Table of Contents


United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-12289
SEACOR Holdings Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware
 
13-3542736
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
2200 Eller Drive, P.O. Box 13038,
Fort Lauderdale, Florida
 
33316
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code (954) 523-2200
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý  Yes    ¨  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨  Yes    ý  No
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. ý  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý  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.  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  x
 
Accelerated filer ¨
 
Non-accelerated filer ¨
(Do not check if a smaller
reporting company)
 
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨  Yes    ý  No
The aggregate market value of the voting stock of the registrant held by non-affiliates as of June 30, 2012 was approximately $1,751,994,315 based on the closing price on the New York Stock Exchange on such date. The total number of shares of Common Stock issued and outstanding as of February 25, 2013 was 19,886,116.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement for its 2012 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission (the “Commission”) pursuant to Regulation 14A within 120 days after the end of the Registrant’s last fiscal year is incorporated by reference into Part III of this Annual Report on Form 10-K.



Table of Contents

SEACOR HOLDINGS INC.
FORM 10-K
TABLE OF CONTENTS
 
 
 
 
PART I
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A.
 
 
 
Item 1B.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
 
 
PART II
 
 
 
 
Item 5.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Item 6.
 
 
 
Item 7.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 7A.
 
 
 
Item 8.
 
 
 
Item 9.
 
 
 
Item 9A.
 
 
 
Item 9B.
 
 
 
 
PART III
 
 
 
 
Item 10.
 
 
 
Item 11.
 
 
 
Item 12.
 
 
 
Item 13.
 
 
 
Item 14.
 
 
 
 
PART IV
 
 
 
 
Item 15.

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FORWARD-LOOKING STATEMENTS
Certain statements discussed in Item 1 (Business), Item 1A (Risk Factors), Item 3 (Legal Proceedings), Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 7A (Quantitative and Qualitative Disclosures About Market Risk) and elsewhere in this Annual Report on Form 10-K as well as in other materials and oral statements that the Company releases from time to time to the public constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors are discussed in Item 1A (Risk Factors). In addition, these statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. It should be understood that it is not possible to predict or identify all such factors. Consequently, the following should not be considered to be a complete discussion of all potential risks or uncertainties. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.
PART I
ITEM 1.
BUSINESS
General
Unless the context indicates otherwise, the terms “we,” “our,” “ours,” “us” and the “Company” refer to SEACOR Holdings Inc. and its consolidated subsidiaries. “SEACOR” refers to SEACOR Holdings Inc., incorporated in 1989 in Delaware. “Common Stock” refers to the common stock, par value $.01 per share, of SEACOR. The Company’s fiscal year ended on December 31, 2012.
SEACOR’s principal executive office is located at 2200 Eller Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316, and its telephone number is (954) 523-2200. SEACOR’s website address is www.seacorholdings.com. The reference to SEACOR’s website is not intended to incorporate the information on the website into this Annual Report on Form 10-K.
The Company’s Corporate Governance policies, including the Board of Directors’ Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee charters are available, free of charge, on SEACOR’s website or in print for stockholders.
All of the Company’s periodic report filings with the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on SEACOR’s website, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports. These reports and amendments are available on SEACOR’s website as soon as reasonably practicable after the Company electronically files the reports or amendments with the SEC. They are also available at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information as to the operation of the SEC’s Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information.
Segment and Geographic Information
SEACOR and its subsidiaries are in the business of owning, operating, investing in and marketing equipment, primarily in the offshore oil and gas and shipping industries. The Company conducts its activities in five primary business segments:
Offshore Marine Services operates a diversified fleet of offshore support vessels primarily servicing offshore oil and gas exploration, development and production facilities worldwide.

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Aviation Services operates and contract-leases helicopters that provide transportation services supporting offshore oil and gas activities primarily in the United States, air medical services to hospitals in the United States, and international contract-leasing activities.
On January 31, 2013, the Company completed the spin-off ("Spin-off") of Era Group Inc. ("Era Group"), the company that operated SEACOR's Aviation Services business segment, by means of a dividend to SEACOR's stockholders of all the issued and outstanding common stock of Era Group. Era Group filed a Registration Statement on Form 10 with the SEC, describing the Spin-off, that was declared effective on January 14, 2013. Prior to the Spin-off, SEACOR and Era Group entered into a Distribution Agreement and several other agreements that will govern the post-Spin-off relationship. Era Group is now an independent company whose common stock is listed on the New York Stock Exchange under the symbol "ERA." Commencing with the three months ending March 31, 2013, the Company will report the historical financial position, results of operations and cash flows of Era Group as discontinued operations.
Inland River Services is primarily engaged in dry and liquid cargo transportation on the U.S. Inland River Waterways and the Gulf Intracoastal Waterways for a range of agricultural and industrial products. In addition, Inland River Services has interests in high-speed multi-modal terminal facilities and provides a broad range of services including machine shop, gear and engine repairs, and the repair of barges and towboats at strategic locations on the U.S. Inland River Waterways.
Shipping Services invests in, operates and leases a diversified fleet of U.S.-flag and foreign-flag marine transportation related assets including deep-sea cargo vessels and harbor tugs primarily servicing the U.S. coastwise petroleum trade and ships docking in the U.S. Gulf and East Coast ports.
The Company's Shipping Services business segment includes activities previously reported in prior annual filings as Marine Transportation Services and Harbor and Offshore Towing Services, which had previously been included in Other.
Alcohol Manufacturing operates an alcohol manufacturing, storage and distribution facility located in Pekin, IL through its subsidiary Illinois Corn Processing LLC ("ICP"). ICP produces, stores and distributes a variety of high quality alcohol used in food, beverage, industrial and petro-chemical end markets; and fuel grade ethanol. On February 1, 2012, the Company obtained a 70% controlling interest in ICP through an acquisition of a portion of its partner's interest.
Other has activities that primarily include:
emergency and crisis services activities;
agricultural commodity trading and logistics activities;
other activities, primarily lending and leasing activities; and
noncontrolling investments in various other businesses, primarily industrial aviation services businesses in Asia.
    Discontinued Operations
In prior annual filings, the Company reported its environmental activities under Environmental Services, which was conducted through SEACOR Environmental Services Inc. ("SES") and O'Brien's Response Management Inc. ("ORM"). SES included National Response Corporation ("NRC"), one of the largest providers of oil spill response services in the United States; NRC Environmental Services Inc., a leading provider of environmental and industrial services on the West Coast of the United States; SEACOR Response Ltd., which provides oil spill response and emergency response services to customers in international markets; and certain other subsidiaries (collectively the “SES Business”). On March 16, 2012, the Company sold the SES Business (the "SES Business Transaction") to J.F. Lehman & Company ("JFL"), a leading, middle-market private equity firm. For all periods presented herein, the Company has reported the historical financial position, results of operations and cash flows of the SES Business as discontinued operations. On December 31, 2012, the Company contributed its interest in ORM to Witt Group Holdings, LLC ("Witt") in exchange for an equity interest in Witt Group Holdings, LLC, which was renamed Witt O'Brien's, LLC (the "ORM Transaction"). For all periods presented herein, the Company has reported the results of its emergency and crisis services activities through ORM under Other.

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In prior annual filings, the Company reported its activities involving the purchase, storage, transportation and sale of energy and agricultural commodities and its interest in ICP under Commodity Trading and Logistics. On December 31, 2012, the energy commodity component of this business segment, SEACOR Energy Inc. ("SEI"), was sold to Par Petroleum Corporation. For all periods presented herein, the Company has reported the historical financial position, results of operations and cash flows of SEI as discontinued operations. For all periods presented herein, the Company has reported the results of its interest in ICP under Alcohol Manufacturing and the agricultural commodity component of this business segment under Other.
Offshore Marine Services
Business
Offshore Marine Services operates a diverse fleet of support vessels primarily servicing offshore oil and gas exploration, development and production facilities worldwide. The vessels deliver cargo and personnel to offshore installations; handle anchors and mooring equipment required to tether rigs to the seabed; tow rigs and assist in placing them on location and moving them between regions; and carry and launch equipment such as remote operated vehicles or “ROVs” used underwater in drilling, well-completion and emergencies. In addition to supporting drilling activities, Offshore Marine Services' vessels support offshore construction and maintenance work, provide accommodations for technicians and specialists, and provide standby safety support and emergency response services. Offshore Marine Services also has a controlling interest in a business that owns and operates vessels primarily used to move personnel and supplies to offshore wind farms. On March 30, 2012, Offshore Marine Services acquired a fleet of lift boats, which operate in the U.S. Gulf of Mexico supporting well intervention, work-over, decommissioning and diving operations. Offshore Marine Services also offers logistics services in support of offshore oil and gas exploration, development and production operations, including shore bases, marine transport and other supply chain management services. Offshore Marine Services contributed 33%, 29% and 37% of consolidated operating revenues in 2012, 2011 and 2010, respectively.

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Equipment and Services
The following tables identify the types of vessels that comprise Offshore Marine Services’ fleet as of December 31 for the indicated years. “Owned” are majority owned by the Company. “Joint Ventured” are owned by entities in which the Company does not have a controlling interest. “Leased-in” may either be vessels contracted from leasing companies to which the Company may have sold such vessels, or vessels chartered-in from other third party owners. “Pooled” are owned by entities not affiliated with Offshore Marine Services with the revenues or results of operations of these vessels being shared with the revenues or results of operations of certain vessels of similar type owned by Offshore Marine Services based upon an agreed formula. “Managed” are owned by entities not affiliated with the Company but operated by Offshore Marine Services for a fee. See Glossary of Vessel Types below for an explanation of the services they perform.
 
 
 
 
 
 
 
 
 
 
 
 
Owned Fleet
 
 
Owned
 
Joint
Ventured
 
Leased-in
 
Pooled or
Managed
 
Total
 
Average
Age
 
U.S.-
Flag
 
Foreign-
Flag
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anchor handling towing supply
 
14

 
2

 
3

 

 
19

 
12

 
11

 
3

Crew
 
30

 
7

 
7

 
3

 
47

 
13

 
15

 
15

Mini-supply
 
5

 
2

 
2

 

 
9

 
12

 
1

 
4

Standby safety
 
24

 
1

 

 

 
25

 
32

 

 
24

Supply
 
10

 
2

 
9

 
5

 
26

 
9

 
4

 
6

Towing supply
 
2

 
1

 

 

 
3

 
10

 

 
2

Liftboats
 
18

 
2

 

 

 
20

 
15

 
18

 

Specialty
 
4

 
3

 

 
3

 
10

 
16

 
1

 
3

Wind farm utility
 
29

 

 
1

 

 
30

 
4

 

 
29

 
 
136

 
20

 
22

 
11

 
189

 
14

 
50

 
86

2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anchor handling towing supply
 
14

 
2

 
3

 

 
19

 
11

 
12

 
2

Crew
 
32

 
7

 
7

 
3

 
49

 
12

 
17

 
15

Mini-supply
 
5

 
1

 
2

 

 
8

 
11

 
1

 
4

Standby safety
 
25

 
1

 

 

 
26

 
31

 

 
25

Supply
 
10

 

 
10

 
10

 
30

 
9

 
6

 
4

Towing supply
 
2

 
1

 
2

 

 
5

 
9

 

 
2

Liftboats
 

 
2

 

 

 
2

 

 

 

Specialty
 
3

 
3

 

 
3

 
9

 
15

 

 
3

Wind farm utility
 
28

 

 
1

 

 
29

 
3

 

 
28

 
 
119

 
17

 
25

 
16

 
177

 
14


36

 
83

2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anchor handling towing supply
 
15

 
2

 
2

 
1

 
20

 
9

 
13

 
2

Crew
 
40

 
2

 
7

 
3

 
52

 
12

 
21

 
19

Mini-supply
 
5

 
1

 
3

 

 
9

 
10

 
1

 
4

Standby safety
 
25

 
1

 

 

 
26

 
31

 

 
25

Supply
 
11

 

 
7

 
9

 
27

 
8

 
7

 
4

Towing supply
 
4

 
1

 
2

 
1

 
8

 
13

 

 
4

Liftboats
 

 
2

 

 

 
2

 

 

 

Specialty
 
4

 
3

 

 
3

 
10

 
20

 

 
4

Wind farm utility
 

 

 

 

 

 

 

 

 
 
104

 
12

 
21

 
17

 
154

 
16

 
42

 
62

 
    
Glossary of Vessel Types
Anchor handling towing supply (“AHTS”) vessels are used primarily to support offshore drilling activities in the towing, positioning and mooring of drilling rigs and other marine equipment. AHTS vessels are also used to transport supplies and equipment from shore bases to offshore drilling rigs, platforms and other installations. The defining characteristics of AHTS vessels are horsepower (“bhp”), size of winch in terms of “line pull” and wire storage capacity. Offshore Marine Services’ fleet

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of AHTS vessels has varying capabilities and supports offshore mooring activities in water depths ranging from 300 to 8,000 feet. Most modern AHTS vessels are equipped with dynamic positioning (“DP”) systems1 to enable them to maintain a fixed position in close proximity to a rig or platform. As of December 31, 2012, eight of the 14 owned AHTS vessels were equipped with DP-2 and two were equipped with DP.
Crew boats are used primarily to move cargo and personnel to and from offshore drilling rigs, platforms and other installations. Historically, crew boats transported people and were also used to deliver “light” cargo such as personal effects, small machinery and small quantities of fuel and water. These boats also served as field standby vessels, moving personnel between platforms and providing emergency stand-by services. Older crew boats are generally 100 to 130 feet in length and are capable of 20 knots speed in light conditions and calm seas. Vessels built since 1998, also referred to as Fast Support Vessels (“FSVs”), range from 130 to 200 feet in length and are capable of speeds between 25 and 35 knots and have enhanced cargo carrying capacities enabling them to support both drilling operations and production services. Newer FSVs support deepwater drilling and production and are equipped with DP-2, firefighting equipment and ride control systems for greater comfort and performance. As of December 31, 2012, five of the 30 owned crew vessels were equipped with DP-2 and five were equipped with DP.
Mini-supply vessels are approximately 145 to 165 feet in length and typically carry deck cargo, liquid mud, methanol, diesel fuel and water. These vessels are typically used to support construction projects, maintenance work, certain drilling support activities and production support. In this vessel class, the new generation of vessels is also equipped with DP capability. As of December 31, 2012, three of the five owned mini-supply vessels were equipped with DP.
Standby safety vessels typically remain on location proximate to offshore rigs and production facilities to respond to emergencies. These vessels carry special equipment to rescue personnel and are equipped to provide first aid and shelter. These vessels sometimes perform a dual role, also functioning as supply vessels.
Supply vessels and towing supply vessels are generally more than 200 feet in length and are used to deliver cargo to rigs and platforms where drilling and work-over activity is underway or to support construction work by delivering pipe to vessels performing underwater installations. Supply vessels are distinguished from other vessels by the total carrying capacity (expressed as deadweight: “dwt”), available area of clear deck space, below-deck capacity for storage of mud and cement used in the drilling process and tank storage for water and fuel oil. Larger supply vessels usually have deck fittings to assist in handling cargo and are often fitted with a crane. The ability to hold station in open water and moderately rough seas is a key factor in differentiating supply vessels. To improve station keeping ability, most modern supply vessels have DP capabilities. Accommodations are also an important feature of supply vessels. As drilling becomes more complex, supply vessels often house third-parties who are specialists in various phases of the drilling process. Towing supply vessels perform similar cargo delivery functions to those handled by supply vessels. They are, however, equipped with more powerful engines (4,000 – 8,000 bhp) and winches, giving them the added capability to perform general towing functions, buoy setting and limited anchor handling work. As of December 31, 2012, four of the twelve owned supply and towing vessels were equipped with DP-2 and three were equipped with DP.
Lift boats provide a self-propelled, stable platform to perform production platform construction, inspection, maintenance and removal; well intervention and work-over; well plug and abandonment; pipeline installation and maintenance; and diving operations. Lift boats are categorized by the length of their jacking legs (160 ft. to 265 ft. for the Company's lift boats), which determines the water depth in which these vessels can work. Secondary features are crane lifting capacity and reach, clear deck area, electrical generating power and accommodation capacity.
Specialty vessels include anchor handling tugs, accommodation, line handling and other vessels. These vessels generally have specialized features adapting them to specific applications including offshore maintenance and construction services, freight hauling services and accommodation services.
______________________
1

The most technologically advanced DP systems have enhanced redundancy in the vessel’s power, electrical, computer and reference systems enabling vessels to maintain accurate position-keeping even in the event of failure of one of those systems (“DP-2”) and, in some cases, additionally in the event of fire and flood (“DP-3”).
Wind farm utility vessels are used primarily to move personnel and supplies to offshore wind farms. There are two main types of vessels; Windcats and Windspeeds. The Windcat series feature a catamaran hull with flush foredeck, providing a stable platform from which personnel can safely transfer to turbine towers, and are capable of speeds between 25 and 31 knots. The Windspeed series are rapid response vessels with a maximum speed of 38 knots, which are used for light work during the construction and operational periods of offshore wind farms. All the wind farm utility vessels have been built since 2004.

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As of December 31, 2012, in addition to its existing fleet, Offshore Marine Services had new construction projects in progress including two foreign-flag, DP-3 catamarans scheduled for delivery in the first and second quarters of 2013; six U.S.-flag, DP-2 FSVs scheduled for delivery between the fourth quarter of 2013 and the fourth quarter of 2015; four U.S.-flag, DP-2 supply vessels for delivery between the third quarter of 2013 and first quarter of 2015; and four foreign-flag wind farm utility vessels scheduled for delivery throughout 2013.
Markets
The demand for vessels supporting the offshore oil and gas industry is affected by the level of exploration and drilling activities, which in turn is influenced by a number of factors including:
expectations as to future oil and gas commodity prices;
customer assessments of offshore drilling prospects compared with land-based opportunities;
customer assessments of cost, geological opportunity and political stability in host countries;
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;
the relative exchange rates for the U.S. dollar; and
various United States and international government policies regarding exploration and development of oil and gas reserves.

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Offshore Marine Services operates vessels in six principal geographic regions. From time to time, vessels are relocated between these regions to meet customer demand for equipment. The table below sets forth vessel types by geographic market as of December 31 for the indicated years. Offshore Marine Services sometimes participates in joint venture arrangements in certain geographical locations in order to enhance marketing capabilities and facilitate operations in certain foreign markets allowing for the expansion of its fleet and operations while diversifying risks and reducing capital outlays associated with such expansion.
 
 
2012
 
2011
 
2010
United States, primarily U.S. Gulf of Mexico:
 
 
 
 
 
 
Anchor handling towing supply
 
12

 
12

 
12

Crew
 
21

 
24

 
28

Mini-supply
 
3

 
3

 
4

Supply
 
9

 
9

 
9

Towing supply
 

 
2

 
2

Liftboats
 
20

 

 

Specialty
 
1

 
2

 
2

 
 
66

 
52

 
57

Africa, primarily West Africa:
 
 
 
 
 
 
Anchor handling towing supply
 
5

 
5

 
5

Crew
 
8

 
8

 
8

Mini-supply
 
2

 
2

 

Supply
 
3

 
3

 
3

Towing supply
 
2

 
2

 
3

Specialty
 
2

 
2

 
2

 
 
22

 
22

 
21

Middle East:
 
 
 
 
 
 
Anchor handling towing supply
 
1

 

 

Crew
 
7

 
7

 
8

Mini-supply
 
2

 
2

 
4

Supply
 
3

 
3

 
3

Towing supply
 

 

 
2

Specialty
 
2

 
2

 
3

 
 
15

 
14

 
20

Brazil, Mexico, Central and South America:
 
 
 
 
 
 
Anchor handling towing supply
 

 
1

 
1

Crew
 
7

 
6

 
6

Mini-supply
 
2

 
1

 
1

Supply
 
9

 
14

 
11

Specialty
 
4

 
4

 
4

 
 
22

 
26

 
23

Europe, primarily North Sea:
 
 
 
 
 
 
Standby safety
 
25

 
26

 
26

Wind farm utility
 
30

 
29

 

 
 
55

 
55

 
26

Asia:
 
 
 
 
 
 
Anchor handling towing supply
 
1

 
1

 
2

Crew
 
4

 
4

 
2

Supply
 
2

 
1

 
1

Towing Supply
 
1

 
1

 
1

Specialty
 
1

 
1

 
1

 
 
9

 
8

 
7

Total Foreign Fleet
 
123

 
125

 
97

Total Fleet
 
189

 
177

 
154

United States, primarily U.S. Gulf of Mexico. As of December 31, 2012, 66 vessels were operating in the U.S. Gulf of Mexico, including 44 owned, 17 leased-in, three joint ventured and two pooled. Offshore Marine Services’ expertise in this market is deepwater anchor handling with its fleet of AHTS vessels, and exploration and production support with its fleet of crew and mini-supply vessels. Over the last few years, the market has split between the traditional shallow water shelf and the deepwater markets. In both markets, customers focus on price once they have identified a reliable operator who can provide available vessels with suitable capabilities for the job.

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Africa, primarily West Africa. As of December 31, 2012, 22 vessels were operating in West Africa, including twelve owned, three leased-in, four joint ventured, one pooled and two managed. Offshore Marine Services' vessels operating in this area generally support large-scale, multi-year projects for major oil companies, primarily in Angola and Ghana. The other vessels in this region operate from ports in the Republic of the Congo and Gabon.
Middle East. As of December 31, 2012, 15 vessels were operating in the Middle East region, including twelve owned, two joint ventured, and one managed. Offshore Marine Services’ vessels operating in this area generally support activities in Azerbaijan, Egypt and countries along the Arabian Gulf and Arabian Sea, including the United Arab Emirates and Qatar.
Brazil, Mexico, Central and South America. As of December 31, 2012, ten vessels were operating in Brazil, including five owned and five managed, and eleven vessels were operating in Mexico, including two owned, one leased-in and eight joint ventured. In addition, one owned vessel was operating in Trinidad & Tobago.
Europe, primarily North Sea. As of December 31, 2012, 55 vessels were operating in the North Sea, including 53 owned, one leased-in and one joint ventured. The North Sea fleet provides standby safety and supply services. Demand in the North Sea market for standby services developed in 1991 after the United Kingdom passed legislation requiring offshore operators 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. Demand for wind farm utility vessels has developed as a result of the recent growth in offshore wind turbines in the North Sea.
Asia. As of December 31, 2012, nine vessels were operating in Asia, including seven owned and two joint ventured. Offshore Marine Services’ vessels operating in this area generally support exploration programs. To date, Offshore Marine Services’ largest markets in this area have been Vietnam and Indonesia.
Customers and Contractual Arrangements
The Offshore Marine Services segment earns revenues primarily from the time charter and bareboat charter of vessels to customers based upon daily rates of hire. Under a time charter, Offshore Marine Services provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, Offshore Marine Services provides a vessel to a customer and the customer assumes responsibility for all operating expenses and all risk of operation. Vessel charters may range from several days to several years. In the U.S. Gulf of Mexico, time charter durations and rates are typically established in the context of master service agreements that govern the terms and conditions of charter.
Offshore Marine Services’ principal customers are major integrated oil companies, large independent oil and gas exploration and production companies and emerging independent companies. Consolidation of oil and gas companies through mergers and acquisitions over the past several years has reduced Offshore Marine Services’ customer base. In 2012, no single customer of Offshore Marine Services was responsible for 10% or more of consolidated operating revenues. The ten largest customers of Offshore Marine Services accounted for approximately 49% of Offshore Marine Services’ operating revenues. The loss of one or a few of these customers could have a material adverse effect on Offshore Marine Services’ results of operations.
Competitive Conditions
Each of the markets in which Offshore Marine Services operates is highly competitive. The most important competitive factors are pricing and the availability and specifications of equipment to fit customer requirements. Other important factors include service, reputation, flag preference, local marine operating conditions, the ability to provide and maintain logistical support given the complexity of a project and the cost of moving equipment from one geographical location to another.
Offshore Marine Services has numerous competitors in each of the geographical regions in which it operates, ranging from international companies that operate in many regions to smaller local companies that typically concentrate their activities in one specific region.
Risks of Foreign Operations
For the years ended December 31, 2012, 2011 and 2010, 56%, 69% and 53%, respectively, of Offshore Marine Services’ operating revenues were derived from its foreign operations.
Foreign operations are subject to inherent risks, which, if they materialize, could have a material adverse effect on Offshore Marine Services’ financial position and its results of operations. See the risk factor regarding “Risks from the Company’s international operations” in “Item 1A. Risk Factors.”

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Aviation Services
Business
Aviation Services is one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the United States, which is its primary area of operations. Aviation Services also provides helicopters and related services to third-party helicopter operators in other countries. Aviation Services' helicopters are primarily used to transport personnel to, from and between offshore installations, drilling rigs and platforms. The primary users of its helicopter services are major integrated and independent oil and gas companies and the U.S. government. In addition to serving the oil and gas industry, Aviation Services provides helicopters under contract-lease, air medical services, firefighting support and Alaska flightseeing tours, among other activities.
Aviation Services provides a number of additional services through joint ventures that complement its core chartering and contract-leasing activities. It holds a 50% interest in a sales and manufacturing organization based in Canada that engineers and manufactures after-market helicopter parts and accessories for sale to helicopter manufacturers and operators, and distributes parts and accessories on behalf of other manufacturers. Aviation Services also holds a 50% interest in a training center based in Lake Charles, Louisiana, that provides instruction, flight simulator and other training to its employees, pilots working for third parties, other helicopter companies, including its competitors, and government agencies.
Aviation Services contributed 17%, 20% and 17% of consolidated operating revenues in 2012, 2011 and 2010, respectively.
Aviation Services' business is conducted through Era Group. On January 31, 2013, SEACOR distributed all of the outstanding shares of common stock of Era Group on a pro rata basis to holders of SEACOR common stock, following which Era Group became an independent publicly traded company.

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Equipment and Services
The following tables identify the types of helicopters that comprise Aviation Services’ fleet and the number of those helicopters in the fleet as of December 31 for the indicated years. “Owned” are those helicopters owned by Aviation Services. “Joint Ventured” are those helicopters owned by entities in which Aviation Services does not have a controlling interest. “Leased-in” are those helicopters leased-in under operating leases. “Managed” are those helicopters owned by non-affiliated entities and operated by Aviation Services for a fee.
 
 
Owned(1)
 
Joint
Ventured
 
Leased-in
 
Managed
 
Total(2)
 
Max.
Pass.(3)
 
Cruise
Speed
(mph)
 
Approx.
Range
(miles)
 
Average
Age
(years)(4)
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Light helicopters – single engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A119
 
17

 
7

 

 

 
24

 
7

 
161

 
270

 
6

AS350
 
35

 

 

 

 
35

 
5

 
138

 
361

 
16

 
 
52

 
7

 

 

 
59

 
 
 
 
 
 
 
 
Light helicopters – twin engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A109
 
7

 

 

 
2

 
9

 
7

 
161

 
405

 
7

BK-117
 

 

 
4

 
2

 
6

 
9

 
150

 
336

 
N/A

EC135
 
17

 

 
2

 

 
19

 
7

 
138

 
288

 
4

EC145
 
3

 

 

 

 
3

 
9

 
150

 
336

 
4

 
 
27

 

 
6

 
4

 
37

 
 
 
 
 
 
 
 
Medium helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW139
 
32

 
1

 

 

 
33

 
12

 
173

 
426

 
4

Bell 212
 
13

 

 

 

 
13

 
11

 
115

 
299

 
34

Bell 412
 
6

 

 

 

 
6

 
11

 
138

 
352

 
31

Sikorsky 76 A/A++
 
6

 

 
1

 

 
7

 
12

 
155

 
348

 
26

Sikorsky 76 C/C++
 
8

 

 

 
2

 
10

 
12

 
161

 
348

 
6

 
 
65

 
1

 
1

 
2

 
69

 
 
 
 
 
 
 
 
Heavy helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EC225
 
10

 

 

 

 
10

 
19

 
162

 
582

 
3

Total Fleet
 
154

 
8

 
7

 
6

 
175

 
 
 
 
 
 
 
 
 ______________________
(1)
Excludes two BO-105 light-twin helicopters removed from service and one AW139 medium helicopter delivered in 2012 but not operational until 2013.
(2)
As of December 31, 2012, Aviation Services had committed to purchase eleven new helicopters, consisting of one AW139 medium helicopter, five AW169 light-twin helicopters and five AW189 medium helicopters, which are not reflected in the table above. In addition, Aviation Services had outstanding options to purchase up to an additional nine AW139 medium helicopters and five AW189 medium helicopters.
(3)
In typical configuration for Aviation Services’ operations.
(4)
For owned fleet.

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Table of Contents

 
 
Owned(1)
 
Joint
Ventured
 
Leased-in
 
Managed
 
Total
 
Max.
Pass.(2)
 
Cruise
Speed
(mph)
 
Approx.
Range
(miles)
 
Average
Age
(years)(3)
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Light helicopters – single engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A119
 
17

 
6

 

 

 
23

 
7

 
161

 
270

 
5

AS350
 
32

 

 
3

 

 
35

 
5

 
138

 
361

 
15

 
 
49

 
6

 
3

 

 
58

 
 
 
 
 
 
 
 
Light helicopters – twin engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A109
 
7

 

 

 
2

 
9

 
7

 
161

 
405

 
6

BK-117
 
3

 

 
4

 
4

 
11

 
9

 
150

 
336

 
27

BO-105
 
4

 

 

 

 
4

 
4

 
138

 
276

 
21

EC135
 
13

 

 
2

 

 
15

 
7

 
138

 
288

 
4

EC145
 
3

 

 

 
3

 
6

 
9

 
150

 
336

 
3

 
 
30

 

 
6

 
9

 
45

 
 
 
 
 
 
 
 
Medium helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW139
 
25

 
1

 

 

 
26

 
12

 
173

 
426

 
3

Bell 212
 
14

 

 

 

 
14

 
11

 
115

 
299

 
33

Bell 412
 
6

 

 

 

 
6

 
11

 
138

 
352

 
30

Sikorsky 76 A/A++
 
6

 

 
2

 
2

 
10

 
12

 
155

 
348

 
25

Sikorsky 76 C/C++
 
8

 

 

 
1

 
9

 
12

 
161

 
348

 
5

 
 
59

 
1

 
2

 
3

 
65

 
 
 
 
 
 
 
 
Heavy helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EC225
 
7

 

 

 

 
7

 
19

 
162

 
582

 
3

Total Fleet
 
145

 
7

 
11

 
12

 
175

 
 
 
 
 
 
 
 
 ______________________
(1)
Excludes one BO-105 light-twin helicopter removed from service and one EC225 heavy helicopter, two EC135 light-twin helicopters and four AW139 medium helicopters delivered in 2011 but not operational until 2012.
(2)
In typical configuration for Aviation Services’ operations.
(3)
For owned fleet.

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Table of Contents

 
 
Owned(1)
 
Joint
Ventured
 
Leased-in(2)
 
Managed
 
Total
 
Max.
Pass.(3)
 
Cruise
Speed
(mph)
 
Approx.
Range
(miles)
 
Average
Age
(years)(4)
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Light helicopters – single engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A119
 
17

 
6

 

 

 
23

 
7

 
161

 
270

 
5

AS350
 
34

 

 
3

 

 
37

 
5

 
138

 
361

 
14

 
 
51

 
6

 
3

 

 
60

 
 
 
 
 
 
 
 
Light helicopters – twin engine:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A109
 
7

 

 

 
2

 
9

 
7

 
161

 
405

 
4

BK-117
 
3

 

 
4

 
4

 
11

 
9

 
150

 
336

 
26

BO-105
 
7

 

 

 

 
7

 
4

 
138

 
276

 
23

EC135
 
10

 

 
2

 

 
12

 
7

 
138

 
288

 
5

EC145
 
3

 

 

 
3

 
6

 
9

 
150

 
336

 
2

 
 
30

 

 
6

 
9

 
45

 
 
 
 
 
 
 
 
Medium helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW139
 
22

 

 

 

 
22

 
12

 
173

 
426

 
3

Bell 212
 
15

 

 

 

 
15

 
11

 
115

 
299

 
32

Bell 412
 
6

 

 

 

 
6

 
11

 
138

 
352

 
29

Sikorsky 76 A/A++
 
6

 

 
2

 
2

 
10

 
12

 
155

 
348

 
24

Sikorsky 76 C/C++
 
8

 

 

 
1

 
9

 
12

 
161

 
348

 
4

 
 
57

 

 
2

 
3

 
62

 
 
 
 
 
 
 
 
Heavy helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S61
 
3

 

 

 

 
3

 
19

 
138

 
497

 
41

EC225
 
6

 

 

 

 
6

 
19

 
162

 
582

 
2

 
 
9

 

 

 

 
9

 
 
 
 
 
 
 
 
Total Fleet
 
147

 
6

 
11

 
12

 
176

 
 
 
 
 
 
 
 
 ______________________
(1)
Excludes one EC-120 light-single helicopter removed from service and one A119 light-single helicopter that was not placed into service until 2011. During 2012, one S76A medium helicopter and one BO-105 light-twin helicopter were removed from service and disassembled for spare parts.
(2)
Excludes three EC-120 light-single helicopters removed from service.
(3)
In typical configuration for Aviation Services’ operations.
(4)
For owned fleet.
Glossary of Helicopter Types:
Heavy helicopters, which have twin engines and a typical passenger capacity of 19, are primarily used in support of the deepwater offshore oil and gas industry, frequently in harsh environments or in areas with long distances from shore, such as those in the U.S. Gulf of Mexico, Brazil, Australia and the North Sea.
Medium helicopters, which mostly have twin engines and a typical passenger capacity of eleven to twelve, are primarily used to support the offshore oil and gas industry, search and rescue services, air medical services, firefighting activities and corporate uses.
Light helicopters, which may have single or twin engines and a typical passenger capacity of four to nine, are used to support a wide range of activities, including the shallow-water oil and gas industry, the mining industry, power line and pipeline surveying, air medical services, tourism and corporate uses.
Medium and heavy helicopters fly longer distances at higher speeds, can carry heavier payloads than light helicopters and are usually equipped with sophisticated avionics permitting them to operate in more demanding weather conditions and difficult climates. Medium and heavy helicopters are most commonly used for crew changes on large offshore production facilities and drilling rigs servicing the oil and gas industry. They are the preferred helicopters in international offshore markets, where facilities tend to be larger, the drilling locations more remote, and onshore infrastructure more limited.
    

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As of December 31, 2012, in addition to its existing fleet, Aviation Services had one AgustaWestland AW139 medium helicopter that was delivered in 2012 and will become operational in 2013. As of December 31, 2012, Aviation Services had placed orders for eleven new helicopters, consisting of one AW139 medium helicopter, five AgustaWestland AW169 light twin helicopters and five AgustaWestland AW189 medium helicopters. The AW139 medium helicopter was delivered in January 2013. The AW189 medium helicopters are scheduled to be delivered in 2014 and 2015. Delivery dates for the AW169 light twin helicopters have yet to be determined. In addition, Aviation Services had outstanding options to purchase up to an additional nine AW139 medium helicopters and five AW189 medium helicopters. If these options are exercised, the helicopters will be delivered beginning in 2013 through 2016. Subsequent to December 31, 2012, the Company exercised an option to purchase one AW139 medium helicopter.
Markets
Aviation Services’ current principal markets for its transportation and search and rescue services to the offshore oil and gas exploration, development and production industry are in the U.S. Gulf of Mexico and Alaska. In addition, Aviation Services currently conducts international operations in support of oil and gas exploration, development and production activity, primarily in Brazil, parts of Europe, Asia and Mexico.
Demand for helicopters in support of the offshore oil and gas exploration, development and production industry, both in the United States and internationally, is affected by the level of offshore exploration and drilling activities, which in turn is influenced by a number of factors, including:
expectations as to future oil and gas commodity prices;
customer assessments of offshore drilling prospects compared with land-based opportunities;
customer assessments of cost, geological opportunity and political stability in host countries;
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;
the relative exchange rates for the U.S. dollar; and
various United States and international government policies regarding exploration and development of oil and gas reserves.
Helicopter services to the oil and mining industries in Alaska are provided on a contract or charter basis from bases in Valdez, Anchorage, the Kenai area and Deadhorse. In addition to supporting oil company activities in the Cook Inlet and along the North Slope of Alaska, Aviation Services operates a fixed base operation ("FBO") at Ted Stevens Anchorage International Airport, provides summer flightseeing tours and supports inland firefighting and mining operations. Aviation Services’ air medical services operations are primarily in the northeastern United States and Florida. In addition, Aviation Services contract-leases helicopters primarily to foreign operators in a number of locations in support of a wide variety of activities, and, in some instances, supports their operations with technical assistance, maintenance programs and sourcing of parts.
Seasonality
A significant portion of Aviation Services’ operating revenues and profits related to oil and gas industry activity is dependent on actual flight hours. The fall and winter months have fewer hours of daylight, particularly in Alaska and the North Sea, and flight hours are generally lower at these times. In addition, prolonged periods of adverse weather in the fall and winter months, coupled with the effect of fewer hours of daylight, can adversely impact operating results. In general, the months of December through February in the U.S. Gulf of Mexico and October through April in Alaska have more days of adverse weather conditions than the other months of the year. In the U.S. Gulf of Mexico, June through November is tropical storm season. During a tropical storm, Aviation Services is unable to operate in the area of the storm. However, flight activity may increase immediately before and after a storm due to the evacuation and return of offshore workers. The Alaska flightseeing operation is also seasonal with activity occurring only from late May until early September. There is less seasonality in Aviation Services’ contract-leasing activities.
    

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Table of Contents

Customers and Contractual Arrangements
Aviation Services’ principal customers in the U.S. Gulf of Mexico are major integrated and independent exploration and production companies and U.S. government agencies, primarily The Bureau of Safety and Environmental Enforcement (“BSEE”), a division of the U.S Department of the Interior. Aviation Services provides helicopters to BSEE under contract and provides services including the provision of flight crews, helicopter maintenance and management of flight operations. In Alaska, Aviation Services’ principal customers are oil and gas companies, mining companies and cruise line passengers. Internationally, Aviation Services typically contract-leases helicopters to local helicopter companies that operate Aviation Services’ helicopters under their own operating certificates and retain the operating risk. These companies in turn provide helicopter transportation services to oil and gas companies and other governmental agencies.
Aviation Services charters the majority of its helicopters through master service agreements, subscription agreements, day-to-day charter arrangements and contract-leases. Master service agreements and subscription agreements typically require a fixed monthly fee plus incremental payments based on hours flown. These agreements have fixed terms ranging from one month to five years and generally may be canceled upon 30-days notice. Day-to-day charter arrangements call for either a combination of a daily fixed fee plus a charge based on hours flown or an hourly rate with a minimum number of hours to be charged. Contract-leases generally run from two to five years with no early cancellation provisions. Services provided under contract-leases can include only the equipment, or can include the equipment, logistical and maintenance support, insurance and personnel, or a combination thereof. The rate structure, as it applies to Aviation Services’ oil and gas contracts typically contains terms that limit its exposure to increases in fuel costs over a pre-agreed level. Fuel costs in excess of these levels are passed through to customers. Air medical services are provided under contracts with hospitals that typically include either a fixed monthly and hourly rate structure or a fee per completed flight. Aviation Services operates some air medical contracts pursuant to which it charges a fee per flight, either to a hospital or insurance company. Other markets include international oil and gas industry support activities, agricultural support and general aviation activities. With respect to flightseeing aircraft, block space is allocated to cruise lines and seats are sold directly to customers. Aviation Services’ FBO operation sells fuel on an ad-hoc basis.
In 2012, no single customer of Aviation Services was responsible for 10% or more of consolidated operating revenues. The ten largest customers of Aviation Services accounted for approximately 59% of Aviation Services’ operating revenues in 2012. The loss of one or a few of its customers could have a material adverse effect on Aviation Services’ results of operations.
Competitive Conditions
The helicopter industry is highly competitive. There are, however, barriers to entry as customers rely heavily on existing relationships, an established safety record, knowledge of site characteristics and access to appropriate facilities. Customers evaluate Aviation Services against its competitors based on a number of factors, including price; safety record; reliability of service; availability, adaptability and type of equipment; the availability and flexibility to provide incremental helicopters and different models from those primarily required; and operational experience.
In the U.S. Gulf of Mexico, Aviation Services has many competitors, including several customers that operate their own helicopter fleets and smaller companies that offer services similar to those offered by Aviation Services. In Alaska, Aviation Services competes against a large number of operators and in Brazil, Aviation Services has several primary competitors.
In air medical services, there are several major competitors with fleets dedicated to air medical operations. Aviation Services competes against national and regional firms, and there is usually more than one competitor in each local market. In addition, Aviation Services competes against hospitals that operate their own helicopters and, in some cases, against ground ambulances.
Aviation Services’ contract-leasing business competes against financial leasing companies.
Risks of Foreign Operations
Aviation Services operates worldwide. For the years ended December 31, 2012, 2011 and 2010, 22%, 28% and 24%, respectively, of Aviation Services’ operating revenues were derived from its foreign operations.
Foreign operations are subject to inherent risks, which, if they materialize, could have a material adverse effect on Aviation Services’ financial position and its results of operations. See the risk factor regarding “Risks from the Company’s international operations” in “Item 1A. Risk Factors.”


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Table of Contents

Inland River Services
Business
Inland River Services owns, operates, invests in and markets river transportation equipment primarily used for moving agricultural and industrial commodities, and chemical and petrochemical products, on the U.S. Inland River Waterways, primarily the Mississippi River, Illinois River, Tennessee River, Ohio River and their tributaries, and the Gulf Intracoastal Waterways. Internationally, Inland River Services has joint venture interests in a transshipment terminal at the Port of Ibicuy, Argentina and operations on the Parana-Paraguay Rivers in Argentina and the Magdalena River in Colombia. In addition to its primary barge business, Inland River Services also owns, operates and invests in high-speed multi-modal terminal facilities for both dry and liquid commodities and provides a broad range of services including machine shop, gear and engine repairs, and the repair of barges and towboats at strategic locations on the U.S. Inland River Waterways.
Inland River Services contributed 14%, 15% and 11% of consolidated operating revenues in 2012, 2011 and 2010, respectively.

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Table of Contents

Equipment and Services
The following tables identify the types of equipment that comprise Inland River Services’ fleet as of December 31 for the indicated years. “Owned” are majority owned by the Company. “Joint Ventured” are owned by entities in which the Company does not have a controlling interest. “Leased-in” are leased-in under operating leases. “Pooled or Managed” are owned by entities not affiliated with Inland River Services with operating revenues and voyage expenses pooled with certain barges of similar type owned by Inland River Services and the net results allocated to participants based upon the number of days the barges participate in the pool or are owned by entities not affiliated with the Company but operated by Inland River Services for a fee. For “Pooled” barges, each barge owner is responsible for the costs of insurance, maintenance and repair as well as for capital and financing costs of its own equipment in the pool.
 
 
Owned(1)
 
Joint
Ventured
 
Leased-in
 
Pooled or
Managed
 
Total
2012
 
 
 
 
 
 
 
 
 
 
Inland river dry cargo barges
 
683

 
172

 
2

 
587

 
1,444

Inland river liquid tank barges
 
73

 

 

 
8

 
81

Inland river deck barges
 
20

 

 

 

 
20

Inland river towboats
 
 
 
 
 
 
 
 
 

4,000 hp - 6,250 hp
 
3

 
13

 

 

 
16

3,300 hp - 3,900 hp
 
1

 

 

 

 
1

Less than 3,200 hp
 
12

 
2

 

 

 
14

Dry cargo vessel(2)
 

 
1

 

 

 
1

 
 
792

 
188

 
2

 
595

 
1,577

2011
 
 
 
 
 
 
 
 
 
 
Inland river dry cargo barges
 
689

 
172

 
2

 
633

 
1,496

Inland river liquid tank barges
 
69

 

 

 
8

 
77

Inland river deck barges
 
20

 

 

 

 
20

Inland river towboats
 
 
 
 
 
 
 
 
 

4,000 hp - 6,250 hp
 
3

 
13

 

 

 
16

3,300 hp - 3,900 hp
 
1

 

 

 

 
1

Less than 3,200 hp
 
12

 
2

 

 

 
14

Dry cargo vessel(2)
 

 
1

 

 

 
1

 
 
794

 
188

 
2

 
641

 
1,625

2010
 
 
 
 
 
 
 
 
 
 
Inland river dry cargo barges
 
634

 
172

 
2

 
580

 
1,388

Inland river liquid tank barges
 
68

 

 
2

 
10

 
80

Inland river deck barges
 
26

 

 

 

 
26

Inland river towboats
 
 
 
 
 
 
 
 
 

4,000 hp - 6,250 hp
 
3

 
13

 

 

 
16

3,300 hp - 3,900 hp
 
1

 

 

 

 
1

Less than 3,200 hp
 
13

 
2

 

 

 
15

Dry cargo vessel(2)
 

 
1

 

 

 
1

 
 
745

 
188

 
4

 
590

 
1,527

______________________
(1)
 Excludes three dry cargo barges and two towboats delivered in 2011 but not operational until 2012.
(2)
Argentine-flag.

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Table of Contents

The table below sets forth equipment types by geographic market as of December 31 for the indicated years.
 
 
2012
 
2011
 
2010
United States:
 
 
 
 
 
 
Inland river dry cargo barges
 
1,266

 
1,318

 
1,216

Inland river liquid tank barges
 
77

 
73

 
80

Inland river deck barges
 
20

 
20

 
26

Inland river towboats
 
 
 
 
 
 
4,000 hp – 6,250 hp
 
9

 
9

 
9

3,300 hp – 3,900 hp
 
1

 
1

 
1

Less than 3,200 hp
 
10

 
12

 
13

 
 
1,383

 
1,433

 
1,345

South America:
 
 
 
 
 
 
Inland river dry cargo barges
 
178

 
178

 
172

Inland river liquid tank barges
 
4

 
4

 

Inland river towboats
 
 
 
 
 
 
4,000 hp – 6,250 hp
 
7

 
7

 
7

1,700 hp – 3,200 hp
 
3

 
2

 
2

Less than 3,200 hp
 
1

 

 

Dry-cargo vessel
 
1

 
1

 
1

 
 
194

 
192

 
182

 
 
1,577

 
1,625

 
1,527

As of December 31 of the indicated year, the average age (in years) of Inland River Services’ owned and joint ventured fleet was as follows:
 
 
2012
 
2011
 
2010
Dry cargo barges
 
7

 
6

 
6

Liquid tank barges – 10,000 barrel
 
14

 
15

 
14

Liquid tank barges – 30,000 barrel
 
9

 
11

 
10

Deck barges
 
5

 
4

 
3

Towboats(1)
 
37

 
37

 
37

 ______________________
(1)
Towboats have been upgraded and maintained to meet or exceed current industry standards.
Inland barges are unmanned and are moved on the U.S. Inland River Waterways by towboats. The combination of a towboat and dry cargo barges is commonly referred to as a “tow.” The Inland River Services dry cargo fleet consists of hopper barges, which can be “open tops” for the transport of commodities that are not sensitive to water such as coal, aggregate and scrap, or covered for the transport of products such as grain, ores, alloys, cements and fertilizer. Each dry cargo barge in the Inland River Services’ fleet is capable of transporting approximately 1,500 to 2,000 tons (1,350 to 1,800 metric tons) of cargo. The carrying capacity of a barge at any particular time is determined by water depth in the river channels and hull depth of the barge. Adverse river conditions, such as high water resulting from excessive rainfall or low water caused by drought, can also impact operations by limiting the speed at which tows travel the U.S. Inland River Waterways, the number of barges included in tows and the quantity of cargo that is loaded in the barges.
A typical dry cargo voyage begins by shifting a clean, empty barge from a fleeting location to a loading facility. The barge is then moved from the loading location and assembled into a tow before proceeding to its discharge destination. After unloading, it is shifted to a fleeting area for cleaning and service, if needed, before being placed again at a load facility. Typically, grain cargos move southbound and non-grain cargos move northbound. Generally, Inland River Services attempts to coordinate the logistical match-up of northbound and southbound movements of cargo to minimize repositioning costs.
    

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Inland River Services’ fleet of 10,000 barrel liquid tank barges transports liquid bulk commodities such as lube oils, solvents and glycols. The operations of these barges are similar to those of the dry cargo barges described above. Inland River Services’ fleet of 30,000 barrel liquid tank barges transports refined petroleum products and black oil products and are normally chartered-out as “unit tows” consisting of two to three barges along with a towboat working in patterns prescribed by the customer. Inland River Services is responsible for providing manpower for the towboats working in such operations.
As of December 31, 2012, in addition to its existing fleet, Inland River Services had new construction projects in progress for six 30,000 barrel liquid tank barges, five inland river towboats and two 10,000 barrel liquid tank barges all scheduled for delivery in 2013.
Markets
The market for Inland River Services is driven by supply and demand economics, which impacts prices, utilization and margins achieved by Inland River Services’ assets. The relationship between supply and demand reflects many factors, including:
the level of domestic and international production of the basic agricultural products to be transported (in particular, the yield from grain harvests);
the level of domestic and international consumption of agricultural products and the effect of these levels on the volumes of products that are physically moved into the export markets;
the level of domestic and worldwide demand for iron ore, steel, steel by-products, coal, ethanol, petroleum and other bulk commodities;
the strength or weakness of the U.S. dollar; and
the cost of ocean freight and fuel.
Within the United States and international markets, other local factors also have an effect on pricing and margins, including:
the supply of barges available to move the products;
the cost of qualified wheelhouse personnel;
the ability to position the barges to maximize efficiencies and utility in moving cargos both northbound and southbound;
the cost of alternative forms of transportation (primarily rail) and capacities at export facilities;
general operating logistics on the river network including size and operating status of locks and dams;
the effect of river levels on the loading capacities of the barges in terms of draft restrictions; and
foreign and domestic laws and regulations.
Seasonality
During harsh winters the upper Mississippi River usually closes to barge traffic from mid-December to mid-March. Ice often hinders the navigation of barge traffic on the mid-Mississippi River, the Illinois River and the upper Ohio River during the same period. The volume of grain transported from the Midwest to the U.S. Gulf of Mexico, which is primarily for export, is greatest during the harvest season from mid-August through late November. The harvest season is particularly significant to Inland River Services because pricing tends to peak during these months in response to higher demand for equipment.
Customers and Contractual Arrangements
The principal customers for Inland River Services are major agricultural companies, major integrated oil companies and industrial companies. In 2012, no single customer of Inland River Services was responsible for 10% or more of consolidated operating revenues. The ten largest customers of Inland River Services accounted for approximately 63% of Inland River Services’ revenues in 2012. The loss of one or a few of its customers could have a material adverse effect on Inland River Services’ results of operations.
    

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Most of Inland River Services’ dry cargo barges are employed under contracts of affreightment that can vary in duration, ranging from one voyage to several years. For longer term contracts, base rates may be adjusted in response to changes in fuel prices and operating expenses. Some longer term contracts provide for the transport of a minimum number of tons of cargo or specific transportation requirements for a particular customer. Some barges are bareboat chartered-out to third parties for a fixed payment of hire per day for the duration of the charter. These contracts tend to be longer, ranging in term from one to five years.
Inland River Services generally charges a price per ton for point to point transportation of dry bulk commodities. Customers are permitted a specified number of days to load and discharge the cargo and thereafter pay a per diem demurrage rate for extra time. From time to time, dry cargo barges may be used for storage for a period prior to delivery.
Inland River Services’ 10,000 barrel liquid tank barges are either chartered-out on term contracts ranging from one to five years or marketed in the spot market.
Inland River Services’ 30,000 barrel liquid tank barges are either marketed as unit tows under term contracts ranging from one to two years or in the spot market.
Inland River Services' tank farm and dry-bulk handling facilities are marketed on a tariff system driven by throughput volume.
Inland River Services' fleeting operations generally charge a day rate for fleeting and a per shift fee for handling to and from docks and cleaning facilities.
Inland River Services' machine shop, gear and engine repairs, and repairs of towboats and barges are charged either on an hourly basis or on a fixed fee basis depending on the scope and nature of work.
Competitive Conditions
Generally, Inland River Services believes the primary barriers to effective competitive entry into the U.S. Inland River Waterways markets are the complexity of operations, the consolidation of the inland river towing industry and the difficulty in assembling a large enough fleet and an experienced staff to execute voyages efficiently and re-position barges effectively to optimize their use. The primary competitive factors among established operators are price, availability and reliability of barges and equipment of a suitable type and condition for a specific cargo.
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