------------- ----------------
Segment Profit........................................... 43,441 184 43,625
---------------- ----------------
Interest Income.......................................... 3,969
Interest Expense......................................... (7,797)
Derivative Income, net................................... 632
Losses from Sale of Marketable Securities, net........... (678)
Corporate Expenses....................................... (4,756)
Equity in Earnings of 50% or Less Owned Companies........ (2,392)
----------------
Consolidated Earnings Before Income Taxes............. $ 32,603
================
FOR THE SIX MONTHS ENDED JUNE 30, 2001:
Revenue from External Customers............................. $ 187,343 $ 18,285 $ 205,628
Intersegment Revenues........................................ 440 - 440
---------------- ---------------- ----------------
Segment Operating Revenues............................... 187,783 18,285 206,068
---------------- ----------------
Elimination of Intersegment Revenues..................... (440)
----------------
Consolidated Operating Revenues ...................... $ 205,628
================
Operating Profit............................................ 41,954 2,276 44,230
Gains (Losses) from Equipment Sales or Retirements, net..... 4,002 (155) 3,847
Foreign Currency Transaction Gains (Losses), net............ (659) 1 (658)
Equity in Earnings of 50% or Less Owned Companies........... 3,218 473 3,691
Gain from Sale of Interest in a 50% or Less Owned Company... 100 - 100
---------------- ---------------- ----------------
Segment Profit........................................... 48,615 2,595 51,210
---------------- ----------------
Interest Income.......................................... 7,887
Interest Expense......................................... (10,995)
Derivative Losses, net................................... (35)
Gains from Sale of Marketable Securities, net............ 2,399
Corporate Expenses....................................... (4,702)
Equity in Earnings of 50% or Less Owned Companies........ (3,691)
----------------
Consolidated Earnings Before Income Taxes............. $ 42,073
================
OFFSHORE MARINE SERVICES
OPERATING REVENUES. Operating revenues decreased $12.4 million, or 12%, and $1.4
million, or 1%, in the three and six-month periods ended June 30, 2002,
respectively, compared to the three and six-month periods ended June 30, 2001
due primarily to vessel dispositions, lower utilization, higher mobilization
activity and the change in certain vessels' charter arrangements. Operating
revenues additionally declined between comparable three-month periods due to
lower domestic rates per day worked. These declines were offset by an
improvement in operating revenues resulting from vessel acquisitions.
The sale and charter-in termination of 13 supply and towing supply, 7 crew, 6
standby safety, 5 utility and 2 mini-supply vessels resulted in a decline in
operating revenues of approximately $8.0 million and $15.3 million between
comparable three and six-month periods, respectively.
Operating revenues declined approximately $7.7 million and $10.2 million between
comparable three and six-month periods, respectively, due primarily to lower
utilization of the Company's domestic fleet. The decline between comparable
six-month periods was partially offset by an improvement in the utilization of
the Company's vessels working internationally.
Lower domestic fleet utilization resulted primarily from a decline in U.S. Gulf
of Mexico drilling activity that began during the second half of 2001 in
response to falling natural gas prices and a weak economic outlook. The number
of offshore mobile rigs working in the U.S. Gulf of Mexico at June 30, 2002 was
128 as compared with 176 on the same date in the prior year. As a result, at
June 30, 2002, the Company had 32 vessels out of service due to weak market
conditions in addition to 13 vessels held for sale. Although oil and natural gas
prices have recently improved, there has been no particular strengthening in the
demand for our vessels.
14
Operating revenues declined approximately $1.6 million and $2.9 million between
comparable three and six-month periods, respectively, with the removal from
service and relocation of certain offshore support vessels between operating
regions and the change of certain vessels from time charter-out to bareboat
charter-out arrangements.
Operating revenues also declined approximately $3.9 million between comparable
three-month periods due primarily to a decrease in rates per day worked earned
by the Company's domestic fleet. Worldwide fleet rates per day worked increased
between comparable six-month periods and resulted in an approximate $0.7 million
improvement in operating revenues. Rates improved primarily in the Company's
domestic fleet of anchor handling towing supply and its supply and towing supply
vessels working worldwide.
The 2001 Stirling Shipping Holdings Limited ("Stirling") and Gilbert Cheramie
Boats, Inc. fleet acquisitions resulted in an approximate $5.1 million and $17.5
million increase in operating revenues between comparable three and six-month
periods, respectively. Through these transactions, 38 anchor handling towing
supply, supply, mini-supply and utility vessels entered operations for SEACOR.
Additional vessel purchases, the delivery of newly constructed vessels and the
charter-in of vessels also increased revenues by approximately $4.0 million and
$8.5 million between comparable three and six-month periods, respectively. These
additional 16 vessels included crew, mini-supply, towing supply and anchor
handling towing supply. At June 30, 2002, 39 of the overall fleet additions
operated from U.S. ports and the remainder worked internationally.
OPERATING PROFIT. Operating profit decreased $15.8 million, or 58%, and $8.5
million, or 20%, in the three and six-month periods ended June 30, 2002,
respectively, compared to the three and six-month periods ended June 30, 2001
due primarily to those factors affecting operating revenues outlined above.
Operating profit also declined in the comparable three and six-month periods due
to higher operating expenses resulting primarily from (i) an increase in the
third quarter of 2001 in crew wages paid to seamen working domestically in
response to competition for qualified personnel, (ii) the sale and leaseback of
several vessels and (iii) an increase in drydocking costs. Operating profit also
declined in the comparable three-month periods due to higher costs associated
with vessel repairs and maintenance.
GAINS FROM EQUIPMENT SALES OR RETIREMENTS, NET. Net gains from equipment sales
or retirements decreased $1.1 million, or 55%, and $0.8 million, or 19%, in the
three and six-month periods ended June 30, 2002, respectively, compared to the
three and six-month periods ended June 30, 2001. During the six-month period
ended June 30, 2002, a total of four utility, four towing supply, two crew, one
standby safety, one supply and one anchor handling towing supply vessel were
sold. Of these vessels sold, two towing supply and one supply were chartered-in
pursuant to sale-leaseback transactions. The three and six-month periods ended
June 30, 2002 included a charge of $1.3 million resulting from the write-down of
the carrying value of certain offshore marine equipment associated with a
previously cancelled construction contract. During the six-month period ended
June 30, 2001, four crew, four utility, two towing supply and one standby safety
vessel were sold.
FOREIGN CURRENCY TRANSACTION GAINS (LOSSES), NET. The Company recognized foreign
currency transaction gains of $6.4 million and $3.3 million in the three and
six-month periods ended June 30, 2002, respectively, as compared with foreign
currency transaction losses of $0.2 million and $0.7 million in the three and
six-month periods ended June 30, 2001, respectively. In late 2001 and early
2002, SEACOR provided significant advances to certain wholly owned U.K.
subsidiaries, whose functional currency is Pounds Sterling. An increase in the
value of the Pound Sterling relative to the U.S. dollar has resulted in the
Company's recognition of a significant foreign currency transaction gain with
respect to these advances during the three and six-month periods ended June 30,
2002. See "Item 3. Quantitative and Qualitative Disclosures About Market Risks"
for additional discussion.
EQUITY IN EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings increased
$1.3 million, or 130%, and $0.3 million, or 10%, in the three and six-month
periods ended June 30, 2002, respectively, compared to the three and six-month
periods ended June 30, 2001. The increase in earnings resulted primarily from
higher profits earned by the Company's Mexican joint venture. In addition,
results for the six-month period ended June 30, 2001 included $1.3 million
generated from the sale of a vessel, and the six-month period ended June 30,
2002 did not include any vessel sales.
15
OTHER BUSINESSES
OPERATING REVENUES. Operating revenues decreased $2.6 million, or 27%, and $3.2
million, or 18%, in the three and six-month periods ended June 30, 2002 compared
to the three and six-month periods ended June 30, 2001 due primarily to a
reduction in oil spill response and retainer revenues earned by the Company's
environmental service business. The severity of oil spills managed by the
Company declined between three and six-month comparable periods. Retainer
revenues declined due to the loss of certain customers and contract
renegotiations with certain other customers. These declines were partially
offset by higher revenues earned by the Company's inland river business
resulting primarily from an increase in the size of its barge fleet.
OPERATING PROFIT. Operating profit decreased $0.8 million, or 62%, and $0.9
million, or 41%, in the three and six-month periods ended June 30, 2002,
respectively, compared to the three and six-month periods ended June 30, 2001
due primarily to those factors adversely affecting operating revenues outlined
above. These declines were partially offset by lower expenses upon cessation of
goodwill amortization effective January 1, 2002 in accordance with recently
enacted accounting standards.
EQUITY IN EARNINGS (LOSSES) OF 50% OR LESS OWNED COMPANIES. Results decreased
$1.1 million, or 352%, and $1.6 million, or 342%, in the three and six-month
periods ended June 30, 2002, respectively, compared to the three and six-month
periods ended June 30, 2001. The decline in results between comparable three and
six-month periods was due primarily to the Company's recognition of a charge for
investment impairment 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. Earnings also
declined due to reduced profits of Chiles and the non-recurrence of a dry-bulk
carrier ship sale and was partially offset by lower operating losses of Globe
Wireless.
INTEREST INCOME AND INTEREST EXPENSE. Net interest expense decreased $0.2
million, or 13%, and increased $0.7 million, or 23%, in the three and six-month
periods ended June 30, 2002, respectively, compared to the three and six-month
periods ended June 30, 2001. Interest income declined due primarily to lower
invested cash balances that resulted primarily from fleet acquisitions. Lower
interest expense resulted primarily from the redemption of $135.3 million
principal amount of the Company's 5 3/8% Convertible Subordinated Notes Due 2006
(the "5 3/8% Notes") during 2001 and the repayment of certain outstanding
indebtedness related primarily to the acquisition of offshore support vessels.
DERIVATIVE INCOME (LOSSES), NET. Net gains from derivative transactions
increased $1.3 million and $0.7 million in the three and six-month periods ended
June 30, 2002, respectively, compared to the three and six-month periods ended
June 30, 2001 due primarily to the revaluation of interest rate swap agreements
and foreign currency forward exchange contracts. These increases in derivative
gains were partially offset by losses resulting from natural gas and crude oil
swaps and U.S. treasury note and U.S. treasury bond option and futures
contracts. See "Item 3. Quantitative and Qualitative Disclosures About Market
Risks" for additional discussion.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. The Company recognized a
net gain of $0.5 million and a net loss of $0.7 million from the sale of
marketable securities in the three and six-month periods ended June 30, 2002,
respectively. Substantially all of the recognized gains and losses during 2002
resulted from the mark-to-market of short sales of equity securities. During the
three and six-month periods ended June 30, 2001, the Company recognized a net
gain of $1.3 million and $2.4 million, respectively, resulting primarily from
the sale of equity securities.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company's ongoing liquidity requirements arise primarily from its need to
service debt, fund working capital, acquire, construct or improve equipment and
make other investments. Management believes that cash flow from operations will
provide sufficient working capital to fund the Company's operating needs. The
Company may, from time to time, issue shares of its common stock, preferred
stock or debt, or a combination thereof, or sell vessels to finance the
acquisition of equipment and businesses or make improvements to existing
equipment.
16
The Company's cash flow levels and operating revenues are 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 fleet. The Company's
offshore marine business is directly affected by the volatility of oil and gas
prices, the level of offshore production and exploration activity and other
factors beyond the Company's control.
CASH AND MARKETABLE SECURITIES
Since December 31, 2001, the Company's cash and investments in marketable
securities increased by $2.3 million. At June 30, 2002, cash and marketable
securities totaled $260.3 million, including $173.8 million of unrestricted cash
and cash equivalents, $23.3 million of marketable securities and $63.2 million
of construction reserve funds. Construction reserve funds at June 30, 2002 are
intended for use in defraying costs to construct U.S.-flag offshore marine
vessels for the Company.
CASH GENERATION AND DEPLOYMENT
OPERATING ACTIVITIES. Cash flow provided from operating activities during the
six-month period ended June 30, 2002 totaled $37.9 million and increased 18.2%
from the comparable period in 2001 due primarily to the favorable effect of
changes in working capital. This increase was partially offset by the adverse
effect of lower utilization of the Company's offshore support vessels.
INVESTING AND FINANCING ACTIVITIES. During the six-month period ended June 30,
2002, the Company generated $73.2 million from investing and financing
activities. Thirteen offshore support vessels were sold for $53.8 million.
Available-for-sale securities were sold for $11.0 million. Additional cash was
generated primarily from the receipt of principal note payments and dividends
from 50% or less owned companies.
During the six-month period ended June 30, 2002, the Company used $115.6 million
in its investing and financing activities. Capital expenditures for property and
equipment, primarily related to the acquisition of offshore support vessels and
barges, totaled $60.0 million. Four crew and two anchor handling towing supply
vessels and sixty-two barges were constructed for the Company during the first
half of the year. The Company repaid $33.7 million of its outstanding
indebtedness. Marketable securities were acquired for $11.6 million.
Construction reserve fund balances rose by $7.9 million as deposits into joint
depository construction reserve fund accounts exceeded reimbursements to the
Company.
CAPITAL EXPENDITURES
As of June 30, 2002, the Company was committed to the construction of 6 crew, 3
supply vessel and 1 towing supply vessel for an approximate aggregate cost of
$83.4 million of which $17.5 million has been expended. The vessels are expected
to enter service within the next two years. At June 30, 2002, the Company was
also committed to the construction of 112 barges at an approximate aggregate
cost of $28.0 million. The Company expects a certain number of the barges to be
purchased by third parties and managed by the Company. The barges are expected
to be delivered at various dates during 2002.
CREDIT FACILITY AND NOTES
REVOLVING CREDIT FACILITY. As of August 7, 2002, the Company had $169.8 million
available for borrowing under its $200.0 million revolving credit facility
maturing in February 2007. Availability under the facility increased by $21.8
million following year-end upon cancellation of a letter of credit that served
as security for note obligations the Company issued in connection with the
acquisition of Stirling in 2001. The Company presently has an outstanding letter
of credit, in the amount of $0.2 million.
PROMISSORY NOTES DUE PRIOR STIRLING SHAREHOLDERS. During the second quarter of
2002, the Company repaid (pound)14.7 million, or $21.4 million, in one year loan
notes, plus accrued interest. The notes were issued in connection with the
acquisition of Stirling in 2001.
5 3/8% NOTES. On July 31, 2002, SEACOR redeemed $10.0 million of the $46.3
million aggregate principal amount outstanding of its 5 3/8% Notes. The
redemption price was $1,023.90 per $1,000 principal amount of the notes.
17
CHILES MERGER
On August 7, 2002, the stockholders of Chiles approved a merger with ENSCO and
the merger was completed. Pursuant to the terms of the merger agreement, Chiles'
stockholders will receive $5.25 and 0.6575 shares of ENSCO's common stock for
each share of Chiles' common stock they owned at the time of the merger. The
Company will receive $25.4 million and 3,176,646 shares of ENSCO's common stock,
valued at $73.4 million as of August 7, 2002.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Below is an aggregation of the Company's contractual obligations and commercial
commitments as of June 30, 2002, 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(1).................. $ 259,203 $ 255 $ 34,925 $ 76,359 $ 147,664
Operating Leases................... 82,356 22,757 42,151 7,280 10,168
Construction Commitments........... 93,881 89,444 4,437 - -
---------- ---------- ----------- ---------- ----------
Total Contractual Cash
Obligations........................ $ 435,440 $ 112,456 $ 81,513 $ 83,639 $ 157,832
========== ========== =========== ========== ==========
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)..... $ 1,974 $ 1,974 $ - $ - $ -
Pelican Joint Venture Guarantee(3). 1,500 - - 1,500 -
Letter of Credit .................. 175 175 - - -
---------- ---------- ----------- ---------- ----------
Total Commercial Commitments.... $ 3,649 $ 2,149 $ - $ 1,500 $ -
========== ========== =========== ========== ==========
- --------------------
(1) In July 2002, SEACOR redeemed $10.0 million of the $46.3 million aggregate
principal amount outstanding of its 5 3/8% Notes.
(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.
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 the impairment test as of January 1,
2002 and have determined there is no goodwill impairment. The Company ceased
amortization of its remaining goodwill balance effective January 1, 2002. For
the three and six-month periods ended June 30, 2001, goodwill amortization
totaled $0.9 million and $1.4 million, respectively, and adjusted for goodwill
amortization, net income would have been $18.9 million, or $0.91 per fully
diluted share, and $31.3 million, or $1.55 per fully diluted share,
respectively.
Effective January 1, 2002, the Company adopted 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 adoption
of this statement has not had a material impact on the Company's financial
statements.
18
In July 2001, the Financial Accounting Standards Board 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 May 2002, the FASB also issued SFAS No. 145 - "Recission of FASB Statements
Nos. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical
Corrections" which is effective for fiscal years beginning after May 15, 2002.
This statement, among other matters, provides guidance with respect to the
accounting for gains or losses on capital leases which were modified to become
operating leases. The statement also eliminates the requirement that gains or
losses on the early extinguishment of debt be classified as extraordinary items
and provides guidance when gains or losses on the early retirement of debt
should or should not be reflected as an extraordinary item. The Company does not
expect this statement to have a material impact on its financials statements
when it becomes effective.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports located
in the United Kingdom where its functional currency is Pounds Sterling. 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 may
enter into forward exchange contracts. The forward exchange contracts would
enable the Company to sell pounds sterling in the future at fixed exchange rates
to offset the consequences of changes in foreign exchange on the amount of U.S.
dollar cash flows to be derived from the net assets. The Company considers these
forward exchange contracts as economic hedges of a net investment as the
translation adjustments resulting from the forward exchange contracts move in
the opposite direction from the translation adjustments resulting from the
restatement of its United Kingdom subsidiaries' net assets. At June 30, 2002,
there were no outstanding forward exchange contracts for which hedge accounting
criteria were met.
SEACOR has loaned funds to certain of its wholly owned subsidiaries that are
Pound Sterling functional currency investees. At June 30, 2002, the outstanding
balance of these intercompany loans totaled $98.4 million, or (pound)64.2
million. Repayment of these advances is 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 these
intercompany advances 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 a $1.0 million foreign currency
transaction loss with respect to these advances.
The Company from time to time enters into forward exchange contracts or futures
contracts that are considered speculative with respect to Pounds Sterling, Euros
and Norwegian Kroners. 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. The Norwegian Kroner
contracts enable 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 if it decides to conduct business in Norway. At
June 30, 2002, there were no outstanding forward exchange contracts and the fair
value of the futures contracts was immaterial.
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, U.S. treasury bonds
options and futures contracts and rate-lock agreements on U.S. treasury notes
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 June 30, 2002,
the Company's unrealized gain with respect to its positions in commodity
contracts totaled $0.1 million and was reported in the Condensed Consolidated
Balance Sheets as "Trade and other receivables." Also at June 30, 2002, the
Company's unrealized loss with respect to its positions in U.S. treasury
obligations totaled $0.5 million and was reported in the Condensed Consolidated
Balance Sheets as "Other current liabilities."
19
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 June 30, 2002, $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 June 30,
2002. 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 and second quarter of 2002 with a major
financial institution with respect to notional amounts equal to a portion of its
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 June 30, 2002, $41.0 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 $41.7
million. At June 30, 2002, the unrealized gain which resulted from the fair
value of the notional amounts exceeding the agreed upon price set forth in the
swap agreements totaled $0.8 million. The swap agreements terminate during the
fourth quarter of 2002 and the second quarter of 2003 unless extended by mutual
consent.
20
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of SEACOR SMIT Inc. was held on May 15, 2002.
At that meeting the following directors were elected to terms to expire at the
annual meeting in 2003 or until their successors are duly elected and qualified:
Charles Fabrikant, Oivind Lorentzen III, Michael E. Gellert, Stephen Stamas,
Richard M. Fairbanks III, Pierre de Demandolx, James A. F. Cowderoy, Andrew R.
Morse and John C. Hadjipateras.
The following table sets forth the number of votes cast for, against or
withheld, as well as the number of abstentions and broker non-votes, with
respect to each nominee for director at the annual meeting of stockholders held
on May 15, 2002.
Broker
Description of Matter For Against Withheld Abstentions Non-Votes
--------------------- --- ------- -------- ----------- ---------
Charles Fabrikant 16,336,333 N/A 1,447,931 N/A N/A
James A. F. Cowderoy 17,639,171 N/A 145,093 N/A N/A
Michael E. Gellert 17,671,187 N/A 113,077 N/A N/A
Stephen Stamas 17,671,241 N/A 113,023 N/A N/A
Richard M. Fairbanks III 17,671,137 N/A 113,127 N/A N/A
Pierre de Demandolx 17,676,437 N/A 107,827 N/A N/A
Oivind Lorentzen III 17,676,287 N/A 107,977 N/A N/A
Andrew R. Morse 17,676,841 N/A 107,423 N/A N/A
John C. Hadjipateras 17,676,737 N/A 107,527 N/A N/A
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits:
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
B. Reports on Form 8-K:
(i) Current Report on Form 8-K dated May 14, 2002,
reporting, under Item 5, the execution by Chiles
Offshore Inc. of a Merger Agreement with ENSCO
International Incorporated, and the execution of a
Voting Agreement by the Company in connection with such
transaction.
(ii) Current Report on Form 8-K dated June 25, 2002,
reporting, under Item 4, the Company's engagement of
Ernst & Young LLP as its new independent auditor for
2002.
(iii) Current Report on Form 8-K dated July 1, 2002,
reporting, under Item 5, that the Company had called
for redemption $10,000,000 of the $46,319,000 in
aggregate principal amount outstanding of its 5 3/8%
Convertible Subordinated Notes due 2006.
21
SIGNATURES
Pursuant to the requirements 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)
DATE: AUGUST 14, 2002 By: /s/ Charles Fabrikant
--------------------------------------
Charles Fabrikant, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
DATE: AUGUST 14, 2002 By: /s/ Randall Blank
--------------------------------------
Randall Blank, Executive Vice President,
Chief Financial Officer and Secretary
(Principal Financial Officer)
22
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer