SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-12289
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SEACOR SMIT INC.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 13-3542736
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
11200 Richmond Avenue, Suite 400, Houston, Texas 77042
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 782-5990
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Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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Common Stock, par value New York Stock Exchange
$.01 per share
Securities registered pursuant to Section 12 (g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of March 24, 2000 was approximately $582,147,000. The
total number of shares of Common Stock issued and outstanding as of March
24, 2000 was 11,206,436.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A within 120 days after the end of
the Registrant's last fiscal year is incorporated by reference into Items
10 through 13, Part III of this Annual Report on Form 10-K.
<PAGE>
SEACOR SMIT INC.
FORM 10-K
TABLE OF CONTENTS
PART I
<TABLE>
<S> <C>
Page
Item 1. Business.............................................................................. 1
Offshore Marine Services.............................................................. 2
Environmental Services................................................................ 7
Drilling Services..................................................................... 9
Other Investments..................................................................... 12
Employees............................................................................. 12
Glossary of Selected Offshore Marine Industry Terms................................... 13
Item 2. Properties............................................................................ 14
Item 3. Legal Proceedings..................................................................... 14
Item 4. Submission of Matters to a Vote of Security Holders................................... 14
Item 4A. Executive Officers of the Registrant.................................................. 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters................. 16
Item 6. Selected Financial Data............................................................... 17
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................. 18
Offshore Marine Services.............................................................. 18
Environmental Services................................................................ 20
Drilling Services..................................................................... 21
Results of Operations................................................................. 22
Liquidity and Capital Resources....................................................... 27
Item 8. Financial Statements and Supplementary Data........................................... 33
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................................. 33
PART III
Item 10. Directors and Executive Officers of the Registrant.................................... 34
Item 11. Executive Compensation................................................................ 34
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 34
Item 13. Certain Relationships and Related Transactions........................................ 34
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................... 36
</TABLE>
<PAGE>
When included in this Annual Report on Form 10-K 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 Annual Report on Form 10-K. 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.
ITEM 1. BUSINESS
GENERAL
The Company is a major provider of offshore marine services to the oil
and gas exploration and production industry, is one of the leading
providers of oil spill response services to owners of tank vessels and
oil storage, processing, and handling facilities, and owns a majority
equity interest in companies that own and operate mobile offshore jackup
drilling rigs.
The Company's offshore marine service business operates a diversified
fleet of vessels principally through wholly owned, majority owned, and
50% or less owned subsidiaries, many of which have been organized to
facilitate vessel acquisitions and various financing transactions in
connection therewith and to satisfy foreign and domestic vessel
certification requirements. The Company's vessels are primarily
dedicated to servicing offshore oil and gas exploration and production
facilities mainly in the U.S. Gulf of Mexico, offshore West Africa, the
North Sea, the Far East, Latin America, and the Mediterranean. The
Company's offshore marine fleet, including owned, chartered-in, joint
ventured, pooled, and managed vessels, delivers cargo and personnel to
offshore installations, handles anchors for drilling rigs and other
marine equipment, supports offshore construction and maintenance work,
and provides standby safety support and oil spill response services. The
Company may also from time to time furnish vessels for special projects
such as well stimulation, seismic data gathering, salvage, freight
hauling, and line handling. In connection with its offshore marine
services, the Company offers logistics services, which include
shorebase, marine transport, and other supply chain management services
in support of offshore exploration and production operations.
The Company's environmental service business provides contractual oil
spill response and other professional services to those who store,
transport, produce, or handle petroleum and certain non-petroleum oils
as required by the Oil Pollution Act of 1990, as amended ("OPA 90"), and
various state regulations. The Company's environmental services,
provided primarily through its wholly owned subsidiaries, National
Response Corporation ("NRC"), International Response Corporation
("IRC"), and ERST/O'Brien's Inc. ("ERST"), include training, consulting
and supervision for emergency preparedness, response and crisis
management associated with oil or hazardous material spills, fires, and
natural disasters, and the maintenance of specialized equipment for
immediate deployment in response to spills and other events. NRC has
acted as the principal oil spill response contractor on several of the
largest oil spills that have occurred in the United States since the
enactment of OPA 90.
The Company owns a 58.3% membership interest in Chiles Offshore LLC, a
Delaware limited liability company ("Chiles Offshore"), that was formed
for purposes of constructing, owning, and operating mobile offshore
drilling rigs. Since inception in 1997 and until July 1999, Chiles
Offshore operated as a development stage company, devoting substantially
all its efforts to constructing two state-of-the-art premium jackup
offshore drilling rigs (each a "Rig" and together, the "Rigs"), raising
capital, and securing contracts for the Rigs. The first Rig, the Chiles
Columbus, entered service in June 1999. The second Rig, the Chiles
Magellan, entered service in November 1999. References herein to
"Chiles" shall mean Chiles Offshore together with its wholly owned
subsidiaries, Chiles Columbus LLC and Chiles Magellan LLC (the "Rig
Owners"), both of which are Delaware limited liability companies and
owners of the Chiles Columbus and Chiles Magellan, respectively.
Unless the context indicates otherwise, any reference in this Annual
Report on Form 10-K to the "Company" refers to SEACOR SMIT Inc.,
incorporated in 1989 in Delaware, and its consolidated subsidiaries,
"SEACOR" refers to SEACOR SMIT Inc., and "Common Stock" refers to the
common stock, par value $.01 per share, of SEACOR. SEACOR's principal
executive offices are located at 11200 Richmond Avenue, Suite 400,
Houston, Texas 77082, where its telephone number is (713) 782-5990.
Certain industry terms used in the description of the Company's offshore
marine business are defined or described under "Glossary of Selected
Offshore Marine Industry Terms" appearing at the end of this Item 1.
1
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OFFSHORE MARINE SERVICES
GEOGRAPHIC MARKETS SERVED
The operations of the Company's offshore marine service business are
concentrated in five geographic regions of the world. The table below
sets forth, at the dates indicated, the number of vessels owned,
bareboat chartered-in, and managed by the Company and vessels operated
through its joint ventures and pooling arrangements in each of those
regions.
<TABLE>
<CAPTION>
At December 31,
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Geographic Market 1997 1998 1999
- ----------------------------------------------------- ------------------- ----------------- -------------------
Domestic, principally the U.S. Gulf of Mexico..... 195 177 181
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<S> <C> <C> <C>
Foreign:
Offshore West Africa.......................... 31 39 30
North Sea..................................... 31 28 24
Far East...................................... 17 14 13
Latin America................................. 20 34 32
Other Foreign................................. 12 15 14
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Total Foreign............................. 111 130 113
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Total Fleet............................ 306 307 294
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</TABLE>
DOMESTIC. The Company is a major provider of offshore marine services to
the oil and gas exploration and production industry that operates
primarily in the U.S. Gulf of Mexico. In support of exploration
activities, the Company utilizes its supply, towing supply, anchor
handling towing supply, and crew vessels; whereas, in production support
activities, the Company employs its utility as well as crew vessels. The
Company also operates or bareboat charters-out specially equipped
vessels that provide well stimulation, seismic data gathering, oil spill
response, and freight services.
At December 31, 1999, the Company owned and operated 41 of approximately
374 supply, towing supply, and anchor handling towing supply vessels and
137 of approximately 385 crew and utility vessels currently operating in
the U.S. Gulf of Mexico. At December 31, 1999, the Company also owned 1
utility vessel that was bareboat chartered-out to an environmental
service segment joint venture and 2 vessels providing seismic and
freight services. Twenty-one vessels in the Company's domestic fleet,
including 11 supply, 5 crew, 3 towing supply, and 2 anchor handling
towing supply, are bareboat chartered-in under leases that expire at
various times between 2000 and 2004 and contain purchase and lease
renewal options.
OFFSHORE WEST AFRICA. The Company is one of the largest offshore marine
operators serving the West African coast, and at December 31, 1999, it
owned 28 (including 3 bareboat chartered-out) and bareboat chartered-in
2 of approximately 225 offshore support vessels working in this region.
Competition is more concentrated in this market than in the U.S. Gulf of
Mexico in that 9 companies operate most of the vessels currently active
in the region. The need for offshore support vessels in this market is
primarily dependent upon multi-year offshore oil and gas exploration and
development projects and production support.
NORTH SEA. The Company provides standby safety, supply, and towing
supply vessel services to customers in the North Sea. At December 31,
1999, there were approximately 140 vessels certified to provide standby
safety services in the North Sea, and the Company owns and operates 11
of those vessels. The Company or its managing agent, under pooling
arrangements with U.K. companies, markets 8 additional standby safety
vessels. See "Joint Ventures and Pooling Arrangements." Demand in this
market for standby safety service developed in 1991 after the United
Kingdom promulgated increased safety legislation requiring offshore
operations to maintain higher specification standby safety vessels. The
legislation requires a vessel to "stand by" to provide a means of
evacuation and rescue for platform and rig personnel in the event of an
emergency at an offshore installation. The Company believes that it was
one of the first companies to convert offshore support vessels for use
as standby safety service vessels.
On February 9, 2000, the Company announced that it signed a letter of
intent to acquire all of the issued share capital of Putford Enterprises
Ltd. and associated companies (collectively "Boston Putford"). Pursuant
to this letter of intent, Boston Putford's standby safety vessels,
certain joint venture interests and vessels, and fixed assets would be
acquired. Boston Putford's standby safety fleet, including vessels held
in joint ventures but excluding vessels managed for third parties,
consists of 18 vessels operating primarily in the southern U.K. sector
of the North Sea. The Company expects to consolidate its standby safety
services in the U.K. sector of the North Sea into the Boston Putford
operations following completion of its acquisition of Boston Putford.
Also, at December 31, 1999, the Company operated 5 of approximately 220
offshore support vessels working in the North Sea. Two towing supply and
1 supply vessel were working on the Netherlands' Continental Shelf and 2
supply vessels were employed in the U.K. sector.
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FAR EAST. At December 31, 1999, 7 owned, 2 bareboat chartered-in, and 1
managed vessel of the Company and 3 vessels owned by joint venture
corporations in which the Company has an equity interest, operated in
this region, including 6 anchor handling towing supply, 5 towing supply,
and 2 crew vessels. See "Joint Ventures and Pooling Arrangements." At
December 31, 1999, there were approximately 281 offshore support vessels
owned by approximately 20 companies supporting exploration, production,
construction, and special project activities in approximately 16
countries in the Far East.
LATIN AMERICA. The Company provides offshore marine services in Latin
America for both exploration and production activities. At December 31,
1999, 19 of the Company's 32 vessels in this region were based in
Mexican ports, and the remaining fleet was based in ports in Chile,
Brazil, Venezuela, Trinidad, St. Croix, Barbados, and Argentina. Joint
venture corporations in which the Company holds an equity interest owned
20 of its Latin American vessels and bareboat or time chartered-in an
additional 9 vessels, 7 from the Company and 2 from outside sources. See
"Joint Ventures and Pooling Arrangements." Two additional Latin American
offshore support vessels owned by the Company were bareboat
chartered-out to a Brazilian customer, and 1 offshore support vessel was
operated by the Company's environmental service segment in support of
oil spill response activities in St. Croix.
Operating conditions in Mexico are, in many respects, similar to those
in the U.S. Gulf of Mexico; however, demand for offshore support vessels
in Mexico historically has been affected to a significant degree by
Mexican government policies, particularly those relating to Petroleos
Mexicanos ("PEMEX"), the Mexican national oil company. At December 31,
1999, there were approximately 165 offshore support vessels, including
tugs and barges, operating in the Mexican offshore market.
OTHER FOREIGN. The Company provides offshore marine services in various
other foreign regions. At December 31, 1999, the Company's 14 Other
Foreign vessels were based in ports in Egypt, the United Arab Emirates,
Greece, Tunisia, and France. Of these vessels, joint venture
corporations in which the Company holds an equity interest owned 10, and
the Company bareboat chartered-in 1 and owned 3, including 1 bareboat
chartered-out. See "Joint Ventures and Pooling Arrangements."
FLEET
The offshore marine service industry supplies vessels to owners and
operators of offshore drilling rigs and production platforms. Two of the
largest groups of offshore support vessels that the Company operates are
crew boats, which transport personnel and small loads of cargo when
expedited deliveries are required, and utility boats, which support
offshore production by delivering general cargo and facilitating infield
transportation of personnel and materials. Two other significant classes
of vessels operated by the Company are towing supply and anchor handling
towing supply vessels. These vessels have more powerful engines and deck
mounted winches and are capable of towing and positioning offshore
drilling rigs as well as providing supply vessel services. The Company
also operates supply vessels, which transport drill pipe, drilling
fluids, and construction materials, and special service vessels, which
support well stimulation, seismic data gathering, line handling, freight
hauling, oil spill response, salvage, and standby safety. As of December
31, 1999, the average age of the Company's owned offshore marine fleet
was approximately 14.1 years. Excluding the Company's standby safety
vessels, the average age of the Company's fleet was approximately 13.7
years.
The following table sets forth, at the dates indicated, certain summary
fleet information for the Company. For a description of vessel types,
see "Glossary of Selected Offshore Marine Industry Terms" at the end of
this Item 1.
<TABLE>
<CAPTION>
At December 31,
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Type of Vessels 1997 1998 1999
- ----------------------------------------------------- --------------- ---------------- ------------------
<S> <C> <C> <C>
Crew.............................................. 83 82 81
Utility and Line Handling......................... 86 83 81
Supply and Towing Supply.......................... 75 81 80
Anchor Handling Towing Supply..................... 37 34 30
Standby Safety.................................... 22 23 19
Geophysical, Freight, and Other................... 3 4 3
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Total Fleet..................................... 306 307 294(1)
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</TABLE>
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(1) Includes 222 offshore support vessels owned by the Company
and 72 offshore support vessels that are not owned by the
Company. Of the 72 offshore support vessels that are not
Company owned, 33 are owned by joint venture corporations
in which the Company has an equity interest, 8 are operated
under pooling arrangements with Company owned vessels, 29
are chartered-in or managed by the Company, and 2 are
chartered-in by the TMM Joint Venture, as hereinafter
defined, for use in their operations.
Since 1994, vessel acquisition transactions and investments in joint
ventures that have significantly increased the size of the Company's
fleet include: (i) 127 utility, crew, and supply vessels acquired in a
1995 transaction (the "Graham Transaction") with John E. Graham & Sons
and certain of its affiliated companies (collectively "Graham"), (ii) 11
towing and anchor handling towing supply vessels acquired pursuant to
transactions in 1995 and 1996 (the "1995 and 1996 CNN Transactions")
with Compagnie Nationale de Navigation ("CNN"), a French corporation,
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(iii) 41 crew and utility vessels acquired in a 1996 transaction (the
"McCall Transaction") with McCall Enterprises, Inc. and its affiliated
companies (the "McCall Companies"), (iv) 28 anchor handling towing
supply, supply, and towing supply vessels acquired and equity
investments in joint ventures that owned 21 anchor handling towing
supply and towing supply vessels pursuant to a 1996 transaction (the
"SMIT Transaction") with SMIT Internationale N.V. ("SMIT"), (v) 24
utility, crew, and supply vessels acquired in a 1997 transaction (the
"Galaxie Transaction") with Galaxie Marine Service, Inc. and affiliated
companies ("Galaxie"), and (vi) 25 crew, anchor handling towing supply,
supply, and utility vessels constructed for the Company during the three
years ending December 31,1999. The vessels acquired in the Graham
Transaction, the McCall Transaction, and the Galaxie Transaction and
those constructed for the Company primarily support the oil and gas
exploration and production industry in the U.S. Gulf of Mexico; whereas,
vessels acquired in the 1995 and 1996 CNN Transactions and the SMIT
Transaction are employed in foreign offshore support markets.
At December 31, 1999, 2 crew and 1 anchor handling towing supply vessel
were being constructed for the Company and are expected to enter
service in 2000.
The Company actively monitors opportunities to buy and sell vessels that
will maximize the overall utility and flexibility of its fleet. The
table below sets forth, during the fiscal years indicated, the number of
offshore support vessels sold by type of service. At December 31, 1999,
23 of those vessels, including 15 supply/towing supply, 5 crew, and 3
anchor handling towing supply were bareboat chartered-in by the Company.
<TABLE>
<CAPTION>
Type of Vessel 1995 1996 1997 1998 1999 Total
------------------------------------------ ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Utility................................... 6 16 7 7 2 38
Supply.................................... 4 - 15 6 - 25
Anchor Handling Towing Supply............. 1 - 5 8 1 15
Crew...................................... 1 - 2 5 11 19
Towing Supply............................. - - 6 8 - 14
Freight................................... - - 1 - - 1
Seismic................................... - - 1 - - 1
------------ ----------- ----------- ------------ ----------- -----------
12 16 37 34 14 113
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</TABLE>
JOINT VENTURES AND POOLING ARRANGEMENTS
The Company has formed or acquired interests in offshore marine joint
ventures and entered into pooling arrangements with various third
parties to enter new markets, enhance its marketing capabilities, and
facilitate operations in certain foreign markets. These arrangements
allow the Company to expand its fleet and lessen the risks and capital
outlays associated with independent fleet expansion. The joint venture
and pooling arrangements in which the Company participates are described
below:
VEESEA JOINT VENTURE. Standby safety vessels operated by the Company in
the North Sea are owned by a subsidiary of the Company, VEESEA Holdings,
Inc. ("VEESEA Holdings") and its subsidiaries (collectively, "VEESEA").
All standby safety vessels operated by the Company in the North Sea are
managed under an arrangement with Vector Offshore Limited, a U.K.
company ("Vector"), which owns a 9% interest in VEESEA Holdings (the
"Veesea Joint Venture"). The Veesea Joint Venture enabled the Company,
beginning in 1991, to enter a niche market using local management and an
existing infrastructure. At December 31, 1999, 11 vessels owned by the
Company were providing standby safety services pursuant to the Veesea
Joint Venture.
SEAVEC POOL. In January 1995, the Company entered into a pooling
arrangement with Toisa Ltd., a U.K. offshore marine transportation and
services company ("Toisa"). Under this pooling arrangement (the "SEAVEC
Pool"), the Company and Toisa jointly market their standby safety
vessels in the North Sea market, with operating revenues pooled and
allocated to the respective companies pursuant to a formula based on the
class of vessels each company contributes to the pool. At December 31,
1999, the SEAVEC Pool was comprised of 15 vessels of which Toisa owned
4.
AVIAN FLEET POOL. In November 1996, Vector bareboat chartered-in seven
standby safety vessels which provided for VEESEA Holdings, Toisa, and
the owners of the vessels to share in net operating profits after
certain adjustments for maintenance and management expenses (previously
known as the "Saint Fleet Pool"). Vector assumed management control of
these vessels in December 1996 and currently markets the vessels in
coordination with the SEAVEC Pool. Three of the Saint Fleet Pool vessels
have been returned to the owners, and the remaining four vessels
(collectively, the "Avian Fleet") have been upgraded to comply with the
latest statutory standby safety requirements. Following the Avian Fleet
upgrade, net operating profit sharing after certain adjustments for
maintenance and management expenses was limited to the vessel owners and
Veesea Holdings (the "Avian Fleet Pool").
TMM JOINT VENTURE. During 1994, the Company and Transportacion Maritima
Mexicana S.A. de C.V., a Mexican corporation ("TMM"), organized a joint
venture to serve the Mexican offshore market (the "TMM Joint Venture").
The TMM Joint Venture is comprised of two corporations, Maritima
Mexicana, S.A. and SEAMEX International Ltd., in each of which the
Company owns a 40% equity interest. The TMM Joint Venture enabled the
Company to expand into a market contiguous to the U.S. Gulf of Mexico
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and provides greater marketing flexibility for the Company's fleet in
the region. At December 31, 1999, the TMM Joint Venture operated 12
vessels owned by the joint venture and 7 bareboat and time chartered-in
vessels, 5 of which were provided by the Company.
SMIT JOINT VENTURES. Pursuant to the SMIT Transaction, the Company
acquired certain joint venture interests owned by SMIT and structured a
joint venture with SMIT (the "SMIT Joint Ventures") that increased the
Company's presence in international markets. During the third quarter of
1999, the Board of Directors of a SMIT Joint Venture adopted a plan of
liquidation, which provided for the complete liquidation of the joint
venture corporation. At December 31, 1999, the Smit Joint Ventures owned
15 vessels, including 3 to be sold under the plan of liquidation, and
bareboat chartered-in an additional vessel. The SMIT Joint Ventures'
vessels operate in the Far East, Latin America, the Middle East, and the
Mediterranean.
VISION JOINT VENTURE. During 1997, the Company and a wholly owned
subsidiary of TMM structured a limited liability company, SEACOR VISION
LLC (the "Vision Joint Venture"), that owns and operates an anchor
handling towing supply vessel that was constructed in 1997. The TMM
subsidiary owns 25% of the Vision Joint Venture, and the Company owns
all of the remaining membership interest. At December 31, 1999, the
vessel was servicing the oil and gas industry in the U.S. Gulf of
Mexico.
LOGISTICS JOINT VENTURE. During 1996, the Company structured a joint
venture corporation, Energy Logistics, Inc., with Baker/M.O. Services,
Inc. Since its inception, Energy Logistics, Inc.'s mission has been to
provide shorebase, marine transport, and other supply chain management
services in support of offshore exploration and production operations
primarily in the U.S. Gulf of Mexico. In December 1999, the Company
acquired additional common shares of Energy Logistics, Inc., increasing
its ownership interest from 50% to 67%. Also, in December 1999, Energy
Logistics, Inc. acquired Liberty Services, Inc. and its affiliated
companies (collectively referred to as "Liberty"), Louisiana based
corporations that have provided base services, equipment rental, and
personnel in support of the offshore energy industry for over 15 years.
At December 31, 1999, Energy Logistics, Inc. and Liberty (collectively
referred to as "ELI") operated shorebase support facilities in six
Louisiana, Texas, and Mississippi cities and employed six of the
Company's crew and utility vessels in its operations.
OTHER JOINT VENTURES. The Company participates in eight additional joint
ventures that provide offshore marine vessel services to the oil and gas
industry (the "Other Joint Ventures"). At December 31, 1999, the Other
Joint Ventures owned six vessels that are operated internationally,
including a vessel bareboat chartered-out to the Smit Joint Ventures.
The Other Joint Ventures also chartered-in three vessels from the
Company; two operated internationally and one operated in the U.S. Gulf
of Mexico. One of the Other Joint Ventures assists with management of
the Company's vessels operating offshore Nigeria.
INDUSTRY CONDITIONS
Exploration and drilling activities, which affect the demand for
vessels, are influenced by a number of factors, including the current
and anticipated prices of oil and natural gas, the expenditures by oil
and gas companies for exploration and development, and the availability
of drilling rigs. In addition, demand for drilling services remains
dependent on a variety of political and economic factors beyond the
Company's control, including worldwide demand for oil and natural gas,
the ability of the Organization of Petroleum Exporting Countries
("OPEC") to set and maintain production levels and pricing, the level of
production of non-OPEC countries, and the policies of various
governments regarding exploration and development of their oil and
natural gas reserves.
Extremely low oil and gas commodity prices during 1998 and early 1999
resulted in a significant decline in the number of wells drilled.
Drilling activities on the U.S. continental shelf declined over the past
three years with approximately 1,100 wells drilled in 1997 compared to
approximately 700 wells drilled in 1999. Conversely, U.S. deepwater
drilling activities, in water depths generally greater than 1,500 feet,
have remained steady since 1997 with approximately 85 wells being
drilled in each of the past three years. At the end of 1999, worldwide
and U.S. Gulf of Mexico rig utilization approximated 73% and 78%,
respectively. Also during 1998 and 1999, the availability of offshore
support vessels has grown due to vessel construction worldwide.
Utilization of the Company's domestic offshore support fleet began to
decline following the second quarter of 1998, during which it averaged
96.3% compared to 74.7% during the fourth quarter of 1999. Also, between
1998 and 1999, rates per day worked declined for all classes of the
Company's domestic offshore support fleet, except for its anchor
handling towing supply vessel class, whose rates per day worked rose due
to the recent construction of more advanced vessels. During the two year
period ended December 31, 1999, domestic rates per day worked declined
over 40% to approximately $4,220 for the Company's supply and towing
supply fleet, over 8% to approximately $2,480 for its crew fleet, and
over 14% to approximately $1,630 for its utility fleet.
Utilization and rates per day worked of the Company's foreign offshore
support fleet were also adversely affected by the decline in commodity
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prices. As in its domestic operations, demand and rates per day worked
for the Company's foreign offshore support vessels began to decline
following the second quarter of 1998. Foreign utilization and rates per
day worked averaged 91.1% and $7,200, respectively, during the second
quarter of 1998 compared to 61.9% and $5,550, respectively, during the
fourth quarter of 1999. In the Company's two principal foreign operating
regions, Offshore West Africa and the North Sea, utilization and rates
per day worked declined for all vessels owned and operated by the
Company.
During the fourth quarter of 1999, the Company experienced a slight
increase in the demand for certain of its offshore support vessels due
to an increase in the number of drilling rigs operating in the U.S. Gulf
of Mexico. Improvement in demand for the Company's vessels cannot be
expected without further increases in the number of rigs in operation.
Beginning in the second half of 1999 and continuing into 2000, rig
utilization and day rates improved, primarily in the U.S. Gulf of
Mexico.
CUSTOMERS
The Company offers offshore marine services to over 200 customers who
are primarily major integrated oil companies and large independent oil
and gas exploration and production companies. The Company has enjoyed
long-standing relationships with several of its customers, and the
Company has established alliances with some of them. The percentage of
revenues attributable to any individual customer varies from time to
time, depending on the level of oil and gas exploration undertaken by a
particular customer, the suitability of the Company's vessels for the
customer's projects, and other factors, many of which are beyond the
Company's control. For the fiscal year ended December 31, 1999,
approximately 10% of the Company's offshore marine service segment's
operating revenues was received from Chevron.
CHARTER TERMS
Customers for offshore support vessels generally award charters based on
suitability and availability of equipment, price and reputation for
quality service, and duration of employment. Charter terms may vary from
several days to several years.
COMPETITION
The offshore marine service industry is highly competitive. In addition
to price, service, and reputation, the principal competitive factors for
offshore support fleets include the existence of national flag
preference, operating conditions and intended use (all of which
determine the suitability of vessel types), complexity of maintaining
logistical support, and the cost of transferring equipment from one
market to another.
Although there are many suppliers of offshore marine services,
management believes that only Tidewater, Inc. operates in all geographic
markets and has a substantial percentage of the domestic and foreign
offshore marine market in relation to that of the Company and its other
competitors.
GOVERNMENT REGULATION
DOMESTIC REGULATION. The Company's operations are subject to significant
federal, state, and local regulations, as well as international
conventions. The Company's domestically registered vessels are subject
to the jurisdiction of the United States Coast Guard (the "Coast
Guard"), the National Transportation Safety Board, the U.S. Customs
Service, and the U.S. Maritime Administration, as well as subject to
rules of private industry organizations such as the American Bureau of
Shipping. These agencies and organizations establish safety standards
and are authorized to investigate vessels and accidents and to recommend
improved maritime safety standards. Moreover, to ensure compliance with
applicable safety regulations, the Coast Guard is authorized to inspect
vessels at will.
The Company is also subject to the Shipping Act, 1916, as amended (the
"Shipping Act"), and the Merchant Marine Act of 1920, as amended (the
"1920 Act," and together with the Shipping Act, the "Acts"), which
govern, among other things, the ownership and operation of vessels used
to carry cargo between U.S. ports. The Acts require that vessels engaged
in the U.S. coastwise trade be owned by U.S. citizens and built in the
United States. For a corporation engaged in the U.S. coastwise trade to
be deemed a citizen of the U.S., (a) the corporation must be organized
under the laws of the U.S. or of a state, territory, or possession
thereof, (b) each of the president or other chief executive officer and
the chairman of the board of directors of such corporation must be U.S.
citizens, (c) no more than a minority of the number of directors of such
corporation necessary to constitute a quorum for the transaction of
business can be non-U.S. citizens, and (d) at least 75% of the interest
in such corporation must be owned by U.S. "Citizens" (as defined in the
Acts). Should the Company fail to comply with the U.S. citizenship
requirements of the Acts, it would be prohibited from operating its
vessels in the U.S. coastwise trade during the period of such
non-compliance.
To facilitate compliance with the Acts, the Company's Restated
Certificate of Incorporation: (i) contains provisions limiting the
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aggregate percentage ownership by Foreigners of any class of the
Company's capital stock (including the Common Stock) to 22.5% of the
outstanding shares of each such class to ensure that such foreign
ownership will not exceed the maximum percentage permitted by applicable
maritime law (presently 25.0%), and authorizes the Board of Directors,
under certain circumstances, to increase the foregoing percentage to
24.0%, (ii) requires institution of a dual stock certification system to
help determine such ownership, and (iii) permits the Board of Directors
to make such determinations as reasonably may be necessary to ascertain
such ownership and implement such limitations. In addition, the
Company's Amended and Restated By-Laws provide that the number of
foreign directors shall not exceed a minority of the number necessary to
constitute a quorum for the transaction of business and restrict any
officer who is not a U.S. citizen from acting in the absence or
disability of the Chairman of the Board of Directors and Chief Executive
Officer and the President, all of whom must be U.S. citizens.
FOREIGN REGULATION. The Company, through its subsidiaries, joint
ventures, and pooling arrangements, operates vessels registered in the
following foreign jurisdictions: St. Vincent and the Grenadines,
Vanuatu, the Cayman Islands, France, Chile, Egypt, the Netherlands,
Bahamas, Greece, Panama, Liberia, the Philippines, Argentina, Trinidad,
Tunisia, and Mexico. The Company's vessels registered in these
jurisdictions are subject to the laws of the applicable jurisdiction as
to ownership, registration, manning, and safety of vessels. In addition,
the vessels are subject to the requirements of a number of international
conventions to which the jurisdiction of registration of the vessels is
a party. Among the more significant of these conventions are: (i) the
1978 Protocol Relating to the International Convention for the
Prevention of Pollution from Ships, (ii) the International Convention on
the Safety of Life at Sea, 1974 and 1978 Protocols, and (iii) the
International Convention on Standards of Training, Certification, and
Watchkeeping for Seafarers, 1978. The Company believes that its vessels
registered in these foreign jurisdictions are in compliance with all
applicable material regulations and have all licenses necessary to
conduct their business. In addition, vessels operated as standby safety
vessels in the North Sea are subject to the requirements of the
Department of Transport of the U.K. pursuant to the U.K. Safety Act.
ENVIRONMENTAL REGULATION. The Company's offshore support vessels
routinely transport diesel fuel to offshore rigs and platforms and carry
diesel fuel for their own use, transport certain bulk chemical materials
used in drilling activities, transport rig-generated wastes to shore for
delivery to waste disposal contractors, and transport liquid mud which
contains oil and oil by-products. These operations are subject to a
variety of federal and analogous state statutes concerning matters of
environmental protection. Statutes and regulations that govern the
discharge of oil and other pollutants onto navigable waters include OPA
90 and the Clean Water Act of 1972, as amended (the "Clean Water Act").
The Clean Water Act imposes substantial potential liability for the
costs of remediating releases of petroleum and other substances in
reportable quantities. State laws analogous to the Clean Water Act also
specifically address the accidental release of petroleum in reportable
quantities.
OPA 90, which amended the Clean Water Act, increased the limits on
liability for oil discharges at sea, although such limits do not apply
in certain listed circumstances. In addition, some states have enacted
legislation providing for unlimited liability under state law for oil
spills occurring within their boundaries. Other environmental statutes
and regulations governing the Company's offshore marine operations
include, among other things, the Resource Conservation and Recovery Act,
as amended ("RCRA"), which regulates the generation, transportation,
storage, and disposal of on-shore hazardous and non-hazardous wastes;
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), which imposes strict and joint and
several liability for the costs of remediating historical environmental
contamination; and the Outer Continental Shelf Lands Act, as amended
("OCSLA"), which regulates oil and gas exploration and production
activities on the Outer Continental Shelf.
OCSLA provides the federal government with broad discretion in
regulating the leasing of offshore resources for the production of oil
and gas. Because the Company's offshore marine operations rely on
offshore oil and gas exploration and production, the government's
exercise of OCSLA authority to restrict the availability of offshore oil
and gas leases could have a material adverse effect on the Company's
financial condition and results of operations.
In addition to these federal and state laws, state and local laws and
regulations and certain international treaties to which the U.S. is a
signatory, such as MARPOL 73/78, subject the Company to various
requirements governing waste disposal and water and air pollution.
ENVIRONMENTAL SERVICES
MARKET
The Company's environmental service business is operated primarily
through NRC, IRC, and ERST and provides contractual oil spill response
and other related training and consulting services. The market for these
services has grown substantially since 1990 when the United States
Congress passed OPA 90 after the Exxon Valdez spill in Alaska. OPA 90
requires that all tank vessels operating within the Exclusive Economic
Zone of the United States and all facilities and pipelines handling oil
that could have a spill impacting the navigable waters of the United
States, develop a plan to respond to a "worst case" oil spill and ensure
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by contract or other approved means the ability to respond to such a
spill.
EQUIPMENT AND SERVICES
OIL SPILL RESPONSE SERVICES. The Company owns and maintains specialized
equipment that is positioned in designated areas to comply with
regulations promulgated by the Coast Guard and also has personnel
trained to respond to oil spills as required by customers and
regulations. The Company provides these services on the East, Gulf, and
West Coasts of the United States as well as in the Caribbean. West Coast
coverage is provided through Clean Pacific Alliance ("CPA"), a joint
venture between NRC and Crowley Marine Services.
When an oil spill occurs, the Company mobilizes specialized oil spill
response equipment, using either its own personnel or personnel under
contract, to provide emergency response services for both land and
marine oil spills. The Company has established a network of
approximately 85 independent oil spill response contractors that may
assist it with the provisioning of equipment and personnel. NRC has
acted as the principal contractor on several of the largest oil spills
that have occurred in the United States after the enactment of OPA 90.
TRAINING, DRILL, AND OTHER PROFESSIONAL SERVICES. The Company has
developed customized training programs for industrial companies that
educate personnel on the risks associated with the prevention of and
response to oil spills, handling of hazardous materials, fire fighting,
and other crisis-related events. The Company also plans for and
participates in customer oil spill response drill programs, vessel
response plans, and response exercises. The Company's drill services and
training programs are offered both on a stand-alone basis and as part of
its base retainer services.
INTERNATIONAL. The Company operates its environmental service business
internationally through IRC. Client services of IRC include oil spill
response, training, exercise support, and special projects in assessing
risk of spills, response preparedness, strategies, and resource
requirements. International response services are currently provided in
the Southeast Asia, Indian Ocean, Caribbean, and Latin America regions.
Joint ventures have been formed with local partners in Thailand and
Venezuela to provide spill response and other services to multinational
oil companies, governments, and industry. The Company expects to
complete the structuring of a Brazilian joint venture in 2000.
CUSTOMERS AND CONTRACT ARRANGEMENTS
The Company offers its retainer services and oil spill response services
primarily to the domestic and international shipping community and to
owners of facilities such as refineries, pipelines, exploration and
production platforms, and tank terminals. In addition to its retainer
customers, the Company also provides oil spill response services to
others, including, under certain circumstances, the Coast Guard. The
Company presently has approximately 700 customers. The Company's
retainer arrangements with these customers include both short-term
contracts (one year or less) and long-term agreements, in some cases as
long as ten years from inception. For the fiscal year ended December 31,
1999, approximately 25% and 13% of the Company's environmental retainer
revenue was received from Coastal Refining and Marketing, Inc. and Citgo
Petroleum Corporation, respectively.
The Company also generates revenue from the supervision of activities in
response to oil spill emergencies. The level of spill activity can
dramatically impact the Company's environmental service revenue. A
single large spill can contribute significantly to overall revenues and
to operating income. However, the Company is unable to predict revenues
from oil spills.
COMPETITION
The principal competitive factors in the environmental service business
are price, service, reputation, experience, and operating capabilities.
Management believes that the lack of uniform regulatory development and
enforcement on a federal and state level has created a lower barrier to
entry in several market segments, which has increased the number of
competitors. The Company's oil spill response business faces competition
primarily from the Marine Spill Response Corporation, a non-profit
corporation funded by the major integrated oil companies, other industry
cooperatives, and also from smaller contractors who target specific
market niches. The Company's environmental consulting business faces
competition from a number of relatively small privately held spill
management companies.
GOVERNMENT REGULATION
NRC is "classified" by the Coast Guard as an Oil Spill Removal
Organization ("OSRO"). The OSRO classification process is strictly
voluntary and plan holders who utilize classified OSROs are exempt from
the requirement to list their response resources in their plans. The
classification process represents standard guidelines by which the Coast
Guard and plan holders can evaluate an OSRO's potential to respond to
and recover oil spills of various types and sizes in different operating
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environments and geographic locations. NRC and CPA, in combination, hold
OSRO classification under the current Coast Guard guidelines for every
port in the continental United States, Hawaii, and the Caribbean.
In addition to the Coast Guard, the Environmental Protection Agency
("EPA"), the Office of Pipeline Safety, the Minerals Management Service
division of the Department of Interior, and individual states regulate
vessels, facilities, and pipelines in accordance with the requirements
of OPA 90 or under analogous state law. There is currently little
uniformity among the regulations issued by these agencies.
When responding to third-party oil spills, the Company's environmental
service business enjoys immunity from imposition of liability under
federal law and some state laws for any spills arising from its response
efforts, except if the Company's environmental service business is found
to be grossly negligent or to have engaged in willful misconduct. The
Company's environmental service business maintains insurance coverage
against such claims arising from its response operations. It considers
the limits of liability adequate, although there can be no assurance
that such coverage will be sufficient to cover future claims that may
arise
DRILLING SERVICES
THE RIGS
Jackup rigs are the largest category of mobile offshore drilling units,
representing approximately 60% of such units. A mobile offshore drilling
unit consists of a drilling package mounted on a hull, which is
maintained at a specific location during drilling operations. The
drilling package typically consists of a power plant, hoisting
equipment, a rotary system, tubulars, and systems for mud treating and
pumping, well control, and the handling of bulk materials. The
specifications of the drilling package determine the capability of the
rig to drill to various depths and penetrate certain sub-surface
environments. The drilling unit also includes the living quarters,
heliport, cranes, and other equipment necessary to support the drilling
operations. The design of the particular drilling unit determines the
marine environment in which it can operate.
Several factors determine the type of rig most suitable for a particular
project, the more significant of which are the marine environment, water
depth, and seabed conditions at the proposed drilling location, whether
the drilling is being done over a platform or other structure, the
intended well depth and variable deck load, and well control
requirements. Considerable variation in utilization and day rates often
exists for different types of rigs, primarily as a function of their
capabilities and location.
Jackup rigs are mobile, self-elevating drilling platforms equipped with
legs that are lowered to the ocean floor until a foundation is
established to support the drilling platform. A jackup rig consists of
the hull, jacking system, drilling equipment, crew quarters, loading and
unloading facilities, storage areas, heliport, and other related
equipment. Oil and gas exploration companies use jackup rigs extensively
for offshore drilling in water depths from 20 feet to 350 feet. A jackup
rig is towed to the drillsite with its hull riding in the sea and its
legs retracted. At the drillsite, the legs are jacked down to the ocean
floor until the hull has been elevated a sufficient distance above the
water to allow storm waves to pass beneath. After completion of drilling
operations, the hull is lowered until it rests in the water and then the
legs are retracted for relocation to another drillsite.
The nature of the seabed at a particular drilling location dictates the
appropriate rig-leg configuration of the jackup rig to be used. Some
jackup rigs have a lower hull (mat) attached to the bottom of the rig
legs, while others have independent legs. A mat-supported rig provides a
stable foundation in flat soft-bottom areas, while independent-leg rigs
are better suited for harder or uneven seabed conditions.
Jackup rigs can be generally characterized as either slot jackup rigs or
cantilevered jackup rigs. Slot-design rigs are configured for drilling
operations to take place through a slot in the hull. A slot design is
appropriate for drilling exploratory wells in the absence of any
existing permanent structure, such as a production platform, although
some slot design rigs are capable of drilling over certain production
platforms. A cantilevered jackup rig can extend its drill floor and
derrick over an existing, fixed structure, thereby permitting the rig to
drill or work over a well located on such a structure.
Jackup rigs vary a great deal in size and capability. The Company
defines premium jackup rigs as cantilevered, independent-leg, jackup
rigs capable of operating in water depths of 300 feet or greater,
excluding (due to their substantially higher construction cost) the
class of jackup rigs built for service in "harsh environments," such as
the North Sea and Eastern Canada.
The Rigs constructed by the Company consist of one LeTourneau Enhanced
116-C jackup rig and one LeTourneau Super 116 jackup rig, both of which
are improved versions of the most versatile and popular design in the
worldwide jackup rig fleet (the LeTourneau 116-C). The hulls, machinery,
and outfitting are identical on the two Rigs and are based on the larger
LeTourneau Super 116 design. The only difference is that the LeTourneau
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Super 116 design has a leg that has been designed to a higher
specification while the LeTourneau Enhanced 116-C design is based on a
LeTourneau 116-C design that has subsequently been strengthened to carry
the larger LeTourneau Super 116 hull and longer legs. The Rigs have
capabilities that exceed those of typical existing premium jackup rigs,
including increased engine horsepower, increased hydraulic horsepower,
and an enlarged mud handling and solids control system. The Rigs also
incorporate such features as digital drilling controls, dual pipe
handling, pipe handling robotics, and a drillpipe identification and
tracking system.
The Rigs are registered in Panama with an "A1--Self Elevating Drilling
Unit" certification from the American Bureau of Shipping.
MARKET
The offshore contract drilling business is influenced by a number of
factors, including the current and anticipated prices of oil and natural
gas, the expenditures by oil and gas companies for exploration and
development, and the availability of drilling rigs. In addition, demand
for drilling services remains dependent on a variety of political and
economic factors beyond the Company's control, including worldwide
demand for oil and natural gas, the ability of OPEC to set and maintain
production levels and pricing, the level of production of non-OPEC
countries, and the policies of the various governments regarding
exploration and development of their oil and natural gas reserves.
The Company expects to focus its operations initially on the U.S. Gulf
of Mexico market, which is the largest single market for jackup rigs in
the world and which features the presence of an established pipeline and
production infrastructure. Due to the Company's initial focus on the
U.S. Gulf of Mexico, the Company's business and operations will be
particularly dependent upon the condition of the oil and natural gas
industry in the U.S. Gulf of Mexico and on the exploration and
production expenditures of oil and gas companies there.
Historically, the offshore contract drilling industry has been highly
competitive and cyclical, with periods of high demand, short rig supply,
and high day rates followed by periods of low demand, excess rig supply,
and low day rates. During 1998 and early 1999, the decline in product
prices in the oil and gas industry resulted in reduced day rates and
decreased utilization worldwide and particularly in the U.S. Gulf of
Mexico jackup market. Should recent improvements in product prices in
the oil and gas industry be sustained, owners of jackup rigs should
benefit through an improvement in day rates and utilization.
COMPETITION
The contract drilling industry is highly competitive. Customers
sometimes award contracts on a competitive bid basis, and although a
customer selecting a rig may consider, among other things, a
contractor's safety record, crew quality, and quality of service and
equipment, price is the major factor in determining the selection of a
drilling contractor. The Company believes that competition for drilling
contracts will continue to be intense for the foreseeable future because
of the ability of contractors to move rigs from areas of low utilization
and day rates to areas of greater activity and relatively higher day
rates. Such movement or a decrease in drilling activity in any major
market could further depress day rates and could adversely affect
utilization of the Company's Rigs. Substantially all of the Company's
competitors in the business of providing jackup drilling services have
substantially larger fleets and are more established as drilling
contractors.
OFFSHORE CONTRACT DRILLING SERVICES
The Company's contracts to provide offshore drilling services are
expected to vary in their terms and provisions. The Company expects that
it may obtain contracts through competitive bidding, although the
Company may also be awarded drilling contracts without competitive
bidding. Drilling contracts generally provide for a basic drilling rate
on a fixed day rate basis regardless of whether such drilling results in
a successful well. Drilling contracts may also provide for lower rates
during periods when a rig is being moved or when drilling operations are
interrupted or restricted by equipment breakdowns, adverse weather or
water conditions, or other conditions beyond the control of the Company.
Under day rate contracts, the Company would generally expect to pay the
operating expenses of the Rig, including wages and the cost of
incidental supplies. Revenues from day rate contracts are expected to
account for a substantial portion of the Company's revenues. In
addition, the Company may work a Rig under day rate contracts pursuant
to which the customer also agrees to pay the Company an incentive bonus
based upon performance.
A day rate drilling contract generally extends over a period of time
covering either the drilling of a single well, a group of wells (a
"well-to-well contract"), or a stated term (a "term contract") and may
be terminated by the customer in the event the drilling unit is
destroyed or lost or if drilling operations are suspended for a
specified period of time as a result of a breakdown of major equipment
or in some cases due to other events beyond the control of either party.
In addition, it is expected that certain of the Company's Rig contracts
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may permit the customer to terminate the contract early by giving notice
and in some circumstances may require the payment of an early
termination fee by the customer. The contract term in many instances may
be extended by the customer exercising options for the drilling of
additional wells at fixed or mutually agreed terms, including day rates.
The duration of offshore drilling contracts is generally determined by
market demand and the respective management strategy of the offshore
drilling contractor and its customers. In periods of rising demand for
offshore rigs, contractors typically prefer well-to-well contracts that
give contractors the flexibility to profit from increasing day rates. In
contrast, during these periods customers with reasonably definite
drilling programs typically prefer longer term contracts to maintain
drilling prices at the lowest level possible. Conversely, in periods of
decreasing demand for offshore rigs, contractors generally prefer longer
term contracts to preserve day rates at existing levels and ensure
utilization, while the customers prefer well-to-well contracts that
allow them to obtain the benefit of lower day rates. In general, the
Company intends to seek a reasonable balance of single well,
well-to-well, and term contracts to minimize the downside impact of a
decline in the market while still participating in the benefit of
increasing day rates in a rising market.
The Company's Rig operations will be subject to the many hazards
inherent in the offshore drilling business, including blowouts,
craterings, fires, collisions, and groundings of drilling equipment,
which could cause substantial damage to the environment, and damage or
loss from adverse weather and sea conditions. These hazards could also
cause personal injury and loss of life, suspend drilling operations, or
seriously damage or destroy the property and equipment involved and, in
addition to environmental damage, could cause substantial damage to
producing formations and surrounding areas. The Company's offshore
drilling equipment will also be subject to hazards inherent in marine
operations, such as capsizing, grounding, collision, damage from weather
or sea conditions, or unsound location. In addition, the Company may be
subject to liability for oil spills, reservoir damage, and other
accidents that could cause substantial damages.
Although as of the date of this Report, the Company's Rig operations
have received no revenues from external customers attributable to
foreign countries, and the Company's long-lived Rig assets are currently
located in the United States, in the future all or a portion of the
revenues from operation of the Rigs may be derived from foreign
operations and be subject, in varying degrees, to risks inherent in
doing business abroad. The Company's non-U.S. Rig operations will be
subject to certain political, economic, and other uncertainties not
encountered in U.S. operations, including risks of war and civil
disturbances (or other risks that may limit or disrupt markets),
expropriation, and the general hazards associated with the assertion of
national sovereignty over certain areas in which operations are
conducted. The Company's Rig operations outside the United States may
face the additional risks of fluctuating currency values, hard currency
shortages, controls of currency exchange, and repatriation of income or
capital.
GOVERNMENTAL REGULATION
The Company's Rig operations are subject to numerous federal, state, and
local environmental laws and regulations that relate directly or
indirectly to its operations, including certain regulations controlling
the discharge of materials into the environment, requiring removal and
clean-up under certain circumstances, or otherwise relating to the
protection of the environment. For example, the Company may be liable
for damages and costs incurred in connection with oil spills for which
it is held responsible. Laws and regulations protecting the environment
have become increasingly stringent in recent years and may in certain
circumstances impose "strict liability" and render a company liable for
environmental damage without regard to negligence or fault on the part
of such company. Such laws and regulations may expose the Company to
liability for the conduct of or conditions caused by others, or for acts
of the Company that were in compliance with all applicable laws at the
time such acts were performed. The application of these requirements or
the adoption of new requirements could have a material adverse effect on
the Company.
OPA 90 and similar legislation enacted in Texas, Louisiana, and other
coastal states address oil spill prevention and control and
significantly expand liability exposure across all segments of the oil
and gas industry. OPA 90, such similar legislation, and related
regulations impose a variety of obligations on the Company related to
the prevention of oil spills and liability for damages resulting from
such spills. OPA 90 imposes strict, and with limited exceptions, joint
and several liability upon each responsible party for oil removal costs
and a variety of public and private damages. OPA 90 also imposes ongoing
financial responsibility requirements on a responsible party. A failure
to comply with such ongoing requirements or inadequate cooperation in a
spill could subject a responsible party, including in some
circumstances, the Company, to civil or criminal enforcement action. OPA
90 also requires the U.S. Minerals Management Service to promulgate
regulations to implement the financial responsibility requirements for
offshore facilities. If implemented as written, the financial
responsibility requirements of OPA 90 could have the effect of
significantly increasing the amount of financial responsibility that oil
and gas operators must demonstrate to comply with OPA 90. While industry
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groups and marine insurance carriers are seeking modification of these
requirements, implementation of these requirements in their current form
could adversely affect the ability of some of the Company's prospective
customers to operate in U.S. waters, which could have a material adverse
effect on the Company.
The Clean Water Act prohibits the discharge of certain substances into
the navigable waters of the U.S. without a permit. The regulations
implementing the Clean Water Act require permits to be obtained by an
operator before certain exploration or drilling activities occur.
Violations of monitoring, reporting, and permitting requirements can
result in the imposition of civil and criminal penalties. The provisions
of the Clean Water Act can also be enforced by citizens' groups. Many
states have similar laws and regulations.
OCSLA authorizes regulations relating to safety and environmental
protection applicable to lessees and permittees operating on the Outer
Continental Shelf. Specific design and operational standards may apply
to Outer Continental Shelf vessels, rigs, platforms, vehicles, and
structures. Violation of lease terms relating to environmental matters
or regulations issued pursuant to OCSLA can result in substantial civil
and criminal penalties as well as potential court injunctions curtailing
operations and the cancellation of leases. Such enforcement liabilities
can result from either governmental or citizen prosecution.
CERCLA currently exempts crude oil, and RCRA currently exempts certain
drilling materials, such as drilling fluids and production waters, from
the definitions of hazardous substances and hazardous wastes. However,
the Company's operations may involve the generation, use, or handling of
other materials, such as fracturing fluids or acids that may be
classified as environmentally hazardous substances or waste, and that
are subject to RCRA and comparable state statutes. There can be no
assurance that such exemptions will be preserved in future amendments of
such acts, if any, or that more stringent laws and regulations
protecting the environment will not be adopted. The EPA and various
state agencies have limited the disposal options for certain hazardous
and nonhazardous wastes and are considering the adoption of stricter
handling and disposal standards for nonhazardous wastes. CERCLA assigns
strict liability to each responsible party, as defined, for all response
and remediation costs, as well as natural resource damages. Few defenses
exist to the liability imposed by CERCLA.
The Company's Rig operations are subject to the Clean Air Act, as
amended, and comparable state statutes. Traditional air quality programs
relating to the prevention of significant deterioration of air quality
in areas with unacceptable pollution levels ("nonattainment areas")
restrict drilling in affected areas. Amendments to the Clean Air Act
were adopted in 1990 and contain provisions that may impose certain
requirements with respect to air emissions that may require capital
expenditures by the Company. Any greater degree of regulation in
nonattainment areas would increase the cost associated with operation in
those areas.
OTHER INVESTMENTS
In 1998, the Company acquired an interest in the predecessor of Globe
Wireless, LLC ("Globe Wireless") and now owns approximately 38% of the
voting Units issued by Globe Wireless. Globe Wireless is a provider of
advanced marine telecommunication services using satellite and high
frequency radio technologies. It owns and operates a worldwide network
of high frequency radio stations to offer email, data transfer, and
Telex services to ships at a much lower cost than competing satellite
services. The Company believes that Globe Wireless offers the only such
service combining radio, satellite, and Internet communications to the
maritime community. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources - Globe Wireless."
In addition, the Company from time to time, makes investments in other
related businesses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources - Capital Expenditures."
EMPLOYEES
As of December 31, 1999, the Company directly or indirectly employed
approximately 2,800 persons. Of the individuals directly employed by the
Company, approximately 1,700 work aboard offshore support vessels or
Rigs and 405 work ashore. The Company's administrative, base support,
and managerial personnel include 302 offshore marine, 80 environmental,
and 12 drilling service segment employees and 11 corporate employees.
The Company also indirectly employs personnel for its various
operations. West Africa Offshore, Ltd., a Nigerian corporation of which
the Company owns 40%, assists with the management of the Company's
vessels operating offshore Nigeria and, at December 31, 1999, employed
approximately 215 shipboard and 100 administrative, shore support, and
managerial personnel. At December 31, 1999, approximately 90 shipboard
personnel were provided to the Company for its North Sea offshore supply
vessel operations pursuant to an agreement with SMIT. At December 31,
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1999, Celtic Pacific Ship Management Overseas, Ltd., a vessel manning
agency, provided approximately 210 shipboard personnel for the Company's
North Sea standby safety operations. At December 31, 1999, the Company's
partner in ELI provided approximately 80 base support and administrative
personnel for its logistics operations.
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GLOSSARY OF SELECTED OFFSHORE MARINE INDUSTRY TERMS
ANCHOR HANDLING TOWING SUPPLY VESSELS. Anchor handling towing supply
vessels are equipped with winches capable of towing drilling rigs and
lifting and positioning their anchors and other marine equipment. They
range in size and capacity and are usually characterized in terms of
horsepower and towing capacity. For U.S. Gulf of Mexico service, anchor
handling towing supply vessels typically require 6,000 horsepower or
more to position and service semi-submersible rigs drilling in deep
water areas.
BAREBOAT CHARTER. This is a lease arrangement 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 vessel owner.
CREW BOATS. Crew boats transport personnel and cargo to and from
production platforms and rigs. Older crew boats, early 1980's built, are
generally 100 ft. to 110 ft. in length and are generally designed for
speed to transport personnel and small amounts of cargo. Newer crew boat
designs, also known as Fast Support Intervention Vessels ("FSIV"), are
generally larger, 130 ft. to 180 ft. in length, and have greater cargo
carrying capacities. They are used primarily to transport cargo on a
time sensitive basis.
FREIGHT VESSELS. Freight vessels have a substantial amount of clear deck
space for cargo and adequate stability to handle tiers of containers or
overdimensional cargo. Speed and fuel consumption are also important
factors in this vessel category.
LINE HANDLING VESSELS. Line handling vessels are outfitted with special
equipment to assist tankers while they are loading at single buoy
moorings. They have a high degree of maneuverability, are well fendered
and include pollution dispersal capability.
OIL SPILL RESPONSE VESSELS. Oil spill response vessels are specially
equipped to respond to oil spill emergencies and are certified as such
by the U.S. Coast Guard.
OVERALL UTILIZATION. For any vessel with respect to any period, the
ratio of aggregate number of days worked by such vessel to total
calendar days available during such period.
PROJECT AND GEOPHYSICAL VESSELS. These vessels generally have special
features to meet the requirements of specific jobs. The special features
include large deck spaces, high electrical generating capacities, slow
controlled speed and unique thrusters, extra berthing facilities, and
long range capabilities. These vessels are primarily used for well
stimulation and for the deployment of seismic data gathering equipment.
RATE PER DAY WORKED. For any vessel with respect to any period, the
ratio of total charter revenue of such vessel to the aggregate number of
days worked of such vessel for such period.
STANDBY SAFETY VESSELS. Standby safety vessels operate in the U.K.
sector of the North Sea. They typically remain on station to provide a
safety backup to offshore rigs and production facilities, carry special
equipment to rescue personnel, are equipped to provide first aid and
shelter and, in some cases, also function as supply vessels.
SUPPLY VESSELS. Supply vessels serve drilling and production facilities
and support offshore construction and maintenance work. They are
differentiated from other vessels by cargo flexibility and capacity. The
size of a vessel typically determines deck capacity, although vessels
constructed after 1979 with exhaust stacks forward have better
configurations for cargo stowage and handling. In addition to deck
cargo, such as pipe or drummed materials on pallets, supply vessels
transport liquid mud, potable and drill water, diesel fuel and dry bulk
cement. Generally, customers prefer vessels with large liquid mud and
bulk cement capacity and large areas of clear deck space. For certain
jobs, other characteristics such as maneuverability, fuel efficiency, or
firefighting capability may also be important.
TIME CHARTER. This is a lease arrangement 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.
TOWING SUPPLY VESSELS. These vessels perform the same functions as
supply vessels but are equipped with more powerful engines (3,000 to
5,000 horsepower) and deck mounted winches, giving them the added
capability to perform general towing duties, buoy setting and limited
anchor handling work. Towing supply vessels are primarily used in
international operations, which require the additional versatility that
these vessels offer relative to supply vessels.
UTILITY VESSELS. These vessels provide service to offshore production
facilities and also support offshore maintenance and construction work.
Their capabilities include the transportation of fuel, water, deck
cargo, and personnel. They range in length from 96 feet to 135 feet and
can, depending on the vessel design, have enhanced features such as
firefighting and pollution response capabilities.
14
<PAGE>
ITEM 2. PROPERTIES
SEACOR's executive offices in Houston, Texas and New York, New York and
its offshore marine and drilling service segments' headquarters are
located in Houston, Texas. Headquarters for the Company's environmental
service segment are located in Calverton, New York.
The Company also maintains additional facilities in support of its
offshore marine, environmental service, and logistics operations.
Domestically, the offshore marine service segment's largest base is
located in Morgan City, Louisiana and includes administrative offices,
warehouse facilities, and a waterfront site for vessel dockage. Other
domestic offshore marine service segment facilities are located
primarily in Louisiana cities that both serve as ports-of-call for many
customers and represent strategically dispersed operating bases along
the U.S. Gulf of Mexico. In its foreign operations, the Company's
offshore marine service segment maintains offices in Rotterdam, the
Netherlands, Paris, France, Great Yarmouth, London, and Aberdeen, United
Kingdom, Dubai, United Arab Emirates, and Singapore in support of its
widely dispersed foreign fleet. The Company's logistics operation has
sites in Morgan City, Cameron, Venice, Belle Chasse, and Dulac,
Louisiana, Sabine Pass, Texas, and Pascagoula, Mississippi that serve as
operating bases or provide administrative offices and warehouse
facilities. The Company's environmental service segment maintains small
marketing offices in Florida, Texas, Tennessee, California, Louisiana,
New Jersey, Washington, St. Croix, and Puerto Rico. The Company believes
that its facilities, including waterfront locations used for vessel
dockage and the undertaking of certain vessel repair work, provide an
adequate base of operations for the foreseeable future. Information
regarding the Company's fleet is included in Item 1 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal and other proceedings which are
incidental to the conduct of its business. The Company believes that
none of these proceedings, if adversely determined, would have a
material adverse effect on its financial condition or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1999.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age, and offices held by each of the executive officers of the
Company at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- ------------------ -----------------------------------------------------
<S> <C> <C>
Charles Fabrikant 55 Chairman of the Board of Directors,
President, and Chief Executive Officer
Randall Blank 49 Executive Vice President, Chief Financial
Officer and Secretary
Alice Gran 50 Vice President and General Counsel
Lenny Dantin 47 Vice President and Treasurer
Milton Rose 55 Vice President
Andrew Strachan 52 Vice President
</TABLE>
Charles Fabrikant has been Chairman of the Board and Chief Executive
Officer of SEACOR since December 1989 and has served as a director of
certain of SEACOR's subsidiaries since December 1989. He has been
President of SEACOR since October 1992. For more than the past five
years, Mr. Fabrikant has been the Chairman of the Board and Chief
Executive Officer of SCF Corporation ("SCF") and President of Fabrikant
International Corporation ("FIC"), each a privately owned corporation
engaged in marine operations and investments. Since January 1992, Mr.
Fabrikant has been Chairman of the Board of NRC. Each of SCF and FIC may
be deemed to be an affiliate of the Company. Mr. Fabrikant is a licensed
attorney admitted to practice in the State of New York and in the
District of Columbia.
Randall Blank has been Executive Vice President and Chief Financial
Officer of SEACOR since December 1989 and has been the Secretary since
October 1992. Since June 1994, Mr. Blank has been Chief Financial
Officer and Vice President of NRC. From December 1989 to October 1992,
Mr. Blank was Treasurer of SEACOR. In addition, Mr. Blank has been a
director of certain of SEACOR's subsidiaries since January 1990. Since
1986, Mr. Blank has served as President and Chief Operating Officer of
SCF.
Alice Gran has been Vice President and General Counsel of SEACOR since
July 1998. From 1978 until joining SEACOR, Ms. Gran was a partner in the
Washington, D.C. law firm of Fort & Schlefer, L.L.P. Ms. Gran is a
licensed attorney admitted to practice in the District of Columbia.
15
<PAGE>
Lenny Dantin has been Vice President of SEACOR since March 1991,
Treasurer since October 1992, and has been Vice President and the
Secretary, Treasurer and a director of certain of SEACOR's subsidiaries
since January 1990. Also, since 1994, Mr. Dantin has been a director of
one of the companies comprising the TMM Joint Venture.
Milton Rose has been Vice President of SEACOR and President and Chief
Operating Officer of SEACOR Marine, Inc. since January 1993. In
addition, since January 1993, Mr. Rose has been a director of certain of
SEACOR's subsidiaries. Since 1994, he has been a director of one of the
companies comprising the TMM Joint Venture. From 1985 to January 1993,
Mr. Rose was Vice President-Marine Division for Bay Houston Towing
Company.
Andrew Strachan has been a Vice President of SEACOR since April 1997 and
a director of certain SEACOR subsidiaries since December 1996. Prior to
joining SEACOR, Mr. Strachan held various positions at SMIT from 1967
through 1996, and most recently, Mr. Strachan served as Group Director
for SMIT's offshore shipping business.
16
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
On October 23, 1996, SEACOR's Common Stock commenced trading on the New
York Stock Exchange, Inc. (the "NYSE") under the trading symbol "CKH."
Prior to October 23, 1996, SEACOR's Common Stock was traded on the
Nasdaq Stock Market's National Market under the trading symbol "CKOR."
Set forth in the tables below for the periods presented are the high and
low sale prices for SEACOR's Common Stock:
<TABLE>
<CAPTION>
HIGH LOW
---------------------- ----------------------
<S> <C> <C>
Fiscal Year Ending December 31, 1998:
First Quarter........................................... 61 1/8 50 1/4
Second Quarter.......................................... 61 15/16 53 1/2
Third Quarter........................................... 61 7/16 33
Fourth Quarter.......................................... 54 3/8 31 1/4
Fiscal Year Ending December 31, 1999:
First Quarter........................................... 54 1/2 38 1/2
Second Quarter.......................................... 57 5/8 48 1/2
Third Quarter........................................... 55 9/16 47 1/2
Fourth Quarter.......................................... 53 11/16 44 11/16
Fiscal Year Ending December 31, 2000:
First Quarter (through March 24, 2000).................. 57 1/8 43 9/16
</TABLE>
The closing sale price of SEACOR's Common Stock, as reported on the NYSE
Composite Tape on March 24, 2000, was $56 per share. As of March 24,
2000, there were 81 holders of record of the Common Stock.
SEACOR has not paid any cash dividends in respect of its Common Stock
since its inception in December 1989 and has no present intention to pay
any such dividends in the foreseeable future. Instead, SEACOR intends to
retain earnings for working capital and to finance the expansion of its
business. Pursuant to the terms of the Company's $100.0 million reducing
revolving credit facility with Den norske Bank ASA (the "DnB Credit
Facility"), SEACOR may declare and pay dividends if it is in full
compliance with the covenants contained in the DnB Credit Facility and
no Events of Default, as defined in the DnB Credit Facility, have
occurred and are continuing or will occur after giving effect to any
declaration or distribution to shareholders. In addition to any
contractual restrictions, as a holding company, SEACOR's ability to pay
any cash dividends is dependent on the earnings and cash flows of its
operating subsidiaries and their ability to make funds available to
SEACOR. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources."
The payment of future cash dividends, if any, would be made only from
assets legally available therefor, and would also depend on the
Company's financial condition, results of operations, current and
anticipated capital requirements, plans for expansion, restrictions
under then existing indebtedness, and other factors deemed relevant by
the Company's Board of Directors in its sole discretion.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth, for the periods and at the dates
indicated, selected historical and consolidated financial data for the
Company, in thousands of dollars, except per share data. Such financial
data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements of the Company included in Parts II
and IV, respectively, of this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue:
Marine............................................ $ 104,894 $ 193,557 $ 325,009 $ 359,611 $ 258,705
Other............................................. 21,765 30,887 21,939 26,180 30,720
------------ ------------ ------------ ------------ ------------
126,659 224,444 346,948 385,791 289,425
Costs and Expenses:
Operating expenses -
Marine.......................................... 66,205 108,043 158,175 177,236 154,947
Other........................................... 12,223 16,625 9,318 10,486 11,839
Administrative and general......................... 13,953 22,304 28,299 36,102 34,744
Depreciation and amortization...................... 18,842 24,967 36,538 36,449 41,282
------------ ------------ ------------ ------------ ------------
Operating Income...................................... 15,436 52,505 114,618 125,518 46,613
Net interest income (expense)......................... (4,098) (2,155) (1,412) 2,548 (1,835)
Gain from equipment sales or retirements, net......... 4,076 2,264 61,928 38,338 1,677
Other income (expense) (1)............................ 228 (646) 569 6,492 (2,939)
------------ ------------ ------------ ------------ ------------
Income before income taxes, minority interest,
equity in net earnings of 50% or less owned
companies, and extraordinary item.................. 15,642 51,968 175,703 172,896 43,516
Income tax expense.................................... 5,510 18,535 61,384 60,293 15,249
------------ ------------ ------------ ------------ ------------
Income before minority interest, equity in
net earnings of 50% or less owned
companies, and extraordinary item.................. 10,132 33,433 114,319 112,603 28,267
Minority interest in (income) loss of subsidiaries.... 321 244 (301) (1,612) 1,148
Equity in net earnings of 50% or less owned 872 1,283 5,575 13,627 330
companies............................................. ------------ ------------ ------------ ------------ ------------
Income before extraordinary item...................... 11,325 34,960 119,593 124,618 29,745
Extraordinary item - gain (loss) on extinguishment
of debt, net of tax................................. - (807) (439) 1,309 1,191
------------ ------------ ------------ ------------ ------------
Net income........................................... $ 11,325 $ 34,153 $ 119,154 $ 125,927 $ 30,936
============ ============ ============ ============ ============
Net income per common share:
Basic earnings per common share................ $ 1.50 $ 2.97 $ 8.61 $ 9.59 $ 2.60
Diluted earnings per common share............... 1.37 2.74 7.47 8.25 2.54
STATEMENT OF CASH FLOWS DATA:
Cash provided by operating activities............. $ 9,939 $ 58,737 $ 105,548 $ 122,141 $ 47,872
Cash provided by (used in) investing activities.... (78,695) (100,120) (215,087) (149,202) 39,779
Cash provided by (used in) financing activities.... 53,291 161,482 135,468 27,308 (82,686)
OTHER FINANCIAL DATA:
EBITDA (2)........................................ $ 35,964 $ 79,730 $ 157,341 $ 174,293 $ 91,977
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents(3)...................... $ 28,786 $ 149,053 $ 175,381 $ 175,267 $ 178,509
Total assets...................................... 350,883 636,455 1,019,801 1,257,975 1,196,991
Total long-term debt, including current portion... 111,095 220,452 360,639 474,921 468,493
Stockholders' equity.............................. 183,464 351,071 474,014 542,782 508,130
</TABLE>
- -------------------
(1) In 1998 and 1999, other income primarily includes gains or
losses from commodity swap transactions, the sale of marketable
securities, and the sale of investments in 50% or less owned
companies.
(2) As used herein, "EBITDA" is operating income plus depreciation
and amortization, amortization of deferred mobilization costs,
which is included in marine operating expenses, minority
interest in (income) loss of subsidiaries and equity in net
earnings of 50% or less owned companies, before applicable
income taxes. EBITDA should not be considered by an investor as
an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flows as a
better measure of liquidity.
(3) Cash and cash equivalents exclude restricted cash in 1997,
1998, and 1999 of $46,983, $69,234, and $21,985, respectively,
and marketable securities in 1996, 1997, 1998, and 1999 of
$311, $160,440, $194,703, and $73,005, respectively.
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OFFSHORE MARINE SERVICES
The Company provides marine transportation, logistics, and related
services largely dedicated to supporting offshore oil and gas
exploration and production. Marine transportation services are provided
through the operation, domestically and internationally, of offshore
support vessels. The Company's vessels deliver cargo and personnel to
offshore installations, tow and handle the anchors of drilling rigs and
other marine equipment, support offshore construction and maintenance
work, and provide standby safety support. The Company's vessels also are
used for special projects, such as well stimulation, seismic data
gathering, freight hauling, line handling, salvage, and oil spill
emergencies. Logistics services include shorebase, marine transport, and
other supply chain management services in support of offshore
exploration and production operations.
Operating revenues are affected primarily by the number of vessels
owned, average rates per day worked and utilization of the Company's
fleet, and the number of vessels bareboat and time chartered-in.
Since 1994, acquisition transactions and investments in joint ventures
that have significantly increased the size of the Company's fleet
include: (i) 127 vessels acquired in the 1995 Graham Transaction, (ii)
11 vessels acquired in the 1995 and 1996 CNN Transactions, (iii) 41
vessels acquired in the 1996 McCall Transaction, (iv) 28 vessels
acquired and equity investments in joint ventures that owned 21 vessels
pursuant to the 1996 SMIT Transaction, (v) 24 vessels acquired in the
1997 Galaxie Transaction, and (vi) 25 vessels constructed during 1997,
1998, and 1999. The vessels acquired in the Graham Transaction, the
McCall Transaction, and the Galaxie Transaction and the vessels
constructed primarily support the oil and gas exploration and production
industry in the U.S. Gulf of Mexico; whereas, vessels acquired in the
1995 and 1996 CNN Transactions and the SMIT Transaction are employed in
foreign offshore support markets. The Company also actively monitors
opportunities to buy and sell vessels that will maximize the overall
utility and flexibility of its fleet. Since 1994, the Company has sold
113 vessels, and at December 31, 1999, 23 of the vessels sold were
bareboat chartered-in. At December 31, 1999, the Company was
constructing 2 crew and 1 anchor handling towing supply vessel that are
expected to enter service in 2000.
Rates per day worked and utilization of the Company's fleet are a
function of demand for and availability of marine vessels that is
closely aligned with the level of exploration and development of
offshore areas. The level of exploration and development of offshore
areas is affected by both short-term and long-term trends in oil and gas
prices which, in turn, are related to the demand for petroleum products
and the current availability of oil and gas resources. The table below
sets forth rates per day worked and utilization data for the Company
during the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1997 1998 1999
------------------ ----------------- ------------------
<S> <C> <C> <C>
Rates per Day Worked ($):(1)(2)
Supply/Towing supply............................... 6,283 6,572 5,432
Anchor handling towing supply...................... 10,176 12,283 11,869
Crew............................................... 2,291 2,701 2,493
Standby safety..................................... 6,033 6,620 6,045
Utility/Line handling.............................. 1,381 1,904 1,691
Geophysical, Freight, and Other.................... 4,586 6,120 5,576
Overall fleet.................................. 3,598 4,254 3,929
Overall Utilization (%):(1)
Supply/Towing supply............................... 92.3 89.4 69.9
Anchor handling towing supply...................... 84.4 85.8 73.5
Crew............................................... 97.5 93.2 83.0
Standby safety..................................... 94.0 99.5 74.1
Utility/Line handling.............................. 97.9 91.6 65.9
Geophysical, Freight, and Other.................... 97.7 99.2 55.7
Overall fleet.................................. 95.2 91.5 73.1
</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) Revenues for certain of the Company's vessels, primarily
its standby safety vessels, are earned in foreign
currencies, primarily British pounds sterling, and have
been converted to U.S. dollars at the weighted average
exchange rate for the periods indicated.
19
<PAGE>
From time to time, the Company bareboat or time charters-in vessels.
Operating revenues for vessels owned and bareboat or time chartered-in
are incurred at similar rates. However, operating expenses associated
with vessels bareboat and time chartered-in include charter hire
expenses that, in turn, are included in vessel expenses, but exclude
depreciation expense. At December 31, 1999, 28 vessels were bareboat
chartered-in, including 23 under sale and leaseback arrangements, and no
vessels were time chartered-in.
The Company also bareboat charters-out vessels. Operating revenues for
these vessels are lower than for vessels owned and operated or bareboat
chartered-in by the Company, because vessel expenses, normally recovered
through charter revenue, are the burden of the charterer. Operating
expenses include depreciation expense if the vessels which are
chartered-out are owned. At December 31, 1999, the Company had 14
vessels bareboat chartered-out, which included 11 chartered to its joint
ventures, entities affiliated with its joint venture operations, or the
environmental service segment.
The table below sets forth the Company's fleet structure at the dates
indicated.
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------
Fleet Structure 1997 1998 1999
- ----------------------------------------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
Owned.............................................. 248 225 222
Bareboat and time chartered-in..................... 11 27 28
Managed............................................ 1 4 1
Joint ventures and pool vessels(1):
TMM Joint Venture.............................. 13 17 14
SMIT Joint Venture............................. 21 18 15
Other Joint Ventures........................... - 4 6
SEAVEC Pool.................................... 5 5 4
Avian Fleet Pool (formally, Saint Fleet Pool).. 7 7 4
----------------- ----------------- ------------------
Overall Fleet................................ 306 307 294
================= ================= ==================
</TABLE>
- ------------
(1) See "Business - Joint Ventures and Pooling Arrangements."
Vessel operating expenses are primarily a function of fleet size and
utilization. The most significant vessel operating expense items are
wages paid to marine personnel, maintenance and repairs, and marine
insurance. In addition to variable vessel operating expenses, the
offshore marine business also incurs fixed charges related to the
depreciation of property and equipment. Depreciation is a significant
operating cost, and the amount related to vessels is the most
significant component.
A portion of the Company's revenues and expenses, primarily from the
Company's North Sea operations, are paid in foreign currencies. For
financial statement reporting purposes, these amounts are translated
into U.S. dollars at the weighted average exchange rates during the
relevant period. Overall, approximately 39% of the Company's offshore
marine operating revenues were derived from foreign operations, whether
in U.S. dollars or foreign currencies, for the twelve months ended
December 31, 1999.
The Company's foreign offshore marine operations are subject to various
risks inherent in conducting business in foreign nations. These risks
include, among others, political instability, potential vessel seizure,
nationalization of assets, fluctuating currency values, hard currency
shortages, controls of currency exchange, the repatriation of income or
capital, import-export quotas, and other forms of public and
governmental regulation, all of which are beyond the control of the
Company. Although, historically, the Company's operations have not been
affected materially by such conditions or events, it is not possible to
predict whether any such conditions or events might develop in the
future. The occurrence of any one or more of such conditions or events
could have a material adverse effect on the Company's financial
condition and results of operations.
Regulatory drydockings, which are a substantial component of marine
maintenance and repair costs, are expensed when incurred. Under
applicable maritime regulations, vessels must be drydocked twice in a
five-year period for inspection and routine maintenance and repair. The
Company follows an asset management strategy pursuant to which it defers
required drydocking of selected marine vessels and voluntarily removes
these marine vessels from operation during periods of weak market
conditions and low rates per day worked. Should the Company undertake a
large number of drydockings in a particular fiscal quarter or fiscal
year or drydock and repair a disproportionate number of older vessels,
which typically have higher drydocking costs, comparative results may be
affected. For the years ended December 31, 1999, 1998, and 1997,
drydocking costs totaled $5.5 million, $10.8 million, and $11.6 million,
respectively. During those same periods, the Company completed the
drydocking of 81, 95, and 109 marine vessels, respectively.
As of December 31, 1999, the average age of vessels owned by the Company
was approximately 14.1 years. Excluding the Company's standby safety
vessels, the average age of the Company's fleet was approximately 13.7
years. The Company believes that after offshore support vessels have
been in service for approximately 25 years (20 years for crewboats), the
level of expenditures (which typically increase with vessel age)
necessary to satisfy required marine certification standards may not be
20
<PAGE>
economically justifiable. There can be no assurance that the Company
will be able to maintain its fleet by extending the economic life of
existing vessels or acquiring new or used vessels, or that the Company's
financial resources will be sufficient to enable it to make capital
expenditures for such purposes.
Operating results are also affected by the Company's participation in
the following joint ventures: (i) the Veesea Joint Venture, a majority
owned subsidiary which operated 11 standby safety vessels in the North
Sea at December 31, 1999; (ii) the SEAVEC Pool and Avian Fleet Pool
which coordinate the marketing of 19 standby safety vessels in the North
Sea, of which 11 were owned by the Veesea Joint Venture at December 31,
1999; (iii) the TMM Joint Venture which operated 19 offshore marine
vessels in Mexico at December 31, 1999, including 5 bareboat or time
chartered-in from the Company; (iv) the SMIT Joint Ventures which
operated 16 offshore marine vessels in the Far East, Latin America, the
Middle East, and the Mediterranean at December 31, 1999; (v) the Vision
Joint Venture, a majority owned subsidiary which operated 1 offshore
marine vessel in the U.S. Gulf of Mexico at December 31, 1999; (vi) the
Logistics Joint Venture, which provides shorebase, marine transport, and
other supply chain management services, and (vii) Other Joint Ventures
which operated 8 offshore marine vessels in Latin America, the
Mediterranean, the Far East and the U.S. Gulf of Mexico. See "Business -
Joint Ventures and Pooling Arrangements."
On December 2, 1999, Energy Logistics, Inc. acquired all of the
outstanding common shares of Liberty for $1.9 million, subject to
certain adjustments as defined in the associated stock purchase
agreement. To finance the transaction, Energy Logistics, Inc. sold
additional shares of its common stock to the Company for $0.7 million,
borrowed $1.2 million from the Company, and used existing cash balances.
The Company's ownership interest in Energy Logistics, Inc. rose to 67%
following its recent share acquisition, and from December 1999, the
financial condition, results of operations, and cash flows of ELI are
reflected in the Company's consolidated financial statements. Prior to
December 1999, the Company reported its equity interest in Energy
Logistics, Inc. as an investment in a 50% or less owned company that was
accounted for by the equity method.
On February 9, 2000, the Company announced that it signed a letter of
intent to acquire all of the issued share capital of Boston Putford.
Boston Putford's standby safety vessels, certain joint venture interests
and vessels, and fixed assets will be acquired for aggregate
consideration of approximately (pound)19.0 million. Boston Putford will
also receive aggregate consideration of approximately (pound)5.0 million
for working capital in the companies at closing. The purchase
consideration will consist of (pound)15.0 million in cash, approximately
84,000 shares of Common Stock, approximately (pound)9.1 million in five
year zero coupon notes having a current value of (pound)6.2 million, and
the assumption of certain liabilities. The final purchase price is
subject to certain closing adjustments. Boston Putford's standby safety
fleet, including vessels held in joint ventures but excluding vessels
managed for third parties, consists of 18 vessels operating primarily in
the southern U.K. sector of the North Sea. Consummation of the
transaction is also subject to satisfactory completion of due diligence,
execution of definitive documentation, and receipt of all necessary
regulatory approvals and compliance with appropriate procedures in the
United States and the United Kingdom. The Company expects to consolidate
its standby safety services in the U.K. sector of the North Sea into the
Boston Putford operations following completion of its acquisition of
Boston Putford.
ENVIRONMENTAL SERVICES
The Company's environmental service business provides contractual oil
spill response and other related training and consulting services. The
Company's clients include tank vessel owner/operators, refiners and
terminal operators, exploration and production facility operators, and
pipeline operators. The Company charges a retainer fee to its customers
for ensuring by contract the availability (at predetermined rates) of
its response services and equipment. Retainer services include employing
a staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
emergency and spill response as contemplated by response plans filed by
the Company's customers in accordance with OPA 90 and various state
regulations. The Company maintains relationships with numerous
environmental sub-contractors to assist with response operations and
equipment maintenance and provide trained personnel for deploying
equipment in a spill response.
Pursuant to retainer agreements entered into with the Company, certain
vessel owners pay in advance to the Company an annual retainer fee based
upon the number and size of vessels in each such owner's fleet and in
some circumstances pay the Company additional fees based upon the level
of each vessel owner's voyage activity in the U.S. The Company
recognizes the greater of revenue earned by voyage activity or the
portion of the retainer earned in each accounting period. Certain vessel
and facility owners pay a fixed fee or a fee based on volume of
petroleum product transported for the Company's retainer services and
such fee is recognized ratably throughout the year. The Company's
retainer agreements with vessel owners generally range from one to three
years while retainer arrangements with facility owners are as long as
ten years.
Spill response revenue is dependent on the magnitude of any one spill
response and the number of spill responses within a given fiscal period.
21
<PAGE>
Consequently, spill response revenue can vary greatly between comparable
periods and the revenue from any one period is not indicative of a trend
or of anticipated results in future periods. Costs of oil spill response
activities relate primarily to (i) payments to sub-contractors for
labor, equipment and materials, (ii) direct charges to the Company for
equipment and materials, (iii) participation interests of others in
gross profits from oil spill response, and (iv) training and exercises
related to spill response preparedness.
The Company charges consulting fees to customers for customized training
programs, its planning of and participation in customer oil spill
response drill programs and response exercises, and other special
projects.
The principal components of the Company's operating costs are salaries
and related benefits for operating personnel, payments to
sub-contractors, equipment maintenance, and depreciation. These expenses
are primarily a function of regulatory requirements and the level of
retainer business. Operating results are also affected by NRC's
participation in CPA on the West Coast of the United States.
DRILLING SERVICES
The Company's drilling service business is conducted through Chiles
Offshore, a 58.3% majority owned subsidiary. From inception and until
July 1999, Chiles operated as a development stage company, devoting
substantially all its efforts constructing two mobile offshore drilling
rigs, raising capital, and securing contracts for the Rigs. In 1997,
Chiles commenced construction of two premium jackup mobile offshore
drilling rigs, the Chiles Columbus and the Chiles Magellan, which were
delivered to Chiles in May 1999 and October 1999, respectively.
The drilling service segment's operating revenues are affected by rates
per day worked and utilization of the Rigs. The rates per day worked and
utilization of the Rigs are a function of demand for and availability of
rigs, which are closely aligned with the level of exploration and
development of offshore areas. The level of exploration and development
of offshore areas is affected by both short-term and long-term trends in
oil and gas prices which, in turn, are related to the demand for
petroleum products and the current availability of oil and gas
resources.
The drilling service segment's operating expenses are primarily a
function of fleet size and utilization. The most significant variable
operating expenses for the Rigs are compensation and related expenses
for personnel, maintenance and repairs, supplies, and insurance. In
addition to variable operating expenses, the drilling service segment
also incurs fixed charges related to the depreciation of property and
equipment. Depreciation is a significant fixed operating charge and the
amount related to the Rigs is the most significant component.
The Chiles Columbus was placed in service in June 1999. At December 31,
1999, it was operating under a multi-well contract in the U.S. Gulf of
Mexico. If all wells currently planned by the customer of the Chiles
Columbus are drilled, work is expected to continue through the third
quarter of 2000. The Chiles Magellan was placed in service in November
1999. At December 31, 1999, it was operating in the U.S. Gulf of Mexico
under a drilling contract with expected completion in February 2000.
Following this project, the Chiles Magellan is contracted to provide
additional drilling services in the U.S. Gulf of Mexico with expected
completion in June 2000 (the "Magellan Contract"). Under the terms of
the Magellan Contract, Chiles received a $1.5 million advance deposit
from the customer against expected contractual revenues under the
Magellan Contract. Failure of the Chiles Magellan to be available in
accordance with certain terms and conditions of the Magellan Contract
could obligate Chiles to return the $1.5 million advance deposit to its
customer. After an initial well, the customer under the Magellan
Contract has certain options to use the Chiles Magellan, under certain
circumstances, for additional wells in the same area for a specified
period of time at the then-current market rates. Chiles has also entered
into arrangements for the deferral, until October 2000, of certain
vendor payments totaling $3.5 million with respect to the construction
of the Rigs.
Chiles has recently entered into a Bareboat Charter Agreement
("Charter") for a rig ("Chartered Rig") constructed for the owner at a
U.S. shipyard. The Chartered Rig is similar in class to the Rigs owned
by Chiles. The Charter commenced in January 2000 upon delivery of the
Chartered Rig from the shipyard. Chiles is presently commissioning the
Chartered Rig in preparation for service in the U.S. Gulf of Mexico to
start in the second quarter of 2000.
Since delivery of the Rigs in 1999 and through December 31, 1999,
utilization and average day rates were 99.4% and $29,900, respectively.
22
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth operating revenue and operating profit by
the Company's various business segments for the periods indicated, in
thousands of dollars. The Company evaluates the performance of each
operating segment based upon the operating profit of the segment
including gains or losses from equipment sales and retirements and the
sale of interest in 50% or less owned companies and equity in the net
earnings of 50% or less owned companies, but excluding minority interest
in income or loss of subsidiaries, interest income and expense, gains or
losses from commodity swap transactions and the sale of marketable
securities, corporate expenses, and income taxes. Operating profit is
defined as Operating Income as reported in the Consolidated Statements
of Income included in Part IV of this Annual Report on Form 10-K net of
corporate expenses and certain other income and expense items. The
disaggregation of financial results has been prepared using a management
approach. Segment assets exclude those considered by the Company to be
of a corporate nature. Corporate assets include SEACOR and its wholly
owned subsidiaries' unrestricted cash, marketable securities, certain
other assets, and property and equipment related to corporate
operations. Information disclosed in the tables presented below may
differ from separate financial statements reported by subsidiaries of
the Company due to certain elimination entries required in
consolidation.
<TABLE>
<CAPTION>
Corporate
Marine Environmental Drilling and Other Total
------------ -------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
1999
Operating Revenues -
External Customers.............................$ 258,177 $ 22,659 $ 7,651 $ 938(a)$ 289,425
Intersegment................................... 528 161 - (689) -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or Retirements, net... 1,661 16 - - 1,677
Loss from Sale of Interest in a 50% or Less
Owned Company.................................... (72) - - - (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................... 4,906 814 - (3,107) 2,613
Minority Interest in Loss of Subsidiaries........ - - - 1,148 1,148
Net Interest Expense............................. - - - (1,835) (1,835)
Losses from Commodity Swap Transactions, net..... - - - (1,323) (1,323)
Losses from Sale of Marketable Securities, net... - - - (279) (279)
Corporate Expenses............................... - - - (5,169) (5,169)
Income Taxes..................................... - - - (17,533) (17,533)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 41,989 $ 1,288 $ - $ 33,999 $ 77,276
Other Segment Assets............................. 621,197 27,650 199,294 - 848,141
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 663,186 28,938 199,294 33,999 925,417
Corporate........................................ - - - 271,574 271,574
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 663,186 $ 28,938 $ 199,294 $ 305,573 $ 1,196,991
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=========================================================================================================================
1998
Operating Revenues -
External Customers.............................$ 359,611 $ 26,180 $ - $ - $ 385,791
Intersegment................................... - - - - -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 359,611 $ 26,180 $ - $ - $ 385,791
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 127,403 $ 4,479 $ (823) $ - $ 131,059
Gains from Equipment Sales or Retirements, net... 38,227 111 - - 38,338
Gain from Sale of Interest in a 50% or Less
Owned Company.................................... 1,197 - - - 1,197
Equity in Net Earnings of 50% or Less Owned
Companies........................................ 13,657 554 - - 14,211
Minority Interest in Income of Subsidiaries...... - - - (1,612) (1,612)
Net Interest Income.............................. - - - 2,548 2,548
Gains from Commodity Swap Transactions, net...... - - - 3,273 3,273
Gains from Sale of Marketable Securities, net.... - - - 1,827 1,827
Corporate Expenses............................... - - - (5,344) (5,344)
Income Taxes..................................... - - - (60,879) (60,879)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 54,954 $ 524 $ - $ - $ 55,478
Other Segment Assets............................. 770,614 29,103 177,832 - 977,549
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 825,568 29,627 177,832 - 1,033,027
Corporate........................................ - - - 224,948 224,948
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 825,568 $ 29,627 $ 177,832 $ 224,948 $ 1,257,975
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 32,534 $ 3,846 $ 56 $ 13 $ 36,449
=========================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Corporate
Marine Environmental Drilling and Other Total
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1997
Operating Revenues -
External Customers............................$ 325,009 $ 21,939 $ - $ - $ 346,948
Intersegment.................................. - - - - -
------------ ------------- ------------- ------------- -------------
Total........................................ 325,009 $ 21,939 $ - $ - $ 346,948
============ ============= ============= ============= =============
Operating Profit $ 115,818 $ 3,029 $ (382) $ - $ 118,465
(Loss).............................
Gains (Losses) from Equipment Sales or 62,027 (99) - - 61,928
Retirements, net................................
Equity in Net Earnings of 50% or Less Owned 5,656 771 - - 6,427
Companies.......................................
Minority Interest in Income of Subsidiaries..... - - - (301) (301)
Net Interest Expense............................ - - - (1,412) (1,412)
Corporate Expenses.............................. - - - (3,278) (3,278)
Income Taxes.................................... - - - (62,236) (62,236)
------------ ------------- ------------- ------------- -------------
Income (Loss) before Extraordinary Item.....$ 183,501 $ 3,701 $ (382) $ (67,227) $ 119,593
============ ============= ============= ============= =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies.......................$ 37,151 $ 1,219 $ - $ - $ 38,370
or Less Owned Companies.........................
Other Segment Assets............................ 702,449 32,861 67,398 - 802,708
------------ ------------- ------------- ------------- -------------
Subtotal Segment Assets....................... 739,600 34,080 67,398 - 841,078
Corporate....................................... - - - 178,723 178,723
------------ ------------- ------------- ------------- -------------
Total Assets................................$ 739,600 $ 34,080 $ 67,398 $ 178,723 $ 1,019,801
============ ============= ============= ============= =============
Depreciation and Amortization...................$ 32,914 $ 3,563 $ 6 $ 55 $ 36,538
==========================================================================================================================
</TABLE>
(a) Includes the operating revenues of the Company's
telecommunications business, Marinet (hereinafter defined),
that was acquired in April 1999 and sold effective July 1,
1999.
Revenues attributed to geographic areas were based upon the country of
domicile for offshore marine service segment customers and the country
in which the Company provided oil spill protection or other related
training and consulting services for environmental service segment
customers. The Company considers long-lived assets to be property and
equipment that has been distributed to geographical areas based upon the
assets' physical location during the applicable period. Certain of the
Company's offshore marine service segment's long-lived vessel assets
relocate between its geographical areas of operation. The costs of
long-lived vessel assets that are relocated have been allocated between
geographical areas of operation based upon length of service in the
applicable region. The following table is presented in thousands of
dollars.
<TABLE>
<CAPTION>
United Other
United States Nigeria Kingdom Foreign Total
-------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1999:
Revenue........................ $ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
Long-Lived Assets.............. 550,106 40,486 33,083 91,522 715,197
1998:
Revenue........................ 234,651 30,655 28,524 91,961 385,791
Long-Lived Assets.............. 406,945 47,257 31,416 139,243 624,861
1997:
Revenue........................ 216,513 25,318 39,099 66,018 346,948
Long-Lived Assets.............. 262,309 42,888 42,213 135,524 482,934
</TABLE>
COMPARISON OF FISCAL YEAR 1999 TO FISCAL YEAR 1998
OFFSHORE MARINE SERVICES
OPERATING REVENUE. The Company's offshore marine service segment's
operating revenues decreased $100.9 million, or 28.1%, in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due primarily to lower utilization and rates per
day worked and the sale of vessels. The adverse effect of reduced
drilling and production support activities due to declines in oil and
gas prices was partially offset by an increase in operating revenues
resulting from the entry into service of vessels both constructed for
and chartered-in by the Company.
Operating revenues declined approximately $71.2 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due to lower vessel utilization. Demand for all
classes of the Company's U.S. Gulf of Mexico fleet was adversely
affected and declines in demand for its supply/towing supply and utility
vessels were particularly significant. The Company's domestic fleet
utilization ranged from 68.9% to 79.0% throughout 1999 and averaged
75.4% in December; whereas, in 1998, utilization ranged from 82.8% to
97.2%. Utilization of the Company's offshore West Africa supply/towing
and anchor handling towing supply, North Sea standby safety, and Far
East and Other Foreign regions anchor handling towing supply and
supply/towing supply vessels also declined. Utilization of the Company's
vessels operating offshore West Africa was 84.9% in 1998 compared to
60.9% in 1999. North Sea standby safety vessel utilization was 99.5% in
1998 compared to 74.1% in 1999, and in the Far East and Other Foreign
regions, utilization declined from 85.6% in 1998 to 76.0% in 1999.
Operating revenues declined approximately $32.8 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
24
<PAGE>
ended December 31, 1998 due to declines in rates per day worked of the
Company's worldwide fleet. Approximately 60% of the decrease resulted
from lower rates per day worked of the Company's domestic fleet of
supply/towing supply, crew, and utility vessels. Rates per day worked of
the Company's domestic supply/towing supply vessels declined sharply,
averaging $7,000 during the first quarter of 1998 compared to $4,275 in
the fourth quarter of 1999. Rates per day worked also declined for the
Company's offshore West Africa anchor handling towing supply and
supply/towing supply, Far East and Other Foreign anchor handling towing
supply, and North Sea standby safety and supply/towing supply vessels.
Vessels removed from the Company's operations due to their sale or the
cancellation of certain charter-in agreements resulted in an approximate
$27.6 million decline in operating revenues between years. The entry
into operation of vessels constructed for the Company or chartered-in
increased operating revenues by approximately $36.5 million between
years. Revenues also declined between years as certain vessels
previously operated by the Company have been bareboat chartered-out.
OPERATING PROFIT. The Company's offshore marine business segment's
operating profit declined $81.2 million, or 63.8%, in the twelve month
period ended December 31, 1999 compared to the twelve month period ended
December 31, 1998 due primarily to those factors adversely affecting
operating revenues outlined above. Operating profits were also adversely
affected between comparable years due to an increase in foreign currency
translation losses resulting from the revaluation of Dutch Guilder cash
deposits during periods of a strengthening U.S. dollar. At December 31,
1999, weak demand and low rates per day worked resulted in the Company
removing 46 vessels from service, including 27 that require drydocking
prior to re-entering operation. The vessels removed from service were
primarily from the utility fleet that operated in the U.S. Gulf of
Mexico. Performance based compensation expense for administrative
personnel declined between comparable years in response to declining
profits. Operating costs also declined between years as bad debt
expenses recognized in 1998 did not recur in 1999, and the Company
recovered certain receivables written-off in prior periods.
GAINS (LOSSES) FROM EQUIPMENT SALES AND RETIREMENTS, NET. Net gains from
equipment sales and retirements decreased $36.6 million in the twelve
month period ended December 31, 1999 compared to the twelve month period
ended December 31, 1998 due to fewer and less valuable vessel sales. In
the twelve month period ended December 31, 1999, the Company sold 14
vessels; whereas, during the fiscal year 1998, the Company sold 34
vessels. During 1999, the Company sold 11 crew, 2 utility, and 1 anchor
handling towing supply vessel. In 1998, 8 towing supply, 8 anchor
handling towing supply, 7 utility, 6 supply, and 5 crew vessels were
sold. Of the vessels sold in 1999 and 1998, 5 and 11, respectively, were
subsequently bareboat chartered-in pursuant to sale and leaseback
transactions, and certain of the gains realized from those sales were
deferred and are being credited to income as reductions in rental
expense over the life of the respective bareboat charters.
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
declined $8.8 million in the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998 due
primarily to: (i) reduced drilling and production activities that
resulted from declines in oil and gas prices, (ii) lower gains from less
valuable vessel sales, (iii) reduced fleet size in the SMIT Joint
Ventures resulting from vessel sales, and (iv) increased trade accounts
receivable bad debt reserves with respect to customers of the TMM Joint
Venture.
In 1999, the Board of Directors of one of the SMIT Joint Ventures
adopted a plan of liquidation due to such venture's limited
opportunities for future investments and growth and the Company received
a $10.0 million liquidating dividend. The SMIT joint venture to be
liquidated was structured in 1996 pursuant to the SMIT Transaction and
commenced operations with nine owned vessels. This joint venture shall
continue operations until such time as its remaining fleet (three
vessels at December 31, 1999) can be sold or otherwise liquidated. With
respect to the Company's equity interest in the earnings of the SMIT
joint venture to be liquidated, the Company has recorded $3.0 million of
income tax expense in 1999. In prior periods, no income tax expense was
recorded in connection with this foreign joint venture's operations in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
ENVIRONMENTAL SERVICES
OPERATING REVENUE. The environmental service segment's operating
revenues decreased $3.4 million, or 12.8%, in the twelve month period
ended December 31, 1999 compared to the twelve month period ended
December 31, 1998. The decrease was due primarily to a decline in the
number and severity of oil spills managed by the Company and reduced
retainer revenues that resulted from the loss of a large customer.
OPERATING PROFIT. The environmental service segment's operating profit
increased $0.3 million, or 7.2%, in the twelve month period ended
December 31, 1999 compared to the twelve month period ended December 31,
1998. Declines in operating revenues were offset by the Company's
reduction in operating and general and administrative expenses.
25
<PAGE>
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
increased $0.3 million in the twelve month period ended December 31,
1999 compared to the twelve month period ended December 31, 1998 due
primarily to an increase in the oil spill response activities of CPA.
DRILLING SERVICES
The Chiles Columbus was placed in service during June 1999 and the
Chiles Magellan was placed in service during November 1999. Prior to
such time, and since inception, Chiles has not engaged in operations
other than managing construction of the Rigs and related matters. With
the delivery and commissioning of the two Rigs, Chiles generated
operating revenues of $7.7 million. Chiles has incurred operating losses
since its inception in 1997.
OTHER
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity losses in
the twelve month period ended December 31, 1999 resulted primarily from
the Company's recognition of its share of the operating losses of Globe
Wireless. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method during the second
quarter of 1999. Prior to this time, the Company carried its investment
in Globe Wireless at cost. See "Liquidity and Capital Resources - Globe
Wireless Investment."
NET INTEREST INCOME (EXPENSE). In the twelve month period ended December
31, 1999, the Company incurred net interest expense; whereas, in
comparable periods of 1998, the Company realized net interest income.
Between comparable periods, funds invested in interest bearing
securities declined due primarily to the Company's use of cash for the
purchase of property and equipment, Common Stock, and the retirement of
certain indebtedness. The decrease in interest income was partially
offset by a decline in interest costs that resulted primarily from the
Company's debt repurchase program and entry into swap agreements. See
"Liquidity and Capital Resources - Stock and Debt Repurchase Program and
Certain Credit Facilities and Financial Instruments," below.
GAINS (LOSSES) FROM COMMODITY SWAP TRANSACTIONS, NET. In the twelve
month period ended December 31, 1999, the Company recognized a net loss
of $1.3 million from commodity price hedging arrangements; whereas, in
the twelve month period ended December 31, 1998, the Company recognized
a net gain of $3.3 million. In 1999, the net loss was due primarily to
the settlement prices quoted on the New York Mercantile Exchange
("NYMEX") exceeding the contract prices for various natural gas and
crude oil positions; whereas, during 1998, the net gain was due
primarily to the contract prices exceeding the settlement prices quoted
on the NYMEX for various natural gas positions. See Item 7A
"Quantitative and Qualitative - Disclosures About Market Risks" for
additional discussion of the Company's commodity price hedging
arrangements.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. In the twelve
month period ended December 31, 1999, losses resulted primarily from the
sale of interest bearing securities during periods when interest rates
exceeded those in effect at date of purchase. These losses were
substantially offset by gains realized from the sale of other marketable
securities. In the twelve months ended December 31, 1998, gains resulted
primarily from the sale of interest bearing securities during periods
when interest rates were lower than those in effect at date of purchase.
CORPORATE EXPENSES. In the twelve month period ended December 31, 1999
compared to the twelve month period ended December 31, 1998, corporate
expenses declined $0.2 million due primarily to a reduction in
performance based compensation expense in response to declining profits.
COMPARISON OF FISCAL YEAR 1998 TO FISCAL YEAR 1997
OFFSHORE MARINE SERVICES
OPERATING REVENUE. The Company's offshore marine service segment's
operating revenues increased $34.6 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. The increase was due primarily to higher rates per
day worked by many of the Company's vessels operating domestically and
in foreign regions. Domestic revenue rose due to improvements in rates
per day worked and vessel acquisitions partially offset by vessel
dispositions, a decline in the utilization of supply/towing supply,
crewboats, and utility vessels, and the relocation of vessels to work
offshore West Africa and in other foreign regions. Revenues earned from
the Company's operations offshore West Africa rose due primarily to the
relocation of vessels into the region, improved rates per day worked,
additional chartered-in vessels, and vessel acquisitions partially
offset by vessel dispositions. Revenues earned from the Company's
operations in the Far East and Latin America rose due primarily to
higher rates per day worked, additional chartered-in vessels, and vessel
acquisitions offset by vessel dispositions and the relocation of
equipment to offshore West Africa. Revenues earned from the Company's
operations in the North Sea declined due to vessel dispositions and the
26
<PAGE>
relocation of vessels to other foreign regions offset by the effect of
higher rates per day worked.
OPERATING PROFIT. The Company's offshore marine service segment's
operating profit increased $11.6 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. The increase was due to factors affecting operating
revenue as outlined above offset by higher costs associated with (i)
crew wages, (ii) administration (as discussed below), (iii) repairs and
maintenance, (iv) bareboat and time charters-in, (v) a vessel
construction contract cancellation, and (vi) crew travel. Domestic and
foreign crew wages rose in response to competition for qualified
personnel in an active offshore market. Main engine and hull repair
costs rose primarily in response to greater running time of the
Company's crewboats. Electronic and communication costs rose due to the
installation and use of additional communication equipment aboard
vessels working domestically and in foreign regions. Bareboat charter
expense rose domestically in connection with the Company's sale and
leaseback of 19 vessels. Charter expense also rose in foreign operations
due to the addition of vessels to the Company's fleet. Certain fees and
expenses were incurred domestically pursuant to the cancellation of a
contract for the construction of a supply vessel. Crew travel expenses
rose due primarily to the relocation of vessels from domestic to foreign
markets and an increase in the frequency of crew rotation aboard other
vessels working offshore West Africa. These cost increases were offset
by a decline in domestic drydocking expenses due primarily to the
disposition and drydock deferral of certain vessels.
GAINS (LOSSES) FROM EQUIPMENT SALES AND RETIREMENTS, NET. Net gains from
equipment sales and retirements decreased $23.8 million in the twelve
month period ended December 31, 1998 compared to the twelve month period
ended December 31, 1997. During 1998, net gains from equipment sales and
retirements aggregated $38.2 million, resulting primarily from the sale
of 34 offshore marine vessels: 8 towing supply (3 of which were bareboat
chartered-in), 8 anchor handling towing supply (3 of which were bareboat
chartered-in), 7 utility, 6 supply (5 of which were bareboat
chartered-in), and 5 crew. During 1997, net gains from equipment sales
and retirements aggregated $62.0 million, resulting primarily from the
sale of 37 offshore marine vessels: 15 supply (7 of which were bareboat
chartered-in), 6 towing supply, 5 anchor handling towing supply (1 of
which was bareboat chartered-in), 7 utility, 2 crew, 1 freight, and 1
seismic. The decrease in gains between comparable periods was due
primarily to a decline in the number of offshore marine vessels sold and
the increase in the deferral of gains associated with sale and leaseback
transactions. In accordance with generally accepted accounting
principles, gains from sale and leaseback transactions are deferred to
the extent of the present value of minimum lease payments and are
credited to income as a reduction in rental expense over the applicable
lease terms.
EQUITY IN NET EARNINGS OF 50% OR LESS OWNED COMPANIES. Equity earnings
from 50% or less owned companies increased $8.0 million in the twelve
month period ended December 31, 1998 compared to the twelve month period
ended December 31, 1997. The increase primarily related to a $2.1
million and $1.4 million gain from the sale of an offshore marine vessel
by the TMM Joint Venture and the SMIT Joint Ventures, respectively. The
TMM Joint Venture's earnings also rose due to fleet expansion and higher
revenues earned by offshore support vessels operating between comparable
years.
GAIN FROM SALE OF INTEREST IN A 50% OR LESS OWNED COMPANY. Gain from the
sale of the Company's investment in a 50% or less owned company
increased $1.2 million in the twelve month period ending December 31,
1998 compared to the twelve month period ending December 31, 1997.
During 1998, the Company sold its equity interest in a joint venture
entity that provided marine and underwater services to offshore terminal
and oilfield operations internationally. There was no comparable
disposition of an equity interest in a 50% or less owned company during
1997.
ENVIRONMENTAL SERVICES
OPERATING REVENUE. The Company's environmental service segment's
operating revenues increased $4.2 million in the twelve month period
ended December 31, 1998 compared to the twelve month period ended
December 31, 1997 due primarily to oil spill, retainer, and other
service revenue earned during 1998 as a result of the Company's
acquisition of ERST in October 1997.
OPERATING PROFIT. Operating profit of the Company's environmental
service segment increased $1.4 million in the twelve month period ended
December 31, 1998 compared to the twelve month period ended December 31,
1997. In addition to including the results of ERST, which was acquired
in October 1997, operating profits rose due to reduced operating costs.
DRILLING SERVICES
Since inception, the Company's drilling service segment has engaged in
no operations other than managing construction of the Rigs and related
matters. The Company has not generated any operating revenues to date.
The drilling service business' operating loss was $0.8 million in the
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twelve month period ending December 31, 1998 as a result of general and
administrative and depreciation expenses.
OTHER
MINORITY INTEREST IN INCOME (LOSSES) OF SUBSIDIARIES. Minority interest
in income of subsidiaries of the Company increased $1.3 million in the
twelve month period ended December 31, 1998 compared to the twelve month
period ended December 31, 1997 due primarily to the commencement of
operations in June 1997 of the Vision Joint Venture.
NET INTEREST INCOME (EXPENSE). Interest income increased $12.6 million
in the twelve month period ended December 31, 1998 compared to the
twelve month period ended December 31, 1997 due primarily to greater
invested cash balances that resulted from (i) the sale in September 1997
of the Company's 7.2% Senior Notes due 2009 ("7.2% Notes"), (ii) the
sale of offshore marine vessels, (iii) the sale in April 1998 of $110.0
million aggregate principal amount of Chiles' 10.0% Senior Notes Due
2008 (the "Chiles 10.0% Notes"), and (iv) the continuing strong results
of operations.
Interest expense increased $8.6 million in the twelve month period ended
December 31, 1998 compared to the twelve month period ended December 31,
1997 due primarily to the (i) sale in September 1997 of the 7.2% Notes,
(ii) sale in April 1998 of the Chiles 10.0% Notes, and (iii)
amortization of debt discount recognized on indebtedness issued pursuant
to the SMIT Additional Consideration Transaction. The increase in
interest expense was partially offset by the capitalization of interest
costs in connection with the construction of offshore marine vessels and
the Rigs.
GAINS (LOSSES) FROM COMMODITY SWAP TRANSACTIONS, NET. Gains from
commodity swap transactions increased $3.3 million in the twelve month
period ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. During 1998, the Company entered into natural gas
commodity swap transactions that resulted in the recognition of a net
gain. There were no comparable commodity swap transactions during the
prior year. See "Liquidity and Capital Resources" for additional
discussion of the Company's commodity swap activities.
GAINS (LOSSES) FROM SALE OF MARKETABLE SECURITIES, NET. Gains from the
sale of marketable securities increased $1.8 million in the twelve month
period ended December 31, 1998 compared to the twelve month period ended
December 31, 1997. During 1998, the Company sold certain
available-for-sale securities that resulted in net gains from those
transactions. No available-for-sale securities were sold during the
prior year.
CORPORATE EXPENSES. Corporate administrative expenses also increased
between the comparable twelve month periods due to higher wage and legal
costs.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL. The Company's ongoing liquidity requirements arise primarily
from its need to service debt, fund working capital, acquire, construct,
or improve equipment and make other investments. Management believes
that cash flow from operations will provide sufficient working capital
to fund the Company's operating needs. The Company may, from time to
time, issue shares of Common Stock, preferred stock, debt, or a
combination thereof, or sell vessels to finance the acquisition of
equipment and businesses or make improvements to existing equipment.
The Company's cash flow levels and operating revenues are determined
primarily by the size of the Company's offshore marine and rig fleet,
rates per day worked and overall utilization of the Company's offshore
marine vessels and rigs, as well as retainer, spill response, and
consulting activities of the Company's environmental service business.
The Company's marine and drilling service businesses are directly
affected by the volatility of oil and gas prices, the level of offshore
production and exploration activity, and other factors beyond the
Company's control.
CASH AND MARKETABLE SECURITIES. At December 31, 1999, the Company's cash
and investments in marketable securities totaled $273.5 million,
including $178.5 million of unrestricted cash and cash equivalents,
$73.0 million of investments in marketable securities, and $22.0 million
of restricted cash. The Company's cash and investments in marketable
securities declined $165.7 million in the twelve month period ending
December 31, 1999 compared to the twelve month period ending December
31, 1998. See " - Cash Generation and Deployment" below.
Restricted cash at December 31, 1999 is intended for use in defraying
costs to construct offshore support vessels for the Company. At December
31, 1999, the Company had funded approximately $20.4 million in offshore
marine vessel construction costs from unrestricted cash balances, and
subject to the Maritime Administration's approval, the Company expects
such amounts to be reimbursed from construction reserve fund restricted
cash accounts.
During the years 1997 through 1999, the Company deposited proceeds from
the sale of certain offshore support vessels into escrow and
construction reserve fund bank accounts for purposes of acquiring newly
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constructed U.S.-flag vessels and qualifying for the Company's temporary
deferral of taxable gains realized from the sale of the vessels. Escrow
accounts were established pursuant to certain exchange and escrow
agreements and restrict the use of funds deposited therein for a period
of six months. Should replacement offshore marine vessels not be
delivered prior to expiration of the applicable six-month escrow period,
funds then remaining in the escrow accounts will be released to the
Company for general use. The Company has also established, pursuant to
Section 511 of the Merchant Marine Act, 1936, as amended, joint
depository construction reserve fund accounts with the Maritime
Administration. From date of deposit, withdrawals from these accounts
are subject to prior written approval of the Maritime Administration.
Funds must be committed for expenditure within three years or be
released for the Company's general use. Gains from vessel sales
previously deferred would become immediately taxable upon release to the
Company, for general use, of sale proceeds that were deposited into
joint depository construction reserve fund accounts.
During 1998, net proceeds from the sale of the Chiles 10.0% Notes were
deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as
Escrow Agent. The use of these funds was limited to (i) partially
funding the construction of the Rigs, (ii) paying interest on the Chiles
10.0% Notes through the first two semi-annual interest payment dates,
and (iii) providing working capital. At December 31, 1999, the net
proceeds from the sale of the Chiles 10.0% Notes had been expended in
accordance with the terms of the escrow agreements.
Investments in marketable securities at December 31, 1999 were primarily
comprised of debt securities issued by U.S. Government and also included
equity securities, debt securities of the government of the United
Kingdom, debt securities of a state of the United States, and corporate
debt. Of the Company's investments in debt securities, approximately 80%
have contractual maturities of five years or less.
STOCK AND DEBT REPURCHASE PROGRAM. In 1999 and 2000, SEACOR's Board of
Directors increased its previously announced securities repurchase
authority by $120.0 million. The securities covered by the repurchase
program include Common Stock, the Company's 5 3/8% Convertible
Subordinated Notes Due 2006 (the "5 3/8% Notes") and 7.2% Notes, and the
Chiles 10.0% Notes (collectively, the "SEACOR Securities"). In the
twelve month period ended December 31, 1999, the Company acquired
1,462,000 shares of Common Stock, $43.2 million principal amount of the
Chiles 10.0% Notes, $5.2 million principal amount of the 5 3/8% Notes,
and $2.5 million principal amount of the 7.2% Notes for an aggregate
cost of $112.8 million. Since initiating its security repurchase program
in 1997, the Company has acquired 2,877,300 shares of Common Stock and
$69.0 million principal amount of the Chiles 10.0% Notes, 7.2% Notes,
and 5 3/8% Notes, at an aggregate cost of $193.3 million as of December
31, 1999. The Company has entered into swap agreements with respect to
the Chiles 10.0% Notes. See " - Credit Facilities" and Item 7A
"Quantitative and Qualitative Disclosures About Market Risks". At March
24, 2000, the Company had $37.4 million of its Board of Directors
authority available for the purchase of additional SEACOR Securities
that may be conducted from time to time through open market purchases,
privately negotiated transactions, or otherwise depending on market
conditions.
GLOBE WIRELESS. During April 1998, the Company entered into a financing
arrangement with Globe, Inc., the predecessor of Globe Wireless,
providing for potential financing from the Company aggregating $20.0
million, comprised of $10.0 million of Globe, Inc.'s Series C
Convertible Preferred Stock ("Series C Stock") and $10.0 million of
senior secured promissory notes ("Promissory Notes"). Upon signing of
the financing agreements, the Company acquired 3,288,156 shares of
Series C Stock for $7.0 million, exchanged a note evidencing a $3.0
million loan in 1997 for Promissory Notes, and received a warrant for
the purchase of additional Series C Stock at an exercise price of $2.13
per share (the "Series C Warrant"). In October 1998, the Company
purchased an additional 1,750,000 shares of Series C Stock for $3.0
million, renegotiated certain covenants of the April 1998 financing
agreement, and in connection therewith, the exercise price of the Series
C Warrant was reduced to $1.71 per share. In April 1999, the Series C
Warrant was exchanged for a warrant to purchase Class C Preferred Units
of Globe Wireless ("Class C Units") at an exercise price of $1.71 per
unit (the "SEACOR Warrants"), and all of Globe, Inc.'s Series C Stock,
including that held by the Company, was exchanged for an equivalent
number of Class C Units. Through December 16, 1999, the Company advanced
Globe Wireless an additional $13.7 million.
In May 1999, SEACOR, through its wholly owned subsidiary, SEACOR Malted
Inc., and its wholly owned subsidiary Malted Ltd., acquired all of the
issued and outstanding stock of Marinet Systems Ltd. ("Marinet"), a
United Kingdom based provider of communications services and equipment
to the maritime industry. Effective July 1, 1999, Globe Wireless
acquired all of the issued and outstanding stock of SEACOR Malted Inc.
and its wholly owned subsidiaries for a $5.3 million note payable to the
Company (the "Marinet Loan").
In December 1999, Globe Wireless commenced a private placement offering
(the "Private Placement") to raise a minimum of $34.0 million (the
"Minimum Offering") and a maximum of $44.0 million (the "Maximum
Offering") in additional capital for general corporate purposes,
including capital expenditures and working capital, through the sale of
18,565,401 Class D Preferred Units ("Class D Units") at $2.37 per unit.
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In February 2000, the Maximum Offering was increased to $57.0 million.
The Minimum Offering was consummated as of December 16, 1999, and in
connection therewith, Globe Wireless issued 15,470,047 Class D Units in
exchange for gross cash proceeds of $24.7 million and the conversion
into Class D Units of certain advances by the Company to Globe Wireless
and the Marinet Loan, aggregating $12.0 million. In connection with the
consummation of the Minimum Offering, the Company exercised the SEACOR
Warrant and purchased 7,556,667 Class C Units at the exercise price of
$1.71 per unit from Globe Wireless in exchange for the cancellation of
$10.0 million of Promissory Notes and the payment of $3.0 million in
cash. In February 2000, Globe Wireless completed the Maximum Offering
through the sale of 8,580,586 additional Class D Units in exchange for
gross cash proceeds of $20.3 million.
Prior to 1999, the Company carried its investment in Globe Wireless at
cost. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method of accounting
during the second quarter of 1999.
CASH GENERATION AND DEPLOYMENT. Cash flow provided from operating
activities totaled $47.9 million in fiscal year 1999 and declined $74.3
million, or 60.8%, from the prior fiscal year due primarily to a decline
in operating profits of the Company's offshore marine service segment
resulting from reduced drilling and production activities.
During fiscal year 1999, the Company generated $269.0 million from
investing and financing activities. Available-for-sale securities were
sold for $134.4 million. Restricted cash balances declined by $47.2
million as withdrawals from vessel joint depository construction reserve
fund and rig escrow accounts used to defray vessel and rig construction
costs exceeded deposits into such accounts generated from the sale of
equipment. Fourteen offshore support vessels were sold for $20.9
million. Chiles borrowed $22.0 million under the Amended Chiles Bank
Facility; the Company sold, subject to swap agreements, $18.6 million
notional amount of the Chiles 10.0% Notes that it had previously
reacquired, to a financial institution; and Chiles completed an offering
of membership interests and rights to purchase membership interests, and
the Company realized $4.3 million, net of offering cost. See " - Credit
Facilities" and Item 7A "Quantitative and Qualitative Disclosures About
Market Risks." Offshore marine and environmental service segment joint
ventures distributed $11.5 million in dividends and additional cash was
provided primarily from regularly scheduled and the accelerated
repayment of notes receivable due from various of the Company's joint
ventures, cash settlements on commodity swap transactions, and the
Energy Logistics, Inc. acquisition.
During fiscal year 1999, the Company used $311.9 million in its
investing and financing activities. Capital expenditures for property
and equipment, primarily Rigs and offshore support vessels, totaled
$140.5 million. SEACOR Securities were repurchased pursuant to the Stock
and Debt Repurchase Program for $112.8 million. Investments in and
advances to 50% or less owned companies rose by $21.8 million due
primarily to the Company's investment in Globe Wireless. Marketable
securities were acquired for $15.7 million. The Company has provided
$10.2 million of cash collateral pursuant to swap agreements for the
Chiles 10.0% Notes, which may be released under certain conditions. The
costs to purchase Liberty and Marinet and additional equity interest in
Energy Logistics, Inc., net of cash acquired, totaled $6.2 million.
Additional cash was used primarily for scheduled repayments of
outstanding indebtedness and the purchase of other investments.
CAPITAL EXPENDITURES. Property and equipment capital expenditures
totaled $140.5 million, $226.8 million, and $136.1 million in 1999,
1998, and 1997, respectively. Property additions in each of those years
primarily related to the Company's acquisition, construction, and
improvement of offshore support vessels, and capital expenditures in
1999 and 1998 additionally included costs to construct the Rigs. The
offshore marine service segment's construction program that began in
1996 reflects the Company's continuing commitment to serve the offshore
oil and gas industry with equipment well suited for deep water drilling
and production activities.
At December 31, 1999, the Company was committed to the construction of
three offshore support vessels at an approximate aggregate cost of $30.3
million of which $20.9 million has been expended. These vessels are
expected to enter service in 2000.
Joint venture corporations, in which the Company owns a 50% equity
interest, are committed to the construction of two Handymax Dry-Bulk
ships that are expected to enter service in 2001. The cost to construct
and place these ships into service will approximate $39.0 million, 75%
of which is expected to be financed from external sources. The Company
also holds a 50% equity interest in another joint venture that is
currently operating a Handymax Dry-Bulk vessel built in 1990.
The Company may make selective acquisitions of offshore marine vessels
or fleets of offshore support vessels, drilling rigs, and oil spill
response equipment or expand the scope and nature of its environmental
and logistics services. The Company also may upgrade or enhance its
offshore support vessels or construct offshore support vessels to remain
competitive in the marketplace. Management anticipates that such
expenditures would be funded through a combination of existing cash
balances, cash flow provided by operations, sale of existing equipment
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and, potentially, through the issuance of additional indebtedness,
shares of Common Stock, or the Company's preferred stock.
CREDIT FACILITIES. On November 17, 1998, the Company entered into the
DnB Credit Facility, as agent for itself and other lenders named
therein, which replaced an existing revolving credit facility with Den
norske Bank ASA. Under the terms of the DnB Credit Facility, the Company
may borrow up to $100.0 million aggregate principal amount (the "Maximum
Committed Amount") of unsecured reducing revolving credit loans maturing
on November 17, 2004. The Maximum Committed Amount will automatically
decrease semi-annually by 4.54% beginning November 17, 1999, with the
balance payable at maturity. Outstanding borrowings will bear interest
at annual rates ranging from 45 to 110 basis points (the "Margin") above
LIBOR. The Margin is determined quarterly and varies based upon the
percentage the Company's funded debt bears to earnings before interest,
taxes, depreciation, and amortization ("EBITDA"), as defined, and/or the
credit rating maintained by Moody's and Standard & Poor's, if any. The
DnB Credit Facility requires the Company, on a consolidated basis, to
maintain a minimum ratio of vessels' values to Maximum Committed Amount,
as defined, a minimum cash and cash equivalent level, a specified
interest coverage ratio, specified debt to capitalization ratios, and a
minimum net worth. The DnB Credit Facility limits the amount of secured
indebtedness which the Company and its subsidiaries may incur, provides
for a negative pledge with respect to certain activities of the
Company's vessel owning/operating subsidiaries, and restricts the
payment of dividends. At December 31, 1999, the Company had
approximately $95.0 million available for future borrowings under the
DnB Credit Facility.
On April 29, 1998, Chiles Offshore completed the sale of the Chiles
10.0% Notes. Interest on the Chiles 10.0% Notes is payable semi-annually
on May 1 and November 1 of each year commencing November 1, 1998. The
Chiles 10.0% Notes are not redeemable at the option of Chiles Offshore
prior to May 1, 2003, except that until May 1, 2001, Chiles Offshore may
redeem, at its option, in the aggregate, up to 35% of the original
principal amount of the Chiles 10.0% Notes, on a pro rata basis, with
the net proceeds of one or more Public Equity Offerings (as defined), at
a redemption price of 110% plus accrued interest to the redemption date;
provided, however, that at least $71.5 million aggregate principal
amount of the Chiles 10.0% Notes remains outstanding after each such
redemption. On and after May 1, 2003, the Chiles 10.0% Notes may be
redeemed at the option of Chiles Offshore, in whole or in part,
initially at 105.0% of the principal amount thereof and declining by
1.67% each year thereafter to 100.0% of the principal amount on and
after May 1, 2006, plus accrued interest to the date of redemption. The
proceeds from the issuance of the Chiles 10.0% Notes were placed in
escrow and used to (a) partially fund the construction of Rigs, (b) pay
interest on the Chiles 10.0% Notes through the first two semi-annual
interest payment dates, and (c) provide working capital. All obligations
with respect to the Chiles 10.0% Notes are limited exclusively to Chiles
Offshore and are nonrecourse to SEACOR. Chiles Offshore incurred $4.2
million in costs associated with the sale of the Chiles 10.0% Notes. In
October 1999, Chiles Offshore entered into amendments to the Indenture
governing the Chiles 10% Notes (the "Amendments") which were approved by
the holders of a majority of the Chiles 10.0% Notes and that had the
effect of removing certain covenants contained in such Indenture. In
consideration for such approval, consenting noteholders received $1.00
for each $1,000 in aggregate principal amount of Chiles 10.0% Notes held
by them. In January 2000, Chiles filed a notice with the Securities
and Exchange Commission terminating, retroactively effective to December
31, 1999, its reporting obligations pursuant to the Securities Exchange
Act of 1934, as amended.
Also, on April 29, 1998, Chiles Offshore entered into a bank credit
agreement that provided for a $25.0 million revolving credit facility
(the "Chiles Bank Facility") maturing December 31, 2004. The Chiles Bank
Facility was arranged by Nederlandse Scheepshypotheek Bank N.V. and
MeesPierson Capital Corporation. In December 1999, the Chiles Bank
Facility was amended and available borrowings rose from $25.0 million to
$40.0 million (the "Amended Chiles Bank Facility"). The Amended Chiles
Bank Facility provides for a floating interest rate of LIBOR plus 1 3/8%
per annum (approximately 7.3% at December 31, 1999) on amounts
outstanding under the Amended Chiles Bank Facility and provides for
repayment of such amounts in eight quarterly installments of $1.875
million beginning March 31, 2003, followed by eight quarterly
installments of $3.125 million, with the remaining balance payable on
December 31, 2006. As a condition precedent to the increase in the
Amended Chiles Bank Facility, Chiles Offshore was required to reduce the
outstanding principal amount of the Chiles 10% Notes by $15.0 million to
$95.0 million.
During November 1999, Chiles Offshore completed an offering of
membership interests and rights to purchase membership interests (the
"Offering") which provided all current members with a pro rata right to
purchase such securities in an aggregate amount of $15.0 million. The
proceeds from this Offering were used by Chiles Offshore to repurchase,
at par, $15.0 million aggregate principal amount of the Chiles 10.0%
Notes from SEACOR. A wholly owned subsidiary of SEACOR, acquired $10.6
million or approximately 71% of the Offering, and certain other members
acquired the balance of the Offering. Purchasers in the Offering have
the right to acquire an additional $3.0 million of membership interests
in Chiles Offshore at the same valuation for a period of four and
one-half years following the Offering.
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The Rig Owners guarantee the Amended Chiles Bank Facility and such
guarantees are secured by first priority mortgages on the Rigs,
assignment of earnings of the Rigs (which may continue to be collected
by Chiles Offshore unless there occurs an event of default), and
assignments of insurance proceeds. The Amended Chiles Bank Facility
contains customary affirmative covenants, representations, and
warranties and is cross-defaulted to the related promissory notes;
provided, however, should there occur an event of default under the
Amended Chiles Bank Facility (other than arising from enforcement
actions undertaken by a holder of other indebtedness of Chiles Offshore,
enforcement actions arising from in rem claims against either of the
Rigs or bankruptcy events with respect to Chiles Offshore or a Rig
Owner), the lenders under the Amended Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the holders of the Chiles 10.0% Notes ("Noteholders") or
Chiles Offshore may cure such event of default or prepay all of the
indebtedness outstanding under the Amended Chiles Bank Facility. The
Amended Chiles Bank Facility also contains certain negative covenants
applicable to Chiles Offshore and the Guarantors, including prohibitions
against the following: certain liens on the collateral under the Amended
Chiles Bank Facility; material changes in the nature of their business;
sale or pledge of any Guarantor's membership interests; sale or
disposition of any Rig or other substantial assets; certain changes in
office locations; consolidations or mergers; certain Restricted Payments
(as defined in the Chiles Bank Facility), including distributions on
membership interests in Chiles Offshore (the "Membership Interests");
the exercise of a right to call the Chiles 10.0% Notes; or any material
amendment or modification of the Indenture. The Amended Chiles Bank
Facility further requires Chiles Offshore to prevent the Guarantors from
making certain loans and advances, except in their normal course of
business or to certain affiliates; assuming, guaranteeing or (except in
their ordinary course of business) otherwise becoming liable in
connection with any obligations other than guarantees for the benefit of
the lenders under the Amended Chiles Bank Facility, guarantees in favor
of the Noteholders or pre-existing guaranties; paying out any funds,
except in their ordinary course of business for the business of Chiles
Offshore or service of certain indebtedness permitted under the Amended
Chiles Bank Facility; and issuing or disposing of any of their own
membership interests (except to Chiles Offshore). In addition, the
Amended Chiles Bank Facility requires that the fair market value of the
Rigs, as determined by appraisers appointed by the lenders thereunder,
at all times equals or exceeds an amount equal to 200% of outstanding
indebtedness under the Amended Chiles Bank Facility. At December 31,
1999, Chiles Offshore had $18.0 million available under the Amended
Chiles Bank Facility for future borrowings.
A wholly owned subsidiary of SEACOR currently owns a 58.3% equity
interest in Chiles Offshore, which was acquired for $45.6 million, and
SEACOR owns $26.7 million principal amount of the Chiles 10.0% Notes and
has entered into swap agreements under which it bears the economic risk
of $68.1 million notional principal amount of Chiles 10% Notes covered
by such agreements. See Item 7a "Quantitative and Qualitative
Disclosures About Market Risk".
Pursuant to a February 1998 letter agreement between the Company and
SMIT, the Company agreed to prepay certain contingent obligations for
additional purchase consideration that would otherwise have been payable
to SMIT in 1999 pursuant to a certain Asset Purchase Agreement dated
December 19, 1996, by and among the Company and SMIT. The prepayment
included cash of $20.9 million and the issuance, effective January 1,
1999, of five-year subordinated promissory notes in the aggregate
principal amount of $23.2 million, which notes will bear interest at
5.467% per annum payable quarterly in arrears.
At December 31, 1999, the Company had outstanding $147.5 million
aggregate principal amount of its 7.2% Notes which will mature on
September 15, 2009. Interest on the 7.2% Notes is payable semi-annually
on March 15 and September 15 of each year commencing March 15, 1998. The
7.2% Notes may be redeemed at any time at the option of the Company, in
whole or from time to time in part, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to
the date of redemption plus a Make-Whole Premium, if any, relating to
the then prevailing Treasury Yield and the remaining life of the 7.2%
Notes. The 7.2% Notes were issued under an indenture that contains
covenants including, among others, limitations on liens and sale and
leasebacks of certain Principal Properties, as defined in the 1997
Indenture, and certain restrictions on the Company consolidating with or
merging into any other Person.
At December 31, 1999, the Company had outstanding $181.6 million
aggregate principal amount of its 5 3/8% Notes that were issued pursuant
to a private placement and the SMIT Transaction in 1996. The 5 3/8%
Notes are convertible, in whole or part, at the option of the holder at
any time prior to the close of business on the business day next
preceding November 15, 2006, unless previously redeemed into shares of
Common Stock at a conversion price of $66.00 per share (equivalent to a
conversion rate of 15.1515 shares of Common Stock per $1,000 principal
amount of the 5 3/8% Notes), subject to adjustment in certain
circumstances. The 5 3/8% Notes are redeemable at the Company's option
at any time on or after November 24, 1999 at the redemption prices
specified therein, together with accrued and unpaid interest to the
repurchase date. The 5 3/8% Notes are general unsecured obligations of
the Company, subordinated in right of payment to all senior indebtedness
of the Company and effectively subordinated in right of payment to all
indebtedness and other obligations and liabilities and any preferred
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stock of the Company's subsidiaries. Also, pursuant to the SMIT
Transaction, the Company entered into certain lease purchase agreements
which obligate the Company to purchase two vessels from SMIT with cash
and $6.75 million principal amount of the 5 3/8% Notes in 2001.
CAPITAL STRUCTURE. At December 31, 1999, the Company's capital structure
was comprised of $468.5 million in long-term debt (including current
portion) and $508.1 million in stockholders' equity. Long-term debt
declined $6.4 million between years. The retirement of indebtedness
under the Stock and Debt Repurchase Program and scheduled payment of
other indebtedness was partially offset by an increase in borrowings
resulting from drawings under the Amended Chiles Credit Facility, the
sale of Chiles 10% Notes previously held in treasury by the Company to a
financial institution, subject to swap agreements, and debt assumed
pursuant to Energy Logistics, Inc.'s acquisition of Liberty.
Stockholders' equity rose due to an increase in retained earnings of
$30.9 million from net income and Common Stock and paid in capital of
$3.0 million primarily from the issuance of Common Stock in connection
with the acquisition of ERST that occurred in 1997 and amortization of
restricted stock. $65.5 million of Common Stock repurchases and return
to treasury of unvested restricted Common Stock and a $3.0 million
decline in accumulated other comprehensive income resulting from the
Company's investment in available-for-sale securities and foreign
currency translation adjustments offset these increases.
MINORITY INTEREST. Minority interest is primarily comprised of the
interest of the Company's partners in the net worth of three joint
ventures: Chiles, the Veesea Joint Venture, and the Vision Joint
Venture.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as either
an asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative's fair market value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement,
and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133" ("SFAS 137"). SFAS 137 is an amendment of SFAS
133 and defers the effective date of SFAS 133 to June 15, 2000. The
Company has not yet quantified the impact on its financial statements
but does not believe adoption will have a material impact on net income,
comprehensive income, and accumulated other comprehensive income.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports
located in the United Kingdom where its functional currency is pounds
sterling. The financial statements of the Company's United Kingdom
operations are measured using the pound sterling and changes in the
strength of that currency relative to the U.S. dollar and the
corresponding adjustment to the net assets of those operations caused by
exchange rate fluctuations result in the recognition of currency
translation adjustments that are reported in Accumulated Other
Comprehensive Income in Stockholders' Equity. To protect certain of the
U.S. dollar value of pound sterling denominated net assets of the
Company from the effects of volatility in foreign exchange rates that
might occur prior to their conversion to U.S. dollars, the Company has
entered into forward exchange contracts. The forward exchange contracts
enable the Company to sell pounds sterling in the future at fixed
exchange rates to offset the consequences of changes in foreign exchange
on the amount of U.S. dollar cash flows to be derived from the net
assets. The Company considers these forward exchange contracts as
economic hedges of a net investment as the translation adjustments
resulting from the forward exchange contracts move in the opposite
direction from the translation adjustments resulting from the
restatement of its United Kingdom subsidiaries' net assets. At December
31, 1999, the notional and fair values of those forward exchange
contracts, which expire at various dates through October 2000, were
approximately $3.9 million and $0.1 million, respectively. The weighted
average exchange rate of the Company's forward exchange contracts at
December 31, 1999 was approximately .62 pounds sterling per U.S. dollar.
The Company also collects certain revenues and pays certain expenses in
other foreign currencies. With respect to these foreign currency risks,
the Company has not entered into hedging contracts and its operating
results are positively or negatively affected as these foreign
currencies strengthen or weaken against the U.S. dollar.
The Company has entered into and settled various positions in natural
gas and crude oil via swaps, options, and futures contracts pursuant to
which, on each applicable settlement date, the Company receives or pays
an amount, if any, by which a contract price for a swap, an option, or a
futures contract exceeds the settlement price quoted on the New York
33
<PAGE>
Mercantile Exchange ("NYMEX") or receives or pays the amount, if any, by
which the settlement price quoted on the NYMEX exceeds the contract
price. The general purpose of these hedge transactions is to provide
value to the Company should the price of natural gas and crude oil
decline which over time, if sustained, would lead to a decline in the
Company's offshore assets' market values and cash flows. For accounting
purposes, the Company records the change in market value of its
commodity contracts at the end of each month and recognizes a related
gain or loss. At December 31, 1999, the Company's positions in commodity
contracts were not material.
In order to reduce its cost of capital, the Company entered into swap
agreements during 1999 with a major financial institution with respect
to notional amounts equal to a portion of the outstanding principal
amount of the Chiles 10.0% Notes. Pursuant to each such agreement, such
financial institution has agreed to pay to the Company an amount equal
to interest paid by Chiles on the notional amount of Chiles 10.0% Notes
subject to such agreement, and the Company has agreed to pay to such
financial institution an amount equal to interest currently at the rate
of approximately 6.9% per annum on the agreed upon price of such
notional amount of Chiles 10% Notes as set forth in the applicable swap
agreement. The Company has provided the financial institution with cash
collateral of $10.2 million, which will be released to the Company
should the aggregate exposure under the swap agreements be reduced to
less than $50.0 million.
Upon termination of each swap agreement, the financial institution has
agreed to pay to the Company the amount, if any, by which the fair
market value of the notional amount of Chiles 10.0% Notes subject to the
swap agreement on such date exceeds the agreed upon price of such
notional amount as set forth in such swap agreement, and the Company has
agreed to pay to such financial institution the amount, if any, by which
the agreed upon price of such notional amount exceeds the fair market
value of such notional amount on such date. Each swap agreement
terminates upon the earliest to occur of the redemption in full or
maturity of the Chiles 10.0% Notes, at any time at the election of the
Company or, at the election of the financial institution, on April 30,
2004. At December 31, 1999, the market value of such swaps as of such
date was approximately $6.8 million. Of the Chiles 10.0% Notes subject
to swap agreements, $18.6 million notional amount was purchased by the
financial institution from the Company.
The Company is exposed to market risks associated with movements in
interest rates relating to its debt security investments. A 1% increase
in interest rates would decrease the Company's annual comprehensive
income approximately $2.2 million, assuming its investments in debt
securities at December 31, 1999 remain unchanged and an immediate
increase in rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes are included in
Part IV of this Form 10-K on pages 37 through 60.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
34
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As permitted by General Instruction G. to this Form 10-K, other than
information with respect to the Company's executive officers which is
set forth in Item 4A of Part I of this Form 10-K, the information
required to be disclosed pursuant to this Item 10 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement
to be filed with the Commission pursuant to Regulation 14A within 120
days after the end of the Company's last fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
As permitted by General Instruction G. to this Form 10-K, the
information required to be disclosed pursuant to this Item 11 is
incorporated in its entirety herein by reference to the Company's
definitive proxy statement to be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's last
fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As permitted by General Instruction G. to this Form 10-K, the
information required to be disclosed pursuant to this Item 12 is
incorporated in its entirety herein by reference to the Company's
definitive proxy statement to be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's last
fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As permitted by General Instruction G. to this Form 10-K, the
information required to be disclosed pursuant to this Item 13 is
incorporated in its entirety herein by reference to the Company's
definitive proxy statement to be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's last
fiscal year.
35
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) Documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement
Schedules.
See Index to Consolidated Financial Statements and Financial
Statement Schedules on page 43 of this Form 10-K.
3. Exhibits:
Exhibit
Number Description
- ------ -----------
2.1* Asset Purchase Agreement, dated as of December 19, 1996, by and
among SEACOR Holdings, Inc. and certain of its subsidiaries, and
Smit Internationale N.V. and certain of its subsidiaries
(incorporated herein by reference to Exhibit 2.0 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
2.2* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Triangle Marine, Inc.,
F.C. Felterman, Ernest Felterman, D. Lee Felterman and Daniel C.
Felterman (incorporated herein by reference to Exhibit 2.1 to
the Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.3* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman,
Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein, by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.4* Definitive Purchase Agreement, dated September 5, 1995, by and
among Graham Marine Inc., Edgar L. Graham, J. Clark Graham, and
Glenn A. Graham (incorporated herein by reference to Exhibit 2.0
to the Company's Current Report on Form 8-K dated September 15,
1995).
2.5* Global Agreement, dated as of November 14, 1995, by and among
Compagnie Nationale de Navigation and Feronia International
Shipping, SA and SEACOR Holdings, Inc. and the subsidiaries
listed in said agreement (incorporated herein by reference to
Exhibit 2.2 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
2.6* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and McCall
Enterprises, Inc. (incorporated herein by reference to Exhibit
2.1 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with the Commission on June 7, 1996).
2.7* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Support Services, Inc. and
McCall Support Vessels, Inc. (incorporated herein by reference
to Exhibit 2.2 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
2.8* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall
Crews, Inc. (incorporated herein by reference to Exhibit 2.3 to
the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
2.9* Exchange Agreement relating to McCall Crewboats, L.L.C., dated
as of May 31, 1996, by and among SEACOR Holdings, Inc. and the
persons listed on the signature pages thereto (incorporated
36
<PAGE>
herein by reference to Exhibit 2.4 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.10* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Boat Rentals, Inc., dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., McCall Enterprises, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.5 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.11* Share Exchange Agreement and Plan of Reorganization relating to
Philip A. McCall, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.6 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
2.12* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Crews, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.7 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
3.1* Restated Certificate of Incorporation of SEACOR SMIT Inc.
(incorporated herein by reference to Exhibit 3.1(a) to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
3.2* Certificate of Amendment to the Restated Certificate of
Incorporation of SEACOR SMIT Inc. (incorporated herein by
reference to Exhibit 3.1(b) to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1997 and filed
with the Commission on August 14, 1997).
3.3* Amended and Restated By-laws of SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (No. 333-12637) of
SEACOR Holdings, Inc. filed with the Commission on September 25,
1996).
4.1* Indenture, dated as of November 1, 1996, between First Trust
National Association, as trustee, and SEACOR Holdings, Inc.
(including therein forms of 5-3/8% Convertible Subordinated
Notes due November 15, 2006 of SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 4.0 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 and filed with the Commission on
November 14, 1996).
4.2* Indenture, dated as of September 22, 1997, between SEACOR SMIT
Inc. and First Trust National Association, as trustee (including
therein form of Exchange Note 7.20% Senior Notes Due
2009)(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.3* Investment and Registration Rights Agreement, dated as of March
14, 1995, by and among SEACOR Holdings, Inc., Miller Family
Holdings, Inc., Charles Fabrikant, Mark Miller, Donald
Toenshoff, Alvin Wood, Granville Conway and Michael Gellert
(incorporated herein by reference to Exhibit 4.0 of the
Company's Current Report on Form 8-K dated March 14, 1995, as
amended).
4.4* Investment and Registration Rights Agreement, dated as of May
31, 1996, among SEACOR Holdings, Inc. and the persons listed on
the signature pages thereto (incorporated herein by reference to
Exhibit 10.8 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
4.5* Registration Rights Agreement, dated November 5, 1996, between
SEACOR Holdings, Inc. and Credit Suisse First Boston
Corporation, Salomon Brothers Inc. and Wasserstein Perella
Securities, Inc. (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 and filed with the
Commission on November 14, 1996).
4.6* Investment and Registration Rights Agreement, dated as of
December 19, 1996, by and between SEACOR Holdings, Inc. and Smit
International Overseas B.V. (incorporated herein by reference to
Exhibit 4.0 to the Company's Current Report on Form 8-K dated
37
<PAGE>
December 19, 1996 and filed with the Commission on December 24,
1996).
4.7* Investment and Registration Rights Agreement, dated as of
January 3, 1997, among SEACOR Holdings, Inc., Acadian Offshore
Services, Inc., Galaxie Marine Service, Inc., Moonmaid Marine,
Inc. and Triangle Marine, Inc. (incorporated herein by reference
to Exhibit 4.6 to the Company's Registration Statement on Form
S-3 (No. 333-20921) filed with the Commission on January 31,
1997).
4.8* Investment and Registration Rights Agreement, dated October 27,
1995, by and between SEACOR Holdings, Inc. and Coastal Refining
and Marketing, Inc. (incorporated herein by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3 (No.
33-97868) filed with the Commission on November 17, 1995).
4.9* Investment and Registration Rights Agreement, dated November 14,
1995, by and between SEACOR Holdings, Inc. and Compagnie
Nationale de Navigation (incorporated herein by reference to
Exhibit 4.3 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
4.10* Registration Agreement, dated as of September 22, 1997, between
the Company and the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.11* Restated Stockholders' Agreement dated December 16, 1992
(incorporated herein by reference to Exhibit 10.12 to the Annual
Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal year
ended December 31, 1992).
10.1* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Enterprises, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.2* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Support Vessels, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.2
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.3* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of N.F. McCall Crews, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.3 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.4* Indemnification Agreement, dated as of May 31, 1996, among all
of the members of McCall Crewboats, L.L.C., Norman McCall, as
representative of such members, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.5* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Boat Rentals, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.5
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.6* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Philip A. McCall, Inc. and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.7* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.7 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
38
<PAGE>
10.8* The Master Agreement, dated as of June 6, 1996, by and among
Compagnie Nationale de Navigation, SEACOR Holdings, Inc. and
SEACOR Worldwide Inc. (incorporated herein by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1996).
10.9* Management and Administrative Services Agreement, dated January
1, 1990, between SCF Corporation and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.32 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.10* Amendment No. 1 to the Management and Services Agreement, dated
as of January 1, 1993, between SCF Corporation and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.34 to the Annual Report on Form 10-K of SEACOR Holdings, Inc.
for the fiscal year ended December 31, 1992).
10.11* Lease Agreement, dated September 1, 1989, between The Morgan
City Fund and NICOR Marine Inc. (SEACOR Marine Inc., as
successor lessee) (incorporated herein by reference to Exhibit
10.33 to the Company's Registration Statement on Form S-1 (No.
33-53244) filed with the Commission on November 10, 1992).
10.12*,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.13*,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated
herein by reference to SEACOR Holdings, Inc.'s Proxy Statement
dated March 18, 1996 relating to the Annual Meeting of
Stockholders held on April 18, 1996).
10.14*,** Benefit Agreement, dated May 1, 1989, between NICOR Marine Inc.
and Lenny P. Dantin (assumed by SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 10.51 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.15*,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by reference
to Exhibit 10.61 to the Annual Report on Form 10-K of SEACOR
Holdings, Inc. for the fiscal year ended December 31, 1992).
10.16* Management and Services Agreement, dated January 1, 1985,
between NICOR Marine (Nigeria) Inc. and West Africa Offshore
Limited (assumed by SEACOR Holdings, Inc.) (incorporated herein
by reference to Exhibit 10.55 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission
on November 10, 1992).
10.17* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.18* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.19* Joint Venture Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit-Lloyd (Antillen) N.V. (incorporated
herein by reference to Exhibit 10.0 to the Company's Current
Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.20* Form of Management Agreement (incorporated herein by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.21* Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated herein
by reference to Exhibit 10.3 to the Company's Current Report on
39
<PAGE>
Form 8-K dated December 19, 1996 and filed with the Commission
on December 24, 1996).
10.22* Salvage and Maritime Contracting Agreement, dated December 19,
1996, between SEACOR Holdings, Inc. and Smit Internationale N.V.
(incorporated herein by reference to Exhibit 10.5 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.23* License Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc., certain subsidiaries of SEACOR Holdings, Inc.
and Smit Internationale N.V. (incorporated herein by reference
to Exhibit 10.6 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.24* Amended and Restated Operating Agreement of Chiles Offshore LLC,
dated as of December 16, 1997, between SEACOR Offshore Rigs
Inc., COI, LLC and the other Members identified therein.
10.25* Letter Agreement, dated February 26, 1998, between SEACOR SMIT
Inc. and certain of its subsidiaries and SMIT Internationale
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K filed with the Commission of March 11, 1998).
10.26* Purchase Agreement, dated as of September 15, 1997, between the
Company and Salomon Brothers Inc., individually and as
representative of the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
10.27* Revolving Credit Facility Agreement dated as of June 30, 1997
among SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the
other banks and financial institutions named therein
(incorporated herein by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
10.28* Agreement, dated October 27, 1995, by and among SEACOR Holdings,
Inc., NRC Holdings, Inc., Coastal Refining and Marketing, Inc.,
and Phibro Energy USA, Inc. (incorporated herein by reference to
Exhibit 10.1 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 15, 1995).
10.29*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and Mark Miller (incorporated
herein by reference to Exhibit 10.3 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.30*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and James Miller (incorporated
herein by reference to Exhibit 10.4 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.31*,** Letter agreement, dated February 26, 1997, between SEACOR SMIT
Inc. and certain of its' subsidiaries and SMIT Internationale,
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Current Report on Form 8-K
filed with the Commission on March 11, 1998).
10.32 Agreement for a U.S. $100,000,000 Revolving Credit Facility to
be made available to SEACOR SMIT Inc. by the financial
institutions identified on Schedule A and Den Norske Bank ASA,
as agent, dated November 17, 1998.
10.33 Amendment No. 1 To Credit Agreement made as of February 4, 1999
by and between SEACOR SMIT Inc., the financial institutions
listed in Schedule A to that certain Credit Agreement dated
November 17, 1998 and Den norske Bank ASA.
10.34 Amendment No. 2 To Credit Agreement made as of October 1, 1999
by and between SEACOR SMIT Inc., certain financial institutions
and Den norske Bank ASA., which further amends that certain
Revolving Credit Agreement dated November 17, 1998 and Amendment
No. 1 thereto dated February 4, 1999.
10.35** Form of Type A Restricted Stock Grant Agreement.
10.36** Form of Type B Restricted Stock Grant Agreement.
40
<PAGE>
10.37** Form of Option Agreement for Officers and Key Employees pursuant
to the SEACOR SMIT Inc. 1996 Share Incentive Plan.
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
- ---------------
* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required
to be filed as an exhibit pursuant to Item 14 (c) of the rules governing
the preparation of this report.
(b) Reports on Form 8-K:
None.
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By: /s/ Charles Fabrikant
--------------------------------------
Charles Fabrikant,
Chairman of the Board,
President, and Chief Executive Officer
Date: March 30, 2000
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles Fabrikant Chairman of the Board, March 30, 2000
------------------------------- President and Chief Executive
Charles Fabrikant Officer (Principal Executive Officer)
/s/ Randall Blank Executive Vice President, Chief March 30, 2000
------------------------------- Financial Officer and Secretary
Randall Blank (Principal Financial Officer)
/s/ Lenny P. Dantin Vice President and March 30, 2000
------------------------------- Treasurer (Principal Accounting
Lenny P. Dantin Officer and Controller)
/s/ Granville E. Conway Director March 30, 2000
-------------------------------
Granville E. Conway
/s/ Michael E. Gellert Director March 30, 2000
-------------------------------
Michael E. Gellert
/s/ Antoon Kienhuis Director March 30, 2000
-------------------------------
Antoon Kienhuis
/s/ Stephen Stamas Director March 30, 2000
-------------------------------
Stephen Stamas
/s/ Richard M. Fairbanks III Director March 30, 2000
----------------------------
Richard M. Fairbanks III
/s/ Pierre de Demandolx Director March 30, 2000
-------------------------------
Pierre de Demandolx
/s/ Andrew R. Morse Director March 30, 2000
-------------------------------
Andrew R. Morse
</TABLE>
42
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Financial Statements:
Page
<S> <C>
Report of Independent Public Accountants................................................... 38
Consolidated Balance Sheets - December 31, 1999 and 1998................................... 39
Consolidated Statements of Income for each of the three years
ended December 31, 1999, 1998, and 1997................................................. 40
Consolidated Statements of Changes in Equity for each of the
three years ended December 31, 1999, 1998, and 1997..................................... 41
Consolidated Statements of Cash Flows for each of the three years
ended December 31, 1999, 1998, and 1997................................................. 42
Notes to Consolidated Financial Statements................................................. 43
Financial Schedules:
Reports of Independent Public Accountants on Financial
Statement Schedule...................................................................... 61
Valuation and Qualifying Accounts for each of the three
years ended December 31, 1999, 1998, and 1997........................................... 62
</TABLE>
All Financial Schedules, except those set forth above, have been omitted
since the information required is included in the financial statements
or notes or have been omitted as not applicable or required.
43
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SEACOR SMIT Inc.:
We have audited the accompanying consolidated balance sheets of SEACOR
SMIT Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998 and the related consolidated statements of income, changes
in equity and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SEACOR SMIT
Inc. and subsidiaries as of December 31, 1999 and 1998 and the results
of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Arthur Andersen LLP
New Orleans, Louisiana
February 15, 2000
44
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1999 1998
----------- -----------
Current Assets:
<S> <C> <C>
Cash and cash equivalents, including restricted cash of $14,239 at December 31, 1998 ............ $ 178,509 $ 175,267
Marketable securities (available-for-sale) ...................................................... 18,196 40,325
Trade and other receivables, net of allowance for
doubtful accounts of $1,567 and $1,956, respectively ......................................... 69,501 86,621
Prepaid expenses and other ...................................................................... 15,810 9,520
----------- -----------
Total current assets ....................................................................... 282,016 311,733
----------- -----------
Investments, at Equity, and Receivables from 50% or Less Owned Companies ........................... 77,276 55,478
Available-for-Sale Securities ...................................................................... 54,809 154,378
Property and Equipment:
Vessels and equipment ........................................................................... 603,854 506,279
Rigs ............................................................................................ 193,820 --
Construction in progress ........................................................................ 21,761 185,116
Other ........................................................................................... 39,577 45,188
----------- -----------
859,012 736,583
Less-accumulated depreciation ................................................................... 143,815 111,722
----------- -----------
715,197 624,861
----------- -----------
Restricted Cash .................................................................................... 21,985 69,234
Other Assets ....................................................................................... 45,708 42,291
----------- -----------
$ 1,196,991 $ 1,257,975
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt ............................................................... $ 2,832 $ 2,122
Accounts payable and accrued expenses ........................................................... 29,757 45,842
Accrued wages ................................................................................... 4,870 4,740
Accrued interest ................................................................................ 4,056 4,511
Other current liabilities ....................................................................... 7,477 14,503
----------- -----------
Total current liabilities .................................................................. 48,992 71,718
----------- -----------
Long-Term Debt ..................................................................................... 465,661 472,799
Deferred Income Taxes .............................................................................. 101,704 86,124
Deferred Gains and Other Liabilities ............................................................... 35,783 51,623
Minority Interest in Subsidiaries .................................................................. 36,721 32,929
Stockholders' Equity:
Common stock, $.01 par value, 40,000,000 shares authorized; 14,215,458 and
14,146,457 shares issued in 1999 and 1998, respectively ...................................... 142 141
Additional paid-in capital ...................................................................... 275,051 272,012
Retained earnings ............................................................................... 368,022 337,086
Less 2,934,284 and 1,472,134 shares held in treasury in 1999 and 1998, respectively, at cost .... (131,183) (65,656)
Unamortized restricted stock .................................................................... (1,110) (972)
Accumulated other comprehensive income (loss) ................................................... (2,792) 171
----------- -----------
Total stockholders' equity ................................................................. 508,130 542,782
----------- -----------
$ 1,196,991 $ 1,257,975
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
45
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Operating Revenue:
Marine ....................................................................... $ 258,705 $ 359,611 $ 325,009
Other ........................................................................ 30,720 26,180 21,939
------------ ------------ ------------
289,425 385,791 346,948
------------ ------------ ------------
Costs and Expenses:
Operating expenses -
Marine .................................................................... 154,947 177,236 158,175
Other ..................................................................... 11,839 10,486 9,318
Administrative and general ................................................... 34,744 36,102 28,299
Depreciation and amortization ................................................ 41,282 36,449 36,538
------------ ------------ ------------
242,812 260,273 232,330
------------ ------------ ------------
Operating Income ............................................................. 46,613 125,518 114,618
------------ ------------ ------------
Other Income (Expense):
Interest income .............................................................. 20,495 25,346 12,756
Interest expense ............................................................. (22,330) (22,798) (14,168)
Gain from equipment sales or retirements, net ................................ 1,677 38,338 61,928
Other ........................................................................ (2,939) 6,492 569
------------ ------------ ------------
(3,097) 47,378 61,085
------------ ------------ ------------
Income Before Income Taxes, Minority Interest, Equity in
Earnings...........Extraordinary ............................................. Item
15,642 15,642
of 50% or Less Owned Companies, and Extraordinary Item ....................... 43,516 172,896 175,703
------------ ------------ ------------
Income Tax Expense:
Current ...................................................................... 358 33,635 36,317
Deferred ..................................................................... 14,891 26,658 25,067
------------ ------------ ------------
15,249 60,293 61,384
------------ ------------ ------------
Income Before Minority Interest, Equity in Earnings of 50% or
10,132 8,168
Less Owned Companies, and Extraordinary Item ................................. 28,267 112,603 114,319
Minority Interest in (Income) Loss of Subsidiaries ........................... 1,148 (1,612) (301)
Equity in Net Earnings of 50% or Less Owned Companies ........................ 330 13,627 5,575
------------ ------------ ------------
Income Before Extraordinary Item ............................................. 29,745 124,618 119,593
Extraordinary Item - Gain/(Loss) on Extinguishment of Debt, net of tax ....... 1,191 1,309 (439)
------------ ------------ ------------
Net Income ................................................................... $ 30,936 $ 125,927 $ 119,154
============ ============ ============
Basic Earnings Per Common Share:
Income before extraordinary item ............................................. $ 2.50 $ 9.49 $ 8.64
Extraordinary item ........................................................... 0.10 0.10 (0.03)
------------ ------------ ------------
Net income ................................................................... $ 2.60 $ 9.59 $ 8.61
============ ============ ============
Diluted Earnings Per Common Share:
Income before extraordinary item ............................................. $ 2.46 $ 8.17 $ 7.50
Extraordinary item ........................................................... 0.08 0.08 (0.03)
------------ ------------ ------------
Net income ................................................................... $ 2.54 $ 8.25 $ 7.47
============ ============ ============
Weighted Average Common Shares:
Basic ........................................................................ 11,911,653 13,135,111 13,840,205
Diluted ...................................................................... 14,834,963 16,090,556 16,845,001
</TABLE>
The accompanying notes are an integral part of these financial statements
and should be read in conjunction herewith.
46
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Accumulated
Additional Unamortized Other
Common Paid-in Retained Treasury Restricted Comprehensive Comprehensive
Stock Capital Earnings Stock Stock Income Income
- --------------------------------------------- --------- ---------- ------------ ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999
- -----------------------------------------------
Balance, December 31, 1998 $ 141 $ 272,012 $ 337,086 $ (65,656) $ (972) $ 171 $ -
Add/(Deduct) -
-Net income for fiscal year 1999 - - 30,936 - - - 30,936
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition - 1,482 - - - - -
Issuance of restricted stock 1 1,594 - - (1,653) - -
-Amortization of restricted stock - - - - 1,508 - -
-Cancellation of restricted stock - - - (7) 7 - -
-Net currency translation adjustments - - - - - (526) (526)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (2,437) (2,437)
-Debt offering costs - (37) - - - - -
-Purchase of treasury shares - - - (65,520) - - -
-------- ---------- ------------- ---------- ----------- ------------ -------------
Balance, December 31, 1999 $ 142 $ 275,051 $ 368,022 $(131,183) $(1,110) $ (2,792) $ 27,973
===================================================================================================================================
1998
- -----------------------------------------------
Balance, December 31, 1997 $ 140 $ 268,728 $ 211,159 $ (5,365) $ (986) $ 338 $ -
Add/(Deduct) -
-Net income for fiscal year 1998 - - 125,927 - - - 125,927
-Issuance of common stock:
ERST/O'Brien's Inc. acquisition - 442 - - - - -
Exercise of stock options 1 1,473 - - - - -
Issuance of restricted stock - 1,369 - - (1,319) - -
-Amortization of restricted stock - - - - 1,333 - -
-Net currency translation adjustments - - - - - (121) (121)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (46) (46)
-Purchase of treasury shares - - - (60,291) - - -
-------- ---------- ------------- ---------- ----------- ------------- -------------
Balance, December 31, 1998 $ 141 $ 272,012 $ 337,086 $ (65,656) $ (972) $ 171 $ 125,760
===================================================================================================================================
1997
- -----------------------------------------------
Balance, December 31, 1996 $ 139 $ 258,904 $ 92,005 $ (622) $ (279) $ 924 $ -
Add/(Deduct) -
-Net income for fiscal year 1997 - - 119,154 - - - 119,154
-Issuance of common stock:
Galaxie transaction 1 2,787 - - - - -
SMIT transaction - 1,554 - - - - -
ERST/O'Brien's Inc. acquisition - 3,614 - - - - -
Exercise of stock options - 656 - - - - -
Issuance of restricted stock - 1,213 - - (1,146) - -
-Amortization of restricted stock - - - - 439 - -
-Net currency translation adjustments - - - - - (570) (570)
-Change in unrealized gains (losses) on
available-for-sale securities - - - - - (16) (16)
-Purchase of treasury shares - - - (4,743) - - -
-------- ---------- ------------- ---------- ----------- ------------- -------------
Balance, December 31, 1997 $ 140 $ 268,728 $ 211,159 $ (5,365) $ (986) $ 338 $ 118,568
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
47
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income ............................................................................ $ 30,936 $ 125,927 119,154
Depreciation and amortization ......................................................... 41,282 36,449 36,538
Restricted stock amortization ..................................................... 1,508 1,333 439
Debt discount amortization ........................................................ 129 1,275 7
Bad debt expense .................................................................. (328) 455 1,155
Deferred income taxes ............................................................. 14,891 26,658 25,067
Equity in net earnings of 50% or less owned companies ............................. (330) (13,627) (5,575)
Extraordinary (gain) loss, extinguishment of debt ................................. (1,191) (1,309) 439
(Gain) loss from sale of investment in 50% or less owned companies ................ 72 (1,197) --
(Gain) loss on commodity swap transactions, net ................................... 1,323 (3,273) --
(Gain) loss from sale of available-for-sale securities, net ....................... 279 (1,827) --
Gain from equipment sales or retirements, net ..................................... (1,677) (38,338) (61,928)
Amortization of deferred gains on sale and leaseback transactions ................. (24,278) (19,797) --
Minority interest in income (loss) of subsidiaries ................................ (1,148) 1,612 301
Other, net ........................................................................ 3,382 2,770 1,451
Changes in operating assets and liabilities -
(Increase) decrease in receivables .............................................. 15,139 231 (35,976)
(Increase) in prepaid expenses and other assets ................................. (5,692) (5,230) (1,600)
Increase (decrease) in accounts payable, accrued and other liabilities .......... (26,425) 10,029 26,076
--------- --------- ---------
Net cash provided by operations ............................................... 47,872 122,141 105,548
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment ............................................... (140,470) (226,779) (136,097)
Proceeds from the sale of marine vessels and equipment ............................ 20,889 143,965 139,828
Investments in and advances to 50% or less owned companies ........................ (21,798) (6,973) (7,075)
Principal payments on notes due from 50% or less owned companies .................. 8,610 2,611 723
Proceeds from sale of investment in 50% or less owned companies ................... 263 2,310 --
Net (increase) decrease in restricted cash account ................................ 47,249 (22,251) (46,983)
Proceeds from sale of available-for-sale securities ............................... 134,352 143,241 --
Proceeds from maturity of held-to-maturity securities ............................. -- 33,020 311
Purchases of available-for-sale securities ........................................ (15,745) (209,018) (127,454)
Purchase of held-to-maturity securities ........................................... -- -- (33,032)
Purchases of convertible preferred stock of and loans to Globe Wireless, LLC ...... -- (11,500) (3,000)
Cash settlement from commodity price hedging arrangements ......................... 3,694 (431) --
Dividends received from 50% or less owned companies ............................... 11,450 2,334 --
Acquisitions, net of cash acquired ................................................ (6,239) -- --
Other, net ........................................................................ (2,476) 269 (2,308)
--------- --------- ---------
Net cash provided by (used in) investing activities ........................... 39,779 (149,202) (215,087)
--------- --------- ---------
Cash Flows from Financing Activities:
Payments of long-term debt and stockholder loans .................................. (47,830) (14,741) (10,383)
Proceeds from issuance of long-term debt .......................................... 38,115 -- 1,125
Payments on capital lease obligations ............................................. (1,587) (1,454) (1,844)
Net proceeds from the sale of Chiles Offshore LLC 10.0% Senior Notes .............. -- 105,762 --
Collateral deposits pursuant to swap agreements ................................... (10,166) -- --
Net proceeds from sale of 7.2% Subordinated Notes ................................. -- -- 148,049
Proceeds from sale of minority interest ........................................... -- -- 4,096
Proceeds from membership interest offering of Chiles Offshore LLC ................. 4,338 -- --
Distribution of membership interest to a minority shareholder ..................... -- (2,725) --
Common stock acquired for treasury ................................................ (65,520) (60,291) (4,743)
Other, net ........................................................................ (36) 757 (832)
--------- --------- ---------
Net cash provided by (used in) financing activities ........................... (82,686) 27,308 135,468
--------- --------- ---------
Effects of Exchange Rate Changes on Cash and Cash Equivalents ......................... (1,723) (361) 399
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents .................................. 3,242 (114) 26,328
Cash and Cash Equivalents, beginning of period ........................................ 175,267 175,381 149,053
--------- --------- ---------
Cash and Cash Equivalents, end of period .............................................. $ 178,509 $ 175,267 $ 175,381
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
48
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES:
NATURE OF OPERATIONS. SEACOR SMIT Inc. ("SEACOR") and its subsidiaries
(the "Company") furnish offshore support services to the offshore oil
and gas exploration and production industry and provide contractual oil
spill response and professional services to those who store, transport,
produce, or handle petroleum and certain non-petroleum oils. The
Company's offshore support vessels operate principally in the United
States, West Africa, the North Sea, the Far East, Latin America, and the
Mediterranean. SEACOR also owns a majority membership interest in Chiles
Offshore LLC ("Chiles Offshore") and its wholly owned subsidiaries
("Chiles"), a joint venture and strategic alliance created to own and
operate state-of-the-art premium jackup offshore drilling rigs. In 1999,
construction was completed on two premium jackup offshore drilling rigs
(the "Rigs"). Since inception in 1997 and until July 1999, Chiles
operated as a development stage company, devoting all its efforts to
constructing the Rigs, raising capital, and securing contracts for the
Rigs.
BASIS OF CONSOLIDATION. The consolidated financial statements include
the accounts of SEACOR and all majority owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. The equity
method of accounting is used by the Company when it has a 20% to 50%
ownership interest in other entities and the ability to exercise
significant influence over their operating and financial policies.
Accordingly, the Company's share of the net earnings of these entities
is included in consolidated net income. Investments in other companies
are carried at cost.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS. Cash equivalents refer to securities with
maturities of three months or less when purchased. At December 31, 1998,
cash, totaling $14,239,000, was restricted as to use by Chiles under
certain escrow agreements. See Note 6, Restricted Cash.
ACCOUNTS RECEIVABLE. Customers of offshore marine support and rig
services are primarily major and large independent oil and gas
exploration and production companies; whereas, customers of oil spill
and emergency response services include tank vessel owner/operators,
refiners, terminals, exploration and production facilities and pipeline
operators. The Company's customers are granted credit on a short-term
basis and related credit risks are considered minimal.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at
historical cost and depreciated over the estimated useful lives of the
related assets. Depreciation is computed on the straight-line method for
financial reporting purposes. Maintenance and repair costs, including
routine drydock inspections on vessels in accordance with maritime
regulations, are charged to operating expense as incurred. Expenditures
that extend the useful life or improve the marketing and commercial
characteristics of vessels and major renewals or improvements to other
properties are capitalized. Vessels and related equipment are
depreciated over 20-25 years, and the Rigs are depreciated over 25
years. All other property and equipment are depreciated and amortized
over two to ten years.
Certain interest costs incurred during the construction of offshore
support vessels and the Rigs have been capitalized as part of the
assets' carrying values and are being amortized to expense over such
assets estimated useful lives. Interest capitalized in 1999, 1998, and
1997 totaled $9,836,000, $8,455,000, and $1,516,000, respectively.
OTHER ASSETS. Intangibles and other assets include the following, in
thousands:
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Goodwill $ 20,118 $ 17,682
Convertible preferred stock of Globe Wireless, LLC - 10,000
Deferred financing costs 9,824 10,788
Net sale-type leases, see Note 12 2,311 3,454
Covenants-not-to-compete 57 1,509
Notes receivable 1,523 4,500
Collateral deposits pursuant to swap agreements, see Note 2 10,166 -
Common stock investments, carried at cost 1,000 -
Receivable due from a financial institution pursuant
to swap agreements, see Note 2 6,772 -
Other 436 764
----------- ------------
52,207 48,697
Less accumulated amortization (6,499) (6,406)
----------- ------------
Total other assets $ 45,708 $ 42,291
=========== ============
</TABLE>
49
<PAGE>
Intangible assets are being amortized to expense primarily on a
straight-line basis over their estimated period of benefit, ranging from
two to twenty years. Amortization expense for intangible assets totaled
$2,703,000 in 1999, $2,190,000 in 1998, and $947,000 in 1997. In 1998,
other assets included the Company's $14,500,000 equity investment in and
loans to Globe Wireless, LLC ("Globe Wireless"), a telecommunications
service provider that operates a worldwide network of high frequency
radio stations that provide a worldwide wireless data network initially
targeted at the maritime industry in support of Internet messaging,
telex, and facsimile communications. Globe Wireless also provides the
maritime industry Telex-Over-Radio and satellite messaging services. Due
to an ability to significantly influence the operating activities of
Globe Wireless, the Company began accounting for its investment in Globe
Wireless under the equity method during the second quarter of 1999, see
Note 5, Investments, at Equity, and Receivables From 50% or Less Owned
Companies.
INCOME TAXES. Deferred income tax assets and liabilities have been
provided in recognition of the income tax effect attributable to the
difference between assets and liabilities reported in the tax return and
financial statements. Deferred tax assets or liabilities are provided
using the enacted tax rates expected to apply to taxable income in the
periods in which the deferred tax assets and liabilities are expected to
be settled or realized.
DEFERRED GAIN. The Company has entered into vessel sale and leaseback
transactions and other vessel sale transactions with joint venture
corporations in which the Company has a 50% or less ownership interest.
Certain gains realized from these transactions were not immediately
recognized as income but were deferred in the Consolidated Balance
Sheets. For the sale and leaseback transactions, gains were deferred to
the extent of the present value of minimum lease payments and are being
amortized to income as reductions in rental expense over the applicable
lease terms. For vessel sale transactions with joint venture
corporations, gains were deferred to the extent of the Company's
ownership interest and are being amortized to income over the applicable
vessels' depreciable lives.
FOREIGN CURRENCY TRANSLATION. The assets, liabilities, and results of
operations of certain SEACOR subsidiaries are measured using the
currency of the primary foreign economic environment within which they
operate, their functional currency. For the purpose of consolidating
these subsidiaries with SEACOR, the assets and liabilities of these
foreign operations are translated to U.S. dollars at currency exchange
rates as of the balance sheet date and for revenue and expenses at the
weighted average currency exchange rates during the applicable reporting
periods. Translation adjustments resulting from the process of
translating these subsidiaries' financial statements are charged to
Accumulated Other Comprehensive Income in Stockholders' Equity.
Certain SEACOR subsidiaries also enter into transactions denominated in
currencies other than their functional currency. Changes in currency
exchange rates between the functional currency and the currency in which
a transaction is denominated is included in the determination of net
income in the period in which the currency exchange rates change. Net
pre-tax foreign currency exchange losses were $1,288,000 in 1999 and not
material in 1998 and 1997. Gains and losses on foreign currency
transactions that are designated as, and effective as, economic hedges
of a net investment in a foreign entity (such as debt denominated in a
foreign currency or forward exchange contracts) are charged to
Accumulated Other Comprehensive Income in Stockholders' Equity. Gains or
losses on foreign currency transactions that do not hedge an exposure
are included in determining net income in accordance with the
requirements for other foreign currency transactions as described above.
REVENUE RECOGNITION. The Company's offshore marine and drilling service
segments earn revenue primarily from the time charter of vessels and
drilling contracts for rigs to customers based upon daily rates of hire.
A time charter is a lease arrangement under which the Company provides a
vessel or rig to a customer and is responsible for all crewing,
insurance, and other operating expenses. Vessel or rig charters may
range from several days to several years. Drilling contracts may be for
single or multiple wells or for term periods.
Environmental customers are charged retainer fees for ensuring by
contract the availability (at predetermined rates) of the Company's
response services and equipment. Retainer services include employing a
staff to supervise response to an oil spill or other emergency and
maintaining specialized equipment. Certain vessel owners pay in advance
a minimum annual retainer fee based upon the number and size of vessels
in each such owner's fleet and in some circumstances pay the Company
additional fees based upon the level of each vessel owner's voyage
activity in the U.S. The Company recognizes the greater of revenue
earned by voyage activity or the portion of the retainer earned in each
accounting period. Certain other vessel owners pay a fixed fee for the
Company's retainer service and such fee is recognized ratably throughout
the year. Facility owners generally pay a quarterly fee based on a
formula that defines and measures petroleum products transported to or
processed at the facility. Some facility owners pay an annual fixed fee
and such fee is recognized ratably throughout the year. Retainer
agreements with vessel owners generally range from one to three years
while retainer arrangements with facility owners are as long as ten
years. Spill response revenue is dependent on the magnitude of any one
spill response and the number of spill responses within a given fiscal
50
<PAGE>
year. Consequently, spill response revenue can vary greatly between
comparable periods. Consulting fees are also earned by the Company's
environmental service business from preparation of customized training
programs, planning of and participation in customer oil spill response
drill programs and response exercises, and other special projects.
51
<PAGE>
EARNINGS PER SHARE. Basic earnings per common share were computed based
on the weighted-average number of common shares issued and outstanding
for the relevant periods. Diluted earnings per common share were
computed based on the weighted-average number of common shares issued
and outstanding plus all potentially dilutive common shares that would
have been outstanding in the relevant periods assuming the vesting of
restricted stock grants and the issuance of common shares for stock
options and convertible subordinated notes through the application of
the treasury stock and if-converted methods, respectively. Certain
options and share awards, 31,067, 52,711, and 16,960 in 1999, 1998, and
1997, respectively, were excluded from the computation of diluted
earnings per share as the effect would have been antidultive.
<TABLE>
<CAPTION>
Per
Income Shares Share
------ ------ -----
<S> <C> <C> <C>
FOR THE YEAR ENDED 1999-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 29,745,000 11,911,653 $ 2.50
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 123,631
Convertible Securities.................................. 6,714,000 2,799,679
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions............................. $ 36,459,000 14,834,963 $ 2.46
=============== ============== =========
FOR THE YEAR ENDED 1998-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 124,618,000 13,135,111 $ 9.49
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 125,901
Convertible Securities.................................. 6,761,000 2,829,544
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.............................. $ 131,379,000 16,090,556 $ 8.17
=============== ============== =========
FOR THE YEAR ENDED 1997-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item........................ $ 119,593,000 13,840,205 $ 8.64
=========
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock............................ - 163,930
Convertible Securities.................................. 6,787,000 2,840,866
--------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions.............................. $ 126,380,000 16,845,001 $ 7.50
=============== ============== =========
</TABLE>
COMPREHENSIVE INCOME. In 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components in a full set of
general purpose financial statements. Comprehensive income is defined as
the total of net income and all other changes in equity of an enterprise
that result from transactions and other economic events of a reporting
period other than transactions with owners. The Company has chosen to
disclose Comprehensive Income in the Consolidated Statements of Changes
in Equity. For purposes of SFAS 130, the Company's other comprehensive
income or loss was comprised of net currency translation adjustments and
unrealized holding gains and losses on available-for-sale securities.
Income taxes allocated to each component of other comprehensive income
during the years indicated are as follows, in thousands of dollars:
<TABLE>
<CAPTION>
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
----------------- ------------------ -----------------
<S> <C> <C> <C>
1999
Foreign currency translation adjustments................................. $ (809) $ 283 $ (526)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. (4,030) 1,412 (2,618)
Less - reclassification adjustment for (gains) losses included in 279 (98) 181
net income...............................................................
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (4,560) $ 1,597 $ (2,963)
================= ================== =================
1998
Foreign currency translation adjustments................................. $ (186) $ 65 $ (121)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. 1,757 (615) 1,142
Less - reclassification adjustment for (gains) losses included in (1,827) 639 (1,188)
net income...............................................................
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (256) $ 89 $ (167)
================= ================== =================
1997
Foreign currency translation adjustments................................. $ (876) $ 306 $ (570)
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period.............. (25) 9 (16)
Less - reclassification adjustment for (gains) losses included in - - -
net income...............................................................
----------------- ------------------ -----------------
Other comprehensive income............................................... $ (901) $ 315 $ (586)
================= ================== =================
</TABLE>
52
<PAGE>
Accumulated other comprehensive income balances during the years
indicated are as follows, in thousands of dollars:
<TABLE>
<CAPTION>
Foreign Unrealized Accumulated
Currency Gains (Losses) on Other Comprehensive
Items Securities Income
------------------------ ------------------------ -----------------------
<S> <C> <C> <C>
1999
Beginning balance...............$ 233 $ (62) $ 171
Current period change........... (526) (2,437) (2,963)
------------------------ ------------------------ -----------------------
Ending Balance..................$ (293) $ (2,499) $ (2,792)
======================== ======================== =======================
1998
Beginning balance...............$ 354 $ (16) $ 338
Current period change........... (121) (46) (167)
------------------------ ------------------------ -----------------------
Ending Balance..................$ 233 $ (62) $ 171
======================== ======================== =======================
1997
Beginning balance...............$ 924 $ - $ 924
Current period change........... (570) (16) (586)
------------------------ ------------------------ -----------------------
Ending Balance..................$ 354 $ (16) $ 338
======================== ======================== =======================
</TABLE>
RELIANCE ON FOREIGN OPERATIONS. For the years ended December 31, 1999,
1998, and 1997, approximately 36%, 39%, and 38%, respectively, of the
Company's operating revenues were derived from its foreign operations.
The Company's foreign operations, primarily contained in its offshore
marine service segment, are subject to various risks inherent in
conducting business in foreign nations. These risks include, among
others, political instability, potential vessel seizure, nationalization
of assets, currency restrictions and exchange rate fluctuations,
import-export quotas, and other forms of public and governmental
regulations, all of which are beyond the control of the Company.
Although, historically, the Company's operations have not been affected
materially by such conditions or events, it is not possible to predict
whether any such conditions or events might develop in the future. The
occurrence of any one or more of such conditions or events could have a
material adverse effect on the Company's financial condition and results
of operations. Oil spill response and related training and consulting
service revenues derived from foreign markets have not been material,
and the Rigs operate in the U.S. Gulf of Mexico.
RECENT ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and
reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured
at its fair value. SFAS 133 requires that changes in the derivative's
fair market value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative's gains and losses to offset related results
on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. In June 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133"
("SFAS 137"). SFAS 137 is an amendment of SFAS 133 and defers the
effective date of SFAS 133 to June 15, 2000. The Company has not yet
quantified the impact on its financial statements but does not believe
adoption will have a material impact on net income, comprehensive
income, and accumulated other comprehensive income.
RECLASSIFICATIONS. Certain reclassifications of prior year information
have been made to conform with the current year presentation.
2. FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments have
been determined using available market information and appropriate
valuation methodologies. Considerable judgment was required in
developing the estimates of fair value, and accordingly, the estimates
presented herein, in thousands of dollars, are not necessarily
indicative of the amounts that the Company could realize in a current
market exchange.
<TABLE>
<CAPTION>
1999 1998
----------------------------- -----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and temporary cash investments............................. $ 178,509 $ 178,509 $ 175,267 $ 175,267
Marketable securities........................................... 73,005 73,005 194,703 194,703
Collateral deposits, notes, and other receivables............... 22,169 22,151 12,114 12,072
Restricted cash................................................. 21,985 21,985 69,234 69,234
Convertible preferred and other stock investments, carried at 1,000 1,000 10,000 10,000
cost
Commodity swaps, options, and futures and forward contracts..... 59 59 3,708 3,708
LIABILITIES:
Long-term debt, including current portion....................... 449,238 424,886 454,079 441,599
Indebtedness to a minority shareholder of a subsidiary.......... 607 630 607 669
Commodity swaps, options, and futures and forward contracts..... 1,285 1,285 37 37
</TABLE>
53
<PAGE>
The carrying value of cash and temporary cash investments, restricted
cash, collateral deposits, and other receivables approximate fair value.
It was not practicable to estimate the fair value of the Company's 1998
investment in convertible preferred stock and other less significant
stock investments in 1999 because of the lack of quoted market prices
and the inability to estimate fair value without incurring excessive
costs. The fair values of the Company's notes receivable, long-term
debt, indebtedness to a minority stockholder, marketable securities,
commodity swaps, options, and futures, and forward contracts were
estimated based upon quoted market prices or by discounting the
underlying cash flows using market information as to interest rates for
receivables and indebtedness of similar terms and maturity.
The Company has foreign currency exchange risks primarily related to its
offshore marine service vessel operations that are conducted from ports
located in the United Kingdom, where its functional currency is pounds
sterling. The financial statements of the Company's United Kingdom
operations are measured using the pound sterling and changes in the
strength of that currency relative to the U.S. dollar and the
corresponding adjustment to the net assets of those operations caused by
exchange rate fluctuations result in the recognition of currency
translation adjustments that are reported in Accumulated Other
Comprehensive Income in Stockholders' Equity. To protect the U.S. dollar
value of certain pound sterling denominated net assets of the Company
from the effects of volatility in foreign exchange rates that might
occur prior to their conversion to U.S. dollars, the Company has entered
into forward exchange contracts. The forward exchange contracts enable
the Company to sell pounds sterling in the future at fixed exchange
rates to offset the consequences of changes in foreign exchange on the
amount of U.S. dollar cash flows to be derived from the net assets. The
Company considers these forward exchange contracts as economic hedges of
its net investment in the United Kingdom and resulting gains or losses
from those transactions are charged to Accumulated Other Comprehensive
Income in Stockholders' Equity. At December 31, 1999, the total notional
value of those forward exchange contracts was $3,935,000, all of which
expire at various dates through October 2000.
The Company has entered into and settled various positions in natural
gas and crude oil via swaps, options, and futures contracts pursuant to
which, on each applicable settlement date, the Company receives or pays
an amount, if any, by which a contract price for a swap, an option, or a
futures contract exceeds the settlement price quoted on the New York
Mercantile Exchange ("NYMEX") or receives or pays the amount, if any, by
which the settlement price quoted on the NYMEX exceeds the contract
price. The general purpose of these hedge transactions is to provide
value to the Company should the price of natural gas and crude oil
decline which over time, if sustained, would lead to a decline in the
Company's offshore assets' market values and cash flows. For accounting
purposes, the Company records the change in the market value of its
commodity contracts at the end of each month and recognizes a related
gain or loss. For the twelve month periods ending December 31, 1999 and
1998, the Company has recognized $1,323,000 of net losses and $3,273,000
of net gains, respectively, from commodity hedging activities that were
reported as Other Income in the Consolidated Statements of Income. At
December 31, 1999, the Company's positions in commodity contracts were
not material. The Company had no positions in commodity contracts during
1997.
In order to reduce its cost of capital, the Company entered into swap
agreements during 1999 with a major financial institution with respect
to notional amounts equal to a portion of the $110,000,000 aggregate
principal amount of the Chiles 10.0% Senior Notes Due 2008 (the "Chiles
10.0% Notes"). Pursuant to each such agreement, such financial
institution has agreed to pay to the Company an amount equal to interest
paid by Chiles on the notional amount of Chiles 10.0% Notes subject to
such agreement, and the Company has agreed to pay to such financial
institution an amount equal to interest currently at the rate of
approximately 6.9% per annum on the agreed upon price of such notional
amount of Chiles 10.0% Notes as set forth in the applicable swap
agreement. At December 31, 1999, the Company bears the economic risk of
$68,130,000 notional principal amount of the Chiles 10.0% Notes covered
by such swap agreements. The Company has provided the financial
institution with cash collateral of $10,166,000 which will be released
to the Company should the aggregate exposure under the swap agreements
be reduced to less than $50,000,000.
Upon termination of each swap agreement, the financial institution has
agreed to pay to the Company the amount, if any, by which the fair
market value of the notional amount of Chiles 10.0% Notes subject to the
swap agreement on such date exceeds the agreed upon price of such
notional amount as set forth in such swap agreement, and the Company has
agreed to pay to such financial institution the amount, if any, by which
the agreed upon price of such notional amount exceeds the fair market
value of such notional amount on such date. Each swap agreement
terminates upon the earliest to occur of the redemption in full or
maturity of the Chiles 10.0% Notes, at any time at the election of the
Company or, at the election of the financial institution, on April 30,
2004. At December 31, 1999, the market value of such swaps, totaling
$6,772,000, has been recorded as a premium with respect to the Chiles
10.0% Notes and a receivable due from the financial institution with
which the Company has swap agreements. The premium will be amortized
54
<PAGE>
over the remaining life of the Chiles 10.0% Notes, subject to periodic
revaluation based upon the fair market value of such swaps.
3. MARKETABLE SECURITIES:
The Company's marketable securities are categorized as
available-for-sale, as defined by the Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Available-for-sale securities are measured at fair
values with unrealized holding gains and losses charged to Accumulated
Other Comprehensive Income in Stockholders' Equity.
The amortized cost and fair value of marketable securities at December
31, 1999 and 1998 were as follows, in thousands of dollars:
<TABLE>
<CAPTION>
Gross Unrealized Holding
-----------------------------
Type of Securities Amortized Cost Gains Losses Fair Value
- -------------------------------------------- ----------------- ------------ ------------ ------------------
<S> <C> <C> <C> <C>
1999
AVAILABLE-FOR-SALE:
U.S. Government and Agencies......... $ 56,312 $ - $ (3,282) $ 53,030
U.S. States and Political Subdivisions 1,045 - (81) 964
Corporate Debt Securities............ 1,770 - (80) 1,690
U.K. Government Securities........... 4,439 - (110) 4,329
Equity Securities.................... 13,428 637 (1,073) 12,992
----------------- ------------ ------------ ------------------
$ 76,994 $ 637 $ (4,626) $ 73,005
================= ============ ============ ==================
1998
AVAILABLE-FOR-SALE:
U.S. Government and Agencies......... $ 142,409 $ 1,465 $ (429) $ 143,445
U.S. States and Political Subdivisions 42,240 37 (783) 41,494
Corporate Debt Securities............ 5,143 - (337) 4,806
U.K. Government Securities........... 4,529 49 - 4,578
Equity Securities.................... 427 - (47) 380
----------------- ------------ ------------ ------------------
$ 194,748 $ 1,551 $ (1,596) $ 194,703
================= ============ ============ ==================
</TABLE>
The contractual maturities of marketable securities at December 31, 1999
were as follows, in thousands of dollars:
<TABLE>
<CAPTION>
Amortized Fair
Type and Maturity Cost Value
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C>
AVAILABLE-FOR-SALE:
Mature in One Year or Less................................ $ 18,276 $ 18,196
Mature After One Year Through Five Years.................. 32,381 30,645
Mature After Five Years Through Ten Years.................. 5,317 4,873
Mature After Ten Years..................................... 7,592 6,299
------------ -------------
$ 63,566 $ 60,013
============ =============
</TABLE>
During 1999 and 1998, the sale of available-for-sale securities resulted
in gross realized gains of $721,000 and $2,084,000, respectively, and
gross realized losses of $1,000,000 and $257,000, respectively. The
specific identification method was used to determine the cost of
available-for-sale securities in computing realized gains and losses. No
available-for-sale securities were sold during 1997.
4. VESSEL ACQUISITIONS AND DISPOSITIONS:
SMIT TRANSACTION. On December 19, 1996, the Company acquired
substantially all of the offshore support vessel assets, vessel spare
parts, and certain related joint venture interests owned by SMIT
Internationale N.V. ("SMIT") and its subsidiaries (the "SMIT
Transaction"). Pursuant to a letter of intent, dated December 19, 1996,
between the Company and SMIT, that provided for the Company to acquire
an additional four vessels (the "Malaysian Purchase") that were owned by
a Malaysian joint venture in which SMIT had an interest, the Company
completed the Malaysian Purchase for aggregate consideration of
$12,909,000 in 1997.
GALAXIE TRANSACTION. On January 3, 1997, the Company acquired
substantially all of the offshore marine assets, including vessels,
owned by Galaxie Marine Service, Inc., Moonmaid Marine, Inc., Waveland
Marine Service, Inc., and Triangle Marine, Inc. (collectively,
"Galaxie"), for aggregate consideration of $23,354,000, consisting of
$20,567,000 in cash and 50,000 shares of SEACOR's common stock. The 24
vessels acquired from Galaxie primarily serve the oil and gas industry
in the U.S. Gulf of Mexico.
VESSEL CONSTRUCTION. Since 1996, the Company completed the construction
of 11 crew, 7 anchor handling towing supply, 5 supply, and 2 utility
vessels at an approximate aggregate cost of $234,140,000.
VESSEL DISPOSITIONS. The table below sets forth, during the fiscal years
indicated, the number of offshore support vessels sold by type of
service. At December 31, 1999, 23 of those vessels, including 15
supply/towing supply, 5 crew, and 3 anchor handling towing supply, were
bareboat chartered-in by the Company.
<TABLE>
<CAPTION>
Type of Vessel 1999 1998 1997
------------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
Utility................................... 2 7 7
Supply.................................... - 6 15
Anchor Handling Towing Supply............. 1 8 5
Crew...................................... 11 5 2
Towing Supply............................. - 8 6
Freight................................... - - 1
Seismic................................... - - 1
------------- ------------- -------------
14 34 37
============= ============= =============
</TABLE>
55
<PAGE>
5. INVESTMENTS, AT EQUITY, AND RECEIVABLES FROM 50% OR LESS OWNED
COMPANIES:
Investments, carried at equity, and advances to 50% or less owned
companies at December 31, 1999 and 1998 were as follows, in thousands of
dollars:
<TABLE>
<CAPTION>
Ownership
50% or Less Owned Companies Percentage 1999 1998
------------------------------------------ --------------- ------------- -------------
<S> <C> <C> <C>
Globe Wireless, LLC....................... 47.4% $ 31,646 $ -
SEAMEX International, Ltd................. 40.0% 14,025 14,195
Ocean Marine Services (Egypt) Ltd......... 33.3% 6,252 6,897
SEACOR-Smit (Aquitaine) Ltd............... 50.0% 5,641 14,529
Maritima Mexicana, S.A.................... 40.0% 3,828 4,506
Ultragas Smit Lloyd Ltda.................. 49.0% 3,524 2,638
Patagonia Offshore Services S.A........... 50.0% 2,595 4,228
Other..................................... 25.7%-50.0% 9,765 8,485
------------- -------------
$ 77,276 $ 55,478
============= ==============
</TABLE>
GLOBE WIRELESS. During April 1998, the Company entered into a financing
arrangement with Globe, Inc., the predecessor of Globe Wireless,
providing for potential financing from the Company aggregating
$20,000,000, comprised of $10,000,000 of Globe, Inc.'s Series C
Convertible Preferred Stock ("Series C Stock") and $10,000,000 of senior
secured promissory notes ("Promissory Notes"). Upon signing of the
financing agreements, the Company acquired 3,288,156 shares of Series C
Stock for $7,000,000, exchanged a note evidencing a $3,000,000 loan in
1997 for Promissory Notes, and received a warrant for the purchase of
additional Series C Stock at an exercise price of $2.13 per share (the
"Series C Warrant"). In October 1998, the Company purchased an
additional 1,750,000 shares of Series C Stock for $3,000,000,
renegotiated certain covenants of the April 1998 financing agreement,
and in connection therewith, the exercise price of the Series C Warrant
was reduced to $1.71 per share. In April 1999, the Series C Warrant was
exchanged for a warrant to purchase Class C Preferred Units of Globe
Wireless ("Class C Units") at an exercise price of $1.71 per unit (the
"SEACOR Warrants"), and all of Globe, Inc.'s Series C Stock, including
that held by the Company, was exchanged for an equivalent number of
Class C Units. Through December 16, 1999, the Company advanced Globe
Wireless an additional $13,721,000.
In May 1999, SEACOR, through its wholly owned subsidiary, SEACOR Malted
Inc., and its wholly owned subsidiary Malted Ltd., acquired all of the
issued and outstanding stock of Marinet Systems Ltd. ("Marinet"), a
United Kingdom based provider of communications services and equipment
to the maritime industry. Effective July 1, 1999, Globe Wireless
acquired all of the issued and outstanding stock of SEACOR Malted Inc.
and its wholly owned subsidiaries for a $5,279,000 note payable to the
Company (the "Marinet Loan").
In December 1999, Globe Wireless commenced a private placement offering
(the "Private Placement") to raise a minimum of $34,000,000 (the
"Minimum Offering") and a maximum of $44,000,000 (the "Maximum
Offering") in additional capital for general corporate purposes,
including capital expenditures and working capital, through the sale of
18,565,401 Class D Preferred Units ("Class D Units") at $2.37 per unit.
In February 2000, the Maximum Offering was increased to $57,000,000. The
Minimum Offering was consummated as of December 16, 1999, and in
connection therewith, Globe Wireless issued 15,470,047 Class D Units in
exchange for gross cash proceeds of $24,664,000 and the conversion into
Class D Units of certain advances by the Company to Globe Wireless and
the Marinet Loan, aggregating $12,000,000. In connection with the
consummation of the Minimum Offering, the Company exercised the SEACOR
Warrant and purchased 7,556,667 Class C Units at the exercise price of
$1.71 per unit from Globe Wireless in exchange for the cancellation of
$10,000,000 of Promissory Notes and the payment of $2,954,000 in cash.
In February 2000, Globe Wireless completed the Maximum Offering through
the sale of 8,580,586 additional Class D Units in exchange for gross
cash proceeds of $20,336,000. At present, through its ownership of Class
D Units and Class C Units, the Company controls approximately 38% of the
voting Units issued by Globe Wireless.
Prior to 1999, the Company carried its investment in Globe Wireless at
cost. Due to an ability to significantly influence the operating
activities of Globe Wireless, the Company began accounting for its
investment in Globe Wireless under the equity method of accounting
during the second quarter of 1999.
SMIT JOINT VENTURES. Pursuant to the SMIT Transaction, the Company and
SMIT structured a joint venture, SEACOR-Smit (Aquitaine) Ltd., a
Bahamian corporation ("Aquitaine"), and the Company purchased the joint
venture interests of SMIT in Smit Swire Shilbaya Egypt Ltd., an Egyptian
corporation ("SSS"), and Ultragas Smit Lloyd Ltda., a Chilean
corporation ("Ultragas-Smit"). During 1998, the assets of SSS were
transferred to Ocean Marine Services (Egypt) Ltd. ("OMS"), also an
Egyptian corporation. At December 31, 1999, OMS owned six vessels that
were operating offshore Egypt; Ultragas-Smit owned three vessels that
56
<PAGE>
were operating offshore Chile; and Aquitaine owned three vessels that
were operating in the Far East and Latin America.
In 1999, the Board of Directors of Aquitaine adopted a plan of
liquidation due to such venture's limited opportunities for future
investments and growth and the Company received a $10,000,000
liquidating dividend. Aquitaine shall continue operations until such
time as its remaining fleet can be sold or otherwise liquidated. With
respect to the Company's equity interest in the net earnings of
Aquitaine, the Company has recorded $3,000,000 of income tax expense in
1999. In prior periods, no income tax expense was recorded in connection
with this foreign joint venture's operations in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."
PATAGONIA. During 1997, the Company and a subsidiary of Sociedad Naviera
Ultragas Ltda., the Company's joint venture partner in Ultragas-Smit,
formed Patagonia Offshore Services S.A., a Panamanian corporation
("Patagonia"), to operate vessels in support of the Argentine and
adjacent offshore markets. Patagonia owns one vessel that was acquired
from the Company in 1997. The Company realized a gain from the vessel
sale that has been deferred to the extent of its ownership interest in
Patagonia and is being amortized to income over the vessel's depreciable
life.
TMM JOINT VENTURES. During 1994, the Company and Transportacion Maritima
Mexicana S.A. de C.V., a Mexican corporation ("TMM"), structured a joint
venture to serve the Mexican offshore market (the "TMM Joint Venture")
that is comprised of two corporations, Maritima Mexicana, S.A. and
SEAMEX International Ltd. ("SEAMEX"), a Liberian corporation. Since
1994, the Company has sold six of its vessels to the TMM Joint Venture.
The Company realized gains from the vessel sales that have been deferred
to the extent of the Company's ownership interest in the TMM Joint
Venture and are being amortized to income over the vessels' depreciable
lives. At December 31, 1999, the TMM Joint Venture operated 12 offshore
support vessels owned by the joint venture and 7 bareboat and time
chartered-in offshore support vessels, 5 of which were provided by the
Company.
OTHER. The Company participates in other joint ventures that operate
offshore support vessels, environmental service businesses, and a
Handymax Dry-Bulk vessel built in 1990.
At December 31, 1999, the amount of consolidated retained earnings that
represents undistributed earnings of 50% or less owned companies
accounted for by the equity method was $21,001,000. Deferred taxes have
not been recorded with respect to $11,113,000 of those earnings.
6. RESTRICTED CASH:
At December 31, 1999, restricted cash, totaling $21,985,000, is intended
for use in defraying costs to construct offshore support vessels for the
Company. At December 31, 1999, the Company has funded $20,421,000 of
offshore support vessels construction costs from unrestricted cash
balances, and subject to the Maritime Administration's approval, the
Company expects such amounts to be reimbursed from construction reserve
fund restricted cash accounts, as discussed below.
Proceeds from the sale of certain offshore support vessels in 1997,
1998, and 1999 have been deposited into escrow and construction reserve
fund bank accounts for purposes of acquiring newly constructed U.S.-flag
vessels and qualifying for the Company's temporary deferral of taxable
gains realized from the sale of the vessels. Escrow accounts were
established pursuant to certain exchange and escrow agreements and
restrict the use of funds deposited therein for a period of six months.
Should replacement offshore support vessels not be delivered prior to
expiration of the applicable six-month escrow period, funds then
remaining in the escrow accounts will be released to the Company for
general use. In 1998, the Company also established, pursuant to Section
511 of the Merchant Marine Act, 1936, as amended, joint depository
construction reserve fund accounts with the Maritime Administration.
From date of deposit, withdrawals from these accounts are subject to
prior written approval of the Maritime Administration. Funds must be
committed for expenditure within three years or be released for the
Company's general use. Gains from vessel sales previously deferred would
become immediately taxable upon release to the Company, for general use,
of sale proceeds that were deposited into joint depository construction
reserve fund accounts.
Net proceeds from the sale by Chiles of the Chiles 10.0% Notes were
deposited into escrow accounts in accordance with certain escrow
agreements between Chiles and U.S. Bank Trust National Association, as
Escrow Agent. The use of these funds was limited to (i) partially
funding the construction of the Rigs, (ii) paying interest on the Chiles
10.0% Notes through the first two semi-annual interest payment dates,
and (iii) providing working capital. At December 31, 1999, the net
proceeds from the sale of the Chiles 10.0% Notes had been expended in
accordance with the terms of the escrow agreements.
57
<PAGE>
7. INCOME TAXES:
Income before income taxes, minority interest, equity in net earnings of
50% or less owned companies, and extraordinary item derived from the
United States and foreign operations for the years ended December 31,
are as follows, in thousands of dollars:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
United States........................................$ 36,382 $ 118,721 $ 141,979
Foreign.............................................. 7,134 54,175 33,724
--------------- --------------- ---------------
$ 43,516 $ 172,896 $ 175,703
=============== =============== ===============
The Company files a consolidated U.S. federal tax return. Income tax
expense (benefit) consisted of the following components for the years
ended December 31, in thousands of dollars:
1999 1998 1997
--------------- --------------- ---------------
Current:
State.............................................$ 666 $ 1,367 $ 295
Federal........................................... (2,176) 26,607 33,303
Foreign........................................... 1,868 5,661 2,719
Deferred:
Federal........................................... 14,891 26,658 25,067
--------------- --------------- ---------------
$ 15,249 $ 60,293 $ 61,384
=============== =============== ===============
The following table reconciles the difference between the statutory
federal income tax rate for the Company to the effective income tax
rate:
1999 1998 1997
--------------- ---------------- ----------------
Statutory Rate..................................... 35.0.% 35.0 % 35.0%
Foreign and State Taxes............................ 1.8.% 1.3 % 0.2%
Other.............................................. (1.8)% (1.4)% (0.3%
--------------- --------------- ---------------
35.0 % 34.9 % 34.9%
=============== =============== ===============
</TABLE>
The components of the net deferred income tax liability were as follows,
for the years ended December 31, in thousands of dollars:
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Deferred tax assets:
Foreign Tax Credit Carryforwards.............. $ 2,486 $ 881
Subpart F Loss................................ 2,499 2,462
Nondeductible Accruals........................ 827 1,030
Other......................................... 1,800 128
-------------- --------------
Total deferred tax assets............... 7,612 4,501
-------------- --------------
Deferred tax liabilities:
Property and equipment........................ 106,099 88,184
Investment in Subsidiaries.................... 3,060 2,192
Other......................................... - 93
-------------- --------------
Total deferred tax liabilities.......... 109,159 90,469
-------------- --------------
Net deferred tax liabilities...... $ 101,547 $ 85,968
============== ==============
</TABLE>
The Company has not recognized a deferred tax liability of $7,585,000
for undistributed earnings of certain non-U.S. subsidiaries and joint
venture corporations because it considers those earnings to be
indefinitely reinvested abroad. As of December 31, 1999, the
undistributed earnings of these subsidiaries and joint venture
corporations were $21,671,000.
8. LONG-TERM DEBT:
Long-term debt balances, maturities, and interest rates are as follows
as of December 31, in thousands of dollars:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
5 3/8% Convertible Subordinated Notes due 2006, interest payable semi-annually $ 181,600 $ 186,750
7.2% Senior Notes due 2009, interest payable semi-annually 147,500 150,000
10.0% Senior Notes of Chiles due 2008, interest payable semi-annually 68,265 92,870
5.467% Subordinated Promissory Notes due SMIT in 2004, interest payable quarterly 23,200 23,200
Chiles Bank Facility, principal payments beginning 2003 and due through 2006,
bearing interest at LIBOR plus 1 3/8% (approximately 7.3% at December 31, 1999) 22,000 -
Capital Lease Obligations, see Note 12 19,255 20,842
Promissory Notes due various financial institutions, primarily secured by property
and equipment, interest rates ranging from 7.15% to 10.0%, principal repayments
at various dates through 2004 1,515 -
Promissory Note due a vessel charterer, payable in equal monthly installments
from from February 1998 through June 2002, bearing interest at 10.0%,
secured by mortgage on a vessel 737 985
Promissory Note due a stockholder, payable in equal annual installments from
January 1998 through January 2001, bearing interest at 7.5% 536 776
---------------- ----------------
464,608 475,423
Less - Portion due within one year (2,832) (2,122)
- Debt premium or (discount), net 3,885 (502)
---------------- ----------------
$ 465,661 $ 472,799
================ ================
</TABLE>
58
<PAGE>
Annual maturities of long-term debt for the five years following
December 31, 1999 are as follows, in thousands of dollars.
<TABLE>
<CAPTION>
2000 2001(1) 2002 2003 2004
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Amount..................................... $ 2,832 $ 18,729 $ 282 $ 7,636 $ 30,765
=========== =========== ============ ============ ============
</TABLE>
- --------------
(1) Six million seven hundred and fifty thousand dollars of the debt
maturing in 2001 is payable in convertible subordinated notes in
accordance with the terms of a lease between the Company and
SMIT.
CONVERTIBLE NOTES. On November 5, 1996, the Company completed the
private placement of $172,500,000 aggregate principal amount of its 5
3/8% Convertible Subordinated Notes due November 15, 2006 (the
"Convertible Notes"). The Convertible Notes and the SMIT Convertible
Notes (collectively the "5 3/8% Notes") were issued under an Indenture
dated as of November 1, 1996, (the "1996 Indenture"), between the
Company and First Trust National Association, as trustee. The 5 3/8%
Notes are convertible, in whole or part, at the option of the holder at
any time prior to the close of business on the business day next
preceding November 15, 2006, unless previously redeemed into shares of
SEACOR's common stock at a conversion price of $66.00 per share
(equivalent to a conversion rate of 15.1515 shares of SEACOR's common
stock per $1,000 principal amount of the 5 3/8% Notes), subject to
adjustment in certain circumstances. The 5 3/8% Notes are redeemable at
the Company's option at any time on or after November 24, 1999 at the
redemption prices specified therein, together with accrued and unpaid
interest to the date of repurchase. The Company incurred $4,311,000 in
costs associated with the sale of the Convertible Notes including
$3,881,000 of underwriter's discount. The debt issue costs are reported
in other assets and are being amortized to expense over the life of the
related debt. The 5 3/8% Notes are general unsecured obligations of the
Company, subordinated in right of payment to all "Senior Indebtedness"
(as defined in the 1996 Indenture) of the Company and effectively
subordinated in right of payment to all indebtedness and other
obligations and liabilities and any preferred stock of the Company's
subsidiaries. The 5 3/8% Notes will mature on November 15, 2006 and bear
interest at a rate of 5 3/8% per annum from November 5, 1996, in the
case of the Convertible Notes, and December 19, 1996, in the case of the
SMIT Convertible Notes, or in each case, from the most recent interest
payment date on which interest has been paid or provided for, payable on
May 15 and November 15 of each year, commencing on May 15, 1997 to the
holders thereof on May 1 and November 1, respectively, preceding such
interest payment date.
On December 19, 1996, pursuant to the SMIT Transaction, the Company
issued $15,250,000 principal amount of its SMIT Convertible Notes. The
SMIT Convertible Notes were issued under the 1996 Indenture discussed
above. Also, pursuant to the SMIT Transaction, the Company entered into
lease purchase agreements for two vessels.
During 1997 and 1999, the Company purchased $1,000,000 and $5,150,000,
respectively, principal amount of its Convertible Notes in the open
market. The write-off of certain deferred financing costs associated
with the Convertible Notes acquired and the difference between the
amount paid to acquire the Convertible Notes and their carrying value
resulted in the Company recognizing an extraordinary loss of $114,000 or
$.01 per basic share in 1997. In 1999, the extraordinary loss with
respect to the retirement of Convertible Notes was not material.
DNB CREDIT FACILITY. On November 17, 1998, the Company entered into an
agreement for a $100,000,000 unsecured reducing revolving credit
facility with Den norske Bank ASA (the "DnB Credit Facility"), as agent
for itself and other lenders named therein that replaced the prior
revolving credit facility with Den norske Bank ASA ("DnB"). Until
termination of the DnB Credit Facility, a commitment fee is payable on a
quarterly basis, at rates ranging from 17.5 to 40 basis points per annum
on the average unfunded portion of the DnB Credit Facility. The
commitment fee rate varies based upon the percentage the Company's
funded debt bears to earnings before interest, taxes, depreciation, and
amortization ("EBITDA"), as defined, and/or the credit rating maintained
by Moody's and Standard & Poor's, if any.
Under the terms of the DnB Credit Facility, the Company may borrow up to
$100,000,000 aggregate principal amount (the "Maximum Committed Amount")
of unsecured reducing revolving credit loans maturing on November 17,
2004. The Maximum Committed Amount will automatically decrease
semi-annually by 4.54% beginning November 17, 1999, with the balance
payable at maturity. Outstanding borrowings will bear interest at annual
rates ranging from 45 to 110 basis points (the "Margin") above LIBOR.
The Margin is determined quarterly and varies based upon the percentage
the Company's funded debt bears to EBITDA, as defined, and/or the credit
rating maintained by Moody's and Standard & Poor's, if any.
The DnB Credit Facility requires the Company, on a consolidated basis,
to maintain a minimum ratio of vessels' values to Maximum Committed
Amount, as defined, a minimum cash and cash equivalent level, a
specified interest coverage ratio, specified debt to capitalization
ratios and a minimum net worth. The DnB Credit Facility limits the
amount of secured indebtedness which the Company and its subsidiaries
may incur, provides for a negative pledge with respect to certain
59
<PAGE>
activities of the Company's vessel owning/operating subsidiaries, and
restricts the payment of dividends. At December 31, 1999, the Company
had $95,460,000 available for future borrowings under the DnB Credit
Facility.
An extraordinary loss of $325,000 or $0.02 per basic share was
recognized in 1997 in connection with the termination of a prior
revolving credit facility with DnB that resulted from the write-off of
unamortized debt issue costs.
7.2% NOTES. On September 15, 1997, the Company completed the sale of
$150,000,000 aggregate principal amount of its 7.2% Senior Notes due
2009 (the "7.2% Notes") which will mature on September 15, 2009. The
offering was made to qualified institutional buyers and a limited number
of institutional accredited investors and in offshore transactions
exempt from registration under U.S. federal securities laws. Interest on
the 7.2% Notes is payable semi-annually on March 15 and September 15 of
each year commencing March 15, 1998. The 7.2% Notes may be redeemed at
any time at the option of the Company, in whole or from time to time in
part, at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of redemption plus a
Make-Whole Premium, if any, relating to the then prevailing Treasury
Yield and the remaining life of the 7.2% Notes. On December 8, 1997, the
Company completed an exchange offer through which it exchanged all of
the 7.2% Notes for a series of 7.2% Senior Notes (the "7.2% Exchange
Notes") which are identical in all material respects to the 7.2% Notes,
except that the 7.2% Exchange Notes are registered under the Securities
Act of 1933, as amended. The 7.2% Notes and the 7.2% Exchange Notes were
issued under an indenture (the "1997 Indenture") between the Company and
First Trust National Association, as trustee. The 1997 Indenture
contains covenants including, among others, limitations on liens and
sale and leasebacks of certain Principal Properties, as defined in the
1997 Indenture, and certain restrictions on the Company consolidating
with or merging into any other Person, as defined in the 1997 Indenture.
The Company incurred $1,412,500 in costs associated with the sale of the
7.2% Notes including $1,012,500 of underwriters discount. Debt issue
costs are reported in Other Assets of the Consolidated Balance Sheet and
are being amortized to expense over the life of the related
indebtedness. During 1999, the Company purchased $2,500,000 principal
amount of its 7.2% Notes in the open market.
SMIT NOTES. Pursuant to a February 1998 letter agreement between the
Company and SMIT, the Company agreed to prepay certain contingent
obligations for additional purchase consideration that would otherwise
have been payable to SMIT in 1999 pursuant to the SMIT Transaction. The
prepayment included cash of $20,880,000 and the issuance, effective
January 1, 1999, of five-year subordinated promissory notes in the
aggregate principal amount of $23,200,000, which notes bear interest at
5.467% per annum payable quarterly in arrears. The amounts prepaid to
SMIT have increased the carrying values of vessels and certain joint
venture interests that were acquired in the SMIT Transaction.
60
<PAGE>
CHILES 10.0% NOTES. On April 29, 1998, the Company's majority owned
subsidiary, Chiles Offshore, completed the sale of the Chiles 10.0%
Notes. The offering was made to qualified institutional buyers and to
certain persons in offshore transactions exempt from registration under
U.S. federal securities laws. Pursuant to an exchange offer that was
consummated on September 28, 1998, all holders of the Chiles 10% Notes
exchanged such notes for new notes identical in form and terms, that
were registered under the Securities Act of 1933, as amended. Interest
on the Chiles 10.0% Notes is payable semi-annually on May 1 and November
1 of each year commencing November 1, 1998. The Chiles 10.0% Notes are
not redeemable at the option of Chiles Offshore prior to May 1, 2003,
except that until May 1, 2001, Chiles Offshore may redeem, at its
option, in the aggregate, up to 35% of the original principal amount of
the Chiles 10.0% Notes, on a pro-rata basis, with the net proceeds of
one or more Public Equity Offerings (as defined), at a redemption price
of 110% plus accrued interest to the redemption date; provided, however,
that at least $71,500,000 aggregate principal amount of the Chiles 10.0%
Notes remains outstanding after each such redemption. On and after May
1, 2003, the Chiles 10.0% Notes may be redeemed at the option of Chiles
Offshore, in whole or in part, initially at 105.0% of the principal
amount thereof and declining by 1.67% each year thereafter to 100.0% of
the principal amount on and after May 1, 2006, plus accrued interest to
the date of redemption. The proceeds from the issuance of the Chiles
10.0% Notes were placed in escrow to be used to (a) partially fund the
construction of Rigs, (b) pay interest on the Chiles 10.0% Notes through
the first two semi-annual interest payment dates, and (c) provide
working capital. All obligations with respect to the Chiles 10.0% Notes
are limited exclusively to Chiles Offshore and are nonrecourse to
SEACOR. Chiles Offshore incurred $4,238,000 in costs associated with the
sale of the Chiles 10.0% Notes that have been reported as Other Assets
in the Condensed Balance Sheets and are being amortized to expense over
the life of the related indebtedness. In October 1999, Chiles Offshore
entered into amendments to the Indenture governing the Chiles 10.0%
Notes (the "Amendments") which were approved by the holders of a
majority of the Chiles 10.0% Notes and that had the effect of removing
certain covenants contained in such Indenture. In consideration for such
approval, consenting noteholders received $1.00 for each $1,000 in
aggregate principal amount of Chiles 10.0% Notes held by them. In
January 2000, Chiles filed a notice with the Securities and
Exchange Commission terminating, retroactively effective to December 31,
1999, its reporting obligations pursuant to the Securities Exchange Act
of 1934, as amended.
SEACOR and a wholly owned subsidiary of SEACOR purchased $17,130,000 and
$43,235,000 principal amount of the Chiles 10.0% Notes in the open
market in 1998 and 1999, respectively. The write-off of certain deferred
financing costs associated with the Chiles 10.0% Notes acquired and the
difference between the amount paid to acquire the Chiles 10.0% Notes and
their carrying value resulted in the recognition of an extraordinary
gain of $1,309,000 or $0.10 per basic share and $1,211,000 or $0.10 per
basic share in 1998 and 1999, respectively. During 1999, SEACOR and its
wholly owned subsidiary that owned Chiles 10.0% Notes sold $18,630,000
principal amount of such notes to a financial institution, subject to
swap agreements, see Note 2, Financial Instruments.
CHILES BANK FACILITY. Also on April 29, 1998, Chiles Offshore entered
into a bank credit agreement that provided for a $25,000,000 revolving
credit facility (the "Chiles Bank Facility") maturing December 31, 2004.
The Chiles Bank Facility was arranged by Nederlandse Scheepshypotheek
Bank N.V. and MeesPierson Capital Corporation. In December 1999, the
Chiles Bank Facility was amended and available borrowings rose from
$25,000,000 to $40,000,000 (the "Amended Chiles Bank Facility"). The
Amended Chiles Bank Facility provides for a floating interest rate of
LIBOR plus 1 3/8% per annum (approximately 7.3% at December 31, 1999) on
amounts outstanding under the Amended Chiles Bank Facility and provides
for repayment of such amounts in eight quarterly installments of
$1,875,000 beginning March 31, 2003, followed by eight quarterly
installments of $3,125,000, with the remaining balance payable on
December 31, 2006. As a condition precedent to the increase in the
Amended Chiles Bank Facility, Chiles Offshore was required to reduce the
outstanding principal amount of the Chiles 10.0% Notes by $15,000,000 to
$95,000,000.
During November 1999, Chiles Offshore completed an offering of
membership interests and rights to purchase membership interests (the
"Offering") which provided all current members with a pro rata right to
purchase such securities in an aggregate amount of $15,000,000. A wholly
owned subsidiary of SEACOR acquired $10,646,000 or approximately 71% of
the Offering. Proceeds from the Offering were used by Chiles Offshore to
purchase, at par, $15,000,000 aggregate principal amount of the Chiles
10.0% Notes from SEACOR, which was previously acquired in the open
market. At December 31, 1999, a wholly owned subsidiary of SEACOR owned
a 58.3% membership interest in Chiles Offshore, which was acquired for
$45,646,000, and SEACOR owned $26,735,000 principal amount of the Chiles
10.0% Notes.
Chiles Columbus LLC and Chiles Magellan LLC (the "Rig Owners"), wholly
owned subsidiaries of Chiles Offshore and owners of the Rigs the Chiles
Columbus and Chiles Magellan, respectively, guarantee the Amended Chiles
Bank Facility and such guarantees are secured by first priority
mortgages on the Rigs, assignment of earnings of the Rigs (which may
continue to be collected by Chiles Offshore unless there occurs an event
of default), and assignments of insurance proceeds. The Amended Chiles
Bank Facility contains customary affirmative covenants, representations,
61
<PAGE>
and warranties and is cross-defaulted to the related promissory notes;
provided, however, should there occur an event of default under the
Amended Chiles Bank Facility (other than arising from enforcement
actions undertaken by a holder of other indebtedness of Chiles Offshore,
enforcement actions arising from in rem claims against either of the
Rigs or bankruptcy events with respect to Chiles Offshore or a Rig
Owner), the lenders under the Amended Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the holders of the Chiles 10.0% Notes ("Noteholders") or
Chiles Offshore may cure such event of default or prepay all of the
indebtedness outstanding under the Amended Chiles Bank Facility. The
Amended Chiles Bank Facility also contains certain negative covenants
applicable to Chiles Offshore and the Guarantors, including prohibitions
against the following: certain liens on the collateral under the Amended
Chiles Bank Facility; material changes in the nature of their business;
sale or pledge of any Guarantor's membership interests; sale or
disposition of any Rig or other substantial assets; certain changes in
office locations; consolidations or mergers; certain Restricted Payments
(as defined in the Chiles Bank Facility), including distributions on
membership interests in Chiles Offshore (the "Membership Interests");
the exercise of a right to call the Chiles 10.0% Notes; or any material
amendment or modification of the Indenture. The Amended Chiles Bank
Facility further requires Chiles Offshore to prevent the Guarantors from
making certain loans and advances, except in their normal course of
business or to certain affiliates; assuming, guaranteeing or (except in
their ordinary course of business) otherwise becoming liable in
connection with any obligations other than guaranties for the benefit of
the lenders under the Amended Chiles Bank Facility, guarantees in favor
of the Noteholders or pre-existing guarantees; paying out any funds,
except in their ordinary course of business for the business of Chiles
Offshore or service of certain indebtedness permitted under the Amended
Chiles Bank Facility; and issuing or disposing of any of their own
membership interests (except to Chiles Offshore). In addition, the
Amended Chiles Bank Facility requires that the fair market value of the
Rigs, as determined by appraisers appointed by the lenders thereunder,
at all times equals or exceeds an amount equal to 200% of outstanding
indebtedness under the Amended Chiles Bank Facility. At December 31,
1999, Chiles Offshore had $18,000,000 available under the Amended Chiles
Bank Facility for future borrowings.
The Chiles Bank Facility contains customary affirmative covenants,
representations, and warranties and is cross-defaulted to the related
promissory notes; provided, however, should there occur an event of
default under the Chiles Bank Facility (other than arising from
enforcement actions undertaken by a holder of other indebtedness of
Chiles Offshore, enforcement actions arising from in rem claims against
either of the Rigs or bankruptcy events with respect to Chiles Offshore
or a Rig Owner), the lenders under the Chiles Bank Facility have agreed
on a one-time basis not to enforce remedies for a period of 60 days
during which the Noteholders or the Company may cure such event of
default or prepay all of the indebtedness outstanding under the Chiles
Bank Facility. In addition, the Chiles Bank Facility requires that the
fair market value of the Rigs, as determined by appraisers appointed by
the lenders thereunder, at all times equals or exceeds an amount equal
to 130% of outstanding indebtedness under the Chiles Bank Facility.
9. COMMON STOCK:
During 1998, SEACOR's Board of Directors increased its previously
announced securities repurchase authority by $65,000,000 and expanded
its previously announced securities repurchase authority to include, in
addition to its common stock and 5 3/8% Notes, its 7.2% Notes and the
Chiles 10% Notes (collectively, the "SEACOR Securities"). Shares
totaling 1,305,100 at an aggregate cost of $60,291,000 were repurchased
for treasury during the year. 712,000 of these shares, previously issued
as part of the Company's purchase consideration in the SMIT Transaction,
were repurchased from a subsidiary of SMIT. All other repurchases of
SEACOR's common stock during 1998 were made in the open market.
During 1999, SEACOR's Board of Directors increased its securities
repurchase authority by $105,000,000. Shares totaling 1,462,000 at an
aggregate cost of $65,520,000 were repurchased for treasury during the
year. As of December 31, 1999, the Company had approximately $26,669,000
available for the repurchase of SEACOR Securities. The repurchase of any
SEACOR Securities will be effected from time to time through open market
purchases, privately negotiated transactions, or otherwise, depending on
market conditions.
10. BENEFIT PLANS:
SEACOR SAVINGS PLAN. SEACOR, through a wholly owned subsidiary,
introduced a defined contribution plan (the "SEACOR Plan"), effective
July 1, 1994. Furthermore, in connection with a merger and acquisition,
the Company assumed the obligations of certain other defined
contribution plans. Effective January 1, 1998, the Company merged the
defined contribution plans previously assumed into the SEACOR Plan.
Requirements for eligibility in the SEACOR Plan include (i) one year of
full time employment, (ii) attainment of 21 years of age, and (iii)
residency in the United States. Participants may contribute up to 15% of
their pre-tax annual compensation, and contributions are funded monthly.
Participants are fully vested in the Company's contribution upon (i)
attaining the age of 65, (ii) death, (iii) becoming disabled, or (iv)
completing five years of employment service. Contribution forfeitures
for non-vested terminated employees are used to reduce future
62
<PAGE>
contributions of the Company or pay administrative expenses. The
Company's contribution is limited to 50% of the employee's first 6% of
wages invested in the SEACOR Plan and is subject to annual review by the
Board of Directors. The Company's contributions to plans were $948,000,
$845,000, and $614,000 for the years ended December 31, 1999, 1998, and
1997, respectively.
STOCK PLANS. On November 22, 1992, and April 18, 1996, SEACOR's
stockholders adopted the 1992 Non-Qualified Stock Option Plan (the
"Stock Option Plan") and the 1996 Share Incentive Plan (the "Share
Incentive Plan"), respectively, (collectively, the "Plans"). The Plans
provide for the grant of options to purchase shares of SEACOR's common
stock, and the Share Incentive Plan additionally provides for the grant
of stock appreciation rights, restricted stock awards, performance
awards, and stock units to key officers and employees of the Company.
The exercise price per share of options granted cannot be less than 75%
and 90% of the fair market value of SEACOR's common stock at the date of
grant under the Stock Option Plan and Share Incentive Plan,
respectively. Options granted under the Plans expire no later than the
tenth anniversary of the date of grant. The Plans are administered by
the Stock Option and Executive Compensation Committee of the Board of
Directors (the "Compensation Committee"). Five hundred thousand shares
of SEACOR's common stock have been reserved for issuance under each of
the Stock Option Plan and the Share Incentive Plan.
STOCK OPTIONS. In October 1995, Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock Based
Compensation," was issued effective in 1996 for the Company. Under SFAS
123, companies could either adopt a "fair valued based method" of
accounting for an employee stock option, as defined, or continue to use
accounting methods as prescribed by APB Opinion No. 25. The Company has
elected to continue accounting for its plan under APB Opinion No 25. Had
compensation costs for the plan been determined consistent with SFAS
123, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts for the years ended December
31, 1999, 1998, and 1997, in thousands of dollars, except per share
data.
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------- ------------------------------- -------------------------------
As Reported Pro forma As Reported Pro forma As Reported Pro forma
--------------- --------------- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Income........................$ 30,936 $ 30,439 $ 125,927 $ 125,746 $ 119,154 $ 119,051
Earnings per common share:
Basic..........................$ 2.60 $ 2.56 $ 9.59 $ 9.57 $ 8.61 $ 8.60
Diluted........................ 2.54 2.50 8.25 8.24 7.47 7.47
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future events, and additional awards in the future are
anticipated.
SHARE AWARD TRANSACTIONS. The following transactions have occurred in
the Plans during the periods ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------- ---------------------------- ----------------------------
Number of Wt'ed Avg. Number of Wt'ed Avg. Number of Wt'ed Avg.
Shares Exer. Price Shares Exer. Price Shares Exer. Price
------------- -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Stock Option Activities -
Outstanding, at beginning of year.. 295,814 $ 19.64 325,112 $ 17.04 346,112 $ 16.92
Granted......................... 69,850 $ 44.95 20,652 $ 51.74 - $ -
Exercised....................... - $ - (48,750)$ 15.54 (21,000)$ 15.05
Canceled........................ (1,750) $ 26.57 (1,200)$ 34.46 - $ -
------------- ------------ ------------
Outstanding, at end of year........ 363,914 $ 24.47 295,814 $ 19.64 325,112 $ 17.04
============= ============ ============
Options exercisable at year end.... 280,935 $ 18.08 275,362 $ 17.26 317,812 $ 16.72
=============
============ ============
Weighted average fair value of
options granted.................$ 27.86 $ 33.58 $ -
============= ============ ============
Restricted stock awards granted........ 37,000 $ 44.68 25,290 $ 52.16 18,510 $ 61.92
============= ============ ============
Shares available for future grant...... 375,963 480,913 525,589
============= ============ ============
</TABLE>
The fair value of each option granted during the periods presented is
estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: (a) no dividend yield, (b)
weighted average expected volatility of 44.07% and 44.06% in the years
1999 and 1998, respectively, (c) discount rates of 5.01% and 5.21% in
the years 1999 and 1998, respectively, and (d) expected lives of five
years.
On date of issue, the market value of restricted shares issued to
certain officers and key employees of the Company is recorded in
Stockholders' Equity as Unamortized Restricted Stock and then amortized
to expense over one and three year vesting periods. During 1999, 1998,
and 1997, compensation cost recognized in connection with restricted
stock awards totaled $1,508,000, $1,333,000, and $439,000, respectively.
At December 31, 1999, there were 52,017 shares of unvested restricted
stock outstanding at a weighted average price of $47.79. Of the unvested
shares outstanding, 30,733, 12,934, and 8,350 shares will vest in 2000,
2001, and 2002, respectively. On February 3, 2000, the Compensation
Committee granted 20,585 restricted shares to certain officers and key
employees of the Company with aggregate market value of $961,000 on that
date.
63
<PAGE>
The following table summarizes certain information about the options
outstanding at December 31, 1999 grouped into three exercise price
ranges:
<TABLE>
<CAPTION>
Exercise Price Range
------------------------------------------------------------
$9.64 - $14.75 $18.75 - $21.25 $30.75 - $53.00
------------------- ------------------- -------------------
<S> <C> <C> <C>
Options outstanding at December 31, 1999...................... 124,166 146,246 93,502
Weighted-average exercise price............................... $ 14.11 $ 19.52 $ 45.95
Weighted-average remaining contractual life (years)........... 3.6 4.2 8.3
Options exercisable at December 31, 1999...................... 124,166 146,246 10,523
Weighted average exercise price of exercisable options........ $ 14.11 $ 19.52 $ 44.77
</TABLE>
11. RELATED PARTY TRANSACTIONS:
NRC contracts with James Miller Marine Services ("JMMS"), an
environmental contractor based in Staten Island, New York, for spill
response services. In fiscal 1999, 1998, and 1997, NRC paid
approximately $362,000, $398,000, and $612,000, respectively, to JMMS
for these services. The brother of a NRC director is Vice President of
JMMS.
Globe Wireless provides the Company's offshore marine service segment a
"ship-to-shore" communication network and has provisioned and installed
certain computer hardware, software, and electronic equipment aboard its
offshore marine vessels. In fiscal 1999, 1998, and 1997, approximately
$1,421,000, $743,000, and $40,000, respectively, was paid to Globe
Wireless for services and merchandise provided the Company.
A fee is paid to a minority stockholder for managing the Company's North
Sea standby safety vessels. The U.S. dollar equivalent of such fees paid
in pounds sterling approximated $1,058,000, $1,087,000, and $1,015,000
in the years ended December 31, 1999, 1998, and 1997, respectively.
12. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1999, the Company has commitments to build three
offshore support vessels at an approximate aggregate cost of $30,250,000
of which $20,950,000 has been expended. These vessels are expected to
enter service in 2000. Joint venture corporations, in which the Company
owns a 50% equity interest, are committed to the construction of two
Handymax Dry-Bulk ships that are expected to enter service in 2001. The
cost to construct and place these ships into service will approximate
$39,000,000, of which 75% is expected to be financed from external
sources.
In the normal course of its business, the Company becomes involved in
various litigation matters including, among other things, claims by
third parties for alleged property damages, personal injuries, and other
matters. While the Company believes it has meritorious defenses against
these claims, management has used estimates in determining the Company's
potential exposure and has recorded reserves in its financial statements
related thereto where appropriate. It is possible that a change in the
Company's estimates of that exposure could occur, but the Company does
not expect such changes in estimated costs will have a material effect
on the Company's financial position or results of operations.
During 1998 and 1995, the Company entered into sale-type leases for two
crew and one anchor handling towing supply vessels, respectively. The
anchor handling towing supply vessel was sold in 1998 to a third party
and bareboat chartered to SEAMEX. The remaining leases expire in 2001
and contain options that permit the lessee to purchase the vessels at
various dates during the term of the leases. The amortization of
unearned income in the years ended December 31, 1999, 1998, and 1997,
totaled $548,000, $403,000, and $448,000, respectively. The net
investment in sale-type leases at December 31, 1999 was comprised of
minimum lease payment receivables totaling $1,605,000, estimated
residual values of $1,933,000, and unearned income of $906,000. As of
December 31, 1999, $321,000 and $2,311,000 of the net investment in the
sale-type leases were reported in the Consolidated Balance Sheets as
current and noncurrent Other Assets, respectively.
In December 1996, pursuant to the SMIT Transaction, the Company leased
two vessels under capital leases with gross costs of $21,239,000 that
are being depreciated over an estimated useful life of 23 years. At
December 31, 1999 and 1998, accumulated depreciation related to these
vessels totaled $2,754,000 and $1,781,000, respectively. At December 31,
1999, $1,675,000 and $17,580,000 in obligations under these capital
leases are reported as current and long-term debt, respectively. Minimum
lease payments of $2,669,000 and $18,482,000 are due in 2000 and 2001,
respectively. The amount to be paid in 2001 will include cash and the
issuance of $6,750,000 in SMIT Convertible Notes. Future minimum lease
payments include interest of $1,896,000.
During 1999, 1998, and 1997, the Company completed transactions for the
sale and leaseback of 5, 11, and 8 vessels, respectively, and the leases
have been classified as operating leases in accordance with SFAS No. 13
"Accounting for Leases." The leases contain purchase and lease renewal
options at fair market value or rights of first refusal with respect to
the sale or lease of the vessels and range in duration from two to five
years. Gains realized from those sales, totaling $6,566,000, $38,442,000
64
<PAGE>
and $26,986,000 in 1999, 1998, and 1997, respectively, have been
deferred and are being credited to income as reductions in rental
expense over the lease terms. Rental expense in 1999, 1998 and 1997
totaled $3,525,000, $2,142,000, and $504,000, respectively. Future
minimum lease payments are $18,599,000 in 2000, $4,912,000 in 2001,
$1,967,000 in 2002, $1,312,000 in 2003, and $471,000 in 2004.
13. MAJOR CUSTOMERS AND SEGMENT DATA:
The Company adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information," during the fourth quarter of 1998. SFAS 131 established
standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders.
It also established standards for related disclosures about products and
services, geographic areas, and major customers. SFAS 131 defined
operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and
in assessing performance. The Company has aggregated its business
activities into three operating segments: marine, environmental, and
drilling. These operating segments represent strategic business units
that offer different services.
The marine service segment charters support vessels to owners and
operators of offshore drilling rigs and production platforms both
domestically and internationally. Two of the largest groups of offshore
support vessels operated by the Company are crew boats, which transport
personnel and small loads of cargo when expedited deliveries are
required, and utility boats, which support offshore production
activities by delivering general cargo and facilitating infield
transportation of personnel and materials. Two other significant classes
of vessels operated by the Company are towing supply and anchor handling
towing supply vessels. These vessels have powerful engines and deck
mounted winches, and are capable of towing and positioning offshore
drilling rigs as well as providing supply vessel services. The Company
also operates supply vessels, which transport drill pipe, drilling
fluids, and construction materials, and special service vessels, which
include standby safety, well stimulation, seismic data gathering, line
handling, freight, oil spill response, and salvage vessels. In
connection with its offshore marine services, the Company offers
logistics services, which include shorebase, marine transport, and other
supply chain management services in support of offshore exploration and
production operations.
The environmental service segment provides contractual oil spill
response and other related training and consulting services. The
Company's clients include tank vessel owner/operators, refiners and
terminal operators, exploration and production facility operators, and
pipeline operators. The Company charges a retainer fee to its customers
for ensuring by contract the availability (at predetermined rates) of
its response services and equipment. Retainer services include employing
a staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
emergency and spill response as contemplated by response plans filed by
the Company's customers in accordance with Oil Pollution Act of 1990 and
various state regulations. The Company maintains relationships with
numerous environmental sub-contractors to assist with response
operations, equipment maintenance, and provide trained personnel for
deploying equipment in a spill response. When oil spills occur, the
Company mobilizes specialized oil spill response equipment, using either
its own personnel or personnel under contract, to provide emergency
response services for both land and marine oil spills.
The Company's drilling service business is conducted through Chiles
Offshore, a 58.3% majority owned subsidiary. From inception and until
July 1999, Chiles operated as a development stage company, devoting
substantially all its efforts constructing two mobile offshore drilling
rigs, raising capital, and securing contracts for the Rigs. In 1997,
Chiles commenced construction of two premium jackup mobile offshore
drilling rigs, the Chiles Columbus and the Chiles Magellan, which were
delivered to Chiles in May 1999 and October 1999, respectively. Jackup
rigs are mobile self-elevating drilling platforms equipped with legs
that are lowered to the ocean floor until a foundation is established to
support drilling operations. Oil and gas exploration companies use
jackup rigs extensively for offshore drilling in water depths from 20
feet to 350 feet.
65
<PAGE>
The Company evaluates the performance of each operating segment based
upon the operating profit of the segment and including gains or losses
from the sale of equipment and interest in 50% or less owned companies
and equity in the net income of 50% or less owned companies but
excluding minority interest in income or loss of subsidiaries, interest
income and expense, net gains or losses from the sale of marketable
securities and commodity swap transactions, corporate expenses, and
income taxes. Operating profit is defined as Operating Income as
reported in the Consolidated Statements of Income net of corporate
expenses and certain other income and expense items. The accounting
policies of the operating segments are the same as those described in
the summary of significant accounting policies except that the
disaggregation of financial results has been prepared using a management
approach. Segment assets exclude those considered by the Company to be
of a corporate nature. Corporate assets include SEACOR and its wholly
owned subsidiaries' unrestricted cash, marketable securities, certain
other assets, and property and equipment related to corporate
operations. Information disclosed in the tables presented below may
differ from separate financial statements presented by subsidiaries of
the Company due to certain elimination entries required in
consolidation.
Revenues attributed to geographic areas were based upon the country of
domicile for marine service segment customers and the country in which
the Company provided oil spill protection or other related training and
consulting services for environmental service segment customers.
Revenues from services rendered to divisions or subsidiaries of one
customer totaled $26,139,000 in 1999, $40,717,000 in 1998 and
$41,852,000 in 1997 (9% of revenues in 1999, 11% of revenues in 1998,
and 12% of revenues in 1997). Information about profit and loss and
assets by business segment is as follows for the years ended December
31, in thousands of dollars:
<TABLE>
<CAPTION>
Corporate
Marine Environmental Drilling and Other Total
------------ -------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
1999
Operating Revenues -
External Customers.............................$ 258,177 $ 22,659 $ 7,651 $ 938(a)$ 289,425
Intersegment................................... 528 161 - (689) -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 258,705 $ 22,820 $ 7,651 $ 249 $ 289,425
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 46,158 $ 4,801 $ (585) $ 144 $ 50,518
Gains from Equipment Sales or Retirements, net... 1,661 16 - - 1,677
Loss from Sale of Interest in a 50% or Less
Owned Company.................................... (72) - - - (72)
Equity in Net Earnings (Losses) of 50% or
Less Owned Companies........................... 4,906 814 - (3,107) 2,613
Minority Interest in Loss of Subsidiaries........ - - - 1,148 1,148
Interest Income.................................. - - - 20,495 20,495
Interest Expense................................. - - - (22,330) (22,330)
Losses from Commodity Swap Transactions, net..... - - - (1,323) (1,323)
Losses from Sale of Marketable Securities, net... - - - (279) (279)
Corporate Expenses............................... - - - (5,169) (5,169)
Income Taxes..................................... - - - (17,533) (17,533)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 52,653 $ 5,631 $ (585) $ (27,954) $ 29,745
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 41,989 $ 1,288 $ - $ 33,999 $ 77,276
Other Segment Assets............................. 621,197 27,650 199,294 - 848,141
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 663,186 28,938 199,294 33,999 925,417
Corporate........................................ - - - 271,574 271,574
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 663,186 $ 28,938 $ 199,294 $ 305,573 $ 1,196,991
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 34,936 $ 3,815 $ 2,478 $ 53 $ 41,282
=========================================================================================================================
1998
Operating Revenues -
External Customers.............................$ 359,611 $ 26,180 $ - $ - $ 385,791
Intersegment................................... - - - - -
------------ -------------- ------------- ------------- ------------
Total.........................................$ 359,611 $ 26,180 $ - $ - $ 385,791
============ ============== ============= ============= ============
Operating Profit (Loss)..........................$ 127,403 $ 4,479 $ (823) $ - $ 131,059
Gains from Equipment Sales or Retirements, net... 38,227 111 - - 38,338
Gain from Sale of Interest in a 50% or Less
Owned Company.................................... 1,197 - - - 1,197
Equity in Net Earnings of 50% or Less Owned
Companies........................................ 13,657 554 - - 14,211
Minority Interest in Income of Subsidiaries...... - - - (1,612) (1,612)
Interest Income.................................. - - - 25,346 25,346
Interest Expense................................. - - - (22,798) (22,798)
Gains from Commodity Swap Transactions, net...... - - - 3,273 3,273
Gains from Sale of Marketable Securities, net.... - - - 1,827 1,827
Corporate Expenses............................... - - - (5,344) (5,344)
Income Taxes..................................... - - - (60,879) (60,879)
------------ -------------- ------------- ------------- ------------
Income (Loss) before Extraordinary Item......$ 180,484 $ 5,144 $ (823) $ (60,187) $ 124,618
============ ============== ============= ============= ============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies........................$ 54,954 $ 524 $ - $ - $ 55,478
Other Segment Assets............................. 770,614 29,103 177,832 - 977,549
------------ -------------- ------------- ------------- ------------
Subtotal Segment Assets........................ 825,568 29,627 177,832 - 1,033,027
Corporate........................................ - - - 224,948 224,948
------------ -------------- ------------- ------------- ------------
Total Assets.................................$ 825,568 $ 29,627 $ 177,832 $ 224,948 $ 1,257,975
============ ============== ============= ============= ============
Depreciation and Amortization....................$ 32,534 $ 3,846 $ 56 $ 13 $ 36,449
=========================================================================================================================
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
Corporate
Marine Environmental Drilling and Other Total
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1997
Operating Revenues -
External Customers............................$ 325,009 $ 21,939 $ - $ - $ 346,948
Intersegment.................................. - - - - -
------------ ------------- ------------- ------------- -------------
Total........................................ 325,009 $ 21,939 $ - $ - $ 346,948
============ ============= ============= ============= =============
Operating Profit $ 115,818 $ 3,029 $ (382) $ - $ 118,465
(Loss).............................
Gains (Losses) from Equipment Sales or 62,027 (99) - - 61,928
Retirements, net................................
Equity in Net Earnings of 50% or Less Owned 5,656 771 - - 6,427
Companies.......................................
Minority Interest in Income of Subsidiaries..... - - - (301) (301)
Interest Income................................. - - - 12,756 12,756
Interest Expense................................ - - - (14,168) (14,168)
Corporate Expenses.............................. - - - (3,278) (3,278)
Income Taxes.................................... - - - (62,236) (62,236)
------------ ------------- ------------- ------------- -------------
Income (Loss) before Extraordinary Item.....$ 183,501 $ 3,701 $ (382) $ (67,227) $ 119,593
============ ============= ============= ============= =============
Investments, at Equity, and Receivables from 50%
or Less Owned Companies.......................$ 37,151 $ 1,219 $ - $ - $ 38,370
or Less Owned Companies.........................
Other Segment Assets............................ 702,449 32,861 67,398 - 802,708
------------ ------------- ------------- ------------- -------------
Subtotal Segment Assets....................... 739,600 34,080 67,398 - 841,078
Corporate....................................... - - - 178,723 178,723
------------ ------------- ------------- ------------- -------------
Total Assets................................$ 739,600 $ 34,080 $ 67,398 $ 178,723 $ 1,019,801
============ ============= ============= ============= =============
Depreciation and Amortization...................$ 32,914 $ 3,563 $ 6 $ 55 $ 36,538
==========================================================================================================================
</TABLE>
(a) Includes the operating revenues of the Company's telecommunications
business, Marinet, which was acquired in April 1999 and sold effective
July 1, 1999.
The Company considers long-lived assets to be property and equipment
that has been distributed to geographical areas based upon the assets'
physical location during the applicable period. Certain of the Company's
offshore marine service segment's long-lived vessel assets relocate
between its geographical areas of operation. The costs of long-lived
vessel assets that are relocated have been allocated between
geographical areas of operation based upon length of service in the
applicable region. Information concerning principal geographic areas was
as follows for the years ending December 31, in thousands of dollars:
<TABLE>
<CAPTION>
United United Other
States Nigeria Kingdom Foreign Total
------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
1999:
Revenue........................... $ 186,673 $ 19,324 $ 24,643 $ 58,785 $ 289,425
Long-Lived Assets................. 550,106 40,486 33,083 91,522 715,197
1998:
Revenue........................... 234,651 30,655 28,524 91,961 385,791
Long-Lived Assets................. 406,945 47,257 31,416 139,243 624,861
1997:
Revenue........................... 216,513 25,318 39,099 66,018 346,948
Long-Lived Assets................. 262,309 42,888 42,213 135,524 482,934
</TABLE>
14. SUBSEQUENT EVENTS:
Subsequent to December 31, 1999, SEACOR reported that its Board of
Directors had increased its previously announced securities repurchase
program by $15,000,000. With this increase, the Company has
approximately $37,400,000 available for such purposes. The securities
covered by the repurchase program continue to include the Company's
common stock, its 5 3/8% Notes, its 7.2% Notes, and the Chiles 10.0%
Notes. Subsequent to December 31, 1999, the Company has purchased
approximately $4,000,000 of its securities, primarily its common stock
and as of March 24, 2000 has approximately 11,206,000 common shares
outstanding. The repurchase of securities will be conducted from time to
time through open market purchases, privately negotiated transactions,
or otherwise depending on market conditions.
On February 9, 2000, the Company announced that it signed a letter of
intent to acquire all of the issued share capital of Boston Putford.
Boston Putford's standby safety vessels, certain joint venture interests
and vessels, and fixed assets will be acquired for aggregate
consideration of approximately (pound)19,000,000. Boston Putford will
also receive aggregate consideration of approximately (pound)5,000,000
for working capital in the companies at closing. The purchase
consideration will consist of (pound)15,000,000 in cash, approximately
84,000 shares of SEACOR's common stock, approximately (pound)9,100,000
in five year zero coupon notes having a current value of
(pound)6,200,000, and the assumption of certain liabilities. The final
purchase price is subject to certain closing adjustments. Boston
Putford's standby safety fleet, including vessels held in joint ventures
but excluding vessels managed for third parties, consists of 18 vessels
operating primarily in the southern U.K. sector of the North Sea.
Consummation of the transaction is also subject to satisfactory
completion of due diligence, execution of definitive documentation, and
receipt of all necessary regulatory approvals and compliance with
appropriate procedures in the United States and the United Kingdom. The
Company expects to consolidate its standby safety services in the U.K.
sector of the North Sea into the Boston Putford operations following
completion of its acquisition of Boston Putford.
67
<PAGE>
15. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ----------- ----------
(in thousands of dollars)
<S> <C> <C> <C>
Cash income taxes paid.................................................................. $ 5,048 $ 47,345 $ 29,160
Cash interest paid...................................................................... 35,875 22,514 12,022
Schedule of Non-Cash Investing and Financing Activities:
Property exchanged for investment in and notes receivable from 50% or less owned - - 2,240
company.................................................................................
Sale of a subsidiary to Globe Wireless for a note receivable........................ 5,279 - -
Conversion of loans into convertible preferred units of Globe Wireless.............. 22,000 - -
Investment in 50% or less owned companies with long-term debt, including debt - 738 -
discount...............................................................................
Acquisition of ERST/O'Brien's Inc. with SEACOR's common stock....................... 1,482 442 3,614
Purchase of vessels with - SEACOR's common stock....................... - - 4,342
- notes, including debt discount.............. - 22,462 -
</TABLE>
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Selected financial information for interim periods are presented below
in thousands of dollars, except share data. Earnings per share are
computed independently for each of the quarters presented; therefore,
the sum of the quarterly earnings per share do not necessarily equal the
total for the year.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31,
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
1999:
Revenue..................................... $ 71,335 $ 71,894 $ 68,475 $ 77,721
Gross profit(1)............................. 18,129 19,031 17,496 26,701
Income before extraordinary item............ 6,140 4,109 6,217 13,279
Basic earnings per common share -
Income before extraordinary item........ 0.55 0.34 0.51 1.08
Extraordinary item...................... - 0.08 - 0.02
-------------- -------------- -------------- ---------------
Net Income.............................. $ 0.55 $ 0.42 $ 0.51 $ 1.10
============== ============== ============== ===============
Diluted earnings common per share -
Income before extraordinary item........ $ 0.55 $ 0.34 $ 0.51 $ 0.97
Extraordinary item...................... - 0.07 - 0.02
-------------- -------------- -------------- ---------------
Net Income.............................. $ 0.55 $ 0.41 $ 0.51 $ 0.99
============== ============== ============== ===============
1998:
Revenue..................................... $ 92,791 $ 100,043 $ 95,744 $ 97,213
Gross profit(1)............................. 35,194 42,416 42,189 41,821
Income before extraordinary item............ 27,937 26,361 36,050 34,270
Basic earnings per common share -
Income before extraordinary item........ 2.21 2.02 2.74 2.51
Extraordinary item...................... 0.10 - - -
-------------- -------------- -------------- ---------------
Net Income.............................. $ 2.31 $ 2.02 $ 2.74 $ 2.51
============== ============== ============== ===============
Diluted earnings common per share -
Income before extraordinary item........ $ 1.90 $ 1.75 $ 2.34 $ 2.16
Extraordinary item...................... 0.08 - - -
-------------- -------------- -------------- ---------------
Net Income.............................. $ 1.98 $ 1.75 $ 2.34 $ 2.16
============== ============== ============== ===============
</TABLE>
- ---------------------
(1) Gross profit is defined as Operating Income as reported in the
Consolidated Statements of Income plus general and administrative
expenses.
68
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To SEACOR SMIT Inc.:
We have audited, in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements of
SEACOR SMIT Inc. and its subsidiaries and have issued our report thereon
dated February 15, 2000. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The
schedule on page 62 is the responsibility of the Company's management
and is presented for the purpose of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana
February 15, 2000
69
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Balance Charges to Balance
Beginning Cost and (a) End
Description of Year Expenses Deductions of Year
- ------------------------------------------------ ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1999
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 1,956 $ (328) $ 61 $ 1,567
============= ============== ============= ==============
Year Ended December 31, 1998
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 1,626 $ 455 $ 125 $ 1,956
============= ============== ============= ==============
Year Ended December 31, 1997
Allowance for doubtful accounts
(deducted from accounts receivable)..... $ 475 $ 1,155 $ 4 $ 1,626
============= ============== ============= ==============
</TABLE>
(a) Accounts receivable amounts deemed uncollectible and removed from
accounts receivable and allowance for doubtful accounts.
70
<PAGE>
SEACOR SMIT INC.
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR END DECEMBER 31, 1999
Exhibit
Number Description
- ------ -----------
2.1* Asset Purchase Agreement, dated as of December 19, 1996, by and
among SEACOR Holdings, Inc. and certain of its subsidiaries, and
Smit Internationale N.V. and certain of its subsidiaries
(incorporated herein by reference to Exhibit 2.0 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
2.2* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Triangle Marine, Inc.,
F.C. Felterman, Ernest Felterman, D. Lee Felterman and Daniel C.
Felterman (incorporated herein by reference to Exhibit 2.1 to
the Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.3* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman,
Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein, by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.4* Definitive Purchase Agreement, dated September 5, 1995, by and
among Graham Marine Inc., Edgar L. Graham, J. Clark Graham, and
Glenn A. Graham (incorporated herein by reference to Exhibit 2.0
to the Company's Current Report on Form 8-K dated September 15,
1995).
2.5* Global Agreement, dated as of November 14, 1995, by and among
Compagnie Nationale de Navigation and Feronia International
Shipping, SA and SEACOR Holdings, Inc. and the subsidiaries
listed in said agreement (incorporated herein by reference to
Exhibit 2.2 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
2.6* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and McCall
Enterprises, Inc. (incorporated herein by reference to Exhibit
2.1 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with the Commission on June 7, 1996).
2.7* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Support Services, Inc. and
McCall Support Vessels, Inc. (incorporated herein by reference
to Exhibit 2.2 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
2.8* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall
Crews, Inc. (incorporated herein by reference to Exhibit 2.3 to
the Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
2.9* Exchange Agreement relating to McCall Crewboats, L.L.C., dated
as of May 31, 1996, by and among SEACOR Holdings, Inc. and the
persons listed on the signature pages thereto (incorporated
71
<PAGE>
herein by reference to Exhibit 2.4 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.10* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Boat Rentals, Inc., dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., McCall Enterprises, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.5 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with the
Commission on June 7, 1996).
2.11* Share Exchange Agreement and Plan of Reorganization relating to
Philip A. McCall, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.6 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
2.12* Share Exchange Agreement and Plan of Reorganization relating to
Cameron Crews, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the persons
listed on the signature pages thereto (incorporated herein by
reference to Exhibit 2.7 to the Company's Current Report on Form
8-K dated May 31, 1996 and filed with the Commission on June 7,
1996).
3.1* Restated Certificate of Incorporation of SEACOR SMIT Inc.
(incorporated herein by reference to Exhibit 3.1(a) to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
3.2* Certificate of Amendment to the Restated Certificate of
Incorporation of SEACOR SMIT Inc. (incorporated herein by
reference to Exhibit 3.1(b) to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1997 and filed
with the Commission on August 14, 1997).
3.3* Amended and Restated By-laws of SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (No. 333-12637) of
SEACOR Holdings, Inc. filed with the Commission on September 25,
1996).
4.1* Indenture, dated as of November 1, 1996, between First Trust
National Association, as trustee, and SEACOR Holdings, Inc.
(including therein forms of 5-3/8% Convertible Subordinated
Notes due November 15, 2006 of SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 4.0 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 and filed with the Commission on
November 14, 1996).
4.2* Indenture, dated as of September 22, 1997, between SEACOR SMIT
Inc. and First Trust National Association, as trustee (including
therein form of Exchange Note 7.20% Senior Notes Due
2009)(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.3* Investment and Registration Rights Agreement, dated as of March
14, 1995, by and among SEACOR Holdings, Inc., Miller Family
Holdings, Inc., Charles Fabrikant, Mark Miller, Donald
Toenshoff, Alvin Wood, Granville Conway and Michael Gellert
(incorporated herein by reference to Exhibit 4.0 of the
Company's Current Report on Form 8-K dated March 14, 1995, as
amended).
4.4* Investment and Registration Rights Agreement, dated as of May
31, 1996, among SEACOR Holdings, Inc. and the persons listed on
the signature pages thereto (incorporated herein by reference to
Exhibit 10.8 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with the Commission on June 7, 1996).
4.5* Registration Rights Agreement, dated November 5, 1996, between
SEACOR Holdings, Inc. and Credit Suisse First Boston
Corporation, Salomon Brothers Inc. and Wasserstein Perella
Securities, Inc. (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 and filed with the
Commission on November 14, 1996).
4.6* Investment and Registration Rights Agreement, dated as of
December 19, 1996, by and between SEACOR Holdings, Inc. and Smit
International Overseas B.V. (incorporated herein by reference to
Exhibit 4.0 to the Company's Current Report on Form 8-K dated
72
<PAGE>
December 19, 1996 and filed with the Commission on December 24,
1996).
4.7* Investment and Registration Rights Agreement, dated as of
January 3, 1997, among SEACOR Holdings, Inc., Acadian Offshore
Services, Inc., Galaxie Marine Service, Inc., Moonmaid Marine,
Inc. and Triangle Marine, Inc. (incorporated herein by reference
to Exhibit 4.6 to the Company's Registration Statement on Form
S-3 (No. 333-20921) filed with the Commission on January 31,
1997).
4.8* Investment and Registration Rights Agreement, dated October 27,
1995, by and between SEACOR Holdings, Inc. and Coastal Refining
and Marketing, Inc. (incorporated herein by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3 (No.
33-97868) filed with the Commission on November 17, 1995).
4.9* Investment and Registration Rights Agreement, dated November 14,
1995, by and between SEACOR Holdings, Inc. and Compagnie
Nationale de Navigation (incorporated herein by reference to
Exhibit 4.3 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 17, 1995).
4.10* Registration Agreement, dated as of September 22, 1997, between
the Company and the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
4.11* Restated Stockholders' Agreement dated December 16, 1992
(incorporated herein by reference to Exhibit 10.12 to the Annual
Report on Form 10-K of SEACOR Holdings, Inc. for the fiscal year
ended December 31, 1992).
10.1* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Enterprises, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.2* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Support Vessels, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.2
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.3* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of N.F. McCall Crews, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.3 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.4* Indemnification Agreement, dated as of May 31, 1996, among all
of the members of McCall Crewboats, L.L.C., Norman McCall, as
representative of such members, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
10.5* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Boat Rentals, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.5
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.6* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Philip A. McCall, Inc. and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with the Commission on June 7, 1996).
10.7* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.7 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with the Commission on June 7, 1996).
73
<PAGE>
10.8* The Master Agreement, dated as of June 6, 1996, by and among
Compagnie Nationale de Navigation, SEACOR Holdings, Inc. and
SEACOR Worldwide Inc. (incorporated herein by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1996).
10.9* Management and Administrative Services Agreement, dated January
1, 1990, between SCF Corporation and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.32 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.10* Amendment No. 1 to the Management and Services Agreement, dated
as of January 1, 1993, between SCF Corporation and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.34 to the Annual Report on Form 10-K of SEACOR Holdings, Inc.
for the fiscal year ended December 31, 1992).
10.11* Lease Agreement, dated September 1, 1989, between The Morgan
City Fund and NICOR Marine Inc. (SEACOR Marine Inc., as
successor lessee) (incorporated herein by reference to Exhibit
10.33 to the Company's Registration Statement on Form S-1 (No.
33-53244) filed with the Commission on November 10, 1992).
10.12*,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.13*,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated
herein by reference to SEACOR Holdings, Inc.'s Proxy Statement
dated March 18, 1996 relating to the Annual Meeting of
Stockholders held on April 18, 1996).
10.14*,** Benefit Agreement, dated May 1, 1989, between NICOR Marine Inc.
and Lenny P. Dantin (assumed by SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 10.51 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.15*,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by reference
to Exhibit 10.61 to the Annual Report on Form 10-K of SEACOR
Holdings, Inc. for the fiscal year ended December 31, 1992).
10.16* Management and Services Agreement, dated January 1, 1985,
between NICOR Marine (Nigeria) Inc. and West Africa Offshore
Limited (assumed by SEACOR Holdings, Inc.) (incorporated herein
by reference to Exhibit 10.55 to the Company's Registration
Statement on Form S-1 (No. 33-53244) filed with the Commission
on November 10, 1992).
10.17* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.18* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.19* Joint Venture Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit-Lloyd (Antillen) N.V. (incorporated
herein by reference to Exhibit 10.0 to the Company's Current
Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.20* Form of Management Agreement (incorporated herein by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.21* Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated herein
by reference to Exhibit 10.3 to the Company's Current Report on
74
<PAGE>
Form 8-K dated December 19, 1996 and filed with the Commission
on December 24, 1996).
10.22* Salvage and Maritime Contracting Agreement, dated December 19,
1996, between SEACOR Holdings, Inc. and Smit Internationale N.V.
(incorporated herein by reference to Exhibit 10.5 to the
Company's Current Report on Form 8-K dated December 19, 1996 and
filed with the Commission on December 24, 1996).
10.23* License Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc., certain subsidiaries of SEACOR Holdings, Inc.
and Smit Internationale N.V. (incorporated herein by reference
to Exhibit 10.6 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.24* Amended and Restated Operating Agreement of Chiles Offshore LLC,
dated as of December 16, 1997, between SEACOR Offshore Rigs
Inc., COI, LLC and the other Members identified therein.
10.25* Letter Agreement, dated February 26, 1998, between SEACOR SMIT
Inc. and certain of its subsidiaries and SMIT Internationale
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K filed with the Commission of March 11, 1998).
10.26* Purchase Agreement, dated as of September 15, 1997, between the
Company and Salomon Brothers Inc., individually and as
representative of the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-4 (No. 333-38841)
filed with the Commission on October 27, 1997).
10.27* Revolving Credit Facility Agreement dated as of June 30, 1997
among SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the
other banks and financial institutions named therein
(incorporated herein by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August 14,
1997).
10.28* Agreement, dated October 27, 1995, by and among SEACOR Holdings,
Inc., NRC Holdings, Inc., Coastal Refining and Marketing, Inc.,
and Phibro Energy USA, Inc. (incorporated herein by reference to
Exhibit 10.1 of the Company's Registration Statement on Form S-3
(No. 33-97868) filed with the Commission on November 15, 1995).
10.29*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and Mark Miller (incorporated
herein by reference to Exhibit 10.3 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.30*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and James Miller (incorporated
herein by reference to Exhibit 10.4 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with the
Commission on November 15, 1995).
10.31*,** Letter agreement, dated February 26, 1997, between SEACOR SMIT
Inc. and certain of its' subsidiaries and SMIT Internationale,
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Current Report on Form 8-K
filed with the Commission on March 11, 1998).
10.32 Agreement for a U.S. $100,000,000 Revolving Credit Facility to
be made available to SEACOR SMIT Inc. by the financial
institutions identified on Schedule A and Den Norske Bank ASA,
as agent, dated November 17, 1998.
10.33 Amendment No. 1 To Credit Agreement made as of February 4, 1999
by and between SEACOR SMIT Inc., the financial institutions
listed in Schedule A to that certain Credit Agreement dated
November 17, 1998 and Den norske Bank ASA.
10.34 Amendment No. 2 To Credit Agreement made as of October 1, 1999
by and between SEACOR SMIT Inc., certain financial institutions
and Den norske Bank ASA., which further amends that certain
Revolving Credit Agreement dated November 17, 1998 and Amendment
No. 1 thereto dated February 4, 1999.
10.35** Form of Type A Restricted Stock Grant Agreement.
10.36** Form of Type B Restricted Stock Grant Agreement.
10.37** Form of Option Agreement for Officers and Key Employees pursuant
to the SEACOR SMIT Inc. 1996 Share Incentive Plan.
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
- --------------------
* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required
to be filed as an exhibit pursuant to Item14 (c) of the rules governing
the preparation of this report.
75
EXHIBIT 10.32
================================================================================
AGREEMENT FOR
A
U.S. $100,000,000
REVOLVING CREDIT FACILITY
TO BE MADE AVAILABLE TO
SEACOR SMIT INC.
BY
THE FINANCIAL INSTITUTIONS
IDENTIFIED ON SCHEDULE A
AND
DEN NORSKE BANK ASA, AS AGENT
================================================================================
November 17, 1998
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1 DEFINITIONS...................................................................................................1
1.1 Defined Terms..................................................................................1
1.2 Construction..................................................................................11
1.3 Accounting Terms..............................................................................11
1.4 Headings......................................................................................11
SECTION 2 REPRESENTATIONS AND WARRANTIES..............................................................................11
2.1(a) Due Organization and Power....................................................................11
2.1(b) Authorization and Consents....................................................................11
2.1(c) Binding Obligations...........................................................................11
2.1(d) No Violation..................................................................................12
2.1(e) Litigation....................................................................................12
2.1(f) No Default....................................................................................12
2.1(g) Vessel Ownership, Classification, and Insurance...............................................12
2.1(h) Citizenship...................................................................................12
2.1(i) Financial Statements..........................................................................13
2.1(j) Tax Returns and Payments......................................................................13
2.1(k) Insurance.....................................................................................13
2.1(l) Solvency......................................................................................13
2.1(m) Environmental Matters.........................................................................13
2.1(n) Foreign Trade Control Regulations.............................................................14
SECTION 3 ADVANCES OF THE FACILITY/LETTERS OF CREDIT..................................................................14
3.1 Advances......................................................................................14
3.2 Use of Proceeds...............................................................................15
3.3 Drawdown Notice...............................................................................15
3.4 Drawdown Notice a Warranty....................................................................15
3.5 Notation of Advance on Note...................................................................15
3.6 Foreign Currency Advances.....................................................................15
3.7 Letters of Credit.............................................................................16
3.8 Letter of Credit Requests; Request for
Issuance of Letter of Credit..................................................................16
3.9 Letter of Credit Payments Deemed Advances.....................................................17
3.10 Letter of Credit Participation................................................................18
SECTION 4 CONDITIONS..................................................................................................19
4.1 Conditions Precedent to Drawdown of the
Initial Advance under the Credit Facility....................................................19
i
<PAGE>
4.2 Further Conditions Precedent..................................................................21
4.3 Break Funding Costs...........................................................................22
4.4 Satisfaction after Drawdown...................................................................22
SECTION 5 REPAYMENT, PREPAYMENT AND REDUCTION.........................................................................22
5.1 Repayment.....................................................................................22
5.2 Scheduled Reductions of the Committed Amount..................................................22
5.3 Prepayment....................................................................................22
5.4 Permanent Reduction of the Committed
Amount of the Credit Facility.................................................................23
5.5 Reduction of Commitment.......................................................................23
SECTION 6 INTEREST AND RATE...........................................................................................23
6.1 Applicable Rate...............................................................................23
6.2 The Margin....................................................................................23
6.3 LIBOR; Interest Periods.......................................................................24
6.4 Interest Payments.............................................................................24
6.5 Interest due only on Banking Day..............................................................25
6.6 Calculation of Interest.......................................................................25
SECTION 7 PAYMENTS 25
7.1 Place of Payments, No Set Off.................................................................25
7.2 Proof of no Withholding.......................................................................25
7.3 Federal Income Tax Credits....................................................................26
SECTION 8 ACCOUNTS 26
8.1 The Operating Accounts........................................................................26
SECTION 9 EVENTS OF DEFAULT............................................................................................26
9.1(a) Principal Payments............................................................................26
9.1(b) Interest and Other Payments...................................................................26
9.1(c) Representations, etc..........................................................................26
9.1(d) Impossibility, Illegality.....................................................................26
9.1(e) Citizenship...................................................................................27
9.1(f) Financial Covenants...........................................................................27
9.1(g) Other Covenants...............................................................................27
9.1(h) Debt..........................................................................................27
9.1(i) Bankruptcy....................................................................................27
9.1(j) Judgments.....................................................................................27
9.1(k) Inability to Pay Debts........................................................................28
9.1(l) Vessels Value/Commitment......................................................................28
9.1(m) Change of Control of the Borrower.............................................................28
ii
<PAGE>
9.2 Indemnification...............................................................................28
9.3 Application of Moneys.........................................................................29
SECTION 10 COVENANTS 29
10.1 ..........................................................................................29
10.1A(i) Performance of Agreements.................................................................30
10.1A(ii) Compliance with Covenants.................................................................30
10.1A(iii) Notice of Default.........................................................................30
10.1A(iv) Obtain Consents...........................................................................30
10.1A(v) Financial Statements......................................................................30
10.1A(vi) Qualification to Own U.S. Flag Vessels....................................................31
10.1A(vii) Corporate Existence.......................................................................31
10.1A(viii) Books, Records, etc.......................................................................31
10.1A(ix) Inspection................................................................................32
10.1A(x) Taxes.....................................................................................32
10.1A(xi) Compliance with Statutes, etc.............................................................32
10.1A(xii) Environmental Matters.....................................................................32
10.1A(xiii) Evidence of Insurance.....................................................................33
10.1A(xiv) Maintenance of Assets.....................................................................33
10.1A(xv) Funded Debt/Total Capitalization..........................................................33
10.1A(xvi) Senior Debt/Total Capitalization..........................................................33
10.1A(xvii) Permitted Secured Senior Debt.............................................................33
10.1A(xviii) Cash, Cash Equivalents....................................................................33
10.1A(xix) Interest Coverage Ratio...................................................................33
10.1A(xx) Consolidated Net Worth....................................................................33
10.1A(xxi) ERISA Matters.............................................................................34
10.1A(xxii) Delivery of Share Certificates............................................................34
10.1B(i) Liens.....................................................................................34
10.1B(ii) Sale of Assets............................................................................35
10.1B(iii) Dividends.................................................................................35
10.1B(iv) Changes in Business.......................................................................35
10.1B(v) Consolidation, Merger.....................................................................35
10.1B(vi) Use of Proceeds...........................................................................35
10.1(B)(vii) Redemption/Repurchase of Securities.......................................................35
10.1(B)(viii) Negative Pledge...........................................................................36
10.2 Vessel Valuations.........................................................................36
10.3 Inspection and Survey Reports.............................................................36
iii
<PAGE>
SECTION 11 ASSIGNMENT AND PARTICIPATIONS..............................................................................36
SECTION 12 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC.............................................................................37
12.1 Illegality....................................................................................37
12.2 Increased Cost................................................................................37
12.3 Non-availability of Funds.....................................................................38
12.4 Determination of Losses.......................................................................39
12.5 Compensation for Losses.......................................................................39
SECTION 13 CURRENCY INDEMNITY.........................................................................................39
13.1 Currency Conversion...........................................................................39
13.2 Change in Exchange Rate.......................................................................39
13.3 Additional Debt Due...........................................................................40
13.4 Rate of Exchange..............................................................................40
SECTION 14 FEES AND EXPENSES..........................................................................................40
14.1 Commitment Fee................................................................................40
14.2 Letter of Credit and Facing Fees and
Related Charges...............................................................................41
14.3 Agency Fee....................................................................................41
14.4 Agent's Other Fees............................................................................41
14.5 Costs, Charges and Expenses...................................................................41
SECTION 15 APPLICABLE LAW, JURISDICTION AND WAIVER....................................................................42
15.1 Applicable Law................................................................................42
15.2 Jurisdiction..................................................................................42
15.3 Waiver of Jury Trial..........................................................................42
SECTION 16 THE AGENT.........................................................................................43
16.1 Appointment of Agent..........................................................................43
16.2 Distribution of Payments......................................................................43
16.3 Holder of Interest in Note....................................................................43
16.4 No Duty to Examine, Etc.......................................................................43
16.5 Agent as Lender...............................................................................43
16.6(a) Obligations of Agent..........................................................................43
16.6(b) No Duty to Investigate........................................................................43
16.7(a) Discretion of Agent...........................................................................44
16.7(b) Instructions of Majority Lenders..............................................................44
16.8 Assumption re Event of Default................................................................44
16.9 No Liability of Agent or Lenders..............................................................44
iv
<PAGE>
16.10 Indemnification of Agent......................................................................45
16.11 Consultation with Counsel.....................................................................45
16.12 Resignation...................................................................................45
16.13 Representations of Lenders....................................................................45
16.14 Notification of Event of Default..............................................................46
16.15 No Agency until Syndication...................................................................46
SECTION 17 NOTICES AND DEMANDS........................................................................................46
17.1 Notices in Writing............................................................................46
17.2 Addresses for Notice..........................................................................46
17.3 Notices Deemed Received.......................................................................46
SECTION 18 MISCELLANEOUS..............................................................................................47
18.1 Time of Essence...............................................................................47
18.2 Unenforceable, etc., Provisions - Effect......................................................47
18.3 References....................................................................................47
18.4 Further Assurances............................................................................47
18.5 Entire Agreement, Amendments..................................................................47
SCHEDULES
A THE LENDERS AND THEIR COMMITMENTS
B THE VESSEL OWNING/OPERATING SUBSIDIARIES AND OTHER SUBSIDIARIES
C THE VESSELS
D COMPANY CHART
E EXISTING NEWBUILDINGS
F EXISTING LETTERS OF CREDIT
EXHIBITS
1 NOTE
2 FORM OF DRAWDOWN NOTICE
3 FORM OF LETTER OF CREDIT REQUEST
4 FORM OF COMPLIANCE CERTIFICATE
5 FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
</TABLE>
v
<PAGE>
REVOLVING CREDIT FACILITY AGREEMENT
THIS REVOLVING CREDIT FACILITY AGREEMENT made this 17th day
of November, 1998, by and among (1) SEACOR SMIT INC., a corporation incorporated
under the laws of the State of Delaware with offices at 11200 Westheimer, Suite
850, Houston, Texas (hereinafter called the "Borrower"), (2) the banks and
financial institutions whose names and addresses are set out in Schedule A
hereto (together with any assignee pursuant to Section 11, collectively, the
"Lenders", each a "Lender"); and (3) DEN NORSKE BANK ASA, a bank incorporated
under the laws of the Kingdom of Norway, acting through its New York branch,
with offices at 200 Park Avenue, New York, New York, as arranger and
administrative agent (hereinafter called the "Agent")
WITNESSETH THAT:
1 DEFINITIONS
1.1. Defined Terms. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings attributed
to them below:
"Acceptable Accounting Firm" means Arthur Anderson & Co., L.L.P. or any
other firm of independent certified public
or chartered accountants of international
reputation selected by the Borrower and
acceptable to the Agent;
"Advance" means any Dollar Advance or Foreign Currency
Advance;
"Agent's Exchange Rate" means the exchange rate offered by the Agent
of Dollars for a particular foreign currency
or vice versa in accordance with its normal
practices on the relevant date, in either
case, including any costs associated with
the relevant exchange contract;
"Agreement" means this revolving credit facility
agreement as the same may be amended,
restated, modified or supplemented from time
to time;
"Applicable Rate" means any rate of interest on any Advance
from time to time applicable pursuant to
Section 6.1;
"Assignment and Assumption
Agreement(s)" shall mean the Assignment and Assumption
Agreement(s) executed pursuant to Section 11
substantially in the form of Exhibit 5;
<PAGE>
"Banking Day(s)" means day(s) on which banks are open for the
transaction of business of the nature
required by this Agreement in the place or
places from time to time specified;
"Base Rate" means the higher of (i) the Agent's Prime
Rate and (ii) one-half percent (1/2%) above
the Federal Funds Effective Rate;
"Basis Point" or the symbol "bp" means one one-hundredth of one percent
(0.01%).
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United
States of America or any agency or
instrumentality thereof (provided that the
full faith and credit of the United States
of America is pledged in support thereof)
having maturities of not more than ninety
(90) days from the date of acquisition, (ii)
time deposits and certificates of deposit of
any Lender or any commercial bank of
recognized standing having capital and
surplus in excess of Five Hundred Million
Dollars ($500,000,000), (iii) repurchase
obligations with a term of not more than
seven (7) days for underlying securities of
the types described in (i) above entered
into with any Lender or any bank meeting the
qualifications specified in (ii) above, and
(iv) commercial paper issued by any Lender
or the parent corporation of any commercial
bank of recognized standing organized under
the laws of the United States of America or
any state thereof having capital and surplus
in excess of Five Hundred Million Dollars
($500,000,000), and commercial paper rated
at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent
thereof by Moody's, and in each case
maturing within ninety (90) days after the
date of acquisition;
"Change of Control" means either (i) any "person" (as such term
is defined in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as
amended) is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, as
amended), directly or indirectly, of more
than fifty percent (50%) of the total voting
power of the voting stock of any company or
(ii) the Board of Directors of any company
ceases to consist of a majority of the
existing directors or directors elected by
the existing directors of such company;
2
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"Chiles" means, collectively, Chiles Offshore L.L.C.,
a limited liability company organized and
existing under the laws of the State of
Delaware, together with its consolidated
subsidiaries;
"Chiles Consolidated Debt" any indebtedness of Chiles which (a), in
accordance with GAAP, is included in the
consolidated indebtedness of the Borrower
and (b) is without recourse to the Borrower,
the Subsidiaries (other than Chiles) or the
assets of the Borrower or such Subsidiaries;
"Chiles Consolidated EBITDA" means, the aggregate, to be measured on a
trailing twelve (12) month basis, of
operating income (before deductions for
interest, taxes, depreciation and
amortization) of Chiles which ), in
accordance with GAAP, is consolidated into
the Borrower;
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute and the
regulations promulgated thereunder;
"Committed Amount" means One Hundred Million Dollars
($100,000,000), as reduced from time to time
pursuant to Sections 5.2 and 5.4, being the
maximum aggregate principal amount in
Dollars of the Advances and Letters of
Credit which may be outstanding at any time
under the Credit Facility;
"Commitment" shall mean in relation to a Lender, the
portion of the Credit Facility set out
opposite its name in Schedule A hereto or,
as the case may be, in any relevant
Assignment and Assumption Agreement, as the
same may be reduced from time to time as
provided by Section 5.5;
"Compliance Certificate" means a certificate of the chief financial
officer of the Borrower in the form set out
in Exhibit 4 or in such other form as the
Agent may reasonably require and which
shall, include, among other things, notice
of any events specified Section 10.1B(viii)
"Consolidated Net Worth" for any period, shall mean, for any company,
the sum of such company's common and
preferred stock (excluding any capital stock
subject to mandatory redemption) and
additional paid-in-capital, plus retained
earnings (minus accumulated deficit) and
currency translation adjustments, all as
3
<PAGE>
shown on the consolidated balance sheet of
such company and its subsidiaries as
determined in accordance with GAAP;
"Credit Facility" means the sums advanced or to be advanced by
the Lenders to the Borrower and the Letters
of Credit to be issued by the Letter of
Credit Issuer for the account of the
Borrower, all pursuant to, and subject to
the terms of, this Agreement;
"Credit Facility Balance" means the sum of (i) the amount of the
Dollar Advances, (ii) the amount of the then
Dollar Equivalent of the Foreign Currency
Advances and (iii) the amount of the Letter
of Credit Outstandings at any relevant time,
all as reduced by payments and increased by
Advances and Letters of Credit pursuant to
the terms of this Agreement;
"Credit Period" means the period from the Drawdown Date of
the initial Advance made hereunder to the
date upon which the Advances and all other
amounts due to the Lenders and the Agent
pursuant to this Agreement and the Note are
repaid or prepaid in full;
"CRN Group" means CRN Holdings, Inc., a corporation
organized under the laws of the State of
Delaware, and any of its direct and indirect
subsidiaries now or hereafter acquired;
"Default Rate" shall have the meaning ascribed thereto in
Section 6.1;
"Dollars" and the sign "$" means the legal currency, at any relevant
time hereunder, of the United States of
America and, in relation to all payments
hereunder, in same day funds settled through
the New York Clearing House Interbank
Payments System (or such other Dollar funds
as may be determined by the Agent to be
customary for the settlement in New York
City of banking transactions of the type
herein involved);
"Dollar Advance" means any amount advanced in Dollars to the
Borrower on any Drawdown Date; "Dollar
Equivalent" means any amount of a Foreign
Currency converted to Dollars at the Agent's
Exchange Rate;
"Drawdown Dates" means the dates, each being a Banking Day
falling prior to the Termination Date, upon
which the Borrower has requested that an
Advance be made available to the Borrower or
4
<PAGE>
an Advance is deemed to have been made due
to a drawing under any Letter of Credit;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3.3;
"Dutch Guilders" and the
symbol "Dfl" means the legal currency, at any relevant
time hereunder, of The Netherlands;
"EBITDA" means on a consolidated basis, the
aggregate, to be measured on a trailing
twelve (12) month basis, of (i) operating
income (before deductions for interest,
taxes, depreciation and amortization), (ii)
interest income and (iii) "Equity in Net
Earnings of Fifty Percent (50%) or Less
Owned Companies" (as such term is used in
the Borrower's published financial reports).
For purposes of determining the EBITDA of
the Borrower, Chiles Consolidated EBITDA for
the corresponding period shall be excluded;
"Environmental Affiliate" means any person or entity the liability of
which for Environmental Claims the Borrower
may have assumed by contract or operation of
law;
"Environmental Claim" shall have the meaning ascribed thereto in
Section 2.1(n);
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended;
"ERISA Affiliate" means a trade or business (whether or not
incorporated) which is under common control
with the Borrower within the meaning of
Sections 414(b),(c),(m) or (o) of the Code;
"Events of Default" means any of the events set out in Section
9.1;
"Existing Credit Facility" the credit facility provided under that
certain credit agreement, dated June 30,
1997, among the Borrower, the financial
institutions named therein as Lenders, and
the Agent;
"Existing Letters of Credit" shall have the meaning ascribed thereto in
Section 3.7;
"Facing Fee" shall have the meaning ascribed thereto in
Section 14.2;
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such
period to the weighted average of the rates
on overnight Federal Funds transactions with
members of the Federal Reserve System
arranged by Federal Funds brokers, as
5
<PAGE>
published for such day (or, if such day is
not a Banking Day, for the next preceding
Banking Day) by the Federal Reserve Bank of
New York, or, if such rate is not so
published for any day which is a Banking
Day, the average of the quotations for such
day on such transactions received by the
Agent from three (3) Federal Funds brokers
of recognized standing selected by the
Agent;
"Foreign Currency" means any of Pounds Sterling, Dutch Guilders
or French Francs;
"Foreign Currency Advance" means an Advance denominated in a Foreign
Currency;
"French Francs" and the symbol "FF" means the legal currency, at any relevant
time hereunder, of France;
"Funded Debt" means, on a consolidated basis, the sum of
(i) indebtedness for borrowed money, all
obligations evidenced by bonds, debentures,
notes or similar instruments, and purchase
money obligations which, in accordance with
GAAP, would be shown on the consolidated
balance sheet as a liability, (ii) all
obligations arising under letters of credit,
(iii) all obligations as lessee under leases
which have been, in accordance with GAAP,
recorded as capitalized lease obligations
and (iv) guaranties of non-consolidated
entity obligations less (v) the Chiles
Consolidated Debt and (vi) indebtedness
which is consolidated in the Borrower's
published financial statements in accordance
with GAAP but which represents a minority
interest holders' share of such indebtedness
unless such minority holders' share has been
guaranteed by the Borrower or a Subsidiary;
"GAAP" shall have the meaning ascribed thereto in
Section 1.3;
"Interest Coverage Ratio" means, on a consolidated basis, (a) EBITDA
divided by (b) an amount equal to interest
payments projected for the following twelve
(12) months (the foregoing calculation shall
assume that (i) all committed revolving
credit facilities are fully drawn and (ii)
interest during the following twelve (12)
months shall accrue at the rates prevailing
at the time of calculation) less (x)
interest on indebtedness which is
consolidated in the Borrower's published
financial statements in accordance with GAAP
but which represents a minority interest
holders' share of such indebtedness and (y)
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<PAGE>
interest on the Chiles Consolidated Debt;
"Interest Notice" means a notice to the Agent specifying the
duration of the relevant Interest Period;
"Interest Period(s)" means period(s) of one (1), three (3) or six
(6) months selected by the Borrower or such
longer period(s) as the Lenders may agree;
"L/C Supportable Obligation" means such obligations of the Borrower as
are not inconsistent with the issuance
policies of the Letter of Credit Issuer;
"Letter of Credit" shall have the meaning ascribed thereto in
Section 3.7;
"Letter of Credit Fee" shall have the meaning ascribed thereto in
Section 14.2;
"Letter of Credit Issuer" means Den norske Bank ASA;
"Letter of Credit Outstandings" means, at any time, the aggregate Stated
Amount of all outstanding Letters of Credit,
less any drawings previously made
thereunder;
"Letter of Credit Participant" shall have the meaning ascribed thereto in
Section 3.10;
"Letter of Credit Participant
Percentage" means, in relation to a Lender, the
percentage of the Credit Facility set out
opposite its name in Schedule A hereto;
"Letter of Credit Request" shall have the meaning ascribed thereto in
Section 3.8;
"LIBOR" means the rate of interest for deposits, in
Dollars or the relevant Foreign Currency, as
the case may be, of an amount equivalent to
the relevant Advance (or portion thereof),
for periods equivalent to the applicable
Interest Period, which appear at or about
11:00 A.M. (London Time) on the day falling
two (2) Banking Days prior to the first day
of the relevant Interest Period as displayed
on Telerate page 3750 (British Bankers'
Association Interest Settlement Rates), in
the case of Dollars or Pounds Sterling, or
Telerate page 3740 (British Bankers'
Association Interest Settlement Rates), in
the case of Dutch Guilders or French Francs
(or such other page as may replace such page
3750 or such page 3740, as the case may be,
on such system or on any other system of the
information vendor for the time being
designated by the British Bankers'
7
<PAGE>
Association to calculate the BBA Interest
Settlement Rate (as defined in the British
Bankers' Association's Recommended Terms and
Conditions ("BBAIRS" terms) dated August
1985)), provided, however, that, if on any
date of determination of the Applicable
Rate, no rate is so displayed for amounts
equivalent to the relevant Advance (or
portion thereof) and for periods equivalent
to the applicable Interest Period, LIBOR
shall be equal to the arithmetic mean
(rounded upward if necessary to four decimal
places) of the rates respectively quoted to
the Agent by each of the Reference Banks as
the offered rate for deposits of Dollars or
the relevant Foreign Currency, as the case
may be, in an amount approximately equal to
the amount in relation to which LIBOR is to
be determined for a period equivalent to
such period to prime banks in the London
Interbank Market at or about 11:00 a.m.
(London time) on the second Banking Day
before the first day of such period;
"Majority Lenders" shall mean (x) at any time that there is
only a single Lender, the Lender; (y) at any
time that there are only two (2) Lenders,
both Lenders and (z) at any time that there
are three (3) or more Lenders, two (2) or
more Lenders whose aggregate Commitments
exceed two-thirds of the total Commitments;
"Margin" shall have the meaning ascribed thereto in
Section 6.1;
"Material Adverse Change" shall mean the occurrence of an event or
condition which (a) materially impairs the
ability of (1) the Borrower to meet any of
its obligations with regard to the Credit
Facility and the financing arrangements
established in connection therewith or (2)
the Borrower and the Subsidiaries to meet
any of their respective other obligations
that are material to the Borrower and the
Subsidiaries considered as a whole or (b)
have a material adverse effect on the
business, assets, operations, property or
financial condition of the Borrower and the
Subsidiaries considered as a whole;
"Moody's" shall mean Moody's Investors Service, Inc.,
a credit rating agency;
"Note" means the promissory note to be executed by
the Borrower to the order of the Agent to
evidence the Advances of the Credit Facility
8
<PAGE>
substantially in the form of Exhibit 1 or in
such other form as the Agent may agree;
"Operating Accounts" shall have the meaning ascribed thereto in
Section 8.1;
"Permitted Liens" means any of the liens permitted under
Section 10.1B(i);
"Plan" means any employee benefit plan covered by
Title IV of ERISA;
"Pounds Sterling" and the
sign "(pound)" means the legal currency, at any relevant
time hereunder, of England;
"Prime Rate" means the rate which the Agent announces
from time to time as its prime lending rate,
the Prime Rate to change when and as such
prime lending rate changes;
"Reduction Dates" means the day falling twelve (12) months
after the date hereof and the dates which
fall respectively at six (6) month intervals
thereafter and ending on the Termination
Date or, if any such date is not a Banking
Day, the next following Banking Day, unless
such next following Banking Day falls in the
following month, in which case the relevant
Reduction Date shall be the immediately
preceding Banking Day;
"Reference Banks" means the banks chosen from time to time by
the British Bankers' Association for the
purpose of establishing Interest Settlement
Rates;
"S&P" shall mean Standard & Poor's Rating
Services, a credit rating agency;
"Senior Debt" means, for the Borrower, on a consolidated
basis, the aggregate of (i) any secured
indebtedness (excluding any Chiles
Consolidated Debt), (ii) the committed
amount of all other indebtedness for
borrowed money (other than (x) undrawn
portions of the Committed Amount and (y) any
undrawn committed amount for indebtedness of
Chiles) and (iii) Funded Debt ranking pari
passu with drawn amounts outstanding under
the Credit Facility;
"Stated Amount" means with respect to each Letter of Credit
the maximum amount available to be drawn
thereunder (regardless of whether any
conditions for drawing could then be met);
9
<PAGE>
"Subsidiaries" means the corporations or other entities
listed on Schedule B (including, without
limitation, the Vessel Owning/Operating
Subsidiaries) of which the Borrower owns
legally or beneficially greater than fifty
percent (50%) of the issued and outstanding
stock or other interest in such entity and
has more than fifty percent (50%) of the
total voting power of the voting stock or
other interest in such corporation or other
entity, together with any other corporations
or other entities now or hereafter in
existence of which the Borrower owns legally
or beneficially greater than fifty percent
(50%) of the issued and outstanding stock or
other interest in such entity and has more
than fifty percent (50%) of the total voting
power of the voting stock or other interest
in such corporation or other entity,
provided, however, that, so long as the
obligations of Chiles remain without
recourse to the Borrower and its
subsidiaries (other than Chiles), Chiles
shall not be included as a Subsidiary;
"Taxes" means any present or future income or other
taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now
or hereafter imposed, levied, collected,
withheld or assessed by any taxing authority
whatsoever, except for taxes on or measured
by the overall net income of the Lenders
imposed by their respective jurisdiction of
incorporation or domicile of the lending
office making the Advances or any
governmental subdivision or taxing authority
of any thereof or by any other taxing
authority having jurisdiction over any
Lender or the Agent (unless such
jurisdiction is asserted solely by reason of
the activities of the Borrower or any
Subsidiary);
"Termination Date" means the day falling six (6) years after
the date hereof or, if such day is not a
Banking Day, the next following Banking Day,
unless such next following Banking Day falls
in the following month, in which case the
Termination Date shall be the immediately
preceding Banking Day;
"Total Capitalization" for any company, means, on a consolidated
basis, the aggregate of Funded Debt and
Consolidated Net Worth;
"Vessel Owning/Operating
Subsidiaries" those Subsidiaries designated as Vessel
Owning/Operating Subsidiaries on Schedule B,
together with any future subsidiaries now or
hereafter acquired which either own or
operate Vessels, provided, however, that
10
<PAGE>
neither the CRN Group nor Chiles shall be
deemed to be Vessel Owning/Operating
Subsidiaries;
"Vessels" means (i) each of the vessels listed on
Schedule C, so long as such vessel remains
more than fifty percent (50%) owned,
directly or indirectly, by a Vessel
Owning/Operating Subsidiary, (ii) the
existing newbuildings described in Schedule
E and (iii) and any other vessels now or
hereafter more than fifty percent (50%)
owned, directly or indirectly, by a Vessel
Owning/Operating Subsidiary.
1.2. Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations, partnerships, unincorporated associations and their respective
successors and assigns.
1.3. Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
as in effect from time to time in the United States of America consistently
applied ("GAAP") and all financial statements submitted pursuant to this
Agreement shall be prepared in accordance with, and all financial data submitted
pursuant hereto shall be derived from financial statements prepared in
accordance with, GAAP.
1.4. Headings. In this Agreement, section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation
hereof.
2 REPRESENTATIONS AND WARRANTIES
2.1. In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Advances and to issue and/or participate in Letters of Credit as
provided for herein, the Borrower hereby represents and warrants to the Agent
and the Lenders (which representations and warranties shall survive the
execution and delivery of this Agreement and the Note and the making of the
Advances and the issuance of Letters of Credit) that:
(a) Due Organization and Power. the Borrower and each of
the Subsidiaries are duly formed and are validly existing in good standing under
the laws of their respective jurisdictions of incorporation, have duly qualified
and are authorized to do business as a foreign corporation in each jurisdiction
wherein the nature of the business transacted thereby makes such qualification
necessary, have full power to carry on their respective businesses as now being
conducted and, in the case of the Borrower, to enter into and perform the
Borrower's obligations under each of this Agreement and the Note and have
complied with all statutory, regulatory and other requirements relative to such
businesses and such agreements the noncompliance with which could reasonably be
expected to give rise to a Material Adverse Change;
11
<PAGE>
(b) Authorization and Consents. all necessary corporate
action has been taken to authorize, and all necessary consents and
authorizations have been obtained and remain in full force and effect to permit,
the Borrower to enter into and perform its obligations under each of this
Agreement and the Note and to permit the Borrower to borrow, service and repay
the Advances and, as of the date of this Agreement, no further consents or
authorizations are necessary for the service and repayment of the Advances or
any part of any thereof;
(c) Binding Obligations. each of this Agreement and the
Note constitutes legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with its terms, except to the
extent that such enforcement may be limited by equitable principles, principles
of public policy or applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting generally the enforcement of creditors'
rights;
(d) No Violation. the execution and delivery of, and the
performance of the provisions of, this Agreement and the Note do not, and will
not during the Credit Period, contravene any applicable law or regulation
existing at the date hereof or any contractual restriction binding on the
Borrower or its certificate of incorporation or by-laws;
(e) Litigation. except as otherwise disclosed in the 1997
annual report of the Borrower or the 10Q report of the Borrower for the period
ending June 30, 1998, no action, suit or proceeding is pending or overtly
threatened against the Borrower or any of the Subsidiaries before any court,
board of arbitration or administrative agency which could result in any Material
Adverse Change;
(f) No Default. except as otherwise disclosed in writing to
the Agent on or prior to the date hereof, neither the Borrower nor any of the
Subsidiaries are in default under any agreement by which any thereof is bound,
nor are any thereof in default in respect of any financial commitment or
obligation, where such default could result in any Material Adverse Change;
(g) Vessel Ownership, Classification, and Insurance. as of
the date hereof:
(i) each of the Vessels is owned as listed on
Schedule C, free and clear of all liens of record except as
otherwise set forth on Schedule C and duly registered in
the name of its owner under the flag as listed on Schedule
C;
(ii) except as otherwise set forth on Schedule C,
each of the Vessels is classed in the highest
classification and rating for vessels of the same age and
type with the American Bureau of Shipping, Lloyd's Register
of Shipping, Det norske Veritas, Bureau Veritas,
Germanischer Lloyd or other classification society
acceptable to the Agent without any material outstanding
recommendations; and
(iii) each of the Vessels is insured in accordance
with standard industry practice, including, without
limitation, coverage for hull and machinery, war risk and
protection & indemnity (evidence of which shall include,
without limitation, cover notes, certificates of entry or
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<PAGE>
such other evidence as shall be reasonably satisfactory to
the Agent);
(h) Citizenship. each of the Vessel Owning/Operating
Subsidiaries which owns a Vessel registered under the laws and flag of the
United States of America is eligible to document a United States flag vessel
within the meaning of 46 App. U.S.C.ss.12102(a) and, if any such Vessel is
operating in the coastwise trade, within the meaning of Section 2 of the United
States Shipping Act, 1916, as amended (46 App. U.S.C.ss. 802), the Vessel
Owning/Operating Subsidiary owning or operating same is qualified to own and
operate vessels in the coastwise trade;
(i) Financial Statements. except as otherwise disclosed in
writing to the Lenders on or prior to the date hereof, all financial statements,
information and other data furnished by the Borrower to the Lenders are complete
and correct, and such financial statements have been prepared in accordance with
GAAP and accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of the
operations thereof for the period or respective periods covered by such
financial statements. Since such date or dates there has been no Material
Adverse Change and neither the Borrower nor any of the Subsidiaries have any
contingent obligations, liabilities for taxes or other outstanding financial
obligations which on a consolidated basis are material in the aggregate, except
as disclosed in such statements, information and data;
(j) Tax Returns and Payments. since March 31, 1998, the
Borrower and each of the Subsidiaries have filed all tax returns required to be
filed thereby and have paid all taxes payable thereby which have become due,
other than those not yet delinquent or the non-payment of which would not give
rise to a Material Adverse Change and except for those taxes being contested in
good faith and by appropriate proceedings or other acts and for which adequate
reserves have been set aside on the books thereof;
(k) Insurance. each of the Borrower and the Subsidiaries
have insured their respective properties, assets and businesses against such
risks and in such amounts as are required by law and as are customary for
comparable companies engaged in similar businesses;
(l) Solvency. on the date of the making of the initial
Advance and both immediately before and immediately after giving effect to all
the transactions contemplated by this Agreement and the other documents referred
to herein to occur on the date of the making of the initial Advance and as of
the date hereof, (i) the sum of the Borrower's property (on a consolidated
basis), at a fair valuation, does and will exceed its liabilities (on a
consolidated basis), including contingent liabilities, (ii) the present fair
salable value of the Borrower's assets (on a consolidated basis) is not and
shall not be less than the amount that will be required to pay the Borrower's
probable liability on its then existing debts (on a consolidated basis),
including contingent liability, as they mature, (iii) the Borrower (on a
consolidated basis) does not and will not have unreasonably small capital with
which to continue its business, and (iv) the Borrower (on a consolidated basis)
has not incurred, does not intend to incur and does not believe it will incur
debts beyond its ability to pay such debts as they mature;
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(m) Environmental Matters. except as heretofore disclosed
in writing to the Lenders (i) the Borrower and each of the Subsidiaries are now
and will continue to be, to the extent required, in compliance with all
applicable United States federal and state, local, foreign and international
laws, regulations, conventions and agreements relating to pollution prevention
or protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, navigable waters, waters of the
contiguous zone, ocean waters and international waters), including, without
limitation, laws, regulations, conventions and agreements relating to (1)
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and by-products ("Materials of
Environmental Concern"), or (2) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern ("Environmental Laws") (except, as to all of the above,
where the failure to do so would not be reasonably likely to result in a
Material Adverse Change); (ii) the Borrower and each of the Subsidiaries now
have and will continue to have, to the extent required, all permits, licenses,
approvals, rulings, variances, exemptions, clearances, consents or other
authorizations required under applicable Environmental Laws ("Environmental
Approvals") and are now and will continue to be, to the extent required, in
compliance with all Environmental Approvals required to operate their respective
businesses as then being conducted (except where the failure to comply with,
obtain or renew such permits, licenses, rulings, variances, exemptions,
clearances, consents or other authorizations would not be reasonably likely to
result in a Material Adverse Change); and (iii) neither the Borrower nor any of
the Subsidiaries have received any notice of any claim, action, cause of action,
investigation or demand by any Person, entity, enterprise or government, or any
political subdivision, intergovernmental body or agency, department or
instrumentality thereof, alleging potential liability which would reasonably be
likely to result in a Material Adverse Change, or a requirement to incur, any
investigatory costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources, property
and/or personal injury damages, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any Materials
of Environmental Concern at any location, whether or not owned by the Borrower
or any of the Subsidiaries, or (2) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law or Environmental
Approval ("Environmental Claim") (other than Environmental Claims that have been
fully and finally adjudicated or otherwise determined and all fines, penalties
and other costs, if any, payable by the Borrower or any of the Subsidiaries in
respect thereof have been paid in full or which are fully covered by insurance
(including permitted deductibles)), if such costs, damages, fees, expenses,
fines and/or penalties on a consolidated basis are material in the aggregate;
and
(n) Foreign Trade Control Regulations. none of the
transactions contemplated herein will violate any of the provisions of the
Foreign Assets Control Regulations of the United States of America (Title 31,
Code of Federal Regulations, Chapter V, Part 500, as amended), any of the
provisions of the Cuban Assets Control Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 515, as
14
<PAGE>
amended), any of the provisions of the Libyan Sanctions Regulations of the
United States of America (Title 31, Code of Federal Regulations, Chapter V, Part
550, as amended), any of the provisions of the Iranian Transactions Regulations
of the United States of America (Title 31, Code of Federal Regulations, Chapter
V, Part 560, as amended), any of the provisions of the Iraqi Sanctions
Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 575, as
amended), any of the provisions of the Federal Republic of Yugoslavia (Serbia
and Montenegro) Sanctions Regulations (Title 31, Code of Federal Regulations,
Chapter V, Part 585 as amended) or any of the provisions of the Regulations of
the United States of America Governing Transactions in Foreign Shipping of
Merchandise (Title 31, Code of Federal Regulations, Chapter V, Part 505, as
amended).
3 ADVANCES OF THE FACILITY/LETTERS OF CREDIT
3.1. Advances. Each of the Lenders, relying upon each of the representations and
warranties set out in Section 2, hereby agrees with the Borrower that, subject
to the terms of this Agreement, it will on the Drawdown Dates make its portion
of each Advance (pro rata in proportion to its Commitment) in Dollars or a
Foreign Currency, as requested by the Borrower, available through the Agent to
the Borrower in an aggregate amount not to exceed at any one time outstanding
the then available Committed Amount, provided, however, that no further Advances
shall be made after the Banking Day immediately preceding the Termination Date.
Each such Dollar Advance shall be in an amount (in an integral multiple of One
Million Dollars ($1,000,000)) equal to or exceeding One Million Dollars
($1,000,000). Each Foreign Currency Advance shall be in an amount (in an
integral multiple of one hundred (100) units of account of the relevant
currency) equal to or exceeding the then Dollar Equivalent of One Million
Dollars (US$1,000,000). Each Advance may only be denominated in a single
currency. Each Advance shall be repaid in full, as more fully set forth
hereinafter, not later than the Termination Date. Not more than fifteen (15)
Advances may be made in each consecutive twelve (12) month period. Within the
limits of this Section 3.1 and upon the conditions herein provided, the Borrower
may from time to time borrow pursuant to this Section 3.1, repay Advances
pursuant to Section 5 and reborrow pursuant to this Section 3.1.
3.2. Use of Proceeds. The proceeds of the Advances shall be utilized (a) to
repay any outstanding advances under the Existing Credit Facility and (b) for
general corporate purposes.
3.3. Drawdown Notice. The Borrower shall not less than three (3) Banking Days
before each Drawdown Date (other than a Drawdown Date occurring by reason of a
drawing under any Letter of Credit) serve a notice (a "Drawdown Notice") on the
Agent (which shall promptly furnish a copy to each Lender), substantially in the
form set out in Exhibit 2, which notice shall (a) be in writing addressed to the
Agent, (b) be effective on receipt by the Lender, provided it is received before
11 a.m. New York time (otherwise it shall be deemed to have been received on the
next Banking Day), (c) specify the currency, amount and purpose of the Advance
to be drawn, (d) specify the Banking Day on which the Advance is to be drawn and
the initial Interest Period, (e) specify the disbursement instructions and (f)
be irrevocable.
3.4. Drawdown Notice a Warranty. Each Drawdown Notice shall be deemed to
constitute a warranty by the Borrower (a) that the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
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on the date of such Drawdown Notice and will be true and correct on the Drawdown
Date as if made on such date, (b) that after giving effect to the borrowing made
pursuant to such Drawdown Notice, the Credit Facility Balance shall not exceed
the Committed Amount then available hereunder pursuant to Section 3.1 and (c)
that no Event of Default nor any event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default has occurred and is
continuing.
3.5. Notation of Advance on Note. Each Advance made by the Lenders to the
Borrower may be evidenced by a notation of the same made by the Agent on the
grid attached to the Note, which notation, absent manifest error, shall be prima
facie evidence of the amount of the relevant Advance.
3.6. Foreign Currency Advances. The Dollar Equivalent (calculated at the
applicable Agent's Exchange Rate from time to time prevailing) of the aggregate
principal amount of Foreign Currency Advances at any time outstanding under the
Credit Facility (together with the Dollar Equivalent of the aggregate Stated
Amount of Letters of Credit then outstanding and denominated in currencies other
than Dollars) shall not exceed thirty percent (30%) of the then available
Committed Amount. To the extent provisions of this Agreement require the
calculation of amounts advanced or available under the Credit Facility in
Dollars, any such amounts (if denominated in a Foreign Currency) which are
subject to such calculation shall, for purposes of such calculations, be
notionally converted to Dollars at the relevant Agent's Exchange Rate then
prevailing. The calculation of such currency conversion shall be certified by
the Agent, which certification, absent any manifest error, shall be conclusive
and binding on the Borrower. If exchange rate fluctuations (a) cause the Credit
Facility Balance to exceed the Committed Amount at any time or (b) cause the
Foreign Currency Advances to exceed thirty percent (30%) of the then available
Committed Amount at any time, then the Borrower shall, within seven (7) days of
written demand of the Agent, repay Advances in an amount equal to the excess of
the Credit Facility Balance over the Committed Amount or repay Foreign Currency
Advances in an amount sufficient to reduce Foreign Currency Advances to not more
than thirty percent (30%) of the then available Committed Amount, as the case
may be.
3.7. Letters of Credit. (a) Subject to and upon the terms and conditions herein
set forth, the Borrower may request that the Letter of Credit Issuer at any time
and from time to time prior to the Banking Day immediately preceding the
Termination Date issue, for the account of the Borrower and in support of L/C
Supportable Obligations, and subject to and upon the terms and conditions herein
set forth, the Letter of Credit Issuer agrees to issue from time to time,
irrevocable standby letters of credit denominated in Dollars (or in such other
currency as the Borrower and the Letter of Credit Issuer may agree) and in such
form as may be approved by the Letter of Credit Issuer (singly, a "Letter of
Credit" and collectively, the "Letters of Credit"). Schedule F contains a
description of all letters of credit issued for the account of the Borrower
pursuant to the Existing Credit Agreement which will remain outstanding on the
date hereof. Each such letter of credit, including any extension thereof (each
an "Existing Letter of Credit"), shall constitute a "Letter of Credit", for all
purposes of this Agreement and shall be deemed issued for the purposes of
Sections 3.10 and 14.2 on the date hereof.
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<PAGE>
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued, the Stated Amount of which, (x) when added to the Letter of
Credit Outstandings at such time, would exceed the greater of Fifteen Million
Dollars ($15,000,000) and fifteen percent (15%) of the Committed Amount at such
time or (y) when added to the Letter of Credit Outstandings at such time plus
the aggregate principal amount of all Advances made by Lenders then outstanding
would exceed the Committed Amount at such time; and (ii) each Letter of Credit
shall have an expiry date occurring not later than the earlier of (x) the date
which occurs thirty (30) months after the date of issuance thereof and (y) the
Banking Day immediately preceding the Termination Date; provided that the
Borrower may request, and the Agent may consent, in its sole absolute
discretion, to extend the expiry dates of certain Letters of Credit beyond the
Termination Date. For purposes of determining compliance with limitations set
forth in this Agreement, the Dollar Equivalent of the Stated Amount of any
Letter Credit denominated in a currency other than Dollars shall be converted at
the Agents Exchange Rate in effect at the time of determination.
3.8. Letter of Credit Requests; Request for Issuance of Letter of Credit. (a)
Whenever the Borrower wishes that a Letter of Credit be issued, the Borrower
shall give the Letter of Credit Issuer written notice (a "Letter of Credit
Request"), substantially in the form of Exhibit 3 prior to 11:00 a.m., New York
time, at least seven (7) Banking Days (or three (3) Banking Days if the issuance
of the Letter of Credit has been approved in advance by the Letter of Credit
Issuer) prior to the proposed date of issuance (which shall be a Banking Day),
which Letter of Credit Request shall include any documents that the Letter of
Credit Issuer may reasonably require in connection therewith. The Letter of
Credit Request shall after three (3) Banking Days (or one (1) Banking Day if the
issuance of the Letter of Credit has been approved in advance by the Letter of
Credit Issuer) be irrevocable. The Letter of Credit Issuer shall promptly notify
each Lender of each Letter of Credit Request.
(b) The Letter of Credit Issuer shall, on the date of each
issuance of a Letter of Credit by it, give each Lender and the Borrower written
notice of the issuance of such Letter of Credit.
3.9. Letter of Credit Payments Deemed Advances. (a) The Borrower hereby agrees
that any payment or disbursement made by the Letter of Credit Issuer under any
Letter of Credit shall be deemed an Advance under this Agreement and shall bear
interest for each day from the date of such payment or disbursement at the Base
Rate as in effect on each day until the date falling three (3) Banking Days
after receipt by the Agent of an Interest Notice with respect to such Advance
and shall thereafter bear interest at the Applicable Rate. The Letter of Credit
Issuer shall give prompt notice to the Borrower and the Lenders of each payment
or disbursement under a Letter of Credit.
(b)(i) The Letter of Credit Issuer shall not concern
itself with the regularity or propriety of any
demand made under any Letter of Credit beyond the
face thereof, provided that such demand strictly
complies with the terms of such Letter of Credit
and (subject to the above proviso) it shall not
be a defense to a claim of the Letter of Credit
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<PAGE>
Issuer that the Letter of Credit Issuer could
have resisted the payment in respect of which
such claim is made.
(ii) The Borrower's obligation to repay any
Advance deemed made under this Section 3.9
(including, in each case, interest thereon)
shall be absolute and unconditional under
any and all circumstances and irrespective
of any setoff, counterclaim or defense to
payment which the Borrower may have or have
had against the Letter of Credit Issuer or
any Lender, including, without limitation,
any defense based upon the failure of any
drawing under a Letter of Credit to conform
to the terms of the Letter of Credit (other
than the failure of the Letter of Credit
Issuer to determine that any documents
required to be delivered under such Letter
of Credit have been delivered and that they
comply on their face with the requirements
of such Letter of Credit) or any
non-application or misapplication by the
beneficiary of the proceeds of such drawing;
provided, however, that the Borrower shall
not be obligated to reimburse the
Letter of Credit Issuer for any wrongful
payment made by the Letter of Credit Issuer
under a Letter of Credit as a result of acts
or omissions constituting willful misconduct
or gross negligence on the part of the
Letter of Credit Issuer.
3.10. Letter of Credit Participation. (a) Immediately upon the issuance by the
Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer
shall be deemed to have sold and transferred to each Lender, and each Lender
(each a "Letter of Credit Participant") shall be deemed irrevocably and
unconditionally to have purchased and received from the Letter of Credit Issuer,
without recourse or warranty, an undivided interest and participation, to the
extent of such Lender's Commitment, in such Letter of Credit, each substitute
letter of credit, each drawing made thereunder and the obligation of the
Borrower under this Agreement with respect thereto (although the Letter of
Credit Fee shall be payable directly to the Agent for the account of the Letter
of Credit Participants as provided in Section 14.2) and any security therefor or
guaranty pertaining thereto.
(b) In determining whether to pay under any Letter of
Credit, the Letter of Credit Issuer shall not have any obligation relative to
the respective Letter of Credit Participants other than to determine that any
documents required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Letter of
Credit Issuer under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for the Letter of Credit Issuer any resulting liability to the respective
Letter of Credit Participants.
(c) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit, upon receipt of notice thereof as provided
in Section 3.9(a), each Letter of Credit Participant shall promptly and
unconditionally pay to the Letter of Credit Issuer, the amount of such Letter of
Credit Participant's Percentage of such payment in Dollars (or in the currency
of issuance if issued in a currency other than Dollars) and in same day funds;
provided, however, that no Letter of Credit Participant shall be obligated to
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<PAGE>
pay to the Letter of Credit Issuer its percentage of such payment for any
wrongful payment made by the Letter of Credit Issuer under a Letter of Credit as
a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer. If the Letter of Credit
Issuer so notifies any Letter of Credit Participant required to fund a Drawing
under a Letter of Credit prior to 11:00 a.m., New York time, on any Banking Day,
such Letter of Credit Participant shall make available to the Letter of Credit
Issuer such Letter of Credit Participant's Percentage of the amount of such
payment on such Banking Day in same day funds. If and to the extent such Letter
of Credit Participant shall not have so made its percentage of the amount of
such drawing available to the Letter of Credit Issuer, such Letter of Credit
Participant agrees to pay to the Letter of Credit Issuer, forthwith on demand
such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Letter of Credit Issuer at the overnight
Federal Funds Effective Rate. The failure of any Letter of Credit Participant to
make available to the Letter of Credit Issuer its percentage of any drawing
under any Letter of Credit shall not relieve any other Letter of Credit
Participant of its obligation hereunder to make available to the Letter of
Credit Issuer its percentage of any payment under any Letter of Credit on the
date required, as specified above, but no Letter of Credit Participant shall be
responsible for the failure of any other Letter of Credit Participant to make
available to the Letter of Credit Issuer such other Letter of Credit
Participant's Percentage of any such payment.
(d) The obligation of the respective Letter of Credit
Participants to make payments to the Letter of Credit Issuer with respect to
Letters of Credit shall be irrevocable and not subject to counterclaim, set-off
or other defense or any other qualification or exception whatsoever (provided
that no Letter of Credit Participant shall be required to make payments
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct) and shall be made in accordance with the terms and conditions of
this Agreement under all circumstances, including, without limitation, any of
the following circumstances:
(i) any lack of validity or enforceability of this
Agreement.
(ii) the existence of any claim, set-off, defense or
other right which the Borrower may have at any
time against a beneficiary named in a Letter of
Credit, any transferee of any Letter of Credit
(or any person for whom any such transferee may
be acting), the Agent, any Lender or other
person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions
(including any underlying transaction between the
Borrower and the beneficiary named in any such
Letter of Credit);
(iii) any draft, certificate or other document
presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate
in any respect; or
(iv) the occurrence of any Event of Default.
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4 CONDITIONS
4.1. Conditions Precedent to Drawdown of the Initial Advance under the Credit
Facility. The obligation of the Lenders to make the initial Advance available to
the Borrower under this Agreement shall be expressly subject to the following
conditions precedent:
(a) the Agent shall have received the following documents
in form and substance satisfactory to the Agent and its legal advisers:
(i) copies, certified as true and complete by an
officer of the Borrower of the resolutions of its
board of directors evidencing approval of this
transaction and authorizing an appropriate
officer or officers or attorney-in-fact or
attorneys-in-fact to execute this Agreement and
the Note on its behalf;
(ii) copies, certified as true and complete by an
officer of the Borrower or other applicable
party, of all documents evidencing any other
necessary actions (including actions by such
parties thereto other than the Borrower as may be
required by the Lenders), approvals or consents
with respect to this Agreement and the Note and
the transactions contemplated hereby and thereby;
(iii) copies, certified as true and complete by an
officer of the Borrower of its certificate of
incorporation and by-laws;
(iv) certificate of the Secretary or Assistant
Secretary of the Borrower certifying as to (x)
the incumbency of the signatories of the
Borrower, (y) the present directors of the
Borrower and (z) the authorized, issued and
outstanding capital stock of each of the Vessel
Owning/Operating Subsidiaries legally and
beneficially owned by the Borrower; and
(v) good standing certificate of the Borrower;
(b) the Borrower shall have duly executed and
delivered:
(i) this Agreement,
(ii) the Note, and
(iii) the fee letter referred to in Section 14.4;
(c) the Operating Accounts referred to in Section 8.1 shall
have been duly established with the Agent;
(d) the Agent shall have received an itemized written
valuation in form and substance satisfactory to the Agent, from an independent
shipbroker selected by the Borrower and acceptable to the Agent as to the then
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current fair market value (charter free), in Dollars, of the Vessels and, such
valuation shall be dated no earlier than sixty (60) days prior to the initial
Drawdown Date;
(e) the Agent shall have received a certificate of the
chief financial officer of the Borrower confirming the representations and
warranties set forth in Section 2.1(l) and containing conclusions as to the
solvency of the Borrower (on a consolidated basis);
(f) the Lenders and the Agent shall have received payment
in full of all fees and expenses due to them on the date hereof including,
without limitation, all fees and expenses due under Section 14;
(g) the Agent shall be satisfied that neither the Borrower
nor any of the Subsidiaries is subject to any Environmental Claim which could
give rise to a Material Adverse Change;
(h) the Agent shall have received true and complete copies
of (i) the 10K report of the Borrower for the year ending December 31, 1997
filed with the United States Securities and Exchange Commission and (ii) all 10Q
and 8K reports filed by the Borrower with the United States Securities and
Exchange Commission since December 31, 1997;
(i) no Material Adverse Change having occurred since June
30, 1998;
(j) the Agent having received such evidence as it may
require that the Borrower and each of the Subsidiaries have insured their
respective properties and other assets with underwriters and agents acceptable
to the Agent in the manner required under Section 2.1(k);
(k) all sums owing by the Borrower under or in connection
with the Existing Credit Facility (excluding the Existing Letters of Credit),
shall have been repaid in full and the Existing Credit Facility provided under
such agreement shall have been terminated;
(l) certificates and other evidences of ownership, if any,
representing all of the present issued and outstanding shares of, or other
interests in, the Vessel Owning/Operating Subsidiaries owned, directly or
indirectly, by the Borrower shall have been delivered to the Agent;
(m) the Agent shall have received a certificate of an
officer of the Borrower certifying that the company chart attached as Schedule D
to this Agreement lists all of the ownership interests of the Borrower and the
Subsidiaries in any corporation, partnership or other entity; and
(n) the Agent shall have received opinions from Seward &
Kissel, counsel to the Lenders and the Agent, and Alice Gran, Esq., general
counsel for the Borrower, in such form as the Agent and counsel to the Lenders
may agree, as well as such other legal opinions as the Agent shall have required
as to all or any matters under the laws of the United States of America, the
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State of New York and the State of Delaware covering the representations and
conditions which are the subjects of Sections 2 and 4 or in such other form as
the Agent may agree.
4.2. Further Conditions Precedent. The obligation of the Lenders to make any
Advance (other than an Advance which occurs by reason of a drawing under any
Letter of Credit) available to the Borrower shall be expressly and separately
from the foregoing conditional upon, on the relevant Drawdown Date:
(a) the Agent having received a Drawdown Notice in
accordance with the terms of Section 3.3;
(b) the representations stated in Section 2 (updated
mutatis mutandis) being true and correct as if made on that date;
(c) no Event of Default having occurred and being
continuing and no event having occurred and being continuing which, with the
giving of notice or lapse of time, or both, would constitute an Event of
Default; and
(d) the Agent being satisfied that no Event of Default will
arise following the drawdown of the Advance in question by reason of the
drawdown of the Advance and that no event or state of affairs exists which
constitutes, in the reasonable opinion of the Agent, a material risk that it
will be unlawful or impossible for the Borrower to make any payment or perform
any material obligation as required under the terms of this Agreement and the
Note.
4.3. Break Funding Costs. In the event that, on any date specified for the
making of an Advance in any Drawdown Notice, the Lenders shall not be obliged
under this Agreement to make such Advance available under this Agreement, the
Borrower shall indemnify and hold the Lenders or any of them, fully harmless
against any losses which they may sustain as a result of borrowing or agreeing
to borrow funds to meet the drawdown requirement in respect thereof and the
certificate of such Lender, absent manifest error, shall be conclusive and
binding on the Borrower as to the extent of any such losses.
4.4. Satisfaction after Drawdown. Without prejudice to any of the other terms
and conditions of this Agreement, in the event the Lenders, in their sole
discretion, make an Advance prior to the satisfaction of all or any of the
conditions referred to elsewhere in Sections 4.1 and 4.2, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within fourteen (14) days after the relevant Drawdown
Date (or such longer period as the Lenders, in their sole discretion, may
agree).
5 REPAYMENT, PREPAYMENT AND REDUCTION.
5.1. Repayment. The Borrower shall repay all outstanding Advances (subject to
reductions and prepayments as hereinafter set forth) on the Termination Date and
shall also repay outstanding Advances, to the extent required to comply with (a)
the scheduled reductions required pursuant to Section 5.2 below on each
Reduction Date, (b) Section 3.6, (c) a reduction of the Credit Facility pursuant
to Section 5.4 or (d) as may be otherwise provided in this Agreement. Each
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Advance (together with interest accrued thereon and any costs or other sums
associated therewith payable by the Borrower hereunder) shall be repaid in the
currency in which such Advance was drawn down or, in the case of such costs or
sums, the currency in which such cost or sum was incurred or booked by the Agent
and the Lenders.
5.2. Scheduled Reductions of the Committed Amount. Subject to the provisions of
Section 5.4, (a) on each Reduction Date (other than that corresponding to the
Termination Date) the Committed Amount shall be reduced by Four Million Five
Hundred Forty-Five Thousand Dollars ($4,545,000) (or such lesser amount as may
be required pursuant to the last sentence of this Section 5.2) and (b) on the
Termination Date, the Committed Amount shall be reduced to zero. Upon the
effectiveness of each reduction of the Committed Amount whether pursuant to
Sections 5.4 or 12.1 or otherwise pursuant to this Agreement, the amount of each
scheduled reduction of the Committed Amount required pursuant to this Section
5.2 for each Reduction Date falling thereafter shall be adjusted pro rata to
reflect such reduction of the Committed Amount.
5.3. Prepayment. The Borrower may prepay, upon five (5) days' written notice,
any outstanding Advance or any portion thereof, without penalty, provided that
such prepayment is made on the last day of the Interest Period covering such
Advance. Each prepayment shall be (a) in a minimum amount of: (x) if made in
Dollars, One Million Dollars ($1,000,000) or (y) if made in a Foreign Currency,
the then Dollar Equivalent (rounded upward to the nearest multiple of one
hundred (100) units of account of the relevant currency) of One Million Dollars
($1,000,000), (b) in an amount equal to an integral multiple of such minimum
amount or (c) in the full amount of the Advance. On the date of prepayment all
accrued interest to the date of such prepayment shall be paid in full with
respect to Advances or portion thereof being prepaid, together with any and all
actual costs or expenses incurred by the Agent or any Lender in connection with
any breaking of funding or with the unwinding of any such interest rate swap or
other hedging arrangements entered into by the Lenders (in each case, as
certified by the relevant Lenders, which certification, absent any manifest
error, shall be conclusive and binding on the Borrower).
5.4. Permanent Reduction of the Committed Amount of the Credit Facility. (i) The
Borrower shall have the right, at any time and from time to time, to request,
without penalty, a permanent partial or whole reduction of the Committed Amount,
provided that (a) the Agent receives three (3) Banking Days' prior written
notice of such request and (b) if the then outstanding Credit Facility Balance
exceeds the Committed Amount as so reduced, such requested reduction occurs on
the last day of the applicable Interest Period(s) for Advances (or portions
thereof) outstanding under this Agreement at least equal to the excess of the
Credit Facility Balance over the reduced Committed Amount. Each such partial
permanent reduction shall be equal to or shall exceed One Million Dollars
($1,000,000) and shall be an integral multiple of One Million Dollars
($1,000,000).
5.5. Reduction of Commitment. Simultaneously with each reduction of the
Committed Amount (whether pursuant to Sections 5.2, 5.4 or otherwise), each
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Lender's Commitment in respect of the Credit Facility shall be reduced pro rata
in proportion to their respective interests in the Credit Facility.
6 INTEREST AND RATE
6.1. Applicable Rate. Except as otherwise provided in Section 3.9, each Advance
shall bear interest at a rate per annum (the "Applicable Rate") equal to the
aggregate of (a) LIBOR for the applicable Interest Period, plus (b) the then
applicable margin (the "Margin") determined in accordance with Section 6.2. Upon
the occurrence of an Event of Default or an event or condition which, with the
giving of notice or passage of time or both, would constitute an Event of
Default, the Credit Facility Balance or any other amount payable hereunder or
under the Note shall bear interest thereafter at a rate (the "Default Rate") of
two hundred basis points (200 bp) over the Applicable Rate then in effect.
6.2. The Margin. The Margin, as determined from time to time by the Agent as
provided herein, shall be equal to the lower of the margins corresponding to (a)
the percentage that the Borrower's consolidated Funded Debt (excluding any
Funded Debt subordinated to the indebtedness of the Borrower under the Credit
Facility and in respect of which no payments of principal are scheduled to be
paid on or before the Termination Date) bears to the consolidated EBITDA for the
Borrower and (b) the Borrower's credit rating as determined by S & P and
Moody's, as follows:
<TABLE>
<CAPTION>
- -------------------------------- --------------------------------------------- --------------------------------------------
Applicable Margin Funded Debt/EBITDA Credit Rating
- -------------------------------- --------------------------------------------- --------------------------------------------
<S> <C> <C>
45 bp less than or equal to 75% BBB+/Baa1
- -------------------------------- --------------------------------------------- --------------------------------------------
55 bp greater than 75%, but BBB/Baa2
less than or equal to 150%
- -------------------------------- --------------------------------------------- --------------------------------------------
65 bp greater than 150%, but BBB-/Baa3
less than or equal to 225%
- -------------------------------- --------------------------------------------- --------------------------------------------
85 bp greater than 225%, but BB+/Ba1
less than or equal to 300%
- -------------------------------- --------------------------------------------- --------------------------------------------
110 bp greater than 300% BB/Ba2
- -------------------------------- --------------------------------------------- --------------------------------------------
</TABLE>
For purposes of determining the Applicable Margin, if the respective credit
ratings of the Borrower by Moody's and S&P for any period correspond to two
different margins, the Applicable Margin shall be the lowest of the margins
corresponding to (x) the aforesaid ratio of Funded Debt to EBITDA,(y) the
Borrower's credit rating as determined by S&P and (z) the Borrower's credit
rating as determined by Moody's. The applicable Margin shall be determined by
the Agent quarterly (based upon the latest 10Q or 10K report and Compliance
Certificate delivered by the Borrower to the Agent from time to time pursuant to
this Agreement). The newly determined Margin shall be effective on the last day
of the month following the month during which such report and certificate were
delivered to the Agent.
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6.3. LIBOR; Interest Periods. With respect to each Advance, the Borrower may
select Interest Periods of one (1), three (3) or six (6) months (or such longer
period as the Lenders may, in their sole discretion, agree), provided, however,
that at all times the Borrower must select an Interest Period for a portion of
the outstanding Advances so that sufficient deposits shall mature on each
Reduction Date to cover the principal amount of the Advances required to be
repaid on such Reduction Date, and provided further, that in no event may the
Borrower select an Interest Period of one (1) month more than six (6) times in
any calendar year. The Borrower shall give an Interest Notice to the Agent
(which shall promptly forward same to the Lenders) at least three (3) Banking
Days prior to the end of any then existing Interest Period, which Interest
Notice shall set forth the Interest Period selected. If at the end of any then
existing Interest Period, the Borrower fails to give an Interest Notice as
provided herein, the following Interest Period shall have a duration of three
(3) months. LIBOR and the Applicable Rate shall be determined by the Agent two
(2) Banking Days prior to the first day of the relevant Interest Period and
shall be promptly notified in writing to the Borrower. The Borrower's right to
select an Interest Period shall be further subject to the restriction that no
selection of an Interest Period shall be effective unless the Lenders are
satisfied that the necessary funds will be available to the Lenders for such
period and the Agent is satisfied that no Event of Default or event which with
notice or the passage of time, or both, would constitute an Event of Default
shall have occurred. No Interest Period may extend beyond the Termination Date.
6.4. Interest Payments. Interest on each Advance or portion thereof, shall be
payable quarterly in arrears and on the last day of each Interest Period.
6.5. Interest Due Only on Banking Day. If interest would, under Section 6.4, be
payable on a day which is not a Banking Day, it shall then be payable on the
next following Banking Day, unless such next following Banking Day falls in the
following month in which case it shall be payable on the Banking Day immediately
preceding the day on which such interest would otherwise be payable.
6.6. Calculation of Interest. All interest shall accrue from day to day and be
calculated on the actual number of days elapsed and on the basis of a three
hundred sixty (360) day year.
7 PAYMENTS
7.1. Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made on the due dates of such payments to the Agent at its
office located at 200 Park Avenue, New York, New York or to such other branch of
the Agent as the Agent may direct, without set-off or counterclaim and free
from, clear of and without deduction for, any Taxes, provided, however, that if
the Borrower shall at any time be compelled by law to withhold or deduct any
Taxes from any amounts payable to the Lenders or the Agent hereunder, then,
subject to Section 7.2, the Borrower shall pay such additional amounts in
Dollars as may be necessary in order that the net amounts received after
withholding or deduction shall equal the amounts which would have been received
if such withholding or deduction were not required and, in the event any
withholding or deduction is made, whether for Taxes or otherwise, the Borrower
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shall promptly send to the Agent such documentary evidence with respect to such
withholding or deduction as may be required from time to time by the Agent, the
Lenders or any thereof.
7.2. Proof of no Withholding. Any Lender and any transferee, assignee or
participation holder (a "Transferee") that is not incorporated under the laws of
the United States of America or a State thereof agrees that, on the initial
Drawdown Date and prior to the first date on which any payment is due to such
Lender hereunder, such Lender will deliver to the Borrower (i) two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying in each case that such
Lender or Transferee is entitled to receive payments under this Agreement and
the Note without deduction or withholding of any United States Federal income
taxes and (ii) a United States Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each Lender or Transferee which delivers
to the Borrower a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the
preceding sentence further undertakes to deliver to the Borrower two (2) further
copies of said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms, or other manner of certification, as the case may be, on or before the
date that any such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Borrower and such extensions or renewals thereof as may reasonably be
requested by the Borrower certifying in the case of a Form 1001 or 4224 that
such Lender or such Transferee is entitled to receive payments under this
Agreement and the Note without deduction or withholding of any United States
Federal income taxes, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender or such Transferee
from duly completing and delivering any such letter or form with respect to it,
and such Lender or such Transferee advises the Borrower that it is not capable
of (i) receiving payments without any deduction or withholding of United States
Federal income tax, and (ii) in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
7.3. Federal Income Tax Credits. In connection with the foregoing, each Lender
may consult with its legal advisers, all fees and expenses of which shall be for
the account of the Borrower. If a Lender obtains the benefit of a credit against
its liability for federal income taxes imposed by the United States of America
for all or part of the Taxes as to which the Borrower has paid additional
amounts as aforesaid then such Lender shall reimburse the Borrower for the
amount of the credit so obtained.
8 ACCOUNTS
8.1. The Operating Accounts. Except as otherwise agreed by the Agent, the
Borrower and the Vessel Owning/Operating Subsidiaries shall maintain with the
Agent at the office of the Agent located at 200 Park Avenue, New York, New York
or at other branches of the Agent the principal operating accounts of the
Borrower and the Vessel Owning/Operating Subsidiaries if the Agent has full
commercial banking capability as of the date of this Agreement in the geographic
areas in which the Borrower or any of the Vessel Owning/Operating Subsidiaries
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operate. The Lenders expressly acknowledge that such operating accounts are not
pledged or otherwise hypothecated to the Lenders in connection with the Credit
Facility. The Lenders further acknowledge that any moneys deposited in such
accounts may be utilized for any business purpose whatsoever consistent with the
terms of this Agreement. Amounts accumulated in each Operating Account shall
bear interest for the account of the party maintaining such account in
accordance with the Agent's normal practice.
9 EVENTS OF DEFAULT
9.1. In the event that any of the following events shall occur and be
continuing:
(a) Principal Payments. any payment of principal due on the
Termination Date or any Reduction Date or otherwise due hereunder or under the
Note is not paid on the due date; or
(b) Interest and other Payments. any interest on any of the
Advances or any other amount becoming payable to the Agent or the Lenders under
this Agreement or under the Note is not paid on the due date or date of demand
(as the case may be), and such default continues unremedied for a period of five
(5) Banking Days; or
(c) Representations, etc. any representation, warranty or
other statement made by the Borrower in this Agreement or in any other
instrument, document or other agreement delivered in connection herewith or
therewith proves to have been untrue or misleading in any material respect as at
the date as of which made; or
(d) Impossibility, Illegality. it becomes impossible or
unlawful for the Borrower to fulfill any of the covenants and obligations
contained herein or in the Note or for the Agent or the Lenders to exercise any
of the rights vested in them hereunder or under the Note and such impossibility
or illegality in the reasonable opinion of the Majority Lenders will give rise
to a Material Adverse Change; or
(e) Citizenship. the Borrower or any of the Subsidiaries
owning Vessels registered under the laws and flag of the United States of
America defaults in the performance of Section 10.1.A(vi) and, provided such
default does not render any such Vessel liable to forfeiture, such default is
not cured within thirty (30) days of its occurrence; or
(f) Financial Covenants. the Borrower defaults in the
performance of Sections 10.1.A (xv), (xvi), (xvii), (xviii), (xix) or (xx) and
such default is not cured within thirty (30) days; or
(g) Other Covenants. the Borrower defaults in the
performance of any other term, covenant or agreement contained in this
Agreement, in the Note or in any other instrument, document or other agreement
delivered in connection herewith or therewith, or there occurs any other event
which constitutes a default under this Agreement or under the Note, in each case
other than an Event of Default referred to elsewhere in this Section 9.1, and
such default in the reasonable opinion of the Majority Lenders will give rise to
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a Material Adverse Change and such default continues unremedied for a period of
thirty (30) days following notice thereof by the Agent; or
(h) Debt. the Borrower or any of the Subsidiaries shall
default in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of (i) any Funded Debt or (ii)
indebtedness to trade creditors exceeding, in the aggregate, One Million Dollars
($1,000,000) and in connection with such default or in connection with any
non-payment default in respect of such Funded Debt, any party becomes entitled
to enforce the security for any such Funded Debt or other indebtedness and such
party shall take steps to enforce the same, unless such default or enforcement
is being contested in good faith and by appropriate proceedings or other acts
and the Borrower and/or such Subsidiary or Subsidiaries, as the case may be,
shall set aside on its books adequate reserves with respect thereto; or
(i) Bankruptcy. the Borrower or any of the Subsidiaries
commences any proceedings relating to any substantial portion of its property
under any reorganization, arrangement or readjustment of debt, dissolution,
winding up, adjustment, composition, bankruptcy or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect ("Proceeding"), or there is
commenced against any thereof any Proceeding and such Proceeding remains
undismissed or unstayed for a period of thirty (30) days; or any receiver,
trustee, liquidator or sequestrator of, or for, any thereof or any substantial
portion of the property of any thereof is appointed and is not discharged within
a period of thirty (30) days; or any thereof by any act indicates consent to or
approval of or acquiescence in any Proceeding or to the appointment of any
receiver, trustee, liquidator or sequestrator of, or for, itself or any
substantial portion of its property; or
(j) Judgments. any judgment or order is made the effect
whereof would be to render ineffective or invalid this Agreement, the Note or
either thereof; or
(k) Inability to Pay Debts. the Borrower or any of the
Subsidiaries is unable to pay or admits its inability to pay its debts as they
fall due or if a moratorium shall be declared in respect of any Funded Debt of
the Borrower or any of the Subsidiaries; or
(l) Vessels Value/Commitment. the aggregate value of the
Vessels (as determined from time to time in accordance with Section 10.2) (it
being understood that for purposes of this Section 9.1(l), the value of a Vessel
owned by a Vessel Owning/Operating Subsidiary in which the Borrower has less
than a one hundred percent (100%) direct and/or indirect ownership interest
shall be prorated for such ownership interest), shall be less than two hundred
percent (200%) of the Committed Amount; or
(m) Change of Control of the Borrower. the Borrower shall
have suffered a Change of Control,
then the Lenders' obligation to make the Credit Facility available shall cease
and the Agent, on behalf of the Lenders, may (with the consent of the Majority
Lenders) and shall (upon the Majority Lenders' instruction) by notice to the
Borrower, (i) declare the entire balance of the then outstanding Advances,
accrued interest and any other sums payable by the Borrower hereunder and under
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the Note due and payable whereupon the same shall forthwith be due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived (provided that upon the happening of an event specified
in subsections (i) or (k) of this Section 9.1, the Note shall be immediately due
and payable without declaration or other notice to the Borrower), (ii) terminate
any Letter of Credit which may be terminated in accordance with its terms and
(iii) direct the Borrower to pay (and the Borrower hereby agrees upon receipt of
such notice, or upon the occurrence of an Event of Default specified in
subsection (i) or (k) of this Section 9.1, it will pay) to the Agent at the
office set forth in Section 7.1 such additional amounts, to be held as security
in respect of Letters of Credit then outstanding (if any), equal to the
aggregate of the then Letter of Credit Outstandings, such amounts to be repaid
to the Borrower to the extent not utilized to cover Letter of Credit drawings.
In such event, the Agent and the Lenders may proceed to protect and enforce
their rights by action at law, suit in equity or in admiralty or other
appropriate proceeding, whether for specific performance of any covenant
contained in this Agreement or in the Note or in aid of the exercise of any
power granted herein or therein, or the Agent and the Lenders may proceed to
enforce the payment of the Note when due or to enforce any other legal or
equitable right of the Lenders, or proceed to take any action authorized or
permitted by applicable laws for the collection of all sums due, or so declared
due, on the Note, including, without limitation, the right to appropriate and
hold or apply (directly, by way of set-off or otherwise) to the payment of the
obligations of the Borrower hereunder and/or under the Note (whether or not then
due) all moneys and other amounts of the Borrower , then or thereafter in
possession of the Lenders, the balance of any deposit account (demand or time,
matured or unmatured) of the Borrower then or thereafter with the Lenders and
every other claim of the Borrower then or thereafter against the Lenders.
9.2. Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Agent and the Lenders harmless against any loss or reasonable costs or expenses
(including legal fees and expenses) which the Agent or any Lender sustains or
incurs as a consequence of any default in payment of the principal amount of any
Advance or interest accrued thereon or any other amount payable hereunder or
under the Note including, but not limited to, all actual losses incurred in
liquidating or re-employing fixed deposits made by third parties or funds
acquired to effect or maintain the Credit Facility or any part thereof and any
costs incurred by the Agent or any Lender in connection with the unwinding of
any interest rate swap or other hedging arrangements. The Borrower also agrees
to reimburse and indemnify the Letter of Credit Issuer for and against any and
all losses, costs or expenses of whatever nature which may be incurred by the
Letter of Credit Issuer in performing its respective duties in any way relating
to or arising out of its issuance of Letters of Credit; provided that the
Borrower shall not be liable for the portion of such losses, costs or expenses
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct. To the extent the Letter of Credit Issuer is not so indemnified by
the Borrower, the Letter of Credit Participants will reimburse and indemnify the
Letter of Credit Issuer in proportion to its Letter of Credit Participant
Percentage. The Agent or any such Lender's certification of such loss, costs and
expenses absent any manifest error, shall be conclusive and binding on the
Borrower.
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9.3. Application of Moneys. All moneys received by the Agent or any Lender under
or pursuant to this Agreement or the Note after the happening of any Event of
Default shall be applied by the Agent in the following manner:
(i) first, in or towards the payment or reimbursement of
any expenses or liabilities incurred by the Agent and
the Lenders in connection with the ascertainment,
protection or enforcement of the Agent's and the
Lenders' rights and remedies hereunder and under the
Note,
(ii) secondly, in or towards payment of any interest owing
in respect of the Advances,
(iii) thirdly, in or towards repayment of the Advances,
(iv) fourthly, as security in respect of Letters of Credit
then outstanding, in the aggregate amount of the then
Letter of Credit Outstandings,
(v) fifthly, in or towards payment of all other sums
which may be owing to the Agent and the Lenders under
this Agreement or under the Note, and
(vi) sixthly, the surplus (if any), as well as any moneys
held as security for Letters of Credit to the extent
not utilized to cover Letters of Credit, shall be
paid to the Borrower or to whomsoever else may be
entitled thereto.
10 COVENANTS
10.1. The Borrower hereby covenants and undertakes with the Agent and the
Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of the Credit Facility or otherwise owing
under this Agreement or under the Note:
A. The Borrower will:
(i) Performance of Agreements. duly perform and observe
the terms of this Agreement and the Note;
(ii) Compliance with Covenants. comply with each of its
covenants set forth in this Agreement;
(iii) Notice of Default. promptly inform the Agent of the
occurrence of (a) any Event of Default or of any
event which with the giving of notice or lapse of
time, or both, would constitute an Event of Default,
(b) any litigation or governmental proceeding pending
or overtly threatened against it or against any of
the Subsidiaries which could reasonably be expected
to give rise to a Material Adverse Change and (c) any
other event or condition of which it becomes aware
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which is reasonably likely to give rise to a Material
Adverse Change;
(iv) Obtain Consents. without prejudice to Section 2.1 and
this Section 10.1, obtain every consent and do all
other acts and things which may from time to time be
necessary or advisable for the continued due
performance of all its obligations under this
Agreement and under the Note;
(v) Financial Statements. deliver to the Agent:
(a) as soon as available but not later
than ninety (90) days after the end of each
fiscal year of the Borrower, a complete copy of
the 10K report (or equivalent) of the Borrower
filed with the United States Securities and
Exchange Commission (including audited annual
financial statements of the Borrower, together
with a report thereon by an Acceptable Accounting
Firm), which shall be prepared by the Borrower
and certified by the chief financial officer of
the Borrower, together with a Compliance
Certificate from such chief financial officer;
(b) as soon as available but not later
than sixty (60) days after the end of each
quarter of each fiscal year of the Borrower, a
copy of the 10Q report (or equivalent) of the
Borrower filed with the United States Securities
and Exchange Commission which shall be prepared
by the Borrower and certified by the chief
financial officer of the Borrower, together, in
each instance, with a Compliance Certificate from
such chief financial officer;
(c) within ten (10) days of filing,
notice of the filing of all 8K reports (or
equivalent) filed by the Borrower with the United
States Securities and Exchange Commission (or any
similar governmental authority) and deliver to
the Agent, promptly on its request therefor,
copies of such filings;
(d) promptly upon the mailing thereof
to the shareholders of the Borrower generally,
copies of all financial statements, reports and
proxy statements so mailed;
(e) within ten (10) days of filing,
notice of the filing of all registration
statements (other than the exhibits thereto and
any registration statements on Form S-8 or its
equivalent) which the Borrower shall have filed
with the United States Securities and Exchange
Commission (or similar governmental authority)
and deliver to the Agent, promptly on its request
therefor, copies of such filings; and
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(f) such other statement or
statements, lists of property and accounts,
budgets, forecasts, reports and financial
information (including a listing of all
outstanding indebtedness of the Borrower and the
Subsidiaries for borrowed monies) with respect to
the business, operations and management of the
Borrower and the Subsidiaries and the employment
of the assets owned or operated directly or
indirectly by the Borrower or any of the
Subsidiaries as the Agent may from time to time
reasonably request in writing and any material
reports received by any thereof from their
independent certified accountants;
(vi) Qualification to Own U.S. Flag Vessels. throughout
the Credit Period, if the Borrower or a Subsidiary
owns a United States flag vessel (a) the Borrower
shall remain eligible, and shall cause such
Subsidiary to continue to be eligible, to document
such United States flag vessel within the meaning of
46 App. U.S.C. ss.12102(a) and (b) if such United
States flag vessel is operated in the coastwise
trade, remain qualified, and cause such Subsidiary to
continue to be qualified, to own and operate vessels
in the coastwise trade, within the meaning of Section
2 of the Shipping Act, 1916, as amended;
(vii) Corporate Existence. do or cause to be done all
things necessary to preserve and keep in full force
and effect its corporate existence, as well as the
corporate existence of its Subsidiaries, and all
licenses, franchises, permits and assets necessary to
the conduct of its business and the business of its
Subsidiaries;
(viii) Books, Records, etc. keep, and cause each of the
Subsidiaries to keep, proper books of record and
account into which full and correct entries shall be
made, in accordance with GAAP throughout the Credit
Period;
(ix) Inspection. allow any representative or
representatives designated by the Agent, subject to
applicable laws and regulations, to visit and inspect
any of its or any of the Subsidiaries' properties,
and, on request, to examine its or any of the
Subsidiaries' books of account, records, reports and
other papers (and to make copies thereof and to take
extracts therefrom) and to discuss the affairs,
finances and accounts of any thereof with its
officers and executive employees all at such
reasonable times and as often as the Agent reasonably
requests;
(x) Taxes. pay and discharge, and cause each of the
Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies
imposed upon it or upon its income or property prior
to the date upon which penalties attach thereof;
provided, however, that neither it nor any such
Subsidiary shall be required to pay and discharge any
such tax, assessment, charge or levy which are being
contested in good faith and by appropriate
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proceedings or other acts and so long as it or such
Subsidiary shall set aside on its books adequate
reserves with respect thereto;
(xi) Compliance with Statutes, etc. do, or cause to be
done, all things necessary to comply with all
material laws, and the rules and regulations
thereunder, applicable to itself or to any of the
Subsidiaries including, without limitation, those
laws, rules and regulations relating to employee
benefit plans and environmental matters;
(xii) Environmental Matters. promptly upon the occurrence
of any of the following conditions, provide to the
Agent a certificate of a chief executive officer
thereof, specifying in detail the nature of such
condition and its proposed response or the response
of its Environmental Affiliate: (a) its receipt or
the receipt by any Subsidiary or any of their
Environmental Affiliates of any communication
whatsoever that alleges that such person is not in
compliance with any applicable environmental law or
environmental approval, if such noncompliance could
reasonably be expected to give rise to a Material
Adverse Change, (b) knowledge by it, any Subsidiary
or any of their Environmental Affiliates that there
exists any Environmental Claim pending or threatened
against any such person, which could reasonably be
expected to give rise to a Material Adverse Change,
or (c) any release, emission, discharge or disposal
of any material that could form the basis of any
Environmental Claim against it, any Subsidiary or any
of their Environmental Affiliates if such
Environmental Claim could reasonably be expected to
give rise to a Material Adverse Change. Upon the
written request by the Agent, it will submit to the
Agent at reasonable intervals, a report providing an
update of the status of any issue or claim identified
in any notice or certificate required pursuant to
this subsection;
(xiii) Evidence of Insurance. shall, and shall procure that
each of the Subsidiaries shall, maintain the
insurances on its properties as provided under
Section 2.1(g)(iii) and 2.1(k), with underwriters,
brokers and protection and indemnity clubs acceptable
to the Agent, and the Borrower shall provide the
Agent, annually, with copies of insurance policies
and cover notes (together with such other
documentation as the Agent may reasonably require)
evidencing the same;
(xiv) Maintenance of Assets. maintain and keep, and cause
the Subsidiaries to maintain and keep, all properties
used or useful in the conduct of their business in
good condition, repair and working order and supplied
with all necessary equipment and will make, or cause
to be made, all necessary repairs, renewals and
replacements thereof so that the business carried on
in connection therewith and every portion thereof may
be properly and advantageously conducted at all
times;
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(xv) Funded Debt/Total Capitalization. procure that, on a
consolidated basis, the Funded Debt of the Borrower
shall not exceed fifty percent (50%) of its Total
Capitalization;
(xvi) Senior Debt/Total Capitalization. procure that, on a
consolidated basis, the Senior Debt of the Borrower
shall not exceed thirty-five percent (35%) of its
Total Capitalization;
(xvii) Permitted Secured Senior Debt. procure that, on a
consolidated basis, not more than the greater of (a)
One Hundred Five Million Dollars ($105,000,000) of
the Senior Debt of the Borrower and (b) seventeen and
one-half percent (17 1/2%) of its Total
Capitalization may be secured indebtedness (as used
herein, such secured Senior Debt shall include,
without limitation, all capitalized leases);
(xviii) Cash, Cash Equivalents. at all times maintain, on a
consolidated basis, readily available cash or Cash
Equivalents in an aggregate amount at least equal to
the greater of (a) Thirty Million Dollars
($30,000,000) and (b) an amount equal to twelve and
one-half percent (12 1/2%) of the Funded Debt, on a
consolidated basis, of the Borrower;
(xix) Interest Coverage Ratio. maintain, on a consolidated
basis, an Interest Coverage Ratio of 3.0 to 1.0,
measured quarterly;
(xx) Consolidated Net Worth. at all times maintain a
Consolidated Net Worth equal to (a), during calendar
year 1998, Three Hundred and Nine Million Six Hundred
Thousand Dollars ($309,600,000) and (b), during each
calendar year thereafter, the aggregate of (x) Three
Hundred Nine Million Six Hundred Thousand Dollars
($309,600,000) and (y) an amount equal to fifty
percent (50%) of the Borrower's consolidated annual
net income, if any, for the preceding calendar year
or each of the preceding calendar years, as the case
may be, commencing with calendar year 1998, as
reported from time to time, in the Borrower's
published financial reports;
(xxi) ERISA Matters. forthwith upon learning of the
occurrence of any material liability of the Borrower,
any of the Subsidiaries or any ERISA Affiliate
pursuant to ERISA in connection with the termination
of any Plan or withdrawal or partial withdrawal from
any multiemployer plan (as defined in ERISA) or of a
failure to certify the minimum funding standard of
Section 412 of the Code or Part 3 of Title I of ERISA
by any Plan for which the Borrower, any of the
Subsidiaries or any ERISA Affiliate is plan
administrator (as defined in ERISA), furnish or cause
to be furnished to the Lender written notice thereof;
and
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(xxii) Delivery of Share Certificates. deliver to the
Agent, promptly upon the Agent's request and, in
any event, annually, simultaneous with the
delivery of the Compliance Certificate delivered
report under Section 10.1A.(v)(a), all share
certificates or other evidences of ownership, if
any, issued to the Borrower or to any Subsidiary
evidencing an ownership interest in any Vessel
Owning/Operating Subsidiary.
B. The Borrower will not, without the prior written
consent of the Lenders:
(i) Liens. create, assume or permit to exist, or
permit any of the Vessel Owning/Operating
Subsidiaries to create, assume or permit to
exist, any lien, charge or encumbrance whatsoever
upon any of the properties or other assets of any
thereof, except:
(a) liens for taxes not yet payable
for which adequate reserves have been maintained;
(b) pledges or deposits to secure
obligations under workmen's compensation laws or
similar legislation, deposits to secure public or
statutory obligations, warehousemen's or other
like liens, or deposits to obtain the release of
such liens and deposits to secure surety, appeal
or customs bonds on which it or any of the Vessel
Owning/Operating Subsidiaries is the principal,
as to all of the foregoing, only to the extent
arising and continuing in the ordinary course of
business;
(c) liens, charges and other
encumbrances over such property or other assets
(other than Vessels) of the Borrower or any of
the Vessel Owning/Operating Subsidiaries, unless
otherwise prohibited by Section 10.1B(viii);
(d) with respect to Vessels, liens for
crew's wages remaining unpaid in accordance with
reasonable commercial practices or for collision
or salvage, liens in favor of suppliers of
necessaries or other similar liens arising in the
ordinary course of the vessel-owning company's
business so long as the suppliers thereof have
not evidenced an intention to enforce any such
lien or liens for loss, damage or expense, which
are fully covered by insurance or, in respect of
which, a bond or other security has been posted
by the company owning such Vessel with the
appropriate court or other tribunal to prevent
the arrest or secure the release of any vessel
from arrest on account of such claim or lien; and
(e) liens securing Senior Debt as set
forth on Schedule C and as otherwise permitted by
the terms of this Agreement;
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(ii) Sale of Assets. (a) Cease, or threaten to cease, its
operations or (b) viewed on a consolidated basis with
its Subsidiaries, sell or otherwise dispose of, or
threaten to sell or otherwise dispose of, all or
substantially all of the assets thereof, or all or
substantially all of such assets are seized or
otherwise appropriated except for requisition for
hire;
(iii) Dividends. declare or make any distributions to its
shareholders, by dividend or otherwise, or otherwise
dispose of any assets to its shareholders in cash or
in any other manner unless the Borrower and the
Subsidiaries are in full compliance with the
covenants contained in this Agreement and no Event of
Default has occurred and is continuing or will occur
after giving effect to any declaration or
distributions to shareholders;
(iv) Changes in Business. change or permit any of the
Subsidiaries to change, the nature of its business or
commence any other business not reasonably related to
the maritime services, environmental services, energy
services or related businesses;
(v) Consolidation, Merger. consolidate with, or merge
into, any corporation (it being understood that the
Borrower can merge with any corporation so long as
the Borrower is the surviving entity, any Subsidiary
can merge or consolidate with any other Subsidiary
and any Subsidiary can merge into the Borrower);
(vi) Use of Proceeds. use the proceeds of the Credit
Facility in violation of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System,
as in effect from time to time;
(vii) Redemption/Repurchase of Securities. redeem or
repurchase any of its outstanding convertible
subordinated bonds or outstanding shares, unless
after giving effect to any such redemption or
repurchase it is in compliance with its covenants
hereunder and no Event of Default shall have occurred
and be continuing and notification of any such
redemption or repurchase shall be included in the
next quarterly Compliance Certificate delivered to
the Agent; and
(viii) Negative Pledge. sell, encumber or otherwise
transfer, or permit any Vessel Owning/Operating
Subsidiary to sell, encumber or otherwise transfer,
any of its Vessels or any of the right, title or
interest of any thereof therein, assign, pledge or
otherwise encumber any earnings of, insurances
covering or requisition compensation in respect of,
any of its Vessels or sell, assign, pledge or
otherwise transfer or encumber any of the shares of
stock of any of the Vessel Owning/Operating
Subsidiaries directly or indirectly legally or
beneficially owned by the Borrower unless (x) notice
of such sale, assignment, pledge, transfer or other
encumbrance shall be included with and a part of the
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next following Compliance Certificate delivered by
the Borrower to the Agent pursuant to Section
10.1A.(v) and (y) after giving effect to any such
sale, assignment, pledge, transfer or other
encumbrance, the Borrower is in compliance with its
covenants and no Event of Default shall have occurred
and be continuing.
10.2. Vessel Valuations. Upon the reasonable request of the Agent, the Borrower
shall obtain, at the Borrower's cost, valuations of the Vessels owned by Vessel
Owning/Operating Subsidiaries, charter free, in Dollars from an independent
shipbroker satisfactory to the Agent (it being understood that the initial
valuation for any Vessel acquired in an arm's length transaction with a third
party shall be the purchase price of such Vessel). In the event the Borrower
shall fail or refuse to obtain the valuations requested pursuant to this Section
10.2 within ten (10) days of the Agent's request therefor, the Agent shall be
authorized to obtain such valuations, at the Borrower's cost, from an
independent shipbroker selected by the Agent, which valuations shall be deemed
the equivalent of valuations duly obtained by the Borrower pursuant to this
Section 10.2, but the Agent's actions in doing so shall not excuse any default
of the Borrower under this Section 10.2.
10.3. Inspection and Survey Reports. Upon the reasonable request of the Agent,
the Borrower shall provide the Agent with copies of all internally generated
inspection or survey reports on the Vessels and shall, if the Agent so
reasonably requests, cause the Vessels to be surveyed on an annual basis by a
surveyor appointed by the Agent. All costs arising in connection with any such
survey or surveys (including, but not limited to, the fees of the relevant
surveyor or firm of surveyors appointed by the Agent to make such survey or
surveys) shall be borne by the Borrower.
11 ASSIGNMENT AND PARTICIPATIONS
This Agreement shall be binding upon, and inure to the
benefit of, the Borrower, the Agent, the Lenders and their respective successors
and assigns, except that the Borrower may not assign any of its rights or
obligations hereunder without the prior written consent of the Lenders. In
giving any consent as aforesaid to any assignment by the Borrower, the Lenders
shall be entitled to impose such conditions as they shall deem advisable. Any
Lender shall be entitled to assign the whole or any part of its rights or
obligations under this Agreement or grant participation(s) in the Credit
Facility to any subsidiary or holding company of such Lender, to any subsidiary
company of any thereof or, with the consent of the Borrower and the Agent (in
each case not to be unreasonably withheld) to any other bank or financial
institution whatsoever and such Lender shall forthwith give notice of any such
assignment or participation to the Agent and the Borrower, provided, however,
that (a) except as provided by Section 16, in such event Den norske Bank ASA
shall remain the agent, (b) any such assignment or participation shall be in a
minimum amount of Ten Million Dollars ($10,000,000), (c) any such assignment to
a Lender is to be made pursuant to an Assignment and Assumption Agreement
substantially in the form of Exhibit 5 hereto, (d) Den norske Bank ASA's
Commitment shall be not less than twenty-five percent (25%) of the Committed
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Amount and (e) except as provided in Sections 14.2 and for such reasonable legal
fees and expenses incurred in connection with the documentation of such an
assignment (but not participation), no such assignment or participation will
result in any additional costs to, or additional material requirements on, the
Borrower. The Borrower will take all reasonable actions requested by the Lenders
to effect such assignment, including, without limitation, the execution of a
written consent to such Assignment and Assumption Agreement.
12 ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
12.1. Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof a
Lender has a reasonable basis to conclude that it has become unlawful for such
Lender to maintain or give effect to its obligations as contemplated by this
Agreement, the Lender shall inform the Borrower and the Agent to that effect,
whereafter the liability of such Lender to make its Commitment available shall
forthwith cease and the Borrower shall be required either to prepay to such
Lender any portion of the then outstanding Advances owing to such Lender
immediately or, if such Lender so agrees, to prepay such portion of the
outstanding Advances to such Lender on the last day of the then current Interest
Period or Periods, in accordance with and subject to the provisions of Section
12.5 and to pay to the Agent sufficient amounts of cash to fund any possible
drawings under Letters of Credit then in existence, such amounts to be repaid to
the Borrower to the extent not utilized to cover Letter of Credit drawings. In
any such event, but without prejudice to the aforesaid obligations of the
Borrower to prepay the outstanding Advances or part thereof and fund any
possible drawings under Letters of Credit then in existence, the Borrower and
such Lender shall negotiate in good faith with a view to agreeing on terms for
making the Commitment available from another jurisdiction or otherwise
restructuring the Commitment on a basis which is not unlawful.
12.2. Increased Cost. If any change in applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject a Lender to any Taxes with respect to its
income from the Credit Facility or any part thereof,
or
(ii) change the basis of taxation to a Lender of payments
of principal or interest or any other payment due or
to become due pursuant to this Agreement (other than
a change in the basis effected by the jurisdiction of
incorporation of such Lender or the domicile of the
Lender's office through which the Lender's Commitment
is made or any governmental subdivision or other
taxing authority having jurisdiction over such Lender
(unless such jurisdiction is asserted solely by
reason of the activities of the Borrower or any of
the Subsidiaries) or such other jurisdiction where
the Credit Facility may be payable), or
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(iii) impose, modify or deem applicable any reserve
requirements or require the making of any special
deposits against or in respect of any assets or
liabilities of, deposits with or for the account
of, or loans by, any Lender, or
(iv) impose on any Lender any other condition
affecting the Commitment or any portion of any
Advance thereunder, and the result of the
foregoing is either to increase the cost to such
Lender of making available or maintaining its
Commitment or to reduce the amount of any payment
received by such Lender
then and in any such case if such increase or reduction in the opinion of such
Lender materially affects the interests of such Lender under or in connection
with this Agreement:
(a) such Lender shall notify the
Borrower and the Agent of the happening of such
event,
(b) the Borrower agrees forthwith upon
demand to pay to such Lender such amount as such
Lender certifies to be necessary to compensate
such Lender for such additional cost or such
reduction, and
(c) any such demand as is referred to
in sub-section (b) of this Section 12.2 may be
made by such Lender at any time before or after
any repayment of the Advances.
12.3. Non-availability of Funds. If the Agent shall determine that, by reason of
circumstances affecting the London Interbank Eurodollar Market generally,
adequate and reasonable means do not or will not exist for ascertaining the
Applicable Rate for any Interest Period, the Agent shall give notice of such
determination to the Borrower. The Borrower and the Lenders shall then negotiate
in good faith in order to agree upon a mutually agreeable basis for funding the
Advance or Advances in question, and/or for determining the interest rate and/or
Interest Period(s) to be substituted for those which would otherwise have
applied under this Agreement. If the Borrower and the Lenders are unable to
agree upon such a substituted funding base, interest rate and/or Interest
Period(s) within thirty (30) days of the giving of such notice, the Borrower
shall repay the Credit Facility, or the relevant portion thereof, as the case
may be, to the Lenders immediately; provided, however, that if the Borrower
fails to make such repayment, the Lenders shall determine a funding basis, set
an interest rate and/or set an Interest Period(s), as the case may be, all to
take effect from the expiration of the relevant Interest Period(s) in effect at
the date of said determination notice, which rate shall be equal to the
aggregate of the Margin and the cost to the Lenders of funding the relevant
Advance or Advances.
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12.4. Determination of Losses. A certificate or determination notice of the
Lenders or the Agent as to any of the matters referred to in this Section 12,
absent manifest error, shall be conclusive and binding on the Borrower.
12.5. Compensation for Losses. Where the Advances are to be prepaid by the
Borrower pursuant to Section 12.1 the Borrower agrees simultaneously with such
prepayment to pay to the relevant Lender all accrued interest to the date of
actual payment and all other sums payable by the Borrower to such Lender
pursuant to this Agreement, together with such amounts as may be certified by
such Lender to be necessary to compensate such Lender for any actual loss,
premium or penalties incurred or to be incurred by it on account of funds
borrowed to make, fund or maintain its Commitment for the remainder (if any) of
the then current Interest Period or Periods, if any, but otherwise without
penalty or premium.
13 CURRENCY INDEMNITY
13.1. Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars or a
particular Foreign Currency, as the case may be, under this Agreement or under
the Note, then the conversion shall be made, in the discretion of the Agent, at
the rate of exchange prevailing either on the date of default or on the day
before the day on which the judgment is given or the order for enforcement is
made, as the case may be (the "conversion date"), provided that the Agent shall
not be entitled to recover under this section any amount in the judgment
currency which exceeds at the conversion date the amount in Dollars or the
relevant Foreign Currency, as the case may be, due under this Agreement and/or
under the Note.
13.2. Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement and/or
under the Note in Dollars or the relevant Foreign Currency; any excess over the
amount due received or collected by the Lenders shall be remitted to the
Borrower.
13.3. Additional Debt Due. Any amount due from the Borrower under Section 13.2
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement and/or
under or in respect of the Note.
13.4. Rate of Exchange. The term "rate of exchange" in this Section 13 means the
rate at which the Agent in accordance with its normal practices is able on the
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relevant date to purchase Dollars or the relevant Foreign Currency with the
judgment currency and includes any premium and costs of exchange payable in
connection with such purchase.
14 FEES AND EXPENSES
14.1. Commitment Fee. (a) The Borrower shall pay to the Agent, for distribution
to the Lenders, a commitment fee in Dollars, payable quarterly in arrears,
computed at the relevant rates per annum applicable pursuant to this Section
14.1 (the "Commitment Fee Rate(s)") on the average unfunded portion of the
Committed Amount (valued in Dollars) during such quarter. The commitment fee
shall accrue from the date hereof and shall terminate on the Termination Date.
(b) The Commitment Fee Rates, as determined from time to
time by the Agent as provided herein, shall be equal to the lower of the rates
corresponding to (a) the percentage that the Borrower's consolidated Funded Debt
(excluding any Funded Debt subordinated to the indebtedness of the Borrower
under the Credit Facility and in respect of which no payments of principal are
scheduled to be paid on or before the Termination Date) bears to the
consolidated EBITDA for the Borrower and (b) the Borrower's credit rating as
determined by S&P and Moody's, as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------- --------------------------------------------- ------------------------------------
Commitment Fee Rate Funded Debt/EBITDA Credit Rating
- ----------------------------------------------- --------------------------------------------- ------------------------------------
<S> <C> <C>
17.5 bp less than or equal to 75% BBB+/Baa1
- ----------------------------------------------- --------------------------------------------- ------------------------------------
20.0 bp greater than 75%, but BBB/Baa2
less than or equal to 150%
- ----------------------------------------------- --------------------------------------------- ------------------------------------
22.5 bp greater than 150%, but BBB-/Baa3
less than or equal to 225%
- ----------------------------------------------- --------------------------------------------- ------------------------------------
30.0 bp greater than 225%, but BB+/Ba1
less than or equal to 300%
- ----------------------------------------------- --------------------------------------------- ------------------------------------
40.0 bp greater than 300% BB/Ba2
- ----------------------------------------------- --------------------------------------------- ------------------------------------
</TABLE>
For purposes of determining the applicable Commitment Fee Rate(s), if the
respective credit ratings of the Borrower by Moody's and S&P for any period
correspond to two different Commitment Fee Rates, the applicable Commitment Fee
Rate(s) shall be the lowest of the rates corresponding to (x) the aforesaid
ratio of Funded Debt to EBITDA, (y) the Borrower's credit rating as determined
by S&P and (z) the Borrower's credit rating as determined by Moody's. The
applicable Commitment Fee Rate(s) shall be determined by the Agent quarterly
(based upon the latest 10Q report or 10K report and Compliance Certificate
delivered by the Borrower to the Agent from time to time pursuant to this
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Agreement). The newly determined Commitment Fee Rate(s) shall be effective on
the on the last day of the month following the month during which such report
was delivered to the Agent.
14.2. Letter of Credit and Facing Fees and Related Charges. In addition, the
Borrower shall pay to the Agent, for distribution to the Lenders, a fee in
Dollars in respect of each Letter of Credit (the "Letter of Credit Fee")
computed at a rate per annum equal to the Margin in effect from time to time on
the daily Stated Amount of such Letter of Credit as reduced by any drawings
thereunder. If the Credit Facility is syndicated, the Borrower further agrees to
pay to the Letter of Credit Issuer, commencing at such time, a fee in Dollars in
respect of each Letter of Credit (the "Facing Fee") computed at a rate per annum
equal to one-eighth of one percent (1/8%) on the daily Stated Amount of such
Letter of Credit as reduced by any drawings thereunder. Accrued Letter of Credit
and Facing Fees shall be due and payable quarterly in arrears on the first day
of each October, January, April and July of each year the Credit Facility
remains outstanding and on the Termination Date. The Borrower also agrees to pay
to the Letter of Credit Issuer all customary issuing and handling fees of the
Letter of Credit Issuer in connection with its issuance of Letters of Credit.
14.3. Agency Fee. The Borrower shall also pay to the Agent an annual agency fee
of Five Thousand Dollars ($5,000) for each additional Lender (up to three (3))
which acquires a participation or syndicated interest in the Credit Facility
from Den norske Bank ASA, payable annually in advance, commencing upon the date
on which each such additional Lender acquires such participation or syndicated
interest in the Credit Facility.
14.4. Agent's Other Fees. The Borrower shall pay to the Agent, for its own
account, such fees as shall have been agreed in accordance with the letter
agreement dated September 17, 1998 between the Borrower and the Agent.
14.5. Costs, Charges and Expenses. The Borrower agrees to pay the Agent and the
Lenders upon demand (whether or not the Credit Facility or any part thereof is
made available hereunder) all reasonable costs, charges and expenses (including
legal fees and expenses, as well as travel expenses of the Agent and the
Lenders) incurred by the Agent and the Lenders in connection with the
negotiation, preparation, execution and enforcement or attempted enforcement of
this Agreement, the Note or otherwise in connection with the Credit Facility, as
well as in connection with any supplements, amendments, assignments, waivers or
consents relating thereto.
15 APPLICABLE LAW, JURISDICTION AND WAIVER
15.1. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
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15.2. Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York in any action or proceeding brought
against it by the Agent or the Lenders under this Agreement or under any
document delivered hereunder and the Borrower hereby irrevocably appoints SEACOR
Management Services Inc. with an office at 1370 Avenue of the Americas, New
York, New York, its attorney-in-fact and agent for service of summons or other
legal process thereon, which service may be made by serving a copy of any
summons or other legal process in any such action or proceeding on such agent
and such agent is hereby authorized and directed to accept by and on behalf of
the Borrower service of summons and other legal process of any such action or
proceeding against the Borrower. The service, as herein provided, of such
summons or other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Borrower as such, and shall be legal and
binding upon the Borrower for all the purposes of any such action or proceeding.
Final judgment (a certified or exemplified copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness of a Borrower to any
Lender or the Agent) against the Borrower in any such legal action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment. The Borrower will advise the Agent promptly of any change of address
of the foregoing agent or of the substitution of another agent therefor. In the
event that the foregoing agent or any other agent appointed by the Borrower
shall not be conveniently available for such service or if the Borrower fails to
maintain an agent as provided herein, the Borrower hereby irrevocably appoints
the person who then is the Secretary of State of the State of New York as such
attorney-in-fact and agent. The Borrower will advise the foregoing agent of the
appointment made hereby, but failure to so advise shall not affect the
appointment made hereby. Notwithstanding anything herein to the contrary, the
Agent or the Lenders may bring any legal action or proceeding in any other
appropriate jurisdiction.
15.3. WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER, THE
AGENT AND THE LENDERS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER
PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT OR THE NOTE.
16 THE AGENT
16.1. Appointment of Agent. Each of the Lenders hereby irrevocably appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and under the Note as are delegated to the
Agent by the terms hereof and thereof. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable for any action taken or
omitted to be taken by it or them under this Agreement and under the Note or in
connection therewith, except for its or their own gross negligence or willful
misconduct.
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16.2. Distribution of Payments. Whenever any payment is received by the Agent
from the Borrower for the account of the Lenders, or any of them, whether of
principal or interest on the Note, commissions, commitment fees under Section
14.1, or otherwise, it will thereafter cause like funds relating to such payment
to be promptly distributed ratably to the Lenders according to their respective
Commitments, in each case to be applied according to the terms of this
Agreement.
16.3. Holder of Interest in Note. The Agent may treat each Lender as the holder
of all of the interest of such Lender in the Note unless and until the Agent has
received a copy of an Assignment and Assumption Agreement evidencing the
transfer of all or any part of such Lender's interest in the Credit Facility.
16.4. No Duty to Examine, Etc. The Agent shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of this Agreement, the Note
or any instrument, document or communication furnished pursuant to this
Agreement or the Note or in connection with any thereof and the Agent shall be
entitled to assume that the same are valid, effective and genuine, have been
signed or sent by the proper parties and are what they purport to be.
16.5. Agent as Lender. With respect to that portion of the Credit Facility made
available by it, the Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not the Agent, and
the term "Lender" or "Lenders" shall include the Agent in its capacity as a
Lender. The Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with, the Borrower as if it were not
the Agent.
16.6. (a) Obligations of Agent. The obligations of the Agent under this
Agreement and under the Note are only those expressly set forth herein and
therein.
(b) No Duty to Investigate. The Agent shall not at any time
be under any duty to investigate whether an Event of Default, or an event which
with the giving of notice or lapse of time, or both, would constitute an Event
of Default, has occurred or to investigate the performance of this Agreement and
the Note by the Borrower.
16.7. (a) Discretion of Agent. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement
and the Note , unless the Agent shall have been instructed by the Majority
Lenders to exercise such rights or to take or refrain from taking such action;
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<PAGE>
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law.
(b) Instructions of Majority Lenders. The Agent shall in
all cases be fully protected in acting or refraining from acting under this
Agreement and under the Note in accordance with the instructions of the Majority
Lenders (or, where expressly required hereby, all the Lenders), and any action
taken or failure to act pursuant to such instructions shall be binding on all of
the Lenders.
16.8. Assumption re Event of Default. Except as otherwise provided in Section
16.14, the Agent shall be entitled to assume that no Event of Default, or event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default, has occurred and is continuing, unless the Agent has been
notified by the Borrower of such fact or has been notified by a Lender that such
Lender considers that an Event of Default or such an event (specifying in detail
the nature thereof) has occurred and is continuing. In the event that the Agent
shall have been notified by any party in the manner set forth in the preceding
sentence of any Event of Default or of an event which with the giving of notice
or lapse of time, or both, would constitute an Event of Default, the Agent shall
notify the Lenders and shall take action and assert such rights under this
Agreement or the Note as the Majority Lenders shall request in writing.
16.9. No Liability of Agent or Lenders. Neither the Agent nor any of the Lenders
shall be under any liability or responsibility whatsoever:
(a) to the Borrower or any other person or entity as a
consequence of any failure or delay in performance by, or any breach by, any
other Lender or any other person of any of its or their obligations under this
Agreement or under the Note;
(b) to any Lender or Lenders as a consequence of any
failure or delay in performance by, or any breach by the Borrower of any of its
obligations under this Agreement or under the Note; or
(c) to any Lender or Lenders for any statements,
representations or warranties contained in this Agreement or in the Note or in
any document or instrument delivered in connection with the transaction hereby
contemplated; or for the validity, effectiveness, enforceability or sufficiency
of this Agreement and the Note or any document or instrument delivered in
connection with the transactions hereby contemplated.
16.10. Indemnification of Agent. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower), pro rata according to the respective
amounts of their Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including reasonable
legal fees and expenses incurred in investigating claims and defending itself
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<PAGE>
against such liabilities) which may be imposed on, incurred by or asserted
against, the Agent in any way relating to or arising out of this Agreement and
the Note, any action taken or omitted by the Agent hereunder or thereunder or
the preparation, administration, amendment or enforcement of, or waiver of any
provision of, this Agreement and the Note, except that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
16.11. Consultation with Counsel. The Agent may consult with legal counsel
selected by the Agent and shall not be liable for any action taken, permitted or
omitted by it in good faith in accordance with the advice or opinion of such
counsel.
16.12. Resignation. The Agent may resign at any time by giving sixty (60) days'
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within sixty (60) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall (unless an
Event of Default has occurred and is continuing) be subject to the prior written
consent of the Borrower, such consent not to be unreasonably withheld. After any
retiring Agent's resignation as Agent hereunder, the provisions of this Section
16 shall continue in effect for its benefit with respect to any actions taken or
omitted by it while acting as Agent.
16.13. Representations of Lenders. Each Lender represents and warrants to each
other Lender and the Agent that:
(i) in making its decision to enter into this Agreement and to make
its Commitment available hereunder, it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Borrower, that it has made an independent credit judgment and that it has not
relied upon any statement, representation or warranty by any other Lender or the
Agent; and
(ii) So long as any portion of its Commitment remains outstanding, it
will continue to make its own independent evaluation of the financial condition
and affairs of the Borrower.
16.14. Notification of Event of Default. The Agent hereby undertakes promptly to
notify the Lenders, and each of the Lenders hereby undertakes promptly to notify
the Agent and the other Lenders, of the existence of any Event of Default which
shall have occurred and be continuing of which the Agent or such Lender has
actual knowledge.
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16.15. No Agency until Syndication. Unless and until the Credit Facility is
syndicated, all references in this Agreement to the term "Agent" shall be deemed
to be references to Den Norske Bank ASA, as a Lender and not as administrative
agent.
17 NOTICES AND DEMANDS
17.1. Notices in Writing. Every notice or demand under this Agreement shall be
in writing and may be given or made by telecopy.
17.2. Addresses for Notice. Every notice or demand shall be sent, if to the
Borrower or the Agent, at the address set forth below and, if to the Lenders at
their address and telecopy numbers set forth in Schedule A or at such other
address or telecopy numbers as such party may hereafter specify for the purpose
by notice to each other party hereto.
Any notices addressed to the Borrower shall be sent as follows:
c/o SEACOR Management Services Inc.
1370 Avenue of the Americas, 25th floor
New York, New York 10019
Telecopy.: (212) 582-8522
Any notices addressed to the Agent shall be sent as follows:
200 Park Avenue
New York, New York 10166-0396
Telecopy No.: (212) 681-3900
Any notice sent by telecopy shall be confirmed by letter dispatched as soon as
practicable thereafter.
17.3. Notices Deemed Received. Every notice or demand shall, except so far as
otherwise expressly provided by this Agreement, be deemed to have been received
(provided that it is received prior to 2 p.m. New York time; otherwise it shall
be deemed to have been received on the next following Banking Day), in the case
of a telecopy at the time of dispatch thereof (provided further that if the date
of dispatch is not a Banking Day in the locality of the party to whom such
notice or demand is sent it shall be deemed to have been received on the next
following Banking Day in such locality) and, in the case of a letter, at the
time of receipt thereof.
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18 MISCELLANEOUS
18.1. Time of Essence. Time is of the essence of this Agreement but no failure
or delay on the part of the Agent or the Lenders to exercise any power or right
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Agent or the Lenders of any power or right hereunder
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
18.2. Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement or in the Note would, if given effect,
(i) cause such of the Borrower or any of the Subsidiaries, as the case may be,
which owns United States flag vessels to cease to be a citizen of the United
States within the meaning of Section 2 of the United States Shipping Act 1916,
as amended, or cause a transfer of any of the Vessels registered under the laws
and flag of the United States of America in violation of Section 9 of said Act
or (ii) be otherwise invalid, illegal or unenforceable in any respect under any
law applicable in any relevant jurisdiction, said provision shall not be
enforceable against the Borrower or any of the Subsidiaries, as the case may be,
but the validity, legality and enforceability of the remaining provisions herein
or therein contained shall not in any way be affected or impaired thereby.
18.3. References. References herein to Sections and Schedules are to be
construed as references to sections of, and schedules to, this Agreement.
18.4. Further Assurances. The Borrower agrees that if this Agreement or the Note
shall at any time be deemed by the Agent for any reason insufficient in whole or
in part to carry out the true intent and spirit hereof or thereof, it will
execute or cause to be executed such other and further assurances and documents
as in the opinion of the Agent may be required in order more effectively to
accomplish the purposes of this Agreement and the Note.
18.5. Entire Agreement, Amendments. This Agreement, the Note and the letter
agreement referred to in Section 14.4constitute the entire agreement of the
parties hereto, including all parties added hereto pursuant to an Assignment and
Assumption Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument. Any
provision of this Agreement or the Note may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower and the
Majority Lenders (and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no amendment or waiver shall, unless
signed by all the Lenders, (i) increase or decrease the Commitment of any Lender
or subject any Lender to any additional obligation other than those set forth
herein, (ii) reduce the principal of or rate of interest on the Credit Facility
48
<PAGE>
or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on the Loan or any fees hereunder, (iv) amend Section
11, (v) waive any condition precedent to the availability of the Credit Facility
or any Advance thereunder, (vi) amend or modify this Section 18.5 or (vii)
change the definition of "Majority Lenders".
IN WITNESS whereof the parties hereto have caused this
Agreement to be duly executed by their duly authorized
representative as of the day and year first above written.
SEACOR SMIT INC.
By /s/ Randall Blank
---------------------------------
Randall Blank
Executive Vice President
By special authority for
DEN NORSKE BANK ASA, New York
Branch, as Agent and Lender
By /s/ George P. Malanga
---------------------------------
George P. Malanga
Senior Vice President
and
By /s/ Nikolai Nachamkin
---------------------------------
Nikolai Nachamkin
Vice President
EXHIBIT 10.33
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment")
is made as of the 4th day of February, 1999 by and between (i) SEACOR SMIT INC.,
a corporation organized and existing under the laws of the State of Delaware
(the "Borrower"), (ii) the financial institutions listed in Schedule A (the
"Lenders") to that certain Credit Agreement dated November 17, 1998 (the
"Original Agreement"), among the Borrower, the Lenders and the Agent (as
hereinafter defined) and (iii) DEN NORSKE BANK ASA, a banking corporation
organized and existing under the laws of Norway, as agent for the Lenders (the
"Agent") and amends and is supplemental to the Original Agreement.
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the Original Agreement, the Lenders
made available to the Borrower a credit facility in the maximum principal amount
of U.S.$100,000,000 (the "Loan"), the proceeds of which were made available for
the purposes of repaying outstanding advances under the Existing Credit Facility
(as defined in the Original Agreement) and for general corporate purposes and
WHEREAS, in connection with the assignment and assumption
of a portion of the original Lender's commitment under the Original Agreement to
certain new Lenders, the parties desire to amend certain provisions of the
Original Agreement.
NOW, THEREFORE, in consideration of the premises and such
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the parties, it is hereby agreed as follows:
1. Definitions. Unless otherwise defined herein, words and
expressions defined in the Original Agreement shall bear the same meanings when
used herein.
2. Representations and Warranties. The Borrower hereby
reaffirms, as of the date hereof, each and every representation and warranty
made thereby in the Original Agreement and the Note (updated mutatis mutandis).
3. No Defaults. The Borrower hereby represents and warrants
that as of the date hereof there exists no Event of Default or any condition
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default.
4. Performance of Covenants. The Borrower hereby reaffirms
that it has duly performed and observed the covenants and undertakings set forth
in the Original Agreement and the Note on its part to be performed, and
covenants and undertakes to continue to duly perform and observe such covenants
and undertakings, as amended hereby, so long as the Original Agreement, as the
same is amended hereby and may hereafter be amended or supplemented, shall
remain in effect.
<PAGE>
5. Amendment to the Original Agreement. Subject to the
terms and conditions of this Amendment, the Original Agreement is hereby amended
and supplemented as follows:
(a) all references to "this Agreement" shall be deemed to refer to
the Original Agreement as amended hereby;
(b) Section 1.1 shall be amended by:
(1) deleting the existing definition of "Agent's Exchange
Rate" and inserting the following in place thereof:
"means the exchange rate offered by the Agent (or in
the case of the calculation of amounts drawn or
otherwise payable under Letters of Credit denominated
in currencies other than Dollars, the Letter of
Credit Issuer) of Dollars for a particular foreign
currency or vice versa in accordance with its normal
practices on the relevant date, in either case,
including any costs associated with the relevant
exchange contract or, if it does not then offer such
exchange rates in respect of such foreign currency,
such exchange rate in respect of such currency as the
Agent or the Letter of Credit Issuer, as the case may
be, deems reasonable;"
(2) amending the definition of "Credit Period" by
inserting "and all commitments to extend credit under
this Agreement have been terminated" at the end
thereof;
(3) amending the definition of "Dollar Equivalent" by
deleting "Foreign Currency" and inserting "foreign
currency" in place thereof;
(4) deleting the existing definition of Letter of Credit
Issuer and inserting the following in place thereof:
"means, with respect to each Letter of Credit, the
Lender which, at the request of the Borrower, issues
the same;"
(5) amending the definition of "LIBOR" by
i) replacing "Banking Day" and "Banking Days"
with "LIBOR Reference Day" and "LIBOR
Reference Days" in each instance that they
appear; and
ii) replacing on the eighth through thirteenth
lines thereof:
"Telerate page 3750 (British Bankers'
Association Interest Settlement Rates), in
the case of Dollars or Pounds Sterling, or
Telerate page 3740 (British Bankers'
Association Interest Settlement Rates), in
2
<PAGE>
the case of Dutch Guilders or French Francs
(or such other page as may replace such page
3750 or such page 3740,"
with:
"page LIBOR01 of the Reuters screen, in the
case of Dollars, Pounds Sterling, or, if
applicable, euros, or page LIBOR02 of the
Reuters screen, in the case of Dutch
Guilders or French Francs (or such other
page as may replace such pages LIBOR01 and
LIBOR02,";
(6) Inserting a new definition of "LIBOR Reference
Day(s)" which shall read:
"days on which banks in the London interbank market
generally will provide quotations for deposits in the
relevant currencies;"
(7) amending the definition of "Majority Lenders" by
inserting at the end thereof:
"or, if all Commitments have been terminated
hereunder, two (2) or more Lenders, the aggregate
outstanding Advances made by which exceed two thirds
of the aggregate Advances then outstanding;"
(c) Section 3.1 shall be amended by inserting the following at the
end thereof:
"The obligation of each Lender to advance its
respective portion of any Advance shall be several
and not joint with the other Lenders. With respect to
each Advance, no Lender shall be obliged to advance
to the Borrower (a) with respect to each Advance, an
amount in excess of such Lender's pro rata share of
such Advance and, (b) in the aggregate Credit
Facility Balance outstanding at any time, an amount
in excess of its Commitment."
(d) Section 3.6 shall be amended by:
(1) deleting "Foreign Currency" from the eighth line
thereof and inserting "currency other than Dollars"
in place thereof;
(2) inserting "or the Letter of Credit Issuer, as the
case may be," after "Agent" on the tenth line
thereof;
(3) inserting "and the Lenders" after "Borrower" on the
eleventh line thereof; and
3
<PAGE>
(4) inserting after "Foreign Currency Advances" on the
thirteenth and penultimate lines thereof:
"(together with the Dollar Equivalent of the
aggregate Stated Amount of Letters of Credit then
outstanding and denominated in currencies other than
Dollars)"
(e) Section 3.7(b) shall be amended by deleting "and the Agent may
consent in its sole absolute" on the ninth line thereof and
inserting "and the Letter of Credit Issuer, the Agent and the
Majority Lenders may consent, in their respective absolute" in
place thereof;
(f) Section 3.9(a) shall be amended by:
(1) inserting the following after "Advance" on the third
line thereof:
"in Dollars (amounts paid or disbursed in currencies
other than Dollars or Foreign Currencies shall be
converted to Dollars at the Agent's Exchange Rate as
of the date of payment or disbursement) or the
Foreign Currency in which such Letter of Credit was
denominated"
and
(2) inserting the following after "disbursement" on the
penultimate line thereof:
"and the amount thereof in, as applicable, (x)
Dollars, (y) the relevant Foreign Currency or (z), if
such payment or disbursement was in a currency other
than Dollars or a Foreign Currency, the Dollar
Equivalent of such payment or disbursement (together
with the sum thereof in the relevant foreign currency
and the applicable Agent's Exchange Rate)".
(g) Section 3.10(c) shall be amended by deleting "(or in the
currency of issuance if issued in a currency other than
Dollars)" from the fourth and fifth lines and inserting the
following in place thereof:
"(or if the Letter of Credit was (x), issued in a
Foreign Currency, the currency of issuance or (y)
issued in a currency other than Dollars or the
Foreign Currencies, in Dollars, based upon the Dollar
Equivalent of the deemed advance as calculated
pursuant to Section 3.9(a))"
4
<PAGE>
(h) Section 6.1 shall be amended by inserting the following after
"6.2" on the fourth line thereof:
"plus (c) any applicable margin or eurocurrency
liability reserve requirement imposed on any Lender
as a result of the operation of Regulation D (Title
12, Code of Federal Regulations, Chapter II, Part
204) as in effect from time to time constituting a
sum payable by the Borrower under Section 12.2"
(i) Section 9.1(h) shall be amended by:
(1) inserting "or indebtedness" after "Funded Debt" on
the fifth line thereof;
(2) inserting "(x)" after "entitled to" on the fifth line
thereof and
(3) deleting "unless such default" from the seventh line
thereof and inserting the following in their place:
"or (y) any party becomes entitled to accelerate and
accelerates such Funded Debt or indebtedness, unless
such default, acceleration"
(j) Section 10.1 shall be amended by inserting the following after
"and so long as" on the second line thereof:
"(x) any commitments to advance credit hereunder
remain in effect or (y)"
(k) Section 10.1A.(v) shall be amended by inserting "(in
sufficient number of copies to provide one to each Lender)" on
the first line thereof after "Agent";
(l) Section 10.2 shall be amended by inserting (1) "and/or the
Majority Lenders" after the word "Agent" in the first line
thereof, (2) "or the Majority Lenders'" after "Agent's" on the
seventh line thereof;
(m) Section 10.3 shall be amended by inserting "and/or the
Majority Lenders" after the word "Agent" in the first and
third lines thereof.
(n) Section 11 shall be amended by adding the following at the end
thereof:
"Anything contained in this Section 11 to the
contrary notwithstanding, any Lender may at any time
pledge all or any portion of its interest and rights
under this Agreement (including all or any portion of
any Note) to any of the twelve Federal Reserve Banks
organized under ss.4 of the Federal Reserve Act, 12
5
<PAGE>
U.S.C. ss.341. No such pledge or the enforcement
thereof shall release the pledgor Lender from its
obligations hereunder."
(o) Adding the following new Section 14.6:
"14.6 Indemnification. Neither any Lender nor the
Agent nor any director, officer, agent or employee of
any thereof shall be liable to the Borrower for any
action taken or not taken by it in connection
herewith in the absence of its own gross negligence
or willful misconduct. The Borrower hereby agrees to
indemnify each of the Lenders and the Agent, their
respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each
an "Indemnitee") and hold each Indemnitee harmless
from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including,
without limitation, the reasonable fees and
disbursements of counsel, which may be imposed on,
incurred by or asserted against, any Indemnitee in
any way relating to or arising out of this Agreement
and the Notes or any action taken or omitted by any
Indemnitee hereunder or thereunder provided that (i)
no Indemnitee shall have the right to be indemnified
hereunder for such Indemnitee's own gross negligence
or willful misconduct and (ii) to the extent
permitted by law, the Indemnitee shall provide the
Borrower with prompt notice, but not later than sixty
(60) days after it becomes aware, of any claim giving
rise to any such indemnified liability."
(p) Section 16.6 shall be amended by adding the following to the
end thereof:
"(c) Reports and Notices. Promptly upon receipt
thereof by the Agent, the Agent shall furnish each
Lender with a copy of all financial reports, vessel
valuations and survey or inspection reports, and
notices delivered to it by the Borrower hereunder."
and
(q) Section 18 shall be amended by inserting the following new
Section 18.6 at the end thereof:
"18.6 Adjustments. If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all
or any part of the Advances made by such Lender, or
interest thereon, or receive any collateral in
respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or
6
<PAGE>
proceedings of the nature referred to in Section
9.1(i) or (k), or otherwise) in a greater proportion
than any such payment to and collateral received by
any other Lender in respect of such other Lender's
Advances, or interest thereon, such Benefitted Lender
shall purchase for cash from each of the other
Lenders such portion of each such other Lender's
Advances, and shall provide each of such other
Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with
each of the Lenders, provided, however, that if all
or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees
that each Lender so purchasing a portion of another
Lender's Borrowings may exercise all rights of
payment (including, without limitation, rights of
set-off, to the extent not prohibited by law) with
respect to such portion as fully as if such Lender
were the direct holder of such portion.
6. No Other Amendment. All other terms and conditions of
the Original Agreement shall remain in full force and effect and the Original
Agreement shall be read and construed as if the terms of this Amendment were
included therein by way of addition or substitution, as the case may be.
7. Promissory Note. By the execution and delivery of this
Amendment, the Borrower and the Lenders hereby consent and agree that all
references in the Note to the Original Agreement shall be deemed to refer to the
Original Agreement as amended by this Amendment.
8. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
9. Counterparts. This Amendment may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed to be an original but all such counterparts shall constitute but one
and the same agreement.
7
<PAGE>
10. Headings; Amendment. In this Amendment, section
headings are inserted for convenience of reference only and shall be ignored in
the interpretation of this Amendment. This agreement cannot be amended other
than by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Amendment by its duly authorized representative on the day and year first
above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
----------------------------------
Randall Blank
Executive Vice President
By special authority for DEN
NORSKE BANK ASA, New York Branch,
as Agent for the Lenders and as a
Lender
By: /s/ Barbara Gronquist
----------------------------------
Barbara Gronquist
First Vice President
and
By: /s/ Nikolai Nachamkin
----------------------------------
Nikolai Nachamkin
Vice President
8
00382.068 #61701
EXHIBIT 10.34
- --------------------------------------------------------------------------------
AMENDMENT NO. 2
TO
US$100,000,000
REVOLVING CREDIT FACILITY
DATED NOVEMBER 17, 1998
MADE AVAILABLE TO
SEACOR SMIT INC.
BY
THE FINANCIAL INSTITUTIONS
SIGNATORIES HERETO
AND
DEN NORSKE BANK ASA, AS AGENT
- --------------------------------------------------------------------------------
October 1, 1999
<PAGE>
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment")
is made as of the 1st day of October, 1999 by and between (i) SEACOR SMIT
INC., a corporation organized and existing under the laws of the State of
Delaware (the "Borrower"), (ii) the financial institutions who are signatories
hereto (together, the "Lenders", and each a "Lender") and (iii) DEN NORSKE BANK
ASA, a banking corporation organized and existing under the laws of Norway, as
agent for the Lenders (the "Agent"), which further amends that certain Credit
Agreement dated November 17, 1998 made by and among the Borrower, the lenders
listed in Schedule 1 thereto and the Agent, as amended by Amendment No. 1
thereto dated February 4, 1999 (the "Original Agreement").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the Original Agreement, the Lenders
made available to the Borrower a credit facility in the maximum principal amount
of U.S.$100,000,000 (the "Loan"), the proceeds of which were made available for
the purpose of repaying outstanding advances under the Existing Credit Facility
(as defined in the Original Agreement) and for general corporate purposes; and
WHEREAS, the parties desire to amend certain provisions of
the Original Agreement.
NOW, THEREFORE, in consideration of the premises and such
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the parties, it is hereby agreed as follows:
1. Definitions. Unless otherwise defined herein, words and
expressions defined in the Original Agreement shall bear the same meanings when
used herein.
2. Representations and Warranties. The Borrower hereby
reaffirms, as of the date hereof, each and every representation and warranty
made thereby in the Original Agreement and the Note (updated mutatis mutandis).
3. No Defaults. The Borrower hereby represents and warrants
that as of the date hereof there exists no Event of Default or any condition
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default.
4. Performance of Covenants. The Borrower hereby reaffirms
that it has duly performed and observed the covenants and undertakings set forth
in the Original Agreement and the Note on its part to be performed, and
covenants and undertakes to continue to duly perform and observe such covenants
<PAGE>
and undertakings, as amended hereby, so long as the Original Agreement, as the
same is amended hereby and may hereafter be amended or supplemented, shall
remain in effect.
5. Amendment to the Original Agreement. Subject to the
terms and conditions of this Amendment, the Original Agreement is hereby amended
and supplemented as follows:
(a) all references to "this Agreement" shall be deemed to refer to
the Original Agreement as amended hereby;
(b) Section 1.1 shall be amended by:
(1) inserting the following new definition of
"Available-for-Sale Securities" immediately following
the definition of "Assignment and Assumption
Agreement(s)":
"means securities categorized as
"available-for-sale", as defined by the Statement of
Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity
Securities" issued by the Financial Accounting
Standards Board;"
(2) deleting the existing definition of "Cash
Equivalents" and inserting the following in place
thereof:
"means (i) freely tradable securities registered with
a public exchange in the United States having
maturities of not more than ninety (90) days from the
date of acquisition, in each case the value thereof
shall be determined in accordance with GAAP;
provided, however, that the value of any securities
of Chiles held by the Borrower or its affiliates or
securities pledged to third parties to secure
financing or otherwise, shall be excluded from such
determination, (ii) Marketable Securities and (iii)
seventy-five percent (75%) of Restricted Cash;"
(3) inserting the following new definition of
"Construction Reserve Funds" immediately following
the definition of "Consolidated Net Worth":
"means money in one or more construction reserve
funds established by the Borrower pursuant to Section
511 of the Merchant Marine Act, 1936;"
2
<PAGE>
(4) amend the definition of Funded Debt by deleting the
word "and" before the word "(iv)", inserting before
the words "less (v)" the following words:
"and (v) the aggregate total unsecured cost of debt
subject to swap agreements entered into by the
Borrower for the purpose of hedging the redemption
values of Chiles' One Hundred Ten Million Dollars
($110,000,000) 10% Senior Notes due in the year 2008
whenever the Borrower does not maintain at least one
of the following three criteria: (a) Investment Grade
Rating from Moody's, (b) Investment Grade Rating from
S&P, or (c) Funded Debt (without the inclusion of
Chiles' Swap Agreements referred to in Section
10.4)/EBITDA ratio of less than two hundred
twenty-five percent (225%)",
deleting the figure "(v)"and the substitution of
"(vi)" in lieu thereof, and by deleting the figure
"(vi)"and the substitution of "(vii)" in lieu
thereof;
(5) inserting the following new definition of
"Held-to-Maturity Securities" immediately following
the definition of "GAAP":
"means securities categorized as "held-to-maturity"
as defined by the Statement of Financial Accounting
Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" issued by
the Financial Accounting Standards Board;"
(6) inserting the following new definition of "Investment
Grade Rating" immediately following the definition of
"Interest Period(s)":
"means with respect to Moody's a rating of "Baa3" or
better, and with respect to S&P a rating of "BBB-" or
better;"
(7) inserting the following new definition of "Like-Kind
Exchange Funds" immediately following the definition
of "LIBOR Reference Date":
"means the funds belonging to and received by the
Borrower following the sale of assets, and held by or
on behalf of the Borrower for a period of up to six
(6) months pending a purchase of new assets
3
<PAGE>
qualifying for "like-kind exchange" treatment under
Section 1031 of the Internal Revenue Code;"
(8) inserting the following new definition of "Marketable
Securities" immediately following the definition of
"Margin":
"means Available-for-Sale Securities and
Held-to-Maturity Securities, in each case the value
thereof shall be determined in accordance with GAAP;
provided, however, that the value of any securities
of Chiles held by the Borrower or its affiliates or
securities pledged to third parties to secure
financing or otherwise, shall be excluded from such
determination;"
(9) inserting the following new definition of "Restricted
Cash" immediately following the definition of
"Reference Banks":
"means Construction Reserve Funds and Like-Kind
Exchange Funds;"
(c) Section 10.1.A.(xviii) shall be amended by deleting the
existing text and inserting the following in place thereof:
"(a) as long as the Borrower retains an Investment
Grade Rating from either Moody's or S&P, maintain, on
a consolidated basis, readily available cash or Cash
Equivalents, while at any time excluding any cash or
Cash Equivalents held by Chiles, in an aggregate
amount at least equal to the greater of (i) Thirty
Million Dollars ($30,000,000) and (ii) the twelve
(12) month projected interest expense assuming all
available credit facilities, other than any and all
Chiles Consolidated Debt, were drawn, and (b) if the
Borrower fails to retain an Investment Grade Rating
from either Moody's or S&P, maintain, on a
consolidated basis, readily available cash or Cash
Equivalents, while at any time excluding any cash or
Cash Equivalents held by Chiles, in an amount at
least equal to the greater of (i) Thirty Million
Dollars ($30,000,000) and (ii) twelve and one-half
percent (12 1/2%) of Funded Debt, on a consolidated
basis, of the Borrower;"
4
<PAGE>
and
(d) Section 10 shall be amended by inserting the following new
Section 10.4 at the end thereof:
"10.4 Chiles' Swap Agreements. The Borrower may enter
into certain swap agreements to hedge the redemption
values of Chiles' One Hundred Ten Million Dollars
($110,000,000) 10% Senior Notes due in the year 2008,
provided that the Borrower (i) is in compliance with
all the covenants in this Section 10 and (ii) the
Borrower maintains at least one of the following
three criteria: (a) Investment Grade Rating from
Moody's, (b) Investment Grade Rating from S&P, or (c)
Funded Debt (without the inclusion of Chiles' Swap
Agreements referred to herein)/EBITDA ratio of less
than two hundred twenty-five percent (225%). Should
the Borrower not be in compliance with 10.4(i) and
10.4(ii), as outlined above, then the Borrower may
not enter into any additional Chiles' Swap
Agreements, without the written consent of the
Lenders."
6. No Other Amendment. All other terms and conditions of
the Original Agreement shall remain in full force and effect and the Original
Agreement shall be read and construed as if the terms of this Amendment were
included therein by way of addition or substitution, as the case may be.
7. Promissory Note. By the execution and delivery of this
Amendment, the Borrower and the Lenders hereby consent and agree that all
references in the Note to the Original Agreement shall be deemed to refer to the
Original Agreement as amended by this Amendment.
8. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
9. Counterparts. This Amendment may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed to be an original but all such counterparts shall constitute but one
and the same agreement.
10. Headings; Amendment. In this Amendment, section
headings are inserted for convenience of reference only and shall be ignored in
the interpretation of this Amendment. This agreement cannot be amended other
than by written agreement signed by the parties hereto.
5
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Amendment by its duly authorized representative
on the day and year first above written.
SEACOR SMIT INC.
By /s/ Randall Blank
----------------------------------
Randall Blank
Executive Vice President
By special
authority for DEN
NORSKE BANK ASA,
New York Branch,
as Agent for the
Lenders and as a
Lender
By /s/ Barbara Gronquist
----------------------------------
Barbara Gronquist
First Vice President
and
By /s/ Nikolai Nachamkin
----------------------------------
Nikolai Nachamkin
First Vice President
Citibank, N.A.
By /s/
----------------------------------
Name:
Title:
6
<PAGE>
BankBoston, N.A.
By /s/
----------------------------------
Name:
Title:
00382.068 #104197
7
EXHIBIT 10.35
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day
(Agreement_Date__Month) (Agreement_Date__Day), (Agreement_Date__Year)
between SEACOR SMIT Inc., a Delaware corporation (the "Company"), and (Name),
residing at (address_1) (address_2) (address_3) (city_state_zip)
(country) (the "Grantee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and
the Grantee desires to accept, shares of the Company's Common Stock, $0.01 par
value ("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee (share_number_) (restricted) Common Shares (the "Restricted
Stock"). Simultaneously with the execution and delivery of this Agreement by the
parties hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance
with, the provisions of a certain Restricted Stock Grant
Agreement dated (Agreement_Date__Month)
(Agreement_Date__Day), (Agreement_Date__Year) between
(Name) and SEACOR SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest in the Grantee as
follows:
Date Number of shares
-------------------------------------- ----------------------------
(first_vestment_date) (first_vestment_amount_)
(second_vestment_date) (second_vestment_amount_)
(final_vestment_date) (final_vestment_amount_)
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
<PAGE>
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall
have the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by him
pursuant to the terms of his employment as an officer
or key employee of the Company; or (B) the Grantee
shall have committed an act of fraud, theft or
dishonesty which is reasonably likely to result in
financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to have
been terminated for Cause unless and until there
shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board of
Directors of the Company at a meeting of such Board
of Directors duly called and held for the purpose of
determining whether, in the good faith judgment of a
majority of the Board of Directors of the Company,
the Company has "cause" to terminate the Grantee's
employment pursuant to these provisions; and
(iii) "Change-in-Control" of the Company shall be deemed to
have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of
the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of the
Company and its subsidiaries (taken as a whole); or
(E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
2
<PAGE>
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with
the Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within
ten (10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby represents and
warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
3
<PAGE>
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed
this Agreement on the date and year first above written.
SEACOR SMIT INC.
By:
-----------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
---------------------------------
(Name)
EXHIBIT 10.36
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this
(month_of_plan) (day_of_plan), (year_of_plan) between SEACOR SMIT Inc., a
Delaware corporation (the "Company"), and (Name), residing at (address_1)
(address_2) (address_3) (city_state_zip) (the "Grantee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and
the Grantee desires to accept, shares of the Company's Common Stock, $0.01 par
value ("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee (exercise_amt) (restricted) Common Shares (the "Restricted
Stock"). Simultaneously with the execution and delivery of this Agreement by the
parties hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance
with, the provisions of a certain Restricted Stock Grant
Agreement dated (month_of_plan) (day_of_plan),
(year_of_plan) between (Name) and SEACOR SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest on
(stock_vestment_date).
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and (iv) the occurrence of
<PAGE>
a "Change-in-Control" of the Company (as hereinafter
defined).
(b) For all purposes of this Agreement, the following terms shall
have the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by him
pursuant to the terms of his employment as an officer
or key employee of the Company.; or (B) the Grantee
shall have committed an act of fraud, theft or
dishonesty which is reasonably likely to result in
financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to have
been terminated for Cause unless and until there
shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board of
Directors of the Company at a meeting of such Board
of Directors duly called and held for the purpose of
determining whether, in the good faith judgment of a
majority of the Board of Directors of the Company,
the Company has "cause" to terminate the Grantee's
employment pursuant to these provisions; and
(iii) "Change-in-Control" of the Company shall be deemed to
have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of
the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of the
Company and its subsidiaries (taken as a whole); or
(E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
2
<PAGE>
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with
the Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within
ten (10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby represents and
warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
3
<PAGE>
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly
executed this Agreement on the date and year first above written. SEACOR SMIT
INC.
By: _________________________
Name: Randall Blank
Title: Secretary
GRANTEE
-----------------------------
(Name)
EXHIBIT 10.37
OPTION AGREEMENT
FOR OFFICERS AND KEY EMPLOYEES
PURSUANT TO THE SEACOR SMIT INC. (FORMERLY SEACOR HOLDINGS, INC.)
1996 SHARE INCENTIVE PLAN
This OPTION AGREEMENT dated as of
(Agreement_Date__Month) (Agreement_Date__Day), (Agreement_Date__Year) (the
"Grant Date") provides for the granting of options by SEACOR SMIT Inc., a
Delaware corporation (the "Company"), to (Name), an employee of the Company
(the "Employee"), to purchase shares of the Company's common stock, par value
$.01 (the "Common Stock"), on the terms and subject to the conditions
hereinafter provided.
The stock options to be granted pursuant hereto shall not
be Incentive Stock Options (as defined in Section 422A of the Internal Revenue
Code of 1986, as amended).
1. Number of Shares. The Company hereby awards to the
Employee options to purchase (share_number_) shares of Common Stock (the
"Stock Options").
2. Exercise Price. For the Stock Options granted hereunder,
the per-share exercise price shall be (exercise_price_words_) United States
dollars (US $ (exercise_price_xxxx_)), the price at which the shares last
traded on the New York Stock Exchange on the Grant Date.
3. Payment of Exercise Price. The option exercise price may
be paid in cash, by the delivery of shares of Common Stock of the Company then
owned by the Employee, or by a combination of these methods. Payments may also
be made by delivering a properly executed exercise notice to the Company
together with a copy of irrevocable instructions to a broker to deliver promptly
to the Company the amount of sale or loan proceeds to pay the exercise price. To
facilitate the foregoing, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms. The Company may prescribe any other
method of paying the exercise price that it determines to be consistent with
applicable law, including, without limitation, in lieu of the exercise of Stock
Options by delivery of shares of Common Stock of the Company then owned by the
Employee, providing the Company with a notarized statement attesting to the
number of shares owned, where upon verification by the Company, the Company may
issue to the Employee only the number of incremental shares to which the
Employee is entitled upon exercise of the Stock Options. In determining which
methods the Employee may utilize to pay the exercise price, the Company may
consider such factors as it determines are appropriate.
4. Exercise Period.
a. General. Subject to the terms and conditions set forth
herein, Stock Options granted hereunder shall be exercisable as follows:
(i). (first_exercisable_vest_amt) shall be exercisable as
of (first_exercisable_vest_date);
(ii). (second_exercisable_vest_amt) shall be exercisable
as of (second_exercisable_vest_date); and
(iii). (third_exercisable_vest_amt) shall be exercisable as
of (third_exercisable_vest_date).
Subject to the last sentence of Paragraph 4b, no Stock Option awarded hereunder
shall be exercisable later than ten years after the Grant Date. The Stock Option
awarded hereunder shall not be transferable otherwise than by will or the laws
of descent and distribution, and shall be exercisable during the Employee's
lifetime only by the Employee.
b. Death. In the event of the Employee's death, each Stock
Option awarded but unexercised as of the date of death shall become immediately
<PAGE>
exercisable, and may be exercised for a period commencing as of the date after
the day of death and continuing for one year thereafter.
c. Retirement. Subject to Paragraph 5, in the event of
Employee's formal retirement, each Stock Option awarded, but unexercised as of
the date of retirement shall become immediately exercisable, and may be
exercised until the first to occur of (i) the one year anniversary of the
Employee's retirement date and (ii) the tenth anniversary of the Grant Date.
d. Termination of Employment Without Cause. Subject to
Paragraph 5, in the event Employee is terminated without Cause (as defined
below), each Stock Option awarded, but unexercised as of the date of termination
shall become immediately exercisable, and may be exercised until the first to
occur of (i) the date which shall be ninety (90) days after the effective date
of such termination and (ii) the tenth anniversary of the Grant Date. For
purposes hereof, "Cause" means (w) fraud, embezzlement or gross insubordination
on the part of the Employee or breach by the Employee of his or her obligations
under any Company policy or procedure; (x) conviction of or the entry of a plea
of nolo contendere by the Employee for any felony; (y) a material breach of, or
the willful failure or refusal by the Employee to perform and discharge, his or
her duties, responsibilities or obligations, as an Employee; or (z) any act of
moral turpitude or willful misconduct by the Employee which (A) is intended to
result in substantial personal enrichment of the Employee at the expense of the
Company or any of its subsidiaries or affiliates or (B) has a material adverse
impact on the business or reputation of the Company, or any of its subsidiaries
or affiliates.
5. Termination of Stock Options; Post-Employment Exercises.
No Stock Option represented by this Agreement may be exercised after termination
of the Employee's employment with the Company and all Stock Options shall
terminate and be of no further force or effect from and after the date of such
termination, except as provided for in Paragraphs 4b, 4c or 4d hereof. The
exercise of any Stock Option after termination of the Employee's employment by
reason of retirement as provided in Paragraph 4c or by reason of termination
without Cause as provided in Paragraph 4d shall be subject to satisfaction of
the conditions precedent that the Employee neither (i) competes with, or takes
other employment with or renders services to a competitor of, the Company, its
subsidiaries or affiliates without the written consent of the Company, nor (iii)
conducts herself or himself in a manner adversely affecting the Company.
6. Adjustment Provisions; Change in Control.
a. If there shall be any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spinoff, combination of
shares, exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to each outstanding Stock Option such
that each such Stock Option shall thereafter be exercisable for such securities,
cash and/or other property as would have been received in respect of the Common
Stock subject to such Stock Option had it been exercised in full immediately
prior to such change or distribution, and such an adjustment shall be made
successively each time any such change shall occur. In addition, in the event of
any such change or distribution, in order to prevent dilution or enlargement of
the Employee's rights hereunder, the Company will have authority to adjust, in
an equitable manner, the number and kind of shares that may be issued with
respect to any Stock Option hereunder, the number and kind of shares subject to
outstanding Stock Options, the exercise price applicable to outstanding Stock
2
<PAGE>
Options, and the Market Value (as hereinafter defined) and other value
determinations applicable to outstanding Stock Options. Appropriate adjustments
may also be made by the Company in the terms of any Stock Options to reflect
such changes or distributions and to modify any other terms of outstanding Stock
Options on an equitable basis. In addition, the Company is authorized to make
adjustments to the terms and conditions of Stock Options, in recognition of
unusual or nonrecurring events affecting the Company or the financial statements
of the Company, or in response to changes in applicable laws, regulations, or
accounting principles. For purposes of this Paragraph 6 and Paragraph 7, the
"Market Value" of the Shares shall be equal to 100% of the closing price of the
Common Stock on the New York State Exchange or any other national securities
exchange or other market system as reported by the Wall Street Journal for the
date on which such Market Value is being fixed, or, if there shall be no trading
on such date, the date next preceding on which trading occurred.
b. Notwithstanding any other provision hereunder, if there
is a Change in Control of the Company, all then outstanding Stock Options shall
immediately become exercisable. For purposes of this Paragraph 6b, a "Change in
Control" of the Company shall be deemed to have occurred upon any of the
following events:
(i) A change in control of the direction and administration
of the Company's business of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act; or
(ii) During any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute the Company's Board
of Directors or any individuals who would be "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least a majority
thereof; or
(iii) The Company's Common Stock shall cease to be publicly
traded; or
(iv) The Company's Board of Directors shall approve a sale
of all or substantially all of the assets of the Company, and such transaction
shall have been consummated; or
(v) The Company's Board of Directors shall approve any
merger, consolidation, or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any event
described in Paragraph 6b(ii) or (iii) above, and such transaction shall have
been consummated.
Notwithstanding the foregoing, (A) any spin-off of a
division or subsidiary of the Company to its stockholders and (B) any event
listed in (i) through (v) above that the Board of Directors determines not to be
a Change in Control of the Company, shall not constitute a Change in Control of
the Company.
For purposes of this Paragraph 6b, "Continuing Directors"
shall mean (x) the directors of the Company in office on the Grant Date and (y)
any successor to any such director and any additional director who after such
date was nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection.
The Company may determine that, upon the occurrence of a
Change in Control of the Company, each Stock Option outstanding hereunder shall
3
<PAGE>
terminate within a specified number of days after notice to the Employee, and
the Employee shall receive, with respect to each share of Common Stock subject
to such Stock Option, an amount equal to the excess of the Market Value of such
shares of Common Stock immediately prior to the occurrence of such Change in
Control over the exercise price per share of such Stock Option; such amount to
be payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Company, in
its discretion, shall determine.
7. Withholding. All payments or distributions of Stock
Options made hereunder of shares of Common Stock covered by Stock Options shall
be net of any amounts required to be withheld pursuant to applicable federal,
national, state and local tax withholding requirements imposed by each taxing
authority having jurisdiction. The Company may require the Employee to remit to
it an amount sufficient to satisfy such tax withholding requirements prior to
the delivery of any certificates for such shares of Common Stock. The Company
may, in its discretion and subject to such rules as it may adopt (including any
as may be required to satisfy applicable tax and/or non-tax regulatory
requirements), permit the Employee to pay all or a portion of the federal,
national, state and local withholding taxes arising in connection with any Stock
Option by electing to have the Company withhold shares of Common Stock having a
Market Value equal to the amount to be withheld, provided that such withholding
shall only be at rates required by applicable statutes or regulations.
8. Tenure. The Employee's right to continue to serve the
Company or any of its subsidiaries as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by the award hereunder.
9. Specific Restrictions Upon Option Shares. The Employee
hereby agrees with the Company as follows:
a. The Employee shall acquire shares of Common Stock
hereunder for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the United States Securities
Act of 1933, as amended (the "1933 Act"), and shall not dispose of any such
shares in transactions which, in the opinion of counsel to the Company, violate
the 1933 Act, or the rules and regulations thereunder, or any applicable state
or national securities or "blue sky" laws; and further
b. If any shares of Common Stock that are shares subject to
the Stock Options shall be registered under the 1933 Act, no public offering
(otherwise than on a national securities exchange, as defined in the United
States Securities Exchange Act of 1934, as amended) of any shares acquired
hereunder shall be made by the Employee (or any other person) under such
circumstances that he or she (or such person) may be deemed an underwriter, as
defined in the 1933 Act; and further
c. The Employee agrees that the Company shall have the
authority to endorse upon the certificate or certificates representing the
shares acquired hereunder such legends referring to the foregoing restrictions
and any other applicable restrictions, as it may deem appropriate.
10. Notices. Any notice required or permitted under this
Option Agreement shall be deemed to have been duly given if delivered,
4
<PAGE>
telecopied or mailed, certified or registered mail, return receipt requested to
the Employee at such address as the Company shall maintain for the Employee in
its personnel records.
11. Failure to Enforce Not a Waiver. The failure of the
Company to enforce at any time any provision of this agreement shall in no
manner be construed to be a waiver of such provision or of any other provision
hereof.
12. Governing Law. The Option Agreement shall be governed
by and construed according to the laws of the State of New York, applicable to
agreements made and performed in that state.
13. Partial Invalidity. The invalidity or illegality of any
provision herein shall not be deemed to affect the validity of any other
provision.
14. Stock Option Plan Controls. This agreement is subject
to all terms and provisions of the SEACOR SMIT Inc. (formerly SEACOR Holdings,
Inc.) 1996 Share Incentive Plan (the "Plan"), which are incorporated herein by
reference. In the event of any conflict, the terms and provisions of the Plan
shall control over the terms and provisions of this agreement. All capitalized
terms herein shall have the meanings given to such terms by the Plan unless
otherwise defined herein or unless the context clearly indicates otherwise.
IN WITNESS WHEREOF, the Company has executed this Option
Agreement on the date and year first above written.
SEACOR SMIT INC.
By:
--------------------------
Name: Randall Blank
Title: Secretary
The undersigned hereby accepts, and agrees to, all terms and provisions of the
foregoing Option Agreement.
-----------------------------
Name:
5
EXHIBIT 21.1
SEACOR SMIT INC.
REGISTRANT'S MAJORITY OWNED SUBSIDIARIES
AT DECEMBER 31, 1999
Jurisdiction of
Incorporation
-------------
Sea-Aker L.L.C. Louisiana
Arthur Levy Enterprises, Inc. Louisiana
Cameron Boat Rentals, Inc. Louisiana
Glady's McCall, Inc. Louisiana
Gulf Marine Transportation, Inc. Louisiana
McCall Marine Services, Inc. Louisiana
Cameron Crews, Inc. Louisiana
Philip A. McCall, Inc. Louisiana
McCall Boat Rentals, Inc. Louisiana
Carroll McCall, Inc. Louisiana
McCall Crewboats, L.L.C. Louisiana
McCall Enterprises, Inc. Louisiana
SEACOR Marine (Nigeria) Inc. Louisiana
SEAMAC Offshore L.L.C. Louisiana
McCall Support Vessels, Inc. Louisiana
O'Brien's Oil Pollution Services, Inc. Louisiana
SEACOR Marine (Mexico) Inc. Louisiana
SEACOR Ocean Support Services Inc. Louisiana
SEACOR Ocean Lines Inc. Louisiana
Galaxie Offshore Inc. Louisiana
SEACOR Supply Ships Associates Inc. Louisiana
N.F. McCall Crews, Inc. Louisiana
Liberty Services, Inc. Louisiana
Bell Maintenance and Fabricators, Inc. Louisiana
Penta Investments, Ltd. Louisiana
SEACOR Marine International Inc. Delaware
SEACOR Capital Corporation Delaware
SEACOR Deepwater 1, Inc. Delaware
SEACOR Deepwater 2, Inc. Delaware
SEACOR Deepwater 3, Inc. Delaware
VEESEA Holdings Inc. Delaware
Storm Shipping Inc. Delaware
Gem Shipping Inc. Delaware
SEACOR-SMIT Offshore (International) Inc. Delaware
SEACOR-SMIT Offshore I Inc. Delaware
National Response Corporation Delaware
National Response Corporation of Puerto Rico Delaware
NRC Services, Inc. Delaware
CRN Holdings Inc. Delaware
International Response Corporation Delaware
OSRV Holdings, Inc. Delaware
Vision Offshore Inc. Delaware
SEACOR Vision LLC Delaware
ERST/O'Brien's, Inc. Delaware
ERST, Inc. Delaware
SEACOR Offshore Rigs Inc. Delaware
Chiles Offshore LLC Delaware
SEACOR Management Services Inc. Delaware
SEACOR Offshore Inc. Delaware
Acadian Supply Ships Inc. Delaware
SEACOR Worldwide Inc. Delaware
SMIT Holdings Inc. Delaware
Graham Marine Inc. Delaware
<PAGE>
EXHIBIT 21.1
SEACOR SMIT INC.
REGISTRANT'S MAJORITY OWNED SUBSIDIARIES
AT DECEMBER 31, 1999
Jurisdiction of
Incorporation
-------------
Graham Offshore Inc. Delaware
Graham Boats Inc. Delaware
SEACOR Marine Inc. Delaware
SEACOR Ocean Boats Inc. Delaware
Energy Logistics, Inc. Delaware
Mariners Online Inc. Delaware
SEACOR International Chartering Inc. Delaware
SEACOR Communications Inc. Delaware
Anna Offshore Inc. Alabama
SEACOR Marine (Bahamas) Inc. Bahamas
SEACOR-SMIT Offshore (Worldwide) Ltd. Bahamas
SEACOR-SMIT Offshore (International) Ltd. Bahamas
SEACOR Bulk Carriers Inc. Marshall Islands
SEACOR Marine (Europe) B.V. Netherlands
SEACOR-SMIT Offshore I B.V. Netherlands
SEACOR-SMIT Offshore II B.V. Netherlands
SEACOR-SMIT Holdings B.V. Netherlands
SEACOR Marine (Asia) Pte. Ltd. Singapore
Gem Shipping Ltd. Cayman Islands
SEACOR Marine (UK) Ltd. United Kingdom
Vector-Seacor Ltd. United Kingdom
Feronia International Shipping S.A. France
SEACOR Marine (Isle of Man) Ltd. Isle of Man
SEACOR Marine (Middle East) FZE United Arab Emirates
Venezuelan Response Corporation, S.A. Venezuela
2
<PAGE>
EXHIBIT 21.1
SEACOR SMIT INC.
REGISTRANT'S 50% OR LESS SUBSIDIARIES
AT DECEMBER 31, 1999
Jurisdiction of
Incorporation
-------------
West Africa Offshore Ltd. Nigeria
Maritime Mexicana, S.A. de C.V. Mexico
Seamex International Ltd. Liberia
Clean Pacific Alliance, L.L.C. Nevada
Supplylink International B.V. Netherlands
Minvest S.A. Argentina
Smit-Lloyd Mainport (Ireland) Ltd. Ireland
South Atlantic Offshore Services S.A. Panama
Red Dragon Marine Services Ltd. China
Ocean Marine Services (Egypt) Ltd. Egypt
Smit Lloyd Matsas (Hellas) Shipping Company S.A. Greece
Seacor-Smit (Aquitaine) Ltd. Bahamas
Ultragas Seacor Ltda. Chile
Patagonia Offshore Services SA Argentina
Sarost S.A. Tunisia
Vensea Offshore Ltd. Bahamas
Delwave Ltd. Trinidad & Tobago
Sea Treasure Shipping Ltd. Liberia
Marine Environmental Services (Thailand) Ltd. Thailand
Vensea Marine S.R.L. Venezuela
Globe Wireless, LLC Delaware
Yarnell Marine LLC Washington
3
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SEACOR SMIT Inc.:
As independent public accountants, we hereby consent to the
incorporation of our reports dated February 15, 2000, included in this
Form 10-K for the year ended December 31, 1999, into the Company's
previously filed Registration Statements File Nos. 333-03534, 333-11705,
333-12637, 333-22249, and 333-20921.
Arthur Andersen LLP
New Orleans, Louisiana
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of SEACOR SMIT INC. & SUBSIDIARIES contained in the
accompanying Annual Report on Form 10-K and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 178,509
<SECURITIES> 18,196
<RECEIVABLES> 71,068
<ALLOWANCES> 1,567
<INVENTORY> 1,536
<CURRENT-ASSETS> 282,016
<PP&E> 859,012
<DEPRECIATION> 143,815
<TOTAL-ASSETS> 1,196,991
<CURRENT-LIABILITIES> 48,992
<BONDS> 465,661
0
0
<COMMON> 142
<OTHER-SE> 507,998
<TOTAL-LIABILITY-AND-EQUITY> 1,196,991
<SALES> 0
<TOTAL-REVENUES> 289,425
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 166,786
<LOSS-PROVISION> (328)
<INTEREST-EXPENSE> 22,330
<INCOME-PRETAX> 43,516
<INCOME-TAX> 15,249
<INCOME-CONTINUING> 28,267
<DISCONTINUED> 0
<EXTRAORDINARY> 1,191
<CHANGES> 0
<NET-INCOME> 30,936
<EPS-BASIC> 2.60
<EPS-DILUTED> 2.54
</TABLE>
