Table of Contents

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 September 30, 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 October 27, 2017 was 17,859,335. The Registrant has no other class of common stock outstanding.


Table of Contents

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

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS
SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
 
September 30,
2017
 
December 31,
2016
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
267,156

 
$
256,638

Restricted cash
2,436

 
2,249

Marketable securities
62,606

 
76,137

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts of $2,400 and $2,989 in 2017 and 2016, respectively
83,287

 
108,641

Other
38,176

 
35,482

Inventories
3,952

 
2,582

Prepaid expenses and other
6,741

 
3,707

Discontinued operations

 
277,365

Total current assets
464,354

 
762,801

Property and Equipment:
 
 
 
Historical cost
1,483,434

 
1,178,556

Accumulated depreciation
(487,049
)
 
(444,559
)
 
996,385

 
733,997

Construction in progress
22,769

 
246,010

Net property and equipment
1,019,154

 
980,007

Investments, at Equity, and Advances to 50% or Less Owned Companies
175,387

 
175,461

Construction Reserve Funds
51,846

 
75,753

Goodwill
32,773

 
32,758

Intangible Assets, Net
30,655

 
20,078

Other Assets
8,796

 
17,189

Discontinued Operations

 
798,274

 
$
1,782,965

 
$
2,862,321

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current portion of long-term debt
$
119,840

 
$
163,202

Accounts payable and accrued expenses
31,518

 
59,563

Other current liabilities
70,762

 
62,164

Discontinued operations

 
85,020

Total current liabilities
222,120

 
369,949

Long-Term Debt
619,712

 
631,084

Exchange Option Liability on Subsidiary Convertible Senior Notes

 
19,436

Deferred Income Taxes
165,093

 
157,441

Deferred Gains and Other Liabilities
81,238

 
98,098

Discontinued Operations

 
390,045

Total liabilities
1,088,163

 
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; 38,473,585 and 37,939,032 shares issued in 2017 and 2016, respectively
385

 
379

Additional paid-in capital
1,557,086

 
1,518,635

Retained earnings
377,700

 
910,723

Shares held in treasury of 20,614,250 and 20,538,327 in 2017 and 2016, respectively, at cost
(1,363,558
)
 
(1,357,331
)
Accumulated other comprehensive loss, net of tax
(266
)
 
(11,514
)
 
571,347

 
1,060,892

Noncontrolling interests in subsidiaries
123,455

 
135,376

Total equity
694,802

 
1,196,268

 
$
1,782,965

 
$
2,862,321

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

1

Table of Contents

SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except share data, unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Operating Revenues
$
158,171

 
$
109,570

 
$
392,376

 
$
314,269

Costs and Expenses:
 
 
 
 
 
 
 
Operating
107,258

 
66,573

 
252,156

 
193,636

Administrative and general
20,531

 
20,931

 
68,949

 
64,968

Depreciation and amortization
20,501

 
15,864

 
54,689

 
46,005

 
148,290

 
103,368

 
375,794

 
304,609

Gains (Losses) on Asset Dispositions and Impairments, Net
5,209

 
(593
)
 
10,918

 
2,590

Operating Income
15,090

 
5,609

 
27,500

 
12,250

Other Income (Expense):
 
 
 
 
 
 
 
Interest income
2,367

 
4,492

 
6,651

 
13,100

Interest expense
(9,121
)
 
(9,955
)
 
(31,101
)
 
(29,892
)
Debt extinguishment gains (losses), net
3

 
557

 
(94
)
 
5,395

Marketable security losses, net
(12,478
)
 
(9,484
)
 
(13,316
)
 
(52,454
)
Derivative gains (losses), net

 
(862
)
 
19,727

 
(3,527
)
Foreign currency gains, net
969

 
418

 
898

 
2,812

Other, net
64

 
(5,461
)
 
68

 
(13,110
)
 
(18,196
)
 
(20,295
)
 
(17,167
)
 
(77,676
)
Income (Loss) from Continuing Operations Before Income Tax Benefit and Equity in Earnings (Losses) of 50% or Less Owned Companies
(3,106
)
 
(14,686
)
 
10,333

 
(65,426
)
Income Tax Benefit
(12,795
)
 
(7,164
)
 
(12,563
)
 
(29,921
)
Income (Loss) from Continuing Operations Before Equity in Earnings (Losses) of 50% or Less Owned Companies
9,689

 
(7,522
)
 
22,896

 
(35,505
)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
488

 
(1,112
)
 
2,929

 
(7,169
)
Income (Loss) from Continuing Operations
10,177

 
(8,634
)
 
25,825

 
(42,674
)
Income (Loss) from Discontinued Operations, Net of Tax
10,927

 
(25,392
)
 
(23,150
)
 
(62,809
)
Net Income (Loss)
21,104

 
(34,026
)
 
2,675

 
(105,483
)
Net Income attributable to Noncontrolling Interests in Subsidiaries
3,543

 
5,777

 
13,839

 
16,665

Net Income (Loss) attributable to SEACOR Holdings Inc.
$
17,561

 
$
(39,803
)
 
$
(11,164
)
 
$
(122,148
)
Basic Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
 
 
 
 
Continuing operations
$
0.38

 
$
(0.82
)
 
$
0.55

 
$
(3.45
)
Discontinued operations
0.62

 
(1.53
)
 
(1.20
)
 
(3.78
)
 
$
1.00

 
$
(2.35
)
 
$
(0.65
)
 
$
(7.23
)
Diluted Earnings (Loss) Per Common Share of SEACOR Holdings Inc.:
 
 
 
 
 
 
Continuing operations
$
0.38

 
$
(0.82
)
 
$
0.55

 
$
(3.45
)
Discontinued operations
0.62

 
(1.53
)
 
(1.19
)
 
(3.78
)
 
$
1.00

 
$
(2.35
)
 
$
(0.64
)
 
$
(7.23
)
Weighted Average Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
17,508,770

 
16,943,647

 
17,265,140

 
16,896,751

Diluted
17,637,824

 
16,943,647

 
17,510,560

 
16,896,751




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

2

Table of Contents

SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net Income (Loss)
$
21,104

 
$
(34,026
)
 
$
2,675

 
$
(105,483
)
Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Foreign currency translation gains (losses)
425

 
(305
)
 
2,147

 
(6,641
)
Reclassification of foreign currency translation losses to foreign currency gains, net

 
74

 

 
74

Derivative losses on cash flow hedges

 
(187
)
 
(389
)
 
(3,855
)
Reclassification of derivative losses on cash flow hedges to interest expense

 
9

 
33

 
9

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

 
785

 
109

 
2,111

Other
5

 
(7
)
 
(11
)
 
(16
)
 
430

 
369

 
1,889

 
(8,318
)
Income tax benefit (expense)
(151
)
 
(182
)
 
(605
)
 
2,612

 
279

 
187

 
1,284

 
(5,706
)
Comprehensive Income (Loss)
21,383

 
(33,839
)
 
3,959

 
(111,189
)
Comprehensive Income attributable to Noncontrolling Interests in Subsidiaries
3,543

 
5,625

 
14,000

 
15,810

Comprehensive Income (Loss) attributable to SEACOR Holdings Inc.
$
17,840

 
$
(39,464
)
 
$
(10,041
)
 
$
(126,999
)




























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

3

Table of Contents

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

 

 

 
1,443

 

 

 
1,443

Exercise of stock options
4

 
14,980

 

 

 

 

 
14,984

Director stock awards

 
63

 

 

 

 

 
63

Restricted stock
2

 
(2
)
 

 

 

 

 

Exercise of conversion option in convertible debt

 
3

 

 

 

 

 
3

Distribution of SEACOR Marine stock to shareholders

 
2,656

 
(521,859
)
 

 
10,125

 
(18,613
)
 
(527,691
)
Purchase of conversion option in convertible debt, net of tax

 
(927
)
 

 

 

 

 
(927
)
Purchase of treasury shares

 

 

 
(7,569
)
 

 

 
(7,569
)
Amortization of share awards

 
22,691

 

 

 

 

 
22,691

Cancellation of restricted stock

 
101

 

 
(101
)
 

 

 

Purchase of subsidiary shares from noncontrolling interests

 
(1,114
)
 

 

 

 
(2,579
)
 
(3,693
)
Consolidation of 50% or less owned companies

 

 

 

 

 
17,374

 
17,374

Disposition of subsidiary with noncontrolling interests

 

 

 

 

 
(14,673
)
 
(14,673
)
Distributions to noncontrolling interests

 

 

 

 

 
(7,430
)
 
(7,430
)
Net income (loss)

 

 
(11,164
)
 

 

 
13,839

 
2,675

Other comprehensive income

 

 

 

 
1,123

 
161

 
1,284

Nine Months Ended September 30, 2017
$
385

 
$
1,557,086

 
$
377,700

 
$
(1,363,558
)
 
$
(266
)
 
$
123,455

 
$
694,802
























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

4

Table of Contents

SEACOR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
Net Cash Provided by Operating Activities of Continuing Operations
$
85,088

 
$
60,547

Cash Flows from Investing Activities of Continuing Operations:
 
 
 
Purchases of property and equipment
(99,306
)
 
(207,825
)
Proceeds from disposition of property and equipment
27,614

 
142,076

Investments in and advances to 50% or less owned companies
(7,636
)
 
(4,464
)
Return of investments and advances from 50% or less owned companies
9,676

 
8,361

Proceeds on the sale of a controlling interest in a subsidiary
5,000

 

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

 
(1,099
)
(Issuances of) payments received on third party leases and notes receivable, net
24,349

 
(1,824
)
Net increase in restricted cash
(187
)
 
(2,244
)
Withdrawals from construction reserve funds
37,714

 
16,827

Deposits into construction reserve funds
(13,807
)
 

Business acquisitions, net of cash acquired
5,250

 

Net cash used in investing activities of continuing operations
(11,333
)
 
(50,192
)
Cash Flows from Financing Activities of Continuing Operations:
 
 
 
Payments on long-term debt and capital lease obligations
(133,151
)
 
(131,196
)
Proceeds from issuance of long-term debt, net of issue costs
38,900

 
78,380

Purchase of conversion option in convertible debt
(1,354
)
 
(7,096
)
Common stock acquired for treasury
(7,569
)
 
(2,396
)
Proceeds from share award plans
16,427

 
1,618

Distributions to noncontrolling interests

 
(200
)
Net cash used in financing activities of continuing operations
(86,747
)
 
(60,890
)
Effects of Exchange Rate Changes on Cash and Cash Equivalents
856

 
(1,937
)
Net Decrease in Cash and Cash Equivalents from Continuing Operations
(12,136
)
 
(52,472
)
Cash Flows from Discontinued Operations:
 
 
 
Operating Activities
26,875

 
17,338

Investing Activities
2,720

 
(14,304
)
Financing Activities
(7,149
)
 
7,753

Effects of Exchange Rate Changes on Cash and Cash Equivalents
208

 
499

Net Increase in Cash and Cash Equivalents from Discontinued Operations
22,654

 
11,286

Net Increase (Decrease) in Cash and Cash Equivalents
10,518

 
(41,186
)
Cash and Cash Equivalents, Beginning of Period
256,638

 
357,146

Cash and Cash Equivalents, End of Period
$
267,156

 
$
315,960











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

5

Table of Contents

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 and nine months ended September 30, 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 September 30, 2017, its results of operations for the three and nine months ended September 30, 2017 and 2016, its comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016, its changes in equity for the nine months ended September 30, 2017, and its cash flows for the nine months ended September 30, 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.
Discontinued Operations. On June 1, 2017, the Company completed the spin-off of SEACOR Marine Holdings Inc. (“SEACOR Marine”), the company that operated SEACOR’s Offshore Marine Services business segment (the “Spin-off”), by means of a dividend of all the issued and outstanding common stock of SEACOR Marine to SEACOR’s shareholders. SEACOR Marine is now an independent company whose common stock is listed on the New York Stock Exchange under the symbol “SMHI.” For all periods presented herein, the Company has reported the historical financial position, results of operations and cash flows of SEACOR Marine as discontinued operations (see Note 15).
On July 3, 2017, the Company completed the sale of its 70% interest in Illinois Corn Processing LLC (“ICP”), the company that operated SEACOR’s Illinois Corn Processing business segment, through a merger transaction whereby the Company received $21.0 million in cash and a note from the buyer for $32.8 million after working capital adjustments resulting in a third quarter gain of $10.9 million, net of tax. On September 15, 2017, the Company received payment of the outstanding balance of the note, including accrued and unpaid interest. For all periods presented herein, the Company has reported the historical financial position, results of operations and cash flows of ICP as discontinued operations (see Note 15).
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.
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

Table of Contents

As of September 30, 2017, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:
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
Articulated tug-barge - U.S.-flag
25
Dry-bulk carrier - U.S.-flag
25
Short-sea container/RORO(1) vessels
20
Harbor and offshore tugs
25
Ocean liquid tank barges
25
Terminal facilities
20
______________________
(1)
Roll on/Roll off (“RORO”).
Equipment maintenance and repair costs including 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 nine months ended September 30, 2017, capitalized interest totaled $2.4 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 value and impairment charges are recorded if the carrying value exceeds fair value. The Company performs its testing on an asset or asset group basis. The Company’s estimates of undiscounted cash flows are highly subjective and actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the nine months ended September 30, 2017 and 2016, the Company recognized impairment charges of $0.4 million and $1.1 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 nine months ended September 30, 2017, the Company recognized an impairment charge of $0.9 million, net of tax, related to its 50% or less owned companies. During the nine months ended September 30, 2016, the Company did not recognize any impairment charges related to its 50% or less owned companies.
Income Taxes. During the nine months ended September 30, 2017, the Company’s effective income tax rate of (121.6)% was primarily due to the reversal of a provision related to potential tax exposures surrounding the spin-off of Era Group Inc. (“Era Group”) by means of a dividend to SEACOR’s shareholders of all the issued and outstanding common stock of Era Group (the “Era Spin-off”) and taxes not provided on income attributable to noncontrolling interests (see Note 6).

7

Table of Contents

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 nine months ended September 30 was as follows (in thousands):
 
2017
 
2016
Balance at beginning of period
$
82,423

 
$
92,610

Adjustments to deferred gains arising from asset sales
7,720

 
9,003

Amortization of deferred gains included in operating expenses as a reduction to rental expense
(11,126
)
 
(11,219
)
Amortization of deferred gains included in gains (losses) on asset dispositions and impairments, net
(1,764
)
 
(1,816
)
Other

 
(1,697
)
Balance at end of period
$
77,253

 
$
86,881

Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income (loss) were as follows (in thousands):
 
SEACOR Holdings Inc. Stockholders’ Equity
 
Noncontrolling Interests
 
 
 
Foreign
Currency
Translation
Adjustments
 
Derivative
Gains 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

 
 
Distribution of SEACOR Marine stock to shareholders
10,031

 
94

 

 
10,125

 

 

 

 
 
Other comprehensive income (loss)
1,994

 
(260
)
 
(6
)
 
1,728

 
153

 
13

 
(5
)
 
$
1,889

Income tax (expense) benefit
(698
)
 
91

 
2

 
(605
)
 

 

 

 
(605
)
Nine Months Ended September 30, 2017
$
(266
)
 
$

 
$

 
$
(266
)
 
$
(1,460
)
 
$
(4
)
 
$
(2
)
 
$
1,284

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.

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Computations of basic and diluted earnings (loss) per common share of SEACOR were as follows (in thousands, except share data):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
Net Income (Loss) attributable to SEACOR
 
Average O/S Shares
 
Per Share
 
Net Loss Attributable to SEACOR
 
Average O/S Shares
 
Per Share
2017
 
 
 
 
 
 
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
17,561

 
17,508,770

 
$
1.00

 
$
(11,164
)
 
17,265,140

 
$
(0.65
)
Effect of Dilutive Share Awards:
 
 
 
 
 
 
 
 
 
 
 
Options and Restricted Stock(1)

 
129,054

 
 
 

 
245,420

 
 
Convertible Notes(2)

 

 
 
 

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
17,561

 
17,637,824

 
$
1.00

 
$
(11,164
)
 
17,510,560

 
$
(0.64
)
2016
 
 
 
 
 
 
 
 
 
 
 
Basic Weighted Average Common Shares Outstanding
$
(39,803
)
 
16,943,647

 
$
(2.35
)
 
$
(122,148
)
 
16,896,751

 
$
(7.23
)
Effect of Dilutive Share Awards:
 
 
 
 
 
 
 
 
 
 
 
Options and Restricted Stock(3)

 

 
 
 

 

 
 
Convertible Notes(4)

 

 
 
 

 

 
 
Diluted Weighted Average Common Shares Outstanding
$
(39,803
)
 
16,943,647

 
$
(2.35
)
 
$
(122,148
)
 
16,896,751

 
$
(7.23
)
______________________
(1)
For the three and nine months ended September 30, 2017, diluted earnings (loss) per common share of SEACOR excluded 1,727,132 and 2,638,753, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive. Diluted weighted average shares outstanding are calculated based on continuing operations.
(2)
For the three and nine months ended September 30, 2017, diluted earnings (loss) per common share of SEACOR excluded 1,889,027 and 2,488,460, respectively, of common shares issuable pursuant to the Company’s 2.5% Convertible Senior Notes and 2,801,147 and 2,801,147, respectively, of common shares issuable pursuant to the Company’s 3.0% Convertible Senior Notes as the effect of their inclusion in the computation would be anti-dilutive.
(3)
For the three and nine months ended September 30, 2016, diluted loss per common share of SEACOR excluded 2,041,652 and 2,041,652, respectively, of certain share awards as the effect of their inclusion in the computation would be anti-dilutive.
(4)
For the three and nine months ended September 30, 2016, diluted loss per common share of SEACOR excluded 2,382,626 and 2,910,688, respectively, of common shares issuable pursuant to the Company’s 2.5% Convertible Senior Notes, 1,825,326 and 1,825,326, respectively, of common shares issuable pursuant to the Company’s 3.0% Convertible Senior Notes and 2,243,500 and 2,243,500, respectively, of 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 currently 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 barge pooling arrangements may result in a gross presentation of operating revenues and expenses for pooled third party equipment resulting in a material increase in operating revenues and expenses, however operating income would remain unchanged.
On February 25, 2016, the FASB issued a comprehensive new leasing standard, which is meant to improve 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

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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 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 does not expect the adoption of the new standard will have a material impact 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 unit’s 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. BUSINESS ACQUISITIONS
ISH. On July 3, 2017, International Shipholding Corporation (“ISH”) emerged from bankruptcy pursuant to its chapter 11 plan of reorganization (the “Plan”) by the U.S. Bankruptcy Court for the Southern District of New York. Pursuant to the Plan, SEACOR Ocean Transport Inc., a wholly-owned subsidiary of SEACOR, acquired all of the equity of the reorganized ISH. Under the terms of the Plan, the Company paid $10.5 million in cash, converted $18.1 million of debtor-in-possession financing into equity and assumed $28.7 million of debt primarily from a new credit facility that is secured by the assets and equity of ISH and is non-recourse to SEACOR and its subsidiaries other than ISH (see Note 5). ISH, through its subsidiaries, operates a diversified fleet of U.S. and foreign-flag vessels including Pure Car/Truck Carriers (“PCTCs”) and U.S.-flag dry-cargo bulk carriers that provide worldwide and domestic maritime transportation services to commercial and governmental customers. In addition, ISH has investments in two 50% or less owned companies that operate two foreign-flag rail ferries and a railcar repair and maintenance facility. The Company has excluded pro forma financial information with respect to the ISH acquisition as financial information for the specific assets acquired under the Plan were not material or reasonably attainable. The Company performed a preliminary fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair value resulting in no goodwill being recorded.
Purchase Price Allocation. The allocation of the purchase price for the Company’s acquisition for the nine months ended September 30, 2017 was as follows (in thousands):
Marketable securities
$
13

Trade and other receivables
15,420

Other current assets
2,055

Investments, at Equity, and Advances to 50% or Less Owned Companies
10,000

Property and Equipment
15,478

Intangible Assets
12,658

Other Assets(1)
(17,863
)
Accounts payable and other accrued liabilities
(18,183
)
Long-Term Debt (including current portion)
(28,725
)
Deferred Income Taxes
3,939

Other Liabilities
(42
)
Purchase price(2)
$
(5,250
)
______________________
(1)
Other Assets is net of debtor-in-possession financing converted into equity of $18.1 million.
(2)
Purchase price is net of cash acquired totaling $15.7 million.

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3. EQUIPMENT ACQUISITIONS AND DISPOSITIONS
During the nine months ended September 30, 2017, capital expenditures were $99.3 million and primarily related to equipment ordered prior to 2017. Equipment deliveries during the nine months ended September 30, 2017 included two inland river liquid tank barges, three inland river towboats, one U.S.-flag articulated tug-barge, one U.S.-flag product tanker, one U.S.-flag harbor tug and two foreign-flag harbor tugs.
During the nine months ended September 30, 2017, the Company sold 50 dry-cargo barges, two inland river towboats and other property and equipment for net proceeds of $27.6 million and gains of $17.6 million, of which $9.9 million were recognized currently and $7.7 million were deferred (see Note 1). Equipment dispositions included the sale-leaseback of 50 dry-cargo barges for $12.5 million with leaseback terms of 84 months. In addition, the Company recognized previously deferred gains of $1.8 million. The Company also recognized a loss of $0.4 million related to the total loss of one inland river specialty barge.
4. INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES
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 nine months ended September 30, 2017, the Company and its partner each contributed capital of $0.4 million and made working capital advances of $0.5 million to SCFCo, received working capital repayments of $1.7 million from SCFCo and converted $4.2 million of loans to capital. As of September 30, 2017, the Company had outstanding loans and working capital advances to SCFCo of $27.4 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 nine months ended September 30, 2017, the Company provided advances of $2.0 million to Trailer Bridge and received repayments of $2.1 million from Trailer Bridge on the secured financing. As of September 30, 2017, the outstanding amount on the secured financing was $3.9 million, inclusive of accrued and unpaid interest.
SeaJon. SeaJon owned an articulated tug-barge operating in the Great Lakes trade that was sold to a third party in June 2017. During the nine months ended September 30, 2017, the Company received dividends of $12.5 million and capital distributions of $3.5 million from SeaJon.
Kotug. On April 1, 2017, the Company and Kotug Caribbean Holdings LLC formed Kotug Seabulk Maritime LLC (“Kotug”) to operate four foreign-flag harbor tugs and one foreign-flag ocean liquid tank barge in Freeport, Grand Bahama. The Company has a 50% ownership interest in Kotug. During the nine months ended September 30, 2017, the Company and its partner each contributed capital of $0.3 million.
RF Vessel Holdings. On July 3, 2017, ISH emerged from bankruptcy pursuant to its chapter 11 plan of reorganization and SEACOR Ocean Transport Inc., a wholly-owned subsidiary of SEACOR, acquired all of the equity of the reorganized ISH (see Note 2). As part of the ISH business acquisition, the Company acquired a 100% interest in Rail-Ferry Vessel Holdings LLC (“RF Vessel Holdings”), which owns two foreign-flag rail ferries. On September 1, 2017, the Company sold a 50% interest in RF Vessel Holdings to G&W Agave Holdings (MI) Inc. for $1.9 million and retained a 50% ownership interest in the newly-formed joint venture.
Golfo de Mexico. On July 3, 2017, ISH emerged from bankruptcy pursuant to its chapter 11 plan of reorganization and SEACOR Ocean Transport Inc., a wholly-owned subsidiary of SEACOR, acquired all of the equity of the reorganized ISH (see Note 2). As part of the ISH business acquisition, the Company acquired a 100% interest in Golfo de Mexico Rail-Ferry Holdings LLC (“Golfo de Mexico”), which operates the two foreign-flag rail ferries owned by RF Vessel Holdings. On September 1, 2017, the Company sold a 50% interest in Golfo de Mexico to G&W Agave Holdings (MI) Inc. for $3.1 million and retained a 50% ownership interest in the newly-formed joint venture.
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 to VA&E. During the nine months ended September 30, 2017, VA&E borrowed $3.5 million on the credit facility. As of September 30, 2017, the outstanding balance on the credit facility and subordinated loan was $7.5 million, inclusive of accrued and unpaid interest. During the nine months ended September 30, 2017, the Company identified indicators of impairment for its investment in VA&E based on their recent financial results and recognized an impairment charge of $0.9 million, net of tax, for an other-than-temporary decline in the fair value of its investment in VA&E (see Note 8).
    Avion. Avion is a distributor of aircraft and aircraft related parts. During the nine months ended September 30, 2017, the Company made advances of $1.0 million to Avion and received repayments of $2.0 million from Avion. As of September 30, 2017, the Company had outstanding advances to Avion of $2.0 million.

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5. LONG-TERM DEBT
SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire SEACOR 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 September 30, 2017, the Company’s remaining repurchase authority for the Securities was $77.4 million.
3.0% Convertible Senior Notes. In connection with the Spin-off, the conversion rate of the 3.0% Convertible Senior Notes was adjusted to 12.1789. The Company has reserved the maximum number of shares of Common Stock needed for conversion, or 2,801,147 shares as of September 30, 2017.
2.5% Convertible Senior Notes. During the nine months ended September 30, 2017, the Company repurchased $61.7 million in principal amount of its 2.5% Convertible Senior Notes for total consideration of $61.9 million. Consideration of $60.5 million was allocated to the settlement of the long-term debt resulting in debt extinguishment gains of $0.1 million included in the accompanying condensed consolidated statements of income (loss). Consideration of $1.4 million was allocated to the purchase of the conversion option embedded in the 2.5% Convertible Senior Notes as included in the accompanying consolidated statements of changes in equity. As of September 30, 2017, the remaining principal amount outstanding of $95.5 million is included in current liabilities as the holders may require the Company to repurchase these notes on December 19, 2017.
In connection with the Spin-off, the conversion rate of the 2.5% Convertible Senior Notes was adjusted to 18.4176. The Company has reserved the maximum number of shares of Common Stock needed for conversion, or 1,758,107 shares as of September 30, 2017.
7.375% Senior Notes. During the nine months ended September 30, 2017, the Company repurchased $7.6 million in principal amount of its 7.375% Senior Notes for $7.7 million resulting in debt extinguishment losses of $0.2 million included in the accompanying condensed consolidated statements of income (loss). The outstanding principal amount of these notes outstanding was $153.1 million as of September 30, 2017.
SEA-Vista Credit Facility. During the nine months ended September 30, 2017, SEA-Vista borrowed $38.9 million and repaid $45.9 million on the Revolving Loan and made scheduled repayments of $3.6 million on the Term A-1 Loan and $3.0 million on the Term A-2 Loan. As of September 30, 2017, SEA-Vista had $21.0 million of remaining borrowing capacity under the Revolving Loan. Subsequent to September 30, 2017, SEA-Vista borrowed $6.0 million on the Revolving Loan.
ISH Credit Facility. On July 3, 2017, ISH emerged from bankruptcy pursuant to the Plan (see Note 2). In conjunction with the emergence under the Plan, ISH assumed debt of $25.0 million under a credit facility that matures in July 2020. The facility consists of two tranches: (i) a $5.0 million revolving credit facility (the “ISH Revolving Loan”) and (ii) a $20.0 million term loan (the “ISH Term Loan”) (collectively the “ISH Credit Facility”). ISH incurred $0.1 million of issuance costs. The proceeds from this facility will be used for general working capital purposes and payments to ISH’s creditors in accordance with the Plan. During the nine months ended September 30, 2017, ISH repaid $7.2 million on the ISH Term Loan and $5.0 million on the ISH Revolving Loan.
Both loans bear interest at a variable rate of either LIBOR multiplied by the Statutory Reserve Rate or Prime Rate plus an applicable margin, as defined in the ISH Credit Facility. A quarterly fee of 0.5% is payable on the unused commitment of the ISH Revolving Loan. Beginning September 30, 2017, ISH is required to make quarterly prepayments on the ISH Term Loan of $0.7 million. Commencing with the calendar year ending December 31, 2018, ISH is required to make annual prepayments on the ISH Term Loan in an amount equal to 50% of excess cash flow as defined in the credit agreement.
The ISH Credit Facility contains various financial and restrictive covenants including indebtedness to EBITDA and adjusted EBITDA to interest expense maintenance, as defined in the ISH Credit Facility. The ISH Credit Facility is non-recourse to SEACOR and its subsidiaries other than ISH. As of September 30, 2017, the ISH Credit Facility had $5.0 million of remaining borrowing capacity under the ISH Revolving Loan.
Other. During the nine months ended September 30, 2017 the Company acquired $3.9 million of debt related to the ISH acquisition (see Note 2). This debt bears interest at 7.0% and is collateralized by certain acquired assets. During the nine months ended September 30, 2017, the Company made scheduled payments on other long-term debt of $0.3 million.
Letters of Credit. As of September 30, 2017, the Company had outstanding letters of credit totaling $27.2 million with various expiration dates through 2019, including $16.7 million that have been issued on behalf of SEACOR Marine.
Guarantees. The Company has guaranteed the payments of amounts owed under certain sale-leaseback transactions, equipment financing and multi-employer pension obligations on behalf of SEACOR Marine. As of September 30, 2017, these guarantees on behalf of SEACOR Marine totaled $84.9 million and decline as payments are made on the outstanding obligations.

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The Company earns a fee of 50 basis points per annum on these guarantees and outstanding letters of credit. For the three and nine months ended September 30, 2017, the Company earned fees of $0.1 million and $0.5 million, respectively. For the three and nine months ended September 30, 2016, the Company earned fees of $0.1 million and $0.6 million, respectively.
6. INCOME TAXES
The following table reconciles the difference between the statutory federal income tax rate for the Company and the effective income tax rate on continuing operations for the nine months ended September 30, 2017:
Statutory rate
35.0
 %
Income subject to tonnage tax
(3.4
)%
Reversal of uncertain tax position
(97.9
)%
Non-deductible expenses
1.3
 %
Noncontrolling interests
(55.1
)%
Losses of foreign subsidiaries not benefited
(13.1
)%
State taxes
5.3
 %
Share award plans
6.3
 %
 
(121.6
)%
During the year ended December 31, 2013, the Company provided for income taxes of $10.1 million relating to potential tax exposures surrounding the Era Spin-off. During the nine months ended September 30, 2017, the Company reversed this provision as the statute of limitations expired. In addition, the Company reversed accumulated accrued interest of $2.0 million related to this provision, included as a reduction in interest expense in the accompanying condensed consolidated statements of income (loss).
7. DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
Cash Flow Hedges. SeaJon, one of the Company’s 50% or less owned companies, had an interest rate swap agreement designated as a cash flow hedge that matured in April 2017. This interest rate swap called for SeaJon to pay a fixed interest rate of 2.79% on the amortized notional value and receive a variable interest rate based on LIBOR on the amortized notional value. By entering into this interest rate swap agreement, SeaJon converted the variable LIBOR component of certain of its outstanding borrowings to a fixed interest rate.
Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the nine months ended September 30 as follows (in thousands):
 
2017
 
2016
Exchange option liability on subsidiary convertible senior notes
$
19,436

 
$
(3,328
)
Forward currency exchange, option and future contracts
291

 
(186
)
Exchange traded commodity swap, option and future contracts

 
(13
)
 
$
19,727

 
$
(3,527
)
The exchange option liability on subsidiary convertible senior notes terminated as a consequence of the Spin-off.
The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. 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. As of September 30, 2017, there were no outstanding forward currency exchange contracts.
8. 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

13

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are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
The Company’s financial assets and liabilities as of September 30, 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)
$
62,606

 
$

 
$

Construction reserve funds
51,846

 

 

______________________
(1)
Marketable security losses, net include unrealized losses of $12.5 million and $9.6 million for the three months ended September 30, 2017 and 2016, respectively, related to marketable security positions held by the Company as of September 30, 2017. Marketable security losses, net include unrealized losses of $12.8 million and $53.0 million for the nine months ended September 30, 2017 and 2016, respectively, related to marketable security positions held by the Company as of September 30, 2017.
The estimated fair values of the Company’s other financial assets and liabilities as of September 30, 2017 were as follows (in thousands):
 
 
 
Estimated Fair Value
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash
$
269,592

 
$
269,592

 
$

 
$

Investments, at cost, in 50% or less owned companies (included in other assets)
4,300

 
see below
 
 
 
 
Notes receivable from third parties (included in other receivables and other assets)
2,773

 
950

 
1,741

 

LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion(1)
$
739,552

 
$

 
$
749,775

 
$

______________________
(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 and notes receivable from third parties 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. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
The Company’s other assets and liabilities that were measured at fair value during the nine months ended September 30, 2017 were as follows (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
ASSETS
 
 
 
 
 
 
Investments, at equity, and advances in 50% or less owned companies
 
$

 
$
6,000

 
$

Investments, at equity and advances in 50% or less owned companies. During the nine months ended September 30, 2017, the Company identified indicators of impairment for its investment in VA&E based on their recent financial results. The Company evaluated the fair value of VA&E and determined that its assets and liabilities were carried at fair value except for property, plant and equipment and certain deferred tax assets. Based on this evaluation, the Company concluded its carrying value was in excess of fair value and the impairment was other than temporary resulting in an impairment charge of $0.9 million, net of tax, of its equity investment.

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9. 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 September 30, 2017, the Company’s repurchase authority for the Securities was $77.4 million.
During the nine months ended September 30, 2017, the Company purchased 110,298 shares of Common Stock for treasury from its employees, to cover their tax withholding obligations related to share award transactions, for an aggregate purchase price of $7.6 million. 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.
10. NONCONTROLLING INTERESTS IN SUBSIDIARIES
Noncontrolling interests in the Company’s consolidated subsidiaries were as follows (in thousands):
 
Noncontrolling Interests
 
September 30, 2017
 
December 31, 2016
Inland River Services:
 
 
 
 
 
 
 
Other
3.0
%
51.8%
 
$
959

 
$
980

Shipping Services:
 
 
 
 
 
 
 
SEA-Vista
49%
 
122,344

 
106,054

Discontinued Operations
1.8
%
50.0%
 

 
28,190

Other
5.0
%
14.6%
 
152

 
152

 
 
 
 
 
$
123,455

 
$
135,376

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 September 30, 2017, the net assets of SEA-Vista were $249.7 million. During the nine months ended September 30, 2017, the net income of SEA-Vista was $33.2 million, of which $16.3 million was attributable to noncontrolling interests. During the nine months ended September 30, 2016, the net income of SEA-Vista was $32.4 million, of which $15.9 million was attributable to noncontrolling interests.
Discontinued Operations. As of December 31, 2016, discontinued operations primarily consisted of noncontrolling interests in Windcat Workboats, a subsidiary of SEACOR Marine and noncontrolling interests in ICP (see Note 1).
11. MULTI-EMPLOYER AND DEFINED BENEFIT PENSION PLANS
AMOPP. During the nine months ended September 30, 2017, the Company received notification from the AMOPP that the Company’s withdrawal liability as of September 30, 2016 would have been $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 September 30, 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.
ISH Retirement Plan. ISH sponsored a defined benefit pension plan (the “ISH Plan”) covering non-union employees prior to its acquisition by the Company on July 3, 2017 (see Note 2). The ISH Plan generally provided participants with benefits based on years of service and compensation levels for participants hired prior to September 1, 2006. From that date forward, the benefit was calculated prospectively under a cash balance formula with pay credits based on age plus service years and interest credits based on an as defined U.S. treasury rate. Effective July 3, 2017, in conjunction with the Plan, an amendment was made to the ISH Plan that fully vested all active participants as of January 1, 2017 and froze the retirement benefits effective August 31, 2017. As of August 31, 2017, all retirement benefits earned were fully preserved and will be paid in accordance with the ISH Plan and legal requirements.

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Table of Contents

The following table sets forth the projected benefit obligation, plan assets and funded status associated with the ISH Plan as of September 30, 2017 (in thousands):
Fair Value of Assets
$
37,464

Projected Benefit Obligation
(37,227
)
Funded Status as of July 3, 2017
237

Net Pension Income July 3, 2017 through August 31, 2017
832

Funded Status as of September 30, 2017(1)
$
1,069

_____________________
(1)
Included in other assets in the accompanying condensed consolidated balance sheets.
The significant assumptions used in determining the projected benefit obligation and net pension income were as follows:
Discount rate
4.00
%
Rate of increase in compensations levels
4.50
%
CPI
3.00
%
Cash balance interest credits (compounded annually)
4.50
%
Expected long-term rate of return on plan assets
6.75
%
The future benefit payments expected to be paid in each of the next five fiscal years are as follows (in thousands):
2017(1)
909

2018
1,711

2019
1,804

2020
1,885

2021
1,982

_____________________
(1)    July 3, 2017 through December 31, 2017
12. SHARE BASED COMPENSATION
Transactions in connection with the Company’s share based compensation plans during the nine months ended September 30, 2017 were as follows:
Director stock awards granted
1,250

Employee Stock Purchase Plan (“ESPP”) shares issued
36,552

Restricted stock awards granted
146,850

Restricted stock awards canceled
2,177

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

Granted(1)
970,069

Exercised
(386,417
)
Forfeited
(3,374
)
Expired
(541,783
)
Outstanding as of September 30, 2017
1,678,360

Shares available for future grants and ESPP purchases as of September 30, 2017(2)
946,572

______________________
(1)
On June 2, 2017, the Company granted 846,353 stock options to existing option holders under make-whole provisions upon the Spin-off.
(2)
Shares available for future grants and ESPP purchases were adjusted on June 2, 2017 to reflect the Spin-off in accordance with make-whole provisions of the plans.

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Table of Contents

13. COMMITMENTS AND CONTINGENCIES
The Company's capital commitments as of September 30, 2017 by year of expected payment were as follows (in thousands):
 
Remainder of 2017
 
2018
 
2019
 
Total
Shipping Services
$
4,689

 
$
2,252

 
$

 
$
6,941

Inland River Services
1,577

 
1,137

 
529

 
3,243

 
$
6,266

 
$
3,389

 
$
529

 
$
10,184

Shipping Services’ capital commitments included two U.S.-flag harbor tugs and one foreign-flag RORO vessel. Inland River Services’ capital commitments included other equipment and various vessel improvements. Subsequent to September 30, 2017, the Company committed to purchase additional equipment for $2.6 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, which is currently pending in the U.S. District Court for the Eastern District of Louisiana (the “MDL”). The “B3” master complaint naming ORM and NRC asserted 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. The Company has continually taken the position that all of the B3 claims asserted against it, 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”). On August 2, 2016, the Court granted an omnibus motion for summary judgment 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”). The deadline to appeal both of these orders has expired.
As noted above, various civil actions involving the Company, ORM, and/or NRC and concerning the Deepwater Horizon clean-up were consolidated with the MDL, although the majority of them have since been dismissed or otherwise resolved. The remaining claim is the following:
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.
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.
On July 18, 2017, the Court issued an order dismissing all remaining “B3” claims in the MDL with prejudice, with the exception of certain claims specifically listed on an exhibit annexed to the order (the “Master MDL B3 Dismissal Order”). Nathan Fitzgerald, the decedent in the Fitzgerald Action, was listed on the exhibit annexed to the Master MDL B3 Dismissal Order and so this claim against the Company remains pending. The Company is unable to estimate the potential exposure, if any, resulting from this matter, to the extent it remains viable, but believes it is without merit and does not expect that it 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 Company believes that the potential exposure, if any, resulting from these matters has been reduced as a result of the various developments in the MDL, including the B3 Dismissal Order and Remaining Eleven Plaintiffs’ 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.

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Table of Contents

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 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 were then stayed since they were consolidated with the MDL. The names of only a very small percentage of the claimants in these two matters appear to be listed on the exhibit to the Master MDL B3 Dismissal Order. 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 these developments 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 are 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, in connection with the various cases relating to the Deepwater Horizon oil spill response and clean-up 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.
14. SEGMENT INFORMATION
Accounting standards require public business enterprises to report information about each of their operating business segments that exceed certain quantitative thresholds or meet certain other reporting requirements. Operating business segments have been defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Certain reclassifications of prior period information have been made to conform the current period’s reportable segment presentation as a result of the Company’s presentation of discontinued operations (see Notes 1 and 15). The Company’s basis of measurement of segment profit or loss is as previously defined in the Company’s Annual report on Form 10-K for the year ended December 31, 2016.

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Table of Contents

The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments.

 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
Witt
O’Brien’s
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
External customers
44,608

 
103,780

 
9,667

 
116

 

 
158,171

Intersegment

 

 
14

 

 
(14
)
 

 
44,608

 
103,780

 
9,681

 
116

 
(14
)
 
158,171

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Operating
35,388

 
65,866

 
6,068

 

 
(64
)
 
107,258

Administrative and general
3,141

 
9,612

 
2,960

 
180

 
4,638

 
20,531

Depreciation and amortization
6,329

 
13,516

 
206

 

 
450

 
20,501

 
44,858

 
88,994

 
9,234

 
180

 
5,024

 
148,290

Gains on Asset Dispositions, Net
5,136

 
73

 

 

 

 
5,209

Operating Income (Loss)
4,886

 
14,859

 
447

 
(64
)
 
(5,038
)
 
15,090

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Foreign currency gains (losses), net
992

 
5

 
29

 
(12
)
 
(45
)
 
969

Other, net

 
59

 

 

 
5

 
64

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
(1,235
)
 
1,493

 
100

 
130

 

 
488

Segment Profit
4,643

 
16,416

 
576

 
54

 
 
 
 
Other Income (Expense) not included in Segment Profit
 
 
 
 
 
 
 
 
 
(19,229
)
Less Equity Earnings included in Segment Profit
 
 
 
 
 
 
 
 
 
(488
)
Loss Before Taxes, Equity Earnings and Discontinued Operations
 
 
 
 
 
 
 
(3,106
)

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Table of Contents


 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
Witt
O’Brien’s
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the nine months ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
External customers
124,921

 
243,442

 
23,665

 
348

 

 
392,376

Intersegment

 

 
85

 

 
(85
)
 

 
124,921

 
243,442

 
23,750

 
348

 
(85
)
 
392,376

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Operating
99,859

 
137,070

 
15,483

 

 
(256
)
 
252,156

Administrative and general
11,658

 
24,728

 
8,641

 
559

 
23,363

 
68,949

Depreciation and amortization
19,404

 
32,792

 
613

 

 
1,880

 
54,689

 
130,921

 
194,590

 
24,737

 
559

 
24,987

 
375,794

Gains (Losses) on Asset Dispositions and Impairments, Net
11,260

 
(342
)
 

 

 

 
10,918

Operating Income (Loss)
5,260

 
48,510

 
(987
)
 
(211
)
 
(25,072
)
 
27,500

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Derivative gains, net

 

 

 

 
19,727

 
19,727

Foreign currency gains (losses), net
730

 
8

 
62

 
(12
)
 
110

 
898

Other, net

 
118

 

 
(300
)
 
250

 
68

Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
(4,877
)
 
8,150

 
237

 
(581
)
 

 
2,929

Segment Profit (Loss)
1,113

 
56,786

 
(688
)
 
(1,104
)
 
 
 
 
Other Income (Expense) not included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
(37,860
)
Less Equity Earnings included in Segment Profit (Loss)
 
 
 
 
 
 
 
 
 
(2,929
)
Income Before Taxes, Equity Earnings and Discontinued Operations
 
 
 
 
 
 
 
10,333

 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
32,901

 
66,137

 
60

 

 
208

 
99,306

 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment:
 
 
 
 
 
 
 
 
 
 


Historical cost
444,582

 
1,008,093

 
1,227

 

 
29,532

 
1,483,434

Accumulated depreciation
(175,669
)
 
(290,400
)
 
(915
)
 

 
(20,065
)
 
(487,049
)
 
268,913

 
717,693

 
312

 

 
9,467

 
996,385

Construction in progress
2,177

 
20,592

 

 

 

 
22,769

Net property and equipment
271,090

 
738,285

 
312

 

 
9,467

 
1,019,154

Investments, at Equity, and Advances to 50% or Less Owned Companies
65,738

 
53,388

 
782

 
55,479

 

 
175,387

Inventories
1,866

 
2,032

 
54

 

 

 
3,952

Goodwill
2,415

 
1,852

 
28,506

 

 

 
32,773

Intangible Assets
10,860

 
12,285

 
7,510

 

 

 
30,655

Other current and long-term assets, excluding cash and near cash assets(1)
54,295

 
44,845

 
13,802

 
1,807

 
22,251

 
137,000

Segment Assets
406,264

 
852,687

 
50,966

 
57,286

 
 
 
 
Cash and near cash assets(1)
 
 
 
 
 
 
 
 
 
 
384,044

Total Assets
 
 
 
 
 
 
 
 
 
 
1,782,965

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

20

Table of Contents

 
Inland
River
Services
$’000
 
Shipping
Services
$’000
 
Witt
O’Brien’s
$’000
 
Other
$’000
 
Corporate
and
Eliminations
$’000
 
Total
$’000
For the three months ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
External customers
41,094

 
57,350

 
11,010

 
116

 

 
109,570

Intersegment

 

 
20

 

 
(20
)
 

 
41,094

 
57,350

 
11,030

 
116

 
(20
)
 
109,570

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Operating
31,496

 
28,542

 
6,618

 

 
(83
)
 
66,573

Administrative and general
3,982

 
6,675

 
3,423

 
410

 
6,441

 
20,931

Depreciation and amortization
6,308

 
8,216

 
432