SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
(Amendment No. 1)
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
---------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-12289
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SEACOR SMIT INC.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 13-3542736
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
11200 Richmond Avenue, Suite 400, Houston, Texas 77042
- ------------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 782-5990
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Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, par value New York Stock Exchange
$.01 per share
Securities registered pursuant to Section 12 (g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of March 24, 2000 was approximately $582,147,000. The
total number of shares of Common Stock issued and outstanding as of March
24, 2000 was 11,206,436.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A within 120 days after the end of
the Registrant's last fiscal year is incorporated by reference into Items
10 through 13, Part III of this Annual Report on Form 10-K.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A to the Annual Report of SEACOR SMIT
Inc. (the "Company"), amends and restates in their entirety Item 7 of Part II
and Item 14 of Part IV solely to correct typographical and formatting errors.
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OFFSHORE MARINE SERVICES
The Company provides marine transportation, logistics, and related
services largely dedicated to supporting offshore oil and gas
exploration and production. Marine transportation services are provided
through the operation, domestically and internationally, of offshore
support vessels. The Company's vessels deliver cargo and personnel to
offshore installations, tow and handle the anchors of drilling rigs and
other marine equipment, support offshore construction and maintenance
work, and provide standby safety support. The Company's vessels also are
used for special projects, such as well stimulation, seismic data
gathering, freight hauling, line handling, salvage, and oil spill
emergencies. Logistics services include shorebase, marine transport, and
other supply chain management services in support of offshore
exploration and production operations.
Operating revenues are affected primarily by the number of vessels
owned, average rates per day worked and utilization of the Company's
fleet, and the number of vessels bareboat and time chartered-in.
Since 1994, acquisition transactions and investments in joint ventures
that have significantly increased the size of the Company's fleet
include: (i) 127 vessels acquired in the 1995 Graham Transaction, (ii)
11 vessels acquired in the 1995 and 1996 CNN Transactions, (iii) 41
vessels acquired in the 1996 McCall Transaction, (iv) 28 vessels
acquired and equity investments in joint ventures that owned 21 vessels
pursuant to the 1996 SMIT Transaction, (v) 24 vessels acquired in the
1997 Galaxie Transaction, and (vi) 25 vessels constructed during 1997,
1998, and 1999. The vessels acquired in the Graham Transaction, the
McCall Transaction, and the Galaxie Transaction and the vessels
constructed primarily support the oil and gas exploration and production
industry in the U.S. Gulf of Mexico; whereas, vessels acquired in the
1995 and 1996 CNN Transactions and the SMIT Transaction are employed in
foreign offshore support markets. The Company also actively monitors
opportunities to buy and sell vessels that will maximize the overall
utility and flexibility of its fleet. Since 1994, the Company has sold
113 vessels, and at December 31, 1999, 23 of the vessels sold were
bareboat chartered-in. At December 31, 1999, the Company was
constructing 2 crew and 1 anchor handling towing supply vessel that are
expected to enter service in 2000.
Rates per day worked and utilization of the Company's fleet are a
function of demand for and availability of marine vessels that is
closely aligned with the level of exploration and development of
offshore areas. The level of exploration and development of offshore
areas is affected by both short-term and long-term trends in oil and gas
prices which, in turn, are related to the demand for petroleum products
and the current availability of oil and gas resources. The table below
sets forth rates per day worked and utilization data for the Company
during the periods indicated.
Year Ended December 31,
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1997 1998 1999
------------------ ----------------- ------------------
Rates per Day Worked ($):(1)(2)
Supply/Towing supply............................... 6,283 6,572 5,432
Anchor handling towing supply...................... 10,176 12,283 11,869
Crew............................................... 2,291 2,701 2,493
Standby safety..................................... 6,033 6,620 6,045
Utility/Line handling.............................. 1,381 1,904 1,691
Geophysical, Freight, and Other.................... 4,586 6,120 5,576
Overall fleet.................................. 3,598 4,254 3,929
Overall Utilization (%):(1)
Supply/Towing supply............................... 92.3 89.4 69.9
Anchor handling towing supply...................... 84.4 85.8 73.5
Crew............................................... 97.5 93.2 83.0
Standby safety..................................... 94.0 99.5 74.1
Utility/Line handling.............................. 97.9 91.6 65.9
Geophysical, Freight, and Other.................... 97.7 99.2 55.7
Overall fleet.................................. 95.2 91.5 73.1
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(1) Rates per day worked is the ratio of total charter
revenue to the total number of vessel days worked. Rates
per day worked and overall utilization figures exclude
owned vessels that are bareboat chartered-out, vessels
owned by corporations that participate in pooling
arrangements with the Company, joint venture vessels,
and managed/operated vessels and include vessels
bareboat and time chartered-in by the Company.
(2) Revenues for certain of the Company's vessels, primarily
its standby safety vessels, are earned in foreign
currencies, primarily British pounds sterling, and have
been converted to U.S. dollars at the weighted average
exchange rate for the periods indicated.
From time to time, the Company bareboat or time charters-in vessels.
Operating revenues for vessels owned and bareboat or time chartered-in
are incurred at similar rates. However, operating expenses associated
with vessels bareboat and time chartered-in include charter hire
expenses that, in turn, are included in vessel expenses, but exclude
depreciation expense. At December 31, 1999, 28 vessels were bareboat
chartered-in, including 23 under sale and leaseback arrangements, and no
vessels were time chartered-in.
The Company also bareboat charters-out vessels. Operating revenues for
these vessels are lower than for vessels owned and operated or bareboat
chartered-in by the Company, because vessel expenses, normally recovered
through charter revenue, are the burden of the charterer. Operating
expenses include depreciation expense if the vessels which are
chartered-out are owned. At December 31, 1999, the Company had 14
vessels bareboat chartered-out, which included 11 chartered to its joint
ventures, entities affiliated with its joint venture operations, or the
environmental service segment.
The table below sets forth the Company's fleet structure at the dates
indicated.
At December 31,
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Fleet Structure 1997 1998 1999
- ----------------------------------------------------- ----------------- ----------------- ------------------
Owned.............................................. 248 225 222
Bareboat and time chartered-in..................... 11 27 28
Managed............................................ 1 4 1
Joint ventures and pool vessels(1):
TMM Joint Venture.............................. 13 17 14
SMIT Joint Venture............................. 21 18 15
Other Joint Ventures........................... - 4 6
SEAVEC Pool.................................... 5 5 4
Avian Fleet Pool (formally, Saint Fleet Pool).. 7 7 4
----------------- ----------------- ------------------
Overall Fleet................................ 306 307 294
================= ================= ==================
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(1) See "Business - Joint Ventures and Pooling Arrangements."
Vessel operating expenses are primarily a function of fleet size and
utilization. The most significant vessel operating expense items are
wages paid to marine personnel, maintenance and repairs, and marine
insurance. In addition to variable vessel operating expenses, the
offshore marine business also incurs fixed charges related to the
depreciation of property and equipment. Depreciation is a significant
operating cost, and the amount related to vessels is the most
significant component.
A portion of the Company's revenues and expenses, primarily from the
Company's North Sea operations, are paid in foreign currencies. For
financial statement reporting purposes, these amounts are translated
into U.S. dollars at the weighted average exchange rates during the
relevant period. Overall, approximately 39% of the Company's offshore
marine operating revenues were derived from foreign operations, whether
in U.S. dollars or foreign currencies, for the twelve months ended
December 31, 1999.
The Company's foreign offshore marine operations are subject to various
risks inherent in conducting business in foreign nations. These risks
include, among others, political instability, potential vessel seizure,
nationalization of assets, fluctuating currency values, hard currency
shortages, controls of currency exchange, the repatriation of income or
capital, import-export quotas, and other forms of public and
governmental regulation, all of which are beyond the control of the
Company. Although, historically, the Company's operations have not been
affected materially by such conditions or events, it is not possible to
predict whether any such conditions or events might develop in the
future. The occurrence of any one or more of such conditions or events
could have a material adverse effect on the Company's financial
condition and results of operations.
Regulatory drydockings, which are a substantial component of marine
maintenance and repair costs, are expensed when incurred. Under
applicable maritime regulations, vessels must be drydocked twice in a
five-year period for inspection and routine maintenance and repair. The
Company follows an asset management strategy pursuant to which it defers
required drydocking of selected marine vessels and voluntarily removes
these marine vessels from operation during periods of weak market
conditions and low rates per day worked. Should the Company undertake a
large number of drydockings in a particular fiscal quarter or fiscal
year or drydock and repair a disproportionate number of older vessels,
which typically have higher drydocking costs, comparative results may be
affected. For the years ended December 31, 1999, 1998, and 1997,
drydocking costs totaled $5.5 million, $10.8 million, and $11.6 million,
respectively. During those same periods, the Company completed the
drydocking of 81, 95, and 109 marine vessels, respectively.
As of December 31, 1999, the average age of vessels owned by the Company
was approximately 14.1 years. Excluding the Company's standby safety
vessels, the average age of the Company's fleet was approximately 13.7
years. The Company believes that after offshore support vessels have
been in service for approximately 25 years (20 years for crewboats), the
level of expenditures (which typically increase with vessel age)
necessary to satisfy required marine certification standards may not be
2
economically justifiable. There can be no assurance that the Company
will be able to maintain its fleet by extending the economic life of
existing vessels or acquiring new or used vessels, or that the Company's
financial resources will be sufficient to enable it to make capital
expenditures for such purposes.
Operating results are also affected by the Company's participation in
the following joint ventures: (i) the Veesea Joint Venture, a majority
owned subsidiary which operated 11 standby safety vessels in the North
Sea at December 31, 1999; (ii) the SEAVEC Pool and Avian Fleet Pool
which coordinate the marketing of 19 standby safety vessels in the North
Sea, of which 11 were owned by the Veesea Joint Venture at December 31,
1999; (iii) the TMM Joint Venture which operated 19 offshore marine
vessels in Mexico at December 31, 1999, including 5 bareboat or time
chartered-in from the Company; (iv) the SMIT Joint Ventures which
operated 16 offshore marine vessels in the Far East, Latin America, the
Middle East, and the Mediterranean at December 31, 1999; (v) the Vision
Joint Venture, a majority owned subsidiary which operated 1 offshore
marine vessel in the U.S. Gulf of Mexico at December 31, 1999; (vi) the
Logistics Joint Venture, which provides shorebase, marine transport, and
other supply chain management services, and (vii) Other Joint Ventures
which operated 8 offshore marine vessels in Latin America, the
Mediterranean, the Far East and the U.S. Gulf of Mexico. See "Business -
Joint Ventures and Pooling Arrangements."
On December 2, 1999, Energy Logistics, Inc. acquired all of the
outstanding common shares of Liberty for $1.9 million, subject to
certain adjustments as defined in the associated stock purchase
agreement. To finance the transaction, Energy Logistics, Inc. sold
additional shares of its common stock to the Company for $0.7 million,
borrowed $1.2 million from the Company, and used existing cash balances.
The Company's ownership interest in Energy Logistics, Inc. rose to 67%
following its recent share acquisition, and from December 1999, the
financial condition, results of operations, and cash flows of ELI are
reflected in the Company's consolidated financial statements. Prior to
December 1999, the Company reported its equity interest in Energy
Logistics, Inc. as an investment in a 50% or less owned company that was
accounted for by the equity method.
On February 9, 2000, the Company announced that it signed a letter of
intent to acquire all of the issued share capital of Boston Putford.
Boston Putford's standby safety vessels, certain joint venture interests
and vessels, and fixed assets will be acquired for aggregate
consideration of approximately (pound)19.0 million. Boston Putford will
also receive aggregate consideration of approximately (pound)5.0 million
for working capital in the companies at closing. The purchase
consideration will consist of (pound)15.0 million in cash, approximately
84,000 shares of Common Stock, approximately (pound)9.1 million in five
year zero coupon notes having a current value of (pound)6.2 million, and
the assumption of certain liabilities. The final purchase price is
subject to certain closing adjustments. Boston Putford's standby safety
fleet, including vessels held in joint ventures but excluding vessels
managed for third parties, consists of 18 vessels operating primarily in
the southern U.K. sector of the North Sea. Consummation of the
transaction is also subject to satisfactory completion of due diligence,
execution of definitive documentation, and receipt of all necessary
regulatory approvals and compliance with appropriate procedures in the
United States and the United Kingdom. The Company expects to consolidate
its standby safety services in the U.K. sector of the North Sea into the
Boston Putford operations following completion of its acquisition of
Boston Putford.
ENVIRONMENTAL SERVICES
The Company's environmental service business provides contractual oil
spill response and other related training and consulting services. The
Company's clients include tank vessel owner/operators, refiners and
terminal operators, exploration and production facility operators, and
pipeline operators. The Company charges a retainer fee to its customers
for ensuring by contract the availability (at predetermined rates) of
its response services and equipment. Retainer services include employing
a staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
emergency and spill response as contemplated by response plans filed by
the Company's customers in accordance with OPA 90 and various state
regulations. The Company maintains relationships with numerous
environmental sub-contractors to assist with response operations and
equipment maintenance and provide trained personnel for deploying
equipment in a spill response.
Pursuant to retainer agreements entered into with the Company, certain
vessel owners pay in advance to the Company an annual retainer fee based
upon the number and size of vessels in each such owner's fleet and in
some circumstances pay the Company additional fees based upon the level
of each vessel owner's voyage activity in the U.S. The Company
recognizes the greater of revenue earned by voyage activity or the
portion of the retainer earned in each accounting period. Certain vessel
and facility owners pay a fixed fee or a fee based on volume of
petroleum product transported for the Company's retainer services and
such fee is recognized ratably throughout the year. The Company's
retainer agreements with vessel owners generally range from one to three
years while retainer arrangements with facility owners are as long as
ten years.
Spill response revenue is dependent on the magnitude of any one spill
response and the number of spill responses within a given fiscal period.
3
Consequently, spill response revenue can vary greatly between comparable
periods and the revenue from any one period is not indicative of a trend
or of anticipated results in future periods. Costs of oil spill response
activities relate primarily to (i) payments to sub-contractors for
labor, equipment and materials, (ii) direct charges to the Company for
equipment and materials, (iii) participation interests of others in
gross profits from oil spill response, and (iv) training and exercises
related to spill response preparedness.
The Company charges consulting fees to customers for customized training
programs, its planning of and participation in customer oil spill
response drill programs and response exercises, and other special
projects.
The principal components of the Company's operating costs are salaries
and related benefits for operating personnel, payments to
sub-contractors, equipment maintenance, and depreciation. These expenses
are primarily a function of regulatory requirements and the level of
retainer business. Operating results are also affected by NRC's
participation in CPA on the West Coast of the United States.
DRILLING SERVICES
The Company's drilling service business is conducted through Chiles
Offshore, a 58.3% majority owned subsidiary. From inception and until
July 1999, Chiles operated as a development stage company, devoting
substantially all its efforts constructing two mobile offshore drilling
rigs, raising capital, and securing contracts for the Rigs. In 1997,
Chiles commenced construction of two premium jackup mobile offshore
drilling rigs, the Chiles Columbus and the Chiles Magellan, which were
delivered to Chiles in May 1999 and October 1999, respectively.
The drilling service segment's operating revenues are affected by rates
per day worked and utilization of the Rigs. The rates per day worked and
utilization of the Rigs are a function of demand for and availability of
rigs, which are closely aligned with the level of exploration and
development of offshore areas. The level of exploration and development
of offshore areas is affected by both short-term and long-term trends in
oil and gas prices which, in turn, are related to the demand for
petroleum products and the current availability of oil and gas
resources.
The drilling service segment's operating expenses are primarily a
function of fleet size and utilization. The most significant variable
operating expenses for the Rigs are compensation and related expenses
for personnel, maintenance and repairs, supplies, and insurance. In
addition to variable operating expenses, the drilling service segment
also incurs fixed charges related to the depreciation of property and
equipment. Depreciation is a significant fixed operating charge and the
amount related to the Rigs is the most significant component.
The Chiles Columbus was placed in service in June 1999. At December 31,
1999, it was operating under a multi-well contract in the U.S. Gulf of
Mexico. If all wells currently planned by the customer of the Chiles
Columbus are drilled, work is expected to continue through the third
quarter of 2000. The Chiles Magellan was placed in service in November
1999. At December 31, 1999, it was operating in the U.S. Gulf of Mexico
under a drilling contract with expected completion in February 2000.
Following this project, the Chiles Magellan is contracted to provide
additional drilling services in the U.S. Gulf of Mexico with expected
completion in June 2000 (the "Magellan Contract"). Under the terms of
the Magellan Contract, Chiles received a $1.5 million advance deposit
from the customer against expected contractual revenues under the
Magellan Contract. Failure of the Chiles Magellan to be available in
accordance with certain terms and conditions of the Magellan Contract
could obligate Chiles to return the $1.5 million advance deposit to its
customer. After an initial well, the customer under the Magellan
Contract has certain options to use the Chiles Magellan, under certain
circumstances, for additional wells in the same area for a specified
period of time at the then-current market rates. Chiles has also entered
into arrangements for the deferral, until October 2000, of certain
vendor payments totaling $3.5 million with respect to the construction
of the Rigs.
Chiles has recently entered into a Bareboat Charter Agreement
("Charter") for a rig ("Chartered Rig") constructed for the owner at a
U.S. shipyard. The Chartered Rig is similar in class to the Rigs owned
by Chiles. The Charter commenced in January 2000 upon delivery of the
Chartered Rig from the shipyard. Chiles is presently commissioning the
Chartered Rig in preparation for service in the U.S. Gulf of Mexico to
start in the second quarter of 2000.
Since delivery of the Rigs in 1999 and through December 31, 1999,
utilization and average day rates were 99.4% and $29,900, respectively.
4
RESULTS OF OPERATIONS
The following table sets forth operating revenue and operating profit by
the Company's various business segments for the periods indicated, in
thousands of dollars. The Company evaluates the performance of each
operating segment based upon the operating profit of the segment
including gains or losses from equipment sales and retirements and the
sale of interest in 50% or less owned companies and equity in the net
earnings of 50% or less owned companies, but excluding minority interest
in income or loss of subsidiaries, interest income and expense, gains or
losses from commodity swap transactions and the sale of marketable
securities, corporate expenses, and income taxes. Operating profit is
defined as Operating Income as reported in the Consolidated Statements
of Income included in Part IV of this Annual Report on Form 10-K net of
corporate expenses and certain other income and expense items. The
disaggregation of financial results has been prepared using a management
approach. Segment assets exclude those considered by the Company to be
of a corporate nature. Corporate assets include SEACOR and its wholly
owned subsidiaries' unrestricted cash, marketable securities, certain
other assets, and property and equipment related to corporate
operations. Information disclosed in the tables presented below may
differ from separate financial statements reported by subsidiaries of
the Company due to certain elimination entries required in
consolidation.
Corporate
Marine Environmental Drilling and Other Total
------------ -------------- ------------- ------------- ------------
1999
Operating Revenues -
External Customers.............................$ 258,177 $ 22,659 $ 7,651 $ 938(a)$ 289,425
Intersegment................................... 528 161 - (689) -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or Retirements, net... 1,661 16 - - 1,677
Loss from Sale of Interest in a 50% or Less
Owned Company.................................... (72) - - - (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................... 4,906 814 - (3,107) 2,613
Minority Interest in Loss of Subsidiaries........ - - - 1,148 1,148
Net Interest Expense............................. - - - (1,835) (1,835)
Losses from Commodity Swap Transactions, net..... - - - (1,323) (1,323)
Losses from Sale of Marketable Securities, net... - - - (279) (279)
Corporate Expenses............................... - - - (5,169) (5,169)
Income Taxes..................................... - - - (17,533) (17,533)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 41,989 $ 1,288 $ - $ 33,999 $ 77,276
Other Segment Assets............................. 621,197 27,650 199,294 - 848,141
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 663,186 28,938 199,294 33,999 925,417
Corporate........................................ - - - 271,574 271,574
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 663,186 $ 28,938 $ 199,294 $ 305,573 $ 1,196,991
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=========================================================================================================================
1998
Operating Revenues -
External Customers.............................$ 359,611 $ 26,180 $ - $ - $ 385,791
Intersegment................................... - - - - -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 359,611 $ 26,180 $ - $ - $ 385,791
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 127,403 $ 4,479 $ (823) $ - $ 131,059
Gains from Equipment Sales or Retirements, net... 38,227 111 - - 38,338
Gain from Sale of Interest in a 50% or Less
Owned Company.................................... 1,197 - - - 1,197
Equity in Net Earnings of 50% or Less Owned
Companies........................................ 13,657 554 - - 14,211
Minority Interest in Income of Subsidiaries...... - - - (1,612) (1,612)
Net Interest Income.............................. - - - 2,548 2,548
Gains from Commodity Swap Transactions, net...... - - - 3,273 3,273
Gains from Sale of Marketable Securities, net.... - - - 1,827 1,827
Corporate Expenses............................... - - - (5,344) (5,344)
Income Taxes..................................... - - - (60,879) (60,879)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 54,954 $ 524 $ - $ - $ 55,478
Other Segment Assets............................. 770,614 29,103 177,832 - 977,549
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 825,568 29,627 177,832 - 1,033,027
Corporate........................................ - - - 224,948 224,948
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 825,568 $ 29,627 $ 177,832 $ 224,948 $ 1,257,975
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 32,534 $ 3,846 $ 56 $ 13 $ 36,449
=========================================================================================================================
5
Corporate
Marine Environmental Drilling and Other Total
------------ ------------- ------------- ------------- -------------
1997
Operating Revenues -
External Customers............................$ 325,009 $ 21,939 $ - $ - $ 346,948
Intersegment.................................. - - - - -
------------ ------------- ------------- ------------- -------------
Total........................................ 325,009 $ 21,939 $ - $ - $ 346,948
============ ============= ============= ============= =============
Operating Profit (Loss)........................$ 115,818 $ 3,029 $ (382) $ - $ 118,465
Gains (Losses) from Equipment Sales or 62,027 (99) - - 61,928
Retirements, net................................
Equity in Net Earnings of 50% or Less Owned
Companies....................................... 5,656 771 - - 6,427
Minority Interest in Income of Subsidiaries..... - - - (301) (301)
Net Interest Expense............................ - - - (1,412) (1,412)
Corporate Expenses.............................. - - - (3,278) (3,278)
Income Taxes.................................... - - - (62,236) (62,236)
------------ ------------- ------------- ------------- -------------
Income (Loss) before Extraordinary Item.....$ 183,501 $ 3,701 $ (382) $ (67,227) $ 119,593
============ ============= ============= ============= =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies.......................$ 37,151 $ 1,219 $ - $ - $ 38,370
Other Segment Assets............................ 702,449 32,861 35,012 - 770,322
------------ ------------- ------------- ------------- -------------
Subtotal Segment Assets....................... 739,600 34,080 35,012 - 808,692
Corporate....................................... - - - 211,109 211,109
------------ ------------- ------------- ------------- -------------
Total Assets................................$ 739,600 $ 34,080 $ 35,012 $ 211,109 $ 1,019,801
============ ============= ============= ============= =============
Depreciation and Amortization...................$ 32,914 $ 3,563 $ 6 $ 55 $ 36,538
==========================================================================================================================
(a) Includes the operating revenues of the Company's
telecommunications business, Marinet (hereinafter defined),
that was acquired in April 1999 and sold effective July 1,
1999.
Revenues attributed to geographic areas were based upon the country of
domicile for offshore marine service segment customers and the country
in which the Company provided oil spill protection or other related
training and consulting services for environmental service segment
customers. The Company considers long-lived assets to be property and
equipment that has been distributed to geographical areas based upon the
assets' physical location during the applicable period. Certain of the
Company's offshore marine service segment's long-lived vessel assets
relocate between its geographical areas of operation. The costs of
long-lived vessel assets that are relocated have been allocated between
geographical areas of operation based upon length of service in the
applicable region. The following table is presented in thousands of
dollars.
United Other
United States Nigeria Kingdom Foreign Total
-------------- ------------- -------------- ------------- --------------
1999:
Revenue........................ $ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
Long-Lived Assets.............. 550,106 40,486 33,083 91,522 715,197
1998:
Revenue........................ 234,651 30,655 28,524 91,961 385,791
Long-Lived Assets.............. 406,945 47,257 31,416 139,243 624,861
1997:
Revenue........................ 216,513 25,318 39,099 66,018 346,948
Long-Lived Assets.............. 262,309 42,888 42,213 135,524 482,934
COMPARISON OF FISCAL YEAR 1999 TO FISCAL YEAR 1998
OFFSHORE MARINE SERVICES
OPERATING REVENUE. The Company's offshore marine service segment's
operating revenues decreased $100.9 million, or 28.1%, in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due primarily to lower utilization and rates per
day worked and the sale of vessels. The adverse effect of reduced
drilling and production support activities due to declines in oil and
gas prices was partially offset by an increase in operating revenues
resulting from the entry into service of vessels both constructed for
and chartered-in by the Company.
Operating revenues declined approximately $71.2 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due to lower vessel utilization. Demand for all
classes of the Company's U.S. Gulf of Mexico fleet was adversely
affected and declines in demand for its supply/towing supply and utility
vessels were particularly significant. The Company's domestic fleet
utilization ranged from 68.9% to 79.0% throughout 1999 and averaged
75.4% in December; whereas, in 1998, utilization ranged from 82.8% to
97.2%. Utilization of the Company's offshore West Africa supply/towing
and anchor handling towing supply, North Sea standby safety, and Far
East and Other Foreign regions anchor handling towing supply and
supply/towing supply vessels also declined. Utilization of the Company's
vessels operating offshore West Africa was 84.9% in 1998 compared to
60.9% in 1999. North Sea standby safety vessel utilization was 99.5% in
1998 compared to 74.1% in 1999, and in the Far East and Other Foreign
regions, utilization declined from 85.6% in 1998 to 76.0% in 1999.
Operating revenues declined approximately $32.8 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
6
ended December 31, 1998 due to declines in rates per day worked of the
Company's worldwide fleet. Approximately 60% of the decrease resulted
from lower rates per day worked of the Company's domestic fleet of
supply/towing supply, crew, and utility vessels. Rates per day worked of
the Company's domestic supply/towing supply vessels declined sharply,
averaging $7,000 during the first quarter of 1998 compared to $4,275 in
the fourth quarter of 1999. Rates per day worked also declined for the
Company's offshore West Africa anchor handling towing supply and
supply/towing supply, Far East and Other Foreign anchor handling towing
supply, and North Sea standby safety and supply/towing supply vessels.
Vessels removed from the Company's operations due to their sale or the
cancellation of certain charter-in agreements resulted in an approximate
$27.6 million decline in operating revenues between years. The entry
into operation of vessels constructed for the Company or chartered-in
increased operating revenues by approximately $36.5 million between
years. Revenues also declined between years as certain vessels
previously operated by the Company have been bareboat chartered-out.
OPERATING PROFIT. The Company's offshore marine business segment's
operating profit declined $81.2 million, or 63.8%, in the twelve month
period ended December 31, 1999 compared to the twelve month period ended
December 31, 1998 due primarily to those factors adversely affecting
operating revenues outlined above. Operating profits were also adversely
affected between comparable years due to an increase in foreign currency
translation losses resulting from the revaluation of Dutch Guilder cash
deposits during periods of a strengthening U.S. dollar. At December 31,
1999, weak demand and low rates per day worked resulted in the Company
removing 46 vessels from service, including 27 that require drydocking
prior to re-entering operation. The vessels removed from service were
primarily from the utility fleet that operated in the U.S. Gulf of
Mexico. Performance based compensation expense for administrative
personnel declined between comparable years in response to declining
profits. Operating costs also declined between years as bad debt
expenses recognized in 1998 did not recur in 1999, and the Company
recovered certain receivables written-off in prior periods.
GAINS (LOSSES) FROM EQUIPMENT SALES AND RETIREMENTS, NET. Net gains from
equipment sales and retirements decreased $36.6 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due to fewer and less valuable vessel sales. In
the twelve month period ended December 31, 1999, the Company sold 14
vessels; whereas, during the fiscal year 1998, the Company sold 34
vessels. During 1999, the Company sold 11 crew, 2 utility, and 1 anchor
handling towing supply vessel. In 1998, 8 towing supply, 8 anchor
handling towing supply, 7 utility, 6 supply, and 5 crew vessels were
sold. Of the vessels sold in 1999 and 1998, 5 and 11, respectively, were
subsequently bareboat chartered-in pursuant to sale and leaseback
transactions, and certain of the gains realized from those sales were
deferred and are being credited to income as reductions in rental
expense over the life of the respective bareboat charters.
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
declined $8.8 million in the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998 due
primarily to: (i) reduced drilling and production activities that
resulted from declines in oil and gas prices, (ii) lower gains from less
valuable vessel sales, (iii) reduced fleet size in the SMIT Joint
Ventures resulting from vessel sales, and (iv) increased trade accounts
receivable bad debt reserves with respect to customers of the TMM Joint
Venture.
In 1999, the Board of Directors of one of the SMIT Joint Ventures
adopted a plan of liquidation due to such venture's limited
opportunities for future investments and growth and the Company received
a $10.0 million liquidating dividend. The SMIT joint venture to be
liquidated was structured in 1996 pursuant to the SMIT Transaction and
commenced operations with nine owned vessels. This joint venture shall
continue operations until such time as its remaining fleet (three
vessels at December 31, 1999) can be sold or otherwise liquidated. With
respect to the Company's equity interest in the earnings of the SMIT
joint venture to be liquidated, the Company has recorded $3.0 million of
income tax expense in 1999. In prior periods, no income tax expense was
recorded in connection with this foreign joint venture's operations in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
ENVIRONMENTAL SERVICES
OPERATING REVENUE. The environmental service segment's operating
revenues decreased $3.4 million, or 12.8%, in the twelve month period
ended December 31, 1999 compared to the twelve month period ended
December 31, 1998. The decrease was due primarily to a decline in the
number and severity of oil spills managed by the Company and reduced
retainer revenues that resulted from the loss of a large customer.
OPERATING PROFIT. The environmental service segment's operating profit
increased $0.3 million, or 7.2%, in the twelve month period ended
December 31, 1999 compared to the twelve month period ended December 31,
1998. Declines in operating revenues were offset by the Company's
reduction in operating and general and administrative expenses.
7
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
increased $0.3 million in the twelve month period ended December 31,
1999 compared to the twelve month period ended December 31, 1998 due
primarily to an increase in the oil spill response activities of CPA.
DRILLING SERVICES
The Chiles Columbus was placed in service during June 1999 and the
Chiles Magellan was placed in service during November 1999. Prior to
such time, and since inception, Chiles has not engaged in operations
other than managing construction of the Rigs and related matters. With
the delivery and commissioning of the two Rigs, Chiles generated
operating revenues of $7.7 million. Chiles has incurred operating losses
since its inception in 1997.
OTHER
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity losses in
the twelve month period ended December 31, 1999 resulted primarily from
the Company's recognition of its share of the operating losses of Globe
Wireless. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method during the second
quarter of 1999. Prior to this time, the Company carried its investment
in Globe Wireless at cost. See "Liquidity and Capital Resources - Globe
Wireless Investment."
NET INTEREST INCOME (EXPENSE). In the twelve month period ended December
31, 1999, the Company incurred net interest expense; whereas, in
comparable periods of 1998, the Company realized net interest income.
Between comparable periods, funds invested in interest bearing
securities declined due primarily to the Company's use of cash for the
purchase of property and equipment, Common Stock, and the retirement of
certain indebtedness. The decrease in interest income was partially
offset by a decline in interest costs that resulted primarily from the
Company's debt repurchase program and entry into swap agreements. See
"Liquidity and Capital Resources - Stock and Debt Repurchase Program and
Certain Credit Facilities and Financial Instruments," below.
GAINS (LOSSES) FROM COMMODITY SWAP TRANSACTIONS, NET. In the twelve
month period ended December 31, 1999, the Company recognized a net loss
of $1.3 million from commodity price hedging arrangements; whereas, in
the twelve month period ended December 31, 1998, the Company recognized
a net gain of $3.3 million. In 1999, the net loss was due primarily to
the settlement prices quoted on the New York Mercantile Exchange
("NYMEX") exceeding the contract prices for various natural gas and
crude oil positions; whereas, during 1998, the net gain was due
primarily to the contract prices exceeding the settlement prices quoted
on the NYMEX for various natural gas positions. See Item 7A
"Quantitative and Qualitative Disclosures About Market Risks" for
additional discussion of the Company's commodity price hedging
arrangements.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. In the twelve
month period ended December 31, 1999, losses resulted primarily from the
sale of interest bearing securities during periods when interest rates
exceeded those in effect at date of purchase. These losses were
substantially offset by gains realized from the sale of other marketable
securities. In the twelve months ended December 31, 1998, gains resulted
primarily from the sale of interest bearing securities during periods
when interest rates were lower than those in effect at date of purchase.
CORPORATE EXPENSES. In the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998, corporate
expenses declined $0.2 million due primarily to a reduction in
performance based compensation expense in response to declining profits.
COMPARISON OF FISCAL YEAR 1998 TO FISCAL YEAR 1997
OFFSHORE MARINE SERVICES
OPERATING REVENUE. The Company's offshore marine service segment's
operating revenues increased $34.6 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. The increase was due primarily to higher rates per
day worked by many of the Company's vessels operating domestically and
in foreign regions. Domestic revenue rose due to improvements in rates
per day worked and vessel acquisitions partially offset by vessel
dispositions, a decline in the utilization of supply/towing supply,
crewboats, and utility vessels, and the relocation of vessels to work
offshore West Africa and in other foreign regions. Revenues earned from
the Company's operations offshore West Africa rose due primarily to the
relocation of vessels into the region, improved rates per day worked,
additional chartered-in vessels, and vessel acquisitions partially
offset by vessel dispositions. Revenues earned from the Company's
operations in the Far East and Latin America rose due primarily to
higher rates per day worked, additional chartered-in vessels, and vessel
acquisitions offset by vessel dispositions and the relocation of
equipment to offshore West Africa. Revenues earned from the Company's
operations in the North Sea declined due to vessel dispositions and the
8
relocation of vessels to other foreign regions offset by the effect of
higher rates per day worked.
OPERATING PROFIT. The Company's offshore marine service segment's
operating profit increased $11.6 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. The increase was due to factors affecting operating
revenue as outlined above offset by higher costs associated with (i)
crew wages, (ii) administration (as discussed below), (iii) repairs and
maintenance, (iv) bareboat and time charters-in, (v) a vessel
construction contract cancellation, and (vi) crew travel. Domestic and
foreign crew wages rose in response to competition for qualified
personnel in an active offshore market. Main engine and hull repair
costs rose primarily in response to greater running time of the
Company's crewboats. Electronic and communication costs rose due to the
installation and use of additional communication equipment aboard
vessels working domestically and in foreign regions. Bareboat charter
expense rose domestically in connection with the Company's sale and
leaseback of 19 vessels. Charter expense also rose in foreign operations
due to the addition of vessels to the Company's fleet. Certain fees and
expenses were incurred domestically pursuant to the cancellation of a
contract for the construction of a supply vessel. Crew travel expenses
rose due primarily to the relocation of vessels from domestic to foreign
markets and an increase in the frequency of crew rotation aboard other
vessels working offshore West Africa. These cost increases were offset
by a decline in domestic drydocking expenses due primarily to the
disposition and drydock deferral of certain vessels.
GAINS (LOSSES) FROM EQUIPMENT SALES AND RETIREMENTS, NET. Net gains from
equipment sales and retirements decreased $23.8 million in the twelve
month period ended December 31, 1998 compared to the twelve month period
ended December 31, 1997. During 1998, net gains from equipment sales and
retirements aggregated $38.2 million, resulting primarily from the sale
of 34 offshore marine vessels: 8 towing supply (3 of which were bareboat
chartered-in), 8 anchor handling towing supply (3 of which were bareboat
chartered-in), 7 utility, 6 supply (5 of which were bareboat
chartered-in), and 5 crew. During 1997, net gains from equipment sales
and retirements aggregated $62.0 million, resulting primarily from the
sale of 37 offshore marine vessels: 15 supply (7 of which were bareboat
chartered-in), 6 towing supply, 5 anchor handling towing supply (1 of
which was bareboat chartered-in), 7 utility, 2 crew, 1 freight, and 1
seismic. The decrease in gains between comparable periods was due
primarily to a decline in the number of offshore marine vessels sold and
the increase in the deferral of gains associated with sale and leaseback
transactions. In accordance with generally accepted accounting
principles, gains from sale and leaseback transactions are deferred to
the extent of the present value of minimum lease payments and are
credited to income as a reduction in rental expense over the applicable
lease terms.
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
from 50% or less owned companies increased $8.0 million in the twelve
month period ended December 31, 1998 compared to the twelve month period
ended December 31, 1997. The increase primarily related to a $2.1
million and $1.4 million gain from the sale of an offshore marine vessel
by the TMM Joint Venture and the SMIT Joint Ventures, respectively. The
TMM Joint Venture's earnings also rose due to fleet expansion and higher
revenues earned by offshore support vessels operating between comparable
years.
GAIN FROM SALE OF INTEREST IN A 50% OR LESS OWNED COMPANY. Gain from the
sale of the Company's investment in a 50% or less owned company
increased $1.2 million in the twelve month period ending December 31,
1998 compared to the twelve month period ending December 31, 1997.
During 1998, the Company sold its equity interest in a joint venture
entity that provided marine and underwater services to offshore terminal
and oilfield operations internationally. There was no comparable
disposition of an equity interest in a 50% or less owned company during
1997.
ENVIRONMENTAL SERVICES
OPERATING REVENUE. The Company's environmental service segment's
operating revenues increased $4.2 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997 due primarily to oil spill, retainer, and other
service revenue earned during 1998 as a result of the Company's
acquisition of ERST in October 1997.
OPERATING PROFIT. Operating profit of the Company's environmental
service segment increased $1.4 million in the twelve month period ended
December 31, 1998 compared to the twelve month period ended December 31,
1997. In addition to including the results of ERST, which was acquired
in October 1997, operating profits rose due to reduced operating costs.
DRILLING SERVICES
Since inception, the Company's drilling service segment has engaged in
no operations other than managing construction of the Rigs and related
matters. The Company has not generated any operating revenues to date.
The drilling service business' operating loss was $0.8 million in the
9
twelve month period ending December 31, 1998 as a result of general and
administrative and depreciation expenses.
OTHER
MINORITY INTEREST IN INCOME (LOSSES) OF SUBSIDIARIES. Minority interest
in income of subsidiaries of the Company increased $1.3 million in the
twelve month period ended December 31, 1998 compared to the twelve month
period ended December 31, 1997 due primarily to the commencement of
operations in June 1997 of the Vision Joint Venture.
NET INTEREST INCOME (EXPENSE). Interest income increased $12.6 million
in the twelve month period ended December 31, 1998 compared to the
twelve month period ended December 31, 1997 due primarily to greater
invested cash balances that resulted from (i) the sale in September 1997
of the Company's 7.2% Senior Notes due 2009 ("7.2% Notes"), (ii) the
sale of offshore marine vessels, (iii) the sale in April 1998 of $110.0
million aggregate principal amount of Chiles' 10.0% Senior Notes Due
2008 (the "Chiles 10.0% Notes"), and (iv) the continuing strong results
of operations.
Interest expense increased $8.6 million in the twelve month period ended
December 31, 1998 compared to the twelve month period ended December 31,
1997 due primarily to the (i) sale in September 1997 of the 7.2% Notes,
(ii) sale in April 1998 of the Chiles 10.0% Notes, and (iii)
amortization of debt discount recognized on indebtedness issued pursuant
to the SMIT Additional Consideration Transaction. The increase in
interest expense was partially offset by the capitalization of interest
costs in connection with the construction of offshore marine vessels and
the Rigs.
GAINS (LOSSES) FROM COMMODITY SWAP TRANSACTIONS, NET. Gains from
commodity swap transactions increased $3.3 million in the twelve month
period ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. During 1998, the Company entered into natural gas
commodity swap transactions that resulted in the recognition of a net
gain. There were no comparable commodity swap transactions during the
prior year. See Item 7A "Quantitative and Qualitative Disclosure About
Market Risks" for additional discussion of the Company's commodity swap
activities.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. Gains from the
sale of marketable securities increased $1.8 million in the twelve month
period ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. During 1998, the Company sold certain
available-for-sale securities that resulted in net gains from those
transactions. No available-for-sale securities were sold during the
prior year.
CORPORATE EXPENSES. Corporate administrative expenses also increased
between the comparable twelve month periods due to higher wage and legal
costs.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL. The Company's ongoing liquidity requirements arise primarily
from its need to service debt, fund working capital, acquire, construct,
or improve equipment and make other investments. Management believes
that cash flow from operations will provide sufficient working capital
to fund the Company's operating needs. The Company may, from time to
time, issue shares of Common Stock, preferred stock, debt, or a
combination thereof, or sell vessels to finance the acquisition of
equipment and businesses or make improvements to existing equipment.
The Company's cash flow levels and operating revenues are determined
primarily by the size of the Company's offshore marine and rig fleet,
rates per day worked and overall utilization of the Company's offshore
marine vessels and rigs, as well as retainer, spill response, and
consulting activities of the Company's environmental service business.
The Company's marine and drilling service businesses are directly
affected by the volatility of oil and gas prices, the level of offshore
production and exploration activity, and other factors beyond the
Company's control.
CASH AND MARKETABLE SECURITIES. At December 31, 1999, the Company's cash
and investments in marketable securities totaled $273.5 million,
including $178.5 million of unrestricted cash and cash equivalents,
$73.0 million of investments in marketable securities, and $22.0 million
of restricted cash. The Company's cash and investments in marketable
securities declined $165.7 million in the twelve month period ending
December 31, 1999 compared to the twelve month period ending December
31, 1998. See " - Cash Generation and Deployment" below.
Restricted cash at December 31, 1999 is intended for use in defraying
costs to construct offshore support vessels for the Company. At December
31, 1999, the Company had funded approximately $20.4 million in offshore
marine vessel construction costs from unrestricted cash balances, and
subject to the Maritime Administration's approval, the Company expects
such amounts to be reimbursed from construction reserve fund restricted
cash accounts.
During the years 1997 through 1999, the Company deposited proceeds from
the sale of certain offshore support vessels into escrow and
construction reserve fund bank accounts for purposes of acquiring newly
10
constructed U.S.-flag vessels and qualifying for the Company's temporary
deferral of taxable gains realized from the sale of the vessels. Escrow
accounts were established pursuant to certain exchange and escrow
agreements and restrict the use of funds deposited therein for a period
of six months. Should replacement offshore marine vessels not be
delivered prior to expiration of the applicable six-month escrow period,
funds then remaining in the escrow accounts will be released to the
Company for general use. The Company has also established, pursuant to
Section 511 of the Merchant Marine Act, 1936, as amended, joint
depository construction reserve fund accounts with the Maritime
Administration. From date of deposit, withdrawals from these accounts
are subject to prior written approval of the Maritime Administration.
Funds must be committed for expenditure within three years or be
released for the Company's general use. Gains from vessel sales
previously deferred would become immediately taxable upon release to the
Company, for general use, of sale proceeds that were deposited into
joint depository construction reserve fund accounts.
During 1998, net proceeds from the sale of the Chiles 10.0% Notes were
deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as
Escrow Agent. The use of these funds was limited to (i) partially
funding the construction of the Rigs, (ii) paying interest on the Chiles
10.0% Notes through the first two semi-annual interest payment dates,
and (iii) providing working capital. At December 31, 1999, the net
proceeds from the sale of the Chiles 10.0% Notes had been expended in
accordance with the terms of the escrow agreements.
Investments in marketable securities at December 31, 1999 were primarily
comprised of debt securities issued by U.S. Government and also included
equity securities, debt securities of the government of the United
Kingdom, debt securities of a state of the United States, and corporate
debt. Of the Company's investments in debt securities, approximately 80%
have contractual maturities of five years or less.
STOCK AND DEBT REPURCHASE PROGRAM. In 1999 and 2000, SEACOR's Board of
Directors increased its previously announced securities repurchase
authority by $120.0 million. The securities covered by the repurchase
program include Common Stock, the Company's 5 3/8% Convertible
Subordinated Notes Due 2006 (the "5 3/8% Notes") and 7.2% Notes, and the
Chiles 10.0% Notes (collectively, the "SEACOR Securities"). In the
twelve month period ended December 31, 1999, the Company acquired
1,462,000 shares of Common Stock, $43.2 million principal amount of the
Chiles 10.0% Notes, $5.2 million principal amount of the 5 3/8% Notes,
and $2.5 million principal amount of the 7.2% Notes for an aggregate
cost of $112.8 million. Since initiating its security repurchase program
in 1997, the Company has acquired 2,877,300 shares of Common Stock and
$69.0 million principal amount of the Chiles 10.0% Notes, 7.2% Notes,
and 5 3/8% Notes, at an aggregate cost of $193.3 million as of December
31, 1999. The Company has entered into swap agreements with respect to
the Chiles 10.0% Notes. See " - Credit Facilities" and Item 7A
"Quantitative and Qualitative Disclosures About Market Risks". At March
24, 2000, the Company had $37.4 million of its Board of Directors
authority available for the purchase of additional SEACOR Securities
that may be conducted from time to time through open market purchases,
privately negotiated transactions, or otherwise depending on market
conditions.
GLOBE WIRELESS. During April 1998, the Company entered into a financing
arrangement with Globe, Inc., the predecessor of Globe Wireless,
providing for potential financing from the Company aggregating $20.0
million, comprised of $10.0 million of Globe, Inc.'s Series C
Convertible Preferred Stock ("Series C Stock") and $10.0 million of
senior secured promissory notes ("Promissory Notes"). Upon signing of
the financing agreements, the Company acquired 3,288,156 shares of
Series C Stock for $7.0 million, exchanged a note evidencing a $3.0
million loan in 1997 for Promissory Notes, and received a warrant for
the purchase of additional Series C Stock at an exercise price of $2.13
per share (the "Series C Warrant"). In October 1998, the Company
purchased an additional 1,750,000 shares of Series C Stock for $3.0
million, renegotiated certain covenants of the April 1998 financing
agreement, and in connection therewith, the exercise price of the Series
C Warrant was reduced to $1.71 per share. In April 1999, the Series C
Warrant was exchanged for a warrant to purchase Class C Preferred Units
of Globe Wireless ("Class C Units") at an exercise price of $1.71 per
unit (the "SEACOR Warrants"), and all of Globe, Inc.'s Series C Stock,
including that held by the Company, was exchanged for an equivalent
number of Class C Units. Through December 16, 1999, the Company advanced
Globe Wireless an additional $13.7 million.
In May 1999, SEACOR, through its wholly owned subsidiary, SEACOR Malted
Inc., and its wholly owned subsidiary Malted Ltd., acquired all of the
issued and outstanding stock of Marinet Systems Ltd. ("Marinet"), a
United Kingdom based provider of communications services and equipment
to the maritime industry. Effective July 1, 1999, Globe Wireless
acquired all of the issued and outstanding stock of SEACOR Malted Inc.
and its wholly owned subsidiaries for a $5.3 million note payable to the
Company (the "Marinet Loan").
In December 1999, Globe Wireless commenced a private placement offering
(the "Private Placement") to raise a minimum of $34.0 million (the
"Minimum Offering") and a maximum of $44.0 million (the "Maximum
Offering") in additional capital for general corporate purposes,
including capital expenditures and working capital, through the sale of
18,565,401 Class D Preferred Units ("Class D Units") at $2.37 per unit.
11
In February 2000, the Maximum Offering was increased to $57.0 million.
The Minimum Offering was consummated as of December 16, 1999, and in
connection therewith, Globe Wireless issued 15,470,047 Class D Units in
exchange for gross cash proceeds of $24.7 million and the conversion
into Class D Units of certain advances by the Company to Globe Wireless
and the Marinet Loan, aggregating $12.0 million. In connection with the
consummation of the Minimum Offering, the Company exercised the SEACOR
Warrant and purchased 7,556,667 Class C Units at the exercise price of
$1.71 per unit from Globe Wireless in exchange for the cancellation of
$10.0 million of Promissory Notes and the payment of $3.0 million in
cash. In February 2000, Globe Wireless completed the Maximum Offering
through the sale of 8,580,586 additional Class D Units in exchange for
gross cash proceeds of $20.3 million.
Prior to 1999, the Company carried its investment in Globe Wireless at
cost. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method of accounting
during the second quarter of 1999.
CASH GENERATION AND DEPLOYMENT. Cash flow provided from operating
activities totaled $47.9 million in fiscal year 1999 and declined $74.3
million, or 60.8%, from the prior fiscal year due primarily to a decline
in operating profits of the Company's offshore marine service segment
resulting from reduced drilling and production activities.
During fiscal year 1999, the Company generated $269.0 million from
investing and financing activities. Available-for-sale securities were
sold for $134.4 million. Restricted cash balances declined by $47.2
million as withdrawals from vessel joint depository construction reserve
fund and rig escrow accounts used to defray vessel and rig construction
costs exceeded deposits into such accounts generated from the sale of
equipment. Fourteen offshore support vessels were sold for $20.9
million. Chiles borrowed $22.0 million under the Amended Chiles Bank
Facility; the Company sold, subject to swap agreements, $18.6 million
notional amount of the Chiles 10.0% Notes that it had previously
reacquired, to a financial institution; and Chiles completed an offering
of membership interests and rights to purchase membership interests, and
the Company realized $4.3 million, net of offering cost. See " - Credit
Facilities" and Item 7A "Quantitative and Qualitative Disclosures About
Market Risks." Offshore marine and environmental service segment joint
ventures distributed $11.5 million in dividends and additional cash was
provided primarily from regularly scheduled and the accelerated
repayment of notes receivable due from various of the Company's joint
ventures, cash settlements on commodity swap transactions, and the
Energy Logistics, Inc. acquisition.
During fiscal year 1999, the Company used $311.9 million in its
investing and financing activities. Capital expenditures for property
and equipment, primarily Rigs and offshore support vessels, totaled
$140.5 million. SEACOR Securities were repurchased pursuant to the Stock
and Debt Repurchase Program for $112.8 million. Investments in and
advances to 50% or less owned companies rose by $21.8 million due
primarily to the Company's investment in Globe Wireless. Marketable
securities were acquired for $15.7 million. The Company has provided
$10.2 million of cash collateral pursuant to swap agreements for the
Chiles 10.0% Notes, which may be released under certain conditions. The
costs to purchase Liberty and Marinet and additional equity interest in
Energy Logistics, Inc., net of cash acquired, totaled $6.2 million.
Additional cash was used primarily for scheduled repayments of
outstanding indebtedness and the purchase of other investments.
CAPITAL EXPENDITURES. Property and equipment capital expenditures
totaled $140.5 million, $226.8 million, and $136.1 million in 1999,
1998, and 1997, respectively. Property additions in each of those years
primarily related to the Company's acquisition, construction, and
improvement of offshore support vessels, and capital expenditures in
1999 and 1998 additionally included costs to construct the Rigs. The
offshore marine service segment's construction program that began in
1996 reflects the Company's continuing commitment to serve the offshore
oil and gas industry with equipment well suited for deep water drilling
and production activities.
At December 31, 1999, the Company was committed to the construction of
three offshore support vessels at an approximate aggregate cost of $30.3
million of which $20.9 million has been expended. These vessels are
expected to enter service in 2000.
Joint venture corporations, in which the Company owns a 50% equity
interest, are committed to the construction of two Handymax Dry-Bulk
ships that are expected to enter service in 2001. The cost to construct
and place these ships into service will approximate $39.0 million, 75%
of which is expected to be financed from external sources. The Company
also holds a 50% equity interest in another joint venture that is
currently operating a Handymax Dry-Bulk vessel built in 1990.
The Company may make selective acquisitions of offshore marine vessels
or fleets of offshore support vessels, drilling rigs, and oil spill
response equipment or expand the scope and nature of its environmental
and logistics services. The Company also may upgrade or enhance its
offshore support vessels or construct offshore support vessels to remain
competitive in the marketplace. Management anticipates that such
expenditures would be funded through a combination of existing cash
balances, cash flow provided by operations, sale of existing equipment
12
and, potentially, through the issuance of additional indebtedness,
shares of Common Stock, or the Company's preferred stock.
CREDIT FACILITIES. On November 17, 1998, the Company entered into the
DnB Credit Facility, as agent for itself and other lenders named
therein, which replaced an existing revolving credit facility with Den
norske Bank ASA. Under the terms of the DnB Credit Facility, the Company
may borrow up to $100.0 million aggregate principal amount (the "Maximum
Committed Amount") of unsecured reducing revolving credit loans maturing
on November 17, 2004. The Maximum Committed Amount will automatically
decrease semi-annually by 4.54% beginning November 17, 1999, with the
balance payable at maturity. Outstanding borrowings will bear interest
at annual rates ranging from 45 to 110 basis points (the "Margin") above
LIBOR. The Margin is determined quarterly and varies based upon the
percentage the Company's funded debt bears to earnings before interest,
taxes, depreciation, and amortization ("EBITDA"), as defined, and/or the
credit rating maintained by Moody's and Standard & Poor's, if any. The
DnB Credit Facility requires the Company, on a consolidated basis, to
maintain a minimum ratio of vessels' values to Maximum Committed Amount,
as defined, a minimum cash and cash equivalent level, a specified
interest coverage ratio, specified debt to capitalization ratios, and a
minimum net worth. The DnB Credit Facility limits the amount of secured
indebtedness which the Company and its subsidiaries may incur, provides
for a negative pledge with respect to certain activities of the
Company's vessel owning/operating subsidiaries, and restricts the
payment of dividends. At December 31, 1999, the Company had
approximately $95.0 million available for future borrowings under the
DnB Credit Facility.
On April 29, 1998, Chiles Offshore completed the sale of the Chiles
10.0% Notes. Interest on the Chiles 10.0% Notes is payable semi-annually
on May 1 and November 1 of each year commencing November 1, 1998. The
Chiles 10.0% Notes are not redeemable at the option of Chiles Offshore
prior to May 1, 2003, except that until May 1, 2001, Chiles Offshore may
redeem, at its option, in the aggregate, up to 35% of the original
principal amount of the Chiles 10.0% Notes, on a pro rata basis, with
the net proceeds of one or more Public Equity Offerings (as defined), at
a redemption price of 110% plus accrued interest to the redemption date;
provided, however, that at least $71.5 million aggregate principal
amount of the Chiles 10.0% Notes remains outstanding after each such
redemption. On and after May 1, 2003, the Chiles 10.0% Notes may be
redeemed at the option of Chiles Offshore, in whole or in part,
initially at 105.0% of the principal amount thereof and declining by
1.67% each year thereafter to 100.0% of the principal amount on and
after May 1, 2006, plus accrued interest to the date of redemption. The
proceeds from the issuance of the Chiles 10.0% Notes were placed in
escrow and used to (a) partially fund the construction of Rigs, (b) pay
interest on the Chiles 10.0% Notes through the first two semi-annual
interest payment dates, and (c) provide working capital. All obligations
with respect to the Chiles 10.0% Notes are limited exclusively to Chiles
Offshore and are nonrecourse to SEACOR. Chiles Offshore incurred $4.2
million in costs associated with the sale of the Chiles 10.0% Notes. In
October 1999, Chiles Offshore entered into amendments to the Indenture
governing the Chiles 10% Notes (the "Amendments") which were approved by
the holders of a majority of the Chiles 10.0% Notes and that had the
effect of removing certain covenants contained in such Indenture. In
consideration for such approval, consenting noteholders received $1.00
for each $1,000 in aggregate principal amount of Chiles 10.0% Notes held
by them. In January 2000, Chiles filed a notice with the Securities
and Exchange Commission terminating, retroactively effective to December
31, 1999, its reporting obligations pursuant to the Securities Exchange
Act of 1934, as amended.
Also, on April 29, 1998, Chiles Offshore entered into a bank credit
agreement that provided for a $25.0 million revolving credit facility
(the "Chiles Bank Facility") maturing December 31, 2004. The Chiles Bank
Facility was arranged by Nederlandse Scheepshypotheek Bank N.V. and
MeesPierson Capital Corporation. In December 1999, the Chiles Bank
Facility was amended and available borrowings rose from $25.0 million to
$40.0 million (the "Amended Chiles Bank Facility"). The Amended Chiles
Bank Facility provides for a floating interest rate of LIBOR plus 1 3/8%
per annum (approximately 7.3% at December 31, 1999) on amounts
outstanding under the Amended Chiles Bank Facility and provides for
repayment of such amounts in eight quarterly installments of $1.875
million beginning March 31, 2003, followed by eight quarterly
installments of $3.125 million, with the remaining balance payable on
December 31, 2006. As a condition precedent to the increase in the
Amended Chiles Bank Facility, Chiles Offshore was required to reduce the
outstanding principal amount of the Chiles 10% Notes by $15.0 million to
$95.0 million.
During November 1999, Chiles Offshore completed an offering of
membership interests and rights to purchase membership interests (the
"Offering") which provided all current members with a pro rata right to
purchase such securities in an aggregate amount of $15.0 million. The
proceeds from this Offering were used by Chiles Offshore to repurchase,
at par, $15.0 million aggregate principal amount of the Chiles 10.0%
Notes from SEACOR. A wholly owned subsidiary of SEACOR, acquired $10.6
million or approximately 71% of the Offering, and certain other members
acquired the balance of the Offering. Purchasers in the Offering have
the right to acquire an additional $3.0 million of membership interests
in Chiles Offshore at the same valuation for a period of four and
one-half years following the Offering.
13
The Rig Owners guarantee the Amended Chiles Bank Facility and such
guarantees are secured by first priority mortgages on the Rigs,
assignment of earnings of the Rigs (which may continue to be collected
by Chiles Offshore unless there occurs an event of default), and
assignments of insurance proceeds. The Amended Chiles Bank Facility
contains customary affirmative covenants, representations, and
warranties and is cross-defaulted to the related promissory notes;
provided, however, should there occur an event of default under the
Amended Chiles Bank Facility (other than arising from enforcement
actions undertaken by a holder of other indebtedness of Chiles Offshore,
enforcement actions arising from in rem claims against either of the
Rigs or bankruptcy events with respect to Chiles Offshore or a Rig
Owner), the lenders under the Amended Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the holders of the Chiles 10.0% Notes ("Noteholders") or
Chiles Offshore may cure such event of default or prepay all of the
indebtedness outstanding under the Amended Chiles Bank Facility. The
Amended Chiles Bank Facility also contains certain negative covenants
applicable to Chiles Offshore and the Guarantors, including prohibitions
against the following: certain liens on the collateral under the Amended
Chiles Bank Facility; material changes in the nature of their business;
sale or pledge of any Guarantor's membership interests; sale or
disposition of any Rig or other substantial assets; certain changes in
office locations; consolidations or mergers; certain Restricted Payments
(as defined in the Chiles Bank Facility), including distributions on
membership interests in Chiles Offshore (the "Membership Interests");
the exercise of a right to call the Chiles 10.0% Notes; or any material
amendment or modification of the Indenture. The Amended Chiles Bank
Facility further requires Chiles Offshore to prevent the Guarantors from
making certain loans and advances, except in their normal course of
business or to certain affiliates; assuming, guaranteeing or (except in
their ordinary course of business) otherwise becoming liable in
connection with any obligations other than guarantees for the benefit of
the lenders under the Amended Chiles Bank Facility, guarantees in favor
of the Noteholders or pre-existing guaranties; paying out any funds,
except in their ordinary course of business for the business of Chiles
Offshore or service of certain indebtedness permitted under the Amended
Chiles Bank Facility; and issuing or disposing of any of their own
membership interests (except to Chiles Offshore). In addition, the
Amended Chiles Bank Facility requires that the fair market value of the
Rigs, as determined by appraisers appointed by the lenders thereunder,
at all times equals or exceeds an amount equal to 200% of outstanding
indebtedness under the Amended Chiles Bank Facility. At December 31,
1999, Chiles Offshore had $18.0 million available under the Amended
Chiles Bank Facility for future borrowings.
A wholly owned subsidiary of SEACOR currently owns a 58.3% equity
interest in Chiles Offshore, which was acquired for $45.6 million, and
SEACOR owns $26.7 million principal amount of the Chiles 10.0% Notes and
has entered into swap agreements under which it bears the economic risk
of $68.1 million notional principal amount of Chiles 10% Notes covered
by such agreements. See Item 7a "Quantitative and Qualitative
Disclosures About Market Risk".
Pursuant to a February 1998 letter agreement between the Company and
SMIT, the Company agreed to prepay certain contingent obligations for
additional purchase consideration that would otherwise have been payable
to SMIT in 1999 pursuant to a certain Asset Purchase Agreement dated
December 19, 1996, by and among the Company and SMIT. The prepayment
included cash of $20.9 million and the issuance, effective January 1,
1999, of five-year subordinated promissory notes in the aggregate
principal amount of $23.2 million, which notes will bear interest at
5.467% per annum payable quarterly in arrears.
At December 31, 1999, the Company had outstanding $147.5 million
aggregate principal amount of its 7.2% Notes which will mature on
September 15, 2009. Interest on the 7.2% Notes is payable semi-annually
on March 15 and September 15 of each year commencing March 15, 1998. The
7.2% Notes may be redeemed at any time at the option of the Company, in
whole or from time to time in part, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to
the date of redemption plus a Make-Whole Premium, if any, relating to
the then prevailing Treasury Yield and the remaining life of the 7.2%
Notes. The 7.2% Notes were issued under an indenture that contains
covenants including, among others, limitations on liens and sale and
leasebacks of certain Principal Properties, as defined in the 1997
Indenture, and certain restrictions on the Company consolidating with or
merging into any other Person.
At December 31, 1999, the Company had outstanding $181.6 million
aggregate principal amount of its 5 3/8% Notes that were issued pursuant
to a private placement and the SMIT Transaction in 1996. The 5 3/8%
Notes are convertible, in whole or part, at the option of the holder at
any time prior to the close of business on the business day next
preceding November 15, 2006, unless previously redeemed into shares of
Common Stock at a conversion price of $66.00 per share (equivalent to a
conversion rate of 15.1515 shares of Common Stock per $1,000 principal
amount of the 5 3/8% Notes), subject to adjustment in certain
circumstances. The 5 3/8% Notes are redeemable at the Company's option
at any time on or after November 24, 1999 at the redemption prices
specified therein, together with accrued and unpaid interest to the
repurchase date. The 5 3/8% Notes are general unsecured obligations of
the Company, subordinated in right of payment to all senior indebtedness
of the Company and effectively subordinated in right of payment to all
indebtedness and other obligations and liabilities and any preferred
14
stock of the Company's subsidiaries. Also, pursuant to the SMIT
Transaction, the Company entered into certain lease purchase agreements
which obligate the Company to purchase two vessels from SMIT with cash
and $6.75 million principal amount of the 5 3/8% Notes in 2001.
CAPITAL STRUCTURE. At December 31, 1999, the Company's capital structure
was comprised of $468.5 million in long-term debt (including current
portion) and $508.1 million in stockholders' equity. Long-term debt
declined $6.4 million between years. The retirement of indebtedness
under the Stock and Debt Repurchase Program and scheduled payment of
other indebtedness was partially offset by an increase in borrowings
resulting from drawings under the Amended Chiles Credit Facility, the
sale of Chiles 10% Notes previously held in treasury by the Company to a
financial institution, subject to swap agreements, and debt assumed
pursuant to Energy Logistics, Inc.'s acquisition of Liberty.
Stockholders' equity rose due to an increase in retained earnings of
$30.9 million from net income and Common Stock and paid in capital of
$3.0 million primarily from the issuance of Common Stock in connection
with the acquisition of ERST that occurred in 1997 and amortization of
restricted stock. $65.5 million of Common Stock repurchases and return
to treasury of unvested restricted Common Stock and a $3.0 million
decline in accumulated other comprehensive income resulting from the
Company's investment in available-for-sale securities and foreign
currency translation adjustments offset these increases.
MINORITY INTEREST. Minority interest is primarily comprised of the
interest of the Company's partners in the net worth of three joint
ventures: Chiles, the Veesea Joint Venture, and the Vision Joint
Venture.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as either
an asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative's fair market value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement,
and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133" ("SFAS 137"). SFAS 137 is an amendment of SFAS
133 and defers the effective date of SFAS 133 to June 15, 2000. The
Company has not yet quantified the impact on its financial statements
but does not believe adoption will have a material impact on net income,
comprehensive income, and accumulated other comprehensive income.
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) Documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement
Schedules.
See Index to Consolidated Financial Statements and Financial
Statement Schedules on page 43 of this Form 10-K.
3. Exhibits:
Exhibit
Number Description
- ------ -----------
2.1* Asset Purchase Agreement, dated as of December 19, 1996, by and
among SEACOR Holdings, Inc. and certain of its subsidiaries, and
Smit Internationale N.V. and certain of its subsidiaries
(incorporated herein by reference to Exhibit 2.0 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
2.2* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Triangle Marine, Inc.,
F.C. Felterman, Ernest Felterman, D. Lee Felterman and Daniel C.
Felterman (incorporated herein by reference to Exhibit 2.1 to
the Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.3* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman,
Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein, by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.4* Definitive Purchase Agreement, dated September 5, 1995, by and
among Graham Marine Inc., Edgar L. Graham, J. Clark Graham, and
Glenn A. Graham (incorporated herein by reference to Exhibit 2.0
to the Company's Current Report on Form 8-K dated September 15,
1995).
2.5* Global Agreement, dated as of November 14, 1995, by and among
Compagnie Nationale de Navigation and Feronia International
Shipping, SA and SEACOR Holdings, Inc. and the subsidiaries
listed in said agreement (incorporated herein by reference to
Exhibit 2.2 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
2.6* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and McCall
Enterprises, Inc. (incorporated herein by reference to Exhibit
2.1 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with the Commission on June 7, 1996).
2.7* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Support Services, Inc. and
McCall Support Vessels, Inc. (incorporated herein by reference
to Exhibit 2.2 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
2.8* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall
Crews, Inc. (incorporated herein by reference to Exhibit 2.3 to
the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
2.9* Exchange Agreement relating to McCall Crewboats, L.L.C., dated
as of May 31, 1996, by and among SEACOR Holdings, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.4 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
16
2.10* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Boat Rentals, Inc., dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., McCall Enterprises, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.5 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.11* Share Exchange Agreement and Plan of Reorganization relating to
Philip A. McCall, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.6 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
2.12* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Crews, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.7 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
3.1* Restated Certificate of Incorporation of SEACOR SMIT Inc.
(incorporated herein by reference to Exhibit 3.1(a) to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
3.2* Certificate of Amendment to the Restated Certificate of
Incorporation of SEACOR SMIT Inc. (incorporated herein by
reference to Exhibit 3.1(b) to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1997 and filed
with the Commission on August 14, 1997).
3.3* Amended and Restated By-laws of SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (No. 333-12637) of
SEACOR Holdings, Inc. filed with the Commission on September 25,
1996).
4.1* Indenture, dated as of November 1, 1996, between First Trust
National Association, as trustee, and SEACOR Holdings, Inc.
(including therein forms of 5-3/8% Convertible Subordinated
Notes due November 15, 2006 of SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 4.0 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 and filed with the Commission on
November 14, 1996).
4.2* Indenture, dated as of September 22, 1997, between SEACOR SMIT
Inc. and First Trust National Association, as trustee (including
therein form of Exchange Note 7.20% Senior Notes Due
2009)(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.3* Investment and Registration Rights Agreement, dated as of March
14, 1995, by and among SEACOR Holdings, Inc., Miller Family
Holdings, Inc., Charles Fabrikant, Mark Miller, Donald
Toenshoff, Alvin Wood, Granville Conway and Michael Gellert
(incorporated herein by reference to Exhibit 4.0 of the
Company's Current Report on Form 8-K dated March 14, 1995, as
amended).
4.4* Investment and Registration Rights Agreement, dated as of May
31, 1996, among SEACOR Holdings, Inc. and the persons listed on
the signature pages thereto (incorporated herein by reference to
Exhibit 10.8 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
4.5* Registration Rights Agreement, dated November 5, 1996, between
SEACOR Holdings, Inc. and Credit Suisse First Boston
Corporation, Salomon Brothers Inc. and Wasserstein Perella
Securities, Inc. (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 and filed with the
Commission on November 14, 1996).
4.6* Investment and Registration Rights Agreement, dated as of
December 19, 1996, by and between SEACOR Holdings, Inc. and Smit
International Overseas B.V. (incorporated herein by reference to
Exhibit 4.0 to the Company's Current Report on Form 8-K dated
December 19, 1996 and filed with the Commission on December 24,
1996).
17
4.7* Investment and Registration Rights Agreement, dated as of
January 3, 1997, among SEACOR Holdings, Inc., Acadian Offshore
Services, Inc., Galaxie Marine Service, Inc., Moonmaid Marine,
Inc. and Triangle Marine, Inc. (incorporated herein by reference
to Exhibit 4.6 to the Company's Registration Statement on Form
S-3 (No. 333-20921) filed with the Commission on January 31,
1997).
4.8* Investment and Registration Rights Agreement, dated October 27,
1995, by and between SEACOR Holdings, Inc. and Coastal Refining
and Marketing, Inc. (incorporated herein by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3 (No.
33-97868) filed with the Commission on November 17, 1995).
4.9* Investment and Registration Rights Agreement, dated November 14,
1995, by and between SEACOR Holdings, Inc. and Compagnie
Nationale de Navigation (incorporated herein by reference to
Exhibit 4.3 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
4.10* Registration Agreement, dated as of September 22, 1997, between
the Company and the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.11* Restated Stockholders' Agreement dated December 16, 1992
(incorporated herein by reference to Exhibit 10.12 to the Annual
Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal year
ended December 31, 1992).
10.1* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Enterprises, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.2* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Support Vessels, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.2
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.3* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of N.F. McCall Crews, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.3 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.4* Indemnification Agreement, dated as of May 31, 1996, among all
of the members of McCall Crewboats, L.L.C., Norman McCall, as
representative of such members, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.5* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Boat Rentals, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.5
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.6* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Philip A. McCall, Inc. and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.7* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.7 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
18
10.8* The Master Agreement, dated as of June 6, 1996, by and among
Compagnie Nationale de Navigation, SEACOR Holdings, Inc. and
SEACOR Worldwide Inc. (incorporated herein by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1996).
10.9* Management and Administrative Services Agreement, dated January
1, 1990, between SCF Corporation and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.32 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.10* Amendment No. 1 to the Management and Services Agreement, dated
as of January 1, 1993, between SCF Corporation and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.34 to the Annual Report on Form 10-K of SEACOR Holdings, Inc.
for the fiscal year ended December 31, 1992).
10.11* Lease Agreement, dated September 1, 1989, between The Morgan
City Fund and NICOR Marine Inc. (SEACOR Marine Inc., as
successor lessee) (incorporated herein by reference to Exhibit
10.33 to the Company's Registration Statement on Form S-1 (No.
33-53244) filed with the Commission on November 10, 1992).
10.12*,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.13*,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated
herein by reference to SEACOR Holdings, Inc.'s Proxy Statement
dated March 18, 1996 relating to the Annual Meeting of
Stockholders held on April 18, 1996).
10.14*,** Benefit Agreement, dated May 1, 1989, between NICOR Marine Inc.
and Lenny P. Dantin (assumed by SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 10.51 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.15*,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by reference
to Exhibit 10.61 to the Annual Report on Form 10-K of SEACOR
Holdings, Inc. for the fiscal year ended December 31, 1992).
10.16* Management and Services Agreement, dated January 1, 1985,
between NICOR Marine (Nigeria) Inc. and West Africa Offshore
Limited (assumed by SEACOR Holdings, Inc.) (incorporated herein
by reference to Exhibit 10.55 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission
on November 10, 1992).
10.17* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.18* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.19* Joint Venture Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit-Lloyd (Antillen) N.V. (incorporated
herein by reference to Exhibit 10.0 to the Company's Current
Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.20* Form of Management Agreement (incorporated herein by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.21* Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated herein
by reference to Exhibit 10.3 to the Company's Current Report on
Form 8-K dated December 19, 1996 and filed with the Commission
on December 24, 1996).
19
10.22* Salvage and Maritime Contracting Agreement, dated December 19,
1996, between SEACOR Holdings, Inc. and Smit Internationale N.V.
(incorporated herein by reference to Exhibit 10.5 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.23* License Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc., certain subsidiaries of SEACOR Holdings, Inc.
and Smit Internationale N.V. (incorporated herein by reference
to Exhibit 10.6 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.24* Amended and Restated Operating Agreement of Chiles Offshore LLC,
dated as of December 16, 1997, between SEACOR Offshore Rigs
Inc., COI, LLC and the other Members identified therein.
10.25* Letter Agreement, dated February 26, 1998, between SEACOR SMIT
Inc. and certain of its subsidiaries and SMIT Internationale
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K filed with the Commission of March 11, 1998).
10.26* Purchase Agreement, dated as of September 15, 1997, between the
Company and Salomon Brothers Inc., individually and as
representative of the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
10.27* Revolving Credit Facility Agreement dated as of June 30, 1997
among SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the
other banks and financial institutions named therein
(incorporated herein by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
10.28* Agreement, dated October 27, 1995, by and among SEACOR Holdings,
Inc., NRC Holdings, Inc., Coastal Refining and Marketing, Inc.,
and Phibro Energy USA, Inc. (incorporated herein by reference to
Exhibit 10.1 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 15, 1995).
10.29*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and Mark Miller (incorporated
herein by reference to Exhibit 10.3 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.30*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and James Miller (incorporated
herein by reference to Exhibit 10.4 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.31*,** Letter agreement, dated February 26, 1997, between SEACOR SMIT
Inc. and certain of its' subsidiaries and SMIT Internationale,
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Current Report on Form 8-K
filed with the Commission on March 11, 1998).
10.32 Agreement for a U.S. $100,000,000 Revolving Credit Facility to
be made available to SEACOR SMIT Inc. by the financial
institutions identified on Schedule A and Den Norske Bank ASA,
as agent, dated November 17, 1998.
10.33 Amendment No. 1 To Credit Agreement made as of February 4, 1999
by and between SEACOR SMIT Inc., the financial institutions
listed in Schedule A to that certain Credit Agreement dated
November 17, 1998 and Den norske Bank ASA.
10.34 Amendment No. 2 To Credit Agreement made as of October 1, 1999
by and between SEACOR SMIT Inc., certain financial institutions
and Den norske Bank ASA., which further amends that certain
Revolving Credit Agreement dated November 17, 1998 and Amendment
No. 1 thereto dated February 4, 1999.
10.35*,** Form of Type A Restricted Stock Grant Agreement (incorporated
herein by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999).
10.36*,** Form of Type B Restricted Stock Grant Agreement (incorporated
herein by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999).
20
10.37*,** Form of Option Agreement for Officers and Key Employees pursuant
to the SEACOR SMIT Inc. 1996 Share Incentive Plan (incorporated
herein by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999).
21.1 List of Registrant's Subsidiaries (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999).
23.1 Consent of Arthur Andersen LLP (incorporated herein by reference
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999).
27.1 Financial Data Schedule (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999).
- ---------------
* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required
to be filed as an exhibit pursuant to Item 14 (c) of the rules governing
the preparation of this report.
(b) Reports on Form 8-K:
None.
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to
be signed on its behalf by the undersigned, thereunto duly authorized.
SEACOR SMIT INC.
(Registrant)
By: /s/ Lenny P. Dantin
--------------------------------------
Lenny P. Dantin
Vice President, and Treasurer
(Principal Accounting Officer
and Controller)
Date: April 6, 2000
22
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Financial Statements:
Page
Report of Independent Public Accountants................................................... 38
Consolidated Balance Sheets - December 31, 1999 and 1998................................... 39
Consolidated Statements of Income for each of the three years
ended December 31, 1999, 1998, and 1997................................................. 40
Consolidated Statements of Changes in Equity for each of the
three years ended December 31, 1999, 1998, and 1997..................................... 41
Consolidated Statements of Cash Flows for each of the three years
ended December 31, 1999, 1998, and 1997................................................. 42
Notes to Consolidated Financial Statements................................................. 43
Financial Schedules:
Reports of Independent Public Accountants on Financial
Statement Schedule...................................................................... 61
Valuation and Qualifying Accounts for each of the three
years ended December 31, 1999, 1998, and 1997........................................... 62
All Financial Schedules, except those set forth above, have been omitted
since the information required is included in the financial statements
or notes or have been omitted as not applicable or required.
23
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SEACOR SMIT Inc.:
We have audited the accompanying consolidated balance sheets of SEACOR
SMIT Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998 and the related consolidated statements of income, changes
in equity and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SEACOR SMIT
Inc. and subsidiaries as of December 31, 1999 and 1998 and the results
of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Arthur Andersen LLP
New Orleans, Louisiana
February 15, 2000
24
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS 1999 1998
----------- -----------
Current Assets:
Cash and cash equivalents, including restricted cash of $14,239 at December 31, 1998 ............ $ 178,509 $ 175,267
Marketable securities (available-for-sale) ...................................................... 18,196 40,325
Trade and other receivables, net of allowance for
doubtful accounts of $1,567 and $1,956, respectively ......................................... 69,501 86,621
Prepaid expenses and other ...................................................................... 15,810 9,520
----------- -----------
Total current assets ....................................................................... 282,016 311,733
----------- -----------
Investments, at Equity, and Receivables from 50% or Less Owned Companies ........................... 77,276 55,478
Available-for-Sale Securities ...................................................................... 54,809 154,378
Property and Equipment:
Vessels and equipment ........................................................................... 603,854 506,279
Rigs ............................................................................................ 193,820 --
Construction in progress ........................................................................ 21,761 185,116
Other ........................................................................................... 39,577 45,188
----------- -----------
859,012 736,583
Less-accumulated depreciation ................................................................... 143,815 111,722
----------- -----------
715,197 624,861
----------- -----------
Restricted Cash .................................................................................... 21,985 69,234
Other Assets ....................................................................................... 45,708 42,291
----------- -----------
$ 1,196,991 $ 1,257,975
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt ............................................................... $ 2,832 $ 2,122
Accounts payable and accrued expenses ........................................................... 29,757 45,842
Accrued wages ................................................................................... 4,870 4,740
Accrued interest ................................................................................ 4,056 4,511
Other current liabilities ....................................................................... 7,477 14,503
----------- -----------
Total current liabilities .................................................................. 48,992 71,718
----------- -----------
Long-Term Debt ..................................................................................... 465,661 472,799
Deferred Income Taxes .............................................................................. 101,704 86,124
Deferred Gains and Other Liabilities ............................................................... 35,783 51,623
Minority Interest in Subsidiaries .................................................................. 36,721 32,929
Stockholders' Equity:
Common stock, $.01 par value, 40,000,000 shares authorized; 14,215,458 and
14,146,457 shares issued in 1999 and 1998, respectively ...................................... 142 141
Additional paid-in capital ...................................................................... 275,051 272,012
Retained earnings ............................................................................... 368,022 337,086
Less 2,934,284 and 1,472,134 shares held in treasury in 1999 and 1998, respectively, at cost .... (131,183) (65,656)
Unamortized restricted stock .................................................................... (1,110) (972)
Accumulated other comprehensive income (loss) ................................................... (2,792) 171
----------- -----------
Total stockholders' equity ................................................................. 508,130 542,782
----------- -----------
$ 1,196,991 $ 1,257,975
=========== ===========
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
25
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
1999 1998 1997
------------ ------------ ------------
Operating Revenue:
Marine ..................................................................... $ 258,705 $ 359,611 $ 325,009
Other ...................................................................... 30,720 26,180 21,939
------------ ------------ ------------
289,425 385,791 346,948
------------ ------------ ------------
Costs and Expenses:
Operating expenses -
Marine .................................................................... 154,947 177,236 158,175
Other ..................................................................... 11,839 10,486 9,318
Administrative and general ................................................. 34,744 36,102 28,299
Depreciation and amortization .............................................. 41,282 36,449 36,538
------------ ------------ ------------
242,812 260,273 232,330
------------ ------------ ------------
Operating Income ............................................................. 46,613 125,518 114,618
------------ ------------ ------------
Other Income (Expense):
Interest income ............................................................ 20,495 25,346 12,756
Interest expense ........................................................... (22,330) (22,798) (14,168)
Gain from equipment sales or retirements, net .............................. 1,677 38,338 61,928
Other ...................................................................... (2,939) 6,492 569
------------ ------------ ------------
(3,097) 47,378 61,085
------------ ------------ ------------
Income Before Income Taxes, Minority Interest, Equity in Earnings
of 50% or Less Owned Companies, and Extraordinary Item ..................... 43,516 172,896 175,703
------------ ------------ ------------
Income Tax Expense:
Current .................................................................... 358 33,635 36,317
Deferred ................................................................... 14,891 26,658 25,067
------------ ------------ ------------
15,249 60,293 61,384
------------ ------------ ------------
Income Before Minority Interest, Equity in Earnings of 50% or
Less Owned Companies, and Extraordinary Item ............................... 28,267 112,603 114,319
Minority Interest in (Income) Loss of Subsidiaries ........................... 1,148 (1,612) (301)
Equity in Net Earnings of 50% or Less Owned Companies ........................ 330 13,627 5,575
------------ ------------ ------------
Income Before Extraordinary Item ............................................. 29,745 124,618 119,593
Extraordinary Item - Gain/(Loss) on Extinguishment of Debt, net of tax ....... 1,191 1,309 (439)
------------ ------------ ------------
Net Income ................................................................... $ 30,936 $ 125,927 $ 119,154
============ ============ ============
Basic Earnings Per Common Share:
Income before extraordinary item ........................................... $ 2.50 $ 9.49 $ 8.64
Extraordinary item ......................................................... 0.10 0.10 (0.03)
------------ ------------ ------------
Net income ................................................................... $ 2.60 $ 9.59 $ 8.61
============ ============ ============
Diluted Earnings Per Common Share:
Income before extraordinary item ........................................... $ 2.46 $ 8.17 $ 7.50
Extraordinary item ......................................................... 0.08 0.08 (0.03)
------------ ------------ ------------
Net income ................................................................... $ 2.54 $ 8.25 $ 7.47
============ ============ ============
Weighted Average Common Shares:
Basic ...................................................................... 11,911,653 13,135,111 13,840,205
Diluted .................................................................... 14,834,963 16,090,556 16,845,001
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
26
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
Accumulated
Additional Unamortized Other
Common Paid-in Retained Treasury Restricted Comprehensive Comprehensive
Stock Capital Earnings Stock Stock Income Income
- --------------------------------------------- --------- ---------- ------------ ---------- ----------- ------------- -------------
1999
- -----------------------------------------------
Balance, December 31, 1998 $ 141 $ 272,012 $ 337,086 $ (65,656) $ (972) $ 171 $ -
Add/(Deduct) -
-Net income for fiscal year 1999 - - 30,936 - - - 30,936
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition - 1,482 - - - - -
Issuance of restricted stock 1 1,594 - - (1,653) - -
-Amortization of restricted stock - - - - 1,508 - -
-Cancellation of restricted stock - - - (7) 7 - -
-Net currency translation adjustments - - - - - (526) (526)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (2,437) (2,437)
-Debt offering costs - (37) - - - - -
-Purchase of treasury shares - - - (65,520) - - -
-------- ---------- ------------- ---------- ----------- ------------ -------------
Balance, December 31, 1999 $ 142 $ 275,051 $ 368,022 $(131,183) $(1,110) $ (2,792) $ 27,973
===================================================================================================================================
1998
- -----------------------------------------------
Balance, December 31, 1997 $ 140 $ 268,728 $ 211,159 $ (5,365) $ (986) $ 338 $ -
Add/(Deduct) -
-Net income for fiscal year 1998 - - 125,927 - - - 125,927
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition - 442 - - - - -
Exercise of stock options 1 1,473 - - - - -
Issuance of restricted stock - 1,369 - - (1,319) - -
-Amortization of restricted stock - - - - 1,333 - -
-Net currency translation adjustments - - - - - (121) (121)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (46) (46)
-Purchase of treasury shares - - - (60,291) - - -
-------- ---------- ------------- ---------- ----------- ------------- -------------
Balance, December 31, 1998 $ 141 $ 272,012 $ 337,086 $ (65,656) $ (972) $ 171 $ 125,760
===================================================================================================================================
1997
- -----------------------------------------------
Balance, December 31, 1996 $ 139 $ 258,904 $ 92,005 $ (622) $ (279) $ 924 $ -
Add/(Deduct) -
-Net income for fiscal year 1997 - - 119,154 - - - 119,154
-Issuance of common stock:
Galaxie transaction 1 2,787 - - - - -
SMIT transaction - 1,554 - - - - -
ERST/O'Brien's Inc. acquisition - 3,614 - - - - -
Exercise of stock options - 656 - - - - -
Issuance of restricted stock - 1,213 - - (1,146) - -
-Amortization of restricted stock - - - - 439 - -
-Net currency translation adjustments - - - - - (570) (570)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (16) (16)
-Purchase of treasury shares - - - (4,743) - - -
-------- ---------- ------------- ---------- ----------- ------------- -------------
Balance, December 31, 1997 $ 140 $ 268,728 $ 211,159 $ (5,365) $ (986) $ 338 $ 118,568
===================================================================================================================================
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
27
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
1999 1998 1997
--------- --------- ---------
Cash Flows from Operating Activities:
Net income ........................................................................ $ 30,936 $ 125,927 119,154
Depreciation and amortization ..................................................... 41,282 36,449 36,538
Restricted stock amortization ..................................................... 1,508 1,333 439
Debt discount amortization ........................................................ 129 1,275 7
Bad debt expense .................................................................. (328) 455 1,155
Deferred income taxes ............................................................. 14,891 26,658 25,067
Equity in net earnings of 50% or less owned companies ............................. (330) (13,627) (5,575)
Extraordinary (gain) loss, extinguishment of debt ................................. (1,191) (1,309) 439
(Gain) loss from sale of investment in 50% or less owned companies ................ 72 (1,197) --
(Gain) loss on commodity swap transactions, net ................................... 1,323 (3,273) --
(Gain) loss from sale of available-for-sale securities, net ....................... 279 (1,827) --
Gain from equipment sales or retirements, net ..................................... (1,677) (38,338) (61,928)
Amortization of deferred gains on sale and leaseback transactions ................. (24,278) (19,797) --
Minority interest in income (loss) of subsidiaries ................................ (1,148) 1,612 301
Other, net ........................................................................ 3,382 2,770 1,451
Changes in operating assets and liabilities -
(Increase) decrease in receivables .............................................. 15,139 231 (35,976)
(Increase) in prepaid expenses and other assets ................................. (5,692) (5,230) (1,600)
Increase (decrease) in accounts payable, accrued and other liabilities .......... (26,425) 10,029 26,076
--------- --------- ---------
Net cash provided by operations ............................................... 47,872 122,141 105,548
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment ............................................... (140,470) (226,779) (136,097)
Proceeds from the sale of marine vessels and equipment ............................ 20,889 143,965 139,828
Investments in and advances to 50% or less owned companies ........................ (21,798) (6,973) (7,075)
Principal payments on notes due from 50% or less owned companies .................. 8,610 2,611 723
Proceeds from sale of investment in 50% or less owned companies ................... 263 2,310 --
Net (increase) decrease in restricted cash account ................................ 47,249 (22,251) (46,983)
Proceeds from sale of available-for-sale securities ............................... 134,352 143,241 --
Proceeds from maturity of held-to-maturity securities ............................. -- 33,020 311
Purchases of available-for-sale securities ........................................ (15,745) (209,018) (127,454)
Purchase of held-to-maturity securities ........................................... -- -- (33,032)
Purchases of convertible preferred stock of and loans to Globe Wireless, LLC ...... -- (11,500) (3,000)
Cash settlement from commodity price hedging arrangements ......................... 3,694 (431) --
Dividends received from 50% or less owned companies ............................... 11,450 2,334 --
Acquisitions, net of cash acquired ................................................ (6,239) -- --
Other, net ........................................................................ (2,476) 269 (2,308)
--------- --------- ---------
Net cash provided by (used in) investing activities ........................... 39,779 (149,202) (215,087)
--------- --------- ---------
Cash Flows from Financing Activities:
Payments of long-term debt and stockholder loans .................................. (47,830) (14,741) (10,383)
Proceeds from issuance of long-term debt .......................................... 38,115 -- 1,125
Payments on capital lease obligations ............................................. (1,587) (1,454) (1,844)
Net proceeds from the sale of Chiles Offshore LLC 10.0% Senior Notes .............. -- 105,762 --
Collateral deposits pursuant to swap agreements ................................... (10,166) -- --
Net proceeds from sale of 7.2% Subordinated Notes ................................. -- -- 148,049
Proceeds from sale of minority interest ........................................... -- -- 4,096
Proceeds from membership interest offering of Chiles Offshore LLC ................. 4,338 -- --
Distribution of membership interest to a minority shareholder ..................... -- (2,725) --
Common stock acquired for treasury ................................................ (65,520) (60,291) (4,743)
Other, net ........................................................................ (36) 757 (832)
--------- --------- ---------
Net cash provided by (used in) financing activities ........................... (82,686) 27,308 135,468
--------- --------- ---------
Effects of Exchange Rate Changes on Cash and Cash Equivalents ......................... (1,723) (361) 399
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents .................................. 3,242 (114) 26,328
Cash and Cash Equivalents, beginning of period ........................................ 175,267 175,381 149,053
--------- --------- ---------
Cash and Cash Equivalents, end of period .............................................. $ 178,509 $ 175,267 $ 175,381
========= ========= =========
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
28
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES:
NATURE OF OPERATIONS. SEACOR SMIT Inc. ("SEACOR") and its subsidiaries
(the "Company") furnish offshore support services to the offshore oil
and gas exploration and production industry and provide contractual oil
spill response and professional services to those who store, transport,
produce, or handle petroleum and certain non-petroleum oils. The
Company's offshore support vessels operate principally in the United
States, West Africa, the North Sea, the Far East, Latin America, and the
Mediterranean. SEACOR also owns a majority membership interest in Chiles
Offshore LLC ("Chiles Offshore") and its wholly owned subsidiaries
("Chiles"), a joint venture and strategic alliance created to own and
operate state-of-the-art premium jackup offshore drilling rigs. In 1999,
construction was completed on two premium jackup offshore drilling rigs
(the "Rigs"). Since inception in 1997 and until July 1999, Chiles
operated as a development stage company, devoting all its efforts to
constructing the Rigs, raising capital, and securing contracts for the
Rigs.
BASIS OF CONSOLIDATION. The consolidated financial statements include
the accounts of SEACOR and all majority owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. The equity
method of accounting is used by the Company when it has a 20% to 50%
ownership interest in other entities and the ability to exercise
significant influence over their operating and financial policies.
Accordingly, the Company's share of the net earnings of these entities
is included in consolidated net income. Investments in other companies
are carried at cost.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS. Cash equivalents refer to securities with
maturities of three months or less when purchased. At December 31, 1998,
cash, totaling $14,239,000, was restricted as to use by Chiles under
certain escrow agreements. See Note 6, Restricted Cash.
ACCOUNTS RECEIVABLE. Customers of offshore marine support and rig
services are primarily major and large independent oil and gas
exploration and production companies; whereas, customers of oil spill
and emergency response services include tank vessel owner/operators,
refiners, terminals, exploration and production facilities and pipeline
operators. The Company's customers are granted credit on a short-term
basis and related credit risks are considered minimal.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at
historical cost and depreciated over the estimated useful lives of the
related assets. Depreciation is computed on the straight-line method for
financial reporting purposes. Maintenance and repair costs, including
routine drydock inspections on vessels in accordance with maritime
regulations, are charged to operating expense as incurred. Expenditures
that extend the useful life or improve the marketing and commercial
characteristics of vessels and major renewals or improvements to other
properties are capitalized. Vessels and related equipment are
depreciated over 20-25 years, and the Rigs are depreciated over 25
years. All other property and equipment are depreciated and amortized
over two to ten years.
Certain interest costs incurred during the construction of offshore
support vessels and the Rigs have been capitalized as part of the
assets' carrying values and are being amortized to expense over such
assets estimated useful lives. Interest capitalized in 1999, 1998, and
1997 totaled $9,836,000, $8,455,000, and $1,516,000, respectively.
OTHER ASSETS. Intangibles and other assets include the following, in
thousands:
1999 1998
----------- ------------
Goodwill $ 20,118 $ 17,682
Convertible preferred stock of Globe Wireless, LLC - 10,000
Deferred financing costs 9,824 10,788
Net sale-type leases, see Note 12 2,311 3,454
Covenants-not-to-compete 57 1,509
Notes receivable 1,523 4,500
Collateral deposits pursuant to swap agreements, see Note 2 10,166 -
Common stock investments, carried at cost 1,000 -
Receivable due from a financial institution pursuant
to swap agreements, see Note 2 6,772 -
Other 436 764
----------- ------------
52,207 48,697
Less accumulated amortization (6,499) (6,406)
----------- ------------
Total other assets $ 45,708 $ 42,291
=========== ============
29
Intangible assets are being amortized to expense primarily on a
straight-line basis over their estimated period of benefit, ranging from
two to twenty years. Amortization expense for intangible assets totaled
$2,703,000 in 1999, $2,190,000 in 1998, and $947,000 in 1997. In 1998,
other assets included the Company's $14,500,000 equity investment in and
loans to Globe Wireless, LLC ("Globe Wireless"), a telecommunications
service provider that operates a worldwide network of high frequency
radio stations that provide a worldwide wireless data network initially
targeted at the maritime industry in support of Internet messaging,
telex, and facsimile communications. Globe Wireless also provides the
maritime industry Telex-Over-Radio and satellite messaging services. Due
to an ability to significantly influence the operating activities of
Globe Wireless, the Company began accounting for its investment in Globe
Wireless under the equity method during the second quarter of 1999, see
Note 5, Investments, at Equity, and Receivables From 50% or Less Owned
Companies.
INCOME TAXES. Deferred income tax assets and liabilities have been
provided in recognition of the income tax effect attributable to the
difference between assets and liabilities reported in the tax return and
financial statements. Deferred tax assets or liabilities are provided
using the enacted tax rates expected to apply to taxable income in the
periods in which the deferred tax assets and liabilities are expected to
be settled or realized.
DEFERRED GAIN. The Company has entered into vessel sale and leaseback
transactions and other vessel sale transactions with joint venture
corporations in which the Company has a 50% or less ownership interest.
Certain gains realized from these transactions were not immediately
recognized as income but were deferred in the Consolidated Balance
Sheets. For the sale and leaseback transactions, gains were deferred to
the extent of the present value of minimum lease payments and are being
amortized to income as reductions in rental expense over the applicable
lease terms. For vessel sale transactions with joint venture
corporations, gains were deferred to the extent of the Company's
ownership interest and are being amortized to income over the applicable
vessels' depreciable lives.
FOREIGN CURRENCY TRANSLATION. The assets, liabilities, and results of
operations of certain SEACOR subsidiaries are measured using the
currency of the primary foreign economic environment within which they
operate, their functional currency. For the purpose of consolidating
these subsidiaries with SEACOR, the assets and liabilities of these
foreign operations are translated to U.S. dollars at currency exchange
rates as of the balance sheet date and for revenue and expenses at the
weighted average currency exchange rates during the applicable reporting
periods. Translation adjustments resulting from the process of
translating these subsidiaries' financial statements are charged to
Accumulated Other Comprehensive Income in Stockholders' Equity.
Certain SEACOR subsidiaries also enter into transactions denominated in
currencies other than their functional currency. Changes in currency
exchange rates between the functional currency and the currency in which
a transaction is denominated is included in the determination of net
income in the period in which the currency exchange rates change. Net
pre-tax foreign currency exchange losses were $1,288,000 in 1999 and not
material in 1998 and 1997. Gains and losses on foreign currency
transactions that are designated as, and effective as, economic hedges
of a net investment in a foreign entity (such as debt denominated in a
foreign currency or forward exchange contracts) are charged to
Accumulated Other Comprehensive Income in Stockholders' Equity. Gains or
losses on foreign currency transactions that do not hedge an exposure
are included in determining net income in accordance with the
requirements for other foreign currency transactions as described above.
REVENUE RECOGNITION. The Company's offshore marine and drilling service
segments earn revenue primarily from the time charter of vessels and
drilling contracts for rigs to customers based upon daily rates of hire.
A time charter is a lease arrangement under which the Company provides a
vessel or rig to a customer and is responsible for all crewing,
insurance, and other operating expenses. Vessel or rig charters may
range from several days to several years. Drilling contracts may be for
single or multiple wells or for term periods.
Environmental customers are charged retainer fees for ensuring by
contract the availability (at predetermined rates) of the Company's
response services and equipment. Retainer services include employing a
staff to supervise response to an oil spill or other emergency and
maintaining specialized equipment. Certain vessel owners pay in advance
a minimum annual retainer fee based upon the number and size of vessels
in each such owner's fleet and in some circumstances pay the Company
additional fees based upon the level of each vessel owner's voyage
activity in the U.S. The Company recognizes the greater of revenue
earned by voyage activity or the portion of the retainer earned in each
accounting period. Certain other vessel owners pay a fixed fee for the
Company's retainer service and such fee is recognized ratably throughout
the year. Facility owners generally pay a quarterly fee based on a
formula that defines and measures petroleum products transported to or
processed at the facility. Some facility owners pay an annual fixed fee
and such fee is recognized ratably throughout the year. Retainer
agreements with vessel owners generally range from one to three years
while retainer arrangements with facility owners are as long as ten
years. Spill response revenue is dependent on the magnitude of any one
spill response and the number of spill responses within a given fiscal
30
year. Consequently, spill response revenue can vary greatly between
comparable periods. Consulting fees are also earned by the Company's
environmental service business from preparation of customized training
programs, planning of and participation in customer oil spill response
drill programs and response exercises, and other special projects.
31
EARNINGS PER SHARE. Basic earnings per common share were computed based
on the weighted-average number of common shares issued and outstanding
for the relevant periods. Diluted earnings per common share were
computed based on the weighted-average number of common shares issued
and outstanding plus all potentially dilutive common shares that would
have been outstanding in the relevant periods assuming the vesting of
restricted stock grants and the issuance of common shares for stock
options and convertible subordinated notes through the application of
the treasury stock and if-converted methods, respectively. Certain
options and share awards, 31,067, 52,711, and 16,960 in 1999, 1998, and
1997, respectively, were excluded from the computation of diluted
earnings per share as the effect would have been antidultive.
Per
Income Shares Share
------ ------ -----
FOR THE YEAR ENDED 1999-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 29,745,000 11,911,653 $ 2.50
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 123,631
Convertible Securities.................................. 6,714,000 2,799,679
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions............................. $ 36,459,000 14,834,963 $ 2.46
=============== ============== =========
FOR THE YEAR ENDED 1998-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 124,618,000 13,135,111 $ 9.49
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 125,901
Convertible Securities.................................. 6,761,000 2,829,544
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.............................. $ 131,379,000 16,090,556 $ 8.17
=============== ============== =========
FOR THE YEAR ENDED 1997-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 119,593,000 13,840,205 $ 8.64
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 163,930
Convertible Securities.................................. 6,787,000 2,840,866
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.............................. $ 126,380,000 16,845,001 $ 7.50
=============== ============== =========
COMPREHENSIVE INCOME. In 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components in a full set of
general purpose financial statements. Comprehensive income is defined as
the total of net income and all other changes in equity of an enterprise
that result from transactions and other economic events of a reporting
period other than transactions with owners. The Company has chosen to
disclose Comprehensive Income in the Consolidated Statements of Changes
in Equity. For purposes of SFAS 130, the Company's other comprehensive
income or loss was comprised of net currency translation adjustments and
unrealized holding gains and losses on available-for-sale securities.
Income taxes allocated to each component of other comprehensive income
during the years indicated are as follows, in thousands of dollars:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
----------------- ------------------ -----------------
1999
Foreign currency translation adjustments................................. $ (809) $ 283 $ (526)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. (4,030) 1,412 (2,618)
Less - reclassification adjustment for (gains) losses included in
net income......................................................... 279 (98) 181
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (4,560) $ 1,597 $ (2,963)
================= ================== =================
1998
Foreign currency translation adjustments................................. $ (186) $ 65 $ (121)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. 1,757 (615) 1,142
Less - reclassification adjustment for (gains) losses included in
net income......................................................... (1,827) 639 (1,188)
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (256) $ 89 $ (167)
================= ================== =================
1997
Foreign currency translation adjustments................................. $ (876) $ 306 $ (570)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. (25) 9 (16)
Less - reclassification adjustment for (gains) losses included in
net income......................................................... - - -
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (901) $ 315 $ (586)
================= ================== =================
32
Accumulated other comprehensive income balances during the years indicated are
as follows, in thousands of dollars:
Foreign Unrealized Accumulated
Currency Gains (Losses) on Other Comprehensive
Items Securities Income
------------------------ ------------------------ -----------------------
1999
Beginning balance...............$ 233 $ (62) $ 171
Current period change........... (526) (2,437) (2,963)
------------------------ ------------------------ -----------------------
Ending Balance..................$ (293) $ (2,499) $ (2,792)
======================== ======================== =======================
1998
Beginning balance...............$ 354 $ (16) $ 338
Current period change........... (121) (46) (167)
------------------------ ------------------------ -----------------------
Ending Balance..................$ 233 $ (62) $ 171
======================== ======================== =======================
1997
Beginning balance...............$ 924 $ - $ 924
Current period change........... (570) (16) (586)
------------------------ ------------------------ -----------------------
Ending Balance..................$ 354 $ (16) $ 338
======================== ======================== =======================
RELIANCE ON FOREIGN OPERATIONS. For the years ended December 31, 1999,
1998, and 1997, approximately 36%, 39%, and 38%, respectively, of the
Company's operating revenues were derived from its foreign operations.
The Company's foreign operations, primarily contained in its offshore
marine service segment, are subject to various risks inherent in
conducting business in foreign nations. These risks include, among
others, political instability, potential vessel seizure, nationalization
of assets, currency restrictions and exchange rate fluctuations,
import-export quotas, and other forms of public and governmental
regulations, all of which are beyond the control of the Company.
Although, historically, the Company's operations have not been affected
materially by such conditions or events, it is not possible to predict
whether any such conditions or events might develop in the future. The
occurrence of any one or more of such conditions or events could have a
material adverse effect on the Company's financial condition and results
of operations. Oil spill response and related training and consulting
service revenues derived from foreign markets have not been material,
and the Rigs operate in the U.S. Gulf of Mexico.
RECENT ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and
reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured
at its fair value. SFAS 133 requires that changes in the derivative's
fair market value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative's gains and losses to offset related results
on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. In June 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133"
("SFAS 137"). SFAS 137 is an amendment of SFAS 133 and defers the
effective date of SFAS 133 to June 15, 2000. The Company has not yet
quantified the impact on its financial statements but does not believe
adoption will have a material impact on net income, comprehensive
income, and accumulated other comprehensive income.
RECLASSIFICATIONS. Certain reclassifications of prior year information
have been made to conform with the current year presentation.
2. FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments have
been determined using available market information and appropriate
valuation methodologies. Considerable judgment was required in
developing the estimates of fair value, and accordingly, the estimates
presented herein, in thousands of dollars, are not necessarily
indicative of the amounts that the Company could realize in a current
market exchange.
1999 1998
----------------------------- -----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------------- ------------- -------------- -------------
ASSETS:
Cash and temporary cash investments............................. $ 178,509 $ 178,509 $ 175,267 $ 175,267
Marketable securities........................................... 73,005 73,005 194,703 194,703
Collateral deposits, notes, and other receivables............... 22,169 22,151 12,114 12,072
Restricted cash................................................. 21,985 21,985 69,234 69,234
Convertible preferred and other stock investments, carried at
cost.......................................................... 1,000 1,000 10,000 10,000
Commodity swaps, options, and futures and forward contracts..... 59 59 3,708 3,708
LIABILITIES:
Long-term debt, including current portion....................... 449,238 424,886 454,079 441,599
Indebtedness to a minority shareholder of a subsidiary.......... 607 630 607 669
Commodity swaps, options, and futures and forward contracts..... 1,285 1,285 37 37
33
The carrying value of cash and temporary cash investments, restricted
cash, collateral deposits, and other receivables approximate fair value.
It was not practicable to estimate the fair value of the Company's 1998
investment in convertible preferred stock and other less significant
stock investments in 1999 because of the lack of quoted market prices
and the inability to estimate fair value without incurring excessive
costs. The fair values of the Company's notes receivable, long-term
debt, indebtedness to a minority stockholder, marketable securities,
commodity swaps, options, and futures, and forward contracts were
estimated based upon quoted market prices or by discounting the
underlying cash flows using market information as to interest rates for
receivables and indebtedness of similar terms and maturity.
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports
located in the United Kingdom, where its functional currency is pounds
sterling. The financial statements of the Company's United Kingdom
operations are measured using the pound sterling and changes in the
strength of that currency relative to the U.S. dollar and the
corresponding adjustment to the net assets of those operations caused by
exchange rate fluctuations result in the recognition of currency
translation adjustments that are reported in Accumulated Other
Comprehensive Income in Stockholders' Equity. To protect the U.S. dollar
value of certain pound sterling denominated net assets of the Company
from the effects of volatility in foreign exchange rates that might
occur prior to their conversion to U.S. dollars, the Company has entered
into forward exchange contracts. The forward exchange contracts enable
the Company to sell pounds sterling in the future at fixed exchange
rates to offset the consequences of changes in foreign exchange on the
amount of U.S. dollar cash flows to be derived from the net assets. The
Company considers these forward exchange contracts as economic hedges of
its net investment in the United Kingdom and resulting gains or losses
from those transactions are charged to Accumulated Other Comprehensive
Income in Stockholders' Equity. At December 31, 1999, the total notional
value of those forward exchange contracts was $3,935,000, all of which
expire at various dates through October 2000.
The Company has entered into and settled various positions in natural
gas and crude oil via swaps, options, and futures contracts pursuant to
which, on each applicable settlement date, the Company receives or pays
an amount, if any, by which a contract price for a swap, an option, or a
futures contract exceeds the settlement price quoted on the New York
Mercantile Exchange ("NYMEX") or receives or pays the amount, if any, by
which the settlement price quoted on the NYMEX exceeds the contract
price. The general purpose of these hedge transactions is to provide
value to the Company should the price of natural gas and crude oil
decline which over time, if sustained, would lead to a decline in the
Company's offshore assets' market values and cash flows. For accounting
purposes, the Company records the change in the market value of its
commodity contracts at the end of each month and recognizes a related
gain or loss. For the twelve month periods ending December 31, 1999 and
1998, the Company has recognized $1,323,000 of net losses and $3,273,000
of net gains, respectively, from commodity hedging activities that were
reported as Other Income in the Consolidated Statements of Income. At
December 31, 1999, the Company's positions in commodity contracts were
not material. The Company had no positions in commodity contracts during
1997.
In order to reduce its cost of capital, the Company entered into swap
agreements during 1999 with a major financial institution with respect
to notional amounts equal to a portion of the $110,000,000 aggregate
principal amount of the Chiles 10.0% Senior Notes Due 2008 (the "Chiles
10.0% Notes"). Pursuant to each such agreement, such financial
institution has agreed to pay to the Company an amount equal to interest
paid by Chiles on the notional amount of Chiles 10.0% Notes subject to
such agreement, and the Company has agreed to pay to such financial
institution an amount equal to interest currently at the rate of
approximately 6.9% per annum on the agreed upon price of such notional
amount of Chiles 10.0% Notes as set forth in the applicable swap
agreement. At December 31, 1999, the Company bears the economic risk of
$68,130,000 notional principal amount of the Chiles 10.0% Notes covered
by such swap agreements. The Company has provided the financial
institution with cash collateral of $10,166,000 which will be released
to the Company should the aggregate exposure under the swap agreements
be reduced to less than $50,000,000.
Upon termination of each swap agreement, the financial institution has
agreed to pay to the Company the amount, if any, by which the fair
market value of the notional amount of Chiles 10.0% Notes subject to the
swap agreement on such date exceeds the agreed upon price of such
notional amount as set forth in such swap agreement, and the Company has
agreed to pay to such financial institution the amount, if any, by which
the agreed upon price of such notional amount exceeds the fair market
value of such notional amount on such date. Each swap agreement
terminates upon the earliest to occur of the redemption in full or
maturity of the Chiles 10.0% Notes, at any time at the election of the
Company or, at the election of the financial institution, on April 30,
2004. At December 31, 1999, the market value of such swaps, totaling
$6,772,000, has been recorded as a premium with respect to the Chiles
10.0% Notes and a receivable due from the financial institution with
which the Company has swap agreements. The premium will be amortized
34
over the remaining life of the Chiles 10.0% Notes, subject to periodic
revaluation based upon the fair market value of such swaps.
3. MARKETABLE SECURITIES:
The Company's marketable securities are categorized as
available-for-sale, as defined by the Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Available-for-sale securities are measured at fair
values with unrealized holding gains and losses charged to Accumulated
Other Comprehensive Income in Stockholders' Equity.
The amortized cost and fair value of marketable securities at December
31, 1999 and 1998 were as follows, in thousands of dollars:
Gross Unrealized Holding
-----------------------------
Type of Securities Amortized Cost Gains Losses Fair Value
- -------------------------------------------- ----------------- ------------ ------------ ------------------
1999
AVAILABLE-FOR-SALE:
U.S. Government and Agencies......... $ 56,312 $ - $ (3,282) $ 53,030
U.S. States and Political Subdivisions 1,045 - (81) 964
Corporate Debt Securities............ 1,770 - (80) 1,690
U.K. Government Securities........... 4,439 - (110) 4,329
Equity Securities.................... 13,428 637 (1,073) 12,992
----------------- ------------ ------------ ------------------
$ 76,994 $ 637 $ (4,626) $ 73,005
================= ============ ============ ==================
1998
AVAILABLE-FOR-SALE:
U.S. Government and Agencies......... $ 142,409 $ 1,465 $ (429) $ 143,445
U.S. States and Political Subdivisions 42,240 37 (783) 41,494
Corporate Debt Securities............ 5,143 - (337) 4,806
U.K. Government Securities........... 4,529 49 - 4,578
Equity Securities.................... 427 - (47) 380
----------------- ------------ ------------ ------------------
$ 194,748 $ 1,551 $ (1,596) $ 194,703
================= ============ ============ ==================
The contractual maturities of marketable securities at December 31, 1999
were as follows, in thousands of dollars:
Amortized Fair
Type and Maturity Cost Value
- ------------------------------------------------------------- ------------ -------------
AVAILABLE-FOR-SALE:
Mature in One Year or Less................................ $ 18,276 $ 18,196
Mature After One Year Through Five Years.................. 32,381 30,645
Mature After Five Years Through Ten Years.................. 5,317 4,873
Mature After Ten Years..................................... 7,592 6,299
------------ -------------
$ 63,566 $ 60,013
============ =============
During 1999 and 1998, the sale of available-for-sale securities resulted
in gross realized gains of $721,000 and $2,084,000, respectively, and
gross realized losses of $1,000,000 and $257,000, respectively. The
specific identification method was used to determine the cost of
available-for-sale securities in computing realized gains and losses. No
available-for-sale securities were sold during 1997.
4. VESSEL ACQUISITIONS AND DISPOSITIONS:
SMIT TRANSACTION. On December 19, 1996, the Company acquired
substantially all of the offshore support vessel assets, vessel spare
parts, and certain related joint venture interests owned by SMIT
Internationale N.V. ("SMIT") and its subsidiaries (the "SMIT
Transaction"). Pursuant to a letter of intent, dated December 19, 1996,
between the Company and SMIT, that provided for the Company to acquire
an additional four vessels (the "Malaysian Purchase") that were owned by
a Malaysian joint venture in which SMIT had an interest, the Company
completed the Malaysian Purchase for aggregate consideration of
$12,909,000 in 1997.
GALAXIE TRANSACTION. On January 3, 1997, the Company acquired
substantially all of the offshore marine assets, including vessels,
owned by Galaxie Marine Service, Inc., Moonmaid Marine, Inc., Waveland
Marine Service, Inc., and Triangle Marine, Inc. (collectively,
"Galaxie"), for aggregate consideration of $23,354,000, consisting of
$20,567,000 in cash and 50,000 shares of SEACOR's common stock. The 24
vessels acquired from Galaxie primarily serve the oil and gas industry
in the U.S. Gulf of Mexico.
VESSEL CONSTRUCTION. Since 1996, the Company completed the construction
of 11 crew, 7 anchor handling towing supply, 5 supply, and 2 utility
vessels at an approximate aggregate cost of $234,140,000.
VESSEL DISPOSITIONS. The table below sets forth, during the fiscal years
indicated, the number of offshore support vessels sold by type of
service. At December 31, 1999, 23 of those vessels, including 15
supply/towing supply, 5 crew, and 3 anchor handling towing supply, were
bareboat chartered-in by the Company.
Type of Vessel 1999 1998 1997
------------------------------------------ ------------- ------------- -------------
Utility................................... 2 7 7
Supply.................................... - 6 15
Anchor Handling Towing Supply............. 1 8 5
Crew...................................... 11 5 2
Towing Supply............................. - 8 6
Freight................................... - - 1
Seismic................................... - - 1
------------- ------------- -------------
14 34 37
============= ============= =============
35
5. INVESTMENTS, AT EQUITY, AND RECEIVABLES FROM 50% OR LESS OWNED
COMPANIES:
Investments, carried at equity, and advances to 50% or less owned
companies at December 31, 1999 and 1998 were as follows, in thousands of
dollars:
Ownership
50% or Less Owned Companies Percentage 1999 1998
------------------------------------------ --------------- ------------- -------------
Globe Wireless, LLC....................... 47.4% $ 31,646 $ -
SEAMEX International, Ltd................. 40.0% 14,025 14,195
Ocean Marine Services (Egypt) Ltd......... 33.3% 6,252 6,897
SEACOR-Smit (Aquitaine) Ltd............... 50.0% 5,641 14,529
Maritima Mexicana, S.A.................... 40.0% 3,828 4,506
Ultragas Smit Lloyd Ltda.................. 49.0% 3,524 2,638
Patagonia Offshore Services S.A........... 50.0% 2,595 4,228
Other..................................... 25.7%-50.0% 9,765 8,485
------------- -------------
$ 77,276 $ 55,478
============= ==============
GLOBE WIRELESS. During April 1998, the Company entered into a financing
arrangement with Globe, Inc., the predecessor of Globe Wireless,
providing for potential financing from the Company aggregating
$20,000,000, comprised of $10,000,000 of Globe, Inc.'s Series C
Convertible Preferred Stock ("Series C Stock") and $10,000,000 of senior
secured promissory notes ("Promissory Notes"). Upon signing of the
financing agreements, the Company acquired 3,288,156 shares of Series C
Stock for $7,000,000, exchanged a note evidencing a $3,000,000 loan in
1997 for Promissory Notes, and received a warrant for the purchase of
additional Series C Stock at an exercise price of $2.13 per share (the
"Series C Warrant"). In October 1998, the Company purchased an
additional 1,750,000 shares of Series C Stock for $3,000,000,
renegotiated certain covenants of the April 1998 financing agreement,
and in connection therewith, the exercise price of the Series C Warrant
was reduced to $1.71 per share. In April 1999, the Series C Warrant was
exchanged for a warrant to purchase Class C Preferred Units of Globe
Wireless ("Class C Units") at an exercise price of $1.71 per unit (the
"SEACOR Warrants"), and all of Globe, Inc.'s Series C Stock, including
that held by the Company, was exchanged for an equivalent number of
Class C Units. Through December 16, 1999, the Company advanced Globe
Wireless an additional $13,721,000.
In May 1999, SEACOR, through its wholly owned subsidiary, SEACOR Malted
Inc., and its wholly owned subsidiary Malted Ltd., acquired all of the
issued and outstanding stock of Marinet Systems Ltd. ("Marinet"), a
United Kingdom based provider of communications services and equipment
to the maritime industry. Effective July 1, 1999, Globe Wireless
acquired all of the issued and outstanding stock of SEACOR Malted Inc.
and its wholly owned subsidiaries for a $5,279,000 note payable to the
Company (the "Marinet Loan").
In December 1999, Globe Wireless commenced a private placement offering
(the "Private Placement") to raise a minimum of $34,000,000 (the
"Minimum Offering") and a maximum of $44,000,000 (the "Maximum
Offering") in additional capital for general corporate purposes,
including capital expenditures and working capital, through the sale of
18,565,401 Class D Preferred Units ("Class D Units") at $2.37 per unit.
In February 2000, the Maximum Offering was increased to $57,000,000. The
Minimum Offering was consummated as of December 16, 1999, and in
connection therewith, Globe Wireless issued 15,470,047 Class D Units in
exchange for gross cash proceeds of $24,664,000 and the conversion into
Class D Units of certain advances by the Company to Globe Wireless and
the Marinet Loan, aggregating $12,000,000. In connection with the
consummation of the Minimum Offering, the Company exercised the SEACOR
Warrant and purchased 7,556,667 Class C Units at the exercise price of
$1.71 per unit from Globe Wireless in exchange for the cancellation of
$10,000,000 of Promissory Notes and the payment of $2,954,000 in cash.
In February 2000, Globe Wireless completed the Maximum Offering through
the sale of 8,580,586 additional Class D Units in exchange for gross
cash proceeds of $20,336,000. At present, through its ownership of Class
D Units and Class C Units, the Company controls approximately 38% of the
voting Units issued by Globe Wireless.
Prior to 1999, the Company carried its investment in Globe Wireless at
cost. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method of accounting
during the second quarter of 1999.
SMIT JOINT VENTURES. Pursuant to the SMIT Transaction, the Company and
SMIT structured a joint venture, SEACOR-Smit (Aquitaine) Ltd., a
Bahamian corporation ("Aquitaine"), and the Company purchased the joint
venture interests of SMIT in Smit Swire Shilbaya Egypt Ltd., an Egyptian
corporation ("SSS"), and Ultragas Smit Lloyd Ltda., a Chilean
corporation ("Ultragas-Smit"). During 1998, the assets of SSS were
transferred to Ocean Marine Services (Egypt) Ltd. ("OMS"), also an
Egyptian corporation. At December 31, 1999, OMS owned six vessels that
were operating offshore Egypt; Ultragas-Smit owned three vessels that
36
were operating offshore Chile; and Aquitaine owned three vessels that
were operating in the Far East and Latin America.
In 1999, the Board of Directors of Aquitaine adopted a plan of
liquidation due to such venture's limited opportunities for future
investments and growth and the Company received a $10,000,000
liquidating dividend. Aquitaine shall continue operations until such
time as its remaining fleet can be sold or otherwise liquidated. With
respect to the Company's equity interest in the net earnings of
Aquitaine, the Company has recorded $3,000,000 of income tax expense in
1999. In prior periods, no income tax expense was recorded in connection
with this foreign joint venture's operations in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."
PATAGONIA. During 1997, the Company and a subsidiary of Sociedad Naviera
Ultragas Ltda., the Company's joint venture partner in Ultragas-Smit,
formed Patagonia Offshore Services S.A., a Panamanian corporation
("Patagonia"), to operate vessels in support of the Argentine and
adjacent offshore markets. Patagonia owns one vessel that was acquired
from the Company in 1997. The Company realized a gain from the vessel
sale that has been deferred to the extent of its ownership interest in
Patagonia and is being amortized to income over the vessel's depreciable
life.
TMM JOINT VENTURES. During 1994, the Company and Transportacion Maritima
Mexicana S.A. de C.V., a Mexican corporation ("TMM"), structured a joint
venture to serve the Mexican offshore market (the "TMM Joint Venture")
that is comprised of two corporations, Maritima Mexicana, S.A. and
SEAMEX International Ltd. ("SEAMEX"), a Liberian corporation. Since
1994, the Company has sold six of its vessels to the TMM Joint Venture.
The Company realized gains from the vessel sales that have been deferred
to the extent of the Company's ownership interest in the TMM Joint
Venture and are being amortized to income over the vessels' depreciable
lives. At December 31, 1999, the TMM Joint Venture operated 12 offshore
support vessels owned by the joint venture and 7 bareboat and time
chartered-in offshore support vessels, 5 of which were provided by the
Company.
OTHER. The Company participates in other joint ventures that operate
offshore support vessels, environmental service businesses, and a
Handymax Dry-Bulk vessel built in 1990.
At December 31, 1999, the amount of consolidated retained earnings that
represents undistributed earnings of 50% or less owned companies
accounted for by the equity method was $21,001,000. Deferred taxes have
not been recorded with respect to $11,113,000 of those earnings.
6. RESTRICTED CASH:
At December 31, 1999, restricted cash, totaling $21,985,000, is intended
for use in defraying costs to construct offshore support vessels for the
Company. At December 31, 1999, the Company has funded $20,421,000 of
offshore support vessels construction costs from unrestricted cash
balances, and subject to the Maritime Administration's approval, the
Company expects such amounts to be reimbursed from construction reserve
fund restricted cash accounts, as discussed below.
Proceeds from the sale of certain offshore support vessels in 1997,
1998, and 1999 have been deposited into escrow and construction reserve
fund bank accounts for purposes of acquiring newly constructed U.S.-flag
vessels and qualifying for the Company's temporary deferral of taxable
gains realized from the sale of the vessels. Escrow accounts were
established pursuant to certain exchange and escrow agreements and
restrict the use of funds deposited therein for a period of six months.
Should replacement offshore support vessels not be delivered prior to
expiration of the applicable six-month escrow period, funds then
remaining in the escrow accounts will be released to the Company for
general use. In 1998, the Company also established, pursuant to Section
511 of the Merchant Marine Act, 1936, as amended, joint depository
construction reserve fund accounts with the Maritime Administration.
From date of deposit, withdrawals from these accounts are subject to
prior written approval of the Maritime Administration. Funds must be
committed for expenditure within three years or be released for the
Company's general use. Gains from vessel sales previously deferred would
become immediately taxable upon release to the Company, for general use,
of sale proceeds that were deposited into joint depository construction
reserve fund accounts.
Net proceeds from the sale by Chiles of the Chiles 10.0% Notes were
deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as
Escrow Agent. The use of these funds was limited to (i) partially
funding the construction of the Rigs, (ii) paying interest on the Chiles
10.0% Notes through the first two semi-annual interest payment dates,
and (iii) providing working capital. At December 31, 1999, the net
proceeds from the sale of the Chiles 10.0% Notes had been expended in
accordance with the terms of the escrow agreements.
37
7. INCOME TAXES:
Income before income taxes, minority interest, equity in net earnings of
50% or less owned companies, and extraordinary item derived from the
United States and foreign operations for the years ended December 31,
are as follows, in thousands of dollars:
1999 1998 1997
--------------- --------------- ---------------
United States........................................$ 36,382 $ 118,721 $ 141,979
Foreign.............................................. 7,134 54,175 33,724
--------------- --------------- ---------------
$ 43,516 $ 172,896 $ 175,703
=============== =============== ===============
The Company files a consolidated U.S. federal tax return. Income tax
expense (benefit) consisted of the following components for the years
ended December 31, in thousands of dollars:
1999 1998 1997
--------------- --------------- ---------------
Current:
State.............................................$ 666 $ 1,367 $ 295
Federal........................................... (2,176) 26,607 33,303
Foreign........................................... 1,868 5,661 2,719
Deferred:
Federal........................................... 14,891 26,658 25,067
--------------- --------------- ---------------
$ 15,249 $ 60,293 $ 61,384
=============== =============== ===============
The following table reconciles the difference between the statutory
federal income tax rate for the Company to the effective income tax
rate:
1999 1998 1997
--------------- ---------------- ----------------
Statutory Rate..................................... 35.0.% 35.0 % 35.0%
Foreign and State Taxes............................ 1.8.% 1.3 % 0.2%
Other.............................................. (1.8)% (1.4)% (0.3%
--------------- --------------- ---------------
35.0 % 34.9 % 34.9%
=============== =============== ===============
The components of the net deferred income tax liability were as follows,
for the years ended December 31, in thousands of dollars:
1999 1998
-------------- --------------
Deferred tax assets:
Foreign Tax Credit Carryforwards.............. $ 2,486 $ 881
Subpart F Loss................................ 2,499 2,462
Nondeductible Accruals........................ 827 1,030
Other......................................... 1,800 128
-------------- --------------
Total deferred tax assets............... 7,612 4,501
-------------- --------------
Deferred tax liabilities:
Property and equipment........................ 106,099 88,184
Investment in Subsidiaries.................... 3,060 2,192
Other......................................... - 93
-------------- --------------
Total deferred tax liabilities.......... 109,159 90,469
-------------- --------------
Net deferred tax liabilities...... $ 101,547 $ 85,968
============== ==============
The Company has not recognized a deferred tax liability of $7,585,000
for undistributed earnings of certain non-U.S. subsidiaries and joint
venture corporations because it considers those earnings to be
indefinitely reinvested abroad. As of December 31, 1999, the
undistributed earnings of these subsidiaries and joint venture
corporations were $21,671,000.
8. LONG-TERM DEBT:
Long-term debt balances, maturities, and interest rates are as follows
as of December 31, in thousands of dollars:
1999 1998
---------------- ----------------
5 3/8% Convertible Subordinated Notes due 2006, interest payable semi-annually $ 181,600 $ 186,750
7.2% Senior Notes due 2009, interest payable semi-annually 147,500 150,000
10.0% Senior Notes of Chiles due 2008, interest payable semi-annually 68,265 92,870
5.467% Subordinated Promissory Notes due SMIT in 2004, interest payable quarterly 23,200 23,200
Chiles Bank Facility, principal payments beginning 2003 and due through 2006,
bearing interest at LIBOR plus 1 3/8% (approximately 7.3% at December 31, 1999) 22,000 -
Capital Lease Obligations, see Note 12 19,255 20,842
Promissory Notes due various financial institutions, primarily secured by property
and equipment, interest rates ranging from 7.15% to 10.0%, principal repayments
at various dates through 2004 1,515 -
Promissory Note due a vessel charterer, payable in equal monthly installments
from from February 1998 through June 2002, bearing interest at 10.0%,
secured by mortgage on a vessel 737 985
Promissory Note due a stockholder, payable in equal annual installments from
January 1998 through January 2001, bearing interest at 7.5% 536 776
---------------- ----------------
464,608 475,423
Less - Portion due within one year (2,832) (2,122)
- Debt premium or (discount), net 3,885 (502)
---------------- ----------------
$ 465,661 $ 472,799
================ ================
38
Annual maturities of long-term debt for the five years following
December 31, 1999 are as follows, in thousands of dollars.
2000 2001(1) 2002 2003 2004
----------- ----------- ------------ ------------ ------------
Amount..................................... $ 2,832 $ 18,729 $ 282 $ 7,636 $ 30,765
=========== =========== ============ ============ ============
- --------------
(1) Six million seven hundred and fifty thousand dollars of the debt
maturing in 2001 is payable in convertible subordinated notes in
accordance with the terms of a lease between the Company and
SMIT.
CONVERTIBLE NOTES. On November 5, 1996, the Company completed the
private placement of $172,500,000 aggregate principal amount of its 5
3/8% Convertible Subordinated Notes due November 15, 2006 (the
"Convertible Notes"). The Convertible Notes and the SMIT Convertible
Notes (collectively the "5 3/8% Notes") were issued under an Indenture
dated as of November 1, 1996, (the "1996 Indenture"), between the
Company and First Trust National Association, as trustee. The 5 3/8%
Notes are convertible, in whole or part, at the option of the holder at
any time prior to the close of business on the business day next
preceding November 15, 2006, unless previously redeemed into shares of
SEACOR's common stock at a conversion price of $66.00 per share
(equivalent to a conversion rate of 15.1515 shares of SEACOR's common
stock per $1,000 principal amount of the 5 3/8% Notes), subject to
adjustment in certain circumstances. The 5 3/8% Notes are redeemable at
the Company's option at any time on or after November 24, 1999 at the
redemption prices specified therein, together with accrued and unpaid
interest to the date of repurchase. The Company incurred $4,311,000 in
costs associated with the sale of the Convertible Notes including
$3,881,000 of underwriter's discount. The debt issue costs are reported
in other assets and are being amortized to expense over the life of the
related debt. The 5 3/8% Notes are general unsecured obligations of the
Company, subordinated in right of payment to all "Senior Indebtedness"
(as defined in the 1996 Indenture) of the Company and effectively
subordinated in right of payment to all indebtedness and other
obligations and liabilities and any preferred stock of the Company's
subsidiaries. The 5 3/8% Notes will mature on November 15, 2006 and bear
interest at a rate of 5 3/8% per annum from November 5, 1996, in the
case of the Convertible Notes, and December 19, 1996, in the case of the
SMIT Convertible Notes, or in each case, from the most recent interest
payment date on which interest has been paid or provided for, payable on
May 15 and November 15 of each year, commencing on May 15, 1997 to the
holders thereof on May 1 and November 1, respectively, preceding such
interest payment date.
On December 19, 1996, pursuant to the SMIT Transaction, the Company
issued $15,250,000 principal amount of its SMIT Convertible Notes. The
SMIT Convertible Notes were issued under the 1996 Indenture discussed
above. Also, pursuant to the SMIT Transaction, the Company entered into
lease purchase agreements for two vessels.
During 1997 and 1999, the Company purchased $1,000,000 and $5,150,000,
respectively, principal amount of its Convertible Notes in the open
market. The write-off of certain deferred financing costs associated
with the Convertible Notes acquired and the difference between the
amount paid to acquire the Convertible Notes and their carrying value
resulted in the Company recognizing an extraordinary loss of $114,000 or
$.01 per basic share in 1997. In 1999, the extraordinary loss with
respect to the retirement of Convertible Notes was not material.
DNB CREDIT FACILITY. On November 17, 1998, the Company entered into an
agreement for a $100,000,000 unsecured reducing revolving credit
facility with Den norske Bank ASA (the "DnB Credit Facility"), as agent
for itself and other lenders named therein that replaced the prior
revolving credit facility with Den norske Bank ASA ("DnB"). Until
termination of the DnB Credit Facility, a commitment fee is payable on a
quarterly basis, at rates ranging from 17.5 to 40 basis points per annum
on the average unfunded portion of the DnB Credit Facility. The
commitment fee rate varies based upon the percentage the Company's
funded debt bears to earnings before interest, taxes, depreciation, and
amortization ("EBITDA"), as defined, and/or the credit rating maintained
by Moody's and Standard & Poor's, if any.
Under the terms of the DnB Credit Facility, the Company may borrow up to
$100,000,000 aggregate principal amount (the "Maximum Committed Amount")
of unsecured reducing revolving credit loans maturing on November 17,
2004. The Maximum Committed Amount will automatically decrease
semi-annually by 4.54% beginning November 17, 1999, with the balance
payable at maturity. Outstanding borrowings will bear interest at annual
rates ranging from 45 to 110 basis points (the "Margin") above LIBOR.
The Margin is determined quarterly and varies based upon the percentage
the Company's funded debt bears to EBITDA, as defined, and/or the credit
rating maintained by Moody's and Standard & Poor's, if any.
The DnB Credit Facility requires the Company, on a consolidated basis,
to maintain a minimum ratio of vessels' values to Maximum Committed
Amount, as defined, a minimum cash and cash equivalent level, a
specified interest coverage ratio, specified debt to capitalization
ratios and a minimum net worth. The DnB Credit Facility limits the
amount of secured indebtedness which the Company and its subsidiaries
may incur, provides for a negative pledge with respect to certain
39
activities of the Company's vessel owning/operating subsidiaries, and
restricts the payment of dividends. At December 31, 1999, the Company
had $95,460,000 available for future borrowings under the DnB Credit
Facility.
An extraordinary loss of $325,000 or $0.02 per basic share was
recognized in 1997 in connection with the termination of a prior
revolving credit facility with DnB that resulted from the write-off of
unamortized debt issue costs.
7.2% NOTES. On September 15, 1997, the Company completed the sale of
$150,000,000 aggregate principal amount of its 7.2% Senior Notes due
2009 (the "7.2% Notes") which will mature on September 15, 2009. The
offering was made to qualified institutional buyers and a limited number
of institutional accredited investors and in offshore transactions
exempt from registration under U.S. federal securities laws. Interest on
the 7.2% Notes is payable semi-annually on March 15 and September 15 of
each year commencing March 15, 1998. The 7.2% Notes may be redeemed at
any time at the option of the Company, in whole or from time to time in
part, at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of redemption plus a
Make-Whole Premium, if any, relating to the then prevailing Treasury
Yield and the remaining life of the 7.2% Notes. On December 8, 1997, the
Company completed an exchange offer through which it exchanged all of
the 7.2% Notes for a series of 7.2% Senior Notes (the "7.2% Exchange
Notes") which are identical in all material respects to the 7.2% Notes,
except that the 7.2% Exchange Notes are registered under the Securities
Act of 1933, as amended. The 7.2% Notes and the 7.2% Exchange Notes were
issued under an indenture (the "1997 Indenture") between the Company and
First Trust National Association, as trustee. The 1997 Indenture
contains covenants including, among others, limitations on liens and
sale and leasebacks of certain Principal Properties, as defined in the
1997 Indenture, and certain restrictions on the Company consolidating
with or merging into any other Person, as defined in the 1997 Indenture.
The Company incurred $1,412,500 in costs associated with the sale of the
7.2% Notes including $1,012,500 of underwriters discount. Debt issue
costs are reported in Other Assets of the Consolidated Balance Sheet and
are being amortized to expense over the life of the related
indebtedness. During 1999, the Company purchased $2,500,000 principal
amount of its 7.2% Notes in the open market.
SMIT NOTES. Pursuant to a February 1998 letter agreement between the
Company and SMIT, the Company agreed to prepay certain contingent
obligations for additional purchase consideration that would otherwise
have been payable to SMIT in 1999 pursuant to the SMIT Transaction. The
prepayment included cash of $20,880,000 and the issuance, effective
January 1, 1999, of five-year subordinated promissory notes in the
aggregate principal amount of $23,200,000, which notes bear interest at
5.467% per annum payable quarterly in arrears. The amounts prepaid to
SMIT have increased the carrying values of vessels and certain joint
venture interests that were acquired in the SMIT Transaction.
40
CHILES 10.0% NOTES. On April 29, 1998, the Company's majority owned
subsidiary, Chiles Offshore, completed the sale of the Chiles 10.0%
Notes. The offering was made to qualified institutional buyers and to
certain persons in offshore transactions exempt from registration under
U.S. federal securities laws. Pursuant to an exchange offer that was
consummated on September 28, 1998, all holders of the Chiles 10% Notes
exchanged such notes for new notes identical in form and terms, that
were registered under the Securities Act of 1933, as amended. Interest
on the Chiles 10.0% Notes is payable semi-annually on May 1 and November
1 of each year commencing November 1, 1998. The Chiles 10.0% Notes are
not redeemable at the option of Chiles Offshore prior to May 1, 2003,
except that until May 1, 2001, Chiles Offshore may redeem, at its
option, in the aggregate, up to 35% of the original principal amount of
the Chiles 10.0% Notes, on a pro-rata basis, with the net proceeds of
one or more Public Equity Offerings (as defined), at a redemption price
of 110% plus accrued interest to the redemption date; provided, however,
that at least $71,500,000 aggregate principal amount of the Chiles 10.0%
Notes remains outstanding after each such redemption. On and after May
1, 2003, the Chiles 10.0% Notes may be redeemed at the option of Chiles
Offshore, in whole or in part, initially at 105.0% of the principal
amount thereof and declining by 1.67% each year thereafter to 100.0% of
the principal amount on and after May 1, 2006, plus accrued interest to
the date of redemption. The proceeds from the issuance of the Chiles
10.0% Notes were placed in escrow to be used to (a) partially fund the
construction of Rigs, (b) pay interest on the Chiles 10.0% Notes through
the first two semi-annual interest payment dates, and (c) provide
working capital. All obligations with respect to the Chiles 10.0% Notes
are limited exclusively to Chiles Offshore and are nonrecourse to
SEACOR. Chiles Offshore incurred $4,238,000 in costs associated with the
sale of the Chiles 10.0% Notes that have been reported as Other Assets
in the Condensed Balance Sheets and are being amortized to expense over
the life of the related indebtedness. In October 1999, Chiles Offshore
entered into amendments to the Indenture governing the Chiles 10.0%
Notes (the "Amendments") which were approved by the holders of a
majority of the Chiles 10.0% Notes and that had the effect of removing
certain covenants contained in such Indenture. In consideration for such
approval, consenting noteholders received $1.00 for each $1,000 in
aggregate principal amount of Chiles 10.0% Notes held by them. In
January 2000, Chiles filed a notice with the Securities and
Exchange Commission terminating, retroactively effective to December 31,
1999, its reporting obligations pursuant to the Securities Exchange Act
of 1934, as amended.
SEACOR and a wholly owned subsidiary of SEACOR purchased $17,130,000 and
$43,235,000 principal amount of the Chiles 10.0% Notes in the open
market in 1998 and 1999, respectively. The write-off of certain deferred
financing costs associated with the Chiles 10.0% Notes acquired and the
difference between the amount paid to acquire the Chiles 10.0% Notes and
their carrying value resulted in the recognition of an extraordinary
gain of $1,309,000 or $0.10 per basic share and $1,211,000 or $0.10 per
basic share in 1998 and 1999, respectively. During 1999, SEACOR and its
wholly owned subsidiary that owned Chiles 10.0% Notes sold $18,630,000
principal amount of such notes to a financial institution, subject to
swap agreements, see Note 2, Financial Instruments.
CHILES BANK FACILITY. Also on April 29, 1998, Chiles Offshore entered
into a bank credit agreement that provided for a $25,000,000 revolving
credit facility (the "Chiles Bank Facility") maturing December 31, 2004.
The Chiles Bank Facility was arranged by Nederlandse Scheepshypotheek
Bank N.V. and MeesPierson Capital Corporation. In December 1999, the
Chiles Bank Facility was amended and available borrowings rose from
$25,000,000 to $40,000,000 (the "Amended Chiles Bank Facility"). The
Amended Chiles Bank Facility provides for a floating interest rate of
LIBOR plus 1 3/8% per annum (approximately 7.3% at December 31, 1999) on
amounts outstanding under the Amended Chiles Bank Facility and provides
for repayment of such amounts in eight quarterly installments of
$1,875,000 beginning March 31, 2003, followed by eight quarterly
installments of $3,125,000, with the remaining balance payable on
December 31, 2006. As a condition precedent to the increase in the
Amended Chiles Bank Facility, Chiles Offshore was required to reduce the
outstanding principal amount of the Chiles 10.0% Notes by $15,000,000 to
$95,000,000.
During November 1999, Chiles Offshore completed an offering of
membership interests and rights to purchase membership interests (the
"Offering") which provided all current members with a pro rata right to
purchase such securities in an aggregate amount of $15,000,000. A wholly
owned subsidiary of SEACOR acquired $10,646,000 or approximately 71% of
the Offering. Proceeds from the Offering were used by Chiles Offshore to
purchase, at par, $15,000,000 aggregate principal amount of the Chiles
10.0% Notes from SEACOR, which was previously acquired in the open
market. At December 31, 1999, a wholly owned subsidiary of SEACOR owned
a 58.3% membership interest in Chiles Offshore, which was acquired for
$45,646,000, and SEACOR owned $26,735,000 principal amount of the Chiles
10.0% Notes.
Chiles Columbus LLC and Chiles Magellan LLC (the "Rig Owners"), wholly
owned subsidiaries of Chiles Offshore and owners of the Rigs the Chiles
Columbus and Chiles Magellan, respectively, guarantee the Amended Chiles
Bank Facility and such guarantees are secured by first priority
mortgages on the Rigs, assignment of earnings of the Rigs (which may
continue to be collected by Chiles Offshore unless there occurs an event
of default), and assignments of insurance proceeds. The Amended Chiles
Bank Facility contains customary affirmative covenants, representations,
41
and warranties and is cross-defaulted to the related promissory notes;
provided, however, should there occur an event of default under the
Amended Chiles Bank Facility (other than arising from enforcement
actions undertaken by a holder of other indebtedness of Chiles Offshore,
enforcement actions arising from in rem claims against either of the
Rigs or bankruptcy events with respect to Chiles Offshore or a Rig
Owner), the lenders under the Amended Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the holders of the Chiles 10.0% Notes ("Noteholders") or
Chiles Offshore may cure such event of default or prepay all of the
indebtedness outstanding under the Amended Chiles Bank Facility. The
Amended Chiles Bank Facility also contains certain negative covenants
applicable to Chiles Offshore and the Guarantors, including prohibitions
against the following: certain liens on the collateral under the Amended
Chiles Bank Facility; material changes in the nature of their business;
sale or pledge of any Guarantor's membership interests; sale or
disposition of any Rig or other substantial assets; certain changes in
office locations; consolidations or mergers; certain Restricted Payments
(as defined in the Chiles Bank Facility), including distributions on
membership interests in Chiles Offshore (the "Membership Interests");
the exercise of a right to call the Chiles 10.0% Notes; or any material
amendment or modification of the Indenture. The Amended Chiles Bank
Facility further requires Chiles Offshore to prevent the Guarantors from
making certain loans and advances, except in their normal course of
business or to certain affiliates; assuming, guaranteeing or (except in
their ordinary course of business) otherwise becoming liable in
connection with any obligations other than guaranties for the benefit of
the lenders under the Amended Chiles Bank Facility, guarantees in favor
of the Noteholders or pre-existing guarantees; paying out any funds,
except in their ordinary course of business for the business of Chiles
Offshore or service of certain indebtedness permitted under the Amended
Chiles Bank Facility; and issuing or disposing of any of their own
membership interests (except to Chiles Offshore). In addition, the
Amended Chiles Bank Facility requires that the fair market value of the
Rigs, as determined by appraisers appointed by the lenders thereunder,
at all times equals or exceeds an amount equal to 200% of outstanding
indebtedness under the Amended Chiles Bank Facility. At December 31,
1999, Chiles Offshore had $18,000,000 available under the Amended Chiles
Bank Facility for future borrowings.
The Chiles Bank Facility contains customary affirmative covenants,
representations, and warranties and is cross-defaulted to the related
promissory notes; provided, however, should there occur an event of
default under the Chiles Bank Facility (other than arising from
enforcement actions undertaken by a holder of other indebtedness of
Chiles Offshore, enforcement actions arising from in rem claims against
either of the Rigs or bankruptcy events with respect to Chiles Offshore
or a Rig Owner), the lenders under the Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the Noteholders or the Company may cure such event of
default or prepay all of the indebtedness outstanding under the Chiles
Bank Facility. In addition, the Chiles Bank Facility requires that the
fair market value of the Rigs, as determined by appraisers appointed by
the lenders thereunder, at all times equals or exceeds an amount equal
to 130% of outstanding indebtedness under the Chiles Bank Facility.
9. COMMON STOCK:
During 1998, SEACOR's Board of Directors increased its previously
announced securities repurchase authority by $65,000,000 and expanded
its previously announced securities repurchase authority to include, in
addition to its common stock and 5 3/8% Notes, its 7.2% Notes and the
Chiles 10% Notes (collectively, the "SEACOR Securities"). Shares
totaling 1,305,100 at an aggregate cost of $60,291,000 were repurchased
for treasury during the year. 712,000 of these shares, previously issued
as part of the Company's purchase consideration in the SMIT Transaction,
were repurchased from a subsidiary of SMIT. All other repurchases of
SEACOR's common stock during 1998 were made in the open market.
During 1999, SEACOR's Board of Directors increased its securities
repurchase authority by $105,000,000. Shares totaling 1,462,000 at an
aggregate cost of $65,520,000 were repurchased for treasury during the
year. As of December 31, 1999, the Company had approximately $26,669,000
available for the repurchase of SEACOR Securities. The repurchase of any
SEACOR Securities will be effected from time to time through open market
purchases, privately negotiated transactions, or otherwise, depending on
market conditions.
10. BENEFIT PLANS:
SEACOR SAVINGS PLAN. SEACOR, through a wholly owned subsidiary,
introduced a defined contribution plan (the "SEACOR Plan"), effective
July 1, 1994. Furthermore, in connection with a merger and acquisition,
the Company assumed the obligations of certain other defined
contribution plans. Effective January 1, 1998, the Company merged the
defined contribution plans previously assumed into the SEACOR Plan.
Requirements for eligibility in the SEACOR Plan include (i) one year of
full time employment, (ii) attainment of 21 years of age, and (iii)
residency in the United States. Participants may contribute up to 15% of
their pre-tax annual compensation, and contributions are funded monthly.
Participants are fully vested in the Company's contribution upon (i)
attaining the age of 65, (ii) death, (iii) becoming disabled, or (iv)
completing five years of employment service. Contribution forfeitures
for non-vested terminated employees are used to reduce future
42
contributions of the Company or pay administrative expenses. The
Company's contribution is limited to 50% of the employee's first 6% of
wages invested in the SEACOR Plan and is subject to annual review by the
Board of Directors. The Company's contributions to plans were $948,000,
$845,000, and $614,000 for the years ended December 31, 1999, 1998, and
1997, respectively.
STOCK PLANS. On November 22, 1992, and April 18, 1996, SEACOR's
stockholders adopted the 1992 Non-Qualified Stock Option Plan (the
"Stock Option Plan") and the 1996 Share Incentive Plan (the "Share
Incentive Plan"), respectively, (collectively, the "Plans"). The Plans
provide for the grant of options to purchase shares of SEACOR's common
stock, and the Share Incentive Plan additionally provides for the grant
of stock appreciation rights, restricted stock awards, performance
awards, and stock units to key officers and employees of the Company.
The exercise price per share of options granted cannot be less than 75%
and 90% of the fair market value of SEACOR's common stock at the date of
grant under the Stock Option Plan and Share Incentive Plan,
respectively. Options granted under the Plans expire no later than the
tenth anniversary of the date of grant. The Plans are administered by
the Stock Option and Executive Compensation Committee of the Board of
Directors (the "Compensation Committee"). Five hundred thousand shares
of SEACOR's common stock have been reserved for issuance under each of
the Stock Option Plan and the Share Incentive Plan.
STOCK OPTIONS. In October 1995, Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock Based
Compensation," was issued effective in 1996 for the Company. Under SFAS
123, companies could either adopt a "fair valued based method" of
accounting for an employee stock option, as defined, or continue to use
accounting methods as prescribed by APB Opinion No. 25. The Company has
elected to continue accounting for its plan under APB Opinion No 25. Had
compensation costs for the plan been determined consistent with SFAS
123, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts for the years ended December
31, 1999, 1998, and 1997, in thousands of dollars, except per share
data.
1999 1998 1997
------------------------------- ------------------------------- -------------------------------
As Reported Pro forma As Reported Pro forma As Reported Pro forma
--------------- --------------- --------------- -------------- --------------- ---------------
Net Income........................$ 30,936 $ 30,439 $ 125,927 $ 125,746 $ 119,154 $ 119,051
Earnings per common share:
Basic..........................$ 2.60 $ 2.56 $ 9.59 $ 9.57 $ 8.61 $ 8.60
Diluted........................ 2.54 2.50 8.25 8.24 7.47 7.47
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future events, and additional awards in the future are
anticipated.
SHARE AWARD TRANSACTIONS. The following transactions have occurred in
the Plans during the periods ended December 31:
1999 1998 1997
----------------------------- ---------------------------- ----------------------------
Number of Wt'ed Avg. Number of Wt'ed Avg. Number of Wt'ed Avg.
Shares Exer. Price Shares Exer. Price Shares Exer. Price
------------- -------------- ------------ -------------- ------------ --------------
Stock Option Activities -
Outstanding, at beginning of year.. 295,814 $ 19.64 325,112 $ 17.04 346,112 $ 16.92
Granted......................... 69,850 $ 44.95 20,652 $ 51.74 - $ -
Exercised....................... - $ - (48,750)$ 15.54 (21,000)$ 15.05
Canceled........................ (1,750) $ 26.57 (1,200)$ 34.46 - $ -
------------- ------------ ------------
Outstanding, at end of year........ 363,914 $ 24.47 295,814 $ 19.64 325,112 $ 17.04
============= ============ ============
Options exercisable at year end.... 280,935 $ 18.08 275,362 $ 17.26 317,812 $ 16.72
=============
============ ============
Weighted average fair value of
options granted.................$ 27.86 $ 33.58 $ -
============= ============ ============
Restricted stock awards granted........ 37,000 $ 44.68 25,290 $ 52.16 18,510 $ 61.92
============= ============ ============
Shares available for future grant...... 375,963 480,913 525,589
============= ============ ============
The fair value of each option granted during the periods presented is
estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: (a) no dividend yield, (b)
weighted average expected volatility of 44.07% and 44.06% in the years
1999 and 1998, respectively, (c) discount rates of 5.01% and 5.21% in
the years 1999 and 1998, respectively, and (d) expected lives of five
years.
On date of issue, the market value of restricted shares issued to
certain officers and key employees of the Company is recorded in
Stockholders' Equity as Unamortized Restricted Stock and then amortized
to expense over one and three year vesting periods. During 1999, 1998,
and 1997, compensation cost recognized in connection with restricted
stock awards totaled $1,508,000, $1,333,000, and $439,000, respectively.
At December 31, 1999, there were 52,017 shares of unvested restricted
stock outstanding at a weighted average price of $47.79. Of the unvested
shares outstanding, 30,733, 12,934, and 8,350 shares will vest in 2000,
2001, and 2002, respectively. On February 3, 2000, the Compensation
Committee granted 20,585 restricted shares to certain officers and key
employees of the Company with aggregate market value of $961,000 on that
date.
43
The following table summarizes certain information about the options
outstanding at December 31, 1999 grouped into three exercise price
ranges:
Exercise Price Range
------------------------------------------------------------
$9.64 - $14.75 $18.75 - $21.25 $30.75 - $53.00
------------------- ------------------- -------------------
Options outstanding at December 31, 1999...................... 124,166 146,246 93,502
Weighted-average exercise price............................... $ 14.11 $ 19.52 $ 45.95
Weighted-average remaining contractual life (years)........... 3.6 4.2 8.3
Options exercisable at December 31, 1999...................... 124,166 146,246 10,523
Weighted average exercise price of exercisable options........ $ 14.11 $ 19.52 $ 44.77
11. RELATED PARTY TRANSACTIONS:
NRC contracts with James Miller Marine Services ("JMMS"), an
environmental contractor based in Staten Island, New York, for spill
response services. In fiscal 1999, 1998, and 1997, NRC paid
approximately $362,000, $398,000, and $612,000, respectively, to JMMS
for these services. The brother of a NRC director is Vice President of
JMMS.
Globe Wireless provides the Company's offshore marine service segment a
"ship-to-shore" communication network and has provisioned and installed
certain computer hardware, software, and electronic equipment aboard its
offshore marine vessels. In fiscal 1999, 1998, and 1997, approximately
$1,421,000, $743,000, and $40,000, respectively, was paid to Globe
Wireless for services and merchandise provided the Company.
A fee is paid to a minority stockholder for managing the Company's North
Sea standby safety vessels. The U.S. dollar equivalent of such fees paid
in pounds sterling approximated $1,058,000, $1,087,000, and $1,015,000
in the years ended December 31, 1999, 1998, and 1997, respectively.
12. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1999, the Company has commitments to build three
offshore support vessels at an approximate aggregate cost of $30,250,000
of which $20,950,000 has been expended. These vessels are expected to
enter service in 2000. Joint venture corporations, in which the Company
owns a 50% equity interest, are committed to the construction of two
Handymax Dry-Bulk ships that are expected to enter service in 2001. The
cost to construct and place these ships into service will approximate
$39,000,000, of which 75% is expected to be financed from external
sources.
In the normal course of its business, the Company becomes involved in
various litigation matters including, among other things, claims by
third parties for alleged property damages, personal injuries, and other
matters. While the Company believes it has meritorious defenses against
these claims, management has used estimates in determining the Company's
potential exposure and has recorded reserves in its financial statements
related thereto where appropriate. It is possible that a change in the
Company's estimates of that exposure could occur, but the Company does
not expect such changes in estimated costs will have a material effect
on the Company's financial position or results of operations.
During 1998 and 1995, the Company entered into sale-type leases for two
crew and one anchor handling towing supply vessels, respectively. The
anchor handling towing supply vessel was sold in 1998 to a third party
and bareboat chartered to SEAMEX. The remaining leases expire in 2001
and contain options that permit the lessee to purchase the vessels at
various dates during the term of the leases. The amortization of
unearned income in the years ended December 31, 1999, 1998, and 1997,
totaled $548,000, $403,000, and $448,000, respectively. The net
investment in sale-type leases at December 31, 1999 was comprised of
minimum lease payment receivables totaling $1,605,000, estimated
residual values of $1,933,000, and unearned income of $906,000. As of
December 31, 1999, $321,000 and $2,311,000 of the net investment in the
sale-type leases were reported in the Consolidated Balance Sheets as
current and noncurrent Other Assets, respectively.
In December 1996, pursuant to the SMIT Transaction, the Company leased
two vessels under capital leases with gross costs of $21,239,000 that
are being depreciated over an estimated useful life of 23 years. At
December 31, 1999 and 1998, accumulated depreciation related to these
vessels totaled $2,754,000 and $1,781,000, respectively. At December 31,
1999, $1,675,000 and $17,580,000 in obligations under these capital
leases are reported as current and long-term debt, respectively. Minimum
lease payments of $2,669,000 and $18,482,000 are due in 2000 and 2001,
respectively. The amount to be paid in 2001 will include cash and the
issuance of $6,750,000 in SMIT Convertible Notes. Future minimum lease
payments include interest of $1,896,000.
During 1999, 1998, and 1997, the Company completed transactions for the
sale and leaseback of 5, 11, and 8 vessels, respectively, and the leases
have been classified as operating leases in accordance with SFAS No. 13
"Accounting for Leases." The leases contain purchase and lease renewal
options at fair market value or rights of first refusal with respect to
the sale or lease of the vessels and range in duration from two to five
years. Gains realized from those sales, totaling $6,566,000, $38,442,000
44
and $26,986,000 in 1999, 1998, and 1997, respectively, have been
deferred and are being credited to income as reductions in rental
expense over the lease terms. Rental expense in 1999, 1998 and 1997
totaled $3,525,000, $2,142,000, and $504,000, respectively. Future
minimum lease payments are $18,599,000 in 2000, $4,912,000 in 2001,
$1,967,000 in 2002, $1,312,000 in 2003, and $471,000 in 2004.
13. MAJOR CUSTOMERS AND SEGMENT DATA:
The Company adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information," during the fourth quarter of 1998. SFAS 131 established
standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders.
It also established standards for related disclosures about products and
services, geographic areas, and major customers. SFAS 131 defined
operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and
in assessing performance. The Company has aggregated its business
activities into three operating segments: marine, environmental, and
drilling. These operating segments represent strategic business units
that offer different services.
The marine service segment charters support vessels to owners and
operators of offshore drilling rigs and production platforms both
domestically and internationally. Two of the largest groups of offshore
support vessels operated by the Company are crew boats, which transport
personnel and small loads of cargo when expedited deliveries are
required, and utility boats, which support offshore production
activities by delivering general cargo and facilitating infield
transportation of personnel and materials. Two other significant classes
of vessels operated by the Company are towing supply and anchor handling
towing supply vessels. These vessels have powerful engines and deck
mounted winches, and are capable of towing and positioning offshore
drilling rigs as well as providing supply vessel services. The Company
also operates supply vessels, which transport drill pipe, drilling
fluids, and construction materials, and special service vessels, which
include standby safety, well stimulation, seismic data gathering, line
handling, freight, oil spill response, and salvage vessels. In
connection with its offshore marine services, the Company offers
logistics services, which include shorebase, marine transport, and other
supply chain management services in support of offshore exploration and
production operations.
The environmental service segment provides contractual oil spill
response and other related training and consulting services. The
Company's clients include tank vessel owner/operators, refiners and
terminal operators, exploration and production facility operators, and
pipeline operators. The Company charges a retainer fee to its customers
for ensuring by contract the availability (at predetermined rates) of
its response services and equipment. Retainer services include employing
a staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
emergency and spill response as contemplated by response plans filed by
the Company's customers in accordance with Oil Pollution Act of 1990 and
various state regulations. The Company maintains relationships with
numerous environmental sub-contractors to assist with response
operations, equipment maintenance, and provide trained personnel for
deploying equipment in a spill response. When oil spills occur, the
Company mobilizes specialized oil spill response equipment, using either
its own personnel or personnel under contract, to provide emergency
response services for both land and marine oil spills.
The Company's drilling service business is conducted through Chiles
Offshore, a 58.3% majority owned subsidiary. From inception and until
July 1999, Chiles operated as a development stage company, devoting
substantially all its efforts constructing two mobile offshore drilling
rigs, raising capital, and securing contracts for the Rigs. In 1997,
Chiles commenced construction of two premium jackup mobile offshore
drilling rigs, the Chiles Columbus and the Chiles Magellan, which were
delivered to Chiles in May 1999 and October 1999, respectively. Jackup
rigs are mobile self-elevating drilling platforms equipped with legs
that are lowered to the ocean floor until a foundation is established to
support drilling operations. Oil and gas exploration companies use
jackup rigs extensively for offshore drilling in water depths from 20
feet to 350 feet.
45
The Company evaluates the performance of each operating segment based
upon the operating profit of the segment and including gains or losses
from the sale of equipment and interest in 50% or less owned companies
and equity in the net income of 50% or less owned companies but
excluding minority interest in income or loss of subsidiaries, interest
income and expense, net gains or losses from the sale of marketable
securities and commodity swap transactions, corporate expenses, and
income taxes. Operating profit is defined as Operating Income as
reported in the Consolidated Statements of Income net of corporate
expenses and certain other income and expense items. The accounting
policies of the operating segments are the same as those described in
the summary of significant accounting policies except that the
disaggregation of financial results has been prepared using a management
approach. Segment assets exclude those considered by the Company to be
of a corporate nature. Corporate assets include SEACOR and its wholly
owned subsidiaries' unrestricted cash, marketable securities, certain
other assets, and property and equipment related to corporate
operations. Information disclosed in the tables presented below may
differ from separate financial statements presented by subsidiaries of
the Company due to certain elimination entries required in
consolidation.
Revenues attributed to geographic areas were based upon the country of
domicile for marine service segment customers and the country in which
the Company provided oil spill protection or other related training and
consulting services for environmental service segment customers.
Revenues from services rendered to divisions or subsidiaries of one
customer totaled $26,139,000 in 1999, $40,717,000 in 1998 and
$41,852,000 in 1997 (9% of revenues in 1999, 11% of revenues in 1998,
and 12% of revenues in 1997). Information about profit and loss and
assets by business segment is as follows for the years ended December
31, in thousands of dollars:
Other and
Marine Environmental Drilling Corporate Total
------------ -------------- ------------- ------------- ------------
1999
Operating Revenues -
External Customers.............................$ 258,177 $ 22,659 $ 7,651 $ 938(a)$ 289,425
Intersegment................................... 528 161 - (689) -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or Retirements, net... 1,661 16 - - 1,677
Loss from Sale of Interest in a 50% or Less
Owned Company.................................. (72) - - - (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................... 4,906 814 - (3,107) 2,613
Minority Interest in Loss of Subsidiaries........ - - - 1,148 1,148
Interest Income.................................. - - - 20,495 20,495
Interest Expense................................. - - - (22,330) (22,330)
Losses from Commodity Swap Transactions, net..... - - - (1,323) (1,323)
Losses from Sale of Marketable Securities, net... - - - (279) (279)
Corporate Expenses............................... - - - (5,169) (5,169)
Income Taxes..................................... - - - (17,533) (17,533)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 41,989 $ 1,288 $ - $ 33,999 $ 77,276
Other Segment Assets............................. 621,197 27,650 199,294 - 848,141
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 663,186 28,938 199,294 33,999 925,417
Corporate........................................ - - - 271,574 271,574
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 663,186 $ 28,938 $ 199,294 $ 305,573 $ 1,196,991
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=========================================================================================================================
1998
Operating Revenues -
External Customers.............................$ 359,611 $ 26,180 $ - $ - $ 385,791
Intersegment................................... - - - - -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 359,611 $ 26,180 $ - $ - $ 385,791
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 127,403 $ 4,479 $ (823) $ - $ 131,059
Gains from Equipment Sales or Retirements, net... 38,227 111 - - 38,338
Gain from Sale of Interest in a 50% or Less
Owned Company.................................... 1,197 - - - 1,197
Equity in Net Earnings of 50% or Less Owned
Companies........................................ 13,657 554 - - 14,211
Minority Interest in Income of Subsidiaries...... - - - (1,612) (1,612)
Interest Income.................................. - - - 25,346 25,346
Interest Expense................................. - - - (22,798) (22,798)
Gains from Commodity Swap Transactions, net...... - - - 3,273 3,273
Gains from Sale of Marketable Securities, net.... - - - 1,827 1,827
Corporate Expenses............................... - - - (5,344) (5,344)
Income Taxes..................................... - - - (60,879) (60,879)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 54,954 $ 524 $ - $ - $ 55,478
Other Segment Assets............................. 770,614 29,103 177,832 - 977,549
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 825,568 29,627 177,832 - 1,033,027
Corporate........................................ - - - 224,948 224,948
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 825,568 $ 29,627 $ 177,832 $ 224,948 $ 1,257,975
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 32,534 $ 3,846 $ 56 $ 13 $ 36,449
=========================================================================================================================
46
Other and
Marine Environmental Drilling Corporate Total
------------ ------------- ------------- ------------- -------------
1997
Operating Revenues -
External Customers............................$ 325,009 $ 21,939 $ - $ - $ 346,948
Intersegment.................................. - - - - -
------------ ------------- ------------- ------------- -------------
Total........................................ 325,009 $ 21,939 $ - $ - $ 346,948
============ ============= ============= ============= =============
Operating Profit (Loss).........................$ 115,818 $ 3,029 $ (382) $ - $ 118,465
Gains (Losses) from Equipment Sales or
Retirements, net.............................. 62,027 (99) - - 61,928
Equity in Net Earnings of 50% or Less Owned
Companies..................................... 5,656 771 - - 6,427
Minority Interest in Income of Subsidiaries..... - - - (301) (301)
Interest Income................................. - - - 12,756 12,756
Interest Expense................................ - - - (14,168) (14,168)
Corporate Expenses.............................. - - - (3,278) (3,278)
Income Taxes.................................... - - - (62,236) (62,236)
------------ ------------- ------------- ------------- -------------
Income (Loss) before Extraordinary Item.....$ 183,501 $ 3,701 $ (382) $ (67,227) $ 119,593
============ ============= ============= ============= =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies.......................$ 37,151 $ 1,219 $ - $ - $ 38,370
Other Segment Assets............................ 702,449 32,861 35,012 - 770,322
------------ ------------- ------------- ------------- -------------
Subtotal Segment Assets....................... 739,600 34,080 35,012 - 808,692
Corporate....................................... - - - 211,109 211,109
------------ ------------- ------------- ------------- -------------
Total Assets................................$ 739,600 $ 34,080 $ 35,012 $ 211,109 $ 1,019,801
============ ============= ============= ============= =============
Depreciation and Amortization...................$ 32,914 $ 3,563 $ 6 $ 55 $ 36,538
==========================================================================================================================
(a) Includes the operating revenues of the Company's telecommunications
business, Marinet, which was acquired in April 1999 and sold effective
July 1, 1999.
The Company considers long-lived assets to be property and equipment
that has been distributed to geographical areas based upon the assets'
physical location during the applicable period. Certain of the Company's
offshore marine service segment's long-lived vessel assets relocate
between its geographical areas of operation. The costs of long-lived
vessel assets that are relocated have been allocated between
geographical areas of operation based upon length of service in the
applicable region. Information concerning principal geographic areas was
as follows for the years ending December 31, in thousands of dollars:
United United Other
States Nigeria Kingdom Foreign Total
------------- ------------- ------------- -------------- -------------
1999:
Revenue........................... $ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
Long-Lived Assets................. 550,106 40,486 33,083 91,522 715,197
1998:
Revenue........................... 234,651 30,655 28,524 91,961 385,791
Long-Lived Assets................. 406,945 47,257 31,416 139,243 624,861
1997:
Revenue........................... 216,513 25,318 39,099 66,018 346,948
Long-Lived Assets................. 262,309 42,888 42,213 135,524 482,934
14. SUBSEQUENT EVENTS:
Subsequent to December 31, 1999, SEACOR reported that its Board of
Directors had increased its previously announced securities repurchase
program by $15,000,000. With this increase, the Company has
approximately $37,400,000 available for such purposes. The securities
covered by the repurchase program continue to include the Company's
common stock, its 5 3/8% Notes, its 7.2% Notes, and the Chiles 10.0%
Notes. Subsequent to December 31, 1999, the Company has purchased
approximately $4,000,000 of its securities, primarily its common stock
and as of March 24, 2000 has approximately 11,206,000 common shares
outstanding. The repurchase of securities will be conducted from time to
time through open market purchases, privately negotiated transactions,
or otherwise depending on market conditions.
On February 9, 2000, the Company announced that it signed a letter of
intent to acquire all of the issued share capital of Boston Putford.
Boston Putford's standby safety vessels, certain joint venture interests
and vessels, and fixed assets will be acquired for aggregate
consideration of approximately (pound)19,000,000. Boston Putford will
also receive aggregate consideration of approximately (pound)5,000,000
for working capital in the companies at closing. The purchase
consideration will consist of (pound)15,000,000 in cash, approximately
84,000 shares of SEACOR's common stock, approximately (pound)9,100,000
in five year zero coupon notes having a current value of
(pound)6,200,000, and the assumption of certain liabilities. The final
purchase price is subject to certain closing adjustments. Boston
Putford's standby safety fleet, including vessels held in joint ventures
but excluding vessels managed for third parties, consists of 18 vessels
operating primarily in the southern U.K. sector of the North Sea.
Consummation of the transaction is also subject to satisfactory
completion of due diligence, execution of definitive documentation, and
receipt of all necessary regulatory approvals and compliance with
appropriate procedures in the United States and the United Kingdom. The
Company expects to consolidate its standby safety services in the U.K.
sector of the North Sea into the Boston Putford operations following
completion of its acquisition of Boston Putford.
47
15. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS:
1999 1998 1997
---------- ----------- ----------
(in thousands of dollars)
Cash income taxes paid.................................................................. $ 5,048 $ 47,345 $ 29,160
Cash interest paid...................................................................... 35,875 22,514 12,022
Schedule of Non-Cash Investing and Financing Activities:
Property exchanged for investment in and notes receivable from 50% or less owned
company........................................................................... - - 2,240
Sale of a subsidiary to Globe Wireless for a note receivable........................ 5,279 - -
Conversion of loans into convertible preferred units of Globe Wireless.............. 22,000 - -
Investment in 50% or less owned companies with long-term debt, including debt
discount.......................................................................... - 738 -
Acquisition of ERST/O'Brien's Inc. with SEACOR's common stock....................... 1,482 442 3,614
Purchase of vessels with - SEACOR's common stock....................... - - 4,342
- notes, including debt discount.............. - 22,462 -
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Selected financial information for interim periods are presented below
in thousands of dollars, except share data. Earnings per share are
computed independently for each of the quarters presented; therefore,
the sum of the quarterly earnings per share do not necessarily equal the
total for the year.
Quarter Ended
---------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31,
-------------- -------------- -------------- ---------------
1999:
Revenue..................................... $ 71,335 $ 71,894 $ 68,475 $ 77,721
Gross profit(1)............................. 18,129 19,031 17,496 26,701
Income before extraordinary item............ 6,140 4,109 6,217 13,279
Basic earnings per common share -
Income before extraordinary item........ 0.55 0.34 0.51 1.08
Extraordinary item...................... - 0.08 - 0.02
-------------- -------------- -------------- ---------------
Net Income.............................. $ 0.55 $ 0.42 $ 0.51 $ 1.10
============== ============== ============== ===============
Diluted earnings common per share -
Income before extraordinary item........ $ 0.55 $ 0.34 $ 0.51 $ 0.97
Extraordinary item...................... - 0.07 - 0.02
-------------- -------------- -------------- ---------------
Net Income.............................. $ 0.55 $ 0.41 $ 0.51 $ 0.99
============== ============== ============== ===============
1998:
Revenue..................................... $ 92,791 $ 100,043 $ 95,744 $ 97,213
Gross profit(1)............................. 35,194 42,416 42,189 41,821
Income before extraordinary item............ 27,937 26,361 36,050 34,270
Basic earnings per common share -
Income before extraordinary item........ 2.21 2.02 2.74 2.51
Extraordinary item...................... 0.10 - - -
-------------- -------------- -------------- ---------------
Net Income.............................. $ 2.31 $ 2.02 $ 2.74 $ 2.51
============== ============== ============== ===============
Diluted earnings common per share -
Income before extraordinary item........ $ 1.90 $ 1.75 $ 2.34 $ 2.16
Extraordinary item...................... 0.08 - - -
-------------- -------------- -------------- ---------------
Net Income.............................. $ 1.98 $ 1.75 $ 2.34 $ 2.16
============== ============== ============== ===============
- ---------------------
(1) Gross profit is defined as Operating Income as reported in the
Consolidated Statements of Income plus general and administrative
expenses.
48
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To SEACOR SMIT Inc.:
We have audited, in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements of
SEACOR SMIT Inc. and its subsidiaries and have issued our report thereon
dated February 15, 2000. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The
schedule on page 62 is the responsibility of the Company's management
and is presented for the purpose of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana
February 15, 2000
49
SEACOR SMIT INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
Balance Charges to Balance
Beginning Cost and (a) End
Description of Year Expenses Deductions of Year
- ------------------------------------------------ ------------- -------------- ------------- --------------
Year Ended December 31, 1999
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 1,956 $ (328) $ 61 $ 1,567
============= ============== ============= ==============
Year Ended December 31, 1998
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 1,626 $ 455 $ 125 $ 1,956
============= ============== ============= ==============
Year Ended December 31, 1997
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 475 $ 1,155 $ 4 $ 1,626
============= ============== ============= ==============
(a) Accounts receivable amounts deemed uncollectible and removed from
accounts receivable and allowance for doubtful accounts.
50