UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2004 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 HOLDINGS INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3542736
- ------------------------------------- --------------------------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
11200 Richmond, Suite 400, Houston, Texas 77082
- ---------------------------------------------- --------------------------
(Address of Principal Executive Offices) (Zip Code)
(281) 899-4800
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The total number of shares of common stock, par value $.01 per share,
outstanding as of May 3, 2004 was 18,532,868. The Registrant has no other class
of common stock outstanding.
SEACOR HOLDINGS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of
March 31, 2004 and December 31, 2003 (unaudited)....................................1
Condensed Consolidated Statements of Operations for each of the
Three Months Ended March 31, 2004 and 2003 (unaudited)..............................2
Condensed Consolidated Statements of Cash Flows for each of the
Three Months Ended March 31, 2004 and 2003 (unaudited)..............................3
Notes to the Condensed Consolidated Financial Statements (unaudited).....................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................................7
Item 3. Quantitative and Qualitative Disclosures About Market Risk..............................12
Item 4. Controls and Procedures.................................................................12
Part II. Other Information
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers..................13
Item 6. Exhibits and Reports on Form 8-K........................................................13
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEACOR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
March 31, December 31,
2004 2003
----------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents....................................................... $ 237,359 $ 263,135
Available-for-sale securities................................................... 58,267 48,856
Trade and other receivables, net of allowance for
doubtful accounts of $3,039 and $2,800, respectively......................... 99,156 108,676
Prepaid expenses and other current assets....................................... 24,200 23,551
----------------- -----------------
Total current assets......................................................... 418,982 444,218
----------------- -----------------
Investments, at Equity, and Receivables from
50% or Less Owned Companies.................................................... 59,918 59,848
Property and Equipment............................................................. 1,037,134 1,021,703
Less accumulated depreciation................................................... (294,571) (283,487)
----------------- -----------------
Net property and equipment................................................... 742,563 738,216
----------------- -----------------
Construction Reserve Funds......................................................... 145,876 126,140
Other Assets....................................................................... 34,087 34,189
----------------- -----------------
$ 1,401,426 $ 1,402,611
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............................................... $ 71 $ 93
Accounts payable and accrued expenses........................................... 25,137 30,333
Other current liabilities....................................................... 58,768 47,089
----------------- -----------------
Total current liabilities.................................................... 83,976 77,515
----------------- -----------------
Long-Term Debt..................................................................... 332,225 332,179
Deferred Income Taxes.............................................................. 189,340 190,704
Deferred Income and Other Liabilities.............................................. 27,492 29,858
Minority Interest in Subsidiaries.................................................. 1,864 1,909
Stockholders' Equity:
Common stock, $.01 par value, 24,506,240 and 24,466,010 shares
issued at March 31, 2004 and December 31, 2003............................... 245 245
Additional paid-in capital...................................................... 410,537 408,828
Retained earnings............................................................... 528,420 531,384
Treasury stock, 5,973,672 and 5,884,971 shares at
March 31, 2004 and December 31, 2003, at cost................................ (187,267) (183,531)
Unamortized restricted stock compensation....................................... (3,978) (2,998)
Accumulated other comprehensive income -
Cumulative translation adjustments.......................................... 14,911 12,994
Unrealized gain on available-for-sale securities............................ 3,661 3,524
----------------- -----------------
Total stockholders' equity................................................... 766,529 770,446
----------------- -----------------
$ 1,401,426 $ 1,402,611
================= =================
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
1
SEACOR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
Three Months Ended
March 31,
--------------------------------------
2004 2003
----------------- ----------------
Operating Revenues............................................................ $ 95,974 $ 96,860
----------------- ----------------
Costs and Expenses:
Operating expenses......................................................... 75,030 67,100
Administrative and general................................................. 15,076 14,079
Depreciation and amortization.............................................. 13,961 14,636
----------------- ----------------
104,067 95,815
----------------- ----------------
Operating Income (Loss)....................................................... (8,093) 1,045
----------------- ----------------
Other Income (Expense):
Interest income............................................................ 1,379 2,556
Interest expense........................................................... (5,378) (5,506)
Debt extinguishments....................................................... - (1,125)
Income from equipment sales or retirements, net............................ 3,638 5,147
Derivative income, net..................................................... 79 1,749
Foreign currency transaction gains, net.................................... 466 535
Marketable securities sale gains, net...................................... 2,749 2,191
Other, net................................................................. 119 3
----------------- ----------------
3,052 5,550
----------------- ----------------
Income (Loss) Before Income Tax Expense (Benefit), Minority
Interest in (Income) Loss of Subsidiaries and Equity in
Earnings of 50% or Less Owned Companies.................................... (5,041) 6,595
Income Tax Expense (Benefit).................................................. (1,502) 2,399
----------------- ----------------
Income (Loss) Before Minority Interest in (Income) Loss of
Subsidiaries and Equity in Earnings of 50% or Less
Owned Companies........................................................... (3,539) 4,196
Minority Interest in (Income) Loss of Subsidiaries............................ 5 (98)
Equity in Earnings of 50% or Less Owned Companies............................. 570 246
----------------- ----------------
Net Income (Loss)............................................................. $ (2,964) $ 4,344
================= ================
Basic Earnings Per Common Share............................................... $ (0.16) $ 0.22
================= ================
Diluted Earnings Per Common Share............................................. $ (0.16) $ 0.22
================= ================
Weighted Average Common Shares:
Basic..................................................................... 18,467,580 19,775,194
Diluted................................................................... 18,467,580 20,362,120
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
2
SEACOR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
Three Months Ended
March 31,
----------------------------------
2004 2003
--------------- ---------------
Net Cash Provided by Operating Activities.............................................. $ 6,370 $ 8,936
--------------- ---------------
Cash Flows from Investing Activities:
Purchase of property and equipment.................................................. (18,818) (23,431)
Proceeds from equipment sales....................................................... 7,037 69,794
Purchase of available-for-sale securities........................................... (21,645) (14,382)
Proceeds from sale of available-for-sale securities................................. 22,717 19,421
Investments in and advances to 50% or less owned companies.......................... (12) (6,000)
Principal payments on notes due from 50% or less owned companies.................... 523 627
Dividends received from 50% or less owned companies................................. 123 2,197
Net increase in construction reserve funds.......................................... (19,736) (2,932)
Cash settlements of derivative transactions......................................... (71) (59)
Other, net.......................................................................... - 121
--------------- ---------------
Net cash provided by (used in) investing activities.............................. (29,882) 45,356
--------------- ---------------
Cash Flows from Financing Activities:
Payments of long-term debt.......................................................... (32) (59,451)
Proceeds from share award plans..................................................... 433 367
Common stock acquired for treasury.................................................. (4,085) (14,310)
Dividends paid to minority interest holders......................................... (41) -
Premium paid with 5-3/8% note extinguishment........................................ - (632)
--------------- ---------------
Net cash used in financing activities............................................ (3,725) (74,026)
--------------- ---------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents........................... 1,461 (688)
--------------- ---------------
Net Decrease in Cash and Cash Equivalents.............................................. (25,776) (20,422)
Cash and Cash Equivalents, Beginning of Period......................................... 263,135 342,046
--------------- ---------------
Cash and Cash Equivalents, End of Period............................................... $ 237,359 $ 321,624
=============== ===============
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
3
SEACOR HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial information for the three months ended
March 31, 2004 and 2003 has been prepared by the Company and was not audited by
its independent public accountants. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) have been made to
present fairly the financial position, results of operations and cash flows of
the Company as of and for the three months ended March 31, 2004 and 2003.
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, 2003.
Unless the context otherwise indicates, any references in this Quarterly Report
on Form 10-Q to the "Company" refer to SEACOR Holdings Inc. and its consolidated
subsidiaries, and any references in this Quarterly Report on Form 10-Q to
"SEACOR" refer to SEACOR Holdings Inc.
Certain reclassifications of prior period information have been made to conform
to the current period presentation.
2. STOCK AND DEBT REPURCHASE PLAN
For the three months ended March 31, 2004, the Company acquired a total of
99,057 shares of its common stock for treasury at an aggregate cost of $4.1
million pursuant to its stock and debt repurchase plan and, as of March 31,
2004, $54.1 million of authority remains available to repurchase additional
shares of its common stock, its 7.2% Senior Notes Due 2009 ("7.2% Notes") and
its 5-7/8% Senior Notes due 2012 ("5-7/8% Notes"). Securities acquired pursuant
to the Company's repurchase plan may be conducted from time to time through open
market purchases, privately negotiated transactions or otherwise, depending on
market conditions.
3. COMMITMENTS AND CONTINGENCIES
The Company's remaining capital commitments as of March 31, 2004 for 7 new and 1
used vessel, 308 new dry cargo hopper barges, 24 new chemical tank barges and 3
new helicopters totaled $128.0 million, with deliveries expected throughout
2004. The Company also holds options to purchase 150 new dry cargo hopper barges
for delivery in 2005.
In connection with an examination of the Company's income tax return for fiscal
year 2001, the Internal Revenue Service (IRS) has indicated that it may assert a
deficiency in the amount of taxes paid based on the manner in which vessel
assets were classified for the purpose of depreciation. If the IRS were able to
sustain its position, the Company would be required to pay currently certain
amounts, which have not yet been determined, that are currently reported as
long-term deferred tax obligations. Other than a potential charge for interest
related to any such deficiencies, the final resolution of this matter should not
have an effect on the Company's results of operations. The Company intends to
vigorously defend its position and to contest any deficiency that may be
asserted.
4. COMPREHENSIVE INCOME
For the three months ended March 31, 2004 and 2003, the Company had total
comprehensive losses of $0.9 million and $1.7 million, respectively. Other
comprehensive losses consisted of gains and losses from foreign currency
translation adjustments and unrealized holding gains and losses on
available-for-sale securities.
4
5. EARNINGS PER SHARE
Basic earnings per common share were computed based on the weighted average
number of common shares issued and outstanding during the relevant periods.
Diluted earnings per common share were computed based on the weighted average
number of common shares issued and outstanding plus all potentially dilutive
common shares that would have been outstanding in the relevant periods assuming
the vesting of restricted stock grants and the issuance of common shares for
stock options and convertible subordinated notes through the application of the
treasury stock and if-converted methods. Diluted earnings per common share
exclude certain options and share awards, totaling 327,454 and 284,285 in the
three months ended March 31, 2004 and 2003, respectively, as the effect of their
inclusion in the computation would have been antidilutive.
Net income Average O/S Per
(loss) Shares Share
-------------- ---------------- -------
FOR THE THREE MONTHS ENDED MARCH 31, 2004:
Basic Earnings Per Common Share..........................$ (2,964,000) 18,467,580 $ (0.16)
=======
Effect of Dilutive Securities -
Options and restricted stock............................ - -
-------------- ----------------
Diluted Earnings Per Common Share........................$ (2,964,000) 18,467,580 $ (0.16)
============== ================ =======
FOR THE THREE MONTHS ENDED MARCH 31, 2003:
Basic Earnings Per Common Share..........................$ 4,344,000 19,775,194 $ 0.22
=======
Effect of Dilutive Securities -
Options and restricted stock............................ - 167,739
Convertible securities.................................. 167,000 419,187
-------------- ----------------
Diluted Earnings Per Common Share........................$ 4,511,000 20,362,120 $ 0.22
============== ================ =======
6. STOCK COMPENSATION
Under Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
companies could either adopt a "fair value method" of accounting for its stock
based compensation plans or continue to use the "intrinsic value method" as
prescribed by APB Opinion No. 25. The Company has elected to continue accounting
for its stock compensation plans using the intrinsic value method. Had
compensation costs for the plans been determined using a fair value method
consistent with SFAS 123, the Company's net income (loss) and earnings per share
would have been reduced to the following pro forma amounts for the three months
ended March 31:
(in thousands, except share and option data) 2004 2003
- ----------------------------------------------------------- -------------- -------------
Net income (loss), as reported............................ $ (2,964) $ 4,344
Add: stock based compensation using intrinsic value
method................................................ 416 487
Less: stock based compensation using fair value method.... (643) (752)
------------- -------------
Net income (loss), pro forma.............................. $ (3,191) $ 4,079
============= =============
Basic earnings per common share:
As reported............................................. $ (0.16) $ 0.22
Pro forma............................................... (0.17) 0.21
Diluted earnings per common share:
As reported............................................. $ (0.16) $ 0.22
Pro forma............................................... (0.17) 0.21
The effects of applying a fair value method consistent with SFAS 123 in this pro
forma disclosure are not indicative of future events and the Company anticipates
that it will award additional stock based compensation in future periods.
5
7. SEGMENT INFORMATION
Accounting standards require public business enterprises to report information
about each of their operating business segments that exceed certain quantitative
thresholds or meet certain other reporting requirements. Operating business
segments have been defined as a component of an enterprise about which separate
financial information is available and is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. In accordance with Statement of Financial Accounting Standards No
131, the Company's inland river services segment has been separately reported in
the segment information presented below due to its increased significance
resulting from capital expansion. Certain reclassifications of prior period
information have been made to conform to the current period's reportable segment
presentation. The Company's basis of measurement of segment profit or loss has
not changed from those previously described in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2003.
Offshore Inland
Marine Environmental River
Services Services Services Other Total
---------------------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2004 (IN THOUSANDS)
- ------------------------------------------------------------
OPERATING REVENUES:
External customers........................................$ 65,096 $ 16,392 $ 8,576 $ 5,910 $ 95,974
Intersegment............................................... 1,196 - - 795 1,991
----------- -------------- ------------ ------------- -----------
$ 66,292 $ 16,392 $ 8,576 $ 6,705 97,965
=========== ============== ============ =============
Eliminations............................................... (1,991)
-----------
$ 95,974
===========
REPORTABLE SEGMENT PROFIT (LOSS):
Operating profit (loss)...................................$ (4,378) $ 957 $ 943 $ (2,610) $ (5,088)
Income (loss) from equipment sales or retirements, net..... 3,420 (3) 73 148 3,638
Foreign currency transaction gains (losses), net........... 551 (2) - - 549
Other, net................................................. 5 - - - 5
Equity in earnings (losses) of 50% or less owned
companies................................................ 1,336 - - (766) 570
----------- -------------- ------------ ------------- -----------
$ 934 $ 952 $ 1,016 $ (3,228) (326)
=========== ============== ============ =============
RECONCILIATION TO LOSS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY EARNINGS:
Interest income........................................... 1,379
Interest expense.......................................... (5,378)
Derivative income, net.................................... 79
Marketable securities sale gains, net..................... 2,749
Corporate expenses........................................ (3,005)
Corporate foreign currency transaction losses, net........ (83)
Other, net................................................ 114
Equity in earnings of 50% or less owned companies......... (570)
-----------
$ (5,041)
===========
FOR THE THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS)
- ------------------------------------------------------------
OPERATING REVENUES:
External customers........................................$ 80,696 $ 6,137 $ 4,840 $ 5,187 $ 96,860
Intersegment............................................... 411 - - - 411
----------- -------------- ------------ ------------- -----------
$ 81,107 $ 6,137 $ 4,840 $ 5,187 97,271
=========== ============== ============ =============
Eliminations............................................... (411)
-----------
$ 96,860
===========
REPORTABLE SEGMENT PROFIT (LOSS):
Operating profit (loss)...................................$ 3,312 $ (399) $ 884 $ (146) $ 3,651
Income (loss) from equipment sales or retirements, net..... 5,307 - - (160) 5,147
Foreign currency transaction gains, net.................... 535 - - - 535
Other, net................................................. 3 - - - 3
Equity in earnings (losses) of 50% or less owned
companies................................................. 549 (2) - (301) 246
----------- -------------- ------------ ------------- -----------
$ 9,706 $ (401) $ 884 $ (607) 9,582
=========== ============== ============ =============
RECONCILIATION TO INCOME BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY EARNINGS:
Interest income........................................... 2,556
Interest expense.......................................... (5,506)
Debt extinguishments...................................... (1,125)
Derivative income, net.................................... 1,749
Marketable securities sale gains, net..................... 2,191
Corporate expenses........................................ (2,606)
Equity in earnings of 50% or less owned companies......... (246)
-----------
$ 6,595
===========
6
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), 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: the
cyclical nature of the oil and gas industry, adequacy of insurance coverage,
currency exchange fluctuations, changes in foreign political, military and
economic conditions, the ongoing need to replace aging vessels, dependence of
Offshore Marine Services on several customers, 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,
vessel-related risks, effects of adverse weather conditions and seasonality on
Aviation Services, helicopter related risks, effects of adverse weather and
river conditions and seasonality on inland river operations, the level of grain
export volume, the effect of fuel prices on barge towing costs, variability in
freight rates for inland river barges, changes in Environmental Services "Oil
Spill Removal Organization" classification with the Coast Guard, liability in
connection with providing spill response services, restrictions imposed by the
Shipping Acts on the amount of foreign ownership of the Company's Common Stock,
the effect of international economic and political factors in inland river
operations and various other matters, many of which are beyond the Company's
control and other factors. The words "estimate," "project," "intend," "believe,"
"plan" and similar expressions are intended to identify forward-looking
statements. Forward-looking statements speak only as of the date of the document
in which they are made. We disclaim any obligation or undertaking to provide any
updates or revisions to any forward-looking statement to reflect any change in
our expectations or any change in events, conditions or circumstances on which
the forward-looking statement is based.
CONSOLIDATED RESULTS OF OPERATIONS
For The Three Months Ended March 31,
-------------------------------------------
2004 2003
-------------------- ----------------------
(in thousands) Amount % Amount %
- -------------------------------------------------------------------- ------------ ------- -------------- -------
Operating revenues.................................................$ 95,974 100 $ 96,860 100
------------ ------- -------------- -------
Cost and expenses:
Operating expenses............................................... 75,030 78 67,100 69
Administrative and general....................................... 15,076 16 14,079 15
Depreciation and amortization.................................... 13,961 15 14,636 15
------------ ------- -------------- -------
104,067 108 95,815 99
------------ ------- -------------- -------
Operating income (loss)............................................. (8,093) (8) 1,045 1
Other income, net................................................... 3,052 3 5,550 6
------------ ------- -------------- -------
Income (loss) before taxes, minority interest and equity earnings... (5,041) (5) 6,595 7
Income tax expense (benefit)........................................ (1,502) 2 2,399 2
------------ ------- -------------- -------
Income (loss) before minority interest and equity earnings.......... (3,539) (3) 4,196 4
Minority interest................................................... 5 - (98) -
Equity earnings..................................................... 570 - 246 -
------------ ------- -------------- -------
Net income (loss)..................................................$ (2,964) (3) $ 4,344 4
============ ======= ============== =======
OVERVIEW
The table above provides an analysis of the Company's consolidated statements of
income for each quarter indicated. See "Item 1. Financial Statements - Note 7.
Segment Information" included in Part I for additional financial information
about the Company's business segments. Additional discussions of results of
operations by business segment are presented below. The Company's operations are
divided among the following four business segments: "Offshore Marine Services;"
"Environmental Services;" "Inland River Services;" and "Other," which primarily
includes its "Aviation Services" business. The Company began separately
reporting its Inland River Services business as a segment in the first quarter
of 2004 due to its increased significance resulting from capital expansion.
7
Consolidated operating revenues declined 0.9%, or $0.9 million, to $96.0 million
in the three months ended March 31, 2004 ("Current Year Quarter") from $96.9
million in the three months ended March 31, 2003 ("Prior Year Quarter").
Offshore Marine Services' operating revenues decreased in the Current Year
Quarter primarily as a result of a reduction in the number of vessels the
Company operated. This decline was substantially offset by an increase in
operating revenues earned by Environmental Services, resulting primarily from an
acquisition transaction, and Inland River Services, resulting primarily from
barge fleet growth.
In the Current Year Quarter, the Company incurred a consolidated net loss of
$3.0 million as compared to earning consolidated net income of $4.3 million in
the Prior Year Quarter. Weak market conditions in the offshore marine industry
continue to adversely affect rates per day work and utilization of Offshore
Marine Services' vessels and have resulted in losses during the Current Year
Quarter. Aviation Services' operating losses increased in the Current Year
Quarter. Costs of operations presently exceed flight revenues earned by
helicopters recently acquired and existing helicopters incurred major repairs.
The adverse effect on earnings of Offshore Marine Services and Aviation
Services' operations was partly offset by an improvement in the operating
results of Environmental Services and Inland River Services.
OPERATING REVENUES BY BUSINESS SEGMENT AND GEOGRAPHIC REGION
For the Three Months Ended March 31,
--------------------------------------
2004 2003
------------------ ------------------
(in thousands) Amount % Amount %
- -------------------------------------------------------------------------- ---------- ----- ---------- -------
BUSINESS SEGMENT:
Offshore Marine Services.............................................. $ 66,292 69 $ 81,107 84
Environmental Services................................................ 16,392 17 6,137 6
Inland River Services................................................. 8,576 9 4,840 5
Other................................................................. 6,705 7 5,187 5
Elimination........................................................... (1,991) (2) (411) -
---------- ----- ---------- -------
$ 95,974 100 $ 96,860 100
========== ===== ========== =======
GEOGRAPHIC REGION:
United States......................................................... $ 57,426 60 $ 53,374 55
---------- ----- ---------- -------
North Sea............................................................. 16,972 18 18,487 19
West Africa........................................................... 12,488 13 13,685 14
Asia.................................................................. 2,951 3 5,652 6
Latin America & Mexico................................................ 5,449 6 4,830 5
Other Regions......................................................... 688 - 832 1
---------- ----- ---------- -------
38,548 40 43,486 45
---------- ----- ---------- -------
95,974 100 96,860 100
========== ===== ========== =======
OFFSHORE MARINE SERVICES. Operating revenues declined 18%, or $14.8 million, to
$66.3 million in the Current Year Quarter from $81.1 million in the Prior Year
Quarter due principally to net vessel dispositions. Since commencement of the
Prior Year Quarter, Offshore Marine Services sold or terminated the bareboat
charter-in of 73 vessels as compared to 11 vessels acquired or bareboat
chartered-in. Weak customer demand, the removal of vessels from service for
repairs and a net increase in the number of vessels entering bareboat
charter-out service upon concluding time charter-out arrangements also resulted
in lower operating revenues.
Functional currency (Pounds Sterling) rates per day worked earned by North Sea
standby safety vessels remained constant between comparable quarters; however, a
strengthening in the Pound Sterling currency relative to the U.S. dollar in the
Current Year Quarter increased reported operating revenues of Offshore Marine
Services by approximately $1.9 million. Because Offshore Marine Services pays
expenses associated with its North Sea operations in Pounds Sterling, the
strengthening of that currency relative to the U.S. dollar did not have a
material effect on overall operating income and net income of the Company in the
Current Year Quarter or Prior Year Quarter.
ENVIRONMENTAL SERVICES. Operating revenues increased 167%, or $10.3 million, to
$16.4 million in the Current Year Quarter from $6.1 million in the Prior Year
Quarter due principally to increased business activities resulting from the
acquisition in the fourth quarter of 2003 of West Coast operator Foss
Environmental Services Company ("Foss"). Foss, now known as NRC Environmental
Services Inc. ("NRCES"), provides oil spill emergency response services,
industrial and marine cleaning services, petroleum storage tank removal and site
remediation, transportation and disposal of hazardous waste and environmental
equipment and product sales.
NRCES managed a significant oil spill in the Current Year Quarter. Future
operating revenues of Environmental Services may vary widely as a result of the
unpredictability of the number and severity of oils spills it may manage.
8
INLAND RIVER SERVICES. Operating revenues increased 77%, or $3.8 million, to
$8.6 million in the Current Year Quarter from $4.8 million in the Prior Year
Quarter due to the addition of newly constructed and chartered-in dry cargo
hopper barges ("barges"), the hauling of greater freight volumes and an increase
in cargo stored aboard barges. Freight rates remained generally constant between
years.
Since commencing the Prior Year Quarter, Inland River Services operating fleet
grew by 113 new barges. The fleet also grew with the charter-in of 180 barges
during the last half of 2003. Freight volumes hauled by Inland River Services
were higher in the Current Year Quarter for non-grain shipments, exceeding
declines in freight volumes hauled of grain products. Storage revenue also
increased due to higher levels of fertilizer imports and adverse river
conditions during the winter months.
OTHER. Operating revenues increased 29%, or $1.5 million, to $6.7 million in the
Current Year Quarter from $5.2 million in the Prior Year Quarter due principally
to increased flight hours resulting from helicopter fleet growth in the
Company's Aviation Services business.
OPERATING INCOME (LOSS) BY BUSINESS SEGMENT
For the Three Months Ended March 31,
-------------------------------------
(in thousands) 2004 2003
- ---------------------------------------- ---------------- -----------------
BUSINESS SEGMENT:
Offshore Marine Services............ $ (4,378) $ 3,312
Environmental Services.............. 957 (399)
Inland River Services............... 943 884
"Other"............................. (2,610) (146)
Corporate expenses.................. (3,005) (2,606)
---------------- -----------------
$ (8,093) $ 1,045
================ =================
OFFSHORE MARINE SERVICES. Operating losses totaled $4.4 million in the Current
Year Quarter as compared to operating income of $3.3 million earned in the Prior
Year Quarter. Further declines in rates per day worked and utilization due to
weak customer demand has resulted in operating losses in the Current Year
Quarter. Results in the Current Year Quarter were not affected by net vessel
dispositions, as their combined operating activities approximated break-even.
ENVIRONMENTAL SERVICES. Operating income totaled $1.0 million in the Current
Year Quarter as compared to $0.4 million of operating loss in the Prior Year
Quarter. An increase in consulting services, additional income earned as a
result of the integration of profits of NRCES after the Company's acquisition of
Foss, reduced spill response equipment repair expenses and reduced depreciation
expense upon certain assets having reached their depreciable lives resulted in
improved operating results in the Current Year Quarter.
INLAND RIVER SERVICES. Operating income increased 7%, or $0.1 million, to $1.0
million in the Current Year Quarter from $0.9 million in the Prior Year Quarter.
Higher fuel and non-grain shipment costs offset increases in operating revenues.
The recent charter-in of 180 barges since the end of the Prior Year Quarter,
operating expenses of which exceed that for barges owned by the Company, also
contributed toward lower operating income margin for Inland River Services.
OTHER. Operating losses increased to $2.6 million in the Current Year Quarter
from $0.1 million in the Prior Year Quarter. An increase in expenses resulting
from the commencement of operation of six new helicopters and major repairs to
existing helicopters substantially exceeded the increase between quarters of
operating revenues. Operating revenues earned by new helicopters are not
presently adequate to defray related operating, administrative and depreciation
expenses. New helicopter operating results are expected to improve in future
periods with an increase in flight hours.
9
OTHER INCOME, NET
For the Three Months Ended March 31,
------------------------------------
(in thousands) 2004 2003
- ------------------------------------------------------------------------ ---------------- ----------------
Net interest expense................................................... $ (3,999) $ (2,950)
Debt extinguishment.................................................... - (1,125)
Income from equipment sales or retirements, net........................ 3,638 5,147
Derivative income, net................................................. 79 1,749
Foreign currency transaction gains, net................................ 466 535
Marketable securities sale gains, net.................................. 2,749 2,191
Other, net............................................................. 119 3
---------------- ----------------
$ 3,052 $ 5,550
================ ================
NET INTEREST EXPENSE. Net interest expense increased 36%, or $1.0 million, to
$4.0 million in the Current Year Quarter from $3.0 million in the Prior Year
Quarter due primarily to lower invested cash balances and reductions in the
associated interest rates. Interest expense savings resulting from the repayment
of loans that financed vessel acquisitions and the redemption of the Company's
5-3/8% Convertible Subordinated Notes Due 2006 ("5-3/8% Notes") were offset by
the 2003 fourth quarter termination of interest rate swap agreements with
respect to the Company's 7.2% Notes and reduced capitalized interest.
DEBT EXTINGUISHMENT. On February 20, 2003, the Company redeemed the outstanding
principal amount of its 5-3/8% Notes that resulted in a write-off of related
unamortized deferred financing costs and premium payment totaling $1.1 million.
INCOME FROM EQUIPMENT SALES OR RETIREMENTS, NET. Income from equipment sales or
retirements decreased 29%, or $1.5 million, to $3.6 million in the Current Year
Quarter from $5.1 million in the Prior Year Quarter. Equipment sales in the
Current Year Quarter resulted primarily from the disposition of 12 vessels,
including nine utility vessels. Equipment sales in the Prior Year Quarter
resulted primarily from the disposition of 8 vessels, including two large anchor
handling towing supply vessels.
DERIVATIVE INCOME, NET. Derivative income decreased 95%, or $1.6 million, to
$0.1 million in the Current Year Quarter from $1.7 million in the Prior Year
Quarter. Results of the Prior Year Quarter included derivative income of $2.2
million resulting from the revaluation of costless collars associated with the
Company's common stock investment in ENSCO International Incorporated. These
costless collars were terminated in the second quarter of 2003.
INCOME TAXES
The Company's income tax rate decreased to 29.8% in the Current Year Quarter
from 36.4% in the Prior Year Quarter due primarily to tax provisions for state
jurisdictions with taxable income and the consequence of non-deductible
compensation expenses excluded from the U.S. consolidated tax return.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company's ongoing liquidity requirements arise primarily from the funding of
working capital needs, acquisition, construction or improvement of equipment,
repayment of debt obligations, repurchase of common stock and purchase of other
investments. The Company's principal sources of liquidity are cash balances,
available-for-sale securities, construction reserve funds, cash flows from
operations and borrowings under its revolving credit facility although, from
time to time, it may issue debt, shares of its common stock, preferred stock, or
a combination thereof, or sell vessels and other assets to finance the
acquisition of equipment and businesses or make improvements to existing
equipment.
As of March 31, 2004, the Company has $198.7 million available for use under a
five year, non-reducing, unsecured revolving credit facility that terminates in
February 2007.
10
OPERATING ACTIVITIES
Cash flows provided from operating activities were $6.4 million in the Current
Year Quarter and $8.9 million in the Prior Year Quarter. The decline in
operating cash flows resulted primarily from the decline in net earnings between
the comparable periods (see Consolidated Results of Operations discussion
above). The impact of the decline in net earnings on operating cash flows was
partially offset by reductions in working capital during the Current Year
Quarter.
INVESTING ACTIVITIES
Cash flows used in investing activities were $29.9 million in Current Year
Quarter as compared to cash flows provided by investing activities of $45.4
million in the Prior Year Quarter. The decline in investing cash flows resulted
primarily from reduced proceeds from equipment sales and increased deposits in
construction reserve funds for future purchase of vessels or barges.
The Company's remaining capital commitments as of March 31, 2004 for 7 new and 1
used vessel, 308 new dry cargo hopper barges, 24 new chemical tank barges and 3
new helicopters totaled $128.0 million, with deliveries expected throughout
2004. The Company also holds options to purchase 150 new dry cargo hopper barges
for delivery in 2005.
FINANCING ACTIVITIES
Cash flows used in financing activities were $3.7 million in the Current Year
Quarter and $74.0 million in the Prior Year Quarter. The Company repaid $59.5
million of its outstanding indebtedness in the Prior Year Quarter with proceeds
from the sale in the third quarter of 2002 of its 5-7/8% Notes. In addition,
fewer shares of the Company's common stock were acquired between comparable
quarters pursuant to the Company's Stock and Debt Repurchase Plan.
During the Current Year Quarter, the Company acquired a total of 99,057 shares
of its common stock for treasury at an aggregate cost of $4.1 million pursuant
to its stock and debt repurchase plan, and as of March 31, 2004, $54.1 million
of authority remains available to repurchase additional shares of its common
stock, its 7.2% Notes and its 5-7/8% Notes. Securities acquired pursuant to the
Company's repurchase plan may be conducted from time to time through open market
purchases, privately negotiated transactions or otherwise, depending on market
conditions.
FINANCIAL POSITION
Total assets of the Company remained constant at $1.401 billion between March
31, 2004 and December 31, 2003. The Company's combined cash, available-for-sale
securities and construction reserve funds increased 1% to $441.5 million and
represented 32% of total assets at quarter end. Net property and equipment
increased 1% to $742.6 million and represented 53% of total assets at quarter
end. Long-term debt remained constant at $332.2 million between March 31, 2004
and December 31, 2003.
SHORT AND LONG-TERM LIQUIDITY REQUIREMENTS
The Company anticipates it will generate positive cash flows from operations in
the near term and these cash flows will be adequate to meet the Company's
working capital requirements and contribute toward defraying the costs of its
capital expenditures. As in the past and in further support of the Company's
capital expenditure program, the Company intends to sell vessels, enter into
sale and leaseback transactions for vessels, or utilize construction reserve
funds, or a combination thereof. To the extent the Company relies on existing
cash balances, proceeds from the sale of available-for-sale securities or
construction reserve funds, the Company's liquidity would be reduced.
11
The Company's long-term liquidity is dependent upon its ability to generate
operating cash flows sufficient to meet its requirements for working capital,
capital expenditures and a reasonable return on shareholders' investment. The
Company believes that earning such operating profits will permit it to maintain
its access to favorably priced debt, equity and off-balance sheet financing
arrangements. With the cyclical nature of the energy business and the recent
adverse effect it has had on the Company's results of operations and cash flows,
the Company has adopted a strategy of reducing its overall dependency on
Offshore Marine Services and reinvesting certain of its capital resources in
Inland River Services.
CONTINGENCIES
In connection with an examination of the Company's income tax return for fiscal
year 2001, the Internal Revenue Service (IRS) has indicated that it may assert a
deficiency in the amount of taxes paid based on the manner in which vessel
assets were classified for the purpose of depreciation. If the IRS were able to
sustain its position, the Company would be required to pay currently certain
amounts, which have not yet been determined, that are currently reported as
long-term deferred tax obligations. Other than a potential charge for interest
related to any such deficiencies, the final resolution of this matter should not
have an effect on the Company's results of operations. The Company intends to
vigorously defend its position and to contest any deficiency that may be
asserted.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in the Company's exposure to market risk
during the three-month period ended March 31, 2004. For discussion of the
Company's exposure to market risk, refer to Item 7A, Quantitative and
Qualitative Disclosures about Market Risk, contained in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2003.
ITEM 4. CONTROLS AND PROCEDURES
The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), as of March 31, 2004. Based on their evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of March 31,
2004.
There has been no change in the Company's internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
that occurred during the Company's fiscal quarter ended March 31, 2004, that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
12
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY SECURITIES
This table provides information with respect to purchases by the Company of
shares of its Common Stock during the first fiscal quarter of 2004:
Total Number of Shares Approximate Dollar Value of
Total Number Purchased as Part of Shares that May Yet Be
of Shares Average Price Paid Publicly Announced Plans or Purchased Under Plans or
Period Purchased per Share Programs Programs
- ---------------------------- -------------- -------------------- ------------------------------ ------------------------------
January 1 - 31, 2004 1,100 $43.56 1,100 $58,136,000
February 1 - 29, 2004 350 $41.21 350 $58,122,000
March 1 - 31, 2004 97,607 $41.18 97,607 $54,099,000
-------------- ------------------------------
Total 99,057 $41.20 99,057
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange
Act, as amended.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange
Act, as amended.
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
B. Reports on Form 8-K:
(i) Current Report on Form 8-K, dated February 27, 2004,
reporting under Item 12 that, on February 26, 2004, the
Company issued a press release announcing its financial
results for the fourth quarter and fiscal year ended
December 31, 2003.
(ii) Current Report on Form 8-K, dated March 15, 2004,
reporting under Item 5 that, on March 15, 2004, the
Company issued a press release announcing the Registrant's
name change from SEACOR SMIT Inc. to SEACOR Holdings Inc.
13
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 Holdings Inc.
(Registrant)
DATE: MAY 10, 2004 By: /s/ Charles Fabrikant
----------------------------------------
Charles Fabrikant, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
DATE: MAY 10, 2004 By: /s/ Randall Blank
----------------------------------------
Randall Blank, Executive Vice President,
Chief Financial Officer and Secretary
(Principal Financial Officer)
14
EXHIBIT INDEX
31.1 Certification by the Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.
31.2 Certification by the Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
15