UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2017              or             
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-12289
SEACOR Holdings Inc.
(Exact Name of Registrant as Specified in Its Charter)
________________________________________
Delaware
 
13-3542736
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
2200 Eller Drive, P.O. Box 13038,
 
 
Fort Lauderdale, Florida
 
33316
(Address of Principal Executive Offices)
 
(Zip Code)
954-523-2200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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  ¨
 
Emerging growth company  ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý
The total number of shares of common stock, par value $.01 per share, outstanding as of May 5, 2017 was 17,549,991. The Registrant has no other class of common stock outstanding.



SEACOR HOLDINGS INC.
Table of Contents

Part I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
Part II.
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.


i


PART I—FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS
SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
 
March 31,
2017
 
December 31,
2016
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
418,903

 
$
399,644

Restricted cash
4,065

 
3,711

Marketable securities
98,189

 
116,276

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts of $9,935 and $8,347 in 2017 and 2016, respectively
131,292

 
162,880

Other
65,227

 
56,287

Inventories
19,385

 
16,773

Prepaid expenses and other
8,998

 
7,230

Total current assets
746,059

 
762,801

Property and Equipment:
 
 
 
Historical cost
2,482,651

 
2,194,023

Accumulated depreciation
(1,020,009
)
 
(1,008,867
)
 
1,462,642

 
1,185,156

Construction in progress
224,809

 
370,512

Net property and equipment
1,687,451

 
1,555,668

Investments, at Equity, and Advances to 50% or Less Owned Companies
297,162

 
313,772

Construction Reserve Funds
147,955

 
153,962

Goodwill
32,787

 
32,758

Intangible Assets, Net
19,519

 
20,078

Other Assets
24,045

 
23,282

 
$
2,954,978

 
$
2,862,321

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current portion of long-term debt
$
364,583

 
$
183,602

Accounts payable and accrued expenses
66,749

 
90,702

Other current liabilities
103,088

 
95,645

Total current liabilities
534,420

 
369,949

Long-Term Debt
733,214

 
848,771

Exchange Option Liability on Subsidiary Convertible Senior Notes
16,809

 
19,436

Deferred Income Taxes
311,949

 
288,601

Deferred Gains and Other Liabilities
131,717

 
139,296

Total liabilities
1,728,109

 
1,666,053

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

 

Common stock, $.01 par value, 60,000,000 shares authorized; 38,039,909 and 37,939,032 shares issued in 2017 and 2016, respectively
380

 
379

Additional paid-in capital
1,527,460

 
1,518,635

Retained earnings
914,806

 
910,723

Shares held in treasury of 20,634,001 and 20,538,327 in 2017 and 2016, respectively, at cost
(1,364,172
)
 
(1,357,331
)
Accumulated other comprehensive loss, net of tax
(11,024
)
 
(11,514
)
 
1,067,450

 
1,060,892

Noncontrolling interests in subsidiaries
159,419

 
135,376

Total equity
1,226,869

 
1,196,268

 
$
2,954,978

 
$
2,862,321




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

1


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except share data, unaudited)
 
Three Months Ended March 31,
 
2017
 
2016
Operating Revenues
$
190,447

 
$
213,928

Costs and Expenses:
 
 
 
Operating
143,964

 
157,468

Administrative and general
35,427

 
35,704

Depreciation and amortization
30,397

 
30,989

 
209,788

 
224,161

Gains on Asset Dispositions and Impairments, Net
4,631

 
217

Operating Loss
(14,710
)
 
(10,016
)
Other Income (Expense):
 
 
 
Interest income
2,813

 
5,593

Interest expense
(13,474
)
 
(11,935
)
Debt extinguishment gains, net

 
3,223

Marketable security gains (losses), net
32,574

 
(25,096
)
Derivative gains, net
3,075

 
2,620

Foreign currency gains, net
1,210

 
37

Other, net
194

 
268

 
26,392

 
(25,290
)
Income (Loss) Before Income Tax Expense (Benefit) and Equity in Earnings (Losses) of 50% or Less Owned Companies
11,682

 
(35,306
)
Income Tax Expense (Benefit)
1,572

 
(14,831
)
Income (Loss) Before Equity in Earnings (Losses) of 50% or Less Owned Companies
10,110

 
(20,475
)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
546

 
(49
)
Net Income (Loss)
10,656

 
(20,524
)
Net Income attributable to Noncontrolling Interests in Subsidiaries
6,573

 
6,662

Net Income (Loss) attributable to SEACOR Holdings Inc.
$
4,083

 
$
(27,186
)
 
 
 
 
Basic Earnings (Loss) Per Common Share of SEACOR Holdings Inc.
$
0.24

 
$
(1.62
)
 
 
 
 
Diluted Earnings (Loss) Per Common Share of SEACOR Holdings Inc.
$
0.24

 
$
(1.62
)
 
 
 
 
Weighted Average Common Shares Outstanding:
 
 
 
Basic
17,074,043

 
16,817,368

Diluted
17,363,839

 
16,817,368











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

2


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2017
 
2016
Net Income (Loss)
$
10,656

 
$
(20,524
)
Other Comprehensive Income (Loss):
 
 
 
Foreign currency translation gains (losses)
664

 
(1,868
)
Derivative losses on cash flow hedges
(9
)
 
(1,830
)
Reclassification of derivative losses on cash flow hedges to interest expense
12

 

Reclassification of derivative losses on cash flow hedges to equity in earnings (losses) of 50% or less owned companies
190

 
224

Other
(7
)
 
(5
)
 
850

 
(3,479
)
Income tax benefit (expense)
(264
)
 
1,154

 
586

 
(2,325
)
Comprehensive Income (Loss)
11,242

 
(22,849
)
Comprehensive Income attributable to Noncontrolling Interests in Subsidiaries
6,669

 
6,481

Comprehensive Income (Loss) attributable to SEACOR Holdings Inc.
$
4,573

 
$
(29,330
)


































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

3


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands, unaudited)
 
 
SEACOR Holdings Inc. Stockholders’ Equity
 
Non-
Controlling
Interests In
Subsidiaries
 
Total
Equity
 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Shares
Held In
Treasury
 
Accumulated
Other
Comprehensive
Loss
 
December 31, 2016
 
$
379

 
$
1,518,635

 
$
910,723

 
$
(1,357,331
)
 
$
(11,514
)
 
$
135,376

 
$
1,196,268

Issuance of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Stock Purchase Plan
 

 

 

 
728

 

 

 
728

Exercise of stock options
 
1

 
5,611

 

 

 

 

 
5,612

Director stock awards
 

 
43

 

 

 

 

 
43

Purchase of treasury shares
 

 

 

 
(7,569
)
 

 

 
(7,569
)
Amortization of share awards
 

 
3,171

 

 

 

 

 
3,171

Consolidation of 50% or less owned companies
 

 

 

 

 

 
17,374

 
17,374

Net income
 

 

 
4,083

 

 

 
6,573

 
10,656

Other comprehensive income
 

 

 

 

 
490

 
96

 
586

Three Months Ended March 31, 2017
 
$
380

 
$
1,527,460

 
$
914,806

 
$
(1,364,172
)
 
$
(11,024
)
 
$
159,419

 
$
1,226,869




































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

4


SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2017
 
2016
Net Cash Provided by Operating Activities
$
82,653

 
$
42,446

Cash Flows from Investing Activities:
 
 
 
Purchases of property and equipment
(77,617
)
 
(47,436
)
Cash settlements on derivative transactions, net
(324
)
 

Proceeds from disposition of property and equipment
8,337

 
246

Investments in and advances to 50% or less owned companies
(8,428
)
 
(7,953
)
Return of investments and advances from 50% or less owned companies
7,352

 
1,136

Net repayments on revolving credit line to 50% or less owned companies

 
3,394

Cash assumed on consolidation of 50% or less owned companies
1,943

 

(Issuances of) payments received on third party leases and notes receivable, net
(709
)
 
2,023

Net increase in restricted cash
(354
)
 

Net decrease in construction reserve funds
6,007

 
58

Net cash used in investing activities
(63,793
)
 
(48,532
)
Cash Flows from Financing Activities:
 
 
 
Payments on long-term debt and capital lease obligations
(16,065
)
 
(32,647
)
Proceeds from issuance of long-term debt, net of issue costs
17,390

 
12,373

Purchase of conversion option in convertible debt

 
(1,382
)
Common stock acquired for treasury
(7,569
)
 
(2,396
)
Proceeds and tax benefits from share award plans
6,340

 
442

Distributions to noncontrolling interests

 
(3,698
)
Net cash provided by (used in) financing activities
96

 
(27,308
)
Effects of Exchange Rate Changes on Cash and Cash Equivalents
303

 
(142
)
Net Increase (Decrease) in Cash and Cash Equivalents
19,259

 
(33,536
)
Cash and Cash Equivalents, Beginning of Period
399,644

 
530,009

Cash and Cash Equivalents, End of Period
$
418,903

 
$
496,473





















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

5


SEACOR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The condensed consolidated financial information for the three months ended March 31, 2017 and 2016 has been prepared by the Company and has not been audited by its independent registered certified public accounting firm. The condensed consolidated financial statements include the accounts of SEACOR Holdings Inc. and its consolidated subsidiaries. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of March 31, 2017, its results of operations for the three months ended March 31, 2017 and 2016, its comprehensive income (loss) for the three months ended March 31, 2017 and 2016, its changes in equity for the three months ended March 31, 2017, and its cash flows for the three months ended March 31, 2017 and 2016. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the "Company" refers to SEACOR Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to "SEACOR" refers to SEACOR Holdings Inc without its consolidated subsidiaries. Capitalized terms used and not specifically defined herein have the same meaning given those terms in the Company's Annual report on Form 10-K for the year ended December 31, 2016.
Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet these criteria is deferred until the criteria are met. Deferred revenues, included in other current liabilities in the accompanying condensed consolidated balance sheets, for the three months ended March 31 were as follows (in thousands):
 
2017
 
2016
Balance at beginning of period
$
6,953

 
$
6,953

Revenues deferred during the period
1,536

 

Balance at end of period
$
8,489

 
$
6,953

As of March 31, 2017, deferred revenues of $6.8 million related to the time charter of several offshore support vessels scheduled to be paid through the conveyance of an overriding royalty interest (the “Conveyance”) in developmental oil and gas producing properties operated by a customer in the U.S. Gulf of Mexico. Payments under the Conveyance, and the timing of such payments, were contingent upon production and energy sale prices. On August 17, 2012, the customer filed a voluntary petition for Chapter 11 bankruptcy. The Company is vigorously defending its interest in connection with the bankruptcy filing; however, payments received under the Conveyance subsequent to May 19, 2012 are subject to creditors’ claims in bankruptcy court. The Company will recognize revenues when reasonably assured of a judgment in its favor. All costs and expenses related to these charters were recognized as incurred.
As of March 31, 2017, deferred revenues of $1.5 million related to the time charter of an offshore support vessel to a customer for which collection was not reasonably assured. The Company will recognize revenues when collected or when collection is reasonably assured. All costs and expenses related to this charter were recognized as incurred.
Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

6


As of March 31, 2017, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
Offshore support vessels (excluding wind farm utility)
20
Wind farm utility vessels
10
Inland river dry-cargo and deck barges
20
Inland river liquid tank barges
25
Inland river towboats and harbor boats
25
Product tankers - U.S.-flag
25
Short-sea Container/RORO(1) vessels
20
Harbor and offshore tugs
25
Ocean liquid tank barges
25
Terminal and manufacturing facilities
20
______________________
(1)
Roll on/Roll off (“RORO”).
Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.
Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. During the three months ended March 31, 2017, capitalized interest totaled $3.0 million.
Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. These indicators may include a significant decrease in the market price of a long-lived asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If the carrying values of the assets are not recoverable, as determined by the estimated undiscounted cash flows, the estimated fair value of the assets or asset groups are compared to their current carrying values and impairment charges are recorded if the carrying value exceeds fair value. The Company performs its testing on an asset or asset group basis. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the three months ended March 31, 2017 and 2016, the Company recognized impairment charges of $0.4 million and $0.4 million, respectively, related to long-lived assets held for use.
Impairment of 50% or Less Owned Companies. Investments in 50% or less owned companies are reviewed periodically to assess whether there is an other-than-temporary decline in the carrying value of the investment. In its evaluation, the Company considers, among other items, recent and expected financial performance and returns, impairments recorded by the investee and the capital structure of the investee. When the Company determines the estimated fair value of an investment is below carrying value and the decline is other-than-temporary, the investment is written down to its estimated fair value. Actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance, the severity and expected duration of declines in value, and the available liquidity in the capital markets to support the continuing operations of the investee, among other factors. Although the Company believes its assumptions and estimates are reasonable, the investee’s actual performance compared with the estimates could produce different results and lead to additional impairment charges in future periods. During the three months ended March 31, 2017 and 2016, the Company did not recognize any impairment charges related to its 50% or less owned companies.
Income Taxes. During the three months ended March 31, 2017, the Company’s effective income tax rate of 13.5% was primarily due to taxes not provided on income attributable to noncontrolling interests (see Note 8).

7


Deferred Gains. The Company has sold certain equipment to its 50% or less owned companies, entered into vessel sale-leaseback transactions with finance companies, and provided seller financing on sales of its equipment to third parties and its 50% or less owned companies. A portion of the gains realized from these transactions were deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets. Deferred gain activity related to these transactions for the three months ended March 31 was as follows (in thousands):
 
2017
 
2016
Balance at beginning of period
$
116,333

 
$
135,909

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(5,676
)
 
(5,658
)
Amortization of deferred gains included in gains (losses) on asset dispositions and impairments, net
(604
)
 
(623
)
Other

 
(1,707
)
Balance at end of period
$
110,053

 
$
127,921

Accumulated Other Comprehensive Loss. The components of accumulated other comprehensive loss were as follows (in thousands):
 
SEACOR Holdings Inc. Stockholders’ Equity
 
Noncontrolling Interests
 
 
 
Foreign
Currency
Translation
Adjustments
 
Derivative
Losses on
Cash Flow
Hedges, net
 
Other
 
Total
 
Foreign
Currency
Translation
Adjustments
 
Derivative
Losses on
Cash Flow
Hedges, net
 
Other
 
Other
Comprehensive
Income
December 31, 2016
$
(11,593
)
 
$
75

 
$
4

 
$
(11,514
)
 
$
(1,613
)
 
$
(17
)
 
$
3

 
 
Other comprehensive income (loss)
582

 
177

 
(5
)
 
754

 
82

 
16

 
(2
)
 
$
850

Income tax (expense) benefit
(204
)
 
(62
)
 
2

 
(264
)
 

 

 

 
(264
)
Three Months Ended March 31, 2017
$
(11,215
)
 
$
190

 
$
1

 
$
(11,024
)
 
$
(1,531
)
 
$
(1
)
 
$
1

 
$
586

Earnings (Loss) Per Share. Basic earnings (loss) per common share of SEACOR is computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings (loss) per common share of SEACOR is computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the treasury stock and if-converted methods. Dilutive securities for this purpose assumes restricted stock grants have vested, common shares have been issued pursuant to the exercise of outstanding stock options and common shares have been issued pursuant to the conversion of all outstanding convertible notes.

8


Computations of basic and diluted earnings (loss) per common share of SEACOR were as follows (in thousands, except share data):
 
Three Months Ended March 31,
 
Net Income (Loss) Attributable to SEACOR
 
Average O/S Shares
 
Per Share
2017
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
4,083

 
17,074,043

 
$
0.24

Effect of Dilutive Share Awards:
 
 
 
 
 
Options and Restricted Stock(1)

 
289,796

 
 
Convertible Notes(2)

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
4,083

 
17,363,839

 
$
0.24

2016
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
(27,186
)
 
16,817,368

 
$
(1.62
)
Effect of Dilutive Share Awards:
 
 
 
 
 
Options and Restricted Stock(1)

 

 
 
Convertible Notes(3)

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
(27,186
)
 
16,817,368

 
$
(1.62
)
______________________
(1)
For the three months ended March 31, 2017 and 2016, diluted earnings (loss) per common share of SEACOR excluded 903,720 and 1,997,822, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive.
(2)
For the three months ended March 31, 2017, diluted earnings per common share of SEACOR excluded 1,885,772 common shares issuable pursuant to the Company’s 2.5% Convertible Senior Notes, 1,825,326 common shares issuable pursuant to the Company’s 3.0% Convertible Senior Notes and 2,243,500 common shares issuable pursuant to the Company’s 3.75% Subsidiary Convertible Senior Notes as the effect of their inclusion in the computation would be anti-dilutive.
(3)
For the three months ended March 31, 2016, diluted loss per common share of SEACOR excluded 3,379,393 common shares issuable pursuant to the Company’s 2.5% Convertible Senior Notes, 1,825,326 common shares issuable pursuant to the Company’s 3.0% Convertible Senior Notes and 2,243,500 common shares issuable pursuant to the Company’s 3.75% Subsidiary Convertible Senior Notes as the effect of their inclusion in the computation would be anti-dilutive.
New Accounting Pronouncements. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States. The core principal of the new standard is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. The Company will adopt the new standard on January 1, 2018 and expects to use the modified retrospective approach upon adoption. The Company is in the preliminary stages of determining the impact, if any, the adoption of the new accounting standard will have on its consolidated financial position, results of operations or cash flows. Principal versus agent considerations of the new standard with respect to the Company’s vessel management services and pooling arrangements may result in a gross presentation of operating revenues and expenses compared with its current net presentation for results from managed and pooled third party equipment.
On February 25, 2016, the FASB issued a comprehensive new leasing standard, which improves transparency and comparability among companies by requiring lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The new standard is effective for interim and annual periods beginning after December 15, 2018 and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.
On August 26, 2016, the FASB issued an amendment to the accounting standard which amends or clarifies guidance on classification of certain transactions in the statement of cash flows, including classification of proceeds from the settlement of insurance claims, debt prepayments, debt extinguishment costs and contingent consideration payments after a business combination. This new standard is effective for the Company as of January 1, 2018 and early adoption is permitted. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.

9


On October 24, 2016, the FASB issued a new accounting standard, which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory. The new standard is effective for interim and annual periods beginning after December 31, 2017 and requires a modified retrospective approach to adoption. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.
On November 17, 2016, the FASB issued an amendment to the accounting standard which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.
On January 26, 2017, the FASB issued an amendment to the accounting standard which simplified wording and removes step two of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting units carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill test. The new standard is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020, with early adoption permitted for interim or annual goodwill impairment tests on testing dates after January 1, 2017. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.
2.
EQUIPMENT ACQUISITIONS AND DISPOSITIONS
During the three months ended March 31, 2017, capital expenditures and payments on fair value hedges were $77.9 million. Equipment deliveries during the three months ended March 31, 2017 included three fast support vessels, one inland river towboat, one U.S.-flag product tanker and one U.S.-flag harbor tug.
During the three months ended March 31, 2017, the Company sold two liftboats, two offshore support vessels previously retired and removed from service (one anchor handling towing supply vessel and one specialty vessel) and other property and equipment for net proceeds of $8.8 million ($8.3 million in cash and $0.5 million of previously received deposits) and gains of $4.8 million, all of which were recognized currently. In addition, the Company recognized previously deferred gains of $0.6 million. The Company also recognized a loss of $0.4 million related to the total loss of one inland river specialty barge.
3.
INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES
MexMar. MexMar owns and operates 15 offshore support vessels in Mexico. During the three months ended March 31, 2017, the Company and its partner each received capital distributions of $7.4 million from MexMar.
Falcon Global. Falcon Global was formed to construct and operate two foreign-flag liftboats. During the three months ended March 31, 2017, the Company and its partner each contributed additional capital of $0.4 million in cash and the Company made working capital advances of $2.0 million in cash. In March 2017, the Company’s partner declined to participate in a capital call from Falcon Global and, as a consequence, the Company obtained 100% voting control of Falcon Global in accordance with the terms of the operating agreement. The Company has consolidated Falcon Global’s net assets effective March 31, 2017 as follows (in thousands):
 
2017
Cash
$
1,943

Marketable securities
785

Trade and other receivables
(291
)
Investments, at Equity, and Advances to 50% or Less Owned Companies
(19,374
)
Property and Equipment
96,000

Accounts payable
3,201

Other current liabilities
1,153

Long-Term Debt
58,335

Other Liabilities
(1,000
)
Noncontrolling interests in subsidiaries
17,374


10


Sea-Cat Crewzer II. On April 28, 2017, the Company acquired a 100% controlling interest in Sea-Cat Crewzer II through the acquisition of its partners 50% ownership interest for $11.3 million in cash.
Sea-Cat Crewzer. On April 28, 2017, the Company acquired a 100% controlling interest in Sea-Cat Crewzer through the acquisition of its partners 50% ownership interest for $4.4 million in cash.
SCFCo. SCFCo was established to operate inland river towboats and inland river dry-cargo barges on the Parana-Paraguay Rivers in South America and a terminal facility at Port Ibicuy, Argentina. During the three months ended March 31, 2017, the Company and its partner each made working capital advances of $0.5 million in cash to SCFCo and converted $2.5 million of loans to capital. As of March 31, 2017, the Company had outstanding loans and working capital advances to SCFCo of $29.2 million.
Trailer Bridge. Trailer Bridge is an operator of U.S.-flag deck and RORO barges and provides marine transportation services between Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic. The Company provides secured financing to Trailer Bridge and, during the three months ended March 31, 2017, the Company provided advances of $2.0 million on the secured financing. As of March 31, 2017, the outstanding amount on the secured financing was $5.9 million, inclusive of accrued and unpaid interest.
SeaJon. SeaJon owns an articulated tug-barge operating in the Great Lakes trade. During the three months ended March 31, 2017, the Company received dividends of $0.8 million.
VA&E. VA&E primarily focuses on the global origination, trading and merchandising of sugar, pairing producers and buyers and arranging for the transportation and logistics of the product. The Company provides an uncommitted credit facility of up to $3.5 million and a subordinated loan of $3.5 million. During the three months ended March 31, 2017, VA&E borrowed $3.5 million on the credit facility. As of March 31, 2017, the outstanding balance on the credit facility and subordinated loan was $7.2 million including accrued and unpaid interest.
Guarantees. The Company has guaranteed the payment of amounts owed under a vessel charter and banking facilities by certain of its 50% or less owned companies. As of March 31, 2017, the total amount guaranteed by the Company under these arrangements was $27.2 million. In addition, as of March 31, 2017, the Company had uncalled capital commitments to two of its 50% or less owned companies totaling $1.8 million.
4.
LONG-TERM DEBT
SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire SEACOR’s common stock, par value $0.01 per share (“Common Stock”), 7.375% Senior Notes, 3.0% Convertible Senior Notes, and 2.5% Convertible Senior Notes (collectively the “Securities”) through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. As of March 31, 2017, the Company’s repurchase authority for the Securities was $147.0 million.
As of March 31, 2017, the remaining principal amount outstanding of the Company’s 2.5% Convertible Senior Notes of $157.1 million and the principal amount of the Company’s 3.75% Subsidiary Convertible Senior Notes of $175.0 million are included in current liabilities as the holders may require the Company to repurchase these notes on December 19, 2017 and January 11, 2018, respectively.
Falcon Global Term Loan Facility. On August 3, 2015, Falcon Global entered into a term loan facility to finance the construction of two foreign-flag liftboats. The facility consists of two tranches: (i) a $62.5 million facility to fund the construction costs of the liftboats (“Tranche A”) and (ii) a $18.0 million facility for certain project costs (“Tranche B”). Borrowings under the facility bear interest at variable rates based on LIBOR plus a margin ranging from 2.5% to 2.9%, or an average rate of 3.97% as of March 31, 2017. The facility is secured by the liftboats and is repayable over a five year period beginning the earlier of either six months after completion of the construction of the liftboats or June 30, 2017 and matures no later than June 30, 2022. In March 2017, the Company’s partner declined to participate in a capital call from Falcon Global and, as a consequence, the Company obtained 100% voting control of Falcon Global in accordance with the terms of the operating agreement. The Company has consolidated Falcon Global’s debt under this facility of $58.3 million, net of issue costs of $1.0 million, effective March 31, 2017 (See Note 3). Subsequent to March 31, 2017, the Tranche B facility was canceled prior to any funding.
SEA-Vista Credit Facility. During the three months ended March 31, 2017, SEA-Vista borrowed $14.0 million and repaid $13.9 million on the Revolving Loan and made scheduled repayments of $0.9 million on the Term A-1 Loan. As of March 31, 2017, SEA-Vista had $13.9 million of remaining borrowing capacity under this facility. Subsequent to March 31, 2017, SEA-Vista borrowed $13.9 million on the Revolving Loan.

11


ICP Revolving Credit Facility. As of March 31, 2017, ICP had $14.5 million of borrowing capacity under this facility.
Other. During the three months ended March 31, 2017, the Company borrowed $3.4 million and made scheduled payments on other long-term debt of $1.3 million. As of March 31, 2017, the Company had $3.2 million of borrowing capacity under these facilities. As of March 31, 2017, the Company had outstanding letters of credit totaling $26.2 million with various expiration dates through 2019 and other labor and performance guarantees of $1.3 million.
5.
DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
Derivative instruments are classified as either assets or liabilities based on their individual fair values. The fair values of the Company’s derivative instruments as of March 31, 2017 were as follows (in thousands):
 
Derivative
Asset(1)
 
Derivative
Liability(2)
Derivatives designated as hedging instruments:
 
 
 
Forward currency exchange contracts (fair value hedges)
$

 
$
143

Interest rate swap agreements (cash flow hedges)

 
4

 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
Exchange option liability on subsidiary convertible senior notes

 
16,809

Forward currency exchange, option and future contracts
206

 

Interest rate swap agreements

 
327

Exchange traded commodity swap, option and future contracts
753

 
61

 
$
959

 
$
17,344

______________________
(1)
Included in other receivables in the accompanying condensed consolidated balance sheets.
(2)
Included in other current liabilities in the accompanying condensed consolidated balance sheets, except for the exchange option liability on subsidiary convertible senior notes.
Fair Value Hedges. From time to time, the Company may designate certain of its foreign currency exchange contracts as fair value hedges in respect of capital commitments denominated in foreign currencies. By entering into these foreign currency exchange contracts, the Company may fix a portion of its capital commitments denominated in foreign currencies in U.S. dollars to protect against currency fluctuations. As of March 31, 2017, the Company had euro denominated forward currency exchange contracts designated as fair value hedges with an aggregate U.S. dollar equivalent of $1.9 million. During the three months ended March 31, 2017, the Company recognized immaterial gains on these contracts which was included as a decrease to the corresponding hedged equipment included in construction in progress in the accompanying condensed consolidated balance sheets.
Cash Flow Hedges. The Company and certain of its 50% or less owned companies have interest rate swap agreements designated as cash flow hedges. By entering into these interest rate swap agreements, the Company and its 50% or less owned companies have converted the variable LIBOR or EURIBOR component of certain of their outstanding borrowings to a fixed interest rate. The Company recognized immaterial losses on derivative instruments designated as cash flow hedges during the three months ended March 31, 2017. As of March 31, 2017, the interest rate swaps held by the Company and its 50% or less owned companies were as follows:
The Company had two interest rate swap agreements maturing in 2021 that call for the Company to pay a fixed rate of interest of (0.03)% on the aggregate notional value of €15.0 million ($16.0 million) and receive a variable interest rate based on EURIBOR on the aggregate notional value.
MexMar had five interest rate swap agreements with maturities in 2023 that call for MexMar to pay a fixed rate of interest ranging from 1.71% to 2.10% on the aggregate amortized notional value of $120.6 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.
Sea-Cat Crewzer II had an interest rate swap agreement maturing in 2019 that calls for Sea-Cat Crewzer II to pay a fixed rate of interest of 1.52% on the amortized notional value of $22.7 million and receive a variable interest rate based on LIBOR on the amortized notional value.
Sea-Cat Crewzer had an interest rate swap agreement maturing in 2019 that calls for Sea-Cat Crewzer to pay a fixed rate of interest of 1.52% on the amortized notional value of $20.1 million and receive a variable interest rate based on LIBOR on the amortized notional value.

12


SeaJon had an interest rate swap agreement maturing in 2017 that calls for SeaJon to pay a fixed interest rate of 2.79% on the amortized notional value of $29.7 million and receive a variable interest rate based on LIBOR on the amortized notional value.
Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the three months ended March 31 as follows (in thousands):
 
2017
 
2016
Exchange option liability on subsidiary convertible senior notes
$
2,628

 
$
(136
)
Options on equities and equity indices

 
2,904

Forward currency exchange, option and future contracts
113

 
45

Interest rate swap agreements

 
(6
)
Exchange traded commodity swap, option and future contracts
334

 
(187
)
 
$
3,075

 
$
2,620

The exchange option liability relates to a bifurcated embedded derivative in the Company’s 3.75% Subsidiary Convertible Senior Notes.
The Company holds positions in publicly traded equity options that convey the right or obligation to engage in future transactions in the underlying equity security or index. The Company’s investment in equity options primarily includes positions in energy, marine, transportation and other related businesses. These contracts are typically entered into to mitigate the risk of changes in the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose.
The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of March 31, 2017, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $1.9 million. As of March 31, 2017, the fair market value of the outstanding forward currency option contracts was an unrealized gain of $0.1 million. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months.
The Company and certain of its 50% or less owned companies have entered into interest rate swap agreements for the general purpose of providing protection against increases in interest rates, which might lead to higher interest costs. As of March 31, 2017, the interest rate swaps held by the Company or its 50% or less owned companies were as follows:
The Company had an interest rate swap agreement maturing in 2022 that calls for the Company to pay a fixed interest rate of 2.06% on the amortized notional value of $60.9 million and receive a variable interest rate based on LIBOR on the amortized notional value.
OSV Partners had two interest rate swap agreements with maturities in 2020 that call for OSV Partners to pay a fixed rate of interest ranging from 1.89% to 2.27% on the aggregate amortized notional value of $36.8 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.
Dynamic Offshore had an interest rate swap agreement maturing in 2018 that calls for Dynamic Offshore to pay a fixed interest rate of 1.30% on the amortized notional value of $71.5 million and receive a variable interest rate based on LIBOR on the amortized notional value.
The Company enters and settles exchange traded commodity swap, option and future contracts (primarily corn, ethanol and natural gas) to protect its raw material and finished goods inventory balances from market changes. As of March 31, 2017, the net market exposure to these commodities under these contracts was not material.
6.
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

13


The Company’s financial assets and liabilities as of March 31, 2017 that are measured at fair value on a recurring basis were as follows (in thousands):
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
Marketable securities(1)
$
98,189

 
$

 
$

Derivative instruments (included in other receivables)
753

 
206

 

Construction reserve funds
147,955

 

 

LIABILITIES
 
 
 
 
 
Short sale of marketable securities(1) (included in other current liabilities)
$
1,720

 
$

 
$

Derivative instruments (included in other current liabilities)
61

 
474

 

Exchange option liability on subsidiary convertible senior notes

 

 
16,809

______________________
(1)
Marketable security gains (losses), net include unrealized gains of $20.8 million and unrealized losses of $21.5 million for the three months ended March 31, 2017 and 2016, respectively, related to marketable security positions held by the Company as of March 31, 2017.
The fair value of the exchange option liability on the subsidiary convertible senior notes is estimated with significant inputs that are both observable and unobservable in the market and therefore is considered a Level 3 fair value measurement. The Company used a binomial lattice model to estimate the fair value of the exchange option on the subsidiary convertible senior notes that assumes the holders will maximize their value by finding the optimal decision between redeeming at the redemption price or exchanging into shares of Common Stock. This model determines the fair value of the exchange option embedded in the subsidiary convertible senior notes as the differential in the fair value of the notes including the exchange option compared with the fair value of the notes excluding the exchange option. The indicated value of the exchange option was then multiplied by the probability of the SMHI Spin-off to determine the recorded fair value of the exchange option liability.
The significant unobservable input used in the fair value measurement is the probability assessment of a SMHI Spin-off. Holding the observable inputs constant, an increase in the probability of a SMHI Spin-off to 100% would result in no value being assigned to the exchange option liability. The significant observable inputs used in the fair value measurement as of March 31, 2017 were not materially different from those as of December 31, 2016. For the three months ended March 31, 2017, the estimated fair value of the exchange option liability decreased by $2.6 million primarily as a result of the decrease in the price of Common Stock.
The estimated fair values of the Company’s other financial assets and liabilities as of March 31, 2017 were as follows (in thousands):
 
 
 
Estimated Fair Value
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash
$
422,968

 
$
422,968

 
$

 
$

Investments, at cost, in 50% or less owned companies (included in other assets)
4,432

 
see below
 
 
 
 
Notes receivable from third parties (included in other receivables and other assets)
13,061

 
see below
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion(1)
$
1,097,797

 
$

 
$
1,119,711

 
$

______________________
(1)
The estimated fair value includes the embedded conversion options on the Company’s 2.5% and 3.0% Convertible Senior Notes.
The carrying value of cash, cash equivalents and restricted cash approximates fair value. The fair value of the Company’s long-term debt was estimated based upon quoted market prices or by using discounted cash flow analyses based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of certain of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. It was not practicable to estimate the fair value of the Company’s notes receivable from third parties as the overall returns are uncertain due to certain provisions for additional payments contingent upon future events. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

14


The Company’s other assets and liabilities that were measured at fair value during the three months ended March 31, 2017 were as follows (in thousands):
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
Investments, at equity, and advances to 50% or less owned companies
$

 
$

 
$
17,374

Investments, at equity, and advances in 50% or less owned companies. During the three months ended March 31, 2017, the Company’s partner declined to participate in a capital call from Falcon Global and, as a consequence, the Company obtained 100% voting control of Falcon Global in accordance with the terms of the operating agreement (see Note 3). Upon the change in control, the Company marked its investment in Falcon Global to fair value. Falcon Global’s primary assets consist of two newly constructed foreign-flag liftboats. The estimated fair value of the liftboats was the primary input used by the Company in determining the fair value of its investment based on a third-party valuation using significant inputs that are unobservable in the market and therefore are considered a Level 3 fair value measurement. Due to limited market transactions, the primary valuation methodology applied by the appraisers was an estimated cost approach less economic obsolescence based on utilization and rates per day worked trending over the prior year in the Middle East region where the vessels are intended to operate.
7.
STOCK REPURCHASES
SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire its Securities through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. As of March 31, 2017, the Company’s repurchase authority for the Securities was $147.0 million.
During the three months ended March 31, 2017, the Company purchased 110,298 shares of Common Stock for treasury for an aggregate purchase price of $7.6 million from its employees to cover their tax withholding obligations related to share award transactions. These shares were purchased in accordance with the terms of the Company’s Share Incentive Plans and not pursuant to the repurchase authorization granted by SEACOR’s Board of Directors.
8.
NONCONTROLLING INTERESTS IN SUBSIDIARIES
Noncontrolling interests in the Company’s consolidated subsidiaries were as follows (in thousands):
 
Noncontrolling Interests
 
March 31, 2017
 
December 31, 2016
Offshore Marine Services:
 
 
 
 
 
 
 
Falcon Global
50%
 
$
17,374

 
$

Windcat Workboats
25%
 
5,158

 
5,266

Other
1.8%
 
280

 
277

Inland River Services:
 
 
 
 
 
 
 
Other
3.0
%
51.8%
 
977

 
980

Shipping Services:
 
 
 
 
 
 
 
SEA-Vista
49%
 
112,458

 
106,054

Illinois Corn Processing
30%
 
23,021

 
22,647

Other
5.0
%
14.6%
 
151

 
152

 
 
 
 
 
$
159,419

 
$
135,376

Falcon Global. Falcon Global owns and operates two foreign-flag liftboats. In March 2017, the Company’s partner declined to participate in a capital call from Falcon Global and, as a consequence, the Company obtained 100% voting control of Falcon Global in accordance with the terms of the operating agreement. As a consequence, the Company has consolidated Falcon Global’s net assets of $34.7 million as of March 31, 2017 (see Note 3).

15


Windcat Workboats. Windcat Workboats owns and operates the Company’s wind farm utility vessels that are primarily used to move personnel and supplies in the major offshore wind markets of Europe. As of March 31, 2017, the net assets of Windcat Workboats were $20.6 million. During the three months ended March 31, 2017, the net loss of Windcat Workboats was $0.8 million, of which $0.2 million was attributable to noncontrolling interests. During the three months ended March 31, 2016, the net loss of Windcat Workboats was $2.5 million, of which $0.6 million was attributable to noncontrolling interests.
SEA-Vista. SEA-Vista owns and operates the Company’s fleet of U.S.-flag product tankers used in the U.S. coastwise trade of crude oil, petroleum and specialty chemical products. As of March 31, 2017, the net assets of SEA-Vista were $229.5 million. During the three months ended March 31, 2017, the net income of SEA-Vista was $13.1 million, of which $6.4 million was attributable to noncontrolling interests. During the three months ended March 31, 2016, the net income of SEA-Vista was $13.9 million, of which $6.8 million was attributable to noncontrolling interests.
Illinois Corn Processing. ICP owns and operates an alcohol manufacturing, storage and distribution facility located in Pekin, IL. As of March 31, 2017, the net assets of ICP were $76.7 million. During the three months ended March 31, 2017, the net income of ICP was $1.3 million, of which $0.4 million was attributable to noncontrolling interests. During the three months ended March 31, 2016, the net income of ICP was $1.4 million, of which $0.4 million was attributable to noncontrolling interests.
9.
MULTI-EMPLOYER PENSION PLANS
AMOPP. During the three months ended March 31, 2017, the Company received notification from the AMOPP that the Company’s withdrawal liability as of September 30, 2016 was $28.6 million based on an actuarial valuation performed as of that date. That liability may change in future years based on various factors, primarily employee census. As of March 31, 2017, the Company has no intention to withdraw from the AMOPP and no deficit amounts have been invoiced. Depending upon the results of the future actuarial valuations and the ten-year rehabilitation plan, it is possible that the AMOPP will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received or contribution levels are increased.
10.    SHARE BASED COMPENSATION
Transactions in connection with the Company’s share based compensation plans during the three months ended March 31, 2017 were as follows:
Director stock awards granted
750

Employee Stock Purchase Plan (“ESPP”) shares issued
14,624

Restricted stock awards granted

Restricted stock awards canceled

Stock Option Activities:
 
Outstanding as of December 31, 2016
1,639,865

Granted

Exercised
(100,127
)
Forfeited

Expired

Outstanding as of March 31, 2017
1,539,738

Shares available for future grants and ESPP purchases as of March 31, 2017
506,967

11.
COMMITMENTS AND CONTINGENCIES
The Company's capital commitments as of March 31, 2017 by year of expected payment were as follows (in thousands):
 
2017
 
2018
 
2019
 
2020
 
Total
Offshore Marine Services
$
13,817

 
$
53,050

 
$
13,183

 
$
1,800

 
$
81,850

Shipping Services
13,893

 

 

 

 
13,893

Inland River Services
20,465

 

 

 

 
20,465

Illinois Corn Processing
1,762

 
375

 

 

 
2,137

 
$
49,937

 
$
53,425

 
$
13,183

 
$
1,800

 
$
118,345


16


Offshore Marine Services' capital commitments included six fast support vessels, three supply vessels and one wind farm utility vessel. These commitments included $15.4 million for one supply vessel that may be assumed by a third party at their option. Shipping Services’ capital commitments included one U.S.-flag chemical and petroleum articulated tug-barge, two U.S.-flag harbor tugs and two foreign-flag harbor tugs. Inland River Services’ capital commitments included two inland river towboats, one 30,000 barrel inland river liquid tank barge and other equipment and improvements. Subsequent to March 31, 2017, the Company committed to purchase additional equipment for $9.7 million.
On December 15, 2010, ORM and NRC were named as defendants in one of the several “master complaints” filed in the overall multi-district litigation relating to the Deepwater Horizon oil spill response and clean-up in the Gulf of Mexico pending in the U.S. District Court for the Eastern District of Louisiana (the “MDL”). The “B3” master complaint naming ORM and NRC asserts various claims on behalf of a putative class against multiple defendants concerning the clean-up activities generally and the use of dispersants specifically. Both prior to and following the filing of the aforementioned master complaint, individual civil actions naming the Company, ORM, and/or NRC alleging B3 exposure-based injuries and/or damages were consolidated with the MDL and stayed pursuant to court order, discussed in turn below. The Company has continually taken the position that all of the B3 claims asserted against ORM and NRC have no merit. On February 16, 2016, all but eleven B3 claims against ORM and NRC were dismissed with prejudice, whether by joinder in the master complaint, individual complaint, or otherwise (the “B3 Dismissal Order”). The deadline for Plaintiffs to appeal the B3 Dismissal Order has passed and the Company continues to evaluate how this ruling will impact the individual civil actions. On April 8, 2016, the Court entered an order establishing a summary judgment briefing schedule as to the remaining eleven B3 claimants (the “Remaining Eleven Plaintiffs”). The Clean-Up Responder Defendants, including ORM and NRC, filed an omnibus motion for summary judgment as to the Remaining Eleven Plaintiffs on May 9, 2016. Following briefing by the parties, on August 2, 2016, the Court granted the omnibus motion as it concerns ORM and NRC in its entirety, dismissing the Remaining Eleven Plaintiffs’ against ORM and NRC with prejudice (the “Remaining Eleven Plaintiffs’ Dismissal Order”). To date, no appeal has been filed and the deadline to appeal has expired.
As noted above, various civil actions concerning the Deepwater Horizon clean-up have been consolidated with the MDL, although a number of them have been dismissed or otherwise resolved. A summary of those that remain pending is as follows. On October 3, 2012, ORM and NRC were served with a Rule 14(c) Third-Party Complaint by Jambon Supplier II, L.L.C. and Jambon Marine Holdings L.L.C. in their Limitation of Liability action, in the Matter of Jambon Supplier II, L.L.C., et al., No. 2:12-CV-00426 (E.D. La.) (the “Jambon Action”). This Third-Party Complaint alleges that if claimant David Dinwiddie, who served as a clean-up crewmember aboard the M/V JAMBON SUPPLIER II vessel during the clean-up efforts, was injured as a result of his exposure to dispersants and chemicals during the course and scope of his employment, then said injuries were caused by the third-party defendants. The Jambon Action remains stayed. On April 8, 2013, the Company, ORM, and NRC were named as defendants in William and Dianna Fitzgerald v. BP Exploration et al., No. 2:13-CV-00650 (E.D. La.) (the “Fitzgerald Action”), which is a suit by a husband and wife whose son allegedly participated in the clean-up effort and became ill as a result of his exposure to oil and dispersants. While the decedent in the Fitzgerald Action’s claims against ORM and NRC were dismissed by virtue of the Remaining Eleven Plaintiffs’ Dismissal Order, the claim as against the Company remains stayed. The Company continues to evaluate the impact of the B3 Dismissal Order, the Remaining Eleven Plaintiffs’ Dismissal Order, and other developments in the MDL, including the settlements discussed below, on these individual actions. Following a status conference with the Court on February 17, 2017, the Court issued several new pretrial orders in connection with the remaining claims in the MDL. Plaintiffs’ submissions in connection with these pretrial orders will continue until May 3, 2017, with defense reporting to the Court to follow. The Company is unable to estimate the potential exposure, if any, resulting from these matters, to the extent they remain viable, but believes they are without merit and does not expect that they will have a material effect on its consolidated financial position, results of operations or cash flows.
On February 18, 2011, Triton Asset Leasing GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., and Transocean Deepwater Inc. (collectively “Transocean”) named ORM and NRC as third-party defendants in a Rule 14(c) Third-Party Complaint in Transocean’s own Limitation of Liability Act action, which is part of the overall MDL, tendering to ORM and NRC the claims in the referenced master complaint that have already been asserted against ORM and NRC. Transocean, Cameron International Corporation (“Cameron”), Halliburton Energy Services, Inc., and M-I L.L.C. (“M-I”) also filed cross-claims against ORM and NRC for contribution and tort indemnity should they be found liable for any damages in Transocean's Limitation of Liability Act action and ORM and NRC asserted counterclaims against those same parties for identical relief. The remainder of the aforementioned cross-claims in Transocean's limitation action remain pending, although the Court has found Cameron and M-I to be not liable in connection with the Deepwater Horizon incident and resultant oil spill and dismissed these parties from the MDL. As indicated above, the Company is unable to estimate the potential exposure, if any, resulting from these actions but believes they are without merit and does not expect that these matters will have a material effect on its consolidated financial position, results of operations or cash flows.
On November 16, 2012, 668 individuals who served as beach clean-up workers in Escambia County, Florida during the Deepwater Horizon oil spill response commenced a civil action in the Circuit Court for the First Judicial Circuit of Florida, in and for Escambia County, Abney et al. v. Plant Performance Services, LLC et al., No. 2012-CA-002947, in which they allege, among other things, that ORM and other defendants engaged in the contamination of Florida waters and beaches in violation of Florida

17


Statutes Chapter 376 and injured the Plaintiffs by exposing them to dispersants during the course and scope of their employment. This case was removed to federal court and ultimately consolidated with the MDL on April 2, 2013. On April 22, 2013, a companion case to this matter was filed in the U.S. District Court for the Northern District of Florida, Abood et al. v. Plant Performance Services, LLC et al., No. 3:13-CV-00284 (N.D. Fla.), which alleges identical allegations against the same parties but names an additional 174 Plaintiffs, all of whom served as clean-up workers in various Florida counties during the Deepwater Horizon oil spill response. This case was consolidated with the MDL on May 10, 2013. By court order, both of these matters have been stayed since they were consolidated with the MDL. The Company continues to evaluate the impact of the developments in the MDL, including the settlements discussed below, on these cases, but believes that the potential exposure, if any, resulting from these matters has been reduced as a result of the B3 Dismissal Order and does not expect that these matters will have a material effect on its consolidated financial position, results of operations or cash flows.
Separately, on March 2, 2012, the Court announced that BP Exploration and BP America Production Company (“BP America”) (collectively “BP”) and the Plaintiffs had reached an agreement on the terms of two proposed class action settlements that will resolve, among other things, Plaintiffs’ economic loss claims and clean-up related claims against BP. Both settlements were granted final approval by the Court, all appeals have concluded, and the deadline for submitting claims with respect to both settlements has passed. Although neither the Company, ORM, nor NRC are parties to the settlement agreements, the Company, ORM, and NRC are listed as released parties on the releases accompanying both settlement agreements. Consequently, class members who did not file timely requests for exclusion will be barred from pursuing economic loss, property damage, personal injury, medical monitoring, and/or other released claims against the Company, ORM, and NRC. The Company believes these settlements have reduced the potential exposure, if any, from some of the pending actions described above, and continues to evaluate the settlements’ impacts on these cases.
In the course of the Company’s business, it may agree to indemnify the counterparty to an agreement. If the indemnified party makes a successful claim for indemnification, the Company would be required to reimburse that party in accordance with the terms of the indemnification agreement. Indemnification agreements generally are subject to threshold amounts, specified claim periods and other restrictions and limitations.
In connection with the SES Business Transaction, the Company remains contingently liable for certain obligations, including potential liabilities relating to work performed in connection with the Deepwater Horizon oil spill response. Pursuant to the agreement governing the sale, the Company’s potential liability to the purchaser may not exceed the consideration received by the Company for the SES Business Transaction. The Company is currently indemnified under contractual agreements with BP for the potential liabilities relating to work performed in connection with the Deepwater Horizon oil spill response.
In the normal course of its business, the Company becomes involved in various other litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

18


12.    SEGMENT INFORMATION
The Company’s segment presentation and basis of measurement of segment profit or loss are as previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments.

 
Offshore
Marine
Services
$’000
 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
ICP(1)(2)
$’000
 
Witt
O’Brien’s
’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
34,281

 
42,036

 
67,639

 
38,385

 
7,990

 
116

 

 
190,447

Intersegment
23

 
633

 

 

 
18

 

 
(674
)
 

 
34,304

 
42,669

 
67,639

 
38,385

 
8,008

 
116

 
(674
)
 
190,447

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
33,379

 
32,569

 
37,354

 
36,101

 
5,372

 

 
(811
)
 
143,964

Administrative and general
11,826

 
3,792

 
7,088

 
746

 
3,219

 
154

 
8,602

 
35,427

Depreciation and amortization
12,503

 
6,592

 
9,161

 
1,175

 
202

 

 
764

 
30,397

 
57,708

 
42,953

 
53,603

 
38,022

 
8,793

 
154

 
8,555

 
209,788

Gains (Losses) on Asset Dispositions and Impairments, Net
4,819

 
233

 
(421
)
 

 

 

 

 
4,631

Operating Income (Loss)
(18,585
)
 
(51
)
 
13,615

 
363

 
(785
)
 
(38
)
 
(9,229
)
 
(14,710
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative gains (losses), net
(89
)
 

 

 
334

 

 

 
2,830

 
3,075

Foreign currency gains (losses), net
(189
)
 
1,368

 
(5
)
 

 
10

 

 
26

 
1,210

Other, net
(1
)
 

 
(362
)
 
615

 

 
(300
)
 
242

 
194

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
438

 
(2,378
)
 
1,036

 

 
157

 
1,293

 

 
546

Segment Profit (Loss)
(18,426
)
 
(1,061
)
 
14,284

 
1,312

 
(618
)
 
955

 
 
 
 
Other Income (Expense) not included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
21,913

Less Equity Earnings included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
(546
)
Income Before Taxes and Equity Earnings
 
 
 
 
 
 
 
 
 
11,682

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
10,143

 
12,819

 
52,619

 
664

 
35

 

 
1,337

 
77,617

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Historical cost
1,089,176

 
433,382

 
872,285

 
56,756

 
1,559

 

 
29,493

 
2,482,651

Accumulated depreciation
(534,522
)
 
(173,249
)
 
(267,163
)
 
(24,864
)
 
(1,262
)
 

 
(18,949
)
 
(1,020,009
)
 
554,654

 
260,133

 
605,122

 
31,892

 
297

 

 
10,544

 
1,462,642

Construction in progress
83,710

 
12,014

 
127,734

 
1,317

 
34

 

 

 
224,809

Net property and equipment
638,364

 
272,147

 
732,856

 
33,209

 
331

 

 
10,544

 
1,687,451

Investments, at Equity, and Advances to 50% or Less Owned Companies
114,767

 
68,193

 
54,514

 

 
758

 
58,930

 

 
297,162

Inventories
3,421

 
1,812

 
1,086

 
12,913

 
153

 

 

 
19,385

Goodwill

 
2,429

 
1,852

 

 
28,506

 

 

 
32,787

Intangible Assets

 
11,642

 

 

 
7,877

 

 

 
19,519

Other current and long-term assets, excluding cash and near cash assets(3)
66,225

 
57,575

 
23,999

 
8,578

 
17,665

 
11,988

 
43,532

 
229,562

Segment Assets
822,777

 
413,798

 
814,307

 
54,700

 
55,290

 
70,918

 
 
 
 
Cash and near cash assets(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
669,112

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,954,978

______________________
(1)
Operating revenues includes $35.7 million of tangible product sales and operating expenses includes $33.4 million of costs of goods sold.
(2)
Inventories includes raw materials of $1.8 million and work in process of $1.5 million.
(3)
Cash and near cash assets includes cash, cash equivalents, restricted cash, marketable securities and construction reserve funds.

19


 
Offshore
Marine
Services
$’000
 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
ICP(1)(2)
$’000
 
Witt
O’Brien’s
’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External customers
59,853

 
39,028

 
57,055

 
49,609

 
8,248

 
135

 

 
213,928

Intersegment
26

 
586

 

 

 
36

 

 
(648
)
 

 
59,879

 
39,614

 
57,055

 
49,609

 
8,284

 
135

 
(648
)
 
213,928

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
48,850

 
30,118

 
27,234

 
46,289

 
5,805

 

 
(828
)
 
157,468

Administrative and general
12,398

 
3,912

 
6,918

 
656

 
3,973

 
250

 
7,597

 
35,704

Depreciation and amortization
14,838

 
7,137

 
6,562

 
1,053

 
455

 

 
944

 
30,989

 
76,086

 
41,167

 
40,714

 
47,998

 
10,233

 
250

 
7,713

 
224,161

Gains (Losses) on Asset Dispositions and Impairments, Net
(380
)
 
605

 
(6
)
 

 
(2
)
 

 

 
217

Operating Income (Loss)
(16,587
)
 
(948
)
 
16,335

 
1,611

 
(1,951
)
 
(115
)
 
(8,361
)
 
(10,016
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative gains (losses), net
2,898

 

 

 
(187
)
 

 

 
(91
)
 
2,620

Foreign currency gains (losses), net
(1,560
)
 
1,437

 
(3
)
 

 
(26
)
 
(1
)
 
190

 
37

Other, net
265

 

 
1

 

 

 

 
2

 
268

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
2,161

 
(2,778
)
 
26

 

 
86

 
456

 

 
(49
)
Segment Profit (Loss)
(12,823
)
 
(2,289
)
 
16,359

 
1,424

 
(1,891
)
 
340

 
 
 
 
Other Income (Expense) not included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
(28,215
)
Less Equity Earnings included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
49

Loss Before Taxes and Equity Earnings (Losses)
 
 
 
 
 
 
 
 
 
(35,306
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
20,907

 
1,970

 
23,894

 
686

 

 

 
(21
)
 
47,436

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Historical cost
1,099,063

 
379,310

 
451,347

 
51,341

 
3,053

 

 
31,091

 
2,015,205

Accumulated depreciation
(557,968
)
 
(148,779
)
 
(240,652
)
 
(20,443
)
 
(2,613
)
 

 
(15,593
)
 
(986,048
)
 
541,095

 
230,531

 
210,695

 
30,898

 
440

 

 
15,498

 
1,029,157

Construction in progress
117,809

 
9,136

 
357,296

 
2,031

 

 

 
(1,800
)
 
484,472

Held for sale equipment

 
86,332

 

 

 

 

 

 
86,332

Net property and equipment
658,904


325,999


567,991


32,929


440




13,698

 
1,599,961

Investments, at Equity, and Advances to 50% or Less Owned Companies
135,406

 
79,478

 
63,365

 

 
460

 
55,661

 

 
334,370

Inventories
3,199

 
1,268

 
544

 
13,325

 
95

 

 

 
18,431

Goodwill

 
2,400

 
1,852

 

 
48,124

 

 

 
52,376

Intangible Assets
1,017

 
5,744

 

 

 
18,989

 

 

 
25,750

Other current and long-term assets, excluding cash and near cash assets(3)
93,050

 
45,383

 
26,319

 
7,969

 
18,933

 
14,591

 
12,037

 
218,282

Segment Assets
891,576

 
460,272

 
660,071

 
54,223

 
87,041

 
70,252

 
 
 
 
Cash and near cash assets(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
862,717

Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,111,887

______________________
(1)
Operating revenues includes $46.6 million of tangible product sales and operating expenses includes $43.3 million of costs of goods sold.
(2)
Inventories includes raw materials of $2.5 million and work in process of $1.5 million.
</
(3)
Cash and near cash assets includes cash, cash equivalents, marketable securities and construction reserve funds.