SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1998 or
-----------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 1-12289
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SEACOR SMIT INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3542736
- ----------------------------------- -----------------------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
11200 Westheimer, Suite 850, Houston Texas 77042
- ------------------------------------------- ------------------------------
(Address of Principal Executive Offices) (Zip Code)
(713) 782-5990
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------------ ------------
The total number of shares of Common Stock, par value $.01 per share,
outstanding as of August 7, 1998 was 13,191,493. The Registrant has no other
class of Common Stock outstanding.
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997.......................1
Condensed Consolidated Statements of Operations For the
Three and Six Months Ended June 30, 1998 and 1997.........2
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997...........3
Notes to Condensed Consolidated Financial Statements.........4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................7
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders..........17
Item 6. Exhibits and Reports on Form 8-K.............................17
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------------------- ------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................... $ 134,949 $ 175,381
Held-to-maturity securities........................................ - 33,020
Trade and other receivables, net of allowance for
doubtful accounts of $1,451 and $1,626, respectively............ 88,168 84,087
Inventories........................................................ 1,657 2,149
Prepaid expenses and other......................................... 2,002 1,422
-------------------- ------------------
Total current assets......................................... 226,776 296,059
-------------------- ------------------
Investments in, at Equity, and Receivables from 50%
or Less Owned Companies............................................ 50,129 38,370
Available-for-Sale Securities......................................... 166,096 127,420
Property and Equipment................................................ 643,623 592,883
Less--Accumulated depreciation..................................... (98,330) (109,949)
-------------------- ------------------
Net property and equipment................................... 545,293 482,934
-------------------- ------------------
Restricted Cash....................................................... 190,450 46,983
Other Assets.......................................................... 37,729 28,035
-------------------- ------------------
$ 1,216,473 $ 1,019,801
==================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and current portion of long-term debt............. $ 23,095 $ 36,229
Other current liabilities.......................................... 25,103 23,292
-------------------- ------------------
Total current liabilities.................................... 48,198 59,521
-------------------- ------------------
Long-Term Debt........................................................ 490,926 358,714
Deferred Income Taxes................................................. 71,042 59,681
Deferred Gain and Other Liabilities................................... 63,710 34,168
Minority Interest in Subsidiaries..................................... 34,686 33,703
Stockholders' Equity:
Common stock, $.01 par value, 14,135,261 and 14,064,221
shares issued at June 30, 1998, and December 31, 1997.......... 141 140
Additional paid-in capital......................................... 271,447 268,728
Retained earnings.................................................. 281,479 211,159
Less 905,468 and 166,968 shares held in treasury at June 30,
1998 and December 31, 1997, respectively, at cost.............. (43,797) (5,365)
Less unamortized restricted stock compensation..................... (1,523) (986)
Accumulated other comprehensive income............................. 164 338
-------------------- ------------------
Total stockholders' equity................................... 507,911 474,014
-------------------- ------------------
$ 1,216,473 $ 1,019,801
==================== ==================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
AND SHOULD BE READ IN CONJUNCTION HEREWITH.
1
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA, UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Operating Revenue:
Marine...................................................... $ 89,611 $ 79,993 $ 180,770 $ 154,948
Environmental -
Oil spill response......................................... 1,189 1,160 2,641 1,637
Retainer fees and other services........................... 4,944 4,095 9,546 7,842
------------- ------------- -------------- ------------
95,744 85,248 192,957 164,427
------------- ------------- -------------- ------------
Costs and Expenses:
Cost of oil spill response.................................. 818 1,067 1,986 1,562
Operating expenses -
Marine..................................................... 42,823 40,752 86,192 74,879
Environmental.............................................. 1,310 1,316 2,649 2,538
Administrative and general.................................. 9,128 7,632 17,635 14,115
Depreciation and amortization............................... 8,604 8,754 18,120 17,621
------------- ------------- -------------- ------------
62,683 59,521 126,582 110,715
------------- ------------- -------------- ------------
Operating Income............................................... 33,061 25,727 66,375 53,712
------------- ------------- -------------- ------------
Other (Expense) Income:
Interest on debt............................................ (6,185) (2,849) (10,668) (5,641)
Interest income............................................. 6,096 2,497 11,784 4,561
Gain from equipment sales, net.............................. 17,863 31,123 30,582 47,010
Other....................................................... (20) 486 (74) 443
------------- ------------- -------------- ------------
17,754 31,257 31,624 46,373
------------- ------------- -------------- ------------
Income Before Income Taxes, Minority Interest, Equity in
Earnings of 50% or Less Owned Companies and
Extraordinary Item.......................................... 50,815 56,984 97,999 100,085
Income Tax Expense............................................. 17,390 20,321 34,022 35,203
------------- ------------- -------------- ------------
Income Before Minority Interest, Equity in Earnings of
50% or Less Owned Companies and Extraordinary Item.......... 33,425 36,663 63,977 64,882
Minority Interest in (Income) Loss of Subsidiaries............. (232) 113 (703) 145
Equity in Earnings of 50% or Less Owned Companies.............. 2,857 1,648 7,046 2,159
------------- ------------- -------------- ------------
Income Before Extraordinary Item............................... 36,050 38,424 70,320 67,186
Extraordinary Item - Extinguishment of Debt, net of tax........ - (325) - (325)
------------- ------------- -------------- ------------
Net Income..................................................... $ 36,050 $ 38,099 $ 70,320 $ 66,861
============= ============= ============== ============
Basic Earnings Per Common Share:
Income Before Extraordinary Item............................ $ 2.74 $ 2.78 $ 5.25 $ 4.85
Extraordinary Item.......................................... - (0.02) - (0.02)
------------- ------------- -------------- ------------
Net Income................................................. $ 2.74 $ 2.76 $ 5.25 4.83
============= ============= ============== ============
Diluted Earnings Per Common Share:
Income Before Extraordinary Item............................ $ 2.34 $ 2.38 $ 4.50 $ 4.18
Extraordinary Item.......................................... - (0.02) - (0.02)
------------- ------------- -------------- ------------
Net Income................................................. $ 2.34 $ 2.36 $ 4.50 $ 4.16
============= ============= ============== ============
Weighted Average Common Shares:
Basic....................................................... 13,175,389 13,824,513 .13,406,818 .13,858,748
Diluted..................................................... 16,153,292 16,825,974 .16,394,089 .16,880,760
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
AND SHOULD BE READ IN CONJUNCTION HEREWITH.
2
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
----------------- ------------------
Net Cash Provided by Operating Activities............................ $ 40,891 $ 39,870
----------------- ------------------
<S> <C> <C>
Cash Flows from Investing Activities:
Purchase of property and equipment................................ (111,834) (54,429)
Proceeds from property and equipment sales........................ 120,203 66,460
Purchase of securities............................................ (63,769) -
Proceeds from sale of securities.................................. 58,032 311
Investments in and advances to 50% or less owned companies........ (12,437) (1,067)
Principal payments on notes due from 50% or less owned
Companies........................................................ 995 273
Principal payments received under a sale-type lease............... 126 104
Restricted cash................................................... (143,467) (32,495)
Dividends received from 50% or less owned companies............... 120 -
----------------- ------------------
Net cash used in investing activities......................... (152,031) (20,843)
----------------- ------------------
Cash Flows from Financing Activities:
Payments on long-term debt........................................ - (1,351)
Payments on capital lease obligations............................. (744) (746)
Payments on stockholders' loans................................... (223) -
Other............................................................. 5 -
Proceeds from issuance of long-term debt.......................... 110,000 750
Proceeds from exercise of stock options........................... 757 21
Common stock acquired for treasury................................ (38,432) (4,515)
----------------- ------------------
Net cash provided (used) in financing activities.............. 71,363 (5,841)
----------------- ------------------
Effect of Exchange Rate Changes
on Cash and Cash Equivalents...................................... (655) (26)
----------------- ------------------
Net Increase (Decrease) in Cash and Cash Equivalents................. (40,432) 13,160
Cash and Cash Equivalents, Beginning of Period....................... 175,381 149,053
================= ==================
Cash and Cash Equivalents, End of Period............................. $ 134,949 $ 162,213
================= ==================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
AND SHOULD BE READ IN CONJUNCTION HEREWITH.
3
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION --
The condensed consolidated financial information for the three and
six-month periods ended June 30, 1998, and 1997, has been prepared by the
Company and was not audited by its independent public accountants. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations, and cash flows at June 30, 1998, and for all periods presented have
been made. Results of operations for the interim periods presented are not
necessarily indicative of the operating results for the full year or any future
periods.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the financial statements
and related notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
Unless the context otherwise indicates, any references in this
Quarterly Report on Form 10-Q to the "Company" refer to SEACOR SMIT Inc. and its
consolidated subsidiaries, and any references in this Quarterly Report on Form
10-Q to "SEACOR" refer to SEACOR SMIT Inc.
2. RECENT ACCOUNTING PRONOUNCEMENTS --
In June 1998, the Financial Accounting Standards Board 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 market value. SFAS 133 requires that changes in the derivative's fair 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. SFAS 133 is
effective for fiscal years beginning after June 15, 1999. A company may also
implement SFAS 133 as of the beginning of any fiscal quarter after issuance
(that is, fiscal quarters beginning June 16, 1998 and thereafter). SFAS 133 must
be applied to derivative instruments and certain derivative instruments embedded
in hybrid contracts that were issued, acquired, or substantially modified after
December 31, 1997. We have not yet quantified the impacts of adopting SFAS 133
on our financial statements and have not determined the timing of or method of
our adoption of SFAS 133.
3. RESTRICTED CASH --
Restricted cash at June 30, 1998 totaled $190,450,000, and of such
balance, $93,672,000 and $96,778,000 are intended for use in defraying the costs
of constructing offshore marine vessels for the Company and two premium offshore
jackup drilling rigs ("Rigs") for Chiles Offshore LLC ("Chiles"), a majority
owned subsidiary, respectively. At June 30, 1998, the Company has funded
$32,000,000 in offshore marine vessel construction costs from unrestricted cash
balances, and subject to the Maritime Administration's approval during the third
quarter, the Company expects such amounts to be reimbursed from construction
reserve fund restricted cash accounts, see discussion below.
4
<PAGE>
Proceeds from the sale of certain offshore marine vessels 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 in 1997 and 1998 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 their 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 (the "Construction Reserve Fund
Program"), 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, and funds must
be committed for expenditure within three years or they will be released for the
Company's general use.
Net proceeds from the sale by Chiles in April 1998 of $110,000,000
aggregate principal amount of its 10.0% Senior Notes Due 2008 (the "Chiles 10%
Notes") were deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as Escrow
Agent. These funds may be used to (i) partially fund the construction of Rigs,
(ii) pay interest on the Chiles 10.0% Notes through the first two semi-annual
interest payment dates, and (iii) provide working capital. Upon receipt by the
Escrow Agent of an Officer's Certificate of Chiles that Chiles has made the
final installment of the Rigs' purchase price in accordance with the related
construction contracts, any funds remaining in escrow will be released by the
Escrow Agent to Chiles.
4. REPORTING OF COMPREHENSIVE INCOME --
During the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" which establishes standards for reporting comprehensive income (defined
as net income and all other non-owner changes in equity) in the financial
statements. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997, and the reclassification of financial statements for earlier periods
presented for comparative purposes is required. For the three month periods
ended June 30, 1998 and 1997, total comprehensive income was $36,157,000 and
$33,002,000, respectively. For the six month periods ended June 30, 1998 and
1997, total comprehensive income was $70,141,000 and $60,011,000, respectively.
Other comprehensive income or losses in 1998 and 1997 primarily resulted from
net currency translation adjustments. Unrealized holding losses on securities
were also included in 1998 comprehensive losses.
5. SECURITIES REPURCHASE PROGRAM --
SEACOR's Board of Directors extended its previously announced
securities repurchase authority to include, in addition to its common stock and
5 3/8% convertible subordinated notes due 2006, its 7.2% senior notes due 2009
and the 10% senior notes due 2008 of its affiliate, Chiles Offshore LLC. The
repurchase of any such securities will be effected from time to time through
open market purchases, privately negotiated transactions or otherwise depending
on market conditions.
5
<PAGE>
6. EARNINGS PER SHARE --
<TABLE>
<CAPTION>
For the Three Month Periods For the Six Month Periods
June 30, June 30,
---------------------------------- ---------------------------------
Per Per
Income Shares Share Income Shares Share
------------- ------------ ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1998
- ----
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item..... $ 36,050,000 13,175,389 $ 2.74 $70,320,000 13,406,818 $ 5.25
======= =======
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock......... - 148,359 - 157,727
Convertible Securities............... 1,690,000 2,829,544 3,380,000 2,829,544
------------- ------------ ------------ ------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.......... $ 37,740,000 16,153,292 $ 2.34 $73,700,000 16,394,089 $ 4.50
============= ============ ======= ============ ============ =======
1997
- ----
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item..... $ 38,424,000 13,824,513 $ 2.78 67,186,000 13,858,748 $ 4.85
======= =======
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock......... - 156,766 - 177,317
Convertible Securities............... 1,676,000 2,844,695 3,369,000 2,844,695
------------- ------------ ------------ ------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.......... $ 40,100,000 16,825,974 $ 2.38 $70,555,000 16,880,760 $ 4.18
============= ============ ======= ============ ============ =======
</TABLE>
7. VESSEL DISPOSITIONS --
During the three and six month periods ended June 30, 1998, the Company
completed the sale of 14 and 26 offshore marine vessels, respectively. Net
pre-tax gains realized from the sale of these vessels and other equipment
totaled $17,863,000 and $30,582,000 in the respective three and six month
periods ended June 30, 1998. Eleven of the vessels sold during the year have
been bareboat chartered-in by the Company under operating leases that range in
duration from 2 to 4 years. Certain of the gains realized from the sale of these
11 vessels have been deferred and are being credited to income as reductions in
rental expense over the lease terms.
8. COMMITMENT AND CONTINGENCY --
As of August 1, 1998, the Company has contracted for the construction
of 21 offshore marine vessels for an approximate aggregate cost of $212,000,000
(including the vessel for the TMM joint venture described below) of which
$65,000,000 has been funded. In addition, the Company's majority owned
subsidiary, Chiles, has commitments to construct Rigs for an approximate
aggregate cost of $178,000,000 of which $72,500,000 has been funded. These
construction projects are expected to be completed over the next two years.
Pursuant to Memoranda of Agreement between the Company and
Transportacion Maritima Mexicana S.A. de C.V. ("TMM"), two joint venture
corporations have been formed, each of which will own one offshore marine
service vessel. One of such vessels has been delivered and the other is
currently under construction. It is expected that TMM will invest approximately
$6,000,000 for a 12.5% equity interest in each joint venture corporation and
that the Company will own all remaining equity interests in these joint venture
corporations.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When included in this Quarterly Report on Form 10-Q or in documents incorporated
herein by reference, the words "expects," "intends," "anticipates," "believes,"
"estimates," and analogous expressions are intended to identify forward-looking
statements. Such statements inherently are subject to a variety of risks and
uncertainties that could cause actual results to differ materially from those
projected. Such risks and uncertainties include, among others, general economic
and business conditions, industry fleet capacity, changes in foreign and
domestic oil and gas exploration and production activity, competition, changes
in foreign political, social and economic conditions, regulatory initiatives and
compliance with governmental regulations, customer preferences and various other
matters, many of which are beyond the Company's control. These forward-looking
statements speak only as of the date of this Quarterly Report on Form 10-Q. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or any change in the Company's expectations with regard thereto or
any change in events, conditions or circumstances on which any statement is
based.
OFFSHORE MARINE SERVICES
The Company provides marine transportation and related services largely
dedicated to supporting offshore oil and gas exploration and production 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, freight hauling, line handling, seismic data gathering, salvage,
and oil spill emergencies.
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.
Opportunities to buy and sell vessels are actively monitored by the
Company to maximize overall fleet utility and flexibility. Since 1994, certain
acquisition transactions and investments in joint ventures have added over 230
vessels to the Company's fleet. During this same time period, over 85 vessels
were sold of which 19 have been chartered-in. The Company is also presently
committed to the construction of 21 vessels over the next two years.
7
<PAGE>
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.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Rates Per Day Worked ($): (1) (2)
Supply and Towing Supply................... 6,810 6,307 6,908 6,069
Anchor Handling Towing Supply.............. 11,641 10,634 11,848 9,738
Crew....................................... 2,713 2,163 2,704 2,114
Standby Safety............................. 6,534 5,962 6,490 5,669
Utility and Line Handling.................. 1,898 1,356 1,868 1,327
Geophysical, Freight and Other............. 4,872 4,654 4,623 4,692
Overall Fleet........................... 4,199 3,548 4,210 3,422
Overall Utilization (%): (1)
Supply and Towing Supply................... 91.5 90.1 91.3 93.1
Anchor Handling Towing Supply.............. 86.5 79.0 85.9 82.5
Crew....................................... 97.2 97.1 97.1 97.6
Standby Safety............................. 99.7 97.2 99.1 91.6
Utility and Line Handling.................. 96.8 97.7 96.0 97.5
Geophysical, Freight and Other............. 100.0 97.5 100.0 95.0
Overall Fleet........................... 95.0 94.2 94.6 95.0
</TABLE>
- ---------------------
(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) Certain of the Company's vessels earn revenue in foreign currencies which
have been converted to U.S. dollars for reporting purposes at the weighted
average exchange rates of those foreign currencies for the periods
indicated.
From time-to-time, the Company bareboats or time charters-in vessels. A
bareboat charter is a vessel lease under which the lessee ("charterer") is
responsible for all crewing, insurance, and other operating expenses, as well as
the payment of bareboat charter hire to the providing entity. A time charter is
a lease under which the entity providing the vessel is responsible for all
crewing, insurance, and other operating expenses and the charterer only pays a
time charter hire fee to the providing entity. 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.
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 June
30, 1998 and 1997, the Company had five and seven vessels, respectively,
bareboat chartered-out.
8
<PAGE>
The table below sets forth the Company's marine fleet structure at the dates
indicated:
<TABLE>
<CAPTION>
FLEET STRUCTURE At June 30,
------------------------
1998 1997
------------------------
<S> <C> <C>
Owned...................................... 226 256
Bareboat and Time Chartered-In............. 23 5
Managed.................................... 3 -
Joint Ventured (1)......................... 34 33
Pooled (2)................................. 12 12
========================
Overall Fleet.......................... 298 306
========================
</TABLE>
(1) 1998 and 1997 include 15 and 12 vessels, respectively, owned or
chartered-in by a joint venture between Transportacion Maritima Mexicana
S.A. de C.V. ("TMM") and the Company (the "TMM Joint Venture"). 1998 and
1997 also include 19 and 21 vessels, respectively, owned by corporations in
which the Company acquired an equity interest pursuant to a transaction
with Smit Internationale N.V. ("Smit") in December 1996 (the "Smit Joint
Ventures").
(2) 1998 and 1997 include five vessels owned by Toisa Ltd. which participate in
a pool with ten Company owned North Sea standby safety vessels.
Additionally, 1998 and 1997 includes seven standby safety vessels in which
the Company shares net operating profits after certain adjustments with
Toisa and owners of the vessels (the "Saint Fleet Pool").
Vessel operating expenses are primarily a function of fleet size and
utilization levels. The most significant vessel operating expense items are
wages paid to marine personnel, maintenance and repairs, and marine insurance.
In addition to variable vessel operating expenses, the offshore marine segment
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 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. The foregoing applies primarily to the Company's North Sea
operations. Overall, the percentage of the Company's offshore marine operating
revenues derived from foreign operations whether in U.S. dollars or foreign
currencies approximated 38% and 41% during the six month periods ended June 30,
1998 and 1997, respectively.
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, currency restrictions and exchange rate fluctuations, 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 put through survey a disproportionate number of older or larger
vessels which typically have higher drydocking costs, comparative results may be
affected. For the six month period ended June 30, 1998 and 1997, drydocking
costs totaled $7.1 million and $4.3 million, respectively. During these periods
the Company completed the drydocking of 54 and 56 vessels, respectively.
9
<PAGE>
Operating results are also affected by the Company's participation in
(i) a joint venture arrangement with Vector Offshore Limited, a U.K.
corporation, which owns a 9% equity interest in the Company's subsidiary (the
"Veesea Joint Venture") that operates 10 standby safety vessels in the North
Sea, (ii) the SEAVEC and Saint Fleet Pools, which coordinate the marketing of 22
standby safety vessels in the North Sea, of which 10 are owned by the Veesea
Joint Venture, (iii) the TMM Joint Venture which operates 15 vessels offshore
Mexico, (iv) the Smit Joint Ventures which operated 19 vessels in the Far East,
Latin America, the Middle East, the Mediterranean and offshore West Africa, and
(v) other joint venture arrangements.
ENVIRONMENTAL SERVICES
The Company's environmental services 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 Oil Pollution
Act of 1990, as amended, 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 seven 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.
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 principal components of the Company's environmental service
business 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 the Company's
participation in Clean Pacific Alliance on the West Coast of the United States.
10
<PAGE>
DRILLING SERVICES
Through certain investment transactions in August and December 1997,
the Company acquired a 55.4% membership interest in Chiles Offshore LLC
("Chiles"), a joint venture and strategic alliance created to construct, own,
and operate two premium offshore jackup drilling rigs ("Rigs"). Prior to
December, 1997, the Company did not own a controlling interest in Chiles and
therefore accounted for its investment under the equity method. Beginning after
the Company's acquisition of a controlling interest in Chiles, the financial
position and results of operations of Chiles were included in the consolidated
financial statements of the Company. Prior to the second quarter of 1998, the
results of operations for Chiles were not material. At present, Chiles has no
operating assets.
RESULTS OF OPERATIONS
The following table sets forth operating revenue and operating profit
by business segment for the periods indicated. The offshore marine business
segment's data is provided by geographic area of operation. The environmental
business segment's principal operations are in the United States. The drilling
business segment is currently constructing Rigs in the United States that are
expected to enter operation in 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------------------
1998 1997 1998 1997
----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Operating Revenue --
Marine:
United States...................................... $ 53,533 $ 47,479 $ 111,332 $ 92,181
North Sea.......................................... 9,569 16,664 19,343 30,888
West Africa........................................ 14,871 10,015 29,597 21,348
Other Foreign...................................... 11,638 5,835 20,498 10,531
-------------- ------------- ---------------- -------------
89,611 79,993 180,770 154,948
Environmental ....................................... 6,133 5,255 12,187 9,479
Drilling............................................. - - - -
============== ============= =============== ==============
95,744 85,248 192,957 164,427
============== ============= =============== ==============
Operating Profit --
Marine:
United States...................................... 35,568 45,962 71,091 80,420
North Sea.......................................... 3,391 6,109 7,553 9,850
West Africa........................................ 8,194 4,221 10,921 8,602
Other Foreign...................................... 4,542 1,612 8,415 3,757
-------------- ------------- ---------------- -------------
51,695 57,904 97,980 102,629
Environmental ....................................... 904 615 1,677 830
Drilling............................................. (381) - (381) -
-------------- ------------- -------------- --------------
52,218 58,519 99,276 103,459
Other income (expense) (1)............................. 84 (2) 59 (3)
General corporate administration....................... (1,398) (1,181) (2,452) (2,291)
Net interest (expense) income.......................... (89) (352) 1,116 (1,080)
Minority interest in loss (income) of subsidiaries..... (232) 113 (703) 145
Equity in net earnings of 50% or less owned companies.. 2,857 1,648 7,046 2,159
Income tax expense..................................... (17,390) (20,321) (34,022) (35,203)
============== ============== ============== ==============
Income before extraordinary item....................... $ 36,050 $ 38,424 $ 70,320 $ 67,186
============== ============== ============== ==============
</TABLE>
(1) Excludes gains from equipment sales and certain other expenses that were
reclassified to operating profit of the applicable business segment in
the applicable period.
The marine business segment's operating revenue increased $9.6 million
or 12% and $25.8 million or 17% in the three and six month periods ended June
30, 1998, respectively, compared to the three and six month periods ended June
30, 1997. The increase was due primarily to higher rates per day worked
11
<PAGE>
earned by the Company's domestic and foreign fleet. Approximately two-thirds of
the revenue earned from the improvement in rates per day worked was derived from
the operation of the Company's domestic fleet. The increase was offset by a
decline in revenue earned between comparable periods in the U.S. Gulf of Mexico
and the North Sea due to a net reduction in owned and operated vessels. Since
June 30, 1997, the number of vessels operated by the Company offshore West
Africa and in Other Foreign regions has increased due primarily to the
relocation of vessels from the U.S. Gulf of Mexico and the North Sea.
The environmental business segment's operating revenue increased $0.9
million or 17% and $2.7 million or 28% in the three and six month periods ended
June 30, 1998 compared to the three and six month periods ended June 30, 1997.
Oil spill, retainer, and other service revenues earned in 1998 include the
results of ERST/O'Brien's Inc. ("ERST"), an entity acquired by the Company in
October 1997. Excluding the effect of ERST, the environmental business segment's
revenue declined between comparable quarters but increased slightly between
comparable six month periods. The change in both periods primarily related to
the number and severity of oil spills managed by the Company.
The marine business segment's operating profit decreased $6.2 million
and $4.6 million in the three and six month periods ended June 30, 1998,
respectively, compared to the three and six month periods ended June 30, 1997.
Excluding the effect of gains from the sale of equipment in each period,
operating profit increased $6.9 million and $11.7 million in the three and six
month periods ended June 30, 1998, respectively, compared to the three and six
month periods ended June 30, 1997. The increase was due to factors affecting
operating revenue as outlined above offset by higher wage and related benefits,
repair and maintenance, bareboat charter, travel, and administrative costs. Crew
wages and related benefits increased domestically, in West Africa and in Other
Foreign regions in response to competition for qualified personnel due to active
market conditions. Repair and maintenance costs rose domestically, in the North
Sea and in Other Foreign regions due to higher drydocking, main engine, hull,
and electronic expenses. Higher drydocking expense resulted from an increase in
the number and cost of larger vessel repairs. Bareboat charter expenses were
higher due primarily to recent vessel sale and leaseback transactions. Travel
expenses rose due to an increase in the frequency of crew rotation aboard the
Company's vessels working offshore West Africa.
In the three and six month periods ended June 30, 1998, the Company
sold 14 and 26 vessels, respectively, and other equipment resulting in gains of
$18.0 million and $30.7 million, respectively. Vessels sold during this six
month period included: 7 towing supply, 6 supply, 5 utility, 4 anchor handling
towing supply, and 4 crew vessels that operated in the U.S. Gulf of Mexico,
offshore West Africa, and the North Sea. In the three and six month periods
ended June 30, 1997, the Company sold 10 and 22 vessels, respectively, and other
equipment resulting in gains of $31.1 million and $47.0 million, respectively.
Vessels sold during this six month period included: 7 supply, 5 utility, 4
towing supply, 3 anchor handling towing supply, 2 crew, and 1 freight vessel
that operated primarily in the U.S. Gulf of Mexico. Profits from the 1998 vessel
sales were lower than the comparable prior period due primarily to the deferral
of certain gains associated with sale and leaseback of 11 vessels.
Declining oil prices have recently resulted in reduced drilling
activities in the U.S. Gulf of Mexico. As a result, rates per day work and
utilization have declined for the Company's domestic supply and towing supply
vessel fleet. For the Company's remaining domestic fleet, primarily crew,
utility, and anchor handling towing supply vessels, rates per day worked have
generally remained steady and utilization has been relatively high. Should the
cutback in U.S.
12
<PAGE>
Gulf of Mexico drilling activities continue or increase, the Company's domestic
operating profits may be adversely affected. Declining oil prices have not
resulted in rate per day work or utilization declines of the Company's foreign
offshore marine fleet. Should oil price declines result in reduced foreign
drilling activities, the Company's foreign operating profits may also be
adversely affected.
The environmental business segment's operating profit increased $0.3
million and $0.8 million in the three and six month periods ended June 30, 1998
compared to the three and six month periods ended June 30, 1997 In addition to
including the results of ERST, operating profits rose due to reduced operating
costs.
The Company's overall administrative and general expenses, relating
primarily to operating activities, increased $1.5 million and $3.5 million in
the three and six month periods ended June 30, 1998, respectively, compared to
the three and six month periods ended June 30, 1997. The increase was primarily
due to (i) rising wage and related benefit costs in the marine business segment,
(ii) the acquisition of ERST, and (iii) the acquisition of a majority equity
interest in Chiles. Administrative wage and related benefit costs of the marine
business segment rose due to additional staffing requirements in the North Sea,
West Africa, and Other Foreign regions. Wage and related benefit costs also
increased in the Company's domestic marine business segment commensurate with
competition in the labor market for administrative personnel. The increase was
offset by a decline in expense provisions for doubtful trade accounts
receivable. Administrative and general expenses primarily include costs
associated with personnel, professional services, travel, communications,
facility rental and maintenance, general insurance, and franchise taxes.
The Company's overall depreciation and amortization expense, relating
primarily to operating activities, did not change significantly between the
comparable three and six month periods end June 30, 1998 and 1997. A decline in
depreciation expense due to offshore marine vessel sales was offset primarily by
higher expense associated with depreciating additional offshore marine vessel
purchase consideration paid during the first quarter of 1998 to SMIT
International Overseas B.V. ("SMIT Overseas") pursuant to a December 19, 1996
transaction (the "SMIT Additional Consideration Transaction") and newly
constructed offshore marine vessels.
Net interest was an expense of $0.1 million and income of $1.1 million
during the three and six month periods ended June 30, 1998, respectively.
Interest income rose between comparable periods due primarily to greater
invested cash balances that primarily resulted from (i) the sale in September
1997 of $150.0 million aggregate principal amount of the Company's 7.2% Senior
Notes Due 2009 (the "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 also rose between
comparable periods. An increase in the Company's interest expense due to the (i)
sale of the 7.2% Notes, (ii) sale of the Chiles 10.0% Notes, and (iii)
amortization of debt discount recognized on indebtedness issued pursuant to the
SMIT Additional Consideration Transaction was partially offset by an increase in
capitalized interest costs associated with the offshore marine vessel and
premium offshore jackup drilling rig construction programs.
Equity earnings from 50% or less owned companies increased $1.2 million
and $4.9 million in the three and six
13
<PAGE>
month period ended June 30, 1998 compared to the three and six month period
ended June 30, 1997. The increases resulted primarily from improved operating
results of the Company's Mexican and Smit Joint Ventures. The increase between
comparable six month periods additionally includes an approximate $1.4 million
gain from a vessel sale by one of the Smit Joint Venture corporations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily from its
need to service debt, fund working capital, acquire, construct, or improve
equipment and make other investments. Management believes that cash flow from
operations will provide sufficient working capital to fund the Company's
operating needs. The Company may, from time to time, issue shares of its common
stock, 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 fleet, vessels' rates per day worked,
overall vessel utilization, and the level of spill response activity. Factors
relating to the marine service business are affected directly by the volatility
of oil and gas prices, the level of offshore production and exploration activity
and other factors beyond the Company's control.
For the six month period ended June 30, 1998, the Company had a modest
improvement in net cash provided by operating activities over the comparable
period in 1997. The increase was due primarily to favorable changes in the
Company's net working capital.
For the six month period ended June 30, 1998, the Company had a net use
of cash in investing activities resulting primarily from (i) additional funds
set aside into restricted cash accounts to be used toward the purchase of
offshore marine vessels and Rigs, (ii) purchases of marketable securities, (iii)
expenditures associated with the construction of offshore marine vessels and
Rigs, and (iv) the satisfaction of a cash obligation pursuant to the SMIT
Additional Consideration Transaction. The use of cash was offset principally by
cash generated from the sale of 25 offshore marine vessels and certain
marketable securities.
For the six month period ended June 30, 1998, the Company generated
cash from financing activities primarily from the sale of the Chiles 10.0%
Notes. The increase was primarily offset by the repurchase of 738,500 shares of
the Company's common stock, 712,000 of which were repurchased from a subsidiary
of SMIT Overseas on March 3, 1998.
Pursuant to a revolving credit facility (the "DnB Facility") with Den
norske Bank ("DnB"), the Company may borrow up to $93.75 million. At June 30,
1998, the Company had $93.75 million available for future borrowings. The Credit
Facility requires the Company, on a consolidated basis, to maintain a minimum
ratio of indebtedness to vessel value, 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 Credit Facility limits the
amount of secured indebtedness which the Company and its subsidiaries may incur,
provides for a negative pledge with respect to the Company's and its
subsidiaries' assets, and restricts the payment of dividends.
On April 29, 1998, Chiles, executed a commitment letter with
MeesPierson Capital Corporation and Nederlandse Scheepshypotheek Bank N.V. that
provides for a $25.0 million revolving credit facility (the "Chiles Bank
Facility") maturing December 31, 2004. Availability under the Chiles Bank
Facility will commence upon first delivery of one of the two Rigs being
constructed by Chiles that is expected to occur during the second quarter of
1999.
14
<PAGE>
At June 30, 1998, the Company had restricted cash of approximately
$190.5 million, and of such balance, $93.7 million and $96.8 million are
intended for use in defraying the costs of constructing offshore marine vessels
for the Company and Rigs for Chiles, respectively. At June 30, 1998, the Company
has funded approximately $32.0 million in offshore marine vessel construction
costs from unrestricted cash balances, and subject to the Maritime
Administration's approval during the third quarter, the Company expects such
amount to be replenished from construction reserve fund restricted cash
accounts, see discussion below.
Proceeds from the sale of certain offshore marine vessels 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 in 1997 and 1998 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 their 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 (the "Construction Reserve Fund
Program"), 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, and funds must
be committed for expenditure within three years or they will be released for the
Company's general use.
Net proceeds from the sale by Chiles in April 1998 of $110,000,000
aggregate principal amount of its 10.0% Senior Notes Due 2008 (the "Chiles 10%
Notes") were deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as Escrow
Agent. These funds may be used to (i) partially fund the construction of Rigs,
(ii) pay interest on the Chiles 10.0% Notes through the first two semi-annual
interest payment dates, and (iii) provide working capital. Upon receipt by the
Escrow Agent of an Officer's Certificate of Chiles that Chiles has made the
final installment of the Rigs' purchase price in accordance with the related
construction contracts, any funds remaining in escrow will be released by the
Escrow Agent to Chiles.
SEACOR's Board of Directors extended its previously announced
securities repurchase authority to include, in addition to its common stock and
5 3/8% convertible subordinated notes due 2006, its 7.2% senior notes due 2009
and the 10% senior notes due 2008 of its affiliate, Chiles Offshore LLC. The
repurchase of any such securities will be effected from time to time through
open market purchases, privately negotiated transactions or otherwise depending
on market conditions.
CAPITAL EXPENDITURES
The Company may make selective acquisitions of marine vessels or fleets
of marine vessels and oil spill response equipment or expand the scope and
nature of its environmental services. The Company also may upgrade or enhance
its marine vessels or construct marine 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 and, potentially, through the issuance of
additional indebtedness or shares of its common stock.
15
<PAGE>
As of August 1, 1998, the Company has contracted for the construction
of 21 offshore marine vessels for an approximate aggregate cost $212.0 million
(including the vessel for the TMM joint venture described below) of which $65.0
million has been funded. In addition, the Company's majority owned subsidiary,
Chiles, has commitments to build Rigs for an approximate aggregate cost of
$178.0 million of which $72.5 million has been funded. These construction
projects are expected to be completed over the next two years. Pursuant to
Memoranda of Agreement between the Company and TMM, two joint venture
corporations have been formed, each of which will own one offshore marine
service vessel. One of such vessels has been delivered and the other is
currently under construction. It is expected that TMM will invest approximately
$6.0 million for a 12.5% equity interest in each joint venture corporation and
that the Company will own all remaining equity interests in these joint venture
corporations.
Expenditures for environmental compliance to modify marine segment
vessels have not been a significant component of the Company's capital budget.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board 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 market value. SFAS 133 requires that changes in the derivative's fair 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. SFAS 133 is
effective for fiscal years beginning after June 15, 1999. A company may also
implement SFAS 133 as of the beginning of any fiscal quarter after issuance
(that is, fiscal quarters beginning June 16, 1998 and thereafter). SFAS 133 must
be applied to derivative instruments and certain derivative instruments embedded
in hybrid contracts that were issued, acquired, or substantially modified after
December 31, 1997. We have not yet quantified the impacts of adopting SFAS 133
on our financial statements and have not determined the timing of or method of
our adoption of SFAS 133.
YEAR 2000
The Company is currently in the process of upgrading existing software
applications and replacing certain computer hardware equipment to be year 2000
compliant. At present, the Company is still evaluating all areas of its
information technology infrastructure. The Company does not expect that the
costs to modify its information technology infrastructure to be Year 2000
compliant will be material to its financial condition or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
16
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1998 Annual Meeting of Stockholders of SEACOR SMIT Inc.
("SEACOR") was held on June 1, 1998 (the "Annual Meeting").
(b) At the Annual Meeting, Messrs. Charles Fabrikant, Granville E.
Conway, Michael E. Gellert, Stephen Stamas, Richard M. Fairbanks
III, Pierre de Demandolx, Antoon Kienhuis, and Andrew Morse were
elected as directors to serve until the 1999 Annual Meeting of
Stockholders of SEACOR or until their respective successors are
earlier elected and qualified.
(c) At the Annual Meeting, SEACOR's stockholders ratified the
appointment of Arthur Andersen LLP to serve as SEACOR's
independent auditors for the fiscal year ending December 31,
1998. Messrs. Charles Fabrikant, Granville E. Conway, Michael E.
Gellert, Stephen Stamas, Richard M. Fairbanks III, Pierre de
Demandolx, Antoon Kienhuis, and Andrew Morse were elected.
11,281,535 shares were voted in favor of the election of Charles
Fabrikant with 111,256 shares withheld. 11,283,473 shares were
voted in favor of the election of Granville E. Conway with
109,318 shares withheld. 11,311,115 shares were voted in favor of
the election of Michael E. Gellert with 81,676 shares withheld.
11,311,115 shares were voted in favor of the election of Stephen
Stamas with 81,676 shares withheld. 11,283,635 shares were voted
in favor of the election of Richard M. Fairbanks III with 109,156
shares withheld. 11,310,320 shares were voted in favor of the
election of Pierre de Demandolx with 82,471 shares withheld.
11,310,870 shares were voted in favor of the election of Antoon
Kienhuis with 81,921 shares withheld. 11,295,835 shares were
voted in favor of the election of Andrew Morse with 96,956 shares
withheld. There were no shares voted against the election of any
of the directors. 11,385,546 shares were voted in favor of the
appointment of Arthur Andersen LLP, with 1,725 shares voted
against such appointment and 5,520 withheld.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits:
27.1 Financial Data Schedule.
B. Reports on Form 8-K:
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEACOR SMIT Inc.
(Registrant)
DATE: AUGUST 14, 1998 By: /s/ Charles Fabrikant
----------------------------------------
Charles Fabrikant, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
DATE: AUGUST 14, 1998 By: /s/ Randall Blank
----------------------------------------
Randall Blank, Executive Vice President,
Chief Financial Officer and Secretary
Principal Officer)
18
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 134,949
<SECURITIES> 0
<RECEIVABLES> 89,619
<ALLOWANCES> 1,451
<INVENTORY> 1,657
<CURRENT-ASSETS> 226,776
<PP&E> 643,623
<DEPRECIATION> 98,330
<TOTAL-ASSETS> 1,216,473
<CURRENT-LIABILITIES> 48,198
<BONDS> 490,926
0
0
<COMMON> 141
<OTHER-SE> 507,770
<TOTAL-LIABILITY-AND-EQUITY> 1,216,473
<SALES> 0
<TOTAL-REVENUES> 192,957
<CGS> 0
<TOTAL-COSTS> 1,986
<OTHER-EXPENSES> 88,841
<LOSS-PROVISION> (130)
<INTEREST-EXPENSE> 10,668
<INCOME-PRETAX> 97,999
<INCOME-TAX> 34,022
<INCOME-CONTINUING> 63,977
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,320
<EPS-PRIMARY> 5.25
<EPS-DILUTED> 4.50
</TABLE>
