Nature Of Operations And Accounting Policies | 12 Months Ended |
Dec. 31, 2013 |
Nature Of Operations And Accounting Policies [Abstract] | ' |
Nature Of Operations And Accounting Policies | ' |
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1 | NATURE OF OPERATIONS AND ACCOUNTING POLICIES | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nature of Operations and Segmentation. SEACOR Holdings Inc. (“SEACOR”) and its subsidiaries (collectively referred to as the “Company”) are in the business of owning, operating, investing in and marketing equipment, primarily in the offshore oil and gas, shipping and logistics industries. 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. The Company has identified the following reporting segments: |
Offshore Marine Services. Offshore Marine Services operates a diverse fleet of support vessels primarily servicing offshore oil and gas exploration, development and production facilities worldwide. The vessels deliver cargo and personnel to offshore installations; handle anchors and mooring equipment required to tether rigs to the seabed; tow rigs and assist in placing them on location and moving them between regions; and carry and launch equipment such as remote operated vehicles or “ROVs” used underwater in drilling, well-completion and emergencies. In addition to supporting drilling activities, Offshore Marine Services' vessels support offshore construction and maintenance work, provide accommodations for technicians and specialists, and provide standby safety support and emergency response services. Offshore Marine Services also operates a fleet of lift boats in the U.S. Gulf of Mexico supporting well intervention, work-over, decommissioning and diving operations and has a controlling interest in a business that owns and operates vessels primarily used to move personnel and supplies to offshore wind farms. In addition, Offshore Marine Services offers logistics services in support of offshore oil and gas exploration, development and production operations, including shore bases, marine transport and other supply chain management services. Offshore Marine Services contributed 45%, 40% and 36% of consolidated operating revenues in 2013, 2012 and 2011, respectively. |
Inland River Services. Inland River Services owns, operates, invests in and markets river transportation equipment primarily used for moving agricultural and industrial commodities, and chemical and petrochemical products, on the U.S. Inland River Waterways, primarily the Mississippi River, Illinois River, Tennessee River, Ohio River and their tributaries, and the Gulf Intracoastal Waterways. Internationally, Inland River Services has operations on the Magdalena River in Colombia and noncontrolling interests in operations on the Parana-Paraguay River Waterways and in a transshipment terminal at the Port of Ibicuy, Argentina. In addition to its primary barge business, Inland River Services also owns, operates and invests in high-speed multi-modal terminal facilities for both dry and liquid commodities and provides a broad range of services including machine shop, gear and engine repairs, and the repair and drydocking of barges and towboats at strategic locations on the U.S. Inland River Waterways. Inland River Services contributed 17%, 17% and 18% of consolidated operating revenues in 2013, 2012 and 2011, respectively. |
Shipping Services. Shipping Services invests in, operates and leases a diversified fleet of U.S.-flag and foreign-flag marine transportation related assets, including deep-sea cargo vessels primarily servicing the U.S. coastwise petroleum trade, harbor tugs servicing vessels docking in the U.S. Gulf and East Coast ports and foreign-flag Very Large Gas Carriers ("VLGC's") through its noncontrolling investment in Dorian LPG. Additional assets and services include liner and short-sea transportation to and from ports in Florida, Puerto Rico, the Bahamas and Western Caribbean, a terminal support and bunkering operation in St. Eustatius, a U.S.-flag articulated tug and dry-bulk barge operating on the Great Lakes and technical ship management services. Shipping Services contributed 16%, 14% and 16% of consolidated operating revenues in 2013, 2012 and 2011, respectively. |
Illinois Corn Processing. Illinois Corn Processing LLC ("ICP") operates an alcohol manufacturing, storage and distribution facility located in Pekin, IL. A flexible production platform and infrastructure enables ICP to produce, store, and distribute a variety of high quality alcohol used in the food, beverage, industrial, and petrochemical end-markets as well as fuel grade ethanol. The capability to produce these specialized streams differentiates ICP from other fuel ethanol plants and positions it as a key supply partner to a broad customer base. The Company obtained a controlling interest in ICP on February 1, 2012 through the acquisition of a portion of its partner's interest. ICP contributed 16% and 14% of consolidated operating revenues in 2013 and 2012, respectively. |
Other. The Company also has activities that are referred to and described under Other, which primarily include a noncontrolling investment in emergency and crisis services activities, agricultural commodity trading and logistics activities, lending and leasing activities and noncontrolling interests in various other businesses, primarily industrial aviation services businesses in Asia. |
Discontinued Operations (see Note 16). The Company reports the historical financial position, results of operations and cash flows of disposed businesses as discontinued operations when it has no continuing interest in the business. On March 16, 2012, the Company sold National Response Corporation ("NRC"), NRC Environmental Services Inc., SEACOR Response Ltd., and certain other subsidiaries (collectively the “SES Business”) to J.F. Lehman & Company, a leading, middle-market private equity firm (the "SES Business Transaction"). On December 31, 2012, the Company sold SEACOR Energy Inc. ("SEI") to Par Petroleum Corporation. On January 31, 2013, the Company completed the spin-off ("Spin-off") of Era Group Inc. (“Era Group”)by means of a dividend to SEACOR's shareholders of all the issued and outstanding common stock of Era Group. |
Basis of Consolidation. The consolidated financial statements include the accounts of SEACOR and its controlled subsidiaries. Control is generally deemed to exist if the Company has greater than 50% of the voting rights of a subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation. |
Noncontrolling interests in consolidated subsidiaries are included in the consolidated balance sheets as a separate component of equity. The Company reports consolidated net income inclusive of both the Company’s and the noncontrolling interests’ share, as well as the amounts of consolidated net income attributable to each of the Company and the noncontrolling interests. If a subsidiary is deconsolidated upon a change in control, any retained noncontrolled equity investment in the former controlled subsidiary is measured at fair value and a gain or loss is recognized in net income based on such fair value. If a subsidiary is consolidated upon a change in control, any previous noncontrolled equity investment in the subsidiary is measured at fair value and a gain or loss is recognized based on such fair value. |
The Company employs the equity method of accounting for investments in 50% or less owned companies that it does not control but has the ability to exercise significant influence over the operating and financial policies of the business venture. Significant influence is generally deemed to exist if the Company has between 20% and 50% of the voting rights of a business venture. In certain circumstances, the Company may have an economic interest in excess of 50% but may not control and consolidate the business venture. Conversely, the Company may have an economic interest less than 50% but may control and consolidate the business venture. The Company reports its investments in and advances to these business ventures in the accompanying consolidated balance sheets as investments, at equity, and advances to 50% or less owned companies. The Company reports its share of earnings or losses from investments in 50% or less owned companies in the accompanying consolidated statements of income as equity in earnings (losses) of 50% or less owned companies, net of tax. |
The Company employs the cost method of accounting for investments in 50% or less owned companies it does not control or exercise significant influence. These investments in private companies are carried at cost and are adjusted only for capital distributions and other-than-temporary declines in fair value. |
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include those related to deferred revenues, allowance for doubtful accounts, useful lives of property and equipment, impairments, income tax provisions and certain accrued liabilities. Actual results could differ from those estimates and those differences may be material. |
Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet this criteria is deferred until the criteria are met. Deferred revenues for the years ended December 31 were as follows (in thousands): |
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| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | | |
Balance at beginning of year | | $ | 6,592 | | | $ | 9,845 | | | $ | 20,829 | | | | | | | | | | | | | | | | | |
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Revenues deferred during the year | | — | | | 3,806 | | | 7,402 | | | | | | | | | | | | | | | | | |
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Revenues recognized during the year | | — | | | (7,059 | ) | | (18,386 | ) | | | | | | | | | | | | | | | | |
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Balance at end of year | | $ | 6,592 | | | $ | 6,592 | | | $ | 9,845 | | | | | | | | | | | | | | | | | |
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As of December 31, 2013, deferred revenues included $6.6 million relating to the time charter of several offshore support vessels scheduled to be paid through the conveyance of an overriding royalty interest (the "Conveyance") in developmental oil and gas producing properties operated by a customer in the U.S. Gulf of Mexico. Payments under the Conveyance, and the timing of such payments, were contingent upon production and energy sale prices. On August 17, 2012, the customer filed a voluntary petition for Chapter 11 bankruptcy. The Company is vigorously defending its interest in connection with the bankruptcy filing; however, payments received under the Conveyance subsequent to August 17, 2012 are subject to bankruptcy court approval. The Company will recognize revenues as approved by the bankruptcy court. All costs and expenses related to these charters were recognized as incurred. |
The Company’s Offshore Marine Services segment earns and recognizes revenues primarily from the time charter and bareboat charter of vessels to customers based upon daily rates of hire. Under a time charter, Offshore Marine Services provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, Offshore Marine Services provides the vessel to the customer and the customer assumes responsibility for all operating expenses and risk of operation. Vessel charters may range from several days to several years. Revenues from time charters and bareboat charters are recorded and recognized as services are provided. In the U.S. Gulf of Mexico, time charter durations and rates are typically established in the context of master service agreements that govern the terms and conditions of charter. |
The Company’s Inland River Services segment earns revenues primarily from voyage affreightment contracts whereby customers are charged an established rate per ton to transport cargo from point to point. Revenues from voyage affreightment contracts are generally recognized over the progress of the voyage while the related costs are expensed as incurred. Certain of Inland River Services’ barges are operated in barge pools with other barges owned by third parties from whom Inland River Services earns and recognizes a management fee as the services are rendered. Pursuant to the pooling agreements, operating revenues and expenses of participating barges are combined and the net results are allocated on a pro-rata basis based on the number of barge days contributed by each participant. In addition, revenues are earned from equipment chartered to third parties and from the storage and demurrage of cargoes associated with affreightment activities. In both of these cases, revenues are recognized as services are rendered. Inland River Services’ tank farm and handling facility earns revenues through rental and throughput charges. Rental revenues are recognized ratably over the rental period while throughput charges are recognized as product volume moves through the facility. |
The Company’s Shipping Services segment earns revenue from the time charter, bareboat charter and voyage charter of vessels, contracts of affreightment, ship assist services and ship management agreements with vessel owners. Under a time charter, Shipping Services provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, Shipping Services provides the vessel to a customer and the customer assumes responsibility for all operating expenses and risk of operation. Revenues from time charters and bareboat charters are recognized as services are provided. Voyage contracts are contracts to carry cargoes on a single voyage basis regardless of time to complete. Contracts of affreightment are contracts for cargoes that are committed on a multi-voyage basis for various periods of time with minimum and maximum cargo tonnages specified over the period at a fixed or escalating rate per ton. Revenues for voyage contracts and contracts of affreightment are recognized over the progress of the voyage while the related costs are expensed as incurred. Ship assist services are provided by the Company's harbor towing fleet to docking and undocking cargo vessels in various ports in the U.S. Gulf of Mexico and Atlantic Coast. Revenues from ship assist services are recognized as the services are performed. Ship management agreements typically provide for technical services over a specified period of time, typically a year or more. Revenues from ship management agreements are recognized ratably over the service period. |
ICP earns revenues from the sale of alcohol, co-products and by-products. Revenues and related costs from these sales are recorded when title transfers to the buyer. |
Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist of U.S treasury securities, money market instruments, time deposits and overnight investments. |
Restricted Cash. Restricted cash, primarily relates to income generated from the operations of certain of Shipping Services’ U.S.-flag product tankers and consists primarily of U.S. treasury securities (see Note 9). |
Marketable Securities. Marketable equity securities with readily determinable fair values and debt securities are reported in the accompanying consolidated balance sheets as marketable securities. These investments are stated at fair value with both realized and unrealized gains and losses reported in the accompanying consolidated statements of income as marketable security gains (losses), net. Short sales of marketable securities are stated at fair value in the accompanying consolidated balance sheets with both realized and unrealized gains and losses reported in the accompanying consolidated statements of income as marketable security gains (losses), net. |
Trade Receivables. Customers of Offshore Marine Services and Shipping Services are primarily major and independent oil and gas exploration and production companies. Customers of Inland River Services are primarily major agricultural and industrial companies based within the United States. Customers of ICP include petrochemical, agricultural and industrial companies based within the United States. Customers of the Company's other business activities primarily include industrial companies and distributors. All customers are granted credit on a short-term basis and related credit risks are considered minimal. The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates and actual results could differ from those estimates and those differences may be material. Trade receivables are deemed uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted. |
Derivative Instruments. The Company accounts for derivatives through the use of a fair value concept whereby all of the Company’s derivative positions are stated at fair value in the accompanying consolidated balance sheets. Realized and unrealized gains and losses on derivatives not designated as hedges are reported in the accompanying consolidated statements of income as derivative losses, net. Realized and unrealized gains and losses on derivatives designated as cash flow hedges are reported as a component of other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income to the extent they are effective and reclassified into earnings on the same line item associated with the hedged transaction and in the same period the hedged transaction affects earnings. Any ineffective portions of cash flow hedges are reported in the accompanying consolidated statements of income as derivative losses, net. Realized and unrealized gains and losses on derivatives designated as cash flow hedges that are entered into by the Company’s 50% or less owned companies are also reported as a component of the Company’s other comprehensive income (loss) in proportion to the Company’s ownership percentage, with reclassifications and ineffective portions being included in equity in earnings (losses) of 50% or less owned companies, net of tax, in the accompanying consolidated statements of income. |
Concentrations of Credit Risk. The Company is exposed to concentrations of credit risk associated with its cash and cash equivalents, restricted cash, marketable securities and derivative instruments. The Company minimizes its credit risk relating to these positions by monitoring the financial condition of the financial institutions and counterparties involved and by primarily conducting business with large, well-established financial institutions and diversifying its counterparties. The Company does not currently anticipate nonperformance of its significant counterparties. The Company is also exposed to concentrations of credit risk relating to its receivables due from customers in the industries described above. The Company does not generally require collateral or other security to support its outstanding receivables. The Company minimizes its credit risk relating to receivables by performing ongoing credit evaluations and, to date, credit losses have not been material. |
Inventories. Inventories are stated at the lower of cost (using the first-in, first-out and average cost methods) or market. Inventories consist primarily of fuel and fuel oil in the Company’s Offshore Marine Services, Shipping Services and Inland River Services segments. Inventories in ICP consist primarily of corn, high quality alcohol and fuel alcohol. Inventories in the Company's other business activities consist of sugar, rice and salt. The Company records write-downs, as needed, to adjust the carrying amount of inventories to the lower of cost or market. During the years ended December 31, 2013, 2012, and 2011, the Company recorded market write-downs of $0.2 million, $0.2 million and $0.3 million, respectively. |
Property and Equipment. Equipment, stated at cost, is depreciated using the straight line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is typically based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date. |
As of December 31, 2013, the estimated useful life (in years) of each of the Company’s major classes of new equipment was as follows: |
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Offshore support vessels (excluding wind farm utility) | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wind farm utility vessels | 10 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Inland river dry cargo and deck barges | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Inland river liquid tank barges | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Inland river towboats | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S.-flag product tankers | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RORO(1) vessels | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Harbor tugs | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ocean liquid tank barges | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Terminal and manufacturing facilities | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | Roll on/Roll off ("RORO"). | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Company’s major classes of property and equipment as of December 31 were as follows (in thousands): |
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| | Historical | | Accumulated | | Net Book | | | | | | | | | | | | | | | | |
Cost(1) | Depreciation | Value | | | | | | | | | | | | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | | | |
Offshore support vessels (excluding wind farm utility) | | $ | 1,047,119 | | | $ | (438,528 | ) | | $ | 608,591 | | | | | | | | | | | | | | | | | |
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Wind farm utility vessels | | 65,094 | | | (14,121 | ) | | 50,973 | | | | | | | | | | | | | | | | | |
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Inland river dry cargo and deck barges | | 241,210 | | | (80,772 | ) | | 160,438 | | | | | | | | | | | | | | | | | |
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Inland river liquid tank barges | | 85,639 | | | (18,138 | ) | | 67,501 | | | | | | | | | | | | | | | | | |
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Inland river towboats | | 61,407 | | | (22,454 | ) | | 38,953 | | | | | | | | | | | | | | | | | |
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U.S.-flag product tankers | | 318,497 | | | (173,278 | ) | | 145,219 | | | | | | | | | | | | | | | | | |
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RORO vessels | | 18,328 | | | (3,995 | ) | | 14,333 | | | | | | | | | | | | | | | | | |
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Harbor tugs | | 101,762 | | | (34,017 | ) | | 67,745 | | | | | | | | | | | | | | | | | |
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Ocean liquid tank barges | | 39,238 | | | (7,335 | ) | | 31,903 | | | | | | | | | | | | | | | | | |
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Terminal and manufacturing facilities | | 120,601 | | | (33,594 | ) | | 87,007 | | | | | | | | | | | | | | | | | |
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Other(2) | | 100,288 | | | (40,098 | ) | | 60,190 | | | | | | | | | | | | | | | | | |
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| | $ | 2,199,183 | | | $ | (866,330 | ) | | $ | 1,332,853 | | | | | | | | | | | | | | | | | |
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2012 | | | | | | | | | | | | | | | | | | | | | | |
Offshore support vessels (excluding wind farm utility) | | $ | 1,074,170 | | | $ | (398,050 | ) | | $ | 676,120 | | | | | | | | | | | | | | | | | |
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Wind farm utility vessels | | 58,484 | | | (6,887 | ) | | 51,597 | | | | | | | | | | | | | | | | | |
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Inland river dry cargo and deck barges | | 239,896 | | | (70,407 | ) | | 169,489 | | | | | | | | | | | | | | | | | |
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Inland river liquid tank barges | | 106,541 | | | (18,605 | ) | | 87,936 | | | | | | | | | | | | | | | | | |
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Inland river towboats | | 53,895 | | | (20,054 | ) | | 33,841 | | | | | | | | | | | | | | | | | |
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U.S.-flag product tankers | | 317,894 | | | (154,288 | ) | | 163,606 | | | | | | | | | | | | | | | | | |
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RORO vessels | | 15,674 | | | (2,492 | ) | | 13,182 | | | | | | | | | | | | | | | | | |
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Harbor tugs | | 114,974 | | | (32,965 | ) | | 82,009 | | | | | | | | | | | | | | | | | |
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Ocean liquid tank barges | | 39,073 | | | (5,914 | ) | | 33,159 | | | | | | | | | | | | | | | | | |
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Terminal and manufacturing facilities | | 120,164 | | | (20,906 | ) | | 99,258 | | | | | | | | | | | | | | | | | |
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Other(2) | | 97,618 | | | (33,235 | ) | | 64,383 | | | | | | | | | | | | | | | | | |
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| | $ | 2,238,383 | | | $ | (763,803 | ) | | $ | 1,474,580 | | | | | | | | | | | | | | | | | |
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-1 | Includes property and equipment acquired in business acquisitions and recorded at fair value as of the date of the acquisition. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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-2 | Includes land and buildings, leasehold improvements, fixed-wing aircraft, vehicles and other property and equipment. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation expense totaled $130.2 million, $126.1 million and $102.1 million in 2013, 2012 and 2011, respectively. |
Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized. |
Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. Capitalized interest totaled $6.4 million, $4.3 million and $5.8 million in 2013, 2012 and 2011, respectively. |
Intangible Assets. The Company’s intangible assets primarily arose from business acquisitions (see Note 4) and consist of non-compete agreements, trademarks and tradenames, customer relationships, software and technology, and acquired contractual rights. These intangible assets are amortized over their estimated useful lives ranging from two to ten years. During the years ended December 31, 2013, 2012, and 2011, the Company recognized amortization expense of $4.3 million, $5.6 million and $4.8 million, respectively. |
The Company’s intangible assets by type were as follows (in thousands): |
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| | Non-Compete | | Trademark/ | | Customer | | Software/ | | Acquired | | Total | | | | |
Agreements | Tradenames | Relationships | Technology | Contractual | | | | |
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| | Gross Carrying Value | | | | |
Year Ended December 31, 2011 | | $ | 901 | | | $ | 9,136 | | | $ | 36,350 | | | $ | 590 | | | $ | 5,787 | | | $ | 52,764 | | | | | |
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Acquired intangible assets | | — | | | — | | | 1,621 | | | — | | | 2,436 | | | 4,057 | | | | | |
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Foreign currency translation | | — | | | — | | | — | | | — | | | 152 | | | 152 | | | | | |
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Fully amortized intangible assets | | (561 | ) | | — | | | — | | | — | | | — | | | (561 | ) | | | | |
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ORM Transaction (see Note 5) | | (300 | ) | | (712 | ) | | (11,384 | ) | | (590 | ) | | — | | | (12,986 | ) | | | | |
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Year Ended December 31, 2012 | | 40 | | | 8,424 | | | 26,587 | | | — | | | 8,375 | | | 43,426 | | | | | |
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Acquired intangible assets | | — | | | 74 | | | 1,525 | | | — | | | — | | | 1,599 | | | | | |
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Foreign currency translation | | — | | | — | | | — | | | — | | | (132 | ) | | (132 | ) | | | | |
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Fully amortized intangible assets | | — | | | (437 | ) | | — | | | | | | (4,772 | ) | | (5,209 | ) | | | | |
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Year Ended December 31, 2013 | | $ | 40 | | | $ | 8,061 | | | $ | 28,112 | | | $ | — | | | $ | 3,471 | | | $ | 39,684 | | | | | |
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| | Accumulated Amortization | | | | |
Year Ended December 31, 2011 | | $ | (719 | ) | | $ | (3,722 | ) | | $ | (22,476 | ) | | $ | (246 | ) | | $ | (4,073 | ) | | $ | (31,236 | ) | | | | |
Amortization expense | | (135 | ) | | (611 | ) | | (3,739 | ) | | (118 | ) | | (1,026 | ) | | (5,629 | ) | | | | |
Fully amortized intangible assets | | 561 | | | — | | | — | | | — | | | — | | | 561 | | | | | |
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ORM Transaction (see Note 5) | | 268 | | | 350 | | | 7,201 | | | 364 | | | — | | | 8,183 | | | | | |
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Year Ended December 31, 2012 | | (25 | ) | | (3,983 | ) | | (19,014 | ) | | — | | | (5,099 | ) | | (28,121 | ) | | | | |
| | | |
Amortization expense | | (8 | ) | | (984 | ) | | (2,454 | ) | | — | | | (903 | ) | | (4,349 | ) | | | | |
| | | |
Fully amortized intangible assets | | — | | | 437 | | | — | | | — | | | 4,772 | | | 5,209 | | | | | |
| | | |
Year Ended December 31, 2013 | | $ | (33 | ) | | $ | (4,530 | ) | | $ | (21,468 | ) | | $ | — | | | $ | (1,230 | ) | | $ | (27,261 | ) | | | | |
| | | |
Weighted average remaining contractual life, in years | | 0.92 | | | 6.42 | | | 4.79 | | | 0 | | | 4.1 | | | 5.13 | | | | | |
| | | |
Future amortization expense of intangible assets for each of the years ended December 31 is as follows (in thousands): |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | | $ | 3,579 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
2015 | | 2,410 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
2016 | | 1,385 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
2017 | | 1,251 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
2018 | | 989 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Years subsequent to 2018 | | 2,809 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 12,423 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying values of the assets are not recoverable, as determined by the estimated undiscounted cash flows, the carrying values of the assets are reduced to fair value. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the years ended 2013, 2012 and 2011, the Company recognized impairment charges of $3.0 million, $1.2 million and $0.1 million, respectively, related to long-lived assets held for use. |
Impairment of 50% or Less Owned Companies. The Company performs regular reviews of each 50% or less owned company's financial condition, the business outlook for its products and services, and its present and projected results and cash flows. When a 50% or less owned company has experienced consistent declines in financial performance or difficulties in raising capital to continue operations, and when the Company expects the decline to be other-than-temporary, the investment is written down to fair value. Actual results may vary from estimates due to the uncertainty regarding the projected financial performance of 50% or less owned companies, the severity and expected duration of declines in value, and the available liquidity in the capital markets to support the continuing operations of the 50% or less owned company. The Company did not recognize any impairment charges in the years ended December 31, 2013, 2012 and 2011. |
Goodwill. Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net identified tangible and intangible assets acquired. The Company performs an annual impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests. The Company’s impairment review process compares the fair value of the reporting unit to its carrying value, including the goodwill related to the reporting unit. To determine the fair value of the reporting unit, the Company uses a discounted future cash flow approach that uses estimates for revenues, costs and appropriate discount rates, among other things. These estimates are reviewed each time the Company tests goodwill for impairment and are typically developed as part of the Company’s routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable, variations from those estimates could produce materially different results. The Company did not recognize any goodwill impairments in the years ended December 31, 2013, 2012 and 2011. During the year ended December 31, 2012, the Company deconsolidated $37.1 million of goodwill as a result of the ORM Transaction (see Note 5). |
Business Combinations. The Company recognizes, with certain exceptions, 100 percent of the fair value of assets acquired, liabilities assumed, and noncontrolling interests when the acquisition constitutes a change in control of the acquired entity. Shares issued in consideration for a business combination, contingent consideration arrangements and pre-acquisition loss and gain contingencies are all measured and recorded at their acquisition-date fair value. Subsequent changes to fair value of contingent consideration arrangements are generally reflected in earnings. Any in-process research and development assets acquired are capitalized as are certain acquisition-related restructuring costs if the criteria related to exit or disposal cost obligations are met as of the acquisition date. Acquisition-related transaction costs are expensed as incurred and any changes in an acquirer’s existing income tax valuation allowances and tax uncertainty accruals are recorded as an adjustment to income tax expense. The operating results of entities acquired are included in the accompanying consolidated statements of income from the date of acquisition (see Note 4). |
Deferred Financing Costs. Deferred financing costs incurred in connection with the issuance of debt are amortized over the life of the related debt using the effective interest rate method for term loans and straight line method for revolving credit facilities. Amortization of deferred financing costs totaled $1.9 million, $0.5 million and $0.5 million for the years ended December 31, 2013, 2012 and 2011, respectively, and is included in interest expense in the accompanying consolidated statements of income. |
Self-insurance Liabilities. The Company maintains hull, liability and war risk, general liability, workers compensation and other insurance customary in the industries in which it operates. Most of the insurance is obtained through SEACOR sponsored programs, with premiums charged to participating businesses based on insured asset values. Both the marine hull and liability policies have significant annual aggregate deductibles. Marine hull annual aggregate deductibles are accrued as claims are incurred by participating businesses and proportionately shared among the participating businesses. Marine liability annual aggregate deductibles are accrued based on historical loss experience and actual claims incurred. The Company also maintains self-insured health benefit plans for its participating employees. Exposure to the health benefit plans are limited by maintaining stop-loss and aggregate liability coverage. To the extent that estimated self-insurance losses, including the accrual of annual aggregate deductibles, differ from actual losses realized, the Company’s insurance reserves could differ significantly and may result in either higher or lower insurance expense in future periods. |
Income Taxes. Deferred income tax assets and liabilities have been provided in recognition of the income tax effect attributable to the book and tax basis differences of assets and liabilities reported in the accompanying consolidated financial statements. Deferred tax assets or liabilities are provided using the enacted tax rates expected to apply to taxable income in the periods in which they are expected to be settled or realized. Interest and penalties relating to uncertain tax positions are recognized in interest expense and administrative and general, respectively, in the accompanying consolidated statements of income. The Company records a valuation allowance to reduce its deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. |
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In the normal course of business, the Company may be subject to challenges from tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions. As part of the calculation of income tax expense, the Company determines whether the benefits of its tax positions are at least more likely than not of being sustained based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained, the Company accrues the largest amount of the tax benefit that is more likely than not of being sustained. Such accruals require management to make estimates and judgments with respect to the ultimate outcome of its tax benefits and actual results could vary materially from these estimates. |
Deferred Gains – Equipment Sale-Leaseback Transactions and Financed Equipment Sales. From time to time, the Company enters into equipment sale-leaseback transactions with finance companies or provides seller financing on sales of its equipment to third parties or 50% or less owned companies. A portion of the gains realized from these transactions is not immediately recognized in income and has been recorded in the accompanying consolidated balance sheets in deferred gains and other liabilities. In sale-leaseback transactions (see Note 4), gains are deferred to the extent of the present value of future minimum lease payments and are amortized as reductions to rental expense over the applicable lease terms. In financed equipment sales (see Note 4), gains are deferred to the extent that the repayment of purchase notes is dependent on the future operations of the sold equipment and are amortized based on cash received from the buyers. Deferred gain activity related to these transactions for the years ended December 31 was as follows (in thousands): |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | | |
Balance at beginning of year | | $ | 96,447 | | | $ | 101,155 | | | $ | 113,871 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Deferred gains arising from equipment sales | | 26,881 | | | 23,183 | | | 12,319 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Amortization of deferred gains included in operating expenses as reduction to rental expense | | (10,687 | ) | | (16,652 | ) | | (22,191 | ) | | | | | | | | | | | | | | | | |
Amortization of deferred gains included in gains on asset dispositions and impairments, net | | (2,099 | ) | | (11,239 | ) | | (2,834 | ) | | | | | | | | | | | | | | | | |
Reductions of deferred gains on repurchased equipment and other | | — | | | — | | | (10 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Balance at end of year | | $ | 110,542 | | | $ | 96,447 | | | $ | 101,155 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Deferred Gains – Equipment Sales to the Company’s 50% or Less Owned Companies. A portion of the gains realized from non-financed sales of the Company’s vessels and barges to its 50% or less owned companies is not immediately recognized in income and has been recorded in the accompanying consolidated balance sheets in deferred gains and other liabilities. Effective January 1, 2009, the Company adopted new accounting rules related to the sale of its equipment to its 50% or less owned companies. For transactions occurring subsequent to the adoption of the new accounting rules, gains are deferred only to the extent of the Company's uncalled capital commitments and amortized as those commitments lapse or funded amounts are returned by the 50% or less owned companies. For transactions occurring prior to the adoption of the new accounting rules, gains were deferred and are being amortized based on the Company's ownership interest, the Company's uncalled capital commitments, cash received and the applicable equipment's useful lives. Deferred gain activity related to these transactions for the years ended December 31 was as follows (in thousands): |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | | |
Balance at beginning of year | | $ | 15,066 | | | $ | 16,036 | | | $ | 16,881 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Amortization of deferred gains included in gains on asset dispositions and impairments, net | | (845 | ) | | (970 | ) | | (845 | ) | | | | | | | | | | | | | | | | |
Balance at end of year | | $ | 14,221 | | | $ | 15,066 | | | $ | 16,036 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock Based Compensation. Stock based compensation is amortized to compensation expense on a straight line basis over the requisite service period of the grants using the Black-Scholes valuation model. The Company will reconsider its use of this model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that cannot be reasonably estimated using this model. The Company does not estimate forfeitures in its expense calculations as forfeiture history has been minor. The Company presents the excess tax benefits from the exercise of stock options as a financing cash flow in the accompanying consolidated statements of cash flows. |
Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income (loss) were as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | SEACOR Holdings Inc. Stockholders Equity | | Noncontrolling | | |
Interests |
| | Foreign | | Derivative | | Other | | Total | | Foreign | | Other | | Other |
Currency | Losses on | Currency | Comprehensive |
Translation | Cash Flow | Translation | Income (Loss) |
Adjustments | Hedges, net | Adjustments | |
Year ended December 31, 2010 | | $ | (3,995 | ) | | $ | (2,933 | ) | | $ | (111 | ) | | $ | (7,039 | ) | | $ | — | | | $ | — | | | |
|
Other comprehensive income (loss) | | (629 | ) | | (900 | ) | | 116 | | | (1,413 | ) | | (118 | ) | | — | | | $ | (1,531 | ) |
|
Income tax (expense) benefit | | 220 | | | 315 | | | (41 | ) | | 494 | | | — | | | — | | | 494 | |
|
Year ended December 31, 2011 | | (4,404 | ) | | (3,518 | ) | | (36 | ) | | (7,958 | ) | | (118 | ) | | — | | | $ | (1,037 | ) |
|
Other comprehensive income (loss) | | 4,871 | | | 4,286 | | | 31 | | | 9,188 | | | 439 | | | (10 | ) | | $ | 9,617 | |
|
Income tax (expense) benefit | | (1,705 | ) | | (1,500 | ) | | (11 | ) | | (3,216 | ) | | — | | | — | | | (3,216 | ) |
|
Year ended December 31, 2012 | | (1,238 | ) | | (732 | ) | | (16 | ) | | (1,986 | ) | | 321 | | | (10 | ) | | $ | 6,401 | |
|
Distribution of Era Group stock to shareholders | | (55 | ) | | — | | | — | | | (55 | ) | | — | | | — | | | |
|
Other comprehensive income (loss) | | 563 | | | 731 | | | 12 | | | 1,306 | | | 74 | | | 5 | | | $ | 1,385 | |
|
Income tax (expense) benefit | | (197 | ) | | (256 | ) | | (4 | ) | | (457 | ) | | — | | | — | | | (457 | ) |
|
Year ended December 31, 2013 | | $ | (927 | ) | | $ | (257 | ) | | $ | (8 | ) | | $ | (1,192 | ) | | $ | 395 | | | $ | (5 | ) | | $ | 928 | |
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Foreign Currency Translation. The assets, liabilities and results of operations of certain SEACOR subsidiaries are measured using their functional currency which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these subsidiaries with SEACOR, their assets and liabilities are translated to U.S. dollars at currency exchange rates as of the balance sheet dates and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these subsidiaries’ financial statements are reported in other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income. |
Foreign Currency Transactions. Certain SEACOR subsidiaries enter into transactions denominated in currencies other than their functional currency. Gains and losses resulting from changes in currency exchange rates between the functional currency and the currency in which a transaction is denominated are included in foreign currency gains (losses), net in the accompanying consolidated statements of income in the period in which the currency exchange rates change. |
Earnings Per Share. Basic earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the treasury stock and if-converted methods. Dilutive securities for this purpose assumes restricted stock grants have vested, common shares have been issued pursuant to the exercise of outstanding stock options and common shares have been issued pursuant to the conversion of all outstanding convertible notes. |
Computations of basic and diluted earnings per common share of SEACOR for the years ended December 31 were as follows (in thousands, except share data): |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Income | | Average o/s Shares | | Per Share | | | | | | | | | | | | | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | $ | 36,970 | | | 19,893,954 | | | $ | 1.86 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | | | |
Options and Restricted Stock(1) | | — | | | 399,333 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Convertible Securities(2)(3) | | — | | | — | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | $ | 36,970 | | | 20,293,287 | | | $ | 1.82 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
2012 | | | | | | | | | | | | | | | | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | $ | 61,215 | | | 20,426,770 | | | $ | 3 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | | | |
Options and Restricted Stock(1) | | — | | | 349,126 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Convertible Securities(2) | | — | | | — | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | $ | 61,215 | | | 20,775,896 | | | $ | 2.95 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
2011 | | | | | | | | | | | | | | | | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | $ | 41,056 | | | 21,119,461 | | | $ | 1.94 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | | | |
Options and Restricted Stock(1) | | — | | | 347,382 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | $ | 41,056 | | | 21,466,843 | | | $ | 1.91 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
______________________ |
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-1 | For the years ended December 31, 2013, 2012 and 2011, diluted earnings per common share of SEACOR excluded 133,315, 549,223 and 338,920, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2 | For the years ended December 31, 2013 and 2012, diluted earnings per common share of SEACOR excluded 4,200,525 and 176,609 shares, respectively, issuable pursuant to the Company's 2.5% Convertible Senior Notes (see Note 9) as the effect of their inclusion in the computation would be anti-dilutive. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-3 | For the year ended December 31, 2013, diluted earnings per common share of SEACOR excluded 240,043 shares issuable pursuant to the Company's 3.0% Convertible Senior Notes (see Note 9) as the effect of their inclusion in the computation would be anti-dilutive. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassifications. Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. These reclassifications had no effect on net income as previously reported. |
Restatement of Prior Period Interim Financial Results. In February 2014, the Company discovered an error in its accounting for taxes related to the Era Group Spin-Off, which occurred on January 31, 2013. As a result, the Company will restate the condensed consolidated financial statements included in its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, June 30 and September 30, 2013, together with an explanation of the restatements, as soon as reasonably practicable (see Note 18). |