XNYS:CKH Seacor Holdings Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 ________________________________________
FORM 10-Q
________________________________________ 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012              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
SEACOR Holdings Inc.
(Exact Name of Registrant as Specified in Its Charter)
________________________________________ 
Delaware
 
13-3542736
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
2200 Eller Drive, P.O. Box 13038,
 
 
Fort Lauderdale, Florida
 
33316
(Address of Principal Executive Offices)
 
(Zip Code)
954-523-2200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
________________________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
(Do not check if a smaller
reporting company)
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý
The total number of shares of common stock, par value $.01 per share, outstanding as of April 27, 2012 was 21,122,654. The Registrant has no other class of common stock outstanding.



SEACOR HOLDINGS INC.
Table of Contents
 
Part I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
Part II.
 
 
 
 
Item 1.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 6.




PART I—FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS
SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
 
March 31,
2012
 
December 31,
2011
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
281,977

 
$
462,188

Restricted cash
25,958

 
21,281

Marketable securities
68,586

 
66,898

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts of $2,805 and $3,652 in 2012 and 2011, respectively
299,484

 
303,843

Other
41,699

 
51,793

Inventories
94,329

 
69,109

Deferred income taxes
11,123

 
11,123

Prepaid expenses and other
11,384

 
9,323

Discontinued operations
4,019

 
44,989

Total current assets
838,559

 
1,040,547

Property and Equipment
3,314,759

 
3,018,145

Accumulated depreciation
(905,362
)
 
(867,914
)
Net property and equipment
2,409,397

 
2,150,231

Investments, at Equity, and Advances to 50% or Less Owned Companies
220,772

 
249,753

Construction Reserve Funds & Title XI Reserve Funds
259,926

 
259,974

Goodwill
57,054

 
57,054

Intangible Assets, Net
22,132

 
21,528

Other Assets
99,113

 
102,348

Discontinued Operations

 
46,699

 
$
3,906,953

 
$
3,928,134

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current portion of long-term debt
$
22,078

 
$
41,091

Current portion of capital lease obligations
2,289

 
2,368

Accounts payable and accrued expenses
142,410

 
185,156

Other current liabilities
176,558

 
150,864

Discontinued operations
650

 
22,047

Total current liabilities
343,985

 
401,526

Long-Term Debt
976,872

 
995,450

Capital Lease Obligations
2,848

 
3,068

Deferred Income Taxes
576,195

 
566,920

Deferred Gains and Other Liabilities
135,695

 
143,390

Discontinued Operations

 
9,717

Total liabilities
2,035,595

 
2,120,071

Equity:
 
 
 
SEACOR Holdings Inc. stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued nor outstanding

 

Common stock, $.01 par value, 60,000,000 shares authorized; 36,603,406 and 36,444,439 shares issued in 2012 and 2011, respectively
366

 
364

Additional paid-in capital
1,265,708

 
1,256,209

Retained earnings
1,549,167

 
1,512,679

Shares held in treasury of 15,489,052 and 15,511,323 in 2012 and 2011, respectively, at cost
(970,023
)
 
(971,687
)
Accumulated other comprehensive loss, net of tax
(5,369
)
 
(7,958
)
 
1,839,849

 
1,789,607

Noncontrolling interests in subsidiaries
31,509

 
18,456

Total equity
1,871,358

 
1,808,063

 
$
3,906,953

 
$
3,928,134

The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.


1


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data, unaudited)
 
Three Months Ended March 31,
 
2012
 
2011
Operating Revenues
$
497,885

 
$
438,011

Costs and Expenses:
 
 
 
Operating
384,112

 
341,743

Administrative and general
46,178

 
41,654

Depreciation and amortization
39,327

 
38,330

 
469,617

 
421,727

Gains on Asset Dispositions and Impairments, Net
5,542

 
7,255

Operating Income
33,810

 
23,539

Other Income (Expense):
 
 
 
Interest income
2,976

 
3,732

Interest expense
(12,024
)
 
(10,040
)
Debt extinguishment losses, net
(160
)
 
(48
)
Marketable security gains, net
3,358

 
1,534

Derivative losses, net
(4,119
)
 
(3,318
)
Foreign currency gains, net
2,552

 
5,059

Other, net
(54
)
 
(178
)
 
(7,471
)
 
(3,259
)
Income from Continuing Operations Before Income Tax Expense and Equity in Earnings of 50% or Less Owned Companies
26,339

 
20,280

Income Tax Expense
10,608

 
7,673

Income from Continuing Operations Before Equity in Earnings of 50% or Less Owned Companies
15,731

 
12,607

Equity in Earnings of 50% or Less Owned Companies, Net of Tax
1,242

 
42

Income from Continuing Operations
16,973

 
12,649

Income (Loss) from Discontinued Operations, Net of Tax
19,400

 
(1,180
)
Net Income
36,373

 
11,469

Net Income (Loss) attributable to Noncontrolling Interests in Subsidiaries
(115
)
 
299

Net Income attributable to SEACOR Holdings Inc.
$
36,488

 
$
11,170

 
 
 
 
Net Income (Loss) attributable to SEACOR Holdings Inc.:
 
 
 
Continuing operations
$
17,088

 
$
12,350

Discontinued operations
19,400

 
(1,180
)
 
$
36,488

 
$
11,170

Basic Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
 
Continuing operations
$
0.83

 
$
0.59

Discontinued operations
0.95

 
(0.06
)
 
$
1.78

 
$
0.53

Diluted Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
 
Continuing operations
$
0.82

 
$
0.58

Discontinued operations
0.93

 
(0.06
)
 
$
1.75

 
$
0.52

Weighted Average Common Shares Outstanding:
 
 
 
Basic
20,519,660

 
21,104,739

Diluted
20,893,210

 
21,439,424

The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

2


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except share data, unaudited)
 
 
Three Months Ended March 31,
 
 
2012
 
2011
Net Income
 
$
36,373

 
$
11,469

Other Comprehensive Income (Loss):
 
 
 
 
Foreign currency translation adjustments
 
3,200

 
1,374

Reclassification of net foreign currency translation losses to foreign currency gains, net
 
758

 

Derivative losses on cash flow hedges
 
(500
)
 
(99
)
Reclassification of net derivative losses on cash flow hedges to interest expense or equity in earnings of 50% or less owned companies
 
734

 
748

Other
 
42

 

 
 
4,234

 
2,023

Income tax expense
 
(1,394
)
 
(708
)
 
 
2,840

 
1,315

Comprehensive Income
 
39,213

 
12,784

Comprehensive Income attributable to Noncontrolling Interests in Subsidiaries
 
136

 
299

Comprehensive Income attributable to SEACOR Holdings Inc.
 
$
39,077

 
$
12,485



















The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.


3



SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands, unaudited)
 
SEACOR Holdings Inc. Stockholders’ Equity
 
Non-
Controlling
Interests In
Subsidiaries
 
Total
Equity
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Shares
Held In
Treasury
 
Accumulated
Other
Comprehensive
Loss
 
December 31, 2011
$
364

 
$
1,256,209

 
$
1,512,679

 
$
(971,687
)
 
$
(7,958
)
 
$
18,456

 
$
1,808,063

Issuance of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Stock Purchase Plan

 

 

 
1,696

 

 

 
1,696

Exercise of stock options
1

 
3,174

 

 

 

 

 
3,175

Director stock awards

 
97

 

 

 

 

 
97

Restricted stock and restricted stock units
1

 
388

 

 
(32
)
 

 

 
357

Amortization of share awards

 
5,840

 

 

 

 

 
5,840

Acquisition of subsidiary with noncontrolling interests

 

 

 

 

 
13,250

 
13,250

Issuance of noncontrolling interests

 

 

 

 

 
83

 
83

Dividends paid to noncontrolling interests

 

 

 

 

 
(416
)
 
(416
)
Net income (loss)

 

 
36,488

 

 

 
(115
)
 
36,373

Other comprehensive income

 

 

 

 
2,589

 
251

 
2,840

Three months ended March 31, 2012
$
366

 
$
1,265,708

 
$
1,549,167

 
$
(970,023
)
 
$
(5,369
)
 
$
31,509

 
$
1,871,358


































The accompanying notes are an integral part of these consolidated financial statements
and should be read in conjunction herewith.

4



SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2012
 
2011
Net Cash Provided by Operating Activities of Continuing Operations
$
49,580

 
$
92,556

Cash Flows from Investing Activities of Continuing Operations:
 
 
 
Purchases of property and equipment
(119,604
)
 
(63,338
)
Proceeds from disposition of property and equipment
5,818

 
13,632

Cash settlements on derivative transactions, net
(98
)
 
3,314

Investments in and advances to 50% or less owned companies
(13,546
)
 
(8,708
)
Return of investments and advances from 50% or less owned companies
2,442

 
2,674

Net advances on revolving credit line to 50% or less owned companies
(300
)
 
(3,728
)
Principal payments on third party notes receivable, net
3,713

 
545

Net increase in restricted cash
(4,677
)
 
(6,894
)
Net (increase) decrease in construction reserve funds and title XI reserve funds
48

 
(7,804
)
Net increase in escrow deposits on like-kind exchanges

 
(4,047
)
Repayments on leases, net
955

 
1,373

Business acquisitions, net of cash acquired
(148,139
)
 

Net cash used in investing activities of continuing operations
(273,388
)
 
(72,981
)
Cash Flows from Financing Activities of Continuing Operations:
 
 
 
Payments on long-term debt and capital lease obligations
(61,017
)
 
(3,081
)
Net borrowings (repayments) on inventory financing arrangements
(17,312
)
 
3,488

Proceeds from issuance of long-term debt
38,069

 

Proceeds and tax benefits from share award plans
5,261

 
4,633

Cash received from (dividends paid to) noncontrolling interests, net
(333
)
 
597

Net cash provided by (used in) financing activities of continuing operations
(35,332
)
 
5,637

Effects of Exchange Rate Changes on Cash and Cash Equivalents
2,185

 
3,554

Net Increase (Decrease) in Cash and Cash Equivalents from Continuing Operations
(256,955
)
 
28,766

Cash Flows from Discontinued Operations:
 
 
 
Operating Activities
(11,815
)
 
13,471

Investing Activities
88,532

 
(1,758
)
Effects of Exchange Rate Changes on Cash and Cash Equivalents
27

 
10

Net Increase in Cash and Cash Equivalents from Discontinued Operations
76,744

 
11,723

Net Increase (Decrease) in Cash and Cash Equivalents
(180,211
)
 
40,489

Cash and Cash Equivalents, Beginning of Period
462,188

 
365,329

Cash and Cash Equivalents, End of Period
$
281,977

 
$
405,818

The accompanying notes are an integral part of these condensed consolidated financial statements
and should be read in conjunction herewith.

5


SEACOR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.
BASIS OF PRESENTATION AND ACCOUNTING POLICY

The condensed consolidated financial information for the three months ended March 31, 2012 and 2011 has been prepared by the Company and has not been audited by its independent registered public accounting firm. The condensed consolidated financial statements include the accounts of SEACOR Holdings Inc. and its consolidated subsidiaries. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of March 31, 2012, its results of operations for the three months ended March 31, 2012 and 2011, its comprehensive income for the three months ended March 31, 2012 and 2011, its changes in equity for the three months ended March 31, 2012, and its cash flows for the three months ended March 31, 2012 and 2011. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to SEACOR Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “SEACOR” refers to SEACOR Holdings Inc.

Discontinued Operations. On March 16, 2012, the Company sold certain companies and assets of its Environmental Services business segment for a net sales price of $99.9 million and recognized a gain of $20.7 million, net of tax, or $0.99 per diluted share. The Company has no continuing involvement in the business sold, although the sales agreement provides that the Company may receive contingent consideration equal to a portion of the revenue generated by any extraordinary oil spill response that occurs within three years following the date of sale. As a result, the Company has reported, for all periods presented, the financial position, results of operations and cash flows for the sold business as discontinued operations in the accompanying condensed consolidated financial statements. The remaining business in the segment was renamed Emergency and Crisis Services.

Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet these criteria is deferred until the criteria are met. Deferred revenues, included in other current liabilities, for the three months ended March 31 were as follows (in thousands): 
 
2012
 
2011
Balance at beginning of period
$
9,968

 
$
21,045

Revenues deferred during the period
4,050

 
263

Revenues recognized during the period
(4,700
)
 
(2,554
)
Balance at end of period
$
9,318

 
$
18,754


As of March 31, 2012, deferred revenues included $6.3 million relating to the time charter of several offshore support vessels operating in the U.S. Gulf of Mexico that are scheduled to be paid through the conveyance of a limited net profit interest in developmental oil and gas producing properties owned by a customer. Payments from the conveyance of the limited net profit interest, and the timing of such payments, are contingent upon production and energy sale prices. Based on the current production payout estimate, the deferred revenues are expected to be paid through mid-2012. The Company expects to defer an additional $0.8 million of vessel charter hire under this arrangement through December 2012. The Company will continue to recognize revenues as cash is received or earlier should future payments become determinable. All costs and expenses related to these charters were recognized as incurred.


6


As of March 31, 2012, deferred revenues also included $2.8 million related to contract-lease revenues for certain helicopters leased by Aviation Services to Aeroleo Taxi Aero S/A ("Aeroleo"), its Brazilian joint venture (see Note 6). The deferral resulted from difficulties experienced by Aeroleo following one of its customer's cancellation of certain contracts for a number of AW139 aircraft under contract-lease from Aviation Services. The Company will recognize revenues as cash is received or earlier should future collectability become reasonably assured. All costs and expenses related to these contract-leases were recognized as incurred.

Reclassifications. Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. These reclassifications had no effect on net income as previously reported.


2.
FAIR VALUE MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities as of March 31, 2012 that are measured at fair value on a recurring basis were as follows (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
Marketable securities(1)
$
30,563

 
$
38,023

 
$

Derivative instruments (included in other receivables)
319

 
2,040

 

Construction reserve funds and Title XI reserve funds
259,926

 

 

LIABILITIES
 
 
 
 
 
Short sale of marketable securities (included in other current liabilities)
24,761

 

 

Derivative instruments (included in other current liabilities)
3,011

 
8,154

 

 ______________________
(1)
Marketable security gains (losses), net include gains of $2.6 million and losses of $3.7 million for the three months ended March 31, 2012 and 2011, respectively, related to marketable security positions held by the Company as of March 31, 2012.

As of March 31, 2012, the Company's Level 2 marketable securities included a $33.1 million investment in 9.25% Senior Secured Notes (the “Notes”) due from Trailer Bridge, Inc. (“Trailer Bridge”). The Company held a 50.9% interest in the total outstanding Notes. Trailer Bridge filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in United States Bankruptcy Court for the Middle District of Florida (the “Bankruptcy Court”) on November 16, 2011. On March 16, 2012, the Bankruptcy court confirmed Trailer Bridge's second amended restructuring plan, which provided for a majority of the Note holders, including the Company, to receive a pro rata share of a new $65.0 million debt instrument and a pro rata share of at least 91% of the equity interest in the newly restructured company. Existing common shareholders had the option to receive a 9% equity interest in the newly restructured company or a cash payment of $0.15 per share. The restructuring plan was implemented on April 2, 2012 resulting in the Company obtaining a 47.3% ownership interest in the newly restructured company after the exercise of the existing common shareholders' option.

7


The estimated fair value of the Company’s other financial assets and liabilities as of March 31, 2012 were as follows (in thousands): 
 
 
 
Estimated Fair Value
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash
$
307,935

 
$
307,935

 
$

 
$

Investments, at cost, in 50% or less owned companies (included in other assets)
9,315

 
see below
 
 
 
 
Notes receivable from other business ventures (included in other receivables and other assets)
57,054

 
see below
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion
998,950

 

 
1,028,047

 


The carrying value of cash, cash equivalents and restricted cash approximates fair value. The fair value of the Company’s long-term debt was estimated based upon quoted market prices or by using discounted cash flow analyses based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. It was not practicable to estimate the fair value of the Company’s notes receivable from other business ventures as the overall returns are uncertain due to certain provisions for additional payments contingent upon future events. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The Company’s non-financial assets and liabilities that were measured at fair value during the three months ended March 31, 2012 were as follows (in thousands): 
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
Investment in Illinois Corn Processing LLC(1)
$

 
$
30,916

 
$

 ______________________
(1)
During the three months ended March 31, 2012, the Company marked its equity investment in its Illinois Corn Processing LLC ("ICP") joint venture to fair value following the acquisition of a controlling interest (see Note 6). The investment's fair value was determined based on a fair value analysis of the assets and liabilities of ICP.


3.
DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. Derivative assets and liabilities are included in other receivables and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. The fair values of the Company’s derivative instruments as of March 31, 2012 were as follows (in thousands): 
 
Derivative
Asset
 
Derivative
Liability
Derivatives designated as hedging instruments:
 
 
 
Interest rate swap agreements (cash flow hedges)
$

 
$
4,681

 

 
4,681

Derivatives not designated as hedging instruments:
 
 
 
Options on equities and equity indices
369

 
646

Forward currency exchange, option and future contracts
427

 
282

Interest rate swap agreements

 
3,075

Commodity swap, option and future contracts:
 
 
 
Exchange traded
319

 
2,259

Non-exchange traded
1,244

 
222

 
2,359

 
6,484

 
$
2,359

 
$
11,165


8


Fair Value Hedges. During the three months ended March 31, 2011, the Company utilized forward currency exchange contracts designated as fair value hedges to fix a portion of its euro-denominated capital commitments in U.S. dollars to protect against currency fluctuations. As of March 31, 2012, there were no forward currency exchange contracts designated as fair value hedges.

The Company recognized gains (losses) on derivative instruments designated as fair value hedges for the three months ended March 31 as follows (in thousands):
 
Derivative losses, net
 
2012
 
2011
Forward currency exchange contracts, effective and ineffective portions
$

 
$
4,684

Decrease in fair value of hedged items included in property and equipment corresponding to effective portion of derivative gains

 
(4,684
)
 
$

 
$


Cash Flow Hedges. As of March 31, 2012, the Company is a party to various interest rate swap agreements, with maturities ranging from 2013 to 2014, which have been designated as cash flow hedges. These agreements call for the Company to pay fixed interest rates ranging from 2.25% to 2.85% on aggregate notional values of $125.0 million and receive a variable interest rate based on the London Interbank Offered Rate (“LIBOR”) on these notional values. As of March 31, 2012, one of the Company’s Offshore Marine Services 50% or less owned companies had an interest rate swap agreement maturing in 2015 that has been designated as a cash flow hedge. This instrument calls for the joint venture to pay a fixed interest rate of 1.48% on the amortized notional value of $19.2 million and receive a variable interest rate based on LIBOR on the amortized notional value. In addition, as of March 31, 2012, one of the Company’s Inland River Services 50% or less owned companies had four interest rate swap agreements with maturities ranging from 2013 to 2015 that have been designated as cash flow hedges. These instruments call for the joint venture to pay fixed rates of interest ranging from 1.53% to 4.16% on the aggregate amortized notional value of $53.7 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. By entering into these interest rate swap agreements, the Company and its joint ventures have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate.

The Company recognized gains (losses) on derivative instruments designated as cash flow hedges for the three months ended March 31 as follows (in thousands): 
 
Other comprehensive income
 
Derivative losses, net
 
2012
 
2011
 
2012
 
2011
Interest rate swap agreements, effective portion
$
(500
)
 
$
(99
)
 
$

 
$

Interest rate swap agreements, ineffective portion

 

 
(28
)
 
(79
)
Reclassification of derivative losses to interest expense or equity in earnings of 50% or less owned companies
734

 
748

 

 

 
$
234

 
$
649

 
$
(28
)
 
$
(79
)

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the three months ended March 31 as follows (in thousands):
 
Derivative losses, net
 
2012
 
2011
Options on equities and equity indices
$
(1,212
)
 
$
(263
)
Forward currency exchange, option and future contracts
583

 
418

Interest rate swap agreements
(334
)
 
321

Commodity swap, option and future contracts:
 
 
 
Exchange traded
(1,427
)
 
(3,127
)
Non-exchange traded
(1,701
)
 
(452
)
U.S. Treasury notes, rate-locks and bond future and option contracts

 
(136
)
 
$
(4,091
)
 
$
(3,239
)


9


The Company holds positions in publicly traded equity options that convey the right or obligation to engage in a future transaction on the underlying equity security or index. The Company’s investment in equity options primarily includes positions in energy, marine, transportation and other related businesses. These contracts are typically entered into to mitigate the risk of changes in the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose of.

The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of March 31, 2012, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $47.9 million. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months.

The Company has entered into various interest rate swap agreements with maturities ranging from 2012 through 2015 that call for the Company to pay fixed interest rates ranging from 1.67% to 2.59% on aggregate amortized notional values of $94.5 million and receive a variable interest rate based on LIBOR on these notional values. In addition, one of the Company’s Offshore Marine Services 50% or less owned companies has entered into an interest rate swap agreement maturing in 2014 that calls for the joint venture to pay a fixed interest rate of 3.05% on the amortized notional value of $25.2 million and receive a variable interest rate based on LIBOR on the amortized notional value. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company or its joint venture.

The Company enters and settles positions in various exchange and non-exchange traded commodity swap, option and future contracts. In the Company’s commodity trading and logistics business, fixed price future purchase and sale contracts for ethanol and sugar are included in the Company’s non-exchange traded derivative positions. The Company enters into exchange traded positions to protect these purchase and sale contracts as well as its inventory balances from market changes. As of March 31, 2012, the net market exposure to ethanol and sugar under these contracts was not material. The Company also enters into exchange traded positions (primarily natural gas, heating oil, crude oil, gasoline, ethanol and sugar) to provide value to the Company should there be a sustained decline in the price of commodities that could lead to a reduction in the market values and cash flows of the Company’s Offshore Marine Services and Inland River Services businesses. As of March 31, 2012, these positions were not material.

The Company enters and settles various positions in U.S. Treasury notes and bonds through rate locks, futures or options on futures tied to U.S. Treasury notes. The general purpose of these transactions is to provide value to the Company should the price of U.S. Treasury notes and bonds decline, leading to generally higher interest rates, which might lead to higher interest costs for the Company. As of March 31, 2012, there were none of these types of positions outstanding.


4.
BUSINESS ACQUISITIONS

Superior Lift Boats Acquisition. On March 30, 2012, the Company acquired 18 lift boats, real property and working capital from Superior Energy Inc. (“Superior”) for $142.5 million. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The preliminary fair value analysis is pending completion of a final valuation for the acquired assets and liabilities.

ICP Acquisition. On February 1, 2012, the Company obtained a 70% controlling interest in ICP through its acquisition of a portion of its partner's interest for $9.1 million in cash (see Note 6). ICP owns and operates an alcohol manufacturing facility dedicated to the production of alcohol for beverage, industrial and fuel applications. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The preliminary fair value analysis is pending completion of a final valuation for the acquired assets and liabilities.

Lewis & Clark Acquisition. On December 31, 2011, the Company acquired certain assets and liabilities of Lewis & Clark Marine, Inc. and certain related affiliates (“Lewis & Clark”) for $29.6 million. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in $1.6 million in goodwill being recorded. The preliminary fair value analysis is pending completion of a final valuation for the acquired assets and liabilities.

10


Windcat Acquisition. On December 22, 2011, the Company acquired 75% of the issued and outstanding shares in Windcat Workboats Holdings Ltd. (“Windcat”) for $21.5 million in cash. Windcat, based in the United Kingdom and the Netherlands, is an operator of 29 wind farm utility vessels operating in the main offshore wind markets of Europe. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The preliminary fair value analysis is pending completion of a final valuation for the acquired assets and liabilities.

Naviera Acquisition. On December 21, 2011, the Company acquired a 70% controlling interest in SEACOR Colombia Fluvial (MI) LLC for $1.9 million in cash. SEACOR Colombia Fluvial (MI) LLC's wholly-owned subsidiary, Naviera Central S.A. (“Naviera”), is a provider of inland river barge and terminal services in Colombia. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in $1.0 million in goodwill being recorded. The preliminary fair value analysis is pending completion of a final valuation for the acquired assets and liabilities.

Soylutions Acquisition. On July 29, 2011, the Company obtained a 100% controlling interest in Soylutions LLC (“Soylutions”) through its acquisition of its partner’s interest for $11.9 million in cash (see Note 6). The Company performed a fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The fair value analysis was finalized during the three months ended March 31, 2012.

Purchase Price Allocation. The following table summarizes the allocation of the purchase price for the Company’s business acquisitions during the three months ended March 31, 2012 (in thousands):
Trade and other receivables
$
18,136

Other current assets
16,611

Investments, at Equity, and Advances to 50% or Less Owned Companies
(42,358
)
Property and Equipment
175,793

Intangible Assets
2,071

Accounts payable
(4,465
)
Other current liabilities
(3,300
)
Long-Term Debt
(946
)
Other Liabilities
(157
)
Noncontrolling interests in subsidiaries
(13,246
)
Purchase price(1)
$
148,139

 ______________________
(1)
Purchase price is net of cash acquired of $3.5 million.


5.
EQUIPMENT ACQUISITIONS, DISPOSITIONS AND DEPRECIATION AND IMPAIRMENT POLICIES

During the three months ended March 31, 2012, capital expenditures were $119.6 million. Equipment deliveries during the period included one offshore support vessel, one wind farm utility vessel, three inland river dry cargo barges and seven helicopters.

During the three months ended March 31, 2012, the Company sold one offshore support vessel, one helicopter, one inland river towboat and other equipment for net proceeds of $5.8 million and gains of $4.5 million, all of which was recognized currently.

11



From time to time, the Company enters into vessel sale-leaseback transactions with finance companies, provides seller financing on sales of its vessels to third parties and sells vessels, helicopters and barges to its 50% or less owned companies. A portion of the gains realized from these transactions may be deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets. Deferred gain activity related to these transactions for the three months ended March 31 was as follows (in thousands):
 
2012
 
2011
Balance at beginning of period
$
119,570

 
$
131,836

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(4,925
)
 
(5,596
)
Amortization of deferred gains included in gains on asset dispositions and impairments, net
(1,064
)
 
(1,074
)
Balance at end of period
$
113,581

 
$
125,166


Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

As of March 31, 2012, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
Offshore support vessels
20
Helicopters(1)
15
Inland river dry cargo and deck barges
20
Inland river liquid tank barges
25
Inland river towboats
25
U.S.-flag tankers
25
RORO vessels
20
Harbor and offshore tugs
25
Ocean liquid tank barges
25
______________________ 
(1)
Effective July 1, 2011, the Company changed its estimated useful life and salvage value for helicopters from 12 to 15 years and 30% to 40%, respectively, due to improvements in new aircraft models that continue to increase their long-term value and make them viable for operation over a longer period of time. For the three months ended March 31, 2012, the change in estimate increased operating income by $3.9 million, net income by $2.6 million, and basic and diluted earnings per share by $0.12.

The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to fair value. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the three months ended March 31, 2012, impairment charges recognized by the Company related to long-lived assets held for use were not material.


6.
INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES

Illinois Corn Processing. In January 2012, the Company and its partner each made a capital contribution of $0.5 million. On February 1, 2012, the Company obtained a 70% controlling interest in ICP through its acquisition of a portion of its partner’s interest for $9.1 million in cash (see Note 4). Upon the acquisition, the Company adjusted its investment in ICP to fair value resulting in the recognition of a gain of $6.0 million, net of tax, which is included in equity in earnings in 50% or less owned companies in the accompanying condensed consolidated statements of income. During the month ended January 31, 2012, the Company made net advances of $0.3 million under its revolving line of credit.

12



Aeroleo. On March 1, 2012, the Company recorded an impairment charge of $5.9 million, net of tax, on its investment in and advances to Aeroleo. The impairment charge resulted from difficulties experienced by Aeroleo following one of its customer's cancellation of certain contracts for a number of AW139 aircraft under contract-lease from Aviation Services.

Hawker Pacific. The Company's Hawker Pacific joint venture is an aviation sales and support organization and a distributor of aviation components. During the three months ended March 31, 2012, the Company advanced $3.3 million to Hawker Pacific. The advance bears interest at 10.0% per annum and matures on December 31, 2012, or earlier if a qualified refinancing occurs. As of March 31, 2012, the Company had an outstanding loan totaling $3.3 million inclusive of accrued interest.

Avion Pacific Limited. Avion Pacific Limited (“Avion”) is a joint venture that distributes aircraft and aircraft-related parts in Asia. During the three months ended March 31, 2012, the Company made advances of $9.0 million to Avion and received repayments of $2.1 million. As of March 31, 2012, the Company had outstanding loans to Avion totaling $16.7 million inclusive of accrued interest.

SCFCo Holdings. SCFCo Holdings LLC (“SCFCo”) was established to operate towboats and dry cargo barges on the Parana-Paraguay Rivers and a terminal facility at Port Ibicuy, Argentina. At various times, SCFCo has agreed to expand its operations through additional capital contributions and bank financing. During the three months ended March 31, 2012, the Company and its partner each contributed additional capital of $0.5 million.

Guarantees. The Company has guaranteed the payment of amounts owed by one of its joint ventures under a vessel charter agreement that expires in 2012. In addition, the Company has guaranteed amounts owed under banking facilities by certain of its joint ventures. As of March 31, 2012, the total amount guaranteed by the Company under these arrangements was $24.0 million. In addition, as of March 31, 2012, the Company had uncalled capital commitments to two of its joint ventures for a total of $2.6 million.


7.
COMMITMENTS AND CONTINGENCIES

As of March 31, 2012, the Company’s unfunded capital commitments consisted primarily of offshore support vessels, helicopters, inland river tank barges, an interest in a dry-bulk articulated tug-barge, an interest in a river grain terminal and other property and equipment. These commitments totaled $343.0 million, of which $157.7 million is payable during the remainder of 2012 with the balance payable through 2016. Of the total unfunded capital commitments, $44.9 million may be terminated without further liability other than the payment of liquidated damages of $1.4 million.

On August 19, 2011, the Company granted two fixed price purchase options to an unrelated third party to acquire up to 25% of the outstanding common stock of O'Brien's Response Management Inc. ("O'Brien's"), the Company's Emergency and Crisis Services business segment. The first option to acquire a 12.5% interest may be exercised beginning August 19, 2012 through August 19, 2014. If the first option is exercised, the second option to acquire an additional 12.5% may be exercised beginning August 19, 2013 through August 19, 2015.

On June 12, 2009, a purported civil class action was filed against the Company, Era Group Inc., Era Helicopters LLC and three other defendants (collectively, the “Defendants”) in the U.S. District Court for the District of Delaware, Superior Offshore International, Inc. v. Bristow Group Inc., et al., No. 09-CV-438 (D. Del.).  The Complaint alleges that the Defendants violated federal antitrust law by conspiring with each other to raise, fix, maintain or stabilize prices for offshore helicopter services in the U.S. Gulf of Mexico during the period January 2001 to December 2005.  The purported class of plaintiffs includes all direct purchasers of such services and the relief sought includes compensatory damages and treble damages.  The Company believes that the claims set forth in the Complaint are without merit and intends to vigorously defend the action.  On September 4, 2009, the Defendants filed a motion to dismiss the Complaint.  On September 14, 2010, the Court entered an order dismissing the Complaint.  On September 28, 2010, the plaintiffs filed a motion for reconsideration and amendment and a motion for re-argument (the “Motions”).  On November 30, 2010, the Court granted the Motions, amended the Court's September 14, 2010 Order to clarify that the dismissal was without prejudice, permitted the filing of an amended Complaint, and authorized limited discovery with respect to the new allegations in the amended Complaint.  Following the completion of such limited discovery, on February 11, 2011, the Defendants filed a motion for summary judgment to dismiss the amended Complaint with prejudice.  On June 23, 2011, the Court granted summary judgment for the Defendants.  On July 22, 2011, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Third Circuit.  On August 9, 2011, Defendants moved for certain excessive costs, expenses, and attorneys' fees under 28 U.S.C. § 1927. That motion is fully briefed and a decision is pending. On October 11, 2011, the plaintiffs filed their opening appeal brief with the U.S. Court of Appeals for the Third Circuit. That motion was fully briefed and oral argument completed on March 20, 2012. The Company is unable to estimate the potential exposure, if any, resulting from these claims but

13


believes they are without merit and will continue to vigorously defend the action.

On July 14, 2010, a group of individuals and entities purporting to represent a class commenced a civil action in the U.S. District Court for the Eastern District of Louisiana, Terry G. Robin, et al. v. Seacor Marine, L.L.C., et al., No. 2:10-cv-01986 (E.D. La.) (the “Robin Case”), in which they assert that support vessels, including vessels owned by the Company, responding to the explosion and resulting fire that occurred aboard the semi-submersible drilling rig, the Deepwater Horizon, were negligent in their efforts to save lives and put out the fire and contributed to the sinking of the Deepwater Horizon and subsequent oil spill. The action now is part of the overall multi-district litigation, In re Oil Spill by the Oil Rig “Deepwater Horizon”, MDL No. 2179 (“MDL”). The complaint seeks compensatory, punitive, exemplary, and other damages.  In response to this lawsuit, the Company filed petitions seeking exoneration from, or limitation of liability in relation to, any actions that may have been taken by vessels owned by the Company to extinguish the fire.  Pursuant to the Limitation of Liability Act, those petitions imposed an automatic stay on the Robin Case, and the court set a deadline of April 20, 2011 for individual claimants to assert claims in the limitation cases.  Approximately 66 claims were submitted by the deadline in all of the limitation actions.  On June 8, 2011, the Company moved to dismiss these claims (with the exception of one claim filed by a Company employee) on various legal grounds.  On October 12, 2011, the Court granted the Company's motion to dismiss in its entirety, dismissing with prejudice all claims that had been filed against the Company in the limitation actions (with the exception of one claim filed by a Company employee that was not subject to the motion to dismiss).  The Court entered final judgments in favor of the Company in the Robin Case and each of the limitation actions on November 21, 2011.  On December 12, 2011, the claimants appealed each of those judgments to the Unites States Court of Appeals for the Fifth Circuit.  The claimants' opening brief was filed on March 26, 2012, and the Company's response brief is due on May 7, 2012.  The Company is unable to estimate the potential exposure, if any, resulting from this matter but believes it is without merit and will continue to vigorously defend the action.

On July 20, 2010, two individuals purporting to represent a class commenced a civil action in the Civil District Court for the Parish of Orleans in the State of Louisiana, John Wunstell, Jr. and Kelly Blanchard v. BP, et al., No. 2010-7437 (Division K) (the “Wunstell Action”), in which they assert, among other theories, that Mr. Wunstell suffered injuries as a result of his exposure to certain noxious fumes and chemicals in connection with the provision of remediation, containment and response services by O'Brien's. The action now is part of the overall MDL. The complaint also seeks to establish a “class-wide court-supervised medical monitoring program” for all individuals “participating in BP's Deepwater Horizon Vessels of Opportunity Program and/or Horizon Response Program” who allegedly experienced injuries similar to those of Mr. Wunstell. The Company believes this lawsuit has no merit and will seek its dismissal.  Pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend O'Brien's in connection with the Wunstell Action and claims asserted in the MDL.

On December 15, 2010, O'Brien's and then-SEACOR subsidiary National Response Corporation (“NRC”) were named as defendants in one of the several consolidated “master complaints” that have been filed in the overall MDL.  The master complaint naming O'Brien's and NRC asserts various claims on behalf of a putative class against multiple defendants concerning the clean-up activities generally, and the use of dispersants specifically.  By court order, the Wunstell Action has been stayed as a result of the filing of the referenced master complaint.  The Company believes that the claims asserted against O'Brien's and NRC in the master complaint have no merit and on February 28, 2011, O'Brien's and NRC moved to dismiss all claims against them in the master complaint on legal grounds.  On September 30, 2011, the Court granted in part and denied in part the motion to dismiss that O'Brien's and NRC had filed (an amended decision was issued on October 4, 2011 that corrected several grammatical errors and non-substantive oversights in the original order).  Although the Court refused to dismiss the referenced master complaint in its entirety at that time, the Court did recognize the validity of the “derivative immunity” and “implied preemption” arguments that O'Brien's and NRC advanced and has directed O'Brien's and NRC to (i) conduct limited discovery to develop evidence to support those arguments and (ii) then re-assert the arguments.  A schedule for such limited discovery and future motion practice has been established by the Court and currently contemplates that O'Brien's and NRC will file motions re-asserting their derivative immunity and implied preemption arguments on May 18, 2012.  The Court did, however, dismiss all state-law claims and certain other claims that had been asserted in the referenced master complaint, and dismissed the claims of all plaintiffs that have failed to allege a legally-sufficient injury.  In addition to the indemnity provided to O'Brien's, pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend O'Brien's and NRC in connection with these claims in the MDL. 

Subsequent to the filing of the referenced master complaint, four additional individual civil actions have been filed in the U.S. District Court for the Eastern District of Louisiana concerning the clean-up activities generally, which name the Company, O'Brien's and/or NRC as defendants and are part of the overall MDL. On April 8, 2011, O'Brien's was named as a defendant in Johnson Bros. Corporation of Louisiana v. BP, PLC, et al., No. 2:11-cv-00781 (E.D. La.), which is a suit by an individual business seeking damages allegedly caused by a delay on a construction project alleged to have resulted from the clean-up operations. On April 15, 2011, O'Brien's and NRC were named as defendants in James and Krista Pearson v. BP Exploration & Production, Inc., et al., No. 2:11-cv-00863 (E.D. La.), which is a suit by a husband and wife, who allegedly participated in the clean-up effort and

14


are seeking damages for personal injury, property damage to their boat, and amounts allegedly due under contract. On April 15, 2011, O'Brien's and NRC were named as defendants in Thomas Edward Black v. BP Exploration & Production, Inc., et al., No. 2:11-cv-00867 (E.D. La.), which is a suit by an individual who is seeking damages for lost income because he allegedly could not find work in the fishing industry after the oil spill. On April 20, 2011, a complaint was filed in Darnell Alexander, et al. v. BP, PLC, et al., No. 2:11-cv-00951 (E.D. La.) on behalf of 117 individual plaintiffs that seek to adopt the allegations made in the referenced master complaint against O'Brien's and NRC (and the other defendants). By court order, all four of these additional individual cases have been stayed as a result of the filing of the referenced master complaint.  The Company is unable to estimate the potential exposure, if any, resulting from this matter but believes it is without merit and does not expect this matter will have a material effect on the Company's consolidated financial position or its results of operations.

On February 18, 2011, Triton Asset Leasing GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., and Transocean Deepwater Inc. (collectively “Transocean”) named O'Brien's and NRC as third-party defendants in a Rule 14(c) Third-Party Complaint in Transocean's own Limitation of Liability Act action, which is part of the overall MDL, tendering to O'Brien's and NRC the claims in the referenced master complaint that have already been asserted against O'Brien's and NRC. Transocean, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P., and Weatherford International, Inc. have also filed cross-claims against O'Brien's and NRC for contribution and tort indemnity should they be found liable for any damages in Transocean's Limitation of Liability Act action and O'Brien's and NRC have asserted counterclaims against those same parties for identical relief.  As provided above, the Company is unable to estimate the potential exposure, if any, resulting from these actions but believes they are without merit and does not expect this matter will have a material effect on the Company's consolidated financial position or its results of operations.

Separately, on March 2, 2012, the Court announced that BP Exploration & Production Inc. and BP America Production Company (collectively "BP") and the plaintiffs had reached an agreement on the terms of two proposed class action settlements that will resolve, among other things, plaintiffs' economic loss claims and clean-up related claims against BP.  The parties filed their proposed settlement agreements on April 18, 2012 along with motions seeking preliminary approval of the settlements, and the Court held a hearing on April 25, 2012 to consider those motions but has yet to make a ruling.   Although neither the Company, O'Brien's or NRC are parties to the settlement agreements, the Company, O'Brien's and NRC are listed on the releases accompanying both settlement agreements, such that if the settlement agreements are approved by the Court as currently drafted, any plaintiffs that settle will be required to release their claims against the Company, O'Brien's and NRC.

In the course of the Company's business, it may agree to indemnify a party.  If the indemnified party makes a successful claim for indemnification, the Company would be required to reimburse that party in accordance with the terms of the indemnification agreement.  Indemnification agreements generally are subject to threshold amounts, specified claim periods and other restrictions and limitations. 

In connection with the disposition of certain entities of the Company's Environmental Services Business Segment (the “NRC Entities”) on March 16, 2012, the Company remains contingently liable for certain obligations of the NRC Entities, including potential liabilities relating to work performed in connection with the Oil Spill Response.  These potential liabilities may not exceed the purchase consideration received by the Company for the NRC Entities and the Company currently is indemnified under contractual agreements with BP.

In the normal course of its business, the Company becomes involved in various other litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company's potential exposure to these matters 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 would have a material effect on the Company's consolidated financial position or its results of operations.

In 2011, the Company received a Notice of Infringement (the “Notice”) from the Brazilian Federal Revenue Office. The Notice alleged the Company had imported a number of vessels into Brazil without properly completing the required importation documents and levied an assessment of $25.7 million. The Company intends to vigorously defend its position that the proposed assessment is erroneous and believes the resolution of this matter will not have a material effect on the Company's consolidated financial position or its results of operations. Of the levied assessment, $19.3 million relates to managed vessels whose owner would be responsible to reimburse any potential payment.


8.
MULTI-EMPLOYER PENSION PLANS

There has been no material change in the multi-employer pension plans in which the Company participates, except that the Company received notification from the American Maritime Officers Pension Plan (the "AMOPP”) that, based on an actuarial valuation performed as of September 30, 2011, if the Company chose to withdraw from the AMOPP, its withdrawal liability would have been $39.3 million. That liability may change in future years based on various factors, primarily employee census. As of March 31, 2012, the Company has no intention to withdraw from the AMOPP and no deficit amounts have been invoiced. Depending upon the results of the future actuarial valuations and the ten-year rehabilitation plan, it is possible that the AMOPP will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received or contribution levels are increased.

9.
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

As of March 31, 2012, the Company had $125.0 million of outstanding borrowings under the SEACOR revolving credit facility. The remaining availability under this facility was $279.0 million, net of issued letters of credit of $1.0 million. As of March 31, 2012, Era Group Inc. ("Era") had $290.0 million of outstanding borrowings under its senior secured revolving credit facilities. The remaining availability under this facility was $59.7 million, net of issued letters of credit of $0.3 million. In addition, as of March 31, 2012, the Company had other outstanding letters of credit totaling $56.7 million with various expiration dates through 2014.

During the three months ended March 31, 2012, the Company made scheduled payments on long-term debt and capital lease obligations of $2.1 million, repaid $3.2 million of acquired debt, made repayments of $50.0 million of borrowings under the SEACOR revolving credit facility, made net repayments on inventory financing arrangements of $17.3 million and borrowed $38.0 million under the Era senior secured revolving credit facility.

SEACOR’s Board of Directors has previously authorized the Company to purchase any or all of its 5.875% Senior Notes due 2012 and its 7.375% Senior Notes due 2019, which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the three months ended March 31, 2012, the Company purchased $5.5 million, in principal amount, of its 5.875% Senior Notes for $5.7 million, resulting in a loss on debt extinguishment of $0.2 million.


10.
STOCK REPURCHASES

SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire shares of SEACOR common stock, par value $0.01 per share (“Common Stock”), which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the three months ended March 31, 2012, the Company did not acquire any Common Stock for treasury. As of March 31, 2012, the remaining authority under the repurchase plan was $150.0 million.


11.
EARNINGS PER COMMON SHARE OF SEACOR

Basic earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the treasury stock method. Dilutive securities for this purpose assumes restricted stock grants have vested and common shares have been issued pursuant to the exercise of outstanding stock options. For the three months ended March 31, 2012, diluted earnings per common share of SEACOR excluded 501,274 of certain share awards as the effect of their inclusion in the computation would have been antidilutive. For the three months ended March 31, 2011, diluted earnings per common share of SEACOR excluded 182,839 of certain share awards as the effect of their inclusion in the computation would have been antidilutive.

15



A reconciliation of basic and diluted weighted average outstanding common shares of SEACOR for the three months ended March 31 was as follows:
 
2012
 
2011
Basic Weighted Average Common Shares Outstanding
20,519,660

 
21,104,739

Effect of Dilutive Share Awards:
 
 
 
Options and Restricted Stock
373,550

 
334,685

Diluted Weighted Average Common Shares Outstanding
20,893,210

 
21,439,424




12.
SHARE BASED COMPENSATION

Transactions in connection with the Company’s share based compensation plans during the three months ended March 31, 2012 were as follows:
Director stock awards granted
1,000

Employee Stock Purchase Plan (“ESPP”) shares issued
22,641

Restricted stock awards granted
109,100

Restricted stock awards canceled

Shares released from Deferred Compensation Plan

Restricted Stock Unit Activities:
 
Outstanding as of December 31, 2011
1,130

Granted

Converted to shares and issued to Deferred Compensation Plan
(370
)
Outstanding as of March 31, 2012
760

Stock Option Activities:
 
Outstanding as of December 31, 2011
1,272,192

Granted
37,400

Exercised
(48,497
)
Forfeited

Expired
(750
)
Outstanding as of March 31, 2012
1,260,345

Shares available for future grants and ESPP purchases as of March 31, 2012
368,896



13.
SEGMENT INFORMATION

Accounting standards require public business enterprises to report information about each of their operating business segments that exceed certain quantitative thresholds or meet certain other reporting requirements. An operating business segment has been defined as a component of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Certain reclassifications of prior year information have been made to conform to the current year's reportable segment presentation as a result of the Company's presentation of discontinued operations (see Note 1). The Company’s basis of measurement of segment profit or loss is as previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16


The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments.
 
Offshore
Marine
Services
$’000
 
Aviation
Services
$’000
 
Inland
River
Services
$’000
 
Marine
Transportation
Services
$’000
 
Emergency and Crisis
Services
$’000
 
Commodity
Trading and
Logistics
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
120,938

 
61,052

 
49,896

 
26,196

 
10,163

 
209,696

 
19,944

 

 
497,885

Intersegment
148

 

 
3,594

 
87

 
52

 

 

 
(3,881
)
 

 
121,086

 
61,052

 
53,490

 
26,283

 
10,215

 
209,696

 
19,944

 
(3,881
)
 
497,885

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
75,340

 
39,676

 
35,183

 
15,758

 
6,873

 
203,233

 
11,814

 
(3,765
)
 
384,112

Administrative and general
11,856

 
9,677

 
3,982

 
2,475

 
3,254

 
3,141

 
2,817

 
8,976

 
46,178

Depreciation and amortization
12,882

 
9,630

 
7,007

 
5,651

 
484

 
1,060

 
2,158

 
455

 
39,327

 
100,078

 
58,983

 
46,172

 
23,884

 
10,611

 
207,434

 
16,789

 
5,666

 
469,617

Gains on Asset Dispositions
1,845

 
1,765

 
1,927

 

 
5

 

 

 

 
5,542

Operating Income (Loss)
22,853

 
3,834

 
9,245

 
2,399

 
(391
)
 
2,262

 
3,155

 
(9,547
)
 
33,810

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative losses, net

 
(124
)
 

 

 

 
(2,939
)
 

 
(1,056
)
 
(4,119
)
Foreign currency gains (losses), net
1,123

 
917

 
(22
)
 
9

 
14

 
79

 
(16
)
 
448

 
2,552

Other, net

 
30

 

 
30

 

 

 

 
(114
)
 
(54
)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
1,829

 
(6,419
)
 
250

 
(217
)
 
67

 
6,154

 
(422
)
 

 
1,242

Segment Profit (Loss)
25,805

 
(1,762
)
 
9,473

 
2,221

 
(310
)
 
5,556

 
2,717

 
 
 
 
Other Income (Expense) not included in Segment Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,850
)
Less Equity Earnings included in Segment Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,242
)
Income Before Taxes, Equity Earnings and Disc. Ops.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,339

Capital Expenditures
42,778

 
54,272

 
4,884

 
2,541

 
412

 

 
13,696

 
1,021

 
119,604

As of March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment
826,153

 
752,602

 
375,968

 
223,137

 
1,523

 
42,821

 
166,423

 
20,770

 
2,409,397

Investments, at Equity, and Advances to 50% or Less Owned Companies
68,645

 
40,841

 
50,758

 
11,989

 
268

 

 
48,271

 

 
220,772

Inventories (1)
6,261

 
25,876

 
2,681

 

 
642

 
57,393

 
1,476

 

 
94,329

Goodwill
13,367

 
352

 
4,345

 
550

 
37,138

 

 
1,302

 

 
57,054

Intangible Assets
5,500

 

 
8,755

 
1,423

 
5,909

 
157

 
388

 

 
22,132

Other current and long-term assets, excluding cash and near cash assets(2)
140,019

 
77,356

 
61,675

 
4,444

 
19,904

 
71,617

 
68,434

 
19,354

 
462,803

Segment Assets
1,059,945

 
897,027

 
504,182

 
241,543

 
65,384

 
171,988

 
286,294

 
 
 
 
Cash and near cash assets(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
636,447

Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,019

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,906,953

______________________
(1)
Inventories for Commodity Trading and Logistics includes raw materials of $2.8 million and work in process of $2.4 million resulting from the acquisition of ICP. (see Note 4).
(2)
Cash and near cash assets includes cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

17


 
Offshore
Marine
Services
$’000
 
Aviation
Services
$’000
 
Inland
River
Services
$’000
 
Marine
Transportation
Services
$’000
 
Emergency and Crisis Services
$’000
 
Commodity
Trading
and Logistics
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended March 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
80,323

 
56,155

 
43,928

 
17,224

 
28,833

 
194,012

 
17,536

 

 
438,011

Intersegment
21

 

 
2,541

 
88

 

 

 

 
(2,650
)
 

 
80,344

 
56,155

 
46,469

 
17,312

 
28,833

 
194,012

 
17,536

 
(2,650
)
 
438,011

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
63,020

 
33,465

 
27,884

 
8,979

 
14,776

 
187,018

 
9,142

 
(2,541
)
 
341,743

Administrative and general
11,770

 
7,020

 
2,697

 
1,417

 
2,811

 
2,660

 
2,620

 
10,659

 
41,654

Depreciation and amortization
12,533

 
11,919

 
5,622

 
4,978

 
502

 
13

 
2,289

 
474

 
38,330

 
87,323

 
52,404

 
36,203

 
15,374

 
18,089

 
189,691

 
14,051

 
8,592

 
421,727

Gains on Asset Dispositions and Impairments, Net
4,364

 
2,194

 
697

 

 

 

 

 

 
7,255

Operating Income (Loss)
(2,615
)
 
5,945

 
10,963

 
1,938

 
10,744

 
4,321

 
3,485

 
(11,242
)
 
23,539

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative gains (losses), net

 
310

 

 

 

 
(4,750
)
 

 
1,122

 
(3,318
)
Foreign currency gains (losses), net
725

 
353

 

 
16

 
(51
)
 
(5
)
 
1

 
4,020

 
5,059

Other, net

 

 
1

 

 

 

 
(1
)
 
(178
)
 
(178
)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
735

 
(99
)
 
(256
)
 

 

 
51

 
(389
)
 

 
42

Segment Profit (Loss)
(1,155
)
 
6,509

 
10,708

 
1,954

 
10,693

 
(383
)
 
3,096

 
 
 
 
Other Income (Expense) not included in Segment Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4,822
)
Less Equity Earnings included in Segment Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(42
)
Income Before Taxes, Equity Earnings and Disc. Ops
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,280

Capital Expenditures
18,093

 
9,209

 
31,521

 
4,199

 
16

 

 
229

 
71

 
63,338

As of March 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
Property and Equipment
617,170

 
603,904

 
343,618

 
217,938

 
900

 
143

 
150,983

 
18,704

 
1,953,360

Investments, at Equity, and Advances to 50% or Less Owned Companies
45,865

 
32,669

 
40,472

 

 

 
14,546

 
54,773

 

 
188,325

Inventories
4,523

 
24,408

 
2,702

 
365

 
380

 
58,607

 
1,539

 

 
92,524

Goodwill
13,367

 
353

 
1,743

 

 
37,086

 

 
1,302

 

 
53,851

Intangible Assets
7,502

 

 
1,001

 
1,834

 
7,733

 

 
502

 

 
18,572

Other current and long-term assets, excluding cash and near cash assets(1)
109,330

 
54,585

 
41,359

 
2,418

 
39,738

 
38,477

 
43,392

 
38,886

 
368,185

Segment Assets
797,757

 
715,919

 
430,895

 
222,555

 
85,837

 
111,773

 
252,491

 
 
 
 
Cash and near cash assets(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
906,078

Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
153,803

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,734,698

 ______________________
(1)
Cash and near cash assets includes cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds.

18


ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: decreased demand and loss of revenues as a result of U.S. government implemented moratoriums directing operators to cease certain drilling activities and any extension of such moratoriums (the “Moratoriums”), weakening demand for the Company’s services as a result of unplanned customer suspensions, cancellations, rate reductions or non-renewals of vessel charters and aviation equipment or failures to finalize commitments to charter vessels and aviation equipment in response to Moratoriums, increased government legislation and regulation of the Company’s businesses which could increase cost of operations, increased competition if the Jones Act is repealed, liability, legal fees and costs in connection with providing spill and emergency response services, including the Company’s involvement in response to the oil spill that resulted from the sinking of the Deepwater Horizon in April 2010, decreased demand for the Company’s services as a result of declines in the global economy, declines in valuations in the global financial markets and illiquidity in the credit sectors, including, interest rate fluctuations, availability of credit, inflation rates, change in laws, trade barriers, commodity prices and currency exchange fluctuations, the cyclical nature of the oil and gas industry, activity in foreign countries and changes in foreign political, military and economic conditions, changes in foreign and domestic oil and gas exploration and production activity, safety record requirements related to Offshore Marine Services, Marine Transportation Services and Aviation Services, decreased demand for Marine Transportation Services and Harbor and Offshore Towing Services due to construction of additional refined petroleum products, natural gas or crude oil pipelines or due to decreased demand for refined petroleum products, crude oil or chemical products or a change in existing methods of delivery, compliance with U.S. and foreign government laws and regulations, including environmental laws and regulations, the dependence of Offshore Marine Services, Marine Transportation Services and Aviation Services on several customers, consolidation of the Company’s customer base, safety issues experienced by a particular helicopter model that could result in customers refusing to use that helicopter model or a regulatory body grounding that helicopter model, which could also permanently devalue that helicopter model, the ongoing need to replace aging vessels and aircraft, industry fleet capacity, restrictions imposed by the Shipping Acts and Aviation Acts on the amount of foreign ownership of the Company’s Common Stock, operational risks of Offshore Marine Services, Marine Transportation Services, Harbor and Offshore Towing Services and Aviation Services, effects of adverse weather conditions and seasonality, dependence of spill response revenue on the number and size of spills and upon continuing government regulation in this area and Emergency and Crisis Services’ ability to comply with such regulation and other governmental regulation, liability in connection with providing spill response services, the level of grain export volume, the effect of fuel prices on barge towing costs, variability in freight rates for inland river barges, the effect of international economic and political factors in Inland River Services’ operations, adequacy of insurance coverage, the attraction and retention of qualified personnel by the Company and various other matters and factors, many of which are beyond the Company’s control. In addition, these statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors. Consequently, the following should not be considered a complete discussion of all potential risks or uncertainties. The words “estimate,” “project,” “intend,” “believe,” “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Form 10-Q should be evaluated together with the many uncertainties that affect the Company’s businesses, particularly those mentioned under “Forward-Looking Statements” in Item 7 on the Company’s Form 10-K and SEACOR’s periodic reporting on Form 8-K (if any), which are incorporated by reference.

Overview

The Company’s operations are divided into six main business segments – Offshore Marine Services, Aviation Services, Inland River Services, Marine Transportation Services, Emergency and Crisis Services and Commodity Trading and Logistics. The Company also has activities that are referred to and described under Other that primarily includes Harbor and Offshore Towing Services, various other investments in joint ventures and lending and leasing activities.

On March 16, 2012, the Company sold certain companies and assets of its Environmental Services business segment for a net sales price of $99.9 million and recognized a gain of $20.7 million, net of tax, or $0.99 per diluted share.  The Company has no continuing involvement in the business sold, although the sales agreement provides that the Company may receive contingent consideration equal to a portion of the revenue generated by any extraordinary oil spill response that occurs within three years following the date of sale.  As a result, the Company has reported, for all periods presented, the financial

19


position, results of operations and cash flows for the sold business as discontinued operations.  The remaining business in its Environmental Services business segment was renamed Emergency and Crisis Services.

Emergency and Crisis Services is primarily engaged in providing emergency preparedness and crisis management services to the public and private sectors in the United States and abroad. Clients served include aerospace, chemicals, energy, food, health care, industrial, mining, oil, retail, shipping and transportation as well as industry associations, non-profit associations, school districts and universities.


Consolidated Results of Operations

The sections below provide an analysis of the Company’s operations by business segment for the three months ended March 31, 2012 (“Current Year Quarter”), as compared with the three months ended March 31, 2011 (“Prior Year Quarter”). See “Item 1. Financial Statements—Note 13. Segment Information” included in Part I for consolidating segment tables for each period presented.

Offshore Marine Services
 
Three Months Ended March 31,
 
2012
 
2011
 
$’000
 
%
 
$’000
 
%
Operating Revenues:
 
 
 
 
 
 
 
United States, primarily U.S. Gulf of Mexico
47,313

 
39
 
19,161

 
24

Africa, primarily West Africa
17,087

 
14
 
19,467

 
24

Middle East